The effectiveness of building retrofits under a subsidy scheme: Empirical evidence from Switzerland

While retrofitting buildings is one of the key elements of reaching climate and energy goals, it is burdened by insufficient speed and depth. Governments have attempted to accelerate deep retrofits via subsidies, but scant evidence exists on these policies’ effectiveness. In this study, we investigate the effectiveness of retrofitting subsidies by using a range of econometric techniques and a unique dataset of over 400 Swiss buildings with 19,000 observations over 11 years. Specifically, we analyze whether retrofits reduce energy consumption, whether subsidized retrofits lead to deeper retrofits than non-subsidized retrofits, and we differentiate the impact by subsidy amount. We find that retrofits reduce average energy use by 10–20%, that the achieved savings through subsidized and non-subsidized retrofits do not differ significantly, and that the subsidy amount is correlated to a reduction in energy use by 0.42 CHF per kWh over a period of 20 years. Our study highlights the importance of policies that enhance retrofit depth, the need to further investigate the causes of the wide variation in retrofitting results, and to consider effectiveness studies within the policy design.