systems (Brooks et al., 2006a,b). Variabilities in the stringency and enforcement of building energy codes across states and localities constitute another barrier to energy efficiency in buildings (Brown et al., 2007).
Misplaced incentives, also known as split incentives or principal-agent problems, exist in numerous situations. The most visible example is in rental markets, where building owners are responsible for investment decisions but tenants pay the energy bills. Studies have revealed lower levels of energy efficiency in U.S. dwellings occupied by renters compared to those occupied by owners.
Misplaced incentives are found in new-construction markets as well, where decisions about building design and features are also made by people who are not responsible for paying the energy bills. Architects, builders, and contractors have an incentive to minimize first cost in order to win bids and maximize their profits (Koomey, 1990; Brown et al., 2007). Moreover, commercial leases are often structured so that the landlord allocates energy costs to tenants based on the amount of square footage leased rather than on the amount of energy used (Lovins, 1992).
It can take many years to inform and educate a large majority of households and businesses about energy efficiency options. For example, after nearly 8 years of active promotion and incentives for the use of compact fluorescent lamps, nearly one-third of households surveyed in the Pacific Northwest in late 2004 were still unaware of them (Rasmussen et al., 2005).
Lack of information is an even greater problem and a harder one to fix for individual end-uses. For example, when a tenant of a commercial building buys office equipment, its electricity usage is not individually metered. And not a single end-use in homes is ever metered separately. Householders have no direct information as to whether their computer or video game box or hair dryer is a big energy user or a trivial one.
Businesses tend to pay limited attention to energy use and energy-savings opportunities if energy costs are a small fraction of the total cost of owning or operating the business or factory—or if energy efficiency is not viewed as a priority by company management. As a result, many businesses limit energy efficiency investments to projects with payback periods of no more than 2 or 3 years (DeCanio, 1993; Geller, 2003).
Some highly efficient appliances or other energy efficiency measures are relatively new and still not widely available in the marketplace or not well supported by product providers (Hall et al., 2005). And some very effective energy efficiency