Does Energy Star Certification Reduce Energy Use in Commercial Buildings?

Abstract

A number of policies and programs are aimed at reducing energy use in buildings—building energy codes, disclosure laws, energy-use benchmarking, and mandated or subsidized energy audits. In the United States, many of these initiatives are enacted at the state or local level. At the federal level, one of the main programs is Energy Star certification, which provides a label to top energy-performing buildings. In this paper, we evaluate changes in rents and utility expenditures following Energy Star certification using a national sample of over 4,100 office buildings combined with Energy Star data from the US Environmental Protection Agency (EPA). We find that building rents increase by 3.6% following certification, but that utility expenditures remain unchanged. We provide novel evidence that buildings do not make upgrades or capital investments to obtain a certification, suggesting that the Energy Star program primarily certifies buildings that are already energy efficient.