Investments that make our homes greener: The role of regulation

Abstract

Operation of residential buildings is responsible for roughly 22% of global energy consumption and 17% of CO₂ emissions. We study the investments triggered by a regulatory intervention requiring rented properties to satisfy minimum energy efficiency standards. The analysis shows significant investments in low capital expenditure retrofits. Using an instrumented difference-in-differences methodology, we show that the investments do not have an economically significant impact on rents, so that landlords are not compensated for them.