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Appliances refers to a vast array of devices that account for about 35 percent of overall energy consumption in the United States. As was pointed out in an early California Energy Commission hearing determining the scope of the law that delegated to that Commission authority to regulate the efficiency of appliances, Webster's Unabridged Dictionary(2nd ed., 1979) defines appliance as "something applied to a particular use; a device or machine...." This broad definition allows products that use energy directly or indirectly for virtually any purpose to be considered as appliances.

This review adopts the broad perspective, recognizing that the primary policy mechanisms applied to improve energy efficiency—minimum efficiency standards, incentive programs, normative and informative labeling programs, and technology-driven market forces—can address a very wide variety of products.

Examples of products considered appliances under U.S. federal law, most recently modified by the Energy Policy Act of 1992, include residential products such as refrigerators, freezers, clothes washers, dishwashers, water heaters, heating and cooling equipment, televisions, computers and their power supplies, showerheads, toilets, plumbing fittings, and cooking products. Also considered appliances under U.S. federal law commercial and industrial appliances such as air conditioning and heating systems and their components, water heaters and storage tanks, boilers, lighting system components such as fluorescent lamps, ballasts and fixtures, in addition, incandescent lamps, and motors. These products are involved in virtually all energy use in the residential and commercial sectors, which exceeds 35 percent of the U.S. total, including the upstream effect of electricity consumption. Excluding motors and lighting, appliance energy use is about one–fifth of the U.S. total.

Each of these products is different; each uses a different technology, is subject to different market forces, different production characteristics, distribution practices, and pricing systems. Yet, the dominant trends in energy efficiency, and in the policies used to affect it, show remarkable similarity across end uses.

For most appliances, substantial efficiency improvements have taken place over the last thirty years. Most of these improvements have been responsive to policy initiatives at the state or federal level, although in a few cases technology improvements that were aimed at some other goal also included substantial energy efficiency improvements as a by-product. The range of efficiency improvement has varied dramatically, from reductions of over 75 percent in energy use of refrigerators that comply with the 2001 Department of Energy standard compared with similiar (but somewhat smaller) products in 1972, to water heaters, where current products appear to be no higher in efficiency than they were in the 1940s.

Energy policies and the progress of technology are deeply intertwined for appliances. Appliances are sold to provide a specific energy service, and that service is the focus of their marketing and promotion as well as of consumer acceptance. Energy efficiency is not widely perceived by the marketplace to be important. Even when the payback period of energy efficiency investment by the consumer is short, surveys have shown that energy efficiency is never the first, or even second or third most important feature determining consumer choice.

This trend is self-reinforcing in the broader market and creates a vicious circle. Manufacturers recognize that the consumer will not accept a product that costs more to achieve greater energy efficiency, even if the payback period is as short as three years. Because of this observation, manufacturers do not produce high–efficiency options for the consumer marketplace in sufficient quantities to make their prices competitive. The consumer, therefore, does not perceive efficiency as a product differentiation feature. This reinforces an indifference to energy efficiency. In recognition of this indifference, policy interventions—in the form of mandatory efficiency standards, incentive programs such as rebates for products meeting specified efficiency levels or competitive acquisition of products that achieve the highest cost/efficiency results, bulk purchases of efficient products, and normative labeling—have led to the introduction of vastly improved technologies.

Indeed, before widespread government policy interventions into appliance efficiency, trends in efficiency were as likely to represent decreases in efficiency as increases. The same market barriers that recently have impeded the introduction of new technologies for efficiency have, in the past, caused products to be redesigned with new technologies for lower energy efficiency in order to cut first costs.

Refrigerators declined in efficiency following World War II due, apparently, to the substitution of lower-cost, lower-efficiency motors with improved thermal insulation to protect them from waste heat generation, and there is some evidence that water heater efficiency declined between the end of World War II and 1975, and that industrial dry-type transformers declined in efficiency between 1970 and 1993.

Energy consumption also can increase through the introduction of new product features, a process that should be distinguished from reductions in efficiency. The move from black and white to color television, and the introduction of automatic defrost on refrigerators, are examples of additions of features that compromise energy conservation. These must be balanced against other features or technologies, such as electric components for television and micro-channel heat exchangers for air conditioners, that improve product performance while also improving efficiency.

The effects of trends toward lower efficiency and higher energy-consuming features and the countervailing force of policy interventions is illustrated in Figure1, which displays the history of refrigerator energy consumption.

During the period before 1972, when energy policy ignored efficiency, energy consumption grew at an annual rate of about 6 percent. Some of this trend was due to the introduction of new features such as automatic defrosting and through-the-door ice service, some of it was due to increases in product size and in freezer compartment size, but two percentage points of the annual growth rate in energy was due to actual decreases in efficiency.

Following multiple energy policy initiatives of the post-1973 era, this trend was arrested and energy consumption began to decline, even as size and features continued to increase. The effect of the 1979 California efficiency standard is clearly apparent in the figure. Further inflection points in the curve appear when California implemented its 1987 standards, when the 1990 federal standards went into effect, and particularly when the 1993 amendments went into effect. In addition, a gradual slope toward decreasing energy consumption coincided with utility-sponsored incentive programs whose largest effects were felt in the mid-1980s and early 1990s.

In sum, for appliances, energy efficiency technology improvements are not always adopted even after they become well understood and technology changes do not necessarily lead to improved energy efficiency.


During the era from the end of World War II to 1973, energy consumption for appliances increased dramatically. Overall, residential electricity consumption was increasing at an annual rate of 9 percent in the United States, while residential energy consumption was increasing by about 3 percent. These increases were driven by a number of factors that all compounded the growth: increasing population, increasing number of households due to declining household size, increasing saturation of products, increasing levels of energy service being provided by many of the products, and, in several cases, declining energy efficiency. Some, new products were introduced that had not existed previously, but if we define end uses broadly, this has not been a major effect.

Increasing saturation was a particularly important trend. While the vast majority of families owned refrigerators after World War II, virtually everyone owned a refrigerator in 1973, and over 10 percent of households had more than one. While televisions were relatively unknown in 1947, radios provided a similar service and consumed noticeable amounts of energy. Some other trends in saturation are noted in Table 1.

Appliances began to attract serious analytic interest toward the end of this era. The Northeast blackout of

Product 1970 1982 1990 1996
Microwave Ovenssmall25.6%82.7%90.5%

1965 inspired engineers to take a second look at the consequences of continued exponential growth in electricity demand. On the West Coast, environmental concerns over the siting of power plants led to early analysis of the possibilities of policy interventions such as appliance efficiency standards.

The energy crisis of 1973 greatly accelerated efforts at analyzing the impact of appliances on regional and national energy consumption, and stimulating policy responses. On the West Coast, a major analysis of power plant siting options and efficiency and renewable energy alternatives led to the passage of the Warren-Alquist Act of 1974. This act established a California Energy Commission with the authority to forecast the needs for power plants under different scenarios of energy efficiency, analyze efficiency options, and propose efficiency standards. California adopted its first appliance standard in 1976.

In the east, a New York Public Service Commissioner testified before Congress in mid-1973 in support of appliance efficiency standards, even before the energy crisis, and New York State began to adopt its own appliance efficiency standards in 1976.

At the national level, the Ford Administration in response to the embargo began to take active steps to develop energy policy for presentation in the 1975 State of the Union Address. The Federal Energy Administration staff worked with state officials to provide a framework for a broad national energy policy. This policy, announced by President Gerald Ford, led to an executive order and ultimately, the Energy Policy and Conservation Act of 1975.

This act selected some dozen key residential appliances and proposed industry-wide voluntary targets for energy efficiency improvement. If industry could not meet these voluntary targets, which averaged a 20 percent reduction in energy use compared to then-current figures, mandatory standards would be established. The legislation also required the establishment of nationally uniform test procedures for appliances, and mandatory labeling of the energy performance results obtained from the tests.

But before the effectiveness of the voluntary program could be determined other important events intervened. First, states began to adopt efficiency regulations of their own. The state proceedings generated considerable controversy, with manufacturers uniformly opposing the energy standards.

The prospect of a patchwork of state standards became a cause of great concern to manufacturers. When President Jimmy Carter was elected, he proposed that mandatory standards be set by the Department of Energy (DOE) to replace the voluntary efficiency targets. While opposing mandatory standards at the federal level, manufacturers acquiesced to the National Energy Conservation and Policy Act (NECPA) of 1978, which required DOE to set appliance efficiency standards for residential products. In return, manufacturers were able to obtain a requirement for DOE to evaluate the impacts on manufacturers that standards would impose and to consider them in setting the standards.

In addition, manufacturers obtained language allowing federal standards to preempt state efforts in most cases. Pursuant to this legislation, the Carter Administration proposed appliance standards in mid-1980, but was unable to issue a final rule before the Reagan Administration took over.

By the end of the 1970s, important new trends began to be manifest. First, one appliance manufacturer, Carrier, changed its initial advocacy position from opposition to appliance standards to support of those standards, because it found that the higher efficiency and higher profitability products that it would have preferred to sell were not doing well in states without standards, but were selling well in states with standards.

In addition, public interest organizations began to be active participants in the efficiency standards debates. Organizations such as the Natural Resources Defense Council and the American Council for an Energy-Efficient Economy were participating in regulatory and legislative proceedings on appliance efficiency standards and policies, supporting stronger standards than those proposed by state or federal officials.

Another important trend that had become established by 1980 was governmental support, primarily at the federal level but also in several states, of research and development efforts to improve end use energy efficiency. These efforts, funded primarily by the Department of Energy at the federal level, and the New York State Energy Research and Development Authority at the state level, but also by other organizations, focused both on expanding the technological opportunities for efficiency and on analyzing the markets for energy–efficient products and services, and market barriers that were impeding progress. Already by 1980, the intellectual basis of technologies that would prove very important commercially over the next twenty years had been initiated. Products such as low-emissivity coatings for windows, compact fluorescent lamps, electronic ballasts for fluorescent lamps, and high-efficiency compressors for refrigerators, are some of the noteworthy examples.

While initial policy efforts had focused at direct users of energy in the residential sector, increasing analysis identified other opportunities for efficiency, which began to be the target of standards efforts and later utility programs. State standards began to be established for shower heads and plumbing fittings, as well as for ballasts powering fluorescent lamps.

By the early 1980's the federal labeling requirements had taken effect and all residential appliances were labeled with yellow "Energy Guide" stickers. Initial studies, however, suggested that theses stickers were "not particularly effective in specific purchase decisions." More recent analysis has found that despite high levels of awareness of the label, significant comprehension problems exist with it.

The movement toward federal appliance efficiency standards stalled in the 1980s as the Reagan Administration, which opposed standards from an ideological perspective, began. That administration's approach was made evident by its refusal to finalize the DOE's 1980 standards proposal, and in 1983, by the issuance of a federal rule that determined that no standards were necessary. Both the delay and the "no standard" determination were challenged by NRDC, with the support of several large states, through the courts.

While these disputes were being settled, other activities were taking place. Utilities began to offer rebates to encourage the purchase of more efficient products, focusing first on refrigerators and air conditioners. State energy offices began considering adopting their own appliance efficiency standards. In California, the Energy Commission in 1983 adopted stringent standards for refrigerators, freezers, central air conditioners, and heat pumps. Following California's lead, several other states became interested in adopting appliance efficiency standards, since there was now a state model on which they could draw. By the end of 1986, six states had adopted new standards for one or more products.

The proliferation of state standards—and the 1985 court decision overturning DOE's "no-standard" stance—led manufacturers to accept federal standards. In 1986, the appliance industry offered to negotiate with NRDC, seeking a compromise that would adopt national appliance efficiency standards, but provide enhanced federal preemption of state efforts. NRDC, working directly with state energy offices, utilities, and other environmental and consumer organizations, reached an agreement with manufacturers over legislation that would adopt specific efficiency regulations explicitly in the law, and provide a schedule according to which DOE would consider increasingly stringent regulation in the future. The legislation passed Congress rapidly and overwhelmingly. It is known as the National Appliances Energy Conservation Act (NAECA) of 1987.

States also began to look at new products. Massachusetts promulgated legislation requiring its state energy office to set standards for fluorescent and incandescent lamps, and introduced legislation requiring standards for electric motors. Transformers were later added to the Massachusetts list.

Another forum for advancing the efficiency of appliances used in the commercial sector was the American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE), which had first issued voluntary standards for energy efficiency of commercial buildings, including the efficiency of equipment installed in those buildings, in 1975, responding (albeit slowly) to the Northeast blackout. The ASHRAE/EIS standards, issued in 1989, became the basis for negotiations on national standards for commercial-sized heating, cooling, and water heating equipment, which were eventually incorporated into national law in the Energy Policy Act of 1992 (EPAct).

EPAct also nationalized state efforts that had gotten underway to regulate water consumption of toilets, plumbing fittings, and showerheads. The faucet and showerhead standards reduce hot water use, thereby saving energy for consumers. The toilet efficiency standards do not save energy in the home, but they do reduce municipal expenditures for water supply, disposal, and clean-up.

The late-1980s also saw the initiation of more widespread programs operated by utilities to promote energy–efficient appliances in the marketplace. Many of these focused on reducing peak loads by offering rebates for more efficient air conditioners and chillers in both residential and commercial applications.

As the 1990s began, a new concept in voluntary programs, market transformations, was developed and implemented for an increasing number of product. This approach invokes a strategic intervention in the marketplace, intended to produce significant improvements in energy efficiency features, generally through the introduction of new technologies, structured in such a way as to promote long-lasting effects.

Some of the first market transformation programs in the United States included the Energy Star program for computers and related equipment, established by the Environmental Protection Agency, which set a voluntary specification for efficiency based on the technologies used in laptop computers. In a laptop, the hard drive and display screens power down after brief periods of inactivity to low stand-by levels in order to conserve battery life. These same features were to be incorporated in desktop computers to qualify for an Energy Star label. The cost of the improvements was very low, and the Energy Star specification gained very high market penetration relatively quickly.

At the same time, a consortium of utilities working with public interest organizations, state energy offices, and the federal government, organized the Super Efficiency Refrigerator Program, a competitive challenge to refrigerator manufacturers to produce a product that saved at least 25 percent in energy use while eliminating chlorofluorocarbons. The winning manufacturer—the one that bid the lowest life cycle cost product—could receive up to $30 million obtained from utility subscriptions.

The progress of these programs, and encouraging results from similar programs in Sweden, led to an increasing number of market transformation programs during the 1990s.

Market transformation involves coordination between large numbers of market players. It recognizes that because of returns to scale in manufacturing, uniform specifications are necessary to create the climate necessary to make investment in energy efficiency improvements. This coordination was developed at the regional level through informal collaboration in California; the Northwest Energy Efficiency Alliance in Oregon, Washington, Montana, and Idaho; the Northeast Energy Efficiency Partnerships in the New England area; by a joint agreement between EPA and DOE to promote the Energy Star program at the national governmental level; and the nationwide Consortium for Energy Efficiency (CEE), an organization consisting of utilities, public interest organizations, and state energy offices.

Currently, CEE offers programs for air conditioners, heat pumps, clothes washers, dishwashers, refrigerators, industrial motors and drives, gas furnaces and boilers, lamps, light fixtures, and transformers.

In the early part of the 1990s deliberations on appliance efficiency standards appeared to be heading toward greater consensus. Manufacturers, efficiency advocates, and states joined together to discuss a negotiated joint proposal for the second DOE revision under NAECA of refrigerator standards, which was to be issued in 1995. All major parties submitted a joint proposal to DOE in late 1994.

But an ideological shift in Congress disrupted this process. In the 104th Congress, industrial opponents of appliance efficiency standards found sympathetic support, and passed a one-year moratorium on appliance efficiency standards in 1995. The moratorium held back DOE efforts on appliance standards for nearly two years. The refrigerator standard that was to be issued early in 1995 was delayed until 1997, and the effectiveness date set back three years until 2001. Progress toward new standards on ballasts, water heaters, air conditioners, clothes washers, and other products was delayed.

As of mid-2000, DOE was actively pursuing revised standards on clothes washers, water heaters, and residential central air conditioners, in addition to fluorescent lighting ballasts. These choices were the result of a formal prioritization proceeding, in which DOE, with stakeholder input, decided to concentrate its budgetary resources on the products that had the potential for the largest energy savings and economic value. Standards on fluorescent lamp ballasts and clothes washers had become a foregone conclusion as energy advocates and industry representatives reached negotiated agreements on joint support of new standards that would be promulgated by DOE in 2000.

The benefits from appliance efficiency improvements have been substantial to date. As of mid-2000,

 1970-1975 Energy Use 2000-2001 Energy Use
Appliance Average Best Average Best
Refrigerator1,725 kWh/yr1,325 kWh/yrStandard = 475 kWh/yr
Clothes Washer3.81 kWh/cycle~2 kWh/cycle0.7 kWh/cycle
Central Air Conditioners7 EER9.5 EER9.8 EER13EER
Dishwashers4.2 kWh/cycle~2 kWh/cycle~1 kWh/cycle

total projected energy savings from current standards by the year 2015, when most of the stock of appliances will have turned over, is 3.5 quads ( a quad is a unit of thermal energy equal to one quadrillion Btu's) of primary energy per year, almost 4 percent of total U.S. energy used for all purposes. The net economic savings from these standards exceeds $175 billion.

The overwhelming bulk of these savings is due to appliance and equipment efficiency standards, although the synergistic relationship between standards and voluntary programs makes any assignment of credit somewhat arbitrary. Savings could be considered significantly larger if the base case against which it is being compared allows efficiencies to declines. Although this phenomenon has occurred several times, it is virtually never present in the economic models used to evaluate standards.


Despite considerable gains in the energy efficiency of most appliances over the past thirty years, substantial additional savings remain feasible and cost effective. A study by ACEEE and NRDC estimated that an aggressive set of new appliance efficiency standards could save one and one-half quads of energy, or thirty metric tons carbon equivalent (MTCE)of greenhouse pollution by 2010; appliance turnover would raise the savings from the same standards to over three quads and almost sixty MTCE by the year 2020. An unpredictable fraction of this potential can or will be achieved by other efficiency programs.

Additional savings from next generation standards or from additional products are likely. For virtually all products that have had efficiency regulations, new technologies became available following the implementation of the standards that were not available before, and in some cases were not even foreseeable. Some of this progress is illustrated in Table 2.

These savings can be complemented by additional efficiency improvements brought forth by market transformation programs. For products such as room air conditioners, dishwashers, and residential lighting systems, the federal government, through the Energy Star program, and the Consortium for Energy Efficiency have issued specifications for higher levels of efficiency than required by standards. These specifications can be promoted in the market through utility-paid incentives, tax credits (such as those currently available in the state of Oregon), and the provision of information and marketing support.

Such programs are underway at the regional, national level, or international level, developed by government agencies, by utilities, or by non-governmental organization.

For distribution transformers, a voluntary standard assembled by the trade association NEMA (National Electrical Manufacturers Association) achieves substantial savings, particularly in standby energy, with a payback period typically of three years. The loss rate from the transformers is small, but the throughput of electricity accounts for a large fraction of total energy use in buildings, particularly when utility-owned transformers are considered.

A number of new technology promotion options are being explored in the lighting area. Work is underway on market transformation programs based on bulk procurement for improved efficacy incandescent light bulbs and for compact fluorescent lamps and fixtures. For incandescent lamps, adaptations of the infrared reflective lamp coating that is already in use on reflector bulbs are encouraged by the EPAct requirement.

The Department of Energy is issuing an Energy Star specification for compact fluorescent screw-in lamps, and EPA is revising its specification for energy efficiency (effectively compact fluorescent). These Energy Star specifications can serve as the base for marketing efforts and utility incentive programs. EPA recently issues an Energy Star specification for electronic equipment calling for greatly reduced standby losses in the small AC/DC transformers; Lawrence Berkeley National Laboratory has worked on developing a one-watt standby loss specification for such transformers worldwide.

Given the rapid growth of low voltage portable electronic equipment, including cellular phones, tape recorders and CD players, VCRs, televisions and associated equipment, and other products using rechargeable batteries. Considering the ever growing number of products that operate on standby, the potential savings from such a standard and other products using rechargeable batteries, the potential savings from such a standard could be quite large.

While tremendous progress has been made towards improving the efficiency of home refrigerators, a large number of commercial refrigeration units, both in the form of refrigerated beverage vending machines and in the form of supermarket-style refrigerators, use technologies essentially unchanged in decades. These products consume several times the energy use per unit volume of refrigerated storage compared to residential units. Work is underway for an Energy Star specification for these products as well as buyer group-based programs that will encourage the highest currently feasible efficiencies.

An additional potential for significant and growing energy savings is in the consumer electronics area. The explosive growth of laptop computers has demonstrated the feasibility of products that use about an order of magnitude less energy than their desktop counterparts, even when they are fully on. The rapid proliferation of video display screens in both home and office environments makes this a particularly attractive area for technology development and for policy encouragement of technological development aimed at energy efficiency.

In summary, there is no evidence to suggest that we have reached the point of diminishing returns in improving appliance efficiency in the United States. Instead, each step forward for a given product tends to reveal additional measures not previously analyzed that could reduce energy use even further, often while improving the quality of the energy service provided. The primary constraint on progress appears to be the intellectual effort of identifying the opportunities and developing programs directed at pursuing them.

David Goldstein


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