Regressive Furnace Fans

department of energy

by Sofie E. Miller, Senior Policy Analyst

April 16, 2014

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In October, the U.S. Department of Energy issued a proposed rule setting energy efficiency standards for residential furnace fans. The rule is intended to save consumers money and reduce greenhouse gas emissions. However, the DOE’s use of low discount rates when estimating the benefits of the fans results in a proposed rule that would benefit well-off Americans but harm low- and medianincome households. That raises the question of whether the rule is economically justified and would improve social welfare, as required by law.

The DOE’s proposal establishes energy efficiency standards for 10 separate product classes of furnace fans. It would save a total of 4.58 “quads” of energy (4.58 quadrillion BTUs) over the first 30 years of implementation (2019–2048), according to the government analysis. The primary benefit of that energy conservation is the savings in energy expenditures by residential consumers, which comprise about 73 percent of the rule’s total benefits. In exchange for reduced long-term energy expenditures, the rule would cause the price of furnace fans to increase by between $67 and $183 per unit, a price increase of 31–54 percent.

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