Electricity

CFA Fires Back At Potential Attack on Refrigerator Energy Efficiency Standards by Trump Administration

Highlights Consumer Benefits of Standards and Cost of Department of Energy Rollbacks

Washington, D.C. – Yesterday, in response to the U.S. Department of Energy (DOE) Request for Information (RFI)[1], the Consumer Federation of America (CFA) submitted comments supporting efficiency standards for refrigerators and freezers. CFA reinforced its longstanding position that the Trump Administration’s rollback of a broad array of energy efficiency standards stands to cost consumers $2 trillion, and that standards in general and appliance standards, and in this instance, refrigerator standards provide consumers tremendous pocketbook savings.

In the Request for Information, the Department of Energy, without guidance or reference to the extensive record already established by CFA in previous proceedings, asks for, among other issues, comment on market failure which it defines as a “situation in which the market outcome does not maximize societal welfare issue.” CFA provided extensive background information of why performance standards are appropriate in addressing market failure, and the key characteristics of well-crafted performance standards.

CFA points out there are still significant energy savings available from refrigerators, that  2016 report[2]  gives the potential annual utility bill savings for residential refrigerators with updated standards reducing energy consumption between 10-20% would be approximately $2.4 billion by 2035 and close to $2.8 billion by 2050 ($2013). The potential cumulative savings by 2050 would be $59 billion for residential refrigerators. These savings can be made possible through technologies such as variable-speed compressors and vacuum insulated panels.[3]

“By improving the energy efficiency of appliances, like refrigerators and freezers, consumers not only save money, they also curb electricity use, potentially reducing the need for expensive new power plants,” said Mel Hall-Crawford, CFA’s Director of Energy Programs.  “Energy efficient appliances are a win-win-win for consumers, electric utilities, and the environment,” she added.

CFA’s analysis of appliance efficiency standards from 2008-2016 shows the standards resulted in:

  • Consumer pocketbook savings of about $400 billion and
  • $350 billion of indirect macroeconomic benefits, at
  • A cost of just under $80 billion,
  • A benefit-cost ratio of over 8-to-1.
  • Adding in the public health and safety benefit that is at least $80 billion, we arrive at total benefits above $800 billion and a benefit cost ratio of 10-to-1.
  • Thus, combining benefits of past and present standards, we see over $1.8 trillion in benefits with less than $300 million in costs, for a benefit cost ratio of about 6-to-1.

The high benefit to cost ratio shows the value of continued adoption of appliance efficiency standards. The energy bill savings will more than offset the cost of current and future technology, resulting in substantial potential net economic benefits.

Contrary to what opponents of energy efficiency standards claim, low-income consumers disproportionally benefit from efficiency standards, in fact the savings from appliance standards are higher for low-income consumers, while the costs are lower compared to other income brackets. Low-income consumers also pay a larger share of their wages in electricity costs, therefore the benefits of lower energy usage are magnified compared to higher income levels.

In addition, these standards enjoy broad public support with two CFA surveys finding that all Americans (95%) think it is “beneficial for appliances like refrigerators, clothes washers, and air conditioners to become more energy efficient,” with 78% believing this increased efficiency to be “very beneficial.” Nearly all Americans (~ 90%) think improved appliance efficiency is important for personal financial reasons, large majorities (~80%) also believe improved appliance efficiency to be important for environmental reasons – because it reduces the nation’s consumption of electricity “to reduce greenhouse gas emissions.”

“Empirical analysis of benefits, sources of market failure, the performance of “command-but-not-control” standards, law and administrative practice, and public opinion strongly support the continued development of energy efficiency standards.  The agency’s Request for Information fails to reflect the importance and centrality of market imperfections and failures which provide ample justification for and design of standards that will save consumers and the nation billions of dollars in the refrigerator market and trillions of dollars across the full range of energy consuming durable goods,” said Mark Cooper, Director of Research at CFA.

Click here to see the full submission.

[1] Department of Energy, Office of Energy Efficiency and Renewable Energy, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Refrigerators, Refrigerator Freezers and Freezers, Federal Register, 10 CFR Part 430, (Vol. 84, No. 221, Friday November 15, 2019, p. 62470-62482).

[2] Appliance Standards Awareness Project and the American Council for an Energy Efficient Economy, Next Generation Standards: How the National Energy Efficiency Standards Program Can Continue to Drive Energy, Economic, and Environmental Benefits (2016).

[3] ENERGY STAR refrigerators consume approximately 10% less energy than those meeting the minimum energy efficiency standards, which would certainly illustrate that the market is capable of a higher minimum standard  https://www.energystar.gov/products/appliances/refrigerators/key_product_criteria.

 

 Contacts:

Mel Hall-Crawford, 805-245-0523

Mark Cooper, 301-807-1623