Carbon Pricing Creeps into DOE Rulemaking

The Department of Energy's latest appliance efficiency standard rule monetizes the cost of carbon dioxide emissions. The rulemaking for Residential Water Heaters, Direct Heating, and Pool Heaters was released on March 31. The rule uses the a range of estimates for the social cost of carbon: $4.7, $21.4, $35.1, and $64.9 (in 2007 dollars). The second-lowest estimate ($21.4) would roughly double the price of electricity from coal generators, which would significantly skew the cost-benefit calculation towards higher efficiencies. However, DOE primarily considered consumer costs in selecting a standard level. It appears likely that future rulemakings, including many NEMA products, will continue to explicitly price carbon.