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Should the United States Create Trading Markets for Energy Efficiency?

June 2016

Citation: ELR 10466

Author: Noah M. Sachs

For over 30 years, the United States has deployed an effective set of policies to promote energy efficiency, including appliance standards, information disclosure requirements, auto fuel economy standards, building codes, and tax rebates. From 1980 to 2014, the energy intensity of the U.S. economy declined by about 50%—a remarkable success story. Energy efficiency policies and technologies were responsible for a substantial portion of that decline. Climate and energy experts are now calling for the near-complete decarbonization of the U.S. economy by the middle of the century, raising the question of whether the old policy tools to promote energy efficiency are up to the task. This Comment examines whether the vision for energy efficiency markets matches the reality. It explains how energy efficiency markets work, examines the handful of energy efficiency markets that have been established to date, and explores the policy challenges inherent in commodifying energy efficiency and making it a tradable good.

Noah Sachs is a Professor at the University of Richmond School of Law and Director of the law school’s Robert R. Merhige Jr. Center for Environmental Studies. He writes frequently about climate change and energy efficiency.

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