Policy

Efficiency standards

J. Environ. Econ. Manag. http://doi.org/qvr (2013)

Energy efficiency standards are policy tools to address market failures like undesired carbon emissions from energy use and consumers' misperceptions about energy savings from cost-effective technologies — leading to low adoption levels. However, the economic and environmental effectiveness of these instruments is still debated.

Ian W. H. Parry, of the International Monetary Fund, and colleagues used an analytical model to analyse efficiency standards and pricing policies for reducing petrol and electricity use, and for mitigating carbon emissions in the US. In the case of fuel, they found that taxes alone are generally more efficient than a combination of taxes and standards. For electricity use, combining taxes and standards makes only a slight improvement. Finally, in the absence of misperceptions over energy savings, a combination of energy and emissions standards can cost three times more than carbon pricing. With large misperceptions, combining carbon pricing with fuel or electricity taxes is better than combining it with energy efficiency standards.

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Contestabile, M. Efficiency standards. Nature Clim Change 4, 87 (2014). https://doi.org/10.1038/nclimate2128

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