[Federal Register Volume 81, Number 10 (Friday, January 15, 2016)]
[Rules and Regulations]
[Pages 2420-2533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33067]
[[Page 2419]]
Vol. 81
Friday,
No. 10
January 15, 2016
Part III
Department of Energy
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10 CFR Part 431
Energy Conservation Program for Certain Industrial Equipment: Energy
Conservation Standards for Small, Large, and Very Large Air-Cooled
Commercial Package Air Conditioning and Heating Equipment and
Commercial Warm Air Furnaces; Final Rule
Federal Register / Vol. 81 , No. 10 / Friday, January 15, 2016 /
Rules and Regulations
[[Page 2420]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Numbers EERE-2013-BT-STD-0007 and EERE-2013-BT-STD-0021]
RIN 1904-AC95 and 1904-AD11
Energy Conservation Program for Certain Industrial Equipment:
Energy Conservation Standards for Small, Large, and Very Large Air-
Cooled Commercial Package Air Conditioning and Heating Equipment and
Commercial Warm Air Furnaces
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Direct final rule.
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SUMMARY: The Energy Policy and Conservation Act of 1975, as amended
(EPCA), prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
small, large, and very large air-cooled commercial package air
conditioning and heating equipment and commercial warm air furnaces.
EPCA also requires that the U.S. Department of Energy (DOE)
periodically review and consider amending its standards for specified
categories of industrial equipment, including commercial heating and
air conditioning equipment, in order to determine whether more-
stringent, amended standards would be technologically feasible and
economically justified, and save a significant additional amount of
energy. In this direct final rule, DOE is amending the energy
conservation standards for both small, large, and very large air-cooled
commercial package air conditioning and heating equipment and
commercial warm air furnaces after determining that the amended energy
conservation standards being adopted for these equipment would result
in the significant conservation of energy and be technologically
feasible and economically justified.
DATES: The effective date of this rule is May 16, 2016 unless adverse
comment is received by May 4, 2016. If adverse comments are received
that DOE determines may provide a reasonable basis for withdrawal of
the direct final rule, a timely withdrawal of this rule will be
published in the Federal Register. If no such adverse comments are
received, compliance with the amended standards in this final rule will
be required for small, large, and very large air-cooled commercial
package air conditioning and heating equipment as detailed in the
SUPPLEMENTARY INFORMATION. Compliance with the amended standards
established for commercial warm air furnaces in this final rule is
required starting on January 1, 2023.
ADDRESSES: The dockets, which include 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 dockets are listed in the www.regulations.gov
index. However, some documents listed in the index, such as those
containing information that is exempt from public disclosure, may not
be publicly available.
A link to the docket Web page for small, large, and very large air-
cooled commercial package air conditioning and heating equipment can be
found at: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0007. A
link to the docket Web page for commercial warm air furnaces can be
found at: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0021.
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 dockets, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies, EE-5B, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 286-1692. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Direct Final Rule
A. Benefits and Costs to Commercial Consumers
B. Impact on Manufacturers
1. Commercial Unitary Air Conditioners and Heat Pumps
2. Commercial Warm Air Furnaces
C. National Benefits and Costs
1. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
2. Commercial Warm Air Furnaces
3. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment and Commercial Warm Air Furnaces
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemakings
a. Commercial Unitary Air Conditioners and Heat Pumps
b. Commercial Warm Air Furnaces
III. General Discussion
A. Combined Rulemaking
B. Consensus Agreement
1. Background
2. Recommendations
C. Compliance Dates
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
G. Energy Efficiency Descriptors for Commercial Unitary Air
Conditioners and Heat Pumps
1. Cooling Efficiency Metric
2. Heating Efficiency Metric
H. Other Issues
1. Economic Justification of the Proposed Standards
a. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
b. Commercial Warm Air Furnaces
c. Response
2. ASHRAE 90.1 Process
3. Other
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. General
2. Scope of Coverage and Equipment Classes
a. Commercial Unitary Air Conditioners and Heat Pumps
b. Commercial Warm Air Furnaces
3. Technology Options
a. Commercial Unitary Air Conditioners and Heat Pumps
b. Commercial Warm Air Furnaces
B. Screening Analysis
1. Commercial Unitary Air Conditioners and Heat Pumps
2. Commercial Warm Air Furnaces
C. Engineering Analysis
1. Methodology
2. Efficiency Levels
a. Baseline Efficiency Levels
b. Incremental and Max-Tech Efficiency Levels
3. Equipment Testing, Reverse Engineering and Energy Modeling
a. Commercial Unitary Air Conditioners and Heat Pumps
b. Commercial Warm Air Furnaces
4. Cost Estimation Process
5. Manufacturing Production Costs
a. Commercial Unitary Air Conditioners and Heat Pumps
[[Page 2421]]
b. Commercial Warm Air Furnaces
6. Manufacturer Markup
7. Shipping Costs
D. Markups Analysis
1. Distribution Channels
2. Markups and Sales Tax
E. Energy Use Analysis
1. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
a. Energy Use Simulations
b. Generalized Building Sample
2. Commercial Warm Air Furnaces
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
a. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
b. Commercial Warm Air Furnaces
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
a. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
b. Commercial Warm Air Furnaces
7. Discount Rates
8. Efficiency Distribution in the No-New-Standards Case
a. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
b. Commercial Warm Air Furnaces
9. Payback Period Analysis
G. Shipments Analysis
1. Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
a. Shipments by Market Segment
b. Shipment Market Shares by Efficiency Level
2. Commercial Warm Air Furnaces
a. Impact of Standards on Shipments
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
3. Net Present Value
a. Total Annual Installed Cost
b. Total Annual Operating Cost Savings
c. Net Benefit
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
3. Discussion of Comments
a. Employment Impacts on CUAC/CUHP Manufacturers
b. Conversion Costs related to CUACs/CUHPs
c. Small Business Impacts on CWAF Manufacturers
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Development of Social Cost of Carbon Values
c. Current Approach and Key Assumptions
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Commercial Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Commercial Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Small, Large, and
Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment
2. Benefits and Burdens of TSLs Considered for Commercial Warm
Air Furnaces
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Commercial Unitary Air Conditioners and Heat Pumps
a. Description of Estimated Number of Small Entities Regulated
b. Description and Estimate of Compliance Requirements
2. Commercial Warm Air Furnaces
a. Description of Estimated Number of Small Entities Regulated
3. Duplication, Overlap, and Conflict With Other Rules and
Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
Title III, Part C \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (December 22, 1975), coupled
with Section 441(a) Title IV of the National Energy Conservation Policy
Act, Public Law 95-619 (November 9, 1978), (collectively codified at 42
U.S.C. 6311-6317), established the Energy Conservation Program for
Certain Industrial Equipment, which includes the small, large, and very
large air-cooled commercial package air conditioning and heating
equipment and commercial warm air furnaces (``CWAFs'') that are the
subject of this rulemaking.\2\ The former group of equipment (i.e. air-
cooled commercial package air conditioning and heating equipment) is
referred to herein as air-cooled commercial unitary air conditioners
and heat pumps (``CUACs'' and ``CUHPs'').
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\1\ Part C was codified as Part A-1 of the corresponding portion
of the U.S. Code.
\2\ 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 (April 30, 2015).
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DOE received a statement submitted jointly by interested persons
that are fairly representative of relevant points of view (including
representatives of manufacturers of the covered equipment at issue,
States, and efficiency advocates) containing recommendations with
respect to energy conservation standards for the above equipment (see
section III.B for description of the jointly-submitted statement). DOE
has determined that the recommended standards contained in that
jointly-submitted statement (hereinafter ``Joint Statement'') are in
accordance with 42 U.S.C. 6313(a)(6)(B), which prescribes the
conditions for adoption of a uniform national standard more stringent
than the applicable levels prescribed by ASHRAE/IES Standard 90.1 for
the above equipment. (The acronym ``ASHRAE/IES'' stands for the
American Society of Heating, Refrigerating, and Air-Conditioning
Engineers/Illuminating Engineering Society.) Under the authority
provided by 42 U.S.C. 6295(p)(4) and 6316(b)(1), DOE is issuing this
direct final rule establishing amended energy conservation standards
for CUACs, CUHPs, and CWAFs.
The amended minimum standards for CUACs and CUHPs are shown in
Table I-1, with the CUAC and CUHP cooling efficiency standards
presented in terms of an integrated energy efficiency ratio (``IEER'')
and the CUHP heating efficiency standards presented as a coefficient of
performance (``COP''). The
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IEER metric would replace the currently used energy efficiency ratio
(``EER'') metric on which DOE's standards are currently based. The
standards will adopt ASHRAE 90.1-2013 efficiency levels in that will
apply starting on January 1, 2018 and a higher level that will apply
starting on January 1, 2023 as recommended by the ASRAC Working Group's
Joint Statement. The standards contained in the recommendations apply
to all equipment listed in Table I-1 manufactured in, or imported into,
the United States starting on the dates shown in that table.
Table I-1--Amended Energy Conservation Standards for Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
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Proposed energy
Equipment type Heating type conservation standard Compliance date
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Small Commercial Packaged AC and
HP (Air-Cooled)-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity:
AC............................ Electric Resistance 12.9 IEER............ January 1, 2018.
Heating or No 14.8 IEER............ January 1, 2023.
Heating.
All Other Types of 12.7 IEER............ January 1, 2018.
Heating. 14.6 IEER............ January 1, 2023.
HP............................ Electric Resistance 12.2 IEER, 3.3 COP... January 1, 2018.
Heating or No 14.1 IEER, 3.4 COP... January 1, 2023.
Heating.
All Other Types of 12.0 IEER, 3.3 COP... January 1, 2018.
Heating. 13.9 IEER, 3.4 COP... January 1, 2023.
Large Commercial Packaged AC and
HP (Air-Cooled)-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity:
AC............................ Electric Resistance 12.4 IEER............ January 1, 2018.
Heating or No 14.2 IEER............ January 1, 2023.
Heating.
All Other Types of 12.2 IEER............ January 1, 2018.
Heating. 14.0 IEER............ January 1, 2023.
HP............................ Electric Resistance 11.6 IEER, 3.2 COP... January 1, 2018.
Heating or No 13.5 IEER, 3.3 COP... January 1, 2023.
Heating.
All Other Types of 11.4 IEER, 3.2 COP... January 1, 2018.
Heating. 13.3 IEER, 3.3 COP... January 1, 2023.
Very Large Commercial Packaged AC
and HP (Air-Cooled)-->=240,000
Btu/h and <760,000 Btu/h Cooling
Capacity:
AC............................ Electric Resistance 11.6 IEER............ January 1, 2018.
Heating or No 13.2 IEER............ January 1, 2023.
Heating.
All Other Types of 11.4 IEER............ January 1, 2018.
Heating. 13.0 IEER............ January 1, 2023.
HP............................ Electric Resistance 10.6 IEER, 3.2 COP... January 1, 2018.
Heating or No 12.5 IEER, 3.2 COP... January 1, 2023.
Heating.
All Other Types of 10.4 IEER, 3.2 COP... January 1, 2018.
Heating. 12.3 IEER, 3.2 COP... January 1, 2023.
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For CWAFs, the amended standards, which prescribe the minimum
allowable thermal efficiency (``TE''), are shown in Table I-2. These
standards apply to all equipment listed in Table I-2 manufactured in,
or imported into, the United States starting on January 1, 2023.
Table I-2--Energy Conservation Standards for Commercial Warm Air
Furnaces
------------------------------------------------------------------------
Input Thermal
Equipment class capacity * efficiency **
(Btu/h) (%)
------------------------------------------------------------------------
Gas-Fired Furnaces...................... >=225,000 81
Oil-Fired Furnaces...................... >=225,000 82
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* In addition to being defined by input capacity, a CWAF is ``a self-
contained oil- or gas-fired furnace designed to supply heated air
through ducts to spaces that require it and includes combination warm
air furnace/electric air conditioning units but does not include unit
heaters and duct furnaces.'' CWAFs coverage is further discussed in
section IV.A.2, ``Scope of Coverage and Equipment Classes.''
** Thermal efficiency is at the maximum rated capacity (rated maximum
input), and is determined using the DOE test procedure specified at 10
CFR 431.76.
A. Benefits and Costs to Commercial Consumers
Table I-3 presents DOE's evaluation of the economic impacts of the
energy conservation standards on commercial consumers of CUACs and
CUHPs, as measured by the average life-cycle cost (``LCC'') savings and
the payback period (``PBP'').\3\ The average LCC savings are positive
for all equipment classes, and the PBP is less than the average
lifetime of the equipment, which is estimated to be 22 years (see
section IV.F.6).
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\3\ The average LCC savings are measured relative to the
efficiency distribution in the no-new-standards case, which depicts
the market in the compliance year in the absence of standards (see
section IV.F.8). The simple PBP, which is designed to compare
specific CWAF efficiency levels, is measured relative to the
baseline model (see section IV.C.2.a).
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Table I-3--Impacts of Amended Energy Conservation Standards on
Commercial Consumers of Small, Large, and Very Large Commercial Package
Air Conditioning and Heating Equipment
------------------------------------------------------------------------
Average LCC
Equipment class savings Payback
(2014$) period (years)
------------------------------------------------------------------------
Small CUACs............................. 104 13.4
Large CUACs............................. 2,336 1.9
Very Large CUACs........................ 2,468 6.2
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Table I-4 presents DOE's evaluation of the economic impacts of the
energy conservation standards on commercial consumers of CWAFs, as
measured by the average LCC savings and the PBP. The average LCC
savings are positive for both equipment classes, and the PBP is less
than the average lifetime of the equipment, which is estimated to be 23
years for both gas-fired and oil-fired CWAFs (see section IV.F.6).
Table I-4--Impacts of Amended Energy Conservation Standards on
Commercial Consumers of Commercial Warm Air Furnaces
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Average LCC
Equipment class savings Simple payback
(2014$) period (years)
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Gas-Fired CWAFs......................... 284 1.4
Oil-Fired CWAFs......................... 400 1.9
------------------------------------------------------------------------
DOE's analysis of the impacts of the adopted standards on
commercial consumers of CUACs/CUHPs and CWAFs is described in section
IV.F of this document.
B. Impact on Manufacturers
1. Commercial Unitary Air Conditioners and Heat Pumps
The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year through the
end of the analysis period (2015 to 2048). Using a real discount rate
of 6.2 percent, DOE estimates that the INPV for CUAC/CUHP manufacturers
is $1,638.2 million in 2014$. Under the standards adopted in this
direct final rule, DOE expects INPV may change approximately -26.8
percent to -2.3 percent, which corresponds to approximately -$440.4
million and -$38.5 million in 2014$. In order to bring equipment into
compliance with the standards adopted in this direct final rule, DOE
expects the industry to incur $520.8 million in total conversion costs.
2. Commercial Warm Air Furnaces
As indicated above, the INPV is the sum of the discounted cash
flows to the industry from the base year through the end of the
analysis period (2015 to 2048). Using a real discount rate of 8.9
percent, DOE estimates that the INPV for CWAF manufacturers is $96.3
million in 2014$. Under the standards adopted in this direct final
rule, DOE expects INPV may be reduced by approximately 13.9 percent to
6.1 percent, which corresponds to -$13.4 million and -$5.9 million in
2014$. In order to bring products into compliance with the standards in
this direct final rule, DOE expects the industry to incur $22.2 million
in conversion costs.
DOE's analysis of the impacts of the standards in this direct final
rule on manufacturers is described in section IV.J of this document.
C. National Benefits and Costs \4\
1. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
DOE's analyses indicate that energy conservation standards being
adopted in this direct final rule for CUAC and CUHP equipment would
save a significant amount of energy. Relative to the case without
amended standards (referred to as the ``no-new-standards case''), the
lifetime energy savings for CUAC and CUHP equipment purchased in 2018-
2048 amount to 14.8 quadrillion British thermal units (Btu), or
``quads.'' \5\ This represents a savings of 24 percent relative to the
energy use of these products in the no-new-standards case.
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\4\ All monetary values in this section are expressed in 2014
dollars and, where appropriate, are discounted to 2015 unless
explicitly stated otherwise. Energy savings in this section refer to
the full-fuel-cycle savings (see section IV.H for discussion).
\5\ A quad is equal to 10\15\ British thermal units (``Btu'').
The quantity refers to full-fuel-cycle (``FFC'') energy savings. FFC
energy savings 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 efficiency standards. For more information on the
FFC metric, see section IV.H.2.
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The cumulative net present value (``NPV'') of total consumer costs
and savings of the standards for CUACs and CUHPs ranges from $15.2
billion (at a 7-percent discount rate) to $50 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product and
installation costs for CUACs and CUHPs purchased in 2018-2048.
In addition, the CUAC and CUHP equipment standards that are being
adopted in this direct final rule are projected to yield significant
environmental benefits as a result of the improvement in the
conservation of energy. DOE estimates that the standards would result
in cumulative greenhouse gas (``GHG'') emission reductions (over the
same period as for energy savings) of 873 million metric tons (Mt) \6\
of carbon dioxide (CO2), 454 thousand tons of sulfur dioxide
(SO2), 1,634 tons of nitrogen oxides (NOX), 3,917
thousand tons of methane (CH4), 9.54 thousand tons of
nitrous oxide (N2O), and 1.68 tons of mercury (Hg).\3\ The
cumulative reduction in CO2 emissions through 2030 amounts
to 77 million Mt, which is equivalent to the
[[Page 2424]]
emissions resulting from the annual electricity use of more than 10.6
million homes.
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\3\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2015 (AEO 2015) 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 Federal
interagency working group.\7\ The derivation of the SCC values is
discussed in section IV.L. Using discount rates appropriate for each
set of SCC values, DOE estimates that the net present monetary value of
the CO2 emissions reduction (not including CO2-
equivalent emissions of other gases with global warming potential) is
between $5.0 billion and $75.9 billion, with a value of $24.9 billion
using the central SCC case represented by $40.0/t in 2015. DOE also
estimates that the net present monetary value of the NOX
emissions reduction to be $1.4 billion at a 7-percent discount rate,
and $4.4 billion at a 3-percent discount rate.\8\
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\7\ Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. Interagency Working
Group on Social Cost of Carbon, United States Government (May 2013;
revised July 2015) (Available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
\8\ DOE estimated the monetized value of NOX
emissions reductions using benefit per ton estimates from the
Regulatory Impact Analysis for the Proposed Carbon Pollution
Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants, published in June 2014 by
EPA's Office of Air Quality Planning and Standards. (Available at:
http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf). See section IV.L.2 for further
discussion. Note that the agency is primarily using a national
benefit-per-ton estimate for particulate matter emitted from the
Electricity Generating Unit sector based on an estimate of premature
mortality derived from the ACS study (Krewski et al., 2009). If the
benefit-per-ton estimates were based on the Six Cities study
(Lepuele et al., 2011), the values would be nearly two-and-a-half
times larger. Because of the sensitivity of the benefit-per-ton
estimate to the geographical considerations of sources and receptors
of emissions, DOE intends to investigate refinements to the agency's
current approach of one national estimate by assessing the regional
approach taken by EPA's Regulatory Impact Analysis for the Clean
Power Plan Final Rule. Note that DOE is currently investigating
valuation of avoided and SO2 and Hg emissions.
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Table I-5 summarizes the national economic benefits and costs
expected to result from the adopted standards for CUACs and CUHPs.
Table I-5--Summary of National Economic Benefits and Costs of Amended
Energy Conservation Standards for Small, Large, and Very Large
Commercial Package Air Conditioning and Heating Equipment *
------------------------------------------------------------------------
Present value
Category (billion Discount rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings......... 23.0 7
64.9 3
CO2 Reduction Value ($12.2/t case) **... 5.0 5
CO2 Reduction Value ($40.0/t case) **... 24.9 3
CO2 Reduction Value ($62.3/t case) **... 40.2 2.5
CO2 Reduction Value ($117/t case) **.... 75.9 3
NOX Reduction Value [dagger]............ 1.4 7
4.4 3
Total Benefits [dagger][dagger]..... 49.3 7
94.1 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs.... 7.7 7
14.9 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction Value 41.6 7
[dagger][dagger]....................... 79.2 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with equipment
shipped in 2018-2048. These results include benefits to consumers
which accrue after 2048 from the products purchased in 2018-2048. The
costs account for the incremental variable and fixed costs incurred by
manufacturers due to the standard, some of which may be incurred in
preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2014$, 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.L.2.
DOE estimated the monetized value of NOX emissions reductions using
benefit per ton estimates from the Regulatory Impact Analysis for the
Proposed Carbon Pollution Guidelines for Existing Power Plants and
Emission Standards for Modified and Reconstructed Power Plants,
published in June 2014 by EPA's Office of Air Quality Planning and
Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
discussion. Note that the agency is primarily using a national benefit-
per-ton estimate for particulate matter emitted from the Electricity
Generating Unit sector based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009). If the benefit-per-
ton estimates were based on the Six Cities study (Lepuele et al.,
2011), the values would be nearly two-and-a-half times larger. Because
of the sensitivity of the benefit-per-ton estimate to the geographical
considerations of sources and receptors of emissions, DOE intends to
investigate refinements to the agency's current approach of one
national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
using the series corresponding to average SCC with 3-percent discount
rate ($40.0/t case).
The benefits and costs of the adopted CUAC and CUHP standards for
equipment sold in 2018-2048 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.\9\
---------------------------------------------------------------------------
\9\ 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 the analysis period,
starting in the compliance year, that yields the same present value.
---------------------------------------------------------------------------
[[Page 2425]]
Although 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 CUACs and CUHPs shipped in 2018-2048. Because
CO2 emissions have a very long residence time in the
atmosphere,\10\ the SCC values in future years reflect future
CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------
\10\ 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,' ''
110 J. Geophys. Res. D14105.
---------------------------------------------------------------------------
Estimates of annualized benefits and costs of the adopted standards
are shown in Table I-6. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, (for which DOE used a 3-percent discount
rate along with the SCC series that has a value of $40.0/t in
2015),\11\ the estimated cost of the standards in this rule is $708
million per year in increased equipment costs, while the estimated
annual benefits are $2,099 million in reduced equipment operating
costs, $1,320 million in CO2 reductions, and $132.0 million
in reduced NOX emissions. In this case, the net benefit
amounts to $2,843 million per year. Using a 3-percent discount rate for
all benefits and costs and the SCC series that has a value of $40.0/t
in 2015, the estimated cost of the standards is $792 million per year
in increased equipment costs, while the estimated annual benefits are
$3,441 million in reduced operating costs, $1,320 million in
CO2 reductions, and $231.3 million in reduced NOX
emissions. In this case, the net benefit amounts to $4,201 million per
year.
---------------------------------------------------------------------------
\11\ DOE used a 3% discount rate because the SCC values for the
series used in the calculation were derived using a 3% discount rate
(see section IV.L).
Table I-6--Annualized Benefits and Costs of Amended Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment
*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
---------------------------------------------------------------------------------------------------------------------
Discount rate (%) Primary estimate Low net benefits estimate High net benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings... 7............................... 2,099..................... 2,021..................... 2,309
3............................... 3,441..................... 3,287..................... 3,830.
CO2 Reduction Value ($12.2/t case) 5............................... 357....................... 355....................... 361.
**.
CO2 Reduction Value ($40.0/t case) 3............................... 1,320..................... 1,313..................... 1,337.
**.
CO2 Reduction Value ($62.3/t case) 2.5............................. 1,973..................... 1,964..................... 1,999.
**.
CO2 Reduction Value ($117/t case) 3............................... 4,028..................... 4,009..................... 4,080.
**.
NOX Reduction Value [dagger]...... 7............................... 132.0..................... 131.3..................... 299.1.
3............................... 231.3..................... 230.2..................... 516.3.
Total Benefits 7 plus CO2 range................ 2,588 to 6,259............ 2,507 to 6,160............ 2,970 to 6,689.
[dagger][dagger].
7............................... 3,551..................... 3,465..................... 3,946.
3 plus CO2 range................ 4,029 to 7,701............ 3,872 to 7,525............ 4,708 to 8,427.
3............................... 4,992..................... 4,830..................... 5,684.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7............................... 708....................... 888....................... 275
3............................... 792....................... 1028...................... 231.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]........ 7 plus CO2 range................ 1,880 to 5,551............ 1,619 to 5,273............ 2,695 to 6,414.
7............................... 2,843..................... 2,578..................... 3,671.
3 plus CO2 range................ 3,238 to 6,909............ 2,843 to 6,497............ 4,477 to 8,196.
3............................... 4,201..................... 3,802..................... 5,453.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with CUACs and CUHPs shipped in 2018-2048. These results include benefits to
consumers which accrue after 2048 from the CUACs and CUHPs purchased in 2018-2048. 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 AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
respectively. In addition, incremental product costs reflect a constant price trend in the Primary estimate, a slightly increasing price trend in the
Low Benefits estimate, and a slightly decreasing price trend in the Low Benefits estimate. The methods used to project price trends are explained in
section IV.D.1.
** 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.L.2. DOE estimated the monetized value of NOX emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants,'' published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency used a national
benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived
from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study
(Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton
estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current
approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[[Page 2426]]
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/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.H, IV.K and IV.L of this document.
2. Commercial Warm Air Furnaces
DOE's analyses indicate that the adopted energy conservation
standards for CWAFs would save a significant amount of energy. Relative
to the case without amended standards (referred to as the ``no-new-
standards case''), the lifetime energy savings for CWAFs purchased in
2023-2048 amount to 0.23 quads. This represents a savings of 0.8
percent relative to the energy use of these products in the case
without amended standards (i.e. the no-new-standards case).
The cumulative NPV of total consumer costs and savings of the
standards for CWAFs ranges from $0.3 billion (at a 7-percent discount
rate) to $1.0 billion (at a 3-percent discount rate). This NPV
expresses the estimated total value of future operating-cost savings
minus the estimated increased product and installation costs for CWAFs
purchased in 2023-2048.
In addition, the CWAF equipment standards that are being adopted in
this direct final rule are projected to yield significant environmental
benefits as a result of the improvement in the conservation of energy.
Specifically, these standards are projected to result in cumulative GHG
emission reductions (over the same period as for energy savings) of
12.4 Mt of CO2, 0.40 thousand tons of SO2, 41.2
tons of NOX, 146 thousand tons of CH4, 0.03
thousand tons of N2O, and 0.001 tons of mercury. The
cumulative reduction in CO2 emissions through 2030 amounts
to 0.9 Mt, which is equivalent to the emissions resulting from the
annual electricity use of about 79,000 homes.
The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 developed by the
Federal interagency Working Group. The derivation of the SCC values is
discussed in section IV.L. Using discount rates appropriate for each
set of SCC values, DOE estimates that the net present monetary value of
the CO2 emissions reduction (not including CO2-
equivalent emissions of other gases with global warming potential)
ranges from $71.4 million to $1,078 million, with a value of $353
million using the central SCC case represented by $40.0/t in 2015. DOE
also estimates that the net present monetary value of the
NOX emissions reduction to be $36.1 million at a 7-percent
discount rate, and $110 million at a 3-percent discount rate.
Table I-7 summarizes the national economic benefits and costs
expected to result from the adopted CWAF standards.
Table I-7--Summary of National Economic Benefits and Costs of Amended
Energy Conservation Standards for Commercial Warm Air Furnaces *
------------------------------------------------------------------------
Present value
Category (billion Discount Rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings.................. 0.4 7
1.0 3
CO2 Reduction Value ($12.2/t case) **... 0.07 5
CO2 Reduction Value ($40.0/t case) **... 0.35 3
CO2 Reduction Value ($62.3/t case) **... 0.57 2.5
CO2 Reduction Value ($117/t case) **.... 1.08 3
NOX Reduction Value [dagger]............ 0.04 7
0.11 3
Total Benefits [dagger][dagger]..... 0.75 7
1.5 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs.... 0.03 7
0.06 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction 0.72 7
Monetized Value[dagger][dagger]........ 1.4 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with CWAFs
shipped in 2023-2048. These results include benefits to commercial
consumers which accrue after 2048 from the products purchased in 2023-
2048. The costs account for the incremental variable and fixed costs
incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2014$, 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.L.2.
DOE estimated the monetized value of NOX emissions reductions using
benefit per ton estimates from the Regulatory Impact Analysis titled,
``Proposed Carbon Pollution Guidelines for Existing Power Plants and
Emission Standards for Modified and Reconstructed Power Plants,''
published in June 2014 by EPA's Office of Air Quality Planning and
Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
discussion. Note that the agency is primarily using a national benefit-
per-ton estimate for particulate matter emitted from the Electricity
Generating Unit sector based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009). If the benefit-per-
ton estimates were based on the Six Cities study (Lepuele et al.,
2011), the values would be nearly two-and-a-half times larger. Because
of the sensitivity of the benefit-per-ton estimate to the geographical
considerations of sources and receptors of emissions, DOE intends to
investigate refinements to the agency's current approach of one
national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
using the series corresponding to average SCC with 3-percent discount
rate ($40.0/t case).
[[Page 2427]]
The benefits and costs of the adopted standards, for CWAFs sold in
2023-2048, 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.\12\
---------------------------------------------------------------------------
\12\ 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.7. Using the present value, DOE then
calculated the fixed annual payment over the analysis period,
starting in the compliance year to 2048, that yields the same
present value.
---------------------------------------------------------------------------
Estimates of annualized benefits and costs of the adopted standards
are shown in Table I-8. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction, (for which DOE used a 3-percent discount
rate along with the SCC series that has a value of $40.0/t in 2015),
the estimated cost of the standards in this rule is $4.31 million per
year in increased equipment costs, while the estimated annual benefits
are $49 million in reduced equipment operating costs, $24 million in
CO2 reductions, and $4.91 million in reduced NOX
emissions. In this case, the net benefit amounts to $74 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 $4.38 million per year in increased equipment costs,
while the estimated annual benefits are $71 million in reduced
operating costs, $24 million in CO2 reductions, and $7.59
million in reduced NOX emissions. In this case, the net
benefit amounts to $99 million per year.
Table I-8--Annualized Benefits and Costs of Amended Standards for Commercial Warm Air Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
Discount rate (%) -----------------------------------------------------------------------------------
Primary estimate Low estimate High estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings............ 7............................... 49........................ 48........................ 54.
3............................... 71........................ 70........................ 81.
CO2 Reduction Value ($12.2/t case) 5............................... 6.99...................... 7.08...................... 7.37.
**.
CO2 Reduction Value ($40.0/t case) 3............................... 24........................ 25........................ 26.
**.
CO2 Reduction Value ($62.3/t case) 2.50............................ 36........................ 36........................ 38.
**.
CO2 Reduction Value ($117/t case) 3............................... 74........................ 75........................ 79.
**.
NOX Reduction Value [dagger]...... 7............................... 4.91...................... 4.98...................... 11.44.
3............................... 7.59...................... 7.70...................... 17.61.
Total Benefits 7 plus CO2 range................ 61 to 128................. 60 to 128................. 73 to 144.
[dagger][dagger].
7............................... 78........................ 78........................ 91.
3 plus CO2 range................ 86 to 153................. 84 to 152................. 106 to 177.
3............................... 103....................... 102....................... 124.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7............................... 4.31...................... 5.04...................... 3.92
3............................... 4.38...................... 5.22...................... 3.94.
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]........ 7 plus CO2 range................ 57 to 124................. 55 to 123................. 69 to 140.
7............................... 74........................ 72........................ 87.
3 plus CO2 range................ 82 to 149................. 79 to 147................. 102 to 173.
3............................... 99........................ 97........................ 120.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with CWAFs shipped in 2023-2048. These results include benefits to commercial
consumers which accrue after 2048 from the CWAFs purchased from 2023-2048. 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 AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
respectively. In addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits
Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3.
** 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.L.2. DOE estimated the monetized value of NOX emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency used a national
benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived
from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study
(Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton
estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current
approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/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.
[[Page 2428]]
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K and IV.L of this document.
3. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment and Commercial Warm Air Furnaces
DOE's analyses indicate that energy conservation standards being
adopted in this direct final rule for CUAC and CUHP equipment and CWAFs
would save a significant amount of energy. Relative to the no-new-
standards case, the lifetime energy savings for CUAC and CUHP equipment
purchased in 2018-2048 and CWAFs purchased in 2023-2048 amount to 15.0
quads. This represents a savings of 24 percent relative to the energy
use of these products in the no-new-standards case.
The cumulative NPV of total consumer costs and savings of the
standards for CUACs and CUHPs and CWAFs ranges from $15.5 billion (at a
7-percent discount rate) to $51 billion (at a 3-percent discount rate).
This NPV expresses the estimated total value of future operating-cost
savings minus the estimated increased product and installation costs
for CUACs and CUHPs purchased in 2018-2048 and CWAFs purchased in 2023-
2048.
In addition, the standards that are being adopted in this direct
final rule are projected to yield significant environmental benefits as
a result of the improvement in the conservation of energy. DOE
estimates that the standards would result in cumulative GHG emission
reductions (over the same period as for energy savings) of 885 million
Mt of CO2, 454 thousand tons of SO2, 1,675 tons
of NOX, 4,063 thousand tons of CH4, 10 thousand
tons of N2O, and 1.68 tons of Hg. The cumulative reduction
in CO2 emissions through 2030 amounts to 78 million Mt,
which is equivalent to the emissions resulting from the annual
electricity use of approximately 10.7 million homes.
The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 developed by a Federal
interagency working group. The derivation of the SCC values is
discussed in section IV.L. Using discount rates appropriate for each
set of SCC values, DOE estimates that the net present monetary value of
the CO2 emissions reduction (not including CO2-
equivalent emissions of other gases with global warming potential) is
between $5.1 billion and $77 billion, with a value of $25.3 billion
using the central SCC case represented by $40.0/t in 2015. DOE also
estimates that the net present monetary value of the NOX
emissions reduction to be $1.4 billion at a 7-percent discount rate,
and $4.5 billion at a 3-percent discount rate.
Table I-9 summarizes the combined national economic benefits and
costs expected to result from the adopted standards for CUACs and CUHPs
and CWAF.
Table I-9--Summary of National Economic Benefits and Costs of Amended
Energy Conservation Standards for Small, Large, and Very Large
Commercial Package Air Conditioning and Heating Equipment and Commercial
Warm Air Furnaces *
------------------------------------------------------------------------
Present value
Category (billion Discount rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings.................. 23.3 7
65.9 3
CO2 Reduction Value ($12.2/t case) **... 5.1 5
CO2 Reduction Value ($40.0/t case) **... 25.2 3
CO2 Reduction Value ($62.3/t case) **... 40.8 2.5
CO2 Reduction Value ($117/t case) **.... 77.0 3
NOX Reduction Value [dagger]............ 1.5 7
4.5 3
Total Benefits [dagger][dagger]..... 50.1 7
95.6 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs.... 7.8 7
15.0 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction Value 42.3 7
[dagger][dagger].......................
80.6 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with CUACs and
CUHPs shipped in 2018-2048 and CWAFs shipped in 2023-2048. These
results include benefits to commercial consumers which accrue after
2048. The costs account for the incremental variable and fixed costs
incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2014$, 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.L.2.
DOE estimated the monetized value of NOX emissions reductions using
benefit per ton estimates from the Regulatory Impact Analysis for the
Proposed Carbon Pollution Guidelines for Existing Power Plants and
Emission Standards for Modified and Reconstructed Power Plants,
published in June 2014 by EPA's Office of Air Quality Planning and
Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
discussion. Note that the agency is primarily using a national benefit-
per-ton estimate for particulate matter emitted from the Electricity
Generating Unit sector based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009). If the benefit-per-
ton estimates were based on the Six Cities study (Lepuele et al.,
2011), the values would be nearly two-and-a-half times larger. Because
of the sensitivity of the benefit-per-ton estimate to the geographical
considerations of sources and receptors of emissions, DOE intends to
investigate refinements to the agency's current approach of one
national estimate by assessing the regional approach taken by EPA's
Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
using the series corresponding to average SCC with 3-percent discount
rate ($40.0/t case).
[[Page 2429]]
The benefits and costs of the adopted standards for CUAC and CUHP
and CWAFs can also be expressed in terms of annualized values.
Estimates of annualized benefits and costs of the adopted standards are
shown in Table I-10. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction (for which DOE used a 3-percent discount
rate along with the SCC series that has a value of $40.0/t in 2015),
the estimated cost of the standards in this rule is $711 million per
year in increased equipment costs, while the estimated annual benefits
are $2,132 million in reduced equipment operating costs, $1,339 million
in CO2 reductions, and $135 million in reduced
NOX emissions. In this case, the net benefit amounts to
$2,895 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 $795 million per year in
increased equipment costs, while the estimated annual benefits are
$3,496 million in reduced operating costs, $1,339 million in
CO2 reductions, and $237 million in reduced NOX
emissions. In this case, the net benefit amounts to $4,277 million per
year.
Table I-10--Annualized Benefits and Costs of Amended Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating
Equipment and Commercial Warm Air Furnaces *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
---------------------------------------------------------------------------------------------------------------------
Discount rate (%) Primary estimate Low estimate High estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings............ 7............................... 2,132..................... 2,053..................... 2,346.
3............................... 3,496..................... 3,340..................... 3,892.
CO2 Reduction Value ($12.2/t case) 5............................... 362....................... 360....................... 367.
**.
CO2 Reduction Value ($40.0/t case) 3............................... 1,339..................... 1,332..................... 1,357.
**.
CO2 Reduction Value ($62.3/t case) 2.50............................ 2,002..................... 1,992..................... 2,029.
**.
CO2 Reduction Value ($117/t case) 3............................... 4,085..................... 4,067..................... 4,141.
**.
NOX Reduction Value [dagger]...... 7............................... 135....................... 135....................... 307.
3............................... 237....................... 236....................... 530.
Total Benefits 7 plus CO2 range................ 2,629 to 6,353............ 2,548 to 6,254............ 3,019 to 6,794.
[dagger][dagger].
7............................... 3,606..................... 3,520..................... 4,010.
3 plus CO2 range................ 4,095 to 7,819............ 3,937 to 7,643............ 4,789 to 8,563.
................................ 5,072..................... 4,909..................... 5,779.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs 7............................... 711....................... 891....................... 277.
3............................... 795....................... 1033...................... 234.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]........ 7 plus CO2 range................ 1,918 to 5,642............ 1,657 to 5,363............ 2,742 to 6,516.
7............................... 2,895..................... 2,629..................... 3,732.
3 plus CO2 range................ 3,300 to 7,024............ 2,904 to 6,610............ 4,555 to 8,330.
3............................... 4,277..................... 3,876..................... 5,545.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with CUACs and CUHPs shipped in 2018-2048 and CWAFs shipped in 2023-2048. These
results include benefits to commercial consumers which accrue after 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 AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high
decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3.
** 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.L.2. DOE estimated the monetized value of NOX emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency is primarily
using a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature
mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six
Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the
benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the
agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power
Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/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.
D. Conclusion
DOE has determined that the statement containing recommendations
with respect to energy conservation standards for CUACs, CUHPs and
CWAFs was submitted jointly by interested persons that are fairly
representative of relevant points of view, in accordance with 42 U.S.C.
[[Page 2430]]
6295(p)(4)(A) and 6313(a)(6)(B).\13\ After considering the analysis and
weighing the benefits and burdens, DOE has determined that the
recommended standards are in accordance with 42 U.S.C. 6313(a)(6)(B),
which contains provisions for adopting a uniform national standard more
stringent than the amended ASHRAE Standard 90.1 for the equipment
considered in this document. Specifically, the Secretary has
determined, supported by clear and convincing evidence, that the
adoption of the recommended standards would result in significant
additional conservation of energy and is technologically feasible and
economically justified. In determining whether the recommended
standards are economically justified, the Secretary has determined that
the benefits of the recommended standards exceed the burdens, given
that, when considering 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 yield
benefits outweighing the negative impacts on some consumers and on
manufacturers, including the conversion costs that could result in a
reduction in INPV for manufacturers.
---------------------------------------------------------------------------
\13\ See 42 U.S.C. 6313(b) (applying 42 U.S.C. 6295(p)(4) to
energy conservation standard rulemakings involving a variety of
industrial equipment, including CUACs, CUHPs, and CWAFs).
---------------------------------------------------------------------------
Under the authority provided by 42 U.S.C. 6295(p)(4) and
6316(b)(1), DOE is issuing this direct final rule establishing amended
energy conservation standards for CUACs/CUHPs and CWAFs. Consistent
with this authority, DOE is also publishing elsewhere in this Federal
Register a notice of proposed rulemaking proposing standards that are
identical to those contained in this direct final rule.\14\ See 42
U.S.C. 6295(p)(4)(A)(i).
---------------------------------------------------------------------------
\14\ Because DOE has already published initial notices of
proposed rulemaking for CUACs, CUHPs, and CWAFs, DOE is publishing a
supplemental notice of proposed rulemaking that proposes the
identical energy conservation standards detailed in this direct
final rule.
---------------------------------------------------------------------------
II. Introduction
The following section briefly discusses the statutory authority
underlying this direct final rule, as well as some of the relevant
historical background related to the establishment of standards for
small, large, and very large, CUAC/CUHP and CWAF equipment.
A. Authority
As indicated above, EPCA includes provisions covering the equipment
addressed by this document.\15\ EPCA addresses, among other things, the
energy efficiency of certain types of commercial and industrial
equipment. Relevant provisions of the Act specifically include
definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C.
6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C.
6315), and the authority to require information and reports from
manufacturers (42 U.S.C. 6316).
---------------------------------------------------------------------------
\15\ 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 (April 30, 2015).
---------------------------------------------------------------------------
Section 342(a) of EPCA concerns energy conservation standards for
small, large, and very large, CUACs and CUHPs. (42 U.S.C. 6313(a)) This
category of equipment has a rated capacity between 65,000 Btu/h and
760,000 Btu/h. This equipment is designed to heat and cool commercial
buildings and is often located on the building's rooftop.
The initial Federal energy conservation standards for CWAFs were
added to EPCA by the Energy Policy Act of 1992 (EPACT 1992), Public Law
No. 102-486 (Oct. 24, 1992). See 42 U.S.C. 6313(a)(4). These types of
covered equipment have a rated capacity (rated maximum input \16\)
greater than or equal to 225,000 Btu/h, can be gas-fired or oil-fired,
and are designed to heat commercial and industrial buildings. Id.
---------------------------------------------------------------------------
\16\ ``Rated maximum input'' means the maximum gas-burning
capacity of a CWAF in Btus per hour, as specified by the
manufacturer.
---------------------------------------------------------------------------
Pursuant to section 342(a)(6) of EPCA, DOE is to consider amending
the energy efficiency standards for certain types of commercial and
industrial equipment whenever ASHRAE amends the standard levels or
design requirements prescribed in ASHRAE/IES Standard 90.1, and
whenever more than 6 years had elapsed since the issuance of the most
recent final rule establishing or amending a standard for the equipment
as of the date of AEMTCA's enactment, December 18, 2012. (42 U.S.C.
6313(a)(6)(C)(vi)) Because more than six years had elapsed since DOE
issued a final rule with standards for CUACs and CUHPs or CWAFs on
October 18, 2005 (see 70 FR 60407), DOE initiated the process to review
these standards.
Pursuant to EPCA, DOE's energy conservation program for covered
equipment consists essentially of four parts: (1) Testing; (2)
labeling; (3) the establishment of Federal energy conservation
standards; and (4) certification and enforcement procedures. Subject to
certain criteria and conditions, DOE is required to develop test
procedures to measure the energy efficiency, energy use, or estimated
annual operating cost of covered equipment. (42 U.S.C. 6314)
Manufacturers of covered equipment must use the prescribed DOE test
procedure as the basis for certifying to DOE that their equipment
comply with the applicable energy conservation standards adopted under
EPCA and when making representations to the public regarding their
energy use or efficiency. (42 U.S.C. 6314(d)) Similarly, DOE must use
these test procedures to determine whether a given manufacturer's
equipment complies with standards adopted pursuant to EPCA. The DOE
test procedures for small, large, and very large CUACs/CUHPs and CWAFs
currently appear at title 10 of the Code of Federal Regulations
(``CFR'') parts 431.96 and 431.76, respectively.
When setting standards for the equipment addressed by this
document, EPCA prescribes specific statutory criteria for DOE to
consider. See generally 42 U.S.C. 6313(a)(6)(A)-(C). In deciding
whether a proposed standard is economically justified, DOE must
determine whether the benefits of the standard exceed its burdens. DOE
must make this determination after receiving comments on the proposed
standard, and by considering, to the maximum extent practicable, the
following seven statutory factors:
1. The economic impact of the standard on manufacturers and
consumers of products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products which are likely to result from the standard;
3. The total projected amount of energy savings likely to result
directly from the standard;
4. Any lessening of the utility or the performance of the covered
products likely to result from the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy considers relevant. (42
U.S.C. 6313(a)(6)(B)(ii))
With respect to the types of equipment at issue in this rule, EPCA
also contains what is known as an ``anti-backsliding'' provision, which
prevents the Secretary from prescribing any
[[Page 2431]]
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))(aa)
With respect to the equipment addressed by this direct final rule,
DOE notes that EPCA prescribes limits on the Agency's ability to
promulgate a standard if DOE has made a finding that interested persons
have established by a preponderance of the evidence that a standard is
likely to result in the unavailability of any product type (or class)
of performance characteristics that are substantially the same as those
generally available in the United States at the time of the finding.
See 42 U.S.C. 6313(B)(iii)(II).
With particular regard to direct final rules, the Energy
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140 (December 19, 2007), amended EPCA, in relevant part, to grant DOE
authority to issue a type of final rule (i.e., a ``direct final rule'')
establishing an energy conservation standard for a product on receipt
of a statement that is submitted jointly by interested persons that are
fairly representative of relevant points of view (including
representatives of manufacturers of covered products, States, and
efficiency advocates), as determined by the Secretary, and that
contains recommendations with respect to an energy or water
conservation standard. If the Secretary determines that the recommended
standard contained in the statement is in accordance with 42 U.S.C.
6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable, the Secretary may
issue a final rule establishing the recommended standard. A notice of
proposed rulemaking (``NOPR'') that proposes an identical energy
efficiency standard is published simultaneously with the direct final
rule. A public comment period of at least 110 days is provided. See 42
U.S.C. 6295(p)(4). Not later than 120 days after the date on which a
direct final rule issued under this authority is published in the
Federal Register, the Secretary shall withdraw the direct final rule if
the Secretary receives 1 or more adverse public comments relating to
the direct final rule or any alternative joint recommendation and based
on the rulemaking record relating to the direct final rule, the
Secretary determines that such adverse public comments or alternative
joint recommendation may provide a reasonable basis for withdrawing the
direct final rule under subsection 42 U.S.C. 6295(o), 6313(a)(6)(B), or
any other applicable law. On withdrawal of a direct final rule, the
Secretary shall proceed with the notice of proposed rulemaking
published simultaneously with the direct final rule and publish in the
Federal Register the reasons why the direct final rule was withdrawn.
This direct final rule provision applies to the equipment at issue in
this direct final rule. See 42 U.S.C. 6316(b)(1).
B. Background
1. Current Standards
DOE last amended its standards for small, large, and very large,
CUACs/CUHPs on October 18, 2005. At that time, DOE codified both the
amended standards for small and large equipment and the then-new
standards for very large equipment set by the Energy Policy Act of 2005
(``EPAct 2005''), Pub. L. 109-58. See also 70 FR 60407 (August 8,
2005). The current standards are set forth in Table II-1.
Table II-1--Minimum Cooling and Heating Efficiency Levels for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance
Equipment type Cooling capacity Sub-category Heating type Efficiency level date
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- >=65,000 Btu/h and AC....................... Electric Resistance EER = 11.2............ 1/1/2010
Conditioning and Heating Equipment <135,000 Btu/h. Heating or No Heating.
(Air-Cooled).
All Other Types of EER = 11.0............ 1/1/2010
Heating.
HP....................... Electric Resistance EER = 11.0 COP = 3.3.. 1/1/2010
Heating or No Heating.
All Other Types of EER = 10.8 COP = 3.3.. 1/1/2010
Heating.
Large Commercial Packaged Air- >=135,000 Btu/h and AC....................... Electric Resistance EER = 11.0............ 1/1/2010
Conditioning and Heating Equipment <240,000 Btu/h. Heating or No Heating.
(Air-Cooled).
All Other Types of EER = 10.8............ 1/1/2010
Heating.
HP....................... Electric Resistance EER = 10.6 COP = 3.2.. 1/1/2010
Heating or No Heating.
All Other Types of EER = 10.4 COP = 3.2.. 1/1/2010
Heating.
Very Large Commercial Packaged Air- >=240,000 Btu/h and AC....................... Electric Resistance EER = 10.0............ 1/1/2010
Conditioning and Heating Equipment <760,000 Btu/h. Heating or No Heating.
(Air-Cooled).
All Other Types of EER = 9.8............. 1/1/2010
Heating.
HP....................... Electric Resistance EER = 9.5 COP = 3.2... 1/1/2010
Heating or No Heating.
[[Page 2432]]
All Other Types of EER = 9.3 COP = 3.2... 1/1/2010
Heating.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As noted above, EPACT 1992 amended EPCA to set the current minimum
energy conservation standards for CWAFs. (42 U.S.C. 6313(a)(4)(A) and
(B)) These standards, which apply to all CWAFs manufactured on or after
January 1, 1994, are set forth in Table II-2.
Table II-2--Federal Energy Efficiency Standards for CWAFs
----------------------------------------------------------------------------------------------------------------
Input Thermal
Equipment type capacity (Btu/ efficiency * Compliance
h) % date
----------------------------------------------------------------------------------------------------------------
Gas-Fired Furnaces.............................................. >=225,000 80 1/1/1994
Oil-Fired Furnaces.............................................. >=225,000 81 1/1/1994
----------------------------------------------------------------------------------------------------------------
* At the maximum rated capacity (rated maximum input).
2. History of Standards Rulemakings
a. Commercial Unitary Air Conditioners and Heat Pumps
On October 29, 1999, the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating
Engineering Society of North America (IESNA) adopted Standard 90.1-
1999, ``Energy Standard for Buildings Except Low-Rise Residential
Building,'' which included amended efficiency levels for CUACs and
CUHPs. On June 12, 2001, the Department published a Framework Document
that described a series of analytical approaches to evaluate energy
conservation standards for CUACs and CUHPs with rated capacities
between 65,000 Btu/h and 240,000 Btu/h, and presented this analytical
framework to stakeholders at a public workshop. On July 29, 2004, DOE
issued an Advance Notice of Proposed Rulemaking (``ANOPR'') (hereafter
referred to as the ``2004 ANOPR'') to solicit public comments on its
preliminary analyses for this equipment. 69 FR 45460. Subsequently,
Congress enacted EPAct 2005, which, among other things, established
amended standards for small and large CUACs and CUHPs and new standards
for very large CUACs and CUHPs. As a result, EPAct 2005 displaced the
rulemaking effort that DOE had already begun. DOE codified these new
statutorily-prescribed standards on October 18, 2005. 70 FR 60407.
Section 5(b) of AEMTCA amended Section 342(a)(6) of EPCA (42 U.S.C.
6313(a)(6)) by requiring DOE to initiate a rulemaking to consider
amending the standards for any covered equipment as to which more than
6 years has elapsed since the issuance of the most recent final rule
establishing or amending a standard for the equipment as of the date of
AEMTCA's enactment, December 18, 2012. (42 U.S.C. 6313(a)(6)(C)(vi))
Under this provision, DOE was also obligated to publish a notice of
proposed rulemaking to amend the applicable standards by December 31,
2013. See 42 U.S.C. 6313(a)(6)(C)(vi). Consequently, DOE initiated a
rulemaking effort to determine whether to amend the current standards
for CUACs and CUHPs.
On February 1, 2013, DOE published a request for information
(``RFI'') and notice of document availability for small, large, and
very large, air cooled CUACs and CUHPs. 78 FR 7296. The document sought
to solicit information from the public to help DOE determine whether
national standards more stringent than those already in place would
result in a significant amount of additional energy savings and whether
those national standards would be technologically feasible and
economically justified. Separately, DOE also sought information on the
merits of adopting the IEER metric as the energy efficiency descriptor
characterizing cooling-mode efficiency for small, large, and very large
CUACs and CUHPs, rather than the current EER metric. (See section III.G
for more details).
DOE notes that in October 2010, ASHRAE published ASHRAE Standard
90.1-2010, which amended its requirements for CUACs and CUHPs to
include, among other things, new requirements for IEER. In October
2013, ASHRAE published ASHRAE Standard 90.1-2013, which further amended
those IEER requirements. The provisions relating to EER and COP
contained in ASHRAE Standard 90.1-2010 and ASHRAE Standard 90.1-2013,
however, remained the same as the current DOE standards for this
equipment. As discussed in section IV.C.2, DOE considered efficiency
levels associated with the IEER requirements in both ASHRAE Standard
90.1-2010 and ASHRAE Standard 90.1-2013.
On September 30, 2014, DOE published a NOPR for small, large, and
very large CUACs and CUHPs. 79 FR 58948. The document solicited
information from the public to help DOE determine whether more-
stringent energy conservation standards for small, large, and very
large CUACs and CUHPs would result in a significant additional amount
of energy savings and whether those standards would be technologically
feasible and economically justified.
The September 2014 document also announced that a public meeting
would be held on November 6, 2014 at DOE headquarters in Washington, DC
At this meeting, DOE presented the methodologies and results of the
analyses set forth in the NOPR, and interested parties that
participated in the public meeting discussed a variety of topics.
DOE also received a number of written comments from interested
parties in response to the NOPR. DOE considered these comments, as well
as comments from the public meeting, in preparing the direct final
rule. The commenters are summarized in Table II-3. Relevant comments,
and DOE's responses, are provided in the appropriate sections of this
document.
[[Page 2433]]
Table II-3--Interested Parties Providing Written Comment on the NOPR for
Small, Large, and Very Large Air-Cooled CUACs and CUHPs
------------------------------------------------------------------------
Name Acronyms Type
------------------------------------------------------------------------
A2H, Inc.......................... A2H............... E
Air-Conditioning, Heating and AHRI.............. TA
Refrigeration Institute.
Appliance Standards Awareness Joint Efficiency EA
Project (ASAP), Alliance to Save Advocates.
Energy (ASE), American Council
for an Energy-Efficient Economy
(ACEEE), Natural Resources
Defense Council (NRDC), Northeast
Energy Efficiency Partnerships
(NEEP), and Northwest Energy
Efficiency Alliance (NEEA).
Applied Engineering of East Applied E
Tennessee, Inc. Engineering.
American Society of Heating, ASHRAE............ TA
Refrigerating and Air-
Conditioning Engineers.
Balanced Principles, LLC.......... Balanced E
Principles.
Pacific Gas and Electric Company California IOUs... U
(PG&E), Southern California Gas
Company (SCGC), San Diego Gas and
Electric (SDG&E), and Southern
California Edison (SCE).
Cato Institute.................... .................. PP
Coradini, Michael; Doss, Eddie; .................. I
Heinrich; Michael; Huntley, John;
Long, Robert.
Danfoss........................... Danfoss........... CS
Environmental Investigation Agency EIA Global........ EA
Gardiner Trane, H & H Sales .................. D
Associates, Inc., Havtech, Heat
Transfer Solutions, HVAC
Equipment Sales, Inc., MWSK
Equipment Sales Inc., Slade Ross,
Inc.
Goodman Manufacturing............. Goodman........... M
Sofie Miller (George Washington Miller............ EI
University Regulatory Studies
Center).
I.C. Thomasson Associates, Inc.... IC Thomasson...... E
Ingersoll Rand (Trane)............ Trane............. M
KJWW.............................. KJWW.............. E
Lennox International Inc.......... Lennox............ M
Merryman-Farr, LLC................ Merryman-Farr..... C
Nidec Motor Corporation........... Nidec............. CS
Nortek Global HVAC LLC............ Nordyne........... M
Policy Navigation Group........... .................. PP
Regal-Beloit Corporation.......... Regal-Beloit...... CS
Rheem Manufacturing Company....... Rheem............. M
Smith-Goth Engineers, Inc......... Smith-Goth........ E
Southern Company.................. Southern Company.. U
Thompson Engineers, Inc........... Thompson.......... E
United Technologies Corporation... Carrier........... M
University of Michigan Plant UM................ EI
Operations.
Viridis Engineering............... Viridis........... E
------------------------------------------------------------------------
C: Mechanical Contractor; CS: Component Supplier; D: Equipment
Distributor: E: Engineering Consulting Firm; EA: Efficiency/
Environmental Advocate; EI: Educational Institution; I: Individual; M:
Manufacturer; PP: Public Policy Research Organization; TA: Trade
Association; U: Utility; UR: Utility Representative.
b. Commercial Warm Air Furnaces
On October 21, 2004, DOE published a final rule in the Federal
Register that adopted definitions for ``commercial warm air furnace''
and ``TE,'' promulgated test procedures for this equipment, and
recodified the energy conservation standards to place them contiguously
with the test procedures in the Code of Federal Regulations (``CFR'').
69 FR 61916, 61917, 61939-41. In the same final rule, DOE incorporated
by reference (see 10 CFR 431.75) a number of industry test standards
relevant to commercial warm air furnaces, including: (1) American
National Standards Institute (``ANSI'') Standard Z21.47-1998, ``Gas-
Fired Central Furnaces,'' for gas-fired CWAFs; (2) Underwriters
Laboratories (``UL'') Standard 727-1994, ``Standard for Safety Oil-
Fired Central Furnaces,'' for oil-fired CWAFs; (3) provisions from
Hydronics Institute (HI) Standard BTS-2000, ``Method to Determine
Efficiency of Commercial Space Heating Boilers,'' to calculate flue
loss for oil-fired CWAFs, and (4) provisions from the American Society
of Heating, Refrigerating, and Air-conditioning Engineers (``ASHRAE'')
Standard 103- 1993, ``Method of Testing for Annual Fuel Utilization
Efficiency of Residential Central Furnaces and Boilers,'' to determine
the incremental efficiency of condensing furnaces under steady-state
conditions. Id. at 61940. DOE later updated the test procedures for
CWAFs to match the procedures specified in ASHRAE Standard 90.1-2010,
which referenced ANSI Z21.47-2006, ``Gas-Fired Central Furnaces,'' for
gas-fired CWAFs, and UL 727-2006, ``Standard for Safety for Oil-Fired
Central Furnaces,'' for oil-fired furnaces. 77 FR 28928, 28987-88 (May
16, 2012).
As with CUACs and CUHPs, DOE was obligated to publish either: (1) A
notice of determination that the current standards do not need to be
amended, or (2) a notice of proposed rulemaking containing proposed
standards for CWAFs by December 31, 2013. (42 U.S.C. 6313(a)(6)(C)(i)
and (vi)) Consequently, DOE initiated a rulemaking to determine whether
to amend the current standards for CWAFs.
In starting this rulemaking process, DOE published an RFI and
notice of document availability for CWAFs. See 78 FR 25627 (May 2,
2013). The document solicited information from the public to help DOE
determine whether more-stringent energy conservation standards for
CWAFs would result in a significant additional amount of energy savings
and whether those standards would be technologically feasible and
economically justified.
Based on feedback and additional analysis, on February 4, 2015, DOE
published a NOPR for CWAFs. See 80 FR 6182. The NOPR, in addition to
announcing a public meeting to discuss the proposal's details,
solicited information from the public to help DOE determine whether
more-stringent energy conservation standards for
[[Page 2434]]
CWAFs would result in a significant additional amount of energy savings
and whether those standards would be technologically feasible and
economically justified. The public meeting, which took place on March
2, 2015 at DOE headquarters in Washington, DC, centered on the
methodologies and results of the analyses set forth in the NOPR.
Participating interested parties also raised a variety of topics, which
are discussed throughout this document.
DOE received a number of written comments from interested parties
in response to the NOPR. DOE considered these comments, as well as
comments from the public meeting, in the preparation of this final
rule. The commenters are identified in Table II-4. Relevant comments,
and DOE's responses, are provided in the appropriate sections of this
document.
Table II-4--Interested Parties Providing Written Comments on the NOPR
for Commercial Warm Air Furnaces
------------------------------------------------------------------------
Name Acronyms Commenter Type *
------------------------------------------------------------------------
Air-Conditioning, Heating and AHRI............. TA
Refrigeration Institute.
American Council for an Energy- ACEEE............ EA
Efficient Economy.
American Gas Association...... AGA.............. IR
Appliance Standards Awareness ASAP, ASE, ACEEE, EA
Project, Alliance to Save NRDC (The
Energy, American Council for Advocates).
an Energy-Efficient Economy,
Natural Resources Defense
Council.
Gas Technology Institute...... GTI.............. RO
Goodman Global, Inc........... Goodman.......... M
Ingersoll Rand................ Trane............ M
Lennox International Inc...... Lennox........... M
Nortek Global HVAC LLC........ Nordyne.......... M
Rheem Manufacturing Company... Rheem............ M
United Technologies Carrier.......... M
Corporation.
The U.S. Chamber of Commerce, U.S. Chamber of TA
the American Chemistry Commerce.
Council, the American Coke
and Coal Chemicals Institute,
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.
U.S. Small Business SBA.............. GA
Administration's Office of
Advocacy.
------------------------------------------------------------------------
* EA: Efficiency Advocate; GA: Government Agency; IR: Industry
Representative; M: Manufacturer; RO: Research Organization; TA: Trade
Association.
III. General Discussion
A. Combined Rulemaking
As discussed in section II.B.2, DOE had been conducting separate
standards rulemakings for two sets of interrelated equipment: (1)
Small, large, and very large, CUACs and CUHPs; and (2) CWAFs. In
response to the CUAC/CUHP NOPR, Lennox and Goodman requested that DOE
align the rulemakings for these equipment because of their inherent
impact on each other. The commenters asserted that combining the
rulemakings would reduce manufacturer burden by allowing manufacturers
to consider both of these regulatory changes in one design cycle.
(CUAC: Lennox, No. 60 at p. 8; Goodman, No. 65 at p. 5) \17\
---------------------------------------------------------------------------
\17\ In this direct final rule, DOE discusses comments received
in regards to both the CUAC/CHUP and CWAF rulemakings. Comments
received in regards to the CUAC/CUHP rulemaking and filed in the
docket for this standards rulemaking (Docket No. EERE-2013-BT-STD-
0007) are identified by ``CUAC'' preceding the comment citation.
Comments received in regards to the CWAF rulemaking and filed in the
docket for this standards rulemaking (Docket No. EERE-2013-BT-STD-
0021) are identified by ``CWAF'' preceding the comment citation.
Comments received in regards to the ASRAC Working Group activities
(discussed in section III.B), while filed in the dockets for both
the CUAC/CUHP and CWAF rulemakings, are identified by the equipment
in regards to which the comment was made.
---------------------------------------------------------------------------
In light of the broad overlap between these equipment, DOE agreed
that a combined rulemaking for small, large, and very large, CUACs and
CUHPs and CWAFs had certain advantages. For example, DOE observed that
a large fraction of CWAFs are part of combined single-package CUACs/
CWAF equipment, combining both air conditioning and gas-fired heating.
Combining the rulemakings allowed simultaneous consideration of both
functions of what is generally a single piece of equipment, thus
allowing DOE to accurately account for the relations between the
different systems. This approach also ensured that there would be no
divergence of equipment development timelines for the separate
functions, thus reducing costs and manufacturer impacts. As a result,
DOE is setting standards for these equipment that aligns the effective
dates of the CUAC/CUHP and CWAF rulemakings. DOE expects that aligning
the effective dates will reduce total conversion costs and cumulative
regulatory burden, while also allowing industry to gain clarity on
potential regulations that could affect refrigerant availability before
the higher appliance standard takes effect in 2023. Approximately 68.5
percent of industry equipment listings currently meet the 2018
standard, while 20.4 percent of current industry equipment listings
meet the 2023 standard level.
B. Consensus Agreement
1. Background
In response to the September 2014 CUAC/CUHP NOPR, Lennox suggested
that DOE adopt the ASHRAE 90.1-2013 standards for the equipment subject
to this rulemaking but also offered in the alternative that DOE should
convene a negotiated rulemaking to address potential amendments to the
current standards, which would enhance stakeholder input into the
discussion, analysis and outcome of the rulemaking. (CUAC: Lennox, No.
60 at p. 3) Other manufacturers made similar suggestions. (CUAC: Trane,
No. 63 at p. 14; Goodman, No. 65 at p. 22) In response to the CWAF
NOPR, AHRI stated that the best approach to resolve the issues it
identified, as well as the concerns of other stakeholders on this
rulemaking and on the CUAC rulemaking, would be for DOE to conduct a
negotiated rulemaking at
[[Page 2435]]
which stakeholders can work together to develop standards that will
result in energy savings using technology that is feasible and
economically justified. (CWAF: AHRI, No. 26 at p. 15) In addition, AHRI
and ACEEE submitted a joint letter to the Appliance Standards and
Rulemaking Federal Advisory Committee (``ASRAC'') requesting that it
consider approving a recommendation that DOE initiate a negotiated
rulemaking for commercial package air conditioners and commercial
furnaces. (EERE-2013-BT-STD-0007-0080) ASRAC carefully evaluated this
request and the Committee voted to charter a working group to support
the negotiated rulemaking effort requested by these parties.
Subsequently, after careful consideration, DOE determined that,
given the complexity of the CUAC/CUHP rulemaking and the logistical
challenges presented by the related CWAF proposal, a combined effort to
address these equipment types was appropriate to ensure a comprehensive
vetting of issues and related analyses that would support any final
rule settting standards for this equipment. To this end while highly
unusual to do so after issuing a proposed rule, DOE solicited the
public for membership nominations to the working group that would be
formed under the ASRAC charter by issuing a Notice of Intent to
Establish the Commercial Package Air Conditioners and Commercial Warm
Air Furnaces Working Group To Negotiate Potential Energy Conservation
Standards for Commercial Package Air Conditioners and Commercial Warm
Air Furnaces. 80 FR 17363 (April 1, 2015). The CUAC/CUHP-CWAF Working
Group (in context, ``the Working Group'') was established under ASRAC
in accordance with the Federal Advisory Committee Act and the
Negotiated Rulemaking Act--with the purpose of discussing and, if
possible, reaching consensus on a set of energy conservation standards
to propose or finalize for CUACs, CUHPs and CWAFs. The Working Group
was to consist of fairly representative parties having a defined stake
in the outcome of the proposed standards, and would consult, as
appropriate, with a range of experts on technical issues.
DOE received 17 nominations for membership. Ultimately, the Working
Group consisted of 17 members, including one member from ASRAC and one
DOE representative.\18\ The Working Group met six times (five times in-
person and once by teleconference). The meetings were held on April 28,
May 11-12, May 20-21, June 1-2, June 9-10, and June 15, 2015.\19\ As a
result of these efforts, the Working Group successfully reached
consensus on energy conservation standards for CUACs, CUHPs, and CWAFs.
On June 15, 2015, it submitted a Term Sheet to ASRAC outlining its
recommendations, which ASRAC subsequently adopted.\20\
---------------------------------------------------------------------------
\18\ The group members were John Cymbalsky (U.S. Department of
Energy), Marshall Hunt (Pacific Gas & Electric Company, San Diego
Gas & Electric Company, Southern California Edison, and Southern
California Gas Company), Andrew deLaski (Appliance Standards
Awareness Project), Louis Starr (Northwest Energy Efficiency
Alliance), Meg Waltner (Natural Resources Defense Council), Jill
Hootman (Trane), John Hurst (Lennox), Karen Meyers (Rheem
Manufacturing Company), Charlie McCrudden (Air Conditioning
Contractors of America), Harvey Sachs (American Council for an
Energy Efficient Economy), Paul Doppel (Mitsubishi Electric), Robert
Whitwell (United Technologies Corporation (Carrier)), Michael Shows
(Underwriters Laboratories), Russell Tharp (Goodman Manufacturing),
Sami Zendah (Emerson Climate Technologies), Mark Tezigni (Sheet
Metal and Air Conditioning Contractors National Association, Inc.),
Nick Mislak (Air-Conditioning, Heating, and Refrigeration
Institute).
\19\ In addition, most of the members of the ASRAC Working Group
held several informal meetings on March 19-20, 2015, March 30, 2015,
and April 13, 2015. The purpose of these meetings was to initiate
work on some of the analytical issues raised in stakeholder comments
on the CUAC NOPR.
\20\ Available at http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0007-0093. The following
individuals served as members of ASRAC that received and approved
the Term Sheet: Co-Chair John Mandyck (Carrier/United Technologies
Corporation), Co-Chair Andrew deLaski (Appliance Standards Awareness
Project), Ashley Armstrong (U.S. Department of Energy), John Caskey
(National Electrical Manufacturers Association), Jennifer Cleary
(Association of Home Appliance Manufacturers), Thomas Eckman
(Northwest Power and Conservation Council), Charles Hon (True
Manufacturing Company), Dr. David Hungerford (California Energy
Commission), Dr. Diane Jakobs (Rheem Manufacturing Company), Kelley
Kline (General Electric, Appliances), Deborah Miller (National
Association of State Energy Officials), and Scott Blake Harris
(Harris, Wiltshire & Grannis, LLP).
---------------------------------------------------------------------------
DOE carefully considered the consensus recommendations submitted by
the Working Group in the form of a single Term Sheet, and adopted by
ASRAC, related to amending the energy conservation standards for CUACs,
CUHPs, and CWAFs. Based on this consideration, DOE has determined that
these recommendations comprise a statement submitted by interested
persons that are fairly representative of relevant points of view,
consistent with 42 U.S.C. 6295(p)(4). In reaching this determination,
DOE took into consideration the fact that the Working Group, in
conjunction with ASRAC members who approved the recommendations,
consisted of representatives of manufacturers of the covered equipment
at issue, States, and efficiency advocates. Thus all of the groups
specifically identified by Congress as potentially relevant parties to
any consensus recommendation submitted by ASRAC participated in
approving the recommendations submitted to DOE. (42 U.S.C.
6295(p)(4)(A)) As delineated above, the Term Sheet was signed and
submitted by a broad cross-section of interests, including the
manufacturers of the subject equipment, trade associations representing
these manufacturers and installation contractors, environmental and
energy-efficiency advocacy organizations, and electric utility
companies. The ASRAC Committee approving the Working Group's
recommendations included at least two members representing States--one
representing the National Association of State Energy Officials (NASEO)
and one representing the State of California.\21\ DOE is not aware of a
relevant point of view that was not represented by one or more of the
participants in the Working Group or ASRAC.
---------------------------------------------------------------------------
\21\ These individuals were Deborah E. Miller (NASEO) and David
Hungerford (California Energy Commission).
---------------------------------------------------------------------------
By its plain terms, the statute contemplates that the Secretary
will exercise discetion to determine whether a given statement is
``submitted jointly by interested persons that are fairly
representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates).''
In this case, given the broad range of persons participating in the
process that led to the submission--in the Working Group and in ASRAC--
and given the breadth of perspectives expressed in that process, DOE
has determined that the statement it received meets this criterion.
Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine
whether a jointly-submitted recommendation for an energy or water
conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable. In making this determination, DOE has
conducted an analysis to evaluate whether the potential energy
conservation standards under consideration would meet these
requirements. This evaluation is similar to the comprehensive approach
that DOE typically conducts whenever it considers potential energy
conservation standards for a given type of product or equipment. DOE
applies these principles to any consensus recommendations it may
receive to satisfy its statutory obligation to ensure that any energy
conservation standard that it adopts achieves the maximum improvement
in energy efficiency that is
[[Page 2436]]
technologically feasible and economically justified and will result in
the significant conservation of energy. Upon review, the Secretary
determined that the Term Sheet's recommendations submitted in the
instant rulemaking comports with the standard-setting criteria set
forth under 42 U.S.C. 6313(a)(6)(B). Accordingly, the efficiency levels
recommended to DOE by the Working Group through ASRAC were included as
the ``recommended trial standard level (TSL)'' for CUACs/CUHPs and as
TSL 2 for CWAFs in this rule (see section V.A for description of all of
the considered TSLs). The details regarding how the consensus-
recommended TSLs comply with the standard-setting criteria are
discussed and demonstrated in the relevant sections throughout this
document.
In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have
been satisfied, the Secretary has determined that it is appropriate to
adopt the amended energy conservation standards recommended in the
Joint Statement for CUACs, CUHPs, and CWAFs through this direct final
rule.
Pursuant to the same statutory provision, DOE is also
simultaneously publishing a NOPR proposing that the identical standard
levels contained in this direct final rule be adopted. Consistent with
the statute, DOE is providing a 110-day public comment period on both
the direct final rule and the NOPR. Based on the comments received
during this period, the direct final rule will either become effective
or DOE will withdraw it if (1) one or more adverse comments is received
and (2) DOE determines that those comments, when viewed in light of the
rulemaking record related to the direct final rule, provide a
reasonable basis for withdrawal of the direct final rule under 42
U.S.C. 6313(a)(6)(B) and for DOE to continue this rulemaking under the
NOPR. (Receipt of an alternative joint recommendation may also trigger
a DOE withdrawal of the direct final rule in the same manner.) See 42
U.S.C. 6295(p)(4)(C). Typical of other rulemakings, it is the
substance, rather than the quantity, of comments that will ultimately
determine whether a direct final rule will be withdrawn. To this end,
the substance of any adverse comment(s) received will be weighed
against the anticipated benefits of the jointly-submitted
recommendations and the likelihood that further consideration of the
comment(s) would change the results of the rulemaking. DOE notes that,
to the extent an adverse comment had been previously raised and
addressed in the rulemaking proceeding, such a submission will not
typically provide a basis for withdrawal of a direct final rule.
2. Recommendations
For commercial package air conditioners and heat pumps (i.e. CUACs/
CUHPs), the Working Group recommended two sets of standards along with
two sets of compliance dates--one would apply starting on January 1,
2018, and the other would apply on January 1, 2023. The 2018 standards
for CUACs and CUHPs--excluding double-duct air conditioners and heat
pumps (see discussion below)--recommended by the Working Group are
contained in Table III-1 and Table III-2. The 2023 standards for the
same equipment are contained in Table III-3 and Table III-4.
Table III-1--Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air
Conditioners and Heat Pumps Manufactured Starting on January 1, 2018
----------------------------------------------------------------------------------------------------------------
Minimum energy
Equipment category Rated cooling Subcategory Heating type efficiency
capacity standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Split and >=65,000 Btu/h AC............... Electric Resistance IEER = 12.9.
Single Package Air- and <135,000 Btu/ Heating or No Heating. IEER = 12.7.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 12.2.
Heating or No Heating. IEER = 12.0.
ll Other Types of
Heating.
Large Commercial Split and >=135,000 Btu/h AC............... Electric Resistance IEER = 12.4.
Single Package Air- and <240,000 Btu/ Heating or No Heating. IEER = 12.2.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 11.6.
Heating or No Heating. IEER = 11.4.
All Other Types of
Heating.
Very Large Commercial Split and >=240,000 Btu/h AC............... Electric Resistance IEER = 11.6.
Single Package Air- and <760,000 Btu/ Heating or No Heating. IEER = 11.4.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 10.6.
Heating or No Heating. IEER = 10.4
All Other Types of
Heating.
----------------------------------------------------------------------------------------------------------------
Table III-2--Consensus Recommended Minimum Heating Efficiency Standards for Air-Cooled Heat Pumps Manufactured
Starting on January 1, 2018
----------------------------------------------------------------------------------------------------------------
Rated cooling Minimum energy
Equipment category capacity Heating type efficiency standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Split and Single >=65,000 Btu/h and Electric Resistance Heating COP = 3.3.
Package Heat Pumps (Air-Cooled). <135,000 Btu/h. or No Heating.
All Other Types of Heating.
Large Commercial Split and Single >=135,000 Btu/h and Resistance Heating or No COP = 3.2.
Package Heat Pumps (Air-Cooled) <240,000 Btu/h. Heating.
(Air-Cooled). All Other Types of Heating.
Very Large Commercial Split and >=240,000 Btu/h and Resistance Heating or No COP = 3.2
Single Package Heat Pumps (Air- <760,000 Btu/h. Heating.
Cooled). All Other Types of Heating.
----------------------------------------------------------------------------------------------------------------
[[Page 2437]]
Table III-3--Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air
Conditioners and Heat Pumps Manufactured Starting on January 1, 2023
----------------------------------------------------------------------------------------------------------------
Minimum energy
Equipment category Rated cooling Subcategory Heating type efficiency
capacity standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Split and >=65,000 Btu/h AC............... Electric Resistance IEER = 14.8.
Single Package Air- and <135,000 Btu/ Heating or No Heating. EER = 14.6.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 14.1.
Heating or No Heating. IEER = 13.9.
All Other Types of
Heating.
Large Commercial Split and >=135,000 Btu/h AC............... Electric Resistance IEER = 14.2.
Single Package Air- and <240,000 Btu/ Heating or No Heating. IEER = 14.0.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 13.5.
Heating or No Heating. IEER = 13.3.
All Other Types of
Heating.
Very Large Commercial Split and >=240,000 Btu/h AC............... Electric Resistance IEER = 13.2.
Single Package Air- and <760,000 Btu/ Heating or No Heating. IEER = 13.0.
Conditioners and Heat Pumps h. All Other Types of
(Air-Cooled). Heating.
HP............... Electric Resistance IEER = 12.5.
Heating or No Heating. IEER = 12.3
All Other Types of
Heating.
----------------------------------------------------------------------------------------------------------------
Table III-4--Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air
Conditioners and Heat Pumps Manufactured Starting on January 1, 2023
----------------------------------------------------------------------------------------------------------------
Rated cooling Minimum energy
Equipment category capacity Heating type efficiency standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Split and Single >=65,000 Btu/h and Electric Resistance Heating COP = 3.4.
Package Heat Pumps (Air-Cooled). <135,000 Btu/h. or No Heating.
All Other Types of Heating.
Large Commercial Split and Single >=135,000 Btu/h and Resistance Heating or No COP = 3.3.
Package Heat Pumps (Air-Cooled). <240,000 Btu/h. Heating.
All Other Types of Heating.
Very Large Commercial Split and >=240,000 Btu/h and Resistance Heating or No COP = 3.2
Single Package Heat Pumps (Air- <760,000 Btu/h. Heating.
Cooled). All Other Types of Heating.
----------------------------------------------------------------------------------------------------------------
The ASRAC Working Group also recommended that DOE separately define
double-duct air conditioners and heat pumps, as discussed further in
section IV.A.2.a, and that the current energy conservation standards
continue to apply to these equipment. See 10 CFR 431.97, Table 1.
For CWAFs, the Working Group recommended that the standards
provided in Table III-5 apply to equipment manufactured starting on
January 1, 2023.
Table III-5--Consensus Recommended Minimum Energy Conservation Standards
for Commercial Warm Air Furnaces
------------------------------------------------------------------------
Minimum energy efficiency
Equipment category standard (%)
------------------------------------------------------------------------
Gas-fired Commercial Warm Air Furnaces. Thermal efficiency * = 81.
Oil-fired Commercial Warm Air Furnaces. Thermal efficiency * = 82.
------------------------------------------------------------------------
* At the maximum rated capacity (rated maximum input).
C. Compliance Dates
When DOE amends the standards for CUACs, CUHPs, and CWAFs through
an ordinary notice-and-comment process, EPCA prescribes a set of
timelines based on the particular circumstances surrounding that
amendment. The proposed rule that eventually led to the formation of
the Working Group was the beginning of DOE's six-year evaluation of the
standards for these products. Consistent with 42 U.S.C.
6313(a)(6)(C)(iv), DOE originally proposed a compliance date of
December 2018.\22\
---------------------------------------------------------------------------
\22\ For purposes of its analysis, DOE used 2019, which would be
the first full year of compliance.
---------------------------------------------------------------------------
Commenting on the CUAC/CUHP NOPR, AHRI, Nordyne and Goodman
disagreed with DOE's interpretation of the statutory lead time
requirements for amended standards for CUACs and CUHPs. They argued
that section 6313(a)(6)(D), which specifies a lead time of four years,
should apply to any new standard that DOE promulgates. (CUAC: AHRI, No.
68 at pp. 14-17; Nordyne, No. 61 at pp. 11-15; Goodman, No. 65 at p. 3)
Lennox added that DOE's proposed 3-year time frame is not feasible and
stated that at least a 5-year development cycle would be required to
meet the proposed standard. (CUAC: Lennox, No. 60 at p. 8)
In resolving these timeline differences, the Working Group gave
careful consideration to these concerns and recommended to ASRAC, which
ASRAC then adopted, a set of jointly-submitted recommendations that
specified a compliance date of January 1, 2018, for the first tier of
standards, and January 1, 2023 for the second tier. These tiered dates
were accepted and recommended by the signatories to the Term Sheet,
which included
[[Page 2438]]
manufacturers who critiqued the initial proposed lead times presented
by DOE.
While the January 1, 2018 compliance date is earlier than the
proposed three-year lead time, DOE has the authority under section
325(p)(4) to accept recommendations for compliance dates contained in a
joint submission recommending amended standards. In DOE's view, the
direct final rule authority provision specifies the finding DOE has to
make. Specifically, Congress specified that if DOE determines that the
recommended standard is in accordance with 42 U.S.C. 6295(o) or section
342(a)(6)(B) of EPCA (i.e. 42 U.S.C. 6313(a)(6)(B)), DOE may issue a
final rule establishing those standards. See 42 U.S.C.
6295(p)(4)(A)(i). Applying the direct final rule provision in this
manner meets Congress's goal to promote consensus agreements that
reflect broad input from interested parties who can fashion agreements
that best promote the aims of the statute. In the absence of that kind
of agreement, DOE notes that the more specific prescriptions of EPCA
would ordinarily prevail. However, when DOE receives a recommendation
resulting from the appropriate process--in this case, the detailed
procedure laid out in the direct final rule provision of EPCA--that
process provides the necessary fidelity to the statute, along with
compliance with section 6295(o) (or, in this case, 42 U.S.C.
6313(a)(6)(B)), that Congress instructed DOE to apply. DOE also notes
that the January 1, 2018 standard levels are the same as the efficiency
levels already adopted in ASHRAE Standard 90.1-2013, which has an
effective date of January 1, 2016. In light of this fact, most
manufacturers are already developing equipment designs and planning the
production of equipment that will meet this efficiency level.
For CWAFs, the consensus agreement specifies a compliance date of
January 1, 2023. As with the lead time for CUACs and CUHPs, DOE has the
authority when adopting recommended standards submitted in a consensus
agreement pursuant to section 325(p)(4), to accept recommendations
regarding compliance dates. See 42 U.S.C. 6295(p)(4) and 6316(b)(1).
See also 76 FR at 37426. DOE has made the determination that the
rulemaking record in this case supports the adoption of this
recommended lead time for CWAFs.
In its analysis of the other TSLs considered for the direct final
rule, DOE used a compliance date that is 3 years after the expected
publication of the final rule establishing amended standards (see
discussion at the beginning of this section).
D. 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. See
chapter 3 of the direct final rule's Technical Support Documents
(``TSDs'') for a discussion of the list of technology options that were
identified. 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, particularly the designs DOE considered,
those it screened out, and those that are the basis for the trial
standard levels (TSLs) in this rulemaking. For further details on the
screening analysis for this rulemaking, see chapter 4 of the direct
final rule TSDs.
Additionally, DOE notes that these screening criteria do not
directly address the proprietary status of design options. DOE only
considers 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 (i.e., if there are other non-
proprietary technologies capable of achieving the same efficiency). DOE
believes the amended standards for the equipment covered in this
rulemaking would not mandate the use of any proprietary technologies,
and that all manufacturers would be able to achieve the amended levels
through the use of non-proprietary designs. Specifically, the
efficiency levels considered in the analysis are all represented by
commercially-available equipment examples. Further, the technologies
used in these equipment are available to all manufacturers.
2. Maximum Technologically Feasible Levels
DOE assessed the recommended standards by accounting for the
elements contained in 42 U.S.C. 6313(a)(6)(B). That provision requires
DOE to determine in cases where standards more stringent than those
already prescribed by ASHRAE 90.1 whether those more stringent
standards will yield a significant amount of additional conservation of
energy and will be technologically feasible and economically justified.
In determining whether the ``economically justified'' prong is met, DOE
must, after receiving views and comments on the standard, determine
whether the benefits of the standard exceed the burdens that the
standard would impose by, to the maximum extent practiable, considering
seven different factors. See generally, 42 U.S.C. 6313(a)(6)(B)(ii)(I)-
(VII). Consistent with this approach, DOE's engineering analysis helped
identify the maximum technologically feasible (``max-tech'')
improvements in energy efficiency for CUACs/CUHPs and CWAFs by using
the design parameters for the most efficient equipment available on the
market. (See chapter 5 of the direct final rule TSDs.) The max-tech
levels that DOE determined for this rulemaking are described in section
IV.C.2.b of this direct final rule.
E. Energy Savings
1. Determination of Savings
For the adopted standards, DOE projected energy savings over the
entire lifetime of equipment purchased in 2018-2048 for CUACs/CUHPs and
2023-2048 for CWAFs. DOE quantified the energy savings attributable to
each TSL as the difference in energy consumption between each standards
case and the no-new-standards case. The no-new-standards case
represents a projection of energy consumption that reflects how the
market for a type of equipment would likely evolve in the absence of
amended energy conservation standards.
DOE used its national impact analysis (``NIA'') spreadsheet model
to estimate energy savings from potential amended standards for CUACs/
CUHPs and CWAFs. The NIA spreadsheet model (described in section IV.H
of this document) calculates savings in site energy, which is the
energy directly consumed by products at the locations where they are
used. Based on the calculated site energy, DOE calculates
[[Page 2439]]
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.\23\ 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.H of this document.
For CWAFs, the energy savings are primarily in the form of natural gas,
of which the primary energy savings are considered to be equal to the
site energy savings.\24\
---------------------------------------------------------------------------
\23\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
\24\ Primary energy consumption refers to the direct use at the
source, or supply to users without transformation, of crude energy;
that is, energy that has not been subjected to any conversion or
transformation process.
---------------------------------------------------------------------------
2. Significance of Savings
To adopt more-stringent standards for the covered equipment at
issue, DOE must determine on the basis of clear and convincing evidence
that such action would result in the significant additional
conservation of energy over levels that would be achieved through the
adoption of the relevant ASHRAE standards. (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, 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.'' The energy
savings for all the TSLs considered in the rulemakings for CUACs/CUHPs
and CWAFs, including the adopted standards, are nontrivial, and,
therefore, DOE considers them ``significant'' within the meaning of
section 325 of EPCA. To this end, DOE views the considerable data and
analysis in support of the standards being adopted as satisfying the
clear and convincing threshold set out in EPCA for the adoption of
energy conservation standards more stringent that the relevant ASHRAE
levels.
F. Economic Justification
1. Specific Criteria
As noted above, EPCA provides seven factors to be evaluated in
determining whether a potentially more-stringent energy conservation
standard for the equipment addressed by this direct final rule is
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
Commenting on the CUAC/CUHP NOPR, AHRI stated that DOE is not
performing the full cost-benefit analysis that EPCA Section
6313(a)(6)(B)(ii) requires. It stated that DOE performed cost-benefit
considerations at various points of its analysis yet never fully
reconciled those analyses or the assumptions and scope of coverage
underlying them. It added that DOE's cost-benefit analyses to the
Nation, to manufacturers, and on employment take very different
geographic scopes, ignore the immediately apparent effects on
employment, and rely on unsupported analyses for effects on the general
economy. In its view, DOE must reconcile these various approaches and
their assumptions and also make available any models or inputs/outputs
it relies upon. AHRI stated that DOE should remedy these shortcomings
by performing an integrated, full cost-benefit analysis considering all
factors including the effects on all directly related domestic
industries. (CUAC: AHRI, No. 68 at pp. 26-29)
As noted above, EPCA Section 6313(a)(6)(B)(ii) lays out the factors
DOE shall, to the maximum extent practicable, consider in determining
whether the benefits of a given standard exceed the burdens. EPCA does
not mention or require the type of integrated cost-benefit analysis
that AHRI envisions. It does not state or imply that all of the
benefits and burdens need to be quantified in monetary terms. DOE's
historical practice has been to analyze each of the factors to the
maximum extent practicable. EPCA does not provide guidance as to the
relative importance that DOE should attach to the listed factors.
Therefore, in considering the factors listed in EPCA, DOE has
historically used data and analysis to determine whether standards that
satisfy other EPCA requirements are also economically justified.
DOE also notes that it laid out a process to elaborate on the
procedures, interpretations and policies that will guide the Department
in establishing new or revised energy efficiency standards for consumer
products. 61 FR 36974 (July 15, 1996). That process provides for
greatly enhanced opportunities for public input, improved analytical
approaches, and encouragement of consensus-based standards. This
enhanced approach was developed by the Department on the basis of
extensive consultations with many stakeholders.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts a manufacturer impact analysis (``MIA''),
as discussed in section IV.J. (42 U.S.C. 6313(a)(6)(B)(ii)(I)) DOE
first uses an annual cash-flow approach to determine the quantitative
impacts. This step includes both a short-term assessment--based on the
cost and capital requirements during the period between when a
regulation is issued and when entities must comply with the
regulation--and a long-term assessment over the analysis period. The
industry-wide impacts analyzed include: (1) Industry net present value
(``INPV''), which values the industry on the basis of expected future
cash flows; (2) cash flows by year; (3) changes in revenue and income;
and (4) other measures of impact, as appropriate. Second, DOE analyzes
and reports the impacts on different subgroups of manufacturers,
including impacts on small manufacturers. Third, DOE considers the
impact of standards on domestic manufacturer employment and
manufacturing capacity, as well as the potential for standards to
result in plant closures and loss of capital investment. Finally, DOE
takes into account cumulative impacts of various DOE regulations and
other regulatory requirements on manufacturers.
For individual commercial consumers, measures of economic impact
include the changes in LCC and PBP associated with new or amended
standards. These measures are discussed further in the following
section. For consumers in the aggregate, DOE also calculates the
national net present value of the economic impacts applicable to a
particular rulemaking. DOE also evaluates the LCC impacts of potential
standards on identifiable subgroups of consumers that may be affected
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered equipment in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(II))
[[Page 2440]]
DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the equipment. The LCC analysis requires a variety of inputs, such as
equipment prices, equipment energy consumption, energy prices,
maintenance and repair costs, equipment lifetime, and discount rates
appropriate for commercial consumers. To account for uncertainty and
variability in specific inputs, such as equipment lifetime and discount
rate, DOE uses a distribution of values, with probabilities attached to
each value.
The PBP is the estimated amount of time (in years) it takes
commercial consumers to recover the increased purchase cost (including
installation) of more-efficient equipment through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that commercial consumers
will purchase the covered equipment in the first year of compliance
with amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of amended standards. DOE's LCC and PBP
analysis is discussed in further detail in section IV.F.
c. Energy Savings
Although the significant conservation of energy is a separate
statutory requirement for adopting an energy conservation standard,
EPCA requires DOE, in determining the economic justification of a
standard, to consider the total projected energy savings that are
expected to result directly from the standard. (42 U.S.C.
6313(a)(6)(B)(ii)(III)) As discussed in section IV.H, DOE uses the NIA
spreadsheet to project national energy savings.
Commenting on the CUAC NOPR, AHRI stated that DOE gave energy
savings disproportionate weight in its analysis, which conflicts with
42 U.S.C. 6313(a)(6)(A)(ii)(II) and 6313(a)(6)(B)(ii)(I)-(VII). In its
view, DOE should consider seven different factors in determining
whether the benefits of a proposed standard exceed its burdens, and
stated that there is no indication in the statute or otherwise that
Congress intended this to be anything other than a roughly equal
weighting of factors where no particular factor is king over all the
others. (CUAC: AHRI, No. 68 at p. 22)
Section 6313(a)(6)(A)(ii)(II) concerns DOE's authority to adopt a
national standard more stringent than the amended ASHRAE/IES Standard
90.1 if such standard would result in the 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 concluded that the adopted standards for CUACs/
CUHPs would result in the significant additional conservation of energy
and are technologically feasible and economically justified.
Section 6313(a)(6)(B)(ii)(I)-(VII) lists the factors that DOE must
consider in determining whether a standard is economically justified
for the purposes of subparagraph (A)(ii)(II). Weighing these factors,
in DOE's view, requires a careful balancing of each factor to help
ensure the comprehensiveness of the Agency's review of any potential
standard under consideration. Accordingly, DOE has weighed these
factors in assessing the energy efficiency levels recommended by the
Working Group.
d. Lessening of Utility or Performance of Equipment
In establishing equipment classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Based on data
available to DOE, the standards adopted in this final rule would not
reduce the utility or performance of the equipment under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a proposed standard. (42 U.S.C.
6313(a)(6)(B)(ii)(V)) Specifically, it instructs DOE to consider the
impact of any lessening of competition, as determined in writing by the
Attorney General, that is likely to result from the imposition of the
standard. DOE is simultaneously publishing a NOPR containing proposed
energy conservation standards identical to those set forth in this
direct final rule and has transmitted a copy of the rule and the
accompanying TSD to the Attorney General, requesting that the U.S.
Department of Justice (``DOJ'') provide its determination on this
issue. DOE will consider DOJ's comments on the direct final rule in
determining whether to proceed with finalizing its standards. DOE will
also publish and respond to the DOJ's comments in the Federal Register
in a separate notice.
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) The energy savings from
the adopted standards for CUACs/CUHPs and CWAFs are likely to provide
improvements to the security and reliability of the Nation's energy
system. Reductions in the demand for electricity also may result in
reduced costs for maintaining the reliability of the Nation's
electricity system. DOE conducts a utility impact analysis to estimate
how standards may affect the Nation's needed power generation capacity,
as discussed in section IV.M.
The adopted standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and GHGs
associated with energy production and use. DOE conducts an emissions
analysis to estimate how potential standards may affect these
emissions, as discussed in section IV.K; the emissions impacts are
reported in section V.B.6 of this document. DOE also estimates the
economic value of emissions reductions resulting from the considered
TSLs, as discussed in section IV.L.
Commenting on the CUAC/CUHP NOPR, AHRI questioned DOE's inclusion
of environmental benefits in its consideration since none of the more
specific factors in section 6313(a)(6)(B)(ii)(I)-(VI) refer to
environmental matters. (AHRI asserted that DOE must have based its
inclusion of environmental and SCC benefits on the catch-all ``other
factors'' provision of 42 U.S.C. 6313(a)(6)(B)(ii)(VII).) AHRI stated
that DOE must clarify precisely why and how it believes that it has the
statutory authority under section 6313(a)(6)(B)(ii) to consider SCC
issues in any fashion, and, if so, under what sub-provision (i.e.,
which of the seven factors) such analysis comes. (CUAC: AHRI, No. 68 at
p. 28)
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy and water
conservation, which is one of the factors to consider under EPCA. (42
U.S.C. 6295(o)(2)(B)(i)(VI)) Given the threats posed by global climate
change to the economy, public health,
[[Page 2441]]
ecosystems, and national security,\25\ combined with the well-
recognized potential of well-designed energy conservation measures to
reduce GHG emissions, DOE believes that evaluation of the potential
benefits from slowing anthropogenic climate change must be part of the
consideration of the need for national energy conservation.
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\25\ National Climate Assessment 2014. Available at: http://nca2014.globalchange.gov/. The National Security Implications of a
Changing Climate. May 2015. The White House. Available at: https://www.whitehouse.gov/the-press-office/2015/05/20/white-house-report-national-security-implications-changing-climate.
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g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) In
developing the direct final rule, DOE has also considered the
submission of the jointly-submitted Term Sheet from the Working Group
and approved by ASRAC. In DOE's view, the Term Sheet sets forth a
statement by interested persons that are fairly representative of
relevant points of view (including representatives of manufacturers of
covered equipment, States, and efficiency advocates) and contains
recommendations with respect to energy conservation standards that are
in accordance with 42 U.S.C. 6313(a)(6)(B), as required by EPCA's
direct final rule provision. See 42 U.S.C. 6295(p)(4). DOE has
encouraged the submission of agreements such as the one developed and
submitted by the CUAC-CUHP-CWAF Working Group as a way to bring diverse
stakeholders together, to develop an independent and probative analysis
useful in DOE standard setting, and to expedite the rulemaking process.
DOE also believes that standard levels recommended in the Term Sheet
may increase the likelihood for regulatory compliance, while decreasing
the risk of litigation.
2. Rebuttable Presumption
EPCA creates a rebuttable presumption that an energy conservation
standard is economically justified if the additional cost to the
commercial consumer of an equipment that meets the standard is less
than three times the value of the first year's energy savings resulting
from the standard, as calculated under the applicable DOE test
procedure. 42 U.S.C. 6295(o)(2)(B)(iii) Although this rebuttable
presumption is not specifically mentioned in section 6316(b)(1) as
applying to CUACs/CUHPs and CWAFs, DOE nonetheless considered the
rebuttable presumption criteria as part of its analysis. DOE's LCC and
PBP analyses generate values used to calculate the effect potential
amended energy conservation standards would have on the payback period
for consumers. These analyses include, but are not limited to, the 3-
year payback period contemplated under the rebuttable-presumption test.
In addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i), and 42
U.S.C. 6313(a)(6)(B)(ii). The results of this analysis serve as the
basis for DOE's evaluation of the economic justification for a
potential standard level (thereby supporting or rebutting the results
of any preliminary determination of economic justification). The
rebuttable presumption payback calculation is discussed in section IV.F
of this document.
G. Energy Efficiency Descriptors for Commercial Unitary Air
Conditioners and Heat Pumps
The current energy conservation standards for CUACs and CUHPs are
based on the metrics EER for cooling efficiency and COP for CUHP
heating efficiency. See 10 CFR 431.97(b). In this direct final rule,
DOE is adopting energy conservation standards based on IEER for cooling
efficiency and is continuing to use COP for denoting CUHP heating
efficiency.
1. Cooling Efficiency Metric
In the CUAC/CUHP RFI, DOE noted that it was considering whether to
replace the existing cooling efficiency descriptor, EER, with a new
energy-efficiency descriptor, IEER. 78 FR at 7299. Unlike the EER
metric, which only uses the efficiency of the equipment operating at
full-load in high-ambient-temperature conditions (i.e., 95 degrees
Fahrenheit ([deg]F)), the IEER metric factors in the efficiency of
equipment operating at part-loads of 75 percent, 50 percent, and 25
percent of capacity at reduced ambient temperature consistent with
part-load operation as well as the efficiency at full-load. This is
accomplished by weighting the full- and part-load efficiencies with a
representative average amount of time operating at each loading point.
The IEER metric incorporates part-load efficiencies measured with
outside temperatures appropriate for the load levels, i.e. at lower
temperatures for lower load levels. As part of a final rule published
on May 16, 2012, DOE amended the test procedure for this equipment to
incorporate by reference AHRI Standard 340/360--2007, ``Performance
Rating of Commercial and Industrial Unitary Air-Conditioning and Heat
Pump Equipment'' (``AHRI Standard 340/360-2007''). 77 FR 28928. DOE
notes that AHRI Standard 340/360-2007 already includes methods and
procedures for testing and rating equipment with the IEER metric.
ASHRAE, through its Standard 90.1, includes requirements based on the
part-load performance metric, IEER. These IEER requirements were first
established in Addenda to the 2008 Supplement to Standard 90.1-2007,
and were required for compliance with ASHRAE Standard 90.1 on January
1, 2010.\26\
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\26\ ASHRAE. ASHRAE Addenda. 2008 Supplement. http://www.ashrae.org/File%20Library/docLib/Public/20090317_90_1_2007_supplement.pdf.
---------------------------------------------------------------------------
EPCA requires that test procedures be reasonably designed to
produce test results that measure the energy efficiency of covered
equipment during a representative average use cycle or period of use.
(42 U.S.C. 6314(a)(2)) As discussed above, the IEER metric weights the
efficiency of operating at different part-loads and full-load based on
usage patterns, which collectively provide a more representative
measure of annual energy use than the EER metric. A manufacturer that
was involved in the development of the IEER metric indicated that the
usage pattern weights for the IEER metric were developed by analyzing
equipment usage patterns of several buildings across the 17 ASHRAE
Standard 90.1-2010 (appendix B) climate zones. (Docket ID: EERE-2013-
BT-STD-0007-0018, Carrier, at p. 1) These usage patterns and climate
zones were based on a comprehensive analysis performed by industry in
assessing the manner in which CUAC and CUHP equipment operate in the
field, both in terms of actual usage and the climatic conditions in
which they are used. The weighting factors accounted for the hours of
operation where mechanical cooling was active--i.e., the associated
analysis assumed use of economizing (use of cool outdoor air for
cooling) for appropriate hours in climate zones for which equipment
would be installed with this feature. Id. As a result, DOE stated in
the CUAC/CUHP NOPR that the IEER metric, as a whole, provides a more
accurate representation of the annual energy use for this equipment
than the EER metric, which only considers full-load energy use. For
these reasons, DOE proposed to amend its
[[Page 2442]]
energy conservation standards for CUACs/CUHPs to be based on the IEER
metric. 79 FR at 58959.
AHRI, Nordyne, Rheem, Trane, the Joint Efficiency Advocates, and
Southern Company all generally supported using IEER as the proposed
metric. (CUAC: AHRI, No. 68 at p. 42; Nordyne, No. 61 at p. 35; Rheem,
No. 70 at p. 2; Trane, No. 63 at p. 6; Joint Efficiency Advocates, No.
69 at pp. 1-2; Southern Company, Public Meeting Transcript, No. 104 at
p. 25) The Joint Efficiency Advocates supported DOE's proposal to
replace EER with IEER. In their view, DOE could retain the EER
standards while adding IEER. They added that if DOE decided to use a
single metric, IEER would better reflect annual energy consumption than
EER since this equipment rarely operates at full-load. (CUAC: Joint
Efficiency Advocates, No. 69 at pp. 1-2)
While supporting the use of IEER, AHRI, Nordyne, and Lennox
recognized that EER will continue to be an important metric for
utilities when managing peak load electricity usage. (CUAC: AHRI, No.
68 at p. 42; Nordyne, No. 61 at p. 35; Lennox, No. 60 at p. 14) The
California IOUs recommended that DOE establish standards using both EER
and IEER metrics to prevent poor equipment performance at high
temperature full-load conditions. Given the low weighting (2 percent)
of the full-load condition for the IEER metric, there is an incentive
for manufacturers to optimize equipment at the part-load conditions
with ambient temperatures between 65[emsp14][deg]F and
82[emsp14][deg]F. The California IOUs indicated that moving to an IEER-
only metric could potentially mean that a new standard could result in
equipment that is designed with full-load EER values lower than the
current standards. (CUAC: California IOUs, No. 67 at p. 2; California
IOUs, ASRAC Public Meeting, No. 102 at p. 99) The California IOUs
commented that, in the absence of dual metrics using both EER and IEER,
they supported standards based on EER, or use of IEER accompanied by
required reporting of each of the IEER test points, including full-load
EER. (CUAC: California IOUs, No. 67 at pp. 2, 7-8) The Joint Efficiency
Advocates similarly supported the reporting of each IEER test point.
(CUAC: Joint Efficiency Advocates, No. 69 at p. 8)
However, the California IOUs and other members of the ASRAC Working
Group more recently agreed as Term Sheet signatories to recommend that
DOE adopt standards for CUACs and CUHPs based on IEER for cooling
efficiency. (CUAC: ASRAC Term Sheet, No. 93 at pp. 2-4) DOE also notes
that ASHRAE Standard 90.1 includes requirements and reporting for both
EER and IEER. As a result, although DOE is setting energy conservation
standards for CUACs and CUHPs based on the IEER metric, EER ratings of
equipment would still be available through the AHRI certification
database. DOE notes that AHRI and manufacturers agreed to continue to
require verification and reporting of EER for equipment through AHRI's
certification program. AHRI also agreed to submit a letter to the
docket for this rulemaking committing to continuing to require
verification and reporting of EER for it's certification program.
(CUAC: ASRAC Public Meeting, No. 101 at pp. 9, 55; ASRAC Public
Meeting, No. 103 at pp. 113-116) Thus, utilities, and others, would
still be able to consider full-load efficiency in their energy
efficiency programs. For these reasons, and for the reasons stated
previously that the IEER metric provides a more accurate representation
of the annual energy use for this equipment, DOE is adopting standards
for small, large, and very large, CUACs and CUHPs cooling efficiency
based on the IEER metric.
DOE notes that a change in metrics (i.e., from EER to IEER)
necessitates an initial DOE determination that the new requirement
would not result in backsliding when compared to the current standards.
See 42 U.S.C. 6313(a)(6)(B)(iii)(I). As discussed in section IV.A, DOE
conducted energy modeling by selecting actual models available on the
market that comply with the current DOE energy conservation standards
for these equipment based on EER, to evaluate each IEER efficiency
level (by analyzing the efficiency at each loading condition, including
full-load EER). Based on this analysis, staged-air volume (``SAV'') and
variable-air volume (``VAV'') equipment--two types of CUAC/CUHP
equipment that include design features focused on improved part-load
performance as opposed to full-load EER performance \27\--that already
meet the energy conservation standard levels adopted in this direct
final rule had EER values higher than the current standard levels for
this equipment--i.e., these equipment were more efficient than what the
current EER-based standards require. Even with the design changes that
are focused on improved part-load performance (as with SAV and VAV
units), the equipment exceeded the current EER standard levels, which
suggests that the risk of backsliding is low.
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\27\ SAV units typically use a multiple-speed indoor fan motor,
which is achieved by incorporating a variable frequency drive
(``VFD'') to adjust the motor speed to provide two stages of indoor
air flow to match staged compressor operation and thus provide
improved part-load performance. For the first stage of operation,
the indoor fan motor is controlled to provide two-thirds of the
total air flow established for the unit. For the second stage, the
VFD adjusts the indoor fan motor to provide the total air flow
established for the unit (i.e., 100-percent air flow). VAV units are
capable of providing more accurate control of supply air temperature
by varying cooling capacity and air flow rates. VAV units are
typically equipped with a VFD to control the indoor fan speed based
on supply air pressure and operate at multiple stages of air flow
rates to match the variable cooling capacity (either by multiple
compressor staging or variable-speed compressors). In contrast,
constant air volume (CAV) CUACs and CUHPs typically use a single
speed indoor fan motor and operate by controlling cooling capacity
based on temperature/humidity in the conditioned space and operate
at a fixed indoor air flow rate supplying variable temperature air.
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As discussed in section IV.A.2.a, DOE is establishing separate
equipment classes for double-duct CUACs and CUHPs and is maintaining
the current energy conservation standards for this equipment. As a
result, DOE is maintaining the existing EER metric for the double-duct
CUAC and CUHP equipment classes.
2. Heating Efficiency Metric
The current energy conservation standards for small, large, and
very large air-cooled CUHPs heating efficiency are based on the COP
metric.\28\ 10 CFR 431.97(b) For the CUAC/CUHP NOPR, DOE proposed
standards for heating efficiency based on the COP metric. See 79 FR at
58960.
---------------------------------------------------------------------------
\28\ COP is defined as the ratio of the produced heating effect
to its net work input.
---------------------------------------------------------------------------
AHRI, Nordyne, Goodman and Rheem supported the continued use of COP
as the heating efficiency metric for CUHPs. (CUAC: AHRI, No. 68 at p.
42; Nordyne, No. 61 at p. 35; Goodman, No. 65 at p. 12; Rheem, No. 70
at p. 2) In addition, members of the ASRAC Working Group agreed as
signatories to the Term Sheet to standards for air-cooled CUHPs based
on COP for heating efficiency. (CUAC: ASRAC Term Sheet, No. 93 at pp.
2-4) As discussed in section IV.A, DOE is adopting standards for air-
cooled CUHPs in this direct final rule based on COP for heating
efficiency.
H. Other Issues
1. Economic Justification of the Proposed Standards
a. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
In response to the CUAC/CUHP NOPR, AHRI commented that DOE did not
explain how it concluded that the proposed rulemaking would result in
the significant additional conservation
[[Page 2443]]
of energy and is technologically feasible and economically justified by
clear and convincing evidence, as required by 42 U.S.C.
6313(a)(6)(A)(ii)(II). (CUAC: AHRI, No. 68 at pp. 12-13) Lennox and
Nordyne made similar comments. (CUAC: Lennox, No. 60 at pp. 4-5;
Nordyne, No. 61 at pp. 6-8) AHRI stated that DOE's analysis fell short
of this elevated requirement of proof. AHRI added that instead of
starting with the max-tech standard level, DOE was obliged by Section
6313(a)(6)(A)(ii) to first consider the amended ASHRAE standard for
adoption, and consider a higher level only based on clear and
convincing evidence. (CUAC: AHRI, No. 68 at p. 13)
Trane stated that DOE's CUAC/CUHP NOPR analysis grossly
underestimated the costs at all the TSL levels and, therefore,
overstated the benefits to the nation. (CUAC: Trane, No. 63 at p. 8)
AHRI also commented that the proposed minimum efficiency level
(EL3) represents a significant increase from the ASHRAE 90.1-2013
levels that will become effective in 2016. It stated that in order to
achieve EL 3 levels it will be necessary to redesign approximately 80
percent of all units that are commercially-available today, and as a
result, many classes of products will be eliminated, causing a
significant contraction of the market. AHRI stated that the required
design modifications will come at a significant cost to the consumer,
and consumers who are unable to afford more efficient units will likely
continue to repair and not replace units in service. It added that the
situation could potentially alter the competitive landscape as other
technologies are favored as alternatives (e.g., water-cooled,
evaporatively-cooled, and variable refrigerant flow mult-split air
conditioners and heat pumps). (CUAC: AHRI, Public Meeting Transcript,
No. 104 at pp. 15-16) Lennox also stated that the proposed standards
would require over 90 percent of its current products to be redesigned.
(CUAC: Lennox, No. 60 at p. 8)
b. Commercial Warm Air Furnaces
Trane stated that the LCC savings for gas-fired CWAFs at the
proposed standard are hardly measurable, and any slight change in the
increase in product cost, installation or maintenance costs, and energy
prices can change these savings to an increase in LCC. Similar results
would occur in the NPV calculation where a positive NPV could easily
become an increase in costs to the nation. (CWAF: Trane, No. 27 at p.
7)
c. Response
DOE notes that while it is not adopting the proposed standards from
the CUAC/CUHP and CWAF NOPRs, these comments, along with the intensive
feedback received during the Working Group discussions contributed to
the modified approach and revised standards recommended by the ASRAC
Working Group that DOE is presenting in this direct final rule. As
discussed in section V.C, DOE has determined that the recommendations
are in accordance with the provisions of 42 U.S.C. 6313(a)(6)(B), as
required by 42 U.S.C. 6295(p)(4) and 6316(b)(1). The evidence
supporting this determination is clearly described in detail in the
direct final rule TSDs and the accompanying spreadsheets. The evidence
that the adopted standards would result in the significant additional
conservation of energy and are technologically feasible is convincing,
as the projected energy savings exceed the threshold for significance
by a wide margin (see section III.E.2), and their technological
feasibility, based on DOE's examination, is well-established (see
section III.D). The evidence that the adopted standards are
economically justified is also convincing. In particular, the economic
impact of the standards on the consumers of CUACs/CUHPs and CWAFs is
positive by a wide margin, as discussed in section V.C.
2. ASHRAE 90.1 Process
Commenting on the CUAC/CUHP NOPR, a number of parties stated that
DOE should rely on the ASHRAE process in setting amended commercial
equipment efficiency standards.
ASHRAE urged DOE to rely on the efficiencies established in ASHRAE
Standard 90.1-2013 for the equipment listed in this rulemaking. It
noted that: (1) ASHRAE 90.1-2013 underwent the fully open ANSI/ASHRAE
consensus process with buy-in and consensus from manufacturers, energy
advocates, representatives from DOE, and other materially affected and
interested parties; (2) the efficiency levels were established in a
cost-effective manner using the ASHRAE ``scalar ratio'' economic
analysis methodology; and (3) many interested parties, including DOE,
invested a significant amount of time and energy in establishing the
efficiency levels currently found in ASHRAE 90.1-2013 with ample
opportunities to provide input. ASHRAE recommended that DOE no longer
pursue the proposed rulemaking, and approve the ASHRAE 90.1-2013
efficiency levels for this equipment. (CUAC: ASHRAE, No. 59 at pp. 1-
4). AHRI, Goodman and Lennox made a similar comment. (CUAC: AHRI, No.
68 at pp. 2, 10-11; Goodman, No. 65 at pp. 2-3; Lennox, No. 60 at pp.
8-9) A number of other parties made similar comments. (CUAC: Huntley,
No. 62 at p. 1; Viridis, No. 56 at p. 1; Merryman-Farr, No. 49 at p. 1;
KJWW, No. 46 at p. 1; Smith-Goth, No. 45 at p. 1; A2H, No. 44 at p. 1)
Notwithstanding DOE's participation in the development of ASHRAE
Standard 90.1-2013, which did not impact the EER standards for which
DOE already incorporated into its regulations, amendments to EPCA
established by AEMTCA required DOE to initiate the current rulemaking,
which DOE began in advance of the ASHRAE 90.1-2013 amendments (see
section II.A). EPCA, as amended, also directs DOE to prescribe
standards that are designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified, and would result in the significant additional conservation
of energy. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) It also provides the
factors that DOE has considered to select and adopt standards for which
the benefits exceed the burdens. (42 U.S.C. 6313(a)(6)(B)(ii)) In DOE's
view, the standards being adopted in this direct final rule satisfy
these elements. DOE further notes that AHRI, Goodman and Lennox are
parties to the recommendations that form the basis for this direct
final rule, pursuant to 42 U.S.C. 6295(p)(4) and 6316(b)(1), indicating
that the direct final rule's standard levels and supporting analyses
resolved their concerns related to DOE's initial NOPR.
3. Other
Referring to section VI.A of the CUAC/CUHP NOPR, AHRI stated that
DOE did not present evidence to support two of the market failures that
it identified pursuant to section 1(b)(1) of Executive Order 12866.\29\
(CUAC: AHRI, No. 68 at pp. 24-25) AHRI stated that DOE must demonstrate
that such market failures actually exist in the real world and that
once quantified, DOE's assessment of costs and benefits for its
[[Page 2444]]
rules in this area align with such an important external validity check
on its analysis.
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\29\ Specifically, in AHRI's view, DOE did not establish that
the following market failures exist: (1) There is a lack of customer
information in the commercial space conditioning market, and the
high costs of gathering and analyzing relevant information leads
some customers to miss opportunities to make cost-effective
investments in energy efficiency; and (2) In some cases, the
benefits of more efficient equipment are not relized due to
misaligned incentives between purchasers and users. (E.g. where an
equipment purchase decision is made by a building contractor or
building owner who does not pay the energy costs.) See CUAC; AHRI,
No. 68 at 24.
---------------------------------------------------------------------------
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 direct final rule,
DOE identified two problems that would generally be considered ``market
barriers'' (numbers 1 and 2 in section VI.A, which are related to
certain features concerning consumer decision-making), and one problem
that most economists would consider a ``market failure'' (number 3,
which concerns environmental externalities).\30\ E.O. 12866 does not
require any quantification of the problems, which in any case would be
extremely difficult. Such quantification would unlikely bear any
relationship to the costs and benefits estimated for energy
conservation standards. E.O. 12866 does not provide any specific
guidance regarding how agencies should assess the significance of the
identified problems. However, DOE's extensive activities in promoting
energy conservation over several decades have demonstrated that the
problems of (1) lack of consumer information and/or information
processing capability about energy efficiency opportunities, and (2)
and asymmetric information and/or high transactions costs are
significant enough to warrant policy actions designed to help overcome
them.
---------------------------------------------------------------------------
\30\ Note that since the publication of the CUAC/CUHP NOPR, DOE
has refined the description of the problems identified pursuant to
E.O. 12866. See section VI.A.
---------------------------------------------------------------------------
Miller indicated that neither of the potential market failures
cited by DOE (externalities related to GHG emissions and asymmetric
information (and related misaligned incentives) regarding high-
efficiency commercial appliances is solved by its proposed energy
efficiency standards, leaving the proposal economically unjustifiable.
Miller further stated that DOE does not explain why sophisticated,
profit-motivated purchasers of CUACs and CUHPs would suffer from either
informational deficits or cognitive biases that would cause them to
purchase products with high lifetime costs without demanding higher-
price, higher-efficiency products. Miller added that this asymmetric
information, if it exists, could be remedied by improved labeling or
other types of consumer education campaigns rather than banning
products from the marketplace. (Miller, No. 39 at p. 13)
The proposed standards, as well as the adopted standards contained
in this direct final rule, are intended to address the above-cited
problems, but DOE's action is primarily responsive to the statutes that
govern the amendment of energy efficiency standards (see section II.A).
Neither the relevant statutes nor the relevant Executive Order
(Executive Order 12866, ``Regulatory Planning and Review'') \31\ make
any mention of solving the problems that DOE has identified.
Incorporating external costs into energy prices is outside the scope of
any existing DOE authority. DOE agrees that improved labeling or other
types of consumer education campaigns could help to ameliorate
information problems, but DOE is still required to follow the statutory
obligations concerning amendment of energy efficiency standards.
---------------------------------------------------------------------------
\31\ 58 FR 51735 (Oct. 4, 1993).
---------------------------------------------------------------------------
Miller stated that DOE expects only 10 percent of the externality
benefits of carbon reductions to accrue to Americans, so the costs to
American citizens outweigh the social benefits of the standard by
almost 3 to 1, calling into question whether the proposal is
economically justified. (Miller, No. 39 at p. 13)
DOE notes that the domestic SCC values were estimated by the
interagency Working Group as a range from 7 percent to 23 percent of
the global values. Using the central SCC value, the domestic
CO2 reduction monetized value from the proposed standards
amounts to $2.2 to $7.1 billion. The incremental costs range from $4.1
to $8.8 billion for 7-percent and 3-percent discount rates,
respectively, but the operating cost savings are far larger, such that
the NPV of consumer benefit ranges from $16.5 billion to $50.8 billion
for 7-percent and 3-percent discount rates, respectively.
Miller stated that DOE's proposal does not maintain flexibility and
freedom of choice for purchasers of CUAC and CUHP equipment. (Miller,
No. 39 at p. 13) In contrast to the proposed standards, which DOE is
not adopting, the standards adopted for CUACs and CUHPs allow a much
higher share of currently-produced models to remain on the market. The
models that would be allowed under the standards cover a wide range of
efficiencies and other attributes, thereby maintaining considerable
choice for purchasers of CUACs and CUHPs.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking. Separate subsections address each component of DOE's
analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in support of this direct final rule. The first
tool is a spreadsheet that calculates the LCC savings and PBP of
potential amended or new energy conservation standards. The national
impacts analysis uses a second spreadsheet set that provides shipments
forecasts and calculates national energy savings and net present value
of total consumer costs and savings expected to result 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 spreadsheet tools are available
on the DOE Web site for the rulemaking for CUACs/CUHPs: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=59; and for CWAFs: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/70. Additionally,
DOE used output from the latest version of EIA's Annual Energy Outlook
(AEO), a widely known energy forecast for the United States, for the
emissions and utility impact analyses.
A. Market and Technology Assessment
1. General
For the market and technology assessment, DOE developed information
that provided an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, market characteristics, and the technologies used in the
equipment. This activity included both quantitative and qualitative
assessments, based primarily on publicly-available information. The
subjects addressed in the market and technology assessment for this
rulemaking include scope of coverage, equipment classes, types of
equipment sold and offered for sale, manufacturers, and technology
options that could improve the energy efficiency of the equipment under
examination. The key findings of DOE's market and technology assessment
are summarized below. For additional detail, see chapter 3 of the CUAC/
CUHP and CWAF direct final rule TSDs.
[[Page 2445]]
2. Scope of Coverage and Equipment Classes
a. Commercial Unitary Air Conditioners and Heat Pumps
The energy conservation standards adopted in this direct final rule
cover small, large, and very large, CUACs and CUHPs under section
342(a) of EPCA. (42 U.S.C. 6313(a)) This category of equipment has a
rated capacity between 65,000 Btu/h and 760,000 Btu/h. It is designed
to heat and cool commercial buildings. In the case of single-package
units, which house all of the components (i.e., compressor, condenser
and evaporator coils and fans, and associated operating and control
devices) within a single cabinet, these units are typically located on
the building's rooftop. In the case of split-system units, the
compressor and condenser coil and fan (or in the case of CUHPs, the
outdoor coil and fan) are housed in a cabinet typically located on the
outside of the building, and the evaporator coil and fan (or in the
case of CUHPs, the indoor coil and fan) are housed in a cabinet
typically located inside the building.
When evaluating and establishing energy conservation standards, DOE
divides covered equipment into equipment classes by the type of energy
used, capacity, or other performance-related features that would
justify a different standard. In determining whether a performance-
related feature would justify a different standard, DOE considers such
factors as the utility to the consumer of the feature and other factors
DOE determines are appropriate. All of the different air conditioning
and heat pump equipment addressed by this rule are air-cooled unitary
air-conditioners and heat pumps.
The current equipment classes that EPAct 2005 established for
small, large, and very large CUACs and CUHPs divide this equipment into
twelve classes characterized by rated cooling capacity, equipment type
(air conditioner versus heat pump), and heating type. Table IV-1 shows
the current equipment class structure.
Table IV-1--Current Air-Cooled CUAC and CUHP Equipment Classes
----------------------------------------------------------------------------------------------------------------
Equipment class Equipment type Cooling capacity Subcategory Heating type
----------------------------------------------------------------------------------------------------------------
1..................... Small Commercial Packaged >=65,000 Btu/h and AC.............. Electric Resistance
Air-Conditioning and <135,000 Btu/h. Heating or No
Heating Equipment (Air- Heating.
Cooled).
2..................... .......................... .................... ................ All Other Types of
Heating.
3..................... .......................... .................... HP.............. Electric Resistance
Heating or No
Heating.
4..................... .......................... .................... ................ All Other Types of
Heating.
5..................... Large Commercial Packaged >=135,000 Btu/h and AC.............. Electric Resistance
Air-Conditioning and <240,000 Btu/h. Heating or No
Heating Equipment (Air- Heating.
Cooled).
6..................... .......................... .................... ................ All Other Types of
Heating.
7..................... .......................... .................... HP.............. Electric Resistance
Heating or No
Heating.
8..................... .......................... .................... ................ All Other Types of
Heating.
9..................... Very Large Commercial >=240,000 Btu/h and AC.............. Electric Resistance
Packaged Air-Conditioning <760,000 Btu/h. Heating or No
and Heating Equipment Heating.
(Air-Cooled).
10.................... .......................... .................... ................ All Other Types of
Heating.
11.................... .......................... .................... HP.............. Electric Resistance
Heating or No
Heating.
12.................... .......................... .................... ................ All Other Types of
Heating.
----------------------------------------------------------------------------------------------------------------
AC = Air conditioner; HP = Heat pump.
In the CUAC/CUHP NOPR, DOE proposed energy conservation standards
based on this existing equipment class structure, which is also
provided in Table 1 of 10 CFR 431.97. 79 FR 58964.
United CoolAir Corporation (``UCA'') submitted a request that DOE
exempt a specific type of air conditioning equipment (``double-duct
air-cooled air conditioners''). See UCA, EERE-2013-BT-STD-0007-0020.
These units are designed for indoor installation in constrained spaces
using ducting to an outside wall for the supply and discharge of
condenser air to and from the condensing unit. The sizing of these
units is constrained both by the space available in the installation
location and the available openings in the building through which the
unit's sections must be moved to reach the final installation location.
These size constraints, coupled with the higher power required by the
condenser fan to provide sufficient pressure to move the condenser air
through the supply and return ducts, affect the energy efficiency of
these types of systems. More conventional designs for which condensers
are located outdoors can more easily draw in condenser air through the
condenser (or outdoor coil for heat pumps) and can move the air using
direct-drive propeller fans. These design differences allow a
manufacturer to maximize condenser surface area, reduce the pressure
rise requirement of the fan, significantly reduce condenser (outdoor)
fan power and improve equipment efficiency.
Currently, double-duct air conditioners are tested and rated under
the same test conditions as single-duct air conditioners, without any
ducting connected to, or an external static pressure applied on, the
condenser side. UCA has asserted that the double-duct design provides
customer utility in that it allows interior field installations in
existing buildings in circumstances where space constraints make an
outdoor unit impractical to use. Id. DOE noted in the CUAC/CUHP NOPR
that the design features associated with the described double-duct
designs may affect energy use while providing justifiable customer
utility. 79 FR at 58964.
In response to the CUAC/CUHP NOPR, a number of heating, ventilating
and air conditioning (``HVAC'') equipment distributors--MWSK Equipment
Sales Inc. (``MWSK''), H & H Sales Associates, Inc. (``H&H''), Gardiner
Trane, Heat Transfer Solutions (``HTS''), HVAC Equipment Sales, Inc.,
Havtech, and Slade Ross, Inc.--all supported establishing a new
equipment class for the indoor horizontal double-duct units. These
commenters explained that UCA's double-duct units are unique in that
they are modular and are applied completely inside buildings where
rooftop air conditioners and split systems are not practical or
possible. (CUAC: MSWK, No. 72 at pp. 1-2; H&H,
[[Page 2446]]
No. 73 at p. 1; Gardiner Trane, No. 74 at pp. 1-2; HTS, No. 75 at p. 1;
HVAC Equipment Sales, Inc., No. 76 at p. 1; Havtech, No. 77 at p. 1;
Slade Ross, Inc., No. 78 at p. 1) MWSK added that the substantial
increase in cost (unit and installation) imposed by the proposed
standards that will not be able to be recouped with savings in energy
expenditures will cause these indoor air conditioners to cease to exist
and customers will continue to repair units rather than replace them.
Alternative systems are limited and costly for customers to have the
application re-engineered. (CUAC: MSWK, No. 72 at pp. 1-2)
Goodman commented that if DOE creates a separate equipment class
for double-duct units, the definitions should be very clearly specified
to prevent gaming. Goodman stated that the definition should include
(a) physical properties of the equipment (fan type and orientation,
maximum product height/width/depth, duct connection sizes, or other
such parameters), (b) application properties (minimum external static
pressure for condenser airflow, refrigerant line set lengths, maximum
capacities, etc.), (c) literature requirements (statements within
installation and operation manuals and specification sheets), and (d)
certification requirements. (CUAC: Goodman, No. 65 at pp. 12-13)
Members of the ASRAC Working Group agreed that a separate equipment
class should be established for double-duct CUACs and CUHPs. The ASRAC
Term Sheet recommended the following approach with respect to these
equipment:
The existing EER standard levels provided in Table 1 of 10
CFR 431.97 shall continue to apply for double-duct CUACs and CUHPs.
Double-duct air conditioner or heat pump would be defined
as meaning air-cooled commercial package air conditioning and heating
equipment that satisfies the following elements:
[cir] It 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;
[cir] It 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, ``Heating and
Cooling Equipment,'' or equivalent requirements for outdoor use;
[cir] (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 components that do
not exceed maximum depth of 35 inches; and
[cir] It has a rated cooling capacity greater than or equal to
65,000 Btu/h and up to 300,000 Btu/h. (CUAC: ASRAC Term Sheet, No. 93
at pp. 4-5)
Based on DOE's review of double-duct CUACs and CUHPs available on
the market, DOE agrees with the ASRAC Term Sheet recommendations.
First, DOE agrees that these units have features that justify
establishing separate equipment classes for them. Double-duct units, as
evidenced by several commenters, offer a unique utility that may
otherwise become unavailable if these units were subjected to the more
rigorous standards required by this direct final rule for other CUAC
and CUHP equipment. DOE notes that double-duct units, which are
installed within the building envelope and use ductwork to transfer
outdoor air to and from the outdoor unit, would have added challenges
in meeting more stringent energy conservation standards due to space
constraints and added condenser fan power.
Second, DOE agrees that the definition for these units recommended
in the ASRAC Term Sheet, with minor modifications, appropriately
distinguish them from other classes. Double-duct units must have
limited width or height to be able to fit through doorways and to fit
in above-ceiling space (for horizontal units) or in closets (for
vertical units) for interior installation. DOE's research showed that
vertical and horizontal double-duct units had a width or height of 34
inches or less, respectively. As a result, DOE agrees that specifying a
maximum width or height of 35 inches to include only units that can be
installed indoors, as presented in the ASRAC Term Sheet
recommendations, is appropriate. To this end, DOE is adopting this
approach by clarifying the provision. Specifically, since a complete
unit cannot be smaller than its largest component, placing the 35-inch
restriction on the finished equipment itself addresses the dimensional
restrictions intended by the Working Group while simplifying the text
of the definition itself. DOE also notes that because these units are
designed for indoor installation, as noted by UCA, DOE agrees that
these units would require ducting of outdoor air from the building
exterior and that units intended for outdoor use should not be
considered in the same equipment class. As a result, DOE agrees with
the ASRAC Term Sheet recommendations that double-duct units and/or all
of their components should be non-weatherized and not marked as being
in compliance with UL Standard 1995 or equivalent requirements for
outdoor use. DOE also notes that single package vertical units
(``SPVUs'') are already covered under separate standards (10 CFR
431.97(d)). As a result, to ensure that SPVUs are not covered under the
definition of double-duct CUACs and CUHPs, DOE agrees with the ASRAC
Term Sheet recommendations that for vertical double-duct units, only
those with split configurations (that may be installed with the two
components attached together) should be included as part of this
separate equipment class. For these reasons, DOE is adopting the
definition proposed in the ASRAC Term Sheet for double-duct CUACs and
CUHPs and is maintaining the existing EER standards contained in Table
1 of 10 CFR 431.97 for this equipment.
b. Commercial Warm Air Furnaces
The energy conservation standards adopted in this direct final rule
cover CWAFs, as defined by EPCA and DOE. EPCA defines a ``warm air
furnace'' as ``a self-contained oil- or gas-fired furnace designed to
supply heated air through ducts to spaces that require it and includes
combination warm air furnace/electric air conditioning units but does
not include unit heaters and duct furnaces.'' (42 U.S.C. 6311(11)(A))
DOE defines the term ``commercial warm air furnace'' as meaning ``a
warm air furnace that is industrial equipment, and that has a capacity
(rated maximum input) of 225,000 Btu per hour or more.'' 10 CFR 431.72.
Accordingly, this rulemaking covers equipment in these categories
having a rated capacity of 225,000 Btu/h or higher and that are
designed to supply heated air in commercial and industrial buildings
via ducts (excluding unit heaters and duct furnaces).\32\
---------------------------------------------------------------------------
\32\ At its most basic level, a CWAF operates by using a burner
to combust fuel (e.g. natural gas or oil) and then pass the products
of combustion through a heat exchanger, which is used to warm the
indoor air stream by transferring heat from the combustion products.
This warm indoor air is delivered via ducts to e.g.the conditioned
spaces within the building's interior.
---------------------------------------------------------------------------
As discussed above for CUACs/CUHPs, DOE divides covered equipment
into equipment classes based on the type of energy used, capacity, or
other performance-related features that would justify having a higher
or lower standard from that which applies to other equipment classes.
The equipment classes for CWAFs were defined in the EPACT 1992
[[Page 2447]]
amendments to EPCA, and are divided into two classes based on fuel type
(i.e., one for gas-fired units, and one for oil-fired units). Table IV-
2 shows the equipment class structure for CWAFs and the current federal
minimum energy efficiency standards.
Table IV-2--CWAFs Equipment Classes
------------------------------------------------------------------------
Federal
Heating minimum
Fuel type capacity (Btu/ thermal
h) efficiency
(%)
------------------------------------------------------------------------
Gas-fired............................... >=225,000 80
Oil-fired............................... >=225,000 81
------------------------------------------------------------------------
In response to the CWAFs NOPR, Nordyne commented that the CWAF
definition should include gas-fired ``makeup'' air furnaces.\33\
Nordyne stated that gas-fired makeup air furnaces follow the same test
procedure to determine energy efficiency as do gas-fired CWAFs, and
noted that the heat exchangers, air burners, and other components of
gas-fired makeup air furnaces are similar to those in CWAFs. Further,
Nordyne asserted that there is little difference in functionality
between these equipment, and there is no sense in performing extra
analysis to consider separate equipment classes/standards for gas-fired
makeup air furnaces and gas-fired CWAFs (CWAF: Nordyne, NOPR Public
Meeting Transcript, No. 17 at p. 35-36). DOE reiterates that the
definition of a CWAF requires that (among other criteria) a unit be
able to ``supply heated air through ducts to spaces that require it''
(42 U.S.C. 6311(11)(A)). Therefore, if a makeup air furnace is capable
of operating in this manner, and if it meets all other criteria to be
classified as a CWAF, then it would be considered as such under DOE's
regulations.
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\33\ ``Makeup'' air furnaces may be used to precondition fresh
outdoor air for distribution to other air handling units, which then
provide further conditioning and distribute the air via ducts to the
conditioned space. Alternatively, makeup air furnaces may also
condition fresh outdoor air and directly distribute it via ducts to
the conditioned space.
---------------------------------------------------------------------------
3. Technology Options
As part of the market and technology assessment, DOE uses
information about existing and past technology options and prototype
designs to help identify technologies that manufacturers could use to
improve CUAC/CUHP and CWAF energy efficiency. Initially, these
technologies encompass all those that DOE believes are technologically
feasible. Chapter 3 of the CUAC/CUHP and CWAF direct final rule TSDs
includes the detailed list and descriptions of all technology options
identified for this equipment.
a. Commercial Unitary Air Conditioners and Heat Pumps
For the CUAC/CUHP NOPR, DOE considered the technology options
presented in Table IV-3. 79 FR at 58969.
Table IV-3--Technology Options Considered in the CUAC/CUHP NOPR
------------------------------------------------------------------------
-------------------------------------------------------------------------
Heat transfer improvements:
Electro-hydrodynamic enhancement
Alternative refrigerants
Condenser and evaporator fan and fan motor improvements:
Larger fan diameters
More efficient fan blades (e.g., air foil centrifugal
evaporator fans, backward-curved centrifugal evaporator fans, high
efficiency propeller condenser fans)
High efficiency motors (e.g., copper rotor motor, high
efficiency induction, permanent magnet, electronically commutated)
Variable speed fans/motors
Larger heat exchangers
Microchannel heat exchangers
Compressor Improvements:
High efficiency compressors
Multiple compressor staging
Multiple-tandem or variable-capacity compressors
Thermostatic expansion valves
Electronic expansion valves
Subcoolers
Reduced indoor fan belt loss:
Synchronous (toothed) belts
Direct-drive fans
------------------------------------------------------------------------
In the CUAC/CUHP NOPR, DOE noted that for the majority of the
identified technology options, the analysis considered designs that are
generally consistent with existing equipment on the market (e.g., heat
exchanger sizes, fan and fan motor types, controls, air flow). 79 FR at
58969.
Goodman commented that all of the technology options listed by DOE
are available in the market today and manufacturers can and do use such
options whenever they are cost effective. All of the proposed
technology options can be used to provide minor improvements to the
HVAC system's efficiency, specifically IEER, but have minimal, if any,
impact on EER. (CUAC: Goodman, No. 65 at p. 13) Goodman stated that the
majority of the technology options increase physical size of the
components and/or unit. Face area of indoor/outdoor coils can be held
constant while improving heat transfer by either additional coil rows
or increased fin density. However, Goodman noted that both of those
options also increase the fan power required to move air through the
coils which at least partially counteracts the gains from more coil
surface area. Goodman stated that some of the proposed technology
options such as increased condenser fan diameter, while technologically
feasible, are not practically feasible. (CUAC: Goodman, No. 65 at p.
13)
Rheem commented that a larger diameter forward-curved indoor fan
performs well at the low static test condition but can be unstable when
the system is installed with a high static duct system. Rheem also
stated that the applicability of the backward-inclined blower wheel
requires a complete redesign of a package unit outside envelope, which
will add cost to the system. Other options, such as multiple
compressors or variable frequency drives, are not as disruptive to the
footprint design. Rheem noted that the footprint of the unit intended
for the replacement market is restricted to existing roof curbs and
duct configurations. Rheem added that additional unit height on very
large equipment may be restricted by internal tractor trailer
clearances when the equipment is shipped. (CUAC: Rheem, No. 70 at p. 3)
As discussed in section IV.A, DOE selected and analyzed currently
available models using their rated efficiency to characterize the
energy use and manufacturing production costs at each efficiency level.
As a result, DOE analyzed equipment designs, including unit dimensions,
expansion devices, and indoor and outdoor coils and fans/
[[Page 2448]]
motors, consistent with currently available models and the design of
the equipment as a whole. As discussed in section IV.A, DOE also
considered how changes in the equipment footprint would impact the need
for roof curb adapters for replacement installations. For these
reasons, DOE believes that the technology options analyzed in this
direct final rule accurately reflect the efficiency improvement and
incremental manufacturing costs associated with these designs.
Regarding copper rotor motors, DOE noted in the CUAC/CUHP NOPR that
manufacturing more efficient copper rotor motors requires using copper
instead of aluminum for critical components of an induction motor's
rotor (e.g., conductor bars and end rings). DOE noted that in the case
of motor rotors for similar horsepower motors, copper rotors can reduce
the electric motor total energy losses by between 15 percent and 23
percent as compared to aluminum rotors. As a result, DOE considered
copper rotor motors as a technology option. 79 FR at 58966.
Nidec commented that the reduction in electric motor total energy
losses estimated by DOE to be achievable with copper rotors when
compared to aluminum rotors is not consistent with what has been
reported as achievable in previous DOE rulemakings for electric motors
nor is it consistent with Nidec's experience. Nidec noted that the TSD
for electric motors showed a reduction in total losses of less than 10
percent when changing from an aluminum rotor to a die-cast copper rotor
along with additional enhancements to the motor design such as
increased stack length, increased slot fill, and/or different
lamination steel material. Nidec added that DOE may also be overstating
in the electric motors rulemaking the reduction in total losses that
can typically be achieved, citing comments made by the National
Electrical Manufacturers Association (``NEMA'') on that rulemaking
indicating that the full-load loss for a prototype 10-hp motor was only
5.9 percent less than that for the motor with the aluminum rotor.
(CUAC: Nidec, No. 55 at pp. 2-5)
DOE appreciates the additional information regarding the reduction
in total losses associated with copper rotors. As discussed above, DOE
considered design options for the engineering analysis consistent with
equipment currently available on the market and considered the
efficiency of the equipment as a whole rather than quantifying the
energy savings associated with individual components. Accordingly, as
part of its technology options analysis, DOE screened in copper rotors
as one possible option to improve overall CUAC/CUHP efficiency.
However, DOE notes that, based on its review of equipment available on
the market, it did not observe any models that incorporated copper
rotor motors. Because DOE analyzed the full system design of equipment
and specific design options consistent with actual equipment available
on the market, DOE did not specifically analyze copper rotor motors as
part of the engineering analysis.
Regal-Beloit commented that DOE should consider electronically
commutated motors (``ECMs'') as an alternate technology for the indoor
fan. ECM technology is now a viable alternative to variable frequency
drives (``VFDs'') for CUACs and CUHPs. Regal-Beloit also commented that
DOE should consider ECM technology at efficiency levels other than the
max-tech. (CUAC: Regal-Beloit, No. 66 at p. 1) As noted in Table IV-3,
DOE considered ECMs as a technology option. As discussed in section
IV.C.3.a, DOE revised the engineering analysis to be based on rated
models at each efficiency level so that equipment design and specific
design options analyzed were consistent with actual equipment at each
efficiency level. Based on DOE's review of equipment available on the
market, DOE did not observe any models using ECMs for the indoor fan.
In addition, Carrier commented as part of the ASRAC Working Group
meetings that ECMs are not currently used for indoor fan motor above 1
horsepower. (CUAC: Carrier, ASRAC Public Meeting, No. 94 at p. 186)
However, DOE notes that manufacturers would not be precluded from
incorporating ECMs for the indoor fan. Details of the design options at
each efficiency level are presented in chapter 5 of the CUAC/CUHP
direct final rule TSD.
b. Commercial Warm Air Furnaces
In the analyses for this direct final rule, DOE reviewed the market
for CWAFs, as well as information gathered from interviews with CWAF
manufacturers during the NOPR analyses, to determine the common
technologies implemented to improve CWAF efficiency. Based on this
information, DOE primarily considered the following technology options
to improve CWAF thermal efficiency:
Increased heat exchanger (HX) surface area \34\
---------------------------------------------------------------------------
\34\ This design option includes a larger combustion inducer (to
overcome the pressure drop of the increased HX area). The larger
combustion inducer does not directly lead to a higher TE, but would
allow the implementation of other technologies (i.e., HX
improvements) that would cause the furnace to operate more
efficiently.
HX enhancements (e.g., dimples, turbulators)
Condensing secondary HX (stainless steel) \35\
---------------------------------------------------------------------------
\35\ This design option includes a larger combustion inducer
fan, upgraded housing for combustion blowers, stainless steel
impellers, condensate heater, and condensate drainage system that
would be required for condensing operation. Although these design
changes do not directly lead to a higher TE, they allow the
implementation of condensing operation, which causes the furnace to
operate more efficiently.
DOE notes that a secondary heat exchanger for condensing operation
is a possible technology option for CWAFs, but also that this
technology has considerable issues to overcome when used in weatherized
equipment. These issues relate specifically to the handling of acidic
condensate produced by a condensing furnace in the secondary heat
exchanger. Condensate must be drained from the furnace to prevent
build-up in the secondary heat exchanger, and properly disposed of
after exiting into the external environment. Some building codes limit
the disposal of condensate into the municipal sewage system, so the
condensate must be passed through a neutralizer to reduce its acidity
to appropriate levels prior to disposal. In weatherized installations,
it is more difficult to access the municipal sewage system than in non-
weatherized installations. Condensate produced by a weatherized
condensing furnace must flow naturally or be pumped through pipes to
the nearest disposal drain, which may not be in close proximity to the
furnace. In cold environments, there is a risk of the condensate
freezing as it flows through these pipes, which can cause an eventual
back-up of condensate into the heat exchanger, resulting in significant
damage to the furnace.
Despite these issues, DOE found in its review of the market that
multiple manufacturers offer weatherized HVAC equipment with a
condensing furnace heating section. DOE believes that this fact
indicates that many of the issues related to a condensing secondary
heat exchanger can be overcome, and thus, DOE considered a condensing
secondary heat exchanger as a technology option. As discussed in
section IV.B.1, this technology was ultimately passed through the
screening analysis and considered in the engineering analysis.
Regarding condensate disposal, DOE included the cost of condensate
disposal lines for all condensing installations; for further details on
the installation costs of a
[[Page 2449]]
condensate disposal system, see section IV.F.1 of this direct final
rule, and chapter 8 of the CWAF direct final rule TSD.
DOE also identified the following additional technology options for
improving CWAF efficiency. Many of these technologies were either
removed from the analysis because they were screened out or because
they did not improve the rated TE of CWAFs as measured by the DOE test
procedure (see section IV.B for further details):
Pulse combustion
Low NOX premix burner
Low pressure, air-atomized burner (oil-fired CWAFs only)
Burner de-rating
Two-stage or modulating combustion
Insulation improvements
Delayed-action oil pump solenoid valve (oil-fired CWAFs only)
Off-cycle dampers
Electronic ignition
Concentric venting
High-static flame-retention head oil burner (oil-fired CWAFs
only)
B. Screening Analysis
After DOE identified the technologies that might improve CUAC/CUHP
and CWAF energy efficiency, DOE conducted a screening analysis. The
purpose of the screening analysis is to determine which options to
consider further and which to screen out. DOE consulted with industry,
technical experts, and other interested parties in developing a list of
design options. DOE then applied the following set of screening
criteria to determine which design options are unsuitable for further
consideration in the rulemaking:
Technological Feasibility: DOE will consider only those
technologies incorporated in commercial equipment or in working
prototypes to be technologically feasible.
Practicability to Manufacture, Install, and Service: If
mass production of a technology in commercial equipment and reliable
installation and servicing of the technology could be achieved on the
scale necessary to serve the relevant market at the time of the
effective date of the standard, then DOE will consider that technology
practicable to manufacture, install, and service.
Adverse Impacts on Equipment Utility or Equipment
Availability: DOE will not further consider a technology if DOE
determines it will have a significant adverse impact on the utility of
the equipment to significant subgroups of customers. DOE will also not
further consider a technology that will result in the unavailability of
any covered equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as equipment generally available in the United
States at the time.
Adverse Impacts on Health or Safety: DOE will not further
consider a technology if DOE determines that the technology will have
significant adverse impacts on health or safety.
Additionally, DOE notes that these screening criteria do not
directly address the proprietary status of technology options. DOE only
considers 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 (i.e., if there are other non-
proprietary technologies capable of achieving the same efficiency). DOE
believes the standards for the equipment covered in this rulemaking
would not require the use of any proprietary technologies, and that all
manufacturers would be able to achieve the proposed levels through the
use of non-proprietary designs.
Technologies that pass through the screening analysis are referred
to as ``design options'' and are subsequently examined in the
engineering analysis for consideration in DOE's downstream cost-benefit
analysis.
1. Commercial Unitary Air Conditioners and Heat Pumps
For CUACs and CUHPs, DOE screened out the following technology
options in the CUAC/CUHP NOPR. 79 FR at 58969-58970.
Table IV-4--Technology Options Screened Out for the CUAC/CUHP NOPR
------------------------------------------------------------------------
Technology option Reason for screening out
------------------------------------------------------------------------
Electro-hydrodynamic enhanced heat Practicability to manufacture,
transfer. install, and service;
technological feasibility.
Alternative refrigerants.............. Technological feasibility.
Sub-coolers........................... Technological feasibility.
------------------------------------------------------------------------
Regarding the use of potential refrigerants, in the CUAC/CUHP NOPR,
DOE considered ammonia, carbon dioxide, and various hydrocarbons (such
as propane and isobutane) as alternative refrigerants to those that are
currently in use, such as R-410A. DOE noted that safety concerns need
to be taken into consideration when using ammonia and hydrocarbons in
air conditioning systems. The Environmental Protection Agency (``EPA'')
created the Significant New Alternatives Policy (``SNAP'') Program to
evaluate alternatives to ozone-depleting substances. Substitutes are
reviewed on the basis of ozone depletion potential, global warming
potential, other environmental impacts, toxicity, flammability, and
exposure potential. DOE noted at the time of the CUAC/CUHP NOPR that
ammonia used in vapor compression cycles, carbon dioxide, and
hydrocarbons were approved or were being considered under SNAP for
certain uses, but these or other low global warming potential (``GWP'')
alternatives were not listed as acceptable substitutes for this
equipment.\36\ DOE also stated in the CUAC/CUHP NOPR that it is not
aware of any other more efficient refrigerant options that are SNAP-
approved. Because these alternative refrigerants that may be more
efficient had not yet been approved for this equipment at the time of
its analysis, DOE did not consider alternate refrigerants for further
consideration. 79 FR at 58970.
---------------------------------------------------------------------------
\36\ On April 10, 2015, EPA listed certain hydrocarbons and R-32
for residential self-contained A/C appliances as acceptable subject
to use conditions to address safety concerns (See 80 FR 19453). EPA
is also evaluating new refrigerants for other A/C applications,
including commercial A/C. Additional information regarding EPA's
SNAP Program is available online at: http://www.epa.gov/ozone/snap/.
---------------------------------------------------------------------------
Danfoss and the Environmental Investigation Agency (EIA Global)
commented that the United States is supporting a phasedown of HFC
refrigerants, including HFC-410A, through the Montreal Protocol. (CUAC:
Danfoss, No. 53 at p. 2; EIA Global, No. 58 at pp. 3-4) Danfoss added
that Europe has already mandated a 40-percent reduction in HFC
production by 2020. Danfoss stated that it is likely that EPA will also
set limits on the use of HFC-410A in the future, but the timing and
impact on the use of R-410A is unknown at this time. Danfoss encouraged
DOE to work closely with EPA and to align standards for CUACs and CUHPs
with EPA SNAP rules, so that major equipment redesigns can be
[[Page 2450]]
kept to a minimum. (CUAC: Danfoss, No. 53 at p. 2)
EIA Global expressed its concern that DOE's analysis will be
incomplete without the inclusion of alternative hydrocarbon
refrigerants and that the high GWP of current HFC refrigerants for this
equipment category will further damage the stability of the climate,
thus offsetting the efficiency gains associated with standards. EIA
Global commented that DOE should consider currently available systems
using alternative refrigerants and the effects of the EPA's
finalization of its proposed rule, ``Protection of Stratospheric Ozone:
Listing Substitutes for Refrigeration and Air-Conditioning and Revision
of the Venting Prohibition for Certain Refrigerant Substitutes,'' which
lists propane (R-290) and hydrocarbon blend R-441A as acceptable
alternatives under the EPA's SNAP program for end uses including light
commercial air conditioners and heat pumps. EIA Global commented that
DOE should consider the energy efficiency savings and the reduction in
GHG emissions from these alternative low-GWP refrigerants. EIA Global
also urged DOE to include provisions to enable persons to petition for
an interim revisiting of the standard in light of the EPA SNAP rule
approving the use of these alternative refrigerants. (CUAC: EIA Global,
No. 58 at pp. 1-2, 4-8)
EIA Global stated that, given the President's recent Executive
Action, ``Invest in New Technologies to Support Safer Alternatives,''
DOE should be using its authority to not only conduct its own research
and commercialization of HFC-free technologies, but also to incentivize
U.S. industry to manufacture HFC-free and energy efficient CUACs and
CUHPs, so they can lead the world in the development and marketing of
the next generation of this equipment. (CUAC: EIA Global, No. 58 at pp.
1-4)
DOE recognizes that EPA published a final rule approving
alternative refrigerants, subject to use conditions, in specific end-
uses. 80 FR 19454 (Apr. 10, 2015). However, DOE notes that these end-
use applications did not include CUACs and CUHPs that are the subject
of this rulemaking. DOE notes that hydrocarbon refrigerants have not
yet been approved by the EPA SNAP program for these types of equipment
and, hence, cannot be considered as a technology option in DOE's
analysis. DOE also notes that, while it is possible that HFC
refrigerants currently used in CUACs and CUHPs may be restricted by
future rules, DOE cannot speculate on the outcome of a rulemaking in
progress and can only consider in its rulemakings rules that are
currently in effect. Therefore, DOE has not included possible outcomes
of potential EPA SNAP rulemakings. This position is consistent with
past DOE rulings, such as in the 2014 final rule for commercial
refrigeration equipment (79 FR 17725, 17753-54 (March 28, 2014)) and
the 2015 final rule for automatic commercial icemakers (80 FR 4646,
4670-71 (Jan. 28, 2015)) DOE notes that recent rules by the EPA that
allow use of hydrocarbon refrigerants or that impose new restrictions
on the use of HFC refrigerants do not address air-cooled CUACs and
CUHPs applications. 80 FR 19454 (April 10, 2015) and 80 FR 42879 (July
20, 2015). DOE acknowledges that there are government-wide efforts to
reduce emissions of HFCs, and such actions are being pursued both
through international diplomacy as well as domestic actions. DOE, in
concert with other relevant agencies, will continue to work with
industry and other stakeholders to identify safer and more sustainable
alternatives to HFCs while evaluating energy efficiency standards for
this equipment.
DOE also recognizes that while some alternative refrigerants may be
under consideration as potential future replacements for CUACs and
CUHPs, including low-GWP blends submitted to EPA's SNAP program, the
development of safety and other related building code standards that
will impact decisions regarding the final selected alternatives are
still under way. DOE cannot consider all of the potential alternatives
to accurately analyze the efficiency impacts for this equipment.
Goodman similarly noted as part of the ASRAC Working Group meetings
that the safety standards for alternative refrigerants are in the
process of being developed, and the current standards, UL 1995,
``Heating and Cooling Equipment'' and UL 60335-2-40, ``Safety of
Household and Similar Electrical Appliances, Part 2-34: Particular
Requirements for Motor-Compressors,'' specifically ban any flammable
refrigerant from comfort air conditioning products. (CUAC: Goodman,
ASRAC Public Meeting, No. 99 at pp. 43-44)
DOE also notes that performance information regarding all
alternative refrigerants, such as CUACs and CUHPs with proven test data
and publicly available compressor performance information, are not
available at this time to properly evaluate the impacts of alternative
refrigerants on energy use.
As mentioned in section VI.B.4, if a manufacturer believes that its
design is subjected to undue hardship by regulations, the manufacturer
may petition DOE's Office of Hearing and Appeals (OHA) for exception
relief or exemption from the standard pursuant to OHA's authority under
section 504 of the DOE Organization Act (42 U.S.C. 7194), as
implemented at subpart B of 10 CFR part 1003. OHA has the authority to
grant such relief on a case-by-case basis if it determines that a
manufacturer has demonstrated that meeting the standard would cause
hardship, inequity, or unfair distribution of burdens. DOE also notes
that any person may petition DOE for an amended standard applicable to
a variety of consumer products and commercial/industrial equipment. See
42 U.S.C. 6295(r) and 42 U.S.C. 6313(a). This provision, however, does
not apply to the equipment addressed by this rulemaking. See 42 U.S.C.
6316(b).
In recognition of the issues related to alternative refrigerants,
members of the ASRAC Working Group agreed as part of the Term Sheet to
delay implementation of the second phase of increased energy
conservation standard levels until January 1, 2023, in part to align
dates with potential refrigerant phase-outs and to provide sufficient
development lead time after safety requirements for acceptable
alternatives have been established. (CUAC: ASRAC Term Sheet, No. 93 at
pp. 3-4; ASRAC Public Meeting, No. 100 at pp. 82; ASRAC Public Meeting,
No. 101 at pp. 48-49) Delaying the implementation of the second phase
of standards in the manner recommended and agreed to by the Working
Group will provide manufacturers with flexibility and additional time
to comply with both energy conservation standards and potential
refrigerant changes, allowing manufacturers to better coordinate
equipment redesign to reduce the cumulative burden. As discussed in
section III.C, DOE is adopting the proposed two-phased approach
recommended in the ASRAC Term Sheet.
With respect to copper rotors, Nidec disagreed with DOE's
determination not to screen out this option. In its view, copper rotor
motors do not satisfy either the screening criteria of (a)
practicability to manufacture, install, and service; or (b) adverse
impacts on equipment utility or equipment availability. (CUAC: Nidec,
No. 55 at p. 2-5) Nidec stated that the very short lifespans for the
end ring dies and casting pistons for copper die-casting presses would
prevent motor manufacturers from mass producing copper rotors on a
sufficient scale due to the constant need to replace this tooling.
(CUAC: Nidec, No. 55 at p. 5) Nidec also noted that there is a lack of
die-cast copper rotor production
[[Page 2451]]
capability in place today, which, given the dramatic increase in
production capability that would be required in a very short amount of
time to satisfy the demand for air conditioning and heating equipment
impacted by the present rulemaking if such equipment required motors
with die-cast copper rotors to meet the proposed standards, should
counsel against the inclusion of this option from DOE's analysis.
(CUAC: Nidec, No. 55 at pp. 5-6)
As noted in the electric motors final rule, DOE noted that two
large motor manufacturers currently offer die-cast copper rotor motors
up to 30-horsepower. DOE also noted in the electric motors rule that
full scale deployment of copper would likely require considerable
capital investment and that such investment could increase the
production cost of copper rotor motors considerably. 79 FR 30934,
30963-65 (May 29, 2014). However, increased motor cost alone would not
be a reason to screen out this technology. For these reasons, DOE did
not screen out this technology on the basis of practicability to
manufacture, install, and service, or adverse impacts on equipment
utility or equipment availability.
Based on the screening analysis, DOE identified the design options
listed in Table IV-5 for further consideration in the engineering
analysis:
Table IV-5--CUAC/CUHP Design Options Retained for Engineering Analysis
------------------------------------------------------------------------
-------------------------------------------------------------------------
Condenser and evaporator fan and fan motor improvements:
Larger fan diameters
More efficient fan blades (e.g., air foil centrifugal
evaporator fans, backward-curved centrifugal evaporator fans, high
efficiency propeller condenser fans)
High efficiency motors (e.g., copper rotor motor, high
efficiency induction, permanent magnet, electronically commutated)
Variable speed fans/motors
Larger heat exchangers
Microchannel heat exchangers
Compressor Improvements:
High efficiency compressors
Multiple compressor staging
Multiple- or variable-capacity compressors
Thermostatic expansion valves
Electronic expansion valves
Reduced indoor fan belt loss:
Synchronous (toothed) belts
Direct-drive fans
------------------------------------------------------------------------
A full description of each technology option is included in chapter
3 of the CUAC/CUHP direct final rule TSD, and additional discussion of
the screening analysis is included in chapter 4 of the CUAC/CUHP direct
final rule TSD.
2. Commercial Warm Air Furnaces
For CWAFs, DOE screened out the technology options listed in Table
IV-6. Each of these technology options failed to meet at least one of
the four screening criteria: (1) technological feasibility; (2)
practicability to manufacture, install, and service; (3) impacts on
equipment utility or equipment availability; and (4) adverse impacts on
health or safety. See 10 CFR part 430, subpart C, appendix A, 4(a)(4)
and 5(b).
Table IV-6--Technology Options Screened Out for Commercial Warm Air
Furnaces
------------------------------------------------------------------------
Technology option Reason for screening out
------------------------------------------------------------------------
Pulse combustion.......................... Adverse impact on utility;
potential for adverse
impact on safety.
Low NOX premix burner..................... Technological feasibility.
Burner de-rating.......................... Adverse impact on utility.
Low pressure, air-atomized burner (oil- Technological Feasibility.
fired CWAFs only).
------------------------------------------------------------------------
In addition, the following technology options met all four of the
screening criteria, but were removed from further consideration in the
engineering analysis because they do not impact the CWAF efficiency as
measured by the DOE test procedure:
Two-stage or modulating combustion
Insulation improvements
Off-cycle dampers
Delayed-action oil pump solenoid valve (oil-fired CWAFs only)
Electronic ignition
Based on the screening analysis, DOE identified the following five
technology options for further consideration in the engineering
analysis:
Condensing secondary heat exchanger
Increased heat exchanger surface area
Heat exchanger enhancements (e.g., dimples, baffles, and
turbulators)
Concentric venting
High-static flame-retention head oil burner (oil-fired CWAFs
only)
A full description of each technology option is included in chapter
3 of the CWAF direct final rule TSD, and additional discussion of the
screening analysis is included in chapter 4 of the CWAF direct final
rule TSD.
C. Engineering Analysis
The engineering analysis establishes the relationship between an
increase in energy efficiency of equipment and the increase in
manufacturer selling price (``MSP'') required to achieve that
efficiency increase. This relationship serves as the basis for the
cost-benefit calculations for commercial customers, manufacturers, and
the Nation. In determining the cost-efficiency relationship, DOE
estimates the increase in manufacturer cost associated with increasing
the efficiency of equipment to incrementally higher efficiency levels
above the baseline efficiency level, up to the maximum technologically
feasible (``max-tech'') efficiency level for each equipment class.
1. Methodology
DOE typically structures its engineering analysis using one or more
of three identified basic methods for generating manufacturing costs:
(1) The design-option approach, which provides the incremental costs of
adding individual technology options (as identified in the market and
technology assessment and passed through the screening analysis) that
can be added alone or in combination with a baseline model in order to
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. A supplementary method called a catalog
teardown uses published manufacturer catalogs and supplementary
component data to estimate the major physical differences between a
piece of equipment that has been physically disassembled and another
piece of similar equipment for which catalog data are available to
determine the cost of the latter equipment.
For CUACs and CUHPs, DOE conducted the engineering analyses using a
combination of the efficiency-level approach and the reverse-
engineering approach and analyzed three specific capacities, one
representing each of the three equipment class capacity ranges (i.e.,
small, large, and very large). Based on a review of manufacturer
equipment offerings, information from the previous standards rulemaking
regarding cooling
[[Page 2452]]
capacities that represent volume equipment shipment points within the
equipment class capacity ranges, and information obtained from
manufacturer interviews, DOE selected representative cooling capacities
of 90,000 Btu/h (7.5 tons) for the >=65,000 to <135,000 Btu/h capacity
range, 180,000 Btu/h (15 tons) for the >=135,000 to <240,000 Btu/h
capacity range, and 360,000 Btu/h (30 tons) for the >=240,000 to
<760,000 Btu/h capacity range. Where feasible, DOE selected models for
reverse engineering with low and high efficiencies from a given
manufacturer that are built on the same platform. DOE also supplemented
the teardown analysis by conducting catalog teardowns for equipment
spanning the full range of capacities and efficiencies from all
manufacturers selling equipment in the United States.
For CWAFs, DOE conducted the engineering analysis using the
reverse-engineering approach to estimate the costs of achieving various
efficiency levels. DOE selected two gas-fired CWAF units in the non-
condensing efficiency range for physical teardowns, both at a heating
input rating of 250,000 Btu/h, which was considered to be the
representative heating input rating for the gas-fired equipment class.
In addition, DOE purchased a condensing, 92-percent TE gas-fired makeup
air furnace for physical examination. Makeup air furnaces are the only
type of 92-percent TE gas-fired CWAFs currently available on the
market. DOE also performed a physical teardown of an oil-fired CWAF at
81-percent TE at an input rating of 400,000 Btu/h, which was
subsequently scaled down via cost estimation techniques to represent a
unit with a 250,000 Btu/h heating input rating. Similar to gas-fired
CWAFs, 250,000 Btu/h was also considered the representative heating
input rating for oil-fired CWAFs. GTI commented that at around a
heating input of 400,000 Btu/h, in gas-fired CWAFs, it may be common
practice for manufacturers to transition from a single furnace to two
furnaces in packaged equipment. This would necessitate additional
components associated with the second furnace including additional gas
valves and inducer fans, which may contribute to a different price
regime (CWAF: GTI, NOPR Public Meeting Transcript, No. 17 at pp. 74-
75). DOE agrees that gas-fired CWAFs are generally not manufactured
with individual combustion modules (i.e., a single gas valve, inducer
assembly, and heat exchanger assembly) with heating inputs of greater
than 400,000 Btu/h, usually due to insurance and liability reasons. DOE
acknowledges that the manufacturing costs for equipment using multiple
combustion modules will be higher than for equipment using single
modules. However, DOE believes that at efficiency levels higher than
baseline for units with multiple combustion modules, the energy savings
relative to the baseline efficiency level scales proportionally with
the increased incremental cost (relative to baseline) to manufacture
equipment with multiple combustion modules. As such, DOE did not
estimate manufacturing costs for units above 400,000 Btu/h heating
input, because it does not believe that the relationship between
incremental equipment cost and incremental energy savings at efficiency
levels higher than baseline will be significantly different than at the
representative heating input capacity selected for analysis.
DOE used catalog data, information from the physical teardown
examinations, and manufacturer feedback to estimate the manufacturing
costs for gas-fired CWAFs at the 80-percent, 81-percent, 82-percent and
92-percent TE levels, as well as the manufacturing costs for oil-fired
CWAFs at the 81-percent, 82-percent and 92-percent TE levels.
Additional detail on the teardowns performed is provided in chapter 5
of the CWAF direct final rule TSD.
2. Efficiency Levels
a. Baseline Efficiency Levels
The baseline model is used as a reference point for each equipment
class in the engineering analysis and the life-cycle cost and payback-
period analyses, which provides a starting point for analyzing
potential technologies that provide energy efficiency improvements.
Generally, DOE considers ``baseline'' equipment to refer to a model or
models having features and technologies that just meet, but do not
exceed, the minimum energy conservation standard.
Commercial Unitary Air Conditioners and Heat Pumps
As discussed in section III.G, for CUACs and CUHPs, DOE decided to
replace the current cooling performance energy efficiency descriptor,
EER, with IEER. With this change in metrics (i.e., from EER to IEER),
DOE must ensure that a new IEER-based standard would not result in a
backsliding of energy efficiency levels when compared to the current
standards (42 U.S.C. 6313(a)(6)(B)(iii)(I)). To this end, DOE must
first establish a baseline IEER for each CUAC and CUHP equipment class
to compare that level against the various standards that DOE evaluated
for this equipment.
In the CUAC/CUHP NOPR, DOE noted that it is typically obligated
either to adopt those standards developed by ASHRAE or to adopt levels
more stringent than the ASHRAE levels if there is clear and convincing
evidence in support of doing so. (42 U.S.C. 6313(a)(6)(A)) DOE noted
that ASHRAE Standard 90.1-2010 specifies minimum efficiency
requirements using both the EER and IEER metrics. As discussed in the
CUAC/CUHP RFI, DOE evaluated the relationship between EER and IEER by
considering models that are rated at the current DOE standard levels
based on the EER metric for each equipment class. DOE then analyzed the
distribution of corresponding rated IEER values for each equipment
class, noting that a single EER level can correspond to a range of
IEERs. DOE also noted that the lowest IEER values associated with the
current DOE standards for EER generally correspond with the ASHRAE
Standard 90.1-2010 minimum efficiency requirements. See 78 FR at 7299.
Based on this evaluation, because DOE is considering energy
conservation standards based on the IEER metric, DOE proposed in the
CUAC/CUHP NOPR to use the ASHRAE Standard 90.1-2010 minimum IEER
requirements to characterize the baseline cooling efficiency for each
equipment class. Because the baseline efficiency level is intended to
be representative of the minimum efficiency of equipment, DOE did not
consider higher IEER levels for the baseline. (79 FR at 58972.)
For CUHPs, DOE considered heating efficiency standards based on the
COP metric. As discussed in section II.B.1, EPAct 2005 established
minimum COP levels for small, large, and very large air-cooled CUHPs,
which DOE codified in a final rule on October 18, 2005. 70 FR 60407.
DOE proposed in the CUAC/CUHP NOPR to use these current COP standard
levels to characterize the baseline heating efficiency for each
equipment class. (79 FR at 58972.)
Table IV-7 presents the baseline efficiency levels for each
equipment class considered in the CUAC/CUHP NOPR.
[[Page 2453]]
Table IV-7--Baseline Efficiency Levels Proposed in the CUAC/CUHP NOPR
----------------------------------------------------------------------------------------------------------------
Equipment type Heating type Baseline efficiency level
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC and HP (Air-
Cooled)-->=65,000 Btu/h and <135,000 Btu/
h Cooling Capacity:
AC................................... Electric Resistance Heating 11.4 IEER
or No Heating.
All Other Types of Heating.. 11.2 IEER
HP................................... Electric Resistance Heating 11.2 IEER 3.3 COP
or No Heating.
All Other Types of Heating.. 11.0 IEER 3.3 COP
Large Commercial Packaged AC and HP (Air-
Cooled)-->=135,000 Btu/h and <240,000
Btu/h Cooling Capacity:
AC................................... Electric Resistance Heating 11.2 IEER
or No Heating.
All Other Types of Heating.. 11.0 IEER
HP................................... Electric Resistance Heating 10.7 IEER 3.2 COP
or No Heating.
All Other Types of Heating.. 10.5 IEER 3.2 COP
Very Large Commercial Packaged AC and HP
(Air-Cooled)-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity:
AC................................... Electric Resistance Heating 10.1 IEER
or No Heating.
All Other Types of Heating.. 9.9 IEER
HP................................... Electric Resistance Heating 9.6 IEER 3.2 COP
or No Heating.
All Other Types of Heating.. 9.4 IEER 3.2 COP
----------------------------------------------------------------------------------------------------------------
Based on a review of equipment available on the market, DOE notes
that an IEER of 10.6 is more representative of the baseline cooling
efficiency for major manufacturers of units falling into the very large
CUACs with ``electric resistance heating or no heating'' equipment
class. As a result, DOE revised the baseline cooling efficiency level
for this equipment class. DOE also revised the baseline cooling
efficiency levels for the very large equipment classes for (1) all
other types of heating and (2) heat pumps by using the corresponding
differences in IEER specifications for these pairs of equipment classes
prescribed in ASHRAE Standard 90.1-2010. For all other equipment
classes, DOE maintained the baseline efficiency levels from the CUAC/
CUHP NOPR. The efficiency levels considered in this final rule are
presented below in Table IV-8.
Table IV-8--Direct Final Rule Baseline Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Equipment type Heating type Baseline efficiency level
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC
and HP (Air-Cooled)-->=65,000
Btu/h and <135,000 Btu/h
Cooling Capacity:
AC........................ Electric 11.4 IEER
Resistance
Heating or No
Heating.
All Other Types 11.2 IEER
of Heating.
HP........................ Electric 11.2 IEER 3.3 COP
Resistance
Heating or No
Heating.
All Other Types 11.0 IEER 3.3 COP
of Heating.
Large Commercial Packaged AC
and HP (Air-Cooled)--
>=135,000 Btu/h and <240,000
Btu/h Cooling Capacity:
AC........................ Electric 11.2 IEER
Resistance
Heating or No
Heating.
All Other Types 11.0 IEER
of Heating.
HP........................ Electric 10.7 IEER 3.2 COP
Resistance
Heating or No
Heating.
All Other Types 10.5 IEER 3.2 COP
of Heating.
Very Large Commercial Packaged
AC and HP (Air-Cooled)--
>=240,000 Btu/h and <760,000
Btu/h Cooling Capacity:
AC........................ Electric 10.6 IEER
Resistance
Heating or No
Heating.
All Other Types 10.4 IEER
of Heating.
HP........................ Electric 10.1 IEER 3.2 COP
Resistance
Heating or No
Heating.
All Other Types 9.9 IEER 3.2 COP
of Heating.
----------------------------------------------------------------------------------------------------------------
[[Page 2454]]
Commercial Warm Air Furnaces
In establishing the baseline efficiency level for this analysis,
DOE used the existing minimum energy conservation standards for CWAFs
to identify baseline units. The baseline TE levels for each equipment
class are presented in Table IV-9.
Table IV-9--Baseline Thermal Efficiency Levels for CWAFs
------------------------------------------------------------------------
Baseline
Equipment class efficiency
level (%)
------------------------------------------------------------------------
Gas-fired Commercial Warm Air Furnace................... 80
Oil-fired Commercial Warm Air Furnace................... 81
------------------------------------------------------------------------
b. Incremental and Max-Tech Efficiency Levels
For each equipment class, DOE analyzes several efficiency levels
and determines the incremental cost at each of these levels.
Commercial Unitary Air Conditioners and Heat Pumps
For the CUAC/CUHP NOPR, DOE developed efficiency levels based on a
review of industry standards and available equipment. For Efficiency
Level 1, DOE used the IEER levels specified in the draft of addendum CL
\37\ to ASHRAE Standard 90.1-2010 (Draft Addendum CL).\38\ For the
higher efficiency levels, DOE initially determined the levels for CUAC
equipment classes with electric resistance heating or no heating based
on the range of efficiency levels associated with equipment listed in
the AHRI certification database and the California Energy Commission's
(``CEC'') database. DOE noted in the CUAC/CUHP NOPR that the max-tech
efficiency levels rely on the performance of recently introduced
models. DOE conducted its analysis for the small, large, and very large
equipment classes using equipment with 7.5-ton, 15-ton, and 30-ton
cooling capacities to represent their respective classes. DOE chose
efficiency levels for CUACs with all other types of heating equal to
the efficiency levels for equipment with electric resistance heating or
no heating, minus the differences in the IEER specifications for these
pairs of equipment classes prescribed in Draft Addendum CL. DOE stated
in the CUAC/CUHP NOPR that these decreases in IEER appropriately
reflect the additional power required for gas furnace pressure drop. 79
FR at 58972-73.
---------------------------------------------------------------------------
\37\ ASHRAE periodically updates specifications in its Standard
90.1 through a public review process. Draft Addendum CL, which was
made available for public review in October 2012, included changes
in required efficiency levels for CUACCUACsCUACs and CUHPs falling
into the small, large, and very large capacity ranges. ``CL'' refers
to the revision number.
\38\ The Addendum CL to ASHRAE Standard 90.1-2010 included the
latest revisions to the ASHRAE 90.1 efficiency levels for the
equipment considered in this rulemaking at the time DOE conducted
the analyses for the NOPR. ASHRAE later finalized the Addendum CL
changes in ASHRAE 90.1-2013, with minor changes to the IEER levels
for large CUACCUACsCUACs and CUHPs (i.e., cooling capacity of
>=135,000 Btu/h and <240,000 Btu/h).
---------------------------------------------------------------------------
For the CUHP equipment classes, DOE proposed cooling mode
efficiency levels equal to the CUAC efficiency levels minus the
difference in IEER specifications for these two equipment types
prescribed in Draft Addendum CL. DOE stated that these decreases in
IEER are representative of the efficiency differences that occur due to
losses from the reversing valve and the reduced potential for
optimization of coil circuitry for cooling, since coils in heat pumps
must work for both heating and cooling operation. Id.
For the CUHP equipment classes, DOE proposed heating efficiency
levels in the CUAC/CUHP NOPR based on a variation of COP with IEER. 79
FR at 58973. In the previous standards rulemaking from 2004 for these
equipment, DOE proposed to address the energy efficiency of air-cooled
CUHP by developing functions relating COP to EER. 69 FR at 45468. DOE
noted that this method was also used by industry to establish minimum
performance requirements for ASHRAE Standard 90.1-1999. Id. AHRI
supplied the ASHRAE Standard 90.1-1999 committee with curves relating
the COP as a function of EER. Using this information, the committee
then set the minimum COP levels to the COP corresponding to the
selected minimum EER level. Id. To determine COP efficiency levels for
the CUAC/CUHP NOPR, DOE evaluated AHRI and CEC data for small, large,
and very large air-cooled CUHP units with electric resistance heat or
no heat to analyze the relationship between COP and both IEER and EER.
DOE's review of data showed that for each cooling capacity range, the
correlations between COP and IEER using linear regressions are no less
strong than the correlations between COP and EER, the latter of which
was used in DOE's prior standards rulemaking for this equipment and in
developing ASHRAE Standard 90.1-1999's minimum COP levels (69 FR at
45468). Based on this evaluation, DOE proposed in the CUAC/CUHP NOPR to
use the functions relating COP to IEER based on AHRI and CEC data to
select the COP level associated with each of the IEER-based efficiency
levels. 79 FR at 58973.
The efficiency levels for each equipment class proposed in the
CUAC/CUHP NOPR are presented in Table IV-10.
Table IV-10--Incremental Efficiency Levels Presented in the CUAC/CUHP NOPR
----------------------------------------------------------------------------------------------------------------
Efficiency levels;
------------------------------------------------------
Equipment type Heating type EL4 (Max-
Baseline EL1 EL2 EL3 Tech)
-------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC
and HP (Air-Cooled)-->=65,000
Btu/h and <135,000 Btu/h
Cooling Capacity:
AC........................ Electric 11.4 IEER 12.9 IEER 14 IEER 14.8 IEER 19.9 IEER
Resistance
Heating or No
Heating.
All Other Types 11.2 IEER 12.7 IEER 13.8 IEER 14.6 IEER 19.7 IEER
of Heating.
HP........................ Electric 11.2 12.2 13.3 14.1 19.2
Resistance IEER, IEER, IEER, IEER, IEER,
Heating or No 3.3 COP 3.3 COP 3.4 COP 3.5 COP 3.7 COP
Heating.
All Other Types 11.0 12 IEER, 13.1 13.9 19.0
of Heating. IEER, 3.3 COP IEER, IEER, IEER,
3.3 COP 3.4 COP 3.4 COP 3.6 COP
----------------------------------------------------------------------------------------------------------------
[[Page 2455]]
Large Commercial Packaged AC
and HP (Air-Cooled)--
>=135,000 Btu/h and <240,000
Btu/h Cooling Capacity:
AC........................ Electric 11.2 IEER 12.2 IEER 13.2 IEER 14.2 IEER 18.4 IEER
Resistance
Heating or No
Heating.
All Other Types 11.0 IEER 12.0 IEER 13.0 IEER 14.0 IEER 18.2 IEER
of Heating.
HP........................ Electric 10.7 11.4 12.4 13.4 17.6
Resistance IEER, IEER, IEER, IEER, IEER,
Heating or No 3.2 COP 3.2 COP 3.3 COP 3.3 COP 3.3 COP
Heating.
All Other Types 10.5 11.2 12.2 13.2 17.4
of Heating. IEER, IEER, IEER, IEER, IEER,
3.2 COP 3.2 COP 3.3 COP 3.3 COP 3.3 COP
----------------------------------------------------------------------------------------------------------------
Very Large Commercial Packaged
AC and HP (Air-Cooled)--
>=240,000 Btu/h and <760,000
Btu/h Cooling Capacity:
AC........................ Electric 10.1 IEER 11.6 IEER 12.5 IEER 13.5 IEER 15.5 IEER
Resistance
Heating or No
Heating.
All Other Types 9.9 IEER 11.4 IEER 12.3 IEER 13.3 IEER 15.3 IEER
of Heating.
HP........................ Electric 9.6 IEER, 10.6 11.5 12.5 14.5
Resistance 3.2 COP IEER, IEER, IEER, IEER,
Heating or No 3.2 COP 3.2 COP 3.2 COP 3.2 COP
Heating.
All Other Types 9.4 IEER, 10.4 11.3 12.3 14.3
of Heating. 3.2 COP IEER, IEER, IEER, IEER,
3.2 COP 3.2 COP 3.2 COP 3.2 COP
----------------------------------------------------------------------------------------------------------------
Lennox commented that DOE is required to consider ASHRAE 90.1-2013
according to 42 U.S.C. 6313(a)(6)(A). Lennox noted that Efficiency
Level 1 mirrors the values in ASHRAE 90.1-2013 except for large CUAC/
CUHP equipment class. (CUAC: Lennox, No. 60 at p. 7) As discussed
above, DOE based the CUAC/CUHP NOPR Efficiency Level 1 IEERs on ASHRAE
90.1-2010 Addendum CL. After the NOPR, DOE reviewed ASHRAE 90.1-2013
and updated the IEERs for Efficiency Level 1 accordingly for this
direct final rule.
The Joint Efficiency Advocates and California IOUs reacted to the
CUAC/CUHP NOPR by urging DOE to evaluate intermediate efficiency levels
between Efficiency Level 3 and Efficiency Level 4, noting that the
presence of gaps between these levels. The Joint Efficiency Advocates
and California IOUs noted that there are models at various IEER levels
available between Efficiency Level 3 and Efficiency Level 4 across the
equipment classes. (CUAC: Joint Efficiency Advocates, No. 69 at p. 2;
California IOUs, No. 67 at pp. 3-5; ASAP, ASRAC Public Meeting, No. 102
at pp. 202, 209-210, 211-212, 217-218).
The Joint Efficiency Advocates and the California IOUs urged DOE to
reevaluate the max-tech levels and noted that for each equipment class,
the highest IEERs of commercially-available equipment listed in the
AHRI directory are higher than the max-tech levels. (CUAC: Joint
Efficiency Advocates, No. 69 at pp. 2-3; California IOUs, No. 67 at pp.
6-7)
Carrier supported DOE's approach for determining the max-tech
efficiency levels based on recently introduced models. These models
represent technologies that are both available for all of the capacity
sizes within a given equipment class and that are economically
justified for their performance improvement. (CUAC: Carrier, No. 48 at
p. 3) Goodman commented during the negotiated rulemaking that DOE
should also consider an additional efficiency level between the CUAC/
CUHP NOPR Efficiency Level 2 and Efficiency Level 3. (CUAC: Goodman,
ASRAC Public Meeting No. 102 at pp. 208--209)
Based on DOE's review of equipment listed in the AHRI directory,
DOE agreed with interested parties that additional efficiency levels
should be considered in its analysis. For all equipment classes, DOE
added an efficiency level between Efficiency Level 2 and Efficiency
Level 3 from the CUAC/CUHP NOPR, identified in this direct final rule
as Efficiency Level 2.5. DOE also added an efficiency level, identified
in this direct final rule as efficiency level 5, above CUAC/CUHP NOPR
Efficiency Level 4, to represent the max-tech models available on the
market. For small and large equipment, DOE added an efficiency level
between Efficiency Level 3 and Efficiency Level 4 from the CUAC/CUHP
NOPR, identified in this direct final rule as Efficiency Level 3.5. As
part of the ASRAC Working Group meeting, interested parties agreed on
these additional efficiency levels for the analysis. (CUAC: ASRAC
Public Meeting, No. 94 at pp. 170--171)
For this direct final rule, the IEER values for the baseline
efficiency level and Efficiency Level 1 for the ``all other types of
heating equipment'' classes are based on the IEER difference of 0.2 as
compared to the electric resistance heating or no heating equipment
class specified in ASHRAE 90.1-2010 and ASHRAE 90.1-2013. As discussed
further in section IV.E.1, DOE chose cooling efficiency levels for
CUACs coupled with all other types of heating above Efficiency Level 1
that provided the same energy savings between incremental efficiency
levels as was determined for the electric resistance or no heating
equipment classes within each equipment class capacity range (i.e.,
small, large, and very large). Using this approach, the IEER
differential between these equipment classes ranged from 0.2 to 0.4 at
the higher efficiency levels and reflect the additional power required
for gas furnace pressure drop. Therefore, DOE estimated that the energy
savings for any efficiency level relative to the baseline would be
identical for both sets of equipment classes.
Based on DOE's review of equipment available on the market, the
majority of models with electric resistance heating or no heating
equipment are designed on the same basic platform and cabinet size as
the equivalent models with all other types of heating equipment.
Because these equipment have the same or similar designs, DOE estimates
that implementing the same design changes
[[Page 2456]]
would result in the same or similar energy savings for both sets of
equipment classes. For small and large heating equipment classes at
Efficiency Level 3 and the very large heating equipment class at
Efficiency Level 2.5, DOE analyzed the cooling efficiency levels based
on the IEER values included in the ASRAC Working Group recommendations,
as presented in section III.B.2, which used an IEER differential of 0.2
compared to the electric resistance heating or no heating equipment
classs. Table IV-11 shows, as an example, these differences in IEER for
each CUAC ``all other types of heating equipment'' class relative to
the electric resistance heating equipment classes.
Table IV-11--CUACs With All Other Types of Heating IEER Differentials Relative to CUACs With Electric Resistance
Heating or No Heating
----------------------------------------------------------------------------------------------------------------
IEER differentials
-----------------------------------------------
Efficiency level Very Large
Small CUACs Large CUACs CUACs
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ 0.2 0.2 0.2
EL 1............................................................ 0.2 0.2 0.2
EL 2............................................................ 0.2 0.2 0.2
EL 2.5.......................................................... 0.3 0.2 * 0.2
EL 3............................................................ * 0.2 * 0.2 0.3
EL 3.5.......................................................... 0.3 0.3 ..............
EL 4............................................................ 0.3 0.3 0.3
EL 5............................................................ 0.4 0.4 0.3
----------------------------------------------------------------------------------------------------------------
* IEER differential for these levels were based on the recommended efficiency levels in the ASRAC Term Sheet.
For the CUHP equipment classes, DOE used a similar approach for
determining the IEER differentials relative to the CUAC equipment
classes. The IEER values for the baseline efficiency level and
Efficiency Level 1 for the CUHP equipment classes are based on the IEER
differences as compared to the CUAC equipment classes specified in
ASHRAE 90.1-2010 and ASHRAE 90.1-2013. As discussed further in section
IV.E.1, DOE chose cooling efficiency levels for the CUHP equipment
classes above Efficiency Level 1 that provided the same energy savings
between incremental efficiency levels as was determined for the CUAC
equipment classes within each equipment class capacity range (i.e.,
small, large, and very large). Using this approach, the IEER
differential between these equipment classes ranged from 0.8 to 1.3 at
the higher efficiency levels and reflect the efficiency differences
that occur due to losses from the reversing valve and the reduced
potential for optimization of coil circuitry for cooling, since coils
in heat pumps must work for both heating and cooling operation.
Therefore, DOE estimated that the energy savings for any efficiency
level relative to the baseline would be identical for both sets of
equipment classes. Because DOE considered the same design changes at
each efficiency level for both sets of equipment classes, DOE estimates
that this would result in the same or similar energy savings for both
sets of equipment classes. For small and large CUHP equipment classes
at Efficiency Level 3 and the very large CUHP equipment class at
Efficiency Level 2.5, DOE analyzed the cooling efficiency levels based
on the IEER values included in the ASRAC Working Group recommendations,
as discussed in section III.B.2, which used an IEER differential of 0.7
compared to the CUAC equipment classes. Table IV-12 shows these
differences in IEER for the CUHP equipment classes relative to the CUAC
equipment classes.
Table IV-12--CUHP IEER Differentials Relative to CUAC Levels
----------------------------------------------------------------------------------------------------------------
IEER differentials
-----------------------------------------------
Efficiency level Very Large
Small CUACs Large CUACs CUACs
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ 0.2 0.5 0.5
EL 1............................................................ 0.7 0.8 1.0
EL 2............................................................ 0.8 0.9 1.1
EL 2.5.......................................................... 0.8 0.9 * 0.7
EL 3............................................................ * 0.7 * 0.7 1.2
EL 3.5.......................................................... 0.9 1.0 ..............
EL 4............................................................ 1.1 1.2 1.3
EL 5............................................................ 1.2 1.3 1.3
----------------------------------------------------------------------------------------------------------------
* IEER differential for these levels were based on the recommended efficiency levels in the ASRAC Term Sheet.
Regarding the incremental COP heating efficiency levels for CUHPs,
AHRI, Nordyne, Carrier, Goodman and Rheem commented that they did not
support DOE's approach for determining the COP levels based on a
correlation with IEER. These commenters stated that there is no
technical or statistical justification to support that a correlation
exists between IEER and COP. IEER is a part-load metric while COP is a
full-load heating metric similar to EER for cooling. (CUAC: AHRI, No.
68 at p. 32; Nordyne, No. 61 at p. 27; Carrier, No. 48 at pp. 3-4;
Goodman, No. 65 at p. 14; Rheem, No. 70 at p. 4)
Members of the ASRAC Working Group were not able to suggest a more
appropriate approach for assigning COP values to the efficiency levels
analyzed. Because the use of correlations between
[[Page 2457]]
COP and EER was generally accepted by industry and interested parties
involved in the development of ASHRAE Standard 90.1-1999 and because
the correlations between COP and IEER using linear regressions are no
less strong than the correlations between COP and EER, DOE maintained
the same approach used in the CUAC/CUHP NOPR for determining the CUHP
heating mode efficiency levels, using the relationship between COP and
IEER to select the COP levels corresponding to each incremental IEER
level. DOE also notes that the COP values analyzed at each incremental
efficiency level represent modest increases above the current DOE
standard levels. Members of the ASRAC Working Group also agreed as Term
Sheet signatories to recommend that DOE adopt standards to increase the
stringency of the requirements for COP. At Efficiency Level 3 for the
small and large equipment classes and Efficiency Level 2.5 for the very
large equipment class, DOE analyzed the heating efficiency levels based
on the COP values included in the ASRAC Working Group recommendations,
as discussed in section III.B.2.
Based on the discussion above, DOE considered the efficiency levels
presented in Table IV-13 for this direct final rule.
Table IV-13--Direct Final Rule Incremental Efficiency Levels
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency levels
---------------------------------------------------------------------------------------------------
Equipment type Heating type Metric EL5 (Max-
Baseline EL1 EL2 EL2.5 EL3 EL3.5 EL4 Tech)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC and HP
(Air-Cooled)-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity:
AC............................. Electric Resistance IEER................. 11.4................. 12.9 14.0 14.5 14.8 15.8 19.9 21.5
Heating or No IEER................. 11.2................. 12.7 13.8 14.2 14.6 15.5 19.6 21.1
Heating.
All Other Types of
Heating.
HP............................. Electric Resistance IEER................. 11.2................. 12.2 13.2 13.7 14.1 14.9 18.8 20.3
Heating or No COP.................. 3.3.................. 3.3 3.4 3.4 3.4 3.5 3.7 3.7
Heating.
All Other Types of IEER................. 11.0................. 12.0 13.0 13.5 13.9 14.6 18.5 19.9
Heating COP.................. 3.3.................. 3.3 3.4 3.4 3.4 3.5 3.6 3.7
Large Commercial Packaged AC and HP
(Air-Cooled)-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity:
AC............................. Electric Resistance IEER................. 11.2................. 12.4 13.2 13.7 14.2 15.0 18.5 20.1
Heating or No IEER................. 11.0................. 12.2 13 13.5 14 14.7 18.2 19.7
Heating.
All Other Types of
Heating.
HP............................. Electric Resistance IEER................. 10.7................. 11.6 12.3 12.8 13.5 14.0 17.3 18.8
Heating or No COP.................. 3.2.................. 3.2 3.3 3.3 3.3 3.3 3.3 3.3
Heating.
All Other Types of IEER................. 10.5................. 11.4 12.1 12.6 13.3 13.7 17.0 18.4
Heating COP.................. 3.2.................. 3.2 3.3 3.3 3.3 3.3 3.3 3.3
Very Large Commercial Packaged AC AC................... Electric Resistance IEER................. 10.6 11.6 12.5 13.2 13.5 14.9 15.6
and HP (Air-Cooled)-->=240,000 Btu/ Heating or No IEER................. 10.4 11.4 12.3 13.0 13.2 14.6 15.3
h and <760,000 Btu/h Cooling Heating.
Capacity. All Other Types of
Heating.
HP................... Electric Resistance IEER................. 10.1 10.6 11.4 12.5 12.3 13.6 14.3
Heating or No COP.................. 3.2 3.2 3.2 3.2 3.2 3.2 3.2
Heating.
All Other Types of IEER................. 9.9.................. 10.4 11.2 12.3 12.1 13.3 14.0
Heating COP.................. 3.2.................. 3.2 3.2 3.2 3.2 3.2 3.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Warm Air Furnaces
For CWAFs, DOE developed efficiency levels for analysis higher than
the baseline efficiency level (i.e., the Federal minimum standard
level) based on a review of equipment available on the market. DOE
compiled a database of the CWAF market to determine what types of
equipment are currently available to commercial customers. At the
representative capacity for each equipment class, DOE surveyed
manufacturers' equipment offerings to identify commonly-available
efficiency levels. By identifying the most prevalent energy
efficiencies in the range of available equipment, DOE was then able to
establish a technology path that manufacturers typically use to
increase the TE of a CWAF to incrementally higher efficiency levels
above baseline, up to the max-tech efficiency level.
In its analysis, DOE focused on specific incremental TE levels
above the baseline for each equipment class. The incremental TE levels
are representative of efficiency levels along the technology paths that
CWAF manufacturers commonly use to maintain cost-effective designs
while increasing the TE of equipment. DOE reviewed its Compliance
Certification Management
[[Page 2458]]
System (``CCMS'') database,\39\ as well as AHRI's Directory of
Certified Product Performance,\40\ manufacturer catalogs, and other
publicly-available literature to determine which TE levels are the most
prevalent for each equipment class. For gas-fired CWAFs, DOE chose two
efficiency levels between the baseline and max-tech for analysis (see
Table IV-14). For oil-fired CWAFs, DOE chose one TE level between the
baseline and max-tech for analysis (see Table IV-15).
---------------------------------------------------------------------------
\39\ For more information see: http://www.regulations.doe.gov/certification-data/CCMS-81578122497.html.
\40\ For more information see: https://www.ahridirectory.org/ahridirectory/pages/cfr/defaultSearch.aspx.
---------------------------------------------------------------------------
DOE found several manufacturers that offer gas-fired equipment at
81-percent TE. In the analysis for the direct final rule, DOE found
only one manufacturer of gas-fired equipment rated at 82-percent TE,
which is available across a limited range of input capacities. In
addition, all of the 82-percent TE units offered by this manufacturer
are non-weatherized, and are thus not representative of the large
majority of gas-fired CWAF model offerings, which are weatherized.
Therefore, in its analyses for the direct final rule, DOE did not
identify any weatherized gas-fired CWAFs at 82-percent TE. However, in
the analyses for the CWAF NOPR, DOE identified a different manufacturer
of gas-fired 82-percent TE CWAFs. These particular units were
weatherized. This manufacturer offered equipment at this efficiency
level across a wide range of input capacities, indicating that meeting
the 82-percent TE level is technologically feasible for weatherized
gas-fired CWAFs at most input capacities. Thus, DOE considered 81-
percent and 82-percent as incrementally higher TE levels for the gas-
fired CWAF analysis.
DOE also considered the max-tech efficiency level. As discussed in
section IV.C.1, DOE purchased a 92-percent thermally efficient gas-
fired makeup air furnace for teardown, as makeup air units are
currently the only type of gas-fired CWAF at a condensing efficiency
level. There are substantially more non-makeup air CWAFs product
offerings than makeup air furnace product offerings. However, based on
manufacturer feedback, physical teardowns and examination of equipment,
and product literature, DOE observed that gas-fired makeup air furnaces
are technologically very similar to non-makeup air CWAFs.
Further, DOE identified a residential-sized (i.e., input rating
below 225,000 Btu/h) weatherized furnace design that utilizes
condensing technology. As such, DOE identified the max-tech efficiency
level for gas-fired CWAFs as 92-percent TE, which is based on the use
of condensing heat exchanger technology. For oil-fired furnaces, which
are typically installed indoors, DOE surveyed the market and identified
the baseline efficiency level as 81-percent TE (which is the current
federal energy conservation standard for this equipment class). DOE
also found that the majority of non-condensing equipment had a TE of
82-percent. One unit with a TE of 92-percent, which is the max-tech
efficiency level, was identified. As such, DOE selected 81-percent, 82-
percent, and 92-percent TE as the efficiency levels for analysis. The
efficiency levels DOE analyzed for each equipment class (including the
baseline levels) are presented in Table IV-14 and Table IV-15.
Table IV-14--Efficiency Levels Analyzed for Gas-Fired CWAFs
------------------------------------------------------------------------
Thermal
Efficiency level efficiency (%)
------------------------------------------------------------------------
EL0 (Baseline).......................................... 80
EL1..................................................... 81
EL2..................................................... 82
Max-Tech................................................ 92
------------------------------------------------------------------------
Table IV-15--Efficiency Levels Analyzed for Oil-Fired CWAFs
------------------------------------------------------------------------
Thermal
Efficiency level efficiency (%)
------------------------------------------------------------------------
EL0 (Baseline).......................................... 81
EL1..................................................... 82
Max-Tech................................................ 92
------------------------------------------------------------------------
3. Equipment Testing, Reverse Engineering and Energy Modeling
a. Commercial Unitary Air Conditioners and Heat Pumps
As discussed above, for the engineering analysis, DOE specifically
analyzed representative capacities of 7.5 tons, 15 tons, and 30 tons to
develop incremental cost-efficiency relationships.
For the CUAC/CUHP NOPR, DOE selected four 7.5-ton, two 15-ton, and
one 30-ton CUAC models, and one 7.5-ton CUHP model. The models were
selected to develop a representative sample of the market at different
efficiency levels. DOE based the selection of units for testing and
reverse engineering on the efficiency data available in the AHRI
certification database and the CEC equipment database. 79 FR at 58974.
DOE conducted testing on each unit according to the IEER test method
specified in AHRI Standard 340/360-2007. DOE then conducted physical
teardowns on each test unit to develop a manufacturing cost estimation
process and to evaluate key design features (e.g., heat exchangers,
compressors, fan/fan motors, control strategies, etc.). DOE
supplemented these data by conducting catalog teardowns on 346 models
spanning the full range of capacities from all manufacturers selling
equipment in the United States. DOE based the catalog teardowns on
information provided in equipment literature and experience from the
physical teardowns. Id.
For CUACs, DOE conducted energy modeling using the modeling tools
developed by the Center for Environmental Energy Engineering from the
University of Maryland at College Park. The tools include a detailed
heat exchanger modeling program and a refrigeration cycle modeling
program. The refrigeration cycle modeling program can integrate the
heat exchanger and compressor models to perform a refrigeration cycle
model. Details regarding the energy modeling tools are discussed in
section 5.5.5 and 5.6.4 of chapter 5 of the CUAC/CUHP direct final rule
TSD.
As explained in the CUAC/CUHP NOPR, DOE applied the key design
features identified during physical equipment teardowns and used the
energy modeling tool to generate detailed performance data (e.g.,
capacity and EER), validating them against the results obtained from
laboratory testing at each IEER capacity level (25, 50, 75, and 100
percent), or with the published performance data. See 79 FR at 58974.
With the validated energy models, DOE expanded the modeling tasks with
various system design options and identified the key design features
(consistent with equipment available on the market) required for 7.5-
ton, 15-ton, and 30-ton CUAC units with electric resistance heating or
no heating to achieve each efficiency level. Based on these equipment
designs, DOE also generated energy use profiles for CUACs. These
profiles included wattage inputs for key components (i.e., compressor,
indoor and outdoor fan motors, and controls) at each operating load
level measured using the IEER test method for each efficiency level to
serve as inputs for the energy use analysis. For the CUAC/CUHP NOPR,
DOE also used the design details, some for the reverse-engineered
models and some from DOE's energy modeling work, to determine the
incremental manufacturing costs for each efficiency
[[Page 2459]]
level for 7.5-ton, 15-ton and 30-ton CUACs units. Id.
Lennox expressed concern regarding the differences between using
tested and rated IEER values to validate the energy modeling
simulations. Lennox noted that Efficiency Level 1 for 7.5 tons (12.9
IEER) was based on a unit with a rated IEER of 11.4, but which DOE
tested at 12.9 IEER. Lennox's modeling of this unit predicted an IEER
of 12.2. Lennox commented that using a single test point to extrapolate
well above manufacturer ratings to justify the proposed standard levels
is arbitrary and not a valid approach. (CUAC: Lennox, No. 60 p. 13)
AHRI, Nordyne and Lennox commented that the design features that
DOE used to characterize the energy use and costs for the baseline and
incremental efficiency levels for 7.5 tons are not representative of
realistic models. (CUAC: AHRI, No. 68 at p. 35; Nordyne, No. 61 at p.
29; Lennox, No. 60 at p. 13) They added that DOE's approach for the 7.5
ton analysis of developing a design for the baseline efficiency level
by decreasing the size of the heat exchangers of the Efficiency Level 1
design results in a loss of EER performance below the current DOE
minimum standard levels. (CUAC: AHRI, No. 68 at p. 35; Nordyne, No. 61
at p. 29; Lennox, No. 60 at p. 13) Goodman commented that
manufacturers' published performance documents includes data for a
specific model with specific physical parameters. Goodman stated that
using these data and attempting to perform energy model modifications
to these physical parameters could lead to inaccurate predictions of
the effects of these design changes on performance and energy
consumption. Goodman also expressed concern that there was no
confirmation testing of the simulation results for the higher
efficiency equipment and, based on their assessment, the performance of
equipment at higher efficiency levels is overstated. (CUAC: Goodman,
No. 65 at pp. 15, 17)
To address these concerns with DOE's engineering analysis (i.e.,
limited number of tests and relying on energy-model-based extrapolation
of design details to represent efficiency levels for which DOE had no
test data), DOE revised its analysis to use rated IEER data from actual
models. Using this approach, DOE selected actual models available on
the market to represent each target efficiency level to conduct the
energy modeling and to generate component wattage profiles and
performance correlations. As discussed in section IV.E.1, these
component wattage profiles and performance correlations developed for
this direct final rule were then used in the energy use analysis along
with hourly building cooling loads and generalized building samples to
estimate the energy savings associated with each efficiency level. As
discussed in section IV.C.5, instead of developing manufacturing
production costs based on the specific design parameters used in the
energy modeling as was done in the CUAC/CUHP NOPR, DOE decoupled the
energy modeling and cost estimation analyses for this direct final
rule. In this manner, DOE was able to develop the cost-efficiency
relationship using models based on a full range of manufacturers and
equipment offerings. DOE's methodology and analysis for developing and
conducting the energy modeling and cost-efficiency analysis are
discussed in detail in section 5.5 and 5.6 of chapter 5 of the CUAC/
CUHP direct final rule TSD.
The IEER ratings for the units selected for energy modeling match
the corresponding efficiency level's target IEER within 0.2. In the case where selected unit's IEER rating differs from
the target IEER, the model was first calibrated to match the unit's
ratings. The dimensions of the heat exchangers were then slightly
adjusted such that the adjusted model would produce the target IEER.
With regards to the comments concerning the modeled full-load EER
values, because the revised analysis is based on actual models
available on the market that comply with the current standards for
these equipment, none of the representative units have EER values that
would not comply with the currently required EER-based standards.
Details of the design features, corresponding component wattage
profiles and performance correlations for each efficiency level and
equipment class are presented in chapter 5 of the CUAC/CUHP direct
final rule TSD.
AHRI and Nordyne commented that the modeling used in the NOPR-phase
energy analysis of the equipment was extremely complex and very
dependent upon the precision and accuracy of the parameters entered.
AHRI, Nordyne, and Goodman commented that DOE did not provide
sufficient details and data (e.g., refrigerant charge, type of
expansion device \41\, sensible to latent capacity ratios \42\,
condenser fan power consumption, evaporator blower motor power, etc.)
to thoroughly analyze the accuracy of the energy modeling results.
(CUAC: AHRI, No. 68 at p. 34; Nordyne, No. 61 at pp. 28-29; Goodman,
No. 65 at pp. 1-16) Goodman stated that, based on their estimates using
the physical parameters provided by DOE, the performance of the designs
chosen for Efficiency Level 2, 3, and 4 are overstated, and thus the
costs of the equipment are incorrect. (CUAC: Goodman, No. 65 at p. 15)
Trane commented that DOE did not test and analyze a significant sample
size to develop significant data and validate the energy model given
the broad range of equipment considered in this rulemaking and the
variability in design, testing and manufacturing of these components.
(CUAC: Trane, No. 63 at p. 7)
---------------------------------------------------------------------------
\41\ Expansion devices (e.g., capillary tubes, thermostatic
expansion valves, electronic expansion valves) control the amount of
refrigerant flow into indoor coil.
\42\ The ``sensible to latent capacity'' ratio provides the
conditions at the indoor coil that determine how much of the
system's total cooling capacity is available for handling sensible
loads (i.e., the dry bulb temperature of the building load) versus
latent loads (i.e., the thermal load associated with water vapor in
the air).
---------------------------------------------------------------------------
For each representative model analyzed at each efficiency level for
the direct final rule analysis, DOE reviewed details of the assumptions
for the equipment design parameters and the energy modeling results
(i.e., component wattage profiles and performance correlations) with
the manufacturers of models used in the analysis. DOE revised inputs to
the energy modeling (e.g., component power consumption estimates,
design feature specifications and operation sequences) based on
manufacturer feedback. Based on the confirmation provided by the
specific manufacturers of each unit analyzed regarding the inputs to
the energy modeling, DOE believes the energy modeling results are
representative of the operation and energy consumption of models at
each efficiency level for each equipment class.
AHRI, Nordyne, Carrier and Goodman also commented that the geometry
input for the CoilDesigner energy modeling tool that DOE used in
preparing its NOPR analysis did not accurately model heat exchanger
performance because it did not include inputs required for modeling the
internally enhanced (i.e., rifled \43\) tubing that are used in CUAC
and CUHP heat exchangers. Carrier added that without including these
internal enhancements, the overall coil performance prediction can be
impacted as much as 5 to 10 percent. (CUAC: AHRI, No. 68 at p. 34;
Nordyne, No. 61 at pp. 28-29; Carrier, No. 48 at p. 4; Goodman, No. 65
at p. 15) DOE notes that the CoilDesigner energy modeling
[[Page 2460]]
tool was updated after the analysis for the CUAC/CUHP NOPR had been
conducted. These updates included inputs for modeling the internal
enhancement for tubes for the condenser coils. As a result, DOE updated
its analysis for this direct final rule using the latest version of
CoilDesigner to account for the effects of rifled tubes.
---------------------------------------------------------------------------
\43\ Rifled tubes have grooves on the internal wall of the tube
to increase the heat transfer surface area.
---------------------------------------------------------------------------
As noted in chapter 5 of the CUAC/CUHP NOPR TSD, DOE's analysis for
7.5-ton units assumed that the baseline and Efficiency Level 1 both
used a single refrigerant circuit design. AHRI and Nordyne disagreed
with this approach and commented that use of a single-stage compressor
and a single refrigerant circuit rather than multiple circuits and
compressor stages is not broadly consistent with the current market
trends for 7.5-ton units. AHRI and Nordyne added that nearly 90 percent
of all units sold in this size have multiple compressors, which is
required by ASHRAE 90.1 standards. (CUAC: AHRI, No. 68 at p. 35;
Nordyne, No. 61 at p. 29) Lennox also commented that using a single
compressor design to represent Efficiency Level 1 for the small
equipment class is not consistent with current industry equipment
designs. Lennox noted that nearly 90 percent of their current sales of
7.5 ton units use multiple compressors and that over 95 percent of 7.5
to 10 ton units use multiple compressors. (CUAC: Lennox, No. 60 at pp.
12-13) Carrier commented that the split for single- and dual-compressor
units may be even at 7.5 tons, but that for 10-ton units and up to the
high end of the capacity range for small equipment, everything uses
dual-compressor designs. (CUAC: Carrier, ASRAC Public Meeting, No. 102
at pp. 129, 132-133) ASAP, the California IOUs, NEEA, and ACEEE
commented that DOE should consider both single- and dual-compressor
designs for the small equipment classes. (CUAC: ASAP, California IOUs,
NEEA, ACEEE, ASRAC Public Meeting, No. 102 at pp. 129-140)
Based on DOE's review of models in the small CUAC and CUHP
equipment classes, DOE noted that the majority of models at Efficiency
Level 1 used a dual-compressor design. Based on this review, a dual-
compressor design is more representative of models at Efficiency Level
1. As a result, DOE revised its analysis to use a dual-compressor
design to characterize the energy use and manufacturing production cost
for Efficiency Level 1. DOE noted that single- and dual-compressor
designs are both available at the baseline efficiency level for the
small equipment class. As a result, DOE conducted energy modeling to
develop component wattage profiles and performance for both single- and
dual-compressor designs for the 7.5-ton baseline efficiency level. As
discussed in section IV.A, DOE also developed separate manufacturing
production cost estimates for both single- and dual-compressor designs
for the 7.5-ton baseline efficiency level.
AHRI, Nordyne, Carrier and Lennox commented in response to the
CUAC/CUHP NOPR that a significant number of units at Efficiency Level 1
and Efficiency Level 2 for all equipment classes already incorporate
multiple-speed indoor fans based on the requirements in ASHRAE 90.1 and
California Title 24, and that the percentage of equipment with this
feature will increase over the next several years. As a result, these
commenters stated that DOE is overestimating the fan energy savings in
ventilation mode at higher efficiency levels by considering only
constant speed indoor fans at the lower efficiency levels. (CUAC: AHRI,
No. 68 at pp. 33-34; Nordyne, No. 61 at p. 27-28; Carrier, No. 48 at
pp. 2-3, 11; Lennox, No. 60 at pp. 9-11)
As discussed in section III.G.1, SAV and VAV CUACs/CUHPs
incorporate multiple-speed or variable-speed indoor fan motors, as
commented by interested parties, to stage indoor air flow rates. In
contrast, constant-air volume (``CAV'') CUACs/CUHPs, which typically
use a single- or constant-speed indoor fan motor, operate at a fixed
indoor air flow rate. Based on DOE's review of equipment available on
the market, CAV, SAV and VAV units are available at different
efficiency levels for each of the equipment class cooling capacity
ranges. Based on DOE's review of the indoor fan staging for models on
the market, DOE notes that CAV units are available at Efficiency Level
2 and lower for the small and large equipment classes, and at
Efficiency Level 2.5 and lower for the very large class. DOE notes that
SAV or VAV units are available at Efficiency Level 1 and higher for all
equipment classes. As a result, DOE revised the engineering analysis
for this direct final rule to be based on two design paths for the
different indoor fan staging options. Table IV-16 shows the design
paths for each equipment class.
Table IV-16--CUAC/CUHP Equipment Air Flow Design Path
----------------------------------------------------------------------------------------------------------------
Equipment air flow design
Efficiency level --------------------------------------------------------------------------------
Small CUACs/CUHPs Large CUACs/CUHPs Very large CUACs/CUHPs
----------------------------------------------------------------------------------------------------------------
Baseline....................... CAV...................... CAV...................... CAV.
EL1............................ Path-1: CAV.............. Path-1: CAV.............. Path-1: CAV.
Path-2: SAV.............. Path-2: SAV.............. Path-2: VAV.
EL2............................ Path-1: CAV.............. Path-1: CAV.............. Path-1: CAV.
Path-2: SAV.............. Path-2: SAV.............. Path-2: VAV.
EL2.5.......................... SAV...................... SAV...................... Path-1: CAV.
Path-2: VAV.
EL3............................ SAV...................... SAV...................... VAV.
EL3.5.......................... SAV...................... SAV...................... VAV.
EL4............................ SAV...................... SAV...................... VAV.
EL5/Max-Tech................... SAV...................... VAV...................... VAV.
----------------------------------------------------------------------------------------------------------------
AHRI, Nordyne, and Lennox stated that the power input that DOE used
for the condenser fans and indoor fan in the CUAC/CUHP NOPR modeling
analysis does not appear realistic across the efficiency levels. These
commenters noted that the high-speed indoor fan power on the 7.5-ton
model at Efficiency Level 3 and Efficiency Level 4, and 15 ton model at
all efficiency levels is unrealistically low. (CUAC: AHRI, No. 68 at p.
44; Nordyne, No. 61 at p. 37; Lennox, No. 60 at p. 15) AHRI and Nordyne
commented with regards to variable-speed fans that the negative impact
on mechanical efficiency from high load and low fan speed is not
considered. (CUAC: AHRI, No. 68 at p.
[[Page 2461]]
33; Nordyne, No. 61 at p. 27) Carrier also commented that the fan power
reductions moving from Efficiency Level 2 to Efficiency Level 3 for the
7.5- and 15-ton analysis (31 percent and 36 percent, respectively)
imply the use of very efficient motors at or approaching max-tech
levels. (CUAC: Carrier, No. 48 at p. 3)
For this direct final rule, as discussed above, DOE analyzed actual
models using their rated IEER values to represent each target
efficiency level. DOE calculated indoor fan power using fan performance
tables provided in manufacturer equipment literature for these models,
including for variable-speed fans as noted by AHRI and Nordyne, and
motor efficiency based on compliance with DOE electric motor standards
established by EPCA (10 CFR 431.25). The indoor fan motors used in
equipment are selected to overcome a wide range of external static
pressures (``ESPs''). The actual horsepower delivered by the motors at
the rated air flow and minimum ESP required by the test procedure are
typically less than the nameplate horsepower. For CAV units, the
calculation for horsepower loss is based on the approach adopted in
DOE's rulemaking for commercial and industrial fans and blowers.\44\
For SAV and VAV units, the calculation for horsepower loss is based on
equation developed in DOE's rulemaking for commercial and industrial
pumps test procedure.\45\ The equation accounts for the combined motor
and variable frequency drive loss during full-load and part-load
operation. For the outdoor fans, DOE calculated the outdoor fan power
input based on equipment literature, pressure estimates, typical fan
efficiency and motor efficiency based on compliance with DOE small
electric motor standards (10 CFR 431.25). Details of these analyses are
presented in chapter 5 of the CUAC/CUHP direct final rule TSD.
---------------------------------------------------------------------------
\44\ DOE Energy Conservation Standards for Commercial and
Industrial Fans and Blowers, NODA Life-Cycle Cost (LCC) Spreadsheet.
Available at: http://www.regulations.gov/#!documentDetail;D=EERE-
2013-BT-STD-0006-0034.
\45\ DOE Test Procedure NOPR for Pumps. 80 FR at 17586, 17622
(Apr. 1, 2015). Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-TP-0055-0001.
---------------------------------------------------------------------------
ASRAC Working Group participants commented that DOE should further
investigate the pressure drop associated with conversion curbs and the
percentage of shipments that will require conversion curbs for each
efficiency level, including the base case. Carrier and Trane both
suggested discussing this issue with conversion curb suppliers. (CUAC:
NEEA, ASAP, SMACNA, Carrier, Trane, ASRAC Public Meeting, No. 94 at pp.
147-167) Trane and Carrier commented that DOE should look across the
range of capacities within each equipment class to determine the
efficiency levels at which curb size changes. (CUAC: Trane, Carrier,
ASRAC Public Meeting, No. 94 at pp. 193-199)
DOE collected information from major conversion curb vendors,
including MicroMetl and Thybar (who were both identified during the
Working Group's public discussions), regarding pressure drops, costs,
and the size of the existing market for these products. (CUAC: ASRAC
Public Meeting, No. 96 at pp. 75-77) DOE developed a distribution of
efficiency levels at which conversion curbs are required by reviewing
equipment size trends for key capacities of the equipment classes for
four major manufacturers with equipment spanning the range of
efficiencies considered for the analysis. DOE selected the efficiency
levels that would require cabinet size increases for each manufacturer/
capacity combination. DOE then developed a distribution of the
percentage of shipments at each efficiency level that would require a
conversion curb based on equal manufacturer market share. Regarding the
pressure drop associated with conversion curbs, conversion curb vendors
provided information regarding typical pressure drops for units
installed with conversion curbs. Based on DOE's review of these data
and discussions with conversion curb vendors, DOE determined that a
pressure drop of 0.2 inch water column (in. wc.) represents the average
pressure drop associated with CUAC/CUHP installations that include a
conversion curb. Based on this evaluation, DOE applied a pressure drop
of 0.2 in. wc. for full air flow across all equipment classes as a
result of applying a conversion curb. ASRAC Working Group participants
agreed to using a 0.2 in. wc. pressure drop for conversion curbs.
(ASRAC Public Meeting, No. 97 at pp. 132-136) Using the 0.2 in. wc.
conversion curb pressure drop at full air flow, DOE revised the cooling
capacity and indoor fan power correlations used for the energy use
analysis.
In the CUAC/CUHP NOPR, DOE did not conduct similar energy modeling
for CUHP units since CUHP shipments represent a very small portion of
industry shipments compared to CUACs shipments (9 percent versus 91
percent). With these small numbers, in DOE's view, modeling for CUHPs
was unnecessary because DOE accounted for the difference in efficiency
as compared to that which occurs with the CUAC equipment classes due to
losses from the reversing valve and the reduced potential for
optimization of coil circuitry for cooling, as discussed in section
IV.C.2.b. In addition, because CUHPs represent a small portion of
shipments, DOE noted, based on equipment teardowns and an extensive
review of equipment literature \46\, that manufacturers generally use
the same basic design/platform for equivalent CUAC and CUHP models. DOE
also considered the same design changes for the CUHP equipment classes
that were considered for the CUAC equipment classes within a given
capacity range. For these reasons, in the CUAC/CUHP NOPR, DOE focused
energy modeling on CUAC equipment. 79 FR at 58974-58975. DOE maintained
this approach for this direct final rule. Although not considered in
the engineering and LCC and PBP analyses, DOE did analyze CUHP
equipment in the NIA. From this analysis, DOE believes the energy
modeling conducted for CUAC equipment provides a good estimate of CUHP
cooling performance and provides the necessary information to estimate
the magnitude of the national energy savings from increases in CUHP
equipment efficiency.
---------------------------------------------------------------------------
\46\ For examples of manufacturer literature used in the
analysis, see EERE-2013-BT-STD-0007-0110.
---------------------------------------------------------------------------
b. Commercial Warm Air Furnaces
As discussed above, for the engineering analysis, DOE analyzed a
representative input capacity of 250,000 Btu/h for both the gas-fired
and oil-fired CWAF equipment classes to develop incremental cost-
efficiency relationships. CWAF models selected for reverse engineering
(physical teardown/examination) were used to estimate the costs to
manufacture CWAFs at each efficiency level available on the market,
ranging from the baseline 80-percent TE for gas-fired units, and
baseline 81-percent TE for oil-fired units, up to the max-tech 92-
percent TE for both gas-fired and oil-fired units. Because this reverse
engineering was first conducted to inform the engineering analyses for
the CWAF NOPR, the selection of units for testing and reverse
engineering was based on the efficiency data available in the AHRI
certification database,\47\ the CEC equipment database, and
manufacturers' catalogs \48\ at the time of the CWAF
[[Page 2462]]
NOPR.\49\ Details of the key features of the tested and reverse
engineered units are presented in chapter 5 of the direct final rule
TSD.
---------------------------------------------------------------------------
\47\ Available at: https://www.ahridirectory.org/ahridirectory/pages/home.aspx.
\48\ Available at: http://www.energy.ca.gov/appliances/.
\49\ At the time of the analyses for the CWAF NOPR, the DOE CCMS
database did not contain efficiency data for CWAFs. Upon review of
current efficiency data from the CCMS database and manufacturers'
catalogs in the analyses for the direct final rule, DOE found the
current efficiency distribution of CWAF models to still include a
majority of units at the same efficiency levels that were analyzed
in the NOPR based on the AHRI database, CEC database, and
manufacturers' catalogs. An exception to this was at the 82-percent
TE level for gas-fired CWAFs, where the number of models offered
significantly decreased between the NOPR and direct final rule
analyses. As discussed previously in section IV.C.2.b, this was
because a specific manufacturer of weatherized gas-fired CWAFs units
listed as 82-percent TE at the time of the NOPR analyses no longer
listed this equipment at the 82-percent TE level at the time of the
direct final rule analyses.
---------------------------------------------------------------------------
DOE conducted physical teardowns on each unit tested to inform
manufacturing cost estimations and to evaluate key design features
(e.g., heat exchangers, blower and inducer fans/fan motors, controls).
For gas-fired CWAFs, DOE performed two teardowns on weatherized
CWAFs units at non-condensing efficiency levels. Each CWAFs unit was
part of a packaged CUAC/CWAF rooftop unit. One unit was rated at 80-
percent TE and the other unit was rated at 82-percent TE. Prior to
teardown, the units were tested by a third-party test lab and both
tested at approximately 82-percent TE. The units were from the same
manufacturer and had similarly designed furnace sections with different
air conditioner sections. DOE determined that the similarity of the
test results on both units indicated that the furnace designs that were
torn down are representative of equipment with 82-percent TE. Using the
cost-assessment methodology, DOE determined the manufacturing cost of
each CWAFs torn down via reverse engineering.
Based on the CWAF teardowns, manufacturer feedback, product
literature, and experience from the residential furnaces rulemaking,
DOE determined that the primary method manufacturers use to achieve
efficiency levels above baseline is to increase heat exchanger size. In
the analyses for the February 2015 CWAF NOPR (80 FR 6181), DOE used
feedback from manufacturer interviews to estimate that manufacturers
will typically increase the surface area of the heat exchanger by 10
percent in order to increase TE by 1 percent.\50\ DOE sought comment
from stakeholders on the technologies that were identified for
improving thermal efficiency. 80 FR at 6232. In addition, during the
March 2, 2015 public meeting to discuss the CWAF NOPR, DOE again made
clear the technology options that were considered for improving CWAF TE
(including a 10 precent increase in heat exchanger size to achieve a 1
percent increase in TE), and sought comment regarding its engineering
analysis. (CWAF: DOE, NOPR Public Meeting Transcript, No. 17 at pp. 57,
70-71) During the CWAF NOPR comment period and ASRAC public meetings,
DOE did not receive any comments objecting to DOE's estimates of the
heat exchanger size changes with increased efficiency, nor did DOE
receive any data that would allow for the refinement of this
approximation. Thus, DOE continued to use this estimate for this direct
final rule analysis. However, feedback from manufacturers during the
ASRAC public meetings did allow DOE to determine the specific
variations in the design of the heat exchanger assembly components
between units at the 80-percent (baseline), 81-percent, and 82-percent
TE levels. Specifically, this feedback indicated that heat exchanger
size is increased by adding tubes to the heat exchanger, rather than
lengthening heat exchanger tubes, which DOE accounted for in its direct
final rule analysis. (CWAF: Carrier, ASRAC Public Meeting, No. 94 at
pp. 62-63; Trane, ASRAC Public Meeting, No. 94 at pp. 63; Rheem, ASRAC
Public Meeting, No. 94 at pp. 63-64) At the 80-percent and 81-percent
TE levels, DOE used this information to scale down the size of the heat
exchanger examined in the units torn down at 82-percent TE as the
initial step in estimating the costs to manufacture equipment at the
80-percent and 81-percent TE efficiency levels.
---------------------------------------------------------------------------
\50\ See chapter 5 of the February 2015 CWAF NOPR TSD for
further information, located at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0021-0012.
---------------------------------------------------------------------------
In response to the costs presented in the NOPR, multiple
stakeholders commented that the methodology for estimating the
manufacturing cost of an 82-percent TE gas-fired CWAF did not account
for significant technological modifications required to maintain
equipment reliability at that efficiency level. Specifically, DOE's
cost estimates in the NOPR for the 80-percent through 82-percent TE
levels incorporated the use of aluminized steel to construct key heat
exchanger and inducer assembly components. Multiple stakeholders
commented that the estimated manufacturing cost of an 82-percent TE
unit was not accurate, and that heat exchanger and inducer assembly
components would need to be constructed out of more resilient materials
at 82-percent TE. AHRI commented that to meet an 82-percent TE standard
without sacrificing safety, reliability, and durability, manufacturers
would need to significantly modify their CWAFs offerings to account for
the risk of corrosion in the heat exchanger and venting system as a
result of condensation formation under certain ambient conditions. In
its view, accounting for this factor would require that the incremental
manufacturer production cost (``MPC'') over baseline be higher than
that presented in the NOPR engineering analysis. (CWAF: AHRI, No. 26 at
p. 2) The Advocates commented that if it is determined that some
portion of CWAF sales will necessitate stainless steel heat exchangers
to accommodate condensate formation during operation, then the
engineering analysis should be modified to account for the additional
costs associated with this engineering modification. (CWAF: The
Advocates, No. 24 at p. 1-2) Lennox commented that at 82-percent TE,
the combination of higher TE and reduced dilution air decreases the
safety factor between flue gas temperature and condensation point
temperature by 40 percent, which greatly increases the risk for
condensation formation. To overcome this, more expensive corrosion-
resistant heat exchanger materials are needed. As a result, for smaller
heating input capacity products, Lennox estimates the incremental MPC
to achieve 82-percent TE over baseline efficiency is 12 times higher
than the DOE estimate of $10. For larger capacity products, Lennox
estimates the incremental MPC will be over 20 times higher than the $10
estimate. Additionally, Lennox noted that at 82-percent TE, the inducer
motor would need to be constructed out of more corrosion-resistant
materials. (CWAF: Lennox, No. 22 at p. 7) Rheem commented that at 82-
percent TE, excessive condensation will occur to the point of causing
heat exchanger or vent system corrosion. As a result, it would need to
redesign the combustion system, evaluate alternative materials, conduct
reliability testing, and other field tests--none of which were captured
in the manufacturer costs presented in the TSD. (CWAF: Rheem, No. 25 at
p. 2) Rheem added that to increase TE to 82-percent above baseline, the
estimated $10 incremental MPC is not accurate with regard to Rheem's
product offerings. In its view, the $10 incremental cost included in
DOE's analysis would not allow them to add turbulators to their designs
to enhance furnace efficiency. (CWAF: Rheem, No.
[[Page 2463]]
25 at p. 4) Trane commented that the MPCs presented in the NOPR for the
81-percent and 82-percent TE levels are understated by about 3-fold, in
part because they do not account for the needed use of stainless steel
heat exchangers. CWAFs are designed to operate at the midpoint of
possible air temperature rise across the heat exchanger (which will be
at least a 30 degree Fahrenheit range), which means that 82-percent TE
units will end up operating frequently at 83-percent TE or higher, and
thus experience condensation. (CWAF: Trane, No. 27 p. 4-6)
In the engineering analyses for the direct final rule, DOE modified
its cost estimates for the 82-percent TE level in response to the above
comments. To account for the use of corrosion-resistant materials in
both the heat exchanger and inducer assemblies at 82-percent TE, DOE
estimated the costs of implementing both 409-grade stainless steel
(SS409) and 316-grade stainless steel (SS316) into these assemblies,
rather than aluminized steel. In addition, DOE has observed that a
certain portion of units at 80-percent and 81-percent TE also utilize
heat exchanger and inducer assemblies that incorporate corrosion-
resistant materials into their designs in order to improve durability.
As such, for the 80-percent, 81-percent, and 82-percent TE levels, DOE
estimated individual MPCs for each of the specific material options
that may be incorporated into the heat exchanger/inducer assembly at
that efficiency level. For more information on the methodology used to
estimate the MPCs for the 80-percent, 81-percent, and 82-percent TE
levels, see chapter 5 of the CWAF direct final rule TSD. In the life-
cycle cost and payback period analysis, DOE assigned a percentage of
models at each efficiency level that would incorporate each of the
various material types analyzed. (See chapter 8 of the CWAF direct
final rule TSD for further details.)
As discussed in section IV.C.1, to estimate the manufacturing cost
of a 92-percent TE (max-tech) CWAF, DOE obtained a condensing, 92-
percent TE gas-fired makeup air furnace for physical examination. In
addition, DOE used information gathered from a teardown of a condensing
weatherized residential furnace to further inform the cost estimation.
DOE examined the heat exchanger, inducer fan, condensate management
system, and other aspects of the gas-fired makeup air furnace to
develop an estimate of the cost to manufacture these specific sub-
assemblies in a condensing CWAF. DOE then used information from the
residential condensing weatherized furnace teardown to refine estimates
of the specific costs of a condensate management system for a
condensing efficiency level CWAF. Using these sub-assembly cost
estimates, and additional information provided by the two teardowns of
82-percent TE gas-fired CWAFs, DOE estimated the MPC for a 92-percent
TE gas-fired CWAF. For further information on the estimation of the
manufacturing cost of a 92-percent TE gas-fired CWAF, see chapter 5 of
the direct final rule TSD.
For oil-fired CWAFs, DOE performed a teardown of a non-weatherized
unit at 81-percent TE. DOE used this teardown, along with product
literature, prior industry experience, manufacturer feedback, and
analysis previously performed on oil-fired residential furnaces to
develop estimates of the manufacturing costs of both 82-percent and 92-
percent TE oil-fired CWAFs.
In a previous analysis of residential non-weatherized oil-fired
furnaces, DOE developed an estimate of the cost-efficiency relationship
across a range of efficiency levels. In examining product literature
for oil-fired CWAFs, DOE found that commercial units are very similar
to residential units, except with higher input ratings and overall
larger size. Based on information obtained from the physical teardown
of the 81-percent TE oil-fired CWAF, in addition to the information
gained from the residential furnace analysis and product literature,
DOE was able to conduct a virtual teardown to estimate the
manufacturing costs for an 82-percent TE unit. Key to this cost
estimate was the growth in heat exchanger size necessary for a 1-
percent increase in TE, which necessitates a larger cabinet to
accommodate it. Sheet metal and other components sensitive to size
changes were scaled in order to match the larger size of the unit,
while components that are not sensitive to heat exchanger size changes
remained unchanged.
Similarly, DOE relied on the physical teardown at the 81-percent TE
level, as well as prior comparisons of residential oil-fired furnaces
at condensing and non-condensing efficiency levels, to conduct a
virtual teardown at the 92-percent TE level. At 92-percent TE, a
secondary condensing heat exchanger made from a high-grade stainless
steel was added in order to withstand the formation of condensate from
the flue gases coupled with increased heat extraction into the building
airstream (and, thus, higher TE). This additional heat exchanger was
appropriately-sized based on information gathered from teardowns of
oil-fired residential furnaces. According to product specification
sheets, 92-percent TE oil-fired CWAFs use similar heat exchanger
technology as condensing residential oil-fired furnaces. To accommodate
the secondary heat exchanger, the cabinet was increased in size, and
all associated sheet metal, wiring, and other components sensitive to
cabinet size changes were also scaled as a result. In addition, the
size of the blower fan blade was increased appropriately to account for
the additional airflow needed over the secondary heat exchanger
(however, based on observations in product literature, the rated fan
power was unchanged). The manufacturing costs obtained from these
physical and virtual teardowns served as the basis for the cost-
efficiency relationship for this equipment class. The teardown analyses
for oil-fired CWAFs are described in further detail in chapter 5 of the
direct final rule TSD.
4. Cost Estimation Process
DOE developed a systematic process to estimate the MPCs of CUACs/
CUHPs and CWAFs. The process utilizes a spreadsheet that calculates
costs based on information about the materials and components in the
bills of materials (``BOMs''), based on the price of materials, average
labor rates associated with fabrication and assembly, and the costs of
overhead and depreciation, as determined based on manufacturer
interviews and DOE expertise. To support cost calculations using the
information in the BOMs, DOE collected information on labor rates,
tooling costs, raw material prices, and other factors. For purchased
parts, DOE estimates the purchase price based on volume-variable price
quotations and detailed discussions with manufacturers and component
suppliers. For fabricated parts, the prices of raw metal materials
(e.g., tube, sheet metal) are estimated based on five-year averages.
The cost of transforming both raw materials and purchased parts into
finished assemblies and sub-assemblies is estimated based on current
industry costs for labor, manufacturing equipment/tooling, space, etc.
Additional details on the cost estimation process are contained in
chapter 5 of the CUACs/CUHPs and CWAF direct final rule TSDs.
5. Manufacturing Production Costs
As discussed previously, for both CUACs/CUHPs and CWAFs, DOE
calculated manufacturing costs at each efficiency level by totaling the
costs of materials, labor, depreciation and direct overhead incurred in
the manufacturing process. The total manufacturing cost of equipment at
each efficiency level is
[[Page 2464]]
broken down into two main costs: (1) The full MPC; and (2) the non-
production cost, which includes selling, general, and administration
(``SG&A'') costs; the cost of research and development; and interest
from borrowing for operations or capital expenditures. DOE estimated
the MPC at each efficiency level considered for each equipment class,
from the baseline through the max-tech efficiency levels. DOE
calculated the percentage of MPC attributable to each individual
element of total production costs (i.e., materials, labor,
depreciation, and overhead). These percentages are used to validate the
inputs to the cost estimation process by comparing them to
manufacturers' actual financial data published in annual reports, along
with feedback obtained from manufacturers during interviews. DOE uses
these production cost percentages in the MIA.
a. Commercial Unitary Air Conditioners and Heat Pumps
For the CUAC/CUHP NOPR, DOE developed the cost-efficiency results
using the design information of tested units and design changes
identified as part of the energy modeling analysis. DOE developed cost-
efficiency relationships for each cooling capacity range. DOE also
noted in the CUAC/CUHP NOPR that the incremental manufacturing
production and shipping costs for each efficiency level developed for
the CUACs with electric resistance heating or no heat equipment class
would apply to all of the other equipment classes (i.e., CUACs units
with all other types of heating, CUHPs units with electric resistance
heating or no heat, CUHPs units with all other types of heating) within
a given cooling capacity range. 79 FR at 58975. The cost-efficiency
relationships developed for the CUAC/CUHP NOPR are presented in Table
IV-17.
Table IV-17--CUAC/CUHP NOPR Cost-Efficiency Relationships
----------------------------------------------------------------------------------------------------------------
Incremental manufacturing production cost
-----------------------------------------------
Efficiency level Small air- Large air- Very large air-
cooled CUACs cooled CUACs cooled CUACs
and CUHPs and CUHPs and CUHPs
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ - - -
EL1............................................................. $115.93 $419.16 $542.65
EL2............................................................. 583.47 792.76 1,296.41
EL3............................................................. 788.88 1,236.98 1,834.67
EL4 (Max-Tech).................................................. 1,277.04 1,554.26 2,753.32
----------------------------------------------------------------------------------------------------------------
AHRI, Nordyne, Rheem, Trane, Lennox and Goodman commented that DOE
has underestimated the costs of complying with the proposed standards.
(CUAC: AHRI, No. 68 at pp. 29, 37-38, 44; Nordyne, No. 61 at pp. 24,
33, 37; Rheem, No. 70 at p. 4; Trane, No. 63 at p. 8; Lennox, No. 60 at
p. 15; Goodman, No. 65 at pp. 13, 16)
DOE updated the raw materials and purchased parts costs used in the
manufacturing cost estimation analysis based on U.S. Bureau of Labor
Statistics and American Metals Market data. To address manufacturers
concerns regarding DOE's estimated incremental MPCs, DOE provided
detailed cost data, broken out by production factors (materials, labor,
depreciation, and overhead) and also by major subassemblies (e.g.,
indoor/outdoor heat exchangers and fan assemblies, controls, sealed
system, etc.) and components (e.g., compressors, fan motors, etc.), for
each model analyzed in its physical and catalog teardowns to the
manufacturers of the models. DOE refined its analysis based on all data
and feedback provided by manufacturers.
For this direct final rule, DOE revised its analysis to be based on
the physical and catalog teardown models using their IEER ratings at
each efficiency level. For each equipment class, DOE estimated the
incremental MPCs using the physical and catalog teardown models
individually for each manufacturer that included sufficient information
in their equipment literature to conduct the cost estimation analysis,
then averaged the results across the manufacturers considered. As
discussed above, DOE specifically focused its analysis on 7.5-ton, 15-
ton, and 30-ton CUAC units with electric resistance heating or no
heating. This approach for determining costs, which is different from
the approach used for the energy modeling analysis discussed above,
considers the full range of manufacturers and equipment offerings for
which sufficient data were available to conduct the manufacturing
estimation analysis using their rated IEER values. As discussed in
section IV.C.3.a, DOE evaluated air flow design paths separately for
CUAC and CUHP units with CAV and SAV/VAV air flow designs and also
developed two separate costs for the baseline efficiency level for 7.5
tons for single- and dual-compressor designs.
Where the rated IEER values did not match exactly with the
efficiency levels being considered, DOE's primary method to determine
the MPCs for each efficiency level was to interpolate or extrapolate
results. For example, to determine the costs at 7.5-ton Efficiency
Level 1 (12.9 IEER), DOE determined the MPC for one manufacturer by
interpolating the results for models rated at 12.2 IEER and 13.0 IEER.
For efficiency levels with limited numbers of models, DOE developed
incremental costs to be representative of the industry average cost to
achieve those levels. For example, for Efficiency Level 4 for 7.5- and
15-ton units, DOE applied the relative percentage increase in cost for
the one manufacturer with commercially-available equipment at that
level across the other manufacturers to better represent average labor
and production factors.
Based on this revised approach of considering the full range of
manufacturers and equipment offerings using their rated IEER values and
the consideration of additional feedback from manufacturers, DOE
believes its revised cost estimates for this direct final rule provide
a more accurate representation of the incremental manufacturing
production costs required to achieve each efficiency level. Table IV-18
through Table IV-20 presents the cost-efficiency results developed for
this direct final rule.
[[Page 2465]]
Table IV-18--Direct Final Rule Small Air-Cooled CUACs and CUHPs Cost-Efficiency Relationships
----------------------------------------------------------------------------------------------------------------
Incremental Incremental
MPC (single MPC (dual
Efficiency Level Total MPC compressor compressor
baseline) baseline)
----------------------------------------------------------------------------------------------------------------
Baseline Single Compressor...................................... $1,947.33 .............. ..............
Baseline Dual Compressor........................................ 2,110.04 .............. ..............
EL 1 CAV........................................................ 2,394.77 $447.44 $284.74
EL 1 SAV........................................................ 2,365.85 418.52 255.82
EL 2 CAV........................................................ 2,672.21 724.88 562.18
EL 2 SAV........................................................ 2,737.46 790.13 627.43
EL 2.5.......................................................... 2,836.11 888.78 726.07
EL 3............................................................ 2,924.49 977.16 814.46
EL 3.5.......................................................... 3,072.46 1,125.13 962.42
EL 4............................................................ 3,452.52 1,505.19 1,342.49
EL 5 (Max-Tech)................................................. 4,105.51 2,158.18 1,995.48
----------------------------------------------------------------------------------------------------------------
Table IV-19--Direct Final Rule Large Air-Cooled CUACs and CUHPs Cost-
Efficiency Relationships
------------------------------------------------------------------------
Incremental
EL Total MPC MPC
------------------------------------------------------------------------
Baseline................................ $4,115.95 ..............
EL 1 CAV................................ 4,412.72 296.77
EL 1 SAV................................ 4,462.10 346.15
EL 2 CAV................................ 4,610.56 494.61
EL 2 SAV................................ 4,797.55 681.60
EL 2.5.................................. 4,974.17 858.22
EL 3.................................... 5,169.16 1,053.21
EL 3.5.................................. 5,289.84 1,173.89
EL 4.................................... 5,545.71 1,429.76
EL 5 Max-Tech (VAV)..................... 7,700.47 3,584.52
------------------------------------------------------------------------
Table IV-20--Direct Final Rule Very Large Air-Cooled CUACs and CUHPs
Cost-Efficiency Relationships
------------------------------------------------------------------------
Incremental
EL Total MPC MPC
------------------------------------------------------------------------
Baseline................................ $7,535.78 ..............
EL1 CAV................................. 8,766.75 $1,230.97
EL1 VAV................................. 9,878.35 2,342.56
EL2 CAV................................. 10,250.48 2,714.69
EL2 VAV................................. 10,756.20 3,220.42
EL2.5 CAV............................... 10,403.62 2,867.84
EL2.5 VAV............................... 11,533.72 3,997.93
EL3..................................... 11,866.94 4,331.15
EL4..................................... 11,922.94 4,387.16
EL5 Max-Tech............................ 12,743.07 5,207.29
------------------------------------------------------------------------
b. Commercial Warm Air Furnaces
Based on the analytical methodology discussed in the sections
above, DOE developed the cost-efficiency results for both gas-fired and
oil-fired CWAFs shown in Table IV-21 and Table IV-22 for each TE level
analyzed. As discussed in section IV.A, for each of the 80-percent, 81-
percent, and 82-percent TE levels for gas-fired CWAFs, DOE developed
multiple MPCs accounting for the use of either aluminized steel, SS409,
or SS316 as a material type in the heat exchanger and inducer motor
assemblies. The results shown in Table IV-21 represent the MPCs
developed for each equipment class and efficiency level. Table IV-22
shows the incremental MPC increases, relative to the baseline MPC,
needed to produce equipment at each specific efficiency level above
baseline. Details of the cost-efficiency analysis, including
descriptions of the technologies DOE analyzed at each efficiency level
to develop the incremental manufacturing costs, are presented in
chapter 5 of the CWAF direct final rule TSD.
Table IV-21--Manufacturing Production Costs *
----------------------------------------------------------------------------------------------------------------
EL2 (oil-fired EL3 (gas-fired
Equipment type EL0 (baseline) EL1 Max-Tech) Max-Tech)
----------------------------------------------------------------------------------------------------------------
Gas-fired CWAFs with aluminized steel HX/inducer $337 $350 $357 $1,074
assemblies at EL0 through EL2..................
[[Page 2466]]
Gas-fired CWAFs with SS409 HX/inducer assemblies 447 469 486 1,074
at EL0 through EL2.............................
Gas-fired CWAFs with SS316 HX/inducer assemblies 599 635 664 1,074
at EL0 through EL2.............................
Oil-fired CWAFs................................. 1,613 1,638 2,304 ..............
----------------------------------------------------------------------------------------------------------------
* DOE structures potential standards in terms of TSLs and examined five TSLs in the analysis for this direct
final rule. TSL 1 includes EL1 for gas-fired CWAFs and EL0 for oil-fired CWAFs, TSL 2 includes EL1 for both
equipment classes, TSL 3 includes EL2 for gas-fired CWAFs and EL0 for oil-fired CWAFs, TSL 4 includes EL2 for
gas-fired CWAFs and EL1 for oil-fired CWAFs, and TSL 5 includes EL3 for gas-fired CWAFs and EL2 for oil-fired
CWAFs. For more information on the TSL structure for CWAFs, see section V.A of this direct final rule.
Table IV-22--Incremental Manufacturing Production Cost Increases
----------------------------------------------------------------------------------------------------------------
EL0 EL2 (oil-fired EL3 (gas-fired
Equipment type (baseline) EL1 Max-Tech) Max-Tech)
----------------------------------------------------------------------------------------------------------------
Gas-fired CWAFs with aluminized steel HX/inducer .............. $13 $20 $737
assemblies at EL0 through EL2..................
Gas-fired CWAFs with SS409 HX/inducer assemblies .............. 22 39 627
at EL0 through EL2.............................
Gas-fired CWAFs with SS316 HX/inducer assemblies .............. 35 65 474
at EL0 through EL2.............................
Oil-fired CWAFs................................. .............. 25 691 ..............
----------------------------------------------------------------------------------------------------------------
6. Manufacturer Markup
To account for manufacturers' non-production costs and profit
margin, DOE applies a non-production cost multiplier (the manufacturer
markup) to the MPC. The resulting manufacturer selling price (``MSP'')
is the price at which the manufacturer can recover all production and
non-production costs and earn a profit. To meet new or amended energy
conservation standards, manufacturers often introduce design changes to
their equipment lines that result in increased MPCs. Depending on
competitive pressures, some or all of the increased production costs
may be passed from manufacturers to retailers and eventually to
customers in the form of higher purchase prices. As production costs
increase, manufacturers typically incur additional overhead. The MSP
should be high enough to recover the full cost of the equipment (i.e.,
full production and non-production costs) and yield a profit. The
manufacturer markup has an important bearing on profitability. A high
markup under a standards scenario suggests manufacturers can readily
pass along the increased variable costs and some of the capital and
product conversion costs (the one-time expenditure) to customers. A low
markup suggests that manufacturers will not be able to recover as much
of the necessary investment in plant and equipment. DOE developed the
manufacturer markup through an examination of corporate annual reports
and Securities and Exchange Commission (``SEC'') 10-K reports,\51\ as
well as comments from manufacturer interviews. Additional information
is contained in chapter 6 of the CUACs/CUHPs and CWAF direct final rule
TSDs.
---------------------------------------------------------------------------
\51\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) (Available at: http://www.sec.gov/edgar/searchedgar/companysearch.html) (Last Accessed Dec. 13, 2013).
---------------------------------------------------------------------------
7. Shipping Costs
HVAC equipment manufacturers typically pay for shipping during the
first step in the distribution chain. Freight is not a manufacturing
cost, but because it is a substantial cost incurred by the
manufacturer, DOE is accounting for the shipping costs of CUACs/CUHPs
and CWAFs separately from other non-production costs that comprise the
manufacturer markup. To calculate the MSP at each efficiency level for
CUACs/CUHPs and CWAFs, DOE multiplied the MPC at each efficiency level
by the manufacturer markup and added shipping costs for equipment at
the given efficiency level.
DOE calculated shipping costs at each efficiency level based on the
average outer dimensions of equipment at the given efficiency and the
use of a typical flat-bed, step-deck, or double-drop trailer to ship
the equipment.
For CUACs and CUHPs, DOE's estimated shipping costs for each
efficiency level are presented in Table IV-23 through Table IV-25. DOE
notes that the shipping costs differ between CAV CUACs/CUHPs and SAV/
VAV CUACs/CUHPs because of the design changes used in each type of unit
to reach the higher efficiency levels. CAV CUACs/CUHPs generally rely
on increasing the size of the heat exchangers to achieve higher
efficiencies. As a result, CAV CUACs/CUHPs may require a larger overall
cabinet size and thus a higher shipping cost compared to SAV or VAV
CUACs/CUHPs at the same efficiency level, which generally rely on
implementing airflow and compressor staging to achieve higher
efficiencies that may not require an increase in cabinet size. DOE also
notes that for the very large equipment class, the cabinet size
increases associated with the higher efficiency levels did not change
the number of units that fit on the trailer.
Table IV-23--Direct Final Rule Small Air-Cooled CUACs and CUHPs Shipping
Cost
------------------------------------------------------------------------
Efficiency level Shipping cost
------------------------------------------------------------------------
Baseline Single Compressor.............................. $278.57
Baseline Dual Compressor................................ $278.57
EL 1 CAV................................................ 278.57
EL 1 SAV................................................ 278.57
EL 2 CAV................................................ 278.57
EL 2 SAV................................................ 278.57
EL 2.5.................................................. 278.57
EL 3.................................................... 278.57
EL 3.5.................................................. 278.57
EL 4.................................................... 360.00
EL 5 (Max-Tech)......................................... 360.00
------------------------------------------------------------------------
Table IV-24--Direct Final Rule Large Air-Cooled CUACs and CUHPs Shipping
Cost
------------------------------------------------------------------------
Efficiency level Shipping cost
------------------------------------------------------------------------
Baseline................................................ $360.00
EL 1 CAV................................................ 360.00
[[Page 2467]]
EL 1 SAV................................................ 360.00
EL 2 CAV................................................ 405.00
EL 2 SAV................................................ 360.00
EL 2.5.................................................. 405.00
EL 3.................................................... 405.00
EL 3.5.................................................. 405.00
EL 4.................................................... 450.00
EL 5 Max-Tech (VAV)..................................... 450.00
------------------------------------------------------------------------
Table IV-25--Direct Final Rule Very Large Air-Cooled CUACs and CUHPs
Shipping Cost
------------------------------------------------------------------------
Efficiency level Shipping cost
------------------------------------------------------------------------
Baseline................................................ $900.00
EL1 CAV................................................. 900.00
EL1 VAV................................................. 900.00
EL2 CAV................................................. 900.00
EL2 VAV................................................. 900.00
EL2.5 CAV............................................... 900.00
EL2.5 VAV............................................... 900.00
EL3..................................................... 900.00
EL4..................................................... 900.00
EL5 Max-Tech............................................ 900.00
------------------------------------------------------------------------
Gas-fired CWAF equipment is typically enclosed within a cabinet
that also contains a CUAC.\52\ Thus, the CUAC components are a
significant factor in driving the overall cabinet dimensions. DOE found
that the changes in CWAF component sizes necessary to achieve the 81-
percent and 82-percent TE levels are not large enough to add any size
to the cabinet, which is driven primarily by the size of the CUAC
components. The shipping costs calculated for each CWAF efficiency
level are shown in Table IV-26. Due to the noted impact of CUAC
components on the overall shipping cost for gas-fired CWAFs, DOE
presents only the incremental increase in shipping cost relative to the
baseline efficiency level at each efficiency level analyzed for gas-
fired CWAFs. For oil-fired CWAFs, DOE presents the cost of shipping the
entire unit, since this equipment is not packaged with CUAC components,
and thus, the shipping cost represents the cost to ship only the oil-
fired CWAFs. Chapter 5 of the CWAF direct final rule TSD contains
additional information pertaining to DOE's shipping cost estimates.
---------------------------------------------------------------------------
\52\ Based on shipments data provided by AHRI (see section 3.9.2
of chapter 3 of the CUAC/CUHP direct final rule TSD), DOE has
determined that there are little to no shipments of combined CUHP/
CWAF units.
Table IV-26--CWAFs Shipping Cost Estimates
------------------------------------------------------------------------
Thermal Shipping costs
CWAFs equipment class efficiency (%) * (2014$)
------------------------------------------------------------------------
Gas-Fired CWAFs......................... 80 0
81 0
82 0
92 43.15
Oil-Fired CWAFs......................... 81 69.43
82 75.76
92 83.31
------------------------------------------------------------------------
* Because gas-fired CWAFs are typically included in a cabinet with
CUACs, which influence the shipping cost, the shipping costs for gas-
fired CWAFs at each efficiency level are shown as the incremental
increase in shipping cost above the baseline efficiency level. Since
oil-fired CWAFs are normally self-contained units, the shipping costs
for oil-fired CWAFs are representative of the entire cost to ship the
unit.
D. Markups Analysis
At each step in the distribution channel, companies mark up the
price of their equipment to cover business costs and profit margin. The
markups analysis develops appropriate markups (e.g., manufacturer
markups, retailer markups, distributor markups, contractor markups) in
the distribution chain and sales taxes to convert the MPC estimates
derived in the engineering analysis to consumer prices, which are then
used in the LCC and PBP analysis and other analyses.
1. Distribution Channels
In both the CUAC/CUHP and CWAF NOPRs, DOE characterized three
distribution channels to describe how the equipment passes from the
manufacturer to the commercial consumer. The first of these channels,
the replacement distribution channel, was characterized as follows:
Manufacturer [rarr] Wholesaler [rarr] Small or Large Mechanical
Contractor [rarr] Consumer
The second distribution channel--new construction--was
characterized as follows:
Manufacturer [rarr] Wholesaler [rarr] Small or Large Mechanical
Contractor [rarr] General Contractor [rarr] Consumer
In the third distribution channel, which applies to both the
replacement and new construction markets, the manufacturer sells the
equipment directly to the customer through a national account:
Manufacturer [rarr] Consumer (National Account)
In response to the CWAF NOPR, Lennox and Trane stated that the
national account channel still requires a contractor to perform the
installation, who has a markup on labor and materials as well. (CWAF:
Lennox, Public Meeting Transcript, No. 17 at pp. 80-81; Trane, Public
Meeting Transcript, No. 17 at pp. 82-83) In contrast, ACEEE stated that
the markup refers to the value added by someone who takes ownership of
the equipment. ACEEE questioned whether the installing contractor marks
up the equipment itself. (CWAF: ACEEE, Public Meeting Transcript, No.
17 at pp. 83-84)
DOE notes that the markups analysis develops markups that are
applied to the cost of purchasing only the equipment. Therefore, if the
installing contractor only performs the installation, but does not
purchase the equipment, the contractor is not part of the distribution
channel. The installation, maintenance, and repair costs, including
labor and material costs, are marked up separately using markups from
RS Means data (see section IV.F).
[[Page 2468]]
DOE used the same distribution channels for the direct final rule
analysis.
2. Markups and Sales Tax
The manufacturer markup converts MPC to MSP. DOE developed an
average manufacturer markup by examining the annual SEC 10-K reports
filed by publicly-traded manufacturers primarily engaged in appliance
manufacturing and whose combined product range includes CUACs/CUHPs and
CWAFs.
For all parties except for the manufacturer, DOE developed separate
markups for baseline products (baseline markups) and for the
incremental cost of more-efficient products (incremental markups).
Incremental markups are coefficients that relate the change in the MSP
of higher-efficiency models to the change in the retailer sales price.
AHRI stated in its response to the CUAC/CUHP NOPR that DOE
unreasonably utilized incremental, rather than average markups, which
significantly understates the cost of equipment meeting the proposed
standards. (CUAC: AHRI, No. 68 at p. 3) It stated that DOE's analysis
does not comport with empirical observations of markups in the air
conditioning or heating equipment industries. (CUAC: AHRI, No. 68 at p.
29) According to AHRI, in using this technique, DOE is stating what
should be happening in the market, which does not accurately reflect
what is actually occurring. AHRI attached a report from Shorey
Consulting to its comment to help explain what it perceives as
fundamental flaws in using incremental markups as opposed to average
markups. AHRI stated that average markups should be used in the DOE
analysis, as these markups are, in its view, representative of the
real-world HVAC marketplace. (CUAC: AHRI, No. 68 at p. 35)
DOE is not aware of any representative empirical observations of
markups in the air conditioning or heating equipment industries, except
at an aggregate level. The Shorey Consulting Report describes a survey
of HVAC distributor/wholesalers and HVAC contractors that Shorey
Consulting conducted in November 2014 to determine the actual pricing
practices of both groups. The report states that (1) both distributor/
wholesalers and HVAC contractors manage to target constant margin
percentages across their whole businesses and do not vary margins for
individual products; and (2) these entities respond to manufacturer
price increases (or rare decreases) by passing these price changes
through with their traditional markups. (CUAC: AHRI, No. 68, markups
attachment at pp. 17-20)
To investigate the claims in the Shorey Consulting Report, DOE held
discussions with Construction Programs & Results, Inc. (``CPR''), a
company with long experience in the HVAC contracting field. Laying out
a scenario that resembles what it expects to occur after amended
standards take effect, DOE asked CPR whether HVAC contractors would be
able to retain the same markup that they currently use if equipment
prices increase while other relevant costs (e.g., labor, material, and
operation) remain constant. CPR stated that the contractors would
likely attempt to use the same markup over time, but, assuming no
increase in other costs, they will eventually either have to lower
their markup based on market pressures, or choose to lower their markup
after it has been reviewed and recalculated. The company further stated
that the real-world situation is more complex than DOE's scenario,
noting that the markup change will happen when the company's finances
are reviewed, and the equipment cost increase will be only one factor
in the adjustment. (DOE's questions and CPR's responses are provided in
an appendix to chapter 6 in the CUAC/CUHP direct final rule TSD.)
The above characterization of contractor behavior is consistent
with DOE's markup approach, which assumes that the markup changes for
standards-compliant equipment that have a higher cost than non-
compliant equipment. DOE also believes its approach is not entirely
inconsistent with the information provided by the survey described in
the Shorey Consulting Report. DOE does not mean to suggest that HVAC
distributor/wholesalers and contractors will directly adjust their
markups on equipment if the price they pay goes up as a result of
appliance standards. Rather, the approach assumes that such adjustment
will occur over a (relatively short) period of time as part of a
business management process. This approach embodies the same
perspective as the ``preservation of per-unit operating profit markup
scenario'' used in the MIA (see section IV.J of this document).\53\ DOE
asked CPR if an increase in profitability, which is implied by keeping
a fixed markup when the equipment price goes up, would be viable over
time. The company indicated that, given the many pressures on
contractors to lower their prices for various reasons, such an increase
was unlikely to occur. DOE further notes that if increases in the cost
of goods sold consistently lead to a sustainable increase in
profitability, one would expect distributor/wholesalers and contractors
to welcome such increases. DOE does not expect that such behavior is
common in the HVAC market, or in any markets characterized by a
reasonable degree of competition.
---------------------------------------------------------------------------
\53\ In the preservation of per unit operating profit scenario,
manufacturer markups are set so that operating profit one year after
the compliance date of the amended energy conservation standards is
the same as in the base case on a per-unit basis. Under this
scenario, as the production costs and sales price increase with more
stringent efficiency standards, manufacturers are generally required
to reduce their markups to a level that maintains base-case
operating profit per unit. The implicit assumption behind this
markup scenario is that the industry can only maintain its operating
profit in absolute dollars per unit after compliance with the new
standard.
---------------------------------------------------------------------------
In summary, DOE acknowledges that its approach to estimating
distributor and contractor markup practices after amended standards
become required is necessarily an approximation of real-world practices
that are both complex and varying with business conditions. However,
given the supportive remarks from CPR, and the lack of any evidence
that standards facilitate a sustainable increase in profitability for
distributors and contractors (as would be implied by AHRI's
recommendation), DOE continues to maintain that its use of incremental
markups is reasonable. DOE welcomes information that could support
improvement in its methodology.
To develop markups for the parties involved in the distribution of
CUAC/CUHP and CWAF equipment, DOE utilized several sources, including:
(1) The Heating, Air-Conditioning & Refrigeration Distributors
International (``HARDI'') 2012 Profit Report \54\ to develop wholesaler
markups; (2) the 2005 Air Conditioning Contractors of America's
(``ACCA'') financial analysis for the heating, ventilation, air
conditioning, and refrigeration (``HVACR'') contracting industry \55\
to develop mechanical contractor markups, and (3) the U.S. Census
Bureau's 2007 Economic Census data \56\ for the commercial and
institutional building construction industry to develop general
contractor markups. For mechanical contractors, DOE derived
[[Page 2469]]
separate markups for small and large contractors.
---------------------------------------------------------------------------
\54\ Heating, Air Conditioning & Refrigeration Distributors
International 2012 Profit Report (Available at: http://www.hardinet.org) (Last accessed April 10, 2015).
\55\ Air Conditioning Contractors of America (ACCA), Financial
Analysis for the HVACR Contracting Industry: 2005 (Available at:
https://www.acca.org) (Last accessed April 10, 2013).
\56\ U.S. Census Bureau, 2007 Economic Census Data (2007)
(Available at: http://www.census.gov/econ/) (Last accessed April 10,
2013).
---------------------------------------------------------------------------
Trane questioned how the overall markup of CWAFs compared to that
of CUACs/CUHPs. (CWAF: Trane, No. 17 p. 89-90) DOE notes that the
overall markups for gas-fired CWAFs and CUACs/CUHPs are almost
identical to each other.\57\ DOE used the same general methodology and
data sources for CWAFs as for CUACs/CUHPs.
---------------------------------------------------------------------------
\57\ There are slight differences in the overall markups due to
small differences in manufacturer markups and in the distribution
channel shares.
---------------------------------------------------------------------------
In addition to the markups, DOE derived State and local taxes from
data provided by the Sales Tax Clearinghouse.\58\ These data represent
weighted average taxes that include county and city rates. DOE derived
shipment-weighted average tax values for each of the regions from the
Energy Information Administration's 2003 Commercial Building Energy
Consumption Survey (CBECS 2003) \59\ considered in the analysis.\60\
---------------------------------------------------------------------------
\58\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along
with Combined Average City and County Rates, 2013 (Available at:
http://thestc.com/STrates.stm) (Last accessed Sept. 11, 2013).
\59\ Energy Information Administration (EIA), 2003 Commercial
Building Energy Consumption Survey (Available at: http://www.eia.gov/consumption/commercial/) (Last accessed April 10, 2013).
Note: CBECS 2012 is currently in development but was not available
in time for this rulemaking.
\60\ CBECS 2012 is currently in development but will not be
available in time for this rulemaking.
---------------------------------------------------------------------------
Chapter 6 of the direct final rule TSDs for CUACs/CUHPs and CWAFs
provides details on DOE's development of markups.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of CUACs and CWAFs at different efficiencies in
representative U.S. commercial buildings and (in the case of CWAFs)
multi-family buildings, and to assess the energy savings potential of
increased equipment efficiency. DOE did not analyze CUHP energy use
because, for the reasons explained in section IV.C.4, the energy
modeling in the engineering analysis was performed only for CUAC
equipment.
The energy use analysis estimates the range of energy use of the
equipment in the field (i.e., as they are actually used by commercial
consumers). The energy use analysis provides the basis for other
analyses DOE performed, particularly assessments of the energy savings
and the savings in consumer operating costs that could result from
adoption of amended standards.
Chapter 7 of the direct final rule TSDs provides details on DOE's
energy use analysis for CUACs and CWAFs.
1. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
DOE developed energy consumption estimates only for the CUAC
equipment classes that have electric resistance heating or no heating.
As described in section IV.C.2.b, for equipment classes with all other
types of heating, the incremental change in IEER for each efficiency
level increases to maintain the same energy savings as was determined
for the equipment classes with electric resistance heating or no
heating within each equipment class capacity range (i.e., small, large,
and very large). Using this approach, the IEER differential between
these equipment classes ranged from 0.2 to 0.4 at the higher efficiency
levels. Therefore, DOE estimated that the energy savings for any
efficiency level relative to the baseline would be identical for both
sets of equipment classes. In turn, the energy savings estimates for
the efficiency levels associated with the equipment classes that have
electric resistance heating or no heating were used by DOE in the LCC
and PBP analysis and the NIA to represent both sets of equipment
classes.
In its analysis of the recommended TSL, DOE applied Efficiency
Level 3 to the small and large ``all other types of heating equipment''
classes and Efficiency Level 2.5 to the very large ``all other types of
heating equipment'' class. These were the IEER values recommended by
the ASRAC Working Group, using an IEER differential of 0.2 compared to
the ``electric resistance heating or no heating equipment'' classes.
See supra, section IV.C.2.b. At Efficiency Level 3, based on an
approach of maintaining a constant energy savings differential with the
electric resistance heating or no heating equipment classes, the IEER
differential should be 0.3 for both the small and large ``all other
types of heating equipment'' classes. Since reducing the differential
increases the efficiency of the equipment, additional energy savings
are realized from reducing the IEER differential to 0.2 for the small
and large ``all other types of heating equipment'' classes. The method
for determinining the additional energy savings benefit is described in
section IV.H.2.
The energy use analysis consists of two related parts. In the first
part, DOE calculated energy savings for small, large, and very large
CUACs at the considered efficiency levels based on modifications to the
energy use simulations conducted for the 2004 ANOPR. These building
simulation data are based on the 1995 CBECS. Because the simulation
data reflect the building stock in 1995 that uses CUAC equipment, in
the second part of the analysis, DOE developed a ``generalized building
sample'' to represent the current installation conditions for CUACs.
This part of DOE's analysis involved making adjustments to update the
building simulation data to reflect the current building stock that
uses CUAC equipment.
a. Energy Use Simulations
DOE's simulation database includes hourly profiles for more than
1,000 commercial buildings, which were based on building
characteristics from the 1995 CBECS for the subset of buildings that
uses CUAC equipment. Each building was assigned to a specific location
along with a typical meteorological year (``TMY'') hourly weather file
(referred to as ``TMY2'') to represent local weather. The simulations
capture variability in cooling loads due to factors such as building
activity, schedule, occupancy, local weather, and shell
characteristics.
For the NOPR, DOE modified the energy use simulations conducted for
the 2004 ANOPR to improve the modeling of equipment performance. The
modifications that DOE performed included changes to the ventilation
rates and economizer usage assumptions, the default part-load
performance curve, and the minimum saturated condensing temperature
limit. A more detailed description of the simulation model
modifications can be found in appendix 7A of the direct final rule TSD.
Neither fan operation during ventilation nor economizer usage are
accounted for in the DOE test procedure and, therefore, do not impact
the rated efficiency of a CUAC. Although ventilation rates and
economizer usage do not directly affect the rated equipment
performance, they do impact how often the equipment needs to operate,
whether at full or part-load. The building simulations for the 2004
ANOPR used ventilation rates based on ASHRAE Standard 62-1999.\61\
Because a report prepared by the National Institute for Standards and
Testing (``NIST'') on field measurements indicated that these
ventilation rates were too high,\62\ DOE reduced the rates
[[Page 2470]]
as part of the modified energy use simulations. In the case of
economizer usage, the building simulations for the 2004 ANOPR assumed
all economizers operated without fault. Various field studies have
demonstrated that economizer usage is far from perfect, so in the
modified simulations DOE assigned a 30-percent probability to each
building modeled that the economizer would be non-operational.\63\ With
regard to changes made to how the equipment was modeled, DOE developed
a modified part-load performance curve for the direct-expansion
condenser unit model so that the overall performance would be more
representative of a multi-compressor system. In addition, DOE lowered a
user-input parameter representing the minimum saturated condensing
temperature (``MSCT'') allowed for the refrigerant used in a CUAC--
specifically, DOE dropped the MSCT from 100 [deg]F to 80 [deg]F.\64\
Both of these parameters would affect system performance under part-
load and off-design conditions.
---------------------------------------------------------------------------
\61\ American Society of Heating, Refrigerating and Air-
Conditioning Engineers, Inc. ANSI/ASHRAE Standard 62-1999
Ventilation for Acceptable Indoor Air Quality, 1999. Atlanta,
Georgia.
\62\ Persily, A. and J. Gorfain. 2004. ``Analysis of Ventilation
Data from the U.S. Environmental Protection Agency Building
Assessment Survey and Evaluation (BASE) Study''. NISTIR 7145.
\63\ As described in appendix 7-A of the TSD, field studies
indicate that at least a third of installed economizers do not
function properly and that economizer controls often are
disconnected from the HVAC system.
\64\ The default value in the simulation model for the minimum
saturated condensing temperature (``MSCT'') allowed the refrigerant
in a CUAC to reach 100 [deg]F. DOE lowered the user-input parameter
representing the allowed MSCT to the minimum condensing temperature
of 80 [deg]F to reflect compressor performance literature.
---------------------------------------------------------------------------
The issue of economizer usage was first discussed in the Working
Group meeting on May 11, 2015. (ASRAC Public Meeting, No. 94 at pp. 82-
135) One concern was whether the model used in the simulations properly
modelled the performace of economizers. Another was the market share of
units that use economizers. The third concern was the fraction of
economizers that are operating properly. DOE presented a sensitivity
analysis that showed that even if it assumed that all economizers are
operating properly below an outdoor ambient temperature of 60
[deg]F,\65\ the reduction in cooling load--and the accompanying
potential for energy savings--would be very small. (ASRAC Public
Meeting, No. 96 at pp. 164-174). The Working Group recommended that DOE
maintain the assumptions regarding economizer usage applied in the NOPR
for the direct final rule analysis. (ASRAC Public Meeting, No. 96 at
pp. 177-182), and DOE did so. A description of the sensitivity analysis
for economizers can be found in appendix 7B of the direct final rule
TSD.
---------------------------------------------------------------------------
\65\ The Working Group considered 60[emsp14][deg]F as a
reasonable estimate as to when economizier use would be allowed to
cool the building.
---------------------------------------------------------------------------
DOE used a two-step process to represent the performance of
equipment at baseline and higher efficiency levels. For the NOPR, DOE
first calculated the hourly cooling loads and hourly fan operation for
each building from the compressor and fan energy consumption results
that were generated from the modified building simulations based on
equipment with an efficiency level of 11 EER. It was estimated that
these simulated cooling loads had to be met by the CUACs equipment for
every hour of the year that the equipment operates. Refer to chapter 7
of the CUAC/CUHP direct final rule TSD for more details.
The number of units serving a given building was based on the
cooling load of the building and the cooling capacity of the
representative CUAC unit at an outdoor ambient temperature of
95[emsp14][deg]F--the specific ambient temperature at which
manufacturers report a given unit's cooling capacity. In its informal
meetings, the Working Group determined that the cooling capacity of the
representative CUAC unit should instead be based on the 1-percent
design temperature corresponding to the climate where the building is
located. The 1-percent design temperature would generally be less than
95[emsp14][deg]F, which means that the cooling capacity increases and
the number of units needed to serve the building decreases. (ASRAC
Public Meeting, No. 94 at pp. 80-82) As part of implementing the
suggested approach, DOE allowed a fractional number of units,
equivalent to system size increments of 2.5 tons, to be installed in a
building as part of DOE's model. (ASRAC Public Meeting, No. 96 at p.
143)
In the second step, DOE coupled the hourly cooling loads and fan
operation with equipment performance data, developed from laboratory
and modeled IEER testing conducted according to AHRI Standard 340/360-
2007, to generate the hourly energy consumption of baseline and more
efficient CUAC equipment. DOE's use of the laboratory and modeled IEER
test data allowed it to specifically address how capacity and control
strategies vary with outdoor temperature and building load. The
laboratory and modeled IEER test data were used to calculate the
compressor efficiency (COP) and capacity at varying outdoor
temperatures. The IEER rating test consists of measuring the net
capacity, compressor power, condenser fan power, indoor fan power, and
control power at three to five different rating conditions. The number
of rated conditions the equipment is tested at is determined by the
equipment's capabilities and control strategies. For the NOPR, the net
capacity and compressor(s) power were determined as a linear function
of outdoor temperature from the test results. If the indoor or outdoor
fan was staged, its power consumption was also calculated as a linear
function of outdoor temperature. The power for controls is a constant,
but may vary by staging.
As described in section IV.C.3.a, DOE updated its approach by
replacing the linear function described above with new correlations
between outdoor temperature and the net capacity and compressor(s)
power based on the design of the equipment. The considered designs
included CAV, SAV, and VAV designs. Indoor and outdoor fan(s) power as
well as control power were determined based on equipment staging. Based
on informal Working Group meetings, the indoor fan power in heating
mode assumes that the fan operates at its highest (i.e., most energy
consumptive) stage. (ASRAC Public Meeting, No. 94 at pp. 80-82)
For the NOPR, the determination of fan power was based on ESP
values found in AHRI Standard 340/360-2007, which are also used in the
DOE test procedure. The Working Group discussed the appropriate ESP to
use in the analysis and agreed that DOE should use higher ESPs than
those found in the DOE test procedure to help better simulate actual
field conditions. For the direct final rule, the values used (0.75 and
1.25 in.w.c.) correspond to the ESPs used in the modified building
simulations of the cooling load. (ASRAC Public Meeting, No. 94 at pp.
80-82; ASRAC Public Meeting, No. 95 at pp. 28-31; ASRAC Public Meeting,
No. 96 at pp. 145-164) In addition, as described earlier in section
IV.C.3.a, DOE accounted for the fraction of the market at each
efficiency level that would require the installation of a conversion
curb. The determination of fan power accounted for an increase in the
ESP (0.2 in.w.c.) associated with a conversion curb. (ASRAC Public
Meeting, No. 95 at pp. 28-52; ASRAC Public Meeting, No. 98 at pp. 10-
15) The new correlations between outdoor temperature and the net
capacity and compressor(s) power were based on the new ESPs as well as
the impact of a conversion curb.
The compressor(s) power and capacity of the equipment for each hour
of the year was calculated based on the outdoor temperature for the
simulated buildings. The cooling capacity was calculated such that it
met the simulated building cooling load for each hour. For multi-stage
equipment, the
[[Page 2471]]
staging for each hour was selected to ensure the equipment could meet
the simulated building cooling load. When the cooling capacity exceeded
the simulated building cooling load, the efficiency was adjusted for
cyclic performance using the degradation coefficient and load factor as
calculated according to section 6.2, Part-Load Rating, of AHRI 340/360,
using the new correlations between outdoor temperature and the net
capacity and compressor(s) power described above. The analysis
accounted for the fact that the building cooling load includes the heat
generated by the fan. The total amount of cooling the compressor must
provide varies as the fan efficiency improves with different efficiency
levels.
Members of the ASRAC Working Group discussed the load factor in
informal meetings and, after closely examining DOE's calculation
methods, the group shared its finding that DOE misinterpreted the
determination of the load factor and degradation coefficient. The
equation that DOE was using to determine the compressor load factor did
not properly account for the way loads are distributed on multi-stage
equipment when more than one stage is operating. As a result, DOE
corrected the calculation for compressor power to ensure that the load
factor and degradation coefficient were based only on the highest stage
of operation. In addition, the same load factor and degradation
coefficient were used to determine the indoor fan power at its upper
stage. (ASRAC Public Meeting, No. 94 at pp. 80-82)
The NOPR analysis assumed that when there are multiple units in a
building, all units serve the same share of the total cooling load. The
validity of this assumption was discussed with the Working Group, and
DOE conducted a sensitivity analysis with alternative assumptions.
Assuming that the units serve different shares of the load, the total
annual energy use of the units changes by approximately 1 percent.
(ASRAC Public Meeting, No. 96 at pp. 174-176) Given this outcome, the
Working Group recommended that DOE maintain the assumption applied in
the NOPR for the direct final rule analysis (ASRAC Public Meeting, No.
96 at pp. 177-182). DOE followed this recommendation and a description
of the sensitivity analysis of equipment loading can be found in
appendix 7B of the direct final rule TSD.
Each building simulation determines the indoor fan run-time for
each hour of the year. Energy use was calculated separately for the
compressor, condenser fan, indoor fan, and controls for each hour of
the year for the simulated building. Compressor and condenser fan
energy were summed to reflect cooling energy use. Indoor fan and
control energy were combined into a single category to represent indoor
fan energy use during all modes of operation.
A number of stakeholders stated that it is inappropriate to
incorporate energy savings attributed to fan operation (for
ventilation) during modes of operation other than cooling. (AHRI, No.
68 at p. 33; Carrier, No. 48 at p. 5; Lennox, No. 60 at p. 14) ASAP
agreed with the inclusion of supply fan power in the energy use
analysis. (ASAP, No. 69 at p. 5)
This issue was discussed in informal meetings by a number of
members of the Working Group. The outcome of these discussions was
presented at the May 11, 2015 meeting of the Working Group. (ASRAC
Public Meeting, No. 94 at p. 82) The Working Group agreed to include
fan operation energy during all modes of operation in the energy use
calculations, so DOE maintained the approach used in the NOPR for the
direct final rule.\66\
---------------------------------------------------------------------------
\66\ The Working Group recommended that DOE initiate a
rulemaking to amend the test procedure for this equipment to better
represent the total fan energy use, including considering: (a)
Alternative external static pressures and (b) operation for other
than mechanical cooling and heating. It also recommended that the
energy consumption from the supply air fan during hours of operation
when it is used to provide ventilation air, and the energy use with
the supply fan operation when the unit is in heating mode, should be
included in an energy efficiency metric as a result of this test
procedure modification. Appliance Standards and Rulemaking Federal
Advisory Committee, Commercial Package Air Conditioners and
Commercial Warm Air Furnaces Working Group. Term Sheet. June 15,
2015. Recommendation #2.
---------------------------------------------------------------------------
The calculations provided the annual hourly cooling and fan energy
use profiles for each building. The incremental energy savings between
the baseline equipment and the equipment at higher efficiency levels
was calculated for every hour for each of the 1,033 simulated
buildings.
The building simulations were initially performed to analyze the
energy use of small and large CUAC equipment, but the building cooling
loads that were modeled are representative of CUACs irrespective of
equipment cooling capacity. Therefore, DOE believes that its method of
using these simulations provides a good representation of very large
equipment performance as well as small and large equipment performance.
b. Generalized Building Sample
The NOPR analysis used a ``generalized building sample'' (GBS) to
represent the installation conditions for the equipment covered in this
rulemaking. The GBS was developed using data from the 2003 CBECS and
from the Commercial Demand Module of the National Energy Modeling
System version distributed with AEO 2013.
Only floor space cooled by the covered equipment was included in
the sample. Conceptually, the main difference between the GBS and the
sample of specific commercial buildings compiled in CBECS is that the
GBS aggregates all building floor space associated with a particular
set of building characteristics into a single category. The set of
characteristics that is used to define a category includes all building
features that are expected to influence either (1) the cooling load and
energy use or (2) the energy costs. As an outcome of the Working Group
meetings, it was decided that the building ventilation system type
should be included as a feature because it affects energy use. Thus,
for the direct final rule, a category was added, defining whether the
building ventilation system is CAV or VAV. The primary motivation for
specifying the building ventilation system was twofold: (1) To only
assign CAV designs to CAV buildings and (2) to prevent CAV designs from
being assigned to VAV buildings. The first issue addressed current
equipment selection practices, i.e., purchasers will continue to
specify CAV designs if the building type allows for it. The second
issue acknowledges that CAV designs are never applied to VAV buildings.
As a result, CAV buildings received CAV, SAV or VAV designs, depending
on the efficiency level analyzed. (ASRAC Public Meeting, No. 95, at pp.
33-52) And since CAV designs would not be appropriate for VAV
buildings, these buildings received either SAV or VAV designs. The set
of building characteristics, and the specific values these
characteristics can take, are listed in Table IV-27.
[[Page 2472]]
Table IV-27--List of Characteristics and the Associated Values Used To
Define the Generalized Building Sample
------------------------------------------------------------------------
Number of
Characteristic values Range of values
------------------------------------------------------------------------
Region............................ 10 9 census divisions
with Pacific
subdivided into
north and south.
Building Activity................. 7 assembly, education,
food service, small
office, large
office, mercantile,
warehouse.
Size (based on annual energy 3 small: < 100,000
consumption). kWh;
medium: 100,000 to
1,000,000 kWh;
large: > 1,000,000
kWh.
Vintage........................... 3 category 1: before
1950;
category 2: 1950-
1979;
category 3: 1980 and
later.
Ventilation System Type........... 2 Constant Air Volume
(CAV);
Variable Air Volume
(VAV).
------------------------------------------------------------------------
The region in which the building is located affects both the
cooling loads (through the weather) and the cost of electricity. The
building activity affects building schedules and occupancy, which in
turn influence the demand for cooling. The building size influences the
cost of electricity, because larger facilities tend to have lower
marginal prices. The building vintage may influence shell
characteristics that can affect the cooling loads. The building
ventilation system type dictates the type of equipment design assigned
to a building.
As discussed with the Working Group, for the direct final rule, the
amount of floor space allocated to each category for buildings built in
or before 2012 was updated using the 2012 CBECS. The GBS was projected
to 2019 (the year of the LCC analysis) using the AEO 2015 projections
of commercial building floor space by region and building type. (ASRAC
Public Meeting, No. 95 at pp. 10-28)
Load profiles for each category in the GBS were developed from the
simulation data just described. For each equipment class, a subset of
the 1,033 buildings was used to develop the cooling energy use
profiles. The subset included all buildings with a capacity requirement
equal to or greater than 90 percent of the capacity of the particular
representative unit. For each GBS type, a weighted average energy use
profile, along with energy savings from the considered efficiency
levels, was compiled from the simulated building subset. The average
was taken over all buildings in the subset that have the same region,
building type, size, and vintage category as the GBS category (load
profiles were assumed to be independent of the building ventilation
system type). This average was weighted by the number of units required
to meet each building's cooling load. For some of the GBS categories,
no simulation data were available. In these cases, the weighted-average
energy use profile for the same building type and a nearby region or
vintage were used.
Updating the sample to 2019 required some additional adjustments to
the energy use data. The 1,033 building simulations used TMY2 weather
data that were based on 1961-1990 data. The TMY2 weather data files
were updated to TMY3, which also incorporates 1991-2005 data, in 2008.
A comparison of the two datasets showed that total annual cooling
degree-days (``CDD'') increased by 5 percent at all locations used in
this analysis. This is accounted for by increasing the energy use (for
all efficiency levels) by 5 percent at all locations. The TMY3 dataset
is representative of calendar year 2005. To account for changes in CDD
(and energy use) between 2005 and 2019, DOE used the projected AEO 2015
CDD trend, which shows an increase of approximately 0.6% per year.
Changes to building shell characteristics and internal loads can
lead to a change in the energy required to meet a given cooling load.
The National Energy Modeling System (``NEMS'') commercial demand module
accounts for these trends by adjusting the cooling energy use with a
factor that is a function of region and building activity. These
factors assume 100 percent compliance with existing building codes. In
the GBS, these same factors were used to adjust the cooling energy use
for floor space constructed after 1999. To account for more realistic
levels of code compliance, the factors were multiplied by 0.35.
For the Working Group's analysis, DOE removed buildings with a
cooling load of under five tons from the original sample because these
buildings would be more likely to be served by smaller equipment than
the CUACs covered in this rulemaking. DOE also screened out buildings
with more than four stories for the 7.5-ton equipment class, since such
equipment would likely be too small to meet the cooling load. (ASRAC
Public Meeting, No. 95 at pp. 27-28) For the 15-ton and 30-ton
equipment classes, DOE removed buildings from consideration that have
cooling loads low enough that multiple smaller units would likely be
used instead of a single 15-ton or 30-ton unit. The Working Group did
not object to these changes, and DOE incorporated them in the direct
final rule analysis.
Commenting on the NOPR, Rheem stated that the 1,033 simulated
samples have limited applicability when predicting energy consumption
in commercial buildings. Rheem questioned whether unoccupied or
underutilized buildings were included. (Rheem, No. 70 at p. 5) AHRI and
Nordyne commented that a generalized building sample may not accurately
represent the energy consumption of equipment in the commercial
building stock. They stated that benchmarked buildings are more
effective in estimating actual energy use. (AHRI, No. 68 at p. 44;
Nordyne, No. 61 at p. 37) Goodman commented that the ASHRAE 90.1
committee utilized a broad spectrum of buildings from the existing
building stock, not a generalized building sample, which Goodman
contends is less accurate. (Goodman, No. 65 at pp. 17-18)
The GBS includes only buildings that use covered equipment and are
occupied with the equipment in use. Benchmarking may provide better
estimates of energy use in individual buildings, but DOE requires a
representation of the entire building stock, for which the only
available data source is CBECS combined with information from building
simulations. The ASHRAE 90.1 committee evaluated the cost-effectiveness
of ASHRAE 90.1-2010 for new construction based on simulations of six
building types in five
[[Page 2473]]
climate locations, a more restricted sample than what is incorporated
in the GBS.
2. Commercial Warm Air Furnaces
For CWAFs, DOE calculated the energy use associated with providing
space heating in a representative sample of U.S commercial buildings
and multi-family residential buildings. The CWAF annual energy
consumption includes the gas and oil fuel used for space heating and
the auxiliary electrical use associated with the furnace electrical
components.
DOE estimated the heating load of CWAFs in commercial buildings and
multi-family buildings by developing building samples for each of the
two equipment classes covered by the standards based on CBECS 2003 and
2009 Residential Energy Consumption Survey (RECS 2009).\67\ DOE used
the heating energy consumption reported in CBECS 2003 or RECS 2009,
which is based on the existing heating system, to calculate the space
heating load of each building. The heating load represents the amount
of heating required to keep a building comfortable throughout an
average year. This approach captures the variability in heating loads
due to factors such as building activity, schedule, occupancy, local
weather, and shell characteristics. The heating load estimates from
CBECS 2003 and RECS 2009 were adjusted for average weather conditions,
existing CWAF equipment efficiency, and for projected improvements to
the building shell efficiency.
---------------------------------------------------------------------------
\67\ EIA, 2009 Residential Energy Consumption Survey (Available
at: http://www.eia.gov/consumption/residential/) (Last accessed
April 10, 2013).
---------------------------------------------------------------------------
Commenting on the NOPR, Goodman, Rheem, and AHRI stated that CBECS
2003 is outdated. (CWAF: Goodman, No. 23 at p. 4; Rheem, No. 23 at p.
6; AHRI, No. 26 at pp. 5-6) Goodman and AHRI further stated that DOE
should use CBECS 2012 data when it is released in May 2015. (CWAF:
Goodman, No. 23 at p. 4; AHRI, No. 26 at pp. 5-6) For the direct final
rule, DOE used CBECS 2012 building sample characteristics to determine
the CWAFs sample; \68\ however, DOE continued to use CBECS 2003 data
for all other portions of its analysis because the energy use data for
CBECS 2012 was not available at the time of the analysis.\69\
---------------------------------------------------------------------------
\68\ Energy Information Administration (EIA), 2003 Commercial
Building Energy Consumption Survey (Available at: http://www.eia.gov/consumption/commercial/) (Last accessed April 10, 2013).
Note: CBECS 2012 is currently in development but not all of the
necessary data was available in time for this rulemaking.
\69\ The full CBECS 2012 dataset is expected to be available in
February 2016.
---------------------------------------------------------------------------
In addition, Goodman and AHRI stated that DOE should not consider
RECS data as part of the CWAF rulemaking. (CWAF: Goodman, No. 23 at p.
4; AHRI, No. 26 at pp. 5-6) Goodman stated that CWAFs installed in
residential homes comprise a negligible percentage of CWAF
installations. (CWAF: Goodman, No. 23 at p. 4) DOE believes that
including CWAFs used in residential buildings provides a more complete
picture of CWAF energy use, and that RECS provides data that reasonably
represent multi-family buildings that use CWAFs. Based on RECS 2009
data, DOE estimates that about two percent of commercial furnaces are
used in multi-family residential applications.\70\
---------------------------------------------------------------------------
\70\ EIA, 2009 Residential Energy Consumption Survey (Available
at: http://www.eia.gov/consumption/residential/) (Last accessed
April 10, 2013).
---------------------------------------------------------------------------
To calculate CWAF energy consumption at each considered efficiency
level, DOE determined the burner operating hours and equipment input
capacity for each building. DOE used the equipment output capacity
(determined using the TE rating) and the heating load in each building
to determine the burner operating hours. DOE assigned the
representative 250 kBtu/h input capacity for all CWAF efficiency
levels.
Commenting on the CWAF NOPR, Rheem stated that it is unreasonable
to assume that the burner and blower run-time will vary to the extent
that DOE estimated (nearly 0-percent on-time to 100-percent on-time in
any range of applications). Rheem stated that the unreasonable burner
and blower on-time assumption inflates the energy consumption at the
baseline efficiency level and proportionately inflates the savings from
higher efficiency. (CWAF: Rheem, No. 26 at p. 6) On the other hand, GTI
stated that on any given building there is significant diversity in
unit run-times. (GTI, Public Meeting Transcript, No. 17 at p. 105) In
response, DOE did not arbitrarily assume burner operating hours would
apply to each CWAF sample. Rather, the burner operating hours are based
on the annual heating energy use reported for sample buildings in CBECS
2003 and RECS 2009, as well as the assumed representative equipment
input capacity. A wide range of burner operating hours is reflective of
actual CWAF operation because some CWAFs in buildings with multiple
furnaces may have limited use, while other CWAFs may serve very large
building heating loads.
Trane stated that many local building codes require major building
renovations to meet new building standards, affecting the energy
efficiency of the building stock and in turn, the calculation of energy
use. (CWAF: Trane, No. 27 at p. 8) Goodman made a similar comment.
(CWAF: Goodman, No. 23 at p. 4)
DOE accounted for changes in building shell efficiency using the
building shell efficiency index derived from the NEMS simulation
performed for EIA's Annual Energy Outlook 2015 (AEO 2015),\71\ which
projects changes in average building shell performance in the future.
On average, this decreases the projected heating load for 2019 by 13
percent compared with the CBECS or RECS-derived values.
---------------------------------------------------------------------------
\71\ Energy Information Administration (EIA), Annual Energy
Outlook 2015 (AEO 2015) Full Version (Available at: http://www.eia.gov/forecasts/aeo/) (Last accessed May 15, 2015).
---------------------------------------------------------------------------
For the NOPR, DOE assumed that all CWAFs use single-stage permanent
split capacitor motors. Lennox suggested that the analysis should take
into account the impact of variable frequency drives that are called
for under ASHRAE 90.1. Lennox stated that variable frequency drives
will adjust the speed of the fans and reduce the energy use in certain
applications. (CWAF: Lennox, Public Meeting Transcript, No. 17 at p.
101)
For the direct final rule, DOE used the average fan power values
from the CUAC analysis. These fan power values include variable
frequency drives for the very large CUAC equipment class.
For condensing CWAFs, DOE's NOPR analysis accounted for the
increased blower fan electricity use in the field in both heating and
cooling mode due to the presence of the secondary heat exchanger. DOE
also accounted for condensate line freeze protection or a condensate
pump electricity use for a fraction of installations. Condensing CWAFs
installed outdoors that are located in regions with an outdoor design
temperature of <=32[emsp14][deg]F, which constitute roughly 90 percent
of gas-fired CWAFs based on location data from CBECS 2003 and RECS
2009, were assumed to require condensate freeze protection. All oil-
fired CWAFs are assumed to be installed indoors so condensate line
freeze protection was assumed to not be needed.
Lennox stated that condensing CWAFs designs require secondary heat
exchangers, which increase static pressure in the airstream and
pressure drop within the heat exchanger. This additional resistance
must be overcome
[[Page 2474]]
with increased electrical power at all operating conditions, including
in cooling and ventilation mode. (CWAF: Lennox, No. 22 at p. 6)
Additionally, Lennox stated that enhancements that increase internal
heat exchanger pressure drop will be needed to improve heat transfer,
resulting in an increase in combustion air blower energy use. Further
improvements to air-side heat transfer are needed through the use of
baffles or increased airflow levels, which increase blower pressure
drop and increase fan power. (CWAF: Lennox, No. 22 at p. 6) For the
direct final rule analysis, DOE refined its approach to include the
impact of condensing design on ventilation fan power. DOE's updated
methodology resulted in 25 percent greater electricity use for
condensing gas-fired CWAFs compared to non-condensing designs.
GTI, Goodman, AHRI, and Rheem stated that an 82-percent TE minimum
standard will require a larger heat exchanger or other design changes
that will restrict the airflow through the unit, which will increase
the electricity use of the blower motor. (CWAF: GTI, Public Meeting
Transcript, No. 17 at p. 104; Goodman, No. 23 at p. 2; Rheem, No. 25 at
pp. 4-5; AHRI, No. 26 at p. 6) DOE concluded that the static pressure
difference for 82-percent TE compared to baseline equipment is very
small in terms of increased electricity use, because the increase in
heat exchanger size in going from baseline equipment to 82-percent TE
is not large enough to cause an increase in static pressure that would
be relevant in terms of DOE's analysis. Therefore, DOE did not include
higher electricity use for this efficiency level.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on representative commercial consumers of potential energy conservation
standards for CUACs \72\ and CWAFs. The effect of new or amended energy
conservation standards on commercial consumers usually involves a
reduction in operating cost and an increase in purchase cost. DOE uses
the following two metrics to measure commercial consumer impacts:
---------------------------------------------------------------------------
\72\ As indicated previously, DOE did not conduct LCC and PBP
analyses for CUHPs because an energy use analysis was not performed
for this equipment.
---------------------------------------------------------------------------
The LCC (life-cycle cost) is the total commercial consumer
expense of an equipment over the life of that equipment, consisting of
total installed cost (manufacturer selling price, distribution chain
markups, sales tax, and installation costs) plus operating costs
(expenses for energy use, maintenance, and repair). To compute the
operating costs, DOE discounts future operating costs to the time of
purchase and sums them over the lifetime of the equipment.
The PBP (payback period) is the estimated amount of time
(in years) it takes commercial consumers to recover the increased
purchase cost (including installation) of more-efficient equipment
through lower operating costs. DOE calculates the PBP by dividing the
change in purchase cost at higher efficiency levels by the change in
annual operating cost for the year that amended or new standards are
assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of CUACs or CWAFs in the absence of
new or amended energy conservation standards. In contrast, the PBP for
a given efficiency level is measured relative to the baseline
equipment.
For each considered efficiency level in each equipment class, DOE
calculated the LCC and PBP for the nationally representative sets of
commercial consumers described in the preceding section. For each
sample building, DOE determined the energy consumption for the covered
equipment and the appropriate energy prices, thereby capturing
variability in energy consumption and energy prices.
Inputs to the calculation of total installed cost include the cost
of the equipment--which includes MPCs, manufacturer, wholesaler, and
contractor markups, and sales taxes--and installation costs. Inputs to
the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, equipment lifetimes, and discount rates. DOE created
distributions of values for equipment lifetime, discount rates, and
sales taxes to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP, which
incorporates Crystal Ball\TM\ (a commercially-available software
program), relies on a Monte Carlo simulation to incorporate uncertainty
and variability into the analysis. The Monte Carlo simulations randomly
sample input values from the probability distributions and the consumer
samples. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 buildings per simulation run.
DOE calculates the LCC and PBP for commercial consumers as if each
were to purchase new equipment in the expected year of compliance with
amended standards. As discussed in section III.C, for the TSLs that
represent the recommended standards, the compliance dates for CUACs are
January 1, 2018, for the first tier of standards, and January 1, 2023
for the second tier of standards, For CWAFs, the compliance date for
the new standards is January 1, 2023. For all other TSLs examined by
DOE, the compliance January 1, 2019 compliance date would apply. For
purposes of the LCC and PBP analysis, DOE used 2019 as the first full
year of compliance for all TSLs.
For CUACs, the energy savings estimates for the efficiency levels
associated with the equipment classes that have electric resistance
heating or no heating were used in the LCC and PBP analysis to
represent the equipment classes with all other types of heating.
Table IV-28 and Table IV-29 summarize the approach and data DOE
used to derive inputs to the LCC and PBP calculations. The subsections
that follow provide further discussion. Details of the spreadsheet
models, and of all the inputs to the LCC and PBP analyses, are
contained in chapter 8 of the direct final rule TSDs and their
appendices.
[[Page 2475]]
Table IV.28--Summary of Inputs and Methods for the LCC and PBP Analysis:
Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment *
------------------------------------------------------------------------
Inputs Method/source
------------------------------------------------------------------------
Equipment Cost.................... Derived by multiplying MPCs by
manufacturer, wholesaler, and
contractor markups and sales tax,
as appropriate. No change over
time.
Installation Costs................ Baseline installation cost
determined with data from RS Means.
Estimated increase in cost with
increased efficiency as a function
of equipment weight.
Annual Energy Use................. See section IV.E.1.
Energy Prices..................... Marginal and average electricity
prices for each member of the GBS
based on utility electricity tariff
data.
Energy Price Trends............... Based on AEO 2015 price forecasts.
Repair and Maintenance Costs...... Based on RS Means data. Cost varies
by efficiency level.
Product Lifetime.................. Derived from shipments model.
Discount Rates.................... Caclulated as the weighted average
cost of capital for businesses
purchasing CUACs. Primary data
source was Damodaran Online.
Compliance Date................... 2019 (for purpose of analysis).
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the direct
final rule TSD.
Table IV.29--Summary of Inputs and Methods for the LCC and PBP Analysis:
Commercial WarmAir Furnaces *
------------------------------------------------------------------------
Inputs Method/Source
------------------------------------------------------------------------
Equipment Cost.................... Derived by multiplying MPCs by
manufacturer, wholesaler, and
contractor markups and sales tax,
as appropriate. Used historical
data to derive a price scaling
index to forecast product costs.
Installation Costs................ Cost determined with data from RS
Means. Cost increases with
efficiency.
Annual Energy Use................. The total fuel use plus electricity
use per year. Number of operating
hours and energy use based on the
2003 CBECS and 2009 RECS.
Energy Prices..................... Natural Gas: Based on EIA's Natural
Gas Navigator data for 2012. Fuel
Oil and LPG: Based on EIA's State
Energy Consumption, Price, and
Expenditures Estimates (SEDS) for
2012.
Electricity: Based on EIA's Form 826
data for 2012.
Energy Price Trends............... Based on AEO 2015 price forecasts.
Repair and Maintenance Costs...... Based on RS Means data. Assumed
variation in cost by efficiency.
Product Lifetime.................. Gas-fired CWAF: Based on the 2014
NOPR for CUAC equipment.
Oil-fired CWAF: Based on the
residential oil-fired furnace
lifetime distribution in the 2009
residential furnaces direct final
rule.
Discount Rates.................... Caclulated as the weighted average
cost of capital for businesses
purchasing CWAFs. Primary data
source was Damodaran Online.
Compliance Date................... 2019 (2023 for TSL 2).
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the direct
final rule TSD.
1. Equipment Cost
To calculate commercial consumer equipment costs, DOE multiplied
the MPCs developed in the engineering analysis by the markups described
in section IV.D (along with sales taxes). DOE used different markups
for baseline equipment and higher-efficiency equipment, because DOE
applies an incremental markup to the increase in MSP associated with
higher-efficiency equipment.
The equipment costs estimated in the engineering analysis refer to
costs when the analysis was conducted. To project the costs in the
compliance years, DOE developed cost trends based on historical trends.
For CUACs, DOE derived an inflation-adjusted index of the producer
price index (PPI) for ``unitary air-conditioners, except air source
heat pumps'' from 1978 to 2014.\73\ Although the inflation-adjusted PPI
index shows a long-term declining trend, data for the last decade have
shown a flat-to-slightly rising trend. Given the uncertainty as to
which of the trends will prevail in coming years, DOE chose to apply a
constant price trend (2013 levels) for the LCC and PBP analysis.
---------------------------------------------------------------------------
\73\ Product series ID: PCU333&415333415E: Unitary air-
conditioners, except air source heat pumps. (Available at:
www.bls.gov/ppi/).
---------------------------------------------------------------------------
Commenting on the CUAC/CUHP NOPR, ASAP encouraged DOE to attempt to
capture price trends of technologies that can improve efficiency of air
conditioners and heat pumps. In its view, the prices of technologies
used in high-efficiency equipment are likely to decline much faster
than the total price of the equipment. With respect to CUACs and CUHPs,
ASAP expects the prices of brushless permanent magnet fan motors and
variable-speed supply fans to decline faster than the total price of
the equipment. ASAP recommended that DOE use a component-based price
trend. (ASAP, No. 69 at p. 8)
DOE acknowledges that the price of more recently introduced
components may decline faster than the total price of the equipment.
However, it is not aware of data that would allow estimation of a trend
for such components and ASAP provided none. Accordingly, DOE did not
use a separate price trend for technologies used in high-efficiency
equipment.
For CWAFs, DOE used the historic trend in the PPI for ``Warm air
furnaces'' \74\ to estimate the change in price between the present and
the compliance years. The inflation-
[[Page 2476]]
adjusted PPI for ``Warm air furnaces'' shows a small rate of annual
price decline.
---------------------------------------------------------------------------
\74\ Product series ID: PCU333415333415C: Warm air furnaces
including duct furnaces, humidifiers and electric comfort heating.
(Available at: http://www.bls.gov/ppi/).
---------------------------------------------------------------------------
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment.
a. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
For the CUAC/CUHP NOPR, DOE derived installation costs for CUACs
equipment from current RS Means data.\75\ Based on these data, DOE
concluded that data for 7.5-ton, 15-ton, and 30-ton rooftop air
conditioners would be sufficiently representative of the installation
costs for the >=65,000 Btu/h to <135,000 Btu/h, >=135,000 Btu/h to
<240,000 Btu/h, and >=240,000 Btu/h to <760,000 Btu/h air conditioning
equipment classes, respectively. Within a given capacity (equipment
class), DOE chose to vary installation costs in direct proportion to
the physical weight of the equipment. The weight of the equipment in
each class and efficiency level was determined through the engineering
analysis. Because labor rates vary significantly in each region of the
country, DOE used RS Means data to identify how installation costs vary
among regions and incorporated these costs into the analysis.
---------------------------------------------------------------------------
\75\ http://www.rsmeansonline.com; Accessed March 27, 2013.
---------------------------------------------------------------------------
Commenting on the CUAC/CUHP NOPR, Carrier stated that RS Means
should be used for installation cost based on unit tonnage, not weight
or physical characteristics. (Carrier, No. 48 at p. 6) Trane and
Goodman commented that RS Means underestimates installation costs.
(Trane, No. 63 at p. 9; Goodman, No. 65 at p. 19) Rheem stated that the
costs should include regional adjustments and demolition costs for
removal of existing equipment. (Rheem, No. 70 at p. 5)
The Working Group debated the validity of DOE's method to vary
installation costs in direct proportion to the physical weight of the
equipment, and also discussed the cost of using a crane and whether the
cost varies with efficiency. (ASRAC Public Meeting, No. 95 at pp. 103-
126) DOE found that crane costs do not vary except past a threshold
that is not relevant for this equipment. Because the Working Group did
not find a compelling basis to recommend changes to DOE's method, DOE
retained the approach used in the NOPR for the direct final rule (ASRAC
Public Meeting, No. 96 at pp. 202-235). However, for a certain fraction
of the market, DOE included additional costs for installing a
conversion curb to accommodate equipment designs with large footprints.
The cost was based on several factors, including equipment class,
weight, and brand. As discussed by the Working Group, the fraction of
the market that would require a conversion curb increases with
efficiency. (ASRAC Public Meeting, No. 98 at pp. 17-20) The conversion
curb costs for the small, large and very large CUAC equipment classes
are $1,000, $1,750, and $4,000, respectively. (ASRAC Public Meeting,
No. 96 at pp. 235-237) The installation costs used for the direct final
rule include removal of existing equipment.
Carrier expressed concern that the variable-speed fan technology
applied to supply fans at higher efficiency levels may have an
additional cost increase to customers who are replacing equipment. It
noted that many of these older building designs may need either the
ductwork and/or the diffusers to be modified or replaced, as their
designs may not be capable of managing the lower velocities that will
occur with variable-speed supply fans. It added that if the ductwork/
diffuser designs are not capable of these reduced velocities, then
significant thermal discomfort can result and may actually cause
increased equipment run-time due to poor air distribution within the
occupied space. (Carrier, No. 48 at p. 2)
Based on the Working Group discussions, DOE included additional
installed costs for adding controls (e.g., thermostats) in CAV
buildings to accommodate SAV and VAV equipment designs. (ASRAC Public
Meeting, No. 95 at pp. 126-134) However, DOE did not include additional
costs for replacing diffusers based on research commissioned by
ASHRAE.\76\ The research found that diffusers used in CAV buildings can
also be used to accommodate single-zone SAV and VAV equipment.
Specifically, CAV diffusers can provide proper air distribution for air
volumes as low as 10-percent of full volume. (ASRAC Public Meeting, No.
96 at pp. 238-247)
---------------------------------------------------------------------------
\76\ Arens, et al. Thermal and air quality acceptability in
buildings that reduce energy by reducing minimum airflow from
overhead diffusers. ASHRAE RP-1515: Final Report, Center for the
Built Environment--University of California, Berkeley (2012).
---------------------------------------------------------------------------
b. Commercial Warm Air Furnaces
For the CWAF NOPR, DOE used data from the 2013 RS Means Mechanical
Cost Data \77\ to estimate the baseline installation cost. For CWAFs
with condensing designs, DOE accounted for additional installation
costs for condensate removal, which includes condensate drainage,
freeze protection, and treatment. DOE also accounted for meeting the
venting requirements for oil-fired commercial warm air furnaces, as
well as for the small fraction of gas commercial warm air furnaces
installed indoors.
---------------------------------------------------------------------------
\77\ RS Means, 2013 Mechanical Cost Data (Available at: http://rsmeans.reedconstructiondata.com/60023.aspx) (Last accessed April
10, 2013).
---------------------------------------------------------------------------
Commenting on the CWAF NOPR, AGA stated that if the revised
standard mandates condensing technology, installing condensing furnaces
in many existing buildings would require additional installation
requirements and costs to properly address condensate disposal issues,
including the freezing of the condensate for commercial furnaces in
outdoor installations that are typical for commercial buildings. AGA
stated that DOE has not fully considered these added installation costs
in its analysis. (CWAF: AGA, No. 20 at p. 2)
In the NOPR (as well as for the direct final rule), DOE included
the cost of condensate disposal in the installation cost for condensing
CWAFs in indoor and outdoor installations. It included the cost of a
condensate pipe, condensate pump, use of heat tape for outdoor
installations, additional electrical outlet for heat tape and
condensate pump, and condensate neutralizer, when applicable, based on
the installation location of the CWAFs and building characteristics
reported in CBECS 2003 and RECS 2009. The use of heat tape was
determined based on weather data from NOAA. DOE notes that the adopted
standards do not require condensing technology. The details of the
condensate removal costs are provided in appendix 8D of the direct
final rule TSD.
AHRI stated that the standards may increase the size of the unit,
which would potentially require rework of the installation platform.
(CWAF: AHRI, No. 17 at pp. 185-186) Similarly, Lennox stated that DOE
should consider the cost involved in converting existing building stock
to accept larger footprint products and the renovation needed to accept
a larger roof curb or an adapter curb. (CWAF: Lennox, No. 22 at p. 10)
DOE assumed in the engineering analysis that the increase in
condensing CWAF unit size from the use of larger heat exchangers would
only impact the height, and no change in the cabinet size of higher
efficiency non-condensing CWAFs would be needed. Furthermore, the CUAC
analysis already accounted for additional costs for installing a
[[Page 2477]]
conversion curb to accommodate equipment designs with larger
footprints, making it unnecessary to consider such costs for CWAFs,
most of which are packaged with CUACs.
AHRI stated that although 82-percent TE CWAFs are not designed for
condensing, there will be conditions that make condensate production a
much greater concern than for indoor furnaces. (CWAF: AHRI, No. 26 at
p. 2) Goodman stated that in field installations, the likelihood of
condensate production in 82-percent TE weatherized CWAFs is much higher
than in the lab, particularly in cold climates and at higher altitudes.
Goodman stated that prolonged exposure to condensate in 82-percent TE
CWAFs will corrode major components within the CWAFs and will lead to
reliability issues. (CWAF: Goodman, No. 23 at pp. 2-3) Similarly, Trane
stated that there are condensate issues for both 82-percent TE and
condensing CWAFs that will need to be addressed by the installer. Trane
stated that to have a redundant protection against roof membrane
failure, builders or installers may need to upgrade the roof around the
CWAFs, which was not taken into account in DOE's analysis. Trane added
that 82-percent TE CWAFs still need heat tape to be energized
continuously in the winter months for the condensate not to freeze,
which DOE's analysis did not take into account. (CWAF: Trane, No. 27 at
p. 7) Lennox stated that due to the introduction of condensate at 82-
percent TE and above, many components will be susceptible to corrosion.
(CWAF: Lennox, No. 22 at p. 10)
As discussed with the Working Group, for the direct final rule
analysis, DOE did not apply a cost of a condensate withdrawal system or
heat tape for non-condensing CWAFs (i.e., 82-percent TE) because these
models do not produce enough condensate to require withdrawal from the
unit, as is shown by the lack of equipment at this efficiency that
require the use a condensate withdrawal system in the installation and
operation manual. DOE did not apply redundant protection against roof
membrane failure for condensing CWAFs, because it assumed that roof
changes would already be done to accommodate the condensate from the
CUAC unit (see section IV.F.2.a). See appendix 8D of the CWAF direct
final rule TSD for more details.
Trane stated that calculating the total installed cost for the
furnace separately from the entire rooftop unit (``RTU'') is not
realistic, as replacing a failed CWAF would incur the full cost of the
RTU even if the cooling side was still operating. (CWAF: Trane, Public
Meeting Transcript, No. 17 at p. 128) Lennox agreed with this view.
(CWAF: Lennox, Public Meeting Transcript, No. 17 at p. 130)
DOE's analyses for CWAFs and CUACs accounted for the likelihood
that failure of either the CWAF or the CUAC would lead to replacement
of the entire RTU. In calculating installation costs for CWAFs, DOE
took into account only the additional costs that would be required for
the furnace component, since all other installation components are
already accounted for in the CUAC analysis.
3. Annual Energy Consumption
The calculation of annual per-unit energy consumption at each
considered efficiency level is described above in section IV.E.
DOE typically considers the potential for a rebound effect, which
occurs when a piece of equipment that is made more efficient is used
more intensively, such that the expected energy savings from the
efficiency improvement may not fully materialize.
Commenting on the CUAC/CUHP NOPR, Rheem agreed that it is
appropriate to not include a rebound effect. (CUAC: Rheem, No. 70 at p.
7) Commenting on the CWAF NOPR, Rheem stated generally that no rebound
effect exists for a commercial furnace because the person who pays the
energy bill is usually not the building occupant, but such an effect
could exist where the person who pays the energy bill is also the
building occupant. (CWAF: Rheem, No. 25 at p. 7) AHRI agreed that there
is minimum rebound effect associated with a higher efficiency standard
for commercial furnaces. (CWAF: AHRI, No. 26 at p. 6) In contrast,
Trane commented that DOE had previously included a rebound effect for
residential air conditioners and furnaces, and it noted that EIA
includes a rebound effect for CWAFs in the AEO. It recommended that
this effect be included in DOE's analyses until data are developed
proving it is not warranted or until EIA drops it from the AEO. (CWAF:
Trane, No. 27 at p. 7)
DOE conducted a literature review on the direct rebound effect in
commercial buildings, and found very few studies, especially with
regard to space heating and cooling. In a paper from 1993, Nadel
describes several studies on takeback in the wake of utility lighting
efficiency programs in the commercial and industrial sectors.\78\ The
findings suggest that in general the rebound associated with lighting
efficiency programs in the commercial and industrial sectors is very
small. In a 1995 paper, Eto et al.\79\ state that changes in energy
service levels after efficiency programs have not been studied
systematically for the commercial sector. They state that while pre-/
post-billing analyses can implicitly pick up the energy use impacts of
amenity changes resulting from program participation, the effect is
usually impossible to isolate. A number of programs attempted to
identify changes in energy service levels through customer surveys.
Five concluded that there was no evidence of takeback, while two
estimated small amounts of takeback for specific end uses, usually less
than 10-percent. A recent paper by Qiu,\80\ which describes a model of
technology adoption and subsequent energy demand in the commercial
building sector, does not present specific rebound percentages, but the
author notes that compared with the residential sector, rebound effects
are smaller in the commercial building sector. An important reason for
this is that in contrast to residential heating and cooling, HVAC
operation adjustment in commercial buildings is driven primarily by
building managers or owners. The comfort conditions are already
established in order to satisfy the occupants, and they are unlikely to
change due to installation of higher-efficiency equipment. While it is
possible that a small degree of rebound could occur for higher-
efficiency CUACs/CUHPs and CWAFs, there is no basis to select a
specific value. Because the available information suggests that any
rebound would be small to negligible, DOE did not include a rebound
effect for the direct final rule.
---------------------------------------------------------------------------
\78\ S. Nadel (1993). The Takeback Effect: Fact or Fiction?
Conference paper: American Council for an Energy-Efficient Economy.
\79\ Eto et al. (1995). Where Did the Money Go? The Cost and
Performance of the Largest Commercial Sector DSM Programs. LBL-3820.
Lawrence Berkeley National Laboratory, Berkeley, CA.
\80\ Qui, Y. (2014). Energy Efficiency and Rebound Effects: An
Econometric Analysis of Energy Demand in the Commercial Building
Sector. Environmental and Resource Economics, 59(2): 295-335.
---------------------------------------------------------------------------
Regarding Trane's comment, DOE has confirmed that EIA includes a
rebound effect for several end-uses in the commercial sector, including
heating and cooling, as well as improvements in building shell
efficiency in its AEO reports.\81\ The DOE analysis presented
[[Page 2478]]
here does not include either the rebound effect for building shell
efficiency or the rebound effect for equipment efficiency as is
included in the AEO, and therefore cannot definitively assess what the
impact of including the rebound effect would have on this analysis. For
example, if the building shell efficiency improvements included in the
AEO reduced heating and cooling load by 10 percent and the rebound
effect on building shell efficiency was assumed to be 10 percent, the
total impact would be to reduce heating and cooling loads by 9 percent.
The DOE analysis presented here includes only the building shell
improvements from the AEO but not the rebound effect on the building
shell efficiency improvements. DOE estimates that a rebound effect of
10 percent on CUAC/CUHP/CWAF efficiency for heating and cooling
improvements could reduce the energy savings by 1.5 quads (10 percent)
over the analysis period. However, this ignores that the rule would
have saved more than 15 quads had the building shell efficiency rebound
effect included in the AEO was also included in DOE's analysis.
---------------------------------------------------------------------------
\81\ Energy Information Administration, Commercial Demand Module
of the National Energy Modeling System: Model Documentation 2013,
Washington, DC, November 2013, page 57. The building shell
efficiency improvement index in the AEO accounts for reductions in
heating and cooling load due to building code enhancements and other
improvements that could reduce the buildings need for heating and
cooling.
---------------------------------------------------------------------------
4. Energy Prices
For the CUAC/CUHP NOPR, DOE used the electricity tariff data
developed for the 2004 ANOPR, which were based on tariffs from a
representative sample of electric utilities, to derive marginal and
average electricity prices for each member of the GBS. The approach
uses tariff data that have been processed into commercial building
marginal and average electricity prices.\82\
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\82\ Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and
J.E. McMahon. Tariff-based Analysis of Commercial Building
Electricity Prices. 2008. Lawrence Berkeley National Laboratory:
Berkeley, CA. Report No. LBNL-55551.
---------------------------------------------------------------------------
The CBECS 1992 and CBECS 1995 surveys provide monthly electricity
consumption and demand for a large sample of buildings. DOE used these
values to help develop usage patterns associated with various building
types. Using these monthly values in conjunction with the tariff data,
DOE calculated monthly electricity bills for each building. The average
price of electricity is defined as the total electricity bill divided
by total electricity consumption. Two marginal prices are defined, one
for electricity demand (in $/kW) and one for electricity consumption
(in $/kWh). These marginal prices are calculated by applying a five-
percent decrement to the CBECS demand or consumption data and
recalculating the electricity bill.
Using the prices derived from the above method, an average price
and a marginal price were assigned to each building in the GBS. For
each member of the GBS, these prices were calculated as the average,
weighted by floor space and survey sample weight, of all buildings in
the CBECS 1992 and 1995 data meeting the set of characteristics
defining the generalized building (i.e., region, vintage, building
activity, and building energy consumption). As most tariffs are
seasonal, average and marginal prices are calculated separately for
summer (May-September) and winter.
The average summer or winter electricity price multiplied by the
baseline summer or winter electricity consumption for equipment of a
given capacity defines the baseline LCC. For each efficiency level, the
operating cost savings are calculated by multiplying the electricity
consumption savings (relative to the baseline) by the marginal
consumption price and the electricity demand reduction by the marginal
demand price. The consumer's electricity bill is only affected by the
electricity demand reduction that is coincident with the building's
monthly peak load. Air-conditioning loads are strongly, but not
perfectly, peak-coincident. Divergences between the building peak and
the air conditioning peak were accounted for by multiplying the
electricity demand reduction by a random factor drawn from a triangular
distribution centered at 0.9 +/- 0.1.
The tariff-based prices were updated to 2013 using the commercial
electricity price index published in the AEO (editions 2009 through
2012). An examination of data published by the Edison Electric
Institute \83\ indicates that the rate of increase of marginal and
average prices is not significantly different, so the same factor was
used for both pricing estimates.
---------------------------------------------------------------------------
\83\ Edison Electric Institute. EEI Typical Bills and Average
Rates Report (bi-annual, 2007-2012). Washington, DC.
---------------------------------------------------------------------------
There were no comments on the NOPR methodology, and DOE retained
the approach used for NOPR for the direct final rule.
For CWAFs, DOE derived average and marginal monthly energy prices
for a number of geographic areas in the United States using the latest
data from EIA (Form 861 data \84\ to calculate commercial electricity
prices, Natural Gas Navigator \85\ to calculate commercial natural gas
prices, and State Energy Data System (SEDS) \86\ to calculate LPG and
fuel oil prices) and monthly energy price factors that it developed.
Average energy prices are applied to the no-new-standards case energy
use, while marginal prices are applied to the differential energy use
from the higher efficiency options. This process assigns an appropriate
energy price to each commercial building and household in the sample,
depending on its sector (commercial or residential) and location.
---------------------------------------------------------------------------
\84\ Energy Information Administration (EIA), Survey form EIA-
861--Annual Electric Power Industry Report (Available at: http://www.eia.gov/electricity/data/eia861/index.html) (Last accessed July
15, 2015).
\85\ Energy Information Administration (EIA), Natural Gas
Navigator (Available at: http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm) (Last accessed July 15, 2015).
\86\ Energy Information Administration (EIA), State Energy Data
System (SEDS) (Available at: http://www.eia.gov/state/seds/) (Last
accessed July 15, 2015).
---------------------------------------------------------------------------
AGA stated that DOE's methodology for calculating marginal natural
gas prices results in higher prices than using individual natural gas
utility tariffs, thus overstating the energy cost savings. (CWAF: AGA,
No. 20 at p. 2) However, AGA did not provide data on natural gas
utility tariffs that would enable DOE to modify its method. As a
result, DOE could not evaluate whether AGA's claim is based on a sample
that is representative of CWAFs users. Thus, DOE retained the approach
used in the NOPR for the direct final rule.
For CUACs and CWAFs, to estimate energy prices in future years, DOE
multiplied the recent energy prices by the forecast of annual change in
national-average commercial energy prices in the Reference case from
AEO 2015, 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.
For further discussion of energy prices, see chapter 8 of the
direct final rule TSDs.
5. Maintenance and Repair Costs
Maintenance costs are expenses associated with ensuring continued
operation of the covered equipment over time. DOE developed maintenance
costs for its analysis using 2013 RS Means Facilities Maintenance &
Repair Cost Data.\87\ These data provide estimates of person-hours,
labor rates, and materials required to maintain commercial air
conditioning equipment and furnaces.
---------------------------------------------------------------------------
\87\ RS Means, 2013 Facilities Maintenance & Repair Cost Data
(Available at: http://rsmeans.reedconstructiondata.com/60303.aspx)
(Last accessed April 10, 2013).
---------------------------------------------------------------------------
In response to the CUAC/CUHP NOPR, AHRI and Nordyne commented that
RS Means maintenance costs do not reflect the normal amounts incurred
by customers, which is double RS Means. (AHRI, No. 68 at p. 44;
Nordyne, No. 61
[[Page 2479]]
at p. 38) Lennox, Goodman and Trane commented that RS Means
significantly underestimates preventative maintenance costs. (Lennox,
No. 60 at p. 15; Goodman, No. 65 at pp. 19-20; Trane, No. 63 at p. 9)
Carrier and Goodman stated that maintenence costs are likely to
increase with efficiency. (Carrier, No. 48 at pp. 5-6; Goodman, No. 65
at p. 20)
The Working Group discussed maintenence costs and generally agreed
with DOE's approach. (ASRAC Public Meeting, No. 95 at pp. 139-143).
Accordingly, DOE retained this approach for the direct final rule.
For the CWAF NOPR, DOE included increased maintenance costs for
condensing equipment. For condensing gas-fired commercial warm air
furnaces, DOE added labor and material costs to account for checking
the condensate withdrawal system, including: Inspecting, cleaning, and
flushing the condensate trap and drain tubes; inspecting the grounding
and power connection of heat tape; checking condensate neutralizer; and
checking condensate pump for corrosion and proper operation. For
condensing oil-fired commercial warm air furnaces, DOE added additional
maintenance for installations in non-low-sulfur regions to account for
extra cleaning of the heat exchanger for condensing designs, as well as
checking of the condensate withdrawal system. DOE did not receive any
comments on this issue, and retained the same approach for the direct
final rule.
Repair costs are expenses associated with repairing or replacing
components of the covered equipment that have failed.
For the CUAC/CUHP NOPR, DOE assumed that any routine or minor
repairs are included in the maintenance costs. As a result, repair
costs were not explicitly modeled in the LCC and PBP analysis. Instead,
DOE incorporated a one-time cost for major repair (compressor
replacement) as a primary input to the repair/replace consumer choice
model in the shipments analysis, which models the decision between
repairing a broken unit and replacing it.
DOE proposed to the Working Group to include compressor repairs in
the LCC and PBP analysis because such repair work would occur
regardless of whether new standards are set (ASRAC Public Meeting, No.
96 at pp. 247-248) The Working Group agreed with this proposal, and,
because the Working Group estimated that compressor repairs occur later
in a CUAC's life, suggested that this type of repair be assumed to take
place in the 13th year. For the direct final rule, compressor repair
costs are based on material costs from Grainger (a provider of
commercial and industrial supplies) and labor costs from RS Means, and
are assumed to scale with equipment price. The cost is applied to 20
percent of consumers, representing the portion of the population that
chooses to repair rather than replace in the no-standards case. DOE
also included non-compressor repairs, conducted in the 7th year, for
all consumers (ASRAC Public Meeting, No. 96 at pp. 247-248).
For CWAFs, DOE developed repair costs for its analysis using 2013
RS Means Facilities Maintenance & Repair Cost Data.\88\ DOE included
additional repair costs for higher efficiency levels (i.e., condensing
furnaces).
---------------------------------------------------------------------------
\88\ RS Means, 2013 Mechanical Cost Data (Available at: http://rsmeans.reedconstructiondata.com/60023.aspx) (Last accessed April
10, 2013).
---------------------------------------------------------------------------
Lennox stated that due to the introduction of condensate at a TE
level of 82-percent and above, many components will be susceptible to
corrosion, thus requiring components to be replaced more frequently.
(CWAF: Lennox, No. 22 at p. 10) For the direct final rule, DOE assumed
that all 82-percent TE CWAFs use stainless steel heat exchangers to
resist corrosion; therefore, DOE did not assume any difference in
repair frequency for 82-percent TE CWAFs.
See chapter 8 of the direct final rule TSDs for more details on
maintenance and repair costs.
6. Equipment Lifetime
Equipment lifetime is the age at which a unit of covered equipment
is retired from service. For the LCC and PBP analysis, DOE develops a
distribution of lifetimes to reflect variability in equipment lifetimes
in the field.
a. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
For the CUAC/CUHP NOPR, DOE used lifetime distributions based on
calibration of the shipments model (see section IV.G.1). The mean
lifetimes were 18.4 years for CUACs and 15.2 years for CUHPs. AHRI and
Nordyne commented that the equipment lifetime assumptions are incorrect
and that a lifetime range of 12-15 years is more appropriate for
equipment in this rulemaking. (AHRI, No. 68 at p. 45; Nordyne, No. 61
at p. 35) Goodman commented that the lifetimes should be different for
each equipment class. (Goodman, No. 65 at pp. 20-21)
The Working Group accepted DOE's approach of using the shipments
model to determine equipment lifetime, along with extension of the
equipment lifetime due to inclusion of compressor repairs. The group
asked DOE to use more recent shipments data. AHRI provided recent data,
but it was not representative of entire industry shipments, so DOE
continued to use the shipments data from the NOPR analysis (ASRAC
Public Meeting, No. 98 at pp. 125-133). Also, as discussed later in
section IV.F.8.a, DOE also incorporated AHRI's more recent data into
its analysis. For the direct final rule, the LCC analysis used lifetime
distributions based on the revised shipments model (see section
IV.G.1), which makes distinct estimates for each of the CUAC equipment
classes.
b. Commercial Warm Air Furnaces
In addressing gas-fired CWAFs, DOE's CWAF NOPR used the same
lifetime probability distribution that was developed in the NOPR
analysis for small, large, and very large air-cooled commercial package
air conditioning and heating equipment.\89\ For oil-fired CWAFs, DOE
used a lifetime Weibull probability distribution based on a method that
utilizes national survey data,\90\ which resulted in a 26-year average
lifetime. DOE expects the lifetime of the equipment to not change due
to any new energy efficiency standards.
---------------------------------------------------------------------------
\89\ Technical Support Document for Small, Large, and Very Large
Commercial Package Air Conditioners and Heat Pumps Notice of
Proposed Rulemaking (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0007-0027).
\90\ Lutz, J., A. Hopkins, V. Letschert, V. Franco, and A.
Sturges. Using national survey data to estimate lifetimes of
residential appliances. HVAC&R Research (2011) 17(5): pp. 28
(Available at: http://www.tandfonline.com/doi/abs/10.1080/10789669.2011.558166).
---------------------------------------------------------------------------
Commenting on the CWAF NOPR, AHRI stated that the analysis
overestimates the average lifetime of a commercial furnace, and that
the proposed standard of 82-percent TE will reduce the life of the
equipment. (CWAF: AHRI, No. 26 at pp. 2, 6)
As discussed with the Working Group, for the direct final rule
analysis, DOE based the lifetime estimate for both gas-fired and oil-
fired CWAFs on the revised CUAC lifetime. (ASRAC Public Meeting, No. 43
at p. 8) DOE does not believe a standard at 82-percent TE would reduce
the life of equipment that use stainless steel heat exchangers for
installations where such material would prevent corrosion issues.
Therefore, as described in section IV.C.3.b, DOE assumed in its
analysis that all 82-percent TE CWAFs would use stainless steel heat
exchangers. In any case, DOE
[[Page 2480]]
notes that the standard adopted for gas-fired CWAFs does not require
82-percent TE.
7. Discount Rates
The discount rate is the rate at which future expenditures or
savings are discounted to estimate their present value. The weighted
average cost of capital is commonly used to estimate the present value
of cash flows to be derived from a typical company project or
investment. Most companies use both debt and equity capital to fund
investments, so their cost of capital is the weighted average of the
cost to the firm of equity and debt financing. DOE estimated the cost
of equity using the capital asset pricing model, which assumes that the
cost of equity for a particular company is proportional to the
systematic risk faced by that company.
The primary source of data for this analysis was Damodaran Online,
a widely used source of information about company debt and equity
financing for most types of firms.\91\ In analyzing these data, DOE
estimated a separate weighted average cost of capital for each business
sector that purchases CUACs and CWAFs. More details regarding DOE's
estimates of consumer discount rates are provided in chapter 8 of the
direct final rule TSDs.
---------------------------------------------------------------------------
\91\ Damodaran Online, The Data Page: Cost of Capital by
Industry Sector, 2001-2013. (Last accessed March, 2014.) See: http:/
/pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------
8. Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of commercial consumers that would
be affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the distribution
(market shares) of equipment efficiencies projected for the compliance
years in the no-new-standards case (i.e., the case without amended or
new energy conservation standards).
a. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
For the CUAC/CUHP NOPR, DOE used a consumer choice model to
estimate efficiency market shares in the expected compliance year. The
consumer choice model considers customer sensitivity to total
installation cost and annual operating cost. DOE used efficiency market
share data for 1999-2001, based on model availability data from the
AHRI-certified directory, to develop the parameters of the consumer
choice model in the shipments analysis. Using these parameters, the
model estimated the shipments at each IEER level based on the installed
cost and operating cost at each efficiency level.
During the Working Group meetings, DOE requested data that might
improve the efficiency distribution in the no-new-standards case. AHRI
provided recent market share data by efficiency based on shipments.
Using these data in preparing the analysis for the direct final rule,
DOE extended the AHRI data to 2019 to estimate efficiency market shares
for each equipment class in the no-new-standards case.\92\ These shares
are presented in chapter 8 of the direct final rule TSD.
---------------------------------------------------------------------------
\92\ DOE used the 2019 efficiency distribution for all of the
TSLs analyzed, including the Recommended TSL.
---------------------------------------------------------------------------
As discussed in section IV.E.1, DOE assigned CAV designs to CAV
buildings and SAV and VAV designs to VAV buildings. Therefore, DOE
needed to develop separate efficiency distributions for CAV, SAV, and
VAV designs for each equipment class. AHRI provided market share data
based on shipments of each design, which DOE used for the direct final
rule analysis. (ASRAC Public Meeting, No. 98 at pp. 22-37). These data
were incorporated into the NIA spreadsheet model that DOE developed.
The distributions used are presented in chapter 8 of the direct final
rule TSD.
b. Commercial Warm Air Furnaces
For the CWAF NOPR, DOE developed the current distribution of
equipment shipments by efficiency level for the CWAF equipment classes
for 2013 based on the number of models at different efficiency levels
from AHRI's Certification Directory for Commercial Furnaces.\93\ These
data show no market share for condensing CWAFs. For condensing gas-
fired CWAFs, however, DOE found that models from non-AHRI member
manufacturers are just now becoming available, so DOE estimated a
market share of one percent by 2018 based on the fraction of condensing
models available in 2013.
---------------------------------------------------------------------------
\93\ AHRI, 2013 AHRI Certification Directory for Commercial
Furnaces (Available at: http://www.ahridirectory.org/ahridirectory/pages/home.aspx) Last accessed Oct. 15, 2013).
---------------------------------------------------------------------------
Commenting on the NOPR, Lennox stated that its CWAFs are expected
to remain at 80-percent TE for the foreseeable future, as there is
little market demand for higher-efficiency furnaces in the commercial
sector. (CWAF: Lennox, No. 22 at pp. 10-11) As discussed with the
Working Group, to estimate the efficiency distribution of CWAFs for the
direct final rule, DOE updated its analysis using the most recent AHRI
Certification Directory for Commercial Furnaces.\94\ (ASRAC Public
Meeting, No. 43 at pp. 7-8) These data include most manufacturers of
CWAFs. DOE agrees with Lennox that the majority of gas-fired CWAFs are
expected to remain at 80-percent TE for the foreseeable future because
the fraction of non-condensing models sold has remained fairly constant
over the last 20 years. In addition, there is a limited number of
condensing CWAF models and lack of incentives (e.g. rebates, tax
credits or similar consumer-focused approaches) to increase the
condensing CWAF market share. Therefore, DOE did not include any
increase in the efficiency of non-condensing CWAFs between 2014 and
2019. Similar to the NOPR analysis, based on the limited availability
condensing gas-fired CWAF models, DOE estimated a market share of one
percent by 2019. The estimated efficiency market shares for CWAFs in
the no-new-standards case in 2019 are presented in chapter 8 of the
CWAF direct final rule TSD.
---------------------------------------------------------------------------
\94\ AHRI, 2015 AHRI Certification Directory for Commercial
Furnaces (Available at: http://www.ahridirectory.org/ahridirectory/pages/home.aspx) Last accessed July 1, 2015).
---------------------------------------------------------------------------
See chapter 8 of the direct final rule TSDs for further information
on the derivation of the efficiency distributions.
9. Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more-efficient equipment,
compared to baseline equipment, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the equipment mean that the increased total installed cost is not
recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the equipment and the change in the
first-year annual operating expenditures relative to the baseline
efficiency level. The PBP calculation uses the same inputs as the LCC
analysis, except that discount rates are not needed.
As noted above, EPCA establishes a rebuttable presumption that a
standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing equipment complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as
[[Page 2481]]
calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For CUACs/CUHPs, the DOE test procedure prescribes
how to calculate equipment efficiency, but not annual energy use. For
the rebuttable presumption PBP, DOE used the same energy use calculated
for the regular PBP calculation at each efficiency level. For CWAFs,
DOE calculated energy consumption using the DOE test procedure.
G. Shipments Analysis
DOE uses projections of annual equipment shipments to calculate the
national impacts of potential amended energy conservation standards on
energy use, NPV, and future manufacturer cash flows.\95\
---------------------------------------------------------------------------
\95\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
1. Small, Large, and Very Large Commercial Package Air Conditioning and
Heating Equipment
The shipments model for CUACs and CUHPs uses a stock accounting
approach, tracking the number of units and vintage for each equipment
class. The vintage (or age) distribution of in-service equipment is a
key input to calculations of both the NES and NPV, because equipment
efficiency varies with vintage, and this in turn affects the energy use
and operating costs.
The primary inputs to the shipments model are time series of total
commercial floor space, market share by equipment class, new
construction market saturations, and equipment lifetimes. Floor space
estimates are based on historic CBECS surveys and projections from AEO
2015. The fraction of cooled floor space assigned to each equipment
class is based on the percentage of total capacity in each class for
historic shipments. The market saturation (i.e., percentage of new
floor space that is cooled by the covered equipment) is a function of
time. Using CBECS estimates of stock saturations and historic shipments
data for each equipment class, DOE calibrated the shipments model by
jointly varying both equipment lifetime and fits to the CBECS stock
saturation. The resulting lifetime representations were Weibull
distributions with mean lifetimes of 21.1 years, 22.6 years, and 33.7
years for small, large and very large equipment classes, respectively.
a. Shipments by Market Segment
The shipments model includes three market segments: (1) New
commercial buildings acquiring new equipment, (2) existing buildings
acquiring new equipment for the first time, and (3) existing buildings
replacing broken equipment.
DOE estimated new equipment shipments to new buildings by
multiplying the market saturation values by the total new floor space
in each year. DOE estimated new shipments to existing buildings as the
total floor space multiplied by the change in saturation with time.
This market segment is approximately zero for the analysis period, as
saturations are no longer changing significantly.
Replacement shipments are those that go into existing buildings to
replace broken equipment. The number of units that break each year is
equal to the total equipment stock minus the number of units that
survive. The number of units that survive is calculated by multiplying
the equipment stock as a function of age by the survival function. The
survival function is the integral of the lifetime function used in the
LCC. If all units that break are replaced, then the number of
replacement shipments in each year is equal to the total number of
broken units. However, in general, some fraction of broken units will
be replaced, which reduces the number of replacement shipments.
For CUACs and CUHPs, the end of lifetime is generally associated
with compressor failure. Installing a new compressor is costly, so
customers typically replace the entire unit rather than simply replace
the compressor. If standards significantly increase the cost of new
equipment, however, one would expect that the repair option would
become more attractive.
For the CUAC/CUHP NOPR, DOE modeled the repair rates for the small
and large CUACs and CUHP equipment classes using a consumer choice
model.\96\ This model was based on an estimated sensitivity to cost and
a comparison of total installation costs for new equipment compared to
repair costs. The price sensitivity was estimated by calibrating the
model to historic data on total shipments, and market share by
efficiency for 1999-2001. Actual repair costs were not known, so DOE
estimated repair costs based on labor costs and the cost of a new
compressor. DOE assumed that repair costs increase in direct proportion
to the price of the equipment. Given the price sensitivity, and an
estimate of the cost of repairing vs. replacing a new unit, a drop in
shipments was estimated for each standard level.
---------------------------------------------------------------------------
\96\ For the very large CUACs and CUHP equipment classes, in the
NOPR DOE did not use the consumer choice model and simply assumed
that, in the standards cases, 100% of broken units would be repaired
at the first failure, and replaced at the second failure.
---------------------------------------------------------------------------
ASAP commented that DOE's model overestimated the impact of higher
efficiency levels on shipments. It stated that there are only 3 years
of data on market share and cost (which are 15 years old), and a
customer's repair/replace decision is more complex than the decision to
purchase a baseline or higher efficiency unit. ASAP commented that the
DOE model fails to capture a number of complex factors affecting
purchase and repair decisions, such as the fact that some manufacturers
offer leases that include no upfront costs. It noted that many units
use R-22 as a refrigerant and since it is being phased out those units
will be more expensive to service and repair. (CUAC: ASAP, No. 69 at
pp. 6-7) The California IOUs, through PG&E, stated that the decision
model should include factors such as the need for immediate resumption
of operation to avoid placing too much weight on the first cost of more
efficient equipment. (CUAC: California IOUs, No. 67 at p. 6) Rheem
commented that the repair/replace decision depends on the commercial
use of the building, how extensive the repair is, whether a warranty
covers the repair, the cost of removal, purchase cost and installation
cost. (CUAC: Rheem, No. 70 at p. 7)
For the direct final rule, DOE examined a variety of potential
modifications to the modeling approach used for the NOPR. The primary
difficulty is that there are multiple parameters that need to be
simultaneously estimated, including the actual repair costs, consumer
price sensitivity, the fraction of consumers whose repair/replace
decision is not driven solely by price, and the mean lifetime of a
repaired unit. As very little additional data were available for the
direct final rule, DOE adopted a simpler and more transparent modeling
approach.
The simplified approach still uses logistic regression to estimate
the rate of purchase of new equipment by owners of broken equipment,
but does not attempt to explicitly model repair costs.\97\ Instead the
model assumes that the change in purchases of new equipment is equal to
the price elasticity multiplied by a change in the utility function.
The utility function for
[[Page 2482]]
this logit model is defined as the total installed cost of the
equipment plus the average discounted lifetime operating costs. DOE
based the discount rate on commercial sector time preference premium
parameters used in the NEMS Commercial Demand Module. For the price
elasticity parameter, DOE presented an estimate of -0.68 to the Working
Group. (ASRAC Public Meeting, No. 97 at p. 56; see also id at pp. 23-26
(background discussion)) This value is twice the value DOE has used for
the residential sector, based on the assumption that commercial sector
purchasers are more price sensitive. The Working Group did not object
to this value, and DOE used it for the direct final rule analysis. For
the standards cases, this approach predicts a drop in shipments
relative to the base case due to the price increases associated with
the higher IEER levels. DOE assumed that this drop in shipments
represents the number of units that are repaired, so that the total
number of units in the stock remains constant at all IEER levels. DOE
applied this approach to all equipment capacities.
---------------------------------------------------------------------------
\97\ In statistics, logistic regression, or logit regression, or
logit model is a regression model where the dependent variable is
categorical. Logistic regression measures the relationship between
the categorical dependent variable and one or more independent
variables by estimating probabilities using a logistic function.
---------------------------------------------------------------------------
For the CUAC/CUHP NOPR, DOE assumed that if the unit is repaired
(i.e., with a new compressor), its life is extended by another lifetime
using the same retirement function as for new equipment. If a unit
encounters a second failure within the analysis period, it is replaced.
Carrier commented that while replacing a failed part with a new
part returns a unit to service, it does not believe that the lifetime
is reset after a repair, and therefore does not expect repaired units
to last as long as new equipment. (Carrier, No. 48 at p. 7) The
California IOUs, through PG&E, made a similar comment. (California
IOUs, No. 67 at p. 6) Trane commented that assuming a compressor repair
results in a new lifetime for the equipment is flawed--in its view, the
lifetime is more likely cut in half. (Trane, No. 63 at p. 10) ASAP does
not believe that a compressor repair will extend the life of the
equipment by one whole lifetime, as there are also other components
that could fail before the new compressor fails. (ASAP, No. 69 at p. 6)
Based on stakeholder comments, for the direct final rule, DOE
assumed that the mean lifetime for repaired equipment is equal to one
half the mean lifetime of new equipment.
b. Shipment Market Shares by Efficiency Level
The approach described in the preceding section provides total
shipments in each equipment class for each year. To estimate the market
shares of the considered efficiency levels in future shipments, DOE
developed a customer choice model. The model was calibrated by
estimating values for two parameters, representing customer sensitivity
to total installation cost and annual operating cost.
To estimate values for the parameters, for the direct final rule
the calibration method was changed to better fit the historic market
shares. DOE used a maximum log likelihood approach that optimized the
customer choice model fit to historical market shares at each
efficiency level for the small and large CUAC equipment classes. To
calibrate the model, DOE used IEER market share data for each CUAC
equipment class provided by AHRI for the Working Group. These market
shares are for 2011 and 2014. Starting in 2015, application of the
parameters, along with data on the installed cost and operating cost at
each efficiency level for each year in the analysis period, determines
the market shares of each efficiency level in each year. Different sets
of parameters were used to estimate market shares for CUACs and CUHP
equipment classes. The details of the data and the method used can be
found in chapter 9 of the CUAC/CUHP direct final rule TSD.
2. Commercial Warm Air Furnaces
For the CWAF NOPR, DOE developed shipment projections based on
historical data and an analysis of key market drivers for each product.
Historical shipments data were used to build up an equipment stock and
also to calibrate the shipments model. Historical shipments data for
CWAF equipment are very limited. DOE used 1994 shipments data from AHRI
(previously the Gas Appliance Manufacturers Association, or ``GAMA'')
that were presented in a report from PNNL,\98\ and the historical
shipments of non-heat pump commercial unitary air conditioners (CUACs
and CUHPs),\99\ which are usually packaged together with CWAFs. The
ratio of the shipments of non-heat pump CUACs and CUHPs and the
shipments of gas-fired CWAFs in 1994 was calculated.\100\ DOE believes
that this ratio should be reasonably stable over time, so DOE
determined the historical shipments of gas-fired CWAFs by multiplying
this ratio with the historical shipments of non-heat pump CUACs.
---------------------------------------------------------------------------
\98\ Pacific Northwest National Laboratory (PNNL), Screening
Analysis for EPACT-Covered Commercial HVAC and Water-Heating
Equipment, April 2000. (Available at: http://www.pnl.gov/main/publications/external/technical_reports/PNNL-13232.pdf) (Last
accessed April 10, 2013).
\99\ Air-Conditioning and Refrigeration Institute, Commercial
Unitary Air Conditioner and Heat Pump Unit Shipments for 1980-2001
(Jan. 2005) (Prepared for Lawrence Berkeley National Laboratory).
\100\ The fraction of non-heat pump CUACs equipment that is
packaged with commercial furnaces is 80 percent.
---------------------------------------------------------------------------
For the NOPR, since shipments data for oil-fired CWAFs were not
publicly available, DOE used the ratio of oil-fired versus gas-fired
residential furnace shipments from AHRI \101\ and the historical
shipments of gas-fired commercial furnaces to calculate the historical
shipment of oil-fired commercial furnaces. DOE estimated from these
data that oil-fired CWAFs account for about 1 percent of total CWAFs
shipments.
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\101\ Air-Conditioning Heating and Refrigeration Institute,
Furnaces Historical Data (1994-2013). 2015. (Available at: http://www.ahrinet.org/site/497/Resources/Statistics/Historical-Data/Furnaces-Historical-Data). (Last accessed January 7, 2015).
---------------------------------------------------------------------------
Commenting on the CWAF NOPR, Lennox stated that most weatherized
CWAFs are integrated into rooftop equipment that also provide cooling,
so it is not logical that the CWAF NOPR has much different shipment
projections than the projections for CUACs and CUHPs. (CWAF: Lennox,
No. 22 at p. 11) As discussed with the Working Group, for the direct
final rule, DOE modified the projection for CWAF shipments, with the
results indicating that the magnitude is similar to the projected
shipments for CUACs and CUHPs. (ASRAC Public Meeting, No. 41 at p. 28)
Chapter 9 of the direct final rule TSD described the modifications.
a. Impact of Standards on Shipments
For the CWAF NOPR, for cases with potential CWAFs standards, DOE
considered whether the increase in price would cause some commercial
consumers to choose to repair rather than replace their CWAF equipment.
The shipments model used a relative price elasticity to account for the
combined effects of changes in purchase price and annual operating cost
on the purchase versus repair decision. Because data for commercial
consumers were lacking, DOE used a relative price elasticity that has
been derived for residential consumers.
Commenting on the CWAF NOPR, AHRI stated that DOE's reliance on
residential purchases to establish commercial product price elasticity
and on car purchases to extend the elasticity over time is not
appropriate. (CWAF: AHRI, No. 26 at p. 5) Lennox stated that the CUAC/
CUHP NOPR projects a severe decline in shipments with amended
standards, so CWAF shipment impacts should reflect a similar decline,
since the two product categories are usually combined in one piece of
[[Page 2483]]
equipment. (CWAF: Lennox, No. 22 at p. 11) DOE notes that decreasing
price elasticity over time is a common effect observed across numerous
products and industries, including appliances. The automobile study
used to develop the price elasticity for the NOPR contains greater
detail on this effect than other studies. For the direct final rule,
DOE used the same product price elasticity for CWAFs as it developed
for CUACs and CUHPs. This value is twice the value DOE has used for the
residential sector, based on the assumption that commercial sector
purchasers are more price sensitive.
AHRI stated that the proposed standard of 82 percent TE for gas-
fired CWAFs may cause some equipment switching because of installation
complications resulting from larger units and modifications to handle
condensate disposal. (CWAF: AHRI, No. 26 at p. 6) Trane argued that
some businesses will elect to switch to less expensive electric heating
options in response to a standard, and it is concerned that DOE has not
modeled the possibility of fuel switching. While the effects of fuel
switching would be greatest at the condensing level, Trane stated that
there could be fuel switching at the lower levels as well. (CWAF:
Trane, No. 27 at pp. 7-8) AGA stated that DOE did not account for fuel/
product switching that will occur as a result of the proposed standard
if manufacturers eliminate the manufacturing of non-condensing
commercial furnaces because the 82 percent TE minimum level is no
longer practical from a safety and durability point of view. (CWAF:
AGA, No. 20 at p. 2)
DOE believes that a standard at 82 percent TE would cause minimal
switching to electricity because of the very high operating costs of an
electric furnace and significant additional electrical installation
costs. DOE did not analyze such switching for the direct final rule
because it is adopting a standard at 81 percent TE, a level where
consumers would have no incentive to switch away from gas.
The details of the shipments analysis can be found in chapter 9 of
the direct final rule TSDs.
H. National Impact Analysis
The NIA assesses the national energy savings (``NES'') and the
national net present value (``NPV'') from a national perspective of
total consumer costs and savings that would be expected to result from
new or amended standards at specific efficiency levels.\102\
(``Consumer'' in this context refers to commercial consumers of the
equipment being regulated.) DOE calculates the NES and NPV based on
projections of annual product shipments, along with the annual energy
consumption and total installed cost data from the energy use and LCC
analyses.\103\ For most of the TSLs considered in this direct final
rule, DOE forecasted the energy savings, operating cost savings, and
equipment costs over the lifetime of CUACs/CUHPs and CWAFs sold from
2019 through 2048. For the TSLs that represent the Working Group
recommendations, DOE accounted for the lifetime impacts of CUACs and
CUHPs sold from 2018 through 2048 and CWAFs sold from 2023 through
2048.
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\102\ The NIA accounts for impacts in the 50 States and the U.S.
territories.
\103\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------
DOE evaluates the impacts of new and amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
equipment class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each equipment class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of equipment with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV-30 summarizes the inputs and methods DOE used for the NIA
analyses for the direct final rule. Discussion of these inputs and
methods follows the table. See chapter 10 of the direct final rule TSDs
for further details.
Table IV.30--Summary of Inputs and Methods for the National Impact
Analysis: Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment and Commercial Warm Air Furnaces
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments......................... See section IV.G.
Compliance Date of Standard....... CUACs and CUHPs: Recommended TSL,
2018 for initial standards and 2023
for second-phase standards; Other
TSLs: 2019.
CWAF: Recommended TSL, 2023; Other
TSLs, 2019.
Efficiency Trends................. CUAC: Based on consumer choice
model.
CWAF:
-- No-New-Standards case: Based on
likely trend.
--Standard cases: ``roll-up''
scenario is used.
Annual Energy Consumption per Unit Annual weighted-average values are a
function of energy use at each
efficiency level.
Total Installed Cost per Unit..... Annual weighted-average values are a
function of cost at each efficiency
level.
Incorporates projection of future
product prices based on historical
data.
Annual Energy Cost per Unit....... Annual weighted-average values are a
function of the annual energy
consumption per unit and energy
prices.
Repair and Maintenance Cost per Annual values are a function of
Unit. efficiency level.
[[Page 2484]]
Energy Prices..................... AEO 2015 forecasts (to 2040) and
extrapolation thereafter.
Energy Site-to-Primary Conversion. A time-series conversion factor
based on AEO 2015.
Discount Rate..................... Three and seven percent.
Present Year...................... 2015.
------------------------------------------------------------------------
1. Equipment Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case. Section IV.F.8 describes how
DOE developed an energy efficiency distribution for the no-new-
standards case for each of the considered equipment classes for the
first year of the forecast period.
For CUACs and CUHPs, DOE used the consumer choice model described
in section IV.G to estimate efficiency market shares in each year of
the shipments projection period. For each standards case, the
efficiency levels that are below the standard are removed from the
possible choices available to customers. The no-new-standards case
shows a slight increasing trend in efficiency for small CUACs and
CUHPs, but the shares were fairly constant for large and very large
CUACs and CUHPs.
For the CWAF NOPR, DOE assumed no change in efficiency for non-
condensing CWAFs over the shipments projection period in the no-new-
standards case. For condensing gas-fired CWAFs, however, it estimated
that market interest in efficiency would lead to a modest growth in
market share.
Trane stated that the equipment minimum energy efficiency
requirements (including CWAFs) in ASHRAE 90.1 have been updated a
number of times and there is every reason to believe they will continue
to be updated without further DOE equipment standards (i.e., no-new-
standards case). (Trane, No. 27 at p. 8) DOE agrees that ASHRAE 90.1
will continue to be updated; however, for CWAFs, the ASHRAE 90.1
requirements have not changed since 1992, so any future changes to CWAF
requirements, within DOE's analysis period, are uncertain. Thus, DOE
believes that its projected efficiency trend for the no-new-standards
case is reasonable.
For the CWAFs standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the compliance year. In
this scenario, the market of products in the no-new-standards case that
do not meet the standard under consideration would ``roll up'' to meet
the new standard level, and the market share of products above the
standard would remain unchanged. After the compliance year, DOE assumed
no change in efficiency over time.
The projections of efficiency trends for CUACs/CUHPs and CWAFs are
further described in chapter 10 of the direct final rule TSDs.
2. National Energy Savings
The NES analysis involves a comparison of national energy
consumption of the considered products in each potential standards case
(TSL) with consumption in the case without amended energy conservation
standards. DOE calculated the national energy consumption by
multiplying the number of units (stock) of each product (by vintage or
age) by the unit energy consumption (also by vintage). Annual NES is
based on the difference in national energy consumption for the no-new-
standards case and for each standard case. Part of the reduction in
energy consumption in a standards case may be due to decreasing
shipments resulting from customers choosing to repair than replace
broken equipment. Therefore, the NES calculation includes the estimated
energy use of units that are repaired rather than replaced.
For CUACs, the per-unit annual site energy savings for each
considered efficiency level come from the energy use analysis, which
estimated energy consumption for the compliance year. For later years,
DOE adjusted the per-unit annual site energy savings to account for
changes in climate (cooling degree-days) and building shell efficiency
based on projections in AEO 2015.
For CUHPs, DOE did not conduct an energy use analysis. Because the
cooling-side performance of CUHPs is nearly identical to that of CUACs,
DOE used the energy consumption estimates developed for CUACs to
characterize the cooling-side performance of CUHPs of the same size. To
characterize the heating-side performance, DOE analyzed CBECS 2003 data
to develop a national-average annual energy use per square foot for
buildings that use CUHPs. DOE assumed that the average COP of the CUHPs
was 2.9.\104\ DOE converted the energy use per square foot value to
annual energy use per ton using a ton per square foot relationship
derived from the energy use analysis for CUACs. This value is different
for each equipment class. Because equipment energy use is a function of
efficiency, DOE assumed that the annual heating energy consumption of a
unit scales proportionally with its heating COP efficiency level.
Finally, to determine the COPs of units with given IEERs, DOE
correlated COP to IEER based on the AHRI Certified Equipment
Database.\105\ Thus, for any given cooling efficiency of a CUHP unit,
DOE was able to establish the corresponding heating efficiency, and, in
turn, the associated annual heating energy consumption.
---------------------------------------------------------------------------
\104\ A heating efficiency of 2.9 COP corresponds to the
existing minimum heating efficiency standard for CUHPs, a value
which the Department believes is representative of the heat pump
stock characterized by CBECS.
\105\ http://www.ahridirectory.org/ahridirectory/pages/homeM.aspx.
---------------------------------------------------------------------------
DOE converted site electricity consumption and savings to primary
energy (i.e., the energy consumed by power plants to generate site
electricity) using annual marginal conversion factors derived from AEO
2015. Cumulative energy savings are the sum of the NES for each year
over the timeframe of the analysis. As explained in section IV.E, DOE
did not incorporate a rebound effect for CUACs and CUHPs or CWAFs.
As noted in section IV.C.2.b and section IV.E.1, for Efficiency
Level 3 for the small and large ``all other types of heating
equipment'' classes and Efficiency Level 2.5 for the very large ``all
other types of heating equipment'' class, the IEER values included in
the ASRAC Working Group recommendations (discussed in section III.B.2)
were based on an IEER differential of 0.2 compared to the ``electric
resistance heating or no heating'' equipment classes. At Efficiency
Level 3, based on an approach of maintaining a constant energy savings
differential with the ``electric resistance heating or no heating''
equipment classes, the IEER
[[Page 2485]]
differential would be 0.3 for both the small and large ``all other
types of heating equipment'' classes. Additional energy savings are
realized from reducing the IEER differential to 0.2 for the small and
large ``all other types of heating equipment'' classes. To calculate
the additional energy savings realized from reducing the IEER
differential to 0.2, DOE utilized a ``top-down'' approach by
determining the national energy savings per IEER for the small and
large equipment classes. DOE then multiplied the national energy
savings per IEER by the IEER reduction of 0.1 to determine the
additional energy savings associated with reducing the IEER
differential.
For the CUHP equipment classes, DOE used the same ``top-down''
method for determining the additional energy savings realized from
reducing the IEER differentials to the IEER values included in the
ASRAC Working Group recommendations, as discussed in section III.B.2.
As described in Section IV.C.2.b, the ASRAC Working Group
recommendation included IEER values for the CUHP equipment classes
based on IEER diffentials of 0.7 for all three CUHP equipment classes
with electric resistance or no heating. At Efficiency Level 3, based on
an approach of maintaining a constant energy savings differential with
the CUAC equipment classes including electric resistance heating or no
heating, the IEER differential would be 0.8, 0.9, and 1.1 for the
small, large, and very large CUHP equipment classes with electric
resistance or no heating, respectively. As a result, additional energy
savings are realized from reducing the IEER differential to 0.7 for the
CUHP equipment classes.
A more detailed description of the method and results for
determining the additional energy associated with reducing the IEER
differentials for both the CUAC equipment classes with all other types
of heating and the CUHP equipment classes with electric resistance or
no heating is given in appendix 10D of the direct final rule TSD.
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 full-fuel-cycle (``FFC'') measures
of energy use and GHGs and other emissions in the national impact
analyses and emissions analyses included in future energy conservation
standards rulemakings. 76 FR 51281 (August 18, 2011). After evaluating
the approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's NEMS is the most appropriate tool for its FFC analysis and
its intention to use NEMS for that purpose. 77 FR 49701 (August 17,
2012). NEMS is a public domain, multi-sector, partial equilibrium model
of the U.S. energy sector \106\ that EIA uses to prepare its Annual
Energy Outlook. The approach used for deriving FFC measures of energy
use and emissions is described in appendix 10B of the direct final rule
TSDs.
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\106\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA-0581 (2009) (Oct. 2009)
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------
3. Net Present Value
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) Total annual installed cost; (2)
total annual savings in operating costs; and (3) a discount factor to
calculate the present value of costs and savings. DOE calculates net
savings in each year as the difference between the no-new-standards
case and each standards case in terms of total savings in operating
costs versus total increases in installed costs. DOE calculates
operating cost savings over the lifetime of the equipment shipped
during the forecast period.
a. Total Annual Installed Cost
The total installed cost includes both the equipment price and the
installation cost. DOE calculated equipment prices by efficiency level
using manufacturer selling prices and weighted-average overall markup
values (weights based on shares of the distribution channels used).
Installation costs come from the LCC and PBP analysis.
For CUHPs, to estimate the cost at higher efficiency levels, DOE
applied the same incremental equipment costs that were developed for
the comparable CUAC efficiency levels for each equipment class).
As noted in section IV.F.1, DOE assumed no change in CUACs and
CUHPs prices over the analysis period. For CWAFs, DOE derived a trend
based on the PPI for ``Warm air furnaces,'' which shows a small rate of
annual price decline. DOE applied the same trends to project prices for
each CWAF equipment class at each considered efficiency level. DOE's
projection of product prices is described in appendix 10C of the direct
final rule TSDs.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different equipment price
trends on the consumer NPV for the considered TSLs. For CUACs and
CUHPs, DOE conducted sensitivity analyses using one trend in which
prices decline, and one in which prices rise. For CWAFs, DOE considered
a high price decline case and a low price decline. The derivation of
these price trends and the results of the sensitivity cases are
described in appendix 10C of the direct final rule TSDs.
The NPV calculation includes the repair cost for units that are
repaired rather than replaced.
b. Total Annual Operating Cost Savings
Operating cost savings are estimated by comparing total energy
expenditures and repair and maintenance costs for the base case and the
standards cases. DOE calculates annual energy expenditures from annual
energy consumption by incorporating forecasted energy prices. To
calculate future energy prices, DOE applied the projected trend in
national-average commercial energy prices from the AEO 2015 Reference
case (which extends to 2040) to the recent prices derived in the LCC
and PBP analysis. DOE used the trend from 2030 to 2040 to extrapolate
beyond 2040. As part of the NIA, DOE also analyzed scenarios that used
inputs from the AEO 2015 Low Economic Growth and High Economic Growth
cases. Those cases have higher and lower energy price trends compared
to the Reference case.
c. Net Benefit
The aggregate difference each year between operating cost savings
and increased equipment expenditures is the net savings or net costs.
In calculating the NPV, DOE multiplies the net savings in future years
by a discount factor to determine their present value. DOE estimates
the NPV using both a 3-percent and a 7-percent real discount rate, in
accordance with guidance provided by the Office of Management and
Budget (``OMB'') to Federal agencies on the development of regulatory
analysis.\107\ The discount rates for the determination of NPV are in
contrast to the discount rates used in the LCC analysis, which are
designed to reflect a consumer's perspective. The 7-percent real value
is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. The 3-percent real value represents the
``social rate of time preference,'' which is the rate at which society
discounts
[[Page 2486]]
future consumption flows to their present value.
---------------------------------------------------------------------------
\107\ OMB Circular A-4, section E (Sept. 17, 2003) (Available
at: http://www.whitehouse.gov/omb/circulars_a004_a-4).
---------------------------------------------------------------------------
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
commercial consumers, DOE evaluates the impact on identifiable
subgroups of consumers that may be disproportionately affected by a new
or amended national standard. DOE evaluates impacts on particular
subgroups of consumers by analyzing the LCC impacts and PBP for those
particular consumers from alternative standard levels. For CUACs/CUHPs
and CWAFs, DOE evaluated impacts on a small business subgroup using the
LCC spreadsheet model. Chapter 11 in the direct final rule TSDs
describes the consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE analyzed manufacturer impacts (i.e., MIAs) to calculate the
potential financial impact of amended energy conservation standards on
CUAC/CUHP and CWAF manufacturers to estimate the potential impact of
such standards on employment and manufacturing capacity. The MIA has
both quantitative and qualitative aspects. The quantitative part of the
MIA primarily relies on the GRIM, an industry cash-flow model with
inputs specific to this rulemaking. The key GRIM inputs are data on the
industry cost structure, equipment costs, shipments, and assumptions
about markups and conversion expenditures. The key output is the INPV.
Different sets of assumptions (markup scenarios) will produce different
results. The qualitative part of the MIA addresses factors such as
equipment characteristics, impacts on particular subgroups of firms,
and important industry, market, and equipment trends. The complete MIA
is outlined in chapter 12 of the CUACs/CUHPs and CWAFs direct final
rule TSDs.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared profiles of the CUAC/CUHP and CWAF
manufacturers that included top-down analyses that DOE used to derive
preliminary financial inputs for the GRIM (e.g., sales, general, and
administration (i.e., SG&A) expenses; research and development
(``R&D'') expenses; and tax rates). DOE used public sources of
information, including company SEC 10-K filings, corporate annual
reports, the U.S. Census Bureau's Economic Census,\108\ and Hoover's
reports.\109\
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\108\ U.S. Census Bureau, Annual Survey of Manufacturers:
General Statistics: Statistics for Industry Groups and Industries
(Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
\109\ Hoovers Inc., Company Profiles, Various Companies
(Available at: http://www.hoovers.com). Last Accessed December 13,
2013.
---------------------------------------------------------------------------
In Phase 2 of the MIA, DOE prepared industry cash-flow analyses to
quantify the potential impacts of an amended energy conservation
standard. In general, new or more-stringent energy conservation
standards can affect manufacturer cash flows in three distinct ways:
(1) Create a need for increased investment; (2) raise production costs
per unit; and (3) alter revenue due to higher per-unit prices and
possible changes in sales volumes.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with a representative cross-section of manufacturers. During
these interviews, DOE discussed engineering, manufacturing,
procurement, and financial topics to validate assumptions used in the
GRIM and to identify key issues or concerns. See sections IV.J.2.c in
79 FR 58948 (CUAC/CUHP NOPR) and 80 FR 6181 (CWAF NOPR) for a
description of the key issues manufacturers raised during their
respective interviews.
Additionally, in Phase 3, DOE evaluated subgroups of manufacturers
that may be disproportionately impacted by new standards or that may
not be accurately represented by the average cost assumptions used to
develop the industry cash-flow analysis. For example, small
manufacturers, niche players, or manufacturers exhibiting a cost
structure that largely differs from the industry average could be more
negatively affected. DOE identified one subgroup (i.e., small
manufacturers) for a separate impact analysis.
DOE applied the small business size standards published by the
Small Business Administration (``SBA'') to determine whether a company
is considered a small business. 65 FR 30836, 30848 (May 15, 2000), as
amended by 65 FR 53533, 53544 (September 5, 2000) and codified at 13
CFR part 121. To be categorized as a small business under North
American Industry Classification System (``NAICS'') code 333415, ``Air-
Conditioning and Warm Air Heating Equipment and Commercial and
Industrial Refrigeration Equipment Manufacturing,'' a CUAC/CUHP or CWAF
manufacturer and its affiliates may employ a maximum of 750 employees.
The 750-employee threshold includes all employees in a business's
parent company and subsidiaries. Based on this classification, DOE
identified three CUAC/CUHP manufacturers that qualify as small
businesses under the SBA definition, and two CWAF manufacturers that
qualify as small businesses. CUAC/CUHP and CWAF small manufacturer
subgroups are discussed in sections V.B.2.d and VI.B of this document.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow due to new
standards that result in a higher or lower industry value. The GRIM
analysis uses a standard annual, discounted cash-flow methodology that
incorporates manufacturer costs, markups, shipments, and industry
financial information as inputs. The GRIM models changes in costs,
distribution of shipments, investments, and manufacturer margins that
could result from an amended energy conservation standard. The GRIM
spreadsheet uses the inputs to arrive at a series of annual cash flows,
beginning in 2015 (the base year of the analysis) and continuing to
2048. DOE calculated INPVs by summing the stream of annual discounted
cash flows during this period. For CUAC/CUHP manufacturers, DOE used a
real discount rate of 6.2 percent, which was derived from industry
financials and then modified according to feedback received during
manufacturer interviews. Similarly, using this approach, DOE estimated
a real discount rate of 8.9 percent for CWAF manufacturers. The
variance in discount rate is due to a different mix of manufacturers,
as not all CUAC/CUHP manufacturers also produce CWAFs (and vice-versa),
and resulting variances in manufacturer feedback.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between a no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the
amended energy conservation standard on manufacturers. As discussed
previously, DOE collected this information on the critical GRIM inputs
from a number of sources, including publicly-available data and
interviews with a number of manufacturers. The GRIM results are shown
in section V.B.2. Additional details about the GRIM, the discount rate,
and other financial parameters can be found in chapter 12 of the CUACs/
CUHPs and CWAFs direct final rule TSDs.
[[Page 2487]]
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing higher-efficiency equipment is typically more
expensive than manufacturing baseline equipment due to the use of more
complex components, which are typically more costly than baseline
components. The changes in the MPC of the analyzed equipment can affect
the revenues, gross margins, and cash flow of the industry, making
these equipment cost data key GRIM inputs for DOE's analysis.
In the MIA, DOE used the MPCs for each considered efficiency level
calculated in the engineering analysis, as described in section IV.C
and further detailed in chapter 5 of the direct final rule TSD. In
addition, DOE used information from its teardown analysis, described in
chapter 5 of the TSD, to disaggregate the MPCs into material, labor,
and overhead costs. To calculate the MPCs for equipment above the
baseline, DOE added the incremental material, labor, and overhead costs
from the engineering cost-efficiency curves to the baseline MPCs. These
cost breakdowns and equipment markups were validated and revised based
on manufacturer comments received during MIA interviews.
Shipments Forecasts
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of these values by equipment
class and efficiency level. Changes in sales volumes and efficiency mix
over time can significantly affect manufacturer finances. For the CUAC/
CUHP and CWAF analyses, the GRIM used the Shipments Analysis to
estimate shipments from 2015 to 2048. See chapter 9 of the CUACs/CUHPs
and CWAFs direct final rule TSDs for additional details.
Conversion Costs
An amended energy conservation standard would cause manufacturers
to incur one-time conversion costs to bring their production facilities
and equipment designs into compliance. DOE evaluated the level of
conversion-related expenditures that would be needed to comply with
each considered efficiency level in each equipment class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
Product conversion costs; and (2) capital conversion costs. Product
conversion costs are one-time investments in research, development,
testing, marketing, and other non-capitalized costs necessary to make
product designs comply with the amended energy conservation standard.
Capital conversion costs are one-time investments in property, plant,
and equipment necessary to adapt or change existing production
facilities such that equipment with new, compliant designs can be
fabricated and assembled.
i. Commercial Unitary Air Conditioners and Heat Pumps
To evaluate the level of capital conversion expenditures
manufacturers would likely incur to comply with amended energy
conservation standards for CUACs/CUHPs, DOE used manufacturer
interviews to gather data on the anticipated level of capital
investment that would be required at each efficiency level. DOE
supplemented manufacturer comments with estimates of capital
expenditure requirements derived from the product teardown analysis and
engineering analysis.
DOE assessed the product conversion costs at each considered
efficiency level by integrating data from quantitative and qualitative
sources. DOE considered market-share-weighted feedback regarding the
potential cost of each efficiency level from multiple manufacturers to
estimate product conversion costs and validated those numbers against
engineering estimates of redesign efforts. In general, DOE assumes that
all conversion-related investments occur between the year of
publication of the final rule and the year by which manufacturers must
comply with the new standard. The conversion cost figures used in the
GRIM can be found in section V.B.2.a of this document. For additional
information on the estimated product and capital conversion costs, see
chapter 12 of the CUACs/CUHPs direct final rule TSD.
ii. Commercial Warm Air Furnaces
To evaluate the level of capital conversion expenditures
manufacturers would likely incur to comply with amended energy
conservation standards for CWAFs, two methodologies were used to
develop conversion cost estimates: (1) A Top-Down approach using
feedback from manufacturer interviews to gather data on the level of
costs expected at each efficiency level, and (2) a Bottom-Up approach
using engineering analysis inputs derived from the equipment teardown
analysis and engineering model described in chapter 5 of the CWAF
direct final rule TSD to evaluate the investment required to design,
manufacture, and sell equipment that meets a higher energy conservation
standard.
For estimating capital conversion costs, the Top-Down approach took
available feedback from manufacturers and marketshare-weighted the
responses to arrive at an approximation representative of the industry
as a whole. Responses from manufacturers with the greatest market share
were given the greatest weight, while responses from manufacturers with
the lowest market share were given the lowest weight. The Bottom-Up
approach took capital conversion costs from the engineering analysis on
a per-manufacturer basis to develop an industry-wide cost estimate.
This analysis included the expected equipment, tooling, conveyor, and
plant costs associated with CWAF production, as estimated by DOE based
on product tear-downs and on manufacturer interviews. The results of
the two methodologies were integrated to create high and low capital
conversion cost scenarios.
Product conversion costs for CWAFs are primarily driven by re-
development and testing expenses. As the standard increases, increasing
levels of re-development effort would be required to meet the
efficiency requirements, as more equipment models would require
redesign. Additionally, expected product conversion costs would ramp up
significantly where DOE expects condensing technology to be necessary
to meet a revised energy conservation standard.
To estimate product R&D costs, the Top-Down approach developed
average costs per product platform based on manufacturer feedback. This
feedback focused on the human capital investments, such as engineering
and lab technician time necessary to update designs. In the Bottom-Up
approach, DOE used vendor quotes, industry product information, and
engineering cost estimation analysis data to estimate the expenses
associated with TE testing, heat limit testing, product safety testing,
reliability testing, and engineering effort.
In general, because manufacturer expenses related to meeting the
new standards must occur prior to the production of compliant
equipment, DOE assumes that all conversion-related investments occur
between the year of publication of the direct final rule and the year
by which manufacturers must comply with the amended standard. The
conversion cost figures used in the GRIM can be found in section V.B.2
of this document. For additional information on the estimated product
and capital conversion costs, see chapter 12 of the CWAFs direct final
rule TSD.
[[Page 2488]]
b. Government Regulatory Impact Model Scenarios
Manufacturer Markup Scenarios
To calculate the MSPs in the GRIM, DOE applied manufacturer markups
to the MPCs estimated in the engineering analysis for each equipment
class and efficiency level. Modifying these manufacturer markups in the
standards case yields different sets of manufacturer impacts. For the
MIA, DOE modeled two standards-case manufacturer markup scenarios to
represent the uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) A preservation of gross margin
percentage markup scenario; and (2) a preservation of per-unit
operating profit markup scenario. These scenarios lead to different
manufacturer markup values that, when applied to the inputted MPCs,
result in varying revenue and cash flow impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' markup across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within an equipment class. As production costs
increase with efficiency, this scenario implies that the absolute
dollar markup will increase as well. Based on publicly-available
financial information for manufacturers of CUAC/CUHP and CWAF
equipment, as well as comments from manufacturer interviews, DOE
assumed the average non-production cost markup--which includes SG&A
expenses, R&D expenses, interest, and profit--to be the following for
each equipment class. The results are presented in Table IV-31 and
Table IV-32.
Table IV.31--Preservation of Gross Margin Percentage Markup for CUAC/
CUHP Equipment in the No-New-Standards Case
------------------------------------------------------------------------
Equipment Markup
------------------------------------------------------------------------
Small Commercial Packaged Air-Conditioners >=65,000 Btu/ 1.3
h and <135,000 Btu/h...................................
Small Commercial Packaged Heat Pumps >=65,000 Btu/h and 1.3
<135,000 Btu/h.........................................
Large Commercial Packaged Air-Conditioners >=135,000 Btu/ 1.34
h and <240,000 Btu/h...................................
Large Commercial Packaged Heat Pumps >=135,000 Btu/h and 1.34
<240,000 Btu/h.........................................
Very Large Commercial Packaged Air-Conditioners 1.41
>=240,000 Btu/h and <760,000 Btu/h.....................
Very Large Commercial Packaged Heat Pumps >=240,000 Btu/ 1.41
h and <760,000 Btu/h...................................
------------------------------------------------------------------------
Table IV.32--Preservation of Gross Margin Percentage Markup for CWAF
Equipment in the No-New-Standards Case
------------------------------------------------------------------------
Equipment Markup
------------------------------------------------------------------------
Gas-fired Commercial Warm Air Furnaces >=225,000 Btu/h.. 1.31
Oil-fired Commercial Warm Air Furnaces >=225,000 Btu/h.. 1.28
------------------------------------------------------------------------
This markup scenario assumes that manufacturers would be able to
maintain their gross margin percentage markups as production costs
increase in response to an amended energy conservation standard.
Manufacturers stated that this scenario is optimistic and represents a
high bound to industry profitability.
In the preservation of operating profit scenario, manufacturer
markups are set so that operating profit one year after the compliance
date of the amended energy conservation standard is the same as in the
no-new-standards case. Under this scenario, as the costs of production
increase under a standards case, manufacturers are generally required
to reduce their markups to a level that maintains the no-new-standards
case's operating profit. The implicit assumption behind this markup
scenario is that the industry can only maintain its operating profit in
absolute dollars after compliance with the new or amended standard is
required. Therefore, operating margin in percentage terms is reduced
between the no-new-standards case and standards case. DOE adjusted
(i.e., lowered) the manufacturer markups in the GRIM at each TSL to
yield approximately the same earnings before interest and taxes in the
standards case as in the no-new-standards case. This markup scenario
represents a low bound to industry profitability under an amended
energy conservation standard, as shown in Table IV-33 and Table IV-34
for CUAC/CUHP and CWAF equipment classes respectively. Table IV-33
includes markups for both the 2019 standard level and the 2023 standard
level for CUAC/CUHP equipment adopted in this document.
Table IV.33--Preservation of Operating Profit Markups for CUAC/CUHP
Equipment at the Adopted Standard Levels
------------------------------------------------------------------------
Markups (2019/
Equipment 2023)
------------------------------------------------------------------------
Small Commercial Packaged Air-Conditioners >=65,000 Btu/ 1.29/1.26
h and <135,000 Btu/h...................................
Small Commercial Packaged Heat Pumps >=65,000 Btu/h and 1.29/1.27
<135,000 Btu/h.........................................
Large Commercial Packaged Air-Conditioners >=135,000 Btu/ 1.33/1.31
h and <240,000 Btu/h...................................
Large Commercial Packaged Heat Pumps >=135,000 Btu/h and 1.33/1.31
<240,000 Btu/h.........................................
Very Large Commercial Packaged Air-Conditioners 1.37/1.33
>=240,000 Btu/h and <760,000 Btu/h.....................
Very Large Commercial Packaged Heat Pumps >=240,000 Btu/ 1.39/1.35
h and <760,000 Btu/h...................................
------------------------------------------------------------------------
[[Page 2489]]
Table IV.34--Preservation of Operating Profit Markups for CWAFs
Equipment at the Adopted Standard Levels
------------------------------------------------------------------------
Equipment Markup
------------------------------------------------------------------------
Gas-fired Commercial Warm Air Furnaces >=225,000 Btu/h.. 1.31
Oil-fired Commercial Warm Air Furnaces >=225,000 Btu/h.. 1.28
------------------------------------------------------------------------
3. Discussion of Comments
During the NOPR public meeting, interested parties commented on the
assumptions and results of the NOPR analysis TSD. Oral and written
comments addressed several topics, including employment impacts,
conversion costs, and impacts on small businesses.
a. Employment Impacts on CUAC/CUHP Manufacturers
Nordyne expressed concern that DOE's NOPR CUAC/CUHP analysis
indicates an increase in employment as a result of the rulemaking.
(CUAC: Nordyne, No. 61 at p. 25) In response, DOE notes that the NOPR
and Final Rule analyses present a range of potential employment
impacts. These impacts are a function of the shipment forecasts and
changes in production labor required to produce compliant products. At
the NOPR stage, DOE presented direct employment impacts that ranged
from a net loss of 94 production jobs to no change in production jobs
at the proposed level.
For the final rule, DOE updated its employment analysis and
continued to follow the same approach in light of the fact that, when
presented with the details of DOE's analysis, manufacturers could not
identify specific errors for DOE to correct. While manufacturers were
unable to provide specific data regarding production employment
numbers, either individually or for the industry as a whole, DOE
accounted for the concerns that were raised regarding the initial
projected employment impacts by incorporating the most recent data from
the U.S. Census Bureau's 2013 Annual Survery of Manufacturers (ASM) and
industry feedback from both written comments and the ASRAC Working
Group meetings. The direct final rule analysis presents an updated set
of direct employment impacts that range from a net loss of 829 jobs to
no change in jobs at the adopted level.
In written comments, Lennox noted that DOE's direct employment
estimates are too low. (CUAC: Lennox, No. 60 at pp. 5-6) Additionally,
AHRI asked DOE to recalculate its employment forecast and methods to
include all jobs associated within the equipment channel and not only
the manufacturing portion. (CUAC: AHRI, No. 68 at p.41)
At the NOPR stage, DOE estimated production employment to be 1,085
workers in the no-new-standards case in 2019. For the final rule, DOE
updated its analysis based on 2013 U.S. Census data, the updated
engineering analysis, and the updated shipments analysis. DOE also
revisited its assumption given the general feedback from industry that
the initial employment figures were too low. DOE's revised direct final
rule analysis forecasts that the industry will employ 2,643 production
workers in the no-new-standards case in 2019.
DOE's employment analysis is based on three primary inputs: CUACs
shipments in 2019, average labor content of the covered products, and
an average production worker wage level. In the final rule analysis,
DOE estimates there are 290,600 unit shipments in 2019. The engineering
analysis shows that labor content can range from 8.2 percent to 17.5
percent of the MPC, depending on product class and model. The shipment-
weighted average labor content of a unit is $342 per unit. Combining
unit shipments and labor content, DOE estimates industry expenditures
of $99.3 million on production labor. Using data from the ASM for NAICS
code 333415, the average production worker's fully-burdened wage is
$37,700 per year in the ``Air-Conditioning and Warm Air Heating
Equipment and Commercial and Industrial Refrigeration Equipment
Manufacturing'' industry. This value translates to 2,643 production
workers supporting the industry in 2019.
When this figure was presented in ASRAC Working Group discussions,
manufacturers stated that this figure was still too low. However, DOE
did not receive any specific comments or suggestions on how it might
modify this methodology to account for this issue. Furthermore, no
manufacturer offered alternative estimates of company or industry
employment data despite repeated requests in the NOPR and at the ASRAC
Working Group meetings. The estimated number of production workers in
DOE's analysis (i.e. 2,643) only accounts for the labor required to
manufacture the most basic product that meets the applicable standard--
it does not take into account additional features that manufacturers
use to differentiate premium products, add-ons, or component in the
cabinet that do not contribute to the cooling function. It also does
not account for variations in worker salary for production performed in
lower wage countries. These items could account for greater actual
employment in the industry. Additional detail on the direct employment
analysis can be found in Chapter 12 of the direct final rule TSD.
DOE notes that there were discrepancies between the NOPR Notice and
NOPR TSD for CUAC/CUHP equipment with regard to the percentage of
production labor that is domestically-based. For the final rule, DOE
does not attempt to estimate the portion of foreign production of
CUACs/CUHPs and CWAFs. Rather, the direct employment number captures
the maximum number of domestic production workers based on the
available data and DOE's methodology.
In response to AHRI's comments, DOE's manufacturer impact analysis
focuses on the impacts to the regulated entities--the CUAC/CUHP
manufacturers. The employment of component suppliers who manufacture
components that may be used in a completed CUAC/CUHP system falls
beyond the scope of the analysis. However, DOE does present the total
employment impacts on the economy at large in the Indirect Employments
Analysis in section IV.N of this document.
b. Conversion Costs Related to CUACs/CUHPs
Responding to the CUAC/CUHP NOPR, stakeholders pointed out that
high capital costs and intensive redesign efforts would be required by
the proposed standards. Manufacturers noted that they are currently
redesigning equipment to meet ASHRAE 90.1-2013 minimum efficiency
levels. Adopting a standard above ASHRAE 90.1-2013 would require the
redesign of most product offerings in a short time frame. (CUAC:
Nordyne, No. 61 at p. 32; Trane, No. 95 at p. 11; AHRI, No. 107 at p.
46)
DOE acknowledges manufacturers' concerns regarding the product
redesign process. To lessen the product redesign
[[Page 2490]]
burden on manufacturers to comply with ASHRAE 90.1-2013 and an amended
CUACs energy conservation standard, the direct final rule adopts a two-
tiered approach that applies the ASHRAE 90.1-2013 levels for compliance
in 2018 (though this occurs at the end of the year and is modeled as a
2019 effective date for the purposes of the MIA) and then applies a
higher standard starting in 2023, as recommended by the ASRAC Working
Group.
Additionally, manufacturers stated that conversion costs of $12.7
million would not adequately cover all product conversion costs. (CUAC:
Nordyne, No. 61 at p. 32; Trane, No. 95 at p. 11; AHRI, No. 107 at p.
45)
To clarify, in the CUAC/CUHP NOPR, DOE included an estimate of
$12.7 million as a testing cost attributable to compliance,
certification, and enforcement efforts that manufacturers would likely
incur to re-rate all basic models using the IEER metric. However, this
cost is only a small portion of the total conversion costs that DOE
estimates that manufacturers are likely to incur. In the CUAC/CUHP
NOPR, DOE expected the industry to incur $226.4 million in conversion
costs at the proposed TSL. After evaluating further information
gathered during additional interviews, as well as applying data from
DOE's revised engineering analysis and shipments forecast, DOE
estimates the industry would likely incur $520.8 million in conversion
costs to comply with the CUAC/CUHP standard adopted in this direct
final rule. This figure does not account for any cost savings that may
result from aligning the CUACs/CUHPs and CWAFs standards' effective
years. Conversion costs are discussed in detail in section V.B.2 of
this document and in chapter 12 of the CUACs/CUHPs direct final rule
TSD.
c. Small Business Impacts on CWAF Manufacturers
The SBA expressed concern about the impacts of the rulemaking on
the one small manufacturer of CWAF equipment. Based on conversations
with that small manufacturer, the SBA stated that the proposed
standards are not economically feasible within the three-year period
prescribed by DOE. (CWAF: SBA, No. 7 at p. 2)
For the direct final rule, DOE has adopted a later compliance date
from the 2018 date proposed in the CWAF NOPR. For the direct final
rule, DOE has extended the compliance year to 2023. This change will
provide the small manufacturer with additional lead-time to comply with
the amended standard level. In DOE's view, this additional lead-time,
coupled with the more accommodating revised standards that are being
adopted, will help this small manufacturer comply with the new
efficiency levels in a timely manner.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of carbon dioxide (CO2), nitrogen oxides
(NOX), sulfur dioxide (SO2), and mercury (Hg).
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, methane (CH4)
and nitrous oxide (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.
For CWAFs, the adopted standards would reduce use of fuel at the
site and slightly reduce electricity use, thereby reducing power sector
emissions. However, the highest efficiency levels (i.e., the max-tech
levels) considered for CWAFs would increase the use of electricity by
the furnace and increase emissions accordingly.
For the CUACs/CUHPs and CWAF NOPRs, DOE used marginal emissions
factors for CO2 and most of the other gases that were
derived from data in AEO 2013.
Commenting on the CUAC/CUHP NOPR and the CWAF NOPR, AHRI stated
that DOE should use the most recent AEO data available, which would
significantly reduce the environmental benefits resulting from
reductions of CO2, SO2, and Hg, among other
emissions. (CUAC: AHRI, No. 68 at p. 18; CWAF: AHRI, No. 26 at pp. 7-8)
Nordyne and Lennox made a similar comment. (CUAC: Nordyne, No. 61 at p.
16; Lennox, No. 60 at p. 17)
For the direct final rule analysis, DOE used marginal emissions
factors that were derived from data in AEO 2015, as described in
section IV.K. The methodology is described in the appendices to chapter
13 and chapter 15 of the direct final rule TSDs.
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA, GHG
Emissions Factors Hub.\110\ The FFC upstream emissions are estimated
based on the methodology described in chapter 15 of the direct final
rule TSDs. The upstream emissions include both emissions from fuel
combustion during extraction, processing, and transportation of fuel,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2.
---------------------------------------------------------------------------
\110\ Available at: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------
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
national impact analysis.
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,\111\ DOE used
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------
\111\ 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.
---------------------------------------------------------------------------
Because the on-site operation of CWAFs requires use of fossil fuels
and results in emissions of CO2, NOX, and
SO2 at the sites where these appliances are used, DOE also
accounted for the reduction in these site emissions and the associated
upstream emissions due to potential standards. Site emissions were
estimated using emissions intensity factors from an EPA
publication.\112\
---------------------------------------------------------------------------
\112\ U.S. Environmental Protection Agency, Compilation of Air
Pollutant Emission Factors, AP-42, Fifth Edition, Volume I:
Stationary Point and Area Sources (1998) (Available at: http://www.epa.gov/ttn/chief/ap42/index.html).
---------------------------------------------------------------------------
The AEO incorporates the projected impacts of existing air quality
regulations on emissions. AEO 2015 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.)
[[Page 2491]]
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.\113\ In 2011, EPA issued a replacement for
CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August
8, 2011). On August 21, 2012, the DC Circuit issued a decision to
vacate CSAPR,\114\ 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.\115\ On October 23, 2014,
the DC Circuit lifted the stay of CSAPR.\116\ Pursuant to this action,
CSAPR went into effect (and CAIR ceased to be in effect) as of January
1, 2015.
---------------------------------------------------------------------------
\113\ 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).
\114\ 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).
\115\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610
(U.S. 2014).
\116\ See Georgia v. EPA, Order (D.C. Cir. filed October 23,
2014) (No. 11-1302).
---------------------------------------------------------------------------
EIA was not able to incorporate CSAPR into AEO 2015, so it assumes
implementation of CAIR. Although DOE's analysis used emissions factors
that assume 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 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. AEO
2015 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.\117\ Therefore, DOE believes that energy conservation standards
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------
\117\ 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.
---------------------------------------------------------------------------
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia.\118\ 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.
---------------------------------------------------------------------------
\118\ 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.
---------------------------------------------------------------------------
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 AEO 2015, which
incorporates the MATS.
L. 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. 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 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 direct 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 14 of the direct final rule TSDs.
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
[[Page 2492]]
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.
a. 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 \119\ 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.
---------------------------------------------------------------------------
\119\ National Research Council, Hidden Costs of Energy:
Unpriced Consequences of Energy Production and Use, National
Academies Press: Washington, DC (2009).
---------------------------------------------------------------------------
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.
b. 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.
c. 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 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,\120\ although preference is given to consideration of the
global benefits of reducing CO2 emissions. Table IV-35
presents the values in the 2010 interagency group report,\121\ which is
reproduced in appendix 14A of the direct final rule TSD.
---------------------------------------------------------------------------
\120\ 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.
\121\ 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).
[[Page 2493]]
Table IV-35--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------------------
Year 5% 3% 2.5% 3%
---------------------------------------------------------------------------
Average Average Average 95th 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, as described in the
2013 update from the interagency Working Group (revised July
2015).\122\ Table IV-36 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 direct 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.
---------------------------------------------------------------------------
\122\ 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-36--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------------------
Year 5% 3% 2.5% 3%
---------------------------------------------------------------------------
Average Average Average 95th 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 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 (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, $40.0, $62.3,
and $117 per metric ton avoided (values expressed in 2014$). DOE
derived SCC 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 response to the CUAC/CUHP NOPR and the CWAF NOPR, DOE received a
number of comments that were critical
[[Page 2494]]
of DOE's use of the SCC values developed by the interagency group.
A group of trade associations led by the U.S. Chamber of Commerce
objected to DOE's continued use of the SCC in the cost-benefit analysis
and stated that the SCC calculation should not be used in any
rulemaking until it undergoes a more rigorous notice, review and
comment process. (CUAC: U.S. Chamber of Commerce, No. 40 at pp. 3-4;
CWAF: U.S. Chamber of Commerce, No. 21 at pp. 3-4) AHRI, Lennox and
Nordyne criticized DOE's use of SCC estimates that are subject to
considerable uncertainty. (CUAC: AHRI, No. 68 at p. 21; Lennox, No. 60
at p. 17; Nordyne, No. 61 at p. 18; CWAF: AHRI, No. 26 at p. 9) AHRI
stated that the emissions reductions and global social cost of carbon
do not meet the requirement of clear and convincing evidence that a
standard more stringent than ASHRAE is justified. (CWAF: AHRI, No. 26
at p. 7) AHRI stated that the interagency process was not transparent
and the estimates were not subjected to peer review. (CWAF: AHRI, No.
26 at p. 12)
In response, 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 14A and 14B of the direct
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 direct 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. 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.\123\ 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.
---------------------------------------------------------------------------
\123\ https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. OMB also stated its
intention to seek independent expert advice on opportunities to
improve the estimates, including many of the approaches suggested by
commenters.
---------------------------------------------------------------------------
AHRI stated that the use of SCC as determined on a global basis for
the world population is outside of DOE's regulatory authority under
EPCA. AHRI stated that EPCA authorizes DOE to conduct a national
analysis of energy savings, but there are no references to global
environmental impacts in the statute. (CUAC: AHRI, No. 68 at p. 21;
CWAF: AHRI, No. 26 at pp. 9-11) Nordyne made similar comments. (CUAC:
Nordyne, No. 61 at p. 18)
In response, DOE's analysis estimates both global and domestic
benefits of CO2 emissions reductions. Following the
recommendation of the interagency Working Group, DOE places more focus
on a global measure of SCC. As discussed in appendix 14A of the direct
final rule TSD, the climate change problem is highly unusual in at
least two respects. First, it involves a global externality: Emissions
of most greenhouse gases 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 greenhouse gas 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 and Nordyne criticized DOE's inclusion of CO2
emissions impacts over a time period greatly exceeding that used to
measure the economic costs. (CUAC: AHRI, No. 68 at p. 22; Nordyne, No.
61 at p. 18) For the analysis of national impacts of standards, DOE
considers the lifetime impacts of equipment shipped in the analysis
period. With respect to energy cost savings, impacts continue until all
of the equipment shipped in the analysis 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 analysis
period.
AHRI and Nordyne stated that DOE wrongly assumes that SCC values
will increase over time, contrary to historical experience and to
economic development science. (CUACs and CUHPs: AHRI, No. 68 at p. 22;
Nordyne, No. 61 at p. 19; CWAF: AHRI, No. 26 at p. 11) In response, the
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 (see
appendix 14A of the direct final rule TSDs). The approach used by the
interagency Working Group allowed estimation of the growth rate of the
SCC directly using the three IAMs, which helps to ensure that the
estimates are internally consistent with other modeling assumptions.
2. Social Cost of Other Air Pollutants
As noted previously, DOE has estimated how the considered energy
conservation standards would reduce site NOX emissions
nationwide and decrease power sector NOX emissions in those
22 States not affected by the CAIR.
[[Page 2495]]
DOE estimated the monetized value of NOX emissions
reductions using benefit per ton estimates from Regulatory Impact
Analysis titled, Proposed Carbon Pollution Guidelines for Existing
Power Plants and Emission Standards for Modified and Reconstructed
Power Plants, published in June 2014 by EPA's Office of Air Quality
Planning and Standards.\124\ The report includes high and low values
for NOX (as PM2.5) for 2020, 2025, and 2030
discounted at 3 percent and 7 percent,\125\ which are presented in
chapter 14 of the direct final rule TSD. DOE assigned values for 2021-
2024 and 2026-2029 using, respectively, the values for 2020 and 2025.
DOE assigned values after 2030 using the value for 2030.
---------------------------------------------------------------------------
\124\ http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. See Tables 4-7, 4-8, and 4-9 in the
report.
\125\ For the monetized NOX benefits associated with
PM2.5, the related benefits (derived from benefit-per-ton
values) are based on an estimate of premature mortality derived from
the ACS study (Krewski et al., 2009), which is the lower of the two
EPA central tendencies. Using the lower value is more conservative
when making the policy decision concerning whether a particular
standard level is economically justified so using the higher value
would also be justified. If the benefit-per-ton estimates were based
on the Six Cities study (Lepuele et al., 2012), the values would be
nearly two-and-a-half times larger. (See chapter 14 of the direct
final rule TSD for further description of the studies mentioned
above.)
---------------------------------------------------------------------------
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. DOE will continue to
evaluate the monetization of avoided NOX emissions and will
make any appropriate updates in energy conservation standards
rulemakings.
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.
M. 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 for the direct final rule
is based on published output from the NEMS associated with AEO 2015.
NEMS produces the AEO Reference case, as well as a number of 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 direct final rule TSDs.
The output of this analysis is a set of time-dependent coefficients
capturing 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 use calculated in the NIA to
provide estimates of selected utility impacts of new or amended energy
conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are any changes in the number of employees of
manufacturers of the products subject to standards, their suppliers,
and related service firms. 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 net jobs created or eliminated in the
national economy, other than in the manufacturing sector being
regulated, caused by: (1) Reduced spending by end users on energy; (2)
reduced spending on new energy supply by the utility industry; (3)
increased consumer spending on new products to which the new standards
apply; 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'').\126\ 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.\127\ There are many reasons for these differences,
including wage differences and the fact that the utility sector is more
capital-intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS
data shows that the net national employment may increase due to shifts
in economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------
\126\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to [email protected].
\127\ 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).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this direct final rule using an input/output model
of the U.S. economy called Impact of Sector Energy Technologies version
3.1.1 (``ImSET'').\128\ 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 187 sectors most relevant to industrial,
commercial, and residential building energy use.
---------------------------------------------------------------------------
\128\ J. M. Roop, M. J. Scott, 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).
---------------------------------------------------------------------------
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 this rule. Therefore, DOE generated
results for near-term timeframes, where these uncertainties are
reduced. For more details on the employment impact analysis, see
chapter 16 of the direct final rule TSDs.
[[Page 2496]]
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for CUACs/
CUHPs and CWAFs. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for CUACs/CUHPs and CWAFs, and the standard levels that DOE
is adopting in the direct final rule. Additional details regarding
DOE's analyses are contained in the direct final rule TSDs supporting
this document.
A. Trial Standard Levels
DOE analyzed the benefits and burdens of eight TSLs for CUACs and
CUHPs that consisted of combinations of efficiency levels for each
equipment class. Table V-1 presents the TSLs and the corresponding
efficiency levels for CUACs and CUHPs. TSL 5 represents the maximum
technologically feasible (``max-tech'') efficiency. The Recommended TSL
corresponds to the standard levels recommended by the Working Group.
Table V-1--Trial Standard Levels for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial packaged air conditioners * Commercial packaged heat pumps *
TSL -----------------------------------------------------------------------------------------------
Small Large Very large Small Large Very large
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency Level **
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 1 1 1 1 1 1
2....................................................... 2 2 2 2 2 2
2.5..................................................... 2.5 2.5 2.5 2.5 2.5 2.5
Recommended............................................. 3 3 2.5 3 3 2.5
3....................................................... 3 3 3 3 3 3
3.5..................................................... 3.5 3.5 3 3.5 3.5 3
4....................................................... 4 4 4 4 4 4
5....................................................... 5 5 5 5 5 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Small = >=65,000 Btu/h and <135,000 Btu/h Cooling Capacity; Large = >=135,000 Btu/h and <240,000 Btu/h Cooling Capacity; Very Large = >=240,000 Btu/h
and <760,000 Btu/h Cooling Capacity.
** For the IEERs that correspond to the efficiency levels, see Table IV-6.
DOE also analyzed the benefits and burdens of five TSLs for CWAFs,
which were developed by combining specific efficiency levels for each
of the equipment classes analyzed. Table V-2 presents the TSLs and the
corresponding efficiency levels for CWAFs. The results for all
efficiency levels that DOE analyzed are in the direct final rule TSD.
TSL 5 represents the max-tech efficiency levels, which rely on
condensing technology. TSL 2 corresponds to the standard levels
recommended by the Working Group.
Table V-2--Trial Standard Levels for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Thermal efficiency (TE)
Equipment class -------------------------------------------------------------------------------
TSL 1 (%) TSL 2 (%) TSL 3 (%) TSL 4 (%) TSL 5 (%)
----------------------------------------------------------------------------------------------------------------
Gas-fired Furnaces.............. 81 81 82 82 92
Oil-fired Furnaces.............. 81 82 81 82 92
----------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Commercial Consumers
DOE analyzed the economic impacts on CUAC and CWAF consumers by
looking at the effects potential amended standards at each TSL would
have on the LCC and PBP. DOE also examined the impacts of potential
standards on commercial consumer subgroups. These analyses are
discussed below.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) Purchase prices increase, and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the direct
final rule TSD provides detailed information on the LCC and PBP
analyses.
Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment
Table V-3 through Table V-12 show the key LCC and PBP results for
the TSL efficiency levels considered for each CUAC equipment class. DOE
did not conduct LCC and PBP analyses for the CUHP equipment classes
because energy modeling was performed only for CUAC equipment. However,
the LCC and PBP results for CUACs are a close proxy for the likely
consumer impacts for CUHPs because: (1) Over 98 percent of the energy
savings for CUHP comes from the cooling side; (2) the per-unit savings
for CUAC equipment and the cooling side of CUHP equipment are about the
same; and (3) the cost of increasing efficiency for CUHPs is
approximately the same as for CUACs.
In the first of each pair of tables, the simple payback is measured
relative to the baseline product. In the second table, the impacts are
measured relative to the efficiency distribution in the no-new-
standards case in the compliance year (see section IV.F.8 of this
document). The average savings reflect the fact that some consumers
purchase products with higher efficiency in the no-new-standards case,
and the savings
[[Page 2497]]
refer only to the other consumers who are affected by a standard at a
given TSL. Consumers for whom the LCC increases at a given TSL
experience a net cost.
Table V.3--Average LCC and PBP Results by Efficiency Level for Small Air-Cooled Commercial Package Air Conditioners (>=65,000 Btu/h and <135,000 Btu/h
Cooling Capacity) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 **.................................... 1 10,024 2,142 31,342 41,366 14.9 20.9
2....................................... 2 10,865 1,992 29,354 40,219 8.5 20.9
2.5..................................... 2.5 11,263 1,748 25,983 37,246 4.9 20.9
Recommended [dagger].................... 3 11,564 1,691 25,216 36,780 4.9 20.9
3....................................... 3 11,564 1,691 25,216 36,780 4.9 20.9
3.5..................................... 3.5 12,002 1,706 25,499 37,501 5.9 20.9
4....................................... 4 13,384 1,626 24,599 37,984 7.5 20.9
5....................................... 5 14,848 1,342 20,845 35,692 6.7 20.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The analysis is for equipment purchased in 2019 for all TSLs. The results for each TSL are calculated assuming that all commercial consumers use
equipment at that efficiency level. The PBP is measured relative to the baseline equipment.
** TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
Table V.4--Average LCC Savings Relative to the No-New-Standards Case for Small Air-Cooled Commercial Package Air
Conditioners (>=65,000 Btu/h and <135,000 Btu/h Cooling Capacity) *
----------------------------------------------------------------------------------------------------------------
Percent of
Average LCC consumers that
TSL EL savings (2014$) experience net
cost (%)
----------------------------------------------------------------------------------------------------------------
1 **...................................................... 1 -210 48
2......................................................... 2 870 25
2.5....................................................... 2.5 3,777 5
Recommended [dagger]...................................... 3 4,233 5
3......................................................... 3 4,233 5
3.5....................................................... 3.5 3,517 13
4......................................................... 4 3,035 25
5......................................................... 5 5,326 16
----------------------------------------------------------------------------------------------------------------
* The analysis is for equipment purchased in 2019 for all TSLs. The savings represent the average LCC for
affected consumers.
** TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
Table V.5--Average LCC and PBP Results by Efficiency Level for Large Air-Cooled Commercial Package Air Conditioners (>=135,000 Btu/h and <240,000 Btu/h
Cooling Capacity) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 **.................................... 1 17,011 3,932 60,455 77,466 1.3 22.6
2....................................... 2 17,892 3,864 59,597 77,488 2.4 22.6
2.5..................................... 2.5 18,667 3,528 54,655 73,322 2.4 22.6
Recommended [dagger].................... 3 19,410 3,320 51,633 71,044 2.6 22.6
3....................................... 3 19,410 3,320 51,633 71,044 2.6 22.6
3.5..................................... 3.5 19,809 3,144 49,047 68,856 2.6 22.6
4....................................... 4 20,707 2,768 43,581 64,288 2.5 22.6
5....................................... 5 24,741 2,700 43,449 68,190 4.6 22.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The analysis is for equipment purchased in 2019 for all TSLs. The results for each TSL are calculated assuming that all commercial consumers use
equipment at that efficiency level. The PBP is measured relative to the baseline equipment.
** TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
[[Page 2498]]
Table V.6--Average LCC Savings Relative to the No-New-Standards Case for Large Air-Cooled Commercial Package Air
Conditioners (>=135,000 Btu/h and <240,000 Btu/h Cooling Capacity) *
----------------------------------------------------------------------------------------------------------------
Percent of
Average LCC consumers that
TSL EL savings (2014$) experience net
cost (%)
----------------------------------------------------------------------------------------------------------------
1 **...................................................... 1 3,997 0
2......................................................... 2 3,728 10
2.5....................................................... 2.5 7,991 5
Recommended [dagger]...................................... 3 10,135 2
3......................................................... 3 10,135 2
3.5....................................................... 3.5 12,266 1
4......................................................... 4 16,803 1
5......................................................... 5 12,900 11
----------------------------------------------------------------------------------------------------------------
* The analysis is for equipment purchased in 2019 for all TSLs. The savings represent the average LCC for
affected consumers.
** TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
Table V.7--Average LCC and PBP Results by Efficiency Level for Very Large Air-Cooled Commercial Package Air Conditioners (>=240,000 Btu/h and <760,000
Btu/h Cooling Capacity) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 **.................................... 1 34,582 6,661 130,022 164,605 5.8 33.9
2....................................... 2 38,075 6,262 122,919 160,993 7.0 33.9
2.5..................................... 2.5 39,107 5,974 117,513 156,620 6.2 33.9
Recommended [dagger].................... 2.5 39,107 5,974 117,513 156,620 6.2 33.9
3....................................... 3 41,510 5,809 114,885 156,396 7.2 33.9
3.5..................................... 3 41,510 5,809 114,885 156,396 7.2 33.9
4....................................... 4 42,406 5,256 104,351 146,758 5.6 33.9
5....................................... 5 44,556 5,131 102,237 146,793 6.3 33.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
The analysis is for equipment purchased in 2019 for all TSLs. The results for each TSL are calculated assuming that all commercial consumers use
equipment at that efficiency level. The PBP is measured relative to the baseline equipment.
** TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
Table V.8--Average LCC Savings Relative to the No-New-Standards Case for Very Large Air-Cooled Commercial
Package Air Conditioners (>=240,000 Btu/h and <760,000 Btu/h Cooling Capacity) *
----------------------------------------------------------------------------------------------------------------
Percent of
Average LCC consumers that
TSL EL savings (2014$) experience net
cost (%)
----------------------------------------------------------------------------------------------------------------
1 **...................................................... 1 1,547 7
2......................................................... 2 4,777 13
2.5....................................................... 2.5 8,610 7
Recommended [dagger]...................................... 2.5 8,610 7
3......................................................... 3 8,881 23
3.5....................................................... 3 8,881 23
4......................................................... 4 18,386 3
5......................................................... 5 18,338 6
----------------------------------------------------------------------------------------------------------------
* The analysis is for equipment purchased in 2019 for all TSLs. The savings represent the average LCC for
affected consumers.
TSL 1 also corresponds to the recommended standards for compliance in 2018.
[dagger] For compliance in 2023.
Commercial Warm Air Furnaces
Table V-9 through Table V-12 show the key LCC and PBP results for
the TSL efficiency levels considered for each CWAF equipment class. In
Table V-9, the simple payback is measured relative to the baseline
product. In Table V-10, the LCC savings are measured relative to the
efficiency distribution in the no-new-standards case in the compliance
year (see section IV.F.8 of this document).
[[Page 2499]]
Table V-9--Average LCC and PBP Results by Efficiency Level for Gas-Fired Commercial Warm Air Furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 1 2,114 1,770 28,610 30,725 1.4 23
2....................................... 1 2,114 1,770 28,610 30,725 1.4 23
3....................................... 2 2,543 1,752 28,311 30,854 12.3 23
4....................................... 2 2,543 1,752 28,311 30,854 12.3 23
5....................................... 3 3,840 1,634 26,319 30,159 11.3 23
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The analysis is for equipment purchased in 2019 for all TSLs. The results for each TSL are calculated assuming that all commercial consumers use
equipment at that efficiency level. The PBP is measured relative to the baseline equipment.
Table V-10--Average LCC Savings Relative to the No-New-Standards Case for Gas-Fired Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Percent of
Average LCC consumers that
TSL EL savings * (2014$) experience net
cost
----------------------------------------------------------------------------------------------------------------
1......................................................... 1 284 6
2......................................................... 1 284 6
3......................................................... 2 75 58
4......................................................... 2 75 58
5......................................................... 3 766 58
----------------------------------------------------------------------------------------------------------------
Note:The analysis is for equipment purchased in 2019 for all TSLs.
* The savings represent the average LCC for affected consumers.
Table V-11--Average LCC and PBP Results by Efficiency Level for Oil-Fired Commercial Warm Air Furnaces
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 0 6,357 3,031 49,243 55,601 NA 23
2....................................... 1 6,410 3,004 48,782 55,192 1.9 23
3....................................... 0 6,357 3,031 49,243 55,601 NA 23
4....................................... 1 6,410 3,004 48,782 55,192 1.9 23
5....................................... 2 7,861 2,829 45,673 53,534 7.5 23
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The analysis is for equipment purchased in 2019 for all TSLs. The results for each TSL are calculated assuming that all commercial consumers use
equipment at that efficiency level. The PBP is measured relative to the baseline equipment.
Table V-12--Average LCC Savings Relative to the No-New-Standards Case for Oil-Fired Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Percent of
consumers that
TSL EL Average LCC savings * (2014$) experience net
cost
----------------------------------------------------------------------------------------------------------------
1......................................... 0 NA............................... 0
2......................................... 1 400.............................. 11
3......................................... 0 NA............................... 0
4......................................... 1 400.............................. 11
5......................................... 2 1,817............................ 54
----------------------------------------------------------------------------------------------------------------
Note: The analysis is for equipment purchased in 2019 for all TSLs.
* The savings represent the average LCC for affected consumers.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on small businesses. Table V-13 and Table V-14 compare
the average LCC savings and PBP at each efficiency level for the
commercial consumer subgroup, along with the average LCC savings for
the entire sample, for small and large CUACs, while Table V-15 shows
similar results for gas-fired CWAFs. DOE did not conduct a consumer
subgroup analysis for very large CUACs or for oil-fired CWAFs because
the sample sizes available to DOE were very small.
In most cases, the average LCC savings and PBP for small businesses
at the considered efficiency levels are not substantially different
from the average
[[Page 2500]]
for all commercial consumers. However, for TSLs 3 and 4 for CWAFs, the
average LCC savings for small businesses are slightly negative while
the average LCC savings for all commercial consumers is slightly
positive. Chapter 11 of the direct final rule TSDs presents the
complete LCC and PBP results for the subgroups.
Table V-13--Comparison of LCC Savings and PBP for Small Business Consumers and All Consumers: Small Air-Cooled
Commercial Package Air Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
Average life-cycle cost Payback period (years)
savings (2014$) -------------------------------
TSL --------------------------------
Small Small All buildings
businesses All buildings businesses
----------------------------------------------------------------------------------------------------------------
1 *............................................. -262 -210 15.4 14.9
2............................................... 522 870 8.6 8.5
2.5............................................. 2,675 3,777 5.3 4.9
Recommended **.................................. 3,003 4,233 5.3 4.9
3............................................... 3,003 4,233 5.3 4.9
3.5............................................. 2,325 3,517 6.4 5.9
4............................................... 1,756 3,035 7.7 7.5
5............................................... 3,386 5,326 7.0 6.7
----------------------------------------------------------------------------------------------------------------
* TSL 1 also corresponds to the recommended standards for compliance in 2018.
** For compliance in 2023.
Table V-14--Comparison of LCC Savings and PBP for Small Business Consumers and All Consumers: Large Air-Cooled
Commercial Package Air Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
Average life-cycle cost Payback period (years)
savings (2014$) -------------------------------
TSL --------------------------------
Small Small All buildings
businesses All buildings businesses
----------------------------------------------------------------------------------------------------------------
1 *............................................. 3,298 3,997 1.4 1.3
2............................................... 3,008 3,728 2.7 2.4
2.5............................................. 6,082 7,991 2.7 2.4
Recommended **.................................. 7,759 10,135 2.9 2.6
3............................................... 7,759 10,135 2.9 2.6
3.5............................................. 9,449 12,266 2.8 2.6
4............................................... 12,919 16,803 2.7 2.5
5............................................... 8,990 12,900 5.0 4.6
----------------------------------------------------------------------------------------------------------------
* TSL 1 also corresponds to the recommended standards for compliance in 2018.
** For compliance in 2023.
Table V-15--Comparison of LCC Savings and PBP for Small Business Consumers and All Consumers: Gas-Fired
Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings Payback period (years)
(2014$) -------------------------------------
TSL --------------------------------------
Small businesses All buildings Small businesses All buildings
----------------------------------------------------------------------------------------------------------------
1................................... 223 284 1.6 1.4
2................................... 223 284 1.6 1.4
3................................... -28 75 13.8 12.3
4................................... -28 75 13.8 12.3
5................................... 377 766 12.1 11.3
----------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in section III.F.2, EPCA establishes a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for equipment that meets the
standard is less than three times the value of the first-year energy
savings resulting from the standard. Section IV.F describes the
approach used to calculate the PBP for the rebuttable presumption.
Table V-16 and Table V-17 shows the rebuttable presumption PBPs for the
considered TSLs for CUACs/CUHPs and CWAFs, respectively. While DOE
examined the rebuttable-presumption criterion, it also considered
whether the standard levels considered for this rule are economically
justified through a more detailed analysis of the economic impacts of
those levels, pursuant to 42 U.S.C. 6313(a)(6)(B)(ii). The results of
that analysis serve as the basis for DOE to definitively evaluate the
economic justification of a potential standard level, thereby
supporting or rebutting the results of any preliminary determination of
economic justification.
[[Page 2501]]
Table V-16--Rebuttable-Presumption Payback Period (Years) for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Small air-cooled Large air-cooled Very large air-
commercial commercial cooled commercial
Trial Standard Level package air package air package air
conditioning conditioning conditioning
equipment equipment equipment
----------------------------------------------------------------------------------------------------------------
1 *.................................................... 30.0 1.5 10.1
2...................................................... 10.0 3.2 12.7
2.5.................................................... 5.4 3.5 9.3
Recommended **......................................... 5.4 3.4 9.3
3...................................................... 5.4 3.4 11.9
3.5.................................................... 6.6 3.2 11.9
4...................................................... 8.9 3.0 6.5
5...................................................... 7.3 5.6 7.6
----------------------------------------------------------------------------------------------------------------
* TSL 1 also corresponds to the recommended standards for compliance in 2018.
** For compliance in 2023.
Table V-17--Rebuttable-Presumption Payback Period (Years) for Commercial
Warm Air Furnace
------------------------------------------------------------------------
Gas-fired Oil-fired
Trial Standard Level CWAFs CWAFs
------------------------------------------------------------------------
1............................................. 1.0 ...........
2............................................. 1.0 1.3
3............................................. 8.1 ...........
4............................................. 8.1 1.3
5............................................. 5.9 3.8
------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
As noted above, DOE performed an MIA to estimate the impact of new
energy conservation standards on CUAC/CUHP and CWAF manufacturers. The
following section describes the expected impacts on manufacturers at
each considered TSL. Chapter 12 of the CUACs/CUHPs direct final rule
TSD and chapter 12 of the CWAFs direct final rule TSD explains the
analysis in further detail.
a. Industry Cash-Flow Analysis Results
Table V-18 through Table V-21 depict the financial impacts
(represented by changes in INPV) of new energy standards on CUAC/CUHP
and CWAF manufacturers, as well as the conversion costs that DOE
expects manufacturers would incur for all product classes at each TSL.
To evaluate the range of cash flow impacts on the CUAC/CUHP and CWAF
industries, DOE modeled two different markup scenarios using different
assumptions that correspond to the range of anticipated market
responses to potential new energy conservation standards: (1) The
preservation of gross margin percentage; and (2) the preservation of
per-unit operating profit. Each of these scenarios is discussed
immediately below.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled a preservation of gross margin percentage markup
scenario, in which a uniform ``gross margin percentage'' markup is
applied across all potential efficiency levels. In this scenario, DOE
assumed that a manufacturer's absolute dollar markup would increase as
production costs increase in the standards case.
To assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of per-unit operating profit
markup scenario, which assumes that manufacturers would be able to earn
the same operating margin in absolute dollars per-unit in the standards
case as in the no-new-standards case. In this scenario, while
manufacturers make the necessary investments required to convert their
facilities to produce new standards-compliant products, operating
profit does not change in absolute dollars per unit and decreases as a
percentage of revenue.
The results below show potential INPV impacts for CUAC/CUHP and
CWAF manufacturers; Table V-18 and Table V-20 reflect the lower bound
of impacts, and Table V-19 and Table V-21 represents the upper bound,
respectively.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding industry values at each TSL. In the following
discussion, the INPV results refer to the difference in industry value
between the no-new-standards case and each standards case that results
from the sum of discounted cash flows from the base year 2015 through
2048, the end of the analysis period for CUACs/CUHPs and CWAFs. To
provide perspective on the short-run cash flow impact, DOE includes in
the discussion of the results below a comparison of free cash flow
between the no-new-standards case and the standards case at each TSL in
the year before new standards would take effect. This figure provides
an understanding of the magnitude of the required conversion costs
relative to the cash flow generated by the industry in the no-new-
standards case.
Commercial Unitary Air Conditioners and Heat Pumps
Table V-18--Manufacturer Impact Analysis for CUACs/CUHPs--Preservation of Gross Margin Percentage Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
No new Trial Standard Level
Units standards ---------------------------------------------------------------------------------------------
case 1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................ 2014$M 1,645 1,706 1,759 1,721 1,606.1 1,697 1,670 1,660 1,738
Change in INPV...................... 2014$M ......... 61 114 77 (38.5) 53 26 16 91
% ......... 3.7 6.9 4.7 (2.3) 3.2 1.6 1.0 5.7
Product Conversion Costs............ 2014$M ......... 64.8 112.1 173.1 294.0 234.0 296.6 342.0 390.0
Capital Conversion Costs............ 2014$M ......... 42.7 74.7 129.4 226.8 184.1 192.6 196.8 201.0
Total Conversion Costs.............. 2014$M ......... 107.5 186.8 302.5 520.8 418.1 489.2 538.8 591.0
Free Cash Flow (2019)............... 2014$M 81.8 41.5 11.7 (32.8) (76.5) (77.2) (105.3) (127.2) (150.3)
Change in Free Cash Flow............ % ......... 49.3 85.7 140.1 188.8 194.4 228.8 255.5 283.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
[[Page 2502]]
M = millions.
Table V-19--Manufacturer Impact Analysis for CUACs/CUHPs--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
No new Trial Standard Level
Units standards ---------------------------------------------------------------------------------------------
case 1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................ 2014$M 1,645 1,538 1,422 1,301 1,204.1 1,197 1,138 1,025 763
Change in INPV...................... 2014$M ......... (107) (223) (344) (440.4) (447) (506) (620) (882)
% ......... (6.5) (13.5) (20.9) (26.5) (27.2) (30.8) (37.7) (53.6)
Product Conversion Costs............ 2014$M ......... 64.8 112.1 173.1 294.0 234.0 296.6 342.0 390.0
Capital Conversion Costs............ 2014$M ......... 42.7 74.7 129.4 226.8 184.1 192.6 196.8 201.0
Total Conversion Costs.............. 2014$M ......... 107.5 186.8 302.5 520.8 418.1 489.2 538.8 591.0
Free Cash Flow (2019)............... 2014$M 81.8 41.5 11.7 (32.8) (76.5) (77.2) (105.3) (127.2) (150.3)
Change in Free Cash Flow............ % ......... 49.3 85.7 140.1 188.8 194.4 228.8 255.5 283.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
M = millions.
TSL 1 represents the most common efficiency levels in the current
market for all product classes. At TSL 1, DOE estimates impacts on INPV
for CUAC/CUHP manufacturers to range from -$107.0 million to $60.9
million, or a change in INPV of -6.5 percent to 3.7 percent. At this
potential standard level, industry free cash flow is estimated to
decrease by as much as 49.3 percent to $41.5 million, compared to the
no-new-standards case value of $81.8 million in 2018, the year before
the modeled compliance year. DOE anticipates that 31.5 percent of
industry platforms would require redesign at a total industry
conversion cost of $107.5 million at TSL 1.
TSL 2 represents EL 2 for all product classes. At TSL 2, DOE
estimates impacts on INPV for CUAC/CUHP manufacturers to range from -
$222.7 million to $114.0 million, or a change in INPV of -13.5 percent
to 6.9 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 85.7 percent to $11.7
million, compared to the no-new-standards case value of $81.8 million
in 2018. DOE anticipates that 59.2 percent of industry platforms would
require redesign at a total industry conversion cost of $186.8 million
at TSL 2.
TSL 2.5 represents EL 2.5 for all product classes. At TSL 2.5, DOE
estimates impacts on INPV for CUAC/CUHP manufacturers to range from -
$344.0 million to $76.6 million, or a change in INPV of -20.9 percent
to 4.7 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 140.1 percent to -$32.8
million, compared to the no-new-standards case value of $81.8 million
in 2018. DOE anticipates that 73.8 percent of industry platforms would
require redesign at a total industry conversion cost of $302.5 million
at TSL 2.5.
The recommended TSL represents adopting EL 1 for small, large and
very large CUAC/CUHP equipment in 2018; and adopting EL 3 for small and
large CUAC/CUHP equipment and EL 2.5 for very large CUAC/CUHP equipment
in 2023. At the recommended TSL, DOE estimates impacts on INPV for
CUAC/CUHP manufacturers to range from -$440.4 million to -$38.5
million, or a change in INPV of -26.8 percent to -2.3 percent. At this
potential standard level, industry free cash flow is estimated to
decrease by as much as 193.5 percent to -$76.5 million by 2022,
compared to the no-new-standards case value of $81.8 million in 2018;
and decrease by as much as 188.8 percent to -$76.5 million compared to
the no-new-standards case value of $86.2 millon in 2022. DOE
anticipates that 79.6 percent of industry platforms would require
redesign at a total industry conversion cost of $520.8 million at the
recommended TSL.
TSL 3 represents EL 3 for all product classes. At TSL 3, DOE
estimates impacts on INPV for CUAC/CUHP manufacturers to range from -
$447.2 million to $52.4 million, or a change in INPV of -27.2 percent
to 3.2 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 194.4 percent to -$77.2
million, compared to the no-new-standards case value of $81.8 million
in the year before the compliance date (2019). DOE anticipates that
81.6 percent of industry platforms would require redesign at a total
industry conversion cost of $418.1 million at TSL 3.
TSL 3.5 represents EL 3.5 for all product classes. At TSL 3, DOE
estimates impacts on INPV for CUAC/CUHP manufacturers to range from -
$506.4 million to $25.7 million, or a change in INPV of -30.8 percent
to 1.6 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 228.8 percent to -$105.3
million, compared to the no-new-standards case value of $81.8 million
in 2018. DOE anticipates that 93.5 percent of industry platforms would
require redesign at a total industry conversion cost of $489.2 million
at TSL 3.5.
TSL 4 represents EL 4 for all product classes. At TSL 4, DOE
estimates impacts on INPV for CUAC/CUHP manufacturers to range from -
$619.6 million to $16.3 million, or a change in INPV of -37.7 percent
to 1.0 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 255.5 percent to -$127.2
million, compared to the no-new-standards case value of $81.8 million
in 2018. DOE anticipates 96.0 percent of industry platforms would
require redesign at a total industry conversion cost of $538.8 million
at TSL 4.
TSL 5 represents max-tech across all equipment classes. At TSL 5,
DOE estimates impacts on INPV CUAC/CUHP manufacturers to range from -
$881.9 million to $93.1 million, or a change in INPV of -53.6 percent
to 5.7 percent. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 283.8 percent to -$150.3
million, compared to the no-new-standards case value of $81.8 million
in 2018. DOE anticipates that 98.7 percent of industry platforms would
require redesign at a total industry conversion cost of $591.0 million
at TSL 5.
Commercial Warm Air Furnaces
Table V-20 and Table V-21 depict the estimated financial impacts
(represented by changes in INPV) of amended energy standards on CWAFs,
as well as conversion costs that DOE expects manufacturers would incur
for all equipment classes at each TSL. To evaluate the range of cash
flow impacts on the CWAF industry associated with potential amended
energy conservation standards, DOE modeled two different markup
scenarios and two different
[[Page 2503]]
conversion cost scenarios, as described in section IV.J.2.b (Government
Regulatory Impact Model Scenarios). The combination of markup scenarios
and conversion cost scenarios created four sets of results: (1)
Preservation of Gross Margin Percentage and Low Conversion Cost
scenario; (2) Preservation of Gross Margin Percentage and High
Conversion Cost scenario; (3) Preservation of Operating Profit and Low
Conversion Costs scenario; (4) Preservation of Operating Profit and
High Conversion Costs scenario. Each of the modeled scenarios results
in a unique set of cash flows and corresponding industry values at each
TSL. DOE presents the highest and lowest INPV results from the combined
scenarios to portray the range of potential impacts on industry. The
low end of the range of impacts in the Preservation of Gross Margin
Percentage and Low Conversion Costs scenario. The high end of the range
of impacts is the Preservation of Operating Profit and High Conversion
Costs scenario.
In the following discussion, the INPV results refer to the
difference in industry value between the no-new-standards case and each
standards case that results from the sum of discounted cash flows from
the base year 2015 through 2048, the end of the analysis period. To
provide perspective on the short-run cash flow impact, DOE includes in
the discussion of the results below a comparison of free cash flow
between the no-new-standards case and the standards case at each TSL in
the year before the standard takes effect. This figure provides an
understanding of the magnitude of the required conversion costs
relative to the cash flow generated by the industry in the no-new-
standards case. The set of results below shows potential INPV impacts
for CWAF manufacturers; Table V-20 represents the lower bound of
impacts, and Table V-21 represents the upper bound.
Table V-20--Manufacturer Impact Analysis for CWAFs--Preservation of Gross Margin Percentage/Low Conversion Cost
Scenario *
----------------------------------------------------------------------------------------------------------------
No new Trial Standard Level
Units standards ------------------------------------------------------
case 1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
INPV............................... 2014$M 96.3 92.6 90.5 125.2 124.8 143.5
Change in INPV..................... 2014$M ......... (3.8) (5.9) 28.8 28.4 47.2
% ......... (3.9) (6.1) 29.9 29.5 49.0
Product Conversion Costs........... 2014$M ......... 6.3 6.6 12.6 12.9 18.3
Capital Conversion Costs........... 2014$M ......... 0.6 0.9 1.2 1.5 64.0
Total Conversion Costs............. 2014$M ......... 6.9 7.5 13.8 14.4 82.3
Free Cash Flow (2018).............. 2014$M 7.8 5.5 3.8 3.2 3.0 (26.9)
Free Cash Flow (change from No-new- % ......... 29.7 51.2 59.3 62.1 444.5
standards case) (2018)............
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
M = millions.
Table V-21--Manufacturer Impact Analysis for CWAFs--Preservation of Operating Profit/High Conversion Cost Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
No new Trial Standard Level
Units standards ----------------------------------------------------------------
case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................................... 2014$M 96.3 86.5 83.5 106.2 101.2 85.5
Change in INPV............................................... 2014$M ........... (10.6) (13.4) 10.3 5.0 (11.3)
% ........... (11.0) (13.9) (32.0) (37.3) (120.1)
Product Conversion Costs..................................... 2014$M ........... 11.3 17.1 36.6 42.4 83.6
Capital Conversion Costs..................................... 2014$M ........... 4.4 5.1 4.5 5.2 73.8
Total Conversion Costs....................................... 2014$M ........... 15.7 22.2 41.0 47.6 157.4
Free Cash Flow (2018)........................................ 2014$M 7.8 2.2 (1.5) (7.5) (10.4) (59.5)
Free Cash Flow (change from No-new-standards case) (2018).... % ........... 72.3 119.3 196.5 233.4 861.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
M = millions.
In its analysis, DOE ran four scenarios based on combinations from
two markup scenarios and two conversion cost scenarios. The results
presented below represent the upper-bound and lower-bound of results
from those scenarios only. Chapter 12 of the CWAF direct final rule TSD
presents results for each markup and conversion cost scenario in
further detail.
TSL 1 represents EL 1 (81 percent) for gas-fired CWAFs and baseline
(81 percent) for oil-fired CWAFs. At this level, DOE estimates 55
percent of the industry platforms would require redesign at a total
industry conversion cost of $6.9 million to $15.7 million. DOE
estimates impacts on INPV for CWAF manufacturers to range from a change
in INPV of -11.0 percent to -3.9 percent, or -$10.6 million to -$3.8
million. At this potential standard level, industry free cash flow is
estimated to decrease by as much as 72.3 percent to $2.2 million,
compared to the no-new-standards case value of $7.3 million in 2018,
the year before the 2019 compliance year.
The recommended TSL represents an EL (81 percent for gas-fired and
82 percent for oil-fired) applicable across all equipment classes. At
this level, DOE estimates 57.0 percent of the industry platforms would
require redesign at at total industry conversion cost of $7.5 to $22.2
million. DOE estimates impacts on INPV for CWAF manufacturers to range
from a change in INPV of -13.9 percent to -6.1 percent, or a change of
-$13.4 million to -$5.9 million. At this potential standard level,
industry free cash flow is estimated to decrease
[[Page 2504]]
by much as 119.3 percent to -$1.5 million, compared to the no-new-
standards case value of $7.3 million in 2022, the year before the 2023
compliance year. Much of this drop in free cash flow is due to
conversion cost expenses manufacturers must make before the compliance
year. However, industry noted that the alignment of the compliance
dates for the CUAC/CUHP and CWAF standards would allow for coordination
of redesign and testing expenses. If this occurs, there would be a
reduction in the total conversion costs associated with this direct
final rule. These synergies resulting from the alignment of the
compliance dates for these standards would result in INPV impacts and
free cash flow impacts that are less severe than forecasted by the GRIM
model.
TSL 3 represents EL 2 (82 percent) for gas-fired equipment and
baseline (81 percent) for oil-fired equipment. At this level, DOE
estimates 91 percent of the industry platforms would require redesign
at a total industry conversion cost of $13.8 million to $41.0 million.
DOE estimates impacts on INPV for CWAF manufacturers to range from a
change in INPV of -32.0 percent to 29.9 percent, or -$30.9 million to
$28.8 million. At this potential standard level, industry free cash
flow is estimated to decrease by as much as 196.5 percent to -$7.5
million, compared to the no-new-standards case value of $7.3 million in
2018.
TSL 4 represents EL 2 (82 percent) for gas-fired equipment and EL 1
(82 percent) for oil-fired equipment. At this level, DOE estimates 94
percent of the industry platforms would require redesign at a total
industry conversion cost of $14.4 million to $47.6 million. DOE
estimates impacts on INPV for CWAF manufacturers to range from a change
in INPV of -37.3 percent to 29.5 percent, or -$35.9 million to $28.4
million. At this potential standard level, industry free cash flow is
estimated to decrease by as much as 233.4 percent to -$10.4 million,
compared to the no-new-standards case value of $7.3 million in 2018.
TSL 5 represents max-tech across all equipment classes (i.e., EL 3
(92 percent) for gas-fired equipment and EL 2 (92 percent) for oil-
fired equipment). At this level, DOE estimates 99 percent of the
industry platforms would require redesign at a total industry
conversion cost of $82.3 million to $157.4 million. Conversion costs
more than triple from TSL 4 to TSL 5. The vast majority of the industry
does not offer condensing commercial furnaces today and would need to
develop condensing technology for commercial applications. Implementing
a condensing commercial furnace would likely have design implications
for the cooling side of the HVAC product and for the chassis that
houses both the cooling and heating components. DOE estimates impacts
on INPV for CWAF manufacturers to range from a change in INPV of -120.1
percent to 49.0 percent, or -$115.7 million to $47.2 million. At this
potential standard level, industry free cash flow is estimated to
decrease by as much as 861.3 percent to -$59.5 million relative to the
no-new-standards case value of $7.3 million in 2018.
b. Impacts on Employment
To quantitatively assess the impacts of energy conservation
standards on direct employment in the collective CUAC/CUHP and CWAF
industry, DOE used the GRIM to estimate the domestic labor expenditures
and number of employees in the no-new-standards case and at each TSL
from 2015 through 2048, the end of the analysis period. DOE used
statistical data from the U.S. Census Bureau's 2013 Annual Survey of
Manufacturers (ASM),\1\ the results of the engineering analysis, and
interviews with manufacturers to determine the inputs necessary to
calculate industry-wide labor expenditures and domestic employment
levels. Labor expenditures related to manufacturing of the product are
a function of the labor intensity of the product, the sales volume, and
an assumption that wages remain fixed in real terms over time. The
total labor expenditures in each year are calculated by multiplying the
MPCs by the labor percentage of MPCs.
---------------------------------------------------------------------------
\1\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau
(2013) (Available at: http://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------
The total labor expenditures in the GRIM were then converted to
domestic production employment levels by dividing production labor
expenditures by the annual payment per production worker (production
worker hours multiplied by the labor rate found in the U.S. Census
Bureau's 2013 ASM). The estimates of production workers in this section
cover workers, including line-supervisors who are directly involved in
fabricating and assembling a product within the manufacturing facility.
Workers performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific products covered by
this rulemaking.
The employment impacts shown in Table V-22 and Table V-23 represent
the potential production employment changes that could result in 2019
for the collective CUAC/CUHP and CWAF industry, respectively. The upper
end of the results in the table estimates the maximum increase in the
number of production workers after the implementation of new energy
conservation standards, and it assumes that manufacturers would
continue to produce the same scope of covered products within the
United States. The total direct employment impacts calculated in the
GRIM are the changes in the number of production workers resulting from
the amended energy conservation standards. In general, more efficient
equipment is larger, more complex, and more labor intensive to build.
Per unit labor requirements and production time requirements increase
with a higher energy conservation standard. As a result, if shipments
remain relatively steady, the model forecasts job growth at the upper
bound on impact.
The lower bound assumes that, as the standard increases,
manufacturers choose to retire sub-standard product lines rather than
invest in manufacturing facility conversions and product redesigns. In
this scenario, there is a loss of employment because manufacturers
consolidate and operate fewer production lines. Since this is intended
to be a worst-case scenario for employment, there is no consideration
given to the fact that there may be employment growth in higher-
efficiency lines. Additional detail can be found in chapter 12 of the
TSDs.
DOE estimates that in the absence of amended energy conservation
standards, there would be 2,643 domestic production workers for CUAC/
CUHP equipment and 232 domestic production workers for CWAF equipment.
For the final rule, DOE does not attempt to estimate the portion of
production that occurs in other countries. Rather, as noted in section
IV.J.3, the direct employment figure captures the maximum number of
domestic production workers based on the available data and DOE's
methodology. One noted constraint is that the production worker
calculation methodology only takes into account the labor required for
the most basic product that meets the appliance standard--it does not
account for
[[Page 2505]]
additional features that manufacturers use to differentiate premium
products, optional features and add-ons, or components in the cabinet
that do not contribute to the cooling and heating functions.
Table V-22--Potential Changes in the Number of CUACs/CUHPs Industry Production Worker Employment in 2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level *
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-
standards 1 2 2.5 Recommended TSL 3 3.5 4 5
case
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic 2,643 2,954 to 1,810... 3,341 to 1,078... 3,577 to 692..... 3,410 to 1,810... 4,005 to 486..... 4,051 to 172.... 3,825 to 106.... 5,352 to 34.
Production Workers in 2019.
Potential Changes in Domestic ........... 311 to (833)..... 698 to (1,565)... 934 to (1,951)... 777 to (833)..... 1,362 to (2,157). 1,408 to (2,471) 1,182 to (2,537) 2,709 to
Production Workers in 2019. (2,609).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses represent negative values.
Table V-23--Potential Changes in the Number of CWAFs Industry Production Worker Employment in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level *
----------------------------------------------------------------------------------------------------------------------
No-new-
standards 1 2 3 4 5
case
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic 232 231 to 104.......... 232 to 100......... 320 to 21.......... 320 to 14.......... 228 to 2.
Production Workers in 2019.
Potential Changes in Domestic ........... (1) to (128)........ 0 to (132)......... 88 to (211)........ 88 to (218)........ (4) to (230).
Production Workers in 2019.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses represent negative values.
DOE notes that the employment impacts discussed here are
independent of the indirect employment impacts to the broader U.S.
economy, which are documented in chapter 15 of the CUACs/CUHPs and
CWAFs direct final rule TSDs.
c. Impacts on Manufacturing Capacity
Commercial Unitary Air Conditioners and Heat Pumps
CUAC/CUHP manufacturers noted during interviews that amended energy
conservation standards could lead to higher fabrication labor hours.
However, they also noted that industry shipments were down 40 percent
from their peak in the 2007-2008 timeframe. Excess capacity in the
industry today and any drop in shipments that result from higher prices
could offset the additional production times. In the long-term, no
manufacturers interviewed expected to have capacity constraints.
Manufacturers did, however, note concerns that engineering and
testing capacity during the time period between the final rule's
anticipated publication date and the 2019 compliance date initially
proposed by DOE. Manufacturers were worried about the level of
technical resources required to redesign and test all products at
higher TSLs. The engineering analysis released with the NOPR showed
that increasingly complex components and control strategies would be
required as standards levels increase. Manufacturers noted in
interviews that the industry would need to add electrical engineering
and control systems, as well as engineering talent beyond current
staffing, to meet the redesign requirements of higher TSLs. They also
noted that additional training might be needed for manufacturing
engineers, laboratory technicians, and service personnel if variable-
speed components are broadly adopted. Furthermore, manufacturers
indicated that as the stringency of standards increase, units tend to
grow in size, requiring more lab resources and time to test. Some
manufacturers were concerned that an amended standard would trigger the
need for new test lab facilities, which would require significantly
more lead time than what DOE had proposed to provide in its NOPR.
Commercial Warm Air Furnaces
According to the CWAF manufacturers interviewed, amended energy
conservation standards could lead to decreased production capacity.
Most manufacturers indicated there would be little to no production
capacity decrease at 81 percent and 82 percent efficiency levels, but
at 91 percent and 92 percent, there would be significant capacity
shortfalls. This feedback is consistent with the engineering analysis,
which found there would be sufficient capacity at current levels to
meet slightly higher efficiency standards, but that significant
[[Page 2506]]
investment would be required to support production of higher
efficiency, condensing furnace standards. For additional information on
the engineering analysis, see chapter 5 of the CWAF direct final rule
TSD.
d. Impacts on Subgroups of Manufacturers
Small manufacturers, niche equipment manufacturers, and
manufacturers exhibiting a cost structure substantially different from
the industry average could be affected disproportionately. As discussed
in section IV.J, using average cost assumptions developed for an
industry cash-flow estimate is inadequate to assess differential
impacts among manufacturer subgroups.
For the collective CUAC/CUHP and CWAF industry, DOE identified and
evaluated the impact of new energy conservation standards on one
subgroup--small manufacturers. The SBA defines a ``small business'' as
having 750 employees or less for NAICS 333415, ``Air-Conditioning and
Warm Air Heating Equipment and Commercial and Industrial Refrigeration
Equipment Manufacturing.'' Based on this definition, DOE identified
three CUAC/CUHP manufacturers and two CWAF manufacturers that qualify
as small businesses. For a discussion of the impacts on the small
manufacturer subgroup, see the regulatory flexibility analysis in
section VI.B of this document.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of recent or impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly
affect manufacturers' financial operations. Multiple regulations
affecting the same manufacturer can strain profits and lead companies
to abandon product lines or markets with lower expected future returns
than competing products. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
During previous stages of this rulemaking, DOE identified a number
of requirements in addition to new energy conservation standards for
CUAC/CUHP and CWAF equipment. The following section briefly summarizes
those identified regulatory requirements and addresses comments DOE
received with respect to cumulative regulatory burden, as well as other
key related concerns that manufacturers raised during interviews.
DOE Energy Conservation Standards
Companies that produce a wide range of regulated products and
equipment may face more capital and product development expenditures
than competitors with a narrower scope of products and equipment. Many
CUAC/CUHP and CWAF manufacturers also produce other residential and
commercial equipment. In addition to the amended energy conservation
standard for CUAC/CUHP and CWAF equipment, these manufacturers contend
with several other Federal regulations and pending regulations that
apply to other products and equipment. DOE recognizes that each
regulation can significantly affect a manufacturer's financial
operations. Multiple regulations affecting the same manufacturer can
quickly strain manufacturer profits and possibly cause an exit from the
market. Table V-24 lists the other DOE energy conservation standards
that could also affect CUAC/CUHP and CWAF manufacturers in the three
years leading up to and after the compliance date of the new energy
conservation standards for this equipment. Additionally, at the request
of stakeholders, DOE has listed several pending DOE rulemakings in the
table below.
Table V-24--Other DOE Regulations Impacting CUAC/CUHP and CWAF
Manufacturers
------------------------------------------------------------------------
Estimated
Approximate total industry
Federal energy conservation standards compliance conversion
date expense
------------------------------------------------------------------------
2007 Residential Furnaces & Boilers,* 72 2015 $88M (2006$)
FR 65136 (Nov. 19, 2007)...............
2010 Gas Fired and Electric Storage 2015 95.4M (2009$)
Water Heaters, 75 FR 20112 (April 16,
2010)..................................
2011 Residential Furnaces ** 76 FR 37408 2015 2.5M (2009$)
(June 27, 2011); 76 FR 67037 (Oct. 31,
2011)..................................
2011 Residential Central Air 2015 26.0M (2009$)
Conditioners and Heat Pumps,** 76 FR
37408 (June 27, 2011); 76 FR 67037
(Oct. 31, 2011)........................
Walk-in Coolers and Freezers, 79 FR 2017 35.2M (2012$)
32049 (June 3, 2014)...................
Commercial and Industrial Fans and 2018 TBD
Blowers [dagger].......................
Furnace Fans, 79 FR 38129 (July 3, 2014) 2019 40.6M (2012$)
Packaged Terminal Air Conditioners and 2019 7.6M (2013$)
Heat Pumps, 80 FR 43162 (July 21,
2015); 80 FR 56894 (Sept. 21, 2015)....
Residential Boilers [dagger]............ 2019 TBD
Commercial Packaged Boilers [dagger].... 2019 TBD
Single Package Vertical Units, 80 FR 2019 9.2M (2014$)
57438 (Sept. 23, 2015).................
Residential Non-Weatherized Gas Furnaces 2019 TBD
[dagger]...............................
Residential Central Air Conditioners and 2021 TBD
Heat Pumps [dagger]....................
Residential Water Heaters [dagger]...... 2021 TBD
------------------------------------------------------------------------
* Conversion expenses for manufacturers of oil-fired furnaces and for
manufacturers of gas-fired and oil-fired boilers associated with the
November 2007 final rule for residential furnaces and boilers are
excluded from this figure. With regard to oil-fired furnaces, the 2011
direct final rule for residential furnaces sets a higher standard and
earlier compliance date for oil-fired furnaces than the 2007 final
rule. As a result, manufacturers will be required design to the 2011
direct final rule standard. The conversion costs associated with the
2011 direct final rule are listed separately in this table. With
regard to gas-fired and oil-fired boilers, EISA 2007 legislated higher
standards and earlier compliance dates for residential boilers than
were in the November 2007 final rule. As a result, gas-fired and oil-
fired boiler manufacturers were required to design to the EISA 2007
standard beginning in 2012.
** Estimated industry conversion expense and approximate compliance date
reflect a court-ordered May 1, 2013 stay of the residential non-
weatherized and mobile home gas furnaces standards set in the 2011
Energy Conservation Standards for Residential Furnaces and Residential
Central Air Conditioners and Heat Pumps.
[[Page 2507]]
[dagger] The final rule for this energy conservation standard has not
been published. For energy conservation standards with a published
NOPR, DOE lists the compliance date and conversion costs for the
proposed standard level. However, standard level and analytical
results are not finalized until the publication of the final rule. For
energy conservation standards that have not yet reached the NOPR
publication phase of the rulemaking, information is not yet available.
In addition to Federal energy conservation standards, DOE
identified other Federal regulatory burdens that would affect CUAC/CUHP
and CWAF manufacturers:
EPA Phase-Out of Hydrochlorofluorocarbons (HCFCs)
The U.S. is obligated under the Montreal Protocol to limit the
production and consumption of HCFCs through incremental reductions,
culminating in a complete phase-out of HCFCs by 2030. On October 28,
2015, EPA published the ``2015 HCFC Allocation Rule,'' which allocates
production and consumption allowances for HCFC-22, HCFC-123, and HCFC-
124 for each year between 2015 and 2019. 79 FR 64253. Production and
import of virgin HCFC-22 for servicing appliances will cease at the end
of 2019, however reclaimed material and stocks of refrigerant produced
prior to 2020 will be available to service existing appliances.
HCFC-22, which is also known as R-22, is a popular refrigerant that
is commonly used in air-conditioning products. As of January 1, 2010,
EPA effectively prohibited the installation in the field of new
appliances containing virgin R-22. 74 FR 66412. Additionally, there is
a prohibition on the manufacture of new appliances and appliance
components pre-charged with R-22 as of the same date. However,
manufacturers can still manufacture components for servicing existing
appliances. 74 FR 66450. Under the Clean Air Act and EPA's implementing
regulations at 40 CFR part 82, subpart A, starting January 1, 2020, it
will be illegal to manufacture any appliance containing virgin HCFCs.
Manufacturers of CUAC/CUHP and CWAF equipment must comply with the
these prohibitions and the allowances established by the allocation
rule, thereby facing a cumulative regulatory burden. As such, no
covered manufacturers offer R-22 products today. The MPCs used for the
baseline and higher efficiency design options account for the move away
from R-22 and the changes in production costs that resulted from the
shift to HFC refrigerants.
DOE Certification, Compliance, and Enforcement (CC&E) Rule
Any amended standard that DOE adopts would also require
manufacturers to follow accompanying CC&E requirements. DOE conducted a
rulemaking to expand the coverage of DOE's alternative efficiency
determination method (``AEDM'') regulations to commercial HVAC,
including the equipment covered by this rulemaking. See 78 FR 79579
(December 31, 2013). An AEDM is a computer modeling or mathematical
tool that predicts the performance of non-tested basic models of a type
of covered equipment or product. In that final rule, DOE permits
manufacturers of small, large, and very large air-cooled commercial
package air conditioning equipment to rate basic models using AEDMs for
compliance certification purposes, reducing the need for sample units
and the overall burden on manufacturers. The AEDM final rule
established revised verification tolerances for small, large, and very
large air-cooled commercial package air conditioning equipment
manufacturers. More information can be found at http://www1.eere.energy.gov/buildings/appliance_standards/implement_cert_and_enforce.html.
EPA ENERGY STAR
During interviews, some manufacturers stated that ENERGY STAR
specifications for CUACs/CUHPs and CWAFs would be a source of
cumulative regulatory burden.
DOE realizes that the cumulative effect of several regulations on
an industry may significantly increase the burden faced by
manufacturers that need to comply with multiple regulations and
certification programs from different organizations and levels of
government.
However, DOE notes that certain programs, such as ENERGY STAR, are
optional for manufacturers. As these programs are voluntary in nature,
they are not considered by DOE to be part of the manufacturers'
cumulative regulatory burden since manufacturers are not legally
required to meet the specifications prescribed by these voluntary
programs.
DOE discusses these and other requirements (e.g., Canadian Energy
Efficiency Regulations, California Title 24, Low NOX
requirements), and includes the full details of the cumulative
regulatory burden analysis, in chapter 12 of the direct final rule
TSDs. DOE also discusses the impacts on the small manufacturer subgroup
in the regulatory flexibility analysis in section VI.B of this direct
final rule.
3. National Impact Analysis
DOE's analysis of the various national impacts flowing from
amending the energy conservation standards for CUACs/CUHPs and CWAFs
are summarized below and include a discussion of the energy savings and
the related economic impacts that are projected to occur.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential standards
for CUACs/CUHPs and CWAFs, DOE compared their energy consumption under
the no-new-standards case to their anticipated energy consumption under
each TSL. For most of the TSLs considered in this direct final rule,
DOE forecasted the energy savings, operating cost savings, and
equipment costs over the lifetime of CUACs/CUHPs and CWAFs sold from
2019 through 2048. For the TSLs that represent the consensus
recommendations, DOE accounted for the lifetime impacts of CUACs and
CUHPs sold from 2018 through 2047 and CWAFs sold from 2023 through
2048. Table V-25 and Table V-26 present DOE's projections of the
national energy savings for each TSL considered for CUACs/CUHPs and
CWAFs, respectively. The savings were calculated using the approach
described in section IV.H of this document. Separate savings for each
equipment class are presented in chapter 10 of the direct final rule
TSDs.
[[Page 2508]]
Table V-25--Cumulative National Energy Savings for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level * (projected quad savings)
Energy savings -----------------------------------------------------------------------------------------
1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy................................................ 5.1 9.3 13.3 14.1 15.2 15.7 18.9 22.4
FFC energy.................................................... 5.3 9.8 13.9 14.8 15.9 16.4 19.7 23.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2048.
Table V-26--Cumulative National Energy Savings for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Trial Standard Level * (projected quad savings)
Energy savings -------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Primary energy.................. 0.2 0.2 0.4 0.4 2.1
FFC energy...................... 0.2 0.2 0.4 0.4 2.4
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2048. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2048.
OMB Circular A-4 \2\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using nine, rather than 30, years
of equipment shipments. The choice of a nine-year period is a proxy for
the timeline in EPCA for the review of certain energy conservation
standards and potential revision of, and compliance with, such revised
standards.\3\ The review timeframe established in EPCA is generally not
synchronized with the equipment lifetime, equipment manufacturing
cycles, or other factors specific to CUACs/CUHPs and CWAFs. Thus, such
results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology. The NES
sensitivity analysis results based on a nine-year analytical period are
presented in Table V-27 and Table V-28 for CUACs/CUHPs and CWAFs,
respectively.
---------------------------------------------------------------------------
\2\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
\3\ Section 342(a)(6)(C) of EPCA--like its consumer product-
related counterpart in Section 325(m)--requires DOE to review its
standards at least once every 6 years, and requires, for certain
products, a 3-year period after any new standard is promulgated
before compliance is required, except that in no case may any new
standards be required within 6 years of the compliance date of the
previous standards. While adding a 6-year review to the 3-year
compliance period adds up to 9 years, DOE notes that it may
undertake reviews at any time within the 6 year period and that the
3-year compliance date may yield to the 6-year backstop. A 9-year
analysis period may not be appropriate given the variability that
occurs in the timing of standards reviews and the fact that for some
consumer products, the compliance period is 5 years rather than 3
years.
Table V-27--Cumulative National Energy Savings for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment;
Nine Years of Shipments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level * (projected quad savings)
Energy savings -----------------------------------------------------------------------------------------
1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy................................................ 1.2 2.1 3.1 2.0 3.5 3.5 4.2 4.7
FFC energy.................................................... 1.2 2.2 3.2 2.1 3.6 3.7 4.4 4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2026. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2027.
Table V-28--Cumulative National Energy Savings for Commercial Warm Air Furnace; Nine Years of Shipments
----------------------------------------------------------------------------------------------------------------
Trial Standard Level * (projected quad savings)
Energy savings -------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Primary energy.................. 0.1 0.1 0.3 0.3 1.3
[[Page 2509]]
FFC energy...................... 0.1 0.1 0.3 0.3 1.3
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2031. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2027.
b. Net Present Value of Commercial Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
commercial consumers that would result from the TSLs considered for
CUACs/CUHPs and CWAFs. In accordance with OMB's guidelines on
regulatory analysis,\4\ DOE calculated NPV using both a 7-percent and a
3-percent real discount rate.
---------------------------------------------------------------------------
\4\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis,'' section E (Sept. 17, 2003) (Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4).
---------------------------------------------------------------------------
Table V-29 and Table V-30 show the commercial consumer NPV results
with impacts counted over the lifetime of equipment purchased in the
relevant analysis period for each TSL.
Table V-29--Cumulative Net Present Value of Consumer Benefits for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level * (Billion 2014$)
Discount rate (%) -----------------------------------------------------------------------------------------------------------
1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
3........................................... 18.0 32.8 47.5 50.0 53.7 55.3 64.1 68.2
7........................................... 5.4 10.1 15.1 15.2 16.8 17.1 19.2 18.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2048.
Table V-30--Cumulative Net Present Value of Consumer Benefits for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Trial Standard Level * (Billion 2014$)
Discount rate (%) ----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
3.............................................. 1.1 1.0 -0.1 -0.1 2.6
7.............................................. 0.4 0.3 -0.4 -0.4 -0.4
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2048. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2048.
The results in Table V-29 reflect the use of a constant price trend
for CUACs and CUHPs over the analysis period (see section IV.F.1). DOE
also conducted a sensitivity analysis that considered one scenario with
a lower rate of price decline than the reference case and one scenario
with a higher rate of price decline than the reference case. The
results of these alternative cases are presented in appendix 10C of the
CUAC/CUHP direct final rule TSD.
The results in Table V-30 reflect the use of the historic trend in
the inflation-adjusted PPI for ``Warm air furnaces'' to estimate the
change in price for CWAFs over the analysis period (see section
IV.F.1). The trend shows a small rate of annual price decline. DOE also
conducted a sensitivity analysis that considered one scenario with a
lower rate of price decline than the reference case and one scenario
with a higher rate of price decline than the reference case. The
results of these alternative cases are presented in appendix 10C of the
CWAF direct final rule TSD.
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V-31 and Table V-32 for CUACs/CUHPs and
CWAFs, respectively. As mentioned previously, such results are
presented for informational purposes only and are not indicative of any
change in DOE's analytical methodology or decision criteria.
Table V-31--Cumulative Net Present Value of Consumer Benefits for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment; Nine Years of Shipments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level * (billion 2014$)
Discount rate (%) -----------------------------------------------------------------------------------------------------------
1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
3........................................... 4.6 8.0 12.4 7.2 13.6 13.6 15.1 13.4
[[Page 2510]]
7........................................... 2.0 3.7 5.8 3.6 6.4 6.3 6.8 5.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2026. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2027.
Table V-32--Cumulative Net Present Value of Consumer Benefits for Commercial Warm Air Furnaces; Nine Years of
Shipments
----------------------------------------------------------------------------------------------------------------
Trial Standard Level * (billion 2014$)
Discount rate (%) -------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
3............................... 0.4 0.4 0.9 0.9 4.4
7............................... 0.2 0.2 0.2 0.2 1.2
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2031. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2027.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for CUACs/CUHPs and CWAFs
to reduce energy bills for consumers of those equipment, with the
resulting net savings being redirected to other forms of economic
activity. These expected shifts in spending and economic activity could
affect the demand for labor. DOE used an input/output model of the U.S.
economy to estimate indirect employment impacts of the TSLs that DOE
considered in this rulemaking. DOE understands that there are
uncertainties involved in projecting employment impacts, especially
changes in the later years of the analysis. Therefore, DOE generated
results for timeframes within five years of the compliance date, where
these uncertainties are reduced.
The results suggest that the adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the direct final rule TSDs presents detailed
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Equipment
DOE has concluded that the standards adopted in this final rule
would not reduce the utility or performance of the CUACs/CUHPs and
CWAFs under consideration in this rulemaking. Manufacturers of these
equipment types currently offer units that meet or exceed the adopted
standards.
5. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It also directs the Attorney General
of the United States (Attorney General) to determine the impact, if
any, of any lessening of competition likely to result from a proposed
standard and to transmit such determination in writing to the Secretary
within 60 days of the publication of a proposed rule, together with an
analysis of the nature and extent of the impact.
To assist the Attorney General in making this determination, DOE
provided the Department of Justice (DOJ) with copies of the NOPR and
the TSD for review. In its assessment letter responding to DOE, DOJ
concluded that the proposed energy conservation standards for CUACs/
CUHPs and CWAFs are unlikely to have a significant adverse impact on
competition. DOE is publishing the Attorney General's assessments for
both proposals at the end of this direct final rule.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. As a measure of this reduced
demand, chapter 15 in the direct final rule TSDs presents the estimated
reduction in generating capacity, relative to the no-new-standards
case, for the TSLs that DOE considered in this rulemaking.
Energy conservation resulting from amended standards for CUACs/
CUHPs and CWAFs are expected to yield environmental benefits in the
form of reduced emissions of air pollutants and GHGs. Table V-33 and
Table V-34 provide DOE's estimate of cumulative emissions reductions
expected to result from the TSLs considered for CUACs/CUHPs and CWAFs,
respectively. The emissions were calculated using the multipliers
discussed in section IV.K. DOE reports annual emissions reductions for
each TSL in chapter 13 of the direct final rule TSDs.
[[Page 2511]]
Table V-33--Cumulative Emissions Reduction for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level *
-------------------------------------------------------------------------------------------------------
1 2 2.5 Recommended 3 3.5 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 297 546 778 824 890 919 1,103 1,307
SO2 (thousand tons)............................. 161 297 423 445 483 498 598 708
NOX (thousand tons)............................. 336 620 883 937 1,010 1,042 1,252 1,483
Hg (tons)....................................... 0.60 1.10 1.57 1.66 1.80 1.85 2.22 2.63
CH4 (thousand tons)............................. 23.3 43.0 61.3 64.7 70.1 72.3 86.7 102.7
N2O (thousand tons)............................. 3.29 6.06 8.63 9.10 9.87 10.18 12.21 14.46
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 17 32 46 49 52 54 65 77
SO2 (thousand tons)............................. 3.2 5.9 8.4 9.0 9.6 9.9 11.9 14.2
NOX (thousand tons)............................. 249 459 654 697 749 773 928 1,101
Hg (tons)....................................... 0.01 0.01 0.02 0.02 0.02 0.02 0.03 0.03
CH4 (thousand tons)............................. 1,378 2,539 3,616 3,852 4,137 4,270 5,128 6,083
N2O (thousand tons)............................. 0.16 0.29 0.42 0.44 0.48 0.49 0.59 0.70
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 314 578 824 873 943 973 1,167 1,383
SO2 (thousand tons)............................. 164 303 431 454 493 508 610 722
NOX (thousand tons)............................. 586 1,080 1,538 1,634 1,759 1,815 2,180 2,584
Hg (tons)....................................... 0.61 1.12 1.59 1.68 1.82 1.88 2.25 2.66
CH4 (thousand tons)............................. 1,401 2,582 3,677 3,917 4,208 4,342 5,215 6,185
N2O (thousand tons)............................. 3.45 6.35 9.05 9.54 10.34 10.67 12.80 15.16
CH4 (million tons CO2eq) **..................... 39.2 72.3 103.0 109.7 117.8 121.6 146.0 173.2
N2O (thousand tons CO2eq) **.................... 913 1,682 2,397 2,528 2,741 2,828 3,392 4,017
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2048.
Table V-34--Cumulative Emissions Reduction for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Trial Standard Level *
-------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Site and Power Sector Emissions **
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 11.8 10.9 19.3 19.3 109
SO2 (thousand tons)............. 0.4 0.4 0.6 0.6 -10.1
NOX (thousand tons)............. 16.5 16.8 27.1 28.8 194
Hg (tons)....................... 0.00 0.00 0.00 0.00 -0.04
CH4 (thousand tons)............. 0.3 0.3 0.5 0.5 1.0
N2O (thousand tons)............. 0.03 0.03 0.05 0.05 0.06
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 1.7 1.5 2.7 2.7 17.4
SO2 (thousand tons)............. 0.0 0.0 0.0 0.0 -0.1
NOX (thousand tons)............. 26.4 24.4 43.3 43.5 279
Hg (tons)....................... 0.00 0.00 0.00 0.00 0.00
CH4 (thousand tons)............. 158 146 260 260 1,672
N2O (thousand tons)............. 0.00 0.00 0.01 0.01 0.02
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 13.4 12.4 22. 22. 126
SO2 (thousand tons)............. 0.4 0.4 0.6 0.7 -10.2
NOX (thousand tons)............. 43. 41.2 70.5 72.2 473
Hg (tons)....................... 0.00 0.00 0.00 0.00 -0.04
CH4 (thousand tons)............. 159 146 260 260 1,673
CH4 (thousand tons CO2eq) 4,440 4,096 7,289 7,292 46,831
[dagger].......................
N2O (thousand tons)............. 0.03 0.03 0.05 0.06 0.08
[[Page 2512]]
N2O (thousand tons CO2eq) 8.8 8.4 14.3 14.6 21.2
[dagger].......................
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2048. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2048.
** Primarily site emissions.
[dagger] CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the considered TSLs
for CUACs/CUHPs and CWAFs. As discussed in section IV.L 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 $117/metric
ton (the 95th-percentile value from a distribution that uses a 3-
percent discount rate). The values for later years are higher due to
increasing damages (public health, economic and environmental) as the
projected magnitude of climate change increases.
Table V-35 and Table V-36 present the global value of
CO2 emissions reductions at each TSL for CUACs/CUHPs and
CWAFs, respectively. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values; these results are presented in chapter
14 of the direct final rule TSD.
Table V-35--Estimates of Global Present Value of CO2 Emissions Reduction for Small, Large, and Very Large Air-
Cooled Commercial Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
SCC Case * (million 2014$)
---------------------------------------------------------------
TSL ** 3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
Site and Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 1,745 8,531 13,755 26,019
2............................................... 3,223 15,745 25,382 48,025
2.5............................................. 4,604 22,470 36,214 68,538
Recommended..................................... 4,769 23,508 37,966 71,745
3............................................... 5,253 25,663 41,369 78,279
3.5............................................. 5,417 26,470 42,672 80,744
4............................................... 6,485 31,728 51,160 96,788
5............................................... 7,682 37,602 60,633 114,725
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 101 496 800 1,512
2............................................... 186 915 1,477 2,791
2.5............................................. 265 1,305 2,106 3,982
Recommended..................................... 277 1,374 2,223 4,196
3............................................... 303 1,491 2,407 4,550
3.5............................................. 312 1,538 2,484 4,695
4............................................... 374 1,845 2,980 5,632
5............................................... 444 2,189 3,535 6,683
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 1,845 9,026 14,555 27,531
2............................................... 3,409 16,660 26,859 50,816
2.5............................................. 4,870 23,775 38,320 72,520
Recommended..................................... 5,046 24,883 40,189 75,941
3............................................... 5,556 27,154 43,777 82,830
3.5............................................. 5,729 28,009 45,156 85,439
4............................................... 6,860 33,573 54,140 102,420
5............................................... 8,127 39,791 64,169 121,407
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
** For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the
other TSLs, the NES is forecasted over the lifetime of equipment sold from 2019-2048.
[[Page 2513]]
Table V-36--Estimates of Global Present Value of CO2 Emissions Reduction for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
SCC Case * (million 2014$)
---------------------------------------------------------------------------
TSL ** 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average average rate, average 95th percentile
----------------------------------------------------------------------------------------------------------------
Site and Power Sector Energy Emissions [dagger]
----------------------------------------------------------------------------------------------------------------
1................................... 70.0 341 549 1,039
2................................... 62.6 310 500 946
3................................... 110 544 879 1,658
4................................... 110 546 882 1,663
5................................... 614 3,053 4,940 9,314
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1................................... 9.8 47.9 77.1 146
2................................... 8.8 43.5 70.3 133
3................................... 15.5 76.5 124 233
4................................... 15.5 76.8 124 234
5................................... 99.0 490 793 1,495
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
1................................... 79.8 388 626 1,185
2................................... 71.4 353 571 1,078
3................................... 126 620 1,003 1,891
4................................... 126 622 1,006 1,897
5................................... 713 3,543 5,733 10,809
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
** For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2048. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2048.
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 CUACs/CUHPs and
CWAFs. The dollar-per-ton values that DOE used are discussed in section
IV.L of this document. Table V-37 and Table V-38 present the cumulative
present values for NOX emissions for each TSL calculated
using 7-percent and 3-percent discount rates, respectively, for the
equipment addressed in this direct final rule. This table presents
values that use the low dollar-per-ton values, which reflect DOE's
primary estimate. Results that reflect the range of NOX
dollar-per-ton values are presented in Table V-41 and Table V-45.
Table V-37--Estimates of Present Value of NOX Emissions Reduction for
Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment *
------------------------------------------------------------------------
Million 2014$
-----------------------
TSL ** 3% 7%
Discount Discount
rate rate
------------------------------------------------------------------------
Site and Power Sector Emissions
------------------------------------------------------------------------
1............................................... 1,055 353
2............................................... 1,947 653
2.5............................................. 2,780 935
Recommended..................................... 2,899 937
3............................................... 3,174 1,064
3.5............................................. 3,274 1,095
4............................................... 3,923 1,307
5............................................... 4,649 1,543
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1............................................... 774 253
2............................................... 1,429 468
2.5............................................. 2,040 670
Recommended..................................... 2,139 677
3............................................... 2,329 763
3.5............................................. 2,403 786
4............................................... 2,881 938
5............................................... 3,418 1,109
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1............................................... 1,828 606
2............................................... 3,376 1,121
2.5............................................. 4,820 1,604
Recommended..................................... 5,038 1,614
3............................................... 5,503 1,826
3.5............................................. 5,677 1,881
4............................................... 6,804 2,245
5............................................... 8,067 2,652
------------------------------------------------------------------------
* The results reflect use of the low benefits per ton values.
[[Page 2514]]
** For the Recommended TSL, the impacts are over the lifetime of
equipment sold from 2018-2048. For the other TSLs, the NES is
forecasted over the lifetime of equipment sold from 2019-2048.
Table V-38--Estimates of Present Value of NOX Emissions Reduction for
Commercial Warm Air Furnaces *
------------------------------------------------------------------------
Million 2014$
-----------------------
TSL ** 3% 7%
discount discount
rate rate
------------------------------------------------------------------------
Site and Power Sector Emissions **
------------------------------------------------------------------------
1............................................... 46.1 16.3
2............................................... 44.9 14.7
3............................................... 72.2 24.7
4............................................... 76.8 26.3
5............................................... 516 174
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1............................................... 73.6 26.0
2............................................... 65.4 21.4
3............................................... 115 39.5
4............................................... 116 39.6
5............................................... 741 249
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1............................................... 120 42.3
2............................................... 110 36.1
3............................................... 188 64.2
4............................................... 192 65.9
5............................................... 1,258 423
------------------------------------------------------------------------
* The results reflect use of the low benefits per ton values.
** For TSL 2, the NES is forecasted over the lifetime of equipment sold
from 2023-2048. For the other TSLs, the NES is forecasted over the
lifetime of equipment sold from 2019-2048.
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 commercial
consumer savings calculated for each TSL considered in this rulemaking.
Table V-39 and Table V-40 present 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 commercial consumer savings
calculated for each TSL considered in this rulemaking, at both a 7-
percent and 3-percent discount rate for CUACs/CUHPs and CWAFs,
respectively. The CO2 values used in the columns of each
table correspond to the four sets of SCC values discussed above.
Table V-39--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with: (billion 2014$)
---------------------------------------------------------------------------
SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/
TSL * metric ton CO2 metric ton CO2 metric ton CO2 metric ton CO2
and 3% low NOX and 3% low NOX and 3% low NOX and 3% low NOX
value value value value
----------------------------------------------------------------------------------------------------------------
1................................... 21.4 28.6 34.2 47.1
2................................... 39.2 52.5 62.6 86.6
2.5................................. 56.6 75.5 90.1 124.3
Recommended......................... 59.4 79.2 94.5 130.3
3................................... 64.0 85.6 102.2 141.3
3.5................................. 66.0 88.2 105.4 145.7
4................................... 76.9 103.6 124.2 172.5
5................................... 83.4 115.0 139.4 196.7
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
----------------------------------------------------------------------------------------------------------------
SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/
metric ton CO2 metric ton CO2 metric ton CO2 metric ton CO2
and 7% low NOX and 7% low NOX and 7% low NOX and 7% low NOX
value value value value
----------------------------------------------------------------------------------------------------------------
1................................... 7.8 15.0 20.6 33.5
2................................... 14.5 27.7 37.9 61.9
2.5................................. 21.4 40.3 54.8 89.0
Recommended......................... 21.7 41.6 56.9 92.6
3................................... 24.0 45.6 62.3 101.3
3.5................................. 24.5 46.8 63.9 104.2
4................................... 28.1 54.8 75.4 123.7
5................................... 29.3 61.0 85.4 142.6
----------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the
other TSLs, the NES is forecasted over the lifetime of equipment sold from 2019-2048.
[[Page 2515]]
Table V-40--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with: (billion 2014$)
---------------------------------------------------------------------------
TSL SCC case $12.2/ SCC case $41.2/ SCC case $63.4/ SCC case $121/
metric ton and metric ton and metric ton and metric ton and
medium NOX value medium NOX value medium NOX value medium NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 1.3 1.6 1.8 2.4
2................................... 1.2 1.4 1.7 2.2
3................................... 0.3 0.7 1.1 2.0
4................................... 0.3 0.8 1.1 2.0
5................................... 4.6 7.4 9.6 14.7
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
----------------------------------------------------------------------------------------------------------------
SCC case $12.0/ SCC case $40.5/ SCC case $62.4/ SCC case $119/
metric ton and metric ton and metric ton and metric ton and
medium NOX value medium NOX value medium NOX value medium NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 0.5 0.8 1.1 1.6
2................................... 0.4 0.7 0.9 1.4
3................................... (0.2) 0.3 0.7 1.6
4................................... (0.2) 0.3 0.7 1.6
5................................... 0.8 3.6 5.8 10.9
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the NES is forecasted over the lifetime of equipment sold from 2023-2048. For the other TSLs, the
NES is forecasted over the lifetime of equipment sold from 2019-2048.
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
equipment shipped in the applicable analysis period. Because
CO2 emissions have a very long residence time in the
atmosphere,\5\ the SCC values in future years reflect future climate-
related impacts that continue beyond 2100.
---------------------------------------------------------------------------
\5\ 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,''' 110 J.
Geophys. Res. D14105 (2005).
---------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered product or
equipment must be designed to achieve significant additional
conservation of energy that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II))
In determining whether a standard is economically justified, the
Secretary must determine whether the benefits of the standard exceed
its burdens by, to the greatest extent practicable, considering the
seven statutory factors discussed previously. (42 U.S.C.
6313(a)(6)(B)(ii)(I)-(VII))
For this direct final rule, DOE considered the impacts from amended
standards for CUACs/CUHPs and CWAFs at each TSL, beginning with the
maximum technologically feasible level, to determine whether that level
was economically justified. Where 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 and saves a
significant amount of energy.
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.
1. Benefits and Burdens of TSLs Considered for Small, Large, and Very
Large Air-Cooled Commercial Package Air Conditioning and Heating
Equipment
Table V-41 and Table V-42 summarize the quantitative impacts
estimated for each TSL for CUACs and CUHPs. The national impacts are
measured over the lifetime of CUACs and CUHPs purchased in the 2018-
2048 period. The energy savings, emissions reductions, and value of
emissions reductions refer to FFC results. The efficiency levels
contained in each TSL are described in section V.A.
Table V-41--Summary of Analytical Results for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment: National Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 2.5 Recommended TSL * TSL 3 TSL 3.5 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National FFC Energy Savings (quads)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
5.3............... 9.8............... 13.9.............. 14.8.............. 15.9.............. 16.4.............. 19.7.............. 23.4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 2516]]
NPV of Consumer Benefits (2014$ billion)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate................ 18.0.............. 32.8.............. 47.5.............. 50.0.............. 53.7.............. 55.3.............. 64.1.............. 68.2
7% discount rate................ 5.4............... 10.1.............. 15.1.............. 15.2.............. 16.8.............. 17.1.............. 19.2.............. 18.8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction (Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 314............... 578............... 824............... 873............... 943............... 973............... 1,167............. 1,383
SO2 (thousand tons)............. 164............... 303............... 431............... 454............... 493............... 508............... 610............... 722
NOX (thousand tons)............. 586............... 1,080............. 1,538............. 1,634............. 1,759............. 1,815............. 2,180............. 2,584
Hg (tons)....................... 0.61.............. 1.12.............. 1.59.............. 1.68.............. 1.82.............. 1.88.............. 2.25.............. 2.66
CH4 (thousand tons)............. 1,401............. 2,582............. 3,677............. 3,917............. 4,208............. 4,342............. 5,215............. 6,185
N2O (thousand tons)............. 3.45.............. 6.35.............. 9.05.............. 9.54.............. 10.34............. 10.67............. 12.80............. 15.16
CH4 (million tons CO2eq **)..... 39.2.............. 72.3.............. 103.0............. 109.7............. 117.8............. 121.6............. 146.0............. 173.2
N2O (thousand tons CO2eq **).... 913............... 1,682............. 2,397............. 2,528............. 2,741............. 2,828............. 3,392............. 4,017
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2014$ billion) [dagger].... 1.845 to 27.53.... 3.409 to 50.82.... 4.870 to 72.52.... 5.046 to 75.94.... 5.556 to 82.83.... 5.729 to 85.44.... 6.860 to 102.4.... 8.127 to 121.4
NOX--3% discount rate (2014$ 1,592 to 3,514.... 2,941 to 6,492.... 4,203 to 9,276.... 4,361 to 9,610.... 4,795 to 10,583... 4,945 to 10,913... 5,922 to 13,066... 7,020 to 15,483
million).
NOX--7% discount rate (2014$ 547 to 1,221...... 1,011 to 2,259.... 1,448 to 3,235.... 1,445 to 3,231.... 1,647 to 3,680.... 1,696 to 3,789.... 2,022 to 4,520.... 2,386 to 5,334
million).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* For the Recommended TSL, the NES is forecasted over the lifetime of equipment sold from 2018-2048. For the other TSLs, the NES is forecasted over the lifetime of equipment sold from 2019-
2048.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
[dagger] Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Table V-42--Summary of Analytical Results for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment: Manufacturer and Consumer Impacts *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 2.5 Recommended TSL TSL 3 TSL 3.5 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) (No- 1,431.0 to 1,705.5 1,421.9 to 1,758.6 1,300.5 to 1,721.1 1,204.1 to 1,606.1 1,197.4 to 1,697.0 1,138.2 to 1,670.3 1,025.0 to 1,660.9 762.7 to 1,737.6
new-standards case INPV =
1,638.2).
Industry NPV (% change)......... (6.5) to 3.7...... (13.5) to 6.9..... (20.9) to 4.7..... (26.8) to (2.3)... (27.2) to 3.2..... (30.8) to 1.6..... (37.7) to 1.0..... (53.6) to 5.7
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Consumer Average LCC Savings (2014)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Small CUACs..................... (210)............. 870............... 3,777............. 4,233............. 4,233............. 3,517............. 3,035............. 5,326
Large CUACs..................... 3,997............. 3,728............. 7,991............. 10,135............ 10,135............ 12,266............ 16,803............ 12,900
Very Large CUACs................ 1,547............. 4,777............. 8,610............. 8,610............. 8,881............. 8,881............. 18,386............ 18,338
Average *....................... 1,045............. 1,971............. 5,340............. 6,220............. 6,238............. 6,396............. 8,370............. 8,697
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Consumer PBP (years)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Small CUACs..................... 14.9.............. 8.5............... 4.9............... 4.9............... 4.9............... 2.6............... 2.5............... 4.6
Large CUACs..................... 1.3............... 2.4............... 2.4............... 2.6............... 2.6............... 2.6............... 2.5............... 4.6
Very Large CUACs................ 5.8............... 7.0............... 6.2............... 6.2............... 7.2............... 7.2............... 5.6............... 6.3
Average *....................... 10.6.............. 6.7............... 4.3............... 4.4............... 4.5............... 3.0............... 2.8............... 4.8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 2517]]
% of Consumers that Experience Net Cost
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Small CUACs..................... 48%............... 25%............... 5%................ 5%................ 5%................ 13%............... 25%............... 16%
Large CUACs..................... 0%................ 10%............... 5%................ 2%................ 2%................ 1%................ 1%................ 11%
Very Large CUACs................ 7%................ 13%............... 7%................ 7%................ 23%............... 23%............... 3%................ 6%
Average *....................... 32%............... 20%............... 5%................ 4%................ 6%................ 11%............... 16%............... 14%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Weighted by shares of each equipment class in total projected shipments in the year of compliance.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 23.4 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be $18.8 billion using a 7-percent discount rate, and $68.2 billion
using a 3-percent discount rate.
The cumulative emissions reductions at TSL 5 are 1,383 million Mt
of CO2, 722 thousand tons of SO2, 2,584 thousand
tons of NOX, 2.66 ton of Hg, 6,185 thousand tons of
CH4, and 15.16 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reduction at
TSL 5 ranges from $8.127 billion to $121.4 billion.
At TSL 5, the average LCC impact is a savings of $5,326 for small
CUACs, $12,900 for large CUACs, and $18,338 for very large CUACs. The
simple payback period is 4.6 years for small CUACs, 4.6 years for large
CUACs, and 6.3 years for very large CUACs. The fraction of consumers
experiencing a net LCC cost is 16 percent for small CUACs, 11 percent
for large CUACs, and 6 percent for very large CUACs. Although DOE did
not estimate consumer impacts for CUHPs, the results would be very
similar to those for CUACs for the reasons stated in section V.B.1.
At TSL 5, the projected change in INPV ranges from a decrease of
$881.9 million to an increase of $93.1 million, which correspond to a
change of -53.7 percent and 5.7 percent, respectively. The industry is
expected to incur $591.0 million in total conversion costs at this
level. DOE projects that 98.7 percent of current equipment listings
would require redesign at this level to meet this standard level today.
At this level, DOE recognizes that manufacturers could face technical
resource constraints. Manufacturers stated they would require
additional engineering expertise and additional test laboratory
capacity. It is unclear whether manufacturers could complete the hiring
of the necessary technical expertise and construction of the necessary
test facilities in time to allow for the redesign of all equipment to
meet max-tech by 2019. Furthermore, DOE recognizes that a standard set
at max-tech could greatly limit equipment differentiation in the small,
large, and very large CUAC/CUHP market. By commoditizing a key
differentiating feature, a standard set at max-tech would likely
accelerate consolidaton in the industry.
The Secretary concludes that at TSL 5 for CUACs and CUHPs, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, and the estimated monetary value of the emissions
reductions would be outweighed by the economic burden on some
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 5 is not
economically justified.
DOE then considered TSL 4. TSL 4 would save 19.7 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be $19.2 billion using a 7-percent discount rate, and
$64.1 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 4 are 1,167 million Mt
of CO2, 610 thousand tons of SO2, 2,180 thousand
tons of NOX, 2.25 ton of Hg, 5,215 thousand tons of
CH4, and 12.80 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reduction at
TSL 4 ranges from $6.860 billion to $102.4 billion.
At TSL 4, the average LCC impact is a savings of $3,035 for small
CUACs, $16,803 for large CUACs, and $18,386 for very large CUACs. The
simple payback period is 2.5 years for small CUACs, 2.5 years for large
CUACs, and 5.6 years for very large CUACs. The fraction of consumers
experiencing a net LCC cost is 25 percent for small CUACs, 1 percent
for large CUACs, and 3 percent for very large CUACs. Although DOE did
not estimate consumer impacts for CUHPs, the results would be very
similar to those for CUACs for the reasons stated in section V.B.1.
At TSL 4, the projected change in INPV ranges from a decrease of
$619.6 million to an increase of $16.3 million, which corresponds to a
change of -37.7 percent and 1.0 percent, respectively. The industry is
expected to incur $538.8 million in total conversion costs at this
level. DOE projects that 96.0 percent of current equipment listings
would require redesign at this level to meet this standard level today.
The Secretary concludes that at TSL 4 for CUACs and CUHPs, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, and the estimated monetary value of the emissions
reductions would be outweighed by the economic burden on some
consumers, and the impacts on manufacturers, including the conversion
costs and profit margin impacts that could result in a reduction in
INPV. Consequently, the Secretary has concluded that TSL 4 is not
economically justified.
DOE then considered TSL 3.5. TSL 3.5 would save 16.4 quads of
energy, an amount DOE considers significant. Under TSL 3.5, the NPV of
consumer benefit would be $17.1 billion using a 7-percent discount
rate, and $55.3 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3.5 are 973 million Mt
of CO2, 508 thousand tons of SO2, 1,815 thousand
tons of NOX, 1.88 ton of Hg, 4,342 thousand tons of
CH4, and 10.67 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reduction at
TSL 3.5 ranges from $5.729 billion to $85.44 billion.
At TSL 3.5, the average LCC impact is a savings of $3,517 for small
CUACs, $12,266 for large CUACs, and $8,881 for very large CUACs. The
simple payback period is 2.6 years for small CUACs, 2.6 years for large
CUACs, and 7.2 years for very large CUACs. The fraction of consumers
experiencing a net LCC cost is 13 percent for small CUACs, 1 percent
[[Page 2518]]
for large CUACs, and 23 percent for very large CUACs. Although DOE did
not estimate consumer impacts for CUHPs, the results would be very
similar to those for CUACs for the reasons stated in section V.B.1.
At TSL 3.5, the projected change in INPV ranges from a decrease of
$506.4 million to an increase of $25.7 million, which corresponds to a
change of -30.8 percent and 1.6 percent, respectively. The industry is
expected to incur $489.2 million in total conversion costs at this
level. DOE projects that 93.5 percent of current equipment listings
would require redesign at this level to meet this standard level today.
The Secretary concludes that at TSL 3.5 for CUACs and CUHPs, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, and the estimated monetary value of the emissions
reductions would be outweighed by the economic burden on some
consumers, and the impacts on manufacturers, including the conversion
costs and profit margin impacts that could result in a reduction in
INPV. Consequently, the Secretary has concluded that TSL 3.5 is not
economically justified.
DOE then considered TSL 3. TSL 3 would save 15.9 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
benefit would be $16.8 billion using a 7-percent discount rate, and
$53.7 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3 are 943 million Mt of
CO2, 493 thousand tons of SO2, 1,759 thousand
tons of NOX, 1.82 ton of Hg, 4,208 thousand tons of
CH4, and 10.34 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reduction at
TSL 3 ranges from $5.556 billion to $82.83 billion.
At TSL 3, the average LCC impact is a savings of $4,233 for small
CUACs, $10,135 for large CUACs, and $8,881 for very large CUACs. The
simple payback period is 4.9 years for small CUACs, 2.6 years for large
CUACs, and 7.2 years for very large CUACs. The fraction of consumers
experiencing a net LCC cost is 5 percent for small CUACs, 2 percent for
large CUACs, and 23 percent for very large CUACs. Although DOE did not
estimate consumer impacts for CUHPs, the results would be very similar
to those for CUACs for the reasons stated in section V.B.1.
At TSL 3, the projected change in INPV ranges from a decrease of
$447.2 million to an increase of $52.4 million, which corresponds to a
change of -27.2 percent and 3.2 percent, respectively. DOE projects
that 81.6 percent of current equipment listings would require redesign
at this level to meet this standard level today.
The Secretary concludes that at TSL 3 for CUACs and CUHPs, the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, and the estimated monetary value of the emissions
reductions would be outweighed by the economic burden on some
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 the Recommended TSL, which reflects the
standard levels recommended by the ASRAC Working Group. The Recommended
TSL would save 14.8 quads of energy, an amount DOE considers
significant. Under the Recommended TSL, the NPV of consumer benefit
would be $15.2 billion using a 7-percent discount rate, and $50.0
billion using a 3-percent discount rate.
The cumulative emissions reductions at the Recommended TSL are 873
million Mt of CO2, 454 thousand tons of SO2,
1,634 thousand tons of NOX, 1.68 ton of Hg, 3,917 thousand
tons of CH4, and 9.54 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reduction at
the Recommended TSL ranges from $5.046 billion to $75.94 billion.
At the Recommended TSL, the average LCC impact is a savings of
$4,233 for small CUACs, $10,135 for large CUACs, and $8,610 for very
large CUACs. The simple payback period is 4.9 years for small CUACs,
2.6 years for large CUACs, and 6.2 years for very large CUACs. The
fraction of consumers experiencing a net LCC cost is 5 percent for
small CUACs, 2 percent for large CUACs, and 7 percent for very large
CUACs. Although DOE did not estimate consumer impacts for CUHPs, the
results would be very similar to those for CUACs for the reasons stated
in section V.B.1.
The Recommended TSL as developed by the Working Group and submitted
to DOE by ASRAC, aligns the effective dates of the CUAC/CUHP and CWAF
rulemakings. That recommended approach adopts the ASHRAE 90.1-2013
efficiency levels for this equipment for compliance starting in 2018
and will phase into a higher level starting in 2023 as recommended to
ASRAC by the Working Group. DOE expects that aligning the effective
dates reduces total conversion costs and cumulative regulatory burden,
while also allowing industry to gain clarity on potential regulations
that could affect refrigerant availability before the higher appliance
standard takes effect in 2023. DOE projects that 31.5 percent of
current equipment listings would require redesign at this level to meet
the 2018 standard level, while 79.6 percent of current equipment
listings would require redesign at this level to meet the 2023 standard
level.
At the Recommended TSL, the projected change in INPV ranges from a
decrease of $440.4 million to a decrease of $38.5 million, which
corresponds to a change of -26.8 percent and -2.3 percent,
respectively. The industry is expected to incur $520.8 million in total
conversion costs at this level. However, the industry members of the
Working Group noted that aligning the compliance dates for the CUAC/
CUHP and CWAF standards in the manner recommended would allow
manufacturers to coordinate their redesign and testing expenses for
these equipment (CUAC: AHRI and ACEEE, No. 80 at p. 1). With this
coordination, manufacturers explained that there would be a reduction
in the total conversion costs associated with this direct final rule.
These synergies resulting from the alignment of the CUAC/CUHP and CWAF
compliance dates would yield INPV impacts that are less severe than the
forecasted INPV range of -26.8 percent to -2.3 percent.
After considering the analysis and weighing the benefits and
burdens, DOE has determined that the recommended standards are in
accordance with 42 U.S.C. 6313(a)(6)(B), which contains provisions for
adopting a uniform national standard more stringent than the amended
ASHRAE Standard 90.1 for the equipment considered in this document.
Specifically, the Secretary has determined, supported by clear and
convincing evidence as described in this direct final rule and
accompanying TSDs, that such adoption would result in the significant
additional conservation of energy and is technologically feasible and
economically justified. In determining whether the recommended
standards are economically justified, the Secretary has determined that
the benefits of the recommended standards exceed the burdens. Namely,
the Secretary has concluded that under the recommended standards for
CUACs and CUHPs, 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
[[Page 2519]]
could result in a reduction in INPV for manufacturers.
Under the authority provided by 42 U.S.C. 6295(p)(4) and
6316(b)(1), DOE is issuing this direct final rule that establishes
amended energy conservation standards for CUACs and CUHPs at the
Recommended TSL. The amended energy conservation standards for CUACs
and CUHPs, which prescribe the minimum allowable IEER and, for
commercial unitary heat pumps, COP, are shown in Table V-43.
Table V-43--Amended Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial Package
Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Proposed energy
Equipment type Heating type conservation standard Compliance date
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC and HP
(Air-Cooled)-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity
AC............................... Electric Resistance 12.9 IEER.............. January 1, 2018.
Heating or No Heating. 14.8 IEER.............. January 1, 2023.
All Other Types of 12.7 IEER.............. January 1, 2018.
Heating. 14.6 IEER.............. January 1, 2023.
HP............................... Electric Resistance 12.2 IEER.............. January 1, 2018.
Heating or No Heating. 3.3 COP................
14.1 IEER.............. January 1, 2023.
3.4 COP................
All Other Types of 12.0 IEER.............. January 1, 2018.
Heating. 3.3 COP................
13.9 IEER.............. January 1, 2023.
3.4 COP................
Large Commercial Packaged AC and HP
(Air-Cooled)-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity
AC............................... Electric Resistance 12.4 IEER.............. January 1, 2018.
Heating or No Heating. 14.2 IEER.............. January 1, 2023.
All Other Types of 12.2 IEER.............. January 1, 2018.
Heating. 14.0 IEER.............. January 1, 2023.
HP............................... Electric Resistance 11.6 IEER.............. January 1, 2018.
Heating or No Heating. 3.2 COP................
13.5 IEER.............. January 1, 2023.
3.3 COP................
All Other Types of 11.4 IEER.............. January 1, 2018.
Heating. 3.2 COP................
13.3 IEER.............. January 1, 2023.
3.3 COP................
Very Large Commercial Packaged AC and
HP (Air-Cooled)-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity
AC............................... Electric Resistance 11.6 IEER.............. January 1, 2018.
Heating or No Heating. 13.2 IEER.............. January 1, 2023.
All Other Types of 11.4 IEER.............. January 1, 2018.
Heating. 13.0 IEER.............. January 1, 2023.
HP............................... Electric Resistance 10.6 IEER.............. January 1, 2018.
Heating or No Heating. 3.2 COP................
12.5 IEER.............. January 1, 2023.
3.2 COP................
All Other Types of 10.4 IEER.............. January 1, 2018.
Heating. 3.2 COP................
12.3 IEER.............. January 1, 2023.
3.2 COP................
----------------------------------------------------------------------------------------------------------------
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
the sum of: (1) The annualized national economic value (expressed in
2014$) of the benefits from operating equipment that meet the adopted
standards (consisting primarily of operating cost savings from using
less energy, minus increases in product purchase costs, and (2) the
annualized monetary value of the benefits of CO2 and
NOX emission reductions.\6\
---------------------------------------------------------------------------
\6\ 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
the analysis period, starting in the compliance year that yields the
same present value.
---------------------------------------------------------------------------
Table V-44 shows the annualized values for CUACs and CUHPs under
the Recommended TSL, expressed in 2014$. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reduction, (for which DOE used a 3-
percent discount rate along with the SCC series that has a value of
$40.0/t in 2015),\7\ the estimated cost of the standards in this rule
is $708 million per year in increased equipment costs, while the
estimated annual benefits are $2,099 million in reduced equipment
operating costs, $1,320
[[Page 2520]]
million in CO2 reductions, and $132.0 million in reduced
NOX emissions. In this case, the net benefit amounts to
$2,843 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 $792 million per year in
increased equipment costs, while the estimated annual benefits are
$3,441 million in reduced operating costs, $1,320 million in
CO2 reductions, and $231.3 million in reduced NOX
emissions. In this case, the net benefit amounts to $4,201 million per
year.
---------------------------------------------------------------------------
\7\ DOE used a 3-percent discount rate because the SCC values
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).
Table V-44--Annualized Benefits and Costs of Adopted Standards for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Million 2014$/year
Discount rate -----------------------------------------------------------------------------------
Primary estimate * Low net benefits estimate High net benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
Consumer Operating Cost 7%.............................. 2,099..................... 2,021..................... 2,309
Savings.
3%.............................. 3,441..................... 3,287..................... 3,830
CO2 Reduction Value ($12.2/t 5%.............................. 357....................... 355....................... 361
case) **.
CO2 Reduction Value ($40.0/t 3%.............................. 1,320..................... 1,313..................... 1,337
case) **.
CO2 Reduction Value ($62.3/t 2.5%............................ 1,973..................... 1,964..................... 1,999
case) **.
CO2 Reduction Value ($117/t 3%.............................. 4,028..................... 4,009..................... 4,080
case) **.
NOX Reduction Value [dagger].. 7%.............................. 132.0..................... 131.3..................... 299.1
3%.............................. 231.3..................... 230.2..................... 516.3
Total Benefits 7% plus CO2 range............... 2,588 to 6,259............ 2,507 to 6,160............ 2,970 to 6,689
[dagger][dagger].
7% 3,551..................... 3,465..................... 3,946
3% plus CO2 range 4,029 to 7,701............ 3,872 to 7,525............ 4,708 to 8,427
3% 4,992..................... 4,830..................... 5,684
Costs
Consumer Incremental Product 7%.............................. 708....................... 888....................... 275
Costs. 3%.............................. 792....................... 1028...................... 231
Net Benefits
Total [dagger][dagger]........ 7% plus CO2 range............... 1,880 to 5,551............ 1,619 to 5,273............ 2,695 to 6,414
7% 2,843..................... 2,578..................... 3,671
3% plus CO2 range 3,238 to 6,909............ 2,843 to 6,497............ 4,477 to 8,196
3% 4,201..................... 3,802..................... 5,453
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with CUACs and CUHPs shipped in 2018-2048. These results include benefits to
consumers which accrue after 2048 from the CUACs and CUHPs purchased in 2018-2048. 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 AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
respectively. In addition, incremental product costs reflect a constant price trend in the Primary estimate, a slightly increasing price trend in the
Low Benefits estimate, and a slightly decreasing price trend in the Low Benefits estimate. The methods used to project price trends are explained in
section IV.D.1.
** 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.L.2. DOE estimated the monetized value of NOx emissions reductions using benefit per
ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency is primarily
using a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature
mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six
Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the
benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the
agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power
Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
($40.0/t) case. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
labeled discount rate, and those values are added to the full range of CO2 values.
2. Benefits and Burdens of TSLs Considered for Commercial Warm Air
Furnaces
Table V-45 and Table V-46 summarize the quantitative impacts
estimated for each TSL for CWAFs. For TSL 2, the national impacts are
projected over the lifetime of equipment sold in 2023-2048. For the
other TSLs, the impacts are projected over the lifetime of equipment
sold in 2019-2048. The energy savings, emissions reductions, and value
of emissions reductions refer to FFC results. The efficiency levels
contained in each TSL are described in section V.A.
Table V-45--Summary of Analytical Results for Commercial Warm Air Furnaces: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Energy Savings 0.25................... 0.23................... 0.41.................. 0.41.................. 2.4.
quads.
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 2521]]
NPV of Consumer Costs and Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.............. 1.1.................... 1.0.................... -0.1.................. -0.1.................. 2.6.
7% discount rate.............. 0.4.................... 0.3.................... -0.4.................. -0.4.................. -0.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons....... 13.4................... 12.4................... 22.0.................. 22.0.................. 126.
SO2 thousand tons............. 0.40................... 0.40................... 0.63.................. 0.67.................. -10.2.
NOX thousand tons............. 43.0................... 41.2................... 70.5.................. 72.2.................. 473.
Hg tons....................... 0.001.................. 0.001.................. 0.002................. 0.002................. -0.04.
CH4 thousand tons............. 159.................... 146.................... 260................... 260................... 1,673.
CH4 thousand tons CO2eq*...... 4,440.................. 4,096.................. 7,289................. 7,292................. 46,831.
N2O thousand tons............. 0.03................... 0.03................... 0.05.................. 0.06.................. 0.08.
N2O thousand tons CO2eq*...... 8.8.................... 8.4.................... 14.3.................. 14.6.................. 21.2.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 2014$ million**........... 79.8 to 1,185.......... 71.4 to 1,078.......... 126 to 1,891.......... 126 to 1,897.......... 713 to 10,809.
NOX--3% discount rate 2014$ 120 to 264............. 110 to 243............. 188 to 414............ 192 to 424............ 1258 to 2772.
million.
NOX--7% discount rate 2014$ 42.3 to 94.4........... 36.1 to 80.9........... 64.2 to 144........... 65.9 to 147........... 423 to 945.
million.
--------------------------------------------------------------------------------------------------------------------------------------------------------
For TSL 2, the impacts are projected over the lifetime of equipment sold in 2023-2048. For the other TSLs, the impacts are projected over the lifetime
of equipment sold in 2019-2048.
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Table V-46--Summary of Analytical Results for Commercial Warm Air Furnaces: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Category -------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) 85.8 to 92.6........... 83.0 to 90.5........... 65.5 to 125.2......... 60.4 to 124.8......... (19.3) to 143.5.
(No-New-Standards Case INPV =
96.3).
Industry NPV (% change)....... (11.0) to (3.9)........ (13.9) to (6.1)........ (32.0) to 29.9........ (37.3) to 29.5........ (120.1)[dagger] to
49.0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas-Fired Commercial Warm Air $284................... $284................... $75................... $75................... $766.
Furnaces.
Oil-Fired Commercial Warm Air NA..................... $400................... NA.................... $400.................. $1,817.
Furnaces.
Average*...................... $284................... $285................... $75................... $79................... $781.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas-Fired Commercial Warm Air 1.4.................... 1.4.................... 12.3.................. 12.3.................. 11.3.
Furnaces.
Oil-Fired Commercial Warm Air NA..................... 1.9.................... NA.................... 1.9................... 7.5.
Furnaces.
Average*...................... 1.4.................... 1.4.................... 12.3.................. 12.1.................. 11.3.
--------------------------------------------------------------------------------------------------------------------------------------------------------
% of Consumers That Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas-Fired Commercial Warm Air 6%..................... 6%..................... 58%................... 58%................... 58%.
Furnaces.
Oil-Fired Commercial Warm Air 0%..................... 11%.................... 0%.................... 11%................... 54%.
Furnaces.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Weighted by shares of each equipment class in total projected shipments in 2019.
[dagger] At max tech, the standard will likely require CWAF manufacturers to make design changes to the cooling components of commercial HVAC products
and to the chassis that houses the heating and cooling components. Because these cooling system changes are triggered by the CWAFs standard, they are
taken into account in the MIA's estimate of conversion costs. The additional expense of updating the commercial cooling product contributes to an INPV
loss that is greater than 100%.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 2.4 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer cost would be
$0.4 billion using a 7-percent discount rate, and the NPV of consumer
benefit would be $2.6 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 5 are 126 Mt of
CO2, 473 thousand tons of NOX, 1,673 thousand
tons of CH4, and 0.08 thousand tons of N2O.
Projected emissions show an increase of 10.2 thousand tons of
SO2 and 0.04 ton of Hg, The estimated
[[Page 2522]]
monetary value of the CO2 emissions reduction at TSL 5
ranges from $713 million to $10,809 million.
At TSL 5, the average LCC impact is a savings of $766 for gas-fired
CWAFs and $1,817 for oil-fired CWAFs. The simple payback period is 11.3
years for gas-fired CWAFs and 7.5 years for oil-fired CWAFs. The
fraction of consumers experiencing a net LCC cost is 58 percent for
gas-fired CWAFs and 54 percent for oil-fired CWAFs.
At TSL 5, the projected change in INPV ranges from a decrease of
$115.7 million to an increase of $47.2 million, which corresponds to a
change of -120.1 percent and 49.0 percent, respectively. The industry
is expected to incur $157.5 million in total conversion costs at this
level. DOE projects that 99 percent of current equipment listings would
require redesign at this level.
The Secretary concludes that at TSL 5 for CWAFs, the benefits of
energy savings, positive NPV of consumer benefits using a discount rate
of 3-percent, emission reductions, and the estimated monetary value of
the emissions reductions would be outweighed by the economic burden on
most consumers, the negative NPV of consumer benefits using a 7-percent
discount rate, 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 5
is not economically justified.
DOE then considered TSL 4. TSL 4 would save 0.41 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
cost would be $0.4 billion using a 7-percent discount rate, and $0.1
billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 4 are 22 Mt of
CO2, 0.67 thousand tons of SO2, 72.2 thousand
tons of NOX, 0.002 ton of Hg, 260 thousand tons of
CH4, and 0.06 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 4
ranges from $126 million to $1,897 million.
At TSL 4, the average LCC impact is a savings of $75 for gas-fired
CWAFs and $400 for oil-fired CWAFs. The simple payback period is 12.3
years for gas-fired CWAFs and 1.9 years for oil-fired CWAFs. The
fraction of consumers experiencing a net LCC cost is 58 percent for
gas-fired CWAFs, and 11 percent for oil-fired CWAFs.
At TSL 4, the projected change in INPV ranges from a decrease of
$35.9 million to an increase of $28.4 million, which corresponds to a
change of -37.3 percent and 29.5 percent, respectively. The industry is
expected to incur $47.6 million in total conversion costs at this
level; DOE projects that 94 percent of current product listings would
require redesign at this level.
The Secretary concludes that at TSL 4 for CWAFs, 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 consumers, negative NPV of consumer benefits, 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.
DOE then considered TSL 3. TSL 3 would save 0.41 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
cost would be $0.4 billion using a 7-percent discount rate, and $0.1
billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3 are 22 Mt of
CO2, 0.63 thousand tons of SO2, 70.5 thousand
tons of NOX, 0.002 ton of Hg, 260 thousand tons of
CH4, and 0.05 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 3
ranges from $126 million to $1,891 million.
At TSL 3, the average LCC impact is a savings of $75 for gas-fired
CWAFs. The simple payback period is 12.3 years for gas-fired CWAFs. The
fraction of consumers experiencing a net LCC cost is 58 percent for
gas-fired CWAFs. The EL at TSL 3 for oil-fired CWAFs is the baseline,
so there are no LCC impacts for oil-fired CWAFs at TSL 3.
At TSL 3, the projected change in INPV ranges from a decrease of
$30.9 million to an increase of $28.8 million, which corresponds to a
change of -32.0 percent and 29.9 percent, respectively. The industry is
expected to incur $41.0 million in total conversion costs at this
level; DOE projects that 91 percent of current equipment listings would
require redesign at this level.
The Secretary concludes that at TSL 3 for CWAFs, 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 consumers, negative NPV of consumer benefits, 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. TSL 2 would save 0.23 quads of energy,
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefit would be $0.3 billion using a 7-percent discount rate, and $1.0
billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 2 are 12.4 Mt of
CO2, 0.40 thousand tons of SO2, 41.2 thousand
tons of NOX, 0.001 ton of Hg, 146 thousand tons of
CH4, and 0.03 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reduction at TSL 2
ranges from $71.4 million to $1,078 million.
At TSL 2, the average LCC impact is a savings of $284 for gas-fired
CWAFs and $400 for oil-fired CWAFs. The simple payback period is 1.4
years for gas-fired CWAFs and 1.9 years for oil-fired CWAFs. The
fraction of consumers experiencing a net LCC cost is 6 percent for gas-
fired CWAFs and 11 percent for oil-fired CWAFs.
At TSL 2, 57 percent of current equipment listings would require
redesign at this level. The projected change in INPV ranges from a
decrease of $13.4 million to a decrease of $5.9 million, which
corresponds to a decrease of 13.9 percent and 6.1 percent,
respectively. The CWAF industry is expected to incur $22.2 million in
total conversion costs. However, the industry noted that aligning the
compliance dates for the CUAC/CUHP and CWAF standards, as recommended
by the Working Group, would allow manufacturers to coordinate their
redesign and testing expenses for this equipment. If this occurs, there
could be a reduction in the total conversion costs associated with this
direct final rule. These synergies resulting from aligning the
compliance dates of the CUAC/CUHP and CWAF standards would result in
INPV impacts that are less severe than the forecasted INPV range of -
13.9 percent to -6.1 percent.
After considering the analysis and weighing the benefits and
burdens, DOE has determined that the recommended standards are in
accordance with 42 U.S.C. 6313(a)(6)(B), which contains provisions for
adopting a uniform national standard more stringent than the amended
ASHRAE/IES Standard 90.1 for the equipment considered in this document.
Specifically, the Secretary has determined, supported by clear and
convincing evidence, that such adoption would result in significant
additional conservation of energy and is technologically feasible and
economically justified. In determining whether the recommended
standards are economically justified, the
[[Page 2523]]
Secretary has determined that the benefits of the recommended standards
exceed the burdens. Namely, the Secretary has concluded that under the
recommended standards for CWAFs, 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.
Under the authority provided by 42 U.S.C. 6295(p)(4) and
6316(b)(1), DOE is issuing this direct final rule that establishes
amended energy conservation standards for CWAFs at TSL 2. The amended
energy conservation standards for CWAFs, which are expressed in terms
of TE, are shown in Table V-47.
Table V-47--Amended Energy Conservation Standards for Commercial Warm
Air Furnaces
------------------------------------------------------------------------
Input capacity (Btu/ Thermal
Equipment type h) efficiency (%)
------------------------------------------------------------------------
Gas-fired CWAFs................... >=225,000 Btu/h..... 81
Oil-fired CWAFs................... >=225,000 Btu/h..... 82
------------------------------------------------------------------------
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
the sum of: (1) The annualized national economic value (expressed in
2014$) of the benefits from operating equipment that meet the adopted
standards (consisting primarily of operating cost savings from using
less energy, minus increases in equipment purchase costs), and (2) the
annualized monetary value of the benefits of CO2 and
NOX emission reductions.
Table V-48 shows the annualized values for CWAFs under TSL 2,
expressed in 2014$. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reductions, (for which DOE used a 3-percent
discount rate along with the average SCC series corresponding to a
value of $40.0/ton in 2015 (2014$)), the estimated cost of the adopted
standards for CWAFs is $4.31 million per year in increased equipment
costs, while the estimated benefits are $49 million per year in reduced
equipment operating costs, $24 million per year in CO2
reductions, and $4.91 million per year in reduced NOX
emissions. In this case, the net benefit amounts to $74 million per
year.
Using a 3-percent discount rate for all benefits and costs and the
average SCC series corresponding to a value of $40.0/ton in 2015 (in
2014$), the estimated cost of the adopted standards for CWAFs is $4.38
million per year in increased equipment costs, while the estimated
benefits are $71 million per year in reduced operating costs, $24
million per year in CO2 reductions, and $7.59 million per
year in reduced NOX emissions. In this case, the net benefit
amounts to $99 million per year.
Table V-48--Annualized Benefits and Costs of Adopted Standards (TSL 2) for Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
(Million 2014$/year)
------------------------------------------------------------
Discount rate % Low net benefits High net benefits
Primary estimate* estimate* estimate*
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost 7................. 49................. 48................ 54
Savings.
3................. 71................. 70................ 81
CO2 Reduction Value ($12.2/ 5................. 6.99............... 7.08.............. 7.37
t case)**.
CO2 Reduction Value ($40.0/ 3................. 24................. 25................ 26
t case)**.
CO2 Reduction Value ($62.3/ 2.5............... 36................. 36................ 38
t case)**.
CO2 Reduction Value ($117/t 3................. 74................. 75................ 79
case)**.
NOX Reduction Value 7................. 4.91............... 4.98.............. 11.44
[dagger].
3................. 7.59............... 7.70.............. 17.61
Total Benefits 7 plus CO2 range.. 61 to 128.......... 60 to 128......... 73 to 144
[dagger][dagger].
7................. 78................. 78................ 91
3 plus CO2 range.. 86 to 153.......... 84 to 152......... 106 to 177
3................. 103................ 102............... 124
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Consumer Incremental 7................. 4.31............... 5.04.............. 3.92
Installed Costs.
3................. 4.38............... 5.22.............. 3.94
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]..... 7 plus CO2 range.. 57 to 124.......... 55 to 123......... 69 to 140
7................. 74................. 72................ 87
3 plus CO2 range.. 82 to 149.......... 79 to 147......... 102 to 173
[[Page 2524]]
3................. 99................. 97................ 120
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with CWAFs shipped in 2023-2048. These
results include benefits to consumers which accrue after 2048 from the CWAFs purchased from 2023-2048. 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 AEO 2015 Reference case, Low Economic Growth case, and
High Economic Growth case, respectively. In addition, incremental equipment costs reflect a medium decline
rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high decline rate in the
High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3.
** 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.L.2. DOE estimated the monetized value of NOX
emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed
Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed
Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at:
http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) For DOE's Primary Estimate and Low
Net Benefits Estimate, the agency is primarily using a national benefit-per-ton estimate for particulate
matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived
from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates
were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than
those from the ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical
considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's
current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact
Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the
average SCC with 3-percent discount rate ($40.0/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
A. 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 CUACs/CUHPs and CWAFs are
intended to address are as follows:
(1) Insufficient information and the high costs of gathering and
analyzing relevant information lead 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 to operate that equipment.
(3) There are external benefits resulting from the improved energy
efficiency of CWAFs 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 greenhouse gases that impact human health and global
warming. DOE attempts to qualify some of the external benefits through
use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory
Affairs (``OIRA'') in the OMB has determined that the proposed
regulatory action is a significant regulatory action under section
(3)(f) of Executive Order 12866. Accordingly, pursuant to section
6(a)(3)(B) of the Order, DOE has provided to OIRA: (i) The text of the
draft regulatory action, together with a reasonably detailed
description of the need for the regulatory action and an explanation of
how the regulatory action will meet that need; and (ii) An assessment
of the potential costs and benefits of the regulatory action, including
an explanation of the manner in which the regulatory action is
consistent with a statutory mandate. DOE has included these documents
in the rulemaking record.
In addition, the Administrator of OIRA has determined that the
proposed regulatory action is an ``economically'' significant
regulatory action under section (3)(f)(1) of Executive Order 12866.
Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has
provided to OIRA an assessment, including the underlying analysis, of
benefits and costs anticipated from the regulatory action, together
with, to the extent feasible, a quantification of those costs; and an
assessment, including the underlying analysis, of costs and benefits of
potentially effective and reasonably feasible alternatives to the
planned regulation, and an explanation why the planned regulatory
action is preferable to the identified potential alternatives. These
assessments can be found in the technical support documents for this
rulemaking.
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
[[Page 2525]]
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 direct 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.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of a final regulatory flexibility analysis (``FRFA'') for
any rule that by law must be proposed 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 entities.
As required by Executive Order 13272, ``Proper Consideration of Small
Entities in Agency Rulemaking,'' 67 FR 53461 (August 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 (http://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 CUAC/CUHP and CWAF equipment, the Small
Business Administration (``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. See 13 CFR part 121. The size standards
are listed by North American Industry Classification System (``NAICS'')
code and industry description and are available at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/small-business-size-standards. Manufacturing of CUACs/CUHPs and CWAFs 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. Commercial Unitary Air Conditioners and Heat Pumps
a. Description of Estimated Number of Small Entities Regulated
To better assess the potential impacts of this rulemaking on small
entities, DOE conducted a focused inquiry of the companies that could
be small business manufacturers of equipment covered by this
rulemaking. DOE conducted a market survey using available public
information to identify potential small manufacturers. DOE's research
involved industry trade association membership directories (including
AHRI \8\), individual company Web sites, and market research tools
(e.g., Hoovers reports \9\) to create a list of companies that
manufacture or sell CUAC/CUHP equipment covered by this rulemaking. DOE
also asked industry representatives if they were aware of any other
small manufacturers during manufacturer interviews. DOE reviewed
publicly-available data and contacted companies on its list, 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 covered by this rulemaking, do not meet the definition
of a ``small business,'' or are foreign-owned and operated.
---------------------------------------------------------------------------
\8\ Based on listings in the AHRI directory accessed on August
2, 2013 (Available at: https://www.ahridirectory.org/ahridirectory/pages/home.aspx).
\9\ Hoovers [verbar] Company Information [verbar] Industry
Information [verbar] Lists, D&B (2013) (Available at: http://www.hoovers.com/) (Last accessed April 3, 2013).
---------------------------------------------------------------------------
DOE identified 12 CUAC/CUHP manufacturers who sell covered
equipment in the U.S market. DOE determined that nine of these
manufacturers were large and three met the SBA's ``small business''
definition.
b. Description and Estimate of Compliance Requirements
The first small manufacturer specialized in double-duct products. A
review of its product literature and Web site showed that its only
covered equipment were double-duct systems. Since this direct final
rule does not amend the standards for double-duct equipment, this rule
will not have an impact on this small manufacturer.
The second small manufacturer did not own any production assets for
the covered equipment. The company outsourced the design and
manufacture to a supplier. Thus, the small business would not face any
capital conversion costs and very limited equipment conversion costs.
The third small manufacturer produced covered equipment that are
subject to this direct final rule. Before issuing this final rule, DOE
attempted to contact this small business manufacturer. However, the
business chose not to participate in an MIA interview. Based on DOE's
research, this third small manufacturer has three platforms with 11
models covered by the CUAC/CUHP rulemaking. However, it is difficult
for DOE to discern the potential conversion costs required to comply
with the direct final rule's standard since no IEER ratings were
provided for these units.
Based on literature reviews, DOE believes this third small
manufacturer specializes in custom and semi-custom products. This would
suggest the manufacturer has less hard-tooling than their large
competitors and their capital requirements would vary dramatically from
the industy average. The company's capital conversion costs would
likely be smaller in absolute dollars relative to large competitors.
However, the small manufacturer would likely need to recover those
costs over a lower volume of shipments.
2. Commercial Warm Air Furnaces
a. Description of Estimated Number of Small Entities Regulated
To better assess the potential impacts of this rulemaking on small
entities, DOE conducted a focused inquiry of the companies that could
be small business manufacturers of equipment covered by this
rulemaking. DOE conducted a market survey using available public
information to identify potential small manufacturers. DOE's research
involved industry trade association membership directories (including
AHRI \10\),
[[Page 2526]]
individual company Web sites, and market research tools (e.g., Hoovers
reports \11\) to create a list of companies that manufacture or sell
CWAF equipment covered by this rulemaking. DOE also asked industry
representatives if they were aware of any other small manufacturers
during manufacturer interviews. DOE reviewed publicly-available data
and contacted companies on its list, 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 covered by this
rulemaking, do not meet the definition of a ``small business,'' or are
foreign-owned and operated.
---------------------------------------------------------------------------
\10\ Based on listings in the AHRI directory accessed on August
2, 2013 (Available at: https://www.ahridirectory.org/ahridirectory/pages/home.aspx).
\11\ Hoovers [verbar] Company Information [verbar] Industry
Information [verbar] Lists, D&B (2013) (Available at: http://www.hoovers.com/) (Last accessed April 3, 2013).
---------------------------------------------------------------------------
DOE identified 14 manufacturers of CWAFs sold in the U.S. market.
DOE determined that eleven manufacturers were large and three
manufacturers met the SBA's definition of a ``small business''.
Before issuing this document, DOE attempted to contact each small
business CWAF equipment manufacturer it had identified. None of them,
however, consented to formal interviews. DOE also attempted to obtain
information about small business impacts while interviewing large
manufacturers.
DOE identified one small gas-fired CWAF manufacturer and two small
oil-fired CWAF manufacturers. The gas-fired CWAF manufacturer accounts
for 17 of the 250 gas-fired CWAFs listings in the AHRI Directory,\12\
or approximately 7 percent of the listings. This small manufacturer
offers product exclusively at 80-percent TE, and at the recommended
TSL, would need to update all equipment offerings to meet a standard of
82-percent TE. However, this position is not unique. There are also
some large gas-fired CWAF manufacturers that would need to update all
equipment offerings to meet the direct final rule's standard. From a
design perspective, DOE believes that most gas-fired equipment lines on
the market today can be upgraded to achieve the standard with increases
in heat exchange surface area.
---------------------------------------------------------------------------
\12\ The AHRI directory lists approximately 1,000 units. Many of
these units are from the same model line, share the same chassis,
and have the same level of performance, but have different heating
capacities or installed product options. DOE consolidated the AHRI
listing of CWAFs such that all units from the same model line and
chassis are listed together as a single unit.
---------------------------------------------------------------------------
With respect to oil-fired small business CWAF manufacturers, the
first of these entities DOE examined accounts for 11 of the 16 oil-
fired CWAFs listings in the AHRI Directory. This manufacturer produces
some of the most efficient products on the market at 92-percent TE.
Similarly, the second small oil-fired manufacturer produces the most
efficient non-condensing equipment on the market at 84-percent TE.
These two small oil-fired manufacturers would unlikely be at a
technological disadvantage relative to its competitors at the
recommended TSL. It is possible the small manufacturers would have a
competitive advantage given its technological lead and experience in
the niche market of high-efficiency commercial oil-fired warm air
furnaces.
Since CWAFs have relatively low sales volumes, and because the
industry as a whole generally produces equipment at the baseline, DOE
believes the average impacts will be similar for large and small
business manufacturers. DOE was unable to identify any publicly
available information that would lead to a conclusion that small
manufacturers would be differentially impacted by this direct final
rule. Therefore, DOE assumed that small business manufacturers would
face similar conversion costs as larger businesses. However, the small
CWAF manufacturers may need to allocate a greater portion of their
technical resources or may need to access outside capital to support
the transition to the direct final rule's standard.
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 the rule being considered today.
4. Significant Alternatives to the Rule
The discussion above analyzes impacts on small businesses that
would result from the direct final rule. In addition to the other TSLs
being considered, the direct final rule TSDs analyzing the potential
impacts from standards for CUACs/CUHPs and CWAFs include 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; and (6) 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 in several cases, they would not be feasible to
implement without authority and funding from Congress, and in all
cases, DOE has determined that the energy savings of these alternatives
are significantly smaller than those that are expected to result from
adoption of the standards (0.2 percent to 2.4 percent of the energy
savings from the adopted standards for CUACs/CUHPs, and less than 0.1
percent to 46 percent for CWAFs).\13\ 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 direct final rule TSDs for
further detail on the policy alternatives DOE considered.)
---------------------------------------------------------------------------
\13\ Bulk government purchase have a small impact on CWAF energy
use in the nation, while commercial consumer rebates could
significantly impact energy use.
---------------------------------------------------------------------------
Further, EPCA provides that a manufacturer whose annual gross
revenue from all of its operations does not exceed $8,000,000 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, authorizes 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. See 10
CFR part 430, subpart E, and part 1003 for additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of CUACs/CUHPs and CWAFs 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 CUACs/CUHPs and
CWAFs, 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 CUACs/CUHPs and CWAFs. 76 FR 12422 (March 7,
2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-information
requirement for 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. The public
[[Page 2527]]
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.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act of 1969
(``NEPA''), 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); Sec. 1021.410(b) and app. B, B(1)-(5). The
rule fits within the 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://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 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
direct final 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 subject to this direct 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.
F. 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 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 direct final rule meets the
relevant standards of Executive Order 12988.
G. 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. Pub. L. 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 this direct final rule 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 CUAC/CUHP and CWAF
manufacturers in the years between the direct final rule and the
compliance date for the new standards, and (2) incremental additional
expenditures by consumers to purchase higher-efficiency CUACs/CUHPs and
CWAFs.
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 direct 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 this document and the ``Regulatory
Impact Analysis'' section of the TSD for this direct final rule respond
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
[[Page 2528]]
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. This direct final rule would
establish amended energy conservation standards for CUACs/CUHPs and
CWAFs 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 chapter 17 of the CUACs/CUHPs and
CWAFs TSDs for this direct final rule.
H. 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 direct final 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.
I. 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 direct final rule
would not result in any takings that might require compensation under
the Fifth Amendment to the U.S. Constitution.
J. 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 direct final rule under the
OMB and DOE guidelines and has concluded that it is consistent with
applicable policies in those guidelines.
K. 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 CUACs/CUHPs and CWAFs, 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 direct final rule.
L. 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.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this direct final rule prior to its effective date. The
report will state that it has been determined that the rule is a
``major rule'' as defined by 5 U.S.C. 804(2). DOE also will submit the
supporting analyses to the Comproller General in the U.S. Government
Accountability Office (``GAO'') and make them available to each House
of Congress.
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this direct
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 December 17, 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
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 431.77 is revised to read as follows:
[[Page 2529]]
Sec. 431.77 Energy conservation standards and their effective dates.
(a) Gas-fired commercial warm air furnaces. Each gas-fired
commercial warm air furnace must meet the following energy efficiency
standard levels:
(1) For gas-fired commercial warm air furnaces manufactured
starting on January 1, 1994, until January 1, 2023, the TE at the
maximum rated capacity (rated maximum input) must be not less than 80
percent; and
(2) For gas-fired commercial warm air furnaces manufactured
starting on January 1, 2023, the TE at the maximum rated capacity
(rated maximum input) must be not less than 81 percent.
(b) Oil-fired commercial warm air furnaces. Each oil-fired
commercial warm air furnace must meet the following energy efficiency
standard levels:
(1) For oil-fired commercial warm air furnaces manufactured
starting on January 1, 1994, until January 1, 2023, the TE at the
maximum rated capacity (rated maximum input) must be not less than 81
percent; and
(2) For oil-fired commercial warm air furnaces manufactured
starting on January 1, 2023, the TE at the maximum rated capacity
(rated maximum input) must be not less than 82 percent.
0
3. Section 431.92 is amended by adding the definition of ``Double-duct
air conditioner or heat pump means air-cooled commercial package air
conditioning and heating equipment'' in alphabetical order to read as
follows:
Sec. 431.92 Definitions concerning commercial air conditioners and
heat pumps.
* * * * *
Double-duct air conditioner or heat pump means air-cooled
commercial package air conditioning and heating equipment that--
(1) 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;
(2) Is intended for indoor installation with ducting of outdoor air
from the building exterior to and from the unit, as evidenced by the
unit and/or all of its components being non-weatherized, including the
absence of any marking (or listing) indicating compliance with UL 1995,
``Heating and Cooling Equipment,'' or any other equivalent requirements
for outdoor use;
(3)(i) If it is a horizontal unit, a complete unit has a maximum
height of 35 inches; (ii) If it is a vertical unit, a complete unit has
a maximum depth of 35 inches; and
(4) Has a rated cooling capacity greater than or equal to 65,000
Btu/h and up to 300,000 Btu/h.
* * * * *
0
4. Section 431.97 is amended by:
0
a. Redesignating Tables 5 through 11 as Tables 7 through 13;
0
b. Revising paragraph (b) and the introductory text of paragraph (c);
0
c. In paragraph (d)(1) introductory text, removing ``Table 7'' and
adding in its place ``Table 9'';
0
d. In paragraph (d)(2) introductory text, removing ``Table 8'' and
adding in its place ``Table 10''; and
0
e. In paragraph (d)(3) introductory text, removing ``Table 9'' and
adding in its place ``Table 11''.
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 starting on the compliance date listed in
the corresponding table must meet the applicable minimum energy
efficiency standard level(s) set forth in Tables 1 through 6 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
Equipment type Cooling capacity Subcategory Heating type Efficiency level manufactured starting on . .
.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Package Air <65,000 Btu/h..... AC All.................... SEER = 13............ June 16, 2008.
Conditioning and Heating
Equipment (Air-Cooled, 3-
Phase, Split-System).
HP All.................... SEER = 13............ June 16, 2008.\1\
Small Commercial Package Air <65,000 Btu/h..... AC All.................... SEER = 13............ June 16, 2008.\1\
Conditioning and Heating
Equipment (Air-Cooled, 3-
Phase, Single-Package).
HP All.................... SEER = 13............ June 16, 2008.\1\
Small Commercial Package Air >=65,000 Btu/h and AC No Heating or Electric EER = 11.2........... January 1, 2010.\2\
Conditioning and Heating <135,000 Btu/h. Resistance Heating.
Equipment (Air-Cooled).
All Other Types of EER = 11.0........... January 1, 2010.\2\
Heating.
HP No Heating or Electric EER = 11.0........... January 1, 2010.\2\
Resistance Heating.
All Other Types of EER = 10.8........... January 1, 2010.\2\
Heating.
Large Commercial Package Air >=135,000 Btu/h AC No Heating or Electric EER = 11.0........... January 1, 2010.\2\
Conditioning and Heating and <240,000 Btu/ Resistance Heating.
Equipment (Air-Cooled). h.
All Other Types of EER = 10.8........... January 1, 2010.\2\
Heating.
HP No Heating or Electric EER = 10.6........... January 1, 2010.\2\
Resistance Heating.
All Other Types of EER = 10.4........... January 1, 2010.\2\
Heating.
[[Page 2530]]
Very Large Commercial Package >=240,000 Btu/h AC No Heating or Electric EER = 10.0........... January 1, 2010.\2\
Air Conditioning and Heating and <760,000 Btu/ Resistance Heating.
Equipment (Air-Cooled). h.
All Other Types of EER = 9.8............ January 1, 2010.\2\
Heating.
HP No Heating or Electric EER = 9.5............ January 1, 2010.\2\
Resistance Heating.
All Other Types of EER = 9.3............ January 1, 2010.\2\
Heating.
Small Commercial Package Air <65,000 Btu/h..... AC All.................... EER = 12.1........... October 29, 2003.
Conditioning and Heating
Equipment (Water-Cooled).
>=65,000 Btu/h and AC No Heating or Electric EER = 12.1........... June 1, 2013.
<135,000 Btu/h. Resistance Heating.
All Other Types of EER = 11.9........... June 1, 2013.
Heating.
Large Commercial Package Air- >=135,000 Btu/h AC No Heating or Electric EER = 12.5........... June 1, 2014.
Conditioning and Heating and <240,000 Btu/ Resistance Heating.
Equipment (Water-Cooled). h.
All Other Types of EER = 12.3........... June 1, 2014.
Heating.
Very Large Commercial Package >=240,000 Btu/h AC No Heating or Electric EER = 12.4........... June 1, 2014.
Air-Conditioning and Heating and <760,000 Btu/ Resistance Heating.
Equipment (Water-Cooled). h.
All Other Types of EER = 12.2........... June 1, 2014.
Heating.
Small Commercial Package Air- <65,000 Btu/h..... AC All.................... EER = 12.1........... October 29, 2003.
Conditioning and Heating
Equipment (Evaporatively-
Cooled).
>=65,000 Btu/h and AC No Heating or Electric EER = 12.1........... June 1, 2013.
<135,000 Btu/h. Resistance Heating.
All Other Types of EER = 11.9........... June 1, 2013.
Heating.
Large Commercial Package Air- >=135,000 Btu/h AC No Heating or Electric EER = 12.0........... June 1, 2014.
Conditioning and Heating and <240,000 Btu/ Resistance Heating.
Equipment (Evaporatively- h.
Cooled).
All Other Types of EER = 11.8........... June 1, 2014.
Heating.
Very Large Commercial Package >=240,000 Btu/h AC No Heating or Electric EER = 11.9........... June 1, 2014.
Air Conditioning and Heating and <760,000 Btu/ Resistance Heating.
Equipment (Evaporatively- h.
Cooled).
All Other Types of EER = 11.7........... June 1, 2014.
Heating.
Small Commercial Package Air- <17,000 Btu/h..... HP All.................... EER = 11.2........... October 29, 2003.\3\
Conditioning and Heating
Equipment (Water-Source: Water-
to-Air, Water-Loop).
>=17,000 Btu/h and HP All.................... EER = 12.0........... October 29, 2003.\3\
<65,000 Btu/h.
>=65,000 Btu/h and HP All.................... EER = 12.0........... October 29, 2003.\3\
<135,000 Btu/h.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2017. See Table 3 of this section for updated efficiency standards.
\2\ And manufactured before January 1, 2018. See Table 3 of this section for updated efficiency standards.
\3\ And manufactured before October 9, 2015. See Table 3 of this section for updated efficiency standards.
[[Page 2531]]
Table 2 to Sec. 431.97--Minimum Heating Efficiency Standards for Air Conditioning and Heating Equipment [Heat
Pumps]
[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, variable refrigerant
flow multi-split air conditioners and heat pumps, and double-duct air-cooled commercial package air conditioning
and heating equipment]
----------------------------------------------------------------------------------------------------------------
Compliance date: Equipment
Equipment type Cooling capacity Efficiency level manufactured starting on . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Package Air <65,000 Btu/h........ HSPF = 7.7.......... June 16, 2008.\1\
Conditioning and Heating
Equipment (Air-Cooled, 3-Phase,
Split-System).
Small Commercial Pacakage Air- <65,000 Btu/h........ HSPF = 7.7.......... June 16, 2008.\1\
Conditioning and Heating
Equipment (Air-Cooled, 3-Phase,
Single-Package).
Small Commercial Package Air >=65,000 Btu/h and COP = 3.3........... January 1, 2010.\2\
Conditioning and Heating <135,000 Btu/h.
Equipment (Air-Cooled).
Large Commercial Packaged Air >=135,000 Btu/h and COP = 3.2........... January 1, 2010.\2\
Conditioning and Heating <240,000 Btu/h.
Equipment (Air-Cooled).
Very Large Commercial Packaged Air >=240,000 Btu/h and COP = 3.2........... January 1, 2010.\2\
Conditioning and Heating <760,000 Btu/h.
Equipment (Air-Cooled).
Small Commercial Packaged Air <135,000 Btu/h....... COP = 4.2........... October 29, 2003.
Conditioning and Heating
Equipment (Water-Source: Water-to-
Air, Water-Loop).
----------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2017. See Table 4 of this section for updated heating efficiency
standards.
\2\ And manufactured before January 1, 2018. See Table 4 of this section for updated heating efficiency
standards.
Table 3 to Sec. 431.97--Updates to the 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, variable refrigerant flow multi-split air conditioners and heat pumps, and double-duct air-cooled commercial
package air conditioning and heating equipment]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance date: Equipment
Equipment type Cooling capacity Subcategory Heating type Efficiency level manufactured starting on . .
.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air >=65,000 Btu/h and AC................... Electric Resistance IEER = 12.9.......... January 1, 2018.\1\
Conditioning and Heating <135,000 Btu/h. Heating or No Heating. IEER = 14.8.......... January 1, 2023.
Equipment (Air-Cooled).
All Other Types of IEER = 12.7.......... January 1, 2018.\1\
Heating. IEER = 14.6.......... January 1, 2023.
HP................... Electric Resistance IEER = 12.2.......... January 1, 2018.\1\
Heating or No Heating. IEER = 14.1.......... January 1, 2023.
All Other Types of IEER = 12.0.......... January 1, 2018.\1\
Heating. IEER = 13.9.......... January 1, 2023.
Large Commercial Packaged Air >=135,000 Btu/h AC................... Electric Resistance IEER = 12.4.......... January 1, 2018.\1\
Conditioning and Heating and <240,000 Btu/ Heating or No Heating. IEER = 14.2.......... January 1, 2023.
Equipment (Air-Cooled). h.
..................... All Other Types of IEER = 12.2.......... January 1, 2018.\1\
Heating. IEER = 14.0.......... January 1, 2023.
HP................... Electric Resistance IEER = 11.6.......... January 1, 2018.\1\
Heating or No Heating. IEER = 13.5.......... January 1, 2023.
All Other Types of IEER = 11.4.......... January 1, 2018.\1\
Heating. IEER = 13.3.......... January 1, 2023.
Very Large Commercial Packaged >=240,000 Btu/h AC................... Electric Resistance IEER = 11.6.......... January 1, 2018.\1\
Air Conditioning and Heating and <760,000 Btu/ Heating or No Heating. IEER = 13.2.......... January 1, 2023.
Equipment (Air-Cooled). h.
All Other Types of IEER = 11.4.......... January 1, 2018.\1\
Heating. IEER = 13.0.......... January 1, 2023.
HP................... Electric Resistance IEER = 10.6.......... January 1, 2018.\1\
Heating or No Heating. IEER = 12.5.......... January 1, 2023.
All Other Types of IEER = 10.4.......... January 1, 2018.\1\
Heating. IEER = 12.3.......... January 1, 2023.
Small Commercial Package Air- <65,000 Btu/h..... AC................... All.................... SEER = 13.0.......... June 16, 2008.
Conditioning and Heating
Equipment (Air-Cooled, 3-
Phase, Split-System).
HP................... All.................... SEER = 14.0.......... January 1, 2017.
Small Commercial Package Air- <65,000Btu/h...... AC................... All.................... SEER = 14.0.......... January 1, 2017.
Conditioning and Heating
Equipment (Air-Cooled, 3-
Phase, Single-Package).
HP................... All.................... SEER = 14.0.......... January 1, 2017.
[[Page 2532]]
Small Commercial Packaged Air- <17,000 Btu/h..... HP................... All.................... EER = 12.2........... October 9, 2015.
Conditioning and Heating
Equipment (Water Source: Water-
to-Air, Water-Loop).
>=17,000 Btu/h and HP................... All.................... EER = 13.0........... October 9, 2015.
<65,000 Btu/h.
>=65,000 Btu/h and HP................... All.................... EER = 13.0........... October 9, 2015.
<135,000Btu/h.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2023.
Table 4 to Sec. 431.97--Updates to the Minimum Heating Efficiency Standards for Air-Cooled Air Conditioning
and Heating Equipment [Heat Pumps]
[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, variable refrigerant
flow multi-split air conditioners and heat pumps, and double-duct air-cooled commercial package air conditioning
and heating equipment]
----------------------------------------------------------------------------------------------------------------
Compliance date: Equipment
Equipment type Cooling capacity Efficiency level.\1\ manufactured starting on . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Package Air <65,000 Btu/h........ HSPF = 8.2.......... January 1, 2017.
Conditioning and Heating
Equipment (Air-Cooled, 3-Phase,
Split-Sytem).
Small Commercial Package Air <65,000 Btu/h........ HSPF = 8.0.......... January 1, 2017.
Conditioning and Heating
Equipment (Air-Cooled, 3-Phase,
Single Package).
Small Commercial Package Air <135,000 Btu/h....... COP = 4.3........... October 9, 2015.
Conditioning and Heating
Equipment (Water-Source: Water-to-
Air, Water-Loop).
Small Commercial Packaged Air >=65,000 Btu/h and COP = 3.3........... January 1, 2018.\2\
Conditioning and Heating <135,000 Btu/h....... COP = 3.4........... January 1, 2023.
Equipment (Air-Cooled).
Large Commercial Packaged Air >=135,000 Btu/h and COP = 3.2........... January 1, 2018.\2\
Conditioning and Heating <240,000 Btu/h....... COP = 3.3........... January 1, 2023.
Equipment (Air-Cooled).
Very Large Commercial Packaged Air >=240,000 Btu/h and COP = 3.2........... January 1, 2018.
Conditioning and Heating <760,000 Btu/h.......
Equipment (Air-Cooled).
----------------------------------------------------------------------------------------------------------------
\1\ For units tested using the relevant AHRI Standards, all COP values must be rated at 47 [deg]F outdoor dry-
bulb temperature for air-cooled equipment.
\2\ And manufactured before January 1, 2023.
Table 5 to Sec. 431.97--Minimum Cooling Efficiency Standards for Double-Duct Air-Conditioning and Heating Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance date: Equipment
Equipment type Cooling capacity Subcategory Heating type Efficiency level manufactured starting on . .
.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Double-Duct Commercial >=65,000 Btu/h and AC................... Electric Resistance EER = 11.2........... January 1, 2010.
Packaged Air Conditioning and <135,000 Btu/h. Heating or No Heating.
Heating Equipment (Air-Cooled).
All Other Types of EER = 11.0........... January 1, 2010.
Heating
HP................... Electric Resistance EER = 11.0........... January 1, 2010.
Heating or No Heating.
All Other Types of EER = 10.8........... January 1, 2010.
Heating.
Large Commercial Double-Duct >=135,000 Btu/h AC................... Electric Resistance EER = 11.0........... January 1, 2010.
Packaged Air Conditioning and and <240,000 Btu/ Heating or No Heating.
Heating Equipment (Air-Cooled). h.
All Other Types of EER = 10.8........... January 1, 2010.
Heating.
HP................... Electric Resistance EER = 10.6........... January 1, 2010.
Heating or No Heating.
All Other Types of EER = 10.4........... January 1, 2010.
Heating.
Very Large Double-Duct >=240,000 Btu/h AC................... Electric Resistance EER = 10.0........... January 1, 2010.
Commercial Packaged Air and <300,000 Btu/ Heating or No Heating.
Conditioning and Heating h.
Equipment (Air-Cooled).
[[Page 2533]]
All Other Types of EER = 9.8............ January 1, 2010.
Heating.
HP................... Electric Resistance EER = 9.5............ January 1, 2010.
Heating or No Heating.
All Other Types of EER = 9.3............ January 1, 2010.
Heating.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 6 to Sec. 431.97--Minimum Heating Efficiency Standards for Double-Duct Air-Cooled Air Conditioning and Heating Equipment
[Heat pumps]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance date: Equipment
Equipment type Cooling capacity Heating type Efficiency level \1\ manufactured starting on . . .
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air >=65,000 Btu/h and Electric Resistance Heating COP = 3.3................ January 1, 2010.
Conditioning and Heating Equipment <135,000 Btu/h. or No Heating.
(Air-Cooled).
All Other Types of Heating. COP = 3.3................ January 1, 2010.
Large Commercial Packaged Air- >=135,000 Btu/h and Electric Resistance Heating COP = 3.2................ January 1, 2010.
Conditioning and Heating Equipment <240,000 Btu/h. or No Heating.
(Air-Cooled).
All Other Types of Heating. COP = 3.2................ January 1, 2010.
Very Large Commercial Packaged Air >=240,000 Btu/h and Electric Resistance Heating COP = 3.2................ January 1, 2010.
Conditioning and Heating Equipment <300,000 Btu/h. or No Heating.
(Air-Cooled).
All Other Types of Heating. COP = 3.2................ January 1, 2010.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For units tested using the relevant AHRI Standards, all COP values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled equipment.
(c) Each packaged terminal air conditioner (PTAC) and packaged
terminal heat pump (PTHP) manufactured starting on January 1, 1994, but
before October 8, 2012 (for standard size PTACs and PTHPs) and before
October 7, 2010 (for non-standard size PTACs and PTHPs) must meet the
applicable minimum energy efficiency standard level(s) set forth in
Table 7 of this section. Each standard size PTAC and PTHP manufactured
starting on October 8, 2012, and each non-standard size PTAC and PTHP
manufactured starting on October 7, 2010, must meet the applicable
minimum energy efficiency standard level(s) set forth in Table 6 of
this section.
* * * * *
[FR Doc. 2015-33067 Filed 1-14-16; 8:45 am]
BILLING CODE 6450-01-P