Professor Franz Fuerst and PhD candidate Yana Akhtyrska, both from the Department of Land Economy, have published a new paper, entitled 'The effectiveness of climate change regulations in the commercial real estate market' in the journal Energy Policy.
The paper, which has been published as 'open access', focuses on the impact of the introduction of Minimum Energy Efficiency Standards in England and Wales.
Read the abstract here:
Legislation to increase building energy efficiency is a key climate change policy instrument in many countries. Although most of these regulations concern the housing stock, office buildings are also a considerable source of greenhouse gas emissions. Office markets face fewer pricing regulations than the residential market and may thus provide a clearer pricing signal of any policy impacts. This paper focusses on the introduction of Minimum Energy Efficiency Standards (MEES) in England and Wales. Applying machine-learning methods, Difference in Differences (DiD) and Fixed Effects (FE) panel data estimation to a comprehensive database of the London office market, our results suggest that the MEES policy has had a measurable and significant impact and lowered the rents of the combined group of affected office units by 6–8% following the announcement of MEES and in the run-up to implementation. A weakly significant 4.4% rental discount is detected for the bordering but unaffected class of EPC E-rated office buildings relative to the A–C EPC group, perhaps due to market expectations of a further expansion of MEES.
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