EPA’s proposed rule sets state-by-state carbon intensity targets for the production of electricity. States are expected to adopt some form of economic incentive regulatory system to achieve these targets, but there has been a great deal of confusion about how, exactly, such a system should work.
Regulation may have a larger impact on society than any other single federal policymaking process. Regulations protect public health, promote economic growth, and help preserve our environment. Various estimates of regulation’s impact on society vary from over $260 billion to over $2 trillion. By comparison, the total of all federal funding for research and development, for instance, is less than $160 billion a year.
When Brookings economist Charles Schultze died in late September, the obituaries that I read largely focused on his activities related to macroeconomics. The only mention of activities related to regulation and regulatory reform that I was able to find was in Ed Cowan’s Washington Post piece in which he stated that Charlie’s “longest-lasting impact may have been on moving the government away from … command and control regulation.”
This chapter explores the reasoning behind energy efficiency regulations and why these reasons are insufficient to support the large costs they impose on consumers, especially low-income consumers.