Annals of Unintended Consequences: California Edition

I like labeling schemes, like Energy Star, that help consumers make more energy-efficient choices. But sometimes policymakers slip up. In California, they’ve just started offering a $200 rebate on new refrigerators whose efficiency exceeds Energy Star requirements by a substantial amount. What could be wrong with that?

A friend in San Francisco writes:

“I just went to the appliance store and they said there was no rebate on ten cubic foot Energy Star fridges, but I could buy a fridge that was two-and-a-half times larger for less money because of the rebate.”

If that sounds bad, it’s because it is. What gives? It’s difficult for small fridges to meet the stringent requirements for the California rebate. (The rebate is technically available to fridges that meet CEE Tier 2 standards. The smallest fridge that meets the standard appears to be 16.5 cubic feet.) This means that one can sometimes qualify for a rebate only by buying a more efficient but larger fridge that uses more energy.

Take a concrete example. Let’s say I’m thinking about buying this 10.3 cubic foot Sanyo refrigerator, which uses 309 kWh/year of electricity, for $463.12. But wait: I can buy this super-efficient (and much prettier) 26.0 cubic foot Samsung, advertised price $605, for only $405 – nearly $60 less – after rebate! Alas, my government-encouraged purchase consumes 543 kWh of electricity each year, a whopping 76% more than the fridge I’d originally planned on buying. Which was probably not the policymakers’ intent.