The impact of mandatory energy audits on building energy use

Cities are increasingly adopting energy policies that reduce information asymmetries and knowledge gaps through data transparency, including energy disclosure and mandatory audit requirements for existing buildings. Although such audits impose non-trivial costs on building owners, their energy use impacts have not been empirically evaluated. Here we examine the effect of a large-scale mandatory audit policy-New York City's Local Law 87-on building energy use, using detailed audit and energy data between 2011 and 2016 for approximately 4,000 buildings. This specific policy context, in which the compliance year is randomly assigned, provides a unique opportunity to explore the audit effect without the self-selection bias found in studies of voluntary audit policies. We find energy use reductions of approximately -2.5% for multifamily residential buildings and -4.9% for office buildings. The results suggest that mandatory audits, by themselves, create an insufficient incentive to invest in energy efficiency at the scale needed to meet citywide carbon-reduction goals. Although more cities are considering mandatory building energy audits, their effect on energy use in buildings is not clear. Using data from New York, Kontokosta et al. estimate the extent to which Local Law 87 mandating building energy audits has contributed to a decrease in energy use.