Helen Mulligan

University of California, Berkeley

Institute of Urban and Regional Development, 316 Wurster Hall

Berkeley, California 94720-1870 USA

tel:+1 (510) 642 1628 e-mail: hmullig@berkeley. edu

The built environment has an essential role to play in the transition to a low — carbon future envisaged in the Kyoto Protocol: buildings account for one-third to half of all energy consumption in developed countries. As yet, however, market — based policy tools have had little bearing on the construction professions. This paper examines the relevant issues and suggests a role for market-based mechanisms in overcoming some deep-seated barriers to the uptake of energy — efficiency measures in buildings. Finally, it uses case study examples of low — energy building projects in California to illustrate the potential for innovative use of market-based mechanisms in this field.

Background

Successive reports of the Intergovernmental Panel on Climate Change (IPCC) have expressed the scientific consensus that increasing concentrations of greenhouse gases in the Earth’s atmosphere are likely to bring about changes in the global climate. The extent and nature of these changes is still unclear; however, there is international concern about potentially severe consequences. This has led to the pursuit of mitigating policies, in particular to those which will lead to downward pressure on the level of greenhouse gases. Per capita emission of greenhouse gases — the most important of which is carbon dioxide — varies greatly by country (fig. 1). This points up the potential for substantial impacts to be made by action on the part of countries in the developed world, and by international linkage.

Many of the developed countries, including member states of the European Union, are following the route of co-ordinated action under the Kyoto Protocol. Target for greenhouse gas emission under the Protocol, are accompanied by “flexible mechanisms” to increase the efficiency with which a global target could be met. These are:

• trading of permits, within and between developed countries

• Joint Implementation (JI): trading with transition economies, i. e. Eastern Europe and

the CIS

• Clean Development Mechanism (CDM): trading with developing countries.

The USA is currently pursuing policy options outside the Kyoto process. However, there is parallel interest in mechanisms similar to those described in the Protocol.