The Department of Energy’s move to strip some LG refrigerators of the Energy Star label set the blogosphere afire with stories about how the EPA was toughening up Energy Star restrictions. It turns out that’s only sort of true.
Here’s the deal: Back in September, the Environmental Protection Agency signed a memorandum of understanding with the Department of Energy. Under the agreement, EPA would continue to be the brand manager for Energy Star, setting performance levels and overseeing monitoring and verification of products, homes and commercial buildings within the Energy Star system, and DOE agreed to step up its monitoring and verification of the test procedures used to evaluate whether products meet Energy Star requirements.
In the case of the LG refrigerators, the company was found to be in violation of the test procedures used to determine whether its appliances met Energy Star requirements or not. And because it was in violation of the test procedures, it was deemed to be falsely using the Energy Star label.
From LG’s point of view, it’s an important distinction, because the way it played out in the press made it look like the company tried to pass off energy-intensive refrigerators as energy-efficient ones, which LG claims it wasn’t trying to do. The company asked a U.S. district court for an injunction on DOE’s ruling so that it could continue using the Energy Star label on the 40,000-odd products affected by the ruling, claiming that it was the victim of inconsistent testing procedures.
The dispute centers around the icemaker, which DOE says must be on but “inoperative” (in other words not actively making ice), a directive LG interpreted as “leave the icemaker off.”
In addition to attributing the mistake to inconsistency on the part of the DOE and its testing procedures, LG claimed that the damage to its brand and market share that would result from the ruling would cause “irreparable harm” to its business.
The court sided with DOE last week. “Loss of market share is simply economic harm by another name,” the court concluded, “and LG has not shown the sort of substantial financial losses that might rise to the level of irreparable harm.” The company has begun instructing its retailers to remove the Energy Star label from the offending refrigerators.
The Icemaker Loophole
Critics of the Energy Star program have long considered the whole icemaker stipulation a loophole for manufacturers.
In 2008, Consumer Reports revealed that while several Energy Star refrigerators did meet energy efficiency requirements when tested according to DOE procedures, most failed miserably when used the way consumers would typically use them.
The magazine’s researchers found, for example, that with the icemaker inoperative, one of LG’s refrigerators produced about 547 kWh per year, but with it on, the way it would be in the average consumers home, it consumed 1,110 kWh per year.
DOE Sends a Message
The LG case became a great opportunity for the DOE to send a loud and emphatic message to all appliance manufacturers.
Last fall, an internal DOE audit had concluded the department wasn’t paying close enough attention to Energy Star testing. Now, this test of the new understanding between EPA and DOE suggests companies can look forward to increased oversight from both agencies when it comes to Energy Star.
“We have no evidence to suggest that there is a problem with the Energy Star label being misused,” explains EPA communications manager Maria Vargas.
“But trust is imperative for the label to continue to work, so we are ramping up our efforts.”
Vargas notes that Energy Star has brand recognition with over 75 percent of Americans. In conjunction with the memorandum of understanding, the two agencies also drafted proposed enhancements to the program, which will result in the EPA updating Energy Star criteria more often and the DOE stepping up its efforts to improve, monitor and review testing procedures.
The Energy Star label has been around since 1992. The programs says it saved American consumers $19 billion in energy costs in 2008 alone and emissions equivalent to those generated by 29 million cars. Vargas attributes the label’s success to its simplicity.
“It’s incredibly complicated behind the scenes, but it makes efficiency very easy for consumers: Items either have the label or they don’t.”
The credibility of that label is the lynchpin of the system, so DOE and EPA are right to back it with appropriate monitoring and regulatory power. Manufacturers and builders, consider yourselves warned.