Here’s a nice success story from Ontario: The Great Refrigerator Roundup. If you have a fridge, freezer, or a/c unit that’s older than 10 years, the province will take it off your hands for free. It’s no big deal, really, except that free is an attractive price point compared to the headache of transporting your old fridge, plus paying the disposal charges.

The appliances are then recycled and the refrigerants get disposed of properly. But the best part is simply that they’re no longer plugged in. That means big electricity savings:

For every 10 – 12 fridges removed, one typical Ontario home is effectively removed from the grid forever… A typical fridge built in1986 uses 1,500 kWh, costing $180 per year, while a new ENERGY STAR ® rated fridge will use approximately one-third of the electricity.

As of January, residents had disposed of more than 50,000 appliances this way, which is no surprise given that upgrading to a newer appliance can save so much money. It’s a win for the climate too because the program yields substantial energy savings. (For more wins like this, read Alan’s excellent blog post: Cap and Caulk.)

Now, just imagine how well a program like the refrigerator roundup could work if it were amped up with some auction revenue from cap and trade program. Most obviously, the revenue could simply pay to operate more programs like this, in more places. But we could go further: putting a bounty on old appliances, so that every appliance turned in would earn a reward — maybe a $100 coupon toward a new energy-efficient one. Going further still, a sales tax exemption for energy efficient appliances could make a new model even more attractive. (In fact, British Columbia’s new budget announces just such an exemption, while a similar proposal has been limping along in Washington’s legislature this session.)

Combined, a coupon and a sales tax exemption could shave 25 percent or so off the cost of a basic but efficient new fridge. And that new fridge, of course, will save even more money, maybe $100 or more each year. Sweet.

But we could do even better.

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  • Energy consumers—even smart ones — are notoriously irrational, as Clark is fond of pointing out. Even when something is clearly in their financial interest, they may not do it.

    For the situation I’ve described, it might take a consumer 6 to 8 years to save enough in reduced energy bills to pay for the new fridge (the “payback period”). And because many folks just don’t think that far ahead they might not take advantage of the program.

    So, to induce consumers to save money—and simultaneously spare new power generation from the local utility—a program could employ some common sense win-win financing. The utility could pick up the tab for the new fridge (maybe getting a nice bulk discount to boot) and pass them out for free to eligible consumers. The consumers would then pay for the fridge in small installments that would simply be rolled into their monthly utility bills, more or less amortized over the life of the “payback period.” Consumer bills wouldn’t go up because the fridge payments would be offset by lower energy costs. And when the fridge was paid for, it’d be all savings. (In fact, a similarly crafty program is being tried out with some new condos in Canada.)

    It’d even be possible to use this type of program to benefit both landlords and renters, one of the stickiest problems in energy conservation. (The split incentives involved in renting mean that both landlords and tenants can justly accuse the other of making it irrational to invest in efficiency.) Landlords with old inefficient appliances could be required (or enticed) to participate in the program. But the landlord wouldn’t have to front the cost for a new model. And the renter who pays the utility bills wouldn’t suffer from higher prices; in fact, in time, they’d benefit from lower ones. Even better, getting new appliances into rented housing has particularly strong fairness implications too, because low-income folks are overwhelmingly renters.

    This is just a hypothetical, of course, and there are probably dozens of ways to improve on my daydream. But it’s the sort of thing that we might expect once we have a cap and trade program running, especially if we have auction revenue from the carbon permits.

    These programs wouldn’t solve all of our climate or equity problems, but they would help. And hey: free refrigerator.