Energy 93 (2015) 1199e1209

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Energy
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The impact of energy audits on energy efciency investment of public

owners. Evidence from Italy
Gian Paolo Barbetta a, b, *, Paolo Canino b, Stefano Cima b
a
Cattolica del Sacro Cuore, Milano, Italy
Universita
b
Fondazione Cariplo, Milano, Italy

a r t i c l e i n f o a b s t r a c t

Article history: Buildings are a promising area of energy savings, but a difference exists between actual and optimal
Received 18 November 2014 investment in this eld. The so called information gap about the costs and benets of energy-saving
Received in revised form activities could explain the difference. Audit programs have been undertaken to overcome the infor-
19 September 2015
mation gap but, surprisingly, most papers analyzing the impact of audits on the adoption of energy-
Accepted 25 September 2015
Available online xxx
saving measures use faulty methods that could provide biased results.
In this paper we ll this gap of the energy literature. First, we introduce robust counterfactual methods
to analyze the impact of energy-saving policies; second, we apply these methods to investigate the
Keywords:
Energy audits
impact of the free-funding of audits on the energy-saving investments of local public administrations, a
Policy instruments neglected area of investigation.
Policy impact As opposite to most of the literature, we cannot identify any statistically signicant effect of the audits
either on the number of energy-saving interventions or on the resources devoted to these activities by
local public administrations. We believe that, in the eld of public non-residential buildings, information
is not sufcient to fostering public investments aimed at increasing energy efciency. As a policy
consequence, public resources should consider different tools, including those aimed at reducing the cost
of investments.
2015 Elsevier Ltd. All rights reserved.

1. Introduction measures in private and public buildings, so that several coun-

The efcient use of energy represents a key element of the
environmental strategy of governments all around the world. The
saving of energy is considered the most effective way to improve
security of energy supply, reduce carbon emissions, foster
competitiveness and stimulate the development of a large leading-
edge market for energy-efcient technologies and products ([1] p.
3). Buildings are among the most promising areas where energy
could be saved. The EC (European Commission) appraises that
around 30% of energy used in buildings could be cost-effectively
saved by 2020 thanks new energy-efcient buildings and to the
retrotting of the existing ones.
For good theoretical reasons, energy audits are considered as
useful tools to increase the implementation of energy-saving
* Corresponding author. Universit
a Cattolica del Sacro Cuore, Department of
Economics and Finance, Largo Gemelli 1, 20123 Milano, Italy. Tel.: 39 333
6100759, 39 02 72342695; fax: 39 02 72342781.
E-mail address: gianpaolo.barbetta@unicatt.it (G.P. Barbetta).
tries adopted policies to foster their use. Although public non-
residential buildings represent a non-trivial share of the total
sector, and could represent a benchmark to imitate for private
owners, only a few audits supported by public policies have been
addressed to these buildings.
Some studies investigated the impact of energy audits on the
implementation of energy-saving measures and found a positive
effect, although the evidence is far from being conclusive. None-
theless, quite un-expectedly, most of these studies used methods
that produce strongly biased impact measures, therefore giving
wrong suggestions to the policy makers.
With this paper we plan to ll two gaps of the literature that
investigates the impact of energy audits on the adoption of energy-
saving measures. First, we plan to introduce in the eld of energy
studies e for the rst time, at least to our knowledge e a reliable
method of impact analysis that has already been used to investigate
the effect of public policies in other elds. Second, we plan to use
this method to evaluate the effect of a new energy-saving program
undertaken in Italy by the CF (Cariplo Foundation) that funded

http://dx.doi.org/10.1016/j.energy.2015.09.117
0360-5442/ 2015 Elsevier Ltd. All rights reserved.
1200 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209
energy audits of public non-residential buildings owned by small
local administrations in order to increase the adoption of energy-
saving measures.
Quite opposite to most of the literature, we cannot conclude that
energy audits increase the adoption of energy-saving measures, at
least in public non-residential buildings. We believe that the pos-
itive results showed by most of the literature depend on the use of
biased methods of investigation.
The rest of the paper is organized as follows. Section 2 illus-
trates: a) the possible role of information and energy audits in
sustaining the adoption of energy-saving measures in buildings; b)
the role of public non-residential buildings in reducing energy
consumption, and c) the limits of the previous literature in
assessing the impact of audit programs on the adoption of energy-
saving measures in buildings. Section 3 depicts the program un-
dertaken by the CF. Section 4 describes the data and the methods
used to analyze the impact of the CF program. Section 5 reports the
results of our analysis, while Section 6 draws some policy
conclusions.
2. Background
Energy efciency has been on top of the policy agenda of in-
dustrial countries for several years. Starting with the energy crisis
of the 1970s, the USA enacted policies to increase the efcient use
of energy [2], while over the last twenty years the EU (European
Union) developed a complex strategy to reduce carbon emission
and energy consumption. In 1992, the Energy Labeling Directive [3]
made it mandatory to display energy labels on electronic appli-
ances so as to direct consumers to the best performing products. In
2002 the Energy Performance of Buildings Directive (and its 2010
recast) [4] set targets for energy reduction for new and retted
buildings. In 2007 the EC proposed a roadmap to reach, by year
2020, at least a 20% reduction in greenhouse gas emissions
compared to 1990, savings of 20% of energy consumption compared
to projections for 2020, and a share of 20% of renewable energies in
EU energy consumption [5]. In year 2011, the reduction target for
greenhouse gas emission was set at about 80% (compared to 1990)
by the year 2050 [6]. In year 2012, Directive 27 [7] established a
common framework of measures to achieve the 20-20-20 target.
In Europe, according to ENEA [8], buildings absorb about 40% of
total energy consumption. Therefore, they are among the most
promising areas of savings [9]. The EC appraises that savings of
around 30% could be cost-effectively achieved by 2020 thanks to
the construction of new energy-efcient buildings as well as to the
retrotting of the existing ones. Whether an increase in energy
efciency could actually lead to a reduction in energy consumption
is disputed by Henry [10], while Jennings et al. [11] discussed
models of strategic planning of residential energy systems.
2.1. The role of information
Even though energy-saving investments in buildings are often
cost-effective, and policies stimulating their increase are consid-
ered as winewin options [12], researchers [13,14] have underlined
the existence of an energy efciency paradox (or gap) between
actual and optimal energy use: householders, business managers
and government ofcials do not invest enough in energy-saving
technologies for buildings.
Following mainstream economic theory [15], investments in
energy-saving technologies in buildings should undergo the same
logic that determines other investment decisions: projects with a
positive net present value will be undertaken by private owners or
ofcials in charge of public buildings. Nonetheless, when energy
markets are subject to failure, several obstacles could prevent
optimal results, generating the energy efciency gap. Sorrell et al.
[16] refer to six broad categories of obstacles to the perfect func-
tioning of energy markets, including: 1) imperfect information; 2)
hidden costs; 3) risk; 4) access to capital; 5) split incentives, and 6)
bounded rationality. Of course, different barriers may overlap,
coexist and interact, and their role could be different in different
markets as underlined by Refs. [17,18].
When considering the markets of private and public buildings,
researchers (see for example [19e21]) identied several factors
that could explain the low level of energy efciency. In particular,
some authors ([13,14,20,22]) believe that the lack of adequate in-
formation (the so-called information gap about the costs and
benets of energy-saving investments) is one of the most relevant
explanations of the efciency gap. In fact, as information is
expensive to obtain, both homeowners and public ofcials may
ignore the existence of some technical solutions or may be unable
to accurately evaluate their economic costs and benets. Moreover,
should information be available, individual investors may nd it too
costly to compare different possible courses of action in order to
make a decision, or (as showed by Attari et al. [23]) could base their
judgments not on precise calculation, but rather on heuristic
models. As a consequence, they could substantially underestimate
both overall energy use and saving potentials. Of course, in some
situations, energy inefciency represents a rational choice, as evi-
denced by Friedman et al. [24].
2.2. Energy audits as policy tools and their use in public non-
residential buildings
Based on this theoretical hypothesis, various programs have
been undertaken to overcome the information gap of homeown-
ers, business people and public ofcials when they make decisions
concerning the use of energy in residential, commercial and public
buildings. In particular, energy audits have been considered as a
useful tool to ll the information gap, so that several countries
decided to endorse and sustain their use, even though the recent
development of new technologies allowed new approaches [25].
Following the early action of the US government e and the recent
suggestion of the EU [26] e a number of countries have funded
audit programs aimed at reducing the information gap for
homeowners and private owners of non-residential buildings. For
example, in 1976, the US Department of Energy created a set of IACs
(Industrial Assessment Centers) meant for providing free energy
assessment to small and medium sized industrial manufactures. In
1991, the Australian Commonwealth Government started the EEAP
(Enterprise Energy Audit Program) subsidising up to 50% of the cost
of industrial audits. In 2008, the German Ministry of Economics
launched a program subsidising 60%e80% of the costs of audits for
rms up to 250 employees, while in 2010 the Swedish government
opened the SEAP (Swedish Energy Audit Program) to sustain up to
50% of the cost of audits of SMEs.
On the contrary, only a few energy-saving programs are
addressed to the public ofcials running non-residential (public)
buildings: in a pioneering contribution, Hirst et al. [27] analyses the
case of public buildings in Minnesota; Beccali et al. [28] the case of
Italian street lighting; Rezzesy et al. [29] analyses the case of Central
and Eastern European countries in transition, Saidur et al. [30]
public hospitals in Malaysia, and Buonomano et al. [31] an Italian
public hospital. No more information is available. This is quite
difcult to explain. First of all, the investment decisions of the
public ofcials in charge of maintaining public non-residential
buildings could be affected by the same lack of information that
impacts on homeowners. In fact, many of these ofcials e espe-
cially those working for small municipalities e are often un-skilled
individuals. Additionally, despite their small number, public non-
 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209
residential buildings are generally much larger in size and consume
much more energy than private homes. Therefore, the direct
contribution of public non-residential buildings to the reduction of
energy use could be relevant. Their indirect contribution could be
quite signicant too. In fact, public buildings are used by large
groups of people, so that the improvement of their energetic per-
formance should not go unnoticed, triggering imitation by private
home-owners. Consequently, energy-saving investments and
retrot interventions in public buildings could have an emblematic
and symbolic impact, persuading private homeowners to increase
the energetic performance of their own facilities, as stated by Ref.
[4]. Furthermore, local policy-makers conscious of the positive
impact of energy-saving investments in public buildings could be
more willing to enforce stringent rules on the energy performance
of private homes, thus contributing to even larger savings of energy
in their regions.
To give just a rough estimate of the possible direct impact of
policies reducing the energy consumption of public buildings in
Italy, one should note that the 2011 census of the Italian population
[32] recorded about 24 million residential homes, whose average
size was about m2 100. Similar gures for non-residential public
buildings are not easily available, but the preliminary results of a
comprehensive census of all Italian public buildings, undertaken by
the Ministry for the economy and nance [33], stated the existence
of about 530,000 units, 53% of which classied as non-residential
ones, with an average estimated size of about m2 700. Therefore,
in Italy, the share of public facilities out of total buildings is far from
trivial.
Moreover, while the total energy consumption of Italian resi-
dential buildings showed a 12% increase between 1995 and 2011,
the same gure for Italian non-residential buildings (which include
public buildings) doubled during the same period [8]. This trend
toward higher energy consumption in public non-residential
buildings is also showed by the index of electric consumption
per-employee, which darted from 100 in 1992 to almost 180 in 2011
([8, p. 33]). Additionally, many Italian public facilities are old
compared to private residential buildings, a reason that explains
their poor energy performance and underlines all the more the
possible savings obtainable with retrot interventions. While
detailed information about the energetic performance of these
public structures are not available in Italy, according to recent
research [34e36] retrot interventions could reduce more than
23% of the energy cost of public non-residential buildings, such as
schools and ofces. Because of these reasons, actions aimed at
increasing energy efciency in public buildings could produce a
quite relevant impact.
Some reasons may prevent such actions from being undertaken.
In fact, many of the Italian public non-residential buildings are
owned by small municipalities that whose personnel lacks the
skills and the information required to properly handle the energy
consumption of their facilities and to improve their efciency. In
fact, the relevance of operating managers in adopting energy-
saving measures has been proved by Blass et al. [37].
2.3. The impact of energy audits on the adoption of energy
efciency measures
Given their wide diffusion, some studies have investigated the
real impact of the policies aimed at conveying information to the
private owners of residential and commercial buildings, such as
audits [38,39]. Results of these investigations are mixed and still
inconclusive, with some studies showing that a good fraction of the
investments suggested by the energy audits is actually made, and
other studies underlining that different factors e besides infor-
mation e inuence investment decisions. Moreover, regardless of
1201
the relevant role of public facilities, the analysis of the impact of
programs conveying information to the public ofcials that are in
charge of maintaining public non-residential buildings is almost
absent, at least to our knowledge, with a notable exception [40].
What is more relevant, nonetheless, is that the methods adopted
by most studies to investigate the impact of energy audits on the
adoptions of energy-saving measures are faulty and could lead to
biased results. In fact, following the seminal contributions of Rubin
[41] and Holland [42], in order to measure the impact of an inter-
vention or a policy one should compare the level of a selected
outcome variable (such as the amount of energy-saving measures)
for the subjects that beneted from the program (factual situa-
tion) with the level of the same outcome variable for the same
subjects, had they not beneted from the program (counterfactual
situation). Given that only the factual situation is observable, one
needs to approximate the counterfactual to determine the impact
of an intervention.
A RCT (randomized controlled trial) [43,44] is often considered
the best device to reach this result [45,46]. In a RCT, the members of
a population eligible for an intervention are randomly assigned to
the treated or control group. If the population is large enough,
the average behavior of the control group is a good proxy of the
average behavior of the treated group, had the treatment not been
administered, therefore representing the counterfactual.
When RCT are not feasible, and only observational data are
available, one should resort to so called quasi-experimental
methods of impact analysis [47,41], such as the Propensity Score
Matching1 (PSM) [48], the Difference-in-Difference2 (DID) [49,50]
or the Instrumental Variable (IV) approaches [51,52] that better
guarantee to determine real causal effects. Quite opposite, most of
the literature analyzing the impact of energy audits resorts to
research methods that do not guarantee such results.
Many authors ([53e57,17]) adopt pre-post research designs.
These studies calculate the difference between the level of an in-
dicator (such as the amount of investment in energy-saving activ-
ities) after the audits have been made and the level of the same
indicator before the audits were made, for all of the units that
underwent the audit program. Any changes in the indicator are
then attributed to the program. Of course, this is a biased measure
of the true impact of the program. In fact, the indicator could
change over time for reasons that have nothing to do with the audit
program, given that several other factors (observable and unob-
servable) may inuence the indicator level (the literature calls this
phenomenon natural dynamic). The pre-post approach cannot
determine whether the change would have occurred anyway, thus
leading to possible erroneous conclusions about the effectiveness
of the program. Not surprisingly, many of these paper nd a
positive impact of the audit programs on the adoption of energy-
saving measures, but this could be the result of an unsound
research method.
Some of the authors [55,57] are aware of these limits, and
consequently interpret their own outcome indicators (such as the
1
Propensity Score Matching is a technique that estimate the effect of a policy
simulating a RCT experimental design when only observational data are available.
The aim of PSM is to reduce the bias in the estimate of a policy effect obtained when
comparing outcomes among units that received the treatment versus those that did
not. This bias is reduced comparing units that were most similar before treatment
delivery.
2
Difference in Difference is a technique that estimate the effect of a policy
simulating a RCT experimental design when only observational data are available.
With DID, the effect of a policy on a specic outcome variable is calculated sub-
tracting the average change, over time, of the outcome variable for the group of
units that did not benet from the policy, from the average change, over the same
time, of the same variable for the group of units that beneted from the policy.
1202 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209

implementation rate of the energy efciency measures suggested

by the audits) as preliminary gross impact estimates that do not
take into account how many energy efciency measures would
have been implemented without the program ([57, p. 58]).
Nonetheless, they use those biased indicators to calculate the cost
for annual energy efciency improvements. Other authors [58]
compare the performance of the units that participated in the
audit programs with that of other (non-randomly selected) units
not taking part in it, and interpret the result as an indicator of the
impact of the program. However, the units going true the audit
program could be different from other units, for example they could
be more prone to making energy-saving investments (the literature
calls this selection bias); therefore any nal differences between
the two groups could depend on the nature of the units rather than
on the audit program.
A few authors [59,40] use regression analysis to determine the
impact of the audit programs. Given the non-random selection
process of the units that underwent the audit programs, this
econometric technique can only measure correlation (and not
causation) between audits and energy-saving measures [60]. Fig. 1. Audited buildings' function.
(Source: CF survey, 2013)
3. The CF program aimed at increasing the energy efciency
of public buildings
For a subset of 1350 buildings (at least one in each municipality,
in particular the ones with higher levels of consumption), besides
In paragraph 2 we showed how little is known about the impact
measuring current consumption, the consultants identied more
of audit programs on the energy-saving behavior of public ofcials
than 3700 specic retrot activities (such as insulation of the
in charge of investment choices for public non-residential build-
building, substitution of windows or heating plants, etc.) that could
ings. Moreover, we showed how the methods used to gauge the
signicantly reduce the use of energy, calculated their costs as well
impact of energy audits are often unsound.
as the possible savings on energy consumptions, and estimated the
We try to ll these two gaps in the literature analyzing the
pay-back period of the investment required. The audits calculated
impact of a project undertaken by the CF, the largest Italian private
that these retrot activities could in theory save more than 200
philanthropic institution. The CF paid grants to fund energy audits
million kWh of energy and 45,000 t of CO2 emissions yearly,
of non-residential buildings owned by small municipalities. We
although effective savings could be different, as showed by Burman
investigate whether these free energy audits were effective in
et al. [61]. The average cost (per building) of the activities proposed
increasing the number of retrots interventions, and the amount of
by the audits slightly exceeds V 130,000, or V 107 per square meter.
nancial resources that the municipalities assigned to these
On average, these investments are expected to break-even in about
activities.
16.3 years.
The CF program (started in year 2006) was aimed at: 1) funding
In the opinion of the CF, the list of activities (with their costs and
energy audits to non-residential buildings owned and managed by
pay-back periods) suggested by the energy audits should ll the
municipalities with less than 30,000 inhabitants, and 2) funding
information gap of public ofcials in charge of building mainte-
activities aimed at increasing the energy management skills of the
nance, and should therefore trigger their decision to invest in
public ofcials working for the same municipalities. The goal of the
energy-saving retrot activities.
two actions was to overcome the information gap suffered by the
personnel of small municipalities when dealing with energy con-
sumption of public buildings, therefore hoping to increase their 4. Counterfactual methods and data for analyzing the impact
direct and indirect investment in energy-saving activities. of the CF program
Over the period 2006e2008, the foundation disbursed about V
8 million in grants to fund the energy audits of 3704 non- In order to overcome the limits of most of the previous literature
residential public buildings belonging to 650 municipalities, out in identifying the impact of the audit programs, we decided to
of the 1672 with less than 30,000 citizens, located in the Northern apply quasi-experimental techniques of counterfactual analysis to
Italian region of Lombardy and the two nearby provinces of Novara data specically collected to this purpose.
and Verbania (in the region of Piedmont), representing the exclu- When observational data are available, the literature suggests to
sive area of activity of the CF. These local administrations were compare the group of treated units (Group 1, represented by the
selected out of the more than 791 municipalities that applied for a municipalities that received a grant from the CF) with the most
grant in three different waves of request for proposals. similar group of untreated entities. In our case, the municipalities
Fig. 1 shows that most of the energy audits funded by the CF that applied for a grant, but were not funded (Group 2) could mimic
were performed in schools (43.9%), town halls and ofces (19.5%), the behavior of the treated municipalities in case the treatment was
sport facilities and pools (13.7%), recreational centres (6.8%), and not administered. Group 2 may suffer from selection bias as it
nursing homes (2.1%). The audits measured the energetic perfor- may include municipalities that e being rejected by the foundation
mance of the public facilities and identied very high levels of ofcers e are less virtuous then the selected ones. In order to
energy consumption equivalent to 234 kWh/m2 per year, placing reduce this bias, we created the second control group represented
these facilities in the worst energy class, according to the Italian by the municipalities neighboring to the funded ones (therefore
legislation. This poor performance was mainly caused by obsolete very similar to them), but located in a different region (outside of
heating and conditioning plants and by the advanced age of most the geographical area of activity of the CF) and therefore not able to
buildings. apply for a grant (Group 3).
 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209 1203

Table 1 intervention, or the amount of resources invested. In particular we

Stratication variables. estimated the following equations:
Stratication variable Variable value

Status 1) Received a grant;

2) Applied for a grant but were rejected;
3) Could not ask for a grant.
Geographic location 1) West border of Lombardy;
2) South border;
3) South-East border;

 X
4
A07 B07
4) North-East border; P INTb;m  P INTb;m b0 b1 Tm b2;i Db;m;i b3 Yb;m
5) Metropolitan areas of Milan and Turin. i1
Population size 1) Less than 2500 people; B06 B06
(Year 2011) 2) Between 2500 and 30,000 people.
b4 Sb;m b5 INTb;m b6 CINTb;m
Touristic location 1) Yes; X
4
2) No. b7 POPm b8 TMm b9;i GLm;i
i1
b10 NVm mm b;m
As a robustness check of our analysis, we decided to compare
(1)
Group 1 with both control groups. Moreover, to make the com-
parison more reliable, we stratied our samples of municipalities
according to three more variables, besides their belonging to any of
the considered groups.3 Subsequently, to collect the information
needed for the analysis, from June to October 2012, the CF in
collaboration with ANCI, the Italian association of local adminis-
trations, mailed a survey questionnaire to a population of 1416

 X
4
A07 B07
municipalities stratied into 60 different layers based on the four C INTb;m  C INTb;m b0 b1 Tm b2;i Db;m;i b3 Db;m
stratication variables described in Table 1. i1
After six rounds of remainders, we got 380 valid questionnaires B06
b4 Sb;m b5 INTb;m B06
b6 CINTb;m
reporting energy-saving interventions and investments of about
27% of the total population. The redemption rate is higher among X
4
b7 POPm b8 TMm b9;i GLm;i
the local administrations that received a grant by the CF (46% of the
i1
population), while it decreases in the two control groups: 31% for
the municipalities of Group 2, and 16% for those of Group 3. b10 NVm mm b;m
Regardless of this difference, we believe that our analysis does not (2)
suffer selection bias because e at least apparently e selection is not
where PINTb;mA07 represents the probability of building b, located in
correlated to our outcome variables, but rather to the size of the
local administration (the redemption rate is about 21% for smaller municipality m, to be the target of a retrot intervention after year
B07 represents the same probability before year 2007,
2007, PINTb;m
municipalities and 33% for more populated ones). Table 2 shows
A07
CINTb;m represents the cost incurred retrotting building b,
some summary statistics.
located in municipality m, after year 2007, CINTb;m B07 represents the
The sheer comparison of average data for the three different
groups cannot determine the effect of the program of the CF. Hence, same cost before year 2007, Tm is a dummy variable taking value 1 if
to properly measure this impact we resorted to non-experimental municipality m got a grant from the CF in years 2006e2008,
methods that can reconstruct the counterfactual situation using mm  IID0; s2m is a municipality specic error term, and
statistical techniques. In order to get robust results for our esti- b;m  IID0; s2b;m is a building specic error term. Other covariates
mates we decided to use different techniques and compare their (used in the former or the following equations) are described in
results. Table 3. Descriptive statistics for the most relevant covariates are
First of all, we adopted a DID approach. Using data for each provided in Table 4.
surveyed building, we compared the growth in the number of Given the possible criticism received by DID [50], in order to
retrot interventions (or in the amount of resources invested) increase the reliability of our results, we also estimated the impact
before and after year 2007 between the buildings belonging to the of the program run by the CF with a second approach based on PSM.
group of treated municipalities (group 1) and the buildings As a rst step, to reconstruct the counterfactual situation, we
belonging to each of the two control groups. In order to make our calculated the propensity scores in order to match each building of
estimates more robust, we tested our DID with a linear regression the treated municipalities with the closest building of the groups (2
model4 controlling for a series of covariates that e according to the and 3) of non-treated municipalities.5 As a second step, we used the
literature e could inuence the probability of a retrot DID approach to estimate the average difference in the probability
to be the target of a retrot intervention (or the amount of re-
sources devoted to those interventions) between buildings
belonging respectively to the treated and matched non-treated
3
The variable Geographic location allows to compare neighboring municipal- groups.
ities sharing common geographical characteristics but located in different regions. In particular, we rst calculated the probability of each building
The variables Size and Touristic location can be considered as proxies of the to belong to the treatment group, through a Probit estimation of
amount of resources available to each local administrations, predictors of the sum equation (3)
spent for energy-saving interventions in public buildings. In fact, the most relevant
sources of income of the Italian local administrations are represent by Transfers
from the Central government (roughly proportional to the total population) and
5
Local estate taxes (higher on buildings owned by non-residents, which are much As a further robustness test, we tested several different matching methods:
more common in touristic areas). nearest neighbor matching, ten nearest neighbor matching, radius matching and
4
We used cluster-robust standard errors. kernel matching.
1204 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209

Table 2
Sample composition.

Administrations that: Received a grant Applied for a grant, but were rejected Could not ask for a grant Total

Number 152 120 108 380

Population (Average) 7478 4548 3354 5878
Touristic location (%) 20.4 25.8 41.7 28.2
N of public buidings (Average) 11.2 8.7 8.7 9.7
Audit activitiesa (%) 0.7 0.9 0 0.6
Energy saving activitiesb (%) 10.5 8.5 8.6 9.4
a
Percentage of non-residential public buildings that were interested by energy audits before year 2006 (un-weighted average).
b
Percentage of non-residential public buildings that were interested by energy saving activities before year 2006 (un-weighted average).

Table 3
Variables description.

Var. name Var. description

Tm Dummy variable for municipalities receiving a grant from the CF in years 2006e2008
Db;m;i Set of dummies (i 1,2,3,4) describing the destination of building b, located in municipality m, (Town hall, School, Sport plant, Recreation center, Other)
Yb;m Year of construction of building b, located in municipality m
Sb;m Size of building b, located in municipality m
B06
INTb;m Dummy for retrot activities in building b, located in municipality m, between years 2002 and 2006
B06
CINTb;m Cost of retrot activities in building b, located in municipality m, made between years 2002 and 2006
POPm Population of municipality m in year 2011
TMm Dummy for touristic municipalities
GLm;i Set of dummies (i 1,2,3,4) describing the geographic location of municipality m
NVm Dummy for municipalities that introduced rules on energy efciency in local Building Regulations
Ym Average year of construction of buildings belonging to municipality m
Sm Average size of buildings belonging to municipality m
pINTmB06 Percentage of buildings belonging to municipality m that were the target of retrot activities between years 2002 and 2006
TCINTm B06 Total cost of retrot activities made by municipality m between years 2002 and 2006
Nm Number of buildings belonging to municipality m

X
4
PTb;m Fb0 B06
b1;i Db;m;i b2 Yb;m b3 Sb;m b4 INTb;m

  
A07 B07
i1 P INTb;m  P INTb;m b0 b1 Tm b2 P Tb;m mm b;m
X
4
(4)
B06
b5 CINTb;m b6 POPm b7 TMm b8;i GLm;i
i1

b9 NVm mm b;m


A07 B07
 
(3) C INTb;m  C INTb;m b0 b1 Tm b2 P Tb;m mm b;m
(5)
where PTb;m represents the probability of building b located in
municipality m, to be part of the treatment group (that is to be the These equations approximate the nonparametric estimators
target of an energy audit funded by the CF), and F is the cumu- adopted in the case of nearest neighbor matching. For the specic
lative standard normal distribution function. analytic framework used for the different matching methods we
As a second step, we used the DID approach testing the linear referred to Rosenbaum and Rubin [48]. The different approaches
regression model (with clustered-robust standard errors) described could give us a robust estimate of the impact of the program run by
by equations (4) and (5): the CF.

Table 4
Descriptive statistics.

Var. name Var. description Obs Mean Std. dev. Min Max

Tm Dummy variable for municipalities receiving a grant from the CF in years 2006e2008 380 0.400 0.491 0 1
Yb;m Year of construction of building b, located in municipality m 3381 1939.4 102.8 900 2012
Sb;m Size of building b, located in municipality m 3457 1228.9 2244.2 4 75310
B06
INTb;m Dummy for retrot activities in building b, located in municipality m, between years 2002 and 2006 3543 0.086 0.280 0 1
B06
CINTb;m Cost (thousand euros) of retrot activities in building b, located in municipality m, made between 3517 15.6 119.3 0 5000
years 2002 and 2006
POPm Population of municipality m in year 2011 380 5878 5796 101 29015
TMm Dummy for touristic municipalities 380 0.282 0.450 0 1
NVm Dummy for municipalities that introduced rules on energy efciency in local Building Regulations 380 0.197 0.399 0 1
Ym Average year of construction of buildings belonging to municipality m 377 1937.6 46.8 1658.7 2010
Sm Average size of buildings belonging to municipality m 373 1074.3 866.1 79 7121
B06
pINTm Percentage of buildings belonging to municipality m that were the target of retrot activities between 380 0.094 0.178 0 1
years 2002 and 2006
B06
TCINTm Total cost (thousand euros) of retrot activities made by municipality m between years 2002 and 2006 380 138.8 459.4 0 5800
Nm Number of buildings belonging to municipality m 378 9.7 6.8 1 50
 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209
Fig. 2. Energy audit performed in last 10 years (percentage of the number of buildings).
(Source: CF survey, 2013)
5. Results
5.1. Descriptive results
A rst descriptive analysis shows that, while the program run by
the CF has a high level of correlation with the number of energy
audits made by the local administrations, its possible relation with
retrot activities and investments is certainly not as clear. In fact,
the left side of Fig. 2 shows that the percentage of public buildings
that underwent energy audits in the municipalities funded by the
CF greatly increased in years 2007e2009, when the audits were
funded, while the same percentage is almost constant in the two
control groups. The right side of the gures shows the same result
before and after year 2006.
The picture is quite different when considering energy-saving
retrot activities undertaken by the municipalities. In this case,
considering aggregated data (Fig. 3, right side) one could note that the
share of public buildings that were the target of retrot interventions
in the municipalities funded by the CF grew from 12.9% (in years
2002e2006) to 19.9%, in years 2007e2012. Considering the control
group of municipalities that applied for a grant, but were not funded,
the same percentage grew from 9.5% to 17.4%, while it increased from
8.9% to 14.1% in the municipalities that could not apply for a grant.
Finally, when considering resources invested in retrot activ-
ities, the average amount (per building) decreases from V 226,000
(in years 2002e2006) to V 137,000 (in years 2007e2012) for the
municipalities funded by the CF; on the contrary, the amount grows
from V 120,000 to V 145,000 for the municipalities of Group 2, and
from V 354,000 to V 511,000 for those of Group 3.
Summarizing, our descriptive results show that the municipal-
ities funded by the CF increased the amount of energy audits much
more than the municipalities belonging to the two control groups.
Nonetheless, the number of retrot activities undertaken by the
rst group of municipalities is only slightly higher than the same
number for the control groups, and nally, the amount of resources
devoted to those interventions is lower (and decreasing) for the
rst group of municipalities.
5.2. Econometric results
We now move from descriptive analysis to the econometric
estimation of the different models presented in Section 4. In Table 5
1205
we show the most relevant results of our estimates: the coefcient
of variable Tm of equations (1), (2), (4) and (5). Our results are
encouraging because the different techniques give very coherent
results, regardless of the control group, with one minor exception
only.6
Column 1 of Table 5 shows that e on average e the energy
audits funded by the CF have a positive impact on the probability
to make retrot interventions in public non-residential buildings.
This probability increases between 1.6% and 6% when energy au-
dits are performed, depending on the estimate technique. None-
theless, none of the coefcient of column 1 is statistically
signicant at the usual levels so that, in general, we fail to identify
a signicant impact of the funding of energy audits on the prob-
ability of a public non-residential building to be the target of a
retrot intervention.
Column 2 of Table 5 shows that e on average e the energy audits
funded by the CF have a negative impact on the amount of re-
sources devoted to retrot interventions of public non-residential
buildings. In fact, the making of an energy audit reduces (be-
tween V 1600 and V 36,000) the average amount of resources
devoted to retrot interventions of a building. However, in this case
too, none of the coefcients is statistically signicant, so that we fail
to identify any impact of the funding of energy audits on the
amount of resources devoted to retrot interventions of public
non-residential buildings.7
5.3. A further investigation
Given the results showed in Section 5.2, we fail to nd a sig-
nicant impact of the audits funded by the CF on the number and
the amount of resources devoted to energy retrot interventions.
Do these results imply that energy audits are a useless tool for
policy makers aiming at increasing the amount of retrot
6
The exception being the estimate of the probability to undertake retrot in-
terventions using PSM (nearest neighbor) and comparing our treatment group with
the control group of municipalities that applied for a grant but were not funded by
the CF.
7
In a second series of regressions e as a robustness test e we used municipalities
(rather than buildings) as unit of analysis. Results e available upon request e are
not signicantly different from the ones obtained when using data for each
building.
1206 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209

Fig. 3. Energy savings retrot activities undertaken in last 10 years (percentage of the number of buildings).
(Source: CF survey, 2013)

interventions? We do not think this to be true. To further investi- X

4
B06
gate this question, we tested the impact of energy audits (regard- PTb;m Fb0 b1;i Db;m;i b2 Yb;m b3 Sb;m b4 INTb;m
less of who funded them) on the probability to undertake a retrot i1
intervention on a public non-residential building. As usual, we used X
4
B06
both a DID and a PSM DID approach testing the two models b5 CINTb;m b6 POPm b7 TMm b8;i GLm;i
represented e respectively e by equation (6) for the DID, and (7) 
i1
and (8) for the PSM DID. b9 NVm mm b;m
(7)


 X
4
A07 B07
P INTb;m  P INTb;m b0 b1 EAA06
b;m b2;i Db;m;i b3 Yb;m
i1


  
A07 B07
P INTb;m  P INTb;m b0 b1 EAA06
b;m b2 P Tb;m mm
B06 B06
b4 Sb;m b5 INTb;m b6 CINTb;m
b;m (8)
X
4
b7 POPm b8 TMm b9;i GLm;i
i1
where EAA06
b;m
represents the probability of building b located in
municipality m, to be the target of an energy audit, F is the cu-
b10 NVm mm b;m
mulative standard normal distribution function, while equation (8)
(6) is the linear approximation of the nearest neighbor matching

Table 5
Impact of audit.

Dependent variable
A07  PINT B07
PINTb;m A07  CINT B07
CINTb;m
b;m b;m
(V/1000)

Control group Municipalities that did not Method DID OLS (eq. 1/2) 0.027 7568
receive a grant (0.030) (5688)
PSM (kernel) DID OLS (eq. 4/5) 0.025 7753
(0.022) (6411)
PSM (nearest neighbor) DID OLS (eq. 4/5) 0.014 1691
(0.031) (6755)
PSM (10 nearest neighbor) DID OLS (eq. 4/5) 0.017 5806
(0.023) (6664)
PSM (radius) DID OLS (eq. 4/5) 0.016 6520
(0.023) (6587)
Municipalities that could not Method DID OLS (eq. 1/2) 0.032 36053**
apply for a grant (0.026) (15004)
PSM (kernel) DID OLS (eq. 4/5) 0.032 23139
(0.024) (21685)
PSM (nearest neighbor) DID OLS (eq. 4/5) 0.060 8604
(0.034) (28930)
PSM (10 nearest neighbor) DID OLS (eq. 4/5) 0.051 26359
(0.027) (26210)
PSM (radius) DID OLS (eq. 4/5) 0.051 23027
(0.027) (25759)

***; **; *; coefcients signicant e respectively e at the 1%, 5% or 10% level. Standard errors in parenthesis.
 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209
Table 6
Further investigation.
Sample
All municipalities
Municipalities that received a grant by the CF
Municipalities that did not receive or could not apply for a grant
***; **; *; coefcients signicant e respectively e at the 1%, 5% or 10% level. Standard errors in parenthesis.
estimator we adopted. Results of these estimates for the coefcient
of our variable EAA06
b;m
are presented in Table 6.
As we can see e when considering the whole group of more
than 3000 facilities investigated by our analysis e the making of an
audit correlates (on average) with a 9% increase in the probability of
undertaking a retrot intervention in a public non-residential
building. However, this increase gets much smaller (5e6%) when
considering the sub-sample of municipalities whose audits have
been funded by the CF, while it gets much higher (17e18%) for all
other municipalities. This analysis does not allow us to say that
energy audits increase the making of retrot interventions, because
of reverse causality problems. In fact, one could say that, once
retrot actions have been planned, an energy audit is always the
rst step for planning detailed actions.
It appears that energy audits have a much higher effect when
they are funded directly by the owner of the facility. This probably
means that municipalities make an audit when they already have
an intervention in mind, with the audit being the rst step of the
process. On the contrary e in a situation heavily inuenced by the
reduction of public expenditures and with diminishing resources
that local authorities can use for their activities e performing an
audit is not a sufcient condition for increasing the amount of
retrot interventions.
6. Conclusions and policy implications
The economic literature devoted a lot of attention to the ex-
istence of information gaps that might explain why many energy
efcient retrot interventions of residential and non-residential
buildings are not undertaken by their owners. As a conse-
quence, policy makers all over the world started programs to
support energy audits, considered a good tool to ll the infor-
mation gap.
We analyze the impact of a program e funded by the CF e aimed
at funding energy audits of public non-residential buildings owned
by small municipalities in Italy. This program is quite similar to
many interventions supported by public money, such as the IAC
program launched by the US Department of Energy in 1976, or the
more recent programs sustained by the German Ministry of Eco-
nomics in 2008 and the SEAP program started by the Swedish
government; both initial and detail energy audits were fully funded
by the CF in the hope that they could ignite energy-saving activities.
The most relevant characteristic of this program is that a private
institution funds public administrations, and not the other way
around.
Previous research generally found a positive impact of the audit
programs on the amount of energy-saving activities undertaken by
1207
Buildings Method Dependent variable
A07  PINT B07
PINTb;m b;m
3294 DID OLS (eq. 6) 0.089***
(0.027)
3278 PSM (kernel) DID OLS (eq. 7/8) 0.093***
(0.021)
1520 DID OLS (eq. 6) 0.057*
(0.032)
1512 PSM (kernel) DID OLS (eq. 7/8) 0.054*
(0.031)
1774 DID OLS (eq. 6) 0.181***
(0.068)
1776 PSM (kernel) DID OLS (eq. 7/8) 0.173***
(0.049)
homeowners or private owners of industrial and service rms. As a
consequence, audits are often described as an efcient instrument
in the efforts to mitigate climate change ([55, p. 672]); they are
considered as unambiguously benecial to an individual rm in
every case ([53, p. 875]), and public subsidies to pay for audits are
deemed as a useful direction to pursue ([53, p. 876]) given that
the cost benet relation of public funds invested in audits in terms
of tons of CO2 reduced is relatively positive compared to other
promotional programs ([55, p. 672]).
We believe that some of these positive evaluations of govern-
mental audit programs may depend on poor methodological ap-
proaches. In fact, using a more reliable technique to estimate the
impact of a policy program, our analysis (concerning the Italian
case) fails to identify any statistically signicant impact of the free
funding of energy audits on either the number of retrot in-
terventions or the amount of nancial resources assigned to these
activities by the local administrations.
Our results show quite clearly that the availability of infor-
mation is not enough to fostering public investments aimed at
increasing the energy efciency of public non-residential build-
ings. Other factors e such as the very tight budget constraint
imposed by the central government to local authorities e could
determine the amount of resource devoted to these activities. In
fact, it is likely that e in Italy e the very tight economic and
nancial conditions experienced by most local authorities since
the starting of the economic and nancial crisis in year 2008,
represent a relevant obstacle to any investment decision of local
municipalities. As a matter of fact, all of the Italian municipalities
have to comply with a tight budget constraint established by the
national government in order to conform to the European Stability
and Growth Pact. Under the rules of this budget constraint, local
municipalities cannot increase their investment activities, not
even when they have the resources that could fund those
investments.
As a policy consequence, public (as well as private) efforts
should probably be devoted to overcoming further barriers (other
than information) that represent most relevant obstacles to the
adoption of cost-efcient energy-saving devices in public non-
residential buildings. New public (and private) interventions
should probably not focus on the information gap issue, but rather
aim at overcoming the probably more relevant barriers that pre-
vents local authorities from spending resources that they already
have, or from accessing the capital markets [16] in order to fund
investments that can break-even in a relatively short time span.
Some measures promoted by the EC and the European Investment
Bank, such as the ELENA (European Local ENergy Assistance) pro-
gram have already moved in this direction.
1208 G.P. Barbetta et al. / Energy 93 (2015) 1199e1209
Acknowledgments
We thank Eleonora Annunziata, Federico Beffa, Davide Cascione
and ANCI (the Association of Italian Municipalities) for help in
planning and running the survey questionnaires. We thank Feder-
ico Beffa, Marco Frey, Elena Jachia and anonymous referees for
helpful comments to a preliminary version.
Data collection and research for this article has been funded by
Fondazione Cariplo, Via Manin 23 e 20123 Milano, Italy e (www.
fondazionecariplo.it).
Usual disclaimers apply.
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