National Academies Press: OpenBook
Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Suggested Citation:"Letter Report." National Research Council. 2009. Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report. Washington, DC: The National Academies Press. doi: 10.17226/12670.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Board on Energy and Environmental Systems May 15, 2009 Dr. John Mizroch Acting Assistant Secretary U.S. Department of Energy Office of Energy Efficiency and Renewable Energy 1000 Independence Avenue SW Washington, DC 20585 Dear Dr. Mizroch: In response to a request from the Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy (EERE), the National Research Council (NRC) appointed the Committee on Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards to conduct a study called for in Section 1802 of the Energy Policy Act of 2005 (Public Law 109-58). As specified in Attachment A of this letter report, the fundamental task before the committee was to evaluate the methodology used for setting energy efficiency standards and to comment on whether site (point-of-use) or source (full-fuel-cycle) measures of energy efficiency better support rulemaking to achieve energy conservation goals. As suggested by Senator Gordon H. Smith (see Attachment B), the committee adopted a broad view of its mandate, taking into account concerns about energy consumption’s impact on national security, the environment, and climate change. Currently DOE rulemaking for appliance energy efficiency is based on site measurement of energy consumption to set efficiency standards and extended site measures of energy consumption to assess national energy consumption and environmental impact. However, full-fuel-cycle measurement of energy consumption is not employed in DOE analyses. The committee met three times and heard presentations from representatives of the electric and natural gas utilities, appliance manufacturers, and the government agencies participating in the various aspects of the appliance standards program. In addition, the committee examined the data and analysis presented in various technical support documents and studies of energy efficiency and measurement of energy use. The committee’s primary general recommendation is that DOE/EERE consider moving over time to the use of a full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts. Using that metric would provide the public with more comprehensive information about the impacts of energy consumption on the environment, the economy, and other national concerns, through the use of labels and other means such as an enhanced website. The current use by DOE/EERE of site energy consumption is effective for setting standards for the operational efficiency of single-fueled appliances within the same class and should be continued without change. However, DOE/EERE’s current use of site energy consumption does not account for the total consumption of energy when more than one fuel is used in an appliance or when more than one fuel can be used for the same application. For these appliances, measuring full-fuel-cycle energy consumption would provide a more complete picture of energy used, allowing comparison across many different appliances as well as an improved assessment of impacts such as effects on energy security and the environment. The 1

attached letter report discusses these matters and offers several related findings and recommendations together with supporting information. Despite its best efforts to come to a full consensus, the committee was unable to achieve unanimous agreement on some of its majority views. The perspectives of committee members David H. Archer and Ellen Berman are presented in Attachments H and I and are referred to at points in the text of the committee’s report. The National Research Council was pleased to have this opportunity to serve DOE/EERE. If you have questions, please contact James Zucchetto, director of the Board on Energy and Environmental Systems, at (202) 334-3222 or Duncan Brown, senior program officer, at (202) 334-1202. Sincerely, James W. Dally, Chair Committee on Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards 2

Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards COMMITTEE TASK AND APPROACH In response to a request from the Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy (EERE), the National Research Council’s (NRC’s) Committee on Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards examined the DOE’s appliance standards program to assess whether the goals of energy efficiency standards are better served by measurements of energy consumed, and improvements in energy efficiency, at the actual site (point of use) of energy consumption or throughout the full fuel cycle, beginning at the source of energy production. The full statement of task is given in Attachment A, and a related request encouraging a broad approach to consideration of these issues is reproduced in Attachment B. The committee gathered information during presentations at its three meetings (see Attachment C) and from a variety of published documents. These included a report by the Rand Corporation that investigated, at the request of the Office of Science and Technology Policy and EERE, the impacts of measuring energy consumption at the site of use versus the source (Ortiz and Bernstein, 1999) and a report by GARD Analytics (2005) commissioned by the American Gas Foundation. The key points of these two studies are summarized in Attachment D. The committee also considered DOE test procedures codified in the Code of Federal Regulations at 10 CFR Part 430; technical support documents developed for recent rulemakings for such products as distribution transformers and residential furnaces and boilers; and written material provided directly to the committee (see Attachment E). DISCUSSION AND ANALYSIS DOE/EERE Standards Setting for Appliances The DOE/EERE appliance standards program is intended to reduce energy consumption in U.S. residential and commercial buildings (which account for 40 percent of the nation’s primary energy use and 70 percent of its electric power use [DOE/EIA, 2008, Table 2-1a]). It does so by setting efficiency standards for appliances that perform specific functions (such as space cooling, water heating, or dishwashing), dividing the appliances into classes differentiated by their energy source (natural gas, oil, or electric power), technology, and capacity. Most of the energy consumed in a building passes through these appliances, and their efficiency is therefore highly important. Even seemingly small differences in energy efficiency can become significant when considered on a national scale. Since Congress passed the Energy Policy Conservation Act of 1975, DOE has established several standards that have led to improved energy efficiency for light bulbs; appliances such as refrigerators, washing machines, air conditioners, storage water heaters, and furnaces; and motors and other devices. As a result, consumption of electricity, natural gas, heating oil, and other forms of energy has been reduced for each unit of service an appliance provides (NRC, 3

2001; Meyers et al., 2003). For example, according to the Association of Home Appliance Manufacturers, large reductions in energy consumption (47 to 69 percent) have been realized since 1980 for clothes washers, refrigerator-freezers, and dishwashers (see Attachment E). The appliance standards program has thus achieved significant benefits in reducing the energy required by appliances in U.S. buildings (NRC, 2001). The appliance standards program is not meant to favor one energy source or technology over another (and the committee saw no evidence that it has done so) but instead to leave decisions about such matters to government policy and/or the market. For that reason, and for the benefit of the consumer purchasing an appliance, the results of the DOE/EERE’S appliance testing and standards setting are expressed in terms of estimated annual operating costs, annual energy usage, and the cost range of similar models. Current DOE standards for the energy consumed by operating individual appliances call for measurement at the site (point of use) of the appliance. For example, the energy efficiency of a storage water heater is defined as a measure of the energy contained in a specified amount of hot water produced per unit of energy consumed at the site of the water heater over a typical day. Some analysts, however, question whether site measurements of energy consumption give a complete picture of overall energy use (see, for example, GARD Analytics, 2005). Using appliance-testing procedures prescribed by DOE with input from the National Institute of Standards and Technology, appliance manufacturers measure site energy consumption. The accuracy of the data on site energy consumption is dependent on whether laboratory-defined operating conditions sufficiently reflect actual energy consumption by a particular appliance in a home or commercial building. Actual energy use differs from the standard according to differences in operating conditions. For a standard to be robust, it should reflect relative energy use. While it is plausible to believe that this is the case for many appliances, confirming empirical studies are lacking. Nevertheless, site energy consumption is the best constrained of the different measures of energy use that are considered in the rulemaking process. Site energy use is also the most appropriate measure for setting operational efficiency requirements for single-fueled appliances within the same class, because it can be controlled by the manufacturer in designing and constructing the appliance. DOE/EERE also estimates extended site energy consumption, which is then used in preparing national impact and environmental impact analyses (Meyers et al., 2003). As a measure of energy consumption, extended site energy endeavors to capture energy losses that occur in the supply chains (generation, transmission, and distribution) for generated electricity and fuels such as natural gas. DOE/EERE also defines for energy sources heat rates that do not involve conversion of heat to work such that hydro, wind, and solar power are made equal to the fossil heat rate. Instead, the heat rates of fossil, nuclear, hydro, wind, and solar energy are weighted according to their generation share, as supplied to the electrical grid.1 In 2005, estimating losses of 9.5 percent due to transmission and distribution, the net conversion factor for site electricity to extended site energy was 3.75, a conversion factor determined from data supplied by the Energy 1 The electricity grid is modeled as a national aggregate. The aggregation of electricity supply into a national grid is an essential element in estimates of extended site energy consumed. There is a concern that the regional variation in electricity grids implies that extended site energy does not accurately reflect energy losses when an appliance is connected to the electricity grid in a specific locale. However, one can also argue that electricity is fungible and that a kilowatt-hour of supply saved by a more efficient appliance could travel well beyond local consumers. 4

Information Administration. The committee did not explore in depth the methodology employed by EERE for the determination of this conversion factor. In examining the DOE/EERE approach to setting standards, the committee found that the agency uses several different models developed by the Energy Information Administration, such as the National Energy Modeling System (NEMS), and conducts several analyses. Each standard is justified by DOE/EERE in terms of technical feasibility, reduction of energy use by the subject appliance, and reduced capital and operating costs for consumers. The agency estimates the effects on appliance manufacturers and calculates the net present value of the energy savings. Although the committee was briefed on the NEMS model, time was not sufficient to examine the capability of such models in depth. In exploring measures of energy consumption and how they serve the goals of energy conservation standards central to DOE/EERE’s appliance standards program, the committee examined all the criteria DOE/EERE considers in setting energy-efficiency standards. These criteria, together with the analyses conducted by DOE/EERE in the rulemaking process and the measure of energy consumption used, are listed in Table 1 and are described in some detail in Attachment F. The committee believes that the seven criteria listed in Table 1 are appropriate and serve the well-being of the U.S. public, consumers, appliance manufactures, and the electric and gas utilities. In addition, it is the opinion of the committee that making the environmental impact of energy consumption an explicit factor in DOE/EERE rulemaking on standards for appliance efficiency, and not merely a consideration added at the discretion of the DOE secretary under the seventh criterion, would acknowledge the public’s strong interest in environmental quality (Leiserowitz, 2006) and would help support related decision making. TABLE 1 Criteria Examined and Analyses Conducted by DOE/EERE in Its Standards-Setting and Rulemaking Process Criteria Set by the Energy Policy and Measure of Energy Conservation Act DOE/EERE Analysis Efficiency Used 1. Economic impact on consumers and Life-cycle cost analysis Site manufacturers Manufacturer impact analysis Not applicable 2. Lifetime operating cost savings compared Life-cycle cost analysis Site to increased cost of the product 3. Total projected energy savings National impact analysis Extended site 4. Impact on utility or performance Engineering analysis Site Screening analysis Not applicable 5. Impact of any lessening of competition Manufacturer impact analysis Not applicable 6. Need for national energy conservation National impact analysis Extended site 7. Other factors the DOE secretary considers Environmental assessment Extended site relevant Utility impact assessment Not applicable Employment impact assessment Mixed 5

Defining and Evaluating Measures of Energy Consumption The committee began by defining site and full-fuel-cycle measures of energy consumption as follows: • Site (point-of-use) measure of energy consumption reflects the use of electricity, natural gas, propane, and/or fuel oil by an appliance at the site where the appliance is operated, based on specified test procedures. • Full-fuel-cycle measure of energy consumption includes, in addition to site energy use, the energy consumed in the extraction, processing, and transport of primary fuels such as coal, oil, and natural gas; energy losses in thermal combustion in power-generation plants; and energy losses in transmission and distribution to homes and commercial buildings.2 The committee also noted that extended site energy consumption⎯which is used by DOE/EERE for assessing the impact of energy use on the economy, energy security, and environmental quality⎯includes the energy used in generating and distributing electricity, natural gas, or oil in addition to the energy used by the appliance at the site. But unlike the full- fuel-cycle measure, the extended site measure of energy consumption does not include the energy consumed in extracting, processing, and transporting primary fuels. Although the site measure of energy consumption allows easy comparison of the operating efficiency of one appliance over another in isolation, it gives only a partial picture of total energy use because it omits the energy needed to mine, process, and transport the primary fuel to a generating plant; the energy used at the generating plant; and the energy used in delivering electricity or fuel to the site of operation of an appliance. For example, based on their site energy consumption, an electric storage water heater might operate with 90 percent efficiency and a natural gas water heater with 70 percent efficiency. But for the electric storage water heater, energy losses of about 70 to 75 percent occur in acquiring the primary fuel and in the generation, transmission, and distribution of the electricity, yielding an overall energy efficiency for the electric storage water heater of about 0.30 X 0.90, or 27 percent. This figure is much lower than the gas-fired storage water heater’s overall energy efficiency of about 0.91 X 0.70, or 64 percent, when full-fuel-cycle energy consumption is the measure employed (Jaramillo et al., 2007, 2008).3 In general, energy losses in heating applications with electric resistance heaters are greater than in heating applications with natural gas when the measure is full-fuel-cycle energy use. 2 For an appliance powered by electricity, for example, full-fuel-cycle energy consumption includes all the energy consumed from the coal mine to the coal-fired power plant to the appliance at its site of operation. For a power plant fueled with natural gas or oil, full-fuel-cycle energy consumption includes all the energy used from the wellhead to the generating plant to the appliance, including transportation. For an appliance that directly uses natural gas (e.g., a storage water heater or stove), full-fuel-cycle energy consumption includes the energy consumed in extracting, processing, and transporting the natural gas, in addition to that used in distributing and ultimately using the gas. 3 Jaramillo et al. (2007, 2008) estimated the efficiency for delivery of natural gas to the appliance site as 91.2 percent. For electricity generated from coal-fired power plants, full-fuel-cycle efficiency varied from 26.8 to 38.7 percent. For electricity generated from natural-gas-fired power plants the full-fuel-cycle efficiency ranged from 27.9 to 50.7 percent. 6

Given such observations, energy analysts have expressed interest in the use of full-fuel- cycle energy consumption as the measure of energy efficiency in DOE rulemaking because it provides more complete estimates of energy consumed and emissions produced (Matthews and Lave, 2000; Matthews et al., 2002). The committee’s examination of these concerns, and its subsequent deliberations, led 9 of 11 members to endorse the full-fuel-cycle measure of energy efficiency as integral to supporting more explicit consideration of the impacts of energy use on the nation and the environment. Two members of the committee, however, had other opinions that are expressed in Attachments H and I. Full-Fuel-Cycle Approach Full-fuel-cycle energy consumption is not currently estimated by DOE/EERE. Its estimates of extended site energy consumption, which are used, as noted above, in preparing national impact and environmental impact analyses (Meyers et al., 2003), understate the total energy consumed to make an appliance operational at a site. Likewise, environmental impact is also underestimated by the extended site measure. Actual energy consumption is estimated more completely by full-fuel-cycle measurements that extend the boundaries of energy consumption to incorporate the source of the fuel. More accurately capturing and understanding the impacts of even relatively small differences in estimated energy consumption have become important given the enormous amount of energy consumed in the United States today (DOE/EIA, 2008). Conversion factors or other methods have not been established by DOE/EERE to convert site energy consumption to full-fuel-cycle energy consumption. The difficulty of this conversion was a matter of debate within the committee. Although, as is pointed out in Attachment I, estimating full-fuel-cycle energy consumption is more involved and requires additional data and analysis for determining suitable methods for converting from a site to a full-fuel-cycle measure of energy consumption, the committee’s majority view is that a methodology can be developed without undue strain on DOE/EERE’s resources. This view is based on an extensive body of literature dealing with life- cycle analysis (Spath et al., 1999; Spath and Mann, 2000; Matthews and Lave, 2002; Matthews et al., 2000). Although life-cycle analysis is not directly comparable to full-fuel-cycle analysis (because its objective is to determine the impact of energy consumption on greenhouse gas emissions for specific applications), data presented in life-cycle analyses include data that trace energy consumption back to the source of the fuel used in powering the appliance. In addition, a variety of methods, results, models, and databases are available to facilitate an estimate of full-fuel-cycle energy consumption. Two important resources affiliated with DOE are the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model4 developed and maintained at Argonne National Laboratories and the U.S. Life Cycle Inventory Database5 from the National Renewable Energy Laboratory. In addition, the sources and sinks of CO2 and other greenhouse gases have been well-characterized, including those resulting from the use of energy (EPA, 2009, Chapter 3). The committee’s acknowledgment of the additional effort required to develop a full-fuel- cycle measure of energy consumption is reflected in its recommendation for a gradual transition 4 Available at http://www.transportation.anl.gov/modeling_simulation/GREET/index.html. 5 Available at http://www.nrel.gov/lci/. 7

to use of that measure for assessment of national and environmental impacts of energy consumption. Appliance Issues and Product Classes DOE/EERE does not combine product classes when setting efficiency standards for appliances in which fuel choice is an option. For example, because furnaces can be fueled with natural gas, propane, oil, or electricity, they are considered as separate appliances, even though they serve the same purpose. Appliances that use different fuels—natural gas, propane, electricity, or oil—are rated within that specific fuel category. For example, ratings for all electrical appliances are based on site energy consumption so that the efficiencies of a specific family of electrical appliance can be compared and ranked. Appliances, such as storage water heaters, that use natural gas, propane, oil, or electricity are, as mentioned above, considered in different categories depending on the fuel used. Currently there are no plans by DOE/EERE to consider within a single category appliances that can use fuel alternatives. In responses to committee queries, both the Edison Electric Institute and the American Gas Association indicated that using extended site energy consumption to establish a standard, without combining product classes of appliances to include both natural gas and electricity, would not change the outcome of the standard (see Attachment E). Customer choices among different appliances are based on many factors, including fuel availability and cost. Storage water heaters, mentioned above, are the “poster child” for the site versus full- fuel-cycle debate. Under current efficiency requirements, the typical gas-fired storage water heater has an Energy Factor (EF) that is significantly lower than that of a typical electric water heater. When site energy consumption is measured, it appears that the electric storage water heater is more efficient than the gas-fired storage water heater. In terms of the appliance’s operating efficiency, this is true. For gas-fired water heaters, full-fuel-cycle energy consumption and site energy consumption differ only by the relatively small losses in efficiency incurred in pipeline transmission and in the distribution of natural gas (about 10 percent). But for electric storage water heaters, the energy losses that occur in the generation, transmission, and distribution of electricity⎯losses that are not accounted for in site (point-of-use) measurements of energy consumption⎯are much larger (about 70 percent). For similar reasons, it is very difficult to compare furnace, boiler, and heat pump efficiency, each of which is rated with different metrics. Providing more comparable ratings would help toward making more complete information on energy consumption available to contractors, builders, and homeowners. For storage water heaters, the metric for energy efficiency could still be called the Energy Factor but could be calculated using extended site energy consumption rather than site consumption until estimates of full-fuel-cycle energy consumption become available. For heating equipment, one option might be to rate all equipment on a percent efficiency basis, again using extended site energy until full-fuel-cycle energy estimates become available. The key parameter in energy efficiency standards is the metric used to measure and regulate product efficiency. This metric varies from product to product, and currently it is based only on site energy use. For example, refrigerator efficiency is now measured in terms of annual consumption of electricity (kilowatt-hours), whereas clothes washer and dishwasher efficiency is measured in terms of water heating and motor energy use per load, with allowances made for appliance capacity. Furnace and storage water heater efficiency is measured in terms of heat 8

(British thermal units) provided per unit of primary fuel consumed on site. Some of these metrics can be improved to allow better comparisons between fuels, although such comparisons can be difficult to make and can sometimes be misleading. Public Participation Proposing the use of estimated full-fuel-cycle energy consumption to help determine impacts on greenhouse gas emissions or “carbon footprint” in setting appliance energy efficiency requirements or producing an index for use on appliance labels might have an impact on public participation in the appliance rulemaking process. While DOE/EERE and the Energy Information Administration already collect much of the data that would be used to construct a full-fuel-cycle energy consumption-based estimate, the construction of such an estimate would necessitate public scrutiny. To participate effectively in a public debate, industry stakeholder groups, environmental organizations, and consumer advocates would have to allocate resources to understanding the details in a technically sophisticated proceeding. Resource-constrained stakeholders could find their participation and their effectiveness in advocating a position somewhat limited compared to less resource-constrained participants. To some extent, this impact would be lessened by DOE/EERE’s obligation to review and analyze any stakeholder input; nonetheless, it could still be incumbent on participants to review stakeholder filings in light of their constituents’ perspectives and to raise concerns they might have. The impact on participation by the public could be mitigated if DOE/EERE were to develop a suitable method for converting site energy measures of consumption to full-fuel-cycle measures of energy consumption, similar to the conversion factor currently used in calculating extended site energy from site energy. Labeling Programs The committee heard presentations from representatives of DOE/EERE, the Federal Trade Commission, the Environmental Protection Agency, and other organizations that relate to the content on and the format of labels affixed to appliances that give the consumer information on appliance efficiency and operating costs. The committee believes that such labels are of critical importance in conveying information to consumers about the energy consumption of an appliance. The current practice of showing the annual operating cost (see Figure F.1 in Attachment F) is an important element and is easily understood by the consumer. Equally important is the indicator of the range of annual operating costs that the customer can use in comparing a selection of products from different manufacturers. In considering additional information to include on the label, it is important to acknowledge increasing evidence that consumers are concerned about greenhouse gas emissions and ways to reduce them (e.g., Leiserowitz, 2006). A majority of the committee believes that information on the impacts of energy consumption on greenhouse gas emissions will be useful to the consumer and will positively affect consumers’ purchasing behavior and their ability to participate in national energy conservation. 9

A majority of the committee believes that additional information on the Energy Guide label is the most effective means for conveying the environmental impact of energy consumption to the public. The DOE/EERE could also consider using an enhanced website for this purpose. FINDINGS AND RECOMMENDATIONS The committee’s primary general recommendation is that DOE/EERE consider moving over time to use of a full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts, especially levels of greenhouse gas emissions, and to providing more comprehensive information to the public through labels and other means, such as an enhanced website. The current use by DOE/EERE of site energy consumption is effective for setting standards for the operational efficiency of single-fueled appliances within the same class and should be continued without change. However, DOE/EERE’s current use of site energy consumption does not account for the total consumption of energy when more than one fuel is used in an appliance (e.g., a heating system with a gas furnace and an electric fan) or when more than one fuel can be used for the same application. For these appliances, measuring full-fuel- cycle energy consumption would provide a more complete picture of energy used, allowing comparison across many different appliances as well as an improved assessment of impacts such as effects on energy security and the environment. Acknowledging the complexities inherent in developing a full-fuel-cycle measure of energy use⎯a concern expressed in Attachment I⎯a majority of the committee recommends a gradual transition to that expanded measure and eventual replacement of the currently used extended site measure. To improve consumers’ understanding, DOE/EERE and the Federal Trade Commission could evaluate potential indices of energy use and its impacts and could explore various options for label design and content using established consumer research methods. In considering the questions posed in its statement of task (Attachment A), the committee developed the findings and recommendations presented below. Findings Question 1: Are the data available for site and full-fuel-cycle energy consumption by appliances and commercial equipment appropriate for the studies undertaken? Finding 1: The data on site energy consumption that are generated in and available to the DOE/EERE appliance standards program are sufficiently accurate for the purpose of setting appliance operational efficiency requirements. However, environmental concerns, particularly with respect to climate change, are playing an increasing role in national discussions of energy use, and broad national impacts of energy consumption should be a specific criterion in DOE/EERE rulemaking. Accurate estimates of full-fuel-cycle energy consumption that will more completely capture the environmental and other national impacts of energy consumption will require the collection and analysis of additional data. 10

Question 2: Are there uncertainties with the data? Finding 2: There are uncertainties in all data, but the data used currently to estimate site energy consumption by appliances operating in the prescribed manner are sufficiently accurate for the DOE/EERE standards program to use in setting energy efficiency requirements for appliances. However, data on and measures of site energy consumption and extended site energy consumption are insufficient for estimating the overall national and environmental impacts of appliance use. Somewhat greater uncertainties exist in the data currently available to estimate full-fuel-cycle energy consumption as opposed to extended site energy consumption. Question 3: Are the models and analyses used appropriate for the studies undertaken? Finding 3: The models used by DOE/EERE to estimate the energy used by single-fuel appliances and to develop associated standards appear to be adequate for setting efficiency requirements in the appliance standards program. The current practice of establishing energy efficiency requirements for appliances based on fuel type appropriately recognizes the need to allow for differences in fuel availability and consumer choice. Finding 4: Using current efficiency ratings to compare appliances that have the same purpose but use different fuels (such as water heaters fired by gas or electricity) can be misleading in some cases, and difficult to accomplish in other cases. Question 4: Does the measure of energy efficiency and/or energy use (site or full-fuel-cycle) impact the ability of the public to participate in the appliance standards rulemaking process? Finding 5: Using full-fuel-cycle energy consumption as the measure of appliance performance could hamper the public’s ability to participate effectively in appliance standards rulemaking, because use of that measure depends on analysis of a larger range of variables plus the collection of more data, both of which are efforts that could require additional resources. Question 5: Does the measure of energy efficiency and/or use affect the studies undertaken by DOE/EERE? Finding 6: Most of the DOE/EERE analyses and studies of single-fuel appliances are not affected by the particular measure of energy consumption used. However, for categories of appliances that can use more than one type of fuel, additional studies are needed to establish the performance standard. If DOE/EERE were to adopt the full-fuel-cycle measure of energy consumption, studies on the energy used in the extraction and transport of fuels would be needed. Finding 7: Access to information on how levels of greenhouse gas emissions are affected by operating an appliance could have an impact on consumers’ purchasing decisions and on national energy conservation. 11

Recommendations Recommendation 1: DOE/EERE should consider moving over time to use of the full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts, especially levels of greenhouse gas emissions, and to providing more comprehensive information to the public through labels and other means including an enhanced website. DOE/EERE efforts should address the data collection and analysis needed to accurately estimate full-fuel-cycle energy consumption as well as to assess and improve consumer understanding and use of information on full-fuel-cycle energy consumption.6 Recommendation 2: For single-fuel appliances, DOE/EERE should retain the current practice of basing energy efficiency requirements on the site measure of energy consumption and should also continue to keep product classes separate when setting efficiency standards for appliances for which fuel choice is an option. Recommendation 3: For appliances for which there is a choice of fuel, such as storage water heaters and heating equipment, efficiency ratings should be calculated using the extended site measure of energy consumption until DOE/EERE can consider and complete a transition to the use of the full-fuel-cycle measure of energy consumption.7 Recommendation 4: DOE/EERE should make available and easily accessible all data used in developing energy efficiency standards for appliances. These data, which include results of analyses, assumptions used as input, performance requirements, and other information used in developing efficiency standards, should be available in an open-standard, machine-readable format. Recommendation 5: DOE/EERE and the Federal Trade Commission should initiate a project to consider the merits of adding to the Energy Guide label an indicator of how an appliance’s total energy consumption might affect levels of greenhouse gas emissions. Such a project would include development of specific data on greenhouse gas emissions associated with the appliance’s operation, formulation of pertinent information for addition to the appliance’s energy efficiency label, and research with a sample of consumers to test various options for encouraging consumers’ understanding and use of information on full-fuel-cycle energy consumption and its impacts.8 6 For differing views, see Attachments H and I. 7 See Attachment I for another view. 8 See Attachment I for another view. 12

REFERENCES DOE/EIA (Department of Energy/Energy Information Administration). 2008. Annual Energy Review. Energy Consumption by Sector. Report No. DOE/EIA-0384(2007). Washington, D.C. DOE, EERE (Office of Energy Efficiency and Renewable Energy). 2007. Buildings Energy Data Book. Washington, D.C. Available at http://buildingsdatabook.eere.energy.gov/. EPA (Environmental Protection Agency). 2009. Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. Available at http://www.epa.gov/climatechange/emissions/usinventoryreport.html. GARD Analytics. 2005. Public Policy and Real Energy Efficiency: Assessing the Effects of Federal Policy on Energy Consumption and the Environment. Prepared for the American Gas Foundation. Jaramillo, P., W.M. Griffin, and H.S. Matthews. 2007. Comparative life-cycle air emissions of coal, domestic natural gas, LNG, and SNG for electricity generation. Environmental Science and Technology 41(17). Jaramillo, P., W.M. Griffin, and H.S. Matthews. 2008. Comparative analysis of the production costs and life-cycle GHG emissions of FT liquid fuels from coal and natural gas. Environmental Science and Technology 42(20):7559-7565. Leiserowitz, A. 2006. Climate change risk perception and policy preferences: The role of affect, imagery, and values. Climate Change 77:45-72. Matthews, H.S., and L.B. Lave. 2000. Applications of environmental valuation for determining externality costs. Environmental Science and Technology 34(8):1390-1395. Matthews, H.S., L. Lave, and H. MacLean. 2002. Life cycle impact analysis: A challenge for risk analysis. Risk Analysis 22(5):853-860. Meyers, S., J.E. McMahon, M.M. McNeil, and X. Liu. 2003. Impacts of U.S. federal energy efficiency standards for residential appliances. Energy 1(8):755-767. NRC (National Research Council). 2001. Energy Research at DOE: Was It Worth It? Washington, D.C.: National Academy Press. Ortiz, D.S., and M.A. Bernstein. 1999. Measures of Residential Energy Consumption and Their Relationships to DOE Policy. Report No. MR 1105.0-DOE. Rand Science and Technology Policy Institute, Santa Monica, Calif. November. Spath, P., and M. Mann. 2000. Life Cycle Assessment of Natural Gas Combined Cycle Power Generation System. Report No. NREL/TP571-27715. Golden, Colo.: National Renewable Energy Laboratory. Spath, P., M. Mann, and D. Kerr. 1999. Life Cycle Assessment of Coal-fired Power Production. Report No. NREL/TP570-25119. Golden, Colo.: National Renewable Energy Laboratory. 13

NOTE This letter report was reviewed in draft form by the following individuals, chosen for their diverse perspectives and technical expertise in accordance with procedures approved by the National Research Council’s Report Review Committee: Dell K. Allen (NAE), consultant; J. Michael Davis, Pacific Northwest National Laboratory; Tom Eckman, Northwest Power and Conservation Council; Jeremy T. Fox, University of Chicago; Robert W. Fri, consultant; David B. Goldstein, Natural Resources Defense Council; Eckhard Groll, Purdue University; James E. Hill, consultant; Alexander MacLachlan (NAE), E.I. du Pont de Nemours & Co. (retired); John P. Rust, University of Maryland; Charles A. Samuels, Mintz Levin; Kenneth Shiver, Southern Company; Frank A. Stanonik, Air-Conditioning, Heating and Refrigeration Institute; and W. Michael Griffin, Carnegie Mellon University. The review was overseen by Elisabeth M. Drake, Massachusetts Institute of Technology (NAE), and Robert A. Frosch, John F. Kennedy School of Government (NAE). Although the individuals listed above provided many constructive comments and suggestions, they were not asked to endorse the report’s conclusions or recommendations, nor did they see the final draft of the report before its release. Responsibility for the final content of this report rests entirely with the authoring committee and the institution. 14

List of Attachments Attachment A: Statement of Task Attachment B: Letter from Senator Gordon H. Smith Attachment C: Committee Meetings and Presentations Received Attachment D: Key Findings from 1999 RAND Study and 2005 GARD Analytics Study Attachment E: Written Material Provided Directly to the Committee Attachment F: Setting Energy Conservation Standards Attachment G: Biographical Sketches of Committee Members Attachment H: Minority Opinion of David H. Archer, Committee Member Attachment I: Minority Opinion of Ellen Berman, Committee Member 15

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Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report Get This Book
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Currently, the Department of Energy (DOE) sets appliance efficiency standards using primarily "site" (or point-of-use) measurements, which reflect only the energy consumed to operate the appliance. Site measurements allow consumers to compare energy efficiency among appliances, but offer no information about other energy costs involved. This congressionally mandated report from the National Research Council recommends that DOE consider moving over time to the use of a full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts. Using that metric would provide the public with more comprehensive information about the impacts of energy consumption on the environment, the economy, and other national concerns. This volume discusses these matters and offers several related findings and recommendations together with supporting information.

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