Market transformation has been widely used by governments and utilities to overcome market barriers that prevent consumers and society from enjoying the many benefits of energy efficiency products.

Understanding the market barriers in your local situation can help you design policy levers that advance sustainable, low-carbon buildings, neighborhoods and infrastructure.

Conventional barriers include:

• First cost orientation: Consumers focus on the initial capital cost rather than longer-term costs of operation and maintenance along with the initial capital cost.
• Knowledge limitations: Training and knowledge limitations of key players including builders, developers, planners, engineers, and end users.
• Split incentives: Developers do not occupy the buildings they build so have little incentive to reduce long-term energy costs through more efficient design, building managers are interested in lower overhead but rarely involved in building design.
• Low demand: Low product availability due to low market demand.
• Externalities: The cost of air pollution on human health, or GHGs on extreme weather events are not included or internalized in the price of the product and service.