Defining "significant conservation of energy" - DOE sets the bar for future regulations
image credit: DOE in Federal Register - RIN 1904–AD38
- Dec 26, 2019 12:30 pm GMTDec 26, 2019 5:56 am GMT
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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.