November/December 2007 Editorial: Energy Efficiency Pioneers

Posted by Alan Meier on November 03, 2007
November/December 2007 Editorial: Energy Efficiency Pioneers
OK, there’s a new energy-saving product on the market. It might even be the fruit of government-funded research. But it’s expensive and available from only a few, small manufacturers (or perhaps just one manufacturer).  The price would surely fall if economies of scale kick in.   But investors don’t understand the energy efficiency market and are reluctant to supply the needed capital.  Nothing happens. The country—indeed the world—needs dozens of these innovations if it is going to meet the ambitious energy-savings targets announced by presidents, governors, and speakers of inconvenient truths. The Business Schools talk of the “valley of death” between the prototype and widespread commercialization, where thousands of great ideas have foundered.  This is (or could be) the story for the heat pump water heater, advanced glazing technologies, and ultra-high efficiency lighting technologies.

So how should the government promote these products?  How does it create, first, a group of “efficiency pioneers” willing to purchase the device and, after that, convince a wider group of early-adopters to tolerate a higher cost and level of risk on the way to lower energy consumption?

If you can get the President’s attention, then the President can simply issue an Executive Order requiring all federal agencies to use this product.  President Bush did just that and greatly accelerated the appearance of products with low standby power use.  That strategy works well for energy-efficient office equipment or howitzers but the government is a small player when it comes residential water heaters or TVs.

If you can get Congress’ attention, then tax credits and other subsidies might stimulate consumer interest in the new product.  But it will be years before Congress passes another energy bill and a small company will whither before then.

If you can get the Department of Energy’s attention, then it might be able to rewrite minimum efficiency standards to make the new product the most sensible compliance path. But the entire standards procedure will require years.

That’s why current discussions inside Energy Star are important. Everybody knows about Energy Star. Consumers recognize the Energy Star name and respect its endorsement. Giving these new products an Energy Star endorsement would give these emerging products immediate name recognition and legitimacy to propel them into the mass market.  Mission accomplished.

But reasonable people can disagree. Consumers have expectations about Energy Star products, namely, that they should be widely available and be good investments.  Selecting Energy Star should be a simple decision after deciding what kind of product to buy. Mixing these “early commercialization” products with the conventional Energy Star product line could undermine Energy Star’s reputation.  What happens after a few recalls by manufacturers?  Promoting obscure, risky products is simply not part of Energy Star’s mission.  Nor are its partnership agreements designed for emerging products.

If not Energy Star, then do we need a new label for the efficiency “pioneer” products?  It is certainly worth considering.  This endorsement might be linked to special features, such as enhanced customer service, extended warranties, or perhaps special financial assistance.  Whatever the features, potential buyers must understand that they will be early adopters and will accept the trials and tribulations.   But these pioneer consumers will also have the satisfaction that they are personally assisting in wider efforts to save energy and improve the environment.  

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