By Holly Fretwell
It is often believed, and in fact intended, that regulations requiring increased energy efficiency will reduce energy consumption. In reality, however, the opposite may be true.
Look back to 1975, and the original Corporate Average Fuel Efficiency (CAFE) standards. The CAFE standards required increased fuel efficiency for cars from a fleet average of 18 miles per gallon in 1978 to 27.5 by 1990. Greater fuel efficiency, however, means less cost per mile driven, which encourages more driving. At the same time, many Americans shifted to larger vehicles, like small trucks and SUVs, for increased safety and more legroom. This also results in increased fuel use. Add to the deal a higher price for new vehicles to meet CAFE standards which leads to driving older vehicles for longer and, again, more fuel use. These are unintended consequences of the required fuel efficiency standards that lead to increased, rather than decreased, gas use.
That doesn’t stop politicians, however, from setting ever higher standards. Current CAFE regulations require average fleet auto efficiency of 35 miles per gallon by 2020. Other energy efficiency standards are also coming to light – literally. The move toward requiring the use of compact fluorescent (CFL) LED lighting over incandescent is likely to have a similar effect. Because CFL and LED lighting are cheaper, use will increase.
Note that increased efficiency resulting in lower costs not only motivates increased use by current users. Lower costs also mean greater access to more people – people that previously had no access to lighting and energy. Energy availability in remote regions can enhance productivity and prosperity.
Call it “green-washing” if you like. Politicians respond to environmental concerns because it earns them votes. What seem to be green regulations, though, may not result in environmental improvement. Few voters understand the unintended consequences of such legislation. It is irrelevant whether politicians do or not.
The bottom line is that more efficient technologies don’t need to be imposed by law. Consumers and producers are drawn toward energy efficiency because it saves money. But don’t be fooled, increased energy efficiency may not coincide with a reduction in energy use; it is instead likely to result in increased energy consumption. When self determined, it does, however, coincide with enhanced quality of life.
Holly Fretwell is a Research Fellow at PERC and an adjunct professor of economics at Montana State University
