Energy Conservation Program: Energy Conservation Standards for Single Package Vertical Air Conditioners and Single Package Vertical Heat Pumps
Federal Register, Volume 80 Issue 184 (Wednesday, September 23, 2015)
Federal Register Volume 80, Number 184 (Wednesday, September 23, 2015)
Rules and Regulations
Pages 57437-57502
From the Federal Register Online via the Government Publishing Office www.gpo.gov
FR Doc No: 2015-23029
Page 57437
Vol. 80
Wednesday,
No. 184
September 23, 2015
Part II
Department of Energy
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10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for Single Package Vertical Air Conditioners and Single Package Vertical Heat Pumps; Final Rule
Page 57438
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DEPARTMENT OF ENERGY
10 CFR Part 431
Docket Number EERE-2012-BT-STD-0041
RIN 1904-AC85
Energy Conservation Program: Energy Conservation Standards for Single Package Vertical Air Conditioners and Single Package Vertical Heat Pumps
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 single package vertical air conditioner (SPVAC) and single package vertical heat pump (SPVHP) equipment (collectively referred to as single package vertical units or SPVUs). EPCA also requires the U.S. Department of Energy (DOE) to determine whether more-stringent standards for SPVACs and SPVHPs would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting standards equivalent to the American National Standards Institute (ANSI)/American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE)/
Illuminating Engineering Society (IES) Standard 90.1-2013 levels for four SPVU equipment classes, and adopting amended energy conservation standards for two other equipment classes of single package vertical units more stringent than the SPVU standards in ASHRAE Standard 90.1-
2013. DOE has determined that the amended energy conservation standards for this equipment are technologically feasible and economically justified, and would result in the significant conservation of energy.
DATES: The effective date of this rule is November 23, 2015. Compliance with the amended standards established for SPVACs and SPVHPs =65,000 and =135,000 and =65,000 Btu/h EER = 10.0....... ASHRAE........... October 9, 2015.
Conditioner. and =135,000 Btu/h EER = 10.0....... ASHRAE........... October 9, 2016.
Conditioner. and =65,000 Btu/h EER = 10.0....... ASHRAE........... October 9, 2015.
Pump. and =135,000 Btu/h EER = 10.0....... ASHRAE........... October 9, 2016.
Pump. and =65,000 Btu/h and =65,000 Btu/h and =135,000 Btu/h and =65,000 Btu/h Adopt ASHRAE... 833 Adopt ASHRAE... 7.3
Conditioner. and =135,000 Btu/h Adopt ASHRAE... N/A Adopt ASHRAE... N/A
Conditioner. and =65,000 Btu/h Adopt ASHRAE... 287 Adopt ASHRAE... 11.3
Pump. and =135,000 Btu/h Adopt ASHRAE... N/A Adopt ASHRAE... N/A
Pump. and 2), 4.9 thousand tons of sulfur dioxide (SO2), 16 tons of nitrogen oxides (NOX), 38 thousand tons of methane (CH4), 0.10 thousand tons of nitrous oxide (N2O), and 0.02 tons of mercury (Hg).\12\ The cumulative reduction in CO2 emissions through 2030 amounts to 2 Mt, which is equivalent to the emissions resulting from the annual electricity use of more than 220,000 homes. Emissions results using the EPCA baseline can be found in chapter 13 of the final rule TSD, and cumulative reduction in CO2 emissions through 2030 amounts to 3 Mt relative to the EPCA baseline.
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\11\ A metric ton is equivalent to 1.1 short tons. Results for NOX and Hg are presented in short tons.
\12\ DOE calculated emissions reductions relative to the ASHRAE base-case, which reflects key assumptions in the Annual Energy Outlook 2015 (AEO2015) Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014.
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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.\13\ The derivation of the SCC values is discussed in section IV.K. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO2 emissions reduction using the ASHRAE baseline (not including CO2 equivalent emissions of other gases with global warming potential) is between $0.06 billion and $0.85 billion, with a value of $0.28 billion using the central SCC case represented by $40.0/t in 2015. DOE
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also estimates that the net present monetary value of the NOX emissions reduction is $0.02 billion at a 7-percent discount rate, and $0.06 billion at a 3-percent discount rate.\14\ Results using the EPCA baseline can be found in chapter 14 of the final rule TSD.
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\13\ Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013; revised July 2015. (Available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.)
\14\ DOE is currently investigating valuation of avoided Hg and SO2 emissions.
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Table I.3 summarizes the national economic benefits and costs expected to result from the adopted standards for SPVUs using both the ASHRAE and EPCA baselines.
Table I.3--Summary of National Economic Benefits and Costs of Amended Energy Conservation Standards for SPVUs
Using ASHRAE and EPCA Baselines *
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Present value billion 2014$
-------------------------------- Discount rate
Category ASHRAE (%)
baseline EPCA baseline
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Benefits
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Consumer Operating Cost Savings................................. 0.37 0.80 7
0.88 1.86 3
CO2 Reduction Value ($12.2/t case) **........................... 0.06 0.13 5
CO2 Reduction Value ($40.0/t case) **........................... 0.28 0.59 3
CO2 Reduction Value ($62.3/t case) **........................... 0.44 0.93 2.5
CO2 Reduction Value ($117/t case) **............................ 0.85 1.79 3
NOX Reduction Monetized Value dagger.......................... 0.02 0.05 7
0.06 0.12 3
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Total Benefitsdaggerdagger.................................. 0.67 1.43 7
1.21 2.56 3
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Costs
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Consumer Incremental Installed Costs............................ 0.26 0.58 7
0.50 1.04 3
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Net Benefits
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Including CO2 and NOX Reduction Monetized Value daggerdagger 0.41 0.86 7
0.71 1.52 3
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* This table presents the costs and benefits associated with SPVUs shipped in 2019-2048. These results include
benefits to consumers that accrue after 2048 from the products purchased in 2019-2048. The costs account for
the incremental variable and fixed costs incurred by manufacturers due to the amended standards, some of which
may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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. The value for NOX
is the average of high and low values found in the literature.
dagger The $/ton values used for NOX are described in section IV.K.
daggerdagger Total benefits for both the 3% and 7% cases are derived using the series corresponding to
average SCC with a 3-percent discount rate ($40.0/t case).
The benefits and costs of the adopted standards, for SPVUs sold in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the national economic value of the benefits in reduced operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO2 and NOX emission reductions, all annualized.\15\
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\15\ To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, 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 2015. 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, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, which yields the same present value.
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Although DOE believes that the value of operating cost savings and CO2 emission reductions are both important, two issues are relevant. 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 SPVUs shipped in 2019-2048. Because CO2 emissions have a very long residence time in the atmosphere,\16\ the SCC values in future years reflect future CO2-emissions impacts that continue beyond 2100.
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\16\ The atmospheric lifetime of CO2 is estimated of the order of 30-95 years. Jacobson, MZ (2005), ``Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' '' J. Geophys. Res. 110. pp. D14105.
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Estimates of annualized benefits and costs of the adopted standards are shown in Table I.4. The results under the primary estimate using the ASHRAE baseline 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 $40.0/t in 2015),\17\ the estimated cost of the standards in this rule is $20 million per year in increased equipment costs, while the estimated annual benefits are $28 million in reduced equipment operating costs, $13 million in CO2 reductions, and $1.6 million in reduced NOX emissions. In this case, the net benefit amounts to $24 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series has a value of $40.0/t in 2015, the estimated cost of the standards is $24 million per year in increased equipment costs, while the estimated annual benefits are $43 million in reduced operating costs, $13 million in CO2 reductions, and $2.7 million in reduced NOX emissions. In this case, the net benefit amounts to $35 million per year. Results using the EPCA baseline are shown in Table I.5.
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\17\ DOE used a 3-percent discount rate because the SCC values for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.K).
Table I.4--Annualized Benefits and Costs of Amended Standards for SPVUs (ASHRAE Baseline) *
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Discount rate Primary estimate Low net benefits estimate High net benefits estimate
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Million 2014$/year
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Benefits
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Consumer Operating Cost Savings... 7%.............................. 28........................ 26........................ 28.
3%.............................. 43........................ 39........................ 44.
CO2 Reduction Value ($12.2/t case) 5%.............................. 3.7....................... 3.6....................... 3.7.
**.
CO2 Reduction Value ($40.0/t case) 3%.............................. 13........................ 13........................ 14.
**.
CO2 Reduction Value ($62.3/t case) 2.5%............................ 20........................ 20........................ 20.
**.
CO2 Reduction Value ($117/t case) 3%.............................. 41........................ 41........................ 41.
**.
NOX Reduction Value dagger...... 7%.............................. 1.6....................... 1.6....................... 1.6.
3%.............................. 2.7....................... 2.7....................... 2.7.
Total Benefits 7% plus CO2 range............... 33 to 71.................. 31 to 68.................. 34 to 71.
daggerdagger.
7%.............................. 43........................ 41........................ 43.
3% plus CO2 range............... 49 to 86.................. 45 to 83.................. 50 to 87.
3%.............................. 59........................ 55........................ 60.
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Costs
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Consumer Incremental Product Costs 7%.............................. 20........................ 25........................ 19.
3%.............................. 24........................ 32........................ 24.
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Net Benefits
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Total daggerdagger............ 7% plus CO2 range............... 14 to 51.................. 6 to 44................... 14 to 52.
7%.............................. 24........................ 16........................ 24.
3% plus CO2 range............... 25 to 62.................. 14 to 51.................. 26 to 63.
3%.............................. 35........................ 23........................ 36.
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* This table presents the annualized costs and benefits associated with SPVUs shipped in 2019-2048. These results include benefits to consumers that
accrue after 2048 from the SPVUs purchased from 2019-2048. 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, Low Benefits, and High Benefits Estimates utilize
projections of energy prices from the AEO2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental product costs reflect a constant rate in the Primary Estimate, an increasing rate in the Low Benefits Estimate, and a decline in the High
Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.2.a.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 The $/ton values used for NOX are described in section IV.K.
daggerdagger Total benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/t case. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
labeled discount rate, and those values are added to the full range of CO2 values.
Table I.5--Annualized Benefits and Costs of Amended Standards for SPVUs (EPCA Baseline) *
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Discount rate Primary estimate Low net benefits estimate High net benefits estimate
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Million 2014$/year
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Benefits
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Consumer Operating Cost Savings... 7%.............................. 60........................ 55........................ 60.
3%.............................. 90........................ 82........................ 92.
CO2 Reduction Value ($12.2/t case) 5%.............................. 7.8....................... 7.7....................... 7.8.
**.
CO2 Reduction Value ($40.0/t case) 3%.............................. 28........................ 28........................ 29.
**.
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CO2 Reduction Value ($62.3/t case) 2.5%............................ 42........................ 42........................ 43.
**.
CO2 Reduction Value ($117/t case) 3%.............................. 87........................ 86........................ 87.
**.
NOX Reduction Value dagger...... 7%.............................. 3.5....................... 3.5....................... 3.5.
3%.............................. 5.8....................... 5.8....................... 5.8.
Total Benefits daggerdagger... 7% plus CO2 range............... 71 to 150................. 66 to 144................. 72 to 151.
7%.............................. 92........................ 87........................ 92.
3% plus CO2 range............... 104 to 183................ 96 to 174................. 106 to 185.
3%.............................. 124....................... 117....................... 126.
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Costs
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Consumer Incremental Product Costs 7%.............................. 43........................ 53........................ 43.
3%.............................. 50........................ 65........................ 50.
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Net Benefits
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Total daggerdagger............ 7% plus CO2 range............... 28 to 107................. 13 to 92.................. 29 to 108.
7%.............................. 49........................ 34........................ 50.
3% plus CO2 range............... 53 to 132................. 31 to 110................. 56 to 135.
3%.............................. 74........................ 52........................ 76.
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* This table presents the annualized costs and benefits associated with SPVUs shipped in 2019-2048. These results include benefits to consumers which
accrue after 2048 from the SPVUs purchased from 2019-2048. 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, Low Benefits, and High Benefits Estimates utilize
projections of energy prices from the AEO2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental product costs reflect a constant rate in the Primary Estimate, an increasing rate in the Low Benefits Estimate, and a decline in the High
Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.2.a.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 The $/ton values used for NOX are described in section IV.K.
daggerdagger Total benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/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.
DOE's analysis of the national impacts of the adopted standards is described in sections IV.G, IV.J, and IV.K of this final rule.
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Conclusion
Based on the analyses culminating in this final rule, DOE found 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 this equipment). DOE has concluded that, based upon clear and convincing evidence, the amended standards adopted in this final rule represent a significant 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 final rule, as well as some of the relevant historical background related to the establishment of standards for SPVUs.
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Authority
Title III, Part C \18\ of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6311 et. seq.), added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which includes the SPVAC and SPVHP equipment that is the subject of this final rule.\19\ In general, this program addresses the energy efficiency of certain types of commercial and industrial equipment. Relevant provisions of the Act include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labelling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers. (42 U.S.C. 6316)
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\18\ For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1.
\19\ All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (Apr. 30, 2015).
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EPCA contains mandatory energy conservation standards for commercial heating, air-conditioning, and water-heating equipment. Specifically, the statute sets standards for small, large, and very large commercial package air-conditioning and heating equipment, SPVACs and SPVHPs, warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. (42 U.S.C. 6313(a)) EPCA established Federal energy conservation standards that generally correspond to the levels in ASHRAE Standard 90.1, as in effect on October 24, 1992 (i.e., ASHRAE/Illuminating Engineering Society of North America (IESNA) Standard 90.1-1989), for each type of covered equipment listed in 42 U.S.C. 6313(a). EISA 2007, Public Law 110-240, amended EPCA by adding definitions and setting minimum energy conservation standards for SPVACs and SPVHPs. (42 U.S.C. 6313(a)(10)(A)) The efficiency standards for SPVACs and SPVHPs established by EISA 2007 correspond to the levels contained in ASHRAE Standard 90.1-2004, which originated as addendum ``d'' to ASHRAE Standard 90.1-2001.
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EPCA requires that DOE conduct a rulemaking to consider amended energy conservation standards for a variety of enumerated types of commercial heating, ventilating, and air-conditioning equipment (of which SPVACs and SPVHPs are a subset) each time ASHRAE Standard 90.1 is updated with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) Such review is to be conducted in accordance with the procedures established for ASHRAE equipment under 42 U.S.C. 6313(a)(6). According to 42 U.S.C. 6313(a)(6)(A), for each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the Federal Register an analysis of the energy savings potential of amended energy efficiency standards within 180 days of the amendment of ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that DOE must adopt amended standards at the new efficiency level specified in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent level would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) In addition, DOE notes that pursuant to the EISA 2007 amendments to EPCA, the agency must periodically review its already-established energy conservation standards for ASHRAE equipment. (42 U.S.C. 6313(a)(6)(C)) In December 2012, this provision was further amended by the American Energy Manufacturing Technical Corrections Act (AEMTCA) to clarify that DOE's periodic review of ASHRAE equipment must occur ``every six years.'' (42 U.S.C. 6313(a)(6)(C)(i))
AEMTCA also modified EPCA to specify that any amendment to the design requirements with respect to the ASHRAE equipment would trigger DOE review of the potential energy savings under U.S.C. 6313(a)(6)(A)(i). Additionally, AEMTCA amended EPCA to require that if DOE proposes an amended standard for ASHRAE equipment at levels more stringent than those in ASHRAE Standard 90.1, DOE, in deciding whether a standard is economically justified, must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the following seven factors:
(I) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(II) The savings in operating costs throughout the estimated average life of the product in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses of the products likely to result from the standard;
(III) The total projected amount of energy savings likely to result directly from the standard;
(IV) Any lessening of the utility or the performance of the products likely to result from the standard;
(V) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(VI) The need for national energy conservation; and
(VII) Other factors the Secretary considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii))
EISA 2007 amended EPCA to provide an independent basis for a one-
time review regarding SPVUs that is not tied to the conditions for initiating review specified by 42 U.S.C. 6313(a)(6)(A) or 42 U.S.C. 6313(a)(6)(C) described previously. Specifically, pursuant to 42 U.S.C. 6313(a)(10)(B), DOE must commence review of the most recently published version of ASHRAE Standard 90.1 with respect to SPVU standards in accordance with the procedures established under 42 U.S.C. 6313(a)(6) no later than 3 years after the enactment of EISA 2007. DOE notes that this provision was not tied to the trigger of ASHRAE publication of an updated version of Standard 90.1 or to a 6-year period from the issuance of the last final rule, which occurred on March 7, 2009 (74 FR 12058). DOE was simply obligated to commence its review by a specified date.
Because ASHRAE did not update its efficiency levels for SPVACs and SPVHPs in ASHRAE Standard 90.1-2010, DOE began the current rulemaking by analyzing amended standards consistent with the 6-year look-back procedures defined under 42 U.S.C. 6313(a)(6)(C). The statutory provision at 42 U.S.C. 6313(a)(6)(B)(ii), recently amended by AEMTCA, states that in deciding whether a standard is economically justified, DOE must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the seven factors stated above.
However, before DOE could finalize its rulemaking initiated by the one-time SPVU review requirement in EISA, ASHRAE acted on October 9, 2013 to adopt ASHRAE Standard 90.1-2013. This revision of ASHRAE Standard 90.1 contained amended standard levels for SPVUs, thereby triggering DOE's statutory obligation under 42 U.S.C. 6313(a)(6)(A) to promulgate an amended uniform national standard at those levels unless DOE determined that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. Consequently, DOE prepared an analysis of the energy savings potential of amended standards at the ASHRAE Standard 90.1-2013 levels (as required by 42 U.S.C. 6313(a)(6)(A)(i)), and issued a NOPR. 79 FR 78614 (Dec. 30, 2014). For this final rule, DOE updated the analyses that accompanied the NOPR in response to stakeholder comments.
DOE is adopting amended standards for two equipment classes of SPVUs that are more stringent than those set forth in ASHRAE Standard 90.1-2013, and is adopting the ASHRAE Standard 90.1-2013 levels for all other SPVU equipment classes. DOE has concluded that there is clear and convincing evidence that the amended standards more stringent than those set forth in ASHRAE Standard 90.1-2013 for two SPVU equipment classes will result in significant additional conservation of energy and be technologically feasible and economically justified, as mandated by 42 U.S.C. 6313(a)(6).
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. 6313(a)(6)(B)(iii)(I)) 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. 6313(a)(6)(B)(iii)(II))
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. (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(e)(1))
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Additionally, when a type or class of covered equipment, such as ASHRAE equipment, has two or more subcategories, DOE often specifies more than one standard level. DOE generally will adopt 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 which justifies a higher or lower standard. (42 U.S.C. 6295(q)(1) and 6316(e)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE generally considers such factors as the utility to the consumer of the feature and other factors DOE deems appropriate. In a rule prescribing such a standard, DOE includes an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2) and 6316(e)(1))
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)).
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Background
1. Current Standards
As noted above, EISA 2007 amended EPCA to establish separate equipment classes and minimum energy conservation standards for SPVACs and SPVHPs. (42 U.S.C. 6313(a)(10)(A)) DOE published a final rule technical amendment in the Federal Register on March 23, 2009, which codified into DOE's regulations the new SPVAC and SPVHP equipment classes and energy conservation standards for this equipment as prescribed by EISA 2007. 74 FR 12058. These standards apply to all SPVUs manufactured on or after January 1, 2010. The current standards are set forth in Table II.1.
Table II.1--Current Federal Energy Conservation Standards for Single
Package Vertical Air Conditioners and Heat Pumps
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Cooling capacity Btu/
Equipment type h Efficiency level
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Single Package Vertical Air =65,000 Btu/h and EER = 8.9
Conditioner. =135,000 Btu/h and EER = 8.6
Conditioner. =65,000 Btu/h and EER = 8.9
Pump. =135,000 Btu/h and EER = 8.6
Pump. =135,000 Btu/h and =65,000 and =135,000 and All.
=65,000 and =135,000 and All.
is either a horizontal single package or split-system unit; or a vertical unit that consists of two components that may be shipped or installed either connected or split;
is intended for indoor installation with ducting of outdoor air from the building exterior to and from the unit, where the unit and/or all of its components are non-weatherized and are not marked (or listed) as being in compliance with UL 1995 or equivalent requirements for outdoor use;
(a) if it is a horizontal unit, the complete unit has a maximum height of 35 inches or the unit has components that do not exceed a maximum height of 35 inches;
(b) if it is a vertical unit, the complete (split, connected, or assembled) unit has component that do not exceed maximum depth of 35 inches; and
(c) has a rated cooling capacity greater than and equal to 65,000 Btu/h and up to 300,000 Btu/h.'' (EERE-2013-BT-STD-0007-0093, pp. 4-5).
DOE notes that the proposed definition does not encompass vertical single package units, and as such there is not any overlap with the definition of SPVU. DOE has not identified any equipment on the market that is arranged vertically in a single package configuration and meets all the criteria of the dual duct definition, with the sole exception of not consisting of two components. If such equipment existed, DOE would consider it to be an SPVU rather than a dual duct air conditioner or heat pump.
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Test Procedure
DOE's current energy conservation standards for SPVUs are expressed in terms of EER for cooling efficiency and COP for heating efficiency (see 10 CFR 431.96(b)).
DOE's test procedures for SPVACs and SPVHPs are codified at Title 10 of the Code of Federal Regulations (CFR), section 431.96. The current test
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procedures were amended in a final rule dated May 16, 2012. 77 FR 28928, 28987-91. The test procedures are incorporated by reference at 10 CFR 431.95(b)(6) and include the ANSI and AHRI Standard 390-2003 ``Performance Rating of Single Package Vertical Air-Conditioners and Heat Pumps'' (AHRI 390-2003).
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Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available equipment or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, Section 4(a)(4)(i).
After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on equipment utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, Section 4(a)(4)(ii)-(iv). Section IV.B of this document discusses the results of the screening analysis for SPVACs and SPVHPs, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE adopts (or does not adopt) an amended energy conservation standard for a type or class of covered equipment, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. (42 U.S.C. 6295(p)(1) and 6313(a)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (``max-
tech'') improvements in energy efficiency for SPVACs and SPVHPs using the design parameters that passed the screening analysis. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.4 of this final rule and in chapter 5 of the final rule TSD.
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Energy Savings
1. Determination of Savings
For each trial standard level (TSL), DOE projected energy savings from application of the TSL to SPVUs purchased in the 30-year period that begins in the year of compliance with any amended standards (2015-
2044 for the ASHRAE level, and 2019-2048 for higher efficiency levels).\21\ The savings are measured over the entire lifetime of products purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the ASHRAE base case, or the case in which DOE must adopt the standard levels in ASHRAE 90.1-
2013.
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\21\ DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period.
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DOE used its national impact analysis (NIA) spreadsheet models to estimate energy savings from potential amended standards for SPVUs. The NIA spreadsheet model (described in section IV.G of this final rule) calculates savings in site energy, which is the energy directly consumed by products at the locations where they are used. Based on the site energy, DOE calculates national energy savings (NES) in terms of primary energy savings at the site or at power plants, and also in terms of full-fuel-cycle (FFC) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy conservation standards.\22\ DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.G.1 of this final rule. For natural gas, the primary energy savings are considered to be equal to the site energy savings.
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\22\ The FFC metric is discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012).
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2. Significance of Savings
Among the criteria that govern DOE's adoption of more-stringent standards for SPVUs than the amended levels in ASHRAE Standard 90.1, clear and convincing evidence must support a determination that the standards would result in ``significant'' energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Although the term ``significant'' is not defined in the Act, the U.S. Court of Appeals, for the District of Columbia Circuit in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended ``significant'' energy savings in the context of EPCA to be savings that were not ``genuinely trivial.'' DOE's estimates of the energy savings for each of the TSLs considered for the final rule for SPVUs 2 and other pollutants. AHRI pointed out that those who purchase and rent commercial buildings (and their tenants) are typically sophisticated consumers who have access to information on energy costs, so any market failure in this context would not be large. AHRI stated that DOE must demonstrate that market failures actually exist in the real world and that, once quantified, DOE's assessment of costs and benefits for its rules in this area align with such an important external validity check on its analysis. (AHRI, No. 19 at pp. 26-27)
Section 1(b)(1) of Executive Order (E.O.) 12866, ``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency 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. As discussed in section VI.A of this final rule, DOE identified two problems that are related to certain features of consumer decision-making (numbers 1 and 2 in section VI.A), and one problem (number 3) that concerns environmental externalities that are not reflected in energy prices.\24\ Energy prices only reflect costs incurred in the production and delivery of energy products (including costs related to meeting existing emissions regulations). They do not reflect costs associated with the effects of the pollutant emissions that do occur. In the case of GHGs, the wide range of economic, public health, and environmental costs associated with climate change are discussed in the National Academies 2014 report America's Climate Choices.\25\
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\24\ Note that since the publication of the SPVU NOPR, DOE has refined the description of the problems identified pursuant to E.O. 12866. See section VI.A.
\25\ Available at: http://nas-sites.org/americasclimatechoices/sample-page/panel-reports/americas-climate-choices-final-report/.
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DOE acknowledges that many SPVU consumers have access to information on energy costs and have the capacity to factor this information into their purchase decision. Indeed, DOE estimates that many consumers would purchase equipment with efficiency that meets or exceeds the proposed standards in the ASHRAE base case. It is possible that the problem related to information is not highly significant in the SPVU market, but DOE believes that the problem of misaligned incentives between purchasers and users exists in the case of building tenants who pay for electricity.
Neither EPCA nor E.O. 12866 require quantification of the problems. Nor is it clear how any such quantification would bear any relationship to the costs and benefits estimated for the adopted standards. In the case of the problem that there are external benefits resulting from improved energy efficiency of equipment that are not captured by the users, DOE attempts to qualify some of the external benefits through use of SCC values.
AHRI commented that, by proposing energy conservation standards for SPVUs above the levels presented in ASHRAE 90.1-2013, DOE failed to recognize that Congress intended that DOE rely on the ``ASHRAE process'' for commercial standards-making. AHRI added that DOE should have raised concerns regarding the proposed efficiency levels through the ASHRAE process. (AHRI, No. 19 at pp. 13-15) In proposing energy conservation standards for SPVUs above the levels presented in ASHRAE 90.1-2013, DOE followed the relevant provisions of EPCA, which authorize the adoption of an energy conservation standard above the levels adopted by ASHRAE if clear and convincing evidence shows that adoption of such a more-stringent standard would result in significant
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additional conservation of energy and be technologically feasible and economically justified. 42 U.S.C. 6313(a)(6)(A)(ii)(II)
AHRI commented that DOE did not make a meaningful attempt to show that the energy savings meet the ``clear and convincing'' requirement of proof, and that the analysis falls short as a result of omissions related to increases in physical size, decreases in shipments, and lack of evidence for the conclusions of the net employment impacts. Furthermore, AHRI noted that the analysis used by DOE in this rulemaking is functionally equivalent to the 6295(o) process that does not have this elevated requirement of proof. (AHRI, No. 19 at pp. 14-
17) Following the publication of the NOPR, DOE revised its analysis to incorporate feedback received through stakeholder comments and otherwise responded to specific concerns, including those related to physical size, shipments, and employment impacts; specific revisions and comment responses are addressed in the relevant sections of the document. Following the update of its analyses and review of the results, DOE continues to believe that there is clear and convincing evidence that the standard would result in significant additional conservation of energy and is technologically feasible and economically justified. Section V.C of this document sets forth in detail the reasons why DOE has made this conclusion.
AHRI also commented that the commercial provisions of the statute do not require the maximum improvement in energy efficiency as is required by the residential provisions of the statute (42 U.S.C. 6295(o)(2)(A)). Therefore, AHRI reported that DOE should not have started at TSL 4 and walked down, but should have first considered ASHRAE and only considered higher levels based on clear and convincing evidence as noted previously. (AHRI, No. 19 at pp. 15-17) In response, as described in this final rule, DOE adopted ASHRAE levels except where clear and convincing evidence supported the adoption of a more stringent standard.
DOE also received several comments from stakeholders regarding the proposed efficiency levels. ASAP et al., NEEA, and the CA IOUs supported the proposed standards for SPVUs. (ASAP et al., No. 18 at p. 1; NEEA, No. 23 at p. 1; and CA IOUs, No. 22 at pp. 1-2) AHRI, Lennox, Friedrich, First Company, and National Coil Company opposed increasing efficiency levels about the ASHRAE 90.1-2013 levels. (AHRI, No. 19 at p. 2; Lennox, No. 16 at p. 2; Friedrich, No. 15 at p. 2; First Company, No. 12 at p. 3; National Coil Company, No. 14 at p. 1) Friedrich stated that adopting the ASHRAE 90.1-2013 standards would allow for a realistic product design cycle. (Friedrich, No. 15 at p. 2) Lennox and AHRI stated that DOE has not provided clear and convincing evidence of the benefits of levels above ASHRAE including TSL 2. (Lennox, No. 16 at pp. 7-8; AHRI, No. 19 at p. 2) Lennox also cited instances when DOE rejected TSLs with higher energy savings in favor of ASHRAE, and noted that TSL 2 does not result in significant energy savings if DOE were to consider reduced future shipments and repairs. (Lennox, No. 16 at pp. 7-8) Similarly, National Coil Company noted that the economic benefits would actually be smaller than those in the NOPR because shipments projections are flawed and the PBPs will discourage consumers from purchasing the higher efficiency product. (National Coil Company, No. 14 at p. 2)
DOE appreciates stakeholder comments on the proposed efficiency levels. With respect to Friedrich's comment regarding design cycle, DOE believes that the compliance period associated with TSL 2 provides adequate time for development and implementation of any necessary changes to equipment offerings. Additionally, DOE's engineering analysis is based on equipment already on the market, so DOE does not believe that design cycle concerns should be a significant issue. In response to Lennox and AHRI, in section V.C of this final rule, DOE presents results related to energy savings, economic justification, and technological feasibility, which together meet the clear and convincing evidence requirement. While Lennox is correct in stating that in the past DOE has rejected TSLs with energy savings greater than those expected from adopting ASHRAE standard levels, in each of those cases, DOE had determined that there is not clear and convincing evidence to support the higher levels based on specific concerns identified in those rulemakings. DOE has revised its shipments analysis in response to comments, including those from Lennox and National Coil Company. After making these revisions, which include consideration of increased repairs and reduced shipments in the standards case, DOE still finds that there is clear and convincing evidence that TSL 2 provides significant energy savings that are economically justified.
Lennox stated that if DOE does not adopt the ASHRAE 90.1-2013 efficiency levels, it should engage stakeholders in a negotiated rulemaking to address multiple concerns. (Lennox, No. 16 at p. 2) AHRI stated that as an alternative to adopting the levels in ASHRAE 90.1-
2013, DOE could issue a supplemental notice of proposed rulemaking (SNOPR) and allow stakeholders opportunity to comment on a revised analysis and proposal. (AHRI, No. 19 at p. 2) AHRI also noted that DOE may not adopt a final rule with energy conservation standards that it determined in the NOPR are not economically justified (i.e., above TSL 2) without issuing an SNOPR. (AHRI, No. 19 at p. 22)
In response, DOE notes that there is no legal requirement for DOE to engage in a negotiated rulemaking. Furthermore, all stakeholders have had the opportunity to comment on DOE's proposals, which specifically included proposed standards for certain classes of SPVUs at levels more stringent than ASHRAE 90.1-2013. In this final rule, DOE is not adopting energy conservation standards above TSL 2.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this rulemaking with regard to SPVACs and SPVHPs. Separate subsections address each component of the analysis.
DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC and PBP of potential amended or new energy conservation standards. The NIA uses a second spreadsheet set that provides shipments forecasts and calculates NES and NPV resulting from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE docket Web page for this rulemaking: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0041. Additionally, DOE used output from the latest version of the Energy Information Administration's (EIA's) Annual Energy Outlook (AEO) for the emissions and utility impact analyses.
AHRI stated that in the NOPR, DOE used AEO2013 rather than AEO2014 even though DOE acknowledged that AEO2014 would reduce environmental benefits resulting from reductions of certain emissions. AHRI further stated that updating to AEO2014 in the final rule is not consistent with the theory or practice of notice and comment rulemaking. According to AHRI, if DOE determines not to adopt ASHRAE 90.1-2013 levels, DOE must issue an SNOPR based on AEO2014 data. AHRI stated that if DOE issues a final rule, it will be
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too late to file comments and AHRI's only option will be litigation as the rule will have a fatal procedural error. (AHRI, No. 19 at pp. 18-
19)
For the final rule, DOE updated to AEO2015, the most recent version available, wherever possible. Updating to the most recent AEO versions, however, had de minimus impact on the analysis and no impact on the conclusions DOE reached. The NOPR provided stakeholders with the opportunity to comment on the methodology in the rulemaking.
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Market and Technology Assessment
To start the rulemaking analysis for SPVACs and SPVHPs, DOE researched information that provided an overall picture of the market for this equipment, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. This activity included both quantitative and qualitative assessments based primarily on publicly available information.
The market and technology assessment presented in the December 2014 NOPR discussed definitions, equipment classes, manufacturers, quantities, types of equipment sold and offered for sale, and technology options that could improve the energy efficiency of the equipment under examination. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.
In written submissions after publication of the NOPR, and discussion during the February 6, 2015 NOPR public meeting, several stakeholders provided comment on DOE's NOPR market and technology assessment. Bard commented that there were several domestic SPVU manufacturers that were not listed among the seven manufacturers considered by DOE in the NOPR. (Bard, NOPR Public Meeting Transcript, No. 11 at p. 52) DOE subsequently identified two additional domestic manufacturers of SPVUs that were not considered in the NOPR. AHRI commented that floor-mounted SPVUs used in offices and retail spaces were not included in the analysis. (AHRI, No. 19 at p. 27) DOE is not aware of any manufacturers of products that meet the statutory definition of an SPVU and are designed to be floor-mounted inside an office or retail space.
Lennox commented that, according to the AHRI database, no units exist on the market that meet the 12.3 EER max-tech level analyzed in the NOPR. (Lennox, No. 16 at p. 17) AHRI also commented that there are no units currently on the market that meet the 12.3 EER max-tech efficiency level. (AHRI, No. 19 at p. 34) For the final rule analysis, DOE reexamined up-to-date SPVU product listings in both the AHRI database and manufacturers' Web sites, and found the max-tech level to be 12.0 EER. This resulted in DOE's selection of a different max-tech level, but did not significantly alter the outcome of the analyses, because the standard level selected was not at the max-tech level of performance.
The December 2014 NOPR listed all of the potential technology options that DOE considered for improving energy efficiency of SPVACs and SPVHPs. 79 FR at 78631. These technology options are listed in Table IV.1.
Table IV.1--Potential Technology Options for Improving Energy Efficiency of SPVACs and SPVHPs
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Technology options
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Heat Exchanger Improvements................. Increased frontal coil area.
Increased depth of coil.
Increased fin density.
Improved fin design.
Improved tube design.
Hydrophilic film coating on fins.
Microchannel heat exchangers.
Dual condensing heat exchangers.
Indoor Blower and Outdoor Fan Improvements.. Improved fan motor efficiency.
Improved fan blades.
Compressor Improvements..................... Improved compressor efficiency.
Multi-speed Compressors.
Other Improvements.......................... Thermostatic expansion valves.
Electronic expansion valves.
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DOE received multiple comments regarding implementation of the technology options listed in Table IV.1 as a means of improving the energy efficiency of SPVUs. These comments are addressed in the relevant sections of the screening analysis and engineering analysis in sections IV.B and IV.C, respectively. DOE did not receive any comments regarding technology options that are not listed in Table IV.1.
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Screening Analysis
After DOE identified the technologies that might improve the energy efficiency of SPVACs and SPVHPs, DOE conducted a screening analysis. The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies to consider further and which to screen out. DOE uses four screening criteria to determine which design options are suitable for further consideration in a standards rulemaking. Namely, design options will be removed from consideration if they are not technologically feasible; are not practicable to manufacture, install, or service; have adverse impacts on product utility or product availability; or have adverse impacts on health or safety. (10 CFR part 430, subpart C, appendix A at 4(a)(4) and 5(b)) Details of the screening analysis are in chapter 4 of the final rule TSD.
Technologies that pass through the screening analysis are referred to as ``design options'' in the engineering analysis. These four screening criteria do not include the proprietary status of design options. DOE will only consider efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level.
Through a review of each technology, DOE found that the technologies identified met all four screening criteria to be examined further in the analysis in the December 2014 NOPR. 79 FR at 78631.
Technologies Not Considered in the Engineering Analysis
Typically, energy-saving technologies that pass the screening analysis are evaluated in the engineering analysis.
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However, some technologies are not included in the analysis for other reasons, including: (1) Data are not available to evaluate the energy efficiency characteristics of the technology; (2) available data suggest that the efficiency benefits of the technology are negligible; or (3) the test procedure and EER or COP metric would not measure the energy impact of these technologies. Accordingly, in the December 2014 NOPR, DOE eliminated the following technologies from consideration in the engineering analysis based upon these additional considerations: increased fin density, improved fin design, improved tube design, hydrophilic film coating on fins, thermostatic or electronic expansion valves, thermostatic cyclic controls, microchannel heat exchangers (MCHXs), and multi-speed compressors. 79 FR at 78631-32.
DOE received multiple comments on its exclusion of MCHXs from the engineering analysis. ASAP et al. commented that higher efficiency levels may have been found to be more cost effective if MCHXs had been incorporated in the analysis. Although DOE did not find any models on the market that use MCHX technology, ASAP et al. expressed the position that DOE could have modeled MCHX technology in order to determine its cost effectiveness. Additionally, ASAP et al. stated that MCHX technology offers reliability benefits to users of SPVUs. (ASAP et al., No. 18 at p. 2) NEEA commented that MCHXs are currently found in some rooftop units manufactured by at least one manufacturer of SPVUs. NEEA stated that DOE would have found MCHXs to be a cost effective design option if modeling software had been used to simulate their use in SPVUs in the engineering analysis. (NEEA, No. 23 at pp. 1-2). The CA IOUs commented that MCHX is a mature technology that has been proven in various automotive and HVAC applications. Further, the CA IOUs stated that the non-existence of this technology in SPVUs may be because the current efficiency standards are sufficiently low to not encourage its use, and it may be cost effective if utilized. (CA IOUs, No. 22 at p. 2) DOE is aware that the technological feasibility of MCHX technology has been proven in certain HVAC applications, including some commercial packaged air conditioners (CUACs). However, DOE is not aware of any manufacturers of SPVUs who either currently or in the past have incorporated MCHX technology into SPVU products. As such, DOE is not aware of any research or data that document the effect that MCHX technology has on the energy efficiency of SPVUs. Therefore, DOE did not consider MCHX technology in its engineering analysis.
After screening out or otherwise removing from consideration the aforementioned technologies, the technologies that DOE identified for consideration in the engineering analysis are included in Table IV.2.
Table IV.2--Design Options Retained for Engineering Analysis
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Increased frontal coil area.
Increased depth of coil.
Improved fan motor efficiency.
Improved fan blade efficiency.
Improved compressor efficiency.
Dual condensing heat exchangers.
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These remaining technology options from Table IV.2 are briefly described below.
Increased Frontal Coil Area
Manufacturers of SPVACs and SPVHPs will often improve the effectiveness of a unit's heat exchangers by using a coil with a larger frontal area, which increases the total heat transfer surface area. Enlarging the frontal area of a condenser coil allows heat to be rejected from the refrigerant at a lower condensing temperature. Similarly, such changes to the evaporator coil allow air to be cooled at a higher refrigerant temperature. These changes (either individually, or in tandem) can reduce the pressure difference across the compressor, and thus reduce the required compressor power. Increases in frontal coil area are limited by two factors. Growth of the evaporator coil is limited because it must be able to dehumidify the indoor air at a higher evaporating temperature. Also, existing cabinet dimensions often cannot accommodate increases in frontal coil area without the incursion of additional costs to enlarge the cabinet.
Increased Depth of Coil
Manufacturers of SPVACs and SPVHPs may choose to increase heat exchanger efficiency by adding tube rows to the evaporator and/or condenser coils. Adding tube rows increases total heat transfer surface area, which decreases the required compressor power (similar to the effect of increased frontal coil area). Adding tube rows to a coil increases its depth. Due to cabinet size constraints, there are limits on how much the depth of the coil can be increased without requiring cabinet expansion. Also, increased coil depth may impose a greater static pressure drop for the fan motor to overcome such that adequate air flow can be maintained. Any added fan power requirements must be considered when assessing the net efficiency benefit of increasing coil depth.
Improved Fan Motor Efficiency
SPVU manufacturers use either permanent split capacitor (PSC) motors or brushless permanent magnet (BPM) motors to power the fans and blowers of the SPVU. BPM motors have higher efficiencies than PSC motors, but are also more expensive and require additional control hardware. In addition, BPM motors weigh more than PSC motors, and may necessitate some system redesign to accommodate their increased weight.
DOE found that PSC motors are the dominant motor design in lower efficiency units and BPM motors are commonly found in higher efficiency equipment. Based on market data, DOE found that, in general, at the 10 EER efficiency level manufacturers transition from using a PSC motor to using a BPM motor to power the indoor blower.
Improved Fan Blade Efficiency
Air system efficiency can be improved through more advanced fan and blower design and by reducing the restrictions to air flow. The air delivery system of an SPVU typically consists of two motors driving three fans: Two indoor blowers (which move air across the evaporator coil) and an outdoor fan (which moves air across the condenser coil). The evaporator blowers are typically centrifugal blowers, while the condenser fan is typically a propeller-type fan. Improvements to the fan blade designs could increase the overall efficiency by decreasing the power demands for the fan motor. Most SPVUs use forward-curved blowers, but some manufacturers have been experimenting with backward-
curved blowers for their quieter performance and higher efficiencies. However, the space limitations within SPVUs make reduction of flow resistance difficult. Backward-curved fan blades were found in SPVUs at the max-tech efficiency level. DOE has not found any data quantifying the efficiency improvement of a backward-curved blower in SPVU models.
Improved Compressor Efficiency
The compressors used in SPVUs are almost exclusively scroll compressors, which use two interleaving scrolls to pump refrigerant throughout the sealed system. The compressor consumes the majority of the electrical input to an
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SPVU (indoor and outdoor blower fans and controls account for the remainder). As such, utilizing a higher efficiency compressor yields a significant improvement to the EER/COP of an SPVU.
Based on physical teardowns, baseline efficiency SPVUs use single-
speed compressors with lower peak-load EERs, whereas more-efficient SPVUs incorporate two-speed compressors with higher EERs in their designs.
Dual Condenser Heat Exchangers
In air-conditioning equipment, the effectiveness of a condenser at discharging heat into the outdoor air stream is directly related to the amount of surface area of the condenser heat exchanger coils.
In order to continue improving the efficiency of the condenser section of a unit when increasing the size of the condenser coil is uneconomical, SPVU manufacturers may utilize two separate condensing heat exchangers, rather than just one. Doing so allows the manufacturer to achieve the desired increase in total condenser coil surface area without the cost constraints of manufacturing a single, large condenser coil as an alternative.
Based on all available information, DOE did not change the screening analysis between the December 2014 NOPR and this final rule. Additional detail on the screening analysis is contained in chapter 4 of the final rule TSD.
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Engineering Analysis
The engineering analysis establishes the relationship between an increase in energy efficiency of the equipment and the increase in manufacturer selling price (MSP) associated with that efficiency increase. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturer cost associated with increasing the efficiency of equipment above the baseline up to higher efficiency levels for each equipment class.
1. Methodology
DOE has identified three basic methods for developing cost-
efficiency curves: (1) The design-option approach, which provides the incremental costs of adding design options to a baseline model that will improve its efficiency (i.e., lower its energy use); (2) the efficiency-level approach, which provides the incremental costs of moving to higher energy efficiency levels, without regard to the particular design option(s) used to achieve such increases; and (3) the reverse-engineering (or cost-assessment) approach, which provides ``bottom-up'' manufacturing cost assessments for achieving various levels of increased efficiency, based on teardown analyses (or physical teardowns) providing detailed data on costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.
DOE conducted the engineering analysis presented in the December 2014 NOPR using a combination of the efficiency level and cost-
assessment approaches for analysis of the EER and COP efficiency levels. More specifically, DOE identified the efficiency levels for the analysis based on the range of rated efficiencies of SPVAC and SPVHP equipment found in the AHRI database and manufacturer literature. DOE selected SPVAC and SPVHP equipment that was representative of the market at different efficiency levels, then purchased and reverse-
engineered the selected equipment. DOE used the cost-assessment approach to determine the manufacturer production costs (MPCs) for SPVAC and SPVHP equipment across a range of efficiencies from the baseline to max-tech efficiency levels. The methodology used to perform the reverse-engineering analysis and derive the cost-efficiency relationship is described in chapter 5 of the final rule TSD.
2. Efficiency Levels for Analysis
The engineering analysis first identifies representative baseline equipment, which is the starting point for analyzing potential technologies that provide energy efficiency improvements. ``Baseline equipment'' refers to a model or models having features and technologies typically found in the least-efficient equipment currently available on the market. As described in the December 2014 NOPR, DOE identified 36,000 Btu/h (3-ton) as the representative cooling capacity for SPVACs and SPVHPs with a cooling capacity less than 65,000 Btu/h, and DOE identified 72,000 (6-ton) as the representative cooling capacity for SPVACs and SPVHPs with a cooling capacity greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h. 79 FR at 78632. DOE identified some SPVHP models with a cooling capacity greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h; however, it could not identify any models in this category with efficiency data available, so these units were not included in the engineering analysis. DOE did not find any models of SPVHP greater than or equal to 135,000 Btu/h on the market. DOE found some SPVAC models with cooling capacities greater than or equal to 135,000 Btu/h and less than 240,000 Btu/h; however, DOE did not consider these models in the engineering analysis due to a lack of available efficiency data.
Next, using the information DOE gathered during the market and technology assessment, DOE selected higher efficiency levels for analysis for the representative cooling capacities based on the most common equipment efficiencies on the market and efficiency levels that are typically achieved via substantial design changes, as well as the highest efficiency level on the market for each equipment class (i.e., the max-tech level). Next, DOE identified typical technologies and features incorporated into equipment at these higher efficiency levels. To determine the appropriate COP heating mode efficiency levels for SPVHPs, DOE performed an analysis of how COP relates to EER. DOE reviewed the models in the database it compiled, and for each equipment class, DOE calculated the median COP for each EER efficiency level for analysis.
Table IV.3 and Table IV.4 list the efficiency levels analyzed for SPVUs. Due to changes in equipment efficiency certification ratings since the analysis conducted for the December 2014 NOPR, the max-tech efficiency level (EL) decreased from 12.3 EER to 12.0 EER. In addition, the median COP value at both EL 3 and EL 4 decreased from 3.9 COP to 3.7 COP. Because DOE could not find any SPVUs with cooling capacities >=135,000 Btu/h and =135,000 Btu/h and =65,000 Btu/h and
=65,000 Btu/h and =65,000 Btu/h and =65,000 Btu/h and =65,000
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Btu/h and =65 SPVHPs, >=65
Efficiency level -------------------------------- kBtu/h and 65,000 Btu/h.
See the engineering analysis for
additional details on selections of
efficiency levels and cost.
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DOE analyzed the EPCA and ASHRAE baseline efficiency levels (reflecting the efficiency levels in ASHRAE Standard 90.1-2013) and up to four higher efficiency levels for SPVUs 20 years).\60\ Federal office space was assumed to use the Federal bond rate, derived as the 40-year geometric average of long-term (>10 years) U.S. government securities.\61\
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\60\ Federal Reserve Bank of St. Louis, State and Local Bonds--
Bond Buyer Go 20-Bond Municipal Bond Index (Last accessed April 16, 2015) Available at: http://research.stlouisfed.org/fred2/series/MSLB20/downloaddata?cid=32995.
\61\ Rate calculated with 1975-2014 data. Data source: U.S. Federal Reserve (Last accessed April 16, 2015) (Available at: www.federalreserve.gov/releases/h15/data.htm).
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Based on this database, DOE calculated the weighted-average, after-
tax discount rate for SPVU equipment purchases, adjusted for inflation, in each of the five business types, which were allocated to the three building types used in the analysis based on estimated market shares of modular buildings used by each business type. The allocation percentages came from a combination of manufacturer interviews and industry data published by the Modular Buildings Institute.62 63 64 65
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\62\ Modular Building Institute, State of the Industry 2006 (Available at: http://www.modular.org/HtmlPage.aspx?name=analysis) (March 6, 2014).
\63\ Modular Building Institute, Commercial Modular Construction Report 2008 (Available at: http://www.modular.org/HtmlPage.aspx?name=analysis) (March 6, 2014).
\64\ Modular Building Institute, Commercial Modular Construction Report 2009 (Available at: http://www.modular.org/HtmlPage.aspx?name=analysis) (March 6, 2014).
\65\ Modular Building Institute, Relocatable Buildings 2011 Annual Report (Available at: http://www.modular.org/HtmlPage.aspx?name=analysis) (March 6, 2014).
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Chapter 8 of the final rule TSD contains the detailed calculations related to discount rates.
3. Payback Period
DOE also determined the economic impact of potential amended energy conservation standards on consumers by calculating the PBP of more-
stringent efficiency levels relative to the base-case efficiency levels. The PBP measures the amount of time it takes the commercial customer to recover the assumed higher purchase expense of more-
efficient equipment through lower operating costs. Similar to the LCC, the PBP is based on the total installed cost and the operating expenses for each building type and State, weighted on the probability of shipment to each market. Because the PBP does not take into account changes in operating expense over time or the time value of money, DOE considered only the first year's operating expenses to calculate the PBP, unlike the LCC, which is calculated over the lifetime of the equipment. Chapter 8 of the final rule TSD provides additional details about the PBP calculations.
DOE received comments during the NOPR public meeting and in written form regarding the LCC analysis. AHRI commented that physical changes in cabinet size will incur higher installation costs, and that physical size changes also affect repair vs. replacement decisions. (AHRI, No. 19 at pp. 16, 17, 31, 32, 34) Bard commented that schools will repair failing equipment rather than replace it with more-expensive, efficient models; customers will not tolerate 14.7 and 10.1 year PBPs, and more efficient models require larger cabinet sizes. (Bard, No. 13 at pp. 2, 3) Lennox commented that increasing cabinet size will increase installation cost as modifications to buildings will be required. (Lennox, No. 16 at p. 18) Lennox also commented that commercial entities will not like paybacks as long as 8.4 years, and will end up repairing old equipment rather
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than buying new. (Lennox, NOPR Public Meeting Transcript, No. 11 at p. 138) DOE appreciates these comments and addressed repair vs. replacement decisions in the NIA, as discussed in section IV.G.2.b. National Coil Company commented that more efficient equipment yields larger cabinet sizes, which are more expensive to install. (National Coil Company, No. 14 at p. 3) Edison Electric Institute commented that some modular portable buildings are only used for 4 to 5 years, which is shorter than the average lifetime of this equipment, and expressed concern that education facilities have longer paybacks and higher net costs relative to the average customer. (Edison Electric Institute, NOPR Public Meeting Transcript, No. 11 at pp. 118, 144) DOE notes that most modular buildings are not destroyed after 4 to 5 years of use, but are moved to another location and continue to be used. Because they are an integral component of modular buildings, SPVUs are moved along with the building and continue giving service in the new location. Friedrich commented that the majority of its equipment goes to the hotel/motel industry, and there is a higher cost to install more-efficient, larger units. (Friedrich, NOPR Public Meeting Transcript, No. 11 at p. 132)
DOE acknowledges and appreciates the comments shared in the public meeting and via written comment. DOE agrees that to a certain extent, more-efficient equipment requires larger cabinet sizes and therefore higher installation costs. As discussed in section IV.C.4, transitioning from EER 9.0 to EER 10.0 necessitates an increase in cabinet size. The economic analyses DOE conducted for equipment with efficiencies greater than EER 10.0 equipment are compared against EER 10.0 equipment. DOE notes that the standard levels for equipment less than 65,000 Btu/h of EER 11.0 and EER 11.0/COP 3.3 for SPVACs and SPVHPs, respectively, do not necessitate larger cabinet sizes than the ASHRAE efficiency equipment. Therefore, DOE did not modify its approach for calculating installation costs for the final rule.
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National Impact Analysis
The NIA evaluates the effects of a considered energy conservation standard from a national perspective rather than from the customer perspective represented by the LCC. This analysis assesses the NPV (future amounts discounted to the present) and the NES of total commercial consumer costs and savings that are expected to result from amended standards at specific efficiency levels.\66\
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\66\ The NIA accounts for impacts in the 50 States and the U.S. territories.
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The NES refers to cumulative energy savings for the lifetime of units shipped from 2019 through 2048. DOE calculated energy savings in each year relative to a base case, defined as DOE adoption of the efficiency levels specified by ASHRAE Standard 90.1-2013. DOE also calculated energy savings from adopting efficiency levels specified by ASHRAE Standard 90.1-2013 compared to the EPCA base case (i.e., the current Federal standards) for units shipped from 2015 through 2044. The NPV refers to cumulative monetary savings. DOE calculated net monetary savings in each year relative to the ASHRAE base case as the difference between total operating cost savings and increases in total installed cost. DOE accounted for operating cost savings until 2072, when the equipment installed in the 30th year after the compliance date of the amended standards should be retired. Cumulative savings are the sum of the annual NPV over the specified period.
1. Approach
The NES and NPV are a function of the total number of units in use and their efficiencies. Both the NES and NPV depend on annual shipments and equipment lifetime. Both calculations start by using the shipments estimate and the quantity of units in service derived from the shipments model.
To make the analysis more transparent to all interested parties, DOE used a spreadsheet tool, available on DOE's Web site,\67\ to calculate the energy savings and the national economic costs and savings from potential amended standards. Interested parties can review DOE's analyses by changing various input quantities within the spreadsheet.
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\67\ DOE's Web page on SPVUs can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/35.
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Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs, but relies on national average equipment costs and energy costs developed from the LCC spreadsheet. DOE used the NES spreadsheet to perform calculations of energy savings and NPV using the annual energy consumption and total installed cost data from the LCC analysis. For efficiency levels higher than ASHRAE, DOE projected the energy savings, energy cost savings, equipment costs, and NPV of benefits for equipment sold in each SPVU class from 2019 through 2048. For the ASHRAE level, DOE projected energy savings for equipment sold from 2015 through 2044. DOE does not calculate economic benefits for the ASHRAE level because it is statutorily required to use the ASHRAE level as the baseline. The projection provided annual and cumulative values for all four output parameters described above.
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National Energy Savings
DOE calculated the NES associated with the difference between the per-unit energy use under a standards-case scenario and the per-unit energy use in the base case. The average energy per unit used by the SPVUs in service gradually decreases in the standards case relative to the base case because more-efficient SPVUs are expected to gradually replace less-efficient ones.
Unit energy consumption values for each equipment class are taken from the LCC spreadsheet for each efficiency level and weighted based on market efficiency distributions. To estimate the total energy savings for each efficiency level, DOE first calculated the delta unit energy consumption (i.e., the difference between the energy directly consumed by a unit of equipment in operation in the base case and the standards case) for each class of SPVUs for each year of the analysis period. The analysis period begins with the earliest expected compliance date of amended energy conservation standards (i.e., 2015), assuming DOE adoption of the baseline ASHRAE Standard 90.1-2013 efficiency levels. For the analysis of DOE's potential adoption of more-stringent efficiency levels, the analysis period does not begin until the compliance date of 2019, four years after DOE would likely issue a final rule requiring such standards.
Second, DOE determined the annual site energy savings by multiplying the stock of each equipment class by vintage (i.e., year of shipment) by the delta unit energy consumption for each vintage (from step one). As mentioned in section IV.E, this includes an increase in gas usage for some SPVAC units sold with gas furnaces (where fan power was reduced to achieve higher efficiency levels).
Third, DOE converted the annual site electricity savings into the annual amount of energy saved at the source of electricity generation (the source or primary energy), using annual conversion factors derived from AEO2015. Finally, DOE summed the annual primary energy savings for the lifetime of units shipped over a 30-year period to calculate the total NES. DOE performed these calculations for each
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efficiency level considered for SPVUs in this rulemaking.
In 2011, in 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 Sciences, DOE announced its intention to use FFC measures of energy use and GHG and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 document, DOE published a statement of amended policy in which DOE explained its determination that EIA's National Energy Modeling System (NEMS) is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector \68\ that EIA uses to prepare its Annual Energy Outlook. The approach used for the final rule, and the FFC multipliers that were applied, are described in appendix 10A of the final rule TSD. NES results are presented in both primary and FFC savings in section V.B.3.a.
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\68\ For more information on NEMS, refer to The National Energy Modeling System: An Overview, DOE/EIA-0581 (98) (Feb. 1998) (Available at: http://www.eia.gov/oiaf/aeo/overview/).
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DOE considered whether a rebound effect is applicable in its NES analysis for SPVUs. A rebound effect occurs when an increase in equipment efficiency leads to increased demand for its service. For example, when a consumer realizes that a more-efficient air conditioner will lower the electricity bill, that person may opt for increased comfort in the home by lowering the temperature, thereby returning a portion of the energy cost savings. For the SPVU market, there are two ways that a rebound effect could occur: (1) Increased use of the air-
conditioning equipment within the commercial buildings in which such units are installed; and (2) additional instances of air-conditioning of spaces that were not being cooled before. In the case of SPVUs, the person owning the equipment (i.e., the building owner) is usually not the person operating the equipment (i.e., the renter). Because the operator usually does not own the equipment, that person will not have the operating cost information necessary to influence their operation of the equipment. Therefore, DOE believes that the first instance is unlikely to occur. Similarly, the second instance is unlikely because a small change in efficiency is insignificant among the factors that determine how much floor space will be air-conditioned.
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Net Present Value
To estimate the NPV, DOE calculated the net impact as the difference between total operating cost savings and increases in total installed costs. DOE calculated the NPV of each considered standard level over the life of the equipment using the following three steps.
First, DOE determined the difference between the equipment costs under the standard-level case and the base case in order to obtain the net equipment cost increase resulting from the higher standard level. As noted in section IV.F.2.a, DOE used a constant price assumption as the default price forecast; the cost to manufacture a given unit of higher efficiency neither increases nor decreases over time. In addition, DOE considered two alternative price trends in order to investigate the sensitivity of the results to different assumptions regarding equipment price trends. One of these used an exponential fit on the deflated PPI for all other miscellaneous refrigeration and air-
conditioning equipment, and the other is based on the ``deflator--other durables excluding medical'' that was forecasted for AEO2015. The derivation of these price trends is described in appendix 10B of the final rule TSD.
Second, DOE determined the difference between the base-case operating costs and the standard-level operating costs in order to obtain the net operating cost savings from each higher efficiency level. The operating cost savings are energy cost savings, which are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate energy prices in future years, DOE multiplied the average regional energy prices by the forecast of annual national-average residential energy price changes in the Reference case from AEO2015, which has an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2030 to 2040. As part of the NIA, DOE also analyzed scenarios that used inputs from the AEO2015 Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the Reference case. NIA results based on these cases are presented in appendix 10B of the final rule TSD.
Third, DOE determined the difference between the net operating cost savings and the net equipment cost increase in order to obtain the net savings (or expense) for each year. DOE then discounted the annual net savings (or expenses) to 2015 for SPVUs bought in or after 2019 and summed the discounted values to provide the NPV for an efficiency level.
In accordance with the OMB's guidelines on regulatory analysis,\69\ DOE calculated 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. DOE used this discount rate to approximate the opportunity cost of capital in the private sector, because recent OMB analysis has found the average rate of return on capital to be near this rate. DOE used the 3-percent rate to capture the potential effects of standards on private consumption (e.g., through higher prices for products and reduced purchases of energy). This rate represents the rate at which society discounts future consumption flows to their present value. This rate can be approximated by the real rate of return on long-term government debt (i.e., yield on United States Treasury notes minus annual rate of change in the Consumer Price Index), which has averaged about 3 percent on a pre-tax basis for the past 30 years.
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\69\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: www.whitehouse.gov/omb/circulars_a004_a-4).
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2. Shipments Analysis
In its shipments analysis, DOE developed shipment projections for SPVUs and, in turn, calculated equipment stock over the course of the analysis period. DOE used the shipments projection and the equipment stock to determine the NES. In order to account for the analysis periods of both the ASHRAE level and higher efficiency levels, the shipments portion of the spreadsheet model projects SPVU shipments from 2015 through 2048.
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Shipments Model and Forecast
To develop the shipments model, DOE started with 2005 shipment estimates from the Air-Conditioning and Refrigeration Institute (ARI, now AHRI) for units less than 65,000 Btu/h as published in a previous rulemaking,\70\
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as more recent data are not available. DOE added additional shipments for SPVACs greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h, which make up 3 percent of the market, based on manufacturer interviews. As there are no models on the market for SPVHPs greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h, or for any SPVUs greater than or equal to 135,000 Btu/h, DOE did not develop shipment estimates (or generate NES and NPV) for these equipment classes. See chapter 9 of the final rule TSD for more details on the initial shipment estimates by equipment class that were used as the basis for the shipments projections discussed below.
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\70\ U.S. Department of Energy--Office of Energy Efficiency and Renewable Energy, Technical Support Document: Energy Efficiency Program for Commercial and Industrial Equipment: Efficiency Standards for Commercial Heating, Air-Conditioning, and Water Heating Equipment Including Packaged Terminal Air-Conditioners and Packaged Terminal Heat Pumps, Small Commercial Packaged Boiler, Three-Phase Air-Conditioners and Heat Pumps 2, NOX, SO2, and Hg. The second component estimates the impacts of potential standards on emissions of two additional GHGs, CH4 and N2O, as well as the reductions to emissions of all species due to ``upstream'' activities in the fuel production chain. These upstream activities comprise extraction, processing, and transporting fuels to the site of combustion. The associated emissions are referred to as upstream emissions.
The analysis of power sector emissions uses marginal emissions factors that were derived from data in AEO2015, as described in section IV.L. The methodology is described in chapter 13 and chapter 15 of the final rule TSD.
Combustion emissions of CH4 and N2O are estimated using emissions intensity factors published by the U.S. Environmental Protection Agency (EPA), GHG Emissions Factors Hub.\80\ The FFC upstream emissions are estimated based on the methodology described in chapter 13 of the final rule TSD. The upstream emissions include both emissions from fuel combustion during extraction, processing, and transportation of fuel, and ``fugitive''
Page 57475
emissions (direct leakage to the atmosphere) of CH4 and CO2.
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\80\ Available at: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
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The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. Total emissions reductions are estimated using the energy savings calculated in the NIA.
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 each ton of gas 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,\81\ DOE used GWP values of 28 for CH4 and 265 for N2O.
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\81\ 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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The AEO incorporates the projected impacts of existing air quality regulations on emissions. AEO2015 generally represents current legislation and environmental regulations, including recent government actions, for which implementing regulations were available as of October 31, 2014. DOE's estimation of impacts accounts for the presence of the emissions control programs discussed in the following paragraphs.
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). (42 U.S.C. 7651 et seq.) SO2 emissions from 28 eastern States and DC were also limited under the Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR created an allowance-based trading program that operates along with the Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit, but it remained in effect.\82\ 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,\83\ and the court ordered EPA to continue administering CAIR. On April 29, 2014, the U.S. Supreme Court reversed the judgment of the DC Circuit and remanded the case for further proceedings consistent with the Supreme Court's opinion.\84\ On October 23, 2014, the DC Circuit lifted the stay of CSAPR.\85\ Pursuant to this action, CSAPR went into effect (and CAIR ceased to be in effect) as of January 1, 2015.
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\82\ 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).
\83\ 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).
\84\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 (U.S. 2014). 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.
\85\ See Georgia v. EPA, Order (D. C. Cir. filed October 23, 2014) (No. 11-1302),
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EIA was not able to incorporate CSAPR into AEO2015, so it assumes implementation of CAIR. Although DOE's analysis used emissions factors that assume that CAIR, not CSAPR, is the regulation in force. However, the difference between CAIR and CSAPR is not relevant for the purpose of DOE's analysis of emissions impacts from energy conservation standards.
The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO2 emissions allowances resulting from the lower electricity demand caused by the adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about the effects of efficiency standards on SO2 emissions covered by the existing cap-and-trade system, but it concluded that negligible reductions in power sector SO2 emissions would occur as a result of standards.
Beginning in 2016, however, SO2 emissions will fall as a result of the Mercury and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the 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. AEO2015 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection 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.\86\ Therefore, DOE believes that energy conservation standards will generally reduce SO2 emissions in 2016 and beyond.
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\86\ DOE notes that the Supreme Court recently remanded EPA's 2012 rule regarding national emission standards for hazardous air pollutants from certain electric utility steam generating units. See Michigan v. EPA (Case No. 14-46, 2015). DOE has tentatively determined that the remand of the MATS rule does not change the assumptions regarding the impact of energy efficiency standards on SO2 emissions. Further, while the remand of the MATS rule may have an impact on the overall amount of mercury emitted by power plants, it does not change the impact of the energy efficiency standards on mercury emissions. DOE will continue to monitor developments related to this case and respond to them as appropriate.
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CAIR established a cap on NOX emissions in 28 eastern States and the District of Columbia.\87\ 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 from other facilities. 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 final rule for these States.
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\87\ 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 emissions is slight.
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The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on AEO2015, which incorporates the MATS.
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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
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calculation analogous 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 final rule.
For this final rule, DOE relied on a set of values for the SCC that was developed by a Federal interagency process. The basis for these values is summarized in the next section, and a more detailed description of the methodologies used is provided as an appendix to chapter 14 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) climate-change-related 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 CO2. A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in CO2 emissions, while a global SCC value is meant to reflect the value of damages worldwide.
Under section 1(b) 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. 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 these 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.
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Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of CO2 emissions, the analyst faces a number of challenges. A report from the National Research Council \88\ points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of GHGs; (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 questions of science, economics, and ethics and should be viewed as provisional.
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\88\ National Research Council, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, National Academies Press: Washington, DC (2009).
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Despite the limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing CO2 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.
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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. The results of this preliminary effort were presented in several proposed and final rules.
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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. Specially, 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.
In 2010, the interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC
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from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3-percent discount rate, was 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,\89\ although preference is given to consideration of the global benefits of reducing CO2 emissions. Table IV.9 presents the values in the 2010 interagency group report,\90\ which is reproduced in appendix 14A of the final rule TSD.
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\89\ 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.
\90\ 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) (Available at: www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
Table IV.9--Annual SCC Values From 2010 Interagency Report, 2010-2050
2007$ 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 this final rule were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature, as described in the 2013 update from the interagency working group (revised July 2015).\91\ Table IV.10 shows the updated sets of SCC estimates from the latest interagency update in 5-year increments from 2010 to 2050. The full set of annual SCC values between 2010 and 2050 is reported in appendix 14B of the final rule TSD. The central value that emerges is the average SCC across models at the 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.
---------------------------------------------------------------------------
\91\ 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 July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
Table IV.10--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
2007$ per metric ton CO2
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 10 31 50 86
2015............................................ 11 36 56 105
2020............................................ 12 42 62 123
2025............................................ 14 46 68 138
2030............................................ 16 50 73 152
2035............................................ 18 55 78 168
2040............................................ 21 60 84 183
2045............................................ 23 64 89 197
2050............................................ 26 69 95 212
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable because 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 previously 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
Page 57478
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 (revised July 2015), adjusted to 2014$ using the implicit price deflator for gross domestic product from the Bureau of Economic Analysis. For each of the four sets of SCC cases specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, and $117 per metric ton avoided (values expressed in 2014$). 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.
In responding to the NOPR, AHRI criticized DOE's use of SCC estimates that are subject to considerable uncertainty. (AHRI, No. 19 at pp. 19-21) The Associations \92\ objected to DOE's use of the SCC in the cost-benefit analysis performed in the NOPR, and expressed the belief that the SCC should not be used in any rulemaking or policymaking until it undergoes a more rigorous notice, review, and comment process. (The Associations, No. 17 at p. 4)
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\92\ The U.S. Chamber of Commerce, the American Chemistry Council, the American Forest & Paper Association, the American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the Brick Industry Association, the Council of Industrial Boiler Owners, the National Association of Manufacturers, the National Mining Association, the National Oilseed Processors Association, and the Portland Cement Association (collectively, ``the Associations'').
---------------------------------------------------------------------------
In conducting the interagency process that developed the SCC values, 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. Key uncertainties and model differences transparently and consistently inform the range of SCC estimates. These uncertainties and model differences are discussed in the interagency working group's reports, which are reproduced in appendices 14A and 14B of the final rule TSD, as are the major assumptions. 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 14B of the final rule TSD for discussion). Although uncertainties remain, the revised estimates that were issued in November 2013 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, using the best science available, and with input from the public.\93\ 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.
---------------------------------------------------------------------------
\93\ 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. In July 2015 OMB published a detailed summary and formal response to the many comments that were received. https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions.
---------------------------------------------------------------------------
AHRI criticized DOE's reliance on the impact of CO2 emissions over a time period greatly exceeding that used to measure the economic costs. (AHRI, No. 19 at pp. 19-21)
For the analysis of national impacts of standards, DOE considers the lifetime impacts of equipment shipped in a 30-year period. With respect to energy cost savings, impacts continue until all of the equipment shipped in the 30-year period is retired. Emissions impacts occur over the same period. With respect to the valuation of CO2 emissions reductions, the SCC estimates developed by the interagency working group are meant to represent the full discounted value (using an appropriate range of discount rates) of emissions reductions occurring in a given year. For example, CO2 emissions in 2050 have a long residence time in the atmosphere, and thus contribute to radiative forcing, which affects global climate, for a long time. In the case of both consumer economic costs and benefits and the value of CO2 emissions reductions, DOE is accounting for the lifetime impacts of equipment shipped in the same 30-year period.
AHRI also criticized DOE's use of global rather than domestic SCC values, pointing out that EPCA references weighing of the need for national energy conservation. (AHRI, No. 19 at p. 20)
DOE's analysis estimates both global and domestic benefits of CO2 emissions reductions. Following the recommendation of the interagency working group, the December 2014 NOPR and this final rule focus on a global measure of SCC. As discussed in appendix 14A of the final rule TSD, the climate change problem is highly unusual in at least two respects. First, it involves a global externality: Emissions of most GHGs contribute to damages around the world even when they are emitted in the United States. Consequently, to address the global nature of the problem, the SCC must incorporate the full (global) damages caused by GHG emissions. Second, climate change presents a problem that the United States alone cannot solve. Even if the United States were to reduce its GHG emissions to zero, that step would be far from enough to avoid substantial climate change. Other countries would also need to take action to reduce emissions if significant changes in the global climate are to be avoided. Emphasizing the need for a global solution to a global problem, the United States has been actively involved in seeking international agreements to reduce emissions and in encouraging other nations, including emerging major economies, to take significant steps to reduce emissions. When these considerations are taken as a whole, the interagency group concluded that a global measure of the benefits from reducing U.S. emissions is preferable. DOE's approach is not in contradiction of the requirement to weigh the need for national energy conservation, as one of the main reasons for national energy conservation is to contribute to efforts to mitigate the effects of global climate change.
AHRI disputed DOE's assumption that SCC values will increase over time. It suggested that adaptation and mitigation efforts would work in the opposite direction. (AHRI, No. 19 at p. 21) As discussed in appendix 14A of the final rule TSD, SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change. The approach used by the interagency working group allowed estimation of the growth rate of the SCC directly using the three integrated assessment models, which helps to ensure that the estimates are internally consistent with other modeling assumptions. Adaptation and mitigation efforts, while necessary and important, are not without cost,
Page 57479
particularly if their implementation is delayed.
1. Social Cost of Other Air Pollutants
As noted previously, DOE has estimated how the considered energy conservation standards would decrease 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 final rule based on estimates developed by EPA for 2016, 2020, 2025, and 2030.\94\ The values reflect estimated mortality and morbidity per ton of directly emitted NOX reduced by electricity generating units. EPA developed estimates using a 3-percent and a 7-percent discount rate to discount future emissions-related costs. The values in 2016 are $5,562/
ton using a 3-percent discount rate and $4,920/ton using a 7-percent discount rate (2014$). DOE extrapolated values after 2030 using the average annual rate of growth in 2016-2030. DOE multiplied the emissions reduction (tons) in each year by the associated $/ton values, and then discounted each series using discount rates of 3 percent and 7 percent as appropriate.
---------------------------------------------------------------------------
\94\ http://www2.epa.gov/benmap/sector-based-pm25-benefit-ton-estimates.
---------------------------------------------------------------------------
DOE evaluates appropriate monetization of avoided SO2 and Hg emissions in energy conservation standards rulemakings. DOE has not included monetization of those emissions in the current analysis.
L. Utility Impact Analysis
The utility impact analysis estimates several effects on the electric power industry that would result from the adoption of new or amended energy conservation standards. The utility impact analysis estimates the changes in installed electrical capacity and generation that would result for each TSL. The analysis is based on published output from the NEMS associated with AEO2015. NEMS produces 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 published side cases to estimate the marginal impacts of reduced energy demand on the utility sector. These marginal factors are estimated based on the changes to electricity sector generation, installed capacity, fuel consumption, and emissions in the AEO Reference case and various side cases. Details of the methodology are provided in the appendices to chapters 13 and 15 of the final rule TSD.
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 electricity savings calculated in the NIA to provide estimates of selected utility impacts of new or amended energy conservation standards.
-
-
Employment Impact Analysis
Employment impacts include direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the products 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 appliances. Indirect employment impacts from standards consist of the jobs created or eliminated in the national economy due to (1) reduced spending by end users on energy; (2) reduced spending on new energy supply by the utility industry; (3) increased customer spending on the purchase of new products; 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.\95\ 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 customer utility bills. Because reduced customer 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). Thus, based on the BLS data alone, DOE believes net national employment may increase because of shifts in economic activity resulting from amended energy conservation standards for SPVUs.
---------------------------------------------------------------------------
\95\ See Bureau of Economic Analysis, ``Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II),'' U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
For the amended standard levels considered in 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).\96\ 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. For the final rule, DOE used ImSET only to estimate short-term (through 2023) employment impacts.
---------------------------------------------------------------------------
\96\ M. J. Scott, O. V. Livingston, P. J. Balducci, J. M. Roop, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------
For more details on the employment impact analysis, see chapter 16 of the final rule TSD.
AHRI commented that the employment analysis ignores the immediately apparent effects on employment and relies on unsupported analysis for effects on the general economy. AHRI claimed that DOE's current approach ignores the ripple effects of the burdens on manufacturers (on suppliers, their employees, and investors). (AHRI, No. 19 at pp. 24-26)
DOE conducts two separate analyses of employment impacts of standards. The MIA looks at the potential impacts of amended energy conservation standards on direct employment in manufacturing of particular covered
Page 57480
products. As described in section V.B.2.b of this document, DOE estimates that the adopted standards could either slightly increase or decrease the number of SPVU production workers. To estimate employment impacts in the general economy, DOE used ImSET, an I-O model that was specifically designed to estimate the national employment effects of energy-saving technologies. Here too the estimated impacts of the amended standards for SPVUs are negligible. DOE did not have sufficient information to estimate how suppliers to SPVU manufacturers would be affected by the standards, but it is likely that any additional costs would be passed on in the price of goods sold to the manufacturers.
V. Analytical Results
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for SPVAC and SPVHP equipment. It addresses the TSLs examined by DOE and the projected impacts of each of these levels if adopted as energy conservation standards for SPVAC and SPVHP equipment. Additional details regarding DOE's analyses are contained in the final rule TSD supporting this document.
-
Trial Standard Levels
DOE developed TSLs that combine efficiency levels for each equipment class of SPVACs and SPVHPs. Table V.1 presents the efficiency EERs for each equipment class in the EPCA and ASHRAE baseline and each TSL. TSL 1 consists of efficiency level 1 for equipment classes less than 65,000 Btu/h. TSL 2 consists of efficiency level 2 for equipment classes less than 65,000 Btu/h. TSL 3 consists of efficiency level 3 for equipment classes less than 65,000 Btu/h. TSL 4 consists of efficiency level 4 (max-tech) for equipment classes less than 65,000 Btu/h. For SPVACs between 65,000 and 135,000 Btu/h, there are no models on the market above the ASHRAE level, and for SPVHPs between 65,000 and 135,000 Btu/h and SPVUs greater than or equal to 135,000 Btu/h and less than 240,000 Btu/h, there are no models on the market at all, and, therefore, DOE had no basis with which to develop higher efficiency levels or conduct analyses. As a result, for each TSL, the EER (and COP) for these equipment classes is shown as the ASHRAE standard level of 10.0 EER (and 3.0 COP for heat pumps).
Table V.1--EPCA Baseline, ASHRAE Baseline, and Trial Standard Levels for SPVUs
----------------------------------------------------------------------------------------------------------------
Trial standard levels EER(/COP)
Equipment class EPCA ASHRAE -------------------------------------------------------
baseline baseline 1 2 3 4
----------------------------------------------------------------------------------------------------------------
SPVACs =65,000 Btu/h and 8.9 10.0 10.0 10.0 10.0 10.0
=65,000 Btu/h and 8.9/3.0 10.0/3.0 10.0/3.0 10.0/3.0 10.0/3.0 10.0/3.0
=135,000 Btu/h and 8.6 10.0 10.0 10.0 10.0 10.0
=135,000 Btu/h and 8.6/2.9 10.0/3.0 10.0/3.0 10.0/3.0 10.0/3.0 10.0/3.0
=65,000 Btu/h and =65,000 Btu/h and =135,000 Btu/h and =135,000 Btu/h and 2 and NOX that DOE estimated for each of the considered TSLs for SPVUs. As discussed in section IV.K of this document, for CO2, DOE used the most recent values for the SCC developed by an interagency process. The four sets of SCC values for CO2 emissions reductions in 2015 resulting from that process (expressed in 2014$) are represented by $12.2/metric ton (the average value from a distribution that uses a 5-percent discount rate), $40.0/
metric ton (the average value from a distribution that uses a 3-percent discount rate), $62.3/metric ton (the average value from a distribution that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-
percentile value from a distribution that uses a 3-percent discount rate). The values for later years are higher due to increasing damages (public health, economic and environmental) as the projected magnitude of climate change increases.
Table V.17 presents the global value of CO2 emissions reductions at each TSL using the ASHRAE baseline, while results using the EPCA baseline are available in chapter 14 of the final rule TSD. For each of the four cases, DOE calculated a present value of the stream of annual values using the same discount rate as was used in the studies
Page 57490
upon which the dollar-per-ton values are based. DOE calculated domestic values as a range from 7 percent to 23 percent of the global values; these results are presented in chapter 14 of the final rule TSD for both the ASHRAE and EPCA baselines.
Table V.17--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
SCC Case * million 2014$
---------------------------------------------------------------
TSL 5% Discount 3% Discount 2.5% Discount 3% Discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 24.9 115 183 350
2............................................... 56.8 263 418 801
3............................................... 89.8 410 650 1,248
4............................................... 90.8 413 655 1,258
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 1.38 6.41 10.2 19.6
2............................................... 3.16 14.7 23.5 45.0
3............................................... 4.95 22.8 36.2 69.4
4............................................... 4.99 22.9 36.3 69.7
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 26.3 121 193 369
2............................................... 60.0 278 442 846
3............................................... 94.7 433 686 1,317
4............................................... 95.8 436 692 1,328
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is 12.0, $40.0, $62.3, and $117
per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other GHGs).
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 reduced 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 rule the most recent values and analyses resulting from the interagency review process.
DOE also estimated the cumulative monetary value of the economic benefits associated with NOX emissions reductions anticipated to result from the considered TSLs for SPVUs. The dollar-
per-ton value that DOE used is discussed in section IV.K of this document. Table V.18 presents the cumulative present values for NOX emissions for each TSL using the ASHRAE baseline calculated using 7-percent and 3-percent discount rates. Results using the EPCA baseline are available in chapter 14 of the final rule TSD.
Table V.18--Estimates of Present Value of NOX Emissions Reduction for
SPVUs Shipped in 2019-2048
------------------------------------------------------------------------
million 2014$
-------------------------------
TSL 3% discount 7% discount
rate rate
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1....................................... 14.3 5.69
2....................................... 32.8 12.8
3....................................... 51.4 21.0
4....................................... 51.8 21.4
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....................................... 10.3 3.99
2....................................... 23.7 9.01
3....................................... 36.8 14.7
4....................................... 37.0 14.9
------------------------------------------------------------------------
Total FFC Emissions
------------------------------------------------------------------------
1....................................... 24.7 9.68
2....................................... 56.5 21.8
3....................................... 88.2 35.6
4....................................... 88.8 36.3
------------------------------------------------------------------------
7. Other Factors
The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) No other factors were considered in this analysis.
8. 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 V.19 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 using the ASHRAE baseline, 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 above.
Page 57491
Table V.19--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
SCC Case $12.0/ SCC Case $40.0/ SCC Case $62.3/ SCC Case $117/
TSL Metric ton and Metric ton and Metric ton and Metric ton and
medium NOX value medium NOX value medium NOX value medium NOX value
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% Discount Rate Added with: (million 2014$)
----------------------------------------------------------------------------------------------------------------
1................................... 0.25 0.34 0.42 0.59
2................................... 0.49 0.71 0.88 1.28
3................................... (0.14) 0.20 0.45 1.08
4................................... (0.37) (0.03) 0.23 0.86
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% Discount Rate Added with: (million 2014$)
----------------------------------------------------------------------------------------------------------------
1................................... 0.10 0.20 0.27 0.45
2................................... 0.20 0.41 0.58 0.98
3................................... (0.14) 0.20 0.46 1.09
4................................... (0.30) 0.04 0.30 0.93
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2014$.
In considering the above results, two issues are relevant. First, the national operating cost savings are domestic U.S. 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 products shipped in 2019 to 2048. Because CO2 emissions have a very long residence time in the atmosphere,\102\ the SCC values in future years reflect future climate-related impacts that continue beyond 2100.
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\102\ The atmospheric lifetime of CO2 is estimated of the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' '' J. Geophys. Res. 110. pp. D14105 (2005).
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-
Conclusions
Any new or amended energy conservation standard for any class of SPVAC and SPVHP equipment must demonstrate that adoption of a uniform national standard more stringent than the amended ASHRAE Standard 90.1 for SPVAC and SPVHP equipment would result in significant additional conservation of energy, is technologically feasible and economically justified, and is supported by clear and convincing evidence. (42 U.S.C. 6313(a)(6)(A)(i)(II)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6313(a)(6)(B)(ii))
DOE considered the impacts of potential standards at each TSL, beginning with the maximum technologically feasible level, to determine whether that level met the evaluation criteria. If the max-tech level was not justified, DOE then considered the next most-efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified, results in significant additional conservation of energy, and is supported by clear and convincing evidence.
To aid the reader as DOE discusses the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE's quantitative analysis for each TSL. 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 and impacts on employment.
1. Benefits and Burdens of TSLs Considered for SPVU Standards
Table V.20 and Table V.21 summarize the quantitative impacts estimated for each TSL for SPVAC and SPVHP equipment using the ASHRAE baseline. The national impacts are measured over the lifetime of SPVAC and SPVHP equipment purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2019-2048). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle results. The efficiency levels contained in each TSL are described in section V.A. Results for the amended standard level using the EPCA baseline can be found in Table V.23 through Table V.27.
Table V.20--Summary of Analytical Results for SPVAC and SPVHP Equipment: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings (quads)
----------------------------------------------------------------------------------------------------------------
0.06 0.15 0.22 0.22
----------------------------------------------------------------------------------------------------------------
NPV of Consumer Costs and Benefits*** (2014$ billion)
----------------------------------------------------------------------------------------------------------------
3% discount rate................................ 0.20 0.38 (0.33) (0.55)
7% discount rate................................ 0.07 0.11 (0.27) (0.43)
----------------------------------------------------------------------------------------------------------------
Page 57492
Cumulative FFC Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 3.85 8.87 13.6 13.6
SO2 (thousand tons)............................. 2.15 4.94 7.60 7.66
NOX (thousand tons)............................. 7.01 16.2 24.6 24.7
Hg (tons)....................................... 0.01 0.02 0.03 0.03
CH4 (thousand tons)............................. 16.6 38.3 58.1 58.2
CH4 (thousand tons CO2eq) *..................... 465 1,074 1,626 1,629
N2O (thousand tons)............................. 0.04 0.10 0.16 0.16
N2O (thousand tons CO2eq) *..................... 11.9 27.3 41.9 42.2
----------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 (2014$ billion) **.......................... 0.03 to 0.37 0.06 to 0.85 0.09 to 1.32 0.10 to 1.33
NOX--3% discount rate (2014$ million)........... 24.7 56.5 88.2 88.8
NOX--7% discount rate (2014$ million)........... 9.68 21.8 35.6 36.3
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP) as the subject emission.
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
emissions.
*** Parentheses indicate negative values.
dagger Energy and emissions savings determined from comparing SPVU energy consumption and emissions at the
ANSI/ASHRAE/IES Standard 90.1-2013 efficiency level to that at the Federal minimum efficiency level.
Table V.21--Summary of Analytical Results for SPVAC and SPVHP Equipment: Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 * TSL 2 * TSL 3 * TSL 4 *
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) (No-new-standards 35.7 to 36.7 33.9 to 37.0 26.3 to 34.8 5.0 to 20.4
case INPV = 41.2)..............................
Industry NPV (% change)......................... (13.3) to (17.9) to (36.3) to (87.8) to
(10.9) (10.3) (15.7) (50.6)
----------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2014$)
----------------------------------------------------------------------------------------------------------------
SPVACs 2, 7.66 thousand tons of SO2, 24.7 thousand tons of NOX, 58.2 thousand tons of CH4, and 0.16 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 4 ranges from $0.10 billion to $1.33 billion.
At TSL 4, the average LCC savings for SPVAC and SPVHP equipment are -$678 and -$153, respectively. On average, these consumers have a higher LCC over the lifetime of the equipment than consumers of less-
efficient equipment. The median PBPs are 25.2 and 14.4 years for SPVAC and SPVHP consumers, respectively. The fraction of SPVAC and SPVHP consumers experiencing a net LCC cost are 85 and 69 percent, respectively.
At TSL 4, the projected change in INPV ranges from a decrease of $36.2 million to a decrease of $20.9 million, which represent a decrease of 87.8 percent and a decrease of 50.6 percent, respectively. DOE estimates 97% of models on the market would require redesign. Industry conversion costs are expected to total $40.9 million.
The Secretary concluded that at TSL 4 for SPVAC and SPVHP equipment, the benefits of energy savings, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the negative NPV of consumer benefits, economic burden on many consumers, and the impacts on manufacturers, including the conversion costs and profit margin impacts that could result in a large reduction in INPV. Consequently, the Secretary has concluded that TSL 4 is not economically justified.
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DOE then considered TSL 3, which would save an estimated 0.22 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be negative $0.27 billion using a discount rate of 7 percent, and negative $0.33 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 13.6 Mt of CO2, 7.60 thousand tons of SO2, 24.6 thousand tons of NOX, 58.1 thousand tons of CH4, and 0.16 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 3 ranges from $0.09 billion to $1.32 billion.
At TSL 3, the average LCC savings for SPVAC and SPVHP equipment are $130 and $817, respectively. The median PBPs are 12.7 and 6.2 years for SPVAC and SPVHP consumers, respectively. The fraction of SPVAC and SPVHP consumers experiencing a net LCC cost are 53 and 4 percent, respectively.
At TSL 3, the projected change in INPV ranges from a decrease of $15.0 million to a decrease of $6.5 million, which represent decreases of 36.3 percent and 15.7 percent, respectively. DOE estimates 96 percent of models on the market would require redesign. Industry conversion costs are expected to total $19.8 million.
The Secretary concluded that at TSL 3 for SPVAC and SPVHP equipment, the benefits of energy savings, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on many SPVAC consumers, and the impacts on manufacturers, including the conversion costs and profit margin impacts that could result in a large reduction in INPV. Consequently, the Secretary has concluded that TSL 3 is not economically justified.
DOE then considered TSL 2, which would save an estimated 0.15 quads of energy, an amount DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $0.11 billion using a discount rate of 7 percent, and $0.38 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 8.87 Mt of CO2, 4.94 thousand tons of SO2, 16.2 thousand tons of NOX, 38.3 thousand tons of CH4, and 0.10 thousand tons of N20. The estimated monetary value of the CO2 emissions reduction at TSL 2 ranges from $0.6 billion to $0.85 billion.
At TSL 2, the average LCC savings for SPVAC and SPVHP equipment are $174 and $435, respectively. The median PBPs are 9.6 and 5.8 years for SPVAC and SPVHP consumers, respectively. The fraction of SPVAC and SPVHP consumers experiencing a net LCC cost are 39 and 2 percent, respectively.
At TSL 2, the projected change in INPV ranges from a decrease of $7.4 million to a decrease of $4.3 million, which represent a decrease of 17.9 percent and a decrease of 10.3 percent, respectively. DOE estimates 71 percent of models on the market would require redesign. Industry conversion costs are expected to total $9.2 million.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at TSL 2 for SPVUs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers. The Secretary has concluded that TSL 2 would save a significant amount of energy, is technologically feasible and economically justified, and is supported by clear and convincing evidence.
Therefore, based on the above considerations, DOE adopts the energy conservation standards for SPVUs at TSL 2. Table V.22 presents the amended energy conservation standards for SPVUs. As mentioned previously, for SPVHPs greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h and for SPVUs greater than or equal to 135,000 Btu/h and less than 240,000 Btu/h, there are no models on the market, and, therefore, DOE had no basis with which to develop higher efficiency levels or conduct analyses. For SPVACs greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h, there are no models on the market higher than the ASHRAE 90.1-2013 level, and, therefore, DOE has no clear and convincing evidence with which to adopt higher levels. As a result, DOE is adopting amended standards for SPVUs equivalent to those in ASHRAE Standard 90.1-2013 for these four equipment classes, as required by law.
Table V.22--Amended Energy Conservation Standards for SPVUs
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Compliance date:
Equipment type Cooling capacity Efficiency level Products manufactured
on and after . . .
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Single Package Vertical Air =65,000 Btu/h and EER = 10.0............. October 9, 2015.
=135,000 Btu/h and EER = 10.0............. October 9, 2016.
=65,000 Btu/h and EER = 10.0 October 9, 2015.
=135,000 Btu/h and EER = 10.0 October 9, 2016.
2 and NOX emission reductions.\103\
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\103\ 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 (2020, 2030, etc.), and then discounted the present value from each year to 2015. 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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Table V.28 shows the annualized values for SPVUs under TSL 2, expressed in 2014$, compared to the ASHRAE baseline. 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 $40.0/t in 2015),\104\ the estimated cost of the standards in this rule is $20 million per year in increased equipment costs, while the estimated annual benefits are $28 million in reduced equipment operating costs, $13 million in CO2 reductions, and $1.6 million in reduced NOX emissions. In this case, the net benefit amounts to $24 million per year. Using a 3-
percent discount rate for all benefits and costs and the SCC series has a value of $40.0/t in 2015, the estimated cost of the standards is $24 million per year in increased equipment costs, while the estimated annual benefits are $43 million in reduced operating costs, $13 million in CO2 reductions, and $2.7 million in reduced NOX emissions. In this case, the net benefit amounts to $35 million per year.
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\104\ DOE used a 3-percent discount rate because the SCC values for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.K).
Table V.28--Annualized Benefits and Costs of Adopted Standards (TSL 2) for SPVUs
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Discount rate................... Primary estimate.......... Low net benefits estimate. High net benefits estimate
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Million 2014$/year
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Benefits
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Consumer Operating Cost Savings... 7%.............................. 28........................ 26........................ 28
3%.............................. 43........................ 39........................ 44
CO2 Reduction Value ($12.2/t case) 5%.............................. 3.7....................... 3.6....................... 3.7
**.
CO2 Reduction Value ($40.0/t case) 3%.............................. 13........................ 13........................ 14
**.
CO2 Reduction Value ($62.3/t case) 2.5%............................ 20........................ 20........................ 20
**.
CO2 Reduction Value ($117/t case) 3%.............................. 41........................ 41........................ 41
**.
NOX Reduction Value dagger...... 7%.............................. 1.6....................... 1.6....................... 1.6
3%.............................. 2.7....................... 2.7....................... 2.7
Total Benefits daggerdagger... 7% plus CO2 range............... 33 to 71.................. 31 to 68.................. 34 to 71
7%.............................. 43........................ 41........................ 43
3% plus CO2 range............... 49 to 86.................. 45 to 83.................. 50 to 87
3%.............................. 59........................ 55........................ 60
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Costs
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Consumer Incremental Product Costs 7%.............................. 20........................ 25........................ 19
3%.............................. 24........................ 32........................ 24
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Net Benefits
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Total daggerdagger............ 7% plus CO2 range............... 14 to 51.................. 6 to 44................... 14 to 52
7%.............................. 24........................ 16........................ 24
3% plus CO2 range............... 25 to 62.................. 14 to 51.................. 26 to 63
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3%.............................. 35........................ 23........................ 36
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* This table presents the annualized costs and benefits associated with SPVUs shipped in 2019-2048. These results include benefits to consumers which
accrue after 2048 from the SPVUs purchased from 2019-2048. 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, Low Benefits, and High Benefits Estimates utilize
projections of energy prices from the AEO2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental product costs reflect a constant rate in the Primary Estimate, an increasing rate in the Low Benefits Estimate, and a decline in the High
Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.2.a.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 The $/ton values used for NOX are described in section IV.K.
daggerdagger Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/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.
VI. Procedural Issues and Regulatory Review
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Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency 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. The problems that the adopted standards for SPVUs are intended to address are as follows:
(1) Insufficient information and the high costs of gathering and analyzing relevant information leads some consumers to miss opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more-efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs.
(3) There are external benefits resulting from improved energy efficiency of equipment that are not captured by the users of such equipment. These benefits include externalities related to public health, environmental protection and national energy security that are not reflected in energy prices, such as reduced emissions of air pollutants and GHGs that impact human health and global warming. DOE attempts to qualify some of the external benefits through use of SCC values.
The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the proposed regulatory action is not a significant regulatory action under section (3)(f) of Executive Order 12866. Accordingly, this rule was not reviewed by OIRA.
DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). EO 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. 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, 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 final 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.
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Administrative Procedure Act
The Administrative Procedure Act, 5 U.S.C. 553, establishes the procedural requirements for rulemaking. It requires, generally, that an agency publish notice and provide opportunity for public comment before adopting a rule. In this final rule, DOE has adopted regulatory text applicable to packaged terminal air conditioners and packaged terminal heat pumps that corrects table number references in current regulatory text. This text is being adopted without providing prior notice and an opportunity for public comment pursuant to authority at 5 U.S.C. 553(b)(B), which authorizes an agency to waive those requirements when there is good cause to do so because such procedures are unnecessary, impracticable or contrary to the public interest. Because these corrections, merely correcting table references, are non-substantive in nature, DOE finds good cause to waive the requirement for providing prior notice and an opportunity for public comment as such procedures are unnecessary.
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Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an final regulatory flexibility analysis (FRFA) for any rule that by law must be for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small
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entities. As required by Executive Order 13272, ``Proper Consideration of Small Entities in Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003 to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's Web site (www.energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for the products that are the subject of this rulemaking.
For manufacturers of SPVACs and SPVHPs, the SBA has set a size threshold, which defines those entities classified as ``small businesses'' for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size standards are listed by NAICS code and industry description and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. SPVAC and SPVHP manufacturing is classified under NAICS 333415, ``Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing.'' The SBA sets a threshold of 750 employees or less for an entity to be considered as a small business for this category.
1. Description and Estimated Number of Small Entities Regulated
DOE reviewed the potential standard levels considered in this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. To better assess the potential impacts of this rulemaking on small entities, DOE conducted a more focused inquiry of the companies that could be small business manufacturers of equipment covered by this rulemaking. During its market survey, DOE used available public information to identify potential small manufacturers. DOE's research involved industry trade association membership directories (e.g., AHRI), information from previous rulemakings, individual company Web sites, and market research tools (e.g., Hoover's reports) to create a list of companies that manufacture or sell SPVAC and SPVHP equipment covered by this rulemaking. DOE also asked stakeholders and industry representatives if they were aware of any additional small manufacturers during manufacturer interviews and at DOE public meetings. DOE reviewed publicly available data and contacted various companies on its complete list of manufacturers, as necessary, to determine whether they met the SBA's definition of a small business manufacturer. DOE screened out companies that do not offer equipment impacted by this rulemaking, do not meet the definition of a ``small business,'' or are foreign owned and operated.
DOE identified nine companies that produce equipment covered under the SPVU energy conservation standard rulemaking. Three of the nine companies are foreign-owned and operated. Of the remaining six domestic businesses, two companies met the SBA definition of a ``small business.'' One small business manufacturer has the largest market share in the SPVU industry and approximately 37 percent of the active listings in the AHRI Directory.\105\ Based on marketing literature and product offerings, the second small domestic manufacturer focuses on industrial capacities. However, no data on the product efficiency or market share was publicly available for the second small manufacturer.
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\105\ Based on model listings in the AHRI directory accessed on June 6, 2012 (Available at: http://www.ahridirectory.org/ahridirectory/pages/ac/defaultSearch.aspx).
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2. Description and Estimate of Compliance Requirements
At the time of analysis, the domestic small manufacturer with the largest market share had 347 active listings. One hundred and twenty three of those listings, or 35 percent, would meet the standards. The other 65 percent of the listings would not meet the standard. The small manufacturer would need to either redesign those products or drop those products and move their customers to more-efficient offerings. However, DOE notes that the small manufacturer had more product listings than any other manufacturer that could meet the standard.
The domestic small manufacturer with the smaller market share had 40 active listings. However, this manufacturer is not a member of AHRI and does not publish any efficiency data on its product offerings. Thus, DOE was unable to determine what portion of products would require redesign for amended energy conservation standard. At the standard level, this manufacturer would need to redesign its entire product offering or leave the SPVU market.
If small manufacturers chose to redesign their products that do not meet the standard, they would need to make capital conversion and product conversion investments. DOE estimated an average total conversion cost of $1.0 million per manufacturer. DOE expects this investment, which is roughly 8 percent of an average manufacturer's annual revenue, to be made over the 4-year period between the publication of the final rule and the effective date of the standard. Since small businesses may have a greater difficulty obtaining credit or may obtain less favorable terms than larger businesses, the small manufacturers may face higher overall costs if they choose to finance the conversion costs resulting from the change in standard.
DOE notes that the small manufacturer with the larger market share produces more SPVU units than its larger competitors. The company could potentially spread the conversion costs over a larger number of units than its competitors. However, the small manufacturer did express concern in MIA interviews that such an effort would tie up their available engineering resources and prevent them from focusing on technology advancements and customer-driven feature requests. Larger manufacturers, which do not have the same shipment volumes as the small manufacturer, may have fewer engineers dedicated to SPVU equipment but potentially could marshal engineering and testing resources across their organization. The concern about adequate availability of engineering resources would also likely apply to the small manufacturer with the smaller market share.
Smaller manufacturers generally pay higher prices for purchased parts, such as BPM motors, relative to larger competitors. Even the small manufacturer with the larger market share and the highest number of SPVU shipments of any manufacturer in the industry, could pay higher prices for component than the larger competition. If their competitors have centralized sourcing, those companies could combine component purchases for SPVU product lines with purchases for other non-SPVU product lines and obtain higher volume discounts than those available to small manufacturers.
Due to the potential conversion costs, the potential engineering and testing effort, and the potential increases in component prices that result from a standard, DOE conducted this regulatory flexibility analysis. Based on DOE's analysis, including interviews
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with manufacturers, the Department believes one of the identified small businesses would be able to meet the standard. That small manufacturer has the strong market share, technical expertise, and production capability to meet the amended standard. The company successfully competes in both the current baseline-efficiency and premium-efficiency market segments. No data on the efficiency or market share of the second small manufacturer is available to analyze.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with this final rule.
4. Significant Alternatives to the Rule
The discussion above analyzes impacts on small businesses that would result from DOE's rule. In addition to the other TSLs being considered, the final rule TSD includes an analysis of the following policy alternatives: (1) No change in standard; (2) consumer rebates; (3) consumer tax credits; (4) manufacturer tax credits; (5) voluntary energy efficiency targets; (6) early replacement; and (7) bulk government purchases. While these alternatives may mitigate to some varying extent the economic impacts on small entities compared to the adopted standards, DOE does not intend to consider these alternatives further because DOE has determined that the energy savings of these alternatives are significantly smaller than those that would be expected to result from adoption of the standards (ranging from approximately 0.01 to 0.5 percent of the energy savings from the adopted standards). Accordingly, DOE is declining to adopt any of these alternatives and is adopting the standards set forth in this document. (See chapter 17 of the final rule TSD for further detail on the policy alternatives DOE considered.)
Additional compliance flexibilities may be available through other means. For example, individual manufacturers may petition for a waiver of the applicable test procedure. Further, EPCA provides that a manufacturer whose annual gross revenue from all of its operations does not exceed $8 million may apply for an exemption from all or part of an energy conservation standard for a period not longer than 24 months after the effective date of a final rule establishing the standard. Additionally, section 504 of the Department of Energy Organization Act, 42 U.S.C. 7194, provides authority for the Secretary to adjust a rule issued under EPCA in order to prevent ``special hardship, inequity, or unfair distribution of burdens'' that may be imposed on that manufacturer as a result of such rule. Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 for additional details.
-
Review Under the Paperwork Reduction Act
Manufacturers of SPVACs and SPVHPs must certify to DOE that their equipment complies with any applicable energy conservation standards. In certifying compliance, manufacturers must test their equipment according to the DOE test procedures for SPVACs and SPVHPs, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including SPVACs and SPVHPs. See generally, 10 CFR part 429. The collection-of-
information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB control number 1910-1400. Public reporting burden for the certification is estimated to average 30 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
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Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that the rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. See 10 CFR part 1021, app. B, B5.1(b); 1021.410(b) and app. B, B(1)-(5). The rule fits within this category of actions because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this rule. DOE's CX determination for this rule is available at http://cxnepa.energy.gov/.
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Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the equipment that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by Executive Order 13132.
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Review Under Executive Order 12988
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, ``Civil Justice Reform,'' imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly
Page 57499
specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.
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Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a),(b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a ``significant intergovernmental mandate,'' and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that although this final rule does not contain a Federal intergovernmental mandate, it may require expenditures of $100 million or more in any one year on the private sector. Such expenditures may include (1) investment in research and development and in capital expenditures by SPVU manufacturers in the years between the final rule and the compliance date for the new standards, and (2) incremental additional expenditures by consumers to purchase higher-
efficiency SPVUs.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The SUPPLEMENTARY INFORMATION section of the notice of final rulemaking and the ``Regulatory Impact Analysis'' section of the TSD for this final rule responds to those requirements.
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. As required by 42 U.S.C. 6295(d), (f), and (o), 6313(e), and 6316(a), this final rule would establish amended energy conservation standards for SPVAC and SPVHP equipment that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified. A full discussion of the alternatives considered by DOE is presented in the ``Regulatory Impact Analysis'' section of the TSD for this final rule.
I. Review Under the Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
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Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and Interference with Constitutionally Protected Property Rights'' 53 FR 8859 (March 18, 1988), DOE has determined that this rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
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Review Under the Treasury and General Government Appropriations Act, 2001
Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
L. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy action. A ``significant energy action'' is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth amended energy conservation standards for SPVAC and SPVHP equipment, is not a significant energy action because the standards are not likely to have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects on this final rule.
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Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of Science and Technology Policy (OSTP), issued its Final Information Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005). The Bulletin establishes that certain scientific information shall be peer reviewed by qualified specialists before it is disseminated by the Federal Government, including influential scientific information related to agency regulatory actions. The purpose of the bulletin is to enhance the quality and credibility of the Government's scientific information. Under the Bulletin, the energy conservation standards rulemaking analyses are ``influential scientific information,'' which the Bulletin defines as ``scientific information the agency reasonably can determine will have, or does have, a clear and substantial impact on important public policies or private sector decisions.'' Id. at FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress peer reviews of the energy conservation standards development process and analyses and has prepared a Peer Review Report pertaining to the energy conservation standards rulemaking analyses. Generation of this report involved a rigorous, formal, and documented evaluation using objective criteria and qualified and independent reviewers to make a judgment as to the technical/scientific/business merit, the actual or anticipated results, and the productivity and management effectiveness of programs and/or projects. The ``Energy Conservation Standards Rulemaking Peer Review Report'' dated February 2007 has been disseminated and is available at the following Web site: www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
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Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, Small businesses.
Issued in Washington, DC, on August 28, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE amends part 431 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND INDUSTRIAL EQUIPMENT
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1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
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2. Section 431.97 is amended by:
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Redesignating Table 8 in paragraph (e) as Table 10, and Table 9 in paragraph (f) as Table 11; and
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Revising paragraph (d).
The revisions read as follows:
Sec. 431.97 Energy efficiency standards and their compliance dates.
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(d)(1) Each single package vertical air conditioner and single package vertical heat pump manufactured on or after January 1, 2010, but before October 9, 2015 (for models >=65,000 Btu/h and =135,000 Btu/h and =65,000 Btu/h and AC................. EER = 8.9.......... January 1, 2010
conditioners and single =135,000 Btu/h AC................. EER = 8.6.......... January 1, 2010
conditioners and single and =65,000 Btu/h and =135,000 Btu/h and =65,000 Btu/h and AC................. EER = 10.0......... October 9, 2015
conditioners and single =135,000 Btu/h AC................. EER = 10.0......... October 9, 2016
conditioners and single and =65,000 Btu/h and AC................. EER = 10.0......... October 9, 2015.
conditioners and single =135,000 Btu/h AC................. EER = 10.0......... October 9, 2016.
conditioners and single and
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