ACEEE NEWS RELEASE

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NEW U.S. STANDARD FOR HOME FURNACES IS A "TURKEY"

Missed Opportunity to Cut Energy Bills and Global Warming Emissions

- AGENCY ADMITS IT DID NOT ADEQUATELY CONSIDER HIGHER STANDARDS -

November 19, 2007

Washington, D.C.—A coalition of consumer, energy, and environmental organizations sharply criticized the U.S. Department of Energy (DOE) for extraordinarily weak home furnace and boiler energy efficiency standards announced today. Not only are the standards announced today little changed from the original levels set by Congress twenty years ago, but also 99% of natural gas furnaces currently sold already meet the new minimum efficiency level.

"DOE has delivered a 'turkey' of an efficiency rule," said Andrew deLaski, Executive Director of the Appliance Standards Awareness Project. "This Thanksgiving, that's bitter news for Americans who care about global warming, high energy prices, and our dependence on overseas energy."

The standard issued today just increases the minimum gas furnace efficiency level to 80% from the current level of 78%. Today's rule also modestly increases the standards for oil furnaces and oil and gas boilers, which, on a national basis, are far less common than gas furnaces (see table below).

"This standard is grossly inadequate — a 90% natural gas furnace efficiency standard would provide more than seventeen times the carbon savings," said David B. Goldstein, Energy Program Co-Director of the Natural Resources Defense Council (NRDC). Goldstein noted that recently both the head of the President's Council on Environmental Quality, James Connaughton, and Secretary of State Rice have highlighted appliance standards as one of best ways to cut global warming emissions. "Today's decision makes it all too clear that the Energy Department attaches zero value to cutting global warming emissions," said Goldstein.

According to DOE, very large energy, economic, and CO₂ emission savings could have been achieved by setting a 90% national standard for gas furnaces or by applying a 90% standard to just the northern region of the country. DOE found that a national 90% standard would save 3.21 quadrillion Btus ("quads") of energy over 24 years, or enough to heat four out of every five U.S. homes for one year, and would net about $11 billion in consumer savings. The higher standard would cut global warming pollution by 141 million metric tons over 24 years— roughly the amount emitted by 25 million cars driven 12,000 miles each — in contrast to just 8 million tons of reduction from the DOE rule.

"Our country cannot create a sustainable energy and climate future through incrementalism," said Kateri Callahan, President of the Alliance to Save Energy. "We need bold action from our government, but instead, for the second time in a row, DOE has issued a very weak efficiency standard that once again leaves important energy and CO₂ savings 'on the table'at a time when we can least afford continued waste." (See transformer rule release at http://aceee.org/press/0710transformers.htm.)

Most of the energy saved by a tougher rule would have been natural gas, a fuel increasingly supplied from overseas, including the Mideast. Over the past ten years, liquefied natural gas imports have increased fivefold and are projected by DOE to keep going up.

A gas furnace standard at 90% efficiency — an efficiency level currently met by about one-third of all sales — would save a typical consumer about 11% off of their home heating bills relative to the current minimum efficiency units available. On average nationally, families who heat with natural gas will spend about $1,000 on their winter heating bills this winter. In some of the coldest states, they will spend far more.

DOE Asks for a "Do-Over;" Agency Could Start New Rulemaking Immediately

Under the terms of a 2005 consent decree resulting from a lawsuit brought by NRDC and ten states, DOE must complete 22 legally overdue efficiency standards according to a court-monitored schedule. In August, DOE asked the overseeing court for more time to complete the furnace rulemaking. According to an affidavit filed by David Rodgers, the Deputy Assistant Secretary for Energy Efficiency, the agency wanted more time in order "to consider a more stringent 90-percent AFUE level." In addition, DOE wanted to consider the "impact of higher efficiencies on natural gas prices," in response to comments from Dow Chemical and NRDC, which had argued that improved furnace efficiency would benefit all consumers by reducing natural gas demand, and therefore prices.

"DOE didn't need a 'do-over' because they already had a more than adequate record to set a strong standard," said Charles Harak, National Consumer Law Center (NCLC). He also noted that DOE's plea for more time rang hollow given the agency was already 13 years behind legal deadlines in finishing the new standard. A 90% efficiency standard had been part of the agency analysis since 2001 and Dow and NRDC first raised the effect of gas savings on gas prices in 2004. Not surprisingly, in late October, the court rejected the Agency's request for more time to consider higher standards.

"Based on their appeal for more time to consider higher standards, even DOE appears to know they've set too weak a standard," said deLaski. "Given the savings at stake, DOE should act immediately to open a new rulemaking to reconsider higher standards."

DOE Claims Regional Standards Not Permitted; Congress Poised to Change the Law

DOE rejected setting a 90% standard for just the northern half of the country on narrow legalistic grounds. In response, both the House and Senate passed, as part of comprehensive energy legislation, bills that would make explicit DOE's authority to create regional standards for heating and cooling products. Recently, the Air-conditioning and Refrigeration Institute (ARI), which represents Carrier, Trane, York, Lennox, and Goodman (the major manufacturers of residential furnaces and air conditioners), and the American Council for an Energy-Efficient Economy (ACEEE) recommended a compromise to Congress that would allow DOE to set up to two regional standards for furnaces and three for central air conditioners. Congress is expected to finalize the energy bill later this year.

"The right furnace standard for Anchorage may not be the right one for Albuquerque," said Steve Nadel, Executive Director of ACEEE. "Fortunately, Congress is ready to make sure DOE considers regional standards the next time it revises air conditioning or heating standards."

States Chart Their Own Course

Frustrated with the pace and direction of the federal standards, four states (Massachusetts, Rhode Island, Vermont, and Maryland) have already set their own furnace and boiler standards. Other states such as New Hampshire and New Jersey are considering following suit.

"In the Northeast, consumer energy bills and global warming rank as top concerns and efficiency ranks as the top solution," said Susan Coakley, Executive Director of the Northeast Energy Efficiency Partnerships (NEEP). "We urge northeast states to move forward immediately to implement their legislation to establish higher, more cost-effective state standards. Such state leadership is crucial to protect consumers and reduce carbon emissions in light of this federal failure to lead."

Today's rule provides guidance to those states for how they can seek a waiver from federal preemption, which is necessary for them to enforce their standards. However, such an approach likely will lead to a patchwork of standards among the various states.

"Strong national or regional standards make the most sense," said deLaski. "Seeking state-by-state standards is a difficult-to-achieve second-best option that will not deliver the same level of energy savings plus economic and environmental benefits."

Oil Standards Also Weak; Congress Set to Override DOE on Boiler Standards

For oil furnaces, DOE did not even evaluate slightly higher levels that efficiency groups had recommended. For oil boilers, DOE structured its analysis to prevent adoption of higher levels recommended by efficiency groups.

"Oil remains a very important heating fuel in some regions," said Nadel. "With oil prices at record levels, it's disappointing DOE didn't pay more attention to oil savings."

For residential boilers, Congress is poised in the pending energy legislation to override the new DOE standards with a multipart standard agreed to by manufacturers and efficiency groups last year. The Congressional standard contains the same efficiency ratings set by DOE, but doubles savings by disallowing standing pilots and requiring controls that cut energy use by up to 10%.

In today's rule, DOE changed the efficiency standards as follows:

1987 standards were effective in 1992. 2007 standards will be effective in 2015.

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PLEASE NOTE: DUE TO AN EDITING ERROR, THE ORIGINAL RELEASE DATED 11/19/07 LISTED EEI AND APPA AT THE BOTTOM OF THE RELEASE. NEITHER EEI NOR APPA ARE PART OF THE COALITION PARTICIPATING IN THIS RELEASE.

The Natural Resources Defense Council (NRDC) is a national, nonprofit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has 1.2 million members and online activists nationwide, served from offices in New York, Washington, Chicago, Los Angeles, San Francisco and Beijing.

The Appliance Standards Awareness Project (ASAP) is dedicated to increasing awareness of and support for energy-saving appliance and equipment efficiency standards. Founded in 1999, ASAP is led by a steering committee that includes representatives from the environmental community, consumer groups, utilities and state government.

The Alliance to Save Energy (ASE) is a coalition of prominent business, government, consumer and environmental leaders who promote the efficient and clean use of energy worldwide to benefit the economy, environment, and national security.

Northeast Energy Efficiency Partnerships, Inc. (NEEP) is a regional nonprofit organization founded in 1996 whose mission is to promote energy efficiency in homes, buildings and industry in the Northeast U.S. through regionally coordinated programs and policies that increase the use of energy efficient products, services and practices, and that help achieve a cleaner environment and a more reliable and affordable energy system. For more information, please visit http://www.neep.org/.

The American Council for an Energy-Efficient Economy (ACEEE) is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 1001 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036-5525 or visit http://aceee.org/.