Appliance Manufacturers Reject Market-Based Efficiency Standards

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By Rebecca Kern

Home and commercial appliance manufacturers oppose an idea the Energy Department has floated that would change the appliance energy efficiency standards program to one based on averages rather than individual product performance.

The department suggested in a public request for information using a market-based policy mechanism, akin to the Environmental Protection Agency’s Corporate Average Fuel Economy program, which uses averaging, banking, and trading of credits for vehicles.

The majority of manufacturer groups and efficiency advocates who wrote comments opposed the department’s concept of moving to an averaging or credit-trading system for appliance standards.

Moving to a fleetwide system would be illegal under the Energy Policy and Conservation Act of 1975, which sets minimum efficiency levels for individual products, they said.

Strict Floors

The appliance standards program sets a minimum efficiency floor for each product type, and it can never be lowered unless there’s an act of Congress, Stephen Yurek, president and CEO of the Heating, and Refrigeration Institute (AHRI), a trade group that represents 300 air conditioning and heating manufacturers, told Bloomberg Environment.

The energy-efficiency program is intended to reduce energy consumption. The standards specify the minimum efficiency level that each home appliance, piece of equipment, or lighting product must have.

This system “provides certainty to the manufacturers and to the market that everybody is moving forward on all products and at a minimum will meet the minimum efficiency threshold,” Yurek said. AHRI members include Honeywell International Inc. and General Electric Appliances Inc., which is owned by the Haier Group Corp. of China.

In November 2017, the Energy Department asked for feedback on adding flexibility for manufacturers to comply with appliance standards while “reducing compliance costs, enhancing consumer choice, and maintaining or increasing energy savings.”

The comment deadline was March 26.

‘Impossible to Enforce’

If the Energy Department were to move to a fleetwide averaging system, it would be “impossible to enforce,” Charles Hon, manager of sustainability and government affairs at True Manufacturing Co. Inc., a commercial refrigeration manufacturer based in O’Fallon, Mo., told Bloomberg Environment.

“You would have to prove the entire fleet was not meeting the standard, and if you look at commercial refrigeration there are like 40 different categories of refrigeration that we manufacture into,” he said.

It would also be difficult to define a fleet, Hon said. His company, for example, makes 500 refrigerator models, and it would be difficult to track how each product falls within the fleetwide average.

Industry Costs, Customer Confusion

AHRI as well as efficiency advocacy groups including the Natural Resources Defense Council and the American Council for an Energy-Efficient Economy also said that changing to fleetwide average standards would increase compliance costs for industry and lead to consumer confusion.

AHRI members sell millions of appliance models, so the information and record-keeping that would be required to calculate the averages would be very labor-intensive, Yurek said.

For appliance products sold from 1987 to 2035, the national efficiency standards are projected to save $2.4 trillion for U.S. consumers and businesses, according to the Appliance Standards Awareness Project, a subgroup under the American Council for an Energy-Efficient Economy.

“You could inadvertently choose a product that is less efficient than the one you’re replacing, and that’s really moving in the wrong direction,” Lauren Urbanek, a senior energy policy advocate at NDRC, told Bloomberg Environment.

The comment period ended at the same time that the Trump administration’s EPA and the Department of Transportation are considering lessening the fuel economy efficiency standards for automobiles.

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