Economic Snapshot | Trade and Globalization

A more efficient energy policy

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for May 2, 2001.

A more efficient energy policy

With gasoline prices on the rise again and the ongoing electricity crisis in California, energy policy is getting the attention it hasn’t seen since the oil shocks of the 1970s. The situation merits concern. But rather than helping free the economy and the environment from the side effects of fossil fuel dependency, the Bush Administration is actually cutting back on efforts to improve energy efficiency. Last month, it proposed cutting spending on energy efficiency and renewable energy by 15%, and appears poised to repeal energy efficiency standards implemented at the end of the Clinton Administration.

Required additional generating capacity (gigawatts)

The graph shows the predicted needed increases in electricity generating capacity over the next 20 years (in gigawatts), and how just two proposed regulations-increasing the energy efficiency of new air conditioners by 30% starting in 2006 and gradually increasing the efficiency of new washers by 35% starting in 2005-could meet 5% of our electricity needs by 2020. This would yield substantial environmental benefits by reducing the amount of coal and natural gas we burn, and it would mean that we could build about 60 fewer power plants than we would otherwise need. And these new appliances would actually cost less to own and operate than current models.

These two policies represent a tiny fraction of the menu of options that exist for improving energy efficiency for consumers and business. A truly comprehensive energy policy would exploit these and other opportunities, reducing rather than increasing U.S. dependence on fossil fuels.

Data source: U. S. Department of Energy.

This week’s Snapshot by EPI economist James P. Barrett.

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