Energy and Emissions in the Building Sector: A Comparison of Three Policies and Their Combinations
International Association for Energy Economics
Standards, subsidies, and carbon taxes are among the measures often considered to reduce energy consumption and carbon dioxide (CO₂) emissions in the buildings sector. Using a modeling system developed by the U.S. Energy Information Administration, residential and commercial sector standards and subsidies were each modeled with and without a carbon tax to determine if a multipolicy approach would be redundant. A separate case examining a carbon tax was also completed for comparison. Between the two equipment-based policies, subsidies achieved more energy and CO₂ emissions reductions at less cost to consumers, as incremental investment costs were shifted to the government. When either of the equipment-based policies was combined with a carbon tax, their energy-and carbon-reducing effects were more addictive than redundant.