Executive Summary

At both the state and national levels, energy-related problems are as severe in 2006 as they have ever been. Energy prices have increased sharply over the past several years, placing an ever greater burden on consumers and businesses. For example, natural gas prices have skyrocketed, with average residential prices reaching $13.30 per million Btu over the first 10 months of 2005, up 53% relative to the same period in 2002. Low- and middle-income families are especially hard hit. Meanwhile, energy-related environmental problems, most notably global warming, continue to dot the news headlines. From a national security perspective, observers of all political stripes raise concerns about U.S. dependence on imported energy—especially oil, but increasingly natural gas. The interconnectedness of energy markets means that price increases for any one resource often ripple through all energy markets. Power system reliability presents yet another challenge. The catastrophic Northeast blackout of August 2003 remains a fresh reminder of the economic costs imposed by electric grid reliability problems. Growing demand for power continues to strain electric systems in some parts of the country.

Given these energy-related problems, policymakers increasingly are turning to efforts to use energy resources more efficiently. This report describes sensible and up-to-date opportunities to advance one specific energy-saving policy: appliance and equipment efficiency standards. Efficiency standards stand out as one of the most effective and successful policies used by both state and federal government to save energy. These standards help reduce unnecessary energy waste by requiring that certain energy-consuming products meet minimum energy-savings performance levels. By saving energy, these standards save consumers and businesses significant amounts of money over the life of the affected equipment, reduce pollution, and improve electric system reliability.

In addition, by easing demand for energy, efficiency standards and other energy-saving policies can help lower natural gas and electricity prices. In 2005, ACEEE researchers found that natural gas markets are so tight that just a modest 2–4% reduction in national gas use can reduce natural gas prices by 20% or more. Such savings can be achieved with more efficient gas-fired appliances as well as through reduced electricity use, since in many regions of the United States, natural gas is the marginal fuel used for power generation.

State Appliance and Equipment Efficiency Standards

Individual states initiated the first efficiency standards for appliances and other equipment in the 1970s and 1980s. California adopted the first appliance standards law in 1974 and in the late 1970s and early to mid-1980s, other states (including Florida, Kansas, and New York) established state standards for various products. These state standards led to broad support for national standards, which Congress enacted in 1987, 1988, and 1992 and Presidents Reagan and George H.W. Bush signed into law to save energy and replace a patchwork of state standards. These initial efficiency standards covered 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.). Their success has been well-documented. For example, as a result of several rounds of state and federal standards, a typical new refrigerator today uses less than one-third as much energy as a typical one sold in the early 1970s. Overall, these existing standards will net consumers and businesses nearly $200 billion in savings by 2020.

Since 2001, states have again been turning to efficiency standards to help reduce energy waste. California adopted new standards for several products in 2001 and for more products in 2004. Maryland and Connecticut enacted state standards laws in 2004, followed by New Jersey, Arizona, Washington, Oregon, Rhode Island, New York, and Massachusetts in 2005. As in the 1980s and 1990s, this round of state standards prompted broad support for strong federal standards, resulting in Congress enacting 16 new standards as part of the Energy Policy Act of 2005, signed into law by President George W. Bush in August 2005. These latest national standards will save energy users another $50 billion net by 2020.

This report examines opportunities for new equipment and appliance standards beyond those enacted by Congress in 2005. We find that near-term standards make sense for 15 products evaluated in this report and that such standards would achieve considerable energy savings, economic benefits, and pollution reductions. These standards could be set at the national or state level, but, given the historical approach to efficiency standards, we recommend that states act first to set such standards. Details on each of these products, including recommended standards and information on product availability and economics, are provided in the body of the report.

View the report for free in PDF or click to order hard copy. The Appliance Standards Awareness Project provides a 50 state breakdown.

69 pp., 2006, $45.00, Report Number ASAP-6/ACEEE-A062