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Article
Publication date: 16 November 2015

Hassan Adan and Franz Fuerst

Improving the energy efficiency of the existing residential building stock has been identified as a key policy aim in many countries. The purpose of this paper is to review the…

Abstract

Purpose

Improving the energy efficiency of the existing residential building stock has been identified as a key policy aim in many countries. The purpose of this paper is to review the extant literature on investment decisions in domestic energy efficiency and presents a model that is both grounded in microeconomic theory and empirically tractable.

Design/methodology/approach

This study develops a modified and extended version of an existing microeconomic model to embed the retrofit investment decision in a residential property market context, taking into account tenants’ willingness to pay and cost-reducing synergies. A simple empirical test of the link between energy efficiency measures and housing market dynamics is then conducted.

Findings

The empirical data analysis for England indicates that where house prices are low, energy efficiency measures tend to increase the value of a house more in relative terms compared to higher-priced regions. Second, where housing markets are tight, landlords and sellers will be successful even without investing in energy efficiency measures. Third, where wages and incomes are low, the potential gains from energy savings make up a larger proportion of those incomes compared to more affluent regions. This, in turn, acts as a further incentive for an energy retrofit. Finally, the UK government has been operating a subsidy scheme which allows all households below a certain income threshold to have certain energy efficiency measures carried out for free. In regions, where a larger proportion of households are eligible for these subsidies,the authors also expect a larger uptake.

Originality/value

While the financial metrics of retrofit measures are by now well understood, most of the existing studies tend to view these investments in isolation, not as part of a larger bundle of considerations by landlords and owners of how energy retrofits might influence a property’s rent, price and appreciation rate. In this paper, the authors argue that establishing this link is crucial for a better understanding of the retrofit investment decision.

Details

Smart and Sustainable Built Environment, vol. 4 no. 3
Type: Research Article
ISSN: 2046-6099

Keywords

Book part
Publication date: 10 August 2018

Rachelle C. Sampson and Y. Maggie Zhou

We examine the effect of firm ownership status on three environmentally relevant variables: energy efficiency, toxic emissions, and spending on pollution abatement. Prior research…

Abstract

We examine the effect of firm ownership status on three environmentally relevant variables: energy efficiency, toxic emissions, and spending on pollution abatement. Prior research has demonstrated that public firms invest less than private firms and suggests this difference is due pressure from investors to strongly favor short over long-term earnings. We extend this logic to other firm behavior, examining whether publicly owned facilities invest in energy efficiency and pollution reduction differently than privately owned facilities. Using data from the US Census of Manufactures from 1980 to 2009, information on pollution from the Environmental Protection Agency Toxic Release Inventory (TRI) and pollution abatement spending from the Pollution Abatement Costs and Expenditures survey, we find that facilities switching to public ownership are less energy efficient and spend less on pollution abatement than their privately owned counterparts. However, we also find that facilities switching to public ownership have lower toxic emissions than other facilities. We also examine how different sources of external pressures alter these results and find that increased regulatory scrutiny is correlated with increased energy efficiency, toxic emissions, and abatement spending. More concentrated institutional ownership in public firms is associated with lower energy efficiency as is a greater brand focus. These latter results are broadly consistent with the idea that publicly owned firms respond to pressures from investors with a reduced focus on environmentally relevant variables. However, since facilities switching to public ownership have lower toxic emissions, this suggests that there are two competing pressures in publicly owned facilities: cost pressures, consistent with lowered energy efficiency, and public perceptions, consistent with lower toxic emissions, particularly since TRI data became available. In this sense, the combination of ownership and transparency of information appears to influence how firms prioritize different stakeholders.

Details

Sustainability, Stakeholder Governance, and Corporate Social Responsibility
Type: Book
ISBN: 978-1-78756-316-2

Keywords

Open Access
Article
Publication date: 5 February 2018

Joseph-Alexander Zeitler

Most of the European apartment blocks are rental units of which the majority needs major refurbishments in upcoming years to achieve climate goals. On the other hand, it is still…

1156

Abstract

Purpose

Most of the European apartment blocks are rental units of which the majority needs major refurbishments in upcoming years to achieve climate goals. On the other hand, it is still difficult for property owners to evaluate the profitability of energetic retrofitting investments. The purpose of this paper is to contribute to the situation by forming a standardized framework and tool to calculate profitability of energy efficiency investments throughout Europe.

Design/methodology/approach

From a European perspective, several different areas of interest (technical, legal, institutional and financial) have been screened to develop an extensive compendium. This has been performed by literature research and several national surveys. Based on these findings, an online-based tool for profitability calculation has been developed to support the decision-making process of each individual, regardless his knowledge on energy efficiency.

Findings

This paper provides a short overview on main investment barriers in Germany. It is found that both market conditions and information deficits harm energy efficiency investments. Frequently, the decision-making process is found difficult due to inflexible regulations and lack of knowledge. This dramatically reduces market incentives that are already in place. Most often, the investor user dilemma is seen as the main investment obstacle. In this context, transparency and reliability are found to trigger energy-efficient investments.

Practical implications

Findings are used to identify best practice examples and to assess their transferability to other markets and countries. Innovative solutions have been extracted to improve the overall investment climate.

Originality/value

The paper contributes to a sound foundation for energy-related investments and the fulfillment of EU reduction targets.

Details

Journal of Property Investment & Finance, vol. 36 no. 1
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 9 February 2024

Chukwunonso Ekesiobi, Stephen Obinozie Ogwu, Joshua Chukwuma Onwe, Ogonna Ifebi, Precious Muhammed Emmanuel and Kingsley Nze Ashibogwu

This study aims to assess financial development and debt status impact on energy efficiency in Nigeria as a developing economy.

Abstract

Purpose

This study aims to assess financial development and debt status impact on energy efficiency in Nigeria as a developing economy.

Design/methodology/approach

This study combined the autoregressive distributed lag (ARDL), fully modified ordinary least squares and canonical cointegration regression analytical methods to estimate the parameters for energy efficiency policy recommendations. Secondary data between 1990 and 2020 were used for the analysis.

Findings

The result confirms the long-run nexus between energy efficiency, financial development and total debt stock. Furthermore, the ARDL estimates for this study’s key variables show that financial development promotes energy efficiency in the short run but hinders long-run energy efficiency. Total debt stock limits energy efficiency in Nigeria in short- and long-run periods.

Research limitations/implications

The limitation of this study is that the scope is limited to Nigeria as a developing economy. The need to support energy efficiency projects is a global call requiring cross-country analysis. Despite this study’s focus on Nigeria, it provides useful insights that can guide energy efficiency policy through the financial sector and debt management.

Practical implications

The financial sector must ensure the availability of long-term credit facilities to clean energy investors. The government must maintain a sustainable debt profile to pave the way for capital expenditure on clean energy projects that promote energy efficiency.

Originality/value

The environmental consequences of energy intensity are being felt globally, with the developing countries most vulnerable. The cheapest way to curb these consequences is to promote energy efficiency to reduce the disastrous effect. Driving energy efficiency requires investment in energy-efficient technology but the challenge for developing economies, i.e. Nigeria’s funding, remains challenging amid a blotted debt profile. This becomes crucial to investigate how financial sector development and debt management can accelerate energy-efficient investments in Nigeria.

Details

International Journal of Energy Sector Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 23 November 2021

Sajid Iqbal and Ahmad Raza Bilal

The study aims to empirically estimate the role of public supports for energy efficiency financing and presents the way forward to mitigate the energy financing barriers that…

Abstract

Purpose

The study aims to empirically estimate the role of public supports for energy efficiency financing and presents the way forward to mitigate the energy financing barriers that incurred during the COVID-19 crisis.

Design/methodology/approach

Using the G7 countries data, the study estimated the nexus between the constructs. Generalized method of moments (GMM) and conventional increasing-smoothing asymptotic of GMM are applied to justify the study findings. Wald econometric technique is also used to robust the results.

Findings

The study findings reported a consistent role of public support on energy efficiency financing indicators, during the COVID-19 crisis period. G7 countries raised funds around 17% through public supports for energy efficiency financing, and it raised 4% of per unit energy usage to GDP, accelerated 16% energy efficiency and 24% output of renewable energy sources, during COVID-19. By this, study findings warrant a maximum support from public offices, energy ministries and other allied departments for energy efficiency optimization.

Practical implications

The study presents multiple policy implications to enhance energy efficiency through different alternative sources, such as, on-bill financing, direct energy efficiency grant, guaranteed financial contracts for energy efficiency and energy efficiency credit lines. If suggested policy recommendations are applied effectively, this holds the potential to diminish the influence of the COVID-19 crisis and can probably uplift the energy efficiency financing during structural crisis.

Originality/value

The originality of the recent study exists in a novel framework of study topicality. Despite growing literature, the empirical discussion in the field of energy efficiency financing and COVID-19 is still shattered and less studied, which is contributed by this study.

Details

China Finance Review International, vol. 12 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 2 March 2012

Magnus Bonde

The purpose of this paper is to investigate if a green lease could eliminate the split incentive problem in two office buildings located in Stockholm, Sweden. It aims to provide a…

1168

Abstract

Purpose

The purpose of this paper is to investigate if a green lease could eliminate the split incentive problem in two office buildings located in Stockholm, Sweden. It aims to provide a theoretical overview concerning the “energy paradox” and to describe a case study in which a green lease was to be implemented in the legal framework for two office buildings in the Stockholm region.

Design/methodology/approach

This paper documents a case study, in which a green lease was to be implemented in the legal framework for two office buildings, to promote a more active engagement in the buildings energy performance. In order to accomplish this, a project group was formed which consisted of representatives from the building owners, tenant, property manager, energy consultants and KTH, Royal Institute of Technology, Stockholm.

Findings

This paper reveals that it is very hard to alter already legally binding agreements. Furthermore, it shows that the separation of ownership and usage of a building may not be optimal from an energy efficiency point of view.

Originality/value

The paper gives an empirical explanation as to why at times energy efficiency measures are not undertaken, even though the investments themselves bring about a positive net present value. In addition, the paper analyses the situation where property maintenance is outsourced to a property management firm, which is a common but seldom discussed situation in the literature.

Details

Journal of Corporate Real Estate, vol. 14 no. 1
Type: Research Article
ISSN: 1463-001X

Keywords

Article
Publication date: 1 July 2014

Richard Greenough and Paolo Tosoratti

The purpose of this paper is to identify the factors present in successful energy efficiency investments that might indicate how to resolve the landlord-tenant dilemma in existing…

1646

Abstract

Purpose

The purpose of this paper is to identify the factors present in successful energy efficiency investments that might indicate how to resolve the landlord-tenant dilemma in existing and new commercial property.

Design/methodology/approach

The paper reviews literature to indicate the importance of energy efficiency in buildings and to explore the barriers to such investments, including problematic landlord-tenant relationships. Such relationships have been investigated by the International Energy Agency, and a similar approach is used here in two case studies in new and existing buildings. These studies explore the nature of landlord-tenant relationships and the importance of policy and standards of building performance.

Findings

In neither case did landlord-tenant issues constitute barriers to investments in energy efficiency, however, these investments were made for other reasons than simple cost savings. Construction of new commercial property to Passivhaus standards ensures a high-build quality and a comfortable building with low-energy costs. The added value to tenants may justify the cost of construction. The cost of investments in energy efficient buildings can also be justified by the enhanced reputation of landlords which may be more valuable than a DEC rating. In neither case was the commercial Green Deal felt to be an attractive funding mechanism.

Practical implications

Conclusions based on these case studies must be regarded as tentative, so future studies of successful energy efficient buildings should be undertaken to explore the motivation to invest, particularly the relative importance of indirect benefits of energy efficiency.

Originality/value

One of the case study buildings is exceptionally energy efficient and is the result of a particularly open and effective contractual relationship. Further study of such cases may suggest a new approach to landlord-tenant problems of energy efficiency, even in refurbishment of existing buildings.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 17 July 2017

Melissa Kazemi Rad, David Riley, Somayeh Asadi and Parhum Delgoshaei

The purpose of this paper is to examine significant steps taken by the Pennsylvania State University (Penn State) to account for both energy cost savings and greenhouse gas (GHG…

Abstract

Purpose

The purpose of this paper is to examine significant steps taken by the Pennsylvania State University (Penn State) to account for both energy cost savings and greenhouse gas (GHG) emissions reduction goals through strategic investments in energy conservation measures (ECMs) in campus buildings. Through an analysis of multiple years of investment in facility upgrades across the university, the impacts of ECMs of various types are characterized by building type. The standards and criteria for ECMs investments are also evaluated with the goal to develop a predictive tool to support decision making pertaining to an annual investment in a portfolio of ECMs that will maintain a trajectory to achieve both financial return on investment as well as GHG reduction goals.

Design/methodology/approach

This study is comprised of three main parts: analyzing the energy costs saving and GHG emissions reduction contribution of various building types in which ECMs were conducted, analyzing costs saving and GHG emissions reduction contribution of each ECM while considering the average annual investments made in them and estimating the impact of upgrading Penn State’s steam plants from firing a mixture of coal and natural gas to natural gas only on the GHG emissions.

Findings

These analyses help identify which types of buildings and ECMs would have larger savings and emissions reduction contributions. A calculator is also created to enable forecasting of costs saving and GHG emissions reduction of investment distribution strategy among ECMs. This study demonstrates that the calculator based on data from previous years will benefit decision makers in more wisely configuring the investment portfolio.

Originality/value

This paper fulfills an identical need to couple energy efficiency strategies coupled with the environmental impacts associated with different fossil fuel energy sources.

Details

Engineering, Construction and Architectural Management, vol. 24 no. 4
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 4 April 2016

Alberto De Marco, Giulio Mangano, Fania Valeria Michelucci and Giovanni Zenezini

The purpose of this paper is to suggest the usage of the project finance (PF) scheme as a suitable mechanism to fund energy efficiency projects at the urban scale and present its…

Abstract

Purpose

The purpose of this paper is to suggest the usage of the project finance (PF) scheme as a suitable mechanism to fund energy efficiency projects at the urban scale and present its advantages and adoption barriers.

Design/methodology/approach

A case study is developed to renew the traffic lighting system of an Italian town via replacement of the old lamps with new light-emitting diode (LED) technology. Several partners are involved in the case project to construct a viable PF arrangement.

Findings

The case study presents the viability of the proposed PF scheme that provides for acceptable financial returns and bankability. However, it also shows that the need for short concession periods may call for a public contribution to the initial funding to make the project more attractive to private investors.

Practical implications

This case study is a useful guideline for governments and promoters to using the PF arrangement to fund energy efficiency investments in urban settings. It helps designing an appropriate PF scheme and understanding the advantages of PF to reduce risk and, consequently, increase the debt leverage and profitability of energy efficiency projects.

Originality/value

This paper contributes to bridging the gap about the lack of works addressing the implementation of the PF mechanism in the energy efficiency sector in urban areas. The importance of this paper is also associated with the shortage of traditional public finance faced by many cities that forces to seek for alternate forms of financing.

Details

International Journal of Energy Sector Management, vol. 10 no. 1
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 22 June 2012

Eckhart Hertzsch, Christopher Heywood and Mirek Piechowski

The purpose of this paper is to present a methodology to improve decision making about investments that reduce buildings' energy consumption.

Abstract

Purpose

The purpose of this paper is to present a methodology to improve decision making about investments that reduce buildings' energy consumption.

Design/methodology/approach

A three‐stage methodology was developed and tested to analyse an existing Australian office building's energy use, its energy rating, and its life cycle investment. In total, seven cases of sets of improvements were modelled for energy performance. Their investment value was evaluated using a life cycle‐based analysis across several investment options.

Findings

A holistic approach to investment shows that the most effective sustainable refurbishments need not be the most expensive. Optimised investment can take advantage of the timing of both re‐investment in component renewal and efficiency gains from the refurbishment. Furthermore, relatively small changes in income can offset capital expenditure for refurbishments and protect against obsolescence.

Originality/value

Much work on sustainable refurbishments rarely considers the investment basis, across a life cycle, of that expenditure, generally seeing them as a cost and rarely considers the optimal time for that expenditure in the asset life cycle. This paper addresses both concerns.

Details

International Journal of Energy Sector Management, vol. 6 no. 2
Type: Research Article
ISSN: 1750-6220

Keywords

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