Leveraging home-purchase behavior for buildings energy savings

Abstract

As of 2013, the building sector accounted for 56.7% of total final energy consumption in Korea with about 44% of its residential energy demand used for thermal services-space heating and cooling-suggesting major opportunities for buildings energy efficiency in the nation. In terms of residence type, apartments accounted for 63.4% of the population in Korea in 2013 and 44.8% in Seoul in 2014 (KSIS 2015) with the shares continuing to rise, requiring increasing energy policy attention. This study employed the nested logit model to analyze the consumer behavior of apartment purchasing and the impact of feebate schemes on the apartment market from year 2014, 2015 transaction data at the apartment-unit level in Seoul. This paper points out that buildings energy efficiency in terms of heating cost does explain apartment purchase addressing the promising possibility of performance based energy efficiency instrument. The simulation of feebate policy on energy efficiency in buildings sector describes usage-based versus efficiency-based policy present different environmental, distributional, and welfare implications. The two policy types provide opposite distributional impacts on different market segments, and interestingly, the usage-based instrument can improve social welfare even without internalizing environmental externalities.