From refrigerators to furnaces, the Department of Energy’s (DOE) appliance efficiency standards impact nearly everyone’s life, covering products representing 90 percent of residential energy consumption and 60 percent of commercial consumption. Appliance efficiency standards date back nearly 40 years, originating in California, with federal law following soon after. President Ronald Reagan signed the first federal law establishing nationwide minimum appliance efficiency standards in 1987. Legislative amendments strengthening the program have generally had strong bipartisan support, and were included in the 2005 and 2007 energy bills signed by President George W. Bush.
What have these standards accomplished? How have they affected consumers and manufacturers? How might they be improved? And what does the future hold? On June 15, BPC held a panel discussion addressing these and other questions. The event was moderated by David Garman, principal and managing partner at Decker Garman Sullivan, LLC, and former undersecretary of energy and assistant secretary of energy efficiency and renewable energy in the George W. Bush administration. Panelists were:
- Steven Nadel, executive director, American Council for an Energy-Efficient Economy (ACEEE)
- Robert McArver, vice president of policy and government relations, Association of Home Appliance Manufacturers (AHAM)
- Richard Tempchin, executive director, retail energy services, Edison Electric Institute (EEI)
- Keith Dennis, senior principal, end-use solutions and standards, National Rural Electric Cooperative Association (NRECA)
This post summarizes key themes from the conversation.
The benefits of appliance efficiency standards are numerous and large
Appliance efficiency standards have provided huge benefits. As moderator David Garman said when opening the discussion, “In terms of saving energy, appliance energy efficiency standards may be the most important and far-reaching tool in our policy toolbox.” The program has achieved impressive results along a number of metrics. DOE has estimated that cumulative energy savings from existing standards will total 70 quadrillion British thermal units (BTUs) by 2020, with consumer savings over the same time period approaching $1 trillion. Cumulative carbon dioxide emissions reductions from existing standards are expected to reach 283 million tons by 2020.
During the discussion, panelists also noted a number of more difficult-to-quantify benefits. As both Steve Nadel from ACEEE and Rob McArver from AHAM noted, standards have forced product innovation that has benefited consumers. Highly-efficient appliances that would be niche products in the absence of standards have become less expensive and accessible to the entire market. McArver observed that manufacturers have responded to standards by creating superior products that both achieve the requirement of the standards and meet consumer preferences. In addition, he noted that having uniform national standards set by DOE generally benefits manufacturers by preventing a patchwork of conflicting state standards and balkanized markets. Finally, Rick Tempchin from EEI noted that in addition to the benefits for utility customers, utilities themselves benefit from the peak-trimming and overall efficiency gains to the system.
DOE’s program works best when the standards reflect stakeholder consensus
All participants agreed that the emphasis on stakeholder consensus that has existed since the origins of the program has been key to the program’s success. The value of consensus to the program was enhanced during the George W. Bush administration, when reforms to the program enabled the agency to promulgate appliance efficiency standards as a direct final rule when there is stakeholder consensus. Steve Nadel of ACEEE noted that roughly half of the existing appliance efficiency standards have resulted from stakeholder negotiation. He added that in cases where there has been controversy, DOE has generally been responsive to the feedback provided during the comment process, and resolved most issues in the final rule. Keith Dennis of NRECA noted that efficiency is a shared goal, and that there is both an ability and willingness for stakeholders to get together and collaborate that should remain central to DOE’s process. He also emphasized the value that the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) has played in negotiating consensus standards.
Some recent rulemakings have led to concerns about the standard-setting process
Some panelists brought up a number of process concerns relevant to recent rulemakings. Both AHAM’s McArver of and NRECA’s Dennis suggested that pressure from the administration on DOE to promulgate new and increasingly stringent standards has led to problems with transparency and analysis that could have negative impacts on industry and consumers. McArver suggested, for example, that DOE’s recent proposed dishwasher standard was issued without sufficient consultation with industry on its technical and cost implications, and relying on data industry believed to be outdated. He also noted that DOE appears to have relegated the Process Rule, promulgated by DOE after Congress put a moratorium on new standards in early 1996, to merely guidance. He suggested that DOE should return to the procedures laid out in the Process Rule. Dennis added that, if the process is working, litigation of standards should be unnecessary. ACEEE’s Nadel agreed with the other panelists that open and transparent analysis by DOE is essential to the process. He observed that DOE has worked hard during the process of developing standards to listen to and reflect stakeholder input, but noted that there is always room for improvement.
Good analysis is crucial, and will become increasingly so as grid-enabled appliance technology evolves
Panelists noted that the increasing ability of appliances to interact with the electric grid is likely to increase the standard-setting challenges facing DOE. As technologies evolve to allow utilities and appliances to communicate directly – enabling more appliances to provide services such as demand response – analysis of the impact of standards will become increasingly complicated and involve a broader set of stakeholders. Panelists suggested that DOE would benefit from allowing more time for such analysis. EEI’s Tempchin and NRECA’s Dennis noted the importance of avoiding unintended consequences, such as interfering with a utility’s ability to use grid-connected appliances for demand response.1 Tempchin also emphasized the importance of ensuring that new standards are technology-neutral and maintain customer choice. ACEEE’s Nadel emphasized the value of voluntary programs such as Energy Star as a good place to test potential requirements before moving to mandatory standards.
As DOE looks forward, it should continue to look back
In general, the panel suggested that as DOE continued to work on new standards, it should be working to understand as comprehensively as possible the impacts of existing standards. Nadel emphasized the need to periodically test the performance of products in the field to see how they line up with existing test procedures. He also emphasized the value of broader retrospective analysis of the costs and benefits of standards, and encouraged DOE to conduct more retrospective studies.
1 This particular concern was raised in response to DOE’s 2010 efficiency standard for water heaters; it was eventually addressed in the Energy Efficiency Improvement Act of 2015, signed into law by President Obama on April 30.