Analysis of Standards for Energy-Efficient Motors

摘要

This analysis does not lead to a clear conclusion regarding the effectiveness of standards for energy efficient motors if effectiveness is based on a benefit-cost ratio criteria. Two alternative assumptions were made regarding the appropriate measure of the costs to the private sector. In the first case it was assumed that private sector users have no biases and expect rates of return on investment that represent their true opportunity cost of capital. Under this assumption the benefit-cost ratio is .65, that is, for every dollar of cost incurred, the associated benefit is 65 cents. The alternative assumption is tha the private sector under values energy conservation investments. Under this assumption, the benfit-cost ratio of the standards program was 1.35. For every dollar spent, $1.35 is returned to society, because the standards force private sector users to correct their biases and therefore allocate capital more productively. (ERA citation 07:047242)