Searching for Hidden Costs

Gloria Helfand, et al

Searching for Hidden Costs: A Technology-Based Approach to the Energy Efficiency Gap in Light-Duty Vehicles

Gloria Helfand, et al: The benefit-cost analysis of standards to reduce vehicle greenhouse gas emissions and improve fuel economy by the U.S. Environmental Protection Agency (EPA) and the Department of Transportation (DOT) displayed large net benefits from fuel savings for new vehicle buyers. This finding pointed to an energy efficiency gap: the amount of energy-saving technology provided in private markets appeared not to include all the technologies that produce net private benefits. The finding of a gap involves three pathways. First, the energy-saving technologies must be effective in achieving fuel reductions. Second, the cost estimates for those technologies must be lower than the present value of fuel reductions. Third, possible “hidden costs” — undesirable aspects of the new technologies – must not exceed the net financial benefits. This study examines the existence of hidden costs in energy-saving technologies through a content analysis of auto reviews of model-year 2014 vehicles. Read full paper (PDF)