Commercial Building Electricity Consumption: Understanding the Role of Shocks, Structure Quality and Contract Incentives
Matthew E. Kahn
University of California,
Los Angeles and NBER
John M. Quigley
University of California
April 22, 2012
The residential sector has been the primary focus of public policies related to energy efficiency, but commercial buildings are now responsible for most of the durable building stock’s total electricity consumption. This paper exploits a unique panel of data to investigate variations in the electricity consumption of individual buildings as they experience both climatic and macro-economic shocks. We also seek to understand the impact of building vintage, contract incentives, and human capital on the cross-sectional variation in electricity consumption across commercial buildings. We document that electricity consumption and building quality are complements, not substitutes. Technological progress may reduce the energy demand from heating, cooling and ventilating, but the behavioral response of building tenants and the large-scale adoption of appliances more than offset these savings, leading to increases in energy consumption in more recently constructed, more efficient structures. In the absence of carbon pricing, these results have important implications for policy makers in assessing and influencing future energy demand.
John's research focused on issues at the intersection of urban and local public finance economics. Quigley, his mentor John Kain and Kain's mentor John Meyer , Brown University's Vern Henderson , and Harvard's Ed Glaeser have been the key urban economists whose research has deeply influenced my work.
He was an amazingly versatile researcher. Take a look at his recent papers. In recent years, he and Dwight Jaffee offered proposals for reforming the GSEs. He and Nils Kok and Piet Eichholtz published several influential papers on the economics of "green buildings". He also published some great work on using a natural experiment from Sweden for testing for the role that universities play in knowledge creation. He and Chip Case and Robert Shiller wrote a famous paper on measuring the marginal propensity to consume out of stock market wealth versus housing equity wealth. On top of this, he wrote an exceptional paper on the political economy of voting for congestion pricing. I could go on and on but I am depressed because I have lost the opportunity to continue to learn from him and to laugh as we would crack jokes in his Goldman School office.
John and his wife Mary Curran, Dora and I would often have dinner together in Berkeley. He was a fascinating man who I was always eager to talk to.
The Chronicle of Higher Education has devoted a lot of attention to the graying of the research university faculty. If senior scholars would act like John Quigley, then U.S academia will continue to thrive. He always was an ambitious and optimistic scholar. I found that to be infectious!