There is much talk these days of a low-carbon economy, creating green jobs, and a new market in energy efficiency retrofit funding. For all the good intentions, many programs are having trouble getting off the ground. There is a lack of infrastructure but, most importantly, an absence of underlying data, indexes, and benchmarks that are essential for the development of any modern economy or market.

When a government sets out to develop an economic policy, among the first things it usually looks at are indexes. If a government is setting interest rates it will look at inflation, the rate of increase in the Consumer Price Index. If it is taking measures that will affect jobs, the government looks at unemployment indexes. If it is adjusting state benefits or pension fund rates, it will look at the retail or Consumer Price Index.

With buildings accounting for around 40 percent of carbon emissions in developed countries and up to 80 percent in some cities, such as New York, governments around the world are looking for ways to substantially improve the energy efficiency of buildings. Many are proposing programs of subsidies, loans, or investments to retrofit homes and commercial buildings.

There are a huge number of buildings needing retrofits. The U.S alone has 130 million single-family homes, in addition to apartments, commercial buildings, and government offices. The cost of retrofitting all of these buildings is potentially enormous – around $2 trillion just to retrofit all U.S. single-family homes.

Governments wouldn’t think of embarking on any other major economic policy without having good quality benchmark data, just as investors wouldn’t think of putting their money in a stock or bond without consulting an index. Yet here we are, discussing some of the biggest civil projects ever conceived with only the most crude and sparse data.

We need to fix this by embarking on a major program of benchmark data gathering.

Indexes and good quality underlying data sources are now part of every financial market and there are many vendors that specialize in providing these sorts of services, including Bloomberg, Thomson Reuters, MSCI, and Factset, among others.

Besides bringing transparency to markets, indexes provide benchmarks against which the performance of individual stocks or investment management strategies can be measured. Benchmarks enable investors to easily monitor the underlying trends of a market and the performance of their particular investments or investment managers. Most importantly, benchmarks give investors the confidence to put their funds into a market.

Let’s look at an example. In the United States, twenty-two states have passed legislation that will enable them to introduce Property Assessed Clean Energy (PACE) schemes. Under the PACE energy efficiency retrofitting model, local governments lend homeowners the money to insulate their homes, add solar panels, or realize other energy efficiency measures. Homeowners repay the money over 10 to 15 years through an addition to their property taxes, which is offset by their reduced energy bills. Governments issue municipal bonds to fund the PACE schemes.

PACE has foundered on the issue of whether the debt incurred by homeowners signing up to such schemes would be junior or senior to their mortgage debt. PACE advocates argue that in order to attract funds to the schemes, the debt should be treated like other tax assessments and be paid off first in the event of a default. Yet the government-sponsored lending agencies Fannie Mae and Freddie Mac have so far refused to back the PACE schemes, citing concerns over the status of the retrofitting debt. One key problem is that neither side has much data to refer to.

As governments look to tackle the carbon emissions of their buildings, energy efficiency retrofitting has the potential to become a multi-trillion dollar global market. With PACE and other similar schemes providing the mechanisms, investors should be queueing up to finance the projects. They aren’t. A key reason for this is that the market currently lacks the transparency and credibility to really take off – two things that benchmark data could help provide.

The first benchmark we need is a measure of current energy usage. Given the size of the carbon footprint of our buildings, it is extraordinary that we have barely begun this process. Measuring our current energy usage is quite possible, actually; we have near universal and auditable data in the form of utility bills.

Granted, the bills don’t give the full picture of energy use; for example, they don’t include the embedded energy of construction, but they give enough information to be useful. By using utility bills, we can relatively quickly and cheaply gather 80 percent of the information we need on 100 percent of buildings, as opposed to the much more expensive and time consuming process of trying to gather 100 percent of the information on just some buildings.

Once we measure, we can compare. If we were to benchmark all the buildings across a state, we could start to compare the energy efficiency of various cities, towns, districts, and regions. We could start by asking why buildings in one city or district have much higher utility bills compared with others. There might be good reasons for this: for example, more extreme weather or an exposed location.

On the other hand, it could be the result of inadequate building regulations or simply a lack of awareness among occupants. We could also compare the energy consumption of similar buildings in similar locations. If we discover large discrepancies, we can ask why. It could be down to the behavior of the users of the building – leaving lights or other equipment on unnecessarily, the excessive use of heating or cooling, and so on. We might find there is a need to educate and change the behavior of these occupants if we want to meet carbon reduction goals and reduce energy bills to pay back retrofitting debt. There are many real-life examples of buildings that are retrofitted to LEED energy efficiency standards but perform worse than a conventional building of the same size because occupants carry on with energy-wasting habits.

History has shown that markets tend to grow when investors have enough information on the underlying assets to give them the confidence to buy. If we are to develop a market for energy efficiency bonds and other investments, the more it starts to resemble other financial markets – with quality data sources and appropriate indexes and benchmarks – the more investors are likely to support it.

If we are serious about reducing the carbon emissions of our buildings and gaining all of the associated benefits, such as reduced energy costs and green jobs, then we need to embark on a major program of benchmark data collection with the utmost urgency.