Four decades of multiyear targets in energy policy: aspirations or credible commitments?

Abstract

A look at the past 40 years of U.S. energy policy provides ample evidence of volatility, including rapidly changing budgets, moving targets, and shifting incentives. Changing policy too often is a serious criticism because systemic inertia—for example, due to the long lifetimes of capital stock and to the atmospheric residence time of CO2—implies a need for persistence in order to achieve social goals. Further, a pattern of failing to meet objectives may reduce the credibility of future targets, and thus reduce the incentives for investment and behavioral change. But changing policy has benefits as well: it allows for adaptive management, experimentation, policy learning, and assimilation of new information. Assembling data on the effectiveness, duration, and ambition of 63 energy policy initiatives with targets ≥5 years, we find: targets were met 64–77% of the time; median duration to target was 12 years; and median rate of change was 2% per year. Significant predictors of success in meeting targets are enforcement, duration, and ambition. These determinants are robust across multiple specifications and definitions of ambition and success. We find a significant decline in ambition over time. Binding targets are much more likely to be met than nonbinding ones, but discretionary clauses completely offset the effect of enforceable penalties on the likelihood of target attainment. WIREs Energy Environ 2014, 3:522–533. doi: 10.1002/wene.116This article is categorized under: Energy Policy and Planning > Economics and Policy Energy Policy and Planning > Climate and Environment