National Academies Press: OpenBook
« Previous: 1 Introduction
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

2

Framework for Developing Regulations

INTRODUCTION

This chapter reviews the U.S. Department of Energy’s (DOE’s) practices for setting energy efficiency standards in the context of the statutory and executive mandates that guide them. It discusses the regulatory impact analysis (RIA) framework embodied in long-standing executive orders and the manner in which this framework provides a useful structure for analyzing and developing new and amended standards and for reviewing existing standards.

The committee reviews the history of energy efficiency standards from Congress’s passage of the Energy Policy and Conservation Act of 1975 (hereafter “EPCA”) to today. It revisits some of the controversies surrounding the Act and associated regulations and examines the impacts of subsequent amendments and the evolution of standard-setting practices over the last 45 years. It summarizes the ex ante analytical requirements with which DOE must comply in setting standards and then reviews the program’s impacts. These impacts include the number of appliances covered and standards established, claims of energy use reductions and consumer cost savings, concerns about impacts on appliance functionality, and effects on competition. This review suggests that framing DOE’s analysis according to RIA principles and steps could provide more information on the societal impacts of proposed standards and better achieve statutory goals. The chapter concludes with a description of the factors the committee considered in its peer evaluation.

CONTEXT—STATUTORY REQUIREMENTS

DOE’s Legislative Authority

DOE’s authority to set energy conservation standards is codified at 42 U.S.C. § 6295.1 In 1975, 2 years before DOE was created by the Department of Energy Organization Act of 1977, Congress passed EPCA, directing the National Institute of Standards and Technology (then known as the National Bureau of Standards) to develop test procedures for measuring the energy efficiency of appliances. Then, in 1978 the National Energy Conservation Policy Act (NECPA) first gave the newly created DOE the authority to set mandatory minimum energy performance standards, which would preempt State standards. As Table 2.1 and Figure 2.1 show, Congress has amended the laws governing energy conservation standards numerous times since then.

___________________

1 Throughout the chapter, U.S.C. is used to refer to the United States Code, a collection of certain statutes arranged by titles according to subject matter. The format is [TITLE NUMBER] U.S.C. § [SECTION NUMBER].

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

TABLE 2.1 Significant Legislative Action for the Appliance and Equipment Standards Program

Action Public Law (P.L.) Date
Energy Policy and Conservation Act (EPCA) P.L. 94-163 December 22, 1975
National Energy Conservation Policy Act P.L. 95-619 November 9, 1978
National Appliance Energy Conservation Act of 1987 (NAECA) P.L. 100-12 March 17, 1987
National Appliance Energy Conservation Amendments of 1988 P.L. 100-357 June 28, 1988
Energy Policy Act of 1992 P.L. 102-486 October 24, 1992
Energy Policy Act of 2005 (EPACT 2005) P.L. 109-58 August 8, 2005
Energy Independence and Security Act of 2007 (EISA 2007) P.L. 110-140 December 19, 2007
American Energy Manufacturing Technical Corrections Act (AEMTCA) P.L. 112-210 December 18, 2012
Image
FIGURE 2.1 Legislative history. SOURCE: John Cymbalski, DOE, “Appliance and Equipment Standards Program Buildings Technology Office,” presentation to the committee, November 19, 2019.
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

EPCA specifies a list of consumer products2 and industrial equipment3 covered by the statute and authorizes the Secretary of Energy to set standards for additional consumer products if the average annual per-household energy use by such product is likely to exceed 100 kilowatt-hours per year (42 U.S.C. § 6292(b)).

Under the Act, DOE must review standards every 6 years, and either determine that the standard does not need to be amended or propose a new standard. If the Secretary determines that a revision is necessary, DOE then has 2 years within which to seek and evaluate public comment and issue a final standard.

In setting new or amended standards, EPCA directs DOE to design standards to “achieve the maximum improvement in energy [or water] efficiency . . . which the Secretary determines is technologically feasible and economically justified” (42 U.S.C. § 6295(o) and (42 U.S.C. § 6313(a)(6)(B)(iii)). It further guides the Secretary to determine whether a standard is “economically justified” using a benefit-cost standard, based on “whether the benefits of the standard exceed its burdens,” taking into consideration the following:

In addition to these criteria, the EPCA provides a rebuttable presumption that a standard is economically justified “if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy, and as applicable, water, savings during the first year that the consumer will receive as a result of the standard” 42 U.S.C. § 6295(o)(2)(B)(iii)). This implies that if DOE finds that the energy savings of a product will allow consumers to recoup the upfront costs within 3 years, it need not conduct further analysis to demonstrate the product is economically justified. In addition to being technologically feasible and economically justified, the standard must “result in significant conservation of energy” or water (42 U.S.C. § 6295(o)(3)).

Furthermore, “the Secretary may not prescribe an amended or new standard . . . [that] is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the

___________________

2 These are listed at 42 U.S.C. § 6292(a) and include refrigerators, kitchen ranges and ovens, water heaters, dishwashers, clothes washers and dryers, television sets, general service incandescent lamps, and showerheads.

3 Listed at 42 U.S.C. § 6311(1), covered equipment includes electric motors and pumps, commercial refrigerators, automatic commercial ice makers, walk-in freezers, and commercial clothes washers.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

same as those generally available in the United States at the time of the Secretary’s finding” (42 U.S.C. § 6295(o)(4)).

Other Requirements Governing Standards Development

In addition to its organic statutes, DOE is subject to other legislative and executive requirements when developing and issuing new standards. This section summarizes the Administrative Procedure Act and key executive orders that guide DOE’s regulatory practices.

The Administrative Procedure Act

The Administrative Procedure Act of 1946 (APA) established procedures an agency must follow in issuing binding rules and regulations. It constrains executive rulemaking in three main ways. First, agencies can only act within limits set by their organic statutes. Second, agencies must notify the public of the proposed action and consider public comments before issuing a final rule. Third, final actions must be supported by the factual record developed during rulemaking, including substantive comments received.

DOE relies on the APA’s “informal” or “notice and comment” rulemaking procedures to issue energy efficiency standards (5 U.S.C. § 553). Usually, it proposes a rule or standard and invites public comment through a Notice of Proposed Rulemaking (NOPR) published in the Federal Register. After reviewing public comments on the NOPR, it will issue a final rule.

DOE occasionally engages in negotiated rulemaking to bring different stakeholders to the table to jointly draft a proposed regulation. (An example is the rulemaking for distribution transformers.4,5) The resulting draft usually must comply with the APA’s informal rulemaking requirements and go through public notice and comment. However, EPCA gives DOE authority to publish a direct final rule that establishes energy conservation standards based on a recommendation “that is submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary” (42 U.S.C. § 6295(p)(4)). When issuing a direct final rule, the Secretary must simultaneously publish an identical proposed rule. If DOE receives an adverse comment or alternative recommendation that provides a reasonable basis for withdrawal, it must withdraw the direct final rule (42 U.S.C. § 6295(p)(4)(C)).

Executive Order 12866

Executive Order (E.O.) 12866 (Clinton, 1993) guides both regulatory practice and analysis. Pursuant to E.O. 12866, before publishing significant proposed and final rules in the Federal Register, DOE must send them to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) for interagency review. This review serves two primary purposes: to coordinate regulatory policies across agencies and to ensure regulations follow good regulatory practices outlined in

___________________

4 U.S. Department of Energy (DOE), 2012, “Notice of Proposed Rulemaking and Public Meeting: Energy Conservation Program: Energy Conservation Standards for Distribution Transformers,” Federal Register 77: 7282-7381, February 10.

5 DOE, 2012, “Final Rule: Energy Conservation Program: Energy Conservation Standards for Distribution Transformers,” Federal Register 78: 23336-23436, April 18.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

E.O. 12866 (discussed further below).6 The default length of this review is 90 days (E.O. 12866 Sec. 6(b)(2)), although either OMB or DOE can extend that.

Other Legislative and Executive Requirements

Energy conservation standards are subject to other procedural requirements; the most relevant are summarized in Table 2.2.

TABLE 2.2 Procedural and Regulatory Review Requirements

Requirement Summary
E.O. 12866 (Clinton, 1993) Requires regulatory analysis and OMB/OIRA review of significant regulatory actions.
E.O. 13563 (Obama, 2011) Reinforced E.O. 12866 and emphasized integration and innovation, flexible approaches, science, and retrospective review.
Regulatory Flexibility Act (1980; 5 U.S.C. 604) “Requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities” (DOE EERE, 2021, p. 18911).
Paperwork Reduction Act (1995) The collection-of-information requirement for certification and recordkeeping is subject to review and approval by OMB/OIRA.
Unfunded Mandates Reform Act (1995) Requires agencies “to assess the effects of Federal regulatory actions on State, local, and tribal governments and the private sector,” to provide a statement of benefits and costs on national economy, and to seek input from state, local and tribal government on a “proposed significant intergovernmental mandate” (DOE EERE, 2021, p. 18912).
E.O. 13132 “Federalism” (1999) Policies and regulations that affect state law are required to “examine the constitutional and statutory authority supporting any action that would limit the policy making discretion of the States and to carefully assess the necessity for such actions” (DOE EERE, 2021, p. 18912). Must give states the opportunity to provide input.
Review Under the Information Quality Bulletin for Peer Review (2005) DOE conducted peer review of “energy conservation standards development process and analyses and has prepared a Peer Review Report pertaining to the energy conservation standards rulemaking analysis” (DOE EERE, 2021, p. 18913).

NOTE: E.O. = executive order; OIRA = Office of Information and Regulatory Affairs; OMB = Office of Management and Budget.

SOURCE: U.S. Department of Energy Office of Energy Efficiency and Renewable Energy (DOE EERE), 2021, “Energy Conservation Program for Appliance Standards: Procedures, Interpretations, and Policies for Consideration in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment,” Federal Register 86(68): 18901-18921.

___________________

6 E.O. 12866 Sec. 2(b) states as follows: “Coordinated review of agency rulemaking is necessary to ensure that regulations are consistent with applicable law, the President’s priorities, and the principles set forth in this Executive order, and that decisions made by one agency do not conflict with the policies or actions taken or planned by another agency.”

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

EVOLUTION OF STANDARDS

Standards Versus Labeling

In 1975, EPCA established the first federal program aimed at energy conservation for consumer products. It “consist[ed] of test procedures, labeling, and energy targets for consumer products.”7 It authorized federal appliance efficiency standards, but only if efficiency labels—providing consumers with relevant information on which to make their own choices—were unsuccessful.

In 1978, EPCA was amended to remove the labeling prerequisite. In response, on June 20, 1980, DOE proposed energy efficiency standards for eight types of home appliances: refrigerators and refrigerator-freezers, freezers, clothes dryers, water heaters, room air conditioners, kitchen ranges and ovens, central air conditioners, and furnaces. Its supporting analysis relied heavily on private benefits, in the form of cost savings to consumers that modeling predicted would be obtained with these standards. DOE argued that standards were necessary because myopia prevented consumers from appreciating that their cost savings from reduced energy usage over the life of a more efficient appliance would exceed the higher up-front purchase price (Mannix and Dudley, 2015).

DOE’s explanation of consumer short-sightedness did not persuade President Carter’s Regulatory Analysis Review Group (RARG).8 The RARG argued that “[w]hile consumers still might be ‘myopic’ in considering future energy savings, the case is not nearly so clear-cut as it once might have seemed” (RARG, 1980, p. 5). Instead, RARG “identified several assumptions and methodologies that appear unrealistic, unduly pessimistic about the workings of the market or of labelling, unduly optimistic about the effect of mandatory standards, or simply undocumented or unclear” (RARG, 1980, p. 7).

Rejecting DOE’s “assumptions . . . of extremely irrational behavior on the part of consumers,” RARG recommended that DOE not issue standards.

DOE’s analysis of the net benefits of the standards appears to have exaggerated them, particularly in comparison to the benefits of labels. We suggest that this analysis be redone with more realistic and cautious assumptions and with lower standards, as suggested above. If, as a result, a particular standard does not appear to offer significant net benefits beyond those available from labelling, we recommend that DOE find, as it has the power to do, that such a standard is not justified. (RARG, 1980, p. 7)

Notwithstanding the Carter White House’s criticisms, DOE attempted to issue final appliance efficiency standards in January 1981, but the new Reagan administration agreed with its predecessor and instructed DOE to issue a “no-standard standard” (Mannix and Dudley, 2015). In 1982 and 1983, DOE issued regulations finding that appliance efficiency standards were not economically justified.9,10 The passage of the 1987 National Appliance Energy Conservation Act led to new standards for a number of additional product categories (see Figure 2.1).

A few years later, the Energy Star program was initiated as a voluntary measure and has attracted high engagement from manufacturers seeking to use the label as a marketing tool. However, its analysis and techniques do not need to employ the same rigor or transparency as DOE does in the appliance

___________________

7 Further information is available at DOE, “History and Impacts: Buildings,” https://www.energy.gov/eere/buildings/history-and-impacts.

8 RARG membership included most executive branch regulatory agencies. Its executive committee consisted of the Council of Economic Advisors, the Office of Management and Budget, the U.S. Department of Labor, and the U.S. Environmental Protection Agency. See OMB (1997).

9 DOE, 1982, “Energy Conservation Program for Consumer Products; Final Rule for Clothes Dryers and Kitchens Ranges and Ovens,” Federal Register 47: 57198-57219, December 22.

10 DOE, 1983, “Energy Conservation Program for Consumer Products; Final Rule for Refrigerators and Refrigerator-Freezers, Freezers, Water Heaters, Room Air Conditioners, Furnaces and Central Air Conditioners,” Federal Register 48: 39376-39409.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

standards development in the methods used to categorize products into like groups or “levels” based on energy efficiency performance.

REQUIREMENTS FOR REGULATORY ANALYSIS

In parallel with legislative authority for issuing energy efficiency standards, presidents have required agencies to analyze the likely impact of regulations before issuing them. Both legislation and executive order require DOE to qualitatively and quantitatively assess the impacts of its standards. This section describes executive and statutory RIA requirements and draws parallels between them and those embodied in EPCA.

Regulatory Impact Analysis (RIA)

Since the 1970s, presidents of both parties have directed regulatory agencies to consider the costs and benefits of regulatory actions. Executive Order 12866, issued by President Clinton in 1993, continues to guide the development of rulemaking today. It requires agencies to conduct an RIA, which (1) identifies the compelling public need for regulation; (2) evaluates alternative approaches to address that need; and (3) estimates the benefits and costs of those alternatives (OMB, 2010, pp. 2-3). In writing regulations, it directs agencies to “assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating,” and to select alternatives that maximize net benefits, to the extent permitted by law.11 (See also Box 2.1.)

For regulations deemed significant under E.O. 12866 § 3(f)(1),12 agencies must provide as part of their decision-making process (unless prohibited by law):

___________________

11 E.O. 12866, Section 1.a. states as follows: “in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach.”

12 OMB refers to this category of significant regulations as “economically significant.”

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

The RIAs DOE prepares for its energy efficiency standards are not integrated into the standard-setting framework and mainly discuss alternatives that DOE concludes are not permitted by statute though conceivably might be authorized by legislators in the future. It is presented separately from, and after,13 other analyses, which appears inconsistent with the purpose of the RIA “to inform agency decisions in advance of regulatory actions and to ensure that regulatory choices are made after appropriate consideration of the likely consequences” (OMB, 2011b). According to OIRA, “[r]egulatory analysis also has an important democratic function; it promotes accountability and transparency and is a central part of open government” (OMB, 2011b). As is discussed below and in subsequent chapters, more attention to the RIA’s analysis of societal benefits could improve DOE’s analyses and potentially the consumer impacts and societal outcomes of DOE’s standards.

Because the RIA requirements are consistent with DOE’s statutory mandate to ensure its standards are technologically feasible and economically justified, using the RIA framework to support new or amended standards offers advantages. As OMB’s Circular A-4 explains:

Regulatory analysis is a tool regulatory agencies use to anticipate and evaluate the likely consequences of rules. It provides a formal way of organizing the evidence on the key effects—good and bad—of the various alternatives that should be considered in developing regulations. The motivation is to (1) learn if the benefits of an action are likely to justify the costs or (2) discover which of various possible alternatives would be the most cost-effective. (OMB, 2003)

Need for Regulation

The first step in the RIA framework is identifying the problem to be solved. The “Regulatory Philosophy” stated in E.O. 12866 is that “Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people” (Clinton, 1993, § 1(a)). The first two principles reproduced above reinforce that step (Clinton, 1993, § 2(b)(1) and § 2(b)(2)).

Circular A-4 provides direction to agencies:

Before recommending Federal regulatory action, an agency must demonstrate that the proposed action is necessary. If the regulatory intervention results from a statutory or judicial directive, you should describe the specific authority for your action, the extent of discretion available to you, and the regulatory instruments you might use.

The major types of market failure include externality, market power, and inadequate or asymmetric information. Correcting market failures is a reason for regulation, but it is not the only reason. Other possible justifications include improving the functioning of government, removing distributional unfairness, or promoting privacy and personal freedom.

The concept of “market failure” is important. Market economies rely on competition and price signals to allocate scarce resources to their most valued uses, to encourage innovation, and to satisfy consumer

___________________

13 For example, the RIA is the last of 17 chapters in DOE’s 2014 Technical Support Document for Residential Dishwashers (DOE, 2014a).

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

needs. When markets are operating properly—which, as Circular A-4 makes clear, is not always the case—government regulation can disrupt those signals, reducing the efficiency of market forces and harming social welfare. Because of these effects, longstanding good regulatory practice begins with an explanation of why market outcomes are less efficient than what government regulations could be expected to accomplish (Dudley et al., 2017). Appliance markets are subject to a wide range of market imperfections, on both the producer and consumer side, including issues related to oligopolistic markets, consumer information, renters and other housing market issues, and the environmental and security consequences of energy use. As is developed in Chapter 4, these failures are specific to particular consumers, manufacturers and appliances; interact in different ways with the minimum efficiency standards contemplated by this program; and their importance in particular cases may rest on empirical verification. Because of this heterogeneity, careful consideration of market outcomes and market failures can contribute meaningfully to DOE analyses. We consider some of these possibilities in this section in the context of the RIA structure, and return to the relationship between market failures and standards in Chapter 4.

DOE discusses several possible market failure justifications for energy efficiency standards. For example, the 2012 residential dishwasher rule published by DOE identifies three problems the standards address.14 Two relate to what Allcott and Greenstone (2012) refer to as “investment inefficiencies,” where consumers’ lack of information or the ability to process information on energy efficiency such that they do not take profitable investments, leading to an “energy efficiency gap” (Jaffe and Stavins, 1994). The other recognizes “externalities related to environmental protection and energy security that are not reflected in energy prices, such as reduced emissions of greenhouse gases.”15,16

Alternatives

E.O. 12866 directs agencies to assess alternatives to regulation (including economic incentives or information provision) (Clinton, 1993, § 1(b)(3)), as well as alternative forms of regulation (Clinton, 1993, § 1(b)(5)). For efficiency standards, alternatives to regulation might include labeling, “consumer-initiated litigation in the product liability system,” or “regulation at the State or local level” (OMB, 2011a). For example, household appliances, particularly those involved in heating or cooling, might be better addressed locally (OMB, 2011b), given the variation in temperature conditions across the United States. E.O. 13563 directs agencies to “consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public” (Obama, 2011). These include “appropriate default rules, and disclosure requirements” (OMB, 2011a).

Two of DOE’s three justifications for action on a dishwasher standard relate to product purchasers having inadequate information on potential cost savings from more efficient appliances. Given this, E.O. 12866 and OMB’s Circular A-4 call for more consideration than DOE currently provides of the alternatives to standards regulations that address information asymmetry. Tailoring regulatory design to the problem to be solved is particularly important given OMB’s warning that regulations can impede market efficiency. Its guidelines include a “presumption against certain types of regulatory action”

___________________

14 DOE lists and describes these failures on DOE, 2012, “Direct Final Rule: Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers,” Federal Register 77: 31917-31963, May 30, p. 31959.

15 For commercial refrigeration equipment, where consumers are profit-motivated commercial entities and not individuals, DOE suggests that “[f]or certain segments of the companies that purchase commercial refrigeration equipment, such as small grocers, there may be a lack of consumer information and/or information processing capability about energy efficiency opportunities in the commercial refrigeration equipment market” (DOE, 2014, “Final Rule: Energy Conservation Program: Energy Conservation Standards for Commercial Refrigeration Equipment,” Federal Register 79(60): 17726-17818, March 28, p. 17812).

16 DOE, 2012, “Direct Final Rule: Energy Conservation Program: Energy Conservation Standards for Residential Dishwashers,” Federal Register 77: 31917-31963, May 30.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

including “mandatory uniform quality standards for goods or services if the potential problem can be adequately dealt with through voluntary standards or by disclosing information of the hazard to buyers or users” (OMB, 2003). “In light of both economic theory and actual experience,” OMB calls for “a particularly demanding burden of proof . . . to demonstrate the need for” such regulations (OMB, 2003).

Benefits and Costs

E.O. 12866 directs agencies, “in choosing among alternative regulatory approaches, [to] select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach.” EPCA does not require another approach. It directs DOE only to set standards that are “economically justified,” and explains:

In determining whether a standard is economically justified, the Secretary shall, after receiving views and comments furnished with respect to the proposed standard, determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable. (42 U.S.C. § 6295(o)(2)(B))

FINDING: Given the similarities between DOE’s statutory requirements and the regulatory impact analysis practices embodied in presidential executive orders and OMB guidelines, using the RIA framework to organize the development of the standards could lead to greater attention to their social welfare impacts.

DOE generally provides its estimates of benefits and costs in sections of the Technical Support Document (TSD) other than the RIA. For example, for the three rulemakings considered as part of this review (commercial refrigeration equipment (CRE), residential dishwashers, and residential furnaces), the TSD is organized such that Chapter 8 estimates consumer costs (in terms of life-cycle costs and payback periods). Chapter 10 estimates national energy savings, Chapter 12 looks at manufacturer impacts, and Chapters 13 and 14 quantify and monetize the benefits of emissions reductions at different levels. Chapter 17, the final chapter of the TSD, is labeled RIA and compares several alternatives to regulation.

The dishwasher rule provides a good example of the value of integrating the RIA analysis into the detailed and extensive economic analyses of costs and benefits. In this case, DOE’s analyses conclude that the changes mandated by the proposed standard provide consumers with significant economic benefits—in effect, that the investment in a standard-complying dishwasher saves consumers money owing to the value of energy savings to the consumer being larger than the cost of compliance (i.e., the increased price of the appliance). If this is the case, why don’t consumers buy the more efficient appliance? One possibility, subscribed to by the DOE analysis is a consumer market failure that results in an energy efficiency gap. However, as is discussed in Chapter 4, the relationship between an observed energy efficiency gap and the proposed market failures is not a given: the observed gap may be related to systematic market failures that are properly addressed by standards, but in some cases evidence suggests that other non-market factors could be present. Such other factors could include misrepresenting the following: the actual costs of ownership (Jaccard et al., 2003; NRC, 2010, p. 47); the pattern of use of the consumer (Jaffe and Stavins, 1994); or the performance of the appliance (NRC, 2013, p. 28). (See also Allcott and Greenstone, 2012; Gerarden et al., 2017; Hassett and Metcalf, 1992; Stern et al., 2016.) An analysis focused on market failures can consider not only whether a standard is likely to be justified, but also whether the calculations provided by the analysis are likely to be correct.

As with the dishwasher rule, for many energy conservation regulations, most of the quantified benefits derive from private savings to purchasers of more efficient products (Gayer and Viscusi, 2013). The National Highway Traffic Safety Administration’s 2011 regulation for fuel efficiency of medium and heavy-duty engines and vehicles, for example, attributed $42 billion of the net benefits of the

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

regulation—the vast majority—to private savings on fuel costs that would accrue to the would-be purchasers of the more efficient engines and vehicles.17 The conclusion that DOE standards are needed for consumers to realize these savings require a fuller justification than the brief statements currently provided in TSDs and rule preambles. These preambles typically suggest that consumers lack information or information processing ability to realize those benefits themselves. DOE’s RIAs do not present evidence that individuals behave irrationally when making purchasing decisions on covered products. Nor do they provide evidence that indicates DOE is better able to judge other people’s preferences or be more faithful agents of their interests than the people themselves (Mannix and Dudley, 2015), consistent with the admonition of E.O. 12866 to identify the failures of private markets (Clinton, 1993, sec. 1.b.1).

Distributional Effects

E.O. 12866 requires agencies to consider distributive impacts and equity (Clinton, 1993, Sec. 1.a and Sec. 1.b.5). Chapter 11 of DOE’s TSDs18 provide a subgroup analysis, which “evaluates impacts on groups or customers who may be disproportionately affected by any national energy conservation standard . . . by analyzing the life cycle cost (LCC) impacts and payback period (PBP) for those consumers from the considered energy efficiency levels” (DOE, 2016). This is consistent with the OMB Circular A-4 requirement to “provide a separate description of distributional effects (i.e., how both benefits and costs are distributed among sub-populations of particular concern) so that decision makers can properly consider them along with the effects on economic efficiency.”

As Jaffe and Stavins (1994) observe, “If the relevant population is heterogeneous with respect to the amount of energy it uses . . . even a technology that looks very good for the average user will be unattractive for a portion of the population.” President Biden has emphasized the importance of analyzing the distributional impacts of regulations (Biden, 2021). Consistent with E.O. 12866 and OMB Circular A-4, DOE conducts subgroup analyses for its standards, where relevant groups vary with the appliance considered, considering such features as regional and socioeconomic variation. But here too a greater focus on market failure could be useful. For example, the existence of unemployed but apparently cost effective energy efficiency technology can arise in rental units where landlords purchase appliances, tenants pay energy costs, and landlords are unable to recoup through higher rent the utility savings associated with more expensive, energy efficient appliance. If such a market failure is expected, a subgroup analysis focused on rental properties may be useful. The landlord/tenant problem (sometimes referred to as split incentives) is discussed in more detail in Chapters 4 and 5.

Retrospective Review

E.O. 12866 directs each agency to “periodically review its existing significant regulations to determine whether any such regulations should be modified or eliminated so as to make the agency’s regulatory program more effective in achieving the regulatory objectives, less burdensome, or in greater alignment with the President’s priorities and the principles set forth in this Executive order” (Clinton, 1993, Sec. 5.a). E.O.13563 (Obama, 2010, Sec. 6.a.) further tells agencies to “consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

___________________

17 See U.S. Environmental Protection Agency and National Highway Traffic Safety Administration, 2011, “Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles” Federal Register 76(179): 57106-57513, September 15, p. 57106b.

18 See, for example, DOE (2014a,b, 2016).

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

Further discussion of ex post analysis, including how this could apply to price, is included in Chapter 4 in the section “The Determination of Markups.” See also Recommendation 4-1.

FINDING: Conducting an evaluation, ex post (i.e., after promulgation of standards), of the performance of appliances and equipment will permit DOE to evaluate the validity of the ex ante assumptions it relied on in setting standards and will allow learning and iterative improvement of its analysis and its standards.

RECOMMENDATION 2-1: To better understand the social impacts of its standards, DOE should organize its analysis following the regulatory analysis framework laid out in OMB Circular A-4. For example, rather than presenting the RIA as the last stage in the process, the analyses shown in Figure S.1 could be technical appendices to the RIA, which would integrate this information in presenting estimates of the net benefits and distributional impacts of the proposed efficiency standard and reasonable alternatives, referencing information from relevant appendices as it describes a baseline scenario and cost and benefit models.

RECOMMENDATION 2-2: DOE should pay greater attention to the justification for the standards, as required by executive orders and the EPCA requirement that standards be economically justified. DOE should attempt to find significant failures of private markets or irrational behavior by consumers in the no-standards case and should consider such a finding as being necessary to conclude that standards are economically justified.

RECOMMENDATION 2-3: DOE should commit to collecting data necessary to conduct more rigorous ex post analysis of the effects of standards on consumers, producers, energy consumption, and environmental impacts.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires agencies to consider the impact of their regulatory actions on small entities (e.g. businesses, organizations, or government jurisdictions), analyze effective alternatives that minimize small entity impacts, and make their analyses available for public comment. Unless an agency certifies that its proposed regulation would not have a “significant economic impact on a substantial number of small entities,” it must prepare a regulatory flexibility analysis. DOE established procedures in 2003 to consider impacts on small entities.19

Of the three appliance rules reviewed in this report, DOE certified that the residential dishwasher standard would not have a significant economic impact on small entities. It conducted the required regulatory flexibility analysis for both the CRE and residential furnace standards.

Paperwork Reduction Act

The Paperwork Reduction Act of 1980, as amended in 1995, aims to among other things, “minimize the paperwork burden . . . resulting from the collection of information by or for the Federal Government,” “ensure the greatest possible public benefit from and maximize the utility of information created, collected, maintained, used, shared and disseminated by or for the Federal Government” and “improve the quality and use of Federal information to strengthen decision making, accountability, and openness in Government and society” (44 U.S.C. § 3501).

___________________

19 DOE Office of General Counsel, 2003, “Notice of Procedures and Policies: Executive Order 13272; Consideration of Small Entities in Agency Rulemaking,” Federal Register 68: 7990-7994, February 19.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

It requires federal agencies to seek public comment on proposed collections from 10 or more persons, and to submit those proposed collections for OIRA/OMB review and approval. When OMB approves an information collection, it assigns an OMB control number that the agency must display on the information collection. (For more information, see Sunstein, 2010.) The public is not required to respond to any collection that does not display an OMB control number.

OMB defines information as “any statement or estimate of fact or opinion, regardless of form or format, whether in numerical, graphic, or narrative form, and whether oral or maintained on paper, electronic or other media” (5 C.F.R. 1320.3(h) [i.e., Code of Federal Regulations, Title 5, Section 1320.3(h)]). This includes government forms, surveys, recordkeeping requirements and third-party or public disclosures (5 C.F.R. 1320.3(c)).

DOE regulations require manufacturers to certify that all covered consumer products and commercial equipment comply with applicable energy conservation standards. In certifying compliance, manufacturers must test their products according to DOE test procedures.20,21 For each standard, DOE estimates the number of hours needed to certify compliance (reporting burden). For example, for the CRE standards, DOE states “the reporting burden for the certification is estimated to average 20 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.”22

PROGRAM IMPACTS

List of Regulations Issued

DOE provides the table of standards and estimated energy savings for its regulations, replicated here as Table 2.3.

___________________

20 There is no requirement for third-party testing. In the case of motors, however, the laboratory itself must be certified.

21DOE, 2016, “Energy Conservation Program: Energy Conservation Standards for Residential Boilers,” Federal Register 80(61): 17222-17305.

22 DOE, 2014, “Energy Conservation Program: Energy Conservation Standards for Commercial Refrigeration Equipment,” Federal Register 79: 17726-17818, p. 17814.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

TABLE 2.3 Energy Savings Data for U.S. Department of Energy (DOE) Energy Conservation Standards, 1989-2019

Product/Equipment Citation Date of Final Rule Publication Analysis Period (years) Site Energy Savings (quads) Site Energy Savings (%)

Small gas furnaces

54 FR 47916 11/17/1989 24 0.300 0.2%

Refrigerators, refrigerator-freezers, freezers

54 FR 47916 11/17/1989 23 1.900 13.0%

Residential clothes washers

56 FR 22250 5/14/1991 23 0.290 5.0%

Clothes dryers

56 FR 22250 5/14/1991 23 0.320 6.0%

Dishwashers

56 FR 22250 5/14/1991 23 0.450 12.0%

Refrigerators, refrigerator-freezers, freezers

62 FR 23102 4/28/1997 30 2.400 15.0%

Room air conditioners

62 FR 50122 9/24/1997 30 0.170 3.0%

Fluorescent lamp ballasts

65 FR 56740 9/19/2000 26 0.43-0.83 Unavailable

Residential clothes washers

66 FR 3314 1/12/2001 27 3.350 29.0%

Water heaters

66 FR 4474 1/17/2001 27 2.730 4.0%

Central air conditioners and heat pumps

66 FR 7170 1/22/2001 30 2.400 10.0%

Distribution transformers

72 FR 58190 10/12/2007 30 1.260 21.0%

Furnaces and boilers

72 FR 65136 11/19/2007 24 0.240 0.2%

Packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs)

73 FR 58772 10/7/2008 30 0.009 4.0%

Commercial refrigeration equipment

74 FR 1092 1/9/2009 30 0.360 16.0%

Electric and gas kitchen ranges and ovens (actual savings for gas cooktops and ovens)

74 FR 16040 4/8/2009 30 0.130 4.0%

Incandescent reflector lamps

74 FR 34080 7/14/2009 30 0.35-0.88 20-25%

General service fluorescent lamps

74 FR 34080 7/14/2009 30 1.4-3.7 4-12%

Beverage vending machines

74 FR 44914 8/31/2009 30 0.068 20.0%

Commercial clothes washers

75 FR 1122 1/8/2010 30 0.078 12.0%

Small electric motors (SEMs)

75 FR 10874 3/9/2010 30 1.050 52.0%

Pool heaters

75 FR 20112 4/16/2010 30 0.018 1.0%

Direct heating equipment

75 FR 20112 4/16/2010 30 0.190 3.0%

Water heaters

75 FR 20112 4/16/2010 30 1.690 3.0%

Room air conditioners

76 FR 22454 4/21/2011 30 0.150 6.0%

Clothes dryers

76 FR 22454 4/21/2011 30 0.190 3.0%

Central air conditioners and heat pumps and furnaces

76 FR 37408 6/27/2011 30 2.62-3.58 1-2%

Refrigerators, refrigerator-freezers, freezers

76 FR 57516 9/15/2011 30 2.330 14.0%
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Product/Equipment Citation Date of Final Rule Publication Analysis Period (years) Site Energy Savings (quads) Site Energy Savings (%)

Fluorescent lamp ballasts

76 FR 70548 11/14/2011 30 0.9-1.8 2-4%

Dishwashers

77 FR 31918 5/30/2012 30 0.070 2.0%

Residential clothes washers

77 FR 32308 5/31/2012 30 1.410 14.0%

Distribution transformers

78 FR 23336 4/18/2013 30 1.900 18.0%

Microwave ovens (standby/off mode)

78 FR 36316 6/17/2013 30 0.250 57.0%

Metal halide lamp fixtures

79 FR 7746 2/10/2014 30 0.16-0.20 3.0%

External power supplies

79 FR 7846 2/10/2014 30 0.320 56.0%

Commercial refrigeration equipment

79 FR 17726 3/28/2014 30 1.140 13.0%

Electric motors

79 FR 30934 5/29/2014 30 2.800 0.7%

Walk-in coolers and freezers

79 FR 32050 6/3/2014 30 1.250 28.0%

Furnace fans

79 FR 38130 7/3/2014 30 1.080 10.0%

Commercial clothes washers

79 FR 74492 12/15/2014 30 0.044 7.0%

General service fluorescent lamps

80 FR 4042 1/26/2015 30 0.900 7.0%

Automatic commercial ice makers

80 FR 4646 1/28/2015 30 0.063 8.0%

Single package vertical air conditioners and heat pumps

80 FR 57438 9/23/2015 30 0.050 4.0%

Ceiling fan light kits

81 FR 580 1/6/2016 30 0.016 3.0%

Beverage vending machines

81 FR 1028 1/8/2016 30 0.044 16.0%

Residential boilers

81 FR 2320 1/15/2016 30 0.137 0.6%

Commercial warm air furnaces

81 FR 2420 1/15/2016 30 0.200 0.8%

Small, large, and very large commercial package air conditioning and heating equipment

81 FR 2420 1/15/2016 30 5.500 24.0%

Commercial, industrial pumps

81 FR 4368 1/26/2016 30 0.105 0.9%

Commercial pre-rinse spray valves

81 FR 4748 1/27/2016 30 0.065 8.0%

Battery chargers

81 FR 38266 6/13/2016 30 0.061 11.0%

Dehumidifiers

81 FR 38338 6/13/2016 30 0.100 7.0%

Miscellaneous refrigeration products

81 FR 75194 10/28/2016 30 0.540 58.0%

Central air conditioners and heat pumps

82 FR 1786 1/6/2017 30 1.200 3.0%

Dedicated-purpose pool pumps

82 FR 5650 1/18/2017 30 1.300 39.0%

Ceiling fans

82 FR 6826 1/19/2017 30 0.740 26.0%

Walk-in coolers and freezers

82 FR 31808 7/10/2017 30 0.290 8.0%

NOTE: FR = Federal Register, e.g., “82 FR 31802” means Federal Register Volume 82, page 31808; Quads = quadrillion British thermal units.

SOURCE: DOE, 2019, “Energy Savings Data for DOE Energy Conservation Standards, 1989-2019,” EERE-2017-BT-STD-0062-0144, https://www.regulations.gov.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

Concerns About Effects on Appliance Function, Impact on Features Consumers Value

DOE’s statute directs it to set standards for which the benefits exceed the burdens “to the greatest extent possible” (42 U.S.C. 6295 § (o)(2)(B)(i)). In weighing benefits and burdens, DOE is to compare estimated energy cost savings to possible increases in maintenance expenses as well as initial appliance prices (42 U.S.C. 6295 § (o)(2)(B)(i)(II)). The statute also requires DOE to consider “any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard” (42 U.S.C. 6295 § (o)(2)(B)(i)(IV)).

It is often difficult to predict maintenance expenses or impacts on the product’s utility at the time DOE conducts ex ante analysis. Ex post evaluation of actual experiences is essential to know whether DOE is meeting its statutory obligations, and to inform subsequent ex ante regulatory impact analysis.

Fraas and Miller’s retrospective evaluation of clothes washer and refrigerator standards identifies three issues that led actual cost savings to be less than projected in DOE’s ex ante analyses:

  1. Product life and reliability;
  2. Greater energy usage than anticipated; and
  3. Additional operation and maintenance costs (Fraas and Miller, 2020).

Their two case studies suggest between 2001 and 2011, compliance with the energy efficiency standards brought design challenges that increased repair rates and significantly decreased the product life of clothes washers and refrigerators. Their case studies “illustrate the need to consider the potentially substantial costs of operation and repair in conducting retrospective analyses of DOE energy efficiency standards” (Fraas and Miller, 2020), as well as more attention to these unintended consequences in setting initial standards.

Impact on Competition

EPCA directs DOE to consider the impact of “any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard” (§ (o)(2)(B)(i)(V)). With respect to the markets for dishwasher and refrigerators, Fraas and Miller (2012) find:

The markets for these appliances have experienced an intense oligopolistic competition for market share with the consolidation of U.S. manufacturers and aggressive entry strategies by Samsung and LG Electronics. Any assessment of the pricing behavior and product differentiation in these appliance markets needs to be evaluated within this context.

CRITERIA AND PRINCIPLES GUIDING THIS REVIEW

This section describes the criteria the committee used to assess DOE’s methods in setting the minimum energy standards for products and equipment. It also describes the principles and worldviews that guided the committee’s deliberations. These criteria and principles are applied in Chapters 3 and 4 where the committee reviews the various components of the analyses of the TSDs that support the NOPR for standards for Residential Furnaces (DOE, 2016), Residential Dishwashers (DOE, 2014a), and Commercial Refrigeration Equipment (DOE, 2014b). The sequence of analyses in the TSDs is show in Figure 2.2.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Image
FIGURE 2.2 Sequence of analyses in DOE’s technical support documents. SOURCE: John Cymbalski, DOE, “Appliance and Equipment Standards Program Buildings Technology Office,” presentation to the committee, November 19, 2019.

In the following chapters the methods used to set standards are examined in terms of five attributes:

  • Adequacy and consistency with program’s goal, consistent with relevant law and executive order;
  • Transparency and replicability;
  • Adherence to state-of-the-art theory and methods of analysis commensurate with data availability and DOE’s ability to collect and analyze new data;
  • Rigor in the treatment of uncertainty and variability; and
  • Effectiveness in setting a path of continuous improvement of the process to set standards.

Adequacy of Methods and Consistency with Program’s Goal

The first criterion the committee applies in assessing the methods used is whether they allow DOE to determine appropriate appliance standards that are adequate to meet overall goals of the statute in terms of promoting energy efficiency and energy conservation—that is, the report asks if the methods are “fit for purpose.” To the extent that the goal of a program to set minimum energy efficiency standards for appliances and equipment is broader than just reducing annual energy consumption in the compliance year and the future, minimum energy efficiency standards for appliances and equipment are a component of a larger strategy to fulfill DOE’s mission to “ensure America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.”1 Hence, in the committee’s view, the main goal of the standards is reducing the costs and environmental externalities of the energy consumed by the regulated equipment and products. This view contrasts with a narrower interpretation that sees reducing the energy consumption of products and equipment as the main goal of the standards.

Because the products and equipment regulated by the standards program have an economic life time that spans years and because both the costs and externalities of the energy consumed in the future are

___________________

1 U.S. Department of Energy (DOE), “Mission,” https://www.energy.gov/mission.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

highly uncertain, the committee agrees that the goals of each standard must be expressed in terms of a planning horizon and a probabilistic measure. For example, the goal of a particular standard is to reduce the expected value of costs and environmental externalities of the energy that will be consumed during the next 3 decades. Currently DOE uses a planning horizon of 30 years.

In looking at whether DOE’s methods are suitable for this larger purpose of reducing costs and externalities of the energy consumed, the committee considers it necessary to ask whether DOE’s approach is comprehensive, forward-looking, and mindful of path dependencies (Arthur, 1989).

It is important to note that in its assessment of the methods and recommendations, the committee does not make any assumptions about the availability or limitations on DOE’s analytical or material resources or its priorities in the use of such resources. The committee offers its recommendations in light of what is considered a best practice and feasible given DOE’s existing programs but does not make any statements or assumption about the financial or personnel requirements to implement changes. Nonetheless, in selecting recommendations for inclusion in the Summary of this report, the committee has prioritized those recommendations that clearly communicate uncertainty, are feasible in scope, and which would be cost effective for DOE to implement in future TSDs.

Comprehensiveness of the Technological and Regulatory Alternatives Considered

In applying this first criterion on adequacy of methods, the committee asks whether, in its analysis, DOE is comprehensive in its consideration of technologies and regulatory mechanisms likely to deliver similar energy and environmental outcomes of the standard examined. In terms of technological comprehensiveness, the committee discusses the need to examine a large set of technologies and assess their energy consumption and environmental effects before any potential effects on industry competitiveness are brought into consideration.

In terms of regulatory comprehensiveness, the committee asks if DOE looks at its standards setting process as a component of its long-term strategy on energy and the environment. In this vein, the committee asks if DOE is properly considering tradeoffs between the stringency of a standard and the timing and flexibility of compliance to achieve better outcomes. DOE’s method to set standards already examines whether non-regulatory policies (e.g., voluntary targets, tax credits) can deliver better outcomes than the standard proposed. However, the committee’s question is not whether non-regulatory approaches are better than the standard but instead, whether DOE is being comprehensive in its consideration of a standard that varies in its stringency, flexibility of compliance, and timing of compliance. The committee’s view is that comprehensiveness in the consideration of the bundle of attributes of a standard (i.e., its stringency, timing of compliance, and flexibility) allows DOE to consider path dependencies.

Consideration of the Outcomes of Energy Efficiency Standards in a Changing Context

A further question the committee asks on this first criterion is whether DOE is forward-looking in its consideration of the possible future circumstances that affect the outcomes achieved by standards. A standard that passes the cost-benefit analysis under a business-as-usual scenario may fail when plausible future changes are considered. Advances in the technology of the equipment subject to the standards, changes in the U.S. grid energy mix, adoption of a carbon tax, new ways to price electricity (e.g., by time of use), and shifts in electricity and energy demand caused by a changing climate, may all significantly affect the value of different attributes of the regulated products and equipment. For example, the flexibility of operations and responsiveness of an appliance may be more valuable (in terms of reducing electricity costs and externalities) than its energy consumption efficiency under a future scenario with large shares of renewable energy in the grid. The committee’s view is that accounting for a wide range of plausible technological, socio-demographic, policy, and climate scenarios is necessary for a proper consideration of the span of costs and benefits brought by a regulation.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

Path-Dependencies in DOE’s Analysis of the Societal Benefits and Costs of Standards

The standards setting process entails one of many choices that DOE must make as part of a continuous decision-making process that spans decades into the future. As such, a further question on adequacy of methods is whether DOE considers the path dependencies (Arthur, 1989) that may arise with particular standards. Path dependencies can lead to sub-optimal efficiency as has been observed in the United Kingdom’s interventions favoring adoption of a new technology for domestic heating (Gross and Hanna, 2019). Each new standard puts DOE on a different path for achieving its long-term energy and environmental goals. Each new standard makes some alternative courses of action infeasible and opens up other ones. In particular, standards that require substantial changes in the technology and/or supply chains used by manufacturers may set technical path dependencies that must be considered in the context of a long-time horizon and DOE’s future actions. For example, it may be that a moderately stringent energy efficiency standard set today precludes the evolution of more energy-efficient technologies in the future because the factory upgrades or development of supply chains for complying with today’s standard, are incompatible with those required alternative future technologies. The Global Energy Assessment (Ürge-Vorsatz, 2012, pp. 709-710) considered energy efficiency in the buildings sector and the cost benefits of two paths: one a suboptimal step followed by a top-up step; the other the path efficient method of reaching the same efficiency level in one step. The study found that the former path risked lock-in because the top-up step would not be cost-effective or perhaps even highly uneconomic. DOE already performs an analysis of Cumulative Regulatory Burden as part of its assessment of Other Impacts of a standard, but this analysis looks at the regulations 3 years before and after the compliance date of the strategy and does not consider potential technological developments or standards further in the future (6, 12, and 18 years into the future).

Transparency, Clarity, and Replicability of Analysis

The second criterion that the committee applies to assess the standards-setting process is whether DOE describes methods and assumptions in sufficient detail such that the analysis can be replicated, and whether DOE communicates the final results clearly, properly characterizing the uncertainty that surrounds them and the variability of outcomes across geographies, income-groups, types of households etc.

Greater transparency in the TSDs DOE produces for each standard would make them more accessible to those interested in understanding and commenting on DOE’s proposals. Facilitating input from diverse parties early in the standard-development process could improve DOE’s analysis, the information on which it depends, and ultimately the standards themselves. It may be possible that improving the presentation of the TSDs to include summaries of data inputs and intermediate and final outputs of the different analyses would lead to standards that reduce the costs of participation for different societal groups.

The committee has also noted that although some information obtained by DOE are covered by nondisclosure agreements (NDAs), transparency can still be achieved by describing the methods used to gather that information and how that process leads to the inputs in the models. The committee comments on the transparency in the assumptions, data gathering methods, and model structures because it thinks that this allows DOE to evaluate the outcomes of the approaches used in past analyses, to learn from past experience, and constantly improve their methods (as evaluated with the fifth criteria).

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

Adherence to State-of-the-Art Theory and Methods of Analysis Commensurate with Data Availability and DOE’s Ability to Collect and Analyze New Data

The third criterion is whether the models DOE uses to characterize the products’ supply chains and consumers are consistent with the most current knowledge regarding industrial organization, practices of manufacturers and distributors, and consumers’ choices and behavior. The committee also looks at whether the analysis makes full use of new sources of relevant data, new methods of data collection, and of DOE’s own programs for data collection and analysis.

In particular, the committee looks at whether assumptions about consumers’ preferences regarding products’ attributes, mode, and time of use, which have profound impact on estimates of energy costs and emissions, are informed by data collection and analysis from DOE’s programs. The committee asks whether DOE’s standards office capitalizes on all of DOE’s resources to enhance is data and information. For example, does the Building Technologies Office maintain regular interaction with the Energy Information Administration2 on the Residential Energy Consumption Survey (RECS) and Commercial Building Energy Consumption Survey (CBECS) to ensure that the scope of the questions and the methods of data collection gather key information on consumers’ valuation of a product’s attributes as well as timing, intensity and mode of use? In addition, the committee asks whether DOE takes advantage of new technologies for the collection of real-time energy use (with smart meters and in-home energy use monitors) to gain a deeper understanding of any discrepancies between laboratory and real-setting results and of the relationship between climatic conditions and the amount and timing of energy consumption of different equipment.

Rigor in the Treatment of Variability and Uncertainty

The fourth criterion the committee considers is whether the methods used include an explicit characterization of the uncertainty and variability in all of the factors that affect the welfare impacts of a standard, and whether DOE clearly presents the variability in the impacts of the standards across different segments and the uncertainty surrounding key assumptions.

Rigor in the Representation and Communication of Variability

The characteristics of the residential, commercial, or industrial buildings where the regulated products and equipment are installed and used and the hydroclimatic and economic conditions of the place where they are purchased determine the effects of energy efficiency standards. Geographical, socioeconomic, and behavioral factors affect not only the costs of the equipment or amount of energy consumed, but also the cost of such energy and its associated emissions. In addition to variability in the effects of a standard for different types of consumers, there is widespread variability in the temporal effects; for the same customer, standards may reduce the costs of energy and/or reduce associated emissions during some times of the year and may increase it under other times. Thus, in applying this fourth criterion on treatment of variability and uncertainty, the committee asks whether DOE’s methods consider the variability in the characteristics of the economic, climatic, energy, and water systems where the customers of the regulated products and equipment reside, and whether DOE communicates results acknowledging such variability. Because energy efficiency standards are set for the entire United States after calculating the benefits at a national level and for a horizon of three decades, DOE’s analysis presents the aggregated results for the

___________________

2 The Energy Information Administration (EIA) is a federal statistical agency created in 1977 by the U.S. Department of Energy Reorganization Act of 1977. According to its website, the EIA “collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.” Further information is available at http://www.eia.doe.gov.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

entire Nation and for the entire planning horizon. Nevertheless, executive orders necessitate having an understanding of the effects on different populations and circumstances, the latter including consumers’ socioeconomic status, intensity, frequency and mode of use of the product, climatic or geographic region, time of day, time of year. Accounting for variability across all of the dimensions that affect the impacts of standards can both improve the usefulness of the final results and facilitate communicating the findings to decision makers and the public. Once DOE has segmented manufacturers and users by attributes known to influence the impacts of a standard, the uncertainty on standards impacts within each group will be narrower.

Communicating the Variability on the Results

While DOE’s statutory authority envisions setting one standard for the entire nation, presenting results at more granular level will be informative and likely improve regulatory outcomes. By displaying the variability in intermediate and final outputs of its analysis at different levels of resolution (e.g., by climate zone, socio economic status, type of consumer, state), DOE’s analysis will better contribute to achieving DOE’s ultimate goal of reducing energy costs and emissions in this country. Compounding the variability across multiple dimensions (e.g., climate zones, socioeconomic status, type of user, state and local taxes, electricity prices) will result in a large number of scenarios to analyze. For example, presenting results for each state (e.g., 50), income decile (i.e., 10), and frequency of use of the regulated product (assume four categories) will result in 2000 subcases, though this number could be reduced by substituting climate zones for states. It is the committee’s view that decision makers and the public will benefit from obtaining detailed information on the factors that determine the impacts of a standard. It is also the committee’s view that new tools for sharing and visualizing data sets enhance the value of providing such information. For the TSDs, it may be enough that DOE presents summary statistics for different dimensions. For example, DOE can show the estimated net benefits for each state, both as an absolute metric and per-capita, or can rank the states by net benefits and discuss in detail the benefits for the states in the 5th, 25th, 50th, 75th and 95th percentiles. It may also be useful for DOE to present detailed results for the extremes of the ranges obtained when all dimensions of variability are compounded. For example, DOE can describe the characteristics of the commercial establishments that would see the highest reduction in energy costs when replacing a baseline refrigerator with one meeting the proposed standard, or the characteristics of the households that benefit the least from purchasing a new dishwasher that meets the standards vs. a dishwasher that met the old standards.

Rigor in the Representation and Communication of Uncertainty

A further question in applying the committee’s criterion on variability and uncertainty asks whether uncertainty on all of the factors affecting the costs and benefits of a standard (on consumers, utilities, manufacturers, and society) must be propagated throughout the analysis to obtain an estimate of the probability distribution of all of the relevant quantities calculated. Following the RIA framework described in OMB Circular A-4, including that circular’s guidance for understanding and presenting uncertainty, would facilitate greater clarity that could be reflected in DOE’s Life Cycle Cost and Pay Back Period Analysis, Energy and Water Use Analysis and Emissions Analyses (see Figure 2.1) and the calculations of net present value of savings and so forth contained within.

In general, the uncertainty surrounding an estimate is the result of the compounded effects of model and parametric uncertainty (Manning et al., 2004). Model uncertainty refers to the degree of confidence on the representation of the relationship between different variables and parameters of the system modeled. In contrast, parametric uncertainty refers to the degree of confidence on the values of the parameters. For example, in the estimation of an unknown variable Y with the model Y = a + bX there can be uncertainty about the parameters a and b (i.e., parametric uncertainty) or about the model itself

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

(i.e., if perhaps Y = a + bX2 better describes the real world than the original linear model considered). The committee finds that there is uncertainty in some of the specific models used (e.g., model to estimate the effects of technological learning, model to estimate the emissions associated with demand reduction, model to estimate markups, engineering model to estimate the energy consumption of an equipment). However, the higher-level models used to estimate many of the quantities affecting the final selection of the standards (e.g., LCC, PBP) are straightforward and do not add additional uncertainty. Hence, parametric uncertainty accounts for a large share of the entire uncertainty surrounding a final calculation and hence, propagation of parametric uncertainty alone will add more depth and accuracy to the uncertainty characterization of these quantities.

Communicating Uncertainty on the Results

Propagating the uncertainty through the analysis implies that the final estimate of each relevant quantity is not a point but a probability distribution function or in some cases, a range of all of the possible values it can take (Dudley et al., 2017). For some categories of appliances, uncertainty over the impacts of the standards is likely to be large. Subsequent chapters discuss some of these cases. (See the annex to Chapter 4 for an analysis of the TSD for residential dishwashers.) Presenting results as we recommend here, with ranges of outcomes, has advantages. It can inform the agency about where its ex post analyses should be focused: which standards are most in need of ex post evaluation due to a wide range of possible impacts of the standard or which dimensions of the analysis are subject to maximal uncertainty. As is developed in Chapters 3 and 4, in some cases, the actual energy use associated with some appliances, the price and cost of appliances meeting a new standard, and the performance characteristics and availability of new appliances can differ substantially from the ex ante “expected” case, and can suggest where standard updates might be relevant. Characterizing and discussing the uncertainty ex ante can inform where and how data and ex post analyses are likely to lead to regulatory improvements.

Presenting the dependence between uncertainty and the costs and benefits of different regulatory options can usefully guide investments in data used in the studies. As is discussed below, using emerging technologies that allow much more granular information about appliance use, especially by heterogeneous subgroups and expanding current surveys need not be resource intensive and may have large payoffs.

Finally, providing detailed information about the extent and sources of uncertainty behind the cost and benefits estimates for standards can inform decisions and the public at large. Circular A-4 states “by assessing the sources of uncertainty and the way in which benefit and cost estimates may be affected under plausible assumptions, you can shape your analysis to inform decision makers and the public about the effects and the uncertainties of alternative regulatory actions” (OMB, 2003).

Effectiveness in Setting a Path for Continuous Improvement of the Process to Set Energy Efficiency Standards

Finally, the fifth criterion applied to these methods is whether they are designed to improve with time as standards are designed, the market responds, and new data are available to test past assumptions and considerations of variability and uncertainty. A single rulemaking resulting in establishment or revision of a standard for appliances and equipment should be seen as just one stage in the long-term process that revises standards every 6 years. In that context, the committee’s question is if DOE capitalizes on its experience setting standards in the past, and sets up the infrastructure to learn from the outcomes of the standards set today to improve its analysis in the future. Does DOE validate the assumptions made about different factors affecting its estimates of net benefits of standards looking at past assumptions and observed quantities? Does it conduct retrospective analysis to validate its engineering models? Does it examine the accuracy of its models of technological learning in the manufacturing of different equipment?

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

REFERENCES

Allcott, H., and M. Greenstone. 2012. “Is There an Energy Efficiency Gap?” Journal of Economic Perspectives 26(1): 3-28.

Arthur, W.B. 1989. “Competing Technologies, Increasing Returns, and Lock-In by Historical Events.” The Economic Journal 99(394): 116-131. March.

Clinton, W. 1993. “Executive Order 12866, Regulatory Planning and Review, and Amendments.” https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf.

DOE (U.S. Department of Energy). 2014a. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Dishwashers. Washington, DC. December. https://www.regulations.gov/document/EERE-2014-BT-STD-0021-0005.

DOE. 2014b. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Commercial Refrigeration Equipment. Washington, DC. February. https://www.regulations.gov/document/EERE-2010-BT-STD-0003-0102.

DOE. 2016. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Furnaces. Washington, DC. August 30. https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0217.

Dudley, S., R. Belzer, G. Blomquist, T. Brennan, C. Carrigan, J. Cordes, L. Cox, et al. 2017. “Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker.” Journal of Benefit-Cost Analysis 8(2): 187-204.

Fraas, A., and S.E. Miller. 2020. “Measuring Energy Efficiency: Accounting for the Hidden Costs of Product Failure.” Economics of Energy & Environmental Policy 9(2).

Gayer, T., and W.K. Viscusi. 2013. “Overriding Consumer Preferences with Energy Regulations.” Journal of Regulatory Economics 43: 248-264. https://doi-org.proxygw.wrlc.org/10.1007/s11149-013-9210-2.

Gerarden, T.D., R.G. Newell, and R.N. Stavins. 2017. “Assessing the Energy-Efficiency Gap.” Journal of Economic Literature 55(4): 1486-1525.

Hassett, K.A., and G.E. Metcalf. 1992. “Energy Tax Credits and Residential Conservation Investment.” Working Paper No. 4020. Cambridge, MA: National Bureau of Economic Research.

Jaccard, M., J. Nyboer, C. Bataille, and B. Sadownik. 2003. “Modeling the Cost of Climate Policy: Distinguishing Between Alternative Cost Definitions and Long-Run Cost Dynamics.” The Energy Journal 24(1): 49-73.

Jaffe, A., and R. Stavins. 1994. “The Energy Paradox and the Diffusion of Conservation Technology.” Resource and Energy Economics 16(2): 91-122.

Manning, M., M. Petit, D. Easterling, J. Murphy, A. Patwardhan, H-H. Rogner, R. Swart, G. Yohe, eds. 2004. Workshop Report: IPCC Workshop on Describing Scientific Uncertainties in Climate Change to Support Analysis of Risk and of Options. National University of Ireland, Maynooth, Co. Kildare, Ireland 11-13 May, 2004. Boulder, CO: Intergovernmental Panel on Climate Change Working Group I Technical Support Unit.

NRC (National Research Council). 2010. Real Prospects for Energy Efficiency in the United States. Washington, DC: The National Academies Press.

NRC. 2011. Modeling the Economics of Greenhouse Gas Mitigation: Summary of a Workshop. Washington, DC: The National Academies Press.

OMB (Office of Management and Budget). 1997. Report to Congress on the Costs and Benefits of Regulation. https://georgewbush-whitehouse.archives.gov/omb/inforeg/rcongress.html.

OMB. 2003. Circular A-4, Regulatory Analysis. https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.

OMB. 2010. Agency Checklist: Regulatory Impact Analysis. https://www.whitehouse.gov/sites/default/files/omb/inforeg/regpol/RIA_Checklist.pdf.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

OMB. 2011a. Circular A-4, Regulatory Impact Analysis: Frequently Asked Questions (FAQs). https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/OMB/circulars/a004/a-4_FAQ.pdf.

OMB. 2011b. Circular A-4, Regulatory Impact Analysis: A Primer. https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/inforeg/inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf.

RARG (Regulatory Analysis Review Group). 1980. Department of Energy’s proposed efficiency standards for consumer appliances: Report of the Regulatory Analysis Review Group. Washington, DC: Executive Office of the President. September 15.

Stern, P.C., K.B. Janda, M.A. Brown, L. Steg, E.L. Vine, and L. Lutzenhiser. 2016. “Opportunities and Insights for Reducing Fossil Fuel Consumption by Households and Organizations.” Nature Energy 1(5): 16043.

Sunstein, C. 2010. Memorandum for the Heads of Executive Departments and Agencies, and Independent Regulatory Agencies: Information Collection Under the Paperwork Reduction Act. April 7, 2010. https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/assets/inforeg/PRAPrimer_04072010.pdf.

Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page13
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page14
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page15
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page16
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page17
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page18
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page19
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page20
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page21
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page22
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page23
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page24
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page25
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page26
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page27
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page28
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page29
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page30
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page31
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page32
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page33
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page34
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page35
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page36
Suggested Citation:"2 Framework for Developing Regulations." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Page37
Next: 3 Assessing Current Models: Engineering and Technology Cost and Technology Performance »
Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards Get This Book
×
Buy Paperback | $42.00 Buy Ebook | $33.99
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

The U.S. Department of Energy (DOE) issues standards regulations for energy conservation pursuant to the Energy Policy and Conservation Act of 1975, as amended, and other authorities. These standards regulations apply to certain consumer products and commercial and industrial equipment. These can include air conditioning and heating systems, washing machines, and commercial refrigeration, among numerous other examples. DOE issues standards regulations by rulemaking and includes quantitative maximum water and energy use or minimum energy conservation standards. There are currently standards regulations for more than 70 product classes (i.e., a specific type of consumer product or commercial or industrial equipment). This report reviews the assumptions, models, and methodologies that DOE uses in setting the quantitative portion of the standards regulations following the Office of Management and Budget's guidance on the use of scientific information. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards makes findings and recommendations on how DOE can improve its analyses and align its regulatory analyses with best practices for cost-benefit analysis.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    Switch between the Original Pages, where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text.

    « Back Next »
  6. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  7. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  8. ×

    View our suggested citation for this chapter.

    « Back Next »
  9. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!