WP-031: Kevin Novan, Aaron Smith, and Tianxia Zhou, "Residential Building Codes Do Save Energy: Evidence From Hourly Smart-Meter Data" (June 2017)

In 1978 California adopted the nation’s first state-level energy building codes, establishing minimum energy efficiency requirements for new buildings. In a new paper, Kevin Novan, Aaron Smith and Tianxia Zhou (University of California, Davis) examine how Title 24, the policy that established the residential energy efficiency codes for reducing heating and cooling usage, has affected electricity consumption. Using a rich dataset of hourly electricity consumption for 158,112 houses, they estimate that the average house built just after 1978 uses 13% less electricity for cooling than a similar house built just before 1978.

Title 24 was primarily intended to reduce the energy required for indoor temperature control. To determine if Title 24 provided electricity savings, the authors tested whether the level of electricity used for cooling during 2012 and 2013 dropped noticeably in houses built immediately after 1978 versus those built immediately before 1978. The 13% drop in electricity use cannot be explained by differences in the type of house built, changes in energy prices or the fact that post-1978 houses are newer and have aged less. Therefore, the results support the conclusion that California’s 1978 building energy codes have resulted in significant and meaningful electricity savings.

The authors estimate that the electricity savings alone have recovered nearly half of the upfront costs of complying with the efficiency standards. Given that the natural gas cost savings were predicted to exceed the electricity costs by a factor of nine, their results support the conclusion that the policy would comfortably pass a cost-benefit test.

In settings where market failures prevent energy costs from being completely passed through to home prices, building codes can serve as a cost-effective tool for improving residential energy efficiency.