The PACE Progam and Prospects for Residential Efficiency Programs

The dramatic rise and recent stumble of Property Assessed Clean Energy (PACE) financing offers an instructive case study of the persistent barriers that prevent consumer energy markets from functioning efficiently, and how these barriers could be overcome. It has long been argued that addressing climate change requires putting a price on carbon emissions in order to make less carbon intensive technologies economically competitive with fossil fuels. And yet, with no price on carbon forthcoming, there are a host of Energy Efficiency (EE) technologies for buildings that are not only cost competitive, but actually have a negative cost. Despite very favorable economics, these technologies fail to gain traction in the market year after year. PACE financing was designed to unlock the frozen monetary and carbon savings that exist today, by removing a number of the key barriers in this market. This GR Brief will examine the outlook for PACE financing, how this type of market failure can be overcome, as well as the implications of the building energy efficiency market on a successful carbon pricing policy.  

Energy Efficiency Market Failure

The central tenant of a carbon price is that the market will find the most efficient ways to reduce carbon emissions if it is directed to do so by a price signal. However consumer energy markets are full of barriers that prevent them from operating efficiently and nowhere are these failures more apparent than with EE technologies in buildings.

See full article here.