CBS Newsletter
Spring 1995
pg. 4

Appliance Efficiency Standards

Part 1 of 2

In the National Energy Policy Conservation Act (1978), Congress required DOE to set energy-efficiency standards for 13 residential appliances if technologically feasible and economically justified. In 1987, the National Appliance Energy Conservation Act (NAECA) established the first national standards for refrigerators and freezers, furnaces, air conditioners, and other appliances and established a schedule for possible updates. It was supported by manufacturers largely because it eliminated disparate state standards. The legislation was also supported by environmental and consumer groups, received broad bipartisan support in Congress, and was signed into law by President Reagan. Subsequent amendments added fluorescent lamp ballasts, and the Energy Policy Act of 1992 (EPAct) added lamps (incandescent and fluorescent), small electric motors, office equipment, and plumbing products.

LBL's Role

The Center's Energy Analysis Program has been a contractor to DOE since 1979 and the prime contractor for engineering and economic analysis of appliance standards since 1982. Currently about 25 people work on this project, including six scientists. LBL's role is to provide economic and technical analysis of alternative standard levels in support of the DOE, which selects the standard levels that ultimately become law.

The analysis of appliance standards includes:

• Engineering analysis: What design changes could save energy, and how much energy? The analysis includes using manufacturer and other researchers' data, developing or modifying simulation models (e.g., for thermal performance of a refrigerator, air conditioner, or water heater), calculating energy savings, and researching manufacturing costs.
• Economic analysis: What are the national impacts from the perspectives of consumers (net effects of increased equipment price and decreased energy expenditures), manufacturers (units sold and profitability), and utilities (lost revenues, but deferral of new capacity)? The analysis includes forecasting models for energy used in U.S. residential and commercial buildings through 2030, financial models of prototypical manufacturers in each industry, and estimates of reduced energy sales and of deferred requirements for new power plants.
• Environmental analysis: By how much will CO₂, SO₂, and NO_x emissions be reduced?

Analytical Results

Appliance standards have beneficial economic and environmental effects. The projected economic effects of standards to date (including original legislation and updates) include the following:

• The national economy benefits by about $1000 for every federal dollar expended on this program.
• Consumer benefits exceed costs by about 2.5 to 1. For residential appliances, the net present value (the benefits that result for consumers after subtracting the extra cost of more efficient appliances from the total energy savings) is $53 billion (1990$, discounted at 7% real) projected from 1990-2015 from the NAECA standards and its updates on refrigerators and freezers, washers and sryers, and dishwashers.
• For lamps, the net present value of the standards in EPAct is $56 billion (1990$, discounted at 7% real, 1995-2030).
• Proposed rules, including those applying to ballasts and water heaters, if finalized, will save consumers an additional $66 billion (1990$ net present value at 7% real, 1996-2030). Public comments on these proposals are being analyzed, and new proposals for other appliances are expected in 1995.

The results from NAECA and updates that have already become law, and not counting EPAct or proposed rules will be:

• Cumulative energy savings (1990-2015) of 23 Quads, equivalent to 1.4 years of U.S. residential energy use.
• Deferred electricity generating capacity by 2015 equivalent to 21 GW, equivalent to 42 500-MW power plants. Proposed further standards could defer another 37 GW.
• Reduced environmental impacts (1990-2015) approach 400 million tons of carbon, 3.3 million tons of NO_x, and 5.0 million tons of SO₂, amounting to 2% of total U.S. emissions.

The second part of this article, to appear in the summer issue, will explore the policy context of appliance standards and describe the success of energy efficiency standards for refrigerators.

—Jim McMahon

Jim McMahon
Energy Analysis Program
(510) 486-6049; (510) 486-6996 fax

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