The MARKET: An Alternative Energy Efficiency Program

Posted on Sat 03/24/2012 by

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By David Kreutzer, Ph.D. ~

Adding to a long list of energy-efficiency legislation, two Members of Congress—David B. McKinley (R–WV) and Peter Welch (D–VT)—recently proposed a federal energy-efficiency bill that gives tax rebates to homeowners who make energy-saving improvements to their homes. This bill and its predecessors reward consumers for saving money.

Let’s propose a simpler, more direct, and more effective alternative.

The Momentous Act to Reduce Konsumers’ Energy Tabs (The MARKET)

Preamble: Federal energy efficiency programs typically tie the rebate/subsidy to the amount spent on efficiency or to meeting certain efficiency thresholds. They do not tie the reward to actual dollars saved. To remedy this weakness, The MARKET provides dollar-for-dollar benefits tied directly to actual savings.

SEC. 1. Rebate for equipment upgrades and weatherization projects

Any equipment upgrade or weatherization project that demonstrates actual savings will be rewarded under The MARKET.

(a) For every dollar a household or business saves on its monthly energy bill, it will save a dollar on its monthly energy bill. For example, if a homeowner installs new windows and additional insulation that reduce his or her monthly heating and air conditioning bill by $100, the homeowner will save $100 on his or her monthly heating and air conditioning bill. There will be no paperwork to fill out; homeowners will receive the savings directly and immediately from their energy suppliers in the form of a lower bill.

SEC. 2. Rebate for energy-saving behavior

Unlike many other federal energy programs, The MARKET provides financial incentives for energy-conserving behavior.

(a) For every dollar that consumers can save on their energy bills by reducing energy-consuming activities, they will save a dollar on their energy bills. For example, if a homeowner puts a timer on the shower and gets the family to take shorter showers and reduce the monthly hot water bill by $20, the family will save $20 on its monthly hot water bill.

SEC. 3. Rebate for transportation efficiency

The three fundamental strategies for saving energy in transportation are:

  1. Upgrade to a more energy-efficient car or truck
  2. Use alternative transportation
  3. Don’t go there

The transportation rebate will be expenditure A minus expenditure B, where expenditure A is fuel cost when no attempt is made to save energy and expenditure B is fuel cost after energy-saving strategies are employed.

The MARKET provides perfect incentives for efficient energy savings. Consumers will invest in technology upgrades and behavior modification anywhere the savings outweigh the costs. In addition, since there is no government expenditure, the impact on the federal budget would be minimal. There is no need for compliance with the Paperwork Reduction Act, since there is no paperwork.

David Kreutzer, Ph.D. writes articles for  The Heritage Foundation . http://www.heritage.org/   and he is the Senior Policy Analyst in Energy Economics and Climate Change, Center for Data Analysis.

Read more informative articles at Heritage – The Foundry . http://blog.heritage.org/

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