by Ted Gayer, W. Kip Viscusi
August 07, 2012
In recent years, federal agencies have issued energy-efficiency standards for everything from cars to light bulbs. These regulations are commonly billed as important efforts to reduce greenhouse gases. But, according to a new study published by the Mercatus Center at George Mason University, the standards have a negligible effect on emissions. By the agencies’ own estimates, the environmental benefits of these rules are minor, and cannot on their own justify the regulations. Thus, to justify these expensive new regulations, the agencies instead rely on the claim that the regulations save consumers’ and firms’ money, by forcing them to buy more expensive energy-efficient products. This is a departure from the traditional approach of conducting benefit-cost analyses, in that it assumes that consumers and firms make irrational purchasing decisions. Basing regulatory analyses on such an assumption could justify regulations that mandate virtually all choices consum¬ers and firms make.