Climate Progress Possible With Energy Efficiency Standards for Appliances — Under Laws Congress Already Passed

President Obama's focus in his second inaugural address on the need to address climate change was welcome after many months of near silence on this critical issue. While tackling climate change will require significant efforts limiting emissions from power plants, automobiles, and other sources, the President has recognized in the past that improving energy efficiency in general, and setting stricter energy efficiency standards for appliances specifically, can have a major impact on reducing both U.S. greenhouse gas emissions and consumer energy costs. Indeed, according to one recent study:

taking into account products sold from the inception of each national appliance standard through 2035, existing standards will net consumers and businesses more than $1.1 trillion in savings cumulatively. … On an annual basis, products meeting existing standards reduced U.S. electricity use in 2010 by about 280 terawatt-hours (TWh), a 7% reduction. The electricity savings will grow to about 680 TWh in 2025 and 720 TWh in 2035, reducing U.S. electricity consumption by about 14% in each of those years.

Until 2009, with the rise of the Tea Party, energy efficiency had been one of the few bipartisan issues surrounding energy policy, with both Republic and Democratic Congresses and Presidents recognizing that new standards benefit a range of interests, including business groups, consumers and the environment. Moreover, appliance manufacturers and interest groups often favor new standards, which can lead to economies of scale, cost savings, and more predictability for the future development of products. Because of Congressional actions mandating stricter efficiency standards for a range of products, current legislation does not stand as a major barrier to improving appliance efficiency standards. Instead, the problem more often lies within Department of Energy and reviewing agencies such as the Office of Management and Budget. The lengthy and expensive process of setting efficiency standards, and then OMB review of those standards, has consistently resulted in significant delays and less-than-optimal standards, despite Congressional mandates and deadlines. Indeed, a report published last week by the Appliance Standards Awareness Project and American Council for an Energy-Efficient Economy concludes that “delays in updating energy efficiency standards for certain appliances and devices could cost consumers and businesses $3.7 billion in lost savings -- and lead to an extra 40 million metric tons of excess carbon dioxide emissions.” The report found that “during the first two years of the Obama administration, DOE and OMB worked well to complete new standards on time. But over the past two years, OMB’s reviews have become lengthy—as long as 16 months in one case—and DOE has fallen behind.”

This data shows that if the administration could successfully implement the standards on the books today, it could make significant progress in energy policy even without new legislation. President Obama should thus put additional pressure on DOE and OMB, as he did early in his first administration, to finalize all remaining congressionally mandated standards.

Even beyond the existing Congressional mandates, however, President Obama and DOE could strengthen their ability to increase efficiency standards by not attempting to do it all at the federal level and, instead, enlisting the states as full participants in the standard-setting process. Currently, DOE regulations and policy make it very difficult, if not impossible, for states to adopt more stringent appliance efficiency standards that could later be adopted by the rest of the country. While many states, particularly California, have historically been leaders in the appliance efficiency area, current federal law preempts many state efforts to set standards if a federal standard exists, even if that federal standard is outdated or ineffective. While federal law contains a waiver process that would allow more stringent state standards, DOE has interpreted the waiver provisions very narrowly, making it virtually impossible for states to obtain a waiver.

A 2012 CPR briefing paper I co-authored, States Can Lead the Way to Improved Appliance Energy Efficiency Standards, explains how DOE should clarify the existing state waiver process and respond more favorably to such requests so that states can play a more central role in improving efficiency standards. Allowing states to take the lead in improving appliance energy efficiency standards will benefit consumers, manufacturers, and the environment.  Consumers will save money on their electric bills and enjoy updated appliances at a lower cost as a result of improved standards.  Manufacturers stand to gain from increased sales and lowered production costs.  The environment will benefit from reduced natural resource consumption and lowered greenhouse gas emissions.

Unfortunately, these benefits are currently being foregone due to numerous delays at the agency level. These delays will result in at least $28 billion in unrealized energy savings by 2030.  To avoid this result, DOE can work with states to allow them to be equal partners in achieving meaningful efficiency gains.  This is an area where the President can exhibit leadership on climate change without the need for Congressional actions. Focusing on improved appliance efficiency standards, with their history of receiving bipartisan support, would be an easy way for the President to take a first step in putting substance behind his statements in the second inaugural address on climate change.