{"id":156201,"date":"2010-01-08T15:45:35","date_gmt":"2010-01-08T20:45:35","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.33206"},"modified":"2010-01-08T15:38:23","modified_gmt":"2010-01-08T20:38:23","slug":"the-limits-of-incentives-in-energy-policy","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/156201","title":{"rendered":"The Limits of Incentives in Energy Policy"},"content":{"rendered":"

Bradford Plumer makes a really excellent point here<\/a> about how prices and incentives and good energy policy don’t always align, and still won’t even if we pass cap and trade:<\/p>\n

\n

A renter might notice
\nthat his windows are leaky and the refrigerator is old and
\ndecrepit–and that all this waste is hell on the monthly electric
\nbill–but he’s not going to caulk the windows for a place he’ll move
\nout of in a few years. And the landlord, meanwhile, isn’t paying the
\nenergy bill, so why should he buy a new fridge? No one’s behaving
\nirrationally here–it’s just that the incentives don’t align in favor
\nof efficiency. And a price on emissions wouldn’t necessarily fix this.
\nThat’s why, in some cases, there’s a rationale for well-designed
\nregulations in addition to a carbon cap.<\/p>\n<\/blockquote>\n

This pivots off an interblog discussion about whether there are lots of firms passing up profits by not adopting “pollution-abatement” policies, like the ones in the graph below.<\/p>\n

\t<\/p>\n

<\/p>\n

<\/p>\n

\"Greenhouse_Gas_Emissions_Executive_Summary.pdf<\/a><\/span><\/p>\n

Last year EnerNOC, an energy efficiency consulting company, located<\/a>
\n$100,000 in energy savings for Morgan Stanley’s Times Square offices
\n(they were keeping the elevator machinery rooms as cool as the
\ncorporate suite, and things like that). Morgan Stanley’s profit in the
\nfirst three quarters of 2009 was more than $100,000. To be specific, it
\nwas $729 million more. So you can understand why spending time on an
\nenergy efficiency policy was not a big concern for their
\nboard. But that’s exactly why it’s likely that there are a lot of firms
\nlike Morgan Stanley who are likely passing up abatement policies, even
\nif they save hundreds of thousands of dollars.<\/p>\n

It makes sense that adopting a national cap and trade policy would
\nraise national awareness of emissions, and that awareness might trickle
\nup to the folks who exercise control over their buildings’ energy use.
\nBut Plumer’s exactly right that not everybody has a financial incentive
\nto care about how much energy they consume. For example, I live in an
\napartment where heat is included in the rent, so nothing’s stopping me
\nfrom turning the thermostat to Tropical<\/i> and watching TV in my
\nbathing suit all year.
\nThe cost of heating being factored into my rent is a bit like an employer taking health care out of our
\ncompensation. We don’t see the money being spent, so we don’t have the
\nsame incentive to ration our use — of heat or health care.


\n

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\n\"\"<\/a>
\n\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

Bradford Plumer makes a really excellent point here about how prices and incentives and good energy policy don’t always align, and still won’t even if we pass cap and trade: A renter might notice that his windows are leaky and the refrigerator is old and decrepit–and that all this waste is hell on the monthly […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-156201","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/156201","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=156201"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/156201\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=156201"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=156201"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=156201"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}