Energy Efficiency: Better Coordination among Federal Programs Needed to Allocate Testing Resources
Released: 2013-03-28T00:00:00

Letter

Three Federal Programs Take Different Approaches to the Shared Goal of Improving Energy Efficiency and the Scope of Covered Products Varies

The three key federal energy efficiency programs we reviewed–– minimum energy efficiency standards, EnergyGuide, and Energy Star— take different approaches to the shared goal of improving energy efficiency of selected categories of household appliances and consumer electronics. The scope of products that these three programs cover also varies.

Programs Take Different Approaches

The three key federal energy efficiency programs we reviewed take different approaches to improving energy efficiency as follows: Federal minimum efficiency standards. Federal minimum efficiency standards for selected categories of household appliances and consumer electronics, among other things, are designed to eliminate the least efficient products from the market. Under EPCA, Congress required DOE to set minimum energy efficiency standards for manufacturers of specified categories of consumer products such as refrigerators, dishwashers, furnaces, and hot water heaters. Congress later amended the statute to include additional consumer product categories, as well as other categories. Manufacturers’ compliance with the standards is mandatory. The statute requires DOE to set and revise standards through the federal rulemaking process. This process calls for analyzing the technical and economic issues associated with setting energy efficiency standards for each category, proposing a standard through public notification, soliciting comments on the standard, revising the rule, and issuing the final rule. Most of the categories with deadlines require at least two rules—either to set an initial standard and later update it, or to update a congressionally set standard and then update it again about 5 years after the first deadline. DOE estimates that, from the inception of the federal minimum efficiency standards program in 1975 through 2005, consumer benefits from these standards amounted to about $64 billion. DOE projects that the standards will have saved consumers $241 billion by 2030 and $269 billion by 2045.

EnergyGuide. EnergyGuide is designed to provide information displayed on a label attached to selected products that enables consumers to compare the estimated energy cost and energy consumption of different models within a given product category. EnergyGuide’s familiar yellow label has aided consumers for over 30 years in selecting household appliances and consumer electronics such as televisions and dishwashers by providing information on how much it will cost to run particular models per year and their level of energy consumption. EPCA requires DOE, in consultation with FTC, to study new product categories to determine whether they should be added to the EnergyGuide program and to report annually on the energy savings of the program. Manufacturers’ compliance with the standards is mandatory. FTC has the authority to add additional product categories if the commission determines that labeling for the product is likely to assist consumers in making purchasing decisions. The statute requires FTC to set and revise standards through the federal rulemaking process.

Energy Star. Energy Star is designed to identify the most energy efficient models––generally the top 25 percent–– within a given category of products without sacrificing performance. Manufacturers of qualified products can place the widely recognized Energy Star label on qualifying products as an indication of energy efficiency, which gives the manufacturer an incentive to improve energy efficiency. Participation is voluntary. EPA has reported that the additional incentive the Energy Star program provides as a marketing tool for manufacturers encourages efficiency beyond the level of federal minimum efficiency standards, further reducing energy consumption and the associated greenhouse gas emissions. According to EPA, as of 2012, Energy Star products had prevented more than 150 million metric tons of greenhouse gas emissions annually and reduced electricity consumption by more than 200 billion kilowatt-hours (kWh) per year––a savings that offsets the need for more than 185 additional power plants.

Figure 1 provides an example of the different types of information conveyed to consumers for household appliances and consumer electronics by each of the three programs. Specifically, the figure illustrates a hypothetical case of two models of dishwasher, a product covered by all three programs. In the example, both dishwashers meet the federal minimum efficiency standards. However, the model on the left side of the figure qualifies for an Energy Star label––as noted by the Energy Star logo on the lower right corner of the Energy Guide label for that product––while the model on the right does not. The manufacturers of both models also publish an EnergyGuide label as shown in the figure and are compliant with the federal minimum energy efficiency standard.

In 2011, the most recent year for which data are available, DOE’s budget for these programs was $42 million; EPA’s was $53.3 million; and FTC officials estimated that FTC spent about $215,000, for a total of about $96 million to administer these programs.

The Scope of Products Covered Varies

The scope of products that the three federal energy efficiency programs cover varies. Specifically, the minimum efficiency standards currently apply to 33 selected categories of household appliances and consumer electronics;

EnergyGuide currently covers 16 such product categories; and

Energy Star program––the broadest of the three programs––currently covers 37 such product categories.

Our analysis found that some products are covered by only one program, some by two programs, and some by all three. For example, of the 37 product categories covered by Energy Star, 21 are covered only by Energy Star, 3 are covered by Energy Star and the federal minimum efficiency standards, and the remaining 13 are covered by all three programs. Figure 2 illustrates the coverage of product categories and the extent to which products are covered by one, two, or all three programs.

The three agencies have had varying histories expanding the product categories covered by each program, specifically, as follows:

DOE has had a limited role in expanding the products covered by the minimum energy efficiency standards; rather, Congress has directed DOE to expand the products covered. The program has set standards for products such as clothes dryers and furnaces since the 1980s, and it has been expanded to include products such as ceiling fans and dehumidifiers. The scope of product categories covered under the federal minimum efficiency standards has largely been determined by statute and, while DOE has the authority to expand the scope of the program by adding new product categories and update standards for existing categories, it must go through a rulemaking process to do so. In 2007, we reported that DOE had faced difficulties meeting statutory deadlines for issuing standards, but it has recently made progress in improving its timeliness.

FTC officials told us seven products have been added to EnergyGuide since 1980––including fluorescent lamps in the 1990s, ceiling fans in 2007, and color televisions in 2011. In 2007 we noted, among other things, that DOE, in consultation with FTC, is required to study new products to determine if any products should be added to EnergyGuide. At that time, however, DOE staff could not identify any instance of such a study, and they told us that they had not completed one during the prior 10 years. We recommended that DOE, in consultation with FTC, regularly review product categories not currently covered to assess whether they should be included in the EnergyGuide program. DOE and FTC took steps to implement this recommendation, including defining certain terms that would provide a basis for expanding product categories in the future. In addition, during the course of our current work, officials from FTC told us they take steps to consider new products, including soliciting suggestions from stakeholders during the rulemaking process, accepting petitions from interested parties, and coordinating with DOE and Energy Star officials. While FTC has not added any new products since 2011, officials told us that they routinely consider new product categories. For example, the agency considered requiring an EnergyGuide label for personal computers but determined that variations in the components used to assemble computers and the lack of a standard testing procedure were barriers. Like the federal minimum efficiency standards, the scope of product categories covered under EnergyGuide has largely been determined by statute, and FTC must go through a rulemaking process to expand the scope of the program.

EPA has expanded Energy Star from its initial coverage of computers and monitors to include many more product categories. For example, it added new products, such as residential heating and cooling equipment, then continued to add product categories through the 1990s and 2000s—for example, clothes washers in 1997, ceiling fans in 2001, and water heaters in 2009—so that Energy Star now includes 37 household appliance and consumer electronic product categories. Because Energy Star is a voluntary program that does not engage in the same formal rulemaking process as the other two programs, it can add product categories more easily and has added many product categories.

Federal Energy Efficiency Programs Are Fragmented and Overlap and Have One Area of Duplication

Federal programs to increase the energy efficiency of household appliances and consumer electronics are fragmented because more than one federal agency is involved in the same broad area of national need; they overlap because the three programs have similar goals and target similar users. The programs are not broadly duplicative because they are not engaged in the same activities and do not provide the same services, and the agencies coordinate on key decisions related to meeting their common overarching goal of improving energy efficiency. However, we identified one duplicative activity within Energy Star program.

Fragmentation. Federal programs to improve energy efficiency for household appliances and consumer electronics are fragmented because three federal agencies are addressing the same broad area of national need—in this case, improving energy efficiency. In March 2011, we reported that fragmentation has the potential to result in duplication of resources. For example, fragmentation can lead to technical or administrative functions that could be shared among programs instead being managed separately by each agency. However, we have also reported that fragmentation is, by itself, not an indication that unnecessary duplication of efforts or activities exists. In the case of these three programs, each agency collects its own data on the products covered by its program, but we did not find evidence that the independent data collected by each agency adversely impact the effectiveness of these programs. Moreover, agency officials told us they are working to share data with one another. For example, FTC officials told us that they are formally working with DOE officials through the rulemaking process to create a single database that manufacturers will use to submit the information required for both agencies.

Overlap. Federal programs to foster energy efficiency for household appliances and consumer electronics overlap because the three programs have the shared goal of encouraging energy efficiency of household appliances and consumer electronics and target similar users, namely consumers of these products. However, we have reported in the past that overlapping programs may be aligned in a way that they are complementary. In the case of these three programs, we found that their differing approaches may have complementary functions—with the minimum efficiency standards setting a minimum level of efficiency for all products in a category, EnergyGuide providing specific information about estimated energy consumption and costs to help consumers select the product that best meets their need within this range, and Energy Star identifying a group of the most energy efficient models––generally the top 25 percent–– within a given category of products.

Duplication: The efforts of the three programs to improve energy efficiency for home appliances and consumer electronics are not broadly duplicative in that they are not engaged in the same activities or providing the same services; however, we identified one duplicative activity within the testing activities undertaken to support the Energy Star program. EPA officials told us that two levels of testing occur within the Energy Star program––qualification testing to determine if a product is eligible to display the Energy Star label and verification testing to confirm that products using the Energy Star label in the marketplace continue to meet Energy Star specifications. We identified some duplication in the verification testing activities. Specifically, DOE and EPA have separate verification testing efforts that, in themselves, are not duplicative, but we found some instances in which both agencies tested identical product models in the same year.

DOE’s Energy Star verification testing activities were initiated in 2010 and are funded and managed by the department, though the actual testing occurs at third-party laboratories. According to DOE officials, every 4 to 6 months, DOE typically selects for testing from 100 to 200 different models across various product categories including household appliances and consumer electronics. DOE tests only Energy Star products that are also subject to federal minimum efficiency standards, allowing the agency to monitor compliance with both programs.

EPA’s Energy Star verification testing activities were initiated in 2011 and are funded by the program’s partners––primarily appliance and electronics manufacturers. The testing is conducted at EPA- recognized laboratories, and the results are verified by EPA- recognized certification bodies. At a minimum, EPA requires that the certification bodies test 10 percent of the models within a product category each year (e.g., 10 percent of all computers) from all product categories for which they have certified results. EPA officials told us they select half of the models tested based on an approximation of which products are the highest selling. The certification bodies select the other half at random from among the products they have certified.

Officials from both DOE and EPA told us that they work closely to coordinate their efforts; however, we examined DOE and EPA verification testing data for a total of 1,238 tests during 2011 and a portion of 2012 and found 11 instances–-about 1 percent of the products tested— in which identical models were tested in the same year under the testing done for EPA and DOE. In discussing this information with EPA and DOE officials, we determined that this duplication occurred because the two agencies do not fully coordinate and share information about the products they plan to test. In particular, EPA does not have information about the products its certification bodies select for testing; therefore, it cannot communicate this information to DOE before DOE selects products for testing. EPA officials told us that, in March 2012, they instituted a protocol through which they communicate to DOE twice yearly the results of the certification body testing to minimize the potential for duplication in their testing activities. EPA informs the certification bodies as to which products it has selected for testing, so no duplication should occur between the models EPA selects and the models the certification bodies select. However, the certification bodies do not inform EPA as to the models they select for testing until after that testing has taken place; therefore, EPA officials cannot share information with DOE about which models the certification bodies have tested until after the conclusion of the certification bodies’ testing. Without this information, DOE may continue to select the same models; therefore, some models may continue to be tested twice while other models go untested. As a result, the agencies cannot coordinate to ensure that scarce testing resources are maximized, either by eliminating unnecessary duplicative testing, or reallocating resources toward testing additional products.

Conclusions

Three key federal programs to foster energy efficiency in household appliances and consumer electronics––the federal minimum efficiency standards, the EnergyGuide product labeling program, and the Energy Star voluntary product labeling program––each perform valuable functions in improving energy efficiency. While these three programs are fragmented and overlap, the officials managing these programs have undertaken efforts to mitigate the potential consequences of fragmentation and overlap by collaborating to achieve their common overall goal of improving the energy efficiency of these products. Further, given the differing missions of the programs, we believe they are not broadly duplicative, and that the sum total of the three efforts provides more value than would any one of the three alone. Nonetheless, because EPA does not have timely information about the products that certification bodies have selected for testing, it cannot regularly communicate to DOE the models selected for testing to support the Energy Star program. As a result, the two agencies have tested identical models of some products in the same year. By not coordinating to identify and eliminate these duplicative activities, the agencies may be missing opportunities to better allocate testing resources, by either allowing more models to be tested or by simply eliminating unnecessary testing costs.

Recommendation for Executive Action

To limit the potential for duplication in the current Energy Star verification testing activities, we recommend that the Administrator of EPA develop a process that helps ensure that the Energy Star certification bodies communicate the models they randomly select for testing to EPA and DOE as quickly as possible so that DOE can avoid selecting the same models.

Agency Comments and Our Evaluation

We provided a draft of this report to FTC, DOE, and EPA for comment. FTC provided no comments. We received written comments from DOE and EPA on the draft report, which are summarized below and reproduced in appendixes I and II, respectively. Both agencies acknowledged the importance of coordinating their verification testing activities. DOE neither agreed nor disagreed with our recommendation. EPA agreed with our findings but disagreed with our draft recommendation and stated that it was concerned that it would be labor intensive to collect information from the certification bodies. As an alternative to our recommendation, EPA proposed that it work with DOE to develop a process to improve verification testing while minimizing burden but did not offer specific plans to better coordinate. We maintain that coordination must involve all of the entities charged with testing products, including the certification bodies. We modified the recommendation to clarify that EPA has flexibility to find an efficient process for the certification bodies to share the information.

We are sending copies of this report to the Secretary of Energy, the Acting Administrator of the Environmental Protection Agency, the Chairman of the Federal Trade Commission, the appropriate congressional committees, and other interested parties. The report also is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have questions about this report, please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.

Appendix I: Comments from the Department of Energy

Appendix II: Comments from the Environmental Protection Agency

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Jon Ludwigson, Assistant Director; Emily Norman; Alison O’Neill; Stuart Ryba; Karla Springer; and Barbara Timmerman made key contributions to this report.