BEST STANDARDS NECESSARY

Energy Standards Needed, Report Says
Steve Lohr, May 17, 2007 (NY Times)

WHO
McKinsey Global Institute (Diana Farrell, director)
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WHAT
US residential building electricity use in 2020 could be cut by more than 1/3 with specific changes which would follow wise national new-product standard-setting.

WHEN
The McKinsey study, released May 17, considers electricity consumption patterns for 2020.

WHERE
US residential buildings

WHY
- US residential buildings are the largest single energy-consuming group in the world.
- Recommended national changes: compact fluorescent light bulbs, high-efficiency water heaters and kitchen appliances, improved room-insulation, power modulation
- Energy saved=110 new coal-fired 600-megawatt power plants
- Market forces will not be enough to bring the changes because inadequate consumer information produces bad choices. Example—Neither short-term apartment renter and landlord has incentive to spend to make the apartment more efficient.
- Solution: Government instituted product standards.
- Alternate Solution: Putting a price on carbon dioxide emissions.
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QUOTES
- Farrell: “The study makes a strong case for what economists tend to shy away from — market intervention…But this would be market intervention to correct market distortions that exist…Everyone would be better off if the capital investments were made…But the individual parties do not have the incentives to make the needed investments.”
- Robert N. Stavins, environmental economist, Harvard University: “Often, the reason energy-efficient improvements have not been widely adopted is that there are real costs to many sets of individuals and they are making personally rational choices…Energy-efficiency requirements raise the prices of products and can impose significant costs on the less affluent.”
- Terry Tamminen, former director California Environmental Protection Agency/ climate program director, New America Foundation: “Enlightened regulation ensures that all your choices are relatively good ones…”