Creating dependable markets and driving demand for low-carbon energy is critical to giving the private sector the security it needs to make capital-intensive investments. One simple and budget-friendly approach is to adopt new standards and codes that require policymakers and firms to adopt low-carbon, high-efficiency policies and practices. Some examples from ACES include:
- A renewable electricity standard, or RES, requiring every state to meet a set percentage of its power needs through renewable generation.
- An energy efficiency resource standard, or EERS, requiring every state to decrease its energy consumption through efficiency measures.
- Updated codes to increase home appliance efficiency.
- Updated codes to increase residential, commercial, and industrial building efficiency.
These are all examples of policies that create demand and help develop new markets and new industries. The net social benefits of these initiatives are quite large, but they are not being captured due to failures in the current market. Public policy intervention can help.
The government procurement process is an additional tool to help deploy new low-carbon energy technologies. Government procurement represents a source of stable and sizeable demand that can encourage businesses to ramp up production and achieve the economies of scale necessary to bring down the marginal costs of each new unit. This, in turn, can make the given technology more appealing to private consumers—another example of using public policy to recognize and capture the true net social benefits of the clean-energy transformation.
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