Minimum Efficiency Standards Research Articles

Equity implications of market structure and appliance energy efficiency regulation

Minimum efficiency standards for products such as appliances are economically efficient when they correct a market failure. Negative ramifications of these standards, particularly for credit constrained or low-income consumers, such as increased prices or decreased choice, are contingent on the pricing behavior of suppliers. We use market point of sales data to estimate the change in price and efficiency of clothes washers following the change in United States minimum efficiency standards in 2004 and 2007, differentiated by market segment. With a relatively narrow confidence interval, the average price of the baseline market segment did not change significantly concurrent with either the 2004 or 2007 standard change, while efficiency of these products increased by 30%, resulting in significant financial savings for consumers of the least expensive baseline products. The highest efficiency products experienced a significant drop in price and increase in efficiency as well, particularly following the 2007 standard change. The results suggest that the effect of this increase in minimum efficiency standards for clothes washers was beneficial to all consumers, but particularly those with lower incomes or renters. Low-income consumers were not priced out of the market, but rather benefited particularly. We offer discussion of potential explanations of these findings.

Energy-Efficiency Policy and its Effects at the Intensive and at the Extensive Investment Margins with Heterogenous Households

I analyze energy-efficiency policy as a prescription of a minimum-efficiency standard for energy-using household goods like cars, building insulation, and home appliances. Such a policy has two effects. At the intensive margin, a household that invests will choose a more efficient device. At the extensive margin, there will be more households that choose not to invest at all. Thus, additional to and different from rebound effects, energy-efficiency policy may have unintended consequences. I analyze the equilibrium effects of a minimum-efficiency standard, taking price adjustments and household heterogeneity into account. A moderate minimum-efficiency standard increases demand for efficiency-enhancing household capital goods, and reduces energy demand. More stringent policy is shown to be less effective or even counterproductive. For the case of a fixed supply of efficiency-enhancing capital, it is shown that minimum-efficiency standards increase equilibrium energy demand. Finally, I analyze which households benefit from minimum-efficiency standards and which ones lose. A standard induces investing households to expend more for household capital and less for energy. The wedge between the induced expenditures and the private optimum is analyzed as a deadweight loss.

Ratcheting, Competition, and the Diffusion of Technological Change: The Case of Televisions Under an Energy Efficiency Program

In differentiated goods markets with societal implications, quality standards are commonly implemented to avoid the under-provision of innovation. Firms have clear incentives to engage in strategic behavior because policymakers use market outcomes as a benchmark in designing regulation. This study examines a unique energy efficiency standard for television sets, under which future minimum efficiency standards are explicitly a function of current product offerings. The setting illustrates firms’ dual incentives at work: A firm better differentiates products under a looser standard, but may want to induce a tighter standard if it can benefit from raising rivals’ costs. These incentives drive firms to ratchet quality. We develop a structural model of product entry that illustrates how the regulator’s standard setting rule affects a firm’s product quality decision. Counterfactual simulations illustrate that ratcheting down was prevalent in this market and that incentives to ratchet up did not exist. The results suggest that in many commonly regulated markets in which firms share similar cost structures, firms are likely to experience incentives to ratchet down and delay the introduction of innovative products. The study highlights the importance of understanding supply side incentives, such as ratcheting, in designing and assessing policy.

Effectiveness of Energy Efficiency Standards and Labeling Requirements: The Case of Air Conditioners in Japan, Thailand, China and India

This chapter evaluates whether standards and labeling programs aimed at improving the energy efficiency of electrical appliances have been successful at achieving their goals. Standards and labeling programs work to reduce energy consumption by (a) influencing consumers’ choice of appliance and (b) inducing manufacturers to improve the energy efficiency of their products. In Most middle- and high-income countries first introduced mandatory minimum energy performance standards (MEPS) and/or multi-grade labeling and then added high energy performance standards (HEPS) that upgraded those standards. Analysis of product-level data for the air conditioner markets in Japan, Thailand, India and China yielded the following findings: (1) Standards and labeling programs appear to be effective at changing energy efficiency levels in the marketplace. There has been a clear improvement in the energy efficiency of air conditioners, measured by such indexes as coefficient of performance (COP), energy efficiency ratio (EER) and annual performance factor (APF) in Japan. (2) More energy-efficient products are priced higher in Japan and India. (3) Japan succeeded in reducing electricity consumption from air conditioners by one-half, but neither Thailand nor China succeeded in curbing electricity consumption. Appropriate fine-tuning of policy instruments is necessary to effectively reduce electricity use by air conditioners. An example is the introduction of a rule-based mechanism to revise minimum efficiency standards regularly. Cross-country harmonization of regulatory methods, such as methods to measure energy efficiency and revise efficiency standards, may also be beneficial.

The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR $$^{\textregistered }$$ ® Certified Refrigerators

The number and variety of governmental programs designed to promote energy efficiency have increased over time. Examples include mandatory minimum efficiency standards, subsidies for more energy efficient goods and services, and consumer labels, such as the United States Environmental Protection Agency’s ENERGY STAR\(^{\textregistered }\). While there has been considerable research on the effects of these programs in isolation, there has been less of a focus on joint effects or interactions between programs. This study examines how the offer of a mail-in rebate influences consumer willingness-to-pay for an ENERGY STAR-certified refrigerator. Data used for this study were collected from an online survey containing a hypothetical choice experiment conducted in the United States in 2009. Results suggest that the offer of a rebate induces uncertainty about the quality of ENERGY STAR-certified refrigerators and, thus, could actually reduce willingness-to-pay for such refrigerators.

A European Impact Assessment of the Eco-design Requirements for Heating Systems – What Kind of Savings can we Expect?

Improving energy efficiency is seen as a key pillar in transforming the energy system. Residential heating systems could make a substantial contribution to reducing energy demand since they rank among the largest European energy consumers, accounting for about 21.5% (10,327 PJ) of the total final energy demand in 2010. To exploit heating system-related saving potentials, the EU implemented the Eco-Design Directive, which sets minimum efficiency standards at the design phase. In terms of heating systems, Lots 1 and 2 were published in 2013 and Lots 15 and 20 are in the process of being developed. To evaluate the impact of these measures, a scenario analysis is being conducted as part of the Eco-Design preparation studies. The Eco-Design impact assessment is for time horizons to 2025 and 2035, which are rather short compared to the lifetime of heating systems of 20 years or more. The technology-specific assessments also neglect the interdependency between heating systems. This study aims to close this research gap by applying an impact assessment to a combination of all four Lots addressing heating systems. The bottom-up model FORECAST-Residential is used to analyse the EU27 building and heating stock on a country by country basis up to 2050. The analysis reveals that the Eco-Design Directives could reduce final energy demand by 1,376 PJ by 2050. The largest potential for savings are attributed to Lot 1, which is mainly related to replacing constant temperature and low temperature boilers by more efficient condensing boilers together with a strong diffusion of heat pumps.

High Efficiency Electric Motors: Economic and Energy Advantages

The energy crisis that is currently being faced by humanity has demanded the revision of the regulations applied to different energy consumers, including electrical machines. The minimum efficiency standards for electrical machines provided by the regulations have been increased. Different categories have been defined to identify the engine based on the level of losses. Regardless of the benefits of ecological nature imposed by recent regulations, the use of the new generations of high efficiency induction engines is attractive from an economic standpoint. The lower power consumption engines and its increasing life span can allow quickly recovering the additional cost of new units and achieving further gains. In this paper the current regulations in different countries of the world are reviewed. According to the energy cost in Argentina, a computation of the times of economic payback is also presented.

Retrospective evaluation of appliance price trends

Real prices of major appliances (refrigerators, dishwashers, heating and cooling equipment) have been falling since the late 1970s despite increases in appliance efficiency and other quality variables. This paper demonstrates that historic increases in efficiency over time, including those resulting from minimum efficiency standards, incur smaller price increases than were expected by the Department of Energy (DOE) forecasts made in conjunction with standards. This effect can be explained by technological innovation, which lowers the cost of efficiency, and by market changes contributing to lower markups and economies of scale in production of higher efficiency units. We reach four principal conclusions about appliance trends and retail price setting: 1. For the past several decades, the retail price of appliances has been steadily falling while efficiency has been increasing. 2. Past retail price predictions made by the DOE analyses of efficiency standards, assuming constant prices over time, have tended to overestimate retail prices. 3. The average incremental price to increase appliance efficiency has declined over time. DOE technical support documents have typically overestimated this incremental price and retail prices. 4. Changes in retail markups and economies of scale in production of more efficient appliances may have contributed to declines in prices of efficient appliances.

Durable goods and residential demand for energy and water: evidence from a field trial

This article describes a household production model in which energy‐efficient durable goods cost less to operate so households may use them more. The model is estimated using household‐level data from a field trial in which participants received high‐efficiency clothes washers free of charge. The estimation strategy exploits this quasi‐random replacement of washers to derive precise estimates of the household production technology and a demand function for clothes washing. During the field trial, households increased clothes washing on average by 5.6% after receiving a high‐efficiency washer, implying a price elasticity of −.06. The complete model is used to evaluate the cost‐effectiveness of recent changes in minimum efficiency standards for clothes washers.

Energy efficiency standards for equipment: Additional opportunities in the residential and commercial sectors

Energy efficiency standards for residential and commercial equipment have been a major source of energy conservation in the US This study estimated key national impacts of potential new and upgraded energy efficiency standards. These impacts approximate the opportunity for national benefits that may be lost if energy efficiency standards for residential and commercial equipment are not upgraded and expanded from current levels. The results suggest that national benefits from new and upgraded standards may be substantial. They also indicate that standards for currently unregulated products may yield more benefits than upgrading minimum efficiency standards for products that already have them. The majority of those currently unregulated products are in the commercial sector.

Interactions between lighting and space conditioning energy use in US commercial buildings

Reductions in lighting energy have secondary effects on cooling and heating energy consumption. In general, lighting energy reductions increase heating and decrease cooling requirements of a building. The net change in a building's annual energy requirements, however, is difficult to quantify and depends on the building characteristics, operating conditions, and climate. This paper characterizes the effects of lighting/HVAC interactions on the annual heating/cooling requirements of prototypical US commercial buildings through computer simulations using the DOE-2.1E building energy analysis program. Twelve building types of two vintages and five climates are chosen to represent the US commercial building stock. For each combination of building type, vintage, and climate, a prototypical building is simulated with varying lighting power densities, and the resultant changes in heating and cooling loads are recorded. These loads are used together with market information on the saturation of the different HVAC equipment in commercial buildings to determine the changes in energy use and expenditures for heating and cooling. Results are presented by building type for the US as a whole. Therefore, the data presented in this paper can be used to assess the secondary effects of lighting-related federal policies with widespread impacts, such as minimum efficiency standards. Generally, in warm climates the interactions will induce monetary savings and in cold climates the interactions will induce monetary penalties. For the commercial building stock in the US, a reduction in lighting energy that is well distributed geographically will induce neither significant savings nor significant penalties from associated changes in HVAC primary energy and energy expenditures.

10.2172/1072835

Window air conditioners are the dominant cooling product for residences, in terms of annual unit sales. They are inexpensive, portable and can be installed by the owner. For this reason, they are an attractive solution for supplemental cooling, for retrofitting air conditioning into a home which lacks ductwork, and for renters. Window air conditioners for sale in the United States are required to meet very modest minimum efficiency standards. Four window air conditioners' performance were tested in the Advanced HVAC Systems Laboratory on NREL's campus in Golden, CO. In order to separate and study the refrigerant system's performance, the unit's internal leakage pathways, the unit's fanforced ventilation, and the leakage around the unit resulting from installation in a window, a series of tests were devised that focused on each aspect of the unit's performance. These tests were designed to develop a detailed performance map to determine whole-house performance in different climates. Even though the test regimen deviated thoroughly from the industry-standard ratings test, the results permit simple calculation of an estimated rating for both capacity and efficiency that would result from a standard ratings test. Using this calculation method, it was found that the three new air conditioners' measured performancemore » was consistent with their ratings. This method also permits calculation of equivalent SEER for the test articles. Performance datasets were developed across a broad range of indoor and outdoor operating conditions, and used them to generate performance maps.« less

Projected regional impacts of appliance efficiency standards for the US residential sector

Minimum efficiency standards for residential appliances have been implemented in the US for a large number of residential end-uses. This analysis assesses the potential energy, dollar, and carbon impacts of those standards at the state and national levels. We explicitly account for improvements in efficiency likely to occur in the absence of standards, but because our method for characterizing these exogenous improvements probably overestimates them, both the energy and cost savings presented in this article represent lower bounds to the true benefits. Cumulative present-valued dollar savings after subtracting out the additional cost of the more efficient equipment are about $30 billion from 1990 to 2010. Each dollar of federal expenditure on implementing the standards will contribute $165 of net present-valued savings to the US economy over the 1990 to 2010 period. Average benefit/cost ratios for these standards are about 3.5 for the US as a whole. Projected carbon reductions are approximately 9 million metric tons of carbon per year in the years from 2000 to 2010. Because these standards save energy at a cost less than the price of that energy, the resulting carbon emission reductions are achieved at negative net cost to society.

Regulating appliance energy efficiency in Canada some similarities and differences with the US

The objective of Canada's energy efficiency regulations is to eliminate the most energy-inefficient energy-using products from the Canadian market by establishing minimum efficiency standards for certain energy-using equipment. Under the Energy Efficiency Act, regulations have been developed for a wide range of equipment. The Energy Efficiency Regulations, which came into effect in February 1995, apply to equipment imported into Canada and equipment manufactured in Canada and shipped from one province to another. Canada's energy efficiency regulatory process differs significantly from that of the United States in a number of ways. The Canadian regulations, for example, have different verification, reporting, and importing requirements. Important distinctions also exist with respect to the legislative authority for the Canadian regulatory program. Nevertheless, despite the differences in approaches, processes, climate, energy prices and policy objectives, Canadian regulations are still greatly influenced by regulatory activities and trends in the United States. The North American equipment market is an integrated one, with a constant two-way flow of products across the Canada-US border. As a result, the market domination by US equipment manufacturers has a strong impact on energy-efficiency levels in Canada. One of the key future thrusts of Canadian regulators will be to pursue greater harmonization of regulatory requirements within Canada and among Canada, the United States, and Mexico, as well as globally. The goal is to establish an effective, comprehensive, and consistent energy-efficiency regulatory regime that will contribute to the achievement of economic and environmental objectives around the world.

National appliance energy conservation act: Analysis of product changes and the impacts on housing

Summary NAECA was enacted in 1987 and amended in 1988. Minimum efficiency standards have been established for air conditioners, heat pumps, dishwashers, clothes washers and dryers, furnaces, refrigerators and freezers, water heaters, and gas direct heaters. The DOE has not established minimum efficiency standards for televisions, microwave ovens, ranges and ovens. Appliance manufacturers have reduced energy consumption using improved insulation, more efficient motors, electronic controls, efficient compressors, and non‐continuous burning pilots. Energy efficient appliances can prevent pollution by reducing the demand for electricity. From 1990 to 2015, the cumulative energy impact of the National Appliance Energy Conservation Amendments of 1988 is estimated to be an 0.8 percent savings of all fuels. However, energy efficient residential appliances are only one factor in the total energy consumption equation.

The Thermal Performance of Residential Electric Water Heaters Subjected to Various Off-Peak Schedules

An increasing number of utilities control the supply of power to residential water heaters as one means of reducing peak electrical demand. Water heaters operated in this manner are referred to as off-peak water heaters. Several utilities are also considering the use of solar domestic water heaters as an additional means of limiting power demand during times of greatest electrical usage. The research described within this paper quantifies the variation in thermal efficiency attributable to subjecting residential electrical water heaters to various off-peak and water removal schedules and, thus, forms a basis of comparison to which the thermal efficiency of solar water heaters or other water heating technologies may be compared. Laboratory tests, where the off-peak period and hot water draw schedule were varied, were conducted on two residential storage water heaters. A computer model of an electric water heater was developed and validated. The laboratory tests and the model were used to quantify the effect that various off-peak and hot water draw schedules have on water heater thermal efficiency. Thermal efficiency was found to vary up to seven percent for water heaters which meet the present minimum efficiency standards as specified within the National Appliance Energy Conservation Act. The energy factor, as measured using the Department of Energy Test Procedure for Water Heaters, is shown to be independent of the off-peak schedule because of a “normalizing” that occurs as part of the calculation procedure.

Illumination and sustainable development Part II: Implementing lighting efficiency programs

In Part I of this article, we considered the technology and economics of alternative lighting systems, both electric and fuel based, demonstrating that there are ample and cost-effective opportunities for energy savings. In this second and final part, we consider some of the barriers that hinder the implementation of energy-efficient lighting. These barriers may be overcome by measures such as minimum efficiency standards, both voluntary and mandatory, assistance in building design, financial incentives, and subsidies. A number of programs in different countries have incorporated these measures successfully to promote energy-efficient lighting. We describe in some detail programs designed to promote the diffusion of compact fluorescent lamps. Roughly a third of the world's population today does not have access to electric lighting. There are no practical alternatives among non-fuel lighting that are resource efficient and produce an adequate amount of light. We take a brief look at the options for making electricity available where it is currently not available for lighting: an alternative to extending the grid is decentralized generation, using diesel, producer gas, or biogas. Where biogas is being considered we show that it is far better to use it to generate electricity (for lighting) than to use it in gas mantle lamps. One electric lighting option is the use of rechargeable battery operated fluorescent lanterns that can be charged using a photovoltaic panel.

Energy Conservation Options for Canada: A Nationwide Survey of Consumer Opinion

During the past decade a considerable number of studies have increased our understanding of consumer behavior in relation to energy use and conservation. A criticism of the early work has been its lack of direct relevance to policy makers under pressure to develop and implement programs to reduce energy consumption. This study provides a link between existing research knowledge and the need for policy formulation guidelines. Data were obtained from a nationwide sample of 1,451 Canadian households concerning the acceptability of selected programs designed to reduce energy consumption in the consumer sector. Respondents also provided judgments concerning the desirability of a broad range of approaches to consumer energy conservation. The findings revealed that consumers are more willing to accept conservation initiatives which are non‐coercive and informational in nature. Information and labelling programs, minimum efficiency standards, home audit programs, and financial grants/tax incentives were the specific initiatives rated most acceptable.