Energy Conservation Program: Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment, 58947-59020 [2014-22894]
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Vol. 79
Tuesday,
No. 189
September 30, 2014
Part IV
Department of Energy
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10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for Small,
Large, and Very Large Air-Cooled Commercial Package Air Conditioning
and Heating Equipment; Proposed Rule
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Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 / Proposed Rules
DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE–2013–BT–STD–
0007]
RIN 1904–AC95
Energy Conservation Program: Energy
Conservation Standards for Small,
Large, and Very Large Air-Cooled
Commercial Package Air Conditioning
and Heating Equipment
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking
(NOPR) and public meeting.
AGENCY:
The Energy Policy and
Conservation Act of 1975 (EPCA), as
amended, prescribes energy
conservation standards for various
consumer products and certain
commercial and industrial equipment,
including small, large, and very large
air-cooled commercial package air
conditioning and heating equipment.
EPCA also requires the U.S. Department
of Energy (DOE) to determine whether
more-stringent, amended standards
would be technologically feasible and
economically justified, and would save
a significant amount of energy. In this
document, DOE proposes to amend the
energy conservation standards for small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment. This document
also announces a public meeting to
receive comment on these proposed
standards and associated analyses and
results.
DATES: DOE will hold a public meeting
on Thursday, November 6, 2014, from 9
a.m. to 4 p.m., in Washington, DC. The
meeting will also be broadcast as a
webinar. See section VII Public
Participation for webinar registration
information, participant instructions,
and information about the capabilities
available to webinar participants.
DOE will accept comments, data, and
information regarding this notice of
proposed rulemaking (NOPR) before and
after the public meeting, but no later
than December 1, 2014. See section VII
Public Participation for details.
ADDRESSES: The public meeting will be
held at the U.S. Department of Energy,
Forrestal Building, Room 4A–104, 1000
Independence Avenue SW.,
Washington, DC 20585. To attend,
please notify Ms. Brenda Edwards at
(202) 586–2945. Please note that foreign
nationals visiting DOE Headquarters are
subject to advance security screening
procedures. Any foreign national
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SUMMARY:
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wishing to participate in the meeting
should advise DOE as soon as possible
by contacting Ms. Edwards to initiate
the necessary procedures. Please also
note that those wishing to bring laptops
into the Forrestal Building will be
required to obtain a property pass.
Visitors should avoid bringing laptops,
or allow an extra 45 minutes. Persons
can attend the public meeting via
webinar. For more information, refer to
the Public Participation section VII.
Any comments submitted must
identify the NOPR for Energy
Conservation Standards for small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment, and provide docket number
EE–2013–BT–STD–0007 and/or
regulatory information number (RIN)
number 1904–AC95. Comments may be
submitted using any of the following
methods:
1. Federal eRulemaking Portal:
www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: CommPkgACHP2013
STD0007@ee.doe.gov. Include the
docket number and/or RIN in the
subject line of the message.
3. Mail: Ms. Brenda Edwards, U.S.
Department of Energy, Building
Technologies Program, Mailstop EE–5B,
1000 Independence Avenue SW.,
Washington, DC 20585–0121. If
possible, please submit all items on a
CD. It is not necessary to include
printed copies.
4. Hand Delivery/Courier: Ms. Brenda
Edwards, U.S. Department of Energy,
Building Technologies Program, 950
L’Enfant Plaza SW., Suite 600,
Washington, DC 20024. Telephone:
(202) 586–2945. If possible, please
submit all items on a CD, in which case
it is not necessary to include printed
copies.
Written comments regarding the
burden-hour estimates or other aspects
of the collection-of-information
requirements contained in this proposed
rule may be submitted to Office of
Energy Efficiency and Renewable
Energy through the methods listed
above and by email to Chad_S_
Whiteman@omb.eop.gov.
For detailed instructions on
submitting comments and additional
information on the rulemaking process,
see section VII of this document (Public
Participation).
Docket: The docket, which includes
Federal Register notices, public meeting
attendee lists and transcripts,
comments, and other supporting
documents/materials, is available for
review at regulations.gov. All
documents in the docket are listed in
the regulations.gov index. However,
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some documents listed in the index,
such as those containing information
that is exempt from public disclosure,
may not be publicly available.
A link to the docket Web page can be
found at: https://www.regulations.gov/#
!docketDetail;D=EERE-2013-BT-STD0007. This Web page will contain a link
to the docket for this notice on the
regulations.gov site. The regulations.gov
Web page will contain simple
instructions on how to access all
documents, including public comments,
in the docket. See section VII for further
information on how to submit
comments through
www.regulations.gov.
For further information on how to
submit a comment, review other public
comments and the docket, or participate
in the public meeting, contact Ms.
Brenda Edwards at (202) 586–2945 or by
email: Brenda.Edwards@ee.doe.gov.
FOR FURTHER INFORMATION CONTACT: Mr.
John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and
Renewable Energy, Building
Technologies Program, EE–5B, 1000
Independence Avenue SW.,
Washington, DC 20585–0121.
Telephone: (202)–287–1692. Email:
John.Cymbalsky@ee.doe.gov.
Mr. Michael Kido, U.S. Department of
Energy, Office of the General Counsel,
Mailstop GC–71, 1000 Independence
Avenue SW., Washington, DC 20585–
0121. Telephone: (202) 586–8145.
Email: Michael.Kido@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
A. Benefits and Costs to Customers
B. Impact on Manufacturers
C. National Benefits
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for
Small, Large, and Very Large Air-Cooled
Commercial Package Air Conditioning
and Heating Equipment
III. General Discussion
A. Energy Efficiency Descriptor
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and
Consumers
b. Life-Cycle Cost
c. Energy Savings
d. Lessening of Utility or Performance of
Products
e. Impact of Any Lessening of Competition
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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. General
2. Scope of Coverage and Equipment
Classes
3. Technology Options
B. Screening Analysis
C. Engineering Analysis
1. Methodology
2. Baseline Efficiency Levels
3. Incremental Efficiency Levels
4. Equipment Testing, Reverse Engineering,
Energy Modeling, and Cost-Efficiency
Results
D. Markups Analysis
E. Energy Use Analysis
1. Energy Use Simulations
2. Generalized Building Sample
F. Life-Cycle Cost and Payback Period
Analysis
1. Equipment Costs
2. Installation Costs
3. Unit Energy Consumption
4. Electricity Prices and Electricity Price
Trends
5. Maintenance Costs
6. Repair Costs
7. Lifetime
8. Discount Rate
9. Base Case Market Efficiency Distribution
10. Compliance Date
11. Payback Period Inputs
12. Rebuttable-Presumption Payback
Period
G. Shipments Analysis
1. Shipments by Market Segment
2. Shipment Market Shares by Efficiency
Level
H. National Impact Analysis
1. Efficiency Trends
2. National Energy Savings
3. Net Present Value of Customer Benefit
a. Total Annual Installed Cost
b. Total Annual Operating Cost Savings
I. Customer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
a. Government Regulatory Impact Model
Key Inputs
b. Government Regulatory Impact Model
Scenarios
c. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other
Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions
Reductions
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results
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A. Trial Standard Levels
B. Economic Justification and Energy
Savings
1. Economic Impacts on Individual
Customers
a. Life-Cycle Cost and Payback Period
b. Customer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Customer Costs and
Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Summary of National Economic Impacts
8. Other Factors
C. Proposed Standards
1. Benefits and Burdens of Trial Standard
Levels Considered for Small, Large, and
Very Large Air-Cooled Commercial
Package Air Conditioning and Heating
Equipment
2. Summary of Benefits and Costs
(Annualized) of the Proposed Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
and 13563
B. Review Under the Regulatory Flexibility
Act
1. Description and Estimated Number of
Small Entities Regulated
2. Description and Estimate of Compliance
Requirements
3. Duplication, Overlap, and Conflict with
Other Rules and Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction
Act
D. Review Under the National
Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared
General Statements For Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
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VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
Title III, Part B 1 of the Energy Policy
and Conservation Act of 1975 (EPCA or
the Act), Public Law 94–163 (42 U.S.C.
6291–6309, as codified), established the
Energy Conservation Program for
Consumer Products Other Than
Automobiles. Pursuant to EPCA, any
new or amended energy conservation
standard that DOE prescribes for certain
equipment, such as small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment (also known as commercial
unitary air conditioners and heat
pumps), shall be designed to achieve the
maximum improvement in energy
efficiency that is technologically
feasible and economically justified. (42
U.S.C. 6313(a)(6)(A)(ii)(II)).
Furthermore, the new or amended
standard must result in a significant
conservation of energy. (42 U.S.C.
6313(a)(6)(A)(ii)(II)). In accordance with
these and other statutory provisions
discussed in this notice, including
EPCA’s requirement that DOE review its
standards for this equipment every six
years, DOE proposes amended energy
conservation standards for small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment (also referred to in this
notice as small, large, and very large aircooled commercial unitary air
conditioners and commercial unitary
heat pumps). The proposed standards,
which are collectively characterized as
Trial Standard Level 3 (TSL 3),
prescribe the minimum allowable
efficiency level based on an integrated
energy efficiency ratio (IEER) and, for
air-cooled commercial unitary heat
pumps, coefficient of performance
(COP). These proposed levels are shown
in Table I.1. These proposed standards,
if adopted, would apply to all
equipment listed in Table I.1 and
manufactured in and intended for
distribution and sale in the U.S., or
imported into, the U.S. on or after the
date three years after the publication of
the final rule for this equipment.
1 For editorial reasons, upon codification in the
U.S. Code, Part B was redesignated Part A.
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TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL, LARGE, AND VERY LARGE COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Equipment type
Heating type
Small Commercial Packaged Air Conditioners (AC)
and Heat Pump (HP) (Air-Cooled)—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity.
Proposed energy
conservation standard
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
14.8 IEER.
14.6 IEER.
HP
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
14.1
13.9
14.2
14.0
IEER, 3.5 COP.
IEER, 3.4 COP.
IEER.
IEER.
AC
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
13.4
13.2
13.5
13.3
IEER, 3.3 COP.
IEER, 3.3 COP.
IEER.
IEER.
HP
Large Commercial Packaged AC and HP (AirCooled)—≥135,000 Btu/h and <240,000 Btu/h
Cooling Capacity.
AC
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
12.5 IEER, 3.2 COP.
12.3 IEER, 3.2 COP.
AC
HP
Very Large Commercial Packaged AC and HP (AirCooled)—≥240,000 Btu/h and <760,000 Btu/h
Cooling Capacity.
A. Benefits and Costs to Customers
Table I.2 presents DOE’s evaluation of
the economic impacts of the proposed
standards on customers of small, large,
and very large air-cooled commercial
unitary air conditioners (CUAC), as
measured by the average life-cycle cost
(LCC) savings and the median payback
period.2 The average LCC savings are
positive for all CUAC equipment
classes, and the PBP is less than the
average lifetime of the equipment,
which is estimated to be 18.4 years.
These classes account for approximately
90 percent of total shipments of small,
large, and very large air-cooled CUAC
and commercial unitary heat pumps
(CUHP).3
TABLE I.2—IMPACTS OF PROPOSED STANDARDS ON CUSTOMERS OF SMALL, LARGE, AND VERY LARGE COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Average LCC
savings
(2013$)
Equipment class
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and <240,000 Btu/h Cooling Capacity .............
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity .....
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DOE’s analysis of the impacts of the
proposed standards on consumers is
described in section IV.F of this
proposed rulemaking.
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 (2014)
through the end of the analysis period
(2048). Using a real discount rate of 6.2
percent, DOE estimates that the industry
net present value for manufacturers is
$1,261 million.4 Under the proposed
standards, DOE expects that INPV will
be reduced by 7.02 to 24.71 percent,
which is a reduction of approximately
$88.55 to $311.58 million. Based on
comments from manufacturers of
covered equipment, the industry is
2 The payback period measures the amount of
time it takes for savings in operating costs to equal
the incremental cost increase.
3 DOE did not analyze LCC impacts for small,
large, and very large air-cooled CUHP because
energy modeling was performed only for CUAC
equipment. The reasons for this approach are
discussed in section IV.C.4.
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currently going through an extended
period of consolidation. It is possible
that the proposed standards would
contribute to continued consolidation.
DOE’s analysis of the impacts of the
proposed standards on manufacturers is
described in section IV.J of this
proposed rulemaking.
C. National Benefits and Costs
DOE’s analyses indicate that the
proposed standards would save a
significant amount of energy. The
lifetime savings for small, large, and
very large air-cooled CUAC and CUHP
purchased in the 30-year period that
begins in the year of compliance with
amended standards (2019–2048), in
comparison to the base case without
amended standards, amount to 11.7
4 All monetary values in this document are
expressed in 2013 dollars and, where appropriate,
are discounted to 2014 unless explicitly stated
otherwise.
5 A quad is equal to 1015 British thermal units
(Btu).
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4,779
3,469
16,477
Median
payback
period
(years)
3.9
6.6
2.5
quadrillion Btu of energy (quads).5 This
is a savings of 29 percent relative to the
energy use of this equipment in the base
case.6
The cumulative net present value
(NPV) of total customer costs and
savings of the proposed standards for
small, large, and very large air-cooled
CUAC and CUHP ranges from $16.5
billion to $50.8 billion for 7-percent and
3-percent discount rates, respectively.
This NPV expresses the estimated total
value of future operating-cost savings
minus the estimated increased product
costs for products purchased in 2019–
2048.
In addition, the proposed standards
would have significant environmental
benefits.7 The energy savings described
6 The base case assumptions are described in
section IV.H.
7 DOE calculated emissions reductions relative to
the Annual Energy Outlook 2013 (AEO 2013)
Reference case, which generally represents current
legislation and environmental regulations for which
implementing regulations were available as of
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above are estimated to result in
cumulative emission reductions of 1,085
million metric tons (Mt) 8 of carbon
dioxide (CO2), 3,072 thousand tons of
methane (CH4), 15.5 thousand tons of
nitrous oxide (N2O), 2,934 thousand
tons of sulfur dioxide (SO2), 1,021
thousand tons of nitrogen oxides (NOX)
and 3.57 tons of mercury (Hg).9 The
estimated CO2 emissions reductions
through 2030 amount to 64 Mt.10 These
projections are expected to change in
light of recently available data from the
estimated from the Annual Energy
Outlook (AEO) 2014 data, which suggest
a drop in potential emissions reductions
over a similar period of time.
The value of the CO2 reductions is
calculated using a range of values per
metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC)
developed by an interagency process.11
The derivation of the SCC values is
discussed in section IV.L. Using
discount rates appropriate for each set
of SCC values (see Table I.3), DOE
estimates the present monetary value of
the CO2 emissions reduction to be
58951
between $6.1 billion and $95.9 billion,
with a value of $30.9 billion using the
central SCC case represented by $40.5/t
in 2015. Additionally, DOE estimates
the present monetary value of the NOX
emissions reduction to be $343 million
and $1,060 million at 7-percent and 3percent discount rates, respectively.
Table I.3 summarizes the national
economic costs and benefits expected to
result from the proposed standards for
small, large, and very large air-cooled
CUAC and CUHP.
TABLE I.3—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION
STANDARDS FOR SMALL, LARGE, AND VERY LARGE COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT *
Present value
billion 2013$
Category
Discount rate
(%)
Benefits
Operating Cost Savings ...................................................................................................................................
20.6
59.7
6.1
30.9
49.9
95.9
0.3
1.1
51.9
91.6
4.1
8.8
Total Benefits † ................................................................................................................................................
7
3
47.8
82.8
CO2 Reduction Monetized Value ($12.0/t case) ** ..........................................................................................
CO2 Reduction Monetized Value ($40.5/t case) ** ..........................................................................................
CO2 Reduction Monetized Value ($62.4/t case) ** ..........................................................................................
CO2 Reduction Monetized Value ($119/t case) ** ...........................................................................................
NOX Reduction Monetized Value (at $2,684/ton) ** ........................................................................................
7
3
5
3
2.5
3
7
3
7
3
7
3
Costs
Incremental Installed Costs .............................................................................................................................
Total Net Benefits
Including Emissions Reduction Monetized Value † .........................................................................................
* This table presents the costs and benefits associated with small, large, and very large air-cooled CUAC and CUHP shipped in 2019–2048.
These results include benefits to customers which accrue after 2048 from the products purchased in 2019–2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values found in the literature.12
† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate.
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The benefits and costs of today’s
proposed standards, for products sold in
2019–2048, can also be expressed in
terms of annualized values. The
annualized monetary values are the sum
of (1) the annualized national economic
December 31, 2012. Emissions factors based on the
Annual Energy Outlook 2014 (AEO 2014), which
became available too late for incorporation into this
analysis, indicate that a significant decrease in the
cumulative emission reductions of carbon dioxide,
methane, nitrous oxide, sulfur dioxide, nitrogen
oxides and mercury from the proposed standards
can be expected if the projections of power plant
utilization assumed in AEO 2014 are realized. For
example, the estimated amount of cumulative
emission reductions of CO2 are expected to
decrease by 36% from DOE’s current estimate (from
1,085 Mt to 697Mt) based on the projections in AEO
2014 relative to AEO 2013. The monetized benefits
from GHG reductions would likely decrease by a
comparable amount. DOE plans to use emissions
factors based on the most recent AEO available for
the next phase of this rulemaking, which may or
may not be AEO 2014, depending on the timing of
the issuance of the next rulemaking document.
8 A metric ton is equivalent to 1.1 short tons.
Results for NOX and Hg are presented in short tons.
9 The reductions are measured over the period in
which equipment purchased in 2019–2048 continue
to operate.
10 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a 36% decrease in
cumulative emissions reductions for CO2 thus
decreasing the estimate of 64 Mt of CO2 reductions
through the year 2030 to 41 Mt. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
11 Technical Update of the Social Cost of Carbon
for Regulatory Impact Analysis Under Executive
Order 12866. Interagency Working Group on Social
Cost of Carbon, United States Government. May
2013; revised November 2013. https://
www.whitehouse.gov/sites/default/files/omb/assets/
inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf.
12 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 / Proposed Rules
value of the benefits from consumer
operation of products that meet the
proposed standards; consisting
primarily of operating cost savings from
using less energy, minus increases in
equipment purchase and installation
costs, which is another way of
representing customer NPV, and (2) the
annualized monetary value of the
benefits of CO2 and NOX emission
reductions.13
Although combining the values of
operating savings and CO2 emission
reductions provides a useful
perspective, two issues should be
considered. First, the national operating
savings are domestic U.S. consumer
monetary savings that occur as a result
of market transactions while the value
of CO2 reductions is based on a global
value. Second, the assessments of
operating cost savings and CO2 savings
proposed in today’s rule is $430 million
per year in increased equipment costs,
while the benefits are $2,177 million per
year in reduced equipment operating
costs, $1,774 million in CO2
reductions,14 and $36 million in
reduced NOX emissions. In this case, the
net benefit amounts to $3,558 million
per year.15 Using a 3-percent discount
rate for all benefits and costs and the
average SCC series, the cost of the
standards proposed in today’s rule is
$507 million per year in increased
equipment costs, while the benefits are
$3,426 million per year in reduced
operating costs, $1,774 million in CO2
reductions,16 and $61 million in
reduced NOX emissions. In this case, the
net benefit amounts to $4,755 million
per year.17
are performed with different methods
that use different time frames for
analysis. The national operating cost
savings is measured for the lifetime of
small, large, and very large air-cooled
CUAC and CUHP shipped in 2019–
2048. The SCC values, on the other
hand, reflect the present value of some
future climate-related impacts resulting
from the emission of one ton of carbon
dioxide in each year. These impacts
continue well beyond 2100.
Estimates of annualized benefits and
costs of the proposed standards are
shown in Table I.4. The results under
the primary estimate are as follows.
Using a 7-percent discount rate for
benefits and costs other than CO2
reduction, for which DOE used a 3percent discount rate along with the
average SCC series that uses a 3-percent
discount rate, the cost of the standards
TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL, LARGE,
AND VERY LARGE COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT *
Discount rate
Low net benefits
estimate
Primary estimate
High net benefits
estimate
million 2013$/year
Benefits
Operating Cost Savings .........................
CO2 Reduction Monetized Value ($12.0/
t case) **.
CO2 Reduction Monetized Value ($40.5/
t case) **.
CO2 Reduction Monetized Value ($62.4/
t case) **.
CO2 Reduction Monetized Value ($119/t
case) **.
NOX Reduction Monetized Value (at
$2,684/ton) **.
Total Benefits † ................................
7% ................................
3% ................................
5% ................................
2,177 ............................
3,426 ............................
484 ...............................
1,984 ............................
3,127 ............................
467 ...............................
2,407
3,781
505
3% ................................
1,774 ............................
1,714 ............................
1,846
2.5% .............................
2,632 ............................
2,543 ............................
2,737
3% ................................
5,504 ............................
5,317 ............................
5,727
7%
3%
7%
7%
3%
3%
36.18
60.89
2,698
3,988
3,972
5,262
34.75
58.85
2,486
3,733
3,653
4,900
37.90
63.40
2,950 to 8,172
4,291
4,349 to 9,572
5,691
................................
................................
plus CO2 range .....
................................
plus CO2 range .....
................................
............................
............................
to 7,718 .............
............................
to 8,991 .............
............................
............................
............................
to 7,336 .............
............................
to 8,503 .............
............................
Costs
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Incremental Product Costs .....................
7% ................................
13 DOE used a two-step calculation process to
convert the time-series of costs and benefits into
annualized values. First, DOE calculated a present
value in 2013, the year used for discounting the
NPV of total customer costs and savings, for the
time-series of costs and benefits using discount
rates of three and seven percent for all costs and
benefits except for the value of CO2 reductions. For
the latter, DOE used a range of discount rates, as
shown in Table I.4. From the present value, DOE
then calculated the fixed annual payment over a 30year period (2019 through 2048) that yields the
same present value. The fixed annual payment is
the annualized value. Although DOE calculated
annualized values, this does not imply that the
time-series of cost and benefits from which the
annualized values were determined is a steady
stream of payments.
14 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
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430 ...............................
350 ...............................
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
15 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors
based on the most recent AEO available, which may
or may not be AEO 2014, depending on the timing
of the issuance of the next rulemaking document.
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485
16 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors
based on the most recent AEO available, which may
or may not be AEO 2014, depending on the timing
of the issuance of the next rulemaking document.
17 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors
based on the most recent AEO available, which may
or may not be AEO 2014, depending on the timing
of the issuance of the next rulemaking document.
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58953
TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL, LARGE,
AND VERY LARGE COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT *—Continued
Discount rate
Primary estimate
Low net benefits
estimate
High net benefits
estimate
3% ................................
507 ...............................
433 ...............................
550
2,135
3,383
4,468
3,220
2,465 to 7,687
3,806
5,140
3,799 to 9,021
Net Benefits
Total † ..............................................
7%
7%
3%
3%
plus CO2 range .....
................................
................................
plus CO2 range .....
2,268
3,558
4,755
3,465
to 7,288 .............
............................
............................
to 8,484 .............
to 6,986 .............
............................
............................
to 8,071 .............
* This table presents the annualized costs and benefits associated with small, large, and very large air-cooled CUAC and CUHP shipped in
2019¥2048. These results include benefits to customers which accrue after 2048 from the products purchased in 2019–2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation
for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case, Low
Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect no change for projected
product price trends in the Primary Estimate, an increasing trend for projected product prices in the Low Benefits Estimate, and a decreasing
trend for projected product prices in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
The value for NOX is the average of the low and high values used in DOE’s analysis.18
† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount
rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled
discount rate, and those values are added to the full range of CO2 values.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
DOE’s analysis of the national impacts
of the proposed standards is described
in sections IV.H, IV.K and IV.L of this
proposed rulemaking.
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. DOE further
notes that products achieving these
standard levels are already
commercially available for most of the
equipment classes covered by this
proposal. Based on the analyses
described above, DOE has concluded
that the benefits of the proposed
standards to the Nation (energy savings,
positive NPV of customer benefits,
customer LCC savings, and emission
reductions) would outweigh the
burdens (loss of INPV for manufacturers
and LCC increases for some customers).
DOE also considered more-stringent
energy efficiency levels as trial standard
levels, and is considering them in this
rulemaking. However, DOE has
concluded that the potential burdens of
the more-stringent energy efficiency
18 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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levels would outweigh the projected
benefits. Based on consideration of the
public comments DOE receives in
response to this notice and related
information collected and analyzed
during the course of this rulemaking
effort, DOE may adopt energy efficiency
levels presented in this NOPR 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 proposal, as well as
some of the relevant historical
background related to the establishment
of standards for small, large, and very
large air-cooled CUAC and CUHP.
A. Authority
Title III, Part C 19 of the Energy Policy
and Conservation Act of 1975 (EPCA or
the Act), Public Law 94–163 (42 U.S.C.
6311–6317, as codified), was added by
the National Energy Conservation Policy
Act (Pub. L. 95–619 (Nov. 9, 1978). That
law established the Energy Conservation
Program for Certain Industrial
Equipment, which includes provisions
covering the commercial heating and
air-conditioning equipment that is the
subject of this notice.20 In general, this
program addresses the energy efficiency
19 For editorial reasons, upon codification in the
U.S. Code, Part C was re-designated Part A–1.
20 All references to EPCA in this document refer
to the statute as amended through the American
Energy Manufacturing Technical Corrections Act of
2012, Public Law 112–210 (Dec. 18, 2012).
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of certain types of commercial and
industrial equipment. Relevant
provisions of the Act include definitions
(42 U.S.C. 6311), energy conservation
standards (42 U.S.C. 6313), test
procedures (42 U.S.C. 6314), labelling
provisions (42 U.S.C. 6315), and the
authority to require information and
reports from manufacturers (42 U.S.C.
6316).
Section 342(a) of EPCA concerns
energy conservation standards for small,
large, and very large, air-cooled CUAC
and CUHP. (42 U.S.C. 6313(a)) This
category of equipment has a rated
capacity between 64,000 Btu/h and
760,000 Btu/h. It is designed to heat and
cool commercial buildings and is
typically located on the building’s
rooftop. Section 5(b) of the American
Energy Manufacturing Technical
Corrections Act of 2012 (Pub. L. No.
112–210 (Dec. 18, 2012) (AEMTCA)
amended Section 342(a)(6) of EPCA.
Among other things, AEMTCA modified
the manner in which DOE must amend
the energy efficiency standards for
certain types of commercial and
industrial equipment. DOE is typically
obligated either to adopt those standards
developed by the American Society of
Heating, Refrigerating, and AirConditioning Engineers (ASHRAE)—or
to adopt levels more stringent than the
ASHRAE levels if there is clear and
convincing evidence in support of doing
so (42 U.S.C. 6313(a)(6)(A)). AEMTCA
added to this process a requirement that
DOE initiate a rulemaking to consider
amending the standards for any covered
equipment as to which more than 6
years has elapsed since the issuance of
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the most recent final rule establishing or
amending a standard for the equipment
as of the date of AEMTCA’s enactment,
December 18, 2012. (42 U.S.C.
6313(a)(6)(C)(vi)) Under this new
framework, DOE must issue either a
notice of determination that the current
standards do not need to be amended or
a notice of proposed rulemaking (NOPR)
containing proposed standards by
December 31, 2013. See 42 U.S.C.
6313(a)(6)(C)(i) and (vi).21 Today’s
NOPR satisfies the mandatory review
process imposed by AEMTCA.
Pursuant to EPCA, DOE’s energy
conservation program for covered
equipment consists essentially of four
parts: (1) Testing; (2) labeling; (3) the
establishment of Federal energy
conservation standards; and (4)
certification and enforcement
procedures. Subject to certain criteria
and conditions, DOE is required to
develop test procedures to measure the
energy efficiency, energy use, or
estimated annual operating cost of
covered equipment. (42 U.S.C. 6314)
Manufacturers of covered equipment
must use the prescribed DOE test
procedure as the basis for certifying to
DOE that their equipment comply with
the applicable energy conservation
standards adopted under EPCA and
when making representations to the
public regarding the energy use or
efficiency of those equipment. (42
U.S.C. 6314(d)) Similarly, DOE must use
these test procedures to determine
whether the equipment comply with
standards adopted pursuant to EPCA.
Id. The DOE test procedures for small,
large, and very large air-cooled CUAC
and CUHP currently appear at 10 CFR
431.96.
When setting standards for the
equipment addressed by this proposed
rulemaking, EPCA prescribes specific
statutory criteria for DOE to consider.
See generally 42 U.S.C. 6313(a)(6)(A)–
(C). As indicated above, any amended
standard for covered equipment must be
designed to achieve the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified. Furthermore,
DOE may not adopt any standard that
would not result in the significant
conservation of energy. Moreover, DOE
may not prescribe a standard for certain
equipment, if (1) no test procedure has
been established for the equipment, or
(2) if DOE determines by rule that the
proposed standard is not
technologically feasible or economically
justified. In deciding whether a
proposed standard is economically
21 Subparagraph (A) and subparagraph (B) refer to
42 U.S.C. 6313(a)(6).
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justified, DOE must determine whether
the benefits of the standard exceed its
burdens. DOE must make this
determination after receiving comments
on the proposed standard, and by
considering, to the greatest extent
practicable, the following seven factors:
1. The economic impact of the
standard on manufacturers and
consumers of the equipment subject to
the standard;
2. The savings in operating costs
throughout the estimated average life of
the covered equipment in the type (or
class) compared to any increase in the
price, initial charges, or maintenance
expenses for the covered equipment that
are likely to result from the imposition
of the standard;
3. The total projected amount of
energy, or as applicable, water, savings
likely to result directly from the
imposition of the standard;
4. Any lessening of the utility or the
performance of the covered equipment
likely to result from the imposition of
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 imposition of 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. 6313(a)(6)(B))
EPCA, as codified, 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
covered equipment. Also, the Secretary
may not prescribe an amended or new
standard if interested persons have
established by a preponderance of the
evidence that the standard is likely to
result in the unavailability in the United
States of any covered equipment type
(or class) of performance characteristics
(including reliability), features, sizes,
capacities, and volumes that are
substantially the same as those generally
available in the United States. (42 U.S.C.
6313(a)(6)(B)(iii))
Further, under EPCA’s provisions for
consumer products, there is 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 energy savings
during the first year that the consumer
will receive as a result of the standard,
as calculated under the applicable test
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procedure. For this rulemaking, DOE
considered the criteria for rebuttable
presumption as part of its analysis.
Additionally, EPCA specifies
requirements when promulgating a
standard for a type or class of covered
equipment that has two or more
subcategories. DOE must specify a
different standard level than that which
applies generally to such type or class
of equipment for any group of covered
equipment that have the same function
or intended use if DOE determines that
equipment within such group (A)
consume a different kind of energy from
that consumed by other covered
equipment within such type (or class);
or (B) have a capacity or other
performance-related feature which other
equipment within such type (or class)
do not have and such feature justifies a
higher or lower standard. In
determining whether a performancerelated feature justifies a different
standard for a group of equipment, DOE
must consider such factors as the utility
to the consumer of the feature and other
factors DOE deems appropriate. Any
rule prescribing such a standard must
include an explanation of the basis on
which such higher or lower level was
established. DOE considered these
criteria for this rulemaking.
Federal energy conservation
requirements generally preempt State
laws or regulations concerning energy
conservation testing, labeling, and
standards. DOE may, however, grant
waivers of Federal preemption for
particular State laws or regulations.
DOE has also reviewed this regulation
pursuant to Executive Order 13563,
issued on January 18, 2011. (76 FR 3281,
Jan. 21, 2011). EO 13563 is
supplemental to and explicitly reaffirms
the principles, structures, and
definitions governing regulatory review
established in Executive Order 12866.
To the extent permitted by law, agencies
are required by Executive Order 13563
to: (1) Propose or adopt a regulation
only upon a reasoned determination
that its benefits justify its costs
(recognizing that some benefits and
costs are difficult to quantify); (2) tailor
regulations to impose the least burden
on society, consistent with obtaining
regulatory objectives, taking into
account, among other things, and to the
extent practicable, the costs of
cumulative regulations; (3) select, in
choosing among alternative regulatory
approaches, those approaches that
maximize net benefits (including
potential economic, environmental,
public health and safety, and other
advantages; distributive impacts; and
equity); (4) to the extent feasible, specify
performance objectives, rather than
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specifying the behavior or manner of
compliance that regulated entities must
adopt; and (5) identify and assess
available alternatives to direct
regulation, including providing
economic incentives to encourage the
desired behavior, such as user fees or
marketable permits, or providing
information upon which choices can be
made by the public.
DOE emphasizes as well that
Executive Order (EO) 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 has emphasized that such
techniques may include identifying
changing future compliance costs that
might result from technological
innovation or anticipated behavioral
changes. For the reasons stated in the
preamble, DOE believes that this NOPR
is consistent with these principles,
including the requirement that, to the
extent permitted by law, benefits justify
costs and that net benefits are
maximized. Consistent with EO 13563,
and the range of impacts analyzed in
this rulemaking, the energy efficiency
58955
standard proposed herein by DOE
achieves maximum net benefits.
B. Background
1. Current Standards
DOE most recently issued amended
standards for small, large, and very
large, air-cooled CUAC and CUHP on
October 18, 2005, which codified both
the amended standards for small and
large equipment and the new standards
for very large equipment set by the
Energy Policy Act of 2005 (EPAct 2005),
Public Law 109–58, 70 FR 60407 (Aug.
8, 2005). The current standards are set
forth in Table II.1.
TABLE II.1—MINIMUM COOLING AND HEATING EFFICIENCY LEVELS FOR SMALL, LARGE, AND VERY LARGE COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Equipment type
Cooling capacity
Small Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled).
≥65,000 Btu/h and
<135,000 Btu/h.
Sub-category
AC
HP
Large Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled).
≥135,000 Btu/h and
<240,000 Btu/h.
AC
HP
Very Large Commercial Packaged AirConditioning and Heating Equipment
(Air-Cooled).
≥240,000 Btu/h and
<760,000 Btu/h.
AC
HP
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2. History of Standards Rulemaking for
Small, Large, and Very Large Air-Cooled
Commercial Package Air Conditioning
and Heating Equipment
On October 29, 1999, the American
Society of Heating, Refrigerating, and
Air-Conditioning Engineers (ASHRAE)/
Illuminating Engineering Society of
North America (IESNA) adopted
Standard 90.1–1999, ‘‘Energy Standard
for Buildings Except Low-Rise
Residential Building’’, which included
amended efficiency levels for CUAC and
CUHP. On June 12, 2001, the
Department published a Framework
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Efficiency level
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
Electric Resistance
Heating or No Heating.
All Other Types of
Heating.
EER = 11.2 ...........
1/1/2010
EER = 11.0 ...........
1/1/2010
EER = 11.0 ...........
COP = 3.3
1/1/2010
EER = 10.8 ...........
COP = 3.3
EER = 11.0 ...........
1/1/2010
1/1/2010
EER = 10.8 ...........
1/1/2010
EER = 10.6 ...........
COP = 3.2
1/1/2010
EER = 10.4 ...........
COP = 3.2
EER = 10.0 ...........
1/1/2010
1/1/2010
EER = 9.8 .............
1/1/2010
EER = 9.5 .............
COP = 3.2
1/1/2010
EER = 9.3 .............
COP = 3.2
1/1/2010
Document that described a series of
analytical approaches to evaluate energy
conservation standards for air-cooled
CUAC and CUHP with rated capacities
between 65,000 Btu/h and 240,000 Btu/
h, and presented this analytical
framework to stakeholders at a public
workshop. On July 29, 2004, DOE issued
an Advance Notice of Proposed
Rulemaking (ANOPR) (hereafter referred
to as the 2004 ANOPR) to solicit public
comments on its preliminary analyses
for this equipment. 69 FR 45460.
Subsequently, Congress enacted EPAct
2005, which, among other things,
established amended standards for
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date
Heating type
Sfmt 4702
small and large CUAC and CUHP and
new standards for very large air-cooled
CUAC and CUHP. As a result, EPAct
2005 displaced the rulemaking effort
that DOE had already begun. DOE
codified these new statutorilyprescribed standards on October 18,
2005. 70 FR 60407.
Section 5(b) of AEMTCA amended
Section 342(a)(6) of EPCA by requiring
DOE to initiate a rulemaking to consider
amending the standards for any covered
equipment as to which more than 6
years has elapsed since the issuance of
the most recent final rule establishing or
amending a standard for the equipment
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as of the date of AEMTCA’s enactment,
December 18, 2012. (42 U.S.C.
6313(a)(6)(C)(vi)) Accordingly, DOE
must issue either a notice of
determination that the current standards
for small, large, and very large, air
cooled CUAC and CUHP do not need to
be amended or a notice of proposed
rulemaking containing proposed
standards. DOE has, based on available
data, chosen the latter.
On February 1, 2013, DOE published
a request for information (RFI) and
notice of document availability for
small, large, and very large, air cooled
CUAC and CUHP. 78 FR 7296. The
notice sought to solicit information from
the public to help DOE determine
whether national standards more
stringent than those that are currently in
place would result in a significant
amount of additional energy savings and
whether those national standards would
be technologically feasible and
economically justified. Separately, DOE
also sought information on the merits of
adopting integrated energy efficiency
ratio (IEER) as the energy efficiency
descriptor for small, large, and very
large air-cooled CUAC and CUHP (see
section III.A for more details).
DOE received a number of comments
from interested parties in response to
the RFI. These commenters are
summarized in Table II.2. DOE
considered these comments in the
preparation of this NOPR. Relevant
comments, and DOE’s responses, are
provided in the appropriate sections of
this proposed rulemaking.
TABLE II.2—INTERESTED PARTIES PROVIDING WRITTEN COMMENT ON THE RFI
Name
Abbreviation
Type
AAON Inc .........................................................................................................
Air-Conditioning, Heating and Refrigeration Institute .......................................
Appliance Standards Awareness Project, American Council for an EnergyEfficient Economy, Natural Resources Defense Council.
EBM-Papst Inc .................................................................................................
Edison Electric Institute ....................................................................................
Ingersoll Rand ..................................................................................................
Lennox International Inc ...................................................................................
Lentz Engineering Associates ..........................................................................
Modine Manufacturing Co ................................................................................
New Buildings Institute .....................................................................................
Northwest Energy Efficiency Alliance ..............................................................
Pacific Gas and Electric Company, Southern California Gas Company, San
Diego Gas and Electric, Southern California Edison, Sacramento Municipal Utility District, National Grid.
Rheem Manufacturing Co ................................................................................
UTC Climate, Controls & Security ...................................................................
Whole Building Systems ..................................................................................
AAON ......................................................................
AHRI ........................................................................
ASAP, ACEEE, NRDC (Joint Efficiency Advocates).
EBM-Papst ..............................................................
EEI ...........................................................................
Ingersoll Rand .........................................................
Lennox .....................................................................
Lentz ........................................................................
Modine .....................................................................
NBI ..........................................................................
NEEA .......................................................................
PG&E, SCGC, SDG&E, SCE, SMUD, National
Grid (Joint Utilities).
M
IA
EA
Rheem .....................................................................
Carrier .....................................................................
Whole Building Systems .........................................
M
M
I
CS
UR
M
M
I
M
EA
U
IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate;
CS: Component Supplier; I: Individual; U: Utility; UR: Utility Representative
III. General Discussion
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A. Energy Efficiency Descriptor
The current energy conservation
standards for small, large, and very large
air-cooled CUAC and CUHP are based
on energy efficiency ratio (EER) for
cooling efficiency and COP for CUHP
heating efficiency. 10 CFR 431.97(b)
Cooling Efficiency Metric
In the RFI, DOE noted that it was
considering whether to replace the
existing efficiency descriptor, EER, with
a new energy-efficiency descriptor,
IEER. Unlike the EER metric, which
only uses the efficiency of the
equipment operating at full load, the
IEER metric factors in the efficiency of
operating at part-loads of 75 percent, 50
percent, and 25 percent of capacity as
well as the efficiency at full load. This
is accomplished by weighting the fulland part-load efficiencies with the
average amount of time operating at
each loading point. The IEER metric
incorporates part load efficiencies
measured with outside temperatures
appropriate for the load levels, i.e. at
lower temperatures for lower load
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levels. 78 FR 7296, 7299 (Feb. 1, 2013).
As part of a final rule published on May
16, 2012, DOE amended the test
procedure for this equipment to
incorporate by reference the AirConditioning, Heating and Refrigeration
Institute (AHRI) Standard 340/360–
2007, ‘‘Performance Rating of
Commercial and Industrial Unitary AirConditioning and Heat Pump
Equipment’’ (AHRI Standard 340/360–
2007). 77 FR 28928. DOE notes that
AHRI Standard 340/360–2007 already
includes methods and procedures for
testing and rating equipment with the
IEER metric.
ASHRAE, through its Standard 90.1,
includes requirements based on the
part-load performance metric, IEER.
These IEER requirements were first
established in Addenda from the 2008
Supplement to Standard 90.1–2007, and
became effective on January 1, 2010.22
DOE may establish ‘‘energy
conservation standards’’ that set either a
22 ASHRAE. ASHRAE Addenda. 2008
Supplement. https://www.ashrae.org/
File%20Library/docLib/Public/20090317_90_1_
2007_supplement.pdf.
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single performance standard or a single
design requirement—not both. (42
U.S.C. 6311(18)) As such, DOE may
prescribe an energy conservation
standard based either on a single
performance-based standard or design
requirement. In the case of small, large,
and very large air-cooled CUAC and
CUHP, ASHRAE Standard 90.1–2010
specifies two performance requirements:
EER and IEER. In selecting a new
performance-based energy conservation
standard, the statute prescribes that a
single standard be used—in this case,
either an improved EER or a new
standard using IEER. DOE did not
consider altering its energy conservation
standard to be based on a single design
requirement because performance-based
standards will provide manufacturers
with more flexibility in developing
equipment that meets the standard
levels rather than requiring a specific
design. DOE notes that a change in
metrics (i.e., from EER to IEER) would
necessitate an initial DOE determination
that the new requirement would not
result in backsliding when compared to
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the current standards. See 42 U.S.C.
6313(a)(6)(B)(iii)(I).
As part of the RFI, DOE conducted a
review of the market to see if part-load
performance is currently being used and
accepted for rating CUAC and CUHP.
On January 2, 2009, the Environmental
Protection Agency (EPA) issued a draft
ENERGY STAR specification for Light
Commercial Air Conditioners and Heat
Pumps equipment, i.e., small and large
air-cooled CUAC and CUHP, which
proposed to adopt IEER as part of the
minimum energy efficiency criteria.23
The Air-Conditioning, Heating and
Refrigeration Institute (AHRI) supported
this change. DOE also noted in the RFI
that the Consortium for Energy
Efficiency (CEE), an organization for
energy efficiency advocates, has
adopted IEER for its Tier 0, 1, and 2
efficiencies for CUAC and CUHP, i.e.,
small, large, and very large air-,
water-, and evaporatively-cooled air
conditioners and air- and water-source
heat pumps.24 78 FR 7296, 7299 (Feb. 1,
2013).
DOE also noted in the RFI that IEER
has gained support through efforts such
as DOE’s Commercial Building Energy
Alliance (CBEA) technology transfer
program, which sponsors the High
Performance Rooftop Unit Challenge
(RTU Challenge). This program provides
a market mechanism that reduces
barriers for manufacturers to procure
greater than 18–IEER 10-ton 25
equipment and encourages the private
sector to commit to adopt energyefficient equipment. A number of
manufacturers are currently
participating in the RTU Challenge,
including Lennox, 7AC Technologies,
Rheem, Carrier, and McQuay. Of these
participants, both Carrier and McQuay
have already begun producing AHRIcertified equipment meeting or
exceeding 18 IEER. In conjunction with
manufacturer support, fourteen CBEAmember private entities,26 such as
Target Corp., Macy’s, Inc., McDonald’s
Corp., and others, have also signaled
their support and indicated their strong
23 ENERGY STAR. Re: EPA Proposed Draft Energy
Star Specification for Light Commercial HVAC
Equipment. https://www.energystar.gov/ia/partners/
prod_development/revisions/downloads/lhvac/
AHRI_Comments_D1.pdf.
24 Consortium for Energy Efficiency. CEE
Commercial Unitary AC and HP Specification.
https://www.cee1.org/files/CEE_CommHVAC_
UnitarySpec2012.pdf.
25 Air conditioning cooling capacity may be
denoted in tons. An air conditioning ton is
equivalent to 12,000 Btu/h of cooling capacity (or
3.5 kilowatts of cooling capacity).
26 U.S. Department of Energy. Building
Technologies Program. High Performance Rooftop
Unit Challenge Fact Sheet. https://
apps1.eere.energy.gov/buildings/publications/pdfs/
alliances/techspec_rtus.pdf.
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interest in potentially purchasing highefficiency rooftop units, a sign of their
confidence in the RTU Challenge and its
ability to use IEER to accurately portray
the energy use of air-cooled CUAC and
CUHP in the field. 78 FR 7296, 7299
(Feb. 1, 2013).
As part of the RFI, DOE conducted a
market analysis to compare the two
metrics based on publicly available
ratings of existing equipment currently
available in the market. DOE made a
document available for comment that
provided the methodology and results of
the investigation of the relationship
between IEER and EER for air-cooled
CUAC and CUHP with cooling
capacities between 65,000 Btu/hr and
760,000 Btu/hr (i.e., 5 and 63 tons). In
addition, DOE looked at the variance of
heating efficiency (i.e., COP) with IEER
and EER.27 In the RFI, DOE noted that
if it decides to propose standards using
the IEER metric, it would transition the
existing Federal energy conservation
standards that are based on the EER
metric to the new IEER metric to
determine baseline energy-efficiency
levels to use in the analysis. DOE sought
comments and data regarding its
consideration of transitioning metrics
and the analysis conducted on the
currently available models. 78 FR 7296,
7299 (Feb. 1, 2013).
In response to the RFI, DOE received
a number of comments from interested
parties concerning which energy
efficiency descriptor should be used for
this equipment—i.e. EER or IEER. The
Edison Electric Institute (EEI), New
Buildings Institute (NBI), Northwest
Energy Efficiency Alliance (NEEA), the
Joint Utilities,28 and the Joint Efficiency
Advocates 29 commented that DOE
should adopt standards for small, large,
and very large air-cooled CUAC and
CUHP using both the EER and IEER
metrics. (EEI, No. 9 at p. 4; NBI, No. 12
at p. 2; NEEA, No. 15 at p. 1; Joint
Utilities, No. 13 at p. 2; Joint Efficiency
Advocates, No. 11 at p. 1)
EEI, NEEA, and the Joint Utilities
expressed concern that if DOE
eliminated the EER metric, which
measures peak load efficiency,
27 The document is available at: https://
www1.eere.energy.gov/buildings/appliance_
standards/product.aspx/productid/77.
28 A joint comment was submitted by the Pacific
Gas and Electric Company (PG&E), Southern
California Gas Company (SCGC), San Diego Gas and
Electric (SDG&E), Southern California Edison (SCE),
Sacramento Municipal Utility District (SMUD), and
National Grid, which are referred to as the Joint
Utilities.
29 A Joint comment was submitted by the
Appliance Standards Awareness Project (ASAP),
American Council for an Energy-Efficient Economy
(ACEEE), and Natural Resources Defense Council
(NRDC), which are referred to as the Joint Efficiency
Advocates.
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58957
manufacturers would design their
equipment to improve their IEER
ratings, which could negatively impact
peak load efficiency. (EEI, No. 9 at p. 5;
NEEA, No. 15 at pp. 1–2; Joint Utilities,
No. 13 at p. 3) NEEA commented that
using only one metric leads to a bias of
energy savings depending on the
climate zone, with EER favoring hot-dry
climates and IEER favoring milder
climates. NEEA stated that maximizing
EER tends to involve heat exchanger
improvements, while IEER
improvement involves staging of
compressors, and that shifting costs
between these two designs degrades
either IEER or EER. NEEA noted that,
based on their review of the AHRI
certification database, a correlation
between high IEER and high EER does
not necessarily exist. NEEA noted that
equipment with a high EER and high
IEER exists, but may just reflect
premium equipment available on the
market that maximize both metrics.
(NEEA, No. 15 at p. 1) EEI and the Joint
Utilities commented that both the EER
and IEER metrics should be used to
prevent higher peak demands on utility
grids and higher energy bills for
customers in hot-dry climates, and to
prevent equipment from being
manufactured that is less efficient than
the current standards. (EEI, No. 9 at p.
5; Joint Utilities, No. 13 at p. 3) NBI
added that because the type of
application and its emphasis on fullload versus part-load cannot be known
beforehand, the cost-effectiveness of
standards can only be assured by
including both EER and IEER metrics.
(NBI, No. 12 at pp. 1–2)
The Joint Utilities commented that the
IEER metric, unlike the EER metric,
accounts for potentially significant partload energy savings from technologies
such as inverter duty compressors,
variable speed fans, and staged
compressors. The Joint Utilities also
indicated that continued growth and
dependence on demand response
programs is expected in California and
New England, and that, during demand
response events, controls may be used
to restrict unit capacities and lower fan
speeds. According to the Joint Utilities,
if units have comparable EER values,
the units with higher IEERs have the
capability to use less energy when
capacity is restricted and are more likely
to have the capability of modifying
compressor operation or reducing fan
speed. (Joint Utilities, No. 13 at pp. 2–
3) (Joint Utilities, No. 13 at p. 3)
The Joint Utilities commented that
there is no additional testing burden
associated with implementing both the
IEER and EER metrics as compared to
using only IEER because the EER test is
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part of the IEER metric. The Joint
Utilities added that manufacturers have
been reporting both EER and IEER
values for AHRI certification since 2010.
The Joint Utilities stated that, based on
their review of the AHRI certification
database, the nominal difference
between the average IEER and EER
values for each CUAC equipment class
capacity range (i.e., small, large, and
very large) varied from 1.38 and 1.87.
The Joint Utilities stated that if
standards are based only on IEER and
the average performance difference in
IEER and EER remains the same, then
equipment meeting an IEER-only
standard could have EERs as low as 8.86
(which is approximately 10 percent to
21 percent lower than the current EER
standards for air-cooled CUAC). (Joint
Utilities, No. 13 at pp. 3–4, 6)
EEI, the Joint Utilities, and the Joint
Efficiency Advocates commented that
DOE has the authority to adopt two
efficiency metrics. (EEI, No. 9 at p. 4;
Joint Utilities, No. 13 at p. 3; Joint
Efficiency Advocates, No. 11 at p. 1) EEI
stated that if DOE must demonstrate that
a standard measured using IEER is no
less stringent than a standard measured
using EER, then the two standards must
have the same stringency. EEI stated
that, as a result, using two different
metrics does not contravene the
requirement that DOE apply a single
standard. (EEI, No. 9 at p. 4) EEI added
that this two-metric approach is
consistent with past precedent set in the
direct final rule for residential split
system air conditioners and packaged
air conditioners (76 FR 37408 (June 27,
2011); 76 FR 67037 (Oct. 31, 2011)),
which will require SEER and EER
standards for equipment sold in the
‘‘Southwest’’ region of the United
States. (EEI, No. 9 at p. 5) The Joint
Utilities commented that, based on their
understanding, DOE is considering
using a multiple metric approach in
other rulemakings (e.g., commercial and
industrial fans and blowers) and, as
such, DOE should be able to do the
same for this rulemaking. (Joint
Utilities, No. 13 at p. 3)
According to the Joint Utilities, the
intent of DOE’s requirement to adopt
ASHRAE or more stringent standard
levels is for the ASHRAE levels to serve
as the standards baseline. The Joint
Utilities stated that ASHRAE Standard
90.1 has specified both IEER and EER
metrics for this equipment since 2010
and that industry supports and
recognizes the need for a two metric
approach for their standards. The Joint
Utilities stated that both metrics should
be used to align with the industry
standards approach. (Joint Utilities, No.
13 at p. 2)
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As discussed above, EPCA requires
that DOE establish energy conservation
standards using either a single
performance standard or a single design
requirement—but not both. See 42
U.S.C. 6311(18). Consistent with this
restriction, DOE is proposing an
approach that would apply a single
performance-based standard for
manufacturers to follow. Although some
commenters have suggested that DOE
deviate from this requirement, none has
suggested an approach that would
sufficiently address the legal constraints
that EPCA imposes on DOE’s ability to
set multiple metrics for the equipment
at issue in this proposal. Accordingly,
DOE is declining to adopt a multiplemetric approach for CUAC and CUHP
equipment.
Modine Manufacturing Company
(Modine) supported the use of the IEER
metric to allow for the optimization of
efficiency at part-load conditions.
Modine stated that equipment designed
to maximize EER at full-load conditions,
which accounts for only 2 percent of
cooling time, may be significantly less
efficient at part-load conditions. Modine
presented data showing that a unit that
is optimized around EER had an EER of
12.5, but the overall IEER is only 11.46,
whereas a unit optimized around IEER
had an EER of 10.3, but an IEER of 12.6.
Modine also presented data showing
that only a 2-point improvement in IEER
for a 15-ton unit and a 20- to 30-ton unit
would improve the efficiency by 18
percent and 20 percent, respectively.
(Modine, No. 5 at pp. 2, 7–9) The Joint
Efficiency Advocates commented that if
DOE concludes that they do not have
the authority to adopt two metrics, DOE
should replace EER with IEER to better
reflect annual energy consumption and
encourage the adoption of part-load
technologies that can achieve significant
energy savings in the field. (Joint
Efficiency Advocates, No. 11 at pp. 1–
2) Whole Building Systems also
supported the use of the IEER metric to
better reflect annual energy
consumption. Whole Building Systems
added that design engineers, contactors,
and owners need an annual or seasonal
part load performance metric to make
more informed purchasing and lifecycle cost decisions. (Whole Building
Systems, No. 4 at p. 1)
AAON and AHRI both recognized the
benefits of using the IEER metric for
representation of the equipment’s
overall cooling energy efficiency.
However, AAON, AHRI, Carrier, Lennox
and Ingersoll Rand noted the following
concerns with relying solely on the IEER
metric:
• DOE’s definition of basic model
will significantly increase the number of
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models that manufacturers are required
to test and, in the collective view of
AAON and AHRI, make the DOE test
requirements impossible to achieve.
(AAON, No. 8 at pp. 1–2; AHRI, No. 14
at p. 4)
• The rulemaking for the Alternative
Efficiency Determination Method
(AEDM) is still incomplete. The
proposed requirement for the overall
average of AEDM outputs is, in their
view, far more stringent than the
uncertainty of the AHRI Standard 340/
360–2007 test method and any
combined manufacturing or component
tolerances. (AAON, No. 8 at p. 2; AHRI,
No. 14 at p. 4)
• If the part-load IEER metric is used,
then the sequence of operation of each
subcomponent of the equipment has a
great effect on the listed metric. This
would result in many more basic
models based on DOE’s current
definition. (AAON, No. 8 at p. 2; AHRI,
No. 14 at p. 4)
• The uncertainty associated with
modeling or testing (including
assessment, compliance, and
enforcement testing) equipment using
the IEER metric is significantly greater
than for the single EER test. AHRI
Standard 340/360 currently has a 10
percent uncertainty allowance on the
IEER metric because of the higher
variability in results due to the multiple
tests required, compared to a 5-percent
uncertainty allowance on the single test
EER metric. (AAON, No. 8 at p. 2; AHRI,
No. 14 at pp. 4–5; Carrier, No. 7 at p.
1; Lennox, No. 6 at p. 1; Ingersoll Rand,
No. 10 at p. 1)
AAON, AHRI, and Ingersoll Rand
indicated that they would support
replacing EER with IEER only if DOE
resolves pending issues related to the
AEDM, the basic model definition and
the uncertainty in measurement testing.
AAON and AHRI stated that DOE
should implement the testing and rating
requirements, including the uncertainty
tolerances, referenced in AHRI Standard
340/360 in their entirety. AHRI added
that the sampling plan in 10 CFR 429.43
will have to be revised and adjusted
accordingly. (AAON, No. 8 at p. 3;
AHRI, No. 14 at pp. 1, 4–5; Ingersoll
Rand, No. 10 at pp. 1–2) Carrier also
commented that DOE should limit the
basic model definition to the base
refrigeration system to avoid the
requirement that equipment be tested
with factory options, which may
negatively impact cooling or heating
rating point efficiency, but provide
efficiency benefits when considered
from a whole building perspective (e.g.,
economizers and energy recovery
ventilators). (Carrier, No. 7 at p. 1)
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Rheem supported the use of one
efficiency metric, but not multiple
metrics. Rheem stated that if IEER is
going to replace EER, a technical review
must be conducted to highlight the
advantage to the consumer versus the
confusion in the market place and
burden on the OEM. Rheem stated that
other aspects of the energy conservation
standards for this equipment are in
transition and must be finalized before
a constructive evaluation can be made
of the benefits of a part-load efficiency
metric. (Rheem, No. 17 at pp. 1–2)
Lennox commented that it has
captured most of the achievable EER
efficiency improvements with currently
available technology, and that there are
diminishing returns in requiring
increasingly stringent EER levels.
(Lennox, No. 6 at p. 3) However, Lennox
supported the continued use of the EER
metric due to the IEER test uncertainty
issue discussed above. (Lennox, No. 6 at
p. 1) Lennox commented that using the
IEER metric now would require
resolving the following issues: (1)
Setting a baseline IEER for various
equipment classes, (2) the ability to use
the AEDMs, and (3) implementation and
vetting of testing protocols. (Lennox,
No. 6 at p. 2)
The Joint Utilities commented that if
DOE is not willing to adopt standards
using both metrics, DOE should use the
current EER metric instead of IEER to
provide a better approximation of
heating, ventilation, and airconditioning (HVAC) performance
during peak loading conditions.
According to the Joint Utilities, in
California and New England,
commercial air conditioning accounts
for a disproportionately high fraction of
seasonal peak demand as compared to
commercial HVAC energy consumption
as a fraction of annual energy
consumption. (Joint Utilities, No. 13 at
p. 4) The Joint Utilities also commented
that a substantial fraction of U.S. cities
have peak temperatures above 95
degrees Fahrenheit (°F) in the summer,
and summer peak temperature has been
increasing over time. The Joint Utilities
stated that peak electricity demands
have large effects on energy
procurement and energy pricing, and
that shifts in energy pricing rate
structures, such as in California, will
further increase electricity prices during
peak conditions. The Joint Utilities
stated that using an IEER-only metric
would under-represent the condition
that has the largest effect on peak energy
demand and energy pricing. The Joint
Utilities stated that an improved IEER
metric that is representative of annual
energy cost would place a heavier
weighting on the 95 °F full-load test
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point, but absent that change the Joint
Utilities would support retaining EER
metric. (Joint Utilities, No. 13 at p. 4)
DOE notes that the issues related to
the basic model definition and AEDM
were addressed separately in DOE’s
Commercial Certification Working
Group. DOE published a final rule on
December 31, 2013, which incorporated
requirements for the testing and
tolerances for validation and
verification of an AEDM, and also
amended the basic model definition for
small, large, and very large air-cooled
CUAC and CUHP. 78 FR 79579. EPCA
requires that test procedures be
reasonably designed to produce test
results that measure the energy
efficiency of covered equipment during
a representative average use cycle or
period of use. (42 U.S.C. 6314(a)(2)) As
discussed above, the IEER metric
weights the efficiency of operating at
different partial loads and full load
based on usage patterns, which
collectively provide a more
representative measure of annual energy
use than the EER metric. A
manufacturer that was involved in the
development of the IEER metric
indicated that the usage pattern weights
for the IEER metric were developed by
analyzing equipment usage patterns of
several buildings across the 17 ASHRAE
Standard 90.1–2010 (appendix B)
climate zones. (Docket ID: EERE–2013–
BT–STD–0007–0018, Carrier, at p. 1)
These usage patterns and climate zones
were based on a comprehensive analysis
performed by industry in assessing the
manner in which CUAC and CUHP
equipment operate in the field, both in
terms of actual usage and the climatic
conditions in which they are used. The
weighting factors accounted for the
hours of operation where mechanical
cooling was active. Id. As a result, the
IEER metric, as a whole, provides a
more accurate representation of the
annual energy use for this equipment
than the EER metric, which only
considers full load energy use. For these
reasons, DOE is proposing energy
conservation standards in this NOPR
based on the IEER metric. DOE
recognizes the issues regarding the
uncertainty of IEER test measurements
and welcomes additional data regarding
the measurement uncertainties to
develop appropriate sampling plans.
Because the weighting factors for the
IEER metric are representative of field
use and because DOE is unaware of any
data indicating that changes to these
weighting factors are warranted, DOE is
not considering changing the weighting
factors for the loading conditions
specified in AHRI Standard 340/360–
2007 for the IEER metric, as commented
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58959
by the Joint Utilities. With regards to the
Joint Utilities comment that an
improved IEER metric that is
representative of annual energy cost
would place a heavier weighting on the
full-load test point, DOE welcomes
comment and data on whether the test
procedure for air-cooled CUAC and
CUHP should be amended to revise the
weightings for the IEER metric to place
a higher weighting value on the fullload efficiency.
Issue 2: DOE requests comment on
whether the test procedure for aircooled CUAC and CUHP should be
amended to revise the weightings for the
IEER metric to place a higher weighting
value on the full-load efficiency. DOE
also requests data to determine
appropriate weighting factors for the
full-load test condition and part-load
test conditions (75 percent, 50 percent,
and 25 percent of capacity).
With regards to the Joint Utilities
comment that DOE should use the
current EER metric instead of IEER to
provide a better approximation of HVAC
performance during peak loading
conditions, DOE notes that, as discussed
above, EPCA does not include
provisions for dual metrics for this
equipment. See 42 U.S.C. 6311(18). DOE
also notes that because the IEER metric
includes measurements at full load
capacity, the metric already accounts for
EER. Further, ASHRAE Standard 90.1
includes requirements for both EER and
IEER. As a result, although DOE is
considering energy conservation
standards based on the IEER metric,
utilities would still be able to evaluate
EER ratings of equipment.
In response to the RFI, AHRI
commented that the draft of addendum
CL 30 to ASHRAE Standard 90.1–2010
(Draft Addendum CL) would amend the
minimum IEER levels, but did not
amend the minimum EER levels because
the ASHRAE Standard 90.1 committee
was unable to justify raising the full
load efficiency standard. (AHRI, No. 14
at pp. 1–2) AHRI and Ingersoll Rand
commented that full load efficiencies
are approaching their thermodynamic
limits, and that further improvements
will be both very minimal and very
costly. (AHRI, No. 14 at p. 2; Ingersoll
Rand, No. 10 at p. 1) AHRI added that
while energy efficiency gains in the
1970s were achieved at relatively low
cost, the efficiency improvements
realized recently resulted in significant
increase in equipment cost. AHRI stated
30 ASHRAE periodically updates specifications in
its Standard 90.1 through a public review process.
The latest of these proposed changes is contained
in Draft Addendum CL, which was made available
for public review in October 2012. ‘‘CL’’ refers to
the revision number.
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that the industry is entering a phase
where efficiency of equipment is
becoming closer to the Carnot efficiency
(i.e., the thermodynamic limit) and full
load efficiency gains in the future will
be minimal but very costly. (AHRI, No.
14 at p. 2) AHRI noted that the ASHRAE
Standard 90.1 committee has recognized
the increasing full load minimum
efficiency standards for CUAC and
CUHP has reached a point of
diminishing returns in terms of energy
savings, and instead focused efforts on
other areas to reduce the energy
consumption of this equipment,
including the following design
requirements:
• Mandatory use of economizers on
equipment ≥54,000 Btu/h of cooling
capacity in all climate zones at the
exception of zones 1a and 1b,
• Modulation of economizer outdoor
and return air dampers to provide up to
100 percent of the design supply air
quantity as outdoor air for cooling,
• More stringent damper leakage
requirements
• Additional requirements for supply
air temperature reset and static pressure
reset on variable air volume systems,
• Integrated economizer control and
direct expansion (i.e., the evaporator is
in direct contact with the air stream)
unit capacity staging requirements
which necessitate two speed fans and
two stages of mechanical cooling for
constant volume systems or three or
more stages for variable air volume
systems, and
• Fan controls for both constant air
volume and variable air volume units
including extending the indoor fan part
load power requirements down to 1⁄4
horsepower. (AHRI, No. 14 at pp. 2–3)
AHRI stated that although these
requirements significantly reduce the
energy consumption of CUAC, most of
the energy savings resulting from their
implementation is not captured by the
test procedure and cannot be translated
in an EER improvement. AHRI stated
that DOE should consider other factors
beyond EER and/or COP when
conducting its analysis and that by
appropriately modeling this equipment,
DOE will conclude that increasing the
EER and COP is not a cost-effective way
of improving the CUAC/CUHP
efficiency. (AHRI, No. 14 at p. 3)
As discussed above, DOE determined
that the IEER metric provides a more
accurate representation of the annual
energy use for this equipment than the
EER metric, and is proposing standards
based on IEER. DOE recognizes that
raising the stringency of EER may not be
a cost-effective way of improving the
efficiency of this equipment. DOE
reached this tentative conclusion based
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on the preliminary determination by the
ASHRAE Standard 90.1 committee for
Draft Addendum CL that raising the full
load efficiency standard would not be
cost-effective. DOE also takes note of the
comments from interested parties that
manufacturers are already reaching the
thermodynamic limits with respect to
full load efficiency for CUAC and CUHP
equipment, which is limiting the
potential for further full load efficiency
improvements for these HVAC
equipment. For these reasons, DOE is
not considering standards based on the
EER metric. Based on energy modeling
of design changes consistent with
equipment available on the market (by
analyzing the efficiency at each loading
condition, including full-load EER), as
discussed in sections IV.A through IV.C,
DOE notes that the proposed IEER-based
standard levels presented in section I
would not result in an EER rating less
than the current standard levels. DOE
discusses the use of the COP metric in
the following section.
Heating Efficiency Metric
The current energy conservation
standards for small, large, and very large
air-cooled CUHP heating efficiency are
based on the COP metric.31 10 CFR
431.97(b)
In response to the RFI, Ingersoll Rand
commented that a performance metric
does not exist that simulates part load
performance in heating. (Ingersoll Rand,
No. 6 at p. 4) Modine commented that
DOE could consider creating a new
metric for CUHP, an integrated COP that
is based on heating weather bin data, to
provide a more representative measure
of energy efficiency during the heating
mode. (Modine, No. 5 at p. 2)
DOE is not aware of any test
procedures that have been developed
that measure part load performance in
heating mode for small, large, and very
large air-cooled CUHP. In addition, DOE
notes that Modine did not provide any
data, nor is DOE aware of any data,
regarding the annual usage for CUHP
under part-load heating conditions to
determine whether part-load heating
hours are significant and would warrant
the development of a part-load heating
metric. As discussed in section IV.C.3,
one manufacturer noted that CUHPs
typically operate in full load heating
mode and cycle the auxiliary heat on
and off because heat pump capacity
alone is inadequate to meet the building
load. In addition, DOE is unaware of
data regarding usage patterns for CUHP
to determine appropriate test conditions
under part-load heating conditions.
31 COP is defined as the ratio of the produced
heating effect to its net work input.
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Because DOE is unaware of any test
procedures or usage data regarding partload performance in heating mode for
CUHP that shows that part-load heating
hours are significant, DOE is not
considering amendments to the test
procedure to measure part-load heating
efficiency at this time. For this NOPR,
DOE is proposing standards for the
heating efficiency based on the COP
metric.
Regional Standards
In response to the RFI, NEEA and NBI
stated that DOE should consider
regional standards for small, large, and
very large air-cooled CUAC and CUHP.
(NEEA, No. 15 at p. 2; NBI, No. 12 at
p. 2) NEEA commented that AHRI
Standard 340/360 tends to favor certain
climate zones and exclude or decrease
savings by only having one efficiency
value to characterize the 8 climate zones
in the United States. NEEA also stated
that the test procedure tends to under
value fan energy as external static
pressure values are optimistically low.
According to NEEA and NBI, the use of
regional efficiency standards would
increase energy savings and reflect the
equipment selection options for design
engineers in selecting equipment for
varying climatic zones. NEEA added
that regional standards would increase
and bolster technological development
of air conditioning equipment for
varying climate zones. NBI stated that,
in particular, DOE should investigate
regional standards for ‘‘hot-dry’’
climates to recognize the significant
research and field experience that
allows packaged air conditioners to
cost-effectively achieve higher
efficiencies in these climates. NBI stated
that DOE has developed regional
standards for other residential HVAC
equipment (10 CFR 430.32(c)(5). NBI
commented that DOE should consider
adopting CCE Tier 2 ratings for ‘‘hotdry’’ regional standards. (NEEA, No. 15
at p. 2; NBI, No. 12 at p. 2)
EPCA requires that any amended
standard for small, large, and very large
air-cooled CUAC and CUHP must be a
uniform national standard. (42 U.S.C.
6313(a)(6)(A)) EPCA does not provide
DOE with the authority to set regional
standards for CUAC and CUHP
equipment. As a result, DOE is not
considering regional standards for
small, large, and very large air-cooled
CUAC and CUHP.
Issue 1: DOE requests comment on the
use of IEER as the cooling efficiency
metric and COP as the heating efficiency
metric (for CUHP) for the proposed
energy conservation standards,
including additional data and input
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B. Technological Feasibility
the NOPR TSD.) The max-tech levels
that DOE determined for this
rulemaking are described in section
IV.C.3 of this proposed rule.
1. General
C. Energy Savings
regarding the uncertainty of IEER test
measurements.
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 equipment or in
working prototypes to be
technologically feasible. 10 CFR part
430, subpart C, appendix A, section
4(a)(4)(i).
After DOE has determined that
particular technology options are
technologically feasible, it further
evaluates each technology option in
light of the following additional
screening criteria: (1) Practicability to
manufacture, install, and service; (2)
adverse impacts on equipment utility or
availability; and (3) adverse impacts on
health or safety. 10 CFR part 430,
subpart C, appendix A, section
4(a)(4)(ii)–(iv). Section IV.B of this
proposed rulemaking discusses the
results of the screening analysis for
small, large, and very large air-cooled
CUAC and CUHP, particularly the
designs DOE considered, those it
screened out, and those that are the
basis for the TSLs in this rulemaking.
For further details on the screening
analysis for this rulemaking, see chapter
4 of the NOPR Technical Support
Document (TSD).
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2. Maximum Technologically Feasible
Levels
When DOE proposes to adopt an
amended standard for a type or class of
covered equipment, it must determine
the maximum improvement in energy
efficiency or maximum reduction in
energy use that is technologically
feasible for such equipment.
Accordingly, in the engineering
analysis, DOE determined the maximum
technologically feasible (‘‘max-tech’’)
improvements in energy efficiency for
small, large, and very large air-cooled
CUAC and CUHP, using the design
parameters for the most efficient
equipment available on the market or in
working prototypes. (See chapter 5 of
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1. Determination of Savings
For each TSL, DOE projected energy
savings from the products that are the
subject of this rulemaking purchased in
the 30-year period that begins in the
year of compliance with amended
standards (2019–2048). The savings are
measured over the entire lifetime of
products purchased in the 30-year
analysis period.32 DOE quantified the
energy savings attributable to each TSL
as the difference in energy consumption
between each standards case and the
base case. The base case represents a
projection of energy consumption in the
absence of amended mandatory
efficiency standards, and it considers
market forces and policies that affect
demand for more efficient products.
DOE used its national impact analysis
(NIA) spreadsheet model to estimate
energy savings from amended standards
for the products that are the subject of
this rulemaking. The NIA spreadsheet
model (described in section IV.H of this
proposed rule) calculates energy savings
in site energy, which is the energy
directly consumed by products at the
locations where they are used. For
electricity, DOE reports national energy
savings in terms of the savings in the
energy that is used to generate and
transmit the site electricity. To calculate
this quantity, DOE derives annual
conversion factors from the model used
to prepare the Energy Information
Administration’s (EIA) most recent
Annual Energy Outlook (AEO).
DOE has begun to also estimate fullfuel-cycle energy savings, as discussed
in DOE’s statement of policy and notice
of policy amendment. 76 FR 51281
(August 18, 2011), as amended at 77 FR
49701 (August 17, 2012). The full-fuelcycle (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 efficiency standards.
DOE’s evaluation of FFC savings is
driven in part by the National Academy
of Science’s (NAS) report on FFC
measurement approaches for DOE’s
32 In the past DOE presented energy savings
results for only the 30-year period that begins in the
year of compliance. In the calculation of economic
impacts, however, DOE considered operating cost
savings measured over the entire lifetime of
products purchased in the 30-year period. DOE has
chosen to modify its presentation of national energy
savings to be consistent with the approach used for
its national economic analysis.
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58961
Appliance Standards Program.33 The
NAS report discusses that the FFC
metric was primarily intended for
energy efficiency standards rulemakings
where multiple fuels may be used by a
particular product. In the case of this
rulemaking, only a single fuel—
electricity—is consumed by the
equipment. DOE’s approach is based on
the calculation of an FFC multiplier for
each of the energy types used by
covered equipment. Although the
addition of FFC energy savings in the
rulemakings is consistent with the
recommendations, the methodology for
estimating FFC does not project how
fuel markets would respond to this
particular standard rulemaking. The
FFC methodology simply estimates how
much additional energy, and in turn
how many tons of emissions, may be
displaced if the estimated quantity of
energy was not consumed by the
equipment covered in this rulemaking.
It is also important to note that
inclusion of FFC savings does not affect
DOE’s choice of proposed standards.
For more information on FFC energy
savings, see section IV.H.2.
2. Significance of Savings
To adopt national standards more
stringent than the amended ASHRAE/
IES Standard 90.1 for small, large, and
very large air-cooled CUAC and CUHP,
DOE must determine that such action
would result in significant additional
conservation of energy. (42 U.S.C.
6313(a)(6)(A)(ii)) Although the term
‘‘significant’’ is not defined in the Act,
the U.S. Court of Appeals, in Natural
Resources Defense Council v.
Herrington, 768 F.2d 1355, 1373 (D.C.
Cir. 1985), indicated that Congress
intended ‘‘significant’’ energy savings in
the context of EPCA to be savings that
were not ‘‘genuinely trivial.’’ The energy
savings for today’s proposed standards
(presented in section V.B) are nontrivial,
and, therefore, DOE considers them
‘‘significant’’ within the meaning of
section 325 of EPCA.
D. Economic Justification
1. Specific Criteria
EPCA provides seven factors to be
evaluated in determining whether a
more stringent standard for small, large,
and very large air-cooled CUAC and
CUHP is economically justified. (42
U.S.C. 6313(a)(6)(B)(ii)) The following
sections discuss how DOE has
33 ‘‘Review of Site (Point-of-Use) and Full-FuelCycle Measurement Approaches to DOE/EERE
Building Appliance Energy-Efficiency Standards,’’
(Academy report) was completed in May 2009 and
included five recommendations. A copy of the
study can be downloaded at: https://www.nap.edu/
catalog.php?record_id=12670.
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addressed each of those seven factors in
this rulemaking.
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a. Economic Impact on Manufacturers
and Consumers
In determining the impacts of a
potential amended standard on
manufacturers, DOE conducts a
manufacturer impact analysis (MIA), as
discussed in section IV.J. 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 industrywide impacts analyzed include industry
net present value (INPV), which values
the industry on the basis of expected
future cash flows; cash flows by year;
changes in revenue and income; and
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 life-cycle cost (LCC) and payback
period (PBP) associated with new or
amended standards. These measures are
discussed further in the following
section. For consumers in the aggregate,
DOE also calculates the national net
present value of the economic impacts
applicable to a particular rulemaking.
DOE also evaluates the LCC impacts of
potential standards on identifiable
subgroups of consumers that may be
affected disproportionately by a national
standard.
b. Savings in Operating Costs Compared
to Increase in Price
EPCA requires DOE to consider the
savings in operating costs throughout
the estimated average life of the covered
product compared to any increase in the
price of the covered product that are
likely to result from the imposition of
the standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this
comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase
price of a product (including its
installation) and the operating expense
(including energy, maintenance, and
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repair expenditures) discounted over
the lifetime of the product. 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. For its analysis,
DOE assumes that consumers will
purchase the covered products in the
first year of compliance with amended
standards.
The LCC savings and the PBP for the
considered efficiency levels are
calculated relative to a base case that
reflects projected market trends in the
absence of amended standards. DOE
identifies the percentage of consumers
estimated to receive LCC savings or
experience an LCC increase, in addition
to the average LCC savings associated
with a particular standard level. DOE’s
LCC and PBP analysis is discussed in
further detail in section IV.F.
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.
6313(a)(6)(B)(ii)(III)) As discussed in
section IV.H, DOE uses the NIA
spreadsheet to project national energy
savings.
d. Lessening of Utility or Performance of
Products
In establishing classes of products,
and in evaluating design options and
the impact of potential standard levels,
DOE evaluates standards that would not
lessen the utility or performance of the
considered products. (42 U.S.C.
6313(a)(6)(B)(ii)(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.
6313(a)(6)(B)(ii)(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
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nature and extent of the impact. (42
U.S.C. 6295(o)(2) (B)(ii)) DOE will
transmit a copy of today’s proposed rule
to the Attorney General with a request
that the Department of Justice (DOJ)
provide its determination on this issue.
DOE will address the Attorney General’s
determination in the final rule.
f. Need for National Energy
Conservation
In evaluating the need for national
energy conservation, DOE expects that
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.
The proposed standards also are
likely to result in environmental
benefits in the form of reduced
emissions of air pollutants and
greenhouse gases associated with energy
production. DOE reports the emissions
impacts from the proposed standards,
and from each TSL it considered, in
section V.B.6 of this proposed
rulemaking. DOE also reports estimates
of the economic value of emissions
reductions resulting from the
considered TSLs, as discussed in
section IV.L.
g. Other Factors
EPCA allows the Secretary of Energy,
in determining whether a standard is
economically justified, to consider any
other factors that the Secretary deems to
be relevant. (42 U.S.C.
6313(a)(6)(B)(ii)(VII))
2. Rebuttable Presumption
As set forth in 42 U.S.C.
6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy
conservation standard is economically
justified if the additional cost to the
consumer of a product that meets the
standard is less than three times the
value of the first year’s energy savings
resulting from the standard, as
calculated under the applicable DOE
test procedure. DOE’s LCC and PBP
analyses generate values used to
calculate the effects that proposed
energy conservation standards would
have on the payback period for
consumers. These analyses include, but
are not limited to, the 3-year payback
period contemplated under the
rebuttable-presumption test. In addition,
DOE routinely conducts an economic
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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.12 of this
proposed rule.
IV. Methodology and Discussion of
Related Comments
DOE used four analytical tools to
estimate the impact of today’s proposed
standards. The first tool is a spreadsheet
that calculates LCCs and PBPs of
potential new energy conservation
standards. The second tool is a model
that provides shipments forecasts, and
the third tool is a spreadsheet that
calculates national energy savings and
net present value resulting from
potential amended energy conservation
standards. The fourth spreadsheet tool,
the Government Regulatory Impact
Model (GRIM), helped DOE to assess
manufacturer impacts.
Additionally, DOE estimated the
impacts of energy conservation
standards for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment on
utilities and the environment. DOE used
a version of EIA’s National Energy
Modeling System (NEMS) for the utility
and environmental analyses. The NEMS
model simulates the energy sector of the
U.S. economy. EIA uses NEMS to
prepare its Annual Energy Outlook
(AEO), a widely known energy forecast
for the United States. The version of
NEMS used for appliance standards
analysis is called NEMS–BT 34 and is
based on the AEO version with minor
modifications.35 The NEMS–BT model
offers a sophisticated picture of the
effect of standards, because it accounts
for the interactions between the various
energy supply and demand sectors and
the economy as a whole.
As discussed below, specifically in
section IV.D on the markups analysis
and section IV.E on the energy use
analysis, DOE utilized methods
developed for the 2004 ANOPR to
conduct these analyses. In the case of
the markups analysis, DOE utilized the
same distribution channels as the 2004
ANOPR to characterize how small,
large, and very large air-cooled CUAC
equipment is distributed from the
manufacturer to the end-user. In the
case of the energy use analysis, building
simulations performed for the 2004
ANOPR laid the basis for estimating the
annual energy consumption of small,
large, and very large air-cooled CUAC
equipment. However, DOE incorporated
several modifications to the simulations
themselves as well as detailed
performance data from the Engineering
Analysis to estimate the energy
consumption of equipment at the
specific energy efficient levels evaluated
in today’s NOPR. DOE also notes that
inputs to the LCC and PBP analysis,
including the installation and
maintenance costs, used the same data
source as the 2004 ANOPR, but DOE
updated the data to reflect the most
recent version of the data source.
A. Market and Technology Assessment
1. General
For the market and technology
assessment, DOE develops information
that provides an overall picture of the
market for the equipment concerned,
including the purpose of the equipment,
the industry structure, and market
characteristics. 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 scope of coverage,
equipment classes, types of equipment
sold and offered for sale, and technology
options that could improve the energy
efficiency of the equipment under
58963
examination. Chapter 3 of the NOPR
TSD contains additional discussion of
the market and technology assessment.
2. Scope of Coverage and Equipment
Classes
The proposed energy conservation
standards in today’s NOPR cover small,
large, and very large, air-cooled CUAC
and CUHP under section 342(a) of
EPCA. (42 U.S.C. 6313(a)) This category
of equipment has a rated capacity
between 65,000 Btu/h and 760,000 Btu/
h. It is designed to heat and cool
commercial buildings. In the case of
single-package units, which house all of
the components (i.e., compressor,
condenser and evaporator coils and
fans, and associated operating and
control devices) within a single cabinet,
these units are typically located on the
building’s rooftop. In the case of splitsystem units, the compressor and
condenser coil and fan (or in the case of
CUHP, the outdoor coil and fan) are
housed in a cabinet typically located on
the outside of the building, and the
evaporator coil and fan (or in the case
of CUHP, the indoor coil and fan) are
housed in a cabinet typically located
inside the building.
When evaluating and establishing
energy conservation standards, DOE
divides covered equipment into
equipment classes by the type of energy
used or by capacity or other
performance-related features that would
justify a different standard. In
determining whether a performancerelated feature would justify a different
standard, DOE considers such factors as
the utility to the consumer of the feature
and other factors DOE determines are
appropriate.
The current equipment classes that
EPAct 2005 established for small, large,
and very large air-cooled CUAC and
CUHP divide this equipment into
twelve classes characterized by rated
cooling capacity, equipment type (air
conditioner versus heat pump), and
heating type. Table IV.1 shows the
current equipment class structure.
TABLE IV.1—PROPOSED EQUIPMENT CLASSES
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Equipment
class
Equipment type
Cooling capacity
Sub-category
Heating type
1 .................
Small Commercial Packaged Air-Conditioning
and Heating Equipment (Air-Cooled).
.........................................................................
.........................................................................
≥65,000 Btu/h and <135,000
Btu/h.
.................................................
.................................................
AC ....................
Electric Resistance Heating or
No Heating.
All Other Types of Heating.
Electric Resistance Heating or
No Heating.
2 .................
3 .................
34 BT stands for DOE’s Building Technologies
Program.
35 The EIA allows the use of the name ‘‘NEMS’’
to describe only an AEO version of the model
without any modification to code or data. Because
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the present analysis entails some minor code
modifications and runs the model under various
policy scenarios that deviate from AEO
assumptions, the name ‘‘NEMS–BT’’ refers to the
model as used here. For more information on
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...........................
HP ....................
NEMS, refer to The National Energy Modeling
System: An Overview, DOE/EIA–0581 (98)
(Feb.1998), available at: https://tonto.eia.doe.gov/
FTPROOT/forecasting/058198.pdf.
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TABLE IV.1—PROPOSED EQUIPMENT CLASSES—Continued
Equipment
class
Equipment type
Cooling capacity
Sub-category
Heating type
4 .................
5 .................
.........................................................................
Large Commercial Packaged Air-Conditioning
and Heating Equipment (Air-Cooled).
.........................................................................
.........................................................................
.................................................
≥135,000 Btu/h and <240,000
Btu/h.
.................................................
.................................................
...........................
AC .....................
.................................................
≥240,000 Btu/h and <760,000
Btu/h.
...........................
AC ....................
10 ...............
11 ...............
.........................................................................
Very Large Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled).
.........................................................................
.........................................................................
All Other Types of Heating.
Electric Resistance Heating or
No Heating.
All Other Types of Heating.
Electric Resistance Heating or
No Heating.
All Other Types of Heating.
Electric Resistance Heating or
No Heating.
.................................................
.................................................
...........................
HP ....................
12 ...............
.........................................................................
.................................................
...........................
6 .................
7 .................
8 .................
9 .................
...........................
HP ....................
All Other Types of Heating.
Electric Resistance Heating or
No Heating.
All Other Types of Heating.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
AC = Air conditioner; HP = Heat pump.
In the RFI, DOE stated that it planned
to continue using these classes, which
are also provided in Table 1 of 10 CFR
431.97. DOE requested feedback on the
current equipment classes and sought
information regarding other equipment
classes it should consider for inclusion
in its analysis 78 FR 7296, 7300 (Feb. 1,
2013).
Modine, Carrier, and AAON
supported the equipment class
structures presented in the RFI.
(Modine, No. 5 at p. 1; Carrier, No. 7 at
p. 2; AAON, No. 8 at p. 3) AHRI
disagreed with DOE’s determination
that every equipment category for which
there is a minimum energy conservation
standard is an equipment class. AHRI
stated that equipment classes should be
delineated based on cooling capacity
and on whether the unit is an air
conditioner or a heat pump. AHRI
commented that the same equipment
class could have two different efficiency
levels (e.g., one for equipment with
electric resistance heat (or none) and the
other for equipment with all other types
of heating element). (AHRI, No. 14 at p.
5)
As discussed above, EPCA specifies
the criteria for separation into different
equipment classes: (1) Type of energy
used, or (2) capacity or other
performance-related features such as
those that provide utility to the
consumer or others the Secretary
determines are appropriate that would
justify the establishment of a separate
energy conservation standard. DOE
notes that considering two different
efficiency levels for different equipment
types, as asserted by AHRI, would create
two separate equipment classes because
a performance-related feature (e.g., type
of heating) inherently affects the
efficiency and warrants establishing a
separate energy conservation standard.
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For these reasons, DOE is proposing
energy conservation standards in this
NOPR based on the existing equipment
class structure provided in Table 1 of 10
CFR 431.97, as shown in Table IV.1.
United CoolAir Corporation (UCA)
submitted a request for exemption for a
specific type of air conditioning
equipment (‘‘double-duct air-cooled air
conditioner’’). See UCA, EERE–2013–
BT–STD–0007–0020. These units are
designed for indoor installation in
constrained spaces using ducting to an
outside wall for the supply and
discharge of condenser air to the
condensing unit. The sizing of these
units is constrained both by the space
available in the installation location and
the available openings in the building
through which the unit’s sections must
be moved to reach the final installation
location. These size constraints, coupled
with the higher power required by the
condenser fan to provide sufficient
pressure to move the condenser air
through the supply and return ducts,
affect the energy efficiency of these
types of systems. More conventional
designs that use outdoor units or
condenser sections of packaged
commercial air conditioners do not
require this more complex ductwork
and can more easily move condenser air
using direct-driven propeller fans.
Currently, double-ducted air
conditioners are tested and rated under
the same test conditions as single-duct
air conditioners, without any ducting
connected to, or an external static
pressure applied on, the condenser side.
This would provide more favorable
conditions for testing and rating
equipment efficiency in terms of IEER
than typically experienced in the field.
UCA has asserted that the double-duct
design provides customer utility in that
it allows interior field installations in
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existing buildings in circumstances
where spacing constraints make an
outdoor unit impractical to use. Id. DOE
recognizes that the design features
associated with the described dual-duct
designs may affect energy use while
providing justifiable customer utility.
However, DOE also questions how
much of an efficiency impact, in terms
of IEER, the dual-duct design may
provide when tested under the current
test conditions discussed above
compared to single-duct air conditioners
and welcomes additional data regarding
the impact on the measured IEER.
Issue 3: DOE requests comments on
whether separate equipment classes
should be considered for dual-duct airconditioners. DOE further requests
detailed comments regarding the
definition of such equipment, and any
detailed information, such as test data,
test conditions, key component design
details, fan power consumption, as well
as other relevant information that may
help DOE evaluate potential alternative
equipment class standard levels.
3. Technology Options
As part of the market and technology
assessment, DOE uses information about
existing and past technology options
and prototype designs to help identify
technologies that manufacturers could
use to improve energy efficiency.
Initially, these technologies encompass
all those that DOE believes are
technologically feasible. Chapter 3 of
the NOPR TSD includes the detailed list
and descriptions of all technology
options identified for this equipment.
In the RFI, DOE stated that it planned
to consider the specific technology
options presented in Table IV.2. 78 FR
7296, 7300 (Feb. 1, 2013).
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TABLE IV.2—RFI TECHNOLOGY OPTIONS
Heat transfer improvements:
• Electro-hydrodynamic enhancement.
Alternative refrigerants.
Condenser and evaporator fan and fan motor improvements:
• Larger fan diameters.
• More efficient fan blades (e.g., air foil centrifugal evaporator fans, backward-cured centrifugal evaporator fans, high efficiency propeller
condenser fans).
• High efficiency motors (e.g., copper rotor motor, high efficiency induction, permanent magnet, electronically commutated).
Larger heat exchangers.
Microchannel heat exchangers.
Reduce air leakage paths within the unit.
Low-pressure-loss filters.
Compressor Improvements:
• High efficiency compressors.
• Multiple compressors.
Thermostatic expansion valves.
Electronic expansion valves.
High-side solenoid valve or discharge line check-valve to minimize pressure equalization.
Heat-pipes (for high latent loads).
Sub-coolers.
Reduced indoor fan belt loss:
• Synchronous (toothed) belts.
• Direct-drive fans.
Demand-control ventilation strategy.
The RFI sought comment from
interested parties on these, as well as
other options that DOE had not listed.
Carrier commented that, in general,
many of the technologies presented by
DOE in the RFI are already used in
equipment. (Carrier, No. 7 at p. 2) DOE
agrees that many of the technologies are
used in equipment currently available
on the market. As a result, DOE
continued to consider such technologies
for improving the efficiency above the
baseline level for this NOPR. DOE also
notes that for the majority of the
identified technology options, DOE
considered designs in its analyses that
are generally consistent with existing
equipment on the market (e.g., heat
exchanger sizes, fan and fan motor
types, controls, air flow).
The following sections discuss
comments from interested parties on
specific technology options.
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Heat Exchanger Size
Increasing the heat transfer surface
area of the heat exchangers can be
achieved by increasing their width,
height, or depth. These measures can
improve heat transfer effectiveness,
which can reduce the condensing
temperature and increase the
evaporating temperature needed to
transfer the cooling (or heating) load.
Such temperature adjustments reduce
the compressor’s compression ratio and
hence its required power input. Lennox
indicated that evaporator coil area is
already near the maximum for optimum
efficiency and latent heat removal.
Lennox stated that increasing the coil
area leads to higher evaporating
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temperatures, lessening the ability of the
coil to remove moisture from the air,
which could lead to humidity control
problems in hot humid regions.
(Lennox, No. 6 at p. 2) Lennox also
commented that adding coil rows
increases costs proportional to the
number of rows, but provides less than
proportional efficiency gain. (Lennox,
No. 6 at p. 2)
DOE agrees with Lennox that
increasing the evaporator size may lead
to a decrease in latent heat removal.
Based on a review of currently available
equipment literature and DOE’s energy
modeling analyses, DOE determined
that, for a given capacity, the heat
exchanger sizes varied significantly,
with larger coil sizes generally
correlating to higher IEER levels (see
chapter 5 of the NOPR TSD for
additional information).36 As part of the
engineering analysis, the design options
36 The following are examples of the equipment
literature DOE reviewed:
(1) United Technologies Corporation. ‘‘Carrier
50TC Cooling Only/Electric Heat, Packaged
Rooftop, 3 to 15 Nominal Tons: Product Data.’’
Available online at: https://
www.docs.hvacpartners.com/idc/groups/public/
documents/techlit/50tc-19pd.pdf (Accessed on
Sept. 12, 2013).
(2) Lennox International Inc. ‘‘Lennox Packaged
Electric/Electric LCH Energence® Rooftop Units:
Product Specifications.’’ Available online at:
https://tech.lennoxintl.com/C03e7o14l/3rEpIb5d/
ehb_lch_bbox_1306_210556_020.pdf (Accessed on
Sept. 12, 2013).
(3) Ingersoll Rand. ‘‘Trane Product Catalog:
Packaged Rooftop Air Conditioners, VoyagerTM
Cooling and Gas/Electric, 121⁄2–25 Tons, 60Hz’’
Available online at: https://www.trane.com/CPS/
Uploads/UserFiles/DXUnitarySystems/
Light%20Rooftops/RT-PRC028-EN_08022013.pdf
(Accessed on Sept. 12, 2013).
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DOE considered for different IEER levels
include the variation of evaporator coil
size, and DOE’s analysis considered
evaporator coil sizes consistent with
equipment available on the market.
Fans and Fan Motors
As stated above, DOE proposed
several improvements to the indoor and
outdoor fan motors, including copper
rotor motors, higher efficiency motors,
and direct-drive fans, and synchronous
belts.
Manufacturing more efficient copper
rotor motors requires using copper
instead of aluminum for critical
components of an induction motor’s
rotor (e.g., conductor bars and end
rings). By using copper in these motor
components, the efficiency of the motor
can improve significantly because the
electrical conductivity of this material,
relative to other materials commonly
used in rotor construction (e.g.
aluminum) is much higher (i.e., lower
electrical resistance). With this higher
level of conductivity, the electrical
losses that might otherwise present
themselves during operation in a given
motor are significantly reduced.
However, using a copper-cast rotor in an
electric motor presents a variety of
production challenges. For example,
copper melts at higher temperatures
than aluminum, so the casting process
becomes more difficult (due to higher
thermal stress on the die mold) and is
likely to increase both production time
and cost for manufacturing a motor.
EBM-Papst Inc. (EBM-Papst)
commented that copper rotor motors
provide marginally increased efficiency
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over aluminum and aluminum alloy
rotor motors. EBM-Papst noted that the
torque characteristic of copper rotor
motors is very stiff, so that copper rotor
motors cannot control speed based on
voltage and, as a result, variable speed
copper rotor motors would require
variable frequency drives. EBM-Papst
also indicated that casting of copper
requires very high temperatures and
very specialized tools. (EBM-Papst, No.
16, p. 1)
DOE agrees with EBP-Papst that
copper rotor motors are more difficult to
manufacture than aluminum rotor
motors due to the high temperatures
required for casting. However, as part of
the previous rulemaking for this
equipment, DOE noted that in the case
of motor rotors for similar horsepower
motors, copper rotors can reduce the
electric motor total energy losses by
between 15 percent and 23 percent as
compared to aluminum rotors.37 DOE
also notes that, based on a review of
equipment literature, equipment is
available on the market that offers
variable speed indoor fan motors using
variable frequency drives. As a result,
DOE considered copper rotor motors as
a technology option.
High-efficiency electric motors that
drive evaporator and condenser fans can
increase efficiency and reduce overall
energy use in air-cooled CUAC and
CUHP. EBM-Papst stated that highefficiency permanent magnet motors are
available with ferrite magnets. EBMPapst indicated that external rotor
permanent magnet motors with
completely integrated drive electronics
are available up to a 6 kilowatt (kW) (8
horsepower) electrical input. EBM-Papst
stated that versions with 7.5 kW and 12
kW (10 horsepower and 15 horsepower),
which DOE notes may be applicable for
very large air-cooled CUAC and CUHP
indoor fan motors, will become
available in 2013 and 2014,
respectively. In light of EBM-Papst’s
information, DOE decided to consider
higher efficiency permanent magnet
motors as part of its list of technology
options because they may reduce the
energy consumption compared to
motors currently used by manufacturers
for CUAC and CUHP equipment. As
discussed above, DOE’s analysis
considered fan motors consistent with
equipment available on the market.
Direct-drive fans connect the fan
blade/wheel directly to the motor shaft,
thereby eliminating drive belt energy
loss. EBM-Papst also commented that
37 See chapter 4 of the TSD for the July 2004
ANOPR, available online at: https://
www.regulations.gov/#!documentDetail;D=EERE2006-STD-0103-0078.
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direct-drive fans prevent friction power
losses that can be found in fans with
mechanical transmission components
even when these components are
perfectly aligned with properlytightened high-quality belts. (EBMPapst, No. 16 at p. 2) DOE notes that
certain air-cooled CUAC and CUHP
currently available on the market
already incorporate direct-drive fans in
higher efficiency equipment. As a result,
DOE proposes to keep direct-drive fans
on the list of technologies.
Another option to improve efficiency
would be to increase the diameter of the
outdoor fan, which reduces the
discharge velocity of the air leaving the
condenser fan. The energy associated
with the discharge velocity is dissipated
and cannot be recovered, hence, a lower
discharge velocity reduces this loss and
reduces fan power input. Regarding
increasing the outdoor fan diameter,
EBM-Papst commented that fan
efficiency varies significantly with the
fan’s duty point. EBM-Papst noted that
many fans are selected with the
operating point very far to the right of
the point of peak efficiency (i.e., fans are
designed for higher flow rates and are
sized smaller than is optimal for
efficiency) and that such selections
yield lower first cost and smaller
equipment size. EBM-Papst stated that
fan selections that match the duty point
closer with the fan’s peak efficiency are
usually larger. Moreover, EBM-Papst
commented that despite the potential
increase in operational fan efficiency, a
larger fan—while operating at lower
rotational speed—can require a slightly
higher motor torque, which results in
the need for a larger motor frame size.
(EBM-Papst, No. 16, p. 2) (Larger framesized motors provide higher horsepower
and torque levels.) Lennox also
commented that fan efficiency increases
with fan diameter, but that cabinet size
and shipping dimensions constrain the
ability of manufacturers to increase fan
diameters much beyond the current
sizes. (Lennox, No. 6 at p. 2)
With respect to these comments, DOE
recognizes that fan efficiency can play a
role in improving CUAC/CUHP
efficiency. DOE also realizes that fan
diameter size is limited by cabinet sizes
and shipping dimensions. DOE has
incorporated fan diameter and motor
sizes consistent with existing equipment
available on the market to ensure that
components are appropriately sized.
EBM-Papst suggested that DOE
consider that company’s HyBlade® axial
fan and AxiTop diffuser for axial fans as
technology options for improving
condenser fan efficiency. (EBM-Papst,
No. 16 at p. 3) EBM-Papst stated that the
HyBlade® axial fan uses a blade with a
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metal core for structural strength and
motor heat dissipation, while using
injection molded blade surfaces for
advanced geometries that allow for
optimized aerodynamic shape, resulting
in increased efficiency compared to
conventional fan blades. (EBM-Papst,
No. 16 Appendix 4 at p. 2) According
to EBM-Papst, the Axitop diffuser
reduces discharge losses due to
stripping and back-flow of air and, as a
result, boosts the pressure increase of
the fan. This increases the efficiency of
the fan and allows the fan speed to be
reduced (i.e., fan motors may run at
lower power) while producing the same
air volume, resulting in a decrease in
energy use of the overall system. EBMPapst noted that in one customer
application (at constant air volume),
energy consumption was reduced by 27
percent using this technology. (EBMPapst, No. 16 Appendix 3 at pp. 1–2)
DOE notes that both of these
technologies are patented by EBMPapst. DOE does not intend to consider
energy conservation standards that
would necessitate the use of any
proprietary designs or patented
technologies, which could allow a
single manufacturer to monopolize the
market. As a result, DOE is not
considering EBM-Papst’s HyBlade®
axial fan and AxiTop diffuser as
technology options in this NOPR.
However, DOE notes that the proposed
energy conservation standards would
not prohibit the use of these
technologies.
EBM-Papst made several comments
regarding indoor fan energy use and
available design options to improve
their efficiency—which, by extension,
would improve overall CUAC/CUHP
efficiency. EBM-Papst commented that
unnecessary electrical consumption by
indoor fans impacts the energy
efficiency doubly, because of the
additional heat load on the conditioned
space. DOE recognizes that the heat load
caused by the indoor motor may result
in added energy consumption to cool
the air heated by the motor. DOE notes
that the energy modeling tool used in
the engineering analyses is already
designed to account for the heat load
caused by the indoor fan motor as part
of the overall system performance.
An airfoil centrifugal fan is a type of
fan that has blades shaped like air foils
that are inclined such that the blade
trailing edge is angled away from the
rotation direction. The best airfoil fans
can operate at efficiencies near 90
percent.38 Utilizing this type of fan for
38 United States Army. December 9, 2005.
Maintenance of Mechanical and Electrical
Equipment At Command, Control,
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indoor fan applications can improve the
efficiency of the CUAC/CUHP system.
Regarding specific indoor fan types,
EBM-Papst stated that airfoil centrifugal
fans are known for low sound.
Additionally, EBM-Papst stated that the
efficiency benefits of airfoil impellers
over backward curved impellers (which
have the tips of its blades inclined away
from the direction of the airflow,
enabling it to move air at higher
pressures) should be examined closely.
(EBM-Papst, No. 16 at p. 2) Although
EBM-Papst did not provide details
regarding the low sound feature, DOE
recognizes that the airfoil centrifugal fan
has less friction losses during operation,
which produces less noise, and also
results in lower power consumption.
DOE acknowledges that
manufacturers may offer features that
are beneficial to consumers, like low
sound fans, but do not impact
efficiency. A number of manufacturers
indicated that airfoil centrifugal fans
and backward curved centrifugal fans
(i.e., similar to airfoil fans, but they have
simpler blades and cannot attain
comparable efficiencies) may improve
IEER due to lower fan power
consumption. As a result, DOE proposes
to include these fan types on the list of
technology options. As discussed above,
DOE considered technology options and
designs that are generally consistent
with existing equipment on the market.
Additionally, as part of the reverse
engineering analysis (see section
IV.C.1), DOE considered fan curves and
test data to account for the performance
of the fans as part of the air-cooled
CUAC and CUHP.
EBM-Papst also provided the
following comments on other fan and
fan motor efficiency improving
technologies:
• Lower air-speed results in lower fan
energy losses and EBM-Papst
recommended imposing an upper limit
for air speed inside of the commercial
package equipment, referenced to air
inlet area, the air outlet area, and/or air
filter area. Air-speed of less than 2.5
meters/second would be ideal.
• Optimize the air path in the unit to
minimize airflow impedance.
• Optimize the fan selection in terms
of fan diameter, and fan type (axial,
centrifugal forward curved, centrifugal
backward curved, cross flow, mixed
flow) so that the fan duty point of its
peak efficiency is: (1) Close to the actual
fan duty point required by the
Communications, Computers, Intelligence,
Surveillance, and Reconnaissance (C4isr) Facilities,
HQUSACE/OCE Army Technical Manuals [Online
Report]. DOE documented this report in the
rulemaking docket as docket ID EERE–2013–BT–
STD–0007–0019.
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commercial package equipment, and (2)
that the chosen fan type enhances the
air path in the unit.
• Fine-tune the fan design (blade
angle, number of blades, impeller
width) so that the fan’s operational
efficiency in the unit matches the fan
peak efficiency exactly.
• Some electronic motor speed
controllers can cause structure-borne
noise. A better controller potentially
avoids the need for sound attenuation,
which in turn, frees up the air path for
increased air-side efficiency.
• Improve the combination of fans
with motors and speed controllers. A
regulation harmonized with EN
13053:2006+A1 would limit the
maximum permitted electrical power
consumption of the motorized fan.
Equation (6) in EN 13053 determines a
reference power input based on fan
static pressure and on airflow. The
resulting product is compared against a
table which categorizes the equipment
in class P1 (best) through class P7
(worst). (EBM-Papst, No. 16 at p. 3)
DOE agrees that reducing the air
speed can reduce fan power
consumption and included variable or
staged air flow as a technology option.
DOE also recognizes that optimizing fan
type and fan design may decrease the
fan power consumption and thus
improve the efficiency of the air-cooled
CUAC and CUHP. As a result, DOE is
including these designs on the list of
technology options. DOE also agrees
that appropriately matching the fan with
the fan motor improves efficiency.
However, DOE proposes to evaluate aircooled CUAC and CUHP as a whole and
does not propose to set separate
performance requirements for the fan
assembly. With regards to EBM-Papst’s
comments concerning optimizing air
paths and better motor controllers,
DOE’s analyses considered air flow
paths and control systems consistent
with existing equipment available on
the market.
Electronic Expansion Valves
Expansion valves are refrigerant
metering devices that control the
amount of refrigerant flowing to the
evaporator coil, decreasing the
temperature and pressure of the
refrigerant, which creates the driving
force to move heat out of the
conditioned space and into the
evaporator. Electronic expansion valves
use an electronic control system and
sensors that measure suction line
temperature and pressure to maintain
more precise control of superheat over
a wide range of operating conditions
and, as a result, may increase energy
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efficiency under varying load conditions
when paired with modulating systems.
Lennox stated that electronic
expansion valves are very costly and not
economically justified because they
provide little full load benefit. (Lennox,
No. 6 at p. 2) As explained in section
III.A, DOE proposes to transition to
IEER, a part load efficiency metric, and
electronic expansion valves are
beneficial for partial loads because they
can precisely control the expansion
process which leads to lower power
consumption, and therefore, a higher
IEER. DOE recognizes that that
electronic expansion valves may be
more expensive that other expansion
devices, like capillary tubes or
thermostatic expansion valves, but DOE
already considers the costs of design
options separately as part of the
engineering analyses, which means that
these devices may be screened out once
costs are factored into the analysis. As
a result, DOE is continuing to consider
electronic expansion valves as a
technology option for purposes of its
engineering analysis.
Part-Load Technology Options
Variable-capacity or multiple-tandem
compressors provide the ability to
modulate the cooling capacity, allowing
equipment to better match the cooling
load than single speed compressors that
can only operate by cycling on and off.
The effectiveness of the heat exchangers
is greater during operation with reduced
mass flow at part load, thus reducing
the condensing temperature and
increasing the evaporating temperature
required to transfer the load—this in
turn reduces the compressor’s operating
pressure ratio and its power input. As
a result, using variable capacity or
multiple-tandem compressors may
improve the overall system efficiency by
matching part-load operating conditions
(and reducing energy consumption)
more closely than units using single
speed compressors. Variable speed fans/
motors can also improve CUAC and
CUHP efficiency by varying fan speed to
reduce air flow rate at part load. If the
indoor/outdoor heat exchangers of a
unit are served by a variable-capacity
compressor or by a tandem compressor
set, less air flow is needed to transfer
the load. Overall system efficiency can
be improved by reducing the indoor or
outdoor air flow and reducing indoor/
outdoor fan power.
DOE’s consideration of a shift to an
IEER-based standard generated a
number of comments. Ingersoll Rand
commented that moving to an IEER
metric will require manufacturers to
optimize around part load performance,
likely in the form of improved heat
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transfer and airflow. (Ingersoll Rand,
No. 10 at p. 3) Whole Building Systems,
LLC, commented that DOE should
include variable-capacity compressors,
along with variable speed condenser
and evaporator fans. It noted that these
technologies are already being adopted
by manufacturers. (Whole Building
Systems, No. 4 at p. 1) Carrier added
that compressor staging (multiple or
variable capacity-compressors) and
indoor and outdoor fan speed control
would increase IEER efficiency, but
would not impact EER. (Carrier, No. 7
at p. 2)
DOE agrees with Whole Building
Systems, Carrier, and Ingersoll Rand
that variable-capacity compressors,
compressor staging, and variable speed
fans improve IEER because they provide
the ability to modulate the cooling
capacity and reduce the overall system
power consumption under part-load
conditions. Based on DOE’s review of
manufacturer equipment literature,
these design elements are already being
used in equipment currently available
on the market. Accordingly, DOE
included these design elements in the
list of technology options considered for
this NOPR.
Modine commented that DOE should
also consider the intelligent interactive
modulation head pressure control, a
technology option developed by
Airedale International Air Conditioning
(Airedale) to improve off peak load
efficiencies. (Modine, No. 5 at pp. 1–2)
DOE notes that Modine did not provide
any details regarding this technology or
the associated efficiency improvement.
DOE also notes that Airedale was
acquired by Modine in 2005. DOE does
not consider proprietary technologies as
part of its analyses and, as a result, did
not consider the intelligent interactive
modulation head pressure control
developed by Airedale as a separate
technology option. However, DOE
recognizes that different equipment
manufacturers may take different
approaches for part-load operation
control strategies.
Technology Options That Do Not Impact
IEER
DOE laid out a number of technology
options for comment that have no
impact on IEER but that could have an
overall impact on energy usage that
would not be fully captured by the use
of this proposed metric. Demand-control
ventilation strategies monitor the indoor
space occupancy and conditions (e.g.,
using CO2 sensors) to deliver the
required ventilation as needed (based on
building air quality requirements). In
contrast, conventional systems that do
not employ these strategies may provide
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fixed amounts of ventilated air based on
assumed conditions. By comparison,
demand-control ventilation strategies
would more accurately control the
amount of outdoor air required for
ventilation that needs to be conditioned
by the equipment.
Lennox and Ingersoll Rand
commented that demand-control
ventilation strategy does not benefit
either EER or IEER ratings. (Lennox, No.
6 at p. 3; Ingersoll Rand, No. 10 at p. 3)
Carrier also commented that many units
on the market have capabilities for
demand management, and with the
development of smart meters and the
smart grid, there are more effective ways
to control peak power for this class of
equipment than the technology options
identified by DOE. Carrier stated that
these features are not captured in EER
or IEER metrics. (Carrier, No. 7 at p. 2)
Lentz Engineering Associates, Inc.
commented that DOE should consider a
technology option where the primary
function of the air handling systems is
to efficiently process or manage
ventilation and where the primary
heating and cooling plants rely on
recovered energy instead of expending
new energy assets. Lentz Engineering
stated that this can result in energy use
reductions in HVAC systems on the
order of 85 to 90 percent. (Lentz, No. 3
at p. 1)
DOE also considered the
implementation of a high-side solenoid
valve. A high-side solenoid valve (i.e., a
solenoid valve located in the highpressure-refrigerant line) and a
discharge line check valve (i.e., a check
valve located in the compressor
discharge line) can be installed in a
refrigeration system to minimize
pressure equalization between the highpressure and low-pressure sides.
Lennox commented that these valves do
not benefit either EER or IEER ratings,
but no further details were provided in
their comments. (Lennox, No. 6 at p. 3)
Another option could also be used.
Heat pipes are used in hot humid
climates to increase dehumidification.
Refrigerant inside the heat pipe precools incoming supply air by absorbing
the heat from it. The evaporator cools
the supply air further, and is able to
extract more water vapor than a
conventional evaporator would. After
the refrigerant in the tubes changes into
a vapor, it flows to the condensing
section at the other end of the system,
releasing its heat and flowing back to
the evaporator end of the pipe to begin
the cycle again. Lennox also commented
that heat-pipes for high latent loads do
not benefit either EER or IEER ratings.
(Lennox, No. 6 at p. 3)
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In addition to the items describe
above, AAON noted several other
technologies that DOE did not initially
consider that can improve efficiency.
These technologies include capacity
modulation (i.e., modulate system
capacity output for part load conditions
by various means to reduce overall
energy consumption), economizers (i.e.,
an automatic system that enables a
cooling system to supply outdoor air to
reduce or eliminate the need for
mechanical cooling during mild or cold
weather), heat recovery (i.e., a process
that preconditions outdoor air entering
the equipment through direct or indirect
thermal and/or moisture exchange with
the exhaust air) and energy efficient
control sequences (e.g., single zone
variable-air-volume) are outside the
scope of AHRI Standard 340/360–2007
and beyond the lab facilities capabilities
to test. AAON added that although
energy can be saved annually by using
any one of these options, the full load
EER ratings would be decreased due to
the higher pressure drop incurred with
many of these features. AAON stated
that rating system modifications exist to
account for the energy savings of some
of these technologies, such as those
contained in AHRI Guideline V for
energy recovery systems. (AAON, No. 8
at p. 3)
DOE recognizes that technologies
such as demand-control strategies,
economizers, energy recovery, high-side
solenoid valves or discharge line checkvalves and heat pipes may result in
annual building energy savings.
However, DOE is not aware of any data
showing that these technologies
improve IEER based on the current DOE
test procedure. As a result, DOE is not
proposing to include these technologies
in its analyses. However, DOE notes that
the IEER metric for this equipment
already accounts for both capacity
modulation and energy efficient control
sequences. In addition, based on a
review of equipment literature, DOE
notes that both capacity modulation and
energy efficient control sequences are
used to improve part-load performance
for this equipment. As a result, DOE
included these technology options as
part of the analyses.
Based on manufacturer comments and
DOE’s review of equipment literature,
DOE is declining to include low
pressure drop filters and air leakage
paths within the unit from the list of
technology options. Comments from
several manufacturers during
manufacturer interviews and public
meetings held as part of the Commercial
HVAC, Water Heating, and Refrigeration
Certification Working Group
(Commercial Certification Working
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Group), indicated that most
manufacturers test their systems
without filters installed or use
disposable filters that produce minimal
pressure drops when used.
Additionally, the filter type used in a
system is a feature specified by the
customer based on the needs of the
installation. For example, a unit
installed in a hospital will require filters
with a high Minimum Efficiency
Reporting Value (MERV) rating,39 which
may cause an increase in pressure drop
depending on the density of the filter
material and an accompanying increase
in fan power and energy use of the unit.
DOE proposes to remove air leakage
paths from the list of technology options
because several manufacturers indicated
during interviews that air leakage paths
58969
are already eliminated during design of
air-cooled CUAC and CUHP.
Based on these assertions and
supplemental follow-up work
performed, DOE considered the
following technology options listed in
Table IV.3 in formulating its proposed
standards:
TABLE IV.3—PROPOSED TECHNOLOGY OPTIONS
Heat transfer improvements:
• Electro-hydrodynamic enhancement.
Alternative refrigerants.
Condenser and evaporator fan and fan motor improvements:
• Larger fan diameters.
• More efficient fan blades (e.g., air foil centrifugal evaporator fans, backward-cured centrifugal evaporator fans, high efficiency propeller
condenser fans).
• High efficiency motors (e.g., copper rotor motor, high efficiency induction, permanent magnet, electronically commutated).
• Variable speed fans/motors.
Larger heat exchangers.
Microchannel heat exchangers.
Compressor Improvements:
• High efficiency compressors.
• Multiple compressor staging.
• Multiple-tandem or variable-capacity compressors.
Thermostatic expansion valves.
Electronic expansion valves.
Subcoolers.
Reduced indoor fan belt loss:
• Synchronous (toothed) belts.
• Direct-drive fans.
analysis. Details of the screening
analysis are in chapter 4 of the NOPR
TSD. In view of the above factors, DOE
screened out the following design
options.
B. Screening Analysis
After DOE identified the technologies
that might improve the energy efficiency
of electric motors, DOE conducted a
screening analysis. The purpose of the
screening analysis is to determine
which options to consider further and
which to screen out. DOE consulted
with industry, technical experts, and
other interested parties in developing a
list of design options. DOE then applied
the following set of screening criteria to
determine which design options are
unsuitable for further consideration in
the rulemaking:
• Technological Feasibility: DOE will
consider only those technologies
incorporated in commercial equipment
or in working prototypes to be
technologically feasible.
• Practicability to Manufacture,
Install, and Service: If mass production
of a technology in commercial
equipment and reliable installation and
servicing of the technology could be
achieved on the scale necessary to serve
the relevant market at the time of the
effective date of the standard, then DOE
will consider that technology
practicable to manufacture, install, and
service.
• Adverse Impacts on Equipment
Utility or Equipment Availability: DOE
will not further consider a technology if
DOE determines it will have a
significant adverse impact on the utility
of the equipment to significant
subgroups of customers. DOE will also
not further consider a technology that
will result in the unavailability of any
covered equipment type with
performance characteristics (including
reliability), features, sizes, capacities,
and volumes that are substantially the
same as equipment generally available
in the United States at the time.
• Adverse Impacts on Health or
Safety: DOE will not further consider a
technology if DOE determines that the
technology will have significant adverse
impacts on health or safety.
Technologies that pass through the
screening analysis are referred to as
‘‘design options’’ in the engineering
39 ASHRAE Standard 52.2–2007, ‘‘Method of
Testing General Ventilation Air-Cleaning Devices
for Removal Efficiency by Particle Size,’’ establishes
the MERV rating, which is the standard comparison
of the efficiency of an air filter, ranging from 1 (least
efficient) to 16 (most efficient), and measures a
filter’s ability to remove particles from 0.3 to 10
microns in size.
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Issue 4: DOE requests comment and
data regarding additional design options
or variants of the considered design
options that can increase the range of
considered efficiency improvements,
including design options that may not
yet be found on the market.
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Electro-Hydrodynamic Enhanced Heat
Transfer
Electro-hydrodynamic enhancement
of heat transfer increases the net heat
transfer coefficient by applying a highvoltage electrostatic potential field
across a heat transfer fluid to destabilize
the thermal boundary layer and incite
fluid mixing. The improved heat
transfer of the evaporator and condenser
coils may improve a given system’s
overall efficiency. DOE notes, however,
that this technology is still in the
research stage. In response to the RFI,
Lennox commented that locating an
electrode between each of the hundreds/
thousands of heat exchanger fins (which
would be the likely method for applying
this option) has not been adequately
demonstrated for commercial
deployment. (Lennox, No. 6 at p. 2)
Although the technique has been
shown to improve heat transfer in
laboratory testing, DOE is not aware of
any commercially available equipment
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or working prototypes that use electrohydrodynamic heat transfer. As a result,
DOE does not believe at this time that
this option meets the screening criterion
of technological feasibility. In addition,
DOE agrees with Lennox that this
technology has not been adequately
demonstrated for commercial
deployment and, as a result, does not
meet the criterion of practicability to
install and service on a scale necessary
to serve the relevant market at the time
of the compliance date of a new
standard. For these reasons, DOE did
not consider electro-hydrodynamic heat
transfer further in the NOPR analyses.
Alternative Refrigerants
DOE considered ammonia, carbon
dioxide, and various hydrocarbons
(such as propane and isobutane) as
alternative refrigerants to those that are
currently in use, such as R–410A. In
response to the February 2013 RFI,
Lennox stated that virtually all
equipment is designed with R–410A as
the refrigerant, and that because of the
lengthy qualification process to develop
a new refrigerant and the components
that would need to be redesigned to use
it, it is not reasonable to expect a new
refrigerant in the timeframe for new
energy conservation standards. (Lennox,
No. 6 at p. 2) DOE notes that safety
concerns need to be taken into
consideration when using ammonia and
hydrocarbons in air-conditioning
systems. EPA created the Significant
New Alternatives Policy (SNAP)
Program to evaluate alternatives to
ozone-depleting substances. Substitutes
are reviewed on the basis of ozone
depletion potential, global warming
potential, toxicity, flammability, and
exposure potential. DOE notes that
ammonia (in vapor compression cycles),
carbon dioxide, and hydrocarbons have
been approved or are being considered
under SNAP for certain uses, but these
or other low GWP alternatives are not
yet listed as acceptable substitutes for
this equipment.40 DOE is also not aware
of any other more efficient refrigerant
options that are SNAP-approved.
Because these alternative refrigerants
have not yet been approved for this
equipment, DOE did not consider
alternate refrigerants for further
analysis.
Sub-Coolers
A sub-cooler is a device located
between the condenser coil outlet and
the expansion device inlet used to
further cool the refrigerant exiting the
condenser in order to achieve a higher
cooling/heating capacity for a unit. In
response to the RFI, Lennox added that
sub-coolers do not provide a benefit at
comfort air conditioning operating
conditions. (Lennox, No. 6 at p. 3) DOE
notes that air-cooled CUAC and CUHP
units typically sub-cool the refrigerant
in the condensing coil (by further
decreasing the temperature of the
refrigerant). DOE also notes that
additional mechanical sub-cooling from
smaller, secondary vapor-compression
circuits has not been incorporated in
commercial equipment or in working
prototypes. As a result, DOE does not
believe sub-cooling meets the criterion
of technological feasibility and did not
consider it for further analysis.
Based on the screening analysis, DOE
considered the design options listed in
Table IV.4.
TABLE IV.4—DESIGN OPTIONS RETAINED FOR ENGINEERING ANALYSIS
Condenser and evaporator fan and fan motor improvements:
• Larger fan diameters.
• More efficient fan blades (e.g., air foil centrifugal evaporator fans, backward-cured centrifugal evaporator fans, high efficiency propeller
condenser fans).
• High efficiency motors (e.g., copper rotor motor, high efficiency induction, permanent magnet, electronically commutated).
• Variable speed fans/motors.
Larger heat exchangers.
Microchannel heat exchangers.
Compressor Improvements:
• High efficiency compressors.
• Multiple compressor staging.
• Multiple- or variable-capacity compressors.
Thermostatic expansion valves.
Electronic expansion valves.
Reduced indoor fan belt loss:
• Synchronous (toothed) belts.
• Direct-drive fans.
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C. Engineering Analysis
The engineering analysis estimates
the cost-efficiency relationship of
equipment at different levels of
increased energy efficiency. This
relationship serves as the basis for the
cost-benefit calculations for commercial
customers, manufacturers, and the
Nation. In determining the costefficiency relationship, DOE estimates
the increase in manufacturer cost
associated with increasing the efficiency
of equipment above the baseline up to
the maximum technologically feasible
40 On July 9, 2014, EPA proposed to list certain
hydrocarbons and R–32 for residential selfcontained A/C appliances as acceptable subject to
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DOE has identified three basic
methods for generating manufacturing
costs: (1) The design-option approach,
which provides the incremental costs of
adding design options to a baseline
model that will improve its efficiency
(i.e., lower its energy use); (2) the
efficiency-level approach, which
provides the incremental costs of
moving to higher energy efficiency
levels, without regard to the particular
design option(s) used to achieve such
increases; and (3) the reverseengineering (or cost-assessment)
approach, which provides ‘‘bottom-up’’
manufacturing cost assessments for
achieving various levels of increased
efficiency, based on teardown analyses
(or physical teardowns) providing
detailed data on costs for parts and
material, labor, shipping/packaging, and
investment for models that operate at
particular efficiency levels. A
supplementary method called a catalog
use conditions to address safety concerns (See 79
FR 38811). EPA is also evaluating new refrigerants
for other A/C applications, including commercial
A/C. Additional information regarding EPA’s SNAP
Program is available online at: https://www.epa.gov/
ozone/snap/.
(‘‘max-tech’’) efficiency level for each
equipment class.
1. Methodology
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teardown uses published manufacturer
catalogs and supplementary component
data to estimate the major physical
differences between a piece of
equipment that has been physically
disassembled and another piece of
similar equipment for which catalog
data are available to determine the cost
of the latter equipment.
In the RFI, DOE stated that in order
to create the cost-efficiency relationship,
it anticipated having to structure its
engineering analysis using the reverseengineering approach, including
physical and catalog teardowns. DOE
requested comments on using a reverse
engineering approach supplemented
with catalog teardowns and comments
on what the appropriate representative
capacities would be for each equipment
class. 78 FR 7300.
AAON commented that it is
inappropriate and unethical for DOE to
use proprietary information and trade
secrets provided during manufacturer
interviews to reverse engineer
equipment supplemented by the catalog
teardowns. AAON stated that disclosing
trade secrets in a public forum,
accessible worldwide, undermines U.S.
manufacturing and damages the free
enterprise system. (AAON, No. 8 at p. 4)
DOE notes that it does not publicly
disclose proprietary information
obtained from individual
manufacturers. Instead, as part of the
manufacturer interviews, DOE
aggregates all manufacturer responses to
prevent disclosing of proprietary
information and trade secrets.
AAON commented that DOE’s
methodology is flawed because all
models are weighted equally. AAON
indicated that models with higher
efficiency and cost are sold in much
lower quantities than models with lower
efficiency and cost. AAON added that
models with higher efficiency and cost
may not be economically justified and
are only sold to consumers that want the
highest efficiency regardless of
economic justification. (AAON, No. 8 at
p. 3) DOE intends to conduct a full
analysis to determine the economic
justification of higher efficiency levels,
including developing incremental
manufacturing costs for higher
efficiency equipment based on energy
modeling, reverse engineering analyses,
and catalog teardowns. Although
manufacturers may currently sell higher
efficiency models at lower quantities,
DOE’s analysis considers the
incremental manufacturing costs if
energy conservation standards are set at
a particular efficiency level and assumes
that market share will shift to the new
standard level.
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Carrier commented that reverse
engineering of a few selected samples
will not provide an accurate picture of
manufacturing costs, which depend on
volume, tooling approach (dedicated
versus flexible) and assembly processes
and procedures for which reverse
engineering will not provide insight.
Carrier recommended that DOE should
work with AHRI and industry to obtain
costs using a blind survey, with each
manufacturer providing estimates for
the cost increases related to the
proposed standards. (Carrier, No. 7 at p.
3) DOE notes that it supplemented its
reverse engineering analyses with
manufacturer interviews and solicited
feedback on the volume, tooling, and
processes used to manufacture
equipment and the manufacturing costs
required to meet each efficiency level
for each equipment class. As a result,
DOE believes that the manufacturing
cost-efficiency results from the
engineering analyses are sufficiently
representative of the manufacturing
processes used for this equipment.
Ingersoll Rand commented that DOE
should analyze the following categories
to adequately represent variation in
equipment types: (1) 7.5-ton cooling and
heat pump, (2) 15-ton cooling and heat
pump, (3) 40-ton cooling only. (Ingersoll
Rand, No. 10 at p. 3) Lennox added that
DOE should select equipment from
manufacturers that have equipment
with baseline and higher efficiency in
the same platform. (Lennox, No. 6 at p.
3)
For this NOPR, DOE conducted the
engineering analyses using the reverseengineering approach and analyzed
three specific capacities to represent
each of the three cooling capacity
categories (i.e., small, large, and very
large). Based on a review of
manufacturer equipment offerings and
information obtained from manufacturer
interviews, DOE selected representative
capacities of 90,000 Btu/h (7.5 tons) for
the ≥65,000 to <135,000 Btu/h capacity
range, 180,000 Btu/h (15 tons) for the
≥135,000 to <240,000 Btu/h capacity
range, and 360,000 Btu/h (30 tons) for
the ≥240,000 to <760,000 Btu/h capacity
range. DOE noted in the 2004 ANOPR
that 7.5 tons and 15 tons represent
volume shipment points in their
respective capacity range. 69 FR 45469.
These capacities are near the center of
their respective equipment class
capacity ranges. Additionally, DOE
interviewed several equipment
manufacturers as part of the current
rulemaking and found that the majority
of manufacturers interviewed agreed
that the 7.5-ton, 15-ton, and 30-ton
capacities adequately represent the
three equipment class capacity ranges.
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58971
Where feasible, DOE selected models
for reverse engineering with low and
high efficiencies from a given
manufacturer that are built on the same
platform. DOE also supplemented the
teardown analysis by conducting catalog
teardowns for equipment spanning the
full range of capacities and efficiencies
from all manufacturers selling
equipment in the United States.
2. Baseline Efficiency Levels
The baseline model is used as a
reference point for each equipment class
in the engineering analysis and the lifecycle cost and payback-period analyses.
Typically, DOE would consider
equipment that just meets the minimum
energy conservation standard as
baseline equipment. However, as
discussed in section III.A, DOE is
proposing to replace the current cooling
performance energy efficiency
descriptor, EER, with IEER, and a single
EER level can correspond to a range of
IEERs. As a result, DOE must establish
a baseline IEER for each equipment
class. As part of the RFI, DOE requested
comment on approaches that it should
consider when determining a baseline
IEER as well as an appropriate baseline
IEER for each equipment class. 78 FR
7300–7301 (Feb. 1, 2013).
Modine commented that DOE should
continue to use ASHRAE Standard 90.1
and ASHRAE Standard 189.1,
‘‘Standard for the Design of HighPerformance Green Buildings,’’
(ASHRAE Standard 189.1) 41 for
establishing baseline IEER levels
because current technology makes it
readily possible to achieve the ASHRAE
Standard 189.1 minimum IEER
standards. (Modine, No. 5 at p. 2) The
IEER levels specified in ASHRAE
Standard 189.1 are 0.2 to 1.1 IEER
higher than the ASHRAE Standard 90.1
levels.
As discussed in section II.A, DOE is
typically obligated either to adopt those
standards developed by ASHRAE or to
adopt levels more stringent than the
ASHRAE levels if there is clear and
convincing evidence in support of doing
so. (42 U.S.C. 6313(a)(6)(A)) DOE notes
that ASHRAE Standard 90.1–2010
specifies minimum efficiency
requirements using both the EER and
IEER metrics. As discussed in the RFI,
DOE evaluated the relationship between
EER and IEER by considering models
that are rated at the current DOE
standard levels based on the EER metric
41 ASHRAE Standard 189.1 provides minimum
requirements for the siting, design, construction,
and plan for operation of high-performance green
buildings. Available online at: https://
www.ashrae.org/resources-publications/bookstore/
standard-189-1.
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for each equipment class (as presented
in section II.B.1). DOE then analyzed the
distribution of corresponding rated IEER
values for each equipment class. DOE
notes that the lowest IEER values
associated with the current DOE
standards for EER generally correspond
with the ASHRAE Standard 90.1–2010
minimum efficiency requirements. 78
FR 7296, 7299 (Feb. 1, 2013); EERE–
2013–BT–STD–0007–0001. Based on
this evaluation, because DOE is
considering energy conservation
standards based on the IEER metric,
DOE proposes to use the ASHRAE
Standard 90.1–2010 minimum IEER
requirements to characterize the
baseline cooling efficiency for each
equipment class. DOE also notes that
equipment is available on the market
that is at or near the ASHRAE Standard
90.1–2010 minimum IEER requirements.
As a result, DOE is not considering
higher IEER levels for the baseline.
For CUHP, DOE is considering
heating efficiency standards based on
the COP metric. As discussed in section
II.B.1, EPAct 2005 established minimum
COP levels for small, large, and very
large air-cooled CUHP, which DOE
codified in a final rule on October 18,
2005. 70 FR 60407. DOE proposes to use
these current COP standard levels to
characterize the baseline heating
efficiency for each equipment class.
The baseline efficiency levels for each
equipment class are presented below in
Table IV.5.
TABLE IV.5—BASELINE EFFICIENCY LEVELS
Equipment type
Heating type
Small Commercial Packaged AC and HP (AirCooled)—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity.
Baseline efficiency
level
AC
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
11.4 IEER.
11.2 IEER.
HP
Electric Resistance Heating or No Heating ...............
11.2 IEER,
3.3 COP.
11.0 IEER,
3.3 COP.
11.2 IEER.
11.0 IEER.
All Other Types of Heating ........................................
Large Commercial Packaged AC and HP (AirCooled)—≥135,000 Btu/h and <240,000 Btu/h
Cooling Capacity.
AC
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
HP
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
Very Large Commercial Packaged AC and HP (AirCooled)—≥240,000 Btu/h and <760,000 Btu/h
Cooling Capacity.
AC
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
HP
Electric Resistance Heating or No Heating ...............
All Other Types of Heating ........................................
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3. Incremental Efficiency Levels
For each equipment class, DOE
analyzes several efficiency levels and
determines the incremental cost at each
of these levels. For this NOPR, DOE
developed efficiency levels based on a
review of industry standards and
available equipment. For efficiency
level 1, DOE used the IEER levels
specified in Draft Addendum CL.42 For
the higher efficiency levels, DOE
initially determined the levels for CUAC
equipment classes with electric
resistance heating or no heating based
on the range of efficiency levels
associated with equipment listed in the
AHRI certification database and the
California Energy Commission’s (CEC)
database. DOE evaluated the full range
of capacities for the small, large, and
very large equipment classes with a
42 The Draft Addendum CL was the latest
available version at the time DOE conducted the
analyses for today’s NOPR. DOE notes that
ASHRAE has more recently finalized Addendum
CL, with minor modifications to the IEER levels for
large air-cooled CUAC and CUHP (i.e., cooling
capacity of >=135,000 Btu/h and <240,000 Btu/h).
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specific focus on 7.5-ton, 15-ton, and
30-ton as the representative cooling
capacities. DOE chose efficiency levels
for CUAC with all other types of heating
equal to the efficiency levels for
equipment with electric resistance
heating or no heating, minus the
differences in the IEER specifications for
these pairs of equipment classes
prescribed in the Draft Addendum CL.
DOE believes these decreases in IEER
appropriately reflect the additional
power required for furnace pressure
drop.
Similarly, for the CUHP equipment
classes, DOE developed cooling mode
efficiency levels equal to the CUAC
efficiency levels minus the difference in
IEER specifications for these two
equipment types prescribed in the Draft
Addendum CL. DOE believes that these
decreases in IEER are representative of
the efficiency differences that occur due
to losses from the reversing valve and
coil circuitry required in heat pumps for
both heating and cooling operation.
As part of the RFI, DOE requested
information on the max-tech efficiency
PO 00000
Frm 00026
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10.7 IEER,
3.2 COP.
10.5 IEER,
3.2 COP.
10.1 IEER.
9.9 IEER.
9.6
3.2
9.4
3.2
IEER,
COP.
IEER,
COP.
levels achievable in the market. 78 FR
7301. The Joint Efficiency Advocates
commented that, based on models in the
AHRI certification database, the
maximum-available IEER levels are 25
to 82 percent higher than the ASHRAE
Standard 90.1–2010 levels depending
on equipment category. The Joint
Efficiency Advocates stated that the
maximum-available efficiency levels
may not represent the maximum
technologically feasible levels since
there may be technology options that
can improve efficiency that have not
been employed in the most-efficient
models currently available. (Joint
Efficiency Advocates, No. 11 at p. 2)
AAON commented that the max-tech
efficiency levels can be assumed to be
slightly above the current CEE Tier 2
levels.43 (AAON, No. 8 at p. 4)
43 The CEE Commercial Unitary Air Conditioner
and Heat Pump Specification can be found online
at: https://library.cee1.org/content/cee-commercialunitary-ac-and-hp-specification-0. DOE notes that
the CEE Tier 2 levels represent an 18-percent to 23percent increase in IEER over the proposed baseline
levels.
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DOE notes that its maximum-available
efficiency levels rely on the
performance of recently introduced
models. DOE evaluated available
equipment literature and energy use
information on these maximumavailable efficiency models and
conducted energy modeling to
determine the feasibility of achieving
these efficiency levels. For the ≥65,000
Btu/h and <135,000 Btu/h capacity
CUAC with electric resistance heating or
no heating equipment classes, DOE
noted, based on its review of the AHRI
certification and CEC equipment
databases, that the maximum-available
unit was rated at 20.9 IEER. However,
sufficient information allowing
correlation of incremental efficiency
gains with specific design options and
incremental manufacturing costs was
not available to properly evaluate this
unit. DOE also notes that a different
manufacturer currently offers a 7.5-ton
model rated at 19.9 IEER and a 10-ton
model rated at 20.8 IEER. DOE notes
that there is also uncertainty regarding
the way the design differences
contribute to the added efficiency of the
10-ton model, making it difficult to
accurately estimate the incremental cost
associated with this efficiency gain. As
a result, DOE is proposing to use 19.9
IEER as the maximum-available
efficiency level representative of this
equipment class. DOE is not aware of
data showing that energy efficiency can
be increased beyond these levels. As a
result, DOE is proposing to use the
maximum-available efficiency levels as
the max-tech levels for the NOPR
analyses.
For the CUHP equipment classes,
DOE is proposing heating efficiency
levels based on a variation of COP with
IEER. In the 2004 ANOPR, DOE
proposed to address the energy
efficiency of air-cooled CUHP by
developing functions relating COP to
EER. 69 FR 45468. DOE also noted that
this method was also used by industry
to establish minimum performance
requirements for ASHRAE Standard
90.1–1999. Id. AHRI supplied the
ASHRAE Standard 90.1–1999
committee with curves relating the COP
as a function of EER. Using this
information, the committee then set the
minimum COP levels to the COP
corresponding to the selected minimum
EER level. Id. DOE stated in the
February 2013 RFI that since this
method was generally accepted by
industry and interested parties involved
in the development of ASHRAE
Standard 90.1–1999, it was considering
a similar approach for this rulemaking.
DOE indicated that if it transitions to
IEER as the cooling mode energy
efficiency descriptor, DOE may establish
minimum COP levels based on the
variation of COP with IEER. As part of
the RFI, DOE requested information on
issues related to using IEER as the
cooling performance metric when
developing a correlation between COP
and IEER. 78 FR 7301.
AAON, Carrier, Ingersoll Rand, and
Lennox commented that there is no
direct correlation between the part-load
metric, IEER, and the full load metric,
COP. (AAON, No. 8 at p. 4; Carrier, No.
7 at p. 4; Ingersoll Rand, No. 6 at p. 4;
Lennox, No. 6 at p. 3) Lennox indicated
that in commercial applications,
CUHP’s typically operate in full load
heating mode and cycle the auxiliary
heat on and off because heat pump
capacity alone is inadequate to meet the
building load. Lennox stated that a
higher IEER does not translate to a
higher COP because design techniques
58973
that improve part load IEER
performance do not improve COP.
(Lennox, No. 6 at p. 3) Carrier noted
that, based on information from the
AHRI certification database, units with
the same COP have significantly
different IEER values. Carrier added that
heating efficiency is much less a factor
for overall energy usage than cooling
efficiency because commercial
equipment operates for many more
hours in cooling mode than heating
mode, indicating that internal building
loads lead to high cooling loads and
cooling energy use and significantly less
heating energy use. Carrier stated that a
separate analysis should be used for
developing heating COP levels and that
this process be completed through a
consensus process working with AHRI
and the manufacturers. (Carrier, No. 7 at
pp. 3–4)
To determine COP efficiency levels,
DOE evaluated AHRI and CEC data for
small, large, and very large air-cooled
CUHP units with electric resistance heat
or no heat to analyze the relationship
between COP and both IEER and EER.
DOE’s review of data showed that the
correlations between COP and IEER
using linear regressions are no less
strong than the correlations between
COP and EER for each cooling capacity
range. Details of this evaluation can be
found in chapter 5 of the NOPR TSD.
Based on this evaluation, DOE is
proposing to use the functions relating
COP to IEER based on AHRI and CEC
data to establish COP efficiency levels.
For each CUHP equipment class, DOE
selected COP levels corresponding to
each incremental IEER level.
The efficiency levels for each
equipment class that DOE considered
for the NOPR analyses are presented in
Table IV.6.
TABLE IV.6—INCREMENTAL EFFICIENCY LEVELS
Efficiency levels
Equipment type
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Small Commercial Packaged AC and HP (AirCooled)—≥65,000 Btu/
h and <135,000 Btu/h
Cooling Capacity.
Heating type
AC
HP
Large Commercial Packaged AC and HP (AirCooled)—≥135,000
Btu/h and <240,000
Btu/h Cooling Capacity.
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AC
19:18 Sep 29, 2014
Baseline
EL1
EL2
EL3
Electric Resistance Heating or No Heating.
11.4 IEER ....
12.9 IEER ....
14 IEER .......
14.8 IEER ....
19.9 IEER.
All Other Types of Heating.
Electric Resistance Heating or No Heating.
All Other Types of Heating.
Electric Resistance Heating or No Heating.
11.2 IEER ....
12.7 IEER ....
13.8 IEER ....
14.6 IEER ....
19.7 IEER.
11.2 IEER, ...
3.3 COP .......
11.0 IEER, ...
3.3 COP .......
11.2 IEER ....
12.2 IEER, ...
3.3 COP .......
12 IEER, ......
3.3 COP .......
12.2 IEER ....
13.3 IEER, ...
3.4 COP .......
13.1 IEER, ...
3.4 COP .......
13.2 IEER ....
14.1 IEER, ...
3.5 COP .......
13.9 IEER, ...
3.4 COP .......
14.2 IEER ....
19.2 IEER,
3.7 COP.
19.0 IEER,
3.6 COP.
18.4 IEER.
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(Max-Tech)
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TABLE IV.6—INCREMENTAL EFFICIENCY LEVELS—Continued
HP
Very Large Commercial
Packaged AC and HP
(Air-Cooled)—≥240,000
Btu/h and <760,000
Btu/h Cooling Capacity.
AC
HP
All Other Types of Heating.
Electric Resistance Heating or No Heating.
All Other Types of Heating.
Electric Resistance Heating or No Heating.
All Other Types of Heating.
Electric Resistance Heating or No Heating.
All Other Types of Heating.
Issue 5: DOE seeks comment on the
incremental and max-tech efficiency
levels identified for the analyses,
including whether the efficiency levels
identified by DOE can be achieved using
the technologies screened-in during the
screening analysis (see section IV.B),
and whether higher efficiencies are
achievable using technologies that were
screened-in during the screening
analysis. Also, DOE seeks comment on
the approach of extrapolating the
efficiency levels from the small, large,
and very large CUAC with electric
resistance heating or no heating
equipment classes to the remaining
equipment classes using the IEER
differentials in ASHRAE Standard 90.1–
2010 draft addendum CL. In addition,
input and data on the approach for
determining the COP levels for the heat
pump equipment classes using the
relationship between IEER and COP.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
4. Equipment Testing, Reverse
Engineering, Energy Modeling, and
Cost-Efficiency Results
As discussed above, for the
engineering analysis, DOE specifically
analyzed representative capacities of 7.5
tons, 15 tons, and 30 tons to develop
incremental cost-efficiency
relationships. DOE selected four 7.5-ton,
two 15-ton, and one 30-ton air-cooled
CUAC models. The models were
selected to develop a representative
sample of the market at different
efficiency levels. DOE based the
selection of units for testing and reverse
engineering on the efficiency data
available in the AHRI certification
database and the CEC equipment
database. DOE also selected one 7.5-ton
CUHP model to evaluate the design
differences between CUAC units and
CUHP units. Details of the key features
of the tested units are presented in
chapter 5 of the NOPR TSD.
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11.0 IEER ....
12.0 IEER ....
13.0 IEER ....
14.0 IEER ....
18.2 IEER.
10.7 IEER, ...
3.2 COP .......
10.5 IEER, ...
3.2 COP .......
10.1 IEER ....
11.4 IEER, ...
3.2 COP .......
11.2 IEER, ...
3.2 COP .......
11.6 IEER ....
12.4 IEER, ...
3.3 COP .......
12.2 IEER, ...
3.3 COP .......
12.5 IEER ....
13.4 IEER, ...
3.3 COP .......
13.2 IEER, ...
3.3 COP .......
13.5 IEER ....
17.6 IEER,
3.3 COP.
17.4 IEER,
3.3 COP.
15.5 IEER.
9.9 IEER ......
11.4 IEER ....
12.3 IEER ....
13.3 IEER ....
15.3 IEER.
9.6
3.2
9.4
3.2
10.6 IEER, ...
3.2 COP .......
10.4 IEER, ...
3.2 COP .......
11.5 IEER, ...
3.2 COP .......
11.3 IEER, ...
3.2 COP .......
12.5 IEER, ...
3.2 COP .......
12.3 IEER, ...
3.2 COP .......
14.5 IEER,
3.2 COP.
14.3 IEER,
3.2 COP.
IEER, .....
COP .......
IEER, .....
COP .......
Because DOE is considering adopting
energy conservation standards based on
the IEER metric, DOE conducted testing
on each unit according to the IEER test
method specified in AHRI Standard
340/360–2007. DOE then conducted
physical teardowns on each test unit to
develop a manufacturing cost model
and to evaluate key design features (e.g.,
heat exchangers, compressors, fan/fan
motors, control strategies, etc.). Because
DOE was only able to conduct testing
and physical teardowns on a limited
sample of equipment, DOE
supplemented these data by conducting
catalog teardowns on 346 models
spanning the full range of capacities
from all manufacturers selling
equipment in the United States. DOE
based the catalog teardowns on
information provided in equipment
literature and experience from the
physical teardowns.
For air-cooled CUAC, DOE conducted
energy modeling using the modeling
tools developed by the Center for
Environmental Energy Engineering from
the University of Maryland at College
Park. The tools include a detailed heat
exchanger modeling program and a
refrigeration cycle modeling program.
The refrigeration cycle modeling
program can integrate the heat
exchanger and compressor models to
perform a refrigeration cycle model. If a
CUAC/CUHP unit was tested, system
control power (i.e., control circuit
power and any auxiliary loads), indoor
and outdoor fan power were obtained
from actual laboratory testing. If a unit
was not tested, fan power energy usage
was estimated from manufacturer
specification sheets at the rated air flow
rates and static pressures. The system
control power is estimated from other
tested units with similar capacities and
system configurations.
Applying the key design features
identified during physical equipment
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teardowns, DOE used the energy
modeling tool to generate detailed
performance data (e.g. capacity and
EER) and validated them against the
results obtained from laboratory testing
at each IEER capacity level (25, 50, 75,
and 100 percent), or with the published
performance data. With the validated
energy models, DOE expanded the
modeling tasks with various system
design options and identified the key
design features (consistent with
equipment available on the market)
required for 7.5-ton, 15-ton, and 30-ton
air-cooled CUAC units with electric
resistance heating or no heating to
achieve each efficiency level. Details of
the design features for each efficiency
level are presented in chapter 5 of the
NOPR TSD. DOE also generated energy
use profiles for air-cooled CUAC, which
included wattage inputs for key
components (i.e., compressor, indoor
and outdoor fan motors, and controls) at
each operating load level measured for
the IEER test method, for each efficiency
level to serve as inputs for the energy
use analysis (discussed in section IV.E).
DOE then used these design features
developed by the energy modeling to
determine the incremental
manufacturing costs for each efficiency
level for 7.5-ton, 15-ton and 30-ton aircooled CUAC units.
Issue 6: DOE requests comments,
information, and data that would inform
adjustment of energy modeling input
and/or results that would allow more
accurate representation of the energy
use impacts of design options using the
modeling tools developed by the Center
for Environmental Energy Engineering
from the University of Maryland at
College Park.
DOE did not, however, conduct
similar modeling for CUHP units. DOE
notes that CUHP shipments represent a
very small portion of industry
shipments compared to CUAC
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shipments (9 percent versus 91 percent).
In addition, because CUHP represent a
small portion of shipments, DOE noted,
based on equipment teardowns and
review of equipment literature, that
manufacturers use the same basic
design/platform for equivalent CUAC
and CUHP models. DOE observed that
equivalent CUAC and CUHP models
used the same package size, core heat
exchangers (the same face area and
depth, but different circuiting), and
indoor/outdoor fan systems (along with
other elements), but used additional
components to allow for heat pump
operation (e.g., reversing valves,
refrigerant accumulators, refrigerant
circuiting). As a result, DOE believes
that the proposed approach of adjusting
between the cooling efficiencies of
CUAC and CUHP to reflect the drop in
efficiency resulting from the CUHP
design (as discussed above in section
IV.C.3) is consistent with the market.
For these same reasons, DOE believes
that it is appropriate to set heating
efficiencies for CUHP based on the
relationship between cooling efficiency
and heating efficiency rather than
conduct a full separate analysis of
heating efficiency. For these reasons,
DOE focused energy modeling solely on
CUAC equipment. Although not
considered in the engineering and LCC
and PBP analyses, DOE did analyze
CUHP equipment in the NIA. From this
analysis, DOE believes the energy
modeling conducted for CUAC
equipment provides a good estimate of
CUHP cooling performance and
provides the necessary information to
estimate the magnitude of the national
energy savings from increases in CUHP
equipment efficiency.
Based on the analyses discussed
above, DOE developed the costefficiency results shown in Table IV.7
through Table IV.9 for each cooling
capacity range. DOE notes that the
incremental manufacturing production
and shipping costs would be equivalent
for each of the equipment classes within
a given cooling capacity range (i.e.,
CUAC units with electric resistance
heating or no heat, CUAC units with all
other types of heating, CUHP units with
electric resistance heating or no heat,
CUHP units with all other types of
heating). Details of the cost-efficiency
analysis, including descriptions of the
technologies DOE analyzed for each
efficiency level to develop incremental
costs, are presented in chapter 5 of the
NOPR TSD.
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58975
increase) to the change in the customer
TABLE IV.7—SMALL AIR-COOLED
CUAC AND CUHP COST-EFFI- price.
In its 2004 ANOPR, DOE used three
CIENCY RELATIONSHIPS
types of distribution channels to
describe how the equipment passes
Incremental
Efficiency
Incremental
from the manufacturer to the customer.
manufacturing
level
shipping cost
production cost
See, e.g. 69 FR 45460, 45476 (describing
distribution channels used as part of
Baseline
.......................... .......................... DOE’s prior CUAC/CUHP standards
EL1 .......
$115.93 ..........................
rulemaking effort). In the new
EL2 .......
583.47 ..........................
EL3 .......
788.88 .......................... construction market, the manufacturer
sells the equipment to a wholesaler. The
EL4
wholesaler sells the equipment to a
(MaxTech)
1,277.04
$102.86 mechanical contractor, who sells it to a
general contractor, who in turn sells the
equipment to the customer or end user
TABLE IV.8—LARGE AIR-COOLED
as part of the building. In the
CUAC AND CUHP COST-EFFI- replacement market, the manufacturer
CIENCY RELATIONSHIPS
sells to a wholesaler, who sells to a
mechanical contractor, who in turn sells
Incremental
the equipment to the customer or end
Efficiency
Incremental
manufacturing
level
shipping cost
user. In the third distribution channel,
production cost
used in both the new construction and
Baseline
.......................... .......................... replacement markets, the manufacturer
EL1 .......
$419.16 .......................... sells the equipment directly to the
EL2 .......
792.76
$192.86 customer through a national account.
EL3 .......
1,236.98
192.86
In the RFI, DOE requested input from
EL4
stakeholders on whether the
(Maxdistribution channels described above
Tech)
1,554.26
192.86
remain relevant for small and large
CUAC/CUHP and whether they are also
relevant for very large air-cooled
TABLE IV.9—VERY LARGE AIRCOOLED CUAC AND CUHP COST- equipment. Carrier stated that the
distribution channels outlined in the
EFFICIENCY RELATIONSHIPS
NOPR are relevant for all products,
including very large air-cooled
Incremental
Efficiency
Incremental
equipment. (Carrier, No. 7 at p. 4) It
manufacturing
level
shipping cost
production cost
added that, for very large air-cooled
equipment, there is an additional
Baseline
.......................... ..........................
channel that consists of factory
EL1 .......
$542.65 ..........................
EL2 .......
1,296.41 .......................... employees selling directly to end
EL3 .......
1,834.67 .......................... customers and mechanical contractors.
Ingersoll Rand stated that the selling
EL4
process, as described, is still relevant for
(MaxTech)
2,753.32
$444.00 these product classes. (Ingersoll Rand,
No. 10 at p. 4) Modine stated that there
Issue 7: DOE requests input and data
are distribution paths in addition to
on the estimated incremental
those listed in the RFI, namely,
manufacturing costs, including the
manufacturer to distributor to
extrapolation of incremental costs for
mechanical contractor to end user,
equipment classes not fully analyzed, in manufacturer to mechanical contractor
particular for heat pump equipment
to general contractor to end user, and
classes.
manufacturer to mechanical contractor
to end user. (Modine, No. 5 at p. 3)
D. Markups Analysis
For today’s NOPR, DOE used the three
The markups analysis develops
distribution channels described
appropriate markups in the distribution previously, which were used in the
chain to convert the estimates of
2004 ANOPR. Although it was not listed
manufacturer selling price derived in
in the RFI, DOE did include a channel
the engineering analysis to customer
of manufacturer to distributor to
prices. (‘‘Customer’’ refers to purchasers mechanical contractor to end user (for
of the equipment being regulated.) DOE
replacement applications). As for the
calculates overall baseline and
channels without a distributor cited by
incremental markups based on the
Modine, DOE was not able to determine
equipment markups at each step in the
whether these channels account for a
distribution chain. The incremental
meaningful share of shipments. Modine
markup relates the change in the
provide no supporting data indicating
manufacturer sales price of higher
that these non-distributor channels
efficiency models (the incremental cost
accounted for a significant share of
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Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 / Proposed Rules
shipments. Because other parties
commented that the three distribution
channels described in the RFI are still
relevant, DOE retained the channels
included in the RFI but decline to
include the non-distributor channels
suggested by Modine for the NOPR
analysis.
For the 2004 ANOPR, based on
information that equipment
manufacturers provided, commercial
customers were estimated to purchase
50 percent of the covered equipment
through small mechanical contractors,
32.5 percent through large mechanical
contractors, and the remaining 17.5
percent through national accounts.
According to the Air Conditioning
Contractors of America’s financial
analysis of the heating, ventilation, airconditioning, and refrigeration (HVACR)
contracting industry, markups used by
small contractors tend to be larger than
those used by large contractors. See 69
FR 45476.
In the RFI, DOE requested input on
the percentage of equipment being
distributed through the various types of
distribution channels and whether the
share of equipment shipped through
each channel varies based on equipment
capacity. Ingersoll Rand stated that,
while the percentages differ among the
equipment capacities, the relative levels
are as suggested by DOE. (Ingersoll
Rand, No. 10 at p. 4) Based on this
feedback, for this NOPR, DOE is
continuing to use the same percentages
that were used in its ANOPR analysis.
DOE had also previously utilized
several sources in preparation of its
ANOPR to help develop markups for the
parties involved in the distribution of
the equipment, including: (1) The Airconditioning & Refrigeration
Wholesalers Association’s 1998
wholesaler profit survey report to
develop wholesaler markups; (2) the Air
Conditioning Contractors of America’s
(ACCA) financial analysis for the
HVACR contracting industry to develop
mechanical contractor markups; and (3)
U.S. Census Bureau economic data for
the commercial and institutional
building construction industry to
develop general contractor markups.
Carrier recommended that DOE
conduct a blind survey through AHRI to
determine the markups for all parties in
the channel. As an alternative to this
approach, DOE utilized updated
versions of the sources mentioned
previously, namely: (1) The Heating, Air
Conditioning & Refrigeration
Distributors International 2010 Profit
Report to develop wholesaler markups;
(2) the Air Conditioning Contractors of
America’s (ACCA) 2005 Financial
Analysis for the HVACR Contracting
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19:18 Sep 29, 2014
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Industry to develop mechanical
contractor markups; and (3) U.S. Census
Bureau economic data for the
commercial and institutional building
construction industry to develop general
contractor markups.44 By following this
alternative approach, DOE obtained
updated data that enabled it to develop
a more accurate picture of the markups
currently being used by the various
parties involved in the distribution
channel.
Chapter 6 of the NOPR TSD provides
further detail on the estimation of
markups.
sample’’ to represent the current
installation conditions for the
equipment covered in this rulemaking.
This part involved making adjustments
to update the building simulation data
to reflect the building stock that uses
air-cooled CUAC equipment in 2011.
1. Energy Use Simulations
The energy use analysis provides
estimates of the annual energy
consumption of small, large, and very
large air-cooled CUAC equipment at the
considered efficiency levels. DOE uses
these values in the LCC and PBP
analyses and in the NIA. DOE did not
analyze CUHP equipment because the
energy modeling discussed in section
IV.C.4 was performed only for CUAC
equipment.
DOE developed energy consumption
estimates only for the CUAC equipment
classes that have electric resistance
heating or no heating. For equipment
classes with all other types of heating,
the incremental change in IEER for each
efficiency level is identical to that for
the equipment classes with electric
resistance heating or no heating.
Therefore, DOE estimated that the
energy savings for any efficiency level
relative to the baseline would be
identical for both sets of equipment
classes. In turn, the energy savings
estimates for the efficiency levels
associated with the equipment classes
that have electric resistance heating or
no heating (see Table IV.1) were used by
DOE in the LCC and PBP analysis and
the NIA to represent both sets of
equipment classes.
The energy use analysis for this NOPR
consists of two related parts. In the first
part, DOE calculated energy savings for
small, large, and very large air-cooled
CUAC at the considered efficiency
levels based on modifications to the
energy use simulations conducted for
the 2004 ANOPR. These building
simulation data are based on the 1995
Commercial Building Energy
Consumption Survey (CBECS). Because
the simulation data reflect the building
stock in 1995 that uses air-cooled CUAC
equipment, in the second part, DOE
developed a ‘‘generalized building
The simulation database from the
2004 ANOPR includes hourly profiles
for more than 1,000 commercial
buildings, which were based on
building characteristics from the 1995
CBECS for the subset of buildings that
uses air-cooled CUAC equipment. Each
building was assigned to a specific
location along with a typical
meteorological year (TMY) hourly
weather file (referred to as TMY2) to
represent local weather. The
simulations capture variability in
cooling loads due to factors such as
building activity, schedule, occupancy,
local weather, and shell characteristics.
DOE received comments on the RFI
regarding how best to model equipment
performance. AAON stated that full
building and equipment modeling are
required to get a credible estimate for a
given building, equipment set, and
control sequence. (AAON, No. 8 at
p. 6) Carrier noted that EER alone
cannot be used to determine energy use
at part-load conditions, as it is a
measure of full-load efficiency and is
tied more closely to the peak kilowatt
(kW). (Carrier, No. 7 at p. 4) DOE’s
simulation modeling approach is based
on full building and equipment
modeling, and takes into account
equipment performance at part-load
conditions to establish the annual
energy use.
For the NOPR, DOE modified the
energy use simulations conducted for
the 2004 ANOPR to improve the
modeling of equipment performance.
The modifications that DOE performed
included changes to the ventilation rates
and economizer usage assumptions, the
default part-load performance curve,
and the minimum saturated condensing
temperature limit.
Although ventilation rates and
economizer usage do not affect
equipment performance per se, they do
impact how often the equipment needs
to operate, whether at full or part load.
The building simulations for the 2004
ANOPR used ventilation rates based on
ASHRAE Standard 62–1999.45 Because
a report prepared by the National
Institute for Standards and Testing
44 U.S. Census Bureau, 2007 Economic Census,
Construction Industry Series and Wholesale Trade
Subject Series. https://www.census.gov/econ/
census07/.
45 American Society of Heating, Refrigerating and
Air-Conditioning Engineers, Inc. ANSI/ASHRAE
Standard 62–1999 Ventilation for Acceptable
Indoor Air Quality, 1999. Atlanta, Georgia.
E. Energy Use Analysis
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(NIST) on field measurements indicated
that these ventilation rates were too
high,46 DOE reduced the rates as part of
the modified energy use simulations. In
the case of economizer usage, the
building simulations for the 2004
ANOPR assumed all economizers
operated without fault. Various field
studies have demonstrated that
economizer usage is far from perfect, so
in the modified simulations DOE
assigned a 30-percent probability to
each building modeled that the
economizer would be non-operational.
With regard to changes made to how the
equipment was modeled, DOE
developed a modified part-load
performance curve for the directexpansion condenser unit model so that
the overall performance would be more
representative of a multi-compressor
system. In addition, DOE lowered a
parameter representing the minimum
saturated condensing temperature
allowed for the refrigerant. Both of these
parameters affect the system
performance under part-load and offdesign conditions. A more detailed
description of the simulation model
modifications can be found in appendix
7–A of the NOPR TSD.
DOE used a two-step process to
represent the performance of equipment
at baseline and higher efficiency levels.
First, DOE calculated the hourly cooling
loads and hourly fan operation for each
building from the compressor and fan
energy consumption results that were
generated from the modified building
simulations based on CUAC equipment
at efficiency of 11 EER. It was estimated
that these simulated cooling loads had
to be met by the CUAC equipment for
every hour of the year that the
equipment operates. Then DOE coupled
the hourly cooling loads and fan
operation with equipment performance
data, developed from laboratory and
modeled IEER testing conducted
according to AHRI Standard 340/360–
2007, to generate the hourly energy
consumption of baseline and more
efficient CUAC equipment.
DOE received additional comments
on the RFI regarding how to scale
equipment energy use as a function of
capacity for a given cooling load. Carrier
stated that capacity is highly dependent
on differences in product design for
performance at full- and part-load
conditions, control strategies, air
distribution method, and applications.
(Carrier, No. 7 at p. 5) AAON stated that
full modeling is required to determine
46 Persily, A. and J. Gorfain. 2004. ‘‘Analysis of
Ventilation Data from the U.S. Environmental
Protection Agency Building Assessment Survey and
Evaluation (BASE) Study’’. NISTIR 7145.
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how equipment energy use scales as a
function of capacity. (AAON, No. 8 at p.
6)
DOE’s use of the laboratory and
modeled IEER test data allowed it to
specifically address how capacity and
control strategies vary with outdoor
temperature and building load. The
laboratory and modeled IEER test data
were used to calculate the compressor
efficiency (COP) and capacity at varying
outdoor temperatures (see section IV.4
of this NOPR for further discussion.)
The IEER rating test consists of
measuring the net capacity, compressor
power, condenser fan power, indoor fan
power, and control power at three to
five different rating conditions. The
number of rated conditions the
equipment is tested at is determined by
the capabilities of and the control
strategies used by the equipment. The
net capacity and COP of the
compressor(s) as a linear function of
outdoor temperature was calculated
from those test results. If the indoor or
outdoor fan was variable speed, its
power consumption was also calculated
as a linear function of outdoor
temperature. The power for controls is
a constant, but may vary by staging.
The COP and capacity of the
equipment for each hour of the year was
calculated based on the outdoor
temperature for the simulated buildings.
The cooling capacity was calculated
such that it met the simulated building
cooling load for each hour. For multistage equipment, the staging for each
hour was selected to ensure the
equipment could meet the simulated
building cooling load. When the cooling
capacity exceeded the simulated
building cooling load, the efficiency was
adjusted for cyclic performance using
the degradation coefficient and load
factor as calculated according to section
6.2, Part-Load Rating, of AHRI 340/360,
using the above described IEER rating
test data. The analysis accounted for the
fact that the building cooling load
includes the heat generated by the fan.
The total amount of cooling the
compressor must provide varies as the
fan efficiency improves with different
efficiency levels.
The hourly fan run time was set equal
to the indoor fan run time of the
simulated building for each hour of the
year. Energy use was calculated
separately for the compressor,
condenser fan, indoor fan, and controls
for each hour of the year for the
simulated building. Compressor and
condenser fan energy were summed to
reflect cooling energy use. Indoor fan
and control energy were combined into
a single category to represent indoor fan
energy use.
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The calculations provided the annual
hourly cooling and fan energy use
profiles for each building. The
incremental energy savings between the
baseline equipment and the equipment
at higher efficiency levels was
calculated for every hour for each of the
1,033 simulated buildings.
The RFI requested comment on
whether the building simulations
developed for small and large airconditioning equipment are applicable
to very large equipment (i.e., equipment
with capacities between 240,000 Btu/h
and 760,000 Btu/h). AAON stated that
the simulation model should be
applicable regardless of equipment size.
(AAON, No. 8 at p. 6) Carrier stated that
building models appropriate to the
equipment size should be used. It noted
that special equipment models will be
needed to properly model the part-load
intensive equipment and changes in
IEER. It suggested that DOE should work
with the AHRI Unitary Large Equipment
Section to define the modeling approach
and obtain the equipment models for
the various IEER and EER levels as
considerable work has already been
done. (Carrier, No. 7 at p. 5)
As described above, DOE used the
simulations to obtain hourly building
cooling loads, fan operating hours, and
associated outdoor temperatures and
applied the IEER rating test data to
determine the hourly performance of the
equipment. Because DOE relied on the
IEER rating test data to come up with
the hourly performance of the
equipment, it believes that this method
provides a good representation of very
large equipment performance as well as
small and large equipment performance.
Therefore, additional building
simulation modeling for very large units
does not appear necessary.
Issue 8: DOE requests comments,
information, and data that could be used
to modify the proposed method for
using laboratory and modeled IEER test
data, which were developed in
accordance to AHRI Standard 340/360–
2007, to calculate the performance of
CUAC equipment at part-load
conditions.
2. Generalized Building Sample
The NOPR analysis used a
‘‘generalized building sample’’ (GBS) to
represent the installation conditions for
the equipment covered in this
rulemaking. The GBS was developed
based on data from the 2003 CBECS 47
and from the Commercial Demand
Module of the National Energy
47 CBECS 2012 is currently in development but
will not be available in time for this rulemaking.
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compiled in CBECS is that the GBS
aggregates all building floor space
associated with a particular set of
building characteristics into a single
category. The set of characteristics that
is used to define a category includes all
Modeling System version distributed
with AEO2013.
Only floor space cooled by the
covered equipment is included in the
sample. Conceptually, the main
difference between the GBS and the
sample of specific commercial buildings
building features that are expected to
influence either (1) the cooling load and
energy use or (2) the energy costs. The
set of building characteristics, and the
specific values these characteristics can
take, are listed in Table IV.10.
TABLE IV.10—LIST OF CHARACTERISTICS AND THE ASSOCIATED VALUES USED TO DEFINE THE GENERALIZED BUILDING
SAMPLE
Characteristic
Number of
values
Range of values
10
7
3
Vintage ......................................
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Region ......................................
Building Activity .........................
Size (based on annual energy
consumption).
3
The region in which the building is
located affects both the cooling loads
(through the weather) and the cost of
electricity. The building activity affects
building schedules and occupancy,
which in turn influence the demand for
cooling. The building activity categories
are the same as those used in the NEMS
commercial building energy demand
module, limited to those building types
that use the equipment covered in this
rule. The building size influences the
cost of electricity, because larger
facilities tend to have lower marginal
prices. The building vintage may
influence shell characteristics that can
affect the cooling loads. The
combination of 10 regions, 7 building
types, 3 sizes, and 3 vintages leads to a
set of 630 independent categories in the
GBS.
The amount of floor space allocated to
each category for buildings built in or
before 2003 was taken from the 2003
CBECS. To update the building floor
space to 2013, the commercial building
data included with the 2013 version of
NEMS were used. This dataset includes
a historical component, starting in 2004,
and provides both existing floor space
and new floor space additions by year,
census division, and building activity.
The floor space additions between 2004
and 2013 were added to the floor space
in vintage category 3.
Load profiles for each of the 630
generalized buildings were developed
from the simulation data just described.
For each equipment class, a subset of
the 1,033 buildings was used to develop
the cooling energy use profiles. The
subset included all buildings with a
capacity requirement equal to or greater
than 90 percent of the capacity of the
particular representative unit. For each
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9 census divisions with Pacific sub-divided into north and south.
assembly, education, food service, small office, large office, mercantile, warehouse.
small: <100,000 kWh.
medium: 100,000 to 1,000,000 kWh.
large: >1,000,000 kWh.
category 1: before 1950.
category 2: 1950–1979.
category 3: 1980 and later.
GBS type, a weighted average energy
use profile, along with energy savings
from the considered efficiency levels,
was compiled from the simulated
building subset. The average was taken
over all buildings in the subset that have
the same region, building type, size, and
vintage category as the GBS category.
This average was weighted by the
number of units required to meet each
building’s cooling load. For some of the
GBS categories, no simulation data were
available. In these cases, the weightedaverage energy use profile for the same
building type and a nearby region or
vintage were used.
Updating the sample to 2013 required
some additional adjustments to the
energy use data. The 1,033 building
simulations used TMY2 weather data.
The TMY2 weather data files were
updated to TMY3 in 2008. A
comparison of the two datasets showed
that total annual cooling degree-days
(CDD) increased by 5 percent at all
locations used in this analysis. This is
accounted for by increasing the energy
use (for all efficiency levels) by 5
percent at all locations.
Changes to building shell
characteristics and internal loads in
recent construction can lead to a change
in the energy required to meet a given
cooling load. The NEMS commercial
demand module accounts for these
trends by adjusting the cooling energy
use with a factor that is a function of
region and building activity. In the GBS,
these same factors were used to adjust
the cooling energy use for floor space
constructed after 1999.
Issue 9: DOE requests comments on
the use of a ‘‘generalized building
sample’’ to characterize the energy
consumption of CUAC equipment in the
commercial building stock. Specifically,
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whether there are any data or
information that could improve the
method for translating the results from
the 1,033 simulated buildings to the
generalized building sample.
F. Life-Cycle Cost and Payback Period
Analysis
The purpose of the LCC and PBP
analysis is to analyze the effects of
potential amended energy conservation
standards on customers of small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment by determining how a
potential amended standard affects their
operating expenses (usually decreased)
and their total installed costs (usually
increased).
The LCC is the total customer expense
over the life of the equipment,
consisting of equipment and installation
costs plus operating costs over the
lifetime of the equipment (expenses for
energy use, maintenance, and repair).
DOE discounts future operating costs to
the time of purchase using customer
discount rates. The PBP is the estimated
amount of time (in years) it takes
customers to recover the increased total
installed cost (including equipment and
installation costs) of a more efficient
type of equipment through lower
operating costs. DOE calculates the PBP
by dividing the change in total installed
cost (normally higher) due to a standard
by the change in annual operating cost
(normally lower) that results from the
standard.
For any given efficiency level, DOE
measures the PBP and the change in
LCC relative to an estimate of the basecase efficiency level. The base-case
estimate reflects the market in the
absence of amended energy
conservation standards, including the
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market for equipment that exceeds the
current energy conservation standards.
The RFI described how DOE would
analyze the potential for variability and
uncertainty by performing the LCC and
PBP calculations on a representative
sample of individual commercial
buildings. The approach utilizes the
sample of buildings developed for the
energy use analysis and the
corresponding simulations results.
Within a given building, one or more
air-conditioning units may serve the
building’s space-conditioning needs,
depending on the cooling load
requirements of the building. As a
result, DOE would express the LCC and
PBP results as the number of units
experiencing economic impacts of
different magnitudes. DOE models both
the uncertainty and the variability in the
inputs to the LCC and PBP analysis
using Monte Carlo simulation and
probability distributions.48 As a result,
the LCC and PBP results are displayed
as distributions of impacts compared to
the base case conditions.
The RFI requested comment from
stakeholders on the overall method for
conducting the LCC and PBP analysis.
Carrier stated that DOE should use the
procedures as developed by the
ASHRAE 90.1 committee and PNNL for
evaluating changes to the ASHRAE 90.1
standard. (Carrier, No. 7 at p. 5) The
procedures referred to by Carrier, while
potentially appropriate in other
circumstances, such as in the
development of building codes for new
construction, are not ideal in the context
of analyzing the potential impacts that
would be likely to result from the
imposition of new energy conservation
standards. DOE’s LCC and PBP analysis,
rather than focusing solely on the
impacts on new buildings (as would
Carrier’s suggested approach would do),
seeks to evaluate the impacts of
potential standards for small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment for all affected customers.
Such an evaluation requires a broader
framework than the more narrow
approach suggested by Carrier.
DOE conducted an LCC and PBP
analysis for the CUAC equipment
classes. As mentioned in section IV.E,
the energy savings estimates for the
efficiency levels associated with the
equipment classes that have electric
48 The Monte Carlo process statistically captures
input variability and distribution without testing all
possible input combinations. Therefore, while some
atypical situations may not be captured in the
analysis, DOE believes the analysis captures an
adequate range of situations in which small, large,
and very large air-cooled commercial package air
conditioning and heating equipment operate.
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resistance heating or no heating were
used in the LCC and PBP analysis to
represent the equipment classes with all
other types of heating. DOE did not
perform an LCC and PBP analysis for
the CUHP equipment for the reasons
discussed in section IV.C.4.
Inputs to the LCC and PBP analysis
are categorized as: (1) Inputs for
establishing the total installed cost and
(2) inputs for calculating the operating
expense. The following sections contain
brief discussions of comments on the
inputs and key assumptions of DOE’s
LCC and PBP analysis and explain how
DOE took these comments into
consideration.
1. Equipment Costs
In the LCC and PBP analysis, the
equipment costs faced by small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment purchasers are derived from
the MSPs estimated in the engineering
analysis and the overall markups
estimated in the markups analysis.
To develop an equipment price trend
for the NOPR, DOE derived an inflationadjusted index of the producer price
index (PPI) for ‘‘unitary airconditioners, except air source heat
pumps’’ from 1978 to 2013.49 Although
the PPI index shows a long-term
declining trend, data for the last decade
have shown a flat-to-slightly rising
trend. Given the uncertainty as to which
of the trends will prevail in coming
years, DOE chose to apply a constant
price trend (2013 levels) for the NOPR.
For the NIA, DOE also analyzed the
sensitivity of results to alternative price
forecasts.
2. Installation Costs
In the RFI, DOE discussed developing
installation costs for the current
rulemaking using the most recent RS
Means data available. AAON agreed that
it is appropriate to use RS Means.
(AAON, No. 8 at p. 6)
For today’s NOPR, DOE derived
installation costs for CUAC equipment
from current RS Means data.50 Based on
these data, DOE tentatively concluded
that data for 7.5-ton, 15-ton, and 30-ton
rooftop air conditioners would be
sufficiently representative of the
installation costs for the ≥65,000 Btu/h
to <135,000 Btu/h, ≥135,000 Btu/h to
<240,000 Btu/h, and ≥240,000 Btu/h to
<760,000 Btu/h air-conditioning
equipment classes, respectively.
Because labor rates vary significantly in
49 The PPP index for heat pumps covered too
short a time period to provide a useful picture of
pricing trends for this equipment.
50 https://www.rsmeansonline.com; Accessed
March 27, 2013.
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58979
each region of the country, DOE used RS
Means data to identify how installation
costs vary among regions and
incorporated these costs into the
analysis.
For the 2004 ANOPR, DOE varied
installation cost as a function of
equipment weight. Because weight
tends to increase with equipment
efficiency, installation cost increased
with equipment efficiency. 69 FR 45481.
In the RFI, DOE envisioned using a
similar approach for this rulemaking.
Carrier recommended that RS Means
Mechanical Cost Data be used to
estimate installed cost based on unit
tonnage rather than unit weight.
(Carrier, No. 7 at p. 5)
For this NOPR, DOE is using a
specific cost from RS Means for each of
the tonnage classes listed previously.
Within a given capacity (equipment
class), DOE chose to vary installation
costs in direct proportion to the
physical weight of the equipment. The
weight of the equipment in each class
and efficiency level was determined
through the engineering analysis.
3. Unit Energy Consumption
The calculation of annual per-unit
energy consumption at each considered
efficiency level is described in section
IV.E.
4. Electricity Prices and Electricity Price
Trends
For the 2004 ANOPR, DOE
determined electricity prices based on
tariffs from a representative sample of
electric utilities. 69 FR 45481–45482.
This approach calculates energy
expenses based on actual electricity
prices that customers are paying. The
RFI discussed retaining the tariff-based
approach and plans to update electricity
prices based on recent or current tariffs.
Carrier agreed with the tariff-based
approach and that the most recent price
data should be used. (Carrier, No. 7 at
p. 6) Similarly, the Joint Efficiency
Advocates asserted that the tariff-based
approach was appropriate for capturing
actual electricity prices paid by
customers. (Joint Efficiency Advocates,
No. 11 at p. 2)
For this NOPR, the tariff data used for
the ANOPR were used to develop
marginal and average prices for each
member of the GBS, which were then
scaled to approximate 2013 prices. The
approach uses tariff data that have been
processed into commercial building
marginal and average electricity
prices.51
51 Coughlin, K., C. Bolduc, R. Van Buskirk, G.
Rosenquist and J. E. McMahon. Tariff-based
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The CBECS 1992 and CBECS 1995
surveys provide monthly electricity
consumption and demand for a large
sample of buildings. DOE used these
values to help develop usage patterns
associated with various building types.
Using these monthly values in
conjunction with the tariff data, DOE
calculated monthly electricity bills for
each building. The average price of
electricity is defined as the total
electricity bill divided by total
electricity consumption. Two marginal
prices are defined, one for electricity
demand (in $/kW) and one for
electricity consumption (in $/kWh).
These marginal prices are calculated by
applying a 5 percent decrement to the
CBECS demand or consumption data
and recalculating the electricity bill.
Using the prices derived from the
above method, an average price and a
marginal price were assigned to each
building in the GBS. For each member
of the GBS, these prices were calculated
as the average, weighted by floor space
and survey sample weight, of all
buildings in the CBECS 1992 and 1995
data meeting the set of characteristics
defining the generalized building (i.e.,
region, vintage, building activity, and
building energy consumption). As most
tariffs are seasonal, average and
marginal prices are calculated
separately for summer (May–September)
and winter.
The average summer or winter
electricity price multiplied by the
baseline summer or winter electricity
consumption for equipment of a given
capacity defines the baseline LCC. For
each efficiency level, the operating cost
savings are calculated by multiplying
the electricity consumption savings
(relative to the baseline) by the marginal
consumption price and the electricity
demand reduction by the marginal
demand price. The consumer’s
electricity bill is only affected by the
electricity demand reduction that is
coincident with the building’s monthly
peak load. Air-conditioning loads are
strongly, but not perfectly, peakcoincident. Divergences between the
building peak and the air-conditioning
peak were accounted for by multiplying
the electricity demand reduction by a
random factor drawn from a triangular
distribution centered at 0.9 +/¥ 0.1.
The tariff-based prices were updated
to 2013 using the commercial electricity
price index published in the AEO
(editions 2009 through 2012). An
examination of data published by the
Analysis of Commercial Building Electricity Prices.
2008. Lawrence Berkeley National Laboratory:
Berkeley, CA. Report No. LBNL–55551.
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Edison Electric Institute 52 indicates that
the rate of increase of marginal and
average prices is not significantly
different, so the same factor was used
for both pricing estimates. DOE
projected future electricity prices using
trends in average commercial electricity
price from AEO 2013.
For further discussion of electricity
prices, see chapter 8 of the NOPR TSD.
5. Maintenance Costs
Maintenance costs are costs
associated with general maintenance of
the equipment (e.g., checking and
maintaining refrigerant charge levels
and cleaning heat-exchanger coils). For
the 2004 ANOPR, DOE developed
maintenance costs from RS Means data,
and DOE estimated that maintenance
costs do not vary with equipment
efficiency. 69 FR 45485. The RFI
discussed developing maintenance costs
for the current rulemaking using the
most recent RS Means data available,
and using the same assumption that
maintenance costs do not vary with
equipment efficiency. AAON stated that
it is appropriate to use RS Means.
(AAON, No. 8 at p. 6)
Carrier stated that RS Means might
serve as a reasonable guide to assist in
developing maintenance costs, but it
expects that maintenance costs vary
with efficiency due to the higher
replacement cost of new, more complex
components, and the technology
required to achieve the higher efficiency
levels. (Carrier, No. 7 at p. 6) Repair or
replacement of components that have
failed is considered a repair cost. DOE
is not aware of information on why
general maintenance would be higher as
a result of the technology used to
achieve higher efficiency levels. Thus,
DOE retained the assumption that
maintenance costs do not vary with
equipment efficiency.
For this NOPR, DOE derived
annualized maintenance costs for
commercial air conditioners from RS
Means data.53 These data provided
estimates of person-hours, labor rates,
and materials required to maintain
commercial air-conditioning equipment.
The estimated annualized maintenance
cost is $298 for a commercial unitary air
conditioner rated between 36,000 Btu/h
and 288,000 Btu/h, and $408 for a unit
rated between 288,000 Btu/h and
600,000 Btu/h.
52 Edison Electric Institute. EEI Typical Bills and
Average Rates Report (bi-annual, 2007–2012).
Washington, DC.
53 https://www.rsmeansonline.com; Accessed
March 26, 2013.
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6. Repair Costs
Repair costs are associated with
repairing or replacing components that
have failed. For the 2004 ANOPR, DOE
estimated that repair costs vary as
function of equipment price. 69 FR
45485. In the RFI, DOE requested
comment as to whether repair costs vary
as a function of equipment price, as well
as any data or information on
developing repair costs. AAON stated
that it is appropriate to estimate repair
costs as a function of equipment costs.
(AAON, No. 8 at p. 7) Carrier stated that
while it does not see repair costs
increasing as a direct result of higher
equipment prices, the higher material
and component costs necessary to
achieve higher efficiency levels (which
result in higher equipment prices) may
also drive higher repair costs. (Carrier,
No. 7 at p. 6)
For this NOPR, DOE assumed that any
routine or minor repairs are included in
the annualized maintenance costs. As a
result, repair costs are not explicitly
modeled in the LCC and PBP analysis.
Instead, DOE incorporated a one-time
cost for major repair (compressor
replacement) as a primary input to the
repair/replace customer choice model in
the shipments analysis, which models
the decision between repairing a broken
unit and replacing it (see section IV.G).
In the repair/replace customer choice
model, DOE used repair costs that vary
in direct proportion with the price of
the equipment, which approximates the
relationship between repair costs and
efficiency described by Carrier.
Issue 10: DOE requests comments on
whether using RS Means cost data to
develop maintenance, repair, and
installation costs for CUAC and CUHP
equipment is appropriate, and if not,
what data should be used.
7. Lifetime
Equipment lifetime is the age at
which the equipment is retired from
service. For the 2004 ANOPR, DOE
based equipment lifetime on a
retirement function, which was based
on the use of a Weibull probability
distribution, with a resulting median
lifetime of 15 years. 69 FR 45486. In the
RFI, DOE sought comment on how it
characterized equipment lifetime. DOE
also requested any data or information
regarding the accuracy of its 15-year
lifetime and whether equipment lifetime
varies based on equipment class.
The Joint Efficiency Advocates
encouraged DOE to reevaluate the
estimated lifetime of commercial aircooled air conditioners and heat pumps
for this rulemaking. They noted that
ASHRAE maintains a public database
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that provides information on the service
life of HVAC equipment. Although the
ASHRAE database does not currently
contain a separate category for
commercial package air conditioners
and heat pumps, it does contain
information on ‘‘other cooling
equipment.’’ In this category, there are
data on 365 units that were in service
at the time of the data collection. Of
these 365 units, the median equipment
age was 20 years. (Joint Efficiency
Advocates, No. 11 at p. 3) NEEA also
encouraged DOE to review actual
equipment lifetime for determining the
life-cycle cost of equipment. (NEEA, No.
15 at p. 2) AAON stated that equipment
lifetime should not be impacted by
equipment class. (AAON, No. 8 at p. 7)
DOE reviewed the ASHRAE database
and determined that the data support an
increase in lifetime relative to what DOE
used for the ANOPR. In the category
‘‘Packaged DX unit, rooftop’’ (which
corresponds to CUAC), of the 215 units
in service, the mean age is 15.6 years
and the median is 16 years.54 The five
units that had been replaced had a
median age of 22 years. These data
strongly suggest that the median lifetime
of 15 years used in the ANOPR is too
short. For this NOPR, DOE updated its
CUAC lifetime to a median of 18.7 years
and a mean of 18.4 years.
The category ‘‘heat pump, air-to-air’’
(which corresponds to CUHP) in the
ASHRAE database has 1,296 units (and
only one that had been retired) with a
median age of 14 years. These data
suggest that the 15-year lifetime used in
the 2004 ANOPR remains reasonable.
For the NOPR, DOE used a slightly
updated CUHP lifetime with a median
of 15.4 years and a mean of 15.2 years.
DOE used the same lifetime
distribution for each set of CUAC and
CUHP equipment classes.
Issue 11: DOE requests comments,
information and data on the equipment
lifetimes developed for CUAC and
CUHP equipment; specifically, any
information that would indicate
whether the retirement functions
yielding median lifetimes of 18.7 years
and 15.4 years for CUAC and CUHP
equipment, respectively, are reasonable.
8. Discount Rate
The discount rate is the rate at which
future expenditures are discounted to
estimate their present value. The cost of
capital commonly is used to estimate
the present value of cash flows to be
derived from a typical company project
or investment. Most companies use both
debt and equity capital to fund
investments, so the cost of capital is the
weighted-average cost to the firm of
equity and debt financing. DOE uses the
capital asset pricing model (CAPM) to
calculate the equity capital component,
and financial data sources to calculate
the cost of debt financing.
For the 2004 ANOPR, DOE derived
the discount rates by estimating the cost
of capital of companies that purchase
air-cooled air-conditioning equipment.
69 FR 45486–45487. For the current
rulemaking, DOE updated its data
sources for calculating this cost. More
details regarding DOE’s estimates of
customer discount rates are provided in
chapter 8 of the NOPR TSD.
9. Base Case Market Efficiency
Distribution
For the LCC analysis, DOE analyzes
the considered efficiency levels relative
to a base case (i.e., the case without
amended energy efficiency standards).
This analysis requires an estimate of the
distribution of product efficiencies in
the base case (i.e., what consumers
would have purchased in the
compliance year in the absence of
amended standards). DOE refers to this
distribution of product energy
58981
efficiencies as the base case efficiency
distribution.
The RFI requested data on current
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment efficiency
market shares (of shipments) by
equipment class, and also similar
historical data. DOE also requested
information on expected trends in
efficiency over the next five years.
Carrier stated that these data is not
readily available for the industry as a
whole, but a joint industry, AHRI and
DOE working group should be able to
develop an estimate based on a
collection of individual manufacturer’s
data. (Carrier, No. 7 at p. 6)
Given the statutory deadlines
described earlier, the formation of a
working group as suggested by Carrier
was not feasible. The only available data
showing air-cooled commercial package
air conditioning and heating equipment
efficiency market shares are from 1999–
2001 and may not be representative of
current market shares or the shares
expected in the near future. Rather than
rely solely on these older data, for this
NOPR, DOE used a consumer choice
model to estimate efficiency market
shares in the expected compliance year
(assumed to be 2019, as discussed
below). The consumer choice model
considers customer sensitivity to total
installation cost and annual operating
cost. DOE used the efficiency market
share data for 1999–2001 to develop the
parameters of the consumer choice
model in the shipments analysis, as
discussed in section IV.G.1. Using the
parameters, the model estimates the
shipments at each IEER level based on
the installed cost and operating cost at
each efficiency level. Table IV.11
presents the estimated base case
efficiency market shares for each aircooled CUAC equipment class.
TABLE IV.11—BASE CASE EFFICIENCY MARKET SHARES IN 2019 FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED
COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Small commercial packaged AC (Air-Cooled)—
≥65,000 Btu/h and <135,000 Btu/h cooling capacity
Market share
(%)
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IEER
11.4
12.9
14.0
14.8
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12.2
13.2
14.2
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Market share
(%)
IEER
78
20
2
0
0
building_function=NA&c_size=0&c_age=0&c_
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Very large commercial packaged AC (AirCooled)—≥240,000 Btu/h and <760,000 Btu/h
cooling capacity
Market share
(%)
IEER
61
39
0
1
0
54 See https://xp20.ashrae.org/publicdatabase/
system_service_life.asp?c_region=0&state=NA&
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Large commercial packaged AC (AirCooled)—≥135,000 Btu/h and <240,000 Btu/h
cooling capacity
10.1
11.6
12.5
13.5
15.5
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24
7
4
1
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Issue 12: DOE requests comments,
information and data on the base case
efficiency distributions of CUAC
equipment. Given that historical market
share efficiency data from 1999–2001
were used to inform a consumer choice
model in the shipments analysis to
develop estimated base case efficiency
distributions in the compliance year
(2019), DOE seeks more recent historical
market share efficiency data would be
useful for validating the estimated base
case efficiency distributions.
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10. Compliance Date
DOE calculated the LCC and PBP for
all customers as if each were to
purchase new equipment in the year
that compliance with amended
standards is required. EPCA directs DOE
to publish a final rule amending the
standard for the products covered by
this NOPR not later than 2 years after a
notice of proposed rulemaking is issued.
(42 U.S.C. 6313(a)(6)(C)(iii)) At the time
of preparation of the NOPR analysis, the
expected issuance date was December
2013, leading to a final rule publication
in December 2015. EPCA also states that
amended standards prescribed under
this subsection shall apply to products
manufactured after a date that is the
later of—(I) the date that is 3 years after
publication of the final rule establishing
a new standard; or (II) the date that is
6 years after the effective date of the
current standard for a covered product.
(42 U.S.C. 6313(a)(6)(C)(iv)) The date
under clause (I), currently projected to
be December 2018, is later than the date
under clause (II). For purposes of its
analysis, DOE used 2019 as the first year
of compliance with amended standards.
11. Payback Period Inputs
The payback period is the amount of
time it takes the consumer to recover the
additional installed cost of more
efficient equipment, compared to
baseline equipment, through energy cost
savings. Payback periods are expressed
in years. Payback periods that exceed
the life of the product mean that the
increased total installed cost is not
recovered in reduced operating
expenses.
The inputs to the PBP calculation are
the total installed cost of the product to
the customer for each efficiency level
and the average annual operating
expenditures for each efficiency level.
The PBP calculation uses the same
inputs as the LCC analysis, except that
discount rates are not needed.
12. Rebuttable-Presumption Payback
Period
EPCA establishes a rebuttable
presumption that a standard is
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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 (and, as
applicable, water) savings during the
first year that the consumer will receive
as a result of the standard, as calculated
under the test procedure in place for
that standard. For each considered
efficiency level, DOE determines the
value of the first year’s energy savings
by calculating the quantity of those
savings in accordance with the
applicable DOE test procedure, and
multiplying that amount by the average
energy price forecast for the year in
which compliance with the amended
standards would be required.
G. Shipments Analysis
DOE uses projections of product
shipments to calculate the national
impacts of standards on energy use,
NPV, and future manufacturer cash
flows. DOE develops shipment
projections based on historical data and
an analysis of key market drivers for
each product. Historical shipments data
are used to build up an equipment stock
and also to calibrate the shipments
model.
The RFI requested comment on DOE’s
approach in developing the shipments
model and forecasts. Carrier
recommended forming a working group
with AHRI to discuss shipment forecast
modeling techniques for this
rulemaking. (Carrier, No. 7 at p. 7) As
indicated earlier, this option was not
feasible in light of the statutory time
constraints. Instead, DOE developed a
shipments model that includes three
market segments: (1) Existing buildings
replacing broken equipment, (2) new
commercial buildings acquiring
equipment, and (3) existing buildings
acquiring new equipment for the first
time.
1. Shipments by Market Segment
For existing buildings replacing
broken equipment, the shipments model
uses a stock accounting framework.
Given the equipment entering the stock
in each year and a retirement function
based on the lifetime distribution
developed in the LCC analysis, the
model predicts how many units reach
the end of their lifetime in each year.
DOE typically refers to new shipments
intended to replace retired units as
‘‘replacement’’ shipments. Such
shipments are usually the largest part of
total shipments.
For CUAC and CUHP, end of lifetime
is generally associated with compressor
failure. Installing a new compressor,
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while possible, is costly. This fact leads
customers to typically replace the entire
CUAC/CUHP unit rather than simply
replace the compressor. A new unit is
more expensive than compressor
replacement, but it may be more energyefficient than the existing unit, which
means it would have lower operating
costs. If standards significantly increase
the cost of new equipment, one would
expect that the repair option would
become more attractive.
For the small and large CUAC and
CUHP equipment classes, DOE modeled
the repair vs. replacement decision, as
described below. If the unit is repaired
(i.e., with a new compressor), its life is
extended by another lifetime, based on
the retirement function. If a unit
encounters a second failure within the
analysis period, the model assumes that
the customer replaces the unit with a
new one. For the very large CUAC and
CUHP equipment classes, DOE assumed
that all customers repair the unit at the
first failure because the total installed
cost of a new unit is very high relative
to the cost of repair. If a unit encounters
a second failure within the analysis
period, DOE assumed that the customer
replaces the unit with a new one, as
further repair of very old equipment is
not likely to occur.
To model the repair vs. replacement
decision, DOE developed a consumer
choice model that estimates customer
sensitivity to total installation cost. A
sensitivity parameter was calculated
using efficiency market share data for
years 1999–2001, along with estimates
of equipment prices and installation
costs by efficiency level (the data
sources are described below). DOE
applied this sensitivity to the difference
between the total installed cost of a new
unit and the repair cost of the existing
unit.
The replacement cost at each
efficiency level is the total installed cost
derived in the LCC analysis. For repair
cost, DOE developed its own estimates
of the material costs for compressors.
(DOE examined RS Means material costs
for compressors and concluded that
they were inaccurate for all size classes,
as several of the estimates exceeded the
costs for an entire new unit.) For labor
and non-compressor material costs, DOE
used data in RS Means Facilities
Maintenance & Repair Cost Data,
2013.55 Within each equipment class,
DOE used repair costs that increase in
direct proportion with the price of the
equipment and with IEER level.
DOE recognizes that the decision to
repair or replace equipment is not solely
55 RS Means Facilities Maintenance & Repair Cost
Data 2013. https://www.rsmeansonline.com.
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a function of the difference between the
total installed cost of a new unit and the
repair cost of the existing unit. The
difference in operating costs may also
play a role, as may general economic
conditions and other factors. DOE did
not have sufficient information to
incorporate these factors explicitly into
its model, so it developed an alternative
approach that assumes that the factors
influencing the repair or replace
decision will be similar in the future as
they were in the past. DOE estimated an
historical average repair rate by
minimizing the difference between
actual historical shipments and modelpredicted shipments in a ‘‘no-repairs’’
scenario. DOE developed a time series
for historical shipments using data
provided by AHRI in 2001 for the small
and large CUAC and CUHP equipment
classes for the years 1980 to 2001,
combined with Census data on
manufacturer shipments 56 as the basis
for shipments in earlier and later years,
and for very large CUAC and CUHP.
Chapter 9 of the NOPR TSD discusses in
more detail the AHRI and Census data
and its use by DOE.
The repair/replace model is a binary
choice model with two parameters,
‘‘alpha’’ and ‘‘gamma.’’ ‘‘Alpha’’
represents customer sensitivity to the
efficiency-weighted average cost
difference between total installed cost of
replacement and repair costs. DOE
assumed that the ‘‘alpha’’ is equal to the
parameter used in the customer choice
model to represent customer sensitivity
to total installed cost. (The customer
choice model is described in section
IV.G.1.) ‘‘Gamma’’ is a scenario
parameter that limits the number of
repairs and can be thought of as
representing ‘‘unknown replacements.’’
Since ‘‘alpha’’ is assumed to be known,
DOE estimated ‘‘gamma’’ by minimizing
the difference between the historical
average repair rate and the repair
probability predicted by the repair/
replace model. This approach ensures
that the estimated repair rate in each
forecast year in the base case is close to
the historical average rate. In the
standards cases, which have higher
installed costs, the repair rate is higher.
Chapter 9 of the NOPR TSD describes
the repair/replace decision model in
more detail.
For existing buildings acquiring new
equipment for the first time, DOE first
estimated saturation values (percentages
of total floor space served by different
cooling capacities or types of
56 U.S.Census Bureau. Current Industrial Reports
for Refrigeration, Air Conditioning, and Warm Air
Heating Equipment, MA333M. Note that the current
industrial reports were discontinued in 2010, so
more recent data are not available.
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equipment) for the stock. CBECS
provides overall CUAC and CUHP
saturation values. To derive percentages
of floor space served by different
cooling capacities or types of
equipment, DOE used shipments data
from the Census. DOE derived the
approximate historical floor space
saturations for each of the CUAC and
CUHP equipment classes by multiplying
the CUAC and CUHP saturation values
from CBECS by the shipment shares
from the Census. DOE used a logistic
regression procedure to fit the CBECS
historical stock saturations to produce a
smooth time series of saturation
estimates for the analysis period.
Shipments for existing buildings
acquiring new equipment for the first
time in each future year are estimated
by multiplying the difference in
projected stock saturation values
between the future year and the
previous year with the estimated floor
space without CUAC and CUHP
equipment in the previous year. In other
words, the shipments account for the
incremental increase in stock saturation.
For new commercial buildings
acquiring equipment, shipments are
estimated by multiplying new
construction floor space in each future
year by saturation values (percentages of
new floor space served by different
cooling capacities or types of
equipment). The shipments model relies
on AEO 2013 for forecasts of new
construction floor space. It assumes that
the saturation value in new commercial
buildings is the same as the stockaverage saturation for each year.
Issue 13: DOE requests comments,
information and data on the methods
and key assumptions used to model the
repair vs. replacement decision, which
is based on estimates of the cost of
repair vs. the cost of new equipment.
Field data for repair costs and how they
vary with equipment first cost and age
would allow DOE to refine its
shipments forecasting by more precisely
modeling the repair vs. replace decision
sensitivity to the difference in repair
and replacement equipment costs.
Issue 14: DOE requests comments,
information and data regarding the
lifetime of repaired equipment. DOE’s
analysis considered major repair
consisting of replacement of the
compressor and miscellaneous materials
associated with the compressor; DOE
estimated that repaired equipment
would last as long as new replacement
equipment. Information is requested to
determine whether this estimate is
reasonable.
Issue 15: DOE requests comments,
information, and data on the repair of
CUACs and CUHPs in the ≥240,000 Btu/
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58983
h and <760,000 Btu/h equipment
classes. For this equipment, the
shipments analysis estimated that any
equipment experiencing their first
failure would be repaired rather than
replaced. Information is requested to
determine whether this estimate is
reasonable.
2. Shipment Market Shares by
Efficiency Level
The approach described in the
preceding section provides total
shipments in each equipment class for
each year. To estimate the market shares
of the considered efficiency levels in
future shipments, DOE developed a
customer choice model. The model was
calibrated by estimating values for two
parameters, representing customer
sensitivity to total installation cost and
annual operating cost. To calibrate the
model, DOE used EER market share data
for small and large CUAC equipment
classes provided by AHRI for the
previous rulemaking. These market
shares are for 1999–2001. DOE used the
equipment prices by EER level from the
2004 ANOPR to assign equipment prices
to each EER bin, along with the
installation costs and maintenance costs
developed for this NOPR. DOE derived
unit energy consumption (UEC) values
for each of the EER bins using the UEC
to EER relationships presented in the
2004 ANOPR TSD, and then applied
historic electricity prices to calculate
annual energy costs.
To estimate values for the parameters,
DOE used a non-linear regression
approach that minimized the sum of the
squared difference between historical
market shares and the predicted values
at each efficiency level for the small and
large CUAC equipment classes. Starting
in 2013, application of the parameters,
along with data on the installed cost and
operating cost at each efficiency level
under consideration, determines the
market shares of each efficiency level.
The same parameters were used to
estimate market shares for each
equipment class. The details of this
approach can be found in chapter 9 of
the NOPR TSD.
H. National Impact Analysis
The NIA assesses the national energy
savings (NES) and the national NPV of
total customer costs and savings that
would be expected to result from
amended standards at specific efficiency
levels.
To make the analysis more accessible
and transparent to all interested parties,
DOE used an MS Excel spreadsheet
model to calculate the energy savings
and the national customer costs and
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savings from each TSL.57 The NIA
calculations are based on the annual
energy consumption and total installed
cost data from the energy use analysis
and the LCC analysis. DOE forecasted
the lifetime energy savings, energy cost
savings, equipment costs, and NPV of
customer benefits for each equipment
class for equipment sold from 2019
through 2048.
DOE evaluated the impacts of
potential new and amended standards
for small, large, and very large aircooled commercial package air
conditioning and heating equipment by
comparing base-case projections with
standards-case projections. The basecase projections characterize energy use
and customer costs for each equipment
class in the absence of new and
amended energy conservation
standards. DOE compared these
projections with those characterizing
the market for each equipment class if
DOE were to adopt amended standards
at specific energy efficiency levels (i.e.,
the standards cases) for that class.
TABLE IV.12—INPUTS FOR THE NATIONAL IMPACT ANALYSIS
Input
Description
Shipments .......................................
Compliance date of standard ..........
Base case efficiencies ....................
Standards case efficiencies ............
Annual energy consumption per
unit.
Total installed cost per unit .............
Electricity expense per unit .............
Escalation of electricity prices ........
Electricity site-to-primary energy
conversion.
Discount rates .................................
Present year ....................................
Annual shipments from shipments model.
January 1, 2019.
Estimated by customer choice model.
Estimated by customer choice model.
Calculated for each efficiency level and equipment class based on inputs from the energy use analysis.
Calculated equipment prices by efficiency level using manufacturer selling prices and weighted-average
overall markup values. Installation costs vary in direct proportion to the weight of the equipment.
Annual energy use for each equipment class is multiplied by the corresponding average energy price.
AEO 2013 forecasts (to 2040) and extrapolation beyond 2040.
A time series conversion factor; includes electric generation, transmission, and distribution losses.
3% and 7% real.
2013.
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1. Efficiency Trends
A key component of DOE’s estimates
of NES and NPV are the equipment
energy efficiencies forecasted over time
for the base case and for each of the
standards cases. For the 2004 ANOPR,
DOE used a combination of historical
commercial and residential equipment
efficiency data to forecast efficiencies
for the base case. To estimate the impact
that standards would have in the year
compliance becomes required, DOE
used a ‘‘roll-up’’ scenario, which
assumes that equipment efficiencies in
the base case that do not meet the
standard level under consideration
would ‘‘roll up’’ to meet the new
standard level and equipment
shipments at efficiencies above the
standard level under consideration are
not affected. 69 FR 45489–45490.
The Joint Efficiency Advocates
encouraged DOE to consider a ‘‘shift’’
scenario (one in which efficiencies
above the standard level under
consideration are affected in a standards
case) for the national impact analysis.
(Joint Efficiency Advocates, No. 11 at p.
3) DOE did not have sufficient data on
current efficiency market shares or
information on market behavior to be
able to develop a ‘‘shift’’ scenario.
57 DOE understands that MS Excel is the most
widely used spreadsheet calculation tool in the
United States and there is general familiarity with
its basic features. Thus, DOE’s use of MS Excel as
the basis for the spreadsheet models provides
interested parties with access to the models within
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The RFI requested information on
expected trends in efficiency over the
long run, but DOE did not receive
comments. For this NOPR, DOE used
the customer choice model in the
shipments analysis to estimate
efficiency market shares in each year of
the shipments projection period. For
each standards case, the efficiency
levels that are below the standard are
removed from the possible choices
available to customers. The base case
shows a slight increasing trend for small
CUAC, but the shares are fairly constant
for large and very large CUAC. The
estimated efficiency trends in the base
case and standards cases are described
in chapter 9 of the NOPR TSD.
2. National Energy Savings
For each year in the forecast period,
DOE calculates the national energy
savings for each standard level by
multiplying the shipments of small,
large, and very large air-cooled CUAC
and CUHP by the per-unit annual
energy savings. Cumulative energy
savings are the sum of the annual energy
savings over the lifetime of all
equipment shipped during 2019–2048.
For small, large, and very large aircooled CUAC, the per-unit annual
energy savings for each considered
a familiar context. In addition, the TSD and other
documentation that DOE provides during the
rulemaking help explain the models and how to use
them, and interested parties can review DOE’s
analyses by changing various input quantities
within the spreadsheet.
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efficiency level come from the energy
use analysis, which estimated energy
consumption for 2019. For later years,
DOE adjusted the per-unit annual site
energy use to account for changes in
climate based on projections in AEO
2013.
For small, large, and very large aircooled CUHP, DOE did not conduct an
energy use analysis. Because the
cooling-side performance of CUHP is
nearly identical to that of CUAC, DOE
used the energy consumption estimates
developed for CUACs to characterize the
cooling-side performance of CUHP of
the same size. To characterize the
heating-side performance, DOE
analyzed CBECS 2003 data to develop a
national-average annual energy use per
square foot for buildings that use
CUHPs. DOE assumed that the average
COP of the CUHP was 2.9.58 DOE
converted the energy use per square foot
value to annual energy use per ton using
a ton per square foot relationship
derived from the energy use analysis for
CUAC. This value is different for each
equipment class. Because equipment
energy use is a function of efficiency,
DOE assumed that the annual heating
energy consumption of a unit scales
proportionally with its heating COP
efficiency level. Finally, to determine
58 A heating efficiency of 2.9 COP corresponds to
the existing minimum heating efficiency standard
for CUHP, a value which the Department believes
is representative of the heat pump stock
characterized by CBECS.
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the COPs of units with given IEERs,
DOE correlated COP to IEER based on
the AHRI Certified Equipment
Database.59 Thus, for any given cooling
efficiency of a CUHP unit, DOE was able
to establish the corresponding heating
efficiency, and, in turn, the associated
annual heating energy consumption.
For CUAC and CUHP, DOE did not
adjust its estimate of energy savings to
account for a rebound effect. A direct
rebound effect occurs when an increase
in efficiency is accompanied by more
intensive use of the equipment. DOE is
not aware of any evidence to support
the notion that commercial customers
would run more efficient equipment
longer or more frequently. The
operation of CUAC and CUHP is
generally matched to the indoor comfort
needs of the building, regardless of the
equipment efficiency.
Issue 16: DOE requests comments on
its decision to not include a rebound
effect for more-efficient CUAC and
CUHP.
DOE calculates the total annual site
energy savings for a given standards
case by subtracting total energy use in
the standards case from total energy use
in the base case. Part of the reduction in
a standards case is due to decreasing
shipments resulting from customers
choosing to repair than replace broken
equipment. The NES calculation also
includes the estimated energy use of
units that are repaired rather than
replaced. The units repaired in each
year are from a number of different
vintages (year built). For each vintage,
DOE estimated an average efficiency
based on an estimated historical trend,
and estimated the average energy use by
scaling the energy use for baseline units
in 2013 according to the estimated
efficiency in each year. The average
energy use of units that are repaired in
each year is weighted by the number of
units in each vintage.
DOE converted the site electricity
consumption and savings to primary
energy (power sector energy
consumption) using annual conversion
factors derived from the AEO 2013
version of the NEMS. Cumulative
energy savings are the sum of the NES
for each year in which equipment
shipped during 2019–2048 continue to
operate.
DOE has historically presented NES
in terms of primary energy savings. In
response to the recommendations of a
committee on ‘‘Point-of-Use and FullFuel-Cycle Measurement Approaches to
Energy Efficiency Standards’’ appointed
by the National Academy of Science,
59 https://www.ahridirectory.org/ahridirectory/
pages/homeM.aspx.
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DOE announced its intention to use fullfuel-cycle (FFC) measures of energy use
and greenhouse gas and other emissions
in the national impact analyses and
emissions analyses included in future
energy conservation standards
rulemakings. 76 FR 51281 (August 18,
2011). While DOE stated in that notice
that it intended to use the Greenhouse
Gases, Regulated Emissions, and Energy
Use in Transportation (GREET) model to
conduct the analysis, it also said it
would review alternative methods,
including the use of EIA’s National
Energy Modeling System (NEMS). After
evaluating both models and the
approaches discussed in the August 18,
2011 notice, DOE published a statement
of amended policy in the Federal
Register in which DOE explained its
determination that NEMS is a more
appropriate tool for this specific use. 77
FR 49701 (August 17, 2012). Therefore,
DOE is using NEMS to conduct FFC
analyses. The approach used for this
NOPR, and the FFC multipliers that
were applied, are described in appendix
10–A of the NOPR TSD.
3. Net Present Value of Customer
Benefit
The inputs for determining the NPV
of the total costs and benefits
experienced by customers of the
considered equipment are: (1) Total
annual installed cost; (2) total annual
savings in operating costs; and (3) a
discount factor. DOE calculates the
lifetime net savings for equipment
shipped each year as the difference
between the base case and each
standards case in total lifetime savings
in lifetime operating costs and total
lifetime increases in installed costs.
DOE calculates lifetime operating cost
savings over the life of each small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment shipped during the forecast
period.
a. Total Annual Installed Cost
The total installed cost includes both
the equipment price and the installation
cost. For each equipment class, DOE
calculated equipment prices by
efficiency level using manufacturer
selling prices and weighted-average
overall markup values (weights based
on shares of the distribution channels
used). Installation costs vary in direct
proportion to the weight of the
equipment. Because DOE calculated the
total installed cost as a function of
equipment efficiency, it was able to
determine annual total installed costs
based on the annual shipment-weighted
efficiency levels determined in the
shipments model.
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For small, large, and very large aircooled CUHPs, to estimate the cost at
higher efficiency levels, DOE applied
the same incremental equipment costs
that were developed for the comparable
CUAC efficiency levels for each
equipment class (see section IV.C.4).
As noted in section IV.F.1, DOE
assumed no change in small, large, and
very large air-cooled CUAC and CUHP
prices over the analysis period.
However, DOE conducted sensitivity
analyses using alternative price trends:
one in which prices decline after 2013,
and one in which prices rise. These
price trends, and the NPV results from
the associated sensitivity cases, are
described in appendix 10–B of the
NOPR TSD.
The NPV calculation includes the
repair cost of units that are repaired
rather than replaced. The approach used
to estimate such costs is described in
section IV.G.
b. Total Annual Operating Cost Savings
DOE calculates the total annual
operating cost savings for a given
standards case relative to operating
costs in the base case. Part of the
operating cost savings in a standards
case is due to a decrease in shipments
resulting from customers choosing to
repair than replace broken equipment.
The NPV calculation includes the
estimated operating costs of units that
are repaired rather than replaced. These
costs were estimated based on the
average energy use of such units and the
average electricity price in each year.
The per-unit energy savings were
derived as described in section IV.H.2.
To calculate future electricity prices,
DOE applied the projected trend in
national-average commercial electricity
price from the AEO 2013 Reference
case, which extends to 2040, to the
tariff-based prices derived in the LCC
and PBP analysis. DOE used the trend
from 2030 to 2040 to extrapolate beyond
2040. In addition, DOE analyzed
scenarios that used the trends in the
AEO 2013 Low Economic Growth and
High Economic Growth cases. These
cases have higher and lower energy
price trends compared to the Reference
case. These price trends, and the NPV
results from the associated cases, are
described in appendix 10–C of the
NOPR TSD.
DOE estimated that annual
maintenance costs (including minor
repairs) do not vary with efficiency
within each equipment class, so they do
not figure into the annual operating cost
savings for a given standards case. In
addition, as noted previously, DOE
included major repair costs in its
shipments model rather than developing
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annualized repair costs. As a result,
repair costs do not factor directly into
the determination of total operating cost
savings for shipments.
In calculating the NPV, DOE
multiplies the net savings in future
years by a discount factor to determine
their present value. DOE estimates the
NPV using both a 3-percent and a 7percent real discount rate, in accordance
with guidance provided by the Office of
Management and Budget (OMB) to
Federal agencies on the development of
regulatory analysis.60 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 7percent 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.
I. Customer Subgroup Analysis
In analyzing the potential impacts of
new or amended standards, DOE
evaluates impacts on identifiable groups
(i.e., subgroups) of customers that may
be disproportionately affected by a
national standard. For the NOPR, DOE
evaluated impacts on a small business
subgroup using the LCC spreadsheet
model. The customer subgroup analysis
is discussed in detail in chapter 11 of
the NOPR TSD.
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J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to determine
the financial impact of amended energy
conservation standards on
manufacturers of CUAC and to estimate
the potential impact of such standards
on employment and manufacturing
capacity. The MIA has both quantitative
and qualitative aspects. The quantitative
part of the MIA primarily relies on the
Government Regulatory Impact Model
(GRIM), an industry cash-flow model
with inputs specific to this rulemaking.
The key GRIM inputs are data on the
industry cost structure, equipment
costs, shipments, and assumptions
about markups and conversion
expenditures. The key output is the
industry net present value (INPV).
Different sets of assumptions (markup
scenarios) will produce different results.
The qualitative part of the MIA
addresses factors such as product
characteristics, impacts on particular
60 OMB Circular A–4, section E (Sept. 17, 2003).
Available at: https://www.whitehouse.gov/omb/
circulars_a004_a-4.
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subgroups of firms, and important
market and product trends. 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 CUAC and CUHP industry that
includes a top-down manufacturer cost
analysis of manufacturers used to derive
preliminary financial inputs for the
GRIM (e.g., sales, general, and
administration (SG&A) expenses;
research and development (R&D)
expenses; and tax rates). DOE used
public sources of information, including
company SEC 10–K filings,61 corporate
annual reports, the U.S. Census
Bureau’s Economic Census,62 and
Hoover’s reports.63
In Phase 2 of the MIA, DOE prepared
an industry cash-flow analysis to
quantify the potential impacts of an
amended energy conservation standard.
In general, energy conservation
standards can affect manufacturer cash
flow in three distinct ways: (1) Create a
need for increased investment; (2) raise
production costs per unit; and (3) alter
revenue due to higher per-unit prices
and possible changes in sales volumes.
In Phase 3 of the MIA, DOE
conducted structured, detailed
interviews with a representative crosssection of manufacturers. During these
interviews, DOE discussed engineering,
manufacturing, procurement, and
financial topics to validate assumptions
used in the GRIM and to identify key
issues or concerns. See section IV.J.2 for
a description of the key issues
manufacturers raised during the
interviews.
Additionally, in Phase 3, DOE
evaluated subgroups of manufacturers
that may be disproportionately
impacted by new standards or that may
not be accurately represented by the
average cost assumptions used to
develop the industry cash-flow analysis.
For example, small manufacturers,
niche players, or manufacturers
exhibiting a cost structure that largely
differs from the industry average could
be more negatively affected. DOE
identified one subgroup (i.e., small
manufacturers) for a separate impact
analysis.
DOE applied the small business size
standards published by the Small
61 U.S. Securities and Exchange Commission.
Annual 10–K Reports. Various Years. https://sec.gov.
62 U.S. Census Bureau, Annual Survey of
Manufacturers: General Statistics: Statistics for
Industry Groups and Industries. https://
factfinder2.census.gov/faces/nav/jsf/pages/
searchresults.xhtml?refresh=t.
63 Hoovers Inc. Company Profiles. Various
Companies. https://www.hoovers.com.
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Business Administration (SBA) to
determine whether a company is
considered a small business. 65 FR
30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544 (Sept.
5, 2000) and codified at 13 CFR part
121. To be categorized as a small
business under North American
Industry Classification System (NAICS)
code 333415, ‘‘Air-Conditioning and
Warm Air Heating Equipment and
Commercial and Industrial Refrigeration
Equipment Manufacturing,’’ a CUAC
and CUHP manufacturer and its
affiliates may employ a maximum of
750 employees. The 750-employee
threshold includes all employees in a
business’s parent company and any
other subsidiaries. Based on this
classification, DOE identified at least
two manufacturers that qualify as small
businesses. The small manufacturer
subgroup is discussed in section VI.B of
this notice and in chapter 12 of the
NOPR TSD.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the
changes in cash flow due to new
standards that result in a higher or
lower industry value. The GRIM
analysis uses a standard, annual cashflow 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 2014 (the base
year of the analysis) and continuing to
2048. DOE calculated INPVs by
summing the stream of annual
discounted cash flows during this
period. For CUAC and CUHP
manufacturers, DOE used a real
discount rate of 6.2 percent, which was
derived from industry financials and
then modified according to feedback
received during manufacturer
interviews.
The GRIM calculates cash flows using
standard accounting principles and
compares changes in INPV between a
base case and each standards case. The
difference in INPV between the base
case and a standards case represents the
financial impact of the amended energy
conservation standard on
manufacturers. As discussed previously,
DOE collected this information on the
critical GRIM inputs from a number of
sources, including publicly-available
data and interviews with a number of
manufacturers (described in the next
section). The GRIM results are shown in
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section V.B.2. Additional details about
the GRIM, the discount rate, and other
financial parameters can be found in
chapter 12 of the NOPR TSD.
a. Government Regulatory Impact Model
Key Inputs
Manufacturer Production Costs
Manufacturing higher-efficiency
equipment is typically more expensive
than manufacturing baseline equipment
due to the use of more complex
components, which are typically more
costly than baseline components. The
changes in the manufacturer production
costs (MPCs) of the analyzed equipment
can affect the revenues, gross margins,
and cash flow of the industry, making
these equipment cost data key GRIM
inputs for DOE’s analysis.
In the MIA, DOE used the MPCs for
each considered efficiency level
calculated in the engineering analysis,
as described in section IV.C.3 and
further detailed in chapter 5 of the
NOPR TSD. In addition, DOE used
information from its teardown analysis,
described in chapter 5 of the TSD, to
disaggregate the MPCs into material,
labor, and overhead costs. To calculate
the MPCs for equipment above the
baseline, DOE added the incremental
material, labor, and overhead costs from
the engineering cost-efficiency curves to
the baseline MPCs. These cost
breakdowns and product markups were
validated and revised with
manufacturers during manufacturer
interviews.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
Shipments Forecasts
The GRIM estimates manufacturer
revenues based on total unit shipment
forecasts and the distribution of these
values 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 forecasts derived from the
shipments analysis from 2014 (the base
year) to 2048 (the end year of the
analysis period). The NIA shipments
forecasts are, in part, based on a
consumer choice model that estimates
customer sensitivity to total installed
cost as well as operating costs. See
section IV.G. above and chapter 9 of the
NOPR TSD for additional details.
Product and Capital Conversion Costs
An amended energy conservation
standard would cause manufacturers to
incur one-time conversion costs to bring
their production facilities and product
designs into compliance. DOE evaluated
the level of conversion-related
expenditures that would be needed to
comply with each considered efficiency
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level in each equipment class. For the
MIA, DOE classified these conversion
costs into two major groups: (1) Capital
conversion costs; and (2) product
conversion costs. Capital conversion
costs are one-time investments in
property, plant, and equipment
necessary to adapt or change existing
production facilities such that new
compliant equipment designs can be
fabricated and assembled. Product
conversion costs are one-time
investments in research, development,
testing, marketing, and other noncapitalized costs necessary to make
product designs comply with the
amended energy conservation standard.
These expenditures are made between
the announcement year of the standard
and the effective date of the standard.
To evaluate the level of capital
conversion expenditures manufacturers
would likely incur to comply with
amended energy conservation
standards, DOE used manufacturer
interviews to gather data on the
anticipated level of capital investment
that would be required at each
efficiency level. DOE supplemented
manufacturer comments with estimates
of capital expenditure requirements
derived from the product teardown
analysis and engineering analysis
described in chapter 5 of the TSD.
DOE assessed the product conversion
costs at each considered efficiency level
by integrating data from quantitative
and qualitative sources. DOE considered
market-share-weighted feedback
regarding the potential costs of each
efficiency level from multiple
manufacturers to estimate product
conversion costs and validated those
numbers against engineering estimates
of redesign efforts. Additionally, DOE
incorporated estimates of the
incremental Certification, Compliance &
Enforcement (CC&E) testing costs that
would result from the proposed test
procedure change. This results in
product conversion costs which occur
even at the baseline because
manufacturers would need to re-rate all
existing basic models.
The testing costs that occur at
baseline total $12.7M for the industry.
This value is based the 6,366 product
listings found in the AHRI database at
the time of analysis. DOE assumed that
the 29 brands in the industry would
each need to run 2 validation tests for
each of the 12 equipment classes,
resulting in 696 physical tests at an
average cost of $10,000 per test, which
includes the cost of the test units.
Additionally, the industry would likely
use AEDMs to determine the IEER rating
of all remaining basic models. While
simulation times ranged from 6 to 24
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hours of engineering time, depending on
the size and complexity of the
equipment being modeled, DOE
estimated the average AEDM calculation
required 13.8 hrs of engineering time to
complete. The cost of physically testing
696 units totaled $6.96M and the cost of
using AEDMs to determine the rating of
the 6,366 product listings would total
$5.76M.
Issue 17: DOE requests comments,
information, and data that would inform
adjustment of the DOE’s estimate of
$12.7M in conversion costs that occurs
in the base case.
In general, DOE assumes that all
conversion-related investments occur
between the year of publication of the
final rule and the year by which
manufacturers must comply with the
new standard. The conversion cost
figures used in the GRIM can be found
in section V.B.2.a of this notice. For
additional information on the estimated
product and capital conversion costs,
see chapter 12 of the NOPR TSD.
b. Government Regulatory Impact Model
Scenarios
Markup Scenarios
As discussed above, MSPs include
direct manufacturing production costs
(i.e., labor, materials, and overhead
estimated in DOE’s MPCs) and all nonproduction 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 equipment 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 the uncertainty
regarding the potential impacts on
prices and profitability for
manufacturers following the
implementation of amended energy
conservation standards: (1) A
preservation of gross margin percentage
markup scenario; and (2) a preservation
of per unit operating profit markup
scenario. These scenarios lead to
different markups values that, when
applied to the inputted MPCs, result in
varying revenue and cash flow impacts.
Under the preservation of gross
margin percentage scenario, DOE
applied a single uniform ‘‘gross margin
percentage’’ markup across all efficiency
levels, which assumes that
manufacturers would be able to
maintain the same amount of profit as
a percentage of revenues at all efficiency
levels within an equipment class. As
production costs increase with
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efficiency, this scenario implies that the
absolute dollar markup will increase as
well. Based on publicly-available
financial information for manufacturers
of small, large, and very large air-cooled
CUAC and CUHP as well as comments
from manufacturer interviews, DOE
assumed the average non-production
cost markup—which includes SG&A
expenses, R&D expenses, interest, and
profit—to be the following for each
CUAC and CUHP equipment class:
TABLE IV.13—BASE CASE MARKUPS
Equipment
Markup
Small Commercial Packaged Air-Conditioners (Air-Cooled)—≥65,000 Btu/h and <135,000 Btu/h ........................................................
Small Commercial Packaged Heat Pumps (Air-Cooled)—≥65,000 Btu/h and <135,000 Btu/h .............................................................
Large Commercial Packaged Air-Conditioners (Air-Cooled)—≥135,000 Btu/h and <240,000 Btu/h .....................................................
Large Commercial Packaged Heat Pumps (Air-Cooled)—≥135,000 Btu/h and <240,000 Btu/h ...........................................................
Very Large Commercial Packaged Air-Conditioners (Air-Cooled)—≥240,000 Btu/h and <760,000 Btu/h .............................................
Very Large Commercial Packaged Heat Pumps (Air-Cooled)—≥240,000 Btu/h and <760,000 Btu/h ..................................................
Because this markup scenario
assumes that manufacturers would be
able to maintain their gross margin
percentage markups as production costs
increase in response to an amended
energy conservation standard, it
represents a high bound to industry
profitability.
In the preservation of per unit
operating profit scenario, manufacturer
markups are set so that operating profit
one year after the compliance date of the
amended energy conservation standard
is the same as in the base case on a per
unit basis. Under this scenario, as the
costs of production increase under a
standards case, manufacturers are
generally required to reduce their
markups to a level that maintains basecase operating profit per unit. The
implicit assumption behind this markup
scenario is that the industry can only
maintain its operating profit in absolute
dollars per unit after compliance with
the new standard is required. Therefore,
operating margin in percentage terms is
reduced between the base case and
standards case. DOE adjusted the
manufacturer markups in the GRIM at
each TSL to yield approximately the
same earnings before interest and taxes
in the standards case as in the base case.
This markup scenario represents a low
bound to industry profitability under an
amended energy conservation standard.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
c. Manufacturer Interviews
DOE interviewed manufacturers
representing approximately 97 percent
of the market by revenue. The
information gathered during these
interviews enabled DOE to tailor the
GRIM to reflect the unique financial
characteristics of the small, large, and
very large air-cooled CUAC and CUHP
industry. In interviews, DOE asked
manufacturers to describe their major
concerns with potential rulemaking
involving CUAC and CUHP equipment.
The following sections highlight
manufacturers’ statements that helped
shape DOEs understanding of potential
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impacts of an amended standard on the
industry. Manufacturers raised a range
of general issues for DOE to consider,
including CC&E, repair and replacement
rates, and alignment with ASHRAE
standards. Below, DOE summarizes
these issues, which were informally
raised in manufacturer interviews, in
order to obtain public comment and
related data.
Certification, Compliance, and
Enforcement
Nearly all manufacturers expressed
concern over certification, compliance,
and enforcement (CC&E) costs. In
particular, confusion over the definition
of ‘‘basic model,’’ ‘‘equipment class,’’
and the still-pending implementation of
alternative efficiency determination
methods (AEDMs) has made it difficult
for some manufacturers to anticipate
their total testing needs and total testing
costs. These issues, depending on how
they are addressed by DOE, will impact
the number of models to require testing.
Additionally, manufacturers noted
that the replacement of the current EER
standard with the proposed IEER
standard would introduce additional
testing complications. IEER testing
necessitates four data points, at 25%,
50%, 75%, and 100% capacity, which
introduces additional cumulative
uncertainty. Accordingly, manufacturers
expressed the need for additional
increases in the testing tolerance.
Manufacturers noted that the confidence
limits currently required by the CC&E
regulations at 10 CFR 429.43 are more
stringent than current laboratory
capabilities as well as current industry
standard practice.
Repair and Replacement Rates
During interviews, most
manufacturers expressed concerns that
an increase in standards may make
customers more likely to repair an old
unit rather than replace it with a new
one. Manufacturers noted that more
efficient units tend to be larger, and
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customers may need to make significant
alterations to roofs in existing buildings
in order to accommodate larger
equipment. The high cost of
redesigning, reconstructing, or possibly
replacing a roof to hold a new unit
could deter customers from purchasing
one. According to manufacturers,
another reason an amended standard
may lead to a drop in shipments is the
price sensitivity of end users. More
efficient units tend to be more
expensive. The lower cost of fixing an
old unit, versus purchasing a new unit,
may be a more attractive option for
some customers. Furthermore,
manufacturers indicated that there
could be a reduction in energy savings
from a higher standard due to the
increase in the number of older, less
efficient units that are repaired rather
than replaced with newer, more
efficient units. Manufacturers expressed
concern over a potential contraction in
market size resulting from amended
standards.
Alignment With ASHRAE Standards
Several manufacturers suggested
during interviews that DOE standards
should be aligned with other industry
standards set by ASHRAE and AHRI. A
few standards, such as ASHRAE 37,
ASHRAE 41, and AHRI 340/360 are
currently being revised, and
manufacturers believe that a
coordination of standards between DOE
and industry organizations would be a
practical way to reduce the amount of
time they need to spend on redesigning
products and meeting multiple
regulations.
K. Emissions Analysis
In the emissions analysis, DOE
estimated the reduction in power sector
emissions of carbon dioxide (CO2),
nitrogen oxides (NOX), sulfur dioxide
(SO2), and mercury (Hg) from potential
energy conservation standards for small,
large, and very large air-cooled
commercial package air conditioning
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and heating equipment. In addition,
DOE estimates emissions impacts in
production activities (extracting,
processing, and transporting fuels) that
provide the energy inputs to power
plants. These are referred to as
‘‘upstream’’ emissions. Together, these
emissions account for the full-fuel-cycle
(FFC). In accordance with DOE’s FFC
Statement of Policy (76 FR 51282 (Aug.
18, 2011)), the FFC analysis includes
impacts on emissions of methane (CH4)
and nitrous oxide (N2O), both of which
are recognized as greenhouse gases.
DOE conducted the emissions
analysis using emissions factors that
were derived from data in the Energy
Information Agency’s (EIA’s) Annual
Energy Outlook 2013 (AEO 2013),
supplemented by data from other
sources.64 DOE developed separate
emissions factors for power sector
emissions and upstream emissions. The
method that DOE used to derive
emissions factors is described in chapter
13 of the NOPR TSD.
For CH4 and N2O, DOE calculated
emissions reduction in tons and also in
terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted
to CO2eq by multiplying by the gas’
global warming potential (GWP) over a
100-year time horizon. Based on the
Fourth Assessment Report of the
Intergovernmental Panel on Climate
Change,65 DOE used GWP values of 25
for CH4 and 298 for N2O.
EIA prepares the Annual Energy
Outlook using the National Energy
Modeling System (NEMS). Each annual
version of NEMS incorporates the
64 Emissions factors based on the Annual Energy
Outlook 2014 (AEO 2014), which became available
too late for incorporation into this analysis, indicate
that a significant decrease in the cumulative
emission reductions of carbon dioxide, methane,
nitrous oxide, sulfur dioxide, nitrogen oxides and
mercury from the proposed standards can be
expected if the projections of power plant
utilization assumed in AEO 2014 are realized. For
example, the estimated amount of cumulative
emission reductions of CO2 are expected to
decrease by 36% from DOE’s current estimate (from
1,085 Mt to 697Mt) based on the projections in AEO
2014 relative to AEO 2013. The monetized benefits
from GHG reductions would likely decrease by a
comparable amount. DOE plans to use emissions
factors based on the most recent AEO available for
the next phase of this rulemaking, which may or
may not be AEO 2014, depending on the timing of
the issuance of the next rulemaking document.
65 Forster, P., V. Ramaswamy, P. Artaxo, T.
Berntsen, R. Betts, D.W. Fahey, J. Haywood, J. Lean,
D.C. Lowe, G. Myhre, J. Nganga, R. Prinn, G. Raga,
M. Schulz and R. Van Dorland. 2007: Changes in
Atmospheric Constituents and in Radiative Forcing.
In Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change. S. Solomon, D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller, Editors. 2007. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA. p. 212.
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projected impacts of existing air quality
regulations on emissions. AEO 2013
generally represents current legislation
and environmental regulations,
including recent government actions, for
which implementing regulations were
available as of December 31, 2012.
SO2 emissions from affected electric
generating units (EGUs) are subject to
nationwide and regional emissions capand-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 (D.C.). SO2 emissions from 28
eastern states and D.C. were also limited
under the Clean Air Interstate Rule
(CAIR; 70 FR 25162 (May 12, 2005)),
which created an allowance-based
trading program that operates along
with the Title IV program. CAIR was
remanded to the U.S. Environmental
Protection Agency (EPA) by the U.S.
Court of Appeals for the District of
Columbia Circuit but it remained in
effect. See North Carolina v. EPA, 550
F.3d 1176 (D.C. Cir. 2008); North
Carolina v. EPA, 531 F.3d 896 (D.C. Cir.
2008). On July 6, 2011 EPA issued a
replacement for CAIR, the Cross-State
Air Pollution Rule (CSAPR). 76 FR
48208 (August 8, 2011). On August 21,
2012, the D.C. Circuit issued a decision
to vacate CSAPR. See EME Homer City
Generation, LP v. EPA, No. 11–1302,
2012 WL 3570721 at *24 (D.C. Cir. Aug.
21, 2012). The court ordered EPA to
continue administering CAIR. The AEO
2013 emissions factors used for this
NOPR assumes that CAIR remains a
binding regulation through 2040.
The attainment of emissions caps is
typically flexible among EGUs and is
enforced through the use of emissions
allowances and tradable permits. Under
existing EPA regulations, any excess
SO2 emissions allowances resulting
from the lower electricity demand
caused by the adoption of an efficiency
standard could be used to permit
offsetting increases in SO2 emissions by
any regulated EGU. In past rulemakings,
DOE recognized that there was
uncertainty about the effects of
efficiency standards on SO2 emissions
covered by the existing cap-and-trade
system, but it concluded that negligible
reductions in power sector SO2
emissions would occur as a result of
standards.
Beginning in 2015, however, SO2
emissions will fall as a result of the
Mercury and Air Toxics Standards
(MATS) for power plants, which were
announced by EPA on December 21,
2011. 77 FR 9304 (Feb. 16, 2012). In the
final MATS rule, EPA established a
standard for hydrogen chloride as a
surrogate for acid gas hazardous air
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pollutants (HAP), and also established a
standard for SO2 (a non-HAP acid gas)
as an alternative equivalent surrogate
standard for acid gas HAP. The same
controls are used to reduce HAP and
non-HAP acid gas; thus, SO2 emissions
will be reduced as a result of the control
technologies installed on coal-fired
power plants to comply with the MATS
requirements for acid gas. AEO 2013
assumes that, in order to continue
operating, coal plants must have either
flue gas desulfurization or dry sorbent
injection systems installed by 2015.
Both technologies, which are used to
reduce acid gas emissions, also reduce
SO2 emissions. Under the MATS, NEMS
shows a reduction in SO2 emissions
when electricity demand decreases (e.g.,
as a result of energy efficiency
standards). Emissions will be far below
the cap established by CAIR, so it is
unlikely that excess SO2 emissions
allowances resulting from the lower
electricity demand would be needed or
used to permit offsetting increases in
SO2 emissions by any regulated EGU.
Therefore, DOE believes that efficiency
standards will reduce SO2 emissions in
2015 and beyond.
CAIR established a cap on NOX
emissions in 28 eastern States and the
District of Columbia. Energy
conservation standards are expected to
have little effect on NOX emissions in
those States covered by CAIR because
excess NOX emissions allowances
resulting from the lower electricity
demand could be used to permit
offsetting increases in NOX emissions.
However, standards would be expected
to reduce NOX emissions in the States
not affected by the caps, so DOE
estimated NOX emissions reductions
from the standards considered in this
NOPR for these States.
The MATS limit mercury emissions
from power plants, but they do not
include emissions caps and, as such,
DOE’s energy conservation standards
would likely reduce Hg emissions. DOE
estimated mercury emissions reduction
using emissions factors based on AEO
2013, which incorporates the MATS.
L. Monetizing Carbon Dioxide and Other
Emissions Impacts
As part of the development of this
proposed rule, DOE considered the
estimated monetary benefits from the
reduced emissions of CO2 and NOX that
are expected to result from each of the
TSLs considered. In order to make this
calculation similar to the calculation of
the NPV of consumer benefit, DOE
considered the reduced emissions
expected to result over the lifetime of
equipment shipped in the forecast
period for each TSL. This section
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summarizes the basis for the monetary
values used for each of these emissions
and presents the values considered in
this rulemaking.
For this NOPR, DOE is relying on a set
of values for the social cost of carbon
(SCC) that was developed by an
interagency process. A summary of the
basis for these values is provided below,
and a more detailed description of the
methodologies used is provided as an
appendix to chapter 14 of the NOPR
TSD.
1. Social Cost of Carbon
The SCC is an estimate of the
monetized damages associated with an
incremental increase in carbon
emissions in a given year. It is intended
to include (but is not limited to) changes
in net agricultural productivity, human
health, property damages from
increased flood risk, and the value of
ecosystem services. Estimates of the
SCC are provided in dollars per metric
ton of carbon dioxide. A domestic SCC
value is meant to reflect the value of
damages in the United States resulting
from a unit change in carbon dioxide
emissions, while a global SCC value is
meant to reflect the value of damages
worldwide.
Under section 1(b)(6) of Executive
Order 12866, ‘‘Regulatory Planning and
Review,’’ 58 FR 51735 (Oct. 4, 1993),
agencies must, to the extent permitted
by law, assess both the costs and the
benefits of the intended regulation and,
recognizing that some costs and benefits
are difficult to quantify, propose or
adopt a regulation only upon a reasoned
determination that the benefits of the
intended regulation justify its costs. The
purpose of the SCC estimates presented
here is to allow agencies to incorporate
the monetized social benefits of
reducing CO2 emissions into costbenefit analyses of regulatory actions.
The estimates are presented with an
acknowledgement of the many
uncertainties involved and with a clear
understanding that they should be
updated over time to reflect increasing
knowledge of the science and
economics of climate impacts.
As part of the interagency process that
developed the SCC estimates, technical
experts from numerous agencies met on
a regular basis to consider public
comments, explore the technical
literature in relevant fields, and discuss
key model inputs and assumptions. The
main objective of this process was to
develop a range of SCC values using a
defensible set of input assumptions
grounded in the existing scientific and
economic literatures. In this way, key
uncertainties and model differences
transparently and consistently inform
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the range of SCC estimates used in the
rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the
incremental economic impacts of carbon
dioxide emissions, the analyst faces a
number of challenges. A recent report
from the National Research Council
points out that any assessment will
suffer from uncertainty, speculation,
and lack of information about: (1)
Future emissions of greenhouse gases;
(2) the effects of past and future
emissions on the climate system; (3) the
impact of changes in climate on the
physical and biological environment;
and (4) the translation of these
environmental impacts into economic
damages. As a result, any effort to
quantify and monetize the harms
associated with climate change will
raise questions of science, economics,
and ethics and should be viewed as
provisional.
Despite the limits of both
quantification and monetization, SCC
estimates can be useful in estimating the
social benefits of reducing carbon
dioxide emissions. The agency can
estimate the benefits from reduced
emissions in any future year by
multiplying the change in emissions in
that year by the SCC value appropriate
for that year. The net present value of
the benefits can then be calculated by
multiplying the future benefits by an
appropriate discount factor and
summing across all affected years.
It is important to emphasize that the
interagency process is committed to
updating these estimates as the science
and economic understanding of climate
change and its impacts on society
improves over time. In the meantime,
the interagency group will continue to
explore the issues raised by this analysis
and consider public comments as part of
the ongoing interagency process.
b. Development of Social Cost of Carbon
Values
In 2009, an interagency process was
initiated to offer a preliminary
assessment of how best to quantify the
benefits from reducing carbon dioxide
emissions. To ensure consistency in
how benefits are evaluated across
agencies, the Administration sought to
develop a transparent and defensible
method, specifically designed for the
rulemaking process, to quantify avoided
climate change damages from reduced
CO2 emissions. The interagency group
did not undertake any original analysis.
Instead, it combined SCC estimates from
the existing literature to use as interim
values until a more comprehensive
analysis could be conducted. The
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outcome of the preliminary assessment
by the interagency group was a set of
five interim values: Global SCC
estimates for 2007 (in 2006$) of $55,
$33, $19, $10, and $5 per metric ton of
CO2. These interim values represented
the first sustained interagency effort
within the U.S. government to develop
an SCC for use in regulatory analysis.
The results of this preliminary effort
were presented in several proposed and
final rules.
c. Current Approach and Key
Assumptions
After the release of the interim values,
the interagency group reconvened on a
regular basis to generate improved SCC
estimates. Specifically, the group
considered public comments and
further explored the technical literature
in relevant fields. The interagency group
relied on three integrated assessment
models commonly used to estimate the
SCC: The FUND, DICE, and PAGE
models. These models are frequently
cited in the peer-reviewed literature and
were used in the last assessment of the
Intergovernmental Panel on Climate
Change (IPCC). Each model was given
equal weight in the SCC values that
were developed.
Each model takes a slightly different
approach to model how changes in
emissions result in changes in economic
damages. A key objective of the
interagency process was to enable a
consistent exploration of the three
models while respecting the different
approaches to quantifying damages
taken by the key modelers in the field.
An extensive review of the literature
was conducted to select three sets of
input parameters for these models:
climate sensitivity, socio-economic and
emissions trajectories, and discount
rates. A probability distribution for
climate sensitivity was specified as an
input into all three models. In addition,
the interagency group used a range of
scenarios for the socio-economic
parameters and a range of values for the
discount rate. All other model features
were left unchanged, relying on the
model developers’ best estimates and
judgments.
In 2010, the interagency group
selected four sets of SCC values for use
in regulatory analyses.66 Three sets of
values are based on the average SCC
from three integrated assessment
models, at discount rates of 2.5 percent,
66 Social Cost of Carbon for Regulatory Impact
Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United
States Government, February 2010. https://
www.whitehouse.gov/sites/default/files/omb/
inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf.
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3 percent, and 5 percent. The fourth set,
which represents the 95th-percentile
SCC estimate across all three models at
a 3-percent discount rate, is included to
represent higher-than-expected impacts
from climate change further out in the
tails of the SCC distribution. The values
benefits of reducing CO2 emissions.
Table IV.14 presents the values in the
2010 interagency group report, which is
reproduced in appendix 14–A of the
NOPR TSD.
grow in real terms over time.
Additionally, the interagency group
determined that a range of values from
7 percent to 23 percent should be used
to adjust the global SCC to calculate
domestic effects, although preference is
given to consideration of the global
TABLE IV.14—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050
[In 2007 dollars per metric ton CO2]
Discount rate %
Year
3
2.5
3
Average
2010
2015
2020
2025
2030
2035
2040
2045
2050
5
Average
Average
95th percentile
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
The SCC values used for this NOPR
were generated using the most recent
versions of the three integrated
assessment models that have been
published in the peer-reviewed
literature.67 Table IV.15 shows the
updated sets of SCC estimates from the
4.7
5.7
6.8
8.2
9.7
11.2
12.7
14.2
15.7
21.4
23.8
26.3
29.6
32.8
36.0
39.2
42.1
44.9
35.1
38.4
41.7
45.9
50.0
54.2
58.4
61.7
65.0
64.9
72.8
80.7
90.4
100.0
109.7
119.3
127.8
136.2
percent discount rate. However, for
purposes of capturing the uncertainties
involved in regulatory impact analysis,
the interagency group emphasizes the
importance of including all four sets of
SCC values.
2013 interagency update in five-year
increments from 2010 to 2050.
Appendix 14–B of the NOPR TSD
provides the full set of values and a
discussion of the revisions made in
2013. The central value that emerges is
the average SCC across models at 3-
TABLE IV.15—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050
[In 2007 dollars per metric ton CO2]
Discount rate %
Year
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3
2.5
3
Average
2010
2015
2020
2025
2030
2035
2040
2045
2050
5
Average
Average
95th percentile
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
11
11
12
14
16
19
21
24
26
32
37
43
47
52
56
61
66
71
51
57
64
69
75
80
86
92
97
89
109
128
143
159
175
191
206
220
It is important to recognize that a
number of key uncertainties remain, and
that current SCC estimates should be
treated as provisional and revisable
since they will evolve with improved
scientific and economic understanding.
The interagency group also recognizes
that the existing models are imperfect
and incomplete. The National Research
Council report mentioned above points
out that there is tension between the
goal of producing quantified estimates
of the economic damages from an
incremental ton of carbon and the limits
of existing efforts to model these effects.
There are a number of analytic
challenges that are being addressed by
the research community, including
research programs housed in many of
the Federal agencies participating in the
interagency process to estimate the SCC.
The interagency group intends to
periodically review and reconsider
those estimates to reflect increasing
knowledge of the science and
economics of climate impacts, as well as
improvements in modeling.
In summary, in considering the
potential global benefits resulting from
reduced CO2 emissions resulting from
this proposed rule, DOE used the values
from the 2013 interagency report,
adjusted to 2013$ using the Gross
Domestic Product price deflator. For
each of the four SCC cases specified, the
values used for emissions in 2015 were
67 Technical Update of the Social Cost of Carbon
for Regulatory Impact Analysis Under Executive
Order 12866. Interagency Working Group on Social
Cost of Carbon, United States Government, May
2013; revised November 2013. https://
www.whitehouse.gov/sites/default/files/omb/assets/
inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf.
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$12.0, $40.5, $62.4, and $119 per metric
ton avoided (values expressed in
2013$). DOE derived values after 2050
using the relevant growth rates for the
2040–2050 period in the interagency
update.
DOE multiplied the CO2 emissions
reduction estimated for each year by the
SCC value for that year in each of the
four cases. To calculate a present value
of the stream of monetary values, DOE
discounted the values in each of the
four cases using the specific discount
rate that had been used to obtain the
SCC values in each case.
DOE solicits comment on the
application of the new SCC values used
to determine the social benefits of CO2
emissions reductions over the
rulemaking analysis period. In
particular, the agency solicits comment
on its derivation of SCC values after
2050, where the agency applied the
average annual growth rate of the SCC
estimates in 2040–2050 associated with
each of the four sets of values.
Issue 18: DOE solicits comment on the
application of the new SCC values used
to determine the social benefits of CO2
emissions reductions over the
rulemaking analysis period. In
particular, the agency solicits comment
on its derivation of SCC values after
2050, where the agency applied the
average annual growth rate of the SCC
estimates in 2040–2050 associated with
each of the four sets of values.
2. Valuation of Other Emissions
Reductions
As noted above, DOE has taken into
account how new or amended energy
conservation standards would reduce
NOX emissions in those 22 states not
affected by the CAIR. DOE estimated the
monetized value of NOX emissions
reductions resulting from each of the
TSLs considered for this NOPR based on
estimates found in the relevant
scientific literature. Estimates of
monetary value for reducing NOX from
stationary sources range from $476 to
$4,893 per ton in 2013$.68 DOE
calculated monetary benefits using a
medium value for NOX emissions of
$2,684 per short ton (in 20123), and real
discount rates of 3-percent and 7percent.
DOE is evaluating appropriate
monetization of avoided SO2 and Hg
emissions in energy conservation
standards rulemakings. It has not
included monetization in the current
analysis.
68 U.S. Office of Management and Budget, Office
of Information and Regulatory Affairs, 2006 Report
to Congress on the Costs and Benefits of Federal
Regulations and Unfunded Mandates on State,
Local, and Tribal Entities, Washington, DC.
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M. Utility Impact Analysis
The utility impact analysis estimates
several effects on the power generation
industry that would result from the
adoption of new or amended energy
conservation standards. In the utility
impact analysis, DOE analyzes the
changes in installed electricity capacity
and generation that would result for
each trial standard level. The utility
impact analysis uses a variant of
NEMS,69 which is a public domain,
multi-sectored, partial equilibrium
model of the U.S. energy sector. DOE
uses a variant of this model, referred to
as NEMS–BT,70 to account for selected
utility impacts of new or amended
energy conservation standards. DOE’s
analysis consists of a comparison
between model results for the most
recent AEO Reference Case and for cases
in which energy use is decremented to
reflect the impact of potential standards.
The energy savings inputs associated
with each TSL come from the NIA.
Chapter 15 of the NOPR TSD describes
the utility impact analysis in further
detail.
N. Employment Impact Analysis
Employment impacts from new or
amended energy conservation standards
include direct and indirect impacts.
Direct employment impacts are any
changes in the number of employees of
manufacturers of the equipment subject
to standards; the MIA addresses those
impacts. Indirect employment impacts
are changes in national employment
that occur due to the shift in
expenditures and capital investment
caused by the purchase and operation of
more efficient equipment. Indirect
employment impacts from standards
consist of the jobs created or eliminated
in the national economy, other than in
the manufacturing sector being
regulated, due to: (1) Reduced spending
by end users on energy; (2) reduced
spending on new energy supply by the
utility industry; (3) increased consumer
spending on the purchase of new
equipment; 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
69 For more information on NEMS, refer to the
U.S. Department of Energy, Energy Information
Administration documentation. A useful summary
is National Energy Modeling System: An Overview
2003, DOE/EIA–0581 (2003) (March, 2003).
70 DOE/EIA approves use of the name NEMS to
describe only an official version of the model
without any modification to code or data. Because
this analysis entails some minor code modifications
and the model is run under various policy scenarios
that are variations on DOE/EIA assumptions, DOE
refers to it by the name ‘‘NEMS–BT’’ (‘‘BT’’ is DOE’s
Building Technologies Program, under whose aegis
this work has been performed).
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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. 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, based on the
BLS data alone, DOE believes net
national employment may increase
because of shifts in economic activity
resulting from amended standards.
For the standard levels considered in
the NOPR, DOE estimated indirect
national employment impacts using an
input/output model of the U.S. economy
called Impact of Sector Energy
Technologies, Version 3.1.1 (ImSET).
ImSET is a special-purpose version of
the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was
designed to estimate the national
employment and income effects of
energy-saving technologies. The ImSET
software includes a computer-based I–O
model having structural coefficients that
characterize economic flows among the
187 sectors. ImSET’s national economic
I–O structure is based on a 2002 U.S.
benchmark table, specially aggregated to
the 187 sectors most relevant to
industrial, commercial, and residential
building energy use. DOE notes that
ImSET is not a general equilibrium
forecasting model, and understands the
uncertainties involved in projecting
employment impacts, especially
changes in the later years of the
analysis. Because ImSET does not
incorporate price changes, the
employment effects predicted by ImSET
may over-estimate actual job impacts
over the long run. For the NOPR, DOE
used ImSET only to estimate short-term
employment impacts.
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For more details on the employment
impact analysis, see chapter 16 of the
NOPR TSD.
V. Analytical Results
A. Trial Standard Levels
At the NOPR stage, DOE develops
Trial Standard Levels (TSLs) for
consideration. TSLs are formed by
grouping different efficiency levels,
which are potential standard levels for
each equipment class. DOE analyzed the
benefits and burdens of the TSLs
developed for this proposed rule. DOE
examined four TSLs for small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment.
Table V.1 presents the TSLs analyzed
and the corresponding efficiency level
for each equipment class. The efficiency
levels in each TSL can be characterized
as follows: TSL 4 is comprised of the
max-tech efficiency level, which is
efficiency level 4 for each equipment
class. TSL 3 is comprised of efficiency
level 3 for each equipment class. TSL 2
is comprised of efficiency level 2 for
each equipment class, and TSL 1 is
comprised of efficiency level 1 for each
equipment class.
TABLE V.1—SUMMARY OF TSLS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL PACKAGE AIR
CONDITIONING AND HEATING EQUIPMENT
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
Efficiency level *
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and
<135,000 Btu/h Cooling Capacity ................................................................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and
<240,000 Btu/h Cooling Capacity ................................................................
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and
<760,000 Btu/h Cooling Capacity ................................................................
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h and <135,000
Btu/h Cooling Capacity ................................................................................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/h and <240,000
Btu/h Cooling Capacity ................................................................................
Very Large Commercial Packaged Heat Pumps—≥240,000 Btu/h and
<760,000 Btu/h Cooling Capacity ................................................................
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
* For the IEERs that correspond to efficiency levels 1 through 4, see Table IV.6.
B. Economic Justification and Energy
Savings
As discussed in section II.A, EPCA
provides seven factors to be evaluated in
determining whether a more stringent
standard for small, large, and very large
air-cooled CUAC and CUHP is
economically justified. (42 U.S.C.
6313(a)(6)(B)(ii)) The following sections
generally discuss how DOE is
addressing each of those factors in this
rulemaking.
1. Economic Impacts on Individual
Customers
DOE analyzed the economic impacts
on small, large, and very large air-cooled
commercial package air conditioning
and heating equipment customers by
looking at the effects standards would
have on the LCC and PBP. DOE also
examined the impacts of potential
standards on customer subgroups. These
analyses are discussed below.
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact
of standards on small, large, and very
large air-cooled CUAC customers, DOE
conducted LCC and PBP analyses for
each TSL. In general, higher-efficiency
equipment would affect customers in
two ways: (1) Annual operating expense
would decrease, and (2) purchase price
would increase. Section IV.F of this
notice discusses the inputs DOE used
for calculating the LCC and PBP. As
stated there, DOE did not do an LCC and
PBP analysis for the CUHP equipment
classes because energy modeling was
performed only for CUAC equipment.
For each representative unit, the key
outputs of the LCC analysis are a mean
LCC savings and a median PBP relative
to the base case, as well as the fraction
of customers for which the LCC will
decrease (net benefit), increase (net
cost), or exhibit no change (no impact)
relative to the base-case product
forecast. No impacts occur when the
base-case efficiency equals or exceeds
the efficiency at a given TSL. Table V.2
through Table V.4 show the key results
for each representative unit.
TABLE V.2—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR SMALL COMMERCIAL PACKAGE AIR
CONDITIONERS
[7.5 ton, ≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity]
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
Trial standard level
1
Efficiency Level ................................................................................................
IEER .................................................................................................................
Total Installed Cost ..........................................................................................
Mean LCC Savings ($) ....................................................................................
Customers with LCC Increase (Cost) (%) * .....................................................
Customers with LCC Decrease (Benefit) (%) * ................................................
Customers with No Change in LCC (%) * .......................................................
Median PBP (Years) ........................................................................................
2
1
12.9
$8,535
$1,094
0%
61%
39%
2.2
3
2
14.0
$9,923
$937
27%
72%
1%
8.0
* Rounding may cause some items to not total 100 percent.
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3
14.8
$10,323
$4,779
0%
99%
0%
3.9
4
19.9
$12,166
$6,771
0%
100%
0%
4.7
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TABLE V.3—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR LARGE COMMERCIAL PACKAGE AIR
CONDITIONERS
[15 ton, ≥135,000 Btu/h and <240,000 Btu/h]
Trial standard level
1
Efficiency Level ................................................................................................
IEER .................................................................................................................
Total Installed Cost ..........................................................................................
Mean LCC Savings ($) ....................................................................................
Customers with LCC Increase (Cost) (%) * .....................................................
Customers with LCC Decrease (Benefit) (%) * ................................................
Customers with No Change in LCC (%) * .......................................................
Median PBP (Years) ........................................................................................
2
3
4
1
12.2
$14,935
$1,038
3%
74%
22%
6.0
2
13.2
$16,858
$2,214
8%
90%
2%
7.2
3
14.2
$17,753
$3,469
6%
93%
0%
6.6
4
18.4
$18,975
$7,508
2%
98%
0%
5.1
* Rounding may cause some items to not total 100 percent.
TABLE V.4—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR VERY LARGE COMMERCIAL PACKAGE AIR
CONDITIONERS
[30 ton, ≥240,000 Btu/h and <760,000 Btu/h]
Trial standard level
1
Efficiency Level ................................................................................................
IEER .................................................................................................................
Total Installed Cost ..........................................................................................
Mean LCC Savings ($) ....................................................................................
Customers with LCC Increase (Cost) (%) * .....................................................
Customers with LCC Decrease (Benefit) (%) * ................................................
Customers with No Change in LCC (%) * .......................................................
Median PBP (Years) ........................................................................................
2
3
4
1
11.6
$29,385
$4,103
2%
62%
36%
2.6
2
12.5
$31,738
$4,801
12%
76%
13%
5.5
3
13.5
$32,828
$16,477
3%
92%
6%
2.5
4
15.5
$36,200
$19,842
5%
94%
1%
3.5
* Rounding may cause some items to not total 100 percent.
b. Customer Subgroup Analysis
In the customer subgroup analysis,
DOE estimated the impacts of the
considered TSLs on small business
customers. The LCC savings and
payback periods for small business
customers are similar to the impacts for
all customers. Chapter 11 of the NOPR
TSD presents detailed results of the
customer subgroup analysis.
c. Rebuttable Presumption Payback
As discussed in section III.E.2, EPCA
establishes a rebuttable presumption
that an energy conservation standard is
economically justified if the increased
purchase cost for equipment that meets
the standard is less than three times the
value of the first-year energy savings
resulting from the standard. DOE
calculated a rebuttable-presumption
PBP for each TSL to determine whether
DOE could presume that a standard at
that level is economically justified.
DOE based the calculations on
average usage profiles. As a result, DOE
calculated a single rebuttablepresumption payback value, and not a
distribution of PBPs, for each TSL.
Table V.5 shows the rebuttablepresumption PBPs for the considered
TSLs. The rebuttable presumption is
fulfilled in those cases where the PBP is
three years or less. However, DOE
routinely conducts an economic
analysis that considers the full range of
impacts to the customer, manufacturer,
Nation, and environment, as required by
EPCA. 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 three-year PBP analysis). Section
V.C addresses how DOE considered the
range of impacts to select today’s
proposed standards.
TABLE V.5—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED
COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
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Trial standard level
1
Efficiency Level ................................................................................................
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and
<135,000 Btu/h Cooling Capacity ................................................................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and
<240,000 Btu/h Cooling Capacity ................................................................
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and
<760,000 Btu/h Cooling Capacity ................................................................
2. Economic Impacts on Manufacturers
As noted above, DOE performed an
MIA to estimate the impact of amended
energy conservation standards on
manufacturers of small, large, and very
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1
2
3
4
2.2
8.0
3.9
4.7
6.0
7.2
6.6
5.1
2.6
5.5
2.5
3.5
large air-cooled commercial package air
conditioning and heating equipment.
The following section describes the
expected impacts on manufacturers at
each considered TSL. Chapter 12 of the
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further detail.
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a. Industry Cash-Flow Analysis Results
Table V.6 and Table V.7 depict the
financial impacts (represented by
changes in INPV) of amended energy
standards on manufacturers of small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment, as well as the
conversion costs that DOE expects
manufacturers would incur for all
equipment classes at each TSL. To
evaluate the range of cash flow impacts
on the commercial packaged air
conditioner and heat pump industry,
DOE modeled two different mark-up
scenarios using different assumptions
that correspond to the range of
anticipated market responses to
amended energy conservation
standards: (1) The preservation of gross
margin percentage; and (2) the
preservation of per unit operating profit.
Each of these scenarios is discussed
immediately below.
To assess the lower (less severe) end
of the range of potential impacts, DOE
modeled a preservation of gross margin
percentage markup scenario, in which a
uniform ‘‘gross margin percentage’’
markup is applied across all potential
efficiency levels. In this scenario, DOE
assumed that a manufacturer’s absolute
dollar markup would increase as
production costs increase in the
standards case.
To assess the higher (more severe) end
of the range of potential impacts, DOE
modeled the preservation of per unit
operating profit markup scenario, which
assumes that manufacturers would not
be able to greater operating profit on a
per unit basis in the standards case.
Rather, as manufacturers make the
necessary investments required to
convert their facilities to produce new
standards-compliant products and incur
higher costs of goods sold, their
percentage markup decreases. Operating
profit does not change in absolute
dollars and decreases as a percentage of
revenue.
As noted in the MIA methodology
discussion (see IV.J.2), in addition to
markup scenarios, the MPC, shipments,
and conversion cost assumptions also
affect INPV results. Of particular note in
this rulemaking is the decline in
cumulative shipments as the TSL
increases that is forecasted in the NIA
58995
shipments. This change in shipments is
summarized in Table V.10.
The set of results below shows
potential INPV impacts for small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment manufacturers; Table V.6
reflects the lower bound of impacts, and
Table V.7 represents the upper bound.
Each of the modeled scenarios results
in a unique set of cash flows and
corresponding industry values at each
TSL. In the following discussion, the
INPV results refer to the difference in
industry value between the base case
and each standards case that results
from the sum of discounted cash flows
from the base year 2014 through 2048,
the end of the analysis period.
To provide perspective on the shortrun cash flow impact, DOE includes in
the discussion of the results below a
comparison of free cash flow between
the base case and the standards case at
each TSL in the year before new
standards would take effect. This figure
provides an understanding of the
magnitude of the required conversion
costs relative to the cash flow generated
by the industry in the base case.
TABLE V.6—INDUSTRY VALUATION AND FINANCIAL IMPACTS—PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP
SCENARIO *
Trial standard level
Units
Base case
1
INPV ................................................................
Change in INPV ..............................................
Product Conversion Costs ..............................
Capital Conversion Costs ...............................
Total Conversion Costs ..................................
Free Cash Flow (2018) ...................................
Free Cash Flow (2018) ...................................
$M ..............................
$M ..............................
% ................................
$M ..............................
$M ..............................
$M ..............................
$M ..............................
% Change ..................
1,260.91
....................
....................
12.72
....................
12.72
73.38
....................
2
1,249.47
(11.45)
(0.91)
38.73
14.94
53.68
58.19
(20.70)
1,208.04
(52.87)
(4.19)
58.52
39.23
97.75
40.82
(44.37)
3
1,172.36
(88.55)
(7.02)
120.90
105.54
226.44
(9.32)
(112.70)
4
1,142.78
(118.13)
(9.37)
210.96
113.31
324.28
(42.13)
(157.42)
TABLE V.7—INDUSTRY VALUATION AND FINANCIAL IMPACTS—PRESERVATION OF PER UNIT OPERATING PROFIT MARKUP
SCENARIO *
Trial standard level
Units
Base case
1
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
INPV ................................................................
Change in INPV ..............................................
Product Conversion Costs ..............................
Capital Conversion Costs ...............................
Total Conversion Costs ..................................
Free Cash Flow (2018) ...................................
Free Cash Flow (2018) ...................................
$M ..............................
$M ..............................
% ................................
$M ..............................
$M ..............................
$M ..............................
$M ..............................
% Change ..................
1,260.91
....................
....................
12.72
12.72
73.38
....................
2
1,187.02
(73.89)
(5.86)
38.73
14.94
53.68
58.19
(20.70)
1,015.61
(245.30)
(19.45)
58.52
39.23
97.75
40.82
(44.37)
3
949.34
(311.58)
(24.71)
120.90
105.54
226.44
(9.32)
(112.70)
4
822.75
(438.16)
(34.75)
210.96
113.31
324.28
(42.13)
(157.42)
* Values in parentheses are negative values.
Base case conversion costs of $12.72
million are attributed to CC&E costs
associated with new product
certification under the proposed test
procedure. This amount consists of
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modeling and equipment testing costs
incurred to recertify currently available
products.
TSL 1 represents EL 1 for all
equipment classes. At TSL 1, DOE
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estimates impacts on INPV for
commercial packaged air conditioning
manufacturers to range from ¥5.86
percent to ¥0.91 percent, or a change in
INPV of ¥$73.89 million to ¥$11.45
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Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 / Proposed Rules
million. At this potential standard level,
industry free cash flow is estimated to
decrease by approximately 20.70
percent to $58.19, compared to the basecase value of $73.38 million in the year
before the compliance date (2018).
At TSL 1, the industry is likely to face
a small contraction. Industry wide
shipments drop by approximately
5.04% in the standard year (2019),
relative to the base case. In addition,
manufacturers incur conversion costs
totaling $53.68 million due to CC&E
requirements, product redesigns for the
Very Large equipment classes, and new
tooling associated with their highest
capacity equipment offerings. While
impacts on the industry as a whole are
relatively mild, small manufacturers
may have greater difficulty with rerating their products to an IEER metric
since they generally do not have the
testing capacity or engineering resources
of larger competitors.
TSL 2 represents EL 2 across all
equipment classes. At TSL 2, DOE
estimates impacts on INPV for
commercial packaged air conditioning
manufacturers to range from ¥19.45
percent to ¥4.19 percent, or a change in
INPV of ¥$245.30 million to ¥$52.87
million. At this potential standard level,
industry free cash flow is estimated to
decrease by approximately 44.37
percent to $40.82 million, compared to
the base-case value of $73.38 million in
the year before the compliance date
(2018).
At TSL 2, industry-wide shipments
drop by 28.32% in the standard year
(2019) relative to the base case.
Additionally, DOE anticipates
conversion costs to increase to $97.75
million for the industry as roughly 67%
of equipment listed in the AHRI
directory would need to be redesigned
in order to meet the higher proposed
efficiency levels. Given the industry’s
existing trend of consolidation, DOE
expects further consolidation at TSL 2.
Manufacturers with limited market
share may choose to sell off their small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment business to
larger competitors.
TSL 3 represents EL 3 for all
equipment classes. At TSL 3, DOE
estimates impacts on INPV for
commercial packaged air conditioning
manufacturers to range from ¥24.71
percent to ¥7.02 percent, or a change in
INPV of ¥$311.58 million to ¥$88.55
million., Industry-wide shipments drop
by 28.76% relative to the base case in
the standards year. DOE anticipates
large capital conversion costs at TSL 3,
as redesigns necessitate additional
investments in tooling for cabinets and
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heat exchangers to meet amended
efficiency standards. Roughly 81% of
equipment listings would require
changes to meet the standard.
Conversion costs total $226.44 million
for the industry. A key indicator of
impact on the industry is the industry
free cash flow, which is estimated to
decrease by approximately 112.70
percent to ¥$9.32 relative to the base
case value of $73.38 million in the year
before the compliance date (2018). The
negative free cash flow indicates that
players in the industry would need to
access cash reserves or borrow money
from capital markets to cover
conversion costs. Given expectation for
a shrinking market and high conversion
costs, some manufacturers indicated
they would move production to lowercost foreign markets at this level.
TSL 4 represents max tech across all
equipment classes. At TSL 4, DOE
estimates impacts on INPV for
commercial packaged air conditioning
manufacturers to range from ¥34.75
percent to ¥9.37 percent, or a change in
INPV of ¥$438.16 million to ¥$118.13
million. At this potential standard level,
industry free cash flow is estimated to
decrease by approximately 157.42
percent relative to the base-case value of
$73.38 million in the year before the
compliance date (2018).
At max-tech, DOE estimates a 35.12%
drop in shipments in the standards
years, a maximum loss of over 34.75%
of industry value over the analysis
period, and conversion costs
approaching $650 million for the
industry. Only 2% of equipment listings
could meet this trial standard level
today. Manufacturers voiced concerns
over the lack of product differentiation
and the commoditization at upper TSLs.
TSL 4 would leave no room for product
differentiation based on efficiency.
Furthermore, given the level of R&D and
production line modifications necessary
at this level, it is unclear whether the
industry could make the necessary
changes in the allotted conversion
period. At TSL 4, most manufacturers
would re-evaluate their role in the
industry. Those that do remain would
strongly consider all cost cutting
measures, including relocation to
foreign countries.
Issue 19: DOE requests comment on
the capital conversion costs and product
conversion costs estimated for each
TSL. In particular, DOE seeks comment
on the conversion costs at max-tech, at
TSL 4.
b. Impacts on Direct Employment
To quantitatively assess the impacts
of energy conservation standards on
direct employment in the small, large,
PO 00000
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Sfmt 4702
and very large air-cooled commercial
package air conditioning and heating
equipment industry, DOE used the
GRIM to estimate the domestic labor
expenditures and number of employees
in the base case and at each TSL from
2015 through 2048. DOE used statistical
data from the U.S. Census Bureau’s 2011
Annual Survey of Manufacturers
(ASM),71 the results of the engineering
analysis, and interviews with
manufacturers to determine the inputs
necessary to calculate industry-wide
labor expenditures and domestic
employment levels. Labor expenditures
related to manufacturing of the product
are a function of the labor intensity of
the product, the sales volume, and an
assumption that wages remain fixed in
real terms over time. The total labor
expenditures in each year are calculated
by multiplying the MPCs by the labor
percentage of MPCs.
The total labor expenditures in the
GRIM were then converted to domestic
production employment levels by
dividing production labor expenditures
by the annual payment per production
worker (production worker hours times
the labor rate found in the U.S. Census
Bureau’s 2011 ASM). The estimates of
production workers in this section cover
workers, including line-supervisors who
are directly involved in fabricating and
assembling a product within the
manufacturing facility. Workers
performing services that are closely
associated with production operations,
such as materials handling tasks using
forklifts, are also included as production
labor. DOE’s estimates only account for
production workers who manufacture
the specific products covered by this
rulemaking. The total direct
employment impacts calculated in the
GRIM are the changes in the number of
production workers resulting from the
amended energy conservation standards
for small, large, and very large aircooled commercial package air
conditioning and heating equipment, as
compared to the base case. In general,
more efficient equipment is larger, more
complex, and more labor intensive to
build. Per unit labor requirements and
production time requirements increase
with a higher energy conservation
standard. As a result, the total labor
calculations described in this paragraph
are considered an upper bound to direct
employment forecasts.
On the other hand, the domestic
HVAC industry has had a track record
of consolidation over the past decade.
See, e.g. Daikin Acquires Goodman,
71 ‘‘Annual Survey of Manufactures (ASM),’’ U.S.
Census Bureau (2011) (Available at: https://
www.census.gov/manufacturing/asm/).
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Daikin Corporate News (Aug. 29, 2012);
Ingersoll Rand to Acquire Trane Inc. for
Approximately $10.1 Billion, Trane
Press Release (Dec. 17, 2007); and JCI
Buys Pennsylvania Firm, Grand Rapids
Press, C6 (Aug. 26, 2005) (noting
purchase of York International by
Johnson Controls, Inc.). DOE recognizes
the potential for industry consolidation
and its concomitant impacts on
employment levels, especially at higher
TSLs. As shipments drop and
conversion costs increase, some
manufacturers may choose not to make
the necessary investments to meet the
amended standard for all equipment
classes. Alternatively, they may choose
to relocate production facilities where
conversion costs and production costs
are lower. To establish a lower bound to
negative employment impacts, DOE
estimated the maximum potential job
loss due to manufacturers either leaving
the industry or moving production to
foreign locations as a result of an
amended standard. These lower bound
estimates were based on GRIM results,
conversion cost estimates, and content
from manufacturers interviews. The
lower bound of employment is
presented in Table V.8 below.
DOE estimates that in the absence of
amended energy conservation
standards, there would be 1,085
domestic production workers for small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment. DOE estimates
that 50 percent of small, large, and very
large air-cooled commercial package air
conditioning and heating equipment
sold in the United States are
manufactured domestically. Table V.8
shows the range of the impacts of
potential amended energy conservation
standards on U.S. production workers of
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment.
TABLE V.8—POTENTIAL CHANGES IN THE TOTAL NUMBER OF SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT PRODUCTION WORKERS IN 2019
Trial standard level *
Base case
Potential Changes in Domestic Production Workers in
2019 (relative to a base case employment of 1,085).
1
2
3
........................
(181) to (10) ..
(482) to (69) ..
(543) to (27) ..
4
(1,085) to
(31).
* Parentheses indicate negative values.
DOE notes that the employment
impacts discussed here are independent
of the indirect employment impacts to
the broader U.S. economy, which are
documented in chapter 15 of the NOPR
TSD.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
c. Impacts on Manufacturing Capacity
According to the commercial
packaged air conditioning
manufacturers interviewed, amended
energy conservation standards could
lead to higher fabrication labor hours.
However, manufacturers noted that
industry shipments are down 40% from
their peak in the 2007–2008 timeframe.
Excess capacity in the industry today
and any drop in shipments that result
from higher prices could offset the
additional production times. In the
long-term, no manufacturers
interviewed expected to have capacity
constraints.
Manufacturers did note concerns
about engineering and testing capacity
in the time period between the
announcement year and the effective
year of the proposed standard.
Manufacturers worried about the level
of technical resources required to
redesign and test all products at higher
TSLs. The engineering analysis shows
increasingly complex components and
control strategies are required as
standard levels increase. Manufacturers
noted in interviews that the industry
would need to add electrical
engineering and control systems
engineering talent beyond current
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staffing to meet the redesign
requirements of higher TSLs. Additional
training might be needed for
manufacturing engineers, laboratory
technicians, and service personnel if
variable speed components are broadly
adopted. Furthermore, as standards
increase, units tend to grow in size,
requiring more lab resources and time to
test. Some manufacturers were
concerned that an amended standard
would trigger the need for construction
of new test lab facilities, which require
significant lead time.
Issue 20: DOE requests comments and
data on capacity constraints at each
TSL—including production capacity
constraints, engineering resource
constraints, and testing capacity
constraints that are directly related to an
amended standard for small, large, and
very large CUAC and CUHP. In
particular, DOE requests comment on
whether the proposed effective date
allows for a sufficient conversion period
to make the equipment design and
facility updates necessary to meet an
amended standard.
d. Impacts on Subgroups of
Manufacturers
Small manufacturers, niche
equipment manufacturers, and
manufacturers exhibiting a cost
structure substantially different from the
industry average could be affected
disproportionately. Using average cost
assumptions developed for an industry
cash-flow estimate is inadequate to
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Fmt 4701
Sfmt 4702
assess differential impacts among
manufacturer subgroups.
For the commercial packaged air
conditioner and heat pump industry,
DOE identified and evaluated the
impact of amended energy conservation
standards on one subgroup—small
manufacturers. The SBA defines a
‘‘small business’’ as having 750
employees or less for NAICS 333415,
‘‘Air-Conditioning and Warm Air
Heating Equipment and Commercial
and Industrial Refrigeration Equipment
Manufacturing.’’ Based on this
definition, DOE identified three
manufacturers in the commercial
packaged air conditioning industry that
qualify as small businesses. For a
discussion of the impacts on the small
manufacturer subgroup, see the
regulatory flexibility analysis in section
VI.B of this notice and chapter 12 of the
NOPR TSD.
e. Cumulative Regulatory Burden
While any one regulation may not
impose a significant burden on
manufacturers, the combined effects of
recent or impending regulations may
have serious consequences for some
manufacturers, groups of manufacturers,
or an entire industry. Assessing the
impact of a single regulation may
overlook this cumulative regulatory
burden. In addition to energy
conservation standards, other
regulations can significantly affect
manufacturers’ financial operations.
Multiple regulations affecting the same
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manufacturer can strain profits and lead
companies to abandon product lines or
markets with lower expected future
returns than competing products. For
these reasons, DOE conducts an analysis
of cumulative regulatory burden as part
of its rulemakings pertaining to
appliance efficiency.
For the cumulative regulatory burden
analysis, DOE looks at other regulations
that could affect small, large, and very
large air-cooled commercial package air
conditioning and heating equipment
manufacturers that will take effect
approximately three years before or after
the 2019 compliance date of amended
energy conservation standards for these
products. In interviews, manufacturers
cited Federal regulations on equipment
other than small, large, and very large
air-cooled commercial package air
conditioning and heating equipment
that contribute to their cumulative
regulatory burden. The compliance
years and expected industry conversion
costs of relevant amended energy
conservation standards are indicated in
the table below. Included in the table
are Federal regulations that have
compliance dates beyond the three year
range of DOE’s analysis. Those
regulations were cited multiple times by
manufacturers in interviews and written
comments, and are included here for
reference.
TABLE V.9—COMPLIANCE DATES AND EXPECTED CONVERSION EXPENSES OF FEDERAL ENERGY CONSERVATION STANDARDS AFFECTING SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND
HEATING EQUIPMENT MANUFACTURERS
Approximate compliance date
Federal energy conservation standards
Estimated total industry conversion
expense
2015
2015
* $88M (2006$)
** $2.5M (2009$)
2007 Residential Furnaces & Boilers 72 FR 65136 (Nov. 19, 2007) .........................................................
2011 Residential Furnaces 76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011) ........................
2011 Residential Central Air Conditioners and Heat Pumps 76 FR 37408 (June 27, 2011); 76 FR
67037 (Oct. 31, 2011) ..............................................................................................................................
2010 Gas Fired and Electric Storage Water Heaters 75 FR 20112 (April 16, 2010) .................................
Walk-in Coolers and Freezers .....................................................................................................................
Furnace Fans ...............................................................................................................................................
Packaged Terminal Air Conditioners and Heat Pumps *** ..........................................................................
Commercial and Industrial Fans and Blowers *** ........................................................................................
2015
2015
2017
2019
TBD
TBD
** $ 26.0M
$95.4M
$33.6.0M
$40.6M
(2009$)
(2009$)
(2012$)
(2012$)
TBD
TBD
* Conversion expenses for manufacturers of oil-fired furnaces and gas- and oil-fired boilers associated with the November 2007 final rule for
residential furnaces and boilers are excluded from this figure. The 2011 direct final rule for residential furnaces sets a higher standard and earlier
compliance date for oil furnaces than the 2007 final rule. As a result, manufacturers will be required design to the 2011 direct final rule standard.
The conversion costs associated with the 2011 direct final rule are listed separately in this table. EISA 2007 legislated higher standards and earlier compliance dates for residential boilers than were in the November 2007 final rule. As a result, gas-fired and oil-fired boiler manufacturers
were required to design to the EISA 2007 standard beginning in 2012. The conversion costs listed for residential gas-fired and oil-fired boilers in
the November 2007 residential furnaces and boilers final rule analysis are not included in this figure.
** Estimated industry conversion expense and approximate compliance date reflect a court-ordered May 1, 2013 stay of the residential nonweatherized and mobile home gas furnaces standards set in the 2011 Energy Conservation Standards for Residential Furnaces and Residential
Central Air Conditioners and Heat Pumps.
*** The final rule for this energy conservation standard has not been published. The compliance date and analysis of conversion costs are estimates and have not been finalized at this time.
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In addition to Federal energy
conservation standards, DOE identified
other regulatory burdens that would
affect manufacturers of small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment:
DOE Certification, Compliance, and
Enforcement (CC&E) Rule
Any amended standard that DOE
would also require accompanying CC&E
requirements for manufacturers of
small, large, and very large air-cooled
commercial package air conditioning
equipment to follow. DOE conducted a
rulemaking to expand AEDM coverage
to commercial HVAC, including the
equipment covered by this rulemaking,
and issued a final rule on December 31,
2013. (78 FR 79579) An AEDM is a
computer modeling or mathematical
tool that predicts the performance of
non-tested basic models. In the final
rule, DOE is allowing manufacturers of
small, large, and very large air-cooled
commercial package air conditioning
equipment to rate basic models using
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AEDMs, reducing the need for sample
units and reducing burden on
manufacturers. The final rule
establishes revised verification
tolerances for small, large, and very
large air-cooled commercial package air
conditioning equipment manufacturers.
More information can be found at
https://www1.eere.energy.gov/buildings/
appliance_standards/implement_cert_
and_enforce.html.
EPA Phase-Out of
Hydrochlorofluorocarbons (HCFCs)
The U.S. is obligated under the
Montreal Protocol to limit production
and consumption of HCFCs through
incremental reductions, culminating in
a complete phase-out of HCFCs by
2030.72 On December 15, 2009, EPA
published the ‘‘2010 HCFC Allocation
Rule,’’ which allocates production and
consumption allowances for HCFC–22
for each year between 2010 and 2014. 74
72 ‘‘Montreal Protocol.’’ United Nations
Environment Programme. Web. 26 Aug. 2010.
https://ozone.unep.org/new_site/en/montreal_
protocol.php.
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FR 66412. The rule also prohibited the
manufacture of new appliances using
virgin HCFC–22, effective January 1,
2010, with limited exceptions. On April
3, 2013, EPA published the ‘‘2012–2014
HCFC Allocation Proposed Rule,’’
which lifted the regulatory ban on the
production and consumption of HCFC–
22 (following a court decision 73 in
August 2010 to vacate a portion of the
‘‘2010 HCFC Allocation Rule’’) by
establishing company-by-company
HCFC–22 baselines and allocating
allowances for 2012–2014. 78 FR 20004.
On December 24, 2013, EPA published
the ‘‘2015–2019 HCFC Allocation
Proposed Rule,’’ which would provide
HCFC allowances, including HCFC–22,
through 2019. 78 FR 78072. Effective
January 1, 2020, there will be no new
production or import of virgin HCFC–
22.
Manufacturers of small, large, and
very large air-cooled commercial
package air conditioning equipment
must comply with the allowances
73 See
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established by the allocation rule as
well as the prohibition on manufacture
of new HFC–22 appliances that took
effect January 1, 2010. As such, no
covered manufacturers offer R–22
products today. The MPCs used for the
baseline and higher efficiency design
options account for the move away from
R–22 and the changes in production
costs that resulted from the shift to HFC
refrigerants.
Issue 21: DOE requests comment on
the identified regulations and their
contribution to cumulative regulatory
burden. Additionally, DOE requests
feedback on product-specific regulations
that take effect between 2016 and 2022
that were not listed, including
identification of the specific regulations
and data quantifying the associated
burdens.
3. National Impact Analysis
For small, large, and very large aircooled commercial package air
conditioning and heating equipment,
projections of shipments are an
important part of the NIA. As discussed
in section IV.G, DOE applied a repair/
replace decision model to estimate how
many units coming to the end of their
lifetime would be repaired rather than
replaced with a new unit. Because the
decision is very sensitive to the
installed cost of new equipment, the
impact of standards on shipments
increases with the minimum efficiency
required. Table V.10 presents the
estimated cumulative shipments in
2019–2048 in the base case and under
each TSL.
TABLE V.10—PROJECTED CUMULATIVE SHIPMENTS OF SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT IN 2019–2048
Percent reduction
from base case (%)
Million units
Base Case ...........................................................................................................................................
TSL 1 ...................................................................................................................................................
TSL 2 ...................................................................................................................................................
TSL 3 ...................................................................................................................................................
TSL 4 ...................................................................................................................................................
a. Significance of Energy Savings
For each TSL, DOE projected energy
savings for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment
purchased in the 30-year period that
begins in the year of anticipated
compliance with amended standards
(2019–2048). The savings are measured
over the entire lifetime of equipment
purchased in the 30-year period. DOE
quantified the energy savings
attributable to each TSL as the
difference in energy consumption
between each standards case and the
9.7
9.2
7.5
7.5
7.1
N/A
4.8
22.5
22.8
27.0
base case. Table V.11 presents the
estimated primary energy savings for
each considered TSL, and Table V.12
presents the estimated FFC energy
savings for each TSL. The approach for
estimating national energy savings is
further described in section IV.H.
TABLE V.11—CUMULATIVE PRIMARY ENERGY SAVINGS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–2048
Trial standard level
Equipment class
1
2
3
4
quads
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ............................................................................................................................................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and <240,000 Btu/h Cooling
Capacity .......................................................................................................................................
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity .................................................................................................................................
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ..................................................................................................................................................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/h and <240,000 Btu/h Cooling Capacity ............................................................................................................................................
Very Large Commercial Packaged Heat Pumps—≥240,000 Btu/h and <760,000 Btu/h Cooling
Capacity .......................................................................................................................................
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Total All Classes .......................................................................................................................
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1.2
4.3
5.4
8.3
0.8
1.8
2.6
3.8
0.7
1.5
2.7
3.4
0.1
0.5
0.7
1.0
0.0
0.1
0.1
0.2
0.0
0.1
0.1
0.2
2.9
8.3
11.7
16.8
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TABLE V.12—CUMULATIVE FULL-FUEL-CYCLE ENERGY SAVINGS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED
COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN
2019–2048
Trial standard level
Equipment class
1
2
3
4
quads
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ............................................................................................................................................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and <240,000 Btu/h Cooling
Capacity .......................................................................................................................................
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity .................................................................................................................................
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ..................................................................................................................................................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/h and <240,000 Btu/h Cooling Capacity ............................................................................................................................................
Very Large Commercial Packaged Heat Pumps—≥240,000 Btu/h and <760,000 Btu/h Cooling
Capacity .......................................................................................................................................
1.2
For this rulemaking, DOE undertook a
sensitivity analysis using nine rather
than 30 years of equipment shipments.
The choice of a nine-year period is a
proxy for the timeline in EPCA for the
review of certain energy conservation
standards and potential revision of and
compliance with such revised
standards.74 This timeframe may not be
statistically relevant with regard to the
equipment lifetime, equipment
manufacturing cycles or other factors
specific to small, large, and very large
air-cooled commercial package air
conditioning and heating equipment.
Thus, this information is presented for
informational purposes only and is not
indicative of any change in DOE’s
5.5
8.4
0.8
1.8
2.6
3.8
0.8
1.6
2.7
3.5
0.1
0.5
0.7
1.0
0.0
0.1
0.1
0.2
0.0
0.1
0.1
0.2
3.0
Total All Classes .......................................................................................................................
4.3
8.4
11.8
17.1
analytical methodology. The NES
results based on a 9-year analytical
period are presented in Table V.13. The
impacts are counted over the lifetime of
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment purchased in
2019–2027.
TABLE V.13—CUMULATIVE PRIMARY ENERGY SAVINGS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–2027
Trial standard level
Equipment class
1
2
3
4
quads
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ............................................................................................................................................
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h and <240,000 Btu/h Cooling
Capacity .......................................................................................................................................
Very Large Commercial Packaged Air Conditioners—≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity .................................................................................................................................
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity ..................................................................................................................................................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/h and <240,000 Btu/h Cooling Capacity ............................................................................................................................................
Very Large Commercial Packaged Heat Pumps—≥240,000 Btu/h and <760,000 Btu/h Cooling
Capacity .......................................................................................................................................
0.3
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0.9
1.4
0.2
0.4
0.5
0.7
0.1
0.2
0.3
0.3
0.0
0.1
0.2
0.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.6
Total All Classes .......................................................................................................................
0.7
1.4
1.9
2.7
Issue 22: For this rulemaking, DOE
analyzed the effects of potential
standards on equipment purchased over
a 30-year period, and it undertook a
sensitivity analysis using 9 years rather
than 30 years of product shipments. The
choice of a 30-year period of shipments
is consistent with the DOE analysis for
other products and commercial
equipment. 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
amended standards. DOE is seeking
74 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
consumer products, the compliance period is 5
years rather than 3 years.
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input on ways to refine the analytic
timeline.
b. Net Present Value of Customer Costs
and Benefits
DOE estimated the cumulative NPV of
the total costs and savings for customers
that would result from the TSLs
considered for small, large, and very
large air-cooled commercial package air
conditioning and heating equipment. In
accordance with OMB’s guidelines on
regulatory analysis,75 DOE calculated
the NPV using both a 7-percent and a 3percent real discount rate. The 7-percent
rate is an estimate of the average beforetax rate of return on private capital in
the U.S. economy, and reflects the
returns on real estate and small business
capital as well as corporate capital. This
discount rate approximates the
opportunity cost of capital in the private
sector (OMB analysis has found the
average rate of return on capital to be
near this rate). The 3-percent rate
reflects the potential effects of standards
on private consumption (e.g., through
higher prices for equipment and
reduced purchases of energy). This rate
represents the rate at which society
59001
discounts future consumption flows to
their present value. It can be
approximated by the real rate of return
on long-term government debt (i.e.,
yield on United States Treasury notes),
which has averaged about 3 percent for
the past 30 years.
Table V.14 shows the customer NPV
results for each TSL considered for
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment. In each case,
the impacts cover the lifetime of
equipment purchased in 2019–2048.
TABLE V.14—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–
2048
Discount rate
%
Equipment class
Trial standard level
1
2
3
4
billion 2012$
Small Commercial Packaged Air Conditioners—≥65,000
Btu/h and <135,000 Btu/h Cooling Capacity ...................
Large Commercial Packaged Air Conditioners—≥135,000
Btu/h and <240,000 Btu/h Cooling Capacity ...................
Very Large Commercial Packaged Air Conditioners—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity .............................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/
h and <240,000 Btu/h Cooling Capacity ..........................
Very Large Commercial Packaged Heat Pumps—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Total All Classes ...........................................................
Small Commercial Packaged Air Conditioners—≥65,000
Btu/h and <135,000 Btu/h Cooling Capacity ...................
Large Commercial Packaged Air Conditioners—≥135,000
Btu/h and <240,000 Btu/h Cooling Capacity ...................
Very Large Commercial Packaged Air Conditioners—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity .............................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/
h and <240,000 Btu/h Cooling Capacity ..........................
Very Large Commercial Packaged Heat Pumps—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Total All Classes ...........................................................
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The NPV results based on the aforementioned nine-year analytical period
are presented in Table V.15. The
impacts are counted over the lifetime of
3
6.9
20.7
26.0
36.2
........................
3.0
6.8
9.7
15.6
........................
3.4
6.4
11.0
13.5
........................
0.8
2.3
3.1
4.2
........................
0.2
0.3
0.5
0.8
........................
0.2
0.3
0.6
0.7
........................
14.4
36.9
50.8
71.0
7
2.5
7.1
9.0
11.8
........................
0.9
2.0
2.9
4.8
........................
1.0
1.8
3.3
3.9
........................
0.3
0.8
1.1
1.5
........................
0.1
0.1
0.2
0.3
........................
0.1
0.1
0.2
0.2
........................
4.8
11.9
16.5
22.5
equipment purchased in 2019–2027. As
mentioned previously, this information
is presented for informational purposes
only and is not indicative of any change
in DOE’s analytical methodology or
decision criteria.
75 OMB Circular A–4, section E (Sept. 17, 2003).
Available at: https://www.whitehouse.gov/omb/
circulars_a004_a-4.
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TABLE V.15—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–
2027
Discount rate
%
Equipment class
Trial standard level
1
2
3
4
billion 2013$
Small Commercial Packaged Air Conditioners—≥65,000
Btu/h and <135,000 Btu/h Cooling Capacity ...................
Large Commercial Packaged Air Conditioners—≥135,000
Btu/h and <240,000 Btu/h Cooling Capacity ...................
Very Large Commercial Packaged Air Conditioners—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity .............................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/
h and <240,000 Btu/h Cooling Capacity ..........................
Very Large Commercial Packaged Heat Pumps—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Total All Classes ...........................................................
Small Commercial Packaged Air Conditioners—≥65,000
Btu/h and <135,000 Btu/h Cooling Capacity ...................
Large Commercial Packaged Air Conditioners—≥135,000
Btu/h and <240,000 Btu/h Cooling Capacity ...................
Very Large Commercial Packaged Air Conditioners—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Small Commercial Packaged Heat Pumps—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity .............................
Large Commercial Packaged Heat Pumps—≥135,000 Btu/
h and <240,000 Btu/h Cooling Capacity ..........................
Very Large Commercial Packaged Heat Pumps—
≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity ...
Total All Classes ...........................................................
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c. Indirect Impacts on Employment
DOE expects energy conservation
standards for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment to
reduce energy costs for equipment
owners, and the resulting net savings to
be redirected to other forms of economic
activity. Those shifts in spending and
economic activity could affect the
demand for labor. As described in
section IV.N, DOE used an input/output
model of the U.S. economy to estimate
indirect employment impacts of the
TSLs that DOE considered in this
rulemaking. DOE understands that there
are uncertainties involved in projecting
employment impacts, especially
changes in the later years of the
analysis. Therefore, DOE generated
results for near-term time frames, where
these uncertainties are reduced.
The results suggest that the proposed
standards are likely to have 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
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3
2.1
5.0
6.3
8.2
........................
0.9
1.7
2.4
3.7
........................
0.4
0.8
1.4
1.7
........................
0.2
0.6
0.9
1.0
........................
0.0
0.1
0.1
0.2
........................
0.0
0.0
0.1
0.1
........................
3.7
8.3
11.3
14.9
7
1.1
2.7
3.3
4.1
........................
0.4
0.7
1.0
1.7
........................
0.2
0.4
0.7
0.8
........................
0.1
0.3
0.5
0.5
........................
0.0
0.0
0.1
0.1
........................
0.0
0.0
0.0
0.0
........................
1.8
4.1
5.6
7.3
employment. Chapter 16 of the NOPR
TSD presents detailed results.
6. Need of the Nation to Conserve
Energy
4. Impact on Utility or Performance
Enhanced energy efficiency, where
economically justified, improves the
Nation’s energy security, strengthens the
economy, and reduces the
environmental impacts or costs of
energy production. Reduced electricity
demand due to energy conservation
standards is also likely to reduce the
cost of maintaining the reliability of the
electricity system, particularly during
peak-load periods. As a measure of this
reduced demand, chapter 15 in the
NOPR TSD presents the estimated
reduction in generating capacity for the
TSLs that DOE considered in this
rulemaking.
Energy savings from standards for
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment could also
produce environmental benefits in the
form of reduced emissions of air
pollutants and greenhouse gases
associated with electricity production.
Table V.16 provides DOE’s estimate of
cumulative emissions reductions
projected to result from the TSLs
considered in this rulemaking. For the
DOE believes that the standards it is
proposing today will not lessen the
utility or performance of small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment.
5. Impact of Any Lessening of
Competition
DOE considers any lessening of
competition that is likely to result from
amended standards. The Attorney
General determines the impact, if any,
of any lessening of competition likely to
result from a proposed standard, and
transmits such determination to the
Secretary, together with an analysis of
the nature and extent of such impact.
To assist the Attorney General in
making such determination, DOE will
provide DOJ with copies of this NOPR
and the TSD for review. DOE will
consider DOJ’s comments on the
proposed rule in preparing the final
rule, and DOE will publish and respond
to DOJ’s comments in that document.
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proposed standards (TSL 3), the
upstream emissions reduction accounts
for 3 percent of total CO2 emissions, 48
percent of total NOX emissions, and 0.3
percent of total SO2 emissions.76 DOE
reports annual emissions reductions for
59003
each TSL in chapter 13 of the NOPR
TSD.
TABLE V.16—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED
COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS *
Trial Standard Level
1
2
3
4
745
375
2,077
2.52
10.74
54.4
1,049
528
2,927
3.55
15.13
76.7
1,514
767
4,232
5.13
21.90
110.6
8.98
124
1.92
0.00
0.09
753
25.4
350
5.44
0.01
0.25
2,127
35.8
492
7.66
0.02
0.36
2,996
51.5
710
11.04
0.03
0.52
4,317
271
252
727
0.89
3.82
1,138
772
19.3
770
725
2,083
2.53
10.99
3,275
2,181
54.5
1,085
1,021
2,934
3.57
15.48
4,614
3,072
76.8
1,565
1,477
4,243
5.16
22.41
6,679
4,427
110.7
Power Sector Emissions
CO2 (million metric tons) .........................................................................
NOX (thousand tons) ...............................................................................
SO2 (thousand tons) ................................................................................
Hg (tons) ..................................................................................................
N2O (thousand tons) ................................................................................
CH4 (thousand tons) ................................................................................
262
129
725
0.88
3.73
19.2
Upstream Emissions
CO4 (million metric tons) .........................................................................
NOX (thousand tons) ...............................................................................
SO2 (thousand tons) ................................................................................
Hg (tons) ..................................................................................................
N2 (thousand tons) ...................................................................................
CH4 (thousand tons) ................................................................................
Total Emissions
CO2 (million metric tons) .........................................................................
NOX (thousand tons) ...............................................................................
SO2 (thousand tons) ................................................................................
Hg (tons) ..................................................................................................
N2O (thousand tons) ................................................................................
N2O (thousand tons CO2eq) ** ................................................................
CH4 (thousand tons) ................................................................................
CH2 (million tons CO2eq) ** .....................................................................
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
* The reduction is measured over the period in which equipment purchased in 2019–2048 continue to operate.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
These results are based on emissions factors in AEO 2013, the most recent version available at the time of this analysis. Use of emissions
factors in AEO 2014 would result in a significant decrease in cumulative emissions reductions for CO2, SO2, and Hg. For example, the estimated
decrease for CO2 emissions reductions is 36%. In the next phase of this rulemaking, DOE plans to use emissions factors based on the most recent AEO available, which may or may not be AEO 2014, depending on the timing of the issuance of the next rulemaking document.
As mentioned in section I, emissions
factors based on the Annual Energy
Outlook 2014 (AEO 2014), which
became available too late for
incorporation into this analysis, show a
significant decrease in the cumulative
emissions reductions from the proposed
standards. For CO2, the emissions
reduction at TSL 3, the proposed
standards, is 697 Mt rather than 1,085
Mt.
As part of the analysis for this rule,
DOE estimated monetary benefits likely
to result from the reduced emissions of
CO2 and NOX that DOE estimated for
each of the TSLs considered. As
discussed in section IV.L, DOE used the
most recent values for the SCC
developed by an interagency process.
The four sets of SCC values resulting
from that process (expressed in 2013$)
are represented by $12.0/metric ton (the
average value from a distribution that
uses a 5-percent discount rate), $40.5/
metric ton (the average value from a
distribution that uses a 3-percent
discount rate), $62.4/metric ton (the
average value from a distribution that
uses a 2.5-percent discount rate), and
$119/metric ton (the 95th-percentile
value from a distribution that uses a 3percent discount rate). These values
correspond to the value of emission
reductions in 2015; the values for later
years are higher due to increasing
damages as the projected magnitude of
climate change increases.
Table V.17 presents the global value
of CO2 emissions reductions at each
TSL. For each of the four cases, DOE
calculated a present value of the stream
of annual values using the same
discount rate as was used in the studies
upon which the dollar-per-ton values
are based. DOE calculated domestic
values as a range from 7 percent to 23
percent of the global values, and these
results are presented in chapter 14 of
the NOPR TSD.
76 The upstream share of the total reduction for
NOx is high because power sector emissions are
capped in many States and because changes in the
projected power plant mix cause NOx emissions to
increase in some years under the standards case.
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TABLE V.17—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER SMALL, LARGE, AND VERY
LARGE AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS
SCC Case *
TSL
5% discount rate, average *
3% discount rate, average *
2.5% discount rate, average *
3% discount rate, 95th
percentile*
Billion 2013$
Power Sector Emissions
1
2
3
4
.......
.......
.......
.......
1.51
4.21
5.92
8.50
7.55
21.21
29.88
42.99
12.17
34.25
48.24
69.45
23.41
65.80
92.67
133.36
0.42
1.18
1.65
2.38
0.81
2.26
3.18
4.57
12.59
35.43
49.90
71.83
24.22
68.06
95.86
137.93
Upstream Emissions
1
2
3
4
.......
.......
.......
.......
0.05
0.15
0.20
0.29
0.26
0.73
1.03
1.47
Total Emissions
1
2
3
4
.......
.......
.......
.......
1.56
4.35
6.13
8.79
7.81
21.94
30.90
44.47
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$).77
DOE is well aware that scientific and
economic knowledge about the
contribution of CO2 and other
greenhouse gas (GHG) emissions to
changes in the future global climate and
the potential resulting damages to the
world economy continues to evolve
rapidly. Thus, any value placed on
reducing CO2 emissions in this
rulemaking is subject to change. DOE,
together with other Federal agencies,
will continue to review various
methodologies for estimating the
monetary value of reductions in CO2
and other GHG emissions. This ongoing
review will consider the comments on
this subject that are part of the public
record for this and other rulemakings, as
well as other methodological
assumptions and issues. However,
consistent with DOE’s legal obligations,
and taking into account the uncertainty
involved with this particular issue, DOE
has included in this proposed rule the
most recent values and analyses
resulting from the interagency process.
DOE also estimated the cumulative
monetary value of the economic benefits
associated with NOX emissions
reductions anticipated to result from
amended standards for small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment. The dollar-per-ton values
that DOE used are discussed in section
IV.L. Table V.18 presents the
cumulative present values for each TSL
calculated using seven-percent and
three-percent discount rates.
TABLE V.18—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION UNDER SMALL, LARGE, AND VERY LARGE
AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS 78
3% discount
rate
TSL
7% discount
rate
Million 2013$
Power Sector Emissions
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
1
2
3
4
...............................................................................................................................................................................
...............................................................................................................................................................................
...............................................................................................................................................................................
...............................................................................................................................................................................
128
369
520
753
36.7
105.5
148
215
139
384
540
52.0
138
194
Upstream Emissions
1 ...............................................................................................................................................................................
2 ...............................................................................................................................................................................
3 ...............................................................................................................................................................................
77 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
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Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
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which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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TABLE V.18—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION UNDER SMALL, LARGE, AND VERY LARGE
AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT TRIAL STANDARD LEVELS 78—
Continued
3% discount
rate
TSL
4 ...............................................................................................................................................................................
7% discount
rate
773
275
267
753
1060
1527
88.7
243
343
490
Total Emissions
1
2
3
4
...............................................................................................................................................................................
...............................................................................................................................................................................
...............................................................................................................................................................................
...............................................................................................................................................................................
7. Summary of National Economic
Impacts
The NPV of the monetized benefits
associated with emissions reductions
can be viewed as a complement to the
NPV of the customer savings calculated
for each TSL considered in this
rulemaking. Table V.19 presents the
NPV values that result from adding the
estimates of the potential economic
benefits resulting from reduced CO2 and
NOX emissions in each of four valuation
scenarios to the NPV of customer
savings calculated for each TSL
considered in this rulemaking, at both a
seven-percent and three-percent
discount rate. The CO2 values used in
the columns of each table correspond to
the four sets of SCC values discussed
above.
TABLE V.19—NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS
FROM CO2 AND NOX EMISSIONS REDUCTIONS
Customer NPV at 3% discount rate added with:
TSL
SCC Case
$12.0/metric
ton CO2*
SCC Case
$40.5/metric
ton CO2*
SCC Case
$62.4/metric
ton CO2*
SCC Case
$119/metric
ton CO2*
Billion 2013$
1
2
3
4
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
16.0
41.3
57.2
80.1
22.5
59.5
82.8
117.0
27.2
73.0
101.8
144.4
39.1
106.3
148.6
211.7
Customer NPV at 7% Discount Rate added with:
TSL
SCC Case
$12.0/metric
ton CO2*
SCC Case
$40.5/metric
ton CO2*
SCC Case
$62.4/metric
ton CO2*
SCC Case
$119/metric
ton CO2*
Billion 2013$
1
2
3
4
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
6.4
16.3
22.7
31.4
12.7
34.1
47.8
67.5
17.5
47.6
66.8
94.8
29.2
80.4
113.0
161.3
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium value, which corresponds
to $2,684 per ton.79
Although adding the value of
customer savings to the values of
emission reductions provides a valuable
perspective, two issues should be
considered. First, the national operating
cost savings are domestic U.S. customer
monetary savings that occur as a result
of market transactions, while the value
of CO2 reductions is based on a global
value. Second, the assessments of
operating cost savings and the SCC are
performed with different methods that
use different time frames for analysis.
The national operating cost savings is
measured for the lifetime of equipment
shipped in 2019–2048. The SCC values,
on the other hand, reflect the present
value of future climate-related impacts
resulting from the emission of one
metric ton of CO2 in each year. These
impacts continue well beyond 2100.
78 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors
based on the most recent AEO available, which may
or may not be AEO 2014, depending on the timing
of the issuance of the next rulemaking document.
79 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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8. Other Factors
The Secretary of Energy, in
determining whether a standard is
economically justified, may consider
any other factors that the Secretary
deems to be relevant. (42 U.S.C.
6313(a)(6)(B)(ii)(VII)) No other factors
were considered in this analysis.
C. Proposed Standards
To adopt national standards more
stringent than the amended ASHRAE/
IES Standard 90.1 for small, large, and
very large air-cooled CUAC and CUHP,
DOE must determine that such action
would result in significant additional
conservation of energy and is
technologically feasible and
economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)). As discussed
previously, EPCA provides seven factors
to be evaluated in determining whether
a more stringent standard for small,
large, and very large air-cooled CUAC
and CUHP is economically justified. (42
U.S.C. 6313(a)(6)(B)(ii)).
For this NOPR, DOE considered the
impacts of standards at each TSL,
beginning with the most energy-efficient
level, to determine whether that level
was economically justified. Where the
most energy-efficient 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
technologically feasible, economically
justified and saves a significant amount
of energy.
To aid the reader in understanding
the benefits and/or burdens of each TSL,
tables in this section summarize the
quantitative analytical results for each
TSL, based on the assumptions and
methodology discussed herein. The
efficiency levels contained in each TSL
are described in section V.A. 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
customers who may be
disproportionately affected by a national
standard (see section V.B.1.b), and
impacts on employment. DOE discusses
the impacts on employment in small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment manufacturing
in section V.B.2, and discusses the
indirect employment impacts in section
V.B.3.c.
1. Benefits and Burdens of Trial
Standard Levels Considered for Small,
Large, and Very Large Air-Cooled
Commercial Package Air Conditioning
and Heating Equipment
Table V.20 and Table V.21 summarize
the quantitative impacts estimated for
each TSL for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment.
TABLE V.20—SUMMARY OF ANALYTICAL RESULTS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT: NATIONAL IMPACTS 80
Category
TSL 1
TSL 2
TSL 3
TSL 4
8.4 ...............
11.8 .............
17.1
36.9 .............
11.9 .............
50.8 .............
16.5 .............
71.0
22.5
1,085 ...........
1,021 ...........
2,934 ...........
3.57 .............
15.48 ...........
4,614 ...........
3,072 ...........
76.8 .............
1,565
1,477
4,243
5.16
22.41
6,679
4,427
110.7
6.13 to 95.9
1060 ............
343 ..............
8.79 to 138
1,527
490
National FFC Energy Savings quads
3.0 ...............
NPV of Customer Benefits 2013$ billion
3% discount rate ........................................................................................................
7% discount rate ........................................................................................................
14.4 .............
4.8 ...............
Cumulative Emissions Reduction (Total FFC Emissions)
CO2 million metric tons ..............................................................................................
NOX thousand tons ...................................................................................................
SO2 thousand tons ....................................................................................................
Hg tons ......................................................................................................................
N2O thousand tons ....................................................................................................
N2O thousand tons CO2eq * ......................................................................................
CH4 thousand tons ....................................................................................................
CH4 million tons CO2eq* ...........................................................................................
271 ..............
252 ..............
727 ..............
0.89 .............
3.82 .............
1,138 ...........
772 ..............
19.3 .............
770 ..............
725 ..............
2,083 ...........
2.53 .............
10.99 ...........
3,275 ...........
2,181 ...........
54.5 .............
Value of Emissions Reduction (Total FFC Emissions)
CO2 2013$ billion ** ...................................................................................................
NOX—3% discount rate 2013$ million ......................................................................
NOX—7% discount rate 2013$ million ......................................................................
1.56 to 24.2
267 ..............
88.7 .............
4.35 to 68.1
753 ..............
243 ..............
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
80 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
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factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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TABLE V.21—SUMMARY OF ANALYTICAL RESULTS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT: MANUFACTURER AND CONSUMER IMPACTS
Category
TSL 1
TSL 2
TSL 3
TSL 4
(245.30) to
(52.87).
(19.45) to (4.19)
(311.58) to
(88.55).
(24.71) to (7.02)
(438.16) to
(118.13).
(34.75) to (9.37).
Manufacturer Impacts
Change in Industry NPV ($ million) † ...............................................
Change in Industry NPV (%) † .........................................................
(73.89) to
(11.45).
(5.86) to (0.91)
Customer Mean LCC Savings 2013$
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and
<135,000 Btu/h Cooling Capacity.
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h
and <240,000 Btu/h Cooling Capacity.
Very Large Commercial Packaged Air Conditioners—≥240,000
Btu/h and <760,000 Btu/h Cooling Capacity.
Weighted Average * ..........................................................................
1,094 ................
937 ...................
4,779 ................
6,711.
1,038 ................
2,214 ................
3,469 ................
7,508.
4,103 ................
4,801 ................
16,477 ..............
19,842.
1,257 ................
1,472 ................
5,150 ................
7,675.
Customer Median PBP years
Small Commercial Packaged Air Conditioners—≥65,000 Btu/h and
<135,000 Btu/h Cooling Capacity.
Large Commercial Packaged Air Conditioners—≥135,000 Btu/h
and <240,000 Btu/h Cooling Capacity.
Very Large Commercial Packaged Air Conditioners—≥240,000
Btu/h and <760,000 Btu/h Cooling Capacity.
Weighted Average * ..........................................................................
Small CUAC—≥65,000 Btu/h and <135,000 Btu/h: **
Customers with Net Cost % ......................................................
Customers with Net Benefit % ..................................................
Customers with No Impact % ...................................................
Large CUAC—≥135,000 Btu/h and <240,000 Btu/h: **
Customers with Net Cost % ......................................................
Customers with Net Benefit % ..................................................
Customers with No Impact % ...................................................
Very Large CUAC—≥240,000 Btu/h and <760,000 Btu/h: **
Customers with Net Cost (%) ...................................................
Customers with Net Benefit (%) ...............................................
Customers with No Impact (%) .................................................
Weighted Average: *
Customers with Net Cost (%) ...................................................
Customers with Net Benefit (%) ...............................................
Customers with No Impact (%) .................................................
2.2 ....................
8.0 ....................
3.9 ....................
4.7.
6.0 ....................
7.2 ....................
6.6 ....................
5.1.
2.6 ....................
5.5 ....................
2.5 ....................
3.5.
3.1 ....................
7.7 ....................
4.5 ....................
4.7.
0% ....................
61% ..................
39% ..................
27% ..................
72% ..................
1% ....................
0% ....................
99% ..................
0% ....................
0%.
100%.
0%.
3% ....................
74% ..................
22% ..................
8% ....................
90% ..................
2% ....................
6% ....................
93% ..................
0% ....................
2%.
98%.
0%.
2% ....................
62% ..................
36% ..................
12% ..................
76% ..................
13% ..................
3% ....................
92% ..................
6% ....................
5%.
94%.
1%.
1% ....................
64% ..................
35% ..................
22% ..................
77% ..................
2% ....................
2% ....................
97% ..................
0% ....................
1%.
99%.
0%.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
* Weighted by shares of each equipment class in total projected shipments in 2019.
** Rounding may cause some items to not total 100 percent.
† Values in parentheses are negative values.
First, DOE considered TSL 4, the most
efficient level (max tech), which would
save an estimated total of 17.1 quads of
energy, an amount DOE considers
significant. TSL 4 has an estimated NPV
of customer benefit of $22.5 billion
using a 7 percent discount rate, and
$70.1 billion using a 3 percent discount
rate.
The cumulative emissions reductions
at TSL 4 are 11,565 million metric tons
of CO2, 1,477 thousand tons of NOX,
4,243 thousand tons of SO2, and 5.16
tons of Hg. The estimated monetary
value of the CO2 emissions reductions at
TSL 4 ranges from $9 billion to $138
billion.81
81 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
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At TSL 4, the average LCC savings is
$6,711 for small CUAC, $7,508 for large
CUAC, and $19,842 for very large
CUAC. The median PBP is 4.7 years for
small CUAC, 5.1 years for large CUAC,
and 3.5 years for very large CUAC. The
share of customers experiencing a net
LCC benefit is 100 percent for small
CUAC, 98 percent for large CUAC, and
94 percent for very large CUAC.
At TSL 4, the projected change in
INPV ranges from a decrease of $438.16
million to decrease of $118.13 million.
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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If the larger decrease is realized, TSL 4
could result in a net loss of 34.75
percent in INPV to manufacturers of
covered small, large, and very large aircooled commercial package air
conditioning and heating equipment.
Conversion costs are expected to total
$210.96 million. Only 2% of industry
product listings meet this proposed
standard today. At this level, DOE
recognizes that manufacturers could
face technical resource constraints.
Manufacturers stated they would
require additional engineering expertise
and additional test laboratory capacity.
It is unclear whether manufacturers
could complete the hiring of the
necessary technical expertise and
construction of the necessary test
facilities in time to allow for the
redesign of all products to meet maxtech by 2019. Furthermore, DOE
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recognizes that a standard set at maxtech could greatly limit product
differentiation in the small, large, and
very large air-cooled CUAC and CUHP
market. By commoditizing a key
differentiating feature, a standard set a
max-tech would likely accelerate
consolidation in the industry.
In view of the foregoing, DOE
concludes that, at TSL 4 for small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment, the benefits of energy
savings, positive NPV of total customer
benefits, customer LCC savings,
emission reductions and the estimated
monetary value of the emissions
reductions would be outweighed by the
large reduction in industry value at TSL
4. Consequently, DOE has concluded
that TSL 4 is not economically justified.
Next, DOE considered TSL 3, which
would save an estimated total of 11.8
quads of energy, an amount DOE
considers significant. TSL 3 has an
estimated NPV of customer benefit of
$16.5 billion using a 7 percent discount
rate, and $50.8 billion using a 3 percent
discount rate.
The cumulative emissions reductions
at TSL 3 are 1,085 million metric tons
of CO2, 1,021 thousand tons of NOX,
2,934 thousand tons of SO2, and 3.57
tons of Hg. The estimated monetary
value of the CO2 emissions reductions at
TSL 4 ranges from $6 billion to $96
billion.82
At TSL 3, the average LCC savings is
$4,779 for small CUAC, $3,469 for large
CUAC, and $16,477 for very large
CUAC. The median PBP is 3.9 years for
small CUAC, 6.6 years for large CUAC,
and 2.5 years for very large CUAC.83
The share of customers experiencing a
net LCC benefit is 99 percent for small
CUAC, 93 percent for large CUAC, and
92 percent for very large CUAC.
At TSL 3, the projected change in
INPV ranges from a decrease of $311.58
million to decrease of $88.55 million. If
the larger decrease is realized, TSL 3
could result in a net loss of 24.71
percent in INPV to manufacturers of
covered small, large, and very large aircooled commercial package air
conditioning and heating equipment.
Conversion costs are expected to total
$120.90 million. 19% of industry
product listings meet this standard level
today.
After considering the analysis and
weighing the benefits and the burdens,
DOE has tentatively concluded that at
TSL 3 for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment,
the benefits of energy savings, positive
NPV of customer benefit, positive
impacts on consumers (as indicated by
positive average LCC savings, favorable
PBPs, and the large percentage of
customers who would experience LCC
benefits), emission reductions, and the
estimated monetary value of the
emissions reductions would outweigh
the potential reductions in INPV for
manufacturers. The Secretary of Energy
has concluded that TSL 3 would save a
significant amount of energy and is
technologically feasible and
economically justified.
Based on the above considerations,
DOE today proposes to adopt the energy
conservation standards for small, large,
and very large air-cooled commercial
package air conditioning and heating
equipment at TSL 3. Table V.22 presents
the proposed energy conservation
standards for small, large, and very large
air-cooled commercial package air
conditioning and heating equipment.
TABLE V.22—PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL, LARGE, AND VERY LARGE AIR-COOLED
COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Equipment type
Heating type
Small Commercial Packaged AC and HP (Air-Cooled)—≥65,000 Btu/h
and <135,000 Btu/h Cooling Capacity.
AC
HP
Large Commercial Packaged AC and HP (Air-Cooled)—≥135,000 Btu/h
and <240,000 Btu/h Cooling Capacity.
AC
HP
Very Large Commercial Packaged AC and HP (Air-Cooled)—≥240,000
Btu/h and <760,000 Btu/h Cooling Capacity.
AC
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HP
82 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
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Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
Electric Resistance Heating or No
Heating.
All Other Types of Heating ..............
the timing of the issuance of the next rulemaking
document.
83 Large CUAC experiences relatively lower LCC
savings and longer PBPs than either small and very
large CUACs due to the design measures being
utilized to achieve higher rated IEER in the
Engineering Analysis. In the case of small and very
large CUACs, increased efficiency at TSL 3 is
attained in large part due to increased compressor
staging, which results in significant improvements
in part-load performance. In the case of large CUAC,
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Proposed energy
conservation
standard
14.8 IEER.
14.6 IEER.
14.1 IEER.
3.5 COP.
13.9 IEER.
3.4 COP.
14.2 IEER.
14.0 IEER.
13.4 IEER
3.3 COP.
13.2 IEER.
3.3 COP.
increased efficiency is attained without increasing
compressor staging, i.e., the baseline design has the
same number of stages as the design at TSL 3.
Although the other design measures for large CUAC
increase the rated IEER of the product, part-load
performance is not impacted significantly. Because
CUAC equipment operates frequently in part-load,
the TSL 3 design for large CUAC results in annual
energy savings and operating cost savings that are
lower relative to what is attained with the designs
for the small and very large CUACs.
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2. Summary of Benefits and Costs
(Annualized) of the Proposed Standards
The benefits and costs of today’s
proposed standards, for equipment sold
in 2019–2048, can also be expressed in
terms of annualized values. The
annualized monetary values are the sum
of (1) the annualized national economic
value of the benefits from consumer
operation of equipment that meet the
proposed standards (consisting
primarily of operating cost savings from
using less energy, minus increases in
equipment purchase and installation
costs, which is another way of
representing consumer NPV), and (2)
the annualized monetary value of the
benefits of emission reductions,
including CO2 emission reductions.84
Although combining the values of
operating savings and CO2 emission
reductions provides a useful
perspective, two issues should be
considered. First, the national operating
savings are domestic U.S. customer
monetary savings that occur as a result
of market transactions while the value
of CO2 reductions is based on a global
value. Second, the assessments of
operating cost savings and CO2 savings
are performed with different methods
that use different time frames for
analysis. The national operating cost
savings is measured for the lifetime of
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment shipped in 2019
–2048. The SCC values, on the other
hand, reflect the present value of some
future climate-related impacts resulting
from the emission of one ton of carbon
dioxide in each year. These impacts
continue well beyond 2100.
Estimates of annualized benefits and
costs of the proposed standards for
small, large, and very large air-cooled
commercial package air conditioning
and heating equipment are shown in
Table V.23. The results under the
primary estimate are as follows. Using a
7-percent discount rate for benefits and
costs other than CO2 reduction, for
59009
which DOE used a 3-percent discount
rate along with the average SCC series
that uses a 3-percent discount rate, the
cost of the standards proposed in this
rule is $430 million per year in
increased equipment costs; while the
estimated benefits are $2,177 million
per year in reduced equipment
operating costs, $1,744 million in CO2
reductions, and $36.2 million in
reduced NOX emissions. In this case, the
net benefit would amount to $3,558
million per year. Using a 3-percent
discount rate for all benefits and costs
and the average SCC series, the
estimated cost of the standards
proposed in this rule is $507 million per
year in increased equipment costs;
while the estimated benefits are $3,426
million per year in reduced operating
costs, $1,774 million in CO2 reductions,
and $60.9 million in reduced NOX
emissions. In this case, the net benefit
would amount to approximately $4,755
million per year.85
TABLE V.23—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR SMALL, LARGE, AND VERY LARGE AIRCOOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT
Discount rate
Low net benefits
estimate *
Primary estimate *
High net benefits
estimate *
million 2013$/year
Benefits
Operating Cost Savings .....................................
CO2 Reduction Monetized Value
case) **.
CO2 Reduction Monetized Value
case) **.
CO2 Reduction Monetized Value
case) **.
CO2 Reduction Monetized Value
case) **.
NOX Reduction Monetized Value (at
ton) **.
($12.0/t
7% ..................................
3% ..................................
5% ..................................
2,177 .......................
3,426 .......................
484 ..........................
1,984 .......................
3,127 .......................
467 ..........................
2,407
3,781
505
($40.5/t
3% ..................................
1,774 .......................
1,714 .......................
1,846
($62.4/t
2.5% ...............................
2,632 .......................
2,543 .......................
2,737
($119/t
3% ..................................
5,504 .......................
5,317 .......................
5,727
$2,684/
7% ..................................
36.18 .......................
34.75 .......................
37.90
3%
7%
7%
3%
3%
60.89
2,698
3,988
3,972
5,262
58.85
2,486
3,733
3,653
4,900
63.40
2,950 to 8,172
4,291
4,349 to 9,572
5,691
Total Benefits † ...................................................
..................................
plus CO2 range ........
..................................
plus CO2 range ........
..................................
.......................
to 7,718 .........
.......................
to 8,991 .........
.......................
.......................
to 7,336 .........
.......................
to 8,503 .........
.......................
Costs
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Incremental Product Costs .................................
84 DOE used a two-step calculation process to
convert the time-series of costs and benefits into
annualized values. First, DOE calculated a present
value in 2013, the year used for discounting the
NPV of total customer costs and savings, for the
time-series of costs and benefits using discount
rates of three and seven percent for all costs and
benefits except for the value of CO2 reductions. For
the latter, DOE used a range of discount rates. From
the present value, DOE then calculated the fixed
annual payment over a 30-year period (2019
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7% ..................................
3% ..................................
430 ..........................
507 ..........................
through 2048) that yields the same present value.
The fixed annual payment is the annualized value.
Although DOE calculated annualized values, this
does not imply that the time-series of cost and
benefits from which the annualized values were
determined is a steady stream of payments.
85 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
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350 ..........................
433 ..........................
485
550
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. The monetized
benefits from GHG reductions would likely
decrease by a comparable amount. In the next phase
of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available,
which may or may not be AEO 2014, depending on
the timing of the issuance of the next rulemaking
document.
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TABLE V.23—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR SMALL, LARGE, AND VERY LARGE AIRCOOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT—Continued
Discount rate
Low net benefits
estimate *
Primary estimate *
High net benefits
estimate *
Net Benefits
Total † ..........................................................
7%
7%
3%
3%
plus CO2 range ........
..................................
..................................
plus CO2 range ........
2,268
3,558
4,755
3,465
to 7,288 .........
.......................
.......................
to 8,484 .........
2,135
3,383
4,468
3,220
to 6,986 .........
.......................
.......................
to 8,071 .........
2,465 to 7,687
3,806
5,140
3,799 to 9,021
* This table presents the annualized costs and benefits associated with small, large, and very large air-cooled CUAC and CUHP shipped in
2019–2048. These results include benefits to customers which accrue after 2048 from the products purchased in 2019–2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation
for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case, Low
Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect no change for projected
product price trends in the Primary Estimate, an increasing trend for projected product prices in the Low Benefits Estimate, and a decreasing
trend for projected product prices in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
The value for NOX is the average of the low and high values used in DOE’s analysis.86
† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount
rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled
discount rate, and those values are added to the full range of CO2 values.
VI. Procedural Issues and Regulatory
Review
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
A. Review Under Executive Orders
12866 and 13563
Section 1(b)(1) of Executive Order
12866, ‘‘Regulatory Planning and
Review,’’ 58 FR 51735 (Oct. 4, 1993),
requires each agency to identify the
problem that it intends to address,
including, where applicable, the failures
of private markets or public institutions
that warrant new agency action, as well
as to assess the significance of that
problem. The proposed standards
address the following problems:
(1) There is a lack of customer
information in the commercial space
conditioning market, and the high costs
of gathering and analyzing relevant
information leads some customers to
miss opportunities to make costeffective investments in energy
efficiency.
(2) In some cases the benefits of more
efficient equipment are not realized due
to misaligned incentives between
purchasers and users. An example of
such a case is when the equipment
purchase decision is made by a building
contractor or building owner who does
not pay the energy costs.
(3) There are external benefits
resulting from improved energy
86 These results are based on emissions factors in
AEO 2013, the most recent version available at the
time of this analysis. Use of emissions factors in
AEO 2014 would result in a significant decrease in
cumulative emissions reductions for CO2, SO2, and
Hg. For example, the estimated decrease for CO2
emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors
based on the most recent AEO available, which may
or may not be AEO 2014, depending on the timing
of the issuance of the next rulemaking document.
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efficiency of CUAC and CUHP that are
not captured by the users of such
equipment. These benefits include
externalities related to public health,
environmental protection and national
security that are not reflected in energy
prices, such as reduced emissions of air
pollutants and greenhouse gases that
impact human health and global
warming.
The proposed standards address these
issues by setting minimum levels of
energy efficiency, which remove from
the market equipment that might be
purchased by poorly informed
customers or by customers who would
not be paying the costs of operating the
equipment. In the process of so doing,
DOE assembles, analyzes, and receives
informed comment on a large quantity
of information that indicates that most
customers would be better off
purchasing equipment that meets the
standards rather than less-efficient
equipment. In cases in which the user
of the equipment is not able to make the
purchase decision, the standards help to
ameliorate the problem of misaligned
incentives between purchasers and
users. Finally, the standards account to
some extent for externalities that are not
represented in market transactions.
In addition, DOE has determined that
this regulatory action is an
‘‘economically significant regulatory
action’’ under section 3(f)(1)
(‘‘significant regulatory action’’) of
Executive Order 12866, as it has an
annual effect on the economy of 100
million or more. Accordingly, section
6(a)(3) of the Executive Order requires
that DOE prepare a regulatory impact
analysis (RIA) on this rule and that the
Office of Information and Regulatory
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Affairs (OIRA) in the Office of
Management and Budget (OMB) review
this rule. DOE presented to OIRA for
review the draft rule and other
documents prepared for this
rulemaking, including the RIA, and has
included these documents in the
rulemaking record. The assessments
prepared pursuant to Executive Order
12866 can be found in the technical
support document for this rulemaking.
DOE has also reviewed this proposal
pursuant to Executive Order 13563,
issued on January 18, 2011. 76 FR 3281
(Jan. 21, 2011). EO 13563 is
supplemental to and explicitly reaffirms
the principles, structures, and
definitions governing regulatory review
established in Executive Order 12866.
To the extent permitted by law, agencies
are required by Executive Order 13563
to: (1) propose or adopt a regulation
only upon a reasoned determination
that its benefits justify its costs
(recognizing that some benefits and
costs are difficult to quantify); (2) tailor
regulations to impose the least burden
on society, consistent with obtaining
regulatory objectives, taking into
account, among other things, and to the
extent practicable, the costs of
cumulative regulations; (3) select, in
choosing among alternative regulatory
approaches, those approaches that
maximize net benefits (including
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
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available alternatives to direct
regulation, including providing
economic incentives to encourage the
desired behavior, such as user fees or
marketable permits, or providing
information upon which choices can be
made by the public.
DOE emphasizes as well that
Executive Order 13563 requires agencies
to use the best available techniques to
quantify anticipated present and future
benefits and costs as accurately as
possible. In its guidance, the Office of
Information and Regulatory Affairs has
emphasized that such techniques may
include identifying changing future
compliance costs that might result from
technological innovation or anticipated
behavioral changes. (DOE also discusses
cumulative regulatory burdens above in
section V.B.2.e.) For the reasons stated
in the preamble, DOE believes that this
NOPR is consistent with these
principles, including the requirement
that, to the extent permitted by law,
benefits justify costs and that net
benefits are maximized.
B. Review Under the Regulatory
Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of 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 Executive Order 13272,
‘‘Proper Consideration of Small Entities
in Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies on February 19,
2003, to ensure that the potential
impacts of its rules on small entities are
properly considered during the
rulemaking process. 68 FR 7990. DOE
has made its procedures and policies
available on the Office of the General
Counsel’s Web site (https://energy.gov/
gc/office-general-counsel). DOE has
prepared the following IRFA for the
products that are the subject of this
rulemaking.
For manufacturers of small, large, and
very large air-cooled CUAC and CUHP,
the Small Business Administration
(SBA) has set a size threshold, which
defines those entities classified as
‘‘small businesses’’ for the purposes of
the statute. DOE used the SBA’s small
business size standards to determine
whether any small entities would be
subject to the requirements of the rule.
65 FR 30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544 (Sept.
5, 2000) and codified at 13 CFR part
121. The size standards are listed by
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North American Industry Classification
System (NAICS) code and industry
description and are available at https://
www.sba.gov/category/navigationstructure/contracting/contractingofficials/small-business-size-standards.
Manufacturing of small, large, and very
large air-cooled CUAC and CUHP is
classified under NAICS 333415, ‘‘AirConditioning and Warm Air Heating
Equipment and Commercial and
Industrial Refrigeration Equipment
Manufacturing.’’ The SBA sets a
threshold of 750 employees or less for
an entity to be considered as a small
business for this category.
1. Description and Estimated Number of
Small Entities Regulated
To estimate the number of companies
that could be small business
manufacturers of equipment covered by
this rulemaking, DOE conducted a
market survey using available public
information to identify potential small
manufacturers. DOE’s research involved
examining industry trade association
membership directories (including
AHRI), public databases (e.g., AHRI
Directory,87 the California Energy
Commission Appliance Efficiency
Database 88), individual company Web
sites, and market research tools (e.g.,
Hoovers reports) to create a list of
companies that manufacture or sell
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 reviewed
publicly-available data and contacted
select companies on its list, as
necessary, to determine whether they
met the SBA’s definition of a small
business manufacturer of covered
commercial packaged air conditioners.
DOE screened out companies that do
not offer products covered by this
rulemaking, do not meet the definition
of a ‘‘small business,’’ or are foreign
owned and operated.
DOE initially identified at least 13
potential manufacturers of commercial
packaged air conditioners sold in the
U.S. DOE then determined that 10 were
large manufacturers, manufacturers that
are foreign owned and operated, or
manufacturers that do not produce
products covered by this rulemaking.
DOE was able to determine that 3
manufacturers meet the SBA’s
definition of a ‘‘small business’’ and
manufacture products covered by this
rulemaking.
87 See www.ahridirectory.org/ahriDirectory/
pages/home.aspx.
88 See https://www.energy.ca.gov/appliances/.
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59011
Before issuing this NOPR, DOE spoke
with two of the small business
manufacturers of commercial packaged
air conditioners. DOE also obtained
information about small business
impacts while interviewing large
manufacturers.
Based on DOE’s research, one small
manufacturer focused exclusively on the
design and specification of equipment—
but had no production assets of its own.
All production was outsourced. The
other small manufacturers performed all
design and specification work but also
owned domestic production facilities
and employed production workers.
Issue 23: DOE requests additional
information on the number of small
businesses in the industry, the names of
those small businesses, and their role in
the market.
2. Description and Estimate of
Compliance Requirements
The proposed standards for
commercial packaged air conditioners
could cause small manufacturers to be
at a disadvantage relative to large
manufacturers. One way in which small
manufacturers could be at a
disadvantage is that they may be
disproportionately affected by product
conversion costs. Product redesign,
testing, and certification costs tend to be
fixed and do not scale with sales
volume. For each product model, small
businesses must make investments in
research and development to redesign
their products, but because they have
lower sales volumes, they must spread
these costs across fewer units.
Moreover, smaller manufacturers may
experience higher testing costs relative
to larger manufacturers as they may not
possess their own test facility and
therefore must outsource all testing at a
higher per unit cost. In general, the
small manufacturers had a number of
equipment lines that was similar to that
of larger competitors with similar
market share. However, because small
manufacturers have fewer engineers
than large manufacturers, they may have
greater difficulty bringing their portfolio
of equipment in-line with an amended
energy conservation standard within the
allotted timeframe or may have to divert
engineering resources from customer
and new product initiatives for a longer
period of time.
Furthermore, smaller manufacturers
may lack the purchasing power of larger
manufacturers. For example, since
motor suppliers give discounts to
manufacturers based on the number of
motors they purchase, larger
manufacturers may have a purchasing
and pricing advantage because their
higher volume demands. This
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purchasing power differential between
high-volume and low-volume orders
applies to other commercial packaged
air conditioner components as well.
In order to meet the proposed
standard, manufacturers may have to
seek outside capital to cover expenses
related to testing and product design
equipment. Smaller firms typically have
a higher cost of borrowing due to higher
risk on the part of investors, largely
attributed to lower cash flows and lower
per unit profitability. In these cases,
small manufacturers may observe higher
costs of debt than larger manufacturers.
To estimate how small manufacturers
would be potentially impacted, DOE
compared required conversion costs at
each TSL for a small manufacturer with
on-site production and an average large
manufacturer (see Table VI.1 and Table
VI.2). In the following tables, TSL 3
represents the proposed standard.
TABLE VI.1—IMPACTS OF CONVERSION COSTS ON A SMALL MANUFACTURER
Capital conversion cost
as a percentage of annual capital expenditures
TSL
TSL
TSL
TSL
1
2
3
4
Product conversion cost
as a percentage of annual R&D expense
Total conversion cost as
a percentage of annual
revenue
Total conversion cost as
a percentage of annual
EBIT
122
199
407
430
526
932
1948
3369
14
24
49
77
159
276
573
896
...............................................
...............................................
...............................................
...............................................
TABLE VI.2—IMPACTS OF CONVERSION COSTS ON A LARGE MANUFACTURER
Capital conversion cost
as a percentage of annual capital expenditures
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TSL
TSL
TSL
TSL
1
2
3
4
Product conversion cost
as a percentage of annual R&D expense
Total conversion cost as
a percentage of annual
revenue
Total conversion cost as
a percentage of annual
EBIT
42
105
279
310
213
287
536
898
5
9
19
26
62
100
216
307
...............................................
...............................................
...............................................
...............................................
At TSL 3, the level proposed in this
NOPR, DOE estimates capital
conversion costs of $2.32 million and
product conversion costs of $7.04
million for an average small
manufacturer that owns production
facilities, compared to capital
conversion costs of $9.08 million and
product conversion costs of $11.05
million for an average large
manufacturer.
At these levels, the amended standard
could contribute to the consolidation of
the industry. As noted in section
V.B.2.a, the GRIM free cash flow results
indicated that some manufacturers may
need to access the capital markets in
order to fund conversion costs directly
related to an amended standard. These
conversion costs would continue to be
borne by the identified small
manufacturers in spite of any
outsourcing of manufacturing activities
because they must still incur the
necessary product conversion costs to
design, test, certify, and market
equipment complying with any new
standards that DOE may promulgate.
Given that small manufacturers tend to
have less access to capital and that the
necessary conversion costs are high
relative to the size of a small business,
it is possible the small manufacturers
will choose to leave the industry or
choose to be purchased by or merged
with larger market players.
Since the proposed standard could
cause small manufacturers to be at a
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disadvantage relative to large
manufacturers, DOE cannot certify that
the proposed standards would not have
a significant impact on a significant
number of small businesses, and
consequently, DOE has prepared this
IRFA analysis.
Issue 24: DOE requests data on the
cost of capital for small manufacturers
to better quantify how small
manufacturers might be disadvantaged
relative to large competitors.
Issue 25: DOE requests comment and
data on the impact of the proposed
standard on small business
manufacturers, including any potential
cumulative regulatory effects.
3. Duplication, Overlap, and Conflict
with Other Rules and Regulations
DOE is not aware of any rules or
regulations that duplicate, overlap, or
conflict with the rule being considered
today.
4. Significant Alternatives to the Rule
The discussion above analyzes
impacts on small businesses that would
result from DOE’s proposed rule. In
addition to the other TSLs being
considered, the proposed rulemaking
TSD includes a regulatory impact
analysis that discusses the following
policy alternatives: (1) Consumer
rebates; (2) consumer tax credits; (3)
manufacturer tax credits; (4) voluntary
energy efficiency targets; and (5) bulk
government purchases. While these
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alternatives may mitigate to some
varying extent the economic impacts on
small entities compared to the
standards, DOE determined that the
energy savings of these alternatives are
significantly smaller than those that
would be expected to result from
adoption of the proposed standard
levels. Accordingly, DOE is declining to
adopt any of these alternatives and is
proposing the standards set forth in this
rulemaking. (See chapter 17 of the
NOPR TSD for further detail on the
policy alternatives DOE considered.)
Issue 26: DOE request input on
regulatory alternatives to consider that
would lessen the impact of the
rulemaking on small business.
C. Review Under the Paperwork
Reduction Act
Manufacturers of small, large, and
very large air-cooled commercial
package air conditioning and heating
equipment must certify to DOE that
their products comply with any
applicable energy conservation
standards. In certifying compliance,
manufacturers must test their products
according to the DOE test procedures for
small, large, and very large air-cooled
commercial package air conditioning
and heating 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
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commercial equipment, including small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment. 76 FR 12422
(March 7, 2011). The collection-ofinformation requirement for the
certification and recordkeeping is
subject to review and approval by OMB
under the Paperwork Reduction Act
(PRA). This requirement has been
approved by OMB under OMB control
number 1910–1400. Public reporting
burden for the certification is estimated
to average 20 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.
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D. Review Under the National
Environmental Policy Act of 1969
Pursuant to the National
Environmental Policy Act (NEPA) of
1969, DOE has determined that the
proposed rule fits within the category of
actions included in Categorical
Exclusion (CX) B5.1 and otherwise
meets the requirements for application
of a CX. See 10 CFR Part 1021, App. B,
B5.1(b); 1021.410(b) and Appendix B,
B(1)–(5). The proposed rule fits within
the category of actions under CX B5.1
because it is a rulemaking that
establishes energy conservation
standards for consumer products or
industrial equipment, and for which
none of the exceptions identified in CX
B5.1(b) apply. Therefore, DOE has made
a CX determination for this rulemaking,
and DOE does not need to prepare an
Environmental Assessment or
Environmental Impact Statement for
this proposed rule. DOE’s CX
determination for this proposed rule is
available at https://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 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
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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. EPCA
governs and prescribes Federal
preemption of State regulations as to
energy conservation for the products
that are the subject of this proposed
rule. States can petition DOE for
exemption from such preemption to the
extent, and based on criteria, set forth in
EPCA. (42 U.S.C. 6297) No further
action is required by Executive Order
13132.
F. Review Under Executive Order 12988
With respect to the review of existing
regulations and the promulgation of
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice
Reform,’’ imposes on Federal agencies
the general duty to adhere to the
following requirements: (1) Eliminate
drafting errors and ambiguity; (2) write
regulations to minimize litigation; and
(3) provide a clear legal standard for
affected conduct rather than a general
standard and promote simplification
and burden reduction. 61 FR 4729 (Feb.
7, 1996). Section 3(b) of Executive Order
12988 specifically requires that
Executive agencies make every
reasonable effort to ensure that the
regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly
specifies any effect on existing Federal
law or regulation; (3) provides a clear
legal standard for affected conduct
while promoting simplification and
burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses
other important issues affecting clarity
and general draftsmanship under any
guidelines issued by the Attorney
General. Section 3(c) of Executive Order
12988 requires Executive agencies to
review regulations in light of applicable
standards in section 3(a) and section
3(b) to determine whether they are met
or it is unreasonable to meet one or
more of them. DOE has completed the
required review and determined that, to
the extent permitted by law, this
proposed rule meets the relevant
standards of Executive Order 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
each Federal agency to assess the effects
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59013
of Federal regulatory actions on State,
local, and Tribal governments and the
private sector. Public Law 104–4, sec.
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 small governments. 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 https://
energy.gov/gc/office-general-counsel.
Although this proposed rule does not
contain a Federal intergovernmental
mandate, it may require expenditures of
$100 million or more on the private
sector. Specifically, the proposed rule
will likely result in a final rule that
could require expenditures of $100
million or more. Such expenditures may
include: (1) Investment in research and
development and in capital
expenditures by small, large, and very
large air-cooled commercial package air
conditioning and heating equipment
manufacturers in the years between the
final rule and the compliance date for
the new standards, and (2) incremental
additional expenditures by consumers
to purchase higher-efficiency small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment, starting at the
compliance date for the applicable
standard.
Section 202 of UMRA authorizes a
Federal agency to respond to the content
requirements of UMRA in any other
statement or analysis that accompanies
the proposed rule. 2 U.S.C. 1532(c). The
content requirements of section 202(b)
of UMRA relevant to a private sector
mandate substantially overlap the
economic analysis requirements that
apply under section 325(o) of EPCA and
Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of
the NOPR and the ‘‘Regulatory Impact
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Analysis’’ section of the TSD for this
proposed rule respond to those
requirements.
Under section 205 of UMRA, the
Department is obligated to identify and
consider a reasonable number of
regulatory alternatives before
promulgating a rule for which a written
statement under section 202 is required.
2 U.S.C. 1535(a). DOE is required to
select from those alternatives the most
cost-effective and least burdensome
alternative that achieves the objectives
of the proposed rule unless DOE
publishes an explanation for doing
otherwise, or the selection of such an
alternative is inconsistent with law.
This proposed rule would establish
energy conservation standards for small,
large, and very large air-cooled
commercial package air conditioning
and heating equipment that are
designed to achieve the maximum
improvement in energy efficiency that
DOE has determined to be both
technologically feasible and
economically justified. A full discussion
of the alternatives considered by DOE is
presented in the ‘‘Regulatory Impact
Analysis’’ section of the TSD for this
proposed rule.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
rule would not have any impact on the
autonomy or integrity of the family as
an institution. Accordingly, DOE has
concluded that it is not necessary to
prepare a Family Policymaking
Assessment.
mstockstill on DSK4VPTVN1PROD with PROPOSALS2
I. Review Under Executive Order 12630
DOE has determined, under Executive
Order 12630, ‘‘Governmental Actions
and Interference with Constitutionally
Protected Property Rights’’ 53 FR 8859
(Mar. 18, 1988), that this regulation
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 guidelines established
by each agency pursuant to general
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guidelines issued by OMB. OMB’s
guidelines were published at 67 FR
8452 (Feb. 22, 2002), and DOE’s
guidelines were published at 67 FR
62446 (Oct. 7, 2002). DOE has reviewed
this 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
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use’’ 66 FR 28355 (May
22, 2001), requires Federal agencies to
prepare and submit to OIRA at OMB, a
Statement of Energy Effects for any
proposed significant energy action. A
‘‘significant energy action’’ is defined as
any action by an agency that
promulgates or is expected to lead to
promulgation of a final rule, and that:
(1) Is a significant regulatory action
under Executive Order 12866, or any
successor order; and (2) is likely to have
a significant adverse effect on the
supply, distribution, or use of energy, or
(3) is designated by the Administrator of
OIRA as a significant energy action. For
any proposed significant energy action,
the agency must give a detailed
statement of any adverse effects on
energy supply, distribution, or use
should the proposal be implemented,
and of reasonable alternatives to the
action and their expected benefits on
energy supply, distribution, and use.
DOE has tentatively concluded that
this regulatory action, which sets forth
proposed energy conservation standards
for small, large, and very large aircooled commercial package air
conditioning and heating 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 the proposed rule.
L. Review Under the Information
Quality Bulletin for Peer Review
On December 16, 2004, OMB, in
consultation with the Office of Science
and Technology Policy (OSTP), issued
its Final Information Quality Bulletin
for Peer Review (the Bulletin). 70 FR
2664 (Jan. 14, 2005). The Bulletin
establishes that certain scientific
information shall be peer reviewed by
qualified specialists before it is
disseminated by the Federal
Government, including influential
scientific information related to agency
regulatory actions. The purpose of the
bulletin is to enhance the quality and
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credibility of the Government’s
scientific information. Under the
Bulletin, the energy conservation
standards rulemaking analyses are
‘‘influential scientific information,’’
which the Bulletin defines as scientific
information the agency reasonably can
determine will have, or does have, a
clear and substantial impact on
important public policies or private
sector decisions. 70 FR 2667.
In response to OMB’s Bulletin, DOE
conducted formal in-progress peer
reviews of the energy conservation
standards development process and
analyses and has prepared a Peer
Review Report pertaining to the energy
conservation standards rulemaking
analyses. Generation of this report
involved a rigorous, formal, and
documented evaluation using objective
criteria and qualified and independent
reviewers to make a judgment as to the
technical/scientific/business merit, the
actual or anticipated results, and the
productivity and management
effectiveness of programs and/or
projects. The ‘‘Energy Conservation
Standards Rulemaking Peer Review
Report’’ dated February 2007 has been
disseminated and is available at the
following Web site: www.eere.energy.
gov/buildings/appliance_standards/
peer_review.html.
VII. Public Participation
A. Attendance at the Public Meeting
The time, date, and location of the
public meeting are listed in the DATES
and ADDRESSES sections at the beginning
of this notice. If you plan to attend the
public meeting, please notify Ms.
Brenda Edwards at (202) 586–2945 or
brenda.edwards@ee.doe.gov. As
explained in the ADDRESSES section,
foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures.
In addition, you can attend the public
meeting via webinar. Webinar
registration information, participant
instructions, and information about the
capabilities available to webinar
participants will be published on DOE’s
Web site at: https://www.eere.energy.gov/
buildings/appliance_standards/
rulemaking.aspx/ruleid/59. Participants
are responsible for ensuring their
systems are compatible with the
webinar software.
B. Procedure for Submitting Prepared
General Statements for Distribution
Any person who has plans to present
a prepared general statement may
request that copies of his or her
statement be made available at the
public meeting. Such persons may
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submit requests, along with an advance
electronic copy of their statement in
PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file
format, to the appropriate address
shown in the ADDRESSES section at the
beginning of this notice. The request
and advance copy of statements must be
received at least one week before the
public meeting and may be emailed,
hand-delivered, or sent by mail. DOE
prefers to receive requests and advance
copies via email. Please include a
telephone number to enable DOE staff to
make follow-up contact, if needed.
C. Conduct of the Public Meeting
DOE will designate a DOE official to
preside at the public meeting and may
also use a professional facilitator to aid
discussion. The meeting will not be a
judicial or evidentiary-type public
hearing, but DOE will conduct it in
accordance with section 336 of EPCA
(42 U.S.C. 6306). A court reporter will
be present to record the proceedings and
prepare a transcript. DOE reserves the
right to schedule the order of
presentations and to establish the
procedures governing the conduct of the
public meeting. After the public
meeting, interested parties may submit
further comments on the proceedings as
well as on any aspect of the rulemaking
until the end of the comment period.
The public meeting will be conducted
in an informal, conference style. DOE
will present summaries of comments
received before the public meeting,
allow time for prepared general
statements by participants, and
encourage all interested parties to share
their views on issues affecting this
rulemaking. Each participant will be
allowed to make a general statement
(within time limits determined by DOE),
before the discussion of specific topics.
DOE will allow, as time permits, other
participants to comment briefly on any
general statements.
At the end of all prepared statements
on a topic, DOE will permit participants
to clarify their statements briefly and
comment on statements made by others.
Participants should be prepared to
answer questions by DOE and by other
participants concerning these issues.
DOE representatives may also ask
questions of participants concerning
other matters relevant to this
rulemaking. The official conducting the
public meeting will accept additional
comments or questions from those
attending, as time permits. The
presiding official will announce any
further procedural rules or modification
of the above procedures that may be
needed for the proper conduct of the
public meeting.
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A transcript of the public meeting will
be included in the docket, which can be
viewed as described in the Docket
section at the beginning of this notice.
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 notice.
Submitting comments via
www.regulations.gov. The
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 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
regulations.gov cannot be claimed as
CBI. Comments received through the
Web site will waive any CBI claims for
the information submitted. For
information on submitting CBI, see the
Confidential Business Information
section below.
DOE processes submissions made
through regulations.gov before posting.
Normally, comments will be posted
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59015
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
regulations.gov provides after you have
successfully uploaded your comment.
Submitting comments via email, hand
delivery/courier, or mail. Comments and
documents submitted via email, hand
delivery, or mail also will be posted to
regulations.gov. If you do not want your
personal contact information to be
publicly viewable, do not include it in
your comment or any accompanying
documents. Instead, provide your
contact information in a cover letter.
Include your first and last names, email
address, telephone number, and
optional mailing address. The cover
letter will not be publicly viewable as
long as it does not include any
comments
Include contact information each time
you submit comments, data, documents,
and other information to DOE. If you
submit via mail or hand delivery/
courier, please provide all items on a
CD, if feasible. It is not necessary to
submit printed copies. No facsimiles
(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.
According 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, postal mail, or
hand delivery/courier 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.
Submit these documents via email or on
a CD, if feasible. DOE will make its own
determination about the confidential
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status of the information and treat it
according to its determination.
Factors of interest to DOE when
evaluating requests to treat submitted
information as confidential include: (1)
A description of the items; (2) whether
and why such items are customarily
treated as confidential within the
industry; (3) whether the information is
generally known by or available from
other sources; (4) whether the
information has previously been made
available to others without obligation
concerning its confidentiality; (5) an
explanation of the competitive injury to
the submitting person which would
result from public disclosure; (6) when
such information might lose its
confidential character due to the
passage of time; and (7) why disclosure
of the information would be contrary to
the public interest.
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. Use of the IEER as the cooling
efficiency metric and COP as the heating
efficiency metric (for CUHP) for the
proposed energy conservation
standards, including additional data and
input regarding the uncertainty of IEER
test measurements. (See section III.A of
this notice for additional information.)
2. Comment on whether the test
procedure for air-cooled CUAC and
CUHP should be amended to revise the
weightings for the IEER metric to place
a higher weighting value on the fullload efficiency. DOE also requests data
to determine appropriate weighting
factors for the full-load test condition
and part-load test conditions (75
percent, 50 percent, and 25 percent of
capacity). (See section III.A of this
notice for additional information.)
3. DOE requests comments and
detailed information regarding any
design features, including dual-duct air
conditioners, that DOE should consider
for establishing separate equipment
classes in this rulemaking. DOE requests
that such information provide test data
illustrating the additional challenges
faced by models having such design
features and a discussion of the
customer utility aspects of the design
feature. In particular, DOE requests
detailed comments regarding the
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definition of such equipment classes,
and any detailed information, such as
test data, test conditions, key
component design details, as well as
other relevant information (e.g., fan
power consumption) that may help DOE
evaluate potential alternative equipment
class standard levels. See section IV.A.2
of this notice for additional
information.)
4. Comment and data regarding
additional design options or variants of
the considered design options that can
increase the range of considered
efficiency improvements, including
design options that may not yet be
found on the market. (See section IV.A.3
of this notice for additional
information.)
5. The incremental and max-tech
efficiency levels identified for the
analyses, including whether the
efficiency levels identified by DOE can
be achieved using the technologies
screened-in during the screening
analysis (see section IV.B), and whether
higher efficiencies are achievable using
technologies that were screened-in
during the screening analysis. Also,
DOE seeks comment on the approach of
extrapolating the efficiency levels from
the small, large, and very large CUAC
with electric resistance heating or no
heating equipment classes to the
remaining equipment classes using the
IEER differentials in ASHRAE Standard
90.1–2010 draft addendum CL. In
addition, input and data on the
approach for determining the COP
levels for the heat pump equipment
classes using the relationship between
IEER and COP. (See section IV.C.3 of
this for additional information.)
6. Comments, information, and data
that would inform adjustment of energy
modeling input and/or results that
would allow more accurate
representation of the energy use impacts
of design options using the modeling
tools developed by the Center for
Environmental Energy Engineering from
the University of Maryland College
Park. (See section IV.C.4 of this notice
for additional information.)
7. Input and data on the estimated
incremental manufacturing costs,
including the extrapolation of
incremental costs for equipment classes
not fully analyzed, in particular for heat
pump equipment classes. (See section
IV.C.4 of this notice for additional
information.)
8. Comments, information, and data
that could be used to modify the
proposed method for using laboratory
and modeled IEER test data, which were
developed in accordance to AHRI
Standard 340/360–2007, to calculate the
performance of CUAC equipment at
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part-load conditions. (See section IV.E.1
of this notice for additional
information.)
9. Comments on the use of a
‘‘generalized building sample’’ to
characterize the energy consumption of
CUAC equipment in the commercial
building stock. Specifically, whether
there are any data or information that
could improve the method for
translating the results from the 1,033
simulated buildings to the generalized
building sample. (See section IV.E.2 of
this notice for additional information.)
10. Whether using RS Means cost data
to develop maintenance, repair, and
installation costs for CUAC and CUHP
equipment is appropriate, and if not,
what data should be used. (See section
IV.F.6 of this notice for additional
information.)
11. Comments, information and data
on the equipment lifetimes developed
for CUAC and CUHP equipment.
Specifically, any information that would
indicate whether the retirement
functions yielding median lifetimes of
18.7 years and 15.4 years for CUAC and
CUHP equipment, respectively, are
reasonable. (See section IV.F.7 of this
notice for additional information.)
12. Comments, information and data
on the base case efficiency distributions
of CUAC equipment. Given that
historical market share efficiency data
from 1999–2001 were used to inform a
consumer choice model in the
shipments analysis to develop estimated
base case efficiency distributions in the
compliance year (2019), DOE seeks
more recent historical market share
efficiency data would be useful for
validating the estimated base case
efficiency distributions. (See section
IV.F.9 of this notice for additional
information.)
13. Comments, information and data
on the methods used to develop the two
consumer choice models in the
shipments analysis—i.e. one model for
estimating the selection of CUAC and
CUHP equipment by efficiency level
and another model for the repair vs.
replacement decision. With regards to
the repair vs. replacement decision, the
model is based on estimates of the cost
of repair vs. the cost of new equipment.
Field data for repair costs and how they
vary with equipment first cost and age
would allow DOE to refine its
shipments forecasting by more precisely
modeling the repair vs. replace decision
sensitivity to the difference in repair
and replacement equipment costs. (See
section IV.G of this notice for additional
information.)
14. Comments, information and data
regarding the lifetime of repaired
equipment. DOE’s analysis considered
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major repair consisting of replacement
of the compressor and miscellaneous
materials associated with the
compressor; DOE estimated that
repaired equipment would last as long
as new replacement equipment.
Information is requested to determine
whether this estimate is reasonable. (See
section IV.G of this notice for additional
information.)
15. Comments, information, and data
on the repair of CUACs and CUHPs in
the ≥240,000 Btu/h and <760,000 Btu/h
equipment classes. For this equipment,
the shipments analysis estimated that
any equipment experiencing their first
failure would be repaired rather than
replaced. Information is requested to
determine whether this estimate is
reasonable. (See section IV.G of this
notice for additional information.)
16. Comments on its decision to not
include a rebound effect for moreefficient CUAC and CUHP. (See section
IV.H of this notice for additional
information.)
17. Comments, information, and data
that would inform adjustment of the
DOE’s estimate of $12.7M in conversion
costs that occur in the base case. (See
section IV.J.2.a of this notice for
additional information.)
18. DOE solicits comment on the
application of the new SCC values used
to determine the social benefits of CO2
emissions reductions over the
rulemaking analysis period. In
particular, the agency solicits comment
on its derivation of SCC values after
2050, where the agency applied the
average annual growth rate of the SCC
estimates in 2040–2050 associated with
each of the four sets of values. (See
section IV.L of this notice for additional
information.) Comments, information,
and data on the capital conversion costs
and product conversion costs estimated
for each TSL. In particular, DOE seeks
comment on the conversion costs at
max-tech. (See section V.B.2.a of this
notice for additional information.)
19. Comments, information, and data
on capacity constraints at each TSL—
including production capacity
constraints, engineering resource
constraints, and testing capacity
constraints that are directly related to an
amended standard for small, large, and
very large CUAC and CUHP. In
particular, DOE requests comment on
whether the proposed effective allows
for a sufficient conversion period to
make the equipment design and facility
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updates necessary to meet an amended
standard. (See section V.B.2.c of this
notice for additional information.)
20. DOE requests comment on the
identified regulations and their
contribution to cumulative regulatory
burden. Additionally, DOE requests
feedback on product-specific regulations
that take effect between 2016 and 2022
that were not listed, including
identification of the specific regulations
and data quantifying the associated
burdens. (See section V.B.2.e of this
notice for additional information.)
21. For this rulemaking, DOE
analyzed the effects of potential
standards on equipment purchased over
a 30-year period, and it undertook a
sensitivity analysis using 9 years rather
than 30 years of product shipments. The
choice of a 30-year period of shipments
is consistent with the DOE analysis for
other products and commercial
equipment. 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
amended standards. DOE is seeking
input on ways to refine the analytic
timeline. (See section V.B.3.a of this
notice for additional information.)
22. Comments, information, and data
on the number of small businesses in
the industry, the names of those small
businesses, and their role in the market.
(See section VI.B.1 of this notice for
additional information.)
23. DOE requests data on the cost of
capital for small manufacturers to better
quantify how small manufacturers
might be disadvantaged relative to large
competitors. (See section VI.B.2 of this
notice for additional information.)
24. DOE requests comment and data
on the impact of the proposed standard
on small business manufacturers,
including any potential cumulative
regulatory effects.
25. DOE also seeks comment on
whether there are features or attributes
of the more energy-efficient CUAC and
CUHP that manufacturers would
produce to meet the standards in this
proposed rule that might affect how
they would be used by consumers. DOE
requests comment specifically on how
any such effects should be weighed in
the choice of standards for the final rule.
(See section IV.A.3 of this notice for
additional information.)
26. Input on regulatory alternatives to
consider that would lessen the impact of
the rulemaking on small business.
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59017
VIII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this proposed rule.
List of Subjects in 10 CFR Part 431
Administrative practice and
procedure, Confidential business
information, Energy conservation,
Household appliances, Imports,
Intergovernmental relations, Reporting
and recordkeeping requirements, and
Small businesses.
Issued in Washington, DC, on September
18, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and
Renewable 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
1. The authority citation for part 431
continues to read as follows:
■
Authority: 42 U.S.C. 6291–6317.
2. Section 431.97 is amended by:
a. Revising paragraph (b) including
Tables 1 through 3;
■ b. Redesignating Tables 4 through 8 as
Tables 5 through 9;
■ c. Adding new Table 4; and
■ c. Revising paragraph (c).
The revision and additions read as
follows:
■
■
§ 431.97 Energy efficiency standards and
their compliance dates.
*
*
*
*
*
(b) Each commercial air conditioner
or heat pump (not including single
package vertical air conditioners and
single package vertical heat pumps,
packaged terminal air conditioners and
packaged terminal heat pumps,
computer room air conditioners, and
variable refrigerant flow systems)
manufactured starting on the
compliance date listed in the
corresponding table must meet the
applicable minimum energy efficiency
standard level(s) set forth in Tables 1, 2,
3, and 4 of this section.
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TABLE 1 TO § 431.97—MINIMUM COOLING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND HEATING EQUIPMENT
[Not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged
terminal heat pumps, computer room air conditioners, and variable refrigerant flow multi-split air conditioners and heat pumps]
Equipment type
Cooling capacity
Subcategory
Small Commercial Packaged AirConditioning and Heating Equipment (Air-Cooled, 3 Phase).
Small Commercial Packaged AirConditioning and Heating Equipment (Air-Cooled).
<65,000 Btu/h ....
≥65,000 Btu/h
and <135,000
Btu/h.
Efficiency level
AC
HP
All .......................
All .......................
SEER = 13 .......................
SEER = 13 .......................
June 16, 2008.
June 16, 2008.
AC
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
All .......................
All .......................
All .......................
All .......................
EER = 11.2 ......................
EER = 11.0 ......................
January 1, 2010.1
January 1, 2010.1
EER = 11.0 ......................
January 1, 2010.1
EER = 10.8 ......................
January 1, 2010.1
EER = 11.0 ......................
EER = 10.8 ......................
January 1, 2010.1
January 1, 2010.1
EER = 10.6 ......................
January 1, 2010.1
EER = 10.4 ......................
January 1, 2010.1
EER = 10.0 ......................
EER = 9.8 ........................
January 1, 2010.1
January 1, 2010.1
EER = 9.5 ........................
January 1, 2010.1
EER = 9.3 ........................
January 1, 2010.1
EER
EER
EER
EER
October
October
October
October
HP
Large Commercial Packaged AirConditioning and Heating Equipment (Air-Cooled).
≥135,000 Btu/h
and <240,000
Btu/h.
AC
Heating Equipment (Air-Cooled) ....
>240,000 Btu/h ..
HP
Very Large Commercial Packaged
Air-Conditioning and Heating
Equipment (Air-Cooled).
≥240,000 Btu/h
and <760,000
Btu/h.
AC
HP
Small Commercial Packaged AirConditioning and Heating Equipment (Water-Cooled, Evaporatively-Cooled,
and
WaterSource).
<17,000 Btu/h ....
≥17,000 Btu/h
and <65,000
Btu/h.
AC
HP
AC
HP
≥65,000 Btu/h
and <135,000
Btu/h.
Large Commercial Packaged AirConditioning and Heating Equipment (Water-Cooled, Evaporatively-Cooled,
and
WaterSource).
Very Large Commercial Packaged
Air-Conditioning and Heating
Equipment (Water-Cooled, Evaporatively-Cooled, and WaterSource).
AC
≥135,000 Btu/h
and <240,000
Btu/h.
≥240,000 Btu/h
and <760,000
Btu/h.
HP
AC
HP
AC
HP
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Compliance date:
products manufactured
on and after . . .
Heating type
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
All .......................
All .......................
All .......................
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
=
=
=
=
12.1
11.2
12.1
12.0
......................
......................
......................
......................
29,
29,
29,
29,
2003.
2003.
2003.
2003.
EER = 11.5 ......................
October 29, 2003.2
EER = 11.3 ......................
October 29, 2003.2
EER = 12.0 ......................
EER = 11.0 ......................
EER = 11.0 ......................
October 29, 2003.2
October 29, 2004.3
October 29, 2004.3
EER = 11.0 ......................
EER = 10.8 ......................
January 10, 2011.3
January 10, 2011.3
EER = 11.0 ......................
January 10, 2011.3
EER = 10.8 ......................
January 10, 2011.3
1 And manufactured before [date 3 years after final rule Federal Register publication]. See Table 3 of this section for updated efficiency standards.
2 And manufactured before June 1, 2013. See Table 3 of this section for updated efficiency standards.
3 And manufactured before June 1, 2014. See Table 3 of this section for updated efficiency standards.
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59019
TABLE 2 TO § 431.97—MINIMUM HEATING EFFICIENCY STANDARDS FOR AIR CONDITIONING AND HEATING EQUIPMENT
[Heat pumps]
Equipment type
Compliance date: Products
manufactured on and
after . . .
Cooling capacity
Small Commercial Packaged Air-Conditioning
Heating Equipment (Air-Cooled, 3 Phase).
Small Commercial Packaged Air-Conditioning
Heating Equipment (Air-Cooled).
Large Commercial Packaged Air-Conditioning
Heating Equipment (Air-Cooled).
Very Large Commercial Packaged Air-Conditioning
Heating Equipment (Air-Cooled).
Small Commercial Packaged Air-Conditioning
Heating Equipment (Water-Source).
Efficiency level
and
<65,000 Btu/h ....................
HSPF = 7.7 .......................
June 16, 2008.
and
≥65,000 Btu/h and
<135,000 Btu/h.
≥135,000 Btu/h and
<240,000 Btu/h.
≥240,000 Btu/h and
<760,000 Btu/h.
<135,000 Btu/h ..................
COP = 3.3 .........................
January 1, 2010.1
COP = 3.2 .........................
January 1, 2010.1
COP = 3.2 .........................
January 1, 2010.1
COP = 4.2 .........................
October 29, 2003.
and
and
and
1 And manufactured before [date 3 years after final rule FEDERAL REGISTER publication]. See Table 4 of this section for updated heating efficiency standards.
TABLE 3 TO § 431.97—UPDATES TO THE MINIMUM COOLING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND
HEATING EQUIPMENT
[Not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged
terminal heat pumps, computer room air conditioners, and variable refrigerant flow multi-split air conditioners and heat pumps]
Compliance date:
Products manufactured on
and after . . .
Equipment type
Cooling capacity
Sub-category
Heating type
Efficiency level
Small Commercial Packaged AirConditioning and Heating Equipment (Air-Cooled).
≥65,000 Btu/h
and <135,000
Btu/h.
AC ..........
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
IEER = 14.8 .....................
IEER = 14.6 .....................
[date 3 years after final
rule Federal Register
publication].
IEER = 14.1 .....................
IEER = 113.9 ...................
[date 3 years after final
rule Federal Register
publication].
IEER = 14.2 .....................
IEER = 14.0 .....................
[date 3 years after final
rule Federal Register
publication].
IEER = 13.4 .....................
IEER = 13.2 .....................
[date 3 years after final
rule Federal Register
publication].
IEER = 13.5 .....................
IEER = 13.3 .....................
[date 3 years after final
rule Federal Register
publication]
IEER = 12.5 .....................
IEER = 12.3 .....................
[date 3 years after final
rule Federal Register
publication]
EER = 12.1 ......................
EER = 11.9 ......................
June 1, 2013.
June 1, 2013.
EER = 12.5 ......................
EER = 12.3 ......................
June 1, 2014.
June 1, 2014.
EER = 12.4 ......................
EER = 12.2 ......................
June 1, 2014.
June 1, 2014.
HP ..........
Large Commercial Packaged AirConditioning and Heating Equipment (Air-Cooled).
≥135,000 Btu/h
and <240,000
Btu/h.
AC ..........
HP ..........
Very Large Commercial Packaged
Air-Conditioning and Heating
Equipment (Air-Cooled).
≥240,000 Btu/h
and <760,000
Btu/h.
AC ..........
HP ..........
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Small Commercial Packaged AirConditioning and Heating Equipment (Water-Cooled).
≥65,000 Btu/h
and <135,000
Btu/h.
................
Large Commercial Packaged AirConditioning and Heating Equipment (Water-Cooled).
≥135,000 Btu/h
and <240,000
Btu/h.
................
Very Large Commercial Packaged
Air-Conditioning and Heating
Equipment (Water-Cooled).
≥240,000 Btu/h
and <760,000
Btu/h.
................
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TABLE 3 TO § 431.97—UPDATES TO THE MINIMUM COOLING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND
HEATING EQUIPMENT—Continued
[Not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged
terminal heat pumps, computer room air conditioners, and variable refrigerant flow multi-split air conditioners and heat pumps]
Compliance date:
Products manufactured on
and after . . .
Equipment type
Cooling capacity
Sub-category
Heating type
Efficiency level
Small Commercial Packaged AirConditioning and Heating Equipment (Evaporatively-Cooled).
≥65,000 Btu/h
and <135,000
Btu/h.
................
EER = 12.1 ......................
EER = 11.9 ......................
June 1, 2013.
June 1, 2013.
Large Commercial Packaged AirConditioning and Heating Equipment (Evaporatively-Cooled).
≥135,000 Btu/h
and <240,000
Btu/h.
................
EER = 12.0 ......................
EER = 11.8 ......................
June 1, 2014.
June 1, 2014.
Very Large Commercial Packaged
Air-Conditioning and Heating
Equipment
(EvaporativelyCooled).
≥240,000 Btu/h
and <760,000
Btu/h.
................
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
Electric Resistance Heating
or No Heating.
All Other Types
of Heating.
EER = 11.9 ......................
EER = 11.7 ......................
June 1, 2014.
June 1, 2014.
TABLE 4 TO § 431.97—UPDATES TO THE MINIMUM HEATING EFFICIENCY STANDARDS FOR AIR-COOLED AIR CONDITIONING
AND HEATING EQUIPMENT
[Heat pumps]
Equipment type
Small Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled).
Large Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled).
Very Large Commercial Packaged AirConditioning and Heating Equipment
(Air-Cooled).
1 For
≥65,000 Btu/h and
<135,000 Btu/h.
≥135,000 Btu/h and
<240,000 Btu/h.
≥240,000 Btu/h and
<760,000 Btu/h.
Efficiency
level 1
Electric Resistance Heating or
No Heating.
All Other Types of Heating
Resistance Heating or No
Heating.
All Other Types of Heating
Resistance Heating or No
Heating.
All Other Types of Heating
COP = 3.5 ...
COP = 3.4 ...
COP = 3.3 ...
COP = 3.2 ...
Compliance date: Products
manufactured on and after
. . .
[date 3 years after final rule
Federal Register publication].
[date 3 years after final rule
Federal Register publication]
[date 3 years after final rule
Federal Register publication]
units tested by AHRI Standards, all COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled equipment.
(c) Each packaged terminal air
conditioner (PTAC) and packaged
terminal heat pump (PTHP)
manufactured starting on January 1,
1994, but before October 8, 2012 (for
standard size PTACs and PTHPs) and
before October 7, 2010 (for non-standard
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Cooling capacity
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size PTACs and PTHPs) must meet the
applicable minimum energy efficiency
standard level(s) set forth in Table 5 of
this section. Each standard size PTAC
and PTHP manufactured starting on
October 8, 2012, and each non-standard
size PTAC and PTHP manufactured
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starting on October 7, 2010, must meet
the applicable minimum energy
efficiency standard level(s) set forth in
Table 6 of this section.
*
*
*
*
*
[FR Doc. 2014–22894 Filed 9–29–14; 8:45 am]
BILLING CODE 6450–01–P
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]]>Agencies
[Federal Register Volume 79, Number 189 (Tuesday, September 30, 2014)]
[Proposed Rules]
[Pages 58947-59020]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22894]
[[Page 58947]]
Vol. 79
Tuesday,
No. 189
September 30, 2014
Part IV
Department of Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for Small,
Large, and Very Large Air-Cooled Commercial Package Air Conditioning
and Heating Equipment; Proposed Rule
Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 /
Proposed Rules
[[Page 58948]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE-2013-BT-STD-0007]
RIN 1904-AC95
Energy Conservation Program: Energy Conservation Standards for
Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking (NOPR) and public meeting.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as
amended, prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
small, large, and very large air-cooled commercial package air
conditioning and heating equipment. EPCA also requires the U.S.
Department of Energy (DOE) to determine whether more-stringent, amended
standards would be technologically feasible and economically justified,
and would save a significant amount of energy. In this document, DOE
proposes to amend the energy conservation standards for small, large,
and very large air-cooled commercial package air conditioning and
heating equipment. This document also announces a public meeting to
receive comment on these proposed standards and associated analyses and
results.
DATES: DOE will hold a public meeting on Thursday, November 6, 2014,
from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also be
broadcast as a webinar. See section VII Public Participation for
webinar registration information, participant instructions, and
information about the capabilities available to webinar participants.
DOE will accept comments, data, and information regarding this
notice of proposed rulemaking (NOPR) before and after the public
meeting, but no later than December 1, 2014. See section VII Public
Participation for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 4A-104, 1000 Independence Avenue SW.,
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at
(202) 586-2945. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures. Any
foreign national wishing to participate in the meeting should advise
DOE as soon as possible by contacting Ms. Edwards to initiate the
necessary procedures. Please also note that those wishing to bring
laptops into the Forrestal Building will be required to obtain a
property pass. Visitors should avoid bringing laptops, or allow an
extra 45 minutes. Persons can attend the public meeting via webinar.
For more information, refer to the Public Participation section VII.
Any comments submitted must identify the NOPR for Energy
Conservation Standards for small, large, and very large air-cooled
commercial package air conditioning and heating equipment, and provide
docket number EE-2013-BT-STD-0007 and/or regulatory information number
(RIN) number 1904-AC95. Comments may be submitted using any of the
following methods:
1. Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: CommPkgACHP2013STD0007@ee.doe.gov. Include the docket
number and/or RIN in the subject line of the message.
3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building
Technologies Program, Mailstop EE-5B, 1000 Independence Avenue SW.,
Washington, DC 20585-0121. If possible, please submit all items on a
CD. It is not necessary to include printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD, in which case it is not necessary to
include printed copies.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy through the methods listed above and by email to
ChadSWhiteman@omb.eop.gov.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section VII of this document
(Public Participation).
Docket: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at regulations.gov. All
documents in the docket are listed in the regulations.gov index.
However, some documents listed in the index, such as those containing
information that is exempt from public disclosure, may not be publicly
available.
A link to the docket Web page can be found at: https://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0007. This Web
page will contain a link to the docket for this notice on the
regulations.gov site. The regulations.gov Web page will contain simple
instructions on how to access all documents, including public comments,
in the docket. See section VII for further information on how to submit
comments through www.regulations.gov.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact Ms. Brenda Edwards at (202) 586-2945 or by email:
Brenda.Edwards@ee.doe.gov.
FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-5B, 1000 Independence Avenue SW., Washington,
DC 20585-0121. Telephone: (202)-287-1692. Email:
John.Cymbalsky@ee.doe.gov.
Mr. Michael Kido, U.S. Department of Energy, Office of the General
Counsel, Mailstop GC-71, 1000 Independence Avenue SW., Washington, DC
20585-0121. Telephone: (202) 586-8145. Email: Michael.Kido@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
A. Benefits and Costs to Customers
B. Impact on Manufacturers
C. National Benefits
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Small, Large, and Very
Large Air-Cooled Commercial Package Air Conditioning and Heating
Equipment
III. General Discussion
A. Energy Efficiency Descriptor
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Life-Cycle Cost
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
[[Page 58949]]
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. General
2. Scope of Coverage and Equipment Classes
3. Technology Options
B. Screening Analysis
C. Engineering Analysis
1. Methodology
2. Baseline Efficiency Levels
3. Incremental Efficiency Levels
4. Equipment Testing, Reverse Engineering, Energy Modeling, and
Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
1. Energy Use Simulations
2. Generalized Building Sample
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Costs
2. Installation Costs
3. Unit Energy Consumption
4. Electricity Prices and Electricity Price Trends
5. Maintenance Costs
6. Repair Costs
7. Lifetime
8. Discount Rate
9. Base Case Market Efficiency Distribution
10. Compliance Date
11. Payback Period Inputs
12. Rebuttable-Presumption Payback Period
G. Shipments Analysis
1. Shipments by Market Segment
2. Shipment Market Shares by Efficiency Level
H. National Impact Analysis
1. Efficiency Trends
2. National Energy Savings
3. Net Present Value of Customer Benefit
a. Total Annual Installed Cost
b. Total Annual Operating Cost Savings
I. Customer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
c. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions Reductions
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Customers
a. Life-Cycle Cost and Payback Period
b. Customer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Customer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Summary of National Economic Impacts
8. Other Factors
C. Proposed Standards
1. Benefits and Burdens of Trial Standard Levels Considered for
Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment
2. Summary of Benefits and Costs (Annualized) of the Proposed
Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description and Estimated Number of Small Entities Regulated
2. Description and Estimate of Compliance Requirements
3. Duplication, Overlap, and Conflict with Other Rules and
Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared General Statements For
Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles. Pursuant to EPCA, any new or amended
energy conservation standard that DOE prescribes for certain equipment,
such as small, large, and very large air-cooled commercial package air
conditioning and heating equipment (also known as commercial unitary
air conditioners and heat pumps), shall be designed to achieve the
maximum improvement in energy efficiency that is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)).
Furthermore, the new or amended standard must result in a significant
conservation of energy. (42 U.S.C. 6313(a)(6)(A)(ii)(II)). In
accordance with these and other statutory provisions discussed in this
notice, including EPCA's requirement that DOE review its standards for
this equipment every six years, DOE proposes amended energy
conservation standards for small, large, and very large air-cooled
commercial package air conditioning and heating equipment (also
referred to in this notice as small, large, and very large air-cooled
commercial unitary air conditioners and commercial unitary heat pumps).
The proposed standards, which are collectively characterized as Trial
Standard Level 3 (TSL 3), prescribe the minimum allowable efficiency
level based on an integrated energy efficiency ratio (IEER) and, for
air-cooled commercial unitary heat pumps, coefficient of performance
(COP). These proposed levels are shown in Table I.1. These proposed
standards, if adopted, would apply to all equipment listed in Table I.1
and manufactured in and intended for distribution and sale in the U.S.,
or imported into, the U.S. on or after the date three years after the
publication of the final rule for this equipment.
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
[[Page 58950]]
Table I.1--Proposed Energy Conservation Standards for Small, Large, and Very Large Commercial Package Air
Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Equipment type Heating type Proposed energy conservation
standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air AC Electric Resistance 14.8 IEER.
Conditioners (AC) and Heat Pump Heating or No Heating. 14.6 IEER.
(HP) (Air-Cooled)-->=65,000 Btu/ All Other Types of
h and <135,000 Btu/h Cooling Heating.
Capacity.
HP Electric Resistance 14.1 IEER, 3.5 COP.
Heating or No Heating. 13.9 IEER, 3.4 COP.
All Other Types of
Heating.
Large Commercial Packaged AC and AC Electric Resistance 14.2 IEER.
HP (Air-Cooled)-->=135,000 Btu/h Heating or No Heating. 14.0 IEER.
and <240,000 Btu/h Cooling All Other Types of
Capacity. Heating.
HP Electric Resistance 13.4 IEER, 3.3 COP.
Heating or No Heating. 13.2 IEER, 3.3 COP.
All Other Types of
Heating.
Very Large Commercial Packaged AC AC Electric Resistance 13.5 IEER.
and HP (Air-Cooled)-->=240,000 Heating or No Heating. 13.3 IEER.
Btu/h and <760,000 Btu/h Cooling All Other Types of
Capacity. Heating.
HP Electric Resistance 12.5 IEER, 3.2 COP.
Heating or No Heating. 12.3 IEER, 3.2 COP.
All Other Types of
Heating.
----------------------------------------------------------------------------------------------------------------
A. Benefits and Costs to Customers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on customers of small, large, and very large air-
cooled commercial unitary air conditioners (CUAC), as measured by the
average life-cycle cost (LCC) savings and the median payback period.\2\
The average LCC savings are positive for all CUAC equipment classes,
and the PBP is less than the average lifetime of the equipment, which
is estimated to be 18.4 years. These classes account for approximately
90 percent of total shipments of small, large, and very large air-
cooled CUAC and commercial unitary heat pumps (CUHP).\3\
---------------------------------------------------------------------------
\2\ The payback period measures the amount of time it takes for
savings in operating costs to equal the incremental cost increase.
\3\ DOE did not analyze LCC impacts for small, large, and very
large air-cooled CUHP because energy modeling was performed only for
CUAC equipment. The reasons for this approach are discussed in
section IV.C.4.
Table I.2--Impacts of Proposed Standards on Customers of Small, Large,
and Very Large Commercial Package Air Conditioning and Heating Equipment
------------------------------------------------------------------------
Median
Average LCC payback
Equipment class savings period
(2013$) (years)
------------------------------------------------------------------------
Small Commercial Packaged Air 4,779 3.9
Conditioners-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity........
Large Commercial Packaged Air 3,469 6.6
Conditioners-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity........
Very Large Commercial Packaged Air 16,477 2.5
Conditioners-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity........
------------------------------------------------------------------------
DOE's analysis of the impacts of the proposed standards on
consumers is described in section IV.F of this proposed rulemaking.
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 (2014) through the end of
the analysis period (2048). Using a real discount rate of 6.2 percent,
DOE estimates that the industry net present value for manufacturers is
$1,261 million.\4\ Under the proposed standards, DOE expects that INPV
will be reduced by 7.02 to 24.71 percent, which is a reduction of
approximately $88.55 to $311.58 million. Based on comments from
manufacturers of covered equipment, the industry is currently going
through an extended period of consolidation. It is possible that the
proposed standards would contribute to continued consolidation.
---------------------------------------------------------------------------
\4\ All monetary values in this document are expressed in 2013
dollars and, where appropriate, are discounted to 2014 unless
explicitly stated otherwise.
---------------------------------------------------------------------------
DOE's analysis of the impacts of the proposed standards on
manufacturers is described in section IV.J of this proposed rulemaking.
C. National Benefits and Costs
DOE's analyses indicate that the proposed standards would save a
significant amount of energy. The lifetime savings for small, large,
and very large air-cooled CUAC and CUHP purchased in the 30-year period
that begins in the year of compliance with amended standards (2019-
2048), in comparison to the base case without amended standards, amount
to 11.7 quadrillion Btu of energy (quads).\5\ This is a savings of 29
percent relative to the energy use of this equipment in the base
case.\6\
---------------------------------------------------------------------------
\5\ A quad is equal to 10\15\ British thermal units (Btu).
\6\ The base case assumptions are described in section IV.H.
---------------------------------------------------------------------------
The cumulative net present value (NPV) of total customer costs and
savings of the proposed standards for small, large, and very large air-
cooled CUAC and CUHP ranges from $16.5 billion to $50.8 billion for 7-
percent and 3-percent discount rates, respectively. This NPV expresses
the estimated total value of future operating-cost savings minus the
estimated increased product costs for products purchased in 2019-2048.
In addition, the proposed standards would have significant
environmental benefits.\7\ The energy savings described
[[Page 58951]]
above are estimated to result in cumulative emission reductions of
1,085 million metric tons (Mt) \8\ of carbon dioxide (CO2),
3,072 thousand tons of methane (CH4), 15.5 thousand tons of
nitrous oxide (N2O), 2,934 thousand tons of sulfur dioxide
(SO2), 1,021 thousand tons of nitrogen oxides
(NOX) and 3.57 tons of mercury (Hg).\9\ The estimated
CO2 emissions reductions through 2030 amount to 64 Mt.\10\
These projections are expected to change in light of recently available
data from the estimated from the Annual Energy Outlook (AEO) 2014 data,
which suggest a drop in potential emissions reductions over a similar
period of time.
---------------------------------------------------------------------------
\7\ DOE calculated emissions reductions relative to the Annual
Energy Outlook 2013 (AEO 2013) Reference case, which generally
represents current legislation and environmental regulations for
which implementing regulations were available as of December 31,
2012. Emissions factors based on the Annual Energy Outlook 2014 (AEO
2014), which became available too late for incorporation into this
analysis, indicate that a significant decrease in the cumulative
emission reductions of carbon dioxide, methane, nitrous oxide,
sulfur dioxide, nitrogen oxides and mercury from the proposed
standards can be expected if the projections of power plant
utilization assumed in AEO 2014 are realized. For example, the
estimated amount of cumulative emission reductions of CO2 are
expected to decrease by 36% from DOE's current estimate (from 1,085
Mt to 697Mt) based on the projections in AEO 2014 relative to AEO
2013. The monetized benefits from GHG reductions would likely
decrease by a comparable amount. DOE plans to use emissions factors
based on the most recent AEO available for the next phase of this
rulemaking, which may or may not be AEO 2014, depending on the
timing of the issuance of the next rulemaking document.
\8\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\9\ The reductions are measured over the period in which
equipment purchased in 2019-2048 continue to operate.
\10\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a 36% decrease in
cumulative emissions reductions for CO2 thus decreasing
the estimate of 64 Mt of CO2 reductions through the year 2030 to 41
Mt. In the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed by an interagency
process.\11\ The derivation of the SCC values is discussed in section
IV.L. Using discount rates appropriate for each set of SCC values (see
Table I.3), DOE estimates the present monetary value of the
CO2 emissions reduction to be between $6.1 billion and $95.9
billion, with a value of $30.9 billion using the central SCC case
represented by $40.5[sol]t in 2015. Additionally, DOE estimates the
present monetary value of the NOX emissions reduction to be
$343 million and $1,060 million at 7-percent and 3-percent discount
rates, respectively.
---------------------------------------------------------------------------
\11\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government.
May 2013; revised November 2013. https://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
---------------------------------------------------------------------------
Table I.3 summarizes the national economic costs and benefits
expected to result from the proposed standards for small, large, and
very large air-cooled CUAC and CUHP.
Table I.3--Summary of National Economic Benefits and Costs of Proposed
Energy Conservation Standards for Small, Large, and Very Large
Commercial Package Air Conditioning and Heating Equipment *
------------------------------------------------------------------------
Present value Discount rate
Category billion 2013$ (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings.............. 20.6 7
59.7 3
CO2 Reduction Monetized Value ($12.0/ 6.1 5
t case) **.........................
CO2 Reduction Monetized Value ($40.5/ 30.9 3
t case) **.........................
CO2 Reduction Monetized Value ($62.4/ 49.9 2.5
t case) **.........................
CO2 Reduction Monetized Value ($119/ 95.9 3
t case) **.........................
NOX Reduction Monetized Value (at 0.3 7
$2,684/ton) **.....................
1.1 3
Total Benefits [dagger]............. 51.9 7
91.6 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Incremental Installed Costs......... 4.1 7
8.8 3
------------------------------------------------------------------------
Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction 47.8 7
Monetized Value [dagger]...........
82.8 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with small,
large, and very large air-cooled CUAC and CUHP shipped in 2019-2048.
These results include benefits to customers which accrue after 2048
from the products purchased in 2019-2048. The results account for the
incremental variable and fixed costs incurred by manufacturers due to
the standard, some of which may be incurred in preparation for the
rule.
** The CO2 values represent global monetized values of the SCC, in
2013$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated
using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
represents the 95th percentile of the SCC distribution calculated
using a 3% discount rate. The SCC time series used by DOE incorporate
an escalation factor. The value for NOX is the average of the low and
high values found in the literature.\12\
[dagger] Total Benefits for both the 3% and 7% cases are derived using
the series corresponding to average SCC with 3-percent discount rate.
The benefits and costs of today's proposed standards, for products
sold in 2019-2048, can also be expressed in terms of annualized values.
The annualized monetary values are the sum of (1) the annualized
national economic
[[Page 58952]]
value of the benefits from consumer operation of products that meet the
proposed standards; consisting primarily of operating cost savings from
using less energy, minus increases in equipment purchase and
installation costs, which is another way of representing customer NPV,
and (2) the annualized monetary value of the benefits of CO2
and NOX emission reductions.\13\
---------------------------------------------------------------------------
\12\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
\13\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the year used for discounting
the NPV of total customer costs and savings, for the time-series of
costs and benefits using discount rates of three and seven percent
for all costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates, as
shown in Table I.4. From the present value, DOE then calculated the
fixed annual payment over a 30-year period (2019 through 2048) that
yields the same present value. The fixed annual payment is the
annualized value. Although DOE calculated annualized values, this
does not imply that the time-series of cost and benefits from which
the annualized values were determined is a steady stream of
payments.
---------------------------------------------------------------------------
Although combining the values of operating savings and
CO2 emission reductions provides a useful perspective, two
issues should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of small, large, and very
large air-cooled CUAC and CUHP shipped in 2019-2048. The SCC values, on
the other hand, reflect the present value of some future climate-
related impacts resulting from the emission of one ton of carbon
dioxide in each year. These impacts continue well beyond 2100.
Estimates of annualized benefits and costs of the proposed
standards are shown in Table I.4. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reduction, for which DOE used a 3-
percent discount rate along with the average SCC series that uses a 3-
percent discount rate, the cost of the standards proposed in today's
rule is $430 million per year in increased equipment costs, while the
benefits are $2,177 million per year in reduced equipment operating
costs, $1,774 million in CO2 reductions,\14\ and $36 million
in reduced NOX emissions. In this case, the net benefit
amounts to $3,558 million per year.\15\ Using a 3-percent discount rate
for all benefits and costs and the average SCC series, the cost of the
standards proposed in today's rule is $507 million per year in
increased equipment costs, while the benefits are $3,426 million per
year in reduced operating costs, $1,774 million in CO2
reductions,\16\ and $61 million in reduced NOX emissions. In
this case, the net benefit amounts to $4,755 million per year.\17\
---------------------------------------------------------------------------
\14\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
\15\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors based on the
most recent AEO available, which may or may not be AEO 2014,
depending on the timing of the issuance of the next rulemaking
document.
\16\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors based on the
most recent AEO available, which may or may not be AEO 2014,
depending on the timing of the issuance of the next rulemaking
document.
\17\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors based on the
most recent AEO available, which may or may not be AEO 2014,
depending on the timing of the issuance of the next rulemaking
document.
Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Small, Large, and Very
Large Commercial Package Air Conditioning and Heating Equipment *
----------------------------------------------------------------------------------------------------------------
Low net benefits High net benefits
Discount rate Primary estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
million 2013$/year
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings.......... 7%................ 2,177............. 1,984............. 2,407
3%................ 3,426............. 3,127............. 3,781
CO2 Reduction Monetized Value 5%................ 484............... 467............... 505
($12.0/t case) **.
CO2 Reduction Monetized Value 3%................ 1,774............. 1,714............. 1,846
($40.5/t case) **.
CO2 Reduction Monetized Value 2.5%.............. 2,632............. 2,543............. 2,737
($62.4/t case) **.
CO2 Reduction Monetized Value 3%................ 5,504............. 5,317............. 5,727
($119/t case) **.
NOX Reduction Monetized Value 7%................ 36.18............. 34.75............. 37.90
(at $2,684/ton) **. 3%................ 60.89............. 58.85............. 63.40
Total Benefits [dagger]..... 7% plus CO2 range. 2,698 to 7,718.... 2,486 to 7,336.... 2,950 to 8,172
7%................ 3,988............. 3,733............. 4,291
3% plus CO2 range. 3,972 to 8,991.... 3,653 to 8,503.... 4,349 to 9,572
3%................ 5,262............. 4,900............. 5,691
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs....... 7%................ 430............... 350............... 485
[[Page 58953]]
3%................ 507............... 433............... 550
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger].............. 7% plus CO2 range. 2,268 to 7,288.... 2,135 to 6,986.... 2,465 to 7,687
7%................ 3,558............. 3,383............. 3,806
3%................ 4,755............. 4,468............. 5,140
3% plus CO2 range. 3,465 to 8,484.... 3,220 to 8,071.... 3,799 to 9,021
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with small, large, and very large air-cooled
CUAC and CUHP shipped in 2019-2048. These results include benefits to customers which accrue after 2048 from
the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred
by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary,
Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference
case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product
costs reflect no change for projected product price trends in the Primary Estimate, an increasing trend for
projected product prices in the Low Benefits Estimate, and a decreasing trend for projected product prices in
the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the
updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and
2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. The value for NOX
is the average of the low and high values used in DOE's analysis.\18\
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
to the full range of CO2 values.
DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K and IV.L of this proposed rulemaking.
---------------------------------------------------------------------------
\18\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
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. DOE further notes that products
achieving these standard levels are already commercially available for
most of the equipment classes covered by this proposal. Based on the
analyses described above, DOE has concluded that the benefits of the
proposed standards to the Nation (energy savings, positive NPV of
customer benefits, customer LCC savings, and emission reductions) would
outweigh the burdens (loss of INPV for manufacturers and LCC increases
for some customers).
DOE also considered more-stringent energy efficiency levels as
trial standard levels, and is considering them in this rulemaking.
However, DOE has 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 notice and related information collected and analyzed
during the course of this rulemaking effort, DOE may adopt energy
efficiency levels presented in this NOPR 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 proposal, as well as some of the relevant historical
background related to the establishment of standards for small, large,
and very large air-cooled CUAC and CUHP.
A. Authority
Title III, Part C \19\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6311-6317, as
codified), was added by the National Energy Conservation Policy Act
(Pub. L. 95-619 (Nov. 9, 1978). That law established the Energy
Conservation Program for Certain Industrial Equipment, which includes
provisions covering the commercial heating and air-conditioning
equipment that is the subject of this notice.\20\ In general, this
program addresses the energy efficiency of certain types of commercial
and industrial equipment. Relevant provisions of the Act include
definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C.
6313), test procedures (42 U.S.C. 6314), labelling provisions (42
U.S.C. 6315), and the authority to require information and reports from
manufacturers (42 U.S.C. 6316).
---------------------------------------------------------------------------
\19\ For editorial reasons, upon codification in the U.S. Code,
Part C was re-designated Part A-1.
\20\ All references to EPCA in this document refer to the
statute as amended through the American Energy Manufacturing
Technical Corrections Act of 2012, Public Law 112-210 (Dec. 18,
2012).
---------------------------------------------------------------------------
Section 342(a) of EPCA concerns energy conservation standards for
small, large, and very large, air-cooled CUAC and CUHP. (42 U.S.C.
6313(a)) This category of equipment has a rated capacity between 64,000
Btu/h and 760,000 Btu/h. It is designed to heat and cool commercial
buildings and is typically located on the building's rooftop. Section
5(b) of the American Energy Manufacturing Technical Corrections Act of
2012 (Pub. L. No. 112-210 (Dec. 18, 2012) (AEMTCA) amended Section
342(a)(6) of EPCA. Among other things, AEMTCA modified the manner in
which DOE must amend the energy efficiency standards for certain types
of commercial and industrial equipment. DOE is typically obligated
either to adopt those standards developed by the American Society of
Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)--or to
adopt levels more stringent than the ASHRAE levels if there is clear
and convincing evidence in support of doing so (42 U.S.C.
6313(a)(6)(A)). AEMTCA added to this process a requirement that DOE
initiate a rulemaking to consider amending the standards for any
covered equipment as to which more than 6 years has elapsed since the
issuance of
[[Page 58954]]
the most recent final rule establishing or amending a standard for the
equipment as of the date of AEMTCA's enactment, December 18, 2012. (42
U.S.C. 6313(a)(6)(C)(vi)) Under this new framework, DOE must issue
either a notice of determination that the current standards do not need
to be amended or a notice of proposed rulemaking (NOPR) containing
proposed standards by December 31, 2013. See 42 U.S.C. 6313(a)(6)(C)(i)
and (vi).\21\ Today's NOPR satisfies the mandatory review process
imposed by AEMTCA.
---------------------------------------------------------------------------
\21\ Subparagraph (A) and subparagraph (B) refer to 42 U.S.C.
6313(a)(6).
---------------------------------------------------------------------------
Pursuant to EPCA, DOE's energy conservation program for covered
equipment consists essentially of four parts: (1) Testing; (2)
labeling; (3) the establishment of Federal energy conservation
standards; and (4) certification and enforcement procedures. Subject to
certain criteria and conditions, DOE is required to develop test
procedures to measure the energy efficiency, energy use, or estimated
annual operating cost of covered equipment. (42 U.S.C. 6314)
Manufacturers of covered equipment must use the prescribed DOE test
procedure as the basis for certifying to DOE that their equipment
comply with the applicable energy conservation standards adopted under
EPCA and when making representations to the public regarding the energy
use or efficiency of those equipment. (42 U.S.C. 6314(d)) Similarly,
DOE must use these test procedures to determine whether the equipment
comply with standards adopted pursuant to EPCA. Id. The DOE test
procedures for small, large, and very large air-cooled CUAC and CUHP
currently appear at 10 CFR 431.96.
When setting standards for the equipment addressed by this proposed
rulemaking, EPCA prescribes specific statutory criteria for DOE to
consider. See generally 42 U.S.C. 6313(a)(6)(A)-(C). As indicated
above, any amended standard for covered equipment must be designed to
achieve the maximum improvement in energy efficiency that is
technologically feasible and economically justified. Furthermore, DOE
may not adopt any standard that would not result in the significant
conservation of energy. Moreover, DOE may not prescribe a standard for
certain equipment, if (1) no test procedure has been established for
the equipment, or (2) if DOE determines by rule that the proposed
standard is not technologically feasible or economically justified. In
deciding whether a proposed standard is economically justified, DOE
must determine whether the benefits of the standard exceed its burdens.
DOE must make this determination after receiving comments on the
proposed standard, and by considering, to the greatest extent
practicable, the following seven factors:
1. The economic impact of the standard on manufacturers and
consumers of the equipment subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered equipment in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered equipment that are likely to result from the imposition of the
standard;
3. The total projected amount of energy, or as applicable, water,
savings likely to result directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the covered
equipment likely to result from the imposition of 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
imposition of 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. 6313(a)(6)(B))
EPCA, as codified, 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 covered
equipment. Also, the Secretary may not prescribe an amended or new
standard if interested persons have established by a preponderance of
the evidence that the standard is likely to result in the
unavailability in the United States of any covered equipment type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6313(a)(6)(B)(iii))
Further, under EPCA's provisions for consumer products, there is 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 energy savings during the first
year that the consumer will receive as a result of the standard, as
calculated under the applicable test procedure. For this rulemaking,
DOE considered the criteria for rebuttable presumption as part of its
analysis.
Additionally, EPCA specifies requirements when promulgating a
standard for a type or class of covered equipment that has two or more
subcategories. DOE must specify a different standard level than that
which applies generally to such type or class of equipment for any
group of covered equipment that have the same function or intended use
if DOE determines that equipment within such group (A) consume a
different kind of energy from that consumed by other covered equipment
within such type (or class); or (B) have a capacity or other
performance-related feature which other equipment within such type (or
class) do not have and such feature justifies a higher or lower
standard. In determining whether a performance-related feature
justifies a different standard for a group of equipment, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. DOE considered these criteria for this
rulemaking.
Federal energy conservation requirements generally preempt State
laws or regulations concerning energy conservation testing, labeling,
and standards. DOE may, however, grant waivers of Federal preemption
for particular State laws or regulations.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011). EO
13563 is supplemental to and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, agencies are
required by Executive Order 13563 to: (1) Propose or adopt a regulation
only upon a reasoned determination that its benefits justify its costs
(recognizing that some benefits and costs are difficult to quantify);
(2) tailor regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the costs of
cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than
[[Page 58955]]
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order (EO) 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 has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
DOE believes that this NOPR is consistent with these principles,
including the requirement that, to the extent permitted by law,
benefits justify costs and that net benefits are maximized. Consistent
with EO 13563, and the range of impacts analyzed in this rulemaking,
the energy efficiency standard proposed herein by DOE achieves maximum
net benefits.
B. Background
1. Current Standards
DOE most recently issued amended standards for small, large, and
very large, air-cooled CUAC and CUHP on October 18, 2005, which
codified both the amended standards for small and large equipment and
the new standards for very large equipment set by the Energy Policy Act
of 2005 (EPAct 2005), Public Law 109-58, 70 FR 60407 (Aug. 8, 2005).
The current standards are set forth in Table II.1.
Table II.1--Minimum Cooling and Heating Efficiency Levels for Small, Large, and Very Large Commercial Package
Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Efficiency Compliance
Equipment type Cooling capacity Sub-category Heating type level date
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- >=65,000 Btu/h AC Electric EER = 11.2..... 1/1/2010
Conditioning and Heating and <135,000 Resistance
Equipment (Air-Cooled). Btu/h. Heating or No
Heating.
All Other Types EER = 11.0..... 1/1/2010
of Heating.
HP Electric EER = 11.0..... 1/1/2010
Resistance COP = 3.3......
Heating or No
Heating.
All Other Types EER = 10.8..... 1/1/2010
of Heating. COP = 3.3......
Large Commercial Packaged Air- >=135,000 Btu/h AC Electric EER = 11.0..... 1/1/2010
Conditioning and Heating and <240,000 Resistance
Equipment (Air-Cooled). Btu/h. Heating or No
Heating.
All Other Types EER = 10.8..... 1/1/2010
of Heating.
HP Electric EER = 10.6..... 1/1/2010
Resistance COP = 3.2......
Heating or No
Heating.
All Other Types EER = 10.4..... 1/1/2010
of Heating. COP = 3.2......
Very Large Commercial >=240,000 Btu/h AC Electric EER = 10.0..... 1/1/2010
Packaged Air-Conditioning and <760,000 Resistance
and Heating Equipment (Air- Btu/h. Heating or No
Cooled). Heating.
All Other Types EER = 9.8...... 1/1/2010
of Heating.
HP Electric EER = 9.5...... 1/1/2010
Resistance COP = 3.2......
Heating or No
Heating.
All Other Types EER = 9.3...... 1/1/2010
of Heating. COP = 3.2......
----------------------------------------------------------------------------------------------------------------
2. History of Standards Rulemaking for Small, Large, and Very Large
Air-Cooled Commercial Package Air Conditioning and Heating Equipment
On October 29, 1999, the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating
Engineering Society of North America (IESNA) adopted Standard 90.1-
1999, ``Energy Standard for Buildings Except Low-Rise Residential
Building'', which included amended efficiency levels for CUAC and CUHP.
On June 12, 2001, the Department published a Framework Document that
described a series of analytical approaches to evaluate energy
conservation standards for air-cooled CUAC and CUHP with rated
capacities between 65,000 Btu/h and 240,000 Btu/h, and presented this
analytical framework to stakeholders at a public workshop. On July 29,
2004, DOE issued an Advance Notice of Proposed Rulemaking (ANOPR)
(hereafter referred to as the 2004 ANOPR) to solicit public comments on
its preliminary analyses for this equipment. 69 FR 45460. Subsequently,
Congress enacted EPAct 2005, which, among other things, established
amended standards for small and large CUAC and CUHP and new standards
for very large air-cooled CUAC and CUHP. As a result, EPAct 2005
displaced the rulemaking effort that DOE had already begun. DOE
codified these new statutorily-prescribed standards on October 18,
2005. 70 FR 60407.
Section 5(b) of AEMTCA amended Section 342(a)(6) of EPCA by
requiring DOE to initiate a rulemaking to consider amending the
standards for any covered equipment as to which more than 6 years has
elapsed since the issuance of the most recent final rule establishing
or amending a standard for the equipment
[[Page 58956]]
as of the date of AEMTCA's enactment, December 18, 2012. (42 U.S.C.
6313(a)(6)(C)(vi)) Accordingly, DOE must issue either a notice of
determination that the current standards for small, large, and very
large, air cooled CUAC and CUHP do not need to be amended or a notice
of proposed rulemaking containing proposed standards. DOE has, based on
available data, chosen the latter.
On February 1, 2013, DOE published a request for information (RFI)
and notice of document availability for small, large, and very large,
air cooled CUAC and CUHP. 78 FR 7296. The notice sought to solicit
information from the public to help DOE determine whether national
standards more stringent than those that are currently in place would
result in a significant amount of additional energy savings and whether
those national standards would be technologically feasible and
economically justified. Separately, DOE also sought information on the
merits of adopting integrated energy efficiency ratio (IEER) as the
energy efficiency descriptor for small, large, and very large air-
cooled CUAC and CUHP (see section III.A for more details).
DOE received a number of comments from interested parties in
response to the RFI. These commenters are summarized in Table II.2. DOE
considered these comments in the preparation of this NOPR. Relevant
comments, and DOE's responses, are provided in the appropriate sections
of this proposed rulemaking.
Table II.2--Interested Parties Providing Written Comment on the RFI
------------------------------------------------------------------------
Name Abbreviation Type
------------------------------------------------------------------------
AAON Inc....................... AAON................. M
Air-Conditioning, Heating and AHRI................. IA
Refrigeration Institute.
Appliance Standards Awareness ASAP, ACEEE, NRDC EA
Project, American Council for (Joint Efficiency
an Energy-Efficient Economy, Advocates).
Natural Resources Defense
Council.
EBM-Papst Inc.................. EBM-Papst............ CS
Edison Electric Institute...... EEI.................. UR
Ingersoll Rand................. Ingersoll Rand....... M
Lennox International Inc....... Lennox............... M
Lentz Engineering Associates... Lentz................ I
Modine Manufacturing Co........ Modine............... M
New Buildings Institute........ NBI.................. ................
Northwest Energy Efficiency NEEA................. EA
Alliance.
Pacific Gas and Electric PG&E, SCGC, SDG&E, U
Company, Southern California SCE, SMUD, National
Gas Company, San Diego Gas and Grid (Joint
Electric, Southern California Utilities).
Edison, Sacramento Municipal
Utility District, National
Grid.
Rheem Manufacturing Co......... Rheem................ M
UTC Climate, Controls & Carrier.............. M
Security.
Whole Building Systems......... Whole Building I
Systems.
------------------------------------------------------------------------
IR: Industry Representative; M: Manufacturer; EA: Efficiency/
Environmental Advocate;
CS: Component Supplier; I: Individual; U: Utility; UR: Utility
Representative
III. General Discussion
A. Energy Efficiency Descriptor
The current energy conservation standards for small, large, and
very large air-cooled CUAC and CUHP are based on energy efficiency
ratio (EER) for cooling efficiency and COP for CUHP heating efficiency.
10 CFR 431.97(b)
Cooling Efficiency Metric
In the RFI, DOE noted that it was considering whether to replace
the existing efficiency descriptor, EER, with a new energy-efficiency
descriptor, IEER. Unlike the EER metric, which only uses the efficiency
of the equipment operating at full load, the IEER metric factors in the
efficiency of operating at part-loads of 75 percent, 50 percent, and 25
percent of capacity as well as the efficiency at full load. This is
accomplished by weighting the full- and part-load efficiencies with the
average amount of time operating at each loading point. The IEER metric
incorporates part load efficiencies measured with outside temperatures
appropriate for the load levels, i.e. at lower temperatures for lower
load levels. 78 FR 7296, 7299 (Feb. 1, 2013). As part of a final rule
published on May 16, 2012, DOE amended the test procedure for this
equipment to incorporate by reference the Air-Conditioning, Heating and
Refrigeration Institute (AHRI) Standard 340/360-2007, ``Performance
Rating of Commercial and Industrial Unitary Air-Conditioning and Heat
Pump Equipment'' (AHRI Standard 340/360-2007). 77 FR 28928. DOE notes
that AHRI Standard 340/360-2007 already includes methods and procedures
for testing and rating equipment with the IEER metric.
ASHRAE, through its Standard 90.1, includes requirements based on
the part-load performance metric, IEER. These IEER requirements were
first established in Addenda from the 2008 Supplement to Standard 90.1-
2007, and became effective on January 1, 2010.\22\
---------------------------------------------------------------------------
\22\ ASHRAE. ASHRAE Addenda. 2008 Supplement. https://
www.ashrae.org/File%20Library/docLib/Public/
200903179012007supplement.pdf.
---------------------------------------------------------------------------
DOE may establish ``energy conservation standards'' that set either
a single performance standard or a single design requirement--not both.
(42 U.S.C. 6311(18)) As such, DOE may prescribe an energy conservation
standard based either on a single performance-based standard or design
requirement. In the case of small, large, and very large air-cooled
CUAC and CUHP, ASHRAE Standard 90.1-2010 specifies two performance
requirements: EER and IEER. In selecting a new performance-based energy
conservation standard, the statute prescribes that a single standard be
used--in this case, either an improved EER or a new standard using
IEER. DOE did not consider altering its energy conservation standard to
be based on a single design requirement because performance-based
standards will provide manufacturers with more flexibility in
developing equipment that meets the standard levels rather than
requiring a specific design. DOE notes that a change in metrics (i.e.,
from EER to IEER) would necessitate an initial DOE determination that
the new requirement would not result in backsliding when compared to
[[Page 58957]]
the current standards. See 42 U.S.C. 6313(a)(6)(B)(iii)(I).
As part of the RFI, DOE conducted a review of the market to see if
part-load performance is currently being used and accepted for rating
CUAC and CUHP. On January 2, 2009, the Environmental Protection Agency
(EPA) issued a draft ENERGY STAR specification for Light Commercial Air
Conditioners and Heat Pumps equipment, i.e., small and large air-cooled
CUAC and CUHP, which proposed to adopt IEER as part of the minimum
energy efficiency criteria.\23\ The Air-Conditioning, Heating and
Refrigeration Institute (AHRI) supported this change. DOE also noted in
the RFI that the Consortium for Energy Efficiency (CEE), an
organization for energy efficiency advocates, has adopted IEER for its
Tier 0, 1, and 2 efficiencies for CUAC and CUHP, i.e., small, large,
and very large air-, water-, and evaporatively-cooled air conditioners
and air- and water-source heat pumps.\24\ 78 FR 7296, 7299 (Feb. 1,
2013).
---------------------------------------------------------------------------
\23\ ENERGY STAR. Re: EPA Proposed Draft Energy Star
Specification for Light Commercial HVAC Equipment. https://
www.energystar.gov/ia/partners/proddevelopment/revisions/
downloads/lhvac/AHRICommentsD1.pdf.
\24\ Consortium for Energy Efficiency. CEE Commercial Unitary AC
and HP Specification. https://www.cee1.org/files/
CEECommHVACUnitarySpec2012.pdf.
---------------------------------------------------------------------------
DOE also noted in the RFI that IEER has gained support through
efforts such as DOE's Commercial Building Energy Alliance (CBEA)
technology transfer program, which sponsors the High Performance
Rooftop Unit Challenge (RTU Challenge). This program provides a market
mechanism that reduces barriers for manufacturers to procure greater
than 18-IEER 10-ton \25\ equipment and encourages the private sector to
commit to adopt energy-efficient equipment. A number of manufacturers
are currently participating in the RTU Challenge, including Lennox, 7AC
Technologies, Rheem, Carrier, and McQuay. Of these participants, both
Carrier and McQuay have already begun producing AHRI-certified
equipment meeting or exceeding 18 IEER. In conjunction with
manufacturer support, fourteen CBEA-member private entities,\26\ such
as Target Corp., Macy's, Inc., McDonald's Corp., and others, have also
signaled their support and indicated their strong interest in
potentially purchasing high-efficiency rooftop units, a sign of their
confidence in the RTU Challenge and its ability to use IEER to
accurately portray the energy use of air-cooled CUAC and CUHP in the
field. 78 FR 7296, 7299 (Feb. 1, 2013).
---------------------------------------------------------------------------
\25\ Air conditioning cooling capacity may be denoted in tons.
An air conditioning ton is equivalent to 12,000 Btu/h of cooling
capacity (or 3.5 kilowatts of cooling capacity).
\26\ U.S. Department of Energy. Building Technologies Program.
High Performance Rooftop Unit Challenge Fact Sheet. https://
apps1.eere.energy.gov/buildings/publications/pdfs/alliances/
techspecrtus.pdf.
---------------------------------------------------------------------------
As part of the RFI, DOE conducted a market analysis to compare the
two metrics based on publicly available ratings of existing equipment
currently available in the market. DOE made a document available for
comment that provided the methodology and results of the investigation
of the relationship between IEER and EER for air-cooled CUAC and CUHP
with cooling capacities between 65,000 Btu/hr and 760,000 Btu/hr (i.e.,
5 and 63 tons). In addition, DOE looked at the variance of heating
efficiency (i.e., COP) with IEER and EER.\27\ In the RFI, DOE noted
that if it decides to propose standards using the IEER metric, it would
transition the existing Federal energy conservation standards that are
based on the EER metric to the new IEER metric to determine baseline
energy-efficiency levels to use in the analysis. DOE sought comments
and data regarding its consideration of transitioning metrics and the
analysis conducted on the currently available models. 78 FR 7296, 7299
(Feb. 1, 2013).
---------------------------------------------------------------------------
\27\ The document is available at: https://www1.eere.energy.gov/
buildings/appliancestandards/product.aspx/productid/77.
---------------------------------------------------------------------------
In response to the RFI, DOE received a number of comments from
interested parties concerning which energy efficiency descriptor should
be used for this equipment--i.e. EER or IEER. The Edison Electric
Institute (EEI), New Buildings Institute (NBI), Northwest Energy
Efficiency Alliance (NEEA), the Joint Utilities,\28\ and the Joint
Efficiency Advocates \29\ commented that DOE should adopt standards for
small, large, and very large air-cooled CUAC and CUHP using both the
EER and IEER metrics. (EEI, No. 9 at p. 4; NBI, No. 12 at p. 2; NEEA,
No. 15 at p. 1; Joint Utilities, No. 13 at p. 2; Joint Efficiency
Advocates, No. 11 at p. 1)
---------------------------------------------------------------------------
\28\ A joint comment was submitted by the Pacific Gas and
Electric Company (PG&E), Southern California Gas Company (SCGC), San
Diego Gas and Electric (SDG&E), Southern California Edison (SCE),
Sacramento Municipal Utility District (SMUD), and National Grid,
which are referred to as the Joint Utilities.
\29\ A Joint comment was submitted by the Appliance Standards
Awareness Project (ASAP), American Council for an Energy-Efficient
Economy (ACEEE), and Natural Resources Defense Council (NRDC), which
are referred to as the Joint Efficiency Advocates.
---------------------------------------------------------------------------
EEI, NEEA, and the Joint Utilities expressed concern that if DOE
eliminated the EER metric, which measures peak load efficiency,
manufacturers would design their equipment to improve their IEER
ratings, which could negatively impact peak load efficiency. (EEI, No.
9 at p. 5; NEEA, No. 15 at pp. 1-2; Joint Utilities, No. 13 at p. 3)
NEEA commented that using only one metric leads to a bias of energy
savings depending on the climate zone, with EER favoring hot-dry
climates and IEER favoring milder climates. NEEA stated that maximizing
EER tends to involve heat exchanger improvements, while IEER
improvement involves staging of compressors, and that shifting costs
between these two designs degrades either IEER or EER. NEEA noted that,
based on their review of the AHRI certification database, a correlation
between high IEER and high EER does not necessarily exist. NEEA noted
that equipment with a high EER and high IEER exists, but may just
reflect premium equipment available on the market that maximize both
metrics. (NEEA, No. 15 at p. 1) EEI and the Joint Utilities commented
that both the EER and IEER metrics should be used to prevent higher
peak demands on utility grids and higher energy bills for customers in
hot-dry climates, and to prevent equipment from being manufactured that
is less efficient than the current standards. (EEI, No. 9 at p. 5;
Joint Utilities, No. 13 at p. 3) NBI added that because the type of
application and its emphasis on full-load versus part-load cannot be
known beforehand, the cost-effectiveness of standards can only be
assured by including both EER and IEER metrics. (NBI, No. 12 at pp. 1-
2)
The Joint Utilities commented that the IEER metric, unlike the EER
metric, accounts for potentially significant part-load energy savings
from technologies such as inverter duty compressors, variable speed
fans, and staged compressors. The Joint Utilities also indicated that
continued growth and dependence on demand response programs is expected
in California and New England, and that, during demand response events,
controls may be used to restrict unit capacities and lower fan speeds.
According to the Joint Utilities, if units have comparable EER values,
the units with higher IEERs have the capability to use less energy when
capacity is restricted and are more likely to have the capability of
modifying compressor operation or reducing fan speed. (Joint Utilities,
No. 13 at pp. 2-3) (Joint Utilities, No. 13 at p. 3)
The Joint Utilities commented that there is no additional testing
burden associated with implementing both the IEER and EER metrics as
compared to using only IEER because the EER test is
[[Page 58958]]
part of the IEER metric. The Joint Utilities added that manufacturers
have been reporting both EER and IEER values for AHRI certification
since 2010. The Joint Utilities stated that, based on their review of
the AHRI certification database, the nominal difference between the
average IEER and EER values for each CUAC equipment class capacity
range (i.e., small, large, and very large) varied from 1.38 and 1.87.
The Joint Utilities stated that if standards are based only on IEER and
the average performance difference in IEER and EER remains the same,
then equipment meeting an IEER-only standard could have EERs as low as
8.86 (which is approximately 10 percent to 21 percent lower than the
current EER standards for air-cooled CUAC). (Joint Utilities, No. 13 at
pp. 3-4, 6)
EEI, the Joint Utilities, and the Joint Efficiency Advocates
commented that DOE has the authority to adopt two efficiency metrics.
(EEI, No. 9 at p. 4; Joint Utilities, No. 13 at p. 3; Joint Efficiency
Advocates, No. 11 at p. 1) EEI stated that if DOE must demonstrate that
a standard measured using IEER is no less stringent than a standard
measured using EER, then the two standards must have the same
stringency. EEI stated that, as a result, using two different metrics
does not contravene the requirement that DOE apply a single standard.
(EEI, No. 9 at p. 4) EEI added that this two-metric approach is
consistent with past precedent set in the direct final rule for
residential split system air conditioners and packaged air conditioners
(76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011)), which will
require SEER and EER standards for equipment sold in the ``Southwest''
region of the United States. (EEI, No. 9 at p. 5) The Joint Utilities
commented that, based on their understanding, DOE is considering using
a multiple metric approach in other rulemakings (e.g., commercial and
industrial fans and blowers) and, as such, DOE should be able to do the
same for this rulemaking. (Joint Utilities, No. 13 at p. 3)
According to the Joint Utilities, the intent of DOE's requirement
to adopt ASHRAE or more stringent standard levels is for the ASHRAE
levels to serve as the standards baseline. The Joint Utilities stated
that ASHRAE Standard 90.1 has specified both IEER and EER metrics for
this equipment since 2010 and that industry supports and recognizes the
need for a two metric approach for their standards. The Joint Utilities
stated that both metrics should be used to align with the industry
standards approach. (Joint Utilities, No. 13 at p. 2)
As discussed above, EPCA requires that DOE establish energy
conservation standards using either a single performance standard or a
single design requirement--but not both. See 42 U.S.C. 6311(18).
Consistent with this restriction, DOE is proposing an approach that
would apply a single performance-based standard for manufacturers to
follow. Although some commenters have suggested that DOE deviate from
this requirement, none has suggested an approach that would
sufficiently address the legal constraints that EPCA imposes on DOE's
ability to set multiple metrics for the equipment at issue in this
proposal. Accordingly, DOE is declining to adopt a multiple-metric
approach for CUAC and CUHP equipment.
Modine Manufacturing Company (Modine) supported the use of the IEER
metric to allow for the optimization of efficiency at part-load
conditions. Modine stated that equipment designed to maximize EER at
full-load conditions, which accounts for only 2 percent of cooling
time, may be significantly less efficient at part-load conditions.
Modine presented data showing that a unit that is optimized around EER
had an EER of 12.5, but the overall IEER is only 11.46, whereas a unit
optimized around IEER had an EER of 10.3, but an IEER of 12.6. Modine
also presented data showing that only a 2-point improvement in IEER for
a 15-ton unit and a 20- to 30-ton unit would improve the efficiency by
18 percent and 20 percent, respectively. (Modine, No. 5 at pp. 2, 7-9)
The Joint Efficiency Advocates commented that if DOE concludes that
they do not have the authority to adopt two metrics, DOE should replace
EER with IEER to better reflect annual energy consumption and encourage
the adoption of part-load technologies that can achieve significant
energy savings in the field. (Joint Efficiency Advocates, No. 11 at pp.
1-2) Whole Building Systems also supported the use of the IEER metric
to better reflect annual energy consumption. Whole Building Systems
added that design engineers, contactors, and owners need an annual or
seasonal part load performance metric to make more informed purchasing
and life-cycle cost decisions. (Whole Building Systems, No. 4 at p. 1)
AAON and AHRI both recognized the benefits of using the IEER metric
for representation of the equipment's overall cooling energy
efficiency. However, AAON, AHRI, Carrier, Lennox and Ingersoll Rand
noted the following concerns with relying solely on the IEER metric:
DOE's definition of basic model will significantly
increase the number of models that manufacturers are required to test
and, in the collective view of AAON and AHRI, make the DOE test
requirements impossible to achieve. (AAON, No. 8 at pp. 1-2; AHRI, No.
14 at p. 4)
The rulemaking for the Alternative Efficiency
Determination Method (AEDM) is still incomplete. The proposed
requirement for the overall average of AEDM outputs is, in their view,
far more stringent than the uncertainty of the AHRI Standard 340/360-
2007 test method and any combined manufacturing or component
tolerances. (AAON, No. 8 at p. 2; AHRI, No. 14 at p. 4)
If the part-load IEER metric is used, then the sequence of
operation of each subcomponent of the equipment has a great effect on
the listed metric. This would result in many more basic models based on
DOE's current definition. (AAON, No. 8 at p. 2; AHRI, No. 14 at p. 4)
The uncertainty associated with modeling or testing
(including assessment, compliance, and enforcement testing) equipment
using the IEER metric is significantly greater than for the single EER
test. AHRI Standard 340/360 currently has a 10 percent uncertainty
allowance on the IEER metric because of the higher variability in
results due to the multiple tests required, compared to a 5-percent
uncertainty allowance on the single test EER metric. (AAON, No. 8 at p.
2; AHRI, No. 14 at pp. 4-5; Carrier, No. 7 at p. 1; Lennox, No. 6 at p.
1; Ingersoll Rand, No. 10 at p. 1)
AAON, AHRI, and Ingersoll Rand indicated that they would support
replacing EER with IEER only if DOE resolves pending issues related to
the AEDM, the basic model definition and the uncertainty in measurement
testing. AAON and AHRI stated that DOE should implement the testing and
rating requirements, including the uncertainty tolerances, referenced
in AHRI Standard 340/360 in their entirety. AHRI added that the
sampling plan in 10 CFR 429.43 will have to be revised and adjusted
accordingly. (AAON, No. 8 at p. 3; AHRI, No. 14 at pp. 1, 4-5;
Ingersoll Rand, No. 10 at pp. 1-2) Carrier also commented that DOE
should limit the basic model definition to the base refrigeration
system to avoid the requirement that equipment be tested with factory
options, which may negatively impact cooling or heating rating point
efficiency, but provide efficiency benefits when considered from a
whole building perspective (e.g., economizers and energy recovery
ventilators). (Carrier, No. 7 at p. 1)
[[Page 58959]]
Rheem supported the use of one efficiency metric, but not multiple
metrics. Rheem stated that if IEER is going to replace EER, a technical
review must be conducted to highlight the advantage to the consumer
versus the confusion in the market place and burden on the OEM. Rheem
stated that other aspects of the energy conservation standards for this
equipment are in transition and must be finalized before a constructive
evaluation can be made of the benefits of a part-load efficiency
metric. (Rheem, No. 17 at pp. 1-2)
Lennox commented that it has captured most of the achievable EER
efficiency improvements with currently available technology, and that
there are diminishing returns in requiring increasingly stringent EER
levels. (Lennox, No. 6 at p. 3) However, Lennox supported the continued
use of the EER metric due to the IEER test uncertainty issue discussed
above. (Lennox, No. 6 at p. 1) Lennox commented that using the IEER
metric now would require resolving the following issues: (1) Setting a
baseline IEER for various equipment classes, (2) the ability to use the
AEDMs, and (3) implementation and vetting of testing protocols.
(Lennox, No. 6 at p. 2)
The Joint Utilities commented that if DOE is not willing to adopt
standards using both metrics, DOE should use the current EER metric
instead of IEER to provide a better approximation of heating,
ventilation, and air-conditioning (HVAC) performance during peak
loading conditions. According to the Joint Utilities, in California and
New England, commercial air conditioning accounts for a
disproportionately high fraction of seasonal peak demand as compared to
commercial HVAC energy consumption as a fraction of annual energy
consumption. (Joint Utilities, No. 13 at p. 4) The Joint Utilities also
commented that a substantial fraction of U.S. cities have peak
temperatures above 95 degrees Fahrenheit ([deg]F) in the summer, and
summer peak temperature has been increasing over time. The Joint
Utilities stated that peak electricity demands have large effects on
energy procurement and energy pricing, and that shifts in energy
pricing rate structures, such as in California, will further increase
electricity prices during peak conditions. The Joint Utilities stated
that using an IEER-only metric would under-represent the condition that
has the largest effect on peak energy demand and energy pricing. The
Joint Utilities stated that an improved IEER metric that is
representative of annual energy cost would place a heavier weighting on
the 95[emsp14][deg]F full-load test point, but absent that change the
Joint Utilities would support retaining EER metric. (Joint Utilities,
No. 13 at p. 4)
DOE notes that the issues related to the basic model definition and
AEDM were addressed separately in DOE's Commercial Certification
Working Group. DOE published a final rule on December 31, 2013, which
incorporated requirements for the testing and tolerances for validation
and verification of an AEDM, and also amended the basic model
definition for small, large, and very large air-cooled CUAC and CUHP.
78 FR 79579. EPCA requires that test procedures be reasonably designed
to produce test results that measure the energy efficiency of covered
equipment during a representative average use cycle or period of use.
(42 U.S.C. 6314(a)(2)) As discussed above, the IEER metric weights the
efficiency of operating at different partial loads and full load based
on usage patterns, which collectively provide a more representative
measure of annual energy use than the EER metric. A manufacturer that
was involved in the development of the IEER metric indicated that the
usage pattern weights for the IEER metric were developed by analyzing
equipment usage patterns of several buildings across the 17 ASHRAE
Standard 90.1-2010 (appendix B) climate zones. (Docket ID: EERE-2013-
BT-STD-0007-0018, Carrier, at p. 1) These usage patterns and climate
zones were based on a comprehensive analysis performed by industry in
assessing the manner in which CUAC and CUHP equipment operate in the
field, both in terms of actual usage and the climatic conditions in
which they are used. The weighting factors accounted for the hours of
operation where mechanical cooling was active. Id. As a result, the
IEER metric, as a whole, provides a more accurate representation of the
annual energy use for this equipment than the EER metric, which only
considers full load energy use. For these reasons, DOE is proposing
energy conservation standards in this NOPR based on the IEER metric.
DOE recognizes the issues regarding the uncertainty of IEER test
measurements and welcomes additional data regarding the measurement
uncertainties to develop appropriate sampling plans.
Because the weighting factors for the IEER metric are
representative of field use and because DOE is unaware of any data
indicating that changes to these weighting factors are warranted, DOE
is not considering changing the weighting factors for the loading
conditions specified in AHRI Standard 340/360-2007 for the IEER metric,
as commented by the Joint Utilities. With regards to the Joint
Utilities comment that an improved IEER metric that is representative
of annual energy cost would place a heavier weighting on the full-load
test point, DOE welcomes comment and data on whether the test procedure
for air-cooled CUAC and CUHP should be amended to revise the weightings
for the IEER metric to place a higher weighting value on the full-load
efficiency.
Issue 2: DOE requests comment on whether the test procedure for
air-cooled CUAC and CUHP should be amended to revise the weightings for
the IEER metric to place a higher weighting value on the full-load
efficiency. DOE also requests data to determine appropriate weighting
factors for the full-load test condition and part-load test conditions
(75 percent, 50 percent, and 25 percent of capacity).
With regards to the Joint Utilities comment that DOE should use the
current EER metric instead of IEER to provide a better approximation of
HVAC performance during peak loading conditions, DOE notes that, as
discussed above, EPCA does not include provisions for dual metrics for
this equipment. See 42 U.S.C. 6311(18). DOE also notes that because the
IEER metric includes measurements at full load capacity, the metric
already accounts for EER. Further, ASHRAE Standard 90.1 includes
requirements for both EER and IEER. As a result, although DOE is
considering energy conservation standards based on the IEER metric,
utilities would still be able to evaluate EER ratings of equipment.
In response to the RFI, AHRI commented that the draft of addendum
CL \30\ to ASHRAE Standard 90.1-2010 (Draft Addendum CL) would amend
the minimum IEER levels, but did not amend the minimum EER levels
because the ASHRAE Standard 90.1 committee was unable to justify
raising the full load efficiency standard. (AHRI, No. 14 at pp. 1-2)
AHRI and Ingersoll Rand commented that full load efficiencies are
approaching their thermodynamic limits, and that further improvements
will be both very minimal and very costly. (AHRI, No. 14 at p. 2;
Ingersoll Rand, No. 10 at p. 1) AHRI added that while energy efficiency
gains in the 1970s were achieved at relatively low cost, the efficiency
improvements realized recently resulted in significant increase in
equipment cost. AHRI stated
[[Page 58960]]
that the industry is entering a phase where efficiency of equipment is
becoming closer to the Carnot efficiency (i.e., the thermodynamic
limit) and full load efficiency gains in the future will be minimal but
very costly. (AHRI, No. 14 at p. 2) AHRI noted that the ASHRAE Standard
90.1 committee has recognized the increasing full load minimum
efficiency standards for CUAC and CUHP has reached a point of
diminishing returns in terms of energy savings, and instead focused
efforts on other areas to reduce the energy consumption of this
equipment, including the following design requirements:
---------------------------------------------------------------------------
\30\ ASHRAE periodically updates specifications in its Standard
90.1 through a public review process. The latest of these proposed
changes is contained in Draft Addendum CL, which was made available
for public review in October 2012. ``CL'' refers to the revision
number.
---------------------------------------------------------------------------
Mandatory use of economizers on equipment >=54,000 Btu/h
of cooling capacity in all climate zones at the exception of zones 1a
and 1b,
Modulation of economizer outdoor and return air dampers to
provide up to 100 percent of the design supply air quantity as outdoor
air for cooling,
More stringent damper leakage requirements
Additional requirements for supply air temperature reset
and static pressure reset on variable air volume systems,
Integrated economizer control and direct expansion (i.e.,
the evaporator is in direct contact with the air stream) unit capacity
staging requirements which necessitate two speed fans and two stages of
mechanical cooling for constant volume systems or three or more stages
for variable air volume systems, and
Fan controls for both constant air volume and variable air
volume units including extending the indoor fan part load power
requirements down to \1/4\ horsepower. (AHRI, No. 14 at pp. 2-3)
AHRI stated that although these requirements significantly reduce
the energy consumption of CUAC, most of the energy savings resulting
from their implementation is not captured by the test procedure and
cannot be translated in an EER improvement. AHRI stated that DOE should
consider other factors beyond EER and/or COP when conducting its
analysis and that by appropriately modeling this equipment, DOE will
conclude that increasing the EER and COP is not a cost-effective way of
improving the CUAC/CUHP efficiency. (AHRI, No. 14 at p. 3)
As discussed above, DOE determined that the IEER metric provides a
more accurate representation of the annual energy use for this
equipment than the EER metric, and is proposing standards based on
IEER. DOE recognizes that raising the stringency of EER may not be a
cost-effective way of improving the efficiency of this equipment. DOE
reached this tentative conclusion based on the preliminary
determination by the ASHRAE Standard 90.1 committee for Draft Addendum
CL that raising the full load efficiency standard would not be cost-
effective. DOE also takes note of the comments from interested parties
that manufacturers are already reaching the thermodynamic limits with
respect to full load efficiency for CUAC and CUHP equipment, which is
limiting the potential for further full load efficiency improvements
for these HVAC equipment. For these reasons, DOE is not considering
standards based on the EER metric. Based on energy modeling of design
changes consistent with equipment available on the market (by analyzing
the efficiency at each loading condition, including full-load EER), as
discussed in sections IV.A through IV.C, DOE notes that the proposed
IEER-based standard levels presented in section I would not result in
an EER rating less than the current standard levels. DOE discusses the
use of the COP metric in the following section.
Heating Efficiency Metric
The current energy conservation standards for small, large, and
very large air-cooled CUHP heating efficiency are based on the COP
metric.\31\ 10 CFR 431.97(b)
---------------------------------------------------------------------------
\31\ COP is defined as the ratio of the produced heating effect
to its net work input.
---------------------------------------------------------------------------
In response to the RFI, Ingersoll Rand commented that a performance
metric does not exist that simulates part load performance in heating.
(Ingersoll Rand, No. 6 at p. 4) Modine commented that DOE could
consider creating a new metric for CUHP, an integrated COP that is
based on heating weather bin data, to provide a more representative
measure of energy efficiency during the heating mode. (Modine, No. 5 at
p. 2)
DOE is not aware of any test procedures that have been developed
that measure part load performance in heating mode for small, large,
and very large air-cooled CUHP. In addition, DOE notes that Modine did
not provide any data, nor is DOE aware of any data, regarding the
annual usage for CUHP under part-load heating conditions to determine
whether part-load heating hours are significant and would warrant the
development of a part-load heating metric. As discussed in section
IV.C.3, one manufacturer noted that CUHPs typically operate in full
load heating mode and cycle the auxiliary heat on and off because heat
pump capacity alone is inadequate to meet the building load. In
addition, DOE is unaware of data regarding usage patterns for CUHP to
determine appropriate test conditions under part-load heating
conditions. Because DOE is unaware of any test procedures or usage data
regarding part-load performance in heating mode for CUHP that shows
that part-load heating hours are significant, DOE is not considering
amendments to the test procedure to measure part-load heating
efficiency at this time. For this NOPR, DOE is proposing standards for
the heating efficiency based on the COP metric.
Regional Standards
In response to the RFI, NEEA and NBI stated that DOE should
consider regional standards for small, large, and very large air-cooled
CUAC and CUHP. (NEEA, No. 15 at p. 2; NBI, No. 12 at p. 2) NEEA
commented that AHRI Standard 340/360 tends to favor certain climate
zones and exclude or decrease savings by only having one efficiency
value to characterize the 8 climate zones in the United States. NEEA
also stated that the test procedure tends to under value fan energy as
external static pressure values are optimistically low. According to
NEEA and NBI, the use of regional efficiency standards would increase
energy savings and reflect the equipment selection options for design
engineers in selecting equipment for varying climatic zones. NEEA added
that regional standards would increase and bolster technological
development of air conditioning equipment for varying climate zones.
NBI stated that, in particular, DOE should investigate regional
standards for ``hot-dry'' climates to recognize the significant
research and field experience that allows packaged air conditioners to
cost-effectively achieve higher efficiencies in these climates. NBI
stated that DOE has developed regional standards for other residential
HVAC equipment (10 CFR 430.32(c)(5). NBI commented that DOE should
consider adopting CCE Tier 2 ratings for ``hot-dry'' regional
standards. (NEEA, No. 15 at p. 2; NBI, No. 12 at p. 2)
EPCA requires that any amended standard for small, large, and very
large air-cooled CUAC and CUHP must be a uniform national standard. (42
U.S.C. 6313(a)(6)(A)) EPCA does not provide DOE with the authority to
set regional standards for CUAC and CUHP equipment. As a result, DOE is
not considering regional standards for small, large, and very large
air-cooled CUAC and CUHP.
Issue 1: DOE requests comment on the use of IEER as the cooling
efficiency metric and COP as the heating efficiency metric (for CUHP)
for the proposed energy conservation standards, including additional
data and input
[[Page 58961]]
regarding the uncertainty of IEER test measurements.
B. 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 equipment or in working prototypes to be
technologically feasible. 10 CFR part 430, subpart C, appendix A,
section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on equipment utility or availability; and (3) adverse impacts
on health or safety. 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii)-(iv). Section IV.B of this proposed rulemaking discusses
the results of the screening analysis for small, large, and very large
air-cooled CUAC and CUHP, particularly the designs DOE considered,
those it screened out, and those that are the basis for the TSLs in
this rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the NOPR Technical Support Document (TSD).
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered equipment, it must determine the maximum improvement in
energy efficiency or maximum reduction in energy use that is
technologically feasible for such equipment. Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for small,
large, and very large air-cooled CUAC and CUHP, using the design
parameters for the most efficient equipment available on the market or
in working prototypes. (See chapter 5 of the NOPR TSD.) The max-tech
levels that DOE determined for this rulemaking are described in section
IV.C.3 of this proposed rule.
C. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the products that
are the subject of this rulemaking purchased in the 30-year period that
begins in the year of compliance with amended standards (2019-2048).
The savings are measured over the entire lifetime of products purchased
in the 30-year analysis period.\32\ DOE quantified the energy savings
attributable to each TSL as the difference in energy consumption
between each standards case and the base case. The base case represents
a projection of energy consumption in the absence of amended mandatory
efficiency standards, and it considers market forces and policies that
affect demand for more efficient products.
---------------------------------------------------------------------------
\32\ In the past DOE presented energy savings results for only
the 30-year period that begins in the year of compliance. In the
calculation of economic impacts, however, DOE considered operating
cost savings measured over the entire lifetime of products purchased
in the 30-year period. DOE has chosen to modify its presentation of
national energy savings to be consistent with the approach used for
its national economic analysis.
---------------------------------------------------------------------------
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from amended standards for the products that
are the subject of this rulemaking. The NIA spreadsheet model
(described in section IV.H of this proposed rule) calculates energy
savings in site energy, which is the energy directly consumed by
products at the locations where they are used. For electricity, DOE
reports national energy savings in terms of the savings in the energy
that is used to generate and transmit the site electricity. To
calculate this quantity, DOE derives annual conversion factors from the
model used to prepare the Energy Information Administration's (EIA)
most recent Annual Energy Outlook (AEO).
DOE has begun to also estimate full-fuel-cycle energy savings, as
discussed in DOE's statement of policy and notice of policy amendment.
76 FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17,
2012). The full-fuel-cycle (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 efficiency standards. DOE's evaluation
of FFC savings is driven in part by the National Academy of Science's
(NAS) report on FFC measurement approaches for DOE's Appliance
Standards Program.\33\ The NAS report discusses that the FFC metric was
primarily intended for energy efficiency standards rulemakings where
multiple fuels may be used by a particular product. In the case of this
rulemaking, only a single fuel--electricity--is consumed by the
equipment. DOE's approach is based on the calculation of an FFC
multiplier for each of the energy types used by covered equipment.
Although the addition of FFC energy savings in the rulemakings is
consistent with the recommendations, the methodology for estimating FFC
does not project how fuel markets would respond to this particular
standard rulemaking. The FFC methodology simply estimates how much
additional energy, and in turn how many tons of emissions, may be
displaced if the estimated quantity of energy was not consumed by the
equipment covered in this rulemaking. It is also important to note that
inclusion of FFC savings does not affect DOE's choice of proposed
standards.
---------------------------------------------------------------------------
\33\ ``Review of Site (Point-of-Use) and Full-Fuel-Cycle
Measurement Approaches to DOE/EERE Building Appliance Energy-
Efficiency Standards,'' (Academy report) was completed in May 2009
and included five recommendations. A copy of the study can be
downloaded at: https://www.nap.edu/
catalog.php?recordid=12670.
---------------------------------------------------------------------------
For more information on FFC energy savings, see section IV.H.2.
2. Significance of Savings
To adopt national standards more stringent than the amended ASHRAE/
IES Standard 90.1 for small, large, and very large air-cooled CUAC and
CUHP, DOE must determine that such action would result in significant
additional conservation of energy. (42 U.S.C. 6313(a)(6)(A)(ii))
Although the term ``significant'' is not defined in the Act, the U.S.
Court of Appeals, in Natural Resources Defense Council v. Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended
``significant'' energy savings in the context of EPCA to be savings
that were not ``genuinely trivial.'' The energy savings for today's
proposed standards (presented in section V.B) are nontrivial, and,
therefore, DOE considers them ``significant'' within the meaning of
section 325 of EPCA.
D. Economic Justification
1. Specific Criteria
EPCA provides seven factors to be evaluated in determining whether
a more stringent standard for small, large, and very large air-cooled
CUAC and CUHP is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii))
The following sections discuss how DOE has
[[Page 58962]]
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as
discussed in section IV.J. 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 industry net present
value (INPV), which values the industry on the basis of expected future
cash flows; cash flows by year; changes in revenue and income; and
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 life-cycle cost (LCC) and payback period (PBP) associated
with new or amended standards. These measures are discussed further in
the following section. For consumers in the aggregate, DOE also
calculates the national net present value of the economic impacts
applicable to a particular rulemaking. DOE also evaluates the LCC
impacts of potential standards on identifiable subgroups of consumers
that may be affected disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product compared
to any increase in the price of the covered product that are likely to
result from the imposition of the standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. 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. For
its analysis, DOE assumes that consumers will purchase the covered
products in the first year of compliance with amended standards.
The LCC savings and the PBP for the considered efficiency levels
are calculated relative to a base case that reflects projected market
trends in the absence of amended standards. DOE identifies the
percentage of consumers estimated to receive LCC savings or experience
an LCC increase, in addition to the average LCC savings associated with
a particular standard level. DOE's LCC and PBP analysis is discussed in
further detail in section IV.F.
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. 6313(a)(6)(B)(ii)(III)) As
discussed in section IV.H, DOE uses the NIA spreadsheet to project
national energy savings.
d. Lessening of Utility or Performance of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE evaluates
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6313(a)(6)(B)(ii)(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.
6313(a)(6)(B)(ii)(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 today's proposed
rule to the Attorney General with a request that the Department of
Justice (DOJ) provide its determination on this issue. DOE will address
the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
In evaluating the need for national energy conservation, DOE
expects that 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.
The proposed standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production. DOE reports the
emissions impacts from the proposed standards, and from each TSL it
considered, in section V.B.6 of this proposed rulemaking. DOE also
reports estimates of the economic value of emissions reductions
resulting from the considered TSLs, as discussed in section IV.L.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII))
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effects that proposed
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic
[[Page 58963]]
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.12 of this proposed rule.
IV. Methodology and Discussion of Related Comments
DOE used four analytical tools to estimate the impact of today's
proposed standards. The first tool is a spreadsheet that calculates
LCCs and PBPs of potential new energy conservation standards. The
second tool is a model that provides shipments forecasts, and the third
tool is a spreadsheet that calculates national energy savings and net
present value resulting from potential amended energy conservation
standards. The fourth spreadsheet tool, the Government Regulatory
Impact Model (GRIM), helped DOE to assess manufacturer impacts.
Additionally, DOE estimated the impacts of energy conservation
standards for small, large, and very large air-cooled commercial
package air conditioning and heating equipment on utilities and the
environment. DOE used a version of EIA's National Energy Modeling
System (NEMS) for the utility and environmental analyses. The NEMS
model simulates the energy sector of the U.S. economy. EIA uses NEMS to
prepare its Annual Energy Outlook (AEO), a widely known energy forecast
for the United States. The version of NEMS used for appliance standards
analysis is called NEMS-BT \34\ and is based on the AEO version with
minor modifications.\35\ The NEMS-BT model offers a sophisticated
picture of the effect of standards, because it accounts for the
interactions between the various energy supply and demand sectors and
the economy as a whole.
---------------------------------------------------------------------------
\34\ BT stands for DOE's Building Technologies Program.
\35\ The EIA allows the use of the name ``NEMS'' to describe
only an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the
model as used here. For more information on NEMS, refer to The
National Energy Modeling System: An Overview, DOE/EIA-0581 (98)
(Feb.1998), available at: https://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
---------------------------------------------------------------------------
As discussed below, specifically in section IV.D on the markups
analysis and section IV.E on the energy use analysis, DOE utilized
methods developed for the 2004 ANOPR to conduct these analyses. In the
case of the markups analysis, DOE utilized the same distribution
channels as the 2004 ANOPR to characterize how small, large, and very
large air-cooled CUAC equipment is distributed from the manufacturer to
the end-user. In the case of the energy use analysis, building
simulations performed for the 2004 ANOPR laid the basis for estimating
the annual energy consumption of small, large, and very large air-
cooled CUAC equipment. However, DOE incorporated several modifications
to the simulations themselves as well as detailed performance data from
the Engineering Analysis to estimate the energy consumption of
equipment at the specific energy efficient levels evaluated in today's
NOPR. DOE also notes that inputs to the LCC and PBP analysis, including
the installation and maintenance costs, used the same data source as
the 2004 ANOPR, but DOE updated the data to reflect the most recent
version of the data source.
A. Market and Technology Assessment
1. General
For the market and technology assessment, DOE develops information
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, and market characteristics. 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 scope of coverage,
equipment classes, types of equipment sold and offered for sale, and
technology options that could improve the energy efficiency of the
equipment under examination. Chapter 3 of the NOPR TSD contains
additional discussion of the market and technology assessment.
2. Scope of Coverage and Equipment Classes
The proposed energy conservation standards in today's NOPR cover
small, large, and very large, air-cooled CUAC and CUHP under section
342(a) of EPCA. (42 U.S.C. 6313(a)) This category of equipment has a
rated capacity between 65,000 Btu/h and 760,000 Btu/h. It is designed
to heat and cool commercial buildings. In the case of single-package
units, which house all of the components (i.e., compressor, condenser
and evaporator coils and fans, and associated operating and control
devices) within a single cabinet, these units are typically located on
the building's rooftop. In the case of split-system units, the
compressor and condenser coil and fan (or in the case of CUHP, the
outdoor coil and fan) are housed in a cabinet typically located on the
outside of the building, and the evaporator coil and fan (or in the
case of CUHP, the indoor coil and fan) are housed in a cabinet
typically located inside the building.
When evaluating and establishing energy conservation standards, DOE
divides covered equipment into equipment classes by the type of energy
used or by capacity or other performance-related features that would
justify a different standard. In determining whether a performance-
related feature would justify a different standard, DOE considers such
factors as the utility to the consumer of the feature and other factors
DOE determines are appropriate.
The current equipment classes that EPAct 2005 established for
small, large, and very large air-cooled CUAC and CUHP divide this
equipment into twelve classes characterized by rated cooling capacity,
equipment type (air conditioner versus heat pump), and heating type.
Table IV.1 shows the current equipment class structure.
Table IV.1--Proposed Equipment Classes
----------------------------------------------------------------------------------------------------------------
Equipment class Equipment type Cooling capacity Sub-category Heating type
----------------------------------------------------------------------------------------------------------------
1.................. Small Commercial >=65,000 Btu/h and AC....................... Electric Resistance
Packaged Air- <135,000 Btu/h. Heating or No
Conditioning and Heating.
Heating Equipment
(Air-Cooled).
2.................. .................... .................... ......................... All Other Types of
Heating.
3.................. .................... .................... HP....................... Electric Resistance
Heating or No
Heating.
[[Page 58964]]
4.................. .................... .................... ......................... All Other Types of
Heating.
5.................. Large Commercial >=135,000 Btu/h and AC....................... Electric Resistance
Packaged Air- <240,000 Btu/h. Heating or No
Conditioning and Heating.
Heating Equipment
(Air-Cooled).
6.................. .................... .................... ......................... All Other Types of
Heating.
7.................. .................... .................... HP....................... Electric Resistance
Heating or No
Heating.
8.................. .................... .................... ......................... All Other Types of
Heating.
9.................. Very Large >=240,000 Btu/h and AC....................... Electric Resistance
Commercial Packaged <760,000 Btu/h. Heating or No
Air-Conditioning Heating.
and Heating
Equipment (Air-
Cooled).
10................. .................... .................... ......................... All Other Types of
Heating.
11................. .................... .................... HP....................... Electric Resistance
Heating or No
Heating.
12................. .................... .................... ......................... All Other Types of
Heating.
----------------------------------------------------------------------------------------------------------------
AC = Air conditioner; HP = Heat pump.
In the RFI, DOE stated that it planned to continue using these
classes, which are also provided in Table 1 of 10 CFR 431.97. DOE
requested feedback on the current equipment classes and sought
information regarding other equipment classes it should consider for
inclusion in its analysis 78 FR 7296, 7300 (Feb. 1, 2013).
Modine, Carrier, and AAON supported the equipment class structures
presented in the RFI. (Modine, No. 5 at p. 1; Carrier, No. 7 at p. 2;
AAON, No. 8 at p. 3) AHRI disagreed with DOE's determination that every
equipment category for which there is a minimum energy conservation
standard is an equipment class. AHRI stated that equipment classes
should be delineated based on cooling capacity and on whether the unit
is an air conditioner or a heat pump. AHRI commented that the same
equipment class could have two different efficiency levels (e.g., one
for equipment with electric resistance heat (or none) and the other for
equipment with all other types of heating element). (AHRI, No. 14 at p.
5)
As discussed above, EPCA specifies the criteria for separation into
different equipment classes: (1) Type of energy used, or (2) capacity
or other performance-related features such as those that provide
utility to the consumer or others the Secretary determines are
appropriate that would justify the establishment of a separate energy
conservation standard. DOE notes that considering two different
efficiency levels for different equipment types, as asserted by AHRI,
would create two separate equipment classes because a performance-
related feature (e.g., type of heating) inherently affects the
efficiency and warrants establishing a separate energy conservation
standard. For these reasons, DOE is proposing energy conservation
standards in this NOPR based on the existing equipment class structure
provided in Table 1 of 10 CFR 431.97, as shown in Table IV.1.
United CoolAir Corporation (UCA) submitted a request for exemption
for a specific type of air conditioning equipment (``double-duct air-
cooled air conditioner''). See UCA, EERE-2013-BT-STD-0007-0020. These
units are designed for indoor installation in constrained spaces using
ducting to an outside wall for the supply and discharge of condenser
air to the condensing unit. The sizing of these units is constrained
both by the space available in the installation location and the
available openings in the building through which the unit's sections
must be moved to reach the final installation location. These size
constraints, coupled with the higher power required by the condenser
fan to provide sufficient pressure to move the condenser air through
the supply and return ducts, affect the energy efficiency of these
types of systems. More conventional designs that use outdoor units or
condenser sections of packaged commercial air conditioners do not
require this more complex ductwork and can more easily move condenser
air using direct-driven propeller fans.
Currently, double-ducted air conditioners are tested and rated
under the same test conditions as single-duct air conditioners, without
any ducting connected to, or an external static pressure applied on,
the condenser side. This would provide more favorable conditions for
testing and rating equipment efficiency in terms of IEER than typically
experienced in the field. UCA has asserted that the double-duct design
provides customer utility in that it allows interior field
installations in existing buildings in circumstances where spacing
constraints make an outdoor unit impractical to use. Id. DOE recognizes
that the design features associated with the described dual-duct
designs may affect energy use while providing justifiable customer
utility. However, DOE also questions how much of an efficiency impact,
in terms of IEER, the dual-duct design may provide when tested under
the current test conditions discussed above compared to single-duct air
conditioners and welcomes additional data regarding the impact on the
measured IEER.
Issue 3: DOE requests comments on whether separate equipment
classes should be considered for dual-duct air-conditioners. DOE
further requests detailed comments regarding the definition of such
equipment, and any detailed information, such as test data, test
conditions, key component design details, fan power consumption, as
well as other relevant information that may help DOE evaluate potential
alternative equipment class standard levels.
3. Technology Options
As part of the market and technology assessment, DOE uses
information about existing and past technology options and prototype
designs to help identify technologies that manufacturers could use to
improve energy efficiency. Initially, these technologies encompass all
those that DOE believes are technologically feasible. Chapter 3 of the
NOPR TSD includes the detailed list and descriptions of all technology
options identified for this equipment.
In the RFI, DOE stated that it planned to consider the specific
technology options presented in Table IV.2. 78 FR 7296, 7300 (Feb. 1,
2013).
[[Page 58965]]
Table IV.2--RFI Technology Options
------------------------------------------------------------------------
-------------------------------------------------------------------------
Heat transfer improvements:
Electro-hydrodynamic enhancement.
Alternative refrigerants.
Condenser and evaporator fan and fan motor improvements:
Larger fan diameters.
More efficient fan blades (e.g., air foil centrifugal
evaporator fans, backward-cured centrifugal evaporator fans, high
efficiency propeller condenser fans).
High efficiency motors (e.g., copper rotor motor, high
efficiency induction, permanent magnet, electronically commutated).
Larger heat exchangers.
Microchannel heat exchangers.
Reduce air leakage paths within the unit.
Low-pressure-loss filters.
Compressor Improvements:
High efficiency compressors.
Multiple compressors.
Thermostatic expansion valves.
Electronic expansion valves.
High-side solenoid valve or discharge line check-valve to minimize
pressure equalization.
Heat-pipes (for high latent loads).
Sub-coolers.
Reduced indoor fan belt loss:
Synchronous (toothed) belts.
Direct-drive fans.
Demand-control ventilation strategy.
------------------------------------------------------------------------
The RFI sought comment from interested parties on these, as well as
other options that DOE had not listed. Carrier commented that, in
general, many of the technologies presented by DOE in the RFI are
already used in equipment. (Carrier, No. 7 at p. 2) DOE agrees that
many of the technologies are used in equipment currently available on
the market. As a result, DOE continued to consider such technologies
for improving the efficiency above the baseline level for this NOPR.
DOE also notes that for the majority of the identified technology
options, DOE considered designs in its analyses that are generally
consistent with existing equipment on the market (e.g., heat exchanger
sizes, fan and fan motor types, controls, air flow).
The following sections discuss comments from interested parties on
specific technology options.
Heat Exchanger Size
Increasing the heat transfer surface area of the heat exchangers
can be achieved by increasing their width, height, or depth. These
measures can improve heat transfer effectiveness, which can reduce the
condensing temperature and increase the evaporating temperature needed
to transfer the cooling (or heating) load. Such temperature adjustments
reduce the compressor's compression ratio and hence its required power
input. Lennox indicated that evaporator coil area is already near the
maximum for optimum efficiency and latent heat removal. Lennox stated
that increasing the coil area leads to higher evaporating temperatures,
lessening the ability of the coil to remove moisture from the air,
which could lead to humidity control problems in hot humid regions.
(Lennox, No. 6 at p. 2) Lennox also commented that adding coil rows
increases costs proportional to the number of rows, but provides less
than proportional efficiency gain. (Lennox, No. 6 at p. 2)
DOE agrees with Lennox that increasing the evaporator size may lead
to a decrease in latent heat removal. Based on a review of currently
available equipment literature and DOE's energy modeling analyses, DOE
determined that, for a given capacity, the heat exchanger sizes varied
significantly, with larger coil sizes generally correlating to higher
IEER levels (see chapter 5 of the NOPR TSD for additional
information).\36\ As part of the engineering analysis, the design
options DOE considered for different IEER levels include the variation
of evaporator coil size, and DOE's analysis considered evaporator coil
sizes consistent with equipment available on the market.
---------------------------------------------------------------------------
\36\ The following are examples of the equipment literature DOE
reviewed:
(1) United Technologies Corporation. ``Carrier 50TC Cooling
Only/Electric Heat, Packaged Rooftop, 3 to 15 Nominal Tons: Product
Data.'' Available online at: https://www.docs.hvacpartners.com/idc/groups/public/documents/techlit/50tc-19pd.pdf (Accessed on Sept. 12,
2013).
(2) Lennox International Inc. ``Lennox Packaged Electric/
Electric LCH Energence[supreg] Rooftop Units: Product
Specifications.'' Available online at: https://tech.lennoxintl.com/
C03e7o14l/3rEpIb5d/
ehblchbbox1306210556020.
pdf (Accessed on Sept. 12, 2013).
(3) Ingersoll Rand. ``Trane Product Catalog: Packaged Rooftop
Air Conditioners, VoyagerTM Cooling and Gas/Electric,
12\1/2\-25 Tons, 60Hz'' Available online at: https://www.trane.com/
CPS/Uploads/UserFiles/DXUnitarySystems/Light%20Rooftops/RT-PRC028-
EN08022013.pdf (Accessed on Sept. 12, 2013).
---------------------------------------------------------------------------
Fans and Fan Motors
As stated above, DOE proposed several improvements to the indoor
and outdoor fan motors, including copper rotor motors, higher
efficiency motors, and direct-drive fans, and synchronous belts.
Manufacturing more efficient copper rotor motors requires using
copper instead of aluminum for critical components of an induction
motor's rotor (e.g., conductor bars and end rings). By using copper in
these motor components, the efficiency of the motor can improve
significantly because the electrical conductivity of this material,
relative to other materials commonly used in rotor construction (e.g.
aluminum) is much higher (i.e., lower electrical resistance). With this
higher level of conductivity, the electrical losses that might
otherwise present themselves during operation in a given motor are
significantly reduced. However, using a copper-cast rotor in an
electric motor presents a variety of production challenges. For
example, copper melts at higher temperatures than aluminum, so the
casting process becomes more difficult (due to higher thermal stress on
the die mold) and is likely to increase both production time and cost
for manufacturing a motor. EBM-Papst Inc. (EBM-Papst) commented that
copper rotor motors provide marginally increased efficiency
[[Page 58966]]
over aluminum and aluminum alloy rotor motors. EBM-Papst noted that the
torque characteristic of copper rotor motors is very stiff, so that
copper rotor motors cannot control speed based on voltage and, as a
result, variable speed copper rotor motors would require variable
frequency drives. EBM-Papst also indicated that casting of copper
requires very high temperatures and very specialized tools. (EBM-Papst,
No. 16, p. 1)
DOE agrees with EBP-Papst that copper rotor motors are more
difficult to manufacture than aluminum rotor motors due to the high
temperatures required for casting. However, as part of the previous
rulemaking for this equipment, DOE noted that in the case of motor
rotors for similar horsepower motors, copper rotors can reduce the
electric motor total energy losses by between 15 percent and 23 percent
as compared to aluminum rotors.\37\ DOE also notes that, based on a
review of equipment literature, equipment is available on the market
that offers variable speed indoor fan motors using variable frequency
drives. As a result, DOE considered copper rotor motors as a technology
option.
---------------------------------------------------------------------------
\37\ See chapter 4 of the TSD for the July 2004 ANOPR, available
online at: https://www.regulations.gov/#!documentDetail;D=EERE-2006-
STD-0103-0078.
---------------------------------------------------------------------------
High-efficiency electric motors that drive evaporator and condenser
fans can increase efficiency and reduce overall energy use in air-
cooled CUAC and CUHP. EBM-Papst stated that high-efficiency permanent
magnet motors are available with ferrite magnets. EBM-Papst indicated
that external rotor permanent magnet motors with completely integrated
drive electronics are available up to a 6 kilowatt (kW) (8 horsepower)
electrical input. EBM-Papst stated that versions with 7.5 kW and 12 kW
(10 horsepower and 15 horsepower), which DOE notes may be applicable
for very large air-cooled CUAC and CUHP indoor fan motors, will become
available in 2013 and 2014, respectively. In light of EBM-Papst's
information, DOE decided to consider higher efficiency permanent magnet
motors as part of its list of technology options because they may
reduce the energy consumption compared to motors currently used by
manufacturers for CUAC and CUHP equipment. As discussed above, DOE's
analysis considered fan motors consistent with equipment available on
the market.
Direct-drive fans connect the fan blade/wheel directly to the motor
shaft, thereby eliminating drive belt energy loss. EBM-Papst also
commented that direct-drive fans prevent friction power losses that can
be found in fans with mechanical transmission components even when
these components are perfectly aligned with properly-tightened high-
quality belts. (EBM-Papst, No. 16 at p. 2) DOE notes that certain air-
cooled CUAC and CUHP currently available on the market already
incorporate direct-drive fans in higher efficiency equipment. As a
result, DOE proposes to keep direct-drive fans on the list of
technologies.
Another option to improve efficiency would be to increase the
diameter of the outdoor fan, which reduces the discharge velocity of
the air leaving the condenser fan. The energy associated with the
discharge velocity is dissipated and cannot be recovered, hence, a
lower discharge velocity reduces this loss and reduces fan power input.
Regarding increasing the outdoor fan diameter, EBM-Papst commented that
fan efficiency varies significantly with the fan's duty point. EBM-
Papst noted that many fans are selected with the operating point very
far to the right of the point of peak efficiency (i.e., fans are
designed for higher flow rates and are sized smaller than is optimal
for efficiency) and that such selections yield lower first cost and
smaller equipment size. EBM-Papst stated that fan selections that match
the duty point closer with the fan's peak efficiency are usually
larger. Moreover, EBM-Papst commented that despite the potential
increase in operational fan efficiency, a larger fan--while operating
at lower rotational speed--can require a slightly higher motor torque,
which results in the need for a larger motor frame size. (EBM-Papst,
No. 16, p. 2) (Larger frame-sized motors provide higher horsepower and
torque levels.) Lennox also commented that fan efficiency increases
with fan diameter, but that cabinet size and shipping dimensions
constrain the ability of manufacturers to increase fan diameters much
beyond the current sizes. (Lennox, No. 6 at p. 2)
With respect to these comments, DOE recognizes that fan efficiency
can play a role in improving CUAC/CUHP efficiency. DOE also realizes
that fan diameter size is limited by cabinet sizes and shipping
dimensions. DOE has incorporated fan diameter and motor sizes
consistent with existing equipment available on the market to ensure
that components are appropriately sized.
EBM-Papst suggested that DOE consider that company's
HyBlade[supreg] axial fan and AxiTop diffuser for axial fans as
technology options for improving condenser fan efficiency. (EBM-Papst,
No. 16 at p. 3) EBM-Papst stated that the HyBlade[supreg] axial fan
uses a blade with a metal core for structural strength and motor heat
dissipation, while using injection molded blade surfaces for advanced
geometries that allow for optimized aerodynamic shape, resulting in
increased efficiency compared to conventional fan blades. (EBM-Papst,
No. 16 Appendix 4 at p. 2) According to EBM-Papst, the Axitop diffuser
reduces discharge losses due to stripping and back-flow of air and, as
a result, boosts the pressure increase of the fan. This increases the
efficiency of the fan and allows the fan speed to be reduced (i.e., fan
motors may run at lower power) while producing the same air volume,
resulting in a decrease in energy use of the overall system. EBM-Papst
noted that in one customer application (at constant air volume), energy
consumption was reduced by 27 percent using this technology. (EBM-
Papst, No. 16 Appendix 3 at pp. 1-2) DOE notes that both of these
technologies are patented by EBM-Papst. DOE does not intend to consider
energy conservation standards that would necessitate the use of any
proprietary designs or patented technologies, which could allow a
single manufacturer to monopolize the market. As a result, DOE is not
considering EBM-Papst's HyBlade[supreg] axial fan and AxiTop diffuser
as technology options in this NOPR. However, DOE notes that the
proposed energy conservation standards would not prohibit the use of
these technologies.
EBM-Papst made several comments regarding indoor fan energy use and
available design options to improve their efficiency--which, by
extension, would improve overall CUAC/CUHP efficiency. EBM-Papst
commented that unnecessary electrical consumption by indoor fans
impacts the energy efficiency doubly, because of the additional heat
load on the conditioned space. DOE recognizes that the heat load caused
by the indoor motor may result in added energy consumption to cool the
air heated by the motor. DOE notes that the energy modeling tool used
in the engineering analyses is already designed to account for the heat
load caused by the indoor fan motor as part of the overall system
performance.
An airfoil centrifugal fan is a type of fan that has blades shaped
like air foils that are inclined such that the blade trailing edge is
angled away from the rotation direction. The best airfoil fans can
operate at efficiencies near 90 percent.\38\ Utilizing this type of fan
for
[[Page 58967]]
indoor fan applications can improve the efficiency of the CUAC/CUHP
system. Regarding specific indoor fan types, EBM-Papst stated that
airfoil centrifugal fans are known for low sound. Additionally, EBM-
Papst stated that the efficiency benefits of airfoil impellers over
backward curved impellers (which have the tips of its blades inclined
away from the direction of the airflow, enabling it to move air at
higher pressures) should be examined closely. (EBM-Papst, No. 16 at p.
2) Although EBM-Papst did not provide details regarding the low sound
feature, DOE recognizes that the airfoil centrifugal fan has less
friction losses during operation, which produces less noise, and also
results in lower power consumption.
---------------------------------------------------------------------------
\38\ United States Army. December 9, 2005. Maintenance of
Mechanical and Electrical Equipment At Command, Control,
Communications, Computers, Intelligence, Surveillance, and
Reconnaissance (C4isr) Facilities, HQUSACE/OCE Army Technical
Manuals [Online Report]. DOE documented this report in the
rulemaking docket as docket ID EERE-2013-BT-STD-0007-0019.
---------------------------------------------------------------------------
DOE acknowledges that manufacturers may offer features that are
beneficial to consumers, like low sound fans, but do not impact
efficiency. A number of manufacturers indicated that airfoil
centrifugal fans and backward curved centrifugal fans (i.e., similar to
airfoil fans, but they have simpler blades and cannot attain comparable
efficiencies) may improve IEER due to lower fan power consumption. As a
result, DOE proposes to include these fan types on the list of
technology options. As discussed above, DOE considered technology
options and designs that are generally consistent with existing
equipment on the market. Additionally, as part of the reverse
engineering analysis (see section IV.C.1), DOE considered fan curves
and test data to account for the performance of the fans as part of the
air-cooled CUAC and CUHP.
EBM-Papst also provided the following comments on other fan and fan
motor efficiency improving technologies:
Lower air-speed results in lower fan energy losses and
EBM-Papst recommended imposing an upper limit for air speed inside of
the commercial package equipment, referenced to air inlet area, the air
outlet area, and/or air filter area. Air-speed of less than 2.5 meters/
second would be ideal.
Optimize the air path in the unit to minimize airflow
impedance.
Optimize the fan selection in terms of fan diameter, and
fan type (axial, centrifugal forward curved, centrifugal backward
curved, cross flow, mixed flow) so that the fan duty point of its peak
efficiency is: (1) Close to the actual fan duty point required by the
commercial package equipment, and (2) that the chosen fan type enhances
the air path in the unit.
Fine-tune the fan design (blade angle, number of blades,
impeller width) so that the fan's operational efficiency in the unit
matches the fan peak efficiency exactly.
Some electronic motor speed controllers can cause
structure-borne noise. A better controller potentially avoids the need
for sound attenuation, which in turn, frees up the air path for
increased air-side efficiency.
Improve the combination of fans with motors and speed
controllers. A regulation harmonized with EN 13053:2006+A1 would limit
the maximum permitted electrical power consumption of the motorized
fan. Equation (6) in EN 13053 determines a reference power input based
on fan static pressure and on airflow. The resulting product is
compared against a table which categorizes the equipment in class P1
(best) through class P7 (worst). (EBM-Papst, No. 16 at p. 3)
DOE agrees that reducing the air speed can reduce fan power
consumption and included variable or staged air flow as a technology
option. DOE also recognizes that optimizing fan type and fan design may
decrease the fan power consumption and thus improve the efficiency of
the air-cooled CUAC and CUHP. As a result, DOE is including these
designs on the list of technology options. DOE also agrees that
appropriately matching the fan with the fan motor improves efficiency.
However, DOE proposes to evaluate air-cooled CUAC and CUHP as a whole
and does not propose to set separate performance requirements for the
fan assembly. With regards to EBM-Papst's comments concerning
optimizing air paths and better motor controllers, DOE's analyses
considered air flow paths and control systems consistent with existing
equipment available on the market.
Electronic Expansion Valves
Expansion valves are refrigerant metering devices that control the
amount of refrigerant flowing to the evaporator coil, decreasing the
temperature and pressure of the refrigerant, which creates the driving
force to move heat out of the conditioned space and into the
evaporator. Electronic expansion valves use an electronic control
system and sensors that measure suction line temperature and pressure
to maintain more precise control of superheat over a wide range of
operating conditions and, as a result, may increase energy efficiency
under varying load conditions when paired with modulating systems.
Lennox stated that electronic expansion valves are very costly and
not economically justified because they provide little full load
benefit. (Lennox, No. 6 at p. 2) As explained in section III.A, DOE
proposes to transition to IEER, a part load efficiency metric, and
electronic expansion valves are beneficial for partial loads because
they can precisely control the expansion process which leads to lower
power consumption, and therefore, a higher IEER. DOE recognizes that
that electronic expansion valves may be more expensive that other
expansion devices, like capillary tubes or thermostatic expansion
valves, but DOE already considers the costs of design options
separately as part of the engineering analyses, which means that these
devices may be screened out once costs are factored into the analysis.
As a result, DOE is continuing to consider electronic expansion valves
as a technology option for purposes of its engineering analysis.
Part-Load Technology Options
Variable-capacity or multiple-tandem compressors provide the
ability to modulate the cooling capacity, allowing equipment to better
match the cooling load than single speed compressors that can only
operate by cycling on and off. The effectiveness of the heat exchangers
is greater during operation with reduced mass flow at part load, thus
reducing the condensing temperature and increasing the evaporating
temperature required to transfer the load--this in turn reduces the
compressor's operating pressure ratio and its power input. As a result,
using variable capacity or multiple-tandem compressors may improve the
overall system efficiency by matching part-load operating conditions
(and reducing energy consumption) more closely than units using single
speed compressors. Variable speed fans/motors can also improve CUAC and
CUHP efficiency by varying fan speed to reduce air flow rate at part
load. If the indoor/outdoor heat exchangers of a unit are served by a
variable-capacity compressor or by a tandem compressor set, less air
flow is needed to transfer the load. Overall system efficiency can be
improved by reducing the indoor or outdoor air flow and reducing
indoor/outdoor fan power.
DOE's consideration of a shift to an IEER-based standard generated
a number of comments. Ingersoll Rand commented that moving to an IEER
metric will require manufacturers to optimize around part load
performance, likely in the form of improved heat
[[Page 58968]]
transfer and airflow. (Ingersoll Rand, No. 10 at p. 3) Whole Building
Systems, LLC, commented that DOE should include variable-capacity
compressors, along with variable speed condenser and evaporator fans.
It noted that these technologies are already being adopted by
manufacturers. (Whole Building Systems, No. 4 at p. 1) Carrier added
that compressor staging (multiple or variable capacity-compressors) and
indoor and outdoor fan speed control would increase IEER efficiency,
but would not impact EER. (Carrier, No. 7 at p. 2)
DOE agrees with Whole Building Systems, Carrier, and Ingersoll Rand
that variable-capacity compressors, compressor staging, and variable
speed fans improve IEER because they provide the ability to modulate
the cooling capacity and reduce the overall system power consumption
under part-load conditions. Based on DOE's review of manufacturer
equipment literature, these design elements are already being used in
equipment currently available on the market. Accordingly, DOE included
these design elements in the list of technology options considered for
this NOPR.
Modine commented that DOE should also consider the intelligent
interactive modulation head pressure control, a technology option
developed by Airedale International Air Conditioning (Airedale) to
improve off peak load efficiencies. (Modine, No. 5 at pp. 1-2) DOE
notes that Modine did not provide any details regarding this technology
or the associated efficiency improvement. DOE also notes that Airedale
was acquired by Modine in 2005. DOE does not consider proprietary
technologies as part of its analyses and, as a result, did not consider
the intelligent interactive modulation head pressure control developed
by Airedale as a separate technology option. However, DOE recognizes
that different equipment manufacturers may take different approaches
for part-load operation control strategies.
Technology Options That Do Not Impact IEER
DOE laid out a number of technology options for comment that have
no impact on IEER but that could have an overall impact on energy usage
that would not be fully captured by the use of this proposed metric.
Demand-control ventilation strategies monitor the indoor space
occupancy and conditions (e.g., using CO2 sensors) to
deliver the required ventilation as needed (based on building air
quality requirements). In contrast, conventional systems that do not
employ these strategies may provide fixed amounts of ventilated air
based on assumed conditions. By comparison, demand-control ventilation
strategies would more accurately control the amount of outdoor air
required for ventilation that needs to be conditioned by the equipment.
Lennox and Ingersoll Rand commented that demand-control ventilation
strategy does not benefit either EER or IEER ratings. (Lennox, No. 6 at
p. 3; Ingersoll Rand, No. 10 at p. 3) Carrier also commented that many
units on the market have capabilities for demand management, and with
the development of smart meters and the smart grid, there are more
effective ways to control peak power for this class of equipment than
the technology options identified by DOE. Carrier stated that these
features are not captured in EER or IEER metrics. (Carrier, No. 7 at p.
2) Lentz Engineering Associates, Inc. commented that DOE should
consider a technology option where the primary function of the air
handling systems is to efficiently process or manage ventilation and
where the primary heating and cooling plants rely on recovered energy
instead of expending new energy assets. Lentz Engineering stated that
this can result in energy use reductions in HVAC systems on the order
of 85 to 90 percent. (Lentz, No. 3 at p. 1)
DOE also considered the implementation of a high-side solenoid
valve. A high-side solenoid valve (i.e., a solenoid valve located in
the high-pressure-refrigerant line) and a discharge line check valve
(i.e., a check valve located in the compressor discharge line) can be
installed in a refrigeration system to minimize pressure equalization
between the high-pressure and low-pressure sides. Lennox commented that
these valves do not benefit either EER or IEER ratings, but no further
details were provided in their comments. (Lennox, No. 6 at p. 3)
Another option could also be used. Heat pipes are used in hot humid
climates to increase dehumidification. Refrigerant inside the heat pipe
pre-cools incoming supply air by absorbing the heat from it. The
evaporator cools the supply air further, and is able to extract more
water vapor than a conventional evaporator would. After the refrigerant
in the tubes changes into a vapor, it flows to the condensing section
at the other end of the system, releasing its heat and flowing back to
the evaporator end of the pipe to begin the cycle again. Lennox also
commented that heat-pipes for high latent loads do not benefit either
EER or IEER ratings. (Lennox, No. 6 at p. 3)
In addition to the items describe above, AAON noted several other
technologies that DOE did not initially consider that can improve
efficiency. These technologies include capacity modulation (i.e.,
modulate system capacity output for part load conditions by various
means to reduce overall energy consumption), economizers (i.e., an
automatic system that enables a cooling system to supply outdoor air to
reduce or eliminate the need for mechanical cooling during mild or cold
weather), heat recovery (i.e., a process that preconditions outdoor air
entering the equipment through direct or indirect thermal and/or
moisture exchange with the exhaust air) and energy efficient control
sequences (e.g., single zone variable-air-volume) are outside the scope
of AHRI Standard 340/360-2007 and beyond the lab facilities
capabilities to test. AAON added that although energy can be saved
annually by using any one of these options, the full load EER ratings
would be decreased due to the higher pressure drop incurred with many
of these features. AAON stated that rating system modifications exist
to account for the energy savings of some of these technologies, such
as those contained in AHRI Guideline V for energy recovery systems.
(AAON, No. 8 at p. 3)
DOE recognizes that technologies such as demand-control strategies,
economizers, energy recovery, high-side solenoid valves or discharge
line check-valves and heat pipes may result in annual building energy
savings. However, DOE is not aware of any data showing that these
technologies improve IEER based on the current DOE test procedure. As a
result, DOE is not proposing to include these technologies in its
analyses. However, DOE notes that the IEER metric for this equipment
already accounts for both capacity modulation and energy efficient
control sequences. In addition, based on a review of equipment
literature, DOE notes that both capacity modulation and energy
efficient control sequences are used to improve part-load performance
for this equipment. As a result, DOE included these technology options
as part of the analyses.
Based on manufacturer comments and DOE's review of equipment
literature, DOE is declining to include low pressure drop filters and
air leakage paths within the unit from the list of technology options.
Comments from several manufacturers during manufacturer interviews and
public meetings held as part of the Commercial HVAC, Water Heating, and
Refrigeration Certification Working Group (Commercial Certification
Working
[[Page 58969]]
Group), indicated that most manufacturers test their systems without
filters installed or use disposable filters that produce minimal
pressure drops when used. Additionally, the filter type used in a
system is a feature specified by the customer based on the needs of the
installation. For example, a unit installed in a hospital will require
filters with a high Minimum Efficiency Reporting Value (MERV)
rating,\39\ which may cause an increase in pressure drop depending on
the density of the filter material and an accompanying increase in fan
power and energy use of the unit. DOE proposes to remove air leakage
paths from the list of technology options because several manufacturers
indicated during interviews that air leakage paths are already
eliminated during design of air-cooled CUAC and CUHP.
---------------------------------------------------------------------------
\39\ ASHRAE Standard 52.2-2007, ``Method of Testing General
Ventilation Air-Cleaning Devices for Removal Efficiency by Particle
Size,'' establishes the MERV rating, which is the standard
comparison of the efficiency of an air filter, ranging from 1 (least
efficient) to 16 (most efficient), and measures a filter's ability
to remove particles from 0.3 to 10 microns in size.
---------------------------------------------------------------------------
Based on these assertions and supplemental follow-up work
performed, DOE considered the following technology options listed in
Table IV.3 in formulating its proposed standards:
Table IV.3--Proposed Technology Options
------------------------------------------------------------------------
-------------------------------------------------------------------------
Heat transfer improvements:
Electro-hydrodynamic enhancement.
Alternative refrigerants.
Condenser and evaporator fan and fan motor improvements:
Larger fan diameters.
More efficient fan blades (e.g., air foil centrifugal
evaporator fans, backward-cured centrifugal evaporator fans, high
efficiency propeller condenser fans).
High efficiency motors (e.g., copper rotor motor, high
efficiency induction, permanent magnet, electronically commutated).
Variable speed fans/motors.
Larger heat exchangers.
Microchannel heat exchangers.
Compressor Improvements:
High efficiency compressors.
Multiple compressor staging.
Multiple-tandem or variable-capacity compressors.
Thermostatic expansion valves.
Electronic expansion valves.
Subcoolers.
Reduced indoor fan belt loss:
Synchronous (toothed) belts.
Direct-drive fans.
------------------------------------------------------------------------
Issue 4: DOE requests comment and data regarding additional design
options or variants of the considered design options that can increase
the range of considered efficiency improvements, including design
options that may not yet be found on the market.
B. Screening Analysis
After DOE identified the technologies that might improve the energy
efficiency of electric motors, DOE conducted a screening analysis. The
purpose of the screening analysis is to determine which options to
consider further and which to screen out. DOE consulted with industry,
technical experts, and other interested parties in developing a list of
design options. DOE then applied the following set of screening
criteria to determine which design options are unsuitable for further
consideration in the rulemaking:
Technological Feasibility: DOE will consider only those
technologies incorporated in commercial equipment or in working
prototypes to be technologically feasible.
Practicability to Manufacture, Install, and Service: If
mass production of a technology in commercial equipment and reliable
installation and servicing of the technology could be achieved on the
scale necessary to serve the relevant market at the time of the
effective date of the standard, then DOE will consider that technology
practicable to manufacture, install, and service.
Adverse Impacts on Equipment Utility or Equipment
Availability: DOE will not further consider a technology if DOE
determines it will have a significant adverse impact on the utility of
the equipment to significant subgroups of customers. DOE will also not
further consider a technology that will result in the unavailability of
any covered equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as equipment generally available in the United
States at the time.
Adverse Impacts on Health or Safety: DOE will not further
consider a technology if DOE determines that the technology will have
significant adverse impacts on health or safety.
Technologies that pass through the screening analysis are referred
to as ``design options'' in the engineering analysis. Details of the
screening analysis are in chapter 4 of the NOPR TSD. In view of the
above factors, DOE screened out the following design options.
Electro-Hydrodynamic Enhanced Heat Transfer
Electro-hydrodynamic enhancement of heat transfer increases the net
heat transfer coefficient by applying a high-voltage electrostatic
potential field across a heat transfer fluid to destabilize the thermal
boundary layer and incite fluid mixing. The improved heat transfer of
the evaporator and condenser coils may improve a given system's overall
efficiency. DOE notes, however, that this technology is still in the
research stage. In response to the RFI, Lennox commented that locating
an electrode between each of the hundreds/thousands of heat exchanger
fins (which would be the likely method for applying this option) has
not been adequately demonstrated for commercial deployment. (Lennox,
No. 6 at p. 2)
Although the technique has been shown to improve heat transfer in
laboratory testing, DOE is not aware of any commercially available
equipment
[[Page 58970]]
or working prototypes that use electro-hydrodynamic heat transfer. As a
result, DOE does not believe at this time that this option meets the
screening criterion of technological feasibility. In addition, DOE
agrees with Lennox that this technology has not been adequately
demonstrated for commercial deployment and, as a result, does not meet
the criterion of practicability to install and service on a scale
necessary to serve the relevant market at the time of the compliance
date of a new standard. For these reasons, DOE did not consider
electro-hydrodynamic heat transfer further in the NOPR analyses.
Alternative Refrigerants
DOE considered ammonia, carbon dioxide, and various hydrocarbons
(such as propane and isobutane) as alternative refrigerants to those
that are currently in use, such as R-410A. In response to the February
2013 RFI, Lennox stated that virtually all equipment is designed with
R-410A as the refrigerant, and that because of the lengthy
qualification process to develop a new refrigerant and the components
that would need to be redesigned to use it, it is not reasonable to
expect a new refrigerant in the timeframe for new energy conservation
standards. (Lennox, No. 6 at p. 2) DOE notes that safety concerns need
to be taken into consideration when using ammonia and hydrocarbons in
air-conditioning systems. EPA created the Significant New Alternatives
Policy (SNAP) Program to evaluate alternatives to ozone-depleting
substances. Substitutes are reviewed on the basis of ozone depletion
potential, global warming potential, toxicity, flammability, and
exposure potential. DOE notes that ammonia (in vapor compression
cycles), carbon dioxide, and hydrocarbons have been approved or are
being considered under SNAP for certain uses, but these or other low
GWP alternatives are not yet listed as acceptable substitutes for this
equipment.\40\ DOE is also not aware of any other more efficient
refrigerant options that are SNAP-approved. Because these alternative
refrigerants have not yet been approved for this equipment, DOE did not
consider alternate refrigerants for further analysis.
---------------------------------------------------------------------------
\40\ On July 9, 2014, EPA proposed to list certain hydrocarbons
and R-32 for residential self-contained A/C appliances as acceptable
subject to use conditions to address safety concerns (See 79 FR
38811). EPA is also evaluating new refrigerants for other A/C
applications, including commercial A/C. Additional information
regarding EPA's SNAP Program is available online at: https://www.epa.gov/ozone/snap/.
---------------------------------------------------------------------------
Sub-Coolers
A sub-cooler is a device located between the condenser coil outlet
and the expansion device inlet used to further cool the refrigerant
exiting the condenser in order to achieve a higher cooling/heating
capacity for a unit. In response to the RFI, Lennox added that sub-
coolers do not provide a benefit at comfort air conditioning operating
conditions. (Lennox, No. 6 at p. 3) DOE notes that air-cooled CUAC and
CUHP units typically sub-cool the refrigerant in the condensing coil
(by further decreasing the temperature of the refrigerant). DOE also
notes that additional mechanical sub-cooling from smaller, secondary
vapor-compression circuits has not been incorporated in commercial
equipment or in working prototypes. As a result, DOE does not believe
sub-cooling meets the criterion of technological feasibility and did
not consider it for further analysis.
Based on the screening analysis, DOE considered the design options
listed in Table IV.4.
Table IV.4--Design Options Retained for Engineering Analysis
------------------------------------------------------------------------
-------------------------------------------------------------------------
Condenser and evaporator fan and fan motor improvements:
Larger fan diameters.
More efficient fan blades (e.g., air foil centrifugal
evaporator fans, backward-cured centrifugal evaporator fans, high
efficiency propeller condenser fans).
High efficiency motors (e.g., copper rotor motor, high
efficiency induction, permanent magnet, electronically commutated).
Variable speed fans/motors.
Larger heat exchangers.
Microchannel heat exchangers.
Compressor Improvements:
High efficiency compressors.
Multiple compressor staging.
Multiple- or variable-capacity compressors.
Thermostatic expansion valves.
Electronic expansion valves.
Reduced indoor fan belt loss:
Synchronous (toothed) belts.
Direct-drive fans.
------------------------------------------------------------------------
C. Engineering Analysis
The engineering analysis estimates the cost-efficiency relationship
of equipment at different levels of increased energy efficiency. This
relationship serves as the basis for the cost-benefit calculations for
commercial customers, manufacturers, and the Nation. In determining the
cost-efficiency relationship, DOE estimates the increase in
manufacturer cost associated with increasing the efficiency of
equipment above the baseline up to the maximum technologically feasible
(``max-tech'') efficiency level for each equipment class.
1. Methodology
DOE has identified three basic methods for generating manufacturing
costs: (1) The design-option approach, which provides the incremental
costs of adding design options to a baseline model that will improve
its efficiency (i.e., lower its energy use); (2) the efficiency-level
approach, which provides the incremental costs of moving to higher
energy efficiency levels, without regard to the particular design
option(s) used to achieve such increases; and (3) the reverse-
engineering (or cost-assessment) approach, which provides ``bottom-up''
manufacturing cost assessments for achieving various levels of
increased efficiency, based on teardown analyses (or physical
teardowns) providing detailed data on costs for parts and material,
labor, shipping/packaging, and investment for models that operate at
particular efficiency levels. A supplementary method called a catalog
[[Page 58971]]
teardown uses published manufacturer catalogs and supplementary
component data to estimate the major physical differences between a
piece of equipment that has been physically disassembled and another
piece of similar equipment for which catalog data are available to
determine the cost of the latter equipment.
In the RFI, DOE stated that in order to create the cost-efficiency
relationship, it anticipated having to structure its engineering
analysis using the reverse-engineering approach, including physical and
catalog teardowns. DOE requested comments on using a reverse
engineering approach supplemented with catalog teardowns and comments
on what the appropriate representative capacities would be for each
equipment class. 78 FR 7300.
AAON commented that it is inappropriate and unethical for DOE to
use proprietary information and trade secrets provided during
manufacturer interviews to reverse engineer equipment supplemented by
the catalog teardowns. AAON stated that disclosing trade secrets in a
public forum, accessible worldwide, undermines U.S. manufacturing and
damages the free enterprise system. (AAON, No. 8 at p. 4) DOE notes
that it does not publicly disclose proprietary information obtained
from individual manufacturers. Instead, as part of the manufacturer
interviews, DOE aggregates all manufacturer responses to prevent
disclosing of proprietary information and trade secrets.
AAON commented that DOE's methodology is flawed because all models
are weighted equally. AAON indicated that models with higher efficiency
and cost are sold in much lower quantities than models with lower
efficiency and cost. AAON added that models with higher efficiency and
cost may not be economically justified and are only sold to consumers
that want the highest efficiency regardless of economic justification.
(AAON, No. 8 at p. 3) DOE intends to conduct a full analysis to
determine the economic justification of higher efficiency levels,
including developing incremental manufacturing costs for higher
efficiency equipment based on energy modeling, reverse engineering
analyses, and catalog teardowns. Although manufacturers may currently
sell higher efficiency models at lower quantities, DOE's analysis
considers the incremental manufacturing costs if energy conservation
standards are set at a particular efficiency level and assumes that
market share will shift to the new standard level.
Carrier commented that reverse engineering of a few selected
samples will not provide an accurate picture of manufacturing costs,
which depend on volume, tooling approach (dedicated versus flexible)
and assembly processes and procedures for which reverse engineering
will not provide insight. Carrier recommended that DOE should work with
AHRI and industry to obtain costs using a blind survey, with each
manufacturer providing estimates for the cost increases related to the
proposed standards. (Carrier, No. 7 at p. 3) DOE notes that it
supplemented its reverse engineering analyses with manufacturer
interviews and solicited feedback on the volume, tooling, and processes
used to manufacture equipment and the manufacturing costs required to
meet each efficiency level for each equipment class. As a result, DOE
believes that the manufacturing cost-efficiency results from the
engineering analyses are sufficiently representative of the
manufacturing processes used for this equipment.
Ingersoll Rand commented that DOE should analyze the following
categories to adequately represent variation in equipment types: (1)
7.5-ton cooling and heat pump, (2) 15-ton cooling and heat pump, (3)
40-ton cooling only. (Ingersoll Rand, No. 10 at p. 3) Lennox added that
DOE should select equipment from manufacturers that have equipment with
baseline and higher efficiency in the same platform. (Lennox, No. 6 at
p. 3)
For this NOPR, DOE conducted the engineering analyses using the
reverse-engineering approach and analyzed three specific capacities to
represent each of the three cooling capacity categories (i.e., small,
large, and very large). Based on a review of manufacturer equipment
offerings and information obtained from manufacturer interviews, DOE
selected representative capacities of 90,000 Btu/h (7.5 tons) for the
>=65,000 to <135,000 Btu/h capacity range, 180,000 Btu/h (15 tons) for
the >=135,000 to <240,000 Btu/h capacity range, and 360,000 Btu/h (30
tons) for the >=240,000 to <760,000 Btu/h capacity range. DOE noted in
the 2004 ANOPR that 7.5 tons and 15 tons represent volume shipment
points in their respective capacity range. 69 FR 45469. These
capacities are near the center of their respective equipment class
capacity ranges. Additionally, DOE interviewed several equipment
manufacturers as part of the current rulemaking and found that the
majority of manufacturers interviewed agreed that the 7.5-ton, 15-ton,
and 30-ton capacities adequately represent the three equipment class
capacity ranges.
Where feasible, DOE selected models for reverse engineering with
low and high efficiencies from a given manufacturer that are built on
the same platform. DOE also supplemented the teardown analysis by
conducting catalog teardowns for equipment spanning the full range of
capacities and efficiencies from all manufacturers selling equipment in
the United States.
2. Baseline Efficiency Levels
The baseline model is used as a reference point for each equipment
class in the engineering analysis and the life-cycle cost and payback-
period analyses. Typically, DOE would consider equipment that just
meets the minimum energy conservation standard as baseline equipment.
However, as discussed in section III.A, DOE is proposing to replace the
current cooling performance energy efficiency descriptor, EER, with
IEER, and a single EER level can correspond to a range of IEERs. As a
result, DOE must establish a baseline IEER for each equipment class. As
part of the RFI, DOE requested comment on approaches that it should
consider when determining a baseline IEER as well as an appropriate
baseline IEER for each equipment class. 78 FR 7300-7301 (Feb. 1, 2013).
Modine commented that DOE should continue to use ASHRAE Standard
90.1 and ASHRAE Standard 189.1, ``Standard for the Design of High-
Performance Green Buildings,'' (ASHRAE Standard 189.1) \41\ for
establishing baseline IEER levels because current technology makes it
readily possible to achieve the ASHRAE Standard 189.1 minimum IEER
standards. (Modine, No. 5 at p. 2) The IEER levels specified in ASHRAE
Standard 189.1 are 0.2 to 1.1 IEER higher than the ASHRAE Standard 90.1
levels.
---------------------------------------------------------------------------
\41\ ASHRAE Standard 189.1 provides minimum requirements for the
siting, design, construction, and plan for operation of high-
performance green buildings. Available online at: https://www.ashrae.org/resources-publications/bookstore/standard-189-1.
---------------------------------------------------------------------------
As discussed in section II.A, DOE is typically obligated either to
adopt those standards developed by ASHRAE or to adopt levels more
stringent than the ASHRAE levels if there is clear and convincing
evidence in support of doing so. (42 U.S.C. 6313(a)(6)(A)) DOE notes
that ASHRAE Standard 90.1-2010 specifies minimum efficiency
requirements using both the EER and IEER metrics. As discussed in the
RFI, DOE evaluated the relationship between EER and IEER by considering
models that are rated at the current DOE standard levels based on the
EER metric
[[Page 58972]]
for each equipment class (as presented in section II.B.1). DOE then
analyzed the distribution of corresponding rated IEER values for each
equipment class. DOE notes that the lowest IEER values associated with
the current DOE standards for EER generally correspond with the ASHRAE
Standard 90.1-2010 minimum efficiency requirements. 78 FR 7296, 7299
(Feb. 1, 2013); EERE-2013-BT-STD-0007-0001. Based on this evaluation,
because DOE is considering energy conservation standards based on the
IEER metric, DOE proposes to use the ASHRAE Standard 90.1-2010 minimum
IEER requirements to characterize the baseline cooling efficiency for
each equipment class. DOE also notes that equipment is available on the
market that is at or near the ASHRAE Standard 90.1-2010 minimum IEER
requirements. As a result, DOE is not considering higher IEER levels
for the baseline.
For CUHP, DOE is considering heating efficiency standards based on
the COP metric. As discussed in section II.B.1, EPAct 2005 established
minimum COP levels for small, large, and very large air-cooled CUHP,
which DOE codified in a final rule on October 18, 2005. 70 FR 60407.
DOE proposes to use these current COP standard levels to characterize
the baseline heating efficiency for each equipment class.
The baseline efficiency levels for each equipment class are
presented below in Table IV.5.
Table IV.5--Baseline Efficiency Levels
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Equipment type Heating type Baseline efficiency level
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC and AC Electric Resistance 11.4 IEER.
HP (Air-Cooled)-->=65,000 Btu/h Heating or No Heating. 11.2 IEER.
and <135,000 Btu/h Cooling All Other Types of
Capacity. Heating.
HP Electric Resistance 11.2 IEER,
Heating or No Heating. 3.3 COP.
All Other Types of 11.0 IEER,
Heating. 3.3 COP.
Large Commercial Packaged AC and AC Electric Resistance 11.2 IEER.
HP (Air-Cooled)-->=135,000 Btu/h Heating or No Heating. 11.0 IEER.
and <240,000 Btu/h Cooling All Other Types of
Capacity. Heating.
HP Electric Resistance 10.7 IEER,
Heating or No Heating. 3.2 COP.
All Other Types of 10.5 IEER,
Heating. 3.2 COP.
Very Large Commercial Packaged AC AC Electric Resistance 10.1 IEER.
and HP (Air-Cooled)-->=240,000 Heating or No Heating. 9.9 IEER.
Btu/h and <760,000 Btu/h Cooling All Other Types of
Capacity. Heating.
HP Electric Resistance 9.6 IEER,
Heating or No Heating. 3.2 COP.
All Other Types of 9.4 IEER,
Heating. 3.2 COP.
----------------------------------------------------------------------------------------------------------------
3. Incremental Efficiency Levels
For each equipment class, DOE analyzes several efficiency levels
and determines the incremental cost at each of these levels. For this
NOPR, DOE developed efficiency levels based on a review of industry
standards and available equipment. For efficiency level 1, DOE used the
IEER levels specified in Draft Addendum CL.\42\ For the higher
efficiency levels, DOE initially determined the levels for CUAC
equipment classes with electric resistance heating or no heating based
on the range of efficiency levels associated with equipment listed in
the AHRI certification database and the California Energy Commission's
(CEC) database. DOE evaluated the full range of capacities for the
small, large, and very large equipment classes with a specific focus on
7.5-ton, 15-ton, and 30-ton as the representative cooling capacities.
DOE chose efficiency levels for CUAC with all other types of heating
equal to the efficiency levels for equipment with electric resistance
heating or no heating, minus the differences in the IEER specifications
for these pairs of equipment classes prescribed in the Draft Addendum
CL. DOE believes these decreases in IEER appropriately reflect the
additional power required for furnace pressure drop.
---------------------------------------------------------------------------
\42\ The Draft Addendum CL was the latest available version at
the time DOE conducted the analyses for today's NOPR. DOE notes that
ASHRAE has more recently finalized Addendum CL, with minor
modifications to the IEER levels for large air-cooled CUAC and CUHP
(i.e., cooling capacity of >=135,000 Btu/h and <240,000 Btu/h).
---------------------------------------------------------------------------
Similarly, for the CUHP equipment classes, DOE developed cooling
mode efficiency levels equal to the CUAC efficiency levels minus the
difference in IEER specifications for these two equipment types
prescribed in the Draft Addendum CL. DOE believes that these decreases
in IEER are representative of the efficiency differences that occur due
to losses from the reversing valve and coil circuitry required in heat
pumps for both heating and cooling operation.
As part of the RFI, DOE requested information on the max-tech
efficiency levels achievable in the market. 78 FR 7301. The Joint
Efficiency Advocates commented that, based on models in the AHRI
certification database, the maximum-available IEER levels are 25 to 82
percent higher than the ASHRAE Standard 90.1-2010 levels depending on
equipment category. The Joint Efficiency Advocates stated that the
maximum-available efficiency levels may not represent the maximum
technologically feasible levels since there may be technology options
that can improve efficiency that have not been employed in the most-
efficient models currently available. (Joint Efficiency Advocates, No.
11 at p. 2) AAON commented that the max-tech efficiency levels can be
assumed to be slightly above the current CEE Tier 2 levels.\43\ (AAON,
No. 8 at p. 4)
---------------------------------------------------------------------------
\43\ The CEE Commercial Unitary Air Conditioner and Heat Pump
Specification can be found online at: https://library.cee1.org/content/cee-commercial-unitary-ac-and-hp-specification-0. DOE notes
that the CEE Tier 2 levels represent an 18-percent to 23-percent
increase in IEER over the proposed baseline levels.
---------------------------------------------------------------------------
[[Page 58973]]
DOE notes that its maximum-available efficiency levels rely on the
performance of recently introduced models. DOE evaluated available
equipment literature and energy use information on these maximum-
available efficiency models and conducted energy modeling to determine
the feasibility of achieving these efficiency levels. For the >=65,000
Btu/h and <135,000 Btu/h capacity CUAC with electric resistance heating
or no heating equipment classes, DOE noted, based on its review of the
AHRI certification and CEC equipment databases, that the maximum-
available unit was rated at 20.9 IEER. However, sufficient information
allowing correlation of incremental efficiency gains with specific
design options and incremental manufacturing costs was not available to
properly evaluate this unit. DOE also notes that a different
manufacturer currently offers a 7.5-ton model rated at 19.9 IEER and a
10-ton model rated at 20.8 IEER. DOE notes that there is also
uncertainty regarding the way the design differences contribute to the
added efficiency of the 10-ton model, making it difficult to accurately
estimate the incremental cost associated with this efficiency gain. As
a result, DOE is proposing to use 19.9 IEER as the maximum-available
efficiency level representative of this equipment class. DOE is not
aware of data showing that energy efficiency can be increased beyond
these levels. As a result, DOE is proposing to use the maximum-
available efficiency levels as the max-tech levels for the NOPR
analyses.
For the CUHP equipment classes, DOE is proposing heating efficiency
levels based on a variation of COP with IEER. In the 2004 ANOPR, DOE
proposed to address the energy efficiency of air-cooled CUHP by
developing functions relating COP to EER. 69 FR 45468. DOE also noted
that this method was also used by industry to establish minimum
performance requirements for ASHRAE Standard 90.1-1999. Id. AHRI
supplied the ASHRAE Standard 90.1-1999 committee with curves relating
the COP as a function of EER. Using this information, the committee
then set the minimum COP levels to the COP corresponding to the
selected minimum EER level. Id. DOE stated in the February 2013 RFI
that since this method was generally accepted by industry and
interested parties involved in the development of ASHRAE Standard 90.1-
1999, it was considering a similar approach for this rulemaking. DOE
indicated that if it transitions to IEER as the cooling mode energy
efficiency descriptor, DOE may establish minimum COP levels based on
the variation of COP with IEER. As part of the RFI, DOE requested
information on issues related to using IEER as the cooling performance
metric when developing a correlation between COP and IEER. 78 FR 7301.
AAON, Carrier, Ingersoll Rand, and Lennox commented that there is
no direct correlation between the part-load metric, IEER, and the full
load metric, COP. (AAON, No. 8 at p. 4; Carrier, No. 7 at p. 4;
Ingersoll Rand, No. 6 at p. 4; Lennox, No. 6 at p. 3) Lennox indicated
that in commercial applications, CUHP's typically operate in full load
heating mode and cycle the auxiliary heat on and off because heat pump
capacity alone is inadequate to meet the building load. Lennox stated
that a higher IEER does not translate to a higher COP because design
techniques that improve part load IEER performance do not improve COP.
(Lennox, No. 6 at p. 3) Carrier noted that, based on information from
the AHRI certification database, units with the same COP have
significantly different IEER values. Carrier added that heating
efficiency is much less a factor for overall energy usage than cooling
efficiency because commercial equipment operates for many more hours in
cooling mode than heating mode, indicating that internal building loads
lead to high cooling loads and cooling energy use and significantly
less heating energy use. Carrier stated that a separate analysis should
be used for developing heating COP levels and that this process be
completed through a consensus process working with AHRI and the
manufacturers. (Carrier, No. 7 at pp. 3-4)
To determine COP efficiency levels, DOE evaluated AHRI and CEC data
for small, large, and very large air-cooled CUHP units with electric
resistance heat or no heat to analyze the relationship between COP and
both IEER and EER. DOE's review of data showed that the correlations
between COP and IEER using linear regressions are no less strong than
the correlations between COP and EER for each cooling capacity range.
Details of this evaluation can be found in chapter 5 of the NOPR TSD.
Based on this evaluation, DOE is proposing to use the functions
relating COP to IEER based on AHRI and CEC data to establish COP
efficiency levels. For each CUHP equipment class, DOE selected COP
levels corresponding to each incremental IEER level.
The efficiency levels for each equipment class that DOE considered
for the NOPR analyses are presented in Table IV.6.
Table IV.6--Incremental Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency levels
--------------------------------------------------------------------------------------------------------------------------
Equipment type Heating type Baseline EL1 EL2 EL3 EL4
(Max-Tech)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC AC Electric 11.4 IEER........ 12.9 IEER........ 14 IEER.......... 14.8 IEER........ 19.9 IEER.
and HP (Air-Cooled)-- Resistance
>=65,000 Btu/h and <135,000 Heating or No
Btu/h Cooling Capacity. Heating.
All Other Types 11.2 IEER........ 12.7 IEER........ 13.8 IEER........ 14.6 IEER........ 19.7 IEER.
of Heating.
HP Electric 11.2 IEER,....... 12.2 IEER,....... 13.3 IEER,....... 14.1 IEER,....... 19.2 IEER,
Resistance 3.3 COP.......... 3.3 COP.......... 3.4 COP.......... 3.5 COP.......... 3.7 COP.
Heating or No
Heating.
All Other Types 11.0 IEER,....... 12 IEER,......... 13.1 IEER,....... 13.9 IEER,....... 19.0 IEER,
of Heating. 3.3 COP.......... 3.3 COP.......... 3.4 COP.......... 3.4 COP.......... 3.6 COP.
Large Commercial Packaged AC AC Electric 11.2 IEER........ 12.2 IEER........ 13.2 IEER........ 14.2 IEER........ 18.4 IEER.
and HP (Air-Cooled)-- Resistance
>=135,000 Btu/h and <240,000 Heating or No
Btu/h Cooling Capacity. Heating.
[[Page 58974]]
All Other Types 11.0 IEER........ 12.0 IEER........ 13.0 IEER........ 14.0 IEER........ 18.2 IEER.
of Heating.
HP Electric 10.7 IEER,....... 11.4 IEER,....... 12.4 IEER,....... 13.4 IEER,....... 17.6 IEER,
Resistance 3.2 COP.......... 3.2 COP.......... 3.3 COP.......... 3.3 COP.......... 3.3 COP.
Heating or No
Heating.
All Other Types 10.5 IEER,....... 11.2 IEER,....... 12.2 IEER,....... 13.2 IEER,....... 17.4 IEER,
of Heating. 3.2 COP.......... 3.2 COP.......... 3.3 COP.......... 3.3 COP.......... 3.3 COP.
Very Large Commercial AC Electric 10.1 IEER........ 11.6 IEER........ 12.5 IEER........ 13.5 IEER........ 15.5 IEER.
Packaged AC and HP (Air- Resistance
Cooled)-->=240,000 Btu/h and Heating or No
<760,000 Btu/h Cooling Heating.
Capacity.
All Other Types 9.9 IEER......... 11.4 IEER........ 12.3 IEER........ 13.3 IEER........ 15.3 IEER.
of Heating.
HP Electric 9.6 IEER,........ 10.6 IEER,....... 11.5 IEER,....... 12.5 IEER,....... 14.5 IEER,
Resistance 3.2 COP.......... 3.2 COP.......... 3.2 COP.......... 3.2 COP.......... 3.2 COP.
Heating or No
Heating.
All Other Types 9.4 IEER,........ 10.4 IEER,....... 11.3 IEER,....... 12.3 IEER,....... 14.3 IEER,
of Heating. 3.2 COP.......... 3.2 COP.......... 3.2 COP.......... 3.2 COP.......... 3.2 COP.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Issue 5: DOE seeks comment on the incremental and max-tech
efficiency levels identified for the analyses, including whether the
efficiency levels identified by DOE can be achieved using the
technologies screened-in during the screening analysis (see section
IV.B), and whether higher efficiencies are achievable using
technologies that were screened-in during the screening analysis. Also,
DOE seeks comment on the approach of extrapolating the efficiency
levels from the small, large, and very large CUAC with electric
resistance heating or no heating equipment classes to the remaining
equipment classes using the IEER differentials in ASHRAE Standard 90.1-
2010 draft addendum CL. In addition, input and data on the approach for
determining the COP levels for the heat pump equipment classes using
the relationship between IEER and COP.
4. Equipment Testing, Reverse Engineering, Energy Modeling, and Cost-
Efficiency Results
As discussed above, for the engineering analysis, DOE specifically
analyzed representative capacities of 7.5 tons, 15 tons, and 30 tons to
develop incremental cost-efficiency relationships. DOE selected four
7.5-ton, two 15-ton, and one 30-ton air-cooled CUAC models. The models
were selected to develop a representative sample of the market at
different efficiency levels. DOE based the selection of units for
testing and reverse engineering on the efficiency data available in the
AHRI certification database and the CEC equipment database. DOE also
selected one 7.5-ton CUHP model to evaluate the design differences
between CUAC units and CUHP units. Details of the key features of the
tested units are presented in chapter 5 of the NOPR TSD.
Because DOE is considering adopting energy conservation standards
based on the IEER metric, DOE conducted testing on each unit according
to the IEER test method specified in AHRI Standard 340/360-2007. DOE
then conducted physical teardowns on each test unit to develop a
manufacturing cost model and to evaluate key design features (e.g.,
heat exchangers, compressors, fan/fan motors, control strategies,
etc.). Because DOE was only able to conduct testing and physical
teardowns on a limited sample of equipment, DOE supplemented these data
by conducting catalog teardowns on 346 models spanning the full range
of capacities from all manufacturers selling equipment in the United
States. DOE based the catalog teardowns on information provided in
equipment literature and experience from the physical teardowns.
For air-cooled CUAC, DOE conducted energy modeling using the
modeling tools developed by the Center for Environmental Energy
Engineering from the University of Maryland at College Park. The tools
include a detailed heat exchanger modeling program and a refrigeration
cycle modeling program. The refrigeration cycle modeling program can
integrate the heat exchanger and compressor models to perform a
refrigeration cycle model. If a CUAC/CUHP unit was tested, system
control power (i.e., control circuit power and any auxiliary loads),
indoor and outdoor fan power were obtained from actual laboratory
testing. If a unit was not tested, fan power energy usage was estimated
from manufacturer specification sheets at the rated air flow rates and
static pressures. The system control power is estimated from other
tested units with similar capacities and system configurations.
Applying the key design features identified during physical
equipment teardowns, DOE used the energy modeling tool to generate
detailed performance data (e.g. capacity and EER) and validated them
against the results obtained from laboratory testing at each IEER
capacity level (25, 50, 75, and 100 percent), or with the published
performance data. With the validated energy models, DOE expanded the
modeling tasks with various system design options and identified the
key design features (consistent with equipment available on the market)
required for 7.5-ton, 15-ton, and 30-ton air-cooled CUAC units with
electric resistance heating or no heating to achieve each efficiency
level. Details of the design features for each efficiency level are
presented in chapter 5 of the NOPR TSD. DOE also generated energy use
profiles for air-cooled CUAC, which included wattage inputs for key
components (i.e., compressor, indoor and outdoor fan motors, and
controls) at each operating load level measured for the IEER test
method, for each efficiency level to serve as inputs for the energy use
analysis (discussed in section IV.E). DOE then used these design
features developed by the energy modeling to determine the incremental
manufacturing costs for each efficiency level for 7.5-ton, 15-ton and
30-ton air-cooled CUAC units.
Issue 6: DOE requests comments, information, and data that would
inform adjustment of energy modeling input and/or results that would
allow more accurate representation of the energy use impacts of design
options using the modeling tools developed by the Center for
Environmental Energy Engineering from the University of Maryland at
College Park.
DOE did not, however, conduct similar modeling for CUHP units. DOE
notes that CUHP shipments represent a very small portion of industry
shipments compared to CUAC
[[Page 58975]]
shipments (9 percent versus 91 percent). In addition, because CUHP
represent a small portion of shipments, DOE noted, based on equipment
teardowns and review of equipment literature, that manufacturers use
the same basic design/platform for equivalent CUAC and CUHP models. DOE
observed that equivalent CUAC and CUHP models used the same package
size, core heat exchangers (the same face area and depth, but different
circuiting), and indoor/outdoor fan systems (along with other
elements), but used additional components to allow for heat pump
operation (e.g., reversing valves, refrigerant accumulators,
refrigerant circuiting). As a result, DOE believes that the proposed
approach of adjusting between the cooling efficiencies of CUAC and CUHP
to reflect the drop in efficiency resulting from the CUHP design (as
discussed above in section IV.C.3) is consistent with the market. For
these same reasons, DOE believes that it is appropriate to set heating
efficiencies for CUHP based on the relationship between cooling
efficiency and heating efficiency rather than conduct a full separate
analysis of heating efficiency. For these reasons, DOE focused energy
modeling solely on CUAC equipment. Although not considered in the
engineering and LCC and PBP analyses, DOE did analyze CUHP equipment in
the NIA. From this analysis, DOE believes the energy modeling conducted
for CUAC equipment provides a good estimate of CUHP cooling performance
and provides the necessary information to estimate the magnitude of the
national energy savings from increases in CUHP equipment efficiency.
Based on the analyses discussed above, DOE developed the cost-
efficiency results shown in Table IV.7 through Table IV.9 for each
cooling capacity range. DOE notes that the incremental manufacturing
production and shipping costs would be equivalent for each of the
equipment classes within a given cooling capacity range (i.e., CUAC
units with electric resistance heating or no heat, CUAC units with all
other types of heating, CUHP units with electric resistance heating or
no heat, CUHP units with all other types of heating). Details of the
cost-efficiency analysis, including descriptions of the technologies
DOE analyzed for each efficiency level to develop incremental costs,
are presented in chapter 5 of the NOPR TSD.
Table IV.7--Small Air-Cooled CUAC and CUHP Cost-Efficiency Relationships
------------------------------------------------------------------------
Incremental
Efficiency level manufacturing Incremental
production cost shipping cost
------------------------------------------------------------------------
Baseline.............................. ............... ...............
EL1................................... $115.93 ...............
EL2................................... 583.47 ...............
EL3................................... 788.88 ...............
EL4 (Max-Tech)........................ 1,277.04 $102.86
------------------------------------------------------------------------
Table IV.8--Large Air-Cooled CUAC and CUHP Cost-Efficiency Relationships
------------------------------------------------------------------------
Incremental
Efficiency level manufacturing Incremental
production cost shipping cost
------------------------------------------------------------------------
Baseline.............................. ............... ...............
EL1................................... $419.16 ...............
EL2................................... 792.76 $192.86
EL3................................... 1,236.98 192.86
EL4 (Max-Tech)........................ 1,554.26 192.86
------------------------------------------------------------------------
Table IV.9--Very Large Air-Cooled CUAC and CUHP Cost-Efficiency
Relationships
------------------------------------------------------------------------
Incremental
Efficiency level manufacturing Incremental
production cost shipping cost
------------------------------------------------------------------------
Baseline.............................. ............... ...............
EL1................................... $542.65 ...............
EL2................................... 1,296.41 ...............
EL3................................... 1,834.67 ...............
EL4 (Max-Tech)........................ 2,753.32 $444.00
------------------------------------------------------------------------
Issue 7: DOE requests input and data on the estimated incremental
manufacturing costs, including the extrapolation of incremental costs
for equipment classes not fully analyzed, in particular for heat pump
equipment classes.
D. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer selling
price derived in the engineering analysis to customer prices.
(``Customer'' refers to purchasers of the equipment being regulated.)
DOE calculates overall baseline and incremental markups based on the
equipment markups at each step in the distribution chain. The
incremental markup relates the change in the manufacturer sales price
of higher efficiency models (the incremental cost increase) to the
change in the customer price.
In its 2004 ANOPR, DOE used three types of distribution channels to
describe how the equipment passes from the manufacturer to the
customer. See, e.g. 69 FR 45460, 45476 (describing distribution
channels used as part of DOE's prior CUAC/CUHP standards rulemaking
effort). In the new construction market, the manufacturer sells the
equipment to a wholesaler. The wholesaler sells the equipment to a
mechanical contractor, who sells it to a general contractor, who in
turn sells the equipment to the customer or end user as part of the
building. In the replacement market, the manufacturer sells to a
wholesaler, who sells to a mechanical contractor, who in turn sells the
equipment to the customer or end user. In the third distribution
channel, used in both the new construction and replacement markets, the
manufacturer sells the equipment directly to the customer through a
national account.
In the RFI, DOE requested input from stakeholders on whether the
distribution channels described above remain relevant for small and
large CUAC/CUHP and whether they are also relevant for very large air-
cooled equipment. Carrier stated that the distribution channels
outlined in the NOPR are relevant for all products, including very
large air-cooled equipment. (Carrier, No. 7 at p. 4) It added that, for
very large air-cooled equipment, there is an additional channel that
consists of factory employees selling directly to end customers and
mechanical contractors. Ingersoll Rand stated that the selling process,
as described, is still relevant for these product classes. (Ingersoll
Rand, No. 10 at p. 4) Modine stated that there are distribution paths
in addition to those listed in the RFI, namely, manufacturer to
distributor to mechanical contractor to end user, manufacturer to
mechanical contractor to general contractor to end user, and
manufacturer to mechanical contractor to end user. (Modine, No. 5 at p.
3)
For today's NOPR, DOE used the three distribution channels
described previously, which were used in the 2004 ANOPR. Although it
was not listed in the RFI, DOE did include a channel of manufacturer to
distributor to mechanical contractor to end user (for replacement
applications). As for the channels without a distributor cited by
Modine, DOE was not able to determine whether these channels account
for a meaningful share of shipments. Modine provide no supporting data
indicating that these non-distributor channels accounted for a
significant share of
[[Page 58976]]
shipments. Because other parties commented that the three distribution
channels described in the RFI are still relevant, DOE retained the
channels included in the RFI but decline to include the non-distributor
channels suggested by Modine for the NOPR analysis.
For the 2004 ANOPR, based on information that equipment
manufacturers provided, commercial customers were estimated to purchase
50 percent of the covered equipment through small mechanical
contractors, 32.5 percent through large mechanical contractors, and the
remaining 17.5 percent through national accounts. According to the Air
Conditioning Contractors of America's financial analysis of the
heating, ventilation, air-conditioning, and refrigeration (HVACR)
contracting industry, markups used by small contractors tend to be
larger than those used by large contractors. See 69 FR 45476.
In the RFI, DOE requested input on the percentage of equipment
being distributed through the various types of distribution channels
and whether the share of equipment shipped through each channel varies
based on equipment capacity. Ingersoll Rand stated that, while the
percentages differ among the equipment capacities, the relative levels
are as suggested by DOE. (Ingersoll Rand, No. 10 at p. 4) Based on this
feedback, for this NOPR, DOE is continuing to use the same percentages
that were used in its ANOPR analysis.
DOE had also previously utilized several sources in preparation of
its ANOPR to help develop markups for the parties involved in the
distribution of the equipment, including: (1) The Air-conditioning &
Refrigeration Wholesalers Association's 1998 wholesaler profit survey
report to develop wholesaler markups; (2) the Air Conditioning
Contractors of America's (ACCA) financial analysis for the HVACR
contracting industry to develop mechanical contractor markups; and (3)
U.S. Census Bureau economic data for the commercial and institutional
building construction industry to develop general contractor markups.
Carrier recommended that DOE conduct a blind survey through AHRI to
determine the markups for all parties in the channel. As an alternative
to this approach, DOE utilized updated versions of the sources
mentioned previously, namely: (1) The Heating, Air Conditioning &
Refrigeration Distributors International 2010 Profit Report to develop
wholesaler markups; (2) the Air Conditioning Contractors of America's
(ACCA) 2005 Financial Analysis for the HVACR Contracting Industry to
develop mechanical contractor markups; and (3) U.S. Census Bureau
economic data for the commercial and institutional building
construction industry to develop general contractor markups.\44\ By
following this alternative approach, DOE obtained updated data that
enabled it to develop a more accurate picture of the markups currently
being used by the various parties involved in the distribution channel.
---------------------------------------------------------------------------
\44\ U.S. Census Bureau, 2007 Economic Census, Construction
Industry Series and Wholesale Trade Subject Series. https://www.census.gov/econ/census07/.
---------------------------------------------------------------------------
Chapter 6 of the NOPR TSD provides further detail on the estimation
of markups.
E. Energy Use Analysis
The energy use analysis provides estimates of the annual energy
consumption of small, large, and very large air-cooled CUAC equipment
at the considered efficiency levels. DOE uses these values in the LCC
and PBP analyses and in the NIA. DOE did not analyze CUHP equipment
because the energy modeling discussed in section IV.C.4 was performed
only for CUAC equipment.
DOE developed energy consumption estimates only for the CUAC
equipment classes that have electric resistance heating or no heating.
For equipment classes with all other types of heating, the incremental
change in IEER for each efficiency level is identical to that for the
equipment classes with electric resistance heating or no heating.
Therefore, DOE estimated that the energy savings for any efficiency
level relative to the baseline would be identical for both sets of
equipment classes. In turn, the energy savings estimates for the
efficiency levels associated with the equipment classes that have
electric resistance heating or no heating (see Table IV.1) were used by
DOE in the LCC and PBP analysis and the NIA to represent both sets of
equipment classes.
The energy use analysis for this NOPR consists of two related
parts. In the first part, DOE calculated energy savings for small,
large, and very large air-cooled CUAC at the considered efficiency
levels based on modifications to the energy use simulations conducted
for the 2004 ANOPR. These building simulation data are based on the
1995 Commercial Building Energy Consumption Survey (CBECS). Because the
simulation data reflect the building stock in 1995 that uses air-cooled
CUAC equipment, in the second part, DOE developed a ``generalized
building sample'' to represent the current installation conditions for
the equipment covered in this rulemaking. This part involved making
adjustments to update the building simulation data to reflect the
building stock that uses air-cooled CUAC equipment in 2011.
1. Energy Use Simulations
The simulation database from the 2004 ANOPR includes hourly
profiles for more than 1,000 commercial buildings, which were based on
building characteristics from the 1995 CBECS for the subset of
buildings that uses air-cooled CUAC equipment. Each building was
assigned to a specific location along with a typical meteorological
year (TMY) hourly weather file (referred to as TMY2) to represent local
weather. The simulations capture variability in cooling loads due to
factors such as building activity, schedule, occupancy, local weather,
and shell characteristics.
DOE received comments on the RFI regarding how best to model
equipment performance. AAON stated that full building and equipment
modeling are required to get a credible estimate for a given building,
equipment set, and control sequence. (AAON, No. 8 at p. 6) Carrier
noted that EER alone cannot be used to determine energy use at part-
load conditions, as it is a measure of full-load efficiency and is tied
more closely to the peak kilowatt (kW). (Carrier, No. 7 at p. 4) DOE's
simulation modeling approach is based on full building and equipment
modeling, and takes into account equipment performance at part-load
conditions to establish the annual energy use.
For the NOPR, DOE modified the energy use simulations conducted for
the 2004 ANOPR to improve the modeling of equipment performance. The
modifications that DOE performed included changes to the ventilation
rates and economizer usage assumptions, the default part-load
performance curve, and the minimum saturated condensing temperature
limit.
Although ventilation rates and economizer usage do not affect
equipment performance per se, they do impact how often the equipment
needs to operate, whether at full or part load. The building
simulations for the 2004 ANOPR used ventilation rates based on ASHRAE
Standard 62-1999.\45\ Because a report prepared by the National
Institute for Standards and Testing
[[Page 58977]]
(NIST) on field measurements indicated that these ventilation rates
were too high,\46\ DOE reduced the rates as part of the modified energy
use simulations. In the case of economizer usage, the building
simulations for the 2004 ANOPR assumed all economizers operated without
fault. Various field studies have demonstrated that economizer usage is
far from perfect, so in the modified simulations DOE assigned a 30-
percent probability to each building modeled that the economizer would
be non-operational. With regard to changes made to how the equipment
was modeled, DOE developed a modified part-load performance curve for
the direct-expansion condenser unit model so that the overall
performance would be more representative of a multi-compressor system.
In addition, DOE lowered a parameter representing the minimum saturated
condensing temperature allowed for the refrigerant. Both of these
parameters affect the system performance under part-load and off-design
conditions. A more detailed description of the simulation model
modifications can be found in appendix 7-A of the NOPR TSD.
---------------------------------------------------------------------------
\45\ American Society of Heating, Refrigerating and Air-
Conditioning Engineers, Inc. ANSI/ASHRAE Standard 62-1999
Ventilation for Acceptable Indoor Air Quality, 1999. Atlanta,
Georgia.
\46\ Persily, A. and J. Gorfain. 2004. ``Analysis of Ventilation
Data from the U.S. Environmental Protection Agency Building
Assessment Survey and Evaluation (BASE) Study''. NISTIR 7145.
---------------------------------------------------------------------------
DOE used a two-step process to represent the performance of
equipment at baseline and higher efficiency levels. First, DOE
calculated the hourly cooling loads and hourly fan operation for each
building from the compressor and fan energy consumption results that
were generated from the modified building simulations based on CUAC
equipment at efficiency of 11 EER. It was estimated that these
simulated cooling loads had to be met by the CUAC equipment for every
hour of the year that the equipment operates. Then DOE coupled the
hourly cooling loads and fan operation with equipment performance data,
developed from laboratory and modeled IEER testing conducted according
to AHRI Standard 340/360-2007, to generate the hourly energy
consumption of baseline and more efficient CUAC equipment.
DOE received additional comments on the RFI regarding how to scale
equipment energy use as a function of capacity for a given cooling
load. Carrier stated that capacity is highly dependent on differences
in product design for performance at full- and part-load conditions,
control strategies, air distribution method, and applications.
(Carrier, No. 7 at p. 5) AAON stated that full modeling is required to
determine how equipment energy use scales as a function of capacity.
(AAON, No. 8 at p. 6)
DOE's use of the laboratory and modeled IEER test data allowed it
to specifically address how capacity and control strategies vary with
outdoor temperature and building load. The laboratory and modeled IEER
test data were used to calculate the compressor efficiency (COP) and
capacity at varying outdoor temperatures (see section IV.4 of this NOPR
for further discussion.) The IEER rating test consists of measuring the
net capacity, compressor power, condenser fan power, indoor fan power,
and control power at three to five different rating conditions. The
number of rated conditions the equipment is tested at is determined by
the capabilities of and the control strategies used by the equipment.
The net capacity and COP of the compressor(s) as a linear function of
outdoor temperature was calculated from those test results. If the
indoor or outdoor fan was variable speed, its power consumption was
also calculated as a linear function of outdoor temperature. The power
for controls is a constant, but may vary by staging.
The COP and capacity of the equipment for each hour of the year was
calculated based on the outdoor temperature for the simulated
buildings. The cooling capacity was calculated such that it met the
simulated building cooling load for each hour. For multi-stage
equipment, the staging for each hour was selected to ensure the
equipment could meet the simulated building cooling load. When the
cooling capacity exceeded the simulated building cooling load, the
efficiency was adjusted for cyclic performance using the degradation
coefficient and load factor as calculated according to section 6.2,
Part-Load Rating, of AHRI 340/360, using the above described IEER
rating test data. The analysis accounted for the fact that the building
cooling load includes the heat generated by the fan. The total amount
of cooling the compressor must provide varies as the fan efficiency
improves with different efficiency levels.
The hourly fan run time was set equal to the indoor fan run time of
the simulated building for each hour of the year. Energy use was
calculated separately for the compressor, condenser fan, indoor fan,
and controls for each hour of the year for the simulated building.
Compressor and condenser fan energy were summed to reflect cooling
energy use. Indoor fan and control energy were combined into a single
category to represent indoor fan energy use.
The calculations provided the annual hourly cooling and fan energy
use profiles for each building. The incremental energy savings between
the baseline equipment and the equipment at higher efficiency levels
was calculated for every hour for each of the 1,033 simulated
buildings.
The RFI requested comment on whether the building simulations
developed for small and large air-conditioning equipment are applicable
to very large equipment (i.e., equipment with capacities between
240,000 Btu/h and 760,000 Btu/h). AAON stated that the simulation model
should be applicable regardless of equipment size. (AAON, No. 8 at p.
6) Carrier stated that building models appropriate to the equipment
size should be used. It noted that special equipment models will be
needed to properly model the part-load intensive equipment and changes
in IEER. It suggested that DOE should work with the AHRI Unitary Large
Equipment Section to define the modeling approach and obtain the
equipment models for the various IEER and EER levels as considerable
work has already been done. (Carrier, No. 7 at p. 5)
As described above, DOE used the simulations to obtain hourly
building cooling loads, fan operating hours, and associated outdoor
temperatures and applied the IEER rating test data to determine the
hourly performance of the equipment. Because DOE relied on the IEER
rating test data to come up with the hourly performance of the
equipment, it believes that this method provides a good representation
of very large equipment performance as well as small and large
equipment performance. Therefore, additional building simulation
modeling for very large units does not appear necessary.
Issue 8: DOE requests comments, information, and data that could be
used to modify the proposed method for using laboratory and modeled
IEER test data, which were developed in accordance to AHRI Standard
340/360-2007, to calculate the performance of CUAC equipment at part-
load conditions.
2. Generalized Building Sample
The NOPR analysis used a ``generalized building sample'' (GBS) to
represent the installation conditions for the equipment covered in this
rulemaking. The GBS was developed based on data from the 2003 CBECS
\47\ and from the Commercial Demand Module of the National Energy
[[Page 58978]]
Modeling System version distributed with AEO2013.
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\47\ CBECS 2012 is currently in development but will not be
available in time for this rulemaking.
---------------------------------------------------------------------------
Only floor space cooled by the covered equipment is included in the
sample. Conceptually, the main difference between the GBS and the
sample of specific commercial buildings compiled in CBECS is that the
GBS aggregates all building floor space associated with a particular
set of building characteristics into a single category. The set of
characteristics that is used to define a category includes all building
features that are expected to influence either (1) the cooling load and
energy use or (2) the energy costs. The set of building
characteristics, and the specific values these characteristics can
take, are listed in Table IV.10.
Table IV.10--List of Characteristics and the Associated Values Used To Define the Generalized Building Sample
----------------------------------------------------------------------------------------------------------------
Number of
Characteristic values Range of values
----------------------------------------------------------------------------------------------------------------
Region........................................ 10 9 census divisions with Pacific sub-divided into
north and south.
Building Activity............................. 7 assembly, education, food service, small office,
large office, mercantile, warehouse.
Size (based on annual energy consumption)..... 3 small: <100,000 kWh.
medium: 100,000 to 1,000,000 kWh.
large: >1,000,000 kWh.
Vintage....................................... 3 category 1: before 1950.
category 2: 1950-1979.
category 3: 1980 and later.
----------------------------------------------------------------------------------------------------------------
The region in which the building is located affects both the
cooling loads (through the weather) and the cost of electricity. The
building activity affects building schedules and occupancy, which in
turn influence the demand for cooling. The building activity categories
are the same as those used in the NEMS commercial building energy
demand module, limited to those building types that use the equipment
covered in this rule. The building size influences the cost of
electricity, because larger facilities tend to have lower marginal
prices. The building vintage may influence shell characteristics that
can affect the cooling loads. The combination of 10 regions, 7 building
types, 3 sizes, and 3 vintages leads to a set of 630 independent
categories in the GBS.
The amount of floor space allocated to each category for buildings
built in or before 2003 was taken from the 2003 CBECS. To update the
building floor space to 2013, the commercial building data included
with the 2013 version of NEMS were used. This dataset includes a
historical component, starting in 2004, and provides both existing
floor space and new floor space additions by year, census division, and
building activity. The floor space additions between 2004 and 2013 were
added to the floor space in vintage category 3.
Load profiles for each of the 630 generalized buildings were
developed from the simulation data just described. For each equipment
class, a subset of the 1,033 buildings was used to develop the cooling
energy use profiles. The subset included all buildings with a capacity
requirement equal to or greater than 90 percent of the capacity of the
particular representative unit. For each GBS type, a weighted average
energy use profile, along with energy savings from the considered
efficiency levels, was compiled from the simulated building subset. The
average was taken over all buildings in the subset that have the same
region, building type, size, and vintage category as the GBS category.
This average was weighted by the number of units required to meet each
building's cooling load. For some of the GBS categories, no simulation
data were available. In these cases, the weighted-average energy use
profile for the same building type and a nearby region or vintage were
used.
Updating the sample to 2013 required some additional adjustments to
the energy use data. The 1,033 building simulations used TMY2 weather
data. The TMY2 weather data files were updated to TMY3 in 2008. A
comparison of the two datasets showed that total annual cooling degree-
days (CDD) increased by 5 percent at all locations used in this
analysis. This is accounted for by increasing the energy use (for all
efficiency levels) by 5 percent at all locations.
Changes to building shell characteristics and internal loads in
recent construction can lead to a change in the energy required to meet
a given cooling load. The NEMS commercial demand module accounts for
these trends by adjusting the cooling energy use with a factor that is
a function of region and building activity. In the GBS, these same
factors were used to adjust the cooling energy use for floor space
constructed after 1999.
Issue 9: DOE requests comments on the use of a ``generalized
building sample'' to characterize the energy consumption of CUAC
equipment in the commercial building stock. Specifically, whether there
are any data or information that could improve the method for
translating the results from the 1,033 simulated buildings to the
generalized building sample.
F. Life-Cycle Cost and Payback Period Analysis
The purpose of the LCC and PBP analysis is to analyze the effects
of potential amended energy conservation standards on customers of
small, large, and very large air-cooled commercial package air
conditioning and heating equipment by determining how a potential
amended standard affects their operating expenses (usually decreased)
and their total installed costs (usually increased).
The LCC is the total customer expense over the life of the
equipment, consisting of equipment and installation costs plus
operating costs over the lifetime of the equipment (expenses for energy
use, maintenance, and repair). DOE discounts future operating costs to
the time of purchase using customer discount rates. The PBP is the
estimated amount of time (in years) it takes customers to recover the
increased total installed cost (including equipment and installation
costs) of a more efficient type of equipment through lower operating
costs. DOE calculates the PBP by dividing the change in total installed
cost (normally higher) due to a standard by the change in annual
operating cost (normally lower) that results from the standard.
For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case efficiency level. The
base-case estimate reflects the market in the absence of amended energy
conservation standards, including the
[[Page 58979]]
market for equipment that exceeds the current energy conservation
standards.
The RFI described how DOE would analyze the potential for
variability and uncertainty by performing the LCC and PBP calculations
on a representative sample of individual commercial buildings. The
approach utilizes the sample of buildings developed for the energy use
analysis and the corresponding simulations results. Within a given
building, one or more air-conditioning units may serve the building's
space-conditioning needs, depending on the cooling load requirements of
the building. As a result, DOE would express the LCC and PBP results as
the number of units experiencing economic impacts of different
magnitudes. DOE models both the uncertainty and the variability in the
inputs to the LCC and PBP analysis using Monte Carlo simulation and
probability distributions.\48\ As a result, the LCC and PBP results are
displayed as distributions of impacts compared to the base case
conditions.
---------------------------------------------------------------------------
\48\ The Monte Carlo process statistically captures input
variability and distribution without testing all possible input
combinations. Therefore, while some atypical situations may not be
captured in the analysis, DOE believes the analysis captures an
adequate range of situations in which small, large, and very large
air-cooled commercial package air conditioning and heating equipment
operate.
---------------------------------------------------------------------------
The RFI requested comment from stakeholders on the overall method
for conducting the LCC and PBP analysis. Carrier stated that DOE should
use the procedures as developed by the ASHRAE 90.1 committee and PNNL
for evaluating changes to the ASHRAE 90.1 standard. (Carrier, No. 7 at
p. 5) The procedures referred to by Carrier, while potentially
appropriate in other circumstances, such as in the development of
building codes for new construction, are not ideal in the context of
analyzing the potential impacts that would be likely to result from the
imposition of new energy conservation standards. DOE's LCC and PBP
analysis, rather than focusing solely on the impacts on new buildings
(as would Carrier's suggested approach would do), seeks to evaluate the
impacts of potential standards for small, large, and very large air-
cooled commercial package air conditioning and heating equipment for
all affected customers. Such an evaluation requires a broader framework
than the more narrow approach suggested by Carrier.
DOE conducted an LCC and PBP analysis for the CUAC equipment
classes. As mentioned in section IV.E, the energy savings estimates for
the efficiency levels associated with the equipment classes that have
electric resistance heating or no heating were used in the LCC and PBP
analysis to represent the equipment classes with all other types of
heating. DOE did not perform an LCC and PBP analysis for the CUHP
equipment for the reasons discussed in section IV.C.4.
Inputs to the LCC and PBP analysis are categorized as: (1) Inputs
for establishing the total installed cost and (2) inputs for
calculating the operating expense. The following sections contain brief
discussions of comments on the inputs and key assumptions of DOE's LCC
and PBP analysis and explain how DOE took these comments into
consideration.
1. Equipment Costs
In the LCC and PBP analysis, the equipment costs faced by small,
large, and very large air-cooled commercial package air conditioning
and heating equipment purchasers are derived from the MSPs estimated in
the engineering analysis and the overall markups estimated in the
markups analysis.
To develop an equipment price trend for the NOPR, DOE derived an
inflation-adjusted index of the producer price index (PPI) for
``unitary air-conditioners, except air source heat pumps'' from 1978 to
2013.\49\ Although the PPI index shows a long-term declining trend,
data for the last decade have shown a flat-to-slightly rising trend.
Given the uncertainty as to which of the trends will prevail in coming
years, DOE chose to apply a constant price trend (2013 levels) for the
NOPR. For the NIA, DOE also analyzed the sensitivity of results to
alternative price forecasts.
---------------------------------------------------------------------------
\49\ The PPP index for heat pumps covered too short a time
period to provide a useful picture of pricing trends for this
equipment.
---------------------------------------------------------------------------
2. Installation Costs
In the RFI, DOE discussed developing installation costs for the
current rulemaking using the most recent RS Means data available. AAON
agreed that it is appropriate to use RS Means. (AAON, No. 8 at p. 6)
For today's NOPR, DOE derived installation costs for CUAC equipment
from current RS Means data.\50\ Based on these data, DOE tentatively
concluded that data for 7.5-ton, 15-ton, and 30-ton rooftop air
conditioners would be sufficiently representative of the installation
costs for the >=65,000 Btu/h to <135,000 Btu/h, >=135,000 Btu/h to
<240,000 Btu/h, and >=240,000 Btu/h to <760,000 Btu/h air-conditioning
equipment classes, respectively. Because labor rates vary significantly
in each region of the country, DOE used RS Means data to identify how
installation costs vary among regions and incorporated these costs into
the analysis.
---------------------------------------------------------------------------
\50\ https://www.rsmeansonline.com; Accessed March 27, 2013.
---------------------------------------------------------------------------
For the 2004 ANOPR, DOE varied installation cost as a function of
equipment weight. Because weight tends to increase with equipment
efficiency, installation cost increased with equipment efficiency. 69
FR 45481. In the RFI, DOE envisioned using a similar approach for this
rulemaking. Carrier recommended that RS Means Mechanical Cost Data be
used to estimate installed cost based on unit tonnage rather than unit
weight. (Carrier, No. 7 at p. 5)
For this NOPR, DOE is using a specific cost from RS Means for each
of the tonnage classes listed previously. Within a given capacity
(equipment class), DOE chose to vary installation costs in direct
proportion to the physical weight of the equipment. The weight of the
equipment in each class and efficiency level was determined through the
engineering analysis.
3. Unit Energy Consumption
The calculation of annual per-unit energy consumption at each
considered efficiency level is described in section IV.E.
4. Electricity Prices and Electricity Price Trends
For the 2004 ANOPR, DOE determined electricity prices based on
tariffs from a representative sample of electric utilities. 69 FR
45481-45482. This approach calculates energy expenses based on actual
electricity prices that customers are paying. The RFI discussed
retaining the tariff-based approach and plans to update electricity
prices based on recent or current tariffs. Carrier agreed with the
tariff-based approach and that the most recent price data should be
used. (Carrier, No. 7 at p. 6) Similarly, the Joint Efficiency
Advocates asserted that the tariff-based approach was appropriate for
capturing actual electricity prices paid by customers. (Joint
Efficiency Advocates, No. 11 at p. 2)
For this NOPR, the tariff data used for the ANOPR were used to
develop marginal and average prices for each member of the GBS, which
were then scaled to approximate 2013 prices. The approach uses tariff
data that have been processed into commercial building marginal and
average electricity prices.\51\
---------------------------------------------------------------------------
\51\ Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and
J. E. McMahon. Tariff-based Analysis of Commercial Building
Electricity Prices. 2008. Lawrence Berkeley National Laboratory:
Berkeley, CA. Report No. LBNL-55551.
---------------------------------------------------------------------------
[[Page 58980]]
The CBECS 1992 and CBECS 1995 surveys provide monthly electricity
consumption and demand for a large sample of buildings. DOE used these
values to help develop usage patterns associated with various building
types. Using these monthly values in conjunction with the tariff data,
DOE calculated monthly electricity bills for each building. The average
price of electricity is defined as the total electricity bill divided
by total electricity consumption. Two marginal prices are defined, one
for electricity demand (in $/kW) and one for electricity consumption
(in $/kWh). These marginal prices are calculated by applying a 5
percent decrement to the CBECS demand or consumption data and
recalculating the electricity bill.
Using the prices derived from the above method, an average price
and a marginal price were assigned to each building in the GBS. For
each member of the GBS, these prices were calculated as the average,
weighted by floor space and survey sample weight, of all buildings in
the CBECS 1992 and 1995 data meeting the set of characteristics
defining the generalized building (i.e., region, vintage, building
activity, and building energy consumption). As most tariffs are
seasonal, average and marginal prices are calculated separately for
summer (May-September) and winter.
The average summer or winter electricity price multiplied by the
baseline summer or winter electricity consumption for equipment of a
given capacity defines the baseline LCC. For each efficiency level, the
operating cost savings are calculated by multiplying the electricity
consumption savings (relative to the baseline) by the marginal
consumption price and the electricity demand reduction by the marginal
demand price. The consumer's electricity bill is only affected by the
electricity demand reduction that is coincident with the building's
monthly peak load. Air-conditioning loads are strongly, but not
perfectly, peak-coincident. Divergences between the building peak and
the air-conditioning peak were accounted for by multiplying the
electricity demand reduction by a random factor drawn from a triangular
distribution centered at 0.9 +/- 0.1.
The tariff-based prices were updated to 2013 using the commercial
electricity price index published in the AEO (editions 2009 through
2012). An examination of data published by the Edison Electric
Institute \52\ indicates that the rate of increase of marginal and
average prices is not significantly different, so the same factor was
used for both pricing estimates. DOE projected future electricity
prices using trends in average commercial electricity price from AEO
2013.
---------------------------------------------------------------------------
\52\ Edison Electric Institute. EEI Typical Bills and Average
Rates Report (bi-annual, 2007-2012). Washington, DC.
---------------------------------------------------------------------------
For further discussion of electricity prices, see chapter 8 of the
NOPR TSD.
5. Maintenance Costs
Maintenance costs are costs associated with general maintenance of
the equipment (e.g., checking and maintaining refrigerant charge levels
and cleaning heat-exchanger coils). For the 2004 ANOPR, DOE developed
maintenance costs from RS Means data, and DOE estimated that
maintenance costs do not vary with equipment efficiency. 69 FR 45485.
The RFI discussed developing maintenance costs for the current
rulemaking using the most recent RS Means data available, and using the
same assumption that maintenance costs do not vary with equipment
efficiency. AAON stated that it is appropriate to use RS Means. (AAON,
No. 8 at p. 6)
Carrier stated that RS Means might serve as a reasonable guide to
assist in developing maintenance costs, but it expects that maintenance
costs vary with efficiency due to the higher replacement cost of new,
more complex components, and the technology required to achieve the
higher efficiency levels. (Carrier, No. 7 at p. 6) Repair or
replacement of components that have failed is considered a repair cost.
DOE is not aware of information on why general maintenance would be
higher as a result of the technology used to achieve higher efficiency
levels. Thus, DOE retained the assumption that maintenance costs do not
vary with equipment efficiency.
For this NOPR, DOE derived annualized maintenance costs for
commercial air conditioners from RS Means data.\53\ These data provided
estimates of person-hours, labor rates, and materials required to
maintain commercial air-conditioning equipment. The estimated
annualized maintenance cost is $298 for a commercial unitary air
conditioner rated between 36,000 Btu/h and 288,000 Btu/h, and $408 for
a unit rated between 288,000 Btu/h and 600,000 Btu/h.
---------------------------------------------------------------------------
\53\ https://www.rsmeansonline.com; Accessed March 26, 2013.
---------------------------------------------------------------------------
6. Repair Costs
Repair costs are associated with repairing or replacing components
that have failed. For the 2004 ANOPR, DOE estimated that repair costs
vary as function of equipment price. 69 FR 45485. In the RFI, DOE
requested comment as to whether repair costs vary as a function of
equipment price, as well as any data or information on developing
repair costs. AAON stated that it is appropriate to estimate repair
costs as a function of equipment costs. (AAON, No. 8 at p. 7) Carrier
stated that while it does not see repair costs increasing as a direct
result of higher equipment prices, the higher material and component
costs necessary to achieve higher efficiency levels (which result in
higher equipment prices) may also drive higher repair costs. (Carrier,
No. 7 at p. 6)
For this NOPR, DOE assumed that any routine or minor repairs are
included in the annualized maintenance costs. As a result, repair costs
are not explicitly modeled in the LCC and PBP analysis. Instead, DOE
incorporated a one-time cost for major repair (compressor replacement)
as a primary input to the repair/replace customer choice model in the
shipments analysis, which models the decision between repairing a
broken unit and replacing it (see section IV.G). In the repair/replace
customer choice model, DOE used repair costs that vary in direct
proportion with the price of the equipment, which approximates the
relationship between repair costs and efficiency described by Carrier.
Issue 10: DOE requests comments on whether using RS Means cost data
to develop maintenance, repair, and installation costs for CUAC and
CUHP equipment is appropriate, and if not, what data should be used.
7. Lifetime
Equipment lifetime is the age at which the equipment is retired
from service. For the 2004 ANOPR, DOE based equipment lifetime on a
retirement function, which was based on the use of a Weibull
probability distribution, with a resulting median lifetime of 15 years.
69 FR 45486. In the RFI, DOE sought comment on how it characterized
equipment lifetime. DOE also requested any data or information
regarding the accuracy of its 15-year lifetime and whether equipment
lifetime varies based on equipment class.
The Joint Efficiency Advocates encouraged DOE to reevaluate the
estimated lifetime of commercial air-cooled air conditioners and heat
pumps for this rulemaking. They noted that ASHRAE maintains a public
database
[[Page 58981]]
that provides information on the service life of HVAC equipment.
Although the ASHRAE database does not currently contain a separate
category for commercial package air conditioners and heat pumps, it
does contain information on ``other cooling equipment.'' In this
category, there are data on 365 units that were in service at the time
of the data collection. Of these 365 units, the median equipment age
was 20 years. (Joint Efficiency Advocates, No. 11 at p. 3) NEEA also
encouraged DOE to review actual equipment lifetime for determining the
life-cycle cost of equipment. (NEEA, No. 15 at p. 2) AAON stated that
equipment lifetime should not be impacted by equipment class. (AAON,
No. 8 at p. 7)
DOE reviewed the ASHRAE database and determined that the data
support an increase in lifetime relative to what DOE used for the
ANOPR. In the category ``Packaged DX unit, rooftop'' (which corresponds
to CUAC), of the 215 units in service, the mean age is 15.6 years and
the median is 16 years.\54\ The five units that had been replaced had a
median age of 22 years. These data strongly suggest that the median
lifetime of 15 years used in the ANOPR is too short. For this NOPR, DOE
updated its CUAC lifetime to a median of 18.7 years and a mean of 18.4
years.
---------------------------------------------------------------------------
\54\ See https://xp20.ashrae.org/publicdatabase/
systemservicelife.asp?cregion=0&state=NA&b
uildingfunction=NA&csize=0&cage=0&c
height=0&cclass=0&clocation=0&selectedsyst
emtype=1&cequipmenttype=NA
---------------------------------------------------------------------------
The category ``heat pump, air-to-air'' (which corresponds to CUHP)
in the ASHRAE database has 1,296 units (and only one that had been
retired) with a median age of 14 years. These data suggest that the 15-
year lifetime used in the 2004 ANOPR remains reasonable. For the NOPR,
DOE used a slightly updated CUHP lifetime with a median of 15.4 years
and a mean of 15.2 years.
DOE used the same lifetime distribution for each set of CUAC and
CUHP equipment classes.
Issue 11: DOE requests comments, information and data on the
equipment lifetimes developed for CUAC and CUHP equipment;
specifically, any information that would indicate whether the
retirement functions yielding median lifetimes of 18.7 years and 15.4
years for CUAC and CUHP equipment, respectively, are reasonable.
8. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to estimate their present value. The cost of capital
commonly is used to estimate the present value of cash flows to be
derived from a typical company project or investment. Most companies
use both debt and equity capital to fund investments, so the cost of
capital is the weighted-average cost to the firm of equity and debt
financing. DOE uses the capital asset pricing model (CAPM) to calculate
the equity capital component, and financial data sources to calculate
the cost of debt financing.
For the 2004 ANOPR, DOE derived the discount rates by estimating
the cost of capital of companies that purchase air-cooled air-
conditioning equipment. 69 FR 45486-45487. For the current rulemaking,
DOE updated its data sources for calculating this cost. More details
regarding DOE's estimates of customer discount rates are provided in
chapter 8 of the NOPR TSD.
9. Base Case Market Efficiency Distribution
For the LCC analysis, DOE analyzes the considered efficiency levels
relative to a base case (i.e., the case without amended energy
efficiency standards). This analysis requires an estimate of the
distribution of product efficiencies in the base case (i.e., what
consumers would have purchased in the compliance year in the absence of
amended standards). DOE refers to this distribution of product energy
efficiencies as the base case efficiency distribution.
The RFI requested data on current small, large, and very large air-
cooled commercial package air conditioning and heating equipment
efficiency market shares (of shipments) by equipment class, and also
similar historical data. DOE also requested information on expected
trends in efficiency over the next five years. Carrier stated that
these data is not readily available for the industry as a whole, but a
joint industry, AHRI and DOE working group should be able to develop an
estimate based on a collection of individual manufacturer's data.
(Carrier, No. 7 at p. 6)
Given the statutory deadlines described earlier, the formation of a
working group as suggested by Carrier was not feasible. The only
available data showing air-cooled commercial package air conditioning
and heating equipment efficiency market shares are from 1999-2001 and
may not be representative of current market shares or the shares
expected in the near future. Rather than rely solely on these older
data, for this NOPR, DOE used a consumer choice model to estimate
efficiency market shares in the expected compliance year (assumed to be
2019, as discussed below). The consumer choice model considers customer
sensitivity to total installation cost and annual operating cost. DOE
used the efficiency market share data for 1999-2001 to develop the
parameters of the consumer choice model in the shipments analysis, as
discussed in section IV.G.1. Using the parameters, the model estimates
the shipments at each IEER level based on the installed cost and
operating cost at each efficiency level. Table IV.11 presents the
estimated base case efficiency market shares for each air-cooled CUAC
equipment class.
Table IV.11--Base Case Efficiency Market Shares in 2019 for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Small commercial packaged AC (Air- Large commercial packaged AC (Air- Very large commercial packaged AC
Cooled)-->=65,000 Btu/h and <135,000 Cooled)-->=135,000 Btu/h and (Air-Cooled)-->=240,000 Btu/h and
Btu/h cooling capacity <240,000 Btu/h cooling capacity <760,000 Btu/h cooling capacity
----------------------------------------------------------------------------------------------------------------
IEER Market share (%) IEER Market share (%) IEER Market share (%)
----------------------------------------------------------------------------------------------------------------
11.4 61 11.2 78 10.1 63
12.9 39 12.2 20 11.6 24
14.0 0 13.2 2 12.5 7
14.8 1 14.2 0 13.5 4
19.9 0 18.4 0 15.5 1
----------------------------------------------------------------------------------------------------------------
[[Page 58982]]
Issue 12: DOE requests comments, information and data on the base
case efficiency distributions of CUAC equipment. Given that historical
market share efficiency data from 1999-2001 were used to inform a
consumer choice model in the shipments analysis to develop estimated
base case efficiency distributions in the compliance year (2019), DOE
seeks more recent historical market share efficiency data would be
useful for validating the estimated base case efficiency distributions.
10. Compliance Date
DOE calculated the LCC and PBP for all customers as if each were to
purchase new equipment in the year that compliance with amended
standards is required. EPCA directs DOE to publish a final rule
amending the standard for the products covered by this NOPR not later
than 2 years after a notice of proposed rulemaking is issued. (42
U.S.C. 6313(a)(6)(C)(iii)) At the time of preparation of the NOPR
analysis, the expected issuance date was December 2013, leading to a
final rule publication in December 2015. EPCA also states that amended
standards prescribed under this subsection shall apply to products
manufactured after a date that is the later of--(I) the date that is 3
years after publication of the final rule establishing a new standard;
or (II) the date that is 6 years after the effective date of the
current standard for a covered product. (42 U.S.C. 6313(a)(6)(C)(iv))
The date under clause (I), currently projected to be December 2018, is
later than the date under clause (II). For purposes of its analysis,
DOE used 2019 as the first year of compliance with amended standards.
11. Payback Period Inputs
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more efficient equipment,
compared to baseline equipment, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the product mean that the increased total installed cost is not
recovered in reduced operating expenses.
The inputs to the PBP calculation are the total installed cost of
the product to the customer for each efficiency level and the average
annual operating expenditures for each efficiency level. The PBP
calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
12. Rebuttable-Presumption Payback Period
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 (and, as applicable, water) savings during the first year
that the consumer will receive as a result of the standard, as
calculated under the test procedure in place for that standard. For
each considered efficiency level, DOE determines the value of the first
year's energy savings by calculating the quantity of those savings in
accordance with the applicable DOE test procedure, and multiplying that
amount by the average energy price forecast for the year in which
compliance with the amended standards would be required.
G. Shipments Analysis
DOE uses projections of product shipments to calculate the national
impacts of standards on energy use, NPV, and future manufacturer cash
flows. DOE develops shipment projections based on historical data and
an analysis of key market drivers for each product. Historical
shipments data are used to build up an equipment stock and also to
calibrate the shipments model.
The RFI requested comment on DOE's approach in developing the
shipments model and forecasts. Carrier recommended forming a working
group with AHRI to discuss shipment forecast modeling techniques for
this rulemaking. (Carrier, No. 7 at p. 7) As indicated earlier, this
option was not feasible in light of the statutory time constraints.
Instead, DOE developed a shipments model that includes three market
segments: (1) Existing buildings replacing broken equipment, (2) new
commercial buildings acquiring equipment, and (3) existing buildings
acquiring new equipment for the first time.
1. Shipments by Market Segment
For existing buildings replacing broken equipment, the shipments
model uses a stock accounting framework. Given the equipment entering
the stock in each year and a retirement function based on the lifetime
distribution developed in the LCC analysis, the model predicts how many
units reach the end of their lifetime in each year. DOE typically
refers to new shipments intended to replace retired units as
``replacement'' shipments. Such shipments are usually the largest part
of total shipments.
For CUAC and CUHP, end of lifetime is generally associated with
compressor failure. Installing a new compressor, while possible, is
costly. This fact leads customers to typically replace the entire CUAC/
CUHP unit rather than simply replace the compressor. A new unit is more
expensive than compressor replacement, but it may be more energy-
efficient than the existing unit, which means it would have lower
operating costs. If standards significantly increase the cost of new
equipment, one would expect that the repair option would become more
attractive.
For the small and large CUAC and CUHP equipment classes, DOE
modeled the repair vs. replacement decision, as described below. If the
unit is repaired (i.e., with a new compressor), its life is extended by
another lifetime, based on the retirement function. If a unit
encounters a second failure within the analysis period, the model
assumes that the customer replaces the unit with a new one. For the
very large CUAC and CUHP equipment classes, DOE assumed that all
customers repair the unit at the first failure because the total
installed cost of a new unit is very high relative to the cost of
repair. If a unit encounters a second failure within the analysis
period, DOE assumed that the customer replaces the unit with a new one,
as further repair of very old equipment is not likely to occur.
To model the repair vs. replacement decision, DOE developed a
consumer choice model that estimates customer sensitivity to total
installation cost. A sensitivity parameter was calculated using
efficiency market share data for years 1999-2001, along with estimates
of equipment prices and installation costs by efficiency level (the
data sources are described below). DOE applied this sensitivity to the
difference between the total installed cost of a new unit and the
repair cost of the existing unit.
The replacement cost at each efficiency level is the total
installed cost derived in the LCC analysis. For repair cost, DOE
developed its own estimates of the material costs for compressors. (DOE
examined RS Means material costs for compressors and concluded that
they were inaccurate for all size classes, as several of the estimates
exceeded the costs for an entire new unit.) For labor and non-
compressor material costs, DOE used data in RS Means Facilities
Maintenance & Repair Cost Data, 2013.\55\ Within each equipment class,
DOE used repair costs that increase in direct proportion with the price
of the equipment and with IEER level.
---------------------------------------------------------------------------
\55\ RS Means Facilities Maintenance & Repair Cost Data 2013.
https://www.rsmeansonline.com.
---------------------------------------------------------------------------
DOE recognizes that the decision to repair or replace equipment is
not solely
[[Page 58983]]
a function of the difference between the total installed cost of a new
unit and the repair cost of the existing unit. The difference in
operating costs may also play a role, as may general economic
conditions and other factors. DOE did not have sufficient information
to incorporate these factors explicitly into its model, so it developed
an alternative approach that assumes that the factors influencing the
repair or replace decision will be similar in the future as they were
in the past. DOE estimated an historical average repair rate by
minimizing the difference between actual historical shipments and
model-predicted shipments in a ``no-repairs'' scenario. DOE developed a
time series for historical shipments using data provided by AHRI in
2001 for the small and large CUAC and CUHP equipment classes for the
years 1980 to 2001, combined with Census data on manufacturer shipments
\56\ as the basis for shipments in earlier and later years, and for
very large CUAC and CUHP. Chapter 9 of the NOPR TSD discusses in more
detail the AHRI and Census data and its use by DOE.
---------------------------------------------------------------------------
\56\ U.S.Census Bureau. Current Industrial Reports for
Refrigeration, Air Conditioning, and Warm Air Heating Equipment,
MA333M. Note that the current industrial reports were discontinued
in 2010, so more recent data are not available.
---------------------------------------------------------------------------
The repair/replace model is a binary choice model with two
parameters, ``alpha'' and ``gamma.'' ``Alpha'' represents customer
sensitivity to the efficiency-weighted average cost difference between
total installed cost of replacement and repair costs. DOE assumed that
the ``alpha'' is equal to the parameter used in the customer choice
model to represent customer sensitivity to total installed cost. (The
customer choice model is described in section IV.G.1.) ``Gamma'' is a
scenario parameter that limits the number of repairs and can be thought
of as representing ``unknown replacements.'' Since ``alpha'' is assumed
to be known, DOE estimated ``gamma'' by minimizing the difference
between the historical average repair rate and the repair probability
predicted by the repair/replace model. This approach ensures that the
estimated repair rate in each forecast year in the base case is close
to the historical average rate. In the standards cases, which have
higher installed costs, the repair rate is higher. Chapter 9 of the
NOPR TSD describes the repair/replace decision model in more detail.
For existing buildings acquiring new equipment for the first time,
DOE first estimated saturation values (percentages of total floor space
served by different cooling capacities or types of equipment) for the
stock. CBECS provides overall CUAC and CUHP saturation values. To
derive percentages of floor space served by different cooling
capacities or types of equipment, DOE used shipments data from the
Census. DOE derived the approximate historical floor space saturations
for each of the CUAC and CUHP equipment classes by multiplying the CUAC
and CUHP saturation values from CBECS by the shipment shares from the
Census. DOE used a logistic regression procedure to fit the CBECS
historical stock saturations to produce a smooth time series of
saturation estimates for the analysis period.
Shipments for existing buildings acquiring new equipment for the
first time in each future year are estimated by multiplying the
difference in projected stock saturation values between the future year
and the previous year with the estimated floor space without CUAC and
CUHP equipment in the previous year. In other words, the shipments
account for the incremental increase in stock saturation.
For new commercial buildings acquiring equipment, shipments are
estimated by multiplying new construction floor space in each future
year by saturation values (percentages of new floor space served by
different cooling capacities or types of equipment). The shipments
model relies on AEO 2013 for forecasts of new construction floor space.
It assumes that the saturation value in new commercial buildings is the
same as the stock-average saturation for each year.
Issue 13: DOE requests comments, information and data on the
methods and key assumptions used to model the repair vs. replacement
decision, which is based on estimates of the cost of repair vs. the
cost of new equipment. Field data for repair costs and how they vary
with equipment first cost and age would allow DOE to refine its
shipments forecasting by more precisely modeling the repair vs. replace
decision sensitivity to the difference in repair and replacement
equipment costs.
Issue 14: DOE requests comments, information and data regarding the
lifetime of repaired equipment. DOE's analysis considered major repair
consisting of replacement of the compressor and miscellaneous materials
associated with the compressor; DOE estimated that repaired equipment
would last as long as new replacement equipment. Information is
requested to determine whether this estimate is reasonable.
Issue 15: DOE requests comments, information, and data on the
repair of CUACs and CUHPs in the >=240,000 Btu/h and <760,000 Btu/h
equipment classes. For this equipment, the shipments analysis estimated
that any equipment experiencing their first failure would be repaired
rather than replaced. Information is requested to determine whether
this estimate is reasonable.
2. Shipment Market Shares by Efficiency Level
The approach described in the preceding section provides total
shipments in each equipment class for each year. To estimate the market
shares of the considered efficiency levels in future shipments, DOE
developed a customer choice model. The model was calibrated by
estimating values for two parameters, representing customer sensitivity
to total installation cost and annual operating cost. To calibrate the
model, DOE used EER market share data for small and large CUAC
equipment classes provided by AHRI for the previous rulemaking. These
market shares are for 1999-2001. DOE used the equipment prices by EER
level from the 2004 ANOPR to assign equipment prices to each EER bin,
along with the installation costs and maintenance costs developed for
this NOPR. DOE derived unit energy consumption (UEC) values for each of
the EER bins using the UEC to EER relationships presented in the 2004
ANOPR TSD, and then applied historic electricity prices to calculate
annual energy costs.
To estimate values for the parameters, DOE used a non-linear
regression approach that minimized the sum of the squared difference
between historical market shares and the predicted values at each
efficiency level for the small and large CUAC equipment classes.
Starting in 2013, application of the parameters, along with data on the
installed cost and operating cost at each efficiency level under
consideration, determines the market shares of each efficiency level.
The same parameters were used to estimate market shares for each
equipment class. The details of this approach can be found in chapter 9
of the NOPR TSD.
H. National Impact Analysis
The NIA assesses the national energy savings (NES) and the national
NPV of total customer costs and savings that would be expected to
result from amended standards at specific efficiency levels.
To make the analysis more accessible and transparent to all
interested parties, DOE used an MS Excel spreadsheet model to calculate
the energy savings and the national customer costs and
[[Page 58984]]
savings from each TSL.\57\ The NIA calculations are based on the annual
energy consumption and total installed cost data from the energy use
analysis and the LCC analysis. DOE forecasted the lifetime energy
savings, energy cost savings, equipment costs, and NPV of customer
benefits for each equipment class for equipment sold from 2019 through
2048.
---------------------------------------------------------------------------
\57\ DOE understands that MS Excel is the most widely used
spreadsheet calculation tool in the United States and there is
general familiarity with its basic features. Thus, DOE's use of MS
Excel as the basis for the spreadsheet models provides interested
parties with access to the models within a familiar context. In
addition, the TSD and other documentation that DOE provides during
the rulemaking help explain the models and how to use them, and
interested parties can review DOE's analyses by changing various
input quantities within the spreadsheet.
---------------------------------------------------------------------------
DOE evaluated the impacts of potential new and amended standards
for small, large, and very large air-cooled commercial package air
conditioning and heating equipment by comparing base-case projections
with standards-case projections. The base-case projections characterize
energy use and customer costs for each equipment class in the absence
of new and amended energy conservation standards. DOE compared these
projections with those characterizing the market for each equipment
class if DOE were to adopt amended standards at specific energy
efficiency levels (i.e., the standards cases) for that class.
Table IV.12--Inputs for the National Impact Analysis
------------------------------------------------------------------------
Input Description
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model.
Compliance date of standard....... January 1, 2019.
Base case efficiencies............ Estimated by customer choice model.
Standards case efficiencies....... Estimated by customer choice model.
Annual energy consumption per unit Calculated for each efficiency level
and equipment class based on inputs
from the energy use analysis.
Total installed cost per unit..... Calculated equipment prices by
efficiency level using manufacturer
selling prices and weighted-average
overall markup values. Installation
costs vary in direct proportion to
the weight of the equipment.
Electricity expense per unit...... Annual energy use for each equipment
class is multiplied by the
corresponding average energy price.
Escalation of electricity prices.. AEO 2013 forecasts (to 2040) and
extrapolation beyond 2040.
Electricity site-to-primary energy A time series conversion factor;
conversion. includes electric generation,
transmission, and distribution
losses.
Discount rates.................... 3% and 7% real.
Present year...................... 2013.
------------------------------------------------------------------------
1. Efficiency Trends
A key component of DOE's estimates of NES and NPV are the equipment
energy efficiencies forecasted over time for the base case and for each
of the standards cases. For the 2004 ANOPR, DOE used a combination of
historical commercial and residential equipment efficiency data to
forecast efficiencies for the base case. To estimate the impact that
standards would have in the year compliance becomes required, DOE used
a ``roll-up'' scenario, which assumes that equipment efficiencies in
the base case that do not meet the standard level under consideration
would ``roll up'' to meet the new standard level and equipment
shipments at efficiencies above the standard level under consideration
are not affected. 69 FR 45489-45490.
The Joint Efficiency Advocates encouraged DOE to consider a
``shift'' scenario (one in which efficiencies above the standard level
under consideration are affected in a standards case) for the national
impact analysis. (Joint Efficiency Advocates, No. 11 at p. 3) DOE did
not have sufficient data on current efficiency market shares or
information on market behavior to be able to develop a ``shift''
scenario.
The RFI requested information on expected trends in efficiency over
the long run, but DOE did not receive comments. For this NOPR, DOE used
the customer choice model in the shipments analysis to estimate
efficiency market shares in each year of the shipments projection
period. For each standards case, the efficiency levels that are below
the standard are removed from the possible choices available to
customers. The base case shows a slight increasing trend for small
CUAC, but the shares are fairly constant for large and very large CUAC.
The estimated efficiency trends in the base case and standards cases
are described in chapter 9 of the NOPR TSD.
2. National Energy Savings
For each year in the forecast period, DOE calculates the national
energy savings for each standard level by multiplying the shipments of
small, large, and very large air-cooled CUAC and CUHP by the per-unit
annual energy savings. Cumulative energy savings are the sum of the
annual energy savings over the lifetime of all equipment shipped during
2019-2048.
For small, large, and very large air-cooled CUAC, the per-unit
annual energy savings for each considered efficiency level come from
the energy use analysis, which estimated energy consumption for 2019.
For later years, DOE adjusted the per-unit annual site energy use to
account for changes in climate based on projections in AEO 2013.
For small, large, and very large air-cooled CUHP, DOE did not
conduct an energy use analysis. Because the cooling-side performance of
CUHP is nearly identical to that of CUAC, DOE used the energy
consumption estimates developed for CUACs to characterize the cooling-
side performance of CUHP of the same size. To characterize the heating-
side performance, DOE analyzed CBECS 2003 data to develop a national-
average annual energy use per square foot for buildings that use CUHPs.
DOE assumed that the average COP of the CUHP was 2.9.\58\ DOE converted
the energy use per square foot value to annual energy use per ton using
a ton per square foot relationship derived from the energy use analysis
for CUAC. This value is different for each equipment class. Because
equipment energy use is a function of efficiency, DOE assumed that the
annual heating energy consumption of a unit scales proportionally with
its heating COP efficiency level. Finally, to determine
[[Page 58985]]
the COPs of units with given IEERs, DOE correlated COP to IEER based on
the AHRI Certified Equipment Database.\59\ Thus, for any given cooling
efficiency of a CUHP unit, DOE was able to establish the corresponding
heating efficiency, and, in turn, the associated annual heating energy
consumption.
---------------------------------------------------------------------------
\58\ A heating efficiency of 2.9 COP corresponds to the existing
minimum heating efficiency standard for CUHP, a value which the
Department believes is representative of the heat pump stock
characterized by CBECS.
\59\ https://www.ahridirectory.org/ahridirectory/pages/homeM.aspx.
---------------------------------------------------------------------------
For CUAC and CUHP, DOE did not adjust its estimate of energy
savings to account for a rebound effect. A direct rebound effect occurs
when an increase in efficiency is accompanied by more intensive use of
the equipment. DOE is not aware of any evidence to support the notion
that commercial customers would run more efficient equipment longer or
more frequently. The operation of CUAC and CUHP is generally matched to
the indoor comfort needs of the building, regardless of the equipment
efficiency.
Issue 16: DOE requests comments on its decision to not include a
rebound effect for more-efficient CUAC and CUHP.
DOE calculates the total annual site energy savings for a given
standards case by subtracting total energy use in the standards case
from total energy use in the base case. Part of the reduction in a
standards case is due to decreasing shipments resulting from customers
choosing to repair than replace broken equipment. The NES calculation
also includes the estimated energy use of units that are repaired
rather than replaced. The units repaired in each year are from a number
of different vintages (year built). For each vintage, DOE estimated an
average efficiency based on an estimated historical trend, and
estimated the average energy use by scaling the energy use for baseline
units in 2013 according to the estimated efficiency in each year. The
average energy use of units that are repaired in each year is weighted
by the number of units in each vintage.
DOE converted the site electricity consumption and savings to
primary energy (power sector energy consumption) using annual
conversion factors derived from the AEO 2013 version of the NEMS.
Cumulative energy savings are the sum of the NES for each year in which
equipment shipped during 2019-2048 continue to operate.
DOE has historically presented NES in terms of primary energy
savings. 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 Science, DOE announced
its intention to use full-fuel-cycle (FFC) measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (August 18, 2011). While DOE stated in that
notice that it intended to use the Greenhouse Gases, Regulated
Emissions, and Energy Use in Transportation (GREET) model to conduct
the analysis, it also said it would review alternative methods,
including the use of EIA's National Energy Modeling System (NEMS).
After evaluating both models and the approaches discussed in the August
18, 2011 notice, DOE published a statement of amended policy in the
Federal Register in which DOE explained its determination that NEMS is
a more appropriate tool for this specific use. 77 FR 49701 (August 17,
2012). Therefore, DOE is using NEMS to conduct FFC analyses. The
approach used for this NOPR, and the FFC multipliers that were applied,
are described in appendix 10-A of the NOPR TSD.
3. Net Present Value of Customer Benefit
The inputs for determining the NPV of the total costs and benefits
experienced by customers of the considered equipment are: (1) Total
annual installed cost; (2) total annual savings in operating costs; and
(3) a discount factor. DOE calculates the lifetime net savings for
equipment shipped each year as the difference between the base case and
each standards case in total lifetime savings in lifetime operating
costs and total lifetime increases in installed costs. DOE calculates
lifetime operating cost savings over the life of each small, large, and
very large air-cooled commercial package air conditioning and heating
equipment shipped during the forecast period.
a. Total Annual Installed Cost
The total installed cost includes both the equipment price and the
installation cost. For each equipment class, DOE calculated equipment
prices by efficiency level using manufacturer selling prices and
weighted-average overall markup values (weights based on shares of the
distribution channels used). Installation costs vary in direct
proportion to the weight of the equipment. Because DOE calculated the
total installed cost as a function of equipment efficiency, it was able
to determine annual total installed costs based on the annual shipment-
weighted efficiency levels determined in the shipments model.
For small, large, and very large air-cooled CUHPs, to estimate the
cost at higher efficiency levels, DOE applied the same incremental
equipment costs that were developed for the comparable CUAC efficiency
levels for each equipment class (see section IV.C.4).
As noted in section IV.F.1, DOE assumed no change in small, large,
and very large air-cooled CUAC and CUHP prices over the analysis
period. However, DOE conducted sensitivity analyses using alternative
price trends: one in which prices decline after 2013, and one in which
prices rise. These price trends, and the NPV results from the
associated sensitivity cases, are described in appendix 10-B of the
NOPR TSD.
The NPV calculation includes the repair cost of units that are
repaired rather than replaced. The approach used to estimate such costs
is described in section IV.G.
b. Total Annual Operating Cost Savings
DOE calculates the total annual operating cost savings for a given
standards case relative to operating costs in the base case. Part of
the operating cost savings in a standards case is due to a decrease in
shipments resulting from customers choosing to repair than replace
broken equipment. The NPV calculation includes the estimated operating
costs of units that are repaired rather than replaced. These costs were
estimated based on the average energy use of such units and the average
electricity price in each year.
The per-unit energy savings were derived as described in section
IV.H.2. To calculate future electricity prices, DOE applied the
projected trend in national-average commercial electricity price from
the AEO 2013 Reference case, which extends to 2040, to the tariff-based
prices derived in the LCC and PBP analysis. DOE used the trend from
2030 to 2040 to extrapolate beyond 2040. In addition, DOE analyzed
scenarios that used the trends in the AEO 2013 Low Economic Growth and
High Economic Growth cases. These cases have higher and lower energy
price trends compared to the Reference case. These price trends, and
the NPV results from the associated cases, are described in appendix
10-C of the NOPR TSD.
DOE estimated that annual maintenance costs (including minor
repairs) do not vary with efficiency within each equipment class, so
they do not figure into the annual operating cost savings for a given
standards case. In addition, as noted previously, DOE included major
repair costs in its shipments model rather than developing
[[Page 58986]]
annualized repair costs. As a result, repair costs do not factor
directly into the determination of total operating cost savings for
shipments.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. DOE
estimates the NPV using both a 3-percent and a 7-percent real discount
rate, in accordance with guidance provided by the Office of Management
and Budget (OMB) to Federal agencies on the development of regulatory
analysis.\60\ 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.
---------------------------------------------------------------------------
\60\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
https://www.whitehouse.gov/omb/circularsa004a-4.
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I. Customer Subgroup Analysis
In analyzing the potential impacts of new or amended standards, DOE
evaluates impacts on identifiable groups (i.e., subgroups) of customers
that may be disproportionately affected by a national standard. For the
NOPR, DOE evaluated impacts on a small business subgroup using the LCC
spreadsheet model. The customer subgroup analysis is discussed in
detail in chapter 11 of the NOPR TSD.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to determine the financial impact of amended
energy conservation standards on manufacturers of CUAC and to estimate
the potential impact of such standards on employment and manufacturing
capacity. The MIA has both quantitative and qualitative aspects. The
quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (GRIM), an industry cash-flow model with inputs
specific to this rulemaking. The key GRIM inputs are data on the
industry cost structure, equipment costs, shipments, and assumptions
about markups and conversion expenditures. The key output is the
industry net present value (INPV). Different sets of assumptions
(markup scenarios) will produce different results. The qualitative part
of the MIA addresses factors such as product characteristics, impacts
on particular subgroups of firms, and important market and product
trends. 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 CUAC and CUHP industry that
includes a top-down manufacturer cost analysis of manufacturers used to
derive preliminary financial inputs for the GRIM (e.g., sales, general,
and administration (SG&A) expenses; research and development (R&D)
expenses; and tax rates). DOE used public sources of information,
including company SEC 10-K filings,\61\ corporate annual reports, the
U.S. Census Bureau's Economic Census,\62\ and Hoover's reports.\63\
---------------------------------------------------------------------------
\61\ U.S. Securities and Exchange Commission. Annual 10-K
Reports. Various Years. https://sec.gov.
\62\ U.S. Census Bureau, Annual Survey of Manufacturers: General
Statistics: Statistics for Industry Groups and Industries. https://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t.
\63\ Hoovers Inc. Company Profiles. Various Companies. https://www.hoovers.com.
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In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis
to quantify the potential impacts of an amended energy conservation
standard. In general, energy conservation standards can affect
manufacturer cash flow in three distinct ways: (1) Create a need for
increased investment; (2) raise production costs per unit; and (3)
alter revenue due to higher per-unit prices and possible changes in
sales volumes.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with a representative cross-section of manufacturers. During
these interviews, DOE discussed engineering, manufacturing,
procurement, and financial topics to validate assumptions used in the
GRIM and to identify key issues or concerns. See section IV.J.2 for a
description of the key issues manufacturers raised during the
interviews.
Additionally, in Phase 3, DOE evaluated subgroups of manufacturers
that may be disproportionately impacted by new standards or that may
not be accurately represented by the average cost assumptions used to
develop the industry cash-flow analysis. For example, small
manufacturers, niche players, or manufacturers exhibiting a cost
structure that largely differs from the industry average could be more
negatively affected. DOE identified one subgroup (i.e., small
manufacturers) for a separate impact analysis.
DOE applied the small business size standards published by the
Small Business Administration (SBA) to determine whether a company is
considered a small business. 65 FR 30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR
part 121. To be categorized as a small business under North American
Industry Classification System (NAICS) code 333415, ``Air-Conditioning
and Warm Air Heating Equipment and Commercial and Industrial
Refrigeration Equipment Manufacturing,'' a CUAC and CUHP manufacturer
and its affiliates may employ a maximum of 750 employees. The 750-
employee threshold includes all employees in a business's parent
company and any other subsidiaries. Based on this classification, DOE
identified at least two manufacturers that qualify as small businesses.
The small manufacturer subgroup is discussed in section VI.B of this
notice and in chapter 12 of the NOPR TSD.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow due to new
standards that result in a higher or lower industry value. The GRIM
analysis uses a standard, annual 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
2014 (the base year of the analysis) and continuing to 2048. DOE
calculated INPVs by summing the stream of annual discounted cash flows
during this period. For CUAC and CUHP manufacturers, DOE used a real
discount rate of 6.2 percent, which was derived from industry
financials and then modified according to feedback received during
manufacturer interviews.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between a base case and each standards
case. The difference in INPV between the base case and a standards case
represents the financial impact of the amended energy conservation
standard on manufacturers. As discussed previously, DOE collected this
information on the critical GRIM inputs from a number of sources,
including publicly-available data and interviews with a number of
manufacturers (described in the next section). The GRIM results are
shown in
[[Page 58987]]
section V.B.2. Additional details about the GRIM, the discount rate,
and other financial parameters can be found in chapter 12 of the NOPR
TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing higher-efficiency equipment is typically more
expensive than manufacturing baseline equipment due to the use of more
complex components, which are typically more costly than baseline
components. The changes in the manufacturer production costs (MPCs) of
the analyzed equipment can affect the revenues, gross margins, and cash
flow of the industry, making these equipment cost data key GRIM inputs
for DOE's analysis.
In the MIA, DOE used the MPCs for each considered efficiency level
calculated in the engineering analysis, as described in section IV.C.3
and further detailed in chapter 5 of the NOPR TSD. In addition, DOE
used information from its teardown analysis, described in chapter 5 of
the TSD, to disaggregate the MPCs into material, labor, and overhead
costs. To calculate the MPCs for equipment above the baseline, DOE
added the incremental material, labor, and overhead costs from the
engineering cost-efficiency curves to the baseline MPCs. These cost
breakdowns and product markups were validated and revised with
manufacturers during manufacturer interviews.
Shipments Forecasts
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of these values 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 forecasts derived from the shipments
analysis from 2014 (the base year) to 2048 (the end year of the
analysis period). The NIA shipments forecasts are, in part, based on a
consumer choice model that estimates customer sensitivity to total
installed cost as well as operating costs. See section IV.G. above and
chapter 9 of the NOPR TSD for additional details.
Product and Capital Conversion Costs
An amended energy conservation standard would cause manufacturers
to incur one-time conversion costs to bring their production facilities
and product designs into compliance. DOE evaluated the level of
conversion-related expenditures that would be needed to comply with
each considered efficiency level in each equipment class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
Capital conversion costs; and (2) product conversion costs. Capital
conversion costs are one-time investments in property, plant, and
equipment necessary to adapt or change existing production facilities
such that new compliant equipment designs can be fabricated and
assembled. Product conversion costs are one-time investments in
research, development, testing, marketing, and other non-capitalized
costs necessary to make product designs comply with the amended energy
conservation standard. These expenditures are made between the
announcement year of the standard and the effective date of the
standard.
To evaluate the level of capital conversion expenditures
manufacturers would likely incur to comply with amended energy
conservation standards, DOE used manufacturer interviews to gather data
on the anticipated level of capital investment that would be required
at each efficiency level. DOE supplemented manufacturer comments with
estimates of capital expenditure requirements derived from the product
teardown analysis and engineering analysis described in chapter 5 of
the TSD.
DOE assessed the product conversion costs at each considered
efficiency level by integrating data from quantitative and qualitative
sources. DOE considered market-share-weighted feedback regarding the
potential costs of each efficiency level from multiple manufacturers to
estimate product conversion costs and validated those numbers against
engineering estimates of redesign efforts. Additionally, DOE
incorporated estimates of the incremental Certification, Compliance &
Enforcement (CC&E) testing costs that would result from the proposed
test procedure change. This results in product conversion costs which
occur even at the baseline because manufacturers would need to re-rate
all existing basic models.
The testing costs that occur at baseline total $12.7M for the
industry. This value is based the 6,366 product listings found in the
AHRI database at the time of analysis. DOE assumed that the 29 brands
in the industry would each need to run 2 validation tests for each of
the 12 equipment classes, resulting in 696 physical tests at an average
cost of $10,000 per test, which includes the cost of the test units.
Additionally, the industry would likely use AEDMs to determine the IEER
rating of all remaining basic models. While simulation times ranged
from 6 to 24 hours of engineering time, depending on the size and
complexity of the equipment being modeled, DOE estimated the average
AEDM calculation required 13.8 hrs of engineering time to complete. The
cost of physically testing 696 units totaled $6.96M and the cost of
using AEDMs to determine the rating of the 6,366 product listings would
total $5.76M.
Issue 17: DOE requests comments, information, and data that would
inform adjustment of the DOE's estimate of $12.7M in conversion costs
that occurs in the base case.
In general, DOE assumes that all conversion-related investments
occur between the year of publication of the final rule and the year by
which manufacturers must comply with the new standard. The conversion
cost figures used in the GRIM can be found in section V.B.2.a of this
notice. For additional information on the estimated product and capital
conversion costs, see chapter 12 of the NOPR TSD.
b. Government Regulatory Impact Model Scenarios
Markup Scenarios
As discussed above, 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 equipment 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 the uncertainty regarding the potential impacts
on prices and profitability for manufacturers following the
implementation of amended energy conservation standards: (1) A
preservation of gross margin percentage markup scenario; and (2) a
preservation of per unit operating profit markup scenario. These
scenarios lead to different markups values that, when applied to the
inputted MPCs, result in varying revenue and cash flow impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' markup across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within an equipment class. As production costs
increase with
[[Page 58988]]
efficiency, this scenario implies that the absolute dollar markup will
increase as well. Based on publicly-available financial information for
manufacturers of small, large, and very large air-cooled CUAC and CUHP
as well as comments from manufacturer interviews, DOE assumed the
average non-production cost markup--which includes SG&A expenses, R&D
expenses, interest, and profit--to be the following for each CUAC and
CUHP equipment class:
Table IV.13--Base Case Markups
------------------------------------------------------------------------
Equipment Markup
------------------------------------------------------------------------
Small Commercial Packaged Air-Conditioners (Air-Cooled)-- 1.3
>=65,000 Btu/h and <135,000 Btu/h.........................
Small Commercial Packaged Heat Pumps (Air-Cooled)-->=65,000 1.3
Btu/h and <135,000 Btu/h..................................
Large Commercial Packaged Air-Conditioners (Air-Cooled)-- 1.34
>=135,000 Btu/h and <240,000 Btu/h........................
Large Commercial Packaged Heat Pumps (Air-Cooled)-- 1.34
>=135,000 Btu/h and <240,000 Btu/h........................
Very Large Commercial Packaged Air-Conditioners (Air- 1.41
Cooled)-->=240,000 Btu/h and <760,000 Btu/h...............
Very Large Commercial Packaged Heat Pumps (Air-Cooled)-- 1.41
>=240,000 Btu/h and <760,000 Btu/h........................
------------------------------------------------------------------------
Because this markup scenario assumes that manufacturers would be
able to maintain their gross margin percentage markups as production
costs increase in response to an amended energy conservation standard,
it represents a high bound to industry profitability.
In the preservation of per unit operating profit scenario,
manufacturer markups are set so that operating profit one year after
the compliance date of the amended energy conservation standard is the
same as in the base case on a per unit basis. Under this scenario, as
the costs of production increase under a standards case, manufacturers
are generally required to reduce their markups to a level that
maintains base-case operating profit per unit. The implicit assumption
behind this markup scenario is that the industry can only maintain its
operating profit in absolute dollars per unit after compliance with the
new standard is required. Therefore, operating margin in percentage
terms is reduced between the base case and standards case. DOE adjusted
the manufacturer markups in the GRIM at each TSL to yield approximately
the same earnings before interest and taxes in the standards case as in
the base case. This markup scenario represents a low bound to industry
profitability under an amended energy conservation standard.
c. Manufacturer Interviews
DOE interviewed manufacturers representing approximately 97 percent
of the market by revenue. The information gathered during these
interviews enabled DOE to tailor the GRIM to reflect the unique
financial characteristics of the small, large, and very large air-
cooled CUAC and CUHP industry. In interviews, DOE asked manufacturers
to describe their major concerns with potential rulemaking involving
CUAC and CUHP equipment. The following sections highlight
manufacturers' statements that helped shape DOEs understanding of
potential impacts of an amended standard on the industry. Manufacturers
raised a range of general issues for DOE to consider, including CC&E,
repair and replacement rates, and alignment with ASHRAE standards.
Below, DOE summarizes these issues, which were informally raised in
manufacturer interviews, in order to obtain public comment and related
data.
Certification, Compliance, and Enforcement
Nearly all manufacturers expressed concern over certification,
compliance, and enforcement (CC&E) costs. In particular, confusion over
the definition of ``basic model,'' ``equipment class,'' and the still-
pending implementation of alternative efficiency determination methods
(AEDMs) has made it difficult for some manufacturers to anticipate
their total testing needs and total testing costs. These issues,
depending on how they are addressed by DOE, will impact the number of
models to require testing.
Additionally, manufacturers noted that the replacement of the
current EER standard with the proposed IEER standard would introduce
additional testing complications. IEER testing necessitates four data
points, at 25%, 50%, 75%, and 100% capacity, which introduces
additional cumulative uncertainty. Accordingly, manufacturers expressed
the need for additional increases in the testing tolerance.
Manufacturers noted that the confidence limits currently required by
the CC&E regulations at 10 CFR 429.43 are more stringent than current
laboratory capabilities as well as current industry standard practice.
Repair and Replacement Rates
During interviews, most manufacturers expressed concerns that an
increase in standards may make customers more likely to repair an old
unit rather than replace it with a new one. Manufacturers noted that
more efficient units tend to be larger, and customers may need to make
significant alterations to roofs in existing buildings in order to
accommodate larger equipment. The high cost of redesigning,
reconstructing, or possibly replacing a roof to hold a new unit could
deter customers from purchasing one. According to manufacturers,
another reason an amended standard may lead to a drop in shipments is
the price sensitivity of end users. More efficient units tend to be
more expensive. The lower cost of fixing an old unit, versus purchasing
a new unit, may be a more attractive option for some customers.
Furthermore, manufacturers indicated that there could be a reduction in
energy savings from a higher standard due to the increase in the number
of older, less efficient units that are repaired rather than replaced
with newer, more efficient units. Manufacturers expressed concern over
a potential contraction in market size resulting from amended
standards.
Alignment With ASHRAE Standards
Several manufacturers suggested during interviews that DOE
standards should be aligned with other industry standards set by ASHRAE
and AHRI. A few standards, such as ASHRAE 37, ASHRAE 41, and AHRI 340/
360 are currently being revised, and manufacturers believe that a
coordination of standards between DOE and industry organizations would
be a practical way to reduce the amount of time they need to spend on
redesigning products and meeting multiple regulations.
K. Emissions Analysis
In the emissions analysis, DOE estimated the reduction in power
sector emissions of carbon dioxide (CO2), nitrogen oxides
(NOX), sulfur dioxide (SO2), and mercury (Hg)
from potential energy conservation standards for small, large, and very
large air-cooled commercial package air conditioning
[[Page 58989]]
and heating equipment. In addition, DOE estimates emissions impacts in
production activities (extracting, processing, and transporting fuels)
that provide the energy inputs to power plants. These are referred to
as ``upstream'' emissions. Together, these emissions account for the
full-fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy
(76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes impacts on
emissions of methane (CH4) and nitrous oxide
(N2O), both of which are recognized as greenhouse gases.
DOE conducted the emissions analysis using emissions factors that
were derived from data in the Energy Information Agency's (EIA's)
Annual Energy Outlook 2013 (AEO 2013), supplemented by data from other
sources.\64\ DOE developed separate emissions factors for power sector
emissions and upstream emissions. The method that DOE used to derive
emissions factors is described in chapter 13 of the NOPR TSD.
---------------------------------------------------------------------------
\64\ Emissions factors based on the Annual Energy Outlook 2014
(AEO 2014), which became available too late for incorporation into
this analysis, indicate that a significant decrease in the
cumulative emission reductions of carbon dioxide, methane, nitrous
oxide, sulfur dioxide, nitrogen oxides and mercury from the proposed
standards can be expected if the projections of power plant
utilization assumed in AEO 2014 are realized. For example, the
estimated amount of cumulative emission reductions of CO2 are
expected to decrease by 36% from DOE's current estimate (from 1,085
Mt to 697Mt) based on the projections in AEO 2014 relative to AEO
2013. The monetized benefits from GHG reductions would likely
decrease by a comparable amount. DOE plans to use emissions factors
based on the most recent AEO available for the next phase of this
rulemaking, which may or may not be AEO 2014, depending on the
timing of the issuance of the next rulemaking document.
---------------------------------------------------------------------------
For CH4 and N2O, DOE calculated emissions
reduction in tons and also in terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted to CO2eq
by multiplying by the gas' global warming potential (GWP) over a 100-
year time horizon. Based on the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change,\65\ DOE used GWP values of
25 for CH4 and 298 for N2O.
---------------------------------------------------------------------------
\65\ Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R.
Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J.
Nganga, R. Prinn, G. Raga, M. Schulz and R. Van Dorland. 2007:
Changes in Atmospheric Constituents and in Radiative Forcing. In
Climate Change 2007: The Physical Science Basis. Contribution of
Working Group I to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change. S. Solomon, D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller,
Editors. 2007. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA. p. 212.
---------------------------------------------------------------------------
EIA prepares the Annual Energy Outlook using the National Energy
Modeling System (NEMS). Each annual version of NEMS incorporates the
projected impacts of existing air quality regulations on emissions. AEO
2013 generally represents current legislation and environmental
regulations, including recent government actions, for which
implementing regulations were available as of December 31, 2012.
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 (D.C.). SO2 emissions from 28 eastern
states and D.C. were also limited under the Clean Air Interstate Rule
(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based
trading program that operates along with the Title IV program. CAIR was
remanded to the U.S. Environmental Protection Agency (EPA) by the U.S.
Court of Appeals for the District of Columbia Circuit but it remained
in effect. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011
EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule
(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C.
Circuit issued a decision to vacate CSAPR. See EME Homer City
Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at *24 (D.C. Cir.
Aug. 21, 2012). The court ordered EPA to continue administering CAIR.
The AEO 2013 emissions factors used for this NOPR assumes that CAIR
remains a binding regulation through 2040.
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by any regulated EGU.
In past rulemakings, DOE recognized that there was uncertainty about
the effects of efficiency standards on SO2 emissions covered
by the existing cap-and-trade system, but it concluded that negligible
reductions in power sector SO2 emissions would occur as a
result of standards.
Beginning in 2015, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants,
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16,
2012). In the final MATS rule, EPA established a standard for hydrogen
chloride as a surrogate for acid gas hazardous air pollutants (HAP),
and also established a standard for SO2 (a non-HAP acid gas)
as an alternative equivalent surrogate standard for acid gas HAP. The
same controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions will be reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. AEO 2013 assumes that, in order to
continue operating, coal plants must have either flue gas
desulfurization or dry sorbent injection systems installed by 2015.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Under the MATS, NEMS shows a reduction
in SO2 emissions when electricity demand decreases (e.g., as
a result of energy efficiency standards). Emissions will be far below
the cap established by CAIR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that efficiency standards will reduce SO2
emissions in 2015 and beyond.
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia. Energy conservation standards are
expected to have little effect on NOX emissions in those
States covered by CAIR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions. However,
standards would be expected to reduce NOX emissions in the
States not affected by the caps, so DOE estimated NOX
emissions reductions from the standards considered in this NOPR for
these States.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. DOE estimated mercury
emissions reduction using emissions factors based on AEO 2013, which
incorporates the MATS.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this proposed rule, DOE considered
the estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the TSLs considered. In order to make this calculation similar to
the calculation of the NPV of consumer benefit, DOE considered the
reduced emissions expected to result over the lifetime of equipment
shipped in the forecast period for each TSL. This section
[[Page 58990]]
summarizes the basis for the monetary values used for each of these
emissions and presents the values considered in this rulemaking.
For this NOPR, DOE is relying on a set of values for the social
cost of carbon (SCC) that was developed by an interagency process. A
summary of the basis for these values is provided below, and a more
detailed description of the methodologies used is provided as an
appendix to chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of carbon dioxide. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in carbon dioxide emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to
the extent permitted by law, assess both the costs and the benefits of
the intended regulation and, recognizing that some costs and benefits
are difficult to quantify, propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs. The purpose of the SCC estimates presented here is
to allow agencies to incorporate the monetized social benefits of
reducing CO2 emissions into cost-benefit analyses of
regulatory actions. The estimates are presented with an acknowledgement
of the many uncertainties involved and with a clear understanding that
they should be updated over time to reflect increasing knowledge of the
science and economics of climate impacts.
As part of the interagency process that developed the SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of challenges. A
recent report from the National Research Council points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) Future emissions of greenhouse gases; (2) the
effects of past and future emissions on the climate system; (3) the
impact of changes in climate on the physical and biological
environment; and (4) the translation of these environmental impacts
into economic damages. As a result, any effort to quantify and monetize
the harms associated with climate change will raise questions of
science, economics, and ethics and should be viewed as provisional.
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
carbon dioxide emissions. The agency can estimate the benefits from
reduced emissions in any future year by multiplying the change in
emissions in that year by the SCC value appropriate for that year. The
net present value of the benefits can then be calculated by multiplying
the future benefits by an appropriate discount factor and summing
across all affected years.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for
the rulemaking process, to quantify avoided climate change damages from
reduced CO2 emissions. The interagency group did not
undertake any original analysis. Instead, it combined SCC estimates
from the existing literature to use as interim values until a more
comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per metric ton of CO2. These interim values
represented the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
c. Current Approach and Key Assumptions
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: The FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change (IPCC).
Each model was given equal weight in the SCC values that were
developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for
use in regulatory analyses.\66\ Three sets of values are based on the
average SCC from three integrated assessment models, at discount rates
of 2.5 percent,
[[Page 58991]]
3 percent, and 5 percent. The fourth set, which represents the 95th-
percentile SCC estimate across all three models at a 3-percent discount
rate, is included to represent higher-than-expected impacts from
climate change further out in the tails of the SCC distribution. The
values grow in real terms over time. Additionally, the interagency
group determined that a range of values from 7 percent to 23 percent
should be used to adjust the global SCC to calculate domestic effects,
although preference is given to consideration of the global benefits of
reducing CO2 emissions. Table IV.14 presents the values in
the 2010 interagency group report, which is reproduced in appendix 14-A
of the NOPR TSD.
---------------------------------------------------------------------------
\66\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government, February 2010. https://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.
Table IV.14--Annual SCC Values From 2010 Interagency Report, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------------------
Year 5 3 2.5 3
---------------------------------------------------------------------------
Average Average Average 95th percentile
----------------------------------------------------------------------------------------------------------------
2010................................ 4.7 21.4 35.1 64.9
2015................................ 5.7 23.8 38.4 72.8
2020................................ 6.8 26.3 41.7 80.7
2025................................ 8.2 29.6 45.9 90.4
2030................................ 9.7 32.8 50.0 100.0
2035................................ 11.2 36.0 54.2 109.7
2040................................ 12.7 39.2 58.4 119.3
2045................................ 14.2 42.1 61.7 127.8
2050................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
The SCC values used for this NOPR were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature.\67\ Table IV.15 shows
the updated sets of SCC estimates from the 2013 interagency update in
five-year increments from 2010 to 2050. Appendix 14-B of the NOPR TSD
provides the full set of values and a discussion of the revisions made
in 2013. The central value that emerges is the average SCC across
models at 3-percent discount rate. However, for purposes of capturing
the uncertainties involved in regulatory impact analysis, the
interagency group emphasizes the importance of including all four sets
of SCC values.
---------------------------------------------------------------------------
\67\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government,
May 2013; revised November 2013. https://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
Table IV.15--Annual SCC Values From 2013 Interagency Update, 2010-2050
[In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------------------
Year 5 3 2.5 3
---------------------------------------------------------------------------
Average Average Average 95th percentile
----------------------------------------------------------------------------------------------------------------
2010................................ 11 32 51 89
2015................................ 11 37 57 109
2020................................ 12 43 64 128
2025................................ 14 47 69 143
2030................................ 16 52 75 159
2035................................ 19 56 80 175
2040................................ 21 61 86 191
2045................................ 24 66 92 206
2050................................ 26 71 97 220
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects. There are a number of analytic challenges that are
being addressed by the research community, including research programs
housed in many of the Federal agencies participating in the interagency
process to estimate the SCC. The interagency group intends to
periodically review and reconsider those estimates to reflect
increasing knowledge of the science and economics of climate impacts,
as well as improvements in modeling.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions resulting from this proposed
rule, DOE used the values from the 2013 interagency report, adjusted to
2013$ using the Gross Domestic Product price deflator. For each of the
four SCC cases specified, the values used for emissions in 2015 were
[[Page 58992]]
$12.0, $40.5, $62.4, and $119 per metric ton avoided (values expressed
in 2013$). DOE derived values after 2050 using the relevant growth
rates for the 2040-2050 period in the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
DOE solicits comment on the application of the new SCC values used
to determine the social benefits of CO2 emissions reductions
over the rulemaking analysis period. In particular, the agency solicits
comment on its derivation of SCC values after 2050, where the agency
applied the average annual growth rate of the SCC estimates in 2040-
2050 associated with each of the four sets of values.
Issue 18: DOE solicits comment on the application of the new SCC
values used to determine the social benefits of CO2
emissions reductions over the rulemaking analysis period. In
particular, the agency solicits comment on its derivation of SCC values
after 2050, where the agency applied the average annual growth rate of
the SCC estimates in 2040-2050 associated with each of the four sets of
values.
2. Valuation of Other Emissions Reductions
As noted above, DOE has taken into account how new or amended
energy conservation standards would reduce NOX emissions in
those 22 states not affected by the CAIR. DOE estimated the monetized
value of NOX emissions reductions resulting from each of the
TSLs considered for this NOPR based on estimates found in the relevant
scientific literature. Estimates of monetary value for reducing
NOX from stationary sources range from $476 to $4,893 per
ton in 2013$.\68\ DOE calculated monetary benefits using a medium value
for NOX emissions of $2,684 per short ton (in 20123), and
real discount rates of 3-percent and 7-percent.
---------------------------------------------------------------------------
\68\ U.S. Office of Management and Budget, Office of Information
and Regulatory Affairs, 2006 Report to Congress on the Costs and
Benefits of Federal Regulations and Unfunded Mandates on State,
Local, and Tribal Entities, Washington, DC.
---------------------------------------------------------------------------
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. It has not included monetization in the current analysis.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the power
generation industry that would result from the adoption of new or
amended energy conservation standards. In the utility impact analysis,
DOE analyzes the changes in installed electricity capacity and
generation that would result for each trial standard level. The utility
impact analysis uses a variant of NEMS,\69\ which is a public domain,
multi-sectored, partial equilibrium model of the U.S. energy sector.
DOE uses a variant of this model, referred to as NEMS-BT,\70\ to
account for selected utility impacts of new or amended energy
conservation standards. DOE's analysis consists of a comparison between
model results for the most recent AEO Reference Case and for cases in
which energy use is decremented to reflect the impact of potential
standards. The energy savings inputs associated with each TSL come from
the NIA. Chapter 15 of the NOPR TSD describes the utility impact
analysis in further detail.
---------------------------------------------------------------------------
\69\ For more information on NEMS, refer to the U.S. Department
of Energy, Energy Information Administration documentation. A useful
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581 (2003) (March, 2003).
\70\ DOE/EIA approves use of the name NEMS to describe only an
official version of the model without any modification to code or
data. Because this analysis entails some minor code modifications
and the model is run under various policy scenarios that are
variations on DOE/EIA assumptions, DOE refers to it by the name
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under
whose aegis this work has been performed).
---------------------------------------------------------------------------
N. Employment Impact Analysis
Employment impacts from new or amended energy conservation
standards include direct and indirect impacts. Direct employment
impacts are any changes in the number of employees of manufacturers of
the equipment subject to standards; the MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more efficient equipment. Indirect
employment impacts from standards consist of the jobs created or
eliminated in the national economy, other than in the manufacturing
sector being regulated, due to: (1) Reduced spending by end users on
energy; (2) reduced spending on new energy supply by the utility
industry; (3) increased consumer spending on the purchase of new
equipment; 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. 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, based
on the BLS data alone, DOE believes net national employment may
increase because of shifts in economic activity resulting from amended
standards.
For the standard levels considered in the NOPR, DOE estimated
indirect national employment impacts using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies, Version 3.1.1
(ImSET). ImSET is a special-purpose version of the ``U.S. Benchmark
National Input-Output'' (I-O) model, which was designed to estimate the
national employment and income effects of energy-saving technologies.
The ImSET software includes a computer-based I-O model having
structural coefficients that characterize economic flows among the 187
sectors. ImSET's national economic I-O structure is based on a 2002
U.S. benchmark table, specially aggregated to the 187 sectors most
relevant to industrial, commercial, and residential building energy
use. DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run. For the NOPR, DOE used ImSET only to
estimate short-term employment impacts.
[[Page 58993]]
For more details on the employment impact analysis, see chapter 16
of the NOPR TSD.
V. Analytical Results
A. Trial Standard Levels
At the NOPR stage, DOE develops Trial Standard Levels (TSLs) for
consideration. TSLs are formed by grouping different efficiency levels,
which are potential standard levels for each equipment class. DOE
analyzed the benefits and burdens of the TSLs developed for this
proposed rule. DOE examined four TSLs for small, large, and very large
air-cooled commercial package air conditioning and heating equipment.
Table V.1 presents the TSLs analyzed and the corresponding
efficiency level for each equipment class. The efficiency levels in
each TSL can be characterized as follows: TSL 4 is comprised of the
max-tech efficiency level, which is efficiency level 4 for each
equipment class. TSL 3 is comprised of efficiency level 3 for each
equipment class. TSL 2 is comprised of efficiency level 2 for each
equipment class, and TSL 1 is comprised of efficiency level 1 for each
equipment class.
Table V.1--Summary of TSLs for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Efficiency level *
---------------------------------------------------------------
Small Commercial Packaged Air Conditioners-- 1 2 3 4
>=65,000 Btu/h and <135,000 Btu/h Cooling
Capacity.......................................
Large Commercial Packaged Air Conditioners-- 1 2 3 4
>=135,000 Btu/h and <240,000 Btu/h Cooling
Capacity.......................................
Very Large Commercial Packaged Air Conditioners-- 1 2 3 4
>=240,000 Btu/h and <760,000 Btu/h Cooling
Capacity.......................................
Small Commercial Packaged Heat Pumps-->=65,000 1 2 3 4
Btu/h and <135,000 Btu/h Cooling Capacity......
Large Commercial Packaged Heat Pumps-->=135,000 1 2 3 4
Btu/h and <240,000 Btu/h Cooling Capacity......
Very Large Commercial Packaged Heat Pumps-- 1 2 3 4
>=240,000 Btu/h and <760,000 Btu/h Cooling
Capacity.......................................
----------------------------------------------------------------------------------------------------------------
* For the IEERs that correspond to efficiency levels 1 through 4, see Table IV.6.
B. Economic Justification and Energy Savings
As discussed in section II.A, EPCA provides seven factors to be
evaluated in determining whether a more stringent standard for small,
large, and very large air-cooled CUAC and CUHP is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)) The following sections
generally discuss how DOE is addressing each of those factors in this
rulemaking.
1. Economic Impacts on Individual Customers
DOE analyzed the economic impacts on small, large, and very large
air-cooled commercial package air conditioning and heating equipment
customers by looking at the effects standards would have on the LCC and
PBP. DOE also examined the impacts of potential standards on customer
subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact of standards on small, large,
and very large air-cooled CUAC customers, DOE conducted LCC and PBP
analyses for each TSL. In general, higher-efficiency equipment would
affect customers in two ways: (1) Annual operating expense would
decrease, and (2) purchase price would increase. Section IV.F of this
notice discusses the inputs DOE used for calculating the LCC and PBP.
As stated there, DOE did not do an LCC and PBP analysis for the CUHP
equipment classes because energy modeling was performed only for CUAC
equipment.
For each representative unit, the key outputs of the LCC analysis
are a mean LCC savings and a median PBP relative to the base case, as
well as the fraction of customers for which the LCC will decrease (net
benefit), increase (net cost), or exhibit no change (no impact)
relative to the base-case product forecast. No impacts occur when the
base-case efficiency equals or exceeds the efficiency at a given TSL.
Table V.2 through Table V.4 show the key results for each
representative unit.
Table V.2--Summary Life-Cycle Cost and Payback Period Results for Small Commercial Package Air Conditioners
[7.5 ton, >=65,000 Btu/h and <135,000 Btu/h Cooling Capacity]
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3 4
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................ 1 2 3 4
IEER............................................ 12.9 14.0 14.8 19.9
Total Installed Cost............................ $8,535 $9,923 $10,323 $12,166
Mean LCC Savings ($)............................ $1,094 $937 $4,779 $6,771
Customers with LCC Increase (Cost) (%) *........ 0% 27% 0% 0%
Customers with LCC Decrease (Benefit) (%) *..... 61% 72% 99% 100%
Customers with No Change in LCC (%) *........... 39% 1% 0% 0%
Median PBP (Years).............................. 2.2 8.0 3.9 4.7
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
[[Page 58994]]
Table V.3--Summary Life-Cycle Cost and Payback Period Results for Large Commercial Package Air Conditioners
[15 ton, >=135,000 Btu/h and <240,000 Btu/h]
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3 4
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................ 1 2 3 4
IEER............................................ 12.2 13.2 14.2 18.4
Total Installed Cost............................ $14,935 $16,858 $17,753 $18,975
Mean LCC Savings ($)............................ $1,038 $2,214 $3,469 $7,508
Customers with LCC Increase (Cost) (%) *........ 3% 8% 6% 2%
Customers with LCC Decrease (Benefit) (%) *..... 74% 90% 93% 98%
Customers with No Change in LCC (%) *........... 22% 2% 0% 0%
Median PBP (Years).............................. 6.0 7.2 6.6 5.1
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
Table V.4--Summary Life-Cycle Cost and Payback Period Results for Very Large Commercial Package Air Conditioners
[30 ton, >=240,000 Btu/h and <760,000 Btu/h]
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3 4
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................ 1 2 3 4
IEER............................................ 11.6 12.5 13.5 15.5
Total Installed Cost............................ $29,385 $31,738 $32,828 $36,200
Mean LCC Savings ($)............................ $4,103 $4,801 $16,477 $19,842
Customers with LCC Increase (Cost) (%) *........ 2% 12% 3% 5%
Customers with LCC Decrease (Benefit) (%) *..... 62% 76% 92% 94%
Customers with No Change in LCC (%) *........... 36% 13% 6% 1%
Median PBP (Years).............................. 2.6 5.5 2.5 3.5
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
b. Customer Subgroup Analysis
In the customer subgroup analysis, DOE estimated the impacts of the
considered TSLs on small business customers. The LCC savings and
payback periods for small business customers are similar to the impacts
for all customers. Chapter 11 of the NOPR TSD presents detailed results
of the customer subgroup analysis.
c. Rebuttable Presumption Payback
As discussed in section III.E.2, EPCA establishes a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for equipment that meets the
standard is less than three times the value of the first-year energy
savings resulting from the standard. DOE calculated a rebuttable-
presumption PBP for each TSL to determine whether DOE could presume
that a standard at that level is economically justified.
DOE based the calculations on average usage profiles. As a result,
DOE calculated a single rebuttable-presumption payback value, and not a
distribution of PBPs, for each TSL. Table V.5 shows the rebuttable-
presumption PBPs for the considered TSLs. The rebuttable presumption is
fulfilled in those cases where the PBP is three years or less. However,
DOE routinely conducts an economic analysis that considers the full
range of impacts to the customer, manufacturer, Nation, and
environment, as required by EPCA. 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 three-year PBP analysis). Section V.C addresses how DOE
considered the range of impacts to select today's proposed standards.
Table V.5--Rebuttable-Presumption Payback Periods (years) for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Trial standard level 1 2 3 4
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................ 1 2 3 4
Small Commercial Packaged Air Conditioners-- 2.2 8.0 3.9 4.7
>=65,000 Btu/h and <135,000 Btu/h Cooling
Capacity.......................................
Large Commercial Packaged Air Conditioners-- 6.0 7.2 6.6 5.1
>=135,000 Btu/h and <240,000 Btu/h Cooling
Capacity.......................................
Very Large Commercial Packaged Air Conditioners-- 2.6 5.5 2.5 3.5
>=240,000 Btu/h and <760,000 Btu/h Cooling
Capacity.......................................
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
As noted above, DOE performed an MIA to estimate the impact of
amended energy conservation standards on manufacturers of small, large,
and very large air-cooled commercial package air conditioning and
heating equipment. 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.
[[Page 58995]]
a. Industry Cash-Flow Analysis Results
Table V.6 and Table V.7 depict the financial impacts (represented
by changes in INPV) of amended energy standards on manufacturers of
small, large, and very large air-cooled commercial package air
conditioning and heating equipment, as well as the conversion costs
that DOE expects manufacturers would incur for all equipment classes at
each TSL. To evaluate the range of cash flow impacts on the commercial
packaged air conditioner and heat pump industry, DOE modeled two
different mark-up scenarios using different assumptions that correspond
to the range of anticipated market responses to amended energy
conservation standards: (1) The preservation of gross margin
percentage; and (2) the preservation of per unit operating profit. Each
of these scenarios is discussed immediately below.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled a preservation of gross margin percentage markup
scenario, in which a uniform ``gross margin percentage'' markup is
applied across all potential efficiency levels. In this scenario, DOE
assumed that a manufacturer's absolute dollar markup would increase as
production costs increase in the standards case.
To assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of per unit operating profit
markup scenario, which assumes that manufacturers would not be able to
greater operating profit on a per unit basis in the standards case.
Rather, as manufacturers make the necessary investments required to
convert their facilities to produce new standards-compliant products
and incur higher costs of goods sold, their percentage markup
decreases. Operating profit does not change in absolute dollars and
decreases as a percentage of revenue.
As noted in the MIA methodology discussion (see IV.J.2), in
addition to markup scenarios, the MPC, shipments, and conversion cost
assumptions also affect INPV results. Of particular note in this
rulemaking is the decline in cumulative shipments as the TSL increases
that is forecasted in the NIA shipments. This change in shipments is
summarized in Table V.10.
The set of results below shows potential INPV impacts for small,
large, and very large air-cooled commercial package air conditioning
and heating equipment manufacturers; Table V.6 reflects the lower bound
of impacts, and Table V.7 represents the upper bound.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding industry values at each TSL. In the following
discussion, the INPV results refer to the difference in industry value
between the base case and each standards case that results from the sum
of discounted cash flows from the base year 2014 through 2048, the end
of the analysis period.
To provide perspective on the short-run cash flow impact, DOE
includes in the discussion of the results below a comparison of free
cash flow between the base case and the standards case at each TSL in
the year before new standards would take effect. This figure provides
an understanding of the magnitude of the required conversion costs
relative to the cash flow generated by the industry in the base case.
Table V.6--Industry Valuation and Financial Impacts--Preservation of Gross Margin Percentage Markup Scenario *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
INPV......................... $M.............. 1,260.91 1,249.47 1,208.04 1,172.36 1,142.78
Change in INPV............... $M.............. ........... (11.45) (52.87) (88.55) (118.13)
%............... ........... (0.91) (4.19) (7.02) (9.37)
Product Conversion Costs..... $M.............. 12.72 38.73 58.52 120.90 210.96
Capital Conversion Costs..... $M.............. ........... 14.94 39.23 105.54 113.31
Total Conversion Costs....... $M.............. 12.72 53.68 97.75 226.44 324.28
Free Cash Flow (2018)........ $M.............. 73.38 58.19 40.82 (9.32) (42.13)
Free Cash Flow (2018)........ % Change........ ........... (20.70) (44.37) (112.70) (157.42)
----------------------------------------------------------------------------------------------------------------
Table V.7--Industry Valuation and Financial Impacts--Preservation of Per Unit Operating Profit Markup Scenario *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
INPV......................... $M.............. 1,260.91 1,187.02 1,015.61 949.34 822.75
Change in INPV............... $M.............. ........... (73.89) (245.30) (311.58) (438.16)
%............... ........... (5.86) (19.45) (24.71) (34.75)
Product Conversion Costs..... $M.............. 12.72 38.73 58.52 120.90 210.96
Capital Conversion Costs..... $M.............. - 14.94 39.23 105.54 113.31
Total Conversion Costs....... $M.............. 12.72 53.68 97.75 226.44 324.28
Free Cash Flow (2018)........ $M.............. 73.38 58.19 40.82 (9.32) (42.13)
Free Cash Flow (2018)........ % Change........ ........... (20.70) (44.37) (112.70) (157.42)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
Base case conversion costs of $12.72 million are attributed to CC&E
costs associated with new product certification under the proposed test
procedure. This amount consists of modeling and equipment testing costs
incurred to recertify currently available products.
TSL 1 represents EL 1 for all equipment classes. At TSL 1, DOE
estimates impacts on INPV for commercial packaged air conditioning
manufacturers to range from -5.86 percent to -0.91 percent, or a change
in INPV of -$73.89 million to -$11.45
[[Page 58996]]
million. At this potential standard level, industry free cash flow is
estimated to decrease by approximately 20.70 percent to $58.19,
compared to the base-case value of $73.38 million in the year before
the compliance date (2018).
At TSL 1, the industry is likely to face a small contraction.
Industry wide shipments drop by approximately 5.04% in the standard
year (2019), relative to the base case. In addition, manufacturers
incur conversion costs totaling $53.68 million due to CC&E
requirements, product redesigns for the Very Large equipment classes,
and new tooling associated with their highest capacity equipment
offerings. While impacts on the industry as a whole are relatively
mild, small manufacturers may have greater difficulty with re-rating
their products to an IEER metric since they generally do not have the
testing capacity or engineering resources of larger competitors.
TSL 2 represents EL 2 across all equipment classes. At TSL 2, DOE
estimates impacts on INPV for commercial packaged air conditioning
manufacturers to range from -19.45 percent to -4.19 percent, or a
change in INPV of -$245.30 million to -$52.87 million. At this
potential standard level, industry free cash flow is estimated to
decrease by approximately 44.37 percent to $40.82 million, compared to
the base-case value of $73.38 million in the year before the compliance
date (2018).
At TSL 2, industry-wide shipments drop by 28.32% in the standard
year (2019) relative to the base case. Additionally, DOE anticipates
conversion costs to increase to $97.75 million for the industry as
roughly 67% of equipment listed in the AHRI directory would need to be
redesigned in order to meet the higher proposed efficiency levels.
Given the industry's existing trend of consolidation, DOE expects
further consolidation at TSL 2. Manufacturers with limited market share
may choose to sell off their small, large, and very large air-cooled
commercial package air conditioning and heating equipment business to
larger competitors.
TSL 3 represents EL 3 for all equipment classes. At TSL 3, DOE
estimates impacts on INPV for commercial packaged air conditioning
manufacturers to range from -24.71 percent to -7.02 percent, or a
change in INPV of -$311.58 million to -$88.55 million., Industry-wide
shipments drop by 28.76% relative to the base case in the standards
year. DOE anticipates large capital conversion costs at TSL 3, as
redesigns necessitate additional investments in tooling for cabinets
and heat exchangers to meet amended efficiency standards. Roughly 81%
of equipment listings would require changes to meet the standard.
Conversion costs total $226.44 million for the industry. A key
indicator of impact on the industry is the industry free cash flow,
which is estimated to decrease by approximately 112.70 percent to -
$9.32 relative to the base case value of $73.38 million in the year
before the compliance date (2018). The negative free cash flow
indicates that players in the industry would need to access cash
reserves or borrow money from capital markets to cover conversion
costs. Given expectation for a shrinking market and high conversion
costs, some manufacturers indicated they would move production to
lower-cost foreign markets at this level.
TSL 4 represents max tech across all equipment classes. At TSL 4,
DOE estimates impacts on INPV for commercial packaged air conditioning
manufacturers to range from -34.75 percent to -9.37 percent, or a
change in INPV of -$438.16 million to -$118.13 million. At this
potential standard level, industry free cash flow is estimated to
decrease by approximately 157.42 percent relative to the base-case
value of $73.38 million in the year before the compliance date (2018).
At max-tech, DOE estimates a 35.12% drop in shipments in the
standards years, a maximum loss of over 34.75% of industry value over
the analysis period, and conversion costs approaching $650 million for
the industry. Only 2% of equipment listings could meet this trial
standard level today. Manufacturers voiced concerns over the lack of
product differentiation and the commoditization at upper TSLs. TSL 4
would leave no room for product differentiation based on efficiency.
Furthermore, given the level of R&D and production line modifications
necessary at this level, it is unclear whether the industry could make
the necessary changes in the allotted conversion period. At TSL 4, most
manufacturers would re-evaluate their role in the industry. Those that
do remain would strongly consider all cost cutting measures, including
relocation to foreign countries.
Issue 19: DOE requests comment on the capital conversion costs and
product conversion costs estimated for each TSL. In particular, DOE
seeks comment on the conversion costs at max-tech, at TSL 4.
b. Impacts on Direct Employment
To quantitatively assess the impacts of energy conservation
standards on direct employment in the small, large, and very large air-
cooled commercial package air conditioning and heating equipment
industry, DOE used the GRIM to estimate the domestic labor expenditures
and number of employees in the base case and at each TSL from 2015
through 2048. DOE used statistical data from the U.S. Census Bureau's
2011 Annual Survey of Manufacturers (ASM),\71\ the results of the
engineering analysis, and interviews with manufacturers to determine
the inputs necessary to calculate industry-wide labor expenditures and
domestic employment levels. Labor expenditures related to manufacturing
of the product are a function of the labor intensity of the product,
the sales volume, and an assumption that wages remain fixed in real
terms over time. The total labor expenditures in each year are
calculated by multiplying the MPCs by the labor percentage of MPCs.
---------------------------------------------------------------------------
\71\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau
(2011) (Available at: https://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------
The total labor expenditures in the GRIM were then converted to
domestic production employment levels by dividing production labor
expenditures by the annual payment per production worker (production
worker hours times the labor rate found in the U.S. Census Bureau's
2011 ASM). The estimates of production workers in this section cover
workers, including line-supervisors who are directly involved in
fabricating and assembling a product within the manufacturing facility.
Workers performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific products covered by
this rulemaking. The total direct employment impacts calculated in the
GRIM are the changes in the number of production workers resulting from
the amended energy conservation standards for small, large, and very
large air-cooled commercial package air conditioning and heating
equipment, as compared to the base case. In general, more efficient
equipment is larger, more complex, and more labor intensive to build.
Per unit labor requirements and production time requirements increase
with a higher energy conservation standard. As a result, the total
labor calculations described in this paragraph are considered an upper
bound to direct employment forecasts.
On the other hand, the domestic HVAC industry has had a track
record of consolidation over the past decade. See, e.g. Daikin Acquires
Goodman,
[[Page 58997]]
Daikin Corporate News (Aug. 29, 2012); Ingersoll Rand to Acquire Trane
Inc. for Approximately $10.1 Billion, Trane Press Release (Dec. 17,
2007); and JCI Buys Pennsylvania Firm, Grand Rapids Press, C6 (Aug. 26,
2005) (noting purchase of York International by Johnson Controls,
Inc.). DOE recognizes the potential for industry consolidation and its
concomitant impacts on employment levels, especially at higher TSLs. As
shipments drop and conversion costs increase, some manufacturers may
choose not to make the necessary investments to meet the amended
standard for all equipment classes. Alternatively, they may choose to
relocate production facilities where conversion costs and production
costs are lower. To establish a lower bound to negative employment
impacts, DOE estimated the maximum potential job loss due to
manufacturers either leaving the industry or moving production to
foreign locations as a result of an amended standard. These lower bound
estimates were based on GRIM results, conversion cost estimates, and
content from manufacturers interviews. The lower bound of employment is
presented in Table V.8 below.
DOE estimates that in the absence of amended energy conservation
standards, there would be 1,085 domestic production workers for small,
large, and very large air-cooled commercial package air conditioning
and heating equipment. DOE estimates that 50 percent of small, large,
and very large air-cooled commercial package air conditioning and
heating equipment sold in the United States are manufactured
domestically. Table V.8 shows the range of the impacts of potential
amended energy conservation standards on U.S. production workers of
small, large, and very large air-cooled commercial package air
conditioning and heating equipment.
Table V.8--Potential Changes in the Total Number of Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment
Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
--------------------------------------------------------------------------------------------------------------------
Base case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic ...................... (181) to (10)......... (482) to (69)........ (543) to (27)........ (1,085) to (31).
Production Workers in 2019
(relative to a base case
employment of 1,085).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
DOE notes that the employment impacts discussed here are
independent of the indirect employment impacts to the broader U.S.
economy, which are documented in chapter 15 of the NOPR TSD.
c. Impacts on Manufacturing Capacity
According to the commercial packaged air conditioning manufacturers
interviewed, amended energy conservation standards could lead to higher
fabrication labor hours. However, manufacturers noted that industry
shipments are down 40% from their peak in the 2007-2008 timeframe.
Excess capacity in the industry today and any drop in shipments that
result from higher prices could offset the additional production times.
In the long-term, no manufacturers interviewed expected to have
capacity constraints.
Manufacturers did note concerns about engineering and testing
capacity in the time period between the announcement year and the
effective year of the proposed standard. Manufacturers worried about
the level of technical resources required to redesign and test all
products at higher TSLs. The engineering analysis shows increasingly
complex components and control strategies are required as standard
levels increase. Manufacturers noted in interviews that the industry
would need to add electrical engineering and control systems
engineering talent beyond current staffing to meet the redesign
requirements of higher TSLs. Additional training might be needed for
manufacturing engineers, laboratory technicians, and service personnel
if variable speed components are broadly adopted. Furthermore, as
standards increase, units tend to grow in size, requiring more lab
resources and time to test. Some manufacturers were concerned that an
amended standard would trigger the need for construction of new test
lab facilities, which require significant lead time.
Issue 20: DOE requests comments and data on capacity constraints at
each TSL--including production capacity constraints, engineering
resource constraints, and testing capacity constraints that are
directly related to an amended standard for small, large, and very
large CUAC and CUHP. In particular, DOE requests comment on whether the
proposed effective date allows for a sufficient conversion period to
make the equipment design and facility updates necessary to meet an
amended standard.
d. Impacts on Subgroups of Manufacturers
Small manufacturers, niche equipment manufacturers, and
manufacturers exhibiting a cost structure substantially different from
the industry average could be affected disproportionately. Using
average cost assumptions developed for an industry cash-flow estimate
is inadequate to assess differential impacts among manufacturer
subgroups.
For the commercial packaged air conditioner and heat pump industry,
DOE identified and evaluated the impact of amended energy conservation
standards on one subgroup--small manufacturers. The SBA defines a
``small business'' as having 750 employees or less for NAICS 333415,
``Air-Conditioning and Warm Air Heating Equipment and Commercial and
Industrial Refrigeration Equipment Manufacturing.'' Based on this
definition, DOE identified three manufacturers in the commercial
packaged air conditioning industry that qualify as small businesses.
For a discussion of the impacts on the small manufacturer subgroup, see
the regulatory flexibility analysis in section VI.B of this notice and
chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of recent or impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly
affect manufacturers' financial operations. Multiple regulations
affecting the same
[[Page 58998]]
manufacturer can strain profits and lead companies to abandon product
lines or markets with lower expected future returns than competing
products. For these reasons, DOE conducts an analysis of cumulative
regulatory burden as part of its rulemakings pertaining to appliance
efficiency.
For the cumulative regulatory burden analysis, DOE looks at other
regulations that could affect small, large, and very large air-cooled
commercial package air conditioning and heating equipment manufacturers
that will take effect approximately three years before or after the
2019 compliance date of amended energy conservation standards for these
products. In interviews, manufacturers cited Federal regulations on
equipment other than small, large, and very large air-cooled commercial
package air conditioning and heating equipment that contribute to their
cumulative regulatory burden. The compliance years and expected
industry conversion costs of relevant amended energy conservation
standards are indicated in the table below. Included in the table are
Federal regulations that have compliance dates beyond the three year
range of DOE's analysis. Those regulations were cited multiple times by
manufacturers in interviews and written comments, and are included here
for reference.
Table V.9--Compliance Dates and Expected Conversion Expenses of Federal
Energy Conservation Standards Affecting Small, Large, and Very Large Air-
Cooled Commercial Package Air Conditioning And Heating Equipment
Manufacturers
------------------------------------------------------------------------
Estimated total
Federal energy conservation Approximate industry
standards compliance date conversion
expense
------------------------------------------------------------------------
2007 Residential Furnaces & 2015 * $88M (2006$)
Boilers 72 FR 65136 (Nov. 19,
2007)............................
2011 Residential Furnaces 76 FR 2015 ** $2.5M (2009$)
37408 (June 27, 2011); 76 FR
67037 (Oct. 31, 2011)............
2011 Residential Central Air 2015 ** $ 26.0M
Conditioners and Heat Pumps 76 FR (2009$)
37408 (June 27, 2011); 76 FR
67037 (Oct. 31, 2011)............
2010 Gas Fired and Electric 2015 $95.4M (2009$)
Storage Water Heaters 75 FR 20112
(April 16, 2010).................
Walk-in Coolers and Freezers...... 2017 $33.6.0M (2012$)
Furnace Fans...................... 2019 $40.6M (2012$)
Packaged Terminal Air Conditioners TBD TBD
and Heat Pumps ***...............
Commercial and Industrial Fans and TBD TBD
Blowers ***......................
------------------------------------------------------------------------
* Conversion expenses for manufacturers of oil-fired furnaces and gas-
and oil-fired boilers associated with the November 2007 final rule for
residential furnaces and boilers are excluded from this figure. The
2011 direct final rule for residential furnaces sets a higher standard
and earlier compliance date for oil furnaces than the 2007 final rule.
As a result, manufacturers will be required design to the 2011 direct
final rule standard. The conversion costs associated with the 2011
direct final rule are listed separately in this table. EISA 2007
legislated higher standards and earlier compliance dates for
residential boilers than were in the November 2007 final rule. As a
result, gas-fired and oil-fired boiler manufacturers were required to
design to the EISA 2007 standard beginning in 2012. The conversion
costs listed for residential gas-fired and oil-fired boilers in the
November 2007 residential furnaces and boilers final rule analysis are
not included in this figure.
** Estimated industry conversion expense and approximate compliance date
reflect a court-ordered May 1, 2013 stay of the residential non-
weatherized and mobile home gas furnaces standards set in the 2011
Energy Conservation Standards for Residential Furnaces and Residential
Central Air Conditioners and Heat Pumps.
*** The final rule for this energy conservation standard has not been
published. The compliance date and analysis of conversion costs are
estimates and have not been finalized at this time.
In addition to Federal energy conservation standards, DOE
identified other regulatory burdens that would affect manufacturers of
small, large, and very large air-cooled commercial package air
conditioning and heating equipment:
DOE Certification, Compliance, and Enforcement (CC&E) Rule
Any amended standard that DOE would also require accompanying CC&E
requirements for manufacturers of small, large, and very large air-
cooled commercial package air conditioning equipment to follow. DOE
conducted a rulemaking to expand AEDM coverage to commercial HVAC,
including the equipment covered by this rulemaking, and issued a final
rule on December 31, 2013. (78 FR 79579) An AEDM is a computer modeling
or mathematical tool that predicts the performance of non-tested basic
models. In the final rule, DOE is allowing manufacturers of small,
large, and very large air-cooled commercial package air conditioning
equipment to rate basic models using AEDMs, reducing the need for
sample units and reducing burden on manufacturers. The final rule
establishes revised verification tolerances for small, large, and very
large air-cooled commercial package air conditioning equipment
manufacturers. More information can be found at https://
www1.eere.energy.gov/buildings/appliancestandards/
implementcertandenforce.html.
EPA Phase-Out of Hydrochlorofluorocarbons (HCFCs)
The U.S. is obligated under the Montreal Protocol to limit
production and consumption of HCFCs through incremental reductions,
culminating in a complete phase-out of HCFCs by 2030.\72\ On December
15, 2009, EPA published the ``2010 HCFC Allocation Rule,'' which
allocates production and consumption allowances for HCFC-22 for each
year between 2010 and 2014. 74 FR 66412. The rule also prohibited the
manufacture of new appliances using virgin HCFC-22, effective January
1, 2010, with limited exceptions. On April 3, 2013, EPA published the
``2012-2014 HCFC Allocation Proposed Rule,'' which lifted the
regulatory ban on the production and consumption of HCFC-22 (following
a court decision \73\ in August 2010 to vacate a portion of the ``2010
HCFC Allocation Rule'') by establishing company-by-company HCFC-22
baselines and allocating allowances for 2012-2014. 78 FR 20004. On
December 24, 2013, EPA published the ``2015-2019 HCFC Allocation
Proposed Rule,'' which would provide HCFC allowances, including HCFC-
22, through 2019. 78 FR 78072. Effective January 1, 2020, there will be
no new production or import of virgin HCFC-22.
---------------------------------------------------------------------------
\72\ ``Montreal Protocol.'' United Nations Environment
Programme. Web. 26 Aug. 2010. https://ozone.unep.org/
newsite/en/montrealprotocol.php.
\73\ See Arkema v. EPA, 618 F.3d 1 (D.C. Cir. 2010).
---------------------------------------------------------------------------
Manufacturers of small, large, and very large air-cooled commercial
package air conditioning equipment must comply with the allowances
[[Page 58999]]
established by the allocation rule as well as the prohibition on
manufacture of new HFC-22 appliances that took effect January 1, 2010.
As such, no covered manufacturers offer R-22 products today. The MPCs
used for the baseline and higher efficiency design options account for
the move away from R-22 and the changes in production costs that
resulted from the shift to HFC refrigerants.
Issue 21: DOE requests comment on the identified regulations and
their contribution to cumulative regulatory burden. Additionally, DOE
requests feedback on product-specific regulations that take effect
between 2016 and 2022 that were not listed, including identification of
the specific regulations and data quantifying the associated burdens.
3. National Impact Analysis
For small, large, and very large air-cooled commercial package air
conditioning and heating equipment, projections of shipments are an
important part of the NIA. As discussed in section IV.G, DOE applied a
repair/replace decision model to estimate how many units coming to the
end of their lifetime would be repaired rather than replaced with a new
unit. Because the decision is very sensitive to the installed cost of
new equipment, the impact of standards on shipments increases with the
minimum efficiency required. Table V.10 presents the estimated
cumulative shipments in 2019-2048 in the base case and under each TSL.
Table V.10--Projected Cumulative Shipments of Small, Large, and Very
Large Air-Cooled Commercial Package Air Conditioning and Heating
Equipment in 2019-2048
------------------------------------------------------------------------
Percent reduction
Million units from base case (%)
------------------------------------------------------------------------
Base Case..................... 9.7 N/A
TSL 1......................... 9.2 4.8
TSL 2......................... 7.5 22.5
TSL 3......................... 7.5 22.8
TSL 4......................... 7.1 27.0
------------------------------------------------------------------------
a. Significance of Energy Savings
For each TSL, DOE projected energy savings for small, large, and
very large air-cooled commercial package air conditioning and heating
equipment purchased in the 30-year period that begins in the year of
anticipated compliance with amended standards (2019-2048). The savings
are measured over the entire lifetime of equipment purchased in the 30-
year period. DOE quantified the energy savings attributable to each TSL
as the difference in energy consumption between each standards case and
the base case. Table V.11 presents the estimated primary energy savings
for each considered TSL, and Table V.12 presents the estimated FFC
energy savings for each TSL. The approach for estimating national
energy savings is further described in section IV.H.
Table V.11--Cumulative Primary Energy Savings for Small, Large, and Very
Large Air-Cooled Commercial Package Air Conditioning and Heating
Equipment Trial Standard Levels for Units Sold in 2019-2048
------------------------------------------------------------------------
Trial standard level
Equipment class -------------------------------------------
1 2 3 4
------------------------------------------------------------------------
quads
-------------------------------------------
Small Commercial Packaged 1.2 4.3 5.4 8.3
Air Conditioners-->=65,000
Btu/h and <135,000 Btu/h
Cooling Capacity...........
Large Commercial Packaged 0.8 1.8 2.6 3.8
Air Conditioners-->=135,000
Btu/h and <240,000 Btu/h
Cooling Capacity...........
Very Large Commercial 0.7 1.5 2.7 3.4
Packaged Air Conditioners--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
Small Commercial Packaged 0.1 0.5 0.7 1.0
Heat Pumps-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity...................
Large Commercial Packaged 0.0 0.1 0.1 0.2
Heat Pumps-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity...................
Very Large Commercial 0.0 0.1 0.1 0.2
Packaged Heat Pumps--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
-------------------------------------------
Total All Classes....... 2.9 8.3 11.7 16.8
------------------------------------------------------------------------
[[Page 59000]]
Table V.12--Cumulative Full-Fuel-Cycle Energy Savings for Small, Large,
and Very Large Air-Cooled Commercial Package Air Conditioning and
Heating Equipment Trial Standard Levels for Units Sold in 2019-2048
------------------------------------------------------------------------
Trial standard level
Equipment class -------------------------------------------
1 2 3 4
------------------------------------------------------------------------
quads
-------------------------------------------
Small Commercial Packaged 1.2 4.3 5.5 8.4
Air Conditioners-->=65,000
Btu/h and <135,000 Btu/h
Cooling Capacity...........
Large Commercial Packaged 0.8 1.8 2.6 3.8
Air Conditioners-->=135,000
Btu/h and <240,000 Btu/h
Cooling Capacity...........
Very Large Commercial 0.8 1.6 2.7 3.5
Packaged Air Conditioners--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
Small Commercial Packaged 0.1 0.5 0.7 1.0
Heat Pumps-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity...................
Large Commercial Packaged 0.0 0.1 0.1 0.2
Heat Pumps-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity...................
Very Large Commercial 0.0 0.1 0.1 0.2
Packaged Heat Pumps--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
-------------------------------------------
Total All Classes....... 3.0 8.4 11.8 17.1
------------------------------------------------------------------------
For this rulemaking, DOE undertook a sensitivity analysis using
nine rather than 30 years of equipment shipments. The choice of a nine-
year period is a proxy for the timeline in EPCA for the review of
certain energy conservation standards and potential revision of and
compliance with such revised standards.\74\ This timeframe may not be
statistically relevant with regard to the equipment lifetime, equipment
manufacturing cycles or other factors specific to small, large, and
very large air-cooled commercial package air conditioning and heating
equipment. Thus, this information is presented for informational
purposes only and is not indicative of any change in DOE's analytical
methodology. The NES results based on a 9-year analytical period are
presented in Table V.13. The impacts are counted over the lifetime of
small, large, and very large air-cooled commercial package air
conditioning and heating equipment purchased in 2019-2027.
---------------------------------------------------------------------------
\74\ 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 consumer products, the compliance period is 5
years rather than 3 years.
Table V.13--Cumulative Primary Energy Savings for Small, Large, and Very
Large Air-Cooled Commercial Package Air Conditioning and Heating
Equipment Trial Standard Levels for Units Sold in 2019-2027
------------------------------------------------------------------------
Trial standard level
Equipment class -------------------------------------------
1 2 3 4
------------------------------------------------------------------------
quads
-------------------------------------------
Small Commercial Packaged 0.3 0.7 0.9 1.4
Air Conditioners-->=65,000
Btu/h and <135,000 Btu/h
Cooling Capacity...........
Large Commercial Packaged 0.2 0.4 0.5 0.7
Air Conditioners-->=135,000
Btu/h and <240,000 Btu/h
Cooling Capacity...........
Very Large Commercial 0.1 0.2 0.3 0.3
Packaged Air Conditioners--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
Small Commercial Packaged 0.0 0.1 0.2 0.2
Heat Pumps-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity...................
Large Commercial Packaged 0.0 0.0 0.0 0.0
Heat Pumps-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity...................
Very Large Commercial 0.0 0.0 0.0 0.0
Packaged Heat Pumps--
>=240,000 Btu/h and
<760,000 Btu/h Cooling
Capacity...................
-------------------------------------------
Total All Classes....... 0.6 1.4 1.9 2.7
------------------------------------------------------------------------
Issue 22: For this rulemaking, DOE analyzed the effects of
potential standards on equipment purchased over a 30-year period, and
it undertook a sensitivity analysis using 9 years rather than 30 years
of product shipments. The choice of a 30-year period of shipments is
consistent with the DOE analysis for other products and commercial
equipment. 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 amended standards. DOE
is seeking
[[Page 59001]]
input on ways to refine the analytic timeline.
b. Net Present Value of Customer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
customers that would result from the TSLs considered for small, large,
and very large air-cooled commercial package air conditioning and
heating equipment. In accordance with OMB's guidelines on regulatory
analysis,\75\ DOE calculated the NPV using both a 7-percent and a 3-
percent real discount rate. The 7-percent rate is an estimate of the
average before-tax rate of return on private capital in the U.S.
economy, and reflects the returns on real estate and small business
capital as well as corporate capital. This discount rate approximates
the opportunity cost of capital in the private sector (OMB analysis has
found the average rate of return on capital to be near this rate). The
3-percent rate reflects the potential effects of standards on private
consumption (e.g., through higher prices for equipment and reduced
purchases of energy). This rate represents the rate at which society
discounts future consumption flows to their present value. It can be
approximated by the real rate of return on long-term government debt
(i.e., yield on United States Treasury notes), which has averaged about
3 percent for the past 30 years.
---------------------------------------------------------------------------
\75\ OMB Circular A-4, section E (Sept. 17, 2003). Available at:
https://www.whitehouse.gov/omb/circularsa004a-4.
---------------------------------------------------------------------------
Table V.14 shows the customer NPV results for each TSL considered
for small, large, and very large air-cooled commercial package air
conditioning and heating equipment. In each case, the impacts cover the
lifetime of equipment purchased in 2019-2048.
Table V.14--Net Present Value of Customer Benefits for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment Trial Standard Levels for Units Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class Discount rate ---------------------------------------------------------------
% 1 2 3 4
----------------------------------------------------------------------------------------------------------------
billion 2012$
---------------------------------------------------------------
Small Commercial Packaged Air 3 6.9 20.7 26.0 36.2
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.......................
Large Commercial Packaged Air .............. 3.0 6.8 9.7 15.6
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.......................
Very Large Commercial Packaged .............. 3.4 6.4 11.0 13.5
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.......................
Small Commercial Packaged Heat .............. 0.8 2.3 3.1 4.2
Pumps-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity
Large Commercial Packaged Heat .............. 0.2 0.3 0.5 0.8
Pumps-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity
Very Large Commercial Packaged .............. 0.2 0.3 0.6 0.7
Heat Pumps-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity
-------------------------------------------------------------------------------
Total All Classes........... .............. 14.4 36.9 50.8 71.0
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air 7 2.5 7.1 9.0 11.8
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.......................
Large Commercial Packaged Air .............. 0.9 2.0 2.9 4.8
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.......................
Very Large Commercial Packaged .............. 1.0 1.8 3.3 3.9
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.......................
Small Commercial Packaged Heat .............. 0.3 0.8 1.1 1.5
Pumps-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity
Large Commercial Packaged Heat .............. 0.1 0.1 0.2 0.3
Pumps-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity
Very Large Commercial Packaged .............. 0.1 0.1 0.2 0.2
Heat Pumps-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity
-------------------------------------------------------------------------------
Total All Classes........... .............. 4.8 11.9 16.5 22.5
----------------------------------------------------------------------------------------------------------------
The NPV results based on the afore-mentioned nine-year analytical
period are presented in Table V.15. The impacts are counted over the
lifetime of equipment purchased in 2019-2027. As mentioned previously,
this information is presented for informational purposes only and is
not indicative of any change in DOE's analytical methodology or
decision criteria.
[[Page 59002]]
Table V.15--Net Present Value of Customer Benefits for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment Trial Standard Levels for Units Sold in 2019-2027
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class Discount rate ---------------------------------------------------------------
% 1 2 3 4
----------------------------------------------------------------------------------------------------------------
billion 2013$
---------------------------------------------------------------
Small Commercial Packaged Air 3 2.1 5.0 6.3 8.2
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.......................
Large Commercial Packaged Air .............. 0.9 1.7 2.4 3.7
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.......................
Very Large Commercial Packaged .............. 0.4 0.8 1.4 1.7
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.......................
Small Commercial Packaged Heat .............. 0.2 0.6 0.9 1.0
Pumps-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity
Large Commercial Packaged Heat .............. 0.0 0.1 0.1 0.2
Pumps-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity
Very Large Commercial Packaged .............. 0.0 0.0 0.1 0.1
Heat Pumps-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity
-------------------------------------------------------------------------------
Total All Classes........... .............. 3.7 8.3 11.3 14.9
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air 7 1.1 2.7 3.3 4.1
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.......................
Large Commercial Packaged Air .............. 0.4 0.7 1.0 1.7
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.......................
Very Large Commercial Packaged .............. 0.2 0.4 0.7 0.8
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.......................
Small Commercial Packaged Heat .............. 0.1 0.3 0.5 0.5
Pumps-->=65,000 Btu/h and
<135,000 Btu/h Cooling Capacity
Large Commercial Packaged Heat .............. 0.0 0.0 0.1 0.1
Pumps-->=135,000 Btu/h and
<240,000 Btu/h Cooling Capacity
Very Large Commercial Packaged .............. 0.0 0.0 0.0 0.0
Heat Pumps-->=240,000 Btu/h and
<760,000 Btu/h Cooling Capacity
-------------------------------------------------------------------------------
Total All Classes........... .............. 1.8 4.1 5.6 7.3
----------------------------------------------------------------------------------------------------------------
c. Indirect Impacts on Employment
DOE expects energy conservation standards for small, large, and
very large air-cooled commercial package air conditioning and heating
equipment to reduce energy costs for equipment owners, and the
resulting net savings to be redirected to other forms of economic
activity. Those shifts in spending and economic activity could affect
the demand for labor. As described in section IV.N, DOE used an input/
output model of the U.S. economy to estimate indirect employment
impacts of the TSLs that DOE considered in this rulemaking. DOE
understands that there are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term time frames,
where these uncertainties are reduced.
The results suggest that the proposed standards are likely to have
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.
4. Impact on Utility or Performance
DOE believes that the standards it is proposing today will not
lessen the utility or performance of small, large, and very large air-
cooled commercial package air conditioning and heating equipment.
5. Impact of Any Lessening of Competition
DOE considers any lessening of competition that is likely to result
from amended standards. The Attorney General determines the impact, if
any, of any lessening of competition likely to result from a proposed
standard, and transmits such determination to the Secretary, together
with an analysis of the nature and extent of such impact.
To assist the Attorney General in making such determination, DOE
will provide DOJ with copies of this NOPR and the TSD for review. DOE
will consider DOJ's comments on the proposed rule in preparing the
final rule, and DOE will publish and respond to DOJ's comments in that
document.
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 or costs of energy production. Reduced
electricity demand due to energy conservation standards is also likely
to reduce the cost of maintaining the reliability of the electricity
system, particularly during peak-load periods. As a measure of this
reduced demand, chapter 15 in the NOPR TSD presents the estimated
reduction in generating capacity for the TSLs that DOE considered in
this rulemaking.
Energy savings from standards for small, large, and very large air-
cooled commercial package air conditioning and heating equipment could
also produce environmental benefits in the form of reduced emissions of
air pollutants and greenhouse gases associated with electricity
production. Table V.16 provides DOE's estimate of cumulative emissions
reductions projected to result from the TSLs considered in this
rulemaking. For the
[[Page 59003]]
proposed standards (TSL 3), the upstream emissions reduction accounts
for 3 percent of total CO2 emissions, 48 percent of total
NOX emissions, and 0.3 percent of total SO2
emissions.\76\ DOE reports annual emissions reductions for each TSL in
chapter 13 of the NOPR TSD.
---------------------------------------------------------------------------
\76\ The upstream share of the total reduction for NOx is high
because power sector emissions are capped in many States and because
changes in the projected power plant mix cause NOx emissions to
increase in some years under the standards case.
Table V.16--Cumulative Emissions Reduction Estimated for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment Trial Standard Levels *
----------------------------------------------------------------------------------------------------------------
Trial Standard Level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 262 745 1,049 1,514
NOX (thousand tons)............................. 129 375 528 767
SO2 (thousand tons)............................. 725 2,077 2,927 4,232
Hg (tons)....................................... 0.88 2.52 3.55 5.13
N2O (thousand tons)............................. 3.73 10.74 15.13 21.90
CH4 (thousand tons)............................. 19.2 54.4 76.7 110.6
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO[ihel4] (million metric tons)................. 8.98 25.4 35.8 51.5
NOX (thousand tons)............................. 124 350 492 710
SO[ihel2] (thousand tons)....................... 1.92 5.44 7.66 11.04
Hg (tons)....................................... 0.00 0.01 0.02 0.03
N[ihel2] (thousand tons)........................ 0.09 0.25 0.36 0.52
CH[ihel4] (thousand tons)....................... 753 2,127 2,996 4,317
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
CO[ihel2] (million metric tons)................. 271 770 1,085 1,565
NOX (thousand tons)............................. 252 725 1,021 1,477
SO[ihel2] (thousand tons)....................... 727 2,083 2,934 4,243
Hg (tons)....................................... 0.89 2.53 3.57 5.16
N[ihel2]O (thousand tons)....................... 3.82 10.99 15.48 22.41
N[ihel2]O (thousand tons CO2eq) **.............. 1,138 3,275 4,614 6,679
CH[ihel4] (thousand tons)....................... 772 2,181 3,072 4,427
CH[ihel2] (million tons CO2eq) **............... 19.3 54.5 76.8 110.7
----------------------------------------------------------------------------------------------------------------
* The reduction is measured over the period in which equipment purchased in 2019-2048 continue to operate.
** CO[ihel2]eq is the quantity of CO[ihel2] that would have the same global warming potential (GWP).
These results are based on emissions factors in AEO 2013, the most recent version available at the time of this
analysis. Use of emissions factors in AEO 2014 would result in a significant decrease in cumulative emissions
reductions for CO[ihel2], SO[ihel2], and Hg. For example, the estimated decrease for CO[ihel2] emissions
reductions is 36%. In the next phase of this rulemaking, DOE plans to use emissions factors based on the most
recent AEO available, which may or may not be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
As mentioned in section I, emissions factors based on the Annual
Energy Outlook 2014 (AEO 2014), which became available too late for
incorporation into this analysis, show a significant decrease in the
cumulative emissions reductions from the proposed standards. For
CO[ihel2], the emissions reduction at TSL 3, the proposed standards, is
697 Mt rather than 1,085 Mt.
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the TSLs considered.
As discussed in section IV.L, DOE used the most recent values for the
SCC developed by an interagency process. The four sets of SCC values
resulting from that process (expressed in 2013$) are represented by
$12.0/metric ton (the average value from a distribution that uses a 5-
percent discount rate), $40.5/metric ton (the average value from a
distribution that uses a 3-percent discount rate), $62.4/metric ton
(the average value from a distribution that uses a 2.5-percent discount
rate), and $119/metric ton (the 95th-percentile value from a
distribution that uses a 3-percent discount rate). These values
correspond to the value of emission reductions in 2015; the values for
later years are higher due to increasing damages as the projected
magnitude of climate change increases.
Table V.17 presents the global value of CO2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values, and these results are presented in
chapter 14 of the NOPR TSD.
[[Page 59004]]
Table V.17--Estimates of Global Present Value of CO2 Emissions Reduction
Under Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment Trial Standard Levels
------------------------------------------------------------------------
SCC Case *
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile*
------------------------------------------------------------------------
Billion 2013$
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1....... 1.51 7.55 12.17 23.41
2....... 4.21 21.21 34.25 65.80
3....... 5.92 29.88 48.24 92.67
4....... 8.50 42.99 69.45 133.36
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....... 0.05 0.26 0.42 0.81
2....... 0.15 0.73 1.18 2.26
3....... 0.20 1.03 1.65 3.18
4....... 0.29 1.47 2.38 4.57
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1....... 1.56 7.81 12.59 24.22
2....... 4.35 21.94 35.43 68.06
3....... 6.13 30.90 49.90 95.86
4....... 8.79 44.47 71.83 137.93
------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions
in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$).\77\
---------------------------------------------------------------------------
\77\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other greenhouse gas (GHG) emissions
to changes in the future global climate and the potential resulting
damages to the world economy continues to evolve rapidly. Thus, any
value placed on reducing CO2 emissions in this rulemaking is
subject to change. DOE, together with other Federal agencies, will
continue to review various methodologies for estimating the monetary
value of reductions in CO2 and other GHG emissions. This
ongoing review will consider the comments on this subject that are part
of the public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this proposed rule the
most recent values and analyses resulting from the interagency process.
DOE also estimated the cumulative monetary value of the economic
benefits associated with NOX emissions reductions
anticipated to result from amended standards for small, large, and very
large air-cooled commercial package air conditioning and heating
equipment. The dollar-per-ton values that DOE used are discussed in
section IV.L. Table V.18 presents the cumulative present values for
each TSL calculated using seven-percent and three-percent discount
rates.
Table V.18--Estimates of Present Value of NOX Emissions Reduction under
Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment Trial Standard Levels \78\
------------------------------------------------------------------------
3% discount 7% discount
TSL rate rate
------------------------------------------------------------------------
Million 2013$
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1....................................... 128 36.7
2....................................... 369 105.5
3....................................... 520 148
4....................................... 753 215
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....................................... 139 52.0
2....................................... 384 138
3....................................... 540 194
[[Page 59005]]
4....................................... 773 275
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1....................................... 267 88.7
2....................................... 753 243
3....................................... 1060 343
4....................................... 1527 490
------------------------------------------------------------------------
7. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the customer
savings calculated for each TSL considered in this rulemaking. Table
V.19 presents the NPV values that result from adding the estimates of
the potential economic benefits resulting from reduced CO2
and NOX emissions in each of four valuation scenarios to the
NPV of customer savings calculated for each TSL considered in this
rulemaking, at both a seven-percent and three-percent discount rate.
The CO2 values used in the columns of each table correspond
to the four sets of SCC values discussed above.
---------------------------------------------------------------------------
\78\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors based on the
most recent AEO available, which may or may not be AEO 2014,
depending on the timing of the issuance of the next rulemaking
document.
Table V.19--Net Present Value of Customer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Customer NPV at 3% discount rate added with:
---------------------------------------------------------------
TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case $119/
metric ton metric ton metric ton metric ton
CO2\*\ CO2\*\ CO2\*\ CO2\*\
----------------------------------------------------------------------------------------------------------------
Billion 2013$
---------------------------------------------------------------
1............................................... 16.0 22.5 27.2 39.1
2............................................... 41.3 59.5 73.0 106.3
3............................................... 57.2 82.8 101.8 148.6
4............................................... 80.1 117.0 144.4 211.7
----------------------------------------------------------------------------------------------------------------
Customer NPV at 7% Discount Rate added with:
---------------------------------------------------------------
TSL SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case $119/
metric ton metric ton metric ton metric ton
CO2\*\ CO2\*\ CO2\*\ CO2\*\
----------------------------------------------------------------------------------------------------------------
Billion 2013$
---------------------------------------------------------------
1............................................... 6.4 12.7 17.5 29.2
2............................................... 16.3 34.1 47.6 80.4
3............................................... 22.7 47.8 66.8 113.0
4............................................... 31.4 67.5 94.8 161.3
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium
value, which corresponds to $2,684 per ton.\79\
Although adding the value of customer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. customer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
the SCC are performed with different methods that use different time
frames for analysis. The national operating cost savings is measured
for the lifetime of equipment shipped in 2019-2048. The SCC values, on
the other hand, reflect the present value of future climate-related
impacts resulting from the emission of one metric ton of CO2
in each year. These impacts continue well beyond 2100.
---------------------------------------------------------------------------
\79\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
[[Page 59006]]
8. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) No
other factors were considered in this analysis.
C. Proposed Standards
To adopt national standards more stringent than the amended ASHRAE/
IES Standard 90.1 for small, large, and very large air-cooled CUAC and
CUHP, DOE must determine that such action would result in significant
additional conservation of energy and is technologically feasible and
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)). As discussed
previously, EPCA provides seven factors to be evaluated in determining
whether a more stringent standard for small, large, and very large air-
cooled CUAC and CUHP is economically justified. (42 U.S.C.
6313(a)(6)(B)(ii)).
For this NOPR, DOE considered the impacts of standards at each TSL,
beginning with the most energy-efficient level, to determine whether
that level was economically justified. Where the most energy-efficient
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 technologically feasible, economically
justified and saves a significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, tables in this section summarize the quantitative analytical
results for each TSL, based on the assumptions and methodology
discussed herein. The efficiency levels contained in each TSL are
described in section V.A. 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 customers who may be disproportionately
affected by a national standard (see section V.B.1.b), and impacts on
employment. DOE discusses the impacts on employment in small, large,
and very large air-cooled commercial package air conditioning and
heating equipment manufacturing in section V.B.2, and discusses the
indirect employment impacts in section V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for Small,
Large, and Very Large Air-Cooled Commercial Package Air Conditioning
and Heating Equipment
Table V.20 and Table V.21 summarize the quantitative impacts
estimated for each TSL for small, large, and very large air-cooled
commercial package air conditioning and heating equipment.
---------------------------------------------------------------------------
\80\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
Table V.20--Summary of Analytical Results for Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment: National Impacts \80\
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
National FFC Energy Savings quads
----------------------------------------------------------------------------------------------------------------
3.0................ 8.4............... 11.8.............. 17.1
----------------------------------------------------------------------------------------------------------------
NPV of Customer Benefits 2013$ billion
----------------------------------------------------------------------------------------------------------------
3% discount rate............... 14.4............... 36.9.............. 50.8.............. 71.0
7% discount rate............... 4.8................ 11.9.............. 16.5.............. 22.5
----------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 million metric tons........ 271................ 770............... 1,085............. 1,565
NOX thousand tons.............. 252................ 725............... 1,021............. 1,477
SO2 thousand tons.............. 727................ 2,083............. 2,934............. 4,243
Hg tons........................ 0.89............... 2.53.............. 3.57.............. 5.16
N2O thousand tons.............. 3.82............... 10.99............. 15.48............. 22.41
N2O thousand tons CO2eq *...... 1,138.............. 3,275............. 4,614............. 6,679
CH4 thousand tons.............. 772................ 2,181............. 3,072............. 4,427
CH4 million tons CO2eq*........ 19.3............... 54.5.............. 76.8.............. 110.7
----------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 2013$ billion **........... 1.56 to 24.2....... 4.35 to 68.1...... 6.13 to 95.9...... 8.79 to 138
NOX--3% discount rate 2013$ 267................ 753............... 1060.............. 1,527
million.
NOX--7% discount rate 2013$ 88.7............... 243............... 343............... 490
million.
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
emissions.
[[Page 59007]]
Table V.21--Summary of Analytical Results for Small, Large, and Very Large Air-Cooled Commercial Package Air
Conditioning and Heating Equipment: Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Change in Industry NPV ($ (73.89) to (11.45) (245.30) to (311.58) to (438.16) to
million) [dagger]. (52.87). (88.55). (118.13).
Change in Industry NPV (%) (5.86) to (0.91).. (19.45) to (4.19). (24.71) to (7.02). (34.75) to (9.37).
[dagger].
----------------------------------------------------------------------------------------------------------------
Customer Mean LCC Savings 2013$
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air 1,094............. 937............... 4,779............. 6,711.
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.
Large Commercial Packaged Air 1,038............. 2,214............. 3,469............. 7,508.
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.
Very Large Commercial Packaged 4,103............. 4,801............. 16,477............ 19,842.
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.
Weighted Average *.............. 1,257............. 1,472............. 5,150............. 7,675.
----------------------------------------------------------------------------------------------------------------
Customer Median PBP years
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air 2.2............... 8.0............... 3.9............... 4.7.
Conditioners-->=65,000 Btu/h
and <135,000 Btu/h Cooling
Capacity.
Large Commercial Packaged Air 6.0............... 7.2............... 6.6............... 5.1.
Conditioners-->=135,000 Btu/h
and <240,000 Btu/h Cooling
Capacity.
Very Large Commercial Packaged 2.6............... 5.5............... 2.5............... 3.5.
Air Conditioners-->=240,000 Btu/
h and <760,000 Btu/h Cooling
Capacity.
Weighted Average *.............. 3.1............... 7.7............... 4.5............... 4.7.
Small CUAC-->=65,000 Btu/h and
<135,000 Btu/h: **
Customers with Net Cost %... 0%................ 27%............... 0%................ 0%.
Customers with Net Benefit % 61%............... 72%............... 99%............... 100%.
Customers with No Impact %.. 39%............... 1%................ 0%................ 0%.
Large CUAC-->=135,000 Btu/h and
<240,000 Btu/h: **
Customers with Net Cost %... 3%................ 8%................ 6%................ 2%.
Customers with Net Benefit % 74%............... 90%............... 93%............... 98%.
Customers with No Impact %.. 22%............... 2%................ 0%................ 0%.
Very Large CUAC-->=240,000 Btu/h
and <760,000 Btu/h: **
Customers with Net Cost (%). 2%................ 12%............... 3%................ 5%.
Customers with Net Benefit 62%............... 76%............... 92%............... 94%.
(%).
Customers with No Impact (%) 36%............... 13%............... 6%................ 1%.
Weighted Average: *
Customers with Net Cost (%). 1%................ 22%............... 2%................ 1%.
Customers with Net Benefit 64%............... 77%............... 97%............... 99%.
(%).
Customers with No Impact (%) 35%............... 2%................ 0%................ 0%.
----------------------------------------------------------------------------------------------------------------
* Weighted by shares of each equipment class in total projected shipments in 2019.
** Rounding may cause some items to not total 100 percent.
[dagger] Values in parentheses are negative values.
First, DOE considered TSL 4, the most efficient level (max tech),
which would save an estimated total of 17.1 quads of energy, an amount
DOE considers significant. TSL 4 has an estimated NPV of customer
benefit of $22.5 billion using a 7 percent discount rate, and $70.1
billion using a 3 percent discount rate.
The cumulative emissions reductions at TSL 4 are 11,565 million
metric tons of CO2, 1,477 thousand tons of NOX,
4,243 thousand tons of SO2, and 5.16 tons of Hg. The
estimated monetary value of the CO2 emissions reductions at
TSL 4 ranges from $9 billion to $138 billion.\81\
---------------------------------------------------------------------------
\81\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
At TSL 4, the average LCC savings is $6,711 for small CUAC, $7,508
for large CUAC, and $19,842 for very large CUAC. The median PBP is 4.7
years for small CUAC, 5.1 years for large CUAC, and 3.5 years for very
large CUAC. The share of customers experiencing a net LCC benefit is
100 percent for small CUAC, 98 percent for large CUAC, and 94 percent
for very large CUAC.
At TSL 4, the projected change in INPV ranges from a decrease of
$438.16 million to decrease of $118.13 million. If the larger decrease
is realized, TSL 4 could result in a net loss of 34.75 percent in INPV
to manufacturers of covered small, large, and very large air-cooled
commercial package air conditioning and heating equipment. Conversion
costs are expected to total $210.96 million. Only 2% of industry
product listings meet this proposed standard today. At this level, DOE
recognizes that manufacturers could face technical resource
constraints. Manufacturers stated they would require additional
engineering expertise and additional test laboratory capacity. It is
unclear whether manufacturers could complete the hiring of the
necessary technical expertise and construction of the necessary test
facilities in time to allow for the redesign of all products to meet
max-tech by 2019. Furthermore, DOE
[[Page 59008]]
recognizes that a standard set at max-tech could greatly limit product
differentiation in the small, large, and very large air-cooled CUAC and
CUHP market. By commoditizing a key differentiating feature, a standard
set a max-tech would likely accelerate consolidation in the industry.
In view of the foregoing, DOE concludes that, at TSL 4 for small,
large, and very large air-cooled commercial package air conditioning
and heating equipment, the benefits of energy savings, positive NPV of
total customer benefits, customer LCC savings, emission reductions and
the estimated monetary value of the emissions reductions would be
outweighed by the large reduction in industry value at TSL 4.
Consequently, DOE has concluded that TSL 4 is not economically
justified.
Next, DOE considered TSL 3, which would save an estimated total of
11.8 quads of energy, an amount DOE considers significant. TSL 3 has an
estimated NPV of customer benefit of $16.5 billion using a 7 percent
discount rate, and $50.8 billion using a 3 percent discount rate.
The cumulative emissions reductions at TSL 3 are 1,085 million
metric tons of CO2, 1,021 thousand tons of NOX,
2,934 thousand tons of SO2, and 3.57 tons of Hg. The
estimated monetary value of the CO2 emissions reductions at
TSL 4 ranges from $6 billion to $96 billion.\82\
---------------------------------------------------------------------------
\82\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
---------------------------------------------------------------------------
At TSL 3, the average LCC savings is $4,779 for small CUAC, $3,469
for large CUAC, and $16,477 for very large CUAC. The median PBP is 3.9
years for small CUAC, 6.6 years for large CUAC, and 2.5 years for very
large CUAC.\83\ The share of customers experiencing a net LCC benefit
is 99 percent for small CUAC, 93 percent for large CUAC, and 92 percent
for very large CUAC.
---------------------------------------------------------------------------
\83\ Large CUAC experiences relatively lower LCC savings and
longer PBPs than either small and very large CUACs due to the design
measures being utilized to achieve higher rated IEER in the
Engineering Analysis. In the case of small and very large CUACs,
increased efficiency at TSL 3 is attained in large part due to
increased compressor staging, which results in significant
improvements in part-load performance. In the case of large CUAC,
increased efficiency is attained without increasing compressor
staging, i.e., the baseline design has the same number of stages as
the design at TSL 3. Although the other design measures for large
CUAC increase the rated IEER of the product, part-load performance
is not impacted significantly. Because CUAC equipment operates
frequently in part-load, the TSL 3 design for large CUAC results in
annual energy savings and operating cost savings that are lower
relative to what is attained with the designs for the small and very
large CUACs.
---------------------------------------------------------------------------
At TSL 3, the projected change in INPV ranges from a decrease of
$311.58 million to decrease of $88.55 million. If the larger decrease
is realized, TSL 3 could result in a net loss of 24.71 percent in INPV
to manufacturers of covered small, large, and very large air-cooled
commercial package air conditioning and heating equipment. Conversion
costs are expected to total $120.90 million. 19% of industry product
listings meet this standard level today.
After considering the analysis and weighing the benefits and the
burdens, DOE has tentatively concluded that at TSL 3 for small, large,
and very large air-cooled commercial package air conditioning and
heating equipment, the benefits of energy savings, positive NPV of
customer benefit, positive impacts on consumers (as indicated by
positive average LCC savings, favorable PBPs, and the large percentage
of customers who would experience LCC benefits), emission reductions,
and the estimated monetary value of the emissions reductions would
outweigh the potential reductions in INPV for manufacturers. The
Secretary of Energy has concluded that TSL 3 would save a significant
amount of energy and is technologically feasible and economically
justified.
Based on the above considerations, DOE today proposes to adopt the
energy conservation standards for small, large, and very large air-
cooled commercial package air conditioning and heating equipment at TSL
3. Table V.22 presents the proposed energy conservation standards for
small, large, and very large air-cooled commercial package air
conditioning and heating equipment.
Table V.22--Proposed Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial
Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Equipment type Heating type............ Proposed energy
conservation
standard
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged AC and HP AC Electric Resistance 14.8 IEER.
(Air-Cooled)-->=65,000 Btu/h and Heating or No Heating.
<135,000 Btu/h Cooling Capacity.
..................... All Other Types of 14.6 IEER.
Heating.
HP Electric Resistance 14.1 IEER.
Heating or No Heating.
..................... All Other Types of 3.5 COP.
Heating.
Large Commercial Packaged AC and HP AC Electric Resistance 13.9 IEER.
(Air-Cooled)-->=135,000 Btu/h and Heating or No Heating.
<240,000 Btu/h Cooling Capacity.
..................... All Other Types of 3.4 COP.
Heating.
HP Electric Resistance 14.2 IEER.
Heating or No Heating.
All Other Types of
Heating.
Very Large Commercial Packaged AC and AC Electric Resistance 14.0 IEER.
HP (Air-Cooled)-->=240,000 Btu/h and Heating or No Heating. 13.4 IEER
<760,000 Btu/h Cooling Capacity.
..................... All Other Types of 3.3 COP.
Heating.
HP Electric Resistance 13.2 IEER.
Heating or No Heating.
..................... All Other Types of 3.3 COP.
Heating.
----------------------------------------------------------------------------------------------------------------
[[Page 59009]]
2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
The benefits and costs of today's proposed standards, for equipment
sold in 2019-2048, can also be expressed in terms of annualized values.
The annualized monetary values are the sum of (1) the annualized
national economic value of the benefits from consumer operation of
equipment that meet the proposed standards (consisting primarily of
operating cost savings from using less energy, minus increases in
equipment purchase and installation costs, which is another way of
representing consumer NPV), and (2) the annualized monetary value of
the benefits of emission reductions, including CO2 emission
reductions.\84\
---------------------------------------------------------------------------
\84\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the year used for discounting
the NPV of total customer costs and savings, for the time-series of
costs and benefits using discount rates of three and seven percent
for all costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates. From
the present value, DOE then calculated the fixed annual payment over
a 30-year period (2019 through 2048) that yields the same present
value. The fixed annual payment is the annualized value. Although
DOE calculated annualized values, this does not imply that the time-
series of cost and benefits from which the annualized values were
determined is a steady stream of payments.
---------------------------------------------------------------------------
Although combining the values of operating savings and
CO2 emission reductions provides a useful perspective, two
issues should be considered. First, the national operating savings are
domestic U.S. customer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of small, large, and very
large air-cooled commercial package air conditioning and heating
equipment shipped in 2019 -2048. The SCC values, on the other hand,
reflect the present value of some future climate-related impacts
resulting from the emission of one ton of carbon dioxide in each year.
These impacts continue well beyond 2100.
Estimates of annualized benefits and costs of the proposed
standards for small, large, and very large air-cooled commercial
package air conditioning and heating equipment are shown in Table V.23.
The results under the primary estimate are as follows. Using a 7-
percent discount rate for benefits and costs other than CO2
reduction, for which DOE used a 3-percent discount rate along with the
average SCC series that uses a 3-percent discount rate, the cost of the
standards proposed in this rule is $430 million per year in increased
equipment costs; while the estimated benefits are $2,177 million per
year in reduced equipment operating costs, $1,744 million in
CO2 reductions, and $36.2 million in reduced NOX
emissions. In this case, the net benefit would amount to $3,558 million
per year. Using a 3-percent discount rate for all benefits and costs
and the average SCC series, the estimated cost of the standards
proposed in this rule is $507 million per year in increased equipment
costs; while the estimated benefits are $3,426 million per year in
reduced operating costs, $1,774 million in CO2 reductions,
and $60.9 million in reduced NOX emissions. In this case,
the net benefit would amount to approximately $4,755 million per
year.\85\
---------------------------------------------------------------------------
\85\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. The monetized benefits
from GHG reductions would likely decrease by a comparable amount. In
the next phase of this rulemaking, DOE plans to use emissions
factors based on the most recent AEO available, which may or may not
be AEO 2014, depending on the timing of the issuance of the next
rulemaking document.
Table V.23--Annualized Benefits and Costs of Proposed Standards for Small, Large, and Very Large Air-Cooled
Commercial Package Air Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Low net benefits High net benefits
Discount rate Primary estimate * estimate * estimate *
----------------------------------------------------------------------------------------------------------------
million 2013$/year
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings.......... 7%................ 2,177............. 1,984............. 2,407
3%................ 3,426............. 3,127............. 3,781
CO2 Reduction Monetized Value 5%................ 484............... 467............... 505
($12.0/t case) **.
CO2 Reduction Monetized Value 3%................ 1,774............. 1,714............. 1,846
($40.5/t case) **.
CO2 Reduction Monetized Value 2.5%.............. 2,632............. 2,543............. 2,737
($62.4/t case) **.
CO2 Reduction Monetized Value 3%................ 5,504............. 5,317............. 5,727
($119/t case) **.
NOX Reduction Monetized Value 7%................ 36.18............. 34.75............. 37.90
(at $2,684/ton) **.
3%................ 60.89............. 58.85............. 63.40
Total Benefits [dagger]......... 7% plus CO2 range. 2,698 to 7,718.... 2,486 to 7,336.... 2,950 to 8,172
7%................ 3,988............. 3,733............. 4,291
3% plus CO2 range. 3,972 to 8,991.... 3,653 to 8,503.... 4,349 to 9,572
3%................ 5,262............. 4,900............. 5,691
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs....... 7%................ 430............... 350............... 485
3%................ 507............... 433............... 550
----------------------------------------------------------------------------------------------------------------
[[Page 59010]]
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger].............. 7% plus CO2 range. 2,268 to 7,288.... 2,135 to 6,986.... 2,465 to 7,687
7%................ 3,558............. 3,383............. 3,806
3%................ 4,755............. 4,468............. 5,140
3% plus CO2 range. 3,465 to 8,484.... 3,220 to 8,071.... 3,799 to 9,021
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with small, large, and very large air-cooled
CUAC and CUHP shipped in 2019-2048. These results include benefits to customers which accrue after 2048 from
the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred
by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary,
Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference
case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product
costs reflect no change for projected product price trends in the Primary Estimate, an increasing trend for
projected product prices in the Low Benefits Estimate, and a decreasing trend for projected product prices in
the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the
updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and
2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. The value for NOX
is the average of the low and high values used in DOE's analysis.\86\
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
to the full range of CO2 values.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The proposed standards address the following problems:
---------------------------------------------------------------------------
\86\ These results are based on emissions factors in AEO 2013,
the most recent version available at the time of this analysis. Use
of emissions factors in AEO 2014 would result in a significant
decrease in cumulative emissions reductions for CO2,
SO2, and Hg. For example, the estimated decrease for
CO2 emissions reductions is 36%. In the next phase of
this rulemaking, DOE plans to use emissions factors based on the
most recent AEO available, which may or may not be AEO 2014,
depending on the timing of the issuance of the next rulemaking
document.
---------------------------------------------------------------------------
(1) There is a lack of customer information in the commercial space
conditioning market, and the high costs of gathering and analyzing
relevant information leads some customers to miss opportunities to make
cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when the equipment purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of CUAC and CUHP that are not captured by the users of such
equipment. These benefits include externalities related to public
health, environmental protection and national security that are not
reflected in energy prices, such as reduced emissions of air pollutants
and greenhouse gases that impact human health and global warming.
The proposed standards address these issues by setting minimum
levels of energy efficiency, which remove from the market equipment
that might be purchased by poorly informed customers or by customers
who would not be paying the costs of operating the equipment. In the
process of so doing, DOE assembles, analyzes, and receives informed
comment on a large quantity of information that indicates that most
customers would be better off purchasing equipment that meets the
standards rather than less-efficient equipment. In cases in which the
user of the equipment is not able to make the purchase decision, the
standards help to ameliorate the problem of misaligned incentives
between purchasers and users. Finally, the standards account to some
extent for externalities that are not represented in market
transactions.
In addition, DOE has determined that this regulatory action is an
``economically significant regulatory action'' under section 3(f)(1)
(``significant regulatory action'') of Executive Order 12866, as it has
an annual effect on the economy of 100 million or more. Accordingly,
section 6(a)(3) of the Executive Order requires that DOE prepare a
regulatory impact analysis (RIA) on this rule and that the Office of
Information and Regulatory Affairs (OIRA) in the Office of Management
and Budget (OMB) review this rule. DOE presented to OIRA for review the
draft rule and other documents prepared for this rulemaking, including
the RIA, and has included these documents in the rulemaking record. The
assessments prepared pursuant to Executive Order 12866 can be found in
the technical support document for this rulemaking.
DOE has also reviewed this proposal pursuant to Executive Order
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). EO 13563
is supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
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
[[Page 59011]]
available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, the Office of Information and Regulatory Affairs has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. (DOE also discusses cumulative
regulatory burdens above in section V.B.2.e.) For the reasons stated in
the preamble, DOE believes that this NOPR is consistent with these
principles, including the requirement that, to the extent permitted by
law, benefits justify costs and that net benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of 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 Executive Order 13272, ``Proper Consideration of Small
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE
published procedures and policies on February 19, 2003, to ensure that
the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's Web site (https://energy.gov/gc/office-general-counsel). DOE
has prepared the following IRFA for the products that are the subject
of this rulemaking.
For manufacturers of small, large, and very large air-cooled CUAC
and CUHP, the Small Business Administration (SBA) has set a size
threshold, which defines those entities classified as ``small
businesses'' for the purposes of the statute. DOE used the SBA's small
business size standards to determine whether any small entities would
be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15,
2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at
13 CFR part 121. The size standards are listed by North American
Industry Classification System (NAICS) code and industry description
and are available at https://www.sba.gov/category/navigation-structure/contracting/contracting-officials/small-business-size-standards.
Manufacturing of small, large, and very large air-cooled CUAC and CUHP
is classified under NAICS 333415, ``Air-Conditioning and Warm Air
Heating Equipment and Commercial and Industrial Refrigeration Equipment
Manufacturing.'' The SBA sets a threshold of 750 employees or less for
an entity to be considered as a small business for this category.
1. Description and Estimated Number of Small Entities Regulated
To estimate the number of companies that could be small business
manufacturers of equipment covered by this rulemaking, DOE conducted a
market survey using available public information to identify potential
small manufacturers. DOE's research involved examining industry trade
association membership directories (including AHRI), public databases
(e.g., AHRI Directory,\87\ the California Energy Commission Appliance
Efficiency Database \88\), individual company Web sites, and market
research tools (e.g., Hoovers reports) to create a list of companies
that manufacture or sell 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 reviewed publicly-available data and contacted
select companies on its list, as necessary, to determine whether they
met the SBA's definition of a small business manufacturer of covered
commercial packaged air conditioners. DOE screened out companies that
do not offer products covered by this rulemaking, do not meet the
definition of a ``small business,'' or are foreign owned and operated.
---------------------------------------------------------------------------
\87\ See www.ahridirectory.org/ahriDirectory/pages/home.aspx.
\88\ See https://www.energy.ca.gov/appliances/.
---------------------------------------------------------------------------
DOE initially identified at least 13 potential manufacturers of
commercial packaged air conditioners sold in the U.S. DOE then
determined that 10 were large manufacturers, manufacturers that are
foreign owned and operated, or manufacturers that do not produce
products covered by this rulemaking. DOE was able to determine that 3
manufacturers meet the SBA's definition of a ``small business'' and
manufacture products covered by this rulemaking.
Before issuing this NOPR, DOE spoke with two of the small business
manufacturers of commercial packaged air conditioners. DOE also
obtained information about small business impacts while interviewing
large manufacturers.
Based on DOE's research, one small manufacturer focused exclusively
on the design and specification of equipment--but had no production
assets of its own. All production was outsourced. The other small
manufacturers performed all design and specification work but also
owned domestic production facilities and employed production workers.
Issue 23: DOE requests additional information on the number of
small businesses in the industry, the names of those small businesses,
and their role in the market.
2. Description and Estimate of Compliance Requirements
The proposed standards for commercial packaged air conditioners
could cause small manufacturers to be at a disadvantage relative to
large manufacturers. One way in which small manufacturers could be at a
disadvantage is that they may be disproportionately affected by product
conversion costs. Product redesign, testing, and certification costs
tend to be fixed and do not scale with sales volume. For each product
model, small businesses must make investments in research and
development to redesign their products, but because they have lower
sales volumes, they must spread these costs across fewer units.
Moreover, smaller manufacturers may experience higher testing costs
relative to larger manufacturers as they may not possess their own test
facility and therefore must outsource all testing at a higher per unit
cost. In general, the small manufacturers had a number of equipment
lines that was similar to that of larger competitors with similar
market share. However, because small manufacturers have fewer engineers
than large manufacturers, they may have greater difficulty bringing
their portfolio of equipment in-line with an amended energy
conservation standard within the allotted timeframe or may have to
divert engineering resources from customer and new product initiatives
for a longer period of time.
Furthermore, smaller manufacturers may lack the purchasing power of
larger manufacturers. For example, since motor suppliers give discounts
to manufacturers based on the number of motors they purchase, larger
manufacturers may have a purchasing and pricing advantage because their
higher volume demands. This
[[Page 59012]]
purchasing power differential between high-volume and low-volume orders
applies to other commercial packaged air conditioner components as
well.
In order to meet the proposed standard, manufacturers may have to
seek outside capital to cover expenses related to testing and product
design equipment. Smaller firms typically have a higher cost of
borrowing due to higher risk on the part of investors, largely
attributed to lower cash flows and lower per unit profitability. In
these cases, small manufacturers may observe higher costs of debt than
larger manufacturers.
To estimate how small manufacturers would be potentially impacted,
DOE compared required conversion costs at each TSL for a small
manufacturer with on-site production and an average large manufacturer
(see Table VI.1 and Table VI.2). In the following tables, TSL 3
represents the proposed standard.
Table VI.1--Impacts of Conversion Costs on a Small Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Capital conversion cost
as a percentage of Product conversion cost Total conversion cost Total conversion cost
annual capital as a percentage of as a percentage of as a percentage of
expenditures annual R&D expense annual revenue annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1............................................... 122 526 14 159
TSL 2............................................... 199 932 24 276
TSL 3............................................... 407 1948 49 573
TSL 4............................................... 430 3369 77 896
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table VI.2--Impacts of Conversion Costs on a Large Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Capital conversion cost
as a percentage of Product conversion cost Total conversion cost Total conversion cost
annual capital as a percentage of as a percentage of as a percentage of
expenditures annual R&D expense annual revenue annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1............................................... 42 213 5 62
TSL 2............................................... 105 287 9 100
TSL 3............................................... 279 536 19 216
TSL 4............................................... 310 898 26 307
--------------------------------------------------------------------------------------------------------------------------------------------------------
At TSL 3, the level proposed in this NOPR, DOE estimates capital
conversion costs of $2.32 million and product conversion costs of $7.04
million for an average small manufacturer that owns production
facilities, compared to capital conversion costs of $9.08 million and
product conversion costs of $11.05 million for an average large
manufacturer.
At these levels, the amended standard could contribute to the
consolidation of the industry. As noted in section V.B.2.a, the GRIM
free cash flow results indicated that some manufacturers may need to
access the capital markets in order to fund conversion costs directly
related to an amended standard. These conversion costs would continue
to be borne by the identified small manufacturers in spite of any
outsourcing of manufacturing activities because they must still incur
the necessary product conversion costs to design, test, certify, and
market equipment complying with any new standards that DOE may
promulgate. Given that small manufacturers tend to have less access to
capital and that the necessary conversion costs are high relative to
the size of a small business, it is possible the small manufacturers
will choose to leave the industry or choose to be purchased by or
merged with larger market players.
Since the proposed standard could cause small manufacturers to be
at a disadvantage relative to large manufacturers, DOE cannot certify
that the proposed standards would not have a significant impact on a
significant number of small businesses, and consequently, DOE has
prepared this IRFA analysis.
Issue 24: DOE requests data on the cost of capital for small
manufacturers to better quantify how small manufacturers might be
disadvantaged relative to large competitors.
Issue 25: DOE requests comment and data on the impact of the
proposed standard on small business manufacturers, including any
potential cumulative regulatory effects.
3. Duplication, Overlap, and Conflict with Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate,
overlap, or conflict with the rule being considered today.
4. Significant Alternatives to the Rule
The discussion above analyzes impacts on small businesses that
would result from DOE's proposed rule. In addition to the other TSLs
being considered, the proposed rulemaking TSD includes a regulatory
impact analysis that discusses the following policy alternatives: (1)
Consumer rebates; (2) consumer tax credits; (3) manufacturer tax
credits; (4) voluntary energy efficiency targets; and (5) bulk
government purchases. While these alternatives may mitigate to some
varying extent the economic impacts on small entities compared to the
standards, DOE determined that the energy savings of these alternatives
are significantly smaller than those that would be expected to result
from adoption of the proposed standard levels. Accordingly, DOE is
declining to adopt any of these alternatives and is proposing the
standards set forth in this rulemaking. (See chapter 17 of the NOPR TSD
for further detail on the policy alternatives DOE considered.)
Issue 26: DOE request input on regulatory alternatives to consider
that would lessen the impact of the rulemaking on small business.
C. Review Under the Paperwork Reduction Act
Manufacturers of small, large, and very large air-cooled commercial
package air conditioning and heating equipment must certify to DOE that
their products comply with any applicable energy conservation
standards. In certifying compliance, manufacturers must test their
products according to the DOE test procedures for small, large, and
very large air-cooled commercial package air conditioning and heating
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
[[Page 59013]]
commercial equipment, including small, large, and very large air-cooled
commercial package air conditioning and heating equipment. 76 FR 12422
(March 7, 2011). The collection-of-information requirement for the
certification and recordkeeping is subject to review and approval by
OMB under the Paperwork Reduction Act (PRA). This requirement has been
approved by OMB under OMB control number 1910-1400. Public reporting
burden for the certification is estimated to average 20 hours per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the proposed rule fits within the category of
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets
the requirements for application of a CX. See 10 CFR Part 1021, App. B,
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The proposed rule fits
within the category of actions under CX B5.1 because it is a rulemaking
that establishes energy conservation standards for consumer products or
industrial equipment, and for which none of the exceptions identified
in CX B5.1(b) apply. Therefore, DOE has made a CX determination for
this rulemaking, and DOE does not need to prepare an Environmental
Assessment or Environmental Impact Statement for this proposed rule.
DOE's CX determination for this proposed rule is available at https://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 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. EPCA governs and
prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of this proposed
rule. States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) No
further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' imposes on Federal agencies the general duty
to adhere to the following requirements: (1) Eliminate drafting errors
and ambiguity; (2) write regulations to minimize litigation; and (3)
provide a clear legal standard for affected conduct rather than a
general standard and promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Section 3(b) of Executive Order 12988 specifically
requires that Executive agencies make every reasonable effort to ensure
that the regulation: (1) Clearly specifies the preemptive effect, if
any; (2) clearly specifies any effect on existing Federal law or
regulation; (3) provides a clear legal standard for affected conduct
while promoting simplification and burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately defines key terms; and (6)
addresses other important issues affecting clarity and general
draftsmanship under any guidelines issued by the Attorney General.
Section 3(c) of Executive Order 12988 requires Executive agencies to
review regulations in light of applicable standards in section 3(a) and
section 3(b) to determine whether they are met or it is unreasonable to
meet one or more of them. DOE has completed the required review and
determined that, to the extent permitted by law, this proposed rule
meets the relevant standards of Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 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 small governments. 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 https://energy.gov/gc/office-general-counsel.
Although this proposed rule does not contain a Federal
intergovernmental mandate, it may require expenditures of $100 million
or more on the private sector. Specifically, the proposed rule will
likely result in a final rule that could require expenditures of $100
million or more. Such expenditures may include: (1) Investment in
research and development and in capital expenditures by small, large,
and very large air-cooled commercial package air conditioning and
heating equipment manufacturers in the years between the final rule and
the compliance date for the new standards, and (2) incremental
additional expenditures by consumers to purchase higher-efficiency
small, large, and very large air-cooled commercial package air
conditioning and heating equipment, starting at the compliance date for
the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. 2 U.S.C. 1532(c). The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of the NOPR and the ``Regulatory
Impact
[[Page 59014]]
Analysis'' section of the TSD for this proposed rule respond to those
requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. 2 U.S.C. 1535(a). DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the proposed rule unless DOE publishes
an explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. This proposed rule would
establish energy conservation standards for small, large, and very
large air-cooled commercial package air conditioning and heating
equipment that are designed to achieve the maximum improvement in
energy efficiency that DOE has determined to be both technologically
feasible and economically justified. A full discussion of the
alternatives considered by DOE is presented in the ``Regulatory Impact
Analysis'' section of the TSD for this proposed rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
DOE has determined, under Executive Order 12630, ``Governmental
Actions and Interference with Constitutionally Protected Property
Rights'' 53 FR 8859 (Mar. 18, 1988), that this regulation 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
guidelines established by each agency pursuant to general guidelines
issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22,
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7,
2002). DOE has reviewed this 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
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
DOE has tentatively concluded that this regulatory action, which
sets forth proposed energy conservation standards for small, large, and
very large air-cooled commercial package air conditioning and heating
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 the proposed rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as scientific information the
agency reasonably can determine will have, or does have, a clear and
substantial impact on important public policies or private sector
decisions. 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site:
www.eere.energy.gov/buildings/appliancestandards/
peerreview.html.
VII. Public Participation
A. Attendance at the Public Meeting
The time, date, and location of the public meeting are listed in
the DATES and ADDRESSES sections at the beginning of this notice. If
you plan to attend the public meeting, please notify Ms. Brenda Edwards
at (202) 586-2945 or brenda.edwards@ee.doe.gov. As explained in the
ADDRESSES section, foreign nationals visiting DOE Headquarters are
subject to advance security screening procedures.
In addition, you can attend the public meeting via webinar. Webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants will be
published on DOE's Web site at: https://www.eere.energy.gov/buildings/
appliancestandards/rulemaking.aspx/ruleid/59. Participants are
responsible for ensuring their systems are compatible with the webinar
software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has plans to present a prepared general statement
may request that copies of his or her statement be made available at
the public meeting. Such persons may
[[Page 59015]]
submit requests, along with an advance electronic copy of their
statement in PDF (preferred), Microsoft Word or Excel, WordPerfect, or
text (ASCII) file format, to the appropriate address shown in the
ADDRESSES section at the beginning of this notice. The request and
advance copy of statements must be received at least one week before
the public meeting and may be emailed, hand-delivered, or sent by mail.
DOE prefers to receive requests and advance copies via email. Please
include a telephone number to enable DOE staff to make follow-up
contact, if needed.
C. Conduct of the Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA (42 U.S.C.
6306). A court reporter will be present to record the proceedings and
prepare a transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the public meeting. After the public meeting, interested parties may
submit further comments on the proceedings as well as on any aspect of
the rulemaking until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will allow, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this notice. 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 notice.
Submitting comments via www.regulations.gov. The 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 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 regulations.gov cannot
be claimed as CBI. Comments received through the Web site will waive
any CBI claims for the information submitted. For information on
submitting CBI, see the Confidential Business Information section
below.
DOE processes submissions made through 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 regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery, or mail also
will be posted to regulations.gov. If you do not want your personal
contact information to be publicly viewable, do not include it in your
comment or any accompanying documents. Instead, provide your contact
information in a cover letter. Include your first and last names, email
address, telephone number, and optional mailing address. The cover
letter will not be publicly viewable as long as it does not include any
comments
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via mail or hand
delivery/courier, please provide all items on a CD, if feasible. It is
not necessary to submit printed copies. No facsimiles (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. According 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, postal mail, or hand delivery/courier 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. Submit these documents via email or on a CD, if
feasible. DOE will make its own determination about the confidential
[[Page 59016]]
status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
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. Use of the IEER as the cooling efficiency metric and COP as the
heating efficiency metric (for CUHP) for the proposed energy
conservation standards, including additional data and input regarding
the uncertainty of IEER test measurements. (See section III.A of this
notice for additional information.)
2. Comment on whether the test procedure for air-cooled CUAC and
CUHP should be amended to revise the weightings for the IEER metric to
place a higher weighting value on the full-load efficiency. DOE also
requests data to determine appropriate weighting factors for the full-
load test condition and part-load test conditions (75 percent, 50
percent, and 25 percent of capacity). (See section III.A of this notice
for additional information.)
3. DOE requests comments and detailed information regarding any
design features, including dual-duct air conditioners, that DOE should
consider for establishing separate equipment classes in this
rulemaking. DOE requests that such information provide test data
illustrating the additional challenges faced by models having such
design features and a discussion of the customer utility aspects of the
design feature. In particular, DOE requests detailed comments regarding
the definition of such equipment classes, and any detailed information,
such as test data, test conditions, key component design details, as
well as other relevant information (e.g., fan power consumption) that
may help DOE evaluate potential alternative equipment class standard
levels. See section IV.A.2 of this notice for additional information.)
4. Comment and data regarding additional design options or variants
of the considered design options that can increase the range of
considered efficiency improvements, including design options that may
not yet be found on the market. (See section IV.A.3 of this notice for
additional information.)
5. The incremental and max-tech efficiency levels identified for
the analyses, including whether the efficiency levels identified by DOE
can be achieved using the technologies screened-in during the screening
analysis (see section IV.B), and whether higher efficiencies are
achievable using technologies that were screened-in during the
screening analysis. Also, DOE seeks comment on the approach of
extrapolating the efficiency levels from the small, large, and very
large CUAC with electric resistance heating or no heating equipment
classes to the remaining equipment classes using the IEER differentials
in ASHRAE Standard 90.1-2010 draft addendum CL. In addition, input and
data on the approach for determining the COP levels for the heat pump
equipment classes using the relationship between IEER and COP. (See
section IV.C.3 of this for additional information.)
6. Comments, information, and data that would inform adjustment of
energy modeling input and/or results that would allow more accurate
representation of the energy use impacts of design options using the
modeling tools developed by the Center for Environmental Energy
Engineering from the University of Maryland College Park. (See section
IV.C.4 of this notice for additional information.)
7. Input and data on the estimated incremental manufacturing costs,
including the extrapolation of incremental costs for equipment classes
not fully analyzed, in particular for heat pump equipment classes. (See
section IV.C.4 of this notice for additional information.)
8. Comments, information, and data that could be used to modify the
proposed method for using laboratory and modeled IEER test data, which
were developed in accordance to AHRI Standard 340/360-2007, to
calculate the performance of CUAC equipment at part-load conditions.
(See section IV.E.1 of this notice for additional information.)
9. Comments on the use of a ``generalized building sample'' to
characterize the energy consumption of CUAC equipment in the commercial
building stock. Specifically, whether there are any data or information
that could improve the method for translating the results from the
1,033 simulated buildings to the generalized building sample. (See
section IV.E.2 of this notice for additional information.)
10. Whether using RS Means cost data to develop maintenance,
repair, and installation costs for CUAC and CUHP equipment is
appropriate, and if not, what data should be used. (See section IV.F.6
of this notice for additional information.)
11. Comments, information and data on the equipment lifetimes
developed for CUAC and CUHP equipment. Specifically, any information
that would indicate whether the retirement functions yielding median
lifetimes of 18.7 years and 15.4 years for CUAC and CUHP equipment,
respectively, are reasonable. (See section IV.F.7 of this notice for
additional information.)
12. Comments, information and data on the base case efficiency
distributions of CUAC equipment. Given that historical market share
efficiency data from 1999-2001 were used to inform a consumer choice
model in the shipments analysis to develop estimated base case
efficiency distributions in the compliance year (2019), DOE seeks more
recent historical market share efficiency data would be useful for
validating the estimated base case efficiency distributions. (See
section IV.F.9 of this notice for additional information.)
13. Comments, information and data on the methods used to develop
the two consumer choice models in the shipments analysis--i.e. one
model for estimating the selection of CUAC and CUHP equipment by
efficiency level and another model for the repair vs. replacement
decision. With regards to the repair vs. replacement decision, the
model is based on estimates of the cost of repair vs. the cost of new
equipment. Field data for repair costs and how they vary with equipment
first cost and age would allow DOE to refine its shipments forecasting
by more precisely modeling the repair vs. replace decision sensitivity
to the difference in repair and replacement equipment costs. (See
section IV.G of this notice for additional information.)
14. Comments, information and data regarding the lifetime of
repaired equipment. DOE's analysis considered
[[Page 59017]]
major repair consisting of replacement of the compressor and
miscellaneous materials associated with the compressor; DOE estimated
that repaired equipment would last as long as new replacement
equipment. Information is requested to determine whether this estimate
is reasonable. (See section IV.G of this notice for additional
information.)
15. Comments, information, and data on the repair of CUACs and
CUHPs in the >=240,000 Btu/h and <760,000 Btu/h equipment classes. For
this equipment, the shipments analysis estimated that any equipment
experiencing their first failure would be repaired rather than
replaced. Information is requested to determine whether this estimate
is reasonable. (See section IV.G of this notice for additional
information.)
16. Comments on its decision to not include a rebound effect for
more-efficient CUAC and CUHP. (See section IV.H of this notice for
additional information.)
17. Comments, information, and data that would inform adjustment of
the DOE's estimate of $12.7M in conversion costs that occur in the base
case. (See section IV.J.2.a of this notice for additional information.)
18. DOE solicits comment on the application of the new SCC values
used to determine the social benefits of CO2 emissions
reductions over the rulemaking analysis period. In particular, the
agency solicits comment on its derivation of SCC values after 2050,
where the agency applied the average annual growth rate of the SCC
estimates in 2040-2050 associated with each of the four sets of values.
(See section IV.L of this notice for additional information.) Comments,
information, and data on the capital conversion costs and product
conversion costs estimated for each TSL. In particular, DOE seeks
comment on the conversion costs at max-tech. (See section V.B.2.a of
this notice for additional information.)
19. Comments, information, and data on capacity constraints at each
TSL--including production capacity constraints, engineering resource
constraints, and testing capacity constraints that are directly related
to an amended standard for small, large, and very large CUAC and CUHP.
In particular, DOE requests comment on whether the proposed effective
allows for a sufficient conversion period to make the equipment design
and facility updates necessary to meet an amended standard. (See
section V.B.2.c of this notice for additional information.)
20. DOE requests comment on the identified regulations and their
contribution to cumulative regulatory burden. Additionally, DOE
requests feedback on product-specific regulations that take effect
between 2016 and 2022 that were not listed, including identification of
the specific regulations and data quantifying the associated burdens.
(See section V.B.2.e of this notice for additional information.)
21. For this rulemaking, DOE analyzed the effects of potential
standards on equipment purchased over a 30-year period, and it
undertook a sensitivity analysis using 9 years rather than 30 years of
product shipments. The choice of a 30-year period of shipments is
consistent with the DOE analysis for other products and commercial
equipment. 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 amended standards. DOE
is seeking input on ways to refine the analytic timeline. (See section
V.B.3.a of this notice for additional information.)
22. Comments, information, and data on the number of small
businesses in the industry, the names of those small businesses, and
their role in the market. (See section VI.B.1 of this notice for
additional information.)
23. DOE requests data on the cost of capital for small
manufacturers to better quantify how small manufacturers might be
disadvantaged relative to large competitors. (See section VI.B.2 of
this notice for additional information.)
24. DOE requests comment and data on the impact of the proposed
standard on small business manufacturers, including any potential
cumulative regulatory effects.
25. DOE also seeks comment on whether there are features or
attributes of the more energy-efficient CUAC and CUHP that
manufacturers would produce to meet the standards in this proposed rule
that might affect how they would be used by consumers. DOE requests
comment specifically on how any such effects should be weighed in the
choice of standards for the final rule. (See section IV.A.3 of this
notice for additional information.)
26. Input on regulatory alternatives to consider that would lessen
the impact of the rulemaking on small business.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this proposed
rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Intergovernmental relations, Reporting and recordkeeping requirements,
and Small businesses.
Issued in Washington, DC, on September 18, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable 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.
0
2. Section 431.97 is amended by:
0
a. Revising paragraph (b) including Tables 1 through 3;
0
b. Redesignating Tables 4 through 8 as Tables 5 through 9;
0
c. Adding new Table 4; and
0
c. Revising paragraph (c).
The revision and additions read as follows:
Sec. 431.97 Energy efficiency standards and their compliance dates.
* * * * *
(b) Each commercial air conditioner or heat pump (not including
single package vertical air conditioners and single package vertical
heat pumps, packaged terminal air conditioners and packaged terminal
heat pumps, computer room air conditioners, and variable refrigerant
flow systems) manufactured starting on the compliance date listed in
the corresponding table must meet the applicable minimum energy
efficiency standard level(s) set forth in Tables 1, 2, 3, and 4 of this
section.
[[Page 59018]]
Table 1 to Sec. 431.97--Minimum Cooling Efficiency Standards for Air-Conditioning and Heating Equipment
[Not including single package vertical air conditioners and single package vertical heat pumps, packaged
terminal air conditioners and packaged terminal heat pumps, computer room air conditioners, and variable
refrigerant flow multi-split air conditioners and heat pumps]
----------------------------------------------------------------------------------------------------------------
Compliance
date: products
Equipment type Cooling capacity Sub- Heating type Efficiency manufactured
category level on and after .
. .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h... AC All............ SEER = 13...... June 16, 2008.
Conditioning and Heating HP All............ SEER = 13...... June 16, 2008.
Equipment (Air-Cooled, 3
Phase).
Small Commercial Packaged Air- >=65,000 Btu/h AC Electric EER = 11.2..... January 1,
Conditioning and Heating and <135,000 Resistance EER = 11.0..... 2010.\1\
Equipment (Air-Cooled). Btu/h. Heating or No January 1,
Heating. 2010.\1\
All Other Types
of Heating.
HP Electric EER = 11.0..... January 1,
Resistance 2010.\1\
Heating or No
Heating.
All Other Types EER = 10.8..... January 1,
of Heating. 2010.\1\
Large Commercial Packaged Air- >=135,000 Btu/h AC Electric EER = 11.0..... January 1,
Conditioning and Heating and <240,000 Resistance EER = 10.8..... 2010.\1\
Equipment (Air-Cooled). Btu/h. Heating or No January 1,
Heating. 2010.\1\
All Other Types
of Heating.
Heating Equipment (Air- >240,000 Btu/h.. HP Electric EER = 10.6..... January 1,
Cooled). Resistance 2010.\1\
Heating or No
Heating.
All Other Types EER = 10.4..... January 1,
of Heating. 2010.\1\
Very Large Commercial >=240,000 Btu/h AC Electric EER = 10.0..... January 1,
Packaged Air-Conditioning and <760,000 Resistance EER = 9.8...... 2010.\1\
and Heating Equipment (Air- Btu/h. Heating or No January 1,
Cooled). Heating. 2010.\1\
All Other Types
of Heating.
HP Electric EER = 9.5...... January 1,
Resistance 2010.\1\
Heating or No
Heating.
All Other Types EER = 9.3...... January 1,
of Heating. 2010.\1\
Small Commercial Packaged Air- <17,000 Btu/h... AC All............ EER = 12.1..... October 29,
Conditioning and Heating >=17,000 Btu/h HP All............ EER = 11.2..... 2003.
Equipment (Water-Cooled, and <65,000 Btu/ AC All............ EER = 12.1..... October 29,
Evaporatively-Cooled, and h. HP All............ EER = 12.0..... 2003.
Water-Source). October 29,
2003.
October 29,
2003.
>=65,000 Btu/h AC Electric EER = 11.5..... October 29,
and <135,000 Resistance 2003.\2\
Btu/h. Heating or No
Heating.
All Other Types EER = 11.3..... October 29,
of Heating. 2003.\2\
HP All............ EER = 12.0..... October 29,
2003.\2\
Large Commercial Packaged Air- >=135,000 Btu/h AC All............ EER = 11.0..... October 29,
Conditioning and Heating and <240,000 HP All............ EER = 11.0..... 2004.\3\
Equipment (Water-Cooled, Btu/h. October 29,
Evaporatively-Cooled, and 2004.\3\
Water-Source).
Very Large Commercial >=240,000 Btu/h AC Electric EER = 11.0..... January 10,
Packaged Air-Conditioning and <760,000 Resistance EER = 10.8..... 2011.\3\
and Heating Equipment (Water- Btu/h. Heating or No January 10,
Cooled, Evaporatively- Heating. 2011.\3\
Cooled, and Water-Source). All Other Types
of Heating.
HP Electric EER = 11.0..... January 10,
Resistance 2011.\3\
Heating or No
Heating.
All Other Types EER = 10.8..... January 10,
of Heating. 2011.\3\
----------------------------------------------------------------------------------------------------------------
\1\ And manufactured before [date 3 years after final rule Federal Register publication]. See Table 3 of this
section for updated efficiency standards.
\2\ And manufactured before June 1, 2013. See Table 3 of this section for updated efficiency standards.
\3\ And manufactured before June 1, 2014. See Table 3 of this section for updated efficiency standards.
[[Page 59019]]
Table 2 to Sec. 431.97--Minimum Heating Efficiency Standards for Air Conditioning and Heating Equipment
[Heat pumps]
----------------------------------------------------------------------------------------------------------------
Compliance date:
Equipment type Cooling capacity Efficiency level Products manufactured
on and after . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h.......... HSPF = 7.7............. June 16, 2008.
Conditioning and Heating Equipment
(Air-Cooled, 3 Phase).
Small Commercial Packaged Air- >=65,000 Btu/h and COP = 3.3.............. January 1, 2010.\1\
Conditioning and Heating Equipment <135,000 Btu/h.
(Air-Cooled).
Large Commercial Packaged Air- >=135,000 Btu/h and COP = 3.2.............. January 1, 2010.\1\
Conditioning and Heating Equipment <240,000 Btu/h.
(Air-Cooled).
Very Large Commercial Packaged Air- >=240,000 Btu/h and COP = 3.2.............. January 1, 2010.\1\
Conditioning and Heating Equipment <760,000 Btu/h.
(Air-Cooled).
Small Commercial Packaged Air- <135,000 Btu/h......... COP = 4.2.............. October 29, 2003.
Conditioning and Heating Equipment
(Water-Source).
----------------------------------------------------------------------------------------------------------------
\1\ And manufactured before [date 3 years after final rule Federal Register publication]. See Table 4 of this
section for updated heating efficiency standards.
Table 3 to Sec. 431.97--Updates to the Minimum Cooling Efficiency Standards for Air-Conditioning and Heating
Equipment
[Not including single package vertical air conditioners and single package vertical heat pumps, packaged
terminal air conditioners and packaged terminal heat pumps, computer room air conditioners, and variable
refrigerant flow multi-split air conditioners and heat pumps]
----------------------------------------------------------------------------------------------------------------
Compliance
Efficiency date: Products
Equipment type Cooling capacity Sub-category Heating type level manufactured on
and after . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- >=65,000 Btu/h AC.......... Electric IEER = 14.8.... [date 3 years
Conditioning and Heating and <135,000 Resistance IEER = 14.6.... after final
Equipment (Air-Cooled). Btu/h. Heating or No rule Federal
Heating. Register
All Other Types publication].
of Heating.
HP.......... Electric IEER = 14.1.... [date 3 years
Resistance IEER = 113.9... after final
Heating or No rule Federal
Heating. Register
All Other Types publication].
of Heating.
Large Commercial Packaged Air- >=135,000 Btu/h AC.......... Electric IEER = 14.2.... [date 3 years
Conditioning and Heating and <240,000 Resistance IEER = 14.0.... after final
Equipment (Air-Cooled). Btu/h. Heating or No rule Federal
Heating. Register
All Other Types publication].
of Heating.
HP.......... Electric IEER = 13.4.... [date 3 years
Resistance IEER = 13.2.... after final
Heating or No rule Federal
Heating. Register
All Other Types publication].
of Heating.
Very Large Commercial >=240,000 Btu/h AC.......... Electric IEER = 13.5.... [date 3 years
Packaged Air-Conditioning and <760,000 Resistance IEER = 13.3.... after final
and Heating Equipment (Air- Btu/h. Heating or No rule Federal
Cooled). Heating. Register
All Other Types publication]
of Heating.
HP.......... Electric IEER = 12.5.... [date 3 years
Resistance IEER = 12.3.... after final
Heating or No rule Federal
Heating. Register
All Other Types publication]
of Heating.
Small Commercial Packaged Air- >=65,000 Btu/h ............ Electric EER = 12.1..... June 1, 2013.
Conditioning and Heating and <135,000 Resistance EER = 11.9..... June 1, 2013.
Equipment (Water-Cooled). Btu/h. Heating or No
Heating.
All Other Types
of Heating.
Large Commercial Packaged Air- >=135,000 Btu/h ............ Electric EER = 12.5..... June 1, 2014.
Conditioning and Heating and <240,000 Resistance EER = 12.3..... June 1, 2014.
Equipment (Water-Cooled). Btu/h. Heating or No
Heating.
All Other Types
of Heating.
Very Large Commercial >=240,000 Btu/h ............ Electric EER = 12.4..... June 1, 2014.
Packaged Air-Conditioning and <760,000 Resistance EER = 12.2..... June 1, 2014.
and Heating Equipment (Water- Btu/h. Heating or No
Cooled). Heating.
All Other Types
of Heating.
[[Page 59020]]
Small Commercial Packaged Air- >=65,000 Btu/h ............ Electric EER = 12.1..... June 1, 2013.
Conditioning and Heating and <135,000 Resistance EER = 11.9..... June 1, 2013.
Equipment (Evaporatively- Btu/h. Heating or No
Cooled). Heating.
All Other Types
of Heating.
Large Commercial Packaged Air- >=135,000 Btu/h ............ Electric EER = 12.0..... June 1, 2014.
Conditioning and Heating and <240,000 Resistance EER = 11.8..... June 1, 2014.
Equipment (Evaporatively- Btu/h. Heating or No
Cooled). Heating.
All Other Types
of Heating.
Very Large Commercial >=240,000 Btu/h ............ Electric EER = 11.9..... June 1, 2014.
Packaged Air-Conditioning and <760,000 Resistance EER = 11.7..... June 1, 2014.
and Heating Equipment Btu/h. Heating or No
(Evaporatively-Cooled). Heating.
All Other Types
of Heating.
----------------------------------------------------------------------------------------------------------------
Table 4 to Sec. 431.97--Updates to the Minimum Heating Efficiency Standards for Air-Cooled Air Conditioning
and Heating Equipment
[Heat pumps]
----------------------------------------------------------------------------------------------------------------
Compliance date:
Efficiency level Products
Equipment type Cooling capacity Heating type \1\ manufactured on
and after . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- >=65,000 Btu/h and Electric COP = 3.5.......... [date 3 years
Conditioning and Heating <135,000 Btu/h. Resistance COP = 3.4.......... after final rule
Equipment (Air-Cooled). Heating or No Federal Register
Heating. publication].
All Other Types of
Heating.
Large Commercial Packaged Air- >=135,000 Btu/h Resistance Heating COP = 3.3.......... [date 3 years
Conditioning and Heating and <240,000 Btu/ or No Heating. after final rule
Equipment (Air-Cooled). h. All Other Types of Federal Register
Heating. publication]
Very Large Commercial Packaged >=240,000 Btu/h Resistance Heating COP = 3.2.......... [date 3 years
Air-Conditioning and Heating and <760,000 Btu/ or No Heating. after final rule
Equipment (Air-Cooled). h. All Other Types of Federal Register
Heating. publication]
----------------------------------------------------------------------------------------------------------------
\1\ For units tested by AHRI Standards, all COP values must be rated at 47[emsp14][deg]F outdoor dry-bulb
temperature for air-cooled equipment.
(c) Each packaged terminal air conditioner (PTAC) and packaged
terminal heat pump (PTHP) manufactured starting on January 1, 1994, but
before October 8, 2012 (for standard size PTACs and PTHPs) and before
October 7, 2010 (for non-standard size PTACs and PTHPs) must meet the
applicable minimum energy efficiency standard level(s) set forth in
Table 5 of this section. Each standard size PTAC and PTHP manufactured
starting on October 8, 2012, and each non-standard size PTAC and PTHP
manufactured starting on October 7, 2010, must meet the applicable
minimum energy efficiency standard level(s) set forth in Table 6 of
this section.
* * * * *
[FR Doc. 2014-22894 Filed 9-29-14; 8:45 am]
BILLING CODE 6450-01-P
