Energy Efficiency, Not Efficiency Mandates
March 26, 2013
In order to compel American businesses and consumers to act in a manner that suits the federal government, various federal agencies have created mandates and energy-efficiency programs for vehicles, homes, manufacturing processes, appliances, and more since the 1970s, says Nicolas Loris, the Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.
Proponents of those programs argue that they save consumers and businesses money, reduce energy use, and reduce emissions. They ignore the fact that markets already incentivize Americans to be more energy efficient. They further disregard consumer preferences as well as the unintended consequences and energy inefficiencies that mandates and subsidies cause. The government should remove efficiency standards and give American families and businesses the freedom to pursue energy efficiency where it makes sense for them according to their individual preferences and budgets.
Producers have a much better ability to meet consumers' demands than any government mandate or subsidy program. Congress should recognize how markets have improved energy efficiency in the United States. It should:
- Prevent new efficiency standards for any new appliances and federal funding for efficiency improvements in manufacturing processes and residential, industrial and commercial buildings.
- Withhold funds or pass legislation that repeals efficiency standards and instead promotes voluntary programs such as EnergyStar, which provides consumers with information about energy savings for appliances.
- Promote a free market energy policy as the best way to ensure accurate energy prices. American families and businesses respond to higher energy prices by putting a greater value on efficiency. This creates competition to produce less expensive energy and greater efficiency.
Energy-efficiency spending programs and legislation have largely enjoyed bipartisan support because the special interests involved stand to gain from these programs. However, the practices of being resourceful and saving money are inherently desired, which means that the economy does not need government mandates, rebate programs, or spending initiatives to make businesses and homeowners more energy efficient.
When companies and consumers do not take full advantage of efficiency gains, it is because they are weighing other factors that influence decision making. Markets have driven the energy economy in the right direction. Mandates do the opposite.
Source: Nicolas Loris, "Energy Efficiency, Not Efficiency Mandates," Heritage Foundation, March 14, 2013.
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