What is Social Discount Rate

The main financial barrier of large scale implementation of green building retrofitting investments is due to the relatively large investment volume needed, compared to the future flow of yearly energy savings or/and yearly estimated differences of incomes collected, if the building is a commercial building (commercial center, office building, hotel or even residential rental building). The uncertainty implicitly involved in this estimation, both for the future savings and for the yearly differences of incomes, which are usually not very large, both make these investments apparently not so attractive for private investors, especially for owners of residential buildings, with limited self-financing power. Nevertheless, from the society point of view, the benefits created by saving the energy and consequently reducing the carbon foot print, can be very attractive. That is why the public support is often used as an “impulse solution” for implementation of these investments. The Cost Benefit Analysis methodology, particularized for these investments, is presented in this chapter.