[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Notices]
[Pages 40529-40534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15969]


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DEPARTMENT OF ENERGY

[EERE-2021-BT-DET-0010]


Analysis Regarding Energy Efficiency Improvements in the 2021 
International Energy Conservation Code (IECC)

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

ACTION: Notice of determination.

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SUMMARY: The U.S. Department of Energy (DOE) has reviewed the 2021 
International Energy Conservation Code (IECC) and determined the 
updated edition would improve energy efficiency in buildings subject to 
the code. DOE analysis indicates that buildings meeting the 2021 IECC, 
as compared with buildings meeting the 2018 IECC, would result in 
national site energy savings of 9.38 percent, source energy savings of 
8.79 percent, and energy cost savings of approximately 8.66 percent of 
residential building energy consumption. Upon publication of this 
affirmative determination, each State must certify that it has reviewed 
the energy efficiency provisions of its residential building code and 
made a determination whether it is appropriate to revise the code to 
meet or exceed the updated edition of the IECC. Additionally, this 
notice provides guidance on State code review processes and associated 
certifications.

DATES: Certification statements provided by States shall be submitted 
by July 28, 2023.

ADDRESSES: A copy of the supporting analysis, as well as links to the 
Federal docket and public comments received, are available at: https://www.energycodes.gov/development/determinations.
    Certification Statements must be addressed to the Building 
Technologies Office--Building Energy Codes Program Manager, U.S. 
Department of Energy, Office of Energy Efficiency and Renewable Energy, 
1000 Independence Avenue SW, EE-5B, Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT: Jeremiah Williams; U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, 1000 
Independence Avenue SW, EE-5B, Washington, DC 20585; (202) 441-1288; 
[email protected].
    For legal issues, please contact Matthew Ring; U.S. Department of 
Energy, Office of the General Counsel, 1000 Independence Avenue SW, GC-
33, Washington, DC 20585; (202) 586-2555; [email protected].

SUPPLEMENTARY INFORMATION:

I. Background
II. Public Participation
III. Determination Statement
IV. State Certification

I. Background

    Title III of the Energy Conservation and Production Act (ECPA), as 
amended, establishes requirements for building energy conservation 
standards, which are administered by the DOE Building Energy Codes 
Program. (42 U.S.C. 6831 et seq.) Section 304(a), as amended, of ECPA 
provides that whenever the 1992 Council of American Building Officials 
(CABO) Model Energy Code, or any successor to that code, is revised, 
the Secretary of Energy (Secretary) must make a determination, no later 
than 12 months after such revision, whether the revised code would 
improve energy efficiency in residential buildings, and must publish 
notice of such determination in the Federal Register. (42 U.S.C. 
6833(a)(5)(A)) If the Secretary determines that the revision of the 
CABO Model Energy Code, or any successor thereof, improves the level of 
energy efficiency in residential buildings then, not later than two 
years after the date of the publication of such affirmative 
determination, each State is required to certify that it has reviewed 
its residential building code regarding energy efficiency, and made a 
determination as to whether it is appropriate to revise its code to 
meet or exceed the provisions of the successor code. (42 U.S.C. 
6833(a)(5)(B)).
    The International Energy Conservation Code (IECC) is the 
contemporary successor to the CABO Model Energy Code specified in ECPA. 
The IECC is revised every three years through an established code 
development and consensus process administered by the International 
Code Council (ICC). As part of the ICC process, any interested party 
may submit proposals, as well as written comments or suggested changes 
to any

[[Page 40530]]

proposal, and make arguments before a committee of experts assembled by 
the ICC, with the collection of accepted proposals forming the revised 
edition of the IECC. More information on the ICC code development 
process is available at https://www.iccsafe.org/codes-tech-support/codes/code-development-process/code-development-2/.
    In addition, on January 20, 2021, the President issued Executive 
Order 13990, ``Protecting Public Health and the Environment and 
Restoring Science to Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 
2021). The Executive Order directed DOE to consider publishing for 
notice and comment a proposed rule suspending, revising, or rescinding 
the final technical determination regarding the 2018 IECC by May 2021. 
Id. at 86 FR 7038. In response, DOE has reviewed the current 2021 IECC 
so that DOE's determination under Section 304(b) of ECPA reflects the 
most recent version of IECC, and to facilitate State and local adoption 
of the 2021 IECC, which will improve energy efficiency in the nation's 
residential buildings.
    To meet the statutory requirement, and to satisfy the directive 
issued under Executive Order 13990, DOE issued a preliminary 
determination and published supporting analysis to quantify the 
expected energy savings associated with the 2021 IECC relative to the 
previous 2018 IECC version. Notice of this preliminary analysis was 
published in the Federal Register on May 16, 2021 (86 FR 26710), and is 
available at: https://www.regulations.gov/document/EERE-2021-BT-DET-0010-0001.

II. Public Participation

    In a May 16, 2021 Federal Register notice, DOE requested public 
comments on its preliminary analysis of the 2021 IECC. (86 FR 26710) 
DOE received four public comments, all of which DOE considered in 
arriving at its final determination. DOE has now issued the final 
analysis of the expected energy savings associated with the 2021 IECC 
as compared to the 2018 IECC. A summary of public comments received, 
and DOE responses, is included in Appendix A of this Notice. The final 
analysis is available at: https://www.energycodes.gov/development/determinations.

III. Determination Statement

    Residential buildings meeting the 2021 IECC (compared to the 
previous 2018 edition) are expected to incur the following savings on a 
weighted national average basis:

 9.38 percent site energy savings
 8.79 percent source energy savings
 8.66 percent energy cost savings

    DOE has rendered the conclusion that the 2021 IECC will improve 
energy efficiency in residential buildings, and, therefore, receives an 
affirmative determination under Section 304(a) of ECPA. States can 
experience significant benefits by updating their codes to reflect 
current construction standards, a total estimated $74.61 billion in 
energy cost savings and 424.20 MMT of avoided CO2 emissions 
in residential buildings (cumulative 2010 through 2040), or $3.24 
billion in annual energy cost savings and 18.50 MMT in annual avoided 
CO2 emissions (annually by 2030). These benefits, including 
emissions reductions, are estimated in a revised 2021 interim report 
addressing building code impacts.\1\ Though not quantified in the 
interim report, there may also be costs to regulated entities as a 
result of updated residential building codes.
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    \1\ See https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-31437.pdf for the 2021 interim code impact 
report. Financial benefits are calculated by applying historical and 
future fuel prices to site energy savings and by discounting future 
savings to 2020 dollars. Historical and future real fuel prices are 
obtained through EIA's AEO 2015 report (EIA 2015).
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IV. State Certification

    Upon publication of this affirmative determination, each State is 
required to review the provisions of its residential building code 
regarding energy efficiency, and determine whether it is appropriate 
for such State to revise its building code to meet or exceed the energy 
efficiency provisions of the 2021 IECC. (42 U.S.C. 6833(a)(5)(B)) This 
action must be made not later than two years from the date of 
publication of a Notice of Determination, unless an extension is 
provided.

State Review and Update

    The State determination must be: (1) Made after public notice and 
hearing; (2) in writing; (3) based upon findings and upon the evidence 
presented at the hearing; and (4) made available to the public. (42 
U.S.C. 6833(a)(2)) States have discretion with regard to the hearing 
procedures they use, subject to providing an adequate opportunity for 
members of the public to be heard and to present relevant information. 
The Department recommends publication of any notice of public hearing 
through appropriate and prominent media outlets, such as in a newspaper 
of general circulation. States should also be aware that this 
determination does not apply to IECC chapters specific to 
nonresidential buildings, as defined in the IECC. Therefore, States 
must certify their evaluations of their State building codes for 
residential buildings with respect to all provisions of the IECC, 
except for those chapters not affecting residential buildings. DOE 
determinations regarding earlier editions of the IECC are available on 
the DOE Building Energy Codes Program website.\2\ Further national and 
State analysis is also available.\3\
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    \2\ Available at https://www.energycodes.gov/regulations/determinations/previous.
    \3\ Available at https://www.energycodes.gov/development/residential/iecc_analysis.
_____________________________________-

State Certification Statements

    State certifications are to be sent to the address provided in the 
ADDRESSES section, or may be submitted to 
[email protected], and must be submitted in accordance 
with the deadline identified in the DATES section. If a State makes a 
determination that it is not appropriate to revise the energy 
efficiency provisions of its residential building code, the State must 
submit to the Secretary, in writing, the reasons for this 
determination, which shall be made available to the public. (42 U.S.C. 
6833(a)(4))
    The DOE Building Energy Codes Program tracks and reports State code 
adoption and certifications.\4\ Once a State has adopted an updated 
residential code, DOE typically provides software, training, and 
support for the new code, as long as the new code is based on the 
national model code (i.e., the 2021 IECC). DOE has issued previous 
guidance on how it intends to respond to technical assistance requests 
related to implementation resources, such as building energy code 
compliance software. (79 FR 15112) DOE is directed to provide incentive 
funding to States to implement the requirements of Section 304, and to 
improve and implement State residential and commercial building energy 
efficiency codes, including increasing and verifying compliance with 
such codes. (See 42 U.S.C. 6833(e)) Some States develop their own codes 
that are only loosely related to the national model codes, and DOE does 
not typically provide technical support for those codes. DOE does not 
prescribe how each State adopts and enforces its energy codes.
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    \4\ Available at https://www.energycodes.gov/adoption/states.
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Requests for Extensions

    Section 304(c) of ECPA requires that the Secretary permit an 
extension of the deadline for complying with the certification 
requirements described previously, if a State can demonstrate that it 
has made a good faith effort to

[[Page 40531]]

comply with such requirements, and that it has made significant 
progress toward meeting its certification obligations. (42 U.S.C. 
6833(c)) Such demonstrations could include one or both of the 
following: (1) A substantive plan for response to the requirements 
stated in Section 304; or (2) a statement that the State has 
appropriated or requested funds (within State funding procedures) to 
implement a plan that would respond to the requirements of Section 304 
of ECPA. This list is not exhaustive. Requests are to be sent to the 
address provided in the ADDRESSES section, or may be submitted to 
[email protected].

Appendix A

    DOE accepted public comments on the Notice of Preliminary 
Determination for the 2021 IECC until June 16, 2021, and received 
submissions from a total of 4 commenters. Responsive public comments 
and associated DOE answers are described as follows. DOE received 
comments on its preliminary determination and supporting analysis of 
the 2021 IECC from the following stakeholders:

 North American Insulation Manufacturers Association (NAIMA)
 Responsible Energy Code Alliance (RECA)
 Edison Electric Institute (EEI)
 Air-Conditioning, Heating and Refrigeration Institute 
(AHRI)

    The comments are summarized as follows and are available at 
https://www.regulations.gov/document/EERE-2021-BT-DET-0010-0001/comment. DOE responded to all comments received. Several issues 
raised by commenters are distinct from the energy efficiency 
analysis DOE has undertaken pursuant to its statutory obligations. 
These include the social cost of carbon, life-cycle cost, and cost 
effectiveness; among these issues, social cost of carbon garnered 
the most attention from commenters and is therefore emphasized in 
the responses below.

North American Insulation Manufacturers Association (NAIMA)

    Comment: NAIMA requested that DOE use the updated climate zone 
designations in the 2021 IECC and not 2018 IECC. DOE's preliminary 
analysis appears to leave out impact of the 2021 IECC climate zone 
designations in numerous counties across the United States. This 
shortfall could lead to an overestimation of the energy savings 
associated with the 2021 IECC.
    DOE Response: DOE acknowledges that the residential provisions 
of the 2021 IECC incorporate several administrative changes 
introduced by the 2013 edition of ASHRAE Standard 169, Climatic Data 
for Building Design Standards (ASHRAE 2013a). ASHRAE 169-2013 
redefined climate zones and moisture regimes based on recent weather 
data. As a result, a number of U.S. counties were reassigned to 
different zones/regimes, and a new, extremely hot Climate Zone 0 was 
added. (The addition of Climate Zone 0 has no impact on DOE's 
analysis, since it does not occur in the U.S.) Approximately 400 
U.S. counties out of more than 3,000 were reassigned, most to warmer 
climate zones. However, the reassignment of localities is considered 
an administrative action, based on long-established definitions of 
heating degree days and cooling degree days, and is handled 
consistently with how similar climate zone updates have been handled 
by previous DOE model energy code determinations. DOE also notes 
that the reassignment of climate zones is expected to occur in the 
future, based on updated weather and climate data, and associated 
updates to ASHRAE Standard 169.
    Comment: NAIMA requested that DOE produce the equivalent cost-
effectiveness document for the 2021 IECC as rapidly as possible 
after the publication of the final 2021 IECC determination. 
Additionally, NAIMA requested that DOE perform this analysis with a 
variety of down payment amounts to show cost-effectiveness with 
typical range of loans--a 0% down loan, a 10% down loan, and a 20% 
down loan.
    DOE Response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of the 2021 IECC would 
improve energy efficiency in residential buildings. Concepts such as 
life-cycle cost and cost effectiveness represent economic analysis 
and are therefore unique from energy efficiency analysis. However, 
DOE recognizes the value of such analysis in informing State and 
local decisions surrounding code review and update processes, as 
well as design decisions associated with specific buildings and 
systems. Distinct from its determination directive under ECPA, DOE 
provides a variety of additional analysis, including cost-
effectiveness analysis. The established DOE methodology is currently 
designed around a single typical home mortgage scenario, and not 
multiple down payment scenarios, as requested by NAIMA. However, DOE 
will consider expanding its analysis in the future to further study 
a range of financing scenarios, including those experienced by low 
and moderate income (LMI) households.

Responsible Energy Codes Alliance (RECA)

    Comment: RECA's first comment recommended that the DOE take 
actions to encourage, and provide additional support for, States and 
cities to adopt and implement the 2021 IECC in the months and years 
ahead.
    DOE response: DOE is directed under ECPA to provide technical 
assistance supporting the implementation of building energy codes. 
Consistent with this directive, DOE intends to continue providing 
robust technical assistance supporting State and local 
implementation of buildings energy codes. DOE recognizes the 
importance of supporting the States and local governments who 
ultimately adopt and implement codes, as well as the wide range of 
industry stakeholders who rely upon energy codes and strive to 
achieve compliance in practice.
    Comment: RECA's second comment stated that RECA agrees with and 
supports the methodology and conclusion in the preliminary analysis.
    DOE response: DOE appreciates the support.
    Comment: RECA's third comment recommended that DOE should 
implement the 2021 IECC into REScheck.
    DOE response: DOE intends to support the implementation of the 
2021 IECC into REScheck in the future.
    Comment: RECA's fourth comment recommended that DOE remove pre-
2015 IECC versions from REScheck.
    DOE response: In maintaining its compliance resources, such as 
the REScheck software \5\, DOE typically supports the three most 
recent editions of the model codes. (79 FR 15112) Following the 
current determination, this is anticipated to include the 2021, 2018 
and 2015 editions of the IECC. DOE intends to maintain consistency 
with this approach.
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    \5\ REScheck is a software tool developed and maintained by DOE 
for the purpose of verifying compliance in residential buildings. 
See https://www.energycodes.gov/rescheck.
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    Comment: RECA's fifth comment recommended that DOE provide cost-
effectiveness analysis.
    DOE response: As outlined in previous responses, DOE notes that 
the current determination is focused on whether the 2021 IECC would 
improve energy efficiency in residential buildings. However, DOE 
recognizes the value of additional forms of technical analysis 
supporting building energy codes, and intends to continue to provide 
both national and State-level cost-effectiveness analysis of the 
2021 IECC in the future.
    Comment: RECA's sixth comment recommended that DOE provide 
State-level energy and cost analyses.
    DOE response: Consistent with the previous comment response, DOE 
intends to provide State-level energy and cost analyses in the 
future.
    Comment: RECA's seventh comment recommended that DOE provide 
implementation support for the 2021 IECC.
    DOE response: Consistent with previous comment responses, DOE 
intends to continue providing robust support for States and local 
governments implementing building energy codes. DOE intends to 
provide additional resources supporting the 2021 IECC implementation 
in the future.

Edison Electric Institute (EEI)

    Comment: EEI's first comment stated that the EPA greenhouse gas 
equivalencies calculator overstates the emissions impact.
    DOE response: As outlined in previous responses, DOE notes that 
the current determination is focused solely on whether the revised 
Standard would improve energy efficiency in residential buildings, 
and CO2 savings were not considered as part of DOE's 
ultimate determination of whether the revised Standard will improve 
energy efficiency. DOE is reporting estimated CO2 savings 
only because it recognizes the value of additional forms of 
technical analysis supporting State implementation of building 
energy codes, including emissions analyses. DOE relies on greenhouse 
gas emission coefficients established by the Environmental 
Protection Agency (EPA) in estimating current year CO2 
savings. EPA's emission coefficients are designed to reflect 
marginal

[[Page 40532]]

CO2 savings from electricity savings occurring on the 
building site, which DOE considers appropriate for estimating and 
communicating the carbon savings stemming from an improved energy 
code. This approach is consistent with how DOE has performed similar 
calculations in previous determinations.
    Comment: EEI's second comment recommended that DOE's 
determination should take into account the commitments utilities 
have made to reduce carbon emissions.
    DOE response: As outlined in previous responses, DOE notes that 
the current determination is focused solely on whether the revised 
Standard would improve energy efficiency in residential buildings, 
and CO2 savings were not considered as part of DOE's 
ultimate determination of whether the revised Standard will improve 
energy efficiency. DOE is reporting estimated CO2 savings 
only because it recognizes the value of additional forms of 
technical analysis supporting State implementation of building 
energy codes, including emissions analyses. DOE's analysis is based 
on several metrics; energy cost, site energy, and source energy. In 
addition, DOE reports carbon emissions on a first-year basis. DOE 
recognizes the progress being made by utilities in decarbonizing the 
electric grid, and emphasizes that estimates provided in the 
supporting technical analysis are based on current emission levels 
and are subject to change in the future.

Air-Conditioning, Heating, and Refrigeration Institute (AHRI)

    Comment: AHRI, p. 2-5. AHRI commented that historically DOE did 
not estimate emission reductions or apply a value to emission 
reductions as part of the results and basis for the determination. 
They further stated that including emission reductions or their 
value, including the SC-CO2, as part of the basis for 
determination was outside DOE's authority to consider (42 U.S.C. 
6833(a)(5)), because EPCA is an energy conservation statute and 
excludes environmental objectives (see 42 U.S.C. 6312 which excludes 
environmental objectives), and that DOE does not have the statutory 
authority to consider greenhouse gas estimates in determination of 
residential building codes. AHRI opined that the SC-CO2 
should only be included for rulemakings where DOE has clear 
statutory authority to do so and stated that it lacks such statutory 
authority as to building energy codes.
    DOE response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of the IECC would improve 
energy efficiency in residential buildings. 42 U.S.C. 6833(b)(2)(A) 
DOE emphasizes that the estimates pertaining to CO2 are 
provided as supplemental information only and were not considered as 
part of DOE's final determination, which is based on energy 
efficiency as required under 42 U.S.C. 6833(5)(A). Climate benefits 
associated with the expected CO2 emissions reductions are 
monetized using estimates of the social cost of carbon presented in 
the Technical Support Document: Social Cost of Carbon, Methane, and 
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 
2021). DOE is reporting estimates related to CO2 only 
because information on the carbon emissions associated with 
buildings are valued by many stakeholders, including States and 
local governments who ultimately implement building codes, and who 
have expressed a need for this information. These estimates are not 
considered as part of DOE's ultimate determination of whether the 
updated IECC will improve energy efficiency.
    Comment: AHRI, p. 2, 5. AHRI stated that DOE is ignoring clear 
congressional intent in including emissions in the narrowly scoped 
building energy code review defined in the statutory text (42 U.S.C. 
6833(b)(1)). AHRI further stated that congress could have added 
global climate change into a variable to weigh in the determination, 
but did not do so and so DOE should not include this in the 
determination.
    DOE Response: See response to previous AHRI comment.
    Comment: AHRI, p. 2. AHRI requested that DOE remove carbon 
emissions from the determination for building energy codes, 
including the 2021 IECC.
    DOE Response: See response to previous AHRI comment.
    Comment: AHRI p. 2. Irrespective of the authority consideration, 
AHRI requested that DOE must act to remedy inaccurate assumptions 
and conclusions on the social cost of carbon benefits analysis. AHRI 
opined that the benefits claimed from full fuel cycle and global 
impact of emissions and SC-CO2 are speculative and 
tangential and that these are calculated over a time period (100 
years) that greatly exceeds that used to measure economic costs.
    DOE Response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of the IECC would improve 
energy efficiency in residential buildings. 42 U.S.C. 6833(b)(2)(A) 
DOE emphasizes that the estimates pertaining to CO2 are 
provided only as supplemental information and are not considered as 
part of the final determination, which is based on energy efficiency 
as required under 42 U.S.C. 6833(b)(2)(A).
    In calculating related CO2 impacts, DOE used the 
estimates for the SC-CO2 from the most recent update of 
the Interagency Working Group on Social Cost of Greenhouse Gases, 
United States Government (IWG), from ``Technical Support Document: 
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates 
under Executive Order 13990.'' (February 2021 TSD). DOE has 
determined that the estimates from the February 2021 TSD, as 
described more below, are based upon sound analysis and provide well 
founded estimates for DOE's analysis of the impacts of 
CO2 related to the reductions of emissions from updating 
the IECC to the 2021 edition.
    These SC-CO2 estimates are interim values developed 
under Executive Order (E.O.) 13990 for use until an improved 
estimate of the impacts of climate change can be developed based on 
the best available science and economics. The SC-CO2 
estimates used in this analysis were developed over many years, 
using a transparent process, peer-reviewed methodologies, the best 
science available at the time of that process, and with input from 
the public. Specifically, an interagency working group (IWG) that 
included the EPA and other executive branch agencies and offices 
used three integrated assessment models (IAMs) to develop the SC-
CO2 estimates and recommended four global values for use 
in regulatory analyses. The SC-CO2 estimates were first 
released in February 2010 and updated in 2013 using new versions of 
each IAM. In 2015, as part of the response to public comments 
received to a 2013 solicitation for comments on the SC-
CO2 estimates, the IWG announced a National Academies of 
Sciences, Engineering, and Medicine review of the SC-CO2 
estimates to offer advice on how to approach future updates to 
ensure that the estimates continue to reflect the best available 
science and methodologies. In January 2017, the National Academies 
released their final report, Valuing Climate Damages: Updating 
Estimation of the Social Cost of Carbon Dioxide, and recommended 
specific criteria for future updates to the SC-CO2 
estimates, a modeling framework to satisfy the specified criteria, 
and both near-term updates and longer term research needs pertaining 
to various components of the estimation process (National Academies 
2017). On January 20, 2021, President Biden issued Executive Order 
13990, which directed the IWG to ensure that the U.S. Government's 
(USG) estimates of the social cost of carbon and other greenhouse 
gases reflect the best available science and the recommendations of 
the National Academies (2017). The IWG was tasked with first 
reviewing the estimates currently used by the USG and publishing 
interim estimates within 30 days of E.O. 13990 that reflect the full 
impact of GHG emissions, including taking global damages into 
account.\6\ The interim SC-CO2 estimates published in 
February 2021 are used here to estimate the climate benefits 
associated with this determination.
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    \6\ The E.O. instructs the IWG to undertake a fuller update of 
the SC-GHG estimates by January 2022.
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    DOE acknowledges that there are a number of challenges in 
attempting to assess the incremental economic impacts of 
CO2 emissions. The science and economic understanding of 
climate change and its impacts is improving over time; research 
focused on the assessment of climate damages and socioeconomic 
emissions projections is particularly important for reducing 
uncertainty in the calculation of the social cost of greenhouse 
gases (SC-GHG),\7\

[[Page 40533]]

as is quantifying and being transparent about where key 
uncertainties in the models remain. But contrary to AHRI's 
suggestion that uncertainty should cause DOE to discount or abandon 
monetization of the social benefits of reducing CO2 
emissions, as IWG has stated, due to a number of sources of 
uncertainty, there is a likelihood that the SC-CO2 is an 
underestimate of the true social cost of emissions.\8\ Despite the 
limits of both quantification and monetization, SC-CO2 
estimates can be useful in estimating the social benefits of 
reducing CO2 emissions. As a result, DOE has used the 
IWG's SC-CO2 estimates in monetizing the social benefits 
of reducing CO2 emissions. However, as discussed in 
previous comments, DOE's SC-CO2 analysis using these 
estimates was not considered in DOE's ultimate determination of 
whether the 2021 IECC Standard will improve energy efficiency.
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    \7\ The social cost of greenhouse gases (SC-GHG) is the monetary 
value of the net harm to society associated with adding a small 
amount of that GHG to the atmosphere in a given year and, therefore, 
should reflect the societal value of reducing emissions of the gas 
in question by one metric ton. The marginal estimate of social costs 
will differ by the type of greenhouse gas (such as carbon dioxide, 
methane, and nitrous oxide) and by the year in which the emissions 
change occurs. The estimates of the social cost of carbon (SC-
CO2), social cost of methane (SC-CH4), and 
social cost of nitrous oxide (SC-N2O) published in the 
February 2021 TSD allow agencies to understand the social benefits 
of reducing emissions of each of these greenhouse gases, or the 
social costs of increasing such emissions, in the policy making 
process. Collectively, these values are referenced as the ``social 
cost of greenhouse gases'' (SC-GHG).
    \8\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021.
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    Comment: AHRI p. 2,3. As part of the rationale for not including 
SC-CO2, AHRI further commented that DOE has acknowledged 
the uncertainty of SC-CO2 estimates and stated that these 
are both provisional and revisable. Further, they noted that the 
interagency working group developing the SC-CO2 noted 
that the underlying models were imperfect and incomplete and notes 
that the intergovernmental panel on climate change (IPCC) which the 
IWG relied on also stated in 2013 that no best estimate for 
equilibrium climate sensitivity could then be given because of the 
lack of agreement on values across assessed lines of evidence and 
studies.
    DOE Response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of the IECC would improve 
energy efficiency in residential buildings. 42 U.S.C. 6833(b)(2)(A) 
DOE emphasizes that the estimates pertaining to CO2 are 
provided only as supplemental information and are not considered as 
part of the final determination, which is based on energy efficiency 
as required under 42 U.S.C. 6833(b)(2)(A).
    As noted above, DOE determined that the estimates from the 
February 2021 TSD are based upon sound analysis and provide well 
founded estimates for DOE's analysis of the impacts of 
CO2 related to the reductions of emissions from updating 
the 90.1 Standard to the 2019 edition. As explained in the February 
2021 TSD and while the IWG works to assess how best to incorporate 
the latest, peer reviewed science to develop an updated set of SC-
GHG estimates, the IWG has determined that it is appropriate for 
agencies to revert to the same set of four values drawn from the SC-
GHG distributions based on three discount rates as were used in 
regulatory analyses between 2010 and 2016 and subject to public 
comment. For each discount rate, the IWG combined the distributions 
across models and socioeconomic emissions scenarios (applying equal 
weight to each) and then selected a set of four values for use in 
benefit-cost analyses: An average value resulting from the model 
runs for each of three discount rates (2.5%, 3%, and 5%), plus a 
fourth value, selected as the 95th percentile of estimates based on 
a 3 percent discount rate. The fourth value was included to provide 
information on potentially higher-than-expected economic impacts 
from climate change, conditional on the 3% estimate of the discount 
rate. As explained in the February 2021 TSD, this update reflects 
the immediate need to have an operational SC-GHG for use in 
regulatory benefit-cost analyses and other applications that was 
developed using a transparent process, peer-reviewed methodologies, 
and the science available at the time of that process. Those 
estimates were subject to public comment in the context of dozens of 
proposed rulemakings as well as in a dedicated public comment period 
in 2013. However, as discussed in previous comments, DOE's SC-
CO2 analysis using these estimates was not considered in 
DOE's ultimate determination of whether the 2021 IECC Standard will 
improve energy efficiency.
    Comment: AHRI, p. 3,5. AHRI commented that EPCA's focus is on 
benefits accruing with this nation, hence incorporation of SC-
CO2 at the global level is beyond the scope and authority 
of DOE. See 42 U.S.C. 6833(a)(1-5). They further noted that EPCA 
originally arose out of the 1970's oil embargo and that nothing in 
the subsequent amendments suggests a different statutory focus other 
than improving the energy economic within the United States. AHRI 
notes that DOE analyzes expected national [domestic] energy savings, 
but does not scale back reported SC-CO2 calculations to 
reflect domestic impacts only.
    DOE Response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of the IECC would improve 
energy efficiency in residential buildings. 42 U.S.C. 6833(b)(2)(A) 
DOE emphasizes that the estimates pertaining to CO2 are 
provided only as supplemental information and are not considered as 
part of the final determination, which is based on energy efficiency 
as required under 42 U.S.C. 6833(b)(2)(A).
    As to the use of a SC-CO2 value that includes impacts 
outside the boundaries of the United States, the February 2021 TSD 
provides a complete discussion of the IWG's initial review conducted 
under E.O. 13990. In particular, the IWG found that a global 
perspective is essential for SC-GHG estimates because climate 
impacts occurring outside U.S. borders can directly (and indirectly 
affect the welfare of U.S. citizens and residents. Thus, U.S. 
interests are affected by the climate impacts that occur outside 
U.S. borders. Examples of affected interests include: Direct effects 
on U.S. citizens and assets located abroad, international trade, and 
tourism, and spillover pathways such as economic and political 
destabilization and global migration. In addition, assessing the 
benefits of U.S. GHG mitigation activities requires consideration of 
how those actions may affect mitigation activities by other 
countries, as those international mitigation actions will provide a 
benefit to U.S. citizens and residents by mitigating climate impacts 
that affect U.S. citizens and residents. Therefore, in this analysis 
DOE centers attention on a global measure of SC-GHG.
    As noted above, DOE determined that the estimates from the 
February 2021 TSD are based upon sound analysis, and therefore, in 
analyzing the impacts of CO2 related to the reductions of 
emissions from updating the 90.1 Standard to the 2019 edition, DOE 
has focused on a global measure of SC-CO2. As noted in 
the February 2021 TSD, the IWG will continue to review developments 
in the literature, including more robust methodologies for 
estimating SC-GHG values based on purely domestic damages, and 
explore ways to better inform the public of the full range of carbon 
impacts, both global and domestic. As a member of the IWG, DOE will 
likewise continue to follow developments in the literature 
pertaining to this issue. However, as discussed in previous 
comments, DOE's SC-CO2 analysis using these estimates was 
not considered in DOE's ultimate determination of whether the 2021 
IECC Standard will improve energy efficiency.
    Comment: AHRI, p.3,4. AHRI stated that DOE wrongly assumes that 
SC-CO2 values increase over time in real dollars and states that 
this is contrary to ``historical experience and to economic 
development science'' and that the more economic development that 
occurs, the more adaptation and mitigation efforts a population 
living in a growing economy can afford to undertake (AHRI cites the 
IWG indicating that developed countries can eliminate 90% of the 
economic impacts and developing countries could eventually eliminate 
50% of the economic impacts of climate change). They comment that 
they see no indication that DOE considered this separately.
    DOE Response: In making its determination, DOE's directive under 
ECPA is to assess whether updated editions of Standard 90.1 would 
improve energy efficiency in commercial buildings. 42 U.S.C. 
6833(b)(2)(A) DOE emphasizes that the estimates pertaining to 
CO2 are provided only as supplemental information and are 
not considered as part of the final determination, which is based on 
energy efficiency as required under 42 U.S.C. 6833(b)(2)(A).
    The model scenarios reported by the IWG demonstrate that the 
damage assessments and corresponding valuation (SC-CO2), 
adjusted for inflation, increase through time. As explained in the 
February 2021 TSD, ``[t]he SC-[CO2] estimates increase 
over time within the models--i.e., the societal harm from one metric 
ton emitted in 2030 is higher than the harm caused by one metric ton 
emitted in 2025--because future emissions produce larger incremental 
damages as physical and economic systems become more stressed in 
response to greater climatic change, and because GDP is growing over 
time and many damage categories are modeled as proportional to GDP. 
As noted above, DOE determined that the estimates from the February 
2021 TSD are based upon sound analysis and provide well founded 
estimates for DOE's analysis of the impacts of CO2 
related to the reductions of emissions

[[Page 40534]]

from updating the 90.1 Standard to the 2019 edition in its building 
codes impact analysis. Accordingly, DOE incorporated the IWG's 
consideration in its analysis. However, as discussed in previous 
comments, DOE's SC-CO2 analysis using these estimates was 
not considered in DOE's ultimate determination of whether the 2021 
IECC Standard will improve energy efficiency.
    Comment: AHRI, p. 4. AHRI argued that it is arbitrary and 
capricious to use different timeframes and assumptions for costs and 
benefits and notes that DOE must clarify precisely why and how it 
believes it has statutory authority under 42 U.S.C. 6833(a) to 
consider SC-CO2 issues and cites why such action is 
legally arbitrary without sufficient documented reason for treating 
similar situations differently. AHRI notes that DOE, in clarifying 
why it believes it has such authority, can establish how it is 
acting consistently in terms of the analysis of benefits.
    DOE Response: See previous response to AHRI comment on the issue 
of authority. On the issue of costs and benefits, DOE reemphasizes 
that its determination analysis is not assessing the costs and 
benefits associated with the updated 2021 IECC, that the 
determination is solely based on energy efficiency, and that the 
reported carbon emissions are reported only as supplemental 
information for the benefit of interested parties and in support of 
the directives of Executive Order 12866. To clarify the issue of 
timeframe, the emission estimates are based on one year (i.e., the 
annual energy consumption estimated via the energy efficiency 
analysis). However, the step of projecting the associated 
CO2 impacts captures the longer-term impact of those 
single-year emissions, as they persist in the atmosphere (and drive 
the damage impacts over the time they persist), which is then 
discounted to present value for the year when the emissions occur. 
DOE does not find an economic inconsistency in this approach to 
reporting emission benefits. Such a calculation is similar to life-
cycle analysis, for instance, which is performed in a similar 
fashion, where a single year event occurs (e.g., a purchase of more 
efficient equipment), but the energy savings are calculated over the 
time they exist (e.g., the life of the equipment), and discounted 
back to the present value to reflect an overall life-cycle cost. 
DOE's reporting here of discounted damage impacts is consistent with 
that general approach.

Signing Authority

    This document of the Department of Energy was signed on July 19, 
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary 
and Acting Assistant Secretary for Energy Efficiency and Renewable 
Energy, pursuant to delegated authority from the Secretary of Energy. 
That document with the original signature and date is maintained by 
DOE. For administrative purposes only, and in compliance with 
requirements of the Office of the Federal Register, the undersigned DOE 
Federal Register Liaison Officer has been authorized to sign and submit 
the document in electronic format for publication, as an official 
document of the Department of Energy. This administrative process in no 
way alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on July 22, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2021-15969 Filed 7-27-21; 8:45 am]
BILLING CODE 6450-01-P