DOE Caves On Natural Gas Efficiency, Costing Consumers $10 Billion Plus 100 Million Tons Of Needless Carbon Pollution

Setback Could Set the Stage for Higher Department of Energy Standards

by Kit Kennedy, NRDC, via Switchboard

The U.S. Department of Energy (DOE) has just retreated on important new energy efficiency standards for natural gas furnaces that were scheduled to go into effect in May and would have saved Americans an estimated $10.7 billion in lower heating bills over the next three decades.

By undoing these standards that were supported by manufacturers, consumers and efficiency advocates, states, and many utilities, American households are destined to waste more natural gas and money. In terms of energy, these standards would have saved 31 billion therms of natural gas over the next 30 years – enough to heat 62 million typical U.S. homes for a year. And the standards would have avoided the emission of somewhere between 81 to 130 million metric tons of global warming carbon pollution over the next three decades – that’s equivalent to the pollution generated by thirty or so coal-fired power plants.

Energy efficiency standards require our appliances and heating and cooling systems to operate efficiently while still providing the same or greater level of performance and comfort. DOE’s appliance efficiency program has a long record of success. Unfortunately, sometimes we encounter a setback, which is what happened Friday with the Department of Energy’s action in an ongoing lawsuit. In a motion filed in a legal challenge, DOE asked the court to “vacate” – or undo – these furnace efficiency standards, so that it can go back to the drawing board and redo them from scratch.

Importantly, consumer and low-income consumer groups agree that this is a setback.  “The Department of Energy’s retreat from long overdue natural gas furnace efficiency standards is bad news for consumers. Strong efficiency standards reduce winter heating bills, helping all families but especially those who have the least means to stay warm and save money,” according to National Consumer Law Center attorney Olivia Wein.

DOE couldn’t have chosen a worse moment to turn the clock back on natural gas efficiency. Just last week, the U.S. National Oceanic and Atmospheric Administration affirmed that 2012 was the hottest year ever in the continental United States, and the destructive impacts of global warming on communities and public health keep adding up, especially in light of Superstorm Sandy. Moreover, concerns over the environmental and public health risks of under-regulated fracking continue to multiply. If DOE succeeds in undoing these standards, it needs to sets things right quickly by setting new furnace efficiency standards at the same or stronger levels.

Here’s the story.

Back in 2010, NRDC worked with consumer groups, states, utilities and manufacturers to negotiate consensus energy efficiency standards for furnaces which we jointly recommended to DOE. The agency then adopted them in 2011. These standards were regional: in the northern part of the United States, where winters are harsher and heating bills higher, the standards would have required that gas furnaces operate at 90% or higher efficiency – meaning that at least 90% of the natural gas burned would go to heating, rather than being wasted.  Today’s furnaces are only required to have an average efficiency of 80%, although there is already a high penetration of 90% efficient furnaces in the Northeast. So these standards were a substantial, but reasonable, advance in efficiency.

Last year, the American Public Gas Association, a small trade group of public natural gas utilities, filed a legal challenge to the consensus furnace standards in the U.S. Court of Appeals for the D.C. Circuit. APGA’s motivation was clearly the potential loss of market share and revenues that these gas efficiency standards represented. APGA’s position was in no way representative of natural gas utilities as a whole. Indeed, the American Gas Association – the much larger organization which represents investor-owned natural gas utilities across the United States – did not join in challenging the standards and worked with NRDC and efficiency advocates to chart a path toward their smooth implementation. And many natural gas utilities – including National Grid and Nstar – have strongly supported these standards.

Because of their importance to consumers and the environment, NRDC — together with consumer groups and other efficiency advocates — became parties to this challenge in order to support DOE and the standards. The Commonwealth of Massachusetts, State of New York and California Energy Commission also filed a legal brief in support.

Unfortunately, after initially defending against the lawsuit and filing a strong legal brief in support of the standards, on Friday DOE chose to wave the white flag and settle the challenge, apparently over concerns about the process that DOE used to adopt the rule, not the substance of the standards themselves. DOE filed a motion asking that the court undo the new standards just months before they were to go into effect. NRDC is reviewing the court papers and our legal options.

So where do things stand now on furnace efficiency standards? Clearly, there’s damage done.

First, new, stronger efficiency standards are long overdue. Congress first established furnace efficiency standards in 1987, and directed DOE to strengthen these standards twice – first by 1994, and second by 2007.  Yet today, despite several botched efforts by DOE, furnace efficiency standards are still at much the same level as they were back in 1987. Any new furnace efficiency standards issued by DOE through a new rulemaking would likely not go into effect until sometime after 2020, and this delay will significantly reduce consumer, energy and environmental benefits.

Second, NRDC has been participating in energy efficiency standard negotiations with manufacturers, efficiency advocates, consumer groups and states for decades.  Negotiated rulemakings are one of the most important pathways for improved efficiency benchmarks and about one-third of DOE energy efficiency standards have been based upon such agreements. DOE’s support is critical to this process and the agency’s recent actions in this lawsuit could have a chilling effect on further negotiated standards.

But there is a path forward on furnace efficiency.  While this setback will delay efficiency gains, inevitably stronger efficiency standards for furnaces will become a reality in the future.  DOE has stated that it will begin a new rulemaking process to develop furnace efficiency standards. This will give NRDC and the many other stakeholders who support efficiency standards an opportunity to advocate for the strongest possible technically feasible and cost effective efficiency standards, which could well be stronger than the ones that DOE abandoned last week.

— Kit Kennedy, NRDC Switchboard blog


12 Responses to DOE Caves On Natural Gas Efficiency, Costing Consumers $10 Billion Plus 100 Million Tons Of Needless Carbon Pollution

  1. Superman1 says:

    Every metric I see relating to ACTION on climate change is going in the opposite direction of where we need to go. Yet, we have all these proposals on this and other climate sites requiring drastic reductions in fossil fuels and drastic conversions to renewables. There could not be a wider gap between what is required to avoid the cliff and what is actually being done to avoid the cliff. And, the gap is not shrinking, it is growing!

  2. Paul Klinkman says:

    The story should add, –>AND by wasting natural gas, the DOE supports more natural gas (mostly methane) leakage into the atmosphere. In one study, 9% of all methane (natural gas) was leaked into the atmosphere somewhere. At this rate, methane fracking is worse than coal for climate change.

  3. Initial reaction: What a setback, indeed, and good luck NRDC in salvaging what you can!

    Developing reaction: If one laid out a concrete national GHG mitigation plan for the US, with specific actions quantified to meet solid goals for 2020, 2030, 2040, 2050…

    I suspect that you wouldn’t be installing new gas capacity after 2020, however efficient it might be.

    I’m not even sure that you’d want to retrofit new, more efficient gas appliances into existing gas applications, although that’s certainly a closer call.

    Given that emissions in every sector need to go down by about 5% per year, year on year… What is the place of installing capacity for new fossil fuel consumption?

    I suspect a real plan would show that, taking into account the the gradual retirement rates, 1) ALL the new stuff has to be virtually carbon-free, beyond its embodied energy, and 2) existing stuff, the great bulk of continuing consumption, has to be converted to virtually carbon-free, beyond new embodied energy, at a reasonable ongoing rate.

    Is the NRDC making current choices of campaign strategy based on a systematic yardstick of climate success, as opposed to simply working to incrementally do better?

    These are no longer the same.

    Great post, great efforts, in any case!

  4. Mulga Mumblebrain says:

    How can this be? Surely the great Obama is just itching, now that he doesn’t need to run again, to save the planet and the children. Who can be hindering his efforts? What malcontents are perverting his noble intent? it’s just too, too, mysterious.

  5. Artful Dodger says:

    These new Standards were at best a half-measure anyway. Natural gas for home heating should require Combined Heat & Power (CHP) units which can raise overall efficiency to over 80%, and provided distributed power sources all over the grid.

    But that cuts into the bottom line of big Utility companies, and would never sell in Washington.

  6. Dory Hippauf says:

    Less efficiency means more Natural Gas is used, which will reduce the current Natural Gas glut. A reduction in the glut means demand will increase (aided by less efficiency standards). As demand increases, so will the prices and profits for the natural gas industry.

    It has nothing to do with the environment, or being unable to make more efficient burners. It has to do with making more profit at any cost.

  7. Sasparilla says:

    Very true Superman1, rather disheartening when viewed year over year over….

  8. Sasparilla says:

    Great observations Kevin. It would seem heat pumps and electricity (however inefficient is) will have to be the future for household heating, considering climate change.

    The same goes for cooking – natural gas – which cooks demand compared to electric – will have to be things of the past as time moves on.

    Definitely shows how far from reality we are compared to where we actually need to be going – we can’t even tighten natural gas furnace efficiencies (supported by most players in the involved industry and consumers).

  9. Sasparilla says:

    Fear not courageous Mulga – President Obama just needs some more time before he launches his all out action plan on climate change….guessing he just needs another 4 years or so (February 2017 or so) before his administration goes all out on this issue.

    Turning off the sarcasm off now – ahh, that felt good. Part of me says… that the 2012 election is over and things are just as hopeless here in the U.S. as it was before the election (the U.S. goes to sleep for 4 more years), it appears time to start looking forward to the 2016 election as we’ll need a new administration that pushes for climate change action (just like President Obama said he would during the 2008 campaign) and a House / Senate that actually will take that action – seems like that’ll be the next serious opportunity for change (however long the odds).

  10. Sasparilla says:

    Great article and insightful comments.

    From a climate change standpoint, we actually need to be phasing out new installations of natural gas furnaces and natural gas cooking ranges while offering proactive incentives to get people to change out their natural gas furnaces and ranges for electric (which, at this point, will be significantly more expensive to use for most people since natural gas is so cheap).

    Viewed in that light, this failure of President Obama’s DOE to stand up for tighter efficiency standards on natural gas furnaces seems pathetic. We are so far from where we need to be going.

  11. Mulga Mumblebrain says:

    ‘Hope Springs Eternal’. And Disappointment soon follows. Faith in capitalist democracy might just be the greatest and most dangerous mass hysteria in human history. I bet the ‘Next Obama’ is even more convincing, charismatic and bewitching.

  12. Tony Firch says:

    There are several things not mentioned and few know about. Yes this was liked by manufacturers as a whole, however, the manufacturers did send some things back to the DOE they wanted to see in the final rule. One of particular note was a “like-for-like” paragraph.

    What most people don’t understand is the feasability in the northern sector to just up and change was not addressed. Here are some points.

    1) Common venting, especially in multi-family and apartment complexes. The cost to adapt to the new venting requirements will be huge.

    2) Attic installations in an uncontrolled space, while not common, there are a lot. High efficiency furnaces produce condensate, which in the northen climate is troublesome because of freezing issues. Again, adding cost and higher possibility for damage resulting.

    3) Some will be forced, or choose, to go all electric because of venting or condensate issues. How will this affect your “climate change”?

    As a side note, how about that EPA and their refrigerant policies? Soon we will be using isobutane, liquid propane and CO2! Flammable or high pressure gas, which do you want?