PNNL

Abstract

As a popular emission reduction tool, the carbon emission trading scheme (ETS) can potentially add an economic incentive for building owners to retrofit buildings in addition to the cost savings in energy. However, the potential impact of ETS on building retrofits has not been quantitively investigated yet. To fill this gap, this study proposed a systematic economic evaluation method to predict the impact of ETS on building retrofits. The reduction of the payback period and the increase of the return on investment are adopted as evaluation metrics. Using medium office buildings as an example, this study predicted the impact of ETS on building retrofits at four locations in the U.S., and three different carbon prices were investigated. The results show that carbon prices have a significant economic impact on building retrofits. With the relatively low forecasted time-variant carbon prices (around 10 USD per ton), the impact of ETS on building retrofits is small. When carbon prices increase, the impact of ETS would be up to 25% for 50 USD per ton (current prices in European Union) and 51% for 100 USD per ton. Furthermore, locations with more fossil energy have a higher relative change in profits and are more sensitive to carbon prices.