The Natural Resources Defense Council (NRDC) and other efficiency groups released a negotiated agreement with manufacturers of residential air conditioners and furnaces yesterday, marking the end of a journey to come to consensus that lasted many months.  I negotiated on NRDC's behalf and we will now take this agreement to both Congress and the Department of Energy (DOE).

The agreement covers residential central air conditioners, heat pumps, and gas and oil furnaces and would set the new minimum federal efficiency standards, once adopted by Congress or the DOE.  The standard does not cover portable air conditioners or window units.  The standards would become effective on May 1, 2013 for most furnaces and Jan. 1, 2015 for air conditioners and heat pumps.

 This agreement is a big deal for several reasons.

The last three of these points warrant more discussion.

The first regional appliance standards ever

It is odd to think that the same appliance standard must apply to cold Massachusetts and to sunny Florida, but that is indeed the case.  The reason is fairly simple.  When the federal appliance standards program was created, manufacturers wanted to be able to have a consistent standard level unit that they could mass produce and sell all over the country.  This makes sense for most appliances, but for products where climate plays a huge role, like heating and cooling equipment, folks end up with equipment that was designed for someone else.  Inefficient equipment costs them money every day. 

With this agreement, consumers will no longer waste money on heating or cooling equipment that was designed for another climate.  Condensing furnaces (90 AFUE) will be required in the cold northern states, but not in the south where heating is rare.  In the hot southern states, 14 SEER air conditioners will be required, up from 13 SEER.  In the hot and dry southwest (which is very different from the hot and humid southeast), the units will also be required to operate efficiently at very high temperatures (well over 90 F) that are common in that climate.  Traditional equipment uses much more energy as the temperature rises simply because it is not designed for those conditions. 

This is a big win for consumers, but it is also good for manufacturers.  These companies have invested in the technologies to make their equipment run efficiently in different conditions, and now they will be assured of a market for these designs.  It benefits everyone to make sure that the best equipment goes where it will operate most effectively. 

Allows states more flexibility with their building codes

Federal appliance standards are preemptive, meaning no state can require anything above federal standard (below the standard is illegal).  This makes sense for appliance standards, but what if a state wants to set a building energy code for new construction that would require equipment above the federal standard?  Tricky legal question.

This agreement settles the issue by amending the law to set a clear path for states to adopt building codes based on equipment that is more efficient than the federal standard.  If a state has a performance code (generally a smart thing to do, where instead of telling a builder or architect how to build the building, the state tells them how much energy it can use and lets them figure out the best way to do it), then the maximum amount of energy that can be used can be calculated using equipment that is more efficient that the federal standard.  In this case, 15 SEER air conditioners and 92 AFUE furnaces would be included as the baseline that the new house would have to meet or exceed.

This provision will help remove the weight around the necks of states that want to have better building energy codes.  It does this while recognizing a fundamental difference between new construction and existing buildings -- it's cheaper and easier to make a new building more efficient than an existing building (which is why we need good energy codes).  Advanced technologies often have different needs than previous designs that older buildings were designed around.  For example, condensing furnaces require a drain to remove condensed water while some efficient gas heating equipment needs an electrical outlet.  New technologies may also be physically larger than the previous design.  Requiring them first in new construction where these costs are not a problem makes sense for consumers.

This agreement will save $13 billion dollars and enough energy to power 18 million homes by 2030

There really isn't much to add to that.  Providing the gateway for new, super efficient technologies to gain a foothold in the market with advanced building codes could potentially save even more. 

This agreement is a big deal and we are pleased with the outcome.  We hope it lays the groundwork for even greater gains in the future while setting a positive precedent for standards covering other appliances.

Related Links:

Making buildings more efficient: It helps to understand human behavior

Why buying cheap energy certificates worsens climate change

Making buildings more efficient: rationalizing retrofit markets

The Appliance Standards Awareness Project (ASAP) and the American Council for an Energy Efficient Economy (ACEEE) released a new report highlighting the opportunities for saving billions of dollars and huge amounts of energy through updated federal appliance standards.

The full report can be found here, executive summary here, and a press release is here.

Add this to the growing list of studies pointing to energy efficiency as our fastest, cleanest, and cheapest energy resource, including the recent McKinsey study that found $1.2 trillion in potential savings. This report makes the important point that appliance standards, while often ignored or downplayed, have a tremendous contribution to make as we move toward a clean energy economy and economic recovery. I try not to trot out savings estimates to make a point, but these numbers are so big that they speak for themselves.

This is not surprising news.  We have known for a long time that federal appliance standards save energy, cut emissions, and return money to taxpayers. We have also seen well crafted standards spur innovation within industries. The really interesting point is that 22 years after the birth of the federal standards program, billions in potential savings are still available.

It's also worth pointing out that half the savings come from fluorescent lights, water heaters, home furnaces, furnace fans, and refrigerators. Many of these have been through several rounds of standards in the past, so clearly manufacturers are innovating and the well has not run dry.

The report also provides recommendations for accelerating certain rulemakings because of the large energy savings available. This is consistent with President Obama's instructions to DOE earlier this year and would move us towards banking those savings sooner than later.

ASAP's newsletter and website are great resources for staying in the loop on all things related to state and federal standards.

Related Links:

Making buildings more efficient: It helps to understand human behavior

Why buying cheap energy certificates worsens climate change

Making buildings more efficient: rationalizing retrofit markets

Last Friday, the House of Representatives passed a landmark climate and energy bill that would finally begin to address the climate crises and move us towards a rational energy policy in this country. There are many key efficiency provisions in the bill, including,

For more detail on any of these, see my blog posts on the first draft of the bill here and here.

All of these policies will have a significant impact on future energy consumption and will save taxpayers money, but as with any important bill, last minute deals were made to gather the needed votes. Unfortunately, a couple of these last second changes significantly weakened key efficiency provisions that would save billions.

Both the building energy labeling provision and the outdoor lighting standard were worsened in the final bill. These losses hurt double in a climate bill, because the energy saved by efficiency not only pays for itself and makes money, but also reduces demand for carbon allowances and therefore lowers carbon prices. It is hard to say whether the opposition to these policies resulted from genuine misunderstanding or obstinacy, but the result is the same - we could be saving a lot more money.

In the case of the building energy labeling program, earlier drafts of the bill directed EPA to begin developing a technically sound and extremely flexible voluntary building energy label for homes and commercial buildings. Years later, when the label was ready for deployment, states would have been funded to label buildings in any way they chose. The National Association of Realtors opposed the provision but is unclear how efficiency information would have harmed their members.

A last second amendment limited the program to new construction only, robbing the current and future owners of today's buildings. The label would have helped those consumers understand the efficiency of their buildings and identify low and no cost opportunities to save money and energy. No building, new or existing, needs to be left out of a voluntary energy label.

It is discouraging that some would prefer to hide efficiency information from consumers in any circumstance. Ignoring wasted energy doesn't make it go away. It is also confounding that the lawmakers that led the charge to include this amendment also pushed for policies that would incorporate energy efficiency into the financing process. Without a technically sound and dependable building energy label, how will the financial industry be able to compare the efficiency of one property to the next?

The outdoor lighting standard that would have covered street lights and parking lot lights was also significantly weakened. Every date in the provision was moved back 5 years and the final tier of the standard (in terms of the amount of light per watt of energy consumed) that would not have taken effect until 2015 was removed completely. While the standard only applies to new fixtures, some parties led a misinformation campaign incorrectly claiming that currently installed fixtures would need to be replaced.

These changes are problematic because of the lost energy savings. Philips Lighting estimated that the standard as originally written could save consumers $3.6 billion annually once the existing stock of fixtures is fully replaced. With these last minute changes, the energy savings will be reduced by almost 1 Terawatt-hour, enough to power about 80,000 homes for a year.

At least one utility opposed the provision, citing extremely high cost figures as a result, but the standard would only have required more efficient lights when the existing units were being replaced so the incremental cost was not very high. This is interesting from the utility perspective, since the costs of running street lights are eventually paid for by the utility customers or taxpayers, standard or no standard. There must be some benefit to certain utilities for continuing to waste this energy since there are only disadvantages for consumers.

To complicate matters further, this weakened national standard, if it becomes law, would prevent states from setting their own more aggressive standards to benefit their citizens. The state/federal preemption issue on standards is something that comes up regularly. For this reason it is extremely important for federal standards enacted through legislation to be based on science rather than determined arbitrarily.

Overall the bill is a significant win for efficiency, containing a cap on carbon emissions, improved building codes, other appliance standards, and incentives for retrofits of existing buildings and the best appliances, but it is extremely unfortunate that some benefits were left on the table. Labels and more efficient street lights could have saved tremendous amounts of money and energy and would have augmented the effectiveness of the policies that remain in the bill. The political process is tricky, but hopefully these policies can be improved in the near future as part of the overall final climate and energy bill.

Related Links:

Making buildings more efficient: It helps to understand human behavior

Why buying cheap energy certificates worsens climate change

Approaching Copenhagen with a Portfolio of Domestic Commitments