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Proposed Water Heater Efficiency Standards Deliver Savings – But Not Enough

Coalition Says Advanced Technologies Offer Bigger Savings

New home water heater efficiency standards proposed by the Obama Administration will save energy and money for U.S. households and reduce global warming and other harmful emissions — but they fall short of their potential, according to a broad coalition of energy-efficiency, consumer and environmental organizations.

"This proposal captures significant and cost-effective energy savings from conventional water heater technologies, but it does little to advance new technologies which can provide much larger energy and economic savings," according to Steven Nadel, executive director of the American Council for an Energy-Efficient Economy.

The new standards will affect the nine million new residential water heaters sold every year, which account for an estimated 20 percent of the typical home's energy use. DOE's analysis shows that the proposed new standards can be met with modest changes, such as adding more insulation to today's conventional tank-style water heaters. But by failing to require even a partial transition to next-generation technologies – condensing gas water heaters and electric heat pump water heaters — the proposed standards leave huge potential energy savings on the table.

"Big energy savings sometimes requires big changes in technology," said Andrew deLaski, executive director of the Appliance Standards Awareness Project. "We're disappointed that the Obama Administration has shied away from making even a modest first step to transition America to the most efficient types of water heaters."

DOE estimates that the proposed standards would save 2.6 quads of energy over 30 years (for comparison, a quad is enough energy to meet the total needs of about 5 million typical U.S. households for one year). Over the same period, consumers would save about $15.6 billion and carbon dioxide emissions would be cut by 154 million metric tons. But a standard that required the more energy-efficient condensing gas and electric heat pump water heaters would increase savings more than six-fold, to nearly 17 quads, save consumers $48 billion and reduce CO2 emissions by 965 million metric tons.

DOE has concluded, however, that such a shift, which would require complete retooling by the water heater industry and entail big increases in upfront costs for some consumers, would be too disruptive.

A middle ground standard would require the use of the newer, more efficient advanced technologies for only water heaters larger than 55 gallons, which represent 4 percent and 11 percent of the gas and electric water heater markets, respectively. That middle ground standard would save 3.7 quads, save consumers $22 billion and reduce CO2 emissions by 217 million metric tons.

"We agree that it's too early to mandate next generation technologies for the entire water heater market," said Nadel. "But if DOE required this shift for the very biggest water heaters, the energy, economic and CO2 savings would increase by about 40 percent compared to the department's proposal. That would also pave the way for a longer term transition to the best, advanced technologies, which is where the biggest savings can be found."

"In their remarkable race to improve appliance efficiency standards, DOE has stumbled a bit, leaving large consumer savings behind and missing the chance to promote new technologies – two goals that the administration has rightly set forth as national imperatives," said Alliance to Save Energy President Kateri Callahan. "We hope that DOE will pick up those savings in the final rule, or that manufacturers will join with us to ensure that, at least in new homes, only the best technologies are used."

Condensing and heat pump technologies are common in space heating but have only a toehold so far in the water heater market. About one-third of U.S. furnace sales are of condensing products, and about 8 percent of U.S homes are warmed with heat pumps. Major water heater companies are working on bringing these technologies to the water heater market.

"Consumers need to be able to buy the most efficient appliances that save them money over the long run," according to Mel Hall-Crawford, energy projects director for the Consumer Federation of America. "Water heaters represent a big portion of the energy costs for a typical home and last between 10 and 15 years. The energy consuming characteristics of buildings will take on greater importance in determining their market value in the years ahead. It's really important for the department to issue a standard that gives consumers as much savings as possible on this product that plays such a large part in determining household energy bills and has such a long life span. The DOE needs to do better than the proposed rule."

"People don't usually think of the costs of taking a hot shower, but options already exist to save on energy and water," said Lane Burt, manager of building energy policy at the Natural Resources Defense Council. "Unfortunately, this proposed standard fails to maximize consumer savings."

"The proposed water heater standards pass up the chance to move technology forward," said Tim Ballo, attorney with Earthjustice. "Water heating is responsible for a fifth of all household energy use, and there are technologies available today that are vastly more efficient than the levels DOE proposed. We're sure that DOE can do better, and we'll be urging the department to reconsider these standards."

"With President Obama about to go to Copenhagen, one of the best ways to show American leadership would be for his administration to embrace new, energy-saving technologies that will create jobs and reduce CO2 emissions," said Callahan. "The United States could be the international leader in advanced water heater technology, and improved standards can help foster that transition."

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