Energy-Efficiency Standards Could Save Consumers $$

Joanna Schroeder

According to a new report, Energy Efficiency Performance Standards: The Cornerstone of Consumer-Friendly Energy Policy, consumers could save nearly $1,000 on annual household energy costs if energy-efficient performance standards were more prevalent and understood.

The Consumer Federation of America (CFA) report also finds a broad consensus among a variety of independent policy evaluations that energy-efficiency performance standards, iStock_000019192538XSmallwhen effectively implemented, are the ideal tool for delivering these savings. Currently, proceedings affecting almost two-dozen new energy performance standards are pending at the federal and state levels for a broad spectrum of products.

“Some analysts doubt the money-saving potential of energy efficiency standards because they assume that energy markets work perfectly and automatically push consumers toward money-saving, energy-efficient options. But that’s not how the real world works,” said Mark Cooper, Director of Research for CFA.

“Hundreds of empirical case studies we reviewed show that barriers and imperfections in energy markets create an efficiency gap—the difference between our actual level of energy consumption and the optimal level of energy consumption,” Cooper continued. “The studies show the barriers affect both the supply-side and the demand-side of markets for residential and commercial/industrial products. More importantly, evaluations of policies over the past decade indicate that those barriers can be brought down by well-designed energy-efficiency performance standards, like fuel economy standards for cars and trucks or standards for air conditioners.”

The report bases its conclusions on an extensive review of studies done by academics, think tanks, private-sector firms, and government agencies, drawing on literature by experts in several fields, including economics, energy efficiency, and technology innovation and diffusion. In addition to examining recent studies that directly address the efficiency gap and performance standards directly, the CFA study draws insights from empirical studies of two closely related fields, the innovation diffusion literature and climate change. The report will provide the analytic basis for evaluating specific standards that are currently going through regulatory review including household appliances, light duty vehicles, and heavy duty trucks.

“Critics of performance standards, whether they are efficiency gap deniers or cost-benefit naysayers, have either ignored the mountain of evidence that shows the benefits of standards far outweigh the costs, or use flawed data and misspecified models to reach unsupported and misleading conclusions. Our economic analysis confirms the pocketbook savings and our survey results show that consumers understand the benefits of these programs,” Cooper said. “Well-crafted, long-term, energy efficiency performance standards give consumers and businesses extra cash through significant energy savings.”

energy efficiency, Legislation