If you find it ironic that members of Congress take private jets to meetings on global warming or debate raising taxes to pay for government health care they get for free, a RAND study may warm your Republican heart.  Except it means saying Europe did something right, which could make it run cold again.

The new study says that wealthier countries use more than a third of their energy to heat, cool and illuminate buildings - but not always efficiently. Recent steps taken by the European Union (and some states in Australia) to inspect, rate and publicly disclose the energy efficiency of buildings indicate buildings that use less energy are worth more when sold or leased.

The buildings sector has unique characteristics that make design of energy efficiency policies particularly challenging: transactions are infrequent, capital costs are already high, and the variablility of design and siting makes energy efficiency comparisons difficulty. Often, owners must bear the costs of efficiency improvements while costs savings are obtained by tenants - hardly a capitalist incentive in the direct sense.

In examining the recent efforts in the EU and the Australian Commonwealth to promote energy efficiency, researchers focused on five key policy tools: building codes, energy efficiency ratings, the role of public buildings, the training and certification of experts, and the issuance of tradable "white certificates."

Building codes, though punitive, are claimed to have been effective in improving energy efficiency in new buildings and in buildings undergoing major refurbishments because they are mandatory and have specific requirements, but codes are slow to have a significant effect on energy use because at most three percent of a nation's building stock is newly constructed or renovated, the study finds. The EU now requires all member nations to have energy efficiency elements in building codes and the EU codes must be reviewed every five years.

Since a building's good energy performance may be attractive to potential buyers or tenants if government penalties are in place for less efficient properties, the EU has made presenting a standardized rating of a building's energy efficiency before or at the time of sale or lease an integral part of its approach. In 2002, the EU began requiring energy performance certificates be presented for all building sales or rentals.

The ratings may be based on a building's design characteristics, energy performance, or both. Many highly rated building designs fail to perform up to potential, however, often because of the way they are managed or because of tenant behavior.

"Incentives may be needed to improve the energy efficiency of older, poorly performing buildings where the biggest aggregate gains are to be made," said Charles Ries, the report's lead author and senior fellow at RAND, a nonprofit research organization. "Ratings systems should be designed to allow for achievable improvements for older buildings, so the perfect is not the enemy of the good."

For public buildings, the EU requires that energy efficiency ratings be posted in a prominent place, typically at the entrance. In Australia, several jurisdictions have policies that set a minimum "Green Star" voluntary rating for any building that is leased or purchased for government use. The RAND study recommends that public building ratings be based on measured energy performance rather than design characteristics alone.

Researchers find that implementing the program throughout Europe has taken time as governments create benchmarks for efficiency ratings, and inspectors have had to be trained to assess buildings and given credentials. The EU is considering amending the system, notably to require a building's energy grade be included in all property advertisements.

In Australia, the states of New South Wales and Victoria issued "white certificates" that could be sold to utilities and big energy users who are required to reduce energy use under the states' cap-and-trade programs. Ries said the effort shows promise, but in some cases third party aggregators distributed low-cost energy saving equipment (compact fluorescent bulbs or low-flow showerheads, for example) to homeowners in order to claim the white certificates. Subsequent studies have shown not all the equipment was actually used and the program had to be changed.

New proposals being considered include a buildings-only cap-and-trade system in which owners of large buildings are given energy savings obligations that can be met either directly, or by buying certificates from better-performing buildings. Such a system would provide more incentives for owners and users to operate buildings more efficiently, the authors find.

Among the report's main opinions on how more government legislation may not be so bad:

  • Building-materials manufacturers may able to better standardize their products if there is regional consistency in the energy efficiency requirements for building codes. This will provide relatively quick benefits. For the long term, performance codes should also be considered, with expanded use of building codes accompanied by aggressive training and quality-assurance programs for inspectors.

  • Energy Performance Certificates should be understandable and meaningful enough to affect marketplace behavior. Moreover, they should be required to be used in property advertisements and listings.

  • Widespread energy efficiency gains are possible only through retrofitting and making operational improvements to existing buildings. Energy use monitoring, as well as incentives, inspection and improvement recommendation systems are essential.

  • Public buildings should continue to be a test bed for new energy-saving ideas and should promote awareness of building energy-performance levels.

  • Building energy-efficiency programs can play an important part of a cap-and-trade program for reducing emissions of carbon dioxide. A ratings system, along with a cadre of trained and licensed experts to conduct the ratings, is crucial to any roll-out of a broad-based "white certificate" program.