Home energy rating policies (sometimes called home energy labeling policies or home energy disclosure policies) can be useful to inform home sellers and prospective home purchasers about a home’s energy efficiency and steps that can be taken to improve this efficiency.
Successful mandatory home energy rating policies are operating in various cities in California, Michigan, Minnesota, and Oregon, as well as in much of Europe and parts of Australia. Proposals for similar programs are pending in other U.S. jurisdictions. Also, several U.S. states and cities operate more-limited programs that disclose energy costs or efficiency features but do not provide ratings.
Evaluations of mandatory rating programs find that they increase the sales price of efficient homes (by several thousand dollars) and result in a higher number of home retrofits than would happen without disclosure (e.g., in one case, a 10-fold increase). Higher rated homes also tend to have lower mortgage default rates.
Voluntary rating programs have very low participation rates and impact. Under voluntary programs, inefficient homes are infrequently rated.
Home energy rating programs can be implemented with limited staff and at modest cost. Experienced consultants are available to assist.
We recommend that states and localities enact home energy rating requirements for homes listed for sale. The policies should use easy-to-understand metrics, refer homeowners and homebuyers to programs that can assist with energy efficiency upgrades, and provide free ratings for low-income homeowners.
