Analysts who believe in the free lunch use conceptually flawed studies to support their claims. Also they are unable to explain why a free market would leave such cost saving on the table rather than adopt conservation measures without government prodding. Instead, they offer vague explanations of market barriers including inappropriate lifestyle choices and demand government regulation to reduce what they see as wasteful use of energy. 16 Hidden Costs of Policy. Economic policy often carries costs that are not captured by traditional welfare-theoretic measures.
Regulatory inefficiency is one way costs can escalate.
When regulation instead of broad market incentives such as taxes is used, the lowest-cost methods of energy conservation can be ignored. Interference in free trade is another way policies to reduce CO 2 emissions can have hidden costs. The countries that are the most dependent on imported energy have been the most aggressive in promoting global cooperation to reduce CO 2 emissions. More self-sufficient countries, such as the United States, have been more reluctant to participate. Within the United States, energy conservation has a decided tilt toward the conservation of oil, the fuel for which we are most import-dependent.