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Defining "significant conservation of energy" - DOE sets the bar for future regulations

image credit: DOE in Federal Register - RIN 1904–AD38

In a final ruling that recently cleared the Office of Information and Regulatory Affairs (OIRA) review, the Department of Energy (DOE) states the following regarding future regulations about whether to amend energy efficiency standards or not: "DOE is proposing to define an energy savings threshold to satisfy the requirement in EPCA that a new or amended energy conservation standard must result in a significant conservation of energy... Specifically, DOE is proposing to apply a threshold of 0.5 quad in energy savings or a 10% reduction in energy consumption over a 30-year analysis period to satisfy this requirement." While quads are very large numbers used to discuss national and global energy policy, .5 quad in a more familiar unit is 146,535,500 MWh. The OIRA review found no issues with the final wording of the ruling and did not believe it was inconsistent with the authority of the DOE to define such a threshold moving forward.

The last refrigeration standard update, for reference, saved about 5.8 quads of energy over 30 years. In order to determine the threshold, DOE looked back at regulations over the last 30 years and calculated the impact such a threshold would have had on regulatory actions and the associated energy savings.
Out of the 57 rulings evaluated where energy savings were involved, the DOE calculated that by using the 0.5 quad minimum, 31 of those rulings would not have met the new threshold for significance, leaving only 26 rulings passing out of the 57. However, those 26 rules accounted for 90.89% of the energy savings from the 57 rules. Having such a threshold would have produced 90% of the energy savings with less than half of the regulations.

By applying the 10% threshold, the result is much more generous. 49 out of the 57 rules pass that test and account for 99.39% of the total energy savings from all 57 rules. Under this new clearly defined threshold, only 8 rules would have been rejected, resulting in only a 0.6% loss of all energy savings.

If you believe in limiting government intervention, it may seem that this new threshold is too generous by including the OR 10% provision. What isn't clear is how much time and money was spent on the 31 rulings which only produced about 10% of the total energy savings vs. the other 26. Are we significantly better off economically and environmentally if that time and expense was instead spent on other activities which we also know yield positive benefits, such as energy efficiency programs, low-income programs, or other incentives? If you have an opinion on which side of the line DOE should have fell on, it would be great to hear it - especially if you've done an economic analysis.


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Matt Chester's picture
Matt Chester on Dec 26, 2019

This is really interesting-- while it seems inherently arbitrary exactly where the line is drawn (which is why I suspect the 'or' is left in there, for purposeful ambiguity), you bring up a good point about the majority of energy savings coming from those rulemakings that remained and that the rest of the money could be spent better elsewhere. One question I would have about those rulemakings omitted though: is there missed opportunity in having the regulations be the 'kick in the pants' to start improving the efficiencies that could end up seeing even greater savings in the long run as innovations are discovered and technology progresses in such a way that would not have been the case without them? 

Matt Bowgren's picture
Matt Bowgren on Dec 26, 2019

There certainly could be. As with all of the rulemakings, one could go back and try to calculate the actual impact they had and compare that to the DOE projections. The calculations the DOE provided were based on their original projections rather than actual results and in several of the rules where there were ranges of outcomes, the DOE used the maximum of that range to arrive at the percentage of energy savings they presented as the total. Reality may be quite different than those projections and certainly taking the maximum of the range seems to be helpful to their case.

MIT researcher Andrew McAffee has a great quote in an article about why we should stop recycling plastic - saying we should use our "mental budget for thinking about the Earth on more high-impact changes." I see a lot of validity to that viewpoint, as our world grows more complicated and populated, to where we could accomplish more incredible feats with focused activity. The fact that so many other countries are concerned about the environment means there is a huge potential market and I'm looking for bigger American-led breakthroughs in clean energy and low-income housing rather than incremental regulations. 

Paul Chernick's picture
Paul Chernick on Dec 30, 2019

It would be wasteful to leave billions of dollars of savings on the table just because they come in small batches. Also, DOE and other parties could get into gaming the rules, splitting a single rule into lots of tiny pieces (i.e., frosted candelabra based lamps under 250 lumens), so no one standard results in 0.5 quads, rather than a single lumen/W standard for a range of bases, shapes, and lumen levels. 

Matt Chester's picture
Matt Chester on Dec 31, 2019

Also, DOE and other parties could get into gaming the rules, splitting a single rule into lots of tiny pieces (i.e., frosted candelabra based lamps under 250 lumens), so no one standard results in 0.5 quads, rather than a single lumen/W standard for a range of bases, shapes, and lumen levels.

This is a great point, and a really scary one to think about. 

Michael Keller's picture
Michael Keller on Jan 2, 2020

How about the DOE just stay the hell out of creating regulations?

Big Government attempting to micro-manage everything has resulted in items such as ceiling fan lights that malfunction because required load limiters do not work very well; dishwashers that take forever to clean dishes while doing a poor job of cleaning; toilets that have to be flushed twice because not enough water shows up to flush the bowl. These are just a few examples of the law-of-unintended-consequences that bureaucrats constantly demonstrate.

The DOE has too many bureaucrats with nothing useful to do. They are just wasting oxygen, in the vernacular of the sub-mariners. The department should face a major-league haircut. Better yet, simply eliminate the massive waste of taxpayer money. The DOE has spent billions and billions of dollars with damm few sucessess. If the DOE was actually held accountable, they would have been eliminated long ago.

We managed fine before the DOE was created. We'll do fine without them.

Matt Bowgren's picture

Thank Matt for the Post!

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