Editor's note: A report released earlier this year from the American Council for an Energy-Efficient Economy said appliance, equipment, and lighting standards will net consumers and businesses in the U.S. more than $1.1 trillion in savings cumulatively, taking into account products sold from the inception of each national standard through 2035. Earlier this month, a free-markets-oriented research center at George Mason University released a dueling report attacking the idea of efficiency standards. One of the ACEEE report's authors fires back.
A new report published earlier this month by the anti-regulatory Mercatus Center (an advocacy outfit associated with the Koch brothers) took aim at appliance and vehicle efficiency standards. In the report, the authors argue that standards reduce consumer choice and are not justified because the environmental benefits are small and consumer benefits are non-existent.
Nothing could be further from the truth. Efficiency standards have a long record as a commonsense way to save money for consumers and provide important societal benefits at the same time. The Mercatus report, entitled Overriding Consumer Preferences with Energy Regulations, is by two economists, Ted Gayer and Kip Viscusi. It’s so full of false claims, inaccurate assumptions, and misleading statements it’s hard to know where to start refuting them. But I thought it would be useful to rebut some of their most egregious claims.
False claim #1: “[C]urrent energy efficiency initiatives do very little to address climate change”
Taking into account all U.S. appliance standards starting with the original round signed into law by Ronald Reagan and including those updated by the Department of Energy (DOE) under two Republican and two Democratic administrations and those added by both Republican- and Democratic-controlled Congresses, U.S. standards reduced greenhouse gas emissions by about 200 million metric tons in 2010, and annual reductions will increase to about 450 million metric tons by 2025. That works out to about 3.5 percent of actual U.S. 2010 emissions and 8 percent of projected 2025 emissions. (See Figure 4 in the ACEEE report, The Efficiency Boom.) Vehicle fuel economy and greenhouse gas standards for model years 2012-2016 are projected to reduce greenhouse gas emissions by 307 million metric tons in 2030, lowering car and light truck emissions by 21 percent. Standards now under consideration for model years 2017-2025 would deliver similar reductions. Undoubtedly, more can and should be done to address climate change, but to suggest that standards “do very little” is absurd.
False claim #2: Efficiency standards restrict consumer choice
Refrigerators are the most regulated appliance in America, having been subject to no fewer than six rounds of improved state and federal efficiency requirements over more than 30 years. Think about it for a moment. Do you have fewer choices in refrigerators than you did 10 years ago? For those who can remember, than 30 years ago? How about for clothes washers? Or for light bulbs?
For each of these products, consumer choices have increased even as standards have eliminated energy-inefficient models from the market. Refrigerators come with a wider array of configurations (the latest rage is French doors—GE just added a second shift at its Louisville, Kentucky plant to keep up with demand), ice and water dispenser options, built-in designs, and other features than have ever existed. Clothes washer buyers have an array of energy- and water-efficient front-loading and top-loading designs covering price points from $400 and up to choose from, many with features like steam cleaning unheard of a decade ago. For light bulbs, manufacturers report that the standards spurred them to introduce a whole new generation of energy-efficient incandescent bulbs so that consumers can now choose among energy-efficient incandescent, compact fluorescent, and newly-introduced LED options. Consumers have more choice than ever.
Next page: Are consumer savings nonexistent?