In this Article, I demonstrate that the regulatory strategy for energy efficiency is working. Although information disclosure, financial incentives, and other softer alternatives to regulation play a vital role in reducing energy demand, these should be viewed as complements to efficiency regulation, rather than replacements. The regulatory approach has led to substantial cost and energy savings in the past, it has enjoyed bipartisan political support, and it targets products and behaviors that are difficult to address through other policy tools. Given the politics of climate change in the United States, which make federal carbon taxes or a cap-and-trade system infeasible, the regulatory option should be expanded, not abandoned.
The regulatory strategy I focus on in this Article is minimum energy performance standards ("MEPS") for products--efficiency benchmarks that manufacturers must meet to sell products in a jurisdiction. I do not discuss automobile fuel efficiency standards in this Article, as that topic has been amply covered elsewhere. Most Americans are familiar with MEPS for products other than automobiles because of refrigerator and air conditioner efficiency standards enacted in the 1980s. This Article, one of the first analyses of MEPS in legal scholarship, discusses the realistic potential for product standards as a climate change strategy. It proceeds in three parts.
In Part I, I introduce the goals and structure of MEPS and then sketch their prior implementation in the United States and the European Union ("EU'). Both the United States and the EU have massively expanded their regulation of product efficiency in the past five years, and efficiency standards are one of the principal environmental legacies of President Obama's first term. The EU has, in addition, deployed other strategies to decrease energy consumption, including high gasoline taxes and its Emissions Trading System. The United States is highly unlikely to enact national emissions trading or carbon taxes any time soon. I argue, therefore, that in the near term direct regulation of the energy use of products is one of the few politically acceptable tools in the U.S. climate toolbox.
In Part II, I provide a theoretical justification for efficiency standards. I argue that standards are an appropriate response to energy market failures and to the environmental externalities inherent in energy consumption. While alternative approaches to climate change mitigation, such as carbon pricing or energy taxes, also address externalities, they are not likely to drive significant changes in energy usage or equipment purchasing decisions. Although these policies will increase energy prices slightly, consumers will either not notice the price increase or will not care enough to change their purchasing decisions and energy-consumption habits. After discussing these hurdles to behavioral and technological change, I then turn to a regulatory strategy. I address some of the traditional criticisms of command-and-control regulation and show why MEPS offer a sound energy efficiency strategy that is consistent with continued product innovation.
Finally, in Part III, I explore the promise and perils of expanding product regulation in the coming years. I outline the potential energy savings that can be expected from feasible product standards, as well as some of the limitations of a regulatory strategy. I also discuss the long-term political viability of MEPS, focusing on the 2011 congressional skirmish over light bulb efficiency standards, which was the first major political backlash in the United States against MEPS. The debate over the light bulb standards pitted energy efficiency against consumer choice, and this values clash, if it continues, could threaten support for efficiency regulation.
Noah M. Sachs, Can We Regulate Our Way to Energy Efficiency? Product Standards as Climate Policy, 65 Vand. L. Rev. 1631 (2012).