The real market incentives
Suppose I paid you for every pound of pollution you generated and punished you for every pound you reduced. You would probably spend most of your time trying to figure out how to generate more pollution. And suppose that if you generated enough pollution, I had to pay you to build a new plant, no matter what the cost, and no matter how much cheaper it might be to not pollute in the first place.
Well, that’s pretty much how we have run the U.S. electric grid for nearly a century. The more electricity a utility sells, the more money it makes. If it’s able to boost electricity demand enough, the utility is allowed to build a new power plant with a guaranteed profit. The only way a typical utility can lose money is if demand drops. So the last thing most utilities want to do is seriously push strategies that save energy, strategies that do not pollute in the first place.
A new study, McKinsey proposes some projections on how an energy plan could reduce CO2 emissions significantly. It has some neat graphs which I could not transfer to here. It proposes that change might not be as expensive as some proclaim.