Social policies must avoid rigidity and loopholes, and adopt more market-based experiments.

We all want to help the environment. Sometimes, though, the initiatives we create to reduce our reliance on fossil fuels can turn out to be bad for the planet.

In 2003, a UK council ruled that any mid- or large-scale development must have the ability to produce, on site, at least ten percent of the energy required by the building.

The problem was that the council didn’t stipulate that this renewable energy had to be used! Another problem with the rule was the specification that the energy be created on site: clearly, a wind turbine placed on top of a building in a crowded area is less effective than one positioned on a nearby hill.

A similar situation has developed in the United States, where, in 1975, standards were introduced to improve the fuel efficiency of vehicles. However, because there were fewer regulations for light trucks, manufacturers created the “sports utility vehicle” (SUV). This bore enough of a resemblance to a light truck to convince regulators it should be subjected to the same standards of fuel efficiency. The result was that the efficiency of vehicles sold in the United States actually declined between 1988 and 2003.

A more fruitful experiment that could help to reduce carbon emissions is a carbon tax, as this would guide commerce toward cheaper, more energy-efficient products.

Much of what we consider to be environmentally friendly is actually not. If you live in the United Kingdom, it may seem more ethical to buy locally grown tomatoes than Spanish imports. Yet the locally grown produce actually results in greater carbon dioxide emissions.

Why? Growing tomatoes in Britain requires heated greenhouses, whereas in Spain, they grow in direct sunlight. Even accounting for their transportation to the United Kingdom, Spanish tomatoes use less fossil fuel.

A better way to reduce carbon emissions is to impose a $50 tax on every ton of carbon emitted by fossil fuels. This would raise the current market price, incentivizing us to drive less or use less electricity, and would encourage us to choose renewable energy sources