Reducing carbon emissions from the building sector is an international policy priority, as a consequence of the Paris Climate Accord obligations. The challenge for policy makers is to identify and deploy effective policy instruments targeting this sector. Examining the mechanics of policy operation in the residential sector is particularly instructive, because of the high level of building activity, diverse stakeholders, and complex policy considerations—involving both consumers and industry stakeholders. Energy policy initiatives undertaken by the European Union provide pertinent case studies; as does the operation of Australia’s national building code. The paper builds upon earlier research examining the application of socio-economic transition theory to the regulation of the building sector. Here, building policy options are examined from a behavioral economics perspective, where stakeholder actions in response to strategic initiatives are considered in socio-psychological terms. The application of behavioral economics principles to building policy has the potential to impact all of the stages of the building lifecycle, from design through construction to operation. The analysis reveals how decision-making by building industry stakeholders diverges substantially from the assumptions of conventional economics. Significant implications then arise for the framing of building sector climate and energy policies, because behavioral economics has the potential to both contribute to the critical re-appraisal of current policies, and also to provide innovative options for refining interventions at key stages in the building lifecycle.
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