A significant body of research confirms the major contribution that improved building performance can make to national energy and greenhouse abatement policies. The challenge facing governments is how best to realize the potential of energy efficient buildings. This paper reviews the effectiveness of economic instruments for building energy policy compared with alternative interventions such as building regulation and information campaigns. The approach taken to building policy by Lord Stern in his seminal climate change report is a cornerstone of this analysis, as is national policy development in Australia as this provided the foundation for this country’s controversial carbon-pricing regime. Regulatory reforms to the Australian Building Code over a decade provide economic analysis to support a historical review of the environmental economics discipline. Formal building code development processes are interrogated to establish the strengths and weaknesses of market based approaches to building energy policy. Study findings confirm that conventional economic interventions are likely to be ineffective as a vehicle for reducing greenhouse gas emissions from the building sector despite the significant potential benefits available therein.