Mind the gap : quantifying principal-agent problems in by unknow

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Extra resources for Mind the gap : quantifying principal-agent problems in energy efficiency ; in support of the G8 plan of action

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The analysis is based on a dataset of annual energy consumption of about 2000 commercial buildings across the country from 1988-92. The analysis separates the amount of energy use10 according to the ownership of mainframe computers, the number of floors in the building, and the ratio of rentable office space floor area to total floor area of the building. A summary of the results is shown in Table 10. The table shows that the higher the ratio of rentable office space floor area, the higher the persquare metre energy consumption.

That is, an increase in energy prices is unlikely to quickly spur new efficiency investments. Another example exists in newly constructed buildings. In this situation the building contractor makes many energy-related decisions, including the efficiency of the heating system and of the windows, and the building’s resistance to air infiltration. Since the energy-efficient alternatives usually increase the cost of construction, the building contractor has incentives to avoid these measures, especially if the measures are invisible to prospective buyers.

06 million End user cannot choose technology Case 2: Efficiency problem 141 million Case 4: Usage problem 6 million Step 3: Estimating the energy consumption affected by the Principal-Agent problem The final step involves calculating the affected energy consumption. The affected energy consumption is the amount of energy consumed by the population of end users in each of the cases where a PA problem exists. The total affected energy consumption across all the PA problems is the sum of energy use falling into Cases 2, 3, and 4.

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