Energy efficiency standard delays means $3.7B savings loss

Energy efficiency standard delays means $3.7B savings loss

President Barack Obama says addressing climate change is smart economic policy as well as a moral imperative, but his administration keeps delaying stronger appliance and equipment energy efficiency standards.

These standards are among the most successful ways to quickly cut energy consumption and contribute to economic growth. They create hundreds of thousands of jobs and save billions of dollars on utility bills across the economy.

In 2010, existing standards cut U.S. electricity use 7 percent, and that will rise to 14 percent by 2035 as people buy the new products. It also created 340,000 jobs. Upgrading and adding new standards would shave another 7 percent off electricity use by 2035.

Over the past two years, the administration has missed deadline after deadline for completing new or updated standards for products ranging from microwave ovens to commercial refrigerators to industrial motors. These delays impose a steep cost.

Eight standards are currently held up, costing individuals and businesses $3.7 billion and 40 million metric tons of excess carbon emissions, according to the Appliance Standards Awareness Project and American Council for an Energy-Efficient Economy.

In fact, every month of delay adds another $300 million in lost savings and another 4.4 million metrics tons of carbon emissions, the equivalent of burning 19,000 rail cars of coal.

Raising efficiency standards also spurs innovation as manufacturers compete to introduce the most advanced equipment at the lowest cost. Delays in issuing standards compound over time because it takes a long time for manufacturers to develop new products.

Here are the standards that are delayed, along with the cost in both lost savings and additional carbon emissions:

  • Microwave ovens (20 months overdue): $276 million in lost savings, 2.1 million metric tons of carbon (mmt)
  • External power supplies (19 months): $370 million, 4.2 mmt
  • ER, BR and small diameter reflector lamps (21 months): $1.05 billion, 7.7 mmt
  • Walk-in coolers and freezers (16 months): $1.1 billion, 10.3 mmt
  • Metal halide lamps (16 months): $261 million, 3.2 mmt
  • Distribution transformers (4 months): $347 million, 6.1 mmt
  • Electric motors (4 months): $202 million, 4.2 mmt
  • Commercial refrigeration equipment (4 months): $92 million, 1.2 mmt

The Department of Energy develops standards and then the White House Office of Management and Budget's Office of Information and Regulatory Affairs, or OIRA, reviews the new rules to make sure their benefits exceeds their costs.

Cass Sunstein, who headed OIRA until recently, touted appliance standards as an example of smart regulations for which "the monetary benefits dwarf the costs."

But OIRA has been reviewing the DOE's new standards for a year or more and there's now a backlog.

It wasn't always this way. Soon after taking office in 2009, Obama declared his administration would prioritize new efficiency standards, and within a few months later, he announced historic standards for commercial lighting products.

Under Dr. Steven Chu's leadership, the DOE fulfilled a 2006 court order to catch up on 22 overdue standards from previous administrations.

Some of DOE's recent important new efficiency standards are for refrigerators, clothes washers and dishwashers, central air conditioners, furnaces and heat pumps.

National energy efficiency standards for common household and business products generated about 340,000 jobs in 2010.

Last December, Congress passed the American Manufacturing Technical Corrections Act (HR 6582). Among other things, the new law amends several equipment efficiency standards already enacted by Congress and reduces barriers to industrial energy efficiency.

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Photo of an efficient lightbulb provided by amasterphotographer via Shutterstock.

This story is reprinted with permission from Sustainable Business.