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Comments on Department of Energy’s Energy Conservation Standards Program

The Department of Energy (DOE) requested information on adding market-based compliance flexibilities to its Appliance and Equipment Energy Conservation Standards (ECS) Program. In many cases, market-based flexibilities lowered compliance costs, incentivized innovation, and decreased administrative burdens without sacrificing policy objectives. But in other cases, these policy tools may not improve economic efficiency and may actually undermine policy objectives.

Comments from our Legal Director, Jason Schwartz, recommend that DOE should only proceed with market-based flexibilities after balancing gains to efficiency against unintended negative consequences to policy goals, and that better energy labels on appliances may be necessary to help prevent consumer confusion caused by the market system. Any pilot program should select product(s) with potential for a market large enough to incentivize regulators and regulated industries to participate. DOE should be able to accurately estimate energy use over the chosen product’s lifetime so that it can study fungibility issues with different program designs. Consumers should also clearly understand how using one product over another will decrease their own energy consumption. The stringency of energy efficiency standards for the product should also have the ability to increase over time. Finally, the success or failure of a pilot study should not be judged too quickly, as it takes time for permit markets to develop.