Do energy efficiency building codes help minimize the efficiency gap in the US? A dynamic panel data approach

This study estimates the effects of energy efficiency policy in the residential sector using panel data of 48 contiguous states starting from 1970 to 2017. To avoid any unobserved heterogeneity and facilitate efficiency in estimation, this study employs a Dynamic Panel Data model with a two-step Generalized Method of Moments technique. The results suggest that energy efficiency policy for the residential sector has saved about 8.6 percent in energy consumption, which is about 22 percent of the total stated saving, leaving an energy efficiency gap of 1.5771 quadrillion Btu. Consistent with previous estimations, this study finds that theoretical saving amounts overestimate energy efficiency output and overinflate the increase in potential energy efficiency by about 32 percent. Since energy efficiency policy has failed to achieve the stated amount of saving in the residential sector, households have no incentive to adopt the energy efficiency policy, which has created an unusual gap in energy efficiency.

Automated summary

This study estimated the effects of energy efficiency policy in the residential sector from 1970 to 2017 using panel data. The results showed that actual energy savings were lower than theoretical estimates by 32%, leading to an energy efficiency gap.