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Energy Efficiency Resource Standards: Economics and Policy

Author

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  • Brennan, Timothy J.

    (Resources for the Future)

  • Palmer, Karen

    (Resources for the Future)

Abstract

Twenty states in the United States have adopted energy efficiency resource standards (EERS) that specify absolute or per¬centage reductions in energy use relative to business as usual. We examine how an EERS compares to policies oriented to meeting objectives, such as reducing greenhouse gas emissions, cor¬recting for consumer error in energy efficiency investment, or reducing peak de¬mand absent real-time prices. If reducing energy use is a policy goal, one could use energy taxes or cap-and-trade systems rather than an EERS. An EERS can be optimal under special conditions, but to achieve optimal goals following energy efficiency investments, the marginal external harm must fall with greater energy use. This could happen if inframarginal energy has greater negative externalities, particularly regarding emissions, than energy employed at the margin.

Suggested Citation

  • Brennan, Timothy J. & Palmer, Karen, 2012. "Energy Efficiency Resource Standards: Economics and Policy," RFF Working Paper Series dp-12-10, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-12-10
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    References listed on IDEAS

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    6. Tsvetan Tsvetanov & Kathleen Segerson, 2011. "Re-Evaluating the Role of Energy Efficiency Standards: A Time-Consistent Behavioral Economics Approach," Working papers 2011-24, University of Connecticut, Department of Economics.
    7. Brennan, Timothy J., 2006. ""Green" preferences as regulatory policy instrument," Ecological Economics, Elsevier, vol. 56(1), pages 144-154, January.
    8. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
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    10. Dennis Coates, 2007. "Stadiums And Arenas: Economic Development Or Economic Redistribution?," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 565-577, October.
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    12. Dermot Gately, 1980. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 373-374, Spring.
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    Cited by:

    1. Alwiyah Abd Alfattah & Ahmad Sakhrieh & Ahmed Al-Ghandoor, 2017. "Energy Efficiency Standards and Labels for Cold Appliances in Jordan," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 95-101.
    2. Strong, Derek Ryan, 2017. "The Early Diffusion of Smart Meters in the US Electric Power Industry," Thesis Commons 7zprk, Center for Open Science.
    3. Yi, Hongtao, 2015. "Clean-energy policies and electricity sector carbon emissions in the U.S. states," Utilities Policy, Elsevier, vol. 34(C), pages 19-29.
    4. Palmer, Karen L. & Grausz, Samuel & Beasley, Blair & Brennan, Timothy J., 2013. "Putting a floor on energy savings: Comparing state energy efficiency resource standards," Utilities Policy, Elsevier, vol. 25(C), pages 43-57.
    5. Amjad Ali & Wuhua Li & Rashid Hussain & Xiangning He & Barry W. Williams & Abdul Hameed Memon, 2017. "Overview of Current Microgrid Policies, Incentives and Barriers in the European Union, United States and China," Sustainability, MDPI, vol. 9(7), pages 1-28, June.
    6. Ghaderi, A. & Parsa Moghaddam, M. & Sheikh-El-Eslami, M.K., 2014. "Energy efficiency resource modeling in generation expansion planning," Energy, Elsevier, vol. 68(C), pages 529-537.

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    More about this item

    Keywords

    energy efficiency resource standards; energy efficiency; electricity; conservation;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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