IER Senior Fellow Robert Michaels published an op-ed today in the Wall Street Journal about the flaws in energy efficiency regulations. Michaels’ study, “The Rebound Dilemma”, demonstrates how increased energy efficiency standards can actually lead to increased energy consumption.
“Mandated increases in energy efficiency—popular almost everywhere on the ideological spectrum—have been implemented around the world. Laws like the European Union’s new requirement for 15% energy savings, or the U.S. Senate’s proposed Clean Energy Standard Act of 2012, appear like clear winners for almost everyone. If the costs of new technologies are within reason, they promise consumers lower energy bills and producers more profit while mitigating the environmental costs of energy development and consumption.
There is just one problem: Basic economics says that the best way to promote some activity is to reduce its price. That often means efficiency requirements end up having the opposite effect than the one intended.”
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