Opportunities for New Appliance and Equipment Efficiency Standards: Energy And Economic Savings Beyond Current Standards Programs

Toru Kubo, Harvey Sachs, and Steven Nadel  

September 2001

Executive Summary

Appliance and equipment efficiency standards have been one of the most successful policies used by state governments and the federal government to save energy. Appliance and equipment efficiency standards prohibit the production and import or sale of appliances and other energy-consuming products less efficient than the minimum requirements. These standards not only save energy but also reduce pollutants, improve electric system reliability, and save consumers and business owners significant amounts of money over the life of the equipment.

In the United States, minimum-efficiency standards for appliances and other equipment were adopted by Congress in 1987, 1988, and 1992 and signed by Presidents Reagan and Bush to address market failures and replace a patchwork of state standards. These initial efficiency standards focused on the “low-hanging fruit”—major residential appliances (e.g., refrigerators, air conditioners, water heaters, washers and dryers, etc.) as well as the most common commercial equipment (e.g., fluorescent lamps, motors, furnaces, etc.) Since then, technology and programmatic advances provide the opportunity to extend the standards programs to additional products that are now “ripe” for harvest of energy/economic savings. These developments include widespread availability of more advanced products; work on new standards by Canada and several states in the United States; development of Energy Star® specifications for many products; updates of key industrial standards; and additional research on the energy savings potential, usage, and cost of these products.

While the efficiency standards established to date have provided significant energy and economic savings, the United States is still experiencing overall growth in energy demand and an increasingly tight supply. Many other regions might become “the next California”—the Northwest, Northeast, Midwest, and South currently face tight supply/demand balances and might face electricity shortages in the next few years. Savings from new products that are now “ripe” for appliance and efficiency standards could reduce the need for additional power plants and ease electric load on already stressed transmission lines and transformers, significantly contributing to improved system reliability.

In this report we describe opportunities for state governments and the federal government to set minimum-efficiency standards for 13 appliances and other types of equipment currently not covered by federal legislation. These are furnace, air conditioner, and heat pump fans; ceiling fans; consumer electronics (standby power); residential torchiere lamps; commercial unit and duct heaters; distribution transformers; commercial food service refrigerators and freezers; refrigerated vending machines; traffic signals; exit signs; commercial clothes washers; commercial ice-makers; and large packaged air conditioners.

Table ES.1 summarizes the potential for energy and economic savings from adopting national minimum-efficiency standards for the above 13 products. Table ES.2 shows the potential peak load and emission reductions from adopting these standards.

Table ES.1 Estimated Energy Savings and Economics of Proposed New Standards

Note: Net benefits are NPV benefits minus NPV costs.

Table ES.2 Estimated Summer Peak Load and Pollutant Reductions from New Standards

These new standards would save 167 terawatt-hours (TWh) of electricity and over 1.8 quads of primary energy in the year 2020, while generating $75 billion in net savings for consumers and business owners for equipment purchased through 2020. The electricity savings amounts to 5% of projected residential and commercial sector U.S. electricity use in 2020. Stated another way, these standards could reduce projected growth in residential and commercial electricity use over the next 2 decades by nearly 20%. The primary energy savings from new standards is well over one-third the savings from all existing federal standards, with an overall benefit-to-cost ratio of 5 to 1—far better than the 3 to 1 ratio for existing standards. These standards are also incredibly cost-effective from a government perspective, with net benefits probably on the order of 1,000 times greater than government expenditures.

Another significant benefit from appliance standards is their impact on summer peak load. We estimate that the proposed standards would save a total of over 54 gigawatts (GW) of power in the year 2020. This is roughly equal to the generating capacity of 180 average power plants (i.e., 300 MW each).

Emissions reductions from the reduced energy consumption would also be significant. In the year 2020, over 34 million metric tons (MMT) of carbon could be reduced, which is equivalent to the annual carbon emissions from over 27 million “average” passenger cars. In addition to carbon, emissions could be reduced significantly for smog-forming nitrogen oxides (NOx), sulfur oxides (SOx; the main component of acid rain), and fine particulate matter.

Clearly, significant savings potential exists for these products at a small increase in first cost, resulting in large energy savings, economic savings, peak load reductions, and emission reductions over the life of the equipment.

Given these benefits, we recommend that states and/or the federal government adopt new efficiency standards on these projects. For most of these, this report provides specific language and recommendations that can be used to craft the appropriate legislation and regulations.

View the report for free in PDF or click to order hard copy.

117 pp., 2001, $25.00, A016