Your Fridge May Get Washington’s Next Regulatory-Rollback

Appliance makers want Congress to ease energy efficiency standards that they say are unrealistic and costly for air conditioners, refrigerators and other equipment — even allowing for future rollbacks. 

The industry is lobbying to amend a decades old conservation law that sets minimum efficiency standards for many household and commercial appliances and bars them from being weakened. Manufacturers say regulators should be required to negotiate requirements with them and that some set by the Obama administration are too costly and will drive up prices.

“We thought they went too far in pushing the efficiency too high and not looking at the economic costs for the consumers,” said Stephen Yurek, president of the Air-Conditioning, Heating, and Refrigeration Institute, which represents companies such as Ingersoll-Rand Plc, which makes air conditioners and heaters. “I think we are going to see a dial back. There is a different philosophy and that is very clear.”

The effort on appliance efficiency, which has long enjoyed bipartisan support, is the latest example of industry working with Republicans to try to rewrite or rescind one of the nation’s bedrock environmental laws. The Clean Air Act, endangered species law, and the National Environmental Policy Act are all facing pressure from business sectors for amendments or updates. The move has also been fueled by President Donald Trump’s order to federal agencies to identify regulations to repeal.

The Energy Department requirements set detailed prescriptions for a wide range of appliances, from specifying the types of doors and insulation for commercial walk-in freezers to how much electricity the clock on a microwave can use. But they add up to significant energy savings, environmentalists say.

Read More: Trump Sweeps Away Climate Rules Vowing ‘New Energy Revolution’

Under President Barack Obama they morphed into an integral part of his plan to address climate change. The roughly 50 standards finalized during his tenure are estimated to save consumers $550 billion in utility bills and avoid 3 billion tons of carbon dioxide, equivalent to about 800 coal plants running for a year, according to government data.

Attempts to roll back efficiency levels will likely face opposition from environmental and consumer groups, and Democratic lawmakers.

“An average American household spends about $500 less per year on utility bills because of the efficiency gains in our every day appliances,” said Andrew deLaski, executive director of the Appliance Standards Awareness Project, a Boston-based organization that organizes energy efficiency proponents to advocate for standards. “Rolling back standards or weakening the law to make it harder to improve standards in the future would lead to more energy waste and hurt consumers.”

Appliance makers may be able to win support by arguing that changes would simplify the energy efficiency law instead of watering it down, analysts say. 

“It’s hard to imagine loosening an environmental statute at the federal level,” said Kevin Book, managing director of the Washington-based research firm ClearView Energy Partners. “But simplification is within the realm of reason.”

Capitol Hill

Last month, Yurek’s group brought company executives to Washington where they met with aides to Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan and dozens of other lawmakers, urging Congress to rewrite the Energy Policy Conservation Act of 1975, which was strengthened in 1987 in a law signed by then President Ronald Reagan. The industry is asking for three major changes, according to a document they provided lawmakers.

First, the law requires standards to be reviewed each six years. That often means that just as a manufacturer is adjusting to one regulation, another is about to be issued. The time between reviews should be extended, industry argued. 

White House Ices Energy, Environmental Rules Pending Review

“This quick pace of rulemakings barely allows manufacturers to breathe between new test procedures and standards,” the group’s advocacy sheet said.

Second, while the Energy Department has often negotiated new standards with manufacturers, it’s not required to do so. Under Obama those negotiations were less common, according to Yurek. The government should be mandated to use a “negotiated rulemaking process,” his group said.

‘Anti-Backsliding’ Ban

Third, the current law says that once a standard is in place, a subsequent administration cannot come along and dial it back. Efficiency rules can only get more stringent, not less. It’s this provision preventing Trump from rolling back Obama’s standards. The so-called anti-backsliding provision should be scrapped, according to industry.

But the group doesn’t want to see the entire law scrapped, a move that could lead to a patchwork of state energy efficiency standards, said Francis Dietz, a spokesman for Air-Conditioning, Heating, and Refrigeration Institute.

Draft legislation being circulated by industry lobbyists would address the industry’s complaints, ending a requirement for periodic reviews and allowing for “backsliding” of existing efficiency standards, according to a copy obtained by Bloomberg.

Energy Department representatives did not respond to an email seeking comment.

Program Supporters

Supporters of efficiency programs say those changes would be damaging — even for business.

“It’s difficult to undo for a reason. If you take a long time and go through public input and establish rules, then the business community knows what the rules are,” said Ben Evans, a spokesman for the Alliance to Save Energy, a Washington non-profit that promotes energy conservation. “If you have a situation where the administration can easily undo things, that’s just not the way a market can really function.”

Other trade groups representing appliance makers have met to discuss strategy on a legislative overhaul of the program, said Jill Notini, vice-president of the Association of Home Appliance Manufacturers, which represents companies such as Whirlpool Corp. and LG Electronics Inc. 

In the 1980s the group’s president Joseph McGuire helped lead a coalition of 200 business organizations that lobbied on behalf of the law Reagan signed, he told Congress last year. But now efficiency gains have reached their limits, and ever-tighter rules would cause costs to increase “beyond an acceptable level,” he said. But the group doesn’t want the entire program eliminated.

What’s at stake became clear already this month.

A coalition of Democratic states and environmental groups sued the Energy Department this month after it delayed issuing energy efficiency standards for ceiling fans, walk-in coolers, and four other consumer products estimated to save $24 billion. It’s a tactic that’s been employed successfully before by groups such as the Natural Resources Defense Council, which has sued the Energy Department multiple times for not issuing energy efficiency standards at six-year intervals, and for issuing standards that were too week, among other reasons. 

“Appliance efficiency standards are a tremendous success,” said Lowell Ungar, a senior policy advisor at the non-profit American Council for an Energy-Efficient Economy. Further updates could save consumers another $1 trillion, he said. “It doesn’t make sense to move backward–we don’t want to go back to 1970s refrigerators or 1970s policies.”

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us