The Fraser Institute

The Fraser Institute

May 28, 2015 05:30 ET

The Fraser Institute: Governments Missing the Mark on Energy and Environmental Regulations

TORONTO, ONTARIO--(Marketwired - May 28, 2015) - Policymakers have encumbered Canadians with superfluous and needlessly costly environmental regulations that do little to improve the environment, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"From light bulb bans to plastic bag bans, governments across the country have implemented inefficient policies that put unnecessary constraints on Canadians' personal choices," said Ross McKitrick, Professor of Economics at the University of Guelph and author of The Principle of Targeting in Energy and Environmental Policy.

The study champions the economic principle of 'targeting' which states that in order to minimize the cost of government intervention, regulations aimed at changing a specific aspect of the economy (such as pollution) should take the form of a single rule targeting only that particular aspect.

In other words, if a government wants to reduce the volume of air contaminants emanating from a power plant, they should (as they already do) regulate those contaminants directly in the form of caps on total allowable emissions from power plants.

Instead, policymakers are going beyond that: In addition to implementing targeted hard caps, they've implemented non-targeted polices that limit Canadians' personal choices while having a negligible effect on the problem it purports to solve.

For example, the federal government banned 100 watt incandescent light bulbs because they might be associated with slightly higher electricity consumption and hence, higher CO2 emissions, despite the fact the majority of electricity in Canada comes from non-emitting hydro-electric or nuclear generation. Similarly-in the name of reducing emissions-governments in Canada instituted household appliance standards and ethanol blending mandates.

"What is more efficient: to manipulate Canadians' purchase decisions on thousands of products and appliances or to simply regulate the amount of emissions a power plant is allowed to release?" McKitrick said.

"It's obvious that the latter option is better and will achieve the target at a minimum possible cost while allowing people the freedom and convenience to manage their own consumer choices."

Another example of a non-targeted policy was Ontario's Green Energy Act of 2009 which provided incentives for builders and operators of wind turbines and solar panels.

The government of the day's stated goal was to reduce air pollution emissions but this could have been done directly under conventional air quality legislation.

How would have a targeted policy differed?

"A targeted policy of CO2 offsets and conventional air pollution scrubbers would have achieved the same emission reductions as the Act sets out to but at about one-seventieth the cost," McKitrick said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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