New Refrigerator Standards show that efficiency is the low hanging fruit that grows back when you pick it

This week, the Department of Energy proposed new efficiency standards for refrigerators and freezers that, if finalized, will save 4.48 quads of primary energy over the next 30 years.

These proposed standards are special for several reasons. Their announcement marks the first step by DOE to implement an agreement negotiated this past summer between home appliance manufacturers and efficiency advocates on several common household appliances: clothes washers and dryers, room air-conditioners, dishwashers, and, of course, refrigerators and freezers. Environmentalists, state energy officials, consumer organizations, utilities, and manufacturers – parties who understand both the potential and difficulties of improving appliance efficiency – all agree that these standards are a good thing.  As my colleagues Lane Burt and Ed Osann have blogged about, the whole agreement will save billions of consumer dollars, 9 quads of primary energy, 5 trillion gallons of water, and 550 MMT CO2 emissions over the next 30 years. 

But more importantly, the agreement and this week’s proposed rule show how American manufacturers can make continuous improvement in energy efficiency when failures of the market are overcome by standards and incentives working together.  Continuous improvement is necessary if we want to stay competitive in a globalizing economy.  The agreement is a landmark in showing how this can occur. 

Refrigerators in particular have played an important role in the history of standards and so this week’s announcement is especially noteworthy. They also happen to represent the majority of the energy savings from the agreement. Refrigerators were one of the first appliances to have their efficiency regulated following the oil embargo in the 1970’s and have reduced their energy use by 75% since then despite the fact that they have continued to get bigger and cheaper!  Before we had energy efficiency policies in the U.S., a top-freezer refrigerator used 2127 kWh/year. After the newly proposed standard goes into effect, the highest energy use allowed will be 400 kWh/year.  If we assume that Energy Star and other programs can save 10% beyond that on average, we will exceed an 83% reduction in energy over 4 decades!

This 83% was not achieved by a great breakthrough.  Instead, it is the result of seven sets of progressively more stringent state and federal standards, complemented by Energy Star labels and at least seven separate financial incentive programs at the utility and federal level.  There was no single technological breakthrough that led to this achievement, rather continued progress and dozens of mini breakthroughs that allowed American industry to save 5/6 of energy while reducing the cost of the product virtually every year. 

Have we reached the end of the road?  The evidence clearly suggests the contrary.  Just like other technology-based indicates, when producers can profit from taking it to the next level, they are quickly able to find where that next level is.  With appropriate financial incentives, they can achieve increasingly higher levels of performance.