Last month, the Air-Conditioning, Heating and Refrigeration Institute (AHRI) filed suit against the Department of Energy following DOE's release of its final rule on energy conservation standards for commercial coolers and freezers. During today's OnPoint, Stephen Yurek, president and CEO of AHRI, discusses the suit and the key challenges he believes his industry faces in meeting the technological requirements of the rule.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Stephen Yurek, president and CEO of the Air-Conditioning, Heating and Refrigeration Institute; Steve, thank you for coming on the show.
Stephen Yurek: Thank you Monica.
Monica Trauzzi: Steve, your organization filed suit against the Department of Energy last month relating to the department's final rule on energy conservation standards for some commercial coolers and freezers. Talk a bit about the background there and why you ultimately decided that the petition for review is necessary.
Stephen Yurek: The Department of Energy, actually since the energy crisis of 1970, has the authority to regulate certain equipment and appliances for energy use, and as part of that, back in 2005, the industry in negotiations with the efficiency advocates requested that commercial refrigeration equipment be covered by the Department of Energy to have them set minimum efficiency standards. So as part of that 2005 energy act, we had efficiency standards put into place, and then that also gave DOE the authority to periodically review those standards and increase them as they saw appropriate meeting the requirements of being economically justified and technically feasible. To this rulemaking process, we were engaged with DOE, and to start off with, you know we're very supportive of this review, providing information to DOE, providing comments through the notice and comments procedure. However, DOE seemed to be on a tact that they were looking at the efficiency of this equipment and trying to drive it up to the highest level they could. Basically what we call max-tech, which is the highest technically feasible operations of this equipment.
Monica Trauzzi: Does the technology exist?
Stephen Yurek: It does not for some of these product categories. You know, in looking at the commercial refrigeration there were over 40 product categories that they were regulating and setting standards for, and for some of those they finally adopted efficiency levels that were above Energy Star levels, which usually Energy Star is at top of the line where the EPA and DOE are trying to push consumers to buy those products, the highest efficient products, and even some of those product category equipment today does not exist that could meet the efficiency levels adopted by DOE, and because of that we asked DOE to set a different level. They didn't in the final rule, and we had no choice but to challenge that final regulation, because it didn't meet the requirements of being technically feasible and economically justified.
Monica Trauzzi: So you've gone the way of the courts, but you've also filed a petition with DOE for reconsideration. Why wasn't that enough? Why did you have to go the court route?
Stephen Yurek: We filed the petition to hopefully correct some errors. However, there is a provision of the act that prevents DOE from once it's published in the Federal Register making a change that would increase the energy use of the equipment. So we didn't know if DOE would find that they didn't have the authority to correct their errors or mistakes to correct their rule, and so we needed to have the courts and the decision there to help us get a justified result.
Monica Trauzzi: So these standards are part of the administration's overarching Climate Action Plan. The Department of Energy points to major savings by consumers resulting from these new standards. Do you agree with the numbers that they've used in terms of energy savings?
Stephen Yurek: We do not. We think that they're high, and they're also based upon this equipment actually being sold and installed in supermarkets and other facilities that use commercial refrigeration equipment, and the question is once that equipment gets so expensive, a lot of times consumers' businesses can't afford that higher efficient equipment, and therefore rather than installing new equipment they repair their current equipment. So there really is no energy savings. So the actual result of these efficiency standards is what we call the unintended consequences when it becomes too high or too expensive, rather than replacing they repair.
Monica Trauzzi: What do you envision as the role that your industry should be playing in helping the administration meet the goals of the Climate Action Plan?
Stephen Yurek: We think that energy efficiency is very important. We think it's part of that plan. It's part of how we can deal with climate change in reducing the energy use of our products used in businesses, but it needs to be at a reasonable level. It needs to be at a level that consumers will buy so that you actually get the energy savings, and then moving it up periodically rather than going one big step to max-tech, taking it in smaller steps so that consumers can one, implement and purchase the equipment, but you actually get the energy savings.
Monica Trauzzi: So which of your member organizations have the most to lose from these new standards?
Stephen Yurek: They all have the most to lose. We represent from the very large billion-dollar companies to very small mom and pops. I think the ones that are really going to hurt are the small manufactures, and even DOE in their rulemaking said that those manufacturers are going to see a two to three times increase in their R&D dollars, and potentially losses of hundreds of millions of dollars in revenue because of these rules.
Monica Trauzzi: All right, we'll keep watching this. Thank you for coming on the show.
Stephen Yurek: Thank you.
Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.
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