The Future of Appliance Efficiency Standards

Steven Nadel

Equipment efficiency standards were initially enacted by several states in order to address several market barriers in the appliance market. Following the state lead, the U.S. Congress adopted national efficiency standards in several steps over the 1987-1992 period. Equipment efficiency standards have been one of the most successful government policies for improving energy efficiency in the United States. Nationwide, in 2000, efficiency standards already in effect are projected to save 88 billion kWh of electricity, which is approximately 3 of projected national electricity use in that year. These savings are on a par with projected savings in 2000 from utility demand-side management programs. Overall, these standards are projected to save consumers over $130 billion over the lifetime of products affected by standards (net of increased product costs) and have a benefit-cost ratio of more than 3 to 1.

In 1995, with the conservative shift in Congress, several equipment manufacturers who formerly supported standards sensed an opportunity to change the law and keep the U.S. Department of Energy from issuing new standards. As a result of their lobbying efforts, Congress adopted a moratorium on new efficiency standards for the 1996 Fiscal Year and several manufacturers have made clear that they will seek to extend the moratorium into the 1997 Fiscal Year. As a result of the standstill on federal standards, several states are planning to retake the initiative and begin work on setting new state efficiency standards. Five products in particular (refrigerator/freezers, fluorescent lamp ballasts, residential clothes washers, building and distribution transformers, and residential central air conditioners) offer particularly large opportunities for energy savings. For each of these products, standards development activities have progressed far enough that specific standards have been developed that states can adopt with a minimum of effort. By moving forward on state standards, states can achieve substantial benefits within their borders (energy and economic savings and emissions reductions) and provide a needed push to get the federal standards-setting process back on track.