Projected Regional Impacts of Appliance Efficiency Standards for the U.S. Residential Sector

Minimum efficiency standards for residential appliances have been implemented in the U.S. for a large number of residential end-uses. This analysis assesses the potential energy, dollar, and carbon impacts of those standards at the state and national levels. In this assessment, we use historical and projected shipments of equipment, a detailed stock accounting model, measured and estimated unit energy savings associated with the standards, estimated incremental capital costs, demographic data, and fuel price data at the finest level of geographic disaggregation available. We explicitly account for improvements in efficiency likely to occur in the absence of standards, but because our method for characterizing these exogenous improvements probably overestimates them, both the energy and cost savings presented in this report represent lower bounds to the true benefits. Energy savings from the standards are substantial. Total primary energy savings will peak in 2004 at about 0.7 exajoules/year (1 exajoule = 1018 joules » 1 quadrillion Btu = 1015 Btus). Cumulative primary energy savings during the 1990 to 2010 period total 10.6 exajoules. Efficiency standards in the residential sector have been a highly cost-effective policy instrument for promoting energy efficiency. Projected cumulative present-valued dollar savings after subtracting out the additional cost of the more efficient equipment are about $33 billion from 1990 to 2010. Even if fuel and electricity prices decline substantially by 2010, as some industry observers predict, the standards remain robustly cost effective, with net savings still totaling $29 billion in this case. Each dollar of federal expenditure on implementing the standards will contribute $165 of net present-valued savings to the US economy over the 1990 to 2010 period. Average benefit/cost ratios for these standards are about 3.5 for the U.S. as a whole. Projected carbon reductions are approximately 9 million metric tons of carbon/year from 2000 through 2010, an amount roughly equal to 4% of carbon emissions in 1990. Because these standards save energy at a cost less than the price of that energy, the resulting carbon emission reductions are achieved at negative net cost to society. Minimum efficiency standards reduce pollution and save money at the same time.