DOE Proposal Sets Hurdles for Efficiency Standards

Richard B. Levine/Newscom

The Department of Energy (DOE) today announced major—and unnecessary—changes to its procedures for administering its unequivocally successful energy efficiency standards program, which currently saves the average U.S. household at least $500 annually and prevents millions of tons of climate-warming carbon pollution.

DOE is proposing changes to its Process Rule that will make it more difficult to set standards. Among other changes, DOE proposes adding additional steps to the rulemaking procedure, steps that will handicap and slow a process that has worked well for years and generated $2 trillion in energy savings for consumers. In addition, it proposes an arbitrary threshold of energy savings that new or updated standards must meet, which means lost energy savings for consumers and businesses and more carbon being emitted into the atmosphere. The plan was released within hours of Daniel Simmons being sworn in as the new assistant secretary in the Office of Energy Efficiency and Renewable Energy (EERE), which administers energy efficiency standards.

Separately, DOE today also proposed to dramatically narrow the scope of light bulbs covered by the upcoming federal 2020 energy efficiency standards, which will cost consumers up to $12 billion on their utility bills and cause up to 25 more coal-burning power plants’ worth of electricity to be generated every year.

The Process Rule outlines the procedures that DOE follows when updating energy-saving standards, which currently cover 60 categories of appliances and equipment representing about 90 percent of home energy use, 60 percent of energy use in commercial buildings, and 30 percent of industrial energy use. Ironically, DOE has spent time and effort updating the Process Rule while ignoring the legal requirements for setting standards and test procedures. As of this publication, DOE has missed deadlines for 16 rules and even more test procedures, and its published regulatory plan lays out a road map of how it intends to miss many more.

DOE inaction is illegal and costly to Americans

Not only is DOE’s lack of action on standards illegal, since the law requires the department to review these standards on a regular basis and update them whenever economically justified, but the delays are also costing consumers millions of dollars in lost savings. Our allies the Appliance Standards Awareness Project (ASAP) and the American Council for an Energy-Efficient Economy (ACEEE) estimate that improvements to standards for which reviews are due within the next few years can potentially increase annual utility bill savings by another $43 billion by 2035, increasing to an annual rate of $65 billion by 2050. Cumulative savings through 2050 could be increased by $1.1 trillion.

But these savings are in peril, both from DOE inaction and from changes to the Process Rule that will make it significantly more difficult to set and update meaningful, impactful standards.

The 177-page proposed rule contains numerous changes to the way DOE would run the standards program. Here are a few that could be particularly detrimental:

Additional steps and requirements

The process DOE currently uses to set standards has been working just fine for decades, giving manufacturers predictability for their product development while enabling the standards program to produce massive amounts of consumer energy savings.

DOE proposes to set additional, seemingly unnecessary requirements for itself, including changes to how and when procedures for measuring the efficiency levels of appliances and equipment are completed, additional reviews the agency must go through before it even decides to set a standard, and higher hurdles a proposed standard must pass before it can be considered.

The Process Rule is guidance the agency sets for itself, not a law. Therefore DOE still must follow the law when it comes to implementing and updating energy efficiency standards. A guidance document can’t be an obstacle that prevents an agency from meeting its statutory obligations—and yet, the changes DOE proposes will no doubt slow the process and make it more difficult for DOE to complete standards in the time frame mandated by Congress.

Defining a “significant” energy-savings threshold

DOE is not allowed to set a new or amended standard that does not “result in significant conservation of energy.” While the definition of “significant” is not specified by Congress, this issue was litigated and decided in the court case NRDC v. Herrington in the late 1980s. Since then, DOE has been using its discretion to appropriately determine what constitutes significant energy savings. Allowing DOE’s professional staff to use data, analysis, and their good judgment has worked well for decades.

DOE proposes to set an arbitrary threshold of savings that standards must meet to be considered “significant: either 0.5 quads, or a 10 percent improvement in efficiency. (For reference, 0.5 quads is equivalent to 2.5% of total annual household energy use in the U.S.—in other words, enough to meet the needs of 3 million homes.) While some standards save more than others, even the smaller savings add up. Had this unjustified savings limit been in place all along, consumers and businesses would have missed out on more than four quadrillion Btus (quads) of energy savings. To put that in perspective, the entire U.S. economy uses 100 quads of energy each year, and the emissions from power plants that generate that energy are a prime contributor to climate change. Setting a savings threshold is completely contrary to the direction the country—and the world—need to go in to avoid the worst impacts of climate change.

Changes to test procedures

DOE proposes to finalize test procedures that will be used to measure the efficiency of products at least 180 days prior to the publication of a proposed new or amended standard for those products. It is certainly a good goal to figure out how to test the efficiency level of a product before starting to set a standard. However, this change gives DOE less flexibility and opens up the test procedure development process—which is highly technical and based on significant input from industry and advocacy groups like NRDC—to become a potential mechanism for delaying the development of standards indefinitely.

Even more concerning is the fact that DOE proposes to adopt, without modification, industry test procedures, with exceptions for certain circumstances. DOE is taking away one of its most important powers and putting it in the hands of the industry it is tasked to regulate. There’s nothing wrong with using industry test procedures as a starting point, but DOE must maintain the final say in order to maintain the integrity of the standards program. DOE will be holding a public meeting on March 21 to further discuss these changes.

To be clear, we don’t have a problem with DOE reviewing and updating its procedures, as long as they follow the law, improve predictability, and make the rulemaking process more easily understood while not hamstringing one of the most successful energy-saving initiatives we’ve ever seen. Instead, the proposed updates to the Process Rule will likely make it more difficult to set strong standards in a timely manner. With all the challenges we face related to climate change, every bit of progress counts. DOE is moving in the wrong direction.

And most important, DOE’s irresponsible decision to focus on fixing something that isn’t broken will have real, long-term consequences for the consumers and businesses that benefit from standards—and that’s not good for any of us.

About the Authors

Lauren Urbanek

Senior Energy Policy Advocate, Climate & Clean Energy Program

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