EERE Reform: Brouillette’s Turn (‘deep decarbonization’ threat still alive)

By Mark Krebs and Tom Tanton -- October 24, 2019

“While DOE has attempted to mitigate the ‘War on Fossil Fuels’ as it pertains to fuel diversity for conventional electric power generation, anti-consumer trends are accelerating as it pertains to end-use.  Specifically, the war against natural gas direct use has escalated; most of which is attributable to DOE’s National Labs. This has led to cities and states, initiated by Berkeley California, to prohibit the use of natural gas for residential uses.”

On October 17, Secretary Perry submitted his resignation letter for “a date later this year.” President Trump said he will be replaced by Dan Brouillette. Accordingly, we thought it appropriate to assess progress towards our recommendations for DOE to refocus on consumer interests per our March 6, 2017, article titled DOE’s EERE: Reform Ideas for Secretary Perry. And to recommend some early actions that can and should be taken by Mr. Brouillette. In short, notable progress has been accomplished under Mr. Perry, but other serious problems will challenge our next energy secretary.

Positive accomplishments under Mr. Perry  include the following:

1. Establish separate product classes for condensing and non-condensing appliances

As reported here on August 1, 2019 in DOE Revisits Forced Electrification (Decarbonization) Rules re Non-condensing Furnaces, Water Heaters, DOE’s Office of Energy Efficiency and Renewable Energy (EERE) published a favorable Notice of Proposed Rulemaking (NOPR) and request for comments on a petition by the natural gas industry (a.k.a. “Gas Industry Petitioners”) for safeguarding consumer access to standard (non-condensing) furnaces and water heaters. It was signed by EERE’s top appointee Daniel Simmons and indicated agreement to issue an “interpretative rule” recognizing the unique “features” of non-condensing appliances, that would otherwise harm consumers if regulated out of existence. 

This “interpretative rule” has yet to be finalized.  Consequently, we consider it a significant and positive development; but still a work-in-progress. We urge it be finalized.

2. Increase transparency and real-world economic analyses

More specifically, we recommended that DOE/EERE update the 1996 “Process Improvement Rule” and make it “judicially enforceable.” On December 18^th, 2017, DOE published its initial Request for Information (RFI) and notification of public meeting to gather public input to begin its process rule overhaul under Docket EERE-2017-BT-STD-0062 (where subsequent NOPR’s, etc. and public comments are available).

Our upshot is as follows:

• The 1996 Process Rule, as reiterated in the Code of Federal Regulations, is, in fact, an actual binding rule. However, wording at the end of it seems to exempt DOE’s “process” from judicial review.  Subsequently; at least in the past EERE has treated its own rule more like a mere collection of guidelines that it has discretion to follow; or not.
• Even then, EERE has demonstrated a growing and willful reluctance to adhere to it.
• By thus selectively ignoring its Process Rule, EERE’s energy savings analysis has eroded in credibility and has routinely and severely overstated consumer benefits while simultaneously understating consumer costs.
• We continue to recommend that EERE’s Process Rule be overhauled and refocused to place American consumers first and the language exempting interpretations of the rule from judicial review should be stricken (at Section 14(c)).

Such revisions would greatly improve transparency, regulatory reliability for better delivering realistic consumer benefits. The present form of EERE’s proposed update has made some significant improvements, but more work is needed, and it appears stalled.  We urge all due diligence to get it moving and finalized.

As for remaining problems: that will challenge Mr. Brouillette

New focus is still conspicuously lacking for curbing the promotion of anti-consumer electrification.

While DOE has attempted to mitigate the “War on Fossil Fuels” as it pertains to fuel diversity for conventional electric power generation, anti-consumer trends are accelerating as it pertains to end-use.  Specifically, the war against natural gas direct use has escalated; most of which is attributable to DOE’s National Labs. This has led to cities and states, initiated by Berkeley California, to prohibit the use of natural gas for residential uses.

On June 7^h, 2017, in Direct Use of Natural Gas: Unshackle Efficiency from Obama’s ‘Deep Decarbonization’ (Part 1of 2), we stated:

“What Secretary Perry has yet to recognize is that the same hostile forces behind the ‘war against coal’ are now focused on eliminating the direct use of natural gas…. By taking a fresh look at the economic importance of natural gas direct use, this path can be changed; assuming the political will exists to do the right thing by consumers.”

In 2017, Secretary Perry was interviewed by the American Gas Association and had this to say:

RP: We’re not going to pursue policies that tell businesses and consumers to choose one energy source over another.  Each region of the United States has its own unique energy needs and we realize businesses and consumers must be able to choose from a wide range of energy portfolio options. At the Department of Energy, we’re focused on the science and technology that will maximize the development and potential of all of our energy resources, including natural gas. The American people should be able to use the type of energy that they think is best for their businesses, their lives and their families.

Mr. Brouillette should clearly and unequivocally reiterate this position statement and let the public and DOE affiliated entities know it will drive DOE policy and actions.

Despite Mr. Perry’s statement, DOE’s “National Labs” and their many cohorts have continued to advocate and fund programs to promote building electrification and discourage, or ban outright, natural gas as an alternative choice to electricity.  For example, on May 6, 2016, The Rocky Mountain Institute (RMI) issued a press release stating that DOE partnered with them under its REALIZE program. Specifically:

Supported by a $500,000 DOE Building America award and $7.2 million CEC Electric Program Investment Charge (EPIC) grant, the three-year collaboration spans across California, Minnesota and Massachusetts to develop pilot projects—totaling approximately 500,000 square feet—in multifamily buildings to demonstrate an industrialized approach to conducting zero-emissions retrofits.

On July 30, 2019, EERE’s Building Technologies Office sent out an email confirming this.  It is also confirmed here: Building America Project Team: Rocky Mountain Institute.  While half a million dollars may be negligible by present subsidization standards, the symbolic message is not.

Since EERE was formed under Hazel O’Leary, we have witnessed cronyism continue to distort the R&D budgets to the benefit of electricity and detriment of other energy delivery mechanisms.  In 2002, Krebs received a review the draft of CATO Institute’s Time to Overhaul Federal Energy R&D. It is worth noting the following paragraph that did not make it into final print:

An examination of the DOE’s R&D budget from 1977 to the present [2002] indicates that … most is used for electricity related programs.  R&D investments in renewable energy, such as wind and solar, are electricity related.  R&D investments in coal technologies and nuclear energy are also electricity related.

And it continues, albeit crony strategies have changed.  Since the Obama Administration, the primary objective appears to be “deep decarbonization” under the guise of “clean” (electric) energy. You can see for yourself that the present EERE strategic plan, issued during the Obama Administration, remains unchanged.  EERE’s Obama-era mission statement also remains intact.  The Krebs category at Master Resource has more documented examples; as does the Tanton category.

While we don’t expect DOE to go out on a limb to protect the direct use of natural gas (like it tried to do for coal and nuclear), neither should DOE work to eliminate a resource that today and for the foreseeable future provides consumers with affordable and resilient non-electric energy alternatives.  Given DOE’s taxpayer funding, protecting consumer choice should be expected; fully recognizing that the direct use of natural gas remains a leading and highly affordable alternative to electricity that should not be ignored and written-off.

Conclusion

We trust Mr. Brouillette to continue the important work begun by Mr. Perry and finish the agenda laid out. This includes:

• Making the Process Rule enforceable.
• Stop trying to electrify everything and thus encouraging those who would outlaw natural gas.

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Mark Krebs, an engineer by training, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of energy-efficiency filings, which he summarized in a Public Utilities Fortnightly article, “It’s a War Out There: A Gas Man Questions Electric Efficiency” (December 1996).

Tom Tanton (ttanton@fastkat.com) is Director with Energy and Environmental Legal Institute. Mr. Tanton has 40 years in energy and environmental policy, focused on enabling technology choice and economic development. Mr. Tanton has testified to numerous state Legislatures and Congress as an expert on energy policy. He formerly served as Principal Policy Advisor at the California Energy Commission.