CO2 Policy and Win-Wins
Margaret Taylor
Stanford University – Precourt Energy Efficiency Center
Lawrence Berkeley National Laboratory – Energy Technologies Area
Reducing Inequality in a Sustainable World Conference
Thursday, 03/05/15
Plenary Session 2: Policies to Promote Sustainability In a More Equitable World
Roadmap
• Framing the issues
– Carbon emissions, energy, and poverty
• Policy and prices
• A stylized fact
– Regarding regulation, government cost over-estimates are
common
– Certainly true of “first best” policy instruments
• Retrospective review, innovation, and appliance standards
– A deep dive on a prominent “complementary policy instrument”
– Prices and quality are better-than-expected
• Discussion
• Acknowledgements
Framing the Issues
The Economy, Energy, and Carbon
Reflects the fact that it has historically tended to be cheaper – even
productivity-enhancing – to use less energy than to decarbonize energy
“First best” policy instruments that price carbon because of the CO2
externality should help the energy system find and pick the cheapest,
low-hanging fruit (i.e., cap-and-trade, carbon tax)
“Complementary” policy instruments target
energy in our economic system (i.e. efficiency
standards) or carbon in our energy system (i.e.
renewable portfolio standards)
Energy in our
economic system
Carbon in our
energy system
U.S. Poverty
Poverty and Energy Use
Average Household End-Use Expenditures ($) in the U.S. 2009
900
800
700
600
500
Total U.S.
Below 100% of Poverty Line
400
300
200
100
0
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
Source: U.S.DOE Residential Energy Consumption Survey (RECS) 2009
Poverty and Energy Use
Average Household End-Use Expenditures ($) in the U.S. 2009
900
800
700
600
500
Total U.S.
Below 100% of Poverty Line
400
300
200
100
0
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
Source: U.S.DOE Residential Energy Consumption Survey (RECS) 2009
Poverty and Energy Use
Average Household End-Use Expenditures ($) in the U.S. 2009
900
800
700
600
500
Total U.S.
Below 100% of Poverty Line
400
300
200
100
0
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
Source: U.S.DOE Residential Energy Consumption Survey (RECS) 2009
Poverty and Energy Use
Average Household End-Use Expenditures ($) in the U.S. 2009
900
800
700
600
500
Total U.S.
Below 100% of Poverty Line
400
300
200
100
0
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
Source: U.S.DOE Residential Energy Consumption Survey (RECS) 2009
Poverty and Energy Use
Average Household End-Use Expenditures ($) in the U.S. 2009
900
800
700
600
500
Total U.S.
Below 100% of Poverty Line
400
300
200
100
0
Space Heating Water Heating Air Conditioning Refrigerators Other end uses
• High energy prices are hard on the poor
Source: U.S.DOE
Residential Energy
Consumption
Survey
(RECS) 2009
• An important
consideration
in energy
utility
regulation
Prices and CO2 Policy
• Concern about what CO2 policy options will do
to prices. Specifically:
– Energy (an operating expense)
– Other prices (if more efficient things have higher
prices)
A Stylized Fact
RIA: A Tool to Analyze Policy Tradeoffs
• Prospective regulatory impact assessment (RIA) helps policymakers weigh societal goals against other public priorities
– Required by a growing number of nations, including the U.S.,
before finalizing any government regulation
A “Stylized Fact”: Significant Cost (Over-)
Estimation Errors are Common in RIAs
About three-quarters of the 60+ U.S. RIA cost estimates
that have been retrospectively reviewed over the last 40
years have proven to be significantly inaccurate (see
Harrington 2006, Simpson 2011)
– The standard benchmark used since Harrington,
Morgenstern, Nelson (2000) to define significant inaccuracy
is true values falling outside the range of +/- 25% of the ex
ante estimate.
– Most inaccurate RIA projections are over-estimates of the
costs of regulation.
• Researchers have not been able to reject the hypothesis that this
robust finding is evidence of systematic bias (see Simpson 2011)
14
A “Stylized Fact”: Significant Cost (Over-)
Estimation Errors are Common in RIAs
About three-quarters of the 60+ U.S. RIA cost estimates
that have been retrospectively reviewed over the last 40
years have proven to be significantly inaccurate (see
Harrington 2006, Simpson 2011)
– The standard benchmark used since Harrington,
Morgenstern, Nelson (2000) to define significant inaccuracy
is true values falling outside the range of +/- 25% of the ex
ante estimate.
– Most inaccurate RIA projections are over-estimates of the
costs of regulation.
• Researchers have not been able to reject the hypothesis that this
robust finding is evidence of systematic bias (see Simpson 2011)
15
Expected vs. Actual: Title IV Prices ($/Ton SO2)
$1,800
Phase I (Trading Begins)
Phase II
$1,600
$1,400
$1,200
$1,000
$800
$600
CTP
$400
$200
Source: Taylor (2012)
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
$0
1993
1992
1991
1990
Government
Expected Prices, before CTP
Allowance Prices
Expected vs. Actual: OTC-NBP Prices ($/Ton NOX)
$9,000
OTC Phase II
(Trading Starts)
$8,000
NBP
$7,000
$6,000
$5,000
$4,000
$3,000
CTP
$2,000
$1,000
Source: Taylor (2012)
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
$0
1997
1996
1995
Government
Expected Prices, before CTP
Allowance Prices
Compliance options used – Evidence of
technological change in the marketplace
SO2
1. Switched to lower sulfur coals (1970s strategy)
2. Balanced with post-combustion control
•
•
Either increased utilization of existing systems or
A smaller-than-expected number of new installations
NOx
1.
2.
3.
Utilized existing zero-emitting nuclear power plants and lower
NOx natural gas-fired power plants more extensively
Purchased off-peak power from outside the region
Benefited from better-than-expected performance from existing
control technologies
Source: Taylor (2012)
Retrospective review, innovation,
and appliance standards
Authors (alphabetical):
C. Anna Spurlock
Margaret Taylor
Hung-Chia Yang
What about Complementary
Instruments?
• Most prominent national complementary instrument is
minimum efficiency performance standards (MEPs) for
appliances and similar energy-using technologies
– Origins in the states after the Northeast blackout in the
1960s
• California particularly important pioneer in the 1970s
– Federal attention begins in the 1970s with a focus on
consumer pocketbooks
• First federal standards in the late 1980s/early 1990s
• Particularly prominent in the Obama Administration as part of its
policy efforts on CO2
– Relevant internationally
What about Complementary
Instruments?
• Most prominent national complementary instrument is
minimum efficiency performance standards (MEPs) for
appliances and similar energy-using technologies
– Origins in the states after the Northeast blackout in the
1960s
• California particularly important pioneer in the 1970s
– Federal attention begins in the 1970s with a focus on
consumer pocketbooks
• First federal standards in the late 1980s/early 1990s
• Particularly prominent in the Obama Administration as part of its
policy efforts on CO2
– Relevant internationally
Market Share of Products
Policy and the Assumed Distribution of
Appliance Price and Efficiency on the Market
Cuts out
Highlights
MEPs
Energy Star
Product efficiency level
Product price
Product features
What we do
Overview of Our Study
• Review expectations versus outcomes for various parts of the
RIAs underlying MEPs rulemakings for five products:
–
–
–
–
–
Room AC  Reviewed price projections, energy use
Dishwashers  Reviewed price projections, energy use
Refrigerators  Reviewed price projections, energy use
Dryers  Reviewed price projections
Clothes Washers  Reviewed price projections, energy use, projections of
market share by efficiency level
• Investigate whether there are quality tradeoffs or win-wins in
meeting the MEPs
23
Data
Monthly panel of
model-specific
prices and market
shares
NPD
Consumer Reports –
Rating
FTC Energy
Data
1991, 1993
2003-2008,
2010-2012
1983, 1987, 1990, 1993,
2003-2011 1995, 1997-1998, 20002002, 2004-2012
1987, 1990, 1993, 1995,
1997, 1999, 2000-2002,
2004-2012
2003-2012
1987-1989, 1991-1992,
Refrigerator 2003-2011 1994, 1996, 1998-2002,
2004-2012
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
2003-2012
Dryer
1989, 1992-1993, 1995,
2003-2011 1998-2002, 2004-2008,
2010-2012
1988, 1992-1993, 1995,
1998-2002, 2005-2008,
2010-2012
Clothes
Washer
2003-2011
Room AC
2003-2011
Dishwasher
1990-2002, 2004-2005,
2010-2012
Consumer Reports –
Brand Reliability
1989, 1991-1993, 19951989, 1991-1993, 19951997, 1999-2002, 20041997, 1999-2002, 2004-2012
2008, 2011
2003-2012
CEC
1993-2013
User
ENERGY
Manual
STAR
Data
2001-2013
P
Data
Monthly panel of
model-specific
prices and market
shares
NPD
Quality and
reliability metrics
Consumer Reports –
Rating
FTC Energy
Data
1991, 1993
2003-2008,
2010-2012
1983, 1987, 1990, 1993,
2003-2011 1995, 1997-1998, 20002002, 2004-2012
1987, 1990, 1993, 1995,
1997, 1999, 2000-2002,
2004-2012
2003-2012
1987-1989, 1991-1992,
Refrigerator 2003-2011 1994, 1996, 1998-2002,
2004-2012
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
2003-2012
Dryer
1989, 1992-1993, 1995,
2003-2011 1998-2002, 2004-2008,
2010-2012
1988, 1992-1993, 1995,
1998-2002, 2005-2008,
2010-2012
Clothes
Washer
2003-2011
Room AC
2003-2011
Dishwasher
1990-2002, 2004-2005,
2010-2012
Consumer Reports –
Brand Reliability
1989, 1991-1993, 19951989, 1991-1993, 19951997, 1999-2002, 20041997, 1999-2002, 2004-2012
2008, 2011
2003-2012
CEC
1993-2013
User
ENERGY
Manual
STAR
Data
2001-2013
P
Data
Monthly panel of
model-specific
prices and market
shares
NPD
Quality and
reliability metrics
Consumer Reports –
Rating
FTC Energy
Data
1991, 1993
2003-2008,
2010-2012
1983, 1987, 1990, 1993,
2003-2011 1995, 1997-1998, 20002002, 2004-2012
1987, 1990, 1993, 1995,
1997, 1999, 2000-2002,
2004-2012
2003-2012
1987-1989, 1991-1992,
Refrigerator 2003-2011 1994, 1996, 1998-2002,
2004-2012
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
2003-2012
Dryer
1989, 1992-1993, 1995,
2003-2011 1998-2002, 2004-2008,
2010-2012
1988, 1992-1993, 1995,
1998-2002, 2005-2008,
2010-2012
Clothes
Washer
2003-2011
Room AC
2003-2011
Dishwasher
1990-2002, 2004-2005,
2010-2012
Consumer Reports –
Brand Reliability
Energy use data
1989, 1991-1993, 19951989, 1991-1993, 19951997, 1999-2002, 20041997, 1999-2002, 2004-2012
2008, 2011
2003-2012
CEC
1993-2013
User
ENERGY
Manual
STAR
Data
2001-2013
P
Data
Monthly panel of
model-specific
prices and market
shares
NPD
Quality and
reliability metrics
Consumer Reports –
Rating
FTC Energy
Data
1991, 1993
2003-2008,
2010-2012
1983, 1987, 1990, 1993,
2003-2011 1995, 1997-1998, 20002002, 2004-2012
1987, 1990, 1993, 1995,
1997, 1999, 2000-2002,
2004-2012
2003-2012
1987-1989, 1991-1992,
Refrigerator 2003-2011 1994, 1996, 1998-2002,
2004-2012
1987-1989, 1991-1992,
1994, 1996, 1998-2002,
2004-2012
2003-2012
Dryer
1989, 1992-1993, 1995,
2003-2011 1998-2002, 2004-2008,
2010-2012
1988, 1992-1993, 1995,
1998-2002, 2005-2008,
2010-2012
Clothes
Washer
2003-2011
Room AC
2003-2011
Dishwasher
1990-2002, 2004-2005,
2010-2012
Consumer Reports –
Brand Reliability
Energy use data
1989, 1991-1993, 19951989, 1991-1993, 19951997, 1999-2002, 20041997, 1999-2002, 2004-2012
2008, 2011
2003-2012
CEC
1993-2013
Detailed product
feature data
User
ENERGY
Manual
STAR
Data
2001-2013
P
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
28
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
29
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
30
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
31
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
32
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA
3rd NAECA
2001
2003
3rd NAECA Tier 1
2004
2005
3rd NAECA Tier 2
2007
2008
2009
1st EISA
2010
1st EISA
2011
2012
Joint Petition
2013
2014
3rd NAECA/Joint
Petition
1st EISA
33
Federal Policy Events
Year
RAC
REF
DW
CW
DR
1st NAECA
1st NAECA
1st NAECA
2nd NAECA
2nd NAECA
2nd NAECA
*
*
1987
1988
1989
1990
1st NAECA
1st NAECA
1991
2nd NAECA
1993
1994
1997
2000
2nd NAECA*
3rd NAECA*
2001
2003
*
*
2004
NPD
Data
2005
*
*
2007
2009
*
*
1st EISA
*
*
2012
2014
3rd NAECA Tier 2*
1st EISA
*
2011
2013
*
*
2008
2010
3rd NAECA Tier 1*
*
3rd NAECA/Joint
Petition
Joint Petition
1st EISA*
*
*
*
34
Organization of Findings
• Outcomes vs. RIA expectations re:
1. Product price
2. Product energy use
3. Product market share
• Outcomes vs. concerns re:
4. Product quality
a. At the time of purchase
b. After the purchase
• 5. Technological change in the marketplace
1. Outcomes vs. RIA expectations re: PRODUCT PRICE
• For all five products, sales-weighted average prices
were lower than projected during our study period
• Held for products as a whole
• Held for products as broken down by product class
• Held for products as broken down by efficiency levels
36
2. Outcomes vs. RIA expectations re: ENERGY USE
Room AC Energy Use
Dishwasher Energy Use
1
.5
0
-.5
.5
0
-.5
Basic finding: In all five cases, energy efficiency
of products was better than
the standard
Sales-weighted average of diff
95% CI
Expected energy use:
ENERGY STAR
1
m
1
20
13
m
1
20
12
m
1
20
11
m
1
20
10
m
1
09
m
-.5
95% CI
1
13
m
1
m
20
12
m
1
20
11
m
1
20
10
m
1
20
09
m
1
20
1
m
08
07
20
1
m
06
20
1
m
05
20
04
m
1
m
03
20
1
20
time
20
13
m
1
12
m
1
20
m
11
20
time
ENERGY STAR
20
0
-1
1
20
10
m
1
09
m
1
m
08
20
1
m
07
20
1
m
06
20
1
m
05
20
1
m
04
20
20
1
m
03
20
ENERGY STAR
.5
-1
Avg. energy percent diff (sales weighted)
1
Clothes Washer Energy Use
1
-.5
m
Test Procedure
20
0
20
MEPS: Congress
b/t MEPs and actual energy eff:
energy percent difference
.5
08
1
95% CI
ENERGY STAR
1
(2007 std - observed)/(2007 std)
MEPs
20
Avg. energy percent diff (sales weighted)
Refrigerator Energy Use
1
07
m
1
time
Avg. energy percent diff (sales weighted)
06
m
20
05
m
20
04
m
20
03
20
1
1
13
m
time
20
20
12
m
1
1
11
m
20
1
10
m
20
1
09
m
20
1
08
m
20
1
20
07
m
1
06
m
20
1
05
m
20
1
04
m
20
03
m
20
1
-1
1
-1
energy percent difference
(1994 std - observed)/(1994 std)
1
Avg. energy percent diff (sales weighted)
95% CI
ENERGY STAR
MEPS: DOE
MEPS: Congress
37
3. Outcomes vs. RIA expectations re:
MARKET SHARE
Clothes Washer Retrospective
Market Share Comparison
Below 2004 Minimum Standard
100
75
50
25
0
Least Efficient
Only detailed expectation information
on market share for CW
market share (percent)
Below 2007 Minimum Standard
100
75
50
25
0
Categorized CW Models by 4 Efficiency Levels
Expected market share:
Meets or Exceeds 2007 Standard
100
75
50
25
0
Observed market share:
More efficient than 2007 standard by 30% or more
Most Efficient
Very high-efficient products – beyond
compliance products – had higher market
share than expected
ENERGY STAR
20
03
m
1
20
04
m
1
20
05
m
1
20
06
m
1
20
07
m
1
20
08
m
1
20
09
m
1
20
10
m
1
20
11
m
1
20
12
m
1
MEPs
100
75
50
25
0
time
Projected Market Share
Observed Marker Share
ENERGY STAR
MEPS: DOE
38
4a. Outcomes vs. concerns re:
QUALITY AT TIME OF PURCHASE
Metric: Consumer Reports variables that span all
relevant MEPs through 2012
Basic finding: All five products show
improvements in quality attributes consumers
care about at the time the MEPs come into effect.
39
4a: Clothes Washers
Clothes Washer Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Front-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
Top-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
Only reporting results if ***
Consumer - Consumer +
No change
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
– Cycle Times
– ~ Capacity
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
40
4a: Clothes Washers
Clothes Washer Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Front-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
Top-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
– Cycle Times
– ~ Capacity
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
41
4a: Clothes Washers
Clothes Washer Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Front-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
Top-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
– Cycle Times
– ~ Capacity
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
42
4a: Clothes Washers
Clothes Washer Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Front-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
Top-Loader
Capacity Score
Cycle Time (mins)
Energy Efficiency Score
Overall Score
Washing Performance
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
1994
2004
2007
2011
– Cycle Times
– ~ Capacity
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
43
4a: Dishwashers
Dishwasher Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
1994
Cycle Time (min.)
2010
1994
Energy Efficiency Score
2010
1994
Overall Score
2010
– Cycle Times
1994
Washing Performance
2010
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
44
4a: Room ACs
Small Capacity
<7K btu/hr
Med Capacity
7-9K btu/hr
Large Capacity
>9K btu/hr
Room AC Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Comfort Score
2000
EE Ratio
2000
Overall Score
2000
Comfort Score
2000
EE Ratio
2000
Overall Score
2000
Comfort Score
2000
EE Ratio
2000
Overall Score
2000
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
– None
-.5
Worse
0
Percent Change in Score
.5
Better
1
1.5
45
Electric Dryer
Dryer Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Gas Dryer
Gas Dryer
4a: Dryers
Capacity Score
1994
Drying Performance
1994
Overall Score
1994
Capacity Score
1994
Drying Performance
1994
Overall Score
1994
• Either no
significant
change or
steady
increase in
ratings.
• Exceptions:
– None
-.5
Worse
0
Percent Change in Score
.5
Better
1
1.5
46
• Either no
significant
change or steady
increase in
ratings.
• Exceptions:
Bottom Freezer
Refrigerator Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Built-In
Built-In
4a: Refrigerators (1)
Capacity (cu.ft.)
1990
1993
2001
Energy Cost (2013$/yr)
1990
1993
2001
Energy Efficiency Score
1990
1993
2001
Overall Score
1990
1993
2001
Temperature Performance
1990
1993
2001
Capacity (cu.ft.)
1990
1993
2001
Energy Cost (2013$/yr)
1990
1993
2001
Energy Efficiency Score
1990
1993
2001
Overall Score
1990
1993
2001
Temperature Performance
1990
1993
2001
– Bottom-Freezer
Energy Costs in
2001 (they got
bigger)
– Built-in Capacity
in 2001 (they
had maxed out
in preceding
years)
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
47
4a: Refrigerators (2)
• Either no
significant
change or steady
increase in
ratings.
• Exceptions:
Top Mount
Side-by-Side w/TTD
Refrigerator Consumer Reports Scores
Percent Change in CR Ratings at Each MEPS Effective Date
Capacity (cu.ft.)
1990
1993
2001
Energy Cost (2013$/yr)
1990
1993
2001
Energy Efficiency Score
1990
1993
2001
Overall Score
1990
1993
2001
Temperature Performance
1990
1993
2001
Capacity (cu.ft.)
1990
1993
2001
Energy Cost (2013$/yr)
1990
1993
2001
Energy Efficiency Score
1990
1993
2001
Overall Score
1990
1993
2001
Temperature Performance
1990
1993
2001
– Side-by-Side
Capacity in
1990 (Standard
not based on
AV)
– Top-Mount in
2001
(manufacturers
were pushing
side-by-side and
bottom
mounts)
-.5
Worse
0
Percent Change in Score
.5
1
1.5
Better
48
4b. Outcomes vs. concerns re:
QUALITY AFTER THE PURCHASE
0
10 10 10 202020
30
30
30
40
For all five products, the significant repair rate
generally declines over our study period,
according to surveys of CR readers
0
Average
Average
Average
Repair
Repair
Repair
Rate
Rate
Rate
(percent)
(percent)
(percent)
Consumer Reports Repair Rate
Clothes
Refrigerator
Dishwasher
Dryer
Washer
1985
1985
1990
1990
1990
1995
1990 1995 1995
1995
Top-mount
2000
2005
2010
Year2000
2000
2005
2005
2010
2010
Year
2000
2005
2010
Top-mount with TTD ice
Year
Side-by-side
Dishwasher
Front Loaders
Side-by-side
ENERGY
Top Loaders
with
STAR
TTD ice
Bottom-mount
Min
Electric
ENERGY
Std:Dryer
DOE
STAR
ENERGY
Gas
MinMin
Dryer
Std:
STAR
Std:
Congress
DOE
MinTest
Min
Std:Procedure
Std:
DOECongress
DOE
MinMin
Std:Std:
Congress
Congress
49
5. Technological Change in the Marketplace Refrigerators
Market Shares by Product Type
Refrigerators
Sales-Weighted Within-Model Price Trends
Refrigerators
Bottom-mount
Compact
Side-by-side
Side-by-side with TTD ice
Top-mount
Top-mount with TTD ice
1
500
.5
Market Share
0
-500
-1000
0
1
.5
1
Top-mount [n=1132]
Bottom-mount [n=1343]
0
20
0
20 3m
0 1
20 4m
0 1
20 5m
0 1
20 6m
0 1
20 7m
0 1
20 8m
0 1
20 9m
1 1
20 0m
1 1
20 1m
12 1
m
20 1
03
20 m
0 1
20 4m
0 1
20 5m
0 1
20 6m
0 1
20 7m
0 1
20 8m
0 1
20 9m
1 1
20 0m
1 1
20 1m
12 1
m
20 1
03
20 m
0 1
20 4m
0 1
20 5m
0 1
20 6m
0 1
20 7m
0 1
20 8m
0 1
20 9m
1 1
20 0m
1 1
20 1m
12 1
m
1
12
m
1
20
11
m
1
20
20
10
m
1
09
m
1
Compact [n=327]
Side-by-side with TTD ice [n=2141]
ENERGY STAR
20
20
08
m
1
07
m
1
20
06
m
1
20
20
05
m
1
m
04
20
20
03
m
1
-1500
Time
ENERGY STAR
50
5. Technological Change in the Marketplace
- Clothes Washers
Never count a
dominant design out!
Sales-Weighted Within-Model Price Trends
Clothes Washers
Market Shares by Product Type
Clothes Washers
500
1
.8
Market Share
0
-500
-1000
.6
.4
.2
Price trend of front-loaders started trending
downward significantly faster after the 2004
standard effective date (significant relative to
a counterfactual)
1
12
m
1
20
20
11
m
1
10
m
1
20
20
09
m
1
08
m
1
20
07
m
1
20
20
06
m
1
m
20
05
m
04
20
03
m
1
Front-loaders [n=486]
Min Std: NAECA
20
1
20
12
m
1
20
11
m
1
10
m
1
20
09
m
1
20
08
m
1
20
07
m
1
20
20
06
m
1
05
m
1
20
04
m
1
20
m
03
20
Top-loaders [n=626]
ENERGY STAR
Min Std: EISA
1
0
-1500
Time
Top-loaders
ENERGY STAR
MEPS: EISA
Front-loaders
MEPS: NAECA
51
5. Incremental Technical Change Adds Up
Sanitization Features
Market Share of Front-Load Clothes Washers
More Core Features
Market Share of Top-Load Clothes Washers
1
.8
.8
Market Share
1
.6
.4
.6
.4
.2
.2
0
0
20
m
03
1
4m
0
20
1
05
m
1
20
m
06
20
1
m
07
20
1
m
08
20
Time
1
9m
0
20
1
10
20
m
1
m
1
11
20
12
m
1
3m
0
20
1
4m
0
20
1
5m
0
20
1
m
1
06
20
20
m
07
20
1
m
08
20
Time
1
m
09
20
1
m
10
20
1
m
11
20
1
m
12
20
Advanced clean action
Internal heater
Advanced motor
NSF certification
High heat
Silver ion
Balance adjustment
Reduced noise
Smooth suspension
Steam
Washer cleaning cycle
ENERGY STAR
Other dispenser features
ENERGY STAR
MEPS: DOE
MEPS: DOE
MEPS: Congress
MEPS: Congress
52
1
Discussion
Some Good News
• MEPs Win-Wins
– Good for energy expenditures
– Better-than-expected for consumer up-front costs
(short-run), quality (appliances have long lifetimes)
• Broader story of CO2 policy instruments
– Stylized fact re: RIA cost over-estimates implies a lot
more win-wins than we usually acknowledge
– We don’t have a strong knowledge base regarding
what those win-wins are and how they came about
More research is needed re: policy and
technical change
Policy
Technical Change
Sets the degrees of freedom policy-makers have to operate with
55
More degrees of freedom for Policy-Makers
could make an Important Difference
Acknowledgements
Research Team - LBNL
LBNL Staff:
Dr. Larry Dale
K. Sydny Fujita
Dr. Anna Spurlock
Dr. Margaret Taylor
Hung-Chia Yang
Dr. Di Zeng
Collaborators:
Dr. Michael Carnall
Economics Consultant
Dr. Daniel Hagen
Dr. Sébastien Houde
Dr. Michael Roberts
Dr. Arlan Brucal
Kim Hyun-gyu
Professor
Economics, Business Admin
Western Washington University
Assistant Professor
Agricultural and Resource Econ
University of Maryland
Associate Professor
Economics
University of Hawaii
Economics
University of Hawaii
Student
Economics
University of Hawaii
http://ees.lbl.gov/economics
58
Research Team - Stanford
PEEC Directors and Researchers:
James L. Sweeney
Director
John Weyant
Deputy Director
Carrie Armel
Margaret Taylor
Dian Grueneich
Martin Fischer
Tobias Schmidt
Visiting Professor
ETH Zurich
Andreas Schäfer
Visiting Professor
University College London
Post-Doctoral Scholars and Visitors:
No
picture
available
Diana Ginnebaugh
Postdoctoral Scholar
Micah Fuller
Postdoctoral Scholar
Regina Ruby Lee Clewlow
Postdoctoral Scholar
Wei-Shiuen Ng
Postdoctoral Scholar
http://peec.stanford.edu/index.php
59
Back-Up
Market Share of Products
A Different Distribution of Appliance
Price and Efficiency on the Market
Cuts out
MEPs
Product efficiency level
Product price
Product features
Expected vs. Actual: NOX RECLAIM Prices ($/Ton)
$25,000
$20,000
$15,000
$10,000
CTP
$5,000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
$0
Ex Ante Expected Prices
Allowance Prices
Expected vs. Actual: NOX RECLAIM Prices ($/Ton)
Major
program
adjustment
after this
$120,000
$100,000
$80,000
$60,000
$40,000
CTP
$20,000
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
$0
Ex Ante Expected Prices
Allowance Prices
EU ETS Prices
PRICE DEVELOPMENT FOR CO2 ALLOWANCES (EUAs)
Phase 3
EUA price
Oct, 2014:
6€
Source: European Environment Agency 2011
Expected vs. Actual: AB32 Auction Prices
“Before
the program
began, some
analysts
predicted
allowance
prices would
soar to $70
or more.”
Source: EDF “Carbon Market California” 2014
RGGI Auction Clearing Price
Major
program
adjustment
Source: CRS Report Nov 2014
RGGI Auction Clearing Price
Source: CRS Report Nov 2014
German Feed-in-Tariffs
Policy makers have to reflect the dynamics
of innovation in the instrument design
Source: Hoppmann, J., et al., “Compulsive policy-making—The evolution of
the German feed-in tariff system for solar photovoltaic power”. Research
Policy (2014), http://dx.doi.org/10.1016/j.respol.2014.01.014
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
(b) Pre-combustion SO2 control
(c) Post-combustion NOx control
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
Trading
80
70
60
50
40
(c) Post-combustion NOx control
2003
Phase II
2001
1999
1997
1989
1987
1985
1983
1981
1979
1977
1975
0
1995
10
1993
20
Phase I
1990 CAA
30
1991
Number of Patents
90
(b) Pre-combustion SO2 control
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
Trading
80
70
60
50
40
(c) Post-combustion NOx control
2003
Phase II
2001
1999
1997
1989
1987
1985
1983
1981
1979
1977
1975
0
1995
10
1993
20
Phase I
1990 CAA
30
1991
Number of Patents
90
(b) Pre-combustion SO2 control
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
Trading
80
70
60
50
40
(c) Post-combustion NOx control
2003
Phase II
2001
1999
1997
1989
1987
1985
1983
1981
1979
1977
1975
0
1995
10
1993
20
Phase I
1990 CAA
30
1991
Number of Patents
90
(b) Pre-combustion SO2 control
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
Trading
25
80
70
20
60
50
15
(c) Post-combustion NOx control
Phase I
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1989
1987
1985
1983
1981
1979
1977
1975
0
1993
10
Phase I
1990 CAA
20
1990 CAA
10
30
Phase II
40
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
Trading
25
80
70
20
60
50
15
(c) Post-combustion NOx control
Phase I
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1989
1987
1985
1983
1981
1979
1977
1975
0
1993
10
Phase I
1990 CAA
20
1990 CAA
10
30
Phase II
40
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
Trading
25
80
70
20
60
50
15
(c) Post-combustion NOx control
Phase I
(d) NOx combustion modification
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1989
1987
1985
1983
1981
1979
1977
1975
0
1993
10
Phase I
1990 CAA
20
1990 CAA
10
30
Phase II
40
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
70
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
Trading
80
70
NOx SIP Call
NBP
2003
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
0
1997
10
1999
OTC Phase I (RACT)
20
1995
30
OTC Phase II
60
40
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
(d) NOx combustion modification
90
50
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
Number of Patents
Trading
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
70
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
Trading
80
70
NOx SIP Call
NBP
2003
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
0
1997
10
1999
OTC Phase I (RACT)
20
1995
30
OTC Phase II
60
40
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
(d) NOx combustion modification
90
50
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
Number of Patents
Trading
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
Traditional Regulation
Trading
Preparation
70
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
Trading
80
70
NOx SIP Call
NBP
2003
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
0
1997
10
1999
OTC Phase I (RACT)
20
1995
30
OTC Phase II
60
40
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
1999
1997
(d) NOx combustion modification
90
50
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
Number of Patents
Trading
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
70
Trading
Preparation
Trading
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
(d) NOx combustion modification
70
Trading
Traditional Regulation
Trading
Preparation
60
90
80
Trading
50
70
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
NBP
OTC Phase II
NOx SIP Call
1999
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
NBP
10
1997
OTC Phase II
20
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
NOx SIP Call
10
1999
20
1997
30
1995
40
1995
30
OTC Phase I (RACT)
50
OTC Phase I (RACT)
40
60
1975
Number of Patents
Traditional Regulation
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
70
Trading
Preparation
Trading
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
(d) NOx combustion modification
70
Trading
Traditional Regulation
Trading
Preparation
60
90
80
Trading
50
70
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
NBP
OTC Phase II
NOx SIP Call
1999
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
NBP
10
1997
OTC Phase II
20
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
NOx SIP Call
10
1999
20
1997
30
1995
40
1995
30
OTC Phase I (RACT)
50
OTC Phase I (RACT)
40
60
1975
Number of Patents
Traditional Regulation
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Commercial-oriented inventive activity
(a) Post-combustion SO2 control
100
Traditional Regulation
Trading
Preparation
30
Trading
70
Trading
Preparation
Trading
20
60
50
15
(c) Post-combustion NOx control
110
Traditional Regulation
Trading
Preparation
100
Phase I
2003
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
5
1991
Phase II
2001
1999
1997
1995
1993
1989
1987
1985
1983
1981
1979
1977
1975
0
Phase I
1990 CAA
10
1990 CAA
10
30
Phase II
40
20
(d) NOx combustion modification
70
Trading
Traditional Regulation
Trading
Preparation
60
90
80
Trading
50
70
Traditional environmental regulation
Trading preparation (after passage, before actual prices)
Trading
2003
2001
NBP
OTC Phase II
NOx SIP Call
1999
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
1975
2003
NBP
10
1997
OTC Phase II
20
2001
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
NOx SIP Call
10
1999
20
1997
30
1995
40
1995
30
OTC Phase I (RACT)
50
OTC Phase I (RACT)
40
60
1975
Number of Patents
Traditional Regulation
25
80
1991
Number of Patents
90
(b) Pre-combustion SO2 control
Some relevant literature
Laffont, Jean-Jacques and Tirole, Jean. Pollution permits
and environmental innovation. Journal of Public
Economics 62 (1996) 127-141.
Taylor, Margaret. Innovation under cap-and-trade programs.
Proceedings of the National Academy of Sciences (2012).
People have More Energy-Using Things
in their Homes
Space Central Water
Heating A/C Heating
Major Appliances
(Durable Goods)
Small Computers,
Apps Electronics
These Things are a Rising Share of
Household Energy Use
Those in Poverty use Appliances Too
100%
90%
80%
70%
60%
50%
Total U.S.
40%
Below Poverty Line
30%
20%
10%
0%
Use >= 1 Use a clothes Use a clothes
Use a
Use room A/C Use central
refrigerator
washer at dryer at home dishwasher
units
A/C
home
People have More Energy-Using Things
in their Homes
Source:
U.S. Poverty
These Things are a Rising Share of
Household Energy Use
Poverty and Refrigerators
100%
90%
80%
70%
60%
Total U.S.
50%
Below Poverty Line
40%
30%
20%
10%
0%
Use >= 1 refrigerator
Use 2 or More Refrigerators
Overall vs. Electricity Expenditures by
Income Group
$0
$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000
$70,000 and more
$50,000 to $69,999
$40,000 to $49,999
$30,000 to $39,999
$20,000 to $29,999
Electricity expenditures
Average annual expenditures
$15,000 to 19,999
$10,000 to $14,999
$5,000 to $9,999
Less than $5,000
All consumer Units
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Income before taxes: Average annual expenditures and characteristics
Consumer Expenditure Survey, 2009
3,500
3,000
2,500
2,000
1,500
Below 100% of Poverty Line
>=$120,000 annual
1,000
500
0
Total
Air Conditioning
Refrigerators
Other end uses: includes,
e.g., cooking appliances,
clothes washers, dryers,
dishwashers, televisions,
computers, small electronic
devices, pools, hot tubs, and
lighting
Average Energy Expenditures (dollars per household using the end use)