ENERGY-EFFICIENT BUILDINGS: INSTITUTIONAL BARRIERS AND OPPORTUNITIES

The report argues that buildings are inefficient not due to a lack of technology, but because of a 'spherically senseless' institutional framework. It identifies key failures such as the decoupling of capital and operating costs for developers, the prevalence of 'catalog engineering' driven by low design fees, and the systemic oversizing of HVAC equipment to avoid liability. The author proposes restructuring professional fees to reward energy savings, integrating multidisciplinary design teams from the conceptual stage, and reforming leasing practices to align the incentives of landlords and tenants.

• Real-estate developers and investors typically prioritize fast, cheap construction to maximize net present value, often ignoring energy efficiency as a minor operating cost. In the U.S., tax rules exacerbate this by allowing operating costs to be fully deducted while capital costs are depreciated over more than 30 years.
• HVAC systems are systematically oversized due to a combination of 'rounding up' safety margins at multiple design stages and a professional culture where designers avoid liability by ensuring equipment is never too small.
• The building design process is fragmented, with approximately two dozen different actors (including architects, engineers, and lenders) using disparate technical languages and performance measures, leading to a lack of whole-system optimization.
• Traditional engineering fee structures, often based on a percentage of capital cost, create a perverse incentive to oversize equipment because higher capital costs lead to higher professional fees, while efficient designs that reduce costs penalize the designer.
• Mechanical designers are typically consulted too late in the design sequence, often after the building's form and envelope are already fixed, which eliminates the most cost-effective opportunities for energy savings.
• Poor operation and maintenance frequently negate the benefits of efficient design. Many commercial buildings lack regular HVAC maintenance, and operators are often incentivized to prioritize the immediate cessation of occupant complaints over energy efficiency.
• Commercial leasing structures often create 'split incentives' where neither the landlord nor the tenant has a financial reason to invest in energy efficiency, as the party paying for the investment is rarely the party paying the utility bill.
• The report suggests that 'design rebates'—where utilities pay designers based on verified lifecycle energy savings rather than effort—could provide high leverage for improving building efficiency.
• There is a significant gap in the research infrastructure for the building industry; R&D investments in construction (estimated below 0.4% of annual put-in-place) are far lower than in the automotive or oil industries.

APA

RMI (1992). ENERGY-EFFICIENT BUILDINGS: INSTITUTIONAL BARRIERS AND OPPORTUNITIES. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_Energy-Efficient-Buildings-Institutional-Barriers-and-Opportunities-E-Source-Official.pdf

Chicago

RMI. ENERGY-EFFICIENT BUILDINGS: INSTITUTIONAL BARRIERS AND OPPORTUNITIES. 1992. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_Energy-Efficient-Buildings-Institutional-Barriers-and-Opportunities-E-Source-Official.pdf.

Wikipedia

{{cite report |author=RMI |title=ENERGY-EFFICIENT BUILDINGS: INSTITUTIONAL BARRIERS AND OPPORTUNITIES |date=1992 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_Energy-Efficient-Buildings-Institutional-Barriers-and-Opportunities-E-Source-Official.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi1992energyefficient, author = {{RMI}}, title = {{ENERGY-EFFICIENT BUILDINGS: INSTITUTIONAL BARRIERS AND OPPORTUNITIES}}, institution = {RMI}, year = {1992}, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_Energy-Efficient-Buildings-Institutional-Barriers-and-Opportunities-E-Source-Official.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }