Barriers to Building Energy Efficiency (BEE) promotion : a transaction costs perspective

Pao Yue-kong Library Electronic Theses Database

Barriers to Building Energy Efficiency (BEE) promotion : a transaction costs perspective

 

Author: Qian, Kun Queena
Title: Barriers to Building Energy Efficiency (BEE) promotion : a transaction costs perspective
Degree: Ph.D.
Year: 2012
Subject: Buildings -- Energy conservation.
Architecture and energy consumption.
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Building and Real Estate
Pages: xviii, 242 leaves : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2522712
URI: http://theses.lib.polyu.edu.hk/handle/200/6604
Abstract: Worldwide, buildings account for a surprisingly high 40% of global energy consumption, and the resulting carbon footprint significantly exceeds that of all forms of transportation combined. Large and attractive opportunities exist to reduce buildings' energy use at lower costs and higher returns than in other sectors. These reductions are fundamental to achieving the International Energy Agency's (IEA) target of a 77% reduction in the planet's carbon footprint to meet the desired 2050 baseline, by reaching the CO{208} levels called for by the Intergovernmental Panel on Climate Change (IPCC). This thesis analyzes the concerns of the market stakeholders, mainly real estate developers and end-users, in terms of transaction costs as they make decisions about investing in Building Energy Efficiency (BEE). It provides a detailed analysis of the current situation and future prospects for BEE adoption by the market's stakeholders. It delineates the market and lays out the economic and institutional barriers to the large-scale deployment of energy-efficient building techniques. Research aim and objectives: The aim of this research is to investigate the barriers raised by transaction costs that hinder market stakeholders from investing in Building Energy Efficiency (BEE). It explains interactions among stakeholders in general and in the specific case of Hong Kong as they consider transaction costs. It focuses on the influence of transaction costs on the decision-making of the stakeholders during the entire process of real estate development. The objectives are as follows. (1) To establish an analytical framework for understanding the barriers to BEE investment with consideration of transaction costs, by: (i) identifying the business barriers to BEE for market stakeholders: the developers and end-users; and (ii) investigating the stakeholders' transaction costs as business barriers to BEE in the real estate development process. (2) To build a theoretical game model of decision making among the BEE market stakeholders to explain: (i) why, at a general level, transaction costs affect stakeholders' decisions in investing in BEE; and (ii) how the dominant factors of transaction costs affect stakeholders' decisions. (3) To study the empirical data from questionnaire surveys of building designers and from focused interviews with real estate developers in Hong Kong: (i) to find out the real market concerns in practice; and (ii)to identify the transaction costs concerns that are specific to real estate development involving BEE. (4) To triangulate the study's empirical findings with those of the theoretical model and analytical framework: (i) to demonstrate how the theoretical game model approach and analytical framework can be used to explain the general workings of the BEE market and also to accommodate specific operations in different institutions; and (ii) to explore how institutions might help overcome BEE barriers for different market stakeholders in terms of transaction costs and what roles government might play in promoting BEE.
This study uses transaction cost economics (TCE) to investigate the barriers that transaction costs raise for stakeholders who might otherwise develop or purchase BEE buildings. It also develops a theoretical game model to simulate the interaction among the developers and end-users and the logic of their decision-making strategies, which lay out the rationales for their choices and the influence of various transaction costs. Policy implications are thus drawn from the rationale of decision making by market stakeholders. The conclusions are augmented and reinforced by survey data from building designers, a relatively neutral party in real estate transactions, to show their perspective on green building and energy efficiency in Asia. A comprehensive approach, involving an investigation of all the stages of real estate development and analyzing information gathered in interviews with major real estate developers and their representatives in Hong Kong, is then used to lay out possible negative concerns about transaction costs that would make these actors hesitant to move forward with BEE. The empirical study further explains the game theoretic results and validates the model with qualitative data on actual practices. The study shows that a coherent institutional framework needs to be established to ensure that the design and implementation of BEE policies acknowledge the concerns of market stakeholders by taking transaction costs into consideration. Regulatory and incentive options should be integrated into BEE policies to minimize efficiency gaps and to realize a sizeable increase in the number of energy-efficient buildings in the next decades. Specifically, the analysis shows that a thorough understanding of the transaction costs borne by particular stakeholders could improve the energy efficiency of buildings, even without improvements in currently available technology.

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