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Split incentives and principal agent problems. In the building sector, investment decisions, including about the energy features of a building, are usually made by developers and investors, not by those who will occupy the building later and be responsible for paying the energy bills. Consequently, energy efficiency features are not installed and occupants will not reap the benefits. Split incentives prevent basing investment decisions on life-cycle costs and, consequently, the realization of the benefits of energy efficiency investments. Lack of information and knowledge. Information about energy efficiency options is often incomplete, unavailable, expensive, and/or difficult to obtain or trust. Even developers, design professionals, and contractors are not always aware of the energy efficiency technologies available (see box 1.2 for an example). Even when they are aware of the technologies, they can be reluctant to take a chance on the technology and include it in building design.16 Many construction companies lack the knowledge of correctly applying new technologies. Complexity of delivering more energy-efficient buildings. The process for delivering a building project is significantly more complex than the manufacturing of a car or an appliance. The project developer needs to deal with independently operated professional and trade units such as architects, engineers, and various construction and installation contractors, as well as suppliers of materials and components, to deliver a building that meets the needs of the clients/customers in safety, function, and energy efficiency. To achieve satisfactory delivery of energy efficiency results, the members of the supply chain need to not only have the know-how to deliver their respective contribution but also to work in effect like a coherent team, so the energyefficient designs are followed consistently throughout the construction
Box 1.2. Not Even Building Energy Efficiency Designers Always Know What Technologies are Available in the Local Market—Experiences from a Project in China One morning in the office, we were talking with the design team about U-factors for window energy-efficiency. We suggested that it should be possible to find windows with lower U-factors. We got into a discussion about what technologies were being used in the windows. We asked about the low-emissivity coatings on the glass. The design team provided the emissivity, and we indicated that this emissivity was typical for a pyrolytic hardcoat low-e coating (apparently called an “online coating” in China) and that better performance was available using the sputter softcoat low-e coating (apparently called an “offline coating” in China). We were initially told that no glass suppliers in the city provided the offline coating; it was available only in other provinces. However, after a few telephone calls, by that afternoon, there were two different local glass suppliers who were all-too-happy to join our meeting and provide information to the design team about the sputter softcoat offline low-e coating that their companies were producing locally. The process was repeated when we talked about high-quality PVC frames for windows. At first, we were told that all the PVC products in China were too flimsy to use in tall buildings and that they all had mechanically fastened corners that leaked air over time. We mentioned the “welded” (heatmelted) corners that were typical in the United States for PVC-frame windows and that there are several 25-story buildings in Seattle with PVC window frames. The next day, a window manufacturer joined the meeting with a sample of his product that showed welded corners, and stating that these PVC windows had been installed in a 30-story building in the city and in a 35story building in Shenzhen where windloads are high due to typhoons. Source: Authors.