Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps

Federal Register, Volume 80 Issue 16 (Monday, January 26, 2015)

Federal Register Volume 80, Number 16 (Monday, January 26, 2015)

Rules and Regulations

Pages 4041-4153

From the Federal Register Online via the Government Printing Office www.gpo.gov

FR Doc No: 2015-00317

Page 4041

Vol. 80

Monday,

No. 16

January 26, 2015

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps; Final Rule

Page 4042

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DEPARTMENT OF ENERGY

10 CFR Part 430

Docket Number EERE-2011-BT-STD-0006

RIN 1904-AC43

Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Final rule.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including general service fluorescent lamps (GSFLs) and incandescent reflector lamps (IRLs). EPCA also requires the U.S. Department of Energy (DOE) to determine whether more-stringent standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting more-stringent energy conservation standards for GSFLs. It has determined that the amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified. DOE concluded in this final rule that amending energy conservation standards for IRLs would not be economically justified.

DATES: The effective date of this rule is March 27, 2015. Compliance with the amended standards established for GSFLs and IRLs in this final rule is January 26, 2018.

ADDRESSES: The docket, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at regulations.gov. All documents in the docket are listed in the regulations.gov index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24. The regulations.gov Web page will contain simple instructions on how to access all documents, including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Ms. Lucy deButts, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-1604. Email: General_Service_Fluorescent_Lamps@ee.doe.gov.

Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7796. Email: Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits

  1. Benefits and Costs to Consumers

  2. Impact on Manufacturers

  3. National Benefits

  4. Conclusion

    II. Introduction

  5. Authority

  6. Background

    1. Current Standards

    2. Corrections to Codified Standards

    3. History of Standards Rulemaking for General Service Fluorescent Lamps and Incandescent Reflector Lamps

    4. Test Procedure

    1. Standby and Off Mode Energy Consumption

    III. General Discussion

  7. Product Classes and Scope of Coverage

  8. Technological Feasibility

    1. General

    2. Maximum Technologically Feasible Levels

  9. Energy Savings

    1. Determination of Savings

    2. Significance of Savings

  10. Economic Justification

    1. Specific Criteria

    1. Economic Impact on Manufacturers and Consumers

    2. Savings in Operating Costs Compared to Increase in Price

    3. Energy Savings

    4. Lessening of Utility or Performance of Products

    5. Impact of Any Lessening of Competition

    6. Need for National Energy Conservation

    7. Other Factors

    2. Rebuttable Presumption

    IV. Issues Affecting Rulemaking Schedule

    V. Issues Affecting Scope

  11. Clarifications of General Service Fluorescent Lamp Definition

  12. General Service Fluorescent Lamp Scope of Coverage

    1. Additional General Service Fluorescent Lamp Types

    2. Additional General Service Fluorescent Lamp Wattages

  13. Incandescent Reflector Lamp Scope of Coverage

    1. Incandescent Reflector Lamp Types

    2. Incandescent Reflector Wattages

  14. Summary of Scope of Coverage

    VI. Methodology and Discussion

  15. Market and Technology Assessment

    1. General Service Fluorescent Lamp Technology Options

    1. Highly Emissive Coatings

    2. Higher Efficiency Lamp Fill Gas Composition

    3. Higher Efficiency Phosphors

    4. Summary of GSFL Technology Options

      2. Incandescent Reflector Lamp Technology Options

    5. Thinner Filaments

    6. Efficient Filament Coiling

    7. Efficient Filament Orientation

    8. Higher Efficiency Inert Fill Gas

    9. Higher Pressure Tungsten-Halogen Lamps

    10. Infrared Glass Coatings

    11. Efficient Filament Placement

    12. Integrally Ballasted Low Voltage Lamps

    13. Summary of IRL Technology Options

  16. Screening Analysis

    1. General Service Fluorescent Lamp Design Options

    2. Incandescent Reflector Lamp Design Options

    1. Higher Temperature Operation

    2. Thinner Filaments

    3. Higher Efficiency Reflector Coatings

    4. Higher Pressure Tungsten-Halogen Lamps

  17. Product Classes

    1. General Service Fluorescent Lamp Product Classes

    1. Two-Foot U-Shaped Lamps

    2. Long-Life Lamps

    3. Summary of GSFL Product Classes

      2. Incandescent Reflector Lamp Product Classes

    4. Rated Voltage

    5. Modified Spectrum

    6. Summary of IRL Product Classes

  18. Engineering Analysis

    1. General Approach

    2. General Service Fluorescent Lamp Engineering

    1. Data Approach

    2. Representative Product Classes

    3. Baseline Lamps

    4. More Efficacious Substitutes

    5. General Service Fluorescent Lamp Systems

    6. Max Tech

    7. Efficacy Levels

    8. Scaling to Other Product Classes

    9. Rare Earth Phosphors

      3. Incandescent Reflector Lamp Engineering

    10. Representative Product Classes

    11. Baseline Lamps

    12. More Efficacious Substitutes

    13. Max Tech

    14. Efficacy Levels

    15. Scaling to Other Product Classes

    16. Xenon

    17. Proprietary Technology

  19. Product Pricing Determination

  20. Energy Use

    1. Operating Hours

    2. Lighting Controls

    1. General Service Fluorescent Lamp Lighting Controls

    2. Incandescent Reflector Lamp Lighting Controls

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  21. Life-Cycle Cost Analysis and Payback Period Analysis

    1. Consumer Product Price

    2. Sales Tax

    3. Installation Cost

    4. Annual Energy Use

    5. Product Energy Consumption Rate

    6. Electricity Prices

    7. Electricity Price Projections

    8. Replacement and Disposal Costs

    9. Lamp Purchase Events

    10. Product Lifetime

    1. Lamp Lifetime

    2. Ballast Lifetime

    11. Discount Rates

    12. Analysis Period

    13. Compliance Date of Standards

    14. Incandescent Reflector Lamp Life-Cycle Cost Results in the NOPR

  22. Consumer Subgroup Analysis

    I. Shipments Analysis

  23. National Impact Analysis--National Energy Savings and Net Present Value Analysis

    1. National Energy Savings

    2. Net Present Value of Consumer Benefit

    1. Total Annual Installed Cost

    2. Total Annual Operating Cost Savings

  24. Manufacturer Impact Analysis

    1. Manufacturer Production Costs

    2. Shipment Projections

    3. Markup Scenarios

    4. Product and Capital Conversion Costs

    5. Other Comments From Interested Parties

    1. High Cost to Manufacturers versus Relatively Low Energy Savings

    2. Impacts on Competition

    3. Impact of GSFL and IRL Standards on Alternative Lighting Technologies

    6. Manufacturer Interviews

    L. Emissions Analysis

  25. Monetizing Carbon Dioxide and Other Emissions Impacts

    1. Social Cost of Carbon

    1. Monetizing Carbon Dioxide Emissions

    2. Development of Social Cost of Carbon Values

    3. Current Approach and Key Assumptions

    2. Valuation of Other Emissions Reductions

  26. Utility Impact Analysis

  27. Employment Impact Analysis

  28. Proposed Standards in April 2014 NOPR

    1. GSFLs Proposed Standards

    2. IRL Proposed Standards

    VII. Analytical Results

  29. Trial Standard Levels

  30. Economic Justification and Energy Savings

    1. Economic Impacts on Individual Consumers

    1. Life-Cycle Cost and Payback Period

    2. Consumer Subgroup Analysis

    3. Rebuttable-Presumption Payback

      2. Economic Impacts on Manufacturers

    4. Industry Cash-Flow Analysis Results

    5. Impacts on Employment

    6. Impacts on Manufacturing Capacity

    7. Impacts on Subgroups of Manufacturers

    8. Cumulative Regulatory Burden

      3. National Impact Analysis

    9. Significance of Energy Savings

    10. Net Present Value of Consumer Costs and Benefits

    11. Alternative Scenario Analyses

    12. Indirect Impacts on Employment

      4. Impact on Utility or Performance of Equipment

      5. Impact of Any Lessening of Competition

      6. Need of the Nation to Conserve Energy

      7. Summary of National Economic Impacts

  31. Conclusions

    1. Benefits and Burdens of Trial Standard Levels Considered for General Service Fluorescent Lamps

    2. Summary of Benefits and Costs (Annualized) of the Adopted Standards for General Service Fluorescent Lamps

    3. Benefits and Burdens of Trial Standard Levels Considered for Incandescent Reflector Lamps

    VIII. Procedural Issues and Regulatory Review

  32. Review Under Executive Orders 12866 and 13563

  33. Review Under the Regulatory Flexibility Act

    1. Description and Estimated Number of Small Entities Regulated

    1. Methodology for Estimating the Number of Small Entities

    2. Manufacturer Participation

    3. GSFL Industry Structure and Nature of Competition

    4. Comparison Between Large and Small Entities

    2. Description and Estimate of Compliance Requirements

    3. Duplication, Overlap, and Conflict With Other Rules and Regulations

    4. Significant Alternatives to the Rule

  34. Review Under the Paperwork Reduction Act

  35. Review Under the National Environmental Policy Act of 1969

  36. Review Under Executive Order 13132

  37. Review Under Executive Order 12988

  38. Review Under the Unfunded Mandates Reform Act of 1995

  39. Review Under the Treasury and General Government Appropriations Act, 1999

    I. Review Under Executive Order 12630

  40. Review Under the Treasury and General Government Appropriations Act, 2001

  41. Review Under Executive Order 13211

    L. Review Under the Information Quality Bulletin for Peer Review

  42. Congressional Notification

    IX. Approval of the Office of the Secretary

    I. Summary of the Final Rule and Its Benefits

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.\2\ These products include GSFLs and IRLs, the subject of this final rule.

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    \1\ For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

    \2\ All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Pub. L. 112-210 (Dec. 18, 2012).

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    Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with these and other statutory provisions discussed in this rule, DOE is adopting amended energy conservation standards for GSFLs. The amended standards, which are the minimum lumen output per watt of a lamp, are shown in Table I.1. These amended standards apply to all products listed in Table I.1, and manufactured in, or imported into, the United States on or after January 26, 2018. For IRLs, DOE considered an efficacy level (EL) as a means of increasing energy savings. However, based on the analyses presented in this final rule, DOE concluded that standards for IRLs are not economically justified and therefore, is not amending IRL standards. On July 14, 2009, DOE published a final rule in the Federal Register, which prescribed the current energy conservation standards for GSFLs and IRLs manufactured on or after July 14, 2012. 74 FR 34080.

    Table I.1--Energy Conservation Standards for General Service Fluorescent Lamps

    Compliance starting January 26, 2018

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    Percent

    Correlated color Adopted level increase over

    Lamp type Covered wattages W temperature Kelvin lm/W * current

    standards

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    4-Foot Medium Bipin................ >=25 W............. 4,500 K and =25 W............. 4,500 K and =49 W............. 4,500 K and 4,500 K and =25 W............. 4,500 K and =44 W............. 4,500 K and 2), 650 thousand tons of methane, 140 thousand tons of sulfur dioxide (SO2), 230 thousand tons of nitrogen oxides (NOX), 2.0 thousand tons of nitrous oxide (N2O), and 0.43 tons of mercury (Hg).\6\ The cumulative reduction in CO2 emissions through 2030 amounts to 90 Mt, which is

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    equivalent to the emissions associated with annual electricity use of approximately 12 million homes.

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    \5\ A metric ton is equivalent to 1.1 short tons. Results for NOX and Hg are presented in short tons.

    \6\ DOE calculated emissions reductions relative to the Annual Energy Outlook (AEO) 2014 Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2013.

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    The value of the CO2 reductions is calculated using a range of values per metric ton of CO2 (otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process.\7\ The derivation of the SCC values is discussed in section VI.M.1. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO2 emissions reductions for GSFLs is between $1.36 billion and $17.6 billion, with a value of $5.72 billion using the central SCC case represented by $40.5/t in 2015.\8\ DOE also estimates that the net present monetary value of the NOX emissions reductions is $400 million at a 3-percent discount rate, and $240 million at a 7-

    percent discount rate.\9\

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    \7\ Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.

    \8\ The values only include CO2 emissions, not CO2 equivalent emissions; other gases with global warming potential are not included.

    \9\ DOE is currently investigating valuation of avoided Hg and SO2 emissions for future rule makings.

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    Table I.3 summarizes the national economic costs and benefits expected to result from these standards for GSFLs.

    Table I.3--Summary of National Economic Benefits and Costs of Amended

    Energy Conservation Standards for General Service Fluorescent Lamps *

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    Present value Discount rate

    Category Billion 2013$ (%)

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    Benefits

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    Operating Cost Savings............ 11.2 7

    18.9 3

    CO2 Reduction Monetized Value 1.3 5

    ($12.0/t case) **................

    CO2 Reduction Monetized Value 5.72 3

    ($40.5/t case) **................

    CO2 Reduction Monetized Value 8.92 2.5

    ($62.4/t case) **................

    CO2 Reduction Monetized Value 17.6 3

    ($119/t case) **.................

    NOX Reduction Monetized Value (at 0.24 7

    $2,684/ton)...................... 0.40 3

    Total Benefits dagger........... 17.1 7

    25.1 3

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    Costs

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    Incremental Installed Costs 9.17 7

    Dagger......................... 13.5 3

    Including Emissions Reduction 7.96 7

    Monetized Value dagger......... 11.6 3

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    * This table presents the costs and benefits associated with GSFLs

    shipped in 2018-2047. These results include impacts on consumers that

    accrue after 2047 from the products purchased in 2018-2047. The

    results account for the incremental variable and fixed costs incurred

    by manufacturers due to the standard, some of which may be incurred in

    preparation for the rule.

    ** The CO2 values represent global monetized values of the SCC, in

    2013$, in 2015 under several scenarios of the updated SCC values. The

    first three cases use the averages of SCC distributions calculated

    using 5%, 3%, and 2.5% discount rates, respectively. The fourth case

    represents the 95th percentile of the SCC distribution calculated

    using a 3% discount rate. The SCC time series incorporate an

    escalation factor.

    dagger Total Benefits for both the 3% and 7% cases are derived using

    the series corresponding to average SCC with 3-percent discount rate

    ($40.5/t case).

    The benefits and costs of these standards, for products sold in 2018-2047, can also be expressed in terms of annualized values. The annualized monetary values are the sum of (1) the annualized national economic value of the benefits from operating the product that meets the amended standard (consisting primarily of operating cost savings from using less energy, minus increases in product purchase prices and installation costs), which is another way of representing consumer NPV, and (2) the annualized monetary value of the benefits of emission reductions, including CO2 emission reductions.\10\

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    \10\ To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2014, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (e.g., 2020 or 2030), and then discounted the present value from each year to 2014. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO2 reductions, for which DOE used case-specific discount rates. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.

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    Although adding the value of consumer savings to the values of emission reductions provides a valuable perspective, two issues should be considered. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas the value of CO2 reductions is based on a global value. Second, the assessments of operating cost savings and CO2 savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of GSFLs shipped in 2018-2047. The SCC values, on the other hand, reflect the present value of all future climate-related impacts resulting from the emission of one metric ton of carbon dioxide in each year. These impacts continue well beyond 2100.

    Estimates of annualized benefits and costs of these standards for GSFLs are shown in Table I.4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reduction, for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.5/t in 2015, the cost of the standards in this rule is $841 million per year in increased equipment costs, while the

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    benefits are $1,030 million per year in reduced equipment operating costs, $310 million in CO2 reductions, and $22.4 million in reduced NOX emissions. In this case, the net benefit amounts to $516 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.5/t in 2015, the cost of the standards in this rule is $724 million per year in increased equipment costs, while the benefits are $1,020 million per year in reduced operating costs, $310 million in CO2 reductions, and $21.6 million in reduced NOX emissions. In this case, the net benefit amounts to $627 million per year.\11\

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    \11\ The annualized consumer operating cost savings, NOX reduction monetized value, and consumer incremental product costs are higher with a 7-percent discount rate than with a 3-percent discount rate. This is in contrast to the present values in Table I.3. Under certain conditions, different present values may lead to similar annualized values when calculated with different discount rates. In this case, the combined effects of (a) projecting to 2018 the present values that DOE calculated in 2014, and (b) annualizing the projected values with 3 percent and 7 percent discount rates over the 30-year analysis period, lead to similar annualized values. For consumer incremental product costs, the effect is more pronounced because the time series covers only 30 years, instead of the longer period covered for operating cost savings and NOX reduction monetized value.

    Table I.4--Annualized Benefits and Costs of Amended Energy Conservation Standards for General Service

    Fluorescent Lamps *

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    million 2013$/year

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    Discount rate LowNet benefits HighNet benefits

    Primary estimate estimate estimate

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    Benefits

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    Consumer Operating Cost Savings.... 7%................... 1,030 1,010 1,050

    3%................... 1,020 1,000 1,050

    CO2 Reduction Monetized Value 5%................... 97.5 97.1 97.5

    ($12.0/t case) **.

    CO2 Reduction Monetized Value 3%................... 310 308 310

    ($40.5/t case) **.

    CO2 Reduction Monetized Value 2.5%................. 448 446 448

    ($62.4/t case) **.

    CO2 Reduction Monetized Value ($119/ 3%................... 950 946 950

    t case) **.

    NOX Reduction Monetized Value (at 7%................... 22.4 22.3 22.4

    $2,684/ton) **. 3%................... 21.6 21.5 21.6

    Total Benefits dagger............ 7% plus CO2 range.... 1,150 to 2,000 1,130 to 1,980 1,170 to 2,030

    7%................... 1,360 1,340 1,390

    3% plus CO2 range.... 1,140 to 2,000 1,120 to 1,970 1,170 to 2,030

    3%................... 1,360 1,330 1,390

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    Costs

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    Consumer Incremental Product Costs. 7%................... 841 882 841

    3%................... 724 763 724

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    Net Benefits

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    Total dagger..................... 7% plus CO2 range.... 300 to 1,160 241 to 1,090 328 to 1,180

    7%................... 516 452 540

    3% plus CO2 range.... 415 to 1,270 350 to 1,200 443 to 1,300

    3%................... 627 561 655

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    * This table presents the annualized costs and benefits associated with GSFLs shipped in 2018-2047. These

    results include benefits to consumers that accrue after 2047 from the products purchased in 2018-2047. The

    results account for the incremental variable and fixed costs incurred by manufacturers due to the standard,

    some of which may be incurred in preparation for the rule. The Primary Benefits Estimate assumes the Reference

    case energy prices from AEO 2014 and decreasing incremental product cost, due to price learning. The Low

    Benefits Estimate uses the Low Economic Growth energy prices from AEO 2014 and constant real product prices.

    The High Benefits Estimate assumes the Low Economic Growth energy price estimates from AEO 2014 and the same

    decreasing incremental product costs as in the Primary Benefits Estimate.

    ** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the

    updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and

    2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution

    calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The

    value for NOX is the average of the low and high values used in DOE's analysis.

    dagger Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average

    SCC with 3-percent discount rate ($40.5/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2

    range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values

    are added to the full range of CO2 values.

  43. Conclusion

    Based on the analyses culminating in this final rule, DOE found that for GSFLs the benefits to the nation of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some users of these products). DOE has concluded that the standards in this rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy.

    II. Introduction

    The following section briefly discusses the statutory authority underlying this rule, as well as some of the relevant historical background related to the establishment of existing standards for GSFLs and IRLs.

  44. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as ``covered products''), which includes the types of GSFLs and IRLs that are the subject of this rulemaking. (42 U.S.C. 6292(a)(14))

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    EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(i)(1)), and directed DOE to conduct further rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(i)(3)-(5)) On July 14, 2009, DOE published a final rule in the Federal Register, which completed the first rulemaking cycle to amend energy conservation standards for GSFLs and IRLs (hereafter the ``2009 Lamps Rule''). 74 FR 34080. That rule adopted standards for additional GSFLs, amended the definition of ``colored fluorescent lamp'' and ``rated wattage,'' and also adopted test procedures applicable to the newly covered GSFLs. Information regarding the 2009 Lamps Rule can be found on regulations.gov, docket number EERE-2006-STD-0131 at www.regulations.gov/#!docketDetail;D=EERE-2006-STD-0131.

    This rulemaking encompasses DOE's second cycle of review to determine whether the standards in effect for GSFLs and IRLs should be amended, including whether the standards should be applicable to additional GSFLs. (DOE notes that under 42 U.S.C. 6295(m), the agency must periodically review its already established energy conservation standards for a covered product. Under this requirement, the next review that DOE would need to conduct must occur no later than six years from the issuance of a final rule establishing or amending a standard for a covered product.)

    Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. Id. The DOE test procedures for GSFLs and IRLs currently appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix R.

    DOE must follow specific statutory criteria for prescribing amended standards for covered products. As indicated above, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including GSFLs and IRLs, if no test procedure has been established for the product, or (2) if DOE determines by rule that the amended standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether an amended standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:

    1. The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

    2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard;

    3. The total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;

    4. Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

    5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

    6. The need for national energy and water conservation; and

    7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

    EPCA, as codified, also contains what is known as an ``anti-

    backsliding'' provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

    Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).

    Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating a standard for a type or class of covered product that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that products within such group (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-

    related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate. Id. Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))

    Federal energy conservation requirements generally supersede state laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of federal preemption for particular state laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).

    Finally, pursuant to the amendments contained in section 310(3) of the Energy Independence and Security Act

    Page 4048

    of 2007 (EISA 2007), any final rule for new or amended energy conservation standards promulgated after July 1, 2010, are required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into the standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE has determined that standby mode and off mode do not apply to GSFLs and IRLs and that their energy use is accounted for entirely in the active mode. Therefore, DOE is not addressing standby and off modes, and will only address active mode in this rulemaking.

    DOE has also reviewed this regulation pursuant to Executive Order (E.O.) 13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). E.O. 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993). To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

    DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs (OIRA) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that this rule is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized. Consistent with E.O. 13563, and the range of impacts analyzed in this rulemaking, the energy-efficiency standard adopted herein by DOE achieves maximum net benefits. For further discussion of how this rulemaking achieves maximum net benefits, see section VII.

  45. Background

    1. Current Standards

    In the 2009 Lamps Rule, DOE prescribed the current energy conservation standards for GSFLs and IRLs manufactured on or after July 14, 2012 (hereafter the ``July 2012 standards''). 74 FR 34080. The current standards are set forth in Table II.1 and Table II.2.

    Table II.1--July 2012 Standards for General Service Fluorescent Lamps

    ------------------------------------------------------------------------

    Minimum

    Lamp type Correlated color average lamp

    temperature efficacy lm/W

    ------------------------------------------------------------------------

    Four-Foot Medium Bipin......... 4,500 K and 4,500 K and 4,500 K and 4,500 K and 4,500 K and 4,500 K and 2.5 >=125 V 6.8*P\0.27\

    =125 V 5.7*P\0.27\

    2.5 \12\ >=125 V 5.8*P\0.27\

    =125 V 4.9*P\0.27\

    35 W 69 75.0 Nov. 1, 1995.

    35 W 69 68.0 Nov. 1, 1995.

    65 W 69 80.0 May 1, 1994.

    100 W 69 80.0 May 1, 1994.

    2.5 >=125 V 6.8*P0.27

    =125 V 5.7*P0.27

    2.5 >=125 V 5.8*P0.27

    =125 V 4.9*P0.27

    8-foot SP slimline lamps with wattages >= 49 W and 4-foot T5 MiniBP SO lamps with wattages >= 25 W and 4-foot T5 MiniBP HO lamps with wattages >= 44 W and =49 W and =25 W and =44 W and Technological Feasibility: DOE will consider technologies incorporated in commercially available products or in working prototypes to be technologically feasible.

    Practicability to Manufacture, Install, and Service: If mass production of a technology and reliable installation and servicing of the technology could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE will consider that technology practicable to manufacture, install, and service.

    Adverse Impacts on Product Utility or Product Availability: If DOE determines a technology to have significant adverse impact on the utility of the product to significant subgroups of consumers, or to result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not further consider this technology.

    Adverse Impacts on Health or Safety: If DOE determines that a technology will have significant adverse impacts on health or safety, it will not further consider this technology.

    Those technology options not screened out by the above four criteria are called ``design options'' and are considered as possible methods of improving efficacy in the engineering analysis. DOE received several comments on technology options not screened out and retained as design options in the NOPR analysis for GSFLs and IRLs.

    1. General Service Fluorescent Lamp Design Options

    DOE received a general comment on the screening methodology as it relates to GSFLs. Philips commented that the screening analysis is not comprehensive enough because it is only looking at efficacy and does not consider other market requirements such as lifetime, dimmability, and CRI. (Philips, Public Meeting Transcript, No. 49 at p. 49)

    One of the screening criteria is determining if a technology option would result in adverse impacts on the utility or availability of the product. DOE determined that of the design options considered for GSFLs, none would have a negative impact on the utility of the lamp (since lumen output is improved or maintained) nor would they eliminate the common lifetimes and CRI currently being offered. DOE acknowledges that krypton, a high-efficiency fill gas, seems to affect dimmability of reduced wattage lamps (i.e., energy saver lamp model). Because of the issues related to dimming associated with reduced wattage lamps, DOE's analysis requires that full-wattage lamps, which do not experience these problems, meet any proposed level. Therefore, because the use of high-efficiency fill gas would only impact the dimmability of certain product options available at a standard level (i.e., reduced wattage lamps), this design option is retained.

    In summary, in this final rule analysis DOE identified as design options the following GSFL technologies that have met the screening criteria:

    Highly Emissive Electrode Coatings

    Higher Efficiency Lamp Fill Gas Composition

    Higher Efficiency Phosphors

    Glass Coatings

    Higher Efficiency Lamp Diameter

    See chapter 4 of the final rule TSD for further details on the GSFL screening analysis.

    2. Incandescent Reflector Lamp Design Options

    DOE received feedback on several IRL design options put forth in the NOPR analysis, including higher temperature operation, thinner filaments, and higher efficiency reflector coatings.

    1. Higher Temperature Operation

      In the NOPR, DOE proposed higher temperature operation as a design option. 79 FR at 24091 (April 29, 2014). By operating the filament at higher temperatures, the spectral output shifts to shorter wavelengths, increasing its overlap with the photopic spectral eye sensitivity. This, in effect, increases the luminous output for a given power input and consequently increases the lamp efficacy. NEMA stated that higher temperature operation leads to a drastic and disproportionate loss in lifetime (e.g., 6-7 percent efficacy gain results in about 50 percent reduction in lifetime). (NEMA, No. 54 at p. 20)

      DOE understands that there may be a tradeoff between operation at higher temperature and a decrease in lifetime. However, DOE believes the use of higher temperature operation can be tuned to achieve a gain in efficacy while maintaining a reasonable lifetime. Therefore, DOE maintained higher temperature operation as a design option for this final rule.

    2. Thinner Filaments

      DOE proposed thinner filaments as a design option in the NOPR analysis. A thinner filament has an increased resistance and therefore an increased operating temperature, which increases the lamp efficacy. NEMA commented that thinner filaments lead to a drastic loss in lifetime. (NEMA, No. 54 at p. 20)

      DOE is aware that an incandescent lamp with a thinner filament cannot withstand as much tungsten evaporation as a thicker filament before failing,

      Page 4062

      resulting in a shorter lifetime. However, a thinner filament design can be implemented to achieve a gain in efficacy while preserving a reasonable lifetime. Therefore, DOE maintained the use of thinner filaments as a design option for this final rule.

    3. Higher Efficiency Reflector Coatings

      DOE proposed higher efficiency reflector coatings with the exception of gold reflector coatings, as a design option in the NOPR analysis. 79 FR at 24091 (April 29, 2014). IRLs are incandescent lamps with a reflective coating, most commonly composed of aluminum or silver applied directly to the reflector surface. The reflector coating allows these lamps to place the same illuminance on a specific area with reduced watts, thereby increasing efficacy. (Note: In the NOPR and in this final rule, DOE screened out gold reflector coating due to impact on product utility as gold reflectivity diminishes at and below blue-

      green wavelengths, which may decrease the color quality of light. See chapter 4 of the final rule TSD for further details.)

      NEMA stated that silver, the best higher efficiency reflector coating, is already in use and cannot be used in glue-sealed lamps (such as PAR20, PAR30, PAR30LN) due to extreme oxidation issues. (NEMA, No. 54 at p. 21)

      DOE research indicates that it is possible to use silver reflector coatings with an epoxy (glue-based) seal. For example, DOE identified a patent that uses aluminum as an inner reflective coating extending from the rim to the base of the lamp and then a second coating consisting of silver spaced from the rim. The silver layer is heat-treated in an oven with a controlled environment prior to fusing the lens to the reflector body, which allows a seal to form without further diminishing the reflective characteristic of the silver.\25\ Because there are methods to apply higher efficiency reflector coatings to all products covered by this rulemaking, DOE maintained the use of higher efficiency reflector coatings as a design option for this final rule.

      ---------------------------------------------------------------------------

      \25\ Woodward, David R. and Walter A. Boyce, Jack R. Sheppard. High efficiency sealed beam reflector lamp with reflective surface of heat treated silver. U.S. Patent No. 5789847A, filed October 24, 1995, and issued August 4, 1998.

      ---------------------------------------------------------------------------

    4. Higher Pressure Tungsten-Halogen Lamps

      DOE proposed the use of high pressure tungsten-halogen as a technology option in the NOPR analysis. 79 FR at 24091 (April 29, 2014). Increasing the pressure of the halogen burner by increasing the density of halogen elements can indirectly raise the efficacy of the tungsten-halogen lamp. NEMA stated that there are practical manufacturing process limitations and key consumer safety concerns with higher pressure tungsten-halogen lamps. (NEMA, No. 54 at p. 21)

      DOE notes that this design option is being used in commercially available lamps. Further, DOE did not find information indicating any manufacturing or safety concerns with the use of higher pressure tungsten-halogen lamps. Therefore, DOE maintained the use of higher pressure tungsten-halogen lamps as a design option for this final rule.

      In summary, in this final rule analysis DOE identified as design options the following IRL technologies that have met the screening criteria:

      Higher Temperature Operation

      Thinner Filaments

      Higher Efficiency Inert Fill Gas

      Higher Pressure Tungsten-Halogen Lamps

      Infrared Glass Coatings

      Higher Efficiency Reflector Coatings (with the exception of gold reflector coatings)

      Higher Efficiency Burners

      See chapter 4 of the final rule TSD for further details on the IRL screening analysis.

  46. Product Classes

    DOE divides covered products into classes by: (a) the type of energy used; (b) the capacity of the product; or (c) other performance-

    related features that justify different standard levels, considering the consumer utility of the feature and other relevant factors. (42 U.S.C. 6295(q)) DOE received several comments regarding product classes proposed for GSFLs and IRLs in the NOPR analysis.

    1. General Service Fluorescent Lamp Product Classes

    In the NOPR analysis DOE considered product classes for GSFLs based on the following three factors: (1) Correlated color temperature; (2) physical constraints of lamps (i.e., lamp shape and length); and (3) lumen package. 79 FR at 24091 (April 29, 2014). DOE received comments regarding establishing additional product classes based on the different spacing of 2-foot U-shaped lamps and lamp lifetime.

    1. Two-Foot U-Shaped Lamps

      DOE received several comments that separate product classes based on the spacing of the 2-foot U-shaped lamps may be needed. Spacing refers to the length between the two legs of the U-shaped lamp. The 2-

      foot U-shaped GSFLs come in 1\5/8\-inch spacing and 6-inch spacing. OSI commented that the 2-foot U-shaped lamps with 1\5/8\-inch spacing and 6-inch spacing should be in different product classes based on DOE's analysis in the NOPR. (OSI, Public Meeting Transcript, No. 49 at pp. 33-34) OSI stated that the reduced wattage 2-foot U-shaped lamps with 1\5/8\-inch spacing are typically used in retail applications and would be eliminated by the rulemaking, resulting in an increase in energy use. OSI added that full-wattage 6-inch lamps would be eliminated by the rulemaking, removing dimming utility. (OSI, Public Meeting Transcript, No. 49 at pp. 60-61) GE noted that this issue could partially be due to the scaling of the 2-foot U-shaped product class from the 4-foot MBP product class and could be an issue specific to the scaling factor or the 4-foot MBP product class efficacy levels. (GE, Public Meeting Transcript, No. 49 at p. 61) NEMA explained that consumers have switched to reduced wattage 1\5/8\-inch 2-foot U-shaped lamps, which serve retail applications and full-wattage 6-inch 2-foot U-shaped lamps are mainly used in offices for dimming purposes. (NEMA, No. 54 at p. 15)

      EEOs recommended that DOE only create separate product classes for 6-inch and 1\5/8\-inch spacing of 2-foot U-shaped if a technical barrier impacting efficacy potential is identified. (EEOs, No. 55 at p. 6) CA IOUs commented that DOE should not create separate product classes for U-shaped lamps with different spacing. CA IOUs supported this statement by identifying commercially available full and reduced wattage U-shaped lamps with 6-inch spacing that would meet the proposed standard in the NOPR for these products. CA IOUs also noted that of the 2-foot U-shaped offerings with 1\5/8\-inch spacing, the majority of products were 31 W lamps, many of which met the standard level proposed in the NOPR analysis. Further, CA IOUs stated that there has to be a clear technical reason for design limitations for U-bend lamps of specific spacing to create separate product classes. They also noted that the 2-foot U-shaped lamps comprise a low market share that is shrinking as 2x2 fixtures are being converted to straight linear 2-foot lamps and therefore, manufacturers may not have developed an array of lamp offerings of varying efficacies. (CA IOU, No. 56 at p. 3)

      DOE determines efficacy levels for 2-foot U-shaped lamps by reducing the efficacy levels of comparable 4-foot MBP lamps by an appropriate scaling

      Page 4063

      factor. DOE updated this scaling factor for the final rule analysis, see section VI.D.2.h for addition detail. In response to stakeholder comments, DOE reviewed the ability of 2-foot U-shaped lamps to comply with the highest efficacy level analyzed in this final rule, paying particular attention to the ability of both lamp spacings to comply. DOE determined that full wattage and reduced wattage versions of both lamp spacings are able to meet the highest efficacy level analyzed in the 2-foot U-shaped product class. Therefore, in this final rule, DOE did not establish separate product classes for the 1\5/8\-inch 2-foot U-shaped and 6-inch 2-foot U-shaped lamps.

    2. Long-Life Lamps

      DOE received comments that a separate product class for GSFLs with longer lifetimes than the standard lifetime may be needed. The longer life products are new on the market and mainly prevalent among the 4-

      foot MBP lamp types. NEMA commented that DOE should ensure that long-

      life lamps could meet the proposed standards or create a new product class for long-life lamps and report the associated analysis. (NEMA, No. 54 at p. 18) NEMA emphasized that the issue is that consumers are willing to pay a premium for long life (e.g., 80,000 hour) fluorescent lamps to avoid frequent lamp replacement. NEMA added that for many consumers long-life LEDs might not be an option due to first cost. (NEMA, Public Meeting Transcript, No. 49 at pp. 72-73) NEMA stated that long-life products offer utility for areas that are difficult to relamp, such as areas over assembly lines, or bridges and tunnels. Further, NEMA contended that design changes that permit much longer lifetimes have a net reduction in lumens/watt. When lumens per watt are increased lifetime is reduced and that increases the frequency of replacement, which in turn increases labor costs for replacement, increases the use of rare earth oxides in manufacturing, and increases mercury release. (NEMA, No. 54 at pp. 13-14)

      GE noted that more lamps would be required to support lifetimes that may be half as long as common lifetimes for fluorescent lamps and this would also increase waste and costs to the manufacturer. GE also noted that elimination of long-life GSFLs would not result in energy savings as fluorescent lamps consume a steady amount of power from initial to mean to end life. (GE, Public Meeting Transcript, No. 49 at pp. 68-69, 73-74) Regarding a question on the market share of long-life GSFLs, OSI responded that because these products have only been recently introduced in the market it is difficult to determine and NEMA noted that it would try to obtain this data for DOE. (OSI, Public Meeting Transcript, No. 49 at p. 74; NEMA, Public Meeting Transcript, No. 49 at pp. 75-76)

      EEOs remarked that although industry members proposed a separate product class for extra-long-life GSFLs with lifetimes of around 80,000 hours, these products are new on the market and it is unclear if a technical barrier exists preventing these lamps from meeting proposed standards. EEOs added that CA IOUs provided examples of reduced wattage extra-long-life 4-foot MBP lamps that would meet proposed levels. Further, EEOs agreed that extra-long-life lamps are cost effective, however, the negative impacts of a proposed level on life could be captured in DOE's economic analysis. (EEOs, No. 55 at pp. 6-7) The Northwest Energy Efficiency Alliance (NEEA) stated that it had not observed consumer concern for lifetime, noting more sales of less efficacious, long-life products. NEEA also noted that it was not possible to have both an efficacious and a good long lifetime product and expected this rulemaking to address the lifetime in the life-cycle cost analysis of the product. (NEEA, Public Meeting Transcript, No. 49 at pp. 77-79)

      CA IOUs commented that a separate product class might be warranted for extra-long-life GSFLs if DOE finds a technical justification for reduced efficacy among these products. CA IOUs identified a variety of commercially available reduced wattage extra-long-life products with catalog efficacies that would pass DOE's proposed standard for 4-foot MBP lamps. Noting that these were reduced wattage lamps, CA IOUs added that if DOE is not able to identify full-wattage extra-long-life lamps that meet the proposed standards, and stakeholders present a technical justification with respect to design limitations preventing such products from being developed, a separate product class might be appropriate for this product type. However, CA IOUs noted that a standard for such a product class should be sufficiently stringent to avoid becoming a loophole. (CA IOU, No. 56 at pp. 3-4)

      In response to stakeholder comments, DOE reviewed information about long life GSFLs from manufacturer interviews, product catalogs, and DOE's certification database. Manufacturer interviews indicated that it may be possible to increase the lifetime of fluorescent lamps by increasing the gas pressure, but that this may also decrease efficacy. DOE reviewed manufacturer catalog offerings and found that several manufacturers offered lamps that were marketed as ``standard life'' and also offered lamps that were marketed as ``long life.'' Catalog information generally indicated that the marketed long life lamps were less efficacious than comparable standard life lamps. Where available, certification data supported this trend. However, DOE notes that there is inconsistency in the industry regarding what actually constitutes a ``long life'' lamp. When comparing lamps offered by different manufacturers, one manufacturer's ``long life'' product may be offered with a lifetime very similar to that of another manufacturer's ``standard life'' product. Further, while DOE is aware that lifetime is a feature valued by consumers, DOE's analysis ensures that the lifetimes typically available at the baseline level are also available at higher efficacy levels (see section VI.D.2.g for more details). In this way, DOE's higher efficacy levels do not impact consumer utility and DOE accounts for any differences in lifetime as economic impacts in the LCC and NIA. Therefore, DOE did not establish separate product classes for long life GSFLs in this final rule analysis.

    3. Summary of GSFL Product Classes

      In this final rule analysis, DOE established product classes for GSFLs as summarized in Table VI.3. See chapter 3 of the final rule TSD for further details on each GSFL product class.

      Table VI.3--GSFL Product Classes in Final Rule Analysis

      ------------------------------------------------------------------------

      Lamp type CCT

      ------------------------------------------------------------------------

      4-foot medium bipin........................................ 4,500 K

      2-foot U-shaped............................................ 4,500 K

      8-foot single pin slimline................................. 4,500 K

      8-foot recessed double contact high output................. 4,500 K

      4-foot T5, miniature bipin standard output................. 4,500 K

      4-foot T5, miniature bipin high output..................... 4,500 K

      ------------------------------------------------------------------------

      2. Incandescent Reflector Lamp Product Classes

      In the NOPR analysis, DOE proposed product classes for IRLs based on the following three factors: (1) Rated voltage, separating lamps less than 125 V from lamps greater than or equal to 125 V; (2) lamp spectrum, separating lamps with a standard spectrum from lamps with a modified spectrum; and

      Page 4064

      (3) lamp diameter, separating lamps with a diameter greater than 2.5 inches from lamps with a diameter less than or equal to 2.5 inches. 79 FR at 24092 (April 29, 2014). DOE received comments on the rated voltage and modified spectrum product class setting factors. DOE did not receive feedback on the other product class divisions proposed for IRLs in the NOPR analysis.

    4. Rated Voltage

      In the NOPR analysis, DOE proposed rated voltage as a class setting factor, establishing a product class for IRLs with voltages less than 125 V and a product class for IRLs with voltages greater than or equal to 125 V. NEMA stated that DOE's reasoning for a separate 130 V product class was out of concern that consumers would shift to 130 V options that are less efficient than 120 V lamps resulting in increased energy consumption. However, NEMA noted that when operated at 120 V, a 60 W 130 V PAR38 uses less energy, approximately 54-55 W. Further, NEMA stated that since this decreases light output, consumers would not choose 130 V IRLs to `cheat' on energy conservation standards. (NEMA, No. 54 at p. 30)

      DOE agrees that the 130 V lamp described by NEMA would use less energy when operated at 120 V. However, in the NOPR analysis and in this final rule DOE concludes that the corresponding decrease in light output would result in consumers purchasing additional lamps to maintain sufficient light. 79 FR at 24093 (April 29, 2014). Therefore, setting higher standards for IRLs without accounting for voltage differences could result in increased energy consumption.

      Westinghouse remarked that the absence of 130 V IRLs on the market has resulted in a loss in utility as 130 V IRLs were used to maintain product lifetimes in areas with transients, voltage spikes, and other power issues, and that consumers in those markets will have to buy more light bulbs due to voltage issues. Citing the 130 V lamps as an example, Westinghouse noted that in this rulemaking DOE has to be careful when setting new IRL standards that such unintended consequences do not happen as they cannot be fixed in the future due to the backsliding provision. (Westinghouse, Public Meeting Transcript, No. 49 at pp. 43-44)

      DOE is aware that the 130 V lamps can provide a certain utility by lasting longer than 120 V lamps in certain areas that are susceptible to voltage spikes. However, based on its assessment that most consumers operate 130 V IRLs at 120 V and differences in efficacy when they are operated at 120 V versus tested at 130 V, DOE determined that there would be a potential migration to 130 V IRLs if they were subject to the same standards as 120 V IRLs and further that there would be additional purchases of 130 V IRLs by the consumer. Hence, in order to preserve energy savings, DOE maintained the rated voltage class division that separates covered IRLs less than 125 V from those that are greater than or equal to 125 V in this rulemaking. (See chapter 3 of the final rule TSD for further information.)

    5. Modified Spectrum

      Modified spectrum IRLs provide unique utility to consumers by providing a different type of light than standard spectrum lamps, much like fluorescent lamps with different CCT values. However, the same technologies (i.e., coatings) that modify the spectral emission of a lamp also decrease lamp efficacy. Therefore, in the NOPR DOE proposed a product class division separating standard spectrum IRLs from modified spectrum IRLs. 79 FR at 24093 (April 29, 2014).

      EEOs added that a separate product class for modified spectrum lamps may not be needed as more efficient technologies, such as CFLs and LEDs, are able to achieve the same utility and also due to the lack of commercially available modified spectrum lamps covered by the rulemaking. (EEOs, No. 55 at pp. 7-8) CA IOUs agreed that due to the limited number of modified spectrum IRLs on the market, the category should be eliminated. (CA IOUs, Public Meeting Transcript, No. 49 at p. 20) ASAP and CA IOUs concluded that there is no need to make an exemption or have a less efficacious standard for modified spectrum lamps. (ASAP, Public Meeting Transcript, No. 49 at pp. 17-18; CA IOUs, Public Meeting Transcript, No. 49 at p. 20) NEMA commented that modified spectrum lamps, like 130 V lamps, cannot remain both cost effective and compliant and referred DOE to manufacturer interviews for additional details. (NEMA, No. 54 at p. 31)

      As in the NOPR, DOE continues to believe that modified spectrum lamps offer unique utility by providing a different spectrum of light. 79 FR at 24093 (April 29, 2014). Although more efficient technologies, such as CFLs and LEDs, may offer similar spectrums, DOE must maintain consumer utility for the products that are within the scope of this rulemaking. Modified spectrum IRLs modify the spectral emission of a lamp in such a way that lamp efficacy decreases. DOE acknowledges that there are currently no modified spectrum products on the market. However, DOE maintains that there are no technological barriers to creating these products. DOE does not consider cost when establishing product classes. Because modified spectrum lamps offer unique utility but at lower efficacy compared to standard spectrum products, DOE maintained the class division for lamp spectrum in this final rule.

    6. Summary of IRL Product Classes

      In this final rule analysis, DOE established product classes for IRLs as summarized in Table VI.4. See chapter 3 of the final rule TSD for further details on each IRL product class.

      Table VI.4--IRL Product Classes in Final Rule Analysis

      ------------------------------------------------------------------------

      Diameter (in

      Lamp type inches) Voltage

      ------------------------------------------------------------------------

      Standard Spectrum....................... >2.5 >=125 V

      .............. =125 V

      .............. 2.5 >=125 V

      .............. =125 V

      .............. .

      ---------------------------------------------------------------------------

      NEEP noted that REO prices and availability had improved in the last few years and, according to DOE, would continue to fluctuate. NEEP commented that DOE appropriately weighed the variability of REO prices in the analysis. (NEEP, No. 57 at p. 3)

      In April of 2012, several manufacturers were granted exception relief exempting their 700 series T8 lamps from the July 2012 standards for a period of two years. The waiver was granted due to the global supply restrictions on rare earth phosphors, the rising world demand of these phosphors, and the resulting impacts on producing higher efficacy GSFLs. DOE notes that manufacturers, in their applications for exception relief, stated that they expected an improvement in the rare earth market, specifically noting that supplies of key rare earth phosphors used in fluorescent lamps will become more equal to estimated demand beginning in 2014. Manufacturers also stated that the two-year relief would provide time for potential development of additional supplies outside of China, for progress in technology advancements and development of alternative technologies that use lesser amounts of rare earth material, and for the expansion of recycling and reclamation initiatives.\40\ Because this waiver expired in 2014, and manufacturers did not reapply for exception relief, DOE does not believe that the availability of high efficiency phosphors will affect manufacturers' ability to consistently produce a product. However, DOE acknowledges that the market for rare earth phosphors is uncertain and therefore continues to analyze in this final rule a scenario of increased rare earth phosphor prices in the LCC and NIA.

      ---------------------------------------------------------------------------

      \40\ Philips Lighting Company, et al. OHA Case Nos. EXC-12-0001, EXC-12-0002, EXC-12-0003 (2012). Accessible here: http://energy.gov/sites/prod/files/oha/EE/EXC-12-0001thru03.pdf.

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      3. Incandescent Reflector Lamp Engineering

      For IRLs, DOE received several comments on the engineering analysis presented in the NOPR. 79 FR at 24106 (April 29, 2014). Stakeholders provided feedback on DOE's baseline lamps, selection of more efficacious substitutes, max tech level, ELs, scaling, and xenon. The following sections summarize the comments and responses received on these topics, and present the IRL engineering methodology for this final rule analysis.

    7. Representative Product Classes

      When a product has multiple product classes, DOE identifies and selects certain product classes as representative and analyzes those product classes directly. DOE chooses these representative product classes primarily due to their high market volumes. For IRLs, in the NOPR analysis DOE identified standard spectrum lamps, with diameters greater than 2.5 inches, and input voltage less than 125 V as the representative product class, shown in gray in Table VI.5. 79 FR at 24107 (April 29, 2014). NEMA commented that the only IRLs that still have any meaningful product sales are in the standard spectrum, less than 2.5 inches in diameter, less than 125 V product class. (NEMA, No. 54 at p. 21) Receiving no

      Page 4076

      other comments, DOE maintained the same IRL representative product classes for the final rule.

      Table VI.5--IRL Representative Product Classes

      ----------------------------------------------------------------------------------------------------------------

      Lamp type Diameter Voltage

      ----------------------------------------------------------------------------------------------------------------

      Standard spectrum..................... >2.5 inches.............. >=125

      =125

      2.5 inches.............. >=125

      =125

      2.5 Inches.

      --------------------------------------------------------------------------------------------------------------------------------------------------------

    8. More Efficacious Substitutes

      DOE selects more efficacious replacements for the baseline lamps considered within each representative product class. DOE considers only design options identified in the screening analysis. In the NOPR, DOE considered substitute lamps that saved energy and, where possible, had a light output within 10 percent of the baseline lamp's light output. Id. at 24109. In identifying the more efficacious substitutes, DOE utilized a database of commercially available lamps. DOE identified two higher efficacy, reduced wattage lamps, referred to in this analysis as an HIR lamp with a lifetime of 2,500 hours and an improved HIR lamp with a lifetime of 4,200 hours, as more efficacious substitutes for the baseline lamp. DOE received several comments regarding its choice for the more efficacious substitutes.

      NEMA insisted that 3,000-hour and longer lifetimes must be available in the commercial market for the product line to maintain viability, as long life is a consumer-demanded utility. Lamp lifetimes shorter than 3,000 hours for premium and expensive halogen PAR38 lamps would not be sustainable or acceptable in the commercial market. (NEMA, No. 54 at p. 21)

      NEMA further explained that the only remaining method to increase IRL efficacy is by shortening their lifetime, and many IRLs are already rated at 1,000 hours. NEMA noted that a 1,000-hour lifetime represents a previous loss of utility from complying with efficacy requirements, and that the shortened lifetime has resulted in public backlash. NEMA warned that with the standards proposed in the NOPR, consumers would lose the utility of lifetime. Using a calculation from The Science of Incandescence,\41\ NEMA stated that the higher efficacy of EL 1 would result in a 30 percent reduction in lifetime for these lamps, causing a total loss of financial feasibility. (NEMA, No. 54 at pp. 21, 29, 49) Westinghouse remarked that IRLs are already at max tech, and that unlike with GSFLs, there is no opportunity for tradeoffs between efficacy and utility. (Westinghouse,

      Page 4077

      Public Meeting Transcript, No. 49 at pp. 54-56)

      ---------------------------------------------------------------------------

      \41\ Vukcevich, Milan R., Science of Incandescence, NELA Press, 1992.

      ---------------------------------------------------------------------------

      DOE recognizes that there is an inverse relationship between efficacy and lifetime for IRLs. DOE believes typical lifetimes of IRLs regulated by this rulemaking are between 1,500 and 4,400 hours. In the engineering analysis, DOE only considered lamps with lifetimes greater than or equal to the baseline when selecting representative lamp units. DOE found evidence that improved technology lamps (i.e., HIR lamps) with lifetimes higher than the baseline lifetime are prevalent on the market. Both representative lamp units that DOE selected in the engineering analysis have lifetimes longer than the baseline. While manufacturers can choose to introduce shorter lifetime products in the future, DOE does not require shortening of lamp lifetime to meet any analyzed level. One of the representative units at EL 1 has a lifetime of 4,200 hours. Thus, DOE ensured that products with lifetimes greater than 3,000 hours would be available for consumers desiring longer life products.

      NEMA commented that the PAR38 lamp is not an adequately representative lamp and inappropriately skews DOE's analysis because it is the only lamp type in the class that can physically incorporate the largest number of technology options, overstating the possible energy savings. NEMA encouraged DOE to examine smaller diameter lamps to better understand what technology options are feasible. (NEMA, No. 54 at p. 29) As an example, NEMA commented that the lifetime of the PAR30 lamp would have to be shortened to the point of being economically infeasible and unmarketable to consumers to meet standards. (NEMA, No. 54 at pp. 29-30) NEMA could not identify a lamp that met the EL proposed in the NOPR while still providing adequate lifetime in all sizes. Specifically, NEMA stated that the rule proposed in the NOPR would allow only certain PAR38 lamps to meet the regulations and most other types and classes of covered IRLs would be eliminated. NEMA argued, therefore, that the EL proposed in the NOPR is invalid for most lamps. (NEMA, No. 54 at p. 29)

      DOE recognizes that in addition to PAR38 lamps, the representative product class also includes PAR30 lamps. Because it is a more common lamp size among the covered IRLs, DOE selected PAR38 as the diameter for the baseline lamp and more efficacious substitutes of the baseline. DOE's research indicates that the design options identified for PAR38 lamps are also applicable to PAR30 lamps. DOE assessed the availability of PAR30 lamps as more efficacious substitutes. DOE found that there are PAR30 lamps with lifetimes of 3,500 and 4,400 hours that are able to achieve the same efficacies as PAR38 lamps. See chapter 5 of the final rule TSD for additional details.

      CA IOUs expressed disappointment that there were not multiple efficacy levels representing higher performance products. CA IOUs stated that DOE had restricted itself to a small subset of IRLs by focusing on PAR38 lamps and requiring lumens to be within 10 percent of the baseline lamp, limiting the lumen range to about 963 to 1,170. CA IOUs mentioned that any design strategies used in other lamp types, (e.g., 800-lumen lamp, 1,200-lumen lamp, PAR30 lamp) that improved efficacy would be fairly transferable among lamp types. CA IOUs questioned why DOE did not consider potential efficacy improvements from these lamp types. (CA IOUs, Public Meeting Transcript, No. 49 at pp. 107-109) Specifically, CA IOUs noted four lamps that have better performance than the proposed efficacy level: The GE 60 W PAR HIR Plus operating at 21 lm/W, the Philips PAR38 Energy Halogen DiOptic operating at 20 lm/W, the OSRAM SYLVANIA PAR38 medium-base warm white outdoor halogen flood operating at 20 lm/W, and the OSRAM SYLVANIA PAR38 warm white outdoor halogen flood operating at 21 lm/W. (CA IOUs, Public Meeting Transcript, No. 49 at pp. 107-109, 118)

      ASAP also disagreed with DOE's criteria of restricting lumen output to be within 10 percent of the baseline lamp, noting that the NOPR analysis seemed to suggest that DOE understood that technologies used in one lamp to achieve a certain lumen package can be used in another. Therefore, ASAP questioned why DOE rejected a more efficacious technology used in another lamp due to the lumen output of that lamp having a greater than 10 percent difference from the baseline lamp. ASAP stated that DOE should have analyzed the more efficacious technology and used scaling to maintain the baseline lumen output. (ASAP, Public Meeting Transcript, No. 49 at p. 113)

      GE, on the other hand, commented that the analysis presented in the NOPR was fairly accurate in terms of addressing and looking at the other potential more efficacious products. GE argued that not all of the lamps proposed by commenters to be more efficacious were within the scope of this rulemaking and not all of the proposed technologies were transferable to covered lamps. (GE, Public Meeting Transcript, No. 49 at p. 112)

      DOE used certain criteria when selecting more efficacious substitutes. Specifically, DOE only considered lamps with the same reflector shape as the baseline lamp, wattages less than the baseline wattage, lumens within 10 percent of the baseline lumens, lifetimes equal to or greater than the baseline lifetime, and that were commercially available in the United States or available as prototypes. These criteria ensured that higher efficacy lamps with similar characteristics to the baseline were available to consumers at each efficacy level analyzed.

      When establishing efficacy levels, DOE considered all lamps available. DOE reviewed the design options incorporated into each lamp, the ability of lamps across lumen packages to meet the level, and the max tech level. Regarding the four lamps that CA IOUs noted as having better performance than the proposed efficacy level, one of them was part of a product line for which certification data indicated that the product line performed below or much closer to EL 1 than indicated by its catalog data. Another of the lamps was part of a product family for which certification data indicated that product performance was at the existing standard level, or baseline, rather than EL 1. A third lamp in the group of four did not have certification data available for DOE to substantiate its performance claims in catalogs. The fourth lamp did have both catalog and certification data available and that data indicated that it performed above EL 1. However, this lamp was not part of a full product line that would indicate that the technology incorporated in the lamps could be used across all lumen packages. While DOE is aware that it is generally the case that technology can be shared among various lamps, modeling a product allows DOE to estimate lamp performance but not confirm performance via certification data or independent testing, a significant concern in this rulemaking. Furthermore, costs for such a product would be uncertain as it would not be commercially available at the time of the analysis. Therefore, DOE chose not to model a higher efficacy lamp that met its criteria for selecting representative units in the NOPR as well as the final rule analysis.

      NEEA commented that, unless the market shares of the 60 W PAR38 and 55 W PAR38 lamps are close to 90 percent of the market, DOE's analysis was incomplete and the more efficacious lamps suggested by CA IOUs need to be analyzed. (NEEA, Public

      Page 4078

      Meeting Transcript, No. 49 at pp. 111-112)

      Through a review of product offerings in catalogs, DOE determined that PAR38 is the most common lamp diameter and 60 W is at least twice as common as any other wattage. Further, DOE did not restrain the representative lamp units to 55 W but rather required that the wattage be less than the baseline. DOE found that the majority of product offerings on the market have wattages at or below 60 W. Thus, DOE finds that the baseline and more efficacious lamp units analyzed represent the most widely offered products on the market. Table VI.7 summarizes the performance characteristics of the more efficacious substitutes for IRLs. For further information see chapter 5 of the final rule TSD.

      Table VI.7--IRL Representative Lamps

      --------------------------------------------------------------------------------------------------------------------------------------------------------

      Representative Lamps

      --------------------------------------------------------------------------------------------------------------

      Wattage Efficacy * Initial Lifetime

      Representative product class -------------------------- light ------------

      Lamp type Descriptor output

      W lm/W ------------- hr

      lm

      --------------------------------------------------------------------------------------------------------------------------------------------------------

      Standard Spectrum, Voltage 2.5 Inches. PAR38....................... Improved HIR............... 55 18.5 1,120 4,200

      --------------------------------------------------------------------------------------------------------------------------------------------------------

      * Efficacy values are based on data from DOE's certification database.

    9. Max Tech

      When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (``max tech'') improvements in energy efficiency for IRLs using the design parameters for the most efficient products available on the market or in working prototypes.

      For IRLs, DOE presented one efficacy level (EL 1) for consideration in the NOPR analysis. Therefore, this level was also the max tech level identified for IRLs. DOE received several comments on the proposed max tech level.

      ASAP and CA IOUs commented that DOE made a mistake in not considering higher ELs for IRLs. ASAP stated that CA IOUs provided reasons for considering higher levels in response to the preliminary analysis and DOE dismissed the suggestions with a ``grab bag'' of unsubstantiated arguments for not considering the higher levels. (ASAP, Public Meeting Transcript, No. 49 at p. 17; CA IOUs, Public Meeting Transcript, No. 49 at p. 20) Further, CA IOUs commented that they do not think that DOE adequately considered alternative technology options they gave in response to the preliminary analysis for a more efficacious max tech. (CA IOUs, Public Meeting Transcript, No. 49 at p. 114) CA IOUs stated that they suggested more efficacious lamps and in not considering them, DOE has not complied with their statutory requirement to investigate max tech. (CA IOUs, Public Meeting Transcript, No. 49 at p. 110) CA IOUs continued that commercially available products were available in different lumen bins or that there were different lamp shapes from PAR38. CA IOUs noted that some of the data they had for support were compliance certification values and some were prototype products from the past or developed recently. (CA IOUs, Public Meeting Transcript, No. 49 at p. 110)

      DOE evaluated the more efficacious lamps proposed by stakeholders in response to the preliminary analysis. As discussed in the NOPR, DOE did not consider some of these lamps when evaluating the max tech level because they were not available with the same reflector shapes or input voltage as the IRLs covered by this rulemaking. 79 FR at 24111(April 29, 2014). In addition, as described in section VI.D.3.c, certification data indicates that some lamps are not performing at the high efficacies advertised in catalogs. Absent certification or independent test data, DOE is unable to verify high efficacy claims. Finally, although certain higher efficacy products have certification data confirming their performance above EL 1, they are not part of a full product line that would indicate that the technology incorporated in the lamps could be used across all lumen packages.

      Regarding prototype lamps, for the NOPR analysis, DOE contacted manufacturers producing high efficacy prototype IRLs and conducted independent testing of these lamps. The testing indicated that these lamps were more efficacious than the max tech level determined by DOE in this analysis.\42\ DOE notes that the lamps tested were prototype lamps and were not manufactured during commercial scale production runs. The measured efficacy of the prototype lamps greatly exceeded the efficacy of commercially available lamps with similar lumen packages. DOE did not, however, have the necessary information to do a cost analysis to determine if an efficacy level based on these lamps would be economically justified. Therefore, in the NOPR phase DOE requested information on the incremental manufacturer production cost of a lamp that could achieve the efficacy of the prototype lamps compared to a lamp that complies with EL 1. DOE also sought information on the manufacturing costs including equipment and product conversion costs necessary to produce lamps at the efficacy of the prototype lamps. However, DOE did not receive any information to conduct a cost assessment of the higher efficacy prototypes and therefore, did not include them in this final rule analysis.

      ---------------------------------------------------------------------------

      \42\ DOE independently verified efficacy values provided by the manufacturer. At the time of NOPR analysis, the manufacturer was still conducting lifetime testing. DOE did not receive any updates on lifetime testing of the prototype lamps at the time of the final rule analysis.

      ---------------------------------------------------------------------------

      CA IOUs stated that the efficacy standards proposed in the NOPR would not be a challenge and an efficacy standard of more than three times higher, as shown in appendix 5A of the NOPR TSD, would be possible and likely be cost effective. Most manufacturers already have the capability to meet the levels proposed in the NOPR, and the achievement of higher efficacies was proven through the testing of prototype lamps. CA IOUs commended DOE on its tests of prototyped products, but expressed confusion over why DOE did not develop pricing estimates for these products and create a corresponding EL. They also questioned why DOE had not used the comments on projected sale prices given during manufacturer interviews in their analysis. CA IOUs noted that a pricing estimate could also

      Page 4079

      have been achieved by a teardown analysis of the prototype lamps compared with similar, commercially available components. Specifically, CA IOUs gave the example that lamps using high performance HIR burner are already commercially available in A-line and MR16 bulb shapes, selling for $3.49 and $6.90, respectively. Supported by these analyses, CA IOUs urged DOE to conduct a complete review of the higher efficacy prototype EL. (CA IOUs, No. 56 at p. 5)

      As noted in the NOPR, while DOE was able to test the efficacies of the prototype lamps, it had insufficient information to perform a cost analysis. 79 FR at 24111 (April 29, 2014). DOE did not find that a teardown analysis of the prototype lamps would be a feasible method to estimate costs. DOE would be unable to determine through teardowns whether the halogen burners used in various product offerings were the same because of the difficulty in analyzing the IR coating, specifically identifying the combinations of coatings applied. Without this knowledge, DOE could not distinguish the specific technology differences between one halogen burner and another and estimate costs accordingly. Expected retail prices of the prototype lamp were provided through comments and manufacturer interviews, but the information indicated that the prices of the higher efficacy products would be less than those of the lamps that comply with EL 1 and even the baseline. As these lamps utilize a more advanced IR coating than lamps currently available on the market, the manufacturer-provided cost was inconsistent with the available market information. Further, this manufacturer does not distribute covered IRLs in the U.S. market. Therefore, DOE was unable to estimate the price of the prototype lamp by comparing it to a similar lamp offered by the same manufacturer, which would have allowed DOE to isolate the change in price due to the more efficient coating. For these reasons, DOE concluded that it did not have the information needed to conduct a cost assessment of the higher efficacy prototype lamps and therefore, did not include them in this final rule analysis.

    10. Efficacy Levels

      After identifying more efficacious substitutes for each of the baseline lamps, in the NOPR, DOE developed ELs based on the consideration of several factors, including: (1) The design options associated with the specific lamps being studied; (2) the ability of lamps across wattages to comply with the standard level of a given product class; and (3) the max tech level. 79 FR at 24093 (April 29, 2014).

      For IRLs, DOE developed a continuous equation that specifies a minimum efficacy requirement across wattages and represents the potential efficacy a lamp can achieve using a particular design option. DOE observed an efficacy division among commercially available IRL products that corresponded to the design options utilized to increase lamp efficacy. Based on this efficacy division, DOE considered one EL in the NOPR analysis. Id. at 24113. DOE received a comment from NEMA regarding the EL presented for IRLs in the NOPR analysis.

      NEMA stated that energy conservation standards above the current IRL standards could not be economically justified. NEMA further stated that the 6.2P \0.27\ level proposed in the NOPR is inappropriately set at the higher end of the normal distribution curve for performance. Following the CCE rules, if the average performance of the more efficacious lamps is 6.2P \0.27\, the standard should be set at 6.0P \0.27\. NEMA did note, however, for standard spectrum IRLs under 125 V, it would be possible to consistently produce lamps at a higher efficacy, up to 6.0P \0.27\ from 5.9P\0.27\, for lamps between 60 W and 205 W. NEMA expressed their belief that only this subset of IRLs could reliably increase their efficacy, and only by that increment. NEMA doubted that this increase would generate significant energy savings on its own. (NEMA, No. 54 at pp. 21-22)

      DOE conducted an updated engineering analysis for the final rule and determined that EL 1 corresponded to an efficacy requirement of 6.2P \0.27\ based on certification data. DOE notes that the statistics included in the compliance procedures are intended to ensure that manufacturers are reporting a value that approximates the population mean. Each tested lamp is not individually required to meet or exceed the standard level. Designing products such that their population mean or the performance of each individual lamp unit within the population exceeds DOE's standard level is not required and is done so at the discretion of individual manufacturers. Regarding an assessment of national energy savings for IRLs see section VII.B.3. Regarding DOE's conclusion as to whether a standard is economically justified, DOE weighs the benefits and burdens in section VII.C.3.

      For the final rule analysis, DOE again reviewed the most updated catalog and certification data available for covered IRLs. As in the NOPR analysis, DOE used the catalog data to identify all products on the market and ensure consideration of all available products in the analysis and assessed both catalog and certification efficacy values to identify efficacy levels. In the NOPR analysis, DOE had found there to be certification data for 51 percent of covered IRL products compliant with the July 2012 standards. For the final rule analysis, DOE found that updates to DOE's certification database resulted in certification data for 61 percent of covered IRL products. While this was an increase from the NOPR analysis, it still did not represent a comprehensive dataset on which to base an engineering analysis. Therefore, in this final rule analysis, DOE again used catalog data to identify all products on the market and ensure consideration of all available products in the analysis. DOE assessed both catalog and certification efficacy values to identify efficacy levels. Using certification data reported for the PAR38 2,500 hour HIR and 4,200 hour improved HIR representative lamps, DOE adjusted EL 1. As mentioned previously, DOE developed a continuous equation that specifies a minimum efficacy requirement across wattages for IRLs. The EL that DOE determined based on the representative lamps is a curve that represents a standard across all wattages.

      Table VI.8 presents the efficacy level for IRLs. See chapter 5 of the final rule TSD for additional information on how the engineering analysis was conducted.

      Table VI.8--Efficacy Levels for Standard Spectrum, Voltage 2.5 Inches IRLs

      ------------------------------------------------------------------------

      Efficacy level Efficacy requirement lm/W

      ------------------------------------------------------------------------

      EL 1..................................... 6.2P \0.27\

      ------------------------------------------------------------------------

      P = rated wattage

    11. Scaling to Other Product Classes

      When more than one product class exists for a covered product, DOE identifies and selects representative product classes to analyze directly. Efficacy levels developed for these representative product classes are then scaled to products not analyzed directly. For IRLs, DOE analyzed directly standard spectrum lamps greater than 2.5 inches in diameter and with input voltages less than 125 V. The efficacy levels developed for this representative product class were then scaled to product classes not analyzed, using a scaling factor to adjust levels for smaller diameter lamps, lamps with higher

      Page 4080

      input voltages, and modified spectrum lamps. DOE received several comments specific to the scaling factors applied to develop efficacy levels for the product classes analyzed directly.

      Diameters Less Than or Equal to 2.5 Inches

      In the NOPR analysis, DOE scaled from the EL developed for IRLs with diameters greater than 2.5 inches (hereafter ``large diameter lamps'') to IRLs with diameters less than or equal to 2.5 inches (hereafter ``small diameter lamps''). Based on catalog data, DOE determined the reduction in efficacy caused by the smaller lamp diameter to be approximately 12 percent. DOE also determined that the more efficient double-ended HIR burners could not fit into small diameter lamps without extending the reflector lens. Therefore, in the NOPR analysis, DOE applied an additional 3.5 percent reduction to account for the ability of small diameter lamps to utilize only less efficient single-ended HIR burners.

      CA IOUs noted that small diameter lamps are less efficacious than larger lamps and agreed with DOE's scaling factor as appropriate, except for the 3.5 percent to account for double-ended burners, as CA IOUs believed that small diameter lamps are capable of utilizing these burners. CA IOUs stated that DOE had not provided enough analysis on the potential issue that fitting double-ended burners in a small diameter lamp would change the physical shape of the lamp and thereby impact whether these lamps can fit in fixtures in which they are currently used. CA IOUs questioned if DOE had collected data on the various lengths of small diameter lamps on the market. CA IOUs noted that they have found R20 lamps with single-ended burners that range in length from 3.1 to 4.2 inches. They stated that the R20 lamp with a double-ended burner they submitted to DOE was 3.5 inches long, and therefore still in the typical R20 range. (CA IOUs, Public Meeting Transcript, No. 49 at pp. 124-126, 128-129)

      OSI commented that, in general, technologies used in PAR30 lamps cannot be used in PAR20 lamps. (OSI, Public Meeting Transcript, No. 49 at p. 127) OSI noted that luminaire manufacturers construct luminaires for the actual lamp length on the market, not to the ANSI specifications for the bulb shape. OSI clarified, therefore, that a lamp longer than what is otherwise on the market would not fit in luminaires, regardless of whether it still met the ANSI requirements for the bulb shape. (OSI, Public Meeting Transcript, No. 49 at pp. 128-

      129) GE agreed and added that a small increase in lamp length would not matter for certain luminaires, such as a track lighting fixture, but that DOE could not assume the new design would fit in all existing fixtures. (GE, Public Meeting Transcript, No. 49 at p. 125) OSI explained that fitting the lamp with the double-ended burner into the luminaire would not be the only problem, DOE should also consider the temperature limits that the double-ended burner might force the lamp to exceed. (OSI, Public Meeting Transcript, No. 49 at p. 127) NEMA commented that lamps need to be designed to match the physical shape of the luminaires in the market. (NEMA, No. 54 at p. 49)

      DOE must consider how the use of a design option affects product utility and whether a more efficacious product is an appropriate substitute for an existing less efficacious product. (42 U.S.C. 6295(o)(2)(B)(i)) DOE confirmed that a double-ended burner was present in the small diameter (PAR20) prototype lamp mentioned previously and also in a commercially available PAR20 lamp that is outside the scope of this rulemaking. However, manufacturers noted that fitting a double-

      ended burner into a small diameter lamp requires changes to the physical shape of the lamp, specifically requiring an extension of the reflector lens. (NEMA, no. 36 at p. 12; GE, Public Meeting Transcript, No. 49 at p. 125) While the modified lamp may still meet ANSI standards for a small diameter lamp such as a PAR20, it would be larger than PAR20 lamps sold in the past and those currently installed. Because the lamp shape would be different from the standard sizes of commercially available small diameter lamps, the modified lamp may not fit in existing structures. DOE conducted an analysis by comparing lengths of small diameter lamps to existing fixtures. The lengths of lamps with double-ended burners varied and DOE cannot state with certainty that these lengths will fit in all fixtures. Further, within the wattage range of lamps covered by this rulemaking (40 W or higher), heat dissipation in lamps with a smaller envelope using a double-ended burner could also become an issue. Additionally, manufacturer feedback indicated that even if the double-ended burner could fit into a small diameter lamp, it would be difficult to place the burner/filament in the optimal position such that the benefits in efficacy could be realized.

      Therefore, in this final rule DOE continued to apply an additional 3.5 percent reduction factor when scaling efficacies of large diameter to small diameter lamps to account for the ability of small diameter lamps to utilize only single-ended burners.

      Operating Voltages Greater Than or Equal to 125 Volts

      In the NOPR analysis, DOE scaled from IRLs with voltages less than 125 V to IRLs with voltages greater than or equal to 125 V. DOE developed a scaling factor that would require 130 V lamps operating at 120 V \43\ to use the same technology and possess the same general performance characteristics as 120 V lamps operating at 120 V. DOE found that while there may be a slight decrease in efficacy, the lifetime of a 130 V lamp is doubled when it is operated at 120 V, giving it an advantage over 120 V lamps. Using the Illuminating Engineering Society of North America (IESNA) Lighting Handbook equations that relate lifetime, lumens, and wattage to voltage of incandescent lamps, DOE determined that a 15 percent scaling factor was necessary.

      ---------------------------------------------------------------------------

      \43\ While a 130 V lamp is typically operated at 120 V, DOE test procedures require that lamps rated at 130 V be tested at 130 V.

      ---------------------------------------------------------------------------

      NEMA commented that in the 2009 Lamps Rule, DOE set a level for 130 V lamps which was approximately 15 percent higher than achievable with the maximum available technology. NEMA argued that, as the efficacy of 130 V lamps is actually slightly lower than 120 V lamps, the only way to achieve such efficacy levels is to greatly shorten lamp life to less than 500 hours even if a 130 V lamp was operated on 120 V. If the consumer had a high voltage problem and was operating near 130 V, the lamp life would be shortened to a few hundred hours. In both scenarios, very short life products are unmarketable to the consumer, especially for 130 V consumers who were primarily buying the lamp due to its long life on 120 V operation during voltage fluctuations. Giving the example of the 130 V IRL, NEMA commented that DOE is incorrect in its assumptions that no utility would be lost with higher IRL standards. Specifically, NEMA explained that 130 V IRLs were able to operate under elevated voltage spike and transient conditions, and are now eliminated from the market due to the 2009 Lamps Rule standards. (NEMA, no. 54 at p. 48)

      Philips commented that the scaling factor used for any new 130 V lamp standards would not matter as the lamp is already out of the market. (Philips, Public Meeting Transcript, No. 49 at p. 123) GE commented that the max tech for 120 V and 130 V lamps are almost identical, so the 15 percent scaling factor used to scale between the two

      Page 4081

      lamps in the 2009 Lamps Rule is responsible for eliminating 130 V lamps from the marketplace, along with its utility. (GE, Public Meeting Transcript, No. 49 at p. 123)

      DOE has not found evidence that more efficacious 130 V IRLs are not technologically feasible or practicable to manufacture. DOE research indicates that the basic structure, components, and operating requirements of these lamps do not prevent the application of design options considered in the engineering analysis to achieve EL 1. Therefore, in this final rule analysis, DOE continued to determine a higher efficacy level for these lamp types.

      Further, DOE remains concerned, that the operation of 130 V lamps at 120 V has the potential to significantly affect energy savings. DOE's research has shown that 130 V lamps are usually operated by consumers at 120 V rather than on a higher voltage line. This could incentivize manufacturers to design a less efficient and less expensive 130 V lamp that would meet standards when tested at 130 V. Because they would be cheaper, there could be a market migration to 130 V lamps and due to the lower lumen output when 130 V lamps are operated at 120 V, consumers may purchase more 130 V lamps, resulting in increased energy consumption.

      DOE's research indicates that operating 130 V lamps at 120 V increases lifetime and lowers efficacy compared to operating these lamps at 130 V. Therefore, to develop an appropriate scaling factor, DOE determined the efficacy of 130 V lamps operated at 120 V if their additional lifetime over that of 120 V lamps were instead used to increase their efficacy. DOE found this increase in efficacy to be 15 percent. Therefore in this final rule analysis, DOE is using a scaling factor of a 15 percent efficacy increase from an IRL with voltages less than 125 V to voltages greater than or equal to 125 V.

      Modified Spectrum

      In the NOPR analysis, DOE established ELs for modified spectrum IRLs by scaling from the ELs developed for the standard spectrum product class. DOE determined that a reduction of 15 percent from the standard spectrum ELs would be appropriate for modified spectrum IRLs.

      EEOs cited a 2009 study by Ecos Consulting which found a 9-11 percent light loss associated with IRL modified spectrum lenses, and recommended either eliminating the allowance altogether or reducing it to 10 percent. (EEOs, No. 55 at p. 7)

      Regarding the use of a 15 percent scaling factor from standard spectrum to modified spectrum IRLs, DOE based this determination on both its understanding of the differences in characteristics and performance of these two lamp types. In the 2009 Lamps Rule, DOE assessed the efficacy differences between standard and modified spectrum IRLs by measuring the efficacies of commercially available standard and modified spectrum lamps. 74 FR 34080 (July 14, 2009). In that analysis, DOE correlated the measured color point data of the lamps with lamp light output reduction and lamp spectral power distribution. By analyzing the data, DOE established that a reduction of 15 percent from the standard spectrum to modified spectrum lamps was necessary. Using the available data for standards-compliant modified spectrum lamps on the market, DOE compared the efficacies of these two lamps with standard spectrum lamps with the same wattage and lifetime by the same manufacturer, and confirmed a 15 percent reduction in efficacy from a modified spectrum lamp to a standard spectrum lamp. Therefore, DOE maintained a 15 percent efficacy reduction from a standard spectrum IRL to a modified spectrum IRL for this final rule.

    12. Xenon

      DOE identified higher efficiency inert fill gas as a design option for improving lamp efficacy of IRLs. Specifically, xenon, due to its low thermal conductivity, can greatly increase lamp efficacy and is utilized in most covered standards-compliant IRLs.

      NEMA commented that the scarcity of xenon makes it questionable that IRL products will be able to comply with the proposed standards just by adding more xenon to the lamp burners. NEMA stated that due to a xenon shortage last year manufacturers had to reduce the use of xenon. NEMA explained that the remaining efficacy margin under current standards allows continued production of IRLs during xenon shortages. Further, NEMA noted that the big xenon producing companies have not expanded their production capacity as much and there is high demand and limited production capacity for this gas. (NEMA, No. 54 at p. 35) NEMA remarked that DOE's xenon price analysis ignores xenon shortages. (NEMA, No. 54 at p. 11) Further, NEMA stated the current high cost of xenon is at 13 Euros per liter compared to its previously low price in early 2013. NEMA predicted that xenon prices would not drop again and instead continue to increase with the increased number of incandescent A-line replacement lamps (which also utilize xenon). (NEMA, No. 54 at p. 35)

      NEMA warned that manufacturers are at risk of not being able to make compliant lamps consistently due to the availability of xenon for IRLs, and if are unable to do so, they will stop making them, as they did with the 130 V IRLs. (NEMA, No. 54 at pp. 13-14) NEMA reported that a member's global buyer for noble gases had reported that xenon availability is at a minimum. NEMA concluded that the EL should be reduced due to the unavailability of xenon and noted that lighting legislation hugely affects the supply and demand of xenon. (NEMA, No. 54 at p. 35)

      DOE acknowledges that xenon supply and prices are important factors for IRLs. Therefore, in the NOPR analysis DOE conducted a market assessment of xenon supply, demand, and prices as well as LCC and NIA sensitivities to determine the impact of increased end user lamp prices due to increases in the price of xenon. DOE updated this market and price assessment as well as the sensitivities for the final rule analysis.

      Based on this research, DOE determined that even if there are short term shortages of xenon, the long term supply of xenon is stable due to its availability in the air. Thus, supply could be increased to meet a continued increase in demand. DOE acknowledges that the supply of xenon cannot be quickly altered in the short term, and therefore conducted a sensitivity analysis to determine the impact of an increased price of xenon. In the final rule analysis, using NEMA's estimation of the current price of xenon, DOE updated the xenon price utilized in the LCC sensitivity analysis from $10 per liter to $18 per liter. Based on the results of this analysis, DOE determined that positive LCC savings could still be achieved at EL 1 with higher xenon prices. Additionally, in the NIA, DOE performed an alternative analysis in which the price of xenon is assumed to increase by a factor of ten in the near future and remain at these elevated levels throughout the analysis period. The impacts of the modeled xenon price increase on the NES and NPV of this rulemaking were minimal. See appendix 7C of the final rule TSD for complete details on the xenon price sensitivity conducted in the LCC, and chapter 12 of this final rule TSD for details on the xenon price sensitivity conducted in the NIA.

    13. Proprietary Technology

      In response to the EL (and max tech) proposed for IRLs in the NOPR, DOE

      Page 4082

      received several comments regarding proprietary technology. 79 FR at 24111 (April 29, 2014). NEMA stated that processes for silver, the best higher efficiency reflector coating, are patent-protected intellectual property (IP). (NEMA, No. 54 at p. 21)

      While DOE had determined in the 2009 Lamps Rule that the silver reflector was patented technology, DOE research indicated that there were alternate pathways to achieve this level, such as filament redesign to achieve higher temperature operation (thus reducing the lifetime), non-proprietary higher efficiency reflectors, and a higher efficiency IR coating. 74 FR 34080, 34133 (July 14, 2009). For this rulemaking, in interviews conducted in the preliminary analysis, manufacturers indicated that there were no specific patent or intellectual property barriers to obtaining commercially available IRL technologies. Further, for the NOPR analysis, DOE confirmed during interviews that proprietary technology is not a barrier to achieving the proposed max tech level. Therefore, DOE has concluded that several manufacturers have found means of designing more efficacious IRLs that are commercially available, such as through the use of IR glass coatings and higher efficiency reflector coatings that do not use proprietary technology. Hence, the EL for IRLs in this final rule is based on a commercially available improved HIR lamp that does not require proprietary technology to achieve its efficacy. Therefore, DOE has determined that this level can be achieved without the use of proprietary technology.

  47. Product Pricing Determination

    Typically, DOE develops manufacturer selling prices (MSPs) for covered products and applies markups to create end-user prices to use as inputs to the LCC analysis and NIA. Because GSFLs and IRLs are difficult to reverse-engineer (i.e., not easily disassembled), DOE did not use this approach to derive end-user prices for the lamps covered in this rulemaking.

    In the NOPR analysis, DOE gathered publicly available lamp pricing data after the compliance date of the July 2012 standards. 79 FR at 24116 (April 29, 2014). Based on feedback from manufacturer interviews, DOE determined that GSFLs and IRLs are sold through three main channels (state procurement; large distributors, including do-it-yourself (DIY) stores i.e., Lowe's and Home Depot; and Internet retailers). Using these main channels and the pricing data, DOE developed three different end-user prices as representative of a range of publicly available prices: low, based on the state procurement channel; medium, based on large distributors and DIY stores; and high, based on Internet retailers. DOE then developed an end-user price weighted by distribution channel. Using manufacturer feedback in interviews, DOE determined an aggregated percentage of shipments that go through each of the main channels for GSFLs and IRLs. The large distributors and DIY stores channel was estimated at 85 percent, the state procurement channel at 10 percent, and the Internet retail channel at 5 percent. DOE then applied these percentages respectively to the average medium price determined for large distributor and DIY stores, the average low price determined for state procurement contracts, and the average high price determined for Internet retailers. The sum of these weighted prices was used as the average consumer price for GSFLs and IRLs in the main LCC analysis and NIA. DOE continued to utilize the low prices and high prices in a sensitivity analysis in the LCC analysis. DOE received several comments on the pricing analysis.

    GE remarked that the pricing methodology presented in the NOPR is a reasonable approach. (GE, Public Meeting Transcript, No. 49 at pp. 130-

    131) CA IOUs agreed that the pricing methodology is appropriate for GSFLs but not for IRLs, as the latter is predominantly purchased through retail channels for homes and small businesses instead of through distributors or state procurements. (CA IOUs, Public Meeting Transcript, No. 49 at p. 131; NEEA, Public Meeting Transcript, No. 49 at pp. 131-132)

    DOE's assessment of the GSFL and IRL markets indicated that there are three main distribution channels. Of these three, DOE determined that the majority of volume goes through the large distributors and DIY stores and assigned it an 80 percent weighting. Because this channel includes stores such as Home Depot and Lowes in addition to distributors, it encompasses channels through which residential and small business consumers are more likely to make their purchases. Additionally, DOE determined that while the volume may be low, IRLs are included in state procurement contracts; therefore, DOE included them as a distribution channel and assigned them a low weighting.

    In the final rule analysis, DOE used the same methodology as described for the NOPR analysis. For the final rule, DOE scaled the prices from 2012$ to 2013$ in the LCC analysis and NIA, using the ratio of the 2013 consumer price index (CPI) and 2012 CPI multiplied by the 2012$ price. See chapter 7 of the final rule TSD for further information on the pricing analysis.

  48. Energy Use

    For the energy-use analysis, DOE estimated the energy use of lamps in the field (i.e., as they are actually used by consumers). The energy-use analysis provided the basis for other DOE analyses, particularly assessments of the energy savings and the savings in consumer operating costs that could result from DOE's adoption of amended standard levels.

    1. Operating Hours

    In the NOPR, to develop annual energy-use estimates, DOE multiplied annual usage (in hours per year) by the lamp power (in watts) for IRLs and the lamp-and-ballast system input power (in watts) for GSFLs. Id. at 24117. DOE characterized representative lamp or lamp-and-ballast systems in the engineering analysis (see section VI.D). To characterize the country's average use of lamps for a typical year, DOE developed annual operating hour distributions by sector, using data published in the 2010 U.S. Lighting Market Characterization report (2010 LMC),\44\ the Commercial Building Energy Consumption Survey (CBECS),\45\ the Manufacturer Energy Consumption Survey (MECS),\46\ and the Residential Energy Consumption Survey (RECS).\47\ Id. at 24118. DOE did not receive any comments on this subject and maintained this approach for determining operating hours for this final rule. DOE updated the MECS data to 2010 data.\48\

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    \44\ U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Energy Conservation Program for Consumer Products: 2010 U.S. Lighting Market Characterization. 2012. Washington, DC. http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010-lmc-final-jan-2012.pdf.

    \45\ U.S. Department of Energy, Energy Information Administration. Commercial Building Energy Consumption Survey: Micro-level data, file 2 Building Activities, Special Measures of Size, and Multi-building Facilities. 2003. Washington, DC. www.eia.gov/consumption/commercial/data/2003/index.cfm?view=microdata.

    \46\ U.S. Department of Energy, Energy Information Administration. Manufacturing Energy Consumption Survey, Table 9.1: Enclosed Floorspace and Number of Establishment Buildings. 2006. Washington, DC. www.eia.gov/consumption/manufacturing/data/2006/xls/Table9_1.xlsl.

    \47\ U.S. Department of Energy, Energy Information Administration. RECS Public Use Microdata files. 2009. Washington, DC. www.eia.gov/consumption/residential/data/2009.

    \48\ U.S. Department of Energy, Energy Information Administration. Manufacturing Energy Consumption Survey, Table 9.1: Enclosed Floorspace and Number of Establishment Buildings. 2010. Washington, DC. http://www.eia.gov/consumption/manufacturing/data/2010/.

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    Page 4083

    2. Lighting Controls

    DOE evaluated the impact of lighting controls on the energy use of GSFLs and IRLs. Most lighting controls have one of two impacts: reducing operating wattage or reducing operating hours. DOE refers to these two groups of controls as dimmers or light sensors, and occupancy sensors, respectively. The calculated operating hours used in the reference case already account for the use of occupancy sensors because the 2010 LMC operating hour data are based on building surveys and metering data. In the NOPR analysis, DOE accounted for the use of dimmers or light sensors by modeling GSFLs and IRLs on dimmers and developing associated energy-use results for both types of covered lamps as a sensitivity analysis. See appendix 6A of the final rule TSD for further information.

    DOE received an overall comment regarding its approach to lighting controls for GSFLs and IRLs. Westinghouse suggested that DOE separate dimming percentages between IRLs and GSFLs because in the commercial sector, GSFLs are generally dimmed more often and IRLs are on simple switch circuits, and in the residential sector, IRLs are frequently dimmed and GSFLs are almost never dimmed. (Westinghouse, Public Meeting Transcript, No. 49 at p. 142)

    DOE agrees with Westinghouse that GSFLs and IRLs are used differently and that usage varies depending on the market sector. DOE calculated separate dimming percentages for GSFL and IRL and for each market sector in which they are present. The following sections discuss these percentages in more detail.

    1. General Service Fluorescent Lamp Lighting Controls

      In the NOPR, DOE assessed the impacts of dimmers on GSFLs by determining the reduction in system lumen output and system input power as a result of using dimming ballasts. Id. Based on product research and manufacturer feedback, DOE analyzed dimming scenarios for 2-lamp 4-

      foot MBP systems, 4-lamp 4-foot MBP systems, 2-lamp 4-foot T5 MiniBP SO systems, and 2-lamp 4-foot T5 MiniBP HO systems operating in the commercial and industrial sectors. DOE did not analyze dimmable GSFL systems in the residential sector because DOE believes these systems are rarely dimmed. DOE determined that the average reduction of system lumen output for GSFLs was 33 percent, based on research and manufacturer input. DOE did not receive any comments on this approach to analyzing GSFL dimming and therefore maintained this approach in the final rule.

    2. Incandescent Reflector Lamp Lighting Controls

      In the NOPR analysis, DOE research indicated that, on average, consumers using dimmers reduce lamp wattage by 20 percent, corresponding to a lumen reduction of 25 percent and an increase in lifetime by a factor of 3.94. Id. at 24119. DOE analyzed two scenarios in LCC sensitivity analyses: (1) The light output of the baseline lamp was reduced by 25 percent and more efficient lamps were dimmed to the same light output and (2) the characteristics of the lamps analyzed represented the distribution of dimmers across the nation. For the second scenario, DOE used the 2010 LMC to determine that 29 percent of halogen IRLs operate on dimmers or light sensors in the residential sector and 5 percent of halogen IRLs operate on dimmers in the commercial sector and used these percentages to calculate weighted-

      average performance characteristics. DOE received several comments on its approach to analyzing IRL dimming.

      Philips disagreed with only 5 percent dimming in the commercial sector, stating that given the 30-year analysis period, this percentage is understated. Philips specifically referenced California's new requirements for dimming in all renovations and new buildings and American Society of Heating, Refrigerating and Air Conditioning Engineers' (ASHRAE's) support of these measures driving increased dimming prevalence across the country. (Philips, Public Meeting Transcript, No. 49 at pp. 137-138) NEEA agreed with Philips that 5 percent dimming for the commercial sector is too low and added that the 29 percent dimming DOE used for the residential sector is far too high. Westinghouse also questioned the 29 percent dimming estimate for the residential sector noting that if the percentage was for residential IRLs only, it may be representative but was too high for GSFLs as homeowners tend not to dim those lamps. (Westinghouse, Public Meeting Transcript, No. 49 at p. 141)

      To update DOE's numbers, NEEA suggested a report they had completed on a 13-month residential metering study that studied 2,200 sensors in 103 houses by fixture type, technology, and room. NEEA explained that their data include the wattage of the lamp, the controls on the socket, the number of lamps per fixture, the number of lamps per switch, the type of fixture, and room in which it is located. NEEA suggested that the data contain enough samples to characterize residential lighting in the four states included. NEEA also mentioned a census they conducted across 1,400 houses that gathered the same data, which can then be applied across the entire region. NEEA sent a summary of the data to DOE for immediate use, and stated that the rest of the data would be available for download on NEEA's and NEMA's Web sites. (NEEA, Public Meeting Transcript, No. 49 at pp.138, 140)

      Regarding the accuracy of the percentages, the 29 percent of lamps on dimmers was applied to IRLs for the residential sector analysis and the 5 percent of lamps on dimmers was applied to IRLs for the commercial sector. As noted, these values are based on the 2010 LMC and DOE believes are an accurate representation of the percentage of IRLs on dimmers in each sector. Regarding the potential increase in percentage, while the percentage of occupancy sensors may increase, DOE assumed that the percentage of IRLs on dimmers will remain relatively constant because dimmers provide utility for consumers beyond energy savings. DOE also reviewed NEEA's data, but ultimately maintained the methodology described above because NEEA's data is limited to the Northwest region while the 2010 LMC lighting controls data is based several building audit studies, spanning several geographic regions and years of data collection, which was then scaled based an inventory of lighting at the national level. Therefore, for this final rule, DOE maintained its methodology for analyzing dimming for IRLs.

  49. Life-Cycle Cost Analysis and Payback Period Analysis

    In the NOPR analysis, DOE conducted LCC and PBP analyses to evaluate the economic impacts of proposed energy conservation standards for GSFLs and IRLs on individual consumers. 79 FR at 24119 (April 29, 2014). The LCC is the total consumer expense over the life of a product, consisting of purchase, installation, and operating costs (operating costs are expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounted future operating costs to the time of purchase and summed them over the lifetime of the product. The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more efficient product through lower operating costs. DOE calculates the PBP by dividing the

    Page 4084

    change in purchase cost (normally higher) by the change in average annual operating cost (normally lower) that results from the higher efficiency standard. DOE used a ``simple'' PBP for this rulemaking, which does not take into account other changes in operating expenses over time or the time value of money.

    For any given efficacy or energy-use level, DOE measures the PBP and the change in LCC relative to an estimated base-case product efficacy or energy-use level. The base-case estimate reflects the market without new or amended mandatory energy conservation standards, including the market for products that exceed the current energy conservation standards.

    Inputs to the calculation of total installed cost include the cost of the product--which includes consumer product price and sales taxes--

    and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, product lifetimes, discount rates, and the year in which compliance with proposed standards would be required. DOE also incorporated a residual value calculation to account for any remaining lifetime of lamps at the end of the analysis period. The residual value is an estimate of the product's value to the consumer at the end of the LCC analysis period. In addition, this residual value recognizes that a lamp may continue to function beyond the end of the analysis period. DOE calculates the residual value by linearly prorating the product's initial cost consistent with the methodology described in the Life-Cycle Costing Manual for the Federal Energy Management Program.\49\

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    \49\ Fuller, Sieglinde K. and Stephen R. Peterson. National Institute of Standards and Technology Handbook 135 (1996 Edition); Life-Cycle Costing Manual for the Federal Energy Management Program. (Prepared for U. S. Department of Energy, Federal Energy Management Program, Office of the Assistant Secretary for Conservation and Renewable Energy.) February 1996. NIST: Gaithersburg, MD. Available at: http://fire.nist.gov/bfrlpubs/build96/PDF/b96121.pdf.

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    As inputs to the PBP analysis, DOE used the total installed cost of the product to the consumer for each efficacy level, as well as the first-year annual operating costs for each efficacy level. The calculation requires the same inputs as the LCC, except for energy price trends and discount rates; only energy prices for the year in which compliance with any new standard would be required (2018, in this case) are needed.

    To account for uncertainty and variability, DOE created value distributions for inputs as appropriate, including operating hours, electricity prices, discount rates and sales tax rates, and disposal costs. For example, DOE created a probability distribution of annual energy consumption in its energy-use analysis, based in part on a range of annual operating hours. The operating hour distributions capture variation across census divisions and large states, building types, and lamp or lamp-and-ballast systems for three sectors (commercial, industrial, and residential).

    DOE conducted the LCC and PBP analyses using a spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a commercially available software program), the spreadsheet model generates a Monte Carlo simulation \50\ to perform the analysis by incorporating uncertainty and variability considerations. The Monte Carlo simulations randomly sample input values from the probability distributions and lamp user samples, performing 1,000 iterations per simulation run.

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    \50\ Monte Carlo simulations model uncertainty by utilizing probability distributions instead of single values for certain inputs and variables.

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    DOE did not receive any comments on the general methodology regarding the LCC and PBP assessment. In the final rule analysis, DOE generally maintained the methodology from the NOPR analysis, with a few changes. Table VI.9 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations for the NOPR, as well as the changes made for this final rule. The final rule TSD chapter 8 and its appendices provide details on the spreadsheet model and of all the inputs to the LCC and PBP analyses. The final rule TSD appendix 8B provides results of the sensitivity analyses conducted using Monte Carlo simulation. The subsections that follow discuss the comments regarding each initial input and any changes made to them in the final rule analysis.

    Table VI.9--Summary of Inputs and Key Assumptions in the LCC and PBP Analyses *

    ----------------------------------------------------------------------------------------------------------------

    Inputs NOPR TSD Changes for the Final Rule

    ----------------------------------------------------------------------------------------------------------------

    Consumer Product Price................ Applied discounts to manufacturer No change.

    catalog (``blue book'') pricing in

    order to represent low, medium, and

    high prices for all lamp categories.

    Used a weighted-average price in the

    main analysis based on the percentage

    of shipments that go through the

    distribution channel having low,

    medium, or high prices.

    Sales Tax............................. Derived sector-specific average tax No change.

    values based on the probability of

    purchasing a GSFL or IRL in each census

    division and large state from data

    provided by the Sales Tax Clearinghouse.

    Installation Cost..................... Derived costs using the RS Means No change.

    Electrical Cost Data and U.S. Bureau of

    Labor Statistics to obtain average

    labor times for installation, as well

    as labor rates for electricians and

    helpers based on wage rates, benefits,

    and training costs.

    Annual Operating Hours................ Determined operating hours by Updated MECS data to 2010

    associating operating hours for a GSFL data.

    or IRL in a specific building type

    using the average lamps per square foot

    and the percentage of lamps of each

    type with regional distributions of

    various building types using the 2010

    LMC and EIA's 2003 CBECS, 2009 RECS,

    and 2006 MECS.

    Page 4085

    Product Energy Consumption Rate....... Determined lamp input power for IRLs No change.

    based on published manufacturer

    literature. Calculated system input

    power for GSFLs. Used lamp arc power,

    catalog BF, number of lamps per system,

    and tested BLE (when possible) to

    calculate system input power for each

    unique lamp-and-ballast combination.

    Electricity Prices.................... Electricity: Based on EIA's Form 861 Electricity: Based on EIA's

    data for 2011 scaled to 2012 (the Form 861 data for 2012 scaled

    dollar year of the analysis) using AEO to 2013 (the dollar year of

    2013 and the consumer price index. the analysis) using AEO 2014

    Variability: Weighted-average national and the consumer price index.

    price for each sector and lamp type Variability: No change.

    calculated from the probability of a

    GSFL or IRL purchased in each census

    division or large state.

    Electricity Price Projections......... Forecasted using AEO 2013............... Forecasted using AEO 2014.

    Replacement and Disposal Costs........ Commercial and industrial: Included No change.

    labor and materials costs for lamp

    replacement, and disposal costs for

    failed GSFLs.

    Residential: Included only materials

    cost for lamps, with no lamp disposal

    costs.

    Product Lifetime...................... Ballast lifetime based on average No change.

    ballast life of 49,054 from 2011

    Ballast Rule. Lamp lifetime based on

    published manufacturer literature where

    available.

    Discount Rates........................ Commercial and industrial: Derived No change.

    discount rates using the cost of

    capital of publicly traded firms in the

    sectors that purchase lamps, based on

    data in the 2003 CBECS, Damodaran

    Online,\51\ Office of Management and

    Budget (OMB) Circular No. A-94,\52\ and

    state and local bond interest

    rates.\53\

    Residential: Derived discount rates

    using the finance cost of raising funds

    to purchase lamps either through the

    financial cost of any debt incurred to

    purchase product or the opportunity

    cost of any equity used to purchase

    equipment, based on the Federal

    Reserve's Survey of Consumer Finances

    data \54\ for 1989, 1992, 1995, 1998,

    2001, 2004, 2007, and 2010.

    Analysis Period....................... IRLs and commercial and industrial No change.

    GSFLs: Based on the baseline lamp life

    in hours divided by the annual

    operating hours of that lamp.

    Residential GSFLs lamp failure: Based on

    the lifetime of the ballast.

    Residential GSFLs ballast failure and

    new construction/renovation: Based on

    the lifetime of the ballast.

    Compliance Date of Standards.......... 2017.................................... 2018.

    Lamp Purchase Events.................. Assessed three events: lamp failure, No change.

    ballast failure (GSFLs only), and new

    construction/renovation.

    ----------------------------------------------------------------------------------------------------------------

    * References for the data sources mentioned in this table are provided in the sections following the table or in

    chapter 8 of the final rule TSD.

    1. Consumer Product Price

    In the NOPR, DOE used a variety of sources to develop consumer product prices, including lamp prices from manufacturers' blue books, state procurement contracts, large electrical supply distributors, hardware and home improvement stores, Internet retailers, and other similar sources. 79 FR at 24122 (April 29, 2014). DOE then developed low, medium, and high prices based on its findings. DOE calculated a weighted-average price based on the percentage of shipments going through the low discount (high price), medium discount (medium price), and high discount (low price) distribution channels. Because fluorescent lamps operate on a ballast in practice, DOE analyzed lamp-

    and-ballast systems in the engineering analysis and therefore also determined end-user prices for ballasts. DOE utilized the end-user prices from the 2011 Ballast Rule converted to 2012$ to develop prices for replacement ballasts. In the final analysis, DOE maintained the same methodology, but converted the prices to 2013$ instead of 2012$. For further discussion regarding end-user prices, see section VI.E.

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    \51\ Damodaran Online, The Data Page: Historical Returns on Stocks, Bonds, and Bills--United States (2014). Available at: http:/

    /pages.stern.nyu.edu/~adamodar.

    \52\ U.S. Office of Management and Budget, Circular No. A-94 Appendix C (2013). Available at: www.whitehouse.gov/omb/circulars_a094/a94_appx-c.

    \53\ Federal Reserve Board, Statistics: Releases and Historical Data--Selected Interest Rates--State and Local Bonds (2014). Available at: www.federalreserve.gov/datadownload/Build.aspx?rel=H15.

    \54\ The Federal Reserve Board, Survey of Consumer Finances. Available at: www.federalreserve.gov/PUBS/oss/oss2/scfindex.html.

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    On February 22, 2011, DOE published a notice of data availability (NODA; 76 FR 9696) stating that DOE may consider whether its regulatory analysis would be improved by addressing product price trends. Using three decades of historic data on the quantities and values of domestic shipments of fluorescent lamps and PAR lamps reported by the U.S. Census Bureau in their Current Industrial Reports, DOE examined product prices trends, fitting the data to an experience curve, as described in chapter 11 of the NOPR TSD. DOE found that the data are well-

    represented by the experience curve and consistent with price learning theory. Therefore, consistent with the NODA, DOE incorporated price trends into this rulemaking. In the LCC analysis, DOE

    Page 4086

    adjusts prices for each year using the experience curve.

    2. Sales Tax

    In the NOPR analysis, DOE obtained state and local sales tax data from the Sales Tax Clearinghouse. Id. The data represented weighted averages that included county and city rates. DOE used the data to calculate a weighted-average sales tax based on the probability of a GSFL or IRL purchased for a particular building type in each census division and large state (New York, California, Texas, and Florida). DOE used information in the 2010 LMC, such as the number of lamps per square feet and the percentage of lamps within a building that are linear fluorescent or halogen. In combination with this information, DOE used CBECS, MECS, and RECS, respectively, for commercial, industrial, and residential building data on building types in each census division and large state. DOE did not receive any feedback on its approach to determining sales tax. In this final rule analysis, DOE used the same methodology with updated sales tax data from the Sales Tax Clearinghouse.\55\

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    \55\ Sales Tax Clearinghouse. Aggregate State Tax Rates. (2014). Available at: http://thestc.com/STrates.stm.

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    3. Installation Cost

    The installation cost is the total cost to the consumer to install the product, excluding the consumer product price. Installation costs include labor, overhead, and any miscellaneous materials and parts. As detailed in the NOPR analysis, DOE considered the total installed cost of a lamp or lamp-and-ballast system to be the consumer product price (including sales taxes) plus the installation cost. For the commercial and industrial sectors, DOE assumed consumers must pay to install the lamp or lamp-and-ballast system and assumed the installation cost was the product of the average labor rate and the time needed to install a lamp or lamp and ballast. In the residential sector, DOE assumed that consumers must pay for only the installation of a lamp-and-ballast system. Therefore, the installation cost assumed was the product of the average labor rate and the time needed to install the lamp-and-ballast system. DOE assumed that residential consumers would install their own replacement lamps and, thus, would incur no installation cost when replacing their own lamp. Id.

    DOE did not receive any comments on the installation cost. DOE retained this methodology for determining installation costs in this final rule analysis.

    4. Annual Energy Use

    As discussed in section VI.F, DOE estimated the annual energy use of representative lamp or lamp-and-ballast systems by multiplying input power and sector operating hours. For further discussion regarding annual energy-use calculations, see section VI.F.1. DOE maintained its methodology of determining annual energy-use inputs in this final rule analysis.

    5. Product Energy Consumption Rate

    As in the NOPR analysis, DOE determined lamp input power for IRLs based on published manufacturer literature. 79 FR at 24123 (April 29, 2014). For GSFLs, DOE calculated the system input power using published manufacturer literature and test data. DOE used lamp arc power, catalog BF, number of lamps per system, and tested BLE (when possible) to calculate system input power for each unique lamp-and-ballast combination. The rated system input power was then multiplied by the annual operating hours of the system to determine the annual energy consumption. DOE did not receive any comments on energy consumption rate calculations. DOE retained this methodology for determining energy consumption in this final rule analysis.

    6. Electricity Prices

    For the LCC and PBP in the NOPR analysis, DOE derived average energy prices for 13 U.S. geographic areas consisting of the nine census divisions, with four large states (New York, Florida, Texas, and California) treated separately. Id. For census divisions containing one of these large states, DOE calculated the regional average, excluding the data for the large state. The derivation of prices was based on data from EIA Form 861, ``Annual Electric Power Industry Database.'' DOE calculated weighted-average electricity prices based on the probability of a GSFL or IRL purchased in each census division and large state. The same methodology as noted previously for determining average weighted sales tax was used to calculate average weighted electricity prices. DOE used data published in the 2010 LMC in combination with CBECS, MECS, and RECS to determine an average weighted electricity price based on the probability of a GSFL or IRL in a particular building type in each census division and large state. DOE did not receive any comments on this approach. DOE retained this methodology for determining electricity prices in this final rule analysis.

    7. Electricity Price Projections

    To estimate the trends in energy prices for the NOPR analysis, DOE used the price forecasts in AEO 2013. Id. To arrive at prices in future years, DOE multiplied current average prices by the forecast of annual average price changes in AEO 2013. In this final rule analysis, DOE used the same approach, but updated its energy price forecasts using AEO 2014. In addition, the spreadsheet tools that DOE used to conduct the LCC and PBP analyses allow users to select price forecasts from AEO's low-growth, high-growth, and reference case scenarios to estimate the sensitivity of the LCC and PBP to different energy price forecasts. DOE did not receive any comments on this approach and maintained this methodology for determining electricity price projections in the final rule analysis.

    8. Replacement and Disposal Costs

    In its NOPR analysis, DOE addressed lamp replacements occurring within the analysis period as part of installed costs for considered lamp or lamp-and-ballast system designs. Id. Replacement costs in the commercial and industrial sectors included the labor and materials costs associated with replacing a lamp at the end of its lifetime, discounted to 2012$. For the residential sector, DOE assumed that consumers would install their own replacement lamps and incur no related labor costs.

    Some consumers recycle failed GSFLs, thus incurring a disposal cost. In its research, DOE found average disposal costs of 10 cents per linear foot for GSFLs.\56\ A 2004 report by the Association of Lighting and Mercury Recyclers noted that approximately 30 percent of lamps used by businesses and 2 percent of lamps in the residential sector are recycled nationwide.\57\ DOE considered the 30 percent lamp-recycling rate to be significant and incorporated GSFL disposal costs into the LCC analysis for commercial and industrial consumers. Given the very low (2 percent) estimated lamp-recycling rate in the residential sector, DOE assumed that residential consumers would be less likely to voluntarily incur the higher disposal costs. Therefore, DOE excluded the

    Page 4087

    disposal costs for lamps and ballasts from the LCC analysis for residential GSFLs.

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    \56\ Environmental Health and Safety Online's fluorescent lights and lighting disposal and recycling Web page--Recycling Costs. Available at www.ehso.com/fluoresc.php.

    \57\ Association of Lighting and Mercury Recyclers, ``National Mercury-Lamp Recycling Rate and Availability of Lamp Recycling Services in the U.S.'' Nov. 2004.

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    DOE received no comments concerning these assumed recycling rates, disposal costs, and their application in the LCC analysis. DOE maintained this approach in the final rule analysis.

    9. Lamp Purchase Events

    DOE designed the LCC and PBP analyses for this rulemaking around scenarios where consumers need to purchase a lamp. Each of these events may give the consumer a different set of lamp or lamp-and-ballast designs and, therefore, a different set of LCC savings for a certain efficacy level. In the NOPR analysis, DOE evaluated three types of events that would prompt a consumer to purchase a lamp. Id at 24123. These events are described in the following list. Though described primarily in the context of GSFLs, lamp purchase events can be applied to IRLs as well. However, considering that IRLs are not used with a ballast, the only lamp purchase events applicable to IRLs are lamp failure (Event I) and new construction and renovation (Event III).

    Lamp Failure (Event I): This event reflects a scenario in which a lamp has failed (spot relamping) or is about to fail (group relamping). In the base case, identical lamps are installed as replacements. In the standards case, the consumer installs a standards-

    compliant lamp that is compatible with the existing ballast.

    Ballast Failure (Event II): This is a scenario in which the failure of the installed ballast triggers a lamp-and-ballast purchase.

    New Construction and Renovation (Event III): This event encompasses all fixture installations where the lighting design will be completely new or can be completely changed. During new construction and renovation, the spatial layout of fixtures in a building space is not constrained to any previous configuration. However, because DOE's higher efficacy replacements generally maintain lumen output within 10 percent of the baseline system, DOE did not assume that spacing was changed.

    DOE received several comments regarding the lamp purchasing events assessed in the NOPR analysis. OSI questioned if, in the event of ballast failure in the new construction and renovation scenario, the installed cost includes the price of controls that are required by recent building codes, especially ASHRAE 90.1. (OSI, Public Meeting Transcript, No. 49 at pp. 144-145) ASHRAE 90.1 is a standard that provides the minimum requirements for energy-efficient design of certain commercial buildings. OSI noted that any replacement of lamps and ballasts that could be considered renovation would be subject to building codes requiring the installation of lighting controls, and this cost should be added to the scenarios. (OSI, Public Meeting Transcript, No. 49 at p. 146) Westinghouse agreed, stating that having to buy a control for a lamp should be treated no differently than having to hire an electrician and is part of the installation cost for a typical end-user product. (Westinghouse, Public Meeting Transcript, No. 49 at p. 145) NEEA acknowledged that controls may be required by building codes, but pointed out that a building code would apply regardless of the EL chosen. Thus the costs of controls would be the same at each level and would be unlikely to change the incremental installed costs analyzed in the LCC analysis. (NEEA, Public Meeting Transcript, No. 49 at p. 146)

    DOE agrees that in the LCC analysis, a consumer that purchases a new lamp will have to comply with the same building code in both the base case (absent amended energy conservation standards) and the standards case (with amended energy conservation standards). In instances where the building code would require lighting controls, DOE reviewed the lighting systems analyzed in the GSFL engineering analysis for this rulemaking and determined that the required controls would not differ between the baseline systems analyzed and each higher efficacy system. Because the controls would be the same at each level, the incremental costs associated with the controls (price and installation) would not be different for the different ELs, Therefore, DOE did not include the cost of controls in the final rule analysis.

    Regarding more efficient replacement systems analyzed, NEMA noted switching from T12 or T8 to T5 lamps is expensive, and therefore suggested that the LCC and PBP analyses include the re-ballasting costs for lamps, luminaires, ballasts, labor, and down time. (NEMA, No. 54 at p. 48)

    The LCC and PBP analyses determine the economic impacts to a consumer within an individual product class. Because only one type of lamp (i.e., T5 or T8) is specified within each product class, DOE does not account for product class switching in the LCC and PBP analyses. DOE does, however, account for product class switching in the shipments analysis and, subsequently, the NIA. See VI.I for additional details on product class switching in the shipments analysis.

    DOE received no other comments on lamp purchase events and is maintaining the lamp purchase events and the associated assumptions in this final rule analysis.

    10. Product Lifetime

    1. Lamp Lifetime

      In the NOPR analysis, DOE used manufacturer literature to determine lamp lifetimes. DOE also considered the impact of group relamping practices on GSFL lifetime in the commercial and industrial sectors. In the NOPR analysis, DOE assumed that a lamp subject to group relamping operates for 85 percent of its rated lifetime based on information from manufacturers in interviews that consumer behavior had changed due to recent economic conditions and group relamping occurred at 85-90 percent of rated life. Id. at 24124.

      Westinghouse agreed that relamping would occur at 85 percent of rated life in the commercial sector, however, they noted that in the residential sector, relamping would occur when the resident cannot see or when the lamp fails. (Westinghouse, Public Meeting Transcript, No. 49 at p. 144) Philips further commented that older consumers would relamp sooner, due to impaired eyesight. (Philips, Public Meeting Transcript, No. 49 at p. 144)

      DOE assumed that during group relamping, a consumer removes and replaces a collection of lamps that are near the end of their lives at once, as a way of avoiding the failure of any individual lamp in the collection. While DOE models this behavior in the commercial sector, DOE assumed that residential sector consumers replace their lamps either when they fail or when the associated fixture is removed; thus, there are no spot or group relamping lifetime impacts on the residential sector.

      NEMA noted that group relamping is commonly recommended at 70-80 percent of rated life. During the 2010-2011 rare earth crises, group relamping may have been delayed, but it has since come back in line with the recommended time frame. (NEMA, No. 54 at p. 32)

      DOE acknowledges that the economic conditions that impacted group relamping decisions may have been temporary and, taking into consideration NEMA's observation, changed the group relamping assumption to 75 percent of rated life for the final rule analysis. See chapter 8 of the final rule TSD for further details.

      Page 4088

      In the NOPR, DOE used 15 years as the estimated fixture and ballast lifetime in the residential sector for purposes of its analyses. NEMA commented that DOE should not assume a normal average lifetime for residential GSFLs as these lamps typically fail from frequent switching rather than deterioration of the emitter. NEMA mentioned that failure due to rapid switching is unpredictable and variable, based on the frequency of switches, and therefore it is difficult to define an average lifetime in this sector. NEMA suggested that DOE review their analysis for residential GSFL lifetime by incorporating switching and hours of use data from the NEEA residential building stock assessment metering study. (NEMA, No. 54 at pp. 31-32)

      Based on a report, DOE found that the average fixture and ballast in the residential sector lasts for 15 years.\58\ Therefore, in its residential sector analysis for GSFLs, DOE established 15 years as the average ballast lifetime in the residential sector, regardless of operating hours. Because the lamp lifetime exceeds the ballast lifetime under average operating hours conditions, DOE assumed that the ballast lifetime of 15 years limits the lamp lifetime. While the typical lifetime of a GSFL is about 37 years in the residential sector, by basing the analysis period on the ballast lifetime, DOE used a much shorter analysis period than the product lifetime in its analysis for residential GSFLs and, therefore, likely accounted for early failure of lamps due to frequent switching. As recommended by NEMA, DOE also reviewed NEEA's data, but found that the data did not provide the lifetime data on the GSFLs DOE analyzed in the residential sector. Therefore, DOE maintained the lamp lifetime of 15 years based on the ballast lifetime for this final rule analysis.

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      \58\ Economic Research Associates, Inc., and Quantec, LLC. Revised/Updated EULs Based On Retention And Persistence Studies Results. Southern California Edison, 2005.

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    2. Ballast Lifetime

      Chapter 8 of the NOPR TSD detailed DOE's development of average ballast lifetimes, which were based on assumptions used in the 2011 Ballast Rule. For ballasts in the commercial and industrial sectors, DOE used an average ballast lifetime of 49,054 hours. Consistent with the 2011 Ballast Rule, DOE assumed an average ballast lifetime of approximately 15 years in the residential sector. DOE received no comments on this approach and retained these ballast lifetimes in the final rule.

      11. Discount Rates

      The calculation of consumer LCC requires the use of an appropriate discount rate. DOE used the discount rate to determine the present value of lifetime operating expenses. The discount rate used in the LCC analysis represents the rate from an individual consumer's perspective.\59\

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      \59\ The consumer discount rate is in contrast to the discount rates used in the NIA, which are intended to represent the rate of return of capital in the U.S. economy, as well as the societal rate of return on private consumption.

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      In the NOPR analysis, for the residential sector, DOE derived discount rates from estimates of the interest or ``finance cost'' to purchase residential products. 79 FR at 24125 (April 29, 2014). The finance cost of raising funds to purchase these products can be interpreted as: 1) the financial cost of any debt incurred to purchase products (principally interest charges on debt), or 2) the opportunity cost of any equity used to purchase products (principally interest earnings on household equity). Household equity is represented by holdings in assets, such as stocks and bonds, as well as the return on homeowner equity. Much of the data required, which involves determining the cost of debt and equity, comes from the Federal Reserve Board's triennial ``Survey of Consumer Finances.'' \60\ For the commercial and industrial sectors, DOE derived discount rates from the cost of capital of publicly traded firms in the business sectors that purchase lamps.

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      \60\ The Federal Reserve Board. Survey of Consumer Finances 1989, 1992, 1995, 1998, 2001, 2004, 2007, 2010. Federal Reserve Board: Washington, DC. Available at: www.federalreserve.gov/pubs/

      oss/oss2/scfindex.html.

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      DOE received no comments concerning the determination of discount rates. Thus, DOE maintained this approach in the final rule analysis. For further details on discount rates, see chapter 8 and appendix 8C of the final rule TSD.

      12. Analysis Period

      The analysis period is the span of time over which the LCC is calculated. In the NOPR analysis, DOE used the longest baseline lamp life in a product class divided by the annual operating hours of that lamp as the analysis period. Id. During Monte Carlo simulations for the LCC analysis, DOE selected the analysis period based on the longest baseline lamp life divided by the annual operating hours chosen by Crystal Ball. For GSFLs in the residential sector, the analysis period is based on the useful life of the baseline lamp for a specific event. GE and Philips commented that this approach seemed reasonable. (GE, Public Meeting Transcript, No. 49 at p. 147; Philips, Public Meeting Transcript, No. 49 at p. 148) DOE maintained this approach for determining the analysis period in the final rule analysis.

      13. Compliance Date of Standards

      The compliance date is the date when a covered product is required to meet a new or amended standard. Consistent with 42 U.S.C. 6295(i)(5), DOE analyzed a compliance date in 2018, three years after the publication of the final amended standards. DOE calculated the LCC for all end users, as if each one would purchase a new lamp in the year compliance with the standard is required.

      14. Incandescent Reflector Lamp Life-Cycle Cost Results in the NOPR

      DOE received several comments regarding the LCC results of IRLs in the NOPR analysis. GE commented that the LCC analysis appeared to be done mostly for commercial customers of PAR38 lamps and would have a dramatically different and negative outcome for the residential sector and other consumers. (GE, Public Meeting Transcript, No. 49 at p. 152)

      DOE conducted separate LCC analyses for the commercial sector and residential sector. See chapter 8 of the final rule TSD for all results by sector.

      NEMA commented that consumers were unlikely to realize the operating cost savings DOE claimed in the NOPR. (NEMA, No. 54 at p. 11) NEMA questioned how the proposed rulemaking can generate positive savings for consumers of IRLs when the increased product costs are higher than the energy savings. NEMA reasoned that an 18.75 lm/W PAR38 would need an infrared coated burner to reach an efficacy of 19.57 lm/W to comply with the standards proposed in the NOPR. The increased efficacy would save the consumer $0.36 per year while the burner would add about $1 to the cost of the lamp. NEMA further argued that the lamp is only rated at 1,100 hours, so the consumer will never see the payback from the improved lamp. NEMA commented that DOE cannot assume that technological breakthroughs yet to be discovered would improve the efficacy and lifetime of the lamp. As such, NEMA concluded that DOE cannot prove that a full range of products would comply with the standards proposed in the NOPR, and that DOE has not adequately addressed the negative cost effects on the consumer. (NEMA, No. 54 at pp. 32-33)

      Page 4089

      In its analysis, DOE considered only more efficacious replacements with lifetimes greater than or equal to the baseline lifetime. Both representative lamp units that DOE analyzed at EL 1 have lifetimes longer than the baseline. The characteristics of the representative lamp units were used as inputs to the LCC analysis. The LCC analysis assumes that the analysis period is the lifetime of the baseline lamp. Any lamps at higher efficacy levels that have longer lifetimes than that of the baseline product incorporate a residual value into the life-cycle cost, which subtracts the value of the lamp at the end of the analysis period from the total life-cycle cost. Thus, the residual values of the longer lifetime lamps increase the LCC savings.

      NEMA commented that the increased efficacy of the EL 1 proposed in the NOPR would result in a 30 percent reduction in lifetime,\61\ meaning a total loss of financial feasibility as the payback period would be longer than the lifetime of the more efficacious lamps. (NEMA, No. 54 at p. 29)

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      \61\ NEMA cited the following reference for this calculation: Vukcevich, Milan R. The Science of Incandescence. NELA Press, 1992.

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      DOE recognizes that there is an inverse relationship between efficacy and lifetime for IRLs. The engineering analysis focuses on commercially available products and DOE does not analyze efficacy levels that require shorter lifetimes than the baseline product. However, DOE is aware that to meet higher efficacy levels, manufacturers can choose to produce lamps with shorter lifetimes than the baseline lamp to achieve higher efficacies. Given that manufacturers responded to the July 2012 standards by introducing IRLs with shorter lifetimes, DOE understands this is a likely path manufacturers may take in response to higher standards. To capture the impacts of the relationship between lifetime and efficacy in IRLs, DOE determined how much the lifetime of a lamp with the same wattage as the baseline lamp must be shortened to achieve each efficacy level in the final rule analysis. (See chapter 5 of the final rule TSD for further information.) The impact of these shortened lifetime lamps are assessed as sensitivities in the LCC, NIA, and MIA. (See respectively, appendix 8B, chapter 12, and appendix 13B of the final rule TSD). For the shortened lifetime sensitivity, because the wattage is the same as the baseline, there are no energy savings and therefore, the LCC savings are negative and a payback period cannot be calculated.

  50. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers (e.g., low-income households) that a national standard may disproportionately affect. In the NOPR analysis, DOE evaluated low-

    income consumers and institutions that serve low-income populations (e.g., small nonprofits) as subgroups. DOE did not receive any comments regarding subgroups and therefore maintained this approach for assessing consumer subgroups in the final rule analysis. Chapter 9 of the final rule TSD presents the results of the consumer subgroup analysis.

    I. Shipments Analysis

    DOE uses projections of product shipments to calculate the national impacts of standards on energy use, NPV, and future manufacturer cash flows. DOE develops shipment projections based on historical data and an analysis of key market drivers for each product. Historical shipments data are used to build up a product stock and also to calibrate the shipments model. The details of the shipments model are described in chapter 11 of the final rule TSD.

    The shipments model projects shipments of GSFLs and IRLs over a 30-

    year analysis period for the base case (no standards) and for all standards cases. Separate shipments projections are calculated for the residential sector and for the commercial and industrial sectors. The shipments model used to estimate GSFL and IRL lamp shipments for this rulemaking has four main interacting elements: (1) A lamp demand module that estimates the demand for GSFL and IRL lighting for each year of the analysis period; (2) a price-learning module, which projects future prices based on historic price trends; (3) substitution matrices, which specify the product choices available to consumers (lamps as well as lamp-and-ballast combinations for fluorescent lamps) depending on whether they are renovating lighting systems, installing lighting systems in new construction, or simply replacing lamps; and (4) a market-share module that assigns shipments to product classes, ballasts, and lamp options, based on consumer sensitivities to first costs (prices) and operation and maintenance costs.

    The lamp demand module first estimates the lumen demand for GSFL and IRL lighting. The lumen demand calculation assumes that sector-

    specific lighting capacity (maximum lumen output of installed lamps) remains fixed per square foot of floor space over the analysis period. Floor space changes over the analysis period according to the EIA's AEO 2014 projections of residential and commercial floor space; industrial floor space is assumed to grow at the same rate as commercial floor space. A lamp turnover calculation estimates shipments of lamps in each year given the initial stock, the expected lifetimes of the lamps (and ballasts for GSFLs), and sector-specific assumptions on operating hours. The turnover model attempts to meet the lumen demand as closely as possible, subject to the constraint that the areal density of lighting fixtures is fixed for existing buildings that are not renovated.

    The lamp demand module accounts for the penetration of LED lighting into the GSFL and IRL markets. The reference assumption for LED market penetration is based on projections developed for DOE's Solid-State Lighting (SSL) Program.\62\ The SSL Program projections extend only to 2030; DOE extrapolated to the end of the shipments forecast period. DOE fitted the technology adoption curve to allow for an entire market takeover by LEDs. Given the best fit to the SSL forecast, DOE estimates that LEDs will achieve close to 100 percent penetration in both the GSFL and IRL markets by 2046.

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    \62\ Navigant Consulting, Inc. Energy Savings Potential of Solid-State Lighting in General Illumination Applications. U.S. DOE Solid State Lighting Program, January 2012. Available at http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/ssl_energy-savings-report_jan-2012.pdf.

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    The shipments model accounts for the use of lighting controls, including dimming and on-off controls, because controls affect ballast and lamp requirements and, therefore, lifetimes and shipments. The reference assumption for lighting system controls for the commercial sector is that state building energy code requirements for lighting controls remain constant at current levels, as does the ratio of voluntary to code-driven demand. Because code provisions are implemented only in new construction and building renovations that meet certain threshold requirements, code-driven implementation of lighting controls grows in slowly over time.

    The price-learning module estimates lamp and ballast prices in each year of the analysis period using a standard price-learning model.\63\ The model is

    Page 4090

    calibrated using three decades of historic data on the volume and value of fluorescent and PAR lamp shipments in the U.S. market, from which cumulative shipments and average prices are derived. Prices and cumulative shipments are fit to an experience curve. They are then augmented in each subsequent year of the analysis based on the shipments determined for the prior year by the module that assigns shipments to product classes and ELs. The current year's shipments, in turn, affect the subsequent year's prices. As shown in chapter 11 of the final rule TSD, because fluorescent and PAR lamps have been on the market for decades, cumulative shipments are changing slowly. Therefore, experience curve effects are relatively small--an effect that is further constrained by the expected incursion of solid-state lighting into the GSFL and IRL markets.

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    \63\ For discussion of approaches for incorporating learning in regulatory analysis, see Taylor, Margaret, and Sydny K. Fujita. Accounting for Technological Change in Regulatory Impact Analyses: The Learning Curve Technique. Berkeley: Lawrence Berkeley National Laboratory, 2013. LBNL-6195E.

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    The market-share module apportions the lamp and ballast shipments in each year among the different product classes, ballast types, and lamp options based on consumer sensitivities to first costs and operation and maintenance costs. To determine the prices used as inputs to the market-share module, DOE uses the ballast prices, weighted-

    average lamp prices, and installation costs developed in the engineering and LCC analyses. The operation and maintenance costs are based on the power required to operate a particular lamp-and-ballast system, the price of electricity, and the annualized cost of lamp replacements over the lifetime of that system. To enable a fair comparison between systems with different light output, the module considers the prices and operating and maintenance costs computed per kilolumen of light output. For consumers replacing lamps on existing ballasts, only the lamp-related prices and energy costs are considered by the market-share module. For consumers replacing an entire lamp-and-

    ballast system, the full price of the system, as well as the energy and annualized relamping costs, are considered.

    The ballast types and lamp options considered in the shipments model were determined in the engineering analysis. Whereas the earlier analyses considered only lamp-and-ballast combinations that did not increase energy relative to the baseline system, the shipments analysis allows consumers to choose among different lamp-and-ballast systems. These lamp-and-ballast combinations include full wattage and reduced wattage lamps coupled to ballasts with high, normal, or low ballast factors, and dimming ballasts. Programmed start and instant start ballasts are also considered separately, where appropriate. DOE limits or excludes lamp-and-ballast combinations that DOE's research indicates would not provide acceptable performance or would only do so in limited circumstances. The remaining combinations allow for a variety of different energy-saving and non-energy-saving options relative to the baseline. Details of the selection of allowable lamp-and-ballast combinations are given in chapter 11 of the final rule TSD.

    The market-share module allows for the possibility that consumers will switch among the different product classes, ballast types, and lamp options over time. Substitution matrices were developed to specify the product choices available to consumers (lamps as well as lamp-and-

    ballast combinations), depending on whether they are retrofitting lighting systems, renovating the lighted space, installing lighting systems in new construction, or simply replacing lamps, and depending on the particular lighting application. In this way, the module assigns market shares to the different product classes, ballast types, and ELs based on historical observations of consumer sensitivity to price and to operating and maintenance costs.

    DOE projects that some fraction of the lighting market currently being served by T8 lamps will migrate to T5 lamps in the absence of standards. At the NOPR stage, DOE projected that the standards in this rulemaking would make certain T5 systems more cost competitive relative to certain T8 systems, resulting in an increase in the rate of this T8 to T5 lamp migration. DOE received comments regarding product class switching between T8 lamps and T5 lamps. Philips, NEMA, and GE commented that consumers will not switch from T8 lamps to T5 lamps. Philips and NEMA stated that T5s have been on the market for 20 years and have not been used as substitutes for T8s. NEMA and GE mentioned that T5 lamps are shorter than T8 lamps; therefore, T5 lamps cannot be used to retrofit T8 fixtures and vice versa. Philips, NEMA, and GE also noted that T5 and T8 lamps are used in different applications. Because T5 lamps have higher luminance than T8 lamps, T5 lamps are typically used in indirect fixtures or places with high ceiling heights, whereas T8 lamps are used in direct fixtures or places with lower ceiling heights. Hence Philips, NEMA, and GE stated that these lamps cannot be used interchangeably. (Philips, Public Meeting Transcript, No. 49 at p. 163-164; GE, Public Meeting Transcript, No. 49 at p. 163, p. 167-168; NEMA, No. 54 at p. 14, p. 46)

    DOE is aware that there are physical and optical differences between T8 and T5 lamps. DOE assumes in its modeling for this rulemaking that switching between T8 and T5 lamps does not occur during retrofits. The potential for substitution of 4-foot MBP and 8-foot slimline with T5 SO Lamps is only assumed at the time of new construction and renovation, when a new luminaire would be specified. DOE's analysis indicates that there exist T5 luminaires that compete directly with 4-foot MBP T8 luminaires in most applications in the largest luminaire markets (e.g., commercial offices, education, industrial). In some cases, luminaire manufacturers offer essentially identical luminaires in 4-foot T8 and T5 versions. Therefore, DOE believes that the switching from T8s to T5s estimated in the NOPR, and in the final rule, is reasonable. See appendix 11C of the final rule TSD for examples of these luminaires and a discussion of DOE's analysis of the substitution potential for 4-foot MBP and T5 SO Lamps.

    NEMA noted that first cost is a significant driver of consumers' choice of product class and, as a consequence, higher initial T8 lamp costs would drive consumers to T5 products or LED products in new construction and renovation projects. (NEMA, No. 54 at p. 46) This comment is consistent with DOE's assumptions in the analysis for this rulemaking.

    NEMA noted that, even if the standards required the 4-foot MBP T8 to increase phosphor use, T5 lamps would remain more expensive than T8 lamps owing to differences in manufacturing technology. (NEMA, No. 54 at p. 34) DOE determined the end-user prices of lamps by applying a shipment-weighted discount to the blue book price of the lamp. In certain cases the end-user prices for 4-foot MBP T8 lamps are higher than for T5 MiniBP SO lamps (see chapter 7 of the final rule TSD). At max tech, the full-wattage 4-foot MBP T8 lamp end-user prices are higher than the full wattage T5 MiniBP SO.

    NEMA also commented that T5 lamp sales are not from T8 consumers but are mainly from consumers switching from older inefficient technology, like HID lamps. However, NEMA added that this rulemaking would slow down the transition from HID products to T5 lamps. (NEMA, No. 54 at p. 47)

    In its assessment of the market, DOE did not find any T5 HO lamps at the baseline efficacy level considered here.

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    Thus, the amended standard represents the least efficacious T5 HO lamps on the market. For this reason DOE believes that this standard will have no impact on the transition from HID to T5 technology.

    NEMA noted that the inability of non-PAR38 lamps to meet the proposed standard would cause consumers to switch to either expensive LED lamps or BR lamps that consume more energy than PAR lamps. NEMA calculated that the overall energy savings could be negative. (NEMA, No. 54 at pp. 20, 29) NEMA stated that significant energy savings would be lost under the proposed standards due to forcing halogen PAR30 lamp consumers to switch to LED lamps, the reduced wattage 39W PAR30 lamps, or 65W BR30 lamps after PAR30 lamps are eliminated from the market. NEMA and GE predicted that the majority of consumers would switch to the BR30 lamps, which would cause an increase of 97 kWh per year, an inadvertent increase of 0.03 quads of energy. NEMA stated that, given the popularity of these IRLs and the alternative lamps once they are eliminated, no new standard should be set for PAR30 lamps. (NEMA, No. 54 at pp. 48-49; GE, Public Meeting Transcript, No. 49 at pp. 121-122) ASAP noted that there are substitute lamps outside of the scope of this rulemaking and that DOE needed to consider what consumer choices could be made among the unregulated product options. (ASAP, Public Meeting Transcript, No. 49 at pp. 114-115) GE disagreed and stated that consumers purchase quite a number of regulated products, such as PAR20, PAR30, and 90W PAR38 lamps. (GE, Public Meeting Transcript, No. 49 at pp. 115-116)

    DOE's analysis indicates that there are PAR30 and PAR20 products on the market that meet EL 1. DOE recognizes that BR lamps are potential substitutes for non-PAR38 IRLs. However, given the large price difference between PAR and BR lamps in the current market, DOE believes that all consumers currently using PAR lamps are obtaining a unique utility from the PAR lamps for which they are willing to pay a substantial price premium. Thus, DOE believes that all potential switching from PAR to BR lamps has already taken place. DOE accounts for some consumers shifting to LED lamps with the use of an LED market adoption curve.

    The market-share module incorporates a limit on the diffusion of new technology into the market using the widely accepted Bass adoption model,\64\ the parameters of which are based on historic penetration rates of new lighting technologies into the market. It also accounts for other observed deviations from purely price- and cost-driven behavior using an acceptance factor, which sets an upper limit on the market share of certain product classes and lamp options that DOE research indicates are acceptable only to a subset of the market. The available options depend on the case under consideration; in each of the standards cases corresponding to the different TSLs, only those lamp options at or above the particular standard level in each product class are considered to be available.

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    \64\ Bass, F.M. A New Product Growth Model for Consumer Durables. Management. 1969. 15(5): pp. 215-227.

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    Because DOE executes the market-share module for the base case and each of the standards cases independently, the shipments analysis allows for the possibility that setting a standard on one product class could shift market share toward a different product class. The costs and benefits accruing to consumers from such market share shifts are fully accounted for in the NIA.

    When the shipments model selects lamps for replacement, retrofit, renovation, or new construction, it accepts only lamps or lamp-and-

    ballast combinations that retain lumen capacity within acceptable bounds.

    As discussed previously, based on manufacturer feedback, DOE determined that consumers would not notice a change in light output that is up to 10 percent, and that some consumers will choose to reduce light levels beyond 10 percent to conserve energy. Accordingly, in the shipments analysis, DOE assumes that consumers choose between lighting systems within 10 percent of current light output by considering the trade-off between first cost and operating costs, and not the relative light output. In this approach, systems that save energy in a cost-

    effective way will tend to be selected over systems that increase light output without saving energy. DOE further assumes that the fraction of the market that will accept larger reductions in lumen output is fixed throughout the analysis period. The size of this market segment was estimated from the current market share of reduced wattage lamps that reduce light levels by more than 10 percent compared to the baseline lamp. The model does not allow cumulative reductions in light levels. The model retains national average light levels within 10 percent of the average level at the beginning of the analysis period. No potential standards considered in this analysis lead to average light levels outside of this range.

    DOE is aware of the substantial impact of the ballast and lamp choice on the energy consumption of a lamp-and-ballast system. As discussed earlier in this section, the shipments analysis explicitly models the possibility that consumers will choose to reduce their ballast factor during a renovation or retrofit or switch to reduced wattage lamps when relamping an existing system. In addition, this analysis models the growth of dimming ballasts in the market and allows a variety of lamps to be coupled to dimming ballasts to achieve a fixed light output. Thus, when high-efficacy lamps are coupled to dimming ballasts, the overall energy savings are greater than those that are achieved when lower efficacy lamps are coupled to dimming ballasts. DOE assigns market share to these lamp-and-ballast pairings using a model based on historical consumer sensitivity to price and operating costs. When a particular pairing saves energy in a cost-effective manner compared to other pairings, its market share is increased compared to less cost-effective options. As in the NOPR analysis, DOE did not consider delamping in this final rule because manufacturer feedback confirmed that delamping is not common practice when retrofitting existing T8 systems as lumen output levels have already been reduced to comply with newer recommended lighting levels and building codes. The shipments model, however, allows for the possibility that consumers will alter the number of lamps per square foot during renovations to maintain light levels.

    NEMA noted that future installations or retrofits would not adequately ``tune'' lamp and ballast pairings, by manipulating the ballast factor, especially during the maintenance phase of system lifetime when lamps and ballasts get replaced on a case-by-case basis. Furthermore, without this ballast tuning, consumers would have increased light density with the same energy consumption as the previous lamp-and-ballast system had. (NEMA, No. 54 at pp. 18 and 36)

    DOE is aware that the ballast factor is not typically modified during the maintenance phase of a lamp-ballast system. DOE assumes in its modeling for this rulemaking that any tuning of the ballast and lamp pairing does not occur during the maintenance phase. Adequate tuning is only assumed at the time of new construction, renovation, and retrofitting.

    GE and NEMA disagreed with the assumption that ballast factors can be

    Page 4092

    tuned to maintain the same light output. They both stated that ballast factors are only available in 10 percent increments while the resulting increase in efficacy is only about 2-3 percent. They commented that consumers will keep the same ballast factor for retrofits, which means that the lamps will still consume the same amount of energy but will be giving 2-3 percent more lumen output. (GE, Public Meeting Transcript, No. 49 at p.196-198; NEMA, No. 54 at p. 18)

    DOE is aware that ballast factors tend to cluster around modal values that are separated by roughly 10 percent. However, in analyzing the market, DOE identified ballasts with a broad range of ballast factors that were not restricted to these modal values. Moreover, DOE notes that the increase in lumen output from the baseline to the full-

    wattage EL 2 lamp is 7 percent for 4-ft MBP lamps, and 16 percent for T5 SO lamps. DOE believes that, for consumers undertaking renovations, lighting retrofits, and new construction, the selection of ballast factor will be informed by the lamps available on the market and that an increased fraction of consumers will choose lower ballast factors than are now typical if typical lamp lumen ratings increase.

    DOE notes that full wattage lamp options are available for all product classes at all efficacy levels considered in this analysis. DOE's research indicates that krypton gas is generally used to reduce the wattage of lamps and that full wattage lamps can generally be dimmed reliably. Also, as discussed previously, DOE found that dimming ballasts for 4-foot MBP lamps are commonly marketed as compatible with reduced wattage lamps, which are presumably krypton filled. Accordingly, in the shipments analysis and the NIA, DOE allows all full wattage lamp options to be coupled to dimming ballasts. DOE also allowed reduced wattage options in the 4-foot MBP category to be coupled to dimming ballasts, but, because the range of applications for this combination is restricted, DOE limits its market share in the analysis.

    NEMA provided their Ballast Section market survey data, indicating that dimming ballast sales decreased between 2010 and 2013. NEMA acknowledged that CA Title 24 and ASHRAE 90.1 may increase these shipments, but stated that the increase in shipments could not be properly estimated at this time due to their recent or sporadic adoption. NEMA noted that the last rulemaking constrained this decreasing market. (NEMA, No. 54 at p. 33, p. 35, p. 47)

    DOE thanks NEMA for the input on dimming ballast shipments. DOE believes that, given the many recently updated commercial building codes that require lighting controls, the market share of dimming ballasts is very likely to increase in the future and that the recent decline is likely transitory. Therefore, DOE has modeled the fraction of commercial floorspace that is subject to such codes and utilizes this in its analysis to estimate the future market share of dimming ballasts, based on current usage of dimming in fluorescent lighting systems.

    Rare earth oxides (REOs) are used in GSFL phosphors to increase their efficacy. The shipments model considers the potential impact of changes in rare earth oxide prices on fluorescent lamp prices and, thereby, on GSFL shipments. Large increases in rare earth oxide prices in 2010 and 2011 raised manufacturer concerns that future price increases could have adverse impacts on the market. DOE developed shipments scenarios in its NOPR to reflect uncertainties in the prices of rare earth oxides.

    NEMA noted that the prices during the last REO crisis increased by 400 to 700 percent. Due to decreased REO prices and subsequent slowing of REO supply expansion, NEMA mentioned the possibility of another price increase as future supplies are uncertain. Therefore, NEMA suggested that DOE revise the estimates of the high end of possible prices to 700 percent of current prices. (NEMA, No. 54 at p. 34-35)

    DOE has examined the rare earth oxide market and still considers future rare earth prices significantly uncertain. DOE considered two price scenarios in its shipments modeling for GSFLs, as described in appendix 11B of the final rule TSD. The reference scenario assumes that rare earth prices remain fixed at their June 2014 level. The high rare earth price scenario assumes an average rare earth price 4.5 times the reference level, representing a value that is half way between the low pre-2010 baseline price and the 2011 peak price. This scenario represents the average price of regular price fluctuations between the peak and baseline amounts. DOE notes that the high rare earth price scenario represents a high price volatility scenario where the price could fluctuate at higher or lower levels than 4.5 times the baseline rare earth price.

  51. National Impact Analysis--National Energy Savings and Net Present Value Analysis

    The NIA assesses the NES and the national NPV of total consumer costs and savings expected to result from amended standards for GSFLs and IRLs at specific efficacy levels. Analyzing impacts of potential energy conservation standards for GSFLs and IRLs requires comparing projections of total energy consumption with amended energy conservation standards to projections of energy consumption without the standards (the base case).

    As the shipments model allows for substitutions across product classes when lighting systems are selected during renovation or new construction, understanding the impact of setting a standard at any given level for any given product class requires considering the impact on all other product classes. Therefore, in addition to conducting the analysis for the covered products as a whole, DOE evaluated the NPV and NES by product class to determine the impact of consumer switching between product classes. The NIA was developed in a Microsoft Excel spreadsheet,\65\ allowing access to a broad range of scenario assumptions for conducting sensitivity analyses on specific input values. The major inputs for the NIA are described in Table VI.10.

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    \65\ Available at www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/24.

    Table VI.10--Inputs for the National Impact Analysis

    ------------------------------------------------------------------------

    Input Description

    ------------------------------------------------------------------------

    Shipments......................... Annual shipments from shipments

    model.

    Compliance date of standard....... January 1, 2018.

    Base case efficiencies............ Estimated by market-share module of

    shipments model.

    Standards case efficiencies....... Estimated by market-share module of

    shipments model.

    Annual energy consumption per unit Calculated for each efficacy level

    and product class based on inputs

    from the energy use analysis.

    Page 4093

    Total installed cost per unit..... Lamp prices by efficacy level,

    ballast prices by ballast type, and

    lamp and ballast installation

    costs. The weighted-average prices

    and installation costs developed in

    the engineering analysis and LCC

    analysis were used.

    Electricity expense per unit...... Annual energy use for each product

    class is multiplied by the

    corresponding average energy price.

    Escalation of electricity prices.. AEO 2014 forecasts (to 2040) and

    extrapolation beyond 2040.

    Electricity site-to-primary energy A time series conversion factor;

    conversion. includes electric generation,

    transmission, and distribution

    losses.

    Discount rates.................... 3% and 7% real.

    Present year...................... 2014.

    ------------------------------------------------------------------------

    1. National Energy Savings

    The inputs for determining the NES for each product class are: (1) Lamp shipments; (2) annual energy consumption per unit; (3) installed stocks of lamps (coupled to each analyzed ballast type for GSFLs) in each year; and (4) site-to-primary energy and FFC conversion factors. The lamp stocks were calculated by the shipments model for each year of the analysis period from the prior year's stock, minus retirements, plus new shipments, accounting for lamp and ballast lifetimes. DOE calculated the national electricity consumption in each year by multiplying the number of units of each product class and EL in the stock by each unit's power consumption and operating hours. The power consumption is determined by the lamp wattage and, for each GSFL, by the ballast type to which each lamp is coupled. The operating hours are estimated by taking a weighted average of the distributions developed in the LCC analysis. The electricity savings are estimated from the difference in national electricity consumption by GSFLs between the base case (without new standards) and each of the standards cases for lamps shipped during the 2018-2047 period.

    DOE accounted for the impact of lighting system controls on lighting energy use as well as on lamp shipments, as discussed in the previous section. DOE understands that many lighting control systems may not achieve the savings for which they were designed. Accordingly, the estimated average energy reduction from controls is based on a meta-analysis of studies on the performance of actual lighting controls systems in the field.\66\

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    \66\ Williams, A., B. Atkinson, K. Garbesi, E. Page, and F. Rubinstein (2012). Lighting controls in commercial buildings. Leukos 8(3): 161-180. www.ies.org/leukos/samples/1_Jan12.pdf.

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    NEMA requested clarification on DOE's assumption that no individual reduced wattage lamp option will be coupled to more than 10 percent of the dimming ballasts in the installed stock, owing to performance problems that may arise in some applications. (NEMA, No. 54 at p. 33) NEMA further commented that DOE cannot assume energy savings from pairing 28W energy-saver lamps with dimming ballasts, as DOE cannot presume that consumers will tolerate not having full dimming functionality with these lamps. NEMA specified that DOE must remove all energy savings estimated to result from the energy-saver lamps in this scenario and instead assume full-wattage lamps would be installed. (NEMA, No. 54 at p. 36)

    In its assessment of the market, DOE noted the presence of T8 dimming ballasts whose marketing materials indicated compatibility with reduced wattage lamps. Therefore, DOE believes that at least some consumers with dimming ballasts would consider coupling them to such lamps. DOE is aware, however, that in some cases significant performance degradation is possible when coupling reduced wattage lamps to dimming ballasts. Therefore, DOE assumed that only a small fraction of consumers with dimming ballasts would consider purchasing reduced wattage lamps to install on their ballasts. Specifically, DOE took this fraction to be 10 percent of consumers who have dimming ballasts. This represents the fraction of consumers who would consider such a lamp-

    ballast combination among the set of plausible options; not all such consumers will in fact decide to purchase reduced wattage lamps. Thus, the fraction of dimming ballasts that are coupled to reduced wattage lamps remains exceedingly small in DOE's projections throughout the analysis period.

    NEMA commented that, although 4-foot T8 argon lamps can have efficacies of 89, 90, 91, or 92.4 lumens per watt, at different efficacies these lamps will still operate at the same wattages, and instead they would just provide different illumination. Therefore, NEMA stated that there is no meaningful difference in national energy use impact from choosing any of these three levels above 89 lm/W. Furthermore, NEMA added that an energy conservation standard for 4-foot MBP GSFLs at 89 lm/W will maintain consumer utility as well as increase national energy savings by increasing use of dimming systems. (NEMA, No. 54 at p. 14)

    DOE does not agree that lamps at different efficacies will still operate at the same wattages. DOE considers two modes by which energy savings can be achieved with full-wattage lamps. First, when using more efficacious lamps, consumers with dimming ballasts may dim their systems to a lower input wattage to achieve the same light output. Second, consumers undertaking renovations, lighting retrofits, and new construction may select lower ballast factors on average if only high-

    efficacy lamps are available on the market. Regarding NEMA's claim that a standard at 89 lm/W will increase national energy savings by maintaining utility and increasing use of dimming systems, DOE has ensured that, at all ELs considered for 4-foot MBP lamps, lamp options are available that can be coupled to dimming systems. Therefore DOE does not believe that this final rule will negatively impact the energy savings that is available from dimming.

    DOE accounts for the direct rebound effect in its NES analysis. Direct rebound reflects the idea that, as appliances become more efficient, consumers use more of their service because their operating cost is reduced. In the case of lighting, the rebound could be manifested in increased hours of use or in increased lighting density (fixtures per square foot). Based on information evaluated for the preliminary analysis, DOE assumed no rebound for the residential or commercial lighting in its reference scenario for the final rule analysis.

    NEMA commented that, if light levels are reduced through energy-

    saver lamps or lower ballast factor ballasts, end users

    Page 4094

    could offset the reduction in light levels by increasing the GSFL use or through other technologies, thereby reducing the energy-saving benefit. NEMA referenced an article and a report that they believe support their point of view. (NEMA, No. 54 at p. 36) Additionally, Miller commented that DOE should evaluate whether there was a measurable rebound effect resulting from use of more energy-efficient lamps. (Miller, No. 50 at p. 12)

    DOE is not aware of any methodologically sound studies that have quantified a direct rebound effect for lighting efficacy improvement in commercial buildings, where most GSFLs are used. As discussed in chapter 12 of the final rule TSD, DOE did not find evidence of systematic increases in operating hours or lighting density of GSFLs or IRLs with increased efficacy of these products. The items mentioned by NEMA refer to the potential for higher lighting demand when consumers start using LEDs. DOE believes that adoption of LEDs would not be impacted by the standards in this notice, so any rebound effect associated with this lighting technology is not germane. Based on the weight of the evidence, DOE assumed zero rebound for GSFLs or IRLs with increased efficacy. DOE also conducted a sensitivity analysis assuming a high rebound rate of 15 percent, which is presented in chapter 12 of the final rule TSD. Using a high rebound rate does not change the relative ranking of the considered TSLs.

    DOE converted the site electricity consumption and savings to primary energy (power sector energy consumption) using annual conversion factors derived from the AEO 2014 version of NEMS. Cumulative energy savings are the sum of the NES for each year in which product shipped during 2018 through 2047 continue to operate.

    DOE has historically presented NES in terms of primary energy savings. In 2011, response to the recommendations of a committee on ``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards'' appointed by the National Academy of Science, DOE announced its intention to use FFC measures of energy use and emissions in the NIA and emissions analysis included in future energy conservation standards rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in the Federal Register in which DOE explained its determination that NEMS is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012). Therefore DOE is using a NEMS-based approach to conduct FFC analyses for this rule. This approach is further described in appendix 12C of the final rule TSD.

    GE and NEMA stated that there are no energy savings from switching from T8 lamps to T5 lamps. GE mentioned that, although the efficacies of T5 lamps are measured at high frequency and T8 lamps are measured at low frequency, the lamps have similar efficacies. (GE, Public Meeting Transcript, No. 49 at p. 163) NEMA commented that the efficiencies of T8 and T5 lamps are not directly comparable, because the efficiencies are measured differently. (NEMA, No. 54 at p. 14, p. 46) NEMA further added that the T5 lamp-ballast systems have the same power consumption as the equivalent T8 lamp-ballast systems. (GE, Public Meeting Transcript, No. 49 at p. 163; NEMA, No. 54 at p. 46)

    DOE does not assume an automatic energy savings from switching from a T8 system to a T5 system. The energy use of a lamp-and-ballast system is calculated using the wattage of the installed lamps as well as the ballast factor and ballast luminous efficacy of the ballast on which the lamps are installed. DOE notes that, while it does not assume automatic energy savings of a T5 system compared to a T8 system, there are T5 lamp-and-ballast combinations (e.g., low ballast factor ballast coupled with high efficacy lamps) that can have lower power consumption compared to a T8 system of similar light output. Further, DOE agrees that testing on high frequency circuits versus low frequency circuits impacts efficacy measurements. Per DOE test procedure, GSFLs are tested at low frequency unless only high frequency reference ballast specifications are available. The T5 MiniBP SO and HO lamps and 8-foot RDC HO should be tested on high frequency circuits, as those are the only specifications provided for these lamp types. The 4-foot MBP, 2-

    foot U-shaped and 8-foot SP slimline lamps should be tested on low frequency circuits. Therefore, within each product class, the lamp efficacies should be comparable, however, efficacies of lamps across product classes may not be comparable.

    NEMA noted that PAR38 lamps that currently meet the proposed standard are not available through consumer channels and consumers would lose all reasonable options for PAR lamps. (NEMA, No. 54 at pp. 10) DOE understands that the availability of certain PAR lamps may be concentrated in the commercial sector. However, DOE does not find that to be a barrier to such lamps becoming available and used in other sectors of the market.

    NEMA noted that setting new standards for 130 V IRLs would be a waste of resources and would skew energy savings estimates, as the product is no longer available. (NEMA, No. 54 at p. 54) DOE assumes in its analysis that there are no 130 V IRLs on the market. No energy savings from such products are assumed.

    2. Net Present Value of Consumer Benefit

    The inputs for determining the NPV of the total costs and benefits experienced by consumers of the considered product are: (1) Total annual installed cost; (2) total annual savings in operating costs; and (3) a discount factor to calculate the present value of costs and savings. DOE calculated net savings each year as the difference between the base case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculated savings over the lifetime of products shipped during in the 2018-2047 period. The NPV was calculated as the difference between the present value of operating cost savings and the present value of total installed costs.

    1. Total Annual Installed Cost

      The total installed cost includes both the product price and the installation cost. For each product class, DOE utilized weighted-

      average prices for each of the lamp-and-ballast options, as well as installation costs, as developed in the engineering and LCC analyses. DOE calculated the total installed cost for each lamp-and-ballast option and determined annual total installed costs based on the annual shipments of lamps and ballasts determined in the shipments model. As noted in section VI.I, DOE assumed that GSFL and IRL prices decline slowly over the analysis period according to a learning rate developed from historical data.

      As discussed in section VI.I, DOE considered two price scenarios in its modeling for GSFLs. The reference scenario assumes that rare earth prices remain fixed at their June 2014 level. The high rare earth price scenario assumes that rare earth prices are 4.5 times higher than the reference level, representing a value at the midpoint of the low pre-

      2010 baseline price and the peak 2011 price. The impact of the latter scenario on the NPV results is discussed in section VII.B.3.c.

      NEEP expressed support for DOE's REO pricing analysis (NEEP, No. 57 at p. 3), but NEMA stated that DOE does not include an analysis of price

      Page 4095

      elasticity and consumer buying practices during previous REO shortages. NEMA also noted that the proposed standards would create an REO shortage. (NEMA, No. 54 at p. 34; Public Meeting Transcript, No. 49 at pp. 180-182)

      DOE estimates that, for the amended standards, the annual increase in demand for REOs will be approximately 300 tons per year in the first 5 years, which amounts to less than 1 percent of the annual 8,000-ton global demand for REOs used in phosphors. DOE expects that demand will steadily decrease over the analysis period owing to the increasing LED market. Therefore, DOE does not believe that the amended standards will cause a significant change in the supply of REOs.

      For IRLs, DOE conducted a sensitivity analysis on the potential impact on the rulemaking of a 10-fold increase in xenon prices. The impact of the scenario on the results is discussed in section VII.B.3.c.

    2. Total Annual Operating Cost Savings

      The per-unit energy savings were derived as described in section III.C. To calculate future electricity prices, DOE applied the projected trend in national average commercial and residential electricity prices from the AEO 2014 Reference case, which extends to 2040, to the energy prices derived in the LCC and PBP analysis. DOE used the trend from 2030 to 2040 to extrapolate beyond 2040. In addition, DOE analyzed scenarios that used the trends in the AEO 2014 Low Economic Growth and High Economic Growth cases. These cases have energy price trends that are, respectively, lower and higher in the long term compared to the Reference case. These price trends, and the NPV results from the associated cases, are described in chapter 12 of the final rule TSD.

      DOE estimated that annual maintenance costs do not vary with efficacy within each product class, so they do not figure into the annual operating cost savings for a given standards case. DOE utilized the lamp disposal costs developed in the LCC analysis, along with the shipments model forecast of the lamp retirements in each year, to estimate the annual cost savings related to lamp disposal costs from extended lamp lifetime. In the NIA, DOE assumes that 30 percent of commercial consumers are subject to disposal costs.

      In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. In accordance with OMB's guidelines on regulatory analysis,\67\ DOE calculated the NPV using both a 7-percent and a 3-percent real discount rate. The 7-percent rate is an estimate of the average before-tax rate of return on private capital in the U.S. economy; it reflects the returns on real estate and small business capital as well as corporate capital. This discount rate approximates the opportunity cost of capital in the private sector. The 3-percent rate reflects the potential effects of standards on private consumption (e.g., through higher prices for product and reduced purchases of energy). This rate represents the rate at which society discounts future consumption flows to their present value. It can be approximated by the real rate of return on long-term government debt (i.e., yield on U.S. Treasury notes), which has averaged about 3 percent for the past 30 years.

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      \67\ OMB Circular A-4, section E (Sept. 17, 2003). Available at: www.whitehouse.gov/omb/circulars_a004_a-4.

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  52. Manufacturer Impact Analysis

    DOE conducted separate MIAs for GSFLs and IRLs to estimate the financial impact of potential amended energy conservation standards on manufacturers of GSFLs and IRLs, respectively. The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA relies on the GRIM, an industry cash-flow model customized for GSFLs and IRLs covered in this rulemaking. The key GRIM inputs are data on the industry cost structure, product costs, shipments, and assumptions about markups and conversion costs. The key MIA output is INPV. DOE used the GRIM to calculate cash flows using standard accounting principles and to compare changes in INPV between a base case and various TSLs (the standards cases). The difference in INPV between the base and standards cases represents the financial impact of potential amended energy conservation standards on GSFL and IRL manufacturers. Different sets of assumptions (scenarios) produce different INPV results. The qualitative part of the MIA addresses factors such as manufacturing capacity; characteristics of, and impacts on, any particular subgroup of manufacturers; impacts on competition; and the cumulative regulatory burden placed on GSFL and IRL manufacturers.

    DOE outlined its complete methodology for the MIA in the previously published NOPR. Also, the complete MIA is presented in chapter 13 of the final rule TSD.

    1. Manufacturer Production Costs

    Manufacturing more efficacious lamps is typically more expensive than manufacturing baseline lamps due to the need for more costly components and materials used in the lamps as well as more extensive R&D to design the more efficacious lamps. The resulting changes in the manufacturer product costs (MPCs) of the representative lamps can affect the revenues, gross margins, and cash flows of lamp manufacturers. DOE strives to accurately model the potential changes in these production costs, as they are a key input for the GRIM and DOE's overall analysis. For the final rule, DOE updated the dollar year of the MPCs from 2012$, the dollar year used in the NOPR, to 2013$.

    2. Shipment Projections

    Changes in sales volumes and efficacy distribution of lamps over time can significantly affect manufacturer finances. The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of shipments by efficacy level. For the final rule, DOE slightly altered the distribution of shipments based on interested party comments. DOE also updated the shipments to reflect the potential amended standard going into effect in 2018 as opposed to 2017, the standard compliance date used in the NOPR. This had a negligible effect on the MIA results. For the MIA, the GRIM used the NIA's annual shipment projections from 2015, the base year, to 2047, the end of the analysis period. For a complete description of the shipment analysis see chapter 11 of the final rule TSD.

    3. Markup Scenarios

    For the GSFL and IRL NOPR MIAs, DOE modeled two standards case markup scenarios to represent the uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of potential amended energy conservation standards: (1) A flat, or preservation of gross margin, markup scenario and (2) a preservation of operating profit markup scenario. Each scenario leads to different manufacturer markup values, which when applied to the inputted MPCs, result in varying revenue and cash-flow impacts.

    During the NOPR public meeting, Philips and Westinghouse commented that DOE should consider a third markup scenario for GSFLs where manufacturers are not able to maintain the absolute dollars on their GSFLs, as they do in the preservation of operating

    Page 4096

    profit, due to the increase in MPC of GSFLs as a result of amended energy conservation standards. Philips stated that amended standards could cause a total commoditization of the GSFL market, especially at max-tech, so the only way to differentiate products is by price. They also stated that since manufacturers have already established the pricing levels for these GSFLs, it is hard to justify an increase in the price after standards go into effect, as many of the big box retail stores are not going to accept a higher price for GSFLs. Both of the factors likely will result in manufacturers reducing their manufacturer markups. (Philips, Public Meeting Transcript, No. 49 at pp. 216-217; Westinghouse, Public Meeting Transcript, No. 49 at pp. 221-222) Based on the GSFL market pricing conditions described during manufacturer interviews, DOE concluded that the markup scenario recommended by Philips and Westinghouse is a realistic markup scenario that should be incorporated into the MIA to reflect the range of possible outcomes following GSFL standards. Therefore, DOE examined the INPV impacts of a two-tiered markup scenario in the final rule for the GSFL MIA as a result of these comments. The results of this additional markup scenario are displayed in section VII.B.2.a, along with the rest of the manufacturer INPV results.

    In the two-tiered markup scenario, DOE assumed that higher efficacy GSFLs command a higher manufacturer markup and baseline efficacy GSFLs subsequently have a lower manufacturer markup. DOE estimated the manufacturer markups for GSFLs under a two-tier pricing strategy in the base case based on manufacturer interviews conducted as part of the NOPR analysis. In the standards case, DOE modeled the situation in which portfolio reduction reduces the margin of higher efficacy GSFLs as they become the new baseline efficacy products due to amended standards. This new two-tiered markup scenario represents the lower bound profitability markup scenario.

    4. Product and Capital Conversion Costs

    Amended energy conservation standards will cause manufacturers to incur one-time conversion costs to bring their production facilities and product designs into compliance. For the MIA, DOE classified these one-time conversion costs into two major groups: (1) Product conversion costs and (2) capital conversion costs. Product conversion costs are one-time investments in R&D, testing, compliance, marketing, and other non-capitalized costs necessary to make product designs comply with amended standards. Capital conversion costs are one-time investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new product designs can be fabricated and assembled. For the final rule, DOE only updated the dollar year of the conversion costs from 2012$, the dollar year used in the NOPR, to 2013$.

    During the NOPR public meeting GE and Philips commented that they believe that IRL manufacturers would be unwilling to make large investments to make sure IRLs comply with energy conservation standards at TSL 1, since the market is changing so rapidly to LEDs and manufacturers might not ever be able to recover any substantial investment put in upgrading their IRLs. (Philips, Public Meeting Transcript, No. 49 at p. 231 & GE, Public Meeting Transcript, No. 49 a pp. 231-232) DOE understands manufacturers' concern with making significant investments in a product that is rapidly losing market share and projected to experience a significant decline in shipments over the analysis period. DOE took these manufacturers' concerns into account when selecting the standards for IRLs in this final rule.

    5. Other Comments From Interested Parties

    During the NOPR public meeting and comment period, interested parties commented on the assumptions, methodology, and results of the NOPR MIA. DOE received comments about the potential high cost to manufacturers versus the relatively low energy savings for the NOPR standards proposed; the potential negative impacts on competition due to standards; and the potential impact of standards on alternative lighting technologies. These comments are addressed in the following sections.

    1. High Cost to Manufacturers Versus Relatively Low Energy Savings

      NEMA and GE commented that the pending IRL standards as proposed in the NOPR would have a significant negative impact on IRL manufacturers' INPV while only marginally contributing to the projected energy savings. (NEMA, No. 54 at pp. 3-5 & GE, Public Meeting Transcript, No. 49 at pp. 217-218) DOE agrees that as proposed in the NOPR, the IRL standards at TSL 1 could reduce IRL manufacturers' INPV by up to 29.5 percent and would save an estimated 0.013 quads. DOE carefully examines all potential burdens, such as a potential decrease in manufacturers' INPV and the cumulative regulatory burden placed on manufacturers by additional regulations, against potential benefits, such as energy savings and consumer benefits, when determining final standards. Both the benefits and burdens for this rulemaking were closely examined before making a final decision regarding the IRL standards. See section VII.C.3 of this final rule for a complete description of the potential benefits and burdens of IRL standards.

    2. Impacts on Competition

      A couple of interested parties commented that DOE should use the Herfindahl-Hirschman Index (HHI) to examine whether potential energy conservation standards could significantly lessen competition in an industry. (Kidwell, No. 53 at pp. 1-6 & Miller, No. 50 at pp. 10-11, 13) The HHI is used by DOJ to examine market consolidation in the case of potential mergers. In these cases there is clear market share information before and after the event being analyzed, a potential merger. However, when examining potential energy conservation standards it is more difficult to accurately predict how individual manufacturers will respond to potential standards.

      The decision of an individual manufacturer to make an upfront investment in order to comply with potential standards and remain in an existing market as opposed to exit the market is a complex business. For the GSFL and IRL rulemakings there is no technical reason any of the major manufacturers could not continue to manufacture compliant products, could maintain their current market share within an industry, or would be forced to exit the market. DOE acknowledges that both the GSFL and IRL markets are moderately concentrated markets, according to the HHI. However, based on manufacturer interviews, DOE does not believe there is any technical or proprietary reason the market share of either the GSFL or IRL markets would substantially change due to the energy conservation standards established in this final rule. Therefore, an analysis using the HHI would not be able to determine if standards lessened competition, since the market share before the standards would be similar to the market share after the standards.

    3. Impact of GSFL and IRL Standards on Alternative Lighting Technologies

      NEEP commented that the MIA should account for the potential growth in other lighting technologies (i.e., LEDs), since alternative lighting sales are projected to take market share away from GSFLs and IRLs in the future.

      Page 4097

      (NEEP, No. 57 at p.3) DOE's shipment analysis does predict that LEDs and other alternative lighting technologies will significantly take more and more market share away from GSFLs and IRLs in future years. This growing LED market share is modeled in the base case of the shipment analysis when no energy conservation standards are enacted, and is therefore independent from any GSFL or IRL standards that are being analyzed in this rulemaking.

      The shipment analysis does not anticipate that consumers will shift to LEDs as a result of potential GSFL or IRL standards and therefore the total number of lighting hours fulfilled by GSFLs and IRLs is the same in the base case as in the standards cases. Since DOE is attempting to model the direct impacts of the GSFL and IRL standards independently from other external factors that are occurring in the GSFL and IRL markets, DOE does not believe it should include revenue from the sale of alternative lighting technologies in the MIA for GSFLs and IRLs. See the shipments analysis in chapter 11 of the final rule TSD for a complete description of how GSFL and IRL shipments change in response to potential GSFL and IRL standards.

      6. Manufacturer Interviews

      DOE interviewed manufacturers representing more than 90 percent of covered GSFL and more than 80 percent of covered IRL sales in the United States. The NOPR interviews were in addition to the preliminary interviews DOE conducted as part of the preliminary analysis. DOE outlined the key issues for the rulemaking for GSFL and IRL manufacturers in the NOPR. 79 FR at 24136-7 (April 29, 2014) DOE considered the information received during these interviews in the development of the NOPR and this final rule. Comments on the NOPR regarding the impact of potential amended standards on manufacturers were discussed in the previous sections. DOE did not conduct interviews with manufacturers between the publication of the NOPR and this final rule. Also, DOE did not receive any comments on the manufacturer key issues identified in the NOPR.

      L. Emissions Analysis

      In the emissions analysis, DOE estimated the reduction in power sector emissions of carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) from potential energy conservation standards for GSFLs and IRLs. In addition, DOE estimates emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants. These are referred to as ``upstream'' emissions. Together, these emissions account for the full-fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy (76 FR 51282 (Aug. 18, 2011)),\68\ the FFC analysis also includes impacts on emissions of methane (CH4) and nitrous oxide (N2O), both of which are recognized as greenhouse gases.

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      \68\ DOE's FFC was amended in 2012 for reasons unrelated to the inclusion of CH4 and N2O. 77 FR 49701 (Aug. 17, 2012).

      ---------------------------------------------------------------------------

      DOE primarily conducted the emissions analysis using emissions factors for CO2 and most of the other gases derived from data in AEO 2014. Combustion emissions of CH4 and N2O were estimated using emissions intensity factors published by the Environmental Protection Agency (EPA), GHG Emissions Factors Hub.\69\ DOE developed separate emissions factors for power sector emissions and upstream emissions. The method that DOE used to derive emissions factors is described in chapter 14 of the final rule TSD.

      ---------------------------------------------------------------------------

      \69\ http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.

      ---------------------------------------------------------------------------

      For CH4 and N2O, DOE calculated emissions reduction in tons and also in terms of units of carbon dioxide equivalent (CO2eq). Gases are converted to CO2eq by multiplying the physical units by the gas' global warming potential (GWP) over a 100-year time horizon. Based on the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,\70\ DOE used GWP values of 28 for CH4 and 265 for N2O.

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      \70\ IPCC, 2013: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.). Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Chapter 8.

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      EIA prepares the Annual Energy Outlook using NEMS. Each annual version of NEMS incorporates the projected impacts of existing air quality regulations on emissions. AEO 2014 generally represents current legislation and environmental regulations, including recent government actions, for which implementing regulations were available as of October 31, 2013.

      SO2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual emissions cap on SO2 for affected EGUs in the 48 contiguous states and the District of Columbia (DC). SO2 emissions from 28 eastern states and DC were also limited under the Clean Air Interstate Rule (CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based trading program that operates along with the Title IV program. CAIR was remanded to the U.S. Environmental Protection Agency (EPA) by the U.S. Court of Appeals for the District of Columbia Circuit but it remained in effect.\71\ In 2011, EPA issued a replacement for CAIR, the Cross-

      State Air Pollution Rule (CSAPR). 76 FR 48208 (Aug. 8, 2011). On August 21, 2012, the DC Circuit issued a decision to vacate CSAPR.\72\ The court ordered EPA to continue administering CAIR. The emissions factors used for this rule, which are based on AEO 2014, assume that CAIR remains a binding regulation through 2040.\73\

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      \71\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).

      \72\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).

      \73\ On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other downwind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation, No 12-1182, slip op. at 32 (U.S. April 29, 2014). On October 23, 2014, the DC Circuit lifted the stay of CSAPR and CSAPR is scheduled to go into effect (and the CAIR will sunset) as of January 1, 2015. Because DOE is using emissions factors based on AEO 2014 for this rule, the final rule assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the purpose of DOE's analysis of SO2 emissions.

      ---------------------------------------------------------------------------

      The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Beginning in 2016, however, SO2 emissions will decline significantly as a result of the Mercury and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), and also established a standard for SO2 (a non-HAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP acid gas; thus, SO2 emissions will be reduced as a result of the control technologies installed on coal-fired power plants to comply with the MATS requirements for acid gas. AEO 2014 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection

      Page 4098

      systems installed by 2016. Both technologies, which are used to reduce acid gas emissions, also reduce SO2 emissions. Under the MATS, emissions will be far below the cap established by CAIR, so it is unlikely that excess SO2 emissions allowances resulting from the lower electricity demand would be needed or used to permit offsetting increases in SO2 emissions by any regulated EGU. Therefore, DOE believes that energy efficiency standards will reduce SO2 emissions in 2016 and beyond

      CAIR established a cap on NOX emissions in 28 eastern States and the District of Columbia.\74\ Energy conservation standards are expected to have little effect on NOX emissions in those States covered by CAIR because excess NOX emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NOX emissions. However, standards would be expected to reduce NOX emissions in the States not affected by the caps, so DOE estimated NOX emissions reductions from the standards considered in this rule for these States.

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      \74\ CSAPR also applies to NOX, and it would supersede the regulation of NOX under CAIR. As stated previously, the current analysis assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR with regard to DOE's analysis of NOX is slight.

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      The MATS limit mercury emissions from power plants, but they do not include emissions caps. DOE estimated mercury emissions reduction using emissions factors based on AEO 2014, which incorporates the MATS.

  53. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this rule, DOE considered the estimated monetary benefits from the reduced emissions of CO2 and NOX that are expected to result from each of the TSLs considered. In order to make this calculation similar to the calculation of the NPV of consumer benefit, DOE considered the reduced emissions expected to result over the lifetime of products shipped in the forecast period for each TSL. This section summarizes the basis for the monetary values used for each of these emissions and presents the values considered in this rulemaking.

    For this rule, DOE is relying on a set of values for the social cost of carbon (SCC) that was developed by an interagency process. A summary of the basis for these values is provided in the following section, and a more detailed description of the methodologies used is provided as an appendix to chapter 15 of the final rule TSD.

    1. Social Cost of Carbon

    The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric ton of carbon dioxide. A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in carbon dioxide emissions, while a global SCC value is meant to reflect the value of damages worldwide.

    Under section 1(b)(6) of Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. The purpose of the SCC estimates presented here is to allow agencies to incorporate the monetized social benefits of reducing CO2 emissions into cost-benefit analyses of regulatory actions that have small, or ``marginal,'' impacts on cumulative global emissions. The estimates are presented with an acknowledgement of the many uncertainties involved and with a clear understanding that they should be updated over time to reflect increasing knowledge of the science and economics of climate impacts.

    As part of the interagency process that developed the SCC estimates, technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking process.

    1. Monetizing Carbon Dioxide Emissions

      When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of challenges. A report from the National Research Council points out that any assessment will suffer from uncertainty, speculation, and lack of information about: (1) Future emissions of greenhouse gases; (2) the effects of past and future emissions on the climate system; (3) the impact of changes in climate on the physical and biological environment; and (4) the translation of these environmental impacts into economic damages. As a result, any effort to quantify and monetize the harms associated with climate change will raise serious questions of science, economics, and ethics and should be viewed as provisional.

      Despite the limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing carbon dioxide emissions. The agency can estimate the benefits from reduced (or costs from increased) emissions in any future year by multiplying the change in emissions in that year by the SCC values appropriate for that year. The NPV of the benefits can then be calculated by multiplying each of these future benefits by an appropriate discount factor and summing across all affected years.

      It is important to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on society improves over time. In the meantime, the interagency group will continue to explore the issues raised by this analysis and consider public comments as part of the ongoing interagency process.

    2. Development of Social Cost of Carbon Values

      In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carbon dioxide emissions. To ensure consistency in how benefits are evaluated across Federal agencies, the Administration sought to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO2 emissions. The interagency group did not undertake any original analysis. Instead, it combined SCC estimates from the existing literature to use as interim values until a more comprehensive analysis could be conducted. The outcome of the preliminary assessment by the interagency group was a set of five interim values: global SCC estimates for 2007 (in 2006$) of $55, $33, $19, $10, and $5 per metric ton of CO2. These interim values represented the first sustained interagency effort within the U.S. government to develop an SCC for use in regulatory analysis.

      Page 4099

      The results of this preliminary effort were presented in several proposed and final rules.

    3. Current Approach and Key Assumptions

      After the release of the interim values, the interagency group reconvened on a regular basis to generate improved SCC estimates. Specifically, the group considered public comments and further explored the technical literature in relevant fields. The interagency group relied on three integrated assessment models commonly used to estimate the SCC: the FUND, DICE, and PAGE models. These models are frequently cited in the peer-reviewed literature and were used in the last assessment of the Intergovernmental Panel on Climate Change (IPCC). Each model was given equal weight in the SCC values that were developed.

      Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. A key objective of the interagency process was to enable a consistent exploration of the three models while respecting the different approaches to quantifying damages taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: climate sensitivity, socio-economic and emissions trajectories, and discount rates. A probability distribution for climate sensitivity was specified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio-economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model developers' best estimates and judgments.

      The interagency group selected four sets of SCC values for use in regulatory analyses.\75\ Three sets of values are based on the average SCC from three integrated assessment models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The fourth set, which represents the 95th-percentile SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from climate change further out in the tails of the SCC distribution. The values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects,\76\ although preference is given to consideration of the global benefits of reducing CO2 emissions. Table VI.11 presents the values in the 2010 interagency group report, which is reproduced in appendix 15A of the final rule TSD.

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      \75\ Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government, February 2010. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

      \76\ It is recognized that this calculation for domestic values is approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time.

      Table VI.11--Annual SCC Values From 2010 Interagency Report, 2010-2050

      In 2007 dollars per metric ton CO2

      ----------------------------------------------------------------------------------------------------------------

      Discount rate %

      ---------------------------------------------------------------

      5 3 2.5 3

      Year ---------------------------------------------------------------

      95th

      Average Average Average Percentile

      ----------------------------------------------------------------------------------------------------------------

      2010............................................ 4.7 21.4 35.1 64.9

      2015............................................ 5.7 23.8 38.4 72.8

      2020............................................ 6.8 26.3 41.7 80.7

      2025............................................ 8.2 29.6 45.9 90.4

      2030............................................ 9.7 32.8 50.0 100.0

      2035............................................ 11.2 36.0 54.2 109.7

      2040............................................ 12.7 39.2 58.4 119.3

      2045............................................ 14.2 42.1 61.7 127.8

      2050............................................ 15.7 44.9 65.0 136.2

      ----------------------------------------------------------------------------------------------------------------

      The SCC values used for the rule were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature.\77\ Table VI.12 shows the updated sets of SCC estimates from the 2013 interagency update in five-year increments from 2010 to 2050. Appendix 15B of the final rule TSD provides the full set of values. The central value that emerges is the average SCC across models at 3-percent discount rate. However, for purposes of capturing the uncertainties involved in regulatory impact analysis, the interagency group emphasizes the importance of including all four sets of SCC values.

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      \77\ Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.

      Table VI.12--Annual SCC Values From 2013 Interagency Update, 2010-2050

      In 2007 dollars per metric ton CO2

      ----------------------------------------------------------------------------------------------------------------

      Discount rate %

      ---------------------------------------------------------------

      5 3 2.5 3

      Year ---------------------------------------------------------------

      95th

      Average Average Average Percentile

      ----------------------------------------------------------------------------------------------------------------

      2010............................................ 11 32 51 89

      2015............................................ 11 37 57 109

      2020............................................ 12 43 64 128

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      2025............................................ 14 47 69 143

      2030............................................ 16 52 75 159

      2035............................................ 19 56 80 175

      2040............................................ 21 61 86 191

      2045............................................ 24 66 92 206

      2050............................................ 26 71 97 220

      ----------------------------------------------------------------------------------------------------------------

      It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Research Council report mentioned above points out that there is tension between the goal of producing quantified estimates of the economic damages from an incremental ton of carbon and the limits of existing efforts to model these effects. There are a number of analytical challenges that are being addressed by the research community, including research programs housed in many of the Federal agencies participating in the interagency process to estimate the SCC. The interagency group intends to periodically review and reconsider those estimates to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling.

      In summary, in considering the potential global benefits resulting from reduced CO2 emissions, DOE used the values from the 2013 interagency report, adjusted to 2013$ using the Gross Domestic Product price deflator. For each of the four SCC cases specified, the values used for emissions in 2015 were $12.0, $40.5, $62.4, and $119 per metric ton avoided (values expressed in 2013$). DOE derived values after 2050 using the relevant growth rates for the 2040-2050 period in the interagency update.

      DOE multiplied the CO2 emissions reduction estimated for each year by the SCC value for that year in each of the four cases. To calculate a present value of the stream of monetary values, DOE discounted the values in each of the four cases using the specific discount rate that had been used to obtain the SCC values in each case.

      The Associations objected to DOE's continued use of the SCC in the cost-benefit analysis performed in connection with this proposed rule, and they believe the SCC should be withdrawn as a basis for the rule. They stated that the SCC calculation should not be used in any rulemaking or policymaking until it undergoes a more rigorous notice, review, and comment process. (The Associations, No. 51 at p. 4) In contrast, the Joint Commenters stated that the current SCC values are sufficiently robust and accurate to continue to be the basis for regulatory analysis going forward. They argued that, if anything, current values are significant underestimates of the SCC. They stated that the interagency working group's analytic process was science-

      based, open, and transparent, and the SCC is an important and accepted tool for regulatory policy-making, based on well-established law and fundamental economics. (The Joint Comment, 48 at p. 1)

      NEMA presented a critique--based largely on the writing of Robert Pindyck of the Massachusetts Institute of Technology--of the integrated assessment models (IAMs) used in projecting future damages from CO2 emissions. The critique included strong criticisms of the IAMs' climate sensitivity analysis and damage function. NEMA argued that given the enormous uncertainty in the IAMs, these models--even ``averaged'' as the Interagency Working Group has done--are poor tools for agency decision-making, particularly with respect to products regulated by EPCA that are not themselves a source of emissions. (NEMA, No. 54 at pp. 39-44)

      DOE acknowledges the limitations of the SCC estimates, which are discussed in detail in the 2010 interagency working group's report. Specifically, uncertainties in the assumptions regarding climate sensitivity, as well as other model inputs such as economic growth and emissions trajectories, are discussed and the reasons for the specific input assumptions chosen are explained. However, the three integrated assessment models used to estimate the SCC are frequently cited in the peer-reviewed literature and were used in the last assessment of the IPCC. In addition, new versions of the models that were used in 2013 to estimate revised SCC values were published in the peer-reviewed literature (see appendix 15B of the final rule TSD for discussion). Although uncertainties remain, the revised estimates used for this rule are based on the best available scientific information on the impacts of climate change. The current estimates of the SCC have been developed over many years, and with input from the public. In November 2013, OMB announced a new opportunity for public comment on the interagency technical support document underlying the revised SCC estimates. 78 FR 70586. OMB is reviewing comments and considering whether further revisions to the SCC estimates are warranted. DOE stands ready to work with OMB and the other members of the interagency working group on further review and revision of the SCC estimates as appropriate.

      NEMA stated that the monetized benefits of carbon emission reductions are informative at some level, but should not be considered as determinative in the Secretary's decision-making under EPCA. NEMA believes that DOE should base its net benefit determination for justifying a particular energy conservation on the traditional criteria relied upon by DOE: impacts on manufacturers, consumers, employment, energy savings, and competition. (NEMA, 54 at pp. 38 and 44) In a similar vein, the Associations believe the SCC should be withdrawn as a basis for the proposed rule. (The Associations, No. 51, p. 4)

      The monetized benefits of carbon emission reductions are one factor that DOE considers in its evaluation of the economic justification of proposed standards. As shown in Table VII.58, the benefits of these standards in terms of

      Page 4101

      consumer operating cost savings exceed the incremental costs of the standards-compliant products. The benefits of CO2 emission reductions were considered by DOE, but were not determinative in DOE's decision to adopt these standards, nor were they a primary basis of that decision.

      2. Valuation of Other Emissions Reductions

      As noted previously, DOE has taken into account how amended energy conservation standards would reduce site NOX emissions nationwide and increase power sector NOX emissions in those 22 States not affected by the CAIR. DOE estimated the monetized value of net NOX emissions reductions resulting from each of the TSLs considered for this rule based on estimates found in the relevant scientific literature. Estimates of monetary value for reducing NOX from stationary sources range from $476 to $4,893 per ton in 2013$.\78\ DOE calculated monetary benefits using a medium value for NOX emissions of $2,684 per short ton and real discount rates of 3 percent and 7 percent.

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      \78\ U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2006) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf).

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      DOE is evaluating appropriate monetization of avoided SO2 and Hg emissions in energy conservation standards rulemakings. It has not included monetization in the current analysis.

  54. Utility Impact Analysis

    The utility impact analysis estimates several effects on the power generation industry that would result from the adoption of new or amended energy conservation standards. In the utility impact analysis, DOE analyzes the changes in installed electricity capacity and generation that would result for each TSL. The utility impact analysis is based on published output from NEMS. Each year, NEMS is updated to produce the AEO reference case as well as a number of side cases that estimate the economy-wide impacts of changes to energy supply and demand. DOE uses those published side cases that incorporate efficiency-related policies to estimate the marginal impacts of reduced energy demand on the utility sector. The output of this analysis is a set of time-dependent coefficients that capture the change in electricity generation, primary fuel consumption, installed capacity and power sector emissions due to a unit reduction in demand for a given end use. These coefficients are multiplied by the stream of energy savings calculated in the NIA to provide estimates of selected utility impacts of new or amended energy conservation standards. Chapter 16 of the final rule TSD describes the utility impact analysis in further detail.

  55. Employment Impact Analysis

    Employment impacts from new or amended energy conservation standards include direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the product subject to standards; the MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient product. Indirect employment impacts from standards consist of the jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, due to: (1) Reduced spending by end users on energy; (2) reduced spending on new energy supply by the utility industry; (3) increased consumer spending on the purchase of new product; and (4) the effects of those three factors throughout the economy.

    One method for assessing the possible effects on the demand for labor of such shifts in economic activity is to compare sector employment statistics developed by the Labor Department's Bureau of Labor Statistics (BLS). BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy. There are many reasons for these differences, including wage differences and the fact that the utility sector is more capital-

    intensive and less labor-intensive than other sectors. Energy conservation standards have the effect of reducing consumer utility bills. Because reduced consumer expenditures for energy likely lead to increased expenditures in other sectors of the economy, the general effect of efficiency standards is to shift economic activity from a less labor-intensive sector (i.e., the utility sector) to more labor-

    intensive sectors (e.g., the retail and service sectors). Based on the BLS data, DOE expects that net national employment may increase because of shifts in economic activity resulting from amended standards.

    For the standard levels considered for the final rule, DOE estimated indirect national employment impacts using an input/output model of the U.S. economy called Impact of Sector Energy Technologies, Version 3.1.1 (ImSET).\79\ ImSET is a special-purpose version of the ``U.S. Benchmark National Input-Output'' (I-O) model, which was designed to estimate the national employment and income effects of energy-saving technologies. The ImSET software includes a computer-

    based I-O model having structural coefficients that characterize economic flows among the 187 sectors. ImSET's national economic I-O structure is based on a 2002 U.S. benchmark table, specially aggregated to the 187 sectors most relevant to industrial, commercial, and residential building energy use. DOE notes that ImSET is not a general equilibrium forecasting model, and understands the uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Because ImSET does not incorporate price changes, the employment effects predicted by ImSET may over-estimate actual job impacts over the long run. DOE used ImSET only to estimate short-term employment impacts. For more details on the employment impact analysis, see chapter 17 of the final rule TSD.

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    \79\ Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact of Sector Energy Technologies, 2005. Pacific Northwest National Laboratory. Richland, WA. Report No. PNNL-15273. .

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  56. Proposed Standards in April 2014 NOPR

    In the NOPR, DOE proposed to adopt new and amended standards for all GSFL product classes and amended standards for all IRL product classes. For GSFLs, DOE proposed adopting TSL 5, which represented the max tech and maximum NES. Specifically, TSL 5 would set energy conservation standards at EL 2 for the 4-foot MBP, 8-foot SP slimline, 8-foot RDC HO, and T5 MiniBP SO product classes. For IRLs, DOE proposed adopting TSL 1, which was EL 1 and represented max tech. DOE received general comments on the proposed standards.

    Miller stated that there are three problems that DOE states it is trying to address by setting efficacy standards for GSFLs and IRLs: lack of consumer information, asymmetric information about the benefits of energy-efficient commercial appliances, and externalities related to greenhouse gas

    Page 4102

    emissions. However, two of the problems cited by DOE--lack of consumer information about energy efficiency and information asymmetry--are not addressed in its proposed efficacy standards. Additionally, DOE does not explain why GSFL and IRL consumers would suffer from either informational deficits or cognitive biases that would cause them to purchase products with high lifetime costs without demanding higher price, higher efficacy products. Miller further states that this asymmetric information, if it exists, could be remedied by improved labeling or other types of consumer education campaigns rather than banning products from the marketplace, especially given the projected penetration rates of LEDs. (Miller, No. 50 at p. 11)

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and Review'' requires Federal agencies to identify the problem that it intends to address, including, where applicable, the failures of private markets or public institutions that warrant new agency action, as well as to assess the significance of that problem. 58 FR 51735 (Oct. 4, 1993) Section 1(b) also states that agencies should adhere to the listed principles to the extent permitted by law. DOE's standards rulemaking process is intended to fulfill the requirements of EPCA. Any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) The proposed standards, and the standards established in this final rule, meet these criteria. By adopting standards that achieve maximum improvement in energy efficiency that is technologically feasible and economically justified, this rulemaking is indirectly addressing any potential lack of consumer information regarding energy efficiency and asymmetric information regarding these products. Alternative remedies proposed by Miller, such as labeling and consumer information, are covered by other programs established by EPCA. (42 U.S.C. 6294 and 42 U.S.C. 6307) However, the existence of such programs does not obviate DOE's legal requirement to adhere to the standards rulemaking process laid out in EPCA.

    Miller stated that DOE's approach is contrary to instruction to agencies in Executive Order 13563, which requires agencies to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. Miller noted that this included warnings, appropriate default rules, and disclosure requirements, and providing clear and intelligible information to the public. (Miller, No. 50 at p. 11)

    DOE identified and evaluated non-regulatory approaches to improving the efficacy of GSFLs and IRLs, as described in chapter 18 of the final rule TSD. DOE currently does not have statutory authority to implement most of these alternatives. Furthermore, DOE concluded that all of the non-regulatory alternatives would save less energy and have a lower NPV than adopted standards.

    Regarding warnings, default rules, and disclosure requirements, in this final rule notice DOE clearly describes amendments to existing standards being adopted in this rule and explains that compliance to the new and amended standards will be required three years after the publication date of this notice. See section VI.G.13 for compliance date information. DOE has held public meetings and invited comments from stakeholders in the framework, preliminary analysis, and NOPR stages of this rulemaking and held interviews with manufacturers at the preliminary and NOPR stages. At each stage DOE has published documents, including this final notice, that clearly lay out the methodology, assumptions, analysis, and results, as well as describe in detail comments received from stakeholders and DOE's responses.

    Miller also stated that DOE's proposal does not maintain flexibility and freedom of choice for purchasers of GSFLs and IRLs, and the resulting benefits do not justify the costs as required both by statute and by Executive Order. (Miller, No. 50 at p. 12)

    DOE determined that the proposed levels in the NOPR and the standard being adopted do not lessen the utility or performance of GSFLs and IRLs. DOE has ensured that the typical characteristics of lamps meeting the existing standard, such as shape, CCT, CRI, lifetime, and lumen package are represented at the higher efficacy levels proposed in the NOPR and being adopted in this rule. Further, consumers will continue to have a range of purchasing choices under the adopted standards. For further comments and discussion on the impact of higher efficacy levels on product availability, see section VI.D.2 for GSFLs and section VI.D.3 for IRLs.

    Miller stated that if DOE proceeds to issue the standards as proposed in the NOPR, DOE should commit to retrospective review to assess whether the rule meets the statutory standard of achieving the maximum improvement in energy efficiency that is both technologically feasible and economically justified, while also resulting in a significant conservation of energy. Miller outlined a number of metrics to consider in a retrospective review. These included quantifying environmental benefits and security, reliability, and costs of maintaining the nation's energy system as a result of standards; and potentialities such as a rebound effect, impedance of LED technology, adverse impacts on manufacturers, increased mercury, and loss of product utility and optionality as a result of standards. (Miller, No. 50 at p. 12) Miller also noted that DOE should commit to measuring metrics and assumptions of this final rule on a regular basis and collecting information for this purpose. (Miller, No. 50 at p. 9)

    As stated in DOE's Final Plan for the Retrospective Review of Existing Rules, dated August 23, 2011,\80\ DOE is committed to maintaining a consistent culture of retrospective review and analysis. In the plan, DOE sets forth a process for identifying significant rules that are obsolete, unnecessary, unjustified, excessively burdensome, or counterproductive. Once such rules have been identified, DOE will, after considering public input on any proposed change, determine what action is necessary or appropriate. DOE will continually engage in review of its rules to determine whether there are burdens on the public that can be avoided by amending or rescinding existing requirements. DOE's consideration of appliance standards within the context of retrospective review is discussed at pages 9-10 of the final plan. Since the release of its final plan, DOE has issued a number of reports documenting its progress in the retrospective review of its regulations.\81\ DOE has also issued a number of Requests for Information seeking input from the public on its retrospective review efforts, most recently on July 3, 2014. 79 FR at 37963 (April 29, 2014). DOE encourages all interested parties to provide input in DOE's retrospective review process.

    ---------------------------------------------------------------------------

    \80\ Available at http://energy.gov/gc/services/open-government/restrospective-regulatory-review.

    \81\ These reports are also available at http://energy.gov/gc/services/open-government/restrospective-regulatory-review.

    ---------------------------------------------------------------------------

    CA IOUs and ASAP endorsed the NOPR analyses and stated they would support a final rule similar to the rule proposed in the NOPR. (CA IOUs, Public Meeting Transcript, No. 49 at p. 245; ASAP, Public Meeting Transcript,

    Page 4103

    No. 49 at pp. 16, 244) EEOs stated the proposed standards would build on the achievements of the 2009 Lamps Rule, which had increased minimum efficacy by 19 percent for GSFLs and 62 percent for IRLs, by further increasing efficacy by 4 percent for GSFLs and 8 percent for IRLs. Specifically, EEOs highlighted the potential savings from the proposed standards for GSFLs, but noted that potential savings from proposed IRL standards are also significant. EEOs also pointed out that the proposed standards were cost-effective for both commercial and residential consumers. (EEOs, No. 55 at p. 2) GE, however, found the standard levels proposed in the NOPR problematically high, especially with regards to the increased burden on the industry. (GE, Public Meeting Transcript, No. 49 at p. 243)

    When considering establishing new or amending existing standards, DOE weighs the benefits and burdens of such standards. In the NOPR, for GSFL TSL 5 and IRL TSL 1, DOE determined that the benefits of energy savings, positive NPV of total consumer benefits, positive impacts on consumers, emission reductions and the estimated monetary value of the emissions reductions would outweigh the potential reduction in industry value. In the following sections DOE discusses comments received specifically on the proposed standards for GSFLs and IRLs.

    1. GSFLs Proposed Standards

    DOE also received several comments specific to the GSFL standards proposed in the NOPR. ASAP noted that the proposed GSFL standards, in combination with the GSFL standards from the 2009 Lamps Rule and the ballast standards from the 2011 Ballast Rule, would result in substantial energy savings, in particular due to their impact on the commercial sector. ASAP stated and CA IOUs agreed that this is an example of how standards can couple with utility-based and voluntary programs to shift lighting efficiency. (ASAP, Public Meeting Transcript, No. 49 at pp. 13-15; CA IOUs, Public Meeting Transcript, No. 49 at p. 20) CA IOUs further commented that the proposed GSFL standards are designed to push the fluorescent lamp market to ``best-

    in-class'' and the resulting energy savings estimate of 3.5 quads is significant. (CA IOUs, No. 56 at pp. 1-2) NEEP noted that the proposed max-tech efficacy levels for GSFL would bring over 2 TWhs of annual electricity reduction to the NEEP region in 2020 and more than 100 MWs of capacity reductions (9.8TWhs and 573 MW nationally). NEEP continued that the very aggressive energy efficiency programs administered in the region have made the proposed standards practical. (NEEP, No. 57 at p. 1)

    NEMA, however, disagreed, stating that the proposed higher performance levels would result in the unavailability of extended life lamps, inability for manufacturers to repeatedly and consistently produce products for testing and enforcement problems, price increases, minimal efficiency gains, consumer diversion to full-wattage lamps with reduced energy savings, and a significant financial impact to U.S. industry without sufficient payback. (NEMA, No. 54 at p. 16)

    As previously noted, in the NOPR analysis, DOE proposed TSL 5 for GSFLs, which required adopting the proposed EL 2 for the 4-foot MBP lamps, 8-foot slimline lamps, 8-foot RDC HO, 4-foot T5 MiniBP SO, and EL 1 for 4-foot T5 MiniBP HO. 79 FR 24068, 24174 Based on an assessment of catalog and certification data, DOE found that these levels are technologically feasible (see chapter 5 of the NOPR TSD for the further details on the engineering analysis) and maintained the GSFLs with typical lifetimes (see section VI.D.2.g for further discussion). Although DOE proposed TSL 5 in the NOPR, as discussed in section VII.C.1, in this final rule DOE found that the burdens of TSL 5 outweigh the benefits and is therefore adopting a lower standard level.

    NEMA recommended alternative standards for the GSFL product classes than those proposed in the NOPR. For lamps with CCT 4,500 K, NEMA recommended that the current standards be maintained for 4-foot MBP lamps (88 lm/W); 2-foot U-shaped lamps (81 lm/W); and 8-

    foot SP slimline lamps (93.0 lm/W) and standards be amended to 90 lm/W for the 8-foot RDC HO product class; 84 lm/W for the 4-foot T5 MiniBP SO; and 76 lm/W for the 4-foot T5 MiniBP HO product class. (NEMA, No. 54 at p. 28)

    CA IOUs noted that DOE has proposed a standard for the 4-foot MBP lamps that can be achieved by an 800 series, full-wattage, and high-

    lumen T8 lamp. CA IOUs mentioned that their rebate and incentive programs have encouraged the adoption of these third generation T8 lamps and have utilized them in cost-effective installations to achieve large energy savings, and also mentioned that the standards would further encourage this market transformation without adversely impacting product performance. (CA IOUs, No. 56 at pp. 1-2) NEEP commented that about two-thirds of the savings would be lost if the levels of the 4-foot MBP lamps were weakened, therefore DOE should maintain these levels as the higher performing lamps are available and cost-effective. (NEEP, No. 57 at p. 1)

    Based on catalog and certification data, for the 4-foot MBP product class DOE determined that there were two higher efficacy levels than the existing standard: EL 1 representing a standard 800 series full wattage lamp and EL 2 representing an improved 800 series full wattage lamp in which the phosphor mix and/or coating is enhanced to increase efficacy. DOE developed standards for the 2-foot U-shaped product class by scaling from standards for the 4-foot MBP product class. DOE developed a scaling factor based on the efficacy difference of comparable 4-foot MBP and 2-foot U-shaped product lines, and in this final rule confirmed this scaling factor using updated certification data. For this final rule, DOE used updated catalog and certification data for all products and confirmed the higher efficacy levels above the existing standard for the 4-foot MBP and 2-foot U-shaped lamps. Therefore, DOE found that higher efficacy levels than the current standards for the 4-foot MBP, 2-foot U-shaped, and 8-foot SP slimline lamps are feasible and reflect the performance of products currently on the market. See section VI.D.2.g for the detailed engineering analysis of these lamp types.

    In the NOPR for lamps with CCT 4,500 K, the proposed TSL 5 required EL 2 at 90.6 lm/W for 4-foot MBP lamps; EL 2 at 94.1 lm/W for the 8-foot SP slimline lamps; EL 2 at 95.6 lm/W for the 8-foot RDC HO lamps; EL 2 at 91.3 lm/W for the 4-foot T5 MiniBP SO lamps; and EL 1 at 78.6 lm/W for the T5 MiniBP HO lamps. Standards for GSFLs with CCT > 4,500 K were scaled from corresponding GSFLs with CCT 4,500 K: EL 2 for the 4-foot MBP was adjusted to 89.3 lm/W; EL 2 for the 8-foot SP slimline was adjusted to 96.0 lm/W; EL 2 for the 8-foot RDC HO lamps was adjusted to 93.7 lm/W; EL 2 for the 4-foot T5 MiniBP SO was adjusted to 89.3 lm/W; and EL 1 for the T5 MiniBP HO was adjusted to 76.9 lm/W. See chapter 5 of this final rule TSD for the detailed engineering analysis of GSFL scaling.

    DOE conducted a comprehensive analysis of all GSFL products available on the market and utilized both catalog and certification data to determine the efficacy levels for each product class. After weighing the benefits and burdens in this final rule analysis, DOE is adopting TSL 4 which will require EL 2 for the 4-foot MBP lamps and the 4-foot T5 MiniBP SO lamps; EL 1 for the 4-foot T5 MiniBP HO lamps; and maintain existing standards for the 8-foot SP slimline and 8-foot RDC HO lamps. See section VII.C.1 for a discussion on the benefits and burdens of GSFL standards.

    People's Republic of China (P.R. China) commented that for the 8-

    foot SP slimline lamps with a CCT > 4,500 K the standard proposed in the NOPR increases existing standards by 1.2 percent, while for the 4-

    foot T5 MiniBP SO lamps with a CCT 4,500 K and the 4-foot T5 MiniBP SO with CCT 2.5 inch diameter; 2.5 inch diameter; 2 and NOX that DOE estimated for each of the TSLs considered. As discussed in section VI.M.1, DOE used the most recent values for the SCC developed by an interagency process. The four sets of SCC values resulting from that process (expressed in 2013$) represented by $12.0/

    metric ton (the average value from a distribution that uses a 5-percent discount rate), $40.5/metric ton (the average value from a distribution that uses a 3-percent discount rate), $62.4/metric ton (the average value from a distribution that uses a 2.5-percent discount rate), and $119/metric ton (the 95th-percentile value from a distribution that uses a 3-percent discount rate). These values correspond to the value of emission reductions in 2015; the values for later years are higher due to increasing

    Page 4138

    damages as the projected magnitude of climate change increases.

    Table VII.49 and Table VII.50 present the global value of CO2 emissions reductions at each TSL. For each of the four cases, DOE calculated a present value of the stream of annual values using the same discount rate as was used in the studies upon which the dollar-per-ton values are based. DOE calculated domestic values as a range from 7 percent to 23 percent of the global values, and these results are presented in chapter 15 of the final rule TSD.

    Table VII.50--Estimates of Global Present Value of CO2 Emissions Reduction Under GSFL Trial Standard Levels

    ----------------------------------------------------------------------------------------------------------------

    SCC Case *

    ---------------------------------------------------------------------------

    TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,

    average * average * rate, average * 95th percentile *

    ----------------------------------------------------------------------------------------------------------------

    Million 2013$

    ----------------------------------------------------------------------------------------------------------------

    Power Sector Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 100 430 660 1,300

    2................................... 110 440 690 1,400

    3................................... 390 1,600 2,600 5,000

    4................................... 1,300 5,400 8,500 17,000

    5................................... 1,300 5,600 8,700 17,000

    ----------------------------------------------------------------------------------------------------------------

    Upstream Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 5.0 21 33 65

    2................................... 5.2 22 34 67

    3................................... 19 82 130 250

    4................................... 65 270 430 840

    5................................... 66 280 440 860

    ----------------------------------------------------------------------------------------------------------------

    Total Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 110 450 690 1,400

    2................................... 110 470 720 1,400

    3................................... 410 1,700 2,700 5,300

    4................................... 1,400 5,700 8,900 18,000

    5................................... 1,400 5,800 9,100 18,000

    ----------------------------------------------------------------------------------------------------------------

    * For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119

    per metric ton (2013$).

    Table VII.51--Estimates of Global Present Value of CO2 Emissions Reduction Under IRL Trial Standard Level

    ----------------------------------------------------------------------------------------------------------------

    SCC Case *

    ---------------------------------------------------------------------------

    TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,

    average * average * rate, average * 95th percentile *

    ----------------------------------------------------------------------------------------------------------------

    Million 2013$

    ----------------------------------------------------------------------------------------------------------------

    Power Sector Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 7.1 28 44 86

    ----------------------------------------------------------------------------------------------------------------

    Upstream Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 0.31 1.2 1.9 3.7

    ----------------------------------------------------------------------------------------------------------------

    Total Emissions

    ----------------------------------------------------------------------------------------------------------------

    1................................... 7.4 30 46 90

    ----------------------------------------------------------------------------------------------------------------

    * For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119

    per metric ton (2013$).

    DOE is well aware that scientific and economic knowledge about the contribution of CO2 and other GHG emissions to changes in the future global climate and the potential resulting damages to the world economy continues to evolve rapidly. Thus, any value placed on reducing CO2 emissions in this rulemaking is subject to change. DOE, together with other Federal agencies, will continue to review various methodologies for estimating the monetary value of reductions in CO2 and other GHG emissions. This ongoing review will consider the comments on this subject that are part of the public record for this and other rulemakings, as well as other methodological assumptions and issues. However, consistent with DOE's legal obligations, and taking into account the uncertainty involved with this particular issue, DOE has included in this amended rule the

    Page 4139

    most recent values and analyses resulting from the interagency process.

    DOE also estimated the cumulative monetary value of the economic benefits associated with NOX emissions reductions anticipated to result from amended standards for GSFLs and IRLs. The dollar-per-ton value that DOE used is discussed in section VI.L. Table VII.51 and Table VII.52 present the cumulative present values for each TSL calculated using 7-percent and 3-percent discount rates.

    Table VII.52--Estimates of Present Value of NOX Emissions Reduction

    Under GSFL Trial Standard Levels

    ------------------------------------------------------------------------

    3% discount 7% discount

    TSL rate rate

    ------------------------------------------------------------------------

    Million 2013$

    ------------------------------------------------------------------------

    Power Sector Emissions

    ------------------------------------------------------------------------

    1............................................. 17 11

    2............................................. 18 12

    3............................................. 66 42

    4............................................. 210 130

    5............................................. 220 140

    ------------------------------------------------------------------------

    Upstream Emissions

    ------------------------------------------------------------------------

    1............................................. 14 8.8

    2............................................. 15 9.3

    3............................................. 56 34

    4............................................. 190 110

    5............................................. 190 110

    ------------------------------------------------------------------------

    Total Emissions

    ------------------------------------------------------------------------

    1............................................. 32 20

    2............................................. 33 21

    3............................................. 120 75

    4............................................. 400 240

    5............................................. 410 250

    ------------------------------------------------------------------------

    Table VII.53--Estimates of Present Value of NOX Emissions Reduction

    Under IRL Trial Standard Level

    ------------------------------------------------------------------------

    3% discount 7% discount

    TSL rate rate

    ------------------------------------------------------------------------

    Million 2013$

    ------------------------------------------------------------------------

    Power Sector Emissions

    ------------------------------------------------------------------------

    1............................................. 1.3 0.97

    ------------------------------------------------------------------------

    Upstream Emissions

    ------------------------------------------------------------------------

    1............................................. 0.92 0.67

    ------------------------------------------------------------------------

    Total Emissions

    ------------------------------------------------------------------------

    1............................................. 2.2 1.6

    ------------------------------------------------------------------------

    7. Summary of National Economic Impacts

    The NPV of the monetized benefits associated with emissions reductions can be viewed as a complement to the NPV of the consumer savings calculated for each TSL considered in this rulemaking. Table VII.53 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced CO2 and NOX emissions in each of four valuation scenarios to the NPV of consumer savings calculated for each TSL considered in this rulemaking, at both a 7-percent and 3-percent discount rate. The CO2 values used in the columns of each table correspond to the four sets of SCC values discussed previously.

    Table VII.54--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2

    and NOX Emissions Reductions Under GSFL Trial Standard Levels

    ----------------------------------------------------------------------------------------------------------------

    Consumer NPV at 3% Discount Rate added with:

    ---------------------------------------------------------------------------

    TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case $119/

    metric ton CO2 metric ton CO2 metric ton CO2 metric ton CO2

    plus NOX* plus NOX* plus NOX* plus NOX*

    ----------------------------------------------------------------------------------------------------------------

    Billion 2013$

    ----------------------------------------------------------------------------------------------------------------

    1................................... -0.28 0.058 0.31 0.98

    2................................... -0.47 -0.11 0.15 0.85

    3................................... 1.7 3.0 3.9 6.5

    4................................... 7.2 12 15 23

    5................................... 6.7 11 14 23

    ----------------------------------------------------------------------------------------------------------------

    Consumer NPV at 7% Discount Rate added with:

    ---------------------------------------------------------------------------

    TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case $119/

    metric ton CO2 metric ton CO2 metric ton CO2 metric ton CO2

    plus NOX* plus NOX* plus NOX* plus NOX*

    ---------------------------------------------------------------------------

    Billion 2013$

    ----------------------------------------------------------------------------------------------------------------

    1................................... -0.24 0.097 0.34 1.0

    2................................... -0.37 0.153 0.24 0.94

    3................................... 0.84 2.2 3.1 5.7

    4................................... 3.6 8.0 11 20

    5................................... 3.3 7.7 11 20

    ----------------------------------------------------------------------------------------------------------------

    * These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium

    value, which corresponds to $2,684 per ton.

    Page 4140

    Table VII.55--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits from CO2

    and NOX Emissions Reductions Under IRL Trial Standard Level

    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------

    TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case

    metric ton CO2 metric ton CO2 metric ton CO2 $119/metric ton

    plus NOX* plus NOX* plus NOX* CO2 plus NOX*

    -----------------------------------------------------------------------

    Billion 2013$

    ----------------------------------------------------------------------------------------------------------------

    1....................................... 0.26 0.29 0.30 0.35

    ----------------------------------------------------------------------------------------------------------------

    Consumer NPV at 7% Discount Rate added with:

    -----------------------------------------------------------------------

    TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case

    metric ton CO2 metric ton CO2 metric ton CO2 $119/metric ton

    plus NOX* plus NOX* plus NOX* CO2 plus NOX*

    -----------------------------------------------------------------------

    Billion 2013$

    ----------------------------------------------------------------------------------------------------------------

    1....................................... 0.18 0.20 0.22 0.26

    ----------------------------------------------------------------------------------------------------------------

    * These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium

    value, which corresponds to $2,684 per ton.

    Although adding the value of consumer savings to the values of emission reductions provides a valuable perspective, two issues should be considered. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, while the value of CO2 reductions is based on a global value. Second, the assessments of operating cost savings and the SCC are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of product shipped in 2018-2047. The SCC values, on the other hand, reflect the present value of future climate-related impacts resulting from the emission of one metric ton of CO2 in each year. These impacts continue well beyond 2100.

  57. Conclusions

    When considering proposed standards, the new or amended energy conservation standard that DOE adopts for any type (or class) of covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens, considering to the greatest extent practicable the seven statutory factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or amended standard must also ``result in significant conservation of energy.'' (42 U.S.C. 6295(o)(3)(B))

    DOE considers the impacts of standards at each TSL, beginning with the max tech level, to determine whether that level meets the evaluation criteria. Where the max tech level is not justified, DOE then considers the next most efficient level and undertakes the same evaluation until it reaches the highest efficacy level that is technologically feasible, economically justified, and saves a significant amount of energy.

    To aid the reader in understanding the benefits and/or burdens of each TSL, Table VII.55 and Table VII.56 in this section summarize the quantitative analytical results for each TSL, based on the assumptions and methodology discussed herein. The efficacy levels contained in each TSL are described in section VII.A. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard (see section VII.B.1.b) and impacts on employment. DOE discusses the impacts on employment in GSFL and IRL manufacturing in section VII.B.2.b and discusses the indirect employment impacts in section VII.B.3.d.

    DOE also notes that the economics literature provides a wide-

    ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of (1) a lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant accelerating or altering purchases; (3) inconsistent weighting of future energy cost savings relative to available returns on other investments; (4) computational or other difficulties associated with the evaluation of relevant tradeoffs; and (5) a divergence in incentives (for example, renter versus owner or builder versus purchaser). Other literature indicates that with less-than-perfect foresight and a high degree of uncertainty about the future, it may be rational for consumers to trade off these types of investments at a higher-than-expected rate between current consumption and uncertain future energy cost savings. This undervaluation suggests that regulation that promotes energy efficiency can produce significant net private gains (as well as producing social gains by, for example, reducing pollution).

    In DOE's current regulatory analysis, potential changes in the benefits and costs of a regulation due to changes in consumer purchase decisions are included in two ways. First, if consumers forego a purchase of a product in the standards case, this decreases sales for product manufacturers and the cost to manufacturers is included in the MIA. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a standard decreases the number of products purchased by consumers, this decreases the potential energy savings from an energy conservation standard. DOE provides estimates of changes in the volume of product purchases in chapter 9 of the final rule TSD. DOE's current analysis does not explicitly control for heterogeneity in consumer preferences, preferences across subcategories of products or specific features, or

    Page 4141

    consumer price sensitivity variation according to household income.\93\

    ---------------------------------------------------------------------------

    \93\ P.C. Reiss and M.W. White, Household Electricity Demand, Revisited, Review of Economic Studies (2005) 72, 853-883.

    ---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.\94\ DOE welcomes comments on how to more fully assess the potential impact of energy conservation standards on consumer choice and how to quantify this impact in its future regulatory analysis.

    ---------------------------------------------------------------------------

    \94\ Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice. Lawrence Berkeley National Laboratory (2010) (Available at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.

    ---------------------------------------------------------------------------

    1. Benefits and Burdens of Trial Standard Levels Considered for General Service Fluorescent Lamps

    Table VII.55 and Table VII.56 summarize the quantitative impacts estimated for each TSL for GSFL.

    Table VII.56--Summary of Analytical Results for GSFL: National Impacts

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    National FFC Energy Savings quads

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    0.19 0.20 0.74 2.5 2.6

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    NPV of Consumer Benefits 2013$ billion

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    13% discount rate.................................................. 0.42 0.61 1.1 5.5 4.9

    17% discount rate.................................................. 0.37 0.51 0.35 2.0 1.6

    rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr------------------------------------------------------------------------------------

    Cumulative Emissions Reduction (Total FFC Emissions)

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    CO2 (million metric tons).......................................... 12 13 48 160 160

    SO2 (thousand tons)................................................ 11 11 42 140 140

    NOX (thousand tons)................................................ 18 18 69 230 240

    Hg (tons).......................................................... 0.033 0.035 0.13 0.43 0.44

    CH4 (thousand tons)................................................ 49 51 190 650 660

    CH4 (million tons CO2eq)*.......................................... 1,400 1,400 5,400 18,000 19,000

    NO2 (thousand tons)................................................ 0.15 0.16 0.60 2.0 2.1

    NO2 (thousand tons CO2eq) *........................................ 41 42 160 540 550

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Value of Emissions Reduction (Total FFC Emissions)

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    CO2, 2013$ billion **.............................................. 0.11 to 1.4 0.11 to 1.4 0.41 to 5.3 1.4 to 18 1.4 to 18

    NOX--3% discount rate, 2013$ million............................... 32 33 120 400 410

    NOX--7% discount rate, 2013$ million............................... 20 21 75 240 250

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    CO2 is the quantity of CO2 that would have the same GWP.

    ** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

    Table VII.57 Summary of Analytical Results for GSFL: Manufacturer and Consumer Impacts

    ----------------------------------------------------------------------------------------------------------------

    Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

    ----------------------------------------------------------------------------------------------------------------

    Manufacturer Impacts

    ----------------------------------------------------------------------------------------------------------------

    Change in Industry NPV (2013$ 49.5--(42.9) 48.2--(56.5) 130.4--(74.2) 426.8--(330.0) 444.6--(367.7)

    million)dagger...............

    (Base Case Industry NPV of

    $1,551.6)......................

    Change in Industry NPV 3.2--(2.8) 3.1--(3.6) 8.4--(4.8) 27.5--(21.3) 28.7--(23.7)

    (%)dagger....................

    ----------------------------------------------------------------------------------------------------------------

    Consumer Mean LCC Savings 2013$

    ----------------------------------------------------------------------------------------------------------------

    4-foot MBP 2, 240 thousand tons of NOX, 140 thousand tons of SO2, 0.44 tons of Hg, 660 thousand tons of CH4, and 2.1 thousand tons of N2O. The estimated monetary value of the CO2 emissions reductions at TSL 5 ranges from $1.4 billion to $18 billion.

    At TSL 5, DOE estimates industry will need to invest approximately $39.1 million in conversion costs. At TSL 5, the projected change in INPV ranges from a decrease of $367.7 million to an increase of $444.6 million, which equates to a decrease of 23.7 percent and an increase of 28.7 percent, respectively, in INPV for manufacturers of covered GSFLs.

    At TSL 5, the weighted-average LCC savings is $5.98 for the 4-foot MBP lamps, $5.68 for the 4-foot T5 MiniBP SO lamps, $4.74 for the 4-

    foot T5 MiniBP HO lamps, $1.72 for the 8-foot SP slimline lamps, and -

    $16.94 for the 8-foot RDC HO lamps.

    At TSL 5, 8-foot HO lamps are required to meet EL 2, which represents an 800 series full wattage T8 lamp. Because no reduced wattage 8-foot HO lamps exist at this level, consumers who require 8-

    foot HO lamps must purchase a more efficient lamp that consumes the same amount of energy as lamps available at lower efficacy levels. Thus, for an increased cost, these consumers must purchase a lamp that produces more light but does not save energy. Because there are no energy-saving options for 8-foot HO consumers at TSL 5, all consumers that continue to purchase this lamp type would experience negative LCC savings.

    After considering the analysis and weighing the benefits and the burdens, DOE has determined that at TSL 5 for GSFLs, the benefits of energy savings, positive NPV of total consumer benefits, the overall positive impacts on consumers, emission reductions and the estimated monetary value of the emissions reductions would be outweighed by the potential reduction in industry value and negative LCC savings experienced by consumers of 8-foot RDC HO lamps. Therefore, the Secretary has concluded that TSL 5 is not economically justified.

    Next, DOE considered TSL 4, which represents the combination of ELs that achieve the maximum NPV. TSL 4 would save an estimated total of 2.5 quads of energy, an amount DOE considers significant and approaches maximum energy savings achieved at TSL 5. TSL 4 has an estimated NPV of consumer benefit of $2.0 billion using a 7-percent discount rate, and $5.5 billion using a 3 percent discount rate.

    The cumulative emissions reductions at TSL 4 are 160 million metric tons of CO2, 230 thousand tons of NOX, 140 thousand tons of SO2, 0.43 tons of Hg, 650 thousand tons of CH4, and 2.0 thousand tons of N2O. The estimated monetary value of the CO2 emissions reductions at TSL 4 ranges from $1.4 billion to $18 billion.

    At TSL 4, DOE estimates industry will need to invest approximately $26.6 million in conversion costs. At TSL 4, the projected change in INPV ranges from a decrease of $330.0 million to an increase of $426.8 million, which equates to a decrease of 21.3 percent and an increase of 27.5 percent, respectively, in INPV for manufacturers of covered GSFLs.

    At TSL 4, the weighted average LCC savings is $5.98 for the 4-foot MBP lamps, $5.68 for the 4-foot T5 MiniBP SO lamps, and $4.74 for the 4-foot T5 MiniBP HO lamps. At TSL 4, no amended standard is adopted for the 8-foot SP slimline lamps or 8- foot RDC HO lamps and therefore LCC savings are not reported.

    After considering the analysis and weighing the benefits and the burdens, DOE determined that at TSL 4 for GSFLs, the benefits of energy savings, positive NPV of total consumer benefits, the overall positive impacts on consumers, emission reductions and the estimated monetary value of the emissions reductions would outweigh the potential reduction in industry value. The Secretary has concluded that TSL 4 would save a significant amount of energy and is technologically feasible and economically justified.

    Based on the above considerations, DOE adopts the energy conservation standards for GSFLs at TSL 4. Table VII.57 presents the adopted energy conservation standards for GSFLs.

    Table VII.58--Energy Conservation Standards for GSFL

    ------------------------------------------------------------------------

    Adopted level

    Lamp type CCT K lm/W

    ------------------------------------------------------------------------

    4-Foot Medium Bipin..................... 4,500 88.7

    2-Foot U-Shaped......................... 4,500 83.3

    8-Foot Slimline......................... 4,500 93.0

    8-Foot High Output...................... 4,500 88.0

    Page 4143

    4-Foot Miniature Bipin Standard Output.. 4,500 89.3

    4-Foot Miniature Bipin High Output...... 4,500 76.9

    ------------------------------------------------------------------------

    2. Summary of Benefits and Costs (Annualized) of the Adopted Standards for General Service Fluorescent Lamps

    The benefits and costs of these standards, for product sold in 2018-2047, can also be expressed in terms of annualized values. The annualized monetary values are the sum of (1) the annualized national economic value of the benefits from consumer operation of product that meet the amended standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase and installation costs, which is another way of representing consumer NPV), and (2) the annualized monetary value of the benefits of emission reductions, including CO2 emission reductions.\95\

    ---------------------------------------------------------------------------

    \95\ See section VI.M for description of the method used for annualization.

    ---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the standards for GSFL are shown in Table VII.58. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reduction, for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.5/t in 2015, the cost of the standards in this rule is $841 million per year in increased equipment costs, while the benefits are $1,030 million per year in reduced equipment operating costs, $310 million in CO2 reductions, and $22.4 million in reduced NOX emissions. In this case, the net benefit amounts to $516 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.5/t in 2015, the cost of the standards in this rule is $724 million per year in increased equipment costs, while the benefits are $1,020 million per year in reduced operating costs, $310 million in CO2 reductions, and $21.6 million in reduced NOX emissions. In this case, the net benefit amounts to $627 million per year. \96\

    ---------------------------------------------------------------------------

    \96\ The annualized consumer operating cost savings, NOX reduction monetized value, and consumer incremental product costs are higher with a 7-percent discount rate than with a 3-percent discount rate. This is in contrast to the present values in Table VII.58. Under certain conditions, different present values may lead to similar annualized values when calculated with different discount rates. In this case, the combined effects of (a) projecting to 2018 the present values that DOE calculated in 2014, and (b) annualizing the projected values with 3 percent and 7 percent discount rates over the 30-year analysis period, lead to similar annualized values. For consumer incremental product costs, the effect is more pronounced because the time series covers only 30 years, instead of the longer period covered for operating cost savings and NOX reduction monetized value.

    Table VII.59--Annualized Benefits and Costs of Amended Standards for GSFL (TSL 4) *

    ----------------------------------------------------------------------------------------------------------------

    Low net benefits High net benefits

    Discount rate Primary estimate estimate estimate

    ----------------------------------------------------------------------------------------------------------------

    Million 2013$/year

    ----------------------------------------------------------------------------------------------------------------

    Benefits

    ----------------------------------------------------------------------------------------------------------------

    Consumer Operating Cost Savings. 7%................ 1,030............. 1,010............. 1,050

    3%................ 1,020............. 1,000............. 1,050

    CO2 Reduction Monetized Value 5%................ 97.5.............. 97.1.............. 97.5

    ($12.0/t case) **.

    CO2 Reduction Monetized Value 3%................ 310............... 308............... 310

    ($40.5/t case) **.

    CO2 Reduction Monetized Value 2.5%.............. 448............... 446............... 448

    ($62.4/t case) **.

    CO2 Reduction Monetized Value 3%................ 950............... 946............... 950

    ($119/t case) **.

    NOX Reduction Monetized Value 7%................ 22.4.............. 22.3.............. 22.4

    (at $2,684/ton) **. 3%................ 21.6.............. 21.5.............. 21.6

    Total Benefits dagger......... 7% plus CO2 range. 1,150 to 2,000.... 1,130 to 1,980.... 1,170 to 2,030

    7%................ 1,360............. 1,340............. 1,390

    3% plus CO2 range. 1,140 to 2,000.... 1,120 to 1,970.... 1,170 to 2,030

    3%................ 1,360............. 1,330............. 1,390

    ----------------------------------------------------------------------------------------------------------------

    Costs

    ----------------------------------------------------------------------------------------------------------------

    Consumer Incremental Product 7%................ 841............... 882............... 841

    Costs. 3%................ 724............... 763............... 724

    ----------------------------------------------------------------------------------------------------------------

    Net Benefits

    ----------------------------------------------------------------------------------------------------------------

    Total dagger.................. 7% plus CO2 range. 300 to 1,160...... 241 to 1,090...... 328 to 1,180

    7%................ 516............... 452............... 540

    3% plus CO2 range. 415 to 1,270...... 350 to 1,200...... 443 to 1,300

    Page 4144

    3%................ 627............... 561............... 655

    ----------------------------------------------------------------------------------------------------------------

    * This table presents the annualized costs and benefits associated with GSFLs shipped in 2018-2047. These

    results include benefits to consumers that accrue after 2047 from the products purchased in 2018-2047. The

    results account for the incremental variable and fixed costs incurred by manufacturers due to the standard,

    some of which may be incurred in preparation for the rule. The Primary Benefits Estimate assumes the Reference

    case energy prices from AEO 2014 and decreasing incremental product cost, due to price learning. The Low

    Benefits Estimate uses the Low Economic Growth energy prices from AEO 2014 and constant real product prices.

    The High Benefits Estimate assumes the Low Economic Growth energy price estimates from AEO 2014 and the same

    decreasing incremental product costs as in the Primary Benefits Estimate.

    ** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the

    updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and

    2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution

    calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The

    value for NOX is the average of the low and high values used in DOE's analysis.

    dagger Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average

    SCC with 3-percent discount rate ($40.5/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2

    range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values

    are added to the full range of CO2 values.

    3. Benefits and Burdens of Trial Standard Levels Considered for Incandescent Reflector Lamps

    Table VII.59 and Table VII.60 summarize the quantitative impacts estimated for the TSL for IRL.

    Table VII.60--Summary of Analytical Results for IRL: National Impacts

    ------------------------------------------------------------------------

    Category TSL 1

    ------------------------------------------------------------------------

    National FFC Energy Savings quads

    ------------------------------------------------------------------------

    0.011

    ------------------------------------------------------------------------

    NPV of Consumers Benefits 2013$ billion

    ------------------------------------------------------------------------

    3% discount rate..................................... 0.25

    7% discount rate..................................... 0.17

    ------------------------------------------------------------------------

    Cumulative Emissions Reduction (Total FFC Emissions)

    ------------------------------------------------------------------------

    CO2 (million metric tons)............................ 0.77

    SO2 (thousand tons).................................. 0.76

    NOx (thousand tons).................................. 1.1

    Hg (tons)............................................ 0.0023

    CH4 (thousand tons).................................. 2.7

    CH4 (thousand tons CO2eq) *.......................... 76

    N2O (thousand tons).................................. 0.0088

    N2O (thousand tons CO2eq) *.......................... 2.3

    ------------------------------------------------------------------------

    Value of Emissions Reduction (Total FFC Emissions)

    ------------------------------------------------------------------------

    CO2 2013$ million **................................. 7 to 90

    NOX--3% discount rate 2013$ million.................. 2.2

    NOX--7% discount rate 2013$ million.................. 1.6

    ------------------------------------------------------------------------

    * CO2eq is the quantity of CO2 that would have the same GWP.

    ** Range of the economic value of CO2 reductions is based on estimates

    of the global benefit of reduced CO2 emissions.

    Table VII.61--Summary of Analytical Results for IRL: Manufacturer and

    Consumer Impacts

    ------------------------------------------------------------------------

    Category TSL 1

    ------------------------------------------------------------------------

    Manufacturer Impacts

    ------------------------------------------------------------------------

    Change in Industry NPV (2013$ million) * (Base Case (52.5)-(56.2)

    Industry NPV of $145.4).............................

    Change in Industry NPV (%) *......................... (36.1)-(38.6)

    ------------------------------------------------------------------------

    Consumer Mean LCC Savings * 2013$

    ------------------------------------------------------------------------

    Standard spectrum; >2.5 inch diameter; 2.5 inch diameter; 2, 1.1 thousand tons of NOX, 0.76 thousand tons of SO2, 0.0023 tons of Hg, 2.7 thousand tons of CH4, and 0.0088 thousand tons of N2O. The estimated monetary value of the CO2 emissions reductions at TSL 1 ranges from $7 million to $90 million.

    At TSL 1, the weighted average LCC savings for the standard spectrum, >2.5 inch diameter, 35 W 69 75.0 Nov. 1, 1995.

    35 W 69 68.0 Nov. 1, 1995.

    65 W 69 80.0 May 1, 1994.

    100 W 69 80.0 May 1, 1994.

    4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 4,500K and 2.5 >=125 V 6.8*P0.27

    =125 V 5.7*P0.27

    2.5 >=125 V 5.8*P0.27

    =125 V 4.9*P0.27

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