The Split Incentive & Green Leases
Why the party paying for efficiency is rarely the one who saves, and the lease clauses, service-charge mechanisms and data-sharing terms that fix it.
10 min read · Jacob Willis, Net Zero Lead · Last reviewed July 2026
If commercial buildings are so data-rich and professionally managed, why are so many of them energy-inefficient? The honest answer is not technical at all. It is that for decades, the person who could fund an improvement was not the person whose bill would fall. Economists call it the split incentive, the property industry calls it the landlord-tenant problem, and it is the single most important idea in this course: until you can answer "who pays, and who saves?" for a measure, you cannot predict whether it will happen, however good its payback looks on paper.