Energy Conservation Program: Energy Conservation Standards for Air-Cooled Commercial Package Air Conditioners and Heat Pumps, 44052-44142 [2024-08546]
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
DEPARTMENT OF ENERGY
10 CFR Part 431
[EERE–2022–BT–STD–0015]
RIN 1904–AF34
Energy Conservation Program: Energy
Conservation Standards for Air-Cooled
Commercial Package Air Conditioners
and Heat Pumps
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Direct final rule.
AGENCY:
The Energy Policy and
Conservation Act, as amended
(‘‘EPCA’’), prescribes energy
conservation standards for various
consumer products and certain
commercial and industrial equipment,
including air-cooled commercial
package air conditioners and heat
pumps with a rated cooling capacity
greater than or equal to 65,000 Btu/h. In
this direct final rule, DOE is adopting
amended energy conservation
standards, based on clear and
convincing evidence, for air-cooled
commercial package air conditioners
and heat pumps with a rated cooling
capacity greater than or equal to 65,000
Btu/h, which it has determined satisfy
the relevant statutory criteria.
DATES: The effective date of this rule is
September 17, 2024, unless adverse
comment is received by September 9,
2024. If adverse comments are received
that DOE determines may provide a
reasonable basis for withdrawal of the
direct final rule, a timely withdrawal of
this rule will be published in the
Federal Register. If no such adverse
comments are received, compliance
with the amended standards established
for air-cooled commercial package air
conditioners and heat pumps with a
rated cooling capacity greater than or
equal to 65,000 Btu/h in this direct final
rule is required on and after January 1,
2029.
ADDRESSES: Interested persons are
encouraged to submit comments using
the Federal eRulemaking Portal at
www.regulations.gov under docket
number EERE–2022–BT–STD–0015.
Follow the instructions for submitting
comments. Alternatively, interested
persons may submit comments,
identified by docket number EERE–
2022–BT–STD–0015, by any of the
following methods:
Email: ApplianceStandards
Questions@ee.doe.gov. Include the
docket number EERE–2022–BT–STD–
0015 in the subject line of the message.
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SUMMARY:
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Postal Mail: Appliance and
Equipment Standards Program, U.S.
Department of Energy, Building
Technologies Office, Mailstop EE–5B,
1000 Independence Avenue SW,
Washington, DC 20585–0121. If
possible, please submit all items on a
compact disc (‘‘CD’’), in which case it is
not necessary to include printed copies.
Hand Delivery/Courier: Appliance
and Equipment Standards Program, U.S.
Department of Energy, Building
Technologies Office, 950 L’Enfant Plaza
SW, 6th Floor, Washington, DC 20024.
Telephone: (202) 287–1445. If possible,
please submit all items on a CD, in
which case it is not necessary to include
printed copies.
No telefacsimiles (‘‘faxes’’) will be
accepted.
Docket: The docket for this
rulemaking, which includes Federal
Register notices, public meeting
attendee lists and transcripts,
comments, and other supporting
documents/materials, is available for
review at www.regulations.gov. All
documents in the docket are listed in
the www.regulations.gov index.
However, not all documents listed in
the index may be publicly available,
such as information that is exempt from
public disclosure.
The docket web page can be found at
www.regulations.gov/docket/EERE2022-BT-STD-0015. The docket web
page contains instructions on how to
access all documents, including public
comments, in the docket.
FOR FURTHER INFORMATION CONTACT:
Mr. Lucas Adin, U.S. Department of
Energy, Office of Energy Efficiency and
Renewable Energy, Building
Technologies Office, EE–5B, 1000
Independence Avenue SW, Washington,
DC 20585–0121. Telephone: (202) 287–
5904. Email: ApplianceStandards
Questions@ee.doe.gov.
Mr. Eric Stas, U.S. Department of
Energy, Office of the General Counsel,
GC–33, 1000 Independence Avenue SW,
Washington, DC 20585–0121.
Telephone: (202) 586–4798. Email:
Eric.Stas@hq.doe.gov.
For further information on how to
submit a comment or review other
public comments and the docket,
contact the Appliance and Equipment
Standards Program staff at (202) 287–
1445 or by email: ApplianceStandards
Questions@ee.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Direct Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
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II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for
ACUACs and ACUHPs
3. 2022–2023 ASRAC ACUAC/HP Working
Group Recommended Standard Levels
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure and Metrics
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and
Consumers
b. Savings in Operating Costs Compared To
Increase in Price (LCC and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of
Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
IV. Methodology and Discussion of Related
Comments
A. Market and Technology Assessment
1. Equipment Classes
2. Market Post-2023
3. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Levels in Terms of Existing
Metrics
a. Baseline Efficiency
b. Higher Efficiency Levels
2. Efficiency Levels in Terms of New
Metrics
a. IVEC
b. IVHE
3. Energy Modeling
4. Impact of Low-GWP Refrigerants
5. Cost Analysis
a. MPC Estimates
b. MSP Estimates, Manufacturer Markup,
and Shipping Costs
6. Cost-Efficiency Results
D. Markups Analysis
1. Distribution Channels
2. Markups and Sales Tax
E. Energy Use Analysis
1. System-Level Calculations
2. Generalized Building Sample
3. Energy Use Adjustment Factors
4. Comments
F. Life-Cycle Cost and Payback Period
Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the NoNew-Standards Case
9. Payback Period Analysis
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G. Shipments Analysis
1. New Shipments
2. Replacement Shipments
3. Stock Calculation
4. Comments
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Capital and Product Conversion Costs
d. Manufacturer Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in
DOE’s Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas
Emissions
a. Social Cost of Carbon Dioxide
b. Social Cost of Methane and Nitrous
Oxide
c. Sensitivity Analysis Using EPA’s New
SC–GHG Estimates
2. Monetization of Other Emissions
Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy
Savings
1. Economic Impacts on Individual
Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs
and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of
Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs
Considered for ACUACs and ACUHPs
Standards
2. Annualized Benefits and Costs of the
Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866,
13563, and 14094
B. Review Under the Regulatory Flexibility
Act
C. Review Under the Paperwork Reduction
Act of 1995
D. Review Under the National
Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
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G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
The Energy Policy and Conservation
Act, Public Law 94–163, as amended
(‘‘EPCA’’),1 authorizes DOE to regulate
the energy efficiency of a number of
consumer products and certain
industrial equipment. (42 U.S.C. 6291–
6317, as codified) Title III, Part C 2 of
EPCA established the Energy
Conservation Program for Certain
Industrial Equipment. (42 U.S.C. 6311–
6317) This covered equipment includes
small, large, and very large commercial
package air conditioning and heating
equipment. (42 U.S.C. 6311(1)(B)–(D))
Such equipment includes as equipment
categories air-cooled commercial
unitary air conditioners with a rated
cooling capacity greater than or equal to
65,000 Btu/h (‘‘ACUACs’’) and aircooled commercial unitary heat pumps
with a rated cooling capacity greater
than or equal to 65,000 Btu/h
(‘‘ACUHPs’’), which are the subject of
this rulemaking.3 The current energy
conservation standards are found in the
Code of Federal Regulations (‘‘CFR’’) at
10 CFR 431.97(b).
In accordance with the authority
provided by 42 U.S.C. 6295(p)(4) and 42
U.S.C. 6316(b)(1), DOE is issuing this
direct final rule amending the energy
conservation standards for ACUACs and
ACUHPs.4 The amended standards
levels outlined in this document reflect
the culmination of a negotiated
rulemaking that included the following
1 All references to EPCA in this document refer
to the statute as amended through the Energy Act
of 2020, Public Law 116–260 (Dec. 27, 2020), which
reflect the last statutory amendments that impact
Parts A and A–1 of EPCA.
2 For editorial reasons, upon codification in the
U.S. Code, Part C was re-designated Part A–1.
3 While ACUACs and ACUHPs with rated cooling
capacity less than 65,000 Btu/h are included in the
broader category of commercial unitary air
conditioners and heat pumps (‘‘CUACs and
CUHPs’’), they are not addressed in this direct final
rule. The standards for ACUACs and ACUHPs with
rated cooling capacity less than 65,000 Btu/h have
been addressed in a separate rulemaking (see
Docket No. EERE–2022–BT–STD–0008).
Accordingly, all references within this direct final
rule to ACUACs and ACUHPs exclude equipment
with rated cooling capacity less than 65,000 Btu/h.
4 See 42 U.S.C. 6316(b) (applying 42 U.S.C.
6295(p)(4)) to energy conservation standard
rulemakings involving a variety of industrial
equipment, including ACUACs and ACUHPs.
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notices and stakeholder comments
thereon: May 2020 energy conservation
standards request for information (‘‘May
2020 ECS RFI’’) (85 FR 27941 (May 12,
2020); May 2022 test procedure (‘‘TP’’)/
ECS RFI (87 FR 31743 (May 25, 2022));
and the 2022 Appliance Standards and
Rulemaking Federal Advisory
Committee (‘‘ASRAC’’) commercial
unitary air conditioners and heat pumps
working group negotiations, hereinafter
referred to as ‘‘the 2023 ECS
Negotiations’’ (87 FR 45703 (July 29,
2022). Participants in the 2023 ECS
Negotiations included stakeholders
representing manufacturers, energyefficiency and environmental advocates,
States, and electric utility companies.
See section II.B.2 of this document for
a detailed history of the current
rulemaking.
The consensus reached by the
ACUAC/HP ASRAC Working Group
(hereinafter referred to as ‘‘the ACUAC/
HP Working Group’’) on amended
energy conservation standards (‘‘ECS’’)
is outlined in the ASRAC Working
Group Term Sheet (hereinafter referred
to as ‘‘the ACUAC/HP Working Group
ECS Term Sheet’’). (ASRAC Working
Group Term Sheet, Docket No. EERE–
2022–BT–STD–0015, No. 87) In
accordance with the direct final rule
provisions at 42 U.S.C. 6295(p)(4), DOE
has determined that the
recommendations contained in the
ACUAC/HP Working Group ECS Term
Sheet are compliant with 42 U.S.C.
6313(a)(6)(B). As required by EPCA,
DOE is also simultaneously publishing
a notice of proposed rulemaking
(‘‘NOPR’’) that contains identical
standards to those adopted in this direct
final rule. Consistent with the statute,
DOE is providing a 110-day public
comment period on the direct final rule.
(42 U.S.C. 6295(p)(4)(B); 42 U.S.C.
6316(b)(1))) If DOE determines that any
adverse comments received provide a
reasonable basis for withdrawal of the
direct final rule under 42 U.S.C.
6313(a)(6)(B) or any other applicable
law, DOE will withdraw the direct final
rule and continue the rulemaking under
the NOPR. (42 U.S.C. 6295(p)(4)(C); 42
U.S.C. 6316(b)(1)) See section II.A of
this document for more details on DOE’s
statutory authority.
The amended standards that DOE is
adopting in this direct final rule are the
efficiency levels recommended in the
ACUAC/HP Working Group ECS Term
Sheet (shown in Table I.1) as measured
according to DOE’s amended test
procedure for commercial unitary air
conditioners and heat pumps codified at
title 10 of the Code of Federal
Regulations (‘‘CFR’’), part 431, subpart
F, appendix A1 (‘‘appendix A1’’).
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The amended standards
recommended in the Joint Agreement
are represented as trial standard level
(‘‘TSL’’) 3 in this document (hereinafter
the ‘‘Recommended TSL’’) and are
described in section V.A of this
document. These standards apply to all
equipment listed in Table I.1 and
manufactured in, or imported into the
United States starting on January 1,
2029.
Table 1.1 Energy Conservation Standards for ACUACs and ACUHPs (Compliance
Startine: January 1, 2029)
Cooling Capacity
Subcategory
Supplementary Heating Type
AC
Electric Resistance Heating or No
Heating
All Other Types of Heating
2:65,000 Btu/hand
<135,000 Btu/h
All Types of Heating or No Heating
HP
2:240,000 Btu/h
and <760,000
Btu/h
Table I.2 summarizes DOE’s
evaluation of the economic impacts of
the adopted standards on consumers of
IVEC = 13.8
IVEC = 13.4
IVHE = 6.2
IVEC = 13.8
All Other Types of Heating
IVEC = 13.3
HP
All Types of Heating or No Heating
IVEC = 13.1
IVHE= 6.0
AC
Electric Resistance Heating or No
Heating
All Other Types of Heating
HP
A. Benefits and Costs to Consumers
IVEC = 14.3
Electric Resistance Heating or No
Heating
AC
2:135,000 Btu/h
and <240,000
Btu/h
Minimum
Efficiency
All Types of Heating or No Heating
ACUACs and ACUHPs, as measured by
the average life-cycle cost (‘‘LCC’’)
savings and the simple payback period
(‘‘PBP’’).5 The average LCC savings are
positive for all equipment classes, and
IVEC = 12.9
IVEC = 12.2
IVEC = 12.1
IVHE= 5.8
the PBP is less than the average lifetime
of the equipment, which is estimated to
be 21–30 years, depending on
equipment class (see sections IV.F and
V.B.1 of this document).
Table 1.2 Impacts of Adopted Energy Conservation Standards on Consumers of
ACUACs
Average LCC Savings
(2022$)
Equipment Class
Simple Payback Period
(rears)
The industry net present value
(‘‘INPV’’) is the sum of the discounted
cash flows to the industry from the
reference year through the end of the
analysis period (2024–2058). Using a
real discount rate of 5.9 percent, DOE
estimates that the INPV for
manufacturers of ACUACs and ACUHPs
in the case without amended standards
is $2,653.0 million in 2022$. Under the
adopted standards, DOE estimates the
change in INPV to range from ¥7.3.
percent to ¥3.0 percent, which is
approximately ¥$193.9 million to
¥$79.5 million. In order to bring this
equipment into compliance with
amended standards, it is estimated that
industry will incur total conversion
costs of $288.0 million.
DOE’s analysis of the impacts of the
adopted standards on manufacturers is
5 The average LCC savings refer to consumers that
are affected by a standard and are measured relative
to the efficiency distribution in the no-newstandards case, which depicts the market in the
compliance year in the absence of new or amended
standards (see section IV.F.9 of this document). The
simple PBP, which is designed to compare specific
efficiency levels, is measured relative to the
baseline equipment (see section IV.C of this
document).
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B. Impact on Manufacturers
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DOE’s analysis of the impacts of the
adopted standards on consumers is
described in section IV.F of this
document.
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Small (2:65,000 Btu/hand
$1,380
5.9
<135,000 Btu/h) CUACs
Large (2:135,000 Btu/hand
$2,488
3.5
<240,000 Btu/h) CUACs
Very Large (2:240,000 Btu/hand
$6,431
1.1
<760,000 Btu/h) CUACs
Note: DOE did not conduct these analyses for ACUHPs for reasons discussed in section IV.C.3 of this
document.
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
described in sections IV.J and V.B.2 of
this document.
C. National Benefits and Costs 6
DOE’s analyses indicate that the
adopted energy conservation standards
for ACUACs and ACUHPs would save a
significant amount of energy. Relative to
the case without amended standards,
the lifetime energy savings for ACUACs
and ACUHPs purchased in the 30-year
period that begins in the anticipated
year of compliance with the amended
standards (2029–2058), amount to 5.5
quadrillion British thermal units
(‘‘Btu’’), or quads.7 This represents a
savings of 10.0 percent relative to the
energy use of this equipment in the case
without amended standards (referred to
as the ‘‘no-new-standards case’’).
The cumulative net present value
(‘‘NPV’’) of total consumer benefits of
the standards for ACUACs and ACUHPs
ranges from $4.39 billion (at a 7-percent
discount rate) to $15.30 billion (at a 3percent discount rate). This NPV
expresses the estimated total value of
future operating-cost savings minus the
estimated increased equipment and
installation costs for ACUACs and
ACUHPs purchased in 2029–2058.
In addition, the adopted standards for
ACUACs and ACUHPs are projected to
yield significant environmental benefits.
DOE estimates that the adopted
standards will result in cumulative
emission reductions (over the same
period as for energy savings) of 108.7
million metric tons (‘‘Mt’’) 8 of carbon
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6 All monetary values in this document are
expressed in 2022 dollars and, where appropriate,
are discounted to 2022 unless explicitly stated
otherwise.
7 The quantity refers to full-fuel-cycle (‘‘FFC’’)
energy savings. FFC energy savings includes the
energy consumed in extracting, processing, and
transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more
complete picture of the impacts of energy efficiency
standards. For more information on the FFC metric,
see section IV.H.2 of this document.
8 A metric ton is equivalent to 1.1 short tons.
Results for emissions other than CO2 are presented
in short tons.
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dioxide (‘‘CO2’’), 25.3 thousand tons of
sulfur dioxide (‘‘SO2’’), 185.1 thousand
tons of nitrogen oxides (‘‘NOX’’), 845.6
thousand tons of methane (‘‘CH4’’), 0.8
thousand tons of nitrous oxide (‘‘N2O’’),
and 0.2 tons of mercury (‘‘Hg’’).9 The
estimated cumulative reduction in CO2
emissions through 2030 amounts to 0.32
Mt, which is equivalent to the emissions
resulting from the annual electricity use
of more than 0.23 million homes.
DOE estimates the value of climate
benefits from a reduction in greenhouse
gases (‘‘GHG’’) using four different
estimates of the social cost of CO2 (‘‘SC–
CO2’’), the social cost of methane (‘‘SC–
CH4’’), and the social cost of nitrous
oxide (‘‘SC–N2O’’). Together these
represent the social cost of GHG (‘‘SC–
GHG’’). DOE used interim SC–GHG
values (in terms of benefit per ton of
GHG avoided) developed by an
Interagency Working Group on the
Social Cost of Greenhouse Gases
(‘‘IWG’’).10 The derivation of these
values is discussed in section IV.L of
this document. For presentational
purposes, the climate benefits
associated with the average SC–GHG at
a 3-percent discount rate are estimated
to be $4.9 billion. DOE does not have a
single central SC–GHG point estimate,
and it emphasizes the value of
considering the benefits calculated
9 DOE calculated emissions reductions relative to
the no-new-standards-case, which reflects key
assumptions in the Annual Energy Outlook 2023
(‘‘AEO 2023’’). AEO 2023 reflects, to the extent
possible, laws and regulations adopted through
mid-November 2022, including the Inflation
Reduction Act. See section IV.K of this document
for further discussion of AEO 2023 assumptions
that affect air pollutant emissions.
10 To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates
presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG. (‘‘February
2021 SC–GHG TSD’’) (available at:
www.whitehouse.gov/wp-content/uploads/2021/02/
TechnicalSupportDocument_
SocialCostofCarbonMethaneNitrousOxide.pdf) (last
accessed Dec. 4, 2023).
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using all four sets of SC–GHG estimates.
DOE is presenting monetized benefits of
GHG emissions reductions in
accordance with the applicable
Executive Orders, and DOE would reach
the same conclusion presented in this
rule in the absence of the estimated
benefits from reductions in GHG
emissions.
DOE also estimated the monetized
health benefits of SO2 and NOX
emissions reductions associated with
energy savings, using benefit-per-ton
estimates from the U.S. Environmental
Protection Agency,11 as discussed in
section IV.L of this document. DOE
estimates the present value of the health
benefits would be $3.0 billion using a 7percent discount rate, and $8.8 billion
using a 3-percent discount rate.12 DOE
is currently only monetizing health
benefits from changes in ambient fine
particulate matter (‘‘PM2.5’’)
concentrations from two precursors
(SO2 and NOX), and from changes in
ambient ozone from one precursor (for
NOX), but will continue to assess the
ability to monetize other effects such as
health benefits from reductions in direct
PM2.5 emissions.
Table I.3 summarizes the monetized
benefits and costs expected to result
from the amended standards for
ACUACs and ACUHPs. There are other
important unquantified effects,
including certain unquantified climate
benefits, unquantified public health
benefits from the reduction of toxic air
pollutants and other emissions,
unquantified energy security benefits,
and distributional effects, among others.
BILLING CODE 6450–01–P
11 U.S. EPA, Estimating the Benefit per Ton of
Reducing Directly Emitted PM2.5, PM2.5 Precursors
and Ozone Precursors from 21 Sectors (available at:
www.epa.gov/benmap/estimating-benefit-tonreducing-pm25-precursors-21-sectors) (last accessed
Dec. 4, 2023).
12 DOE estimates the economic value of these
emissions reductions resulting from the considered
TSLs for the purpose of complying with the
requirements of Executive Order (‘‘E.O.’’) 12866.
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Table 1.3 Summary of Monetized Benefits and Costs of Adopted Energy
Conservation Standards for ACUACs and ACUHPs (TSL 3)
Billion $2022
3% discount rate
Consumer Operating Cost Savings
23.89
Climate Benefits*
4.86
Health Benefits**
8.84
Total Benefitst
37.59
Consumer Incremental Equipment Costst
8.59
Net Benefits
29.00
Change in Producer Cash Flow (INPV)tt
(0.19) - (0.08)
7% discount rate
Consumer Operating Cost Savings
8.94
Climate Benefits* (3% discount rate)
4.86
Health Benefits**
3.00
Total Benefitst
16.81
Consumer Incremental Equipment Costst
4.56
Net Benefits
12.25
(0.19) - (0.08)
Note: This table presents the costs and benefits associated with ACUACs and ACUHPs shipped during the
period 2029-2058. These results include consumer, climate, and health benefits that accrue after 2058 from
the equipment shipped during the period 2029-2058. Parentheses indicate negative values.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2),
methane (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate) (see section IV.L of this document). Together
these represent the global SC-GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3 percent discount rate are shown; however, DOE does not have
a single central SC-GHG point estimate, and it emphasizes the value of considering the benefits calculated
using all four sets of SC-GHG estimates. To monetize the benefits ofreducing GHG emissions, this
analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon,
Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
bytheIWG.
** Health benefits are calculated using benefit-per-ton values for NOx and SO2. DOE is currently only
monetizing (for SO2 and NOx) PM2.s precursor health benefits and (for NOx) ozone precursor health
benefits, but will continue to assess the ability to monetize other effects such as health benefits from
reductions in direct PM2.s emissions. See section IV.L of this document for more details.
i• Total and net benefits include those consumer, climate, and health benefits that can be quantified and
monetized. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are
presented using the average SC-GHG with 3-percent discount rate.
t Costs include incremental equipment costs as well as installation costs.
H Operating Cost Savings are calculated based on the life-cycle costs analysis and national impact analysis
as discussed in detail below. See sections IV.F and IV.Hof this document. DOE's national impacts
analysis includes all impacts (both costs and benefits) along the distribution chain beginning with the
increased costs to the manufacturer to manufacture the equipment and ending with the increase in price
experienced by the consumer. DOE also separately conducts a detailed analysis on the impacts on
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manufacturers (i.e., the manufacturer impact analysis, or "MIA"). See section IV.J of this document. In
the detailed MIA, DOE models manufacturers' pricing decisions based on assumptions regarding
investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts, which is the
rule's expected impact on the INPV. The change in INPV is the present value of all changes in industry
cash flow, including changes in production costs, capital expenditures, and manufacturer profit margins.
Change in INPV is calculated using the industry weighted-average cost of capital value of 5.9 percent that
is estimated in the MIA (see chapter 12 of the direct final rule TSD for a complete description of the
industry weighted-average cost of capital). For ACUACs and ACUHPs, the change in INPV ranges from $193.9 million to -$79.5 million. DOE accounts for that range oflikely impacts in analyzing whether a
trial standard level is economically justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin
scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost
Savings in this table; and the Preservation of Operating Profit scenario, where DOE assumed manufacturers
would not be able to increase per-unit operating profit in proportion to increases in manufacturer
production costs. DOE includes the range of estimated INPV in the above table, drawing on the MIA
explained further in section IV.J of this document, to provide additional context for assessing the estimated
impacts of this direct final rule to society, including potential changes in production and consumption,
which is consistent with OMB's Circular A-4 and E.O. 12866. IfDOE were to include the INPV into the
net benefit calculation for this direct final rule, the net benefits would range from $28.81 billion to $28.92
billion at a 3-percent discount rate and would range from $12.06 billion to $12.17 billion at a 7-percent
discount rate.
The benefits and costs of the
considered standards can also be
expressed in terms of annualized values.
The monetary values for the total
annualized net benefits are: (1) the
reduced consumer operating costs,
minus (2) the increase in equipment
purchase prices and installation costs,
plus (3) the value of climate and health
benefits of emission reductions, all
annualized.13
The national operating cost savings
are domestic private U.S. consumer
monetary savings that occur as a result
of purchasing the covered equipment
and are measured for the lifetime of
ACUACs and ACUHPs shipped in
2029–2058. The health benefits
associated with reduced emissions
achieved as a result of the adopted
standards are also calculated based on
the lifetime of ACUACs and ACUHPs
shipped in 2029–2058. Total benefits for
both the 3-percent and 7-percent cases
are presented using the average GHG
social costs with 3-percent discount
rate.14 Estimates of SC–GHG values are
presented for all four discount rates in
section V.B of this document.
Table I.4 presents the total estimated
monetized benefits and costs associated
with the adopted standard, expressed in
terms of annualized values. The results
under the primary estimate are as
follows.
Using a 3-percent discount rate for all
benefits and costs, the estimated cost of
the adopted standards is $493.2 million
per year in increased equipment costs,
while the estimated annual benefits are
$1,371.6 million in reduced equipment
operating costs, $279.2 million in
climate benefits, and $507.9 million in
health benefits. In this case, the net
benefit would amount to $1.7 billion per
year.
Using a 7-percent discount rate for
consumer benefits and costs and health
benefits from reduced NOx and SO2
emissions, and the 3-percent discount
rate case for climate benefits from
reduced GHG emissions, the estimated
cost of the standards adopted in this
rule is $481.3 million per year in
increased equipment costs, while the
estimated annual benefits are $944.7
million in reduced equipment operating
costs, $279.2 million in climate benefits,
and $317.2 million in health benefits. In
this case, the net benefit amounts to
$1.1 billion per year.
13 To convert the time-series of costs and benefits
into annualized values, DOE calculated a present
value in 2024, the year used for discounting the
NPV of total consumer costs and savings. For the
benefits, DOE calculated a present value associated
with each year’s shipments in the year in which the
shipments occur (e.g., 2030), and then discounted
the present value from each year to 2024. Using the
present value, DOE then calculated the fixed annual
payment over a 30-year period, starting in the
compliance year, that yields the same present value.
14 As discussed in section IV.L.1 of this
document, DOE agrees with the IWG that using
consumption-based discount rates (e.g., 3 percent)
is appropriate when discounting the value of
climate impacts. Combining climate effects
discounted at an appropriate consumption-based
discount rate with other costs and benefits
discounted at a capital-based rate (e.g., 7 percent)
is reasonable because of the different nature of the
types of benefits being measured.
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Table 1.4 Annualized Benefits and Costs of Adopted Standards for ACUACs and
ACUHPs (TSL 3)
Million 2022$/year
Low-NetBenefits
Estimate
High-NetBenefits
Estimate
1,371.6
1,332.2
1,403.0
Climate Benefits*
279.282.8
279.282.8
279.282.8
Health Benefits**
507.9
507.9
507.9
2,158.7
2,119.2
2,190.0
493.2
529.3
415.2
1,665.5
1,590.0
1,774.9
Primary
Estimate
3% discount rate
Consumer Operating Cost Savings
Total Benefits·!·
Consumer Incremental Equipment
Costs:t
Net Benefits
(13)- (5)
Change in Producer Cashflow (INPV)tt
7% discount rate
Consumer Operating Cost Savings
944.7
918.8
966.6
Climate Benefits* (3% discount rate)
279.2
279.2
279.2
Health Benefits**
317.1
317.1
317.1
1,541.0
1,515.1
1,562.9
481.3
511.6
414.3
1,059.7
1,003.5
1,148.7
Total Benefitst
Consumer Incremental Equipment
Costs:t
Net Benefits
(13)- (5)
Change in Producer Cashtlow (INPV)ll
Note: This table presents the costs and benefits associated with ACUACs and ACUHPs shipped in 2029-2058. These
results include consumer, climate, and health benefits that accrue after 2058 from the products shipped in 2029-2058.
The Primary, Low-Net-Benefits, and High-Net-Benefits Estimates utilize projections of energy prices from the
AE02023 Reference case, Low-Economic-Growth case, and High-Economic-Growth case, respectively. In addition,
incremental equipment costs reflect a constant rate in the Primary Estimate, an increasing rate in the Low-Net-Benefits
Estimate, and a decreasing rate in the High-Net-Benefits Estimate. The methods used to derive projected price trends
are explained in sections IV.F. l and IV.H.3 of this document. Note that the Benefits and Costs may not sum to the Net
Benefits due to rounding. Parentheses indicate negative values.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section N.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a 3percent discount rate are shown, but DOE does not have a single central SC-GHG point estimate, and it emphasizes the
value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of
reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social
Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOx and SO2. DOE is currently only monetizing (for
SO2 and NOx) PM2.s precursor health benefits and disbenefits (for NOx) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.s
emissions. See section IV.L of this document for more details.
t Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent
discount rate, but DOE does not have a single central SC-GHG point estimate.
Costs include incremental equipment costs as well as installation costs.
U Operating Cost Savings are calculated based on the life-cycle costs analysis and national impact analysis as
discussed in detail below. See sections IV.F and IV.Hof this document. DOE's national impacts analysis includes all
impacts (both costs and benefits) along the distribution chain beginning with the increased costs to the manufacturer to
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t
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
44059
manufacture the equipment and ending with the increase in price experienced by the consumer. DOE also separately
conducts a detailed analysis on the impacts on manufacturers (i.e., the manufacturer impact analysis, or "MIA"). See
section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on
assumptions regarding investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts,
which is the rule's expected impact on the INPV. The change in INPV is the present value of all changes in industry
cash flow, including changes in production costs, capital expenditures, and manufacturer profit margins. The
annualized change in INPV is calculated using the industry weighted-average cost of capital value of 5.9 percent that is
estimated in the MIA (see chapter 12 of the direct final rule TSD for a complete description of the industry weighted
average cost of capital). For ACUACs and ACUHPs, the annualized change in INPV ranges from -$13 million to -$5
million. DOE accounts for that range oflikely impacts in analyzing whether a trial standard level is economically
justified. See section V.C of this document. DOE is presenting the range of impacts to the INPV under two
manufacturer markup scenarios: the Preservation of Gross Margin scenario, which is the manufacturer markup scenario
used in the calculation of Consumer Operating Cost Savings in this table; and the Preservation of Operating Profit
scenario, where DOE assumed manufacturers would not be able to increase per-unit operating profit in proportion to
increases in manufacturer production costs. DOE includes the range of estimated annualized change in INPV in the
above table, drawing on the MIA explained further in section IV.J of this document, to provide additional context for
assessing the estimated impacts of this direct final rule to society, including potential changes in production and
consumption, which is consistent with OMB's Circular A-4 and E.O. 12866. IfDOE were to include the INPV into the
annualized net benefit calculation for this direct final rule, the annualized net benefits would range from $1,652 million
to $1,660 million at a 3-percent discount rate and would range from $1,046 million to $1,054 million at a 7-percent
discount rate.
DOE’s analysis of the national impacts
of the adopted standards is described in
sections IV.H, IV.K, and IV.L of this
document.
D. Conclusion
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DOE has determined that the ACUAC/
ACUHP Working Group statement
containing recommendations with
respect to energy conservation standards
for ACUACs and ACUHPs was
submitted jointly by interested persons
that are fairly representative of relevant
points of view, in accordance with 42
U.S.C. 6295(p)(4)(A).15 After
considering the analysis and weighing
the benefits and burdens, DOE has
determined that the recommended
standards are in accordance with 42
U.S.C. 6313(a)(6)(B), which contains
criteria for adopting a uniform national
standard more stringent than the levels
contained in the American Society of
Heating, Refrigerating, and AirConditioning Engineers (‘‘ASHRAE’’)
Standard 90.1, as amended,16 for the
equipment considered in this document.
Specifically, the Secretary has
determined, supported by clear and
convincing evidence, that the adoption
of the recommended standards would
result in the significant conservation of
15 See 42 U.S.C. 6316(b) (applying 42 U.S.C.
6295(p)(4) to energy conservation standard
rulemakings involving a variety of industrial
equipment, including ACUACs and ACUHPs.
16 As discussed in section II.B.2, ASHRAE 90.1–
2019 updated the minimum efficiency levels for
ACUACs and ACUHPs to align with those adopted
by DOE in the January 2016 Direct Final Rule—i.e.,
ASHRAE 90.1–2019 includes minimum efficiency
levels that are aligned with the current Federal
energy conservation standards. The most recent
version of ASHRAE Standard 90.1, ASHRAE 90.1–
2022, includes the same minimum efficiency levels
for ACUACs and ACUHPs as ASHRAE 90.1–2019.
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energy and is technologically feasible
and economically justified. In
determining whether the recommended
standards are economically justified, the
Secretary has determined that the
benefits of the recommended standards
exceed the burdens. Namely, the
Secretary has concluded that the
recommended standards, when
considering the benefits of energy
savings, positive NPV of consumer
benefits, emission reductions, the
estimated monetary value of the
emissions reductions, and positive
average LCC savings, would yield
benefits outweighing the negative
impacts on some consumers and on
manufacturers, including the conversion
costs that could result in a reduction in
INPV for manufacturers.
Using a 7-percent discount rate for
consumer benefits and costs and NOX
and SO2 emissions reduction benefits,
and a 3-percent discount rate case for
GHG social costs, the estimated cost of
the standards for ACUACs and ACUHPs
is $481.3 million per year in increased
equipment costs, while the estimated
annual benefits are $944.7 million in
reduced equipment operating costs,
$279.2 million in climate benefits, and
$317.2 million in health benefits. The
net benefit amounts to $1.1 billion per
year. DOE notes that the net benefits are
substantial even in the absence of
climate benefits,17 and DOE would
adopt the same standards in the absence
of such benefits.
The significance of energy savings
offered by a new or amended energy
conservation standard cannot be
determined without knowledge of the
17 The information on climate benefits is provided
in compliance with Executive Order 12866.
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specific circumstances surrounding a
given rulemaking.18 For example, some
covered products and equipment have
most of their energy consumption occur
during periods of peak energy demand.
The impacts of these products on the
energy infrastructure can be more
pronounced than products with
relatively constant demand.
Accordingly, DOE evaluates the
significance of energy savings on a caseby-case basis.
As previously mentioned, the
standards are projected to result in
estimated national energy savings of 5.5
quads (FFC), the equivalent of the
primary annual energy use of 59.1
million homes. In addition, they are
projected to reduce CO2 emissions by
108.7 Mt. Based on these findings, DOE
has determined the energy savings from
the standard levels adopted in this
direct final rule are ‘‘significant’’ within
the meaning of 42 U.S.C.
6313(a)(6)(A)(ii)(II). A more detailed
discussion of the basis for these
conclusions is contained in the
remainder of this document and the
accompanying TSD.
Under the authority provided by 42
U.S.C. 6295(p)(4), DOE is issuing this
direct final rule amending the energy
conservation standards for ACUACs and
ACUHPs. Consistent with this authority,
DOE is also publishing elsewhere in this
issue of the Federal Register a NOPR
proposing standards that are identical to
those contained in this direct final rule.
(See 42 U.S.C. 6295(p)(4)(A)(i); 42
U.S.C. 6316(b)(1))
18 Procedures, Interpretations, and Policies for
Consideration in New or Revised Energy
Conservation Standards and Test Procedures for
Consumer Products and Commercial/Industrial
Equipment, 86 FR 70892, 70901 (Dec. 13, 2021).
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II. Introduction
The following section briefly
discusses the statutory authority
underlying this direct final rule, as well
as some of the relevant historical
background related to the establishment
of energy conservation standards for
ACUACs and ACUHPs.
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A. Authority
EPCA, Public Law 94–163, as
amended, authorizes DOE to regulate
the energy efficiency of certain
consumer products and industrial
equipment. Title III, Part C of EPCA,
added by Public Law 95–619, Title IV,
section 441(a) (42 U.S.C. 6311–6317, as
codified), established the Energy
Conservation Program for Certain
Industrial Equipment, which sets forth a
variety of provisions designed to
improve energy efficiency. This
equipment includes ACUACs and
ACUHPs, which are a category of small,
large, and very large commercial
package air conditioning and heating
equipment and the subject of this
rulemaking. (42 U.S.C. 6311(1)(B)–(D))
EPCA prescribed initial standards for
this equipment. (42 U.S.C. 6313(a)(1)–
(2))
Pursuant to EPCA, DOE must amend
the energy conservation standards for
certain types of commercial and
industrial equipment, including the
equipment at issue in this document,
whenever ASHRAE amends the
standard levels or design requirements
prescribed in ASHRAE Standard 90.1,
‘‘Energy Standard for Buildings Except
Low-Rise Residential Buildings’’
(‘‘ASHRAE Standard 90.1’’). DOE must
adopt the amended ASHRAE Standard
90.1 levels for these equipment
(hereafter ‘‘ASHRAE equipment’’),
unless the Secretary of Energy (‘‘the
Secretary’’) determines by rule
published in the Federal Register and
supported by clear and convincing
evidence that adoption of a morestringent uniform national standard
would result in significant additional
conservation of energy and is
technologically feasible and
economically justified. (42 U.S.C.
6313(a)(6)(A)–(B))
In addition, EPCA contains a review
requirement for this same equipment
(the six-year-lookback review), which
requires DOE to consider the need for
amended standards every six years. To
adopt more-stringent standards under
that provision, DOE must once again
have clear and convincing evidence to
show that such standards would be
technologically feasible and
economically justified and would save a
significant additional amount of energy.
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(42 U.S.C. 6313(a)(6)(C)); see id.
6313(a)(6)(A)(ii)(II) & (a)(6)(B)(i))
In deciding whether a more-stringent
standard is economically justified,
under either the provisions of 42 U.S.C.
6313(a)(6)(A) or 42 U.S.C. 6313(a)(6)(C),
DOE must determine whether the
benefits of the standard exceed its
burdens. DOE must make this
determination after receiving comments
on the proposed standard, and by
considering, to the maximum extent
practicable, the following seven factors:
(1) The economic impact of the
standard on manufacturers and
consumers of 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 standard;
(3) The total projected amount of
energy savings likely to result directly
from the standard;
(4) Any lessening of the utility or the
performance of the covered equipment
likely to result from the standard;
(5) The impact of any lessening of
competition, as determined in writing
by the Attorney General, that is likely to
result from the standard;
(6) The need for national energy
conservation; and
(7) Other factors the Secretary of
Energy considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii)(I)–(VII))
The energy conservation program
under EPCA, consists essentially of four
parts: (1) testing; (2) labeling; (3) the
establishment of Federal energy
conservation standards, and (4)
certification and enforcement
procedures. Relevant provisions of the
EPCA specifically include definitions
(42 U.S.C. 6311), energy conservation
standards (42 U.S.C. 6313), test
procedures (42 U.S.C. 6314), labeling
provisions (42 U.S.C. 6315), and the
authority to require information and
reports from manufacturers (42 U.S.C.
6316; 42 U.S.C. 6296(a), (b) and (d)).
Federal energy efficiency
requirements for covered equipment
established under EPCA generally
supersede State laws and regulations
concerning energy conservation testing,
labeling, and standards. (42 U.S.C.
6316(a) and (b); 42 U.S.C. 6297) DOE
may, however, grant waivers of Federal
preemption in limited instances for
particular State laws or regulations, in
accordance with the procedures and
other provisions set forth under EPCA.
(42 U.S.C. 6316(b)(2)(D))
Under 42 U.S.C. 6314, EPCA sets forth
the criteria and procedures DOE is
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required to follow when prescribing or
amending test procedures for covered
equipment. EPCA requires that any test
procedure prescribed or amended under
this section must be reasonably
designed to produce test results which
reflect energy efficiency, energy use, or
estimated annual operating cost of
covered equipment during a
representative average use cycle and
requires that the test procedure not be
unduly burdensome to conduct. (42
U.S.C. 6314(a)(2)) Manufacturers of
covered equipment must use the Federal
test procedures as the basis for: (1)
certifying to DOE that their equipment
complies with the applicable energy
conservation standards adopted
pursuant to EPCA (42 U.S.C. 6316(b); 42
U.S.C. 6296), and (2) making
representations about the efficiency of
that equipment (42 U.S.C. 6314(d)).
Similarly, DOE uses these test
procedures to determine whether the
equipment complies with relevant
standards promulgated under EPCA.
The current DOE test procedure for
ACUACs and ACUHPs appear at title 10
of the Code of Federal Regulations
(‘‘CFR’’), part 431, subpart F, appendix
A.
EPCA also contains what is known as
an ‘‘anti-backsliding’’ provision, which
prevents the Secretary from prescribing
any amended standard that either
increases the maximum allowable
energy use or decreases the minimum
required energy efficiency of a covered
product. (42 U.S.C. 6313(a)(6)(B)(iii)(I))
Also, the Secretary may not prescribe an
amended or new standard if interested
persons have established by a
preponderance of the evidence that the
standard is likely to result in the
unavailability in the United States in
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)(II)(aa))
Finally, the Energy Independence and
Security Act of 2007 (‘‘EISA 2007’’),
Public Law 110–140, amended EPCA, in
relevant part, to grant DOE authority to
issue a final rule (i.e., a ‘‘direct final
rule’’ or ‘‘DFR’’) establishing an energy
conservation standard upon receipt of a
statement submitted jointly by
interested persons that are fairly
representative of relevant points of view
(including representatives of
manufacturers of covered products,
States, and efficiency advocates), as
determined by the Secretary, that
contains recommendations with respect
to an energy or water conservation
standard that are in accordance with the
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provisions of 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable. (42
U.S.C. 6295(p)(4); 42 U.S.C. 6316(b)(1))
Pursuant to 42 U.S.C. 6295(p)(4), the
Secretary must also determine whether
a jointly submitted recommendation for
an energy or water conservation
standard satisfies 42 U.S.C. 6295(o) or
42 U.S.C. 6313(a)(6)(B), as applicable.
The direct final rule must be
published simultaneously with a NOPR
that proposes an energy or water
conservation standard that is identical
to the standard established in the direct
final rule, and DOE must provide a
public comment period of at least 110
days on this proposal. (42 U.S.C.
6295(p)(4)(A)–(B); 42 U.S.C. 6316(b)(1))
While DOE typically provides a
comment period of 60 days on proposed
energy conservation standards, for a
NOPR accompanying a direct final rule,
DOE provides a comment period of the
same length as the comment period on
the direct final rule—i.e. 110 days.
Based on the comments received during
this period, the direct final rule will
either become effective, or DOE will
withdraw it not later than 120 days after
its issuance if: (1) one or more adverse
comments is received, and (2) DOE
determines that those comments, when
viewed in light of the rulemaking record
related to the direct final rule, may
provide a reasonable basis for
withdrawal of the direct final rule under
42 U.S.C. 6295(o), 42 U.S.C.
6313(a)(6)(B), or any other applicable
law. (42 U.S.C. 6295(p)(4)(C); 42 U.S.C.
6316(b)(1)) Receipt of an alternative
joint recommendation may also trigger a
DOE withdrawal of the direct final rule
in the same manner. (Id.) After
withdrawing a direct final rule, DOE
must proceed with the notice of
proposed rulemaking published at the
same time as the direct final rule and
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publish in the Federal Register the
reasons why the direct final rule was
withdrawn. (Id.)
DOE has previously explained its
interpretation of its direct final rule
authority. In a final rule amending the
Department’s ‘‘Procedures,
Interpretations and Policies for
Consideration of New or Revised Energy
Conservation Standards for Consumer
Products’’ at 10 CFR part 430, subpart
C, appendix A, DOE noted that it may
issue standards recommended by
interested persons that are fairly
representative of relative points of view
as a direct final rule when the
recommended standards are in
accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable. 86
FR 70892, 70912 (Dec. 13, 2021). But the
direct final rule provision in EPCA does
not impose additional requirements
applicable to other standards
rulemakings, which is consistent with
the unique circumstances of rules
issued as consensus agreements under
DOE’s direct final rule authority. Id.
DOE’s discretion remains bounded by
its statutory mandate to adopt a
standard that results in significant
conservation of energy and is
technologically feasible and
economically justified—a requirement
found in 42 U.S.C. 6313(a)(6)(B). As
such, DOE’s review and analysis of the
Joint Agreement is limited to whether
the recommended standards satisfy the
criteria in 42 U.S.C. 6313(a)(6)(B).
Additionally, DOE notes that the
direct final rule authority in EPCA is
permissive. If DOE determines that
recommended standards satisfy the
applicable criteria, the Department
‘‘may issue a final rule.’’ (42 U.S.C.
6295(p)(4)(A)(i)) This discretion is
particularly relevant for ASHRAE
equipment where the applicable
statutory criteria require that an
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amended standard be technologically
feasible and economically justified and
result in significant conservation of
energy. (42 U.S.C. 6313(a)(6)(A)(ii)(II))
This is in contrast to the applicable
criteria for covered products and nonASHRAE equipment, where, in addition
to requiring significant conservation of
energy, an amended standard must also
represent the maximum improvement in
energy efficiency that is technologically
feasible and economically justified.
Thus, there may be situations where the
recommended standards for ASHRAE
equipment satisfy the criteria in 42
U.S.C. 6313(a)(6)(B), but do not
represent that maximum improvement
in energy efficiency that is
technologically feasible and
economically justified. In those
situations, DOE has discretion on
whether to proceed with a direct final
rule or propose its own, more-stringent
standard. In order to inform that
decision, DOE conducts its typical walkdown analysis when evaluating all
direct final rules, including those for
ASHRAE equipment. Under that
approach, DOE starts from the most
stringent possible standard (‘‘max-tech’’)
and ‘‘walks-down’’ through the TSLs
until arriving at the first TSL that meets
all of the statutory criteria.
B. Background
1. Current Standards
In a direct final rule published in the
Federal Register on January 15, 2016
(‘‘January 2016 Direct Final Rule’’), DOE
prescribed the current energy
conservation standards for ACUACs and
ACUHPs manufactured on and after
January 1, 2023. 81 FR 2420. These
standards are set forth in DOE’s
regulations at 10 CFR 431.97(b) and are
repeated in Table II.1.
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Table 11.1 Federal Enerev Conservation Standards for ACUACs and ACUHPs
Small
Commercial
Packaged Air
Conditioning and
Heating
Equipment (AirCooled)
Large
Commercial
Packaged Air
Conditioning and
Heating
Equipment (AirCooled)
Very Large
Commercial
Packaged Air
Conditioning and
Heating
Equipment (AirCooled)
AC
;:::65,000 Btu/h
and <135,000
Btu/h
HP
AC
;:::135,000 Btu/h
and <240,000
Btu/h
HP
AC
;:::240,000 Btu/h
and <760,000
Btu/h
HP
2. History of Standards Rulemaking for
ACUACs and ACUHPs
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Since publication of the January 2016
Direct Final Rule, ASHRAE published
an updated version of ASHRAE
Standard 90.1 (‘‘ASHRAE 90.1–2019’’),
which updated the minimum efficiency
levels for ACUACs and ACUHPs to align
with those adopted by DOE in the
January 2016 Direct Final Rule (i.e.,
specifying two tiers of minimum levels
for ACUACs and ACUHPs, with a
January 1, 2023 compliance date for the
second tier). ASHRAE published
another version of ASHRAE Standard
90.1 in January 2023 (‘‘ASHRAE 90.1–
2022’’), which includes the same
minimum efficiency levels for ACUACs
19 The May 2020 ECS RFI also addressed
commercial warm air furnaces, a separate type of
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Supplementary Heating
Type
Minimum
Efficiency
Electric Resistance
Heating or No Heating
All Other Types of
Heating
Electric Resistance
Heating or No Heating
IEER= 14.6
All Other Types of
Heating
IEER= 13.9
COP= 3.4
IEER= 14.8
IEER= 14.1
COP= 3.4
Electric Resistance
Heating or No Heating
All Other Types of
Heating
Electric Resistance
Heating or No Heating
IEER = 14.0
All Other Types of
Heating
IEER= 13.3
COP= 3.3
IEER = 14.2
IEER= 13.5
COP= 3.3
Electric Resistance
Heating or No Heating
All Other Types of
Heating
Electric Resistance
Heating or No Heating
IEER= 13.0
All Other Types of
Heating
IEER = 12.3
COP= 3.2
IEER= 13.2
IEER= 12.5
COP= 3.2
and ACUHPs as those included in
ASHRAE Standard 90.1–2019.
On May 12, 2020, DOE began its sixyear-lookback review with for ACUACs
and ACUHPs by publishing in the
Federal Register the May 2020 ECS
RFI.19 85 FR 27941. The May 2020 ECS
RFI sought information to help DOE
inform its decisions, consistent with its
obligations under EPCA. DOE received
multiple comments from interested
stakeholders in response to the May
2020 ECS RFI, which prompted DOE to
publish the May 2022 TP/ECS RFI in the
Federal Register on May 25, 2022, to
investigate additional aspects of the
ACUAC and ACUHP TP and standards.
87 FR 31743. In the latter document,
DOE identified several issues that it
determined would benefit from further
comment. DOE discussed these topics
(including any comments received in
response to the May 2020 ECS RFI that
are related to these topics) in the May
2022 TP/ECS RFI. Once again, DOE
received a number of written comments
from interested parties related to
standards for CUACs and CUHPs in
response to the May 2020 ECS RFI and
the May 2022 TP/ECS RFI. DOE
considered these comments in
preparation of this direct final rule.
Table II.2 and Table II.3 list the
stakeholders whose comments were
related to standards for ACUACs and
ACUHPs and have been considered in
this rulemaking. Relevant comments,
and DOE’s responses, are provided in
the appropriate sections of this
document.
covered equipment which was subsequently
handled in a different rulemaking proceeding (see
Docket No. EERE–2019–BT–STD–0042 in
www.regulations.gov).
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Table 11.2 List of Commenters with Written Submissions in Response to the May
2020 ECS RFI Relevant to ACUAC and ACUHP Standards (Excluding DoubleDuct Systems)
Commenter(s)
Abbreviation
Commenter Type
Air-Conditioning, Heating, and Refrigeration Institute
ARRI
Manufacturer Trade
Association
ASAP, ACEEE, et al.
Efficiency
Advocacy
Organizations, State
Agency
CAIOUs
Utilities
Carrier
Manufacturer
Goodman
Manufacturer
Policy Integrity
Other Stakeholder
Lennox International Inc.
Lennox
Northwest Energy Efficiency Alliance
NEEA
Appliance Standards Awareness Project, American
Council for an Energy Efficient Economy, California
Energy Commission, Natural Resources Defense
Council, and Northeast Energy Efficiency
Partnerships
California Investor-Owned Utilities
Carrier Corporation
Goodman Manufacturing Company, L.P.
Institute for Policy Integrity at NYU School of Law
Portland General Electric Company
PGE
Manufacturer
Efficiency
Advocacy
Organization
Utility
Trane Technologies
Trane
Manufacturer
United CoolAir Corporation
UCA
Manufacturer
Table 11.3 List of Commenters with Written Submissions in Response to the May
2022 TP/ECS RFI Relevant to ACUAC and ACUHP Standards
Air-Conditioning, Heating, and Refrigeration Institute
ARRI
Appliance Standards Awareness Project and American
Council for an Energy-Efficient Economy
ASAP andACEEE
California Investor-Owned Utilities
Manufacturer Trade
Association
Efficiency Advocacy
Organizations
CAIOUs
Utilities
Carrier Corporation
Carrier
Manufacturer
Lennox International Inc.
New York State Energy Research and Development
Authority
Lennox
Manufacturer
NYSERDA
State Agency
NEEA
Efficiency Advocacy
Organization
Northwest Energy Efficiency Alliance
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Commenter Type
A parenthetical reference at the end of
a comment quotation or paraphrase
provides the location of the item in the
public record.20 For comments received
in response to the May 2020 ECS RFI
and May 2022 TP/ECS RFI (which are
20 The parenthetical reference provides a
reference for information located in the relevant
docket for this rulemaking, which is maintained at
www.regulations.gov. The references are arranged as
follows: (commenter name, comment docket ID
number, page of that document).
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contained within two different
dockets 21), parenthetical references in
this direct final rule include the full
docket number (rather than just the
document number).
On July 29, 2022, DOE published in
the Federal Register a notice of intent
21 Comments submitted in response to the May
2020 ECS RFI are available in Docket No. EERE–
2019–BT–STD–0042. Comments submitted in
response to the May 2022 TP/ECS RFI are available
in Docket No. EERE–2022–BT–STD–0015.
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to establish a working group for
commercial unitary air conditioners and
heat pumps to negotiate proposed test
procedures and amended energy
conservation standards for this
equipment (‘‘July 2022 Notice of
Intent’’). 87 FR 45703. The ACUAC/HP
Working Group was established under
ASRAC in accordance with the Federal
Advisory Committee Act (‘‘FACA’’) (5
U.S.C. App 2) and the Negotiated
Rulemaking Act (‘‘NRA’’) (5 U.S.C. 561–
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570, Pub. L. 104–320). The purpose of
the ACUAC/HP Working Group was to
discuss, and if possible, reach
consensus on recommended
amendments to the test procedures and
energy conservation standards for
ACUACs and ACUHPs. The ACUAC/HP
Working Group consisted of 14 voting
members, including DOE. (See appendix
A, Working Group Members, Document
No. 65 in Docket No. EERE–2022–BT–
STD–0015) On December 15, 2022, the
ACUAC/HP Working Group signed a
Term Sheet (‘‘ACUAC/HP Working
Group TP Term Sheet’’) of
recommendations regarding ACUAC
and ACUHP test procedures, including
two new efficiency metrics: integrated
ventilation, economizing, and cooling
(‘‘IVEC’’) and integrated ventilation and
heating efficiency (‘‘IVHE’’). (See Id.)
The ACUAC/HP Working Group met
five times to discuss energy
conservation standards for ACUACs and
ACUHPs. These meetings took place on
February 22–23, March 21–22, April 12–
13, April 26–27, and May 1, 2023. As a
result of these efforts, the ACUAC/HP
Working Group successfully reached
consensus on recommended energy
conservation standards in terms of the
new IVEC and IVHE metrics for CUACs
and CUHPs. On May 1, 2023, the
ACUAC/HP Working Group signed the
ACUAC/HP Working Group ECS Term
Sheet outlining its recommendations
which ASRAC approved on October 17,
2023. These recommendations are
discussed further in section II.B.3 of this
direct final rule.22
3. 2022–2023 ASRAC ACUAC/HP
Working Group Recommended Standard
Levels
This section summarizes the standard
levels recommended in the Term Sheet
submitted by the ACUAC/HP Working
Group for ACUAC/HP energy
conservation standards and the
subsequent procedural steps taken by
DOE. Recommendation #1 of the
ACUAC/HP Working Group ECS Term
Sheet recommends standard levels for
ACUACs and ACUHPs with a
recommended compliance date of
January 1, 2029. (ASRAC Term Sheet,
No. 87 at p. 2) These recommended
standard levels are presented in Table
II.4. Recommendation #2 of the
ACUAC/HP Working Group ECS Term
Sheet recommends revising existing
certification requirements to support the
new metrics and standards presented in
Table II.4, specifically requesting that
manufacturers be required to certify the
following information publicly to DOE
for each basic model: (1) crankcase heat
wattage for each compressor stage, and
(2) 5 °F heating capacity and COP, if
applicable. DOE will address
recommendation #2 regarding
certification in a separate rulemaking.
Table 11.4 Energy Conservation Standards for ACUACs and ACUHPs
Recommended in the ACUAC/HP Working Group ECS Term Sheet
Subcategory
Supplementary Heating Type
AC
Electric Resistance Heating or No Heating
All Other Types of Heating
HP
All Types of Heating or No Heating
~135,000 Btu/h
and <240,000
Btu/h
AC
Electric Resistance Heating or No Heating
All Other Types of Heating
HP
All Types of Heating or No Heating
~240,000 Btu/h
and <760,000
Btu/h
AC
Electric Resistance Heating or No Heating
All Other Types of Heating
HP
All Types of Heating or No Heating
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~65,000 Btu/h and
<135,000 Btu/h
After carefully considering the
consensus recommendations for
amending the energy conservation
standards for ACUACs and ACUHPs
submitted by the ACUAC/HP Working
Group and adopted by ASRAC, DOE has
determined that these recommendations
are in accordance with the statutory
requirements of 42 U.S.C. 6295(p)(4)
and 42 U.S.C. 6316(b)(1) for the
issuance of a direct final rule. The
following paragraphs explain DOE’s
rationale in making this determination.
First, with respect to the requirement
that recommended energy conservation
standards be submitted by interested
persons that are fairly representative of
relevant points of view, DOE notes that
the ACUAC/HP Working Group ECS
Term Sheet was signed and submitted
by a broad cross-section of interests,
including the manufacturers who
produce the subject equipment. To
satisfy this requirement, DOE has
generally found that the group
submitting a joint statement must,
where appropriate, include larger
concerns and small businesses in the
regulated industry/manufacturer
community, energy advocates, energy
utilities, consumers, and States.
However, the Department has explained
that it will be necessary to evaluate the
meaning of ‘‘fairly representative’’ on a
case-by-case basis, subject to the
circumstances of a particular
rulemaking, to determine whether
additional parties must be part of a joint
statement beyond the required
‘‘manufacturers of covered products,
States, and efficiency advocates’’
specifically called out by EPCA at 42
U.S.C. 6295(p)(4)(A). In this case, in
addition to manufacturers, the ACUAC/
HP Working Group ECS Term Sheet also
included environmental and energyefficiency advocacy organizations, and
electric utility companies. Although
States were not direct signatories to the
ACUAC/HP Working Group ECS Term
Sheet, the ASRAC Committee approving
22 The ACUAC/HP Working Group ECS Term
Sheet is available at www.regulations.gov/
document/EERE-2022-BT-STD-0015-0087.
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Minimum
Efficiency
IVEC= 14.3
IVEC= 13.8
IVEC= 13.4
IVHE=6.2
IVEC = 13.8
IVEC = 13.3
IVEC= 13.1
IVHE=6.0
IVEC = 12.9
IVEC = 12.2
IVEC = 12.1
IVHE= 5.8
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the ACUAC/HP Working Group’s
recommendations included at least two
members representing States—one
representing the State of New York and
one representing the State of California.
As a result, DOE has determined that
these recommendations were submitted
by interested persons who are fairly
representative of relevant points of view
on this matter, including those
specifically identified by Congress:
manufacturers of covered equipment,
States, and efficiency advocates. (42
U.S.C. 6295(p)(4)(A); 42 U.S.C.
6316(b)(1))
Pursuant to 42 U.S.C. 6295(p)(4), the
Secretary must also determine whether
a jointly-submitted recommendation for
an energy or water conservation
standard satisfies 42 U.S.C. 6295(o) or
42 U.S.C. 6313(a)(6)(B), as applicable. In
making this determination, DOE
conducted an analysis to evaluate
whether the potential energy
conservation standards under
consideration achieve significant energy
savings and are technologically feasible
and economically justified. The
evaluation is similar to the
comprehensive approach that DOE
typically conducts whenever it
considers potential new or amended
energy conservation standards for a
given type of product or equipment.
DOE applies the same principles to any
consensus recommendations it may
receive to satisfy its statutory
obligations. Upon review, the Secretary
determined that the ACUAC/HP
Working Group ECS Term Sheet
comports with the standard-setting
criteria set forth under 42 U.S.C.
6313(a)(6)(B). Accordingly, the
consensus-recommended efficiency
levels were included as the
recommended TSL for ACUACs and
ACUHPs (see section V.A of this
document for description of all of the
considered TSLs). The details regarding
how the consensus-recommended TSL
complies with the standard-setting
criteria are discussed and demonstrated
in the relevant sections throughout this
document.
In sum, the Secretary has determined
that the relevant criteria under 42 U.S.C.
6295(p)(4) and 42 U.S.C. 6316(b)(1) have
been satisfied, such that it is appropriate
to adopt the consensus-recommended
amended energy conservation standards
for ACUACs and ACUHPs through this
direct final rule based on the clear and
convincing evidence discussed
throughout this final rule. Also, in
accordance with the provisions
described in section II.A of this
document, DOE is simultaneously
publishing a NOPR proposing that the
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identical standard levels contained in
this direct final rule be adopted.
III. General Discussion
A. General Comments
In response to the May 2020 ECS RFI,
DOE received multiple comments from
stakeholders generally expressing
support for DOE evaluating and
amending standards for ACUACs and
ACUHPs. (ASAP, ACEEE, et al., EERE–
2019–BT–STD–0042–0023 at p. 1; CA
IOUs EERE–2019–BT–STD–0042–0020
at p. 1; NEEA, EERE–2019–BT–STD–
0042–0024 at p. 9; PGE, EERE–2019–
BT–STD–0042–0009, pp. 1–2) ASAP,
ACEEE, et al. stated that very large
energy savings could result from
amended standards for ACUACs and
ACUHPs, citing the max-tech efficiency
levels analyzed in the January 2016
Direct Final Rule as well as the range of
efficiencies in the current market.
(ASAP, ACEEE, et al., EERE–2019–BT–
STD–0042–0023 at pp. 1–2) PGE also
asserted that standards for ACUACs
should be substantially higher than
standards for ACUHPs to incentivize
increased adoption of ACUHPs by
commercial consumers, particularly in
dual season climates where the
commenter claimed that ACUHPs
deliver higher efficiency, reduce peak
loads, and reduce greenhouse gas
emissions. (PGE, EERE–2019–BT–STD–
0042–0009 at pp. 1–2)
In response to PGE’s assertion that
standards for ACUACs should be
substantially higher than standards for
ACUHPs, DOE notes that at the
recommended TSL, the IVEC values are
marginally higher for ACUACs with all
other types of heat than for ACUHPs, as
mentioned in section IV.C.2.a, and are
unlikely on their own to incentivize
increased adoption of ACUHPs, as
discussed in section IV.G.4. At this
time, DOE does not have evidence or
information that would justify adopting
higher standards for ACUACs than
ACUHPs by a larger margin than
recommended by the ACUAC/HP
Working Group.
DOE also received comments in
response to the May 2020 ECS RFI from
several other stakeholders generally
expressing views that DOE should not
amend the existing energy conservation
standards for ACUACs and ACUHPs.
(AHRI, EERE–2019–BT–STD–0042–
0014 at p. 3; Carrier, EERE–2019–BT–
STD–0042–0013 at pp. 8, 18–19;
Lennox, EERE–2019–BT–STD–0042–
0015 at p. 1; Trane, EERE–2019–BT–
STD–0042–0016 at p. 2) More
specifically, AHRI, Carrier, Lennox, and
Trane argued that standards should not
be amended because of the burdens
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manufacturers already face, including
regulatory changes such as refrigerant
regulations, new efficiency metrics and
standards for central air conditioners
and heat pumps, and pending test
procedure and standard updates for
variable refrigerant flow equipment.
(AHRI, EERE–2019–BT–STD–0042–
0014 at p. 2; Carrier, EERE–2019–BT–
STD–0042–0013 at pp. 18–19; Lennox,
EERE–2019–BT–STD–0042–0015 at pp.
3–4, 8; Trane, EERE–2019–BT–STD–
0042–0016 at p. 2) Commenters also
asserted that the impacts associated
with the 2023 standards could not be
assessed at the time of submitting their
comments because the standards had
yet to take effect, and therefore,
considering new standards prior to 2023
would be premature. (AHRI, EERE–
2019–BT–STD–0042–0014 at p. 3;
Carrier, EERE–2019–BT–STD–0042–
0013 at p. 8, Lennox, EERE–2019–BT–
STD–0042–0015 at pp. 2–3; Trane,
EERE–2019–BT–STD–0042–0016 at p.
2) Lennox also asserted that future
market uncertainties are compounded
by the COVID19 pandemic. (Lennox,
EERE–2019–BT–STD–0042–0015 at p.
2)
DOE acknowledges that at the time of
the May 2020 ECS RFI, compliance was
not yet required for the second tier of
energy conservation standards adopted
in the January 2016 Direct Final Rule,
which had a compliance date of January
1, 2023. However, the ACUAC/HP
Working Group meetings to negotiate
recommended energy conservation
standard levels and the subsequent
agreement outlined in the ACUAC/HP
Working Group ECS Term Sheet
occurred after January 1, 2023. Further,
the analyses of amended energy
conservation standards conducted by
DOE as part of the 2023 ECS
Negotiations were based on the ACUAC/
HP market after the 2023 compliance
date. DOE notes that despite the
concerns raised regarding cumulative
regulatory burden and impacts to the
market due to the COVID 19 pandemic,
Carrier, Lennox, and Trane (as members
of the ACUAC/HP Working Group)
voted in favor of the recommended
standard levels. Additionally, AHRI
subsequently supported efforts for a
negotiated rulemaking to amend
standards in comments received in
response to the May 2022 TP/ECS RFI,
demonstrating AHRI’s position on this
issue changed. (AHRI, EERE–2022–BT–
STD–0015–0008 at p. 1) Therefore, DOE
surmises that those commenters’
original positions on this topic changed
since the time of the May 2020 ECS RFI.
In response to the May 2020 ECS RFI,
AHRI asserted that among ACUACs and
ACUHPs, the only equipment category
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for which DOE is statutorily required to
review amended standards under the
six-year-lookback rulemaking is doubleduct systems, based on the fact that the
2023 standards adopted in the January
2016 Direct Final Rule had not yet come
into effect. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 3) DOE disagrees
with AHRI’s reading of the statute. The
six-year-lookback provision does not
reference compliance dates. (See 42
U.S.C. 6313(a)(6)(C)(1)) The plain
language of EPCA requires DOE to
evaluate amended standards for
ACUACs and ACUHPs ‘‘every 6 years’’
regardless of compliance dates of any
amended standards from previous
rulemakings. (Id.) In this rulemaking,
DOE has evaluated the potential for
amended standards for ACUACs and
ACUHPs (except for double-duct
systems, as discussed in section III.B of
this document) pursuant to its statutory
obligations.
In response to the May 2022 TP/ECS
RFI, Lennox highlighted the
preparations manufacturers are
undergoing to implement the 2023
energy conservation standards, as well
as the pending transition to lower global
warming potential (‘‘GWP’’) refrigerants
in 2025. (Lennox, EERE–2022–BT–STD–
0015–0009 at p. 2) Lennox
recommended that DOE exercise
caution with energy conservation
standard amendments for ACUAC and
ACUHP equipment because
manufacturers need time to assess the
impacts of an amended test procedure
before DOE assesses amending energy
conservations standards. (Id.)
Specifically, Lennox recommended a
180-day period for manufacturers to
assess the test procedure before the DOE
moves forward with energy
conservation standards based on the
provisions of 10 CFR part 430, subpart
C, appendix A. (Id. at pp. 5–6)
As discussed previously, DOE notes
that at the time of the May 2022 TP/ECS
RFI, compliance was not yet required
with the second tier of energy
conservation standards adopted in the
January 2016 Direct Final Rule.
However, the ACUAC/HP Working
Group meetings and subsequent
ACUAC/HP Working Group ECS Term
Sheet agreement occurred after
compliance became required with the
most recent standards (January 1, 2023),
and the analyses of amended energy
conservation standards conducted by
DOE as part of the 2023 ECS
Negotiations were based on the ACUAC/
HP market after the 2023 compliance
date. DOE notes that after the agreement
on the ACUAC/HP Working Group TP
Term Sheet, industry members in the
ACUAC/HP Working Group conducted
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simulations to approximate where many
models currently on the market would
fall in terms of the new IVEC and IVHE
metrics. These simulations were shared
with a DOE contractor and were used in
the 2023 ECS Negotiations. DOE also
notes that Lennox was a member of the
ACUAC/HP Working Group and agreed
to the ACUAC/HP Working Group ECS
Term Sheet; therefore, DOE surmises
that Lennox’s original position on this
topic changed since the time of the May
2022 TP/ECS RFI.
B. Scope of Coverage
This direct final rule applies to
ACUACs and ACUHPs with a rated
cooling capacity greater than or equal to
65,000 Btu/h (excluding double-duct air
conditioners and heat pumps), which is
the scope of equipment addressed in the
2023 ECS Negotiations.
In the May 2020 ECS RFI, DOE
requested comment on several topics
related to double-duct systems. 85 FR
27941, 27943–27953 (May 12, 2020).
DOE received comments regarding
double-duct systems from multiple
stakeholders in response to the May
2020 ECS RFI. (Carrier, EERE–2019–BT–
STD–0042–0013, pp. 2, 8, 10; AHRI,
EERE–2019–BT–STD–0042–0014 at pp.
3–8, 11; UCA, EERE–2019–BT–STD–
0042–0008, Attachment 2) Double-duct
systems are a sub-category of ACUACs
and ACUHPs with a separate definition
(10 CFR 431.92), metrics, and efficiency
requirements (10 CFR 431.97).
As noted, the scope of proposed
standards in the ACUAC/HP Working
Group ECS Term Sheet was determined
through the 2023 ECS Negotiations and
excludes double-duct air conditioners
and heat pumps. Therefore, comments
regarding energy conservation standards
for double-duct systems are outside the
scope of consideration for this
rulemaking. Topics related to energy
conservation standards for double-duct
systems will be addressed in a separate
rulemaking process.
See section IV.A.1 of this document
for discussion of the equipment classes
analyzed in this direct final rule.
C. Test Procedure and Metrics
EPCA sets forth generally applicable
criteria and procedures for DOE’s
adoption and amendment of test
procedures. (42 U.S.C. 6314)
Manufacturers of covered equipment
must use these test procedures to certify
to DOE that their equipment complies
with applicable energy conservation
standards (42 U.S.C. 6316(b)(1); 42
U.S.C. 6296) and when making
representations about the efficiency of
their equipment (42 U.S.C. 6314(d)).
Similarly, DOE uses these test
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procedures to determine whether the
equipment complies with the relevant
standards promulgated under EPCA. (42
U.S.C. 6314(d)) DOE’s current energy
conservation standards are expressed in
terms of IEER for the cooling efficiency
of ACUACs and ACUHPs, and in terms
of COP for the heating efficiency of
ACUHPs. (See 10 CFR 431.97(b))
As previously mentioned, the
ACUAC/HP Working Group met several
times and put forth the ACUAC/HP
Working Group TP Term Sheet of
recommendations regarding ACUAC
and ACUHP test procedures, including
new metrics IVEC and IVHE. DOE
recently adopted the IVEC and IVHE
metrics in a final rule amending the test
procedure for ACUACs and ACUHPs.23
The newly adopted DOE test procedure
for ACUACs and ACUHPs appears at 10
CFR part 431, subpart F, appendix A1
(appendix A1). This direct final rule
adopts amended energy conservation
standards for ACUACs and ACUHPs
denominated in terms of the new IVEC
and IVHE metrics.
DOE notes that a change in metrics
(i.e., from IEER to IVEC and from COP
to IVHE) necessitates an initial DOE
determination that the new requirement
would not result in backsliding when
compared to the current standards. (See
42 U.S.C 6313(a)(6)(B)(iii)(I)) The
translation of the current standards to
IVEC and IVHE baselines is discussed
further in section IV.C.2 of this
document.
D. Technological Feasibility
1. General
In each energy conservation standards
rulemaking, DOE conducts a screening
analysis based on information gathered
on all current technology options and
prototype designs that could improve
the efficiency of the products or
equipment that are the subject of the
rulemaking. As the first step in such an
analysis, DOE develops a list of
technology options for consideration in
consultation with manufacturers, design
engineers, and other interested parties.
DOE then determines which of those
means for improving efficiency are
technologically feasible. DOE considers
technologies incorporated in
commercially-available products or in
working prototypes to be
technologically feasible. See generally
10 CFR 431.4; 10 CFR part 430, subpart
C, appendix A, sections 6(b)(3)(i) and
7(b)(1) (‘‘appendix A’’).
After DOE has determined that
particular technology options are
23 The final rule amending the test procedure can
be found at www.regulations.gov under docket
number EERE–2023–BT–TP–0014.
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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; (3) adverse impacts on
health or safety and (4) unique-pathway
proprietary technologies. Section IV.B of
this document discusses the results of
the screening analysis for ACUACs and
ACUHPs, particularly the designs DOE
considered, those it screened out, and
those that are the basis for the standards
considered in this rulemaking. For
further details on the screening analysis
for this rulemaking, see chapter 4 of the
direct final rule technical support
document (‘‘TSD’’).
2. Maximum Technologically Feasible
Levels
When DOE adopts a new or amended
standard for a type or class of covered
equipment, it determines 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 ACUACs and ACUHPs,
using the design parameters for the most
efficient products available on the
market or in working prototypes. The
max-tech levels that DOE determined
for this rulemaking are described in
section IV.C of this direct final rule and
in chapter 5 of the direct final rule TSD.
E. Energy Savings
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1. Determination of Savings
For each TSL, DOE projected energy
savings from application of the TSL to
ACUACs and ACUHPs purchased in the
30-year period that begins in the year of
compliance with the amended standards
(2029–2058).24 The savings are
measured over the entire lifetime of the
subject equipment purchased in the 30year analysis period. DOE quantified the
energy savings attributable to each TSL
as the difference in energy consumption
between each standards case and the nonew-standards case. The no-newstandards case represents a projection of
energy consumption that reflects how
the market for equipment would likely
evolve in the absence of amended
energy conservation standards.
24 Each TSL is composed of specific efficiency
levels for each equipment class. The TSLs
considered for this direct final rule are described in
section V.A of this document. DOE also presents a
sensitivity analysis that considers impacts for
equipment shipped in a nine-year period.
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DOE used its national impact analysis
(‘‘NIA’’) computer models to estimate
national energy savings (‘‘NES’’) from
potential amended standards for
ACUACs and ACUHPs. The NIA
computer model (described in section
IV.H of this document) calculates energy
savings in terms of site energy, which is
the energy directly consumed by
equipment at the locations where they
are used. For electricity, DOE reports
national energy savings in terms of
primary energy savings, which is the
savings in the energy that is used to
generate and transmit the site
electricity. For natural gas, the primary
energy savings are considered to be
equal to the site energy savings. DOE
also calculates NES in terms of FFC
energy savings. The FFC metric includes
the energy consumed in extracting,
processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum
fuels), and, thus, presents a more
complete picture of the impacts of
energy conservation standards.25 DOE’s
approach is based on the calculation of
an FFC multiplier for each of the energy
types used by covered products or
equipment. For more information on
FFC energy savings, see section IV.H.2
of this document.
2. Significance of Savings
To adopt any new or amended
standards for covered equipment more
stringent than those set forth in
ASHRAE Standard 90.1 or the existing
Federal standard (as applicable in the
context of the specific rulemaking), DOE
must have clear and convincing
evidence that such action would result
in significant additional energy savings.
(See 42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C.
6313(a)(6)(A)(ii)(II)) 26
The significance of energy savings
offered by a new or amended energy
conservation standard cannot be
determined without knowledge of the
25 The FFC metric is discussed in DOE’s
statement of policy and notice of policy
amendment. 76 FR 51282 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
26 In setting a more-stringent standard for
ASHRAE equipment, DOE must have ‘‘clear and
convincing evidence’’ that doing so ‘‘would result
in significant additional conservation of energy’’ in
addition to being technologically feasible and
economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) This language indicates that
Congress had intended for DOE to ensure that, in
addition to the savings from the ASHRAE
standards, DOE’s standards would yield additional
energy savings that are significant. In DOE’s view,
this statutory provision shares the requirement with
the statutory provision applicable to covered
products and non-ASHRAE equipment that
‘‘significant conservation of energy’’ must be
present (42 U.S.C. 6295(o)(3)(B))—and supported
with ‘‘clear and convincing evidence’’—to permit
DOE to set a more-stringent requirement than
ASHRAE.
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specific circumstances surrounding a
given rulemaking. For example, some
covered products and equipment have
most of their energy consumption occur
during periods of peak energy demand.
The impacts of this equipment on the
energy infrastructure can be more
pronounced than equipment with
relatively constant demand.
Accordingly, DOE evaluates the
significance of energy savings on a caseby-case basis, taking into account the
significance of cumulative FFC national
energy savings, the cumulative FFC
emissions reductions, and the need to
confront the global climate crisis, among
other factors.
As stated, the standard levels adopted
in this direct final rule are projected to
result in national energy savings of 5.59
quads, the equivalent of the primary
annual energy use of 146 million homes.
Based on the amount of FFC savings, the
corresponding reduction in emissions,
and the need to confront the global
climate crisis, DOE has determined
(based on the methodology described in
section IV of this document and the
analytical results presented in section
V.B.3.a of this document) that there is
clear and convincing evidence that the
energy savings from the standard levels
adopted in this direct final rule are
‘‘significant’’ within the meaning of 42
U.S.C. 6313(a)(6)(A)(ii)(II).
F. Economic Justification
1. Specific Criteria
As noted previously, EPCA provides
seven factors to be evaluated in
determining whether a potential energy
conservation standard is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)–
(VII)) The following sections discuss
how DOE has addressed each of those
seven factors in this rulemaking.
a. Economic Impact on Manufacturers
and Consumers
EPCA requires DOE to consider the
economic impact of a potential standard
on manufacturers and the consumers of
the equipment subject to the standard.
(42 U.S.C. 6313(a)(6)(B)(ii)(I) and (C)(i))
In determining the impacts of potential
new or amended standards on
manufacturers, DOE conducts an MIA,
as discussed in section IV.J of this
document. DOE first uses an annual
cash-flow approach to determine the
quantitative impacts. This step includes
both a short-term assessment—based on
the cost and capital requirements during
the period between when a regulation is
issued and when entities must comply
with the regulation—and a long-term
assessment over a 30-year period. The
industry-wide impacts analyzed
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include: (1) INPV, which values the
industry on the basis of expected future
cash flows; (2) cash flows by year; (3)
changes in revenue and income; and (4)
other measures of impact, as
appropriate. Second, DOE analyzes and
reports the impacts on different types of
manufacturers, including impacts on
small manufacturers. Third, DOE
considers the impact of standards on
domestic manufacturer employment and
manufacturing capacity, as well as the
potential for standards to result in plant
closures and loss of capital investment.
Finally, DOE takes into account
cumulative impacts of various DOE
regulations and other regulatory
requirements on manufacturers.
For individual consumers, measures
of economic impact include the changes
in LCC and PBP associated with new or
amended standards. These measures are
discussed further in the following
section. For consumers in the aggregate,
DOE also calculates the national net
present value of the consumer costs and
benefits expected to result from
particular standards. DOE also evaluates
the impacts of potential standards on
identifiable subgroups of consumers
that may be affected disproportionately
by a standard.
dividing the change in purchase cost
due to a more-stringent standard by the
change in annual operating cost for the
year that standards are assumed to take
effect.
For its LCC and PBP analysis, DOE
assumes that consumers will purchase
the covered equipment in the first year
of compliance with new or amended
standards. The LCC savings for the
considered efficiency levels are
calculated relative to the case that
reflects projected market trends in the
absence of new or amended standards.
DOE’s LCC and PBP analysis is
discussed in further detail in section
IV.F of this document.
b. Savings in Operating Costs Compared
to Increase in Price (LCC and PBP)
EPCA requires DOE to consider the
savings in operating costs throughout
the estimated average life of the covered
equipment in the type (or class)
compared to any increase in the price
of, or in the initial charges for, or
maintenance expenses of, the covered
equipment that are likely to result from
a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(II)) DOE conducts this
comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase
price of a piece of equipment (including
its installation) and the operating cost
(including energy, maintenance, and
repair expenditures) discounted over
the lifetime of the equipment. The LCC
analysis requires a variety of inputs,
such as equipment prices, equipment
energy consumption, energy prices,
maintenance and repair costs,
equipment lifetime, and discount rates
appropriate for consumers. To account
for uncertainty and variability in
specific inputs, such as equipment
lifetime and discount rate, DOE uses a
distribution of values, with probabilities
attached to each value.
The PBP is the estimated amount of
time (in years) it takes consumers to
recover the increased purchase cost
(including installation) of more-efficient
equipment through lower operating
costs. DOE calculates the PBP by
d. Lessening of Utility or Performance of
Equipment
In establishing equipment classes and
in evaluating design options and the
impact of potential standard levels, DOE
evaluates potential standards that would
not lessen the utility or performance of
the considered equipment. (42 U.S.C.
6313(a)(6)(B)(ii)(IV)) Based on data
available to DOE, the standards adopted
in this document would not reduce the
utility or performance of the equipment
under consideration in this rulemaking.
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c. Energy Savings
Although significant additional
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 of this document, DOE uses
the NIA computer models to project
national energy savings.
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 of the United States
(‘‘Attorney General’’), that is likely to
result from a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(V)) To assist the
Department of Justice (‘‘DOJ’’) in making
such a determination, DOE will transmit
a copy of this direct final rule and the
accompanying TSD to the Attorney
General for review, with a request that
the DOJ provide its determination on
this issue. DOE will consider DOJ’s
comments on the rule contained in its
assessment letter in determining
whether to proceed with the direct final
rule. DOE will also publish and respond
to the DOJ’s comments in the Federal
Register in a separate document.
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f. Need for National Energy
Conservation
DOE also considers the need for
national energy and water conservation
in determining whether a new or
amended standard is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI))
The energy savings from the adopted
standards are likely to provide
improvements to the security and
reliability of the Nation’s energy system.
Reductions in the demand for electricity
also may result in reduced costs for
maintaining the reliability of the
Nation’s electricity system. DOE
conducts a utility impact analysis to
estimate how standards may affect the
Nation’s needed power generation
capacity, as discussed in section IV.M of
this document.
DOE maintains that environmental
and public health benefits associated
with the more efficient use of energy are
important to take into account when
considering the need for national energy
conservation. The adopted standards are
likely to result in environmental
benefits in the form of reduced
emissions of air pollutants and GHGs
associated with energy production and
use. As part of the analysis of the need
for national energy and water
conservation, DOE conducts an
emissions analysis to estimate how
potential standards may affect these
emissions, as discussed in section IV.K
of this document, and the estimated
emissions impacts are reported in
section V.B.6 of this document.27 DOE
also estimates the economic value of
emissions reductions resulting from the
considered TSLs, as discussed in
section IV.L of this document. DOE
emphasizes that the SC–GHG analysis
presented in this direct final rule and
accompanying TSD was performed in
support of the cost-benefit analyses
required by Executive Order (‘‘E.O.’’)
12866, and is provided to inform the
public of the impacts of emissions
reductions resulting from this rule.
However, the SC–GHG estimates were
not factored into DOE’s EPCA analysis
of the need for national energy and
water conservation. DOE would reach
the same conclusion presented in this
27 As discussed in section IV.L of this document,
for the purpose of complying with the requirements
of E.O. 12866, DOE also estimates the economic
value of emissions reductions resulting from the
considered TSLs. DOE calculates this estimate
using a measure of the social cost (‘‘SC’’) of each
pollutant (e.g., SC–CO2). Although this estimate is
calculated for the purpose of complying with E.O.
12866, the Seventh Circuit Court of Appeals
confirmed in 2016 that DOE’s consideration of the
social cost of carbon in energy conservation
standards rulemakings is permissible under EPCA.
Zero Zone v. United States DOE, 832 F.3d 654, 677
(7th Cir. 2016).
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rule in the absence of the estimated
benefits from reductions in GHG
emissions.
g. Other Factors
In determining whether an energy
conservation standard is economically
justified, DOE may consider any other
factors that the Secretary deems to be
relevant. (42 U.S.C.
6313(a)(6)(B)(ii)(VII)) To the extent DOE
identifies any relevant information
regarding economic justification that
does not fit into the other categories
described previously, DOE could
consider such information under ‘‘other
factors.’’
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IV. Methodology and Discussion of
Related Comments
This section addresses the analyses
DOE has performed for this rulemaking
with regard to ACUACs and ACUHPs.
Separate subsections address each
component of DOE’s analyses.
Comments on the methodology and
DOE’s responses are presented in each
section.
DOE used several analytical tools to
estimate the impact of the standards
considered in this document on
consumers and manufacturers. The first
tool is a spreadsheet that calculates the
LCC savings and PBP of potential
amended or new energy conservation
standards. The national impacts
analysis uses a second spreadsheet set
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that provides shipments projections and
calculates national energy savings and
net present value of total consumer
costs and savings expected to result
from potential energy conservation
standards. DOE uses the third
spreadsheet tool, the Government
Regulatory Impact Model (‘‘GRIM’’), to
assess manufacturer impacts of potential
standards. These three spreadsheet tools
are available on the DOE website for this
rulemaking: www1.eere.energy.gov/
buildings/appliance_standards/
standards.aspx?productid=75.
Additionally, DOE used output from the
latest version of the Energy Information
Administration’s (‘‘EIA’s’’) Annual
Energy Outlook (‘‘AEO’’) for the
emissions and utility impact analyses
(i.e., AEO 2023).
A. Market and Technology Assessment
DOE develops information in the
market and technology assessment that
provides an overall picture of the
market for the equipment concerned,
including the purpose of the equipment,
the industry structure, manufacturers,
market characteristics, and technologies
used in the equipment. This activity
includes both quantitative and
qualitative assessments, based primarily
on publicly-available information. The
subjects addressed in the market and
technology assessment for this
rulemaking include: (1) a determination
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44069
of the scope of the rulemaking and
equipment classes; (2) manufacturers
and industry structure; (3) existing
efficiency programs; (4) market and
industry trends, and (5) technologies or
design options that could improve the
energy efficiency of ACUACs and
ACUHPs. The key findings of DOE’s
market assessment are summarized in
the following sections. See chapter 3 of
the direct final rule TSD for further
discussion of the market and technology
assessment.
1. Equipment Classes
When evaluating and establishing
energy conservation standards, DOE
divides covered equipment into
equipment classes by the type of energy
used, capacity, or other performancerelated feature that would justify a
different standard. (42 U.S.C.
6313(a)(6)(B)(iii)(II))
DOE currently defines separate energy
conservation standards for twelve
ACUAC and ACUHP equipment classes
(excluding double-duct systems),
determined according to the following
performance-related features that
provide utility to the consumer: rated
cooling capacity, equipment
subcategory (air conditioner versus heat
pump), and supplementary heating
type. Table IV.1 lists the current
ACUAC and ACUHP equipment classes.
(See also 10 CFR 431.97(b))
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Table IV.1 Current ACUAC an d ACUHP E,QUI 1ment Classes
Cooling Capacity
SubCategory
AC
Small Commercial Packaged
Air-Conditioning and Heating
Equipment (Air-Cooled)
~65,000 Btu/hand
<135,000 Btu/h
HP
AC
Large Commercial Packaged
Air-Conditioning and Heating
Equipment (Air-Cooled)
~135,000 Btu/hand
<240,000 Btu/h
HP
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Very Large Commercial
Packaged Air-Conditioning and ~240,000 Btu/h and
Heating Equipment (Air<760,000 Btu/h
Cooled)
In response to the May 2020 ECS RFI,
DOE received multiple comments from
stakeholders regarding the equipment
classes for ACUACs and ACUHPs.
Several stakeholders recommended that
DOE evaluate the capacity ranges that
separate the current ACUAC and
ACUHP equipment classes, and that
DOE consider splitting the existing very
large equipment classes (i.e., 240,000 to
760,000 Btu/h) into separate equipment
classes because of the potential for
increasing stringency of standards (i.e.,
more models with efficiency
significantly above the 2023 standards)
for ACUACs and ACUHPs with
capacities at the lower end of the very
large capacity range, as compared to the
capacity range of very-large equipment
as a whole. (ASAP, ACEEE, et al.,
EERE–2019–BT–STD–0042–0023 at pp.
2–3; CA IOUs, EERE–2019–BT–STD–
0042–0020 at p. 6; NEEA, EERE–2019–
BT–STD–0042–0024 at pp. 3–5) NEEA
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AC
HP
specifically recommended splitting the
very large equipment class into two
classes: one greater than or equal to
240,000 Btu/h and less than 384,000
Btu/h, and the other greater than or
equal to 384,000 Btu/h and less than
760,000 Btu/h. (NEEA, EERE–2019–BT–
STD–0042–0024 at pp. 3–4) The CA
IOUs specifically recommended
splitting the very large equipment class
into two classes: one greater than or
equal to 240,000 Btu/h and less than
400,000 Btu/h, and the other greater
than or equal to 400,000 Btu/h and less
than 760,000 Btu/h. (CA IOUs, EERE–
2019–BT–STD–0042–0020 at p. 6)
In response, DOE notes that the
stakeholders that recommended
splitting the existing very large
equipment classes (ASAP, NEEA, and
CA IOUs) had representatives that were
members of the ACUAC/HP Working
Group and agreed to the
recommendations in the ACUAC/HP
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Heating Type
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
Working Group ECS Term Sheet, which
maintained the existing equipment class
capacity boundaries based upon the
capacities in the EPCA definitions of
small, large, and very large commercial
package air conditioning and heating
equipment. Consequently, DOE
concludes that the recommended energy
conservation standards and equipment
classes presented in the ACUAC/HP
Working Group ECS Term Sheet
represent those stakeholders’ latest
recommendations on equipment classes.
Additionally, the ACUAC/HP
Working Group ECS Term Sheet
combines all ACUHPs within each
capacity range into single equipment
classes regardless of supplementary
heating type, which is different from
DOE’s existing equipment class
structure (which includes separate
equipment classes in each capacity
range for: (1) ACUHPs with electric
resistance or no heating; and (2)
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ACUHPs with all other types of
heating). DOE is adopting amended
energy conservation standards in terms
of the nine equipment classes
recommended in the ACUAC/HP
44071
Working Group ECS Term Sheet,
presented in Table IV.2.
Table IV2
. Adop·tedACUAC andACUHPE,QUI pment Classes
Small Commercial Packaged
2:65,000 Btu/hand
Air-Conditioning and Heating
<135,000 Btu/h
Equipment (Air-Cooled)
Large Commercial Packaged
2:135,000 Btu/hand
Air-Conditioning and Heating
<240,000 Btu/h
Equipment (Air-Cooled)
Very Large Commercial
Packaged Air-Conditioning and 2:240,000 Btu/h and
Heating Equipment (Air<760,000 Btu/h
Cooled)
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2. Market Post-2023
In the May 2020 ECS RFI, DOE sought
comment on whether currently available
models of ACUACs and ACUHPs
(excluding double-duct systems) with
efficiency ratings that meet or exceed
the 2023 standard levels are
representative of the designs and
characteristics of models that would be
expected to be on the market after the
2023 compliance date. 85 FR 27941,
27948 (May 12, 2020).
AHRI, Carrier, and Trane asserted that
the ACUAC and ACUHP markets at the
time of the May 2020 ECS RFI are not
representative of the models that would
be expected to be on the market after the
2023 standards take effect. (AHRI,
EERE–2019–BT–STD–0042–0014 at pp.
3, 5–6; Carrier, EERE–2019–BT–STD–
0042–0013 at p. 7; Trane, EERE–2019–
BT–STD–0042–0016 at p. 6) More
specifically, AHRI commented that it is
impossible to forecast the market impact
of the 2023 standards on ACUACs and
ACUHPs, and also asserted that State
refrigerant regulations that drive the
industry to use A2L refrigerants will
require components such as
compressors to be redesigned to
accommodate new refrigerants. (AHRI,
EERE–2019–BT–STD–0042–0014 at pp.
3, 5–6) Goodman also stated that
alternative refrigerants would impact
future product design and
characteristics (e.g., requiring factoryinstalled refrigerant detection sensors
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SubCategory
Cooling Capacity
AC
Frm 00021
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Electric Resistance Heating
or No Heating
All Other Types of Heating
HP
All Types of Heating
AC
Electric Resistance Heating
or No Heating
All Other Types of Heating
HP
All Types of Heating
AC
Electric Resistance Heating
or No Heating
All Other Types of Heating
HP
depending on the charge amounts of an
alternate refrigerant). (Goodman, EERE–
2019–BT–STD–0042–0017 at p. 3)
Carrier stated the then-current models
available on the market that meet the
2023 standards will not be the same
products that are offered in 2023
because manufacturers will be working
to optimize efficiencies, lower cost, and
implement new entry level products.
Carrier added that the upcoming 2023
standards will also create a need to
further optimize higher-efficiency
equipment. Carrier asserted that most
products being sold are currently at the
minimum efficiency levels, which leads
to an inability to properly evaluate the
economic impact of moving the markets
from the current standards to 2023
standards. (Carrier, EERE–2019–BT–
STD–0042–0013 at p. 7) Trane stated
that it would be redesigning all of its
ACUAC and ACUHP model lines in
response to the 2023 standards. (Trane,
EERE–2019–BT–STD–0042–0016 at p.
6)
Lennox commented that the market
impacts of the 2023 standards are
unknown because of uncertainties in
assessing the evolving market, including
uncertainties in future shipments, the
economic impact on manufacturers and
consumers, and the total projected
energy savings. (Lennox, EERE–2019–
BT–STD–0042–0015 at pp. 2–3)
However, Lennox also commented that
the ACUAC and ACUHP models on the
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Type
Sfmt 4700
All Types of Heating
market are representative of designs and
characteristics of models that would be
expected to be on the market after the
2023 compliance date. (Id. at p. 5)
Lennox additionally mentioned that the
2023 standards would cause a phase out
of single-speed technology and constant
airflow fans. (Id.)
DOE notes that at the time these
comments were received, compliance
was not yet required with the current
standards. Compliance was required
with the current standards beginning
January 1, 2023. DOE analyzed the
market after January 1, 2023 for its
analyses for the 2023 ECS Negotiations
and for this direct final rule such that
the comments received in 2020 on this
matter are now moot. DOE’s analysis of
the market efficiency distribution to
develop IEER efficiency levels is
discussed in section of this direct final
rule.
3. Technology Options
As part of the market and technology
assessment, DOE identifies technologies
that manufacturers could use to improve
ACUAC and ACUHP energy efficiency.
Chapter 3 of the direct final rule TSD
includes the detailed list and
descriptions of all technology options
identified for this equipment.
In the May 2020 ECS RFI, DOE listed
19 technology options determined to
improve the efficiency of ACUACs and
ACUHPs, as measured by the DOE test
procedure, that were presented in the
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44072
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
January 2016 Direct Final Rule. 85 FR
27941, 27946 (May 12, 2020). DOE
requested comment on the technology
options considered in the development
of the January 2016 Direct Final Rule,
their applicability to the current market,
and the range of performance
characteristics for each technology
option. Id. DOE also sought feedback on
other technology options that it should
consider for inclusion in its analysis. Id.
DOE also sought comment on any
changes in market adoption, costs, and
concerns with incorporating the
technologies identified into equipment
that may have occurred since the
January 2016 Direct Final Rule. Id. DOE
also requested feedback on how
manufacturers would incorporate the
technology options from the January
2016 Direct Final Rule to increase
energy efficiency in ACUACs and
ACUHPs beyond the current levels. Id.
at 85 FR 27949. This request included
information on the order in which
manufacturers would incorporate the
different technologies to incrementally
improve the efficiencies of equipment.
Id. DOE also requested feedback on
whether the increased energy efficiency
would lead to other design changes that
would not occur otherwise. Id. DOE was
also interested in information regarding
any potential impact of design options
on a manufacturer’s ability to
incorporate additional functions or
attributes in response to consumer
demand. Id.
DOE also requested comment on
whether certain design options may not
be applicable to (or incompatible with)
specific equipment classes. Id.
Several stakeholders stated that, in
general, the technology options listed in
the May 2020 ECS RFI are appropriate
and have not seen any significant
changes since the analysis was
conducted for the January 2016 Direct
Final Rule. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 4; Lennox, EERE–
2019–BT–STD–0042–0015 at p. 5;
Trane, EERE–2019–BT–STD–0042–0016
at p. 3)
Carrier stated that high-efficiency,
multi-stage, and variable-speed
compressors, the size of heat
exchangers, and more-efficient
condenser fan blades and motors can
increase efficiency. Carrier also stated
that microchannel heat exchangers and
expansion valves do not affect
efficiency, and that electrohydrodynamic enhancement has a very
minor effect on efficiency.28 (Carrier,
EERE–2019–BT–STD–0042–0013 at p.
28 Carrier used the term electro-hydromatic
enhancement, but DOE assumes Carrier was
referring to electro-hydrodynamic enhancement.
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4) Carrier stated that it anticipates that
the identified technology options would
impact practicability to manufacture,
install, and service, with potential
impacts including larger/heavier
chassis, roof curb changes, and modified
electrical service to accommodate highefficiency components. (Carrier, EERE–
2019–BT–STD–0042–0013 at pp. 5–6)
AHRI stated that there may be limited
availability of electro-hydrodynamic
enhancements (without elaborating on
why) and that direct-drive fan systems
at some voltages may not be available.
(AHRI, EERE–2019–BT–STD–0042–
0014 at p. 4)
NEEA recommended that DOE
consider the presence of economizers,
fan speed control, multi-stage
compressors, electronically-commutated
motors (‘‘ECMs’’), and fan efficiency.
(NEEA, EERE–2019–BT–STD–0042–
0024 at p. 7)
Trane stated that achieving the 2023
standard levels will take a combination
of compressor technology and advanced
heat exchanger design. Trane also stated
that secondarily, indoor and outdoor fan
technologies would be employed to
reach the 2023 standard levels. (Trane,
EERE–2019–BT–STD–0042–0016 at p.
8) Carrier stated that the technology
options identified are currently being
used to reach max-tech efficiency and
that more of the advanced features
would be used to meet the 2023
standards. (Carrier, EERE–2019–BT–
STD–0042–0013 at p. 11) Carrier also
asserted that additional features or
advancements at the time of their
comments would create undue burden
in terms of cost and increased
equipment size, resulting in a lack of
marketability for ACUACs and ACUHPs.
(Id.)
AHRI suggested that DOE contact
manufacturers directly to solicit
feedback on: (1) how manufacturers
would incorporate the identified
technology options to increase energy
efficiency of ACUACs and ACUHPs and
(2) whether certain design options may
not be applicable to specific equipment
classes. (AHRI, EERE–2019–BT–STD–
0042–0014 at p. 7)
In response to the May 2020 ECS RFI,
the CA IOUs and ASAP, ACEEE, et al.
suggested that DOE consider additional
alternative refrigerants as a technology
option. (CA IOUs, EERE–2019–BT–
STD–0042–0020 at p. 5; ASAP, ACEEE,
et al., EERE–2019–BT–STD–0042–0023
at pp. 3–4) ASAP, ACEEE, et al. stated
that alternative refrigerants, including
R–452B, R–454B, and R–32, can
improve efficiency by at least 5 percent
relative to the current refrigerant R–
410A, citing testing conducted by Oak
Ridge National Laboratory (‘‘ORNL’’) in
PO 00000
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Fmt 4701
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partnership with Trane.29 (ASAP,
ACEEE, et al., EERE–2019–BT–STD–
0042–0023 at pp. 1, 3–4) In response to
the May 2022 TP/ECS RFI, ASAP and
ACEEE again recommended DOE
consider low-GWP refrigerants as a
design option. (ASAP and ACEEE,
EERE–2022–BT–STD–0015–0011 at p.
3)
AHRI commented that considering
alternative refrigerants as a technology
option is not appropriate and would be
unduly burdensome for manufacturers,
recommending screening out alternative
refrigerants on the bases of
technological feasibility and
practicability to manufacture, install,
and service. (AHRI, EERE–2019–BT–
STD–0042–0014 at pp. 4–5) Carrier
suggested that alternate refrigerants
should not be the basis of an energy
efficiency increase. (Carrier, EERE–
2019–BT–STD–0042–0013 at p. 7)
As discussed in section IV.C.1 of this
document, DOE conducted its
engineering analysis by selecting and
analyzing currently-available models
using their rated efficiency in terms of
IEER to characterize the energy use and
manufacturing production costs at each
efficiency level. As a result, DOE
analyzed equipment designs, including
expansion devices, indoor and outdoor
coils, and fans/motors, consistent with
currently available models and the
design of the equipment as whole.
Therefore, DOE has concluded that the
technology options in this direct final
rule accurately reflect the efficiency
improvement and incremental
manufacturing costs associated with
these designs.
Comments received in response to the
May 2020 ECS RFI were received three
years prior to the compliance date of the
current standards and the 2023 ECS
Negotiations. Since that time, the
market has updated to comply with the
new standards, and DOE conducted
interviews with manufacturers to solicit
feedback on all aspects of its
engineering analysis, including
technology options used to increase
efficiency of ACUACs and ACUHPs.
Certain technology options were also
discussed among the ACUAC/HP
Working Group during the 2023 ECS
Negotiations. (EERE–2022–BT–STD–
0015–0088 at pp. 60–64; EERE–2022–
BT–STD–0015–0089 at pp. 17–24)
Therefore, DOE surmises that the
positions of commenters on certain
technology options may have changed
since the time of the drafting of some of
the comments received.
29 Available at: www.energy.gov/sites/prod/files/
2017/04/f34/10_32226f_Shen_031417-1430.pdf.
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Regarding economizers, while the
IVEC metric accounts for the benefit of
economizer cooling and the energy
consumed during economizing via
calculations, the metric does not
include testing with economizer
operation due to test burden and
repeatability concerns. As such, the
IVEC metric does not allow for
differentiation in terms of IVEC
efficiency between: (1) systems installed
with economizers versus not installed
with economizers, and (2) different
types of economizers offered. Therefore,
DOE did not consider economizers as a
technology option for this rulemaking.
There are no models currently on the
market that include low-GWP
refrigerants. Therefore, at this time, DOE
does not have sufficient information to
consider low-GWP refrigerants as a
technology option for improving
efficiency. As such, DOE did not
consider low-GWP refrigerants as a
technology option in its analysis.
Section IV.C.4 of this document
includes discussion of the impact of
low-GWP refrigerants on efficiency and
cost of ACUACs and ACUHPs.
44073
Regarding electro-hydrodynamic
enhancement, DOE did not identify any
prototypes or models currently on the
market that incorporate this technology
to improve efficiency.
After consideration of the comments
received, assessment of technology
options used to improve efficiency in
models currently on the market, and
additional information provided during
manufacturer interviews, DOE
considered the technology options
presented in Table IV.3 as part of this
rulemaking.
Table IV.3 ACUAC/HP Technolo!!V Options
Compressor
Multiple Compressor Staging
Variable-Speed or Multiple-Tandem Compressors
Heat Exchangers
Larger Heat Exchangers
Microchannel Heat Exchangers
Condenser Fans and Fan Motors
More-Efficient Fan Blades
Higher Efficiency and Variable-Speed Fans/Motors
Evaporator Fans and Fan Motors
More-Efficient Fan Blades
Higher Efficiency and Variable-Speed Fans/Motors
Direct-Drive Fans
Expansion Valves
Thermostatic Expansion Valve
Electronic Expansion Valve
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B. Screening Analysis
DOE uses the following five screening
criteria to determine which technology
options are suitable for further
consideration in an energy conservation
standards rulemaking:
(1) Technological feasibility.
Technologies that are not incorporated
in commercial equipment or in
commercially viable, existing prototypes
will not be considered further.
(2) Practicability to manufacture,
install, and service. If it is determined
that mass production of a technology in
commercial equipment and reliable
installation and servicing of the
technology could not be achieved on the
scale necessary to serve the relevant
market at the time of the projected
compliance date of the standard, then
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that technology will not be considered
further.
(3) Adverse impacts on equipment
utility or availability. If a technology is
determined to have a significant adverse
impact on the utility of the equipment
to subgroups of consumers, or 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, it will not be
considered further.
(4) Adverse impact on health or safety
of technologies. If it is determined that
a technology would have significant
adverse impacts on health or safety, it
will not be considered further.
(5) Unique-pathway proprietary
technologies. If a technology has
proprietary protection and represents a
unique pathway to achieving a given
efficiency level, it will not be
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considered further, due to the potential
for monopolistic concerns.
10 CFR 431.4; 10 CFR part 430,
subpart C, appendix A, sections 6(c)(3)
and 7(b).
In sum, if DOE determines that a
technology, or a combination of
technologies, fails to meet one or more
of the listed five criteria, it will be
excluded from further consideration in
the engineering analysis. The reasons
for eliminating any technology are
discussed in the following sections.
The subsequent sections include
comments from interested parties
pertinent to the screening criteria,
DOE’s evaluation of each technology
option against the screening analysis
criteria, and whether DOE determined
that a technology option should be
excluded (‘‘screened out’’) based on the
screening criteria.
1. Screened-Out Technologies
In the January 2016 Direct Final Rule,
DOE screened-out three technology
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contained in chapter 3 of the direct final
rule TSD.
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
options: electro-hydrodynamic
enhanced heat transfer (due to
technological feasibility and
practicability to manufacture/install/
service), alternative refrigerants (due to
technological feasibility), and subcoolers (due to technological feasibility).
81 FR 2420, 2449 (Jan. 15, 2016).
In the May 2020 ECS RFI, DOE
presented the three technology options
that were screened out in the January
2016 Direct Final Rule and the criteria
for screening them out. DOE sought
feedback on whether the technology
options that were screened out in the
January 2016 Direct Final Rule should
continue to be screened out. DOE also
sought comment on what impact the
screening criteria would have on
consideration of the technology options
that were considered (i.e., not screened
out) in the January 2016 Direct Final
Rule. 85 FR 27941, 27947 (May 12,
2020).
Trane agreed with the screening
analysis conducted for the January 2016
Direct Final Rule. (Trane, EERE–2019–
BT–STD–0042–0016 at p. 5)
Carrier also agreed with continuing to
screen out the technology options that
were screened out in the January 2016
Direct Final Rule. (Carrier, EERE–2019–
BT–STD–0042–0013 at p. 6) Carrier
further recommended that an additional
screening criterion be added to address
cost of a technology option. (Carrier,
EERE–2019–BT–STD–0042–0013 at p.
6)
As discussed in section IV.A.3 of this
document, DOE is not considering
alternative refrigerants and electrohydrodynamic enhanced heat transfer as
technology options, and, thus, the need
to screen them in or out is not relevant.
With respect to the third previouslyscreened out technology option, DOE is
aware of at least one model line on the
market that uses sub-coolers for
increased efficiency. DOE does not find
that the third previously-screened out
technology meets any of the criteria for
being screened out.
In response to Carrier’s comment
recommending an additional screening
criterion be added to address cost of a
technology option, the added cost of a
technology option is considered in the
cost-efficiency analysis and the
downstream economic analyses that
evaluate the impacts to consumers and
the Nation as a whole. Additionally, the
product and capital conversion costs
manufacturers must bear in order to
implement certain technologies are
considered in the manufacturer impact
analysis, discussed further in section
IV.J of this document.
DOE did not find that any of the other
technology options it identified met the
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criteria to be screened-out in this
rulemaking.
2. Remaining Technologies
Through a review of each technology,
DOE concludes that all of the identified
technologies listed in section IV.A.3 of
this document met all five screening
criteria to be examined further as design
options in DOE’s direct final rule
analysis. In summary, DOE did not
screen out any technology options for
this rulemaking.
DOE determined that these
technology options are technologically
feasible because they are being used or
have previously been used in
commercially-available equipment or
working prototypes. DOE also finds that
all of the remaining technology options
meet the other screening criteria (i.e.,
practicable to manufacture, install, and
service; do not result in adverse impacts
on consumer utility, equipment
availability, health, or safety; and do not
involve a proprietary technology that is
a unique pathway to meeting a given
efficiency level). For additional details,
see chapter 4 of the direct final rule
TSD.
C. Engineering Analysis
The purpose of the engineering
analysis is to establish the relationship
between the efficiency and cost of
ACUACs and ACUHPs. There are two
elements to consider in the engineering
analysis: (1) the selection of efficiency
levels to analyze (i.e., the ‘‘efficiency
analysis’’) and (2) the determination of
equipment cost at each efficiency level
(i.e., the ‘‘cost analysis’’). In determining
the performance of higher-efficiency
equipment, DOE considers technologies
and design option combinations not
eliminated by the screening analysis.
For each equipment class, DOE
estimates the baseline cost, as well as
the incremental cost for the equipment
at efficiency levels above the baseline.
The output of the engineering analysis
is a set of cost-efficiency ‘‘curves’’ that
are used in downstream analyses (i.e.,
the LCC and PBP analyses and the NIA).
1. Efficiency Levels in Terms of Existing
Metrics
DOE typically uses one of two
approaches to develop energy efficiency
levels for the engineering analysis: (1)
relying on observed efficiency levels in
the market (i.e., the efficiency-level
approach), or (2) determining the
incremental efficiency improvements
associated with incorporating specific
design options to a baseline model (i.e.,
the design-option approach). Using the
efficiency-level approach, the efficiency
levels established for the analysis are
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determined based on the market
distribution of existing equipment (in
other words, based on the range of
efficiencies and efficiency level
‘‘clusters’’ that already exist on the
market). Using the design option
approach, the efficiency levels
established for the analysis are
determined through detailed
engineering calculations and/or
computer simulations of the efficiency
improvements from implementing
specific design options that have been
identified in the technology assessment.
DOE may also rely on a combination of
these two approaches. For example, the
efficiency-level approach (based on
actual equipment on the market) may be
extended using the design option
approach to interpolate to define ‘‘gap
fill’’ levels (to bridge large gaps between
other identified efficiency levels) and/or
to extrapolate to the ‘‘max-tech’’ level
(particularly in cases where the ‘‘maxtech’’ level exceeds the maximum
efficiency level currently available on
the market).
In this rulemaking, DOE applied an
efficiency-level approach, analyzing
three specific capacities—90,000 Btu/h
(7.5-tons), 180,000 Btu/h (15-tons), and
360,000 Btu/h (30-tons)—that served as
representative units for the three
equipment capacity ranges—‘‘small’’
(≥65,000 to <135,000 Btu/h), ‘‘large’’
(≥135,000 to <240,000 Btu/h), and ‘‘very
large’’ (≥240,000 to <760,000 Btu/h).
DOE selected these representative
capacities consistent with the analysis
conducted for the January 2016 Direct
Final Rule after concluding based on
assessment of the current market (and
receiving no contrary feedback during
the 2023 ECS Negotiation meetings) that
these capacities continue to be
representative of models on the market
in their respective capacity ranges. To
develop cost-efficiency curves, DOE
used the current cooling efficiency
metric (IEER) and later translated each
efficiency level to the new cooling
efficiency metric (IVEC) because there
were no publicly-available data for
existing models on the market in terms
of the new metric; therefore, the cost to
produce these models could not be
linked directly to efficiency in terms of
IVEC. Selection of the efficiency levels
in terms of the current efficiency
metrics is discussed in sections IV.C.1.a
and IV.C.1.b of this document. Further
discussion on the translation from IEER
to IVEC can be found in section IV.C.2.a
of this document. The selection of
heating efficiency levels in terms of the
new heating efficiency metric (IVHE) is
discussed in section IV.C.2.b of this
document.
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Based on DOE’s review of equipment
available on the market and feedback
received during manufacturer
interviews, DOE understands that the
majority of ACUAC models with electric
resistance heating or no heating are
designed on the same basic platform
and cabinet size as the equivalent
ACUAC models with all other types of
heating and comparable ACUHP
models. Because these models typically
have similar designs, DOE estimated
that implementing the same efficiencyimproving design options would result
in the same or similar energy savings for
comparable equipment classes. As
discussed further in section IV.C.2.a of
this document, ACUACs with all other
types of heating typically are paired
with furnaces that impose additional
pressure drop that must be overcome by
the indoor fan, thus increasing
measured indoor fan power, so for
otherwise comparable models,
efficiencies in terms of IEER are lower
for ACUACs with all other types of
heating than ACUACs with electric
resistance heating or no heating.
Therefore, in order to develop
equivalently stringent efficiency levels
for all ACUACs, DOE first developed
higher efficiency levels specifically for
ACUACs with electric resistance heating
or no heating. As discussed, these
efficiency levels were developed in
terms of IEER, and were subsequently
translated to the new IVEC metric. DOE
then translated these IVEC efficiency
levels for ACUACs with electric
resistance heating or no heating into
IVEC efficiency levels for ACUACs with
all other types of heating by using
furnace pressure drops from product
literature to calculate additional indoor
fan power consumed and ultimately
IVEC decrements to represent the
reduction in IVEC as a result of furnace
pressure drop. The calculated
decrements closely aligned with the
decrements proposed in the ACUAC/HP
Working Group ECS Term Sheet. As
further discussed in section IV.C.2 of
this document, DOE did not analyze
lower IVEC efficiency levels for
ACUHPs as compared to ACUACs.
a. Baseline Efficiency
For each equipment class, DOE
generally selects a baseline model as a
reference point for each class, and
measures changes resulting from
potential energy conservation standards
against the baseline. The baseline model
in each equipment class represents the
characteristics of equipment typical of
that class (e.g., capacity, physical size).
Generally, a baseline model is one that
just meets current energy conservation
standards, or, if no standards are in
place, the baseline is typically the most
common or least efficient unit on the
market.
44075
In the May 2020 ECS RFI, DOE
requested feedback on whether the 2023
energy conservation standards for
ACUACs and ACUHPs are appropriate
baseline efficiency levels for DOE to
apply each equipment class in
evaluating whether to amend energy
conservation standards for this
equipment. 85 FR 27941, 27948 (May
12, 2020). AHRI, Lennox, and Goodman
stated that the 2023 standards would be
the correct baseline efficiency to be used
in a future DOE analysis. (AHRI, EERE–
2019–BT–STD–0042–0014 at p. 6;
Lennox, EERE–2019–BT–STD–0042–
0015 at p. 6; Goodman, EERE–2019–BT–
STD–0042–0017 at p. 3)
Consistent with stakeholder feedback,
DOE used the current energy
conservation standards as the baseline
efficiency level in terms of IEER and
COP for each equipment class. The
baseline efficiency levels in terms of
IEER and COP considered in this direct
final rule are presented in Table IV.4. As
discussed further in section IV.A.1 of
this document, consistent with the
ACUAC/HP Working Group ECS Term
Sheet, DOE is combining ACUHPs with
all types of heating into a single
equipment class for each capacity range.
Therefore, for the baseline for ACUHP
equipment classes, DOE used the
current IEER standard for ACUHPs with
all other types of heating.
Equipment
Cooling Capacity
Small ACUACs
andACUHPs
SubSupplemental Heating
Category
Type
2:65,000 Btu/hand
<135,000 Btu/h
AC
HP
Large ACUACs
andACUHPs
2:135,000 Btu/h
and <240,000
Btu/h
AC
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HP
Very Large
ACUACsand
ACUHPs
2:240,000 Btu/h
and <760,000
Btu/h
AC
HP
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IEER
COP
Electric Resistance
Heating or No Heating
14.8
-
All Other Types of
Heating
14.6
-
All Types of Heating
13.9
3.4
Electric Resistance
Heating or No Heating
14.2
-
All Other Types of
Heating
14.0
-
All Types of Heating
13.3
3.3
Electric Resistance
Heating or No Heating
13.2
-
All Other Types of
Heating
13.0
-
All Types of Heating
12.3
3.2
Sfmt 4725
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Table IV.4 Baseline Efficiency Levels in Terms oflEER and COP
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b. Higher Efficiency Levels
For each equipment class, DOE
analyzes several efficiency levels above
baseline. The maximum available
efficiency level is the highest efficiency
model currently available on the market.
DOE also defines a ‘‘max-tech’’
efficiency level to represent the
maximum possible efficiency for a given
equipment class.
In the May 2020 ECS RFI, DOE
requested comment on what efficiency
levels should be considered as max-tech
levels for ACUACs and ACUHPs for the
evaluation of whether amended
standards are warranted. 85 FR 27941,
27949 (May 12, 2020).
The CA IOUs and ASAP, ACEEE, et
al. suggested DOE should analyze maxtech efficiency levels higher than what
were analyzed in the January 2016
Direct Final Rule and consider max-tech
efficiency levels that reflect
incorporation of all possible technology
options. (CA IOUs, EERE–2019–BT–
STD–0042–0020 at pp. 6–7; ASAP,
ACEEE, et al., EERE–2019–BT–STD–
0042–0023 at pp. 1–2, 4) The CA IOUs
recommended DOE consider the
technology development timeline of
emerging technologies in determining
max-tech levels, specifically technology
options currently in the lab-scale
prototype stage. (CA IOUs, EERE–2019–
BT–STD–0042–0020 at pp. 6–7)
AHRI, Goodman, and Lennox
recommended DOE only consider
commercially-available technologies in
determining max-tech efficiency levels,
specifically those that are used in
equipment certified to DOE’s
Compliance Certification Database
(‘‘CCD’’). (AHRI, EERE–2019–BT–STD–
0042–0014 at p. 6; Goodman, EERE–
2019–BT–STD–0042–0017 at p. 3;
Lennox, EERE–2019–BT–STD–0042–
0015 at p. 6) Lennox additionally
commented that the max-tech levels for
ACUACs and ACUHPs have increased
by up to eight percent since the January
2016 Direct Final Rule, driven by
manufacturers having optimized designs
for the part-load IEER metric, which is
more representative of consumer use
than the prior EER full-load metric, not
the advancement of technologies that
are employed by this equipment.
(Lennox, EERE–2019–BT–STD–0042–
0015 at p. 6)
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Trane stated that the analysis for the
January 2016 Direct Final Rule is still
relevant and that it supported the
process used then for considering maxtech efficiency levels (including
manufacturer interviews). (Trane,
EERE–2019–BT–STD–0042–0016 at p.
7)
Carrier specified what it argued are
the max-tech levels for ACUACs and
ACUHPs should be in terms of IEER and
COP based on certifications to the AHRI
Directory at the time of its comment
submission. (Carrier, EERE–2019–BT–
STD–0042–0013 at pp. 9–10)
Consistent with feedback from
stakeholders, DOE identified
incremental efficiency levels based on a
review of currently available models on
the market, taking into consideration the
efficiency levels analyzed for the
January 2016 Direct Final Rule. DOE
relied on certified IEER data from DOE’s
CCD and the AHRI Directory, focusing
on models that had sufficient
information in public product literature
to develop costs. Review of the market
showed that many of the model lines
analyzed for the January 2016 Direct
Final Rule are still on the market today;
therefore, DOE concluded that many of
the efficiency levels analyzed for the
January 2016 Direct Final Rule were still
appropriate to consider for this
rulemaking. DOE started with the
efficiency levels used for the January
2016 Direct Final Rule analysis that
were above the current IEER standards
(i.e., standards with compliance date of
January 1, 2023), adjusting IEER values
of some efficiency levels as appropriate
based on current market efficiency
distributions. DOE also added efficiency
levels, as needed, to better represent the
range of certified IEER ratings for
ACUAC models with electric resistance
heating or no heating currently available
on the market. This included adjusted
max-tech levels for some classes that
have models on the market with higher
rated IEER than the max-tech levels
analyzed for the January 2016 Direct
Final Rule, consistent with suggestions
by stakeholders.
Regarding the CA IOU’s comment that
DOE consider emerging technologies in
determining max-tech levels, as
discussed, DOE developed max-tech
levels for the engineering analysis based
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Fmt 4701
Sfmt 4700
on model designs currently on the
market. DOE concluded that it lacked
sufficient cost and efficiency
information to analyze higher efficiency
levels than currently on the market.
DOE notes that the max-tech levels
presented in this DFR reflect those
presented in the 2023 ECS Negotiations,
and the CA IOUs were a member of the
ACUAC/HP Working Group and did not
object to the analyzed max-tech levels in
the 2023 ECS Negotiations.
In response to the May 2020 ECS RFI,
Carrier also recommended that DOE
analyze max-tech efficiency separately
for equipment that uses alternate
refrigerants once available on the
market, as it believes that safety code
compliance will require additional
components and testing that may
restrict the use of certain design options.
(Carrier, EERE–2019–BT–STD–0042–
0013 at p. 10)
In response, DOE did not analyze
max-tech levels for equipment with
alternative refrigerants separately for
this rulemaking because DOE is not
aware of any models on the market at
this time that include refrigerants with
GWP below the limit of 700 GWP
adopted by the Environmental
Protection Agency (‘‘EPA’’).30 Section
IV.C.4 of this direct final rule includes
further discussion on consideration of
lower-GWP refrigerants in the
engineering analysis.
The higher efficiency levels for
ACUACs with electric resistance heating
or no heating in terms of IEER
considered in this direct final rule are
presented in Table IV.5.
30 On October 24, 2023, the EPA published a final
rule in the Federal Register restricting the use of
certain higher-GWP hydrofluorocarbons (‘‘HFCs’’)
in aerosols, foams, and refrigeration, air
conditioning, and heat pump products and
equipment (‘‘October 2023 EPA Final Rule’’). This
final rule restricts refrigerants with a GWP higher
than 700 in residential and light commercial air
conditioning and heat pump systems installed on
and after January 1, 2025. 88 FR 73098. On
December 26, 2023, EPA published an interim final
rule and request for comment in the Federal
Register amending a provision of the October 2023
EPA Final Rule allowing one additional year, until
January 1, 2026, for the installation of new
residential and light commercial air conditioning
and heat pump systems using components
manufactured or imported prior to January 1, 2025.
88 FR 88825.
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Table IV.5 Incremental Efficiency Levels in Terms of IEER
Equipment Class
Efficiencv Levels in Terms of IEER
EL3
EL4
ELS
EL6
ELl
EL2
Small ACUACs with electric
resistance heating or no heating 2:65,000 Btu/hand <135,000 Btu/h
Cooling Capacity
15.4
15.8
17.0
18.0
19.9
21.0
22.4
Large ACUACs with electric
resistance heating or no heating 2:135,000 Btu/hand <240,000 Btu/h
Cooling Capacity
14.6
15.0
17.5
20.1
-
-
-
Very Large ACUACs with electric
resistance heating or no heating 2:240,000 Btu/hand <760,000 Btu/h
Cooling Capacity
13.5
15.5
18.5
-
-
-
-
2. Efficiency Levels in Terms of New
Metrics
a. IVEC
DOE considered the efficiency levels
in terms of IVEC presented in Table IV.6
EL7
for this direct final rule. The
development of these efficiency levels
for each equipment class is discussed in
the following subsections.
Table IV.6 Direct Final Rule Efficiency Levels in Terms oflVEC
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Small
ACUACs
and
ACUHPs2:65,000
Btu/hand
<135,000
Btu/h
Cooling
Caoacitv
Large
ACUACs
and
ACUHPs2:135,000
Btu/hand
<240,000
Btu/h
Cooling
Capacity
Very Large
ACUACs
and
ACUHPs2:240,000
Btu/hand
<760,000
Btu/h
Cooling
Caoacitv
Supplemental
Heating Type
Electric
Resistance
Heating or No
Heating
All Other
Types of
Heating
AC
HP
All Types of
Heating
AC
Electric
Resistance
Heating or No
Heating
All Other
Types of
Heating
HP
All Types of
Heating
AC
Electric
Resistance
Heating or No
Heating
All Other
Types of
Heating
All Types of
Heating
HP
ACUACs with Electric Resistance
Heating or No Heating
As discussed in section II.B.3 of this
document, the ACUAC/HP Working
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Baseline
Efficiency Levels in Terms of IVEC
ELl
EL2 EL3 EL4 ELS EL6
10.6
11.6
12.5
13.1
14.3
14.9
16.4
18.7
10.1
11.1
12.0
12.6
13.8
14.4
15.9
18.2
10.1
11.1
12.0
12.6
13.4
14.4
15.9
18.2
12.0
12.9
13.8
15.7
19.5
-
-
-
11.5
12.4
13.3
15.2
19.0
-
-
-
11.5
12.4
13.1
15.2
19.0
-
-
-
12.0
12.9
15.2
18.3
-
-
-
-
11.3
12.2
14.5
17.6
-
-
-
-
11.3
12.1
14.5
17.6
-
-
-
-
Group recommended the current
cooling performance energy efficiency
descriptor, IEER, be replaced with the
newly-developed IVEC metric. While
PO 00000
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Fmt 4701
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the cost-efficiency curves were
developed in terms of the existing
cooling efficiency metric (IEER), DOE
translated the IEER values at each
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efficiency level to IVEC values for use
in the other analyses in this direct final
rule, and to allow consideration of
potential amended energy conservation
standard levels in terms of the IVEC
metric.
With this change in cooling efficiency
metric, DOE must ensure that a new
IVEC-based standard would not result in
backsliding of energy efficiency levels
when compared to the current IEER
standards. (42 U.S.C 6313(a)(6)(B)(iii)(I))
To this end, DOE translated the
identified IEER baseline levels (as
discussed in section IV.C.1.a of this
document) to IVEC baseline levels.
During the course of the 2023 ECS
Negotiations, industry members in the
ACUAC/HP Working Group provided a
DOE contractor with a confidential,
anonymized dataset that included
simulated IEER and IVEC values for
more than 100 models currently
available on the market. In this dataset,
for each equipment class, there is a
range of IVEC values near the IEER
baseline. DOE calculated a weightedaverage IVEC baseline based on the
values in this industry-provided dataset
to use as the IVEC baseline for analysis
for each equipment class for ACUACs
with electric resistance heating or no
heating. Further discussion of DOE’s
analysis of baseline IVEC levels is
included in chapter 5 of the direct final
rule TSD.
DOE also translated the higher
efficiency levels in terms of IEER to
IVEC based on the performance
correlations it developed (discussed
further in section IV.C.3 of this
document) (i.e., DOE used the
performance correlations to calculate an
IVEC value for each IEER efficiency
level). Further discussion of DOE’s
analysis of higher IVEC levels is
included in chapter 5 of the direct final
rule TSD.
ACUACs with All Other Types of
Heating
ACUACs with all other types of
heating typically are paired with
furnaces that impose additional
pressure drop that must be overcome by
the indoor fan, thus increasing
measured indoor fan power. Therefore,
the current IEER standards have lower
minimum efficiency for ACUACs with
all other types of heating as compared
to ACUACs with electric resistance
heating or no heating, and DOE
considered a similar furnace decrement
for IVEC efficiency levels (i.e.,
difference in IVEC levels between
comparable classes to reflect presence of
a furnace). The recommended standard
levels in the ACUAC/HP Working
Group ECS Term Sheet include a
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furnace decrement of 0.5 for IVEC levels
for small and large ACUACs and a
furnace decrement of 0.7 for IVEC levels
for very large ACUACs. DOE conducted
an analysis of furnace pressure drops
based on public literature for ACUAC
models and used estimates of furnace
pressure drop to calculate a furnace
IVEC decrement for small, large, and
very large ACUACs. DOE’s calculated
furnace IVEC decrements are similar to
the decrements of 0.5, 0.5, and 0.7
included in the ACUAC/HP Working
Group ECS Term Sheet for small, large,
and very large ACUACs, respectively.
Therefore, with these decrements
confirmed, DOE used the furnace IVEC
decrements from the ACUAC/HP
Working Group ECS Term Sheet more
broadly to develop IVEC efficiency
levels for ACUACs with all other types
of heating across all considered
efficiency levels for the subject
equipment. In other words, for each
IVEC efficiency level for ACUACs with
electric resistance heating or no heating,
DOE subtracted the corresponding
furnace IVEC decrement from the
ACUAC/HP Working Group ECS Term
Sheet to determine the corresponding
IVEC efficiency level for ACUACs with
all other types of heating. Further
discussion of DOE’s analysis of furnace
IVEC decrements is included in chapter
5 of the direct final rule TSD.
ACUHPs
For the IVEC values of ACUHPs, DOE
conducted an analysis to understand the
potential decrement in IVEC efficiency
ratings between ACUACs and ACUHPs.
Using the January 2016 Direct Final
Rule IEER decrements between ACUACs
and ACUHPs (81 FR 2420, 2456 (Jan. 15,
2016)), DOE determined IEER values at
each efficiency level for ACUHPs. The
performance correlations developed for
each efficiency level of ACUACs were
then adjusted to decrease IEER to reflect
the lower ACUHP IEER values. Changes
made to the performance correlations
reflect the design and operating
differences between otherwise identical
ACUACs and ACUHPs. For example,
compressor performance may be lower
in a heat pump than an air conditioner
due to the reversing valve imposing
pressure drop on the suction line (i.e.,
heat pumps may have reduced capacity
at a similar power input). Compressor
performance may also be lower in a heat
pump than an air conditioner due to
circuiting not being fully optimized for
cooling operation (i.e., heat pumps may
have reduced capacity with a higher
power input in this case). Additionally,
a heat pump is more likely to require a
tube and fin condenser coil instead of a
microchannel heat exchanger, which
PO 00000
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Fmt 4701
Sfmt 4700
could increase high-side pressure
(resulting in a capacity reduction at
increased power input) or increase
condenser fan power. DOE then
calculated IVEC values based on these
adjusted correlations for ACUHPs at
each efficiency level, and the
Department found no significant
difference in IVEC between ACUACs
and ACUHPs with the same
supplemental heating type at each
efficiency level using its performance
correlations, in contrast to the
decrement used when analyzing IEER
efficiency levels for the January 2016
Direct Final Rule.
DOE understands the lack of
decrement found in IVEC between
ACUACs and ACUHPs to be for two
reasons: (1) the design differences in
ACUHPs that reduce IEER affect vapor
compression system performance, and
IVEC weights this performance less than
IEER for several reasons (e.g., because
IVEC also includes economizer-only
cooling operation, higher external static
pressure requirements, and crankcase
heater energy consumption; and (2) the
reduction in vapor compression system
performance for an ACUHP mentioned
previously is counterbalanced by an
increase in IVEC due to the metric
including fewer hours of off-mode
operation (i.e., crankcase heater energy
consumption) for ACUHPs than are
included in IVEC for ACUACs.31
Further discussion of DOE’s analysis of
ACUHP IVEC decrements is included in
chapter 5 of the direct final rule TSD.
Given the finding of no IVEC
decrement between ACUACs and
ACUHPs of the same supplementary
heating type, for all efficiency levels
except for the levels recommended in
the ACUAC/HP Working Group ECS
Term Sheet (discussed later in this subsection), DOE did not analyze lower
IVEC efficiency levels for ACUHPs as
compared to ACUACs. Because the
standard levels recommended in the
ACUAC/HP Working Group ECS Term
Sheet combine ACUHPs into equipment
classes that depend only on cooling
capacity, regardless of supplemental
heating type, DOE analyzed ACUHPs
without separate classes for different
31 The IVEC metric includes all annual crankcase
heater operation, which includes ventilation mode
and unoccupied no-load hours for ACUACs and
ACUHPs. For ACUACs, the IVEC metric also
includes crankcase heater operation during the
heating season, because ACUAC compressors do
not provide mechanical heating, whereas ACUHP
compressors do provide mechanical heating.
Specifically, for ACUACs, IVEC includes 4,202
hours of crankcase heater operation during
ventilation mode, unoccupied no-load hours, and
heating season hours. For ACUHPs, IVEC includes
338 hours of crankcase heater operation during
ventilation mode and unoccupied no-load hours.
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supplementary heating types at all
efficiency levels. Therefore, for all
efficiency levels (including the baseline)
except for the levels recommended in
the ACUAC/HP Working Group ECS
Term Sheet (discussed later in this subsection), the IVEC efficiency levels for
ACUHPs are the same as the efficiency
levels for ACUACs with all other types
of heating.
Despite the finding of no IVEC
decrement for ACUHPs as compared to
ACUACs, the ACUAC/HP Working
Group ECS Term Sheet includes
marginally lower recommended
standards for ACUHPs than ACUACs
with all other types of heat. Therefore,
at the recommended efficiency level for
each ACUHP equipment class, DOE
analyzed the IVEC value recommended
by the ACUAC/HP Working Group for
that class, instead of using the
corresponding IVEC level for ACUACs
with all other types of heating.
As previously discussed, the
additional pressure drop of a furnace
and indoor fan energy required to
overcome that pressure drop results in
lower IVEC for otherwise identical
models with furnaces. This pressure
drop is the reason that DOE’s current
standards apply a decrement such that
ACUHPs with all other types of heating
and have lower IEER standards than
ACUHPs with electric resistance heating
or no heating. Based on review of
models currently on the market and
feedback from manufacturer interviews,
DOE understands that most
manufacturers offer ACUHPs with and
without furnaces (i.e., considered in
either the ‘‘all other types of heating’’
class or the ‘‘electric resistance heating
or no heating’’ class), and ACUHP
models with furnaces are typically
otherwise identical to ACUHP models
without the furnace. Therefore, DOE
understands that manufacturers do not
design separate baseline ACUHP models
to precisely meet the IEER standards for
both ‘‘electric resistance heating or no
heating’’ and ‘‘all other types of
heating’’; rather, they design a single
ACUHP model such that it meets the
applicable standard with or without a
furnace present. If the presence of a
furnace for an ACUHP model impacts
the IEER rating for a model by an
amount that differs from the decrement
present in the IEER standards, using a
single ACUHP design to meet both
standards inherently means that one
model will have an IEER value above
the applicable standard, but DOE
understands that manufacturers do not
undertake the product development
effort to design separate slightly less
efficient ACUHP models to take
advantage of this small IEER gap. Based
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on feedback from manufacturer
interviews, DOE expects this to
continue in the future, even in the
context of more-stringent standards.
Therefore, considering ACUHP
equipment classes including models of
all supplementary heating types (which
is the equipment class structure
recommended in the ACUAC/HP
Working Group ECS Term Sheet), DOE
assumed that manufacturers would
design ACUHPs to meet the applicable
IVEC efficiency level with a furnace
present; by removing the furnace, the
otherwise identical ACUHP models
with electric resistance or no heating
would naturally achieve a higher IVEC.
Therefore, in the analyses following the
engineering analysis, DOE assumed that
all ACUHP IVEC efficiency levels would
be met by ACUHPs with furnaces, and
that ACUHPs without furnaces (but
otherwise identical to the models with
furnaces) would have higher IVEC
values. Therefore, to determine the IVEC
values achieved by ACUHPs without
furnaces, DOE added the previously
discussed furnace decrements to the
ACUHP efficiency levels (which
nominally apply to all ACUHPs
regardless of supplementary heating
type). As a result, DOE concluded that
combining ACUHP equipment classes
for all types of heating into single
equipment classes for each capacity
range would generally result in the same
market dynamics and energy savings as
having ACUHP equipment classes
separated by supplementary heating
type (i.e., with the IVEC standard levels
for ACUHPs with electric resistance or
no heating being higher than the IVEC
standard levels for ACUHPs with all
other types of heating, with the
difference being equal to the previously
discussed furnace IVEC decrements). In
other words, when comparing IVEC
efficiency levels between ACUACs and
ACUHPs, DOE’s analysis for this direct
final rule considers the ACUHP levels to
be comparable to the levels for ACUACs
with all other types of heating (because
the ACUHP levels would need to be met
by ACUHP models with furnaces),
rather than the ACUHP levels being
comparable to the levels for ACUACs
with electric resistance or no heating.
b. IVHE
The ACUAC/HP Working Group also
recommended the current heating
performance energy efficiency
descriptor, COP, be replaced with the
newly-developed IVHE metric. With
this change in heating efficiency metric,
DOE must ensure that a new IVHEbased standard would not result in
backsliding of energy efficiency levels
when compared to the current COP
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standards. (42 U.S.C 6313(a)(6)(B)(iii)(I))
To this end, DOE first established a
baseline at the current energy
conservation standard in terms of COP
for each of the ACUHP equipment
classes, and then translated the COP
baseline for each class to an IVHE
baseline. As discussed previously, DOE
used the current COP energy
conservations standards as the COP
baseline for all ACUHP equipment
classes.
During the 2023 ECS Negotiations and
in confidential interviews conducted
with manufacturers, two industry
members in the ACUAC/HP Working
Group provided a DOE contractor with
simulated COP and IVHE values. DOE
used this data set, as well as DOE’s own
test data, to determine an IVHE baseline
for each ACUHP equipment class.
Specifically, DOE identified an IVHE
baseline representative of models with
simulated COP at or near the current
applicable COP standard level for each
ACUHP equipment class.
Although, as mentioned, two industry
members in the ACUAC/HP Working
Group provided DOE contractors with
simulated COP and IVHE values, this
dataset was significantly smaller than
the previously discussed IVEC dataset.
Therefore, DOE has concluded that it
lacks sufficient IVHE data to identify
IVHE efficiency levels more stringent
than the levels recommended in the
ACUAC/HP Working Group ECS Term
Sheet. In particular, many ACUHP
models currently on the market with
multiple stages of mechanical cooling
offer only one stage of mechanical
heating. DOE recognizes that the IVHE
metric (which includes part-load
operation) will incentivize development
of multiple stages of mechanical heating
in ACUHPs. However, at this time, there
are limited IVHE data available for
ACUHP models with multiple stages of
mechanical heating; therefore, it is
unclear which IVHE levels above the
recommended IVHE levels are attainable
across the range of capacities.
Consequently, for all efficiency levels
above the recommended efficiency
levels, DOE assigned the recommended
IVHE levels—i.e., for all IVEC levels
above the recommended IVEC levels for
ACUHPs, DOE did not analyze an
increase in IVHE levels above the
recommended IVHE levels.
For efficiency levels between the
IVHE baseline and the recommended
IVHE levels, DOE used its own test data
and confidential data provided by
certain industry members to identify
incremental IVHE levels corresponding
to the incremental IVEC levels.
Commercial buildings where ACUHPs
are currently installed tend to be
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dominated by cooling hours as
compared to heating hours (e.g., there
are 4,220 hours with a cooling demand
in the IVEC metric and only 1,745 hours
with a heating demand in the IVHE
metric). Further, as discussed, at this
time, there are limited IVHE data
available to quantify IVHE
improvements from design options that
impact only heating efficiency.
Therefore, the evaluation of amended
energy conservation standards for
ACUHPs is focused on the analysis of
higher cooling efficiency. While many
design options employed to achieve
higher cooling efficiency levels could
inherently result in higher heating
efficiency, DOE did not analyze design
options that improve only heating
efficiency.
DOE considered the efficiency levels
in terms of IVHE presented in Table IV.7
for this direct final rule.
Table IV. 7 ACUHP Efficiency Levels in Terms of IVHE
Efficiency Levels in Terms of IVHE
Small ACUHPs - ~65,000
Btu/hand <135,000 Btu/h
Cooling Capacity
Large ACUHPs - ~135,000
Btu/hand <240,000 Btu/h
Cooling Capacity
Very Large ACUHPs~240,000 Btu/h and <760,000
Btu/h Cooling Capacity
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3. Energy Modeling
As done for the January 2016 Direct
Final Rule (see 81 FR 2420, 2458–2459
(Jan. 15, 2016)), DOE developed
component wattage profiles and
performance correlations for each
efficiency level in this rulemaking
(discussed further in section IV.E of this
document). This served two purposes.
First, and as discussed in section IV.E
of this document, these component
wattage profiles and performance
correlations developed for this direct
final rule were used in the energy use
analysis, along with hourly building
cooling loads and generalized building
samples, to estimate the energy savings
associated with each efficiency level.
Second, as discussed in section IV.C.2.a
of this document, the developed
performance correlations, along with
industry data, were used to develop
IVEC values that translated the IEER
efficiency levels to the IVEC metric.
As previously mentioned in section
IV.C.1.b of this document, many of the
efficiency levels analyzed for the
January 2016 Direct Final Rule were still
appropriate to consider for this
rulemaking. For this rulemaking, DOE
repurposed component wattage profiles
and performance correlations from the
January 2016 Direct Final Rule analysis
for some of those efficiency levels also
included in the January 2016 Direct
Final Rule. Some IEER efficiency levels
for this direct final rule have an IEER
value that is close to but not exactly the
same as an IEER efficiency level
analyzed in the January 2016 Direct
Final Rule. In those cases, DOE adjusted
the calculations used to develop the
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Baseline
ELl
EL2
EL3
EL4
EL5
EL6
EL7
6.0
6.1
6.1
6.1
6.2
6.2
6.2
6.2
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6.0
6.0
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-
-
5.3
5.8
5.8
5.8
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-
-
-
component wattage profiles and
performance correlations for that
efficiency level from the January 2016
Direct Final Rule analysis so that the
resulting IEER would match the IEER
value of the new target IEER efficiency
level.
For new efficiency levels added in the
analysis for this direct final rule that are
not close to an IEER efficiency level
from the January 2016 Direct Final Rule,
DOE selected currently-available models
with rated IEER close to the IEER
efficiency level to use as the basis for
new component wattage profiles and
performance correlations. DOE used
publicly-available product literature for
the selected models to collect relevant
compressor, evaporator fan, condenser
fan, and capacity data. This information
was used to create component wattage
profiles and performance correlations as
a function of temperature for the new
efficiency levels.
These component wattage profiles
and performance correlations were then
used to calculate an IVEC value for each
efficiency level. As discussed in section
IV.C.2.a of this document, the IVEC
values resulting from these component
wattage profiles and performance
correlations were used to develop the
incremental IVEC efficiency levels
corresponding to each incremental IEER
efficiency level. More details regarding
the methodology for creating the
component wattage profiles and
performance correlations for each
efficiency level and equipment class are
presented in chapter 5 of the direct final
rule TSD.
DOE did not conduct similar energy
modeling for ACUHP representative
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units since ACUHP shipments represent
a very small portion of industry
shipments compared to ACUACs
shipments (10 percent versus 90
percent). Further, as discussed, in
section IV.C.2.a of this document, DOE
found no IVEC decrement between
ACUACs and ACUHPs of the same
supplementary heating type, and,
therefore, DOE did not analyze lower
IVEC efficiency levels for ACUHPs as
compared to ACUACs for all efficiency
levels, except for the levels
recommended in the ACUAC/HP
Working Group ECS Term Sheet. In
addition, because ACUHPs represent a
small portion of shipments, DOE noted,
based on equipment teardowns and an
extensive review of equipment
literature, that manufacturers generally
use the same basic design/platform for
equivalent ACUAC and ACUHP models.
DOE also considered the same design
changes for the ACUHP equipment
classes that were considered for the
ACUAC equipment classes within a
given capacity range. For these reasons,
DOE focused energy modeling on
ACUAC equipment. Although not
considered in the LCC and PBP
analyses, DOE did analyze ACUHP
equipment in the NIA. From this
analysis, DOE believes the energy
modeling conducted for ACUAC
equipment provides a good estimate of
ACUHP cooling performance and
provides the necessary information to
estimate the magnitude of the national
energy savings from increases in
ACUHP equipment efficiency.
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4. Impact of Low-GWP Refrigerants
On October 24, 2023, EPA published
in the Federal Register regulations to
restrict the use of HFC refrigerants in
specific sectors or subsectors (‘‘October
2023 EPA Final Rule’’). 88 FR 73098.
This includes establishing a GWP limit
of 700 for refrigerants used in light
commercial air conditioning and heat
pump systems (which includes
ACUACs and ACUHPs) installed
January 1, 2025 or later. Id. at 88 FR
73206, 73208. On December 26, 2023,
EPA published an interim final rule and
request for comment in the Federal
Register amending a provision of the
October 2023 EPA Final Rule allowing
one additional year, until January 1,
2026, for the installation of new
residential and light commercial air
conditioning and heat pump systems
using components manufactured or
imported prior to January 1, 2025. 88 FR
88825. ACUACs and ACUHPs available
on the market today use R–410A, which
has a GWP that exceeds this 700 GWP
limit. This will require manufacturers to
shift away from the use of R–410A to
low-GWP refrigerants.
In response to the May 2020 ECS RFI,
multiple stakeholders commented
regarding the transition to low-GWP
refrigerants and their impacts on
ACUACs and ACUHPs, which was well
before EPA took final regulatory action.
On this topic, the CA IOUs
recommended that DOE work closely
with the California Air Resources Board,
ASHRAE Standing Standard Project
Committee 15—Safety Standard for
Refrigeration Systems, and AHRI’s LowGWP Alternative Refrigeration
Evaluation Program to ensure that
equipment meeting low-GWP
requirements can meet any new
efficiency standard. (CA IOUs, EERE–
2019–BT–STD–0042–0020 at p. 5)
NEEA recommended that DOE
consider the impact of alternate
refrigerants on ACUAC efficiency,
including the technical feasibility and
economic implications of meeting new
and amended standard levels with
alternate refrigerants. (NEEA, EERE–
2019–BT–STD–0042–0024 at p. 9)
AHRI stated that changes to the
engineering analysis would be needed if
conducting an analysis at present due to
the transition to alternative refrigerants.
AHRI stated that the combined costs to
add sensors, controls, and other
components for new refrigerants,
including the cost of these refrigerants,
will increase the overall cost of the
subject equipment by 10–15 percent
over minimum designs of 2018. (AHRI,
EERE–2019–BT–STD–0042–0014 at p.
7)
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Trane stated that systems that use
A2L refrigerants will need more controls
and sensors for safety reasons, which it
predicted will impact the adoption of
the new technologies negatively. (Trane,
EERE–2019–BT–STD–0042–0016 at pp.
4–5) Trane also recommended that DOE
consider in its analysis the effect of new
low-GWP refrigerants on cost, design,
and size of units. (Trane, EERE–2019–
BT–STD–0042–0016 at p. 7) AHRI,
Carrier, and Trane also collectively
mentioned the Federal authority to
regulate refrigerants and the timing of
adoption of State building and safety
codes to support mildly flammable
(A2L) refrigerants. (AHRI, EERE–2019–
BT–STD–0042–0014 at p. 5; Carrier,
EERE–2019–BT–STD–0042–0013 at p. 7;
Trane, EERE–2019–BT–STD–0042–0016
at p. 4)
In the May 2022 TP/ECS RFI, DOE
requested data on the impact of lowGWP refrigerants as replacements for R–
410A on: (1) the cooling and heating
capacities and compressor power of
ACUACs and ACUHPs at various
temperature conditions, including, but
not limited to, the temperatures
currently included in the IEER metric;
and (2) the size and design of heat
exchangers and compressors used in
ACUACs and ACUHPs. 87 FR 31743,
31753 (May 25, 2022). DOE also sought
feedback and any additional data on the
cost of implementing low-GWP
refrigerants in ACUACs and ACUHPs
beyond the comments received in
response to the May 2020 ECS RFI. Id.
In response to DOE’s request for data
on the impact of low-GWP refrigerants
on capacities, compressor power, and
design of heat exchangers and
compressors in the May 2022 TP/ECS
RFI, Carrier stated that replacement
refrigerants require optimization and
compressor displacement changes
which could also impact performance
results, if not properly compensated for.
Carrier provided data for a pure cycle
analysis where equal compressor
isentropic efficiency, heat exchanger
efficiency, and system operating
conditions were assumed. The analysis
presented by Carrier indicates that new
low-GWP refrigerant alternatives R–32
and R–454B do not result in a
significant impact on measured EER,
IEER, and COP at 47 °F and 17 °F.
(Carrier, EERE–2022–BT–STD–0015–
0010 Attachment 1 at p. 17) Carrier
further commented that the required
displacement changes with the
alternative refrigerants it analyzed, so
compressor optimization is required.
Carrier also stated the mass flow rates
changed with the alternative refrigerants
it analyzed, so coil redesign may be
required. (Id.)
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Lennox stated that implementing lowGWP refrigerants will require extensive
product redesign from both a
performance and safety standard
perspective for ACUACs and ACUHPs.
(Lennox, EERE–2022–BT–STD–0015–
0009 at pp. 5–6)
With respect to the cost of
implementing low-GWP refrigerants in
ACUACs and ACUHPs, AHRI stated that
refrigerant charge generally increases
with increasing efficiency. AHRI added
that transporting factory-charged
systems with A2L refrigerants would be
more expensive than shipping existing
systems charged with non-flammable
refrigerants. AHRI further commented
that the Department of Transportation
has not approved special permits
allowing systems with larger charge
amounts to ship in the same manner as
those containing non-flammable
refrigerants. AHRI indicated that
without special permits, the expectation
is that systems over the charge size
threshold of 12 kilograms would need to
be shipped as HAZMAT, which would
be more costly. (AHRI, EERE–2022–BT–
STD–0015–0008 at p. 6)
Carrier stated that the likely
replacement for R–410A will be A2L
refrigerants with low-flame spread per
ASHRAE Standard 34, ‘‘Designation and
Safety Classification of Refrigerants.’’
(Carrier, EERE–2022–BT–STD–0015–
0010 Attachment 1 at p. 17) Carrier
further stated that per UL 60335–2–40
4th edition, ‘‘Household and Similar
Electrical Appliances—Safety—Part 2–
40: Particular Requirements for
Electrical Heat Pumps, AirConditioners, and Dehumidifiers,’’ and
ASHRAE 15–2022, ‘‘Safety Standard for
Refrigeration Systems,’’ additional
changes would be required for A2L
mitigation, including addition of a
refrigerant sensor, additional labeling,
testing, and certification. (Id.) Carrier
commented that it is currently
conducting design work and system
optimization for the anticipated 2025
implementation date, but that it has not
determined final details on cost
impacts. (Id.) Carrier also stated that
there is variability in refrigerant prices
due to supply chain issues and it
anticipates that the start of the
American Innovation and
Manufacturing (‘‘AIM’’) Act regulations
would increase those prices. (Id.)
NEEA recommended that the analysis
consider the effects on efficiency of the
likely and approved refrigerant options
for ACUACs available domestically and
internationally. NEEA specifically
recommended that DOE address the
technical feasibility and economic
implications of meeting amended
standard levels with equipment that
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uses different refrigerants, similar to the
analysis DOE conducted for the 2016
beverage vending machine energy
conservation standards rulemaking (81
FR 1028 (Jan. 8, 2016)). (NEEA, EERE–
2022–BT–STD–0015–0013 at p. 8)
More generally in response to the May
2022 TP/ECS RFI, NYSERDA
recommended that in evaluating
amended energy conservation
standards, DOE should be mindful of
the transition to low-GWP refrigerants
that will be more common, even if not
required, by 2029. (NYSERDA, EERE–
2022–BT–STD–0015–0007 at p. 3)
In response, DOE notes that these
comments were received prior to the
2023 ECS Negotiations, and in
particular, comments received in
response to the May 2020 ECS RFI were
received three years prior to the 2023
ECS Negotiations. Therefore,
manufacturers’ understanding of the
impacts of low-GWP refrigerants may
have changed since the time of the
drafting of some of the comments
received. DOE conducted multiple
rounds of manufacturer interviews to
support the analyses for this direct final
rule. In the first round of manufacturer
interviews, DOE sought feedback on its
engineering analysis, and the
Department particularly sought input on
the potential impacts of low-GWP
refrigerants. DOE understands that
manufacturers are currently still in the
process of developing models that use
low-GWP refrigerants and consequently
there are currently no market efficiency
data available for models using lowGWP refrigerants. However, based on
feedback received to this point during
the course of the rulemaking (including
manufacturer interviews and Carrier’s
comment providing preliminary testing
data), DOE has concluded that
implementation of low-GWP refrigerants
such as R–32 and R–454B is unlikely to
result in a significant impact on
measured efficiency of ACUACs and
ACUHPs. Therefore, DOE conducted its
engineering analysis for this direct final
rule using efficiency data for models
currently on the market that use R–
410A.
With respect to suggestions that DOE
consider the impact of cost of
equipment using A2L refrigerants, DOE
acknowledges that design changes to
implement A2L refrigerants could
impact the cost of equipment and that
models using A2L refrigerants may
require additional controls or sensors to
detect leaks and additional labeling.
However, DOE’s research and feedback
from manufacturer interviews suggests
that based on information available at
this time, these cost differences are not
likely to have a significant impact on
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the marginal cost to improve efficiency
(i.e., the costs to implement these
changes will likely be similar at each
efficiency level). DOE concludes that
the switch to A2L refrigerants will not
make a significant difference to the
incremental costs of higher efficiency
levels as compared to R–410A.
Similarly, to the extent that shipping
costs may increase in some cases for
equipment shipped with A2L
refrigerants, DOE does not expect these
shipping costs are likely to have a
significant impact on the marginal costs
to consumers. Therefore, DOE
conducted its cost analysis, including
shipping costs, considering models
currently on the market that use R–
410A.
5. Cost Analysis
a. MPC Estimates
The cost analysis portion of the
engineering analysis is conducted using
one or a combination of cost
approaches. The selection of cost
approach depends on a suite of factors,
including the availability and reliability
of public information, characteristics of
the regulated equipment, and the
availability and timeliness of
purchasing the equipment on the
market. The cost approaches are
summarized as follows:
• Physical teardowns: Under this
approach, DOE physically dismantles
commercially-available equipment,
component-by-component, to develop a
detailed bill of materials for the
equipment.
• Catalog teardowns: In lieu of
physically deconstructing equipment,
DOE identifies each component using
parts diagrams (available from
manufacturer websites or appliance
repair websites, for example) to develop
the bill of materials for the equipment.
• Price surveys: If neither a physical
nor catalog teardown is feasible (e.g., for
tightly integrated products such as
fluorescent lamps, which are infeasible
to disassemble and for which parts
diagrams are unavailable), costprohibitive, or otherwise impractical
(e.g., large commercial boilers), DOE
conducts price surveys using publiclyavailable pricing data published on
major online retailer websites and/or by
soliciting prices from distributors and
other commercial channels.
In the May 2020 ECS RFI, DOE sought
input on the increase in manufacturer
production cost (‘‘MPC’’) associated
with incorporating particular design
options and/or with reaching efficiency
levels above the baseline. 85 FR 27941,
27949 (May 12. 2020). Specifically, DOE
was interested in whether and how the
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costs estimated in the January 2016
Direct Final Rule have changed since
the time of that analysis. Id. DOE also
requested information on the
investments necessary to incorporate
specific design options, including, but
not limited to, costs related to new or
modified tooling (if any), materials,
engineering and development efforts to
implement each design option, and
manufacturing/production impacts. Id.
Regarding feedback on MPC
associated with each design option and
how costs estimated in the January 2016
Direct Final Rule have changed, AHRI
commented that the work done to
quantify MPCs was generally accurate at
the time of the analysis. Regarding the
list of design options to improve
efficiency, AHRI asserted that ACUAC
progression to larger heat exchangers
was not properly characterized in the
January 2016 Direct Final Rule and that
increases to outdoor and indoor fan
efficiency were missing. (AHRI, EERE–
2019–BT–STD–0042–0014 at p. 7)
DOE notes that AHRI’s comment was
received three years ago and prior to the
2023 ECS Negotiations. As discussed, as
part of the analyses supporting the 2023
ECS Negotiations, DOE contractors
conducted engineering interviews with
manufacturers (all of which are AHRI
members) and analyzed the market after
the January 1, 2023 compliance date.
During these discussions, DOE
contractors received feedback on design
options used in higher efficiency
equipment (including heat exchangers,
indoor fans, and outdoor fans), and the
MPCs developed for this direct final
rule analysis reflect the feedback
received in those confidential
interviews. Additionally, the costefficiency curves were developed based
on ACUAC and ACUHP models
available on the market at the time of
the 2023 ECS Negotiations. To the
extent that available models included
larger heat exchangers and increases to
outdoor and indoor fan efficiency, the
improvement in efficiency and
corresponding cost for these design
options are reflected in the costefficiency curves presented in this
direct final rule. Further, the costefficiency curves were presented during
multiple meetings during the 2023 ECS
Negotiations 32 and ACUAC/HP
Working Group members had ample
opportunity to provide feedback.
In the present case, DOE conducted
the cost analysis using a combination of
physical teardowns and catalog
32 See www.regulations.gov/document/EERE2022-BT-STD-0015-0077 and www.regulations.gov/
document/EERE-2022-BT-STD-0015-0080 for
presentations during the 2023 ECS Negotiations
with cost efficiency curves.
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teardowns of models to assess how
manufacturing costs change with
increased equipment efficiency. The
resulting bill of materials (‘‘BOM’’)
provides the basis for the MPC
estimates. For each equipment class,
DOE initially estimated the MPCs for
models using physical and catalog
teardowns for each manufacturer that
included sufficient information in their
equipment literature to conduct the cost
estimation analysis. As discussed in
section IV.C.1 of this document, DOE
specifically focused its analysis on 7.5ton, 15-ton, and 30-ton ACUAC models
with electric resistance heating or no
heating.
To collect additional information
regarding design options and costs
associated with equipment at different
efficiency levels, DOE provided design
details and cost estimates, broken out by
production factors (materials, labor,
depreciation, and overhead) and also by
major subassemblies (e.g., indoor/
outdoor heat exchangers and fan
assemblies, controls, sealed system) and
components (e.g., compressors, fan
motors), for each model analyzed in its
physical and catalog teardowns to the
manufacturers of the models. DOE
refined its analysis based on all data and
feedback provided by manufacturers in
confidential manufacturer interviews.
As previously discussed, DOE did not
consider any design changes specific to
improving heating efficiency, and the
cost-efficiency analysis was focused on
cooling mode operation. Further, as
discussed, because market efficiency
data in terms of the new IVEC metric are
not available beyond the limited dataset
provided to DOE contractors during the
Negotiations, the cost-efficiency
analysis was conducted based on IEER,
and then IVEC values were developed to
translate the IEER efficiency levels to
IVEC.
DOE analyzed costs (using physical
teardowns and catalog teardowns)
across the full range of manufacturers
and equipment offerings for which DOE
identified sufficient data to conduct the
manufacturing cost estimation analysis.
Therefore, DOE’s cost estimates reflect
the various design pathways that each
manufacturer uses to increase efficiency
in their current model offerings. The
following paragraphs provide additional
detail on DOE’s methodology for
developing MPC estimates, and further
detail is included in chapter 5 of the
direct final rule TSD. Generally, the
methodology used for this direct final
rule is consistent with the methodology
used in the January 2016 Direct Final
Rule analysis. 81 FR 2420, 2464 (Jan. 15,
2016).
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For small and large equipment classes
(represented by 7.5-ton and 15-ton
capacities, respectively), DOE
developed cost-efficiency curves (i.e.,
relationship between rated IEER and
MPC estimate) for each manufacturer
individually, and then aggregated the
manufacturer-specific cost curves into
an industry-average cost-efficiency
curve. For efficiency levels for which
there were no analyzed models from a
given manufacturer with rated IEER
values that exactly match the efficiency
level, DOE’s primary method to
determine the MPCs for those efficiency
levels for that manufacturer was to
interpolate or extrapolate results. For
example, to determine the MPC at 7.5ton Efficiency Level 1 (15.4 IEER) for
one manufacturer, DOE interpolated
between the results for models rated at
14.8 IEER and 15.6 IEER. For cases in
which a manufacturer does not offer a
model near a given efficiency level at
the representative capacity but offers
models at that efficiency level at a
similar capacity, DOE estimated the
costs of similar capacity models at the
target efficiency level and then scaled
those costs up or down to reflect the
capacity difference and estimate what
the cost would be for that model to
achieve that efficiency level at the
representative capacity. For example, to
determine the MPC at 7.5-ton Efficiency
Level 5 (19.9 IEER) for one
manufacturer, DOE scaled down the
cost of an 8.5-ton model with a rated
IEER of 19.9 to reflect DOE’s estimate of
the cost of a 7.5-ton model with
comparable efficiency, by developing a
cost per efficiency times capacity
relationship for that specific model line.
There were certain efficiency levels for
which some manufacturers did not offer
models at or near the target efficiency
level, even including capacities slightly
different than the representative
capacity. For these levels (for example,
the 15-ton Efficiency Level 4 (20.1
IEER)), DOE calculated the relative
percentage increase in cost relative to
baseline for a manufacturer with a
commercially-available model at that
level, and then applied that percentage
increase to the baseline cost for the
other manufacturers to estimate MPCs at
that level for each manufacturer.
For the very large equipment class
represented by 30-ton representative
units, DOE identified fewer
manufacturers offering equipment in
this capacity range. After collecting
information for all models with
sufficient data available to develop cost
estimates, DOE concluded that there are
insufficient models available to develop
separate cost curves for each
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manufacturer and then combine into an
industry-average cost-efficiency curve as
was done for the small and large
equipment classes. Therefore, DOE
developed a single industry-wide cost
curve for very large equipment
including models from all identified
manufacturers. Additionally, DOE’s
review of equipment available on the
market showed that there are two
platform types of equipment for 30-ton
models (and the very large equipment
class more broadly): (1) models with
smaller cabinets for light commercial
applications, and (2) models with larger
cabinets for industrial-type applications.
DOE concluded that there are
insufficient models with the larger
cabinet size spanning the range of
efficiency levels being considered (both
at the low and high ends of the
efficiency range) to develop cost
estimates based on the larger cabinet
size. Therefore, DOE developed
incremental MPCs based on the smaller
cabinet platform.
As discussed, DOE’s cost analysis
focused on ACUAC models with electric
resistance heating or no heating. In the
economic analyses for this rulemaking,
the MPCs developed for ACUACs with
electric resistance heating or no heating
were applied for all ACUACs, including
ACUACs with all other types of heating.
As previously discussed, DOE has found
that ACUACs with electric resistance
heating or no heating model lines and
ACUACs with all other types of heating
model lines generally differ only in the
type of supplemental heating and are
otherwise identical; therefore, the
incremental MPCs for ACUACs with
electric resistance heating or no heating
and ACUACs with all other types of
heating would be the same. In other
words, the cost to achieve higher
efficiencies would not be impacted by
the presence of a furnace. DOE also
developed a baseline cost differential
between a baseline ACUAC model with
electric resistance heating or no heating
as compared to a baseline ACUHP
model, reflecting the cost differentials of
heat pump technology. Consistent with
the analysis from the January 2016
Direct Final Rule and feedback received
during manufacturer interviews, DOE
applied the incremental MPC adders
determined for ACUACs with electric
resistance or no heating to develop cost
curves for ACUHPs. In other words,
while there is an absolute cost
differential associated with heat pump
technology, DOE assumed that this cost
differential remained constant across all
efficiency levels (e.g., the cost to achieve
higher efficiencies would not be
impacted by the presence of a reversing
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valve). The one exception to this
approach was developing costs for the
recommended efficiency levels for
ACUHPs, because as discussed in
section IV.C.2.a of this document, the
IVEC values at those efficiency levels for
ACUHP equipment classes were slightly
different than the IVECs for the
comparable efficiency levels for the
ACUACs with all other types of
heating., For these recommended
ACUHP IVEC levels, DOE used
interpolation to adjust the MPC
estimates for the corresponding ACUAC
levels to reflect the slight difference in
IVEC levels between ACUACS and
ACUHPS. As discussed in section IV.C.2
of this document, DOE translated the
cost-efficiency relationships based on
IEER to IVEC and IVHE. Further
discussion of DOE’s methodology for
developing MPC estimates is included
in chapter 5 of the direct final rule TSD.
b. MSP Estimates, Manufacturer
Markup, and Shipping Costs
To account for manufacturers’ nonproduction costs and profit margin, DOE
applies a multiplier (the manufacturer
markup) to the MPC. The resulting
manufacturer selling price (‘‘MSP’’) is
the price at which the manufacturer
distributes a unit into commerce. DOE
developed an average manufacturer
markup by examining the annual
Securities and Exchange Commission
(‘‘SEC’’) 10–K reports 33 filed by
publicly-traded manufacturers primarily
engaged in commercial package air
conditioning and heating equipment
manufacturing and whose combined
product range includes ACUACs and
ACUHPs.
In the May 2020 ECS RFI, DOE
requested feedback on whether
manufacturer mark-ups determined in
the January 2016 Direct Final Rule are
still appropriate for ACUACs and
ACUHPs. 85 FR 27941, 27950 (May 12,
2020). In response, AHRI stated that its
members found that the manufacturer
markups from the January 2016 Direct
Final Rule are still appropriate for
ACUACs. (AHRI, EERE–2019–BT–STD–
0042–0014 at p. 8) AHRI stated that
manufacturer markups for ACUHPs are
up to 10 percent higher than those
determined in the January 2016 Direct
Final Rule. (Id.)
DOE incorporated AHRI’s feedback
into its current analysis, estimating
manufacturer markups of 1.30 for small
ACUACs, 1.32 for small ACUHPs, 1.34
for large ACUACs, 1.36 for large
ACUHPs, 1.41 for very large ACUACs,
and 1.43 for very large ACUHPs. These
markups were applied to MPC estimates
to develop MSP estimates. See section
IV.J.2.d of this document and chapter 12
of the direct final rule TSD for
additional discussion on manufacturer
markups.
Because the design options associated
with certain incremental efficiency level
involved increases in cabinet sizes, DOE
also estimated the incremental shipping
cost at each efficiency level separate
from the MSP. More specifically, DOE
estimated the per-unit shipping costs
based on the cabinet dimensions at each
efficiency level, assuming the use of a
typical 53-foot flatbed trailer. For
shipping of HVAC equipment, the size
threshold of a trailer is typically met
before the weight threshold. DOE used
the same approach used for estimating
the cost-efficiency relationship,
evaluating shipping costs for each
manufacturer individually then
averaging the results for the small and
large equipment classes, and (for the
reasons described for MPC estimates in
section IV.C.5.a of this document) a
single industry-wide shipping cost
relationship for the very large
equipment class including models from
all identified manufacturers. Further
discussion of DOE’s methodology for
developing shipping cost estimates is
included in chapter 5 of the direct final
rule TSD.
6. Cost-Efficiency Results
The results of the engineering analysis
are reported as cost-efficiency data (or
‘‘curves’’) in the form of IVEC versus
MSP plus shipping cost (in dollars),
which form the basis for subsequent
analyses. As previously mentioned,
DOE’s cost analysis focused on ACUACs
with electric resistance heating or no
heating, which were also used to
represent the MPCs of ACUACs with all
other types of heating. The incremental
MPC estimates for these classes were
applied to ACUHPs. The total MPC,
shipping cost, and MSP plus shipping
cost for each efficiency level for the
ACUAC equipment classes are listed in
Table IV.8 through Table IV.10. The
total MPC, shipping cost, and MSP plus
shipping cost for each efficiency level
for the ACUHP equipment classes
(which, as discussed, are based on the
same incremental MPC estimates as for
ACUAC equipment classes) can be
found in chapter 5 of the direct final
rule TSD.
Table IV.8 Manufacturer Production Costs and Manufacturer Selling Price Plus
Shippin2 Costs for Small ACUACs
Efficiency Level
TotalMPC
Shipping Cost
MSP Plus Shipping
Cost
Baseline
$4,138.28
$4,283.90
$4,370.83
$4,472.63
$4,670.41
$4,978.23
$5,258.34
$5,566.03
$715.43
$715.43
$715.43
$715.43
$715.43
$822.74
$822.74
$822.74
$6,095.19
$6,284.50
$6,397.51
$6,529.85
$6,786.96
$7,294.44
$7,658.58
$8,058.59
* Recommended efficiency level
33 U.S. Securities and Exchange Commission,
Annual 10–K Reports (Various Years) (available at:
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www.sec.gov/edgar/searchedgar/
companysearch.html) (last accessed Oct. 3, 2023).
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EL2
EL3
EL4*
EL5
EL6
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Table IV.9 Manufacturer Production Costs and Manufacturer Selling Price Plus
Shippin2 Costs for Lar2e ACUACs
Efficiency Level
TotalMPC
Shipping Cost
MSP Plus Shipping
Cost
Baseline
EL 1
EL2*
EL3
EL4
$7,376.61
$7,533.13
$7,689.65
$8,421.29
$9,260.56
$1,032.90
$1,056.38
$1,079.85
$1,189.40
$1,228.53
$10,917.56
$11,150.77
$11,383.98
$12,473.93
$13,637.67
* Recommended efficiency level
Table IV.10 Manufacturer Production Costs and Manufacturer Selling Price Plus
Shippin2 Costs for Very Lar2e ACUACs
Efficiency Level
TotalMPC
Shipping Cost
MSP Plus Shipping
Cost
Baseline
EL 1*
EL2
EL3
$14,383.32
$14,522.06
$16,316.97
$19,754.59
$1,565.00
$1,565.00
$1,565.00
$2,347.50
$21,845.48
$22,041.11
$24,571.92
$30,201.47
* Recommended efficiency level
The markups analysis develops
appropriate markups (e.g., manufacturer
markups, retailer markups, distributor
markups, contractor markups) in the
distribution chain and sales taxes to
convert the MPC/MSP estimates derived
in the engineering analysis to consumer
prices, which are then used in the LCC
and PBP analysis. The markups are
multiplicative factors applied to MPCs
and MSPs. At each step in the
distribution channel, companies mark
up the price of the equipment to cover
business costs and profit margin. Before
developing markups, DOE defines key
market participants and identifies
distribution channels.
In response to the May 2020 ECS RFI,
AHRI commented that it is researching
distribution channels; however, it had
no feedback at the time the comment
was written. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 8) Carrier
commented that it has not observed
large shifts in the distribution channels,
as the industry for the subject
equipment remains mature in the U.S.
(Carrier, EERE–2019–BT–STD–0042–
0013 at p. 12)
However, AHRI disagreed with DOE’s
use of incremental markups, citing an
analysis by Everett Shorey from 2014,
and recommended that DOE revert to
using the baseline markup for both
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distributors, with larger discounts from
manufacturers, and thereby resulting in
lower prices to contractors. PGE stated
that raising the minimum efficiency
ratings for ACUACs will have a lesser
negative wholesale pricing impact due
to this volume. (PGE, EERE–2019–BT–
STD–0042–0009 at p. 2)
DOE reviewed the distribution
channels and overall markups from the
January 2016 Direct Final Rule at the
February 9, 2023 public meeting
webinar for this rulemaking (see
presentation slides, EERE–2022–BT–
STD–0015–0073 at pp. 20–23), with
updated overall markups presented at
the March 21–22, 2023 ACUAC/HP
Working Group meeting (see
presentation slides, EERE–2022–BT–
STD–0015–0080 at pp. 30–33). There
was no stakeholder discussion regarding
the distribution channels or markups at
these meetings. For this reason, DOE
continues to use the distribution
channels from the January 2016 Direct
Final Rule, as well as the same overall
methodology, but with updated inputs.
1. Distribution Channels
For ACUACs and ACUHPs, the main
parties in the distribution channel are:
(1) manufacturers; (2) wholesalers; (3)
small or large mechanical contractors,
and (4) consumers. See chapter 6 and
appendix 6A of the direct final rule TSD
for a more detailed discussion about
parties in the distribution chain.
For the direct final rule, DOE
characterized three distribution
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D. Markups Analysis
baseline and incremental costs. (AHRI,
EERE–2019–BT–STD–0042–0014 at p.
8)
DOE responded thoroughly to the
Shorey report in the previous direct
final rule. See 81 FR 2420, 2468 (Jan. 15,
2016). In summary, DOE’s incremental
markup approach assumes that an
increase in profitability, which is
implied by keeping a fixed markup
when the product price goes up, is
unlikely to be viable over time in
reasonably competitive markets. DOE
recognizes that actors in the distribution
chains are likely to seek to maintain the
same markup on appliances in response
to changes in manufacturer sales prices
after an amendment to energy
conservation standards. However, DOE
believes that retail pricing is likely to
adjust over time as those actors are
forces to readjust their markups to reach
a medium-term equilibrium in which
per-unit profit is relatively unchanged
before and after standards are
implemented.
DOE acknowledges that markup
practices in response to amended
standards are complex and vary across
business conditions. However, DOE’s
analysis necessarily only considers
changes in appliance offerings that
occur in response to amended
standards. DOE continues to maintain
that its assumption that standards do
not facilitate a sustainable increase in
profitability is reasonable.
PGE commented that ACUACs are
purchased in larger volume by
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channels to describe how the ACUAC
and ACUHP equipment passes from the
manufacturer to the commercial
consumer. The first of these channels,
the replacement distribution channel,
estimated to represent 66.0 percent of
shipments, was characterized as
follows:
Manufacturer → Wholesaler → Small or
Large Mechanical Contractor →
Consumer
The second channel, the new
construction distribution channel,
estimated to represent 16.5 percent of
shipments, was characterized as
follows:
Manufacturer → Wholesaler → Small or
Large Mechanical Contractor →
General Contractor → Consumer
In the third distribution channel,
which applies to both the replacement
and new construction markets,
estimated to represent 17.5 percent of
shipments, the manufacturer sells the
equipment directly to the customer
through a national account:
Manufacturer → Consumer (National
Account)
2. Markups and Sales Tax
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DOE developed baseline and
incremental markups for each actor in
the distribution channels. Baseline
markups are applied to the price of
equipment with baseline efficiency,
while incremental markups are applied
to the difference in price between
baseline and higher-efficiency models
(the incremental cost increase). The
incremental markup is typically less
than the baseline markup and is
designed to maintain similar per-unit
operating profit before and after new or
amended standards.34
Following the same approach applied
in the January 2016 Direct Final Rule,
DOE relied on several sources to
estimate average baseline and
incremental markups, including: (1) the
2017 Annual Wholesale Trade Survey
for ‘‘Hardware and Plumbing and
Heating Equipment and Supplies
Merchant Wholesaler’’ 35 to develop
wholesaler markups, and (2) U.S.
Census Bureau’s 2017 Economic Census
34 Because the projected price of standardscompliant equipment is typically higher than the
price of baseline equipment, using the same markup
for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While
such an outcome is possible, DOE maintains that in
markets that are reasonably competitive it is
unlikely that standards would lead to a sustainable
increase in profitability in the long run.
35 U.S. Census Bureau, 2017 Annual Wholesale
Trade Survey (available at: www.census.gov/data/
tables/2017/econ/awts/annual-reports.html) (last
accessed Feb. 7, 2023).
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data 36 for the commercial and
institutional building construction
industry to develop mechanical and
general contractor markups. In addition,
DOE used the 2005 Air Conditioning
Contractors of America’s (‘‘ACCA’’)
financial analysis for the heating,
ventilation, air conditioning, and
refrigeration (‘‘HVACR’’) contracting
industry 37 to disaggregate the
mechanical contractor markups into
small and large, replacement and new
construction markets.
In addition to the markups, DOE
derived State and local taxes from data
provided by the Sales Tax
Clearinghouse.38 These data represent
weighted-average taxes that include
county and city rates. DOE derived
population-weighted average tax values
for each of the regions from the Energy
Information Administration’s 2018
Commercial Building Energy
Consumption Survey (‘‘CBECS 2018’’) 39
considered in the analysis.
Chapter 6 of the direct final rule TSD
provides details on DOE’s development
of markups for ACUACs and ACUHPs.
E. Energy Use Analysis
The purpose of the energy use
analysis is to determine the annual
energy consumption of ACUACs at
different efficiencies for a representative
sample of U.S. commercial buildings,
and to assess the energy savings
potential of increased equipment
efficiency. DOE did not analyze ACUHP
energy use because, for the reasons
explained in section IV.C.3 of this
document, the energy modeling in the
engineering analysis was performed
only for ACUAC equipment.
The energy use analysis estimates the
range of energy use of ACUACs in the
field (i.e., as they are actually used by
consumers). The energy use analysis
provides the basis for other analyses
DOE performed, particularly
assessments of the energy savings and
the savings in consumer operating costs
that could result from adoption of
amended or new standards.
Chapter 7 of the direct final rule TSDs
provides details on DOE’s energy use
36 U.S. Census Bureau, 2017 Economic Census
Data (2017) (available at: www.census.gov/econ/)
(last accessed Feb. 7, 2023).
37 Air Conditioning Contractors of America
(ACCA), Financial Analysis for the HVACR
Contracting Industry: 2005 (available at:
www.acca.org/store/) (last accessed Feb. 7, 2023).
38 Sales Tax Clearinghouse Inc., State Sales Tax
Rates Along with Combined Average City and
County Rates, 2023 (available at: thestc.com/
STrates.stm) (last accessed Sept. 11, 2023).
39 Energy Information Administration (EIA), 2018
Commercial Building Energy Consumption Survey
(available at: www.eia.gov/consumption/
commercial/) (last accessed August 19, 2023).
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analysis for ACUACs. DOE developed
engineering correlation data and energy
consumption estimates only for the
ACUAC equipment classes that have
electric resistance heating or no heating.
For equipment classes with all other
types of heating, DOE assumed that the
incremental change in efficiency, and
hence, energy savings and energy cost
savings, would be similar to the values
calculated for the equipment classes
with electric resistance heating or no
heating.
1. System-level Calculations
DOE based the energy use estimates
for all equipment classes on three sets
of input data:
(1) The engineering analysis provided
data that were used to calculate the
equipment net capacity, compressor,
and condenser power consumption as a
function of outdoor air temperature
(‘‘OAT’’), the indoor fan power as a
function of external static pressure
(‘‘ESP’’), and controls power (constant),
for each equipment stage at each
efficiency level. The compressor,
condenser, indoor fan, and controls are
referred to as the ‘‘system components’’
in the discussion that follows. The ‘‘net
capacity’’ is defined as the maximumstage system capacity minus the heat
generated by the indoor fan. DOE
assumed that the ESPs appropriate to
each equipment class were those agreed
upon in the ACUAC/HP Working Group
TP Term Sheet, plus an increment of 0.1
to account for the economizer pressure
drop (also included in the ACUAC/HP
Working Group TP Term Sheet).
(2) Hourly A/C system data were
generated using Energy Plus for 11
commercial building prototypes, 4
building vintages, and 16 climate zones;
as each building prototype includes
multiple systems serving multiple
zones, the total number of simulated
systems in the 11 commercial building
prototypes is 48. Given 4 vintages and
16 climates, this leads to a total of 3,072
individual systems. DOE used TMY3
weather data as simulation input, with
the cities used to represent each climate
zone the same as those used in the
ACUAC/ACUHP Test Procedure. The
simulation data account for economizer
use. The hourly data extracted from the
simulations for each system included
the total system load (heat removed
from the space), the fan fraction
(fraction of the hour that the fan is on),
and cooling and heating coil rates. The
coil cooling/heating rates were used
only to determine the system operating
mode.
(3) Data from the Commercial
Building Energy Consumption Survey
(‘‘CBECS’’) 2018 were used to estimate,
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for those buildings using packaged
cooling systems, the relative share of
floor space by Census Division and
building type. In the 2015 analysis, this
description of the relevant features of
the building stock with associated
weights was referred to as the
Generalized Building Sample (‘‘GBS’’).
DOE prepared the engineering data for
input to the energy use analysis as
follows: For each EL and equipment
stage, the engineering correlations were
used to calculate the net capacity and
component power consumption for a set
of integer temperatures spanning the
range 30 °F to 110 °F (which exceeds the
maximum temperature in the TMY3
data). The capacity and power
consumption data were then scaled by
the system nominal capacity; the power
consumption is, therefore, defined on a
per-unit-of-capacity basis. The system
nominal capacity was defined as the
maximum stage capacity at 95 °F.
DOE processed the building
simulation data for input to the energy
use calculation as follows: First, the
data were scaled to the nominal system
capacity. For this analysis, consistent
with assumption used in the
development of the ACUAC/ACUHP
Test Procedure, DOE assumed that the
system capacity was equal to 1.15 times
the peak hourly load. Next, DOE
assigned one of four operating modes to
each hour: (1) off (zero fan energy use);
(2) fan only (fan energy >0 and coil rates
= 0); (3) cooling (cooling coil rate >0),
and (4) heating (heating coil rate >0).
For multizone variable air volume
(‘‘VAV’’) systems, there were a few
hours where both cooling and heating
rates are positive; as these hours were
dominated by the cooling load, they
were assigned to cooling mode.
DOE combined the building
simulation data with the engineering
data to determine the energy use in each
hour, and summed this energy use over
all hours to determine the annual
summer and winter energy use per unit
of capacity. The summer season was
defined as May through September, and
the winter season as all other months in
the year. In each hour, the energy use
calculations are adjusted based on the
system operating mode:
• Fan-only mode: the engineering
analysis provided a specific value for
fan power during fan-only operation;
during these hours the energy use is
equal to the fan power multiplied by the
fan fraction (to account for the fact that
the system may be off during part of the
hour) plus the controls power.
• Heating mode: as discussed with
the ACUAC/HP Working Group, DOE
assumed that the fan would operate at
maximum stage during heating hours;
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during these hours the energy use is
equal to the fan power multiplied by the
fan fraction (to account for the fact that
the system may be off during part of the
hour) plus the controls power at
maximum stage.
• Cooling mode: all equipment
designs include multi-stage
compressors, so the calculation must
first determine which stages are
operating during the hour. DOE
calculated the total heat removed, and
compared this to the net capacity at
each stage; the highest stage that is less
than the total load is the lower stage,
and the next stage up is the upper stage.
The fraction of load allocated to each
stage determines the fraction of the hour
that the system operates in each stage
(equations describing these calculations
are provided in chapter 7 of the direct
final rule TSD). DOE used the values of
component power for the OAT in the
hour to calculate the energy use for the
upper and lower stages. The total energy
use is equal to the weighted sum of the
values for the lower and upper stages.
If the lower stage was off, DOE 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–
2007, ‘‘2007 Standard for Performance
Rating of Commercial and Industrial
Unitary Air-Conditioning and Heat
Pump Equipment.’’
• Off mode: the energy use is equal to
the controls power for the fan-only
mode.
DOE converted the system-level
energy use data to building-level energy
use data by averaging the energy use
over all systems in a building. To
calculate this average, DOE weighted
each system based on the system
nominal capacity. DOE also accounted
for the possibility that installation of
new equipment would require a
conversion curb. DOE estimated that the
presence of a conversion curb would
add 0.2 to the ESP, with a resulting
adjustment to fan power and system net
capacity. DOE calculated the energy use
two times for each system—once with
no assumed conversion curb, and once
with the assumed conversion curb. DOE
then averaged these results to get a
single value for each system. The
percent of installations with and
without conversion curbs, for each
equipment class and efficiency level,
was estimated based on data collected
for the January 2016 Direct Final Rule.
These data were adjusted to account for
the current equipment baseline, and the
cross-walk between IEER and IVEC, as
discussed during the 2023 ECS
Negotiations. DOE converted the perunit energy use to a value appropriate
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44087
to each representative unit by
multiplying the energy use by the
representative unit capacity.
2. Generalized Building Sample
The calculations described in the
previous section result in summer and
winter energy use values for each
building prototype, vintage, and
climate. To use these data in the LCC,
sample weights must be defined that
reflect the relative frequency of each of
these attributes in the building stock. In
addition to building prototype, vintage,
and climate, DOE included Census
Division (‘‘CD’’) and building type as
attributes in the building sample.
Census Division is included because
energy prices depend on these regions.
Building type is included as this is the
categorization used in CBECS and in the
AEO.
DOE used CBECS 2018 to determine
the total floor space cooled by packaged
equipment distributed by Census
Division and building type as encoded
by Principal Building Activity (‘‘PBA’’)
in CBECS. DOE mapped the CBECS PBA
definitions to the building type
definition used in the AEO commercial
demand module, and the Department
used the AEO building type definitions
as categories in the LCC sample. In
general, the mapping of building
prototype to building type is
straightforward (for example, office,
retail, assembly). For the food sales and
educational building types, there are
two building prototypes (i.e., fullservice and quick-service, and primary
and secondary schools respectively).
Additional data available in CBECS
were used to calculate the percentage of
building type floor space to allocate to
each building prototype.
DOE used four vintage categories: pre1980, 1980–2003, 2004–2018 and 2019–
2029. DOE used CBECS2018 to
apportion floor space by vintage and
building type for the first three vintage
categories. For the fourth category, DOE
used AEO 2023 commercial floor space
projections to adjust the floor space to
the compliance year 2029. DOE used the
AEO to estimate, for the period 2019–
2029, the floor space added and
demolished relative to existing floor
space in 2018, for each building type.
DOE used these percentages to calculate
the existing floor space by vintage and
building type in 2029, then converted
the absolute numbers to percentages.
DOE combined the climate zones
(‘‘CZ’’) and Census Divisions into a set
of 28 distinct sub-regions, using
population data to estimate the weight
for each region. These weights were
used to distribute the floor space by CD
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into floor space by CD–CZ combined
sub-regions.
DOE used the building simulation
data to estimate the total cooling
capacity per square foot of cooled floor
space for each climate zone, building
type and vintage. DOE used the capacity
per square foot numbers to convert total
cooled floor space to total installed
capacity. DOE assigned a weight to each
combination of attributes in the building
sample based on the percentage of
installed capacity.
DOE tailored the sample weights for
the small, large, and very large
equipment classes using a filter based
on system nominal capacity. If the
system nominal capacity was less than
0.8 times the representative unit
capacity, the system was excluded from
the sample (and from the calculation of
building-level energy use).
3. Energy Use Adjustment Factors
Building simulations reflect idealized
conditions and may over-represent or
under-represent heating and cooling
loads relative to real-world conditions.
In the January 2016 Direct Final Rule,
DOE’s analysis relied on building
simulation data that had been calibrated
to CBECS 1995. In the current analysis,
DOE’s building simulations were not
calibrated, so DOE accounted for any
deviations from real-world conditions
by calculating energy use adjustment
factors.
DOE calculated these factors as
follows:
• DOE used CBECS 2018 estimates of
cooling and ventilation energy use to
estimate the average equipment energy
use per square foot of cooled floor space
as a function of building type.
• DOE used data published with the
AEO NEMS model (commercial demand
module) to estimate the ratio of the
stock average efficiency of packaged
cooling equipment in 2018 to the
efficiency of the current standard. DOE
applied this ratio to convert the CBECS
stock-average energy use calculation to
a value that represents what the energy
use would be if the equipment
efficiencies were all equal to the current
standard.
• DOE took the calculated energy use
per unit of capacity for the EL0
engineering data, combined with the
capacity per square foot estimate from
the building simulation data, to
calculate the equipment energy use per
square foot at EL0. As this value varies
slightly by equipment class, DOE used
shipments weight to calculate an
average across all installed stock.
• DOE compared, for each building
type, the CBECS 2018 estimate of energy
use per square foot at the current
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standard to the value calculated for the
EL0 engineering data. DOE used the
ratio of these two values to define an
energy use adjustment factor for each
building type. In most cases, the factor
is larger than 1, reflecting an underestimate of energy use by the simulation
data. However, for education and
healthcare buildings, the calculated
factor is less than 1, corresponding to an
over-estimate of energy use in the
simulated data.
• DOE applied the energy use
adjustment factors to the energy use
values input to the LCC.
DOE considered two other trends that
can impact cooling energy use by spaceconditioning equipment: (1) changes to
building shell characteristics and
internal loads, and (2) increases in
cooling-degree days (driven by
population shifts and estimated weather
trends). Both these trends are modeled
in the AEO commercial demand
module. The first is captured in the AEO
cooling factor, which tends to decrease
loads over time. The second is captured
in AEO estimates of Cooling Degree
Days (‘‘CDD’’) over the projection
period. DOE estimated the combined
impact of the two trends, and calculated
that the average impact of the combined
trends over a 30-year period results in
a 2.8-percent increase in equipment
energy use. DOE decided to not include
the impact of these trends in the energy
use analysis and LCC, as these issues
were not discussed during the ASRAC
negotiations, and so would present a
deviation from the agreed-upon
methodology. As the small increase
would apply to all ELs, DOE determined
that there is no impact to the decision
criteria.
4. Comments
In response to the May 2020 ECS RFI,
the CA IOUs commented that DOE
should update the weather data used in
the energy use analysis to reflect the
temperatures recorded in the U.S. in
recent years. The CA IOUs recommend
that DOE consider the methodology
used by the California Energy
Commission to update weather files to
analyze the Title 24–2022 Building
Energy Code. (CA IOUs, EERE–2019–
BT–STD–0042–0020 at p. 5) AHRI and
Trane stated that the methodology used
in the January 2016 Direct Final Rule is
out of date. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 8; Trane, EERE–
2019–BT–STD–0042–0016 at p. 9) AHRI
and Carrier both recommended using
the ASHRAE prototype buildings and
the ASHRAE 205, ‘‘Standard
Representation of Performance
Simulation Data for HVAC&R and Other
Facility Equipment,’’ standardized
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equipment modeling approach, along
with the Dodge data base, for weighting
factors. AHRI and Carrier further
suggested that the energy modeling
should include real world static
pressures for well-designed duct work,
economizers, fan speed control, stages
of capacity, energy recovery, supply air
reset, and static pressure reset. (AHRI,
EERE–2019–BT–STD–0042–0014 at pp.
8–9; Carrier, EERE–2019–BT–STD–
0042–0013 at pp. 13–14) Carrier added
that both heating and cooling should be
modeled, as well as occupied and
unoccupied operation. (Id.)
NEEA recommended that DOE
account for part-load operation, staged
systems, and varying percentages of
outside air. (NEEA, EERE–2019–BT–
STD–0042–0024 at p. 9)
In response, DOE reviewed its energy
use analysis in light of these comments.
To evaluate the adequacy of the TMY3
weather data, DOE downloaded hourly
historical dry-bulb temperature data for
the period 1998–2020, for the sixteen
climate locations used in the TP and
ECS analyses, from the National
Renewable Energy Laboratory (‘‘NREL’’)
Physical Solar Model (‘‘PSM’’) database,
Version 3 (link https://
developer.nrel.gov/docs/solar/nsrdb/).
DOE constructed histograms of the
historical data (binned temperature
distributions) and compared these to
distributions created from the TMY3
weather data. As the focus of the
ACUAC/HP Working Group was on
cooling, DOE looked primarily at
distributions of temperatures greater
than or equal to 70 deg F. The data did
not show any large discrepancies. Both
the maximum temperatures and the
percent of annual hours in the high
temperature bins were comparable
across all sites. DOE also calculated
annual 65-degree based heating and
cooling degree days (HDD and CDD) for
the two datasets; CDD values calculated
were 1680 for the TMY3 data and 1672
for the NREL–PSM data; HDD values
calculated were 4635 for the TMY3 data
and 4634 for the NREL–PSM data. DOE
determined that the distribution of
hourly temperatures in the TMY3 data
are entirely consistent with the actual
historical data for the last 20 years. In
particular, CDD and HDD metrics,
which are most highly correlated with
cooling and heating loads, are almost
identical between the two data sets.
DOE presented these findings to the
stakeholders, and did not make any
adjustments to the energy use analysis
on this basis.
In addition to the review of historical
weather data requested by the
stakeholders, as noted in section IV.E of
this document, DOE also analyzed the
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projections of CDD trends and
commercial sector cooling load trends
published in AEO 2023. While this
review was not requested by
stakeholders, for completeness DOE
evaluated any potential impacts these
trends might have on energy use over
the analysis period. DOE found that the
combined effect of these two trends
would be to increase lifetime energy
consumption at the baseline by 2.8%;
the same increase would occur at all
higher ELs, hence, the impact on energy
savings would also be 2.8%. A small
increase in energy savings across all ELs
cannot change the relative costeffectiveness of the analyzed TSLs; and
these issues were not actively discussed
during the 2023 ECS Negotiations.
Therefore, DOE decided not to make
this adjustment in the DFR.
DOE used four building vintages,
including the ASHRAE 90.1–2019
building prototypes, to account for
variability in building stock
characteristics in the population of
buildings using ACUACs/ACUHPs. DOE
reviewed and discussed methodologies
for weighting the building simulation
data with stakeholders during the 2023
ECS Negotiations (see EERE–2022–BT–
STD–0015–0055 at pp. 26–30). The sales
data (Dodge data) presented by
stakeholders was from 2006 and may
not represent the current market.
Instead, DOE presented an alternative
approach, based on 2018 CBECS data,
2019 Census data, and supplementary
data from AEO 2023, which was
accepted by stakeholders. More detail
on DOE’s weighting approach is
provided in section IV.E.2 of this
document.
During the ACUAC/HP Working
Group TP negotiations, static pressures
were extensively discussed, and
stakeholders adopted new test
procedure values more appropriate to
real-world conditions. DOE used these
values, with a 0.1 increment to account
for economizer pressure drop, in this
ECS analysis. DOE’s engineering data
and the methods DOE used to calculate
energy use accounted for occupied and
unoccupied hours, part-load operation,
staged systems, economizer operation,
fan speed control, and variable rates of
outdoor air flow. As previously
discussed, DOE did not conduct an
energy use analysis specific to heating.
Furthermore, DOE reviewed its
proposed methodology for the energy
use analysis in the February 9, 2023
webinar (EERE–2022–BT–STD–0015–
0073 at pp. 18–19), the February 22–23,
2023 meeting (EERE–2022–BT–STD–
0015–0078 at p. 36), and the March 21–
22, 2023 meeting (EERE–2022–BT–
STD–0015–0080 at pp. 21–29). In
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general, this methodology is consistent
with that used to develop the weights in
the IVEC metric as part of the test
procedure negotiations, with scalars
developed to match energy use to
CBECS 2018. There were no objections
to the energy use methodology as
presented in ACUAC/HP Working
Group meetings.
DOE also reviewed updates to its
energy use analysis to account for
conversion curbs in the April 24, 2023
slide deck (EERE–2022–BT–STD–0015–
0086 at p. 4) and based on discussion
regarding installation costs related to
conversion curbs at the March 22, 2023
meeting (EERE–2022–BT–STD–0015–
0091 at pp. 40–41, 47).
Chapter 7 of the direct final rule TSD
provides further details on DOE’s energy
use analysis for ACUACs and ACUHPs.
F. Life-Cycle Cost and Payback Period
Analysis
DOE conducted LCC and PBP
analyses to evaluate the economic
impacts on individual consumers of
potential energy conservation standards
for ACUACs. The effect of new or
amended energy conservation standards
on individual consumers usually
involves a reduction in operating cost
and an increase in purchase cost. DOE
used the following two metrics to
measure consumer impacts:
• Life-cycle Cost (‘‘LCC’’) is the total
consumer expense of an appliance or
equipment over the life of that
equipment, consisting of total installed
cost (manufacturer selling price,
distribution chain markups, sales tax,
and installation costs) plus operating
costs (expenses for energy use,
maintenance, and repair). To compute
the operating costs, DOE discounts
future operating costs to the time of
purchase and sums them over the
lifetime of the equipment.
• Payback Period (‘‘PBP’’) is the
estimated amount of time (in years) it
takes consumers to recover the
increased purchase cost (including
installation) of more-efficient equipment
through lower operating costs. DOE
calculates the PBP by dividing the
change in purchase cost at higher
efficiency levels by the change in
annual operating cost for the year that
amended or new standards are assumed
to take effect.
For any given efficiency level, DOE
measures the change in LCC relative to
the LCC in the no-new-standards case,
which reflects the estimated efficiency
distribution of ACUACs in the absence
of new or amended energy conservation
standards. In contrast, the PBP for a
given efficiency level is measured
relative to the baseline equipment.
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For each considered efficiency level
in each equipment class, DOE
calculated the LCC and PBP for a
nationally representative set of
commercial buildings. As stated
previously, DOE developed building
samples from the 2018 CBECS. For each
sample building, DOE determined the
energy consumption for the ACUACs
and the appropriate energy price. By
developing a representative sample of
buildings, the analysis captured the
variability in energy consumption and
energy prices associated with the use of
ACUACs.
Inputs to the LCC calculation include
the installed cost to the commercial
consumer, operating expenses, the
lifetime of the equipment, and a
discount rate. Inputs to the calculation
of total installed cost include the cost of
the equipment—which includes MPCs,
manufacturer markups, retailer and
distributor markups, and sales taxes
(where appropriate)—and installation
costs. Inputs to the calculation of
operating expenses include annual
energy consumption, energy prices and
price projections, repair and
maintenance costs, equipment lifetimes,
and discount rates. Inputs to the
payback period calculation include the
installed cost to the consumer and first
year operating expenses. DOE created
distributions of values for equipment
lifetime, and discount rates, with
probabilities attached to each value, to
account for their uncertainty and
variability.
The computer model DOE uses to
calculate the LCC and PBP relies on a
Monte Carlo simulation to incorporate
uncertainty and variability into the
analysis. The Monte Carlo simulations
randomly sample input values from the
probability distributions and ACUAC
user samples. For this rulemaking, the
Monte Carlo approach is implemented
in the Python programming language.
The model calculated the LCC for
equipment at each efficiency level for
10,000 buildings per simulation run.
The analytical results include a
distribution of 10,000 data points
showing the range of LCC savings for a
given efficiency level relative to the nonew-standards case efficiency
distribution. In performing an iteration
of the Monte Carlo simulation for a
given commercial consumer, equipment
efficiency is chosen based on its
probability. If the chosen equipment
efficiency is greater than or equal to the
efficiency of the standard level under
consideration, the LCC calculation
reveals that a consumer is not impacted
by the standard level. By accounting for
consumers who already purchase moreefficient equipment, DOE avoids
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overstating the potential benefits from
increasing equipment efficiency. DOE
calculated the LCC for consumers of
ACUACs as if each were to purchase
new equipment in the first year of
required compliance with new or
amended standards. Amended
standards apply to ACUACs
manufactured after a date that is the
later of the date that is three years after
publication of any final rule establishing
an amended standard or the date that is
six years after the effective date of the
current standard. (42 U.S.C.
6313(a)(6)(C)(iv)) In this case, the latter
date prevails; therefore, DOE used 2029
as the first year of compliance with any
amended standards for ACUACs.
Table IV.11 summarizes the approach
and data DOE used to derive inputs to
the LCC and PBP calculations. The
subsections that follow provide further
discussion. Details of the computer
model, and of all the inputs to the LCC
and PBP analyses, are contained in
chapter 8 of the direct final rule TSD
and its appendices.
BILLING CODE 6450–01–P
Table IV.11 Summary of Inputs and Methods for the LCC and PBP Analysis*
Inputs
Equipment Cost
Installation Costs
Annual Energy Use
Energy Prices
Enern:v Price Trends
Repair and
Maintenance Costs
Equipment Lifetime
Discount Rates
Source/Method
Derived by multiplying MPCs by manufacturer, wholesaler, and retailer markups
and sales tax, as appropriate. Used constant equipment costs based on historical
data.
Baseline installation cost based on values in the 2016 Direct Final Rule and
scaled to the current year. Assumed increased installation cost with wei!!ht.
The annual cooling energy use based on EnergyPlus building simulation data
combined with equipment efficiency from engineering data.
Variability: Based on the distribution of buildings in CBECS 2018 and regional
TMY3 weather data.
Electricity: Based on EIA's Form 861 data for 2022.
Variability: Regional average and marginal energy prices determined for nine
Census Divisions, with the Pacific region split into California and other States.
Seasonal prices determined for summer and winter.
Based on AEO 2023 price projections.
Assumed no change in maintenance cost with efficiency level. For repair cost,
assumed increased cost by efficiency level that scales with increased equipment
cost.
Average: 21 years for small, 23 years for large, and 30 years for very large
equipment classes.
Approach involves identifying all possible debt or asset classes that might be
used to purchase the considered appliances, or might be affected indirectly.
Primary data source was the Federal Reserve Board's Survey of Consumer
Finances.
January 1, 2029
Compliance Date
* Note: References for the data sources mentioned in this table are provided in the sections following the table or in
chapter 8 of the direct final rule TSD.
DOE reviewed the various LCC inputs
at the February 9, 2023 webinar (EERE–
2022–BT–STD–0015–0073 at pp. 25–35)
and the March 21–22, 2023 meeting
(EERE–2022–BT–STD–0015–0080 at pp.
35–47). The only significant stakeholder
discussion involved lifetimes and
installation, repair, and maintenance
costs. These comments are discussed in
more detail in their respective following
sections.
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1. Equipment Cost
To calculate equipment costs, DOE
multiplied the MPCs developed in the
engineering analysis by the markups
described previously (along with sales
taxes). DOE used different markups for
baseline equipment and higherefficiency equipment, because DOE
applies an incremental markup to the
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increase in MSP associated with higherefficiency equipment. For ACUACs,
DOE reviewed historical producer price
index (‘‘PPI’’) data for ‘‘unitary airconditioners, except heat pumps’’
spanning 1978 to 2022, but did not find
a discernable long-term trend. As a
result, DOE applied constant price
trends to project the equipment cost to
the year of compliance.
2. Installation Cost
The installation cost is the expense to
the commercial consumer of installing
the ACUAC, in addition to the price of
the unit itself. Installation cost includes
labor, overhead, and any miscellaneous
materials and parts needed to install the
equipment. DOE used data from the
January 2016 Direct Final Rule to
estimate the baseline installation costs
for ACUACs, and scaled these values to
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the current year based on data from the
Bureau of Labor Statistics (‘‘BLS’’) 40 for
materials and labor costs, at yearly rates
of 1.95 percent and 2.62 percent,
respectively. DOE assumed installation
costs are proportional to the equipment
weight, as associated with each
efficiency level.
DOE reviewed updates to its
installation cost analysis to account for
conversion curbs that may be required
in some cases to accommodate
equipment designs with large footprints
in the April 24, 2023 slide deck (EERE–
2022–BT–STD–0015–0086 at p. 4),
based on discussion at the March 22,
2023 meeting (EERE–2022–BT–STD–
0015–0091 at pp. 20–21, 40–41, 47). The
approach to determining the
40 Bureau of Labor Statistics data (available at:
www.bls.gov/data/) (last accessed Sept. 9, 2023).
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applicability of conversion curbs in
each installation is consistent with that
in the January 2016 Direct Final Rule. It
generally results in an increased
likelihood of consumers encountering
conversion curb costs as efficiency
levels increase relative to the baseline
equipment.
DOE did not account for any electric
panel upgrades in this rule, because
DOE did not model product switching
from ACUAC-furnace to ACUHP
installations in this rulemaking, as
discussed in section IV.G.4.
3. Annual Energy Consumption
For each sampled building, DOE
determined the energy consumption for
an ACUAC at different efficiency levels
using the approach described previously
in section IV.E of this document.
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4. Energy Prices
Because marginal electricity price
more accurately captures the
incremental savings associated with a
change in energy use from higher
efficiency, it provides a better
representation of incremental change in
consumer costs than average electricity
prices. Therefore, DOE applied average
electricity prices for the energy use of
the equipment purchased in the nonew-standards case, and marginal
electricity prices for the incremental
change in energy use associated with
the other efficiency levels considered.
DOE derived electricity prices in 2022
using data from EEI Typical Bills and
Average Rates reports. Based upon
comprehensive, industry-wide surveys,
this semi-annual report presents typical
monthly electric bills and average
kilowatt-hour costs to the customer as
charged by investor-owned utilities. For
the commercial sector, DOE calculated
electricity prices using the methodology
described in Coughlin and Beraki
(2019).41
DOE’s methodology allows electricity
prices to vary by sector, region, and
season. In the analysis, variability in
electricity prices is chosen to be
consistent with the way the consumer
economic and energy use characteristics
are defined in the LCC analysis. For
ACUACs, DOE developed annual unit
energy consumption values (UECs) by
Census Division for each equipment
class and efficiency level for the
summer (May to September) and winter
(October to April) seasons.
41 Coughlin, K. and B. Beraki (2019), Nonresidential Electricity Prices: A Review of Data
Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No.
LBNL–2001203. (available at: ees.lbl.gov/
publications/non-residential-electricity-prices).
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The average summer and winter
electricity prices were used to measure
the baseline energy cost. The summer
and winter marginal prices, using a
marginal load factor of 0.4, were used to
measure the operating cost savings from
higher-efficiency ACUACs.
EEI non-residential electricity prices
are separated into three rate categories
based on annual peak demand: (1) small
commercial; (2) large commercial, and
(3) industrial. The demand limits for
small commercial, large commercial,
and industrial are up to 100 kW, 100–
1000 kW, and larger than 1000 kW,
respectively. CBECS billing data, which
includes monthly demand information,
were used to calculate the total square
footage assigned to each category based
on annual peak demand, as a function
of building type. For each building in
the CBECS billing data, DOE mapped
the building to a rate category based on
the annual peak demand, and to a
building type based on the CBECS
Principal Building Activity. DOE
calculated the total floor space
associated with each building type and
rate category, and used this to define,
for each building type, a relative weight
for each rate category. DOE then
calculated a weighted-average (across
rate categories) value of the average and
marginal electricity price. DOE
calculated the weighted-average for all
Census Divisions, assuming the rate
category weights do not depend on
Census Division.
See chapter 8 of the direct final rule
TSD for further details.
To estimate energy prices in future
years, DOE multiplied the 2022 energy
prices by the projection of annual
average price changes for each of the
nine Census Divisions from the
Reference case in AEO 2023, which has
an end year of 2050.42 To estimate price
trends after 2050, DOE kept the energy
price constant at the 2050 value.
5. Maintenance and Repair Costs
Repair costs are associated with
repairing or replacing equipment
components that have failed in an
appliance; maintenance costs are
associated with maintaining the
operation of the equipment. Typically,
small incremental increases in
equipment efficiency entail no, or only
minor, changes in maintenance costs
compared to baseline efficiency
equipment. Therefore, DOE assumed no
change in maintenance cost with
efficiency level.
42 EIA, Annual Energy Outlook 2023 (available at:
www.eia.gov/outlooks/aeo/) (last accessed Oct. 1,
2023).
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For repair costs, DOE used data from
the January 2016 Direct Final Rule to
estimate the baseline repair costs for
ACUACs, and scaled these values to the
current year based on data from the BLS
for materials and labor costs, at yearly
rates of 1.95 percent and 2.62 percent,
respectively. DOE assumed repair costs
are proportional to the equipment’s
manufacturer selling price, as associated
with each efficiency level. The approach
to determining the frequency of
equipment repair is consistent with that
in the January 2016 Direct Final Rule,
and it includes non-compressor repairs
conducted in the seventh year, for all
consumers.
In response to the May 2020 ECS RFI,
AHRI stated that the costs used in
previous analyses do not reflect actual
repair and maintenance costs and that
typical maintenance costs are double
the values in RS Means. (AHRI, EERE–
2019–BT–STD–0042–0014 at p. 10) In
contrast, Trane stated that the
methodology used in the January 2016
Direct Final Rule is adequate, although
an update to a more recent version of RS
Means is appropriate. (Trane, EERE–
2019–BT–STD–0042–0016 at p. 10)
Trane and Goodman stated that repair
and maintenance costs will rise for
products using low-GWP refrigerants.
(Trane, EERE–2019–BT–STD–0042–
0016 at p. 10; Goodman, EERE–2019–
BT–STD–0042–0017 at p. 4)
As stated previously, DOE reviewed
the various LCC inputs at the February
9, 2023 webinar (EERE–2022–BT–STD–
0015–0073 at pp. 25–35) and the March
21–22, 2023 meeting (EERE–2022–BT–
STD–0015–0080 at pp. 35–47). At the
March 22, 2023 ACUAC/HP Working
Group meeting, AHRI and Daikin stated
that the maintenance costs were too
low. (EERE–2022–BT–STD–0015–0091
at pp. 21, 38–39) In the April 24, 2023
slide deck, DOE confirmed that the
maintenance and repair cost numbers
were based on negotiated inputs from
the previous rulemaking, adjusted for
inflation. (EERE–2022–BT–STD–0015–
0086 at p. 3)
In response to AHRI, DOE notes that
because maintenance costs do not
change with efficiency level, they have
no impact on the LCC results. In
response to Trane, DOE notes that it did
not update to a more recent version of
RS Means due to additional adjustments
made to repair and maintenance costs
during the 2016 rulemaking, but it did
update the 2016 costs by using the BLS
scalars previously discussed. In
response to Trane and Goodman, DOE
has no data with respect to the impact
of low-GWP refrigerants on repair and
maintenance costs. This issue was not
discussed during the 2023 ECS
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Negotiations. Furthermore, low-GWP
refrigerants would be used at all
efficiency levels in the analysis
including the no-new-standards case, so
any impacts would be independent of
the amended standards.
Consequently, DOE continues to use
the repair and maintenance costs as
discussed during the ACUAC/HP
Working Group meetings.
6. Equipment Lifetime
Equipment lifetime is the age at
which a unit of covered equipment is
retired from service. For the LCC and
PBP analysis, DOE develops a
distribution of lifetimes to reflect
variability in equipment lifetimes in the
field.
For small and large ACUAC
equipment, DOE used the same lifetime
as in the January 2016 Direct Final Rule,
which had been developed based on a
Weibull distribution. DOE assumed a
mean lifetime of 21 years for small
equipment classes, and a mean lifetime
of 23 years for large equipment classes.
For very large equipment classes, DOE
created a new distribution with an
assumed mean lifetime of 30 years,
based on stakeholders’ feedback during
the 2023 ECS Negotiations. The
maximum lifetimes were assumed to be
40 years for the small and large
equipment classes and 60 years for the
very large equipment classes.
In response to the May 2020 ECS RFI,
AHRI disagreed with the Weibull
approach to lifetimes and stated that
service lifetimes are in the range of 12
to 15 years. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 10) In contrast,
Trane stated that the Weibull approach
is appropriate and that equipment
lifetime should be the same as in the
January 2016 Direct Final Rule. (Trane,
EERE–2019–BT–STD–0042–0016 at p.
10) Carrier stated that the lifetimes
determined by the proposed approach
seem reasonable. (Carrier, EERE–2019–
BT–STD–0042–0013 at p. 14) AHRI and
Carrier both stated that location is an
important determinant of lifetime (e.g.,
reduced lifetimes for units with more
runtime hours or for units in coastal
areas due to interactions with salt air).
(AHRI, EERE–2019–BT–STD–0042–
0014 at p.10; Carrier, EERE–2019–BT–
STD–0042–0013 at p. 14)
At the March 22, 2023 ACUAC/HP
Working Group meeting, there was
discussion regarding whether the
proposed lifetime as presented was
really consistent with the previous
rulemaking, as well as a suggestion that
the average life of a 30-ton unit would
be much shorter than 34 years. (EERE–
2022–BT–STD–0015–0091 at pp. 18, 20,
36–38) In the April 24, 2023 slide deck,
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DOE confirmed that the lifetimes were
consistent with those negotiated in the
previous rulemaking. (EERE–2022–BT–
STD–0015–0086 at p. 3) DOE noted that
shipments modeling indicates that a
much shorter lifetime, such as a 20-year
lifetime, would result in approximately
50% more shipments than demonstrated
in the AHRI data. Given that the CUAC
market is saturated (i.e., market
penetrations are not increasing), about
95% of shipments are for the
replacement market. On an average
basis, the number of replacements that
ship each year is equal to the total
installed stock divided by the average
lifetime. The total installed stock is an
independently observed variable (for
example, through CBECS surveys) and
therefore cannot change when
assumptions about the inputs to the
shipments model are varied. This means
that, if the equipment lifetime is
decreased by a factor of 2⁄3, then the
total shipments must increase by a
factor of 3⁄2 (i.e., by 50%), to ensure that
the installed stock remains constant.
Similarly, if AHRI shipments are (for
example) underestimated by 10%, then
a roughly 10% reduction in mean
lifetime would be needed to ensure the
model results alight with the observed
installed stock. Given the possibility of
some uncertainty in AHRI shipments,
and in response to ACUAC/HP Working
Group discussions, DOE reduced the
lifetime for very large equipment by
approximately 10%, from 34 to 30 years.
To provide further information on the
importance of the assumed lifetimes for
the LCC analysis, DOE also conducted a
sensitivity analysis based on a 20-year
lifetime. (Id.) The sensitivity analysis
showed that consumers were only
marginally but not significantly worse
off under a 20-year timeline, as
relatively heavy discounting in the later
years of a unit’s lifetime limits any
impact. For example, for the very large
equipment class at EL 1, under the 20year scenario, the percent of consumers
with net cost increased from 20 to 21%
and the LCC savings decreased from
$2053 to $1671. (Id at p. 14)
In this DFR, DOE continues to use
lifetimes with a mean of 21, 23, and 30
years for the small, large, and very large
equipment classes, respectively, as
discussed in the April 24, 2023 slide
deck. DOE is not including additional
results for the 20-year-lifetime
sensitivity in this direct final rule, but
such results can be found in chapter 8
of the direct final rule TSD. In response
to AHRI and Carrier, DOE does not
assign lifetime based on location, but
the distribution includes variability that
addresses this issue.
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7. Discount Rates
In the calculation of LCC, DOE
applies discount rates appropriate to
commercial buildings to estimate the
present value of future operating cost
savings. The discount rate used in the
LCC analysis represents the rate from an
individual consumer’s perspective. DOE
estimated a distribution of discount
rates for ACUACs based on commercial
consumer financing costs and the cost of
capital for commercial applications.
For developing discount rates by
commercial building type, DOE used the
cost of capital 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. This
corporate finance approach is referred to
as the weighted-average cost of capital.
DOE used currently available economic
data in developing commercial discount
rates, with Damodaran Online being the
primary data source.43 The average
discount rate across the commercial
building types is 6.04 percent.
See chapter 8 of the final rule TSD for
further details on the development of
discount rates.
8. Energy Efficiency Distribution in the
No-New-Standards Case
To accurately estimate the share of
consumers that would be affected by a
potential energy conservation standard
at a particular efficiency level, DOE’s
LCC analysis considered the projected
distribution (market shares) of
equipment efficiencies under the nonew-standards case (i.e., the case
without amended or new energy
conservation standards).
In response to the May 2020 ECS RFI,
AHRI, Carrier, and Trane all commented
that they expect the majority of
shipments to remain close to the Federal
minimum standard level after 2023.
(AHRI, EERE–2019–BT–STD–0042–
0014 at p. 11; Carrier, EERE–2019–BT–
STD–0042–0013 at p. 15; Trane, EERE–
2019–BT–STD–0042–0016 at p. 11) PGE
stated that ACUACs purchased by
customers are often chosen with the
minimum required efficiency ratings.
(PGE, EERE–2019–BT–STD–0042–0009
at p. 2)
In a presentation at an ACUAC/HP
Working Group meeting, industry noted
that approximately 65 percent of
shipments are at baseline efficiency.
43 Damodaran, A. Data Page: Historical Returns
on Stocks, Bonds and Bills-United States. 2021.
pages.stern.nyu.edu/∼adamodar/ (last accessed
April 26, 2022).
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(EERE–2022–BT–STD–0015–0081 at p.
5) AHRI subsequently provided
confidential data to a DOE contractor
regarding shipments of ACUACs and
ACUHPs by IEER. The data submitted
by AHRI were gathered for 2018–2022;
in these data, the market share of
equipment with IEER above the 2023
standard is around 10–20 percent. This
estimate is approximate, as the IEER bin
boundaries in the provided data do not
align exactly with either the 2018 or
2023 energy conservation standard
levels. Under the 2023 standard, it is
expected that a significant fraction of
shipments will roll-up to the 2023
minimum, but possibly not the full 80–
90% shown in the data; some fraction
of shipments may shift to levels above
the minimum.
To estimate the energy efficiency
distribution of ACUACs for 2029, DOE
also reviewed information from the
2015 ASRAC Working Group, combined
with information presented during the
negotiations on the relationship
between the existing metric, IEER, and
the new metric, IVEC. The 2015 ASRAC
Working Group analysis used data
submitted by AHRI to develop separate
base-case efficiency distributions for the
Small, Large, and Very Large equipment
classes. That analysis separated
equipment types into constant air
volume (‘‘CAV’’) and VAV installations,
with lower efficiency levels
corresponding to CAV (fixed fan speed)
designs. In the analysis presented here,
DOE’s engineering analysis considered
only staged or variable-speed designs
because its review of models available
on the market after the January 1, 2023
compliance date of current standards
and confidential discussions with
manufacturers indicated that almost all
models on the market today offer staged
or variable-speed indoor fan designs and
very few models, if any, offer singlespeed indoor fan designs, even at EL0,
implying that going forward, all
installations will use some type of VAV
equipment. The 2015 ASRAC Working
Group base-case efficiency distribution
for VAV equipment indicated
approximately 15-percent market share
for IEER values above the 2023
standard. This estimate is consistent
with the confidential data provided by
AHRI for the years 2018–2022.
To map the IEER levels to the new
IVEC metric, DOE considered
information presented during the 2023
ECS Negotiation meetings, specifically
scatterplots of IEER vs. IVEC. These
scatter plots show a fairly broad range
of IVEC for a given band of IEER. For
example, for Small ACUACs, for IEER
approximately equal to 14.8 (the current
standard), the range of plotted IVEC is
10–14. Hence, it seems reasonable to
assume that when the market transitions
to the new IVEC metric, designs that
cluster near a single value of IEER
would cover a range of IVEC, and some
would, therefore, fall into higher
efficiency levels as defined by the IVEC
metric. For this reason, DOE assumed 70
percent of equipment at baseline and
distributed 30 percent of equipment to
higher IVEC-based ELs. For ELs in this
direct final rule analysis that did not
exist in the 2015 ASRAC analysis, DOE
assumed zero market share in the base
case.
The estimated market shares for the
no-new-standards case for are shown in
Table IV.12. See chapter 8 of the direct
final rule TSD for further information on
the derivation of the efficiency
distributions.
Table IV.12 Market Shares for the No-New-Standards Case in the Compliance
Year
Small
IEER
IVEC
0
14.8
10.6
Market
Share
70%
1
15.4
11.6
10%
2
15.8
12.5
10%
20.1
19.5
-
-
3
17
13.1
10%
4
18
14.3
5
19.9
14.9
6
21
16.4
7
22.4
18.7
-
DOE notes that the market shares in
Table IV.12 are based on shipments
data, as described in the preceding
paragraphs. DOE also reviewed model
counts in the industry-provided dataset
and observed models at ELs shown in
this table as having zero shipments. It is
common for there to be significantly
more models (as a percentage of the
total) than shipments at higher
efficiency levels; there tend to be more
shipments per model at lower efficiency
levels. However, DOE acknowledges
that there are likely to be non-zero
shipments at higher ELs where there are
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20:25 May 17, 2024
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Very Large
IEER
IVEC
14.2
12
Market
Share
70%
IEER
IVEC
13.2
12
Market
Share
70%
14.6
12.9
15%
13.5
12.9
30%
15
17.5
13.8
15%
15.5
15.2
15.7
-
18.5
18.3
-
-
-
models available. Therefore, DOE has
performed a sensitivity analysis for
small CUACs that distributes the 30%
market share above baseline to the first
four ELs (7.5% each) rather than 10%
each at the first three ELs, as shown in
the table. The results of this sensitivity
can be found in Chapter 10 of the TSD.
The LCC Monte Carlo simulations
draw from the efficiency distributions
and randomly assign an efficiency to the
ACUACs purchased by each sample
building in the no-new-standards case.
The resulting percentage shares within
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Fmt 4701
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the sample match the market shares in
the efficiency distributions.
While DOE expects economic factors
to play a role when consumers,
commercial building owners, or
builders decide on what type of ACUAC
to install, assignment of equipment
efficiency for a given installation based
solely on economic measures such as
life-cycle cost or simple payback period,
would not accurately reflect most realworld installations. There are a number
of market failures discussed in the
economics literature that illustrate how
purchasing decisions with respect to
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energy efficiency are unlikely to be
perfectly correlated with energy use, as
described subsequently. DOE finds that
the method of assignment, which is in
part random, simulates behavior in the
ACUAC market, where market failures
result in purchasing decisions not being
perfectly aligned with economic
interests. DOE further emphasizes that
its approach does not assume that all
purchasers of ACUACs make
economically irrational decisions (i.e.,
the lack of a correlation is not the same
as a negative correlation). As part of the
random assignment, some buildings
with large cooling loads will be assigned
higher-efficiency ACUACs, and some
buildings with particularly low cooling
loads will be assigned baseline
ACUACs, which aligns with the
available data.
The following discussion provides
more detail about the various market
failures that affect ACUAC purchases.
First, a recognized problem in
commercial settings is the split
incentive problem, where the building
owner (or building developer) selects
the equipment, and the tenant (or
subsequent building owner) pays for
energy costs.44 45 There are other
similarly misaligned incentives
embedded in the organizational
structure within a given firm or business
that can impact the choice of an
ACUAC. For example, if one department
or individual within an organization is
responsible for capital expenditures
(and therefore equipment selection)
while a separate department or
individual is responsible for paying the
energy bills, a market failure similar to
the split-incentive problem can result.46
Additionally, managers may have other
responsibilities and often have other
incentives besides operating cost
minimization, such as satisfying
shareholder expectations, which can
sometimes be focused on short-term
returns.47 Decision-making related to
44 Vernon, D., and Meier, A. (2012).
‘‘Identification and quantification of principal-agent
problems affecting energy efficiency investments
and use decisions in the trucking industry,’’ Energy
Policy, 49, 266–273.
45 Blum, H. and Sathaye, J. (2010). ‘‘Quantitative
Analysis of the Principal-Agent Problem in
Commercial Buildings in the U.S.: Focus on Central
Space Heating and Cooling,’’ Lawrence Berkeley
National Laboratory, LBNL–3557E (available at:
escholarship.org/uc/item/6p1525mg) (last accessed
March 14, 2024).
46 Prindle, B., Sathaye, J., Murtishaw, S., Crossley,
D., Watt, G., Hughes, J., and de Visser, E. (2007).
‘‘Quantifying the effects of market failures in the
end-use of energy,’’ Final Draft Report Prepared for
International Energy Agency (available from
International Energy Agency, Head of Publications
Service, 9 rue de la Federation, 75739 Paris, Cedex
15 France).
47 Bushee, B.J. (1998). ‘‘The influence of
institutional investors on myopic R&D investment
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commercial buildings is highly complex
and involves gathering information from
and for a variety of different market
actors. It is common to see conflicting
goals across various actors within the
same organization, as well as
information asymmetries between
market actors in the energy efficiency
context in commercial building
construction.48
The arguments for the existence of
market failures in the commercial and
industrial sectors are corroborated by
empirical evidence. One study in
particular showed evidence of
substantial gains in energy efficiency
that could have been achieved without
negative repercussions on profitability,
but the investments had not been
undertaken by firms.49 The study found
that multiple organizational and
institutional factors caused firms to
require shorter payback periods and
higher returns than the cost of capital
for alternative investments of similar
risk. Another study demonstrated
similar results with firms requiring very
short payback periods of 1–2 years in
order to adopt energy-saving projects,
implying hurdle rates of 50 to 100
percent, despite the potential economic
benefits.50
If DOE developed an efficiency
distribution that assigned ACUAC
efficiency in the no-new-standards case
solely according to energy use or
economic considerations such as lifecycle cost or payback period, the
resulting distribution of efficiencies
within the consumer sample would not
reflect any of the market failures above.
Thus, DOE concludes such a
distribution would not be representative
of the ACUAC market.
The use of random assignment is not
an assertion of economic irrationality,
but instead, it is a methodological
approximation of complex consumer
behavior. The analysis is neither biased
toward high or low energy savings. The
methodology does not preferentially
assign lower-efficiency ACUACs to
buildings in the no-new-standards case
behavior,’’ Accounting Review, 305–333. DeCanio,
S.J. (1993). ‘‘Barriers Within Firms to Energy
Efficient Investments,’’ Energy Policy, 21(9), 906–
914 (explaining the connection between shorttermism and underinvestment in energy efficiency).
48 International Energy Agency (IEA) (2007).
Mind the Gap: Quantifying Principal-Agent
Problems in Energy Efficiency. OECD Pub.
(available at www.iea.org/reports/mind-the-gap)
(last accessed March 14, 2024).
49 DeCanio, S.J. (1998). ‘‘The Efficiency Paradox:
Bureaucratic and Organizational Barriers to
Profitable Energy-Saving Investments,’’ Energy
Policy, 26(5), 441–454.
50 Andersen, S.T., and Newell, R.G. (2004).
‘‘Information programs for technology adoption: the
case of energy-efficiency audits,’’ Resource and
Energy Economics, 26, 27–50.
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where savings from the rule would be
greatest, nor does it preferentially assign
lower-efficiency ACUACs to buildings
in the no-new-standards case where
savings from the rule would be smallest.
Some consumers were assigned the
ACUACs that they would have chosen
if they had engaged in perfect economic
considerations when purchasing the
products. Others were assigned lessefficient ACUACs even where a moreefficient product would eventually
result in life-cycle savings, simulating
scenarios where, for example, various
market failures prevent consumers from
realizing those savings. Still others were
assigned ACUACs that were more
efficient than one would expect simply
from life-cycle costs analysis, reflecting,
say, ‘‘green’’ behavior, whereby
consumers ascribe independent value to
minimizing harm to the environment.
9. Payback Period Analysis
The payback period is the amount of
time (expressed in years) it takes the
consumer to recover the additional
installed cost of more-efficient
equipment, compared to baseline
equipment, through energy cost savings.
Payback periods that exceed the life of
the equipment mean that the increased
total installed cost is not recovered in
reduced operating expenses.
The inputs to the PBP calculation for
each efficiency level are the change in
total installed cost of the equipment and
the change in the first-year annual
operating expenditures relative to the
baseline. DOE refers to this as a ‘‘simple
PBP’’ because it does not consider
changes over time in operating cost
savings. The PBP calculation uses the
same inputs as the LCC analysis when
deriving first-year operating costs,
except that discount rates are not
needed.
G. Shipments Analysis
DOE uses projections of annual
equipment shipments to calculate the
national impacts of potential amended
or new energy conservation standards
on energy use, NPV, and future
manufacturer cash flows.51 The
shipments model takes an accounting
approach, tracking market shares of
each equipment class and the vintage of
units in the stock. Stock accounting uses
equipment shipments as inputs to
estimate the age distribution of inservice equipment stocks for all years.
The age distribution of in-service
equipment stocks is a key input to
calculations of both the NES and NPV,
51 DOE uses data on manufacturer shipments as
a proxy for national sales, as aggregate data on sales
are lacking. In general, one would expect a close
correspondence between shipments and sales.
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because operating costs for any year
depend on the age distribution of the
stock.
For the current analysis, DOE
assumed that any new energy
conservation standards for ACUAC and
ACUHP would require compliance in
2029. Thus, all units purchased starting
in 2029 are affected by the standard
level. DOE’s analysis considered
shipments over a 30-year period, in this
case from 2029 through 2058.
To project annual shipments over the
analysis period, DOE used key drivers,
including floor space forecasts,
saturations, and product lifetimes, to
project shipments of small, large, and
very large air-cooled ACUAC and
ACUHP in each market segment, which
are then aggregated to estimate total
shipments. DOE considered two market
segments: (1) shipments to new
construction, (2) shipments to existing
buildings for replacement.
44095
1. New Shipments
Shipments to new buildings are
driven by market saturations (number of
units per square foot) and new floor
space constructed in each year. DOE
assumed that the market saturations for
each equipment type of ACUAC and
ACUHP stay constant over the analysis
period. Table IV.13 shows the saturation
for each equipment class:
.
Equipment
Class
unit/million sq. ft.
ACUAC
::::,65 and
<135
kBtu/h
71.46
DOE obtained the new floor space
projections from the Annual Energy
Outlook 2023 (AEO 2023) 52 reference
case for the commercial sector.
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2. Replacement Shipments
Shipments to existing buildings for
replacement are calculated using an
accounting framework involving initial
shipments and a retirement function.
The shipments model is initialized in
the present year (2023) with a
distribution by vintage for ages up to the
maximum lifetime, in this case 60 years.
The vintage distribution is obtained
from the 2015 rulemaking which is
calibrated by the AHRI shipments in
2013. Specifically, the shipments total
in 2013 is set equal to the AHRI total in
the same year. While AHRI data were
available up to 2022, market conditions
have led to an irregular shipments
pattern. In order to smooth the
projection, DOE calibrated to 2013 and
used model projections for the period
up to 2022. Numerically, the quantity
that impacts the NES and NPV
calculation is cumulative shipments;
DOE confirmed that the difference
between cumulative shipments for the
model projection vs. AHRI historic data
is 1 percent or less. The retirement
function is based on a failure probability
distribution consistent with LCC
calculations described in section IV.F.6
of this document.
3. Stock Calculation
The number units in the existing
stock in each year is equal to the sum
of total units shipped the same year and
the stock in the previous year, with the
52 EIA, Annual Energy Outlook 2023 (available at:
www.eia.gov/outlooks/aeo/) (last accessed Oct. 1,
2023).
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ACUAC
::::,135 and
<240
kBtu/h
28.46
ACUAC
::::,240 and
<760
kBtu/h
9.12
ACUHP
::::,65 and
<135
kBtu/h
7.94
retired units of the same year removed.
The number of 0-year-old units is equal
to the number of total units purchased
in the same year. As the year is
incremented from y ¥ 1 to y, a fraction
of the stock is removed; that fraction is
determined by survival probability,
which uses shipments lifetimes, as
discussed in previous section.
4. Comments
In response to the May 2020 ECS RFI,
AHRI, Carrier, Goodman, and Trane all
commented that historical shipments
would not accurately portray the market
for ACUACs and ACUHPs, as the
impacts of COVID–19 on the HVAC
industry are not yet known. (AHRI,
EERE–2019–BT–STD–0042–0014 at p.
11; Carrier, EERE–2019–BT–STD–0042–
0013 at p. 16; Goodman, EERE–2019–
BT–STD–0042–0017 at p. 4; Trane,
EERE–2019–BT–STD–0042–0016 at p.
11) AHRI also commented that
computer room air conditioner
shipments were likely included as
ACUAC and ACUHP shipments in the
previous rulemaking and that those
shipments should be removed in any
future shipments analysis for ACUAC
and ACUHP. (AHRI, EERE–2019–BT–
STD–0042–0014 at p. 11)
Carrier commented that the higher
cost of higher-efficiency equipment will
lead more customers to repair rather
than replace, although the company
does not anticipate a change in failure
rates or equipment lifetimes. (Carrier,
EERE–2019–BT–STD–0042–0013 at p.
15)
PGE stated that the current
marketplace split between ACUACs and
ACUHPs is estimated at 85 percent to 15
percent. (PGE, EERE–2019–BT–STD–
0042–0009 at p. 2) In response to the
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ACUHP
::::,135 and
<240
kBtu/h
ACUHP
::::,240- and
<760
kBtu/h
1.50
0.48
May 2022 TP/ECS RFI, the CA IOUs
stated that while CUHPs are still a small
fraction of the market, they expected
that CUHPs will play an important role
in non-residential space heating
electrification efforts in the coming
decades. The CA IOUs added that the
Consortium for Energy Efficiency’s 2019
overview of CUAC/HP programs
indicate that States in ASHRAE climate
zones two to five are incentivizing
electric-only CUHPs. (CA IOUs, EERE–
2022–BT–STD–0015–0012 at pp. 4–5) In
a presentation at an ACUAC/HP
Working Group meeting, industry noted
that approximately 10 percent of
shipments are heat pumps. (EERE–
2022–BT–STD–0015–0081 at p. 6)
DOE reviewed its shipments
methodology presented at the February
9, 2023 webinar (EERE–2022–BT–STD–
0015–0073 at pp. 37–43), the February
22–23, 2023 ACUAC/HP Working Group
meeting ((EERE–2022–BT–STD–0015–
0078 at p. 38–40), and the March 21–22,
2023 ACUAC/HP Working Group
meeting (EERE–2022–BT–STD–0015–
0080 at pp. 49–54). While DOE
acknowledges that the impact of
COVID–19 on the HVAC industry were
unknown at the time that stakeholders
submitted comments on the May 2020
ECS RFI, it is DOE practice to use
projections of economic and
demographic data from the AEO as
inputs to the DOE shipments and NIA
models. These projections account, to
the extent possible, for near-term
economic impacts and long-term
expectations. By the time of publication
of this direct final rule, COVID–19related supply chain issues have largely
resolved, so DOE expects that AEO 2023
continues to provide the best available
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source to gauge future shipments of
ACUACs and ACUHPs.
In addition, DOE reviewed publiclyavailable data from the AHRI website
and notes that, while the market share
of heat pumps aggregated across all size
classes is increasing, this increase is
dominated by the residential size
classes (below 60,000 Btu/hr). DOE
recommended that the ACUAC/HP
Working Group base its analysis on an
assumption that 10-percent of Small
unitary product shipments are heat
pumps rather than air conditioning only
products, and 5-percent of Large and
Very Large product shipments are heat
pumps, to which the ACUAC/HP
Working Group did not disagree. DOE
examined AEO 2023 projections of the
market share split between air
conditioners and heat pumps and noted
that, while there is a significant trend of
increasing market share for residential
heat pumps, the trend in the
commercial sector is much weaker, with
less than a 2-percent shift from rooftop
AC to HP over 30 years. Furthermore,
DOE does not expect that the marginal
differences in standard level between
ACUACs with all other types of heat
and ACUHPs, as discussed in sections
III.A and IV.C.2.a, are large enough to
cause any significant difference in
commercial consumer purchasing
decisions. Hence, DOE held the ACUHP
market shares constant over the analysis
period and did not model any shift from
ACUAC-furnace installations to ACUHP
installations in either the base case or
the standards cases.
Regarding AHRI’s comment that
computer room air conditioner
shipments may have been included
historically, DOE notes that this is not
clear as computer room air conditioners
were added to the scope of ASHRAE
Standard 90.1 rather than being carved
out of existing ACUAC equipment
classes. If any computer room air
conditioner shipments were included,
DOE expects it would represent a small
fraction of total shipments and have
limited effects on the analysis. In
addition, this concern was not brought
up in the context of any ASHRAE
Working Group discussions regarding
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shipments, suggesting that it is not
likely a significant issue. For these
reasons, DOE has not adjusted total
shipments to account for computer
room air conditioners.
With regard to the repair vs. replace
decision, DOE noted during the 2023
ECS Negotiations that, while this issue
had been discussed extensively in the
2015 ASRAC negotiations, the impact of
this model feature on the policy
decision is minimal. Quantitatively, the
impact of repairing rather than replacing
some fraction of the stock is just to
delay the time at which the equipment
is replaced; as the lifetime energy use of
the equipment is counted in the NES, a
delay in the time of replacement has a
limited impact on the NES metric. It is
also important to note that DOE used
the equipment economic lifetime in its
analyses (i.e., the time to replacement).
It is possible, and even likely, that this
observed economic lifetime includes the
effect of life-extending equipment
repairs in the no-new-standards case. In
modeling terms, the question is: which
consumers who would have replaced
the unit in the no-new-standards case
would instead repair it in the standards
case? This decision is driven by the
difference between the cost of repairing
an existing unit, and the incremental
cost of a new, more efficient unit. DOE
estimated the cost of repair, as
discussed in section IV.F.5 of this
document, and compared this to the
increase in total installed cost (‘‘TIC’’) at
higher standard levels. Based on this
comparison, the increase in units being
repaired vs. replaced would be
negligible except at max-tech levels, and
in this direct final rule, DOE is not
adopting max-tech levels.
H. National Impact Analysis
The NIA assesses the NES and the
NPV from a national perspective of total
consumer costs and savings that would
be expected to result from new or
amended standards at specific efficiency
levels.53 (‘‘Consumer’’ in this context
refers to consumers of the equipment
53 The
NIA accounts for impacts in the 50 states
and U.S. territories.
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being regulated.) DOE calculates the
NES and NPV for the potential standard
levels considered based on projections
of annual equipment shipments, along
with the annual energy consumption
and total installed cost data from the
energy use and LCC analyses.54 For the
present analysis, DOE projected the
energy savings, operating cost savings,
equipment costs, and NPV of consumer
benefits over the lifetime of ACUACs
and ACUHPs sold from 2029 through
2058.
DOE evaluates the impacts of new or
amended standards by comparing a case
without such standards with standardscase projections. The no-new-standards
case characterizes energy use and
consumer costs for each equipment
class in the absence of new or amended
energy conservation standards. For this
projection, DOE considers historical
trends in efficiency and various forces
that are likely to affect the mix of
efficiencies over time. DOE compares
the no-new-standards case with
projections characterizing the market for
each equipment class if DOE adopted
new or amended standards at specific
energy efficiency levels (i.e., the TSLs or
standards cases) for that class. For the
standards cases, DOE considers how a
given standard would likely affect the
market shares of equipment with
efficiencies greater than the standard.
DOE uses a computer model to
calculate the energy savings and the
national consumer costs and savings
from each TSL. Interested parties can
review DOE’s analyses by changing
various input quantities within the
spreadsheet. The NIA computer model
uses typical values (as opposed to
probability distributions) as inputs.
Table IV.14 summarizes the inputs
and methods DOE used for the NIA
analysis for the direct final rule.
Discussion of these inputs and methods
follows the table. See chapter 10 of the
direct final rule TSD for further details.
BILLING CODE 6450–01–P
54 For the NIA, DOE adjusts the installed cost data
from the LCC analysis to exclude sales tax, which
is a transfer.
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Table IV.14 Summary of Inputs and Methods for the National Impact Analysis
Shipments
Compliance Date of Standard
Efficiency Trends
Annual Energy Consumption per Unit
Total Installed Cost per Unit
Annual Energy Cost per Unit
Repair and Maintenance Cost per Unit
Energy Price Trends
Energy Site-to-Primary and FFC
Conversion
Discount Rate
Present Year
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BILLING CODE 6450–01–C
DOE discussed its NIA methodology
at the February 9, 2023 webinar (EERE–
2022–BT–STD–0015–0073 at pp. 44–48)
and the March 21–22, 2023 ACUAC/HP
Working Group meeting (EERE–2022–
BT–STD–0015–0080 at pp. 55–62).
There was not any discussion on the
NIA methodology during these
meetings.
As discussed in section IV.C.3 of this
document, DOE did not conduct an LCC
analysis for ACUHPs. The energy use
analysis calculated the cooling and
ventilation energy use for ACUACs and
is also representative of the cooling and
ventilation energy use for ACUHPs, but
the energy use analysis did not calculate
the energy use for the heating end-use
for ACUHPs. Instead, the data that are
output from the LCC for input to the
NIA were adjusted to include the
heating energy use, operating cost, and
related savings for ACUHPs. The NIA
also accounted for slightly higher MSPs
for ACUHPs, as described in section
IV.C, Engineering Analysis, of this
document. DOE used the higher MSP for
ACUHPs provided by the engineering
analysis, but the Department assumed
the same installation costs when
estimating the total installed cost for
ACUHPs.
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Method
Annual shipments from shipments model (see section IV.G,
Shipments Analysis, of this document).
January 1, 2029
No-new-standards case: Constant throughout the analysis
period.
Standard cases: Roll-up to the considered TSL starting from the
compliance year.
Annual weighted-average values are a function of shipmentsweighted unit energy consumption (UEC).
Annual weighted-average values are a function of the
efficiency distribution (see section IV.F, LCC Analysis, of this
document).
Annual weighted-average values as a function of the annual
shipments-weighted unit energy consumption ("UEC") and
energy prices at each efficiency level (see section IV.E, Energy
Use, and section IV.F.4, Energy Prices, of this document).
Annual values as a function of efficiency level (see section
IV.F, LCC analysis, of this document).
Based on Energy Information Administration's ("EIA"'s)
Annual Energy Outlook (AEO) 2023 Reference case
projections to 2050 and extrapolation thereafter.
Developed to include the energy consumed in extracting,
processing, and transporting or distributing primary fuels. It is
a time-series conversion factor based on AEO 2023.
Three and seven percent.
2024
When considering ACUHPs, DOE
made two adjustments to the EL0 LCC
sample-averaged output:
• DOE defined a heating energy adder
for ACUHPs, based on CBECS 2018. The
CBECS includes estimates of cooling,
ventilation, and heating energy use for
packaged heat pumps. For those
buildings using heat pumps for heating,
DOE calculated the ratio of energy use
for heating, cooling, and ventilation to
the energy use for cooling and
ventilation only. This ratio is 1.22,
which means that for every kwh of
cooling and ventilation energy use, on
average, ACUHPs would use an
additional 0.22 kwh for heating. DOE
assumed that this ratio is constant
across equipment classes, and added the
heating energy use to the sampleaverage energy use output by the LCC to
define total annual energy use.
• DOE calculated a sample-average
energy price for each equipment class as
the ratio of sample-average annual
operating cost to the sample-average
annual energy consumption for cooling
and ventilation. DOE applied this
average price to the heating energy use
to estimate the total annual operating
cost for ACUHPs.
At higher ELs, DOE estimated the
heating energy use as the EL0 value
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multiplied by the ratio of IVHE at the
considered EL (IVHE increases with
higher efficiency). DOE added this
modified heating energy use to the
cooling and ventilation energy use
output by the LCC to get the total energy
use for ACUHPs at each EL. DOE
applied the LCC sample-average energy
price to calculate the total operating cost
for ACUHPs at each EL.
These summary data, accounting for
all energy use and costs for both
ACUACs and ACUHPs, were then input
to the NIA calculation.
In response to the May 2020 ECS RFI,
PGE stated that ACUHPs have
significant advantages for customers
over ACUACs, as they provide both
heating and cooling and, therefore,
provide for: (1) lower operating and
maintenance costs; (2) decreases in
greenhouse gas and localized air
pollution; and (3) longer life spans for
the equipment. (PGE, EERE–2019–BT–
STD–0042–0009 at p. 2) PGE stated that
ACUHPs, on average, are sold at higher
efficiency ratings compared to ACUACs.
Customers choosing heat pump
technology use it for both heating and
cooling needs, thereby driving greater
efficiency gains during both peak
seasons. Additionally, in Northern
climates, the run time for equipment is
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substantially higher, so there is a natural
tendency to buy more efficient, less
expensive units to operate. (Id.)
As stated, DOE has incorporated
ACUHPs into its NIA analysis. DOE has
not identified a different efficiency
distribution or different lifetimes for
this equipment. However, the NIA does
account for heating energy use.
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1. Equipment Efficiency Trends
A key component of the NIA is the
trend in energy efficiency projected for
the no-new-standards case and each of
the standards cases. Section IV.F.8 of
this document describes how DOE
developed an energy efficiency
distribution for the no-new-standards
case (which yields a shipment-weighted
average efficiency) for each of the
considered equipment classes for the
year of anticipated compliance with an
amended or new standard (2029). To
project the trend in efficiency absent
amended standards for ACUACs and
ACUHPs over the entire shipments
projection period, DOE held the
efficiency distribution constant, as
historical data based on IEER may not
be indicative of potential trends in
IVEC.
For the standards cases, DOE used a
‘‘roll-up’’ scenario to establish the
shipment-weighted efficiency for the
year that standards are assumed to
become effective (2029). In this
scenario, the market shares of
equipment in the no-new-standards case
that do not meet the standard under
consideration would ‘‘roll up’’ to meet
the new standard level, and the market
share of equipment above the standard
would remain unchanged.
To develop standards-case efficiency
trends after 2029, DOE also held the
efficiency distribution constant at the
rolled-up levels, for similar reasons as
in the no-new-standards case.
2. National Energy Savings
The national energy savings analysis
involves a comparison of national
energy consumption of the considered
equipment between each potential
standards case (‘‘TSL’’) and the case
with no new or amended energy
conservation standards. DOE calculated
the national energy consumption by
multiplying the number of units (stock)
of each equipment (by vintage or age) by
the unit energy consumption (also by
vintage). DOE calculated annual NES
based on the difference in national
energy consumption for the no-newstandards case and for each higherefficiency standard case. DOE estimated
energy consumption and savings based
on site energy and converted the
electricity consumption and savings to
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primary energy (i.e., the energy
consumed by power plants to generate
site electricity) using annual conversion
factors derived from AEO 2023.
Cumulative energy savings are the sum
of the NES for each year over the
timeframe of the analysis.
Use of higher-efficiency equipment is
sometimes associated with a direct
rebound effect, which refers to an
increase in utilization of the equipment
due to the increase in efficiency. DOE
did not consider a direct rebound effect
for ACUACs and ACUHPs. An
important reason for this decision is that
in contrast to residential heating and
cooling, HVAC operation adjustment in
commercial buildings is driven
primarily by building managers or
owners. The comfort conditions are
already established in order to satisfy
the occupants, and they are unlikely to
change due to installation of higherefficiency equipment. While it is
possible that a small degree of rebound
could occur for higher-efficiency
ACUACs and ACUHPs, there is no basis
to select a specific value. Because the
available information suggests that any
rebound would be small to negligible,
DOE did not include a rebound effect
for the direct final rule.
In 2011, in response to the
recommendations of a committee on
‘‘Point-of-Use and Full-Fuel-Cycle
Measurement Approaches to Energy
Efficiency Standards’’ appointed by the
National Academy of Sciences, DOE
announced its intention to use FFC
measures of energy use and greenhouse
gas and other emissions in the national
impact analyses and emissions analyses
included in future energy conservation
standards rulemakings. 76 FR 51281
(August 18, 2011). After evaluating the
approaches discussed in the August 18,
2011 notice, DOE published a statement
of amended policy in which DOE
explained its determination that EIA’s
National Energy Modeling System
(‘‘NEMS’’) is the most appropriate tool
for its FFC analysis and its intention to
use NEMS for that purpose. 77 FR 49701
(August 17, 2012). NEMS is a public
domain, multi-sector, partial
equilibrium model of the U.S. energy
sector 55 that EIA uses to prepare its
Annual Energy Outlook. The FFC factors
incorporate losses in production and
delivery in the case of natural gas
(including fugitive emissions) and
additional energy used to produce and
deliver the various fuels used by power
plants. The approach used for deriving
55 For more information on NEMS, refer to The
National Energy Modeling System: An Overview,
DOE/EIA–0581(2023), May 2023 (available at:
www.eia.gov/outlooks/aeo/nems/overview/pdf/
0581(2023).pdf) (last accessed Oct. 23, 2023).
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FFC measures of energy use and
emissions is described in appendix 10B
of the direct final rule TSD.
3. Net Present Value Analysis
The inputs for determining the NPV
of the total costs and benefits
experienced by consumers are: (1) total
annual installed cost; (2) total annual
operating costs (energy costs and repair
and maintenance costs), and (3) a
discount factor to calculate the present
value of costs and savings. DOE
calculates net savings each year as the
difference between the no-newstandards case and each standards case
in terms of total savings in operating
costs versus total increases in installed
costs. DOE calculates operating cost
savings over the lifetime of each
equipment shipped during the
projection period.
As discussed in section IV.F.1 of this
document, DOE developed ACUACs
and ACUHPs price trends based on
historical PPI data. DOE applied the
same trends to project prices for each
equipment class at each considered
efficiency level. For ACUACs and
ACUHPs, DOE has used a constant
default price trend. DOE’s projection of
equipment prices is described in
appendix 10C of the direct final rule
TSD.
To evaluate the effect of uncertainty
regarding the price trend estimates, DOE
investigated the impact of different
equipment price projections on the
consumer NPV for the considered TSLs
for ACUACs and ACUHPs. In addition
to the default price trend, DOE
considered two equipment price
sensitivity cases: (1) an increasing trend
based on the same PPI data but only the
years 2000 to 2022 and (2) a decreasing
trend based on the same PPI data but
only the years 1978 to 2000. The
derivation of these price trends and the
results of these sensitivity cases are
described in appendix 10C of the direct
final rule TSD.
The operating cost savings are energy
cost savings, which are calculated using
the estimated energy savings in each
year and the projected price of the
appropriate form of energy. To estimate
energy prices in future years, DOE
multiplied the average regional energy
prices by the projection of annual
national-average residential energy price
changes in the Reference case from AEO
2023, which has an end year of 2050.
Price trends onwards are held constant
at 2050 level. As part of the NIA, DOE
also analyzed scenarios that used inputs
from variants of the AEO 2023
Reference case that have lower and
higher economic growth. Those cases
have lower and higher energy price
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trends compared to the Reference case.
NIA results based on these cases are
presented in appendix 10C of the direct
final rule TSD.
In calculating the NPV, DOE
multiplies the net savings in future
years by a discount factor to determine
their present value. For this direct final
rule, DOE estimated the NPV of
consumer benefits using both a 3percent and a 7-percent real discount
rate. DOE uses these discount rates in
accordance with guidance provided by
the Office of Management and Budget
(‘‘OMB’’) to Federal agencies on the
development of regulatory analysis.56
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.
I. Consumer Subgroup Analysis
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In analyzing the potential impact of
new or amended energy conservation
standards on consumers, DOE evaluates
the impact on identifiable subgroups of
consumers that may be
disproportionately affected by a new or
amended national standard. The
purpose of a subgroup analysis is to
determine the extent of any such
disproportional impacts. DOE evaluates
impacts on particular subgroups of
consumers by analyzing the LCC
impacts and PBP for those particular
consumers from alternative standard
levels. For this direct final rule, DOE
analyzed the impacts of the considered
standard levels on one subgroup: small
businesses. The analysis used subsets of
the LCC sample composed of buildings
that meet the criteria for the considered
subgroup. Additionally, electricity
prices and discount rates were updated
to be representative of small businesses.
DOE used the LCC and PBP computer
model to estimate the impacts of the
considered efficiency levels on this
subgroup. Chapter 11 in the direct final
rule TSD describes the consumer
subgroup analysis.
56 U.S. Office of Management and Budget,
Circular A–4: Regulatory Analysis (available at:
www.whitehouse.gov/omb/information-foragencies/circulars/) (last accessed Dec. 11, 2023).
DOE used the prior version of Circular A–4 (2003)
as a result of the March 1, 2024, effective date of
the new version.
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J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate
the financial impacts of amended energy
conservation standards on
manufacturers of ACUACs and ACUHPs
and to estimate the potential impacts of
such standards on domestic
employment, manufacturing capacity,
and cumulative regulatory burden for
those manufacturers. The MIA has both
quantitative and qualitative aspects. The
quantitative part of the MIA includes
analyses of projected industry cash
flows, the INPV, additional investments
in research and development (‘‘R&D’’)
and manufacturing capital necessary to
comply with amended standards, and
potential impacts on domestic
manufacturing employment.
Additionally, the MIA seeks to
qualitatively determine how amended
energy conservation standards might
affect manufacturing capacity and
competition, as well as how standards
contribute to manufacturers’ overall
regulatory burden. Finally, the MIA
serves to identify any disproportionate
impacts on manufacturer subgroups,
including small business manufacturers.
The quantitative part of the MIA
primarily relies on the GRIM,57 an
industry cash-flow model with inputs
specific to this rulemaking. The key
GRIM inputs include data on the
industry cost structure, unit production
costs, equipment shipments,
manufacturer markups, and investments
in R&D and manufacturing capital
required to produce compliant
equipment. The key GRIM outputs are
the INPV, which is the sum of industry
annual cash flows over the analysis
period, discounted using the industryweighted average cost of capital, and the
impact on domestic manufacturing
employment. The model uses standard
accounting principles to estimate the
impacts of more-stringent energy
conservation standards on the ACUAC
and ACUHP manufacturing industry by
comparing changes in INPV and
domestic manufacturing employment
between the no-new-standards case and
the various standards cases (i.e.,
‘‘TSLs’’). To capture the uncertainty
relating to manufacturer pricing
strategies following amended standards,
the GRIM estimates a range of possible
impacts under different manufacturer
markup scenarios.
The qualitative part of the MIA
addresses manufacturer characteristics
57 A copy of the GRIM spreadsheet tool is
available on the DOE website for this rulemaking
at www.regulations.gov/docket/EERE-2022-BT-STD0015/document.
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and market trends. Specifically, the MIA
considers such factors as a potential
standard’s impact on manufacturing
capacity, competition within the
industry, the cumulative regulatory
burden impact of other DOE and nonDOE regulations, and impacts on
manufacturer subgroups. The complete
MIA is outlined in chapter 12 of the
direct final rule TSD.
DOE conducted the MIA for this
rulemaking in three phases. In Phase 1
of the MIA, DOE prepared a profile of
the ACUAC and ACUHP manufacturing
industry based on the market and
technology assessment, preliminary
manufacturer interviews, and publiclyavailable information. This included a
top-down analysis of ACUAC and
ACUHP manufacturers that DOE used to
derive preliminary financial inputs for
the GRIM (e.g., revenues; materials,
labor, overhead, and depreciation
expenses; selling, general, and
administrative expenses (‘‘SG&A’’); R&D
expenses; and tax rates). DOE also used
public sources of information to further
calibrate its initial characterization of
the ACUAC and ACUHP manufacturing
industry, including company filings of
form 10–K from the SEC,58 corporate
annual reports, the U.S. Census
Bureau’s Annual Survey of
Manufactures,59 and reports from Dun &
Bradstreet.60
In Phase 2 of the MIA, DOE prepared
a framework industry cash-flow analysis
to quantify the potential impacts of
amended energy conservation
standards. The GRIM uses several
factors to determine a series of annual
cash flows starting with the
announcement of the standard and
extending over a 30-year period
following the compliance date of the
standard. These factors include annual
expected revenues, costs of sales, SG&A
and R&D expenses, taxes, and capital
expenditures. In general, energy
conservation standards can affect
manufacturer cash flow in three distinct
ways: (1) creating a need for increased
investment; (2) raising production costs
per unit, and (3) altering revenue due to
higher per-unit prices and changes in
sales volumes.
In addition, during Phase 2, DOE
developed interview guides to distribute
58 U.S. Securities and Exchange Commission,
Annual 10–K Reports (Various Years) (available at:
www.sec.gov/edgar/searchedgar/
companysearch.html) (last accessed Oct. 3, 2023).
59 U.S. Census Bureau, Annual Survey of
Manufactures: General Statistics: Statistics for
Industry Groups and Industries (2021) (available at:
www.census.gov/programs-surveys/asm/data/
tables.html) (last accessed Dec. 5, 2023).
60 Dun & Bradstreet Company Profiles, Various
Companies (available at: app.dnbhoovers.com) (last
accessed Oct. 3, 2023).
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to manufacturers of ACUACs and
ACUHPs in order to develop other key
GRIM inputs, including equipment and
capital conversion costs, and to gather
additional information on the
anticipated effects of amended energy
conservation standards on revenues,
direct employment, capital assets,
industry competitiveness, and
manufacturer subgroup impacts.
In Phase 3 of the MIA, DOE’s
contractor conducted structured,
detailed interviews with representative
ACUAC and ACUHP manufacturers.
During these interviews, DOE’s
contractor discussed efficiency levels,
design options, and conversion costs to
validate assumptions used in the GRIM.
As part of Phase 3, DOE also evaluated
subgroups of manufacturers that may be
disproportionately impacted by
amended standards or that may not be
accurately represented by the average
cost assumptions used to develop the
industry cash-flow analysis. Such
manufacturer subgroups may include
small business manufacturers, lowvolume manufacturers, niche players,
and/or manufacturers exhibiting a cost
structure that largely differs from the
industry average, all of whom could be
disproportionately affected by amended
energy conservation standards. DOE
identified one subgroup for a separate
impact analysis: small business
manufacturers. The small business
subgroup is discussed in chapter 12 of
the direct final rule TSD.
2. Government Regulatory Impact Model
and Key Inputs
DOE uses the GRIM to quantify the
changes in cash flow over time due to
new or amended energy conservation
standards that result in a higher or
lower INPV. The GRIM uses a standard,
annual discounted cash-flow analysis
that incorporates manufacturer costs,
markups, shipments, and industry
financial information as inputs. The
GRIM models changes in costs,
distribution of shipments, investments,
and manufacturer margins that could
result from an amended energy
conservation standard. The GRIM
spreadsheet uses the inputs to arrive at
a series of annual cash flows, beginning
in 2024 (the reference year of the
analysis) and continuing to 2058 (the
terminal year of the analysis). DOE
calculated INPVs by summing the
stream of annual discounted cash flows
during this period. For manufacturers of
ACUACs and ACUHPs, DOE used a real
discount rate of 5.9 percent, which was
derived from industry financials (i.e.,
corporate annual reports and public
filings to the Securities and Exchange
Commission (SEC 10–Ks)).
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The GRIM calculates cash flows using
standard accounting principles and
compares changes in INPV between the
no-new-standards case and each
standards case. The difference in INPV
between the no-new-standards case and
a standards case represents the financial
impact of the new or amended energy
conservation standard on
manufacturers. As discussed previously,
DOE developed critical GRIM inputs
using a number of sources, including
publicly-available data, results of the
engineering analysis, and information
gathered from industry stakeholders
during the course of manufacturer
interviews and subsequent ACUAC/HP
Working Group meetings. The GRIM
results are presented in section V.B.2 of
this document. Additional details about
the GRIM, the discount rate, and other
financial parameters can be found in
chapter 12 of the direct final rule TSD.
a. Manufacturer Production Costs
Manufacturing more-efficient
equipment is typically more expensive
than manufacturing baseline equipment
due to the use of more complex
components, which are typically more
costly than baseline components. The
changes in the MPCs of covered
equipment can affect the shipments,
revenues, gross margins, and cash flow
of the industry. In this rulemaking, DOE
relies on an efficiency-level approach
for small, large, and very large ACUACs/
HPs. For a complete description of the
MPCs, see section IV.C of this document
and chapter 5 of the direct final rule
TSD.
b. Shipments Projections
The GRIM estimates manufacturer
revenues based on total unit shipment
projections and the distribution of those
shipments by efficiency level and
equipment class. Changes in sales
volumes and efficiency mix over time
can significantly affect manufacturer
finances. For this analysis, the GRIM
uses the NIA’s annual shipment
projections derived from the shipments
analysis from 2024 (the base year) to
2058 (the end year of the analysis
period). In the shipments analysis (see
section IV.G of this document), DOE
estimates the distribution of efficiencies
in the no-new-standards case and
standards cases for all equipment
classes.
For the standards cases in the NIA,
DOE used a ‘‘roll-up’’ scenario to
establish the shipment-weighted
efficiency for the year that standards are
assumed to become effective (2029). In
this scenario, the market shares of
equipment in the no-new-standards case
that do not meet the standard under
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consideration would ‘‘roll up’’ to meet
the new standard level, and the market
share of equipment above the standard
would remain unchanged. For a
complete description of the shipments
analysis, see section IV.G of this
document and chapter 9 of the direct
final rule TSD.
c. Capital and Product Conversion Costs
Amended energy conservation
standards could cause manufacturers to
incur one-time conversion costs to bring
their production facilities and
equipment designs into compliance.
DOE evaluated the level of conversionrelated 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 noncapitalized costs necessary to make
equipment designs comply with
amended energy conservation
standards.
DOE relied on manufacturer feedback
to evaluate the level of capital and
product conversion costs manufacturers
would likely incur at the various TSLs.
DOE contractors conducted interviews
with six manufacturers of small, large,
and very large ACUACs and ACUHPs.
The interviewed manufacturers account
for approximately 90 percent of unit
sales in the industry.
During confidential interviews, DOE’s
contractor asked manufacturers to
estimate the capital conversion costs
(e.g., changes in production processes,
equipment, and tooling) to meet the
various efficiency levels. The capital
conversion cost feedback from these
interviews was then scaled using market
share estimates to estimate total
industry capital conversion costs.
Manufacturers were also asked to
estimate the redesign effort and
engineering resources required at
various efficiency levels to quantify the
product conversion costs. DOE also
relied on data submitted throughout the
2023 ECS Negotiations to estimate
product conversion costs. Specifically,
manufacturers submitted data
simulating IVEC ratings for existing
models currently rated under IEER as
part of the 2023 ECS Negotiations. DOE
reviewed the product conversion cost
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feedback from interviews at each
efficiency level and then compared the
IVEC simulation data provided during
the 2023 ECS Negotiations to IEER data
from the CCD in order to extrapolate the
number of models industry would need
to redesign under amended standards.
Based on manufacturer feedback, DOE
estimated some industry conversion
costs associated with the transition in
energy efficiency metrics from IEER to
IVEC. To estimate total industry product
conversion costs, DOE multiplied the
development redesign estimate at each
efficiency level for each equipment class
by the estimated number of industry
basic models in CCD that would require
redesign. Manufacturer data were
aggregated to better reflect the industry
as a whole and to protect confidential
information.
Industry conversion costs for the
adopted standard (i.e., TSL 3, the
Recommended TSL) total $288.0
million. It consists of $70.8 million in
capital conversion costs and $217.2
million in product conversion costs.
In general, DOE assumes all
conversion-related investments occur
between the year of publication of the
direct final rule and the year by which
manufacturers must comply with the
new standard. The conversion cost
figures used in the GRIM can be found
in section V.B.2 of this document. For
additional information on the estimated
capital and product conversion costs,
see chapter 12 of the direct final rule
TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing
production costs (i.e., labor, materials,
and overhead estimated in DOE’s MPCs)
and all non-production costs (i.e.,
SG&A, R&D, and interest), along with
profit. To calculate the MSPs in the
GRIM, DOE applied non-production
cost manufacturer markups to the MPCs
estimated in the engineering analysis for
each equipment class and efficiency
level. Modifying these manufacturer
markups in the standards case yields
different sets of impacts on
manufacturers. For the MIA, DOE
modeled two standards-case scenarios
to represent uncertainty regarding the
potential impacts on prices and
profitability for manufacturers following
the implementation of amended energy
conservation standards: (1) a
preservation of gross margin percentage
scenario; and (2) a preservation of
operating profit scenario. These
scenarios lead to different manufacturer
markup values that, when applied to the
MPCs, result in varying revenue and
cash flow impacts. The industry cashflow analysis results in section V.B.2.a
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of this document present the impacts of
the upper and lower bound
manufacturer markup scenarios on
INPV. The preservation of gross margin
percentage scenario represents the
upper bound scenario, and the
preservation of operating profit scenario
represents the lower bound scenario for
INPV impacts.
Under the preservation of gross
margin percentage scenario, DOE
applied a single uniform ‘‘gross margin
percentage’’ across all efficiency levels,
which assumes that following amended
standards, 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 manufacturer production costs
increase with efficiency, this scenario
implies that the per-unit dollar profit
will increase. Based on publiclyavailable financial information for
ACUAC and ACUHP manufacturers, as
well as comments from manufacturer
interviews, DOE estimated average gross
margin percentages of 23 percent for
small ACUACs, 24 percent for small
ACUHPs, 25 percent for large ACUACs,
26 percent for large ACUHPs, 29 percent
for very large ACUACs, and 30 percent
for very large ACUHPs.61 Manufacturers
tend to believe it is optimistic to assume
that they would be able to maintain the
same gross margin percentage as their
production costs increase, particularly
for minimally-efficient products.
Therefore, this scenario represents a
high bound to industry profitability
under new or amended energy
conservation standard, because
manufacturers can fully pass on
incremental increases in production
costs due to standards to consumers.
Under the preservation of operating
profit scenario, DOE modeled a
situation in which manufacturers are
not able to increase per-unit operating
profit in proportion to increases in
manufacturer production costs. In the
preservation of operating profit
scenario, as the cost of production goes
up under a standards case,
manufacturers are generally required to
reduce their manufacturer markups (i.e.,
margins) to a level that maintains base61 The gross margin percentage of 23 percent for
small ACUACs is based on a manufacturer markup
of 1.30. The gross margin percentage of 24 percent
for small ACUHPs is based on a manufacturer
markup of 1.32. The gross margin percentage of 25
percent for large ACUACs is based on a
manufacturer markup of 1.34. The gross margin
percentage of 26 percent for large ACUHPs is based
on a manufacturer markup of 1.36. The gross
margin percentage of 29 percent for very large
ACUACs is based on a manufacturer markup of
1.41. The gross margin percentage of 30 percent for
very large ACUHPs is based on a manufacturer
markup of 1.43.
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case operating profit, which allows
them to maintain a cost-competitive
offering in the market. DOE
implemented this scenario in the GRIM
by lowering the manufacturer markups
at each TSL to yield approximately the
same earnings before interest and taxes
in the standards case as in the no-newstandards case in the year after the
compliance date of the amended
standards. In this scenario,
manufacturers maintain their total
operating profit in absolute dollars in
the standards case, despite higher
equipment costs and investment.
Therefore, gross margin (as a
percentage) shrinks in the standards
case for minimally-compliant
equipment. The implicit assumption
behind this scenario is that the industry
can only maintain its operating profit in
absolute dollars after the standard. This
manufacturer markup scenario
represents the lower bound to industry
profitability under new or amended
energy conservation standards.
A comparison of industry financial
impacts under the two manufacturer
markup scenarios is presented in
section V.B.2.a of this document.
3. Discussion of MIA Comments
In response to the May 2020 ECS RFI,
Lennox asserted that the commercial
package air conditioner and commercial
warm air furnace manufacturers are
facing significant cumulative regulatory
burden. (Lennox, EERE–2019–BT–STD–
0042–0015 at pp. 7–8)
In response to the May 2020 ECS RFI,
Carrier likewise commented that
commercial package air conditioner and
heat pump manufacturers face a
significant regulatory burden, citing
regulatory changes to ASHRAE
Standard 90.1, the International Energy
Conservation Code (‘‘IECC’’), California
Air Resource Board, and State-level
action, stressing the potential overlap
between these regulatory actions and
the lack of coordination between their
governing bodies. Carrier requested DOE
to review its approach to multiple
regulations and work closely with
industry organizations to minimize
regulatory burden. (Carrier, EERE–2019–
BT–STD–0042–0013 at pp. 18–19)
In response to the May 2020 ECS RFI,
Trane commented that multiple
regulations affecting the same
manufacturer can strain profits and lead
companies to abandon product lines or
markets. Trane asserted that commercial
package air conditioner and commercial
warm air furnace manufacturers will
experience significant cumulative
regulatory burden due to DOE energy
conservation standards rulemakings.
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(Trane, EERE–2019–BT–STD–0042–
0016 at pp. 12–13)
In response to the May 2020 ECS RFI,
the Air-Conditioning, Heating, and
Refrigeration Institute commented that
the industry faces regulatory burden
from a variety of sources, including the
sunsetting of the UL Standard 1995,
State-level GWP limits, and the
transition to new efficiency metrics,
suggesting that the combined effects of
these changes would consume almost
all available research and development
resources and laboratory time. (AHRI,
EERE–2019–BT–STD–0042–0014 at p.
2)
In response to the May 2022 TP/ECS
RFI, Lennox asserted that commercial
package air conditioner and heat pump
manufacturers are facing unprecedented
regulatory change regarding the
equipment they manufacture, stressing
technical and laboratory resources in
the industry. (Lennox, EERE–2022–BT–
STD–0015–0009 at p. 6) Lennox also
recommended that DOE consider the
cumulative impact of the refrigerant
transition as part of the rulemaking
process for amended energy
conservation standards. (Id. at pp. 5–6)
In response, DOE notes that it
analyzes cumulative regulatory burden
pursuant to section 13(g) of 10 CFR part
430, subpart C, appendix A (which
applies to this equipment per 10 CFR
431.4). As such, the Department will
recognize and consider the overlapping
effects on manufacturers of new or
revised DOE standards and other
Federal regulatory actions affecting the
same products or equipment that take
effect approximately three years before
or after the 2029 compliance date (i.e.,
2026 to 2032). DOE details the
rulemakings and expected conversion
expenses of Federal energy conservation
standards that could impact ACUAC
and ACUHP original equipment
manufacturers (‘‘OEMs’’) that take effect
approximately three years before or after
the 2029 compliance date, as discussed
in section V.B.2.e of this document.
Regarding potential refrigerant
regulations, DOE accounts for the
potential costs associated with
transitioning covered equipment to lowGWP refrigerants in order to comply
with Federal and State regulations
limiting the use of high-GWP
refrigerants in its GRIM. See section
V.B.2.e of this document for addition
information on the estimated refrigerant
transition costs.
In response to the May 2020 ECS RFI,
AHRI’s comment encouraged DOE to
reach out to four manufacturers of
ACUACs/ACUHPs and CWAFs
identified by AHRI as small businesses.
(AHRI, EERE–2019–BT–STD–0042–
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0014 at p. 12) In response to the May
2020 ECS RFI, UCA commented that
DOE should be cognizant of the
disproportionate impact that regulations
may have on small businesses, which,
among other issues, may have more
limited resources to follow and comply
with regulations, and face greater
difficulties competing with larger
corporations. (UCA, EERE–2019–BT–
STD–0042–0006, pp. 1–7 62)
In response, DOE reviewed the
individual company websites of the four
small businesses identified by AHRI and
confirmed that none of them currently
produce equipment covered by this
rulemaking. Further, DOE conducted an
assessment of the ACUAC/HP market
and did not identify any small, domestic
OEMs that manufacture ACUAC/HP
equipment for the U.S. market. See
chapter 3 of the direct final rule TSD for
a list of OEMs of ACUACs and/or
ACUHPs.
K. Emissions Analysis
The emissions analysis consists of
two components. The first component
estimates the effect of potential energy
conservation standards on power sector
and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the
impacts of potential standards on
emissions of two additional greenhouse
gases, CH4 and N2O, as well as the
reductions in emissions of other gases
due to ‘‘upstream’’ activities in the fuel
production chain. These upstream
activities comprise extraction,
processing, and transporting fuels to the
site of combustion.
The analysis of electric power sector
emissions of CO2, NOX, SO2, and Hg
uses emissions intended to represent the
marginal impacts of the change in
electricity consumption associated with
amended or new standards. The
methodology is based on results
published for the AEO, including a set
of side cases that implement a variety of
efficiency-related policies. The
methodology is described in appendix
13A in the direct final rule TSD. The
analysis presented in this document
uses projections from AEO 2023. Power
sector emissions of CH4 and N2O from
fuel combustion are estimated using
Emission Factors for Greenhouse Gas
Inventories published by the EPA.63
62 The UCA comment included two supplemental
attachments: Attachment 1, US DOE LETTER
6.10.2020, and Attachment 2, DOE RFI Double Duct
Information 6.10.2020. DOE references as
‘‘Attachment 1’’ and ‘‘Attachment 2’’ throughout
this document. Both attachments are available on
the docket.
63 Available at www.epa.gov/sites/production/
files/2021-04/documents/emission-factors_
apr2021.pdf (last accessed July 12, 2021).
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FFC upstream emissions, which
include emissions from fuel combustion
during extraction, processing, and
transportation of fuels, and ‘‘fugitive’’
emissions (direct leakage to the
atmosphere) of CH4 and CO2, are
estimated based on the methodology
described in chapter 15 of the direct
final rule TSD.
The emissions intensity factors are
expressed in terms of physical units per
MWh or MMBtu of site energy savings.
For power sector emissions, specific
emissions intensity factors are
calculated by sector and end use. Total
emissions reductions are estimated
using the energy savings calculated in
the national impact analysis.
1. Air Quality Regulations Incorporated
in DOE’s Analysis
DOE’s no-new-standards case for the
electric power sector reflects the AEO,
which incorporates the projected
impacts of existing air quality
regulations on emissions. AEO 2023
reflects, to the extent possible, laws and
regulations adopted through midNovember 2022, including the
emissions control programs discussed in
the following paragraphs the emissions
control programs discussed in the
following paragraphs, and the Inflation
Reduction Act.64
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 (‘‘DC’’). (42 U.S.C. 7651 et
seq.) SO2 emissions from numerous
States in the eastern half of the United
States are also limited under the CrossState Air Pollution Rule (‘‘CSAPR’’). 76
FR 48208 (August 8, 2011). CSAPR
requires these States to reduce certain
emissions, including annual SO2
emissions, and went into effect as of
January 1, 2015.65 AEO 2023
64 For further information, see the Assumptions to
AEO 2023 report that sets forth the major
assumptions used to generate the projections in the
Annual Energy Outlook (available at: www.eia.gov/
outlooks/aeo/assumptions/) (last accessed Oct. 1,
2023).
65 CSAPR requires States to address annual
emissions of SO2 and NOX, precursors to the
formation of fine particulate matter (‘‘PM2.5’’)
pollution, in order to address the interstate
transport of pollution with respect to the 1997 and
2006 PM2.5 National Ambient Air Quality Standards
(‘‘NAAQS’’). CSAPR also requires certain States to
address the ozone season (May-September)
emissions of NOX, a precursor to the formation of
ozone pollution, in order to address the interstate
transport of ozone pollution with respect to the
1997 ozone NAAQS. 76 FR 48208 (August 8, 2011).
EPA subsequently published a supplemental rule in
the Federal Register that included an additional
five States in the CSAPR ozone season program. 76
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incorporates implementation of CSAPR,
including the update to the CSAPR
ozone season program emission budgets
and target dates issued in 2016. 81 FR
74504 (Oct. 26, 2016). Compliance with
CSAPR is flexible among EGUs and is
enforced through the use of tradable
emissions allowances. Under existing
EPA regulations, for States subject to
SO2 emissions limits under CSAPR, any
excess SO2 emissions allowances
resulting from the lower electricity
demand caused by the adoption of an
efficiency standard could be used to
permit offsetting increases in SO2
emissions by another regulated EGU.
However, beginning in 2016, SO2
emissions began to fall as a result of the
Mercury and Air Toxics Standards
(‘‘MATS’’) for power plants.66 77 FR
9304 (Feb. 16, 2012). The final rule
establishes power plant emission
standards for mercury, acid gases, and
non-mercury metallic toxic pollutants.
Because of the emissions reductions
under the MATS, it is unlikely that
excess SO2 emissions allowances
resulting from the lower electricity
demand would be needed or used to
permit offsetting increases in SO2
emissions by another regulated EGU.
Therefore, energy conservation
standards that decrease electricity
generation will generally reduce SO2
emissions. DOE estimated SO2
emissions reduction using emissions
factors based on AEO 2023.
CSAPR also established limits on NOX
emissions for numerous States in the
eastern half of the United States. Energy
conservation standards would have
little effect on NOX emissions in those
States covered by CSAPR emissions
limits if excess NOX emissions
allowances resulting from the lower
electricity demand could be used to
permit offsetting increases in NOX
emissions from other EGUs. In such
case, NOx emissions would remain near
the limit even if electricity generation
goes down. Depending on the
configuration of the power sector in the
different regions and the need for
allowances, however, NOX emissions
might not remain at the limit in the case
of lower electricity demand. That would
mean that standards might reduce NOx
emissions in covered States. Despite this
possibility, DOE has chosen to be
conservative in its analysis and has
FR 80760 (Dec. 27, 2011) (Supplemental Rule). EPA
also published in the Federal Register the CSAPR
Update for the 2008 ozone NAAQS. 81 FR 74504
(Oct. 26, 2016).
66 In order to continue operating, coal power
plants must have either flue gas desulfurization or
dry sorbent injection systems installed. Both
technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions.
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maintained the assumption that
standards will not reduce NOX
emissions in States covered by CSAPR.
Energy conservation standards would be
expected to reduce NOX emissions in
the States not covered by CSAPR. DOE
used AEO 2023 data to derive NOX
emissions factors for the group of States
not covered by CSAPR.
The MATS limit mercury emissions
from power plants, but they do not
include emissions caps and, as such,
DOE’s energy conservation standards
would be expected to slightly reduce Hg
emissions. DOE estimated mercury
emissions reduction using emissions
factors based on AEO 2023, which
incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this
direct final rule, for the purpose of
complying with the requirements of
Executive Order 12866, DOE considered
the estimated net monetary benefits
from the reduced emissions of CO2, CH4,
N2O, NOX, and SO2 that are expected to
result from each of the TSLs considered.
In order to make this calculation
analogous to the calculation of the NPV
of consumer benefit, DOE considered
the reduced emissions expected to
result over the lifetime of equipment
shipped in the projection period for
each TSL. This section summarizes the
basis for the values used for monetizing
the emissions benefits and presents the
values considered in this direct final
rule.
To monetize the benefits of reducing
GHG emissions, this analysis uses the
interim estimates presented in the
Technical Support Document: Social
Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates Under
Executive Order 13990 published in
February 2021 by the IWG (‘‘February
2021 SC–GHG TSD’’).67
1. Monetization of Greenhouse Gas
Emissions
DOE estimates the monetized benefits
of the reductions in emissions of CO2,
CH4, and N2O by using a measure of the
social cost (‘‘SC’’) of each pollutant (e.g.,
SC–CO2). These estimates represent the
monetary value of the net harm to
society associated with a marginal
increase in emissions of these pollutants
in a given year, or the benefit of
avoiding that increase. These estimates
are intended to include (but are not
limited to) climate-change-related
changes in net agricultural productivity,
human health, property damages from
67 See www.whitehouse.gov/wp-content/uploads/
2021/02/TechnicalSupportDocument_
SocialCostofCarbonMethaneNitrousOxide.pdf (last
accessed August 1, 2023).
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increased flood risk, disruption of
energy systems, risk of conflict,
environmental migration, and the value
of ecosystem services.
DOE exercises its own judgment in
presenting monetized climate benefits
as recommended by applicable
Executive orders, and DOE would reach
the same conclusion presented in this
direct final rule in the absence of the
social cost of greenhouse gases. That is,
the social costs of greenhouse gases,
whether measured using the February
2021 interim estimates presented by the
IWG on the Social Cost of Greenhouse
Gases or by another means, did not
affect the rule ultimately adopted by
DOE.
DOE estimated the global social
benefits of CO2, CH4, and N2O
reductions (i.e., SC–GHGs) using SC–
GHG values that were based on the
interim values presented in the
Technical Support Document: Social
Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates under
Executive Order 13990, published in
February 2021 by the IWG (‘‘February
2021 SC–GHG TSD’’). The SC–GHG is
the monetary value of the net harm to
society associated with a marginal
increase in emissions in a given year, or
the benefit of avoiding that increase. In
principle, the SC–GHG includes the
value of all climate change impacts,
including (but not limited to) changes in
net agricultural productivity, human
health effects, property damage from
increased flood risk and natural
disasters, disruption of energy systems,
risk of conflict, environmental
migration, and the value of ecosystem
services. The SC–GHG, therefore,
reflects the societal value of reducing
emissions of the gas in question by one
metric ton. The SC–GHG is the
theoretically appropriate value to use in
conducting benefit-cost analyses of
policies that affect CO2, N2O, and CH4
emissions. As a member of the IWG
involved in the development of the
February 2021 SC–GHG TSD, DOE
agreed that the interim SC–GHG
estimates represent the most appropriate
estimate of the SC–GHG until revised
estimates are developed reflecting the
latest, peer-reviewed science. See 87 FR
78382, 78406–78408 for discussion of
the development and details of the IWG
SC–GHG estimates.
There are a number of limitations and
uncertainties associated with the SC–
GHG estimates. First, the current
scientific and economic understanding
of discounting approaches suggests
discount rates appropriate for
intergenerational analysis in the context
of climate change are likely to be less
than 3 percent, near 2 percent or
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lower.68 Second, the IAMs used to
produce these interim estimates do not
include all of the important physical,
ecological, and economic impacts of
climate change recognized in the
climate change literature and the
science underlying their ‘‘damage
functions’’ (i.e., the core parts of the
IAMs that map global mean temperature
changes and other physical impacts of
climate change into economic—both
market and nonmarket—damages) lags
behind the most recent research. For
example, limitations include the
incomplete treatment of catastrophic
and non-catastrophic impacts in the
integrated assessment models, their
incomplete treatment of adaptation and
technological change, the incomplete
way in which inter-regional and
intersectoral linkages are modeled,
uncertainty in the extrapolation of
damages to high temperatures, and
inadequate representation of the
relationship between the discount rate
and uncertainty in economic growth
over long time horizons. Likewise, the
socioeconomic and emissions scenarios
used as inputs to the models do not
reflect new information from the last
decade of scenario generation or the full
range of projections. The modeling
limitations do not all work in the same
direction in terms of their influence on
the SC–CO2 estimates. However, as
discussed in the February 2021 TSD, the
IWG has recommended that, taken
together, the limitations suggest that the
interim SC–GHG estimates used in this
direct final rule likely underestimate the
damages from GHG emissions. DOE
concurs with this assessment.
DOE is aware that in December 2023,
EPA issued a new set of SC–GHG
estimates in connection with a final
rulemaking under the Clean Air Act.69
As DOE had used the IWG interim
values in proposing this rule and is
currently reviewing the updated 2023
SC–GHG values, for this direct final
rule, DOE used these updated 2023 SC–
GHG values to conduct a sensitivity
analysis of the value of GHG emissions
reductions associated with alternative
standards for ACUACs and ACUHPs
(see section IV.L.1.c of this notice). DOE
notes that because EPA’s estimates are
considerably higher than the IWG’s
interim SC–GHG values applied for this
direct final rule, an analysis that uses
the EPA’s estimates results in
significantly greater climate-related
benefits. However, such results would
not affect DOE’s decision in this direct
final rule. As stated elsewhere in this
document, DOE would reach the same
conclusion regarding the economic
justification of the standards presented
in this direct final rule without
considering the IWG’s interim SC–GHG
values, which DOE agrees are
conservative estimates. For the same
reason, if DOE were to use EPA’s higher
SC–GHG estimates, they would not
change DOE’s conclusion that the
standards are economically justified.
DOE’s derivations of the SC–GHG
(i.e., SC–CO2, SC–N2O, and SC–CH4)
values used for this direct final rule are
discussed in the following sections, and
the results of DOE’s analyses estimating
the benefits of the reductions in
emissions of these GHGs are presented
in section V.B of this document.
a. Social Cost of Carbon Dioxide
The SC–CO2 values used for this
direct final rule were based on the
values developed for the IWG’s
February 2021 TSD, which are shown in
Table IV.15 in five-year increments from
2020 to 2050. DOE notes that it has
exercised its discretion in adopting the
IWG’s estimates, and as previously
stated, DOE finds that the interim SC–
GHG estimates represent the most
appropriate estimate of the SC–GHG
until revised estimates have been
developed reflecting the latest, peerreviewed science.
The set of annual values that DOE
used, which was adapted from estimates
published by EPA,70 is presented in
Appendix 14A of the direct final rule
TSD. These estimates are based on
methods, assumptions, and parameters
identical to the estimates published by
the IWG (which were based on EPA
modeling), and include values for 2051
to 2070. DOE expects additional climate
benefits to accrue for equipment still
operating after 2070, but a lack of
available SC–CO2 estimates for
emissions years beyond 2070 prevents
DOE from monetizing these potential
benefits in this analysis.
Year
5%
Avera2e
2020
2025
2030
2035
2040
2045
2050
14
17
19
22
25
28
32
Discount Rate and Statistic
3%
2.5%
Avera2e
Avera2e
51
56
62
67
73
79
85
3%
95 th percentile
152
169
187
206
225
242
260
76
83
89
96
103
110
116
DOE multiplied the CO2 emissions
reduction estimated for each year by the
SC–CO2 value for that year in each of
the four cases. DOE adjusted the values
to 2022$ using the implicit price
deflator for gross domestic product
(‘‘GDP’’) from the Bureau of Economic
Analysis. To calculate a present value of
the stream of monetary values, DOE
discounted the values in each of the
four cases using the specific discount
rate that had been used to obtain the
SC–CO2 values in each case. See chapter
13 of the direct final rule TSD for the
annual emissions reductions and see
68 Interagency Working Group on Social Cost of
Greenhouse Gases (IWG) (2021) Technical Support
Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government
(available at: www.whitehouse.gov/briefing-room/
blog/2021/02/26/a-return-to-science-evidencebased-estimates-of-the-benefits-of-reducing-climatepollution/) (last accessed Nov. 1, 2023).
69 See www.epa.gov/environmental-economics/
scghg.
70 See EPA, Revised 2023 and Later Model Year
Light-Duty Vehicle GHG Emissions Standards:
Regulatory Impact Analysis, Washington, DC
(December 2021) (available at: nepis.epa.gov/Exe/
ZyPDF.cgi?Dockey=P1013ORN.pdf) (last accessed
Feb. 21, 2023).
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Table IV.15 Annual SC-CO2 Values from 2021 Interagency Update, 2020-2050
12020$ per Metric Ton CO2)
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
also appendix 14A of the direct final
rule TSD for the annual SC–CO2 values.
Regarding the May 2020 ECS RFI,
DOE received comments from Policy
Integrity regarding the social cost of
carbon used in the emissions
monetization analysis. Policy Integrity
commented that DOE should account
for the benefits of greenhouse gas
emissions reductions from the use of
higher-efficiency equipment using the
global estimate of the social cost of
greenhouse gases, and that the values
developed by the IWG are the best
available. (Policy Integrity, EERE–2019–
BT–STD–0042–007 at pp. 2–3, 5)
In response, DOE agrees that the
global estimate of the SC–GHG is
appropriate to use in its analysis. The
SC–GHG values used in this analysis are
based on the best available science and
economics. The IWG is in the process of
assessing how best to incorporate the
latest peer-reviewed science and the
recommendations of the National
Academies to develop an updated set of
SC–GHG estimates, and DOE remains
engaged in that process.
b. Social Cost of Methane and Nitrous
Oxide
The SC–CH4 and SC–N2O values used
for this direct final rule were based on
the values developed for the February
2021 TSD. DOE notes that it has
exercised its discretion in adopting the
IWG’s estimates, and as previously
stated, DOE finds that the interim SC–
44105
GHG estimates represent the most
appropriate estimate of the SC–GHG
until revised estimates have been
developed reflecting the latest, peerreviewed science. Table IV.16 shows the
updated sets of SC–CH4 and SC–N2O
estimates from the latest interagency
update in five-year increments from
2020 to 2050. The full set of annual
values used is presented in Appendix
14–A of the direct final rule TSD. To
capture the uncertainties involved in
regulatory impact analysis, DOE has
determined it is appropriate to include
all four sets of SC–CH4 and SC–N2O
values, as recommended by the IWG.
DOE derived values after 2050 using the
approach described previously for the
SC–CO2.
Table IV.16 Annual SC-CH4 and SC-N2O Values from 2021 lnteragency Update,
2020-2050 (2020$ per Metric Ton)
2020
2025
2030
2035
2040
2045
2050
SC-N20
Discount Rate and Statistic
5%
3%
2.5%
Average
Average
Average
670
800
940
1100
1300
1500
1700
1500
1700
2000
2200
2500
2800
3100
2000
2200
2500
2800
3100
3500
3800
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DOE multiplied the CH4 and N2O
emissions reduction estimated for each
year by the SC–CH4 and SC–N2O
estimates for that year in each of the
cases. DOE adjusted the values to 2022$
using the implicit price deflator for GDP
from the Bureau of Economic Analysis.
To calculate a present value of the
stream of monetary values, DOE
discounted the values in each of the
cases using the specific discount rate
that had been used to obtain the SC–CH4
and SC–N2O estimates in each case. See
chapter 13 of the direct final rule TSD
for the annual emissions reduction, and
see also appendix 14A of the direct final
rule TSD for the annual SC–CH4 and
SC–N2O values.
c. Sensitivity Analysis Using EPA’s New
SC–GHG Estimates
In December 2023, EPA issued an
updated set of SC–GHG estimates (2023
SC–GHG) in connection with a final
rulemaking under the Clean Air Act.
These estimates incorporate recent
research and address recommendations
of the National Academies (2017) and
comments from a 2023 external peer
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3%
95th
percentile
3900
4500
5200
6000
6700
7500
8200
5%
3%
2.5%
Average
Average
Average
5800
6800
7800
9000
10000
12000
13000
18000
21000
23000
25000
28000
30000
33000
27000
30000
33000
36000
39000
42000
45000
review of the accompanying technical
report.
For this rulemaking, DOE used these
updated 2023 SC–GHG values to
conduct a sensitivity analysis of the
value of GHG emissions reductions
associated with alternative standards for
ACUACs and ACUHPs. This sensitivity
analysis provides an expanded range of
potential climate benefits associated
with amended standards. The final year
of EPA’s new 2023 SC–GHG estimates is
2080; therefore, DOE did not monetize
the climate benefits of GHG emissions
reductions occurring after 2080.
The overall climate benefits are
greater when using the higher, updated
2023 SC–GHG estimates, compared to
the climate benefits using the older IWG
SC–GHG estimates. The results of the
sensitivity analysis are presented in
appendix 14C of the direct final rule
TSD.
2. Monetization of Other Emissions
Impacts
For this direct final rule, DOE
estimated the monetized value of NOX
and SO2 emissions reductions from
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3%
95th
percentile
48000
54000
60000
67000
74000
81000
88000
electricity generation using benefit-perton estimates for that sector from the
EPA’s Benefits Mapping and Analysis
Program.71 DOE used EPA’s values for
PM2.5-related benefits associated with
NOX and SO2 and for ozone-related
benefits associated with NOX for 2025,
2030, and 2040, calculated with
discount rates of 3 percent and 7
percent. DOE used linear interpolation
to define values for the years not given
in the 2025 to 2040 range; for years
beyond 2040, the values are held
constant. DOE combined the EPA
regional benefit-per-ton estimates with
regional information on electricity
consumption and emissions from AEO
2023 to define weighted-average
national values for NOX and SO2 (see
appendix 14B of the direct final rule
TSD).
71 U.S. Environmental Protection Agency,
Estimating the Benefit per Ton of Reducing
Directly-Emitted PM2.5, PM2.5 Precursors and Ozone
Precursors from 21 Sectors (available at:
www.epa.gov/benmap/estimating-benefit-tonreducing-directly-emitted-pm25-pm25-precursorsand-ozone-precursors) (last accessed Nov. 1, 2023).
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Year
SC-CH4
Discount Rate and Statistic
44106
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
M. Utility Impact Analysis
The utility impact analysis estimates
the changes in installed electrical
capacity and generation projected to
result for each considered TSL. The
analysis is based on published output
from the NEMS associated with AEO
2023. NEMS produces the AEO
Reference case, as well as a number of
side cases, that estimate the economywide impacts of changes to energy
supply and demand. For the current
analysis, impacts are quantified by
comparing the levels of electricity sector
generation, installed capacity, fuel
consumption and emissions in the AEO
2023 Reference case and various side
cases. Details of the methodology are
provided in the appendices to chapters
13 and 15 of the direct final rule TSD.
The output of this analysis is a set of
time-dependent coefficients that capture
the change in electricity generation,
primary fuel consumption, installed
capacity, and power sector emissions
due to a unit reduction in demand for
a given end use. These coefficients are
multiplied by the stream of electricity
savings calculated in the NIA to provide
estimates of selected utility impacts of
potential new or amended energy
conservation standards.
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N. Employment Impact Analysis
DOE considers employment impacts
in the domestic economy as one factor
in selecting a standard. Employment
impacts from new or amended energy
conservation standards include both
direct and indirect impacts. Direct
employment impacts are any changes in
the number of employees of
manufacturers of the equipment subject
to standards, their suppliers, and related
service firms. The MIA addresses those
impacts. Indirect employment impacts
are changes in national employment
that occur due to the shift in
expenditures and capital investment
caused by the purchase and operation of
more-efficient appliances. Indirect
employment impacts from standards
consist of the net jobs created or
eliminated in the national economy,
other than in the manufacturing sector
being regulated, caused by: (1) reduced
spending by consumers on energy; (2)
reduced spending on new energy supply
by the utility industry; (3) increased
consumer spending on the equipment to
which the new standards apply and
other goods and services, and (4) the
72 See U.S. Department of Commerce–Bureau of
Economic Analysis. Regional Multipliers: A User
Handbook for the Regional Input-Output Modeling
System (‘‘RIMS II’’) (1997) U.S. Government
Printing Office: Washington, DC (available at:
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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 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.72 There are many reasons for
these differences, including wage
differences and the fact that the utility
sector is more capital-intensive and less
labor-intensive than other sectors.
Energy conservation standards have the
effect of reducing consumer utility bills.
Because reduced consumer
expenditures for energy likely lead to
increased expenditures in other sectors
of the economy, the general effect of
efficiency standards is to shift economic
activity from a less labor-intensive
sector (i.e., the utility sector) to more
labor-intensive sectors (e.g., the retail
and service sectors). Thus, the BLS data
suggest that net national employment
may increase due to shifts in economic
activity resulting from energy
conservation standards.
DOE estimated indirect national
employment impacts for the standard
levels considered in this direct final rule
using an input/output model of the U.S.
economy called Impact of Sector Energy
Technologies version 4 (‘‘ImSET’’).73
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
187 sectors most relevant to industrial,
commercial, and residential building
energy use.
DOE notes that ImSET is not a general
equilibrium forecasting model, and that
there are uncertainties involved in
projecting employment impacts,
especially changes in the later years of
the analysis. Because ImSET does not
incorporate price changes, the
employment effects predicted by ImSET
may over-estimate actual job impacts
over the long run for this rule.
Therefore, DOE used ImSET only to
generate results for near-term
timeframes (2034), where these
uncertainties are reduced. For more
details on the employment impact
analysis, see chapter 16 of the direct
final rule TSD.
www.bea.gov/resources/methodologies/RIMSII-userguide) (last accessed August 1, 2023).
73 Livingston, O.V., S.R. Bender, M.J. Scott, and
R.W. Schultz, ImSET 4.0: Impact of Sector Energy
Technologies Model Description and User’s Guide
(2015) Pacific Northwest National Laboratory:
Richland, WA. PNNL–24563.
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V. Analytical Results and Conclusions
The following section addresses the
results from DOE’s analyses with
respect to the considered energy
conservation standards for ACUACs and
ACUHPs. It addresses the TSLs
examined by DOE, the projected
impacts of each of these levels if
adopted as energy conservation
standards for ACUACs and ACUHPs,
and the standard levels that DOE is
adopting in this direct final rule.
Additional details regarding DOE’s
analyses are contained in the direct final
rule TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates
potential new or amended standards for
products and equipment at the
equipment class level and by grouping
individual efficiency levels for each
class into TSLs. Use of TSLs allows DOE
to identify and consider industry-level
manufacturer cost interactions between
the equipment classes, to the extent that
there are such interactions, and
national-level price elasticity of
consumer purchasing decisions that
may change when different standard
levels are set.
In the analysis conducted for this
direct final rule, DOE analyzed the
benefits and burdens of four TSLs for
ACUACs and ACUHPs. DOE developed
TSLs that combine efficiency levels for
each analyzed equipment class. DOE
presents the results for the TSLs in this
document, while the results for all
efficiency levels that DOE analyzed are
in the direct final rule TSD.
Table V.1 presents the TSLs and the
corresponding efficiency levels that
DOE has identified for potential
amended energy conservation standards
for ACUACs and ACUHPs. TSL 4
represents the maximum
technologically feasible (‘‘max-tech’’)
energy efficiency for all equipment
classes. TSL 3 represents the efficiency
levels recommended by the ACUAC/HP
Working Group. TSL 2 and TSL 1
represent intermediate efficiency levels
between baseline and TSL 3 for the
small and large equipment classes, but
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correspond to the same efficiency level
44107
for very large equipment classes as TSL
3.
Table V.1 Trial Standard Levels for ACUACs and ACUHPs
Efficiency Level*
TSL
Large
Small
1
2
1
2
3
1
3 (Recommended)
4
2
4
4
7
Very Large
1
1
1
3
*For the IVEC and IVHE values at each efficiency level, see Table IV.6 and Table IV.7.
While representative ELs were
included in the TSLs, DOE considered
all efficiency levels as part of its
analysis.74
B. Economic Justification and Energy
Savings
1. Economic Impacts on Individual
Consumers
DOE analyzed the economic impacts
on ACUACs and ACUHPs consumers by
looking at the effects that potential
amended standards at each TSL would
have on the LCC and PBP. DOE also
examined the impacts of potential
standards on selected consumer
subgroups. These analyses are discussed
in the following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency
equipment affect consumers in two
ways: (1) purchase price increases and
(2) annual operating costs decrease.
Inputs used for calculating the LCC and
PBP include total installed costs (i.e.,
equipment price plus installation costs),
and operating costs (i.e., annual energy
use, energy prices, energy price trends,
repair costs, and maintenance costs).
The LCC calculation also uses
equipment lifetime and a discount rate.
Chapter 8 of the direct final rule TSD
provides detailed information on the
LCC and PBP analyses.
Table V.2 through Table V.7 show the
LCC and PBP results for the TSLs
considered for each ACUAC equipment
class. As discussed previously, in
section IV.C.3 of this document,
separate LCC and PBP results were not
run for ACUHPs, but values related to
ACUHP shipments are considered in the
NIA. In the first of each pair of tables,
the simple payback is measured relative
to the baseline equipment. In the second
table, the impacts are measured relative
to the efficiency distribution in the nonew-standards case in the compliance
year (see section IV.F.8 of this
document). Because some consumers
purchase equipment with higher
efficiency in the no-new-standards case,
the average savings are less than the
difference between the average LCC of
the baseline equipment and the average
LCC at each TSL. The savings refer only
to consumers who are affected by a
standard at a given TSL. Those who
already purchase equipment with
efficiency at or above a given TSL are
not affected. Consumers for whom the
LCC increases at a given TSL experience
a net cost.
Table V2
. Avera •e LCC and PBP ResuIts fior SmaII ACUAC s
TSL
--1
2
3
--4
Efficiency
Level
Baseline
1
2
3
4
5
6
7
Installed
Cost
17,936
18,366
18,670
19,115
19,653
20,756
21,566
22,467
Average Costs
(2022$)
First Year's
Lifetime
Operating
Operating
Cost
Cost
1,392
21,888
1,310
20,961
1,231
20,045
1,139
19,018
1,089
18,468
1,037
17,975
17,134
959
923
16,791
LCC
39,824
39,327
38,716
38,132
38,121
38,732
38,700
39,258
Simple
Payback
(years)
Average
Lifetime
(years)
--
21
21
21
21
21
21
21
21
5.46
4.72
4.82
5.91
8.46
8.98
10.44
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IV.C.2 of this document. Results by efficiency level
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are presented in chapters 8, 10, and 12 of the direct
final rule TSD.
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74 Efficiency levels that were analyzed for this
direct final rule are discussed in sections IV.C.1 and
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Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The
PBP is measured relative to the baseline equipment.
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
Table V.3 Average LCC Savings Relative to the No-New-Standards Case for Small
ACUACs
.
Life-0 cle Cost Savings
Percent of Consumers that
Average LCC Savings
(2022$)
Experience Net Cost
13%
495
22%
1,047
9%
1,523
26%
1,380
47%
768
49%
800
60%
242
Efficiency
Level
TSL
--
1
2
3
4
5
6
7
1
2
3
---
4
* The savings represent the average LCC for affected consumers.
Table V.4 Avera re LCC an d PBP ResuIts fior Large ACUAC s
Average Costs
TSL
-1, 2
3
-4
Efficiency
Level
Baseline
1
2
3
4
(2022$)
Installed
Cost
30,602
31,125
31,647
33,749
36,467
First Year's
Operating
Cost
2,924
2,770
2,616
2,439
2,061
Lifetime
Operating
Cost
42,733
40,837
38,941
36,929
32,351
LCC
Simple
Payback
(years)
Average
Lifetime
(years)
73,336
71,962
70,588
70,678
68,818
-3.45
3.45
6.74
7.05
23
23
23
23
23
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The
PBP is measured relative to the baseline equipment.
Table V.5 Average LCC Savings Relative to the No-New-Standards Case for Large
ACUACs
Life-C cle Cost Savings
Average LCC Savings *
Percent of Consumers that
(2022$)
Experience Net Cost
3%
1, 2
1
1,363
4%
3
2
2,488
33%
3
2,021
-31%
4
4
3,880
* The savings represent the average LCC for affected consumers.
Efficiency
Level
TSL
.
Table V 6 Avera re LCC an d PBP ResuIts fior Very Large ACUAC s
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-4
0
1
2
3
(2022$)
Installed
Cost
58,902
59,461
64,344
75,201
First Year's
Operating
Cost
6,426
5,931
5,114
4,183
Lifetime
Operating
Cost
100,241
93,252
81,793
69,244
LCC
159,143
152,713
146,137
144,444
Simple
Payback
(years)
Average
Lifetime
(years)
--
30
30
30
30
1.13
4.21
7.46
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The
PBP is measured relative to the baseline equipment.
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
44109
Table V.7 Average LCC Savings Relative to the No-New-Standards Case for Very
Large ACUACs
.
Life-C cle Cost Savings
Average LCC Savings
Percent of Consumers that
(2022$)
Experience Net Cost
1%
1,2,3
1
6,431
5%
2
11,073
-24%
4
3
12,766
* The savings represent the average LCC for affected consumers.
TSL
Efficiency
Level
b. Consumer Subgroup Analysis
In the consumer subgroup analysis,
DOE estimated the impact of the
considered TSLs on small businesses.
Table V.8 through Table V.10 compare
the average LCC savings and PBP at
each efficiency level for the consumer
subgroup, along with similar metrics for
the entire consumer sample for ACUACs
(once again, ACUHPs, are considered
only in the NIA). In most cases, the
average LCC savings and PBP for small
businesses at the considered efficiency
levels are not substantially different
from the average for all commercial
consumers. Chapter 11 of the direct
final rule TSD presents the complete
LCC and PBP results for the subgroup.
Table V.8 Comparison of LCC Savings and PBP for Small Business Consumers
and All Consumers: Small ACUACs
TSL
Efficiency
Level
--
1
2
3
4
5
6
7
1
2
3
--4
Payback Period
Average LCC Savings (2022$)
Small
Businesses
449
959
1,447
1,271
707
693
162
(years)
All Purchasers
495
1,047
1,523
1,380
768
800
242
Small
Businesses
4.53
3.91
3.95
4.86
6.86
7.31
8.46
All Purchasers
5.46
4.72
4.82
5.91
8.46
8.98
10.44
Table V.9 Comparison of LCC Savings and PBP for Small Business Consumers
and All Consumers: Large ACUACs
1
2
3
4
-4
Small
Businesses
1,331
2,426
2,065
3,905
(years)
All Purchasers
1,363
2,488
2,021
3,880
Small
Businesses
2.71
2.71
5.2
5.45
All Purchasers
3.45
3.45
6.74
7.05
Table V.10 Comparison of LCC Savings and PBP for Small Business Consumers
and All Consumers: Very Large ACUACs
TSL
Efficiency
Level
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-4
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3
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Payback Period
Average LCC Savings (2022$)
Small
Businesses
5,701
9,191
10,036
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Frm 00059
(years)
All Purchasers
6,431
11,073
12,766
Fmt 4701
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Small
Businesses
0.91
3.4
5.93
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4.21
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3
Payback Period
Average LCC Savings (2022$)
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Level
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2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate
the impact of amended energy
conservation standards on
manufacturers of ACUACs and
ACUHPs. The next section describes the
expected impacts on manufacturers at
each considered TSL. Chapter 12 of the
direct final rule TSD explains the
analysis in further detail.
a. Industry Cash-Flow Analysis Results
In this section, DOE provides GRIM
results from the analysis, which
examines changes in the industry that
would result from a standard. Table
V.12 and Table V.13 summarize the
estimated financial impacts (represented
by changes in INPV) of potential
amended energy conservation standards
on manufacturers of ACUACs and
ACUHPs, as well as the conversion costs
that DOE estimates manufacturers of
ACUACs and ACUHPs would incur at
each TSL.
As discussed in section IV.J.2.d of this
document, to evaluate the range of cashflow impacts on the ACUAC/ACUHP
industry, DOE modeled two
manufacturer markup scenarios that
correspond to the range of anticipated
market responses to amended standards.
DOE modeled: (1) the preservation of
gross margin percentage scenario and (2)
the preservation of operating profit
scenario. Under the preservation of
gross margin percentage scenario, DOE
applied a single uniform ‘‘gross margin
percentage’’ across all efficiency levels.
As MPCs increase with efficiency, this
scenario implies that the absolute dollar
markup will increase. DOE assumed a
manufacturer ‘‘gross margin percentage’’
of 23 percent for small ACUACs, 24
percent for small ACUHPs, 25 percent
for large ACUACs, 26 percent for large
ACUHPs, 29 percent for very large
ACUACs, and 30 percent for very large
ACUHPs. This manufacturer markup is
the same as the one DOE assumed in the
engineering analysis and the no-newstandards case of the GRIM. Because
this scenario assumes that a
manufacturer’s absolute dollar markup
would increase as MPCs increase in the
standards cases, it represents the upper
(less severe) bound to industry
profitability under potential amended
energy conservation standards.
Specifically, the industry will be able to
maintain its average no-new-standards
case gross margin (as a percentage of
revenue) despite the higher production
costs in the standards cases. In general,
the larger the MPC increases, the less
likely manufacturers are to achieve the
cash flow from operations calculated in
this scenario because it is less likely that
manufacturers will be able to fully
markup these larger production cost
increases.
The preservation of operating profit
scenario reflects manufacturers’
concerns about their inability to
maintain margins as MPCs increase to
reach more-stringent efficiency levels.
In this scenario, while manufacturers
make the necessary investments
required to convert their facilities to
produce compliant products, operating
profit does not change in absolute
dollars and decreases as a percentage of
revenue. It represents the lower (more
severe) bound to industry profitability
under potential amended energy
conservation standards because no
additional operating profit is earned on
the higher MPCs, thereby eroding profit
margins as a percentage of total revenue.
Each of the modeled manufacturer
markup scenarios results in a unique set
of cash-flows and corresponding INPVs
at each TSL. In the following
discussion, the INPV results refer to the
difference in industry value between the
no-new-standards case and each
standards case resulting from the sum of
discounted cash-flows from the
reference year (2024) through the end of
the analysis period (2058). To provide
perspective on the short-run cash-flow
impact, DOE includes in the discussion
of results a comparison of free cash flow
between the no-new-standards case and
the standards case at each TSL in the
year before compliance with new
standards is required. This figure
represents the size of the required
conversion costs relative to the cash
flow generated by the ACUAC/ACUHP
industry in the absence of amended
energy conservation standards.
Table V.12 Manufacturer Impact Analysis for ACUACs/HPs Under the
Preservation of Gross Margin Scenario
INPV
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Change in INPV
2022$ millions
2022$ millions
%
No-NewStandards Case
2,653.0
-
Trial Standard Level*
1
2,608.8
(44.2)
(1.7)
2
3
2,577.0
(76.0)
(2.9)
2,573.5
(79.5)
(3.0)
4
1,822.9
(830.1)
(31.3)
67.5
43.4
21.5
(677.1)
(44.4)
(39.7)
(68.5)
(61.2)
(90.4)
(80.8)
(789.0)
(705.2)
124.9
171.1
217.2
1,443.2
38.4
56.9
70.8
447.8
163.2
228.0
288.0
1,891.0
Free Cash Flow
2022$ millions
111.9
(2028)
2022$ millions
Change in Free
Cash Flow (2028)
%
Product
2022$ millions
32.4
Conversion Costs
Capital
2022$ millions
9.8
Conversion Costs
Total Investment
2022$ millions
42.2
Required**
* Numbers in parentheses indicate a negative value.
**Numbers may not sum exactly due to rounding.
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Table V.13 Manufacturer Impact Analysis for ACUACs/HPs Under the
Preservation of Operating Profit Scenario
INPV
2022$ millions
Change in INPV
No-NewStandards Case
2,653.0
2022$ millions
1
2,560.1
-
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%
Free Cash Flow
2022$ millions
111.9
(2028)
2022$ millions
Change in Free
Cash Flow (2028)
%
Product
2022$ millions
32.4
Conversion Costs
Capital
2022$ millions
9.8
Conversion Costs
Total Investment
2022$ millions
42.2
Required**
* Numbers in parentheses indicate a negative value.
**Numbers may not sum exactly due to rounding.
At TSL 1, DOE estimates that impacts
on INPV range from ¥$92.9 million to
¥$44.2 million, or a change in INPV of
¥3.5 percent to ¥1.7 percent. At TSL
1, industry free cash-flow (operating
cash flow minus capital expenditures
and capital conversion costs) is $67.5
million, which is a decrease of $44.4
million, or a drop of 39.7 percent,
compared to the no-new-standards case
value of $111.9 million in 2028, the year
before the compliance date of amended
energy conservation standards. Industry
conversion costs total $163.2 million.
TSL 1 would set the energy
conservation standard for small
ACUACs/HPs at EL 2, large ACUACs/
HPs at EL 1, and very large ACUACs/
HPs at EL 1. At TSL 1, DOE estimates
that manufacturers would incur
approximately $124.9 million in
product conversion costs, as some small
ACUACs/HPs, large ACUACs/HPs, and
very large ACUACs/HPs would need to
be redesigned to comply with the
standard. DOE also estimates that
manufacturers would incur
approximately $38.4 million in capital
conversion costs.
At TSL 1, DOE estimates that
approximately 52 percent of small
ACUAC/HP models currently available
for purchase, 64 percent of large
ACUAC/HP models, and 64 percent of
very large ACUAC/HP models would
have the capability of meeting the
efficiency levels required at TSL 1,
necessitating a significant amount of
product redesign. DOE estimates that
seven of the nine manufacturers of small
ACUACs/HPs offer small ACUACs/HPs
that would meet the efficiency level
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Trial Standard Level*
2
3
2,511.2
2,459.1
(92.9)
(141.7)
(193.9)
(1,550.6)
(3.5)
(5.3)
(7.3)
(58.4)
67.5
43.4
21.5
(677.1)
(44.4)
(39.7)
(68.5)
(61.2)
(90.4)
(80.8)
(789.0)
(705.2)
124.9
171.1
217.2
1,443.2
38.4
56.9
70.8
447.8
163.2
228.0
288.0
1,891.0
required at TSL 1. DOE estimates that
seven of the eight manufacturers of large
ACUACs/HPs offer large ACUACs/HPs
that meet the efficiency level required at
TSL 1. DOE estimates that six of the
eight manufacturers of very large
ACUACs/HPs offer very large ACUACs/
HPs that meet the efficiency level
required at TSL 1.
At TSL 1, the shipment-weighted
average MPC for all ACUACs/HPs
increases by 2.6 percent relative to the
no-new-standards case shipmentweighted-average MPC for all ACUACs/
HPs in 2029. The incremental increases
in MPC lead to different profitability
and cash-flows under the two
manufacturer markup scenarios.
However, the conversion costs are the
key driver on impacts to the industry,
with the $163.2 million in conversion
costs, being the major contributor to
changes of ¥3.5 percent and ¥1.7
percent of INPV at TSL 1 under the
preservation of operating profit scenario
and the preservation of gross margin
scenario, respectively.
At TSL 2, DOE estimates that impacts
on INPV range from ¥$141.7 million to
¥$76.0 million, or a change in INPV of
¥5.3 percent to ¥2.9 percent. At TSL
2, industry free cash-flow is $43.4
million, which is a decrease of $68.5
million, or a drop of 61.2 percent,
compared to the no-new-standards case
value of $111.9 million in 2028, the year
before the compliance date of amended
energy conservation standards. Industry
conversion costs total $228.0 million.
TSL 2 would set the energy
conservation standard for small
ACUACs/HPs at EL 3, large ACUACs/
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4
l,l02.4
HPs at EL 1, and very large ACUACs/
HPs at EL 1. At TSL 2, DOE estimates
that manufacturers would incur
approximately $171.1 million in
product conversion costs, as some small
ACUACs/HPs, large ACUACs/HPs, and
very large ACUACs/HPs would need to
be redesigned to comply with the
standard. DOE also estimates that
manufacturers would incur
approximately $56.9 million in capital
conversion costs.
At TSL 2, DOE estimates that
approximately 43 percent of small
ACUAC/HP models currently available
for purchase, 64 percent of large
ACUAC/HP models, and 64 percent of
very large ACUAC/HP models would
have the capability of meeting the
efficiency levels required at TSL 2,
necessitating a significant amount of
product redesign. DOE estimates that six
of the nine manufacturers of small
ACUACs/HPs offer small ACUACs/HPs
that would meet the efficiency level
required at TSL 2. DOE estimates that
seven of the eight manufacturers of large
ACUACs/HPs offer large ACUACs/HPs
that meet the efficiency level required at
TSL 2. DOE estimates that six of the
eight manufacturers of very large
ACUACs/HPs offer very large ACUACs/
HPs that meet the efficiency level
required at TSL 2.
At TSL 2, the shipment-weighted
average MPC for all ACUACs/HPs
increases by 3.6 percent relative to the
no-new-standards case shipmentweighted-average MPC for all ACUACs/
HPs in 2029. The incremental increases
in MPC lead to different profitability
and cash-flows under the two
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manufacturer markup scenarios.
However, the conversion costs are the
key driver on impacts to the industry,
with the $228.0 million in conversion
costs, being the major contributor to
changes of ¥5.3 percent and ¥2.9
percent of INPV at TSL 2 under the
preservation of operating profit scenario
and the preservation of gross margin
scenario, respectively.
At TSL 3 (i.e., the ACUAC/HP
Working Group recommended levels),
DOE estimates that impacts on INPV
would range from ¥$193.9 million to
¥$79.5 million, or a change in INPV of
¥7.3 percent to ¥3.0 percent. At TSL
3, industry free cash-flow is $21.5
million, which is a decrease of $90.4
million, or a drop of 80.8 percent,
compared to the no-new-standards case
value of $111.9 million in 2028, the year
before the compliance date of amended
energy conservation standards. Industry
conversion costs total $288.0 million.
TSL 3 would set the energy
conservation standard for small
ACUACs/HPs at EL 4, large ACUACs/
HPs at EL 2, and very large ACUACs/
HPs at EL 1. At TSL 3, DOE estimates
that manufacturers would incur
approximately $217.2 million in
product conversion costs, as some small
ACUACs/HPs, large ACUACs/HPs, and
very large ACUACs/HPs would need to
be redesigned to comply with the
standard. DOE also estimates that
manufacturers would incur
approximately $70.8 million in capital
conversion costs.
At TSL 3, DOE estimates that
approximately 37 percent of small
ACUAC/HP models available for
purchase, 50 percent of large ACUAC/
HP models, and 64 percent of very large
ACUAC/HP models have the capability
of meeting the efficiency levels required
at TSL 3, necessitating a significant
amount of product redesign. DOE
estimates that five of the nine
manufacturers of small ACUACs/HPs
offer small ACUACs/HPs that would
meet the efficiency level required at TSL
3. DOE estimates that six of the eight
manufacturers of large ACUACs/HPs
offer large ACUACs/HPs that meet the
efficiency level required at TSL 3. DOE
estimates that six of the eight
manufacturers of very large ACUACs/
HPs offer very large ACUACs/HPs that
meet the efficiency level required at TSL
3.
At TSL 3, the shipment-weighted
average MPC for all ACUACs/HPs
increases by 6.3 percent relative to the
no-new-standards case shipmentweighted-average MPC for all ACUACs/
HPs in 2029. The incremental increases
in MPC lead to different profitability
and cash-flows under the two
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manufacturer markup scenarios.
However, the conversion costs are the
key driver on impacts to the industry,
with the $288.0 million in conversion
costs, being the major contributor to
changes of ¥7.3 percent and ¥3.0
percent of INPV at TSL 3 under the
preservation of operating profit scenario
and the preservation of gross margin
scenario, respectively.
At TSL 4 (max-tech), DOE estimates
that impacts on INPV range from
¥$1,550.6 million to ¥$830.1 million,
or a change in INPV of ¥58.4 percent
to ¥31.3 percent. At TSL 4, industry
free cash-flow is ¥$677.1 million,
which is a decrease of $789.0 million,
or a drop of 705.2 percent, compared to
the no-new-standards case value of
$111.9 million in 2028, the year before
the compliance date of amended energy
conservation standards. The negative
free-cash-flow calculation indicates
manufacturers may need to access cash
reserves or outside capital to finance
conversion efforts. Industry conversion
costs total $1,891.0 million.
TSL 4 would set the energy
conservation standard for small
ACUACs/HPs at EL 7, large ACUACs/
HPs at EL 4, and very large ACUACs/
HPs at EL 3. At TSL 4, DOE estimates
that manufacturers would incur
approximately $1,443.2 million in
product conversion costs, as the
majority of small ACUACs/HPs, large
ACUACs/HPs, and very large ACUACs/
HPs would need to be redesigned to
comply with the standard. DOE also
estimates that manufacturers would
incur approximately $447.8 million in
capital conversion costs.
At TSL 4, DOE estimates that
approximately 2 percent of small
ACUAC/HP models available for
purchase, 10 percent of large ACUAC/
HP models, and 1 percent of very large
ACUAC/HP models would have the
capability of meeting the efficiency
levels required at TSL 4, necessitating a
significant amount of product redesign.
DOE estimates that only three of the
nine manufacturers of small ACUACs/
HPs offer small ACUACs/HPs that
would meet the efficiency level required
at TSL 4. DOE estimates that only two
of the eight manufacturers of large
ACUACs/HPs offer large ACUACs/HPs
that meet the efficiency level required at
TSL 4. DOE estimates that only one of
the eight manufacturers of very large
ACUACs/HPs offer very large ACUACs/
HPs that meet the efficiency level
required at TSL 4.
At max-tech, DOE expects that
manufacturers would have to contend
with significant engineering uncertainty
(considering that very few
manufacturers produce models that
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would meet the efficiency level required
at TSL 4) and would need to invest
heavily in product redesign at all
capacities. At TSL 4, the shipmentweighted average MPC for all ACUACs/
HPs increases by 30.3 percent relative to
the no-new-standards case shipmentweighted-average MPC for all ACUACs/
HPs in 2029. The incremental increases
in MPC lead to different profitability
and cash-flows under the two
manufacturer markup scenarios.
However, the conversion costs continue
to be the key driver on impacts to the
industry, with the $1,891.0 million in
conversion costs, being the major
contributor to changes of ¥58.4 percent
and ¥31.3 percent of INPV at TSL 4
under the preservation of operating
profit scenario and the preservation of
gross margin scenario, respectively.
b. Direct Impacts on Employment
To quantitatively assess the potential
impacts of amended energy
conservation standards on direct
employment in the ACUACs and
ACUHPs industry, DOE used the GRIM
to estimate the domestic labor
expenditures and number of direct
employees in the no-new-standards case
and in each of the standards cases
during the analysis period. DOE
calculated these values using the most
up-to-date statistical data from the 2021
ASM,75 BLS employee compensation
data,76 and the results of the engineering
analysis.
Labor expenditures related to
equipment manufacturing depend on
the labor intensity of the equipment, the
sales volume, and an assumption that
wages remain fixed in real terms over
time. The total labor expenditures in
each year are calculated by multiplying
the total MPCs by the labor percentage
of MPCs. The total labor expenditures in
the GRIM were then converted to total
production employment levels by
dividing production labor expenditures
by the average fully burdened wage
multiplied by the average number of
hours worked per year per production
worker. To do this, DOE relied on the
ASM inputs: Production Workers
Annual Wages, Production Workers
Annual Hours, Production Workers for
Pay Period, and Number of Employees.
DOE also relied on the BLS employee
compensation data to determine the
75 U.S. Census Bureau, Annual Survey of
Manufactures, ‘‘Summary Statistics for Industry
Groups and Industries in the U.S (2021)’’ (available
at: www.census.gov/programs-surveys/asm/data/
tables.html) (last accessed Dec. 5, 2023).
76 U.S. Bureau of Labor Statistics, Employer Costs
for Employee Compensation (June 2023) (Sept. 12,
2023) (available at: www.bls.gov/news.release/pdf/
ecec.pdf) (last accessed Dec. 5, 2023).
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fully burdened wage ratio. The fully
burdened wage ratio factors in paid
leave, supplemental pay, insurance,
retirement and savings, and legally
required benefits.
The number of production employees
is then multiplied by the U.S. labor
percentage to convert total production
employment to total domestic
production employment. The U.S. labor
percentage represents the industry
fraction of domestic manufacturing
production capacity for the covered
equipment. This value is derived from
manufacturer interviews, product
database analysis, and publiclyavailable information. Based on
information obtained during
manufacturer interviews, DOE estimates
that 50 percent of ACUACs/HPs are
produced domestically.
The domestic production employees
estimate covers production line
workers, including line supervisors,
who are directly involved in fabricating,
processing, or assembling equipment
within the OEM facility. Workers
performing services that are closely
associated with production operations,
such as materials handling tasks using
forklifts, are also included as production
labor.77 DOE’s estimates only account
for production workers who
manufacture the specific equipment
covered by this rulemaking.
Non-production employees account
for the remainder of the direct
employment figure. The non-production
employees estimate covers domestic
workers who are not directly involved
in the production process, such as sales,
engineering, human resources, and
management. Using the amount of
domestic production workers previously
calculated, non-production domestic
employees are extrapolated by
44113
multiplying the ratio of non-production
workers in the industry compared to
production employees. DOE assumes
that this employee distribution ratio
remains constant between the no-newstandards case and standards cases.
Direct employment is the sum of
domestic production employees and
non-production employees. Using the
GRIM, DOE estimates in the absence of
amended energy conservation
standards, there would be 3,429
domestic production and nonproduction employees for ACUACs/HPs
in 2029. Table V.14 shows the range of
the impacts of amended energy
conservation standards on U.S.
manufacturing employment in the
ACUAC/HP industry. The following
discussion provides a qualitative
evaluation of the range of potential
impacts presented in Table V.14.
Table V.14 Domestic Direct Employment Impacts for ACUAC/HPs in 2029*
No-NewStandards
Case
TSLl
TSL2
TSL3
TSL4
The direct employment impacts
shown in Table V.14 represent the
potential domestic employment changes
that could result following the
compliance date of the amended
standards for ACUACs and ACUHPs.
Employment could increase or decrease
due to the labor content of the various
equipment being manufactured
domestically. The upper bound estimate
corresponds to an increase in the
number of domestic workers that would
result from amended energy
conservation standards if manufacturers
continue to produce the same scope of
covered equipment within the United
States after compliance takes effect and
would require additional labor to
produce more-efficient equipment. To
establish a conservative lower bound,
DOE assumes all manufacturers would
shift production to foreign countries
with lower labor costs. At lower TSLs,
DOE believes the likelihood of changes
in production location due to amended
standards are low due to feedback from
industry that they would not expect
major changes to their production lines
and processes, with the majority of
conversion costs driven by equipment
redesign (i.e., investments in research,
development, testing, marketing, and
other non-capitalized costs). However,
as amended standards increase in
stringency and both the complexity and
cost of production facility updates
increases, manufacturers are more likely
to revisit their production location
decisions.
Additional detail on the analysis of
direct employment can be found in
chapter 12 of the direct final rule TSD.
Additionally, the employment impacts
discussed in this section are
independent of the employment impacts
from the broader U.S. economy, which
are documented in chapter 16 of the
direct final rule TSD.
77 The comprehensive description of production
and non-production workers is available online at:
www2.census.gov/programs-surveys/asm/technical-
documentation/questionnaire/2021/instructions/
MA_10000_Instructions.pdf, ‘‘Definitions and
Instructions for the Annual Survey of
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c. Impacts on Manufacturing Capacity
Based on manufacturer feedback, DOE
expects there would be relatively low
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capital conversion costs at TSLs below
the max-tech level (including TSL 3, the
Recommended TSL), which indicates
that major updates to manufacturing
lines will likely not be required to meet
amended standards. At max-tech (i.e.,
TSL 4), it is unclear if most
manufacturers would have the
engineering capacity to complete the
necessary redesigns within the
compliance period. However, because
the Recommended TSL would not
require max-tech efficiencies, DOE does
not expect manufacturers would face
long-term capacity constraints due to
the standard levels detailed in this
direct final rule. Furthermore, accepting
that manufacturers fully considered the
investment and capacity implications
prior to voluntarily entering into the
ACUAC/HP Working Group ECS Term
Sheet, DOE infers that manufacturers
would not have agreed to standard
levels that they could not reasonably
meet within the compliance period.
Manufacturers, MA–10000’’ (pp. 13–14) (last
accessed June 1, 2023).
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912 to
912 to
912 to
Direct Employment
912 to
3,429
in 2029
3,450
3,521
3,707
4,807
Potential Changes in
(2,517) (2,517)
(2,517)
(2,517) to
Direct Employment
to 21
to 92
to 278
1,378
Workers in 2029*
*DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.
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d. Impacts on Subgroups of
Manufacturers
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Using average cost assumptions to
develop industry cash-flow estimates
may not capture the differential impacts
among subgroups of manufacturers.
Small manufacturers, niche players, or
manufacturers exhibiting a cost
structure that differs substantially from
the industry average could be affected
disproportionately. DOE used the
results of the industry characterization
to group manufacturers exhibiting
similar characteristics. Specifically,
DOE investigated small businesses as a
manufacturer subgroup that could be
disproportionally impacted by energy
conservation standards and could merit
additional analysis in the MIA. DOE did
not identify any other adversely
impacted manufacturer subgroups for
this rulemaking based on the results of
the industry characterization.
DOE analyzes the impacts on small
businesses in a separate analysis for the
amended energy conservation standards
proposed in the NOPR published
elsewhere in this issue of the Federal
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Register and in chapter 12 of the direct
final rule TSD. In summary, the SBA
defines a ‘‘small business’’ as having
1,250 employees or less for North
American Industry Classification
System (‘‘NAICS’’) code 333415, ‘‘Air
Conditioning and Warm Air Heating
Equipment and Commercial and
Industrial Refrigeration Equipment
Manufacturing.’’ Based on this
classification, DOE did not identify any
domestic OEMs that qualify as a small
business. For a discussion of the small
business manufacturer subgroup, see
chapter 12 of the direct final rule TSD.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer
burden involves examining at the
cumulative impact of multiple DOE
standards and the regulatory actions of
other Federal agencies, States, and
localities that affect the manufacturers
of a covered product or equipment.
While any one regulation may not
impose a significant burden on
manufacturers, the combined effects of
several existing or impending
regulations may have serious
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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, multiple regulations affecting
the same manufacturer can strain profits
and lead companies to abandon
equipment lines or markets with lower
expected future returns than competing
equipment. For these reasons, DOE
conducts an analysis of cumulative
regulatory burden as part of its
rulemakings pertaining to appliance
efficiency.
For this cumulative regulatory burden
analysis, DOE examined Federal,
equipment-specific regulations that
could affect ACUAC and ACUHP
manufacturers that take effect
approximately three years before or after
the 2029 compliance date. Table V.15
presents the DOE energy conservation
standards that would impact
manufacturers of ACUAC and ACUHP
equipment in the 2026 to 2032
timeframe.
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
44115
Table V.15 Compliance Dates and Expected Conversion Expenses of Federal
Energy Conservation Standards Affecting ACUAC and ACUHP Original
Equipment Manufacturers
Federal Energy
Conservation
Standard
Number
of
OEMs*
Number of
OEMs
Affected by
Today's
Rule**
Approx.
Standards
Compliance
Year
Industry
Conversion
Costs
(Millions)
Industry
Conversion Costs
/Equipment
Revenue***
Refrigerant Regulations
DOE evaluated the potential impacts
of State and Federal refrigerant
regulations, such as the California Air
Resources Board (‘‘CARB’’) rulemaking
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prohibiting the use of refrigerants with
a GWP of 750 or greater starting January
1, 2025 for ‘‘Other Air-conditioning
Equipment,’’ which includes covered
PO 00000
equipment under this rulemaking,78 and
78 State of California Air Resource Board,
‘‘Prohibitions on Use of Certain Hydrofluorocarbons
in Stationary Refrigeration, Stationary Air-
Continued
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lotter on DSK11XQN23PROD with RULES3
Room Air
Conditioners
$24.8
1
2026
0.4%
8
88 FR34298
(2021$)
(Mav 26, 2023)
Consumer Pool
Heaters
$48.4
20
1
2028
1.5%
(2021$)
88 FR34624
(May 30, 2023)
Consumer Water
Heaterst
$228.1
1.3%
22
1
2030
(2022$)
88 FR49058
(Julv 28, 2023)
Consumer Boilerst
$98.0
3.6%
24
2
2030
88 FR 55128
(2022$)
(August 14,2023)
Walk-in Coolers and
Freezerst
$89.0
79
3
2027
0.8%
(2022$)
88 FR60746
(September 5, 2023)
Commercial Water
$42.7
Heating Equipment
15
1
2026
5.3%
88 FR69686
(2022$)
(October 6, 2023)
Consumer Furnaces
$162.0
88 FR87502
15
6
2029
1.8%
(2022$)
(December 18,
2023)
Fans and Blowerst
$888.1
2.4%
89 FR 3714
87
2
2030
(2022$)
(Januaryl9,2024)
* This column presents the total number of OEMs identified in the energy conservation standard rule
that is contributing to cumulative regulatory burden.
** This column presents the number ofOEMs producing ACUACs and ACUHPs that are also listed as
OEMs in the identified energy conservation standard that is contributing to cumulative regulatory
burden.
*** This column presents industry conversion costs as a percentage of equipment revenue during the
conversion period. Industry conversion costs are the upfront investments manufacturers must make to
sell compliant products/equipment. The revenue used for this calculation is the revenue from just the
covered product/equipment associated with each row. The conversion period is the time frame over
which conversion costs are made and lasts from the publication year of the fmal rule to the compliance
year of the energy conservation standard. The conversion period typically ranges from three to five
years, depending on the rulemaking.
t These rulemakings are at the NOPR stage, and all values are subject to change until fmalized through
publication of a fmal rule.
44116
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the October 2023 EPA Final Rule which
establishes a GWP limit of 700 for
refrigerants used in light commercial air
conditioning and heat pump systems
(which includes ACUACs and ACUHPs)
manufactured January 1, 2025, or later.
88 FR 73098, 73206, 73208. Based on
market research and information from
manufacturer interviews, DOE expects
that ACUAC/HP manufacturers will
transition to flammable refrigerants (e.g.,
R–32) in response to these refrigerant
GWP restrictions. See section IV.C.4 of
this document for additional
information. DOE understands that
switching from non-flammable to
flammable refrigerants requires time and
investment to redesign ACUAC/HP
units and to upgrade production
facilities to accommodate the additional
structural and safety precautions
required. DOE expects manufacturers
will need to transition to an A2L 79
refrigerant to comply with upcoming
lotter on DSK11XQN23PROD with RULES3
conditioning, and Other End-Uses Regulation,’’
Amendments effective January 1, 2022 (available at:
ww2.arb.ca.gov/sites/default/files/barcu/regact/
2020/hfc2020/frorevised.pdf) (last accessed Oct. 18,
2023).
79 A2L is a refrigerant classification from the
American Society of Heating, Refrigeration, and
Air-Conditioning Engineers (‘‘ASHRAE’’) Standard
34: ‘‘Designation and Safety Classification of
Refrigerants.’’ The A2L class defines refrigerants
that are nontoxic, but mildly flammable. See section
IV.C.4 of this document for additional discussion
on low-GWP refrigerants.
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refrigerant regulations, prior to the
expected 2029 compliance date of the
amended energy conservation
standards.
Investments required to transition to
flammable refrigerants in response to
Federal or State regulations, including
EPA’s final rule, necessitate a level of
resource allocation beyond typical
annual R&D and capital expenditures.
DOE considers the cost associated with
the refrigerant transition in its GRIM to
be independent of DOE actions related
to any amended energy conservation
standards. DOE accounted for the costs
associated with redesigning ACUAC/
HPs to make use of flammable
refrigerants in the GRIM in the no-newstandards case and standards cases to
reflect the cumulative regulatory burden
from Federal and State refrigerant
regulation. DOE relied on manufacturer
feedback in confidential interviews and
a report prepared by CARB,80 to
estimate the industry refrigerant
transition costs. To avoid
80 Report prepared by the state of California’s Air
Resources Board, ‘‘Proposed Amendments to the
Prohibitions on Use of Certain Hydrofluorocarbons
in Stationary Refrigeration, Chillers, Aerosols,
Propellants, and Foam End-Uses Regulation’’ (2020)
(available at: ww2.arb.ca.gov/sites/default/files/
barcu/regact/2020/hfc2020/appb.pdf?_
ga=2.199664686.188689668.1697147618702155270.1695067053) (last accessed Oct. 18,
2023).
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underestimating the potential costs,
DOE used the more conservative costs
reported in the report prepared by
CARB. Based on feedback, DOE
assumed that the transition to low-GWP
refrigerants would require industry to
invest approximately $210 million in
equipment redesign.
3. National Impact Analysis
This section presents DOE’s estimates
of the national energy savings and the
NPV of consumer benefits that would
result from each of the TSLs considered
as potential amended standards.
a. Significance of Energy Savings
To estimate the energy savings
attributable to potential amended
standards for ACUACs and ACUHPs,
DOE compared their energy
consumption under the no-newstandards case to their anticipated
energy consumption under each TSL.
The savings are measured over the
entire lifetime of equipment purchased
in the 30-year period that begins in the
year of anticipated compliance with
amended standards (2029–2058). Table
V.16 presents DOE’s projections of the
national energy savings for each TSL
considered for ACUACs and ACUHPs.
The savings were calculated using the
approach described in section IV.H.2 of
this document.
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44117
Table V.16 Cumulative National Energy Savings for ACUACs and ACUHPs; 30
Years of Shipments (2029-2058)
Trial Standard Level
Energy
Savings
Equipment
Class
1
2
3
4
1.5
0.6
2.4
3.1
0.6
1.2
5.0
4.1
0.7
0.7
0.7
4.2
0.2
0.3
0.6
Very Large HP
0.0
0.0
0.0
0.0
0.3
0.1
Total
3.0
Small AC
1.5
4.1
2.5
Large AC
Very Large
AC
Small HP
0.6
Large HP
Small AC
Source
Energy
Large AC
Very Large
AC
Small HP
0.0
0.2
0.2
5.4
14.4
0.6
3.2
1.2
5.2
4.2
0.7
0.7
0.7
4.4
0.2
0.3
0.6
Very Large HP
0.0
0.0
0.0
0.0
0.3
0.1
0.0
0.2
0.2
Total
3.1
4.2
5.5
14.8
Large HP
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FFC Energy
OMB Circular A–4 81 requires
agencies to present analytical results,
including separate schedules of the
monetized benefits and costs that show
the type and timing of benefits and
costs. Circular A–4 also directs agencies
to consider the variability of key
elements underlying the estimates of
benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis
using nine years, 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.82 The review timeframe
established in EPCA is generally not
synchronized with the equipment
lifetime, equipment manufacturing
cycles, or other factors specific to
ACUACs and ACUHPs. Thus, such
results are presented for informational
purposes only and are not indicative of
any change in DOE’s analytical
methodology. The NES sensitivity
analysis results based on a nine-year
analytical period are presented in Table
V.17. The impacts are counted over the
lifetime of ACUACs and ACUHPs
purchased in 2029–2037.
81 U.S. Office of Management and Budget,
Circular A–4: Regulatory Analysis (Sept. 17, 2003)
(available at: www.whitehouse.gov/wp-content/
uploads/legacy_drupal_files/omb/circulars/A4/a4.pdf (last accessed Oct. 23, 2023).
82 For ASHRAE equipment, EPCA requires DOE
to review its standards every six years, and requires,
for certain products, a three-year period after any
new standard is promulgated before compliance is
required, except that in no case may any new
standards be required within six years of the
compliance date of the previous standards. (42
U.S.C. 6313(a)(6)(C)) If DOE makes a determination
that amended standards are not needed, it must
conduct a subsequent review within three years
following such a determination. (Id.) As DOE is
evaluating the need to amend the standards, the
sensitivity analysis is based on the review
timeframe associated with amended standards.
While adding a six-year review to the three-year
compliance period adds up to nine years, DOE
notes that it may undertake reviews at any time
within the six-year period and that the three-year
compliance date may yield to the six-year backstop.
A nine-year analysis period may not be appropriate
given the variability that occurs in the timing of
standards reviews and the fact that for some
products, the compliance period is six years rather
than three years.
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44118
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
Table V.17 Cumulative National Energy Savings for ACUACs and ACUHPs;
9 Years of Shipments (2029-2037)
Energy
Savings
Trial Standard Level
Equipment
Class
1
2
3
4
(quads)
FFC Energy
0.4
0.2
0.7
0.2
0.8
0.3
1.4
Very Large
AC
0.2
0.2
0.2
1.2
Small HP
0.0
0.1
0.1
0.2
Large HP
0.0
0.0
0.0
Very Large HP
0.0
Total
0.0
0.8
1.1
0.0
1.5
0.1
0.1
Small AC
0.4
0.7
0.9
4.0
1.4
Large AC
0.2
0.2
0.3
1.2
Very Large
AC
0.2
0.2
0.2
1.2
0.1
0.1
Large HP
0.0
0.0
0.0
0.0
0.2
0.1
Very Large HP
0.0
0.0
Total
0.9
0.0
1.2
Small AC
Large AC
Small HP
BILLING CODE 6450–01–C
b. Net Present Value of Consumer Costs
and Benefits
lotter on DSK11XQN23PROD with RULES3
DOE estimated the cumulative NPV of
the total costs and savings for
83 U.S. Office of Management and Budget,
Circular A–4: Regulatory Analysis (Sept. 17, 2003)
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1.1
0.1
4.1
1.5
consumers that would result from the
TSLs considered for ACUACs and
ACUHPs. In accordance with OMB’s
guidelines on regulatory analysis,83
DOE calculated NPV using both a 7-
percent and a 3-percent real discount
rate. Table V.18 shows the consumer
NPV results with impacts counted over
the lifetime of equipment purchased in
2029–2058.
(available at: www.whitehouse.gov/wp-content/
uploads/legacy_drupal_files/omb/circulars/A4/a4.pdf) (last accessed Oct. 23, 2023).
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Source
Energy
44119
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
Table V.18 Cumulative Net Present Value of Consumer Benefits for ACUACs and
ACUHPs; 30 Years of Shipments (2029-2058)
Discount rate
Trial Standard Level
Equipment Class
1
2
3
4
(billion $2022)
Small AC
4.5
Large AC
2.0
7.0
2.0
7.4
4.0
3.0
8.4
Very Large AC
2.7
2.7
2.7
8.8
Small HP
Large HP
0.6
0.1
0.8
0.1
0.8
0.2
0.4
0.5
Very Large HP
0.2
0.2
Total
IO.I
0.5
21.7
Small AC
1.4
13.0
2.1
0.2
15.3
1.9
Large AC
0.7
0.7
1.3
-1.6
1.6
Very Large AC
Small HP
0.9
0.2
0.9
0.3
0.9
0.2
1.5
-0.2
Large HP
0.0
0.0
0.1
0.1
Very Large HP
0.1
3.2
0.1
4.4
0.1
Total
0.1
4.0
3 percent
7 percent
The NPV results based on the
aforementioned nine-year analytical
period are presented in Table V.19. The
impacts are counted over the lifetime of
equipment purchased in 2029–2037. As
mentioned previously, such results are
presented for informational purposes
only and are not indicative of any
1.5
change in DOE’s analytical methodology
or decision criteria.
Table V.19 Cumulative Net Present Value of Consumer Benefits for ACUACs and
ACUHPs; 9 Years of Shipments (2029-2037)
Discount rate
Trial Standard Level
Equipment Class
1
2
3
4
2.8
1.2
0.8
1.5
3.2
Very Large AC
1.0
1.0
1.0
3.3
3 percent
Small HP
Large HP
0.2
0.0
0.3
0.0
0.3
0.1
0.2
0.2
Very Large HP
0.1
0.1
0.1
Total
3.8
4.8
5.7
0.2
8.2
Small AC
0.7
1.0
0.9
-0.8
Large AC
0.3
0.5
0.1
0.3
0.5
0.1
0.6
0.5
0.1
0.8
0.8
Very Large HP
0.0
0.0
Total
1.6
0.0
0.0
2.0
0.0
0.0
2.2
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Very Large AC
7 percent
Small HP
Large HP
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0.1
0.1
0.8
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Large AC
1.7
0.8
Small AC
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(billion $2022)
44120
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The previous results reflect the use of
a default (constant) trend to estimate the
change in price for ACUACs and
ACUHPs over the analysis period (see
section IV.H of this document). DOE
also conducted a sensitivity analysis
that considered one scenario with a
declining price trend in combination
with AEO High-Economic-Growth (high
benefit) and one scenario with an
increasing price trend in combination
with AEO Low-Economic-Growth (low
benefit). For 30-year shipments at the
amended TSL, in the high benefit
scenario, NPV of consumer benefits
results at 3 percent and 7 percent
discount rates, respectively, are $17.3
billion and $5.2 billion USD. In the low
benefit scenario, NPV of consumer
benefits results at 3 percent and 7
percent discount rates, respectively, are
$14.0 billion and $3.9 billion USD. In
the reference scenario, the NPV of
consumer benefits results at 3 percent
and 7 percent discount rates,
respectively, are $15.3 billion and $4.4
billion USD. The full results of these
alternative cases are presented in
appendix 10C of the direct final rule
TSD.
c. Indirect Impacts on Employment
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DOE estimates that amended energy
conservation standards for ACUACs and
ACUHPs will reduce energy
expenditures for consumers of that
equipment, with the resulting net
savings being redirected to other forms
of economic activity. These expected
shifts in spending and economic activity
could affect the demand for labor. As
described in section IV.N of this
document, DOE used an input/output
model of the U.S. economy to estimate
indirect employment impacts of the
TSLs that DOE considered. There are
uncertainties involved in projecting
employment impacts, especially
changes in the later years of the
analysis. Therefore, DOE generated
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results for near-term timeframes (2029–
2034), where these uncertainties are
reduced.
The results suggest that the adopted
standards are likely to have a negligible
impact on the net demand for labor in
the economy. The net change in jobs is
so small that it would be imperceptible
in national labor statistics and might be
offset by other, unanticipated effects on
employment. Chapter 16 of the direct
final rule TSD presents detailed results
regarding anticipated indirect
employment impacts.
4. Impact on Utility or Performance of
Equipment
As discussed in section III.F.1.d of
this document, DOE has concluded that
the standards adopted in this direct
final rule will not lessen the utility or
performance of ACUACs and ACUHPs
under consideration in this rulemaking.
Manufacturers of this equipment
currently offer units that meet or exceed
the adopted standards.
5. Impact of Any Lessening of
Competition
DOE considered any lessening of
competition that would be likely to
result from new or amended standards.
As discussed in section III.F.1.e of this
document, EPCA directs the Attorney
General of the United States (‘‘Attorney
General’’) to determine the impact, if
any, of any lessening of competition
likely to result from a proposed
standard and to transmit such
determination in writing to the
Secretary within 60 days of the
publication of a proposed rule, together
with an analysis of the nature and
extent of the impact. To assist the
Attorney General in making this
determination, DOE has provided DOJ
with copies of the direct final rule, the
related NOPR, and the accompanying
TSD for review. DOE will consider
DOJ’s comments on the DFR in
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Fmt 4701
Sfmt 4700
determining how to proceed with this
rulemaking. DOE will also publish and
respond to the DOJ’s comments in the
Federal Register in a separate
document. DOE invites comment from
the public regarding any competitive
impacts that are likely to result from
this direct final rule. In addition,
stakeholders may also provide
comments separately to DOJ regarding
these potential impacts. See the
ADDRESSES section of the NOPR
published elsewhere in this issue of the
Federal Register for information to send
comments to DOJ.
6. Need of the Nation To Conserve
Energy
Enhanced energy efficiency, where
economically justified, improves the
Nation’s energy security, strengthens the
economy, and reduces the
environmental impacts (costs) of energy
production. Reduced electricity demand
due to energy conservation standards is
also likely to reduce the cost of
maintaining the reliability of the
electricity system, particularly during
peak-load periods. Chapter 15 in the
direct final rule TSD presents the
estimated impacts on electricitygenerating capacity, relative to the nonew-standards case, for the TSLs that
DOE considered in this rulemaking.
Energy conservation resulting from
potential energy conservation standards
for ACUACs and ACUHPs is expected to
yield environmental benefits in the form
of reduced emissions of certain air
pollutants and greenhouse gases. Table
V.20 provides DOE’s estimate of
cumulative emissions reductions
expected to result from the TSLs
considered in this rulemaking. The
emissions were calculated using the
multipliers discussed in section IV.K of
this document. DOE reports annual
emissions reductions for each TSL in
chapter 13 of the direct final rule TSD.
BILLING CODE 6450–01–P
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44121
Table V.20 Cumulative Emissions Reduction for ACUACs and ACUHPs Shipped in 20292058
Pollutant (unit)
Trial Standard Level
2
1
3
4
Power Sector Emissions
CO2 (million metric tons)
56.33
75.77
99.52
266.67
CH4 (thousand tons)
3.29
4.43
5.82
15.57
N2O (thousand tons)
0.45
0.60
0.79
2.11
NOx (thousand tons)
23.23
31.30
41.13
109.77
SO2 (thousand tons)
14.01
18.85
24.76
66.29
Hg (tons)
0.09
0.13
0.17
0.45
Upstream Emissions
CO2 (million metric tons)
5.22
7.02
9.22
24.72
CH4 (thousand tons)
475.64
639.48
839.72
2,252.67
N2O (thousand tons)
0.02
0.03
0.04
0.11
NOx (thousand tons)
81.55
109.64
143.97
386.21
SO2 (thousand tons)
0.30
0.40
0.53
1.42
Hg (tons)
0.00
0.00
0.00
0.00
Total FFC Emissions
CO2 (million metric tons)
61.55
82.79
108.73
291.39
CH4 (thousand tons)
478.93
643.91
845.55
2,268.24
N2O (thousand tons)
0.47
0.63
0.83
2.21
NOx (thousand tons)
104.78
140.93
185.10
495.97
SO2 (thousand tons)
14.31
19.25
25.29
67.71
Hg (tons)
0.09
0.13
0.17
0.45
BILLING CODE 6450–01–C
As part of the analysis for this
rulemaking, DOE estimated monetary
benefits likely to result from the
reduced emissions of CO2 that DOE
estimated for each of the considered
TSLs for ACUACs and ACUHPs. Section
IV.L of this document discusses the SC–
CO2 values that DOE used. Table V.21
presents the value of CO2 emissions
reduction at each TSL for each of the
SC–CO2 cases. The time-series of annual
values is presented for the selected TSL
in chapter 14 of the direct final rule
TSD.
Table V.21 Present Value of CO2 Emissions Reduction for ACUACs and ACUHPs
Shipped in 2029-2058
TSL
SC-CO2 Case
Discount Rate and Statistics
5%
3%
2.5%
3%
95 th -percentile
Average
VerDate Sep<11>2014
486.1
2,144.7
3,384.9
6,489.2
2
662.7
2,922.2
4,611.1
8,842.4
3
876.0
3,861.9
6,093.4
11,685.9
4
2,265.9
10,006.0
15,796.3
30,273.8
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
As discussed in section IV.L.2 of this
document, DOE estimated the
monetized climate benefits likely to
result from the reduced emissions of
CH4 and N2O that DOE estimated for
each of the considered TSLs for
ACUACs and ACUHPs. Table V.22
presents the value of the CH4 emissions
reduction at each TSL, and Table V.23
presents the value of the N2O emissions
reduction at each TSL. The time-series
of annual values is presented for the
selected TSL in chapter 14 of the direct
final rule TSD.
Table V.22 Present Value of Methane Emissions Reduction for ACUACs and
ACUHPs Shipped in 2029-2058
TSL
SC-CH4 Case
Discount Rate and Statistics
5%
3%
3%
2.5%
95 th -percentile
Average
(million 2022fil
1
176.6
550.1
774.6
1,455.6
2
240.7
749.0
1,054.4
1,981.6
3
318.1
989.6
1,393.1
2,618.1
4
823.9
2,569.2
3,618.5
6,798.4
Table V.23 Present Value of Nitrous Oxide Emissions Reduction for ACUACs and
ACUHPs Shipped in 2029-2058
TSL
SC-N20 Case
Discount Rate and Statistics
3%
5%
3%
2.5%
Average
95 th -percentile
(million 2022D,
1
1.5
6.0
9.3
16.0
2
2.0
8.1
12.7
21.8
3
2.6
10.8
16.8
28.7
4
6.8
27.9
43.5
74.5
ACUHPs. The dollar-per-ton values that
DOE used are discussed in section IV.L
of this document. Table V.24 presents
the present value for NOX emissions
reduction for each TSL calculated using
7-percent and 3-percent discount rates,
and Table V.25 presents similar results
for SO2 emissions reductions. The
results in these tables reflect application
of EPA’s low dollar-per-ton values,
which reflects DOE’s primary estimate.
The time-series of annual values is
presented for the selected TSL in
chapter 14 of the direct final rule TSD.
ER20my24.117</GPH>
for estimating the monetary value of
reductions in CO2 and other GHG
emissions. This ongoing review will
consider the comments on this subject
that are part of the public record for this
and other rulemakings, as well as other
methodological assumptions and issues.
DOE notes, however, that the adopted
standards are economically justified
even without inclusion of monetized
benefits of reduced GHG emissions.
DOE also estimated the monetary
value of the economic benefits
associated with NOX and SO2 emissions
reductions anticipated to result from the
considered TSLs for ACUACs and
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DOE is well aware that scientific and
economic knowledge about the
contribution of CO2 and other GHG
emissions to changes in the future
global climate and the potential
resulting damages to the global and U.S.
economy continues to evolve rapidly.
Thus, any value placed on reduced GHG
emissions in this rulemaking is subject
to change. That said, because of omitted
damages, DOE agrees with the IWG that
these estimates most likely
underestimate the climate benefits of
greenhouse gas reductions. DOE,
together with other Federal agencies,
will continue to review methodologies
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
44123
Table V.24 Present Value ofNOx Emissions Reduction for ACUACs and ACUHPs
Shipped in 2029-2058
7% Discount Rate
3% Discount Rate
TSL
(million 2022$)
1
2
3
4
4,144.9
5,622.5
7,414.1
19,435.2
1,392.2
1,899.5
2,510.5
6,484.2
Table V.25 Present Value of SO2 Emissions Reduction for ACUACs and ACUHPs
Shipped in 2029-2058
3% Discount Rate
7% Discount Rate
I
(million 2022$)
272.5
799.5
1,084.6
371.8
1,430.3
491.4
3,748.2
1,268.7
TSL
1
2
3
4
The benefits of reduced CO2, CH4, and
N2O emissions are collectively referred
to as ‘‘climate benefits.’’ The effects of
SO2 and NOX emissions reductions are
collectively referred to as ‘‘health
benefits.’’ Not all the public health and
environmental benefits from the
reduction of greenhouse gases, NOX,
and SO2 are captured in the values
above, and additional unquantified
benefits from the reductions of those
pollutants, as well as from the reduction
of direct PM and other co-pollutants,
may be significant. DOE has not
included monetary benefits of the
reduction of Hg emissions for this direct
final rule because the amount of
reduction is expected the be very small.
7. Other Factors
The Secretary of Energy, in
determining whether a standard is
economically justified, may consider
any other factors that the Secretary
deems to be relevant. (42 U.S.C.
6313(a)(6)(B)(ii)(VII)) No other factors
were considered in this analysis.
8. Summary of Economic Impacts
Table V.26 presents the NPV values
that result from adding the monetized
estimates of the potential economic,
climate, and health benefits resulting
from reduced GHG, NOX, and SO2
emissions to the NPV of consumer
benefits calculated for each TSL
considered in this rulemaking. The
consumer benefits are domestic U.S.
monetary savings that occur as a result
of purchasing the covered ACUACs and
ACUHPs, and are measured for the
lifetime of equipment shipped in 2029–
2058. The climate benefits associated
with reduced GHG emissions resulting
from the adopted standards are global
benefits, and are also calculated based
on the lifetime of ACUACs and ACUHPs
shipped in 2029–2058. The climate
benefits associated with four SC–GHG
estimates are shown in Table V.26. DOE
does not have a single, central SC–GHG
point estimate, and it emphasizes the
value of considering the benefits
calculated using all four SC–GHG
estimates.
Table V.26 NPV of Consumer Benefits Combined with Present Value of Monetized
Climate Benefits and Health Benefits from Emissions Reductions
20.6
25.3
48.0
3.0% Average SC-GHG Case
17.8
23.3
29.0
2.5% Average SC-GHG Case
3.0% 95th -percentile SC-GHG Case
19.2
25.3
57.5
64.3
5.0% Average SC-GHG Case
3.0% Average SC-GHG Case
5.5
7.6
7.2
2.5% Average SC-GHG Case
9.0
12.8
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31.6
23.0
30.5
38.5
82.0
7% discount rate for Consumer NPV and Health Benefits (billion 2022$)
3.0%
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10.0
8.6
12.3
21.9
12.0
17.1
14.9
21.7
28.8
46.4
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TSL2
TSL3
TSL4
TSL 1
Category
3% discount rate for Consumer NPV and Health Benefits (billion 2022$)
44124
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
C. Conclusion
As noted previously, EPCA specifies
that, for any commercial and industrial
equipment addressed under 42 U.S.C.
6313(a)(6)(A)(i), DOE may prescribe an
energy conservation standard more
stringent than the level for such
equipment in ASHRAE Standard 90.1,
as amended,84 only if ‘‘clear and
convincing evidence’’ shows that a
more-stringent standard would result in
significant additional conservation of
energy and is technologically feasible
and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) For this direct final
rule, DOE considered the impacts of
amended standards for ACUACs and
ACUHPs at each TSL, beginning with
the maximum technologically feasible
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84 As discussed in section II.B.2, ASHRAE 90.1–
2019 updated the minimum efficiency levels for
ACUACs and ACUHPs to align with those adopted
by DOE in the January 2016 Direct Final Rule—i.e.,
ASHRAE 90.1–2019 includes minimum efficiency
levels that are aligned with the current Federal
energy conservation standards. ASHRAE 90.1–2022
includes the same minimum efficiency levels for
ACUACs and ACUHPs as ASHRAE 90.1–2019.
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level, to determine whether that level
was economically justified. Where the
max-tech level was not justified, DOE
then considered the next most efficient
level and undertook the same evaluation
until it reached the highest efficiency
level that is both technologically
feasible and economically justified and
saves a significant additional amount of
energy.
To aid the reader as DOE discusses
the benefits and/or burdens of each TSL,
tables in this section present a summary
of the results of DOE’s quantitative
analysis for each TSL. In addition to the
quantitative results presented in the
tables, DOE also considers other
burdens and benefits that affect
economic justification. These include
the impacts on identifiable subgroups of
consumers who may be
disproportionately affected by a national
standard and impacts on employment.
PO 00000
1. Benefits and Burdens of TSLs
Considered for ACUACs and ACUHPs
Standards
Table V.27 and Table V.28 summarize
the quantitative impacts estimated for
each TSL for ACUACs and ACUHPs.
The national impacts are measured over
the lifetime of ACUACs and ACUHPs
purchased in the 30-year period that
begins in the anticipated year of
compliance with amended standards
(2029–2058). The energy savings,
emissions reductions, and value of
emissions reductions refer to full-fuelcycle results. DOE is presenting
monetized benefits of GHG emissions
reductions in accordance with the
applicable Executive Orders, and DOE
would reach the same conclusion
presented in this document in the
absence of the social cost of greenhouse
gases, including the Interim Estimates
presented by the IWG. The efficiency
levels contained in each TSL are
described in section V.A of this
document.
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44125
Table V.27 Summary of Analytical Results for ACUACs and ACUHPs TSLs:
National Impacts
Category
TSLl
TSL2
TSL3
(Recommended)
TSL4
5.52
14.81
108.73
291.39
845.55
0.83
25.29
185.10
0.17
2,268.24
2.21
67.71
495.97
0.45
23.89
4.86
8.84
37.59
8.59
15.30
29.00
61.32
12.60
23.18
97.11
39.65
21.67
57.46
8.94
4.86
3.00
16.81
4.56
4.39
12.25
22.61
12.60
7.75
42.96
21.06
1.54
21.90
Cumulative FFC National Energy Savings (quads)
Note: This table presents the costs and benefits associated with ACUA Cs and ACUHPs shipped in
2029-2058. These results include benefits to consumers which accrue after 2058 from the equipment
shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4 and SC-N2O.
Together, these represent the global SC-GHG. For presentational purposes of this table, the climate
benefits associated with the average SC-GHG at a 3-percent discount rate are shown, but the Department
does not have a single, central SC-GHG point estimate. DOE emphasizes the value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits ofreducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social
Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in
February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOx and SO2. DOE is currently only
monetizing (for NOx and SO2) PM2.s precursor health benefits and (for NOx) ozone precursor health
benefits, but will continue to assess the ability to monetize other effects such as health benefits from
reductions in direct PM2.s emissions. The health benefits are presented at real discount rates of 3 and 7
percent. See section IV.L of this document for more details.
t Total and net benefits include consumer, climate, and health benefits that can be monetized. For
presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using
the average SC-GHG with 3-percent discount rate.
t Costs include incremental equipment costs as well as installation costs.
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Quads
3.13
4.20
Cumulative FFC Emissions Reduction (total FFC emissions)
61.55
82.79
CO2 (million metric tons)
CHi (thousand tons)
478.93
643.91
N2O (thousand tons)
0.47
0.63
SO2 (thousand tons)
14.31
19.25
NOx (thousand tons)
104.78
140.93
Hg (tons)
0.09
0.13
Present Value of Benefits and Costs (3% discount rate, billion 2022$)
Consumer Operating Cost Savings
13.52
18.23
Climate Benefits*
2.70
3.68
Health Benefits**
4.94
6.71
Total Monetized Benefitst
21.17
28.62
3.40
5.27
Consumer Incremental Equipment Costst
Consumer Net Benefits
10.12
12.96
Total Net Benefits
17.77
23.35
Present Value of Benefits and Costs (7% discount rate, billion 2022$)
Consumer Operating Cost Savings
5.02
6.81
Climate Benefits*
2.70
3.68
Health Benefits**
1.66
2.27
Total Monetized Benefitst
9.39
12.76
Consumer Incremental Equipment Costst
1.81
2.80
Consumer Net Benefits
3.22
4.01
Total Net Benefits
7.58
9.96
44126
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Table V.28 Summary of Analytical Results for ACUACs and ACUHPs TSLs:
Manufacturer and Consumer Impacts
TSL 1
TSL2
TSL3
(Recommended)
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Manufacturer Impacts
Industry NPV (million 2022$) (No-new2,560.1 2,511.2 2,459.1 standards case INPV = 2,653.0)
2,608.8
2,577.0
2,573.5
(3.5) Industry NPV (% change)
(5.3) - (2.9)
(7.3) - (3.0)
(1.7)
Consumer Average LCC Savings (2022$)
Small ACUACs
1,047
1,523
1,380
Large ACUACs
1,363
1,363
2,488
Very Large ACUACs
6,431
6,431
6,431
1,662
1,974
2,154
Shipment-Weighted Average •
Consumer Simple PBP (rears)
Small ACUACs
4.72
4.82
5.91
Large ACUACs
3.45
3.45
3.45
Very Large ACUACs
1.13
1.13
1.13
Shipment-Weighted Average •
4.05
4.12
4.83
Percentae:e of Consumers that Experience a Net Cost
Small ACUACs
22
9
26
Large ACUACs
4
3
3
Very Large ACUACs
1
1
1
•
15
18
Shipment-Weighted Average
7
Note: Parentheses indicate negative(-) values.
* Weighted by shares of each equipment class in total projected shipments in 2022.
DOE first considered TSL 4, which
represents the max-tech efficiency
levels. The max-tech efficiency levels
for all equipment classes would require
complete redesigns of almost all models
currently available on the market to be
optimized around the new test
procedure and energy efficiency metrics
to provide better field performance. TSL
4 could necessitate using a combination
of numerous design options, including
the most efficient compressors, fans and
motor designs, more-efficient heat
exchangers, and/or advanced controls.
TSL 4 would save an estimated 14.8
quads of energy, an amount DOE
considers significant. Under TSL 4, the
NPV of consumer net benefit would be
$1.5 billion using a discount rate of 7
percent, and $21.7 billion using a
discount rate of 3 percent.
The cumulative emissions reductions
at TSL 4 are 291.4 Mt of CO2, 67.7
thousand tons of SO2, 496.0 thousand
tons of NOX, 0.45 tons of Hg, 2,268.2
thousand tons of CH4, and 2.2 thousand
tons of N2O. The estimated monetary
value of the climate benefits from
reduced GHG emissions (associated
with the average SC–GHG at a 3-percent
discount rate) at TSL 4 is $12.6 billion.
The estimated monetary value of the
health benefits from reduced SO2 and
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NOX emissions at TSL 4 is $7.8 billion
using a 7-percent discount rate and
$23.2 billion using a 3-percent discount
rate.
Using a 7-percent discount rate for
consumer benefits and costs, health
benefits from reduced SO2 and NOX
emissions, and the 3-percent discount
rate case for climate benefits from
reduced GHG emissions, the estimated
total NPV at TSL 4 is $21.9 billion.
Using a 3-percent discount rate for all
benefits and costs, the estimated total
NPV at TSL 4 is $57.5 billion. The
estimated total NPV is provided for
additional information; however, DOE
primarily relies upon the NPV of
consumer benefits when determining
whether a potential standard level is
economically justified.
At TSL 4, the average LCC impact is
a savings of $242 for small ACUACs,
$3,880 for large ACUACs, and $12,766
for very large ACUACs. The simple
payback period is 10 years for small
ACUACs and seven years for large and
very large ACUACs. The fraction of
consumers experiencing a net LCC cost
is 60 percent for small ACUACs, 31
percent for large ACUACs, and 24
percent for very large ACUACs. On a
shipment-weighted average basis, the
average LCC impact is a savings of
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TSL4
1,102.4 1,822.9
(58.4) (31.3)
242
3,880
12,766
2,379
10.44
7.05
7.46
9.32
60
31
24
49
$2,379, the simple payback period is 9
years, and the fraction of consumers
experiencing a net LCC cost is 49
percent.
At TSL 4, the projected change in
INPV ranges from a decrease of $1,550.6
million to a decrease of $830.1 million,
which corresponds to decreases of 58.4
percent to 31.3 percent, respectively.
DOE estimates that industry would need
to invest $1,891 million to comply with
standards set at TSL 4. DOE estimates
that approximately 2 percent of small
ACUAC/HP models, 10 percent of large
ACUAC/HP models, and 1 percent of
very large ACUAC/HP models currently
available for purchase meet the
efficiency levels that would be required
at TSL 4 after testing using the amended
test procedure and when represented in
the new metric. Very few manufacturers
produce equipment at TSL 4 efficiency
levels at this time. DOE estimates that
only three of the nine manufacturers of
small ACUACs/HPs currently offer
models that meet the efficiency levels
that would be required for small
ACUACs/HPs at TSL 4. DOE estimates
that only two of the eight manufacturers
of large ACUACs/HPs currently offer
models that meet the efficiency levels
that would be required for large
ACUACs/HPs at TSL 4. DOE estimates
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that only one of the eight manufacturers
of very large ACUACs/HPs currently
offers models that meet the efficiency
level that would be required for very
large ACUACs/HPs at TSL 4.
At TSL 4, DOE understands that all of
the manufacturers would need to utilize
significant engineering resources to
redesign their current offerings to bring
them into compliance with TSL 4
efficiencies. All manufacturers would
have to invest heavily in their
production facilities and source moreefficient components for incorporation
into their designs. One of the challenges
that certain members of the ACUAC/HP
Working Group expressed was ensuring
the footprint of the large and very large
ACUACs and ACUHPs did not grow to
a level that was not sustainable for
existing retrofits. While there was some
uncertainty surrounding what those
footprints might look like, most
manufacturers were generally concerned
that TSL 4 could require such increases
especially for very large models. DOE
understands that to meet max-tech IVEC
levels, a high fraction of models would
need larger cabinet footprints to
accommodate the increased size of
efficiency-improving design options,
which would require substantial
investment in retooling as well as
redesign engineering efforts.
DOE estimates that at TSL 4, most
manufacturers would be required to
redesign every ACUAC/HP model
offering covered by this rulemaking.
Some manufacturers may not have the
engineering capacity to complete the
necessary redesigns within the
compliance period. If manufacturers
were unable to redesign all their
covered ACUAC/HP models within the
compliance period, they would likely
prioritize redesigns based on model
sales volume. In such case, model
offerings of large and very large
ACUACs/HPs might decrease given that
there are many capacities offered for
large and very large ACUACs/HPs and
comparatively fewer shipments across
which to distribute conversion costs.
Furthermore, DOE recognizes that a
standard set at max-tech could greatly
limit equipment differentiation in the
ACUAC/ACUHP market.
Based upon the previous
considerations, the Secretary concludes
that at TSL 4 for ACUACs and ACUHPs,
the benefits of energy savings, positive
NPV of consumer benefits, emission
reductions, and the estimated monetary
value of the emissions reductions would
be outweighed by the impacts on
manufacturers, including the large
conversion costs, profit margin impacts
that could result in a large reduction in
INPV, and the scale and magnitude of
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the redesign efforts needed for
manufacturers to bring their current
equipment offerings into compliance at
this TSL. DOE is concerned that
manufacturers may narrow their
equipment offerings and focus on highvolume models to meet the standard
within the compliance window. DOE is
also concerned with the potential
footprint implications especially for
very large ACUAC/HP models as
manufacturer optimize around the new
test procedure and metric for the largest
of ACUAC/HP models. Consequently,
DOE has concluded that it is unable to
make a determination, supported by
clear and convincing evidence, that TSL
4 is economically justified.
DOE then considered TSL 3 (the
Recommended TSL), which represents
efficiency levels 4, 2, and 1 for small,
large, and very large ACUACs and
ACUHPs, respectively. At TSL 3
efficiency levels, DOE understands that
manufacturers would likely need to
implement fewer design options than
needed for TSL 4. These design options
could include increasing outdoor and/or
indoor coil size, modifying compressor
staging, and improving fan and/or fan
motor efficiency in order to meet these
levels. These technologies and design
paths are familiar to manufacturers as
they produce equipment today that can
meet TSL 3 efficiency levels, but they
are not optimized around the new test
procedure and metrics, which are more
representative of field performance. The
Recommended TSL would save an
estimated 5.5 quads of energy, an
amount DOE considers significant.
Under TSL 3, the NPV of consumer net
benefit would be $4.4 billion using a
discount rate of 7 percent, and $15.3
billion using a discount rate of 3
percent.
The cumulative emissions reductions
at the Recommended TSL are 108.7 Mt
of CO2, 25.3 thousand tons of SO2, 185.1
thousand tons of NOX, 0.2 tons of Hg,
845.6 thousand tons of CH4, and 0.8
thousand tons of N2O. The estimated
monetary value of the climate benefits
from reduced GHG emissions
(associated with the average SC–GHG at
a 3-percent discount rate) at the
Recommended TSL is $4.86 billion. The
estimated monetary value of the health
benefits from reduced SO2 and NOX
emissions at the Recommended TSL is
$3.0 billion using a 7-percent discount
rate and $8.8 billion using a 3-percent
discount rate.
Using a 7-percent discount rate for
consumer benefits and costs, health
benefits from reduced SO2 and NOX
emissions, and the 3-percent discount
rate case for climate benefits from
reduced GHG emissions, the estimated
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44127
total NPV at TSL 3 is $12.3 billion.
Using a 3-percent discount rate for all
benefits and costs, the estimated total
NPV at TSL 3 is $29.0 billion. The
estimated total NPV is provided for
additional information; however, DOE
primarily relies upon the NPV of
consumer benefits when determining
whether a potential standard level is
economically justified.
At the Recommended TSL, the
average LCC impact is a savings of
$1,380 for small ACUACs, $2,488 for
large ACUACs, and $6,431 for very large
ACUACs. The simple payback period is
six years for small ACUACs, 3.5 years
for large ACUACs, and 1 year for very
large ACUACs. The fraction of
consumers experiencing a net LCC cost
is 26 percent for small ACUACs, 4
percent for large ACUACs, and 1
percent for very large ACUACs. On a
shipment-weighted average basis, the
average LCC impact is a savings of
$2,154, the simple payback period is 4.8
years, and the fraction of consumers
experiencing a net LCC cost is 18
percent.
At the Recommended TSL, TSL 3, the
projected change in INPV ranges from a
decrease of $193.9 million to a decrease
$79.5 million, which correspond to
decreases of 7.3 percent and 3.0 percent,
respectively. DOE estimates that
industry must invest $288 million to
comply with standards set at the
Recommended TSL. The ACUAC/HP
Working Group manufacturers were
more comfortable with TSL 3 efficiency
levels because the technologies
anticipated to be used are the same as
technologies employed in the
commercially available products today.
In some cases, manufacturers believed
existing cabinets could be maintained,
while in other cases, investments would
be needed to modify production
equipment for new cabinet designs to
optimize fan design and accommodate
other changes. DOE estimates that at
TSL 3 efficiency levels manufacturers
might likely utilize staging of the
compressor instead of moving the entire
market to variable-speed compressors.
However, DOE understands that both of
these are options that manufacturers
may choose to improve efficiency for
those models needing redesign. While
DOE estimates that there are currently
few shipments at the Recommended
TSL, particularly for small ACUACs/
HPs (as discussed in section IV.F.8 of
this document), DOE estimates that
approximately 37 percent of small
ACUAC/HP models, 50 percent of large
ACUAC/HP models, and 64 percent of
very large ACUAC/HP models currently
available would have the capability of
meeting the efficiency levels required at
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TSL 3 without being redesigned. This
indicates that there is already a
significant number of models available
on the market that would meet the
Recommended TSL when represented
in the new metric, and that the
technology to meet these standards is
readily available. Manufacturers
understand the design pathways and
have significant experience with the
existing technologies needed to bring
the remaining models into compliance
within the timeframe given. DOE
estimates that five of the nine
manufacturers of small ACUACs/HPs
offer small ACUACs/HPs that would
meet the efficiency level required at TSL
3. DOE estimates that six of the eight
manufacturers of large ACUACs/HPs
offer large ACUACs/HPs that meet the
efficiency level required at TSL 3. DOE
estimates that six of the eight
manufacturers of very large ACUACs/
HPs offer very large ACUACs/HPs that
meet the efficiency level required at TSL
3. Given the support expressed by the
ACUAC/HP Working Group for TSL 3
(the Recommended TSL), DOE believes
that all manufacturers of ACUACs/HPs
will be able to redesign their model
offerings in the compliance timeframe.
After considering the analysis and
weighing the benefits and burdens, the
Secretary has concluded that the
Recommended TSL (TSL 3) for ACUACs
and ACUHPs is in accordance with 42
U.S.C. 6313(a)(6)(B), which contains
provisions for adopting a uniform
national standard more stringent than
the amended ASHRAE Standard 90.1 85
for the equipment considered in this
document. Specifically, the Secretary
has determined, supported by clear and
convincing evidence as described in this
direct final rule and accompanying TSD,
that such adoption would result in
significant additional conservation of
energy and is technologically feasible
and economically justified. In
determining whether the recommended
standards are economically justified, the
Secretary has determined that the
benefits of the recommended standards
exceed the burdens. At this TSL, the
average LCC savings for consumers of
ACUACs is positive. An estimated 18
percent of ACUAC consumers
experience a net cost. The FFC national
energy savings are significant, and the
85 As discussed in section II.B.2 of this document,
ASHRAE Standard 90.1–2019 updated the
minimum efficiency levels for ACUACs and
ACUHPs to align with those adopted by DOE in the
January 2016 Direct Final Rule (i.e., ASHRAE
Standard 90.1–2019 includes minimum efficiency
levels that are aligned with the current Federal
energy conservation standards). ASHRAE Standard
90.1–2022 includes the same minimum efficiency
levels for ACUACs and ACUHPs as ASHRAE
Standard 90.1–2019.
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NPV of consumer benefits is positive
using both a 3-percent and 7-percent
discount rate. Notably, the benefits to
consumers vastly outweigh the cost to
manufacturers. At the Recommended
TSL, the NPV of consumer benefits,
even measured at the more conservative
discount rate of 7 percent, is over 47
times higher than the maximum
estimated manufacturers’ loss in INPV.
The economic justification for standard
levels at the Recommended TSL is clear
and convincing even without weighing
the estimated monetary value of
emissions reductions. When those
emissions reductions are included—
representing $4.9 billion in climate
benefits (associated with the average
SC–GHG at a 3-percent discount rate),
and $9.0 billion (using a 3-percent
discount rate) or $3.0 billion (using a 7percent discount rate) in health
benefits—the rationale becomes stronger
still.
Accordingly, the Secretary has
concluded that the Recommended TSL
(TSL 3) would offer the maximum
improvement in efficiency that is
technologically feasible and
economically justified and would result
in the significant additional
conservation of energy. The Secretary
has also concluded, by clear and
convincing evidence, that the adoption
of the recommended standards would
result in the significant conservation of
energy and is technologically feasible
and economically justified. As stated,
DOE conducts the walk-down analysis
to determine the TSL that represents the
maximum improvement in energy
efficiency that is technologically
feasible and economically justified as
required under EPCA. The walk-down is
not a comparative analysis, as a
comparative analysis would result in
the maximization of net benefits instead
of energy savings that are
technologically feasible and
economically justified, which would be
contrary to the statute. See 86 FR 70892,
70908 (Dec. 13, 2021). Although DOE
has not conducted a comparative
analysis to select the amended energy
conservation standards, DOE notes that
compared to TSL 4, the Recommended
TSL results in shorter payback periods
and fewer consumers with net cost and
results in a lower maximum decrease in
INPV and lower manufacturer
conversion costs.
Although DOE considered amended
standard levels for ACUACs and
ACUHPs by grouping the efficiency
levels for each equipment class into
TSLs, DOE evaluates all analyzed
efficiency levels in its analysis.
Although there are ELs for each
equipment class above those of TSL 3,
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the previously discussed uncertainty
around the economic justification to
support amended standards at TSL 4
applies for all efficiency levels higher
than those of the Recommended TSL.
As discussed, there is substantial
uncertainty as to which combinations of
design options manufacturers may
employ to achieve high IVEC levels (i.e.,
those above the Recommended TSL),
which may result in very high product
conversion costs. In addition,
manufacturers’ capacity to redesign all
models that do not meet the amended
standard levels is constrained by
resources devoted to the low-GWP
refrigerant transition and becomes
increasingly difficult as minimum
efficiency levels increases above the
Recommended TSL. Also, similar to
TSL 4, many more cabinets would need
to be redesigned at efficiency levels
above those at TSL 3, which would
require substantial investment in design
and retooling. For small ACUACs and
ACUHPs, adopting an efficiency level
above that at TSL 3 would result in
nearly 50 percent of purchasers
experiencing a net cost. For large and
very large ACUACs and ACUHPs,
higher ELs could potentially result in
reduced configuration and model
availability due to large jumps in failing
model counts, high cost of redesign,
high conversion costs, and lower
shipment volumes (as compared to
small ACUACs and ACUHPs) across
which to distribute conversion costs.
Therefore, DOE has concluded that it is
unable to make a determination,
supported by clear and convincing
evidence, that efficiency levels above
TSL 3 are economically justified.
However, at the Recommended TSL,
there are substantially more model
offerings currently available on the
market, and significantly less redesign
would be required than for higher
efficiency levels. Additionally, the
efficiency levels at TSL 3 result in
positive LCC savings for all equipment
classes and with far fewer consumers
experiencing a net LCC cost, and
mitigate the impacts on INPV and
conversion costs to the point where
DOE has concluded they are
economically justified, as discussed for
the Recommended TSL in the preceding
paragraphs.
Under the authority provided by 42
U.S.C. 6295(p)(4) and 6316(b)(1), DOE is
issuing this direct final rule that adopts
amended energy conservation standards
for ACUACs and ACUHPs at the
Recommended TSL (TSL 3). The
amended energy conservation standards
for ACUACs and ACUHPs, which are
expressed as minimum efficiency values
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44129
in terms of IVEC and IVHE, are shown
in Table V.29.
Table V.29 Amended Energy Conservation Standards for ACUACs and ACUHPs
Compliance Starting 2029)
Supplementary Heating Type
AC
Electric Resistance Heating or No
Heating
All Other Types of Heating
;:::65,000 Btu/hand
<135,000 Btu/h
HP
;:::240,000 Btu/h
and <760,000
Btu/h
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IVEC = 13.8
IVEC = 13.4
IVHE = 6.2
IVEC = 13.8
All Other Types of Heating
IVEC = 13.3
HP
All Types of Heating or No Heating
IVEC = 13.1
IVHE= 6.0
AC
Electric Resistance Heating or No
Heating
All Other Types of Heating
HP
2. Annualized Benefits and Costs of the
Standards
The benefits and costs of the adopted
standards can also be expressed in terms
of annualized values. The annualized
net benefit is: (1) the annualized
national economic value (expressed in
2022$) of the benefits from operating
equipment that meet the adopted
standards (consisting primarily of
operating cost savings from using less
energy), minus increases in equipment
purchase costs, and (2) the annualized
monetary value of the climate and
health benefits from emissions
reductions.
All Types of Heating or No Heating
IVEC = 14.3
Electric Resistance Heating or No
Heating
AC
;:::135,000 Btu/h
and <240,000
Btu/h
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Minimum
Efficiency
Subcategory
All Types of Heating or No Heating
Table V.30 shows the annualized
values for ACUACs and ACUHPs under
the Recommended TSL (TSL 3),
expressed in 2022$. The results under
the primary estimate are as follows.
Using a 7-percent discount rate for
consumer benefits and costs and health
benefits from reduced NOx and SO2
emissions, and the 3-percent discount
rate case for climate benefits from
reduced GHG emissions, the estimated
cost of the standards for ACUACs and
ACUHPs adopted in this rule is $481.3
million per year in increased equipment
costs, while the estimated annual
benefits are $944.7 million in reduced
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IVEC = 12.9
IVEC = 12.2
IVEC = 12.1
IVHE= 5.8
equipment operating costs, $279.2
million in climate benefits, and $317.1
million in health benefits. In this case,
the net benefit would amount to $1.1
billion per year.
Using a 3-percent discount rate for all
benefits and costs, the estimated cost of
the standards for ACUACs and ACUHPs
is $493.2 million per year in increased
equipment costs, while the estimated
annual benefits are $1371.6 billion in
reduced operating costs, $279.2 million
in climate benefits, and $507.9 million
in health benefits. In this case, the net
benefit amounts to $1.7 billion per year.
BILLING CODE 6450–01–P
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Table V.30 Annualized Benefits and Costs of Amended Energy Conservation Standards
for ACUACs and ACUHPs (Recommended TSL 3)
Category
Million 2022$/year
Low-Net-Benefits
Primary Estimate
Estimate
3% discount rate
Consumer Operating
Cost Savings
Climate Benefits*
Health Benefits**
Total Monetized
Benefitst
Consumer
Incremental
Equipment Costst
Total Net Benefits
Change in Producer
Cash Flow (INPV)tt
High-Net-Benefits
Estimate
1,371.6
1,326.3
1,432.6
279.2
278.0
285.1
507.9
505.7
518.6
2,158.7
2,110.0
2,236.3
493.2
526.8
423.9
1,665.5
1,583.2
1,812.4
(13)-(5)
7% discount rate
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944.7
915.9
984.9
279.2
278.0
285.1
317.1
316.1
323.0
1,541.0
1,509.9
1,593.0
481.3
509.9
422.0
1,059.7
1,000.1
1,171.0
(13)-(5)
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Consumer Operating
Cost Savine:s
Climate Benefits (3%
discount rate)*
Health Benefits**
Total Monetized
Benefitst
Consumer
Incremental
Equipment Costst
Total Net Benefits
Change in Producer
Cash Flow (INPV)tt
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
44131
BILLING CODE 6450–01–C
VI. Procedural Issues and Regulatory
Review
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A. Review Under Executive Orders
12866, 13563, and 14094
Executive Order (‘‘E.O.’’) 12866,
‘‘Regulatory Planning and Review,’’ 58
FR 51735 (Oct. 4, 1993), as
supplemented and reaffirmed by E.O.
13563, ‘‘Improving Regulation and
Regulatory Review,’’ 76 FR 3821 (Jan.
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21, 2011), and amended by E.O. 14094,
‘‘Modernizing Regulatory Review,’’ 88
FR 21879 (April 11, 2023), requires
agencies, to the extent permitted by law,
to: (1) propose or adopt a regulation
only upon a reasoned determination
that its benefits justify its costs
(recognizing that some benefits and
costs are difficult to quantify); (2) tailor
regulations to impose the least burden
on society, consistent with obtaining
regulatory objectives, taking into
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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
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Note: This table presents the costs and benefits associated with ACUACs and ACUHPs shipped in 2029-2058.
These results include consumer, climate, and health benefits that accrue after 2058 from the products shipped in
2029-2058. The Primary, Low-Net-Benefits, and High-Net-Benefits Estimates utilize projections of energy prices
and floor space from the AEO 2023 Reference case, Low-Economic-Growth case, and High-Economic-Growth case,
respectively. In addition, incremental equipment costs reflect a constant rate in the Primary Estimate, an increasing
rate in the Low Net Benefits Estimate, and a decreasing rate in the High Net Benefits Estimate. The methods used
to derive projected price trends are explained in sections IV.F.1 and IV.H.3 of this document. Note that the Benefits
and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a
3 percent discount rate are shown, but DOE does not have a single, central SC-GHG point estimate, and it
emphasizes the value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize
the benefits ofreducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOx and SO2. DOE is currently only monetizing
(for SO2 and NOx) PM2.s precursor health benefits and disbenefits and (for NOx) ozone precursor health benefits,
but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.s emissions. See section IV.L of this document for more details.
t Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-percent
discount rate, but DOE does not have a single, central SC-GHG point estimate.
! Costs include incremental equipment costs, as well as installation costs.
H Operating Cost Savings are calculated based on the life-cycle costs analysis and national impact analysis as
discussed in detail below. See sections IV.F and IV.Hof this document. DOE's national impacts analysis includes
all impacts (both costs and benefits) along the distribution chain beginning with the increased costs to the
manufacturer to manufacture the equipment and ending with the increase in price experienced by the consumer.
DOE also separately conducts a detailed analysis on the impacts on manufacturers (i.e., the manufacturer impact
analysis, or "MIA"). See section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing
decisions based on assumptions regarding investments, conversion costs, cashflow, and margins. The MIA
produces a range of impacts, which is the rule's expected impact on the INPV. The change in INPV is the present
value of all changes in industry cash flow, including changes in production costs, capital expenditures, and
manufacturer profit margins. The annualized change in INPV is calculated using the industry weighted-average cost
of capital value of 5.9 percent that is estimated in the manufacturer impact analysis (see chapter 12 of the direct fmal
rule TSD for a complete description of the industry weighted-average cost of capital). For A CUA Cs and ACUHPs,
the annualized change in INPV ranges from -$13 million to -$5 million. DOE accounts for that range oflikely
impacts in analyzing whether a trial standard level is economically justified. See section V.C of this document.
DOE is presenting the range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of
Gross Margin scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating
Cost Savings in this table; and the Preservation of Operating Profit Markup scenario, where DOE assumed
manufacturers would not be able to increase per-unit operating profit in proportion to increases in manufacturer
production costs. DOE includes the range of estimated annualized change in INPV in the above table, drawing on
the MIA explained further in section IV.J of this document to provide additional context for assessing the estimated
impacts of this direct fmal rule to society, including potential changes in production and consumption, which is
consistent with OMB's Circular A-4 and E.O. 12866. IfDOE were to include the INPV into the annualized net
benefit calculation for this direct fmal rule, the annualized net benefits would range from $1,652 million to $1,660
million at 3-percent discount rate and would range from $1,046 million to $1,054 million at 7-percent discount rate.
Parentheses () indicate negative values.
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compliance that regulated entities must
adopt; and (5) identify and assess
available alternatives to direct
regulation, including providing
economic incentives to encourage the
desired behavior, such as user fees or
marketable permits, or providing
information upon which choices can be
made by the public. DOE emphasizes as
well that E.O. 13563 requires agencies to
use the best available techniques to
quantify anticipated present and future
benefits and costs as accurately as
possible. In its guidance, the Office of
Information and Regulatory Affairs
(‘‘OIRA’’) in the Office of Management
and Budget (‘‘OMB’’) has emphasized
that such techniques may include
identifying changing future compliance
costs that might result from
technological innovation or anticipated
behavioral changes. For the reasons
stated in this preamble, this final
regulatory action is consistent with
these principles.
Section 6(a) of E.O. 12866 also
requires agencies to submit ‘‘significant
regulatory actions’’ to OIRA for review.
OIRA has determined that this final
regulatory action constitutes a
‘‘significant regulatory action’’ within
the scope of section 3(f)(1) of E.O.
12866, as amended by E.O. 14094.
Accordingly, pursuant to section
6(a)(3)(C) of E.O. 12866, DOE has
provided to OIRA an assessment,
including the underlying analysis, of
benefits and costs anticipated from the
final regulatory action, together with, to
the extent feasible, a quantification of
those costs; and an assessment,
including the underlying analysis, of
costs and benefits of potentially
effective and reasonably feasible
alternatives to the planned regulation,
and an explanation why the planned
regulatory action is preferable to the
identified potential alternatives. These
assessments are summarized in this
preamble, and further detail can be
found in the technical support
document for this rulemaking.
B. Review Under the Regulatory
Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of an initial regulatory flexibility
analysis (‘‘IRFA’’) and a final regulatory
flexibility analysis (‘‘FRFA’’) for any
rule that by law must be proposed for
public comment, unless the agency
certifies that the rule, if promulgated,
will not have a significant economic
impact on a substantial number of small
entities. As required by E.O. 13272,
‘‘Proper Consideration of Small Entities
in Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
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procedures and policies in the Federal
Register on February 19, 2003, to ensure
that the potential impacts of its rules on
small entities are properly considered
during the rulemaking process. 68 FR
7990. DOE has made its procedures and
policies available on the Office of the
General Counsel’s website
(www.energy.gov/gc/office-generalcounsel).
DOE is not obligated to prepare a
regulatory flexibility analysis for this
rulemaking because there is not a
requirement to publish a general notice
of proposed rulemaking under the
Administrative Procedure Act. See 5
U.S.C. 601(2), 603(a). As discussed
previously, DOE has determined that
the ACUAC/HP Working Group ECS
Term Sheet meets the necessary
requirements under EPCA to issue this
direct final rule for energy conservation
standards for ACUACs and ACUHPs
under the procedures in 42 U.S.C.
6295(p)(4). DOE notes that the NOPR for
energy conservation standards for
ACUACs and ACUHPs published
elsewhere in this issue of the Federal
Register contains a regulatory flexibility
analysis.
C. Review Under the Paperwork
Reduction Act of 1995
Under the procedures established by
the Paperwork Reduction Act of 1995
(‘‘PRA’’), a person is not required to
respond to a collection of information
by a Federal agency unless that
collection of information displays a
currently valid OMB Control Number.
OMB Control Number 1910–1400,
Compliance Statement Energy/Water
Conservation Standards for Appliances,
is currently valid and assigned to the
certification reporting requirements
applicable to covered products and
equipment, including ACUACs and
ACUHPs.
DOE’s certification and compliance
activities ensure accurate and
comprehensive information about the
energy and water use characteristics of
covered products and covered
equipment sold in the United States.
Manufacturers of all covered products
and covered equipment must submit a
certification report before a basic model
is distributed in commerce, annually
thereafter, and if the basic model is
redesigned in such a manner to increase
the consumption or decrease the
efficiency of the basic model such that
the certified rating is no longer
supported by the test data. Additionally,
manufacturers must report when
production of a basic model has ceased
and is no longer offered for sale as part
of the next annual certification report
following such cessation. DOE requires
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the manufacturer of any covered
product or covered equipment to
establish, maintain, and retain the
records of certification reports, of the
underlying test data for all certification
testing, and of any other testing
conducted to satisfy the requirements of
part 429, part 430, and/or part 431.
Certification reports provide DOE and
consumers with comprehensive, up-to
date efficiency information and support
effective enforcement.
DOE is not amending the existing
certification or reporting requirements
or establishing new DOE reporting
requirements for ACUACs and ACUHPs
in this direct final rule. Instead, if
determined to be necessary, DOE may
consider proposals to establish
associated certification requirements
and reporting for ACUACs and ACUHPs
under a separate, future rulemaking
regarding appliance and equipment
certification. DOE will address changes
to OMB Control Number 1910–1400 at
that time, as necessary. Therefore, DOE
has concluded that the amended energy
conservation standards for ACUACs and
ACUHPs will not impose additional
costs for manufacturers related to
reporting and certification.
Notwithstanding any other provision
of the law, no person is required to
respond to, nor shall any person be
subject to a penalty for failure to comply
with, a collection of information subject
to the requirements of the PRA, unless
that collection of information displays a
currently valid OMB Control Number.
D. Review Under the National
Environmental Policy Act of 1969
Pursuant to the National
Environmental Policy Act of 1969
(‘‘NEPA’’), DOE has analyzed this direct
final rule in accordance with NEPA and
DOE’s NEPA implementing regulations
(10 CFR part 1021). DOE has determined
that this rule qualifies for categorical
exclusion under 10 CFR part 1021,
subpart D, appendix B, B5.1, because it
is a rulemaking that establishes energy
conservation standards for consumer
products or industrial equipment, none
of the exceptions identified in B5.1(b)
apply, no extraordinary circumstances
exist that require further environmental
analysis, and it otherwise meets the
requirements for application of a
categorical exclusion. See 10 CFR
1021.410. Therefore, DOE has
determined that promulgation of this
rule is not a major Federal action
significantly affecting the quality of the
human environment within the meaning
of NEPA, and does not require an
environmental assessment or an
environmental impact statement.
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E. Review Under Executive Order 13132
E.O. 13132, ‘‘Federalism,’’ 64 FR
43255 (August 10, 1999), imposes
certain requirements on Federal
agencies formulating and implementing
policies or regulations that preempt
State law or that have federalism
implications. The Executive order
requires agencies to examine the
constitutional and statutory authority
supporting any action that would limit
the policymaking discretion of the
States and to carefully assess the
necessity for such actions. The
Executive order also requires agencies to
have an accountable process to ensure
meaningful and timely input by State
and local officials in the development of
regulatory policies that have federalism
implications. On March 14, 2000, DOE
published a statement of policy
describing the intergovernmental
consultation process it will follow in the
development of such regulations. 65 FR
13735. DOE has examined this rule and
has determined that it would not have
a substantial direct effect on the States,
on the relationship between the
National Government and the States, or
on the distribution of power and
responsibilities among the various
levels of government. EPCA governs and
prescribes Federal preemption of State
regulations as to energy conservation for
the equipment that is the subject of this
direct final rule. States can petition DOE
for exemption from such preemption to
the extent, and based on criteria, set
forth in EPCA. (42 U.S.C. 6316(a) and
(b); 42 U.S.C. 6297) Therefore, no
further action is required by Executive
Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing
regulations and the promulgation of
new regulations, section 3(a) of E.O.
12988, ‘‘Civil Justice Reform,’’ 61 FR
4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to
the following requirements: (1)
eliminate drafting errors and ambiguity;
(2) write regulations to minimize
litigation; (3) provide a clear legal
standard for affected conduct rather
than a general standard, and (4) promote
simplification and burden reduction.
Regarding the review required by
section 3(a), section 3(b) of E.O. 12988
specifically requires that Executive
agencies make every reasonable effort to
ensure that the regulation: (1) clearly
specifies the preemptive effect, if any;
(2) clearly specifies any effect on
existing Federal law or regulation; (3)
provides a clear legal standard for
affected conduct while promoting
simplification and burden reduction; (4)
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specifies the retroactive effect, if any; (5)
adequately defines key terms, and (6)
addresses other important issues
affecting clarity and general
draftsmanship under any guidelines
issued by the Attorney General. Section
3(c) of E.O. 12988 requires Executive
agencies to review regulations in light of
applicable standards in section 3(a) and
section 3(b) to determine whether they
are met or it is unreasonable to meet one
or more of them. DOE has completed the
required review and determined that, to
the extent permitted by law, this direct
final rule meets the relevant standards
of E.O. 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
Title II of the Unfunded Mandates
Reform Act of 1995 (‘‘UMRA’’) requires
each Federal agency to assess the effects
of Federal regulatory actions on State,
local, and Tribal governments and the
private sector. Public Law 104–4, sec.
201 (codified at 2 U.S.C. 1531). For a
regulatory action likely to result in a
rule that may cause the expenditure by
State, local, and Tribal governments, in
the aggregate, or by the private sector of
$100 million or more in any one year
(adjusted annually for inflation), section
202 of UMRA requires a Federal agency
to publish a written statement that
estimates the resulting costs, benefits,
and other effects on the national
economy. (2 U.S.C. 1532(a), (b)) The
UMRA also requires a Federal agency to
develop an effective process to permit
timely input by elected officers of State,
local, and Tribal governments on a
‘‘significant intergovernmental
mandate,’’ and requires an agency plan
for giving notice and opportunity for
timely input to potentially affected
small governments before establishing
any requirements that might
significantly or uniquely affect them. On
March 18, 1997, DOE published a
statement of policy on its process for
intergovernmental consultation under
UMRA. 62 FR 12820. DOE’s policy
statement is also available at
www.energy.gov/sites/prod/files/gcprod/
documents/umra_97.pdf.
DOE has concluded that this direct
final rule may require expenditures of
$100 million or more in any one year by
the private sector. Such expenditures
may include: (1) investment in research
and development and in capital
expenditures by ACUAC and ACUHP
manufacturers in the years between the
direct final rule and the compliance
date for the amended standards and (2)
incremental additional expenditures by
consumers to purchase higher-efficiency
ACUACs and ACUHPs, starting at the
PO 00000
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44133
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 direct final rule. (2 U.S.C. 1532(c))
The content requirements of section
202(b) of UMRA relevant to a private
sector mandate substantially overlap the
economic analysis requirements that
apply under section 325(o) of EPCA and
Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of
this document and the TSD for this
direct final rule respond to those
requirements.
Under section 205 of UMRA, DOE 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 rule,
unless DOE publishes an explanation
for doing otherwise, or the selection of
such an alternative is inconsistent with
law. As required by 42 U.S.C.
6313(a)(6)(C)(i), this direct final rule
establishes amended energy
conservation standards for ACUACs and
ACUHPs that DOE has determined to be
both technologically feasible and
economically justified, and save a
significant additional amount of energy,
as required by 42 U.S.C.
6313(a)(6)(A)(ii)(II) and (a)(6)(B)(ii). A
full discussion of the alternatives
considered by DOE is presented in
chapter 17 of the TSD for this direct
final rule.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
rule would not have any impact on the
autonomy or integrity of the family as
an institution. Accordingly, DOE has
concluded that it is not necessary to
prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630,
‘‘Governmental Actions and Interference
with Constitutionally Protected Property
Rights,’’ 53 FR 8859 (March 18, 1988),
DOE has determined that this rule
would not result in any takings that
might require compensation under the
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44134
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
Fifth Amendment to the U.S.
Constitution.
DOE has not prepared a Statement of
Energy Effects on this direct final rule.
J. Review Under the Treasury and
General Government Appropriations
Act, 2001
Section 515 of the Treasury and
General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note)
provides for Federal agencies to review
most disseminations of information to
the public under information quality
guidelines established by each agency
pursuant to general guidelines issued by
OMB. OMB’s guidelines were published
at 67 FR 8452 (Feb. 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (Oct. 7, 2002). Pursuant to
OMB Memorandum M–19–15,
‘‘Improving Implementation of the
Information Quality Act’’ (April 24,
2019), DOE published updated
guidelines which are available at:
www.energy.gov/sites/prod/files/2019/
12/f70/DOE%20Final
%20Updated%20IQA
%20Guidelines%20Dec%202019.pdf.
DOE has reviewed this direct final rule
under the OMB and DOE guidelines and
has concluded that it is consistent with
applicable policies in those guidelines.
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 2664, 2667
(Jan. 14, 2005).
In response to OMB’s Bulletin, DOE
conducted formal peer reviews of the
energy conservation standards
development process and the analyses
that are typically used and prepared a
report describing that peer review.86
Generation of this report involved a
rigorous, formal, and documented
evaluation using objective criteria and
qualified and independent reviewers to
make a judgment as to the technical/
scientific/business merit, the actual or
anticipated results, and the productivity
and management effectiveness of
programs and/or projects. Because
available data, models, and
technological understanding have
changed since 2007, DOE has engaged
with the National Academy of Sciences
to review DOE’s analytical
methodologies to ascertain whether
modifications are needed to improve
DOE’s analyses. DOE is in the process
of evaluating the resulting December
2021 NAS report.87
K. Review Under Executive Order 13211
E.O. 13211, ‘‘Actions Concerning
Regulations That Significantly Affect
Energy Supply, Distribution, or Use,’’ 66
FR 28355 (May 22, 2001), requires
Federal agencies to prepare and submit
to OIRA at OMB, a Statement of Energy
Effects for any significant energy action.
A ‘‘significant energy action’’ is defined
as any action by an agency that
promulgates or is expected to lead to
promulgation of a final rule, and that:
(1) is a significant regulatory action
under Executive Order 12866, or any
successor order; and (2) is likely to have
a significant adverse effect on the
supply, distribution, or use of energy, or
(3) is designated by the Administrator of
OIRA as a significant energy action. For
any significant energy action, the agency
must give a detailed statement of any
adverse effects on energy supply,
distribution, or use should the proposal
be implemented, and of reasonable
alternatives to the action and their
expected benefits on energy supply,
distribution, and use.
DOE has concluded that this
regulatory action, which sets forth
amended energy conservation standards
for ACUACs and ACUHPs, is not a
significant energy action because the
standards are not likely to have a
significant adverse effect on the supply,
distribution, or use of energy, nor has it
been designated as such by the
Administrator at OIRA. Accordingly,
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M. Congressional Notification
As required by 5 U.S.C. 801, DOE will
report to Congress on the promulgation
86 The
2007 ‘‘Energy Conservation Standards
Rulemaking Peer Review Report’’ is available at the
following website: www.energy.gov/eere/buildings/
downloads/energy-conservation-standardsrulemaking-peer-review-report-0 (last accessed Sept.
26, 2023).
87 The December 2021 NAS report is available at
www.nationalacademies.org/our-work/review-ofmethods-for-setting-building-and-equipmentperformance-standards (last accessed Dec. 5, 2023).
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of this rule prior to its effective date.
The report will state that the Office of
Information and Regulatory Affairs has
determined that this action meets the
criteria set forth in 5 U.S.C. 804(2).
VII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this direct final rule.
List of Subjects in 10 CFR Part 431
Administrative practice and
procedure, Confidential business
information, Energy conservation,
Reporting and recordkeeping
requirements.
Signing Authority
This document of the Department of
Energy was signed on April 12, 2024, by
Jeffrey Marootian, Principal Deputy
Assistant Secretary for Energy Efficiency
and Renewable Energy, pursuant to
delegated authority from the Secretary
of Energy. That document with the
original signature and date is
maintained by DOE. For administrative
purposes only, and in compliance with
requirements of the Office of the Federal
Register, the undersigned DOE Federal
Register Liaison Officer has been
authorized to sign and submit the
document in electronic format for
publication, as an official document of
the Department of Energy. This
administrative process in no way alters
the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on April 17,
2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S.
Department of Energy.
For the reasons set forth in the
preamble, DOE amends part 431 of
chapter II, subchapter D, of title 10 of
the Code of Federal Regulations, as set
forth below:
PART 431—ENERGY EFFICIENCY
PROGRAM FOR CERTAIN
COMMERCIAL AND INDUSTRIAL
EQUIPMENT
1. The authority citation for part 431
continues to read as follows:
■
Authority: 42 U.S.C. 6291–6317; 28 U.S.C.
2461 note.
■
2. Revise § 431.97 to read as follows:
§ 431.97 Energy efficiency standards and
their compliance dates.
(a) All basic models of commercial
package air conditioning and heating
equipment must be tested for
performance using the applicable DOE
test procedure in § 431.96, be compliant
with the applicable standards set forth
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
in paragraphs (b) through (i) of this
section, and be certified to the
Department under 10 CFR part 429.
(b) Each air-cooled commercial
package air conditioning and heating
equipment (excluding air-cooled
equipment with cooling capacity less
than 65,000 Btu/h and double-duct air
conditioners or heat pumps)
manufactured on or after January 1,
2023, and before January 1, 2029, must
meet the applicable minimum energy
efficiency standard level(s) set forth in
table 1 to this paragraph (b). Each aircooled commercial package air
conditioning and heating equipment
(excluding air-cooled equipment with
cooling capacity less than 65,000 Btu/h
and double-duct air conditioners or heat
pumps) manufactured on or after
January 1, 2029, must meet the
applicable minimum energy efficiency
standard level(s) set forth in table 2 to
this paragraph (b). Each water-cooled
commercial package air conditioning
and heating equipment manufactured
on or after the compliance date listed in
table 3 to this paragraph (b) must meet
the applicable minimum energy
44135
efficiency standard level(s) set forth in
table 3. Each evaporatively-cooled
commercial air conditioning and
heating equipment manufactured on or
after the compliance date listed in table
4 to this paragraph (b) must meet the
applicable minimum energy efficiency
standard level(s) set forth in table 4.
Each double-duct air conditioner or heat
pump manufactured on or after January
1, 2010, must meet the applicable
minimum energy efficiency standard
level(s) set forth in table 5 to this
paragraph (b).
TABLE 1 TO PARAGRAPH (b)—MINIMUM EFFICIENCY STANDARDS FOR AIR-COOLED COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT WITH A COOLING CAPACITY GREATER THAN OR EQUAL TO 65,000 BTU/h (EXCLUDING DOUBLE-DUCT AIR-CONDITIONERS AND HEAT PUMPS)
Cooling capacity
Subcategory
Minimum
efficiency 1
Supplementary heating type
Compliance date:
equipment
manufactured
starting on . . .
Air-Cooled Commercial Package Air Conditioning and Heating Equipment With a Cooling Capacity Greater Than or Equal to 65,000 Btu/h (Excluding
Double-Duct Air Conditioners and Heat Pumps)
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥65,000 Btu/h and <135,000 Btu/h ...........................
HP .................
All Other Types of Heating .......................................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥135,000 Btu/h and <240,000 Btu/h .........................
HP .................
All Other Types of Heating .......................................
≥240,000 Btu/h and <760,000 Btu/h .........................
≥240,000 Btu/h and <760,000 Btu/h .........................
≥240,000 Btu/h and <760,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥240,000 Btu/h and <760,000 Btu/h .........................
HP .................
All Other Types of Heating .......................................
1 See
IEER = 14.8 .........
IEER = 14.6 .........
IEER = 14.1 .........
COP = 3.4 ............
IEER = 13.9 .........
COP = 3.4 ............
IEER = 14.2 .........
IEER = 14.0 .........
IEER = 13.5 .........
COP = 3.3 ............
IEER = 13.3 .........
COP = 3.3 ............
IEER = 13.2 .........
IEER = 13.0 .........
IEER = 12.5 .........
COP = 3.2 ............
IEER = 12.3 .........
COP = 3.2 ............
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
January 1, 2023.
section 3 of appendix A to this subpart for the test conditions upon which the COP standards are based.
TABLE 2 TO PARAGRAPH (b)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR AIR-COOLED COMMERCIAL PACKAGE AIR
CONDITIONING AND HEATING EQUIPMENT WITH A COOLING CAPACITY GREATER THAN OR EQUAL TO 65,000 BTU/h
(EXCLUDING DOUBLE-DUCT AIR CONDITIONERS AND HEAT PUMPS)
Cooling capacity
Subcategory
Supplementary heating type
Minimum efficiency
Compliance date:
equipment
manufactured
starting on . . .
lotter on DSK11XQN23PROD with RULES3
Air-Cooled Commercial Package Air Conditioning and Heating Equipment With a Cooling Capacity Greater Than or Equal to 65,000 Btu/h (Excluding
Double-Duct Air Conditioners and Heat Pumps)
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
All Types of Heating .................................................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
All Types of Heating .................................................
≥240,000 Btu/h and <760,000 Btu/h .........................
≥240,000 Btu/h and <760,000 Btu/h .........................
≥240,000 Btu/h and <760,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
All Types of Heating .................................................
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E:\FR\FM\20MYR3.SGM
IVEC
IVEC
IVEC
IVHE
IVEC
IVEC
IVEC
IVHE
IVEC
IVEC
IVEC
IVHE
20MYR3
=
=
=
=
=
=
=
=
=
=
=
=
14.3 .........
13.8 .........
13.4 .........
6.2 ...........
13.8 .........
13.3 .........
13.1 .........
6.0 ...........
12.9 .........
12.2 .........
12.1 .........
5.8 ...........
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
January 1, 2029.
44136
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
TABLE 3 TO PARAGRAPH (b)—MINIMUM COOLING EFFICIENCY STANDARDS FOR WATER-COOLED COMMERCIAL PACKAGE
AIR CONDITIONING EQUIPMENT
Cooling capacity
Supplementary heating type
Compliance date:
equipment
manufactured
starting on . . .
Minimum efficiency
Water-Cooled Commercial Package Air Conditioning Equipment
<65,000 Btu/h ........................................................
≥65,000 Btu/h and <135,000 Btu/h .......................
≥65,000 Btu/h and <135,000 Btu/h .......................
≥135,000 Btu/h and <240,000 Btu/h .....................
≥135,000 Btu/h and <240,000 Btu/h .....................
≥240,000 Btu/h and <760,000 Btu/h .....................
≥240,000 Btu/h and <760,000 Btu/h .....................
All .........................................................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
EER
EER
EER
EER
EER
EER
EER
=
=
=
=
=
=
=
12.1
12.1
11.9
12.5
12.3
12.4
12.2
...........
...........
...........
...........
...........
...........
...........
October 29, 2003.
June 1, 2013.
June 1, 2013.
June 1, 2014.
June 1, 2014.
June 1, 2014.
June 1, 2014.
TABLE 4 TO PARAGRAPH (b)—MINIMUM COOLING EFFICIENCY STANDARDS FOR EVAPORATIVELY-COOLED COMMERCIAL
PACKAGE AIR CONDITIONING EQUIPMENT
Cooling capacity
Supplementary heating type
Compliance date:
equipment
manufactured
starting on . . .
Minimum efficiency
Evaporatively-Cooled Commercial Package Air Conditioning Equipment
<65,000 Btu/h ........................................................
≥65,000 Btu/h and <135,000 Btu/h .......................
≥65,000 Btu/h and <135,000 Btu/h .......................
≥135,000 Btu/h and <240,000 Btu/h .....................
≥135,000 Btu/h and <240,000 Btu/h .....................
≥240,000 Btu/h and <760,000 Btu/h .....................
≥240,000 Btu/h and <760,000 Btu/h .....................
All .........................................................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
All Other Types of Heating ..................................
EER
EER
EER
EER
EER
EER
EER
=
=
=
=
=
=
=
12.1
12.1
11.9
12.0
11.8
11.9
11.7
...........
...........
...........
...........
...........
...........
...........
October 29, 2003.
June 1, 2013.
June 1, 2013.
June 1, 2014.
June 1, 2014.
June 1, 2014.
June 1, 2014.
TABLE 5 TO PARAGRAPH (b)—MINIMUM EFFICIENCY STANDARDS FOR DOUBLE-DUCT AIR CONDITIONERS OR HEAT PUMPS
Cooling capacity
Subcategory
Minimum
efficiency 1
Supplementary heating type
Compliance date:
equipment
manufactured
starting on . . .
Double-Duct Air Conditioners or Heat Pumps
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
≥65,000 Btu/h and <135,000 Btu/h ...........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥65,000 Btu/h and <135,000 Btu/h ...........................
HP .................
All Other Types of Heating .......................................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
≥135,000 Btu/h and <240,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥135,000 Btu/h and <240,000 Btu/h .........................
HP .................
All Other Types of Heating .......................................
≥240,000 Btu/h and <300,000 Btu/h .........................
≥240,000 Btu/h and <300,000 Btu/h .........................
≥240,000 Btu/h and <300,000 Btu/h .........................
AC .................
AC .................
HP .................
Electric Resistance Heating or No Heating ..............
All Other Types of Heating .......................................
Electric Resistance Heating or No Heating ..............
≥240,000 Btu/h and <300,000 Btu/h .........................
HP .................
All Other Types of Heating .......................................
1 See
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
January 1, 2010.
section 3 of appendix A to this subpart for the test conditions upon which the COP standards are based.
(c) Each water-source heat pump
manufactured starting on the
lotter on DSK11XQN23PROD with RULES3
EER = 11.2 ..........
EER = 11.0 ..........
EER = 11.0 ..........
COP = 3.3
EER = 10.8 ..........
COP = 3.3
EER = 11.0 ..........
EER = 10.8 ..........
EER = 10.6 ..........
COP = 3.2
EER = 10.4 ..........
COP = 3.2
EER = 10.0 ..........
EER = 9.8 ............
EER = 9.5 ............
COP = 3.2
EER = 9.3 ............
COP = 3.2
VerDate Sep<11>2014
20:25 May 17, 2024
Jkt 262001
compliance date listed in table 6 to this
paragraph (c) must meet the applicable
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minimum energy efficiency standard
level(s) set forth in this paragraph (c).
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44137
TABLE 6 TO PARAGRAPH (c)—MINIMUM EFFICIENCY STANDARDS FOR WATER-SOURCE HEAT PUMPS (WATER-TO-AIR,
WATER-LOOP)
Cooling capacity
Compliance date: equipment
manufactured starting on . . .
Minimum efficiency
Water-Source Heat Pumps (Water-to-Air, Water-Loop)
<17,000 Btu/h ..............................................................
≥17,000 Btu/h and <65,000 Btu/h ...............................
≥65,000 Btu/h and <135,000 Btu/h .............................
(d) Each non-standard size packaged
terminal air conditioner (PTAC) and
packaged terminal heat pump (PTHP)
manufactured on or after October 7,
2010, must meet the applicable
minimum energy efficiency standard
level(s) set forth in table 7 to this
paragraph (d). Each standard size PTAC
EER = 12.2 ................................................................
COP = 4.3 ..................................................................
EER = 13.0 ................................................................
COP = 4.3 ..................................................................
EER = 13.0 ................................................................
COP = 4.3 ..................................................................
manufactured on or after October 8,
2012, and before January 1, 2017, must
meet the applicable minimum energy
efficiency standard level(s) set forth in
table 7. Each standard size PTHP
manufactured on or after October 8,
2012, must meet the applicable
minimum energy efficiency standard
October 9, 2015.
October 9, 2015.
October 9, 2015.
level(s) set forth in table 7. Each
standard size PTAC manufactured on or
after January 1, 2017, must meet the
applicable minimum energy efficiency
standard level(s) set forth in table 8 to
this paragraph (d).
TABLE 7 TO PARAGRAPH (d)—MINIMUM EFFICIENCY STANDARDS FOR PTAC AND PTHP
Compliance date:
products
manufactured on
and after . . .
Equipment
type
Category
Cooling capacity
Minimum efficiency
PTAC .............
Standard Size .....................
<7,000 Btu/h .......................
≥7,000 Btu/h and ≤15,000
Btu/h.
>15,000 Btu/h .....................
<7,000 Btu/h .......................
≥7,000 Btu/h and ≤15,000
Btu/h.
>15,000 Btu/h .....................
<7,000 Btu/h .......................
EER = 11.7 ................................................
EER = 13.8¥(0.3 × Cap 1) ........................
October 8, 2012.2
October 8, 2012.2
EER = 9.3 ..................................................
EER = 9.4 ..................................................
EER = 10.9¥(0.213 × Cap 1) ....................
October 8, 2012.2
October 7, 2010.
October 7, 2010.
EER = 7.7 ..................................................
EER = 11.9 ................................................
COP = 3.3
EER = 14.0¥(0.3 × Cap 1) ........................
COP = 3.7¥(0.052 × Cap 1)
EER = 9.5 ..................................................
COP = 2.9
EER = 9.3 ..................................................
COP = 2.7
EER = 10.8¥(0.213 × Cap 1) ....................
COP = 2.9¥(0.026 × Cap 1)
EER = 7.6 ..................................................
COP = 2.5
October 7, 2010.
October 8, 2012.
Non-Standard Size .............
PTHP .............
Standard Size .....................
≥7,000 Btu/h and ≤15,000
Btu/h.
>15,000 Btu/h .....................
Non-Standard Size .............
<7,000 Btu/h .......................
≥7,000 Btu/h and ≤15,000
Btu/h.
>15,000 Btu/h .....................
October 8, 2012.
October 8, 2012.
October 7, 2010.
October 7, 2010.
October 7, 2010.
means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.
manufactured before January 1, 2017. See table 8 to this paragraph (d) for updated efficiency standards that apply to this category of
equipment manufactured on and after January 1, 2017.
1 ‘‘Cap’’
2 And
lotter on DSK11XQN23PROD with RULES3
TABLE 8 TO PARAGRAPH (d)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR PTAC
Compliance date:
products
manufactured on
and after . . .
Equipment
type
Category
Cooling capacity
Minimum efficiency
PTAC .............
Standard Size .....................
<7,000 Btu/h .......................
≥7,000 Btu/h and ≤15,000
Btu/h.
>15,000 Btu/h .....................
EER = 11.9 ................................................
EER = 14.0¥(0.3 × Cap 1) ........................
January 1, 2017.
January 1, 2017.
EER = 9.5 ..................................................
January 1, 2017.
1 ‘‘Cap’’
means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.
(e)(1) Each single package vertical air
conditioner and single package vertical
heat pump manufactured on or after
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2015 (for models ≥65,000 Btu/h and
<135,000 Btu/h), or October 9, 2016 (for
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models ≥135,000 Btu/h and <240,000
Btu/h), must meet the applicable
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minimum energy conservation standard
level(s) set forth in this paragraph (e)(1).
TABLE 9 TO PARAGRAPH (e)(1)—MINIMUM EFFICIENCY STANDARDS FOR SINGLE PACKAGE VERTICAL AIR CONDITIONERS
AND SINGLE PACKAGE VERTICAL HEAT PUMPS
Subcategory
Equipment type
Cooling capacity
Single package vertical air conditioners and single
package vertical heat pumps, single-phase and
three-phase.
Single package vertical air conditioners and single
package vertical heat pumps.
<65,000 Btu/h .....................................
AC
HP
≥65,000 Btu/h and <135,000 Btu/h .....
AC
HP
Single package vertical air conditioners and single
package vertical heat pumps.
≥135,000 Btu/h and <240,000 Btu/h ...
AC
HP
(2) Each single package vertical air
conditioner and single package vertical
heat pump manufactured on and after
October 9, 2015 (for models ≥65,000
Efficiency level
EER = 9.0
EER = 9.0
COP = 3.0
EER = 8.9
EER = 8.9
COP = 3.0
EER = 8.6
EER = 8.6
COP = 2.9
Btu/h and <135,000 Btu/h), or October
9, 2016 (for models ≥135,000 Btu/h and
<240,000 Btu/h), but before September
23, 2019, must meet the applicable
Compliance date: products
manufactured on and after . . .
...............
...............
January 1, 2010.
January 1, 2010.
...............
...............
January 1, 2010.
January 1, 2010.
...............
...............
January 1, 2010.
January 1, 2010.
minimum energy conservation standard
level(s) set forth in this paragraph (e)(2).
TABLE 10 TO PARAGRAPH (e)(2)—MINIMUM EFFICIENCY STANDARDS FOR SINGLE PACKAGE VERTICAL AIR CONDITIONERS
AND SINGLE PACKAGE VERTICAL HEAT PUMPS
Subcategory
Equipment type
Cooling capacity
Single package vertical air conditioners and single
package vertical heat pumps, single-phase and
three-phase.
Single package vertical air conditioners and single
package vertical heat pumps.
<65,000 Btu/h .....................................
AC
HP
≥65,000 Btu/h and <135,000 Btu/h .....
AC
HP
Single package vertical air conditioners and single
package vertical heat pumps.
≥135,000 Btu/h and <240,000 Btu/h ...
AC
HP
(3) Each single package vertical air
conditioner and single package vertical
heat pump manufactured on and after
Efficiency level
EER = 9.0 ...............
EER = 9.0 ...............
COP = 3.0
EER = 10.0 .............
EER = 10.0 .............
COP = 3.0
EER = 10.0 .............
EER = 10.0 .............
COP = 3.0
September 23, 2019, must meet the
applicable minimum energy
Compliance date: products
manufactured on and after . . .
January 1, 2010.
January 1, 2010.
October 9, 2015.
October 9, 2015.
October 9, 2016.
October 9, 2016.
conservation standard level(s) set forth
in this paragraph (e)(3).
TABLE 11 TO PARAGRAPH (e)(3)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR SINGLE PACKAGE VERTICAL AIR
CONDITIONERS AND SINGLE PACKAGE VERTICAL HEAT PUMPS
Cooling capacity
Single package vertical air conditioners and single
package vertical heat pumps, single-phase and
three-phase.
Single package vertical air conditioners and single
package vertical heat pumps.
<65,000 Btu/h .....................................
AC
HP
≥65,000 Btu/h and <135,000 Btu/h .....
AC
HP
Single package vertical air conditioners and single
package vertical heat pumps.
≥135,000 Btu/h and <240,000 Btu/h ...
AC
HP
(f)(1) Each computer room air
conditioner with a net sensible cooling
capacity less than 65,000 Btu/h
manufactured on or after October 29,
2012, and before May 28, 2024 and each
lotter on DSK11XQN23PROD with RULES3
Subcategory
Equipment type
Efficiency level
EER = 11.0
EER = 11.0
COP = 3.3
EER = 10.0
EER = 10.0
COP = 3.0
EER = 10.0
EER = 10.0
COP = 3.0
computer room air conditioner with a
net sensible cooling capacity greater
than or equal to 65,000 Btu/h and less
than 760,000 Btu/h manufactured on or
after October 29, 2013, and before May
Compliance date: products
manufactured on and after . . .
.............
.............
September 23, 2019.
September 23, 2019.
.............
.............
October 9, 2015.
October 9, 2015.
.............
.............
October 9, 2016.
October 9, 2016.
28, 2024 must meet the applicable
minimum energy efficiency standard
level(s) set forth in this paragraph (f)(1).
TABLE 12 TO PARAGRAPH (f)(1)—MINIMUM EFFICIENCY STANDARDS FOR COMPUTER ROOM AIR CONDITIONERS
Minimum SCOP efficiency
Equipment type
Net sensible cooling capacity
Downflow
Air-Cooled .....................................................................
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<65,000 Btu/h ...............................................................
≥65,000 Btu/h and <240,000 Btu/h ..............................
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20MYR3
2.20
2.10
Upflow
2.09
1.99
44139
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TABLE 12 TO PARAGRAPH (f)(1)—MINIMUM EFFICIENCY STANDARDS FOR COMPUTER ROOM AIR CONDITIONERS—
Continued
Minimum SCOP efficiency
Equipment type
Net sensible cooling capacity
Downflow
Water-Cooled ................................................................
Water-Cooled with Fluid Economizer ...........................
Glycol-Cooled ...............................................................
Glycol-Cooled with Fluid Economizer ..........................
(2) Each computer room air
conditioner manufactured on or after
May 28, 2024, must meet the applicable
≥240,000 Btu/h and <760,000 Btu/h ............................
<65,000 Btu/h ...............................................................
≥65,000 Btu/h and <240,000 Btu/h ..............................
≥240,000 Btu/h and <760,000 Btu/h ............................
<65,000 Btu/h ...............................................................
≥65,000 Btu/h and <240,000 Btu/h ..............................
≥240,000 Btu/h and <760,000 Btu/h ............................
<65,000 Btu/h ...............................................................
≥65,000 Btu/h and <240,000 Btu/h ..............................
≥240,000 Btu/h and <760,000 Btu/h ............................
<65,000 Btu/h ...............................................................
≥65,000 Btu/h and <240,000 Btu/h ..............................
≥240,000 Btu/h and <760,000 Btu/h ............................
Upflow
1.90
2.60
2.50
2.40
2.55
2.45
2.35
2.50
2.15
2.10
2.45
2.10
2.05
1.79
2.49
2.39
2.29
2.44
2.34
2.24
2.39
2.04
1.99
2.34
1.99
1.94
minimum energy efficiency standard
level(s) set forth in this paragraph (f)(2).
TABLE 13 TO PARAGRAPH (f)(2)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR FLOOR-MOUNTED COMPUTER ROOM
AIR CONDITIONERS
Downflow and upflow ducted
Upflow non-ducted and horizontal flow
Minimum NSenCOP
efficiency
Equipment type
Minimum NSenCOP
efficiency
Net sensible cooling capacity
Net sensible cooling capacity
Upflow
ducted
Downflow
Air-Cooled ................
Air-Cooled with Fluid
Economizer.
Water-Cooled ...........
Water-Cooled with
Fluid Economizer.
Glycol-Cooled ..........
Glycol-Cooled with
Fluid Economizer.
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
<80,000 Btu/h .........................................
≥80,000 Btu/h and <295,000 Btu/h ........
≥295,000 Btu/h and <930,000 Btu/h ......
2.70
2.58
2.36
2.70
2.58
2.36
2.82
2.73
2.67
2.77
2.68
2.61
2.56
2.24
2.21
2.51
2.19
2.15
2.67
2.55
2.33
2.67
2.55
2.33
2.79
2.70
2.64
2.74
2.65
2.58
2.53
2.21
2.18
2.48
2.16
2.12
Upflow
non-ducted
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
<65,000 Btu/h .........................................
≥65,000 Btu/h and <240,000 Btu/h ........
≥240,000 Btu/h and <760,000 Btu/h ......
Horizontal
flow
2.16
2.04
1.89
2.09
1.99
1.81
2.43
2.32
2.20
2.35
2.24
2.12
2.08
1.90
1.81
2.00
1.82
1.73
2.65
2.55
2.47
2.65
2.55
2.47
2.79
2.68
2.60
2.71
2.60
2.54
2.48
2.18
2.18
2.44
2.10
2.10
TABLE 14 TO PARAGRAPH (f)(2)—MINIMUM EFFICIENCY STANDARDS FOR CEILING-MOUNTED COMPUTER ROOM AIR
CONDITIONERS
Equipment type
Net sensible cooling capacity
Minimum NSenCOP
efficiency
Ducted
Air-Cooled with Free Air Discharge Condenser ...................................
lotter on DSK11XQN23PROD with RULES3
Air-Cooled with Free Air Discharge Condenser and Fluid Economizer
Air-Cooled with Ducted Condenser ......................................................
Air-Cooled with Fluid Economizer and Ducted Condenser .................
Water-Cooled .......................................................................................
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<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
Fmt 4701
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E:\FR\FM\20MYR3.SGM
20MYR3
2.05
2.02
1.92
2.01
1.97
1.87
1.86
1.83
1.73
1.82
1.78
1.68
2.38
2.28
Non-ducted
2.08
2.05
1.94
2.04
2
1.89
1.89
1.86
1.75
1.85
1.81
1.7
2.41
2.31
44140
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TABLE 14 TO PARAGRAPH (f)(2)—MINIMUM EFFICIENCY STANDARDS FOR CEILING-MOUNTED COMPUTER ROOM AIR
CONDITIONERS—Continued
Equipment type
Minimum NSenCOP
efficiency
Net sensible cooling capacity
Ducted
Water-Cooled with Fluid Economizer ...................................................
Glycol-Cooled .......................................................................................
Glycol-Cooled with Fluid Economizer ..................................................
(g)(1) Each variable refrigerant flow
air conditioner or heat pump
manufactured on or after the
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
<29,000 Btu/h ...............................................
≥29,000 Btu/h and <65,000 Btu/h ................
≥65,000 Btu/h and <760,000 Btu/h ..............
compliance date listed in table 15 to this
paragraph (g)(1) and prior to January 1,
2024, must meet the applicable
Non-ducted
2.18
2.33
2.23
2.13
1.97
1.93
1.78
1.92
1.88
1.73
2.2
2.36
2.26
2.16
2
1.98
1.81
1.95
1.93
1.76
minimum energy efficiency standard
level(s) set forth in this paragraph (g)(1).
TABLE 15 TO PARAGRAPH (g)(1)—MINIMUM EFFICIENCY STANDARDS FOR VARIABLE REFRIGERANT FLOW MULTI-SPLIT AIR
CONDITIONERS AND HEAT PUMPS
Compliance date:
equipment
manufactured
on and after . . .
Equipment type
Cooling
capacity
Heating type 1
Efficiency level
VRF Multi-Split Air Conditioners (Air-Cooled) .......
≥65,000 Btu/h
and <135,000
Btu/h.
No Heating or Electric Resistance Heating .........
11.2 EER ...................
January 1, 2010.
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
11.0 EER ...................
11.0 EER ...................
January 1, 2010.
January 1, 2010.
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
10.8 EER ...................
10.0 EER ...................
January 1, 2010.
January 1, 2010.
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
9.8 EER .....................
11.0 EER, 3.3 COP ...
January 1, 2010.
January 1, 2010.
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
10.8 EER, 3.3 COP ...
10.6 EER, 3.2 COP ...
January 1, 2010.
January 1, 2010.
All Other Types of Heating ..................................
No Heating or Electric Resistance Heating .........
10.4 EER, 3.2 COP ...
9.5 EER, 3.2 COP .....
January 1, 2010.
January 1, 2010.
All Other Types of Heating ..................................
Without Heat Recovery ........................................
All .........................................................................
9.3 EER, 3.2 COP .....
12.0 EER, ..................
4.2 COP .....................
11.8 EER ...................
4.2 COP .....................
12.0 EER, 4.2 COP ...
January
October
October
October
October
October
All .........................................................................
12.0 EER, 4.2 COP ...
October 29, 2003.
Without Heat Recovery ........................................
10.0 EER, 3.9 COP ...
October 29, 2013.
With Heat Recovery .............................................
9.8 EER, 3.9 COP .....
October 29, 2013.
≥135,000 Btu/h
and <240,000
Btu/h.
≥240,000 Btu/h
and <760,000
Btu/h.
VRF Multi-Split Heat Pumps (Air-Cooled) .............
≥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.
VRF Multi-Split Heat Pumps (Water-Source) ........
<17,000 Btu/h ..
With Heat Recovery .............................................
≥17,000 Btu/h
and <65,000
Btu/h.
≥65,000 Btu/h
and <135,000
Btu/h.
≥135,000 Btu/h
and <760,000
Btu/h.
1, 2010.
29, 2012.
29, 2003.
29, 2012.
29, 2003.
29, 2003.
1 VRF
lotter on DSK11XQN23PROD with RULES3
multi-split heat pumps (air-cooled) with heat recovery fall under the category of ‘‘All Other Types of Heating’’ unless they also have electric resistance heating, in which case it falls under the category for ‘‘No Heating or Electric Resistance Heating.’’
(2) Each variable refrigerant flow air
conditioner or heat pump (except aircooled systems with cooling capacity
VerDate Sep<11>2014
20:25 May 17, 2024
Jkt 262001
less than 65,000 Btu/h) manufactured
on or after January 1, 2024, must meet
the applicable minimum energy
PO 00000
Frm 00090
Fmt 4701
Sfmt 4700
efficiency standard level(s) set forth in
this paragraph (g)(2).
E:\FR\FM\20MYR3.SGM
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44141
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
TABLE 16 TO PARAGRAPH (g)(2)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR VARIABLE REFRIGERANT FLOW MULTISPLIT AIR CONDITIONERS AND HEAT PUMPS
Equipment type
Size category
Heating type
VRF Multi-Split Air Conditioners (Air-Cooled)
≥65,000 and <135,000 Btu/h ........................
≥135,000 and <240,000 Btu/h ......................
≥240,000 Btu/h and <760,000 Btu/h ............
≥65,000 and <135,000 Btu/h ........................
All ..................................................................
All ..................................................................
All ..................................................................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
Heat Pump without Heat Recovery ..............
Heat Pump with Heat Recovery ...................
VRF Multi-Split Heat Pumps (Air-Cooled) .....
≥135,000 and <240,000 Btu/h ......................
≥240,000 Btu/h and <760,000 Btu/h ............
VRF Multi-Split Heat Pumps (Water-Source)
<65,000 Btu/h ...............................................
≥65,000 and <135,000 Btu/h ........................
≥135,000 and <240,000 Btu/h ......................
≥240,000 Btu/h and <760,000 Btu/h ............
(h) Each direct expansion-dedicated
outdoor air system manufactured on or
after the compliance date listed in table
17 to this paragraph (h) must meet the
applicable minimum energy efficiency
Minimum efficiency
15.5
14.9
13.9
14.6
14.4
13.9
13.7
12.7
12.5
16.0
15.8
16.0
15.8
14.0
13.8
12.0
11.8
IEER.
IEER.
IEER.
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
IEER,
3.3
3.3
3.2
3.2
3.2
3.2
4.3
4.3
4.3
4.3
4.0
4.0
3.9
3.9
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
COP.
standard level(s) set forth in this
paragraph (h).
TABLE 17 TO PARAGRAPH (h)—MINIMUM EFFICIENCY STANDARDS FOR DIRECT EXPANSION-DEDICATED OUTDOOR AIR
SYSTEMS
Equipment
category
Direct expansion-dedicated
outdoor air systems.
Compliance
date: equipment
manufactured
starting on . . .
Subcategory
Efficiency level
(AC)—Air-cooled without ventilation energy recovery systems.
(AC w/VERS)—Air-cooled with ventilation energy recovery
systems.
(ASHP)—Air-source heat pumps without ventilation energy
recovery systems.
(ASHP w/VERS)—Air-source heat pumps with ventilation
energy recovery systems.
(WC)—Water-cooled without ventilation energy recovery
systems.
(WC w/VERS)—Water-cooled with ventilation energy recovery systems.
(WSHP)—Water-source heat pumps without ventilation energy recovery systems.
(WSHP w/VERS)—Water-source heat pumps with ventilation energy recovery systems.
ISMRE2 = 3.8 ........................
May 1, 2024.
ISMRE2 = 5.0 ........................
May 1, 2024.
ISMRE2 = 3.8 ........................
ISCOP2 = 2.05
ISMRE2 = 5.0 ........................
ISCOP2 = 3.20
ISMRE2 = 4.7 ........................
May 1, 2024.
ISMRE2 = 5.1 ........................
May 1, 2024.
ISMRE2 = 3.8 ........................
ISCOP2 = 2.13
ISMRE2 = 4.6 ........................
ISCOP2 = 4.04
May 1, 2024.
(i) Air-cooled, three-phase,
commercial package air conditioning
and heating equipment with a cooling
capacity of less than 65,000 Btu/h and
air-cooled, three-phase variable
refrigerant flow multi-split air
conditioning and heating equipment
with a cooling capacity of less than
65,000 Btu/h manufactured on or after
the compliance date listed in tables 18
May 1, 2024.
May 1, 2024.
May 1, 2024.
and 19 to this paragraph (i) must meet
the applicable minimum energy
efficiency standard level(s) set forth in
this paragraph (i).
TABLE 18 TO PARAGRAPH (i)—MINIMUM EFFICIENCY STANDARDS FOR AIR-COOLED, THREE-PHASE, COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/h AND
AIR-COOLED, THREE-PHASE, SMALL VARIABLE REFRIGERANT FLOW MULTI-SPLIT AIR CONDITIONING AND HEATING
EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/h
Cooling
capacity
Subcategory
Air Conditioning Equipment ...
Air Conditioning Equipment ...
Air Conditioning and Heating
<65,000 Btu/h
<65,000 Btu/h
<65,000 Btu/h
Split-System ..............................................................
Single-Package .........................................................
Split-System ..............................................................
Air Conditioning and Heating
<65,000 Btu/h
Single-Package .........................................................
................................................
<65,000 Btu/h
...................................................................................
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Commercial Package
Commercial Package
Commercial Package
Equipment.
Commercial Package
Equipment.
VRF Air Conditioners
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Minimum efficiency
13.0 SEER
14.0 SEER
14.0 SEER
8.2 HSPF
14.0 SEER
8.0 HSPF
13.0 SEER
20MYR3
Compliance date:
equipment
manufactured
starting on . . .
...........
...........
...........
June 16, 2008.1
January 1, 2017.1
January 1, 2017.1
...........
January 1, 2017.1
...........
June 16, 2008.1
44142
Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Rules and Regulations
TABLE 18 TO PARAGRAPH (i)—MINIMUM EFFICIENCY STANDARDS FOR AIR-COOLED, THREE-PHASE, COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/h AND
AIR-COOLED, THREE-PHASE, SMALL VARIABLE REFRIGERANT FLOW MULTI-SPLIT AIR CONDITIONING AND HEATING
EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/h—Continued
Equipment type
Cooling
capacity
Subcategory
Minimum efficiency
VRF Heat Pumps ......................................................
<65,000 Btu/h
...................................................................................
13.0 SEER ...........
7.7 HSPF
Compliance date:
equipment
manufactured
starting on . . .
June 16, 2008.1
1 And manufactured before January 1, 2025. For equipment manufactured on or after January 1, 2025, see table 19 to this paragraph (i) for updated efficiency
standards.
TABLE 19 TO PARAGRAPH (i)—UPDATED MINIMUM EFFICIENCY STANDARDS FOR AIR-COOLED, THREE-PHASE, COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/
h AND AIR-COOLED, THREE-PHASE, SMALL VARIABLE REFRIGERANT FLOW MULTI-SPLIT AIR CONDITIONING AND
HEATING EQUIPMENT WITH A COOLING CAPACITY OF LESS THAN 65,000 BTU/h
Equipment type
Cooling
capacity
Subcategory
Commercial Package Air Conditioning Equipment ...
Commercial Package Air Conditioning Equipment ...
Commercial Package Air Conditioning and Heating
Equipment.
Commercial Package Air Conditioning and Heating
Equipment.
Space-Constrained Commercial Package Air Conditioning Equipment.
Space-Constrained Commercial Package Air Conditioning Equipment.
Space-Constrained Commercial Package Air Conditioning and Heating Equipment.
Space-Constrained Commercial Package Air Conditioning and Heating Equipment.
Small-Duct, High-Velocity Commercial Package Air
Conditioning.
Small-Duct, High-Velocity Commercial Package Air
Conditioning and Heating Equipment.
VRF Air Conditioners ................................................
VRF Heat Pumps ......................................................
<65,000 Btu/h
<65,000 Btu/h
<65,000 Btu/h
Split-System ..............................................................
Single-Package .........................................................
Split-System ..............................................................
<65,000 Btu/h
Single-Package .........................................................
≤30,000 Btu/h
Split-System ..............................................................
13.4 SEER2
13.4 SEER2
14.3 SEER2
7.5 HSPF2
13.4 SEER2
6.7 HSPF2
12.7 SEER2
≤30,000 Btu/h
Minimum efficiency
.........
.........
.........
January 1, 2025.
January 1, 2025.
January 1, 2025.
.........
January 1, 2025.
.........
January 1, 2025.
Single-Package .........................................................
13.9 SEER2 .........
January 1, 2025.
≤30,000 Btu/h
Split-System ..............................................................
January 1, 2025.
≤30,000 Btu/h
Single-Package .........................................................
<65,000 Btu/h
Split-System ..............................................................
13.9 SEER2 .........
7.0 HSPF2
13.9 SEER2 .........
6.7 HSPF2
13.0 SEER2 .........
<65,000 Btu/h
Split-System ..............................................................
<65,000 Btu/h
<65,000 Btu/h
...................................................................................
...................................................................................
14.0 SEER2 .........
6.9 HSPF2
13.4 SEER2 .........
13.4 SEER2 .........
7.5 HSPF2
[FR Doc. 2024–08546 Filed 5–17–24; 8:45 am]
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manufactured
starting on . . .
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January 1, 2025.
January 1, 2025.
January 1, 2025.
January 1, 2025.
January 1, 2025.
]]>Agencies
[Federal Register Volume 89, Number 98 (Monday, May 20, 2024)]
[Rules and Regulations]
[Pages 44052-44142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08546]
[[Page 44051]]
Vol. 89
Monday,
No. 98
May 20, 2024
Part III
Department of Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for Air-
Cooled Commercial Package Air Conditioners and Heat Pumps; Final Rule
Federal Register / Vol. 89 , No. 98 / Monday, May 20, 2024 / Rules
and Regulations
[[Page 44052]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
10 CFR Part 431
[EERE-2022-BT-STD-0015]
RIN 1904-AF34
Energy Conservation Program: Energy Conservation Standards for
Air-Cooled Commercial Package Air Conditioners and Heat Pumps
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including air-cooled
commercial package air conditioners and heat pumps with a rated cooling
capacity greater than or equal to 65,000 Btu/h. In this direct final
rule, DOE is adopting amended energy conservation standards, based on
clear and convincing evidence, for air-cooled commercial package air
conditioners and heat pumps with a rated cooling capacity greater than
or equal to 65,000 Btu/h, which it has determined satisfy the relevant
statutory criteria.
DATES: The effective date of this rule is September 17, 2024, unless
adverse comment is received by September 9, 2024. If adverse comments
are received that DOE determines may provide a reasonable basis for
withdrawal of the direct final rule, a timely withdrawal of this rule
will be published in the Federal Register. If no such adverse comments
are received, compliance with the amended standards established for
air-cooled commercial package air conditioners and heat pumps with a
rated cooling capacity greater than or equal to 65,000 Btu/h in this
direct final rule is required on and after January 1, 2029.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at www.regulations.gov under docket
number EERE-2022-BT-STD-0015. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2022-BT-STD-0015, by any of the
following methods:
Email: [email protected]. Include the docket
number EERE-2022-BT-STD-0015 in the subject line of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. If possible,
please submit all items on a compact disc (``CD''), in which case it is
not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted.
Docket: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at www.regulations.gov. All documents in the docket are listed
in the www.regulations.gov index. However, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2022-BT-STD-0015. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.
FOR FURTHER INFORMATION CONTACT:
Mr. Lucas Adin, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-5904. Email: [email protected].
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-4798. Email: [email protected].
For further information on how to submit a comment or review other
public comments and the docket, contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Direct Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for ACUACs and ACUHPs
3. 2022-2023 ASRAC ACUAC/HP Working Group Recommended Standard
Levels
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure and Metrics
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared To Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Equipment Classes
2. Market Post-2023
3. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Levels in Terms of Existing Metrics
a. Baseline Efficiency
b. Higher Efficiency Levels
2. Efficiency Levels in Terms of New Metrics
a. IVEC
b. IVHE
3. Energy Modeling
4. Impact of Low-GWP Refrigerants
5. Cost Analysis
a. MPC Estimates
b. MSP Estimates, Manufacturer Markup, and Shipping Costs
6. Cost-Efficiency Results
D. Markups Analysis
1. Distribution Channels
2. Markups and Sales Tax
E. Energy Use Analysis
1. System-Level Calculations
2. Generalized Building Sample
3. Energy Use Adjustment Factors
4. Comments
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
[[Page 44053]]
G. Shipments Analysis
1. New Shipments
2. Replacement Shipments
3. Stock Calculation
4. Comments
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Capital and Product Conversion Costs
d. Manufacturer Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon Dioxide
b. Social Cost of Methane and Nitrous Oxide
c. Sensitivity Analysis Using EPA's New SC-GHG Estimates
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for ACUACs and ACUHPs
Standards
2. Annualized Benefits and Costs of the Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317, as codified) Title III, Part C \2\ of EPCA
established the Energy Conservation Program for Certain Industrial
Equipment. (42 U.S.C. 6311-6317) This covered equipment includes small,
large, and very large commercial package air conditioning and heating
equipment. (42 U.S.C. 6311(1)(B)-(D)) Such equipment includes as
equipment categories air-cooled commercial unitary air conditioners
with a rated cooling capacity greater than or equal to 65,000 Btu/h
(``ACUACs'') and air-cooled commercial unitary heat pumps with a rated
cooling capacity greater than or equal to 65,000 Btu/h (``ACUHPs''),
which are the subject of this rulemaking.\3\ The current energy
conservation standards are found in the Code of Federal Regulations
(``CFR'') at 10 CFR 431.97(b).
---------------------------------------------------------------------------
\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part C was re-designated Part A-1.
\3\ While ACUACs and ACUHPs with rated cooling capacity less
than 65,000 Btu/h are included in the broader category of commercial
unitary air conditioners and heat pumps (``CUACs and CUHPs''), they
are not addressed in this direct final rule. The standards for
ACUACs and ACUHPs with rated cooling capacity less than 65,000 Btu/h
have been addressed in a separate rulemaking (see Docket No. EERE-
2022-BT-STD-0008). Accordingly, all references within this direct
final rule to ACUACs and ACUHPs exclude equipment with rated cooling
capacity less than 65,000 Btu/h.
---------------------------------------------------------------------------
In accordance with the authority provided by 42 U.S.C. 6295(p)(4)
and 42 U.S.C. 6316(b)(1), DOE is issuing this direct final rule
amending the energy conservation standards for ACUACs and ACUHPs.\4\
The amended standards levels outlined in this document reflect the
culmination of a negotiated rulemaking that included the following
notices and stakeholder comments thereon: May 2020 energy conservation
standards request for information (``May 2020 ECS RFI'') (85 FR 27941
(May 12, 2020); May 2022 test procedure (``TP'')/ECS RFI (87 FR 31743
(May 25, 2022)); and the 2022 Appliance Standards and Rulemaking
Federal Advisory Committee (``ASRAC'') commercial unitary air
conditioners and heat pumps working group negotiations, hereinafter
referred to as ``the 2023 ECS Negotiations'' (87 FR 45703 (July 29,
2022). Participants in the 2023 ECS Negotiations included stakeholders
representing manufacturers, energy-efficiency and environmental
advocates, States, and electric utility companies. See section II.B.2
of this document for a detailed history of the current rulemaking.
---------------------------------------------------------------------------
\4\ See 42 U.S.C. 6316(b) (applying 42 U.S.C. 6295(p)(4)) to
energy conservation standard rulemakings involving a variety of
industrial equipment, including ACUACs and ACUHPs.
---------------------------------------------------------------------------
The consensus reached by the ACUAC/HP ASRAC Working Group
(hereinafter referred to as ``the ACUAC/HP Working Group'') on amended
energy conservation standards (``ECS'') is outlined in the ASRAC
Working Group Term Sheet (hereinafter referred to as ``the ACUAC/HP
Working Group ECS Term Sheet''). (ASRAC Working Group Term Sheet,
Docket No. EERE-2022-BT-STD-0015, No. 87) In accordance with the direct
final rule provisions at 42 U.S.C. 6295(p)(4), DOE has determined that
the recommendations contained in the ACUAC/HP Working Group ECS Term
Sheet are compliant with 42 U.S.C. 6313(a)(6)(B). As required by EPCA,
DOE is also simultaneously publishing a notice of proposed rulemaking
(``NOPR'') that contains identical standards to those adopted in this
direct final rule. Consistent with the statute, DOE is providing a 110-
day public comment period on the direct final rule. (42 U.S.C.
6295(p)(4)(B); 42 U.S.C. 6316(b)(1))) If DOE determines that any
adverse comments received provide a reasonable basis for withdrawal of
the direct final rule under 42 U.S.C. 6313(a)(6)(B) or any other
applicable law, DOE will withdraw the direct final rule and continue
the rulemaking under the NOPR. (42 U.S.C. 6295(p)(4)(C); 42 U.S.C.
6316(b)(1)) See section II.A of this document for more details on DOE's
statutory authority.
The amended standards that DOE is adopting in this direct final
rule are the efficiency levels recommended in the ACUAC/HP Working
Group ECS Term Sheet (shown in Table I.1) as measured according to
DOE's amended test procedure for commercial unitary air conditioners
and heat pumps codified at title 10 of the Code of Federal Regulations
(``CFR''), part 431, subpart F, appendix A1 (``appendix A1'').
[[Page 44054]]
The amended standards recommended in the Joint Agreement are
represented as trial standard level (``TSL'') 3 in this document
(hereinafter the ``Recommended TSL'') and are described in section V.A
of this document. These standards apply to all equipment listed in
Table I.1 and manufactured in, or imported into the United States
starting on January 1, 2029.
[GRAPHIC] [TIFF OMITTED] TR20MY24.070
A. Benefits and Costs to Consumers
Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of ACUACs and ACUHPs, as measured by
the average life-cycle cost (``LCC'') savings and the simple payback
period (``PBP'').\5\ The average LCC savings are positive for all
equipment classes, and the PBP is less than the average lifetime of the
equipment, which is estimated to be 21-30 years, depending on equipment
class (see sections IV.F and V.B.1 of this document).
---------------------------------------------------------------------------
\5\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.9 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline equipment (see section IV.C of this document).
[GRAPHIC] [TIFF OMITTED] TR20MY24.071
DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the reference year through
the end of the analysis period (2024-2058). Using a real discount rate
of 5.9 percent, DOE estimates that the INPV for manufacturers of ACUACs
and ACUHPs in the case without amended standards is $2,653.0 million in
2022$. Under the adopted standards, DOE estimates the change in INPV to
range from -7.3. percent to -3.0 percent, which is approximately -
$193.9 million to -$79.5 million. In order to bring this equipment into
compliance with amended standards, it is estimated that industry will
incur total conversion costs of $288.0 million.
DOE's analysis of the impacts of the adopted standards on
manufacturers is
[[Page 44055]]
described in sections IV.J and V.B.2 of this document.
C. National Benefits and Costs 6
---------------------------------------------------------------------------
\6\ All monetary values in this document are expressed in 2022
dollars and, where appropriate, are discounted to 2022 unless
explicitly stated otherwise.
---------------------------------------------------------------------------
DOE's analyses indicate that the adopted energy conservation
standards for ACUACs and ACUHPs would save a significant amount of
energy. Relative to the case without amended standards, the lifetime
energy savings for ACUACs and ACUHPs purchased in the 30-year period
that begins in the anticipated year of compliance with the amended
standards (2029-2058), amount to 5.5 quadrillion British thermal units
(``Btu''), or quads.\7\ This represents a savings of 10.0 percent
relative to the energy use of this equipment in the case without
amended standards (referred to as the ``no-new-standards case'').
---------------------------------------------------------------------------
\7\ The quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings includes the energy consumed in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.2 of this document.
---------------------------------------------------------------------------
The cumulative net present value (``NPV'') of total consumer
benefits of the standards for ACUACs and ACUHPs ranges from $4.39
billion (at a 7-percent discount rate) to $15.30 billion (at a 3-
percent discount rate). This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased equipment
and installation costs for ACUACs and ACUHPs purchased in 2029-2058.
In addition, the adopted standards for ACUACs and ACUHPs are
projected to yield significant environmental benefits. DOE estimates
that the adopted standards will result in cumulative emission
reductions (over the same period as for energy savings) of 108.7
million metric tons (``Mt'') \8\ of carbon dioxide
(``CO2''), 25.3 thousand tons of sulfur dioxide
(``SO2''), 185.1 thousand tons of nitrogen oxides
(``NOX''), 845.6 thousand tons of methane
(``CH4''), 0.8 thousand tons of nitrous oxide
(``N2O''), and 0.2 tons of mercury (``Hg'').\9\ The
estimated cumulative reduction in CO2 emissions through 2030
amounts to 0.32 Mt, which is equivalent to the emissions resulting from
the annual electricity use of more than 0.23 million homes.
---------------------------------------------------------------------------
\8\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\9\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2023 (``AEO 2023''). AEO 2023 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the Inflation Reduction Act. See section IV.K of this
document for further discussion of AEO 2023 assumptions that affect
air pollutant emissions.
---------------------------------------------------------------------------
DOE estimates the value of climate benefits from a reduction in
greenhouse gases (``GHG'') using four different estimates of the social
cost of CO2 (``SC-CO2''), the social cost of
methane (``SC-CH4''), and the social cost of nitrous oxide
(``SC-N2O''). Together these represent the social cost of
GHG (``SC-GHG''). DOE used interim SC-GHG values (in terms of benefit
per ton of GHG avoided) developed by an Interagency Working Group on
the Social Cost of Greenhouse Gases (``IWG'').\10\ The derivation of
these values is discussed in section IV.L of this document. For
presentational purposes, the climate benefits associated with the
average SC-GHG at a 3-percent discount rate are estimated to be $4.9
billion. DOE does not have a single central SC-GHG point estimate, and
it emphasizes the value of considering the benefits calculated using
all four sets of SC-GHG estimates. DOE is presenting monetized benefits
of GHG emissions reductions in accordance with the applicable Executive
Orders, and DOE would reach the same conclusion presented in this rule
in the absence of the estimated benefits from reductions in GHG
emissions.
---------------------------------------------------------------------------
\10\ To monetize the benefits of reducing GHG emissions, this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG. (``February 2021 SC-GHG TSD'') (available at:
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf)
(last accessed Dec. 4, 2023).
---------------------------------------------------------------------------
DOE also estimated the monetized health benefits of SO2
and NOX emissions reductions associated with energy savings,
using benefit-per-ton estimates from the U.S. Environmental Protection
Agency,\11\ as discussed in section IV.L of this document. DOE
estimates the present value of the health benefits would be $3.0
billion using a 7-percent discount rate, and $8.8 billion using a 3-
percent discount rate.\12\ DOE is currently only monetizing health
benefits from changes in ambient fine particulate matter
(``PM2.5'') concentrations from two precursors
(SO2 and NOX), and from changes in ambient ozone
from one precursor (for NOX), but will continue to assess
the ability to monetize other effects such as health benefits from
reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------
\11\ U.S. EPA, Estimating the Benefit per Ton of Reducing
Directly Emitted PM2.5, PM2.5 Precursors and
Ozone Precursors from 21 Sectors (available at: www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors) (last
accessed Dec. 4, 2023).
\12\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order (``E.O.'') 12866.
---------------------------------------------------------------------------
Table I.3 summarizes the monetized benefits and costs expected to
result from the amended standards for ACUACs and ACUHPs. There are
other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.
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The benefits and costs of the considered standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are: (1) the reduced consumer operating
costs, minus (2) the increase in equipment purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\13\
---------------------------------------------------------------------------
\13\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2024, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2030), and then discounted the present value from each year
to 2024. Using the present value, DOE then calculated the fixed
annual payment over a 30-year period, starting in the compliance
year, that yields the same present value.
---------------------------------------------------------------------------
The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered equipment and are measured for the lifetime of ACUACs and
ACUHPs shipped in 2029-2058. The health benefits associated with
reduced emissions achieved as a result of the adopted standards are
also calculated based on the lifetime of ACUACs and ACUHPs shipped in
2029-2058. Total benefits for both the 3-percent and 7-percent cases
are presented using the average GHG social costs with 3-percent
discount rate.\14\ Estimates of SC-GHG values are presented for all
four discount rates in section V.B of this document.
---------------------------------------------------------------------------
\14\ As discussed in section IV.L.1 of this document, DOE agrees
with the IWG that using consumption-based discount rates (e.g., 3
percent) is appropriate when discounting the value of climate
impacts. Combining climate effects discounted at an appropriate
consumption-based discount rate with other costs and benefits
discounted at a capital-based rate (e.g., 7 percent) is reasonable
because of the different nature of the types of benefits being
measured.
---------------------------------------------------------------------------
Table I.4 presents the total estimated monetized benefits and costs
associated with the adopted standard, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the adopted standards is $493.2 million per year in
increased equipment costs, while the estimated annual benefits are
$1,371.6 million in reduced equipment operating costs, $279.2 million
in climate benefits, and $507.9 million in health benefits. In this
case, the net benefit would amount to $1.7 billion per year.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOx and SO2 emissions, and the
3-percent discount rate case for climate benefits from reduced GHG
emissions, the estimated cost of the standards adopted in this rule is
$481.3 million per year in increased equipment costs, while the
estimated annual benefits are $944.7 million in reduced equipment
operating costs, $279.2 million in climate benefits, and $317.2 million
in health benefits. In this case, the net benefit amounts to $1.1
billion per year.
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[[Page 44059]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.075
BILLING CODE 6450-01-C
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.
D. Conclusion
DOE has determined that the ACUAC/ACUHP Working Group statement
containing recommendations with respect to energy conservation
standards for ACUACs and ACUHPs was submitted jointly by interested
persons that are fairly representative of relevant points of view, in
accordance with 42 U.S.C. 6295(p)(4)(A).\15\ After considering the
analysis and weighing the benefits and burdens, DOE has determined that
the recommended standards are in accordance with 42 U.S.C.
6313(a)(6)(B), which contains criteria for adopting a uniform national
standard more stringent than the levels contained in the American
Society of Heating, Refrigerating, and Air-Conditioning Engineers
(``ASHRAE'') Standard 90.1, as amended,\16\ for the equipment
considered in this document. Specifically, the Secretary has
determined, supported by clear and convincing evidence, that the
adoption of the recommended standards would result in the significant
conservation of energy and is technologically feasible and economically
justified. In determining whether the recommended standards are
economically justified, the Secretary has determined that the benefits
of the recommended standards exceed the burdens. Namely, the Secretary
has concluded that the recommended standards, when considering the
benefits of energy savings, positive NPV of consumer benefits, emission
reductions, the estimated monetary value of the emissions reductions,
and positive average LCC savings, would yield benefits outweighing the
negative impacts on some consumers and on manufacturers, including the
conversion costs that could result in a reduction in INPV for
manufacturers.
---------------------------------------------------------------------------
\15\ See 42 U.S.C. 6316(b) (applying 42 U.S.C. 6295(p)(4) to
energy conservation standard rulemakings involving a variety of
industrial equipment, including ACUACs and ACUHPs.
\16\ As discussed in section II.B.2, ASHRAE 90.1-2019 updated
the minimum efficiency levels for ACUACs and ACUHPs to align with
those adopted by DOE in the January 2016 Direct Final Rule--i.e.,
ASHRAE 90.1-2019 includes minimum efficiency levels that are aligned
with the current Federal energy conservation standards. The most
recent version of ASHRAE Standard 90.1, ASHRAE 90.1-2022, includes
the same minimum efficiency levels for ACUACs and ACUHPs as ASHRAE
90.1-2019.
---------------------------------------------------------------------------
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 emissions reduction benefits, and a
3-percent discount rate case for GHG social costs, the estimated cost
of the standards for ACUACs and ACUHPs is $481.3 million per year in
increased equipment costs, while the estimated annual benefits are
$944.7 million in reduced equipment operating costs, $279.2 million in
climate benefits, and $317.2 million in health benefits. The net
benefit amounts to $1.1 billion per year. DOE notes that the net
benefits are substantial even in the absence of climate benefits,\17\
and DOE would adopt the same standards in the absence of such benefits.
---------------------------------------------------------------------------
\17\ The information on climate benefits is provided in
compliance with Executive Order 12866.
---------------------------------------------------------------------------
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\18\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------
\18\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 5.5 quads (FFC), the equivalent of
the primary annual energy use of 59.1 million homes. In addition, they
are projected to reduce CO2 emissions by 108.7 Mt. Based on
these findings, DOE has determined the energy savings from the standard
levels adopted in this direct final rule are ``significant'' within the
meaning of 42 U.S.C. 6313(a)(6)(A)(ii)(II). A more detailed discussion
of the basis for these conclusions is contained in the remainder of
this document and the accompanying TSD.
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is
issuing this direct final rule amending the energy conservation
standards for ACUACs and ACUHPs. Consistent with this authority, DOE is
also publishing elsewhere in this issue of the Federal Register a NOPR
proposing standards that are identical to those contained in this
direct final rule. (See 42 U.S.C. 6295(p)(4)(A)(i); 42 U.S.C.
6316(b)(1))
[[Page 44060]]
II. Introduction
The following section briefly discusses the statutory authority
underlying this direct final rule, as well as some of the relevant
historical background related to the establishment of energy
conservation standards for ACUACs and ACUHPs.
A. Authority
EPCA, Public Law 94-163, as amended, authorizes DOE to regulate the
energy efficiency of certain consumer products and industrial
equipment. Title III, Part C of EPCA, added by Public Law 95-619, Title
IV, section 441(a) (42 U.S.C. 6311-6317, as codified), established the
Energy Conservation Program for Certain Industrial Equipment, which
sets forth a variety of provisions designed to improve energy
efficiency. This equipment includes ACUACs and ACUHPs, which are a
category of small, large, and very large commercial package air
conditioning and heating equipment and the subject of this rulemaking.
(42 U.S.C. 6311(1)(B)-(D)) EPCA prescribed initial standards for this
equipment. (42 U.S.C. 6313(a)(1)-(2))
Pursuant to EPCA, DOE must amend the energy conservation standards
for certain types of commercial and industrial equipment, including the
equipment at issue in this document, whenever ASHRAE amends the
standard levels or design requirements prescribed in ASHRAE Standard
90.1, ``Energy Standard for Buildings Except Low-Rise Residential
Buildings'' (``ASHRAE Standard 90.1''). DOE must adopt the amended
ASHRAE Standard 90.1 levels for these equipment (hereafter ``ASHRAE
equipment''), unless the Secretary of Energy (``the Secretary'')
determines by rule published in the Federal Register and supported by
clear and convincing evidence that adoption of a more-stringent uniform
national standard would result in significant additional conservation
of energy and is technologically feasible and economically justified.
(42 U.S.C. 6313(a)(6)(A)-(B))
In addition, EPCA contains a review requirement for this same
equipment (the six-year-lookback review), which requires DOE to
consider the need for amended standards every six years. To adopt more-
stringent standards under that provision, DOE must once again have
clear and convincing evidence to show that such standards would be
technologically feasible and economically justified and would save a
significant additional amount of energy. (42 U.S.C. 6313(a)(6)(C)); see
id. 6313(a)(6)(A)(ii)(II) & (a)(6)(B)(i))
In deciding whether a more-stringent standard is economically
justified, under either the provisions of 42 U.S.C. 6313(a)(6)(A) or 42
U.S.C. 6313(a)(6)(C), DOE must determine whether the benefits of the
standard exceed its burdens. DOE must make this determination after
receiving comments on the proposed standard, and by considering, to the
maximum extent practicable, the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of 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 standard;
(3) The total projected amount of energy savings likely to result
directly from the standard;
(4) Any lessening of the utility or the performance of the covered
equipment likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII))
The energy conservation program under EPCA, consists essentially of
four parts: (1) testing; (2) labeling; (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of the EPCA specifically include
definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C.
6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C.
6315), and the authority to require information and reports from
manufacturers (42 U.S.C. 6316; 42 U.S.C. 6296(a), (b) and (d)).
Federal energy efficiency requirements for covered equipment
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6316(a) and (b); 42 U.S.C. 6297) DOE may, however, grant waivers
of Federal preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. (42 U.S.C. 6316(b)(2)(D))
Under 42 U.S.C. 6314, EPCA sets forth the criteria and procedures
DOE is required to follow when prescribing or amending test procedures
for covered equipment. EPCA requires that any test procedure prescribed
or amended under this section must be reasonably designed to produce
test results which reflect energy efficiency, energy use, or estimated
annual operating cost of covered equipment during a representative
average use cycle and requires that the test procedure not be unduly
burdensome to conduct. (42 U.S.C. 6314(a)(2)) Manufacturers of covered
equipment must use the Federal test procedures as the basis for: (1)
certifying to DOE that their equipment complies with the applicable
energy conservation standards adopted pursuant to EPCA (42 U.S.C.
6316(b); 42 U.S.C. 6296), and (2) making representations about the
efficiency of that equipment (42 U.S.C. 6314(d)). Similarly, DOE uses
these test procedures to determine whether the equipment complies with
relevant standards promulgated under EPCA. The current DOE test
procedure for ACUACs and ACUHPs appear at title 10 of the Code of
Federal Regulations (``CFR''), part 431, subpart F, appendix A.
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6313(a)(6)(B)(iii)(I)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in 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)(II)(aa))
Finally, the Energy Independence and Security Act of 2007 (``EISA
2007''), Public Law 110-140, amended EPCA, in relevant part, to grant
DOE authority to issue a final rule (i.e., a ``direct final rule'' or
``DFR'') establishing an energy conservation standard upon receipt of a
statement submitted jointly by interested persons that are fairly
representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates),
as determined by the Secretary, that contains recommendations with
respect to an energy or water conservation standard that are in
accordance with the
[[Page 44061]]
provisions of 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as
applicable. (42 U.S.C. 6295(p)(4); 42 U.S.C. 6316(b)(1)) Pursuant to 42
U.S.C. 6295(p)(4), the Secretary must also determine whether a jointly
submitted recommendation for an energy or water conservation standard
satisfies 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable.
The direct final rule must be published simultaneously with a NOPR
that proposes an energy or water conservation standard that is
identical to the standard established in the direct final rule, and DOE
must provide a public comment period of at least 110 days on this
proposal. (42 U.S.C. 6295(p)(4)(A)-(B); 42 U.S.C. 6316(b)(1)) While DOE
typically provides a comment period of 60 days on proposed energy
conservation standards, for a NOPR accompanying a direct final rule,
DOE provides a comment period of the same length as the comment period
on the direct final rule--i.e. 110 days. Based on the comments received
during this period, the direct final rule will either become effective,
or DOE will withdraw it not later than 120 days after its issuance if:
(1) one or more adverse comments is received, and (2) DOE determines
that those comments, when viewed in light of the rulemaking record
related to the direct final rule, may provide a reasonable basis for
withdrawal of the direct final rule under 42 U.S.C. 6295(o), 42 U.S.C.
6313(a)(6)(B), or any other applicable law. (42 U.S.C. 6295(p)(4)(C);
42 U.S.C. 6316(b)(1)) Receipt of an alternative joint recommendation
may also trigger a DOE withdrawal of the direct final rule in the same
manner. (Id.) After withdrawing a direct final rule, DOE must proceed
with the notice of proposed rulemaking published at the same time as
the direct final rule and publish in the Federal Register the reasons
why the direct final rule was withdrawn. (Id.)
DOE has previously explained its interpretation of its direct final
rule authority. In a final rule amending the Department's ``Procedures,
Interpretations and Policies for Consideration of New or Revised Energy
Conservation Standards for Consumer Products'' at 10 CFR part 430,
subpart C, appendix A, DOE noted that it may issue standards
recommended by interested persons that are fairly representative of
relative points of view as a direct final rule when the recommended
standards are in accordance with 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable. 86 FR 70892, 70912 (Dec. 13, 2021). But
the direct final rule provision in EPCA does not impose additional
requirements applicable to other standards rulemakings, which is
consistent with the unique circumstances of rules issued as consensus
agreements under DOE's direct final rule authority. Id. DOE's
discretion remains bounded by its statutory mandate to adopt a standard
that results in significant conservation of energy and is
technologically feasible and economically justified--a requirement
found in 42 U.S.C. 6313(a)(6)(B). As such, DOE's review and analysis of
the Joint Agreement is limited to whether the recommended standards
satisfy the criteria in 42 U.S.C. 6313(a)(6)(B).
Additionally, DOE notes that the direct final rule authority in
EPCA is permissive. If DOE determines that recommended standards
satisfy the applicable criteria, the Department ``may issue a final
rule.'' (42 U.S.C. 6295(p)(4)(A)(i)) This discretion is particularly
relevant for ASHRAE equipment where the applicable statutory criteria
require that an amended standard be technologically feasible and
economically justified and result in significant conservation of
energy. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This is in contrast to the
applicable criteria for covered products and non-ASHRAE equipment,
where, in addition to requiring significant conservation of energy, an
amended standard must also represent the maximum improvement in energy
efficiency that is technologically feasible and economically justified.
Thus, there may be situations where the recommended standards for
ASHRAE equipment satisfy the criteria in 42 U.S.C. 6313(a)(6)(B), but
do not represent that maximum improvement in energy efficiency that is
technologically feasible and economically justified. In those
situations, DOE has discretion on whether to proceed with a direct
final rule or propose its own, more-stringent standard. In order to
inform that decision, DOE conducts its typical walk-down analysis when
evaluating all direct final rules, including those for ASHRAE
equipment. Under that approach, DOE starts from the most stringent
possible standard (``max-tech'') and ``walks-down'' through the TSLs
until arriving at the first TSL that meets all of the statutory
criteria.
B. Background
1. Current Standards
In a direct final rule published in the Federal Register on January
15, 2016 (``January 2016 Direct Final Rule''), DOE prescribed the
current energy conservation standards for ACUACs and ACUHPs
manufactured on and after January 1, 2023. 81 FR 2420. These standards
are set forth in DOE's regulations at 10 CFR 431.97(b) and are repeated
in Table II.1.
[[Page 44062]]
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2. History of Standards Rulemaking for ACUACs and ACUHPs
Since publication of the January 2016 Direct Final Rule, ASHRAE
published an updated version of ASHRAE Standard 90.1 (``ASHRAE 90.1-
2019''), which updated the minimum efficiency levels for ACUACs and
ACUHPs to align with those adopted by DOE in the January 2016 Direct
Final Rule (i.e., specifying two tiers of minimum levels for ACUACs and
ACUHPs, with a January 1, 2023 compliance date for the second tier).
ASHRAE published another version of ASHRAE Standard 90.1 in January
2023 (``ASHRAE 90.1-2022''), which includes the same minimum efficiency
levels for ACUACs and ACUHPs as those included in ASHRAE Standard 90.1-
2019.
On May 12, 2020, DOE began its six-year-lookback review with for
ACUACs and ACUHPs by publishing in the Federal Register the May 2020
ECS RFI.\19\ 85 FR 27941. The May 2020 ECS RFI sought information to
help DOE inform its decisions, consistent with its obligations under
EPCA. DOE received multiple comments from interested stakeholders in
response to the May 2020 ECS RFI, which prompted DOE to publish the May
2022 TP/ECS RFI in the Federal Register on May 25, 2022, to investigate
additional aspects of the ACUAC and ACUHP TP and standards. 87 FR
31743. In the latter document, DOE identified several issues that it
determined would benefit from further comment. DOE discussed these
topics (including any comments received in response to the May 2020 ECS
RFI that are related to these topics) in the May 2022 TP/ECS RFI. Once
again, DOE received a number of written comments from interested
parties related to standards for CUACs and CUHPs in response to the May
2020 ECS RFI and the May 2022 TP/ECS RFI. DOE considered these comments
in preparation of this direct final rule. Table II.2 and Table II.3
list the stakeholders whose comments were related to standards for
ACUACs and ACUHPs and have been considered in this rulemaking. Relevant
comments, and DOE's responses, are provided in the appropriate sections
of this document.
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\19\ The May 2020 ECS RFI also addressed commercial warm air
furnaces, a separate type of covered equipment which was
subsequently handled in a different rulemaking proceeding (see
Docket No. EERE-2019-BT-STD-0042 in www.regulations.gov).
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A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\20\
For comments received in response to the May 2020 ECS RFI and May 2022
TP/ECS RFI (which are contained within two different dockets \21\),
parenthetical references in this direct final rule include the full
docket number (rather than just the document number).
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\20\ The parenthetical reference provides a reference for
information located in the relevant docket for this rulemaking,
which is maintained at www.regulations.gov. The references are
arranged as follows: (commenter name, comment docket ID number, page
of that document).
\21\ Comments submitted in response to the May 2020 ECS RFI are
available in Docket No. EERE-2019-BT-STD-0042. Comments submitted in
response to the May 2022 TP/ECS RFI are available in Docket No.
EERE-2022-BT-STD-0015.
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On July 29, 2022, DOE published in the Federal Register a notice of
intent to establish a working group for commercial unitary air
conditioners and heat pumps to negotiate proposed test procedures and
amended energy conservation standards for this equipment (``July 2022
Notice of Intent''). 87 FR 45703. The ACUAC/HP Working Group was
established under ASRAC in accordance with the Federal Advisory
Committee Act (``FACA'') (5 U.S.C. App 2) and the Negotiated Rulemaking
Act (``NRA'') (5 U.S.C. 561-
[[Page 44064]]
570, Pub. L. 104-320). The purpose of the ACUAC/HP Working Group was to
discuss, and if possible, reach consensus on recommended amendments to
the test procedures and energy conservation standards for ACUACs and
ACUHPs. The ACUAC/HP Working Group consisted of 14 voting members,
including DOE. (See appendix A, Working Group Members, Document No. 65
in Docket No. EERE-2022-BT-STD-0015) On December 15, 2022, the ACUAC/HP
Working Group signed a Term Sheet (``ACUAC/HP Working Group TP Term
Sheet'') of recommendations regarding ACUAC and ACUHP test procedures,
including two new efficiency metrics: integrated ventilation,
economizing, and cooling (``IVEC'') and integrated ventilation and
heating efficiency (``IVHE''). (See Id.)
The ACUAC/HP Working Group met five times to discuss energy
conservation standards for ACUACs and ACUHPs. These meetings took place
on February 22-23, March 21-22, April 12-13, April 26-27, and May 1,
2023. As a result of these efforts, the ACUAC/HP Working Group
successfully reached consensus on recommended energy conservation
standards in terms of the new IVEC and IVHE metrics for CUACs and
CUHPs. On May 1, 2023, the ACUAC/HP Working Group signed the ACUAC/HP
Working Group ECS Term Sheet outlining its recommendations which ASRAC
approved on October 17, 2023. These recommendations are discussed
further in section II.B.3 of this direct final rule.\22\
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\22\ The ACUAC/HP Working Group ECS Term Sheet is available at
www.regulations.gov/document/EERE-2022-BT-STD-0015-0087.
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3. 2022-2023 ASRAC ACUAC/HP Working Group Recommended Standard Levels
This section summarizes the standard levels recommended in the Term
Sheet submitted by the ACUAC/HP Working Group for ACUAC/HP energy
conservation standards and the subsequent procedural steps taken by
DOE. Recommendation #1 of the ACUAC/HP Working Group ECS Term Sheet
recommends standard levels for ACUACs and ACUHPs with a recommended
compliance date of January 1, 2029. (ASRAC Term Sheet, No. 87 at p. 2)
These recommended standard levels are presented in Table II.4.
Recommendation #2 of the ACUAC/HP Working Group ECS Term Sheet
recommends revising existing certification requirements to support the
new metrics and standards presented in Table II.4, specifically
requesting that manufacturers be required to certify the following
information publicly to DOE for each basic model: (1) crankcase heat
wattage for each compressor stage, and (2) 5 [deg]F heating capacity
and COP, if applicable. DOE will address recommendation #2 regarding
certification in a separate rulemaking.
[GRAPHIC] [TIFF OMITTED] TR20MY24.079
After carefully considering the consensus recommendations for
amending the energy conservation standards for ACUACs and ACUHPs
submitted by the ACUAC/HP Working Group and adopted by ASRAC, DOE has
determined that these recommendations are in accordance with the
statutory requirements of 42 U.S.C. 6295(p)(4) and 42 U.S.C. 6316(b)(1)
for the issuance of a direct final rule. The following paragraphs
explain DOE's rationale in making this determination.
First, with respect to the requirement that recommended energy
conservation standards be submitted by interested persons that are
fairly representative of relevant points of view, DOE notes that the
ACUAC/HP Working Group ECS Term Sheet was signed and submitted by a
broad cross-section of interests, including the manufacturers who
produce the subject equipment. To satisfy this requirement, DOE has
generally found that the group submitting a joint statement must, where
appropriate, include larger concerns and small businesses in the
regulated industry/manufacturer community, energy advocates, energy
utilities, consumers, and States. However, the Department has explained
that it will be necessary to evaluate the meaning of ``fairly
representative'' on a case-by-case basis, subject to the circumstances
of a particular rulemaking, to determine whether additional parties
must be part of a joint statement beyond the required ``manufacturers
of covered products, States, and efficiency advocates'' specifically
called out by EPCA at 42 U.S.C. 6295(p)(4)(A). In this case, in
addition to manufacturers, the ACUAC/HP Working Group ECS Term Sheet
also included environmental and energy-efficiency advocacy
organizations, and electric utility companies. Although States were not
direct signatories to the ACUAC/HP Working Group ECS Term Sheet, the
ASRAC Committee approving
[[Page 44065]]
the ACUAC/HP Working Group's recommendations included at least two
members representing States--one representing the State of New York and
one representing the State of California. As a result, DOE has
determined that these recommendations were submitted by interested
persons who are fairly representative of relevant points of view on
this matter, including those specifically identified by Congress:
manufacturers of covered equipment, States, and efficiency advocates.
(42 U.S.C. 6295(p)(4)(A); 42 U.S.C. 6316(b)(1))
Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine
whether a jointly-submitted recommendation for an energy or water
conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable. In making this determination, DOE
conducted an analysis to evaluate whether the potential energy
conservation standards under consideration achieve significant energy
savings and are technologically feasible and economically justified.
The evaluation is similar to the comprehensive approach that DOE
typically conducts whenever it considers potential new or amended
energy conservation standards for a given type of product or equipment.
DOE applies the same principles to any consensus recommendations it may
receive to satisfy its statutory obligations. Upon review, the
Secretary determined that the ACUAC/HP Working Group ECS Term Sheet
comports with the standard-setting criteria set forth under 42 U.S.C.
6313(a)(6)(B). Accordingly, the consensus-recommended efficiency levels
were included as the recommended TSL for ACUACs and ACUHPs (see section
V.A of this document for description of all of the considered TSLs).
The details regarding how the consensus-recommended TSL complies with
the standard-setting criteria are discussed and demonstrated in the
relevant sections throughout this document.
In sum, the Secretary has determined that the relevant criteria
under 42 U.S.C. 6295(p)(4) and 42 U.S.C. 6316(b)(1) have been
satisfied, such that it is appropriate to adopt the consensus-
recommended amended energy conservation standards for ACUACs and ACUHPs
through this direct final rule based on the clear and convincing
evidence discussed throughout this final rule. Also, in accordance with
the provisions described in section II.A of this document, DOE is
simultaneously publishing a NOPR proposing that the identical standard
levels contained in this direct final rule be adopted.
III. General Discussion
A. General Comments
In response to the May 2020 ECS RFI, DOE received multiple comments
from stakeholders generally expressing support for DOE evaluating and
amending standards for ACUACs and ACUHPs. (ASAP, ACEEE, et al., EERE-
2019-BT-STD-0042-0023 at p. 1; CA IOUs EERE-2019-BT-STD-0042-0020 at p.
1; NEEA, EERE-2019-BT-STD-0042-0024 at p. 9; PGE, EERE-2019-BT-STD-
0042-0009, pp. 1-2) ASAP, ACEEE, et al. stated that very large energy
savings could result from amended standards for ACUACs and ACUHPs,
citing the max-tech efficiency levels analyzed in the January 2016
Direct Final Rule as well as the range of efficiencies in the current
market. (ASAP, ACEEE, et al., EERE-2019-BT-STD-0042-0023 at pp. 1-2)
PGE also asserted that standards for ACUACs should be substantially
higher than standards for ACUHPs to incentivize increased adoption of
ACUHPs by commercial consumers, particularly in dual season climates
where the commenter claimed that ACUHPs deliver higher efficiency,
reduce peak loads, and reduce greenhouse gas emissions. (PGE, EERE-
2019-BT-STD-0042-0009 at pp. 1-2)
In response to PGE's assertion that standards for ACUACs should be
substantially higher than standards for ACUHPs, DOE notes that at the
recommended TSL, the IVEC values are marginally higher for ACUACs with
all other types of heat than for ACUHPs, as mentioned in section
IV.C.2.a, and are unlikely on their own to incentivize increased
adoption of ACUHPs, as discussed in section IV.G.4. At this time, DOE
does not have evidence or information that would justify adopting
higher standards for ACUACs than ACUHPs by a larger margin than
recommended by the ACUAC/HP Working Group.
DOE also received comments in response to the May 2020 ECS RFI from
several other stakeholders generally expressing views that DOE should
not amend the existing energy conservation standards for ACUACs and
ACUHPs. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 3; Carrier, EERE-2019-
BT-STD-0042-0013 at pp. 8, 18-19; Lennox, EERE-2019-BT-STD-0042-0015 at
p. 1; Trane, EERE-2019-BT-STD-0042-0016 at p. 2) More specifically,
AHRI, Carrier, Lennox, and Trane argued that standards should not be
amended because of the burdens manufacturers already face, including
regulatory changes such as refrigerant regulations, new efficiency
metrics and standards for central air conditioners and heat pumps, and
pending test procedure and standard updates for variable refrigerant
flow equipment. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 2; Carrier,
EERE-2019-BT-STD-0042-0013 at pp. 18-19; Lennox, EERE-2019-BT-STD-0042-
0015 at pp. 3-4, 8; Trane, EERE-2019-BT-STD-0042-0016 at p. 2)
Commenters also asserted that the impacts associated with the 2023
standards could not be assessed at the time of submitting their
comments because the standards had yet to take effect, and therefore,
considering new standards prior to 2023 would be premature. (AHRI,
EERE-2019-BT-STD-0042-0014 at p. 3; Carrier, EERE-2019-BT-STD-0042-0013
at p. 8, Lennox, EERE-2019-BT-STD-0042-0015 at pp. 2-3; Trane, EERE-
2019-BT-STD-0042-0016 at p. 2) Lennox also asserted that future market
uncertainties are compounded by the COVID19 pandemic. (Lennox, EERE-
2019-BT-STD-0042-0015 at p. 2)
DOE acknowledges that at the time of the May 2020 ECS RFI,
compliance was not yet required for the second tier of energy
conservation standards adopted in the January 2016 Direct Final Rule,
which had a compliance date of January 1, 2023. However, the ACUAC/HP
Working Group meetings to negotiate recommended energy conservation
standard levels and the subsequent agreement outlined in the ACUAC/HP
Working Group ECS Term Sheet occurred after January 1, 2023. Further,
the analyses of amended energy conservation standards conducted by DOE
as part of the 2023 ECS Negotiations were based on the ACUAC/HP market
after the 2023 compliance date. DOE notes that despite the concerns
raised regarding cumulative regulatory burden and impacts to the market
due to the COVID 19 pandemic, Carrier, Lennox, and Trane (as members of
the ACUAC/HP Working Group) voted in favor of the recommended standard
levels. Additionally, AHRI subsequently supported efforts for a
negotiated rulemaking to amend standards in comments received in
response to the May 2022 TP/ECS RFI, demonstrating AHRI's position on
this issue changed. (AHRI, EERE-2022-BT-STD-0015-0008 at p. 1)
Therefore, DOE surmises that those commenters' original positions on
this topic changed since the time of the May 2020 ECS RFI.
In response to the May 2020 ECS RFI, AHRI asserted that among
ACUACs and ACUHPs, the only equipment category
[[Page 44066]]
for which DOE is statutorily required to review amended standards under
the six-year-lookback rulemaking is double-duct systems, based on the
fact that the 2023 standards adopted in the January 2016 Direct Final
Rule had not yet come into effect. (AHRI, EERE-2019-BT-STD-0042-0014 at
p. 3) DOE disagrees with AHRI's reading of the statute. The six-year-
lookback provision does not reference compliance dates. (See 42 U.S.C.
6313(a)(6)(C)(1)) The plain language of EPCA requires DOE to evaluate
amended standards for ACUACs and ACUHPs ``every 6 years'' regardless of
compliance dates of any amended standards from previous rulemakings.
(Id.) In this rulemaking, DOE has evaluated the potential for amended
standards for ACUACs and ACUHPs (except for double-duct systems, as
discussed in section III.B of this document) pursuant to its statutory
obligations.
In response to the May 2022 TP/ECS RFI, Lennox highlighted the
preparations manufacturers are undergoing to implement the 2023 energy
conservation standards, as well as the pending transition to lower
global warming potential (``GWP'') refrigerants in 2025. (Lennox, EERE-
2022-BT-STD-0015-0009 at p. 2) Lennox recommended that DOE exercise
caution with energy conservation standard amendments for ACUAC and
ACUHP equipment because manufacturers need time to assess the impacts
of an amended test procedure before DOE assesses amending energy
conservations standards. (Id.) Specifically, Lennox recommended a 180-
day period for manufacturers to assess the test procedure before the
DOE moves forward with energy conservation standards based on the
provisions of 10 CFR part 430, subpart C, appendix A. (Id. at pp. 5-6)
As discussed previously, DOE notes that at the time of the May 2022
TP/ECS RFI, compliance was not yet required with the second tier of
energy conservation standards adopted in the January 2016 Direct Final
Rule. However, the ACUAC/HP Working Group meetings and subsequent
ACUAC/HP Working Group ECS Term Sheet agreement occurred after
compliance became required with the most recent standards (January 1,
2023), and the analyses of amended energy conservation standards
conducted by DOE as part of the 2023 ECS Negotiations were based on the
ACUAC/HP market after the 2023 compliance date. DOE notes that after
the agreement on the ACUAC/HP Working Group TP Term Sheet, industry
members in the ACUAC/HP Working Group conducted simulations to
approximate where many models currently on the market would fall in
terms of the new IVEC and IVHE metrics. These simulations were shared
with a DOE contractor and were used in the 2023 ECS Negotiations. DOE
also notes that Lennox was a member of the ACUAC/HP Working Group and
agreed to the ACUAC/HP Working Group ECS Term Sheet; therefore, DOE
surmises that Lennox's original position on this topic changed since
the time of the May 2022 TP/ECS RFI.
B. Scope of Coverage
This direct final rule applies to ACUACs and ACUHPs with a rated
cooling capacity greater than or equal to 65,000 Btu/h (excluding
double-duct air conditioners and heat pumps), which is the scope of
equipment addressed in the 2023 ECS Negotiations.
In the May 2020 ECS RFI, DOE requested comment on several topics
related to double-duct systems. 85 FR 27941, 27943-27953 (May 12,
2020). DOE received comments regarding double-duct systems from
multiple stakeholders in response to the May 2020 ECS RFI. (Carrier,
EERE-2019-BT-STD-0042-0013, pp. 2, 8, 10; AHRI, EERE-2019-BT-STD-0042-
0014 at pp. 3-8, 11; UCA, EERE-2019-BT-STD-0042-0008, Attachment 2)
Double-duct systems are a sub-category of ACUACs and ACUHPs with a
separate definition (10 CFR 431.92), metrics, and efficiency
requirements (10 CFR 431.97).
As noted, the scope of proposed standards in the ACUAC/HP Working
Group ECS Term Sheet was determined through the 2023 ECS Negotiations
and excludes double-duct air conditioners and heat pumps. Therefore,
comments regarding energy conservation standards for double-duct
systems are outside the scope of consideration for this rulemaking.
Topics related to energy conservation standards for double-duct systems
will be addressed in a separate rulemaking process.
See section IV.A.1 of this document for discussion of the equipment
classes analyzed in this direct final rule.
C. Test Procedure and Metrics
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314)
Manufacturers of covered equipment must use these test procedures to
certify to DOE that their equipment complies with applicable energy
conservation standards (42 U.S.C. 6316(b)(1); 42 U.S.C. 6296) and when
making representations about the efficiency of their equipment (42
U.S.C. 6314(d)). Similarly, DOE uses these test procedures to determine
whether the equipment complies with the relevant standards promulgated
under EPCA. (42 U.S.C. 6314(d)) DOE's current energy conservation
standards are expressed in terms of IEER for the cooling efficiency of
ACUACs and ACUHPs, and in terms of COP for the heating efficiency of
ACUHPs. (See 10 CFR 431.97(b))
As previously mentioned, the ACUAC/HP Working Group met several
times and put forth the ACUAC/HP Working Group TP Term Sheet of
recommendations regarding ACUAC and ACUHP test procedures, including
new metrics IVEC and IVHE. DOE recently adopted the IVEC and IVHE
metrics in a final rule amending the test procedure for ACUACs and
ACUHPs.\23\ The newly adopted DOE test procedure for ACUACs and ACUHPs
appears at 10 CFR part 431, subpart F, appendix A1 (appendix A1). This
direct final rule adopts amended energy conservation standards for
ACUACs and ACUHPs denominated in terms of the new IVEC and IVHE
metrics.
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\23\ The final rule amending the test procedure can be found at
www.regulations.gov under docket number EERE-2023-BT-TP-0014.
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DOE notes that a change in metrics (i.e., from IEER to IVEC and
from COP to IVHE) necessitates an initial DOE determination that the
new requirement would not result in backsliding when compared to the
current standards. (See 42 U.S.C 6313(a)(6)(B)(iii)(I)) The translation
of the current standards to IVEC and IVHE baselines is discussed
further in section IV.C.2 of this document.
D. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially-available products or in working prototypes to be
technologically feasible. See generally 10 CFR 431.4; 10 CFR part 430,
subpart C, appendix A, sections 6(b)(3)(i) and 7(b)(1) (``appendix
A'').
After DOE has determined that particular technology options are
[[Page 44067]]
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; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies.
Section IV.B of this document discusses the results of the screening
analysis for ACUACs and ACUHPs, particularly the designs DOE
considered, those it screened out, and those that are the basis for the
standards considered in this rulemaking. For further details on the
screening analysis for this rulemaking, see chapter 4 of the direct
final rule technical support document (``TSD'').
2. Maximum Technologically Feasible Levels
When DOE adopts a new or amended standard for a type or class of
covered equipment, it determines 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 ACUACs and ACUHPs, using the
design parameters for the most efficient products available on the
market or in working prototypes. The max-tech levels that DOE
determined for this rulemaking are described in section IV.C of this
direct final rule and in chapter 5 of the direct final rule TSD.
E. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to ACUACs and ACUHPs purchased in the 30-year period that begins in
the year of compliance with the amended standards (2029-2058).\24\ The
savings are measured over the entire lifetime of the subject equipment
purchased in the 30-year analysis period. DOE quantified the energy
savings attributable to each TSL as the difference in energy
consumption between each standards case and the no-new-standards case.
The no-new-standards case represents a projection of energy consumption
that reflects how the market for equipment would likely evolve in the
absence of amended energy conservation standards.
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\24\ Each TSL is composed of specific efficiency levels for each
equipment class. The TSLs considered for this direct final rule are
described in section V.A of this document. DOE also presents a
sensitivity analysis that considers impacts for equipment shipped in
a nine-year period.
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DOE used its national impact analysis (``NIA'') computer models to
estimate national energy savings (``NES'') from potential amended
standards for ACUACs and ACUHPs. The NIA computer model (described in
section IV.H of this document) calculates energy savings in terms of
site energy, which is the energy directly consumed by equipment at the
locations where they are used. For electricity, DOE reports national
energy savings in terms of primary energy savings, which is the savings
in the energy that is used to generate and transmit the site
electricity. For natural gas, the primary energy savings are considered
to be equal to the site energy savings. DOE also calculates NES in
terms of FFC energy savings. The FFC metric includes the energy
consumed in extracting, processing, and transporting primary fuels
(i.e., coal, natural gas, petroleum fuels), and, thus, presents a more
complete picture of the impacts of energy conservation standards.\25\
DOE's approach is based on the calculation of an FFC multiplier for
each of the energy types used by covered products or equipment. For
more information on FFC energy savings, see section IV.H.2 of this
document.
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\25\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (August 18, 2011), as
amended at 77 FR 49701 (August 17, 2012).
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2. Significance of Savings
To adopt any new or amended standards for covered equipment more
stringent than those set forth in ASHRAE Standard 90.1 or the existing
Federal standard (as applicable in the context of the specific
rulemaking), DOE must have clear and convincing evidence that such
action would result in significant additional energy savings. (See 42
U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II)) \26\
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\26\ In setting a more-stringent standard for ASHRAE equipment,
DOE must have ``clear and convincing evidence'' that doing so
``would result in significant additional conservation of energy'' in
addition to being technologically feasible and economically
justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This language indicates
that Congress had intended for DOE to ensure that, in addition to
the savings from the ASHRAE standards, DOE's standards would yield
additional energy savings that are significant. In DOE's view, this
statutory provision shares the requirement with the statutory
provision applicable to covered products and non-ASHRAE equipment
that ``significant conservation of energy'' must be present (42
U.S.C. 6295(o)(3)(B))--and supported with ``clear and convincing
evidence''--to permit DOE to set a more-stringent requirement than
ASHRAE.
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The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking. For example,
some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
this equipment on the energy infrastructure can be more pronounced than
equipment with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis, taking into
account the significance of cumulative FFC national energy savings, the
cumulative FFC emissions reductions, and the need to confront the
global climate crisis, among other factors.
As stated, the standard levels adopted in this direct final rule
are projected to result in national energy savings of 5.59 quads, the
equivalent of the primary annual energy use of 146 million homes. Based
on the amount of FFC savings, the corresponding reduction in emissions,
and the need to confront the global climate crisis, DOE has determined
(based on the methodology described in section IV of this document and
the analytical results presented in section V.B.3.a of this document)
that there is clear and convincing evidence that the energy savings
from the standard levels adopted in this direct final rule are
``significant'' within the meaning of 42 U.S.C. 6313(a)(6)(A)(ii)(II).
F. Economic Justification
1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
EPCA requires DOE to consider the economic impact of a potential
standard on manufacturers and the consumers of the equipment subject to
the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(I) and (C)(i)) In
determining the impacts of potential new or amended standards on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed
[[Page 44068]]
include: (1) INPV, which values the industry on the basis of expected
future cash flows; (2) cash flows by year; (3) changes in revenue and
income; and (4) other measures of impact, as appropriate. Second, DOE
analyzes and reports the impacts on different types of manufacturers,
including impacts on small manufacturers. Third, DOE considers the
impact of standards on domestic manufacturer employment and
manufacturing capacity, as well as the potential for standards to
result in plant closures and loss of capital investment. Finally, DOE
takes into account cumulative impacts of various DOE regulations and
other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered equipment in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered equipment
that are likely to result from a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a piece of equipment
(including its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the equipment. The LCC analysis requires a variety of inputs, such as
equipment prices, equipment energy consumption, energy prices,
maintenance and repair costs, equipment lifetime, and discount rates
appropriate for consumers. To account for uncertainty and variability
in specific inputs, such as equipment lifetime and discount rate, DOE
uses a distribution of values, with probabilities attached to each
value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of more-efficient equipment through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered equipment in the first year of compliance with new
or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant additional 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 of this document,
DOE uses the NIA computer models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
In establishing equipment classes and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Based on data
available to DOE, the standards adopted in this document would not
reduce the utility or performance of the equipment under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General of the
United States (``Attorney General''), that is likely to result from a
standard. (42 U.S.C. 6313(a)(6)(B)(ii)(V)) To assist the Department of
Justice (``DOJ'') in making such a determination, DOE will transmit a
copy of this direct final rule and the accompanying TSD to the Attorney
General for review, with a request that the DOJ provide its
determination on this issue. DOE will consider DOJ's comments on the
rule contained in its assessment letter in determining whether to
proceed with the direct final rule. DOE will also publish and respond
to the DOJ's comments in the Federal Register in a separate document.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) The energy
savings from the adopted standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for maintaining the reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
standards may affect the Nation's needed power generation capacity, as
discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The adopted standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and GHGs associated with energy production and use. As part
of the analysis of the need for national energy and water conservation,
DOE conducts an emissions analysis to estimate how potential standards
may affect these emissions, as discussed in section IV.K of this
document, and the estimated emissions impacts are reported in section
V.B.6 of this document.\27\ DOE also estimates the economic value of
emissions reductions resulting from the considered TSLs, as discussed
in section IV.L of this document. DOE emphasizes that the SC-GHG
analysis presented in this direct final rule and accompanying TSD was
performed in support of the cost-benefit analyses required by Executive
Order (``E.O.'') 12866, and is provided to inform the public of the
impacts of emissions reductions resulting from this rule. However, the
SC-GHG estimates were not factored into DOE's EPCA analysis of the need
for national energy and water conservation. DOE would reach the same
conclusion presented in this
[[Page 44069]]
rule in the absence of the estimated benefits from reductions in GHG
emissions.
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\27\ As discussed in section IV.L of this document, for the
purpose of complying with the requirements of E.O. 12866, DOE also
estimates the economic value of emissions reductions resulting from
the considered TSLs. DOE calculates this estimate using a measure of
the social cost (``SC'') of each pollutant (e.g., SC-
CO2). Although this estimate is calculated for the
purpose of complying with E.O. 12866, the Seventh Circuit Court of
Appeals confirmed in 2016 that DOE's consideration of the social
cost of carbon in energy conservation standards rulemakings is
permissible under EPCA. Zero Zone v. United States DOE, 832 F.3d
654, 677 (7th Cir. 2016).
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g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to ACUACs and ACUHPs. Separate subsections
address each component of DOE's analyses. Comments on the methodology
and DOE's responses are presented in each section.
DOE used several analytical tools to estimate the impact of the
standards considered in this document on consumers and manufacturers.
The first tool is a spreadsheet that calculates the LCC savings and PBP
of potential amended or new energy conservation standards. The national
impacts analysis uses a second spreadsheet set that provides shipments
projections and calculates national energy savings and net present
value of total consumer costs and savings expected to result from
potential energy conservation standards. DOE uses the third spreadsheet
tool, the Government Regulatory Impact Model (``GRIM''), to assess
manufacturer impacts of potential standards. These three spreadsheet
tools are available on the DOE website for this rulemaking:
www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=75. Additionally, DOE used output from the
latest version of the Energy Information Administration's (``EIA's'')
Annual Energy Outlook (``AEO'') for the emissions and utility impact
analyses (i.e., AEO 2023).
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include: (1) a determination of the
scope of the rulemaking and equipment classes; (2) manufacturers and
industry structure; (3) existing efficiency programs; (4) market and
industry trends, and (5) technologies or design options that could
improve the energy efficiency of ACUACs and ACUHPs. The key findings of
DOE's market assessment are summarized in the following sections. See
chapter 3 of the direct final rule TSD for further discussion of the
market and technology assessment.
1. Equipment Classes
When evaluating and establishing energy conservation standards, DOE
divides covered equipment into equipment classes by the type of energy
used, capacity, or other performance-related feature that would justify
a different standard. (42 U.S.C. 6313(a)(6)(B)(iii)(II))
DOE currently defines separate energy conservation standards for
twelve ACUAC and ACUHP equipment classes (excluding double-duct
systems), determined according to the following performance-related
features that provide utility to the consumer: rated cooling capacity,
equipment subcategory (air conditioner versus heat pump), and
supplementary heating type. Table IV.1 lists the current ACUAC and
ACUHP equipment classes. (See also 10 CFR 431.97(b))
[[Page 44070]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.080
In response to the May 2020 ECS RFI, DOE received multiple comments
from stakeholders regarding the equipment classes for ACUACs and
ACUHPs. Several stakeholders recommended that DOE evaluate the capacity
ranges that separate the current ACUAC and ACUHP equipment classes, and
that DOE consider splitting the existing very large equipment classes
(i.e., 240,000 to 760,000 Btu/h) into separate equipment classes
because of the potential for increasing stringency of standards (i.e.,
more models with efficiency significantly above the 2023 standards) for
ACUACs and ACUHPs with capacities at the lower end of the very large
capacity range, as compared to the capacity range of very-large
equipment as a whole. (ASAP, ACEEE, et al., EERE-2019-BT-STD-0042-0023
at pp. 2-3; CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 6; NEEA, EERE-
2019-BT-STD-0042-0024 at pp. 3-5) NEEA specifically recommended
splitting the very large equipment class into two classes: one greater
than or equal to 240,000 Btu/h and less than 384,000 Btu/h, and the
other greater than or equal to 384,000 Btu/h and less than 760,000 Btu/
h. (NEEA, EERE-2019-BT-STD-0042-0024 at pp. 3-4) The CA IOUs
specifically recommended splitting the very large equipment class into
two classes: one greater than or equal to 240,000 Btu/h and less than
400,000 Btu/h, and the other greater than or equal to 400,000 Btu/h and
less than 760,000 Btu/h. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 6)
In response, DOE notes that the stakeholders that recommended
splitting the existing very large equipment classes (ASAP, NEEA, and CA
IOUs) had representatives that were members of the ACUAC/HP Working
Group and agreed to the recommendations in the ACUAC/HP Working Group
ECS Term Sheet, which maintained the existing equipment class capacity
boundaries based upon the capacities in the EPCA definitions of small,
large, and very large commercial package air conditioning and heating
equipment. Consequently, DOE concludes that the recommended energy
conservation standards and equipment classes presented in the ACUAC/HP
Working Group ECS Term Sheet represent those stakeholders' latest
recommendations on equipment classes.
Additionally, the ACUAC/HP Working Group ECS Term Sheet combines
all ACUHPs within each capacity range into single equipment classes
regardless of supplementary heating type, which is different from DOE's
existing equipment class structure (which includes separate equipment
classes in each capacity range for: (1) ACUHPs with electric resistance
or no heating; and (2)
[[Page 44071]]
ACUHPs with all other types of heating). DOE is adopting amended energy
conservation standards in terms of the nine equipment classes
recommended in the ACUAC/HP Working Group ECS Term Sheet, presented in
Table IV.2.
[GRAPHIC] [TIFF OMITTED] TR20MY24.081
2. Market Post-2023
In the May 2020 ECS RFI, DOE sought comment on whether currently
available models of ACUACs and ACUHPs (excluding double-duct systems)
with efficiency ratings that meet or exceed the 2023 standard levels
are representative of the designs and characteristics of models that
would be expected to be on the market after the 2023 compliance date.
85 FR 27941, 27948 (May 12, 2020).
AHRI, Carrier, and Trane asserted that the ACUAC and ACUHP markets
at the time of the May 2020 ECS RFI are not representative of the
models that would be expected to be on the market after the 2023
standards take effect. (AHRI, EERE-2019-BT-STD-0042-0014 at pp. 3, 5-6;
Carrier, EERE-2019-BT-STD-0042-0013 at p. 7; Trane, EERE-2019-BT-STD-
0042-0016 at p. 6) More specifically, AHRI commented that it is
impossible to forecast the market impact of the 2023 standards on
ACUACs and ACUHPs, and also asserted that State refrigerant regulations
that drive the industry to use A2L refrigerants will require components
such as compressors to be redesigned to accommodate new refrigerants.
(AHRI, EERE-2019-BT-STD-0042-0014 at pp. 3, 5-6) Goodman also stated
that alternative refrigerants would impact future product design and
characteristics (e.g., requiring factory-installed refrigerant
detection sensors depending on the charge amounts of an alternate
refrigerant). (Goodman, EERE-2019-BT-STD-0042-0017 at p. 3) Carrier
stated the then-current models available on the market that meet the
2023 standards will not be the same products that are offered in 2023
because manufacturers will be working to optimize efficiencies, lower
cost, and implement new entry level products. Carrier added that the
upcoming 2023 standards will also create a need to further optimize
higher-efficiency equipment. Carrier asserted that most products being
sold are currently at the minimum efficiency levels, which leads to an
inability to properly evaluate the economic impact of moving the
markets from the current standards to 2023 standards. (Carrier, EERE-
2019-BT-STD-0042-0013 at p. 7) Trane stated that it would be
redesigning all of its ACUAC and ACUHP model lines in response to the
2023 standards. (Trane, EERE-2019-BT-STD-0042-0016 at p. 6)
Lennox commented that the market impacts of the 2023 standards are
unknown because of uncertainties in assessing the evolving market,
including uncertainties in future shipments, the economic impact on
manufacturers and consumers, and the total projected energy savings.
(Lennox, EERE-2019-BT-STD-0042-0015 at pp. 2-3) However, Lennox also
commented that the ACUAC and ACUHP models on the market are
representative of designs and characteristics of models that would be
expected to be on the market after the 2023 compliance date. (Id. at p.
5) Lennox additionally mentioned that the 2023 standards would cause a
phase out of single-speed technology and constant airflow fans. (Id.)
DOE notes that at the time these comments were received, compliance
was not yet required with the current standards. Compliance was
required with the current standards beginning January 1, 2023. DOE
analyzed the market after January 1, 2023 for its analyses for the 2023
ECS Negotiations and for this direct final rule such that the comments
received in 2020 on this matter are now moot. DOE's analysis of the
market efficiency distribution to develop IEER efficiency levels is
discussed in section of this direct final rule.
3. Technology Options
As part of the market and technology assessment, DOE identifies
technologies that manufacturers could use to improve ACUAC and ACUHP
energy efficiency. Chapter 3 of the direct final rule TSD includes the
detailed list and descriptions of all technology options identified for
this equipment.
In the May 2020 ECS RFI, DOE listed 19 technology options
determined to improve the efficiency of ACUACs and ACUHPs, as measured
by the DOE test procedure, that were presented in the
[[Page 44072]]
January 2016 Direct Final Rule. 85 FR 27941, 27946 (May 12, 2020). DOE
requested comment on the technology options considered in the
development of the January 2016 Direct Final Rule, their applicability
to the current market, and the range of performance characteristics for
each technology option. Id. DOE also sought feedback on other
technology options that it should consider for inclusion in its
analysis. Id.
DOE also sought comment on any changes in market adoption, costs,
and concerns with incorporating the technologies identified into
equipment that may have occurred since the January 2016 Direct Final
Rule. Id. DOE also requested feedback on how manufacturers would
incorporate the technology options from the January 2016 Direct Final
Rule to increase energy efficiency in ACUACs and ACUHPs beyond the
current levels. Id. at 85 FR 27949. This request included information
on the order in which manufacturers would incorporate the different
technologies to incrementally improve the efficiencies of equipment.
Id. DOE also requested feedback on whether the increased energy
efficiency would lead to other design changes that would not occur
otherwise. Id. DOE was also interested in information regarding any
potential impact of design options on a manufacturer's ability to
incorporate additional functions or attributes in response to consumer
demand. Id.
DOE also requested comment on whether certain design options may
not be applicable to (or incompatible with) specific equipment classes.
Id.
Several stakeholders stated that, in general, the technology
options listed in the May 2020 ECS RFI are appropriate and have not
seen any significant changes since the analysis was conducted for the
January 2016 Direct Final Rule. (AHRI, EERE-2019-BT-STD-0042-0014 at p.
4; Lennox, EERE-2019-BT-STD-0042-0015 at p. 5; Trane, EERE-2019-BT-STD-
0042-0016 at p. 3)
Carrier stated that high-efficiency, multi-stage, and variable-
speed compressors, the size of heat exchangers, and more-efficient
condenser fan blades and motors can increase efficiency. Carrier also
stated that microchannel heat exchangers and expansion valves do not
affect efficiency, and that electro-hydrodynamic enhancement has a very
minor effect on efficiency.\28\ (Carrier, EERE-2019-BT-STD-0042-0013 at
p. 4) Carrier stated that it anticipates that the identified technology
options would impact practicability to manufacture, install, and
service, with potential impacts including larger/heavier chassis, roof
curb changes, and modified electrical service to accommodate high-
efficiency components. (Carrier, EERE-2019-BT-STD-0042-0013 at pp. 5-6)
AHRI stated that there may be limited availability of electro-
hydrodynamic enhancements (without elaborating on why) and that direct-
drive fan systems at some voltages may not be available. (AHRI, EERE-
2019-BT-STD-0042-0014 at p. 4)
---------------------------------------------------------------------------
\28\ Carrier used the term electro-hydromatic enhancement, but
DOE assumes Carrier was referring to electro-hydrodynamic
enhancement.
---------------------------------------------------------------------------
NEEA recommended that DOE consider the presence of economizers, fan
speed control, multi-stage compressors, electronically-commutated
motors (``ECMs''), and fan efficiency. (NEEA, EERE-2019-BT-STD-0042-
0024 at p. 7)
Trane stated that achieving the 2023 standard levels will take a
combination of compressor technology and advanced heat exchanger
design. Trane also stated that secondarily, indoor and outdoor fan
technologies would be employed to reach the 2023 standard levels.
(Trane, EERE-2019-BT-STD-0042-0016 at p. 8) Carrier stated that the
technology options identified are currently being used to reach max-
tech efficiency and that more of the advanced features would be used to
meet the 2023 standards. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 11)
Carrier also asserted that additional features or advancements at the
time of their comments would create undue burden in terms of cost and
increased equipment size, resulting in a lack of marketability for
ACUACs and ACUHPs. (Id.)
AHRI suggested that DOE contact manufacturers directly to solicit
feedback on: (1) how manufacturers would incorporate the identified
technology options to increase energy efficiency of ACUACs and ACUHPs
and (2) whether certain design options may not be applicable to
specific equipment classes. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 7)
In response to the May 2020 ECS RFI, the CA IOUs and ASAP, ACEEE,
et al. suggested that DOE consider additional alternative refrigerants
as a technology option. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 5;
ASAP, ACEEE, et al., EERE-2019-BT-STD-0042-0023 at pp. 3-4) ASAP,
ACEEE, et al. stated that alternative refrigerants, including R-452B,
R-454B, and R-32, can improve efficiency by at least 5 percent relative
to the current refrigerant R-410A, citing testing conducted by Oak
Ridge National Laboratory (``ORNL'') in partnership with Trane.\29\
(ASAP, ACEEE, et al., EERE-2019-BT-STD-0042-0023 at pp. 1, 3-4) In
response to the May 2022 TP/ECS RFI, ASAP and ACEEE again recommended
DOE consider low-GWP refrigerants as a design option. (ASAP and ACEEE,
EERE-2022-BT-STD-0015-0011 at p. 3)
---------------------------------------------------------------------------
\29\ Available at: www.energy.gov/sites/prod/files/2017/04/f34/10_32226f_Shen_031417-1430.pdf.
---------------------------------------------------------------------------
AHRI commented that considering alternative refrigerants as a
technology option is not appropriate and would be unduly burdensome for
manufacturers, recommending screening out alternative refrigerants on
the bases of technological feasibility and practicability to
manufacture, install, and service. (AHRI, EERE-2019-BT-STD-0042-0014 at
pp. 4-5) Carrier suggested that alternate refrigerants should not be
the basis of an energy efficiency increase. (Carrier, EERE-2019-BT-STD-
0042-0013 at p. 7)
As discussed in section IV.C.1 of this document, DOE conducted its
engineering analysis by selecting and analyzing currently-available
models using their rated efficiency in terms of IEER to characterize
the energy use and manufacturing production costs at each efficiency
level. As a result, DOE analyzed equipment designs, including expansion
devices, indoor and outdoor coils, and fans/motors, consistent with
currently available models and the design of the equipment as whole.
Therefore, DOE has concluded that the technology options in this direct
final rule accurately reflect the efficiency improvement and
incremental manufacturing costs associated with these designs.
Comments received in response to the May 2020 ECS RFI were received
three years prior to the compliance date of the current standards and
the 2023 ECS Negotiations. Since that time, the market has updated to
comply with the new standards, and DOE conducted interviews with
manufacturers to solicit feedback on all aspects of its engineering
analysis, including technology options used to increase efficiency of
ACUACs and ACUHPs. Certain technology options were also discussed among
the ACUAC/HP Working Group during the 2023 ECS Negotiations. (EERE-
2022-BT-STD-0015-0088 at pp. 60-64; EERE-2022-BT-STD-0015-0089 at pp.
17-24) Therefore, DOE surmises that the positions of commenters on
certain technology options may have changed since the time of the
drafting of some of the comments received.
[[Page 44073]]
Regarding economizers, while the IVEC metric accounts for the
benefit of economizer cooling and the energy consumed during
economizing via calculations, the metric does not include testing with
economizer operation due to test burden and repeatability concerns. As
such, the IVEC metric does not allow for differentiation in terms of
IVEC efficiency between: (1) systems installed with economizers versus
not installed with economizers, and (2) different types of economizers
offered. Therefore, DOE did not consider economizers as a technology
option for this rulemaking.
There are no models currently on the market that include low-GWP
refrigerants. Therefore, at this time, DOE does not have sufficient
information to consider low-GWP refrigerants as a technology option for
improving efficiency. As such, DOE did not consider low-GWP
refrigerants as a technology option in its analysis. Section IV.C.4 of
this document includes discussion of the impact of low-GWP refrigerants
on efficiency and cost of ACUACs and ACUHPs.
Regarding electro-hydrodynamic enhancement, DOE did not identify
any prototypes or models currently on the market that incorporate this
technology to improve efficiency.
After consideration of the comments received, assessment of
technology options used to improve efficiency in models currently on
the market, and additional information provided during manufacturer
interviews, DOE considered the technology options presented in Table
IV.3 as part of this rulemaking.
[GRAPHIC] [TIFF OMITTED] TR20MY24.082
A detailed discussion of each technology option identified is
contained in chapter 3 of the direct final rule TSD.
B. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial equipment or in commercially viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial equipment
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Adverse impacts on equipment utility or availability. If a
technology is determined to have a significant adverse impact on the
utility of the equipment to subgroups of consumers, or 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, it will not be considered
further.
(4) Adverse impact on health or safety of technologies. If it is
determined that a technology would have significant adverse impacts on
health or safety, it will not be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further, due to the
potential for monopolistic concerns.
10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections
6(c)(3) and 7(b).
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the listed five criteria, it
will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
In the January 2016 Direct Final Rule, DOE screened-out three
technology
[[Page 44074]]
options: electro-hydrodynamic enhanced heat transfer (due to
technological feasibility and practicability to manufacture/install/
service), alternative refrigerants (due to technological feasibility),
and sub-coolers (due to technological feasibility). 81 FR 2420, 2449
(Jan. 15, 2016).
In the May 2020 ECS RFI, DOE presented the three technology options
that were screened out in the January 2016 Direct Final Rule and the
criteria for screening them out. DOE sought feedback on whether the
technology options that were screened out in the January 2016 Direct
Final Rule should continue to be screened out. DOE also sought comment
on what impact the screening criteria would have on consideration of
the technology options that were considered (i.e., not screened out) in
the January 2016 Direct Final Rule. 85 FR 27941, 27947 (May 12, 2020).
Trane agreed with the screening analysis conducted for the January
2016 Direct Final Rule. (Trane, EERE-2019-BT-STD-0042-0016 at p. 5)
Carrier also agreed with continuing to screen out the technology
options that were screened out in the January 2016 Direct Final Rule.
(Carrier, EERE-2019-BT-STD-0042-0013 at p. 6) Carrier further
recommended that an additional screening criterion be added to address
cost of a technology option. (Carrier, EERE-2019-BT-STD-0042-0013 at p.
6)
As discussed in section IV.A.3 of this document, DOE is not
considering alternative refrigerants and electro-hydrodynamic enhanced
heat transfer as technology options, and, thus, the need to screen them
in or out is not relevant. With respect to the third previously-
screened out technology option, DOE is aware of at least one model line
on the market that uses sub-coolers for increased efficiency. DOE does
not find that the third previously-screened out technology meets any of
the criteria for being screened out.
In response to Carrier's comment recommending an additional
screening criterion be added to address cost of a technology option,
the added cost of a technology option is considered in the cost-
efficiency analysis and the downstream economic analyses that evaluate
the impacts to consumers and the Nation as a whole. Additionally, the
product and capital conversion costs manufacturers must bear in order
to implement certain technologies are considered in the manufacturer
impact analysis, discussed further in section IV.J of this document.
DOE did not find that any of the other technology options it
identified met the criteria to be screened-out in this rulemaking.
2. Remaining Technologies
Through a review of each technology, DOE concludes that all of the
identified technologies listed in section IV.A.3 of this document met
all five screening criteria to be examined further as design options in
DOE's direct final rule analysis. In summary, DOE did not screen out
any technology options for this rulemaking.
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available equipment or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service; do
not result in adverse impacts on consumer utility, equipment
availability, health, or safety; and do not involve a proprietary
technology that is a unique pathway to meeting a given efficiency
level). For additional details, see chapter 4 of the direct final rule
TSD.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of ACUACs and ACUHPs.
There are two elements to consider in the engineering analysis: (1) the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and (2) the determination of equipment cost at each
efficiency level (i.e., the ``cost analysis''). In determining the
performance of higher-efficiency equipment, DOE considers technologies
and design option combinations not eliminated by the screening
analysis. For each equipment class, DOE estimates the baseline cost, as
well as the incremental cost for the equipment at efficiency levels
above the baseline. The output of the engineering analysis is a set of
cost-efficiency ``curves'' that are used in downstream analyses (i.e.,
the LCC and PBP analyses and the NIA).
1. Efficiency Levels in Terms of Existing Metrics
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing equipment (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual equipment on the market) may be
extended using the design option approach to interpolate to define
``gap fill'' levels (to bridge large gaps between other identified
efficiency levels) and/or to extrapolate to the ``max-tech'' level
(particularly in cases where the ``max-tech'' level exceeds the maximum
efficiency level currently available on the market).
In this rulemaking, DOE applied an efficiency-level approach,
analyzing three specific capacities--90,000 Btu/h (7.5-tons), 180,000
Btu/h (15-tons), and 360,000 Btu/h (30-tons)--that served as
representative units for the three equipment capacity ranges--``small''
(>=65,000 to <135,000 Btu/h), ``large'' (>=135,000 to <240,000 Btu/h),
and ``very large'' (>=240,000 to <760,000 Btu/h). DOE selected these
representative capacities consistent with the analysis conducted for
the January 2016 Direct Final Rule after concluding based on assessment
of the current market (and receiving no contrary feedback during the
2023 ECS Negotiation meetings) that these capacities continue to be
representative of models on the market in their respective capacity
ranges. To develop cost-efficiency curves, DOE used the current cooling
efficiency metric (IEER) and later translated each efficiency level to
the new cooling efficiency metric (IVEC) because there were no
publicly-available data for existing models on the market in terms of
the new metric; therefore, the cost to produce these models could not
be linked directly to efficiency in terms of IVEC. Selection of the
efficiency levels in terms of the current efficiency metrics is
discussed in sections IV.C.1.a and IV.C.1.b of this document. Further
discussion on the translation from IEER to IVEC can be found in section
IV.C.2.a of this document. The selection of heating efficiency levels
in terms of the new heating efficiency metric (IVHE) is discussed in
section IV.C.2.b of this document.
[[Page 44075]]
Based on DOE's review of equipment available on the market and
feedback received during manufacturer interviews, DOE understands that
the majority of ACUAC models with electric resistance heating or no
heating are designed on the same basic platform and cabinet size as the
equivalent ACUAC models with all other types of heating and comparable
ACUHP models. Because these models typically have similar designs, DOE
estimated that implementing the same efficiency-improving design
options would result in the same or similar energy savings for
comparable equipment classes. As discussed further in section IV.C.2.a
of this document, ACUACs with all other types of heating typically are
paired with furnaces that impose additional pressure drop that must be
overcome by the indoor fan, thus increasing measured indoor fan power,
so for otherwise comparable models, efficiencies in terms of IEER are
lower for ACUACs with all other types of heating than ACUACs with
electric resistance heating or no heating. Therefore, in order to
develop equivalently stringent efficiency levels for all ACUACs, DOE
first developed higher efficiency levels specifically for ACUACs with
electric resistance heating or no heating. As discussed, these
efficiency levels were developed in terms of IEER, and were
subsequently translated to the new IVEC metric. DOE then translated
these IVEC efficiency levels for ACUACs with electric resistance
heating or no heating into IVEC efficiency levels for ACUACs with all
other types of heating by using furnace pressure drops from product
literature to calculate additional indoor fan power consumed and
ultimately IVEC decrements to represent the reduction in IVEC as a
result of furnace pressure drop. The calculated decrements closely
aligned with the decrements proposed in the ACUAC/HP Working Group ECS
Term Sheet. As further discussed in section IV.C.2 of this document,
DOE did not analyze lower IVEC efficiency levels for ACUHPs as compared
to ACUACs.
a. Baseline Efficiency
For each equipment class, DOE generally selects a baseline model as
a reference point for each class, and measures changes resulting from
potential energy conservation standards against the baseline. The
baseline model in each equipment class represents the characteristics
of equipment typical of that class (e.g., capacity, physical size).
Generally, a baseline model is one that just meets current energy
conservation standards, or, if no standards are in place, the baseline
is typically the most common or least efficient unit on the market.
In the May 2020 ECS RFI, DOE requested feedback on whether the 2023
energy conservation standards for ACUACs and ACUHPs are appropriate
baseline efficiency levels for DOE to apply each equipment class in
evaluating whether to amend energy conservation standards for this
equipment. 85 FR 27941, 27948 (May 12, 2020). AHRI, Lennox, and Goodman
stated that the 2023 standards would be the correct baseline efficiency
to be used in a future DOE analysis. (AHRI, EERE-2019-BT-STD-0042-0014
at p. 6; Lennox, EERE-2019-BT-STD-0042-0015 at p. 6; Goodman, EERE-
2019-BT-STD-0042-0017 at p. 3)
Consistent with stakeholder feedback, DOE used the current energy
conservation standards as the baseline efficiency level in terms of
IEER and COP for each equipment class. The baseline efficiency levels
in terms of IEER and COP considered in this direct final rule are
presented in Table IV.4. As discussed further in section IV.A.1 of this
document, consistent with the ACUAC/HP Working Group ECS Term Sheet,
DOE is combining ACUHPs with all types of heating into a single
equipment class for each capacity range. Therefore, for the baseline
for ACUHP equipment classes, DOE used the current IEER standard for
ACUHPs with all other types of heating.
[GRAPHIC] [TIFF OMITTED] TR20MY24.083
[[Page 44076]]
b. Higher Efficiency Levels
For each equipment class, DOE analyzes several efficiency levels
above baseline. The maximum available efficiency level is the highest
efficiency model currently available on the market. DOE also defines a
``max-tech'' efficiency level to represent the maximum possible
efficiency for a given equipment class.
In the May 2020 ECS RFI, DOE requested comment on what efficiency
levels should be considered as max-tech levels for ACUACs and ACUHPs
for the evaluation of whether amended standards are warranted. 85 FR
27941, 27949 (May 12, 2020).
The CA IOUs and ASAP, ACEEE, et al. suggested DOE should analyze
max-tech efficiency levels higher than what were analyzed in the
January 2016 Direct Final Rule and consider max-tech efficiency levels
that reflect incorporation of all possible technology options. (CA
IOUs, EERE-2019-BT-STD-0042-0020 at pp. 6-7; ASAP, ACEEE, et al., EERE-
2019-BT-STD-0042-0023 at pp. 1-2, 4) The CA IOUs recommended DOE
consider the technology development timeline of emerging technologies
in determining max-tech levels, specifically technology options
currently in the lab-scale prototype stage. (CA IOUs, EERE-2019-BT-STD-
0042-0020 at pp. 6-7)
AHRI, Goodman, and Lennox recommended DOE only consider
commercially-available technologies in determining max-tech efficiency
levels, specifically those that are used in equipment certified to
DOE's Compliance Certification Database (``CCD''). (AHRI, EERE-2019-BT-
STD-0042-0014 at p. 6; Goodman, EERE-2019-BT-STD-0042-0017 at p. 3;
Lennox, EERE-2019-BT-STD-0042-0015 at p. 6) Lennox additionally
commented that the max-tech levels for ACUACs and ACUHPs have increased
by up to eight percent since the January 2016 Direct Final Rule, driven
by manufacturers having optimized designs for the part-load IEER
metric, which is more representative of consumer use than the prior EER
full-load metric, not the advancement of technologies that are employed
by this equipment. (Lennox, EERE-2019-BT-STD-0042-0015 at p. 6)
Trane stated that the analysis for the January 2016 Direct Final
Rule is still relevant and that it supported the process used then for
considering max-tech efficiency levels (including manufacturer
interviews). (Trane, EERE-2019-BT-STD-0042-0016 at p. 7)
Carrier specified what it argued are the max-tech levels for ACUACs
and ACUHPs should be in terms of IEER and COP based on certifications
to the AHRI Directory at the time of its comment submission. (Carrier,
EERE-2019-BT-STD-0042-0013 at pp. 9-10)
Consistent with feedback from stakeholders, DOE identified
incremental efficiency levels based on a review of currently available
models on the market, taking into consideration the efficiency levels
analyzed for the January 2016 Direct Final Rule. DOE relied on
certified IEER data from DOE's CCD and the AHRI Directory, focusing on
models that had sufficient information in public product literature to
develop costs. Review of the market showed that many of the model lines
analyzed for the January 2016 Direct Final Rule are still on the market
today; therefore, DOE concluded that many of the efficiency levels
analyzed for the January 2016 Direct Final Rule were still appropriate
to consider for this rulemaking. DOE started with the efficiency levels
used for the January 2016 Direct Final Rule analysis that were above
the current IEER standards (i.e., standards with compliance date of
January 1, 2023), adjusting IEER values of some efficiency levels as
appropriate based on current market efficiency distributions. DOE also
added efficiency levels, as needed, to better represent the range of
certified IEER ratings for ACUAC models with electric resistance
heating or no heating currently available on the market. This included
adjusted max-tech levels for some classes that have models on the
market with higher rated IEER than the max-tech levels analyzed for the
January 2016 Direct Final Rule, consistent with suggestions by
stakeholders.
Regarding the CA IOU's comment that DOE consider emerging
technologies in determining max-tech levels, as discussed, DOE
developed max-tech levels for the engineering analysis based on model
designs currently on the market. DOE concluded that it lacked
sufficient cost and efficiency information to analyze higher efficiency
levels than currently on the market. DOE notes that the max-tech levels
presented in this DFR reflect those presented in the 2023 ECS
Negotiations, and the CA IOUs were a member of the ACUAC/HP Working
Group and did not object to the analyzed max-tech levels in the 2023
ECS Negotiations.
In response to the May 2020 ECS RFI, Carrier also recommended that
DOE analyze max-tech efficiency separately for equipment that uses
alternate refrigerants once available on the market, as it believes
that safety code compliance will require additional components and
testing that may restrict the use of certain design options. (Carrier,
EERE-2019-BT-STD-0042-0013 at p. 10)
In response, DOE did not analyze max-tech levels for equipment with
alternative refrigerants separately for this rulemaking because DOE is
not aware of any models on the market at this time that include
refrigerants with GWP below the limit of 700 GWP adopted by the
Environmental Protection Agency (``EPA'').\30\ Section IV.C.4 of this
direct final rule includes further discussion on consideration of
lower-GWP refrigerants in the engineering analysis.
---------------------------------------------------------------------------
\30\ On October 24, 2023, the EPA published a final rule in the
Federal Register restricting the use of certain higher-GWP
hydrofluorocarbons (``HFCs'') in aerosols, foams, and refrigeration,
air conditioning, and heat pump products and equipment (``October
2023 EPA Final Rule''). This final rule restricts refrigerants with
a GWP higher than 700 in residential and light commercial air
conditioning and heat pump systems installed on and after January 1,
2025. 88 FR 73098. On December 26, 2023, EPA published an interim
final rule and request for comment in the Federal Register amending
a provision of the October 2023 EPA Final Rule allowing one
additional year, until January 1, 2026, for the installation of new
residential and light commercial air conditioning and heat pump
systems using components manufactured or imported prior to January
1, 2025. 88 FR 88825.
---------------------------------------------------------------------------
The higher efficiency levels for ACUACs with electric resistance
heating or no heating in terms of IEER considered in this direct final
rule are presented in Table IV.5.
[[Page 44077]]
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2. Efficiency Levels in Terms of New Metrics
a. IVEC
DOE considered the efficiency levels in terms of IVEC presented in
Table IV.6 for this direct final rule. The development of these
efficiency levels for each equipment class is discussed in the
following subsections.
[GRAPHIC] [TIFF OMITTED] TR20MY24.085
ACUACs with Electric Resistance Heating or No Heating
As discussed in section II.B.3 of this document, the ACUAC/HP
Working Group recommended the current cooling performance energy
efficiency descriptor, IEER, be replaced with the newly-developed IVEC
metric. While the cost-efficiency curves were developed in terms of the
existing cooling efficiency metric (IEER), DOE translated the IEER
values at each
[[Page 44078]]
efficiency level to IVEC values for use in the other analyses in this
direct final rule, and to allow consideration of potential amended
energy conservation standard levels in terms of the IVEC metric.
With this change in cooling efficiency metric, DOE must ensure that
a new IVEC-based standard would not result in backsliding of energy
efficiency levels when compared to the current IEER standards. (42
U.S.C 6313(a)(6)(B)(iii)(I)) To this end, DOE translated the identified
IEER baseline levels (as discussed in section IV.C.1.a of this
document) to IVEC baseline levels.
During the course of the 2023 ECS Negotiations, industry members in
the ACUAC/HP Working Group provided a DOE contractor with a
confidential, anonymized dataset that included simulated IEER and IVEC
values for more than 100 models currently available on the market. In
this dataset, for each equipment class, there is a range of IVEC values
near the IEER baseline. DOE calculated a weighted-average IVEC baseline
based on the values in this industry-provided dataset to use as the
IVEC baseline for analysis for each equipment class for ACUACs with
electric resistance heating or no heating. Further discussion of DOE's
analysis of baseline IVEC levels is included in chapter 5 of the direct
final rule TSD.
DOE also translated the higher efficiency levels in terms of IEER
to IVEC based on the performance correlations it developed (discussed
further in section IV.C.3 of this document) (i.e., DOE used the
performance correlations to calculate an IVEC value for each IEER
efficiency level). Further discussion of DOE's analysis of higher IVEC
levels is included in chapter 5 of the direct final rule TSD.
ACUACs with All Other Types of Heating
ACUACs with all other types of heating typically are paired with
furnaces that impose additional pressure drop that must be overcome by
the indoor fan, thus increasing measured indoor fan power. Therefore,
the current IEER standards have lower minimum efficiency for ACUACs
with all other types of heating as compared to ACUACs with electric
resistance heating or no heating, and DOE considered a similar furnace
decrement for IVEC efficiency levels (i.e., difference in IVEC levels
between comparable classes to reflect presence of a furnace). The
recommended standard levels in the ACUAC/HP Working Group ECS Term
Sheet include a furnace decrement of 0.5 for IVEC levels for small and
large ACUACs and a furnace decrement of 0.7 for IVEC levels for very
large ACUACs. DOE conducted an analysis of furnace pressure drops based
on public literature for ACUAC models and used estimates of furnace
pressure drop to calculate a furnace IVEC decrement for small, large,
and very large ACUACs. DOE's calculated furnace IVEC decrements are
similar to the decrements of 0.5, 0.5, and 0.7 included in the ACUAC/HP
Working Group ECS Term Sheet for small, large, and very large ACUACs,
respectively. Therefore, with these decrements confirmed, DOE used the
furnace IVEC decrements from the ACUAC/HP Working Group ECS Term Sheet
more broadly to develop IVEC efficiency levels for ACUACs with all
other types of heating across all considered efficiency levels for the
subject equipment. In other words, for each IVEC efficiency level for
ACUACs with electric resistance heating or no heating, DOE subtracted
the corresponding furnace IVEC decrement from the ACUAC/HP Working
Group ECS Term Sheet to determine the corresponding IVEC efficiency
level for ACUACs with all other types of heating. Further discussion of
DOE's analysis of furnace IVEC decrements is included in chapter 5 of
the direct final rule TSD.
ACUHPs
For the IVEC values of ACUHPs, DOE conducted an analysis to
understand the potential decrement in IVEC efficiency ratings between
ACUACs and ACUHPs. Using the January 2016 Direct Final Rule IEER
decrements between ACUACs and ACUHPs (81 FR 2420, 2456 (Jan. 15,
2016)), DOE determined IEER values at each efficiency level for ACUHPs.
The performance correlations developed for each efficiency level of
ACUACs were then adjusted to decrease IEER to reflect the lower ACUHP
IEER values. Changes made to the performance correlations reflect the
design and operating differences between otherwise identical ACUACs and
ACUHPs. For example, compressor performance may be lower in a heat pump
than an air conditioner due to the reversing valve imposing pressure
drop on the suction line (i.e., heat pumps may have reduced capacity at
a similar power input). Compressor performance may also be lower in a
heat pump than an air conditioner due to circuiting not being fully
optimized for cooling operation (i.e., heat pumps may have reduced
capacity with a higher power input in this case). Additionally, a heat
pump is more likely to require a tube and fin condenser coil instead of
a microchannel heat exchanger, which could increase high-side pressure
(resulting in a capacity reduction at increased power input) or
increase condenser fan power. DOE then calculated IVEC values based on
these adjusted correlations for ACUHPs at each efficiency level, and
the Department found no significant difference in IVEC between ACUACs
and ACUHPs with the same supplemental heating type at each efficiency
level using its performance correlations, in contrast to the decrement
used when analyzing IEER efficiency levels for the January 2016 Direct
Final Rule.
DOE understands the lack of decrement found in IVEC between ACUACs
and ACUHPs to be for two reasons: (1) the design differences in ACUHPs
that reduce IEER affect vapor compression system performance, and IVEC
weights this performance less than IEER for several reasons (e.g.,
because IVEC also includes economizer-only cooling operation, higher
external static pressure requirements, and crankcase heater energy
consumption; and (2) the reduction in vapor compression system
performance for an ACUHP mentioned previously is counterbalanced by an
increase in IVEC due to the metric including fewer hours of off-mode
operation (i.e., crankcase heater energy consumption) for ACUHPs than
are included in IVEC for ACUACs.\31\ Further discussion of DOE's
analysis of ACUHP IVEC decrements is included in chapter 5 of the
direct final rule TSD.
---------------------------------------------------------------------------
\31\ The IVEC metric includes all annual crankcase heater
operation, which includes ventilation mode and unoccupied no-load
hours for ACUACs and ACUHPs. For ACUACs, the IVEC metric also
includes crankcase heater operation during the heating season,
because ACUAC compressors do not provide mechanical heating, whereas
ACUHP compressors do provide mechanical heating. Specifically, for
ACUACs, IVEC includes 4,202 hours of crankcase heater operation
during ventilation mode, unoccupied no-load hours, and heating
season hours. For ACUHPs, IVEC includes 338 hours of crankcase
heater operation during ventilation mode and unoccupied no-load
hours.
---------------------------------------------------------------------------
Given the finding of no IVEC decrement between ACUACs and ACUHPs of
the same supplementary heating type, for all efficiency levels except
for the levels recommended in the ACUAC/HP Working Group ECS Term Sheet
(discussed later in this sub-section), DOE did not analyze lower IVEC
efficiency levels for ACUHPs as compared to ACUACs. Because the
standard levels recommended in the ACUAC/HP Working Group ECS Term
Sheet combine ACUHPs into equipment classes that depend only on cooling
capacity, regardless of supplemental heating type, DOE analyzed ACUHPs
without separate classes for different
[[Page 44079]]
supplementary heating types at all efficiency levels. Therefore, for
all efficiency levels (including the baseline) except for the levels
recommended in the ACUAC/HP Working Group ECS Term Sheet (discussed
later in this sub-section), the IVEC efficiency levels for ACUHPs are
the same as the efficiency levels for ACUACs with all other types of
heating.
Despite the finding of no IVEC decrement for ACUHPs as compared to
ACUACs, the ACUAC/HP Working Group ECS Term Sheet includes marginally
lower recommended standards for ACUHPs than ACUACs with all other types
of heat. Therefore, at the recommended efficiency level for each ACUHP
equipment class, DOE analyzed the IVEC value recommended by the ACUAC/
HP Working Group for that class, instead of using the corresponding
IVEC level for ACUACs with all other types of heating.
As previously discussed, the additional pressure drop of a furnace
and indoor fan energy required to overcome that pressure drop results
in lower IVEC for otherwise identical models with furnaces. This
pressure drop is the reason that DOE's current standards apply a
decrement such that ACUHPs with all other types of heating and have
lower IEER standards than ACUHPs with electric resistance heating or no
heating. Based on review of models currently on the market and feedback
from manufacturer interviews, DOE understands that most manufacturers
offer ACUHPs with and without furnaces (i.e., considered in either the
``all other types of heating'' class or the ``electric resistance
heating or no heating'' class), and ACUHP models with furnaces are
typically otherwise identical to ACUHP models without the furnace.
Therefore, DOE understands that manufacturers do not design separate
baseline ACUHP models to precisely meet the IEER standards for both
``electric resistance heating or no heating'' and ``all other types of
heating''; rather, they design a single ACUHP model such that it meets
the applicable standard with or without a furnace present. If the
presence of a furnace for an ACUHP model impacts the IEER rating for a
model by an amount that differs from the decrement present in the IEER
standards, using a single ACUHP design to meet both standards
inherently means that one model will have an IEER value above the
applicable standard, but DOE understands that manufacturers do not
undertake the product development effort to design separate slightly
less efficient ACUHP models to take advantage of this small IEER gap.
Based on feedback from manufacturer interviews, DOE expects this to
continue in the future, even in the context of more-stringent
standards.
Therefore, considering ACUHP equipment classes including models of
all supplementary heating types (which is the equipment class structure
recommended in the ACUAC/HP Working Group ECS Term Sheet), DOE assumed
that manufacturers would design ACUHPs to meet the applicable IVEC
efficiency level with a furnace present; by removing the furnace, the
otherwise identical ACUHP models with electric resistance or no heating
would naturally achieve a higher IVEC. Therefore, in the analyses
following the engineering analysis, DOE assumed that all ACUHP IVEC
efficiency levels would be met by ACUHPs with furnaces, and that ACUHPs
without furnaces (but otherwise identical to the models with furnaces)
would have higher IVEC values. Therefore, to determine the IVEC values
achieved by ACUHPs without furnaces, DOE added the previously discussed
furnace decrements to the ACUHP efficiency levels (which nominally
apply to all ACUHPs regardless of supplementary heating type). As a
result, DOE concluded that combining ACUHP equipment classes for all
types of heating into single equipment classes for each capacity range
would generally result in the same market dynamics and energy savings
as having ACUHP equipment classes separated by supplementary heating
type (i.e., with the IVEC standard levels for ACUHPs with electric
resistance or no heating being higher than the IVEC standard levels for
ACUHPs with all other types of heating, with the difference being equal
to the previously discussed furnace IVEC decrements). In other words,
when comparing IVEC efficiency levels between ACUACs and ACUHPs, DOE's
analysis for this direct final rule considers the ACUHP levels to be
comparable to the levels for ACUACs with all other types of heating
(because the ACUHP levels would need to be met by ACUHP models with
furnaces), rather than the ACUHP levels being comparable to the levels
for ACUACs with electric resistance or no heating.
b. IVHE
The ACUAC/HP Working Group also recommended the current heating
performance energy efficiency descriptor, COP, be replaced with the
newly-developed IVHE metric. With this change in heating efficiency
metric, DOE must ensure that a new IVHE-based standard would not result
in backsliding of energy efficiency levels when compared to the current
COP standards. (42 U.S.C 6313(a)(6)(B)(iii)(I)) To this end, DOE first
established a baseline at the current energy conservation standard in
terms of COP for each of the ACUHP equipment classes, and then
translated the COP baseline for each class to an IVHE baseline. As
discussed previously, DOE used the current COP energy conservations
standards as the COP baseline for all ACUHP equipment classes.
During the 2023 ECS Negotiations and in confidential interviews
conducted with manufacturers, two industry members in the ACUAC/HP
Working Group provided a DOE contractor with simulated COP and IVHE
values. DOE used this data set, as well as DOE's own test data, to
determine an IVHE baseline for each ACUHP equipment class.
Specifically, DOE identified an IVHE baseline representative of models
with simulated COP at or near the current applicable COP standard level
for each ACUHP equipment class.
Although, as mentioned, two industry members in the ACUAC/HP
Working Group provided DOE contractors with simulated COP and IVHE
values, this dataset was significantly smaller than the previously
discussed IVEC dataset. Therefore, DOE has concluded that it lacks
sufficient IVHE data to identify IVHE efficiency levels more stringent
than the levels recommended in the ACUAC/HP Working Group ECS Term
Sheet. In particular, many ACUHP models currently on the market with
multiple stages of mechanical cooling offer only one stage of
mechanical heating. DOE recognizes that the IVHE metric (which includes
part-load operation) will incentivize development of multiple stages of
mechanical heating in ACUHPs. However, at this time, there are limited
IVHE data available for ACUHP models with multiple stages of mechanical
heating; therefore, it is unclear which IVHE levels above the
recommended IVHE levels are attainable across the range of capacities.
Consequently, for all efficiency levels above the recommended
efficiency levels, DOE assigned the recommended IVHE levels--i.e., for
all IVEC levels above the recommended IVEC levels for ACUHPs, DOE did
not analyze an increase in IVHE levels above the recommended IVHE
levels.
For efficiency levels between the IVHE baseline and the recommended
IVHE levels, DOE used its own test data and confidential data provided
by certain industry members to identify incremental IVHE levels
corresponding to the incremental IVEC levels.
Commercial buildings where ACUHPs are currently installed tend to
be
[[Page 44080]]
dominated by cooling hours as compared to heating hours (e.g., there
are 4,220 hours with a cooling demand in the IVEC metric and only 1,745
hours with a heating demand in the IVHE metric). Further, as discussed,
at this time, there are limited IVHE data available to quantify IVHE
improvements from design options that impact only heating efficiency.
Therefore, the evaluation of amended energy conservation standards for
ACUHPs is focused on the analysis of higher cooling efficiency. While
many design options employed to achieve higher cooling efficiency
levels could inherently result in higher heating efficiency, DOE did
not analyze design options that improve only heating efficiency.
DOE considered the efficiency levels in terms of IVHE presented in
Table IV.7 for this direct final rule.
[GRAPHIC] [TIFF OMITTED] TR20MY24.086
3. Energy Modeling
As done for the January 2016 Direct Final Rule (see 81 FR 2420,
2458-2459 (Jan. 15, 2016)), DOE developed component wattage profiles
and performance correlations for each efficiency level in this
rulemaking (discussed further in section IV.E of this document). This
served two purposes. First, and as discussed in section IV.E of this
document, these component wattage profiles and performance correlations
developed for this direct final rule were used in the energy use
analysis, along with hourly building cooling loads and generalized
building samples, to estimate the energy savings associated with each
efficiency level. Second, as discussed in section IV.C.2.a of this
document, the developed performance correlations, along with industry
data, were used to develop IVEC values that translated the IEER
efficiency levels to the IVEC metric.
As previously mentioned in section IV.C.1.b of this document, many
of the efficiency levels analyzed for the January 2016 Direct Final
Rule were still appropriate to consider for this rulemaking. For this
rulemaking, DOE repurposed component wattage profiles and performance
correlations from the January 2016 Direct Final Rule analysis for some
of those efficiency levels also included in the January 2016 Direct
Final Rule. Some IEER efficiency levels for this direct final rule have
an IEER value that is close to but not exactly the same as an IEER
efficiency level analyzed in the January 2016 Direct Final Rule. In
those cases, DOE adjusted the calculations used to develop the
component wattage profiles and performance correlations for that
efficiency level from the January 2016 Direct Final Rule analysis so
that the resulting IEER would match the IEER value of the new target
IEER efficiency level.
For new efficiency levels added in the analysis for this direct
final rule that are not close to an IEER efficiency level from the
January 2016 Direct Final Rule, DOE selected currently-available models
with rated IEER close to the IEER efficiency level to use as the basis
for new component wattage profiles and performance correlations. DOE
used publicly-available product literature for the selected models to
collect relevant compressor, evaporator fan, condenser fan, and
capacity data. This information was used to create component wattage
profiles and performance correlations as a function of temperature for
the new efficiency levels.
These component wattage profiles and performance correlations were
then used to calculate an IVEC value for each efficiency level. As
discussed in section IV.C.2.a of this document, the IVEC values
resulting from these component wattage profiles and performance
correlations were used to develop the incremental IVEC efficiency
levels corresponding to each incremental IEER efficiency level. More
details regarding the methodology for creating the component wattage
profiles and performance correlations for each efficiency level and
equipment class are presented in chapter 5 of the direct final rule
TSD.
DOE did not conduct similar energy modeling for ACUHP
representative units since ACUHP shipments represent a very small
portion of industry shipments compared to ACUACs shipments (10 percent
versus 90 percent). Further, as discussed, in section IV.C.2.a of this
document, DOE found no IVEC decrement between ACUACs and ACUHPs of the
same supplementary heating type, and, therefore, DOE did not analyze
lower IVEC efficiency levels for ACUHPs as compared to ACUACs for all
efficiency levels, except for the levels recommended in the ACUAC/HP
Working Group ECS Term Sheet. In addition, because ACUHPs represent a
small portion of shipments, DOE noted, based on equipment teardowns and
an extensive review of equipment literature, that manufacturers
generally use the same basic design/platform for equivalent ACUAC and
ACUHP models. DOE also considered the same design changes for the ACUHP
equipment classes that were considered for the ACUAC equipment classes
within a given capacity range. For these reasons, DOE focused energy
modeling on ACUAC equipment. Although not considered in the LCC and PBP
analyses, DOE did analyze ACUHP equipment in the NIA. From this
analysis, DOE believes the energy modeling conducted for ACUAC
equipment provides a good estimate of ACUHP cooling performance and
provides the necessary information to estimate the magnitude of the
national energy savings from increases in ACUHP equipment efficiency.
[[Page 44081]]
4. Impact of Low-GWP Refrigerants
On October 24, 2023, EPA published in the Federal Register
regulations to restrict the use of HFC refrigerants in specific sectors
or subsectors (``October 2023 EPA Final Rule''). 88 FR 73098. This
includes establishing a GWP limit of 700 for refrigerants used in light
commercial air conditioning and heat pump systems (which includes
ACUACs and ACUHPs) installed January 1, 2025 or later. Id. at 88 FR
73206, 73208. On December 26, 2023, EPA published an interim final rule
and request for comment in the Federal Register amending a provision of
the October 2023 EPA Final Rule allowing one additional year, until
January 1, 2026, for the installation of new residential and light
commercial air conditioning and heat pump systems using components
manufactured or imported prior to January 1, 2025. 88 FR 88825. ACUACs
and ACUHPs available on the market today use R-410A, which has a GWP
that exceeds this 700 GWP limit. This will require manufacturers to
shift away from the use of R-410A to low-GWP refrigerants.
In response to the May 2020 ECS RFI, multiple stakeholders
commented regarding the transition to low-GWP refrigerants and their
impacts on ACUACs and ACUHPs, which was well before EPA took final
regulatory action.
On this topic, the CA IOUs recommended that DOE work closely with
the California Air Resources Board, ASHRAE Standing Standard Project
Committee 15--Safety Standard for Refrigeration Systems, and AHRI's
Low-GWP Alternative Refrigeration Evaluation Program to ensure that
equipment meeting low-GWP requirements can meet any new efficiency
standard. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 5)
NEEA recommended that DOE consider the impact of alternate
refrigerants on ACUAC efficiency, including the technical feasibility
and economic implications of meeting new and amended standard levels
with alternate refrigerants. (NEEA, EERE-2019-BT-STD-0042-0024 at p. 9)
AHRI stated that changes to the engineering analysis would be
needed if conducting an analysis at present due to the transition to
alternative refrigerants. AHRI stated that the combined costs to add
sensors, controls, and other components for new refrigerants, including
the cost of these refrigerants, will increase the overall cost of the
subject equipment by 10-15 percent over minimum designs of 2018. (AHRI,
EERE-2019-BT-STD-0042-0014 at p. 7)
Trane stated that systems that use A2L refrigerants will need more
controls and sensors for safety reasons, which it predicted will impact
the adoption of the new technologies negatively. (Trane, EERE-2019-BT-
STD-0042-0016 at pp. 4-5) Trane also recommended that DOE consider in
its analysis the effect of new low-GWP refrigerants on cost, design,
and size of units. (Trane, EERE-2019-BT-STD-0042-0016 at p. 7) AHRI,
Carrier, and Trane also collectively mentioned the Federal authority to
regulate refrigerants and the timing of adoption of State building and
safety codes to support mildly flammable (A2L) refrigerants. (AHRI,
EERE-2019-BT-STD-0042-0014 at p. 5; Carrier, EERE-2019-BT-STD-0042-0013
at p. 7; Trane, EERE-2019-BT-STD-0042-0016 at p. 4)
In the May 2022 TP/ECS RFI, DOE requested data on the impact of
low-GWP refrigerants as replacements for R-410A on: (1) the cooling and
heating capacities and compressor power of ACUACs and ACUHPs at various
temperature conditions, including, but not limited to, the temperatures
currently included in the IEER metric; and (2) the size and design of
heat exchangers and compressors used in ACUACs and ACUHPs. 87 FR 31743,
31753 (May 25, 2022). DOE also sought feedback and any additional data
on the cost of implementing low-GWP refrigerants in ACUACs and ACUHPs
beyond the comments received in response to the May 2020 ECS RFI. Id.
In response to DOE's request for data on the impact of low-GWP
refrigerants on capacities, compressor power, and design of heat
exchangers and compressors in the May 2022 TP/ECS RFI, Carrier stated
that replacement refrigerants require optimization and compressor
displacement changes which could also impact performance results, if
not properly compensated for. Carrier provided data for a pure cycle
analysis where equal compressor isentropic efficiency, heat exchanger
efficiency, and system operating conditions were assumed. The analysis
presented by Carrier indicates that new low-GWP refrigerant
alternatives R-32 and R-454B do not result in a significant impact on
measured EER, IEER, and COP at 47 [deg]F and 17 [deg]F. (Carrier, EERE-
2022-BT-STD-0015-0010 Attachment 1 at p. 17) Carrier further commented
that the required displacement changes with the alternative
refrigerants it analyzed, so compressor optimization is required.
Carrier also stated the mass flow rates changed with the alternative
refrigerants it analyzed, so coil redesign may be required. (Id.)
Lennox stated that implementing low-GWP refrigerants will require
extensive product redesign from both a performance and safety standard
perspective for ACUACs and ACUHPs. (Lennox, EERE-2022-BT-STD-0015-0009
at pp. 5-6)
With respect to the cost of implementing low-GWP refrigerants in
ACUACs and ACUHPs, AHRI stated that refrigerant charge generally
increases with increasing efficiency. AHRI added that transporting
factory-charged systems with A2L refrigerants would be more expensive
than shipping existing systems charged with non-flammable refrigerants.
AHRI further commented that the Department of Transportation has not
approved special permits allowing systems with larger charge amounts to
ship in the same manner as those containing non-flammable refrigerants.
AHRI indicated that without special permits, the expectation is that
systems over the charge size threshold of 12 kilograms would need to be
shipped as HAZMAT, which would be more costly. (AHRI, EERE-2022-BT-STD-
0015-0008 at p. 6)
Carrier stated that the likely replacement for R-410A will be A2L
refrigerants with low-flame spread per ASHRAE Standard 34,
``Designation and Safety Classification of Refrigerants.'' (Carrier,
EERE-2022-BT-STD-0015-0010 Attachment 1 at p. 17) Carrier further
stated that per UL 60335-2-40 4th edition, ``Household and Similar
Electrical Appliances--Safety--Part 2-40: Particular Requirements for
Electrical Heat Pumps, Air-Conditioners, and Dehumidifiers,'' and
ASHRAE 15-2022, ``Safety Standard for Refrigeration Systems,''
additional changes would be required for A2L mitigation, including
addition of a refrigerant sensor, additional labeling, testing, and
certification. (Id.) Carrier commented that it is currently conducting
design work and system optimization for the anticipated 2025
implementation date, but that it has not determined final details on
cost impacts. (Id.) Carrier also stated that there is variability in
refrigerant prices due to supply chain issues and it anticipates that
the start of the American Innovation and Manufacturing (``AIM'') Act
regulations would increase those prices. (Id.)
NEEA recommended that the analysis consider the effects on
efficiency of the likely and approved refrigerant options for ACUACs
available domestically and internationally. NEEA specifically
recommended that DOE address the technical feasibility and economic
implications of meeting amended standard levels with equipment that
[[Page 44082]]
uses different refrigerants, similar to the analysis DOE conducted for
the 2016 beverage vending machine energy conservation standards
rulemaking (81 FR 1028 (Jan. 8, 2016)). (NEEA, EERE-2022-BT-STD-0015-
0013 at p. 8)
More generally in response to the May 2022 TP/ECS RFI, NYSERDA
recommended that in evaluating amended energy conservation standards,
DOE should be mindful of the transition to low-GWP refrigerants that
will be more common, even if not required, by 2029. (NYSERDA, EERE-
2022-BT-STD-0015-0007 at p. 3)
In response, DOE notes that these comments were received prior to
the 2023 ECS Negotiations, and in particular, comments received in
response to the May 2020 ECS RFI were received three years prior to the
2023 ECS Negotiations. Therefore, manufacturers' understanding of the
impacts of low-GWP refrigerants may have changed since the time of the
drafting of some of the comments received. DOE conducted multiple
rounds of manufacturer interviews to support the analyses for this
direct final rule. In the first round of manufacturer interviews, DOE
sought feedback on its engineering analysis, and the Department
particularly sought input on the potential impacts of low-GWP
refrigerants. DOE understands that manufacturers are currently still in
the process of developing models that use low-GWP refrigerants and
consequently there are currently no market efficiency data available
for models using low-GWP refrigerants. However, based on feedback
received to this point during the course of the rulemaking (including
manufacturer interviews and Carrier's comment providing preliminary
testing data), DOE has concluded that implementation of low-GWP
refrigerants such as R-32 and R-454B is unlikely to result in a
significant impact on measured efficiency of ACUACs and ACUHPs.
Therefore, DOE conducted its engineering analysis for this direct final
rule using efficiency data for models currently on the market that use
R-410A.
With respect to suggestions that DOE consider the impact of cost of
equipment using A2L refrigerants, DOE acknowledges that design changes
to implement A2L refrigerants could impact the cost of equipment and
that models using A2L refrigerants may require additional controls or
sensors to detect leaks and additional labeling. However, DOE's
research and feedback from manufacturer interviews suggests that based
on information available at this time, these cost differences are not
likely to have a significant impact on the marginal cost to improve
efficiency (i.e., the costs to implement these changes will likely be
similar at each efficiency level). DOE concludes that the switch to A2L
refrigerants will not make a significant difference to the incremental
costs of higher efficiency levels as compared to R-410A. Similarly, to
the extent that shipping costs may increase in some cases for equipment
shipped with A2L refrigerants, DOE does not expect these shipping costs
are likely to have a significant impact on the marginal costs to
consumers. Therefore, DOE conducted its cost analysis, including
shipping costs, considering models currently on the market that use R-
410A.
5. Cost Analysis
a. MPC Estimates
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
equipment, and the availability and timeliness of purchasing the
equipment on the market. The cost approaches are summarized as follows:
Physical teardowns: Under this approach, DOE physically
dismantles commercially-available equipment, component-by-component, to
develop a detailed bill of materials for the equipment.
Catalog teardowns: In lieu of physically deconstructing
equipment, DOE identifies each component using parts diagrams
(available from manufacturer websites or appliance repair websites, for
example) to develop the bill of materials for the equipment.
Price surveys: If neither a physical nor catalog teardown
is feasible (e.g., for tightly integrated products such as fluorescent
lamps, which are infeasible to disassemble and for which parts diagrams
are unavailable), cost-prohibitive, or otherwise impractical (e.g.,
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices from distributors and other commercial
channels.
In the May 2020 ECS RFI, DOE sought input on the increase in
manufacturer production cost (``MPC'') associated with incorporating
particular design options and/or with reaching efficiency levels above
the baseline. 85 FR 27941, 27949 (May 12. 2020). Specifically, DOE was
interested in whether and how the costs estimated in the January 2016
Direct Final Rule have changed since the time of that analysis. Id. DOE
also requested information on the investments necessary to incorporate
specific design options, including, but not limited to, costs related
to new or modified tooling (if any), materials, engineering and
development efforts to implement each design option, and manufacturing/
production impacts. Id.
Regarding feedback on MPC associated with each design option and
how costs estimated in the January 2016 Direct Final Rule have changed,
AHRI commented that the work done to quantify MPCs was generally
accurate at the time of the analysis. Regarding the list of design
options to improve efficiency, AHRI asserted that ACUAC progression to
larger heat exchangers was not properly characterized in the January
2016 Direct Final Rule and that increases to outdoor and indoor fan
efficiency were missing. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 7)
DOE notes that AHRI's comment was received three years ago and
prior to the 2023 ECS Negotiations. As discussed, as part of the
analyses supporting the 2023 ECS Negotiations, DOE contractors
conducted engineering interviews with manufacturers (all of which are
AHRI members) and analyzed the market after the January 1, 2023
compliance date. During these discussions, DOE contractors received
feedback on design options used in higher efficiency equipment
(including heat exchangers, indoor fans, and outdoor fans), and the
MPCs developed for this direct final rule analysis reflect the feedback
received in those confidential interviews. Additionally, the cost-
efficiency curves were developed based on ACUAC and ACUHP models
available on the market at the time of the 2023 ECS Negotiations. To
the extent that available models included larger heat exchangers and
increases to outdoor and indoor fan efficiency, the improvement in
efficiency and corresponding cost for these design options are
reflected in the cost-efficiency curves presented in this direct final
rule. Further, the cost-efficiency curves were presented during
multiple meetings during the 2023 ECS Negotiations \32\ and ACUAC/HP
Working Group members had ample opportunity to provide feedback.
---------------------------------------------------------------------------
\32\ See www.regulations.gov/document/EERE-2022-BT-STD-0015-0077
and www.regulations.gov/document/EERE-2022-BT-STD-0015-0080 for
presentations during the 2023 ECS Negotiations with cost efficiency
curves.
---------------------------------------------------------------------------
In the present case, DOE conducted the cost analysis using a
combination of physical teardowns and catalog
[[Page 44083]]
teardowns of models to assess how manufacturing costs change with
increased equipment efficiency. The resulting bill of materials
(``BOM'') provides the basis for the MPC estimates. For each equipment
class, DOE initially estimated the MPCs for models using physical and
catalog teardowns for each manufacturer that included sufficient
information in their equipment literature to conduct the cost
estimation analysis. As discussed in section IV.C.1 of this document,
DOE specifically focused its analysis on 7.5-ton, 15-ton, and 30-ton
ACUAC models with electric resistance heating or no heating.
To collect additional information regarding design options and
costs associated with equipment at different efficiency levels, DOE
provided design details and cost estimates, broken out by production
factors (materials, labor, depreciation, and overhead) and also by
major subassemblies (e.g., indoor/outdoor heat exchangers and fan
assemblies, controls, sealed system) and components (e.g., compressors,
fan motors), for each model analyzed in its physical and catalog
teardowns to the manufacturers of the models. DOE refined its analysis
based on all data and feedback provided by manufacturers in
confidential manufacturer interviews.
As previously discussed, DOE did not consider any design changes
specific to improving heating efficiency, and the cost-efficiency
analysis was focused on cooling mode operation. Further, as discussed,
because market efficiency data in terms of the new IVEC metric are not
available beyond the limited dataset provided to DOE contractors during
the Negotiations, the cost-efficiency analysis was conducted based on
IEER, and then IVEC values were developed to translate the IEER
efficiency levels to IVEC.
DOE analyzed costs (using physical teardowns and catalog teardowns)
across the full range of manufacturers and equipment offerings for
which DOE identified sufficient data to conduct the manufacturing cost
estimation analysis. Therefore, DOE's cost estimates reflect the
various design pathways that each manufacturer uses to increase
efficiency in their current model offerings. The following paragraphs
provide additional detail on DOE's methodology for developing MPC
estimates, and further detail is included in chapter 5 of the direct
final rule TSD. Generally, the methodology used for this direct final
rule is consistent with the methodology used in the January 2016 Direct
Final Rule analysis. 81 FR 2420, 2464 (Jan. 15, 2016).
For small and large equipment classes (represented by 7.5-ton and
15-ton capacities, respectively), DOE developed cost-efficiency curves
(i.e., relationship between rated IEER and MPC estimate) for each
manufacturer individually, and then aggregated the manufacturer-
specific cost curves into an industry-average cost-efficiency curve.
For efficiency levels for which there were no analyzed models from a
given manufacturer with rated IEER values that exactly match the
efficiency level, DOE's primary method to determine the MPCs for those
efficiency levels for that manufacturer was to interpolate or
extrapolate results. For example, to determine the MPC at 7.5-ton
Efficiency Level 1 (15.4 IEER) for one manufacturer, DOE interpolated
between the results for models rated at 14.8 IEER and 15.6 IEER. For
cases in which a manufacturer does not offer a model near a given
efficiency level at the representative capacity but offers models at
that efficiency level at a similar capacity, DOE estimated the costs of
similar capacity models at the target efficiency level and then scaled
those costs up or down to reflect the capacity difference and estimate
what the cost would be for that model to achieve that efficiency level
at the representative capacity. For example, to determine the MPC at
7.5-ton Efficiency Level 5 (19.9 IEER) for one manufacturer, DOE scaled
down the cost of an 8.5-ton model with a rated IEER of 19.9 to reflect
DOE's estimate of the cost of a 7.5-ton model with comparable
efficiency, by developing a cost per efficiency times capacity
relationship for that specific model line. There were certain
efficiency levels for which some manufacturers did not offer models at
or near the target efficiency level, even including capacities slightly
different than the representative capacity. For these levels (for
example, the 15-ton Efficiency Level 4 (20.1 IEER)), DOE calculated the
relative percentage increase in cost relative to baseline for a
manufacturer with a commercially-available model at that level, and
then applied that percentage increase to the baseline cost for the
other manufacturers to estimate MPCs at that level for each
manufacturer.
For the very large equipment class represented by 30-ton
representative units, DOE identified fewer manufacturers offering
equipment in this capacity range. After collecting information for all
models with sufficient data available to develop cost estimates, DOE
concluded that there are insufficient models available to develop
separate cost curves for each manufacturer and then combine into an
industry-average cost-efficiency curve as was done for the small and
large equipment classes. Therefore, DOE developed a single industry-
wide cost curve for very large equipment including models from all
identified manufacturers. Additionally, DOE's review of equipment
available on the market showed that there are two platform types of
equipment for 30-ton models (and the very large equipment class more
broadly): (1) models with smaller cabinets for light commercial
applications, and (2) models with larger cabinets for industrial-type
applications. DOE concluded that there are insufficient models with the
larger cabinet size spanning the range of efficiency levels being
considered (both at the low and high ends of the efficiency range) to
develop cost estimates based on the larger cabinet size. Therefore, DOE
developed incremental MPCs based on the smaller cabinet platform.
As discussed, DOE's cost analysis focused on ACUAC models with
electric resistance heating or no heating. In the economic analyses for
this rulemaking, the MPCs developed for ACUACs with electric resistance
heating or no heating were applied for all ACUACs, including ACUACs
with all other types of heating. As previously discussed, DOE has found
that ACUACs with electric resistance heating or no heating model lines
and ACUACs with all other types of heating model lines generally differ
only in the type of supplemental heating and are otherwise identical;
therefore, the incremental MPCs for ACUACs with electric resistance
heating or no heating and ACUACs with all other types of heating would
be the same. In other words, the cost to achieve higher efficiencies
would not be impacted by the presence of a furnace. DOE also developed
a baseline cost differential between a baseline ACUAC model with
electric resistance heating or no heating as compared to a baseline
ACUHP model, reflecting the cost differentials of heat pump technology.
Consistent with the analysis from the January 2016 Direct Final Rule
and feedback received during manufacturer interviews, DOE applied the
incremental MPC adders determined for ACUACs with electric resistance
or no heating to develop cost curves for ACUHPs. In other words, while
there is an absolute cost differential associated with heat pump
technology, DOE assumed that this cost differential remained constant
across all efficiency levels (e.g., the cost to achieve higher
efficiencies would not be impacted by the presence of a reversing
[[Page 44084]]
valve). The one exception to this approach was developing costs for the
recommended efficiency levels for ACUHPs, because as discussed in
section IV.C.2.a of this document, the IVEC values at those efficiency
levels for ACUHP equipment classes were slightly different than the
IVECs for the comparable efficiency levels for the ACUACs with all
other types of heating., For these recommended ACUHP IVEC levels, DOE
used interpolation to adjust the MPC estimates for the corresponding
ACUAC levels to reflect the slight difference in IVEC levels between
ACUACS and ACUHPS. As discussed in section IV.C.2 of this document, DOE
translated the cost-efficiency relationships based on IEER to IVEC and
IVHE. Further discussion of DOE's methodology for developing MPC
estimates is included in chapter 5 of the direct final rule TSD.
b. MSP Estimates, Manufacturer Markup, and Shipping Costs
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce. DOE developed
an average manufacturer markup by examining the annual Securities and
Exchange Commission (``SEC'') 10-K reports \33\ filed by publicly-
traded manufacturers primarily engaged in commercial package air
conditioning and heating equipment manufacturing and whose combined
product range includes ACUACs and ACUHPs.
---------------------------------------------------------------------------
\33\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) (available at: www.sec.gov/edgar/searchedgar/companysearch.html) (last accessed Oct. 3, 2023).
---------------------------------------------------------------------------
In the May 2020 ECS RFI, DOE requested feedback on whether
manufacturer mark-ups determined in the January 2016 Direct Final Rule
are still appropriate for ACUACs and ACUHPs. 85 FR 27941, 27950 (May
12, 2020). In response, AHRI stated that its members found that the
manufacturer markups from the January 2016 Direct Final Rule are still
appropriate for ACUACs. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 8) AHRI
stated that manufacturer markups for ACUHPs are up to 10 percent higher
than those determined in the January 2016 Direct Final Rule. (Id.)
DOE incorporated AHRI's feedback into its current analysis,
estimating manufacturer markups of 1.30 for small ACUACs, 1.32 for
small ACUHPs, 1.34 for large ACUACs, 1.36 for large ACUHPs, 1.41 for
very large ACUACs, and 1.43 for very large ACUHPs. These markups were
applied to MPC estimates to develop MSP estimates. See section IV.J.2.d
of this document and chapter 12 of the direct final rule TSD for
additional discussion on manufacturer markups.
Because the design options associated with certain incremental
efficiency level involved increases in cabinet sizes, DOE also
estimated the incremental shipping cost at each efficiency level
separate from the MSP. More specifically, DOE estimated the per-unit
shipping costs based on the cabinet dimensions at each efficiency
level, assuming the use of a typical 53-foot flatbed trailer. For
shipping of HVAC equipment, the size threshold of a trailer is
typically met before the weight threshold. DOE used the same approach
used for estimating the cost-efficiency relationship, evaluating
shipping costs for each manufacturer individually then averaging the
results for the small and large equipment classes, and (for the reasons
described for MPC estimates in section IV.C.5.a of this document) a
single industry-wide shipping cost relationship for the very large
equipment class including models from all identified manufacturers.
Further discussion of DOE's methodology for developing shipping cost
estimates is included in chapter 5 of the direct final rule TSD.
6. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of IVEC versus MSP plus
shipping cost (in dollars), which form the basis for subsequent
analyses. As previously mentioned, DOE's cost analysis focused on
ACUACs with electric resistance heating or no heating, which were also
used to represent the MPCs of ACUACs with all other types of heating.
The incremental MPC estimates for these classes were applied to ACUHPs.
The total MPC, shipping cost, and MSP plus shipping cost for each
efficiency level for the ACUAC equipment classes are listed in Table
IV.8 through Table IV.10. The total MPC, shipping cost, and MSP plus
shipping cost for each efficiency level for the ACUHP equipment classes
(which, as discussed, are based on the same incremental MPC estimates
as for ACUAC equipment classes) can be found in chapter 5 of the direct
final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.087
[[Page 44085]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.088
[GRAPHIC] [TIFF OMITTED] TR20MY24.089
See chapter 5 of the direct final rule TSD for additional detail on
the engineering analysis.
D. Markups Analysis
The markups analysis develops appropriate markups (e.g.,
manufacturer markups, retailer markups, distributor markups, contractor
markups) in the distribution chain and sales taxes to convert the MPC/
MSP estimates derived in the engineering analysis to consumer prices,
which are then used in the LCC and PBP analysis. The markups are
multiplicative factors applied to MPCs and MSPs. At each step in the
distribution channel, companies mark up the price of the equipment to
cover business costs and profit margin. Before developing markups, DOE
defines key market participants and identifies distribution channels.
In response to the May 2020 ECS RFI, AHRI commented that it is
researching distribution channels; however, it had no feedback at the
time the comment was written. (AHRI, EERE-2019-BT-STD-0042-0014 at p.
8) Carrier commented that it has not observed large shifts in the
distribution channels, as the industry for the subject equipment
remains mature in the U.S. (Carrier, EERE-2019-BT-STD-0042-0013 at p.
12)
However, AHRI disagreed with DOE's use of incremental markups,
citing an analysis by Everett Shorey from 2014, and recommended that
DOE revert to using the baseline markup for both baseline and
incremental costs. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 8)
DOE responded thoroughly to the Shorey report in the previous
direct final rule. See 81 FR 2420, 2468 (Jan. 15, 2016). In summary,
DOE's incremental markup approach assumes that an increase in
profitability, which is implied by keeping a fixed markup when the
product price goes up, is unlikely to be viable over time in reasonably
competitive markets. DOE recognizes that actors in the distribution
chains are likely to seek to maintain the same markup on appliances in
response to changes in manufacturer sales prices after an amendment to
energy conservation standards. However, DOE believes that retail
pricing is likely to adjust over time as those actors are forces to
readjust their markups to reach a medium-term equilibrium in which per-
unit profit is relatively unchanged before and after standards are
implemented.
DOE acknowledges that markup practices in response to amended
standards are complex and vary across business conditions. However,
DOE's analysis necessarily only considers changes in appliance
offerings that occur in response to amended standards. DOE continues to
maintain that its assumption that standards do not facilitate a
sustainable increase in profitability is reasonable.
PGE commented that ACUACs are purchased in larger volume by
distributors, with larger discounts from manufacturers, and thereby
resulting in lower prices to contractors. PGE stated that raising the
minimum efficiency ratings for ACUACs will have a lesser negative
wholesale pricing impact due to this volume. (PGE, EERE-2019-BT-STD-
0042-0009 at p. 2)
DOE reviewed the distribution channels and overall markups from the
January 2016 Direct Final Rule at the February 9, 2023 public meeting
webinar for this rulemaking (see presentation slides, EERE-2022-BT-STD-
0015-0073 at pp. 20-23), with updated overall markups presented at the
March 21-22, 2023 ACUAC/HP Working Group meeting (see presentation
slides, EERE-2022-BT-STD-0015-0080 at pp. 30-33). There was no
stakeholder discussion regarding the distribution channels or markups
at these meetings. For this reason, DOE continues to use the
distribution channels from the January 2016 Direct Final Rule, as well
as the same overall methodology, but with updated inputs.
1. Distribution Channels
For ACUACs and ACUHPs, the main parties in the distribution channel
are: (1) manufacturers; (2) wholesalers; (3) small or large mechanical
contractors, and (4) consumers. See chapter 6 and appendix 6A of the
direct final rule TSD for a more detailed discussion about parties in
the distribution chain.
For the direct final rule, DOE characterized three distribution
[[Page 44086]]
channels to describe how the ACUAC and ACUHP equipment passes from the
manufacturer to the commercial consumer. The first of these channels,
the replacement distribution channel, estimated to represent 66.0
percent of shipments, was characterized as follows:
Manufacturer [rarr] Wholesaler [rarr] Small or Large Mechanical
Contractor [rarr] Consumer
The second channel, the new construction distribution channel,
estimated to represent 16.5 percent of shipments, was characterized as
follows:
Manufacturer [rarr] Wholesaler [rarr] Small or Large Mechanical
Contractor [rarr] General Contractor [rarr] Consumer
In the third distribution channel, which applies to both the
replacement and new construction markets, estimated to represent 17.5
percent of shipments, the manufacturer sells the equipment directly to
the customer through a national account:
Manufacturer [rarr] Consumer (National Account)
2. Markups and Sales Tax
DOE developed baseline and incremental markups for each actor in
the distribution channels. Baseline markups are applied to the price of
equipment with baseline efficiency, while incremental markups are
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental
markup is typically less than the baseline markup and is designed to
maintain similar per-unit operating profit before and after new or
amended standards.\34\
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\34\ Because the projected price of standards-compliant
equipment is typically higher than the price of baseline equipment,
using the same markup for the incremental cost and the baseline cost
would result in higher per-unit operating profit. While such an
outcome is possible, DOE maintains that in markets that are
reasonably competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
Following the same approach applied in the January 2016 Direct
Final Rule, DOE relied on several sources to estimate average baseline
and incremental markups, including: (1) the 2017 Annual Wholesale Trade
Survey for ``Hardware and Plumbing and Heating Equipment and Supplies
Merchant Wholesaler'' \35\ to develop wholesaler markups, and (2) U.S.
Census Bureau's 2017 Economic Census data \36\ for the commercial and
institutional building construction industry to develop mechanical and
general contractor markups. In addition, DOE used the 2005 Air
Conditioning Contractors of America's (``ACCA'') financial analysis for
the heating, ventilation, air conditioning, and refrigeration
(``HVACR'') contracting industry \37\ to disaggregate the mechanical
contractor markups into small and large, replacement and new
construction markets.
---------------------------------------------------------------------------
\35\ U.S. Census Bureau, 2017 Annual Wholesale Trade Survey
(available at: www.census.gov/data/tables/2017/econ/awts/annual-reports.html) (last accessed Feb. 7, 2023).
\36\ U.S. Census Bureau, 2017 Economic Census Data (2017)
(available at: www.census.gov/econ/) (last accessed Feb. 7, 2023).
\37\ Air Conditioning Contractors of America (ACCA), Financial
Analysis for the HVACR Contracting Industry: 2005 (available at:
www.acca.org/store/) (last accessed Feb. 7, 2023).
---------------------------------------------------------------------------
In addition to the markups, DOE derived State and local taxes from
data provided by the Sales Tax Clearinghouse.\38\ These data represent
weighted-average taxes that include county and city rates. DOE derived
population-weighted average tax values for each of the regions from the
Energy Information Administration's 2018 Commercial Building Energy
Consumption Survey (``CBECS 2018'') \39\ considered in the analysis.
---------------------------------------------------------------------------
\38\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along
with Combined Average City and County Rates, 2023 (available at:
thestc.com/STrates.stm) (last accessed Sept. 11, 2023).
\39\ Energy Information Administration (EIA), 2018 Commercial
Building Energy Consumption Survey (available at: www.eia.gov/consumption/commercial/) (last accessed August 19, 2023).
---------------------------------------------------------------------------
Chapter 6 of the direct final rule TSD provides details on DOE's
development of markups for ACUACs and ACUHPs.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of ACUACs at different efficiencies for a
representative sample of U.S. commercial buildings, and to assess the
energy savings potential of increased equipment efficiency. DOE did not
analyze ACUHP energy use because, for the reasons explained in section
IV.C.3 of this document, the energy modeling in the engineering
analysis was performed only for ACUAC equipment.
The energy use analysis estimates the range of energy use of ACUACs
in the field (i.e., as they are actually used by consumers). The energy
use analysis provides the basis for other analyses DOE performed,
particularly assessments of the energy savings and the savings in
consumer operating costs that could result from adoption of amended or
new standards.
Chapter 7 of the direct final rule TSDs provides details on DOE's
energy use analysis for ACUACs. DOE developed engineering correlation
data and energy consumption estimates only for the ACUAC equipment
classes that have electric resistance heating or no heating. For
equipment classes with all other types of heating, DOE assumed that the
incremental change in efficiency, and hence, energy savings and energy
cost savings, would be similar to the values calculated for the
equipment classes with electric resistance heating or no heating.
1. System-level Calculations
DOE based the energy use estimates for all equipment classes on
three sets of input data:
(1) The engineering analysis provided data that were used to
calculate the equipment net capacity, compressor, and condenser power
consumption as a function of outdoor air temperature (``OAT''), the
indoor fan power as a function of external static pressure (``ESP''),
and controls power (constant), for each equipment stage at each
efficiency level. The compressor, condenser, indoor fan, and controls
are referred to as the ``system components'' in the discussion that
follows. The ``net capacity'' is defined as the maximum-stage system
capacity minus the heat generated by the indoor fan. DOE assumed that
the ESPs appropriate to each equipment class were those agreed upon in
the ACUAC/HP Working Group TP Term Sheet, plus an increment of 0.1 to
account for the economizer pressure drop (also included in the ACUAC/HP
Working Group TP Term Sheet).
(2) Hourly A/C system data were generated using Energy Plus for 11
commercial building prototypes, 4 building vintages, and 16 climate
zones; as each building prototype includes multiple systems serving
multiple zones, the total number of simulated systems in the 11
commercial building prototypes is 48. Given 4 vintages and 16 climates,
this leads to a total of 3,072 individual systems. DOE used TMY3
weather data as simulation input, with the cities used to represent
each climate zone the same as those used in the ACUAC/ACUHP Test
Procedure. The simulation data account for economizer use. The hourly
data extracted from the simulations for each system included the total
system load (heat removed from the space), the fan fraction (fraction
of the hour that the fan is on), and cooling and heating coil rates.
The coil cooling/heating rates were used only to determine the system
operating mode.
(3) Data from the Commercial Building Energy Consumption Survey
(``CBECS'') 2018 were used to estimate,
[[Page 44087]]
for those buildings using packaged cooling systems, the relative share
of floor space by Census Division and building type. In the 2015
analysis, this description of the relevant features of the building
stock with associated weights was referred to as the Generalized
Building Sample (``GBS'').
DOE prepared the engineering data for input to the energy use
analysis as follows: For each EL and equipment stage, the engineering
correlations were used to calculate the net capacity and component
power consumption for a set of integer temperatures spanning the range
30 [deg]F to 110 [deg]F (which exceeds the maximum temperature in the
TMY3 data). The capacity and power consumption data were then scaled by
the system nominal capacity; the power consumption is, therefore,
defined on a per-unit-of-capacity basis. The system nominal capacity
was defined as the maximum stage capacity at 95 [deg]F.
DOE processed the building simulation data for input to the energy
use calculation as follows: First, the data were scaled to the nominal
system capacity. For this analysis, consistent with assumption used in
the development of the ACUAC/ACUHP Test Procedure, DOE assumed that the
system capacity was equal to 1.15 times the peak hourly load. Next, DOE
assigned one of four operating modes to each hour: (1) off (zero fan
energy use); (2) fan only (fan energy >0 and coil rates = 0); (3)
cooling (cooling coil rate >0), and (4) heating (heating coil rate >0).
For multizone variable air volume (``VAV'') systems, there were a few
hours where both cooling and heating rates are positive; as these hours
were dominated by the cooling load, they were assigned to cooling mode.
DOE combined the building simulation data with the engineering data
to determine the energy use in each hour, and summed this energy use
over all hours to determine the annual summer and winter energy use per
unit of capacity. The summer season was defined as May through
September, and the winter season as all other months in the year. In
each hour, the energy use calculations are adjusted based on the system
operating mode:
Fan-only mode: the engineering analysis provided a
specific value for fan power during fan-only operation; during these
hours the energy use is equal to the fan power multiplied by the fan
fraction (to account for the fact that the system may be off during
part of the hour) plus the controls power.
Heating mode: as discussed with the ACUAC/HP Working
Group, DOE assumed that the fan would operate at maximum stage during
heating hours; during these hours the energy use is equal to the fan
power multiplied by the fan fraction (to account for the fact that the
system may be off during part of the hour) plus the controls power at
maximum stage.
Cooling mode: all equipment designs include multi-stage
compressors, so the calculation must first determine which stages are
operating during the hour. DOE calculated the total heat removed, and
compared this to the net capacity at each stage; the highest stage that
is less than the total load is the lower stage, and the next stage up
is the upper stage. The fraction of load allocated to each stage
determines the fraction of the hour that the system operates in each
stage (equations describing these calculations are provided in chapter
7 of the direct final rule TSD). DOE used the values of component power
for the OAT in the hour to calculate the energy use for the upper and
lower stages. The total energy use is equal to the weighted sum of the
values for the lower and upper stages. If the lower stage was off, DOE
adjusted for cyclic performance using the degradation coefficient and
load factor as calculated according to section 6.2, Part-Load Rating,
of AHRI 340/360-2007, ``2007 Standard for Performance Rating of
Commercial and Industrial Unitary Air-Conditioning and Heat Pump
Equipment.''
Off mode: the energy use is equal to the controls power
for the fan-only mode.
DOE converted the system-level energy use data to building-level
energy use data by averaging the energy use over all systems in a
building. To calculate this average, DOE weighted each system based on
the system nominal capacity. DOE also accounted for the possibility
that installation of new equipment would require a conversion curb. DOE
estimated that the presence of a conversion curb would add 0.2 to the
ESP, with a resulting adjustment to fan power and system net capacity.
DOE calculated the energy use two times for each system--once with no
assumed conversion curb, and once with the assumed conversion curb. DOE
then averaged these results to get a single value for each system. The
percent of installations with and without conversion curbs, for each
equipment class and efficiency level, was estimated based on data
collected for the January 2016 Direct Final Rule. These data were
adjusted to account for the current equipment baseline, and the cross-
walk between IEER and IVEC, as discussed during the 2023 ECS
Negotiations. DOE converted the per-unit energy use to a value
appropriate to each representative unit by multiplying the energy use
by the representative unit capacity.
2. Generalized Building Sample
The calculations described in the previous section result in summer
and winter energy use values for each building prototype, vintage, and
climate. To use these data in the LCC, sample weights must be defined
that reflect the relative frequency of each of these attributes in the
building stock. In addition to building prototype, vintage, and
climate, DOE included Census Division (``CD'') and building type as
attributes in the building sample. Census Division is included because
energy prices depend on these regions. Building type is included as
this is the categorization used in CBECS and in the AEO.
DOE used CBECS 2018 to determine the total floor space cooled by
packaged equipment distributed by Census Division and building type as
encoded by Principal Building Activity (``PBA'') in CBECS. DOE mapped
the CBECS PBA definitions to the building type definition used in the
AEO commercial demand module, and the Department used the AEO building
type definitions as categories in the LCC sample. In general, the
mapping of building prototype to building type is straightforward (for
example, office, retail, assembly). For the food sales and educational
building types, there are two building prototypes (i.e., full-service
and quick-service, and primary and secondary schools respectively).
Additional data available in CBECS were used to calculate the
percentage of building type floor space to allocate to each building
prototype.
DOE used four vintage categories: pre-1980, 1980-2003, 2004-2018
and 2019-2029. DOE used CBECS2018 to apportion floor space by vintage
and building type for the first three vintage categories. For the
fourth category, DOE used AEO 2023 commercial floor space projections
to adjust the floor space to the compliance year 2029. DOE used the AEO
to estimate, for the period 2019-2029, the floor space added and
demolished relative to existing floor space in 2018, for each building
type. DOE used these percentages to calculate the existing floor space
by vintage and building type in 2029, then converted the absolute
numbers to percentages.
DOE combined the climate zones (``CZ'') and Census Divisions into a
set of 28 distinct sub-regions, using population data to estimate the
weight for each region. These weights were used to distribute the floor
space by CD
[[Page 44088]]
into floor space by CD-CZ combined sub-regions.
DOE used the building simulation data to estimate the total cooling
capacity per square foot of cooled floor space for each climate zone,
building type and vintage. DOE used the capacity per square foot
numbers to convert total cooled floor space to total installed
capacity. DOE assigned a weight to each combination of attributes in
the building sample based on the percentage of installed capacity.
DOE tailored the sample weights for the small, large, and very
large equipment classes using a filter based on system nominal
capacity. If the system nominal capacity was less than 0.8 times the
representative unit capacity, the system was excluded from the sample
(and from the calculation of building-level energy use).
3. Energy Use Adjustment Factors
Building simulations reflect idealized conditions and may over-
represent or under-represent heating and cooling loads relative to
real-world conditions. In the January 2016 Direct Final Rule, DOE's
analysis relied on building simulation data that had been calibrated to
CBECS 1995. In the current analysis, DOE's building simulations were
not calibrated, so DOE accounted for any deviations from real-world
conditions by calculating energy use adjustment factors.
DOE calculated these factors as follows:
DOE used CBECS 2018 estimates of cooling and ventilation
energy use to estimate the average equipment energy use per square foot
of cooled floor space as a function of building type.
DOE used data published with the AEO NEMS model
(commercial demand module) to estimate the ratio of the stock average
efficiency of packaged cooling equipment in 2018 to the efficiency of
the current standard. DOE applied this ratio to convert the CBECS
stock-average energy use calculation to a value that represents what
the energy use would be if the equipment efficiencies were all equal to
the current standard.
DOE took the calculated energy use per unit of capacity
for the EL0 engineering data, combined with the capacity per square
foot estimate from the building simulation data, to calculate the
equipment energy use per square foot at EL0. As this value varies
slightly by equipment class, DOE used shipments weight to calculate an
average across all installed stock.
DOE compared, for each building type, the CBECS 2018
estimate of energy use per square foot at the current standard to the
value calculated for the EL0 engineering data. DOE used the ratio of
these two values to define an energy use adjustment factor for each
building type. In most cases, the factor is larger than 1, reflecting
an under-estimate of energy use by the simulation data. However, for
education and healthcare buildings, the calculated factor is less than
1, corresponding to an over-estimate of energy use in the simulated
data.
DOE applied the energy use adjustment factors to the
energy use values input to the LCC.
DOE considered two other trends that can impact cooling energy use
by space-conditioning equipment: (1) changes to building shell
characteristics and internal loads, and (2) increases in cooling-degree
days (driven by population shifts and estimated weather trends). Both
these trends are modeled in the AEO commercial demand module. The first
is captured in the AEO cooling factor, which tends to decrease loads
over time. The second is captured in AEO estimates of Cooling Degree
Days (``CDD'') over the projection period. DOE estimated the combined
impact of the two trends, and calculated that the average impact of the
combined trends over a 30-year period results in a 2.8-percent increase
in equipment energy use. DOE decided to not include the impact of these
trends in the energy use analysis and LCC, as these issues were not
discussed during the ASRAC negotiations, and so would present a
deviation from the agreed-upon methodology. As the small increase would
apply to all ELs, DOE determined that there is no impact to the
decision criteria.
4. Comments
In response to the May 2020 ECS RFI, the CA IOUs commented that DOE
should update the weather data used in the energy use analysis to
reflect the temperatures recorded in the U.S. in recent years. The CA
IOUs recommend that DOE consider the methodology used by the California
Energy Commission to update weather files to analyze the Title 24-2022
Building Energy Code. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 5)
AHRI and Trane stated that the methodology used in the January 2016
Direct Final Rule is out of date. (AHRI, EERE-2019-BT-STD-0042-0014 at
p. 8; Trane, EERE-2019-BT-STD-0042-0016 at p. 9) AHRI and Carrier both
recommended using the ASHRAE prototype buildings and the ASHRAE 205,
``Standard Representation of Performance Simulation Data for HVAC&R and
Other Facility Equipment,'' standardized equipment modeling approach,
along with the Dodge data base, for weighting factors. AHRI and Carrier
further suggested that the energy modeling should include real world
static pressures for well-designed duct work, economizers, fan speed
control, stages of capacity, energy recovery, supply air reset, and
static pressure reset. (AHRI, EERE-2019-BT-STD-0042-0014 at pp. 8-9;
Carrier, EERE-2019-BT-STD-0042-0013 at pp. 13-14) Carrier added that
both heating and cooling should be modeled, as well as occupied and
unoccupied operation. (Id.)
NEEA recommended that DOE account for part-load operation, staged
systems, and varying percentages of outside air. (NEEA, EERE-2019-BT-
STD-0042-0024 at p. 9)
In response, DOE reviewed its energy use analysis in light of these
comments. To evaluate the adequacy of the TMY3 weather data, DOE
downloaded hourly historical dry-bulb temperature data for the period
1998-2020, for the sixteen climate locations used in the TP and ECS
analyses, from the National Renewable Energy Laboratory (``NREL'')
Physical Solar Model (``PSM'') database, Version 3 (link https://developer.nrel.gov/docs/solar/nsrdb/). DOE constructed histograms of
the historical data (binned temperature distributions) and compared
these to distributions created from the TMY3 weather data. As the focus
of the ACUAC/HP Working Group was on cooling, DOE looked primarily at
distributions of temperatures greater than or equal to 70 deg F. The
data did not show any large discrepancies. Both the maximum
temperatures and the percent of annual hours in the high temperature
bins were comparable across all sites. DOE also calculated annual 65-
degree based heating and cooling degree days (HDD and CDD) for the two
datasets; CDD values calculated were 1680 for the TMY3 data and 1672
for the NREL-PSM data; HDD values calculated were 4635 for the TMY3
data and 4634 for the NREL-PSM data. DOE determined that the
distribution of hourly temperatures in the TMY3 data are entirely
consistent with the actual historical data for the last 20 years. In
particular, CDD and HDD metrics, which are most highly correlated with
cooling and heating loads, are almost identical between the two data
sets. DOE presented these findings to the stakeholders, and did not
make any adjustments to the energy use analysis on this basis.
In addition to the review of historical weather data requested by
the stakeholders, as noted in section IV.E of this document, DOE also
analyzed the
[[Page 44089]]
projections of CDD trends and commercial sector cooling load trends
published in AEO 2023. While this review was not requested by
stakeholders, for completeness DOE evaluated any potential impacts
these trends might have on energy use over the analysis period. DOE
found that the combined effect of these two trends would be to increase
lifetime energy consumption at the baseline by 2.8%; the same increase
would occur at all higher ELs, hence, the impact on energy savings
would also be 2.8%. A small increase in energy savings across all ELs
cannot change the relative cost-effectiveness of the analyzed TSLs; and
these issues were not actively discussed during the 2023 ECS
Negotiations. Therefore, DOE decided not to make this adjustment in the
DFR.
DOE used four building vintages, including the ASHRAE 90.1-2019
building prototypes, to account for variability in building stock
characteristics in the population of buildings using ACUACs/ACUHPs. DOE
reviewed and discussed methodologies for weighting the building
simulation data with stakeholders during the 2023 ECS Negotiations (see
EERE-2022-BT-STD-0015-0055 at pp. 26-30). The sales data (Dodge data)
presented by stakeholders was from 2006 and may not represent the
current market. Instead, DOE presented an alternative approach, based
on 2018 CBECS data, 2019 Census data, and supplementary data from AEO
2023, which was accepted by stakeholders. More detail on DOE's
weighting approach is provided in section IV.E.2 of this document.
During the ACUAC/HP Working Group TP negotiations, static pressures
were extensively discussed, and stakeholders adopted new test procedure
values more appropriate to real-world conditions. DOE used these
values, with a 0.1 increment to account for economizer pressure drop,
in this ECS analysis. DOE's engineering data and the methods DOE used
to calculate energy use accounted for occupied and unoccupied hours,
part-load operation, staged systems, economizer operation, fan speed
control, and variable rates of outdoor air flow. As previously
discussed, DOE did not conduct an energy use analysis specific to
heating.
Furthermore, DOE reviewed its proposed methodology for the energy
use analysis in the February 9, 2023 webinar (EERE-2022-BT-STD-0015-
0073 at pp. 18-19), the February 22-23, 2023 meeting (EERE-2022-BT-STD-
0015-0078 at p. 36), and the March 21-22, 2023 meeting (EERE-2022-BT-
STD-0015-0080 at pp. 21-29). In general, this methodology is consistent
with that used to develop the weights in the IVEC metric as part of the
test procedure negotiations, with scalars developed to match energy use
to CBECS 2018. There were no objections to the energy use methodology
as presented in ACUAC/HP Working Group meetings.
DOE also reviewed updates to its energy use analysis to account for
conversion curbs in the April 24, 2023 slide deck (EERE-2022-BT-STD-
0015-0086 at p. 4) and based on discussion regarding installation costs
related to conversion curbs at the March 22, 2023 meeting (EERE-2022-
BT-STD-0015-0091 at pp. 40-41, 47).
Chapter 7 of the direct final rule TSD provides further details on
DOE's energy use analysis for ACUACs and ACUHPs.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
ACUACs. The effect of new or amended energy conservation standards on
individual consumers usually involves a reduction in operating cost and
an increase in purchase cost. DOE used the following two metrics to
measure consumer impacts:
Life-cycle Cost (``LCC'') is the total consumer expense of
an appliance or equipment over the life of that equipment, consisting
of total installed cost (manufacturer selling price, distribution chain
markups, sales tax, and installation costs) plus operating costs
(expenses for energy use, maintenance, and repair). To compute the
operating costs, DOE discounts future operating costs to the time of
purchase and sums them over the lifetime of the equipment.
Payback Period (``PBP'') is the estimated amount of time
(in years) it takes consumers to recover the increased purchase cost
(including installation) of more-efficient equipment through lower
operating costs. DOE calculates the PBP by dividing the change in
purchase cost at higher efficiency levels by the change in annual
operating cost for the year that amended or new standards are assumed
to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of ACUACs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline equipment.
For each considered efficiency level in each equipment class, DOE
calculated the LCC and PBP for a nationally representative set of
commercial buildings. As stated previously, DOE developed building
samples from the 2018 CBECS. For each sample building, DOE determined
the energy consumption for the ACUACs and the appropriate energy price.
By developing a representative sample of buildings, the analysis
captured the variability in energy consumption and energy prices
associated with the use of ACUACs.
Inputs to the LCC calculation include the installed cost to the
commercial consumer, operating expenses, the lifetime of the equipment,
and a discount rate. Inputs to the calculation of total installed cost
include the cost of the equipment--which includes MPCs, manufacturer
markups, retailer and distributor markups, and sales taxes (where
appropriate)--and installation costs. Inputs to the calculation of
operating expenses include annual energy consumption, energy prices and
price projections, repair and maintenance costs, equipment lifetimes,
and discount rates. Inputs to the payback period calculation include
the installed cost to the consumer and first year operating expenses.
DOE created distributions of values for equipment lifetime, and
discount rates, with probabilities attached to each value, to account
for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on
a Monte Carlo simulation to incorporate uncertainty and variability
into the analysis. The Monte Carlo simulations randomly sample input
values from the probability distributions and ACUAC user samples. For
this rulemaking, the Monte Carlo approach is implemented in the Python
programming language. The model calculated the LCC for equipment at
each efficiency level for 10,000 buildings per simulation run. The
analytical results include a distribution of 10,000 data points showing
the range of LCC savings for a given efficiency level relative to the
no-new-standards case efficiency distribution. In performing an
iteration of the Monte Carlo simulation for a given commercial
consumer, equipment efficiency is chosen based on its probability. If
the chosen equipment efficiency is greater than or equal to the
efficiency of the standard level under consideration, the LCC
calculation reveals that a consumer is not impacted by the standard
level. By accounting for consumers who already purchase more-efficient
equipment, DOE avoids
[[Page 44090]]
overstating the potential benefits from increasing equipment
efficiency. DOE calculated the LCC for consumers of ACUACs as if each
were to purchase new equipment in the first year of required compliance
with new or amended standards. Amended standards apply to ACUACs
manufactured after a date that is the later of the date that is three
years after publication of any final rule establishing an amended
standard or the date that is six years after the effective date of the
current standard. (42 U.S.C. 6313(a)(6)(C)(iv)) In this case, the
latter date prevails; therefore, DOE used 2029 as the first year of
compliance with any amended standards for ACUACs.
Table IV.11 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the computer model, and of all
the inputs to the LCC and PBP analyses, are contained in chapter 8 of
the direct final rule TSD and its appendices.
BILLING CODE 6450-01-P
[GRAPHIC] [TIFF OMITTED] TR20MY24.090
BILLING CODE 6450-01-C
DOE reviewed the various LCC inputs at the February 9, 2023 webinar
(EERE-2022-BT-STD-0015-0073 at pp. 25-35) and the March 21-22, 2023
meeting (EERE-2022-BT-STD-0015-0080 at pp. 35-47). The only significant
stakeholder discussion involved lifetimes and installation, repair, and
maintenance costs. These comments are discussed in more detail in their
respective following sections.
1. Equipment Cost
To calculate equipment costs, DOE multiplied the MPCs developed in
the engineering analysis by the markups described previously (along
with sales taxes). DOE used different markups for baseline equipment
and higher-efficiency equipment, because DOE applies an incremental
markup to the increase in MSP associated with higher-efficiency
equipment. For ACUACs, DOE reviewed historical producer price index
(``PPI'') data for ``unitary air-conditioners, except heat pumps''
spanning 1978 to 2022, but did not find a discernable long-term trend.
As a result, DOE applied constant price trends to project the equipment
cost to the year of compliance.
2. Installation Cost
The installation cost is the expense to the commercial consumer of
installing the ACUAC, in addition to the price of the unit itself.
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment. DOE used data from
the January 2016 Direct Final Rule to estimate the baseline
installation costs for ACUACs, and scaled these values to the current
year based on data from the Bureau of Labor Statistics (``BLS'') \40\
for materials and labor costs, at yearly rates of 1.95 percent and 2.62
percent, respectively. DOE assumed installation costs are proportional
to the equipment weight, as associated with each efficiency level.
---------------------------------------------------------------------------
\40\ Bureau of Labor Statistics data (available at: www.bls.gov/data/) (last accessed Sept. 9, 2023).
---------------------------------------------------------------------------
DOE reviewed updates to its installation cost analysis to account
for conversion curbs that may be required in some cases to accommodate
equipment designs with large footprints in the April 24, 2023 slide
deck (EERE-2022-BT-STD-0015-0086 at p. 4), based on discussion at the
March 22, 2023 meeting (EERE-2022-BT-STD-0015-0091 at pp. 20-21, 40-41,
47). The approach to determining the
[[Page 44091]]
applicability of conversion curbs in each installation is consistent
with that in the January 2016 Direct Final Rule. It generally results
in an increased likelihood of consumers encountering conversion curb
costs as efficiency levels increase relative to the baseline equipment.
DOE did not account for any electric panel upgrades in this rule,
because DOE did not model product switching from ACUAC-furnace to ACUHP
installations in this rulemaking, as discussed in section IV.G.4.
3. Annual Energy Consumption
For each sampled building, DOE determined the energy consumption
for an ACUAC at different efficiency levels using the approach
described previously in section IV.E of this document.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the equipment
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2022 using data from EEI Typical
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric
bills and average kilowatt-hour costs to the customer as charged by
investor-owned utilities. For the commercial sector, DOE calculated
electricity prices using the methodology described in Coughlin and
Beraki (2019).\41\
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\41\ Coughlin, K. and B. Beraki (2019), Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. (available at: ees.lbl.gov/publications/non-residential-electricity-prices).
---------------------------------------------------------------------------
DOE's methodology allows electricity prices to vary by sector,
region, and season. In the analysis, variability in electricity prices
is chosen to be consistent with the way the consumer economic and
energy use characteristics are defined in the LCC analysis. For ACUACs,
DOE developed annual unit energy consumption values (UECs) by Census
Division for each equipment class and efficiency level for the summer
(May to September) and winter (October to April) seasons.
The average summer and winter electricity prices were used to
measure the baseline energy cost. The summer and winter marginal
prices, using a marginal load factor of 0.4, were used to measure the
operating cost savings from higher-efficiency ACUACs.
EEI non-residential electricity prices are separated into three
rate categories based on annual peak demand: (1) small commercial; (2)
large commercial, and (3) industrial. The demand limits for small
commercial, large commercial, and industrial are up to 100 kW, 100-1000
kW, and larger than 1000 kW, respectively. CBECS billing data, which
includes monthly demand information, were used to calculate the total
square footage assigned to each category based on annual peak demand,
as a function of building type. For each building in the CBECS billing
data, DOE mapped the building to a rate category based on the annual
peak demand, and to a building type based on the CBECS Principal
Building Activity. DOE calculated the total floor space associated with
each building type and rate category, and used this to define, for each
building type, a relative weight for each rate category. DOE then
calculated a weighted-average (across rate categories) value of the
average and marginal electricity price. DOE calculated the weighted-
average for all Census Divisions, assuming the rate category weights do
not depend on Census Division.
See chapter 8 of the direct final rule TSD for further details.
To estimate energy prices in future years, DOE multiplied the 2022
energy prices by the projection of annual average price changes for
each of the nine Census Divisions from the Reference case in AEO 2023,
which has an end year of 2050.\42\ To estimate price trends after 2050,
DOE kept the energy price constant at the 2050 value.
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\42\ EIA, Annual Energy Outlook 2023 (available at: www.eia.gov/outlooks/aeo/) (last accessed Oct. 1, 2023).
---------------------------------------------------------------------------
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing equipment
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the equipment. Typically,
small incremental increases in equipment efficiency entail no, or only
minor, changes in maintenance costs compared to baseline efficiency
equipment. Therefore, DOE assumed no change in maintenance cost with
efficiency level.
For repair costs, DOE used data from the January 2016 Direct Final
Rule to estimate the baseline repair costs for ACUACs, and scaled these
values to the current year based on data from the BLS for materials and
labor costs, at yearly rates of 1.95 percent and 2.62 percent,
respectively. DOE assumed repair costs are proportional to the
equipment's manufacturer selling price, as associated with each
efficiency level. The approach to determining the frequency of
equipment repair is consistent with that in the January 2016 Direct
Final Rule, and it includes non-compressor repairs conducted in the
seventh year, for all consumers.
In response to the May 2020 ECS RFI, AHRI stated that the costs
used in previous analyses do not reflect actual repair and maintenance
costs and that typical maintenance costs are double the values in RS
Means. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 10) In contrast, Trane
stated that the methodology used in the January 2016 Direct Final Rule
is adequate, although an update to a more recent version of RS Means is
appropriate. (Trane, EERE-2019-BT-STD-0042-0016 at p. 10) Trane and
Goodman stated that repair and maintenance costs will rise for products
using low-GWP refrigerants. (Trane, EERE-2019-BT-STD-0042-0016 at p.
10; Goodman, EERE-2019-BT-STD-0042-0017 at p. 4)
As stated previously, DOE reviewed the various LCC inputs at the
February 9, 2023 webinar (EERE-2022-BT-STD-0015-0073 at pp. 25-35) and
the March 21-22, 2023 meeting (EERE-2022-BT-STD-0015-0080 at pp. 35-
47). At the March 22, 2023 ACUAC/HP Working Group meeting, AHRI and
Daikin stated that the maintenance costs were too low. (EERE-2022-BT-
STD-0015-0091 at pp. 21, 38-39) In the April 24, 2023 slide deck, DOE
confirmed that the maintenance and repair cost numbers were based on
negotiated inputs from the previous rulemaking, adjusted for inflation.
(EERE-2022-BT-STD-0015-0086 at p. 3)
In response to AHRI, DOE notes that because maintenance costs do
not change with efficiency level, they have no impact on the LCC
results. In response to Trane, DOE notes that it did not update to a
more recent version of RS Means due to additional adjustments made to
repair and maintenance costs during the 2016 rulemaking, but it did
update the 2016 costs by using the BLS scalars previously discussed. In
response to Trane and Goodman, DOE has no data with respect to the
impact of low-GWP refrigerants on repair and maintenance costs. This
issue was not discussed during the 2023 ECS
[[Page 44092]]
Negotiations. Furthermore, low-GWP refrigerants would be used at all
efficiency levels in the analysis including the no-new-standards case,
so any impacts would be independent of the amended standards.
Consequently, DOE continues to use the repair and maintenance costs
as discussed during the ACUAC/HP Working Group meetings.
6. Equipment Lifetime
Equipment lifetime is the age at which a unit of covered equipment
is retired from service. For the LCC and PBP analysis, DOE develops a
distribution of lifetimes to reflect variability in equipment lifetimes
in the field.
For small and large ACUAC equipment, DOE used the same lifetime as
in the January 2016 Direct Final Rule, which had been developed based
on a Weibull distribution. DOE assumed a mean lifetime of 21 years for
small equipment classes, and a mean lifetime of 23 years for large
equipment classes. For very large equipment classes, DOE created a new
distribution with an assumed mean lifetime of 30 years, based on
stakeholders' feedback during the 2023 ECS Negotiations. The maximum
lifetimes were assumed to be 40 years for the small and large equipment
classes and 60 years for the very large equipment classes.
In response to the May 2020 ECS RFI, AHRI disagreed with the
Weibull approach to lifetimes and stated that service lifetimes are in
the range of 12 to 15 years. (AHRI, EERE-2019-BT-STD-0042-0014 at p.
10) In contrast, Trane stated that the Weibull approach is appropriate
and that equipment lifetime should be the same as in the January 2016
Direct Final Rule. (Trane, EERE-2019-BT-STD-0042-0016 at p. 10) Carrier
stated that the lifetimes determined by the proposed approach seem
reasonable. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 14) AHRI and
Carrier both stated that location is an important determinant of
lifetime (e.g., reduced lifetimes for units with more runtime hours or
for units in coastal areas due to interactions with salt air). (AHRI,
EERE-2019-BT-STD-0042-0014 at p.10; Carrier, EERE-2019-BT-STD-0042-0013
at p. 14)
At the March 22, 2023 ACUAC/HP Working Group meeting, there was
discussion regarding whether the proposed lifetime as presented was
really consistent with the previous rulemaking, as well as a suggestion
that the average life of a 30-ton unit would be much shorter than 34
years. (EERE-2022-BT-STD-0015-0091 at pp. 18, 20, 36-38) In the April
24, 2023 slide deck, DOE confirmed that the lifetimes were consistent
with those negotiated in the previous rulemaking. (EERE-2022-BT-STD-
0015-0086 at p. 3) DOE noted that shipments modeling indicates that a
much shorter lifetime, such as a 20-year lifetime, would result in
approximately 50% more shipments than demonstrated in the AHRI data.
Given that the CUAC market is saturated (i.e., market penetrations are
not increasing), about 95% of shipments are for the replacement market.
On an average basis, the number of replacements that ship each year is
equal to the total installed stock divided by the average lifetime. The
total installed stock is an independently observed variable (for
example, through CBECS surveys) and therefore cannot change when
assumptions about the inputs to the shipments model are varied. This
means that, if the equipment lifetime is decreased by a factor of \2/
3\, then the total shipments must increase by a factor of \3/2\ (i.e.,
by 50%), to ensure that the installed stock remains constant.
Similarly, if AHRI shipments are (for example) underestimated by 10%,
then a roughly 10% reduction in mean lifetime would be needed to ensure
the model results alight with the observed installed stock. Given the
possibility of some uncertainty in AHRI shipments, and in response to
ACUAC/HP Working Group discussions, DOE reduced the lifetime for very
large equipment by approximately 10%, from 34 to 30 years. To provide
further information on the importance of the assumed lifetimes for the
LCC analysis, DOE also conducted a sensitivity analysis based on a 20-
year lifetime. (Id.) The sensitivity analysis showed that consumers
were only marginally but not significantly worse off under a 20-year
timeline, as relatively heavy discounting in the later years of a
unit's lifetime limits any impact. For example, for the very large
equipment class at EL 1, under the 20-year scenario, the percent of
consumers with net cost increased from 20 to 21% and the LCC savings
decreased from $2053 to $1671. (Id at p. 14)
In this DFR, DOE continues to use lifetimes with a mean of 21, 23,
and 30 years for the small, large, and very large equipment classes,
respectively, as discussed in the April 24, 2023 slide deck. DOE is not
including additional results for the 20-year-lifetime sensitivity in
this direct final rule, but such results can be found in chapter 8 of
the direct final rule TSD. In response to AHRI and Carrier, DOE does
not assign lifetime based on location, but the distribution includes
variability that addresses this issue.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to commercial buildings to estimate the present value of future
operating cost savings. The discount rate used in the LCC analysis
represents the rate from an individual consumer's perspective. DOE
estimated a distribution of discount rates for ACUACs based on
commercial consumer financing costs and the cost of capital for
commercial applications.
For developing discount rates by commercial building type, DOE used
the cost of capital 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. This corporate finance approach is referred to as the
weighted-average cost of capital. DOE used currently available economic
data in developing commercial discount rates, with Damodaran Online
being the primary data source.\43\ The average discount rate across the
commercial building types is 6.04 percent.
---------------------------------------------------------------------------
\43\ Damodaran, A. Data Page: Historical Returns on Stocks,
Bonds and Bills-United States. 2021. pages.stern.nyu.edu/~adamodar/
(last accessed April 26, 2022).
---------------------------------------------------------------------------
See chapter 8 of the final rule TSD for further details on the
development of discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of equipment efficiencies under the no-
new-standards case (i.e., the case without amended or new energy
conservation standards).
In response to the May 2020 ECS RFI, AHRI, Carrier, and Trane all
commented that they expect the majority of shipments to remain close to
the Federal minimum standard level after 2023. (AHRI, EERE-2019-BT-STD-
0042-0014 at p. 11; Carrier, EERE-2019-BT-STD-0042-0013 at p. 15;
Trane, EERE-2019-BT-STD-0042-0016 at p. 11) PGE stated that ACUACs
purchased by customers are often chosen with the minimum required
efficiency ratings. (PGE, EERE-2019-BT-STD-0042-0009 at p. 2)
In a presentation at an ACUAC/HP Working Group meeting, industry
noted that approximately 65 percent of shipments are at baseline
efficiency.
[[Page 44093]]
(EERE-2022-BT-STD-0015-0081 at p. 5) AHRI subsequently provided
confidential data to a DOE contractor regarding shipments of ACUACs and
ACUHPs by IEER. The data submitted by AHRI were gathered for 2018-2022;
in these data, the market share of equipment with IEER above the 2023
standard is around 10-20 percent. This estimate is approximate, as the
IEER bin boundaries in the provided data do not align exactly with
either the 2018 or 2023 energy conservation standard levels. Under the
2023 standard, it is expected that a significant fraction of shipments
will roll-up to the 2023 minimum, but possibly not the full 80-90%
shown in the data; some fraction of shipments may shift to levels above
the minimum.
To estimate the energy efficiency distribution of ACUACs for 2029,
DOE also reviewed information from the 2015 ASRAC Working Group,
combined with information presented during the negotiations on the
relationship between the existing metric, IEER, and the new metric,
IVEC. The 2015 ASRAC Working Group analysis used data submitted by AHRI
to develop separate base-case efficiency distributions for the Small,
Large, and Very Large equipment classes. That analysis separated
equipment types into constant air volume (``CAV'') and VAV
installations, with lower efficiency levels corresponding to CAV (fixed
fan speed) designs. In the analysis presented here, DOE's engineering
analysis considered only staged or variable-speed designs because its
review of models available on the market after the January 1, 2023
compliance date of current standards and confidential discussions with
manufacturers indicated that almost all models on the market today
offer staged or variable-speed indoor fan designs and very few models,
if any, offer single-speed indoor fan designs, even at EL0, implying
that going forward, all installations will use some type of VAV
equipment. The 2015 ASRAC Working Group base-case efficiency
distribution for VAV equipment indicated approximately 15-percent
market share for IEER values above the 2023 standard. This estimate is
consistent with the confidential data provided by AHRI for the years
2018-2022.
To map the IEER levels to the new IVEC metric, DOE considered
information presented during the 2023 ECS Negotiation meetings,
specifically scatterplots of IEER vs. IVEC. These scatter plots show a
fairly broad range of IVEC for a given band of IEER. For example, for
Small ACUACs, for IEER approximately equal to 14.8 (the current
standard), the range of plotted IVEC is 10-14. Hence, it seems
reasonable to assume that when the market transitions to the new IVEC
metric, designs that cluster near a single value of IEER would cover a
range of IVEC, and some would, therefore, fall into higher efficiency
levels as defined by the IVEC metric. For this reason, DOE assumed 70
percent of equipment at baseline and distributed 30 percent of
equipment to higher IVEC-based ELs. For ELs in this direct final rule
analysis that did not exist in the 2015 ASRAC analysis, DOE assumed
zero market share in the base case.
The estimated market shares for the no-new-standards case for are
shown in Table IV.12. See chapter 8 of the direct final rule TSD for
further information on the derivation of the efficiency distributions.
[GRAPHIC] [TIFF OMITTED] TR20MY24.091
DOE notes that the market shares in Table IV.12 are based on
shipments data, as described in the preceding paragraphs. DOE also
reviewed model counts in the industry-provided dataset and observed
models at ELs shown in this table as having zero shipments. It is
common for there to be significantly more models (as a percentage of
the total) than shipments at higher efficiency levels; there tend to be
more shipments per model at lower efficiency levels. However, DOE
acknowledges that there are likely to be non-zero shipments at higher
ELs where there are models available. Therefore, DOE has performed a
sensitivity analysis for small CUACs that distributes the 30% market
share above baseline to the first four ELs (7.5% each) rather than 10%
each at the first three ELs, as shown in the table. The results of this
sensitivity can be found in Chapter 10 of the TSD.
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the ACUACs purchased
by each sample building in the no-new-standards case. The resulting
percentage shares within the sample match the market shares in the
efficiency distributions.
While DOE expects economic factors to play a role when consumers,
commercial building owners, or builders decide on what type of ACUAC to
install, assignment of equipment efficiency for a given installation
based solely on economic measures such as life-cycle cost or simple
payback period, would not accurately reflect most real-world
installations. There are a number of market failures discussed in the
economics literature that illustrate how purchasing decisions with
respect to
[[Page 44094]]
energy efficiency are unlikely to be perfectly correlated with energy
use, as described subsequently. DOE finds that the method of
assignment, which is in part random, simulates behavior in the ACUAC
market, where market failures result in purchasing decisions not being
perfectly aligned with economic interests. DOE further emphasizes that
its approach does not assume that all purchasers of ACUACs make
economically irrational decisions (i.e., the lack of a correlation is
not the same as a negative correlation). As part of the random
assignment, some buildings with large cooling loads will be assigned
higher-efficiency ACUACs, and some buildings with particularly low
cooling loads will be assigned baseline ACUACs, which aligns with the
available data.
The following discussion provides more detail about the various
market failures that affect ACUAC purchases. First, a recognized
problem in commercial settings is the split incentive problem, where
the building owner (or building developer) selects the equipment, and
the tenant (or subsequent building owner) pays for energy
costs.44 45 There are other similarly misaligned incentives
embedded in the organizational structure within a given firm or
business that can impact the choice of an ACUAC. For example, if one
department or individual within an organization is responsible for
capital expenditures (and therefore equipment selection) while a
separate department or individual is responsible for paying the energy
bills, a market failure similar to the split-incentive problem can
result.\46\ Additionally, managers may have other responsibilities and
often have other incentives besides operating cost minimization, such
as satisfying shareholder expectations, which can sometimes be focused
on short-term returns.\47\ Decision-making related to commercial
buildings is highly complex and involves gathering information from and
for a variety of different market actors. It is common to see
conflicting goals across various actors within the same organization,
as well as information asymmetries between market actors in the energy
efficiency context in commercial building construction.\48\
---------------------------------------------------------------------------
\44\ Vernon, D., and Meier, A. (2012). ``Identification and
quantification of principal-agent problems affecting energy
efficiency investments and use decisions in the trucking industry,''
Energy Policy, 49, 266-273.
\45\ Blum, H. and Sathaye, J. (2010). ``Quantitative Analysis of
the Principal-Agent Problem in Commercial Buildings in the U.S.:
Focus on Central Space Heating and Cooling,'' Lawrence Berkeley
National Laboratory, LBNL-3557E (available at: escholarship.org/uc/item/6p1525mg) (last accessed March 14, 2024).
\46\ Prindle, B., Sathaye, J., Murtishaw, S., Crossley, D.,
Watt, G., Hughes, J., and de Visser, E. (2007). ``Quantifying the
effects of market failures in the end-use of energy,'' Final Draft
Report Prepared for International Energy Agency (available from
International Energy Agency, Head of Publications Service, 9 rue de
la Federation, 75739 Paris, Cedex 15 France).
\47\ Bushee, B.J. (1998). ``The influence of institutional
investors on myopic R&D investment behavior,'' Accounting Review,
305-333. DeCanio, S.J. (1993). ``Barriers Within Firms to Energy
Efficient Investments,'' Energy Policy, 21(9), 906-914 (explaining
the connection between short-termism and underinvestment in energy
efficiency).
\48\ International Energy Agency (IEA) (2007). Mind the Gap:
Quantifying Principal-Agent Problems in Energy Efficiency. OECD Pub.
(available at www.iea.org/reports/mind-the-gap) (last accessed March
14, 2024).
---------------------------------------------------------------------------
The arguments for the existence of market failures in the
commercial and industrial sectors are corroborated by empirical
evidence. One study in particular showed evidence of substantial gains
in energy efficiency that could have been achieved without negative
repercussions on profitability, but the investments had not been
undertaken by firms.\49\ The study found that multiple organizational
and institutional factors caused firms to require shorter payback
periods and higher returns than the cost of capital for alternative
investments of similar risk. Another study demonstrated similar results
with firms requiring very short payback periods of 1-2 years in order
to adopt energy-saving projects, implying hurdle rates of 50 to 100
percent, despite the potential economic benefits.\50\
---------------------------------------------------------------------------
\49\ DeCanio, S.J. (1998). ``The Efficiency Paradox:
Bureaucratic and Organizational Barriers to Profitable Energy-Saving
Investments,'' Energy Policy, 26(5), 441-454.
\50\ Andersen, S.T., and Newell, R.G. (2004). ``Information
programs for technology adoption: the case of energy-efficiency
audits,'' Resource and Energy Economics, 26, 27-50.
---------------------------------------------------------------------------
If DOE developed an efficiency distribution that assigned ACUAC
efficiency in the no-new-standards case solely according to energy use
or economic considerations such as life-cycle cost or payback period,
the resulting distribution of efficiencies within the consumer sample
would not reflect any of the market failures above. Thus, DOE concludes
such a distribution would not be representative of the ACUAC market.
The use of random assignment is not an assertion of economic
irrationality, but instead, it is a methodological approximation of
complex consumer behavior. The analysis is neither biased toward high
or low energy savings. The methodology does not preferentially assign
lower-efficiency ACUACs to buildings in the no-new-standards case where
savings from the rule would be greatest, nor does it preferentially
assign lower-efficiency ACUACs to buildings in the no-new-standards
case where savings from the rule would be smallest. Some consumers were
assigned the ACUACs that they would have chosen if they had engaged in
perfect economic considerations when purchasing the products. Others
were assigned less-efficient ACUACs even where a more-efficient product
would eventually result in life-cycle savings, simulating scenarios
where, for example, various market failures prevent consumers from
realizing those savings. Still others were assigned ACUACs that were
more efficient than one would expect simply from life-cycle costs
analysis, reflecting, say, ``green'' behavior, whereby consumers
ascribe independent value to minimizing harm to the environment.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient equipment, compared to baseline equipment, through energy
cost savings. Payback periods that exceed the life of the equipment
mean that the increased total installed cost is not recovered in
reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the equipment and the change in the
first-year annual operating expenditures relative to the baseline. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs,
except that discount rates are not needed.
G. Shipments Analysis
DOE uses projections of annual equipment shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\51\
The shipments model takes an accounting approach, tracking market
shares of each equipment class and the vintage of units in the stock.
Stock accounting uses equipment shipments as inputs to estimate the age
distribution of in-service equipment stocks for all years. The age
distribution of in-service equipment stocks is a key input to
calculations of both the NES and NPV,
[[Page 44095]]
because operating costs for any year depend on the age distribution of
the stock.
---------------------------------------------------------------------------
\51\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
For the current analysis, DOE assumed that any new energy
conservation standards for ACUAC and ACUHP would require compliance in
2029. Thus, all units purchased starting in 2029 are affected by the
standard level. DOE's analysis considered shipments over a 30-year
period, in this case from 2029 through 2058.
To project annual shipments over the analysis period, DOE used key
drivers, including floor space forecasts, saturations, and product
lifetimes, to project shipments of small, large, and very large air-
cooled ACUAC and ACUHP in each market segment, which are then
aggregated to estimate total shipments. DOE considered two market
segments: (1) shipments to new construction, (2) shipments to existing
buildings for replacement.
1. New Shipments
Shipments to new buildings are driven by market saturations (number
of units per square foot) and new floor space constructed in each year.
DOE assumed that the market saturations for each equipment type of
ACUAC and ACUHP stay constant over the analysis period. Table IV.13
shows the saturation for each equipment class:
[GRAPHIC] [TIFF OMITTED] TR20MY24.092
DOE obtained the new floor space projections from the Annual Energy
Outlook 2023 (AEO 2023) \52\ reference case for the commercial sector.
---------------------------------------------------------------------------
\52\ EIA, Annual Energy Outlook 2023 (available at: www.eia.gov/outlooks/aeo/) (last accessed Oct. 1, 2023).
---------------------------------------------------------------------------
2. Replacement Shipments
Shipments to existing buildings for replacement are calculated
using an accounting framework involving initial shipments and a
retirement function. The shipments model is initialized in the present
year (2023) with a distribution by vintage for ages up to the maximum
lifetime, in this case 60 years. The vintage distribution is obtained
from the 2015 rulemaking which is calibrated by the AHRI shipments in
2013. Specifically, the shipments total in 2013 is set equal to the
AHRI total in the same year. While AHRI data were available up to 2022,
market conditions have led to an irregular shipments pattern. In order
to smooth the projection, DOE calibrated to 2013 and used model
projections for the period up to 2022. Numerically, the quantity that
impacts the NES and NPV calculation is cumulative shipments; DOE
confirmed that the difference between cumulative shipments for the
model projection vs. AHRI historic data is 1 percent or less. The
retirement function is based on a failure probability distribution
consistent with LCC calculations described in section IV.F.6 of this
document.
3. Stock Calculation
The number units in the existing stock in each year is equal to the
sum of total units shipped the same year and the stock in the previous
year, with the retired units of the same year removed. The number of 0-
year-old units is equal to the number of total units purchased in the
same year. As the year is incremented from y - 1 to y, a fraction of
the stock is removed; that fraction is determined by survival
probability, which uses shipments lifetimes, as discussed in previous
section.
4. Comments
In response to the May 2020 ECS RFI, AHRI, Carrier, Goodman, and
Trane all commented that historical shipments would not accurately
portray the market for ACUACs and ACUHPs, as the impacts of COVID-19 on
the HVAC industry are not yet known. (AHRI, EERE-2019-BT-STD-0042-0014
at p. 11; Carrier, EERE-2019-BT-STD-0042-0013 at p. 16; Goodman, EERE-
2019-BT-STD-0042-0017 at p. 4; Trane, EERE-2019-BT-STD-0042-0016 at p.
11) AHRI also commented that computer room air conditioner shipments
were likely included as ACUAC and ACUHP shipments in the previous
rulemaking and that those shipments should be removed in any future
shipments analysis for ACUAC and ACUHP. (AHRI, EERE-2019-BT-STD-0042-
0014 at p. 11)
Carrier commented that the higher cost of higher-efficiency
equipment will lead more customers to repair rather than replace,
although the company does not anticipate a change in failure rates or
equipment lifetimes. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 15)
PGE stated that the current marketplace split between ACUACs and
ACUHPs is estimated at 85 percent to 15 percent. (PGE, EERE-2019-BT-
STD-0042-0009 at p. 2) In response to the May 2022 TP/ECS RFI, the CA
IOUs stated that while CUHPs are still a small fraction of the market,
they expected that CUHPs will play an important role in non-residential
space heating electrification efforts in the coming decades. The CA
IOUs added that the Consortium for Energy Efficiency's 2019 overview of
CUAC/HP programs indicate that States in ASHRAE climate zones two to
five are incentivizing electric-only CUHPs. (CA IOUs, EERE-2022-BT-STD-
0015-0012 at pp. 4-5) In a presentation at an ACUAC/HP Working Group
meeting, industry noted that approximately 10 percent of shipments are
heat pumps. (EERE-2022-BT-STD-0015-0081 at p. 6)
DOE reviewed its shipments methodology presented at the February 9,
2023 webinar (EERE-2022-BT-STD-0015-0073 at pp. 37-43), the February
22-23, 2023 ACUAC/HP Working Group meeting ((EERE-2022-BT-STD-0015-0078
at p. 38-40), and the March 21-22, 2023 ACUAC/HP Working Group meeting
(EERE-2022-BT-STD-0015-0080 at pp. 49-54). While DOE acknowledges that
the impact of COVID-19 on the HVAC industry were unknown at the time
that stakeholders submitted comments on the May 2020 ECS RFI, it is DOE
practice to use projections of economic and demographic data from the
AEO as inputs to the DOE shipments and NIA models. These projections
account, to the extent possible, for near-term economic impacts and
long-term expectations. By the time of publication of this direct final
rule, COVID-19-related supply chain issues have largely resolved, so
DOE expects that AEO 2023 continues to provide the best available
[[Page 44096]]
source to gauge future shipments of ACUACs and ACUHPs.
In addition, DOE reviewed publicly-available data from the AHRI
website and notes that, while the market share of heat pumps aggregated
across all size classes is increasing, this increase is dominated by
the residential size classes (below 60,000 Btu/hr). DOE recommended
that the ACUAC/HP Working Group base its analysis on an assumption that
10-percent of Small unitary product shipments are heat pumps rather
than air conditioning only products, and 5-percent of Large and Very
Large product shipments are heat pumps, to which the ACUAC/HP Working
Group did not disagree. DOE examined AEO 2023 projections of the market
share split between air conditioners and heat pumps and noted that,
while there is a significant trend of increasing market share for
residential heat pumps, the trend in the commercial sector is much
weaker, with less than a 2-percent shift from rooftop AC to HP over 30
years. Furthermore, DOE does not expect that the marginal differences
in standard level between ACUACs with all other types of heat and
ACUHPs, as discussed in sections III.A and IV.C.2.a, are large enough
to cause any significant difference in commercial consumer purchasing
decisions. Hence, DOE held the ACUHP market shares constant over the
analysis period and did not model any shift from ACUAC-furnace
installations to ACUHP installations in either the base case or the
standards cases.
Regarding AHRI's comment that computer room air conditioner
shipments may have been included historically, DOE notes that this is
not clear as computer room air conditioners were added to the scope of
ASHRAE Standard 90.1 rather than being carved out of existing ACUAC
equipment classes. If any computer room air conditioner shipments were
included, DOE expects it would represent a small fraction of total
shipments and have limited effects on the analysis. In addition, this
concern was not brought up in the context of any ASHRAE Working Group
discussions regarding shipments, suggesting that it is not likely a
significant issue. For these reasons, DOE has not adjusted total
shipments to account for computer room air conditioners.
With regard to the repair vs. replace decision, DOE noted during
the 2023 ECS Negotiations that, while this issue had been discussed
extensively in the 2015 ASRAC negotiations, the impact of this model
feature on the policy decision is minimal. Quantitatively, the impact
of repairing rather than replacing some fraction of the stock is just
to delay the time at which the equipment is replaced; as the lifetime
energy use of the equipment is counted in the NES, a delay in the time
of replacement has a limited impact on the NES metric. It is also
important to note that DOE used the equipment economic lifetime in its
analyses (i.e., the time to replacement). It is possible, and even
likely, that this observed economic lifetime includes the effect of
life-extending equipment repairs in the no-new-standards case. In
modeling terms, the question is: which consumers who would have
replaced the unit in the no-new-standards case would instead repair it
in the standards case? This decision is driven by the difference
between the cost of repairing an existing unit, and the incremental
cost of a new, more efficient unit. DOE estimated the cost of repair,
as discussed in section IV.F.5 of this document, and compared this to
the increase in total installed cost (``TIC'') at higher standard
levels. Based on this comparison, the increase in units being repaired
vs. replaced would be negligible except at max-tech levels, and in this
direct final rule, DOE is not adopting max-tech levels.
H. National Impact Analysis
The NIA assesses the NES and the NPV from a national perspective of
total consumer costs and savings that would be expected to result from
new or amended standards at specific efficiency levels.\53\
(``Consumer'' in this context refers to consumers of the equipment
being regulated.) DOE calculates the NES and NPV for the potential
standard levels considered based on projections of annual equipment
shipments, along with the annual energy consumption and total installed
cost data from the energy use and LCC analyses.\54\ For the present
analysis, DOE projected the energy savings, operating cost savings,
equipment costs, and NPV of consumer benefits over the lifetime of
ACUACs and ACUHPs sold from 2029 through 2058.
---------------------------------------------------------------------------
\53\ The NIA accounts for impacts in the 50 states and U.S.
territories.
\54\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------
DOE evaluates the impacts of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
equipment class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each equipment class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of equipment with efficiencies greater than the standard.
DOE uses a computer model to calculate the energy savings and the
national consumer costs and savings from each TSL. Interested parties
can review DOE's analyses by changing various input quantities within
the spreadsheet. The NIA computer model uses typical values (as opposed
to probability distributions) as inputs.
Table IV.14 summarizes the inputs and methods DOE used for the NIA
analysis for the direct final rule. Discussion of these inputs and
methods follows the table. See chapter 10 of the direct final rule TSD
for further details.
BILLING CODE 6450-01-P
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BILLING CODE 6450-01-C
DOE discussed its NIA methodology at the February 9, 2023 webinar
(EERE-2022-BT-STD-0015-0073 at pp. 44-48) and the March 21-22, 2023
ACUAC/HP Working Group meeting (EERE-2022-BT-STD-0015-0080 at pp. 55-
62). There was not any discussion on the NIA methodology during these
meetings.
As discussed in section IV.C.3 of this document, DOE did not
conduct an LCC analysis for ACUHPs. The energy use analysis calculated
the cooling and ventilation energy use for ACUACs and is also
representative of the cooling and ventilation energy use for ACUHPs,
but the energy use analysis did not calculate the energy use for the
heating end-use for ACUHPs. Instead, the data that are output from the
LCC for input to the NIA were adjusted to include the heating energy
use, operating cost, and related savings for ACUHPs. The NIA also
accounted for slightly higher MSPs for ACUHPs, as described in section
IV.C, Engineering Analysis, of this document. DOE used the higher MSP
for ACUHPs provided by the engineering analysis, but the Department
assumed the same installation costs when estimating the total installed
cost for ACUHPs.
When considering ACUHPs, DOE made two adjustments to the EL0 LCC
sample-averaged output:
DOE defined a heating energy adder for ACUHPs, based on
CBECS 2018. The CBECS includes estimates of cooling, ventilation, and
heating energy use for packaged heat pumps. For those buildings using
heat pumps for heating, DOE calculated the ratio of energy use for
heating, cooling, and ventilation to the energy use for cooling and
ventilation only. This ratio is 1.22, which means that for every kwh of
cooling and ventilation energy use, on average, ACUHPs would use an
additional 0.22 kwh for heating. DOE assumed that this ratio is
constant across equipment classes, and added the heating energy use to
the sample-average energy use output by the LCC to define total annual
energy use.
DOE calculated a sample-average energy price for each
equipment class as the ratio of sample-average annual operating cost to
the sample-average annual energy consumption for cooling and
ventilation. DOE applied this average price to the heating energy use
to estimate the total annual operating cost for ACUHPs.
At higher ELs, DOE estimated the heating energy use as the EL0
value multiplied by the ratio of IVHE at the considered EL (IVHE
increases with higher efficiency). DOE added this modified heating
energy use to the cooling and ventilation energy use output by the LCC
to get the total energy use for ACUHPs at each EL. DOE applied the LCC
sample-average energy price to calculate the total operating cost for
ACUHPs at each EL.
These summary data, accounting for all energy use and costs for
both ACUACs and ACUHPs, were then input to the NIA calculation.
In response to the May 2020 ECS RFI, PGE stated that ACUHPs have
significant advantages for customers over ACUACs, as they provide both
heating and cooling and, therefore, provide for: (1) lower operating
and maintenance costs; (2) decreases in greenhouse gas and localized
air pollution; and (3) longer life spans for the equipment. (PGE, EERE-
2019-BT-STD-0042-0009 at p. 2) PGE stated that ACUHPs, on average, are
sold at higher efficiency ratings compared to ACUACs. Customers
choosing heat pump technology use it for both heating and cooling
needs, thereby driving greater efficiency gains during both peak
seasons. Additionally, in Northern climates, the run time for equipment
is
[[Page 44098]]
substantially higher, so there is a natural tendency to buy more
efficient, less expensive units to operate. (Id.)
As stated, DOE has incorporated ACUHPs into its NIA analysis. DOE
has not identified a different efficiency distribution or different
lifetimes for this equipment. However, the NIA does account for heating
energy use.
1. Equipment Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered equipment classes for the year of anticipated compliance
with an amended or new standard (2029). To project the trend in
efficiency absent amended standards for ACUACs and ACUHPs over the
entire shipments projection period, DOE held the efficiency
distribution constant, as historical data based on IEER may not be
indicative of potential trends in IVEC.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2029). In this scenario, the market
shares of equipment in the no-new-standards case that do not meet the
standard under consideration would ``roll up'' to meet the new standard
level, and the market share of equipment above the standard would
remain unchanged.
To develop standards-case efficiency trends after 2029, DOE also
held the efficiency distribution constant at the rolled-up levels, for
similar reasons as in the no-new-standards case.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered equipment between each
potential standards case (``TSL'') and the case with no new or amended
energy conservation standards. DOE calculated the national energy
consumption by multiplying the number of units (stock) of each
equipment (by vintage or age) by the unit energy consumption (also by
vintage). DOE calculated annual NES based on the difference in national
energy consumption for the no-new-standards case and for each higher-
efficiency standard case. DOE estimated energy consumption and savings
based on site energy and converted the electricity consumption and
savings to primary energy (i.e., the energy consumed by power plants to
generate site electricity) using annual conversion factors derived from
AEO 2023. Cumulative energy savings are the sum of the NES for each
year over the timeframe of the analysis.
Use of higher-efficiency equipment is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the equipment due to the increase in efficiency. DOE did not consider a
direct rebound effect for ACUACs and ACUHPs. An important reason for
this decision is that in contrast to residential heating and cooling,
HVAC operation adjustment in commercial buildings is driven primarily
by building managers or owners. The comfort conditions are already
established in order to satisfy the occupants, and they are unlikely to
change due to installation of higher-efficiency equipment. While it is
possible that a small degree of rebound could occur for higher-
efficiency ACUACs and ACUHPs, there is no basis to select a specific
value. Because the available information suggests that any rebound
would be small to negligible, DOE did not include a rebound effect for
the direct final rule.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (August 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (``NEMS'') is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \55\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the direct final rule TSD.
---------------------------------------------------------------------------
\55\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA-0581(2023), May 2023
(available at: www.eia.gov/outlooks/aeo/nems/overview/pdf/0581(2023).pdf) (last accessed Oct. 23, 2023).
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3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) total annual installed cost; (2)
total annual operating costs (energy costs and repair and maintenance
costs), and (3) a discount factor to calculate the present value of
costs and savings. DOE calculates net savings each year as the
difference between the no-new-standards case and each standards case in
terms of total savings in operating costs versus total increases in
installed costs. DOE calculates operating cost savings over the
lifetime of each equipment shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed
ACUACs and ACUHPs price trends based on historical PPI data. DOE
applied the same trends to project prices for each equipment class at
each considered efficiency level. For ACUACs and ACUHPs, DOE has used a
constant default price trend. DOE's projection of equipment prices is
described in appendix 10C of the direct final rule TSD.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different equipment price
projections on the consumer NPV for the considered TSLs for ACUACs and
ACUHPs. In addition to the default price trend, DOE considered two
equipment price sensitivity cases: (1) an increasing trend based on the
same PPI data but only the years 2000 to 2022 and (2) a decreasing
trend based on the same PPI data but only the years 1978 to 2000. The
derivation of these price trends and the results of these sensitivity
cases are described in appendix 10C of the direct final rule TSD.
The operating cost savings are energy cost savings, which are
calculated using the estimated energy savings in each year and the
projected price of the appropriate form of energy. To estimate energy
prices in future years, DOE multiplied the average regional energy
prices by the projection of annual national-average residential energy
price changes in the Reference case from AEO 2023, which has an end
year of 2050. Price trends onwards are held constant at 2050 level. As
part of the NIA, DOE also analyzed scenarios that used inputs from
variants of the AEO 2023 Reference case that have lower and higher
economic growth. Those cases have lower and higher energy price
[[Page 44099]]
trends compared to the Reference case. NIA results based on these cases
are presented in appendix 10C of the direct final rule TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
direct final rule, DOE estimated the NPV of consumer benefits using
both a 3-percent and a 7-percent real discount rate. DOE uses these
discount rates in accordance with guidance provided by the Office of
Management and Budget (``OMB'') to Federal agencies on the development
of regulatory analysis.\56\ The discount rates for the determination of
NPV are in contrast to the discount rates used in the LCC analysis,
which are designed to reflect a consumer's perspective. The 7-percent
real value is an estimate of the average before-tax rate of return to
private capital in the U.S. economy. The 3-percent real value
represents the ``social rate of time preference,'' which is the rate at
which society discounts future consumption flows to their present
value.
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\56\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (available at: www.whitehouse.gov/omb/information-for-agencies/circulars/) (last accessed Dec. 11, 2023).
DOE used the prior version of Circular A-4 (2003) as a result of the
March 1, 2024, effective date of the new version.
---------------------------------------------------------------------------
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels. For this direct final rule,
DOE analyzed the impacts of the considered standard levels on one
subgroup: small businesses. The analysis used subsets of the LCC sample
composed of buildings that meet the criteria for the considered
subgroup. Additionally, electricity prices and discount rates were
updated to be representative of small businesses. DOE used the LCC and
PBP computer model to estimate the impacts of the considered efficiency
levels on this subgroup. Chapter 11 in the direct final rule TSD
describes the consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of ACUACs and ACUHPs and
to estimate the potential impacts of such standards on domestic
employment, manufacturing capacity, and cumulative regulatory burden
for those manufacturers. The MIA has both quantitative and qualitative
aspects. The quantitative part of the MIA includes analyses of
projected industry cash flows, the INPV, additional investments in
research and development (``R&D'') and manufacturing capital necessary
to comply with amended standards, and potential impacts on domestic
manufacturing employment. Additionally, the MIA seeks to qualitatively
determine how amended energy conservation standards might affect
manufacturing capacity and competition, as well as how standards
contribute to manufacturers' overall regulatory burden. Finally, the
MIA serves to identify any disproportionate impacts on manufacturer
subgroups, including small business manufacturers.
The quantitative part of the MIA primarily relies on the GRIM,\57\
an industry cash-flow model with inputs specific to this rulemaking.
The key GRIM inputs include data on the industry cost structure, unit
production costs, equipment shipments, manufacturer markups, and
investments in R&D and manufacturing capital required to produce
compliant equipment. The key GRIM outputs are the INPV, which is the
sum of industry annual cash flows over the analysis period, discounted
using the industry-weighted average cost of capital, and the impact on
domestic manufacturing employment. The model uses standard accounting
principles to estimate the impacts of more-stringent energy
conservation standards on the ACUAC and ACUHP manufacturing industry by
comparing changes in INPV and domestic manufacturing employment between
the no-new-standards case and the various standards cases (i.e.,
``TSLs''). To capture the uncertainty relating to manufacturer pricing
strategies following amended standards, the GRIM estimates a range of
possible impacts under different manufacturer markup scenarios.
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\57\ A copy of the GRIM spreadsheet tool is available on the DOE
website for this rulemaking at www.regulations.gov/docket/EERE-2022-BT-STD-0015/document.
---------------------------------------------------------------------------
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative regulatory burden
impact of other DOE and non-DOE regulations, and impacts on
manufacturer subgroups. The complete MIA is outlined in chapter 12 of
the direct final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the ACUAC and ACUHP
manufacturing industry based on the market and technology assessment,
preliminary manufacturer interviews, and publicly-available
information. This included a top-down analysis of ACUAC and ACUHP
manufacturers that DOE used to derive preliminary financial inputs for
the GRIM (e.g., revenues; materials, labor, overhead, and depreciation
expenses; selling, general, and administrative expenses (``SG&A''); R&D
expenses; and tax rates). DOE also used public sources of information
to further calibrate its initial characterization of the ACUAC and
ACUHP manufacturing industry, including company filings of form 10-K
from the SEC,\58\ corporate annual reports, the U.S. Census Bureau's
Annual Survey of Manufactures,\59\ and reports from Dun &
Bradstreet.\60\
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\58\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) (available at: www.sec.gov/edgar/searchedgar/companysearch.html) (last accessed Oct. 3, 2023).
\59\ U.S. Census Bureau, Annual Survey of Manufactures: General
Statistics: Statistics for Industry Groups and Industries (2021)
(available at: www.census.gov/programs-surveys/asm/data/tables.html)
(last accessed Dec. 5, 2023).
\60\ Dun & Bradstreet Company Profiles, Various Companies
(available at: app.dnbhoovers.com) (last accessed Oct. 3, 2023).
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In Phase 2 of the MIA, DOE prepared a framework industry cash-flow
analysis to quantify the potential impacts of amended energy
conservation standards. The GRIM uses several factors to determine a
series of annual cash flows starting with the announcement of the
standard and extending over a 30-year period following the compliance
date of the standard. These factors include annual expected revenues,
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures.
In general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment; (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute
[[Page 44100]]
to manufacturers of ACUACs and ACUHPs in order to develop other key
GRIM inputs, including equipment and capital conversion costs, and to
gather additional information on the anticipated effects of amended
energy conservation standards on revenues, direct employment, capital
assets, industry competitiveness, and manufacturer subgroup impacts.
In Phase 3 of the MIA, DOE's contractor conducted structured,
detailed interviews with representative ACUAC and ACUHP manufacturers.
During these interviews, DOE's contractor discussed efficiency levels,
design options, and conversion costs to validate assumptions used in
the GRIM. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by amended
standards or that may not be accurately represented by the average cost
assumptions used to develop the industry cash-flow analysis. Such
manufacturer subgroups may include small business manufacturers, low-
volume manufacturers, niche players, and/or manufacturers exhibiting a
cost structure that largely differs from the industry average, all of
whom could be disproportionately affected by amended energy
conservation standards. DOE identified one subgroup for a separate
impact analysis: small business manufacturers. The small business
subgroup is discussed in chapter 12 of the direct final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow over time
due to new or amended energy conservation standards that result in a
higher or lower INPV. The GRIM uses a standard, annual discounted cash-
flow analysis that incorporates manufacturer costs, markups, shipments,
and industry financial information as inputs. The GRIM models changes
in costs, distribution of shipments, investments, and manufacturer
margins that could result from an amended energy conservation standard.
The GRIM spreadsheet uses the inputs to arrive at a series of annual
cash flows, beginning in 2024 (the reference year of the analysis) and
continuing to 2058 (the terminal year of the analysis). DOE calculated
INPVs by summing the stream of annual discounted cash flows during this
period. For manufacturers of ACUACs and ACUHPs, DOE used a real
discount rate of 5.9 percent, which was derived from industry
financials (i.e., corporate annual reports and public filings to the
Securities and Exchange Commission (SEC 10-Ks)).
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the new or
amended energy conservation standard on manufacturers. As discussed
previously, DOE developed critical GRIM inputs using a number of
sources, including publicly-available data, results of the engineering
analysis, and information gathered from industry stakeholders during
the course of manufacturer interviews and subsequent ACUAC/HP Working
Group meetings. The GRIM results are presented in section V.B.2 of this
document. Additional details about the GRIM, the discount rate, and
other financial parameters can be found in chapter 12 of the direct
final rule TSD.
a. Manufacturer Production Costs
Manufacturing more-efficient equipment is typically more expensive
than manufacturing baseline equipment due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the MPCs of covered equipment can affect the shipments,
revenues, gross margins, and cash flow of the industry. In this
rulemaking, DOE relies on an efficiency-level approach for small,
large, and very large ACUACs/HPs. For a complete description of the
MPCs, see section IV.C of this document and chapter 5 of the direct
final rule TSD.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level and equipment class. Changes in sales volumes and
efficiency mix over time can significantly affect manufacturer
finances. For this analysis, the GRIM uses the NIA's annual shipment
projections derived from the shipments analysis from 2024 (the base
year) to 2058 (the end year of the analysis period). In the shipments
analysis (see section IV.G of this document), DOE estimates the
distribution of efficiencies in the no-new-standards case and standards
cases for all equipment classes.
For the standards cases in the NIA, DOE used a ``roll-up'' scenario
to establish the shipment-weighted efficiency for the year that
standards are assumed to become effective (2029). In this scenario, the
market shares of equipment in the no-new-standards case that do not
meet the standard under consideration would ``roll up'' to meet the new
standard level, and the market share of equipment above the standard
would remain unchanged. For a complete description of the shipments
analysis, see section IV.G of this document and chapter 9 of the direct
final rule TSD.
c. Capital and Product Conversion Costs
Amended energy conservation standards could cause manufacturers to
incur one-time conversion costs to bring their production facilities
and equipment designs into compliance. DOE evaluated the level of
conversion-related expenditures that would be needed to comply with
each considered efficiency level in each equipment class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
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 equipment designs comply with amended energy
conservation standards.
DOE relied on manufacturer feedback to evaluate the level of
capital and product conversion costs manufacturers would likely incur
at the various TSLs. DOE contractors conducted interviews with six
manufacturers of small, large, and very large ACUACs and ACUHPs. The
interviewed manufacturers account for approximately 90 percent of unit
sales in the industry.
During confidential interviews, DOE's contractor asked
manufacturers to estimate the capital conversion costs (e.g., changes
in production processes, equipment, and tooling) to meet the various
efficiency levels. The capital conversion cost feedback from these
interviews was then scaled using market share estimates to estimate
total industry capital conversion costs. Manufacturers were also asked
to estimate the redesign effort and engineering resources required at
various efficiency levels to quantify the product conversion costs. DOE
also relied on data submitted throughout the 2023 ECS Negotiations to
estimate product conversion costs. Specifically, manufacturers
submitted data simulating IVEC ratings for existing models currently
rated under IEER as part of the 2023 ECS Negotiations. DOE reviewed the
product conversion cost
[[Page 44101]]
feedback from interviews at each efficiency level and then compared the
IVEC simulation data provided during the 2023 ECS Negotiations to IEER
data from the CCD in order to extrapolate the number of models industry
would need to redesign under amended standards. Based on manufacturer
feedback, DOE estimated some industry conversion costs associated with
the transition in energy efficiency metrics from IEER to IVEC. To
estimate total industry product conversion costs, DOE multiplied the
development redesign estimate at each efficiency level for each
equipment class by the estimated number of industry basic models in CCD
that would require redesign. Manufacturer data were aggregated to
better reflect the industry as a whole and to protect confidential
information.
Industry conversion costs for the adopted standard (i.e., TSL 3,
the Recommended TSL) total $288.0 million. It consists of $70.8 million
in capital conversion costs and $217.2 million in product conversion
costs.
In general, DOE assumes all conversion-related investments occur
between the year of publication of the direct final rule and the year
by which manufacturers must comply with the new standard. The
conversion cost figures used in the GRIM can be found in section V.B.2
of this document. For additional information on the estimated capital
and product conversion costs, see chapter 12 of the direct final rule
TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied non-production cost manufacturer
markups to the MPCs estimated in the engineering analysis for each
equipment class and efficiency level. Modifying these manufacturer
markups in the standards case yields different sets of impacts on
manufacturers. For the MIA, DOE modeled two standards-case scenarios to
represent uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) a preservation of gross margin
percentage scenario; and (2) a preservation of operating profit
scenario. These scenarios lead to different manufacturer markup values
that, when applied to the MPCs, result in varying revenue and cash flow
impacts. The industry cash-flow analysis results in section V.B.2.a of
this document present the impacts of the upper and lower bound
manufacturer markup scenarios on INPV. The preservation of gross margin
percentage scenario represents the upper bound scenario, and the
preservation of operating profit scenario represents the lower bound
scenario for INPV impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' across all
efficiency levels, which assumes that following amended standards,
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 manufacturer production costs increase with efficiency, this
scenario implies that the per-unit dollar profit will increase. Based
on publicly-available financial information for ACUAC and ACUHP
manufacturers, as well as comments from manufacturer interviews, DOE
estimated average gross margin percentages of 23 percent for small
ACUACs, 24 percent for small ACUHPs, 25 percent for large ACUACs, 26
percent for large ACUHPs, 29 percent for very large ACUACs, and 30
percent for very large ACUHPs.\61\ Manufacturers tend to believe it is
optimistic to assume that they would be able to maintain the same gross
margin percentage as their production costs increase, particularly for
minimally-efficient products. Therefore, this scenario represents a
high bound to industry profitability under new or amended energy
conservation standard, because manufacturers can fully pass on
incremental increases in production costs due to standards to
consumers.
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\61\ The gross margin percentage of 23 percent for small ACUACs
is based on a manufacturer markup of 1.30. The gross margin
percentage of 24 percent for small ACUHPs is based on a manufacturer
markup of 1.32. The gross margin percentage of 25 percent for large
ACUACs is based on a manufacturer markup of 1.34. The gross margin
percentage of 26 percent for large ACUHPs is based on a manufacturer
markup of 1.36. The gross margin percentage of 29 percent for very
large ACUACs is based on a manufacturer markup of 1.41. The gross
margin percentage of 30 percent for very large ACUHPs is based on a
manufacturer markup of 1.43.
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Under the preservation of operating profit scenario, DOE modeled a
situation in which manufacturers are not able to increase per-unit
operating profit in proportion to increases in manufacturer production
costs. In the preservation of operating profit scenario, as the cost of
production goes up under a standards case, manufacturers are generally
required to reduce their manufacturer markups (i.e., margins) to a
level that maintains base-case operating profit, which allows them to
maintain a cost-competitive offering in the market. DOE implemented
this scenario in the GRIM by lowering the manufacturer markups at each
TSL to yield approximately the same earnings before interest and taxes
in the standards case as in the no-new-standards case in the year after
the compliance date of the amended standards. In this scenario,
manufacturers maintain their total operating profit in absolute dollars
in the standards case, despite higher equipment costs and investment.
Therefore, gross margin (as a percentage) shrinks in the standards case
for minimally-compliant equipment. The implicit assumption behind this
scenario is that the industry can only maintain its operating profit in
absolute dollars after the standard. This manufacturer markup scenario
represents the lower bound to industry profitability under new or
amended energy conservation standards.
A comparison of industry financial impacts under the two
manufacturer markup scenarios is presented in section V.B.2.a of this
document.
3. Discussion of MIA Comments
In response to the May 2020 ECS RFI, Lennox asserted that the
commercial package air conditioner and commercial warm air furnace
manufacturers are facing significant cumulative regulatory burden.
(Lennox, EERE-2019-BT-STD-0042-0015 at pp. 7-8)
In response to the May 2020 ECS RFI, Carrier likewise commented
that commercial package air conditioner and heat pump manufacturers
face a significant regulatory burden, citing regulatory changes to
ASHRAE Standard 90.1, the International Energy Conservation Code
(``IECC''), California Air Resource Board, and State-level action,
stressing the potential overlap between these regulatory actions and
the lack of coordination between their governing bodies. Carrier
requested DOE to review its approach to multiple regulations and work
closely with industry organizations to minimize regulatory burden.
(Carrier, EERE-2019-BT-STD-0042-0013 at pp. 18-19)
In response to the May 2020 ECS RFI, Trane commented that multiple
regulations affecting the same manufacturer can strain profits and lead
companies to abandon product lines or markets. Trane asserted that
commercial package air conditioner and commercial warm air furnace
manufacturers will experience significant cumulative regulatory burden
due to DOE energy conservation standards rulemakings.
[[Page 44102]]
(Trane, EERE-2019-BT-STD-0042-0016 at pp. 12-13)
In response to the May 2020 ECS RFI, the Air-Conditioning, Heating,
and Refrigeration Institute commented that the industry faces
regulatory burden from a variety of sources, including the sunsetting
of the UL Standard 1995, State-level GWP limits, and the transition to
new efficiency metrics, suggesting that the combined effects of these
changes would consume almost all available research and development
resources and laboratory time. (AHRI, EERE-2019-BT-STD-0042-0014 at p.
2)
In response to the May 2022 TP/ECS RFI, Lennox asserted that
commercial package air conditioner and heat pump manufacturers are
facing unprecedented regulatory change regarding the equipment they
manufacture, stressing technical and laboratory resources in the
industry. (Lennox, EERE-2022-BT-STD-0015-0009 at p. 6) Lennox also
recommended that DOE consider the cumulative impact of the refrigerant
transition as part of the rulemaking process for amended energy
conservation standards. (Id. at pp. 5-6)
In response, DOE notes that it analyzes cumulative regulatory
burden pursuant to section 13(g) of 10 CFR part 430, subpart C,
appendix A (which applies to this equipment per 10 CFR 431.4). As such,
the Department will recognize and consider the overlapping effects on
manufacturers of new or revised DOE standards and other Federal
regulatory actions affecting the same products or equipment that take
effect approximately three years before or after the 2029 compliance
date (i.e., 2026 to 2032). DOE details the rulemakings and expected
conversion expenses of Federal energy conservation standards that could
impact ACUAC and ACUHP original equipment manufacturers (``OEMs'') that
take effect approximately three years before or after the 2029
compliance date, as discussed in section V.B.2.e of this document.
Regarding potential refrigerant regulations, DOE accounts for the
potential costs associated with transitioning covered equipment to low-
GWP refrigerants in order to comply with Federal and State regulations
limiting the use of high-GWP refrigerants in its GRIM. See section
V.B.2.e of this document for addition information on the estimated
refrigerant transition costs.
In response to the May 2020 ECS RFI, AHRI's comment encouraged DOE
to reach out to four manufacturers of ACUACs/ACUHPs and CWAFs
identified by AHRI as small businesses. (AHRI, EERE-2019-BT-STD-0042-
0014 at p. 12) In response to the May 2020 ECS RFI, UCA commented that
DOE should be cognizant of the disproportionate impact that regulations
may have on small businesses, which, among other issues, may have more
limited resources to follow and comply with regulations, and face
greater difficulties competing with larger corporations. (UCA, EERE-
2019-BT-STD-0042-0006, pp. 1-7 \62\)
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\62\ The UCA comment included two supplemental attachments:
Attachment 1, US DOE LETTER 6.10.2020, and Attachment 2, DOE RFI
Double Duct Information 6.10.2020. DOE references as ``Attachment
1'' and ``Attachment 2'' throughout this document. Both attachments
are available on the docket.
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In response, DOE reviewed the individual company websites of the
four small businesses identified by AHRI and confirmed that none of
them currently produce equipment covered by this rulemaking. Further,
DOE conducted an assessment of the ACUAC/HP market and did not identify
any small, domestic OEMs that manufacture ACUAC/HP equipment for the
U.S. market. See chapter 3 of the direct final rule TSD for a list of
OEMs of ACUACs and/or ACUHPs.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions in emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emissions intended to
represent the marginal impacts of the change in electricity consumption
associated with amended or new standards. The methodology is based on
results published for the AEO, including a set of side cases that
implement a variety of efficiency-related policies. The methodology is
described in appendix 13A in the direct final rule TSD. The analysis
presented in this document uses projections from AEO 2023. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the EPA.\63\
---------------------------------------------------------------------------
\63\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12,
2021).
---------------------------------------------------------------------------
FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the direct final rule TSD.
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. For power sector
emissions, specific emissions intensity factors are calculated by
sector and end use. Total emissions reductions are estimated using the
energy savings calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO 2023 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the emissions control programs discussed in the following
paragraphs the emissions control programs discussed in the following
paragraphs, and the Inflation Reduction Act.\64\
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\64\ For further information, see the Assumptions to AEO 2023
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook (available at: www.eia.gov/outlooks/aeo/assumptions/) (last accessed Oct. 1, 2023).
---------------------------------------------------------------------------
SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (``DC''). (42 U.S.C. 7651 et seq.)
SO2 emissions from numerous States in the eastern half of
the United States are also limited under the Cross-State Air Pollution
Rule (``CSAPR''). 76 FR 48208 (August 8, 2011). CSAPR requires these
States to reduce certain emissions, including annual SO2
emissions, and went into effect as of January 1, 2015.\65\ AEO 2023
[[Page 44103]]
incorporates implementation of CSAPR, including the update to the CSAPR
ozone season program emission budgets and target dates issued in 2016.
81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among
EGUs and is enforced through the use of tradable emissions allowances.
Under existing EPA regulations, for States subject to SO2
emissions limits under CSAPR, any excess SO2 emissions
allowances resulting from the lower electricity demand caused by the
adoption of an efficiency standard could be used to permit offsetting
increases in SO2 emissions by another regulated EGU.
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\65\ CSAPR requires States to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (``PM2.5'') pollution, in order
to address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain States to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (August 8, 2011). EPA subsequently
published a supplemental rule in the Federal Register that included
an additional five States in the CSAPR ozone season program. 76 FR
80760 (Dec. 27, 2011) (Supplemental Rule). EPA also published in the
Federal Register the CSAPR Update for the 2008 ozone NAAQS. 81 FR
74504 (Oct. 26, 2016).
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However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants.\66\ 77 FR 9304 (Feb. 16, 2012). The final rule
establishes power plant emission standards for mercury, acid gases, and
non-mercury metallic toxic pollutants. Because of the emissions
reductions under the MATS, it is unlikely that excess SO2
emissions allowances resulting from the lower electricity demand would
be needed or used to permit offsetting increases in SO2
emissions by another regulated EGU. Therefore, energy conservation
standards that decrease electricity generation will generally reduce
SO2 emissions. DOE estimated SO2 emissions
reduction using emissions factors based on AEO 2023.
---------------------------------------------------------------------------
\66\ In order to continue operating, coal power plants must have
either flue gas desulfurization or dry sorbent injection systems
installed. Both technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions.
---------------------------------------------------------------------------
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOx emissions
would remain near the limit even if electricity generation goes down.
Depending on the configuration of the power sector in the different
regions and the need for allowances, however, NOX emissions
might not remain at the limit in the case of lower electricity demand.
That would mean that standards might reduce NOx emissions in covered
States. Despite this possibility, DOE has chosen to be conservative in
its analysis and has maintained the assumption that standards will not
reduce NOX emissions in States covered by CSAPR. Energy
conservation standards would be expected to reduce NOX
emissions in the States not covered by CSAPR. DOE used AEO 2023 data to
derive NOX emissions factors for the group of States not
covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO 2023, which incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this direct final rule, for the
purpose of complying with the requirements of Executive Order 12866,
DOE considered the estimated net monetary benefits from the reduced
emissions of CO2, CH4, N2O,
NOX, and SO2 that are expected to result from
each of the TSLs considered. In order to make this calculation
analogous to the calculation of the NPV of consumer benefit, DOE
considered the reduced emissions expected to result over the lifetime
of equipment shipped in the projection period for each TSL. This
section summarizes the basis for the values used for monetizing the
emissions benefits and presents the values considered in this direct
final rule.
To monetize the benefits of reducing GHG emissions, this analysis
uses the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG
(``February 2021 SC-GHG TSD'').\67\
---------------------------------------------------------------------------
\67\ See www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf
(last accessed August 1, 2023).
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1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the social cost (``SC'') of each pollutant (e.g., SC-
CO2). These estimates represent the monetary value of the
net harm to society associated with a marginal increase in emissions of
these pollutants in a given year, or the benefit of avoiding that
increase. These estimates are intended to include (but are not limited
to) climate-change-related changes in net agricultural productivity,
human health, property damages from increased flood risk, disruption of
energy systems, risk of conflict, environmental migration, and the
value of ecosystem services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive orders, and DOE would
reach the same conclusion presented in this direct final rule in the
absence of the social cost of greenhouse gases. That is, the social
costs of greenhouse gases, whether measured using the February 2021
interim estimates presented by the IWG on the Social Cost of Greenhouse
Gases or by another means, did not affect the rule ultimately adopted
by DOE.
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions (i.e., SC-GHGs) using SC-
GHG values that were based on the interim values presented in the
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates under Executive Order 13990, published in
February 2021 by the IWG (``February 2021 SC-GHG TSD''). The SC-GHG is
the monetary value of the net harm to society associated with a
marginal increase in emissions in a given year, or the benefit of
avoiding that increase. In principle, the SC-GHG includes the value of
all climate change impacts, including (but not limited to) changes in
net agricultural productivity, human health effects, property damage
from increased flood risk and natural disasters, disruption of energy
systems, risk of conflict, environmental migration, and the value of
ecosystem services. The SC-GHG, therefore, reflects the societal value
of reducing emissions of the gas in question by one metric ton. The SC-
GHG is the theoretically appropriate value to use in conducting
benefit-cost analyses of policies that affect CO2,
N2O, and CH4 emissions. As a member of the IWG
involved in the development of the February 2021 SC-GHG TSD, DOE agreed
that the interim SC-GHG estimates represent the most appropriate
estimate of the SC-GHG until revised estimates are developed reflecting
the latest, peer-reviewed science. See 87 FR 78382, 78406-78408 for
discussion of the development and details of the IWG SC-GHG estimates.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
[[Page 44104]]
lower.\68\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions'' (i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic--both market and
nonmarket--damages) lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their
incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are
modeled, uncertainty in the extrapolation of damages to high
temperatures, and inadequate representation of the relationship between
the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as
inputs to the models do not reflect new information from the last
decade of scenario generation or the full range of projections. The
modeling limitations do not all work in the same direction in terms of
their influence on the SC-CO2 estimates. However, as
discussed in the February 2021 TSD, the IWG has recommended that, taken
together, the limitations suggest that the interim SC-GHG estimates
used in this direct final rule likely underestimate the damages from
GHG emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\68\ Interagency Working Group on Social Cost of Greenhouse
Gases (IWG) (2021) Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government (available at:
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/) (last accessed Nov. 1, 2023).
---------------------------------------------------------------------------
DOE is aware that in December 2023, EPA issued a new set of SC-GHG
estimates in connection with a final rulemaking under the Clean Air
Act.\69\ As DOE had used the IWG interim values in proposing this rule
and is currently reviewing the updated 2023 SC-GHG values, for this
direct final rule, DOE used these updated 2023 SC-GHG values to conduct
a sensitivity analysis of the value of GHG emissions reductions
associated with alternative standards for ACUACs and ACUHPs (see
section IV.L.1.c of this notice). DOE notes that because EPA's
estimates are considerably higher than the IWG's interim SC-GHG values
applied for this direct final rule, an analysis that uses the EPA's
estimates results in significantly greater climate-related benefits.
However, such results would not affect DOE's decision in this direct
final rule. As stated elsewhere in this document, DOE would reach the
same conclusion regarding the economic justification of the standards
presented in this direct final rule without considering the IWG's
interim SC-GHG values, which DOE agrees are conservative estimates. For
the same reason, if DOE were to use EPA's higher SC-GHG estimates, they
would not change DOE's conclusion that the standards are economically
justified.
---------------------------------------------------------------------------
\69\ See www.epa.gov/environmental-economics/scghg.
---------------------------------------------------------------------------
DOE's derivations of the SC-GHG (i.e., SC-CO2, SC-
N2O, and SC-CH4) values used for this direct
final rule are discussed in the following sections, and the results of
DOE's analyses estimating the benefits of the reductions in emissions
of these GHGs are presented in section V.B of this document.
a. Social Cost of Carbon Dioxide
The SC-CO2 values used for this direct final rule were
based on the values developed for the IWG's February 2021 TSD, which
are shown in Table IV.15 in five-year increments from 2020 to 2050. DOE
notes that it has exercised its discretion in adopting the IWG's
estimates, and as previously stated, DOE finds that the interim SC-GHG
estimates represent the most appropriate estimate of the SC-GHG until
revised estimates have been developed reflecting the latest, peer-
reviewed science.
The set of annual values that DOE used, which was adapted from
estimates published by EPA,\70\ is presented in Appendix 14A of the
direct final rule TSD. These estimates are based on methods,
assumptions, and parameters identical to the estimates published by the
IWG (which were based on EPA modeling), and include values for 2051 to
2070. DOE expects additional climate benefits to accrue for equipment
still operating after 2070, but a lack of available SC-CO2
estimates for emissions years beyond 2070 prevents DOE from monetizing
these potential benefits in this analysis.
---------------------------------------------------------------------------
\70\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC (December 2021) (available at: nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf) (last accessed Feb. 21, 2023).
[GRAPHIC] [TIFF OMITTED] TR20MY24.094
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2022$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. To calculate a present value of the stream of
monetary values, DOE discounted the values in each of the four cases
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case. See chapter 13 of the direct final
rule TSD for the annual emissions reductions and see
[[Page 44105]]
also appendix 14A of the direct final rule TSD for the annual SC-
CO2 values.
Regarding the May 2020 ECS RFI, DOE received comments from Policy
Integrity regarding the social cost of carbon used in the emissions
monetization analysis. Policy Integrity commented that DOE should
account for the benefits of greenhouse gas emissions reductions from
the use of higher-efficiency equipment using the global estimate of the
social cost of greenhouse gases, and that the values developed by the
IWG are the best available. (Policy Integrity, EERE-2019-BT-STD-0042-
007 at pp. 2-3, 5)
In response, DOE agrees that the global estimate of the SC-GHG is
appropriate to use in its analysis. The SC-GHG values used in this
analysis are based on the best available science and economics. The IWG
is in the process of assessing how best to incorporate the latest peer-
reviewed science and the recommendations of the National Academies to
develop an updated set of SC-GHG estimates, and DOE remains engaged in
that process.
b. Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
direct final rule were based on the values developed for the February
2021 TSD. DOE notes that it has exercised its discretion in adopting
the IWG's estimates, and as previously stated, DOE finds that the
interim SC-GHG estimates represent the most appropriate estimate of the
SC-GHG until revised estimates have been developed reflecting the
latest, peer-reviewed science. Table IV.16 shows the updated sets of
SC-CH4 and SC-N2O estimates from the latest
interagency update in five-year increments from 2020 to 2050. The full
set of annual values used is presented in Appendix 14-A of the direct
final rule TSD. To capture the uncertainties involved in regulatory
impact analysis, DOE has determined it is appropriate to include all
four sets of SC-CH4 and SC-N2O values, as
recommended by the IWG. DOE derived values after 2050 using the
approach described previously for the SC-CO2.
[GRAPHIC] [TIFF OMITTED] TR20MY24.095
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE
adjusted the values to 2022$ using the implicit price deflator for GDP
from the Bureau of Economic Analysis. To calculate a present value of
the stream of monetary values, DOE discounted the values in each of the
cases using the specific discount rate that had been used to obtain the
SC-CH4 and SC-N2O estimates in each case. See
chapter 13 of the direct final rule TSD for the annual emissions
reduction, and see also appendix 14A of the direct final rule TSD for
the annual SC-CH4 and SC-N2O values.
c. Sensitivity Analysis Using EPA's New SC-GHG Estimates
In December 2023, EPA issued an updated set of SC-GHG estimates
(2023 SC-GHG) in connection with a final rulemaking under the Clean Air
Act. These estimates incorporate recent research and address
recommendations of the National Academies (2017) and comments from a
2023 external peer review of the accompanying technical report.
For this rulemaking, DOE used these updated 2023 SC-GHG values to
conduct a sensitivity analysis of the value of GHG emissions reductions
associated with alternative standards for ACUACs and ACUHPs. This
sensitivity analysis provides an expanded range of potential climate
benefits associated with amended standards. The final year of EPA's new
2023 SC-GHG estimates is 2080; therefore, DOE did not monetize the
climate benefits of GHG emissions reductions occurring after 2080.
The overall climate benefits are greater when using the higher,
updated 2023 SC-GHG estimates, compared to the climate benefits using
the older IWG SC-GHG estimates. The results of the sensitivity analysis
are presented in appendix 14C of the direct final rule TSD.
2. Monetization of Other Emissions Impacts
For this direct final rule, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using benefit-per-ton estimates for that sector from the
EPA's Benefits Mapping and Analysis Program.\71\ DOE used EPA's values
for PM2.5-related benefits associated with NOX
and SO2 and for ozone-related benefits associated with
NOX for 2025, 2030, and 2040, calculated with discount rates
of 3 percent and 7 percent. DOE used linear interpolation to define
values for the years not given in the 2025 to 2040 range; for years
beyond 2040, the values are held constant. DOE combined the EPA
regional benefit-per-ton estimates with regional information on
electricity consumption and emissions from AEO 2023 to define weighted-
average national values for NOX and SO2 (see
appendix 14B of the direct final rule TSD).
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\71\ U.S. Environmental Protection Agency, Estimating the
Benefit per Ton of Reducing Directly-Emitted PM2.5,
PM2.5 Precursors and Ozone Precursors from 21 Sectors
(available at: www.epa.gov/benmap/estimating-benefit-ton-reducing-directly-emitted-pm25-pm25-precursors-and-ozone-precursors) (last
accessed Nov. 1, 2023).
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[[Page 44106]]
M. Utility Impact Analysis
The utility impact analysis estimates the changes in installed
electrical capacity and generation projected to result for each
considered TSL. The analysis is based on published output from the NEMS
associated with AEO 2023. NEMS produces the AEO Reference case, as well
as a number of side cases, that estimate the economy-wide impacts of
changes to energy supply and demand. For the current analysis, impacts
are quantified by comparing the levels of electricity sector
generation, installed capacity, fuel consumption and emissions in the
AEO 2023 Reference case and various side cases. Details of the
methodology are provided in the appendices to chapters 13 and 15 of the
direct final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity, and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new or
amended energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are any changes in the number of employees of
manufacturers of the equipment subject to standards, their suppliers,
and related service firms. The MIA addresses those impacts. Indirect
employment impacts are changes in national employment that occur due to
the shift in expenditures and capital investment caused by the purchase
and operation of more-efficient appliances. Indirect employment impacts
from standards consist of the net jobs created or eliminated in the
national economy, other than in the manufacturing sector being
regulated, caused by: (1) reduced spending by consumers on energy; (2)
reduced spending on new energy supply by the utility industry; (3)
increased consumer spending on the equipment to which the new standards
apply and other goods and services, and (4) the effects of those three
factors throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's 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.\72\ There are many
reasons for these differences, including wage differences and the fact
that the utility sector is more capital-intensive and less labor-
intensive than other sectors. Energy conservation standards have the
effect of reducing consumer utility bills. Because reduced consumer
expenditures for energy likely lead to increased expenditures in other
sectors of the economy, the general effect of efficiency standards is
to shift economic activity from a less labor-intensive sector (i.e.,
the utility sector) to more labor-intensive sectors (e.g., the retail
and service sectors). Thus, the BLS data suggest that net national
employment may increase due to shifts in economic activity resulting
from energy conservation standards.
---------------------------------------------------------------------------
\72\ See U.S. Department of Commerce-Bureau of Economic
Analysis. Regional Multipliers: A User Handbook for the Regional
Input-Output Modeling System (``RIMS II'') (1997) U.S. Government
Printing Office: Washington, DC (available at: www.bea.gov/resources/methodologies/RIMSII-user-guide) (last accessed August 1,
2023).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this direct final rule using an input/output model
of the U.S. economy called Impact of Sector Energy Technologies version
4 (``ImSET'').\73\ ImSET is a special-purpose version of the ``U.S.
Benchmark National Input-Output'' (``I-O'') model, which was designed
to estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer- based I-O model
having structural coefficients that characterize economic flows among
187 sectors most relevant to industrial, commercial, and residential
building energy use.
---------------------------------------------------------------------------
\73\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W.
Schultz, ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User's Guide (2015) Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and that there are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run for this rule. Therefore, DOE used ImSET only
to generate results for near-term timeframes (2034), where these
uncertainties are reduced. For more details on the employment impact
analysis, see chapter 16 of the direct final rule TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for ACUACs
and ACUHPs. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for ACUACs and ACUHPs, and the standard levels that DOE is
adopting in this direct final rule. Additional details regarding DOE's
analyses are contained in the direct final rule TSD supporting this
document.
A. Trial Standard Levels
In general, DOE typically evaluates potential new or amended
standards for products and equipment at the equipment class level and
by grouping individual efficiency levels for each class into TSLs. Use
of TSLs allows DOE to identify and consider industry-level manufacturer
cost interactions between the equipment classes, to the extent that
there are such interactions, and national-level price elasticity of
consumer purchasing decisions that may change when different standard
levels are set.
In the analysis conducted for this direct final rule, DOE analyzed
the benefits and burdens of four TSLs for ACUACs and ACUHPs. DOE
developed TSLs that combine efficiency levels for each analyzed
equipment class. DOE presents the results for the TSLs in this
document, while the results for all efficiency levels that DOE analyzed
are in the direct final rule TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential amended energy conservation
standards for ACUACs and ACUHPs. TSL 4 represents the maximum
technologically feasible (``max-tech'') energy efficiency for all
equipment classes. TSL 3 represents the efficiency levels recommended
by the ACUAC/HP Working Group. TSL 2 and TSL 1 represent intermediate
efficiency levels between baseline and TSL 3 for the small and large
equipment classes, but
[[Page 44107]]
correspond to the same efficiency level for very large equipment
classes as TSL 3.
[GRAPHIC] [TIFF OMITTED] TR20MY24.096
While representative ELs were included in the TSLs, DOE considered
all efficiency levels as part of its analysis.\74\
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\74\ Efficiency levels that were analyzed for this direct final
rule are discussed in sections IV.C.1 and IV.C.2 of this document.
Results by efficiency level are presented in chapters 8, 10, and 12
of the direct final rule TSD.
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B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on ACUACs and ACUHPs consumers by
looking at the effects that potential amended standards at each TSL
would have on the LCC and PBP. DOE also examined the impacts of
potential standards on selected consumer subgroups. These analyses are
discussed in the following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency equipment affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., equipment price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses equipment lifetime and a discount rate. Chapter 8 of the direct
final rule TSD provides detailed information on the LCC and PBP
analyses.
Table V.2 through Table V.7 show the LCC and PBP results for the
TSLs considered for each ACUAC equipment class. As discussed
previously, in section IV.C.3 of this document, separate LCC and PBP
results were not run for ACUHPs, but values related to ACUHP shipments
are considered in the NIA. In the first of each pair of tables, the
simple payback is measured relative to the baseline equipment. In the
second table, the impacts are measured relative to the efficiency
distribution in the no-new-standards case in the compliance year (see
section IV.F.8 of this document). Because some consumers purchase
equipment with higher efficiency in the no-new-standards case, the
average savings are less than the difference between the average LCC of
the baseline equipment and the average LCC at each TSL. The savings
refer only to consumers who are affected by a standard at a given TSL.
Those who already purchase equipment with efficiency at or above a
given TSL are not affected. Consumers for whom the LCC increases at a
given TSL experience a net cost.
[GRAPHIC] [TIFF OMITTED] TR20MY24.097
[[Page 44108]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.098
[GRAPHIC] [TIFF OMITTED] TR20MY24.099
[GRAPHIC] [TIFF OMITTED] TR20MY24.100
[GRAPHIC] [TIFF OMITTED] TR20MY24.101
[[Page 44109]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.102
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on small businesses. Table V.8 through Table V.10
compare the average LCC savings and PBP at each efficiency level for
the consumer subgroup, along with similar metrics for the entire
consumer sample for ACUACs (once again, ACUHPs, are considered only in
the NIA). In most cases, the average LCC savings and PBP for small
businesses at the considered efficiency levels are not substantially
different from the average for all commercial consumers. Chapter 11 of
the direct final rule TSD presents the complete LCC and PBP results for
the subgroup.
[GRAPHIC] [TIFF OMITTED] TR20MY24.103
[GRAPHIC] [TIFF OMITTED] TR20MY24.104
[GRAPHIC] [TIFF OMITTED] TR20MY24.105
[[Page 44110]]
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of ACUACs and ACUHPs. The next
section describes the expected impacts on manufacturers at each
considered TSL. Chapter 12 of the direct final rule TSD explains the
analysis in further detail.
a. Industry Cash-Flow Analysis Results
In this section, DOE provides GRIM results from the analysis, which
examines changes in the industry that would result from a standard.
Table V.12 and Table V.13 summarize the estimated financial impacts
(represented by changes in INPV) of potential amended energy
conservation standards on manufacturers of ACUACs and ACUHPs, as well
as the conversion costs that DOE estimates manufacturers of ACUACs and
ACUHPs would incur at each TSL.
As discussed in section IV.J.2.d of this document, to evaluate the
range of cash-flow impacts on the ACUAC/ACUHP industry, DOE modeled two
manufacturer markup scenarios that correspond to the range of
anticipated market responses to amended standards. DOE modeled: (1) the
preservation of gross margin percentage scenario and (2) the
preservation of operating profit scenario. Under the preservation of
gross margin percentage scenario, DOE applied a single uniform ``gross
margin percentage'' across all efficiency levels. As MPCs increase with
efficiency, this scenario implies that the absolute dollar markup will
increase. DOE assumed a manufacturer ``gross margin percentage'' of 23
percent for small ACUACs, 24 percent for small ACUHPs, 25 percent for
large ACUACs, 26 percent for large ACUHPs, 29 percent for very large
ACUACs, and 30 percent for very large ACUHPs. This manufacturer markup
is the same as the one DOE assumed in the engineering analysis and the
no-new-standards case of the GRIM. Because this scenario assumes that a
manufacturer's absolute dollar markup would increase as MPCs increase
in the standards cases, it represents the upper (less severe) bound to
industry profitability under potential amended energy conservation
standards. Specifically, the industry will be able to maintain its
average no-new-standards case gross margin (as a percentage of revenue)
despite the higher production costs in the standards cases. In general,
the larger the MPC increases, the less likely manufacturers are to
achieve the cash flow from operations calculated in this scenario
because it is less likely that manufacturers will be able to fully
markup these larger production cost increases.
The preservation of operating profit scenario reflects
manufacturers' concerns about their inability to maintain margins as
MPCs increase to reach more-stringent efficiency levels. In this
scenario, while manufacturers make the necessary investments required
to convert their facilities to produce compliant products, operating
profit does not change in absolute dollars and decreases as a
percentage of revenue. It represents the lower (more severe) bound to
industry profitability under potential amended energy conservation
standards because no additional operating profit is earned on the
higher MPCs, thereby eroding profit margins as a percentage of total
revenue.
Each of the modeled manufacturer markup scenarios results in a
unique set of cash-flows and corresponding INPVs at each TSL. In the
following discussion, the INPV results refer to the difference in
industry value between the no-new-standards case and each standards
case resulting from the sum of discounted cash-flows from the reference
year (2024) through the end of the analysis period (2058). To provide
perspective on the short-run cash-flow impact, DOE includes in the
discussion of results a comparison of free cash flow between the no-
new-standards case and the standards case at each TSL in the year
before compliance with new standards is required. This figure
represents the size of the required conversion costs relative to the
cash flow generated by the ACUAC/ACUHP industry in the absence of
amended energy conservation standards.
[GRAPHIC] [TIFF OMITTED] TR20MY24.106
[[Page 44111]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.107
At TSL 1, DOE estimates that impacts on INPV range from -$92.9
million to -$44.2 million, or a change in INPV of -3.5 percent to -1.7
percent. At TSL 1, industry free cash-flow (operating cash flow minus
capital expenditures and capital conversion costs) is $67.5 million,
which is a decrease of $44.4 million, or a drop of 39.7 percent,
compared to the no-new-standards case value of $111.9 million in 2028,
the year before the compliance date of amended energy conservation
standards. Industry conversion costs total $163.2 million.
TSL 1 would set the energy conservation standard for small ACUACs/
HPs at EL 2, large ACUACs/HPs at EL 1, and very large ACUACs/HPs at EL
1. At TSL 1, DOE estimates that manufacturers would incur approximately
$124.9 million in product conversion costs, as some small ACUACs/HPs,
large ACUACs/HPs, and very large ACUACs/HPs would need to be redesigned
to comply with the standard. DOE also estimates that manufacturers
would incur approximately $38.4 million in capital conversion costs.
At TSL 1, DOE estimates that approximately 52 percent of small
ACUAC/HP models currently available for purchase, 64 percent of large
ACUAC/HP models, and 64 percent of very large ACUAC/HP models would
have the capability of meeting the efficiency levels required at TSL 1,
necessitating a significant amount of product redesign. DOE estimates
that seven of the nine manufacturers of small ACUACs/HPs offer small
ACUACs/HPs that would meet the efficiency level required at TSL 1. DOE
estimates that seven of the eight manufacturers of large ACUACs/HPs
offer large ACUACs/HPs that meet the efficiency level required at TSL
1. DOE estimates that six of the eight manufacturers of very large
ACUACs/HPs offer very large ACUACs/HPs that meet the efficiency level
required at TSL 1.
At TSL 1, the shipment-weighted average MPC for all ACUACs/HPs
increases by 2.6 percent relative to the no-new-standards case
shipment-weighted-average MPC for all ACUACs/HPs in 2029. The
incremental increases in MPC lead to different profitability and cash-
flows under the two manufacturer markup scenarios. However, the
conversion costs are the key driver on impacts to the industry, with
the $163.2 million in conversion costs, being the major contributor to
changes of -3.5 percent and -1.7 percent of INPV at TSL 1 under the
preservation of operating profit scenario and the preservation of gross
margin scenario, respectively.
At TSL 2, DOE estimates that impacts on INPV range from -$141.7
million to -$76.0 million, or a change in INPV of -5.3 percent to -2.9
percent. At TSL 2, industry free cash-flow is $43.4 million, which is a
decrease of $68.5 million, or a drop of 61.2 percent, compared to the
no-new-standards case value of $111.9 million in 2028, the year before
the compliance date of amended energy conservation standards. Industry
conversion costs total $228.0 million.
TSL 2 would set the energy conservation standard for small ACUACs/
HPs at EL 3, large ACUACs/HPs at EL 1, and very large ACUACs/HPs at EL
1. At TSL 2, DOE estimates that manufacturers would incur approximately
$171.1 million in product conversion costs, as some small ACUACs/HPs,
large ACUACs/HPs, and very large ACUACs/HPs would need to be redesigned
to comply with the standard. DOE also estimates that manufacturers
would incur approximately $56.9 million in capital conversion costs.
At TSL 2, DOE estimates that approximately 43 percent of small
ACUAC/HP models currently available for purchase, 64 percent of large
ACUAC/HP models, and 64 percent of very large ACUAC/HP models would
have the capability of meeting the efficiency levels required at TSL 2,
necessitating a significant amount of product redesign. DOE estimates
that six of the nine manufacturers of small ACUACs/HPs offer small
ACUACs/HPs that would meet the efficiency level required at TSL 2. DOE
estimates that seven of the eight manufacturers of large ACUACs/HPs
offer large ACUACs/HPs that meet the efficiency level required at TSL
2. DOE estimates that six of the eight manufacturers of very large
ACUACs/HPs offer very large ACUACs/HPs that meet the efficiency level
required at TSL 2.
At TSL 2, the shipment-weighted average MPC for all ACUACs/HPs
increases by 3.6 percent relative to the no-new-standards case
shipment-weighted-average MPC for all ACUACs/HPs in 2029. The
incremental increases in MPC lead to different profitability and cash-
flows under the two
[[Page 44112]]
manufacturer markup scenarios. However, the conversion costs are the
key driver on impacts to the industry, with the $228.0 million in
conversion costs, being the major contributor to changes of -5.3
percent and -2.9 percent of INPV at TSL 2 under the preservation of
operating profit scenario and the preservation of gross margin
scenario, respectively.
At TSL 3 (i.e., the ACUAC/HP Working Group recommended levels), DOE
estimates that impacts on INPV would range from -$193.9 million to -
$79.5 million, or a change in INPV of -7.3 percent to -3.0 percent. At
TSL 3, industry free cash-flow is $21.5 million, which is a decrease of
$90.4 million, or a drop of 80.8 percent, compared to the no-new-
standards case value of $111.9 million in 2028, the year before the
compliance date of amended energy conservation standards. Industry
conversion costs total $288.0 million.
TSL 3 would set the energy conservation standard for small ACUACs/
HPs at EL 4, large ACUACs/HPs at EL 2, and very large ACUACs/HPs at EL
1. At TSL 3, DOE estimates that manufacturers would incur approximately
$217.2 million in product conversion costs, as some small ACUACs/HPs,
large ACUACs/HPs, and very large ACUACs/HPs would need to be redesigned
to comply with the standard. DOE also estimates that manufacturers
would incur approximately $70.8 million in capital conversion costs.
At TSL 3, DOE estimates that approximately 37 percent of small
ACUAC/HP models available for purchase, 50 percent of large ACUAC/HP
models, and 64 percent of very large ACUAC/HP models have the
capability of meeting the efficiency levels required at TSL 3,
necessitating a significant amount of product redesign. DOE estimates
that five of the nine manufacturers of small ACUACs/HPs offer small
ACUACs/HPs that would meet the efficiency level required at TSL 3. DOE
estimates that six of the eight manufacturers of large ACUACs/HPs offer
large ACUACs/HPs that meet the efficiency level required at TSL 3. DOE
estimates that six of the eight manufacturers of very large ACUACs/HPs
offer very large ACUACs/HPs that meet the efficiency level required at
TSL 3.
At TSL 3, the shipment-weighted average MPC for all ACUACs/HPs
increases by 6.3 percent relative to the no-new-standards case
shipment-weighted-average MPC for all ACUACs/HPs in 2029. The
incremental increases in MPC lead to different profitability and cash-
flows under the two manufacturer markup scenarios. However, the
conversion costs are the key driver on impacts to the industry, with
the $288.0 million in conversion costs, being the major contributor to
changes of -7.3 percent and -3.0 percent of INPV at TSL 3 under the
preservation of operating profit scenario and the preservation of gross
margin scenario, respectively.
At TSL 4 (max-tech), DOE estimates that impacts on INPV range from
-$1,550.6 million to -$830.1 million, or a change in INPV of -58.4
percent to -31.3 percent. At TSL 4, industry free cash-flow is -$677.1
million, which is a decrease of $789.0 million, or a drop of 705.2
percent, compared to the no-new-standards case value of $111.9 million
in 2028, the year before the compliance date of amended energy
conservation standards. The negative free-cash-flow calculation
indicates manufacturers may need to access cash reserves or outside
capital to finance conversion efforts. Industry conversion costs total
$1,891.0 million.
TSL 4 would set the energy conservation standard for small ACUACs/
HPs at EL 7, large ACUACs/HPs at EL 4, and very large ACUACs/HPs at EL
3. At TSL 4, DOE estimates that manufacturers would incur approximately
$1,443.2 million in product conversion costs, as the majority of small
ACUACs/HPs, large ACUACs/HPs, and very large ACUACs/HPs would need to
be redesigned to comply with the standard. DOE also estimates that
manufacturers would incur approximately $447.8 million in capital
conversion costs.
At TSL 4, DOE estimates that approximately 2 percent of small
ACUAC/HP models available for purchase, 10 percent of large ACUAC/HP
models, and 1 percent of very large ACUAC/HP models would have the
capability of meeting the efficiency levels required at TSL 4,
necessitating a significant amount of product redesign. DOE estimates
that only three of the nine manufacturers of small ACUACs/HPs offer
small ACUACs/HPs that would meet the efficiency level required at TSL
4. DOE estimates that only two of the eight manufacturers of large
ACUACs/HPs offer large ACUACs/HPs that meet the efficiency level
required at TSL 4. DOE estimates that only one of the eight
manufacturers of very large ACUACs/HPs offer very large ACUACs/HPs that
meet the efficiency level required at TSL 4.
At max-tech, DOE expects that manufacturers would have to contend
with significant engineering uncertainty (considering that very few
manufacturers produce models that would meet the efficiency level
required at TSL 4) and would need to invest heavily in product redesign
at all capacities. At TSL 4, the shipment-weighted average MPC for all
ACUACs/HPs increases by 30.3 percent relative to the no-new-standards
case shipment-weighted-average MPC for all ACUACs/HPs in 2029. The
incremental increases in MPC lead to different profitability and cash-
flows under the two manufacturer markup scenarios. However, the
conversion costs continue to be the key driver on impacts to the
industry, with the $1,891.0 million in conversion costs, being the
major contributor to changes of -58.4 percent and -31.3 percent of INPV
at TSL 4 under the preservation of operating profit scenario and the
preservation of gross margin scenario, respectively.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment in the ACUACs and ACUHPs
industry, DOE used the GRIM to estimate the domestic labor expenditures
and number of direct employees in the no-new-standards case and in each
of the standards cases during the analysis period. DOE calculated these
values using the most up-to-date statistical data from the 2021
ASM,\75\ BLS employee compensation data,\76\ and the results of the
engineering analysis.
---------------------------------------------------------------------------
\75\ U.S. Census Bureau, Annual Survey of Manufactures,
``Summary Statistics for Industry Groups and Industries in the U.S
(2021)'' (available at: www.census.gov/programs-surveys/asm/data/tables.html) (last accessed Dec. 5, 2023).
\76\ U.S. Bureau of Labor Statistics, Employer Costs for
Employee Compensation (June 2023) (Sept. 12, 2023) (available at:
www.bls.gov/news.release/pdf/ecec.pdf) (last accessed Dec. 5, 2023).
---------------------------------------------------------------------------
Labor expenditures related to equipment manufacturing depend on the
labor intensity of the equipment, the sales volume, and an assumption
that wages remain fixed in real terms over time. The total labor
expenditures in each year are calculated by multiplying the total MPCs
by the labor percentage of MPCs. The total labor expenditures in the
GRIM were then converted to total production employment levels by
dividing production labor expenditures by the average fully burdened
wage multiplied by the average number of hours worked per year per
production worker. To do this, DOE relied on the ASM inputs: Production
Workers Annual Wages, Production Workers Annual Hours, Production
Workers for Pay Period, and Number of Employees. DOE also relied on the
BLS employee compensation data to determine the
[[Page 44113]]
fully burdened wage ratio. The fully burdened wage ratio factors in
paid leave, supplemental pay, insurance, retirement and savings, and
legally required benefits.
The number of production employees is then multiplied by the U.S.
labor percentage to convert total production employment to total
domestic production employment. The U.S. labor percentage represents
the industry fraction of domestic manufacturing production capacity for
the covered equipment. This value is derived from manufacturer
interviews, product database analysis, and publicly-available
information. Based on information obtained during manufacturer
interviews, DOE estimates that 50 percent of ACUACs/HPs are produced
domestically.
The domestic production employees estimate covers production line
workers, including line supervisors, who are directly involved in
fabricating, processing, or assembling equipment within the OEM
facility. Workers performing services that are closely associated with
production operations, such as materials handling tasks using
forklifts, are also included as production labor.\77\ DOE's estimates
only account for production workers who manufacture the specific
equipment covered by this rulemaking.
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\77\ The comprehensive description of production and non-
production workers is available online at: www2.census.gov/programs-surveys/asm/technical-documentation/questionnaire/2021/instructions/MA_10000_Instructions.pdf, ``Definitions and Instructions for the
Annual Survey of Manufacturers, MA-10000'' (pp. 13-14) (last
accessed June 1, 2023).
---------------------------------------------------------------------------
Non-production employees account for the remainder of the direct
employment figure. The non-production employees estimate covers
domestic workers who are not directly involved in the production
process, such as sales, engineering, human resources, and management.
Using the amount of domestic production workers previously calculated,
non-production domestic employees are extrapolated by multiplying the
ratio of non-production workers in the industry compared to production
employees. DOE assumes that this employee distribution ratio remains
constant between the no-new-standards case and standards cases.
Direct employment is the sum of domestic production employees and
non-production employees. Using the GRIM, DOE estimates in the absence
of amended energy conservation standards, there would be 3,429 domestic
production and non-production employees for ACUACs/HPs in 2029. Table
V.14 shows the range of the impacts of amended energy conservation
standards on U.S. manufacturing employment in the ACUAC/HP industry.
The following discussion provides a qualitative evaluation of the range
of potential impacts presented in Table V.14.
[GRAPHIC] [TIFF OMITTED] TR20MY24.108
The direct employment impacts shown in Table V.14 represent the
potential domestic employment changes that could result following the
compliance date of the amended standards for ACUACs and ACUHPs.
Employment could increase or decrease due to the labor content of the
various equipment being manufactured domestically. The upper bound
estimate corresponds to an increase in the number of domestic workers
that would result from amended energy conservation standards if
manufacturers continue to produce the same scope of covered equipment
within the United States after compliance takes effect and would
require additional labor to produce more-efficient equipment. To
establish a conservative lower bound, DOE assumes all manufacturers
would shift production to foreign countries with lower labor costs. At
lower TSLs, DOE believes the likelihood of changes in production
location due to amended standards are low due to feedback from industry
that they would not expect major changes to their production lines and
processes, with the majority of conversion costs driven by equipment
redesign (i.e., investments in research, development, testing,
marketing, and other non-capitalized costs). However, as amended
standards increase in stringency and both the complexity and cost of
production facility updates increases, manufacturers are more likely to
revisit their production location decisions.
Additional detail on the analysis of direct employment can be found
in chapter 12 of the direct final rule TSD. Additionally, the
employment impacts discussed in this section are independent of the
employment impacts from the broader U.S. economy, which are documented
in chapter 16 of the direct final rule TSD.
c. Impacts on Manufacturing Capacity
Based on manufacturer feedback, DOE expects there would be
relatively low capital conversion costs at TSLs below the max-tech
level (including TSL 3, the Recommended TSL), which indicates that
major updates to manufacturing lines will likely not be required to
meet amended standards. At max-tech (i.e., TSL 4), it is unclear if
most manufacturers would have the engineering capacity to complete the
necessary redesigns within the compliance period. However, because the
Recommended TSL would not require max-tech efficiencies, DOE does not
expect manufacturers would face long-term capacity constraints due to
the standard levels detailed in this direct final rule. Furthermore,
accepting that manufacturers fully considered the investment and
capacity implications prior to voluntarily entering into the ACUAC/HP
Working Group ECS Term Sheet, DOE infers that manufacturers would not
have agreed to standard levels that they could not reasonably meet
within the compliance period.
[[Page 44114]]
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop industry cash-flow
estimates may not capture the differential impacts among subgroups of
manufacturers. Small manufacturers, niche players, or manufacturers
exhibiting a cost structure that differs substantially from the
industry average could be affected disproportionately. DOE used the
results of the industry characterization to group manufacturers
exhibiting similar characteristics. Specifically, DOE investigated
small businesses as a manufacturer subgroup that could be
disproportionally impacted by energy conservation standards and could
merit additional analysis in the MIA. DOE did not identify any other
adversely impacted manufacturer subgroups for this rulemaking based on
the results of the industry characterization.
DOE analyzes the impacts on small businesses in a separate analysis
for the amended energy conservation standards proposed in the NOPR
published elsewhere in this issue of the Federal Register and in
chapter 12 of the direct final rule TSD. In summary, the SBA defines a
``small business'' as having 1,250 employees or less for North American
Industry Classification System (``NAICS'') code 333415, ``Air
Conditioning and Warm Air Heating Equipment and Commercial and
Industrial Refrigeration Equipment Manufacturing.'' Based on this
classification, DOE did not identify any domestic OEMs that qualify as
a small business. For a discussion of the small business manufacturer
subgroup, see chapter 12 of the direct final rule TSD.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves examining at
the cumulative impact of multiple DOE standards and the regulatory
actions of other Federal agencies, States, and localities that affect
the manufacturers of a covered product or equipment. While any one
regulation may not impose a significant burden on manufacturers, the
combined effects of several existing or impending regulations may have
serious consequences for some manufacturers, groups of manufacturers,
or an entire industry. Assessing the impact of a single regulation may
overlook this cumulative regulatory burden. In addition to energy
conservation standards, multiple regulations affecting the same
manufacturer can strain profits and lead companies to abandon equipment
lines or markets with lower expected future returns than competing
equipment. For these reasons, DOE conducts an analysis of cumulative
regulatory burden as part of its rulemakings pertaining to appliance
efficiency.
For this cumulative regulatory burden analysis, DOE examined
Federal, equipment-specific regulations that could affect ACUAC and
ACUHP manufacturers that take effect approximately three years before
or after the 2029 compliance date. Table V.15 presents the DOE energy
conservation standards that would impact manufacturers of ACUAC and
ACUHP equipment in the 2026 to 2032 timeframe.
[[Page 44115]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.109
Refrigerant Regulations
DOE evaluated the potential impacts of State and Federal
refrigerant regulations, such as the California Air Resources Board
(``CARB'') rulemaking prohibiting the use of refrigerants with a GWP of
750 or greater starting January 1, 2025 for ``Other Air-conditioning
Equipment,'' which includes covered equipment under this
rulemaking,\78\ and
[[Page 44116]]
the October 2023 EPA Final Rule which establishes a GWP limit of 700
for refrigerants used in light commercial air conditioning and heat
pump systems (which includes ACUACs and ACUHPs) manufactured January 1,
2025, or later. 88 FR 73098, 73206, 73208. Based on market research and
information from manufacturer interviews, DOE expects that ACUAC/HP
manufacturers will transition to flammable refrigerants (e.g., R-32) in
response to these refrigerant GWP restrictions. See section IV.C.4 of
this document for additional information. DOE understands that
switching from non-flammable to flammable refrigerants requires time
and investment to redesign ACUAC/HP units and to upgrade production
facilities to accommodate the additional structural and safety
precautions required. DOE expects manufacturers will need to transition
to an A2L \79\ refrigerant to comply with upcoming refrigerant
regulations, prior to the expected 2029 compliance date of the amended
energy conservation standards.
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\78\ State of California Air Resource Board, ``Prohibitions on
Use of Certain Hydrofluorocarbons in Stationary Refrigeration,
Stationary Air-conditioning, and Other End-Uses Regulation,''
Amendments effective January 1, 2022 (available at: ww2.arb.ca.gov/sites/default/files/barcu/regact/2020/hfc2020/frorevised.pdf) (last
accessed Oct. 18, 2023).
\79\ A2L is a refrigerant classification from the American
Society of Heating, Refrigeration, and Air-Conditioning Engineers
(``ASHRAE'') Standard 34: ``Designation and Safety Classification of
Refrigerants.'' The A2L class defines refrigerants that are
nontoxic, but mildly flammable. See section IV.C.4 of this document
for additional discussion on low-GWP refrigerants.
---------------------------------------------------------------------------
Investments required to transition to flammable refrigerants in
response to Federal or State regulations, including EPA's final rule,
necessitate a level of resource allocation beyond typical annual R&D
and capital expenditures. DOE considers the cost associated with the
refrigerant transition in its GRIM to be independent of DOE actions
related to any amended energy conservation standards. DOE accounted for
the costs associated with redesigning ACUAC/HPs to make use of
flammable refrigerants in the GRIM in the no-new-standards case and
standards cases to reflect the cumulative regulatory burden from
Federal and State refrigerant regulation. DOE relied on manufacturer
feedback in confidential interviews and a report prepared by CARB,\80\
to estimate the industry refrigerant transition costs. To avoid
underestimating the potential costs, DOE used the more conservative
costs reported in the report prepared by CARB. Based on feedback, DOE
assumed that the transition to low-GWP refrigerants would require
industry to invest approximately $210 million in equipment redesign.
---------------------------------------------------------------------------
\80\ Report prepared by the state of California's Air Resources
Board, ``Proposed Amendments to the Prohibitions on Use of Certain
Hydrofluorocarbons in Stationary Refrigeration, Chillers, Aerosols,
Propellants, and Foam End-Uses Regulation'' (2020) (available at:
ww2.arb.ca.gov/sites/default/files/barcu/regact/2020/hfc2020/appb.pdf?_ga=2.199664686.188689668.1697147618-702155270.1695067053)
(last accessed Oct. 18, 2023).
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3. National Impact Analysis
This section presents DOE's estimates of the national energy
savings and the NPV of consumer benefits that would result from each of
the TSLs considered as potential amended standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential amended
standards for ACUACs and ACUHPs, DOE compared their energy consumption
under the no-new-standards case to their anticipated energy consumption
under each TSL. The savings are measured over the entire lifetime of
equipment purchased in the 30-year period that begins in the year of
anticipated compliance with amended standards (2029-2058). Table V.16
presents DOE's projections of the national energy savings for each TSL
considered for ACUACs and ACUHPs. The savings were calculated using the
approach described in section IV.H.2 of this document.
[[Page 44117]]
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OMB Circular A-4 \81\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using nine years, 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.\82\ The review timeframe established in EPCA is
generally not synchronized with the equipment lifetime, equipment
manufacturing cycles, or other factors specific to ACUACs and ACUHPs.
Thus, such results are presented for informational purposes only and
are not indicative of any change in DOE's analytical methodology. The
NES sensitivity analysis results based on a nine-year analytical period
are presented in Table V.17. The impacts are counted over the lifetime
of ACUACs and ACUHPs purchased in 2029-2037.
---------------------------------------------------------------------------
\81\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (available at:
www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf (last accessed Oct. 23, 2023).
\82\ For ASHRAE equipment, EPCA requires DOE to review its
standards every six years, and requires, for certain products, a
three-year period after any new standard is promulgated before
compliance is required, except that in no case may any new standards
be required within six years of the compliance date of the previous
standards. (42 U.S.C. 6313(a)(6)(C)) If DOE makes a determination
that amended standards are not needed, it must conduct a subsequent
review within three years following such a determination. (Id.) As
DOE is evaluating the need to amend the standards, the sensitivity
analysis is based on the review timeframe associated with amended
standards. While adding a six-year review to the three-year
compliance period adds up to nine years, DOE notes that it may
undertake reviews at any time within the six-year period and that
the three-year compliance date may yield to the six-year backstop. A
nine-year analysis period may not be appropriate given the
variability that occurs in the timing of standards reviews and the
fact that for some products, the compliance period is six years
rather than three years.
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[[Page 44118]]
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b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for ACUACs and
ACUHPs. In accordance with OMB's guidelines on regulatory analysis,\83\
DOE calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.18 shows the consumer NPV results with impacts counted
over the lifetime of equipment purchased in 2029-2058.
---------------------------------------------------------------------------
\83\ U.S. Office of Management and Budget, Circular A-4:
Regulatory Analysis (Sept. 17, 2003) (available at:
www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf) (last accessed Oct. 23, 2023).
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[[Page 44119]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.112
The NPV results based on the aforementioned nine-year analytical
period are presented in Table V.19. The impacts are counted over the
lifetime of equipment purchased in 2029-2037. As mentioned previously,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology or decision
criteria.
[GRAPHIC] [TIFF OMITTED] TR20MY24.113
[[Page 44120]]
The previous results reflect the use of a default (constant) trend
to estimate the change in price for ACUACs and ACUHPs over the analysis
period (see section IV.H of this document). DOE also conducted a
sensitivity analysis that considered one scenario with a declining
price trend in combination with AEO High-Economic-Growth (high benefit)
and one scenario with an increasing price trend in combination with AEO
Low-Economic-Growth (low benefit). For 30-year shipments at the amended
TSL, in the high benefit scenario, NPV of consumer benefits results at
3 percent and 7 percent discount rates, respectively, are $17.3 billion
and $5.2 billion USD. In the low benefit scenario, NPV of consumer
benefits results at 3 percent and 7 percent discount rates,
respectively, are $14.0 billion and $3.9 billion USD. In the reference
scenario, the NPV of consumer benefits results at 3 percent and 7
percent discount rates, respectively, are $15.3 billion and $4.4
billion USD. The full results of these alternative cases are presented
in appendix 10C of the direct final rule TSD.
c. Indirect Impacts on Employment
DOE estimates that amended energy conservation standards for ACUACs
and ACUHPs will reduce energy expenditures for consumers of that
equipment, with the resulting net savings being redirected to other
forms of economic activity. These expected shifts in spending and
economic activity could affect the demand for labor. As described in
section IV.N of this document, DOE used an input/output model of the
U.S. economy to estimate indirect employment impacts of the TSLs that
DOE considered. There are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term timeframes
(2029-2034), where these uncertainties are reduced.
The results suggest that the adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the direct final rule TSD presents detailed
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Equipment
As discussed in section III.F.1.d of this document, DOE has
concluded that the standards adopted in this direct final rule will not
lessen the utility or performance of ACUACs and ACUHPs under
consideration in this rulemaking. Manufacturers of this equipment
currently offer units that meet or exceed the adopted standards.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new or amended standards. As discussed in section III.F.1.e
of this document, EPCA directs the Attorney General of the United
States (``Attorney General'') to determine the impact, if any, of any
lessening of competition likely to result from a proposed standard and
to transmit such determination in writing to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. To assist the Attorney General
in making this determination, DOE has provided DOJ with copies of the
direct final rule, the related NOPR, and the accompanying TSD for
review. DOE will consider DOJ's comments on the DFR in determining how
to proceed with this rulemaking. DOE will also publish and respond to
the DOJ's comments in the Federal Register in a separate document. DOE
invites comment from the public regarding any competitive impacts that
are likely to result from this direct final rule. In addition,
stakeholders may also provide comments separately to DOJ regarding
these potential impacts. See the ADDRESSES section of the NOPR
published elsewhere in this issue of the Federal Register for
information to send comments to DOJ.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. Chapter 15 in the direct final
rule TSD presents the estimated impacts on electricity-generating
capacity, relative to the no-new-standards case, for the TSLs that DOE
considered in this rulemaking.
Energy conservation resulting from potential energy conservation
standards for ACUACs and ACUHPs is expected to yield environmental
benefits in the form of reduced emissions of certain air pollutants and
greenhouse gases. Table V.20 provides DOE's estimate of cumulative
emissions reductions expected to result from the TSLs considered in
this rulemaking. The emissions were calculated using the multipliers
discussed in section IV.K of this document. DOE reports annual
emissions reductions for each TSL in chapter 13 of the direct final
rule TSD.
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BILLING CODE 6450-01-C
As part of the analysis for this rulemaking, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for ACUACs and
ACUHPs. Section IV.L of this document discusses the SC-CO2
values that DOE used. Table V.21 presents the value of CO2
emissions reduction at each TSL for each of the SC-CO2
cases. The time-series of annual values is presented for the selected
TSL in chapter 14 of the direct final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.115
[[Page 44122]]
As discussed in section IV.L.2 of this document, DOE estimated the
monetized climate benefits likely to result from the reduced emissions
of CH4 and N2O that DOE estimated for each of the
considered TSLs for ACUACs and ACUHPs. Table V.22 presents the value of
the CH4 emissions reduction at each TSL, and Table V.23
presents the value of the N2O emissions reduction at each
TSL. The time-series of annual values is presented for the selected TSL
in chapter 14 of the direct final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.116
[GRAPHIC] [TIFF OMITTED] TR20MY24.117
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
global and U.S. economy continues to evolve rapidly. Thus, any value
placed on reduced GHG emissions in this rulemaking is subject to
change. That said, because of omitted damages, DOE agrees with the IWG
that these estimates most likely underestimate the climate benefits of
greenhouse gas reductions. DOE, together with other Federal agencies,
will continue to review methodologies for estimating the monetary value
of reductions in CO2 and other GHG emissions. This ongoing
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues. DOE notes, however, that the
adopted standards are economically justified even without inclusion of
monetized benefits of reduced GHG emissions.
DOE also estimated the monetary value of the economic benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for ACUACs and ACUHPs.
The dollar-per-ton values that DOE used are discussed in section IV.L
of this document. Table V.24 presents the present value for
NOX emissions reduction for each TSL calculated using 7-
percent and 3-percent discount rates, and Table V.25 presents similar
results for SO2 emissions reductions. The results in these
tables reflect application of EPA's low dollar-per-ton values, which
reflects DOE's primary estimate. The time-series of annual values is
presented for the selected TSL in chapter 14 of the direct final rule
TSD.
[[Page 44123]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.118
[GRAPHIC] [TIFF OMITTED] TR20MY24.119
The benefits of reduced CO2, CH4, and
N2O emissions are collectively referred to as ``climate
benefits.'' The effects of SO2 and NOX emissions
reductions are collectively referred to as ``health benefits.'' Not all
the public health and environmental benefits from the reduction of
greenhouse gases, NOX, and SO2 are captured in
the values above, and additional unquantified benefits from the
reductions of those pollutants, as well as from the reduction of direct
PM and other co-pollutants, may be significant. DOE has not included
monetary benefits of the reduction of Hg emissions for this direct
final rule because the amount of reduction is expected the be very
small.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) No
other factors were considered in this analysis.
8. Summary of Economic Impacts
Table V.26 presents the NPV values that result from adding the
monetized estimates of the potential economic, climate, and health
benefits resulting from reduced GHG, NOX, and SO2
emissions to the NPV of consumer benefits calculated for each TSL
considered in this rulemaking. The consumer benefits are domestic U.S.
monetary savings that occur as a result of purchasing the covered
ACUACs and ACUHPs, and are measured for the lifetime of equipment
shipped in 2029-2058. The climate benefits associated with reduced GHG
emissions resulting from the adopted standards are global benefits, and
are also calculated based on the lifetime of ACUACs and ACUHPs shipped
in 2029-2058. The climate benefits associated with four SC-GHG
estimates are shown in Table V.26. DOE does not have a single, central
SC-GHG point estimate, and it emphasizes the value of considering the
benefits calculated using all four SC-GHG estimates.
[GRAPHIC] [TIFF OMITTED] TR20MY24.120
[[Page 44124]]
C. Conclusion
As noted previously, EPCA specifies that, for any commercial and
industrial equipment addressed under 42 U.S.C. 6313(a)(6)(A)(i), DOE
may prescribe an energy conservation standard more stringent than the
level for such equipment in ASHRAE Standard 90.1, as amended,\84\ only
if ``clear and convincing evidence'' shows that a more-stringent
standard would result in significant additional conservation of energy
and is technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) For this direct final rule, DOE considered the
impacts of amended standards for ACUACs and ACUHPs at each TSL,
beginning with the maximum technologically feasible level, to determine
whether that level was economically justified. Where the max-tech level
was not justified, DOE then considered the next most efficient level
and undertook the same evaluation until it reached the highest
efficiency level that is both technologically feasible and economically
justified and saves a significant additional amount of energy.
---------------------------------------------------------------------------
\84\ As discussed in section II.B.2, ASHRAE 90.1-2019 updated
the minimum efficiency levels for ACUACs and ACUHPs to align with
those adopted by DOE in the January 2016 Direct Final Rule--i.e.,
ASHRAE 90.1-2019 includes minimum efficiency levels that are aligned
with the current Federal energy conservation standards. ASHRAE 90.1-
2022 includes the same minimum efficiency levels for ACUACs and
ACUHPs as ASHRAE 90.1-2019.
---------------------------------------------------------------------------
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment.
1. Benefits and Burdens of TSLs Considered for ACUACs and ACUHPs
Standards
Table V.27 and Table V.28 summarize the quantitative impacts
estimated for each TSL for ACUACs and ACUHPs. The national impacts are
measured over the lifetime of ACUACs and ACUHPs purchased in the 30-
year period that begins in the anticipated year of compliance with
amended standards (2029-2058). The energy savings, emissions
reductions, and value of emissions reductions refer to full-fuel-cycle
results. DOE is presenting monetized benefits of GHG emissions
reductions in accordance with the applicable Executive Orders, and DOE
would reach the same conclusion presented in this document in the
absence of the social cost of greenhouse gases, including the Interim
Estimates presented by the IWG. The efficiency levels contained in each
TSL are described in section V.A of this document.
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[[Page 44126]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.122
DOE first considered TSL 4, which represents the max-tech
efficiency levels. The max-tech efficiency levels for all equipment
classes would require complete redesigns of almost all models currently
available on the market to be optimized around the new test procedure
and energy efficiency metrics to provide better field performance. TSL
4 could necessitate using a combination of numerous design options,
including the most efficient compressors, fans and motor designs, more-
efficient heat exchangers, and/or advanced controls. TSL 4 would save
an estimated 14.8 quads of energy, an amount DOE considers significant.
Under TSL 4, the NPV of consumer net benefit would be $1.5 billion
using a discount rate of 7 percent, and $21.7 billion using a discount
rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 291.4 Mt of
CO2, 67.7 thousand tons of SO2, 496.0 thousand
tons of NOX, 0.45 tons of Hg, 2,268.2 thousand tons of
CH4, and 2.2 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 4 is $12.6 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $7.8 billion using a 7-percent discount rate and $23.2 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 4 is $21.9
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $57.5 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
potential standard level is economically justified.
At TSL 4, the average LCC impact is a savings of $242 for small
ACUACs, $3,880 for large ACUACs, and $12,766 for very large ACUACs. The
simple payback period is 10 years for small ACUACs and seven years for
large and very large ACUACs. The fraction of consumers experiencing a
net LCC cost is 60 percent for small ACUACs, 31 percent for large
ACUACs, and 24 percent for very large ACUACs. On a shipment-weighted
average basis, the average LCC impact is a savings of $2,379, the
simple payback period is 9 years, and the fraction of consumers
experiencing a net LCC cost is 49 percent.
At TSL 4, the projected change in INPV ranges from a decrease of
$1,550.6 million to a decrease of $830.1 million, which corresponds to
decreases of 58.4 percent to 31.3 percent, respectively. DOE estimates
that industry would need to invest $1,891 million to comply with
standards set at TSL 4. DOE estimates that approximately 2 percent of
small ACUAC/HP models, 10 percent of large ACUAC/HP models, and 1
percent of very large ACUAC/HP models currently available for purchase
meet the efficiency levels that would be required at TSL 4 after
testing using the amended test procedure and when represented in the
new metric. Very few manufacturers produce equipment at TSL 4
efficiency levels at this time. DOE estimates that only three of the
nine manufacturers of small ACUACs/HPs currently offer models that meet
the efficiency levels that would be required for small ACUACs/HPs at
TSL 4. DOE estimates that only two of the eight manufacturers of large
ACUACs/HPs currently offer models that meet the efficiency levels that
would be required for large ACUACs/HPs at TSL 4. DOE estimates
[[Page 44127]]
that only one of the eight manufacturers of very large ACUACs/HPs
currently offers models that meet the efficiency level that would be
required for very large ACUACs/HPs at TSL 4.
At TSL 4, DOE understands that all of the manufacturers would need
to utilize significant engineering resources to redesign their current
offerings to bring them into compliance with TSL 4 efficiencies. All
manufacturers would have to invest heavily in their production
facilities and source more-efficient components for incorporation into
their designs. One of the challenges that certain members of the ACUAC/
HP Working Group expressed was ensuring the footprint of the large and
very large ACUACs and ACUHPs did not grow to a level that was not
sustainable for existing retrofits. While there was some uncertainty
surrounding what those footprints might look like, most manufacturers
were generally concerned that TSL 4 could require such increases
especially for very large models. DOE understands that to meet max-tech
IVEC levels, a high fraction of models would need larger cabinet
footprints to accommodate the increased size of efficiency-improving
design options, which would require substantial investment in retooling
as well as redesign engineering efforts.
DOE estimates that at TSL 4, most manufacturers would be required
to redesign every ACUAC/HP model offering covered by this rulemaking.
Some manufacturers may not have the engineering capacity to complete
the necessary redesigns within the compliance period. If manufacturers
were unable to redesign all their covered ACUAC/HP models within the
compliance period, they would likely prioritize redesigns based on
model sales volume. In such case, model offerings of large and very
large ACUACs/HPs might decrease given that there are many capacities
offered for large and very large ACUACs/HPs and comparatively fewer
shipments across which to distribute conversion costs. Furthermore, DOE
recognizes that a standard set at max-tech could greatly limit
equipment differentiation in the ACUAC/ACUHP market.
Based upon the previous considerations, the Secretary concludes
that at TSL 4 for ACUACs and ACUHPs, the benefits of energy savings,
positive NPV of consumer benefits, emission reductions, and the
estimated monetary value of the emissions reductions would be
outweighed by the impacts on manufacturers, including the large
conversion costs, profit margin impacts that could result in a large
reduction in INPV, and the scale and magnitude of the redesign efforts
needed for manufacturers to bring their current equipment offerings
into compliance at this TSL. DOE is concerned that manufacturers may
narrow their equipment offerings and focus on high-volume models to
meet the standard within the compliance window. DOE is also concerned
with the potential footprint implications especially for very large
ACUAC/HP models as manufacturer optimize around the new test procedure
and metric for the largest of ACUAC/HP models. Consequently, DOE has
concluded that it is unable to make a determination, supported by clear
and convincing evidence, that TSL 4 is economically justified.
DOE then considered TSL 3 (the Recommended TSL), which represents
efficiency levels 4, 2, and 1 for small, large, and very large ACUACs
and ACUHPs, respectively. At TSL 3 efficiency levels, DOE understands
that manufacturers would likely need to implement fewer design options
than needed for TSL 4. These design options could include increasing
outdoor and/or indoor coil size, modifying compressor staging, and
improving fan and/or fan motor efficiency in order to meet these
levels. These technologies and design paths are familiar to
manufacturers as they produce equipment today that can meet TSL 3
efficiency levels, but they are not optimized around the new test
procedure and metrics, which are more representative of field
performance. The Recommended TSL would save an estimated 5.5 quads of
energy, an amount DOE considers significant. Under TSL 3, the NPV of
consumer net benefit would be $4.4 billion using a discount rate of 7
percent, and $15.3 billion using a discount rate of 3 percent.
The cumulative emissions reductions at the Recommended TSL are
108.7 Mt of CO2, 25.3 thousand tons of SO2, 185.1
thousand tons of NOX, 0.2 tons of Hg, 845.6 thousand tons of
CH4, and 0.8 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
the Recommended TSL is $4.86 billion. The estimated monetary value of
the health benefits from reduced SO2 and NOX
emissions at the Recommended TSL is $3.0 billion using a 7-percent
discount rate and $8.8 billion using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 3 is $12.3
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 3 is $29.0 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
potential standard level is economically justified.
At the Recommended TSL, the average LCC impact is a savings of
$1,380 for small ACUACs, $2,488 for large ACUACs, and $6,431 for very
large ACUACs. The simple payback period is six years for small ACUACs,
3.5 years for large ACUACs, and 1 year for very large ACUACs. The
fraction of consumers experiencing a net LCC cost is 26 percent for
small ACUACs, 4 percent for large ACUACs, and 1 percent for very large
ACUACs. On a shipment-weighted average basis, the average LCC impact is
a savings of $2,154, the simple payback period is 4.8 years, and the
fraction of consumers experiencing a net LCC cost is 18 percent.
At the Recommended TSL, TSL 3, the projected change in INPV ranges
from a decrease of $193.9 million to a decrease $79.5 million, which
correspond to decreases of 7.3 percent and 3.0 percent, respectively.
DOE estimates that industry must invest $288 million to comply with
standards set at the Recommended TSL. The ACUAC/HP Working Group
manufacturers were more comfortable with TSL 3 efficiency levels
because the technologies anticipated to be used are the same as
technologies employed in the commercially available products today. In
some cases, manufacturers believed existing cabinets could be
maintained, while in other cases, investments would be needed to modify
production equipment for new cabinet designs to optimize fan design and
accommodate other changes. DOE estimates that at TSL 3 efficiency
levels manufacturers might likely utilize staging of the compressor
instead of moving the entire market to variable-speed compressors.
However, DOE understands that both of these are options that
manufacturers may choose to improve efficiency for those models needing
redesign. While DOE estimates that there are currently few shipments at
the Recommended TSL, particularly for small ACUACs/HPs (as discussed in
section IV.F.8 of this document), DOE estimates that approximately 37
percent of small ACUAC/HP models, 50 percent of large ACUAC/HP models,
and 64 percent of very large ACUAC/HP models currently available would
have the capability of meeting the efficiency levels required at
[[Page 44128]]
TSL 3 without being redesigned. This indicates that there is already a
significant number of models available on the market that would meet
the Recommended TSL when represented in the new metric, and that the
technology to meet these standards is readily available. Manufacturers
understand the design pathways and have significant experience with the
existing technologies needed to bring the remaining models into
compliance within the timeframe given. DOE estimates that five of the
nine manufacturers of small ACUACs/HPs offer small ACUACs/HPs that
would meet the efficiency level required at TSL 3. DOE estimates that
six of the eight manufacturers of large ACUACs/HPs offer large ACUACs/
HPs that meet the efficiency level required at TSL 3. DOE estimates
that six of the eight manufacturers of very large ACUACs/HPs offer very
large ACUACs/HPs that meet the efficiency level required at TSL 3.
Given the support expressed by the ACUAC/HP Working Group for TSL 3
(the Recommended TSL), DOE believes that all manufacturers of ACUACs/
HPs will be able to redesign their model offerings in the compliance
timeframe.
After considering the analysis and weighing the benefits and
burdens, the Secretary has concluded that the Recommended TSL (TSL 3)
for ACUACs and ACUHPs is in accordance with 42 U.S.C. 6313(a)(6)(B),
which contains provisions for adopting a uniform national standard more
stringent than the amended ASHRAE Standard 90.1 \85\ for the equipment
considered in this document. Specifically, the Secretary has
determined, supported by clear and convincing evidence as described in
this direct final rule and accompanying TSD, that such adoption would
result in significant additional conservation of energy and is
technologically feasible and economically justified. In determining
whether the recommended standards are economically justified, the
Secretary has determined that the benefits of the recommended standards
exceed the burdens. At this TSL, the average LCC savings for consumers
of ACUACs is positive. An estimated 18 percent of ACUAC consumers
experience a net cost. The FFC national energy savings are significant,
and the NPV of consumer benefits is positive using both a 3-percent and
7-percent discount rate. Notably, the benefits to consumers vastly
outweigh the cost to manufacturers. At the Recommended TSL, the NPV of
consumer benefits, even measured at the more conservative discount rate
of 7 percent, is over 47 times higher than the maximum estimated
manufacturers' loss in INPV. The economic justification for standard
levels at the Recommended TSL is clear and convincing even without
weighing the estimated monetary value of emissions reductions. When
those emissions reductions are included--representing $4.9 billion in
climate benefits (associated with the average SC-GHG at a 3-percent
discount rate), and $9.0 billion (using a 3-percent discount rate) or
$3.0 billion (using a 7-percent discount rate) in health benefits--the
rationale becomes stronger still.
---------------------------------------------------------------------------
\85\ As discussed in section II.B.2 of this document, ASHRAE
Standard 90.1-2019 updated the minimum efficiency levels for ACUACs
and ACUHPs to align with those adopted by DOE in the January 2016
Direct Final Rule (i.e., ASHRAE Standard 90.1-2019 includes minimum
efficiency levels that are aligned with the current Federal energy
conservation standards). ASHRAE Standard 90.1-2022 includes the same
minimum efficiency levels for ACUACs and ACUHPs as ASHRAE Standard
90.1-2019.
---------------------------------------------------------------------------
Accordingly, the Secretary has concluded that the Recommended TSL
(TSL 3) would offer the maximum improvement in efficiency that is
technologically feasible and economically justified and would result in
the significant additional conservation of energy. The Secretary has
also concluded, by clear and convincing evidence, that the adoption of
the recommended standards would result in the significant conservation
of energy and is technologically feasible and economically justified.
As stated, DOE conducts the walk-down analysis to determine the TSL
that represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. The walk-down is not a comparative analysis, as a comparative
analysis would result in the maximization of net benefits instead of
energy savings that are technologically feasible and economically
justified, which would be contrary to the statute. See 86 FR 70892,
70908 (Dec. 13, 2021). Although DOE has not conducted a comparative
analysis to select the amended energy conservation standards, DOE notes
that compared to TSL 4, the Recommended TSL results in shorter payback
periods and fewer consumers with net cost and results in a lower
maximum decrease in INPV and lower manufacturer conversion costs.
Although DOE considered amended standard levels for ACUACs and
ACUHPs by grouping the efficiency levels for each equipment class into
TSLs, DOE evaluates all analyzed efficiency levels in its analysis.
Although there are ELs for each equipment class above those of TSL 3,
the previously discussed uncertainty around the economic justification
to support amended standards at TSL 4 applies for all efficiency levels
higher than those of the Recommended TSL. As discussed, there is
substantial uncertainty as to which combinations of design options
manufacturers may employ to achieve high IVEC levels (i.e., those above
the Recommended TSL), which may result in very high product conversion
costs. In addition, manufacturers' capacity to redesign all models that
do not meet the amended standard levels is constrained by resources
devoted to the low-GWP refrigerant transition and becomes increasingly
difficult as minimum efficiency levels increases above the Recommended
TSL. Also, similar to TSL 4, many more cabinets would need to be
redesigned at efficiency levels above those at TSL 3, which would
require substantial investment in design and retooling. For small
ACUACs and ACUHPs, adopting an efficiency level above that at TSL 3
would result in nearly 50 percent of purchasers experiencing a net
cost. For large and very large ACUACs and ACUHPs, higher ELs could
potentially result in reduced configuration and model availability due
to large jumps in failing model counts, high cost of redesign, high
conversion costs, and lower shipment volumes (as compared to small
ACUACs and ACUHPs) across which to distribute conversion costs.
Therefore, DOE has concluded that it is unable to make a determination,
supported by clear and convincing evidence, that efficiency levels
above TSL 3 are economically justified.
However, at the Recommended TSL, there are substantially more model
offerings currently available on the market, and significantly less
redesign would be required than for higher efficiency levels.
Additionally, the efficiency levels at TSL 3 result in positive LCC
savings for all equipment classes and with far fewer consumers
experiencing a net LCC cost, and mitigate the impacts on INPV and
conversion costs to the point where DOE has concluded they are
economically justified, as discussed for the Recommended TSL in the
preceding paragraphs.
Under the authority provided by 42 U.S.C. 6295(p)(4) and
6316(b)(1), DOE is issuing this direct final rule that adopts amended
energy conservation standards for ACUACs and ACUHPs at the Recommended
TSL (TSL 3). The amended energy conservation standards for ACUACs and
ACUHPs, which are expressed as minimum efficiency values
[[Page 44129]]
in terms of IVEC and IVHE, are shown in Table V.29.
[GRAPHIC] [TIFF OMITTED] TR20MY24.123
2. Annualized Benefits and Costs of the Standards
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is:
(1) the annualized national economic value (expressed in 2022$) of the
benefits from operating equipment that meet the adopted standards
(consisting primarily of operating cost savings from using less
energy), minus increases in equipment purchase costs, and (2) the
annualized monetary value of the climate and health benefits from
emissions reductions.
Table V.30 shows the annualized values for ACUACs and ACUHPs under
the Recommended TSL (TSL 3), expressed in 2022$. The results under the
primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOx and SO2 emissions, and the
3-percent discount rate case for climate benefits from reduced GHG
emissions, the estimated cost of the standards for ACUACs and ACUHPs
adopted in this rule is $481.3 million per year in increased equipment
costs, while the estimated annual benefits are $944.7 million in
reduced equipment operating costs, $279.2 million in climate benefits,
and $317.1 million in health benefits. In this case, the net benefit
would amount to $1.1 billion per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards for ACUACs and ACUHPs is $493.2 million
per year in increased equipment costs, while the estimated annual
benefits are $1371.6 billion in reduced operating costs, $279.2 million
in climate benefits, and $507.9 million in health benefits. In this
case, the net benefit amounts to $1.7 billion per year.
BILLING CODE 6450-01-P
[[Page 44130]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.124
[[Page 44131]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.125
BILLING CODE 6450-01-C
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821
(Jan. 21, 2011), and amended by E.O. 14094, ``Modernizing Regulatory
Review,'' 88 FR 21879 (April 11, 2023), requires agencies, to the
extent permitted by law, to: (1) propose or adopt a regulation only
upon a reasoned determination that its benefits justify its costs
(recognizing that some benefits and costs are difficult to quantify);
(2) tailor regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the costs of
cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than specifying
the behavior or manner of
[[Page 44132]]
compliance that regulated entities must adopt; and (5) identify and
assess available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public. DOE emphasizes as well that E.O. 13563
requires agencies to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible. In its guidance, the Office of Information and Regulatory
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in this
preamble, this final regulatory action is consistent with these
principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this final regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866, as amended by E.O. 14094. Accordingly, pursuant to
section 6(a)(3)(C) of E.O. 12866, DOE has provided to OIRA an
assessment, including the underlying analysis, of benefits and costs
anticipated from the final regulatory action, together with, to the
extent feasible, a quantification of those costs; and an assessment,
including the underlying analysis, of costs and benefits of potentially
effective and reasonably feasible alternatives to the planned
regulation, and an explanation why the planned regulatory action is
preferable to the identified potential alternatives. These assessments
are summarized in this preamble, and further detail can be found in the
technical support document for this rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published procedures
and policies in the Federal Register on February 19, 2003, to ensure
that the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's website (www.energy.gov/gc/office-general-counsel).
DOE is not obligated to prepare a regulatory flexibility analysis
for this rulemaking because there is not a requirement to publish a
general notice of proposed rulemaking under the Administrative
Procedure Act. See 5 U.S.C. 601(2), 603(a). As discussed previously,
DOE has determined that the ACUAC/HP Working Group ECS Term Sheet meets
the necessary requirements under EPCA to issue this direct final rule
for energy conservation standards for ACUACs and ACUHPs under the
procedures in 42 U.S.C. 6295(p)(4). DOE notes that the NOPR for energy
conservation standards for ACUACs and ACUHPs published elsewhere in
this issue of the Federal Register contains a regulatory flexibility
analysis.
C. Review Under the Paperwork Reduction Act of 1995
Under the procedures established by the Paperwork Reduction Act of
1995 (``PRA''), a person is not required to respond to a collection of
information by a Federal agency unless that collection of information
displays a currently valid OMB Control Number. OMB Control Number 1910-
1400, Compliance Statement Energy/Water Conservation Standards for
Appliances, is currently valid and assigned to the certification
reporting requirements applicable to covered products and equipment,
including ACUACs and ACUHPs.
DOE's certification and compliance activities ensure accurate and
comprehensive information about the energy and water use
characteristics of covered products and covered equipment sold in the
United States. Manufacturers of all covered products and covered
equipment must submit a certification report before a basic model is
distributed in commerce, annually thereafter, and if the basic model is
redesigned in such a manner to increase the consumption or decrease the
efficiency of the basic model such that the certified rating is no
longer supported by the test data. Additionally, manufacturers must
report when production of a basic model has ceased and is no longer
offered for sale as part of the next annual certification report
following such cessation. DOE requires the manufacturer of any covered
product or covered equipment to establish, maintain, and retain the
records of certification reports, of the underlying test data for all
certification testing, and of any other testing conducted to satisfy
the requirements of part 429, part 430, and/or part 431. Certification
reports provide DOE and consumers with comprehensive, up-to date
efficiency information and support effective enforcement.
DOE is not amending the existing certification or reporting
requirements or establishing new DOE reporting requirements for ACUACs
and ACUHPs in this direct final rule. Instead, if determined to be
necessary, DOE may consider proposals to establish associated
certification requirements and reporting for ACUACs and ACUHPs under a
separate, future rulemaking regarding appliance and equipment
certification. DOE will address changes to OMB Control Number 1910-1400
at that time, as necessary. Therefore, DOE has concluded that the
amended energy conservation standards for ACUACs and ACUHPs will not
impose additional costs for manufacturers related to reporting and
certification.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act of 1969
(``NEPA''), DOE has analyzed this direct final rule in accordance with
NEPA and DOE's NEPA implementing regulations (10 CFR part 1021). DOE
has determined that this rule qualifies for categorical exclusion under
10 CFR part 1021, subpart D, appendix B, B5.1, because it is a
rulemaking that establishes energy conservation standards for consumer
products or industrial equipment, none of the exceptions identified in
B5.1(b) apply, no extraordinary circumstances exist that require
further environmental analysis, and it otherwise meets the requirements
for application of a categorical exclusion. See 10 CFR 1021.410.
Therefore, DOE has determined that promulgation of this rule is not a
major Federal action significantly affecting the quality of the human
environment within the meaning of NEPA, and does not require an
environmental assessment or an environmental impact statement.
[[Page 44133]]
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (August 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this rule and has determined
that it would not have a substantial direct effect on the States, on
the relationship between the National Government and the States, or on
the distribution of power and responsibilities among the various levels
of government. EPCA governs and prescribes Federal preemption of State
regulations as to energy conservation for the equipment that is the
subject of this direct final rule. States can petition DOE for
exemption from such preemption to the extent, and based on criteria,
set forth in EPCA. (42 U.S.C. 6316(a) and (b); 42 U.S.C. 6297)
Therefore, no further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
eliminate drafting errors and ambiguity; (2) write regulations to
minimize litigation; (3) provide a clear legal standard for affected
conduct rather than a general standard, and (4) promote simplification
and burden reduction. Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that Executive
agencies make every reasonable effort to ensure that the regulation:
(1) clearly specifies the preemptive effect, if any; (2) clearly
specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms, and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
E.O. 12988 requires Executive agencies to review regulations in light
of applicable standards in section 3(a) and section 3(b) to determine
whether they are met or it is unreasonable to meet one or more of them.
DOE has completed the required review and determined that, to the
extent permitted by law, this direct final rule meets the relevant
standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this direct final rule may require
expenditures of $100 million or more in any one year by the private
sector. Such expenditures may include: (1) investment in research and
development and in capital expenditures by ACUAC and ACUHP
manufacturers in the years between the direct final rule and the
compliance date for the amended standards and (2) incremental
additional expenditures by consumers to purchase higher-efficiency
ACUACs and ACUHPs, 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 direct final rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and the TSD for this
direct final rule respond to those requirements.
Under section 205 of UMRA, DOE 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 rule, unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C.
6313(a)(6)(C)(i), this direct final rule establishes amended energy
conservation standards for ACUACs and ACUHPs that DOE has determined to
be both technologically feasible and economically justified, and save a
significant additional amount of energy, as required by 42 U.S.C.
6313(a)(6)(A)(ii)(II) and (a)(6)(B)(ii). A full discussion of the
alternatives considered by DOE is presented in chapter 17 of the TSD
for this direct final rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this rule would not result in any
takings that might require compensation under the
[[Page 44134]]
Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, ``Improving
Implementation of the Information Quality Act'' (April 24, 2019), DOE
published updated guidelines which are available at: www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this direct final rule under the OMB and DOE guidelines and
has concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgates or is expected to lead to promulgation of a final
rule, and that: (1) is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth
amended energy conservation standards for ACUACs and ACUHPs, is not a
significant energy action because the standards are not likely to have
a significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this direct final rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667 (Jan. 14, 2005).
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and prepared a report describing that peer
review.\86\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve DOE's analyses. DOE is in the
process of evaluating the resulting December 2021 NAS report.\87\
---------------------------------------------------------------------------
\86\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website:
www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed Sept. 26,
2023).
\87\ The December 2021 NAS report is available at
www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards (last accessed Dec. 5,
2023).
---------------------------------------------------------------------------
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that the Office of Information and Regulatory Affairs has
determined that this action meets the criteria set forth in 5 U.S.C.
804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this direct
final rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Reporting and recordkeeping
requirements.
Signing Authority
This document of the Department of Energy was signed on April 12,
2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for
Energy Efficiency and Renewable Energy, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on April 17, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, DOE amends part 431 of
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations, as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
0
2. Revise Sec. 431.97 to read as follows:
Sec. 431.97 Energy efficiency standards and their compliance dates.
(a) All basic models of commercial package air conditioning and
heating equipment must be tested for performance using the applicable
DOE test procedure in Sec. 431.96, be compliant with the applicable
standards set forth
[[Page 44135]]
in paragraphs (b) through (i) of this section, and be certified to the
Department under 10 CFR part 429.
(b) Each air-cooled commercial package air conditioning and heating
equipment (excluding air-cooled equipment with cooling capacity less
than 65,000 Btu/h and double-duct air conditioners or heat pumps)
manufactured on or after January 1, 2023, and before January 1, 2029,
must meet the applicable minimum energy efficiency standard level(s)
set forth in table 1 to this paragraph (b). Each air-cooled commercial
package air conditioning and heating equipment (excluding air-cooled
equipment with cooling capacity less than 65,000 Btu/h and double-duct
air conditioners or heat pumps) manufactured on or after January 1,
2029, must meet the applicable minimum energy efficiency standard
level(s) set forth in table 2 to this paragraph (b). Each water-cooled
commercial package air conditioning and heating equipment manufactured
on or after the compliance date listed in table 3 to this paragraph (b)
must meet the applicable minimum energy efficiency standard level(s)
set forth in table 3. Each evaporatively-cooled commercial air
conditioning and heating equipment manufactured on or after the
compliance date listed in table 4 to this paragraph (b) must meet the
applicable minimum energy efficiency standard level(s) set forth in
table 4. Each double-duct air conditioner or heat pump manufactured on
or after January 1, 2010, must meet the applicable minimum energy
efficiency standard level(s) set forth in table 5 to this paragraph
(b).
Table 1 to Paragraph (b)--Minimum Efficiency Standards for Air-Cooled Commercial Package Air Conditioning and
Heating Equipment With a Cooling Capacity Greater Than or Equal to 65,000 Btu/h (Excluding Double-Duct Air-
Conditioners and Heat Pumps)
----------------------------------------------------------------------------------------------------------------
Compliance date:
Supplementary Minimum efficiency equipment
Cooling capacity Subcategory heating type \1\ manufactured starting
on . . .
----------------------------------------------------------------------------------------------------------------
Air-Cooled Commercial Package Air Conditioning and Heating Equipment With a Cooling Capacity Greater Than or
Equal to 65,000 Btu/h (Excluding Double-Duct Air Conditioners and Heat Pumps)
----------------------------------------------------------------------------------------------------------------
>=65,000 Btu/h and <135,000 AC.............. Electric IEER = 14.8.......... January 1, 2023.
Btu/h. Resistance
Heating or No
Heating.
>=65,000 Btu/h and <135,000 AC.............. All Other Types IEER = 14.6.......... January 1, 2023.
Btu/h. of Heating.
>=65,000 Btu/h and <135,000 HP.............. Electric IEER = 14.1.......... January 1, 2023.
Btu/h. Resistance COP = 3.4............
Heating or No
Heating.
>=65,000 Btu/h and <135,000 HP.............. All Other Types IEER = 13.9.......... January 1, 2023.
Btu/h. of Heating. COP = 3.4............
>=135,000 Btu/h and <240,000 AC.............. Electric IEER = 14.2.......... January 1, 2023.
Btu/h. Resistance
Heating or No
Heating.
>=135,000 Btu/h and <240,000 AC.............. All Other Types IEER = 14.0.......... January 1, 2023.
Btu/h. of Heating.
>=135,000 Btu/h and <240,000 HP.............. Electric IEER = 13.5.......... January 1, 2023.
Btu/h. Resistance COP = 3.3............
Heating or No
Heating.
>=135,000 Btu/h and <240,000 HP.............. All Other Types IEER = 13.3.......... January 1, 2023.
Btu/h. of Heating. COP = 3.3............
>=240,000 Btu/h and <760,000 AC.............. Electric IEER = 13.2.......... January 1, 2023.
Btu/h. Resistance
Heating or No
Heating.
>=240,000 Btu/h and <760,000 AC.............. All Other Types IEER = 13.0.......... January 1, 2023.
Btu/h. of Heating.
>=240,000 Btu/h and <760,000 HP.............. Electric IEER = 12.5.......... January 1, 2023.
Btu/h. Resistance COP = 3.2............
Heating or No
Heating.
>=240,000 Btu/h and <760,000 HP.............. All Other Types IEER = 12.3.......... January 1, 2023.
Btu/h. of Heating. COP = 3.2............
----------------------------------------------------------------------------------------------------------------
\1\ See section 3 of appendix A to this subpart for the test conditions upon which the COP standards are based.
Table 2 to Paragraph (b)--Updated Minimum Efficiency Standards for Air-Cooled Commercial Package Air
Conditioning and Heating Equipment With a Cooling Capacity Greater Than or Equal to 65,000 Btu/h (Excluding
Double-Duct Air Conditioners and Heat Pumps)
----------------------------------------------------------------------------------------------------------------
Compliance date:
Supplementary equipment
Cooling capacity Subcategory heating type Minimum efficiency manufactured starting
on . . .
----------------------------------------------------------------------------------------------------------------
Air-Cooled Commercial Package Air Conditioning and Heating Equipment With a Cooling Capacity Greater Than or
Equal to 65,000 Btu/h (Excluding Double-Duct Air Conditioners and Heat Pumps)
----------------------------------------------------------------------------------------------------------------
>=65,000 Btu/h and <135,000 AC.............. Electric IVEC = 14.3.......... January 1, 2029.
Btu/h. Resistance
Heating or No
Heating.
>=65,000 Btu/h and <135,000 AC.............. All Other Types IVEC = 13.8.......... January 1, 2029.
Btu/h. of Heating.
>=65,000 Btu/h and <135,000 HP.............. All Types of IVEC = 13.4.......... January 1, 2029.
Btu/h. Heating. IVHE = 6.2...........
>=135,000 Btu/h and <240,000 AC.............. Electric IVEC = 13.8.......... January 1, 2029.
Btu/h. Resistance
Heating or No
Heating.
>=135,000 Btu/h and <240,000 AC.............. All Other Types IVEC = 13.3.......... January 1, 2029.
Btu/h. of Heating.
>=135,000 Btu/h and <240,000 HP.............. All Types of IVEC = 13.1.......... January 1, 2029.
Btu/h. Heating. IVHE = 6.0...........
>=240,000 Btu/h and <760,000 AC.............. Electric IVEC = 12.9.......... January 1, 2029.
Btu/h. Resistance
Heating or No
Heating.
>=240,000 Btu/h and <760,000 AC.............. All Other Types IVEC = 12.2.......... January 1, 2029.
Btu/h. of Heating.
>=240,000 Btu/h and <760,000 HP.............. All Types of IVEC = 12.1.......... January 1, 2029.
Btu/h. Heating. IVHE = 5.8...........
----------------------------------------------------------------------------------------------------------------
[[Page 44136]]
Table 3 to Paragraph (b)--Minimum Cooling Efficiency Standards for Water-Cooled Commercial Package Air
Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
Compliance date:
Cooling capacity Supplementary heating Minimum efficiency equipment manufactured
type starting on . . .
----------------------------------------------------------------------------------------------------------------
Water-Cooled Commercial Package Air Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
<65,000 Btu/h........................ All.................... EER = 12.1............. October 29, 2003.
>=65,000 Btu/h and <135,000 Btu/h.... No Heating or Electric EER = 12.1............. June 1, 2013.
Resistance Heating.
>=65,000 Btu/h and <135,000 Btu/h.... All Other Types of EER = 11.9............. June 1, 2013.
Heating.
>=135,000 Btu/h and <240,000 Btu/h... No Heating or Electric EER = 12.5............. June 1, 2014.
Resistance Heating.
>=135,000 Btu/h and <240,000 Btu/h... All Other Types of EER = 12.3............. June 1, 2014.
Heating.
>=240,000 Btu/h and <760,000 Btu/h... No Heating or Electric EER = 12.4............. June 1, 2014.
Resistance Heating.
>=240,000 Btu/h and <760,000 Btu/h... All Other Types of EER = 12.2............. June 1, 2014.
Heating.
----------------------------------------------------------------------------------------------------------------
Table 4 to Paragraph (b)--Minimum Cooling Efficiency Standards for Evaporatively-Cooled Commercial Package Air
Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
Compliance date:
Cooling capacity Supplementary heating Minimum efficiency equipment manufactured
type starting on . . .
----------------------------------------------------------------------------------------------------------------
Evaporatively-Cooled Commercial Package Air Conditioning Equipment
----------------------------------------------------------------------------------------------------------------
<65,000 Btu/h........................ All.................... EER = 12.1............. October 29, 2003.
>=65,000 Btu/h and <135,000 Btu/h.... No Heating or Electric EER = 12.1............. June 1, 2013.
Resistance Heating.
>=65,000 Btu/h and <135,000 Btu/h.... All Other Types of EER = 11.9............. June 1, 2013.
Heating.
>=135,000 Btu/h and <240,000 Btu/h... No Heating or Electric EER = 12.0............. June 1, 2014.
Resistance Heating.
>=135,000 Btu/h and <240,000 Btu/h... All Other Types of EER = 11.8............. June 1, 2014.
Heating.
>=240,000 Btu/h and <760,000 Btu/h... No Heating or Electric EER = 11.9............. June 1, 2014.
Resistance Heating.
>=240,000 Btu/h and <760,000 Btu/h... All Other Types of EER = 11.7............. June 1, 2014.
Heating.
----------------------------------------------------------------------------------------------------------------
Table 5 to Paragraph (b)--Minimum Efficiency Standards for Double-Duct Air Conditioners or Heat Pumps
----------------------------------------------------------------------------------------------------------------
Compliance date:
Supplementary Minimum efficiency equipment
Cooling capacity Subcategory heating type \1\ manufactured starting
on . . .
----------------------------------------------------------------------------------------------------------------
Double-Duct Air Conditioners or Heat Pumps
----------------------------------------------------------------------------------------------------------------
>=65,000 Btu/h and <135,000 AC.............. Electric EER = 11.2........... January 1, 2010.
Btu/h. Resistance
Heating or No
Heating.
>=65,000 Btu/h and <135,000 AC.............. All Other Types EER = 11.0........... January 1, 2010.
Btu/h. of Heating.
>=65,000 Btu/h and <135,000 HP.............. Electric EER = 11.0........... January 1, 2010.
Btu/h. Resistance COP = 3.3............
Heating or No
Heating.
>=65,000 Btu/h and <135,000 HP.............. All Other Types EER = 10.8........... January 1, 2010.
Btu/h. of Heating. COP = 3.3............
>=135,000 Btu/h and <240,000 AC.............. Electric EER = 11.0........... January 1, 2010.
Btu/h. Resistance
Heating or No
Heating.
>=135,000 Btu/h and <240,000 AC.............. All Other Types EER = 10.8........... January 1, 2010.
Btu/h. of Heating.
>=135,000 Btu/h and <240,000 HP.............. Electric EER = 10.6........... January 1, 2010.
Btu/h. Resistance COP = 3.2............
Heating or No
Heating.
>=135,000 Btu/h and <240,000 HP.............. All Other Types EER = 10.4........... January 1, 2010.
Btu/h. of Heating. COP = 3.2............
>=240,000 Btu/h and <300,000 AC.............. Electric EER = 10.0........... January 1, 2010.
Btu/h. Resistance
Heating or No
Heating.
>=240,000 Btu/h and <300,000 AC.............. All Other Types EER = 9.8............ January 1, 2010.
Btu/h. of Heating.
>=240,000 Btu/h and <300,000 HP.............. Electric EER = 9.5............ January 1, 2010.
Btu/h. Resistance COP = 3.2............
Heating or No
Heating.
>=240,000 Btu/h and <300,000 HP.............. All Other Types EER = 9.3............ January 1, 2010.
Btu/h. of Heating. COP = 3.2............
----------------------------------------------------------------------------------------------------------------
\1\ See section 3 of appendix A to this subpart for the test conditions upon which the COP standards are based.
(c) Each water-source heat pump manufactured starting on the
compliance date listed in table 6 to this paragraph (c) must meet the
applicable minimum energy efficiency standard level(s) set forth in
this paragraph (c).
[[Page 44137]]
Table 6 to Paragraph (c)--Minimum Efficiency Standards for Water-Source
Heat Pumps (Water-to-Air, Water-Loop)
------------------------------------------------------------------------
Compliance date:
equipment
Cooling capacity Minimum efficiency manufactured
starting on . . .
------------------------------------------------------------------------
Water-Source Heat Pumps (Water-to-Air, Water-Loop)
------------------------------------------------------------------------
<17,000 Btu/h................... EER = 12.2........ October 9, 2015.
COP = 4.3.........
>=17,000 Btu/h and <65,000 Btu/h EER = 13.0........ October 9, 2015.
COP = 4.3.........
>=65,000 Btu/h and <135,000 Btu/ EER = 13.0........ October 9, 2015.
h. COP = 4.3.........
------------------------------------------------------------------------
(d) Each non-standard size packaged terminal air conditioner (PTAC)
and packaged terminal heat pump (PTHP) manufactured on or after October
7, 2010, must meet the applicable minimum energy efficiency standard
level(s) set forth in table 7 to this paragraph (d). Each standard size
PTAC manufactured on or after October 8, 2012, and before January 1,
2017, must meet the applicable minimum energy efficiency standard
level(s) set forth in table 7. Each standard size PTHP manufactured on
or after October 8, 2012, must meet the applicable minimum energy
efficiency standard level(s) set forth in table 7. Each standard size
PTAC manufactured on or after January 1, 2017, must meet the applicable
minimum energy efficiency standard level(s) set forth in table 8 to
this paragraph (d).
Table 7 to Paragraph (d)--Minimum Efficiency Standards for PTAC and PTHP
----------------------------------------------------------------------------------------------------------------
Compliance date: products
Equipment type Category Cooling capacity Minimum manufactured on and after .
efficiency . .
----------------------------------------------------------------------------------------------------------------
PTAC......................... Standard Size... <7,000 Btu/h.... EER = 11.7...... October 8, 2012.\2\
>=7,000 Btu/h EER = 13.8-(0.3 October 8, 2012.\2\
and <=15,000 x Cap \1\).
Btu/h.
>15,000 Btu/h... EER = 9.3....... October 8, 2012.\2\
Non-Standard <7,000 Btu/h.... EER = 9.4....... October 7, 2010.
Size.
>=7,000 Btu/h EER = 10.9- October 7, 2010.
and <=15,000 (0.213 x Cap
Btu/h. \1\).
>15,000 Btu/h... EER = 7.7....... October 7, 2010.
PTHP......................... Standard Size... <7,000 Btu/h.... EER = 11.9...... October 8, 2012.
COP = 3.3.......
>=7,000 Btu/h EER = 14.0-(0.3 October 8, 2012.
and <=15,000 x Cap \1\).
Btu/h. COP = 3.7-(0.052
x Cap \1\).
>15,000 Btu/h... EER = 9.5....... October 8, 2012.
COP = 2.9.......
Non-Standard <7,000 Btu/h.... EER = 9.3....... October 7, 2010.
Size. COP = 2.7.......
>=7,000 Btu/h EER = 10.8- October 7, 2010.
and <=15,000 (0.213 x Cap
Btu/h. \1\).
COP = 2.9-(0.026
x Cap \1\).
>15,000 Btu/h... EER = 7.6....... October 7, 2010.
COP = 2.5.......
----------------------------------------------------------------------------------------------------------------
\1\ ``Cap'' means cooling capacity in thousand Btu/h at 95 [deg]F outdoor dry-bulb temperature.
\2\ And manufactured before January 1, 2017. See table 8 to this paragraph (d) for updated efficiency standards
that apply to this category of equipment manufactured on and after January 1, 2017.
Table 8 to Paragraph (d)--Updated Minimum Efficiency Standards for PTAC
----------------------------------------------------------------------------------------------------------------
Compliance date: products
Equipment type Category Cooling capacity Minimum manufactured on and after
efficiency . . .
----------------------------------------------------------------------------------------------------------------
PTAC......................... Standard Size... <7,000 Btu/h.... EER = 11.9...... January 1, 2017.
>=7,000 Btu/h EER = 14.0-(0.3 January 1, 2017.
and <=15,000 x Cap \1\).
Btu/h.
>15,000 Btu/h... EER = 9.5....... January 1, 2017.
----------------------------------------------------------------------------------------------------------------
\1\ ``Cap'' means cooling capacity in thousand Btu/h at 95 [deg]F outdoor dry-bulb temperature.
(e)(1) Each single package vertical air conditioner and single
package vertical heat pump manufactured on or after January 1, 2010,
but before October 9, 2015 (for models >=65,000 Btu/h and <135,000 Btu/
h), or October 9, 2016 (for models >=135,000 Btu/h and <240,000 Btu/h),
must meet the applicable
[[Page 44138]]
minimum energy conservation standard level(s) set forth in this
paragraph (e)(1).
Table 9 to Paragraph (e)(1)--Minimum Efficiency Standards for Single Package Vertical Air Conditioners and
Single Package Vertical Heat Pumps
----------------------------------------------------------------------------------------------------------------
Compliance date:
products
Equipment type Cooling capacity Sub- category Efficiency level manufactured on and
after . . .
----------------------------------------------------------------------------------------------------------------
Single package vertical air <65,000 Btu/h...... AC EER = 9.0.......... January 1, 2010.
conditioners and single package HP EER = 9.0.......... January 1, 2010.
vertical heat pumps, single- COP = 3.0..........
phase and three-phase.
Single package vertical air >=65,000 Btu/h and AC EER = 8.9.......... January 1, 2010.
conditioners and single package <135,000 Btu/h. HP EER = 8.9.......... January 1, 2010.
vertical heat pumps. COP = 3.0..........
Single package vertical air >=135,000 Btu/h and AC EER = 8.6.......... January 1, 2010.
conditioners and single package <240,000 Btu/h. HP EER = 8.6.......... January 1, 2010.
vertical heat pumps. COP = 2.9..........
----------------------------------------------------------------------------------------------------------------
(2) Each single package vertical air conditioner and single package
vertical heat pump manufactured on and after October 9, 2015 (for
models >=65,000 Btu/h and <135,000 Btu/h), or October 9, 2016 (for
models >=135,000 Btu/h and <240,000 Btu/h), but before September 23,
2019, must meet the applicable minimum energy conservation standard
level(s) set forth in this paragraph (e)(2).
Table 10 to Paragraph (e)(2)--Minimum Efficiency Standards for Single Package Vertical Air Conditioners and
Single Package Vertical Heat Pumps
----------------------------------------------------------------------------------------------------------------
Compliance date:
products
Equipment type Cooling capacity Sub- category Efficiency level manufactured on and
after . . .
----------------------------------------------------------------------------------------------------------------
Single package vertical air <65,000 Btu/h...... AC EER = 9.0.......... January 1, 2010.
conditioners and single package HP EER = 9.0.......... January 1, 2010.
vertical heat pumps, single- COP = 3.0..........
phase and three-phase.
Single package vertical air >=65,000 Btu/h and AC EER = 10.0......... October 9, 2015.
conditioners and single package <135,000 Btu/h. HP EER = 10.0......... October 9, 2015.
vertical heat pumps. COP = 3.0..........
Single package vertical air >=135,000 Btu/h and AC EER = 10.0......... October 9, 2016.
conditioners and single package <240,000 Btu/h. HP EER = 10.0......... October 9, 2016.
vertical heat pumps. COP = 3.0..........
----------------------------------------------------------------------------------------------------------------
(3) Each single package vertical air conditioner and single package
vertical heat pump manufactured on and after September 23, 2019, must
meet the applicable minimum energy conservation standard level(s) set
forth in this paragraph (e)(3).
Table 11 to Paragraph (e)(3)--Updated Minimum Efficiency Standards for Single Package Vertical Air Conditioners
and Single Package Vertical Heat Pumps
----------------------------------------------------------------------------------------------------------------
Compliance date:
products
Equipment type Cooling capacity Sub- category Efficiency level manufactured on and
after . . .
----------------------------------------------------------------------------------------------------------------
Single package vertical air <65,000 Btu/h...... AC EER = 11.0......... September 23, 2019.
conditioners and single package HP EER = 11.0......... September 23, 2019.
vertical heat pumps, single- COP = 3.3..........
phase and three-phase.
Single package vertical air >=65,000 Btu/h and AC EER = 10.0......... October 9, 2015.
conditioners and single package <135,000 Btu/h. HP EER = 10.0......... October 9, 2015.
vertical heat pumps. COP = 3.0..........
Single package vertical air >=135,000 Btu/h and AC EER = 10.0......... October 9, 2016.
conditioners and single package <240,000 Btu/h. HP EER = 10.0......... October 9, 2016.
vertical heat pumps. COP = 3.0..........
----------------------------------------------------------------------------------------------------------------
(f)(1) Each computer room air conditioner with a net sensible
cooling capacity less than 65,000 Btu/h manufactured on or after
October 29, 2012, and before May 28, 2024 and each computer room air
conditioner with a net sensible cooling capacity greater than or equal
to 65,000 Btu/h and less than 760,000 Btu/h manufactured on or after
October 29, 2013, and before May 28, 2024 must meet the applicable
minimum energy efficiency standard level(s) set forth in this paragraph
(f)(1).
Table 12 to Paragraph (f)(1)--Minimum Efficiency Standards for Computer Room Air Conditioners
----------------------------------------------------------------------------------------------------------------
Minimum SCOP efficiency
Equipment type Net sensible cooling capacity -------------------------------
Downflow Upflow
----------------------------------------------------------------------------------------------------------------
Air-Cooled................................. <65,000 Btu/h...................... 2.20 2.09
>=65,000 Btu/h and <240,000 Btu/h.. 2.10 1.99
[[Page 44139]]
>=240,000 Btu/h and <760,000 Btu/h. 1.90 1.79
Water-Cooled............................... <65,000 Btu/h...................... 2.60 2.49
>=65,000 Btu/h and <240,000 Btu/h.. 2.50 2.39
>=240,000 Btu/h and <760,000 Btu/h. 2.40 2.29
Water-Cooled with Fluid Economizer......... <65,000 Btu/h...................... 2.55 2.44
>=65,000 Btu/h and <240,000 Btu/h.. 2.45 2.34
>=240,000 Btu/h and <760,000 Btu/h. 2.35 2.24
Glycol-Cooled.............................. <65,000 Btu/h...................... 2.50 2.39
>=65,000 Btu/h and <240,000 Btu/h.. 2.15 2.04
>=240,000 Btu/h and <760,000 Btu/h. 2.10 1.99
Glycol-Cooled with Fluid Economizer........ <65,000 Btu/h...................... 2.45 2.34
>=65,000 Btu/h and <240,000 Btu/h.. 2.10 1.99
>=240,000 Btu/h and <760,000 Btu/h. 2.05 1.94
----------------------------------------------------------------------------------------------------------------
(2) Each computer room air conditioner manufactured on or after May
28, 2024, must meet the applicable minimum energy efficiency standard
level(s) set forth in this paragraph (f)(2).
Table 13 to Paragraph (f)(2)--Updated Minimum Efficiency Standards for Floor-Mounted Computer Room Air Conditioners
--------------------------------------------------------------------------------------------------------------------------------------------------------
Downflow and upflow ducted Upflow non-ducted and horizontal flow
-----------------------------------------------------------------------------------------------------------------
Minimum NSenCOP Minimum NSenCOP
Equipment type efficiency efficiency
Net sensible cooling capacity -------------------------- Net sensible cooling capacity -------------------------
Upflow Upflow non- Horizontal
Downflow ducted ducted flow
--------------------------------------------------------------------------------------------------------------------------------------------------------
Air-Cooled............................ <80,000 Btu/h................ 2.70 2.67 <65,000 Btu/h................ 2.16 2.65
>=80,000 Btu/h and <295,000 2.58 2.55 >=65,000 Btu/h and <240,000 2.04 2.55
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.36 2.33 >=240,000 Btu/h and <760,000 1.89 2.47
Btu/h. Btu/h.
Air-Cooled with Fluid Economizer...... <80,000 Btu/h................ 2.70 2.67 <65,000 Btu/h................ 2.09 2.65
>=80,000 Btu/h and <295,000 2.58 2.55 >=65,000 Btu/h and <240,000 1.99 2.55
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.36 2.33 >=240,000 Btu/h and <760,000 1.81 2.47
Btu/h. Btu/h.
Water-Cooled.......................... <80,000 Btu/h................ 2.82 2.79 <65,000 Btu/h................ 2.43 2.79
>=80,000 Btu/h and <295,000 2.73 2.70 >=65,000 Btu/h and <240,000 2.32 2.68
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.67 2.64 >=240,000 Btu/h and <760,000 2.20 2.60
Btu/h. Btu/h.
Water-Cooled with Fluid Economizer.... <80,000 Btu/h................ 2.77 2.74 <65,000 Btu/h................ 2.35 2.71
>=80,000 Btu/h and <295,000 2.68 2.65 >=65,000 Btu/h and <240,000 2.24 2.60
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.61 2.58 >=240,000 Btu/h and <760,000 2.12 2.54
Btu/h. Btu/h.
Glycol-Cooled......................... <80,000 Btu/h................ 2.56 2.53 <65,000 Btu/h................ 2.08 2.48
>=80,000 Btu/h and <295,000 2.24 2.21 >=65,000 Btu/h and <240,000 1.90 2.18
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.21 2.18 >=240,000 Btu/h and <760,000 1.81 2.18
Btu/h. Btu/h.
Glycol-Cooled with Fluid Economizer... <80,000 Btu/h................ 2.51 2.48 <65,000 Btu/h................ 2.00 2.44
>=80,000 Btu/h and <295,000 2.19 2.16 >=65,000 Btu/h and <240,000 1.82 2.10
Btu/h. Btu/h.
>=295,000 Btu/h and <930,000 2.15 2.12 >=240,000 Btu/h and <760,000 1.73 2.10
Btu/h. Btu/h.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 14 to Paragraph (f)(2)--Minimum Efficiency Standards for Ceiling-
Mounted Computer Room Air Conditioners
------------------------------------------------------------------------
Minimum NSenCOP
Net sensible efficiency
Equipment type cooling -------------------------
capacity Ducted Non-ducted
------------------------------------------------------------------------
Air-Cooled with Free Air <29,000 Btu/h.. 2.05 2.08
Discharge Condenser.
>=29,000 Btu/h 2.02 2.05
and <65,000
Btu/h.
>=65,000 Btu/h 1.92 1.94
and <760,000
Btu/h.
Air-Cooled with Free Air <29,000 Btu/h.. 2.01 2.04
Discharge Condenser and
Fluid Economizer.
>=29,000 Btu/h 1.97 2
and <65,000
Btu/h.
>=65,000 Btu/h 1.87 1.89
and <760,000
Btu/h.
Air-Cooled with Ducted <29,000 Btu/h.. 1.86 1.89
Condenser.
>=29,000 Btu/h 1.83 1.86
and <65,000
Btu/h.
>=65,000 Btu/h 1.73 1.75
and <760,000
Btu/h.
Air-Cooled with Fluid <29,000 Btu/h.. 1.82 1.85
Economizer and Ducted
Condenser.
>=29,000 Btu/h 1.78 1.81
and <65,000
Btu/h.
>=65,000 Btu/h 1.68 1.7
and <760,000
Btu/h.
Water-Cooled................. <29,000 Btu/h.. 2.38 2.41
>=29,000 Btu/h 2.28 2.31
and <65,000
Btu/h.
[[Page 44140]]
>=65,000 Btu/h 2.18 2.2
and <760,000
Btu/h.
Water-Cooled with Fluid <29,000 Btu/h.. 2.33 2.36
Economizer.
>=29,000 Btu/h 2.23 2.26
and <65,000
Btu/h.
>=65,000 Btu/h 2.13 2.16
and <760,000
Btu/h.
Glycol-Cooled................ <29,000 Btu/h.. 1.97 2
>=29,000 Btu/h 1.93 1.98
and <65,000
Btu/h.
>=65,000 Btu/h 1.78 1.81
and <760,000
Btu/h.
Glycol-Cooled with Fluid <29,000 Btu/h.. 1.92 1.95
Economizer.
>=29,000 Btu/h 1.88 1.93
and <65,000
Btu/h.
>=65,000 Btu/h 1.73 1.76
and <760,000
Btu/h.
------------------------------------------------------------------------
(g)(1) Each variable refrigerant flow air conditioner or heat pump
manufactured on or after the compliance date listed in table 15 to this
paragraph (g)(1) and prior to January 1, 2024, must meet the applicable
minimum energy efficiency standard level(s) set forth in this paragraph
(g)(1).
Table 15 to Paragraph (g)(1)--Minimum Efficiency Standards for Variable Refrigerant Flow Multi-Split Air
Conditioners and Heat Pumps
----------------------------------------------------------------------------------------------------------------
Compliance date:
Cooling equipment
Equipment type capacity Heating type \1\ Efficiency level manufactured on and
after . . .
----------------------------------------------------------------------------------------------------------------
VRF Multi-Split Air >=65,000 Btu/h No Heating or 11.2 EER............... January 1, 2010.
Conditioners (Air-Cooled). and <135,000 Electric
Btu/h. Resistance
Heating.
All Other Types 11.0 EER............... January 1, 2010.
of Heating.
>=135,000 Btu/h No Heating or 11.0 EER............... January 1, 2010.
and <240,000 Electric
Btu/h. Resistance
Heating.
All Other Types 10.8 EER............... January 1, 2010.
of Heating.
>=240,000 Btu/h No Heating or 10.0 EER............... January 1, 2010.
and <760,000 Electric
Btu/h. Resistance
Heating.
All Other Types 9.8 EER................ January 1, 2010.
of Heating.
VRF Multi-Split Heat Pumps >=65,000 Btu/h No Heating or 11.0 EER, 3.3 COP...... January 1, 2010.
(Air-Cooled). and <135,000 Electric
Btu/h. Resistance
Heating.
All Other Types 10.8 EER, 3.3 COP...... January 1, 2010.
of Heating.
>=135,000 Btu/h No Heating or 10.6 EER, 3.2 COP...... January 1, 2010.
and <240,000 Electric
Btu/h. Resistance
Heating.
All Other Types 10.4 EER, 3.2 COP...... January 1, 2010.
of Heating.
>=240,000 Btu/h No Heating or 9.5 EER, 3.2 COP....... January 1, 2010.
and <760,000 Electric
Btu/h. Resistance
Heating.
All Other Types 9.3 EER, 3.2 COP....... January 1, 2010.
of Heating.
VRF Multi-Split Heat Pumps <17,000 Btu/h... Without Heat 12.0 EER,.............. October 29, 2012.
(Water-Source). Recovery. 4.2 COP................ October 29, 2003.
With Heat 11.8 EER............... October 29, 2012.
Recovery. 4.2 COP................ October 29, 2003.
>=17,000 Btu/h All............. 12.0 EER, 4.2 COP...... October 29, 2003.
and <65,000 Btu/
h.
>=65,000 Btu/h All............. 12.0 EER, 4.2 COP...... October 29, 2003.
and <135,000
Btu/h.
>=135,000 Btu/h Without Heat 10.0 EER, 3.9 COP...... October 29, 2013.
and <760,000 Recovery.
Btu/h.
With Heat 9.8 EER, 3.9 COP....... October 29, 2013.
Recovery.
----------------------------------------------------------------------------------------------------------------
\1\ VRF multi-split heat pumps (air-cooled) with heat recovery fall under the category of ``All Other Types of
Heating'' unless they also have electric resistance heating, in which case it falls under the category for
``No Heating or Electric Resistance Heating.''
(2) Each variable refrigerant flow air conditioner or heat pump
(except air-cooled systems with cooling capacity less than 65,000 Btu/
h) manufactured on or after January 1, 2024, must meet the applicable
minimum energy efficiency standard level(s) set forth in this paragraph
(g)(2).
[[Page 44141]]
Table 16 to Paragraph (g)(2)--Updated Minimum Efficiency Standards for Variable Refrigerant Flow Multi-Split Air
Conditioners and Heat Pumps
----------------------------------------------------------------------------------------------------------------
Equipment type Size category Heating type Minimum efficiency
----------------------------------------------------------------------------------------------------------------
VRF Multi-Split Air Conditioners >=65,000 and <135,000 All................. 15.5 IEER.
(Air-Cooled). Btu/h.
>=135,000 and All................. 14.9 IEER.
<240,000 Btu/h.
>=240,000 Btu/h and All................. 13.9 IEER.
<760,000 Btu/h.
VRF Multi-Split Heat Pumps (Air- >=65,000 and <135,000 Heat Pump without 14.6 IEER, 3.3 COP.
Cooled). Btu/h. Heat Recovery.
Heat Pump with Heat 14.4 IEER, 3.3 COP.
Recovery.
>=135,000 and Heat Pump without 13.9 IEER, 3.2 COP.
<240,000 Btu/h. Heat Recovery. 13.7 IEER, 3.2 COP.
Heat Pump with Heat
Recovery.
>=240,000 Btu/h and Heat Pump without 12.7 IEER, 3.2 COP.
<760,000 Btu/h. Heat Recovery. 12.5 IEER, 3.2 COP.
Heat Pump with Heat
Recovery.
VRF Multi-Split Heat Pumps (Water- <65,000 Btu/h........ Heat Pump without 16.0 IEER, 4.3 COP.
Source). Heat Recovery. 15.8 IEER, 4.3 COP.
Heat Pump with Heat
Recovery.
>=65,000 and <135,000 Heat Pump without 16.0 IEER, 4.3 COP.
Btu/h. Heat Recovery. 15.8 IEER, 4.3 COP.
Heat Pump with Heat
Recovery.
>=135,000 and Heat Pump without 14.0 IEER, 4.0 COP.
<240,000 Btu/h. Heat Recovery. 13.8 IEER, 4.0 COP.
Heat Pump with Heat
Recovery.
>=240,000 Btu/h and Heat Pump without 12.0 IEER, 3.9 COP.
<760,000 Btu/h. Heat Recovery. 11.8 IEER, 3.9 COP.
Heat Pump with Heat
Recovery.
----------------------------------------------------------------------------------------------------------------
(h) Each direct expansion-dedicated outdoor air system manufactured
on or after the compliance date listed in table 17 to this paragraph
(h) must meet the applicable minimum energy efficiency standard
level(s) set forth in this paragraph (h).
Table 17 to Paragraph (h)--Minimum Efficiency Standards for Direct Expansion-Dedicated Outdoor Air Systems
----------------------------------------------------------------------------------------------------------------
Compliance date:
Equipment category Subcategory Efficiency level equipment manufactured
starting on . . .
----------------------------------------------------------------------------------------------------------------
Direct expansion-dedicated outdoor (AC)--Air-cooled without ISMRE2 = 3.8......... May 1, 2024.
air systems. ventilation energy
recovery systems.
(AC w/VERS)--Air-cooled ISMRE2 = 5.0......... May 1, 2024.
with ventilation energy
recovery systems.
(ASHP)--Air-source heat ISMRE2 = 3.8......... May 1, 2024.
pumps without ventilation ISCOP2 = 2.05........
energy recovery systems.
(ASHP w/VERS)--Air-source ISMRE2 = 5.0......... May 1, 2024.
heat pumps with ISCOP2 = 3.20........
ventilation energy
recovery systems.
(WC)--Water-cooled without ISMRE2 = 4.7......... May 1, 2024.
ventilation energy
recovery systems.
(WC w/VERS)--Water-cooled ISMRE2 = 5.1......... May 1, 2024.
with ventilation energy
recovery systems.
(WSHP)--Water-source heat ISMRE2 = 3.8......... May 1, 2024.
pumps without ventilation ISCOP2 = 2.13........
energy recovery systems.
(WSHP w/VERS)--Water- ISMRE2 = 4.6......... May 1, 2024.
source heat pumps with ISCOP2 = 4.04........
ventilation energy
recovery systems.
----------------------------------------------------------------------------------------------------------------
(i) Air-cooled, three-phase, commercial package air conditioning
and heating equipment with a cooling capacity of less than 65,000 Btu/h
and air-cooled, three-phase variable refrigerant flow multi-split air
conditioning and heating equipment with a cooling capacity of less than
65,000 Btu/h manufactured on or after the compliance date listed in
tables 18 and 19 to this paragraph (i) must meet the applicable minimum
energy efficiency standard level(s) set forth in this paragraph (i).
Table 18 to Paragraph (i)--Minimum Efficiency Standards for Air-Cooled, Three-Phase, Commercial Package Air
Conditioning and Heating Equipment With a Cooling Capacity of Less Than 65,000 Btu/h and Air-Cooled, Three-
Phase, Small Variable Refrigerant Flow Multi-Split Air Conditioning and Heating Equipment With a Cooling
Capacity of Less Than 65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Compliance date:
equipment
Equipment type Cooling capacity Subcategory Minimum efficiency manufactured starting
on . . .
----------------------------------------------------------------------------------------------------------------
Commercial Package Air <65,000 Btu/h... Split-System.... 13.0 SEER............ June 16, 2008.\1\
Conditioning Equipment.
Commercial Package Air <65,000 Btu/h... Single-Package.. 14.0 SEER............ January 1, 2017.\1\
Conditioning Equipment.
Commercial Package Air <65,000 Btu/h... Split-System.... 14.0 SEER............ January 1, 2017.\1\
Conditioning and Heating 8.2 HSPF.............
Equipment.
Commercial Package Air <65,000 Btu/h... Single-Package.. 14.0 SEER............ January 1, 2017.\1\
Conditioning and Heating 8.0 HSPF.............
Equipment.
VRF Air Conditioners.......... <65,000 Btu/h... ................ 13.0 SEER............ June 16, 2008.\1\
[[Page 44142]]
VRF Heat Pumps................ <65,000 Btu/h... ................ 13.0 SEER............ June 16, 2008.\1\
7.7 HSPF.............
----------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2025. For equipment manufactured on or after January 1, 2025, see table
19 to this paragraph (i) for updated efficiency standards.
Table 19 to Paragraph (i)--Updated Minimum Efficiency Standards for Air-Cooled, Three-Phase, Commercial Package
Air Conditioning and Heating Equipment With a Cooling Capacity of Less Than 65,000 Btu/h and Air-Cooled, Three-
Phase, Small Variable Refrigerant Flow Multi-Split Air Conditioning and Heating Equipment With a Cooling
Capacity of Less Than 65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Compliance date:
equipment
Equipment type Cooling capacity Subcategory Minimum efficiency manufactured starting
on . . .
----------------------------------------------------------------------------------------------------------------
Commercial Package Air <65,000 Btu/h... Split-System.... 13.4 SEER2........... January 1, 2025.
Conditioning Equipment.
Commercial Package Air <65,000 Btu/h... Single-Package.. 13.4 SEER2........... January 1, 2025.
Conditioning Equipment.
Commercial Package Air <65,000 Btu/h... Split-System.... 14.3 SEER2........... January 1, 2025.
Conditioning and Heating 7.5 HSPF2............
Equipment.
Commercial Package Air <65,000 Btu/h... Single-Package.. 13.4 SEER2........... January 1, 2025.
Conditioning and Heating 6.7 HSPF2............
Equipment.
Space-Constrained Commercial <=30,000 Btu/h.. Split-System.... 12.7 SEER2........... January 1, 2025.
Package Air Conditioning
Equipment.
Space-Constrained Commercial <=30,000 Btu/h.. Single-Package.. 13.9 SEER2........... January 1, 2025.
Package Air Conditioning
Equipment.
Space-Constrained Commercial <=30,000 Btu/h.. Split-System.... 13.9 SEER2........... January 1, 2025.
Package Air Conditioning and 7.0 HSPF2............
Heating Equipment.
Space-Constrained Commercial <=30,000 Btu/h.. Single-Package.. 13.9 SEER2........... January 1, 2025.
Package Air Conditioning and 6.7 HSPF2............
Heating Equipment.
Small-Duct, High-Velocity <65,000 Btu/h... Split-System.... 13.0 SEER2........... January 1, 2025.
Commercial Package Air
Conditioning.
Small-Duct, High-Velocity <65,000 Btu/h... Split-System.... 14.0 SEER2........... January 1, 2025.
Commercial Package Air 6.9 HSPF2............
Conditioning and Heating
Equipment.
VRF Air Conditioners.......... <65,000 Btu/h... ................ 13.4 SEER2........... January 1, 2025.
VRF Heat Pumps................ <65,000 Btu/h... ................ 13.4 SEER2........... January 1, 2025.
7.5 HSPF2............
----------------------------------------------------------------------------------------------------------------
[FR Doc. 2024-08546 Filed 5-17-24; 8:45 am]
BILLING CODE 6450-01-P
