Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards and Test Procedures for Commercial Heating, Air-Conditioning, and Water-Heating Equipment

Federal Register, Volume 80 Issue 137 (Friday, July 17, 2015)

Federal Register Volume 80, Number 137 (Friday, July 17, 2015)

Rules and Regulations

Pages 42613-42668

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

FR Doc No: 2015-16927

Page 42613

Vol. 80

Friday,

No. 137

July 17, 2015

Part II

Department of Energy

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10 CFR Part 431

Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards and Test Procedures for Commercial Heating, Air-

Conditioning, and Water-Heating Equipment; Final Rule

Page 42614

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DEPARTMENT OF ENERGY

10 CFR Part 431

Docket No. EERE-2014-BT-STD-0015

RIN 1904-AD23

Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards and Test Procedures for Commercial Heating, Air-Conditioning, and Water-Heating Equipment

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

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) is amending its energy conservation standards for small three-phase commercial air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h; water-source heat pumps; and commercial oil-fired storage water heaters. Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), as amended, DOE must assess whether the uniform national standards for these covered equipment need to be updated each time the corresponding industry standard--the American National Standards Institute (ANSI)/American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/

Illuminating Engineering Society of North America (IESNA) Standard 90.1 (ASHRAE Standard 90.1)--is amended, which most recently occurred on October 9, 2013. Under EPCA, DOE may only adopt more stringent standards if there is clear and convincing evidence showing that more stringent amended standards would be technologically feasible and economically justified, and would save a significant additional amount of energy. The levels DOE is adopting are the same as the efficiency levels specified in ASHRAE Standard 90.1-2013. DOE has determined that the ASHRAE Standard 90.1-2013 efficiency levels for the equipment types listed above are more stringent than existing Federal energy conservation standards and will result in economic and energy savings compared existing energy conservation standards. Furthermore, DOE has concluded that clear and convincing evidence does not exist that would justify more-stringent standard levels than the efficiency levels in ASHRAE Standard 90.1-2013 for any of the equipment classes. DOE has also determined that the standards for small three-phase commercial air-cooled air conditioners (split system) do not need to be amended. DOE is also updating the current Federal test procedure for commercial warm-air furnaces to incorporate by reference the most current version of the American National Standards Institute (ANSI) Z21.47, Gas-fired central furnaces, specified in ASHRAE Standard 90.1, and the most current version of ASHRAE 103, Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers.

DATES: The effective date of this rule is September 15, 2015. Compliance with the amended standards established for water-source heat pumps and commercial oil-fired storage water heaters in this final rule is required on and after October 9, 2015. Compliance with the amended standards established for small three-phase commercial air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h in this final rule is required on and after January 1, 2017. The incorporation by reference of certain publications listed in this rule was approved by the Director of the Federal Register as of September 15, 2015.

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

A link to the docket Web page can be found at: www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0015. The www.regulations.gov Web page will contain instructions on how to access all documents, including public comments, in the docket.

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

FOR FURTHER INFORMATION CONTACT:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-6590. Email: Ashley.Armstrong@ee.doe.gov.

Ms. Johanna Hariharan, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-

0121. Telephone: (202) 287-6307. Email: Johanna.Hariharan@hq.doe.gov.

SUPPLEMENTARY INFORMATION: This final rule incorporates by reference the following industry standards into part 431:

ANSI Z21.47-2012, ``Standard for Gas-Fired Central Furnaces'', approved on March 27, 2012.

Copies of ANSI Z21.47-2012 can be obtained from ANSI. American National Standards Institute. 25 W. 43rd Street, 4th Floor, New York, NY 10036. (212) 642-4900, or by going to http://www.ansi.org.

ASHRAE Standard 103-2007, ``Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers,'' sections 7.2.2.4, 7.8, 9.2, and 11.3.7, approved on June 27, 2007.

Copies of ASHRAE Standard 103-2007 can be obtained from ASHRAE. American Society of Heating, Refrigerating and Air-Conditioning Engineers Inc., 1791 Tullie Circle NE., Atlanta, Georgia 30329. (404) 636-8400, or by going to http://www.ashrae.org.

These standards are described in section IX.N.

Table of Contents

I. Synopsis of the Final Rule

II. Introduction

  1. Authority

  2. Background

    1. ASHRAE Standard 90.1-2013

    2. Previous Rulemaking Documents

    3. Compliance Dates for Amended Federal Test Procedures, Amended Federal Energy Conservation Standards, and Representations for Certain ASHRAE Equipment

    III. General Discussion of Comments Received

  3. General Discussion of the Changes in ASHRAE Standard 90.1-

    2013 and Determination of Scope for Further Rulemaking Activity

  4. The Proposed Energy Conservation Standards

    IV. Test Procedure Amendments and Discussion of Related Comments

    V. Methodology for Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

  5. Market Assessment

    1. Equipment Classes

    2. Review of Current Market

    1. Trade Association Information

    2. Manufacturer Information

    3. Market Data

  6. Engineering Analysis

    1. Approach

    2. Baseline Equipment

    3. Identification of Increased Efficiency Levels for Analysis

    4. Engineering Analysis Results

    1. Manufacturer Markups

    2. Shipping Costs

  7. Markups Analysis

  8. Energy Use Analysis

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  9. Life-Cycle Cost and Payback Period Analysis

    1. Equipment Costs

    2. Installation Costs

    3. Unit Energy Consumption

    4. Electricity Prices and Electricity Price Trends

    5. Maintenance Costs

    6. Repair Costs

    7. Equipment Lifetime

    8. Discount Rate

    9. Base-Case Market Efficiency Distribution

    10. Compliance Date

    11. Payback Period Inputs

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

    1. Approach

    2. Shipments Analysis

    3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies

    4. National Energy Savings and Net Present Value

    VI. Methodology for Water-Source Heat Pumps

  11. Market Assessment

    1. Equipment Classes

    2. Review of Current Market

    1. Trade Association Information

    2. Manufacturer Information

    3. Market Data

  12. Engineering Analysis

    1. Approach

    2. Baseline Equipment

    3. Identification of Increased Efficiency Levels for Analysis

    4. Engineering Analysis Results

    1. Manufacturer Markups

    2. Shipping Costs

  13. Markups Analysis

  14. Energy Use Analysis

  15. Life-Cycle Cost and Payback Period Analysis

    1. Equipment Costs

    2. Installation Costs

    3. Unit Energy Consumption

    4. Electricity Prices and Electricity Price Trends

    5. Maintenance Costs

    6. Repair Costs

    7. Equipment Lifetime

    8. Discount Rate

    9. Base-Case Market Efficiency Distribution

    10. Compliance Date

    11. Payback Period Inputs

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

    1. Approach

    2. Shipments Analysis

    3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies

    4. National Energy Savings and Net Present Value

    VII. Methodology for Emissions Analysis and Monetizing Carbon Dioxide and Other Emissions Impacts

  17. Emissions Analysis

  18. Monetizing Carbon Dioxide and Other Emissions Impacts

    1. Social Cost of Carbon

    1. Monetizing Carbon Dioxide Emissions

    2. Development of Social Cost of Carbon Values

    3. Current Approach and Key Assumptions

    2. Valuation of Other Emissions Reductions

    VIII. Analytical Results and Conclusions

  19. Efficiency Levels Analyzed

    1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

    2. Water-Source Heat Pumps

    3. Commercial Oil-Fired Storage Water Heaters

  20. Energy Savings and Economic Justification

    1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

    1. Economic Impacts on Commercial Customers

    2. National Impact Analysis

      2. Water-Source Heat Pumps

    3. Economic Impacts on Commercial Customers

    4. National Impact Analysis

      3. Commercial Oil-Fired Storage Water Heaters

  21. Need of the Nation To Conserve Energy

  22. Amended Energy Conservation Standards

    1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

    2. Water-Source Heat Pumps

    3. Commercial Oil-Fired Storage Water Heaters

    IX. Procedural Issues and Regulatory Review

  23. Review Under Executive Order 12866 and 13563

  24. Review Under the Regulatory Flexibility Act

  25. Review Under the Paperwork Reduction Act of 1995

  26. Review Under the National Environmental Policy Act of 1969

  27. Review Under Executive Order 13132

  28. Review Under Executive Order 12988

  29. Review Under the Unfunded Mandates Reform Act of 1995

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

    I. Review Under Executive Order 12630

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

  32. Review Under Executive Order 13211

    L. Review Under the Information Quality Bulletin for Peer Review

  33. Congressional Notification

  34. Description of Materials Incorporated by Reference

    X. Approval of the Office of the Secretary

    I. Synopsis of the Final Rule

    Title III, Part C \1\ of the Energy Policy and Conservation Act of 1975 (``EPCA'' or ``the Act''), Public Law 94-163, (42 U.S.C. 6311-

    6317, as codified), added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve energy efficiency.\2\ These encompass several types of commercial heating, air-conditioning, and water-heating equipment, including those that are the subject of this rulemaking. (42 U.S.C. 6311(1)(B) and (K)) EPCA, as amended, also requires the U.S. Department of Energy (DOE) to consider amending the existing Federal energy conservation standard for certain types of listed commercial and industrial equipment (generally, commercial water heaters, commercial packaged boilers, commercial air-conditioning and heating equipment, and packaged terminal air conditioners and heat pumps) each time the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 90.1, Energy Standard for Buildings Except Low-Rise Residential Buildings, is amended with respect to such equipment. (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 adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent efficiency level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines that a more-stringent standard is appropriate under the statutory criteria, DOE must establish such more-stringent standard not later than 30 months after publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) ASHRAE officially released ASHRAE Standard 90.1-2013 on October 9, 2013, thereby triggering DOE's previously referenced obligations pursuant to EPCA to determine for those types of equipment with efficiency level or design requirement changes beyond the current Federal standard, whether: (1) The amended industry standard should be adopted; or (2) clear and convincing evidence exists to justify more-stringent standard levels.

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

    \2\ All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2014, Public Law 112-210 (Apr. 30, 2015).

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    DOE published a notice of proposed rulemaking on January 8, 2015, in the Federal Register, describing DOE's determination of scope for considering amended energy conservation standards with respect to certain heating, ventilating, air-conditioning, and water-

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    heating equipment addressed in ASHRAE Standard 90.1-2013. 80 FR 1171, 1180-1186. ASHRAE Standard 90.1-2013 amended its efficiency levels for small three-phase air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h, water-source heat pumps, commercial oil-fired storage water heaters, single package vertical units, and packaged terminal air conditioners. ASHRAE Standard 90.1-2013 also updated its referenced test procedures for several equipment types.

    In determining the scope of the rulemaking, DOE is statutorily required to ascertain whether the revised ASHRAE efficiency levels have become more stringent, thereby ensuring that any new amended national standard would not result in prohibited ``backsliding.'' For those equipment classes for which ASHRAE set more-stringent efficiency levels \3\ (i.e., small three-phase air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h; water-source heat pumps; commercial oil-fired storage water heaters; single package vertical units; and packaged terminal air conditioners), DOE analyzed the energy savings potential of amended national energy conservation standards (at both the new ASHRAE Standard 90.1 efficiency levels and more-stringent efficiency levels) in the April 11, 2014 notice of data availability (NODA) (79 FR 20114) and, except for single package vertical units and packaged terminal air conditioners, which are considered in separate rulemakings,\4\ in the January 8, 2015 NOPR (80 FR 1171). For equipment where more-stringent standard levels than the ASHRAE efficiency levels would result in significant energy savings (i.e., small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h and water-source heat pumps), DOE analyzed the economic justification for more-stringent levels in the January 2015 NOPR. 80 FR 1171, 1213-1220 (Jan. 15, 2015).

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    \3\ ASHRAE Standard 90.1-2013 did not change any of the design requirements for the commercial (HVAC) and water-heating equipment covered by EPCA.

    \4\ See Packaged Terminal Air Conditioners and Heat Pumps Standards Rulemaking Web page: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/64 and Single Package Vertical Air Conditioners and Heat Pumps Standards Rulemaking Web page: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=107.

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    This final rule applies to three classes of small three-phase air-

    cooled air conditioners and heat pumps less than 65,000 Btu/h, three classes of water-source heat pumps, and one class of commercial oil-

    fired storage water heaters, which satisfy all applicable requirements of EPCA and will result in energy savings where models exist below the revised efficiency levels. DOE has concluded that, based on the information presented and its analyses, there is not clear and convincing evidence justifying adoption of more-stringent efficiency levels for this equipment.

    It is noted that DOE's current regulations for have a single equipment class for small, three-phase commercial air-cooled air conditioners less than 65,000 Btu/h, which covers both split-system and single-package models. Although ASHRAE Standard 90.1-2013 did not amend standard levels for the split-system models within that equipment class, it did so for the single-package models. Given this split, in this final rule, DOE is once again separating these two types of equipment into separate equipment classes. However, following the evaluation of amended standards for split-system models under the six-

    year-lookback provision at 42 U.S.C. 6313(a)(6)(C), DOE has concluded that there is not clear and convincing evidence that would justify adoption of more-stringent efficiency levels for small three-phase split-system air-cooled air conditioners less than 65,000 Btu/h, where the efficiency level in ASHRAE 90.1-2013 is the same as the current Federal energy conservation standards.

    Thus, in accordance with the criteria discussed elsewhere in this document, DOE is amending the energy conservation standards for three classes of small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h, three classes of water-source heat pumps, and one class of commercial oil-fired storage water heaters by adopting the efficiency levels specified by ASHRAE Standard 90.1-2013, as shown in Table I.1. Pursuant to EPCA, the amended standards apply to all equipment listed in Table I.1 and manufactured in, or imported into, the United States on or after the date two years after the effective date specified in ASHRAE Standard 90.1-2013 (i.e., by January 1, 2017 for small air-cooled air conditioners and heat pumps and by October 9, 2015 for water-source heat pumps and oil-fired storage water heaters). (42 U.S.C. 6313(a)(6)(D)(i)) DOE is making a determination that standards for split-system air-cooled air conditioners less than 65,000 Btu/h do not need to be amended.

    Table I.1--Current and Amended Energy Conservation Standards for Specific Types of Commercial Equipment

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    Current Federal Amended Federal Compliance date of amended

    Equipment class Energy Conservation Energy Conservation Federal Energy Conservation

    standard standard standard

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    Three-Phase Air-Cooled Single- 13.0 SEER............ 14.0 SEER............ January 1, 2017.

    Package Air Conditioners 105,000 Btu/h and =17,000 and

    =65,000 and

    =17,000 and =65,000 and =17,000 pumps >=65,000 and

    h and =17,000 pumps >=65,000 and

    h and =17,000 and loop) heat pumps >=65,000 and

    ------------------------------------ =17,000 and =65,000 and 2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) from potential amended energy conservation standards for the ASHRAE equipment that is the subject of this document. In addition, DOE estimates emissions impacts in production activities (extracting, processing, and transporting fuels) that provide the energy inputs to power plants. These are referred to as ``upstream'' emissions. Together, these emissions account for the full-fuel cycle (FFC). In accordance with DOE's FFC Statement of Policy (76 FR 51281 (Aug. 18, 2011) as amended at 77 FR 49701 (August 17, 2012)), the FFC analysis also includes impacts on emissions of methane (CH4) and nitrous oxide (N2O), both of which are recognized as greenhouse gases. The combustion emissions factors and the method DOE used to derive upstream emissions factors are described in chapter 9 of the final rule TSD. The cumulative emissions reduction estimated for the subject ASHRAE equipment is presented in section VIII.C.

    DOE primarily conducted the emissions analysis using emissions factors for CO2 and most of the other gases derived from data in AEO 2014. Combustion emissions of CH4 and N2O were estimated using emissions intensity factors published by the U.S. Environmental Protection Agency (EPA) in its Greenhouse Gas (GHG) Emissions Factors Hub.\39\ DOE developed separate emissions factors for power sector emissions and upstream emissions. The method that DOE used to derive emissions factors is described in chapter 9 of the final rule TSD.

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    \39\ See http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.

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

    SO2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia (DC). (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, which created an allowance-based trading program that operates along with the Title IV program, was remanded to the EPA by the U.S. Court of Appeals for the District of Columbia Circuit, but it remained in effect.\40\ 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 D.C. Circuit issued a decision to vacate CSAPR.\41\ The court ordered EPA to continue administering CAIR. The emissions factors used for this final rule, which are based on AEO 2014, assume that CAIR remains a binding regulation through 2040.\42\

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    \40\ 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).

    \41\ 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).

    \42\ On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other downwind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation, No 12-1182, slip op. at 32 (U.S. April 29, 2014). On October 23, 2014, the D.C. Circuit lifted the stay of CSAPR. Pursuant to this action, CSAPR will go into effect (and the Clean Air Interstate Rule will sunset) as of January 1, 2015. However, because DOE used emissions factors based on AEO 2014 for this final rule, the analysis assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the purpose of DOE's analysis of SO2 emissions.

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

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

    CAIR established a cap on NOX emissions in 28 eastern States and the District of Columbia.\43\ Energy conservation standards are expected to have little effect on NOX emissions in those States covered by CAIR, because excess NOX emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NOX emissions. However, standards would be expected to reduce NOX emissions in the States not affected by the caps, so DOE estimated NOX emissions reductions from the standards considered in this final rule for these States.

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    \43\ CSAPR also applies to NOX, and it would supersede the regulation of NOX under CAIR. As stated previously, the current analysis assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR with regard to DOE's analysis of NOX is slight.

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

  35. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this final rule, DOE considered the estimated monetary benefits from the reduced emissions of CO2 and NOX that are expected to result from each of the efficiency levels considered. In order to make this calculation analogous to the calculation of the NPV of consumer benefit, DOE considered the reduced emissions expected to result over the lifetime of equipment shipped in the forecast period for each efficiency level. 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 social cost of carbon (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 10 of the final rule TSD.

    1. Social Cost of Carbon

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

    1. 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 \44\ 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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      \44\ 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.

    2. Development of Social Cost of Carbon Values

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

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      $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.

    3. Current Approach and Key Assumptions

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

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

      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 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,\45\ although preference is given to consideration of the global benefits of reducing CO2 emissions. Table VII.1 presents the values in the 2010 interagency group report,\46\ which is reproduced in appendix 10A of the final rule TSD.

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

      \45\ 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.

      \46\ 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 VII.1--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 document were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature.\47\

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

      \47\ Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).

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

      Table VII.2 shows the updated sets of SCC estimates from the 2013 interagency update in 5-year increments from 2010 to 2050. The full set of annual SCC estimates between 2010 and 2050 is reported in appendix 10B 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.

      Page 42643

      Table VII.2--Annual SCC Values From 2013 Interagency Report, 2010-2050

      2007$ per metric ton CO2

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

      Discount rate

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

      5% 3% 2.5% 3%

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

      95th

      Average Average Average percentile

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

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

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

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

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

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

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

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

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

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

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

      It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable because they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The 2009 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 knowledge of the science and economics of climate impacts, as well as improvements in modeling.

      In summary, in considering the potential global benefits resulting from reduced CO2 emissions, DOE used the values from the 2013 interagency report adjusted to 2014$ using the implicit price deflator for gross domestic product (GDP) 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, $41.2, $63.4, and $121 per metric ton avoided (values expressed in 2014$). 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 was used to obtain the SCC values in each case.

      In response to the NOPR, the Associations stated that DOE should not use SCC values to establish monetary figures for emissions reductions until the SCC undergoes a more rigorous notice, review, and comment process. (The Associations, No. 37 at p. 4) 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 appendix 10A and 10B of the final rule TSD, as are the major assumptions. The 2010 SCC values have been used in a number of Federal rulemakings in which the public had opportunity to comment. In November 2013, the OMB announced a new opportunity for public comment on the TSD underlying the revised SCC estimates. See 78 FR 70586 (Nov. 26, 2013). OMB is currently reviewing comments and considering whether further revisions to the 2013 SCC estimates are warranted. DOE stands ready to work with OMB and the other members of the interagency working group on further review and revision of the SCC estimates as appropriate.

      2. Valuation of Other Emissions Reductions

      As noted previously, DOE has taken into account how considered energy conservation standards would reduce site NOX emissions nationwide and increase power sector NOX emissions in those 22 States not affected by the CAIR. DOE estimated the monetized value of net NOX emissions reductions resulting from each of the efficiency levels considered for this final rule based on estimates found in the relevant scientific literature. Estimates of monetary value for reducing NOX from stationary sources range from $484 to $4,971 per ton in 2014$.\48\ DOE calculated monetary benefits using a medium value for NOX emissions of $2,727 per short ton (in 2014$) and real discount rates of 3 percent and 7 percent.

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

      \48\ U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2006) (Available at: www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf).

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

      DOE is evaluating 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.

      VIII. Analytical Results and Conclusions

  36. Efficiency Levels Analyzed

    1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

    The methodology for small commercial air-cooled air conditioners and heat pumps less than 65,000 Btu/h was presented in section V of this this final rule. Table VIII.1 presents the market baseline efficiency level and the higher efficiency levels analyzed for each equipment class of small commercial air-cooled air conditioners and heat pumps less than 65,000 Btu/h subject to this rule. The EPCA baseline efficiency levels correspond to the lowest efficiency levels currently available on the market. The efficiency levels above the baseline represent efficiency levels specified by ASHRAE

    Page 42644

    Standard 90.1-2013 and efficiency levels more stringent than those specified in ASHRAE Standard 90.1-2013 where equipment is currently available on the market. Note that for the energy savings and economic analysis, efficiency levels above those specified in ASHRAE Standard 90.1-2013 are compared to ASHRAE Standard 90.1-2013 as the baseline rather than the EPCA baseline (i.e., the current Federal standards). For split-system air conditioners, for which ASHRAE 90.1-2013 did not change the efficiency level, all efficiency levels are compared to the Federal or EPCA baseline.

    Table VIII.1--Efficiency Levels Analyzed for Small Commercial Air-Cooled Air Conditioners and Heat Pumps =65,000

    pumps =17,000 and 105,000 Btu/h

    and =17,000 Btu/h and =17,000 Btu/h and =65,000 Btu/h and =65,000 Btu/h and =17,000 and =65,000 and =17,000 to

    =65,000 to

    135,000 Btu/h..................

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

    Notes: Numbers in parentheses indicate negative NPV.

    The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013

    were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards

    were adopted. Economic analysis was not conducted for the ASHRAE levels (EL 0).

    * The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are

    no savings for EL1.

    ** The max-tech level for this equipment class is EL 4.

    Table VIII.28--Summary of Cumulative Net Present Value for Water-Source (Water-to-Air, Water-Loop) Heat Pumps

    (Discounted at Three Percent)

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

    Net present value (billion 2014$)

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

    Equipment class Efficiency Efficiency Efficiency Efficiency Efficiency

    level 1 level 2 level 3 level 4 level 5

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

    Water-Source (Water-to-Air, (0.00) (0.05) (0.20) (0.30) (0.49)

    Water-Loop) HP =17,000 to

    =65,000 to

    135,000 Btu/h..................

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

    Notes: Numbers in parentheses indicate negative NPV.

    The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013

    were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards

    were adopted. Economic analysis was not conducted for the ASHRAE levels (EL 0).

    * The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are

    no savings for EL1.

    ** The max-tech level for this equipment class is EL 4.

    3. Commercial Oil-Fired Storage Water Heaters

    DOE estimated the potential primary energy savings in quads (i.e., 10\15\ Btu) for each efficiency level considered within each equipment class analyzed. Table VIII.29 shows the potential energy savings resulting from the analyses conducted as part of the April 2014 NODA. 79 FR 20114, 20136 (April 11, 2014).

    Page 42653

    Table VIII.29--Potential Energy Savings Estimates for Commercial Oil-

    Fired Storage Water Heaters >105,000 Btu/h and 2, NOX, and Hg emissions reductions for each efficiency level in chapter 9 of the final rule TSD. As discussed in section VII.A, DOE did not include NOX emissions reduction from power plants in States subject to CAIR, because an energy conservation standard would not affect the overall level of NOX emissions in those States due to the emissions caps mandated by CAIR.

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

    \50\ Because DOE did not conduct additional analysis for oil-

    fired storage water heaters, estimates of environmental benefits for amended standards for that equipment type are not shown here.

    Table VIII.30--Cumulative Emissions Reduction for Potential Standards for Small Three-Phase Air-Cooled Air Conditioners and Heat Pumps 2 and NOX estimated for each of the efficiency levels analyzed for small air-cooled air conditioners and heat pumps less than 65,000 Btu/h, water-source heat pumps, and oil-fired storage water heaters. As discussed in section VII.B.1, for CO2, DOE used values for the SCC developed by an interagency process. The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets are based on the average SCC from three integrated assessment models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The fourth set, which represents the 95th-percentile SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution. The four SCC values for CO2 emissions reductions in 2015, expressed in 2014$, are $12.2/ton, $41.2/

    ton, $63.4/ton, and $121/ton. The values for later years are higher due to increasing emissions-related costs as the magnitude of projected climate change increases.

    Table VIII.32 and Table VIII.33 present the global value of CO2 emissions reductions at each efficiency level. For each of the four cases, DOE calculated a present value of the stream of annual values using the same discount rate as was used in the studies upon which the dollar-per-ton values are based. DOE calculated domestic values as a range from 7 percent to 23 percent of the global values, and these results are presented in chapter 10 of the final rule TSD.

    Table VIII.32--Global Present Value of CO2 Emissions Reduction for Potential Standards for Small Three-Phase Air-

    Cooled Air Conditioners and Heat Pumps 2 and other GHG emissions to changes in the future global climate and the potential resulting damages to the world economy

    Page 42656

    continues to evolve rapidly. Thus, any value placed in this rulemaking on reducing CO2 emissions 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 final rule the most recent values and analyses resulting from the interagency review process.

    DOE also estimated a range for the cumulative monetary value of the economic benefits associated with NOX emissions reductions anticipated to result from amended standards for the small air-cooled air conditioners and heat pumps less than 65,000 Btu/h, water-source heat pumps, and oil-fired storage water heaters that are the subject of this final rule. The dollar-per-ton values that DOE used are discussed in section VII.B.2.

    Table VIII.34 and Table VIII.35 present the present value of cumulative NOX emissions reductions for each efficiency level calculated using the average dollar-per-ton values and 7-percent and 3-percent discount rates.

    Table VIII.34--Present Value of NOX Emissions Reduction for Potential

    Standards for Small Three-Phase Air-Cooled Air Conditioners and Heat

    Pumps =17,000 to =65,000 to 135,000 Btu/

    h.

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

    3. Commercial Oil-Fired Storage Water Heaters

    EPCA specifies that, for any commercial and industrial equipment addressed under 42 U.S.C. 6313(a)(6)(A)(i), DOE may prescribe an energy conservation standard more stringent than the level for such equipment in ASHRAE Standard 90.1, as amended, only if ``clear and convincing evidence'' shows that a more-stringent standard would result in significant additional conservation of energy and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II))

    In evaluating more-stringent efficiency levels for oil-fired storage water-heating equipment than those specified by ASHRAE Standard 90.1-2013, DOE reviewed the results in terms of the significance of their additional energy savings. DOE believes that the energy savings from increasing national energy conservation standards for oil-fired storage water heaters above the levels specified by ASHRAE Standard 90.1-2013 would be minimal. As noted in the January 2015 NOPR, DOE does not have ``clear and convincing evidence'' that significant additional conservation of energy would result from adoption of more-stringent standard levels. 80 FR 1171, 1226-27. Comments on the NOPR did not provide any additional information to alter this conclusion. Therefore, DOE did not examine whether the levels are economically justified, and DOE is adopting the energy efficiency levels for this equipment type as set forth in ASHRAE Standard 90.1-2013. Table VIII.38 presents the amended energy conservation standard and compliance date for oil-fired storage water heaters.

    Table VIII.38--Amended Energy Conservation Standards for Oil-Fired Storage Water Heaters

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

    Equipment type Efficiency level (Et) Compliance date

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

    Oil-Fired Storage Water Heaters 80%................................... October 9, 2015.

    >105,000 Btu/h and 2 (carbon dioxide) for oil-fired commercial warm air furnaces. In addition to the flue temperature measurement specified in section 40.6.8 of UL 727-2006 (incorporated by reference, see Sec. 431.75), you must locate one or two sampling tubes within six inches downstream from the flue temperature probe (as indicated on Figure 40.3 of UL 727-2006). If you use an open end tube, it must project into the flue one-third of the chimney connector diameter. If you use other methods of sampling CO2, you must place the sampling tube so as to obtain an average sample. There must be no air leak between the temperature probe and the sampling tube location. You must collect the flue gas sample at the same time the flue gas temperature is recorded. The CO2 concentration of the flue gas must be as specified by the manufacturer for the product being tested, with a tolerance of 0.1 percent. You must determine the flue CO2 using an instrument with a reading error no greater than 0.1 percent.

    (2) Procedure for the measurement of condensate for a gas-fired condensing commercial warm air furnace. The test procedure for the measurement of the condensate from the flue gas under steady-state operation must be conducted as specified in sections 7.2.2.4, 7.8, and 9.2 of ASHRAE 103 (incorporated by reference, see Sec. 431.75) under the maximum rated input conditions. You must conduct this condensate measurement for an additional 30 minutes of steady-state operation after completion of the steady-state thermal efficiency test specified in paragraph (c) of this section.

    (e) Calculation of thermal efficiency --(1) Gas-fired commercial warm air furnaces. You must use the calculation procedure specified in section 2.39, Thermal Efficiency, of ANSI Z21.47 (incorporated by reference, see Sec. 431.75).

    (2) Oil-fired commercial warm air furnaces. You must calculate the percent flue loss (in percent of heat input rate) by following the procedure specified in sections 11.1.4, 11.1.5, and 11.1.6.2 of the HI BTS-2000 (incorporated by reference, see Sec. 431.75). The thermal efficiency must be calculated as: Thermal Efficiency (percent) = 100 percent - flue loss (in percent).

    (f) Procedure for the calculation of the additional heat gain and heat loss, and adjustment to the thermal efficiency, for a condensing commercial warm air furnace. (1) You must calculate the latent heat gain from the condensation of the water vapor in the flue gas, and calculate heat loss due to the flue condensate down the drain, as specified in sections 11.3.7.1 and 11.3.7.2 of ASHRAE 103 (incorporated by reference, see Sec. 431.75), with the exception that in the equation for the heat loss due to hot condensate flowing down the drain in section 11.3.7.2, the assumed indoor temperature of 70emsp14degF and the temperature term TOA must be replaced by the measured room temperature as specified in section 2.2.8 of ANSI Z21.47 (incorporated by reference, see Sec. 431.75).

    (2) Adjustment to the thermal efficiency for condensing furnaces. You must adjust the thermal efficiency as calculated in paragraph (e)(1) of this section by adding the latent gain, expressed in percent, from the condensation of the water vapor in the flue gas, and subtracting the heat loss (due to the flue condensate down the drain), also expressed in percent, both as calculated in paragraph (f)(1) of this section, to obtain the thermal efficiency of a condensing furnace.

    0

    4. Section 431.92 is amended by adding in alphabetical order the definition of ``water-source heat pump'' to read as follows:

    Sec. 431.92 Definitions concerning commercial air conditioners and heat pumps.

    * * * * *

    Water-source heat pump means a single-phase or three-phase reverse-

    cycle heat pump that uses a circulating water loop as the heat source for heating and as the heat sink for cooling. The main components are a compressor, refrigerant-to-water heat exchanger, refrigerant-to-air heat exchanger, refrigerant expansion devices, refrigerant reversing valve, and indoor fan. Such equipment includes, but is not limited to, water-to-air water-loop heat pumps.

    0

    5. Section 431.97 is amended by:

    0

    1. Revising paragraph (b);

      0

    2. Redesignating Tables 4 through 8 in paragraphs (c), (d), (e) and (f), as Tables 5 through 9 respectively; and

      0

    3. Revising the introductory text of paragraph (c).

      The revisions read as follows:

      Sec. 431.97 Energy efficiency standards and their compliance dates.

      * * * * *

      (b) Each commercial air conditioner or heat pump (not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged terminal heat pumps, computer room air conditioners, and variable refrigerant flow systems) manufactured on or after the compliance date listed in the corresponding table must meet the applicable minimum energy efficiency standard level(s) set forth in Tables 1, 2, 3, and 4 of this section.

      Table 1 to Sec. 431.97--Minimum Cooling Efficiency Standards for Air-Conditioning and Heating Equipment (Not Including Single Package Vertical Air

      Conditioners and Single Package Vertical Heat Pumps, Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps, Computer Room Air

      Conditioners, and Variable Refrigerant Flow Multi-Split Air Conditioners and Heat Pumps)

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

      Compliance date:

      Equipment category Cooling capacity Sub-category Heating type Efficiency level equipment manufactured

      on and after. . .

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

      Small Commercial Packaged Air- =65,000 Btu/h and AC No Heating or Electric EER = 11.2............ January 1, 2010.

      Conditioning and Heating Equipment =135,000 Btu/h and AC No Heating or Electric EER = 11.0............ January 1, 2010.

      Conditioning and Heating Equipment =240,000 Btu/h and AC No Heating or Electric EER = 10.0............ January 1, 2010.

      Conditioning and Heating Equipment =65,000 Btu/h and AC No Heating or Electric EER = 12.1............ June 1, 2013.

      =135,000 and =240,000 and =65,000 and =135,000 and =240,000 and =17,000 Btu/h and HP All........................ EER = 12.0............ October 29, 2003 \2\.

      =65,000 Btu/h and HP All........................ EER = 12.0............ October 29, 2003 \2\.

      =65,000 Btu/h and COP = 3.3.............. January 1, 2010.

      Conditioning and Heating Equipment =135,000 Btu/h and COP = 3.2.............. January 1, 2010.

      Conditioning and Heating Equipment =240,000 Btu/h and COP = 3.2.............. January 1, 2010.

      Conditioning and Heating Equipment =17,000 Btu/h HP All EER = 13.0..... October 9,

      and =65,000 Btu/h HP All EER = 13.0..... October 9,

      and 155,000 Btu/hr...... Q/800 + 80% 80%

      110(Vr)frac12 (Btu/

      hr).

      Oil-fired storage water heaters... 155,000 Btu/hr...... Q/800 + 78% 80%

      110(Vr)frac12 (Btu/

      hr).

      Gas-fired instantaneous water =10 gal............. Q/800 + 80% 80%

      110(Vr)frac12 (Btu/

      hr).

      Oil-fired instantaneous water =10 gal............. Q/800 + 78% 78%

      110(Vr)frac12 (Btu/

      hr).

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

      Minimum thermal

      Equipment Category Size insulation

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

      Unfired hot water storage tank.. All............... R-12.5

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

      \a\Vm is the measured storage volume, and Vr is the rated volume, both

      in gallons. Q is the nameplate input rate in Btu/hr.

      \b\ For hot water supply boilers with a capacity of less than 10

      gallons: (1) The standards are mandatory for products manufactured on

      and after October 21, 2005, and (2) products manufactured prior to

      that date, and on or after October 23, 2003, must meet either the

      standards listed in this table or the applicable standards in subpart

      E of this part for a ``commercial packaged boiler.''

      \c\ Water heaters and hot water supply boilers having more than 140

      gallons of storage capacity need not meet the standby loss requirement

      if: (1) The tank surface area is thermally insulated to R-12.5 or

      more; (2) a standing pilot light is not used; and (3) for gas or oil-

      fired storage water heaters, they have a fire damper or fan assisted

      combustion.

      Note: The following letter will not appear in the Code of Federal Regulations.

      March 24, 2015

      Anne Harkavy

      Deputy General Counsel for Litigation, Regulation and Enforcement

      U.S. Department of Energy Washington, DC

      Dear Deputy General Counsel Harkavy: I am responding to your January 2, 2015 letter seeking the views of the Attorney General about the potential impact on competition of proposed energy conservation standards for certain types of commercial heating, air-conditioning, and water-heating equipment. Your request was submitted under Section 325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as amended 42 U.S.C. 6295(o)(2)(B)(i)(V), which requires the Attorney General to make a determination of the impact of any lessening of competition that is likely to result from the imposition of proposed energy conservation standards. The Attorney General's responsibility for responding to requests from other departments about the effect

      Page 42668

      of a program on competition has been delegated to the Assistant Attorney General for the Antitrust Division in 28 CFR 0.40(g).

      In conducting its analysis, the Antitrust Division examines whether a proposed standard may lessen competition, for example, by substantially limiting consumer choice, by placing certain manufacturers at an unjustified competitive disadvantage, or by inducing avoidable inefficiencies in production or distribution of particular products. A lessening of competition could result in higher prices to manufacturers and consumers, and perhaps thwart the intent of the revised standards by inducing substitution to less efficient products.

      We have reviewed the proposed standards contained in the Notice of Proposed Rulemaking (80 FR January 8, 2015) (NOPR). We have also reviewed supplementary information submitted to the Attorney General by the Department of Energy, including a transcript of the public meeting held on the proposed standards on February 6, 2015 Based on this review, our conclusion is that the proposed energy conservation standards for commercial heating, air-conditioning, and water-heating equipment are unlikely to have a significant adverse impact on competition.

      Sincerely,

      William J. Baer

      FR Doc. 2015-16927 Filed 7-16-15; 8:45 am

      BILLING CODE 6450-01-P

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