Why We Need a New Cash for Clunkers to Promote Green Energy

The United States Department of Energy should administer a Cash for Clunkers program to encourage consumers to purchase smart appliances.

The household appliance has never been better equipped to help decrease the United States’ dependence on fossil fuels and improve waste management practices. The electric power industry relies on fossil fuels for 77 percent of its energy generation, making it the single largest contributor to U.S. carbon dioxide (39.8 percent), sulfur dioxide (67 percent), and nitrous oxide (23 percent) emissions. Residences use one fourth of all energy generated, and of a household’s electricity bill, 40 percent of the energy is consumed by standard appliances. Many of these appliances contain greenhouse gases, ozone-depleting chemicals, oil, PCBs, and mercury. When those so-called “white goods” are improperly disposed of, those substances can not only pose a pollution threat, but the highly recyclable steel that makes up 75 percent of a typical appliance goes wasted.

However, with smart appliances entering the market, there is an opportunity to put sophisticated energy saving technology in the American home while ensuring proper disposal of the appliance being replaced. 

Analysis 

Thanks to the Car Allowance Rebate System (“Cash for Clunkers”) – a 2009 federal program which gave rebates to car buyers trading in light motor vehicles rated at 18 miles per gallon or less for a new car or truck with better mileage – the automobile industry saw a net increase of over 210,000 vehicle sales in June through August of 2009, at least 40,000 yearlong jobs, and a boost in GDP. That strong response was followed by a State Energy Efficient Appliance Rebate Program funded by the American Recovery and Reinvestment Act, through which 50 state and six territories established “Cash for Appliances” programs in hopes of seeing similar benefits for energy efficient white goods. Major federal efficiency standards for appliances are periodically passed as technology improves, meaning any white good manufactured before a certain year (i.e. 2006 for clothes washers and dishwashers) would be better off replaced with an Energy Star model. However, results varied greatly with some states running out of all their rebates within a few days while others had to expand the length of the program and eligible appliances to convince people to participate. These results point to the need for key adjustments leading to a new and better program. A return to a federally administered program is better suited to integrate a sexier, superior product – the smart appliance. 

The Association of Appliance Manufacturers (AHAM) defines a smart appliance as “a modernization of the electricity usage system of a home appliance so that it monitors, protects and automatically adjusts its operation to the needs of its owner.” A variety of features are offered with a smart appliance to save the owner money by responding to utility pricing information. This intelligence can contribute to an online home energy management system and allow power usage shifting in order to accommodate renewable energy production times. With smart appliances, you add intelligence and customizability to the efficiency of an Energy Star model and see more savings in energy and water bills.

Next Steps 

The time for this program is coming fast.  Utilities all over the country are developing smart grids, and smart appliances help to fully take advantage of these more sophisticated grids’ capabilities to save consumers money.  This should please environmentalists and consumer advocates who recognize the added benefits of proper white good recycling and efficient appliance availability. The added demand would stimulate the appliance market and appeal to politicians, as it could create new jobs just as the automobile Cash for Clunkers did.  For example, Whirlpool could further expand production given the $19.3 million in American Recovery and Reinvestment Act funds awarded to them to support the manufacture and commercialization of smart appliances. Once many smart grid appliance models have begun to enter the market from different manufacturers, appropriate rebate amounts need to be proposed in relation to product cost and efficiency gains.  Next, there would need to be proper coordination with states and white goods recycling facilities, and most importantly, an education campaign would be necessary to articulate consumer benefits since the benefits of efficient appliances are harder to communicate than those of fuel-efficient cars.