Energy-Efficiency Standards May Not Be So Oppressive

THE JOURNAL RECORD, August 3, 1995 | Go to article overview

Energy-Efficiency Standards May Not Be So Oppressive


Does Washington know your needs better than you?

Most people, it is safe to assume, would like a little help from Uncle Sam when it comes to choosing, say, pesticides or antibiotics.

But some Americans undoubtedly resent being told which water heaters to buy or how much insulation they should stuff in their walls. And with that in mind, the House of Representatives voted last week to stop the Clinton administration from spending any money to set energy-efficiency standards for household appliances or to design model building codes.

Robert Hahn, an economist who specializes in regulation at the American Enterprise Institute, is pleased. There is no energy crisis and thus, he suggests, no compelling national interest in regulating the use of electricity or forcing the pace of technological change.

"When in doubt," he said, "less is better."

But defenders of energy-efficiency regulations are not just the sort of folks who spend their spare time recycling aluminum foil.

"Killing the standards would be a triumph of blind ideology over economic common sense," said Daniel Lashof, a senior scientist at the Natural Resources Defense Council. And whether or not one agrees, there is surely a plausible economic rationale for interfering with the market in energy-related products.

While it is widely assumed that the appliance standards and model building code programs were the handiwork of liberals who never met a payroll, the enabling legislation was, in fact, signed by President Ronald Reagan in 1987 and reinforced by President George Bush's Energy Policy Act of 1992.

In part, Republican support reflected the business reality that there was money to be made in selling insulation and designing energy-efficient machines. In part, it reflected appliance makers' fears that the national market would be balkanized, as states _ notably California _ set their own standards.

The program has not generated much public controversy. The Department of Energy has been cautious in limiting standards to those that can be justified on purely economic grounds. Regulators have, in effect, asked what rational consumers would want: Efficiency is mandated only where the likely savings in utility bills substantially exceed the up-front cost.

And why wouldn't consumers make the same decisions on their own, driving the market to produce the desired level of energy efficiency and obviating the need for rules?

One reason, Lashof suggests, is that consumers have limited time and often leave the decision to a contractor whose primary incentives are to keep prices low and profit margins high. …

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