THE VINE FEBRUARY 17, 2009
It happens every year in college towns across the Northeast: Students sign a lease in the spring or summer, only to find, when winter rolls around, that their rental house is essentially uninsulated, with a heating bill that runs to hundreds of dollars per person per month. (During my senior year of college, our front door didn't just lack weather-stripping—you could actually see the street through the crack underneath.) The landlord may promise repairs, but since he's not paying the utility bills, he rarely comes through.
If car buyers were unable to tell how fuel-efficient their vehicles where before making a purchase, you’d expect a drop in sales of fuel-efficient cars (which do, after all, force trade-offs in space and horsepower). Yet this is exactly what happens with residential energy use. People buy a house—or sign a lease—without any real idea of how much energy their new residence is actually going to use, which sets up a serious information asymmetry. The cost of putting in better insulation is transparent to builders and landlords. In the case of new homes, it's reflected in the purchase price. But the savings from energy efficiency are not nearly as transparent—in fact, buyers or renters would have to pay several hundred dollars for energy audits on each house they’re considering just to be able to factor energy efficiency into their decision-making process. The result is that there’s less of a demand for residential energy efficiency than there would be if people had full information when making their purchasing or leasing decisions. So lots of college students—along with, even more significantly, the low-income renters of old, poorly-insulated apartment units—end up getting screwed.
One solution might be to require anyone who's trying to sell or lease a house or apartment to perform an energy audit—and reveal the results of this audit to prospective buyers or renters. The British government has required these sorts of audits since October of last year, and Oregon governor Ted Kulongoski has talked about requiring them in his state. It’s an idea that ought to catch on nationwide. After all, the appliance store can’t sell a refrigerator without a sticker saying how much energy it will use in a year. Why should houses be any different?