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Michael KnotekDeputy Under Secretary for Science and EnergyOffice of the Under Secretary for Science and Energy
Kathleen HoganDeputy Assistant Secretary for Energy EfficiencyOffice of Energy Efficiency & Renewable Energy
Peter DavidsonExecutive DirectorLoan Programs Office
April StephensonChief Operating Officer/Acting Deputy Executive DirectorLoan Programs Office
FY 14-15: Agency Priority Goal
Implement elements of the Climate Action Plan
Priority Goal
Goal Overview
Overview of the appliance standards part of the goal:
The Appliance Standards Agency Priority Goal is to reduce cumulative carbon pollution by 3 billion metric tons by 2030 through standards set since 2009 and to promulgate new standards for consumer products and industrial equipment by the end of calendar year 2016.
Residential and commercial buildings consume approximately 40 percent of the primary energy consumed in the United States. This amounts to over 39 Quads of primary energy used by the buildings sector per year, an amount that is greater than the yearly energy consumption of either the industrial or the transportation sector. By developing minimum energy efficiency standards, the Energy Department’s Equipment Standards and Analysis program helps reduce energy costs for consumers and businesses, as well as reduce associated energy use and emissions.
By covering a broad range of equipment—appliances, refrigeration, space heating and cooling, water heating and other electrical equipment—the Department's work with standards development and implementation increases energy efficiency in the residential, commercial, and industrial sectors. National standards that eliminate the least energy-efficient products from the market ensure that energy saving technologies are accessible to all consumers, provide manufacturers with a single set of requirements rather than an array of potentially conflicting state and local regulations, and drive technology innovation.
The Department uses three strategies to promote building energy efficiency, focused first on research and development of the most promising emerging technologies, followed by industry support activities such as Better Buildings and ENERGY STAR, and then the implementation of equipment energy efficiency standards.
As mandated by the Energy Policy and Conservation Act of 1978 (as amended), the Department’s Equipment Standards and Analysis program is developing and enforcing efficiency standards and test procedures to cover at least 75 percent of the energy used in the building sector. Under current law, covered products are responsible for 82 percent of residential building energy consumption, 67 percent of commercial, and approximately half of industrial. DOE is required to promulgate energy conservation standards that are technically feasible and economically justified, subject to the Energy Policy and Conservation Act’s (EPCA) seven factors. In determining whether a standard is economically justified, DOE determines whether the benefits of the standard exceed its burdens by considering these seven factors (to the greatest extent practicable):
(1) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;
(2) the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard;
(3) the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;
(4) any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;
(5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
(6) the need for national energy and water conservation; and
(7) other factors the Secretary considers relevant.
To maximize energy savings subject to EPCA, the Standards subprogram first meets all statutory and other legal deadlines for completing standards and test procedures. The Department is also committed to streamlining the process for developing and issuing rulemakings in partnership with industry and other stakeholders. To determine which products should be added through coverage determinations, DOE conducts analyses that examine the energy savings potential of various unregulated residential appliances, electronics, and commercial equipment while considering the impact of non-regulatory energy-efficiency programs currently available in the market. In addition to these actions, DOE also develops test procedures for ENERGY STAR, which is an effective non-regulatory program that saves consumers energy.
The Department is working to address a variety of different challenges associated with this work, including:
Standards require a robust test procedure to be effective.
Changes to the statute or its legal interpretation and the need for additional information in response to public comments on the draft rulemakings are factors that can affect the schedule for final issuance of the standards.
Energy price, product cost and consumer use projections vary and must be factored into the rulemaking process.
Stakeholder Engagement: Energy conservation standards are established by a four-phase rulemaking process: a framework phase, preliminary analysis phase, notice of proposed rulemaking (NOPR), and final rule. The Department actively encourages stakeholder participation and interaction at all stages of the process. Early and frequent interactions among stakeholders have been useful for providing a balanced discussion of critical information required to conduct the analysis to support any standards. Stakeholders include equipment manufacturers, building owners, State energy agencies, utilities, trade associations and other interested parties.
The Department also coordinates with the Federal Trade Commission (FTC) and the Environmental Protection Agency (EPA) on key certification and compliance issues with the Energy Guide Label and ENERGY STAR, respectively. The Department of Energy has also engaged with non-governmental organizations, such as the Collaborative Labeling and Appliance Standards Program, on international harmonization with respect to certification and compliance requirements.
Overview of the loan guarantees part of the goal:
As part of the President’s Climate Action Plan, the Loan Programs Office (LPO) issued the Advanced Fossil Energy Projects Solicitation, which makes up to $8 billion in loan guarantees available to support innovative, advanced fossil energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases.
Fossil fuels currently account for more than 80 percent of U.S. energy production and are projected to remain a significant energy source in the future. As a result, President Obama’s Climate Action Plan announced that LPO would issue this solicitation to accelerate the deployment of cleaner fossil energy technology. This is an important part of the Administration’s long-term plan to achieve a cleaner and more secure energy future as part of its “all-of-the-above” energy strategy.
Strategies
Strategies for the appliance standards part of the goal:
The Department has an established process for developing standards and test procedures that gives stakeholders several opportunities to review and comment on DOE’s approach. DOE traditionally begins the standards process by publishing a framework document and hosting a public meeting to discuss issues such as scope and methodology. This is followed by a preliminary analysis, notice of proposed rulemaking (NOPR), and final rule. At each stage, public comments are incorporated into the downstream analysis.
The current 3-year energy conservation standard timeline was introduced in 2006 as a way to formalize and improve the rulemaking process. In 2010, the Department announced that it was implementing changes to accelerate the process, where possible. The details of the process change are posted online here: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf
The process change incorporates three key changes. First, in appropriate cases, such as faster updates to existing standards where much about the product is known, DOE will begin rulemakings in the NOPR phase, instead of during the Framework Document phase. This could save significant amounts of time off the baseline 3-year rulemaking timetable, where significant stakeholder input has already been received prior to initiation of the formal rulemaking process. Second, DOE is attempting to make Federal Register notices simpler by posting technical details in the Technical Support Document (TSD), which is posted online. Third, DOE is encouraging negotiated rulemakings as a means to engage the public, gather data and information, and reach consensus among interested parties.
The particular rulemaking process for a given product rulemaking can include many steps, including framework documents, preliminary analyses, and requests for information in order to gather additional data and feedback to better inform the rulemaking processes. By the time the Department reaches the final rule stage, the Department has usually spent years conducting analyses to develop the efficiency levels and evaluating their technological feasibility and economic justification. Each product is unique in the requirements for some or all of these steps, but the Department has taken steps to streamline this process by making some or all of the data available electronically, and/or eliminating these documents entirely in favor of electronic dissemination to all stakeholders.
Enforcement activities are also an important part of success. Issuance of an energy conservation standard final rule, by itself, does not comprise an effective standard. The Department must also provide a reliable test procedure for manufacturers to measure the efficiency of their product against the standard. The Department is in the process of strengthening its standards by improving its certification and enforcement activities and regulations. The emphasis on enforcement is important to ensure that the established standards are adhered to. As part of its enforcement activities, the Department reviews certification reports, conducts verification tests, and when necessary, coordinates enforcement tests that can lead to penalties for non-compliance.
Strategies for the loan guarantees part of the goal:
Applicants under the Advanced Fossil Energy Projects Solicitation must submit their application in two parts, “Part I” and “Part II”. To be considered for a particular Part I or Part II round of review, applicants must file their submission no later than 11:59 pm Eastern Time on the corresponding due date for that round. Part I of the application provides DOE with a description of the project. This information will be used as a basis for determining the initial eligibility of the project and the project’s readiness to proceed. The Part II submission may be filed at any time after DOE invites an applicant to submit its Part II submission. Mandatory criteria that DOE will use during each round of Part II reviews in determining which project sponsors/applicants will proceed to the next stage include: (1) whether the project provides a reasonable prospect of repayment of the principal and interest on the guaranteed obligation and other project debt; and (2) whether the guaranteed obligation and other project debt, when combined with amounts available from other sources, will be sufficient to carry out the Project. Other criteria that LPO will consider in evaluating applications include but are not limited to: (1) whether the Project could be fully financed on a long-term basis by commercial banks, institutional investors, or the capital markets without a federal loan guarantee; (2) whether the Project has identified a dedicated and appropriate Project site. Generally, a Project is restricted to one location within the United States. However, DOE may, in its discretion, consider an Application for a Project using a particular technology that is proposed to be situated in more than one location in the United States if multiple locations are integral components of a unitary plan, necessary to the viability of the Project, and at least one of the locations is identified in the Application; (3) the level of NEPA review required by DOE; (4) whether the Guaranteed Obligation is expected to be senior-secured debt; (5) the best use of the loan guarantee (i.e., Applications that demonstrate the most efficient and competitive uses of the loan guarantee); (6) the Project Sponsor’s experience in the development of Advanced Fossil Energy Projects including experience in securing project financing, project due diligence, developing, designing, equipping, building, interconnecting, contracting for the sale/purchase of energy, and commissioning of the assets; (7) and the extent the Project uses partial guarantees and/or co-lenders. The use of partial guarantees and/or co-lenders will be viewed favorably by DOE.
Information supplied in Part II will be used by DOE to make decisions as to whether to continue due diligence. Projects that successfully complete the due diligence, underwriting, and negotiations necessary to develop an acceptable term sheet may be offered a conditional commitment for a loan guarantee. Such projects will then undergo a complete underwriting process. If the underwriting (including due diligence) and negotiations of financing documents are successful, the projects may be awarded a loan guarantee. Additional detail on this process can be found in the solicitation: http://energy.gov/sites/prod/files/2014/04/f14/Fossil-Solicitation-FINAL....
Loan Program Office’s ability to achieve this goal is subject to the quality and number of applications submitted in response to the solicitation. If the applications submitted in the initial rounds of the solicitation are for projects that are not ready to proceed, do not have a reasonable prospect of repayment, or are not otherwise eligible, LPO may not be able to award, by the end of FY 2017, all of the $8 billion in loan guarantees for advanced fossil energy technologies that reduce greenhouse gas emissions.
Progress Update
Progress Update for the appliance standards part of the goal:
DOE works simultaneously on standards development for multiple product classes, prioritizing its activities based on the framework described in the Overview. Each of these product classes goes through multiple development stages for both test procedures and standards, typically including a framework document and public meeting to discuss issues such as scope and methodology, followed by a preliminary analysis, a notice of proposed rulemaking (NOPR), and a final rule. This established process gives stakeholders several opportunities to review and comment on DOE’s approach. At each stage, public comments are incorporated into the downstream analysis, with progress dependent upon DOE’s continued determination of cost-effectiveness and technological feasibility. Because each stage of rule-making is a deliberative process involving stakeholder input and ongoing analysis, this Priority Goal has internal milestones in addition to indicators for assessing progress. The rule-making process itself will be conducted in a rigorous, publically vetted manner. For any given product, active work on these proposals and final standards can take multiple quarters. Progress can be seen in the Progress Update and in the following quarterly milestones.
DOE remains on track to issue 12 final rules in CY 15. The agency estimates that efficiency standards for appliances and federal buildings issued since the beginning of this Administration will achieve 2.2 billion metric tons of CO2 reductions cumulatively by 2030. The remaining standards to be issued in CY 15 are expected to make significant progress in meeting the Climate Action Plan target of 3 billion metric tons.
Test Procedures
|
Quarter |
Number of Products Actively Worked On |
Results (products) |
Number of Rulemakings Actively Worked On |
Results (rulemakings) |
|
Q3 FY14 |
40 |
46 |
32 |
35 |
|
Q4 FY14 |
37 |
45 |
30 |
32 |
|
Q1 FY15 |
33 |
39 |
27 |
28 |
|
Q2 FY15 |
28 |
36 |
23 |
26 |
|
Q3 FY15 |
25 |
33 |
21 |
25 |
|
Q4 FY15 |
22 |
38 |
18 |
28 |
Standards
|
Quarter |
Number of Products Actively Worked On |
Results (products) |
Number of Rulemakings Actively Worked On |
Results (rulemakings) |
|
Q3 FY14 |
44 |
47 |
37 |
37 |
|
Q4 FY14 |
42 |
45 |
35 |
35 |
|
Q1 FY15 |
43 |
48 |
36 |
37 |
|
Q2 FY15 |
41 |
46 |
35 |
35 |
|
Q3 FY15 |
40 |
43 |
34 |
33 |
|
Q4 FY15 |
38 |
43 |
33 |
33 |
Standards published so far include:
|
Commercial clothes washers, general service fluorescent lamps and incandescent reflector lamps, and automatic commercial ice makers. |
|
Package Terminal Air Conditioners / Heat Pumps and Certain Commercial HVAC (ASHRAE Products) |
|
Single Packaged Vertical Units, Grid-Enabled Water Heaters |
Progress Update for the loan guarantees part of the goal:
Part I, Round 1 Closed February 28, 2014
Part I, Round 2 Closed April 30, 2014
Part I, Round 3 Closed July 31, 2014
Part I, Round 4 Closed November 19, 2014
Part I, Round 5 Closed January 14, 2015
Part I, Round 6 Closed March 18, 2015
Part I, Round 7 Closed May 13, 2015
Part I, Round 8 Closed July 31, 2015
Part II, Round 1 Closed May 30, 2014
Part II, Round 2 Closed August 29, 2014
Part II, Round 3 Closed October31, 2014
Part II, Round 4 Closed December 17, 2014
Part II, Round 5 Closed February 18, 2015
Part II, Round 6 Closed April 15, 2015
Part II, Round 7 Closed June 17, 2015
Part II, Round 8 Closed August 19, 2015
Applications that clear Part I may proceed to Part II, which includes the full application process. Information supplied in Part II will be used by DOE to make decisions as to whether to continue due diligence. Projects that successfully complete the due diligence, underwriting, and negotiations necessary to develop an acceptable term sheet may be offered a conditional commitment for a loan guarantee.
The next Part I deadline is November 18, 2015. The next Part II deadline is December 16, 2015[SS1] . 5 Rounds of Part 1 and 6 Rounds of Part 2 in Q4. On schedule to meet $8B by FY17
[SS1]A new supplement was released with extended application dates for Advanced Fossil. They can be found here: http://energy.gov/lpo/articles/doe-finalizes-1-billion-new-loan-guarantee-authority-and-announces-new-application.
Next Steps
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Performance Indicators
Projected carbon reduction associated with published standards final rules. Millions of metric tons of CO2 (equivalent) through 2030.
Contributing Programs & Other Factors
Contributing Programs and Other Factors for the appliance standards part of the goal:
Building Technologies Program (BTP)
As envisioned by Congress, national standards that eliminate the least energy-efficient products from the market ensure that energy saving technologies are accessible to all consumers, provide manufacturers with a single set of requirements rather than an array of potentially conflicting state and local regulations, and drive technology and cost improvements. Since the beginning of the Obama Administration, the Department has issued or codified new efficiency standards for more than 35 products.
Office of Information and Regulatory Affairs
The Department of Energy works closely with the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) during the NOPR and final rule phases of the rulemaking process.
Contributing Programs and Other Factors for the loan guarantees part of the goal:
As part of the President’s Climate Action Plan, the Loan Programs Office (LPO) issued the Advanced Fossil Energy Projects Solicitation, which makes up to $8 billion in loan guarantees available to support innovative, advanced fossil energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases. Projects that LPO determines meet the eligibility criteria set forth in the solicitation may be selected for continuing due diligence, underwriting, and negotiations. Such projects must then obtain intra-agency and interagency approval before a conditional commitment and/or a loan guarantee may be awarded. External partners include the U.S. Treasury Department and the Office of Management and Budget.
Strategic Objectives
Strategic Objective:
Statement:
Advance the goals and objectives in the President’s Climate Action Plan by supporting prudent development, deployment, and efficient use of “all of the above” energy resources that also create new jobs and industries
Description:
DOE is committed to energy solutions that make best use of our domestic energy resources and help the nation achieve an approximately 17% reduction in greenhouse gas emissions below 2005 levels by 2020, and further reductions in the post-2020 period. We will accelerate innovation through development of technologies that make energy cleaner and more efficient, while leveraging American competitive advantages to seize market opportunities for manufacturing and deployment provided by a globally expanding clean energy industry. DOE will increase energy productivity, support safe and responsible deployment of domestic energy resources, and leverage federal credit authorities.
Agency Priority Goals
Statement: Implement elements of the Climate Action Plan, including
Description: Overview of the appliance standards part of the goal: The Appliance Standards Agency Priority Goal is to reduce cumulative carbon pollution by 3 billion metric tons by 2030 through standards set since 2009 and to promulgate new standards for consumer products and industrial equipment by the end of calendar year 2016. Residential and commercial buildings consume approximately 40 percent of the primary energy consumed in the United States. This amounts to over 39 Quads of primary energy used by the buildings sector per year, an amount that is greater than the yearly energy consumption of either the industrial or the transportation sector. By developing minimum energy efficiency standards, the Energy Department’s Equipment Standards and Analysis program helps reduce energy costs for consumers and businesses, as well as reduce associated energy use and emissions. By covering a broad range of equipment—appliances, refrigeration, space heating and cooling, water heating and other electrical equipment—the Department's work with standards development and implementation increases energy efficiency in the residential, commercial, and industrial sectors. National standards that eliminate the least energy-efficient products from the market ensure that energy saving technologies are accessible to all consumers, provide manufacturers with a single set of requirements rather than an array of potentially conflicting state and local regulations, and drive technology innovation. The Department uses three strategies to promote building energy efficiency, focused first on research and development of the most promising emerging technologies, followed by industry support activities such as Better Buildings and ENERGY STAR, and then the implementation of equipment energy efficiency standards. As mandated by the Energy Policy and Conservation Act of 1978 (as amended), the Department’s Equipment Standards and Analysis program is developing and enforcing efficiency standards and test procedures to cover at least 75 percent of the energy used in the building sector. Under current law, covered products are responsible for 82 percent of residential building energy consumption, 67 percent of commercial, and approximately half of industrial. DOE is required to promulgate energy conservation standards that are technically feasible and economically justified, subject to the Energy Policy and Conservation Act’s (EPCA) seven factors. In determining whether a standard is economically justified, DOE determines whether the benefits of the standard exceed its burdens by considering these seven factors (to the greatest extent practicable): (1) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard; (2) the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard; (3) the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard; (4) any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard; (5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; (6) the need for national energy and water conservation; and (7) other factors the Secretary considers relevant. To maximize energy savings subject to EPCA, the Standards subprogram first meets all statutory and other legal deadlines for completing standards and test procedures. The Department is also committed to streamlining the process for developing and issuing rulemakings in partnership with industry and other stakeholders. To determine which products should be added through coverage determinations, DOE conducts analyses that examine the energy savings potential of various unregulated residential appliances, electronics, and commercial equipment while considering the impact of non-regulatory energy-efficiency programs currently available in the market. In addition to these actions, DOE also develops test procedures for ENERGY STAR, which is an effective non-regulatory program that saves consumers energy. The Department is working to address a variety of different challenges associated with this work, including: Standards require a robust test procedure to be effective. Changes to the statute or its legal interpretation and the need for additional information in response to public comments on the draft rulemakings are factors that can affect the schedule for final issuance of the standards. Energy price, product cost and consumer use projections vary and must be factored into the rulemaking process. Stakeholder Engagement: Energy conservation standards are established by a four-phase rulemaking process: a framework phase, preliminary analysis phase, notice of proposed rulemaking (NOPR), and final rule. The Department actively encourages stakeholder participation and interaction at all stages of the process. Early and frequent interactions among stakeholders have been useful for providing a balanced discussion of critical information required to conduct the analysis to support any standards. Stakeholders include equipment manufacturers, building owners, State energy agencies, utilities, trade associations and other interested parties. The Department also coordinates with the Federal Trade Commission (FTC) and the Environmental Protection Agency (EPA) on key certification and compliance issues with the Energy Guide Label and ENERGY STAR, respectively. The Department of Energy has also engaged with non-governmental organizations, such as the Collaborative Labeling and Appliance Standards Program, on international harmonization with respect to certification and compliance requirements. Overview of the loan guarantees part of the goal: As part of the President’s Climate Action Plan, the Loan Programs Office (LPO) issued the Advanced Fossil Energy Projects Solicitation, which makes up to $8 billion in loan guarantees available to support innovative, advanced fossil energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases. Fossil fuels currently account for more than 80 percent of U.S. energy production and are projected to remain a significant energy source in the future. As a result, President Obama’s Climate Action Plan announced that LPO would issue this solicitation to accelerate the deployment of cleaner fossil energy technology. This is an important part of the Administration’s long-term plan to achieve a cleaner and more secure energy future as part of its “all-of-the-above” energy strategy.
