Carbon taxes are again being discussed in the United States as a means of reducing emissions of carbon dioxide and other greenhouse gases (GHGs). Three main arguments are proffered in support of carbon taxes, either alone or in combination:

1. That by setting a price on greenhouse emissions equal to the “social cost of carbon,” a carbon tax would optimally reduce GHG emissions.
2. That replacing existing regulations, subsidies, and tax expenditures with a carbon tax would more cost-effectively achieve emissions-reductions goals.
3. That a revenue-neutral carbon tax would be economically beneficial.

These arguments are found to be wanting.

First, in theory, a carbon tax set at the “social cost of carbon” would lead to an optimal rate of greenhouse emissions. However, the “social cost of carbon” is highly uncertain. The current U.S. administration has chosen to use estimates of the “social cost of carbon” developed during the Obama administration, which would be in the region of $53 per metric ton of “carbon dioxide equivalent” emissions. This is likely significantly higher than the optimal rate.

A carbon tax applied with no offsetting reductions in other taxes or changes in regulations would increase the cost of goods and services. Energy and energy-related goods would be especially hard hit. A tax of around $50 per ton would raise natural gas prices by about 40% and gasoline prices by about 15% above recent levels. This would reduce economic growth by as much as 0.2% and also reduce employment. Even taking into account reductions in damage associated with GHG emissions, applying a carbon tax at a rate of $53 per ton would most likely cause net economic harm.

Second, numerous existing regulations, subsidies, and tax expenditures currently aim to reduce greenhouse gas emissions, including: the Renewable Fuel Standard, vehicle fuel economy and GHG emission standards, renewable portfolio standards, and tax credits for renewable energy and low-emission vehicles.

These regulations, subsidies, and tax expenditures cost hundreds of billions of dollars but do relatively little to reduce emissions. Replacing them all with a carbon tax applied at a uniform rate would in principle be both much less costly and more effective as a means of incentivizing reductions in emissions.

In practice, the likelihood of such a “grand bargain” being successfully implemented is extremely low because powerful, concentrated special interests who currently benefit from the regulations, subsidies, and tax expenditures would lobby heavily to maintain them.

Third, a revenue-neutral carbon tax, achieved by reducing either corporate income tax or the payroll tax or both, could have net benefits even if existing policies aimed at reducing carbon emissions were not repealed. However, it is unlikely that a carbon tax would be implemented in a truly revenue-neutral manner.

Many proposals from Congress and the Biden administration propose paying for new programs with carbon tax revenues, suggesting that there would be pressure to increase such revenue. This is precisely what happened in British Columbia, where an initially revenue-neutral carbon tax has gradually been increased. Elsewhere in the world, carbon taxes have almost ubiquitously been used for revenue-raising purposes.

Introduction

Governments across the world, including the U.S. federal government and many state governments, have sought to regulate emissions of greenhouse gases (GHGs) through a vast array of regulations and subsidies. Several of these have been controversial. For example, federal mandates and subsidies to promote the production and use of ethanol as a fuel have been criticized by both economists and environmentalists.

Meanwhile, vehicle and appliance energy efficiency standards became a cause célèbre in the recent U.S. presidential election.

Governments across the world, including the U.S. federal government and many state governments, have sought to regulate emissions of greenhouse gases (GHGs) through a vast array of regulations and subsidies.

In the face of such controversies, many economists and policy advocates (on both the political left and right) have argued that a carbon tax would be a more efficient policy to reduce GHGs emissions than these regulations and subsidies. There are broadly three arguments made in favor of introducing a carbon tax.

First, from an economic perspective, it is viewed as an efficient way to reduce GHG emissions, thereby internalizing the “social cost” of those emissions.

Second, regardless of whether a carbon tax is desirable per se, it is widely viewed as being superior to existing regulations and subsidies.

Third, even if a carbon tax were introduced on top of existing regulations and subsidies, some argue that it would have net economic benefits if it were implemented revenue-neutrally.

This brief considers the arguments for and against such a tax. It is organized as follows:

• Part 2 describes and evaluates the merits and drawbacks of the social cost argument.

• Part 3 discusses the economic effects of introducing a carbon tax without any other changes in tax, subsidy, or regulatory policy. The aim is to describe the effects of introducing a carbon tax on top of existing policies.

• Part 4 describes and critically evaluates the “grand bargain” argument, whereby a carbon tax is introduced as a replacement for existing regulations, subsidies, and tax expenditures that are aimed at reducing GHG emissions.

• Part 5 assesses the possibility and consequences of introducing a revenue-neutral carbon tax, that is to say combining the introduction of a carbon tax with offsetting reductions in other taxes so that net revenue remains constant.

• Part 6 offers some concluding remarks.

Excerpt of the Policy Brief’s Conclusions

This brief has explored the main arguments put forward in support of introducing a carbon tax.

Part 2 considered the argument that a carbon tax is justified on the grounds that carbon emissions impose a net external cost on society. While that may be true, the scale of those external costs remains uncertain. In determining an appropriate price for carbon emissions, the current U.S. administration uses “social cost of carbon” estimates developed during the Obama administration of approximately $53 per metric ton of CO2-e.

Part 3 explored the economic implications of applying a carbon tax at about that rate. Such a tax would significantly increase the cost of energy and energy-related goods. Studies show that, in the absence of any other changes to taxes, subsidies, or regulations, a carbon tax of around $50 per metric ton would cause U.S. GDP to fall by about 0.4%, lead to hundreds of thousands of lost jobs, and cause incomes to fall across the board, perhaps especially among those already on lower incomes.

While a carbon tax on its own would undoubtedly cause economic harm (notwithstanding any environmental benefits that might arise), it would likely be far less harmful than the many regulations and subsidies currently implemented to reduce carbon emissions. It would also likely be more effective than those policies in reducing emissions. So, in principle, a “grand bargain” in which a carbon tax was introduced in return for eliminating all those more harmful policies would have merit.

Unfortunately, as discussed in Part 4, the existing regulations and subsidies have created sets of concentrated beneficiaries, while the harms they cause are dispersed among the wider population. As such, any attempt to reform these policies is likely to be met with fierce and well-funded opposition.

Part 5 noted that a revenue-neutral carbon tax, achieved either by reducing (possibly even eliminating) corporate income tax or by reducing the payroll tax, could have net benefits even if existing policies aimed at reducing carbon emissions were not repealed. However, it seems unlikely that a carbon tax would be implemented in a truly revenue-neutral manner. Even if such a tax were initially close to revenue-neutral, numerous pressures would almost inevitably lead to it being increased at a rate such that it would generate additional net tax revenues.

Given the economic harm that would be caused by a carbon tax, and since most if not all the benefits from either a grand bargain or a revenue-neutral carbon tax would be generated by the reduction in other taxes, regulations, and subsidies, it would seem preferable for governments to reduce those taxes (or, at least not increase them), and remove those regulations and subsidies without imposing a carbon tax.

Full Policy Brief: A Primer on Carbon Taxes

Full Study: Evidence-Based Policies to Slow Climate Change

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Human emissions of greenhouse gases (GHGs) are contributing to a rise in global average temperatures, with potentially significant effects on the climate. In response, governments around the world have introduced policies intended to reduce emissions of GHGs. Most of these policies are “top-down” and include mandatory restrictions on emissions, mandatory use of certain “low carbon” technologies, and subsidies to specific technologies.

This study finds that such top-down policies’ approaches to controlling GHG emissions may not be as effective as bottom-up approaches that harness the natural tendency of entrepreneurs and innovators to identify more efficient and cost-effective ways to produce goods and services.

The study identifies several key trends that suggest bottom-up approaches are already delivering results:

• Energy use per dollar of gross domestic product (GDP) has been declining at a fairly constant rate in the U.S. for about a century.
• Emissions of carbon dioxide (CO2) per dollar of GDP have been falling faster than the rate of decline in energy use for the past half century, both in the U.S. and globally.
• Over the past 30 years, emissions of other GHG per dollar of GDP have been falling faster than emissions of CO2 globally.

These trends are largely driven by improvements in efficiency and changes in the sources of energy, including a centuries-long shift toward more energy-dense, lower-carbon fuels. These improvements were mainly driven by market forces, not government intervention.

While continued improvements in energy efficiency may slow or even stop the growth in energy use, they are unlikely to lead to a reduction in energy use, let alone a reduction in CO2 emissions. As such, if reductions in carbon dioxide emissions are to occur, they will need to come primarily from a continued shift toward lower-carbon fuels.

Currently, about 90% of the world’s energy and 80% of U.S. energy are supplied by carbon-based fuels. Numerous lower-carbon energy sources are currently available and are able cost-effectively to supply some portion of current energy demand. Unfortunately, however, attempts to shift largely or exclusively to zero-carbon fuels in the short term are likely to be prohibitively costly.

• Hydropower can only be cost-effectively produced in locations that are geologically suitable.
• Geothermal energy can be cost-effective in certain locations and applications.
• Solar and wind power can be cost-effective in a relatively wide range of locations and applications but cannot be relied upon by themselves to supply power because the sun only shines for an average of 12 hours per day and the wind does not blow continuously. For these intermittent power sources to form a significant proportion of energy supply, storage (such as batteries) or back-up generation will be needed.
• Battery storage is currently not cost-competitive with natural gas as a source of back-up power for renewable energy systems.
• Nuclear power remains an important source of energy in the U.S., but the cost of a new nuclear power plant is more than twice the cost of a new natural gas-fired power plant per kW of energy generated.

For low- and especially zero-carbon energy to become the dominant source of power in the U.S. and globally, continued innovation is key. The question is, which policies are most appropriate to drive such innovation?

In other cases, innovations may derive laterally from innovations in other technologies. For example, large-scale battery storage technology has already benefited from dramatic improvements in lithium-ion batteries initially developed for laptops and other small consumer electronics. Likewise, geothermal energy generation is already benefiting from innovations developed to enable the extraction of oil and natural gas from shale formations.

Because many factors are geographically specific, the optimal combination of lower-carbon technologies will vary significantly from place to place. It will also change over time as innovation drives down costs. So, policymakers should avoid one-size-fits-all, top-down approaches and instead look at ways to encourage innovation and implementation from the bottom up—both in general and specifically in energy markets.

Some of the most important factors affecting innovation in general are:

• Competition, both in general and specifically in capital markets;
• Flexible labor markets;
• Low personal and corporate taxes; and
• Streamlined, cost-effective regulation.

Meanwhile, governments could improve the prospects for low-carbon energy generation specifically by taking actions to:

• De-monopolize electricity markets;
• Remove trade barriers in the energy sector (both exports and imports);
• Reduce subsidies and tax expenditures for energy and energy-related technologies;
• Streamline permitting for all forms of energy generation, including nuclear; and
• Eliminate arbitrary, technology-specific energy mandates.

Innovation has the potential dramatically to reduce carbon emissions over the course of the next half-century. Indeed, if the United States were to adopt the pro-innovation approach outlined here, U.S. GHG emissions could fall to zero, or close to zero, by about 2060. Globally, it could take a little longer, but with a concerted effort to remove barriers to innovation, greenhouse gas emissions could approach zero in the last two decades of the century without any need for explicit restrictions on CO2 or other greenhouse gases.

Introduction

Human emissions of greenhouse gases (GHGs) are contributing to a rise in global average temperatures. Concerns about the effects of increased temperature stemming from further increases in atmospheric GHG concentration have led governments around the world to implement policies that aim to reduce GHG emissions.

Unfortunately, many of the policies so far implemented have done little to reduce GHG emissions or reduce the risk of future temperature increases, at enormous cost. Unfortunately, many of the policies so far implemented have done little to reduce GHG emissions or reduce the risk of future temperature increases, at enormous cost. The Renewable Fuels Standard, discussed in Part 7 of this study, is an extreme example, but there are many others. Going forward, it is important to identify cost-effective policies to reduce GHG emissions and thereby slow the rate of climate change.

This study examines and explains the mechanisms underpinning reductions in GHG emissions and describes a set of policy changes that would achieve such reductions cost-effectively. It begins in Part 2 with a simple description of the relationship between economic activity, GHG emissions, and global warming.

Part 3 delves more deeply into the changing relationship between economic activity and emissions and offers a hypothetical projection of future emissions based on this changing relationship.

Parts 4 and 5 consider the role of energy density and dematerialization as explanations for the changing relationship between output and emissions.

Then, Part 6 assesses various factors that underpin both increasing energy density and dematerialization.

Part 7 evaluates the prospects for increasing energy efficiency both in general and through targeted policies.

Part 8 identifies technologies and policies that might lead to lower-carbon energy generation.

Finally, Part 9 draws together the several strands of policies discussed throughout the paper and offers conclusions.

Full Study: Evidence-Based Policies to Slow Climate Change

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Sept. 9 was the court-imposed deadline for the Food and Drug Administration (FDA) to decide which e-cigarettes, if any, would be allowed to remain on the market and which would be banned. In the end, the FDA failed to authorize a single e-cigarette for sale and gave more than a million products outright denials upon the deadline. The agency says it needs more time to decide on the remaining products it hasn’t yet rejected.

Because of this, all e-cigarettes are now subject to FDA enforcement action. The consequences of this decision will be devastating for a once-thriving industry and a tragedy for the health of millions of Americans. Less than a week after the FDA’s deadline expired, the Cochrane Review, recognized as the gold standard for evidence-based medicine, concluded e-cigarettes were more effective in helping smokers quit than traditional nicotine replacement therapies. Moreover, the evidence that e-cigarettes are safer than cigarettes, a pathway out of smoking, and fail to act as a gateway to tobacco has only strengthened since FDA took charge of regulating e-cigarettes back in 2016.

Over the past few years, public concern and government action in relation to e-cigarettes have mainly focused on youth vaping. If that is the motivation for banning most of the e-cigarettes on the market in America, then it is a highly misguided one. For one thing, the bans will likely have little effect on youth vaping. Even before lockdowns and school closures, FDA surveys suggest the number of youth vapers had fallen by around 30 percent since 2019. E-cigarettes were still available in all kinds of flavors and various nicotine strengths, but fewer kids were interested in using them. Moreover, even amongst the small minority of youth who do vape, most will never have heard of, let alone tried the products now banned by the FDA.

The FDA bans on e-cigarettes are likely to lead to an increase in smoking. Many of the now-banned e-cigarette products were used by adults who have either quit smoking are trying to do so. Indeed, the vast majority of vapers are adult smokers and ex-smokers, and the overwhelming evidence shows that by providing smokers with a far less harmful substitute that nonetheless provides much of the same satisfaction as smoking, e-cigarettes are dramatically cutting disease risk for a vulnerable population.

FDA’s decision-makers appear to have ignored arguably the most important premise of the legislation under which their ban has been affected. Section 3 of the Tobacco Control Act outlines its purpose, which crucially includes, “to promote cessation to reduce disease risk and the social costs associated with tobacco-related diseases.” That is precisely what e-cigarettes do. So there should be no need for individual applicants, many of whom are mom-and-pop operations, to demonstrate to the FDA that their specific product has the propensity to reduce smoking and tobacco-related diseases. But that is exactly what was required of each submission. And, to nobody’s great surprise, we then witnessed a tsunami of rejections, largely due to incomplete paperwork or companies failing to provide specific evidence showing their products would benefit adult smokers more than the risk they pose to youth. As The Verge reported:

After a year-long review of millions of e-cigarette–related products, the Food and Drug Administration says it has rejected 946,000 flavored products, prohibiting them from being marketed or sold. It also said that the applications for 4.5 million products were missing materials that the agency required to make a decision. All of those products must also be removed from the market. The FDA said in a statement Thursday that it has reviewed 93 percent of the applications submitted, which included 6.5 million products.

For years, vape companies asked FDA for clear guidance on what would be required to achieve authorization. Eventually, in June 2019, the FDA provided a 55-page guidance document that contained the following helpful advice on how to demonstrate that a product is “appropriate for the protection of public health (APPH)”:

The Federal Food, Drug, and Cosmetic Act (FD&C Act) states that the finding of whether permitting the marketing of a product would be APPH will be determined, when appropriate, on the basis of well-controlled investigations (section 910(c)(5)(A)). However, section 910(c)(5)(B) of the FD&C Act also allows the agency to consider other “valid scientific evidence” if found sufficient to evaluate the tobacco product. Given the relatively new entrance of ENDS on the U.S. market, FDA understands that limited data may exist from scientific studies and analyses. If an application includes, for example, information on other products (e.g., published literature, marketing information) with appropriate bridging studies, FDA intends to review that information to determine whether it is valid scientific evidence sufficient to demonstrate that the marketing of a product would be APPH. Nonclinical studies alone are generally not sufficient to support a determination that permitting the marketing of a tobacco product would be appropriate for the protection of the public health.

Aside from the clear-as-mud bureaucrat-speak (ENDS are “electronic nicotine delivery systems” – i.e. e-cigarettes), the assertion that every producer of vape products must submit clinical studies evaluating the public health risks specific to their products is ludicrous.  

That’s the trouble: FDA’s demands were both vague and absurd. Most “e-cigarette” producers actually just made a few kinds of “juice” by mixing a nicotine solution with food flavorings and diluting with propylene glycol (the stuff used in theatrical smoke machines for decades without harm) and/or vegetable glycerin. Why on earth would FDA ask all these folks to submit clinical studies? It’s bonkers.

Meanwhile, the few larger e-cigarette producers that have been able to afford armies of scientists and lawyers to prepare their submissions have produced dossiers that would not be out of place in an application for approval for a new pharmaceutical that actually is highly toxic even when used as directed. One of the largest e-cigarettes companies, Juul, filed an application stretching to over 125,000 pages with data from more than 100 studies. So far, the FDA hasn’t rejected that submission. It is still reading it.

But even that approach apparently may not be enough. One larger company, Turning Point Brands, was issued a marketing denial order (MDO) in relation to some of its vapor products even though according to the company, “The PMTA [Premarket Tobacco Product Application] denied by this MDO included an in-depth toxicological review, a clinical study, and studies on patterns and likelihood of use.”

The depressing fact is that this entire mess could have easily been avoided by starting from the premise that the category of e-cigarettes prima facie meets the public health test as set out in the Tobacco Control Act—which clearly it does—and then addressing specific issues regarding the safety of individual products by setting clear standards and requiring that producers demonstrate that they meet those standards.

If regulators are concerned about the possibility that the juice contains too much diacetyl and acetyl propionyl (the chemicals that in large enough quantities can cause “popcorn lung”), or nitrosamines (among the nastiest cancer-causing chemicals that are found in tobacco products), or other chemicals that when heated to the normal temperatures of a vape device form nasty substances (such as formaldehyde) the FDA could and should set limits on them.

If FDA is concerned about the potential for an e-cigarette device to blow up, it should require devices to conform to the ANSI/UL standard. (Yes, there is already an ANSI/UL standard for e-cigarettes.)

Most all mom-and-pop vape stores could afford to buy United States Pharmacopeia-grade nicotine and other similarly pure ingredients. They could also afford to send samples of their juice to an approved chemistry lab for evaluation to ensure that they met the standards. And they surely would have done so gladly, knowing that they would be ensuring not only compliance with FDA rules but also the safety of their customers.

The current regulatory framework for approving e-cigarettes isn’t so much a pathway, as advertised, but a mountain accessible only to a few. The consequence of the FDA’s rejection of e-cigarette products is that many businesses will now close and smokers will lose an incredibly effective alternative to traditional cigarettes that has helped millions of people quit smoking. If fewer people switch from cigarettes to e-cigarettes, it means more Americans will die from smoking-related diseases.

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Given current inefficient mosquito-control methods, the high burden of vector-borne diseases, and the positive results of previous field trials of the OX5034 Aedes aegypti mosquito, Reason Foundation urges the Environmental Protection Agency (EPA) to move forward as quickly as possible in approving Oxitec’s request for an experimental use permit to undertake additional field trials in Florida and California. Unfounded fears about this safe technology should not prevent it from being implemented as part of the solution to a serious health problem.

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The COVID-19 pandemic and associated shutdowns and stay-at-home orders have dealt a significant blow to the United States economy. U.S. gross domestic product (GDP) fell by an annualized rate of 30 percent during the second quarter of 2020 and unemployment rose above 14 percent in April but has been declining since then; at the end of October it was 6.9 percent. In response, the federal government has passed numerous bills intended to stimulate the economy.

Between March and July of 2020, numerous policymakers and pundits published reports and proposals claiming that COVID-19 offers an opportunity to make the economy more equitable and environmentally friendly. Of particular note, now-President Joe Biden proposed a $2 trillion plan that aims simultaneously to stimulate the economy, achieve net-zero carbon emissions by 2050, and create “millions of good, union jobs.” Even a small group of Republican senators wrote in support of significant additional subsidies to renewable energy.

This policy brief considers the main “green recovery” proposals and evaluates whether they would achieve their stated objectives. Part 2 summarizes the reports and proposals.  Part 3 analyses a selection of the proposals and claims that underpin them.  Finally, Part 4 offers some conclusions.

Full Policy Brief: Would a Green Fiscal Stimulus Help the Environment and the Economy?

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The systems put in place in other countries relied in part on actions taken by government-run health systems. While some states might choose to follow that practice, similar systems can be implemented largely or even completely by the private sector. Moreover, as Iceland has demonstrated, such systems can be implemented entirely voluntarily. And regardless of whether states and/or municipalities choose to implement such systems, it is not necessary to create new federal or state agencies in order to achieve any of this.

This brief describes such an approach. To do so, it seeks to integrate insights from the relatively successful strategies adopted in Taiwan, South Korea, Hong Kong, Singapore, Iceland and Germany, along with novel technologies that enable contact tracing and sharing of verified COVID-19 status while preserving privacy and autonomy. And we add to this another potentially highly cost-effective strategy, symptom monitoring, which was not available earlier due to lack of data, but can now be implemented and in so doing could help identify clusters almost as effectively has extensive testing and at much lower cost.

Finally, we discuss ways in which data from testing and symptom monitoring can be used by companies and other organizations to determine what kinds of activities and what kinds of personal protective equipment are appropriate given the level of infection risk implied by the data.

Full Brief — Monitor-Test-Trace-Isolate: Policies for Understanding and Reacting to COVID-19 Infections

This brief is part of a series: Strategies for Combating and Recovering From the Coronavirus Pandemic.

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We emphasize that the purpose of these tools is to enhance trust and improve information sharing, so that individuals can move around more freely than would otherwise be the case in a world still filled with grave fear of a deadly disease. While such tools offer intrinsic benefits, they may also offer an alternative to the mandatory restrictions under which so many of us were or are laboring and which might otherwise be re-imposed should another wave of disease occur.

A COVID-19 status app with the characteristics described in this brief has the potential to enable businesses and other organizations to reopen more fully, more quickly. It could also be of great value as part of an alternative to lockdowns should there be a second wave of COVID-19—or should another pandemic hit. Given the economic devastation wrought by the combination of COVID-19 and the lockdowns, it seems likely that such an app would be welcomed as an autonomy-preserving, private, voluntary alternative.

Full Brief — The COVID-19 Status App: A Risk-Based Tool to Enable Businesses to Reopen While Limiting the Spread of Sars-Cov-2

This brief is part of a series: Strategies for Combating and Recovering From the Coronavirus Pandemic.

The post The COVID-19 Status App: A Risk-Based Tool to Enable Businesses to Reopen While Limiting the Spread of Sars-Cov-2 appeared first on Reason Foundation.

We emphasize that the purpose of these tools is to enhance trust and improve information sharing, so that individuals can move around more freely than would otherwise be the case in a world still filled with grave fear of a deadly disease. While such tools offer intrinsic benefits, they may also offer an alternative to the mandatory restrictions under which so many of us were or are laboring and which might otherwise be re-imposed should another wave of disease occur.

As state and local governments remove COVID-19-related restrictions on individuals, businesses, schools, churches and other organizations, we believe those organizations would in many cases benefit from implementing some or all of the actions we have outlined in this brief, clear delineation of the types of activities that may be undertaken and under what circumstances, application of best industry practices, and standards that embody those best practices. By so doing, organizations can help limit the likelihood of further transmission of SARS-CoV-2, enhance their reputation, and build trust among employees, customers, and members. But it cannot be stressed more strongly that the decision to implement these actions must be voluntary.

Each organization has better knowledge about its particular circumstances than does the government and, even though mistakes will be made, must be free to choose which measures to take. Moreover, as the incidence of COVID-19 declines in one place and then the next, such freedom of action affords organizations the opportunity quickly to remove measures that should only be in place when a substantial risk of infection is present.

Full Brief — Risk-Based Tools to Limit the Spread of Sars-Cov-2: Information on Activity Risks and Industry Standards

This brief is part of a series: Strategies for Combating and Recovering From the Coronavirus Pandemic.

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The report begins with a brief review of evidence regarding policies undertaken to address the Spanish Flu pandemic of 1918-19. Part 2 considers the policies implemented by jurisdictions that rapidly brought COVID-19 under control. Part 3 compares and contrasts policies undertaken by a range of different jurisdictions to contain COVID-19 once it has spread. Finally, Part 4 draws some tentative conclusions.

The evidence shows that quick action to identify infections and encourage and assist response were most crucial to limiting the spread of SARS-CoV-2, reducing the incidence of COVID-19, and limiting the effect on this economy. Jurisdictions that failed to act quickly have generally experienced much more severe outbreaks—and worse economic outcomes. However, as the contrasting experiences of Veneto and Lombardy, Germany and the U.K., and San Francisco and New York show, there is very substantial variation in outcomes even between these jurisdictions.

Some of these differences in outcome likely relate to the extent of connections to other jurisdictions with significant COVID-19 outbreaks, as well as local population density, and (related to population density) the presence of urban mass transit systems. But there is little doubt that much of the variation in outcomes is due to the effectiveness of their systems to contain clusters.

Full Brief — COVID-19: Lessons From The Past and Other Jurisdictions

This brief is part of a series: Strategies for Combating and Recovering From the Coronavirus Pandemic.

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To avoid similar tragedies, many jurisdictions, ranging from cities to entire countries, implemented mandatory lockdowns. Superficially, these seemed to have the desired effect of slowing transmission in the short term. However, while some studies find lockdowns effective in slowing transmission of the virus, several studies suggest that much if not all the reduction in transmission would have occurred anyway due to voluntary measures.

Meanwhile, the lockdowns themselves have had devastating effects on economies, societies and even human health. Something needed to be done, but lockdowns are a blunt instrument, affecting all activities and locations equally even when the risks of different activities, businesses, workplaces, and locations are also quite different. The costs of not looking for more-refined ways to reduce risks from the virus were enormous.

The measures discussed here offer an adaptable range of options, recognizing that no single approach will work best everywhere. Individuals and businesses in rural areas may not need to use as many tools to reduce risk as those in urban areas. Communities with more vulnerable populations, such as retirees, may need to take different measures from college towns. As governments consider policies to prevent a second wave, more data-driven approaches based on test and trace are desirable.

Full Brief — COVID-19 Lockdown Problems and Alternative Strategies to Reopening the Economy

This brief is part of a series: Strategies for Combating and Recovering From the Coronavirus Pandemic.

The post COVID-19 Lockdown Problems and Alternative Strategies to Safely Reopening the Economy appeared first on Reason Foundation.

1. COVID-19 Lockdown Problems and Alternative Strategies to Reopening the Economy
2. COVID-19: Lessons From the Past and Other Jurisdictions
3. Risk-Based Tools to Limit the Spread of Sars-Cov-2: Information on Activity Risks and Industry Standards
4. The COVID-19 Status App: A Risk-Based Tool to Enable Businesses to Reopen While Limiting the Spread of Sars-Cov-2
5. Monitor-Test-Trace-Isolate: Policies for Understanding and Reacting to COVID-19 Infections
6. Vital PPE: How To Increase Production And Distribution Of Masks Amid Covid-19

Many countries have reacted to the COVID-19 pandemic by locking down whole economies. While this blunt approach may have reduced transmission of the virus, it has also starved economies, making the medicine often as bad as the ailment. It has become increasingly clear that a one-size-fits-all lockdown approach was the crudest and costliest way to dampen the spread of the virus. A much more refined approach would have been at least as effective and far less costly. It is now time to end the lockdowns and switch to a decentralized approach that enables individuals, businesses, and communities to assess and manage risks.

Variants of such an approach have been used by several countries that have successfully controlled their coronavirus outbreaks by curtailing transmission from the most likely sources and protecting the most vulnerable while allowing for others to tailor their activities according to the risks using a range of risk management tools to enable for a safe reopening of the economy. Meanwhile, in the U.S., many states are not taking advantage of those lessons learned as they gradually end their lockdowns.

We undertook an extensive review of evidence regarding approaches to (a) limiting the spread of SARS-CoV-2, the virus that causes COVID-19; (b) reducing mortality from COVID-19; (c) enabling the maintenance of supply chains and essential services; (d) enabling a more widespread opening of the economy once effective measures have been put in place to reduce transmission and contain local outbreaks.

Based on this review, we identified approaches addressed in a series of policy briefs that, if taken together, form a coherent and effective strategy. Many of these actions are best undertaken by the private sector. Some require government action—though in most cases that action is at a relatively decentralized level: town, county, city, or other local jurisdiction, rather than state or federal. Overall, they can be construed as a public-private partnership.

The post Strategies for Combating and Recovering From the Coronavirus Pandemic appeared first on Reason Foundation.

The Florida Department of Health provides a COVID-19 dashboard with data organized statewide, by county and by ZIP code that focuses on testing, cases and deaths. The Tampa Bay Partnership provides a dashboard that focuses on testing, cases and hospital utilization. The graphs below are taken from that site for the Sarasota area on May 28.

Although this information is useful, on its own it doesn’t help people make good decisions about how to manage the risks associated with COVID-19. Some people, especially those at high risk of severe health consequences from the coronavirus, want information that helps them avoid exposure. Others might only want to know if they’ve been exposed, if they are infected or if community cases are spiking, calling for renewed precautions.

The first information people need, which is not readily available, is about the relative risks of various activities and situations. The one-size-fits-all “just stay home“ approach of the lockdowns does not make sense, nor works well, except possibly as a very short-term emergency measure. It is good that Florida is removing the lockdowns. But now people need risk-based information to safely resume normal activities.

For example, we know there’s vastly less risk of transmission out of doors than inside. We know there’s less risk with less crowded and better ventilated indoor settings. We know there’s less risk if people are wearing masks that prevent them from coughing or sneezing or otherwise releasing infected droplets into the air. We know that it’s possible to get the virus from touching a surface and then touching your face — but that most transmission is through the air. We know that older people and those with certain preexisting conditions are much more likely to die or have serious illness if they contract the coronavirus.

Ideally, people who are or might have been infected with the coronavirus should self-isolate, get tested, and, if they have even mild symptoms, seek treatment. But they still need access to pharmacies, doctors, groceries, etc., and it’s probably good for them to get exercise and sun. So they need to know the risks associated with these activities and how to avoid exposing others. But COVID-19 is more likely spread by people who don’t know they’re infected and who therefore don’t take precautions to protect others. In other words, we lack testing.

Unfortunately, governments seem very hesitant to give useful information to people. Indeed, governments often seem reluctant to let patients have their own information. A few years ago, the Food and Drug Administration stopped 23andMe from providing some health information pertaining to a person’s genetic code directly to that person on the grounds that some people would not know how to interpret the information. More recently, the FDA shut down a COVID-19 testing program backed by Microsoft founder Bill Gates because it allows home testing and provides information directly to patients. Such paternalistic efforts to prevent people from having information that authorities are afraid they will misinterpret are always problematic, but during this pandemic they can be especially harmful.

Other information would be useful as well. For example, knowing the actual incidence of the virus in a location or neighborhood would help us know the likelihood of encountering someone who is infected. This information can best be obtained by testing a more-or-less random sample of the population. But testing is now mainly being done on people who have symptoms or have been exposed to the virus or have workplace reasons to be tested. The latter is important too, but it is clearly skewed toward people more likely to be infected and to test positive, so it doesn’t give a good picture of how many people have the disease, or where, and makes it more difficult to take precautions.

Testing a greater fraction of the community and publicizing that information can also be used to help everyone resume activities while continuing to take appropriate action to manage risks. Precautions like social distancing and better sanitation help a lot, but they can be improved with good information.

One source of information is contact tracing, which helps identify people who have had contact with an infected person and therefore might have been infected themselves. This can now be done quite effectively with contact-tracing smartphone apps. These work by sharing anonymized information, voluntarily entered into the app, with others who also have the app running. Users of the app are then notified if a person with whom they have had contact subsequently becomes infected. (Full disclosure: One of the authors is involved in a consortium developing such an app.)

Already, a number of businesses, events organizers, churches and other organizations are looking at how having employees, participants or members use one of these apps might help everybody better manage their risks of being infected. If you get a warning from your app that you might have been exposed, you can go get tested and meanwhile inform your employer, who might want to keep you away from other employees and customers for a few days until the test results are in. And maybe you won’t go to church or a club event or something else until you know your test results.

Although information about the prevalence of COVID-19 in an area, combined with status and contact tracing apps, can help individuals and private organizations better manage risks, there are ways state and local governments can use testing data and information as well. If positive tests indicate a certain area — as broad as a part of town or a certain beach or as narrow as a certain resort or business — is having a surge in the incidence of the coronavirus, they can work with people there to try to figure out what’s going on and inform everyone who might have been exposed, so they can voluntarily isolate and get tested. At the same time, they might be able to see that certain areas or activities, such as a beach, park or facility, are not experiencing unusual numbers of positive tests and therefore worry less about potential transmission there. It’s all about using the data to help focus energy and resources.

For these ideas to work most effectively requires extensive testing, widespread availability of testing and effective communication of anonymized test results. Although the amount of testing has been ramping up nationally, within Florida, and even locally, there is still a ways to go before these risk management tools can be widely utilized. This should be a priority for governments at all levels.

A version of the column originally appeared in the Sarasota Observer. 

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Many countries have reacted to the COVID-19 pandemic by locking down whole economies. While this blunt approach has successfully reduced transmission of the virus, it has also starved economies, making the medicine often as bad or worse than the ailment. A more-tailored risk-based approach, as has been used by countries that have successfully controlled their outbreaks, would curtail transmission by the most likely sources, while allowing for more individual movement by the least likely transmitters, providing for the safest reopening of the economy.

We undertook an extensive review of evidence regarding approaches to (a) limiting the spread of SARS-CoV2, the virus that causes COVID-19; (b) reducing mortality from COVID-19; (c) enabling the maintenance of supply chains and essential services; (d) enabling more widespread opening of the economy once effective measures have been put in place to reduce transmission and contain local outbreaks.

Based on this review, we identified several actions that, if taken together, form a coherent and effective approach. Some of these actions are best undertaken by the private sector. Some require government action—though in most cases that action is at a relatively decentralized level: town, county, city, or other local jurisdiction, rather than state or federal. Overall, they can be construed as a public-private partnership.

A. Measures to identify the scale of the infection, including hotspots, and contain it

The following three steps are intended to discover how widespread COVID-19 is in a jurisdiction, identify emerging virus hotspots or “clusters”, contain those clusters and reduce transmission generally. These steps should be implemented as soon as possible.

1. Undertake population screening for the virus (SARS-CoV2), as well as antibodies to the virus, in order to locate clusters of current and past infection.

2. Simultaneously undertake targeted testing and contact tracing, both manually and through the use of contact tracing apps, in order to identify as far as possible all those who have the virus.

3. Incentivize full isolation for all who test positive for the virus and anyone identified as at risk due to contact with an infected person, until they are able to have a test. Retest individuals for both virus and antibodies after 2 weeks if non- symptomatic at that time.

B. Support the development of risk-based systems that will enable individuals and companies to engage in an increasingly wide range of economic and social activities

The next four steps are intended to enable individuals and companies to understand better the infection risks associated with particular actions and interactions, and to set rules that appropriately limit those risks.

By taking these steps, it should be possible to implement a phased reopening of businesses and other institutions, and relax stay-at-home requirements, while maintaining appropriate mitigation measures.

The objective is to replace a system that punishes the vast majority of people and businesses with one that requires only those who are infected or likely infected to self- isolate. Those least likely to be infected are able return to work and more normal activities in relative safety.

4. Support the development of an infection-risk based Red-Amber-Green (RAG) CV19 status system for individuals, activities and jurisdictions, which can be used to determine who can and cannot do what, where.

5. Support the use of privacy- and-autonomy-protecting authenticated CV19 status app(s) for access to activities. The purpose of these apps is to enable individuals voluntarily to share their status with others, in order to ensure both parties are able to take appropriate measures to limit risk. The apps could also be tied to a contact tracing system, thereby improving the effectiveness of that system.

6. For many activities in many places, it will likely be necessary to use masks and other personal protective equipment (PPE). Given the current lack of adequate PPE supply, it is important that any unnecessary barriers to production and distribution be removed. In particular, current federal regulations must be relaxed.

7. Businesses should be encouraged to develop best practices for limiting exposure to CV19, which might be formalized as “CV19 standards”. Given concerns about liability for negligence resulting from exposure of staff and customers, Congress should consider limiting liability for businesses that adopt these standards.

C. Encourage the development of effective therapies and vaccines

The final steps in the plan relate to the development of therapies and vaccines. It is expected that the former will reduce the severity of COVID-19 and lower the mortality rate. It is hoped that the latter will enable widespread immunity and hence return to normalcy.

8. Incentivize the rapid development of safe and effective treatments and vaccines. New drugs and vaccines usually take months or even years to test in trials involving thousands of people. Since time is of the essence, new, more efficient solutions are needed—and to a considerable degree are being applied. This has required the relaxation of some regulations.

9. Once effective treatments are available at sufficient scale, so that the case fatality rate is substantially reduced, it may be possible to adjust the risk- proportionate restrictions on individuals, activities and jurisdictions. Given that the main justification for the restrictions was the feared high rates of hospitalization and fatality, which threatened to overwhelm healthcare systems, it makes sense that as effective therapies arrive, the curve will automatically be flattened, so the restrictions can be removed.

10. Once an effective and safe vaccine is available and deemed to be “preventative,” it will be made freely available to all. Most restrictions on vaccinated individuals will be removed. Once a sufficient proportion of the population has immunity, either from the vaccine or having COVID-19, the remaining restrictions may be removed.

Actions 1 through 7 can and should be implemented more-or-less simultaneously. This would enable the rapid removal of many restrictions on movement, while simultaneously protecting the most vulnerable and containing the spread of the virus. It is not necessary to test everyone before removing many of these restrictions.

These measures offer an adaptable range of options, and no one approach will work everywhere. Rural areas may not need to use as many tools to reduce risk as urban areas do, and communities with more vulnerable populations, such as more retirees, may need to take different measures from college towns. In all cases, more data-driven approaches based on track and trace are desirable.

For similar reasons, some jurisdictions will be able to open up more rapidly than others, based on the assessment of local risk factors. Other jurisdictions may have to remain subject to more restrictions for a while longer.

Working Paper: An Evidence-Based Approach to Ending the Coronavirus Crisis

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The original CAFE standards sought to reduce U.S. dependence on foreign oil. While that remains one accepted purpose of current standards, the rationale has now largely shifted to reductions of emissions—especially those associated with climate change.

In 2012, NHTSA and the Environmental Protection Agency (EPA) issued a joint rulemaking for CAFE and GHG emission standards covering the period 2017–2021 and describing “augural” (i.e. intended) standards for 2022–2025. In 2018, EPA and NHTSA issued a proposal for revised standards for 2021 and new standards for 2022–2025 under the auspices of the proposed Safer Affordable Fuel-Efficient Vehicles rule (“SAFE” rule).

This is the fourth in a series of briefs published by Reason Foundation explaining and evaluating CAFE and ZEV standards. It incorporates lessons from those briefs and other studies that consider the overall effect of CAFE standards, as well as more recent work looking at revisions to federal CAFE and GHG standards under the proposed SAFE rule.

Fuel economy standards undoubtedly result in harmful distortions to markets, undermining choice and competition and leading overall to a reduction in beneficial innovation and economic growth. To the extent that reductions of various emissions (such as NOx and CO2) are desirable, there are more economically efficient ways to achieve these reductions, such as taxes and, even better, mileage-based user fees (MBUFs).

In terms of its effects on the economy, the SAFE rule thus represents a substantial improvement over the existing CAFE and GHG emission standards for MY 2017–2021 and an enormous improvement over the augural standards for 2022–2025. The rule will likely save consumers and manufacturers tens if not hundreds of billions of dollars, freeing up resources to be spent on innovation that will increase rates of economic growth and result in vehicles that consumers actually prefer.

Looking to the future, it seems likely that vehicle fuel economy will increase even without fuel economy standards, as vehicle manufacturers implement cost-effective improvements and respond to the felt needs of consumers, especially in the face of gas prices that are generally higher than during the late 1980s and 1990s.

In a study published in 2017, Kenneth Small used an adapted version of the National Energy Modeling System to estimate that if NHTSA and EPA were to leave the average CAFE requirement for light-duty vehicles (LDVs) at 33.7 mpg, the average fuel economy for new cars would rise from 36.7 mpg in 2015 to 41.7 mpg in 2025, while the fuel economy of new light trucks would rise from 27.3 mpg to 35.6 mpg over the same period.

In other words, the average fuel economy for new LDVs would rise to 38.9 miles per gallon (this is about 2 mpg more than the mandated increase in fuel economy under the proposed SAFE rule). Small assumed that the price of a gallon of gasoline would rise to $3.58 by 2025, which is lower than the $3.78 assumed by NHTSA and EPA in their 2012 rulemaking but higher than the $2.93 assumed in the SAFE rulemaking.

These findings are relevant because they suggest that if gas prices are higher than expected in the proposed SAFE rule, the fuel economy standards could cease to be binding, thereby reducing the costs they impose on society. It is difficult to predict the future of gasoline prices, but it seems clear that consumers and manufacturers adjust quickly to unexpected price changes, whereas mandated fuel economy standards run the risk of becoming either ineffectual or seriously harmful.

The Economic Consequences of Fuel Economy Standards

Related Research:

The Effect Of Corporate Average Fuel Economy Standards On Consumers

CAFE and ZEV Standards: Environmental Effects and Alternatives

CAFE Standards in Plain English

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Many of the problems associated with NEPA emanate from its lack of a requirement to consider costs or even prioritization. This is true both for the original mandate and for the 1977 CEQ regulations that currently govern implementation of NEPA. Other problems are related to NEPA being ill-defined, broad and vague.

In 2018, Congressman Rob Bishop (R, Utah) observed in a congressional hearing, which he hosted as then Chairman of the House Natural Resources Committee, that “Due to NEPA’s vague and ambiguous language, the law’s purpose and administration has largely been defined not by congressional intent or agency rulemaking, but rather litigation, court rulings, and ad hoc decision making of agencies operating out of fear of the next lawsuit for projects large and small. As a result, the NEPA process is now an ever-expanding coagulation of regulation, guidance, and caselaw.”

Meanwhile, as Daniel Mandelker has noted: “Experience has shown that [the NEPA] process is over-elaborate, redundant, and not responsive to the needs in NEPA decision making.”

Not unrelated is the Equal Access to Justice Act, which seemingly enables special interest groups (who claim to represent the public broadly) to litigate with impunity.

As Mark Rutzig has noted, the resulting lawsuits by environmental groups have “vastly enlarged the already unreasonable NEPA reporting duties mandated by CEQ.”

But Rutzig notes that, “The CEQ regulations—which fill over 30 pages of the Federal Register—lie at the heart of NEPA’s unexpected impact.”

The proposed rulemaking, with its goal of “more efficient, effective, and timely NEPA reviews” is a venerable attempt to update the 1977 regulations. This comment analyses whether these overall objectives will be accomplished by the proposed rulemaking and what other measures might be taken to achieve these objectives. It focuses on the broad swath of reforms proposed in the NPRM and some specific elements of those reforms that seem particularly pertinent.

The comment begins with a description and analysis of proposed caps on the amount of time agencies take to complete final environmental impact statements (EISs) and the number of pages that may be included in such EISs. It focuses in part on problems created by the NEPA process for the Federal Highway Administration (FHWA), Bureau of Land Management (BLM), and U.S. Forest Service (USFS), and considers whether the proposed rulemaking will affect the ability of the FHWA to advance with highway infrastructure projects, and the USFS/BLM effectively to carry out their respective agency duties (i.e. land management).

The comment then offers constructive suggestions for additional reforms that might further mitigate the problems imposed by NEPA.

The final section raises some particular concerns and questions that should be considered, specifically because the proposed rulemaking could be more aggressive. As a public policy tool, NEPA can certainly enable agencies to achieve multiple goals—including infrastructure development, superior management of public lands, and environmental protection.

Reason Foundation Comment On: Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act. CEQ–2019–0003 (85 FR 1684)

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1. Patients substituting marijuana for other drugs, including opiates.

2. Marijuana consumers substituting legitimate marijuana for illicit marijuana.

3. A significant reduction in crimes associated with marijuana production, distribution, sale and possession.

4. Reductions in other crimes, including some property and violent crimes.

These effects vary by location, with reductions in property and violent crimes being most pronounced in locations close to the Mexican border due to the diminution of activities of Mexican drug trafficking organizations and affiliated gangs. Medical marijuana legalization also appears to be associated with a reduction in drunk driving.

The effects of the legalization of marijuana for recreational use are less clear. In addition, there is evidence that depenalization of possession increases the demand for marijuana. In states that have not also legalized marijuana either for medical or recreational use, this may lead to increases in crime (though the evidence is weak). However, in states that have legalized marijuana for either medical or recreational use, any adverse effects of such increased demand are more than offset by reductions in crime associated with legalization.

The largest benefits in terms of crime reduction, with the possible exception of traffic-related crimes, come from the legalization of marijuana for adult recreational use. Moreover, given the strong relationship between the reduced price of marijuana and reduced criminal activity associated with marijuana production, distribution and supply, these benefits are likely to be stronger in markets that are more competitive.

Full Brief: Does Legalizing Marijuana Reduce Crime?

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Hunger in its various forms (e.g. malnutrition, famine) is a serious threat to human health:

People who are chronically hungry are undernourished. They don’t eat enough to get the energy they need to lead active lives. Their undernourishment makes it hard to study, work or otherwise perform physical activities. Undernourishment is particularly harmful for women and children. Undernourished children do not grow as quickly as healthy children. Mentally, they may develop more slowly. Constant hunger weakens the immune system and makes them more vulnerable to diseases and infections. Mothers living with constant hunger often give birth to underweight and weak babies, and are themselves facing increased risk of death.

It is often said that “hunger does not discriminate.” Yet, it does.

This brief seeks to show how burdensome and excessive regulations block the potential benefits of breakthrough technological innovations from reaching vulnerable populations.

Parts 2 and 3 describe past and current trends in the prevalence of hunger worldwide.

Part 4 discusses the role of technological innovations (the Green Revolution) in achieving progress on hunger in the past few decades. Part 5 addresses the promising benefits of several existing and emerging technologies, while Part 6 examines how the current regulatory environment erects costly barriers, keeping these technologies from reaching vulnerable populations.

Finally, this brief offers recommendations to help solve hunger by reforming current regulatory regimes that block the diffusion of beneficial technologies.

Full Brief: How Burdensome Regulation Obstructs Hunger Relief

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Given the weak evidence for a causal relationship between youth marijuana use and subsequent use of other drugs, policymakers should not be overly concerned about the brain chemistry gateway effect.

Policy Brief: The Gateway Effect of Marijuana

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Corporate average fuel economy (CAFE) standards were first introduced by Congress in 1975, ostensibly to reduce US reliance on foreign oil. The standards have been tightened several times since then, most recently in 2016, when they were combined with standards intended to reduce greenhouse gas emissions. Those standards, which are binding, peak at 41 miles per gallon in 2021. The Obama administration also proposed raising the standards after 2021, suggesting that they should reach 54.5 miles per gallon by 2025. It is these latter, non-binding standards that now won’t be implemented.

Economists have long been skeptical of fuel economy standards because they are an inefficient means of reducing fuel consumption and emissions. The majority of U.S. consumers demonstrably prefer larger, more powerful vehicles, such as pickups and SUVs. But vehicle manufacturers continue to produce large numbers of small vehicles, which have higher fuel economy, in order to comply with fuel economy standards. As a result, manufacturers and dealers are forced to discount the prices of new cars, undermining their overall profitability.

In addition, fuel economy standards result in a “rebound” effect: when it costs less to drive each mile people tend to drive more, which means more emissions. Moreover, by increasing the price of new vehicles, fuel economy standards incentivize consumers to keep older vehicles on the road longer. This is especially true for larger, more powerful “gas guzzlers.” Studies suggest these actions by consumers reduce the potential fuel savings and emissions by 25 to 50 percent.

In a recent study for Reason Foundation, Arthur Wardle and I conservatively estimated that implementing the proposed 2025 standards would reduce annual carbon dioxide emissions by 50 million tons at a cost of $50 billion. That puts the cost of CO2 reduced at an astronomical $1,000 per ton – about 50 times the “social cost of carbon” estimated by the EPA during the Obama administration.

As I noted in another recent study, the social cost of carbon is likely less than $10 per ton (and could be zero). So, had the EPA proceeded with the Obama-era proposals, it would have imposed costs at least 100 times greater than the benefits. Those costs would have fallen disproportionately on poorer consumers.

In a study published last week, I calculated that a person purchasing a three-year-old pickup is already paying about $100 per year more for their vehicle and fuel than they would be in the absence of the new CAFE standards. As fuel standards become more onerous, which they will until at least 2021, the net cost is likely to increase. If the more ambitious Obama-era standards had been imposed, consumers could have been paying $500 per year more than necessary by 2025.

Other policies are better suited to address the pollution associated with vehicle use. Arguably the best policy would be to charge a fee per mile driven, varied according to the time and location of the driving, as well as the emissions from specific vehicles. Such a “mileage-based user fee” could ensure that drivers pay for the harm they generate – and would incentivize drivers to drive less when the harm they cause is greater.

Even the existing gas tax is more efficient than fuel economy standards. The University of California, San Diego, economist Marc Jacobsen estimates that using fuel economy standards to reduce fuel use and emissions costs three to five times as much as a gas tax. In addition to harming consumers and the economy, fuel economy standards are bad for the environment. As noted, they encourage consumers to use their cars more than they otherwise would and they encourage consumers to keep “gas guzzlers” on the road longer for longer. And because these effects drive up the cost of reducing emissions, they effectively waste resources that could be spent on other environmental amenities.

Unfortunately, Congress has tied the hands of agencies that set fuel economy standards, preventing them from rolling back existing standards that are already in force. It would take an act of Congress to scrap those standards.

EPA says it will produce new emission standards for 2022, and beyond, that are less onerous. Given that the existing standards already impose costs greater than the benefits, the best outcome would be for EPA not to increase the standards after 2021.

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Although these EMS programs are voluntary, the U.S. Department of Energy (DoE) has been involved in their development and diffusion. This brief considers the extent to which the standards are likely to achieve their aims and the role of DoE in advancing these standards.

Parts 1 and 2 describe the ISO 50001 EMS and the DoE’s involvement in its proliferation, which resulted in the creation of the Superior Energy Standard (SEP) standard.

Part 3 discusses the intended benefits of EMSs and whether DoE’s involvement is conducive to achieving those benefits.

Finally, this report offers recommendations for restructuring the programs sponsored by the DoE.

Full Brief: Voluntary Energy Standards: ISO 50001 and the Superior Energy Standard

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