[Federal Register Volume 88, Number 101 (Thursday, May 25, 2023)]
[Proposed Rules]
[Pages 33968-34027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09968]
[[Page 33967]]
Vol. 88
Thursday,
No. 101
May 25, 2023
Part II
Department of Energy
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10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines; Proposed Rule
Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 /
Proposed Rules
[[Page 33968]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[EERE-2020-BT-STD-0014]
RIN 1904-AE68
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking and 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 refrigerated
bottled or canned beverage vending machines (BVMs). 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 BVMs, 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 July 24, 2023.
Meeting: DOE will hold a public meeting via webinar on Wednesday,
June 7, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, ``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 U.S. Department of Justice (DOJ) contact
listed in the ADDRESSES section on or before June 26, 2023.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at www.regulations.gov under docket
number EERE-2020-BT-STD-0014. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2020-BT-STD-0014, by any of the
following methods:
Email: [email protected]. Include the docket number number
EERE-2020-BT-STD-0014 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-0014. 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 DOJ 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
rulemaking.
FOR FURTHER INFORMATION CONTACT:
Mr. Bryan Berringer, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 586-0371. Email: [email protected].
Ms. Sarah Butler, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-1777. 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 BVMs
C. Deviation From Process Rule
1. Framework Document
2. Public Comment Period
3. Amended Test Procedures
III. General Discussion
A. General Comments
B. Scope of Coverage
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. Equipment Classes
a. Combination A
2. Technology Options
a. Compressors
b. Alternative Refrigerants
c. Insulation
d. Fan Motors
e. Evaporators and Condensers
[[Page 33969]]
f. Glass Packs
g. Payment Mechanisms
h. Low Power Modes
i. Additional Concerns
B. Screening Analysis
1. Screened Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Energy Use
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Split Incentives
10. 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
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 BVM 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, 13563, and 14094
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. Participation in the Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Webinar
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.
These products include BVMs, the subject of this proposed rulemaking.
(42 U.S.C. 6295(v)) \3\
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\1\ All references to EPCA in this document refer to the statute
as amended through the Infrastructure Investment and Jobs Act,
Public Law 117-58 (Nov. 15, 2021).
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\3\ Because Congress included BVMs in Part A of Title III of
EPCA, the consumer product provisions of Part A (rather than the
industrial equipment provisions of Part A-1) apply to BVMs. DOE
placed the regulatory requirements specific to BVMs in 10 CFR part
431, ``Energy Efficiency Program for Certain Commercial and
Industrial Equipment'' as a matter of administrative convenience
based on their type and will refer to BVMs as ``equipment''
throughout this document because of their placement in 10 CFR part
431. Despite the placement of BVMs in 10 CFR part 431, the relevant
provisions of Title A of EPCA and 10 CFR part 430, which are
applicable to all product types specified in Title A of EPCA, are
applicable to BVMs. See 74 FR 44914, 44917 (Aug. 31, 2009) and 80 FR
45758, 45759 (Jul. 31, 2015). The regulatory provisions of 10 CFR
430.33 and 430.34 and subparts D and E of 10 CFR part 430 are
applicable to BVMs.
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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 3 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 NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
In accordance with these and other statutory provisions discussed
in this document, DOE proposes amended energy conservation standards
for BVMs. The proposed standards, which are expressed in maximum daily
energy consumption as a function of refrigerated volume, if adopted,
would apply to all BVMs listed in Table I.1 manufactured in, or
imported into, the United States starting on the date 3 years after the
publication of the final rule for this proposed rulemaking.
Table I.1--Proposed Energy Conservation Standards for BVMs
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Maximum daily energy
Equipment class consumption (kilowatt hours
per day)
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Class A................................... 0.029 x V * + 1.34.
Class B................................... 0.029 x V * + 1.21.
Combination A............................. 0.048 x V * + 1.50.
Combination B............................. 0.052 x V * + 0.96.
------------------------------------------------------------------------
* V is the representative value of refrigerated volume (ft\3\) of the
BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
[[Page 33970]]
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of BVMs, as measured by the average
life-cycle cost (LCC) savings and the simple payback period (PBP).\4\
The PBP is less than the average lifetime of BVMs, which is estimated
to be 13.4 years (see section IV.F of this document).
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\4\ 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.9 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 Refrigerated Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
Simple
Average LCC payback
Equipment class savings * period
(2021$) (years)
------------------------------------------------------------------------
Class A....................................... (5.52) 5.7
Class B....................................... 206.01 1.2
Combination A................................. 190.03 1.4
Combination B................................. 287.16 2.2
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
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 to the industry from the base year through the end of the
analysis period (2028-2057). Using a real discount rate of 8.5 percent,
DOE estimates that the INPV for manufacturers of BVMs in the case
without amended standards is $85.5 million in 2021$. Under the proposed
standards, the change in INPV is estimated to range from a loss of 2.2
percent to a gain 0.6 percent, which is approximately -$1.9 million to
$0.5 million. In order to bring equipment into compliance with amended
standards, it is estimated that the industry would incur total
conversion costs of $1.5 million.
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 \5\
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\5\ All monetary values in this document are expressed in 2021
dollars.
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DOE's analyses indicate that the proposed energy conservation
standards for BVMs would save a significant amount of energy. Relative
to the case without amended standards, the lifetime energy savings for
BVMs purchased in the 30-year period that begins in the anticipated
year of compliance with the amended standards (2028-2057) amount to
0.09 quadrillion British thermal units (Btu or quads).\6\ This
represents a savings of 30 percent relative to the energy use of this
equipment in the case without amended standards (referred to as the
``no-new-standards case'').
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\6\ 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 BVMs ranges from $0.09 billion (at a 7-
percent discount rate) to $0.25 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 BVMs purchased
in 2028-2057.
In addition, the proposed standards for BVMs are projected to yield
significant environmental benefits. DOE estimates that the proposed
standards would result in cumulative emission reductions (over the same
period as for energy savings) of 3.0 million metric tons (Mt) \7\ of
carbon dioxide (CO2), 1.4 thousand tons of sulfur dioxide
(SO2), 4.7 thousand tons of nitrogen oxides
(NOX), 21 thousand tons of methane (CH4), 0.03
thousand tons of nitrous oxide (N2O), and 0.009 tons of
mercury (Hg).\8\
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\7\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2022 (AEO2022). AEO2022 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 AEO2022 assumptions that effect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (GHGs) 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 GHGs
(``SC-GHGs''). 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 climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
estimated to be $0.14 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 sets of SC-GHG
estimates.
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\9\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG. (``February 2021 SC-GHG TSD''). www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
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DOE estimated the monetary health benefits of SO2 and
NOX emissions reductions using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document. DOE estimated the present value of the health benefits would
be $0.10 billion using a 7-percent discount rate and $0.27 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 E.O. 12866.
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Table I.3 summarizes the monetized benefits and costs expected to
result from the proposed standards for BVMs. There are other important
unquantified effects, including certain unquantified climate benefits,
unquantified public health benefits from the reduction of toxic air
pollutants and other emissions, unquantified energy security benefits,
and distributional effects, among others. The monetization of climate
and health benefits that have been quantified is explained in section
IV.L of this document.
[[Page 33971]]
Table I.3--Summary of Monetized Benefits and Costs of Proposed Energy
Conservation Standards for Refrigerated Bottled or Canned BVMs
[TSL 4]
------------------------------------------------------------------------
Billion
($2021)
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.............................. 0.33
Climate Benefits *........................................... 0.14
Health Benefits **........................................... 0.27
Total Benefits [dagger]...................................... 0.75
Consumer Incremental Product Costs [Dagger].................. 0.08
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Net Benefits............................................. 0.66
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.............................. 0.14
Climate Benefits * (3% discount rate)........................ 0.14
Health Benefits **........................................... 0.10
Total Benefits[dagger]....................................... 0.38
Consumer Incremental Product Costs[Dagger]................... 0.05
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Net Benefits............................................. 0.33
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs
shipped in 2028-2057. These results include benefits to consumers
which accrue after 2057 from the products shipped in 2028-2057.
* 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; however, DOE emphasizes the importance and value of considering
the benefits calculated using all four sets of SC-GHG estimates. To
monetize the benefits of reducing GHG emissions, this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
** 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 DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
installation costs.
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 2021, 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 2021. 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 cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered equipment and are measured for the lifetime of BVMs shipped in
2028-2057. The benefits associated with reduced emissions achieved as a
result of the proposed standards are also calculated based on the
lifetime of BVMs shipped in 2028-2057. Total benefits for both the 3-
percent and 7-percent cases are presented using the average GHG social
costs with a 3-percent discount rate. Estimates of SC-GHG values are
presented for all four discount rates in section V.B.6 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 $5.8 million per year in increased equipment
costs, while the estimated annual benefits are $16 million in reduced
equipment operating costs, $8.5 million in climate benefits, and $12
million in health benefits. In this case. The net benefit would amount
to $30 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards is $4.9 million per year in
increased equipment costs, while the estimated annual benefits are $20
million in reduced operating costs, $8.5 million in climate benefits,
and $16 million in health benefits. In this case, the net benefit would
amount to $39 million per year.
Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines
[TSL 4]
----------------------------------------------------------------------------------------------------------------
Million 2021$/year
--------------------------------------------------------
Low net benefits High net benefits
Primary estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................ 20 19 20
Climate Benefits *..................................... 8.5 8.5 8.5
Health Benefits **..................................... 16 16 17
Total Benefits [dagger]................................ 44 44 45
Consumer Incremental Product Costs [Dagger]............ 4.9 5.2 4.9
--------------------------------------------------------
[[Page 33972]]
Net Benefits....................................... 39 38 40
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................ 16 15 16
Climate Benefits * (3% discount rate).................. 8.5 8.5 8.5
Health Benefits **..................................... 12 12 12
Total Benefits [dagger]................................ 36 35 36
Consumer Incremental Product Costs [Dagger]............ 5.8 6.0 5.7
--------------------------------------------------------
Net Benefits....................................... 30 29 31
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results
include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. 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 sections IV.F.1 and 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; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
by the IWG.
** 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
[Dagger] Costs include incremental equipment costs as well as installation costs.
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, equipment achieving these standard levels is
already commercially available for all product classes covered by this
proposal. As for economic justification, 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 BVMs is $5.8 million per year in increased
equipment costs, while the estimated annual benefits are $16 million in
reduced equipment operating costs, $8.5 million in climate benefits,
and $12 million in health benefits. The net benefit amounts to $30
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\ 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).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 0.09 quad full-fuel-cycle (FFC),
the equivalent of the primary annual energy use of 2.4 million homes.
In addition, they are projected to reduce CO2 emissions by
3.0 Mt. Based on these findings, 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 these tentative conclusions is contained in
the remainder of this document and the accompanying technical support
document (TSD).
DOE also considered more stringent energy efficiency levels (ELs)
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
BVMs.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of
[[Page 33973]]
consumer products and certain industrial equipment. (42 U.S.C. 6291-
6317) Title III, Part B of EPCA established the Energy Conservation
Program for Consumer Products Other Than Automobiles. These products
include BVM equipment, the subject of this document. (42 U.S.C.
6295(v)) EPCA directed DOE to prescribe energy conservation standards
for BVMs not later than 4 years after August 8, 2005. (42 U.S.C
6295(v)(1)) 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))
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 BVMs appear at title 10 of the Code of Federal
Regulations (CFR) part 431, subpart Q, appendix B.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including BVMs. 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 42 U.S.C. 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 BVMs, 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 of Energy (``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
that 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
[[Page 33974]]
reviewed the operating modes available for BVM equipment and determined
that this equipment does not have operating modes that meet the
definition of standby mode or off mode, as established at 42 U.S.C.
6295(gg)(3). Specifically, BVM equipment is typically always providing
at least one main function--refrigeration. (42 U.S.C. 6295(gg)(1)(A))
DOE recognizes that in a unique equipment design, the low power mode
includes disabling the refrigeration system, while for other equipment
the low power mode controls only elevate the thermostat set point.
Because low power modes still include some amount of refrigeration for
most equipment, DOE believes that such a mode does not constitute a
``standby mode,'' as defined by EPCA, for BVM equipment. Therefore, DOE
believes that BVM equipment does not operate under standby and off mode
conditions as defined in EPCA, and that the energy use of BVM equipment
would be captured in any standard established for active mode energy
use. This NOPR does not specifically address standby and off mode
energy consumption for this equipment.
B. Background
1. Current Standards
In the final rule published on January 8, 2016, DOE prescribed the
current energy conservation standards for BVM equipment manufactured on
and after January 8, 2019 (``January 2016 Final Rule''). 81 FR 1028.
These standards are set forth in DOE's regulations at 10 CFR 431.296(b)
and are repeated in Table II.1.
Table II.1--Federal Energy Conservation Standards for Refrigerated
Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
Maximum daily energy
Equipment class consumption (kilowatt hours
per day)
------------------------------------------------------------------------
Class A................................... 0.052 x V [dagger] + 2.43.
Class B................................... 0.052 x V [dagger] + 2.20.
Combination A............................. 0.086 x V [dagger] + 2.66.
Combination B............................. 0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume (ft3)
of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
2. History of Standards Rulemaking for BVMs
On June 10, 2020, DOE published a request for information (``June
2020 RFI'') that identified various issues on which DOE sought comment
to inform its determination of whether the standards need to be
amended. 85 FR 35394.
On April 26, 2022, DOE published a notice that announced the
availability of the preliminary analysis (``April 2022 Preliminary
Analysis'') it conducted for purposes of evaluating the need for
amended energy conservation standards for BVM equipment. 87 FR 24469.
In that notification, DOE sought comment on the analytical framework,
models, and tools that DOE used to evaluate efficiency levels for BVM
equipment, the results of preliminary analyses performed, and the
potential energy conservation standard levels derived from these
analyses, which DOE presented in the accompanying preliminary TSD
(``April 2022 Preliminary TSD'').
On May 23, 2022, DOE held a public webinar in which it presented
the methods and analysis in the April 2022 Preliminary Analysis and
solicited public comment.\13\
---------------------------------------------------------------------------
\13\ See www.regulations.gov/document/EERE-2020-BT-STD-0014-0013
for a PDF version of the transcript.
---------------------------------------------------------------------------
DOE received comments in response to the April 2022 Preliminary
Analysis from the interested parties listed in Table II.2.
Table II.2--April 2022 Preliminary Analysis Written Comments
----------------------------------------------------------------------------------------------------------------
Comment No. in
Commenter(s) Abbreviation the docket Commenter type
----------------------------------------------------------------------------------------------------------------
Appliance Standards Awareness Project, ASAP, ACEEE............... 15 Efficiency Organization.
American Council for an Energy-
Efficient Economy.
National Automated Merchandising NAMA...................... 14 Trade Association.
Association.
----------------------------------------------------------------------------------------------------------------
A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\14\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the May 2022 public meeting, DOE cites the written comments
throughout this document. Any oral comments provided during the webinar
that are not substantively addressed by written comments are summarized
and cited separately throughout this document.
---------------------------------------------------------------------------
\14\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for BVMs. (Docket No. EERE-2020-BT-
STD-0014, which is maintained at www.regulations.gov). The
references are arranged as follows: (commenter name, comment docket
ID number, page of that document).
---------------------------------------------------------------------------
C. Deviation from Process Rule
In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``Process Rule''), DOE notes that it is deviating from the
provision in the Process Rule regarding the pre-NOPR and NOPR stages
for an energy conservation standards rulemaking.
1. Framework Document
Section 6(a)(2) of the Process Rule states that if DOE 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. While DOE
published a preliminary analysis for this rulemaking (see 87 FR 24469),
DOE did not publish a framework document in conjunction with the
preliminary analysis. DOE notes, however, that chapter 2 of the
preliminary technical support document that accompanied the preliminary
analysis--entitled Analytical Framework, Comments from Interested
Parties, and DOE Responses--describes the general analytical framework
that DOE uses in evaluating and developing potential amended energy
conservation standards.\15\ As such, publication of a separate
Framework Document would be largely redundant of previously published
documents.
---------------------------------------------------------------------------
\15\ The preliminary technical support document is available at
www.regulations.gov/document/EERE-2020-BT-STD-0014-0007.
---------------------------------------------------------------------------
2. Public Comment Period
Section 6(f)(2) of the Process Rule specifies that the length of
the public
[[Page 33975]]
comment period for a NOPR will be not less than 75 calendar days. For
this NOPR, DOE has opted instead to provide a 60-day comment period.
DOE is opting to deviate from the 75-day comment period because
stakeholders have already been afforded multiple opportunities to
provide comments on this proposed rulemaking. As noted previously, DOE
requested comment on various issues pertaining to this standards
proposed rulemaking in the June 2020 RFI and provided stakeholders with
a 60-day comment period. 85 FR 35394. Additionally, DOE initially
provided a 60-day comment period for stakeholders to provide input on
the analyses presented in the April 2022 Preliminary TSD. 87 FR 24469.
The analytical assumptions and approaches used for the analyses
conducted for this NOPR are similar to those used for the preliminary
analysis. Therefore, DOE believes a 60-day comment period is
appropriate and will provide interested parties with a meaningful
opportunity to comment on the proposed rule.
3. Amended Test Procedures
NAMA requested that DOE finish the test procedure rulemaking before
the standards rulemaking process begins. (NAMA, No. 14 at p. 16).
Section 8(d)(1) of the Process Rule specifies that test procedure
rulemakings establishing methodologies used to evaluate proposed energy
conservation standards will be finalized prior to publication of a NOPR
proposing new or amended energy conservation standards. Additionally,
new test procedures and amended test procedures that impact measured
energy use or efficiency will be finalized at least 180 days prior to
the close of the comment period for (1) a NOPR proposing new or amended
energy conservation standards or (2) a notice of proposed determinaton
that standards do not need to be amended. In the BVM test procedure
final rule issued on April 25, 2023 (April 2023 Test Procedure Final
Rule), DOE amended the test procedures for BVMs.\16\ DOE determined
that the amendments adopted will not alter (i.e., will not impact) the
measured efficiency of BVMs. Id. As such, the requirement that the
amended test procedure be finalized at least 180 days prior to the
close of the comment period for this NOPR do not apply.
---------------------------------------------------------------------------
\16\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------
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. General Comments
This section summarizes general comments received from interested
parties regarding rulemaking timing and process.
NAMA requested that DOE pay considerable attention to the economic
impacts of new energy regulations on an industry under pressure due to
factors such as the COVID-19 pandemic and the switch from
hydrofluorocarbons (HFCs) to lower global warming potential (GWP)
chemicals. (NAMA, No. 14 at p. 3)
NAMA commented to ask that DOE return to in-person meetings,
stating that while electronic meetings provide value, they present
challenges to full dialogue on these important subjects. (NAMA, No. 14
at p. 3)
NAMA commented that DOE should not discount the time and resources
needed to evaluate and respond to all proposed test procedures and
energy conservation standards for multiple products proposed over a
short period, as is currently the case. (NAMA, No. 14 at p. 16) It
noted that when these rulemakings occur simultaneously, as they are now
and have in the past, the cumulative burden increases substantially.
Id.
NAMA commented that it requested an extension to the Cooperative
Research and Development Agreement (CRADA) between the NAMA Foundation,
DOE, and the Oak Ridge National Laboratory (ORNL) so that the remaining
items revolving around energy efficiency gains can be studied, and
asked that DOE wait until the CRADA is finished before pursuing a
regulation. (NAMA, No. 14 at p. 9) NAMA also commented that in the
preliminary analysis TSD, DOE recognizes the existence of the CRADA
between NAMA, DOE, and ORNL; however, NAMA stated the status of this
CRADA is not current or correct in the TSD. Id. NAMA stated that most
of the activities of the 2019-2021 CRADA were directed toward reduction
of the risk involved in a possible leak situation if it were ever to
occur. Id. NAMA commented that ORNL did extensive testing on leak
scenarios and proposed new methods to reduce the risk from such a leak
in a public space. Id. NAMA stated that, in nearly all the scenarios
tested by ORNL, this involved the use of additional fans to circulate
air. Id. NAMA commented that the energy used by additional ventilation
is not accounted for in the preliminary analysis TSD and that,
according to the proposed DOE test procedure, BVM manufacturers would
be penalized to use additional ventilation and thus to reduce the
safety risk. Id.
DOE has evaluated potential improvements to the energy efficiency
of BVMs to support this NOPR through testing, teardowns, manufacturer
interviews, market review, and comments submitted by stakeholders. DOE
welcomes any additional comments and supporting data, including any
additional results of the CRADA, in response to this NOPR.
In the April 2023 Test Procedure Final Rule, DOE determined to
amend the test procedure to include additional instructions for
refrigerant leak mitigation controls.\17\ DOE specified that for
refrigerant leak mitigation controls that are independent from the
refrigeration or vending performance of the BVM, such controls must be
disconnected, disabled, or otherwise de-energized for the duration of
testing. Id. For refrigerant leak mitigation controls that are
integrated into the BVM cabinet such that they cannot be de-energized
without disabling the refrigeration or vending functions of the BVM or
modifying the circuitry, such controls must be placed in an external
accessory standby mode, if available, or their lowest energy-consuming
state. Id.
---------------------------------------------------------------------------
\17\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------
Section 2.5.1.1 of the preliminary analysis TSD states that DOE
acknowledges the ongoing research at ORNL. DOE recognized that leak
mitigation technologies are still under development and continues to
request comment and data on the use of such technologies and how they
may impact BVM energy use. Id. DOE acknowledged that ASHRAE 15-2019,
ASHRAE 34-2019, and UL 541 specified limitations on placing beverage
vending machines using propane refrigerant in hallways or corridors and
that these industry standards are often adopted as part of local codes.
Id. DOE noted that, since the initial publication of the standards,
addenda \18\ to ASHRAE 15 and 34 have been published to remove the
limitations on placing beverage vending machines using propane in
hallways or
[[Page 33976]]
corridors. Id. These addenda specify a maximum charge limit based on
the lower flammability limit of a refrigerant. Id. For BVM equipment
using propane, the maximum charge limit permitted under the addenda is
114 grams. Id. DOE determined in the preliminary analysis TSD that this
charge limit would allow BVM units in all equipment classes and
available sizes to transition to propane without restricting
installation locations of BVM units for end users. Id. Similarly, DOE
states that it has already observed in the market and tested BVM units
utilizing flammable refrigerants, specifically R-290. Id. In this NOPR,
DOE has tentatively determined, based on manufacturer interviews, test
data, and teardown data, that BVM units in all equipment classes and
available sizes can use a R-290 charge of 114 grams or less. DOE has
not observed any refrigeration leak mitigation controls that consume
additional energy on BVMs using flammable refrigerants and, based on
interviews conducted in support of this NOPR, refrigeration leak
mitigation controls on BVMs using R-290 are not required because all
BVMs use less than 114 grams of R-290. See chapter 5 of the NOPR TSD
for additional discussion.
---------------------------------------------------------------------------
\18\ ASHRAE 15-2019 Addendum C, published August 2020, and
ASHRAE 34-2019 Addendum F, published December 2019, specifically
address this issue and can be accessed at www.techstreet.com/ashrae/standards/ashrae15-2019-packaged-w-34-2019?product_id=2046531.
---------------------------------------------------------------------------
B. Scope of Coverage
This NOPR covers equipment that meet the definition of a
refrigerated bottled or canned beverage vending machine, as codified at
10 CFR 431.292.
A ``refrigerated bottled or canned beverage vending machine'' is
defined as a commercial refrigerator (as defined in 10 CFR 431.62) that
cools bottled or canned beverages and dispenses the bottled or canned
beverages on payment. 10 CFR 431.292.
See section IV.A.1 of this document for discussion of the equipment
classes analyzed in this NOPR.
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 BVM equipment are expressed
in terms of maximum daily energy consumption as a function of the
refrigerated volume of the equipment; see 10 CFR 431.296(b).
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 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 BVM equipment, 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 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 BVM
equipment 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.b of this document 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 the application of the TSL to BVMs purchased in the 30-year period
that begins in the year of compliance with the proposed standards
(2028-2057).\19\ The savings are measured over the entire lifetime of
BVMs 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.
---------------------------------------------------------------------------
\19\ 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 BVMs. 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.\20\ 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.1 of this document.
---------------------------------------------------------------------------
\20\ 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).
---------------------------------------------------------------------------
NAMA commented that DOE overestimated energy savings over the 30
year analysis period. (NAMA, No. 14 at p. 14) DOE clarifies that the
energy savings referenced are FFC energy savings, where the energy
usage calculated by NAMA appears to be site energy usage. DOE also
clarifies that energy savings are based on 30 years of shipments, but
BVMs shipped in year
[[Page 33977]]
30 can continue to save energy until they are retired from service.
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.\21\ 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. 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, 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).
---------------------------------------------------------------------------
\21\ 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 13 December 2021 (86 FR 70892).
---------------------------------------------------------------------------
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 proposed 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 manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual 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 NPV of the consumer
costs and benefits expected to result from particular standards. DOE
also evaluates the impacts of potential standards on identifiable
subgroups of consumers that may be affected disproportionately by a
standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered 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)) DOE conducts this comparison in its LCC and PBP
analyses.
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 analyses, 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 analyses 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 of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes and evaluating design options and
the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered 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 DOJ provide its
determination on this issue. DOE will publish and
[[Page 33978]]
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 benefits in the form of reduced emissions of air
pollutants and GHGs associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this document;
the estimated emissions impacts are reported in section V.B.6 of this
document. DOE also estimates the economic value of emissions reductions
resulting from the considered TSLs, as discussed in section IV.L 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 PBP for consumers.
These analyses include, but are not limited to, the 3-year PBP
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 of this document.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
proposed rulemaking with regard to BVM equipment. Separate subsections
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 proposed rulemaking:
www.regulations.gov/docket/EERE-2020-BT-STD-0014. For this NOPR
analysis, the Energy Information Administration (EIA) Annual Energy
Outlook 2022 (AEO2022),\22\ a widely known energy projection for the
United States, was used for the life-cycle cost, emissions, and utility
impact analyses, which was current for the analysis phase. However,
near the time of publication of the NOPR, EIA released AEO2023. DOE
plans to shift to AEO2023 in the final rule analysis. A preliminary
review of the electricity prices in AEO2023 indicates lower electricity
prices than AEO2022 in the Reference case. Lower electricity prices
could reduce the life-cycle savings and affect the related payback
period calculations. DOE will update other variables and data sets in
the final rule analysis in addition to use of AEO2023, as well as
incorporate feedback from commenters.
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\22\ U.S. Department of Energy-Energy Information
Administration. Annual Energy Outlook 2022. Washington, DC.
Available at https://www.eia.gov/outlooks/archive/aeo22//.
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A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. 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 equipment classes, and (2) technologies or design
options that could improve the energy efficiency of BVM equipment. 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. Equipment Classes
When evaluating and establishing energy conservation standards, DOE
may establish separate standards for a group of covered products (i.e.,
establish a separate product class) if DOE determines that separate
standards are justified based on the type of energy used, or if DOE
determines that a product's capacity or other performance-related
feature justifies a different standard. (42 U.S.C. 6295(q)) 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. Id.
DOE currently separates BVM equipment into four equipment classes
categorized by physical characteristics
[[Page 33979]]
that affect equipment utility and equipment efficiency: (1) whether 25
percent or more of the surface area on the front side of the BVM is
transparent and (2) whether two or more compartments of the BVM are
separated by a solid partition that may or may not share a product
delivery chute, in which at least one compartment is designed to be
refrigerated--as demonstrated by the presence of temperature controls--
and at least one compartment is not (i.e., a combination vending
machine). The equipment classes are defined as follows:
Class A means a refrigerated bottled or canned beverage vending
machine that is not a combination vending machine and in which 25
percent or more of the surface area on the front side of the beverage
vending machine is transparent.
Class B means a refrigerated bottled or canned beverage vending
machine that is not considered to be Class A and is not a combination
vending machine.
Combination A means a combination vending machine where 25 percent
or more of the surface area on the front side of the beverage vending
machine is transparent.
Combination B means a combination vending machine that is not
considered to be Combination A.
DOE currently sets forth energy conservation standards and relevant
definitions for BVM equipment at 10 CFR 431.296 and 10 CFR 431.292,
respectively, and the energy conservation standards are repeated in
Table II.1.
a. Combination A
In the January 2016 Final Rule, DOE noted that the optional test
protocol to determine the transparency of materials and the relative
surface areas of transparent and non-transparent surfaces would be
applicable to combination vending machines except that, the external
surface areas surrounding the non-refrigerated compartment(s) would not
be considered. 81 FR 1027, 1048. That is, all the surfaces that
surround and enclose the compartment designed to be refrigerated (as
demonstrated by the presence of temperature controls) as well as any
surfaces that do not enclose any product-containing compartments (e.g.,
surfaces surrounding any mechanical equipment or containing the product
selection and delivery apparatus) would be considered in the
calculation of transparent and non-transparent surface area for a BVM,
as shown in Figure IV.1. Id.
[GRAPHIC] [TIFF OMITTED] TP25MY23.000
DOE notes that the January 2016 Final Rule and Figure IV.1 do not
mention the solid partition that separates two or more compartments in
a combination vending machine. The definition of combination vending
machine at 10 CFR 431.292 does not limit the size or shape of the solid
partition that might separate refrigerated and non-refrigerated
subcompartments. Based on BVM teardowns conducted in support of this
NOPR, DOE has initially determined that the solid partition projected
to the front surface would constitue a small portion of the overall
transparent surface area calculation. DOE has observed solid partitions
with a projected front surface area of 0.5 inches of thickness and span
the width of the internal compartment resulting in approximately 1.0%
of the front surface area. Therefore, in this NOPR, DOE proposes to
clarify that the solid partition would be considered in the calculation
of transparent and non-transparent surface area for BVM equipment up to
the centerline of the solid partition projected to the front surface
for the surfaces that surround and enclose the compartment designed to
be refrigerated (as demonstrated by the presence of temperature
controls).
[[Page 33980]]
The definition of Combination A requires that ``25 percent or more
of the surface area on the front side of the beverage vending machine
is transparent.'' 10 CFR 431.292. Consistent with the January 2016
Final Rule, DOE proposes to revise the definition of Combination A to
clarify the exclusion of the external surface areas surrounding the
non-refrigerated compartment(s) in the calculation of surface areas of
transparent and non-transparent surfaces:
Combination A means a combination vending machine where 25 percent
or more of the surface area on the front side of the beverage vending
machine that surrounds the refrigerated compartment(s) is transparent.
DOE requests comment on its proposal to revise the definition of
Combination A.
2. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified 29 technology options that would be expected to improve the
efficiency of BVM equipment, as measured by the DOE test procedure and
shown in Table IV.1.
Table IV.1--Technology Options for Refrigerated Bottled or Canned
Beverage Vending Machines in the April 2022 Preliminary TSD
------------------------------------------------------------------------
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Insulation:
Improved resistivity of insulation (insulation type).
Increased insulation thickness.
Vacuum insulated panels.
Improved Glass Packs:
Low-E coatings.
Inert gas fill.
Vacuum insulated glass.
Additional panes.
Frame design.
Compressor:
Improved compressor efficiency.
Variable speed compressors.
Linear compressors.
Evaporator:
Increased surface area.
Tube and fin enhancements (including microchannel designs).
Low pressure differential evaporator.
Condenser:
Increased surface area.
Tube and fin enhancements (including microchannel designs).
Microchannel heat exchanger.
Fans and Fan Motors:
Evaporator fan motors.
Evaporator fan blades.
Evaporator fan controls.
Condenser fan motors.
Condenser fan blades.
Other Technologies:
Lighting.
Anti-sweat heater controls.
Defrost systems.
Expansion valve improvements:
Alternative refrigerants.
Low power payment mechanisms.
Low power states.
------------------------------------------------------------------------
DOE received several comments in response to the April 2022
Preliminary Analysis regarding the technology options.
a. Compressors
NAMA commented that, at the present time, variable speed and two-
speed compressors are not available for the size range of compressors
for most BVMs. (NAMA, No. 14 at p. 24)
NAMA commented that when moving from single speed compressors to
variable speed compressors, in order to take full advantage of this
level of energy efficiency, other components, such as metering devices
(i.e., expansion valves and capillary tubes), must be changed. (NAMA,
No. 14 at p. 24) NAMA added that a control system will have to be added
to monitor the system of the compressor, the cycle, the temperatures,
and environmental conditions, and that these changes must be factored
into the total cost. Id. NAMA commented that it is necessary for DOE to
understand that the refrigeration cycle is only on for 20-25 percent of
the time and that any savings must be allocated across the full set of
DOE test procedure measurements. Id.
NAMA also commented that linear compressors are not available for
BVMs and are many years away from concept design. In addition, NAMA
commented that several manufacturers of linear compressors appear to
have discontinued production. (NAMA, No. 14 at p. 24)
DOE has reviewed variable speed compressors available on the market
and found that variable speed compressors are offered at the same
cooling capacities as single speed compressors currently used in BVMs.
All variable speed compressors observed had more than two speeds.
In this NOPR, DOE did not assume that additional components other
than the variable speed compressor were required to reduce the energy
use for the variable speed compressor design option. DOE is aware of
refrigerant systems which use a capillary tube and a variable speed
compressor which suggests that expansion valve changes are not
necessary. Based on feedback received during manufacturer interviews,
information collected during BVM teardowns, and market research, DOE
has tentatively determined that control systems are already present in
BVM equipment.
In the NOPR analysis, DOE considered the refrigeration cycle
duration in the engineering analysis for the variable speed compressor
design option. See chapter 5 of the NOPR TSD for additional details.
In the April 2022 Preliminary Analysis, DOE did not screen out
linear compressors but did include linear compressors as a ``design
option not directly analyzed.'' DOE included linear compressors as a
technology option because compressor manufacturers had begun
development on linear compressors for residential refrigerators.
However, recent lawsuits and a lack of availability of linear
compressors on the market have prevented further development of this
technology for BVM equipment; therefore, DOE has tentatively determined
that linear compressors meet the screening criterion of ``impacts on
product utility or product availability.'' DOE has screened out linear
compressors as a design option for improving the energy efficiency of
BVM equipment. See section IV.B.1 of this document and chapter 4 of the
NOPR TSD for additional details.
b. Alternative Refrigerants
NAMA commented that the changes necessary to adopt the lower GWP
refrigerants are being made but have not been fully realized in all
models of BVMs. (NAMA, No. 14 at p. 4) NAMA commented that DOE's
statement that BVMs currently available on the market have already
transitioned to R-290 refrigerant is incorrect. (NAMA, No. 14 at p. 16)
NAMA commented that the 114 grams of refrigerant that is allowed
for the low GWP refrigerant is 36 grams less than what is allowed in a
household or commercial refrigerator, which limits the size of the
machine and restricts design options that require additional energy.
(NAMA, No. 14 at p. 8)
DOE notes that the U.S. Environmental Protection Agency (EPA)
proposed refrigerant restrictions pursuant to the American Innovation
and Manufacturing Act (``AIM Act'') \23\
[[Page 33981]]
affecting BVM equipment in a NOPR published on December 15, 2022
(``December 2022 EPA NOPR''). 87 FR 76738. Specifically, EPA proposed
prohibitions for new vending machines (EPA's term for this equipment)
for the use of HFCs and blends containing HFCs that have a GWP of 150
or greater. 87 FR 76738, 76780. The proposal would prohibit manufacture
or import of such vending machines starting January 1, 2025, and would
ban sale, distribution, purchase, receive, or export of such vending
machines starting January 1, 2026. 87 FR 76740. DOE considered the use
of alternative refrigerants that are not prohibited for BVM equipment
in the December 2022 EPA NOPR.
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\23\ Under subsection (i) of the AIM Act, entitled ``Technology
Transitions,'' the EPA may by rule restrict the use of
hydrofluorocarbons (HFCs) in sectors or subsectors where they are
used. A person or entity may also petition EPA to promulgate such a
rule. ``H.R.133--116th Congress (2019-2020): Consolidated
Appropriations Act, 2021.'' Congress.gov, Library of Congress, 27
December 2020, www.congress.gov/bill/116thcongress/house-bill/133.
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DOE notes that several manufactuerers currently rate BVM models to
both ENERGY STAR \24\ and DOE \25\ with BVM equipment using R-290 and
that manufacturers indicated in manufacturer interviews that the
industry is planning to transition to R-290.
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\24\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.
\25\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
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DOE is aware of the 114 gram charge limit for R-290 in BVM
equipment located in a public corridor or lobby as specified in
Addendum C to ANSI/ASHRAE Standard 15-2019, ``Safety Standard for
Refrigeration Systems'' and UL 60335-2-89, ``Particular Requirements
for Commercial Refrigerating Appliances and Ice-Makers with an
Incorporated or Remote Refrigerant Unit or Motor-Compressor.'' Based on
feedback received during manufacturer interviews, information collected
during BVM teardowns, and market research, DOE has tentatively
determined that the 114 gram charge limit does not restrict the size of
the machine nor any technology options considered in this NOPR. DOE has
tentatively determined that all BVM equipment can use less than 114
grams of R-290.
In response to the December 2022 EPA NOPR, this NOPR reflects the
alternative refrigerant design changes made by manufacturers at the
baseline levels for BVM equipment, which incorporate a refrigerant
conversion to R-290 (i.e., the most efficient refrigerant DOE is
currently aware of on the market for BVM equipment), instead of as a
design option as presented in the April 2022 Preliminary Analysis.
See section IV.C.1.a and chapter 5 of the NOPR TSD for additional
details.
NAMA recommended that this be the last rulemaking to raise the
issue of CO2 as a refrigerant, and provided many details on
the design differences and challenges in using CO2 as a
refrigerant. (NAMA, No. 14 at pp. 24-25)
While DOE mentioned CO2 refrigerants in the April 2022
Preliminary TSD as background information on the January 2016 Final
Rule, DOE did not consider CO2 refrigerant as a technology
option in the April 2022 Preliminary TSD or this NOPR.
c. Insulation
NAMA commented that the term ``extra insulation'' is vague, and
manufacturers have been using ``extra'' insulation since the inception
of BVMs. (NAMA, No. 14 at p. 21)
In the April 2022 Preliminary TSD, DOE provided context that
``extra insulation'' refers to an extra \1/4\ inch of insulation
thickness. See chapter 5 of the April 2022 Preliminary TSD for
additional details.
NAMA asserted that in low-volume manufacturing, with multiple
variations of size, features, and designs, vacuum panels are not a
feasible design option. (NAMA, No. 14 at p. 22) NAMA stated that vacuum
panels often leak over time and return very little overall energy
savings during the life of the product. Id. NAMA added that vacuum
panels are very costly as individual parts, but even more so in tooling
costs spread over very small volumes. Id.
Vacuum insulated panels (VIPs) may require cabinet redesign and
additional tooling costs to properly incorporate VIPs in BVMs without
leaks or damage to the panel. DOE has considered the investments
required in additional tooling, equipment, and processes for any
cabinet redesign in the engineering analysis (sunk cost per unit) and
manufacturer impact analysis (capital conversion costs). See chapter 5
and 12 of the NOPR TSD for additional discussion on VIPs.
d. Fan Motors
NAMA commented that manufacturers changing to R-290 have already
incorporated electronically commutated fan motors (ECMs) into their
machines and many did this years ago. (NAMA, No. 14 at p. 21) NAMA
added that, with the change to R-290, manufacturers of BVMs must
utilize ADAC controls and components (sometimes called ``spark-proof''
motors). Id. NAMA further stated that current designs of permanent
split capacitor motors (PSCs) are much more energy efficient than they
were 5 or 10 years ago, and that NAMA approximates the energy use of an
ECM to be higher than the value provided in the April 2022 Preliminary
TSD. Id.
DOE considered the requirement for motors to be ``spark-proof'' for
use with the R-290 refrigerant. DOE notes that, based on feedback
received during manufacturer interviews, information collected during
BVM teardowns, and market research, DOE has tentatively determined that
manufacturers currently use shaded pole motors (SPMs), PSCs, and ECMs,
although not all motor types are used in each BVM equipment class.
Based on feedback from commenters, market research, and additional
testing, DOE has tentatively determined to update the fan motor
efficiency assumptions in this NOPR. Consistent with commenters, DOE
increased the assumed motor efficiency of SPMs and PSCs, and decreased
the assumed motor efficiency of ECMs in this NOPR.
As noted in the April 2022 Preliminary TSD, DOE is also aware of an
additional motor technology that is available for use in BVMs,
permanent magnet synchronous (PMS) motors. PMS motor technology has
shown the potential for motor efficiency improvement beyond ECMs, as
indicated in a 2019 ORNL study comparing PMS motors and ECMs.\26\ Due
to the motor efficiency improvements PMS motors provide in comparison
to ECMs, and based on DOE's updated fan motor efficiency assumptions
(i.e., ECM assumed efficiencies in this NOPR are less than the assumed
PMS motor efficiencies), DOE has tentatively determined to include PMS
motors as a design option for BVMs.
---------------------------------------------------------------------------
\26\ Permanent Magnet Synchronous Motors for Commercial
Refrigeration: Final Report, available at: info.ornl.gov/sites/publications/Files/Pub115680.pdf.
---------------------------------------------------------------------------
See chapter 5 of the NOPR TSD for additional details on fan motors.
e. Evaporators and Condensers
NAMA commented that true microchannel designs are prone to
significant clogging and have been shown to exhibit pin-hole sized
leaks, making them inadvisable with a flammable refrigerant. (NAMA, No.
14 at p. 23)
DOE acknowledges that microchannel condensers may experience
clogging over the lifetime of a unit due to a lack of maintenance by
the end user or other factors; however, DOE's BVM standards
[[Page 33982]]
consider the performance of the unit as measured by the DOE BVM test
procedure, which measures the performance of new BVMs. Additionally,
tube and fin condensers may also experience clogging over the lifetime
of a unit and require proper maintence of the condenser.
DOE notes that microchannel heat exchangers are currently used in a
variety of applications, including mobile air-conditioning, commercial
air-conditioning, residential air-conditioning, and commercial
refrigeration equipment. Although DOE acknowledges that some
microchannel condenser designs could have the potential to leak, DOE
has observed the use of microchannel condensers with flammable
refrigerants in similar applications (e.g., automatic commercial ice
makers). Additionally, pin-hole sized leaks are not unique to
microchannel heat exchangers. Furthermore, DOE notes that the CRADA was
established, in part, to mitigate leak risks and assess potential
hazards, including flammability.\27\
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\27\ See www.energy.gov/eere/buildings/articles/five-new-cooperative-research-agreements-invest-efficiency-performance-and.
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f. Glass Packs
NAMA commented that the change from double pane to triple pane
glass would require a significant increase in the overall structural
design of the machine. (NAMA, No. 14 at p. 22) NAMA noted that the
doors would have to increase in size, thickness, and weight, and that
the wall structure and frame would have to be increased to accommodate
the hanging weight. Id. NAMA added that the overall machine weight
would increase, thereby increasing shipping weight and the
corresponding transportation costs (and thus the carbon footprint of
the machine). Id.
DOE observed both double pane and triple pane glass doors in BVM
equipment and used the teardown analysis of units containing each door
type to inform the NOPR analysis. DOE considered the additional cost
related to structural changes when upgrading from double pane to triple
pane glass doors. DOE did not receive any data which supported an
increase in transporation costs when switching from double pane to
triple pane glass doors. See chapter 5 of the NOPR TSD for additional
detail.
g. Payment Mechanisms
ASAP and ACEEE encouraged DOE to include low-power coin and bill
payment mechanisms as a design option in the engineering analysis, as
BVMs are usually shipped with the payment mechanisms, and their energy
consumption is captured in the test procedures. (ASAP & ACEEE, No. 15
at p. 1)
In the April 2023 Test Procedure Final Rule, DOE determined to
maintain the current 0.20 kWh/day adder to account for the energy use
of payment mechanisms.\28\ The available information demonstrates that
a wide (and growing) variety of payment systems are currently available
on the market; the most common scenario is for the payment mechanism to
be specified (and in some cases, provided) by the customer; and the
customer may decide whether or not to have the payment mechanism
installed by the BVM manufacturer at the time of sale. Id. Therefore,
DOE did not consider low-power payment mechanisms as a design option in
this NOPR. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------
\28\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------
h. Low Power Modes
NAMA commented that it is unclear from the April 2022 Preliminary
TSD exactly what DOE means by ``automatic lighting controls.'' (NAMA,
No. 14 at pp. 19, 20) NAMA added that most of the machines sold today
will go into a ``sleep'' mode after a period of inactivity, which is
not the type of proximity control system used in display case products.
Id. NAMA further commented that customers do not want a vending machine
to go completely to ``sleep,'' because they want users to see the
machine as fully functioning and not dark. Id. NAMA asserted that
machines going completely ``dark'' is a change in utility of the
machine and should be accounted for in a different category.
The ``automatic lighting control'' design option is based on the
``accessory low power mode'' section of the BVM test procedure which
allows for 6 hours of operation in the accessory low power mode during
the test (i.e., the lowest energy-consuming lighting and control
settings that constitute an accessory low power mode). Appendix B to
subpart Q of 10 CFR part 431. Therefore, in the preliminary and NOPR
analyses, DOE modeled 18 hours of light on time for the automatic
lighting control design option and 6 hours of light off time.
``Accessory low power mode'' is defined as a state in which a
beverage vending machine's lighting and/or other energy-using systems
are in low power mode, but that is not a refrigeration low power mode.
Functions that may constitute an accessory low power mode may include,
for example, dimming or turning off lights, but does not include
adjustment of the refrigeration system to elevate the temperature of
the refrigerated compartment(s). Id.
DOE notes that there are currently 17 out of 53 Class A and
Combination A models certified to DOE's Compliance Certification
Database (CCD) \29\ that use accessory low power mode. DOE also notes
that manufacturers provide information on their low power mode
operation in the unit's user manual for varying customer demands.
---------------------------------------------------------------------------
\29\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
---------------------------------------------------------------------------
NAMA commented that many BVMs can be programmed into an ``energy
saver'' mode based on inactivity or schedule. (NAMA, No. 14 at p. 20)
NAMA added that consumers can set the machine to somewhat reduce the
refrigeration cycle during nighttime if the location is truly ``shut
down'' for many hours, but that DOE only allows a credit of 3 percent
for this feature. Id. NAMA stated that mandating some form of automatic
low power mode is different and will be beneficial only if the low
power mode period is significantly longer, adding that if it is short,
the energy savings will be offset by the additional energy required to
bring the product back to the lower temperature. Id.
NAMA commented most current customers of BVMs do not want a low
power mode that affects the holding temperature or lengthens the
pulldown time, and that any change to this could have a direct effect
on the utility and performance of the machine and should be avoided.
(NAMA, No. 14 at p. 20)
DOE acknowledges that there is variability in customer location and
activity and that some of the energy savings of the low power mode will
be offset by the pulldown period to return to normal operation. As
noted in the BVM test procedure NOPR published on August 11, 2014 (2014
BVM test procedure NOPR), DOE understands that refrigeration low power
modes are extremely variable in terms of their control strategies and
operation and, in addition, may require specific instructions from the
manufacturer to precisely modify or adjust the control systems to
accommodate the specific provisions of the DOE test procedure. 79 FR
46908, 46924-46925. As noted in BVM test procedure final rule published
on July 31, 2015 (2015 BVM test procedure Final Rule), DOE's estimate
of 3 percent energy savings due to the
[[Page 33983]]
operation of low power modes is based on the data available and that
DOE believes 3-percent is representative of the common types of
refrigeration low power modes DOE has observed in the market place. 80
FR 45758, 45786. In the April 2023 Test Procedure Final Rule, DOE
maintained the existing test procedure provisions and 3-percent energy
credit for refrigeration low power mode.\30\ In this NOPR, DOE has
tentatively determined that 3-percent continues to be representative of
the common types of refrigeration low power modes DOE has observed in
the marketplace. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------
\30\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------
DOE notes that there are currently 55 out of 107 BVM models
certified to DOE's CCD \31\ that use refrigeration low power mode. DOE
also notes that manufacturers provide information on their low power
mode operation in the unit's user manual for varying customer demands.
---------------------------------------------------------------------------
\31\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
---------------------------------------------------------------------------
i. Additional Concerns
NAMA commented that several of the design options shown in the
April 2022 Preliminary TSD (larger condensers or evaporators, more
insulation, changes to type of glass) would require more space inside
the machine, leading to a reduction in the overall capacity of the
machine, which should be considered in the TSD. (NAMA, No. 14 at p. 11)
In this NOPR, DOE did not consider design options that expanded the
size or footprint of BVM equipment (e.g., larger condensers or
evaporators, more insulation) because BVM equipment may be used in
locations prioritizing smaller equipment footprints and an increase in
cabinet sizes may adversely impact the availability of equipment at a
given refrigerated volume. DOE assumed, based on feedback received
during manufacturer interviews and from equipment teardowns, that the
design options which changed the type of glass would not increase the
door thickness but may require different frame materials or hinges,
which DOE has considered as a cost adder to the design option in this
NOPR. See chapter 5 of the NOPR TSD for additional details.
NAMA commented that several of the design options (e.g., lower
wattage refrigeration systems, vacuum panel insulation, different
evaporators or condensers, and lower wattage fan motors) could
potentially affect the overall performance of the machine, and
therefore should be reviewed in the TSD not only for their energy
efficiency but also the ability to maintain the critial design features
and performance of these machines. (NAMA, No. 14 at p. 12)
In this NOPR, DOE did not consider design options that changed the
measured performance as compared with existing BVM equipment. See
chapter 5 of the NOPR TSD for additional details.
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 commercially viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it
is determined that mass production of a technology in commercial
products and reliable installation and servicing of the technology
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. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or 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) Safety of technologies. 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 technology has
proprietary protection and represents a unique pathway to achieving
a given efficiency level, it will not be considered further, due to
the potential for monopolistic concerns.
See sections 6(b)(3) and 7(b) of the Process Rule.
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.
DOE did not receive any comments in response to the April 2022
Preliminary Analysis specific to the screening analysis.
1. Screened Out Technologies
For BVM equipment, the screening criteria were applied to the
technology options to either retain or eliminate each technology for
consideration in the engineering analysis.
In the April 2022 Preliminary Analysis, DOE did not screen out
linear compressors but did include linear compressors as a ``design
option not directly analyzed.'' DOE included linear compressors as a
technology option because compressor manufacturers had begun
development on linear compressors for residential refrigerators.
However, recent lawsuits and a lack of availability of linear
compressors on the market have prevented further development of this
technology for BVM equipment; therefore, DOE has tentatively determined
that linear compressors meet the screening criterion of ``impacts on
product utility or product availability.'' DOE has tentatively
determined to screen out linear compressors as a design option for
improving the energy efficiency of BVM equipment in this NOPR. See
chapter 4 of the NOPR TSD for additional details.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concluded 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 technology options in Table IV.2.
Table IV.2--Retained Design Options for BVMs
------------------------------------------------------------------------
------------------------------------------------------------------------
Insulation Condenser
------------------------------------------------------------------------
Improved resistivity of insulation Increased surface area.
(insulation type).
Increased insulation thickness......... Tube and fin enhancements
(including microchannel
designs).
[[Page 33984]]
Vacuum insulated panels................ Microchannel heat exchanger.
------------------------------------------------------------------------
Improved Glass Packs Fans and Fan Motors
------------------------------------------------------------------------
Low-E coatings......................... Evaporator fan motors.
Inert gas fill......................... Evaporator fan blades.
Vacuum insulated glass................. Evaporator fan controls.
Additional panes....................... Condenser fan motors.
Frame design........................... Condenser fan blades.
------------------------------------------------------------------------
Compressor Other Technologies
------------------------------------------------------------------------
Improved compressor efficiency......... Lighting.
Variable speed compressors............. Anti-sweat heater controls.
Defrost systems.
------------------------------------------------------------------------
Evaporator Expansion valve improvements
------------------------------------------------------------------------
Increased surface area................. Alternative refrigerants.
Tube and fin enhancements (including Low power payment mechanisms.
microchannel designs).
Low pressure differential evaporator... Low power states.
------------------------------------------------------------------------
DOE has initially determined that these design options are
technologically feasible because they are being used or have previously
been used in commercially available equipment or working prototypes.
DOE also finds that all of the remaining design 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.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of BVM equipment. 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 equipment cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
equipment, DOE considers technologies and design option combinations
not eliminated by the screening analysis. For each equipment class, DOE
estimates the baseline cost, as well as the incremental cost for the
equipment 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 equipment (i.e., 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 equipment 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 in which the
max-tech level exceeds the maximum efficiency level currently available
on the market).
In this proposed rulemaking, DOE relies on a design option
approach, supported with testing and reverse engineering multiple
analysis units. DOE generally relied on test data and reverse
engineering to inform a range of design options used to reduce energy
use. The design options were incrementally added to the baseline
configuration and continued through the ``max-tech'' configuration
(i.e., implementing the ``best available'' combination of available
design options).
Consistent with the January 2016 Final Rule analysis (see chapter 5
of the January 2016 Final Rule TSD), DOE estimated the performance of
design option combinations using an engineering analysis spreadsheet
model. This model estimates the daily energy consumption of BVM
equipment in kWh/day at various performance levels using a design
option approach. The model calculates energy consumption at each
performance level separately for each analysis configuration.
For Class A and Class B, DOE analyzed machines of different sizes
to assess how energy use varies with size via energy testing and
reverse engineering. In this NOPR, representative volumes were chosen
for each equipment class, based on current market offerings: medium and
large for Class A and Class B BVMs, and medium for Combination A and
Combination B. These equipment classes and representative unit volumes
are listed in Table IV.3.
[[Page 33985]]
Table IV.3--Representative Refrigerated Volumes in the NOPR
------------------------------------------------------------------------
Representative
Equipment class Size volume (ft\3\)
------------------------------------------------------------------------
Class A......................... Medium............. 26
Large.............. 35
Class B......................... Medium............. 22
Large.............. 31
Combination A................... Medium............. 11
Combination B................... Medium............. 10
------------------------------------------------------------------------
See chapter 5 of the NOPR TSD for additional detail on the
different units analyzed.
a. Baseline Energy Use
For each 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 equipment class represents the characteristics
of 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 this NOPR, DOE considered the current standards for BVM
equipment when developing the baseline energy use for each analyzed
equipment class. For higher efficiency levels, DOE assessed BVM
efficiencies as a percent improvement relative to the baseline. This
provides a consistent efficiency comparison across each equipment
class. DOE considered the efficiency improvements associated with
implementing available design options beyond the baseline to the max-
tech efficiency level.
In response to the April 2022 Preliminary Analysis, NAMA commented
that most of the analysis appears to have been performed prior to 2020,
yet the industry has been in the midst of considerable change from 2019
to 2022. (NAMA, No. 14 at p. 3)
NAMA commented that current machines on the market today that use
low GWP refrigerants and incorporate most of the design options shown
in Table 2.3 of the April 2022 Preliminary Analysis should be used
together with current costs, and that these should be the baseline
machines. (NAMA, No. 14 at p. 6) NAMA added that DOE should acknowledge
the costs already incurred by manufacturers in order to meet the goals
stated by the Biden Administration to reduce global warming. Id.
DOE expects that NAMA is referring to the December 2022 EPA NOPR in
its comment regarding the goals stated by the Biden Administration to
reduce global warming. As recommended by stakeholders, DOE is
considering the cost and impact of the December 2022 EPA NOPR on this
NOPR. The proposed date of the proposed GWP limit on BVMs is 2 years
earlier than the expected compliance date for any amended BVM standards
associated with the proposals in this document. Hence, the proposed
refrigerant prohibitions listed in the December 2022 EPA NOPR are
assumed to be enacted for the purpose of DOE's analysis in support of
this NOPR.
Refrigerants not prohibited from use in BVM equipment in the
December 2022 EPA NOPR are presumed to be permitted for use in BVM
equipment. As noted in section IV.A.2.b, several manufactuerers
currently rate BVM models to both ENERGY STAR \32\ and DOE \33\ with
BVM equipment using R-290, manufacturers indicated in manufacturer
interviews that the industry is planning to transition to R-290, and
DOE has tentatively determined that all BVM equipment can use less than
114 grams of R-290.
---------------------------------------------------------------------------
\32\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.
\33\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
---------------------------------------------------------------------------
DOE expects that the use of R-290 generally will improve efficiency
as compared with the refrigerants currently in use (e.g., R-134a),
which are proposed to be prohibited by the December 2022 EPA NOPR,
because R-290 has higher refrigeration cycle efficiency than the
current refrigerants. Thus, DOE expects that the December 2022 EPA NOPR
will require redesign that will improve efficiency of BVM equipment.
Hence, the baseline levels for BVM equipment in this NOPR reflect the
design changes made by manufacturers in response to the December 2022
EPA NOPR, which incorporate refrigerant conversion to R-290. The
expected efficiency improvement associated with this refrigerant change
varies by class and is presented in Table IV.4.
DOE's analysis considers that these efficiency improvements,
equipment costs, and manufacturer investments required to comply with
the December 2022 EPA NOPR will be in effect prior to the time of
compliance for the proposed amended DOE BVM standards for all BVM
equipment classes and sizes. DOE updated its baseline equipment costs
to reflect current costs based on feedback received during manufacturer
interviews, information collected during BVM teardowns, and market
research.
Table IV.4--Proposed December 2022 EPA NOPR R-290 Energy Use Baseline
------------------------------------------------------------------------
Energy use
reduction
Equipment class below DOE
standard
(%)
------------------------------------------------------------------------
Class A.................................................... 12.7
Class B.................................................... 15.1
Combination A.............................................. 19.6
Combination B.............................................. 14.7
------------------------------------------------------------------------
The expected efficiency improvement associated with this
refrigerant change is based on R-290 single speed compressors currently
available on the market suitable for BVM equipment. In this NOPR, DOE
did not consider additional single speed compressor efficiency
improvements beyond the baseline because DOE expects that the single
speed compressors currently available on the market for refrigerants
used to comply with the December 2022 EPA NOPR represent the maximum
single speed compressor efficiency achievable for each respective
equipment class.
NAMA commented that the improved evaporator coils design option
seems to be indicating a high fin density and higher pitched coils, but
any increase in fin density may increase the fan motor power required
and energy
[[Page 33986]]
consumption. (NAMA, No. 14 at p. 20) NAMA added that current designs
are optimized based on cost versus energy efficiency, and that changes
would increase capital costs. Id.
In the April 2022 Preliminary Analysis, DOE analyzed ``baseline''
and ``high efficiency'' evaporator and condenser design options,
consistent with the January 2016 Final Rule. Based on stakeholder
comments, interviews with manufacturers, and CoilDesigner simulation,
DOE tentatively determined that the ``high efficiency'' evaporator and
condenser design options are representative of current manufacturer
designs. Therefore, DOE tentatively determined to analyze the ``high
efficiency'' evaporator and condenser coil as ``baseline'' in this NOPR
and remove the ``high efficiency'' evaporator and condenser design
options in the NOPR. See chapter 5 of the NOPR TSD for additional
details.
NAMA commented that according to the Process Rule, DOE should not
pursue a rulemaking if there were less than 0.30 quad of savings over
30 years, as the last published Process Rule dictates. (NAMA, No. 14 at
p. 7) NAMA added that it doesn't believe there will be greater than 5-
10 percent improvement in energy baseline by 2028 to justify the rule.
Id. NAMA stated that, including the fact that many of the improvements
in the design options have already been incorporated several years ago,
the actual improvements it projected to be seen are much less than 10
percent. Id.
DOE notes that on December 13, 2021, DOE published a Final Rule
which revised the Process Rule NAMA is referring to in its comment,\34\
and determinations of significance for energy savings are made on a
case-by-case basis. 86 FR 70892, 70906. DOE discusses 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 in section V.C.1.
---------------------------------------------------------------------------
\34\ See www.regulations.gov/document/EERE-2021-BT-STD-0003-0075.
---------------------------------------------------------------------------
DOE requests comments on its proposal to use baseline levels for
BVM equipment based upon the design changes made by manufacturers in
response to the December 2022 EPA NOPR.
DOE further requests comment on its estimates of energy use
reduction associated with the design changes made by manufacturers in
response to the December 2022 EPA NOPR.
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given equipment.
After conducting the screening analysis described in section IV.B
of this document and chapter 4 of the NOPR TSD, DOE considered the
remaining design options in the engineering analysis to achieve higher
efficiency levels. See chapter 5 of the NOPR TSD for additional detail
on the design options.
NAMA commented that although DOE estimates 25 percent energy
savings for improved evaporator coils, their review of design options
indicates that this is overstated by a factor of 10. (NAMA, No. 14 at
p. 20)
DOE expects that NAMA is referring to the total energy use
reduction below the baseline at a given efficiency level instead of the
energy use reduction for each design option. However, as discussed in
section IV.C.1.a of this document, DOE tentatively determined to
analyze the ``high efficiency'' evaporator coil as ``baseline'' in this
NOPR and remove the ``high efficiency'' evaporator design option in the
NOPR.
NAMA commented that for moving from single speed compressors to
variable speed compressors, the promised energy savings is more in the
area of 5-15 percent (depending on the model), rather than the 49
percent estimated in the April 2022 Preliminary Analysis TSD. (NAMA,
No. 14 at p. 24)
DOE expects that NAMA is referring to the total energy use
reduction below the baseline at a given efficiency level instead of the
energy use reduction for each design option. In this NOPR, DOE assumed
an energy use reduction of 7-14% for variable speed compressors
compared to single speed compressors, depending on the equipment class,
which is consistent with NAMA's estimates. See chapter 5 of the NOPR
TSD for additional details.
NAMA commented that DOE's estimate of a 43 percent improvement in
energy efficiency with the switch from double pane to triple pane glass
is much higher than NAMA's estimate of 12-15 percent improvement in
energy efficiency. (NAMA, No. 14 at p. 22)
DOE expects that NAMA is referring to the total energy use
reduction below the baseline at a given efficiency level instead of the
energy use reduction for each design option. In this NOPR, DOE assumed
an energy use reduction of 1-3% for triple pane glass pack compared to
double pane glass pack, depending on the equipment class, which is
lower than NAMA's estimates but is consistent with data collected from
teardowns and DOE's modeling. See chapter 5 of the NOPR TSD for
additional details.
NAMA commented that when moving from triple pane glass to vacuum
insulated glass, the efficiency improvements are in the vicinity of 2-3
percent gain. (NAMA, No. 14 at p. 24)
In this NOPR, DOE assumed an energy use reduction of approximately
1% for vacuum insulated glass compared to triple pane glass pack, which
is consistent with NAMA's estimates. See chapter 5 of the NOPR TSD for
additional details.
NAMA commented that there is not sufficient space in a BVM to allow
for the recommended change to insulation thickness. (NAMA, No. 14 at p.
21) NAMA stated that there is not sufficient space to allow for
insulation to equate to a reduction of even 10 percent in energy, much
less 31 percent, without impacting utility and performance. Id.
DOE expects that NAMA is referring to the total energy use
reduction below the baseline at a given efficiency level instead of the
energy use reduction for each design option. In this NOPR, DOE did not
consider design options that expanded the size or footprint of BVM
equipment (e.g., more insulation) because BVM equipment may be used in
locations prioritizing smaller equipment footprints and an increase in
cabinet sizes may adversely impact the availability of equipment at a
given refrigerated volume. See chapter 5 of the NOPR TSD for additional
details.
NAMA commented that it believes the 0.15 quad savings at max-tech
is an inflated value based on errors in the engineering analysis, and
asserted that the savings would in fact be considerably lower and no
longer significant enough for the changes in regulation to be
justified. (NAMA, No. 14 at p. 7)
In this NOPR, DOE estimates a combined total of 0.138 quads of FFC
energy savings over the analysis period at the max-tech efficiency
levels for BVM equipment. DOE has considered feedback from
stakeholders, manufacturer interviews, and current market data to
update its engineering analysis in this NOPR. See section V for
additional details.
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
[[Page 33987]]
of public information, characteristics of the regulated equipment, and
the availability and timeliness of purchasing the equipment on the
market. The cost approaches are summarized as follows:
Physical teardowns: Under this approach, DOE physically
dismantles a commercially available equipment, component-by-component,
to develop a detailed bill of materials for the equipment.
Catalog teardowns: In lieu of physically deconstructing a
equipment, 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 equipment.
Price surveys: If neither a physical nor catalog teardown
is feasible (e.g., 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 teardowns and
feedback received from manufacturers during interviews. See chapter 5
of the NOPR TSD for additional details.
DOE received several comments in response to the April 2022
Preliminary Analysis regarding the cost analysis.
NAMA believes that DOE should factor the unprecedented increase in
inflation of basic constituents of the BVM machine and its
manufacturing into the costs shown for design options and the economic
analysis. (NAMA, No. 14 at p. 10)
DOE used current prices when estimating the baseline manufacturer
production costs and design option costs. See chapter 5 of the NOPR TSD
for additional details.
NAMA commented that the analyses in the April 2022 Preliminary TSD
do not address the major changes necessary to the machines to utilize
the lower GWP refrigerants (e.g., R-290). (NAMA, No. 14 at p. 4) NAMA
asserted that for low GWP, flammable A-3 refrigerants to be allowed for
use in machines, redesign of the evaporator and condensor system and
the use of new compressors and expansion valves would be necessary. Id.
Additionally, NAMA noted that all switches, electrical components,
motors (including robotic or vend motors), wiring, and connectors must
be compliant with ``spark-proof'' connections to shield against the
possibility of a leak of such refrigerant. Id. NAMA commented that
neither this level of redesign nor the use of these expensive
components was addressed in the April 2022 Preliminary TSD. Id.
NAMA commented that the incremental cost given in the DOE chart of
$11.28 to switch from an R-134 compressor to an R-290 compressor is
inaccurate considering that the compressor is only one of many
components that must change if the refrigerant is changed to an A-3
refrigerant. (NAMA, No. 14 at pp. 5, 19) NAMA stated that the increase
in the cost of the compressor by itself is more than $40, and from
their sample of five manufacturers, the cost of the change from R-134
to R-290 is approximately $200 per machine rather than $11.28 when all
the components that must change are factored in. Id.
As discussed in section IV.C.1.a of this document, DOE has analyzed
R-290 as the baseline refrigerant for this NOPR, and as a result, DOE
updated its baseline equipment costs to reflect current costs based on
feedback received during manufacturer interviews, information collected
during BVM teardowns, and market research, which includes the costs for
component changes and additions related to R-290. DOE's analysis
considers that these efficiency improvements, equipment costs, and
manufacturer investments required to comply with the December 2022 EPA
NOPR will be in effect prior to the time of compliance for the proposed
amended DOE BVM standards for all BVM equipment classes and sizes. See
chapter 5 of the NOPR TSD for additional details.
NAMA commented that for moving from single speed compressors to
variable speed compressors, the current data shows cost increases in
other product categories much higher than the $103.12 shown, and that
early cost estimates are more than $200 per machine. (NAMA, No. 14 at
p. 24)
NAMA commented that DOE's estimate of $16.72 per machine for
improved evaporator coils is significantly below NAMA's estimates of
the parts alone, and that NAMA's initial estimate is double this amount
and perhaps more when considering capital costs, design, and
recertification. (NAMA, No. 14 at p. 20)
NAMA commented that DOE's estimated cost of $32.36 for the extra
insulation likely does not factor in the cost of redesigning new
tooling to encompass additional insulation. (NAMA, No. 14 at p. 21)
NAMA commented that the cost estimate of $15.31 for moving from
tube and fin to microchannels is not realistic and is not borne out by
discussion with vendors, as this change would require a complete
redesign of all parts of the vending machine refrigeration system and
would need to include a large associated capital cost. (NAMA, No. 14 at
p. 23)
NAMA commented that the cost estimates its industry has seen are
three to four times the cost of glass mentioned in the April 2022
Preliminary TSD when moving from triple pane glass to vacuum insulated
glass. (NAMA, No. 14 at p. 24)
NAMA commented that the cost estimate of $72.84 with the switch to
multiple panes of glass is about half of the total cost when
considering increased structural components at extremely high volumes.
(NAMA, No. 14 at p. 22) NAMA stated that because of these factors, most
manufacturers would not realize this energy efficiency improvement and
would see much higher costs for little or no energy improvement. Id.
DOE notes that, as discussed in section IV.C.1.a of this document,
DOE did not analyze evaporator improvements or extra insulation as
design options.
DOE assumed, based on feedback received during manufacturer
interviews and from equipment teardowns, that the design options which
changed the type of glass may require different frame materials or
hinges, which DOE has considered as a cost adder to these design
options in this NOPR.
DOE updated its baseline and design option costs to reflect current
costs based on feedback received during manufacturer interviews,
information collected during BVM teardowns, stakeholder comments, and
market research. See chapter 5 of the NOPR TSD for additional details.
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 filed by publicly traded
manufacturers primarily engaged in equipment manufacturing and whose
combined equipment range includes BVM equipment.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of daily energy
[[Page 33988]]
consumption (in kWh) versus MSP (in dollars). DOE developed six curves
representing the four equipment classes. The methodology for developing
the curves started with determining the energy consumption for baseline
equipment and MPCs for this equipment. Above the baseline, design
options were implemented until all available technologies were employed
(i.e., at a max-tech level). See chapter 5 of the NOPR TSD for
additional detail on the engineering analysis and appendix 5B of the
NOPR TSD for complete cost-efficiency results.
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analyses and in the manufacturer impact analysis. At each step
in the distribution channel, companies mark up the price of the product
to cover business costs and profit margin.
For BVMs, the main parties in the distribution chain are
manufacturers, wholesalers, and the end users.
DOE developed baseline and incremental markups for each actor in
the distribution chain. 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.\35\
---------------------------------------------------------------------------
\35\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive, it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
DOE relied on economic data from the U.S. Census Bureau to estimate
average baseline and incremental markups.
Chapter 6 of the NOPR TSD provides details on DOE's development of
markups for BVMs.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of BVMs at different efficiencies in representative
U.S. commercial and industrial buildings, and to assess the energy
savings potential of increased BVM efficiency. For the NOPR analysis,
DOE selected seven efficiency levels (ELs) for each equipment class,
each characterized as a percentage of rated daily energy consumption
from the baseline, up to the max-tech efficiency levels defined for
each class in the engineering analysis. Each level with the
corresponding percentage of baseline rated energy consumption varies by
equipment class and can be found in Chapter 7 of the NOPR TSD.
The energy use analysis then estimates the range of energy use of
BVMs 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 operating costs that could result from adoption of amended
or new standards.
The energy use analysis assessed the estimated annual energy
consumption of a BVM installed in the field. DOE recognizes that a
variety of factors may affect the energy use of a BVM, including
ambient conditions, use and stocking profiles, and other factors.
However, very limited data exist on field energy consumption of BVMs.
DOE estimated that the daily energy consumption produced by the DOE
test procedure is representative of the average daily energy
consumption of a BVM in an indoor environment. DOE developed a
methodology to account for the impact of ambient conditions on the
average annual energy consumption. To model the annual energy
consumption of each BVM unit, DOE separately estimated the energy use
of BVMs located indoors and outdoors to account for the impact of
ambient conditions on installed BVM energy use. Chapter 7 of the NOPR
TSD provides details on DOE's energy use analysis for BVMs.
In response to the April 2022 Preliminary Analysis, NAMA commented
that the energy used by additional ventilation to reduce the risk of a
leak in a public space was not accounted for in the April 2022
Preliminary TSD. (NAMA, No. 14 at p. 9)
In response to the NAMA comment, DOE notes that the NAMA concern
regarding additional ventilation needs is due to the presumed use of
hydrocarbon refrigerants. DOE notes that the analysis assumes
hydrocarbon refrigerants at all efficiency levels analyzed, including
the baseline, and any building energy impact due to additional
ventilation requirements in spaces surrounding BVMs is the same at all
efficiency levels and does not impact the differential energy
consumption between efficiency levels or the subsequent economic
calculations.
NAMA commented that although DOE has asserted that coin and bill
payment systems are typically included with BVMs as shipped, its survey
has indicated that this is not uniform and is unique to certain
manufacturers and customers. (NAMA, No. 14 at p. 12) NAMA also
questioned whether the approximation of 0.2 kWh per day is accurate for
the energy consumption of a payment mechanism, although it considers
the present solution to be preferable to the significant amount of time
it would take testing in laboratories to determine a more accurate
approximation resulting in a difference of a fraction of a kWh per day.
(NAMA, No. 14 at p. 13)
In the April 2023 Test Procedure Final Rule, DOE determined to
maintain the current 0.20 kWh/day adder to account for the energy use
of payment mechanisms.\36\ The available information demonstrates that
a wide (and growing) variety of payment systems are currently available
on the market; the most common scenario is for the payment mechanism to
be specified (and in some cases, provided) by the customer; and the
customer may decide whether or not to have the payment mechanism
installed by the BVM manufacturer at the time of sale. Id. Therefore,
DOE did not consider low-power payment mechanisms as a design option in
this NOPR. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------
\36\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
BVMs. 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 a 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, refurbishment, 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.
[[Page 33989]]
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 BVMs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline equipment.
For each considered efficiency level in each equipment class, DOE
calculated the LCC and PBP for a nationally representative set of
consumers. As stated previously, DOE developed consumer samples from
the most recent industry reports. For each sample consumer, DOE
determined the energy consumption for the BVM and the appropriate
energy price. By developing a representative sample of consumers, the
analysis captured the variability in energy consumption and energy
prices associated with the use of BVMs.
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,
refurbishment, and maintenance costs; equipment lifetimes; and discount
rates. DOE created distributions of values for equipment 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 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 BVM user samples. For this
rulemaking, the Monte Carlo approach is implemented in MS Excel
together with the Crystal Ball TM add-on.\37\ The model
calculated the LCC for products at each efficiency level for 10,000
consumers 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, equipment efficiency is chosen based
on its probability. If the chosen equipment efficiency is greater than
or equal to the efficiency of the standard level under consideration,
the LCC calculation reveals that a consumer is not impacted by the
standard level. By accounting for consumers who already purchase more
efficient equipment, DOE avoids overstating the potential benefits from
increasing equipment efficiency.
---------------------------------------------------------------------------
\37\ Crystal Ball TM is commercially available
software tool to facilitate the creation of these types of models by
generating probability distributions and summarizing results within
Excel, available at www.oracle.com/technetwork/middleware/crystalball/overview/index.html (last accessed July 6, 2018).
---------------------------------------------------------------------------
DOE calculated the LCC and PBP for consumers of BVMs as if each
were to purchase a new BVM in the expected year of required compliance
with new or amended standards. New and amended standards would apply to
BVMs manufactured 3 years after the date on which any new or amended
standard is published. (42 U.S.C. 6295(v)(3)) At this time, DOE
estimates publication of a final rule in 2025. Therefore, for purposes
of its analysis, DOE used 2028 as the first year of compliance with any
amended standards for BVMs.
Table IV.5 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet 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.5--Summary of Inputs and Methods for the LCC and PBP Analyses*
------------------------------------------------------------------------
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
component costs.
Installation Costs..................... Installation costs for BVMs are
subsumed in the MSP and markup
and not modeled as an
incremental cost.
Annual Energy Use...................... The total annual energy use
varies by equipment class and
efficiency level. Based on
engineering and energy use
analyses.
Energy Prices.......................... Electricity: Based on EIA's
Form 861 data for 2021.
Variability: Energy prices
determined for 50 states and
the District of Columbia.
Energy Price Trends.................... Based on AEO2022 price
projections.
Variability: Energy price
trends vary by nine census
regions.
Repair, Refurbishment and Maintenance Based on RS Means and United
Costs. States Bureau of Labor
Statistics data. Vary by
efficiency level.
Product Lifetime....................... Average: 13.4 years.
Discount Rates......................... Approach involves identifying
all possible debt or asset
classes that might be used to
purchase the considered
equipment, or might be
affected indirectly. Primary
data source was Damodaran
Online.
Compliance Date........................ 2028.
------------------------------------------------------------------------
* Not used for PBP calculation. 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.
In the April 2022 Preliminary Analysis, DOE requested comment on
the overall methodology and results of the LCC and PBP analyses. In
response to that request, NAMA made three comments.
NAMA stated that DOE should factor the unprecedented increase in
inflation into the economic analysis in addition
[[Page 33990]]
to the design option costs. (NAMA No. 14, at p. 10)
DOE acknowledges the comment from NAMA and applies the annual
implicit price deflators for gross domestic product (GDP) from the U.S.
Bureau of Economic Analysis to the LCC and PBP analyses to capture the
impact of price changes between the years of available cost data and
the analysis year. Equipment and design option costs are developed in
the engineering analysis and are incorporated into the LCC and PBP
analyses by being reflected in the MPCs.
In response to the April 2022 Preliminary Analysis, NAMA commented
to request that in the Economic Impact Analysis on the cost of labor,
real cases from 2021 and 2022 are used rather than the cost of labor in
2018. (NAMA, No. 14 at p. 11)
DOE acknowledges the comment from NAMA and will use the most recent
data available for the LCC and PBP analyses. If the most recent data
available is from prior to 2021, the annual implicit price deflators
for GDP from the U.S. Bureau of Economic Analysis will be used to
reflect the costs in the year 2021.
NAMA commented that in the April 2022 Preliminary Analysis, the
lower efficiency levels resulted in trivial energy savings and the
higher efficiency levels showed a large portion of consumers
experiencing a net cost in the LCC analysis. (NAMA, No. 14 at p. 15)
DOE acknowledges the comment from NAMA and will consider total
energy savings and the portion of consumers experiencing net cost when
proposing new energy efficiency standards.
In response to the April 2022 Preliminary Analysis, NAMA commented
that it is only at low efficiency levels where consumers or business
owners do not experience a net cost according to DOE's analysis, and
that energy savings at those levels are trivial and do not justify DOE
setting new energy efficiency standards for BVMs. (NAMA, No. 14 at p.
15)
DOE acknowledges the comment from NAMA and considers the percentage
of customers that experience a net benefit ot net cost in addition to
energy savings in the economic analysis to determine if the proposed
rule is economically justified.
1. Equipment Cost
To calculate consumer equipment 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 equipment because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency equipment.
BVMs are made of many different components. DOE's research
indicates flat future prices for a majority of the components of BVMs.
DOE included future price reductions for semiconductor and similar
technologies. Semiconductor technology price learning applies to
efficiency levels that include design options with higher-efficiency
evaporator and condenser fan motors (i.e., ECM and permanent magnet
synchronous (PMS) motors). Price learning applies to a proportion of
the motor cost representing the semiconductor technology. Some variable
speed compressors have price learning. Therefore, DOE applied price
learning to compressor components in BVM equipment at efficiency levels
that included variable speed compressors.
2. Installation Cost
Installation costs for BVMs are subsumed in the MSP and markup and
not modeled as an incremental cost. DOE found no evidence that
installation costs would be impacted with increased efficiency levels.
3. Annual Energy Consumption
For each sampled consumer, DOE determined the energy consumption
for a BVM at different efficiency levels using the approach described
previously in section IV.E of this document.
4. Energy Prices
DOE derived electricity prices from the EIA energy price data by
sector and by state(EIA Form 861) for average electricity price data
for the commercial and industrial sectors. DOE used projections of
these electricity prices for commercial and industrial consumers to
estimate future energy prices in the LCC and PBP analyses. EIA's
AEO2022 was used as the source of projections for future electricity
prices.
DOE developed 2021 commercial and industrial retail electricity
prices for each state and the District of Columbia based on EIA Form
861. To estimate energy prices in future years, DOE multiplied the 2021
energy prices by the projection of annual average price changes for
each of the nine census divisions from the Reference case in AEO2022,
which has an end year of 2050.\38\ To estimate price trends after 2050,
the 2041-2050 average was used for all years DOE used EIA's 2018
Commercial Building Energy Consumption Survey \39\ (CBECS 2018) to
determine the difference in commercial energy prices by building type.
DOE applied the ratio of a specific building type's electricity prices
to average commercial electricity prices in the LCC and PBP analyses.
---------------------------------------------------------------------------
\38\ EIA. Annual Energy Outlook 2022 with Projections to 2050.
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last
accessed February 2023).
\39\ www.eia.gov/consumption/commercial/.
---------------------------------------------------------------------------
DOE's methodology allows electricity prices to vary by sector,
state, region, and building type. In the analysis, variability in
electricity prices is chosen to be consistent with the way the consumer
economic and energy use characteristics are defined in the LCC
analysis. Chapter 8 of the NOPR TSD provides more detail about DOE's
approach to developing energy prices and price trends.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing equipment
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in equipment efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency equipment. The repair cost is the cost to the consumer for
replacing or repairing BVM components that have failed. For the LCC
analysis, repair costs also include refurbishment costs and the cost of
replacing BVM components routinely within the lifetime of a BVM. The
LCC analysis models compressors, evaporator fan motors and condenser
fan motors being repaired or replaced twice in the lifetime of the BVM.
The maintenance cost is the cost to the consumer of maintaining
equipment operation. Chapter 8 of the NOPR TSD provides more detail
about DOE's maintenance, repair, and refurbishment cost calculations.
DOE request comments on the frequency and nature of compressor and
motor repairs or replacements in BVMs.
6. Equipment Lifetime
For BVMs, DOE used information from various literature sources and
input from manufacturers and other interested parties to establish
equipment lifetimes for use in the LCC and PBP analyses. This analysis
assumes an average lifetime of 13.4 years based on refurbishments of
major components occurring twice during the life of the equipment at an
interval of 4.5 years. This estimate is based on a 2010
[[Page 33991]]
ENERGY STAR webinar,\40\ which reported average lifetimes of 12 to 15
years, and data on the distribution of equipment ages in the stock of
BVMs in the Pacific Northwest from the Northwest Power and Conservation
Council 2007 Regional Technical Forum \41\ (RTF), which observed the
age of the units in service to be approximately 8 years on average.
---------------------------------------------------------------------------
\40\ EPA. ``Always Count Your Change, How ENERGY STAR
Refrigerated Vending Machines Save Your Facility Money and Energy.''
2010. www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf.
\41\ Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott.
Characterization and Energy Efficiency Opportunities in Vending
Machines for the Northwestern US Market. Prepared for Northwest
Power and Conservation Council Regional Technical Forum by Quantec,
LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007.
---------------------------------------------------------------------------
In response to the April 2022 Preliminary Analysis, NAMA commented
that DOE should develop a model showing what impact increasing the
retail price of a new BVM has on purchasing refurbished machines and
delaying purchases of new machines. (NAMA, No. 14 at p. 13) NAMA
pointed out that any sale of a refurbished machine reduces the sales of
a new machine designed to the new energy standards, thus increasing the
amount of time that the overall impact on the net change to U.S. energy
consumption of the United States by vending machines would occur. Id.
DOE acknowledges this comment and uses the data available to
determine the lifetime assumptions of BVMs in the LCC and PBP analyses.
DOE models two refurbishment processes, each adding to the average
lifetime of equipment. DOE does not have data available to support how
higher MSPs would impact the lifetime of BVMs. DOE uses the latest
industry report to determine shipments and amount of annual shipments
and sales of new BVMs.
7. Discount Rates
The discount rate is the rate at which future expenditures are
discounted to establish their present value. In the calculation of LCC,
DOE determined the discount rate by estimating the cost of capital for
purchasers of BVMs. Most purchasers use both debt and equity capital to
fund investments. Therefore, for most purchasers, the discount rate is
the weighted-average cost of debt and equity financing, or the
weighted-average cost of capital (WACC), less the expected inflation.
To estimate the WACC of BVM purchasers, DOE used a sample of nearly
1,200 companies grouped to be representative of operators of each of
the commercial business types (health care, lodging, foodservice,
retail, education, food sales, and offices) drawn from a database of
6,177 U.S. companies presented on the Damodaran Online website. This
database includes most of the publicly traded companies in the United
States. The WACC approach for determining discount rates accounts for
the current tax status of individual firms on an overall corporate
basis. DOE did not evaluate the marginal effects of increased costs,
and, thus, depreciation due to more expensive equipment, on the overall
tax status.
DOE used the final sample of companies to represent purchasers of
BVMs. For each company in the sample, DOE combined company-specific
information from the Damodaran Online website, long-term returns on the
Standard & Poor's 500 stock market index from the Damodaran Online
website, nominal long-term Federal government bond rates, and long-term
inflation to estimate a WACC for each firm in the sample.
For most educational buildings and a portion of the office
buildings and cafeterias occupied and/or operated by public schools,
universities, and State and local government agencies, DOE estimated
the cost of capital based on a 40-year geometric mean of an index of
long-term tax-exempt municipal bonds (<=20 years). Federal office space
was assumed to use the Federal bond rate, derived as the 40-year
geometric average of long-term (<=10 years) U.S. government securities.
See chapter 8 of the NOPR TSD for further details on the
development of consumer discount rates.
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).
To estimate the energy efficiency distribution of BVMs for 2028,
DOE relied on publicly available energy use data. Specifically, the
market efficiency distribution was determined separately for each
equipment class for which certification information was available in
the DOE certification \42\ and ENERGY STAR databases.\43\ The estimated
market shares for the no-new-standards case for BVMs are shown in Table
IV.6. See chapter 8 of the NOPR TSD for further information on the
derivation of the efficiency distributions.
---------------------------------------------------------------------------
\42\ See www.regulations.doe.gov/ccms.
\43\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.
Table IV.6--Efficiency Level Distribution Within Each Equipment Class in No-New-Standards Case for Beverage
Vending Machines
----------------------------------------------------------------------------------------------------------------
Efficiency level
Equipment class -----------------------------------------------------------------------
0 (%) 1 (%) 2 (%) 3 (%) 4 (%) 5 (%) 6 (%) 7 (%)
----------------------------------------------------------------------------------------------------------------
Class A................................. 67 17 0 11 0 0 0 6
Class B................................. 44 44 0 11 0 0 0 0
Combo A................................. 47 6 0 24 18 0 6 0
Combo B................................. 100 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the BVMs purchased
by each sample household in the no-new-standards case. The resulting
percent shares within the sample match the market shares in the
efficiency distributions.
9. Split Incentives
DOE understands that, in most cases, the purchasers of BVMs (a
bottler or a vending services company) do not pay the energy costs for
operation and thus will not directly reap any energy cost savings from
more efficient equipment. However, DOE assumes that BVM owners will
seek to pass on higher equipment costs to the users who pay the energy
costs, if possible. DOE
[[Page 33992]]
understands that the BVM owner typically has a financial arrangement
with the company or institution on whose premises the BVM is located,
in which the latter may pay a fee or receive a share of the revenue
from the BVM. Thus, DOE expects that BVM owners could modify the
arrangement to effectively pass on higher equipment costs. Therefore,
DOE's LCC and PBP analyses uses the perspective that the company or
institution on whose premises the BVM is located pays the higher
equipment cost and receives the energy cost savings.
In response to the April 2022 Preliminary Analysis, NAMA commented
that the purchaser of a refrigerated vending machine is typically not
the company who will utilize the machine, and that the market
explanation given in the April 2022 Preliminary Analysis TSD does not
reflect this. (NAMA, No. 14 at p. 7)
DOE acknowledges the comment and agrees with NAMA that the
purchaser of a BVM is not typically the same entity that utilizes the
BVM and receives energy savings. DOE assumes in the LCC analysis that
the increased purchase costs of higher-efficiency equipment is passed
on to the entity that utilizes the BVM. The perspective of the LCC and
PBP analyses is that the entity that utilizes the BVM effectively pays
the higher equipment costs and receives the reduction in energy
expenses.
10. Payback Period Analysis
The PBP is the amount of time (expressed in years) it takes the
consumer to recover the additional installed cost of more efficient
products, compared to baseline products, through energy cost savings.
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. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs.
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 equipment complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as 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.\44\
The shipments model takes an accounting approach, tracking market
shares of each equipment 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.
---------------------------------------------------------------------------
\44\ 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.
---------------------------------------------------------------------------
In the BVM NOPR analysis, DOE modeled shipments of BVMs based on
data from Vending Times State of the Industry Reports.\45\ The industry
reports BVM stock trends that were averaged and used to model annual
shipments. Chapter 9 of the NOPR TSD includes more details on the BVM
shipments analysis.
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\45\ Annual Report: State of the Industry 2021
cdn.baseplatform.io/files/base/cygnus/vmw/document/2022/06/
autm_SOI_NoAds.62b3896290401.pdf.
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NAMA stated that DOE should consider the impact of major supply
chain issues, disruptions, and shortages from the past 24 months as
part of the impact of new energy efficiency standard levels. (NAMA, No.
14 at p. 10)
In response to the April 2022 Preliminary Analysis, NAMA commented
that although they were unable to do a detailed analysis of the
percentage of Class A, Class B, Class Combo A, and Class Combo B BVMs
against the models, they believe that the percentage of Class A and
Class Combo A are under-represented by the DOE assumption. (NAMA, No.
14 at p. 6)
DOE recognizes that the industry has been disrupted in recent
years; therefore, DOE's shipment analysis uses data from recent
industry reports that reflect the 2020 and 2021 BVM industry and the
changes from years prior to 2020.
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.\46\
(``Consumer'' in this context refers to consumers of the equipment
being regulated.) DOE calculates the NES and NPV for the potential
standard levels considered based on projections of annual equipment
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,
equipment costs, and NPV of consumer benefits over the lifetime of BVMs
sold from 2028 through 2057.
---------------------------------------------------------------------------
\46\ 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
equipment class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each equipment class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of equipment with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.7 summarizes the inputs and methods DOE used for the NIA
analysis for the NOPR and discussion of these inputs and methods
follows. See chapter 10 of the NOPR TSD for further details.
[[Page 33993]]
Table IV.7--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.............................. Annual shipments from shipments
model.
Compliance Date of Standard............ 2028.
Efficiency Trends...................... No-new-standards case:
Standards cases:
Annual Energy Consumption per Unit..... Annual weighted-average values
are a function of energy use
at each TSL.
Total Installed Cost per Unit.......... Annual weighted-average values
are a function of cost at each
TSL.
Incorporates projection of
future equipment prices based
on historical data.
Annual Energy Cost per Unit............ Annual weighted-average values
as a function of the annual
energy consumption per unit
and energy prices.
Repair and Maintenance Cost per Unit... Annual values from the LCC
analysis that increase with
efficiency levels.
Energy Price Trends.................... AEO2022 projections (to 2050)
and extrapolation thereafter.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO2022.
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 equipment classes for the year of anticipated compliance
with an amended or new standard. To project the trend in efficiency
absent amended standards for BVMs over the entire shipments projection
period, DOE assumed that the efficiency distribution will remain the
same in future years due to lack of information available to inform a
different trend. The approach is further described in chapter 10 of the
NOPR TSD.
To develop standards case efficiency trends after 2028, DOE applied
a ``roll-up'' scenario approach to establish the efficiency
distribution for the compliance year. Under the ``roll-up'' scenario,
DOE assumed that (1) equipment efficiencies in the no-new-standards
case that do not meet the standard level under consideration will
``roll-up'' to meet the new standard level, and (2) equipment
efficiencies above the standard level under consideration will not be
affected.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered equipment 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 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
AEO2022. Cumulative energy savings are the sum of the NES for each year
over the timeframe of the analysis.
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 GHGs
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 \47\ that EIA uses to
prepare its AEO. 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 10D of the NOPR TSD.
---------------------------------------------------------------------------
\47\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at https://www.eia.gov/outlooks/aeo/nems/overview/pdf/0581(2009).pdf (last accessed February 2023).
---------------------------------------------------------------------------
In response to the April 2022 Preliminary Analysis, NAMA commented
that they believe the national energy savings estimated by DOE as 0.152
quads for CSL 6 are in fact the FFC savings, and that DOE should not be
advertising a savings of 0.152 when the data show less. (NAMA, No. 14
at p. 15)
DOE acknowledges the comment and understands that FFC savings will
be higher than primary savings. Both primary and FFC savings are
reported in section V.B.3 of this document.
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 BVM
price trends based on historical PPI data. DOE applied the same trends
to project prices for each product class at each considered efficiency
level. PPI data was deflated using implicit GDP
[[Page 33994]]
deflators and found to be constant on average. Although prices for
overall BVM equipment were found to be constant, DOE developed
component price trends for certain design options using historical PPI
data for semiconductors and related devices. Efficiency levels that
include ECM and PMS motors, and variable speed compressors have price
learning applied to the appropriate portion of the MSP. DOE found that
prices for semiconductor related components decreased by 5.88 percent
annually. DOE's projection of equipment prices is described in chapter
10 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 BVMs. In
addition to the default price trend, DOE considered two product price
sensitivity cases: (1) a high price decline case based on PPI data up
to 2005 and (2) a low price decline case based on PPI data from 2005
onward. The derivation of these price trends are described in chapter 8
of the NOPR TSD.
The energy cost savings are calculated using the estimated
electricity savings in each year and the projected price of
electricity. To estimate energy prices in future years, DOE multiplied
the average regional energy prices by the projection of annual
national-average energy price changes in the AEO2022 Reference case,
which has an end year of 2050. To estimate price trends after 2050, the
2035-2050 average was used for all years. As part of the NIA, DOE also
analyzed scenarios that used inputs from variants of the AEO2022
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 10B 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.\48\ 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.
---------------------------------------------------------------------------
\48\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
georgewbush-whitehouse.archives.gov/omb/memoranda/m03-21.html (last
accessed February 2023).
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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
identified manufacturing facilities that purchase their own BVMs as a
relevant subgroup. These facilities typically have higher discount
rates and lower electricity prices than the general population of BVM
consumers. These two conditions make it likely that this subgroup will
have the lowest LCC savings of any major consumer subgroup.
DOE used the LCC and PBP spreadsheet model to estimate the impacts
of the considered efficiency levels on this subgroup. Chapter 11 in the
NOPR TSD describes the consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of BVMs and to estimate
the potential impacts of such standards on 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 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 WACC, 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 (TSLs). To capture the uncertainty relating to manufacturer
pricing strategies following amended standards, the GRIM estimates a
range of possible impacts under different markup 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 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 BVM manufacturing industry
based on the market and technology assessment, preliminary manufacturer
interviews, and publicly available information. This included a top-
down analysis of BVM 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 BVM manufacturing industry, including company
filings of form 10-K from the SEC,\49\ corporate annual reports, the
[[Page 33995]]
U.S. Census Bureau's Economic Census,\50\ and reports from Dunn &
Bradstreet.\51\
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\49\ U.S. Securities and Exchange Commission. Company Filings.
Available at https://www.sec.gov/edgar/searchedgar/companysearch.html.
\50\ The U.S. Census Bureau. Quarterly Survey of Plant Capacity
Utilization. Available at www.census.gov/programs-surveys/qpc/data/tables.html.
\51\ The Dun & Bradstreet Hoovers login is available at
app.dnbhoovers.com.
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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 BVMs 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 subgroup impacts.
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
of this document 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, markups, shipments, and industry
financial information as inputs. The GRIM models changes in costs,
distribution of shipments, investments, and manufacturer margins that
could result from an amended energy conservation standard. The GRIM
spreadsheet uses the inputs to arrive at a series of annual cash flows,
beginning in 2023 (the base year of the analysis) and continuing to
2057. DOE calculated INPVs by summing the stream of annual discounted
cash flows during this period. For manufacturers of BVMs, DOE used a
real discount rate of 8.5 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 information gathered from industry stakeholders during
the course of manufacturer interviews. The GRIM results are presented
in section V.B.2 of this document. 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.
As discussed in section IV.C.1 of this document, DOE conducted a
market analysis of currently available models listed in DOE's CCD to
determine which efficiency levels were most representative of the
current distribution of BVMs available on the market. DOE determined
MPCs using teardowns and feedback received from manufacturers during
interviews. See chapter 5 of the NOPR TSD for additional details.
DOE seeks comment on the method for estimating manufacturing
production costs.
See section VII.E of this document for a list of issues on which
DOE seeks comment.
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 base year) to 2057 (the end year of
the analysis period). See chapter 9 of the NOPR TSD for additional
details.
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.
To evaluate the level of conversion costs manufacturers would
likely incur to comply with amended energy conservation standards, DOE
relied on estimates of equipment and tooling from feedback from
manufacturer interviews. DOE contractors reached out to all five of the
original equipment manufacturers (OEMs) identified in the CCD database,
two of which agreed to be interviewed. These two OEMs are manufacturers
of Class A, Class B, Combo A, and Combo B equipment. DOE used market
share weighted feedback from the interviews
[[Page 33996]]
to extrapolate industry-level product conversion costs from the
manufacturer feedback.
Feedback from manufacturers on capital and product conversion costs
allowed DOE to create industry estimates, scaled by market share and
model count, in order to model the incremental investment required at
different efficiency levels.
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 non-production cost 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 markup 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 markup scenario and (2) a
preservation of per-unit operating profit markup scenario. These
scenarios lead to different 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'' markup across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within a product class. As manufacturer production
costs increase with efficiency, this scenario implies that the per-unit
dollar profit will increase. DOE estimated gross margin percentages of
22 percent for Class A, 17 percent for Class B, 36 percent for Combo A,
and 36 percent for Combo B. 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 to industry profitability under an amended energy
conservation standard.
Under the preservation of per-unit operating profit markup
scenario, DOE modeled a situation in which manufacturers are not able
to increase per-unit operating profit in proportion to increases in
manufacturer production costs. 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 no-new-standards 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 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. A comparison of industry financial impacts under
the two manufacturer markup scenarios is presented in section V.B.2.a
of this document.
A comparison of industry financial impacts under the two markup
scenarios is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
DOE interviewed two of the five OEMs identified in the CCD.
Participants included manufacturers of Class A, Class B, and Combo B
BVMs.
In interviews, DOE asked manufacturers to describe their major
concerns regarding this proposed rulemaking. 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.
Manufacturers raised concerns about the potentially high levels of
investment necessary under updated standards, citing high conversion
costs associated with increased insulation thickness and VIPs. In
particular, these changes would necessitate large investments in
tooling and product redesign.
Manufacturers also cited concern regarding cost of the potential
concurrent refrigerant transition outlined in the recent EPA
rulemaking. This transition will require manufacturers to make
investments independent of amended DOE standards.
Manufacturers also raised concern over the feasibility of further
efficiency improvements, citing the incorporation of many DOE design
options into baseline equipment. As an example, some of the design
options included in the preliminary analysis are already incorporated
in baseline models, such as evaporator fan motor controllers and high-
efficiency lighting.
4. Discussion of MIA Comments
In response to the April 2022 Preliminary Analysis, NAMA commented
that the 6-year ``lock-in'' provision in the statutory structure is
designed to give manufacturers time to generate sufficient cash flow to
recoup any necessary investments and financial costs/returns, and that
when there are multiple regulations on the same product within the 6-
year lock-in period (such as refrigerant transition, a new test
procedure on payment systems, and new energy efficiency regulations),
the second regulation violates the recoupment assumption inherent in
the first one. (NAMA, No. 14 at p. 16-17) EPCA 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)) Although DOE
considers cumulative regulatory burden in its analysis, DOE does not
have the authority to delay review of its regulations in accordance
with EPCA due to regulations issued by other Federal agencies.
NAMA stated that the existing GRIM model does not consider this
situation, and that it produces an increase in value from the early
write-off of any past investment. Id. NAMA noted that the GRIM
accelerates depreciation (a non-cash item) due to the early write-off
of past investment, by lowering tax cash costs, and that the simplest
way to resolve this is to do a consolidated analysis for multiple
regulations starting from the time of the first regulation. (NAMA, No.
14 at p. 17) NAMA added that although DOE has noted that such an
analysis would require counting both the costs/investments and
revenues/profits for both products, this is correct and is a feature,
not a deficiency. Id. NAMA commented that DOE should be
[[Page 33997]]
analyzing and assessing the change in combined industry value for these
products, or for the same product multiple times. Id. NAMA stated that
if this is not possible, then DOE should incorporate a value reduction
factor in the first post-regulation year of the analysis that subtracts
the value lost from the remaining years of the previous regulation. Id.
NAMA also commented that it urged DOE to incorporate the financial
results of the current Cumulative Regulatory Burden analysis directly
into the MIA. (NAMA, No. 14 at p. 17) NAMA suggested doing this by
adding the combined costs of complying with multiple regulations into
the product conversion costs in the GRIM model. Id. NAMA commented that
an appropriate approach would be to include the costs to manufacturers
of responding to and monitoring regulations. Id.
NAMA also made a range of comments related to the phase out of
certain refrigerants under consideration by the EPA. DOE notes that the
costs associated with the refrigerant transition are not a direct
result of amended standards, however DOE has considered the
implications of these transition costs in its analysis.
DOE did not publish a GRIM in the preliminary analysis phase.
However, DOE has published a GRIM as part of the NOPR analysis. In that
GRIM DOE accounts for the investments manufacturers must make in order
to adopt R-290 as a refrigerant for BVMs in 2025.
DOE analyzes cumulative regulatory burden pursuant to the Process
Rule. Pursuant to the Process Rule, DOE will recognize and consider the
overlapping effects on manufacturers of new or revised DOE standards
and other Federal regulatory actions affecting the same products or
equipment. The results of this analysis can be found in section V.B.2.e
of this document.
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 GHGs, 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 AEO2022. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the EPA.\52\ 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.
---------------------------------------------------------------------------
\52\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf. Last accessed July 12, 2021.
---------------------------------------------------------------------------
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 national impact analysis.
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. AEO2022 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2022,
including the emissions control programs discussed in the following
paragraphs.\53\
---------------------------------------------------------------------------
\53\ For further information, see the Assumptions to AEO2022
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 February 15, 2023).
---------------------------------------------------------------------------
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.\54\ AEO2022 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.
---------------------------------------------------------------------------
\54\ 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).
---------------------------------------------------------------------------
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
[[Page 33998]]
generation would generally reduce SO2 emissions. DOE
estimated SO2 emissions reduction using emissions factors
based on AEO2022.
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 a case,
NOX emissions would remain near 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 AEO2022 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
AEO2022, 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 (E.O.) 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.
To monetize the benefits of reducing GHG emissions, this analysis
uses the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
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 SC-GHGs. That is, SC-GHGs, whether measured using the
February 2021 interim estimates presented by the IWG or by another
means, did not affect the rule ultimately proposed by DOE.
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions using SC-GHG values that
were based on the interim values presented in the Technical Support
Document: 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 1 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-GHGs until revised estimates have
been developed reflecting the latest, peer-reviewed science.
The SC-GHG estimates presented here were developed over many years,
using a transparent process, peer-reviewed methodologies, the best
science available at the time of that process, and input from the
public. Specifically, in 2009, the IWG, which included 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.\55\ and underwent a standard double-blind peer review
process prior to journal publication. In 2015, as part of the response
to public comments received for a 2013 solicitation for comments on the
SC-CO2 estimates, the IWG announced a National Academies of
Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure
that the estimates continue to reflect the best available science and
methodologies. In January 2017, the National Academies released
[[Page 33999]]
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.\56\ Shortly thereafter, in March 2017, President
Trump issued E.O. 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.'' (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.
---------------------------------------------------------------------------
\55\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold,
and A. Wolverton. Incremental CH4 and N2O
mitigation benefits consistent with the US Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
\56\ 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 GHGs
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 Executive order 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 Executive order 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 United States 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; 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
United States 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,\57\ and
recommended that discount rate uncertainty and relevant aspects of
intergenerational ethical considerations be accounted for in selecting
future discount rates.
---------------------------------------------------------------------------
\57\ 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 April 15,
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
April 15, 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 January 18, 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 January
18, 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
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3-percent and 7-percent discount
rates as ``default'' values, Circular A-4 also reminds agencies that
``different
[[Page 34000]]
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-percent discount
rate is not appropriate to apply to value the SC-GHGs in the analysis
presented 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 the above 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 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 were 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.\58\ 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 integrated assessment models, 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 proposed rule likely underestimate the damages from GHG
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\58\ 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
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
---------------------------------------------------------------------------
DOE's derivations of the 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 V.B.6 of this document.
a. Social Cost of Carbon
The SC-CO2 values used for this NOPR were based on the
values presented for the IWG's February 2021 TSD. Table IV.7 shows the
updated sets of SC-CO2 estimates from the IWG's TSD in 5-
year increments from 2020 to 2050. The full set of annual values that
DOE used is presented in appendix 14A of the NOPR TSD. For purposes of
capturing the uncertainties involved in the regulatory impact analysis,
DOE has determined it is appropriate to include all four sets of SC-
CO2 values, as recommended by the IWG.\59\
---------------------------------------------------------------------------
\59\ 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 34001]]
Table IV.8--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2021$ 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 SC-CO2 estimates published by
EPA, adjusted to 2021$.\60\ These estimates are based on methods,
assumptions, and parameters identical to the 2020-2050 estimates
published by the IWG (which were based on EPA modeling).
---------------------------------------------------------------------------
\60\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at: nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed January 13, 2023).
---------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2021$ using the implicit price
deflator for 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 based on the values developed for the February 2021 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 14A of the NOPR TSD. To capture the uncertainties
involved in the 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.9--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2021$ per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 SC-N2O
-------------------------------------------------------------------------------------------------------------------------------
Discount rate and statistic Discount rate and statistic
Year -------------------------------------------------------------------------------------------------------------------------------
3% 95th 3% 95th
5% Average 3% Average 2.5% Average Percentile 5% Average 3% Average 2.5% Average Percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................ 670 1,500 2,000 3,900 5,800 18,000 27,000 48,000
2025............................................................ 800 1,700 2,200 4,500 6,800 21,000 30,000 54,000
2030............................................................ 940 2,000 2,500 5,200 7,800 23,000 33,000 60,000
2035............................................................ 1,100 2,200 2,800 6,000 9,000 25,000 36,000 67,000
2040............................................................ 1,300 2,500 3,100 6,700 10,000 28,000 39,000 74,000
2045............................................................ 1,500 2,800 3,500 7,500 12,000 30,000 42,000 81,000
2050............................................................ 1,700 3,100 3,800 8,200 13,000 33,000 45,000 88,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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 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 the NOPR, 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.\61\ 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 combined the EPA benefit
per ton estimates with regional information on electricity consumption
and emissions to define weighted-average national values for
NOX and SO2 as a function of sector (see appendix
14B of the NOPR TSD).
---------------------------------------------------------------------------
\61\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors
from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------
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 AEO2022. NEMS produces the AEO
[[Page 34002]]
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 AEO2022 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 equipment subject to standards, their
suppliers, and related service firms. The MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more efficient appliances. Indirect
employment impacts from standards consist of the net jobs created or
eliminated in the national economy, other than in the manufacturing
sector being regulated, caused by (1) reduced spending by 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 the Labor Department's Bureau of
Labor Statistics (BLS). BLS regularly publishes its estimates of the
number of jobs per million dollars of economic activity in different
sectors of the economy, as well as the jobs created elsewhere in the
economy by this same economic activity. Data from BLS indicate that
expenditures in the utility sector generally create fewer jobs (both
directly and indirectly) than expenditures in other sectors of the
economy.\62\ 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.
---------------------------------------------------------------------------
\62\ 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 https://www.bea.gov/sites/default/files/methodologies/RIMSII_User_Guide.pdf (last
accessed February 2023).
---------------------------------------------------------------------------
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 (ImSET).\63\ 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 that has structural
coefficients that characterize economic flows among 187 sectors most
relevant to industrial, commercial, and residential building energy
use.
---------------------------------------------------------------------------
\63\ 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 there are uncertainties involved in projecting long-
term 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 overestimate actual job
impacts over the long run for this rule. Therefore, DOE used ImSET only
to generate results for near-term timeframes, 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 BVMs.
It addresses the TSLs examined by DOE, the projected impacts of each of
these levels if adopted as energy conservation standards for BVMs, 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 equipment 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 BVMs. DOE developed TSLs that combine
efficiency levels for each analyzed equipment class. Table V.1 presents
the TSLs and the corresponding efficiency levels that DOE has
identified for potential amended energy conservation standards for
BVMs. TSL 5 represents the max-tech energy efficiency for all equipment
classes. TSL 4 represents the efficiency levels with the maximum NPV at
3 percent. TSL 3 represents the maximum efficiency level with positive
NPV at 7 percent and positive average LCC savings for each equipment
class. As shown in Table V.1, TSL 3 includes higher efficiency products
for Class B, Combo A, and Combo B than TSL 4. The TSL ordering is based
on total NES, which is greater in TSL 4 due to Class A representing
over half of BVM shipments. TSL 2 represents efficiency levels with
maximum LCC savings. TSL 1 represents EL2 for all equipment classes.
DOE presents the results for the TSLs in this document, while the
results for all efficiency levels that DOE analyzed are in the NOPR
TSD.
[[Page 34003]]
Table V.1--Trial Standard Levels for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... EL2 EL3 EL5 EL6 EL 7
Class B......................... EL2 EL3 EL5 EL4 EL 7
Combo A......................... EL2 EL3 EL5 EL4 EL 7
Combo B......................... EL2 EL4 EL6 EL5 EL 7
----------------------------------------------------------------------------------------------------------------
Table V.2 presents the TSLs and the corresponding percent reduction
below the baseline daily energy consumption for each equipment class.
Table V.2--Trial Standard Levels for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 (%) TSL 2 (%) TSL 3 (%) TSL 4 (%) TSL 5 (%)
----------------------------------------------------------------------------------------------------------------
Class A........................................ 15 20 30 37 47.6
Class B........................................ 25 30 40 35 59.6
Combo A........................................ 20 25 35 30 48.9
Combo B........................................ 25 40 50 45 62.9
----------------------------------------------------------------------------------------------------------------
DOE constructed the TSLs for this NOPR to include efficiency levels
representative of efficiency levels with similar characteristics (i.e.,
using similar technologies and/or efficiencies, and having roughly
comparable equipment availability). The use of representative
efficiency levels provided for greater distinction between the TSLs.
While representative efficiency levels were included in the TSLs, DOE
considered all efficiency levels as part of its analysis.\64\
---------------------------------------------------------------------------
\64\ Efficiency levels that were analyzed for this NOPR are
discussed in section IV.E of this document. Results by efficiency
level are presented in TSD chapters 8, 10, and 12.
---------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on BVM consumers by looking at
the effects that potential amended standards at each TSL would have on
the LCC and PBP analyses. 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 equipment affects 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 (i.e., product price plus installation costs) and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD
provides detailed information on the LCC and PBP analyses.
Table V.3 shows LCC and PBP results by TSL including the shipment
weighted average results for each TSL. Table V.4 through Table V.11
show the LCC and PBP results for the TSLs considered for each equipment
class. In the first of each pair of tables, the simple payback is
measured relative to the baseline equipment. 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 equipment 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.
The analysis results indicate that consumers either benefit or are
unaffected by setting standards at TSLs 1 or 2. At TSL 3, 28 percent of
the market would experience net costs and at TSL 4, 34 percent of the
market for BVMs would experience a net cost.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average LCC Consumers that Average LCC Consumers that Average LCC Consumers that
Equipment class savings * experience net savings * experience net savings * experience net
(2021$) cost (%) (2021$) cost (%) (2021$) cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1
TSL 2
TSL 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A........................................ $150 0 $203 0 $99 28
Class B........................................ 167 0 212 0 146 17
Combo A........................................ 212 0 263 0 43 49
Combo B........................................ 214 0 326 0 94 37
Weighted Average **............................ 166 0 222 0 107 28
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 4
TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A........................................ (6) 59 (695) 93 .............. .................
Class B........................................ 206 2 (199) 84 .............. .................
[[Page 34004]]
Combo A........................................ 190 12 (851) 99 .............. .................
Combo B........................................ 287 0 (239) 85 .............. .................
Weighted Average **............................ 97 34 (532) 90 .............. .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
** Weighted by shares of each equipment class in total projected shipments in 2028.
Table V.4--Average LCC and PBP Results for Beverage Vending Machines Class A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
----------------------------------------------------
First Simple Average
TSL Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............................ $3,970 $495 $5,621 $9,591 ........... 13.4
1................................... 2................................... 3,979 477 5,440 9,418 0.5 13.4
2................................... 3................................... 3,987 471 5,379 9,366 0.7 13.4
3................................... 5................................... 4,118 458 5,328 9,446 4.0 13.4
4................................... 6................................... 4,228 450 5,322 9,551 5.7 13.4
5................................... 7................................... 5,034 437 5,206 10,240 18.3 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Class A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------
TSL Efficiency Percent of consumers
level Average LCC savings that experience net
* (2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1................................................... 2 $150 0
2................................................... 3 203 0
3................................................... 5 99 28
4................................................... 6 (6) 59
5................................................... 7 (695) 93
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
Table V.6--Average LCC and PBP Results for Beverage Vending Machines Class B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
----------------------------------------------------
Efficiency First Simple Average
TSL level Installed year's Lifetime payback lifetime
cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 $3,178 $474 $5,412 $8,590 ........... 13.4
1............................................................ 2 3,193 449 5,160 8,353 0.6 13.4
2............................................................ 3 3,199 444 5,109 8,308 0.7 13.4
3............................................................ 5 3,294 434 5,058 8,351 2.8 13.4
4............................................................ 4 3,220 439 5,071 8,292 1.2 13.4
5............................................................ 7 3,736 414 4,960 8,696 9.2 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.7--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Class B
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------
TSL Efficiency Percent of consumers
level Average LCC savings that experience net
* (2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1................................................... 2 $167 0
2................................................... 3 212 0
3................................................... 5 146 17
4................................................... 4 206 2
5................................................... 7 (199) 84
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
[[Page 34005]]
Table V.8--Average LCC and PBP Results for Beverage Vending Machines Combo A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
Efficiency ---------------------------------------------------------------- Simple payback Average
TSL level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 $3,990 $489 $5,551 $9,541 .............. 13.4
1....................................... 2 3,998 466 5,321 9,319 0.4 13.4
2....................................... 3 4,005 460 5,264 9,268 0.5 13.4
3....................................... 5 4,145 448 5,224 9,369 3.8 13.4
4....................................... 4 4,037 454 5,223 9,260 1.4 13.4
5....................................... 7 5,097 432 5,175 10,272 19.5 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.9--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Combo A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------
TSL Efficiency Percent of consumers
level Average LCC savings that experience net
* (2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1................................................... 2 212 0
2................................................... 3 263 0
3................................................... 5 43 49
4................................................... 4 190 12
5................................................... 7 (851) 99
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
Table V.10--Average LCC and PBP Results for Beverage Vending Machines Combo B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
----------------------------------------------------
Efficiency First Simple Average
TSL level Installed year's Lifetime payback lifetime
cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 $3,725 $463 $5,297 $9,023 ........... 13.4
1............................................................ 2 3,735 441 5,073 8,809 0.4 13.4
2............................................................ 4 3,758 427 4,939 8,697 0.9 13.4
3............................................................ 6 3,956 418 4,972 8,928 5.1 13.4
4............................................................ 5 3,814 423 4,921 8,736 2.2 13.4
5............................................................ 7 4,347 406 4,914 9,261 10.9 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.11--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Combo B
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------
TSL Efficiency Percent of consumers
level Average LCC savings that experience net
* (2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1................................................... 2 $214 0
2................................................... 4 326 0
3................................................... 6 94 37
4................................................... 5 287 0
5................................................... 7 (239) 85
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on manufacturing facilities that purchase their own
BVMs due to the lower electricity prices and higher discount rates
compared to other BVM consumer building types. DOE identified
manufacturing facilities that purchase their own BVMs as a relevant
subgroup because these facilities typically have higher discount rates
and lower electricity prices than the general population of BVM
consumers. These two conditions make it likely that this subgroup will
have the lowest LCC savings of any major consumer subgroup. Table V.12
through Table V.15 compare the average LCC savings and PBP at each
efficiency level for the consumer subgroup with similar metrics for the
entire consumer sample for BVMs. Chapter 11 of the NOPR TSD presents
the complete LCC and PBP results for the subgroup analysis.
[[Page 34006]]
Table V.12--Comparison of LCC Savings and PBP for Consumer Subgroups and
All Buildings; Class A
------------------------------------------------------------------------
Full building
Manufacturing sample
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1............................. $105 $150
TSL 2............................. 141 203
TSL 3............................. 15 99
TSL 4............................. (109) (6)
TSL 5............................. (834) (695)
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1............................. 0.6 0.5
TSL 2............................. 0.9 0.7
TSL 3............................. 5.2 4.0
TSL 4............................. 7.4 5.7
TSL 5............................. 23.7 18.3
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1............................. 84 84
TSL 2............................. 84 84
TSL 3............................. 41 67
TSL 4............................. 14 36
TSL 5............................. 0 2
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1............................. 0 0
TSL 2............................. 0 0
TSL 3............................. 53 28
TSL 4............................. 81 59
TSL 5............................. 94 93
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.13--Comparison of LCC Savings and PBP for Consumer Subgroups and
All Buildings; Class B
------------------------------------------------------------------------
Full building
Manufacturing sample
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1............................. $117 $167
TSL 2............................. 147 212
TSL 3............................. 63 146
TSL 4............................. 135 206
TSL 5............................. (332) (199)
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1............................. 0.8 0.6
TSL 2............................. 0.9 0.7
TSL 3............................. 3.7 2.8
TSL 4............................. 1.5 1.2
TSL 5............................. 11.9 9.2
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1............................. 89 89
TSL 2............................. 89 89
TSL 3............................. 69 83
TSL 4............................. 93 98
TSL 5............................. 6 16
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1............................. 0 0
TSL 2............................. 0 0
TSL 3............................. 31 17
TSL 4............................. 7 2
TSL 5............................. 94 84
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
[[Page 34007]]
Table V.14--Comparison of LCC Savings and PBP for Consumer Subgroups and
All Buildings; Combo A
------------------------------------------------------------------------
Full building
Manufacturing sample
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1............................. $149 $212
TSL 2............................. 184 263
TSL 3............................. (25) 43
TSL 4............................. 120 190
TSL 5............................. (953) (851)
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1............................. 0.5 0.4
TSL 2............................. 0.7 0.5
TSL 3............................. 4.9 3.8
TSL 4............................. 1.8 1.4
TSL 5............................. 25.3 19.5
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1............................. 52 52
TSL 2............................. 52 52
TSL 3............................. 31 45
TSL 4............................. 57 64
TSL 5............................. 0 1
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1............................. 0 0
TSL 2............................. 0 0
TSL 3............................. 63 49
TSL 4............................. 19 12
TSL 5............................. 100 99
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.15--Comparison of LCC Savings and PBP for Consumer Subgroups and
All Buildings; Combo B
------------------------------------------------------------------------
Full building
Manufacturing sample
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1............................. $150 $214
TSL 2............................. 224 326
TSL 3............................. (25) 94
TSL 4............................. 174 287
TSL 5............................. (387) (239)
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1............................. 0.6 0.4
TSL 2............................. 1.2 0.9
TSL 3............................. 6.6 5.1
TSL 4............................. 2.8 2.2
TSL 5............................. 14.2 10.9
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1............................. 100 100
TSL 2............................. 100 100
TSL 3............................. 22 63
TSL 4............................. 100 100
TSL 5............................. 3 15
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1............................. 0 0
TSL 2............................. 0 0
TSL 3............................. 78 37
TSL 4............................. 0 0
TSL 5............................. 97 85
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
[[Page 34008]]
c. Rebuttable Presumption Payback
As discussed in section II.A of this document, EPCA establishes a
rebuttable presumption that an energy conservation standard is
economically justified if the increased purchase cost for equipment
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard. In calculating a
rebuttable presumption PBP 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 BVMs. In contrast, the PBPs
presented in section V.B.1.a of this document were calculated using
distributions that reflect the range of energy use in the field.
Table V.16 presents the rebuttable presumption PBPs for the
considered TSLs for BVMs. While DOE examined the rebuttable presumption
criterion, it considered whether the 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.16 Rebuttable Presumption Payback Periods
----------------------------------------------------------------------------------------------------------------
Median payback period (years)
Equipment class ----------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................ 0.4 0.5 2.3 4.0 5.7
Class B........................................ 0.6 0.6 1.2 0.7 4.4
Combo A........................................ 0.4 0.4 1.4 0.5 6.5
Combo B........................................ 0.4 0.5 2.2 0.9 5.1
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of BVMs. 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.
Table V.17 and Table V.18 summarize the estimated financial impacts
(represented by changes in INPV) of potential amended energy
conservation standards on manufacturers of BVMs, as well as the
conversion costs that DOE estimates manufacturers of BVMs would incur
at each TSL.
As discussed in section IV.J.2.d of this document, DOE modeled two
scenarios to evaluate a range of cash flow impacts on the BVM industry:
(1) the preservation of gross margin percentage scenario and (2) the
preservation of operating profit. Under the preservation of gross
margin percentage scenario, DOE applied a single uniform ``gross margin
percentage'' across all efficiency levels. As MPCs increase with
efficiency, this scenario implies that the absolute dollar markup will
increase. DOE estimated gross margin percentages of 18 percent for
Class A, 15 percent for Class B, 26 percent for Combo A, and 26 percent
for Combo B.\65\
---------------------------------------------------------------------------
\65\ This corresponds to manufacturer markups of 1.22 for Class
A, 1.17 for Class B, and 1.36 for Combo A and B.
---------------------------------------------------------------------------
This manufacturer markup is the same as the one DOE assumed in the
engineering analysis and the no-new-standards case of the GRIM. Because
this scenario assumes that a manufacturer's absolute dollar markup
would increase as MPCs increase in the standards cases, it represents
the upper-bound to industry profitability under potential new energy
conservation standards.
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 equipment, operating
profit does not change in absolute dollars and decreases as a
percentage of revenue.
Each of the modeled manufacturer markup scenarios results in a
unique set of cash flows and corresponding industry values at each TSL.
In the following discussion, the INPV results refer to the difference
in industry value between the no-new-standards case and each standards
case resulting from the sum of discounted cash flows from 2023 through
2057. To provide perspective on the short-run cash flow impact, DOE
includes in the discussion of results a comparison of free cash flow
between the no-new-standards case and the standards case at each TSL in
the year before new standards are required.
Table V.17--Manufacturer Impact Analysis for BVMs Under the Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level*
Units No-new- ----------------------------------------------------------------
standards case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2021$ millions.............. 85.5 85.4 85.5 86.1 85.9 68.0
Change in INPV........................... 2021$ millions.............. .............. 0.0 0.0 0.7 0.5 (17.5)
%........................... .............. 0.0 0.0 0.8 0.6 (20.4)
Product Conversion Costs................. 2021$ millions.............. .............. 0.2 0.3 2.3 1.5 9.6
Capital Conversion Costs................. 2021$ millions.............. .............. 0.0 0.0 0.0 0.0 26.9
Total Investment Required**.............. 2021$ millions.............. .............. 0.2 0.3 2.5 1.5 36.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number.
** Numbers may not sum exactly due to rounding.
[[Page 34009]]
Table V.18--Manufacturer Impact Analysis for BVMs Under the Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level*
Units No-new- ----------------------------------------------------------------
standards case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2021$ millions.............. 85.5 85.3 85.3 82.9 83.6 56.3
Change in INPV........................... 2021$ millions.............. .............. (0.2) (0.2) (2.5) (1.9) (29.2)
%........................... .............. (0.2) (0.2) (3.0) (2.2) (34.1)
Product Conversion Costs................. 2021$ millions.............. .............. 0.2 0.3 2.3 1.5 9.6
Capital Conversion Costs................. 2021$ millions.............. .............. 0.0 0.0 0.0 0.0 26.9
Total Investment Required**.............. 2021$ millions.............. .............. 0.2 0.3 2.5 1.5 36.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number.
** Numbers may not sum exactly due to rounding.
At TSL 5, DOE estimates that impacts on INPV would range from -
$29.2 million to $17.5 million, or a change in INPV of -34.1 to -20.4
percent. At TSL 5, industry free cash flow is negative $8.6 million,
which is a decrease of $15.4 million compared to the no-new-standards
case value of $6.8 million in 2027, the year leading up to the proposed
standards. Industry conversion costs total $36.5 million.
At TSL 5, the shipment-weighted-average MPC for BVMs increases by
21.4 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2030. Under both manufacurer markup
scenarios, industry faces a drop in INPV. The reduction in INPV is
driven by the high conversion costs. Product conversion costs could
reach $9.6 million and capital conversion costs could reach $26.9
million. At this level, DOE expects that all equipment classes would
require the use of VIPs for roughly half the cabinet surface area, the
best available-efficiency variable-speed compressor, permanent magnet
synchronous evaporator and condenser fan motors, microchannel
condenser, refrigeration low power mode (per the DOE test procedure),
and evaporator fan controls. The adoption of VIPs is the largest driver
of conversion costs. Higher product conversion costs after typically
needed to implement VIP designs, which are not found in BVMs today, for
prototyping and testing for VIP placement, design, and sizing.
Additionally, extensive incorporation of VIPs can require significant
capital expenditures due to the need for more careful product handling
and conveyor and investments in hard tooling for the VIP installation
process. In the preservation of gross margin markup scenario, the
increase in average MPC and corresponding increase in revenue is
outweighed by the $36.5 million in conversion costs, resulting in a
negative change in INPV at TSL 5.
Under the preservation of operating profit markup 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 21.4
percent shipment-weighted-average MPC increase results in a reduction
in the manufacturer markup. This reduction in the manufacturer markup
and the $36.5 million in conversion costs incurred by manufacturers
cause a negative change in INPV at TSL 5 under the preservation of
operating profit markup scenario.
At TSL 4, DOE estimates that impacts on INPV would range from -$1.9
million to $0.5 million, or a change in INPV of -2.2 to 0.6 percent. At
TSL 4, industry free cash flow is $6.3 million, which is a decrease of
$0.5 million compared to the no-new-standards case value of $6.8
million in 2027, the year leading up to the proposed standards.
Industry conversion costs total $1.5 million.
At TSL 4, the shipment-weighted-average MPC for BVMs increases by
5.0 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2028. In the preservation of gross margin
markup scenario, the increase in cash-flows from increased MSPs
outweigh the upfront conversion investments manufacturers make and
result in a slightly positive change in INPV at TSL 4.
Under the preservation of operating profit markup 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 5.0
percent shipment-weighted-average MPC increase results in a reduction
in the manufacturer markup. This reduction in the manufacturer markup
and the $1.5 million in conversion costs incurred by manufacturers
cause a negative change in INPV at TSL 4 under the preservation of
operating profit markup scenario.
At TSL 3, DOE estimates that impacts on INPV would range from -$3.0
million to $0.7 million, or a change in INPV of -3.0 to 0.8 percent. At
TSL 3, industry free cash flow is $6.0 million, which is a decrease of
$0.8 million compared to the no-new-standards case value of $6.8
million in 2027, the year leading up to the proposed standards.
Industry conversion costs total $2.3 million.
At TSL 3, the shipment-weighted-average MPC for BVMs increases by
5.7 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2028. In the preservation of gross margin
markup scenario, the increase in cash-flows from increased MSPs
outweigh the upfront conversion investments manufacturers make and
result in a slightly positive change in INPV at TSL 3.
Under the preservation of operating profit markup 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 5.7
percent shipment-weighted-average MPC increase results in a reduction
in the manufacturer markup after the analyzed compliance year. This
reduction in the manufacturer markup and the $2.3 million in conversion
costs incurred by manufacturers cause a negative change in INPV at TSL
3 under the preservation of operating profit markup scenario.
At TSL 2, DOE estimates that impacts on INPV would range from -$0.2
million to $0.0 million, or a change in INPV of -0.2 to 0.0 percent. At
TSL 2, industry free cash flow is $6.7 million, which is a decrease of
$0.1 million compared to the no-new-standards case value of $6.8
million in 2027, the year leading up to the proposed standards.
Industry conversion costs total $0.3 million.
At TSL 2, the shipment-weighted-average MPC for BVMs is anticipated
to increase by less than 1 percent relative to the no-new-standards
case shipment-weighted-average MPC for all BVMs in
[[Page 34010]]
2028. In the preservation of gross margin markup scenario, the increase
in cash-flows from increased MSPs outweigh the limited conversion
investments manufacturers make and result in a slightly positive change
in INPV at TSL 2.
Under the preservation of operating profit markup 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 slight
shipment-weighted-average MPC increase results in a reduction in the
manufacturer markup after the analyzed compliance year. This reduction
in the manufacturer markup and the $0.3 million in conversion costs
incurred by manufacturers cause a negative change in INPV at TSL 2
under the preservation of operating profit markup scenario.
At TSL 1, DOE estimates that impacts on INPV would range from -$0.2
million to $0.0, or a change in INPV of -0.2 to 0.0 percent. At TSL 1,
industry free cash flow is $6.7 million, which is a decrease of $0.1
million compared to the no-new-standards case value of $6.8 million in
2027, the year leading up to the proposed standards. Industry
conversion costs total $0.2 million.
At TSL 1, the shipment-weighted-average MPC for BVMs increases by
less than 1 percent relative to the no-new-standards case shipment-
weighted-average MPC for all BVMs in 2028. In the preservation of gross
margin markup scenario, the increase in cash-flows from increased MSPs
outweigh the mild conversion investments manufacturers make and result
in a slightly positive change in INPV at TSL 1.
Under the preservation of operating profit markup 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 slight
shipment-weighted-average MPC increase results in a reduction in the
manufacturer markup after the analyzed compliance year. This reduction
in the manufacturer markup and the $0.2 million in conversion costs
incurred by manufacturers cause a slightly negative change in INPV at
TSL 1 under the preservation of operating profit markup scenario.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment in the BVM 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. 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 \66\ 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 \67\ 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.
---------------------------------------------------------------------------
\66\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2021).'' Available at https://www.census.gov/programs-surveys/asm/data.html (Last accessed February 24, 2023).
\67\ U.S. Bureau of Labor Statistics. Industries at a Glance.
Available at https://www.bls.gov/iag/tgs/iag333.htm. Last accessed
February 24, 2023.
---------------------------------------------------------------------------
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 70 percent of BVMs are produced
domestically.
The domestic production employees estimate covers production line
workers, including line supervisors, who are directly involved in
fabricating and assembling equipment 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 equipment covered by
this proposed rulemaking.
Non-production employees 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.
Direct employment is the sum of domestic production employees and
non-production employees. Using the GRIM, DOE estimates in the absence
of new energy conservation standards there would be 448 domestic
employees for BVMs in 2028. Table V.19 shows the range of the impacts
of energy conservation standards on U.S. manufacturing employment in
the BVMs industry. The following discussion provides a qualitative
evaluation of the range of potential impacts presented in Table V.19.
Table V.19--Domestic Direct Employment Impacts for Beverage Vending Machine Manufacturers in 2028
----------------------------------------------------------------------------------------------------------------
No-new-
standards case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Direct Employment in 2028...... 468 469 470 465 463 464
Potential Changes in Direct .............. (65) to 1 (65) to 2 (64) to (3) (65) to (5) (64) to (4)
Employment Workers in 2028 *..
----------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.
[[Page 34011]]
The direct employment impacts shown in Table V.19 represent the
potential domestic employment changes that could result following the
compliance date for the BVM product classes in this proposal.
Employment could increase or decrease due to the labor content of the
various equipment being manufactured domestically. The upper bound
estimate corresponds to an 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 equipment
within the United States after compliance takes effect. The lower bound
estimate represents the maximum decrease in production workers. In
interviews, manufacturers raised concerns that their customers
purchasing Class B equipment would shift toward purchasing Class A
equipment if the prices of Class B equipment increased and approached
the cost of Class A equipment. To establish a lower bound, DOE assumes
a loss of direct employment commensurate with a potential loss of Class
B shipments.
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 they have experience
incorporating many of the design options that DOE considers in its
engineering analysis. However, manufacturers noted that a few design
options could lead to design and production challenges. In particular,
manufacturers raised concerns about microchannel heat exchangers,
vacuum insulated glass, and vacuum insulated panels. For microchannel
exchangers, manufacturers were dubious about the performance gain from
the design option and raised concerns about further performance issues
in the field due to fouling of the channels. For vacuum insulated
glass, manufacturers noted that prototypes did not provide the expected
performance gains and the design option is not incorporated into any
models today. For VIPs, manufacturers noted that they did not
incorporate the design option into any models today. They noted that
VIPs have a negative impact on the flow of foam within panels and
reduce the overall rigidity of the cabinet. Manufacturers expected
large investment to incorporate VIPs into their product design and to
update production lines. With VIPs in particular, manufacturers were
concerned about the engineering resources and level of investment
required to redesign equipment to meet EPA refrigerant regulations by
2025 and again to meet amended standards in 2028.
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 did not identify any other adversely
impacted manufacturer subgroups for this rulemaking based on the
results of the industry characterization.
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. 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 equipment. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
Some BVM manufacturers also produce commercial refrigeration
equipment (CRE). DOE published a CRE ECS preliminary analysis on June
of 2022. (87 FR 38296). There is not yet a proposed or finalized
amended standard. If DOE proposes or finalizes any energy conservation
standards for CRE prior to finalizing amended energy conservation
standards for BVMs, DOE will add CRE into its consideration of
cumulative regulatory burden for the BVM final rule.
DOE notes that there is cumulative regulatory burden due to
product-specific, Federal regulation from another agency that occurs
within 3 years of the proposed compliance date for an amended standard.
The U.S. Environmental Protection Agency (EPA) proposed refrigerant
restrictions pursuant to the AIM Act \68\ in a NOPR published on
December 15, 2022 (``December 2022 EPA NOPR''). 87 FR 76738.
Specifically, EPA proposed prohibitions for new vending machines (EPA's
term for this equipment) for the use of HFCs and blends containing HFCs
that have a GWP of 150 or greater. 87 FR 76780. The proposal would
prohibit manufacture or import of such vending machines starting
January 1, 2025, and would ban sale, distribution, purchase, receive,
or export of such vending machines starting January 1, 2026. 87 FR
76740. In the engineering analysis, DOE considered the use of
alternative refrigerants that are not prohibited for BVM equipment in
the December 2022 EPA NOPR. DOE understands that adapting product lines
to meet the current and upcoming refrigerant regulations requires
significant development and testing time. In particular, DOE
understands that switching from non-flammable to flammable refrigerants
(e.g., R-290) requires time and investment to redesign BVM models and
upgrade production facilities to accommodate the additional structural
and safety precautions required. As discussed in section IV.C.1 of this
document, DOE anticipates BVM manufacturers transitioning all models to
R-290 to comply with anticipated refrigeration regulations, such as the
December 2022
[[Page 34012]]
EPA NOPR,\69\ prior to the expected 2028 compliance date of potential
energy conservation standards. Therefore, the engineering analysis
assumes the use of R-290 compressors as a baseline design option for
all equipment classes. See section IV.C.1 of this document for
additional information on refrigerant assumptions in the engineering
analysis. DOE accounted for the costs associated with redesigning BVMs
to make use of flammable refrigerants and upgrading production
facilities to accommodate flammable refrigerants in the GRIM under the
assumption that three manufacturers of BVMs have yet to make the R-290
transition. These costs are modeled as an impact to industry cashflow.
DOE relied on manufacturer feedback in confidential interviews and a
report prepared for the EPA \70\ to estimate the industry refrigerant
transition costs. See section V.B.2.e of this document and chapter 12
of the NOPR TSD for additional discussion on cumulative regulatory
burden.
---------------------------------------------------------------------------
\68\ Under subsection (i) of the AIM Act, entitled ``Technology
Transitions,'' the EPA may by rule restrict the use of
hydrofluorocarbons (HFCs) in sectors or subsectors where they are
used. A person or entity may also petition EPA to promulgate such a
rule. ``H.R.133--116th Congress (2019-2020): Consolidated
Appropriations Act, 2021.'' Congress.gov, Library of Congress, 27
December 2020, www.congress.gov/bill/116thcongress/house-bill/133.
\69\ The proposed rule was published on December 15, 2022. 87 FR
76738.
\70\ See pp. 5-113 of the ``Global Non-CO2 Greenhouse
Gas Emission Projections & Marginal Abatement Cost Analysis:
Methodology Documentation'' (2019). www.epa.gov/sites/default/files/2019-09/documents/nonco2_methodology_report.pdf.
---------------------------------------------------------------------------
DOE requests information regarding the impact of cumulative
regulatory burden on manufacturers of BVMs 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 national energy
savings 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 BVMs, 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 equipment
purchased in the 30-year period that begins in the year of anticipated
compliance with amended standards (2028-2057). Table V.20 presents
DOE's projections of the NES for each TSL considered for BVMs. The
savings were calculated using the approach described in section IV.H of
this document.
Table V.20--Cumulative National Energy Savings for Beverage Vending Machines; 30 Years of Shipments
[2028-2057]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate --------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
quads
----------------------------------------------------------------------------------------------------------------
Primary energy..................................................... 0.04 0.05 0.08 0.09 0.13
FFC energy......................................................... 0.04 0.06 0.09 0.09 0.14
----------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \71\ 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 proposed
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.\72\ The review timeframe established in EPCA is
generally not synchronized with the product lifetime, product
manufacturing cycles, or other factors specific to BVMs. 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.21. The impacts are counted over the lifetime of
BVMs purchased in 2028-2035.
---------------------------------------------------------------------------
\71\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003.
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed
January 2023).
\72\ 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.
Table V.21--Cumulative National Energy Savings for Refrigerated Bottled or Canned Beverage Vending Machines; 9
Years of Shipments
[2028-2035]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate --------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
quads
--------------------------------------------
Primary energy..................................................... 0.01 0.02 0.03 0.03 0.04
FFC energy......................................................... 0.01 0.02 0.03 0.03 0.04
----------------------------------------------------------------------------------------------------------------
[[Page 34013]]
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 BVMs. In
accordance with OMB's guidelines on regulatory analysis,\73\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.22 shows the consumer NPV results with impacts counted
over the lifetime of products purchased in 2028-2057.
---------------------------------------------------------------------------
\73\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003.
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed
February 2023).
Table V.22--Cumulative Net Present Value of Consumer Benefits for Refrigerated Bottled or Canned Beverage
Vending Machines; 30 Years of Shipments
[2028-2057]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate --------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
billion 2021$
--------------------------------------------
3 percent.......................................................... 0.16 0.22 0.23 0.25 (0.31)
7 percent.......................................................... 0.07 0.09 0.08 0.09 (0.23)
----------------------------------------------------------------------------------------------------------------
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.23. The impacts are counted over the
lifetime of products purchased in 2028-2035. 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.23--Cumulative Net Present Value of Consumer Benefits for Refrigerated Bottled or Canned Beverage
Vending Machines; 9 Years of Shipments
[2028-2035]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate --------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
billion 2021$
--------------------------------------------
3 percent.......................................................... 0.07 0.09 0.07 0.07 (0.17)
7 percent.......................................................... 0.04 0.05 0.03 0.03 (0.14)
----------------------------------------------------------------------------------------------------------------
The previous results reflect the use of a default trend to estimate
the change in price for BVMs over the analysis period (see section IV.H
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
BVMs 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 (2028-2032),
in which these uncertainties are reduced.
The results suggest that the proposed amended 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 IV.C.1.b of this document, DOE has
tentatively concluded that the standards proposed in this NOPR would
not lessen the utility or performance of the BVMs 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
[[Page 34014]]
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. 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 proposed rulemaking.
Energy conservation resulting from potential energy conservation
standards for BVMs is expected to yield environmental benefits in the
form of reduced emissions of certain air pollutants and GHGs. Table
V.24 provides DOE's estimate of cumulative emissions reductions
expected to result from the TSLs considered in this proposed
rulemaking. The emissions were calculated using the multipliers
discussed in section IV.K of this document. DOE reports annual
emissions reductions for each TSL in chapter 13 of the NOPR TSD.
Table V.24--Cumulative Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending Machines Shipped
in 2028-2057 *
----------------------------------------------------------------------------------------------------------------
Trial standard level
------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................ 1.26 1.73 2.65 2.83 1.26
CH4 (thousand tons)...................................... 0.10 0.13 0.21 0.22 0.10
N2O (thousand tons)...................................... 0.01 0.02 0.03 0.03 0.01
NOX (thousand tons)...................................... 0.63 0.86 1.32 1.41 0.63
SO2 (thousand tons)...................................... 0.60 0.82 1.27 1.35 0.60
Hg (tons)................................................ 0.004 0.005 0.008 0.009 0.004
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................ 0.10 0.13 0.21 0.22 0.10
CH4 (thousand tons)...................................... 9.20 12.65 19.42 20.72 9.20
N2O (thousand tons)...................................... 0.00 0.00 0.00 0.00 0.00
NOX (thousand tons)...................................... 1.47 2.02 3.11 3.32 1.47
SO2 (thousand tons)...................................... 0.01 0.01 0.01 0.02 0.01
Hg (tons)................................................ 0.00001 0.00002 0.00003 0.00003 0.00001
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................ 1.35 1.86 2.86 3.05 1.35
CH4 (thousand tons)...................................... 9.29 12.78 19.63 20.93 9.29
N2O (thousand tons)...................................... 0.01 0.02 0.03 0.03 0.01
NOX (thousand tons)...................................... 2.10 2.89 4.43 4.73 2.10
SO2 (thousand tons)...................................... 0.61 0.83 1.28 1.36 0.61
Hg (tons)................................................ 0.004 0.005 0.008 0.01 0.004
----------------------------------------------------------------------------------------------------------------
* Negative values refer to an increase in emissions.
As part of the analysis for this proposed rulemaking, DOE estimated
monetary benefits likely to result from the reduced emissions of
CO2 that DOE estimated for each of the considered TSLs for
BVMs. Section IV.L of this document discusses the SC-CO2
values that DOE used. Table V.25 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.25--Present Value of CO2 Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending
Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-CO2 Case
---------------------------------------------------------------
Discount rate and statistics
TSL ---------------------------------------------------------------
3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
million 2021$
---------------------------------------------------------------
1............................................... 12 53 83 161
2............................................... 17 73 115 222
3............................................... 25 112 176 340
4............................................... 27 120 188 363
5............................................... 40 178 280 541
----------------------------------------------------------------------------------------------------------------
[[Page 34015]]
As discussed in section IV.L.2 of this document, DOE estimated the
climate benefits likely to result from the reduced emissions of
CH4 and N2O that DOE estimated for each of the
considered TSLs for BVMs. Table V.26 presents the value of the
CH4 emissions reduction at each TSL, and Table V.27 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.26--Present Value of Methane Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending
Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-CH4 Case
---------------------------------------------------------------
Discount rate and statistics
TSL ---------------------------------------------------------------
3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
million 2021$
---------------------------------------------------------------
1............................................... 3 10 14 27
2............................................... 4 14 19 36
3............................................... 7 22 30 57
4............................................... 8 23 33 62
5............................................... 12 35 50 93
----------------------------------------------------------------------------------------------------------------
Table V.27--Present Value of Nitrous Oxide Emissions Reduction for Refrigerated Bottled or Canned Beverage
Vending Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-N2O Case
---------------------------------------------------------------
Discount rate and statistics
TSL ---------------------------------------------------------------
3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
million 2021$
---------------------------------------------------------------
1............................................... 0.04 0.17 0.26 0.45
2............................................... 0.06 0.23 0.35 0.61
3............................................... 0.09 0.36 0.56 0.96
4............................................... 0.10 0.39 0.61 1.05
5............................................... 0.14 0.59 0.92 1.58
----------------------------------------------------------------------------------------------------------------
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 BVMs. The dollar-
per-ton values that DOE used are discussed in section IV.L of this
document. Table V.28 presents the present value for NOX
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.29 presents similar results for
SO2 emissions reductions. The results in these tables
reflect the 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.28--Present Value of NOX Emissions Reduction for Refrigerated
Bottled or Canned Beverage Vending Machines Shipped in 2028-2057
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
million 2021$
-------------------------------
1....................................... 88 33
2....................................... 121 46
3....................................... 185 70
4....................................... 197 75
5....................................... 294 111
------------------------------------------------------------------------
[[Page 34016]]
Table V.29--Present Value of SO2 Emissions Reduction for Refrigerated
Bottled or Canned Beverage Vending Machines Shipped in 2028-2057
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
million 2021$
-------------------------------
1....................................... 34 13
2....................................... 47 18
3....................................... 72 28
4....................................... 76 29
5....................................... 114 44
------------------------------------------------------------------------
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
direct PM and other co-pollutants may be significant. DOE has not
included monetary benefits of the reduction of Hg emissions because the
amount of reduction is very small.
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.30 presents the NPV values that result from adding the
estimates of the potential economic benefits resulting from reduced
GHG, NOX, and SO2 emissions to the NPV of
consumer benefits calculated for each TSL considered in this proposed
rulemaking. The consumer benefits are domestic U.S. monetary savings
that occur as a result of purchasing the covered equipment, and are
measured for the lifetime of products shipped in 2028-2057. 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 BVMs shipped in 2028-2057.
Table V.30--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Using 3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% average SC-GHG case.......... 0.30 0.41 0.52 0.56 0.15
3% average SC-GHG case.......... 0.35 0.47 0.62 0.66 0.31
2.5% average SC-GHG case........ 0.38 0.52 0.70 0.74 0.43
3% 95th percentile SC-GHG case.. 0.47 0.65 0.89 0.95 0.74
----------------------------------------------------------------------------------------------------------------
Using 7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% average SC-GHG case.......... 0.13 0.18 0.21 0.23 (0.02)
3% average SC-GHG case.......... 0.18 0.24 0.31 0.33 0.14
2.5% average SC-GHG case........ 0.21 0.29 0.39 0.41 0.26
3% 95th percentile SC-GHG case.. 0.30 0.41 0.58 0.62 0.56
----------------------------------------------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered equipment
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
BVMs at each TSL, beginning with the max-tech 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.
1. Benefits and Burdens of TSLs Considered for BVM Standards
Table V.31 and Table V.32 summarize the quantitative impacts
estimated for each TSL for BVMs. The national impacts are measured over
the lifetime of BVMs purchased in the 30-year period that begins in the
anticipated year of compliance with amended standards (2028-2057). The
energy savings, emissions reductions, and value of emissions reductions
refer to FFC results. The efficiency levels contained in each TSL are
described in section V.A of this document.
[[Page 34017]]
Table V.31--Summary of Analytical Results for Refrigerated Bottled or Canned Beverage Vending Machine TSLs:
National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads........................... 0.04 0.056 0.086 0.092 0.14
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 1.4 1.9 2.9 3.0 4.5
CH4 (thousand tons)............. 9 13 20 21 31
N2O (thousand tons)............. 0.01 0.02 0.03 0.03 0.05
NOX (thousand tons)............. 2.1 2.9 4.4 4.7 7.1
SO2 (thousand tons)............. 0.6 0.8 1.3 1.4 2.0
Hg (tons)....................... 0.004 0.005 0.008 0.009 0.013
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 0.17 0.24 0.32 0.33 0.47
Climate Benefits *.............. 0.06 0.09 0.13 0.14 0.21
Health Benefits **.............. 0.12 0.17 0.26 0.27 0.41
Total Benefits [dagger]......... 0.36 0.49 0.71 0.75 1.09
Consumer Incremental Product 0.01 0.02 0.08 0.08 0.78
Costs [Dagger].................
Consumer Net Benefits........... 0.16 0.22 0.23 0.25 (0.31)
Total Net Benefits.............. 0.35 0.47 0.62 0.66 0.31
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 0.07 0.10 0.13 0.14 0.19
Climate Benefits *.............. 0.06 0.09 0.13 0.14 0.21
Health Benefits **.............. 0.05 0.06 0.10 0.10 0.15
Total Benefits [dagger]......... 0.18 0.25 0.36 0.38 0.56
Consumer Incremental Product 0.00 0.01 0.05 0.05 0.42
Costs [Dagger].................
Consumer Net Benefits........... 0.07 0.09 0.08 0.09 (0.23)
Total Net Benefits.............. 0.18 0.24 0.31 0.33 0.14
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with automatic commercial ice makers shipped in 2028-
2057. These results include benefits to consumers that accrue after 2057 from the products shipped in 2028-
2057.
* 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; however, DOE emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits
of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** 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 DOE does not have a single central SC-GHG point estimate. DOE emphasizes the
importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs.
Table V.32 Summary of Analytical Results for Refrigerated Bottled or Canned Beverage Vending Machine TSLs:
Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1* TSL 2* TSL 3* TSL 4* TSL 5*
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No-new-standards case INPV 85.3 to 85.3 to 82.9 to 83.6 to 56.3 to
= 85.5)................................................. 85.4 85.5 86.1 85.9 68.0
Industry NPV (% change).................................. (0.2) to (0.2) to (3.0) to (2.2) to (34.1) to
0 0 0.8 0.6 (20.4)
----------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
Class A.................................................. $150 $203 $99 ($6) ($823)
Class B.................................................. $167 $212 $117 $198 ($280)
Combo A.................................................. $212 $263 $89 $207 ($851)
Combo B.................................................. $214 $310 $37 $239 ($245)
Shipment-Weighted-Average\*\............................. $166 $220 $98 $92 ($625)
----------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Class A.................................................. 0.5 0.7 4.0 5.7 23.5
Class B.................................................. 0.6 0.7 3.6 1.4 10.5
[[Page 34018]]
Combo A.................................................. 0.4 0.5 3.8 1.4 19.5
Combo B.................................................. 0.4 0.9 5.1 2.2 10.9
Shipment-Weighted-Average *.............................. 0.5 0.7 4.0 3.8 18.5
----------------------------------------------------------------------------------------------------------------
Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Class A.................................................. 0% 0% 28% 59% 94%
Class B.................................................. 0 0 24 4 88
Combo A.................................................. 0 0 41 3 99
Combo B.................................................. 0 0 53 0 85
Shipment-Weighted-Average *.............................. 0 0 30 33 92
----------------------------------------------------------------------------------------------------------------
* Weighted by shares of each product class in total projected shipments in 2028.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. At this level DOE expects that all equipment classes
would represent EL7, which would require VIPs, variable-speed
compressors, permanent magnet synchronous evaporator and condenser fan
motors, microchannel condensers, refrigeration low power modes (tested
in accordance to the DOE test procedure), and evaporator fan controls
for all equipment classes. Further, DOE expects that Class A and
Combination A machines would require automatic lighting controls
(tested in accordance to the DOE test procedure) and vacuum insulated
glass doors. TSL 5 would save an estimated 0.14 quads of energy, an
amount DOE considers significant. Under TSL 5, the NPV of consumer
benefit would be -$0.23 billion using a discount rate of 7 percent, and
-$0.31 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 4.5 Mt of
CO2, 2.0 thousand tons of SO2, 7.1 thousand tons
of NOX, 0.013 tons of Hg, 31 thousand tons of
CH4, and 0.05 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 $0.21 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 5 is $0.15 billion using a 7-percent discount rate and $0.41
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 $0.14
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 5 is $0.31 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
proposed standard level is economically justified.
At TSL 5, the shipment weighted average LCC impact for an affected
consumer is a cost of $532. The average LCC impact for Class A is a
cost of $695, a cost of $199 for Class B, a cost of $851 for Combo A,
and a cost of $239 for Combo B. The average simple payback period is
18.3 years for Class A, 9.2 years for Class B, 19.5 years for Combo A,
and 10.9 years for Combo B. The shipment-weighted average simple
payback period for all equipment classes is 15.2 years. The fraction of
consumers experiencing a net LCC cost is 93 percent for Class A, 84
percent for Class B, 99 percent for Combo A, 85 percent for Combo B.
The shipment weighted average fraction of consumers experiencing a net
cost is 90 percent across all BVM equipment classes.
At TSL 5, the projected change in INPV ranges from a decrease of
$29.2 million to a decrease of $17.5 million, which corresponds to
decreases of 34.1 percent and 20.4 percent, respectively. DOE estimates
that industry must invest $36.5 million to comply with standards set at
TSL 5. There are five BVM manufacturers that manufacture equipment
covered by this rulemaking. None of the five BVM manufacturers offers
models that meet the efficiency level required at TSL 5 for BVMs in any
product class. DOE expects manufacturers to adopt vacuum insulated
panels at TSL 5. The use of vacuum insulated panels would require
manufacturers to redesign their equipment offerings and invest heavily
in new cabinet fixtures, significantly increasing conversion costs.
The Secretary tentatively concludes that at TSL 5 for BVMs, the
benefits of energy savings, emission reductions, and the estimated
monetary value of the emissions reductions would be outweighed by the
negative NPV of consumer benefits and the economic burden on many
consumers, as well as the impacts on manufacturers, including the large
conversion costs, profit margin impacts that could result in a large
reduction in INPV, and the lack of manufacturers currently offering
products meeting the efficiency levels required at this TSL, including
most small businesses. A majority of BVM consumers (90 percent) would
experience a net cost and the average LCC savings would be negative (-
$532). The potential reduction in INPV could be as high as 34.1
percent. Additionally, no BVM manufacturer offers models that meet the
efficiency level required at TSL 5 for BVMs covered by this rulemaking.
Consequently, the Secretary has tentatively concluded that TSL 5 is not
economically justified.
DOE then considered TSL 4, which represents EL6 for Class A, EL4
for Class B, EL4 for Combo A, and EL5 for Combo B. At these efficiency
levels, DOE expects that all equipment classes would require improved-
efficiency evaporator and condenser fan motors (in many cases ECMs or
permanent magnet synchronous motors), refrigeration low power modes
(tested in accordance to the DOE test procedure), and evaporator fan
controls. Further, DOE expects that Class A machines would require
automatic lighting controls (tested in accordance to the DOE test
procedure), variable-speed compressors, and microchannel condensers;
Combination A machines would require automatic lighting controls
(tested in accordance to the DOE test procedure); and Combination B
machines would require microchannel condensers. TSL 4 would save an
estimated 0.09 quads of energy, an amount DOE considers significant.
Under TSL 4, the NPV of consumer benefit would be $0.09 billion using a
discount rate of 7 percent, and $0.25
[[Page 34019]]
billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 3.0 Mt of
CO2, 1.4 thousand tons of SO2, 4.7 thousand tons
of NOX, 0.009 tons of Hg, 21 thousand tons of
CH4, and 0.03 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 $0.14 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $0.10 billion using a 7-percent discount rate and $0.27
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 $0.33
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $0.66 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
proposed standard level is economically justified.
At TSL 4, the shipment weighted average LCC impact is a savings of
$97. The average LCC impact for Class A is a cost of $5.52, a savings
of $206 for Class B, savings of $190 for Combo A, and savings of $287
for Combo B. The simple payback period is 5.7 years for Class A, 1.2
years for Class B, 1.4 years for Combo A and 2.2 years for combo B. The
shipment weighted average simple payback period for all BVMs is 3.7
years. The fraction of consumers experiencing a net LCC cost is 59
percent for Class A, 2 percent for Class B, 12 percent for Combo A and
0 percent for Combo B. The shipment weighted average fraction of
consumers experiencing a net LCC cost is 34 percent.
At TSL 4, the projected change in INPV ranges from a decrease of
$1.9 million to an increase of $0.5 million, which correspond to a
decrease of 2.2 percent and an increase of 0.6 percent, respectively.
DOE estimates that industry must invest $1.5 million to comply with
standards set at TSL 4. None of the 5 BVM manufacturers currently offer
models that meet the efficiency level required at TSL 4 for BVMs in any
product class. At TSL 5, the primary driver of high conversion costs is
the industry's investment to redesign both products and production
lines for the introduction of vacuum insulated panels. TSL 4 does not
require the incorporation of vacuum insulated panels, which in turn
reduces the need for redesigned models and new cabinet fixtures. This
reduces both the level of potential capital investment and the
engineering effort required to redesign equipment. At TSL 4, the
primary driver of conversion costs is the industry's investment to
redesign products for the incorporation of variable speed compressors,
more efficient evaporators and fan motors, and, for PC 1, triple pane
glass packs.
After considering the analysis and weighing the benefits and
burdens, the Secretary has tentatively concluded that at a standard set
at TSL 4 for BVMs is economically justified. At this TSL, the average
LCC savings for BVM consumers across all equipment classes is positive
with 34 percent of consumers negatively impacted. The NPV of consumer
benefits is positive at each equipment class at both 3-percent and 7-
percent discount rates. Further, TSL 4 represents the maximum NPV of
consumer benefits out of all TSLs at a 3-percent discount rate. The
shipment weighted average LCC impact is a positive savings of $97 at
TSL 4, including a cost of $6 for Class A BVMs. This $6 cost represents
0.06 percent of the average LCC for the equipment ($9,551). Further,
the LCC calculations are based on equipment to be installed on the
compliance year of the proposed rule. However, the costs for higher
efficiency PMS fan motors as well as for variable speed compressors
which may be incorporated in the manufacture of Class A BVMs at TSL 4
is projected to drop quickly in subsequent years, shifting the small
negative LCC for Class A to a positive value quickly and resulting in
both consumer LCC benefits and overall net consumer NPV benefits (see
discussion of equipment price trends in Chapter 8 of the NOPR TSD).
Approximately 7% of the installed cost to the customer for Class A
equipment at TSL 4 ($4,228 shown in Table V.4) are expected to be in
components which DOE anticipates to experience experiential learning
price drops of approximately 5.9% year over year. Thus by year 2 of the
rule the expected cost reduction in Class A is approximately $17 at TSL
4. The anticipated market in the no new standards case has
approximately 95 percent of the market at EL3 and below and these
basecase efficiency equipment would not experience similar component-
level experiential learning. Thus DOE predicts an average reduction in
the incremental installed cost for Class A equipment by year 2 of the
rule of approximately $16.40 over the no-new standards case. Assuming
equipment installed in year 2 will have similar energy benefits to
equipment installed in year 1 over the no new standards case, the
reduction in first cost for equipment installed in year 2 will more
than offset the small negative $6 LCC savings shown for year 1 of the
rule. DOE recognizes that the fraction of consumers of Class A
equipment in the compliance year is negative is more than one-half of
the affected customers, but similarly believes that this will change
within a short few years into the analysis period for the reasons
previously illustrated. Given that Class A NPVs are strongly positive
at both 3-percent and 7-percent discount rates, DOE has determined that
the small LCC cost for Class A in TSL 4 in year one of the analysis
period did not outweigh the NPV benefits that would accrue to consumers
over the analysis period. Thus, DOE has determined that TSL 4 would be
economically justified.
The FFC national energy savings are significant and the NPV of
consumer benefits is positive using both a 3-percent and 7-percent
discount rate. Notably, the benefits to consumers vastly 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 40
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 $0.14 billion in
climate benefits (associated with the average SC-GHG at a 3-percent
discount rate), and $0.27 billion (using a 3-percent discount rate) or
$0.10 billion (using a 7-percent discount rate) in health benefits--the
rationale becomes stronger still.
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 while TSL 5
would provide for over 50% higher energy savings and significantly
greater climate and health benefits from
[[Page 34020]]
emission reductions than TSL 4, the consumer net benefits at TSL 5 are
negative whereas those at TSL 4 are positive. Further both the consumer
net benefits and the total net benefits, including the monetized
benefits from emission reductions, at TSL 4 exceed those at TSL 5 as
well as those of the other TSLs examined by DOE. When comparing TSL 4
to TSL 3, DOE notes that the shipment weighted average LCC savings for
TSL 4 is less than at TSL 3 by $10, but the shipment weighted average
PBP at TSL 4 of 3.7 years, is lower than TSL 3, at 3.8 years. At TSL 4,
the shipment weighted average fraction of customers experiencing a net
LCC cost is 34 percent, only slightly greater than the 28 percent
estimated for TSL 3. Taken as a whole for the BVM market, the LCC and
payback impact on consumers at TSL 3 and TSL 4 are very similar. The
consumer net benefits at TSL 4 exceed those of TSL 3 due to the energy
savings and the total net benefits including monetized benefits of
emission reductions. These additional savings and benefits at TSL 4 are
significant. Thus, DOE considers the impacts to be, as a whole,
economically justified at TSL 4.
Although DOE considered proposed amended standard levels for BVMs
by grouping the efficiency levels for each equipment class into TSLs,
DOE evaluates all analyzed efficiency levels in its analysis. For all
equipment classes except Class A, TSL 4 represents the maximum TSL that
results in LCC savings and for these classes less than 5 percent of the
consumers experience an LCC cost. For Class A, the average LCC savings
was -$6 over the life of the equipment and 59% of consumers experience
negative LCC savings. As noted previously however, the average LCC cost
is small relative to the life-cycle cost of Class A equipment and the
expected reduction in cost of specific components used for Class A at
TSL 4 including variable speed compressors and permanent magnet
synchronous fan motors is anticipated to change the incremental
equipment costs such that the small LCC cost experienced by Class A
purchasers in the compliance year will not be experienced in subsequent
years. Although DOE acknowledges the negative LCC impacts seen in Class
A, given that the weighted average LCC benefits across all classes are
positive at TSL 4, DOE has tentatively determined that TSL 4 is
economically justified.
Therefore, based on the previous considerations, DOE proposes to
adopt the energy conservation standards for BVMs at TSL 4. The proposed
amended energy conservation standards for BVMs, which are expressed as
kWh/day, are shown in Table V.33.
Table V.33--Proposed Amended Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
Maximum daily energy
Equipment class consumption kilowatt hours
per day
------------------------------------------------------------------------
Class A................................... 0.029 x V* + 1.34
Class B................................... 0.029 x V* + 1.21
Combination A............................. 0.048 x V* + 1.50
Combination B............................. 0.052 x V* + 0.96
------------------------------------------------------------------------
* V is the representative value of refrigerated volume (ft\3\) of the
BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
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$) of the
benefits from operating products that meet the proposed standards
(consisting primarily of operating cost savings from using less energy,
minus increases in product purchase costs), and (2) the annualized
monetary value of the climate and health benefits from emission
reductions.
Table V.34 shows the annualized values for BVMs under TSL 4,
expressed in 2021$. 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 BVMs is $5.8 million per year in increased
equipment costs, while the estimated annual benefits are $16 million
from reduced equipment operating costs, $8.5 million from GHG
reductions, and $12 million from reduced NOX and
SO2 emissions. In this case, the net benefit amounts to $30
million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards for BVMs is $4.9 million per
year in increased equipment costs, while the estimated annual benefits
are $20 million in reduced operating costs, $8.5 million from GHG
reductions, and $16 million from reduced NOX and
SO2 emissions. In this case, the net benefit amounts to $39
million per year.
Table V.34--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Refrigerated Bottled or
Canned Beverage Vending Machines (TSL 4)
----------------------------------------------------------------------------------------------------------------
Million 2021$/year
-----------------------------------------------------------------
Low net benefits High net benefits
Primary estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings............... 20 19 20
Climate Benefits *............................ 8.5 8.5 8.5
Health Benefits **............................ 16 16 17
Total Benefits [dagger]....................... 44 44 45
Consumer Incremental Product Costs [Dagger]... 4.9 5.2 4.9
Net Benefits.................................. 39 38 40
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings............... 16 15 16
Climate Benefits * (3% discount rate)......... 8.5 8.5 8.5
Health Benefits **............................ 12 12 12
Total Benefits [dagger]....................... 36 35 36
Consumer Incremental Product Costs [Dagger]... 5.8 6.0 5.7
[[Page 34021]]
Net Benefits.................................. 30 29 31
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results
include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. 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 sections IV.F.1 and 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 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 sets of 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. In the
absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
presents monetized 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but DOE does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.
D. Reporting, Certification, and Sampling Plan
Manufacturers, including importers, must use product-specific
certification templates to certify compliance to DOE. For BVM
equipment, the certification template reflects the general
certification requirements specified at 10 CFR 429.12 and the product-
specific requirements specified at 10 CFR 429.52. DOE is not proposing
to amend the product-specific certification requirements for this
equipment.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving
Regulation and Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011) and E.O.
14094, ``Modernizing Regulatory Review,'' 88 FR 21879 (April 11, 2023),
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 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 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 final regulatory action does not constitute a
``significant regulatory action'' within the scope of section 3(f) of
E.O. 12866. Accordingly, this action was not submitted to OIRA for
review under E.O. 12866.
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 equipment that is the subject of
this proposed rulemaking.
For manufacturers of BVMs, 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
[[Page 34022]]
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. Manufacturing of BVMs is
classified under NAICS 333310, ``Commercial and Service Industry
Machinery Manufacturing.'' The SBA sets a threshold of 1,000 employees
or fewer for an entity to be considered as a small business for this
category.
1. Description of Reasons Why Action Is Being Considered
DOE is proposing amended energy conservation standards for BVMs.
EPCA directed DOE to prescribe energy conservation standards for BVMs
not later than 4 years after August 8, 2005. (42 U.S.C. 6295(v)(1)) DOE
has completed this proposed rulemaking. 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 proposed
rulemaking is in accordance with DOE's obligations under EPCA.
2. Objectives of, and Legal Basis for, Rule
DOE is conducting this proposed rulemaking to fulfill its statutory
obligation under EPCA to 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 not later than 6
years after the issuance of any final rule establishing or amending a
standard. (42 U.S.C. 6295(m)(1)) DOE must follow specific statutory
criteria for prescribing new or amended standards for covered products,
including BVMs. Specifically, 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 determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42
U.S.C. 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)(B))
3. Description on Estimated Number of Small Entities Regulated
To estimate the number of companies that could be small business
manufacturers of products covered by this proposed rulemaking, DOE
conducted a market survey using public information and subscription-
based company reports to identify potential small manufacturers. DOE's
research involved DOE's Compliance Certification Database (CCD),\74\
California Energy Commission's Modernized Appliance Efficiency Database
System directory,\75\ individual company websites, and market research
tools (e.g., reports from Dun & Bradstreet \76\) to create a list of
companies that manufacture, produce, import, or assemble the products
covered by this rulemaking. DOE also asked stakeholders and industry
representatives if they were aware of any other small manufacturers
during manufacturer interviews and at DOE public meetings. 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.
---------------------------------------------------------------------------
\74\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
\75\ California Energy Commission, Modernized Appliance
Efficiency Database System. (Last accessed September 30, 2022.)
cacertappliances.energy.ca.gov/Pages/Search/AdvancedSearch.aspx.
\76\ The Dun & Bradstreet Hoovers login is available at
app.dnbhoovers.com.
---------------------------------------------------------------------------
DOE identified five OEMs of BVMs sold in the United States. Of the
five OEMs, DOE identified two small, domestic manufacturers affected by
proposed amended standards for BVM equipment. The first small business
is an OEM of Class A, Class B, and Combo A equipment. The second small
business is an OEM of Class B, Combo A, and Combo B equipment.
DOE reached out to these small businesses and invited them to
participate in voluntary interviews. DOE also requested information
about small businesses and potential impacts on small businesses while
interviewing large manufacturers.
DOE requests comment on the number of small, domestic OEMs in the
industry.
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
The first small business is an OEM that certifies ten basic models
of Class A BVMs, two basic models of Class B BVMs, and eight basic
models of Combo A BVMs. One of the 20 basic models would meet the
proposed amended standards. In total, the company would need to
redesign 19 basic models.
DOE estimated the first small business would need to invest
$800,000 in product conversion costs to redesign all 19 basic models.
DOE's engineering analysis indicates manufacturers would be able to
produce compliant products on existing production lines with minimal
capital investments. DOE's estimate of the product conversion costs is
based on feedback from manufacturers, which indicated they would need
to invest in redesigning Class A, Class B, and Combo A products to
incorporate design options such as variable speed compressors, more
efficient motors, larger heat exchangers, variable speed compressors,
and triple pane glass packs. DOE estimated the cost of this redesign
per model, and multiplied that cost by the number of models that would
need to be redesigned by the first small business. DOE's analysis
focused on the investments associated with amended standards;
investments associated with changes in regulations by other Federal
agencies (i.e., refrigerant regulations) are not attributed to amended
standards. Based on market research tools, DOE estimated the company's
annual revenue to be $27 million. Taking into account the three-year
conversion period, DOE expects conversion costs to be 1.0% of
conversion period revenue.
The second small business is an OEM that certifies one basic model
of Class B BVMs, five basic models of Combo A BVMs, and one basic model
of Combo B BVMs. None of the company's BVM models would meet the
proposed amended standards. In total, the company would need to
redesign seven basic models.
DOE estimated the company would need to invest $100,000 in product
conversion costs to redesign all seven basic models. DOE's estimate of
the product conversion costs is based on feedback from manufacturers,
which indicated they would need to invest in redesigning Class B, Combo
A, and Combo B products to incorporate design options such as variable
speed compressors, more efficient motors, larger heat exchangers, and
variable speed compressors. DOE estimated the cost of this redesign per
model, and multiplied that cost by the number of models that would need
to be redesigned by the second small business. DOE's engineering
analysis design options suggest manufacturers would be able to produce
compliant products on existing production lines with minimal capital
investments.
[[Page 34023]]
DOE's analysis focused on the investments associated with amended
standards; investments associated with changes in regulations by other
Federal agencies (i.e., refrigerant regulations) are not attributed to
amended standards. Based on market research tools, DOE estimated the
company's annual revenue to be $72 million. Taking into account the
three-year conversion period, DOE expects conversion costs to be 0.1%
of conversion period revenue.
DOE requests comment on the potential impacts of the proposed
standard on small business manufacturing of BVMs, including the extent
of model redesign and manufacturing lines changes necessitated by
standards.
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 this 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, they would come at the expense of a reduction in energy
savings. TSL 1 achieves 56 percent lower energy savings compared to the
energy savings at TSL 4. TSL 2 achieves 39 percent lower energy savings
compared to the energy savings at TSL 4. TSL 3 achieves 6 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 BVM 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 BVM equipment must certify to DOE that their
equipment comply with any applicable energy conservation standards. In
certifying compliance, manufacturers must test their products according
to the DOE test procedures for BVM equipment, 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 BVM equipment.
(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. The 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.
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
proposed 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 equipment that is 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 E.O. 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
[[Page 34024]]
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 E.O. 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. Public Law 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 energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
This rule does not contain a Federal intergovernmental mandate, nor
is it expected to require expenditures of $100 million or more in any
one year by the private sector. As a result, the analytical
requirements of UMRA do not apply.
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 E.O. 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 BVM equipment, 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 Federal 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.\77\ Generation of this report involved a
[[Page 34025]]
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 DOE's
analyses. DOE is in the process of evaluating the resulting report.\78\
---------------------------------------------------------------------------
\77\ The 2007 Energy Conservation Standards Rulemaking Peer
Review Report is available at the following website: www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0. Last accessed Feb. 13, 2023.
\78\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
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VII. Public Participation
A. Participation in the 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: www.energy.gov/eere/buildings/public-meetings-and-comment-deadlines. 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 an interest in the topics addressed in this
proposed rule, or who is representative of a group or class of persons
that has an interest in these issues, may request an opportunity to
make an oral presentation at the webinar. Such persons may submit a
request to [email protected]. Persons who wish to
speak should include with their request a computer file in WordPerfect,
Microsoft Word, PDF, or text (ASCII) file format that briefly describes
the nature of their interest in this proposed rulemaking and the topics
they wish to discuss. Such persons should also provide a daytime
telephone number where they can be reached.
C. Conduct of the Webinar
DOE will designate a DOE official to preside at the webinar 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 webinar. 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 webinar and until the end of the comment
period, interested parties may submit further comments on the
proceedings and any aspect of the proposed rulemaking.
The webinar will be conducted in an informal, conference style. DOE
will conduct a general overview of the topics addressed in this
proposed rulemaking, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this proposed 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 permit, 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 proposed
rulemaking. The official conducting the webinar 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 above procedures that may be needed for the proper
conduct of the webinar.
A transcript of the webinar will be included in the docket, which
can be viewed as described in the Docket section at the beginning of
this document. 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
[[Page 34026]]
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. 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 to [email protected] 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.
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 revise the definition
of Combination A.
(2) DOE requests comments on its proposal to use baseline levels
for BVM equipment based upon the design changes made by manufacturers
in response to the December 2022 EPA NOPR.
(3) DOE further requests comment on its estimates of energy use
reduction associated with the design changes made by manufacturers in
response to the December 2022 EPA NOPR.
(4) DOE request comments on the frequency and nature of compressor
and motor repairs or replacements in BVMs.
(5) DOE seeks comment on the method for estimating manufacturing
production costs.
(6) DOE requests comment on how to address the climate benefits and
other non-monetized effects of the proposal.
(7) DOE requests information regarding the impact of cumulative
regulatory burden on manufacturers of BVMs associated with multiple DOE
standards or product-specific regulatory actions of other Federal
agencies.
(8) DOE requests comment on the number of small, domestic OEMs in
the industry.
(9) DOE requests comment on the potential impacts of the proposed
standard on small business manufacturing of BVMs, including the extent
of model redesign and manufacturing lines changes necessitated by
standards.
Additionally, DOE welcomes comments on other issues relevant to the
conduct of this proposed 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 431
Administrative practice and procedure, Confidential business
information, Energy conservation test procedures, Reporting and
recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on May 1,
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 the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on May 5, 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 431 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
0
2. Amend Sec. 431.292 by revising the definition of ``Combination A''
to read as follows:
Sec. 431.292 Definitions concerning refrigerated bottled or canned
beverage vending machines.
* * * * *
Combination A means a combination vending machine where 25 percent
or more of the surface area on the front side of the beverage vending
machine that surrounds the refrigerated compartment(s) is transparent.
* * * * *
0
3. Revise Sec. 431.296 to read as follows:
Sec. 431.296 Energy conservation standards and their effective dates.
(a) Each refrigerated bottled or canned beverage vending machine
manufactured on or after January 8, 2019 and before [date 3 years after
date of publication of final rule in the Federal Register], shall have
a daily energy consumption (in kilowatt hours per day), when measured
in accordance with the DOE test procedure at Sec. 431.294, that does
not exceed the following:
[[Page 34027]]
------------------------------------------------------------------------
Maximum daily energy
Equipment class consumption (kilowatt hours
per day)
------------------------------------------------------------------------
Class A................................... 0.052 x V [dagger] + 2.43.
Class B................................... 0.052 x V [dagger] + 2.20.
Combination A............................. 0.086 x V [dagger] + 2.66.
Combination B............................. 0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
(ft\3\) of the BVM model, as calculated pursuant to 10 CFR
429.52(a)(3).
(b) Each refrigerated bottled or canned beverage vending machine
manufactured on or after [date 3 years after date of publication of
final rule in the Federal Register], shall have a daily energy
consumption (in kilowatt hours per day), when measured in accordance
with the DOE test procedure at Sec. 431.294, that does not exceed the
following:
------------------------------------------------------------------------
Maximum daily energy
Equipment class consumption (kilowatt hours
per day)
------------------------------------------------------------------------
Class A................................... 0.029 x V [dagger] + 1.34.
Class B................................... 0.029 x V [dagger] + 1.21.
Combination A............................. 0.048 x V [dagger] + 1.50.
Combination B............................. 0.052 x V [dagger] + 0.96.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
(ft\3\) of the BVM model, as calculated pursuant to 10 CFR
429.52(a)(3).
[FR Doc. 2023-09968 Filed 5-24-23; 8:45 am]
BILLING CODE 6450-01-P