Home Energy Efficiency Seen As Big Money Saver


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Improved energy efficiency could save American consumers approximately $1,000 on their annual energy bill, according to estimates in a new report from the Consumer Federation of America. This is because our appliances, electronics, vehicles, and buildings use far more energy than they need to, which leads to more harmful air pollution and unnecessary expense for consumers.

And, as the report documents, the best way to deliver these savings to consumers is through energy efficiency standards – required minimum efficiency standards for vehicles and household products like refrigerators, clothes washers and air conditioners that reduce energy use while maintaining the same high level of service.  Efficiency standards already in place for household appliances alone will save consumers nearly$500 per year by 2020 – but as this report shows, there are tremendous savings still to be captured.

At NRDC, we have long advocated for efficiency standards because they reduce energy waste in our homes and businesses, which means power plants don’t need to generate as much electricity – or the pollution that can come with it. Reducing energy needs with standards is one of the most cost-effective ways to reduce pollution from power plants. Consumer advocates like the Consumer Federation of America are natural allies and partners in this work, because reduced energy waste means lower energy bills for consumers and clean air for all of us. NRDC is proud to have worked for many years with the Consumer Federation, the National Consumer Law Center, Consumers Union and many other consumer groups to push for cost-effective energy efficiency standards nationally and in the states.

energy efficiency

image via Shutterstock

The Consumer Federation’s report explains – and thoroughly documents – how it is that so many billions of dollars in savings could remain untapped by the market in the absence of standards. In other words, if consumers could reduce their bills by $1,000, why aren’t people taking advantage of this windfall?

It is not, as the report explains, that consumers are “irrational” or that they prefer products that consume more energy, as some have suggested. Based on hundreds of empirical studies, the report instead identifies a host of factors that create this “efficiency gap” – the difference between the level of energy efficiency the market achieves on its own and the potential savings.

What are the hurdles?

The hurdles exist on both sides of the market – producers and consumers. For example, manufacturers are frequently hesitant about incorporating energy saving technologies into their products because of uncertainty about consumers’ reaction and about how much those additions will increase the cost of the product. And of course, if manufacturers don’t create the next generation of more efficient products, consumers can’t buy them.

But there are also plenty of factors – too many to catalogue here – that keep consumers from taking full advantage of energy efficiency. A couple struck close to home.  Like the problem of split-incentives. My wife and I rent our home. This means that we pay the electricity bills but our landlord buys the appliances. So, when our landlord decides which refrigerator or water heater to buy, he doesn’t directly factor in the savings in energy costs that a more efficient model will deliver to us. By setting efficiency standards for such products, we can be sure more of these savings are captured, to the benefit of both the environment and consumers.

Standards are a good deal

Energy efficiency standards generally turn out to be an even better deal for consumers than predicted. This is because the costs of complying with energy efficiency regulations are consistently overestimated.

Compiling the results of five different studies, the report shows that, for appliance standards, the projected costs have generally been overestimated by more than 100%, and the cost of vehicle standards by about 50%. In other words, once an efficiency standard is set and our engineers set their mind to the task of making more efficient products, their ingenuity consistently outstrips the estimates made when setting standards. This means that the new products end up costing less and saving consumers more than expected. And as our colleagues at ACEEE have found, more efficient products performed just as well as the old ones — and often included additional features.

The Department of Energy is now working to carry out the president’s objective of reaching 3 billion tons of carbon reductions from energy efficiency and federal building energy standards as part of his strategy to combat climate change. To do this, the Department will have to set new energy efficiency standards for a suite of additional products like furnace fans, lamps, and walk-in coolers.

Meanwhile, the California Energy Commission is expected to announce soon whether it will propose new or updated energy-savings standards for 15 products in the categories of consumer electronics, lighting, water appliances, and “miscellaneous” (such as commercial clothes dryers). In California, alone, making all 15 products more energy efficient could save a whopping $1.2 billion on Californians’ annual utility bills by slashing enough electricity to power every household in Los Angeles50 billion gallons of water; and 60 million therms of natural gas.   

As the Consumer Federation rightly points out, these efforts to set and strengthen energy efficiency standards gives us all much to cheer about.

nrdcEditor’s Note: EarthTechling is proud to repost this article courtesy of Natural Resources Defense Council. Author credit goes to Benjamin Longstreth.

NRDC is the nation's most effective environmental action group, combining the grassroots power of 1.3 million members and online activists with the courtroom clout and expertise of more than 350 lawyers, scientists and other professionals.

    • No_More_Time

      I think it depends on the person’s situation. My wife and I bought our home brand new in 2006 and purchased new appliances for the home. At the peak our electricity bill was $270 for one month during the summer because of A/C use. Gas is used to heat our home so our gas bill in the winter goes up. Once I figured out the settings to be comfortable or a little warm I was able to get our bills between $175-$100 during the summer months. Our gas bill in the winter months would be anywhere from $50-$150 a month. After installing a few solar screens on windows on the second story that we don’t have easy access too and installing a whole house fan I’ve gotten the summer bill to be anywhere from $75-$125 a month and the house is more comfortable. At $125 dollars a month for electricity ,say for 4 months, I cannot see the benefit of replacing any of our appliances that are still working in order to save maybe $5-$25 a month. Now if an appliance stop working I would more than likely purchase a high efficient appliance to replace it.

    • Olivia Mak

      Home energy efficiency is definitely a huge money saver. Fortunately for us, most homes are already built with all the energy saving features we love. I own a manufactured home in Tennessee, and the builders equipped my home with all the money-saving features. Needless to say, I have noticed a difference when it comes time to pay my energy bills.

    • andrewmichler

      …and you grab a photo stock image of the worst performing wall assembly possible. Metal studs reduce insulation r-value by 50% due to thermal conductivity. Fiberglass batt very difficult to properly install for typical walls, especially C type metal studs. This is why our buildings are so poor.

      Editors: please take time to vet your articles when talking about building science. It does a lot of damage when not done properly.