[Federal Register Volume 88, Number 62 (Friday, March 31, 2023)]
[Proposed Rules]
[Pages 19382-19447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05363]
[[Page 19381]]
Vol. 88
Friday,
No. 62
March 31, 2023
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for
Miscellaneous Refrigeration Products; Proposed Rule
Federal Register / Vol. 88 , No. 62 / Friday, March 31, 2023 /
Proposed Rules
[[Page 19382]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2020-BT-STD-0039]
RIN 1904-AF00
Energy Conservation Program: Energy Conservation Standards for
Miscellaneous Refrigeration Products
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking; announcement of public meeting.
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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including
miscellaneous refrigeration products. EPCA also requires the U.S.
Department of Energy (``DOE'') to periodically determine whether more
stringent, standards would be technologically feasible and economically
justified, and would result in significant energy savings. In this
notice of proposed rulemaking (``NOPR''), DOE proposes amended energy
conservation standards for miscellaneous refrigeration products, and
also announces a public meeting to receive comment on these proposed
standards and associated analyses and results.
DATES:
Comments: DOE will accept comments, data, and information regarding
this NOPR no later than May 30, 2023.
Meeting: DOE will hold a public meeting via webinar on Tuesday, May
2, 2023, from 1:00 p.m. to 4:00 p.m. See section IV, ``Public
Participation,'' for webinar registration information, participant
instructions and information about the capabilities available to
webinar participants. Comments regarding the likely competitive impact
of the proposed standard should be sent to the Department of Justice
contact listed in the ADDRESSES section on or before May 1, 2023.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal Rulemaking Portal at www.regulations.gov, under by docket
number EERE-2020-BT-STD-0039. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2020-BT-STD-0039, by any of the
following methods:
Email: [email protected]. Include the docket number EERE-
2020-BT-STD-0039 in the subject line of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-1445. If possible, please submit all items on a compact disc
(``CD''), in which case it is not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VII of this document.
Docket: The docket for this activity, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at www.regulations.gov. All documents in the
docket are listed in the www.regulations.gov index. However, not all
documents listed in the index may be publicly available, such as
information that is exempt from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2020-BT-STD-0039. The docket web page contains instructions on how
to access all documents, including public comments, in the docket. See
section VII of this document for information on how to submit comments
through www.regulations.gov.
EPCA requires the Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice Antitrust Division invites
input from market participants and other interested persons with views
on the likely competitive impact of the proposed standard. Interested
persons may contact the Division at [email protected] on or
before the date specified in the DATES section. Please indicate in the
``Subject'' line of your email the title and Docket Number of this
proposed rule.
FOR FURTHER INFORMATION CONTACT: Mr. Lucas Adin, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC
20585-0121. Email: [email protected].
Mr. Matthew Schneider, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (240) 597-6265. Email:
[email protected].
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact the Appliance and Equipment Standards Program staff at (202)
287-1445 or by email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Miscellaneous
Refrigeration Products
3. Test Procedure
4. Off Mode and Standby Mode
C. Deviation From Appendix A
III. General Discussion
A. Product Classes and Scope of Coverage
B. Definitions
C. Test Procedure
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 Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
a. Product Classes With Automatic Icemakers
b. Addition of a Built-In Combination Cooler-Refrigerator-
Freezer With Bottom-Mounted Freezer and Automatic Icemaker Product
Class
2. Technology Options
B. Screening Analysis
[[Page 19383]]
1. Screened-Out Technologies
2. Technology Options
C. Engineering Analysis
1. Efficiency Analysis
a. Built-In Classes
b. Baseline Efficiency/Energy Use
c. Higher Efficiency Levels
d. VIP and VSC Analysis
2. Cost Analysis
3. Cost-Efficiency Results
4. Manufacturer Selling Price
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Manufacturer Markup Scenarios
3. Manufacturer Interviews
a. Supply Chain Constraints
b. Built-in Product Classes
4. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
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 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. Direct 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 Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for MREF Standards
2. Annualized Benefits and Costs of the Proposed Standards
D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description of Reasons Why Action Is Being Considered
2. Objectives of, and Legal Basis for, Rule
3. Description on Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
5. Duplication, Overlap, and Conflict With Other Rules and
Regulations
6. 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. Information Quality
VII. Public Participation
A. Attendance at the Public Meeting Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Rule
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B \2\ of EPCA, established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include miscellaneous refrigeration
products (``MREFs''), the subject of this rulemaking.
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law. 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in a significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later
than 6 years after issuance of any final rule establishing or amending
a standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a notice of
proposed rulemaking including new proposed energy conservation
standards (proceeding to a final rule, as appropriate). (42 U.S.C.
6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE proposes amended energy conservation standards
for miscellaneous refrigeration products. The proposed standards, which
are expressed in kWh/yr, are shown in Table I.1. These proposed
standards, if adopted, would apply to all miscellaneous refrigeration
products listed in Table I.1 manufactured in, or imported into, the
United States starting on the date 5 years after the publication of the
final rule for this rulemaking.
Table I.1--Proposed Energy Conservation Standards for Miscellaneous
Refrigeration Products
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Equations for maximum energy use
Product class (kWh/yr)
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1. Freestanding compact coolers 5.52AV + 109.1
(``FCC'').
2. Freestanding coolers (``FC''). 5.52AV + 109.1
3. Built-in compact coolers 5.52AV + 109.1
(``BICC'').
[[Page 19384]]
4. Built-in coolers (``BIC'').... 6.30AV + 124.6
C-3A. Cooler with all- 4.11AV + 117.4
refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 4.67AV + 133.0
refrigerator--automatic defrost.
C-5-BI. Built-in cooler with 5.47AV + 196.2 + 28I
refrigerator-freezer--automatic
defrost with bottom-mounted
freezer.
C-9. Cooler with upright freezer 5.58AV + 147.7 + 28I
with automatic defrost without
an automatic icemaker.
C-9-BI. Built-in cooler with 6.38AV + 168.8 + 28I
upright freezer with automatic
defrost without an automatic
icemaker.
C-13A. Compact cooler with all- 4.74AV + 155.0
refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler 5.22AV + 170.5
with all-refrigerator--automatic
defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendix A to subpart B of 10 CFR part 430.
I = 1 for a product with an automatic icemaker and = 0 for a product
without an automatic icemaker.
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of MREFs, as measured by the average
life-cycle cost (``LCC'') savings and the simple payback period
(``PBP'').\3\ The average LCC savings are positive for all product
classes, and the PBP is less than the average lifetime of MREFs, which
varies by product class (see section IV.F.6 of this document).
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\3\ The average LCC savings refer to consumers that are affected
by a standard and 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 new or amended standards
(see section IV.F.8 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this document).
Table I.2--Impacts of Proposed Energy Conservation Standards on Consumers of Miscellaneous Refrigeration
Products
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Product class Average LCC savings [2021$] Simple payback period (years)
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FCC................................... 12.6............................... 6.8
FC.................................... 28.0............................... 8.0
BICC.................................. 2.9................................ 7.9
BIC................................... 57.3............................... 4.0
C-13A................................. 12.0............................... 6.9
C-13A-BI.............................. 15.3............................... 6.7
C-3A.................................. 31.5............................... 1.7
C-3A-BI............................... 36.7............................... 1.6
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Note: See Table I.1 for definition of the product class acronyms.
DOE's analysis of the impacts of the proposed standards on
consumers is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (``INPV'') is the sum of the
discounted cash flows starting with the publication year (2023) of the
NOPR and extending over a 30-year period following the expected
compliance date of the standards (2023 to 2058). Using a real discount
rate of 7.7 percent, DOE estimates that the INPV for manufacturers of
MREFs, in the case without amended standards is $742.0 million.\4\
Under the proposed standards, the change in INPV is estimated to range
from -12.1 percent to -8.4 percent, which is approximately -$89.8
million to -$62.7 million. In order to bring products into compliance
with amended standards, it is estimated that the industry would incur
total conversion costs of $126.9 million.
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\4\ Unless otherwise noted, all monetary values in this document
are expressed in 2021 dollars.
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DOE's analysis of the impacts of the proposed standards on
manufacturers is described in section IV.J of this document. The
analytic results of the manufacturer impact analysis (``MIA'') are
presented in section V.B.2 of this document.
C. National Benefits and Costs
DOE's analyses indicate that the proposed energy conservation
standards for MREFs would save a significant amount of energy. Relative
to the case without amended standards, the lifetime energy savings for
MREFs purchased in the 30-year period that begins in the anticipated
year of compliance with the amended standards (2029-2058) amount to
0.31 quadrillion British thermal units (``Btu''), or quads.\5\ This
represents a savings of 19.6 percent relative to the energy use of
these products in the case without amended standards (refer ed to as
the ``no-new-standards case'').
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\5\ 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.1 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the proposed standards for MREFs ranges from $0.14 billion
(at a 7-percent discount rate) to $0.69 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating cost savings minus the estimated increased product costs for
miscellaneous refrigeration products purchased in 2029-2058.
In addition, the proposed standards for MREFs are projected to
yield significant environmental benefits. DOE estimates that the
proposed standards would result in cumulative emission
[[Page 19385]]
reductions (over the same period as for energy savings) of 10.4 million
metric tons (``Mt'') \6\ of carbon dioxide (``CO2''), 4.8
thousand tons of sulfur dioxide (``SO2''), 15.9 thousand
tons of nitrogen oxides (``NOX''), 70.3 thousand tons of
methane (``CH4''), 0.11 thousand tons of nitrous oxide
(``N2O''), and 0.03 tons of mercury (``Hg'').\7\ DOE used
interim SC-GHG values developed by an Interagency Working Group on the
Social Cost of Greenhouse Gases (IWG) for the CO2
projections.
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2022 (``AEO 2022''). AEO 2022 represents current Federal and
state legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO 2022 assumptions that effect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (GHG) using four different estimates of the social
cost of CO2 (``SC-CO2''), the social cost of
methane (``SC-CH4''), and the social cost of nitrous oxide
(``SC-N2O''). Together these represent the social cost of
GHG (SC-GHG).\8\ DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\9\ The derivation of these values is discussed in section IV.L
of this document. For presentational purposes, the monetized climate
benefits associated with the average SC-GHG at a 3-percent discount
rate are estimated to be $0.5 billion. DOE does not have a single
central SC-GHG point estimate and it emphasizes the importance and
value of considering the benefits calculated using all four SC-GHG
estimates.
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\8\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the Federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. As reflected in
this rule, DOE has reverted to its approach prior to the injunction
and presents monetized GHG abatement benefits where appropriate and
permissible under law.
\9\ 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 (``February 2021 SC-GHG TSD'').
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf
(Last accessed September 22, 2022).
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DOE estimated the monetary health benefits of SO2 and
NOX emissions reductions, also discussed in section IV.L of
this document. DOE estimated the present value of the monetized health
benefits would be $0.3 billion using a 7-percent discount rate, and
$0.8 billion using a 3-percent discount rate.\10\ DOE is currently only
monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor
health benefits, but will continue to assess the ability to monetize
other effects such as health benefits from reductions in direct
PM2.5 emissions.
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\10\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the economic benefits and costs expected to
result from the proposed standards for miscellaneous refrigeration
products. There are other important unquantified effects, including
certain unquantified climate benefits, unquantified public health
benefits from the reduction of toxic air pollutants, direct
PM2.5 and other emissions, unquantified energy security
benefits, and distributional effects, among others.
Table I.3--Summary of Monetized Benefits and Costs of Proposed Energy
Conservation Standards for Miscellaneous Refrigeration Products (TSL 4)
[Billion 2021$]
------------------------------------------------------------------------
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 2.0
Climate Benefits *...................................... 0.5
Health Benefits **...................................... 0.8
Total Monetized Benefits [dagger]....................... 3.3
Consumer Incremental Product Costs [Dagger]............. 1.3
Monetized Net Benefits.................................. 2.0
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 0.8
Climate Benefits * (3% discount rate)................... 0.5
Health Benefits **...................................... 0.3
Total Monetized Benefits [dagger]....................... 1.6
Consumer Incremental Product Costs...................... 0.7
Monetized Net Benefits.................................. 0.9
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Note: This table presents the costs and benefits associated with product
name shipped in 2029-2058. These results include benefits to consumers
which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3 percent discount rate are
shown, but the Department does not have a single central SC-GHG point
estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
of the Fifth Circuit's order, the preliminary injunction is no longer
in effect, pending resolution of the Federal government's appeal of
that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. As reflected in this rule, DOE has
reverted to its approach prior to the injunction and presents
monetized GHG abatement benefits, where appropriate and permissible
under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but the Department does not have a single central SC-GHG point
estimate. DOE emphasizes the importance and value of considering the
benefits calculated using all four SC-GHG estimates.
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are (1) the reduced consumer operating
costs, minus (2) the increase in product purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\11\
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\11\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2022, 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., 2030), and then discounted the present value from each year
to 2022. Using the present value, DOE then calculated the fixed
annual payment over a 30-year period, starting in the compliance
year, that yields the same present value.
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The national operating savings are domestic private U.S. consumer
monetary savings that occur as a result
[[Page 19386]]
of purchasing the covered products and are measured for the lifetime of
miscellaneous refrigeration products shipped in 2029-2058. The benefits
associated with reduced emissions achieved as a result of the proposed
standards are also calculated based on the lifetime of miscellaneous
refrigeration products shipped in 2029-2058. Total benefits for both
the 3-percent and 7-percent cases are presented using the average GHG
social costs with 3-percent discount rate. Estimates of SC-GHG values
are presented for all four discount rates in section IV.L of this
document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the proposed standard, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOx and SO2 emissions, and the
3-percent discount rate case for climate benefits from reduced GHG
emissions, the estimated cost of the standards proposed in this rule is
$81.2 million per year in increased equipment costs, while the
estimated annual benefits are $97.6 million in reduced equipment
operating costs, $28.9 million in monetized climate benefits, and $35.4
million in monetized health benefits. In this case, the monetized net
benefit would amount to $80.6 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards is $81.0 million per year in
increased equipment costs, while the estimated annual benefits are
$123.1 million in reduced operating costs, $28.9 million in monetized
climate benefits, and $49.5 million in monetized health benefits. In
this case, the monetized net benefit would amount to $120.4 million per
year.
Table I.4--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for Miscellaneous
Refrigeration Products (TSL 4)
[Million 2021$/year]
----------------------------------------------------------------------------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 123.1 116.3 131.2
Climate Benefits *.............................................. 28.9 28.1 29.6
Health Benefits **.............................................. 49.5 48.2 50.8
Total Monetized Benefits [dagger]............................... 201.4 192.6 211.6
Consumer Incremental Product Costs [dagger]..................... 81.0 82.3 79.4
Monetized Net Benefits.......................................... 120.4 110.3 132.2
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 97.6 92.7 103.3
Climate Benefits * (3% discount rate)........................... 28.9 28.1 29.6
Health Benefits **.............................................. 35.4 34.6 36.2
Total Monetized Benefits [dagger]............................... 161.9 155.4 169.2
Consumer Incremental Product Costs.............................. 81.2 82.4 79.8
Monetized Net Benefits.......................................... 80.6 72.9 89.4
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with miscellaneous refrigeration products shipped in
2029-2058. These results include benefits to consumers which accrue after 2058 from the products shipped in
2029-2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize projections of energy prices
from the AEO 2022 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-Net-Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods
used to derive projected price trends are explained in section IV.H.3 of this document. Note that the Benefits
and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
NOPR). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a
3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate,
and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG
estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG
abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K and IV.L of this document.
D. Conclusion
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. Specifically, with regards to
technological feasibility products achieving these standard levels are
already commercially available for all product classes covered by this
proposal. As for economic justification,
[[Page 19387]]
DOE's analysis shows that the benefits of the proposed standard exceed,
to a great extent, the burdens of the proposed standards.
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
proposed standards for miscellaneous refrigeration products is $81.2
million per year in increased product costs, while the estimated annual
benefits are $97.6 million in reduced product operating costs, $28.9
million in monetized climate benefits and $35.4 million in monetized
health benefits. The net monetized benefit amounts to $80.6 million per
year.
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\12\ For
example, some covered products and equipment have substantial energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------
\12\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the proposed standards are projected to
result in estimated national energy savings of 0.31 quad (FFC), the
equivalent of the electricity use of 3.4 million homes in one year. In
addition, they are projected to reduce GHG emissions. The NPV of
consumer benefit for these projected energy savings is $0.14 billion
using a discount rate of 7 percent, and $0.69 billion using a discount
rate of 3 percent. The cumulative emissions reductions associated with
these energy savings are 10.4 Mt of CO2, 4.8 thousand tons
of SO2, 15.9 thousand tons of NOX, 0.03 tons of
Hg, 70.3 thousand tons of CH4, and 0.11 thousand tons of
N2O. The estimated monetary value of the climate benefits
from reduced GHG emissions (associated with the average SC-GHG at a 3-
percent discount rate) is $0.5 billion. The estimated monetary value of
the health benefits from reduced SO2 and NOX
emissions is $0.3 billion using a 7-percent discount rate and $0.8
billion using a 3-percent discount rate. As such, DOE has initially
determined the energy savings from the proposed standard levels are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B). A more
detailed discussion of the basis for this tentative conclusion is
contained in the remainder of this document and the accompanying
technical support document (``TSD'').
DOE also considered more stringent energy efficiency levels as
potential standards and is still considering them in this rulemaking.
However, DOE has tentatively concluded that the potential burdens of
the more stringent energy efficiency levels would outweigh the
projected benefits.
Based on consideration of the public comments DOE receives in
response to this document and related information collected and
analyzed during the course of this rulemaking effort, DOE may adopt
energy efficiency levels presented in this document that are either
higher or lower than the proposed standards, or some combination of
level(s) that incorporate the proposed standards in part.
II. Introduction
The following section briefly discusses the statutory authority
underlying this proposed rule, as well as some of the relevant
historical background related to the establishment of standards for
miscellaneous refrigeration products.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles which, in addition to identifying
particular consumer products and commercial equipment as covered under
the statute, permits the Secretary of Energy to classify additional
types of consumer products as covered products. (42 U.S.C. 6292(a)(20))
DOE added MREFs as covered products through a final determination of
coverage published in the Federal Register on July 18, 2016 (the ``July
2016 Final Coverage Determination''). 81 FR 46768. MREFs are consumer
refrigeration products other than refrigerators, refrigerator-freezers,
or freezers, which include coolers and combination cooler refrigeration
products. 10 CFR 430.2. MREFs include refrigeration products such as
coolers (e.g., wine chillers and other specialty products) and
combination cooler refrigeration products (e.g., wine chillers and
other specialty compartments combined with a refrigerator,
refrigerator-freezers, or freezers). EPCA further provides that, not
later than 6 years after the issuance of any final rule establishing or
amending a standard, DOE must publish either a notice of determination
that standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Not later than
three years after issuance of a final determination not to amend
standards, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
The energy conservation program under EPCA consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption for particular State laws or regulations, in accordance with
the procedures and other provisions set forth under EPCA. (See 42
U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly,
DOE must use these test procedures to determine whether the products
comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)).
The DOE test procedures for miscellaneous refrigeration products
appears at 10 CFR part 430, subpart B, appendix A,
[[Page 19388]]
Uniform Test Method for Measuring the Energy Consumption of
Refrigerators, Refrigerator-Freezers, and Miscellaneous Refrigeration
Products (``appendix A'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including refrigerators,
refrigerator-freezers, and freezers. Any new or amended standard for a
covered product must be designed to achieve the maximum improvement in
energy efficiency that the Secretary of Energy (``Secretary'')
determines is technologically feasible and economically justified. (42
U.S.C. 6295(o)(2)(A) and 6295(o)(3)(B)) Furthermore, DOE may not adopt
any standard that would not result in the significant conservation of
energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard: (1) for certain
products, including refrigerators, refrigerator-freezers, and freezers,
if no test procedure has been established for the product, or (2) if
DOE determines by rule that the standard is not technologically
feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In
deciding whether a proposed standard is economically justified, DOE
must determine whether the benefits of the standard exceed its burdens.
(42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after
receiving comments on the proposed standard, and by considering, to the
greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
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 and water conservation; and
(7) Other factors the Secretary considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of product that has the same function or intended use, if DOE
determines that products within such group: (A) consume a different
kind of energy from that consumed by other covered products within such
type (or class); or (B) have a capacity or other performance-related
feature which other products within such type (or class) do not have
and such feature justifies a higher or lower standard. (42 U.S.C.
6295(q)(1)) In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. Id. Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. (42 U.S.C. 6295(q)(2))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) DOE's current test procedures for miscellaneous
refrigeration products address standby mode and off mode energy use. In
this rulemaking, DOE intends to incorporate such energy use into any
amended energy conservation standards that it may adopt.
B. Background
1. Current Standards
DOE added MREFs as covered products through a final determination
of coverage published in the Federal Register on July 18, 2016 (the
``July 2016 Final Coverage Determination''). 81 FR 46768. In that
determination, DOE noted that MREFs, on average, consume more than 150
kilowatt hours per year (``kWh/yr'') and that the aggregate annual
national energy use of these products exceeds 4.2 terawatt hours
(``TWh''). 81 FR 46768, 46775. In addition to establishing coverage,
the July 2016 Final Coverage Determination established definitions for
``miscellaneous refrigeration products,'' ``coolers,'' and
``combination cooler refrigeration products'' in 10 CFR 430.2. 81 FR
46768, 46791-46792.
On October 28, 2016, DOE published a direct final rule (the
``October 2016 Direct Final Rule'') in which it adopted energy
conservation standards for MREFs consistent with the recommendations
from a negotiated rulemaking working group established under the
Appliance Standards and Rulemaking Federal Advisory Committee. 81 FR
75194. Concurrent with the October 2016 Direct Final Rule, DOE
published a NOPR in which it proposed and requested comments on the
standards set forth in the direct final rule. 81 FR 74950. On May 26,
2017, DOE published a notice in the Federal Register in which it
determined that the comments received in response to the October 2016
Direct Final Rule did not provide a reasonable basis for withdrawing
the rule and, therefore, confirmed the adoption of the energy
conservation standards established in that direct final rule. 82 FR
24214.
These current standards for MREFs are set forth in DOE's
regulations at 10 CFR 430.32(aa)(1)-(2) and are repeated
[[Page 19389]]
solely for reference in Table II.1 to aid the reader.
Table II.1--Federal Energy Conservation Standards for MREFs
------------------------------------------------------------------------
Equations for maximum energy use
Product class (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact coolers 7.88AV + 155.8
(``FCC'').
2. Freestanding coolers (``FC''). 7.88AV + 155.8
3. Built-in compact coolers 7.88AV + 155.8
(``BICC'').
4. Built-in coolers (``BIC'').... 7.88AV + 155.8
C-3A. Cooler with all- 4.57AV + 130.4
refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 5.19AV + 147.8
refrigerator--automatic defrost.
C-9. Cooler with upright freezer 5.58AV + 147.7
with automatic defrost without
an automatic icemaker.
C-9-BI. Built-in cooler with 6.38AV + 168.8
upright freezer with automatic
defrost without an automatic
icemaker.
C-9I. Cooler with upright freezer 5.58AV + 231.7
with automatic defrost with an
automatic icemaker.
C-9I-BI. Built-in cooler with 6.38AV + 252.8
upright freezer with automatic
defrost with an automatic
icemaker.
C-13A. Compact cooler with all- 5.93AV + 193.7
refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler 6.52AV + 213.1
with all-refrigerator--automatic
defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendix A to subpart B of 10 CFR part 430.
2. History of Standards Rulemaking for Miscellaneous Refrigeration
Products
On December 8, 2020, DOE published a notice that it was initiating
an early assessment review to determine whether any new or amended
standards would satisfy the relevant requirements of EPCA for a new or
amended energy conservation standard for MREFs and a request for
information (``RFI''). 85 FR 78964 (``December 2020 Early Assessment
Review RFI'').
Comments received following the publication of the December 2020
Early Assessment Review RFI helped DOE identify and resolve issues
related to the subsequent preliminary analysis.\13\ DOE published a
notice of public meeting and availability of the preliminary technical
support document (``TSD'') on January 21, 2022 (``January 2022
Preliminary Analysis''). 87 FR 3229. DOE subsequently held a public
meeting on March 7, 2022, to discuss and receive comments on the
January 2022 Preliminary Analysis. The January 2022 Preliminary
Analysis that presented the methodology and results of the preliminary
analysis is available at: www.regulations.gov/document/EERE-2020-BT-STD-0039-0009.
---------------------------------------------------------------------------
\13\ Comments are available at www.regulations.gov/docket/EERE-2020-BT-STD-0039/comments.
---------------------------------------------------------------------------
DOE received five docket comments in response to the January 2022
Preliminary Analysis from the interested parties listed in Table II.1.
Table II.1--January 2022 Preliminary Analysis Written Comments
------------------------------------------------------------------------
Reference in this
Organization(s) NOPR Organization type
------------------------------------------------------------------------
Association of Home Appliance AHAM.............. Trade
Manufacturers. Organization.
Appliance Standards Awareness ASAP.............. Efficiency
Project. Organization.
California Investor-Owned CA IOUs........... Utility Supplier.
Utilities.
Northwest Energy Efficiency NEEA.............. Efficiency
Alliance. Organization.
Sub Zero Group, Inc............. Sub Zero.......... Manufacturer.
------------------------------------------------------------------------
A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\14\
---------------------------------------------------------------------------
\14\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for miscellaneous refrigeration
products. (Docket No. EERE-2020-BT-STD-0039, which is maintained at
https://www.regulations.gov/document/EERE-2020-BT-STD-0039). The
references are arranged as follows: (commenter name, comment docket
ID number, page of that document).
---------------------------------------------------------------------------
3. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product.
On October 12, 2021, DOE published in the Federal Register a final
rule amending the test procedures for MREFs and other consumer
refrigeration products at appendix A and appendix B of 10 CFR part 430
(the ``October 2021 TP Final Rule''). 86 FR 56790 (October 12, 2021).
The October 2021 TP Final Rule incorporates by reference the most
recent industry test procedure, AHAM Standard HRF-1, ``Energy and
Internal Volume of Consumer Refrigeration Products'' (``AHAM HRF-1-
2019''). However, DOE did not require the change in icemaker energy use
included in the 2019 revision of HRF-1. 86 FR 56793. While DOE had
proposed to implement this change in the proposed test procedure
rulemaking (84 FR 70842, 70848-70850 (December 23, 2019)), DOE
indicated in the October 2021 TP Final Rule that it would not require
the calculations until the compliance dates of any amended energy
conservation standards for these products, which incorporated the
amended automatic icemaker energy consumption. 86 FR 56793. DOE
determined that the test procedure amendments are not expected to
impact the measured energy use of consumer refrigeration products,
including MREFs, as compared to the test procedure in place at the time
of the October 2021 Test Procedure Final Rule. 86 FR 56790.
[[Page 19390]]
The analysis presented in this NOPR is based on the test procedure
as finalized in the October 2021 TP Final Rule, except for the
calculation of the change in energy use attributed to icemaker energy
use, which aligns with the icemaker energy use in HRF-1-2019. The value
of the revised icemaker energy use and the plans to implement this
change coincident with the date of future energy conservation standards
were discussed at length in the October 2021 TP Final Rule. (See 86 FR
56822, October 12, 2021) Hence, this change is proposed in this
document.
4. Off Mode and Standby Mode
Pursuant to the amendments contained in the Energy Independence and
Security Act of 2007 (``EISA 2007''), Public Law 110-140, any final
rule for new or amended energy conservation standards promulgated after
July 1, 2010, is required to address standby mode and off mode energy
use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard
for a covered product after that date, it must, if justified by the
criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)),
incorporate standby mode and off mode energy use into a single
standard, or, if that is not feasible, adopt a separate standard for
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE
test procedures for refrigeration products measure the energy use of
these products during extended time periods that include periods when
the compressor and other key components are cycled off. All of the
energy these products use during the ``off cycles'' is already included
in the measurements. 79 FR 22320, 22345. The approach of testing with
connected functions on but not connected to a network account for
energy consumption of such functions as part of active mode testing,
and as a result, this method provides consumers with representative
estimates of energy consumption.
C. Deviation From Appendix A
In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``appendix A''), DOE notes that it is deviating from the
provision in appendix A regarding the pre-NOPR stages for an energy
conservation standards rulemaking. Section 6(a)(2) of appendix A states
that if the Department determines it is appropriate to proceed with a
rulemaking, the preliminary stages of a rulemaking to issue or amend an
energy conservation standard that DOE will undertake will be a
framework document and preliminary analysis, or an advance notice of
proposed rulemaking. For the reasons that follow, DOE finds it
appropriate to deviate from this step-in appendix A and to instead
publish this NOPR without issuing a framework document. A framework
document is intended to introduce and summarize the various analyses
DOE conducts during the rulemaking process and requests initial
feedback from interested parties. As discussed in the preceding
section, prior to this NOPR, DOE issued an early assessment request for
information in which DOE identified and sought comment on the analyses
conducted in support of the most recent energy conservation standards
rulemaking, for which, DOE provided a 75-day comment period. 85 FR
78964, 78965-78966 (Dec. 8, 2020) (the ``December 2020 Early Assessment
Review RFI'') DOE then issued the January 2022 Preliminary Analysis,
seeking further general comments from stakeholders regarding the
analyses conducted to support the upcoming standards rulemaking, for
which, DOE provided a 60-day comment period for the January 2022
Preliminary Analysis. 87 FR 3229 (Jan. 21, 2022)
As DOE is intending to rely on substantively the same analytical
methods as in the most recent rulemaking, publication of a framework
document would be largely redundant with the published early assessment
RFI and preliminary analysis. As such, DOE is not publishing a
framework document.
Section 6(f)(2) of appendix A provides that the length of the
public comment period for the NOPR will be at least 75 days. For this
NOPR, DOE finds it appropriate to provide a 60-day comment period. As
previously discussed, DOE provided a 60-day comment period on January
2022 Preliminary Analysis. 87 FR 3229. DOE subsequently held a public
meeting on March 7, 2022, to discuss and received comments on the
January 2022 Preliminary Analysis. Consequently, DOE has determined it
is appropriate to provide a 60-day comment period on the NOPR, which
the Department believes will provide interested parties with a
meaningful opportunity to comment on the proposed rule.
III. General Discussion
DOE developed this proposal after considering oral and written
comments, data, and information from interested parties that represent
a variety of interests. The following discussion addresses issues
raised by these commenters.
A. Product Classes and Scope of Coverage
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q))
To simplify the structure for presentation of maximum allowable
energy use equations, DOE is proposing, for class pairs for which one
class includes an icemaker and the other does not, to represent the
icemaker energy use adder in a single energy use equation rather than
in two separate equations. The product class discussion in section IV
below explores this issue further. In addition, DOE is proposing
standard levels for a new class covering built-in combination cooler-
refrigerator-freezers with a bottom-mounted freezer, both with and
without an automatic icemaker, (``combination cooler 5-BI''). This is
also discussion in greater detail in section IV of this document.
B. Definitions
In 10 CFR 430.2, DOE has established definitions for a variety of
refrigeration products, including refrigerators, refrigerator-freezers,
freezers, and coolers and combination cooler refrigeration products
defined as MREFs. DOE recognizes that there are some products that may,
based on their physical and operational characteristics, meet more than
one of the definitions in Sec. 430.2. This includes certain
combination cooler refrigeration products, such as cooler-
refrigerators, cooler-refrigerator-freezers, or cooler-freezers. When
standards for miscellaneous refrigeration products were established,
they were not established for all potential combination products.
Rather, standards were established for combination products that were
on the market at the time of the final rule. 81 FR 75194, 75210, 75215-
75216 (October 28, 2016). In doing so, DOE anticipated that
manufacturers would eventually introduce combination products for which
standards were not originally established under Sec. 430.32(aa). In
these cases, a particular product could also meet the definition of a
refrigerator, refrigerator-freezer, or freezer. To specifically
delineate between those products and MREF products currently
[[Page 19391]]
subject to an energy conservation standard in Sec. 430.32(aa), the
definitions of refrigerator, refrigerator-freezer, or freezer in Sec.
430.2 contain a provision that excludes any miscellaneous refrigeration
product that must comply with an applicable miscellaneous refrigeration
product energy conservation standard. Consequently, MREF products not
exempted by that provision may still be defined as a refrigerator,
refrigerator-freezer, or freezer.
In this NOPR, DOE is clarifying that a product that combines a
cooler with a refrigerator, refrigerator-freezer, or freezer that
otherwise meets the definition of one of those product types in Sec.
430.2 and is not excluded from the definition through coverage by a
standard in 10 CFR 430.32(aa) as a miscellaneous refrigeration product,
must be tested and certified as a refrigerator, refrigerator-freezer,
or freezer according to the applicable test procedure in appendix A or
appendix B (with additional instruction addressing the cooler
compartment of a cooler-freezer, as applicable--these additional
instructions are discussed in section III.C of this document), be
certified according to the certification requirements in 10 CFR 429.14,
and meet the energy conservation standard for the applicable product
class of refrigerator, refrigerator-freezer, or freezer. DOE concludes
that the current regulations require this approach for such products
and is proposing the changes to the regulatory language simply as
clarification.
To ensure this clarification is properly applied, DOE identified
potential clarifying amendments to the refrigerator and freezer
definitions in Sec. 430.2 that would lead to the appropriate
determination of coverage for combination refrigeration products that
do not have a prescribed MREF energy conservation standard. In
particular, in this NOPR DOE proposes to amend the refrigerator and
freezer definitions to clarify that the definitions do apply to
products that have a cooler compartment included in addition to the
fresh food compartment (for a refrigerator) or freezer compartment (for
a freezer). DOE notes that this coverage status is already clear in the
refrigerator-freezer definition, which explicitly allows for additional
compartments other than the fresh food and freezer compartments, which
are defined based on operating temperature, by including allowing the
product to have compartments that may operate outside these defined
parameters. DOE's proposal would make similar clarifications for the
refrigerator and freezer definitions.
DOE requests comment on its proposal to amend the refrigerator and
freezer definitions in Sec. 430.2 to clarify that products that would
otherwise be considered a refrigerator or a freezer that also include a
cooler compartment would be considered a refrigerator or a freezer,
unless a miscellaneous refrigeration product energy conservation
standard in Sec. 430.32(aa) is applicable for the product.
C. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. DOE's
current energy conservation standards for miscellaneous refrigeration
products are expressed in terms of Annual Energy Use, expressed in kWh/
year. (See 10 CFR 430.32(a).)
As previously discussed, DOE planned to delay adopting for consumer
refrigeration products the revised icemaker energy use adder of 28 kWh/
yr that is in AHAM HRF-1-2019--which is the industry test standard--
until the compliance date of a possible amended standard. As discussed
in the October 2021 TP final rule, DOE determined it would not require
testing with the amended icemaker energy use adder until the compliance
dates of the next amended energy conservation standards for
refrigeration products. 86 FR 56815. Therefore, as discussed
previously, this NOPR proposes product classes that implement the 28
kWh/year icemaker adder, consistent with the icemaker energy use in
HRF-1-2019, and also proposes to adopt the updated icemaker adder for
MREF, to be used on or after the compliance date of revised standards.
As previously discussed, DOE is proposing clarifying amendments to
product definitions indicating that products that include a cooler
compartment in addition to a fresh food or freezer compartment but do
not have an MREF energy conservation standard, would still meet the
refrigerator or freezer definitions, as applicable. Additionally, DOE
is proposing clarifying amendments to appendix A and appendix B, as it
relates to testing combination cooler-freezers as well as testing
combination refrigeration products that do not have a prescribed MREF
energy conservation standards.
Specifically, DOE is proposing to add sub-sections to appendix A
and appendix B to clarify the calculation of average per-cycle energy
consumption for combination cooler-freezers and freezers with a cooler
compartment, by referring to section 5.9.3 of HRF-1 2019 and stating
specific ``k'' values to be used in equations presented therein. DOE
also proposes to amend appendix B section 5.2 to refer to section 5.2
of appendix A when testing freezers with cooler compartments, because
the appendix A requirements are more appropriate for products with more
than one compartment. Lastly, DOE proposes to amend appendix B by
adding a clarification to section 5.3 to specify the value of variable
``K'' when referencing section 5.8.2 of HRF-1-2019.
ASAP stated in response to the January 2022 Preliminary Analysis
that they understand that produce growers with a source of
refrigeration likely meet the definition of a cooler but, due to unique
components present in a produce grower that maintain an environment
with temperature and humidity controls that are conducive to growing
plants, produce growers cannot be tested in the same manner as coolers
whose primary function is to chill beverage products. NEEA commented on
a need for implementing different test procedures for produce growers,
citing technology differences between produce growers and other
miscellaneous refrigeration products. NEEA stated that test procedures
for produce growers should include energy use measurements for cabinet
temperature and humidity control systems, water distribution systems,
and carbon dioxide injection systems. ASAP and NEEA encouraged DOE to
establish test procedures for these products. (ASAP, No. 19, p. 3;
NEEA, No. 21, pp. 3-4)
DOE is aware of the produce grower market and appreciates input on
this topic. At this point, only GE Appliances, a Haier Company
(``GEA'') has submitted a petition for waiver from test procedures
covering MREFs. GEA initially also requested an interim waiver. In an
initial denial of the petition for interim waiver, DOE tentatively
concluded that the GEA model meets the definition of a cooler, because
the product consists of a cabinet used with one or more doors, and
maintains compartment temperatures no lower than 39 degrees Fahrenheit,
as determined when tested in a 90-degree Fahrenheit ambient
temperature. 86 FR 35766, 35768 (July 7, 2021). In addition to this,
DOE tentatively determined that the requested alternate test procedure
[[Page 19392]]
would not result in measured energy use of the basic model that is
representative of actual energy used during representative average use.
Id. In November 2021, GEA submitted a revised petition for waiver and
interim waiver for its grower product that proposed a revised
alternative test method designed to address the concerns that DOE
expressed in its denial of the GEA's original petition. Having
considered the merits of GEA's revised approach, and receiving no
comments in opposition, DOE approved use of the revised alternate test
procedure for rating GEA's product through the publication of a
notification of decision and order on October 17, 2022 (87 FR 62835),
reiterating that while the In-Home Grower basic model meets the cooler
definition, it is not subject to the cooler energy conservation
standards because of its unique characteristics, as discussed in the
November 2021 Notification of Petition for Waiver. (87 FR 62835, 62838)
In consideration of the other produce growers mentioned in ASAP's
comment--the Viking Under-counter Micro Green & Herb Cabinet--GCV12,
the Seedo Automated Home Grow Device, and the Bloom In-Home Grow
System--DOE has not received waiver petitions for these products but
will consider investigating these products, including whether they may
be subject to testing requirements based on meeting the definition of
an MREF product, as GEA's product does.
NEEA advocated for the implementation of a test procedure to
calculate the energy impact of interior lighting in all miscellaneous
refrigeration products. NEEA claims that the use of lighting differs
largely depending on manufacturer and personal usage, and with the
proliferation of glass doors for coolers, interior lighting plays a
large role in energy calculations. (NEEA, No. 21, pp. 4-5)
AHAM states the vast majority of the miscellaneous refrigeration
product designs on the market no longer use incandescent lighting and
have shifted to light-emitting diode (``LED'') technology, meaning
efficiency gains from lighting are limited, and efforts to further
regulate lighting options in miscellaneous refrigeration products will
place undue burden on manufacturers. (AHAM, No. 18, p. 7)
The test procedure does not include measurement of energy use with
lighting turned on. DOE last finalized its test procedure for consumer
refrigeration products including MREFs on October 12, 2021. 86 FR
56790. As part of the rulemaking to establish this test procedure, DOE
published a request for information (``RFI'') (82 FR 29780) on June 30,
2017, and a NOPR (84 FR 70842) on December 23, 2019. No comments in
response to the RFI or NOPR suggested that lighting energy use should
be included as part of the test procedure. In the final rule initially
establishing the test procedures for MREF on July 18, 2016, DOE
indicated that it set the requirement to test these products with light
switches in the off position based on field surveys indicating that 90
percent of consumers kept light switches off in coolers. 81 FR 46768,
46782. This requirement was also consistent with the recommendations of
the Working Group that negotiated MREF test procedures and energy
conservation standards under the auspices of the Appliance Standards
and Rulemaking Federal Advisory Committee (``ASRAC''). Id. When DOE
next considers revisions to the test procedure for MREF, DOE may
request information regarding trends affecting lighting energy use in
these products, and, based on information obtained, may consider at
that time, whether the test procedure should be revised to include
lighting energy.
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. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of CFR the
Process Rule.
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 product utility or availability; (3) adverse impacts on
health or safety, and (4) unique-pathway proprietary technologies.
Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section
IV.B of this document discusses the results of the screening analysis
for miscellaneous refrigeration products, particularly the designs DOE
considered, those it screened out, and those that are the basis for the
standards considered in this rulemaking. For further details on the
screening analysis for this rulemaking, see chapter 4 of the NOPR
technical support document (``TSD'').
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
miscellaneous refrigeration products, using the design parameters for
the most efficient products available on the market or in working
prototypes. The max-tech levels that DOE determined for this rulemaking
are described in section IV.C.1.c of this proposed rule and in chapter
5 of the NOPR TSD.
E. Energy Savings
1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to miscellaneous refrigeration
products purchased in the 30-year period that begins in the year of
compliance with the proposed standards (2029-2058).\15\ The savings are
measured over the entire lifetime of miscellaneous refrigeration
products purchased in the previous 30-year period. 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 product would likely evolve in the
absence of amended energy conservation standards.
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\15\ Each TSL is composed of specific efficiency levels for each
product class. The TSLs considered for this NOPR are described in
section V.A of this document. DOE conducted a sensitivity analysis
that considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (``NIA'') spreadsheet model
to estimate national energy savings (``NES'') from potential amended or
new standards for miscellaneous refrigeration products.
[[Page 19393]]
The NIA spreadsheet model (described in section IV.H of this document)
calculates energy savings in terms of site energy, which is the energy
directly consumed by products at the locations where they are used. For
electricity, DOE reports NES in terms of primary energy savings, which
is the savings in the energy that is used to generate and transmit the
site electricity. DOE also calculates NES in terms of 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.\16\ 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.2 of this document.
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\16\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------
2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\17\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand.
---------------------------------------------------------------------------
\17\ The numeric threshold for determining the significance of
energy savings established in a final rule published on February 14,
2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule
published on December 13, 2021 (86 FR 70892).
---------------------------------------------------------------------------
Accordingly, DOE evaluates the significance of energy savings on a
case-by-case basis, taking into account the significance of cumulative
FFC national energy savings, the cumulative FFC emissions reductions,
health benefits, and the need to confront the global climate crisis,
among other factors. DOE has initially determined the energy savings
from the proposed standard levels are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B).
F. Economic Justification
1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. 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 a 30-year
period. The industry-wide impacts analyzed include (1) 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 types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturing 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 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 consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups \18\ of consumers that may be affected
disproportionately by a standard.
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\18\ For this NOPR, DOE analyzed the impacts of the considered
standard levels on senior-only households.
---------------------------------------------------------------------------
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 product 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 products
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) 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 expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product 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
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the 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 consumers will
purchase the covered products in the first year of compliance with new
or 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 new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although 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. 6295(o)(2)(B)(i)(III)) As
discussed in section III.E, DOE uses the NIA spreadsheet model to
project NES.
d. Lessening of Utility or Performance of Products
In establishing product classes and in evaluating design options
and the impact of potential standard levels, DOE
[[Page 19394]]
evaluates potential standards that would not lessen the utility or
performance of the considered products. (42 U.S.C.
6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards
proposed in this document would not reduce the utility or performance
of the products 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.
6295(o)(2)(B)(i)(V)) It also directs the 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 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. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed
rule to the Attorney General with a request that the Department of
Justice (``DOJ'') provide its determination on this issue. DOE will
publish and respond to the Attorney General's determination in the
final rule. DOE invites comment from the public regarding the
competitive impacts that are likely to result from this proposed rule.
In addition, stakeholders may also provide comments separately to DOJ
regarding these potential impacts. See the ADDRESSES section for
information to send comments to DOJ.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the proposed standards 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 of this document.
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
conservation. The proposed standards are likely to result in
environmental and health benefits in the form of reduced emissions of
air pollutants and greenhouse gases (``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 estimated emissions impacts are reported in section I.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 of this document.
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. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product 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. DOE's LCC and PBP
analyses generate values used to calculate the effects that proposed
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). 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.9 of this proposed rule.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to miscellaneous refrigeration products.
Separate paragraphs address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards proposed in this document. 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 projections 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 three spreadsheet tools are
available on the DOE website for this rulemaking: www.regulations.gov/docket/EERE-2020-BT-STD-0039. Additionally, DOE used output from the
latest version of the Energy Information Administration's (``EIA's'')
Annual Energy Outlook (``AEO''), a widely known energy projection for
the United States, for the emissions and utility impact analyses.
DOE received some comments in response to the January 2022
Preliminary Analysis that, rather than addressing specific aspects of
the analysis, are general statements regarding the appropriateness of
amending energy conservation standards and/or the efficiency levels
that might be appropriate.
AHAM stated they support DOE in its efforts to ensure a national
marketplace through the Appliance Standards Program. AHAM also stated
that amended standards for MREFs may not be justified under EPCA given
the relatively low number of shipments in the MREF product category and
the limited opportunity for energy savings that result from that fact.
AHAM therefore stated, especially given DOE's large backlog of
rulemakings (many of which involve products with larger energy savings
opportunities), DOE should prioritize other rulemakings. (AHAM, No. 18,
p. 1)
While miscellaneous refrigeration products have a smaller number of
shipments when compared to refrigerators, refrigerator-freezers, and
freezers, (``RFs''), that is not a factor DOE considers in determining
when to proceed with reviewing a standard. DOE is mandated by 42 U.S.C.
6295(m)(1) to reconsider energy standards no later than 6 years after
issuance of any final rule establishing or amending standards.
[[Page 19395]]
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly available
information. The subjects addressed in the market and technology
assessment for this rulemaking include (1) a determination of the scope
of the rulemaking and product classes, (2) manufacturers and industry
structure, (3) existing efficiency programs, (4) shipments information,
(5) market and industry trends; and (6) technologies or design options
that could improve the energy efficiency of miscellaneous refrigeration
products. The key findings of DOE's market assessment are summarized in
the following sections. See chapter 3 of the NOPR TSD for further
discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
In the January 2022 Preliminary Analysis, DOE identified one
potential product class modification for miscellaneous refrigeration
products. DOE did receive a comment in response to the January 2022
Preliminary Analysis regarding the product class structure, which is
addressed.
a. Product Classes With Automatic Icemakers
DOE has identified an opportunity to simplify and consolidate the
presentation of maximum allowable energy use for products within
product classes that may or may not have an automatic icemaker.
To represent the annual energy consumed by automatic icemakers in
MREFs, DOE's test procedures specify a constant energy-use adder of 84
kWh/year (by use of a 0.23 kWh/day adder; see section 5.3(a)(i) of 10
CFR part 430, subpart B, appendix A and section 5.3.(a) of appendix B).
With this constant adder, the standard levels for product classes with
an automatic icemaker are equal to the standards of their counterparts
without an icemaker plus the 84 kWh/year. Consistent with prior
discussions in the test procedure rulemaking, this NOPR proposes to
amend this equation such that representations made on or after the
compliance date of any potential new energy conservation standards, the
adder to be used shall change from 84 kWh/yr to 28 kWh/yr. DOE
determined as part of the October 2021 TP Final Rule that the revised
adder would more accurately reflect energy use during a representative
average use cycle. 86 FR 56811. However, DOE indicated that it would
not require this change in the test procedure until the date of
potential future energy conservation standard amendments. Id. at 86 FR
56793. Thus, this change is being proposed in this document, with an
implementation date to coincide with the compliance date of the
standards proposed in this document.
DOE has concluded that because the standards for the product
classes with and without automatic icemakers are effectively the same,
except for the constant adder, there is an opportunity to express the
maximum allowable energy use for both icemaking and non-icemaking
classes with the same equation, thus consolidating the presentation of
classes and simplifying the energy conservation standards. The equation
would, for those classes that may or may not have an icemaker, include
a term equal to the icemaking energy use adder multiplied by a factor
that is defined to equal 1 for products with icemakers and to equal
zero for products without icemakers. This approach would consolidate
the product class structure with a single product class descriptor and
maximum energy use equation, while continuing to reflect that products
with and without icemakers may have different maximum energy use
values.
DOE requests comments on its proposal to consolidate the
presentation of maximum allowable energy use for products of classes
that may or may not have an automatic icemaker.
b. Addition of a Built-In Combination Cooler-Refrigerator-Freezer With
Bottom-Mounted Freezer and Automatic Icemaker Product Class
Sub Zero stated they are planning to introduce a built-in
combination cooler-refrigerator-freezer with bottom-mounted freezer and
automatic icemaker. Sub Zero noted, although this configuration is an
MREF covered product, it was not on the market in 2016 so a standard
level was not set; using the same methodology used to set levels for
the eight combination cooler types for which a standard was prescribed,
the allowable maximum energy use would be 6.08AV + 302 kWh/yr. Sub Zero
stated it is their understanding that they will need to request
exception relief from DOE to certify this new product and requested
that a future standard level for this product class be set in the
upcoming MREF rulemaking. (Sub Zero, No. 17, pp. 2-3)
DOE is proposing energy use levels for the built-in combination
cooler-refrigerator-freezer with a bottom-mounted freezer, with and
without an automatic icemaker (``combination cooler 5-BI''), as
requested by Sub Zero.\19\ DOE agrees with Sub Zero that the baseline
energy use for the class with an automatic icemaker would be using the
methodology established in the MREF negotiations for setting energy use
standards for new classes of combination products, if calculated on the
basis of the 84 kWh/yr icemaker energy use of the current test
procedure. When considering the revised 28 kWh/yr icemaker, to be
implemented at the compliance date of any amended energy conservation
standards, the baseline energy use equation for the product class would
be 6.08AV + 246 kWh/yr. Since there are no products on the market that
could serve as the basis for analysis to support setting a future
standard, DOE is using combination cooler class 3A as a proxy for
setting of a future energy conservation standard for the new
combination cooler 5-BI class.
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\19\ Although Sub Zero requested a new class only for models
with an automatic icemaker, DOE is extending the proposal to also
include products without an automatic icemaker, consistent with the
consolidation of the icemaker energy use into the energy use
equation in the presentation of energy use standards.
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DOE requests comment on its proposal to establish energy
conservation standards for combination cooler 5-BI using the analysis
for combination class 3A as proxy for setting the standard level, based
on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is
equal to 0 if the model has no automatic icemaker and equal to 1 if it
does.
2. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified 37 technology options that would be expected to improve the
efficiency of miscellaneous refrigeration products, as measured by the
DOE test procedure:
Table IV.1--Technology Options Identified in the Preliminary Analysis
Insulation
1. Improved resistivity of insulation (insulation type)
2. Increased insulation thickness
3. Vacuum-insulated panels
4. Gas-filled insulation panels
Gaskets and Anti-Sweat Heat
5. Improved gaskets
6. Double door gaskets
[[Page 19396]]
7. Anti-sweat heat
Doors
8. Low-E coatings
9. Inert gas fill
10. Vacuum-insulated glass
11. Additional panes
12. Frame design
13. Solid door
Compressor
14. Improved compressor efficiency
15. Variable-speed compressors
16. Linear compressors
Evaporator
17. Increased surface area
18. Forced-convection evaporator
19. Tube and fin enhancements (including microchannel designs)
20. Multiple evaporators
Condenser
21. Increased surface area
22. Tube and fin enhancements (including microchannel designs
23. Forced-convection condenser
Defrost System
24. Off-cycle defrost
25. Reduced energy for active defrost
26. Adaptive defrost
27. Condenser hot gas defrost
Control System
28. Electronic temperature control
29. Air-distribution control
Other Technologies
30. Fan and fan motor improvements
31. Improved expansion valve
32. Fluid control or solenoid off-cycle valve
33. Alternative refrigerants
34. Improved refrigerant piping
35. Component location
36. Alternative refrigeration systems
Commenters provided feedback on some of these technology options.
These comments are summarized below, along with DOE's responses.
AHAM stated several of the evaluated technology options are
impractical or provide limited to no benefit given current
manufacturing and design processes past EL 1. However, AHAM did not
provide sufficient detail that would enable DOE to revise the listed
technology options and subsequent analysis. (AHAM, No. 18, p. 7)
AHAM also cited issues with DOE's use of LED lighting in its
analysis, DOE's over-reliance on vacuum-insulated panels (``VIPs'') in
its analysis, and an insufficient supply of variable-speed compressors
(``VSCs''). Specifically, AHAM states that the widespread use of LED
lighting in the market currently means the possible efficiency gains
from lighting will be limited. When considering VIPs, AHAM argues that
DOE overused VIPs in its analysis in a manner that is not consistent
with their current use on the market or overall effectiveness. Finally,
AHAM points to the use of VSCs in the higher ELs as risky due to a
potential shortfall of supply from manufacturers if they are included
in a standards rulemaking as a primary design option for energy
efficiency. (AHAM, No. 18, p. 7)
DOE is aware of the widespread use of LED lighting in the market
currently. Therefore, lighting technologies were not considered as a
technology option in the preliminary analysis. Likewise, they were also
not considered in the NOPR analysis.
When considering the impact of VIPs, DOE took into consideration
relevant rulemaking analyses for refrigerator, refrigerator-freezer,
and freezer classes as a basis for VIP effectiveness as well as
manufacturer feedback. With this information, VIP implementation in the
NOPR analysis was more limited than in the preliminary analysis. For
this analysis VIPs were only implemented partially in the max-tech
levels of every directly analyzed class.
The impact of VSCs on the miscellaneous refrigeration product
analyses was primarily based on their ability to provide a higher level
of efficiency when compared to their single-speed counterparts. As a
result of this compressor efficiency increase, they are prevalent in
the higher ELs of the efficiency analyses. DOE acknowledges that more
stringent standards would likely necessitate adoption of more efficient
technologies, such as variable-speed compressors. However, DOE expects
that standards, if adopted, would provide sufficient certainty for
manufacturers and suppliers to establish additional capacity in the
supply chain, if needed.
B. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on product utility or product availability. If it is
determined that a technology would have a significant adverse impact on
the utility of the product for significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not be
considered further.
(4) Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further.
(5) Unique-Pathway Proprietary Technologies. If a design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further due to the potential for monopolistic concerns.
10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
In the January 2022 Preliminary Analysis, DOE screened out the
following technologies on the basis of technological feasibility,
practicability to manufacture, install, and service, adverse impacts on
utility or availability, adverse impacts on health or safety, and use
of unique-pathway proprietary technologies.
Table IV.2--Technologies Screened Out in the Preliminary Analysis
Solid doors
Ultra-low-E (reflective) glass doors
Vacuum-insulated glass
Improved gaskets and double gaskets
Linear compressors
Fluid control or solenoid off-cycle valves
Evaporator tube and fin enhancements
Condenser tube and fin enhancements (except microchannel condensers)
Condenser hot gas defrost
Improved refrigerant piping
[[Page 19397]]
Component location
Alternative refrigeration systems
Improved VIPs
2. Technology Options
Through a review of each technology, DOE concluded in the
preliminary analysis that all of the other identified technologies
listed in section IV.A.2 of this document met all five screening
criteria to be examined further as design options in DOE's NOPR
analysis. In summary, DOE did not screen out the following technology
options:
Table IV.2--Technologies Remaining in the Preliminary Analysis
Insulation
1. Improved resistivity of insulation (insulation type)
2. Increased insulation thickness
3. Gas-filled insulation panels
4. Vacuum-insulated panels
Gasket and Anti-Sweat Heat
5. Anti-sweat heat
Doors
6. Low-E coatings
7. Inert gas fill
8. Additional panes
9. Frame design
Compressor
10. Improved compressor efficiency
11. Variable-speed compressors
Evaporator
12. Forced-convection evaporator
13. Increased surface area
14. Multiple evaporators
Condenser
15. Increased surface area
16. Microchannel designs
17. Forced-convection condenser
Defrost System
18. Reduced energy for automatic defrost
19. Adaptive defrost
20. Off-cycle defrost
Control System
21. Electronic Temperature control
22. Air-distribution control
Other Technologies
23. Fan and fan motor improvements
24. Improved expansion valve
25. Alternative Refrigerants
DOE has initially determined that these technology options are
technologically feasible because they are being used or have previously
been used in commercially available products or working prototypes. DOE
also finds that all of the remaining technology options meet the other
screening criteria (i.e., practicable to manufacture, install, and
service and do not result in adverse impacts on consumer utility,
product availability, health, or safety, unique-pathway proprietary
technologies). For additional details, see chapter 4 of the NOPR TSD.
DOE received comments regarding the screened-out technologies;
relevant comments are addressed.
AHAM agreed with DOE's decision to screen out solid doors as a
technology option for the reason that ELs requiring solid doors will
result in a significant loss in consumer utility. AHAM also agreed with
DOE's decision to screen out Ultra-Low-E Glass Doors for similar
reason, in that this technology also prevents the consumer from being
able to see clearly into the cabinet. AHAM stated, should DOE include a
door technology option in its final analysis for a possible amended
standard, that analysis should provide careful justification to ensure
that consumer utility and consumer costs are not unduly impacted.
(AHAM, No. 18, p. 8)
The CA IOUs urged DOE to reconsider several technologies that they
claimed were screened out of the analysis or improperly categorized.
These technologies include ultra-low E glass doors, Inert Gas-Filled
Glass, vacuum insulated glass, microchannel heat exchangers, and
variable speed compressors. In considering ultra-low E glass doors, the
CA IOUs request the DOE define an acceptable emissivity that does not
significantly hinder visibility while providing energy savings. For
inert gas-filled glass, the CA IOUs claim that triple-pane Argon-filled
glass with low-e coating is widely available throughout the market and
should be considered at lower ELs. Considering vacuum insulated glass,
the CA IOUs point to several manufacturers offering the glass for
refrigeration applications. Finally, the CA IOUs urged DOE to make more
consideration into the implementation of microchannel heat exchangers
and VSCs, claiming that their energy benefits were not fully considered
in the preliminary analysis. (CA IOUs, No. 20, pp. 4-6)
DOE screened out ultra-low E glass panels due to loss in consumer
utility associated with reduced visibility. DOE considers ultra-low E
glass panels to be those with at least three glass layers and more than
one low E coating. A large portion of the MREF market utilizes
transparent glass doors as an option to allow the consumer to see
inside the cooler compartment. Despite its ability to improve
efficiency, ultra-low E glass reduces visibility into the cooler
cabinet. In interviews, manufacturers specifically indicated that they
avoid use of glass panels with more than one low E layer due to
visibility concerns. DOE did include in its analysis triple-glazed
panels with argon fill and one low E layer, consistent with panels that
have been observed in available cooler products.
DOE likewise did not consider vacuum insulated glass as it impacts
practicability of manufacture, repair, and installation. While it
remains available as a technology option for use in refrigeration
equipment (e.g., walk-in cooler doors), DOE is not currently aware of
vacuum-insulated glass currently in use for any MREFs. Also, because
MREFs are typically much smaller than commercial refrigeration
equipment, vacuum-insulated glass may not yet be available for all MREF
sizes.
While the CA IOUs claim that five commercial refrigeration
manufacturers already have integrated microchannel condenser coils in
their equipment outside the MREF product category, DOE has not observed
microchannel condensers in any of the products in the teardown analysis
for MREFs. DOE notes that microchannel condensers may allow for
refrigerant charge reductions and improved heat transfer but known
drawbacks to these designs include irregular refrigerant distribution
and greater pressure drops on the refrigerant side and air side.
Therefore, microchannel condensers may not provide efficiency
improvements. Hence, DOE screened out microchannel condensers as a
technology option.
Variable speed compressors were included in the NOPR analysis and
are implemented in higher-level ELs throughout the analyzed product
classes. Published EER levels for VSCs are generally much higher than
published EERs for single-speed compressors in the capacity range
suitable for compact products, but DOE has not found many MREF products
that use VSCs, nor many related compact refrigerators that use VSCs,
and thus has little evidence on which to base confident predictions of
large efficiency improvements. DOE received a range of estimates of the
improvement potential associated with this technology from
manufacturers during interviews. DOE believes that its MREF NOPR
engineering analysis is representative of performance improvement
potential using variable-speed compressors.
The door technology options that remain for increasing the
efficiency of miscellaneous refrigeration products include low-e
coatings, inert gas fills, additional panes, and frame design changes.
Of these options, gas fills, additional panes, and low-e coating were
the options implemented in the final EL analyses, with max-tech doors
including triple-pane glass, argon gas fill, and a low-e layer on the
outermost glass. These options were implemented based on their current
use in the market.
DOE seeks further comment on any of the technologies screened out
in this NOPR analysis as they were determined to not meet the screening
criteria (i.e.,
[[Page 19398]]
practicable to manufacture, install, and service and do not result in
adverse impacts on consumer utility, product availability, health,
safety, or use of unique-pathway proprietary technologies). DOE also
seeks comment on those technologies retained for further consideration
in the engineering analysis, based on the determination that they are
technologically feasible and also meet the other screening criteria.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of miscellaneous
refrigeration products. There are two elements to consider in the
engineering analysis; the selection of efficiency levels to analyze
(i.e., the ``efficiency analysis'') and the determination of product
cost at each efficiency level (i.e., the ``cost analysis''). In
determining the performance of higher-efficiency products, DOE
considers technologies and design option combinations not eliminated by
the screening analysis. For each product class, DOE estimates the
baseline cost, as well as the incremental cost for the product at
efficiency levels above the baseline. The output of the engineering
analysis is a set of cost-efficiency ``curves'' that are used in
downstream analyses (i.e., the LCC and PBP analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to ``gap fill'' levels (to bridge
large gaps between other identified efficiency levels) and/or to
extrapolate to the max-tech level (particularly in cases where the max-
tech level exceeds the maximum efficiency level currently available on
the market).
For the January 2022 Preliminary Analysis, DOE used the physical
teardown approach supplemented with a catalog teardown approach for
coolers. Several products from the cooler class (compact and standard
size) and one product from the combination cooler class C-13A were used
in physical teardowns. The physical teardown combination cooler was
used to determine manufacturer production costs (``MPCs'') for one
analyzed product class (C-13A), but that analysis primarily relied on
the engineering conducted for the October 15, 2021, preliminary
analysis for consumer refrigerators, refrigerator-freezers, and
freezers (86 FR 57378) as the basis for other MPCs and incremental
costs.
For this NOPR analysis, DOE chose to analyze classes C-3A and C-9
in addition to the original C-13A. Due to the lack of physical teardown
products for these classes, the analysis relied heavily on adjusted
analyses from the consumer refrigerators, refrigerator-freezers, and
freezers (``RF'') classes 3 and 9. RF product class 3 represents
refrigerator-freezers with automatic defrost with top-mounted freezers
without an automatic icemaker while RF product class 9 represents
upright freezers with automatic defrost without an automatic icemaker.
Product class 3 was chosen as a proxy to C-3A due to its similar
configuration, and its analysis was able to be adapted relatively
easily. Likewise, C-9's analysis used RF product class 9's analysis due
to similarities in configuration.\20\ A survey approach was taken to
determine sizing and pricing for representative models, and relevant
design options from C-13A were used in the additional analyses. DOE
also considered input provided during manufacturer interviews to
improve upon design option energy savings and representative ELs.
---------------------------------------------------------------------------
\20\ As described in section IV.C.1.c of this document, DOE
conducted engineering analysis for class C-9, but did not conduct
further analysis due to the limited potential for efficiency
increase.
---------------------------------------------------------------------------
General comments regarding the efficiency analysis are addressed
below.
AHAM noted DOE builds its incremental MPC based on a set path of
technology options, but there is no standard ordering of technology
choice within a single company, let alone across the total industry.
AHAM stated DOE should recognize there is limited new technology that
would allow for significant per-unit reduction in energy consumption,
particularly true of technology options that DOE evaluated to reach
efficiency levels beyond EL 1. (AHAM, No. 18, pp. 6-7)
In response, DOE notes that the ordering of technologies is not
intended to be aligned with the ordering that would be considered by a
single company, nor is it intended to represent the ordering that the
total industry would adopt. Instead, it is intended to provide
reasonable representation, both of design options used by specific
reverse-engineered products, and of an ordering that would prioritize
the most cost-effective options, with gradual reductions in cost-
effectiveness as the EL increases. Also, the certified data shows that
existing products on the market demonstrate significant per-unit
reduction in energy consumption. For example, among DOE's tested and
reverse-engineered compact coolers was a 3.4 cuft cooler certified with
energy use 45% less than the standard, and a 5.1 cuft cooler certified
with energy use 49% less than the standard. These levels were EL3 for
the preliminary analysis and beyond EL4 for the NOPR analysis,
certainly beyond EL1. DOE test results confirmed that their energy use
was consistent with the certifications.
CA IOUs stated that in its review of products currently available
on the market, it was revealed that the incremental design options may
not be the most appropriate (as presented by DOE in Table 5.5.1 of the
preliminary TSD) as products on the market contain a combination of
technologies DOE has attributed to different ELs. For example, smaller
units within the compact category utilize efficiency features affecting
the thermal envelope (argon and/or triple-pane glass), whereas larger
units can utilize condenser, evaporator, and compressor efficiency
features. (CA IOUs, No. 20, pp. 1-2)
When analyzing the models pointed to by CA IOUs, DOE was unable to
confirm the efficiency level for one of the provided MREF models, due
to the fact it was not listed on the Compliance Certification Database
(``CCD'') as of August 2022. The compact model referred to above was
located on the CCD system and rated at around 13% lower energy use than
baseline; however, the model did not match the CCD rated AV, therefore,
the efficiency information may not be up to date. Information regarding
the design options used by each model was also limited, with relevant
engineering design options absent from promotional
[[Page 19399]]
material, user manuals, and specification sheets.
Considering the issues related to gathering information on the
specific models referenced in the comment, DOE is unable to point to
specific reasoning behind the design options implemented in each model.
DOE does note, however, that it considers design options in a manner as
described previously: with design options used by specific reverse-
engineered products, and of an ordering that prioritizes the most cost-
effective options for initial EL steps and gradual reduction in cost-
effectiveness as the EL increases.
DOE requests any further input from commenters regarding the
approach for design option selection and implementation for a given
model, beyond the information DOE has already considered.
a. Built-In Classes
In this NOPR analysis, DOE chose to continue using freestanding
MREF classes as proxies for built-in classes. DOE's analysis of the
current market for miscellaneous refrigeration products showed built-in
and freestanding products occupying the same range of efficiencies, and
DOE did not identify any unique characteristic that would inhibit
efficiency improvements for built-in products relative to freestanding
products based on a review on the market. As a result, DOE chose to
apply its freestanding products analyses to built-in classes. Several
comments were received following the preliminary analysis (which used
the same approach) and are addressed below.
According to AHAM, and echoed by Sub Zero and NEEA, freestanding
product classes are not a good proxy for built-in product classes, and
DOE should evaluate them separately. AHAM stated that DOE's assumption
that the products can employ similar technology options in order to
achieve higher efficiency levels is fundamentally flawed as built-in
designs face difference constraints than freestanding designs. NEEA and
Sub Zero both specifically mentioned insulation thickness increases and
airflow as a major difference between built-in and freestanding
products. (AHAM, No. 18, p. 9; Sub Zero, No. 17, p. 2; NEEA, No. 21,
pp. 2-3)
Based on the comments provided, DOE revisited its review of the
range of efficiency levels attainable by built-in and freestanding
coolers. DOE noted that many products certified as freestanding have
installation instructions that provide requirements for both
freestanding and built-in installation and are advertised for both
installations. DOE found that for such products, the majority of high-
efficiency models are advertised as capable of both freestanding and
built-in installations. For coolers between 2 and 6 cubic feet, DOE
found that all of the most efficient products reviewed (roughly 37%
better than baseline or more) were capable of both configurations,
whereas some of the products that were less efficient in that adjusted
volume range were advertised as freestanding only. This suggests that
built-in products are not inhibited in their ability to achieve high
efficiencies. For larger coolers between 14 and 16 cubic feet in
adjusted volume, DOE found products up to 15% greater than the baseline
level that were configurable in both, based on manufacturer
instructions. There were a few large cooler products that reached the
highest available efficiency reviewed, up to roughly 30% better than
baseline, that are advertised as only capable of a freestanding
configuration.
DOE also reviewed the depth of the various models considered to
determine if models advertised for built-in installation have any clear
dimensional limitation that might make achieving high efficiency levels
more difficult. DOE was unable to determine a clear correlation between
depth and energy use, for any of the models or capacity ranges
considered, nor between depth and instructions or advertising for
built-in installation. In fact, DOE found that the most efficient
freestanding-only model in the large cubic volume range had the
smallest depth of all the other models reviewed, suggesting that
dimensional restriction on depth was not a key factor relative to the
overall unit efficiency.
DOE also observed that the highest efficiency levels for coolers of
the built-in class and efficiency levels for freestanding coolers
having installation instructions or advertising for both freestanding
and built-in installation were at or close to the maximum technology
efficiency levels analyzed by DOE. DOE has not been provided evidence
that manufacturers are using design options in built-ins other than
those that have passed screening for this analysis. There are also no
manufacturer comments that suggest other design options have been used
to achieve max-tech efficiency levels in built-in products. Hence, DOE
concludes built-ins are using the same set of design options as
analyzed at max-tech for freestanding classes. Consequently, DOE did
not conduct separate analysis for built-in classes.
While DOE chose, in this NOPR analysis, to continue using
freestanding classes as proxies for built-in classes, DOE requests
additional information regarding the constraints for built-in designs
relative to freestanding designs, and the associated specific
efficiency and cost impacts.
b. Baseline Efficiency/Energy Use
For each product/equipment class, DOE generally selects a baseline
model as a reference point for each class, and measures changes
resulting from potential energy conservation standards against the
baseline. The baseline model in each product/equipment class represents
the characteristics of a product/equipment typical of that class (e.g.,
capacity, physical size). Generally, a baseline model is one that just
meets current energy conservation standards, or, if no standards are in
place, the baseline is typically the most common or least efficient
unit on the market.
For the January 2022 Preliminary Analysis, DOE chose baseline
efficiency levels represented by the current Federal energy
conservation standards, expressed as maximum annual energy consumption
as a function of the product's adjusted volume. The baseline levels
differ for coolers and combination coolers to account for design
differences; all coolers share the same baseline level, i.e., the
baseline is the same function of adjusted volume for both freestanding
and built-in models, for both compact and standard-size models.
For this NOPR, DOE kept the cooler baselines the same as the
preliminary analysis; the combination cooler baseline has also been
kept the same. From these baselines DOE conducted direct analyses for
three different AV coolers, and two combination coolers (C-13A, and C-
3A). In conducting these analyses, eight teardown units were used in
construction of cost curves, and had their characteristics determined
in large part by testing and reverse-engineering. Further information
on the design characteristics of specific analyzed baseline models is
summarized in the NOPR TSD.
c. Higher Efficiency Levels
For the NOPR analysis, DOE analyzed up to five incremental
efficiency levels beyond the baseline for each of the analyzed product
classes. The efficiency levels start at EL1, 10% more efficient than
the current energy conservation standard. For the compact coolers NOPR
analysis, DOE extended the efficiency levels in steps of 10% of the
current energy conservation standard up to EL 4; for full-size coolers,
EL 4 is analyzed at 35%. For combination coolers (excluding C-9)
efficiency levels above EL 1 are in steps of 5% up to EL 4.
[[Page 19400]]
Finally, EL 5 represents maximum technology (``max-tech''), using
design option analysis to extend the analysis beyond EL 4 using all
applicable design options, including max efficiency variable-speed
compressors, and maximum practical use of VIPs. For coolers, the
current Energy Star specifications correspond to EL 1 for freestanding
full-size coolers (10%), EL 2 for freestanding compact coolers (20%),
and EL 3 for both classes of built-in coolers (30%).
DOE conducted analysis for product class C-9 starting with analysis
for a class 9 upright freezer with comparable total refrigerated
volume. In its analysis, DOE concluded that application of all of the
design options being considered at max-tech would be required for the
product to be compliant with the current energy conservation standards.
Currently, the CCD includes only one product that is certified as C-9--
an LG product certified with energy use 17% below the standard. DOE did
not purchase, test, and reverse-engineer this product, in-part because
of the limited product offering and expected insignificant potential
for energy savings for the class. Thus, DOE is relying primarily on its
analysis of the RF product class 9 freezer, to suggest that
opportunities for energy savings are likely limited and likely not
cost-effective, even if improved efficiency is technically feasible.
DOE has not analyzed efficiency levels beyond baseline for this product
class in this NOPR, but has taken into consideration all design options
applied at max-tech in its analysis.
DOE received comments regarding intermediate efficiency levels as
shown below.
The CA IOUs expressed concern that the cost analysis performed in
the preliminary TSD is overly conservative; the marked drop in
calculated benefits between the lower ELs does not accurately reflect
the more nuanced state of the market. As such, they suggested DOE
implement an intermediate EL, between EL 1 and EL 2, for the Cooler-FC
and Cooler-F product classes. They also suggested an intermediate EL
between EL 2 and EL 3 for product class C-13A. NEEA voiced similar
concerns to CA IOUs and also suggested similar intermediate EL levels
for coolers and C-13A. ASAP also urged DOE to consider an intermediate
EL for compact coolers between ELs 1 and 2. (CA IOUs, No. 20, pp. 1-2;
NEEA, No. 21, pp. 5-6; ASAP, No. 19, pp. 2-3)
In response, DOE notes that the efficiency levels considered in the
NOPR analysis differ significantly from those considered in the January
2022 Preliminary Analysis.\21\ While all of the specific gap fill
levels suggested by stakeholders may not have been included, DOE
believes that, the levels suggested in this NOPR more accurately
reflect the full efficiency range of the market. The proposed EL steps
have been chosen to represent the full range of efficiency and reflect
the products on the market for each product class.
---------------------------------------------------------------------------
\21\ The January 2022 Preliminary Analysis TSD presenting the
preliminary analysis is available at: www.regulations.gov/document/EERE-2020-BT-STD-0039-0009.
---------------------------------------------------------------------------
ASAP noted, in the preliminary TSD for consumer refrigerators and
freezers, DOE estimated a 9-percent improvement in compressor
efficiency associated with converting from a single-speed compressor to
a VSC with similar rated energy efficiency ratio (``EER'') values, and
ASAP stated they expect there to be similar savings for compact
coolers. ASAP further noted, however, in the preliminary analysis for
the 5.1 cubic foot compact cooler representative unit, DOE appears to
show energy savings of only about 2 percent when going from the most
efficient single-speed compressor at EL 3 to a VSC and a triple-pane
glass pack at EL 4. ASAP therefore stated concern that DOE may be
underestimating the energy savings associated with the design options
incorporated at EL 4 and urged DOE to ensure that its analysis is
appropriately capturing the savings from the incorporation of a VSC.
(ASAP, No. 19, p. 2)
When constructing a direct analysis of the 5.1 cubic foot compact
cooler DOE considered numerous design options when moving from EL 3 to
EL 4. The effect of the triple-pane glass and switch to VSC alone do
not contribute to the ultimate percentage difference between El 3 and
EL 4. DOE has continued to work with manufacturers in order to
accurately create ELs for both coolers and combination coolers that are
based on real-world information and energy consumption.
The efficiency levels analyzed for this NOPR beyond the baseline
are shown in Table IV.3.
Table IV.3--Incremental Efficiency Levels for Analyzed Products (% Energy Use Less Than Baseline)
----------------------------------------------------------------------------------------------------------------
Coolers Combination coolers
Product class (AV, cu.ft.) -------------------------------------------------------------------------------
FCC (3.1) (%) FCC (5.1) (%) FC (15.3) (%) C-13A (5) (%) C-3A (21) (%)
----------------------------------------------------------------------------------------------------------------
EL 1............................ 10 10 10 10 10
EL 2 *.......................... 20 20 20 16 15
EL 3............................ 30 30 30 20 20
EL 4............................ 40 40 35 25 24
EL 5............................ 59 50 38 28 30
----------------------------------------------------------------------------------------------------------------
* ENERGY STAR % level varies based on specific teardown units analyzed.
d. VIP and VSC Analysis
DOE received comments on the implementation of VIPs in its
analyses, and the comments are addressed below.
AHAM stated DOE does not account for the limitations of VIPs and
that DOE's modeling does not apply VIPs as they would likely be used in
actual products and, as a result, overestimates their use and impact in
its analysis. AHAM stated DOE should note the following when evaluating
the effectiveness of VIPs: covering all sides of an MREF casing in VIPs
is not reasonable or a good design practice, there are costs associated
with VIPs beyond the price of the panels themselves, a failed VIP in
the field cannot be repaired and it will require a total product
replacement, and VIPs are not effective for smaller products because of
``edge effects.'' AHAM stated DOE should further discuss these issues
with manufacturers during manufacturer interviews and evaluate more
products in order to get a better understanding of the complexities and
costs associated with VIPs and update its analysis accordingly. (AHAM,
No. 18, pp. 7-8)
[[Page 19401]]
In communicating with manufacturers DOE received similar comments
relating to decreased effectiveness of VIPs on miscellaneous
refrigeration products. For the NOPR analysis DOE aimed to adjust the
usage of VIPs in order to provide more accuracy in associated energy
savings. More focus was put on increasing efficiency in glass panels,
gas fills, and thickness changes when moving up in efficiency levels.
Only partial VIP coverage was included in max-tech levels for the NOPR
analysis.
ASAP expressed concern that DOE is underestimating the potential
savings from upgrading from a single-speed compressor to a VSC by not
accounting for the higher EER values of VSCs. ASAP noted that, in the
preliminary TSD, DOE states compressors typically present in MREFs have
capacities of 300 to 400 Btu per hour, but at a capacity of 300 BTU per
hour, for example, even the least efficient VSC has a higher EER than
the most efficient single-speed compressor. ASAP further noted that the
EER of the most efficient VSC at 300 BTU per hour appears to be about
30 percent higher than the most efficient single-speed compressor. ASAP
therefore urged DOE to ensure that its analysis is capturing the
improved full-load efficiency of VSCs relative to single-speed
compressors. (ASAP, No. 19, p. 1)
In the preliminary analysis, as laid out in figure 5.5.1 in the
preliminary TSD, DOE analyzed the capacity and efficiency ratings of
numerous VSCs through publicly available compressor performance data.
79 FR 71705. This figure does show that VSCs account for a higher EER
when compared to single-speed compressors as capacity (Btu/h) is
decreased. However, relating back ASAP's claim relating to 300 Btu/h
capacity compressors, manufacturer feedback indicates that these EER
efficiency increases are not generally realized when implementing this
technology. Manufacturers have reported a wide range of overall
efficiency increases associated with use of variable-speed compressors.
In in the NOPR analysis DOE considered manufacturer feedback regarding
experience with implementing VSC's in order to avoid overestimating
efficiency increases. The analysis primarily considers energy savings
associated with increased heat exchanger effectiveness associated with
lower compressor speed operation and reduced fan speeds, assuming that
fans would be operated at reduced speed when operating at low
compressor speed. VSCs are generally implemented at higher EL levels
throughout the analysis, consistent with their projected cost
effectiveness.
DOE seeks comment on the range of VSC nominal efficiencies and the
relative overall efficiency gains offered by VSCs when operating at
reduced compressor speeds along with reduced fan speeds in MREF
products.
2. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, the availability and timeliness of purchasing the product on
the market. The cost approaches are summarized as follows:
[ballot] Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
[ballot] Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
[ballot] Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated products such as
fluorescent lamps, which are infeasible to disassemble and for which
parts diagrams are unavailable) or cost-prohibitive and otherwise
impractical (e.g., large commercial boilers), DOE conducts price
surveys using publicly available pricing data published on major online
retailer websites and/or by soliciting prices from distributors and
other commercial channels.
In the present case, DOE conducted the analysis using primarily
physical teardowns. Physical teardowns were used to provide a baseline
of technology options and their pricing for a specific product class at
a specific EL level. Then with technology option information, DOE
estimated the cost of various design options including compressors,
VIPs, and insulation, by extrapolating the costs from price surveys of
relevant refrigerators, refrigerator-freezers, and freezers.
AHAM stated VSC supply is not sufficient to accommodate a standard
that requires their use for all MREF products, indicating that this
will drive up costs, and further noting that DOE's analysis does not
account for these increased costs. AHAM also stated MREFs are enclosed
systems and the use of VSCs entails significant redesign costs for
those that do not currently employ VSCs, which DOE's analysis also must
account for. (AHAM, No. 18, p. 8)
DOE has considered the comments regarding VSC availability and cost
of VSC implementation. For this NOPR analysis, DOE estimated the cost
of implementing VSCs based on the costs of relevant variable-speed
compressors available on the market for other refrigeration products.
Regarding component availability, DOE acknowledges that more stringent
standards would likely necessitate adoption of more efficient
technologies, such as variable-speed compressors. However, DOE expects
that standards, if adopted, would provide sufficient time and
regulatory certainty for manufacturers and suppliers to establish
additional capacity in the supply chain, if needed. Should this NOPR
proceed to a final rule, compliance with any amended standards would
not be required until 5-years after a final rule is published. DOE
expects that this 5-year compliance period provides adequate time for
OEMs to sign supply contracts with their compressor suppliers ahead of
anticipated demand.
DOE seeks comment on whether manufacturers expect manufacturing
capacity constraints would limit product availability to consumers in
the timeframe of the amended standard compliance date.
3. Cost-Efficiency Results
The results of the engineering analysis are presented as cost-
efficiency data for each of the efficiency levels for each of the
product classes that were analyzed, as well as those extrapolated from
a product class with similar cooling capacity and features. DOE
developed estimates of MPCs for each unit in the teardown sample, and
also performed additional modeling for each of the teardown samples, to
develop a comprehensive set of MPCs at each efficiency level. The
resulting weighted average incremental MPCs (i.e., the additional costs
manufacturers would likely incur by producing miscellaneous
refrigeration products at each efficiency level compared to the
baseline) are provided in Tables 5.5.5 and 5.5.6 in chapter 5 of the
NOPR TSD. See chapter 5 of the NOPR TSD for additional detail on the
engineering analysis.
DOE seeks comment on the method for estimating manufacturing
production costs and on the resulting cost-efficiency curves.
See section VII.E of this document for a list of issues on which
DOE seeks comment.
[[Page 19402]]
Table IV.1--Incremental Design Options * by Efficiency Level and Product Class
----------------------------------------------------------------------------------------------------------------
Product
class (AV EL1 EL2 EL3 EL4 EL5
***)
----------------------------------------------------------------------------------------------------------------
FCC (3.1) EL Percent...... 10%............ 20%............ 30%............ 40%............ 59%.
Design Options Tube and Fin Static Higher-EER Variable-Speed Partial VIP;
Added. Evaporator; Condenser;. Compressor; Compressor; Triple Pane
Argon Filled Tube and Fin Roll Bond Glass **; Tube
Glass. Condenser. Evaporator; and Fin Bond
Manual Evaporator.
Defrost;
Increased
Insulation
Thickness.
FCC (5.1) EL Percent...... 10%............ 20%............ 30%............ 40%............ 50%.
Design Options Argon Filled Higher-EER Higher-EER Higher-EER Variable-Speed
Added. Glass; Higher- Compressor. Compressor; Compressor; Compressor;
EER Compressor. Hot Wall Tube and Fin Partial VIP;
Condenser. Evaporator; Triple Pane
HotWall + Tube Glass **.
and Fin
Condenser;
Increased
Insulation
Thickness.
FC (15.3) EL Percent...... 10%............ 20%............ 30%............ 35%............ 38%.
Design Options Higher-EER Higher-EER Variable-Speed Triple Pane Partial VIP.
Added. Compressor; Compressor. Compressor; Glass **.
Hot Wall + Variable
Tube and Fin Defrost; 3x
Condenser. Tube and Fin
Evaporator;
Increased
Insulation
Thickness.
C-13A (5) EL Percent...... 10%............ 16%............ 20%............ 25%............ 28%.
Design Options Higher-EER Higher-EER Variable-Speed Triple Pane Partial VIP.
Added. Compressor. Compressor. Compressor. Glass **.
C-3A EL Percent...... 10%............ 15%............ 20%............ 24%............
(20.6).
Design Options Higher-EER Variable-Speed Triple Pane Partial VIP;
Added. Compressor. Compressor; Glass**; Timed Variable (off-
Variable (off- (off-cycle) cycle) Defrost.
cycle) Defrost. Defrost;
Higher-EER
Variable Speed
Compressor.
----------------------------------------------------------------------------------------------------------------
* Design options are cumulative between efficiency levels (except for component replacements).
** Triple-pane glass pack consists of soft-coated low-E glass and argon gas fill (with a reduced gap size to
maintain door thickness).
*** AV represented in ft\3\.
Table IV.2--Cost-Efficiency Curves for Miscellaneous Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Product Class (AV
*) EL0 EL1 EL2 EL3 EL4 EL5
----------------------------------------------------------------------------------------------------------------
FCC (3.1)........ EL Percent..... 0% 10% 20% 30% 40% 59%
MPC............ $273.66 $289.88 $299.61 $309.88 $343.55 $392.74
Incremental MPC $0.00 $16.21 $25.94 $36.22 $69.88 $119.08
FCC (5.1)........ EL Percent..... 0% 10% 20% 30% 40% 50%
MPC............ $307.76 $310.89 $313.29 $327.72 $354.18 $439.26
Incremental MPC $0.00 $3.13 $5.53 $19.96 $46.42 $131.50
FC (15.3)........ EL Percent..... 0% 10% 20% 30% 35% 38%
MPC............ $648.22 $661.71 $665.13 $709.87 $832.95 $845.25
Incremental MPC $0.00 $13.49 $16.91 $61.65 $184.72 $197.02
C-13A (5)........ EL Percent..... 0% 10% 15% 20% 25% 28%
MPC............ $533.25 $535.25 $537.01 $565.74 $589.63 $627.33
Incremental MPC $0.00 $2.00 $3.76 $32.48 $56.37 $94.07
C-3A (20.6)...... EL Percent..... 0% 10% 16% 20% 24% ...........
MPC............ $601.00 $604.17 $639.47 $733.13 $790.03 ...........
Incremental MPC $0.00 $3.17 $38.47 $132.13 $189.03 ...........
C-9 (20) **...... EL Percent..... 0% ........... ........... ........... ........... ...........
MPC............ $514.16 ........... ........... ........... ........... ...........
Incremental MPC $0 ........... ........... ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
* Adjusted volumes provided in ft\3\.
** Only considered at baseline.
4. Manufacturer Selling Price
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce. DOE developed
an average manufacturer markup by examining the annual Securities and
Exchange Commission (``SEC'') 10-K reports \22\ filed by publicly-
traded manufacturers primarily engaged in appliance manufacturing and
whose combined product range includes miscellaneous refrigeration
products. See chapter 12 of the NOPR TSD for additional detail on the
manufacturer markup.
---------------------------------------------------------------------------
\22\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
www.sec.gov/edgar/search/ (last accessed September 22, 2022).
---------------------------------------------------------------------------
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups and distributor markups) in the distribution chain and sales
taxes to
[[Page 19403]]
convert the MSP estimates derived in the engineering analysis to
consumer prices, which are then used in the LCC and PBP analysis. At
each step in the distribution channel, companies markup equipment
prices to cover business costs and profit margin.
For MREFs, DOE identified two distribution channels: (1)
manufacturers to retailers to consumers, and (2) manufactures to
wholesalers to dealers/retailers to consumers. The parties involved in
the distribution channel are retailers, wholesalers and dealers.
DOE developed baseline and incremental markups for each actor in
the distribution channel. Baseline markups are applied to the price of
products with baseline efficiency, while incremental markups are
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental
markup is typically less than the baseline markup and is designed to
maintain similar per-unit operating profit before and after new or
amended standards.
DOE relied on economic data from the U.S. Census Bureau to estimate
average baseline and incremental markups. Specifically, DOE used the
2017 Annual Retail Trade Survey for the ``electronics and appliance
stores'' sector to develop retailer markups, and the 2017 Annual
Wholesale Trade Survey for the ``household appliances, and electrical
and electronic goods merchant wholesalers'' sector to estimate
wholesaler markups. DOE recognized that the overall markup in the
wholesaler channel should be higher than the direct retailer channel.
Considering that most of the wholesalers and dealers/retailers hold
special contract in the wholesaler channel, DOE assumed that the
dealer/retailer markups are half of the values of the retailer makeups
in the direct retailer channel.
DOE requests comment on the assumption used in developing the
dealer/retailer markups and welcomes any feedback on the overall markup
in the wholesaler channel.
Chapter 6 of the NOPR TSD provides details on DOE's development of
markups for MREFs.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of MREFs at different efficiencies in representative
U.S. households, and to assess the energy savings potential of
increased MREF efficiency. The energy use analysis estimates the range
of energy use of MREFs in the field (i.e., as they are actually used by
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 or new standards.
DOE determined a range of annual energy use of MREFs as a function
of unit volume. DOE developed distributions of adjusted volume of
product classes (Table IV.3) with more than one representative unit
base on the capacity distributions reported in the TraQline[supreg]
wine chiller data spanning from 2020 Q1 to 2022 Q1.23 24 DOE
also developed a sample of households that use MREFs based on the
TraQline wine chiller data (see section IV.G for details). For each
volume and considered efficiency level, DOE derived the energy
consumption as measured by the DOE test procedure at 10 CFR part 430,
subpart B, appendix A, with the exception that DOE used in its analysis
the reduced icemaker energy use contribution that would take effect on
the compliance date of new standards.
---------------------------------------------------------------------------
\23\ TraQline is a market research company that specialized in
tracking consumer purchasing behavior across a wide range of
products using quarterly online surveys.
\24\ DOE acknowledges that the pandemics which span the sample
period may contribute to the medium- to long-term consumer behavior
changes. DOE will continue monitor the consumer behavior trend and
may make alternative estimation in the next rulemaking phase.
---------------------------------------------------------------------------
DOE requests comment on its methodology to develop market share
distributions by adjusted volume in the compliance year for each
product class with two representative volumes, as well as data to
further inform these distributions in subsequent rounds of this
rulemaking.
Table IV.3--Distribution of Adjusted Interior Volumes by Product Class
------------------------------------------------------------------------
Adjusted volume (ft\3\) Percentage
------------------------------------------------------------------------
FCC
------------------------------------------------------------------------
3.1..................................................... 83.4
5.1..................................................... 16.6
------------------------------------------------------------------------
BICC
------------------------------------------------------------------------
3.1..................................................... 81.3
5.1..................................................... 18.7
------------------------------------------------------------------------
FC and BIC
------------------------------------------------------------------------
15.3.................................................... 100.0
------------------------------------------------------------------------
C-3A
------------------------------------------------------------------------
21...................................................... 100.0
------------------------------------------------------------------------
C-9
------------------------------------------------------------------------
20...................................................... 100.0
------------------------------------------------------------------------
C-13A
------------------------------------------------------------------------
5....................................................... 100.0
------------------------------------------------------------------------
Chapter 7 of the NOPR TSD provides details on DOE's energy use
analysis for MREFs.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted the LCC and PBP analyses to evaluate the economic
impacts on individual consumers of potential energy conservation
standards for MREFs. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE used the following
two metrics to measure consumer impacts:
The LCC is the total consumer expense of an appliance or
product over the life of that product, 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 product.
The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the 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 MREFs 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 product.
NEEA encouraged DOE to calculate and consider the return on
investment
[[Page 19404]]
(ROI) for each efficiency level as an additional metric of cost-
effectiveness, which would only require the use of simple payback and
device lifetime. (NEEA, No. 21, pp. 6-7).
DOE acknowledges that ROI is a metric that can be useful in
evaluating investments in energy efficiency. However, the measures that
DOE has historically used to evaluate the economic impacts of standards
on consumers--LCC savings and PBP--are more closely related to the
language in EPCA that requires DOE to consider the savings in operating
costs throughout the estimated average life of the covered product 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.
6295(o)(2)(B)(i)(II)) Therefore, DOE finds it reasonable to continue to
use those measures.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units. As stated previously, DOE developed household samples
based on TraQline wine chiller survey data. The survey panel is
weighted against the U.S. Census based on their demographic
characteristic to make the sample representative of the U.S.
population. The wine chiller survey asked respondents about the product
features of the wine chillers they recently purchased, as well as the
purchasing channel of the products. To account for the more recent MREF
consumers, DOE used the latest two years of survey data (2020 Q1 to
2022 Q1) to construct the household sample used in this NOPR.\25\
---------------------------------------------------------------------------
\25\ DOE acknowledges that the pandemics which span the sample
period may contribute to the medium- to long-term consumer behavior
changes. DOE will continue monitor the consumer behavior trend and
may make alternative estimation in the next rulemaking phase.
---------------------------------------------------------------------------
For each sample household, DOE determined the energy consumption
for the MREF(s) and the appropriate energy price. By developing a
representative sample of households, the analysis captured the
variability in energy consumption and energy prices associated with the
use of MREFs.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor 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 (if applicable), product lifetimes, and discount
rates. DOE created distributions of values for product lifetime,
discount rates, and sales taxes, with probabilities attached to each
value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP 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 MREF user samples. The
model calculated the LCC and PBP for products at each efficiency level
for 10,000 housing units per simulation run. The analytical results
include a distribution of 10,000 data points showing the range of LCC
savings for a given efficiency level relative to the no-new-standards
case efficiency distribution. In performing an iteration of the Monte
Carlo simulation for a given consumer, product efficiency is chosen
based on its probability. If the chosen product efficiency is greater
than or equal to the efficiency of the standard level under
consideration, the LCC and PBP calculation reveals that a consumer is
not impacted by the standard level. By accounting for consumers who
already purchase more-efficient products, DOE avoids overstating the
potential benefits from increasing product efficiency.
DOE calculated the LCC and PBP for all consumers of MREFs as if
each were to purchase a new product in the expected year of required
compliance with new or amended standards. New and amended standards
would apply to MREFs manufactured 5 years after the date on which any
new or amended standard is published. (42 U.S.C. 6295(l)(2)) At this
time, DOE estimates publication of a final rule in 2024. Therefore, for
purposes of its analysis, DOE used 2029 as the first year of compliance
with any amended standards for MREFs.
Table IV.4 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The paragraphs that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the NOPR TSD and its appendices.
Table IV.4--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost........................... Derived by multiplying MPCs by
manufacturer and retailer
markups and sales tax, as
appropriate. Used historical
data to derive a price scaling
index to project product
costs.
Installation Costs..................... Assumed no change with
efficiency level. Not
considered in the analysis.
Annual Energy Use...................... Derived from engineering inputs
(See chapter 5 of the NOPR
TSD).
Variability: Based on the
product class and rep unit
volume, where applicable.
Energy Prices.......................... Electricity: Based on 2021
average and marginal
electricity price data from
the Edison Electric Institute.
Variability: Electricity prices
vary by region.
Energy Price Trends.................... Based on AEO 2022 price
projections.
Repair and Maintenance Costs........... Assumed no change with
efficiency level. Not
considered in the analysis.
Product Lifetime....................... Average: 12.6 years.
Discount Rates......................... Approach involves identifying
all possible debt or asset
classes that might be used to
purchase the considered
appliances, or might be
affected indirectly. Primary
data source was the Federal
Reserve Board's Survey of
Consumer Finances.
Compliance Date........................ 2029.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the NOPR TSD.
[[Page 19405]]
1. Product Cost
To calculate consumer product costs, DOE multiplied the MSPs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
Economic literature and historical data suggest that the real costs
of many products may trend downward over time according to ``learning''
or ``experience'' curves. Experience curve analysis implicitly includes
factors such as efficiencies in labor, capital investment, automation,
materials prices, distribution, and economies of scale at an industry-
wide level.\26\ In the experience curve method, the real cost of
production is related to the cumulative production or ``experience''
with a manufactured product. DOE used historical Producer Price Index
(PPI) data for ``household refrigerator and home freezer
manufacturing'' from the Labor Department's Bureau of Labor Statistics'
(``BLS'') spanning the time period between 1989 and 2021 as a proxy of
the production cost for MREFs.\27\ This is the most relevant price
index for MREFs as the main technology options are similar to full-size
refrigerators and several refrigerator manufacturers also produce
MREFs. An inflation-adjusted price index was calculated by dividing the
PPI series by the gross domestic product index from Bureau of Economic
Analysis for the same years. The cumulative production of MREFs were
assembled from the estimated annual shipments using the stock
accounting approach between 2016 and 2021, and a flat shipment trend
was assumed prior to 1951. The estimated learning rate (defined as the
fractional reduction in price expected from each doubling of cumulative
production) is 15.5 1.7 percent.
---------------------------------------------------------------------------
\26\ Taylor, M. and Fujita, K.S. Accounting for Technological
Change in Regulatory Impact Analyses: The Learning Curve Technique.
LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA.
April 2013. http://escholarship.org/uc/item/3c8709p4#page-1.
\27\ Household refrigerator and home freezer manufacturing PPI
series ID: PCU3352203352202; www.bls.gov/ppi/.
---------------------------------------------------------------------------
DOE included variable-speed compressors as a technology option for
higher efficiency levels. To develop future prices specific for that
technology, DOE applied a different price trend to the controls portion
of the variable-speed compressor, which represents part of the price
increment when moving from an efficiency level achieved with the
highest efficiency single-speed compressor to an efficiency level with
variable-speed compressor. DOE used PPI data on ``semiconductors and
related device manufacturing'' between 1967 and 2021 to estimate the
historic price trend of electronic components in the control.\28\ The
regression, performed as an exponential trend line fit, results in an
R-square of 0.99, with an annual price decline rate of 6.3 percent. See
chapter 8 of the TSD for further details on this topic.
---------------------------------------------------------------------------
\28\ Semiconductors and related device manufacturing PPI series
ID: PCU334413334413; www.bls.gov/ppi/.
---------------------------------------------------------------------------
AHAM noted that any declining costs are due to value engineering
and/or productivity improvements, and agreed with DOE's decision not to
use a price learning curve in the preliminary analysis. AHAM also
stated that MREFs are not identical to refrigerators and freezers, and
therefore DOE should not apply the learning curve from the
refrigerators, refrigerator-freezers, and freezers rulemaking analysis.
(AHAM, No. 18, p. 6) On the other hand, NEEA, ASAP and the CA IOUs,
encouraged DOE to incorporate a price learning curve. ASAP and the CA
IOUs expressed concern that assuming constant prices will result in
overestimating the cost to achieve higher efficiency levels in the
assumed compliance year and beyond and suggested the use of price data
from consumer refrigerators to inform the development of an appropriate
learning rate for MREFs, as many of the same design options are used
for MREFs. (NEEA, No. 21, pp. 4-5, ASAP, No. 19 at p. 3, CA IOUs, No.
20, pp. 2-4).
As discussed earlier, in this NOPR DOE developed a price learning
based on the historical refrigerator and freezer PPI and the cumulative
production estimated specifically for MREFs, assuming that the
refrigerator and freezer PPI is representative of MREFs. Given that
similar design options are considered for units in higher efficiency
levels as for consumer refrigerators, DOE also considered a separate
price learning for the controls portion of the variable-speed
compressor in MREFs at higher efficiency levels. DOE is requesting
comment on this approach.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE is not aware of
any data that suggest the cost of installation changes as a function of
efficiency for MREFs. DOE therefore assumed that installation costs are
the same regardless of EL and do not impact the LCC or PBP. As a
result, DOE did not include installation costs in the LCC and PBP
analysis.
3. Annual Energy Consumption
DOE determined the energy consumption for MREFs at different
efficiency levels using the approach described previously in section
IV.E of this document.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the product
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2021 using data from EEI Typical
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric
bills and average kilowatt-hour costs to the customer as charged by
investor-owned utilities. For the residential sector, DOE calculated
electricity prices using the methodology described in Coughlin and
Beraki (2018).\29\
---------------------------------------------------------------------------
\29\ Coughlin, K. and B. Beraki.2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169.
https://ees.lbl.gov/publications/residential-electricity-prices-review (Last accessed September 22, 2022).
---------------------------------------------------------------------------
To estimate energy prices in future years, DOE multiplied the 2021
energy prices by the projection of annual average price changes from
the Reference case in AEO 2022, which has an end year of 2050.\30\ To
estimate price trends after 2050, DOE used the 2050 electricity prices,
held constant.
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\30\ EIA. Annual Energy Outlook 2022 with Projections to 2050.
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last
accessed September 22, 2022).
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5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency produce no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency
[[Page 19406]]
products. DOE is not aware of any data that suggest the cost of repair
or maintenance for MREFs changes as a function of efficiency. DOE
therefore assumed that these costs are the same regardless of EL and do
not impact the LCC or PBP. As a result, DOE did not include maintenance
and repair costs in the LCC and PBP analysis.
6. Product Lifetime
For MREFs, DOE used lifetime estimates from products that operate
using the same refrigeration technology: covered refrigerators and
refrigerator-freezers. DOE assumed a maximum lifetime of 40 years for
all product classes and an average lifetime of 10.3 years for compact
coolers and 17.3 years for full-size coolers. DOE also assumed that the
probability function for the annual survival of MREFs would take the
form of a Weibull distribution. See chapter 8 of the NOPR TSD for a
more detailed discussion.
DOE requests comment and data on the assumptions and methodology
used to calculate MREF survival probabilities.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating cost
savings. DOE estimated a distribution of residential discount rates for
MREFs based on consumer financing costs and the opportunity cost of
consumer funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\31\ The LCC analysis estimates net present value over the
lifetime of the product, so the appropriate discount rate will reflect
the general opportunity cost of household funds, taking this time scale
into account. Given the long-time horizon modeled in the LCC analysis,
the application of a marginal interest rate associated with an initial
source of funds is inaccurate. Regardless of the method of purchase,
consumers are expected to continue to rebalance their debt and asset
holdings over the LCC analysis period, based on the restrictions
consumers face in their debt payment requirements and the relative size
of the interest rates available on debts and assets. DOE estimates the
aggregate impact of this rebalancing using the historical distribution
of debts and assets.
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\31\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; interest rates at which a
consumer is able to borrow or lend. The implicit discount rate is
not appropriate for the LCC analysis because it reflects a range of
factors that influence consumer purchase decisions, rather than the
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------
To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's Survey of Consumer Finances (SCF) for
1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and 2019.\32\ Using the
SCF and other sources, DOE developed a distribution of rates for each
type of debt and asset by income group to represent the rates that may
apply in the year in which amended standards would take effect. DOE
assigned each sample household a specific discount rate drawn from one
of the distributions. The average rate across all types of household
debt and equity and income groups, weighted by the shares of each type,
is 4.1 percent. See chapter 8 of the NOPR TSD for further details on
the development of consumer discount rates.
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\32\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. (Last accessed September 22, 2022.) http://www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
In the January 2022 Preliminary Analysis, DOE estimated the energy
efficiency distribution of MREFs for 2029 using model counts from DOE's
CCD. DOE assumed that the distribution of models was equivalent to the
distribution of products sold. AHAM commented that the distribution DOE
obtained through this approach did not reflect the shipment breakdown
by efficiency seen in the market and submitted shipment data by product
class and efficiency level collected from its members to illustrate the
discrepancy between the CCD data and the AHAM efficiency distributions.
(AHAM, No. 18, p. 2-5)
DOE appreciates AHAM's data submission and, for this NOPR, DOE is
using the efficiency distribution by product class as provided by AHAM.
DOE understands that this approach inherently assumes that the rest of
the MREF market has a similar distribution of efficiencies. However,
due to lack of efficiency data from non-AHAM members, DOE is not able
to verify whether this assumption is incorrect. For this analysis, DOE
also assumed that the current distribution of product efficiencies
would remain constant in 2029, and during the analysis period, in the
no-new-standards case.
The estimated market shares for the no-new-standards case for MREFs
are shown in Table IV.5 of this document. See chapter 8 of the NOPR TSD
for further information on the derivation of the efficiency
distributions.
Table IV.5--Efficiency Distributions for the No-New-Standards Case in the Compliance Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total adjusted 2029 Market share (%)
Product class volume (cu. ---------------------------------------------------------------------------------------------------------------
ft.) EL 0 EL 1 EL 2 EL 3 EL 4 EL 5 Total *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cooler-FC....................................................... 3.1 79 18 3 0 0 0 100
5.1
Cooler-BIC...................................................... 3.1 18 6 1 1 0 74 100
5.1
Cooler-F........................................................ 15.3 42 58 0 0 0 0 100
Cooler-BI....................................................... 15.3 72 8 20 0 0 0 100
C-13A........................................................... 5 99 1 0 0 0 0 100
C-3A............................................................ 21 100 0 0 0 0 .............. 100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.
[[Page 19407]]
DOE requests comment and data on its efficiency distribution
assumptions and projection into future years. Specifically, DOE is
requesting comment and data on the efficiency distribution of non-AHAM
members, to more accurately derive the efficiency distribution for the
whole MREF market.
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 products,
compared to baseline products, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the product 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 product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
As noted previously, EPCA establishes a rebuttable presumption that
a standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the amended standards
would be required.
G. Shipments Analysis
DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\33\
The shipments model takes an accounting approach, tracking market
shares of each product class and the vintage of units in the stock.
Stock accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------
\33\ 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.
---------------------------------------------------------------------------
DOE defined two broad MREF product categories (coolers, and
combination cooler refrigeration products) and developed models to
estimate shipments for each category. DOE used various data and
assumptions to develop the shipments for each product class considered
in this rulemaking.
Given the limited available data sources on historical shipments of
coolers, DOE assumed a penetration rate of 13.3 percent in the U.S.
households based on online surveys \34\ to estimate the annual
shipments starting from 2016, the start year of AEO 2022 housing
projection data. 35 36 DOE multiplied the estimated
penetration by the total number of households from the AEO 2022, and
then determined the number of new shipments by dividing the total stock
by the mean product lifetime. DOE projected the annual shipments by
incorporating the lifetime distributions by product class and assuming
that the growth of new sales is consistent with the housing projections
from AEO 2022. To estimate shipments prior to 2016, DOE assumed a flat
historical shipment trend at the 2016 level. With even more limited
available data sources on historical shipments of combination cooler
refrigeration products, DOE estimated total shipments of combination
cooler refrigeration products in 2014 to be 36,000 units, based on
feedback from manufacturers from the October 2016 Direct Final Rule.
DOE assumed sales would increase in line with the increase in the
number of households in AEO 2022. Finally, DOE incorporated the 2021
shipment data provided by AHAM to re-calibrate total shipments for each
product class considered in this rulemaking.
---------------------------------------------------------------------------
\34\ DOE also reviewed the recent release of the EIA 2020
Residential Energy Consumption Survey (RECS 2020), which identified
wine chillers in representative U.S. households. DOE found that the
penetration rate of wine chillers in RECS 2020 is significantly
lower compared to that estimated by DOE for MREFs based on previous
market surveys. Due to the uncertainty on the breakdown of MREFs
between wine chillers and other miscellaneous refrigeration
applications in the U.S. market, DOE continued to use the 13.3
percent penetration rate for MREFs in this NOPR. However, DOE also
modeled an alternative shipments scenario based on the lower
penetration rate of MREFs in American homes derived from the RECS
2020 data. For more details on this alternative scenario and the
resulting NES and NPV results, see chapter 9 and appendix 10C of the
NOPR TSD, respectively. As part of its request for comment below,
DOE requests input on its shipments modeling.
\35\ Greenblatt, J.B., S.J. Young, H.-C. Yang, T. Long, B.
Beraki, S.K. Price, S. Pratt, H. Willem, L.-B. Desroches, and S.M.
Donovan. U.S. Residential Miscellaneous Refrigeration Products:
Results from Amazon Mechanical Turk Surveys. 2014. Lawrence Berkeley
National Laboratory: Berkeley, CA. Report No. LBNL-6537E.
\36\ Donovan, S.M., S.J. Young, and J.B. Greenblatt. Ice-Making
in the U.S.: Results from an Amazon Mechanical Turk Survey. Lawrence
Berkeley National Laboratory. Report No. LBNL-183899.
---------------------------------------------------------------------------
AHAM commented that the methodology DOE used to develop shipments
in the preliminary analysis was based on findings of a Lawrence
Berkeley National Laboratory (``LBNL'') study taken place nine years
ago and that DOE should improve its data collection effort and consider
other data sources. AHAM conducted another data collection among its
members for 2021 shipments by product class in response to DOE's
comment regarding AHAM shipments from the RFI (AHAM, No. 18 at p. 2-5).
A separate confidential shipment data submission disaggregated by
product class and capacity was provided by AHAM along with its comment.
AHAM stated that the data they provided for 2021 shipments by
product class and efficiency varies substantially from the data and
assumptions in DOE's aforementioned shipments analysis (AHAM, No. 18 at
p. 2). Furthermore, AHAM asserted that the bulk of the market lies at
lower efficiency levels, its membership represents a majority of the
market, and shipments are significantly lower than what DOE is
projecting. Finally, AHAM noted that DOE should further investigate
other data sources to collect accurate information from non-AHAM
members (including NPD,\37\ TraQline data, and manufacturer interviews)
rather than relying on calculations whose assumptions may not be
accurate. Sub Zero echoed AHAM's comments and suggested DOE rethink its
approach using manufacturer-provided data (Sub Zero, No. 17 at p. 2).
---------------------------------------------------------------------------
\37\ https://www.npd.com/.
---------------------------------------------------------------------------
DOE appreciates the shipments data submitted by AHAM, which were
disaggregated by product class and efficiency. As discussed earlier in
this NOPR, DOE used the efficiency distributions by product class to
match those submitted by AHAM. DOE also assumed that the market share
of each product class (in relation to the total MREF shipments) matched
the market shares provided by AHAM. To estimate total MREF shipments,
DOE utilized the AHAM shipments data and AHAM-member information and
reviewed the TraQline data from 2020 Q1 to 2022 Q1 to estimate non-
AHAM-member
[[Page 19408]]
shipments.\38\ Based on this approach, DOE's estimate of the MREF
shipments for the whole market was consistent with the total number of
shipments estimated using DOE's approach discussed earlier and used in
the January 2022 Preliminary Analysis. Hence, DOE continued using the
same approach to develop the total MREF shipments, but incorporated the
product class breakdown provided by AHAM to re-distribute the total
shipments by product class.
---------------------------------------------------------------------------
\38\ DOE also collected and reviewed manufacturer interview data
but was unable to collect a representative sample that would allow
it to estimate non-AHAM-member shipments data.
---------------------------------------------------------------------------
DOE is requesting comment on this approach and welcomes comment and
data related to the total MREF shipments, MREF shipments by product
class, and the non-AHAM-member shipments.
H. National Impact Analysis
The NIA assesses the NES and the 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.\39\
(``Consumer'' in this context refers to consumers of the product being
regulated.) DOE calculates the NES and NPV for the potential standard
levels considered 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. For the present analysis, DOE
projected the energy savings, operating cost savings, product costs,
and NPV of consumer benefits over the lifetime of MREFs sold from 2029
through 2058.
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\39\ The NIA accounts for impacts in the 50 states and U.S.
territories.
---------------------------------------------------------------------------
DOE evaluates the impacts of new or 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
product 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 product 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 products with efficiencies greater than the standard.
DOE uses a model coded in the Python programming language to
calculate the energy savings and the national consumer costs and
savings from each TSL and presents the results in the form of a
spreadsheet. 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.6 summarizes the inputs and methods DOE used for the NIA
analysis for the NOPR. Discussion of these inputs and methods follows
the table. See chapter 10 of the NOPR TSD for further details.
Table IV.6--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.............................. Annual shipments from shipments
model.
Compliance Date of Standard............ 2029.
Efficiency Trends...................... No trend assumed.
Annual Energy Consumption per Unit..... Calculated for each efficiency
level based on inputs from
energy use analysis.
Total Installed Cost per Unit.......... Prices for the year of
compliance are calculated in
the LCC analysis. Prices in
subsequent years are
calculated incorporating price
learning based on historical
data.
Annual Energy Cost per Unit............ Calculated for each efficiency
level using the energy use per
unit, and electricity prices
and trends.
Repair and Maintenance Cost per Unit... Annual values do not change
with efficiency level.
Energy Price Trends.................... AEO 2022 projections to 2050
and fixed at 2050 prices
thereafter.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO 2022.
Discount Rate.......................... 3 percent and 7 percent.
Present Year........................... 2022.
------------------------------------------------------------------------
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered product classes for the year of anticipated compliance with
an amended standard.
For the standards cases, DOE used a ``roll up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2029). In this scenario, the market
shares 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.
In the absence of data on trends in efficiency, DOE assumed no
efficiency trend over the analysis period for both the no-new-standards
and standards cases. For a given case, market shares by efficiency
level were held fixed to their 2029 distribution. DOE requests comment
on its assumption of no efficiency trend and seeks historical product
efficiency data.
2. National Energy Savings
The NES analysis involves a comparison of national energy
consumption of the considered products between each potential standards
case (TSL) and the case with no new or 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). DOE calculated
annual NES based on the difference in national energy consumption for
the no-new standards case and for each higher efficiency standard case.
DOE estimated energy consumption and savings based on site
[[Page 19409]]
energy and converted the electricity consumption and savings to primary
energy (i.e., the energy consumed by power plants to generate site
electricity) using annual conversion factors derived from AEO 2022.
Cumulative energy savings are the sum of the NES for each year over the
timeframe of the analysis.
Use of higher-efficiency products is occasionally associated with a
direct rebound effect, which refers to an increase in utilization of
the product due to the increase in efficiency. DOE did not find any
data on the rebound effect specific to MREFs that would indicate that
consumers would alter their utilization of their product as a result of
an increase in efficiency. MREFs are typically plugged in and operate
continuously; therefore, DOE assumed a rebound rate of 0.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (NEMS) is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \40\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the NOPR TSD.
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\40\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2018, DOE/EIA-0581(2018), April 2019.
Available at www.eia.gov/outlooks/aeo/nems/documentation/ (last
accessed September 22, 2022).
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3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are (1) total annual installed cost, (2) total
annual operating costs (energy costs and repair and maintenance costs),
and (3) a discount factor to calculate the present value of costs and
savings. DOE calculates net savings 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 each product
shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed MREF
price trends based on an experience curve calculated using historical
PPI data. DOE applied the same trends to project prices for each
product class at each considered efficiency level. By 2058, which is
the end date of the projection period, the average price of single-
speed compressor MREFs is projected to drop 14 percent and the average
price of MREFs with a variable-speed compressor is projected to drop
about 15 percent relative to 2029, the compliance year. DOE's
projection of product prices is described in appendix 10C of the NOPR
TSD.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different product price
projections on the consumer NPV for the considered TSLs for MREFs. In
addition to the default price trend, DOE considered high and low-
price- decline sensitivity cases. For the single-speed compressor MREFs
and the non-variable- speed controls portion of MREFs, DOE estimated
the high price decline and the low- price- decline scenarios based on
household refrigerator and home freezer PPI data limited to the period
between the period 1989-2008 and 2009-2021, respectively. For the
variable-speed controls portion of MREFs, DOE estimated the high price
decline and the low- price- decline scenarios based on an exponential
trend line fit of the semiconductor PPI between the period 1994-2021
and 1967-1993, respectively. The derivation of these price trends and
the results of these sensitivity cases are described in appendix 10C of
the NOPR TSD.
The operating cost savings are energy cost savings, which are
calculated using the estimated energy savings in each year and the
projected price of the appropriate form of energy. To estimate energy
prices in future years, DOE multiplied the average regional energy
prices by the projection of annual national-average residential energy
price changes in the Reference case from AEO 2022, which has an end
year of 2050. To estimate price trends after 2050, DOE used the average
annual rate of change in prices from 2020 through 2050. As part of the
NIA, DOE also analyzed scenarios that used inputs from variants of the
AEO 2022 Reference case that have lower and higher economic growth.
Those cases have lower and higher energy price trends compared to the
Reference case. NIA results based on these cases are presented in
appendix 10C of the NOPR TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
NOPR, DOE estimated the NPV of consumer benefits using both a 3-percent
and a 7-percent real discount rate. DOE uses these discount rates in
accordance with guidance provided by the Office of Management and
Budget (OMB) to Federal agencies on the development of regulatory
analysis.\41\ 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 future consumption flows to their present value
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\41\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last
accessed September 30, 2022).
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I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels.
For this NOPR, DOE analyzed the impacts of the considered standard
levels on senior-only households. DOE did not consider low-income
consumers in this NOPR because MREFs are not products generally used by
this subgroup, as they typically cost more than comparable compact
refrigerators, which are able to maintain lower temperatures compared
to MREFs, and therefore serve a wider range of applications. The
analysis used a subset of the TraQline consumer sample composed of
households that meet the criteria for this subgroup. DOE used the LCC
and PBP spreadsheet model to
[[Page 19410]]
estimate the impacts of the considered efficiency levels on senior-only
households. Chapter 11 in the NOPR TSD describes the consumer subgroup
analysis. However, DOE acknowledges the potential limitations of this
dataset to capture possible areas of the market, in particular smaller
businesses (e.g. restaurants and bars), that are users of products such
as wine chillers. DOE believes it is likely that a fraction of the
purchasers of MREFs are likely small business owners who utilize such
cooler products to keep beverages cool within restaurants.
DOE requests comment on the subgroup analysis for MREF products,
and specifically whether to any significant extent these products are
in use by smaller or comparatively lower-income, small businesses. DOE
is also interested in understanding the number of potential small
business purchasers of MREFs that would be impacted at DOE's proposed
TSL 4 and how such impacts may be different than those of the overall
samples.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of MREFs and to estimate
the potential impacts of such standards on direct employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects and includes analyses of projected industry cash flows, the
INPV, investments in research and development (``R&D'') and
manufacturing capital, and domestic manufacturing employment.
Additionally, the MIA seeks to determine how amended energy
conservation standards might affect manufacturing employment, capacity,
and competition, as well as how standards contribute to overall
regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups, including small
business manufacturers.
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (``GRIM''), an industry cash flow model with
inputs specific to this rulemaking. The key GRIM inputs include data on
the industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various standards cases. To capture the
uncertainty relating to manufacturer pricing strategies following
amended standards, the GRIM estimates a range of possible impacts under
different scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative impact of other DOE and
non-DOE, Federal regulations, and impacts on manufacturer subgroups.
The complete MIA is outlined in chapter 12 of the NOPR TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the MREF manufacturing industry
based on the market and technology assessment and publicly available
information. This included a top-down analysis of MREF manufacturers
that DOE used to derive preliminary financial inputs for the GRIM
(e.g., revenues; materials, labor, overhead, and depreciation expenses;
selling, general, and administrative expenses (``SG&A''); and R&D
expenses). DOE also used public sources of information to further
calibrate its initial characterization of the MREF manufacturing
industry, including company filings of Form 10-Ks from the SEC,\42\
corporate annual reports, the U.S. Census Bureau's Annual Survey of
Manufactures (``ASM''),\43\ and reports from Dun & Bradstreet.\44\
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\42\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
www.sec.gov/edgar/search/ (last accessed July 1, 2022).
\43\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2020).'' Available at: www.census.gov/data/tables/time-series/econ/asm/2018-2020-asm.html (Last accessed July 15, 2022).
\44\ The Dun & Bradstreet Hoovers login is available at:
app.dnbhoovers.com (Last accessed July 15, 2022).
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In Phase 2 of the MIA, DOE prepared a framework industry cash flow
analysis to quantify the potential impacts of amended energy
conservation standards. The GRIM uses several factors to determine a
series of annual cash flows starting with the announcement of the
standard and extending over a 30-year period following the compliance
date of the standard. These factors include annual expected revenues,
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures.
In general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute to manufacturers of MREFs in order to develop other key GRIM
inputs, including product and capital conversion costs, and to gather
additional information on the anticipated effects of energy
conservation standards on revenues, direct employment, capital assets,
industry competitiveness, and manufacturer subgroups.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with representative 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 section IV.J.3 of this document for a
description of the key issues raised by manufacturers during the
interviews. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by amended
standards or that may not be accurately represented by the average cost
assumptions used to develop the industry cash flow analysis. Such
manufacturer subgroups may include small business manufacturers, low-
volume manufacturers, niche players, and/or manufacturers exhibiting a
cost structure that largely differs from the industry average. DOE
identified one subgroup for a separate impact analysis: small business
manufacturers. The small business subgroup is discussed in section
VI.B, ``Review under the Regulatory Flexibility Act'' and in chapter 12
of the NOPR TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to
amended standards that result in a higher or lower industry value. The
GRIM uses a standard, annual discounted cash flow analysis that
incorporates manufacturer costs, manufacturer markups, shipments, and
industry financial
[[Page 19411]]
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
2023 (the NOPR publication year) and continuing to 2058. DOE calculated
INPVs by summing the stream of annual discounted cash flows during this
period. For manufacturers of MREFs, DOE used a real discount rate of
7.7 percent, which was derived from industry financials and then
modified according to feedback received during manufacturer interviews.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the 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 developed critical GRIM inputs using a number of
sources, including publicly available data, results of the engineering
analysis and shipments analysis, and information gathered from industry
stakeholders during the course of manufacturer interviews. The GRIM
results are presented in section I.B.2. Additional details about the
GRIM, the discount rate, and other financial parameters can be found in
chapter 12 of the NOPR TSD.
a. Manufacturer Production Costs
Manufacturing more efficient 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 MPCs of covered products can affect the revenues,
gross margins, and cash flow of the industry. For a complete
description of the MPCs, see chapter 5 of the NOPR TSD or section IV.C
of this document.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level. Changes in sales volumes and efficiency mix over time
can significantly affect manufacturer finances. For this analysis, the
GRIM uses the NIA's annual shipment projections derived from the
shipments analysis from 2023 (the NOPR publication year) to 2058 (the
end year of the analysis period). See chapter 9 of the NOPR TSD for
additional details or section IV.G of this document.
c. Product and Capital Conversion Costs
Amended energy conservation standards could cause manufacturers to
incur 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 product 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 investments in research, development, testing,
marketing, and other non-capitalized costs necessary to make product
designs comply with amended energy conservation standards. Capital
conversion costs are investments in property, plant, and equipment
necessary to adapt or change existing production facilities such that
new compliant product designs can be fabricated and assembled.
Product Conversion Costs
DOE based its estimates of the product conversion costs necessary
to meet the varying efficiency levels on information from manufacturer
interviews, the design paths analyzed in the engineering analysis, the
prior MREF rulemaking analysis, and market share and model count
information. 81 FR 75194. Generally, manufacturers indicated a
preference to meet amended standards with design options that were
direct and relatively straight forward component swaps. However, at
higher efficiency levels, manufacturers anticipated the need for
platform redesigns. Efficiency levels that significantly altered
cabinet construction would require very large investments to update
designs. Manufacturers noted that increasing foam thickness would
require complete redesign of the cabinet, liner, and shelving due to
loss of interior volume. Additionally, extensive use of VIPs would
require redesign of the cabinet to maximize the benefits of VIPs.
Capital Conversion Costs
DOE relied on information from manufacturer interviews and the
engineering analysis to evaluate the level of capital conversion costs
would likely incur at the considered standard levels. During
interviews, manufacturers provided estimates and descriptions of the
required tooling changes that would be necessary to upgrade product
lines to meet the various efficiency levels. Based on these inputs, DOE
modeled incremental capital conversion costs for efficiency levels that
could be reached with individual components swaps. However, based on
feedback, DOE modeled higher capital conversion costs when
manufacturers would have to redesign their existing product platforms.
DOE used information from manufacturer interviews to determine the cost
of the manufacturing equipment and tooling necessary to implement
complete redesigns.
Increases in foam thickness require either reductions to interior
volume or increases to exterior volume. Many MREFs are sized to fit
standard widths, meaning any increase in foam thickness would likely
result in the loss of interior volume. Additionally, many MREFs are
sized to maximize storage of specific products (e.g., canned beverages
or wine bottles) and small changes in wall thickness could dramatically
decrease the unit storage capacity for those products. The reduction of
interior volume has significant consequences for manufacturing.
Redesigning the cabinet to increase the effectiveness of insulation
likely requires manufacturers to update designs and tooling associated
with the interior of the product. This could require investing in new
tooling to accommodate changes to the liner, shelving, drawers, and
doors.
To minimize reductions to interior volume, manufacturers may choose
to adopt VIP technology. Extensive incorporation of VIPs into designs
require significant upfront capital due to differences in the handling,
storing, and manufacturing of VIPs as compared to typical polyurethane
foams. VIPs are relatively fragile and must be protected from punctures
and rough handling. If VIPs have leaks of any size, the panel will
eventually lose much of its thermal insulative properties and
structural strength. If already installed within a cabinet wall, a
punctured VIP may significantly reduce the structural strength of the
MREF cabinet. As a result, VIPs require careful handling and
installation. Manufacturers noted the need to allocate special
warehouse space in order to ensure the VIPs are not jostled or roughly
handled in the manufacturing environment. VIPs require significantly
more warehouse space than polyurethane foams. The application of VIPs
can be difficult and may require investment in hard-tooling or robotic
systems to ensure the panels are positioned properly within the cabinet
or door. Manufacturers noted that producing cabinets with VIPs are much
more labor and time intensive than producing cabinets with typical
polyurethane foams and the increase in
[[Page 19412]]
labor can affect total production capacity.
To develop industry conversion cost estimates, DOE estimated the
number of product platforms in DOE's CCD \45\ and California Energy
Commission's Modernized Appliance Efficiency Database System
(``MAEDbS'') \46\ and scaled up the product and capital conversion
costs associated with the number of product platforms that would
require updating at each efficiency level.
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\45\ U.S. Department of Energy's Compliance Certification
Database is available at: www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A* (Last accessed September 22, 2022).
\46\ California Energy Commission's Modernized Appliance
Efficiency Database System is available at:
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx (Last
accessed September 22, 2022). DOE used this database to gather
product information not provided in DOE's CCD (e.g., manufacturer
names).
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DOE acknowledges that manufacturers may follow different design
paths to reach the various efficiency levels analyzed. An individual
manufacturer's investments depend on a range of factors, including the
company's current product offerings and product platforms, existing
production facilities and infrastructure, and make vs. buy decisions
for products. DOE's conversion cost methodology incorporated feedback
from all manufacturers that took part in interviews and extrapolated
industry values. While industry average values may not represent any
single manufacturer, DOE's modeling provides reasonable estimates of
industry-level investments.
In general, DOE assumes 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 of this
document. For additional information on the estimated capital and
product conversion costs, see chapter 12 of the NOPR TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied manufacturer markups to the MPCs
estimated in the engineering analysis for each product class and
efficiency level. Modifying these markups in the standards case yields
different sets of impacts on manufacturers. For the MIA, DOE modeled
two standards case scenarios to represent 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 scenario; and (2) a
preservation of operating profit scenario. These scenarios lead to
different manufacturer markup values that, when applied to the 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'' 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 a product class. As manufacturer production
costs increase with efficiency, this scenario implies that the per-unit
dollar profit will increase. DOE assumed a gross margin percentage of
20 percent for freestanding compact coolers and 28 percent for all
other product classes.\47\ Manufacturers tend to believe it is
optimistic to assume that they would be able to maintain the same gross
margin percentage as their production costs increase, particularly for
minimally efficient products. Therefore, this scenario represents a
high bound of industry profitability under an amended energy
conservation standard.
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\47\ The gross margin percentages of 20 percent and 28 percent
are based on manufacturer markups of 1.25 and 1.38 percent,
respectively.
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In the preservation of operating profit scenario, as the cost of
production goes up under a standards case, manufacturers are generally
required to reduce their manufacturer markups to a level that maintains
base-case operating profit. DOE implemented this scenario in the GRIM
by lowering the manufacturer markups at each TSL to yield approximately
the same earnings before interest and taxes in the standards case as in
the no-new-standards case in the year after the expected compliance
date of the amended standards. The implicit assumption behind this
scenario is that the industry can only maintain its operating profit in
absolute dollars after the standard takes effect.
A comparison of industry financial impacts under the two scenarios
is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
DOE interviewed manufacturers including domestic-based and foreign-
based original equipment manufacturers (``OEMs'') as well as importers.
Participants included manufacturers offering a range of product
classes, including both freestanding and built-in designs.
In interviews, DOE asked manufacturers to describe their major
concerns regarding potential increases in energy conservation standards
for MREFs. The following section highlights manufacturer concerns that
helped inform the projected potential impacts of an amended standard on
the industry. Manufacturer interviews are conducted under non-
disclosure agreements (``NDAs''), so DOE does not document these
discussions in the same way that it does public comments in the comment
summaries and DOE's responses throughout the rest of this document.
a. Supply Chain Constraints
In interviews, some manufacturers expressed concerns about the
ongoing supply chain constraints related to sourcing high-quality
components (e.g., VSCs, VIPs) as well as microprocessors and
electronics. More stringent standards, particularly at TSLs requiring a
large-scale implementation of VSCs, would require that industry source
more high-efficiency compressors and electronic components, which are
already difficult to secure. If these supply constraints continue
through the end of the conversion period, industry could face
production capacity constraints.
b. Built-In Product Classes
Some manufacturers urged DOE to conduct a separate analysis for
built-in product classes. These manufacturers noted that built-in MREFs
face design constraints related to standardized installation dimensions
(i.e., maintaining the same width and not exceeding countertop depth).
These manufacturers asserted that because of the desire to maintain the
same external dimensions, increased insulation thickness would likely
come at the expense of internal volume. For MREFs designed to store
wine, manufacturers explained that even small changes to internal
volume would have a significant impact in terms of ``bottle count,''
which is a key consumer feature and often referenced in marketing
material (e.g., a 32-bottle wine cooler). Since these products are
likely already optimized to hold the maximum number of standard-size
wine bottles, even a small reduction in the interior width could mean
losing an entire column of bottle space. Some manufacturers also noted
built-ins have
[[Page 19413]]
restricted airflow. These manufacturers stated that because of these
differences, freestanding products cannot be used as proxies for built-
in products.
4. Discussion of MIA Comments
In response to the January 2022 Preliminary Analysis, AHAM asserted
that achieving additional energy savings beyond EL 1--particularly for
built-in product classes--would require significant redesign of product
platforms and retooling. Specifically for built-in products, AHAM
asserted that given the low shipment volumes, the significant
investment required to meet more stringent efficiencies would lead to
significant degradation in INPV. (AHAM, No. 18, pp. 6, 9). AHAM also
asserted that any efficiency levels that necessitate changes in chassis
size would result in costly changes to tooling. (AHAM, No. 18, p. 6).
As discussed in section IV.J.2.c, DOE relied on multiple sources,
including manufacturer feedback from interviews, to estimate conversion
costs for each of the analyzed efficiency levels. See Table V.20 for
DOE's capital and product conversion cost estimates. See chapter 12 of
the NOPR TSD for INPV results by product grouping.
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 CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions to emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emissions factors intended
to represent the marginal impacts of the change in electricity
consumption associated with amended or new standards. The methodology
is based on results published for the AEO, including a set of side
cases that implement a variety of efficiency-related policies. The
methodology is described in appendix 13A in the NOPR TSD. The analysis
presented in this notice uses projections from AEO 2022. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (EPA).\48\
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\48\ Available at https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator (last accessed September 22, 2022).
---------------------------------------------------------------------------
FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the NOPR TSD.
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. For power sector
emissions, specific emissions intensity factors are calculated by
sector and end use. Total emissions reductions are estimated using the
energy savings calculated in the NIA.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO 2022 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO 2022,
including the emissions control programs discussed in the following
paragraphs.\49\
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\49\ For further information, see the Assumptions to AEO 2022
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed September 22, 2022).
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SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from numerous States in the eastern half of the United States
are also limited under the Cross-State Air Pollution Rule (``CSAPR'').
76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce
certain emissions, including annual SO2 emissions, and went
into effect as of January 1, 2015.\50\ AEO 2022 incorporates
implementation of CSAPR, including the update to the CSAPR ozone season
program emission budgets and target dates issued in 2016. 81 FR 74504
(Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is
enforced through the use of tradable emissions allowances. 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 another regulated EGU.
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\50\ CSAPR requires states to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (PM2.5) pollution, in order to
address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule).
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However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final 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 are
being reduced as a result of the control technologies installed on
coal-fired power plants to comply with the MATS requirements for acid
gas. In order to continue operating, coal power plants must have either
flue gas desulfurization or dry sorbent injection systems installed.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Because of the emissions reductions
under the MATS, 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
another regulated EGU. Therefore, energy conservation standards that
decrease electricity generation would generally reduce SO2
emissions. DOE estimated SO2 emissions reduction using
emissions factors based on AEO 2022.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOX
emissions would remain near
[[Page 19414]]
the limit even if electricity generation goes down. A different case
could possibly result, depending on the configuration of the power
sector in the different regions and the need for allowances, such that
NOX emissions might not remain at the limit in the case of
lower electricity demand. In this case, energy conservation standards
might reduce NOX emissions in covered States. Despite this
possibility, DOE has chosen to be conservative in its analysis and has
maintained the assumption that standards will not reduce NOX
emissions in States covered by CSAPR. Energy conservation standards
would be expected to reduce NOX emissions in the States not
covered by CSAPR. DOE used AEO 2022 data to derive NOX
emissions factors for the group of States not covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO 2022, which incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this proposed rule, for the purpose
of complying with the requirements of Executive Order 12866, DOE
considered the estimated monetary benefits from the reduced emissions
of CO2, CH4, N2O, NOX, and
SO2 that are expected to result from each of the TSLs
considered. In order to make this calculation analogous to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
the projection period for each TSL. This section summarizes the basis
for the values used for monetizing the emissions benefits and presents
the values considered in this NOPR.
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. As reflected in this rule, DOE has
reverted to its approach prior to the injunction and presents monetized
GHG abatement benefits where appropriate and permissible under law. DOE
requests comment on how to address the climate benefits and other non-
monetized effects of the proposal.
1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the SC of each pollutant (e.g., SC-CO2). These
estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive Orders, and DOE would
reach the same conclusion presented in this proposed rulemaking in the
absence of the social cost of greenhouse gases, including the February
2021 Interim Estimates presented by the Interagency Working Group on
the Social Cost of Greenhouse Gases. DOE estimated the global social
benefits of CO2, CH4, and N2O
reductions (i.e., SC-GHGs) using the estimates presented in the TSD:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
under Executive Order 13990, published in February 2021 by the IWG. The
SC-GHGs is the monetary value of the net harm to society associated
with a marginal increase in emissions in a given year, or the benefit
of avoiding that increase. In principle, SC-GHGs includes the value of
all climate change impacts, including (but not limited to) changes in
net agricultural productivity, human health effects, property damage
from increased flood risk and natural disasters, disruption of energy
systems, risk of conflict, environmental migration, and the value of
ecosystem services. The SC-GHGs therefore, reflects the societal value
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting
benefit-cost analyses of policies that affect CO2,
N2O, and CH4 emissions. As a member of the IWG
involved in the development of the February 2021 SC-GHG TSD, DOE agrees
that the interim SC-GHG estimates represent the most appropriate
estimate of the SC-GHG until revised estimates have been developed
reflecting the latest, peer reviewed science.
The SC-GHGs estimates presented here were developed over many
years, using transparent process, peer reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, the IWG, that included the DOE and other
executive branch agencies and offices was established to ensure that
agencies were using the best available science and to promote
consistency in the social cost of carbon (SC-CO2) values
used across agencies. The IWG published SC-CO2 estimates in
2010 that were developed from an ensemble of three widely cited
integrated assessment models (``IAMs'') that estimate global climate
damages using highly aggregated representations of climate processes
and the global economy combined into a single modeling framework. The
three IAMs were run using a common set of input assumptions in each
model for future population, economic, and CO2 emissions
growth, as well as equilibrium climate sensitivity--a measure of the
globally averaged temperature response to increased atmospheric
CO2 concentrations. These estimates were updated in 2013
based on new versions of each IAM. In August 2016 the IWG published
estimates of the social cost of methane (SC-CH4) and nitrous
oxide (SC-N2O) using methodologies that are consistent with
the methodology underlying the SC-CO2 estimates. The
modeling approach that extends the IWG SC-CO2 methodology to
non-CO2 GHGs has undergone multiple stages of peer review.
The SC-CH4 and SC-N2O estimates were developed by
Marten et al.\51\ and underwent a standard double-blind peer review
process prior to journal publication. 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
[[Page 19415]]
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).\52\ Shortly thereafter, in March 2017, President
Trump issued Executive Order 13783, which disbanded the IWG, withdrew
the previous TSDs, and directed agencies to ensure SC-CO2
estimates used in regulatory analyses are consistent with the guidance
contained in OMB's Circular A-4, ``including with respect to the
consideration of domestic versus international impacts and the
consideration of appropriate discount rates'' (Executive Order
(``E.O.'') 13783, Section 5(c)). Benefit-cost analyses following E.O.
13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and
were calculated using two discount rates recommended by Circular A-4, 3
percent and 7 percent. All other methodological decisions and model
versions used in SC-GHG calculations remained the same as those used by
the IWG in 2010 and 2013, respectively.
---------------------------------------------------------------------------
\51\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold,
and A. Wolverton. Incremental CH4 and N2O
mitigation benefits consistent with the U.S. Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
\52\ National Academies of Sciences, Engineering, and Medicine.
Valuing Climate Damages: Updating Estimation of the Social Cost of
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------
On January 20, 2021, President Biden issued E.O. 13990, which re-
established the IWG and directed it to ensure that the U.S.
Government's 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 SC-GHG estimates currently used in Federal
analyses and publishing interim estimates within 30 days of the E.O.
that reflect the full impact of GHG emissions, including by taking
global damages into account. The interim SC-GHG estimates published in
February 2021 are used here to estimate the climate benefits for this
proposed rulemaking. The E.O. instructs the IWG to undertake a fuller
update of the SC-GHG estimates by January 2022 that takes into
consideration the advice of the National Academies (2017) and other
recent scientific literature. The February 2021 SC-GHG TSD provides a
complete discussion of the IWG's initial review conducted under
E.O.13990. In particular, the IWG found that the SC-GHG estimates used
under E.O. 13783 fail to reflect the full impact of GHG emissions in
multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O.
13783 fail to fully capture many climate impacts that affect the
welfare of U.S. citizens and residents, and those impacts are better
reflected by global measures of the SC-GHG. Examples of omitted effects
from the E.O. 13783 estimates include direct effects on U.S. citizens,
assets, and investments located abroad, supply chains, U.S. military
assets and interests abroad, and tourism, and spillover pathways such
as economic and political destabilization and global migration that can
lead to adverse impacts on U.S. national security, public health, and
humanitarian concerns. 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. A wide range of scientific and economic experts have
emphasized the issue of reciprocity as support for considering global
damages of GHG emissions. If the United States does not consider
impacts on other countries, it is difficult to convince other countries
to consider the impacts of their emissions on the United States. The
only way to achieve an efficient allocation of resources for emissions
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of
damages. As a member of the IWG involved in the development of the
February 2021 SC-GHG TSD, DOE agrees with this assessment and,
therefore, in this proposed rule DOE centers attention on a global
measure of SC-GHG. This approach is the same as that taken in DOE
regulatory analyses from 2012 through 2016. A robust estimate of
climate damages that accrue only to U.S. citizens and residents does
not currently exist in the literature. As explained in the February
2021 TSD, existing estimates are both incomplete and an underestimate
of total damages that accrue to the citizens and residents of the U.S.
because they do not fully capture the regional interactions and
spillovers discussed above, nor do they include all of the important
physical, ecological, and economic impacts of climate change recognized
in the climate change literature. As noted in the February 2021 SC-GHG
TSD, the IWG will continue to review developments in the literature,
including more robust methodologies for estimating a U.S.-specific SC-
GHG value, and explore ways to better inform the public of the full
range of carbon impacts. As a member of the IWG, DOE will continue to
follow developments in the literature pertaining to this issue.
Second, the IWG found that the use of the social rate of return on
capital (7 percent under current OMB Circular A-4 guidance) to discount
the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies (2017) and the economic literature, the IWG continued to
conclude that the consumption rate of interest is the theoretically
appropriate discount rate in an intergenerational context,\53\ and
recommended that discount rate uncertainty and relevant aspects of
intergenerational ethical considerations be accounted for in selecting
future discount rates.
---------------------------------------------------------------------------
\53\ Interagency Working Group on Social Cost of Carbon. Social
Cost of Carbon for Regulatory Impact Analysis Under Executive Order
12866. 2010. United States Government. (Last accessed September 22,
2022.) www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of
Carbon. Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. 2013. (Last accessed
September 22, 2022.) www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact; Interagency Working
Group on Social Cost of Greenhouse Gases, United States Government.
Technical Support Document: Technical Update on the Social Cost of
Carbon for Regulatory Impact Analysis Under Executive Order 12866.
August 2016. (Last accessed September 22, 2022.) www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf;
Interagency Working Group on Social Cost of Greenhouse Gases, United
States Government. Addendum to Technical Support Document on Social
Cost of Carbon for Regulatory Impact Analysis Under Executive Order
12866: Application of the Methodology to Estimate the Social Cost of
Methane and the Social Cost of Nitrous Oxide. August 2016. (Last
accessed September 22, 2022.) www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf.
---------------------------------------------------------------------------
Furthermore, the damage estimates developed for use in the SC-GHG
are estimated in consumption-equivalent terms, and so an application of
OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. DOE agrees with this
assessment and will continue to follow developments in the literature
[[Page 19416]]
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3% and 7% discount rates as
``default'' values, Circular A-4 also reminds agencies that ``different
regulations may call for different emphases in the analysis, depending
on the nature and complexity of the regulatory issues and the
sensitivity of the benefit and cost estimates to the key assumptions.''
On discounting, Circular A-4 recognizes that ``special ethical
considerations arise when comparing benefits and costs across
generations,'' and Circular A-4 acknowledges that analyses may
appropriately ``discount future costs and consumption benefits . . . at
a lower rate than for intragenerational analysis.'' In the 2015
Response to Comments on the Social Cost of Carbon for Regulatory Impact
Analysis, OMB, DOE, and the other IWG members recognized that
``Circular A-4 is a living document'' and ``the use of 7 percent is not
considered appropriate for intergenerational discounting. There is wide
support for this view in the academic literature, and it is recognized
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate
is not appropriate to apply to value the social cost of greenhouse
gases in the analysis presented in this analysis. In this analysis, to
calculate the present and annualized values of climate benefits, DOE
uses the same discount rate as the rate used to discount the value of
damages from future GHG emissions, for internal consistency. That
approach to discounting follows the same approach that the February
2021 TSD recommends ``to ensure internal consistency--i.e., future
damages from climate change using the SC-GHG at 2.5 percent should be
discounted to the base year of the analysis using the same 2.5 percent
rate.'' DOE has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can ``be combined in RIAs with
other cost and benefits estimates that may use different discount
rates.'' The National Academies reviewed ``several options,'' including
``presenting all discount rate combinations of other costs and benefits
with [SC-GHG] estimates.''
As a member of the IWG involved in the development of the February
2021 SC-GHG TSD, DOE agrees with this assessment and will continue to
follow developments in the literature pertaining to this issue. While
the IWG works to assess how best to incorporate the latest, peer
reviewed science to develop an updated set of SC-GHG estimates, it set
the interim estimates to be the most recent estimates developed by the
IWG prior to the group being disbanded in 2017. The estimates rely on
the same models and harmonized inputs and are calculated using a range
of discount rates. As explained in the February 2021 SC-GHG TSD, the
IWG has recommended that 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
recommended for use in benefit-cost analyses: an average value
resulting from the model runs for each of three discount rates (2.5
percent, 3 percent, and 5 percent), 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. As explained
in the February 2021 SC-GHG TSD, and DOE agrees, 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.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
lower.\54\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions''--i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic (both market and
nonmarket) damages--lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the IAMs, their incomplete treatment of
adaptation and technological change, the incomplete way in which inter-
regional and intersectoral linkages are modeled, uncertainty in the
extrapolation of damages to high temperatures, and inadequate
representation of the relationship between the discount rate and
uncertainty in economic growth over long time horizons. Likewise, the
socioeconomic and emissions scenarios used as inputs to the models do
not reflect new information from the last decade of scenario generation
or the full range of projections. The modeling limitations do not all
work in the same direction in terms of their influence on the SC-
CO2 estimates. However, as discussed in the February 2021
TSD, the IWG has recommended that, taken together, the limitations
suggest that the interim SC-GHG estimates used in this final rule
likely underestimate the damages from GHG emissions. DOE concurs with
this assessment.
---------------------------------------------------------------------------
\54\ Interagency Working Group on Social Cost of Greenhouse
Gases (IWG). 2021. Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government. Available at:
https://www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/. (Last accessed September 22, 2022).
---------------------------------------------------------------------------
DOE's derivations of the SC-GHG (SC-CO2, SC-
N2O, and SC-CH4) values used for this NOPR are
discussed in the following sections, and the results of DOE's analyses
estimating the benefits of the reductions in emissions of these GHGs
are presented in section I.B.6 of this document.
a. Social Cost of Carbon
The SC-CO2 values used for this NOPR were generated
using the values presented in the 2021 update from the IWG's February
2021 SC-GHG TSD. Table IV.7 shows the updated sets of SC-CO2
estimates from the latest interagency update in 5-year increments from
2020 to 2050. The full set of annual values used is presented in
Appendix 14-A of the NOPR TSD. For purposes of capturing the
uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate include all four sets of SC-CO2
values, as recommended by the IWG.\55\
---------------------------------------------------------------------------
\55\ For example, the February 2021 TSD discusses how the
understanding of discounting approaches suggests that discount rates
appropriate for intergenerational analysis in the context of climate
change may be lower than 3 percent.
[[Page 19417]]
Table IV.7--Annual SC-CO2Values From 2021 Interagency Update
[2020-2050 (2020$ per metric ton CO2)]
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
------------------------------------------------------------------------------
Year 3% (95th
5% (Average) 3% (Average) 2.5% (Average) percentile)
----------------------------------------------------------------------------------------------------------------
2020 14 51 76 152
2025 17 56 83 169
2030 19 62 89 187
2035 22 67 96 206
2040 25 73 103 225
2045 28 79 110 242
2050 32 85 116 260
----------------------------------------------------------------------------------------------------------------
For 2051 to 2070, DOE used estimates published by EPA, adjusted to
2020$.\56\ These estimates are based on methods, assumptions, and
parameters identical to the 2020-2050 estimates published by the IWG.
DOE expects additional climate benefits to accrue for any longer-life
MREFs after 2070, but a lack of available SC-CO2 estimates
for emissions years beyond 2070 prevents DOE from monetizing these
potential benefits in this analysis. If further analysis of monetized
climate benefits beyond 2070 becomes available prior to the publication
of the final rule, DOE will include that analysis in the final rule.
---------------------------------------------------------------------------
\56\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at: https://www.federalregister.gov/documents/2021/12/30/2021-27854/revised-2023-and-later-model-year-light-duty-vehicle-greenhouse-gas-emissions-standards (last accessed September 22, 2022).
---------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2021$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. 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 SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC- N2O values used for this
NOPR were generated using the values presented in the February 2021 SC-
GHG TSD. Table IV.8 shows the updated sets of SC-CH4 and SC-
N2O estimates from the latest interagency update in 5-year
increments from 2020 to 2050. The full set of annual values used is
presented in appendix 14-A of the NOPR TSD. To capture the
uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG.
DOE derived values after 2050 using the approach described above for
the SC-CO2.
Table IV.8--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 (discount rate and statistic) SC-N2O (discount rate and statistic)
-------------------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% (95th 5% 3% 2.5% 3% (95th
(average) (average) (average) Percentile) (average) (average) (average) Percentile)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020................................ 670 1500 2000 3900 5800 18000 27000 48000
2025................................ 800 1700 2200 4500 6800 21000 30000 54000
2030................................ 940 2000 2500 5200 7800 23000 33000 60000
2035................................ 1100 2200 2800 6000 9000 25000 36000 67000
2040................................ 1300 2500 3100 6700 10000 28000 39000 74000
2045................................ 1500 2800 3500 7500 12000 30000 42000 81000
2050................................ 1700 3100 3800 8200 13000 33000 45000 88000
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE
adjusted the values to 2021$ using the implicit price deflator for
gross domestic product (``GDP'') from the Bureau of Economic Analysis.
To calculate a present value of the stream of monetary values, DOE
discounted the values in each of the cases using the specific discount
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
For this NOPR analysis, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using the latest benefit-per-ton estimates for that sector
from the EPA's Benefits Mapping and Analysis Program.\57\ DOE used
EPA's values for PM2.5-related benefits associated with
NOX and SO2 and for ozone-related benefits
associated with NOX for 2025 2030, and 2040, calculated with
discount rates of 3 percent and 7 percent. DOE used linear
interpolation to define values for the years not given in the 2025 to
2040 period; for years beyond 2040 the values are held constant. DOE
derived values specific to the sector for MREFs using a method
described in appendix 14B of the NOPR TSD.
---------------------------------------------------------------------------
\57\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors
from 21 Sectors. (Last accessed September 22, 2022) www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------
[[Page 19418]]
DOE multiplied the site emissions reduction (in 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.
M. Utility Impact Analysis
The utility impact analysis estimates the changes in installed
electrical capacity and generation projected to result for each
considered TSL. The analysis is based on published output from the NEMS
associated with AEO 2022. NEMS produces the AEO Reference case, as well
as a number of side cases that estimate the economy-wide impacts of
changes to energy supply and demand. For the current analysis, impacts
are quantified by comparing the levels of electricity sector
generation, installed capacity, fuel consumption and emissions in the
AEO 2022 Reference case and various side cases. Details of the
methodology are provided in the appendices to chapters 13 and 15 of the
NOPR TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new or
amended energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed 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. 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 consumers on energy, (2) reduced spending on new
energy supply by the utility industry, (3) increased consumer spending
on the products to which the new standards apply and other goods and
services, 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 BLS. BLS regularly publishes its
estimates of the number of jobs per million dollars of economic
activity in different sectors of the economy, as well as the jobs
created elsewhere in the economy by this same economic activity. Data
from BLS indicate that expenditures in the utility sector generally
create fewer jobs (both directly and indirectly) than expenditures in
other sectors of the economy.\58\ 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 suggest that net national employment may
increase due to shifts in economic activity resulting from energy
conservation standards.
---------------------------------------------------------------------------
\58\ See U.S. Department of Commerce--Bureau of Economic
Analysis. Regional Multipliers: A User Handbook for the Regional
Input-Output Modeling System (RIMS II). 1997. U.S. Government
Printing Office: Washington, DC. Available at apps.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed September 30, 2022).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this NOPR using an input/output model of the U.S.
economy called Impact of Sector Energy Technologies version 4
(``ImSET'').\59\ 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.
---------------------------------------------------------------------------
\59\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W.
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User Guide. 2015. Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and that 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 used ImSET only to generate results
for near-term timeframes (2029-2033), where these uncertainties are
reduced. For more details on the employment impact analysis, see
chapter 16 of the NOPR TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for MREFs.
It addresses the TSLs examined by DOE, the projected impacts of each of
these levels if adopted as energy conservation standards for MREFs, and
the standards levels that DOE is proposing to adopt in this NOPR.
Additional details regarding DOE's analyses are contained in the NOPR
TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates potential amended standards for
products and equipment by grouping individual efficiency levels for
each class into TSLs. Use of TSLs allows DOE to identify and consider
manufacturer cost interactions between the product classes, to the
extent that there are such interactions, and market cross elasticity
from consumer purchasing decisions that may change when different
standard levels are set.
In the analysis conducted for this NOPR, DOE analyzed the benefits
and burdens of five TSLs for MREFs. DOE developed TSLs that combine
efficiency levels for each analyzed product class. These TSLs were
developed by combining specific efficiency levels for each of the MREF
product classes analyzed by DOE. TSL 1 represents a 10 percent increase
in efficiency, corresponding to the lowest analyzed efficiency level
above the baseline for each analyzed product class. TSL 2 represents
efficiency levels consistent with Energy Star requirements for coolers
and a modest increase in efficiency for certain combination cooler
product classes. TSL 3 increases the efficiency for freestanding (FC)
and built-in (BIC) coolers by an additional 10% compared to TSL 1,
while maintaining the same efficiency levels as TSL 2 for combination
coolers. TSL 4 further increases the efficiency levels for the product
classes that make up the vast majority of MREF shipments (FCC, FC, C-
13A). TSL 5 represents max-tech for each product class. DOE presents
the
[[Page 19419]]
results for the TSLs in this document, while the results for all
efficiency levels that DOE analyzed are in the NOPR TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential amended energy conservation
standards for MREFs.
Table V.1--Trial Standard Levels for MREFs
--------------------------------------------------------------------------------------------------------------------------------------------------------
FCC FC BICC BIC C-13A C-13A-BI C-3A C-3A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1.................................................. EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1
TSL 2.................................................. EL 2 EL 1 EL 3 EL 3 EL 2 EL 2 EL 1 EL 1
TSL 3.................................................. EL 2 EL 2 EL 3 EL 2 EL 2 EL 2 EL 1 EL 1
TSL 4.................................................. EL 3 EL 3 EL 3 EL 2 EL 3 EL 3 EL 1 EL 1
TSL 5.................................................. EL 5 EL 5 EL 5 EL 5 EL 5 EL 5 EL 4 EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on MREF consumers by looking at
the effects that potential amended standards at each TSL would have on
the LCC and PBP. DOE also examined the impacts of potential standards
on selected consumer subgroups. These analyses are discussed in the
following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs and operating costs (i.e., annual energy use, energy
prices, energy price trends, and repair costs). The LCC calculation
also uses product lifetime and a discount rate. Chapter 8 of the NOPR
TSD provides detailed information on the LCC and PBP analyses.
Table V.2 through Table V.17 show the LCC and PBP results for the
TSLs considered for each product class. In the first of each pair of
tables, the simple payback is measured relative to the baseline
product. In the second table, 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). Because some consumers
purchase products with higher efficiency in the no-new-standards case,
the average savings are less than the difference between the average
LCC of the baseline product and the average LCC at each TSL. The
savings refer only to consumers who are affected by a standard at a
given TSL. Those who already purchase a product with efficiency at or
above a given TSL are not affected. Consumers for whom the LCC
increases at a given TSL experience a net cost.
Table V.2--Average LCC and PBP Results for FCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 533.1 27.6 242.8 775.9 .............. 10.6
1................................. 1................... 538.3 25.0 220.2 758.5 2.0 10.6
2,3............................... 2................... 559.6 22.3 195.9 755.5 5.0 10.6
4................................. 3................... 586.0 19.7 173.6 759.6 6.8 10.6
4................... 627.6 17.1 150.0 777.5 9.0 10.6
5................................. 5................... 713.1 11.9 104.3 817.4 11.5 10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for FCC
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1................................... 1 17.4 2.8
2,3................................. 2 17.2 33.5
4................................... 3 12.6 49.5
4 -5.4 65.7
5................................... 5 -45.3 77.8
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
[[Page 19420]]
Table V.4--Average LCC and PBP Results for FC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,391.3 41.5 473.2 1,864.5 .............. 14.6
1,2............................... 1................... 1,415.2 37.4 425.8 1,841.0 5.8 14.6
3................................. 2................... 1,421.3 33.6 382.3 1,803.6 3.8 14.6
4................................. 3................... 1,487.3 29.5 335.5 1,822.8 8.0 14.6
4................... 1,705.2 27.6 313.6 2,018.8 22.5 14.6
5................................. 5................... 1,727.0 26.6 302.6 2,029.6 22.5 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.5--Average LCC Savings Relative to the No-New-Standards Case for FC
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1,2................................. 1 23.5 8.8
3................................... 2 47.2 1.6
4................................... 3 28.0 45.5
4 -168.0 94.7
5................................... 5 -178.8 94.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.6--Average LCC and PBP Results for BICC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 735.1 27.6 244.8 979.8 .............. 10.7
1................................. 1................... 741.3 25.0 221.3 962.5 2.4 10.7
2................... 766.3 22.3 197.8 964.1 5.9 10.7
2-4............................... 3................... 797.7 19.7 174.3 972.0 7.9 10.7
4................... 847.2 17.1 150.8 998.0 10.6 10.7
5................................. 5................... 949.6 12.0 106.1 1,055.7 13.8 10.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.7--Average LCC Savings Relative to the No-New-Standards Case for BICC
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1................................... 1 17.2 1.0
2 11.3 11.1
2-4................................. 3 2.9 15.3
4 -23.2 20.1
5................................... 5 -80.9 22.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.8--Average LCC and PBP Results for BIC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,871.9 41.6 474.4 2,346.3 .............. 14.6
1................................. 1................... 1,897.3 37.6 428.9 2,326.2 6.4 14.6
[[Page 19421]]
3,4............................... 2................... 1,903.8 33.6 383.4 2,287.2 4.0 14.6
2................................. 3................... 1,974.0 29.7 337.9 2,311.9 8.6 14.6
4................... 2,205.9 27.7 315.2 2,521.1 24.0 14.6
5................................. 5................... 2,229.1 26.5 301.5 2,530.6 23.6 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.9 Average LCC Savings Relative to the No-New-Standards Case for BIC
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL Level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1................................... 1 20.3 18.7
3,4................................. 2 57.3 3.6
2................................... 3 21.2 53.4
4 -187.9 94.6
5................................... 5 -197.4 94.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.10--Average LCC and PBP Results for C-13A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,148.0 33.8 295.5 1,443.5 .............. 10.6
1................................. 1................... 1,151.6 30.6 267.2 1,418.7 1.1 10.6
2,3............................... 2................... 1,154.7 28.9 253.0 1,407.7 1.4 10.6
4................................. 3................... 1,192.3 27.3 238.9 1,431.2 6.9 10.6
4................... 1,234.6 25.7 224.9 1,459.5 10.7 10.6
5................................. 5................... 1,301.3 24.6 215.3 1,516.6 16.7 10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.11--Average LCC Savings Relative to the No-New-Standards Case for C-13A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1................................... 1 24.8 0.3
2,3................................. 2 35.5 1.0
4................................... 3 12.0 47.5
4 -16.3 74.3
5................................... 5 -73.4 90.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.12--Average LCC and PBP Results for C-13A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,371.7 37.1 327.9 1,699.6 .............. 10.6
1................................. 1................... 1,375.4 33.6 296.5 1,672.0 1.1 10.6
2,3............................... 2................... 1,378.7 31.8 280.8 1,659.6 1.3 10.6
4................................. 3................... 1,418.8 30.0 265.2 1,684.0 6.7 10.6
4................... 1,463.8 28.2 249.5 1,713.3 10.4 10.6
[[Page 19422]]
5................................. 5................... 1,534.8 27.1 239.0 1,773.9 16.3 10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.13--Average LCC Savings Relative to the No-New-Standards Case for C-13A-BI
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC Savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1................................... 1 27.6 0.3
2,3................................. 2 39.6 0.7
4................................... 3 15.3 44.4
4 -14.1 72.0
5................................... 5 -74.6 89.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.14--Average LCC and PBP Results for C-3A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,289.8 34.0 388.9 1,678.7 .............. 14.6
1-4............................... 1................... 1,295.4 30.8 351.7 1,647.1 1.7 14.6
2................... 1,344.7 29.3 334.3 1,678.9 11.5 14.6
3................... 1,510.5 27.7 316.6 1,827.0 35.0 14.6
5................................. 4................... 1,611.2 26.4 300.9 1,912.1 41.9 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.15--Average LCC Savings Relative to the No-New-Standards Case for C-3A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1-4................................. 1 31.5 0.0
2 -0.3 63.9
3 -148.4 98.3
5................................... 4 -233.4 99.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.16--Average LCC and PBP Results for C-3A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............ 1,760.9 38.9 444.5 2,205.4 .............. 14.6
1-4............................... 1................... 1,766.9 35.2 401.8 2,168.7 1.6 14.6
2................... 1,819.3 33.3 380.5 2,199.8 10.5 14.6
3................... 1,995.8 31.4 359.2 2,355.0 31.6 14.6
5................................. 4................... 2,103.0 30.0 343.1 2,446.1 38.7 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
[[Page 19423]]
Table V.17--Average LCC Savings Relative to the No-New-Standards Case for C-3A-BI
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
Efficiency -----------------------------------------------------------
TSL level Average LCC savings * Percent of consumers that
(2021$) experience net cost
----------------------------------------------------------------------------------------------------------------
1-4................................. 1 36.7 0.0
2 5.5 57.8
3 -149.6 97.5
5................................... 4 -240.7 98.9
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on senior-only households. DOE did not consider low-
income consumers in this NOPR because MREFs are not products generally
used by this subgroup, as they typically cost more than comparable
compact refrigerators, which are able to maintain lower temperatures
compared to MREFs, and therefore serve a wider range of applications.
Table V.18 compares the average LCC savings and PBP at each TSL for the
senior-only consumer subgroup with similar metrics for the entire
consumer sample for all product classes. In most cases, the average LCC
savings and PBP for senior-only households at the considered efficiency
levels are improved (i.e., higher LCC savings and equal or lesser
payback periods) from the average for all households. Chapter 11 of the
NOPR TSD presents the complete LCC and PBP results for the subgroup.
Table V.18--Comparison of LCC Savings and PBP for Senior-Only Consumer Subgroup and All Consumers
----------------------------------------------------------------------------------------------------------------
Average LCC savings * (2021$) Simple payback years
---------------------------------------------------------------
TSL Senior-only Senior-only
households All households households All households
----------------------------------------------------------------------------------------------------------------
FCC
1........................................... 18.4 17.4 2.0 2.0
2,3......................................... 19.0 17.2 4.8 5.0
4........................................... 15.1 12.6 6.5 6.8
5........................................... -40.5 -45.3 11.1 11.5
FC
1,2......................................... 26.1 23.5 5.6 5.8
3........................................... 51.2 47.2 3.6 3.8
4........................................... 33.4 28.0 7.7 8.0
5........................................... -178.1 -178.8 21.7 22.5
BICC
1........................................... 18.4 17.2 2.5 2.4
2-4......................................... 1.6 2.9 8.3 7.9
5........................................... -94.3 -80.9 14.4 13.8
BIC
1........................................... 20.4 20.3 6.7 6.4
3,4......................................... 59.8 57.3 4.2 4.0
2........................................... 18.8 21.2 8.9 8.6
5........................................... -224.5 -197.4 24.6 23.6
C-13A
1........................................... 26.4 24.8 1.1 1.1
2,3......................................... 37.9 35.5 1.3 1.4
4........................................... 14.2 12.0 6.7 6.9
5........................................... -72.9 -73.4 16.3 16.7
C-13A-BI
1........................................... 29.1 27.6 1.1 1.1
2,3......................................... 41.7 39.6 1.4 1.3
4........................................... 14.0 15.3 7.0 6.7
5........................................... -86.7 -74.6 17.0 16.3
C-3A
1-4......................................... 33.5 31.5 1.7 1.7
5........................................... -237.1 -233.4 40.6 41.9
C-3A-BI
1-4......................................... 39.5 36.7 1.7 1.6
5........................................... -268.9 -240.7 40.1 38.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
c. Rebuttable Presumption Payback
As discussed in section IV.F.9, EPCA establishes a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for a product that meets the
standard is less than three times the value of the first year's energy
savings resulting from the standard. In calculating a rebuttable
presumption payback period for each of the considered TSLs, DOE used
discrete values, and, as required by EPCA, based the energy use
calculation on the DOE test procedure for MREFs, with
[[Page 19424]]
adjustment for icemaker adder, as discussed in more detail in section
III.B of this document. In contrast, the PBPs presented in section
I.B.a were calculated using distributions that reflect the range of
energy use in the field.
Table V.19 presents the rebuttable presumption payback periods for
the considered TSLs for MREFs. While DOE examined the rebuttable
presumption criterion, it considered whether the proposed standard
levels considered for the NOPR are economically justified through a
more detailed analysis of the economic impacts of those levels,
pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range
of impacts to the consumer, manufacturer, Nation, and environment. The
results of that analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level,
thereby supporting or rebutting the results of any preliminary
determination of economic justification.
Table V.19--Rebuttable Presumption Payback Periods
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Rebuttable payback period (years)
Efficiency level -------------------------------------------------------------------------------------------------------------------------------
FCC FC BICC BIC C-13A C-13A-BI C-3A C-3A-BI
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................... 2.0 5.5 2.3 6.2 1.1 1.0 1.7 1.6
2............................................................... 4.8 3.6 5.7 3.9 1.3 1.3 11.1 10.2
3............................................................... 6.6 7.6 7.7 8.3 6.7 6.4 33.8 30.7
4............................................................... 8.7 21.6 10.3 23.2 10.4 10.1 40.4 37.6
5............................................................... 11.2 21.6 13.3 22.8 16.3 15.7 .............. ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of MREFs. The following section
describes the expected impacts on manufacturers at each considered TSL.
Chapter 12 of the NOPR TSD explains the analysis in further detail.
a. Industry Cash Flow Analysis Results
In this section, DOE provides GRIM results from the analysis, which
examines changes in the industry that would result from a standard. The
following tables summarize the estimated financial impacts (represented
by changes in INPV) of potential amended energy conservation standards
on manufacturers of MREFs, as well as the conversion costs that DOE
estimates manufacturers of MREFs would incur at each TSL.
The impact of potential amended energy conservation standards were
analyzed under two scenarios: (1) the preservation of gross margin
percentage; and (2) the preservation of operating profit, as discussed
in section IV.J.2.d of this document. The preservation of gross margin
percentages applies a ``gross margin percentage'' of 20 percent for
freestanding compact coolers and 28 percent for all other product
classes, across all efficiency levels.\60\ This scenario assumes that a
manufacturer's per-unit dollar profit would increase as MPCs increase
in the standards cases and represents the upper bound to industry
profitability under potential new and amended energy conservation
standards.
---------------------------------------------------------------------------
\60\ The gross margin percentages of 20 percent and 28 percent
are based on manufacturer markups of 1.25 and 1.38 percent,
respectively.
---------------------------------------------------------------------------
The preservation of operating profit scenario reflects
manufacturers' concerns about their inability to maintain margins as
MPCs increase to reach more stringent efficiency levels. In this
scenario, while manufacturers make the necessary investments required
to convert their facilities to produce compliant products, operating
profit does not change in absolute dollars and decreases as a
percentage of revenue. The preservation of operating profit scenario
results in the lower (or more severe) bound to impacts of potential
amended standards on industry.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding INPV for each TSL. INPV is the sum of the discounted
cash flows to the industry from the NOPR publication year through the
end of the analysis period (2023-2058). The ``change in INPV'' results
refer to the difference in industry value between the no-new-standards
case and standards case at each TSL. To provide perspective on the
short-run cash flow impact, DOE includes a comparison of free cash flow
between the no-new-standards case and the standards case at each TSL in
the year before amended 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.
Conversion costs are one-time investments for manufacturers to
bring their manufacturing facilities and product designs into
compliance with potential amended standards. As described in section
IV.J.2.c of this document, conversion cost 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 costs
can have a significant impact on the short-term cash flow on the
industry and generally result in lower free cash flow in the period
between the publication of the final rule and the compliance date of
potential amended standards. Conversion costs are independent of the
manufacturer markup scenarios and are not presented as a range in this
analysis.
Table V.20--Manufacturer Impact Analysis Results for Miscellaneous Refrigeration Products
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-
Unit Standards Case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................... 2021$ Million.................... 742.0 711.3 to 714.7 695.4 to 706.2 697.3 to 706.6 652.3 to 679.4 356.7 to 458.8
Change in INPV................................ %................................ .............. (4.1) to (3.7) (6.3) to (4.8) (6.0) to (4.8) (12.1) to (8.4) (51.9) to (38.2)
Free Cash Flow (2028)......................... 2021$ Million.................... 55.3 37.1 30.1 31.5 9.5 (169.3)
Change in Free Cash Flow (2028)............... %................................ .............. (33.0) (45.7) (43.1) (82.8) (406.0)
[[Page 19425]]
Product Conversion Costs...................... 2021$ Million.................... .............. 52.4 66.4 68.8 101.1 364.5
Capital Conversion Costs...................... 2021$ Million.................... .............. 1.2 6.2 1.2 25.8 174.5
Total Conversion Costs........................ 2021$ Million.................... .............. 53.6 72.6 67.6 126.9 539.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
*Parentheses denote negative (-) values.
The following cash flow discussion refers to product classes as
defined in Table I.1 in section I of this document and the efficiency
levels and design options as detailed in Table IV.1 in section IV.C of
this document.
At TSL 1, the standard represents the lowest analyzed efficiency
level above baseline for all product classes (EL 1). The change in INPV
is expected to range from -4.1 to -3.7 percent. At this level, free
cash flow is estimated to decrease by 33.0 percent compared to the no-
new-standards case value of $55.3 million in the year 2028, the year
before the standards year. Currently, approximately 24 percent of
domestic MREF shipments meet the efficiencies required at TSL 1.
At TSL 1, DOE analyzed implementing various design options for the
range of directly analyzed product classes. These design options could
include implementing more efficient single-speed compressors, tube and
fin evaporators and/or condensers, among other technologies. At this
level, capital conversion costs are minimal since most manufacturers
can achieve TSL 1 efficiencies with relatively simple component
changes. Product conversion costs may be necessary for developing,
qualifying, sourcing, and testing more efficient components. DOE
estimates capital conversion costs of $1.2 million and product
conversion costs of $52.4 million. Conversion costs total $53.6
million.
At TSL 1, the shipment-weighted average MPC for all MREFs is
expected to increase by 0.8 percent relative to the no-new-standards
case shipment-weighted average MPC for all MREFs in 2029. Given the
relatively small increase in production costs, DOE does not project a
notable drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, the minor increase in
cashflow from the higher MSP is slightly outweighed by the $53.6
million in conversion costs, causing a slightly negative change in INPV
at TSL 1 under this scenario. Under the preservation of operating
profit scenario, manufacturers earn the same per-unit operating profit
as would be earned in the no-new-standards case, but manufacturers do
not earn additional profit from their investments. In this scenario,
the manufacturer markup decreases in 2030, the year after the analyzed
compliance year. This reduction in the manufacturer markup and the
$53.6 million in conversion costs incurred by manufacturers cause a
slightly negative change in INPV at TSL 1 under the preservation of
operating profit scenario.
At TSL 2, the standard represents efficiency levels consistent with
Energy Star requirements for coolers and a modest increase in
efficiency for certain combination cooler product classes. The change
in INPV is expected to range from -6.3 to -4.8 percent. At this level,
free cash flow is estimated to decrease by 45.7 percent compared to the
no-new-standards case value of $55.3 million in the year 2028, the year
before the standards year. Currently, approximately 11.5 percent of
domestic MREF shipments meet the efficiencies required at TSL 2.
The design options DOE analyzed for most product classes include
implementing similar design options as TSL 1, such as more efficient
single-speed compressors. For built-in coolers, the analyzed design
options also include implementing variable-speed compressors and
increased insulation thickness. For freestanding compact coolers, C-13A
and C-13A-bi, TSL 2 corresponds to EL 2. For built-in compact coolers
and built-in coolers, TSL 2 corresponds to EL 3. For the remaining
product classes, the efficiencies required at TSL 2 are the same as TSL
1. The increase in conversion costs compared to TSL 1 are largely
driven by the higher efficiencies required for built-in coolers, which
account for 3 percent of MREF shipments. For products that do not meet
this level, increasing insulation thickness would likely mean new
cabinets, liners, and fixtures as well as new shelf designs.
Implementing variable-speed compressors could require more advanced
controls and electronics and new test stations. DOE estimates capital
conversion costs of $6.2 million and product conversion costs of $66.4
million. Conversion costs total $72.6 million.
At TSL 2, the shipment-weighted average MPC for all MREFs is
expected to increase by 4.2 percent relative to the no-new-standards
case shipment-weighted average MPC for all MREFs in 2029. Given the
projected increase in production costs, DOE expects an estimated 4
percent drop in shipments in the year the standard takes effect
relative to the no-new-standards case. In the preservation of gross
margin percentage scenario, the slight increase in cashflow from the
higher MSP is outweighed by the $72.6 million in conversion costs,
causing a slightly negative change in INPV at TSL 2 under this
scenario. Under the preservation of operating profit scenario, the
manufacturer markup decreases in 2030, the year after the analyzed
compliance year. This reduction in the manufacturer markup and the
$72.6 million in conversion costs incurred by manufacturers cause a
negative change in INPV at TSL 2 under the preservation of operating
profit scenario.
At TSL 3, the standard represents an increase in efficiency for
freestanding and built-in coolers by additional 10 percent as compared
to TSL 1, while maintaining the same efficiency levels as TSL 2 for
combination coolers. The change in INPV is expected to range from -6.0
to -4.8 percent. At this level, free cash flow is estimated to decrease
by 43.1 percent compared to the no-new-standards case value of $55.3
million in the year 2028, the year before the standards year.
Currently, approximately 5.3 percent of domestic MREF shipments meet
the efficiencies required at TSL 3.
At this level, DOE analyzed similar design options as TSL 1 and TSL
2, such as implementing incrementally more efficient single-speed
compressors. For all product classes except freestanding coolers and
built-in coolers, the efficiencies required at TSL 3 are the same as
TSL 2. For freestanding coolers, TSL 3 corresponds to EL 2. For built-
in coolers, TSL 3 reflects a lower efficiency
[[Page 19426]]
level (EL 2) as compared to TSL 2 (EL 3). Industry capital conversion
costs decrease at TSL 3 as compared to TSL 2 due to the lower
efficiency level required for built-in coolers. As previously
discussed, DOE expects manufacturers of built-in coolers would likely
need to increase insulation thickness at TSL 2 (EL 3) and incorporate
variable-speed compressors. However, at TSL 3, DOE's engineering
analysis and manufacturer feedback indicate that manufacturers could
achieve EL 2 efficiencies for built-in coolers with relatively
straightforward component swaps versus a larger product redesign
associated with increasing insulation. DOE estimates capital conversion
costs of $1.2 million and product conversion costs of $68.8 million.
Conversion costs total $70.0 million.
At TSL 3, the shipment-weighted average MPC for all MREFs is
expected to increase by 3.9 percent relative to the no-new-standards
case shipment-weighted average MPC for all MREFs in 2029. Given the
projected increase in production costs, DOE expects an estimated 4
percent drop in shipments in the year the standard takes effect
relative to the no-new-standards case. In the preservation of gross
margin percentage scenario, the slight increase in cashflow from the
higher MSP is outweighed by the $70.0 million in conversion costs,
causing a slightly negative change in INPV at TSL 3 under this
scenario. Under the preservation of operating profit scenario, the
manufacturer markup decreases in 2030, the year after the analyzed
compliance year. This reduction in the manufacturer markup and the
$70.0 million in conversion costs incurred by manufacturers cause a
slightly negative change in INPV at TSL 3 under the preservation of
operating profit scenario.
At TSL 4, the standard reflects an increase in efficiency level for
the product classes that make up the vast majority of MREF shipments
(FCC, FC, C-13A). The change in INPV is expected to range from -12.1 to
-8.4 percent. At this level, free cash flow is estimated to decrease by
82.8 percent compared to the no-new-standards case value of $55.3
million in the year 2028, the year before the standards year.
Currently, approximately 3.4 percent of domestic MREF shipments meet
the efficiencies required at TSL 4.
For all product classes except built-in coolers, C-3A and C-3A-BI,
TSL 4 corresponds to EL 3. For built-in coolers, TSL 4 corresponds to
EL 2. For C-3A-BI, TSL 4 corresponds to EL 1. For C-3A, the
efficiencies required at TSL 4 are the same as TSL 3 (EL 1). At this
level, conversion costs are largely driven by the efficiencies required
for freestanding coolers, which accounts for approximately 12 percent
of industry shipments. DOE's shipments analysis estimates that no
freestanding cooler shipments currently meet the efficiencies required
at TSL 4. All manufacturers would need to update their product
platforms, which could include increasing insulation thickness and
implementing variable-speed compressors. Increasing insulation
thickness would likely result in the loss of interior volume and would
require redesign of the cabinet as well as the designs and tooling
associated with the interior of the product, such as the liner,
shelving, racks, and drawers. DOE estimates capital conversion costs of
$25.8 million and product conversion costs of $101.1 million.
Conversion costs total $126.9 million.
At TSL 4, the shipment-weighted average MPC for all MREFs is
expected to increase by 10.0 percent relative to the no-new-standards
case shipment-weighted average MPC for all MREFs in 2029. Given the
projected increase in production costs, DOE expects an estimated 10
percent drop in shipments in the year the standard takes effect
relative to the no-new-standards case. In the preservation of gross
margin percentage scenario, the increase in cashflow from the higher
MSP is outweighed by the $126.9 million in conversion costs and the
drop in annual shipments, causing a negative change in INPV at TSL 4
under this scenario. Under the preservation of operating profit
scenario, the manufacturer markup decreases in 2030, the year after the
analyzed compliance year. This reduction in the manufacturer markup,
the $126.9 million in conversion costs incurred by manufacturers, and
the drop in annual shipments cause a negative change in INPV at TSL 4
under the preservation of operating profit scenario.
At TSL 5, the standard represents the max-tech efficiency levels
for all product classes. The change in INPV is expected to range from -
51.9 to -38.2 percent. At this level, free cash flow is estimated to
decrease by 406.0 percent compared to the no-new-standards case value
of $55.3 million in the year 2028, the year before the standards year.
Currently, approximately 2.7 percent of domestic MREF shipments meet
the efficiencies required at TSL 5.
DOE's shipments analysis estimates that no shipments meet the
efficiencies required across all product classes except for built-in
compact coolers, which account for only 4 percent of industry
shipments. A max-tech standard would necessitate significant investment
to redesign nearly all product platforms and incorporate design options
such as the most efficient variable-speed compressors, triple-pane
glass, increased foam insulation thickness, and VIP technology. Capital
conversion costs may be necessary for new tooling for VIP placement as
well as new testing stations for high-efficiency components. Increasing
insulation thickness would likely result in the loss of interior volume
and would require redesign of the cabinet as well as the designs and
tooling associated with the interior of the product, such as the liner,
shelving, racks, and drawers. Product conversion costs at max-tech are
significant as manufacturers work to completely redesign their product
platforms. For products implementing VIPs, product conversion costs may
be necessary for prototyping and testing for VIP placement, design, and
sizing. Manufacturers implementing triple-pane glass may need to
redesign the door frame and hinges to support the added thickness and
weight. DOE estimates capital conversion costs of $174.5 million and
product conversion costs of $364.5 million. Conversion costs total
$539.0 million.
At TSL 5, the large conversion costs result in a free cash flow
dropping below zero in the years before the standards year. The
negative free cash flow calculation indicates manufacturers may need to
access cash reserves or outside capital to finance conversion efforts.
At TSL 5, the shipment-weighted average MPC for all MREFs is
expected to increase by 32.7 percent relative to the no-new-standards
case shipment-weighted average MPC for all MREFs in 2029. Given the
projected increase in production costs, DOE expects an estimated 20
percent drop in shipments in the year the standard takes effect
relative to the no-new-standards case. In the preservation of gross
margin percentage scenario, the increase in cashflow from the higher
MSP is outweighed by the $539.0 million in conversion costs and drop in
annual shipments, causing a significant negative change in INPV at TSL
5 under this scenario. Under the preservation of operating profit
scenario, the manufacturer markup decreases in 2030, the year after the
analyzed compliance year. This reduction in the manufacturer markup,
the $539.0 million in conversion costs incurred by manufacturers, and
the drop in annual shipments cause a significant decrease in INPV at
TSL 5 under the preservation of operating profit scenario.
[[Page 19427]]
DOE seeks comments, information, and data on the capital conversion
costs and product conversion costs estimated for each TSL.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment in the MREF industry, DOE
used the GRIM to estimate the domestic labor expenditures and number of
direct employees in the no-new-standards case and in each of the
standards cases during the analysis period. DOE calculated these values
using statistical data from the 2020 ASM,\61\ BLS employee compensation
data,\62\ results of the engineering analysis, and manufacturer
interviews.
---------------------------------------------------------------------------
\61\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2020).'' Available at: www.census.gov/data/tables/time-series/econ/asm/2018-2020-asm.html (Last accessed September 22, 2022).
\62\ U.S. Bureau of Labor Statistics. Employer Costs for
Employee Compensation. June 16, 2022. Available at: www.bls.gov/news.release/pdf/ecec.pdf (Last accessed September 22, 2022).
---------------------------------------------------------------------------
Labor expenditures related to product manufacturing depend on 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 total MPCs
by the labor percentage of MPCs. The total labor expenditures in the
GRIM were then converted to total production employment levels by
dividing production labor expenditures by the average fully burdened
wage multiplied by the average number of hours worked per year per
production worker. To do this, DOE relied on the ASM inputs: Production
Workers Annual Wages, Production Workers Annual Hours, Production
Workers for Pay Period, and Number of Employees. DOE also relied on the
BLS employee compensation data to determine the fully burdened wage
ratio. The fully burdened wage ratio factors in paid leave,
supplemental pay, insurance, retirement and savings, and legally
required benefits.
The number of production employees is then multiplied by the U.S.
labor percentage to convert total production employment to total
domestic production employment. The U.S. labor percentage represents
the industry fraction of domestic manufacturing production capacity for
the covered product. This value is derived from manufacturer
interviews, product database analysis, and publicly available
information. DOE estimates that 7.8 percent of MREFs are produced
domestically.
The domestic production employees estimate covers production line
workers, including line supervisors, who are directly involved in
fabricating and assembling products within the OEM 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 proposed rulemaking.
Non-production workers account for the remainder of the direct
employment figure. The non-production employees estimate covers
domestic workers who are not directly involved in the production
process, such as sales, engineering, human resources, and management.
Using the amount of domestic production workers calculated above, non-
production domestic employees are extrapolated by multiplying the ratio
of non-production workers in the industry compared to production
employees. DOE assumes that this employee distribution ratio remains
constant between the no-new-standards case and standards cases.
Using the GRIM, DOE estimates in the absence of amended energy
conservation standards there would be 228 domestic workers for MREFs in
2029. Table V.21 shows the range of the impacts of energy conservation
standards on U.S. manufacturing employment in the MREF industry. The
following discussion provides a qualitative evaluation of the range of
potential impacts presented in Table V.21.
Table V.21--Domestic Direct Employment Impacts for Miscellaneous Refrigeration Product Manufacturers in 2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-
standards case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Employment in 2029 (Production Workers + Non- 228 227 220 220 209 207
Production Workers)....................................
Potential Changes in Direct Employment Workers in 2029 * .............. (201) to (1) (201) to (8) (201) to (8) (201) to (19) (201) to (21)
--------------------------------------------------------------------------------------------------------------------------------------------------------
*DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.
The direct employment impacts shown in Table V.21 represent the
potential domestic employment changes that could result following the
compliance date for the MREF product classes in this proposal. The
upper bound estimate corresponds to a change in the number of domestic
workers that would result from amended energy conservation standards if
manufacturers continue to produce the same scope of covered products
within the United States after compliance takes effect. The lower bound
estimate represents the maximum decrease in production workers if
manufacturing moved to lower labor-cost countries. At lower TSLs, DOE
believes the likelihood of changes in production location due to
amended standards are low due to the relatively minor production line
updates required. However, as amended standards increase in stringency
and both the complexity and cost of production facility updates
increases, manufacturers are more likely to revisit their production
location decisions and/or their make vs. buy decisions.
Additional detail on the analysis of direct employment can be found
in chapter 12 of the NOPR TSD. Additionally, the employment impacts
discussed in this section are independent of the employment impacts
from the broader U.S. economy, which are documented in chapter 16 of
the NOPR TSD.
c. Impacts on Manufacturing Capacity
In interviews, manufacturers noted that the majority of MREFs--
namely freestanding compact coolers--are manufactured in Asia and
rebranded by home appliance manufacturers. Manufacturers had few
concerns about
[[Page 19428]]
manufacturing constraints below the max-tech level and the
implementation of VIPs. However, at max-tech, some manufacturers
expressed technical uncertainty about industry's ability to meet the
efficiencies required as few OEMs offer products at max-tech today. For
example, DOE is not aware of any OEMs that currently offer freestanding
compact coolers that meet TSL 5 efficiencies. DOE's shipments analysis
estimates that except for built-in compact coolers, which only accounts
for 4 percent of MREF shipments, no shipments of other product classes
meet the max-tech efficiencies.
Some low-volume domestic and European-based OEMs offer niche or
high-end MREFs (i.e., built-ins, combination coolers, freestanding
compact coolers that can be integrated into kitchen cabinetry). In
interviews, these manufacturers stated that, due to their low volume
and wide range of product offerings, they could face engineering
resource constraints should amended standards necessitate a significant
redesign, such as requiring insulation thickness changes or VIPs (TSL 4
for freestanding coolers and built-in coolers and TSL 5 for all other
product classes). These manufacturers further stated that the extent of
their resource constraints depend, in part, on the outcome of other
ongoing DOE energy conservation standards rulemakings that impact
related products, in particular, the potential energy conservation
standards for refrigerators, refrigerator-freezers, and freezers.
Pursuant to a consent decree entered on September 20, 2022, DOE has
agreed to sign and post on DOE's publicly accessible website a
rulemaking document for refrigerators, refrigerator-freezers, and
freezers by December 30, 2023, that, when effective, would be DOE's
final agency action for standards for these products.\63\
---------------------------------------------------------------------------
\63\ Natural Resources Defense Council, Inc., et al. v Granholm,
et al, No. 1:20-cv-09127 (S.D.N.Y.), and State of New York, et al. v
Granholm, et al. No. 1:20-cv-09362 (S.D.N.Y.).
---------------------------------------------------------------------------
DOE seeks comment on whether manufacturers expect manufacturing
capacity constraints would limit product availability to consumers in
the timeframe of the amended standard compliance date (2029).
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop industry cash flow
estimates may not capture the differential impacts among subgroups of
manufacturers. Small manufacturers, niche players, or manufacturers
exhibiting a cost structure that differs substantially from the
industry average could be affected disproportionately. DOE investigated
small businesses as a manufacturer subgroup that could be
disproportionally impacted by energy conservation standards and could
merit additional analysis.
DOE analyzes the impacts on small businesses in a separate analysis
in section VI.B of this document as part of the Regulatory Flexibility
Analysis. The manufacturers of the products covered in this rulemaking
have a primary North American Industry Classification System
(``NAICS'') code of 335220: ``Major Household Appliance Manufacturing''
or a secondary NAICS code of 333415: ``Air-Conditioning and Warm Air
Heating Equipment and Commercial and Industrial Refrigeration Equipment
Manufacturing.'' The Small Business Administration (``SBA'') defines a
small business as a company that has fewer than 1,500 employees and
fewer than 1,250 employees for NAICS codes 335220 and 333415,
respectively. DOE used the higher threshold of 1,500 employees to
identify small business manufacturers. Based on this classification,
DOE identified two domestic OEMs that qualify as small businesses. For
a discussion of the impacts on the small business manufacturer
subgroup, see the Regulatory Flexibility Analysis in section VI.B of
this document and chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves looking at the
cumulative impact of multiple DOE standards and the product-specific
regulatory actions of other Federal agencies that affect the
manufacturers of a covered product or equipment. While any one
regulation may not impose a significant burden on manufacturers, the
combined effects of several existing 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.
For the cumulative regulatory burden analysis, DOE examines
Federal, product-specific regulations that could affect MREF
manufacturers that take effect approximately three years before or
after the 2029 compliance date.
Table V.22--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
Miscellaneous Refrigeration Products Original Equipment Manufacturers
----------------------------------------------------------------------------------------------------------------
Number of Industry
Federal energy conservation Number of OEMs affected Approx. Industry conversion
standard OEMs * from today's standards conversion costs costs/product
rule ** year (millions $) revenue *** (%)
----------------------------------------------------------------------------------------------------------------
Room Air Conditioners 8 4 2026 $22.8 (2020$) 0.5
[dagger] 87 FR 20608 (April
7, 2022)...................
Commercial Water Heating 14 1 2026 34.6 (2020$) 4.7
Equipment [dagger] 87 FR
30610 (May 19, 2022).......
Consumer Furnaces [dagger] 15 1 2029 150.6 (2020$) 1.4
87 FR 40590 (July 7, 2022).
Consumer Clothes Dryers 15 5 2027 149.7 (2020$) 1.8
[dagger] 87 FR 51734
(August 23, 2022)..........
Microwave Ovens [dagger] 87 18 7 2026 46.1 (2021$) 0.7
FR 52282 (August 24, 2022).
Consumer Conventional 34 7 2027 183.4 (2021$) 1.2
Cooking Products 88 FR 6818
(February 1, 2023).........
Residential Clothes Washers 19 6 2027 690.8 (2021$) 5.2
[dagger] 88 FR 13520 (March
3, 2023)...................
Refrigerators, Refrigerator- 49 19 2027 1,323.6 (2021$) 3.8
Freezers, and Freezers
[dagger] 88 FR 12452
(February 27, 2023)........
----------------------------------------------------------------------------------------------------------------
* This column presents the total number of OEMs identified in the energy conservation standard rule contributing
to cumulative regulatory burden.
** This column presents the number of OEMs producing MREFs that are also listed as OEMs in the identified energy
conservation standard contributing to cumulative regulatory burden.
[[Page 19429]]
*** This column presents industry conversion costs as a percentage of product revenue during the conversion
period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant
products/equipment. The revenue used for this calculation is the revenue from just the covered product/
equipment associated with each row. The conversion period is the time frame over which conversion costs are
made and lasts from the publication year of the final rule to the compliance year of the final rule. The
conversion period typically ranges from 3 to 5 years, depending on the energy conservation standard.
[dagger] These rulemakings are in the proposed rule stage and all values are subject to change until finalized.
In addition to the rulemakings listed in Table V.29, DOE has
ongoing rulemakings for other products or equipment that MREF
manufacturers produce, including but not limited to automatic
commercial ice makers; \64\ dehumidifiers; \65\ and dishwashers.\66\ If
DOE proposes or finalizes any energy conservation standards for these
products or equipment prior to finalizing energy conservation standards
MREFs, DOE will include the energy conservation standards for these
other products or equipment as part of the cumulative regulatory burden
for the MREF final rule.
---------------------------------------------------------------------------
\64\ www.regulations.gov/docket/EERE-2017-BT-STD-0022.
\65\ www.regulations.gov/docket/EERE-2019-BT-STD-0043.
\66\ www.regulations.gov/docket/EERE-2019-BT-STD-0039.
---------------------------------------------------------------------------
DOE requests information regarding the impact of cumulative
regulatory burden on manufacturers of MREFs associated with multiple
DOE standards or product-specific regulatory actions of other Federal
agencies.
3. National Impact Analysis
This section presents DOE's estimates of the NES and the NPV of
consumer benefits that would result from each of the TSLs considered as
potential amended standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential amended
standards for MREFs, DOE compared their energy consumption under the
no-new-standards case to their anticipated energy consumption under
each TSL. The savings are measured over the entire lifetime of products
purchased in the 30-year period that begins in the year of anticipated
compliance with amended standards (2029-2058). Table V.23 presents
DOE's projections of the NES for each TSL considered for freestanding
and built-in MREFs. The savings were calculated using the approach
described in section IV.H.2 of this document.
Table V.23--Cumulative National Energy Savings for MREFs; 30 Years of Shipments
[2029-2058]
----------------------------------------------------------------------------------------------------------------
Combination
TSL Coolers coolers Total
----------------------------------------------------------------------------------------------------------------
(quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy...................................... 1 0.07 0.02 0.09
2 0.15 0.03 0.19
3 0.17 0.03 0.20
4 0.25 0.05 0.30
5 0.46 0.07 0.52
FFC................................................. 1 0.07 0.02 0.10
2 0.16 0.04 0.19
3 0.18 0.04 0.21
4 0.26 0.05 0.31
5 0.47 0.07 0.54
----------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \67\ 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 9 years, rather than 30
years, of product shipments. The choice of a 9-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.\68\ The review timeframe established in EPCA is generally
not synchronized with the product lifetime, product manufacturing
cycles, or other factors specific to consumer MREFs. 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 9-year analytical period are presented in
Table V.24. The impacts are counted over the lifetime of consumer MREFs
purchased in 2029-2037.
---------------------------------------------------------------------------
\67\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed
September 30, 2022).
\68\ Section 325(m) of EPCA 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 products, the
compliance period is 5 years rather than 3 years.
[[Page 19430]]
Table V.24--Cumulative National Energy Savings for MREFs; 9 Years of Shipments
[2029-2037]
----------------------------------------------------------------------------------------------------------------
Combination
TSL Coolers coolers Total
----------------------------------------------------------------------------------------------------------------
(quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy...................................... 1 0.02 0.01 0.03
2 0.04 0.01 0.05
3 0.05 0.01 0.06
4 0.07 0.01 0.08
5 0.12 0.02 0.14
FFC................................................. 1 0.02 0.01 0.03
2 0.04 0.01 0.05
3 0.05 0.01 0.06
4 0.07 0.01 0.09
5 0.13 0.02 0.15
----------------------------------------------------------------------------------------------------------------
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for MREFs. In
accordance with OMB's guidelines on regulatory analysis,\69\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.25 shows the consumer NPV results with impacts counted
over the lifetime of products purchased in 2029-2058.
---------------------------------------------------------------------------
\69\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed
September 30, 2022).
Table V.25--Cumulative Net Present Value of Consumer Benefits for MREFs; 30 Years of Shipments (2029-2058)
[Million $2021]
----------------------------------------------------------------------------------------------------------------
Combination
TSL Coolers coolers Total
----------------------------------------------------------------------------------------------------------------
3% Discount Rate.................................... 1 348.5 143.4 492.0
2 460.4 207.3 667.6
3 610.3 207.3 817.5
4 547.4 143.4 690.9
5 (1061.9) (296.0) (1357.9)
7% Discount Rate.................................... 1 127.1 56.3 183.5
2 126.7 80.8 207.5
3 189.7 80.8 270.5
4 97.8 37.6 135.3
5 (848.7) (195.3) (1044.0)
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses denote negative values.
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.26. The impacts are counted over the
lifetime of products purchased in 2029-2037. 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.26--Cumulative Net Present Value of Consumer Benefits for MREFs; 9 Years of Shipments (2029-2037)
[Million $2021]
----------------------------------------------------------------------------------------------------------------
Combination
TSL Coolers coolers Total
----------------------------------------------------------------------------------------------------------------
3% Discount Rate.................................... 1 130.2 54.1 184.3
2 162.7 78.1 240.7
3 222.1 78.1 300.1
4 180.0 40.9 220.
5 (484.1) (132.2) (616.3)
7% Discount Rate.................................... 1 63.5 28.5 92.0
2 58.6 40.7 99.4
3 91.9 40.7 132.7
4 36.9 12.3 49.1
[[Page 19431]]
5 (465.5) (108.9) (574.4)
----------------------------------------------------------------------------------------------------------------
The previous results reflect the use of a default trend to estimate
the change in price for consumer MREFs over the analysis period (see
section IV.H.3 of this document). 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 NOPR TSD. In the high-price-
decline case, the NPV of consumer benefits is higher than in the
default case. In the low-price-decline case, the NPV of consumer
benefits is lower than in the default case.
c. Indirect Impacts on Employment
It is estimated that that amended energy conservation standards for
MREFs would reduce energy expenditures for consumers of those products,
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. As described in section
IV.N of this document, DOE used an input/output model of the U.S.
economy to estimate indirect employment impacts of the TSLs that DOE
considered. There are uncertainties involved in projecting employment
impacts, especially changes in the later years of the analysis.
Therefore, DOE generated results for near-term timeframes (2029-2033),
where these uncertainties are reduced.
The results suggest that the proposed standards would be 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 NOPR TSD presents detailed
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
As discussed in section III.F.1.d of this document, DOE has
tentatively concluded that the standards proposed in this NOPR would
not lessen the utility or performance of the MREFs under consideration
in this rulemaking. Manufacturers of these products currently offer
units that meet or exceed the proposed standards.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new or amended standards. As discussed in section III.F.1.e
of this document, the Attorney General determines the impact, if any,
of any lessening of competition likely to result from a proposed
standard, and transmits such determination in writing to the Secretary,
together with an analysis of the nature and extent of such impact. To
assist the Attorney General in making this determination, DOE has
provided DOJ with copies of this NOPR and the accompanying TSD for
review. DOE will consider DOJ's comments on the proposed rule in
determining whether to proceed to a final rule. DOE will publish and
respond to DOJ's comments in that document. DOE invites comment from
the public regarding the competitive impacts that are likely to result
from this proposed rule. In addition, stakeholders may also provide
comments separately to DOJ regarding these potential impacts. See the
ADDRESSES section for information to send comments to DOJ.
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. Chapter 15 in the NOPR TSD
presents the estimated impacts on electricity generating capacity,
relative to the no-new-standards case, for the TSLs that DOE considered
in this rulemaking.
Energy conservation resulting from potential energy conservation
standards for MREFs is expected to yield environmental benefits in the
form of reduced emissions of certain air pollutants and greenhouse
gases. Table V.27 provides DOE's estimate of cumulative emissions
reductions expected to result from the TSLs considered in this
rulemaking. 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 NOPR TSD.
Table V.27--Cumulative Emissions Reduction for MREFs Shipped in 2029-2058
----------------------------------------------------------------------------------------------------------------
Trial standard level
-------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 3.0 6.0 6.6 9.7 16.9
CH4 (thousand tons)............. 0.2 0.5 0.5 0.8 1.3
N2O (thousand tons)............. 0.03 0.07 0.07 0.11 0.19
NOX (thousand tons)............. 1.5 3.0 3.3 4.8 8.4
SO2 (thousand tons)............. 1.5 3.0 3.2 4.7 8.3
Hg (tons)....................... 0.01 0.02 0.02 0.03 0.05
----------------------------------------------------------------------------------------------------------------
[[Page 19432]]
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 0.2 0.5 0.5 0.7 1.3
CH4 (thousand tons)............. 21.7 43.4 47.5 69.5 121.4
N2O (thousand tons)............. 0.00 0.00 0.00 0.00 0.01
NOX (thousand tons)............. 3.5 7.0 7.6 11.1 19.4
SO2 (thousand tons)............. 0.02 0.03 0.03 0.05 0.09
Hg (tons)....................... 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 3.3 6.5 7.1 10.4 18.2
CH4 (thousand tons)............. 22.0 43.9 48.0 70.3 122.7
N2O (thousand tons)............. 0.03 0.07 0.08 0.11 0.19
NOX (thousand tons)............. 5.0 10.0 10.9 15.9 27.9
SO2 (thousand tons)............. 1.5 3.0 3.3 4.8 8.4
Hg (tons)....................... 0.01 0.02 0.02 0.03 0.05
----------------------------------------------------------------------------------------------------------------
As part of the analysis for this rulemaking, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for MREFs. Section
IV.L of this document discusses the SC-CO2 values that DOE
used. Table V.28 presents the value of CO2 emissions
reduction at each TSL for each of the SC-CO2 cases. The
time-series of annual values is presented for the proposed TSL in
chapter 14 of the NOPR TSD.
Table V.28--Present Monetized Value of CO2 Emissions Reduction for MREFs Shipped in 2029-2058
[Million 2021$]
----------------------------------------------------------------------------------------------------------------
SC-CO2 Case (Discount rate and statistics)
TSL ---------------------------------------------------------------------------------------------
5% (Average) 3% (Average) 2.5% (Average) 3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
1 27.4 121.9 192.4 369.7
2 54.9 244.0 385.2 740.2
3 59.6 265.3 418.9 804.8
4 87.1 387.7 612.4 1176.1
5 152.1 677.7 1,070.6 2,055.8
----------------------------------------------------------------------------------------------------------------
As discussed in section IV.L.1 of this document, DOE estimated the
climate benefits likely to result from the reduced emissions of methane
and N2O that DOE estimated for each of the considered TSLs
for MREFs. Table V.29 presents the value of the CH4
emissions reduction at each TSL, and Table V.30 presents the value of
the N2O emissions reduction at each TSL. The time-series of
annual values is presented for the proposed TSL in chapter 14 of the
NOPR TSD.
Table V.29--Present Monetized Value of Methane Emissions Reduction for MREFs Shipped in 2029-2058
[Million 2021$]
----------------------------------------------------------------------------------------------------------------
SC-CH4 case (Discount rate and statistics)
TSL ---------------------------------------------------------------------------------------------
5% (Average) 3% (Average) 2.5% (Average) 3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
1 8.5 26.5 37.4 70.1
2 17.1 53.1 74.8 140.4
3 18.6 57.8 81.5 152.8
4 27.1 84.6 119.2 223.5
5 47.4 147.9 208.6 391.0
----------------------------------------------------------------------------------------------------------------
[[Page 19433]]
Table V.30--Present Monetized Value of Nitrous Oxide Emissions Reduction for MREFs Shipped in 2029-2058
[Million 2021$]
----------------------------------------------------------------------------------------------------------------
SC-N2O case (Discount rate and statistics)
TSL ---------------------------------------------------------------------------------------------
5% (Average) 3% (Average) 2.5% (Average) 3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
1 0.1 0.5 0.7 1.2
2 0.2 0.9 1.4 2.5
3 0.2 1.0 1.6 2.7
4 0.4 1.5 2.3 3.9
5 0.6 2.6 4.0 6.8
----------------------------------------------------------------------------------------------------------------
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
global and U.S. economy continues to evolve rapidly. DOE, together with
other Federal agencies, will continue to review 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.
DOE notes that the proposed standards would be economically justified
even without inclusion of monetized benefits of reduced GHG emissions.
DOE also estimated the monetary value of the health benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for MREFs. The dollar-
per-ton values that DOE used are discussed in section IV.L of this
document. Table V.31 presents the present value for NOX
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.32 presents similar results for
SO2 emissions reductions. The results in these tables
reflect application of EPA's low dollar-per-ton values, which DOE used
to be conservative. The time-series of annual values is presented for
the proposed TSL in chapter 14 of the NOPR TSD.
Table V.31--Present Monetized Value of NOX Emissions Reduction for MREFs
Shipped in 2029-2058
[Million 2021$]
------------------------------------------------------------------------
TSL 3% Discount rate 7% Discount rate
------------------------------------------------------------------------
1 181.8 65.7
2 363.8 131.4
3 395.8 142.4
4 578.3 207.5
5 1,009.8 361.4
------------------------------------------------------------------------
Table V.32--Present Monetized Value of SO2 Emissions Reduction for MREFs
Shipped in 2029-2058
[Million 2021$]
------------------------------------------------------------------------
TSL 3% Discount rate 7% Discount rate
------------------------------------------------------------------------
1 73.7 27.1
2 147.4 54.1
3 160.4 58.7
4 234.2 85.4
5 408.7 148.6
------------------------------------------------------------------------
DOE has not considered the monetary benefits of the reduction of Hg
for this proposed rule. Not all the public health and environmental
benefits from the reduction of greenhouse gases, NOX, and
SO2 are captured in the values above, and additional
unquantified benefits from the reductions of those pollutants as well
as from the reduction of Hg, direct particulate matter (``PM''), and
other co-pollutants may be significant. The energy savings from this
proposal reduces electricity use and therefore reduces the need for
electricity generation. To the extent that the reduced generation
includes a reduction in combustion of coal, this rule will also include
health benefits derived from emission reductions of mercury and
particulate matter.
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. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of Economic Impacts
Table V.33 presents the NPV values that result from adding the
estimates of the potential economic benefits resulting from reduced GHG
and NOX and SO2 emissions to the NPV of consumer
benefits calculated for each TSL considered in this rulemaking. The
consumer benefits are domestic U.S. monetary savings that occur as a
result of purchasing the covered MREFs, and are measured for the
lifetime of products shipped in 2029-2058. The climate benefits
associated with reduced GHG emissions resulting from the adopted
standards are global benefits, and are also calculated based on the
lifetime of MREFs shipped in 2029-2058.
Table V.33--Consumer NPV Combined With Present Monetized Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
3% Discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......... 0.8 1.3 1.5 1.6 0.3
3% Average SC-GHG case.......... 0.9 1.5 1.7 2.0 0.9
[[Page 19434]]
2.5% Average SC-GHG case........ 1.0 1.6 1.9 2.2 1.3
3% 95th percentile SC-GHG case.. 1.2 2.1 2.3 2.9 2.5
----------------------------------------------------------------------------------------------------------------
7% Discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......... 0.3 0.5 0.6 0.5 -0.3
3% Average SC-GHG case.......... 0.4 0.7 0.8 0.9 0.3
2.5% Average SC-GHG case........ 0.5 0.9 1.0 1.2 0.7
3% 95th percentile SC-GHG case.. 0.7 1.3 1.4 1.8 1.9
----------------------------------------------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered product
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
For this NOPR, DOE considered the impacts of amended standards for
MREFs 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. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment. In addition, as discussed in section V.B.1.b of this
document, DOE conducted a subgroup analysis for seniors, the results of
which are comparable to all MREF consumers (see Table V.18.) DOE did
not consider low-income consumers in this NOPR because MREFs are not
products generally used by this subgroup, as they typically cost more
than comparable compact refrigerators, which are able to maintain lower
temperatures compared to MREFs, and therefore serve a wider range of
applications.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. There is evidence that consumers
undervalue future energy savings as a result of (1) a lack of
information, (2) a lack of sufficient salience of the long-term or
aggregate benefits, (3) a lack of sufficient savings to warrant
delaying or altering purchases, (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments, (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs, and (6) a divergence in incentives (for example, between
renters and owners, or builders and purchasers). Having less than
perfect foresight and a high degree of uncertainty about the future,
consumers may trade off these types of investments at a higher-than-
expected rate between current consumption and uncertain future energy
cost savings.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a standard decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the NOPR TSD. However, DOE's current analysis does not explicitly
control for heterogeneity in consumer preferences, preferences across
subcategories of products or specific features, or consumer price
sensitivity variation according to household income.\70\
---------------------------------------------------------------------------
\70\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883.
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy conservation
standards, and potential enhancements to the methodology by which these
impacts are defined and estimated in the regulatory process.\71\ DOE
welcomes comments on how to more fully assess the potential impact of
energy conservation standards on consumer choice and how to quantify
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------
\71\ Sanstad, A.H. Notes on the Economics of Household Energy
Consumption and Technology Choice. 2010. Lawrence Berkeley National
Laboratory. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed September 22, 2022).
---------------------------------------------------------------------------
1. Benefits and Burdens of TSLs Considered for MREF Standards
Table V.34 and Table V.35 summarize the quantitative impacts
estimated for each TSL for MREFs. The national impacts are measured
over the lifetime
[[Page 19435]]
of MREFs purchased in the 30-year period that begins in the anticipated
year of compliance with amended standards (2029-2058). The energy
savings, emissions reductions, and value of emissions reductions refer
to full-fuel-cycle results. The efficiency levels contained in each TSL
are described in section I.A of this document.
Table V.34--Summary of Analytical Results for Miscellaneous Refrigeration Product TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads........................... 0.10 0.19 0.21 0.31 0.54
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 3.3 6.5 7.1 10.4 18.2
CH4 (thousand tons)............. 22.0 43.9 48.0 70.3 122.7
N2O (thousand tons)............. 0.03 0.07 0.08 0.11 0.19
NOX (thousand tons)............. 5.0 10.0 10.9 15.9 27.9
SO2 (thousand tons)............. 1.5 3.0 3.3 4.8 8.4
Hg (tons)....................... 0.01 0.02 0.02 0.03 0.05
----------------------------------------------------------------------------------------------------------------
Present Monetized Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 0.6 1.3 1.4 2.0 3.5
Climate Benefits *.............. 0.1 0.3 0.3 0.5 0.8
Health Benefits **.............. 0.3 0.5 0.6 0.8 1.4
Total Monetized Benefits 1.0 2.1 2.3 3.3 5.8
[dagger].......................
Consumer Incremental Product 0.1 0.6 0.6 1.3 4.9
Costs..........................
Consumer Net Benefits........... 0.5 0.7 0.8 0.7 -1.4
Total Net Monetized Benefits.... 0.9 1.5 1.7 2.0 0.9
----------------------------------------------------------------------------------------------------------------
Present Monetized Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 0.3 0.5 0.6 0.8 1.4
Climate Benefits *.............. 0.1 0.3 0.3 0.5 0.8
Health Benefits **.............. 0.1 0.2 0.2 0.3 0.5
Total Monetized Benefits 0.5 1.0 1.1 1.6 2.7
[dagger].......................
Consumer Incremental Product 0.1 0.3 0.3 0.7 2.5
Costs..........................
Consumer Net Benefits........... 0.2 0.2 0.3 0.1 -1.0
-------------------------------------------------------------------------------
Total Net Monetized Benefits 0.4 0.7 0.8 0.9 0.3
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer MREFs shipped in 2029-2058. These
results include benefits to consumers which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4 and SC-N2O. Together,
these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single
central SC-GHG point estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted
the Federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary
injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's
order, the preliminary injunction is no longer in effect, pending resolution of the Federal government's
appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined
the defendants in that case from ``adopting, employing, treating as binding, or relying upon'' the interim
estimates of the social cost of greenhouse gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas
emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents
monetized GHG abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
the importance and value of considering the benefits calculated using all four SC-GHG estimates.
Table V.35--Summary of Analytical Results for Miscellaneous Refrigeration Products TSLs: Manufacturer and
Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No- 711.3 to 714.7 695.4 to 706.2 697.3 to 706.6 652.3 to 679.4 356.7 to 458.8
new-standards case INPV =
$742.0)........................
Industry NPV (% change)......... (4.1) to (3.7) (6.3) to (4.8) (6.0) to (4.8) (12.1) to (51.9) to
(8.4) (38.2)
----------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
FCC............................. 17.4 17.2 17.2 12.6 -45.3
[[Page 19436]]
FC.............................. 23.5 23.5 47.2 28.0 -178.8
BICC............................ 17.2 2.9 2.9 2.9 -80.9
BIC............................. 20.3 21.2 57.3 57.3 -197.4
C-13A........................... 24.8 35.5 35.5 12.0 -73.4
C-13A-BI........................ 27.6 39.6 39.6 15.3 -74.6
C-3A............................ 31.5 31.5 31.5 31.5 -233.4
C-3A-BI......................... 36.7 36.7 36.7 36.7 -240.7
Shipment-Weighted Average *..... 19.6 20.9 25.0 15.6 -74.0
----------------------------------------------------------------------------------------------------------------
Simple Payback Period (years)
----------------------------------------------------------------------------------------------------------------
FCC............................. 2.0 5.0 5.0 6.8 11.5
FC.............................. 5.8 5.8 3.8 8.0 22.5
BICC............................ 2.4 7.9 7.9 7.9 13.8
BIC............................. 6.4 8.6 4.0 4.0 23.6
C-13A........................... 1.1 1.4 1.4 6.9 16.7
C-13A-BI........................ 1.1 1.3 1.3 6.7 16.3
C-3A............................ 1.7 1.7 1.7 1.7 41.9
C-3A-BI......................... 1.6 1.6 1.6 1.6 38.7
Shipment-Weighted Average *..... 2.5 4.7 4.3 6.9 14.4
----------------------------------------------------------------------------------------------------------------
Percent of Consumers with Net Cost
----------------------------------------------------------------------------------------------------------------
FCC............................. 2.8 33.5 33.5 49.5 77.8
FC.............................. 8.8 8.8 1.6 45.5 94.5
BICC............................ 1.0 15.3 15.3 15.3 22.7
BIC............................. 18.7 53.4 3.6 3.6 94.3
C-13A........................... 0.3 1.0 1.0 47.5 90.3
C-13A-BI........................ 0.3 0.7 0.7 44.4 89.7
C-3A............................ 0.0 0.0 0.0 0.0 99.4
C-3A-BI......................... 0.0 0.0 0.0 0.03 98.9
Shipment-Weighted Average *..... 3.5 24.7 22.1 45.5 80.8
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``N/A'' means not applicable because there is no change in
the standard at certain TSLs.
* Weighted by shares of each product class in total projected shipments in 2029.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. For coolers (i.e., FCC, FC, BICC, and BIC), which
account for approximately 82 percent of MREF shipments-size, DOE
expects that products would require use of VIPs, VSCs, and triple-
glazed doors at this TSL. DOE expects that VIPs would be used in the
products' side walls. In addition, the products would use the best-
available-efficiency variable-speed compressors, forced-convection heat
exchangers with multi-speed brushless-DC (``BLDC'') fans, and increase
in cabinet wall thickness as compared to most baseline products. TSL 5
would save an estimated 0.54 quads of energy, an amount which DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be negative, i.e., -$1.04 billion using a discount rate of 7 percent,
and -$1.36 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 18.2 Mt of
CO2, 8.4 thousand tons of SO2, 27.9 thousand tons
of NOX, 0.05 tons of Hg, 123 thousand tons of
CH4, and 0.19 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 5 is $0.8 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 5 is $0.5 billion using a 7-percent discount rate and $1.4 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 5 is $0.3
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 5 is $0.9 billion. The estimated total
monetized NPV is provided for additional information, however,
consistent with the statutory factors and framework for determining
whether a proposed standard level is economically justified, DOE
considers a range of quantitative and qualitative benefits and burdens,
including the costs and cost savings for consumers, impacts to consumer
subgroups, energy savings, emission reductions, and impacts on
manufacturers.
At TSL 5, for the product classes with the largest market share,
which are FCC, FC, and C-13A and together account for approximately 92
percent of annual shipments, the LCC savings are all negative (-$45.3,
-$178.8, and -$73.4, respectively) and their payback periods are 11.5
years, 22.5, and 16.7 years, respectively, which are all longer than
their corresponding average lifetimes. For these product classes, the
fraction of consumers experiencing a net LCC cost is 77.8 percent, 94.5
percent, and 90.3 percent due to increases in first cost of $180.0,
$335.6, and $73.4, respectively. Overall, a majority of MREF consumers
(80.8 percent) would experience a net cost and the average LCC savings
would be negative for all analyzed product classes.
At TSL 5, the projected change in INPV ranges from a decrease of
$385.3 million to a decrease of $283.2 million, which corresponds to
decreases of 51.9 percent and 38.2 percent, respectively. DOE estimates
that industry must invest $539.0 million to comply with standards set
at TSL 5.
DOE estimates that approximately 2.7 percent of current MREF
shipments meet the max-tech levels. For FCC, FC,
[[Page 19437]]
and C-13A, which together account for approximately 92 percent of
annual shipments, DOE estimates that zero shipments currently meet max-
tech efficiencies.
At TSL 5, manufacturers would likely need to implement all the most
efficient design options analyzed in the engineering analysis.
Manufacturers that do not currently offer products that meet TSL 5
efficiencies would need to develop new product platforms, which would
require significant investment. Conversion costs are driven by the need
for changes to cabinet construction, such as increasing foam insulation
thickness and/or incorporating VIP technology. Increasing insulation
thickness would likely result in the loss of interior volume and would
require redesign of the cabinet as well as the designs and tooling
associated with the interior of the product, such as the liner,
shelving, racks, and drawers. Incorporating VIPs into MREF designs
could also require redesign of the cabinet in order to maximize the
efficiency benefit of this technology. In addition to insulation
changes, manufacturers may need to implement triple-pane glass, which
could require implementing reinforced hinges and redesigning the door
structure.
At this level, DOE expects an estimated 20-percent drop in
shipments in the year the standard takes effect, as some consumers may
forgo purchasing a new MREF due to the increased upfront cost of
baseline models.
The Secretary tentatively concludes that at TSL 5 for MREFs, 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 many
consumers, and the impacts on manufacturers, including the significant
potential reduction in INPV. A majority of MREF consumers (80.8
percent) would experience a net cost and the average LCC savings would
be negative. Additionally, manufacturers would need to make significant
upfront investments to update product platforms. The potential
reduction in INPV could be as high as 51.9 percent. Consequently, the
Secretary has tentatively concluded that TSL 5 is not economically
justified.
DOE then considered TSL 4, which represents EL 3 for all analyzed
product classes except for C-3A and C-3A-BI, for which this TSL
corresponds to EL 1 and BIC, for which this TSL corresponds to EL 2. At
TSL 4, products of most classes would use high-efficiency single-speed
compressors with forced-convection evaporators and condensers using
brushless DC fan motors. Doors would be double-glazed with low-
conductivity gas fill (e.g., argon) and a single low-emissivity glass
layer. Products would not require use of VIPs, but the FC product class
would require thicker walls than corresponding baseline products. TSL 4
would save an estimated 0.31 quads of energy, an amount DOE considers
significant. Under TSL 4, the NPV of consumer benefit would be $0.14
billion using a discount rate of 7 percent, and $0.69 billion using a
discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 10.4 Mt of
CO2, 4.8 thousand tons of SO2, 15.9 thousand tons
of NOX, 0.03 tons of Hg, 70.3 thousand tons of
CH4, and 0.11 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 4 is $0.5 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $0.3 billion using a 7-percent discount rate and $0.8 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 4 is $0.9
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $2.0 billion. The estimated total
monetized NPV is provided for additional information, however,
consistent with the statutory factors and framework for determining
whether a proposed standard level is economically justified, DOE
considers a range of quantitative and qualitative benefits and burdens,
including the costs and cost savings for consumers, impacts to consumer
subgroups, energy savings, emission reductions, and impacts on
manufacturers.
At TSL 4, for the product classes with the largest market share,
which are FCC, FC, and C-13A, the LCC savings are $12.6, $28.0, and
$12.0, respectively, and their payback periods are 6.8 years, 8.0, and
6.9 years, respectively, which are all shorter than their corresponding
average lifetimes. For these product classes, the fraction of consumers
experiencing a net LCC cost is 49.5 percent, 45.5 percent, and 47.5
percent, and increases in first cost for these classes are $52.9,
$96.0, and $44.3, respectively. Overall, the LCC savings would be
positive for all MREF product classes, and more than half of MREF
consumers would experience a net benefit (51 percent).
At TSL 4, the projected change in INPV ranges from a decrease of
$89.8 million to a decrease of $62.7 million, which correspond to
decreases of 12.1 percent and 8.4 percent, respectively. DOE estimates
that industry must invest $126.9 million to comply with standards set
at TSL 4.
DOE estimates that approximately 3.4 percent of shipments currently
meet the required efficiencies at TSL 4 as at max-tech. For most
product classes (i.e., FCC, BICC, BIC, C-13A, C-13A-BI, C-3A, C-3A-BI),
DOE expects manufacturers could reach the required efficiencies with
relatively straightforward component swaps, such as implementing
incrementally more efficient compressors, rather than the full platform
redesigns required at max-tech. DOE expects that FC manufacturers would
need to increase foam insulation thickness and incorporate variable-
speed compressor systems at this level. At TSL 4, DOE expects an
estimated 10-percent drop in shipments in the year the standard takes
effect, as some consumers may forgo purchasing a new MREF due to the
increased upfront cost of baseline models.
After considering the analysis and weighing the benefits and
burdens, the Secretary has tentatively concluded that at a standard set
at TSL 4 for MREFs would be economically justified. At this TSL, the
average LCC savings are positive for all product classes for which an
amended standard is considered, with a shipment-weighted average of
$15.60 in consumer savings.
The FFC national energy savings are significant and the NPV of
consumer benefits is positive (and represents the maximum value) using
both a 3-percent and 7-percent discount rate. Notably, the benefits to
consumers outweigh the cost to manufacturers. At TSL 4, the NPV of
consumer benefits, even measured at the more conservative discount rate
of 7 percent is over 1.5 times higher than the maximum estimated
manufacturers' loss in INPV. The standard levels at TSL 4 are
economically justified even without weighing the estimated monetary
value of emissions reductions. When those emissions reductions are
included--representing $0.5 billion in climate benefits (associated
with the average SC-GHG at a 3-percent discount rate), and $0.8 billion
(using a 3-percent discount rate) or $0.3 billion (using a 7-percent
discount rate) in health benefits--the rationale becomes stronger
still.
[[Page 19438]]
As stated, DOE conducts the walk-down analysis to determine the TSL
that represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. The walk-down is not a comparative analysis, as a comparative
analysis would result in the maximization of net benefits instead of
energy savings that are technologically feasible and economically
justified, which would be contrary to the statute. 86 FR 70892, 70908.
Although DOE has not conducted a comparative analysis to select the
proposed energy conservation standards, DOE notes that TSL 4 represents
the option with positive LCC savings ($15.6) for all product classes
compared to TSL 5 ($-74.0). Further, when comparing the cumulative NPV
of consumer benefit using a 7% discount rate, TSL 4 ($0.14 billion) has
a higher benefit value than TSL 5 (-$1.04 billion), while for a 3%
discount rate, TSL 4 ($0.69 billion) is also higher than TSL 5 (-1.36
billion), which yields negative NPV in both cases. These additional
savings and benefits at TSL 4 are significant. DOE considers the
impacts to be, as a whole, economically justified at TSL 4.
Although DOE considered proposed amended standard levels for MREFs
by grouping the efficiency levels for each product class into TSLs, DOE
evaluates all analyzed efficiency levels in its analysis. For all
product classes, the proposed standard level represents the maximum
energy savings that does not result in negative LCC savings. The ELs at
the proposed standard level result in positive LCC savings for all
product classes, and reduce the decrease in INPV and conversion costs
to the point where DOE has tentatively concluded they are economically
justified, as discussed for TSL 4 in the preceding paragraphs.
Therefore, based on the previous considerations, DOE proposes to
adopt the energy conservation standards for MREFs at TSL 4. The
proposed amended energy conservation standards for MREFs, which are
expressed in kWh/yr, are shown in Table V.36.
Table V.36--Proposed Amended Energy Conservation Standards for MREF
------------------------------------------------------------------------
Equations for maximum energy use (kWh/
Product class yr)
------------------------------------------------------------------------
1. Freestanding compact coolers 5.52AV + 109.1
(``FCC'').
2. Freestanding coolers (``FC''). 5.52AV + 109.1
3. Built-in compact coolers 5.52AV + 109.1
(``BICC'').
4. Built-in coolers (``BIC'').... 6.30AV + 124.6
C-3A. Cooler with all- 4.11AV + 117.4
refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 4.67AV + 133.0
refrigerator--automatic defrost.
C-5-BI. Built-in cooler with 5.47AV + 196.2 + 28I
refrigerator-freezer--automatic
defrost with bottom-mounted
freezer.
C-9. Cooler with upright freezer 5.58AV + 147.7 + 28I
with automatic defrost without
an automatic icemaker.
C-9-BI. Built-in cooler with 6.38AV + 168.8 + 28I
upright freezer with automatic
defrost without an automatic
icemaker.
C-13A. Compact cooler with all- 4.74AV + 155.0
refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler 5.22AV + 170.5
with all-refrigerator--automatic
defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendix A to subpart B of 10 CFR part 430.
I = 1 for a product with an automatic icemaker and = 0 for a product
without an automatic icemaker.
2. Annualized Benefits and Costs of the Proposed Standards
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The annualized net benefit is
(1) the annualized national economic value (expressed in 2021$) of the
benefits from operating products that meet the proposed 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 climate and health benefits from emission
reductions.
Table V.37 shows the annualized values for MREFs under TSL 4,
expressed in 2021$. The results under the primary estimate are as
follows.
Using a 7-percent discount rate for consumer benefits and costs and
NOx and SO2 reduction benefits, and a 3-percent discount
rate case for GHG social costs, the estimated cost of the proposed
standards for MREFs is $81.2 million per year in increased equipment
costs, while the estimated annual benefits are $97.6 million from
reduced equipment operating costs, $28.9 million from GHG reductions,
and $35.4 million from reduced NOX and SO2
emissions. In this case, the net benefit amounts to $80.6 million per
year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards for MREFs is $81.0 million per
year in increased equipment costs, while the estimated annual benefits
are $123.1 million in reduced operating costs, $28.9 million from GHG
reductions, and $49.5 million from reduced NOX and
SO2 emissions. In this case, the net benefit amounts to
$120.4 million per year.
Table V.37--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for MREFs (TSL 4)
[Million 2021$/year]
----------------------------------------------------------------------------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 123.1 116.3 131.2
Climate Benefits *.............................................. 28.9 28.1 29.6
Health Benefits **.............................................. 49.5 48.2 50.8
Total Monetized Benefits [dagger]............................... 201.4 192.6 211.6
Consumer Incremental Product Costs [Dagger]..................... 81.0 82.3 79.4
[[Page 19439]]
Net Monetized Benefits.......................................... 120.4 110.3 132.2
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 97.6 92.7 103.3
Climate Benefits * (3% discount rate)........................... 28.9 28.1 29.6
Health Benefits **.............................................. 35.4 34.6 36.2
Total Monetized Benefits [dagger]............................... 161.9 155.4 169.2
Consumer Incremental Product Costs.............................. 81.2 82.4 79.8
Net Monetized Benefits.......................................... 80.6 72.9 89.4
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with refrigerators, refrigerator-freezers, and
freezers shipped in 2029-2058. These results include benefits to consumers which accrue after 2056 from the
products shipped in 2029-2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize
projections of energy prices from the AEO2022 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-Net-Benefits Estimate, and a high decline rate in the High Net
Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3 of this
document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG
abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
D. Reporting, Certification, and Sampling Plan
Manufacturers, including importers, must use product-specific
certification templates to certify compliance to DOE. For MREFs, the
certification template reflects the general certification requirements
specified at 10 CFR 429.12 and the product-specific requirements
specified at 10 CFR 429.14. As discussed in the previous paragraphs,
DOE is not proposing to amend the product-specific certification
requirements for these products.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' 58 FR 51734 (Oct. 4, 1993) as supplemented and reaffirmed by
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821
(January 21, 2011), requires agencies, to the extent permitted by law,
to (1) propose or adopt a regulation only upon a reasoned determination
that its benefits justify its costs (recognizing that some benefits and
costs are difficult to quantify); (2) tailor regulations to impose the
least burden on society, consistent with obtaining regulatory
objectives, taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations; (3) select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity); (4) to the extent feasible, specify performance
objectives, rather than specifying the behavior or manner of compliance
that regulated entities must adopt; and (5) identify and assess
available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public. DOE emphasizes as well that E.O. 13563
requires agencies to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible. In its guidance, the Office of Information and Regulatory
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') 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,
this proposed/final regulatory action is consistent with these
principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this proposed regulatory action constitutes a
``significant regulatory action within the scope of section 3(f)(1)''
of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O.
12866, DOE has provided to OIRA an assessment, including the underlying
analysis, of benefits and costs anticipated from the proposed
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
[[Page 19440]]
to the identified potential alternatives. These assessments are
summarized in this preamble and further detail can be found in the TSD
for this rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
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 E.O. 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's website (www.energy.gov/gc/office-general-counsel). DOE has
prepared the following IRFA for the products that are the subject of
this proposed rulemaking.
For manufacturers of miscellaneous refrigeration products
(``MREFs''), the SBA has set a size threshold, which defines those
entities classified as ``small businesses'' for the purposes of the
statute. DOE used the SBA's small business size standards to determine
whether any small entities would be subject to the requirements of the
rule. (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 www.sba.gov/document/support--table-size-standards. The manufacturing of the products covered in this
rulemaking are classified under NAICS code 335220: ``Major Household
Appliance Manufacturing'' or NAICS code 333415: ``Air-Conditioning and
Warm Air Heating Equipment and Commercial and Industrial Refrigeration
Equipment Manufacturing.'' The SBA sets a threshold of 1,500 employees
or fewer and 1,250 employees or fewer for an entity to be considered as
a small business for NAICS codes 335220 and 333415, respectively. DOE
used the higher threshold of 1,500 employees to identify small business
manufacturers.
1. Description of Reasons Why Action Is Being Considered
DOE is proposing amended energy conservation standards for MREFs.
EPCA authorizes DOE to regulate the energy efficiency of a number of
consumer products and certain industrial equipment. Title III, Part B
of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles which, in addition to identifying
particular consumer products and commercial equipment as covered under
the statute, permits the Secretary of Energy to classify additional
types of consumer products as covered products. (42 U.S.C. 6292(a)(20))
DOE added MREFs as covered products through a final determination of
coverage published in the Federal Register on July 18, 2016. 81 FR
46768. EPCA further provides that, not later than 6 years after the
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
product do not need to be amended, or a NOPR including new proposed
energy conservation standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1)) This rulemaking is in accordance
with DOE's obligations under EPCA.
2. Objectives of, and Legal Basis for, Rule
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles which, in addition to identifying
particular consumer products and commercial equipment as covered under
the statute, permits the Secretary of Energy to classify additional
types of consumer products as covered products. (42 U.S.C. 6292(a)(20))
DOE added MREFs as covered products through a final determination of
coverage published in the Federal Register on July 18, 2016. 81 FR
46768. MREFs are consumer refrigeration products other than
refrigerators, refrigerator-freezers, or freezers, which include
coolers and combination cooler refrigeration products. 10 CFR 430.2.
MREFs include refrigeration products such as coolers (e.g., wine
chillers and other specialty products) and combination cooler
refrigeration products (e.g., wine chillers and other specialty
compartments combined with a refrigerator, refrigerator-freezers, or
freezers).
EPCA further provides that, not later than 6 years after the
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
product do not need to be amended, or a NOPR including new proposed
energy conservation standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1)) Not later than three years after
issuance of a final determination not to amend standards, DOE must
publish either a notice of determination that standards for the product
do not need to be amended, or a NOPR including new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6295(m)(3)(B))
3. Description on Estimated Number of Small Entities Regulated
DOE reviewed this proposed rule under the provisions of the
Regulatory Flexibility Act and the procedures and policies published on
February 19, 2003. 68 FR 7990. DOE conducted a market survey to
identify potential small manufacturers of MREFs. DOE began its
assessment by reviewing DOE's CCD,\72\ California Energy Commission's
Modernized Appliance Efficiency Database System (``MAEDbS''),\73\
individual company websites, and prior MREF rulemakings to identify
manufacturers of the covered product. DOE then consulted publicly
available data, such as manufacturer websites, manufacturer
specifications and product literature, import/export logs (e.g., bills
of lading from Panjiva,\74\) and basic model numbers, to identify
original equipment manufacturers (``OEMs'') of covered MREFs. DOE
further relied on public data and subscription-based market research
tools (e.g., Dun & Bradstreet reports) \75\ to determine company,
location, headcount, and annual revenue. DOE also asked industry
representatives if they were aware of any small manufacturers during
manufacturer interviews. DOE screened out companies that do not offer
products covered by this rulemaking, do not meet the SBA's definition
of a ``small business,'' or are foreign-owned and operated.
---------------------------------------------------------------------------
\72\ U.S. Department of Energy's Compliance Certification
Database is available at: www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A* (Last accessed May 2, 2022).
\73\ California Energy Commission's Modernized Appliance
Efficiency Database System is available at:
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx (Last
accessed May 2, 2022).
\74\ S&P Global. Panjiva Market Intelligence is available at:
panjiva.com/import-export/United-States (Last accessed May 5, 2022).
\75\ D&B Hoovers [bond] Company Information [bond] Industry
Information [bond] Lists, app.dnbhoovers.com/ (Last accessed May 5,
2022).
---------------------------------------------------------------------------
DOE initially identified 38 OEMs that sell MREFs in the United
States. Of the 38 OEMs identified, DOE tentatively
[[Page 19441]]
determined that two companies qualify as small businesses and are not
foreign-owned and operated.
DOE reached out to both small businesses and invited them to
participate in voluntary interviews. Neither of the small business
consented to participate in formal MIA interviews. DOE also requested
information about small businesses and potential impacts on small
businesses while interviewing larger manufacturers.
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
One of the small businesses identified has 14 MREF models certified
in DOE's CCD. Of those 14 models, nine models are FCC, two are BIC, and
three are C-13A combination coolers. None of the nine FCC models meet
the TSL 4 efficiencies. Of the two BIC, one meets the efficiencies
required at TSL 3. However, the two models have identical dimensions
and share many components. Given the product similarities and low
volume of sales, DOE expects the manufacturer would likely discontinue
the non-compliant model. None of the three C-13A models meet the TSL 4
efficiencies. To meet the required efficiencies for their FCC models,
DOE expects the manufacturer would likely need to incorporate
incrementally more efficient compressors, along with other design
options. DOE expects these updates to be relatively straight forward
component swaps. Some product conversion costs would be necessary for
sourcing, qualifying, and testing more efficient components. To meet
the efficiencies required for their C-13A models, DOE expects the
manufacturer would likely need to implement variable-speed compressors,
along with other design options. Implementing variable-speed
compressors could require more advanced controls and electronics and
new test stations. DOE estimated conversion costs for this small
manufacturer by using product platform estimates to scale-down the
industry conversion costs. DOE estimates that the small would incur
minimal capital conversion costs and product conversion costs of
approximately $1.37 million related to sourcing and testing more
efficient components and variable-speed compressors to meet proposed
amended standards. Based on subscription-based market research reports,
the small business has an annual revenue of approximately $85 million.
The total conversion costs of $1.37 are approximately 0.3 percent of
company revenue over the 5-year conversion period.
Based on a review of publicly available information, the other
small business primarily sources their MREF products from Asian-based
OEMs. However, DOE has tentatively determined that they make some MREF
products in-house at a domestic manufacturing facility. DOE identified
one FCC model certified in CCD. To meet the required efficiencies, DOE
expects the manufacturer would likely need to incorporate incrementally
more efficient compressors, along with other design options. As
previously discussed, DOE expects these updates to be relatively
straight forward component swaps. DOE estimated conversion costs for
this small manufacturer by using product platform estimates to scale-
down the industry conversion costs. DOE estimates that the small
manufacturer would incur minimal capital conversion costs and
approximately $420,000 in product conversion costs related to sourcing
and testing more efficient components to meet proposed amended
standards. Based on subscription-based market research reports, the
small business has an annual revenue of approximately $200 million. The
total conversion costs of approximately $420,000 are less than 1
percent of the estimated company revenue over the 5-year conversion
period.
DOE seeks comments, information, and data on the number of small
businesses in the industry, the names of those small businesses, and
their market shares by product class. DOE also requests comment on the
potential impacts of the proposed standards on small manufacturers.
5. 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 proposed rule.
6. Significant Alternatives to the Rule
The discussion in the previous section analyzes impacts on small
businesses that would result from DOE's proposed rule, represented by
TSL 4. In reviewing alternatives to the proposed rule, DOE examined
energy conservation standards set at lower efficiency levels. While TSL
1, TSL 2, and TSL 3 would reduce the impacts on small business
manufacturers, it would come at the expense of a reduction in energy
savings. TSL 1 achieves 69 percent lower energy savings compared to the
energy savings at TSL 4. TSL 2 achieves 37 percent lower energy savings
compared to the energy savings at TSL 4. TSL 3 achieves 31 percent
lower energy savings compared to the energy savings at TSL 4.
Based on the presented discussion, establishing standards at TSL 4
balances the benefits of the energy savings at TSL 4 with the potential
burdens placed on MREF manufacturers, including small business
manufacturers. Accordingly, DOE does not propose one of the other TSLs
considered in the analysis, or the other policy alternatives examined
as part of the regulatory impact analysis and included in chapter 17 of
the NOPR TSD.
Additional compliance flexibilities may be available through other
means. EPCA provides that a manufacturer whose annual gross revenue
from all of its operations does not exceed $8 million may apply for an
exemption from all or part of an energy conservation standard for a
period not longer than 24 months after the effective date of a final
rule establishing the standard. (42 U.S.C. 6295(t)) Additionally,
manufacturers subject to DOE's energy efficiency standards may apply to
DOE's Office of Hearings and Appeals for exception relief under certain
circumstances. Manufacturers should refer to 10 CFR part 430, subpart
E, and 10 CFR part 1003 for additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of miscellaneous refrigeration products must certify
to DOE that their products comply with any applicable energy
conservation standards. In certifying compliance, manufacturers must
test their products according to the DOE test procedures for
miscellaneous refrigeration products, 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 miscellaneous
refrigeration products. (See generally 10 CFR part 429). The
collection-of-information requirement for the certification and
recordkeeping is subject to review and approval by OMB under the
Paperwork Reduction Act (``PRA''). This requirement has been approved
by OMB under OMB control number 1910-1400. Public reporting burden for
the certification is estimated to average 35 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.
[[Page 19442]]
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
DOE is analyzing this proposed regulation in accordance with the
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA
implementing regulations (10 CFR part 1021). DOE's regulations include
a categorical exclusion for rulemakings that establish energy
conservation standards for consumer products or industrial equipment.
10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this
rulemaking qualifies for categorical exclusion B5.1 because it is a
rulemaking that establishes energy conservation standards for consumer
products or industrial equipment, none of the exceptions identified in
categorical exclusion B5.1(b) apply, no extraordinary circumstances
exist that require further environmental analysis, and it otherwise
meets the requirements for application of a categorical exclusion. See
10 CFR 1021.410. DOE will complete its NEPA review before issuing the
final rule.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this proposed rule and has
tentatively 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 miscellaneous refrigeration products that are the
subject of this proposed 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 E.O. 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 E.O. 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 proposed rule meets the
relevant standards of E.O. 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, section 201 (codified at 2 U.S.C. 1531).
For a proposed 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 proposed ``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
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
Although this proposed rule does not contain a Federal
intergovernmental mandate, it may require expenditures of $100 million
or more in any one year by the private sector. Such expenditures may
include: (1) investment in research and development and in capital
expenditures by miscellaneous refrigeration product manufacturers in
the years between the final rule and the compliance date for the new
standards and (2) incremental additional expenditures by consumers to
purchase higher-efficiency miscellaneous refrigeration products,
starting at the compliance date for the applicable standard.
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 proposed 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 NOPR and the TSD for this
proposed 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 alternative
that achieves the objectives of the proposed rule unless DOE publishes
an explanation for doing otherwise, or the selection of such an
[[Page 19443]]
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m)
this proposed rule would establish amended energy conservation
standards for miscellaneous refrigeration products that are designed to
achieve the maximum improvement in energy efficiency that DOE has
determined to be both technologically feasible and economically
justified, as required by 6295(o)(2)(A) and 6295(o)(3)(B). A full
discussion of the alternatives considered by DOE is presented in
chapter 17 of the TSD for this proposed 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 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 E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15,
1988), DOE has determined that this proposed 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). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this NOPR 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
E.O. 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 proposed 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 proposed 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 tentatively concluded that this regulatory action, which
proposes amended energy conservation standards for miscellaneous
refrigeration products, is not a significant energy action because the
proposed 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 proposed rule.
L. Information Quality
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.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and has prepared a report describing that peer
review.\76\ 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.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve the Department's analyses. DOE is
in the process of evaluating the resulting report.\77\
---------------------------------------------------------------------------
\76\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed August 30, 2022).
\77\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards (Last accessed September 22, 2022)
---------------------------------------------------------------------------
VII. Public Participation
A. Attendance at the Public Meeting Webinar
The time and date of the webinar meeting are listed in the DATES
section at the beginning of this document. Webinar registration
information, participant instructions, and information about the
capabilities available to webinar participants will be published on
DOE's website at www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=39. Participants are responsible for ensuring
their systems are compatible with the webinar software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has plans to present a prepared general statement
may request that copies of his or her statement be made available at
the public meeting. Such persons may submit requests, along with an
advance electronic copy of their statement in PDF (preferred),
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to
the appropriate address
[[Page 19444]]
shown in the ADDRESSES section at the beginning of this document. The
request and advance copy of statements must be received at least one
week before the public meeting and are to be emailed. Please include a
telephone number to enable DOE staff to make follow-up contact, if
needed.
C. Conduct of the Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C.
6306) A court reporter will be present to record the proceedings and
prepare a transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the public meeting. There shall not be discussion of proprietary
information, costs or prices, market share, or other commercial matters
regulated by U.S. antitrust laws. After the public meeting, interested
parties may submit further comments on the proceedings, as well as on
any aspect of the rulemaking, until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present a general overview of the topics addressed in
this rulemaking, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will allow, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly. Participants should
be prepared to answer questions by DOE and by other participants
concerning these issues. DOE representatives may also ask questions of
participants concerning other matters relevant to this rulemaking. The
official conducting the public meeting will accept additional comments
or questions from those attending, as time permits. The presiding
official will announce any further procedural rules or modification of
the previous procedures that may be needed for the proper conduct of
the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this document and will be accessible on the DOE website. In
addition, any person may buy a copy of the transcript from the
transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments, data, and other
information using any of the methods described in the ADDRESSES section
at the beginning of this document.
Submitting comments via www.regulations.gov. The
www.regulations.gov web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (``CBI'')). Comments submitted
through www.regulations.gov cannot be claimed as CBI. Comments received
through the website will waive any CBI claims for the information
submitted. For information on submitting CBI, see the Confidential
Business Information section.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or postal
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If
you do not want your personal contact information to be publicly
viewable, do not include it in your comment or any accompanying
documents. Instead, provide your contact information in a cover letter.
Include your first and last names, email address, telephone number, and
optional mailing address. The cover letter will not be publicly
viewable as long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via postal mail
or hand delivery/courier, please provide all items on a CD, if
feasible, in which case it is not necessary to submit printed copies.
No telefacsimiles (``faxes'') will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email two well-marked copies: one copy of the document marked
``confidential'' including all the information believed to be
confidential, and one copy of the document marked ``non-confidential''
with the information believed to be confidential deleted. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
[[Page 19445]]
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
E. Issues on Which DOE Seeks Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
(1) DOE requests comment on its proposal to amended refrigerator
and freezer definitions to clarify that products that would otherwise
be considered a refrigerator or a freezer that also include a cooler
compartment would be considered a refrigerator or a freezer, unless a
miscellaneous refrigeration product energy conservation standard is
applicable for the product.
(2) DOE invites comment from the public regarding the competitive
impacts that are likely to result from this proposed rule.
(3) DOE requests comments on its proposal to consolidate the
presentation of maximum allowable energy use for products of classes
that may or may not have an automatic icemaker.
(4) DOE requests comment on its proposal to establish energy
conservation standards for combination cooler 5-BI using the analysis
for combination class 3A as proxy for setting the standard level, based
on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is
equal to 0 if the model has no automatic icemaker and equal to 1 if it
does.
(5) DOE seeks further comment on any of the technologies screened
out in this NOPR analysis as they were determined to not meet the
screening criteria (i.e., practicable to manufacture, install, and
service and do not result in adverse impacts on consumer utility,
product availability, health, safety, or use of unique-pathway
proprietary technologies). DOE also seeks comment on those technologies
retained for further consideration in the engineering analysis, based
on the determination that they are technologically feasible and also
meet the other screening criteria.
(6) DOE requests any further input from commenters regarding the
approach for design option selection and implementation for a given
model, beyond the information DOE has already considered.
(7) DOE seeks comment on the range of VSC nominal efficiencies and
the relative overall efficiency gains offered by VSCs when operating at
reduced compressor speeds along with reduced fan speeds in MREF
products.
(8) In interviews, manufacturers noted that the majority of MREFs--
namely freestanding compact coolers--are manufactured in Asia and
rebranded by home appliance manufacturers. Manufacturers had few
concerns about manufacturing constraints below the max-tech level and
the implementation of VIPs. However, at max-tech, some manufacturers
expressed technical uncertainty about industry's ability to meet the
efficiencies required as few OEMs offer products at max-tech today. For
example, DOE is not aware of any OEMs that currently offer freestanding
compact coolers that meet TSL 5 efficiencies. DOE's shipments analysis
estimates that except for built-in compact coolers, which only accounts
for 4 percent of MREF shipments, no shipments of other product classes
meet the max-tech efficiencies.
(9) DOE seeks comment on whether manufacturers expect manufacturing
capacity constraints would limit product availability to consumers in
the timeframe of the amended standard compliance date (2029).
(10) DOE requests information regarding the impact of cumulative
regulatory burden on manufacturers of MREFs associated with multiple
DOE standards or product-specific regulatory actions of other Federal
agencies.
(11) DOE requests comment on the assumption used in developing the
dealer/retailer markups and welcomes any feedback on the overall markup
in the wholesaler channel.
(12) DOE requests comment on its methodology to develop market
share distributions by adjusted volume in the compliance year for each
product class with two representative volumes, as well as data to
further inform these distributions.
(13) DOE requests comment and data on its price learning
methodology used to project MREF prices in the future.
(14) DOE requests comment on its methodology to develop market
share distributions by efficiency level for each product class for the
no-new-standards case in the compliance year, as well as data to
further inform these distributions.
(15) DOE requests comment and data on the assumptions and
methodology used to calculate MREF survival probabilities.
(16) DOE requests comment and data on its efficiency distribution
assumptions and projection into future years. Specifically, DOE is
requesting comment and data on the efficiency distribution of non-AHAM
members, to more accurately derive the efficiency distribution for the
whole MREF market.
(17) DOE requests comment on the overall methodology and results of
the LCC and PBP analyses.
(18) DOE requests comment on the overall methodology and results of
the shipments analysis. More specifically, DOE seeks comment and data
related to the total MREF shipments, market saturation, MREF shipments
by product class, and non-AHAM-member shipments.
(19) DOE requests comment on the assumption that the current
efficiency distribution would remain fixed over the analysis period,
and data to inform an efficiency trend by product class or overall for
the MREF market.
(20) DOE requests comment on the overall methodology and results of
the consumer subgroup analysis.
(21) DOE welcomes comments on how to more fully assess the
potential impact of energy conservation standards on consumer choice
and how to quantify this impact in its regulatory analysis in future
rulemakings.
Additionally, DOE welcomes comments on other issues relevant to the
conduct of this rulemaking that may not specifically be identified in
this document.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking and announcement of public meeting.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Intergovernmental relations, Small businesses.
Signing Authority
This document of the Department of Energy was signed on March 10,
2023, by Francisco Alejandro Moreno, 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
[[Page 19446]]
the legal effect of this document upon publication in the Federal
Register.
Signed in Washington, DC, on March 13, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, DOE proposes to amend
part 430 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Section 430.2 is amended by revising the definitions of ``Freezer''
and ``Refrigerator'' to read as follows:
Sec. 430.2 Definitions.
* * * * *
Freezer means a cabinet, used with one or more doors, that has a
source of refrigeration that requires single-phase, alternating current
electric energy input only and consists of one or more compartments
where at least one of the compartments is capable of maintaining
compartment temperatures of 0 [deg]F (-17.8 [deg]C) or below as
determined according to the provisions in Sec. 429.14(d)(2) of this
chapter. It does not include any refrigerated cabinet that consists
solely of an automatic ice maker and an ice storage bin arranged so
that operation of the automatic icemaker fills the bin to its capacity.
However, the term does not include:
(1) Any product that does not include a compressor and condenser
unit as an integral part of the cabinet assembly; or
(2) Any miscellaneous refrigeration product that must comply with
an applicable miscellaneous refrigeration product energy conservation
standard.
* * * * *
Refrigerator means a cabinet, used with one or more doors, that has
a source of refrigeration that requires single-phase, alternating
current electric energy input only and consists of one or more
compartments where at least one of the compartments is capable of
maintaining compartment temperatures above 32 [deg]F (0 [deg]C) and
below 39 [deg]F (3.9 [deg]C) as determined according to Sec.
429.14(d)(2) of this chapter. A refrigerator may include a compartment
capable of maintaining compartment temperatures below 32 [deg]F (0
[deg]C), but does not provide a separate low temperature compartment
capable of maintaining compartment temperatures below 8 [deg]F (-13.3
[deg]C) as determined according to Sec. 429.14(d)(2). However, the
term does not include:
(1) Any product that does not include a compressor and condenser
unit as an integral part of the cabinet assembly;
(2) A cooler; or
(3) Any miscellaneous refrigeration product that must comply with
an applicable miscellaneous refrigeration product energy conservation
standard.
* * * * *
0
3. Appendix A to subpart B of part 430 is amended by:
0
a. Revising section 5.3(a)(ii); and
0
b. Adding section 5.4.
The revision and addition read as follows.
Appendix A to Subpart B of Part 430--Uniform Test Method for Measuring
the Energy Consumption of Refrigerators, Refrigerator-Freezers, and
Miscellaneous Refrigeration Products
* * * * *
5.3 * * *
(a) * * *
(ii) For miscellaneous refrigeration products: To demonstrate
compliance with the energy conservation standards at 10 CFR
430.32(aa) applicable to products manufactured on or after October
28, 2019, but before the compliance date of any amended standards
published after January 1, 2022, IET, expressed in kilowatt-hours
per cycle, equals 0.23 for a product with one or more automatic
icemakers and otherwise equals 0 (zero). To demonstrate compliance
with any amended standards published after January 1, 2022, IET,
expressed in kilowatt-hours per cycle, is as defined section 5.9.2.1
of HRF-1-2019.
* * * * *
5.4 Test Cycle Energy Calculations for Cooler-Freezers
For cooler-freezers, determine the average per-cycle energy
consumption consistent with section 5.9.3 of HRF-1-2019. If both
compartments are at or colder than their standardized temperatures
for both tests, use the equation in section 5.9.3.1. Otherwise, use
the approach and equations in section 5.9.3.2, where applicable, the
``k'' value shall be 0.0.
0
4. Appendix B to subpart B of part 430 is amended by:
0
a. Adding new paragraph (c) in section 5.2;
0
b. Adding new paragraph (d) in section 5.3; and
0
c. Adding section 5.4.
The additions read as follows.
Appendix B to Subpart B of Part 430--Uniform Test Method for Measuring
the Energy Consumption of Freezers
* * * * *
5.2 * * *
(c) When testing freezers with a cooler compartment, refer to
section 5.2 of appendix A.
* * * * *
5.3 * * *
(d) Freezers with a cooler compartment: the applicable ``K''
value in section 5.8.2 of HRF-1-2019 shall be equal to either 0.7 or
0.85 as determined by the product's freezer configuration.
5.4 Test Cycle Energy Calculations for Freezer With a Cooler
Compartment
Refer to section 5.4 of appendix A.
* * * * *
0
5. Amend Sec. 430.32 by revising paragraph (aa) to read as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(aa) Miscellaneous refrigeration products. The energy standards as
determined by the equations of the following table(s) shall be rounded
off to the nearest kWh per year. If the equation calculation is halfway
between the nearest two kWh per year values, the standard shall be
rounded up to the higher of these values.
(1) The following standards remain in effect from October 28, 2019
until [date 5 years after the publication of the final rule].
------------------------------------------------------------------------
Product class AEU (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact.............................. 7.88AV + 155.8
2. Freestanding...................................... 7.88AV + 155.8
3. Built-in compact.................................. 7.88AV + 155.8
4. Built-in.......................................... 7.88AV + 155.8
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
A to subpart B of 10 CFR part 430.
[[Page 19447]]
The following standards apply to products manufacturer starting on
[date 5 years after the publication of the final rule].
------------------------------------------------------------------------
Product class AEU (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact.............................. 5.52AV + 109.1
2. Freestanding...................................... 5.52AV + 109.1
3. Built-in compact.................................. 5.52AV + 109.1
4. Built-in.......................................... 6.30AV + 124.6
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
A to subpart B of 10 CFR part 430.
(2) The following standards remain in effect from October 28, 2019
until [date 5 years after the publication of the final rule].
------------------------------------------------------------------------
Product class AEU (kWh/yr)
------------------------------------------------------------------------
C-3A. Cooler with all-refrigerator--automatic defrost 4.57AV + 130.4
C-3A-BI. Built-in cooler with all-refrigerator-- 5.19AV + 147.8
automatic defrost...................................
C-9. Cooler with upright freezer with automatic 5.58AV + 147.7
defrost without an automatic icemaker...............
C-9-BI. Built-in cooler with upright freezer with 6.38AV + 168.8
automatic defrost without an automatic icemaker.....
C-9I. Cooler with upright freezer with automatic 5.58AV + 231.7
defrost with an automatic icemaker..................
C-9I-BI. Built-in cooler with upright freezer with 6.38AV + 252.8
automatic defrost with an automatic icemaker........
C-13A. Compact cooler with all-refrigerator-- 5.93AV + 193.7
automatic defrost...................................
C-13A-BI. Built-in compact cooler with all- 6.52AV + 213.1
refrigerator--automatic defrost.....................
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
A to subpart B of 10 CFR part 430.
The following standards apply to products manufacturer starting on
[date 5 years after the publication of the final rule].
------------------------------------------------------------------------
Product class AEU (kWh/yr)
------------------------------------------------------------------------
C-3A. Cooler with all-refrigerator--automatic defrost 4.11AV + 117.4
C-3A-BI. Built-in cooler with all-refrigerator-- 4.67AV + 133.0
automatic defrost...................................
C-5-BI. Built-in cooler with refrigerator-freezer 5.47AV + 196.2 +
with automatic defrost with bottom-mounted freezer.. 28I
C-9. Cooler with upright freezer with automatic 5.58AV + 147.7 +
defrost without an automatic icemaker............... 28I
C-9-BI. Built-in cooler with upright freezer with 6.38AV + 168.8 +
automatic defrost without an automatic icemaker..... 28I
C-13A. Compact cooler with all-refrigerator-- 4.74AV + 155.0
automatic defrost...................................
C-13A-BI. Built-in compact cooler with all- 5.22AV + 170.5
refrigerator--automatic defrost.....................
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
A to subpart B of 10 CFR part 430. I = 1 for a product with an
automatic icemaker and = 0 for a product without an automatic
icemaker.
[FR Doc. 2023-05363 Filed 3-30-23; 8:45 am]
BILLING CODE 6450-01-P