This report compares energy efficiency policy in buildings in China, Germany, and the United States, providing the context for, and describing, policies in these three countries in order to lay the groundwork for future review of policy effectiveness.

As a lens for our analysis, we identify four opportunities for policy to impact energy use in buildings: new con- struction, building retrofit, equipment, and operations. Each of these categories presents distinct challenges and opportunities:

• Integration of efficiency principles during the new construction phase provides an opportunity for a building to achieve substantial energy savings at low cost given current technology. Policies that encourage or require efficiency at the time of construction are therefore crucial to a successful policy portfolio where construction rates are high.
• Building retrofit represents the post-construction opportunity to achieve deep improvements in the building envelope. Old buildings that lack current technology or may have deteriorated over time must be addressed through policy that encourages and deepens retrofit.
• Throughout the lifetime of a building, equipment such as appliances, lighting, and electronics is replaced or upgraded. Each time this occurs represents an opportunity for policy to maximize efficiency improvements by providing incentives, setting standards, and labeling.
• Finally, energy consumption in buildings continually depends upon the behavior of their inhab- itants, which we term operations. Government can provide information and incentives to help encourage building users to operate buildings efficiently and choose low-consumption behaviors.

All of these categories are targeted by energy efficiency policies in all three countries. The policy instruments used are broadly similar, though they differ in their degree of reliance on markets (China is more likely to regulate through mandates than the other countries) and in the level of government that implements them (the U.S. devolves more policy to the state and local levels than the others, while in Germany most regulation is set at the national level but important parts are decided at the European Union and state level). However, differences in underlying conditions in the three countries motivate very different points of emphasis for policy.

China’s building stock is characterized by rapid new construction and demolition of older buildings, large scale urban expansion, and a broad range of climatic conditions. China is developing and modernizing its technologies. Accordingly, China’s foremost building energy efficiency priorities are ensuring that new buildings are built to high standards and improving the efficiency of equipment. Northern China is heated mostly with district heat, and improving incentives for conservation in district-heated buildings could achieve considerable energy savings. Additionally, China faces the challenge of balancing its development-driven increase in building services demand with the preservation of current efficient behaviors such as part-time, part-space heating/cooling and natural ventilation.

Germany has a relatively old building stock, a low con- struction rate, and long building lifetimes. Therefore, policy emphasizes building retrofit, encouraging demand for retrofits and further encouraging these retrofits to attain deep energy savings. Germany also seeks to tighten building standards for new buildings and to control rising electricity use for appliances, electronics, lighting, and other devices. Germany has set ambitious energy reduction goals for its buildings sector (e.g. an 80% reduction in primary energy use in buildings by 2050), the only one of the three countries studied to do so; it is also the only country studied whose population and total building sector energy usage have stabilized and are not expected to rise in the future.

In the United States, aging buildings and new construc- tion both provide policy challenges. Moreover, energy demand for equipment use consumes a higher share of building energy use in the U.S. than in China or Germany. Thus, while new build is the clear emphasis in China and retrofits in Germany, there is no comparable single point of policy focus in the U.S. A portfolio of policies targets new buildings to lock in efficiency at minimum costs, encourages efficiency through retrofit in older buildings, and works to moderate demand from devices and improve their efficiency. Historical factors have led to high energy use (per capita or per unit of floor area) relative to other developed countries such as Germany. Low energy prices and high incomes mean that incentives for efficiency are relatively weak.