Appliance agreement helps drive market transformation
An agreement that will promote increased energy efficiency in appliances was recently reached between the Association of Home Appliance Manufacturers (AHAM) and a nationwide coalition of energy efficiency and water efficiency advocates. The agreement involves a wide range of products including residential and commercial clothes washers, dishwashers, dehumidifiers, refrigerators and refrigerator/freezers. The U.S. Department of Energy (DOE) estimates that as a result of the agreement energy and water use will drop a combined 3.3 quadrillion Btus (quads) of energy and nearly 11 million acre-feet of water over the next 30 years. With refrigerators/freezers and dehumidifiers in particular included, considerable amounts of the projected energy savings would occur at peak periods, translating into significant demand (kW) savings critical to relieving stress on the region’s electric infrastructure and driving much of the retail price pressure. For perspective, 3.3 quads of energy would meet the needs of 15 percent of the U.S. population for a year. Cumulative consumer monetary savings is estimated at $14.7 billion. To achieve these energy savings, this comprehensive agreement utilizes a suite of energy efficiency policies: appliance efficiency standards, ENERGY STAR specifications and manufacturer tax credits.
As part of the implementation of the agreement, many of its provisions have been included in legislation recently introduced in Congress (the Energy Efficiency Promotion Act of 2007, S.1115 and a companion bill H.R. 2083 in the House of Representatives). In this legislation, efficiency standards will be set for dishwashers and commercial clothes washers. In addition, the legislation mandates the DOE to proceed with standards rulemaking for clothes washers, dishwashers and refrigerators. A separate bill, introduced into the House of Representatives (H.R.2137, the Super Efficient Appliance Incentives and Market Transformation Act of 2007) includes the manufacturer tax credits. Per the agreement, the amount spent on tax credits will not exceed a total of $500 million ($100 million for any individual company). The senate legislation has been reported out of the Committee on Energy and Natural Resources and is awaiting action by the full body. In addition, the agreement stipulates that trade associations and efficiency advocates will submit a joint recommendation to the DOE for increased ENERGY STAR levels for residential and commercial clothes washers as well as dishwashers.
The AHAM agreement is a great example of cooperation between industry, government and advocacy groups. The agreement includes:
- Significant energy/water savings that will result in lower electrical demand, reduced carbon emissions and financial savings to consumers.
- Provisions to ensure that the DOE will continue to upgrade efficiency standards as new technologies enter the market.
- Tax incentives for manufacturers that produce high efficiency appliances including clothes washers (residential/commercial), dishwashers, refrigerators, and dehumidifiers. Tax credits help manufacturers make the changes necessary to bring energy efficient products into the market.
A chart summarizing the specifications contained in the agreement is available here.
Implications and Opportunities from NEEP’s Perspective
NEEP’s Regional Initiatives Team is exploring the implications and possible opportunities that have presented themselves in this historic AHAM deal. As standards rise and tax incentives come on line over the next few years, the possibility of substantial energy and water savings through these appliances is very significant. With the newly created momentum surrounding home appliance efficiency, NEEP stands ready to identify the appliances with the most cost effective savings potential.
NEEP will conduct extensive market research on each of the appliances involved in the AHAM agreement, and will develop a rigorous energy and economic potential study that identifies existing barriers to the high efficiency appliance market. Once specific barriers have been identified, specific strategies will be developed to overcome them. The combination of research, analysis and strategy development will be organized into a comprehensive Market Transformation plan for appliances going forward. The goal of this plan will be to assist our sponsor’s plans for their appliance programs. NEEP will use this analysis to help sponsors understand the potential of increased efforts to promote appliances and potentially encourage a renewed focus on the ENERGY STAR Products Initiative.
For more information, please review the American Council for an Energy Efficient Economy’s (ACEEE) press release or contact David Lis, program associate for NEEP's Regional Initiatives.
