Energy-efficiency standards: who will bear the cost?
Authorities are cautious about implementing energy-efficiency standards across supply chains and end-user products, due to concerns that it could result in higher prices for consumers across all income levels.
The implementation of energy-efficiency regulations requires careful consideration, as they may disproportionately raise the cost of end-user products. Research shows that low-income households, which allocate a larger percentage of their budget to energy consumption[1], would be more adversely affected by these price increases, while wealthier households could more readily absorb the additional costs.
Energy-efficiency standards: a gradual approach through corporate expertise
Progress in energy efficiency must be gradual, driven by corporate expertise and innovation and with regulations introduced cautiously.
Energy efficiency has consistently advanced alongside technological improvements and investment. Today’s cars and machinery are significantly more efficient than those from the 1960s, before the oil shocks of the 1970s. This progress is often driven by consumer demand, in addition to regulatory measures.
A more rapid implementation could lead to skyrocketing costs, impacting households across all income levels.
For corporations, especially within the fossil fuel industry, only modest energy-efficiency and clean air standards have been imposed, such as limiting methane leaks. More aggressive measures face challenges, as the conversion costs would ultimately be passed on to consumers, regardless of their economic status.
For end-user products, energy-efficiency standards focus primarily on new buildings, vehicles, and other items, allowing for a phased and manageable transition. Existing products are not subject to these regulations.