# Energy and Economic Impacts of U.S. Federal Energy

and Water Conservation Standards Adopted From

1987 Through 201 2

Principal Authors

Stephen Meyers

, Alison Williams and Peter Chan

Environmental Energy Technologies Division

Project Contributors Greg Rosenquist, Helcio Blum, Barbara Atkinson, Sanaee Iyama,

Jie Gu, Maithili Iyer , Sarah Price

Environmental Energy Technologies Division

One Cyclotron Road Berkeley, CA 94720

April 201 3

The work described in this report was funded by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, Building Technologies Program under Contract No. DE

- AC02

- 05CH11231.2 

### Disclaimer

This document was prepared as an account of wor k sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor the Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference h erein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency

ther eof, or the Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof or the Regents of the University of California.

Lawrence Berkeley National Lab oratory is an equal opportunity employer

.



### Copyright Notice

This manuscript has been authored by an author at Lawrence Berkeley National Laboratory under

Contract No. DE

- AC02

- 05CH11231 with the U.S. Department of Energy. The U.S. Gove rnment retains, and the publisher, by accepting the article for publication, acknowledges, that the U.S. Government

retains a non

- exclusive, paid

- up, irrevocable, world

- wide license to publish or reproduce the published form of this manuscript, or allow ot hers to do so, for U.S. Government purposes.



### Acknowledgements

The work described in this report was funded by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, Building Technologies Program under Contract No. DE

- AC02

- 05CH11231.3



### Table of Contents

Acknowledgements

................................ ................................ ................................ ......................... 2

Abstract

................................ ................................ ................................ ................................ ........... 4

Introduction

................................ ................................ ................................ ................................ ..... 5
Analysis Method Over view

................................ ................................ ................................ ............ 7

Product

- Level Impact of Standards: The Case of Refrigerator

- Freezers

................................ ........ 9
National Impacts

................................ ................................ ................................ ........................... 10
Consumer Impacts

................................ ................................ ................................ ........................ 15
Sources of Uncertainty

................................ ................................ ................................ .................. 15

Conclusion

................................ ................................ ................................ ................................ .... 17
Appendix A: Methods for Estimating National Impacts from Standards

................................ ..... 18
NAECA 1987 and 1988 and DOE Updates before 2007

................................ .......................... 18

EPACT 1992

................................ ................................ ................................ ............................. 19

EPACT 2005

................................ ................................ ................................ ............................. 22

EISA 2007

................................ ................................ ................................ ................................ . 22

DOE Standards 2007

- 2011

................................ ................................ ................................ ........ 23

General Methods

................................ ................................ ................................ ....................... 18
Appendix B: Quad and Carbon Equivalents

................................ ................................ ................. 244 

### Abstract

This paper presents estimates of the key impacts of Federal energy and water conservation
standards adopted from 1987 through 201 2 . The standards for consumer products and
commercial and industrial equipment include those set by legislation as well as standards adopted by DOE through rulemaking.

In 201 2 , th e standards saved an estimated 3.6 quads of primary energy, which is equivalent to 3% of total U.S. energy consump tion. The savings in operating costs for households and
businesses totaled $ 51.4 billion. The average household saved $ 347 in operating costs as a result of residential and plumbing product standards

. The estimated reduction in CO 2 emissions
associated with the standards in 2012 was 198 million metric tons

, which is equivalent to 3 % of
total U.S. CO 2 emissions.

The estimate d cumulative energy savings over the period 1990

- 2070 amount to 17 9 quads

. Accounting for the increased upfront costs of more

- efficient products and the operating cost (energy and water) savings over the products’ lifetime, the standards have a past and projected
cumulative net present value ( NPV ) of consumer benefit of between $ 1,104 billion and $ 1,390 billion, using 7 percent and 3 percent discount rates, respectively.

T he water conservation standards, together with energy conservation standards that also save

water, reduced water use by 1.8 trillion gallons in 2012 , and will achieve cumulative water savings by 2040 of 54 trillion gallons. T he estimated consumer savings in 2012 from reduced water use amounted to $ 1 3 billon.5



### Introduction

The energy conservation program for consumer products and certain commercial and industrial products was established by the Energy Policy and Conservation Act of 1975 (EPCA). EPCA established a program consisting of test procedures, labeling

, and energy conservation targets for 19 types of consumer products

. The National Energy Co nservation Policy Act of 1978 amended EPCA by replacing the energy conservation targets program and directing that energy conservation standards be set for the covered consumer products. W ith the passage of the National Appliance Energy Conservation Act ( NAECA) in 1987

, EPCA was further amended to establish the first national energy conservation standards for consumer products. Subsequent
amendments in 1988, 1992, 2005, and 2007 further expand ed the scope of coverage to include
additional consumer products, certain commercial and industrial equipment

, as well as water conservation standards for residential and commercial products. EPCA, as amended, requires
the Department of Energy ( DOE ) to update or establish standards at levels that “achieve the maximum improvement in energy [or water] efficiency ... which the Secretary determines is technologically feasible and economically justified.” EPCA defines “economically justified” standards as those for which benefits exceed the costs, given a number of f actors, including impacts on consumers and manufacturers and the nation’s need to save energy or water

.
This paper presents estimates of the key impacts of the energy and water conservation standards that have been adopted from 1987 through 201 2

. It updates the results presented in Meyers et al. (2012 ), 1 which covered standards adopted through 201 1

. The standards covered include those set by legislation as well as standards adopted by DOE through rulemaking. The estimates cover both historic and pr ojected impacts of these standards. The impacts cover primary energy savings and water savings, net present value of consumer a benefits, and estimated reductions in CO 2 emissions.

Table 1 lists produc t s covered by standards , the year (s) compliance was or will be required , and the legislation that initially authorized each standard

. The standards that were adopted in 201 2 cover the following products (compliance year in parentheses):

 Residential clothes washers (201 5/2018 )

 Residential dishwashers (2013)

 ASHRAE products (2012/2013/2014) b

a The term “consumer” as used in this report refers to all buyers and users of appliances and equipment covered by standards.

b Water and evaporatively cooled air conditioners , VRF water source heat pumps, computer room air conditioners.6

Table 1. Federal Energy and Water Conservation Standards for Appliances and Equipment Adopted From 1987 Through 201 2

Product Compliance Date for Original Standard and Updates Authorizing

Legislation*

RESIDENTIAL
Clothes Washers + 1988, 1994, 2004/2007

, 2015/2018 NAECA 1987

Clothes Dryers 1988, 1994 , 2014 NAECA 1987
Dishwashers + 1988, 1994, 2010 , 2013 NAECA 1987 Refrigerators and Refrigerator

- Freezers 1990, 1993, 2001 , 2014 NAECA 1987
Freezers 1990, 1993, 2001 , 2014 NAECA 1987
Room Air Conditioners 1990, 2000 , 2014 NAECA 1987

Central Air Conditioners and Heat Pumps 199 2/1993

, 2006 , 2015 NAECA 1987

Water Heaters 1990, 2004, 2015 NAECA 1987
Furnaces 199 2 , 2013 NAECA 1987
Boilers 199 2

, 2012 NAECA 1987 Direct Heating Equipment 1990, 2013 NAECA 1987 Cooking Products 1990 , 2012 NAECA 1987
Pool Heaters 1990, 2013 NAECA 1987 Ceiling Fans and Ceiling Fan Light Kits 2007 EPACT 2005
Torchieres 2006 EPACT 2005
Dehumidifiers 2007, 2012 EPACT 2005 External Power Supplies 2008 EISA 2007
COMMERCIAL & INDUSTRIAL
Electric Motors 1997, 2010 EPACT 1992
Warm Air Furnaces 1994 EPACT 1992 Packaged Boilers 1994 EPACT 1992 Air Conditioners and Heat Pumps 1994/1995, 2003/2004, 2010, 2012 , 2012

- 14 EPACT 1992

Water Heaters, Hot Water Supply Boilers and Unfired Hot Water Storage Tanks 1994, 2004 EPACT 1992

Distribution Transformers 2007, 2010 EPACT 1992, EPACT 2005 Refrigerators, Refrigerator

- Freezers and Freezers 2010, 2012 EPACT 2005
Automatic Ice Makers 2010 EPACT 2005
Clothes Washers + 2007 EPACT 2005
Unit Heaters 2008 EPACT 2005 Refrigerated Beverage Vending Machines 2012 EPACT 2005
Walk

- in Coolers and Walk

- in Freezers 2009 EISA 2007
LIGHTING PRODUCTS Fluorescent Lamp Ballasts 1990, 2005/2010 , 2014 NAECA 1988 General Service Fluorescent Lamps and Incandescent Reflector Lamps 199 5, 2008, 2012 EPACT 1992, EISA 2007 Medium Base Compact Fluorescent Lamps 2006 EPACT 20057

Illuminated Exit Signs 2006 EPACT 2005 Traffic Signal Modules and Pedestrian Modules 2006 EPACT 2005 Mercury Vapor Lamp Ballasts 2008 EPACT 2005 Metal Halide Lamp Ballasts and Fixtures 2009 EISA 2007 General Service Incandescent Lamps, Intermediate Base Incandescent Lamps and Candelabra Base Incandescent Lamps 2012/2014 & 2020 EISA 2007

PLUMBING PRODUCTS
Faucets ++ 1994 EPACT 1992
Showerheads ++ 1994 EPACT 1992
Water Closets ++ 1994/1997 EPACT 1992
Urinals ++ 1994/1997 EPACT 1992
Pre

- rinse Spray Valves ++ 2007 EPACT 2005

* * * The Energy Policy and Conservation Act of 1975 was amended to set energy or water conservation standards by the National Appliance Energy Conservation Act ( NAECA 1987 ), the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), the Energy Policy Act of 1992 (EPACT 1992), the Energy Policy Act of 2005 (EPACT 2005), and the Energy Independence and Security Act of 2007 (EISA 2007).

+ + Water and energy conservation standard

+ ++ Water conservation standard



### Analysis Method Overview

Different analytical methods were used for five sets of standards. For NAECA 1987 and
NAECA 1988 standards and DOE updates of those standards issued before 200 7 , we utilized the analyses conducted by Lawrence Berkeley Natio na l Lab oratory (LBNL) in 200 7

- 2008. 2 For
EPACT 1992 standards, we developed new estimates for this study . For EPACT 2005 standards,

we reviewed and utilized an analys i s conducted by Nadel et al. 3 and added information from DOE analyses where available. For most of the EISA 2007 standards , we drew upon an analys i s conducted by DOE. 4 For the other EISA 2007 standards, c we used unpublished national impact analyses that were prepared by LBNL for DOE. For standards adopted by DOE in 2007

- 201 2

, we drew on the national impact analyses performed for the rulemakings for each of the standards and adapted the results for the framework of this study. Appendix A further describes the use of the above sources in this study.

It is important to note that the analyses performed for the r ulemakings for each of the standards adopted by DOE in 2007

- 2012 were highly detailed and were carefully reviewed by stakeholders. All of the other sources used for this study were much less detailed in their approach and less extensively reviewed.

The mo st challenging aspect of estimating the impacts of standards is characterizing what would have happened w ithout new or amended standards. W e call this counterfactual against which

c Dishwashers, resi dential boilers and dehumidifiers

.8

impacts of standards is measured the “base case.” The sources used for this study vary in how they characterized the base case. The LBNL analysis of the NAECA standards and DOE updates
of those standards before 2007 estimated a dynamic base case in which the energy efficiency of the products improves somewhat even without standards. The analyses performed for DOE’s rulemakings also consider how the market might change in the absence of new or amended standards. In contrast, the analyses used for EPACT 1992, EP ACT 2005

, and EISA 2007 standards used simple assumptions (in many cases , no change in efficiency) regarding the base

case.

We focused on three key impacts associated with standards: (1) p rimary energy savings; (2)

a dditional installed costs; and (3) o pera ting cost savings. Operating cost savings primarily consist of energy cost savings. Energy cost savings were estimated using historical average annual energy prices through 2011, and recent project ions of average annual energy prices after
2011. For standa rds that save water, we also included water cost savings where possible. In some cases (primarily the DOE rulemakings in 2007

- 201 2 ), the operating cost savings also include changes in maintenance and repair costs associated with the standards.

From (2) and (3) we derived net cost or savings for each year

. We also estimated annual
reductions in CO 2 emission s associated with the standards using the annual energy savings and annual average CO 2 emissions factors for the electricity generation sector and for natural gas.

F or each standard we developed a time series of annual impacts, with economic impacts expressed in constant dollars. F or the NAECA standards and DOE updates of those standards before 2007, and for standards adopted by DOE in 2007

- 201 2

, we estimated annual impacts for
each standard for 30 years worth of shipments . For most of the other stand ards, for which the
base case often assume d no change in efficiency, we used a shorter period of shipments as a way of compensating for the lack of a dynamic base case, which might tend to overstate the savings
from standards. For all standards, w e estimated annual energy savings and operating cost savings until products installed in the final year considered are retired from the stock. Retirement is
ba sed on the average lifetime for each product.

Using the annual economic impacts, we derive d a net present value (NPV) by discounting future impacts to the present (defined as 201 2 for this report ). For economic impacts occurring after
201 2 , we used discount rates of 3% and 7%, which are the rates used by DOE in its analyses of national impacts , in accordance with guidance from the Office of Management and Budget to Federal agencies on the development of regulatory analysis

. 5 For economic impacts occu rring
before 201 2 , we derived estimates of their present value using interest rates of 3% and 7%. This approach reflects the view that the present value of the past stream of benefits should reflect the

r eturns to those “ profits ” had they been invested els ewhere in the economy.9

We estimated a monetary value of the reductions in CO 2 emissions using the mid

- range series for the global Social Cost of Carbon (SCC) developed by a Federal interagency process. d Th e series
used has a value of $22.3 per metric ton in 2010 and increases at 3 percent per year.



### Product

- Level Impact of Standards: The Case of Refrigerator

- Freezers Figure 1 illustrates how standards have had an important effect on the energy efficiency of new products, in this case refrigerator

- freezers. The average new refrigerator

- freezer in 2010 used only 44% of the energy per year as an average new unit in 1985. Total energy use for these products has declined even as shipments increased and the average size of new units grew. Nationally, in 2010 refri gerator

- freezers used one

- third less total energy than in 1985 even though there were 70 million more units in use. e

Figure 1

. Refrigerator

- Freezer Energy Use Trends: Average Energy Use for New Products and Total Energy Use for Refrigerator

- Freezers

Sour ce: AHAM Fact Books and 2011 DOE standards rulemaking for residential refrigeration products. f

d For details on the SCC values, see appendix 16

- A of the Technical Support Document for the final rule for residential refrigeration products. http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/refrig_finalrule_tsd.pdf

e The increase in total energy use depicted after 2025 is due to gro wth in purchases of refrigerator

- freezers. If the standard is updated as required by EPCA, the declining trend would continue.

f http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/refrig_finalrule_tsd.pdf10



### National Impacts g

In 201 2

, the energy and water conservation standards saved an estimated 3.64 quads of primary energy, which is equivalent to 3% of total U.S. energy consumption. The savings in operating
costs totaled $ 51.4 billion.

As shown in Table 2 , the cumulative primary energy savings through 201 2 amount to 32.7 quads. T he cumulative consumer NPV through 201 2

, which equals the operating cost savings minus the additional product cost s associated with standards, is between $ 372 billion and $ 484
billion

. Standards on plumbing products account for a large share of the total NPV because they were highly cost

- effecti ve.

O ver the entire time period considered (1990

- 2070) , the cumulative primary energy savings

amount to 178.7 quads and the cumulative consumer NPV is between $ 1,104 billion and $1, 390
billion (Table 3)

. Residential products account for more than half of the total cumulative primary energy savings

. In addition to energy cost savings from energy conservation standards, the consumer NPV includes water cost savings from those standards that affect both energy and water use (such as standards on clothes washers), as well as energy cost savings from water conservation standards that save hot water (i.e., standards on faucets and showerheads).

The cumulative energy savings achieved through 201 2 are only 18 percent of the total
cumulative energy savings. Thus, most of the savings from standards already adopted will occur
in the future. Furthermore, future savings will gr ow as new standards are adopted

.

Table 2. Cumulative Primary Energy Savings and Cumulative Consumer NPV Through 201 2 for all Standards Product type P rimary
energy savings (quads) Share of

primary
energy savings Cumulative NPV

(billion 201 2 $) * Share of NPV

Residential 19.3 59% $ 145

- $ 186 3 9

- 3 8 % Commercial & Industrial 3.9 12% $ 20

- $ 25 5 %
Lighting Products 6.0 18% $ 52

- $ 75 1 4

- 16 % Plumbing Products 3.5 11% $ 1 54

- $ 1 98 41%
Total 32.7 100% $ 372

- $ 484 100%

* The first value refers to the NPV using 3 % interest rate, while the second value refers to the NPV using 7 % rate.

g Additional results , including impacts by each standard, are presented in the Excel spreadsheet used to calculate the impacts, which may be found at the page for this report at : http://efficiency.lbl.gov/bibliography/11

Table 3

. Cumulative Primary Energy Savings and Consumer NPV for A ll Standards (1990

- 2070) Product type Cumulative primary energy savings (quads) Share of total

cumulative primary
energy savings Cumulative NPV

(billion 201 2 $) * Share of total

cumulative NPV

Residential 99.1 5 5 % $ 518

- $ 716 4 7

- 5 2 % Commercial & Industrial 28. 1 16 % $ 83

- $ 126 7

- 9 %
Lighting Products 43.2 2 4 % $ 195

- $ 252 18% Plumbing Products 8.3 5% $ 308

- $ 296 2 1

- 2 8 %

Total 178.7 100% $ 1,104

- $ 1,390 100%

* The first value refers to the NPV using 7% discount or interest rate, while the second value refers to the NPV using 3% rate.

S tandards set by legislation account for 69 percent of cumulative energy savings through 201 2

, and DOE rulemaking s account for 31 percent (Table 4)

. S tandards set by legislation account for
47 percent of total cumulative primary energy savings and 57

- 68 % of the total consumer NPV (depending on which discount rate is used ). Standards set by DOE rulemakings account for 53
percent of total cumulative primary energy savings and 32

- 43 % of the total consumer NPV ( s ee Table 5)

.

Table 4

. Cumulative Primary Energy Savings and Consumer NPV Through 201 2 for A ll Standards by Source of the Standards
Source of Standards Cumulative Primary Energy Savings (quads) Consumer

NPV at 3% discount rate (billion 201 2 $) Consumer

NPV at 7% discount rate (billion 201 2 $)

Legislation

NAECA 1987 /1988 11.7 12 1 167
EPA CT 1992 8.7 194 25 1
EPA CT 200 5 * 1.1 10.6 11.4
EISA 2007 * 1.2

- 2.3

- 2.7
Subtotal 22.7 323 426 DOE Rulemakings
Subtotal 10 48.7 57.2
Total 32.7 372 484

* Savings through 20 12 are very small since the standards are just taking effect.12

Table 5

. Cumulative Primary Energy Savings and NPV for all Standards by Source of the Standards (1990

- 2070)
Source of Standards Primary Energy Savings (quads) Consumer

NPV at 3% discount rate (billion 201 2 $) Consumer

NPV at 7% discount rate (billion 201 2 $) Legislation

NAECA 1987 /1988 21.3 19 7 22 3
EPA CT 1992 15.3 34 6 3 70
EPA CT 200 5 15.5 117 77.6
EISA 2007 31.0 13 6 77.2
Subtotal 83.1 795 747 DOE Rulemakings
Subtotal 95.5 59 5 35 7
Total 178.7 1,390 1,104

T able 6 presents the annual and cumulative water savings from standards. The results include water savings from water conservation standards as well as from energy conservation standards that also save water (such as standards on clothes washers and dishwashers). h The annual savings of 1.5 trillion gallons in 2010 are equal to 9 percent of the total water withdrawals for public supply in 2005

. i The estimated dollar savings from reduced water use in 2010 amounted to $10.8 billon. Lower water use in 2010 due to standards also reduced energy use in municipal sewage and water systems by an estimated 0.05 quad

. j

Table 6

. A nnual and Cumulative Water S avings for A ll Water

- Conserving S tandards

Water Savings ( trillion gallons )

Annual Cumulative through

2010 1.5 11.7

2025 1.5 38.6

2040 0.3 51.4

h Note that water savings estimates are not available for standards on commercial plumbing products (water closets, urinals, and faucets). Thus, the results in Table 6 understate the true savings from standards.

i USGS estimates that water withdrawals for pu blic supply were 44.2 billion gal lons /day in 2005. http://pubs.usgs.gov/circ/1344/
j The calculation uses an energy use value of 3,000 kWh per million gallons, which is an estimated average for the U.S. based on several sources.13

As shown in T able 7

, t he estimated reduction in CO 2 emissions associated with the standards in
201 2 was 1 98 million metric tons of CO 2

, which amounts to 3 .0 % of total U.S. CO 2 emissions in
201 2 . The estimated economic (present) value of reductions in CO 2 emissions associated with
the standards through 2055 is $ 207 billion.

Table 7

. A nnual and Cumulative Reduction in Carbon Dioxide Emissions for A ll Energy
Conservation S tandards

CO 2 Emissions Reduction ( million t ons CO 2 ) Present Value (billion 201 2 $)*

Annual Cumulative

through Annual Cumulative through

201 2 198 1,917 4.82 49

2025 27 1 5,203 5.93 124

2040 132 8,504 2.46 192

2055 20.9 9,402 0.31 207

* The present value was calculated using a discount rate of 3%, in keeping with the method used by DOE in recent rulemakings. See discussion in appendix A.

Figure 2 shows the annual primary energy savings for each grouping of standards , and Figure 3 shows the annual undiscounted net consumer impact . The impacts peak in the 2020

- 2025 period as purchases of products subject to standards increase. The annual savings peak at over $ 55
bill ion around 2025. The decline in impacts reflects the analytical convention of counting impacts for 25

- 30 years of shipments for each standard. As current standards are revised and new standards are adopted, the impacts from all standards will likely not decline.14

Figure 2 . Annual Primary Energy Savings for all Standards by Source of the Standards 

### 0 1 2 3 4 5 6

1995 2005 2015 2025 2035 Annual Primary Energy Savings (quads)

Year

NAECA 1987 EPAct 1992 EPAct 2005 EISA 2007 DOE rulemakings15

Figure 3 . Annual Undiscounted Net Consumer Benefit for all Standards



### Consumer (Residential) Impacts

In 201 2 , we estimate that the typical household sav ed $ 347 in energy and water expenses as a result of residential and plumbing product standards

. By now , most U.S. households use one or more appliances that were subject to Federal energy or water conservation standards. On average, the primary energy saving s from residential and plumbing standards in 201 2 amounted

to 22 million Btu per household, which is equivalent to 1 2 percent of the total energy use of 186
million Btu per household

. k



### Sources of Uncertainty

The estimates made by this study are subject to considerable uncertainty. A major source of uncertainty is the assumed base case against which the impacts of standards are measured. In principle, a base case should reflect how the market for a given produc t will evolve without the standards under consideration. Estimating the consumer demand for higher efficiency products

k Consumers also saved ene rgy from light ing products standards, but we we re not able to disaggregate the estimated savings by these standards by end

- use sector. 0 10 20 30 40 50 60

1995 2005 2015 2025 2035 Annual Undiscounted Net Consumer Impact (billion 2011$)

Year NAECA 1987 EPAct 1992 EPAct 2005 EISA 2007 DOE Rulemakings16

and the marketing decisions of product manufacturers is difficult. Even more difficult is estimating what other policies, either Federal or State, might be implemented if there were no
Federal efficiency standards for a given product

. For the standards adopted by DOE in the past five years, a good amount of consideration and stakeholder input went into the construction of
the base case. For many of the other standards included in this report, the base case reflects simple assumptions.

T he estimates of per

- unit energy savings and additional cost in the sources used for this study are also subject to uncertainty. Most of the sources assume tha t the incremental costs of higher efficiency remain constant over time. l This assumption likely overstates the true costs for two reasons. First, manufacturers of appliances and equipment often find ways to reduce the cost of producing higher efficiency pr oducts when forced to adapt to standards . Second, inflation

adjusted prices of many types of appliances and equipment have trended downward in recent decades. To the extent that this trend continues, it means that the incremental cost of higher efficiency products may decline over time

. The estimates of primary energy savings in the sources we used are based on estimates of “site” energy savings (i.e., savings where the product is in operation). Most of the sources we used convert site savings to primary sa vings using an average multiplier. In contrast, the National Impact Analysis spreadsheets from the DOE rulemakings incorporate marginal site

- to

- primary energy conversion factors. These factors represent the response of the electricity system to an
incremen tal decrease in consumption associated with appliance standards. DOE uses annual site

to

- source conversion factors based on a version of the Energy Information Administration ’s National Energy Modeling System (NEMS). The marginal factors are lower than ave rage site

- to

source conversion factors and are likely more accurate. If we had been able to apply marginal
site

- to

- source conversion factors to all of the standards included, the estimated primary energy savings (and also the reductions in CO 2 emissions) w ould be lower.

For consumer cost savings that occurred in the past, there is some question as to whether the compounding of past savings used in this study is appropriate. We have not found clear guidance in the literature, but there is some precedent for the practice of compounding past savings to estimate their present value. m There is uncertainty regarding the extent to which the savings from appliance standards were invested elsewhere in the economy , and what the appropriate interest
rate should be. Without compounding, the cumulative consumer NPV for all standards through
2010 would be around 15 percent less than reported here.

There is some evidence that consumers use higher efficien cy appliances more intensively due to the reduction in operating co st. The extent of this so

- called direct rebound effect varies among products. 6 In recent years DOE has accounted for a rebound effect in many of its rulemakings. Thus, the energy savings estimates for many standards adopted by DOE since 200 8 include an

l In 2011 DOE began to account for change in product prices in its forecasts.

m See for example: http://www.dalemarsden.c a/docs/publications/Marsden_etal_2006.pdf17

adj ustment (subtraction) for a rebound effect. n The other sources used for this study do not include such an adjustment. The lack of this adjustment means that the savings may be overestimated by 5 %

- 10 %

.



### Conclusion We estimate that energy efficiency standards for appliances and equipment adopted from 1987 through 201 2 have saved a total of 33 quads through 201 2 , an amount equal to one

- third of total
annual U.S. energy use. In 201 2 , the standards saved an estimated 3. 6 quads of primary energy, which is equivale nt to 3% of total U.S. energy consumption. The savings in operating costs for households and businesses totaled $ 51 billion. The average household saved $ 3 47 in operating costs as a result of residential and plumbing product standards

. The estimated reduct ion in CO 2 emissions associated with the standards in 201 2 was 198 million metric tons of CO 2

, which is equivalent to 3 percent of total U.S. CO 2 emissions.

The majority of the savings attributable to the standards adopted thus far are still to come, as products subject to the standards enter the stock. The standards are projected to achieve
cumulat ive energy savings of 17 9 quads. Accounting for the increased upfront costs of more

efficient products and the operating cost (energy and water) savings over t he products’ lifetime,
the standards have a past and projected cumulative net present value ( NPV ) of consumer benefit
of between $ 1,104 billion and $1, 390 billion

, using 7 percent and 3 percent discount rates, respectively.

The water conservation standards , together with energy conservation standards that also save water, reduced water use by 1. 8 trillion gallons in 201 2 , and will achieve cumulative water savings by 2040 of 54 trillion gallons. The estimated consumer savings in 201 2 from reduced water use amounted to $1 3

. 0 billon.

Standards set by legislation account for 47 percent of total cumulative primary energy savings
and 55 to 66 percent of the total cumulative NPV (depending on which discount rate is used ). Standards set by DOE rulemakings account for 53 percent of total cumulative primary energy savings and 34 to 45 percent of the total cumulative NPV.

n DOE does not adjust the energy cost savings for the rebound effect because it believes that, if it were able to monetize the increased value to consumers associated with the rebound effect, this value would be similar to the foregone energy savings.18



### Appendix A: Methods for Estimating National Impacts from Standards o



### General Methods

Energy cost savings were estimated using historical average annual energy prices through 2011, and projected average annual energy prices after 2011. The historical prices were taken from
various DOE Energy Information Administration ( EIA ) sources. The pro jected prices are based

on EIA’s Annual Energy Outlook 201 2

.

We converted dollars from the year given in the various sources to 201 2 $ using the Consumer Price Index for residential appliances and the GDP implicit price deflator for commercial and
industria l equipment.

The annual average CO 2 emissions factors for the electricity generation sector are derived for each year through 2008 from EIA statistics on total CO 2 emissions from the electric power sector and total primary energy consumption by the electri c power sector

. F or each year in 2009

- 2035

, they are derived from similar forecasted outputs in EIA’s Annual Energy Outlook 201 2

. The
values after 2035 are the same as the 2035 factor.

The social cost of carbon (SCC) values from 2010 onward are from the m id

- range series developed by a Federal interagency process. This series is based on the average SCC derived
from the three integrated assessment models that were examined, using a 3

- percent discount

rate. p Because the SCC values are based on a 3

- percent di scount rate, we used the same discount
rate to discount the future annual estimates of the value of reduced CO 2 emissions. SCC values prior to 2010 were estimated based on the post

- 2010 trend.



### NAECA 1987 and 1988 Standards and DOE Updates before 2007

For all of the standards except one, we used the data developed by Meyers et al

. 1 That study developed a spreadsheet accounting model to calculate energy savings and consumer costs and savings for each product. The model tracks the energy use of products s old in each year, beginning in the late 1980s. The model uses historic and projected data on annual shipments of each product and subtracts units from the stock using a retirement function based on the estimated average lifetime of each product.

The key fe ature of the model is that it associates a specific average energy consumption and average product price for each vintage of a given product. (A vintage refers to the products

o Fur ther details are given in cell comments in the Excel spreadsheet used to calculate the impacts, which may be found at the page for this report at : http://efficiency.lbl.gov/bibliography/

p For more info rmation on these SCC values, see chapter 16 and appendix 16

- A of the Residential Clothes Dryers and Room Air Conditioners Direct Final Rule Technical Support Document. http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_clothe s_dryers_room_ac_direct_ final_rule_tsd.html19

shipped in a given year.) Both of these variables are a function of the energy e fficiency assigned to each vintage. In most cases, the actual energy efficiency for each vintage of a product is assigned based on industry sources.

The approach for estimating the impacts of standards involves deriving a base case scenario for

average en ergy efficiency and product price that assumes no standards were or will be implemented. In principle, the base case assumes energy efficiency increases over time as a result of all factors that shape energy efficiency other than Federal standards. For fur ther discussion, see section 2 of Meyers et al

.
For the commercial heating, air conditioning, and water heating standards with compliance dates of 2003 and 2004, we started from the following data reported by Belzer and Winiarski: 7 (1) primary energy savin gs cumulative through 2030 and (2) net economic impacts at a 7

- percent discount rate cumulative from units shipped through 2030. We used an average lifetime for these products of 15 years.

We assume that units retire uniformly over the lifetime and that th e annual energy savings will go up after the effective date until it stabilizes when all the pre

- standard units have been replaced by units meeting the standards. This period that it takes for the annual energy saving s to reach its maximum is equal to the lifetime of the product. Using these assumptions, we calculate the annual site and primary energy savings that will match the given cumulative energy savings from 2003 to 2030. Then we used the Excel Solver to solve for the unit energy saving and increment al equipment cost per unit that will give a net present value (NPV) that closely match es the given

NPV at a 7

- percent discount rate. We then extended the time series to include shipments through
2032 to yield a 30

- year analysis period.



### EPACT 1992 Standards We developed new estimates for this study, as described below. We assumed no change in base case efficiency over time. To compensate for potential overstatement of savings, we counted impacts for only 20 years worth of product shipments. Further details m ay be found in spreadsheets that are available from the authors.

Commercial furnaces and boilers, air conditioners and heat pumps, and water heaters We modified the analytical structure and some of the data developed by Rosenquist et al. for the 2004 study for the National Commission on Energy Policy (NCEP). 8

We estimated base case efficiencies and unit incremental costs for these products using PNNL (2000). This report presents average efficiencies in 1999 and costs for both an EPACT 1992 baseline product and an average product in 1999. We applied these differentials to derive an approximate pre

- EPACT 1992 baseline efficiency and contractor cost for each product.20

Electric motors We developed a simplified NIA model to estimate the impacts of the EPACT 1992 standards for electric motors, using one “average motor” as the basis for the calculations.

The “average motor” energy use was calculated in the base case and in the standards case, using
market

- weighted averages across the covered horsepower ( hp ) r anges, pole configurations, and enclosure type to determine the following parameters: operating hours, load, lifetime, horsepower, and efficiency. All inputs were derived from the draft preliminary analysis from DOE’s 2011 rulemaking for electric motors.

The base

- case efficiency is estimated assuming 30% of shipped motors are at pre

- EPACT standard efficiency levels, 30% are already at the EPACT 1992 efficiency levels, and 40% are at
National Electrical Manufacturers Association ( NEMA ) premium efficiency le vels. The
standards

- case efficiency is estimated using a “roll

- up” scenario

, which leads to assuming 60%
of motors are at the EPACT 1992 efficiency levels and 40% are at the NEMA premium efficiency levels.

Motor equipment costs (includes the repair costs ) for the “average motor” in the base case and
standards case were estimated by extrapolating price and weight data from the preliminary analysis. R epair s are assumed to occur after 5 years of usage and once in a motor ’s lifetime.

Shipment data were obtain ed from the preliminary analysis and are assumed to be the same in
the base

- case and in the standards

- case. The market

- weighted average lifetime (12 years) was
used to calculate the affected stock.

National site energy savings were obtained from multiplying the affected stock by the difference in energy use between the base case and standards case for the “average motor”. National equipment incremental costs were calculated using the affected stock multiplied by the difference in equipment costs b etween the base case and standards case for the “average motor”.

Fluorescent lamps and incandescent reflector lamps

Fluorescent lamps
We calculated savings for full

- wattage T12 lamps covered by the standards sold after the effective dates of the standards: April 30, 1994 for 8

- foot T12 and 8

- foot T12/HO lamps and October 31, 1995 for 4

- foot lamps. To calculate fluorescent lamp shipments, we adapted the spreadsheet used to analyze the impacts of the NAECA fluorescent ballast standards by Meyers
et al . The base

- case forecast assumed that 60 percent of lamp shipments in 1994 were full

wattage lamps, while 40 percent were reduced

- wattage lamp s already complying with the EPAct
1992 standards , according to a 1989 report on Massachusetts’ lamp standards by Nadel et al

. 9

Since the lamps covered by the EPAct 1992 lamp standards (“covered lamps”) were used with magnetic ballasts, and very few T12 lamps used electronic ballasts, we assumed that lamp21

shipments tracked the pattern of magnetic ballast s hipments. W hen the fluorescent ballast standards came into effect in 2005 for ballasts in new luminaires, there was a corresponding
substa ntial decrease in T12 lamp shipments. By 2010, when the ballast standards took effect for the renovation market as well, very few T12 lamps were sold

.
The shipments of covered fluorescent lamps for 1994 were based on estimates by Geller and
Nadel. 10 For 1995

- 2010 we scaled this 1994 shipment value to decline according to the annual
dec rease in magnetic ballast shipments projected in the NAECA ballast standards analysis. Beginning in 201 1 we made the simplifying assumption that T12 lamp shipments ceased.

Assumptions for unit wattage savings, product service lifetime , operating hours, and market shares by lamp type and by new vs. renovation market a re from DOE’s 2000 fluorescent lamp ballast standards analysis. Lamp prices a r e from the 1992 Lighting Policy Analysis by Atkinson
et al. 11

Incandescent reflector lamps

We estimated the impacts of the incandescent reflector lamp standards from 1996

– 2015. (The standards took effect on November 1, 199 5 , so we assumed that savings began in 199 6 .) We used shipments data from past and recent analyses to estimate the annual shipments of lamps complying with the standards. For the commercial sector, complying shipments were derived for
1996

- 2000 from the 1992 Lighting Policy Analysis (Atkinson et al

. ), for 2006

- 2015 from
DOE’s 20 09 incandescent reflector lamp standards NIA spreadsheet (DOE 20 09 ), q and for 2001

– 2005 by linear interpolation. For the residential sector, we estimated complying shipments for
1995 as 10 percent of total shipments, for 2001

– 2015 from DOE 20 09 , and for 1996 to 2000 by linear interpolation.

Assumptions for unit wattage savings a re from Atkinson et al. P roduct service lifetime and operatin g hours are from DOE 20 09

. Lamp prices a re from Atkinson et al.

Plumbing products For showerheads and faucets, we started with product lifetime, 2010 site energy savings (from reduced hot water use) , and 2010 water savings from Koomey et al. 12 F or toilets, we used product lifetime and 2010 water savings.

From the energy savings for 2010, we estimated both the site and source energy savings over a
20

- year period starting from the compliance date, assuming that shipments retire uniformly over the lifetime and are replaced (constant annual sales). Based on this uniform retirement function,

t he energy savings from units surviving beyond the 20

- year period are also calculated. We performed this same estimation for the annual time series of water savings.

q See: http://www1.eere.energy.gov/buildings/appliance_standards/residential/incandescent_lamps_standards_final_rule_to ols.html22

We derived operating cost savings by applying annual time series of average fuel prices and water prices to the site energy and water savings.

We estimat ed that there is zero unit incremental cost for these products because when manufacturers first started to comply with EPACT 1992, they generally did not make significant changes to the products

.
The estimates only cover residential use because no data were available to estimate commercial sector impacts.



### EPACT 2005 Standards For all of the standards except commercial air conditioners ( AC ) and heat pumps, we started from the following data reported by Nadel et al. 3 for each standard: (1) site energy savings in 2020 and 2030, (2) cumulative energy savings through 2030, (3) NPV for products sold through 2030, (4) lifetime, (5) unit annual ene rgy saving, and (6) unit incremental equipment cost. Nadel
et al. used a constant efficiency base case, but they also did not model any increase in shipments ; these two factors would counteract to some extent.

From the energy savings for 2020 and 2030, we estimated both the site and source energy savings for 25 years of shipments starting from the compliance year. Using the energy saving s per unit and the annual energy savings, we calculat ed the shipments in each year. Once we derived the shipments, we coul d calculate the total incremental equipment cost.

We accounted for impacts to shipments through 2030. The number of years of shipments ranges from 21 to 25, depending on the particular standard.

For commercial AC and heat pumps, DOE National Impact Analysis spreadsheets were available. For these products, we followed the methods described in the DOE Standards 2007

- 2010 section

.



### EISA 2007 Standards For most EISA 2007 standards, we started from the following data for each product reported by
DOE in its technical report: 4 (1) cumulative energy savings (through 2038), (2) NPV at 3

- percent
and 7

- percent discount rates. From other relevant DOE sources, we obtained the lifetimes of the products. The DOE report used a constant efficiency base case, which may ten d to somewhat overestimate the savings from the standards. To compensate, we used 25 years of shipments instead of 30 years.

We assumed that units retire uniformly over the lifetime and that the annual energy savings will go up after the compliance dat e until it stabilizes when all the pre

- standard units have been replaced by units meeting the standards. The period that it takes for the annual energy saving s to reach its maximum is equal to the lifetime of the product. Using these assumptions, we
calcul ated the annual site and source energy savings that will match the given cumulative energy23

savings. Then we used the Excel Solver to solve for the unit energy saving s and incremental equipment cost per unit that will give a n NPV that closely matches the gi ven NPV at a 7

- percent discount rate. We then adjusted the calculations to account for 25 years of shipments.

For a few EISA 2007 standards (residential boilers, dishwashers, and dehumidifiers), DOE National Impact Analysis spreadsheets were available. For these products, we followed the
methods described in the following DOE Standards 2007

- 2010 section

.



### DOE Standards 2007

- 201 2

We used the Final Rule NIA spreadsheets from the DOE rulemakings for each of these standards. We set up the spreadsheets for the compliance year and standard levels that were selected in the Final Rules. This gave the annual time series for primary energy savings, additional installed cost, and operating cost savings. In some cases, the time series presented in the spreadsheets were by individual product classes, so we summed them to arrive at totals for the product category or categories in questio n. In some cases we also made modifications to the spreadsheets to arrive at consistent results across products

— for instance, always using 30 years of shipments and extending energy cost savings and energy savings to the end of the lifetime of
the units sh ipped in the 30 th year.24



### Appendix B: Quad and Carbon Equivalents

From the U.S. Department of Energy’s 2010 Buildings Energy Data Book.2526

REFERENCES

1 Meyers, S., A. Williams, and P. Chan . Realized and Projected Impacts of U.S. Energy and Economic Impacts of U.S. Federal Energy and Water Conservation Standards Adopted From 1987 Through 2011 . LBNL

- 5515E . Lawrence Berkeley National Laboratory, Berkeley, CA. http://efficiency.lbl.gov/bibliography/energy_and_economic_impacts_of_u_s_federal_energy_an d_water_conservation_standards_ adopted_from_1987_through_2011

2 Meyers, S., J. McMahon, and B. Atkinson. Realized and Projected Impacts of U.S. Energy Efficiency Standards for Residential and Commercial Appliances. LBNL

- 63017. Lawrence Berkeley National Laboratory, Berkeley, CA. 2008. http://www.osti.gov/bridge/purl.cover.jsp?purl=/938510

- IKYBEw/

3 Nadel, S., A. deLaski, J. Kleisch, and T. Kubo. Leading the Way: Continued Opportunities for New State Appliance and Equipment Efficiency Standards. American Council for an Energy

Efficient Economy and Appliance Standards Awareness Project. Washington, DC. January 2005. http://www.aceee.org/sites/default/files/publications/researchreports/a051.pdf

4 Technical Support Document

- Impacts on the Nation of the Energy Independence and Se curity Act of 2007, March 2009; Available at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/en_masse_tsd_march_2009. pdf

5 Office of M anagement and Budget. OMB Circular A

- 4, Regulatory Analysis. Washington, D.C. September 17, 2003. www.whitehouse.gov/omb/assets/omb/circulars/a004/a

- 4.pdf

6 S. Sorrell, J. Dimitropoulos, and M. Sommerville, “Empirical estimates of the direct rebound effect: a review,” Energy Policy 37(2009) pp. 1356

– 71.

7 Belzer, D. and D. Winiarski. EPACT

- Covered Commercial HVAC and Water Heating Equipment: Summary of Energy Savings and Economic Benefits

– 2004. 11/4/2004. Pacific Northwest National Laboratory.

8 Rosenquist, Greg, Michael McNeil, Maithili Iyer, Steve Meyers, and Jim McMahon. Energy Efficiency Standards for Equipment: Additional Opportunities in the Residential and Co mmercial Sectors. Energy Policy 34 (2004) pp 3257

- 3267.

9 Nadel, S., H. Geller, F. Davis and D. Goldstein. 1989. Lamp Efficiency Standards for Massachusetts: Analysis and Recommendations. June, 1989. American Council for an Energy

Efficient Economy (Washington DC), Fred Davis Corporation (Medfield MA), Natural Resources Defense Council (San Francisco CA). Prepared for Massachusetts Executive Office of Energy Resources. Research Report A891.27

10 Geller, H., and S. Nadel. Consensus National Efficiency St andards for Lamps, Motors, Showerheads and Faucets, and Commercial HVAC Equipment. American Council for an Energy

- Efficient Economy. Washington, DC. June 1992. htt p://www.aceee.org/sites/default/files/publications/researchreports/A921.pdf

11 B. Atkinson et al ., Analysis of Federal Policy Options for Improving U.S. Lighting Energy Efficiency: Commercial and Residential Buildings. LBL

- 31469. December 1992. Lawrence

Be rkeley Laboratory.

12 Koomey, Jonathan, Camilla Dunham, and James D. Lutz. The Effect of Efficiency Standards on Water Use and Water Heating Energy Use in the U.S.: A Detailed End

- use Treatment. LBL

35475. Lawrence Berkeley Laboratory. May 1994.