If energy needs to be saved, there are good ways to do it.
                                                               Government product regulation is not one of them

Tuesday, July 5, 2011

Saving Energy in America

If there is a Problem: Deal with the Problem
From a pro-regulation viewpoint,
if energy use is such a worry, and suggested policies (summarized below) are rejected,
then gasolene, oil, coal, electricity, or products that use a lot of such energy, could simply be taxed to reduce their use, allowing cross-financed subsidies on alternatives to make them cheaper for consumers,
without affecting Federal or State (eg California) Budgets like today

The main message from politicians who are pro-regulation on buildings, cars, refrigerators, light bulbs etc is that "We must save energy and emissions".

Unfortunately, the energy savings from product regulations are much smaller than supposed, from rebound and other general effects, as research has shown

There are also specific reasons why the savings are small,
such that say in the case of light bulbs the savings amount to less than 1% of US (or EU) energy use, as shown with US Dept of Energy and institutional EU statistics references on

But even if the savings were there...

The First Consideration:

Arguably there is no particular need,
for Government to impose energy saving measures on paying consumers, unless there is a society energy shortage.
Such a shortage could of course firstly be met by increasing relevant supply (renewable, low emission etc if desired), rather than by forcing citizens to reduce their energy use.
Besides, any actual shortage of oil or coal or gas raises their price and reduces their use anyway - without the need for Government intervention.
Emissions (not just of CO2) can be dealt with directly or by energy substitution.

As regards electricity use,
refrigerators, light bulbs etc don't burn coal and they don't release CO2 gas:
even if the savings figures from regulating such products are accepted, there are still many more relevant (as well as more significant) measures in generation and distribution as well as consumption, to reduce energy use and electricity waste.

If the need is nevertheless felt to impose energy reducing policies,
then increasing free market competition should be the first choice:

Competition between utility companies, industries and businesses means that they themselves strive to keep down their costs - including energy and electricity costs.

Also, competitive pressure means that they are more likely to engage in market research to satisfy consumers in terms of giving good service at a good price
- including that they will provide good energy saving products at lower prices that also save people money in their usage, as has happened throughout history, without Government intervention.

Moving On:

Even if all that was rejected, then taxation is still better than regulation.

I am playing "devil's advocate" here, since I don't support this.
But let's say you are strongly pro-regulation because of the Great Need to Save Energy....

If energy use is such a problem - then simulate a shortage:
Government can simply put an import duty on oil (also for national energy security reasons) or tax oil, gasolene, coal, electricity as required, to raise the price and reduce the use - instead of running round telling citizens what buildings, cars or light bulbs they can or can't buy and use.

"Hey Man, in America we hate taxes!"
"Hey Man, that means the rich can pay and pollute, unlike the poor folk!"

People are not necessarily just "hit by taxes",
since the taxes help fund subsidies for alternative (and low polluting) energy sources - making them cheaper than before.
A bankrupt state like California,
or a near bankrupt country like the USA,
can't just go on with massive upfront costs for "supposed energy savings down the line"
(savings arguably not there anyway, for reasons described on the website)

"Hey Man, still no way that a politician can tax gasolene, or electricity use!"

Well, then one can move on to product taxation alternatives:
While being petty and with similar disadvantages to product regulations,
importantly it keeps choice yet gives Government valuable income at the same time:
Remember that energy demanding products are often cheaper to begin with,
and (as with light bulbs) may be replaced more often, giving high tax revenue
even on decreasing sales.
2 billion annual US sales of relevant light bulbs shows a massive Federal or State Government tax income potential - and that is just light bulbs.

Again, taxing rather than banning certain building construction or certain pick-up trucks or certain electrical products - all which may have usage advantages for consumers -
also allows, as before, for cross-financed energy saving alternatives to be sold cheaper, equilibrating the market
- so "people are not just hit by taxes" in keeping their freedom of choice.

Notice therefore how the talk that
"Markets fail, people don't buy expensive products even if they save money in the long run"
fails twice over:
- Firstly in the market sense, where people do buy expensive alternatives if they are good enough and marketed properly ("Energizer bunny" commercials for batteries, or similarly with washing up liquids etc that "cost more to buy but save money in the long run"),
- Secondly in taxation, a worse alternative, but that also can reduce or cancel the price differences to even out the market.

Even if one accepts "a great need to save energy",
pro-regulation Government politicians therefore lack
not just understanding,
not just imagination,
but also consideration, for the citizens they serve.

As said,
If there is a Problem: Deal with the Problem...

1 comment:

Environmental Management Training said...

We need to all do our part to conserve energy. Engaging yourselves in an environmental awareness activity is really an act that should be shared with others. It is a good deed indeed for many of us inhabitants of the planet earth. I hope lots of people will mirror this act and also share it to youngsters.