[Federal Register Volume 78, Number 207 (Friday, October 25, 2013)]
[Proposed Rules]
[Pages 64068-64139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24613]
[[Page 64067]]
Vol. 78
Friday,
No. 207
October 25, 2013
Part II
Department of Energy
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10 CFR Parts 429 and 430
Energy Conservation Program for Consumer Products: Energy Conservation
Standards for Residential Furnace Fans; Proposed Rule
Federal Register / Vol. 78, No. 207 / Friday, October 25, 2013 /
Proposed Rules
[[Page 64068]]
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DEPARTMENT OF ENERGY
10 CFR Parts 429 and 430
[Docket Number EERE-2010-BT-STD-0011]
RIN 1904-AC22
Energy Conservation Program for Consumer Products: Energy
Conservation Standards for Residential Furnace Fans
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking and announcement of public
meeting.
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SUMMARY: Pursuant to the Energy Policy and Conservation Act of 1975
(EPCA), as amended, the U.S. Department of Energy (DOE) must prescribe
energy conservation standards for various consumer products and certain
commercial and industrial equipment, including residential furnace
fans. EPCA requires DOE to determine whether such standards would be
technologically feasible and economically justified, and would save a
significant amount of energy. In this notice, DOE is proposing new
energy conservation standards for residential furnace fans. The notice
also announces a public meeting to receive comment on these proposed
standards and associated analyses and results.
DATES: Meeting: DOE will hold a public meeting on Tuesday, December 3,
2013, from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also
be broadcast as a webinar. See section VII, ``Public Participation,''
for webinar registration information, participant instructions, and
information about the capabilities available to webinar participants.
Comments: DOE will accept comments, data, and information regarding
this notice of proposed rulemaking (NOPR) before and after the public
meeting, but no later than December 24, 2013. See section VII, ``Public
Participation,'' for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW.,
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at
(202) 586-2945. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures. Any
foreign national wishing to participate in the meeting should advise
DOE as soon as possible by contacting Ms. Edwards at the phone number
above to initiate the necessary procedures. Please also note that any
person wishing to bring a laptop computer into the Forrestal Building
will be required to obtain a property pass. Visitors should avoid
bringing laptops, or allow an extra 45 minutes. Persons may also attend
the public meeting via webinar. For more information, refer to section
VII, ``Public Participation,'' near the end of this notice.
Instructions: Any comments submitted must identify the NOPR for
Energy Conservation Standards for Residential Furnace Fans, and provide
docket number EE-2010-BT-STD-0011 and/or regulatory information number
(RIN) 1904-AC22. Comments may be submitted using any of the following
methods:
1. Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: [email protected]. Include the docket
number and/or RIN in the subject line of the message. Submit electronic
comments in Word Perfect, Microsoft Word, PDF, or ASCII file format,
and avoid the use of special characters or any form of encryption.
3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Program, Mailstop EE-2J, 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.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD, in which case it is not necessary to
include printed copies.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy through the methods listed above and by email to
[email protected].
No telefacsimilies (faxes) will be accepted. For detailed
instructions on submitting comments and additional information on the
rulemaking process, see section VII of this document (Public
Participation).
Docket: The docket is available for review at www.regulations.gov,
including Federal Register notices, framework documents, public meeting
attendee lists and transcripts, comments, and other supporting
documents/materials. 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.
A link to the docket Web page can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. This Web page contains a link to the docket for this notice
on the www.regulations.gov site. The www.regulations.gov Web page
contains simple instructions on how to access all documents, including
public comments, in the docket. See section VII, ``Public
Participation,'' for further information on how to submit comments
through www.regulations.gov.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact Ms. Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. Ron Majette, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington,
DC, 20585-0121. Telephone: (202) 586-7935. Email:
[email protected].
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-9507. Email: [email protected].
For information on how to submit or review public comments, contact
Ms. Brenda Edwards at (202) 586-2945 or by email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Residential Furnace Fans
III. General Discussion
A. Test Procedure
B. Product Classes and Scope of Coverage
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
[[Page 64069]]
a. Economic Impact on Manufacturers and Consumers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion
A. Market and Technology Assessment
1. Definition and Scope of Coverage
2. Product Classes
3. Technology Options
a. Fan Housing and Airflow Path Design Improvements
b. Inverter Controls for PSC Motors
c. High-Efficiency Motors
d. Multi-Stage or Modulating Heating Controls
e. Backward-Inclined Impellers
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
a. High-Efficiency Motors
b. Backward-Inclined Impellers
C. Engineering Analysis
1. Efficiency Levels
a. Baseline
b. Percent Reduction in FER
2. Manufacturer Production Cost (MPC)
a. Production Volume Impacts on MPC
b. Inverter-Driven PSC Costs
c. Furnace Fan Motor MPC
d. Motor Control Costs
e. Backward-Inclined Impeller MPC
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Installed Cost
2. Operating Costs
3. Other Inputs
4. Base-Case Efficiency Distribution
5. Rebuttable Presumption Payback Period
G. Shipments Analysis
H. National Impact Analysis
1. National Energy Savings Analysis
2. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
3. Discussion of Comments
a. Testing and Certification Burdens
b. Cumulative Regulatory Burden
c. Compliance Date and Implementation Period
d. Small Businesses
e. Conversion Costs
4. Manufacturer Interviews
a. Testing and Certification Burdens
b. Market Size
c. Cumulative Regulatory Burden
d. Consumer Confusion
e. Motors
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
c. Current Approach and Key Assumptions
2. Valuation of Other Emissions Reductions
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 Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impact on Manufacturers
a. Industry Cash-Flow Analysis Results
b. 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 Product Utility or Performance
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
C. Proposed Standards
1. Benefits and Burdens of Trial Standard Levels Considered for
Residential Furnace Fans
2. Summary of Benefits and Costs (Annualized) of the Proposed
Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
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
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Requests to Speak and Prepared
General Statements For Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles, a program covering most major
household appliances, including the residential furnace fans that are
the focus of this notice. Pursuant to EPCA, any new or amended energy
conservation standard that DOE prescribes for certain products, such as
residential furnace fans, shall be designed to achieve the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in a significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE
must consider and prescribe energy conservation standards or energy use
standards for electricity used for purposes of circulating air through
duct work (products for which DOE has adopted the term ``furnace fans''
as shorthand) not later than December 31, 2013. (42 U.S.C.
6295(f)(4)(D))
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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In accordance with these and other statutory provisions discussed
in this notice, DOE is proposing new energy conservation standards for
residential furnace fans. Table I.1 below presents the proposed
standards, which represent the ``estimated annual electrical energy
consumption'' normalized by the estimated total number of annual
operating hours (1870) and the airflow in the maximum airflow-control
setting to produce a fan energy rating (FER). These proposed standards,
if adopted, would apply to all products listed in Table I.1 and
manufactured in, or imported into, the United States on or after the
date five years from the publication of the final rule.
[[Page 64070]]
Table I.1--Proposed Energy Conservation Standards for Residential Furnace Fans
[Compliance Starting Five Years From Final Rule Publication]
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Product class Product class description Proposed standard: FER * (W/1000 cfm)
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1................................... Non-Weatherized, Non- FER = 0.029 x QMax + 180.
Condensing Gas Furnace Fan
(NWG-NC).
2................................... Non-Weatherized, Condensing FER = 0.029 x QMax + 196.
Gas Furnace Fan (NWG-C).
3................................... Weatherized Non-Condensing FER = 0.029 x QMax + 135.
Gas Furnace Fan (WG-NC).
4................................... Non-Weatherized, Non- FER = 0.051 x QMax + 301.
Condensing Oil Furnace Fan
(NWO-NC).
5................................... Non-Weatherized Electric FER = 0.029 x QMax + 165.
Furnace/Modular Blower Fan
(NWEF/NWMB).
6................................... Manufactured Home Non- FER = 0.051 x QMax + 242.
Weatherized, Non-Condensing
Gas Furnace Fan (MH-NWGNC).
7................................... Manufactured Home Non- FER = 0.051 x QMax + 262.
Weatherized, Condensing Gas
Furnace Fan (MH-NWG-C).
8................................... Manufactured Home Electric FER = 0.029 x QMax + 105.
Furnace/Modular Blower Fan
(MH-EF/MB).
9................................... Manufactured Home Reserved.
Weatherized Gas Furnace Fan
(MH-WG).
10.................................. Manufactured Home Non- Reserved.
Weatherized Oil Furnace Fan
(MH-NWO).
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* QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test
procedure. 78 FR 19606, 19627 (April 2, 2013).
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of residential furnace fans, as
measured by the average life-cycle cost (LCC) savings and the median
payback period (PBP). In overview, the average LCC savings are positive
for all product classes.
Table I.2--Impacts of Proposed Standards on Consumers of Residential
Furnace Fans
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Average LCC Median payback
Product class savings (2012$) period (years)
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Non-Weatherized, Non-Condensing 474 5.38
Gas Furnace Fan (NWG-NC).........
Non-Weatherized, Condensing Gas 371 5.39
Furnace Fan (NWG-C)..............
Weatherized Non-Condensing Gas 247 6.39
Furnace Fan (WG-NC)..............
Non-Weatherized, Non-Condensing 40 5.49
Oil Furnace Fan (NWO-NC).........
Non-Weatherized Electric Furnace/ 185 3.55
Modular Blower Fan (NWEF/NWMB)...
Manufactured Home Non-Weatherized, 26 3.35
Non-Condensing Gas Furnace Fan
(MH-NWGNC).......................
Manufactured Home Non-Weatherized, 27 2.73
Condensing Gas Furnace Fan (MH-
NWG-C)...........................
Manufactured Home Electric Furnace/ 78 4.61
Modular Blower Fan (MH-EF/MB)....
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B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2013 to 2048). Using a real discount rate of 7.8
percent, DOE estimates that the INPV for manufacturers of residential
furnace fans is $252.2 million in 2012$. Under the proposed standards,
DOE expects that manufacturers may lose up to 21.6 percent of their
INPV, which is approximately $54.4 million. Total conversion costs
incurred by industry prior to the compliance date are expected to reach
$3.1 million.
C. National Benefits and Costs
DOE's analyses indicate that the proposed standards would save a
significant amount of energy. The cumulative energy savings for
residential furnace fan products purchased in the 30-year period that
begins in the first full year of compliance with new standards (2019-
2048) amount to 4.58 quads.\2\ For comparison, the estimated annual
energy savings in 2030 (0.074 quads) is equal to 0.3 percent of total
projected residential energy use in 2030.\3\
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\2\ A quad is equal to 10\15\ British thermal units (Btu).
\3\ Projected residential energy use in 2030 in the Annual
Energy Outlook 2013 is 21.65 quads.
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The cumulative net present value (NPV) of total consumer costs and
savings for the proposed residential furnace fan standards in 2012$
ranges from $8.51 billion (at a 7-percent discount rate) to $26.16
billion (at a 3-percent discount rate). This NPV expresses the
estimated total value of future operating-cost savings minus the
estimated increased product costs for residential furnace fans
purchased in 2019-2048, discounted to 2013.
In addition, the proposed standards would have significant
environmental benefits.\4\ The energy savings would result in
cumulative emission reductions of 429.8 million metric tons (Mt) \5\ of
carbon dioxide (CO2), 230.9 thousand tons of nitrogen oxides
(NOX), 313.5 thousand tons of sulfur dioxide
(SO2), 1.77 tons of mercury (Hg), 913.7 thousand tons of
methane (CH4), and 5.12 thousand tons of nitrous oxide
(N2O).\6\
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\4\ DOE calculates emissions reductions relative to the Annual
Energy Outlook 2012 (AEO 2012) Reference case, which incorporated
projected effects of all emissions regulations promulgated as of
January 31, 2012.
\5\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\6\ DOE also estimated CO2 and, for CH4
and N2O, CO2 equivalent (CO2eq)
emissions that occur through 2030. The estimated emissions
reductions through 2030 are 40 million metric tons CO2,
2.3 million tons CO2eq for CH4, and 167
thousand tons CO2eq for N2O.
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The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed by an interagency process.
For this NOPR, DOE used an updated set of SCC values \7\ (the
derivation of the
[[Page 64071]]
SCC values is discussed in section IV.L). DOE estimates that the
present monetary value of the CO2 emissions reduction is
between $2.25 and $35.56 billion, expressed in 2012$ and discounted to
2013. DOE also estimates the net present monetary value of the
NOX emissions reduction, expressed in 2012$ and discounted
to 2013, is $0.109 billion at a 7-percent discount rate and $0.314
billion at a 3-percent discount rate.\8\
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\7\ Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866, Interagency Working
Group on Social Cost of Carbon, United States Government (May 2013)
(Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf).
\8\ DOE did not monetize Hg or SO2 emission
reductions for this NOPR because it is currently evaluating
appropriate valuation of reduction in these emissions.
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Table I.3 summarizes the national economic benefits and costs
expected to result from these proposed standards for residential
furnace fans.
Table I.3--Summary of National Economic Benefits and Costs of Proposed
Residential Furnace Fans Energy Conservation Standards (TSL 4), in
Billion 2012$ *
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Present value
Category billion 2012$ Discount rate (%)
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Benefits:
Consumer Operating Cost 11.6 7
Savings.....................
32.0 3
CO2 Reduction Monetized Value 2.2 5
($12.9/t case)**............
CO2 Reduction Monetized Value 11.5 3
($40.8/t case)**............
CO2 Reduction Monetized Value 18.8 2.5
($62.2/t case)**............
CO2 Reduction Monetized Value 35.6 3
($117/t case)**.............
NOX Reduction Monetized Value 0.1 7
(at $2,639/ton).............
0.3 3
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Total Benefits [dagger].. 23.2 7
43.8 3
Costs:
Consumer Incremental 3.1 7
Installed Costs.............
5.8 3
Net Benefits:
Including CO2 and NOX 20.1 7
Reduction Monetized Value...
38.0 3
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* This table presents the costs and benefits associated with residential
furnace fans shipped in 2019-2048. These results include benefits to
consumers which accrue after 2048 from the products purchased in 2019-
2048. The results account for the incremental variable and fixed costs
incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2012$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated
using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
represents the 95th percentile of the SCC distribution calculated
using a 3% discount rate. The SCC time series used by DOE incorporate
an escalation factor. The value for NOX is the average of the low and
high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
the series corresponding to SCC value in 2015 of $40.8/t.
Although combining the values of operating savings and
CO2 emission reductions provides a useful perspective, two
issues should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions, whereas the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use different time frames for analysis. The national operating
cost savings is measured for the lifetime of residential furnace fans
shipped in 2019-2048. The SCC values, on the other hand, reflect the
present value of some future climate-related impacts resulting from the
emission of one ton of carbon dioxide in each year. These impacts
continue well beyond 2100.
The benefits and costs of these proposed standards, for products
sold in 2019-2048, can also be expressed in terms of annualized values.
The annualized monetary values are the sum of: (1) the annualized
national economic value of the benefits from consumer operation of
products that meet the proposed standards (consisting primarily of
operating cost savings from using less energy, minus increases in
equipment purchase and installation costs, which is another way of
representing consumer NPV); and (2) the annualized monetary value of
the benefits of emission reductions, including CO2 emission
reductions.\9\
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\9\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the present year used for
discounting the NPV of total consumer costs and savings, for the
time-series of costs and benefits using discount rates of three and
seven percent for all costs and benefits except for the value of
CO2 reductions. For the latter, DOE used a range of
discount rates, as shown in Table I.4. From the present value, DOE
then calculated the fixed annual payment over a 30-year period (2019
through 2048) that yields the same present value. The fixed annual
payment is the annualized value. Although DOE calculated annualized
values, this does not imply that the time-series of cost and
benefits from which the annualized values were determined is a
steady stream of payments.
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Estimates of annualized benefits and costs of the proposed
standards are shown in Table I.4. The results under the primary
estimate are as follows. (All monetary values below are expressed in
2012$.) Using a 7-percent discount rate for benefits and costs other
than CO2 reduction (for which DOE used a 3-percent discount
rate along with the SCC series corresponding to a value of $40.8/ton in
2015), the cost of the residential furnace fan standards proposed in
this rule is $231 million per year in increased equipment costs, while
the benefits are $872 million per year in reduced equipment operating
costs, $571 million in CO2 reductions, and $8.24 million in
reduced NOX emissions. In this case, the net benefit amounts
to $1,220 million per year. Using a 3-percent discount rate for all
benefits and costs and the SCC series corresponding to a value of
$40.8/ton in 2015, the cost of the residential furnace fans standards
proposed in this rule is $290 million per year in increased equipment
costs, while the benefits are $1,585 million per year in reduced
operating costs, $571 million in CO2
[[Page 64072]]
reductions, and $15.56 million in reduced NOX emissions. In
this case, the net benefit amounts to $1,882 million per year.
Table I.4--Annualized Benefits and Costs of Proposed Standards for Residential Furnace Fans (TSL 4), in Million 2012$
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Discount rate Primary estimate * Low net benefits estimate High net benefits estimate
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million 2012$/year
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Benefits:
Consumer Operating Cost 7%.............................. 872....................... 710....................... 1082.
Savings.
3%.............................. 1585...................... 1264...................... 2011.
CO2 Reduction Monetized Value 5%.............................. 139....................... 117....................... 171.
($12.9/t case) **.
CO2 Reduction Monetized Value 3%.............................. 571....................... 477....................... 702.
($40.8/t case) **.
CO2 Reduction Monetized Value 2.5%............................ 877....................... 732....................... 1079.
($62.2/t case) **.
CO2 Reduction Monetized Value 3%.............................. 1761...................... 1471...................... 2167.
($117/t case) **.
NOX Reduction Monetized Value 7%.............................. 8.24...................... 6.97...................... 9.99.
(at $2,639/ton) **.
3%.............................. 15.56..................... 13.03..................... 19.09.
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Total Benefits [dagger]... 7% plus CO2 range............... 1,019 to 2,641............ 834 to 2,188.............. 1,263 to 3,259.
7%.............................. 1,451..................... 1,194..................... 1,794.
3% plus CO2 range............... 1,740 to 3,362............ 1,394 to 2,748............ 2,201 to 4,197.
3%.............................. 2,172..................... 1,754..................... 2,732.
Costs:
Consumer Incremental Installed 7%.............................. 231....................... 273....................... 201.
Costs.
3%.............................. 290....................... 346....................... 250.
Net Benefits:
Total [dagger]................ 7% plus CO2 range............... 788 to 2,410.............. 561 to 1,915.............. 1,062 to 3,058.
7%.............................. 1,220..................... 921....................... 1,593.
3% plus CO2 range............... 1,450 to 3,072............ 1,047 to 2,402............ 1,951 to 3,947.
3%.............................. 1,882..................... 1,407..................... 2,482.
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* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019-2048. These results include benefits to
consumers which accrue after 2048 from the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred
by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits
Estimates utilize projections of energy prices and housing starts from the AEO 2012 Reference case, Low Estimate, and High Estimate, respectively.
Incremental product costs reflect a constant product price trend in the Primary Estimate, an increasing price trend in the Low Benefits Estimate, and
a decreasing price trend in the High Benefits Estimate.
** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. The first three cases use the averages of SCC
distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
calculated using a 3% discount rate. The SCC values increase over time. The value for NOX (in 2012$) is the average of the low and high values used in
DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $40.8/t in 2015. In the rows labeled
``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
are added to the full range of CO2 values.
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. DOE further notes that products
achieving these standard levels are already commercially available for
at least some, if not most, product classes covered by this proposal.
Based on the analyses described above, DOE has tentatively concluded
that the benefits of the proposed standards to the Nation (energy
savings, positive NPV of consumer benefits, consumer LCC savings, and
emission reductions) would outweigh the burdens (loss of INPV for
manufacturers and LCC increases for some consumers).
DOE also considered more-stringent energy efficiency levels as
trial standard levels, and is still considering them in this
rulemaking. However, DOE has tentatively concluded that the potential
burdens of the more-stringent energy efficiency levels would outweigh
the projected benefits. Based on consideration of the public comments
DOE receives in response to this notice and related information
collected and analyzed during the course of this rulemaking effort, DOE
may adopt energy efficiency levels presented in this notice that are
either higher or lower than the proposed standards, or some combination
of level(s) that incorporate the proposed standards in part.
II. Introduction
The following section briefly discusses the statutory authority
underlying this proposal, as well as some of the relevant historical
background related to the establishment of standards for residential
furnace fans.
A. Authority
Title III, Part B \10\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified) established the Energy Conservation Program for Consumer
Products Other Than Automobiles, a program covering most major
household appliances (collectively referred to as ``covered
products'').\11\ These include products that use electricity for
purposes of circulating air through duct work, hereafter referred to as
``residential furnace fans'' or simply ``furnace fans,'' the subject of
this rulemaking. (42 U.S.C. 6295(f)(4)(D))
---------------------------------------------------------------------------
\10\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\11\ All references to EPCA in this document refer to the
statute as amended through the American Energy Manufacturing
Technical Corrections Act, Public Law 112-210 (enacted December 18,
2012).
---------------------------------------------------------------------------
[[Page 64073]]
Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2) labeling;
(3) the establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is primarily responsible for labeling, and DOE implements the
remainder of the program. Subject to certain criteria and conditions,
DOE is required by EPCA to consider and establish energy conservation
standards for residential furnace fans by December 31, 2013. (42 U.S.C.
6295(f)(4)(D)) DOE is also required to develop test procedures to
measure the energy efficiency, energy use, or estimated annual
operating cost of each covered product prior to the adoption of an
energy conservation standard. (42 U.S.C. 6295(o)(3)(A) and (r))
Manufacturers of covered products must use the prescribed DOE test
procedure as the basis for certifying to DOE that their products comply
with the applicable energy conservation standards adopted under EPCA
and when making representations to the public regarding the energy use
or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s))
Similarly, DOE must use these test procedures to determine whether the
products comply with standards adopted pursuant to EPCA. (42 U.S.C.
6295(s)) DOE does not currently have a test procedure for furnace fans.
Accordingly, to fulfill the statutory requirements, DOE is
simultaneously conducting a test procedure rulemaking for residential
furnace fans. DOE published a notice of proposed rulemaking (NOPR) in
the Federal Register for a residential furnace fans test procedure on
May 15, 2012. 77 FR 28674. After considering public comments, DOE
subsequently published in the Federal Register a supplemental notice of
proposed rulemaking (SNOPR) on April 2, 2013, which contained a revised
test procedure proposal for furnace fans. 78 FR 19606. In accordance
with the statutory requirements outlined in EPCA, DOE will establish a
test procedure for residential furnace fans at or before the time it
prescribes furnace fan energy conservation standards Details on the
furnace fan test procedure rulemaking are available at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/40.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including residential furnace
fans. As indicated above, any new or amended standard for a covered
product must be designed to achieve the maximum improvement in energy
efficiency that is technologically feasible and economically justified.
(42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any
standard that would not result in the significant conservation of
energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a
standard: (1) For certain products, including residential furnace fans,
if no test procedure has been established for the product, or (2) if
DOE determines by rule that the proposed standard is not
technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, after receiving comments on the proposed
standard, DOE must determine whether the benefits of the standard
exceed its burdens by, to the greatest extent practicable, considering
the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers
relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States of any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (See 42 U.S.C. 6295(o)(2)(B)(iii))
Additionally, under 42 U.S.C. 6295(q)(1), the statute specifies
requirements when promulgating an energy conservation standard for a
covered product that has two or more subcategories. DOE must specify a
different standard level for a type or class of covered product that
has the same function or intended use, if DOE determines that products
within such group: (A) consume a different kind of energy from that
consumed by other covered products within such type (or class); or (B)
have a capacity or other performance-related feature which other
products within such type (or class) do not have and such feature
justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)). In
determining whether a performance-related feature justifies a different
standard level, DOE must consider such factors as the utility to the
consumer of the feature and other factors DOE deems appropriate. Id.
Any rule prescribing such a standard must include an explanation of the
basis on which such higher or lower level was established. (42 U.S.C.
6295(q)(2))
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under 42
U.S.C. 6297(d)).
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140,
any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C.
[[Page 64074]]
6295(o)), incorporate standby mode and off mode energy use into a
single standard, or, if that is not feasible, adopt a separate standard
for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B))
The proposed furnace fan energy rating metric would not account for the
electrical energy consumption in standby mode and off mode, because
energy consumption in those modes is already fully accounted for in the
DOE energy conservation standards rulemaking for residential furnaces
and residential central air conditioners (CAC) and heat pumps (HP). 76
FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011). Manufacturers
will be required to use the new metrics and methods adopted in those
rulemakings for the purposes of certifying to DOE that their products
comply with the applicable energy conservation standards adopted
pursuant to EPCA and for making representations about the efficiency of
those products. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s))
Background
1. Current Standards
Currently, no Federal energy conservation standards apply to
residential furnace fans.
2. History of Standards Rulemaking for Residential Furnace Fans
Pursuant to 42 U.S.C. 6295(f)(4)(D), DOE must consider and
prescribe new energy conservation standards or energy use standards for
electricity used for purposes of circulating air through duct work. DOE
has interpreted this statutory language to allow regulation of the
electricity use of any electrically-powered device applied to
residential central heating, ventilation, and air-conditioning (HVAC)
systems for the purpose of circulating air through duct work.
DOE initiated the current rulemaking by issuing an analytical
Framework Document, ``Rulemaking Framework for Furnace Fans'' (June 1,
2010). DOE then published the Notice of Public Meeting and Availability
of the Framework Document for furnace fans in the Federal Register on
June 3, 2010. 75 FR 31323. See http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. The Framework Document
explained the issues, analyses, and process that DOE anticipated using
to develop energy conservation standards for residential furnace fans.
DOE held a public meeting on June 18, 2010 to solicit comments from
interested parties regarding DOE's analytical approach. DOE originally
scheduled the comment period on the Framework Document to close on July
6, 2010, but due to the large number and broad scope of questions and
issues raised, DOE subsequently published a notice in the Federal
Register reopening the comment period from July 15, 2010 until July 27,
2010, to allow additional time for interested parties to submit
comments. 75 FR 41102 (July 15, 2010).
As a concurrent effort to the residential furnace fan energy
conservation standard rulemaking, DOE also initiated a test procedure
rulemaking for residential furnace fans. On May 15, 2012, DOE published
a notice of proposed rulemaking for the test procedure in the Federal
Register. 77 FR 28674. In that NOPR, DOE proposed to establish methods
to measure the performance of covered furnace fans and to obtain a
value for the proposed metric, referred to as the ``fan efficiency
rating'' (FER).\12\ DOE held the test procedure NOPR public meeting on
June 15, 2012, and the comment period closed on July 30, 2012. After
receiving comments on the NOPR alleging significant manufacturer burden
associated with the proposed test procedure, DOE determined that an
alternative test method should be developed. DOE published in the
Federal Register an SNOPR on April 2, 2013, which contained its revised
test procedure proposal and an explanation of the changes intended to
reduce burden. 78 FR 19606. DOE proposed to adopt a modified version of
the alternative test method recommended by the Air-Conditioning,
Heating, and Refrigeration Institute (AHRI) and other furnace fan
manufacturers to rate the electrical energy consumption of furnace
fans. DOE has tentatively concluded that the AHRI-proposed method
provides a framework for accurate and repeatable determinations of FER
that is comparable to the test method previously proposed by DOE, but
at a significantly reduced test burden. As required by EPCA, DOE will
complete its final rule for residential furnace fan test procedures in
advance of the final rule adopting energy conservation standards for
those products. (42 U.S.C. 6295(o)(3)(A) and (r))
---------------------------------------------------------------------------
\12\ In the May 15, 2012 NOPR for the test procedure, DOE
referred to FER as ``fan efficiency rating.'' However, in the April
2, 2013 test procedure SNOPR, DOE proposed to rename the metric as
``fan energy rating,'' thereby keeping the same abbreviation (FER).
---------------------------------------------------------------------------
To further develop the energy conservation standards for
residential furnace fans, DOE gathered additional information and
performed a preliminary technical analysis. This process culminated in
publication in the Federal Register of a Notice of Public Meeting and
the Availability of the Preliminary Technical Support Document (TSD) on
July 10, 2012. 77 FR 40530. In that document, DOE requested comment on
the following matters discussed in the TSD: (1) the selected product
classes; (2) the analytical framework, models, and tools that DOE is
using to evaluate standards; and (3) the results of the preliminary
analyses performed by DOE. Id. DOE also invited written comments on
these subjects, as well as any other relevant issues, and announced the
availability of the TSD on its Web site. Id. at 40530-31. A PDF copy of
the preliminary TSD is available at http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0037.
The preliminary TSD provided an overview of the activities DOE
undertook in developing potential energy conservation standards for
residential furnace fans, and discussed the comments DOE received in
response to the Framework Document. It also described the analytical
methodology that DOE used and each analysis DOE had performed up to
that point. These analyses were as follows:
A market and technology assessment addressed the scope of
this rulemaking, identified the potential product classes of
residential furnace fans, characterized the markets for these products,
and reviewed techniques and approaches for improving their efficiency;
A screening analysis reviewed technology options to
improve the efficiency of furnace fans, and weighed these options
against DOE's four prescribed screening criteria;
An engineering analysis estimated the increase in
manufacturer selling prices (MSPs) associated with more energy-
efficient furnace fans;
An energy use analysis estimated the annual energy use of
furnace fans at various potential standard levels;
A markups analysis converted estimated MSPs to consumer-
installed prices.
A life-cycle cost (LCC) analysis calculated, at the
consumer level, the discounted savings in operating costs throughout
the estimated average life of the product, compared to any increase in
installed costs likely to result directly from the adoption of a given
standard;
A payback period (PBP) analysis estimated the amount of
time it would take consumers to recover the higher expense of
purchasing more-energy-efficient products through lower operating
costs;
[[Page 64075]]
A shipments analysis estimated shipments of residential
furnace fans over the time period examined in the analysis (30 years),
which were used in performing the national impact analysis;
A national impact analysis assessed the aggregate impacts
at the national level of potential energy conservation standards for
residential furnace fans, as measured by the net present value of total
consumer economic impacts and national energy savings; and
A preliminary manufacturer impact analysis took the
initial steps in evaluating the effects new energy conservation
standards may have on furnace fan manufacturers.
The nature and function of the analyses in this rulemaking,
including the engineering analysis, energy-use characterization,
markups to determine installed prices, LCC and PBP analyses, and
national impact analysis, are summarized in the July 2012 notice. 77 FR
40530, 40532-33 (July 10, 2012).
The preliminary analysis public meeting took place on July 27,
2012. At this meeting, DOE presented the methodologies and results of
the analyses set forth in the preliminary TSD. The numerous comments
received since publication of the July 2012 notice, including those
received at the preliminary analysis public meeting, have contributed
to DOE's proposed resolution of the issues noted by interested parties.
The submitted comments include a joint comment from the American
Council for an Energy-Efficiency Economy (ACEEE), Adjuvant Consulting,
on behalf of the Northwest Energy Efficiency Alliance (NEEA), the
Appliance Standards Awareness Project (ASAP), the National Consumer Law
Center (NCLC), and the Natural Resources Defense Council (NRDC); a
comment from the Air-Conditioning, Heating, and Refrigeration Institute
(AHRI); a second joint comment from California Investor-Owned Utilities
(CA IOUs) including Pacific Gas and Electric Company (PG&E), Southern
California Edison (SCE), Southern California Gas Company, and San Diego
Gas and Electric (SDGE); a comment from Earthjustice; a comment from
ebm-papst Inc. (ebm-papst); a comment from Edison Electric Institute
(EEI); and a comment from the Northeast Energy Efficiency Partnership
(NEEP). Manufacturers submitting written comments included: First
Company, Goodman Global, Inc. (Goodman), Ingersoll Rand, Lennox
International, Inc. (Lennox), Morrison Products, Inc. (Morrison),
Mortex Product, Inc. (Mortex), National Motor Corporation (NMC), and
Rheem Manufacturing Company (Rheem). Comments made during the public
meeting by those not already listed include the U.S. Environmental
Protection Agency (EPA), the motor manufacturer Regal Beloit, and Unico
Incorporated. This NOPR summarizes and responds to the issues raised in
these comments. A parenthetical reference at the end of a quotation or
paraphrase provides the location of the item in the public record.
III. General Discussion
A. Test Procedure
In the SNOPR for the residential furnace fan test procedure
published in the Federal Register on April 2, 2013 (78 FR 19606), DOE
proposed to adopt a modified version of a test method recommended by
AHRI and supported by other furnace fan manufacturers in the written
comments on the May 2012 Test Procedure NOPR. (Docket No. EERE-2010-BT-
TP-0010, AHRI, No. 16 at p. 3) DOE agrees with AHRI's assessment that
its method provides a framework for accurate and repeatable
determinations of FER that is comparable to the test method previously
proposed by DOE, but at a significantly reduced test burden. In
general, the test burden of the AHRI method is reduced relative to the
test procedure originally proposed in the NOPR because it: (1) Does not
require airflow to be measured directly; (2) avoids the need to make
multiple determinations in each airflow-control setting because outlet
restrictions to achieve the specified reference system external static
pressure (ESP) would be set in the maximum airflow-control setting and
maintained for measurements in subsequent airflow-control settings; and
(3) can be conducted using the test setup currently required to rate
furnace annual fuel utilization efficiency (AFUE) for compliance with
residential furnace standards.
In the April 2, 2013 test procedure SNOPR, DOE proposed to
incorporate by reference the definitions, test setup and equipment, and
procedures for measuring steady-state combustion efficiency provisions
of American National Standards Institute (ANSI)/American Society of
Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) Standard
103-2007, Method of Testing for Annual Fuel Utilization Efficiency of
Residential Central Furnaces and Boilers (ASHRAE Standard 103). In
addition to these provisions, DOE proposed additional provisions for
apparatuses and procedures for measuring throughput temperature,
external static pressure, and furnace fan electrical input power. DOE
also proposed calculations to derive FER based on the results of
testing for each basic model. 78 FR 19606, 19608-09 (April 2, 2013).
In the SNOPR, DOE proposed to define ``fan energy rating'' (FER) as
the estimated annual electrical energy consumption of the furnace fan
normalized by: (a) the estimated total number of annual fan operating
hours (1,870); \13\ and (b) the airflow in the maximum airflow-control
setting. Id. at 19608. The estimated annual electrical energy
consumption, as proposed, is a weighted average of the furnace fan
electrical input power (in Watts) measured separately for multiple
airflow-control settings at different external static pressures (ESPs).
These ESPs are determined by a reference system that represents
national average duct work system characteristics. Id. Table III.1
below includes the proposed reference system ESP values by installation
type.
---------------------------------------------------------------------------
\13\ Details about the derivation of operating hours used to
calculate FER are found in the test procedure NOPR. 77 FR 28674,
28680 (May 15, 2012).
Table III.1--Proposed Reference System ESP Values by Furnace Fan
Installation Type
------------------------------------------------------------------------
Weighted
average
Installation type ESP (in.
w.c.)
------------------------------------------------------------------------
Units with an internal evaporator coil...................... 0.50
Units designed to be paired with an evaporator coil......... 0.65
Units installed in a manufactured homes \14\................ 0.30
------------------------------------------------------------------------
The proposed rated airflow-control settings correspond to operation
in cooling mode (which DOE finds is predominantly associated with the
maximum airflow-control setting), heating mode, and constant-
circulation mode. Table III.2 illustrates the airflow-control settings
that would be rated for various product types.
---------------------------------------------------------------------------
\14\ Manufactured home external static pressure is much lower
than non-manufactured home installations because there is no return
air duct work in manufactured homes. Also, the United States
Department of Housing and Urban Development (HUD) requirements for
manufactured homes stipulate that the duct work for cooling should
be set at 0.3 in. w.c.
[[Page 64076]]
Table III.2--Proposed Rated Airflow-Control Settings by Product Type
----------------------------------------------------------------------------------------------------------------
Rated airflow-control Rated airflow-
Product type setting 1 control setting 2 Rated airflow-control setting 3
----------------------------------------------------------------------------------------------------------------
Single-stage Heating.............. Default constant- Default heat........ Absolute maximum.
circulation.
Multi-stage or Modulating Heating. Default constant- Default low heat.... Absolute maximum.
circulation.
----------------------------------------------------------------------------------------------------------------
As shown in Table III.2, for products with single-stage heating,
the three proposed rated airflow-control settings are the default
constant-circulation setting, the default heating setting, and the
absolute maximum setting. 78 FR 19606, 19609 (April 2, 2013). For
products with multi-stage heating or modulating heating, the proposed
rated airflow-control settings are the default constant-circulation
setting, the default low heating setting, and the absolute maximum
setting. The absolute lowest default airflow-control setting is used to
represent constant circulation if a default constant-circulation
setting is not specified. DOE proposed to define ``default airflow-
control settings'' as the airflow-control settings specified for
installed use by the manufacturer in the product literature shipped
with the product in which the furnace fan is integrated. Id.
Manufacturers typically provide detailed instructions for setting the
default heating airflow-control setting to ensure that the product in
which the furnace fan is integrated operates safely. Manufacturer
installation guides also provide detailed instructions regarding
compatible thermostats and how to wire them to achieve the specified
default settings.
In the SNOPR, DOE proposed to weight the Watt measurements using
designated annual operating hours for each function (i.e., cooling,
heating, and constant circulation) that are intended to represent
national average operation. Table III.3 shows the proposed estimated
national average operating hours for each function to be used to
calculate FER.
Table III.3--Estimated National Average Operating Hour Values for Calculating FER
----------------------------------------------------------------------------------------------------------------
Single-stage Multi-stage or modulating
Operating mode Variable (hours) (hours)
----------------------------------------------------------------------------------------------------------------
Heating........................... HH (heating hours)........ 830 830/HCR (heat capacity ratio).
Cooling........................... CH (cooling hours)........ 640 640.
Constant Circulation.............. CCH (constant-circulation 400 400.
hours).
-------------------------------------------------
Total......................... .......................... 1,870 (830/HCR) + 1,040.
----------------------------------------------------------------------------------------------------------------
The specified operating hours for the heating mode for multi-stage
heating or modulating heating products are divided by the heat capacity
ratio (HCR) to account for variation in time spent in this mode
associated with turndown of heating output. The HCR is the ratio of the
reduced heat output capacity to maximum heat output capacity. The
proposed FER equation is:
[GRAPHIC] [TIFF OMITTED] TP25OC13.000
Where:
CH = annual furnace fan cooling operating hours;
EMax = furnace fan electrical consumption at maximum
airflow-control setting operating point;
HH = annual furnace fan heating operating hours;
EHeat = furnace fan electrical consumption at the default
heating airflow-control setting operating point for units with
single-stage heating or the default low-heating airflow control
setting operating point for units with multi-stage heating;
CHH = annual furnace fan constant circulation hours;
ECirc = furnace fan electrical consumption at the default
constant-circulation airflow-control setting operating point (or
minimum airflow-control setting operating point if a default
constant-circulation airflow-control setting is not specified);
QMax = airflow at maximum airflow-control setting
operating point; and
1000 = constant to put metric in terms of watts/1000cfm, which is
consistent with industry practice.
The public meeting for the energy conservation standards
preliminary analysis occurred only two months after the public meeting
for the test procedure NOPR. At the time of the preliminary analysis
meeting, the comment period for the test procedure NOPR was still open.
Consequently, many of the written comments and oral comments made
during the preliminary analysis public meeting focused on test
procedure issues and echoed comments in the test procedure rulemaking
proceeding. While these test procedure issues are germane to the
regulation of residential furnace fans more broadly, they are beyond
the scope of the present energy conservation standards rulemaking.
Accordingly, DOE addressed these test procedure-related comments, with
detailed responses, in the April 2, 2013 test procedure SNOPR. Any
additional comments made during the preliminary analysis relating to
the test procedure that were not discussed in the test procedure SNOPR
(i.e., did not result in changes to DOE's proposed test procedure) will
be addressed in the test procedure final rule.
B. Product Classes and Scope of Coverage
Although the title of 42 U.S.C. 6295(f) refers to ``furnaces and
boilers,'' DOE notes that 42 U.S.C. 6295(f)(4)(D) was written using
notably broader language than the other provisions within the
[[Page 64077]]
same section. Specifically, that statutory provision directs DOE to
``consider and prescribe energy conservation standards or energy use
standards for electricity used for purposes of circulating air through
duct work.'' Such language could be interpreted as encompassing
electrically-powered devices used in any residential HVAC product to
circulate air through duct work, not just furnaces, and DOE has
received numerous comments on both sides of this issue. At the present
time, however, DOE is only proposing to cover those circulation fans
that are used in furnaces and modular blowers. DOE is using the term
``modular blower'' to refer to HVAC products powered by single-phase
electricity that comprise an encased circulation blower that is
intended to be the principal air-circulation source for the living
space of a residence. A modular blower is not contained within the same
cabinet as a residential furnace, CAC, or heat pump. Instead, modular
blowers are designed to be paired with separate residential HVAC
products that provide heating and cooling, typically a separate CAC/HP
coil-only unit. DOE finds that modular blowers and electric furnaces
are very similar in design. In many cases, the only difference between
a modular blower and electric furnace is the presence of an electric
resistance heating kit. DOE is aware that some modular blower
manufacturers offer electric resistance heating kits to be installed in
their modular blower models so that the modular blowers can be
converted to stand-alone electric furnaces. In addition, FER values for
modular blowers can be easily calculated using the proposed test
procedure. DOE proposes to address the furnace fans used in modular
blowers in this rulemaking for these reasons. As a result of the extent
of the current rulemaking, DOE is not addressing public comments that
pertain to fans in other types of HVAC products.
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility to the consumer of the feature and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q)) For this
rulemaking, DOE proposes to differentiate between product classes based
on internal structure and application-specific design differences that
impact furnace fan energy consumption. Details regarding how internal
structure and application-specific design differences that impact
furnace fan energy consumption are included in chapter 3 of the NOPR
technical support document (TSD). DOE proposes the following product
classes for this rulemaking.
Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)
Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)
Weatherized Non-Condensing Gas Furnace Fan (WG-NC)
Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)
Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/
NWMB)
Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace
Fan (MH-NWG-NC)
Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan
(MH-NWG-C)
Manufactured Home Electric Furnace/Modular Blower Fan (MH-EF/
MB)
Manufactured Home Weatherized Gas Furnace Fan (MH-WG)
Manufactured Home Non-Weatherized Oil Furnace Fan (MH-NWO).
Each product class title includes descriptors that indicate the
application-specific design and internal structure of its included
products. ``Weatherized'' and ``non-weatherized'' are descriptors that
indicate whether the HVAC product is installed outdoors or indoors,
respectively. Weatherized products also include an internal evaporator
coil, while non-weatherized products are not shipped with an evaporator
coil but may be designed to be paired with one. ``Condensing'' refers
to the presence of a secondary, condensing heat exchanger in addition
to the primary combustion heat exchanger in certain furnaces. The
presence of an evaporator coil or secondary heat exchanger
significantly impacts the internal structure of an HVAC product, and in
turn, the energy performance of the furnace fan integrated in that HVAC
product. ``Manufactured home'' products meet certain design
requirements that allow them to be installed in manufactured homes
(e.g., a more compact cabinet size). Descriptors for ``gas,'' ``oil,''
or ``electric'' indicate the type of fuel that the HVAC product uses to
produce heat, which determines the type and geometry of the primary
heat exchanger used in the HVAC product.
C. 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. 10 CFR part 430, subpart C, appendix A,
section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; and (3) adverse impacts on
health or safety. 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its
analysis any proprietary technology that is a unique pathway to
achieving a certain efficiency level. Section IV.B of this notice
discusses the results of the screening analysis for residential furnace
fans, particularly the designs DOE considered, those it screened out,
and those that are the basis for the trial standard levels (TSLs) in
this rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt a new standard for a type or class of
covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
residential furnace fans, 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
[[Page 64078]]
section IV.C of this proposed rule and in chapter 5 of the NOPR TSD.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the products that
are the subject of this rulemaking purchased in the 30-year period that
begins in the anticipated year of compliance with new standards (2019-
2048). These savings are measured over the entire lifetime of products
purchased in the 30-year analysis period.\15\ DOE quantified the energy
savings attributable to each TSL as the difference in energy
consumption between each standards case and the base case. The base
case represents a projection of energy consumption in the absence of
mandatory energy conservation standards, and it considers market forces
and policies that affect demand for more-efficient products.
---------------------------------------------------------------------------
\15\ In the past, DOE presented energy savings results for only
the 30-year period that begins in the year of compliance. In the
calculation of economic impacts, however, DOE considered operating
cost savings measured over the entire lifetime of products purchased
in the 30-year period. DOE has chosen to modify its presentation of
national energy savings to be consistent with the approach used for
its national economic analysis.
---------------------------------------------------------------------------
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from potential standards for the products that
are the subject of this rulemaking. The NIA spreadsheet model
(described in section IV.H of this notice) calculates energy savings in
site energy, which is the energy directly consumed by products at the
locations where they are used. DOE reports national energy savings on
an annual basis in terms of the primary (source) energy savings, which
is the savings in the energy that is used to generate and transmit the
site energy. To convert site energy to primary energy, DOE derived
annual conversion factors from the model used to prepare the Energy
Information Administration's (EIA's) Annual Energy Outlook 2012 (AEO
2012).
DOE has begun to also estimate energy savings using full-fuel-cycle
metrics. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (August
17, 2012). The full-fuel-cycle (FFC) metric includes the energy
consumed in extracting, processing, and transporting primary fuels
(i.e., coal, natural gas, petroleum fuels), and thus presents a more
complete picture of the impacts of efficiency standards. DOE's approach
is based on calculation of an FFC multiplier for each of the primary
fuels used by covered products and equipment. For more information on
FFC energy savings, see section IV.H.1.
2. Significance of Savings
As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting
a standard for a covered product unless such standard would result in
``significant'' energy savings. Although the term ``significant'' is
not defined in the Act, the U.S. Court of Appeals for the District of
Columbia Circuit, in Natural Resources Defense Council v. Herrington,
768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended
``significant'' energy savings in this context to be savings that were
not ``genuinely trivial.'' The energy savings for all of the TSLs
considered in this rulemaking are nontrivial, and, therefore, DOE
considers them ``significant'' within the meaning of section 325 of
EPCA.
E. Economic Justification
1. Specific Criteria
As discussed above, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential new or amended standard
on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as
discussed in section IV.J. DOE first uses an annual cash-flow approach
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include: (1) Industry net
present value (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, as discussed
in section IV.N. Finally, DOE takes into account cumulative impacts of
various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in life-cycle cost (LCC) and payback period (PBP) associated
with new or amended standards. The LCC, which is specified separately
in EPCA as one of the seven factors to be considered in determining the
economic justification for a new or amended standard, 42 U.S.C.
6295(o)(2)(B)(i)(II), is discussed in the following section. For
consumers in the aggregate, DOE also calculates the national net
present value of the economic impacts applicable to a particular
rulemaking.
b. Life-Cycle Costs
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC savings for the considered efficiency levels are
calculated relative to a base case that reflects projected market
trends in the absence of standards. The LCC analysis requires a variety
of inputs, such as product prices, product energy consumption, energy
prices, maintenance and repair costs, product lifetime, and consumer
discount rates. For its analysis, DOE assumes that consumers will
purchase the considered products in the first year of compliance with
new standards.
To account for uncertainty and variability in specific inputs, such
as product lifetime and discount rate, DOE uses a distribution of
values, with probabilities attached to each value. DOE identifies the
percentage of consumers estimated to receive LCC savings or experience
an LCC increase, in addition to the average LCC savings associated with
a particular standard level. DOE also evaluates the LCC impacts of
potential standards on identifiable subgroups of consumers that may be
affected disproportionately by a national standard. DOE's LCC analysis
is discussed in further detail in section IV.F.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H, DOE uses
[[Page 64079]]
the NIA spreadsheet to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE evaluates
potential standards that would not lessen the utility or performance of
the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) The standards
proposed in this notice will not reduce the utility or performance of
the products under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It also 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 to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V)
and (ii)) DOE will transmit a copy of this proposed rule to the
Attorney General with a request that the Department of Justice (DOJ)
provide its determination on this issue. DOE will publish and respond
to the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
In evaluating the need for national energy conservation, DOE notes
that the energy savings from the proposed standards are likely to
provide improvements to the security and reliability of the nation's
energy system. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) 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.
The proposed standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production. DOE reports the
emissions impacts from each TSL it considered in section IV.K of this
notice. DOE also reports estimates of the economic value of emissions
reductions resulting from the considered TSLs, as discussed in section
IV.L.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
To the extent interested parties submit any relevant information
regarding economic justification that does not fit into the other
categories described above, DOE could consider such information under
``other factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analysis generates values used to determine which of the considered
standard levels meet the three-year payback period contemplated under
the rebuttable presumption test. The rebuttable presumption payback
calculation is discussed in section V.B.1 of this notice. In addition,
DOE routinely conducts an economic analysis that considers the full
range of impacts to consumers, manufacturers, the Nation, and the
environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results
of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification).
IV. Methodology and Discussion
This section addresses the analyses DOE has performed for this
rulemaking with regard to residential furnace fans. After a brief
discussion of the spreadsheet tools and models used, separate
subsections will address each component of DOE's analysis.
DOE used three spreadsheet tools to estimate the impact of this
proposed standards. The first spreadsheet calculates LCCs and payback
periods of potential standards. The second provides shipments
forecasts, and then calculates national energy savings and net present
value impacts of potential standards. Finally, DOE assessed
manufacturer impacts, largely through use of the Government Regulatory
Impact Model (GRIM). All three spreadsheet tools are available online
at the rulemaking portion of DOE's Web site: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41.
Additionally, DOE estimated the impacts on utilities and the
environment that would be likely to result from potential standards for
residential furnace fans. DOE used a version of EIA's National Energy
Modeling System (NEMS) for the utility and environmental analyses.\16\
The NEMS simulates the energy sector of the U.S. economy. EIA uses NEMS
to prepare its Annual Energy Outlook, a widely-known energy forecast
for the United States. NEMS offers a sophisticated picture of the
effect of standards because it accounts for the interactions between
the various energy supply and demand sectors and the economy as a
whole.
---------------------------------------------------------------------------
\16\ For more information on NEMS, refer to the U.S. Department
of Energy, Energy Information Administration documentation. A useful
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581(2003) (March, 2003).
---------------------------------------------------------------------------
A. Market and Technology Assessment
DOE develops information that provides an overall picture of the
market for the products concerned, including the purpose of the
products, the industry structure, manufacturers, market
characteristics, and technologies used in the products. This activity
includes both quantitative and qualitative assessments, based primarily
on publicly-available information. The subjects addressed in the market
and technology assessment for this residential furnace fans rulemaking
include: (1) A determination of the scope of this rulemaking; (2)
product classes and manufacturers; (3) quantities and types of products
sold and offered for sale; (4) retail market trends; (5) regulatory and
non-regulatory programs; and (6) technologies or design options that
could improve the energy efficiency of the product(s) under
examination. The key findings of DOE's market assessment are summarized
below. See chapter 3 of the NOPR TSD for further discussion of the
market and technology assessment.
1. Definition and Scope of Coverage
EPCA provides DOE with the authority to consider and prescribe new
energy conservation standards for electricity used to circulate air
through duct work. (42 U.S.C. 6295(f)(4)(D)) In the preliminary
analysis, DOE defined a ``furnace fan'' as ``any electrically-powered
device used in residential, central heating, ventilation, and air-
conditioning (HVAC) systems for the purpose of circulating air through
duct
[[Page 64080]]
work.'' 77 FR 40530, 40532 (July 10, 2012). DOE considered a typical
furnace fan as consisting of a fan motor and its controls, an impeller,
and a housing, all of which are components of an HVAC product that
includes additional components, including the cabinet.
Interested parties disagreed with DOE's approach to set component-
level regulations, which they warned would ignore system effects that
could impact both fan and system energy consumption. CA IOUs suggested
that ``furnace fan'' be defined as a unit consisting of a fan motor,
its controls, an impeller, shroud, and cabinet that houses all of the
heat exchange material for the furnace. According to CA IOUs, their
suggested definition would reduce ambiguity and ensure that the
components in HVAC products that affect furnace fan energy consumption
are considered in this rulemaking. (CA IOUs, No. 56 at p. 1) Ingersoll
Rand went further and suggested a system-level regulatory approach,
where the entire duct and furnace system would be regulated,
maintaining that such approach would produce a more useful metric to
consumers when evaluating performance. (Ingersoll Rand, No. 43 at p.
42) Conversely, NEEP observed that by regulating fan energy use
separately, the individual efficiency of the component is considered
when it would otherwise be ignored by manufacturers. (NEEP, No. 51 at
p. 3) Rheem commented that some designs require higher air velocity to
improve heat transfer but also require more electrical consumption to
drive the blower at the higher velocity. (Rheem, No. 43 at p. 63) Rheem
commented that turbulent flow is considerably more efficient for heat
transfer than laminar flow, but more energy is required to move
turbulent air. (Rheem, No. 54 at p. 10) Similarly, Lennox and Morrison
commented that in order to improve heating and cooling efficiency,
often a second heating coil is added, but this also leads to higher
electrical consumption by the furnace fan. (Lennox, No. 43 at p. 64;
Morrison, No. 43 at p. 64) Ingersoll Rand argued that as the efficiency
of the furnace fan motor increases, it dissipates less heat and a
furnace consumes more gas to compensate and meet house heat load.
(Ingersoll Rand, No. 43 at p. 66)
In response, DOE is required by EPCA to consider and prescribe new
energy conservation standards or energy use standards for electricity
used for purposes of circulating air through duct work. (42 U.S.C.
6295(f)(4)(D)) Pursuant to this statutory mandate, DOE plans to
establish energy conservation standards for circulation fans used in
residential central HVAC systems. DOE does not interpret its authority
as including the duct work itself. DOE is aware that component-level
regulations could have system-level impacts. Accordingly, DOE plans to
conduct its analyses and set standards in such a way that meets the
statutory requirements set forth by EPCA without ignoring system
effects, which otherwise might compromise the thermal performance of
the HVAC products that incorporate furnace fans. For example, the
proposed test procedure outlined in the April 2, 2013 SNOPR specifies
that the furnace fan be tested as factory-installed in the HVAC
product, thereby enabling the rating metric to account for system
effects on airflow delivery and, ultimately, energy performance. 78 FR
19606, 19612-13. In addition, the product class structure allows for
differentiation of products with designs that achieve higher thermal
efficiency but may have lower fan performance, such as condensing
furnaces.
The scope of the preliminary analysis included furnace fans used in
furnaces, modular blowers, and hydronic air handlers. Even though DOE
has interpreted its authority as encompassing any electrically-powered
device used in residential HVAC products to circulate air through duct
work, the preliminary analysis scope excluded single package central
air conditioners (CAC) and heat pumps (HP) and split-system CAC/HP
blower-coil units. At the time of the preliminary analysis, DOE
determined that it may consider these and other such products in a
future rulemaking as data and information to develop credible analyses
becomes available.
Efficiency advocates expressed concern at the exclusion of packaged
and split-system CAC products because they believe current standards
for these products do not maximize the technologically feasible and
economically justified energy savings for the circulation fans
integrated in these products. ASAP and Adjuvant stated that the metric
used for CAC products does not accurately represent field conditions
and requested that they be added to the scope. (ASAP, No. 43 at p. 17;
Adjuvant, No. 43 at p. 39) Specifically, efficiency advocates found
that the reference external static pressures (ESPs) used to determine
the seasonal energy efficiency ratio (SEER) and heating seasonal
performance factor (HSPF), which already rate these products, did not
reflect field-installed conditions. (ASAP, No. 43 at p. 38;
Earthjustice, No. 49 at p. 1) In a joint comment from ACEEE, ASAP,
NCLC, NEEA, and NRDC (hereafter referred to as ACEEE, et al.), in
addition to a comment from CA IOU, efficiency advocates and utilities
stated that the reference ESP of 0.1-0.2 in. w.c. was too low when
compared to the average field ESP of 0.73 in. w.c. identified in the
TSD. (ACEEE, et al., No. 55 at p. 1; CA IOU, No. 56 at p. 2) ACEEE, et
al. also noted that SEER and HSPF do not account for continuous-
circulation operation which is expected to increase as stricter
building codes call for tighter building envelopes. (ACEEE, et al., No.
55 at p. 2; CA IOU, No. 56 at p. 3) NEEP commented that SEER and HSPF
do not reward for any efficiency gains made by the furnace fan. (NEEP,
No. 51 at p. 3) By excluding these products from the analysis, ACEEE,
et al. argued that DOE is ignoring a significant fraction of the
furnace fan market. (ACEEE, et al., No. 55 at p. 1)
In contrast, many manufacturers believe that the scope of coverage
presented in the preliminary analysis exceeds the statutory authority
granted to DOE because the statutory language for this rulemaking is
found in 42 U.S.C 6295(f) under the title ``Standards for furnaces and
boilers.'' Consequently, manufacturers stated that DOE should not
include any non-furnace products such as central air conditioners, heat
pumps, or condensing unit-blower-coil combinations. Lennox, Mortex, and
First Co. explicitly stated that no equipment other than residential
furnaces and boilers should be included, as doing so is beyond DOE's
statutory authority. (Lennox, No. 47 at p. 4; Mortex, No. 59 at p. 1;
First Co., No. 53 at p. 1) Mortex further stated that the electricity
used to circulate air through duct work is already adequately accounted
for in existing energy efficiency metrics, and that if DOE insists on
proceeding on new energy conservation standards for furnace fans, DOE
should limit it to residential warm air furnaces until there is a
change made by Congress to include additional products. (Mortex, No. 59
at p. 1) Goodman and Ingersoll Rand argued that packaged equipment and
air handlers should not be included in the scope because the electrical
energy consumed by these products to circulate air through duct work is
already accounted for in SEER and HSPF. (Goodman, No. 50 at p. 7;
Ingersoll Rand, No. 57 at pp. A-1) Rheem and Morrison recommended that
hydronic air handlers and modular blowers be excluded from the scope
because these products have not been previously covered by an energy
conservation standard and cannot be defined as furnaces. (Morrison, No.
43 at p. 94;
[[Page 64081]]
Morrison, No. 58 at p. 9; Rheem, No. 54 at p. 2)
Manufacturers also argued that the electricity used to circulate
air through duct work for warm air furnaces with cooling capabilities
is already covered by SEER. (Goodman, No. 50 at p. 7; Mortex, No. 59 at
p. 1) Additionally, for a residential warm air furnace, Mortex stated
that Eae already accounts for heating-mode-related energy
consumption, including energy consumed by the fan. (Mortex, No. 59 at
p. 2) Additionally, by including annual furnace fan cooling and heating
electricity consumption in the FER metric, central air conditioner and
heat pumps products will be covered by multiple metrics. (Goodman, No.
50 at p. 6; Mortex, No. 59 at p. 2)
As discussed in the furnace fan test procedure April 2, 2013 SNOPR,
DOE notes that, although the title of this statutory section refers to
``furnaces and boilers,'' the applicable provision at 42 U.S.C.
6295(f)(4)(D) was written using notably broader language than the other
provisions within the same section. 78 FR 19606, 19611. Specifically,
that statutory provision directs DOE to ``consider and prescribe energy
conservation standards or energy use standards for electricity used for
purposes of circulating air through duct work.'' Such language could be
interpreted as encompassing electrically-powered devices used in any
residential HVAC product to circulate air through duct work, not just
furnaces, and DOE has received numerous comments on both sides of this
issue. At the present time, however, DOE is only proposing energy
conservation standards for those circulation fans that are used in
residential furnaces and modular blowers (see discussion below). As a
result, DOE is not addressing public comments that pertain to fans in
other types of HVAC products. The following list describes the furnace
fans which DOE proposes to address in this rulemaking.
Products addressed in this rulemaking: furnace fans used in
weatherized and non-weatherized gas furnaces, oil furnaces, electric
furnaces, and modular blowers.
Products not addressed in this rulemaking: furnace fans used
in other products, such as split-system CAC and heat pump air handlers,
through-the-wall air handlers, small-duct, high-velocity (SDHV) air
handlers, energy recovery ventilators (ERVs), heat recovery ventilators
(HRVs), draft inducer fans, exhaust fans, or hydronic air handlers.
DOE is using the term ``modular blower'' to refer to HVAC products
powered by single-phase electricity that comprise an encased
circulation blower that is intended to be the principal air circulation
source for the living space of a residence. A modular blower is not
contained within the same cabinet as a residential furnace, CAC, or
heat pump. Instead, modular blowers are designed to be paired with
separate residential HVAC products that provide heating and cooling,
typically a separate CAC/HP coil-only unit. DOE finds that modular
blowers and electric furnaces are very similar in design. In many
cases, the only difference between a modular blower and electric
furnace is the presence of an electric resistance heating kit. DOE is
aware that some modular blower manufacturers offer electric resistance
heating kits to be installed in their modular blower models so that the
modular blowers can be converted to stand-alone electric furnaces. In
addition, FER values for modular blowers can be easily calculated using
the proposed test procedure. DOE proposes to address the furnace fans
used in modular blowers in this rulemaking for these reasons.
After considering available information and public comments
regarding fan operation in cooling mode, DOE maintains its proposal to
account for the electrical consumption of furnace fans while performing
all active mode functions (i.e., heating, cooling, and constant
circulation). DOE recognizes that furnace fans are used not just for
circulating air through duct work during heating operation, but also
for circulating air during cooling and constant-circulation operation.
DOE anticipates that higher airflow-control settings are factory set
for cooling operation. Therefore, DOE expects that the electrical
energy consumption of a furnace fan is generally higher while
performing the cooling function. Additionally, the design of the fan as
well as its typical operating characteristics (i.e., ESP levels during
operation in different modes) is directly related to the performance
requirements in cooling mode. DOE is also concerned that excluding some
functions from consideration in rating furnace fan performance would
incentivize manufacturers to design fans that are optimized to perform
efficiently at the selected rating airflow-control settings but that
are not efficient over the broad range of field operating conditions.
In DOE's view, in order to obtain a complete assessment of overall
performance and a metric that reflects the product's electrical energy
consumption during a representative average use cycle, the metric must
account for electrical consumption in a set of airflow-control settings
that spans all active mode functions. This would ensure a more accurate
accounting of the benefits of improved furnace fans.
DOE is aware that fan electrical consumption is accounted for in
the SEER and HSPF metrics that DOE uses for CAC and heat pump products.
However, DOE does not agree with manufacturers' comments suggesting
that the electricity used to circulate air through duct work is already
adequately accounted for in existing energy efficiency metrics of other
covered products, particularly the SEER and HSPF metrics of CAC/HP.
This is because SEER and HSPF are used to test cooling and heating
performance of a CAC or heat pump product, whereas FER rates airflow
performance of a furnace fan product. While furnace fan airflow
performance contributes to cooling and heating performance,
manufacturers can improve SEER and HSPF without improving fan
performance. In short, SEER and HSPF-based standards do not directly
regulate the efficiency of furnace fans, as required by 42 U.S.C.
6295(f)(4)(D). DOE recognizes that the energy savings in cooling mode
from higher-efficiency furnace fans used in some higher-efficiency CAC
and heat pumps is already accounted for in the analysis of energy
conservation standards for those products. As a result, DOE conducted
its analysis in this current rulemaking in such a way as to avoid
double-counting these benefits by excluding furnace fan electricity
savings that were already included in DOE's analyses for CAC and heat
pump products. Chapter 7 of the NOPR TSD provides a more detailed
discussion of this issue.
2. Product Classes
DOE identified nine key product classes in the preliminary
analysis, each of which was assigned its own candidate energy
conservation standard and baseline FER. DOE identified twelve
additional product classes that represent significantly fewer shipments
and significantly less overall energy use. DOE grouped each non-key
product class with a key product class to which it is closely related
in application-specific design and internal structure (i.e., the
primary criteria used to differentiate between product classes). DOE
assigned the analytical results of each key product class to the non-
key product classes with which it is grouped because DOE expected the
energy use and incremental manufacturer production costs (MPCs) of
improving
[[Page 64082]]
efficiency to be similar within each grouping. Table IV.1 lists the 21
preliminary analysis product classes.
Table IV.1--Preliminary Analysis Product Classes
------------------------------------------------------------------------
Key product class Additional product classes
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas
Furnace Fan (NWG-NC).
Non-weatherized, Condensing Gas Furnace
Fan (NWG-C).
Weatherized Non-Condensing Gas Furnace Weatherized, Non-Condensing Oil
Fan (WG-NC). Furnace Fan (WO-NC).
Weatherized Electric Furnace/
Modular Blower Fan (WEF/WMB).
Manufactured Home Weatherized
Gas Furnace Fan (MH-WG).
Manufactured Home Weatherized
Oil Furnace Fan (MH-WO).
Manufactured Home Weatherized
Electric Furnace/Modular
Blower Fan (MH-WEF/WMB).
Non-weatherized, Non-Condensing Oil Non-Weatherized, Condensing Oil
Furnace Fan (NWO-NC). Furnace Fan (NWO-C).
Manufactured Home Non-
Weatherized Oil Furnace Fan
(MH-NWO).
Non-weatherized Electric Furnace/ ...............................
Modular Blower Fan (NWEF/NWMB).
Heat/Cool Hydronic Air Handler Fan (HAH- Heat-Only Hydronic Air Handler
HC). Fan (HAH-H).
Hydronic Air Handler Fan with
Coil (HAH-C).
Manufactured Home Heat/Cool
Hydronic Air Handler Fan (MH-
HAH-HC).
Manufactured Home Heat-Only
Hydronic Air Handler Fan (MH-
HAH-H).
Manufactured Home Hydronic Air
Handler Fan with Coil (MH-HAH-
C).
Manufactured Home Non-Weatherized, Non- ...............................
Condensing Gas Furnace Fan (MH-NWG-NC).
Manufactured Home Non-Weatherized, ...............................
Condensing Gas Furnace Fan (MH-NWG-C).
Manufactured Home Electric Furnace/ ...............................
Modular Blower Fan (MH-EF/MB).
------------------------------------------------------------------------
Goodman and Rheem agreed that the selected key product classes are
an accurate representation of the market, with Rheem commenting that it
manufactures six of the nine proposed key product classes. (Goodman,
No. 50 at p. 1; Rheem, No. 54 at p. 4) NEEP found that the proposed key
product class structure appropriately allows for differentiation of
products with higher thermal efficiency. (NEEP, No. 51 at p. 2)
Goodman, Rheem, and Ingersoll Rand disagreed with DOE's approach to
specify additional product classes within a key product class, stating
that shipment data indicates that the additional product classes are
too small to be covered. (Goodman, No. 50 at p. 1; Ingersoll Rand, No.
57 at pp. A-1; Rheem, No. 54 at p. 4)
Mortex expressed concern that the key product classes only
represent furnace fan products with the most shipments and, if the
energy conservation standards are set inappropriately high for these
key product classes, the additional products classes (some of which
serve unique applications) may also have trouble meeting any scaled
standards levels based thereon. (Mortex, No. 43 at p. 53)
DOE agrees with Goodman, Rheem, and Ingersoll Rand that the
additional product classes represent products with few and in many
cases, no shipments. Individual discussions with manufacturers for the
MIA confirm DOE's assumption. Additionally, review of the AHRI
appliance directory reveals that only two of the additional product
classes have active models listed: (1) Manufactured home weatherized
gas furnace fans (MH-WG) and (2) manufactured home non-weatherized oil
furnace fans (MH-NWO). The number of active basic models for MH-WG and
MH-NWO are 4 and 16, respectively. For this reason, DOE proposes to
eliminate the additional product classes except for MH-WG and MH-NWO.
Due to the limited number of basic models for MH-WG and MH-NWO, DOE did
not have data to directly analyze and establish standards for these
additional product classes. As a result, DOE proposes to reserve space
to establish standards for MH-WG and MH-NWO furnace fans in the future
as sufficient data become available.
As discussed previously in section IV.A.1, DOE proposes to also
exclude hydronic air handlers from consideration in this rulemaking,
thereby further reducing the number of product classes addressed by
this rulemaking to eight. Table IV.2 includes a list of the revised set
of product classes for residential furnace fans.
Table IV.2--Proposed Product Classes for Residential Furnace Fans
------------------------------------------------------------------------
Product class
-------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC).
Non-Weatherized, Condensing Gas Furnace Fan (NWG-C).
Weatherized Non-Condensing Gas Furnace Fan (WG-NC).
Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC).
Non-Weatherized Electric Furnace/Modular Blower Fan (NWEF/NWMB).
Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan (MH-
NWG-NC).
Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan (MH-NWG-
C).
Manufactured Home Electric Furnace/Modular Blower Fan (MH-EF/MB).
Manufactured Home Weatherized Gas Furnace Fan (MH-WG).
Manufactured Home Non-Weatherized Oil Furnace Fan (MH-NWO).
------------------------------------------------------------------------
[[Page 64083]]
3. Technology Options
In the preliminary analysis, DOE considered seven technology
options that would be expected to improve the efficiency of furnace
fans: (1) Fan housing and airflow path design modifications; (2) high-
efficiency fan motors (in some cases paired with multi-stage or
modulating heating controls); (3) inverter-driven permanent-split
capacitor (PSC) fan motors; (4) backward-inclined impellers; (5)
constant-airflow brushless permanent magnet (BPM) motor control relays;
(6) toroidal transformers; and (7) switching mode power supplies. Since
that time, DOE notes that its proposed scope of coverage no longer
includes hydronic air handlers, the only furnace fan product class for
which standby mode and off mode energy consumption is not accounted for
in a separate DOE rulemaking. Consequently, the standby mode and off
mode technology options (options 5 through 7 in the list above) are no
longer applicable, because energy consumption in those modes is already
fully accounted for in the DOE energy conservation standards rulemaking
for residential furnaces and residential CAC and HP for the remaining
proposed product classes. 76 FR 37408 (June 27, 2011); 76 FR 67037
(Oct. 31, 2011). In addition, DOE found that multi-staging and
modulating heating controls can also improve FER, so hence DOE
evaluated multi-staging and modulating heating controls as a separate
technology option for the NOPR. Thus, the resultant list of potential
technology options identified for the NOPR include: (1) Fan housing and
airflow path design modifications; (2) inverter-driven PSC fan motors;
(3) high-efficiency fan motors; (4) multi-staging and modulating
heating controls; and (5) backward-inclined impellers. Each identified
technology option is discussed below and in more detail in chapter 3 of
the NOPR TSD.
a. Fan Housing and Airflow Path Design Improvements
The preliminary analysis identified fan housing and airflow path
design modifications as potential technology options for improving the
energy efficiency of furnace fans. Optimizing the shape of the inlet
cone \17\ of the fan housing, minimizing gaps between the impeller and
fan housing inlet, and optimizing cut-off location and manufacturing
tolerances were identified as enhancements to a fan housing that could
improve efficiency. Separately, modification of elements in the airflow
path, such as the heat exchanger, could reduce internal static pressure
and as a result, reduce energy consumption. Manufacturer input was
requested to determine the use and practicability of these potential
technology options.
---------------------------------------------------------------------------
\17\ The inlet cone is the opening of the furnace fan housing
through which return air enters the housing. The inlet cone is
typically curved inward, forming a cone-like shape around the
perimeter of the opening, to provide a smooth surface to direct air
from outside the housing to inside the housing and into the
impeller.
---------------------------------------------------------------------------
ASAP expressed support for DOE's consideration of the aerodynamics
of furnace fan cabinets in its initial analysis of technology options.
(ASAP, No. 43 at p. 16) In particular, ASAP cited a 2003 GE study \18\
that quantified energy savings produced by modifying fan housing as
justification for its inclusion as an option. (ASAP, No. 43 at p. 71)
ACEEE, et al. also cited a Lawrence Berkeley National Laboratory (LBNL)
study \19\ that linked changes in efficiency to modifying the clearance
between fan housing and an air handler cabinet wall. (ACEEE, et al.,
No. 55 at p. 2) According to Ingersoll Rand, there are proprietary fan
housing designs on the market that already improve mechanical
efficiency by 10-20 percent at a cost much lower than the cost to
implement high-efficiency motors or make changes to the impeller and
its tolerances. (Ingersoll Rand, No. 57 at pp. A-3)
---------------------------------------------------------------------------
\18\ Wiegman, Herman, Final Report for the Variable Speed
Integrated Intelligent HVAC Blower (2003) (Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).
\19\ Walker, I.S, State-of-the-art in Residential and Small
Commercial Air Handler Performance (2005) LBNL 57330 (Available at:
http://epb.lbl.gov/publications/pdf/lbnl-57330plus.pdf).
---------------------------------------------------------------------------
DOE is aware of the studies cited by ASAP and ACEEE, as well as the
proprietary housing design mentioned by Ingersoll Rand. For the NOPR,
DOE decided to include fan housing design modifications as a technology
to be evaluated further in the screening analysis because of these
indications that each could improve fan efficiency.
Many interested parties requested that DOE keep airflow path design
as a technology option. (Unico, No. 43 at p. 72; EPA, No. 43 at p. 76;
ASAP, No. 43 at p. 77; CA IOU, No. 56 at p. 3; ACEEE, et al., No. 55 at
p. 2) Manufacturers stated that improving airflow path design, like
modifying fan housing, is highly cost-effective when compared to other
enhancements. (Rheem, No. 43 at p. 74; Lennox, No. 43 at p. 74;
Adjuvant, No. 43 at p. 74) Lennox noted a 10-20 percent improvement in
efficiency could be achieved by changing the airflow path when
evaluated against a baseline design coupled with a PSC motor. (Lennox,
No. 47 at p. 9; Morrison, No. 58 at p. 5) However, the EPA questioned
whether considering modified airflow path as a technology option was
appropriate when DOE plans to only regulate the fan itself and not the
entire air handler. (EPA, No. 43 at p. 62)
While Morrison agreed that airflow path and fan housing design
affect performance and efficiency, it argued that establishing a
baseline design (over which to determine improvement) might be
difficult because parameters used to select an individual
manufacturer's design may have taken into account considerations
outside the scope of the furnace fan rulemaking. (Morrison, No. 43 at
p. 75) Rheem suggested that AHRI should present airflow path and fan
housing design data to the DOE in order to help establish the two
technology options. (Rheem, No. 43 at p. 79)
Similar to the fan housing design modifications, DOE decided to
include airflow path design as a technology option to be evaluated
further in the screening analysis as a result of these claims of
potential fan efficiency improvement. In response to the comment
received from the EPA, DOE believes including airflow path design is
appropriate because of its potential to impact fan efficiency. Airflow
path design will impact the proposed rating metric, FER, because DOE is
proposing to test the furnace fan as it is factory installed in the
HVAC product. As discussed previously in section IV.A.1, DOE has
conducted its NOPR analyses in such a way as to meet the statutory
requirements set forth by EPCA without ignoring system effects. Chapter
3 of the NOPR TSD provides more technical detail regarding fan housing
and airflow path design modifications and how these measures could
reduce furnace fan energy consumption.
b. Inverter Controls for PSC Motors
In the preliminary analysis, DOE identified inverter-driven PSC
motors as a technology option. DOE is aware of a series of non-
weatherized gas furnaces with inverter-driven PSC furnace fan motors
that was once commercially available. DOE has determined that inverter
controls provide efficiency improvement by offering additional
intermediate airflow-control settings and a wider range of airflow-
control settings (i.e., lower turndown ratio) than conventional PSC
controls. The additional airflow-control settings and range enable the
furnace fan to better match demand. Publically-available performance
data for the series of furnaces using inverter-driven PSCs demonstrate
that the use of this technology results in reduced FER
[[Page 64084]]
values compared to baseline PSC furnace fans. Consequently, DOE
considered inverter-driven PSCs as a technologically feasible option
for reducing furnace fan energy consumption.
Manufacturers were opposed to listing inverter-driven PSCs as a
viable technology option. Goodman commented that there are alternate,
more cost-effective solutions to reduce energy consumption for air-
moving systems, such as airflow path design. (Goodman, No. 50 at p. 2)
Ingersoll Rand and Morrison commented that the small energy savings
provided by inverter-driven PSCs are not worth the added cost and
complexity when ECM (referred to herein by DOE as a ``constant-airflow
BPM motor'') technology is available at a comparable cost and greater
efficiency. (Ingersoll Rand, No. 57 at pp. A-1; Morrison, No. 58 at p.
2; Rheem, No. 54 at p. 6) Morrison suggested that the motor industry
was seeking lower-cost alternatives to ECM motors, such as fractional
horsepower switched reluctance motors or inverter-driven PSCs, but that
no low-cost alternative currently exists. (Morrison, No. 58 at p. 2)
NMC, a motor manufacturer, went further, stating that inverter-driven
PSC motors using wave chopper controls are not typically more efficient
than multi-tap PSC motors and that they are not a practical alternative
to brushless permanent magnet technology. (NMC, No. 60 at p. 2)
DOE recognizes manufacturers' concerns with the cost-effectiveness
of inverter-driven PSC fan motors. However, DOE decided to include
inverter-driven PSC motors as a technology option to be evaluated
further in the screening analysis due to their potential to reduce
furnace fan energy consumption. DOE evaluates in the engineering
analysis the cost-effectiveness of all energy-saving technology options
that are not screened out. Chapter 3 of the NOPR TSD provides a more
detailed discussion of inverter-driven PSC furnace fan motors.
c. High-Efficiency Motors
In the preliminary analysis, DOE identified four motor types that
are typically used in furnace fan assemblies: (1) PSC motors; (2) PSC
motors that have more than 3 airflow-control settings and sometimes
improved materials (hereinafter referred to as ``improved PSC''
motors); (3) constant-torque BPM motors (often referred to as ``X13
motors''); and (4) constant-airflow BPM motors (often referred to as
``ECMs'').\20\ DOE finds that furnace fans using high-efficiency motor
technology options operate more efficiently than furnace fans using
baseline PSC motors by:
---------------------------------------------------------------------------
\20\ ``ECM'' and ``X13'' refer to the constant-airflow and
constant torque (respectively) BPM offerings of a specific motor
manufacturer. Throughout this notice, DOE will refer to these
technologies using generic terms, which are introduced in the list
above. However, DOE's summaries of interested-party submitted
comments include the terminology used by the interested party when
referring to motor technologies.
---------------------------------------------------------------------------
Functioning more efficiently at a given operating
condition;
Maintaining efficiency throughout the expected operating
range; and
Achieving a lower turndown ratio \21\ (i.e., ratio of
airflow in lowest setting to airflow in highest setting).
---------------------------------------------------------------------------
\21\ A lower turndown ratio can significantly improve furnace
fan efficiency because fan input power has a cubic relationship with
airflow.
---------------------------------------------------------------------------
Ingersoll Rand commented that a PSC motor will use less energy at
higher static pressures, while an ECM increases energy use as static
pressure rises. Ingersoll Rand stated that as a result, understanding
the impact of switching to an ECM at higher static pressures may
confuse the consumer. (Ingersoll Rand, No. 43 at p. 67)
DOE is aware that consumers may be confused when BPM motors
(referred to as ECMs by Ingersoll Rand above) consume more energy than
PSC motors at higher static pressures, because consumers expect BPM
motors to consume less energy than PSC motors under the same operating
conditions. In general, input power to the fan motor increases as
static pressure increases to provide a given airflow (i.e., the fan
motor has to work harder in the face of increased resistance to provide
a desired amount of air).\22\ DOE agrees with Ingersoll Rand that as
static pressure increases, input power to a PSC-driven furnace fan will
decrease, which is seemingly contradictory to the principle described
above. DOE finds that input power to a PSC-driven furnace fan decreases
because the airflow provided by the fan decreases as static pressure
rises (i.e., the fan does not have to work as hard in the face of
increased resistance because the fan is not providing as much air).
Input power to a constant-airflow BPM motor-driven furnace fan, on the
other hand, will increase as static pressure rises because the BPM
motor-driven fan is designed to maintain the desired level of airflow.
Recognizing that this behavior could complicate comparing the relative
performance of these motor technologies, DOE's proposed rating metric,
FER, is normalized by airflow to result in ratings that are in units of
watts/cfm. DOE believes that a comparison using a watts/cfm metric will
mitigate confusion by accurately reflecting that even though a
constant-airflow BPM motor is consuming more power at higher statics,
it is also providing more airflow, which is useful to the consumer.
---------------------------------------------------------------------------
\22\ See chapter 3 of the TSD for more details regarding fan
operation.
---------------------------------------------------------------------------
Interested parties recognized the benefits provided by constant-
torque and constant-airflow BPM motors. NMC agreed that variable-speed
technology is useful in furnace fan applications, because the airflow
settings can be adjusted and optimized for a range of static pressure
levels. (NMC, No. 60 at p. 1) NEEP supported DOE's proposal for an
efficiency level based on a constant-torque ECM as part of the furnace
fan analysis, given that these motors are widely available and less
expensive than ``full blown'' ECM motors. (NEEP, No. 51 at p. 3)
Morrison commented that ECM technology offers the best cost for
performance value. (Morrison, No. 58 at p. 2)
Interested parties agreed that the BPM motor variations (i.e.,
constant-torque and constant-airflow) and inverter-driven PSC motors
generally have lower turndown ratios than a three-speed PSC motor.
Table IV.3 contains the turndown ratio estimates supplied publicly by
interested parties. Manufacturers generally provided similar feedback
during interviews. NMC stated that the turndown ratios achieved by ECM
technology allow for continuous circulation at optimal CFM levels,
unlike PSC options, which cannot achieve low enough CFM. (NMC, No. 60
at p. 1) Lennox commented that including constant circulation as part
of FER will penalize PSCs and artificially inflate the performance of
ECMs. (Lennox, No. 47 at p. 9) Ingersoll Rand stated that furnace fan
turndown ability is limited by the physical characteristics of the
impeller and bearings. (Ingersoll Rand, No. 57 at pp. A-2)
[[Page 64085]]
Table IV.3--Stakeholder Estimated Fan Motor Turndown Ratios
----------------------------------------------------------------------------------------------------------------
Wave chopper Constant-torque Constant- airflow
Stakeholder PSC controller PSC ECM ECM
----------------------------------------------------------------------------------------------------------------
NMC (NMC, No. 60 at p. 1)........... 0.45 0.36 0.45 0.20
Goodman (Goodman, No. 50 at p. 2)... 0.70-0.75 ................. 0.40-0.50 0.25-0.35
Rheem (Rheem, No. 54 at p. 6)....... 0.60 ................. 0.30 0.20
----------------------------------------------------------------------------------------------------------------
Overall, comments regarding high-efficiency motor turndown ratio
validated DOE's expectation that lower turndowns are associated with
improved PSCs, inverter-driven PSCs, and BPM motor variations. These
motors consume significantly less energy over a typical residential
furnace fan operating range. DOE disagrees with Lennox that including
constant circulation as part of FER would ``artificially'' inflate the
performance of BPM motors compared to PSC motors, because DOE concludes
that there is non-trivial use of this mode by consumers. As part of the
test procedure rulemaking, DOE estimates that on average, consumers
operate furnace fans in constant-circulation mode 400 hours annually.
This estimate is used to weight fan constant-circulation electrical
energy consumption in FER. Excluding this mode from the rating metric
would underestimate the potential efficiency improvements of technology
options, such as BPM motors, that could reduce fan electrical
consumption while performing this function. A detailed discussion of
DOE's estimate for national average constant-circulation furnace fan
operating hours can be found in the test procedure NOPR. 77 FR 28674,
28682 (May 15, 2012). DOE did not revise these estimates in the test
procedure SNOPR published on April 2, 2013. 78 FR 19606.
d. Multi-Stage or Modulating Heating Controls
In the preliminary analysis (77 FR 40530 (July 10, 2012)), DOE
identified two-stage and modulating heating controls (hereinafter
collectively referred to as ``multi-stage'' controls) as a method of
reducing residential furnace fan energy consumption. Multi-stage
furnaces typically operate at lower heat input rates and, in turn, a
lower airflow-control setting for extended periods of time compared to
single-stage furnaces to heat a residence.\23\ Due to the cubic
relationship between fan input power and airflow, operating at the
reduced airflow-control setting reduces overall fan electrical energy
consumption for heating despite the extended hours. In the preliminary
analysis, DOE analyzed multi-staging controls paired with use of a
constant-airflow BPM fan motor as one technology option, because DOE
found the two to be almost exclusively used together in commercially-
available products.
---------------------------------------------------------------------------
\23\ A further discussion of multi-stage heating controls is
found in chapter 3 of the preliminary analysis TSD, which can be
found at the following web address: http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0037.
---------------------------------------------------------------------------
ASAP, ACEEE, NCLC, NRDC, and NEEA encouraged DOE to consider X13-
level motors applied with multi-stage furnace controls as a technology
option. ACEEE et al. added that they expect an X13-level motor paired
with multi-stage furnace controls to operate at a lower speed
(corresponding to the lower burner output) in heating mode for a
greater number of hours compared to an X13-level motor applied with
single-stage furnace controls. According to ACEEE et al., the net
effect of operating at a lower speed for a greater number of hours
could be electricity savings, because motor power decreases with the
cube of the speed. (ACEEE et al., No. 55 at p. 3) Rheem commented that
it does use modulating furnace controls with PSC and X13 motors, not
just ECM motors. (Rheem, No. 43 at p. 81) During interviews, other
manufacturers also commented that multi-stage heating controls can be
and are used regardless of motor type.
Based on comments from Rheem and other manufacturers, DOE
recognizes that multi-stage controls can be paired with other motor
types, not just constant-airflow BPM motors. DOE agrees with ACEEE et
al. that implementing multi-stage heating controls independent of motor
type could result in residential furnace fan efficiency improvements.
Consequently, DOE has decided to de-couple multi-staging controls from
the constant-airflow BPM motor technology option. Accordingly, DOE has
evaluated multi-staging controls as a separate technology option for
the NOPR.
e. Backward-Inclined Impellers
DOE determined in the preliminary analysis that using backward-
inclined impellers could lead to possible residential furnace fan
energy savings. Although limited commercial data regarding backward-
inclined impeller performance were available, DOE cited research by
General Electric that showed large improvements in efficiency were
achievable under certain operating conditions.\24\
---------------------------------------------------------------------------
\24\ Wiegman, Herman, Final Report for the Variable Speed
Integrated Intelligent HVAC Blower (2003) (Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).
---------------------------------------------------------------------------
Morrison disagreed with the DOE's findings, stating that literature
indicates there are varying degrees of performance improvement when
backward-inclined impellers are used in place of forward-curved
impellers. (Morrison, No. 43 at p. 132) Specifically, Morrison cited an
LBNL study \25\ where a furnace with a backward-inclined impeller
exhibited no efficiency gains compared to a low efficiency forward-
curved impeller. (Morrison, No. 58 at p. 3) According to Morrison,
limitations on operating speed also make it necessary to couple
backward-inclined impellers with high-efficiency motors. (Morrison, No.
58 at p. 2) Other commenters asserted that the optimal range of
operation for backward-inclined impellers may fall outside that of
typical residential furnace fan use. (SCE, No. 43 at p. 59; Ingersoll
Rand, No. 57 at p. A-3; EEI, No. 60 at p. 2; CA IOU, No. 56 at p. 4) CA
IOU testing showed that backward-inclined impellers are more sensitive
to external static pressures, which could also limit their use. (CA
IOU, No. 56 at p. 4) Rheem stated that improved efficiency of backward-
inclined impellers is often achieved at mid-flow rates and high static
levels. (Rheem, No. 54 at p. 7) Rheem commented that research by the
replacement part manufacturer (Lau) reveals that backward-inclined
impellers, at diameters typically used in residential applications,
offer no significant efficiency improvements. (Rheem, No. 43 at p. 132)
---------------------------------------------------------------------------
\25\ Walker, I.S., Laboratory Evaluation of Residential Furnace
Blower Performance (2005) (Available at: http://www.escholarship.org/uc/item/7tx9c86s#page-1).
---------------------------------------------------------------------------
Ebm-papst, a company that provides custom air-movement products,
offered a diverging opinion from most manufacturers regarding the
energy-saving potential of backward-inclined impellers. That company
retrofitted
[[Page 64086]]
several HVAC products with furnace fan assemblies that incorporated
backward-inclined impellers without increasing cabinet size and tested
them. Depending on the application and the external static pressure
load (typically 0.5 in.w.c. to 1 in.w.c.), ebm-papst found that the
backward-inclined impeller achieved input power reductions from 15-30
percent. (ebm-papst Inc., No. 52 at p. 1) Ebm-papst did note that for
backward-inclined impellers to match the performance of forward-curved
impellers without increasing impeller dimensions, fan speed must
increase. However, ebm-papst did not anticipate that this would be an
obstacle to implementation using available motor technologies. (ebm-
papst Inc., No. 52 at p. 1)
DOE recognizes that backward-inclined impellers may not be more
efficient than forward-curved impellers under all operating conditions
and that there may be considerable constraints to implementation.
However, the GE prototype and ebm-papst prototype both demonstrate that
significant energy consumption reduction is achievable at some points
within the range of residential furnace fan operation. For this reason,
DOE has included backward-inclined impellers as a technology option to
be evaluated further in the screening analysis, where DOE investigates
any other concerns regarding the use of a technology option, such as
the practicability to manufacture or impacts on reliability, utility,
and safety in the screening analysis.
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
1. Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
2. Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
compliance date of the standard, then that technology will not be
considered further.
3. Impacts on product utility or product availability. If it is
determined that a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not be
considered further.
4. Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further.
(10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b))
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the above four criteria, it
will be screened out from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed
below.
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
DOE screened out fan housing and airflow path design improvements
in the preliminary analysis. DOE had little quantitative data to
correlate specific fan housing alterations with efficiency
improvements. Additionally, DOE anticipated that any improvements to
airflow path design that would result in fan efficiency improvement
would require an increase in furnace fan cabinet size or negatively
impact heat exchanger performance, thereby compromising the
practicability to manufacture or reducing utility to consumers.
Interested parties stated many concerns associated with modifying
airflow path designs to reduce residential furnace fan electrical
energy consumption. Morrison provided an example illustrating the
tradeoffs in thermal performance of selecting an airflow path that
enhances fan performance. Specifically, Morrison stated that, ``a 90%+
efficient furnace will have higher pressure drop through the furnace
than a similarly sized 80%+ efficient furnace because of the added heat
transfer surface area.'' (Morrison, No. 58 at p. 5) Conversely,
manufacturers noted that higher SEER requirements call for increased
central air conditioner or heat pump indoor coil size, leaving reduced
space for other HVAC system components. Having to decrease the size of
the fan due to these additional regulations could also make the furnace
fan less efficient. (Morrison, No. 43 at p. 62) Mortex and Morrison
also commented that the primary concern when selecting an airflow path
design is usually safety or impact on heat transfer, not efficiency.
(Mortex, No. 43 at p. 135; Morrison, No. 58 at p. 5) AHRI and Rheem
outlined all of the possible housing design modifications that would
affect airflow path design, including housing shape, distance between
components, size of duct openings, and motor mounting. (AHRI, No. 48 at
p. 3; Rheem, No. 54 at p. 9) AHRI emphasized that some modifications
could improve or decrease efficiency, but all would require an increase
in product size and, thus, manufacturing costs. (AHRI, No. 48 at p. 3)
During manufacturer interviews, many manufacturers reiterated or echoed
that airflow path design modifications would likely require increasing
HVAC product size. Manufacturers explained that increasing HVAC
products size would have adverse impacts on practicability to install
and consumer utility, because the furnace fan market is predominantly a
replacement market. Installing HVAC products that are larger in size
compared to the products they are purchased to replace would likely
present issues, mainly significant increases in installation costs or
minimizing product availability to consumers.
DOE did not receive or find additional quantitative data that shows
a measurable increase in fan efficiency as a result of a specific fan
housing or airflow path design modification. Even after individual
discussion with manufacturers, DOE was not able to identify a case
where fan housing or airflow path design modifications could lead to
potential fan energy savings without increasing the size of the HVAC
product in which the furnace fan is used or compromising thermal
performance or safety. In response to Morrison's comment, DOE assumes
that the ``added heat transfer surface area'' in the 90%+ efficient
furnace that Morrison refers to is the secondary heat exchanger
typically used in condensing furnaces. DOE is aware of the impacts on
thermal efficiency and furnace fan performance of the additional heat
exchanger in condensing furnaces. As discussed in section III.B, DOE
accounted for these impacts in its criteria for differentiating product
classes. The 90%+ furnace (condensing) and 80%+ furnace (non-
condensing) that Morrison refers to would not be in the same product
class
[[Page 64087]]
according to DOE's proposed product classes. In addition, DOE concurs
with manufacturers' observations that an increase in envelope size
would adversely impact practicability to manufacture and install, as
well as product utility. Accordingly, DOE has decided to screen out fan
housing and airflow path design modifications until quantitative data
become available to show that a fan housing or airflow path design
modification results in improved fan efficiency without increasing HVAC
product size or compromising thermal performance or safety.
2. Remaining Technologies
Through a review of each technology, DOE found that all of the
other identified technologies met all four screening criteria to be
examined further in DOE's analysis. In summary, DOE did not screen out
the following technology options: (1) Inverter-driven PSC fan motors;
(2) high-efficiency fan motors; (3) multi-stage heating controls; and
(4) backward-inclined impellers. DOE understands that all of these
technology options are technologically feasible, given that the
evaluated technologies are being used (or have been used) in
commercially-available products or working prototypes. These
technologies all incorporate materials and components that are
commercially available in today's supply markets for the residential
furnace fans that are the subject of this NOPR. Therefore, DOE believes
all of the efficiency levels evaluated in this notice are
technologically feasible. For additional details, please see chapter 4
of the NOPR TSD.
DOE finds that all of the remaining technology options also meet
the other screening criteria (i.e., practicable to manufacture,
install, and service and do not result in adverse impacts on consumer
utility, product availability, health, or safety). Interested parties,
however, voiced concerns regarding these screening criteria as they
apply to BPM fan motors and backward-inclined impellers. DOE addresses
these concerns in the sections immediately below. DOE did not receive
public comments relevant to the screening analysis criteria for the
other remaining technology options.
a. High-Efficiency Motors
AHRI stated that there are a limited number of ECM motor suppliers
to furnace fan manufacturers. (AHRI, No. 48 at p. 2) Lennox commented
that the technology is proprietary and dominated by a single motor
manufacturer. Lennox added that industry competition is adversely
affected as a result. (Lennox, No. 47 at p. 6) AHRI and Lennox noted
that furnace fan manufacturers already have difficulties securing an
adequate supply, so mandating ECM use would impact product
availability. (Lennox, No. 47 at p. 8; AHRI, No. 48 at p. 2) AHRI and
Mortex stated that no alternative ECM exists at the scale of Regal
Beloit ECMs and that limiting PSC applicability would reduce product
flexibility. (AHRI, No. 48 at p. 2; Mortex, No. 43 at p. 129) Both
Goodman and Ingersoll Rand do not expect that a technology with better
or equivalent performance to brushless permanent magnet motors will be
available at a reasonable cost in the next decade. (Goodman, No. 50 at
p. 2; Ingersoll Rand, No. 57 at pp. A-2)
Regal Beloit disagreed with residential furnace fan manufacturers,
claiming that there is more than just a single motor manufacturer
offering ECM technology. (Regal Beloit, No. 43 at p. 130) NMC concurred
with Regal Beloit, stating that it too sells brushless permanent magnet
motors in high volumes to furnace fan manufacturers. (NMC, No. 60 at p.
2) NMC supported DOE's assumption that after implementation of furnace
fan efficiency standards, brushless permanent magnet motor technologies
will become increasingly available over time. (NMC, No. 60 at p. 2)
Ingersoll Rand confirmed that brushless DC motors are an ECM
alternative available from several suppliers, although prices vary.
(Ingersoll Rand, No. 57 at pp. A-2) Although Rheem commented that they
have applied brushless DC motors produced by more than just a single
vendor, their current designs and production processes have been
developed to be specifically paired with Regal Beloit products. (Rheem,
No. 54 at p. 7) DOE discovered during interviews with manufacturers
that there are multiple suppliers of BPM motors. DOE also found further
evidence that some manufacturers purchase BPM motors from multiple
suppliers. EEI stated that the expiration of Regal Beloit ECM patents
around 2020 may increase the availability of this motor type while
decreasing cost. (EEI, No. 43 at p. 127)
In the preliminary analysis, DOE requested comment as to whether
manufacturers could alternatively develop BPM motor controls in-house
when using high-efficiency motors from other, non-Regal Beloit,
suppliers. Currently, Regal Beloit offers BPM motors packaged with
controls. Manufacturers may buy BPM motors that are not pre-packaged
with controls from a supplier other than Regal Beloit, and develop
their own controls. DOE anticipated that if furnace fan manufacturers
had the ability to develop controls independently of Regal Beloit, this
might drive down costs as well as dependency on a single manufacturer.
Most furnace fan manufacturers claimed that development of in-house
controls for BPM motors is not an option. For example, Rheem uses
General Electric and Regal Beloit software tools to program motors and
does not currently have the capability to design motor controls without
this tool. (Rheem, No. 54 at p. 6) Lennox and Morrison noted that
having to design, build, and test motor controls would increase burden
for large manufacturers and be prohibitively expensive to small
manufacturers, neither of which have the expertise to develop these
types of complex controls internally. (Lennox, No. 47 at p. 6;
Morrison, No. 58 at p. 2) Lennox was also fearful that ECM suppliers
might find motor control development an attempt to develop a
replacement product and cut ties with furnace fan manufacturers.
(Lennox, No. 47 at p. 7)
NMC confirmed that many U.S. motor suppliers bring in equipment
from a fan manufacturer and develop unique ECM controls tailored to the
manufacturer. (NMC, No. 43 at p. 128)
While DOE recognizes that Regal Beloit possesses a number of
patents in the BPM motor space, other motor manufacturers (e.g., Broad
Ocean or NMC) also offer BPM models. Additionally, DOE is aware that in
years past, residential furnace fans paired with constant-airflow BPM
motors accounted for 30 percent of the market. While DOE estimates that
constant-airflow BPM motors represent only 10-15 percent of the current
furnace fan market, the manufacturing capability to meet BPM motor
demand exists. Thus, DOE has tentatively concluded that BPM motor
technology is currently available from more than one source and will
become increasingly available to residential furnace fan manufacturers.
Some fan manufacturers expressed concern that high-efficiency motor
reliance on rare earth metals would impact supply. However, DOE is
aware of high-efficiency motors that do not contain rare earth
materials. DOE is also confident, after manufacturer discussions, that
if BPM motors are adopted as a means to meet a future residential
furnace fan energy conservation standard, manufacturers would have a
number of cost- and performance-competitive suppliers from which to
choose who have available, or could rapidly develop, control systems
independently of the motor manufacturer.
[[Page 64088]]
b. Backward-Inclined Impellers
According to Rheem, backward-inclined impellers must have larger
diameter and operate at higher speed than forward-curve impellors in
order to attain equivalent performance (i.e., flow and pressure rise).
(Rheem, No. 54 at p. 7) Goodman asserted that a 40-50 percent increase
in diameter would be necessary for backward-inclined impellers to
outperform their forward-curved counterparts. (Goodman, No. 50 at p. 2)
According to AHRI, an impeller diameter increase would lead to an
increase in overall product size, a change which may not be possible
without redesigning the product. (AHRI, No. 48 p. 2) Morrison and Rheem
argued that the larger evaporator coil size required to meet higher
SEER requirements already limits the space available for furnaces, so
an increase in product size due to backward-inclined impellers would
severely restrict product application. (Morrison, No. 58 at p. 3;
Rheem, No. 54 at p. 7) Ingersoll Rand stated that when used with
backward-inclined impellers, motors typically operate at twice the RPM
of forward-curved impellers for the same air delivery and static
pressure. (Ingersoll Rand, No. 57 at pp. A-3) However, ebm-papst stated
that they retrofitted existing equipment with backward-curved
impellers, which only required making minor changes to the airflow path
within the equipment. Ebm-papst also stated that it tested the
retrofitted products, which achieved reductions of input power to the
furnace fan in the range of 15-30 percent, depending on the specific
equipment and the external static pressure (typically tested at 0.5
in.w.c. and 1.0 in.w.c.). (ebm-papst, No. 52 at p. 1)
AHRI and Rheem were also concerned with the potential impacts that
backward-inclined impellers could have on heat exchanger temperatures.
AHRI and Rheem stated that the air distribution out of a blower housing
with a forward-curved wheel is maximum at the outside edges of the
wheel and decreases at the center of the wheel. The air distribution
out of a blower housing with a backward-inclined wheel is maximum at
the center of the wheel and tapers off at the outside edges. The
modified air distribution out of the blower housing would require
assessment of heat exchanger temperatures for reliability and safety,
as temperature limits operation. (AHRI, No. 48 at p. 2; Rheem, No. 54
at p. 8)
Some commenters also argued that backward-inclined impellers may
affect furnace fan utility, because the noise produced by this impeller
type may limit product application. Utilities have claimed that a
backward-inclined impeller, in combination with increased fan motor
speeds to achieve higher efficiency, leads to amplified noise levels.
(EEI, No. 60 at p. 3; SCE, No. 43 at p. 59) However, during its testing
of HVAC products retrofitted with a backward-inclined impeller, ebm-
papst expressed a contrary view, observing that noise levels produced
by the backward-inclined impeller were not significantly different from
forward-curved impellers. (ebm-papst Inc., No. 52 at p. 1)
DOE finds that there are multiple approaches to implementing
backward-inclined impellers to reduce furnace fan energy consumption.
DOE recognizes that one approach is to use a backward-inclined impeller
that is larger than a standard forward-curved impeller, which may lead
to larger HVAC products. Another approach is to pair the backward-
inclined impeller with a motor that operates at increased RPM. Ebm-
papst tests show a significant potential to reduce fan electrical
energy consumption for a backward-inclined impeller assembly that uses
existing motor technology at higher RPMs and is implemented in existing
HVAC products (i.e., no increase in product size required). Ebm-papst
does not believe that achieving higher RPMs with existing motor
technology is an obstacle for implementing this technology. DOE
believes that this prototype represents a backward-inclined
implementation approach that could achieve fan energy savings while
avoiding the negative impacts listed by manufacturers. Consequently,
DOE decided not to screen out the backward-inclined impeller technology
option.
C. Engineering Analysis
In the engineering analysis (corresponding to chapter 5 of the NOPR
TSD), DOE establishes the relationship between the manufacturer selling
price (MSP) and improved residential furnace fan efficiency. This
relationship serves as the basis for cost-benefit calculations for
individual consumers, manufacturers, and the Nation. DOE typically
structures the engineering analysis using one of three approaches: (1)
Design option; (2) efficiency level; or (3) reverse engineering (or
cost-assessment). The design-option approach involves adding the
estimated cost and efficiency of various efficiency-improving design
changes to the baseline to model different levels of efficiency. The
efficiency-level approach uses estimates of cost and efficiency at
discrete levels of efficiency from publicly-available information, and
information gathered in manufacturer interviews that is supplemented
and verified through technology reviews. The reverse engineering
approach involves testing products for efficiency and determining cost
from a detailed bill of materials derived from reverse engineering
representative products. The efficiency values range from that of a
least-efficient furnace fan sold today (i.e., the baseline) to the
maximum technologically feasible efficiency level. For each efficiency
level examined, DOE determines the MSP; this relationship is referred
to as a cost-efficiency curve.
1. Efficiency Levels
In this rulemaking, DOE used an efficiency-level approach in
conjunction with a design-option approach to identify incremental
improvements in efficiency for each product class. An efficiency-level
approach enabled DOE to identify incremental improvements in efficiency
for efficiency-improving technologies that furnace fan manufacturers
already incorporate in commercially-available models. A design-option
approach enabled DOE to model incremental improvements in efficiency
for technologies that are not commercially available in residential
furnace fan applications. In combination with these approaches, DOE
used a cost-assessment approach to determine the manufacturing
production cost (MPC) at each efficiency level identified for analysis.
This methodology estimates the incremental cost of increasing product
efficiency. When analyzing the cost of each efficiency level, the MPC
is not for the entire HVAC product, because furnace fans are a
component of the HVAC product in which they are integrated. The MPC
includes costs only for the components of the HVAC product that impact
FER.
a. Baseline
During the preliminary analysis, DOE selected baseline units
typical of the least-efficient furnace fans used in commercially-
available, residential HVAC models that have a large number of annual
shipments. This sets the starting point for analyzing potential
technologies that provide energy efficiency improvements. Additional
details on the selection of baseline units may be found in chapter 5 of
the NOPR TSD. DOE compared the FER at higher energy efficiency levels
to the FER of the baseline unit and compared baseline MPCs to the MPCs
at higher efficiency levels.
DOE reviewed FER values that it calculated using test data and
[[Page 64089]]
performance information from publicly-available product literature to
determine baseline FER ratings. Table IV.4 presents the baseline FER
values identified in the preliminary analysis for each product class.
Table IV.4--Preliminary Analysis Baseline FER
------------------------------------------------------------------------
Product class FER (W/1000 cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-condensing Gas 380
Furnace Fan..............................
Non-Weatherized, Condensing Gas Furnace 393
Fan......................................
Weatherized, Non-Condensing Gas Furnace 333
Fan......................................
Non-Weatherized, Non-Condensing Oil 333
Furnace Fan..............................
Electric Furnace/Modular Blower Fan....... 312
Manufactured Home Non-weatherized, Non- 295
condensing Gas Furnace Fan...............
Manufactured Home Non-weatherized, 319
Condensing Gas Furnace Fan...............
Manufactured Home Electric Furnace/Modular 243
Blower Fan...............................
------------------------------------------------------------------------
Manufacturers asserted that the baseline FER values presented in
the preliminary analysis were not representative of the furnace fans in
the least-efficient residential HVAC models offered for sale today.
Specifically, manufacturers stated that non-weatherized, non-condensing
gas furnaces should be assigned a baseline FER of 451 instead of 380
and that non-weatherized, condensing gas furnaces should have an FER of
494 rather than 393. (AHRI, No. 48 at p. 5; Morrison, No. 58 at p. 6;
Goodman, No. 50 at p. 5) Rheem also doubted that the difference in
efficiency between non-condensing and condensing gas furnaces was only
13 points, a FER of 380 versus 393, as presented in the DOE's
preliminary analysis. (Rheem, No. 43 at p. 96) Mortex calculated that
their manufactured home, non-weatherized, non-condensing gas furnace
had an FER of 420, not 295 as suggested by the DOE. Mortex also stated
that published data used to calculate FER values were generated using
ASHRAE Standard 103, not AMCA Standard 210, and that calculating FER
based on published data may not be the best approach. (Mortex, No. 59
at p. 3; Mortex, No. 43 at p. 25) In contrast, Ingersoll Rand stated
that the baseline FER presented in the preliminary analysis was
consistent with the figures presented in AHRI Standard 210/240.
(Ingersoll Rand, No. 57 at pp. A-7) Unico emphasized that the DOE
should consider the broad range of designs fitting the ``baseline''
definition, lest the selected FER only be achievable by one
manufacturer's design. (Unico, No. 43 at p. 79) Mortex disagreed with
the DOE's key product approach, arguing that the selected product
classes will have huge variation in efficiency (i.e., baseline FER).
(Mortex, No. 43 at p. 50) Manufacturers also provided additional
baseline FER estimates during manufacturer interviews.
Some manufacturers also requested that DOE alter FER to better
reflect unit capacity. Goodman suggested that DOE should consider using
only one metric for all furnace fan capacities falling within the
residential range (< 130 kBtuh) after making adjustments to the metric
to include higher capacity units. (Goodman, No. 50 at p. 2)
Alternatively, Mortex recommended that DOE should set maximum FER
values for sub-product classes based on cooling capacity and cabinet
size. (Mortex, No. 59 at p. 3) Similarly, AHRI stated that residential
furnace fans having a 5-ton capacity also have higher FERs and
recommended that DOE adjust baseline FER values to include the largest-
capacity fan within a product class. (AHRI, No. 48 at p. 2) Rheem
calculated FER for 19 models of gas-fired furnaces that used the same
blower housing design, and it found that FER was generally not
dependent on capacity. A graphic summary of Rheem's results are
available in the written comment that Rheem submitted.\26\ (Rheem, No.
54 at p. 5).
---------------------------------------------------------------------------
\26\ Publically available at: http://www.regulations.gov/#
!documentDetail;D=EERE-2010-BT-STD-0011-0054.
---------------------------------------------------------------------------
DOE evaluated the feedback it received and used the data provided
by interested parties to generate new FER values and to revise its
baseline, intermediate efficiency levels, and max-tech FER estimates.
DOE's revisions included FER results for furnace fan models that span
the capacity range of residential products. After reviewing all of the
available FER values based on new data, DOE concluded that FER can best
be represented as a linear function of airflow capacity (i.e., a first
constant added to airflow multiplied by a second constant). The slope
characterizes the change in FER for each unit of airflow capacity
increase, and the y-intercept represents where the FER line intersects
the y-axis (where airflow capacity is theoretically zero). DOE proposes
to use such linear functions to represent FER for the different
efficiency levels of the different product classes. A more detailed
description of the analysis and the methodology DOE used to generate
FER equations for each efficiency level can be found in chapter 5 of
the NOPR TSD.
Table IV.5 shows the revised FER baseline efficiency levels
estimates that DOE used for the NOPR.
Table IV.5--NOPR Baseline FER Estimates
------------------------------------------------------------------------
Product class FER* (W/1000 cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-condensing FER = 0.057 x QMax + 362 .
Gas Furnace Fan.
Non-Weatherized, Condensing Gas FER = 0.057 x QMax + 395.
Furnace Fan.
Weatherized Non-Condensing Gas FER = 0.057 x QMax + 271.
Furnace Fan.
Non-Weatherized, Non-Condensing FER = 0.057 x QMax + 336.
Oil Furnace Fan.
Electric Furnace/Modular Blower FER = 0.057 x QMax + 331.
Fan.
Manufactured Home Non- FER = 0.057 x QMax + 271.
weatherized, Non-condensing Gas
Furnace Fan.
[[Page 64090]]
Manufactured Home Non- FER = 0.057 x QMax + 293.
weatherized, Condensing Gas
Furnace Fan.
Manufactured Home Electric FER = 0.057 x QMax + 211.
Furnace/Modular Blower Fan.
Manufactured Home Weatherized Reserved.
Gas Furnace Fan.
Manufactured Home Non- Reserved.
Weatherized Oil Furnace Fan.
------------------------------------------------------------------------
* QMax is the airflow, in cfm, at the maximum airflow-control setting
measured using the proposed DOE test procedure. 78 FR 19606, 19627
(April 2, 2013).
b. Percent Reduction in FER
For the preliminary analysis, DOE determined average FER reductions
for each efficiency level for a subset of key product classes and
applied these reductions to all product classes. DOE found from
manufacturer feedback and its review of publically-available product
literature that manufacturers use similar furnace fan components and
follow a similar technology path to improving efficiency across all
product classes. DOE does not expect the percent reduction in FER
associated with each design option, whether commercially available or
prototype, to differ across product classes as a result. Table IV.6
includes DOE's preliminary analysis estimates for the percent reduction
in FER from baseline for each efficiency level.
Table IV.6--Preliminary Analysis Estimates for Percent Reduction in FER
From Baseline for Each Efficiency Level
------------------------------------------------------------------------
Percent reduction
Efficiency level (EL) Design option in FER from
baseline
------------------------------------------------------------------------
1......................... Improved PSC............. 2
2......................... Inverter-Driven PSC...... 10
3......................... Constant-Torque BPM Motor 45
4......................... Constant-Airflow BPM 59
Motor + Multi-Staging.
5......................... Premium Constant-Airflow * 63
BPM Motor + Multi-
Staging + Backward-
Inclined Impeller.
------------------------------------------------------------------------
* DOE estimates that implementing a backward-inclined impeller at EL 5
results in a 10% reduction in FER from EL 4. This is equivalent to a
reduction of 4% percent of the baseline FER. The total percent
reduction in FER from baseline for EL 5 includes the 59% reduction
from EL 4 and the 4% net reduction of the backward-inclined impeller
for a total percent reduction of 63% from baseline.
Interested parties questioned DOE's estimates for the FER reduction
for high-efficiency motors. NMC commented that the company offers a
special high-efficiency PSC motor line called PEP[supreg] that can
achieve 10 points of efficiency improvement over standard PSC motors
rather than 1.6-percent improvement shown in the preliminary analysis.
(NMC, No. 60 at p. 1) Other interested parties provided similar
estimates for improved PSC motors during manufacturer interviews. Unico
noted that the high-efficiency BPM motor technology options in the
Engineering Analysis (constant-torque or constant-air-flow BPM) do not
improve fan efficiency as much as DOE's percent reduction in FER
estimates suggest. (Unico, No. 43 at p. 109) Lennox suggested that a
more accurate estimate of reduction in FER resulting from PSC to X13
motor conversions would be 30 percent as opposed to the 45 percent
presented in the preliminary analysis. (Lennox, No. 47 at p. 2) Goodman
provided a reference to a report from Advanced Energy of North Carolina
\27\ that stated that replacing PSC motors with full-ECM motors results
in a 51-percent reduction in full-load efficiency. (Goodman, No. 50 at
p. 3) Goodman would expect that the reduction in FER for X13 and ECM
conversions be lower than presented in the preliminary analysis such as
35-50 percent for X13s and 45-50 percent for ECM. (Goodman, No. 50 at
p. 5)
---------------------------------------------------------------------------
\27\ Fitzpatrick and Murray, Residential HVAC Electronically
Commutated Motor Retrofit Report (2012) (Available at: http://www.advancedenergy.org/ci/services/testing/files/Residential%20HVAC%20Electronically%20Commutated%20Motor%20Retrofit%20Final%20Report.pdf).
---------------------------------------------------------------------------
DOE reviewed its estimates of percent reduction in FER from
baseline for each efficiency level based on interested party feedback.
In addition to the comments presented above, interested parties also
provided FER values for higher-efficiency products in manufacturer
interviews. DOE used these data to revise its percent reduction
estimates. Table IV.7 shows DOE's revised estimates for the percent
reduction in FER for each efficiency level that DOE used in the NOPR
analyses. For a given product class, DOE applied the percent reductions
below to both the slope and y-intercept of the baseline FER equation to
generate FER equations to represent each efficiency level above
baseline.
[[Page 64091]]
Table IV.7--NOPR Estimates for Percent Reduction in FER From Baseline
for Each Efficiency Level
------------------------------------------------------------------------
Percent reduction
Efficiency level (EL) Design option in FER from
baseline
------------------------------------------------------------------------
1......................... Improved PSC............. 10
2......................... Inverter-Driven PSC...... 25
3......................... Constant-Torque BPM Motor 42
4......................... Constant-Torque BPM Motor 50
and Multi-Staging.
5......................... Constant-Airflow BPM 53
Motor and Multi-Staging.
6......................... Premium Constant-Airflow * 57
BPM Motor and Multi-
Staging + Backward-
Inclined Impeller.
------------------------------------------------------------------------
* DOE estimates that implementing a backward-inclined impeller at EL 6
results in a 10% reduction in FER from EL 5. This is equivalent to a
4% percent reduction in FER from baseline. The total percent reduction
in FER from baseline for EL 6 includes the 53% reduction from EL 5 and
the 4% net reduction from the backward-inclined impeller for a total
percent reduction of 57% from baseline.
DOE believes that these revised estimates are consistent with the
comments received from interested parties. Note that EL 4 in the table
above is a newly proposed efficiency level. As discussed in section
IV.A.3, DOE analyzed multi-staging as a separate technology option. For
the NOPR, DOE also has evaluated a separate efficiency level
representing applying multi-staging to a furnace fans with a constant-
torque BPM motor. DOE recognizes that the percent reduction in FER for
inverter-driven PSC increased considerably. However, since the baseline
FER values increased for the NOPR, DOE believes that the percent
reductions cannot directly be compared to those proposed in the
preliminary analysis. DOE notes that the cited reductions may not
appear to be fully consistent with stakeholder comments in part because
they are FER reductions rather than reductions in full-load electrical
efficiency. DOE expects that FER reductions may be significantly higher
than full-load input power reductions, especially for efficiency levels
based on use of BPM motors, because FER includes electrical energy
consumption at reduced operating modes, for which these motors achieve
much greater power reduction than PSC designs.
2. Manufacturer Production Cost (MPC)
In the preliminary analysis, DOE estimated the manufacturer
production cost associated with each efficiency level to characterize
the cost-efficiency relationship of improving furnace fan performance.
The MPC estimates are not for the entire HVAC product because furnace
fans are a component of the HVAC product in which they are integrated.
The MPC estimates includes costs only for the components of the HVAC
product that impact FER, which DOE considered to be the:
Fan motor and integrated controls;
Primary control board (PCB);
Multi-staging components;
Impeller;
Fan housing; and
Components used to direct or guide airflow.
DOE separated the proposed product classes into high-volume and
low-volume product classes and generated high-volume and low-volume MPC
estimates to account for the increased purchasing power of high-volume
manufacturers.\28\
---------------------------------------------------------------------------
\28\ High-volume and low-volume product classes are discussed
further in chapter 5 of the NOPR TSD.
---------------------------------------------------------------------------
a. Production Volume Impacts on MPC
Morrison stated that DOE's assumption that large manufacturers have
the same purchasing power across product types, even when those
products are low volume, may or may not be true, because low-volume
products may run through different processes. (Morrison, No. 43 at p.
118) Rheem stated that, in some cases, it uses the same blower system
in low-volume products that it uses in high-volume products. (Rheem,
No. 43 at p. 118) Unico commented that it uses different manufacturing
processes than those presented in DOE's analysis and recommended that a
different metric should be used to evaluate technologies that differ by
process. (Unico, No. 43 at p. 122) Mortex stated that the motor costs
for smaller manufacturers can be 15-20 percent greater than for large
manufacturers because they do not, as stated by NEMA, benefit from
economies of scale. (Mortex, No. 59 at p. 3; NEMA, No. 43 at p. 113)
DOE recognizes that high-volume manufacturers may use different
processes to manufacture low-volume products than to manufacture high-
volume products. However, DOE finds that 94 percent of the MPC for
furnace fans is attributed to materials (including purchased parts like
fan motors), which are not impacted by process differences. DOE's
estimates also already account for process differences between
manufacturers for high-volume and low-volume products. The products
that DOE evaluated to support calculation of MPC included furnace fans
from various manufacturers, including both high-volume and low-volume
models. Observed process differences are reflected in the bills of
materials for those products. DOE agrees with Mortex that low-volume
manufacturers experience higher costs for materials, such as motors.
DOE believes that its approach to distinguish between high-volume and
low-volume product classes accounts for the expected difference in MPC
between high-volume and low-volume product classes.\29\
---------------------------------------------------------------------------
\29\ High-volume and low-volume product classes are discussed
further in chapter 5 of the NOPR TSD.
---------------------------------------------------------------------------
b. Inverter-Driven PSC Costs
In the preliminary analysis, DOE estimated that the MPC of inverter
control for a PSC motor is $10-$12, depending on production volume.
Ingersoll Rand stated that an inverter cannot be added to a PSC for
only $10-$12. (Ingersoll Rand, No. 57 at pp. A-7) NMC also questioned
the validity of the inverter controller cost estimate, stating that the
cost of an inverter driven controller is significantly higher than $12,
unless DOE is erroneously equating inverters to wave chopper
technology, which is far less efficient. (NMC, No. 60 at p. 1)
DOE's preliminary analysis estimate for the MPC of an inverter-
driven PSC was indeed based on a wave chopper drive. DOE finds that
more sophisticated and costly inverters are required to achieve the
efficiencies reflected in DOE's analysis. Consequently, DOE has
adjusted its cost estimate for PSC inverter technology. DOE gathered
more information about the cost of inverters that are suited for
improving furnace fan efficiency. In addition to receiving cost
estimates during manufacturer interviews, DOE also reviewed its cost
estimates for inverter drives used in other residential applications,
such as clothes washers. DOE finds that $30 for high-volume
[[Page 64092]]
products and $42.29 for low-volume products are better estimates of the
MPC for inverters used to drive PSC furnace fan motors. Accordingly,
DOE has updated these values for the NOPR.
c. Furnace Fan Motor MPC
Manufacturers stated that DOE underestimated the incremental MPC to
implement high-efficiency motors in HVAC products, other than oil
furnaces. (Rheem, No. 54 at p. 10) Most manufacturers stated that the
cost increase to switch from PSCs to more-efficient motor technologies
was at least twice that of the DOE's estimate. (Lennox, No. 43 at p.
23, 113 and No. 47 at p. 1; Mortex, No. 43 at p. 25; Rheem, No. 43 at
p. 112; Goodman, No. 50 at p. 3) AHRI and Morrison claimed incremental
costs associated with an X13 motor should be $60, instead of the $22.73
reported by DOE and in the case of ECMs, $133 instead of the $91.95
reported by DOE. (AHRI, No. 48 at p. 6; Morrison, No. 58 at p. 6)
Nidec, a motor manufacturer, commented that DOE should directly contact
motor suppliers to confirm motor prices. (NMC, No. 43 at p. 112) Regal
Beloit requested DOE review its assumption on motor horsepower range to
explain why Rheem and other manufacturers claim their motors cost twice
what is shown in DOE's preliminary analysis. (Regal Beloit, No. 52 at
p. 242) DOE received additional feedback regarding its estimated motor
prices during NOPR-phase manufacturer interviews.
Based upon the input received from interested parties, DOE adjusted
its motor cost estimates. In general, DOE increased its estimates by
approximately 10 to 15 percent, which is consistent with the feedback
DOE received. Details regarding DOE's revised motor MPC estimates are
provided in chapter 5 of the NOPR TSD.
d. Motor Control Costs
In the preliminary analysis, DOE estimated that the MPC of the
primary control board (PCB) increases with each conversion to a more-
efficient motor type (i.e., from PSC to constant-torque BPM motor and
from constant-torque to constant-airflow BPM motor). Both Lennox and
Goodman confirmed that higher-efficiency motors require more
sophisticated and costly controls. These manufacturers stated that
control costs for an X13 motor application increase from 50-100
percent, as compared to controls for PSC motors. (Lennox, No. 47 at p.
8; Goodman, No. 50 at p. 2) Rheem stated that the controls of one of
its modulating furnace models that uses a variable speed furnace fan
are costly, although no quantified estimate was provided. (Rheem, No.
54 at p. 7) Rheem also responded that Regal Beloit's Evergreen \30\
motors, which are designed as replacements for PSCs, may be used with
the same primary controls developed for the original PSC motor.\31\
(Rheem, No. 54 at p. 7) Ingersoll Rand stated that boards supporting
modulating motors and communication are the most costly. (Ingersoll
Rand, No. 57 at pp. A-2) DOE also received feedback regarding the cost
of the PCBs associated with each motor type during manufacturer
interviews. In general, manufacturers commented that the PCBs used with
constant-torque BPM motors are more costly. However, other manufacturer
interview participants stated that the MPC of the PCB used with these
motors should be equivalent or even less expensive than the PCBs used
with PSC motors.
---------------------------------------------------------------------------
\30\ Evergreen is a constant-airflow BPM motor that is meant to
be installed as an on-site replacement of outdated PSC motors.
\31\ The constant-airflow BPM motors that DOE analyzed for EL 5
and EL 6 cannot be used with the same primary controls for a PSC
motor. See chapter 3 and chapter 5 of the NOPR TSD.
---------------------------------------------------------------------------
DOE agrees with interested parties that the MPC of the PCB needed
for a constant-airflow BPM motor is higher than for the PCB paired with
a PSC motor. DOE maintained this assumption for the NOPR. DOE estimates
that the MPC of a PCB paired with a constant-airflow BPM motor is
roughly twice as much as for a PCB paired with a constant-torque BPM
motor or PSC. DOE also agrees with the interested parties that stated
that the MPC for a PCB paired with a constant-torque BPM motor is
equivalent to that of a PCB needed for a PSC motor. DOE revised its
analysis to reflect this assumption in the NOPR as a result.
e. Backward-Inclined Impeller MPC
Interested parties commented that DOE's preliminary analysis
estimate for the incremental MPC associated with implementing a
backward-inclined impeller, in combination with a premium constant-
airflow BPM motor and multi-staging, is too low. (AHRI, No. 48 at p. 2;
Ingersoll Rand, No. 57 at p. 2) Morrison and AHRI commented that
tighter tolerances and increased impeller diameter lead to increased
material costs, as well as increased costs associated with motor mount
structure and reverse forming fabrication processes. (AHRI, No. 48 at
p. 3; Morrison, No. 43 at p. 120) Rheem and Morrison stated that the
dimensional clearance for a backward-inclined impeller would be 0.04-
0.05 inches instead of 0.24-0.5 for a forward-curved impeller. (Rheem,
No. 54 at p. 8; Morrison, No. 58 at p. 3) This increase in product size
and tolerance could lead to increased production costs. Ingersoll Rand,
Morrison, and Rheem all cited increased material, assembly controls,
reverse forming processes, and the strengthening of motor mounting
systems (necessary at increased motor speeds) as potential costs
associated with backward-inclined impellers. (Ingersoll Rand, No. 57 at
pp. A-3; Morrison, No. 58 at p. 4; Rheem, No. 54 at p. 8)
DOE reviewed its manufacturer production cost estimates for the
backward-inclined impeller technology option based on interested party
comments. During manufacturer interviews, some manufacturers reiterated
or echoed that DOE's estimated MPC for backward-inclined impellers is
too low, but they did not provide quantification of the total MPC of
backward-inclined impellers or the incremental MPC associated with the
changes needed to implement them. Other manufacturers did quantify the
MPC of backward-inclined impeller solutions and their estimates were
consistent with DOE's preliminary analysis estimate. Consequently, DOE
did not modify its preliminary analysis estimated MPC for backward-
inclined impellers.
D. Markups Analysis
DOE uses manufacturer-to-consumer markups to convert the
manufacturer selling price estimates from the engineering analysis to
consumer prices, which are then used in the LCC and PBP analysis and in
the manufacturer impact analysis. Before developing markups, DOE
defines key market participants and identifies distribution channels.
Generally, the furnace distribution chain (which is relevant to the
residential furnace fan distribution chain) includes distributors,
dealers, general contractors, mechanical contractors, installers, and
builders. For the markups analysis, DOE combined mechanical
contractors, dealers, and installers in a single category labeled
``mechanical contractors,'' because these terms are used
interchangeably by the industry. Because builders serve the same
function in the HVAC market as general contractors, DOE included
builders in the ``general contractors'' category.
In the preliminary analysis, DOE used the same distribution
channels for furnace fans as it used for furnaces in the recent energy
conservation standards rulemaking for those products. 76 FR 37408,
37464 (June 27, 2011). DOE believes that this is an appropriate
approach, because the vast
[[Page 64093]]
majority of the furnace fans covered in this rulemaking is a component
of a furnace. Manufactured housing furnace fans in new construction
have a separate distribution channel in which the furnace (and fan) go
directly from the furnace manufacturer to the producer of manufactured
homes.
In the preliminary analysis, DOE requested comment on whether the
market for replacement fans is large enough to merit a separate
distribution channel, and, if so, what would be an appropriate
assumption for its market share. Goodman expressed their belief that
there is no market for replacing and/or upgrading only the furnace fan
component of the furnace. (Goodman, No. 50 at p. 3) Goodman and AHRI
commented that they are opposed to field replacements and retrofits of
motors and blowers because such practices could have product safety
implications. (Goodman, No. 50 at p. 3; AHRI, No. 48 at p. 4) In
contrast, Nidec recommended that DOE should consider a distribution
channel for replacing furnace fans in already installed equipment.
(Nidec, No. 60 at pp. 2-3)
DOE has tentatively concluded that there is insufficient evidence
of a replacement market for furnace fans.
DOE develops baseline and incremental markups to transform the
manufacturer selling price into a consumer product price. DOE uses the
baseline markups, which cover all of a distributor's or contractor's
costs, to determine the sales price of baseline models. Incremental
markups are separate coefficients that DOE applies to reflect the
incremental cost of higher-efficiency models.
AHRI and Morrison voiced concerns with DOE's approach to
incremental markups. (AHRI, No. 48 at p. 6; Morrison, No. 58, at p. 7)
These commenters stated that while the concept of profits constrained
to the long-run cost of capital is a basic tenet of microeconomics, it
has not been validated empirically and that there are enough exceptions
and alternative concepts to question the use of that concept in a
normative manner. AHRI also stated that DOE's basic theoretical
framework requires that the relevant industry must be highly
competitive, and AHRI believes that there are reasons to question this
assumption in the context of residential furnace fans. Goodman
concurred with the concerns noted by AHRI in regards to the markups
analysis. (Goodman, No. 50 at p. 5)
DOE acknowledges that detailed information on actual distributor
and contractor practices would be helpful in evaluating their markups
on furnaces. However, DOE finds it implausible that profit per unit
would increase in the medium and long run if the cost of goods sold
increases due to efficiency standards. Thus, in the absence of evidence
to the contrary, DOE continues to assume that markups would decline
slightly, leaving profit unchanged, and, thus, it uses lower markups on
incremental costs of higher-efficiency products. Regarding the
competitiveness of the HVAC distribution industry and the HVAC
contractor industry, DOE does not have any empirical measures of
competitiveness, but its impression, based on experience with these
industries, is that there is sufficient competition to validate DOE's
assumptions with respect to the difficulty of distributors and
contractors increasing profits as a result of standards.
AHRI and Morrison disagreed with DOE's prediction that margins
should be going up over time as equipment prices decrease. (AHRI, No.
48 at p. 6; Morrison, No. 58, at p. 7) DOE did not project a decrease
in furnace fan prices in the preliminary analysis, and the markups are
assumed to remain the same over time.
Lennox believes that DOE's claim that incremental costs will be
discounted on markups through the distribution chain by approximately
50 percent understates the amount of increased costs that manufacturers
will seek to pass through to consumers. (Lennox, No. 47 at p. 1) DOE
does not apply a separate markup on the incremental manufacturer
selling price. DOE assumes that manufacturers will be able to pass on
the full incremental costs of higher-efficiency furnace fans.
Morrison stated that the markups analysis does not accurately
calculate the costs for installers/contractors. Morrison noted that
with increase in efficiency standards, there will be added labor and an
associated cost to assure the buyer of the efficiency gains; the added
labor of installation and commissioning is not included in the markups
analysis, and, thus, the final markup is too small. (Morrison, No. 58,
at p. 6) In response, the labor for installation and commissioning,
including specific costs for higher-efficiency furnace fans, is
included in the LCC and PBP analysis, as DOE assumes that this cost is
not part of the consumer cost of the furnace itself.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of residential furnace fans in representative U.S.
homes and to assess the energy savings potential of increased furnace
fan efficiency. In general, DOE estimated the annual energy consumption
of furnace fans at specified energy efficiency levels across a range of
climate zones. The annual energy consumption includes the electricity
use by the fan, as well as the change in natural gas, liquid petroleum
gas (LPG), electricity, or oil use for heat production as result of the
change in the amount of useful heat provided to the conditioned space
as a result of the furnace fan. The annual energy consumption of
furnace fans is used in subsequent analyses, including the LCC and PBP
analysis and the national impact analysis.
DOE used the existing DOE test procedures for furnaces and air
conditioners to estimate heating and cooling mode operating hours for
the furnace fan. The power consumption of the furnace fan is determined
using the individual sample housing unit operating conditions (the
pressure and airflow) at which a particular furnace fan will operate
when performing heating, cooling, and constant-circulation functions.
The methodology and the data are fully described in chapter 7 of the
NOPR TSD.
DOE used the Energy Information Administration's (EIA) Residential
Energy Consumption Survey (RECS) \32\ to establish a sample of
households using furnace fans for each furnace fan product class. RECS
data provide information on the age of furnaces with furnace fans, as
well as heating and cooling energy use in each household. The survey
also includes household characteristics such as the physical
characteristics of housing units, household demographics, information
about other heating and cooling products, fuels used, energy
consumption and expenditures, and other relevant data. DOE uses the
household samples not only to determine furnace fan annual energy
consumption, but also as the basis for conducting the LCC and PBP
analysis.
---------------------------------------------------------------------------
\32\ Energy Information Administration, 2009 Residential Energy
Consumption Survey (Available at: http://www.eia.doe.gov/emeu/recs).
---------------------------------------------------------------------------
For the NOPR, DOE used RECS 2009 \33\ heating and cooling energy
use data to determine heating and cooling operating hours. DOE used
data from RECS 2009, American Housing Survey (AHS) 2011,\34\ and the
Census Bureau \35\ to project household weights in 2019, which is the
anticipated compliance date of any new energy efficiency
[[Page 64094]]
standard for residential furnace fans. These adjustments account for
housing market changes since 2009, as well as for projected product and
demographic changes.
---------------------------------------------------------------------------
\33\ See http://www.eia.gov/consumption/residential/data/2009/.
\34\ See http://www.census.gov/housing/ahs/data/national.html.
\35\ See http://www.census.gov/popest/.
---------------------------------------------------------------------------
The power consumption (and overall efficiency) of a furnace fan
depends on the speed at which the motor operates, the external static
pressure difference across the fan, and the airflow through the fan. To
calculate furnace fan electricity consumption, DOE determined the
operating conditions (the pressure and airflow) at which a particular
furnace fan will operate in each RECS housing unit when performing
heating, cooling, and constant-circulation functions.
DOE gathered field data from available studies and research reports
to determine an appropriate distribution of external static pressure
(ESP) values. DOE compiled over 1,300 field ESP measurements from
several studies that included furnace fans in single-family and
manufactured homes in different regions of the country. The average ESP
value in the cooling operating mode from these studies results in an
average 0.65 in. wc for single-family households and 0.30 in. wc for
manufactured homes.
DOE determined furnace fan operating hours in heating mode by
calculating the furnace burner operating hours and adjusting them for
delay times between burner and fan operation. Burner operating hours
are a function of annual house heating load, furnace efficiency, and
furnace input capacity.
EEI stated that DOE should take into consideration the impact of
more-stringent building energy codes when estimating energy use
baselines and projected energy savings. (EEI, No. 65 at p. 4) In
response, DOE's analysis accounts for the likelihood that, compared to
recently-built homes in the RECS sample, new homes in the year of
compliance will have both a lower heating load per square foot and more
square footage using the building shell efficiency index from AEO 2012.
In the preliminary analysis, to estimate use of constant
circulation in the sample homes, DOE evaluated the available studies,
which include a 2010 survey in Minnesota \36\ and a 2003 Wisconsin
field monitoring of residential furnaces.\37\ DOE did not use these
data directly, however, because it believes they are not representative
of consumer practices for the U.S. as a whole. In these northern
States, many homes have low air infiltration, and there is a high
awareness of indoor air quality issues, which could lead to significant
use of constant circulation. To develop appropriate assumptions for
other regions, DOE modified the data from these States using
information from manufacturer product literature (which suggests very
little use in humid climates) and consideration of climate conditions
in other regions.
---------------------------------------------------------------------------
\36\ Provided in CEE, No. 22 at pp. 1-2.
\37\ Pigg, S., ``Electricity Use by New Furnaces: A Wisconsin
Field Study'' (October 2003) (Available at http://www.doa.state.wi.us/docview.asp?docid=1812).
---------------------------------------------------------------------------
Several parties stated that DOE overestimated the use of constant-
circulation mode, thereby overcounting the energy savings from higher-
efficiency furnace fans. AHRI commented that continuous circulation is
used significantly less than estimated in DOE's technical support
document. In particular, AHRI pointed out that DOE's estimate of
constant-circulation hours is based on surveys taken in only two
States--Wisconsin and Minnesota--where there is high occurrence of
indoor air quality issues that make use of the continuous fan feature
more likely. To overcome this perceived deficiency, AHRI recommended a
study of constant-circulation hours in areas of the country that do not
have high occurrences of indoor air quality issues, leading to an
allocation that is more representative of behavior in the U.S. (AHRI,
No. 48 at p. 4) Ingersoll Rand also stated that Wisconsin is not a good
representation of the full national population, noting that DOE
partially acknowledges this by assuming that the North is different
from the South in terms of the use of constant circulation. (Ingersoll
Rand Residential Solutions, No. 57, at p. 8) Goodman concurred that the
values proposed for constant-circulation hours are unrealistically
high. Based on Goodman's experience, the commenter stated that a more
typical value for the percentage of U.S. households that use the fan in
constant-circulation mode would likely be in the low single digits.
(Goodman, No. 50 at p. 3) Morrison also stated that allocation of a
large percentage of furnace fan time in the circulatory mode (21
percent of total time) is excessive. (Morrison, No. 58, at p. 7)
In contrast, CA IOUs stated that constant-circulation mode on the
air handler is a primary means for mechanical ventilation of homes. CA
IOUs argued that as States increasingly adopt building codes that call
for more airtight building envelopes, the need for mechanical
ventilation increases as natural ventilation decreases. Based upon this
reasoning, CA IOUs stated that 400 hours per year in constant-
circulation mode (approximately the average that DOE estimated for non-
weatherized gas furnace fans) would be a conservative estimate. (CA
IOU's, No. 56, at p. 3) NEEA stated that based on recent trends in
ventilation and in the sales of filtration systems, there is a
substantial increase in the use of constant circulation, especially in
new home construction. (Transcript, No. 43 at p. 193)
DOE acknowledges that it would be desirable to have additional data
on the use of constant circulation in other parts of the country, but
DOE was not able to conduct a study as suggested by AHRI for the NOPR
analysis, nor did any commenter provide such data. DOE concurs with the
CA IOUs that the use of constant circulation may increase in new homes.
For the NOPR, DOE used the same assumptions for use of constant
circulation as it did in the preliminary analysis, which are also used
in the proposed DOE test procedure for furnace fans. 77 FR 28674 (May
15, 2012). The shares of homes using the various constant-circulation
modes are presented in Table IV.8. However, DOE also performed a
sensitivity analysis to estimate the effect on the LCC results if it
assumed half as much use of constant circulation. These results are
discussed in section V.B.1 of this notice.
Table IV.8--Constant-Circulation Proposed Test Procedure Assumptions Used for NOPR Analysis
----------------------------------------------------------------------------------------------------------------
Estimated
share of homes Estimated
Assumed in north and share of homes
Constant-circulation fan use average number south-hot dry in south-hot
of hours regions humid region
(percent) (percent)
----------------------------------------------------------------------------------------------------------------
No constant fan................................................. 0 84 97
Year-round...................................................... 7290 7 1
[[Page 64095]]
During heating season........................................... 1097 2 0.4
During cooling season........................................... 541 2 0.4
Other (some constant fan)....................................... 365 5 1
-----------------------------------------------
Total....................................................... .............. 100 100
----------------------------------------------------------------------------------------------------------------
Commenting on the preliminary analysis, EEI stated that DOE should
balance fan energy savings with the potential for additional fuel use
of the HVAC product. (EEI, No. 65 at p. 3) With improved fan
efficiency, there may be less heat from the motor, which means that the
heating system needs to operate more and the cooling system needs to
operate less. In response, DOE did account for the effect of improved
furnace fan efficiency on the heating and cooling load of the sample
homes. Goodman noted that DOE's assumptions are technically correct
with regard to the effect on heating or cooling requirements from the
change in fan energy consumption, and the adjustments appear to be
appropriate. (Goodman, No. 50 at p. 4)
In the preliminary analysis, DOE recognized that the energy savings
in cooling mode from higher-efficiency furnace fans used in some
higher-efficiency CAC and heat pumps was already accounted for in the
analysis related to the energy conservation standards for those
products. To avoid double-counting, the analysis for furnace fans does
not include furnace fan electricity savings that were counted in DOE's
analysis for CAC and heat pump products.
AHRI and Morrison commented that the LCC analysis includes furnace
fan operating hours and furnace fan power operation in the cooling mode
in the total energy consumption calculation. AHRI and Morrison noted
that regulated metrics such as SEER and Heating Seasonal Performance
Factor (HSPF) already address fan energy consumption in air
conditioners and heat pumps respectively. (AHRI, No. 48 at p. 6;
Morrison, No. 58, at p. 8) Morrison commented that including this
energy savings for this standard would result in the savings being
counted under two regulatory standards. Mortex commented that: (1) The
electricity used to circulate air in the summer is already being
accounted for as part of the SEER metric for central air conditioners
and heat pumps; (2) in the winter, the EAE metric for
furnaces accounts for all electricity being used, including by the
furnace fan; and (3) for heat pumps, the electricity used to circulate
air is accounted for in the winter heating mode by the HSPF metric.
(Mortex, No. 59, at pp. 1-2) Ingersoll Rand stated that heating and
cooling should not be combined, as it does not accurately portray the
cooling performance for all possible capacities and duplicates the
furnace fan inclusion in the SEER determination. (Ingersoll Rand
Residential Solutions, No. 57, at p. 1)
The standards for CAC and heat pump products that will be effective
in 2015 do not require a furnace with BPM motor-driven fan. However,
DOE's rulemaking analysis for CAC and heat pump products included
savings from those households purchasing a CAC or heat pump at SEER 15
or above, that would need to have an BPM motor-driven fan in their
furnace to achieve that efficiency level. The base-case efficiency
distribution of fans used in the current analysis includes the presence
of those BMP motor-driven fans in homes with the higher-efficiency CAC
or heat pumps. Because the energy savings from the considered fan
efficiency levels are measured relative to the base-case efficiencies,
any savings reported here for furnace fans are over and above those
counted in the CAC and heat pump rulemaking.
Recognizing the possibility of consumers using higher-efficiency
furnace fans more than baseline furnace fans, DOE included a rebound
effect in its preliminary analysis. DOE used a 2009 program evaluation
report from Wisconsin \38\ to estimate the extent to which increased
use of constant circulation under a standard requiring ECM furnace fans
is likely to cancel out some of the savings from such a fan.
---------------------------------------------------------------------------
\38\ State of Wisconsin, Public Service Commission of Wisconsin,
Focus on Energy Evaluation Semiannual Report, Final (April 8, 2009)
(Available at: http://www.focusonenergy.com/files/document_management_system/evaluation/emcfurnaceimpactassessment_evaluationreport.pdf).
---------------------------------------------------------------------------
Commenters presented differing views on the likelihood of a rebound
effect for furnace fans. Rheem believes that the Wisconsin study is
reasonable in its estimate of the fraction of households that may
switch to continuous circulation use under a standard requiring ECM
furnace fans. (Rheem, No. 54, at p. 13) Goodman does not believe there
has been a significant shift in terms of increased usage of continuous
fan with customers that have an ECM product versus an X13 product
versus a PSC product. (Goodman, No. 50 at p. 4) Ingersoll Rand
commented that if there were any comfort basis for the use of
continuous fan mode, more use might lead to a lower heating set-point
and a higher cooling set-point, offsetting the added energy consumption
for continuous fan. Ingersoll Rand commented that the rebound effect,
if it exists, is uncertain in direction and magnitude and should be
deleted from the analysis. (Ingersoll Rand Residential Solutions, No.
57, at p. 8)
DOE acknowledges that the magnitude of a rebound effect for furnace
fans across the country is uncertain. However, because there is some
evidence for the existence of a rebound effect, DOE prefers to include
such an effect rather than risk overstating the energy savings from
higher-efficiency furnace fans. The specific assumptions are described
in chapter 7 of the NOPR TSD.
F. Life-Cycle Cost and Payback Period Analysis
In determining whether an energy conservation standard is
economically justified, DOE considers the economic impact of potential
standards on consumers. 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
[[Page 64096]]
uses the following two metrics to measure consumer impacts:
Life-cycle cost (LCC) is the total consumer cost of an
appliance or product, generally over the life of the appliance or
product. The LCC calculation includes total installed cost (equipment
manufacturer selling price, distribution chain markups, sales tax and
installation cost), operating costs (energy, repair, and maintenance
costs), equipment lifetime, and discount rate. Future operating costs
are discounted to the time of purchase and summed over the lifetime of
the product.
Payback period (PBP) measures the amount of time it takes
consumers to recover the assumed higher purchase price of a more
energy-efficient product through reduced operating costs. Inputs to the
payback period calculation include the installed cost to the consumer
and first-year operating costs.
DOE analyzed the net effect of potential residential furnace fan
standards on consumers by calculating the LCC and PBP for each
efficiency level for each sample household. DOE performed the LCC and
PBP analyses using a spreadsheet model combined with Crystal Ball (a
commercially-available software program used to conduct stochastic
analysis using Monte Carlo simulation and probability distributions) to
account for uncertainty and variability among the input variables
(e.g., energy prices, installation costs, and repair and maintenance
costs). It uses weighting factors to account for distributions of
shipments to different building types and States to generate LCC
savings by efficiency level. Each Monte Carlo simulation consists of
10,000 LCC and PBP calculations. The model performs each calculation
using input values that are either sampled from probability
distributions and household samples or characterized with single-point
values. The analytical results include a distribution of points showing
the range of LCC savings and PBPs for a given efficiency level relative
to the base-case efficiency forecast. The results of DOE's LCC and PBP
analysis are summarized in section IV.F and described in detail in
chapter 8 of the NOPR TSD.
1. Installed Cost
The installed cost at each efficiency level is based on the MSP,
distribution chain markups, sales tax, and installation cost.
In the preliminary analysis, DOE found that the historic real
(i.e., adjusted for inflation) producer price index (PPI) for integral
horsepower electric motors has been relatively flat except for the last
few years, and elected to use prices held constant at the 2011 level as
the default price assumption to project future motor (and furnace fan)
prices. Goodman commented that specifically looking at fractional motor
(i.e., the type used in furnace fans) instead of integral horsepower
motors would provide a better comparison for furnace fans, and that
prices of such motors will not remain flat, but will continue to grow
in the trend from the last five years. (Goodman, No. 50 at p. 5)
For the NOPR, DOE evaluated the historic real PPI of fractional
horsepower electric motors instead of integral horsepower electric
motors. DOE found that this index has been decreasing except for the
last few years, when it started to increase. Given the uncertainty
about whether the recent trend will continue or instead revert to the
historical mean, for the NOPR, DOE elected to continue using constant
prices at the most recent level as the default price assumption to
project future prices of furnace fans. Appendix 10-C of the NOPR TSD
describes the historic PPI data.
In the preliminary analysis, DOE assumed that a fraction of ECM
furnace fan installations will require up to an hour of extra labor.
Goodman commented that based on its experience, at least two hours of
extra labor will be required in the majority of ECM furnace fan
installations. It notes this is particularly true in light of the fact
that many regulatory authorities, such as California Energy Commission
via Title 24, are requiring more verification of proper airflow, which
may be more challenging with advanced technologies such as ECM motors.
(Goodman, No. 50 at p. 5)
For the NOPR, DOE modified its approach and assumed that up to two
hours of extra labor will be required for all ECM furnace fan
installations. Details of the updated approach are available in chapter
8 of the NOPR TSD.
2. Operating Costs
In the preliminary analysis, DOE used the same maintenance costs
for furnace fans at different efficiency levels. To estimate rates of
fan motor failure, DOE developed a distribution of fan motor lifetime
(expressed in operating hours) by motor size using data developed for
DOE's small electric motors final rule (75 FR 10874 (March 9,
2010)).\39\ DOE then paired these data with the calculated number of
annual operating hours for each sample furnace, including constant
circulation for some of the homes. Replacement motor costs were based
on costs developed in the engineering analysis, and the labor time and
costs were based on RS Means data.40 41 DOE had no
information indicating the extent to which consumers would replace a
fan PSC motor with an ECM, so it assumed that when replacement is
necessary, consumers replace the failed motor with the same type of
motor.
---------------------------------------------------------------------------
\39\ See: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/sem_finalrule_tsd.html.
\40\ RS Means Company Inc., RS Means Residential Cost Data
(2012).
\41\ RS Means Company Inc., Facilities Maintenance & Repair Cost
Data (2012).
---------------------------------------------------------------------------
Nidec estimated that three percent of the motors operating the
furnace fan fail each year. (Nidec, No. 60 at pp. 2-3) DOE agrees that
the fan motor may fail and included motor replacement in the LCC and
PBP analysis.
AHRI, Goodman, and Rheem commented that higher-efficiency motors
have increased failure rates. AHRI and Rheem noted that the failure
rate for a high-efficiency motor is typically higher than the failure
rate of a PSC motor, because the electronics added to a high-efficiency
motor introduce new failure modes associated with the life of
electronic controls in damp, very cold, and very hot conditions. (AHRI,
No. 48 at p. 6; Rheem, No. 54, at p. 14) Goodman commented that
generally, more complex motors contain more components that can
potentially break, which is true of the additional controls in X13 and
ECM technologies. The commenter recommended that DOE estimate that
service requirements will be 20 to 50 percent greater for higher-
efficiency motors and related controls, and that the cost of such
service will be more for X13 and ECM than for PSC motors. Goodman also
suggested that DOE should use a reduced lifetime (by five to ten
percent) for X13 and ECM furnace fan motors, as PSC motor technologies
are very mature and X13 and ECM are relatively young. (Goodman, No. 50
at p. 6)
DOE agrees that the electronics of higher-efficiency motors are
likely to have increased failure rates. For the NOPR, DOE included
repair to electronics for PSC motors with controls, constant-torque BPM
motors, and especially constant-airflow BPM motors. DOE added an extra
cost for the cases that require control updates for these efficiency
levels. DOE also applied an additional labor hour to account for cases
when it is necessary to replace the motors for the constant-torque BPM
and constant-airflow BPM efficiency levels. See chapter 8 of the NOPR
TSD for further details.
[[Page 64097]]
DOE did not have a firm basis for quantifying the degree to which
constant-torque BPM motors and constant-airflow BPM motors have a
shorter lifetime than PSC motors. Although DOE used the same motor
lifetime for each fan efficiency level in terms of total operating
hours, the lifetime in terms of years is lower for constant-torque BPM
and constant-airflow BPM motors, because they are more frequently used
in multi-stage heating mode. In addition, DOE included additional labor
hours to repair constant-torque BPM and constant-airflow BPM motors, as
well as higher equipment cost for the BPM motors. Thus, on average,
consumers with constant-torque BPM motors or constant-airflow BPM
motors have higher life-cycle repair costs.
Goodman commented that DOE excluded annual repair and maintenance
costs from its payback analyses, and it believes those annualized costs
should be included. (Goodman, No. 50 at p. 6) In response, DOE's
rulemaking analysis, and this NOPR, use a simple payback period, which
does not account for changes in operating expense over time. This
payback period is the amount of time it takes the consumer to recover
the additional installed cost of more-efficient products, compared to
baseline products, through energy cost savings. Repair costs are
generally most significant in the later years of a product's lifetime.
Thus, they are not necessarily relevant to the payback periods that
consumers actually experience.
3. Other Inputs
DOE modeled furnace fan lifetime based on the distribution of
furnace lifetimes developed for the recent energy conservation
standards rulemaking for furnaces.\42\ 76 FR 37408, 37476-77 (June 27,
2011). DOE used the same lifetime for furnace fans at different
efficiency levels because there are no data that indicate variation of
lifetime with efficiency. However, DOE modeled fan motor failure and
replacement as a repair cost that affects a certain percentage of
furnace fans, as discussed above. Ingersoll Rand commented that there
should be no reason for an electric furnace to have a shorter lifetime
than a fossil-fueled furnace. (Ingersoll Rand Residential Solutions,
No. 57, at p. 9) For the NOPR analysis, DOE assumed that the lifetime
for the fans installed in electric furnaces and gas furnaces is the
same.
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\42\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_final_rule_tsd.html.
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DOE used the same distribution of discount rates for furnace fans
as it used in the recent energy conservation standards rulemaking for
furnaces. For replacement furnaces, the average rate is 5.0 percent.
4. Base-Case Efficiency Distribution
To estimate the share of consumers that would be affected by an
energy conservation standard at a particular efficiency level, DOE's
LCC and PBP analysis considers the projected distribution (i.e., market
shares) of product efficiencies in the first compliance year under the
base case (i.e., the case without new or amended energy conservation
standards). For the preliminary analysis, DOE found very limited data
with which to estimate either current shares or recent trends. DOE
requested comments on its estimate of the base-case efficiency
distribution of furnace fans in 2019, as well as data that might
support use of different assumptions.
Several parties commented that DOE's estimates of constant-torque
BPM motor and constant-airflow BPM motor market growth seem overly
optimistic. Ingersoll Rand commented that DOE overestimated the future
market share of these motors. (Ingersoll Rand Residential Solutions,
No. 57, at p. 2) Lennox stated that the preliminary TSD's market growth
assumptions are overstated for both constant-torque and variable-speed
(ECM) motors. Lennox believes other factors increased adoption of
higher-efficiency products between 2009 and 2011, namely, that was the
period when a $1,500 Federal tax credit was available for furnaces with
an AFUE rate of 95 percent or more. (Lennox, No. 47 at p. 2) Morrison
commented that the projections for ECM market penetration are based on
information from 2010 that presents an overly positive picture for the
growth absent incentives. It stated that the market share of ECM motors
has fallen in 2012 and will likely remain around that level without
additional incentives, although it noted that regional furnace and air
conditioner standards would likely increase market penetration of ECM
and X13 motors. (Morrison, No. 58 at p. 8) AHRI and Morrison conceded
that DOE's regional standards for central air conditioners, heat pumps
and furnaces may slightly increase the usage of ECM and X13 motors, but
such an increase would still not match DOE's projected ECM market
share. (AHRI, No. 48 at p. 4; Morrison, No. 58 at p. 8) Rheem presented
a forecast from its procurement group that shows the share of variable-
speed motors declining to the 20-25 percent range in 2012 and remaining
at that level in 2013. (Rheem, No. 54, at p. 13) EEI stated that DOE
should take into consideration the impact of tax incentives for the
purchase of energy-efficient heating and cooling equipment when
estimating energy use baselines and projected energy savings. (EEI, No.
65 at p. 4) AHRI included a chart showing a declining trend in the
usage of ECM and X13 motors after the expiration of the Federal tax
credits. (AHRI, No. 48 at p. 4)
AHRI commented that current trends suggest that the ECM and X13
market shares will be 25-30 percent and 10-15 percent respectively by
2019, assuming there are no further tax credit incentives in coming
years. (AHRI, No. 48 at p. 4) Goodman commented that DOE's assumed
market shares for X13 and ECM fans are significantly higher than
Goodman's estimates, and that recent values are probably skewed as a
result of Federal tax credits. Goodman estimates that about 70 percent
of shipments in 2019 are expected to be PSC, and ECM motors are likely
to be twice the volume of X13 motors (i.e., 20 percent ECM and 10
percent X13). (Goodman, No. 50 at p. 4)
For the NOPR, DOE reviewed the information provided by the
manufacturers and modified its estimate of market shares in 2019. The
NOPR analysis assumes that the combined market share of constant-torque
BPM fans and constant-airflow BPM fans will be 35 percent in 2019. The
shares are 13 percent for constant-torque BPM fans and 22 percent for
constant-airflow BPM fans. DOE estimated separate shares for
replacement and new home applications.
The market shares of efficiency levels within the constant-torque
BPM motor and constant-airflow BPM motor categories were derived from
AHRI data on number of models.\43\ No such data were available for the
PSC fan efficiency levels, so DOE used the number of models it tested
or could measure using product literature to estimate that 40 percent
of shipments are at the baseline level and 60 percent are improved PSC
fans. There are currently no models of PSC with a controls design, so
DOE assumed zero market share for such units. The details of DOE's
approach are described in chapter 8 of the NOPR TSD.
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\43\ DOE used the AHRI Directory of Certified Furnace Equipment
(Available at: http://www.ahridirectory.org/ahridirectory/pages/home.aspx) as well as manufacturer product literature.
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[[Page 64098]]
5. Rebuttable Presumption Payback Period
As discussed in section III.E.2, EPCA provides that a rebuttable
presumption is established that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. (42 U.S.C.
6295(o)(2)(B)(i)) The calculation of this so-called rebuttable
presumption payback period uses the same inputs as the calculation of
the regular PBP for each sample household, but it uses average values
instead of distributions, and the derivation of energy consumption and
savings only uses the parameters specified by the proposed DOE test
procedure for furnace fans rather than the method applied in the energy
use analysis (described in section IV.E), which considers the
characteristics of each sample household.
DOE's LCC and PBP analyses generate values that calculate the
payback period for consumers of potential energy conservation
standards, which includes, but is not limited to, the three-year
payback period contemplated under the rebuttable presumption test
discussed above. However, DOE routinely conducts a full economic
analysis that considers the full range of impacts, including those to
the consumer, manufacturer, Nation, and environment, as required under
42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the
basis for DOE to definitively evaluate the economic justification for a
potential standard level (thereby supporting or rebutting the results
of any preliminary determination of economic justification).
G. Shipments Analysis
DOE uses forecasts of product shipments to calculate the national
impacts of standards on energy use, NPV, and future manufacturer cash
flows. DOE develops shipment projections based on historical data and
an analysis of key market drivers for each product.
The vast majority of furnace fans are shipped installed in
furnaces, so DOE estimated furnace fan shipments by projecting furnace
shipments in three market segments: (1) Replacements; (2) new housing;
and (3) new owners in buildings that did not previously have a central
furnace.
To project furnace replacement shipments, DOE developed retirement
functions for furnaces from the lifetime estimates and applied them to
the existing products in the housing stock. The existing stock of
products is tracked by vintage and developed from historical shipments
data. The shipments analysis uses a distribution of furnace lifetimes
to estimate furnace replacement shipments.
To project shipments to the new housing market, DOE utilized
projected new housing construction and historic saturation rates of
various furnace and cooling product types in new housing. DOE used AEO
2012 for projections of new housing. Furnace saturation rates in new
housing are provided by the U.S. Census Bureau's Characteristics of New
Housing.\44\
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\44\ Available at: http://www.census.gov/const/www/charindex.html.
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DOE also included a small market segment consisting of households
that become ``new owners'' of a gas furnace. This segment consists of
households that have central air conditioning and non-central heating
or central air conditioning and electric heating and choose to install
a gas furnace.
Several parties stated that DOE's shipments estimates appear to be
too high. (AHRI, No. 48 at p. 5; Goodman, No. 50 at p. 6; Rheem, No.
54, at p. 15; Ingersoll Rand Residential Solutions, No. 57, at p. 2;
Morrison, No. 58 at p. 6) Goodman stated that DOE projects growth from
approximately 3 million units in 2011 to more than 4 million in 2020,
whereas Goodman estimates about 3.7 million units in 2020, or less if
new energy conservation standards affect sales. (Goodman, No. 50 at p.
6) AHRI, Morrison, and Rheem stated that prior to 2006, the demand for
large homes with multiple furnace systems was more common than it is
today, and it is not clear that the demand for homes with multiple
furnace systems can be projected into the future. These commenters also
argued that the shipment projections do not show an echo effect loss in
replacement sales for the drop in furnace sales in 2009-2013. (AHRI,
No. 48 at p. 5; Morrison, No. 58 at p. 6; Rheem, No. 54 at p. 15) EEI
stated that DOE's projected shipments of furnace fans do not appear
consistent with other estimates of furnace shipments that EEI has
observed. (EEI, No. 65 at p. 4) Lennox noted that DOE has projected
significant market growth starting in 2012 and continuing forward,
which does not appear to be supported by recent sales figures. (Lennox,
No. 47 at p. 2)
For the NOPR, DOE utilized more recent historical shipments data
for gas-fired and oil-fired furnaces, which show a decline in 2012. DOE
also reviewed and modified its projection of furnace shipments. The new
projection (depicted in chapter 9 of the NOPR TSD) shows a lower level
of replacement shipments in the 2025-30 period, which is a consequence
(i.e., an echo) of the decline in historical shipments in 2007-2009.
The NOPR projection for 2020 shows total shipments of 3.7 million,
which is the same as the 3.7 million estimated by Goodman.
Regarding the comment from AHRI, Morrison, and Rheem, DOE's
methodology does not presume that past demand for homes with multiple
furnace systems will continue in the future. However, it does assume
that furnaces installed in the past will be replaced, so the
installation of multiple furnaces in the past would contribute to
future growth in shipments.
In the preliminary analysis, DOE considered whether standards that
require more-efficient furnace fans would have an impact on furnace
shipments. Lennox stated that an overly-stringent standard for furnace
fans would bring further increased costs to consumers, beyond the added
product cost from tightened AFUE standards for furnaces, venting and
drainage for condensing furnaces (required in northern States by
regional standards), and standby mode and off mode power regulations.
Lennox stated that higher purchase prices cause consumers to defer
purchases, repair existing furnaces, and/or find less-efficient,
higher-polluting alternate sources of heat. (Lennox, No. 47 at p. 3)
Goodman commented that it would expect reduction in furnace sales after
implementation of a new furnace fan standard, since many consumers will
choose to repair instead of replacing products currently in their home,
thereby avoiding the need to pay the initial cost of a more expensive,
higher-efficiency product. (Goodman, No. 50 at p. 6) Morrison also
commented that higher upfront costs could lead to consumer switching to
less-efficient products and push consumers to repair rather than
replace units. (Morrison, No. 58, at p. 9)
DOE agrees that it is reasonable to expect that energy conservation
standards for residential furnace fans that result in higher furnace
prices would have some dampening effect on sales. Some consumers might
choose to repair their existing furnace rather than purchase a new one,
or perhaps install an alternative space heating product. To
[[Page 64099]]
estimate the impact on shipments of the price increase for the
considered efficiency levels, DOE used the relative price elasticity
approach that was applied in the 2011 furnace standards rulemaking.\45\
76 FR 37408, 37483 (June 27, 2011). This approach also gives some
weight to the operating cost savings from higher-efficiency products.
Chapter 9 in the NOPR TSD describes the method applied.
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\45\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_final_rule_tsd.html.
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H. National Impact Analysis
The NIA assesses the NES and the NPV from a national perspective of
total consumer costs and savings expected to result from new or amended
energy conservation standards at specific efficiency levels. DOE
determined the NPV and NES for the potential standard levels considered
for the furnace fan product classes analyzed. To make the analysis more
accessible and transparent to all interested parties, DOE prepared a
computer spreadsheet that uses typical values (as opposed to
probability distributions) as inputs. To assess the effect of input
uncertainty on NES and NPV results, DOE has developed its spreadsheet
model to conduct sensitivity analyses by running scenarios on specific
input variables.
Analyzing impacts of potential energy conservation standards for
residential furnace fans requires comparing projections of U.S. energy
consumption with new or amended energy conservation standards against
projections of energy consumption without the standards. The forecasts
include projections of annual appliance shipments, the annual energy
consumption of new appliances, and the purchase price of new
appliances.
A key component of DOE's NIA analysis is the energy efficiencies
projected over time for the base case (without new standards) and each
of the standards cases. The projected efficiencies represent the annual
shipment-weighted energy efficiency of the products under consideration
during the shipments projection period (i.e., from the assumed
compliance date of a new standard to 30 years after compliance is
required).
In the preliminary analysis, DOE derived a growth rate in the
market share of ECM fans by extrapolating the trend from 2005, when the
ECM share was 10 percent, to 2010, when it was approximately 30
percent. In so doing, DOE considered the favorable cost-effectiveness
of ECM fans and assumed that their market share would peak and level
off at 79 percent.
AHRI and Rheem stated that DOE's assumption that the market share
for furnace fans with ECM technology will increase to 75 percent is not
supported by the industry data, especially since the Federal
residential tax credits have expired. (AHRI, No. 48 at p 5; Rheem, No.
54, at p. 15) Goodman also stated that a 75 percent peak market
penetration of ECM motors as estimated by DOE seems high. Goodman
estimates a value in the range of 40-50 percent by mid-century.
(Goodman, No. 50 at p. 4)
For the NOPR, DOE reviewed the information provided by the
manufacturers and modified its estimate of the long-run trend in market
shares of constant-torque BPM and constant-airflow BPM motor furnace
fans. The NOPR analysis assumes a long-run trend that results in market
share of the constant-torque BPM and constant-airflow BPM furnace fans
reaching 45 percent in 2048.
For the preliminary analysis, DOE used a ``roll up'' scenario for
estimating the impacts of the potential energy conservation standards
for residential furnace fans. Under the ``roll-up'' scenario, DOE
assumes: (1) product efficiencies in the base case that do not meet the
standard level under consideration would ``roll-up'' to meet the new
standard level; and (2) product efficiencies above the standard level
under consideration would not be affected. To be consistent with the
assumption regarding base-case efficiency after the compliance year,
DOE assumed that for each standards case, the efficiency distribution
in each product class remains unchanged after 2019. DOE used the same
approach for the NOPR.
1. National Energy Savings Analysis
The national energy savings analysis involves a comparison of
national energy consumption of the considered products in each
potential standards case (TSL) with consumption in the base case with
no new or amended energy conservation standards. DOE calculated the
national energy consumption by multiplying the number of units (stock)
of each product (by vintage or age) by the unit energy consumption
(also by vintage). Vintage represents the age of the product. DOE
calculated annual NES based on the difference in national energy
consumption for the base case (without new efficiency standards) and
for each higher efficiency standard. DOE estimated energy consumption
and savings based on site energy and converted the electricity
consumption and savings to primary energy using annual conversion
factors derived from the AEO 2012 version of the NEMS. Cumulative
energy savings are the sum of the NES for each year over the timeframe
of the analysis.
DOE has historically presented NES in terms of primary energy
savings. In response to the recommendations of a committee on ``Point-
of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency
Standards'' appointed by the National Academy of Science, DOE announced
its intention to use full-fuel-cycle (FFC) measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (August 18, 2011). While DOE stated in that
notice that it intended to use the Greenhouse Gases, Regulated
Emissions, and Energy Use in Transportation (GREET) model to conduct
the analysis, it also said it would review alternative methods,
including the use of EIA's National Energy Modeling System (NEMS).
After evaluating both models and the approaches discussed in the August
18, 2011 notice, DOE published a statement of amended policy in the
Federal Register in which DOE explained its determination that NEMS is
a more appropriate tool for this specific use. 77 FR 49701 (August 17,
2012). Therefore, DOE is using NEMS model to conduct FFC analyses.
Goodman questioned the introduction of FFC measures of energy use.
It noted that, under 42 U.S.C. 6291(4), ``energy use'' is defined as
``the quantity of energy directly consumed by a consumer product at
point of use . . .'' (Goodman, No. 50 at p. 4)
The definition of ``energy use'' cited by Goodman is intended to
apply at the product level. This is apparent from the complete
definition: ``The term `energy use' means the quantity of energy
directly consumed by a consumer product at point of use, determined in
accordance with test procedures under section 6293 of this title.'' (42
U.S.C. 6291(4)) The law also requires DOE, in determining the economic
justification of a standard, to consider the total projected energy
savings that are expected to result directly from the standard. (42
U.S.C. 6295(o)(2)(B)(i)(III)) The term ``energy'' means electricity or
fossil fuels. (42 U.S.C. 6291(3)) The FFC metric provides a more
complete accounting of the fossil fuels saved by standards, and its use
is in keeping with DOE's statutory authority. The approach used to
derive FFC multipliers for this NOPR is described in appendix 10-B of
the NOPR TSD. DOE requests comment
[[Page 64100]]
on the FCC multipliers and the assumptions made to derive the
multipliers.
2. Net Present Value Analysis
The inputs for determining NPV are: (1) Total annual installed
cost; (2) total annual savings in operating costs; (3) a discount
factor to calculate the present value of costs and savings; (4) present
value of costs; and (5) present value of savings. DOE calculated net
savings each year as the difference between the base case and each
standards case in terms of total savings in operating costs versus
total increases in installed costs. DOE calculated savings over the
lifetime of products shipped in the forecast period. DOE calculated NPV
as the difference between the present value of operating cost savings
and the present value of total installed costs. DOE used a discount
factor based on real discount rates of 3 and 7 percent to discount
future costs and savings to present values.
For the NPV analysis, DOE calculates increases in total installed
costs as the difference in total installed cost between the base case
and standards case (i.e., once the standards take effect).
DOE assumed no change in residential furnace fan prices over the
2019-2048 period. In addition, DOE conducted a sensitivity analysis
using alternative price trends, specifically one in which prices
decline over time, and another in which prices rise. These price trends
are described in appendix 10-C of the NOPR TSD.
DOE expresses savings in operating costs as decreases associated
with the lower energy consumption of products bought in the standards
case compared to the base efficiency case. Total savings in operating
costs are the product of savings per unit and the number of units of
each vintage that survive in a given year.
DOE estimates 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.\46\ The NPV results for the residential furnace fan TSLs are
presented in section V.B.3 of this notice.
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\46\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying
and Measuring Benefits and Costs.''
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I. Consumer Subgroup Analysis
In the NOPR stage of a rulemaking, DOE conducts a consumer subgroup
analysis. A consumer subgroup comprises a subset of the population that
may be affected disproportionately by new or revised energy
conservation standards (e.g., low-income consumers, seniors). The
purpose of a subgroup analysis is to determine the extent of any such
disproportional impacts.
For this NOPR, DOE evaluated impacts of potential standards on two
subgroups: (1) Senior-only households and (2) low-income households.
DOE identified these households in the RECS sample and used the LCC
spreadsheet model to estimate the impacts of the considered efficiency
levels on these subgroups. The consumer subgroup results for the
residential furnace fan TSLs are presented in section V.B.1 of this
notice.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impact of new energy
conservation standards on manufacturers of residential furnace fans and
to calculate the potential impact of such standards on employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects. The quantitative part of the MIA primarily relies on the
Government Regulatory Impact Model (GRIM), an industry cash-flow model
with inputs specific to this rulemaking. The key GRIM inputs are data
on the industry cost structure, product costs, shipments, and
assumptions about markups and conversion expenditures. The key output
is the industry net present value (INPV). Different sets of assumptions
(markup scenarios) will produce different results. The qualitative part
of the MIA addresses factors such as product characteristics, impacts
on particular subgroups of firms, and important market and product
trends. The complete MIA is outlined in chapter 12 of the NOPR TSD.
For this rulemaking, DOE considers the ``furnace fan industry'' to
consist of manufacturers who assemble furnace fans as a component of
the HVAC products addressed in this rulemaking.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the residential furnace fans
industry that includes a top-down cost analysis of manufacturers used
to derive preliminary financial inputs for the GRIM (e.g., sales,
general, and administration (SG&A) expenses; research and development
(R&D) expenses; and tax rates). DOE used public sources of information,
including company SEC 10-K filings,\47\ corporate annual reports, the
U.S. Census Bureau's Economic Census,\48\ and Hoover's reports.\49\
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\47\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) (Available at: http://sec.gov).
\48\ U.S.Census Bureau, Annual Survey of Manufacturers: General
Statistics: Statistics for Industry Groups and Industries (Available
at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
\49\ Hoovers Inc. Company Profiles (Various Companies)
(Available at: http://www.hoovers.com).
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In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis
to quantify the potential impacts of a new energy conservation
standard. In general, energy conservation standards can affect
manufacturer cash flow in three distinct ways: (1) create a need for
increased investment; (2) raise production costs per unit; and (3)
alter revenue due to higher per-unit prices and possible changes in
sales volumes.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with a representative cross-section of manufacturers. During
these interviews, DOE discussed engineering, manufacturing,
procurement, and financial topics to validate assumptions used in the
GRIM and to identify key issues or concerns. See section IV.J.4 for a
description of the key issues manufacturers raised during the
interviews.
Additionally, in Phase 3, DOE evaluated subgroups of manufacturers
that may be disproportionately impacted by new standards or that may
not be accurately represented by the average cost assumptions used to
develop the industry cash-flow analysis. For example, small
manufacturers, niche players, or manufacturers exhibiting a cost
structure that largely differs from the industry average could be more
negatively affected. DOE identified one subgroup (i.e., small
manufacturers) for a separate impact analysis.
DOE applied the small business size standards published by the
Small Business Administration (SBA) to determine whether a company is
considered a small business. 65 FR 30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR
part 121. To be categorized as a small business under North American
Industry Classification System (NAICS) code 333415, ``Air-Conditioning
and Warm Air Heating Equipment and Commercial and Industrial
Refrigeration Equipment Manufacturing,'' a residential furnace fan
manufacturer and its affiliates may employ a
[[Page 64101]]
maximum of 750 employees. The 750-employee threshold includes all
employees in a business's parent company and any other subsidiaries.
Based on this classification, DOE identified at least 14 residential
furnace fan manufacturers that qualify as small businesses. The
residential furnace fan small manufacturer subgroup is discussed in
chapter 12 of the NOPR TSD and in section V.B.2.d of this notice.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow due to new
standards that result in a higher or lower industry value. The GRIM
analysis uses a standard, annual cash-flow analysis that incorporates
manufacturer costs, markups, shipments, and industry financial
information as inputs. The GRIM models changes in costs, distribution
of shipments, investments, and manufacturer margins that could result
from new energy conservation standards. The GRIM spreadsheet uses the
inputs to arrive at a series of annual cash flows, beginning in 2013
(the base year of the analysis) and continuing to 2048. DOE calculated
INPVs by summing the stream of annual discounted cash flows during this
period. For residential furnace fan manufacturers, DOE used a real
discount rate of 7.8 percent, which was derived from industry
financials and then modified according to feedback received during
manufacturer interviews.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between a base case and each standards
case. The difference in INPV between the base case and a standards case
represents the financial impact of the new energy conservation standard
on manufacturers. As discussed previously, DOE collected this
information on the critical GRIM inputs from a number of sources,
including publicly-available data and interviews with a number of
manufacturers (described in the next section). The GRIM results are
shown in section V.B.2.a. Additional details about the GRIM, the
discount rate, and other financial parameters can be found in chapter
12 of the NOPR TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing a higher-efficiency product is typically more
expensive than manufacturing a baseline product due to the use of more
complex components, which are typically more costly than baseline
components. The changes in the MPCs of the analyzed products can affect
the revenues, gross margins, and cash flow of the industry, making
these product cost data key GRIM inputs for DOE's analysis.
In the MIA, DOE used the MPCs for each considered efficiency level
calculated in the engineering analysis, as described in section IV.C
and further detailed in chapter 5 of the NOPR TSD. In addition, DOE
used information from its teardown analysis, described in chapter 5 of
the TSD, to disaggregate the MPCs into material, labor, and overhead
costs. To calculate the MPCs for equipment above the baseline, DOE
added the incremental material, labor, and overhead costs from the
engineering cost-efficiency curves to the baseline MPCs. These cost
breakdowns and product markups were validated and revised with
manufacturers during manufacturer interviews.
Shipments Forecast
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of these values by efficiency
level. Changes in sales volumes and efficiency mix over time can
significantly affect manufacturer finances. For this analysis, the GRIM
uses the NIA's annual shipment forecasts derived from the shipments
analysis from 2013 (the base year) to 2048 (the end year of the
analysis period). See chapter 9 of the NOPR TSD for additional details.
For the standards-case shipment forecast, the GRIM uses the NIA
standards-case shipment forecasts. DOE assumes a new efficiency
distribution in the standards case, in which product efficiencies in
the base case that did not meet the standard under consideration would
``roll up'' to meet the new standard in the year that compliance is
required.
Product and Capital Conversion Costs
New energy conservation standards would cause manufacturers to
incur one-time conversion costs to bring their production facilities
and product designs into compliance. DOE evaluated the level of
conversion-related expenditures that would be needed to comply with
each considered efficiency level in each product class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
Product conversion costs; and (2) capital conversion costs. Product
conversion costs are one-time investments in research, development,
testing, marketing, and other non-capitalized costs necessary to make
product designs comply with the new energy conservation standard.
Capital conversion costs are one-time investments in property, plant,
and equipment necessary to adapt or change existing production
facilities such that new product designs can be fabricated and
assembled.
To evaluate the level of capital conversion expenditures
manufacturers would likely incur to comply with new energy conservation
standards, DOE used manufacturer interviews to gather data on the
anticipated level of capital investment that would be required at each
efficiency level. DOE validated manufacturer comments through estimates
of capital expenditure requirements derived from the product teardown
analysis and engineering analysis described in chapter 5 of the TSD.
DOE assessed the product conversion costs at each considered
efficiency level by integrating data from quantitative and qualitative
sources. DOE considered market-share-weighted feedback regarding the
potential costs of each efficiency level from multiple manufacturers to
determine conversion costs such as R&D expenditures and certification
costs. Manufacturer data were aggregated to better reflect the industry
as a whole and to protect confidential information.
In general, DOE assumes that all conversion-related investments
occur between the year of publication of the final rule and the year by
which manufacturers must comply with the new standard. The investment
figures used in the GRIM can be found in section IV.J.2 of this notice.
For additional information on the estimated product and capital
conversion costs, see chapter 12 of the NOPR TSD.
b. Government Regulatory Impact Model Scenarios
Shipment Scenarios
In the NIA, DOE modeled shipments with a roll-up scenario to
represent possible standards-case efficiency distributions for the
years beginning 2019 (the year that compliance with new standards is
proposed to be required) through 2048 (the end of the analysis period).
The roll-up scenario represents the case in which all shipments in the
base case that do not meet the new standard would roll up to meet the
new standard level, with the efficiency of products already at the new
standard level remaining unchanged. Consumers in the base case who
purchase products above the standard level are not affected as they are
assumed to continue to purchase the
[[Page 64102]]
same product in the standards case. See chapter 9 of the NOPR TSD for
more information.
Markup Scenarios
As discussed above, MSPs include direct manufacturing production
costs (i.e., labor, materials, and overhead estimated in DOE's MPCs)
and all non-production costs (i.e., SG&A, R&D, and interest), along
with profit. To calculate the MSPs in the GRIM, DOE applied non-
production cost markups to the MPCs estimated in the engineering
analysis for each product class and efficiency level. Modifying these
markups in the standards case yields different sets of impacts on
manufacturers. For the MIA, DOE modeled two standards-case markup
scenarios to represent the uncertainty regarding the potential impacts
on prices and profitability for manufacturers following the
implementation of new energy conservation standards: (1) a preservation
of gross margin percentage markup scenario; and (2) a preservation of
operating profit markup scenario. These scenarios lead to different
markups values that, when applied to the inputted MPCs, result in
varying revenue and cash flow impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' markup across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within a product class. As production costs increase
with efficiency, this scenario implies that the absolute dollar markup
will increase as well. Based on publicly-available financial
information for manufacturers of residential furnace fans and comments
from manufacturer interviews, DOE assumed the non-production cost
markup--which includes SG&A expenses, R&D expenses, interest, and
profit--to be the following for each residential furnace fan product
class:
Table IV.9--Manufacturer Markup by Residential Furnace Fan Product Class
------------------------------------------------------------------------
Product class Markup
------------------------------------------------------------------------
NWG-NC.................................................. 1.30
NWG-C................................................... 1.31
WG-NC................................................... 1.27
NWO-NC.................................................. 1.35
EF/MB................................................... 1.19
MH-NWG-NC............................................... 1.25
MH-NWG-C................................................ 1.25
MH-EF/MB................................................ 1.15
------------------------------------------------------------------------
Because this markup scenario assumes that manufacturers would be
able to maintain their gross margin percentage markups as production
costs increase in response to a new energy conservation standard, it
represents a high bound to industry profitability.
In the preservation of operating profit scenario, manufacturer
markups are set so that operating profit one year after the compliance
date of the new energy conservation standard is the same as in the base
case. Under this scenario, as the costs of production increase under a
standards case, manufacturers are generally required to reduce their
markups to a level that maintains base-case operating profit. The
implicit assumption behind this markup scenario is that the industry
can only maintain its operating profit in absolute dollars after
compliance with the new standard is required. Therefore, operating
margin in percentage terms is squeezed (reduced) between the base case
and standards case. DOE adjusted the manufacturer markups in the GRIM
at each TSL to yield approximately the same earnings before interest
and taxes in the standards case as in the base case. This markup
scenario represents a low bound to industry profitability under a new
energy conservation standard.
3. Discussion of Comments
During the preliminary analysis public meeting, interested parties
commented on the assumptions and results of the preliminary analysis
TSD. Oral and written comments addressed several topics, including
testing and certification burdens, cumulative regulatory burdens,
compliance date, impacts on small businesses, and conversion costs.
a. Testing and Certification Burdens
Manufacturers expressed concerns about the potential testing and
certification burdens that may be associated with a new furnace fan
energy conservation standard. Ingersoll Rand commented that the
rulemaking would result in additional burden from testing,
certification, and compliance, leading to an increased cost for
consumers. (Ingersoll Rand, No. 57 at p. 2) Rheem stated that, in the
past, there has been no requirement for manufacturers to test and
report furnace airflow data according to any industry or governmental
standard. In addition, Rheem added that there have been no
certification requirements that require the testing of multiple
samples. Therefore, Rheem concluded that it is not reasonable to assume
that manufacturers already have the data available to rate hundreds of
current furnace models. For companies like Rheem, which have a large
number of basic models, the commenter lamented that compliance with new
testing requirements would create a significant burden. (Rheem, No. 54
at p. 3) In order to relieve some of the testing burden, Mortex
recommended that DOE should allow manufacturers to use Alternative
Efficiency Determination Methods (AEDMs). (Mortex, No. 43 at p. 25)
Mortex also recommended that DOE should use an alternative test
procedure that is integrated with AFUE testing so that all models do
not have to be tested separately under the residential furnace fan test
procedure. (Mortex, No. 59 at p. 3) Manufacturers were also concerned
that the time needed to certify all their products would reduce
investment in innovative technologies, because fewer resources would be
available for R&D. (Rheem, No. 54 at p. 16)
DOE recognizes the concerns that manufacturers have regarding test
burden. As discussed in section III.A, DOE proposed in the April 2,
2013 test procedure SNOPR to adopt a modified version of an alternative
test method recommended by AHRI and other furnace fan manufacturers
that aligns the residential furnace fan test procedure with the DOE
test procedure for residential furnaces to significantly reduce burden
on industry. 78 FR 19606. DOE also estimated the capital expenditure,
time to test, and cost to test according to the proposed residential
furnace fan test procedure in the SNOPR. DOE found that the proposed
test procedure would not result in significant capital expenditures for
manufacturers, because they would not have to acquire or use any test
equipment beyond the equipment already used to conduct the test method
specified in the DOE residential furnace test procedure (i.e., the AFUE
test setup). DOE also found that the time to conduct a single furnace
fan test according to its proposed furnace fan test procedure would be
less than 3 hours and cost less than one percent of the manufacturer
selling price of the product into which the furnace fan is integrated.
Consequently, DOE does not find that testing furnace fans according to
this proposed test procedure would be unduly burdensome. Id. at 19619-
21
[[Page 64103]]
b. Cumulative Regulatory Burden
Interested parties expressed concern over the cumulative regulatory
burden that would result from a residential furnace fan energy
conservation standard. Morrison commented that the energy conservation
standards that already apply to residential HVAC products, in
combination with a standard for furnace fans, would significantly
increase manufacturer burden. (Morrison, No. 43 at p. 23) Both AHRI and
Morrison stated that DOE's current estimation of the incremental cost
of testing furnace fans (at less than 2 percent of the manufacturer
selling price) does not account for the additional burden placed on
furnace manufacturers that must now also certify standby mode and off
mode energy consumption, along with AFUE. (AHRI, No. 48 at p. 7;
Morrison, No. 58 at p. 10) Furthermore, Morrison commented that several
of the manufacturers who are impacted by this residential furnace fans
rulemaking face even greater cumulative regulatory burden, because they
also produce other products regulated by DOE. (Morrison, No. 58 at p.
10)
Instead of creating a set of residential furnace fan standards
through a separate energy conservation rulemaking, manufacturers and
efficiency experts advocated for combining all furnace-related
standards into one rulemaking or to have only one metric for all
furnace-related products. CA IOU recommended that DOE should, in future
iterations of furnace-related standards, combine CAC/HP, furnaces, and
furnace fans into a single rulemaking, given their interrelated
performance and energy consumption. (CA IOU, No. 56 at p. 2) Morrison
and Rheem were also concerned that the cost of certifying furnace fan
efficiency ratings would increase upfront costs for consumers and
therefore lead them to choose less-efficient products (e.g., space
heaters) or repair HVAC units instead of replacing them. (Morrison, No.
58 at p. 9; Rheem, No. 54 at p. 16) Furthermore, Morrison believes a
single combined metric would prevent consumer confusion that can arise
from having multiple metrics assigned to a single product, and Morrison
opined that such approach would also reduce the regulatory burden
imposed on manufacturers. (Morrison, No. 43 at p. 24)
DOE realizes that the cumulative effect of multiple regulations on
an industry may significantly increase the burden faced by
manufacturers that need to comply with regulations and testing
requirements from different organizations and levels of government. DOE
takes into account the cumulative cost of multiple regulations on
manufacturers in the cumulative regulatory burden section of its
analysis. Additionally, DOE considers the cumulative regulatory burden
as part of its decision process in setting proposed standards. Further
information on cumulative regulatory burden can be found in section
V.B.2.e of this notice and in chapter 12 of the NOPR TSD.
c. Compliance Date and Implementation Period
Efficiency advocates expressed support for a compliance date sooner
than five years after publication of the final rule, because it would
result in additional energy savings. Earthjustice commented that EPCA
does not mandate a lead time of five years for furnace fans because
furnace fans are not listed in section 325(m) (42 U.S.C.
6295(m)(4)(A)(ii)) as a product to which a 5-year lead time applies.
(Earthjustice, No. 49 at p. 2) In a joint comment (hereinafter referred
to as the joint comment), the Appliance Standards Awareness Project,
American Council for an Energy-Efficient Economy, National Consumer Law
Center, Natural Resources Defense Council, and Northwest Energy
Efficiency Alliance encouraged DOE to consider a compliance date three
years after publication of the final rule. According to the joint
commenters, a three-year lead time for manufacturers is feasible,
because the efficiency levels that DOE evaluated for the preliminary
analysis are based on technologies that are already widely employed in
current HVAC products--namely ECM and X13 motors. (ACEEE, et al., No.
55 at p. 3) NEEP also recommended a compliance date three years after
publication of the final rule. (NEEP, No. 51 at p. 3)
However, according to Goodman, EPCA mandates a lead time of greater
than five years. Goodman commented that EPCA prohibits a manufacturer
from being forced to apply new standards to a product that has had
other new standards applied to it within a 6-year period. (42 U.S.C.
6295(m)(4)(B)) Therefore, the earliest effective date for new energy
conservation standards for residential furnace fans, pursuant to EPCA,
would be January 1, 2021 because a new AFUE standard will become
effective on May 1, 2013 and a new SEER/HSPF standard will become
effective January 1, 2015. (Goodman, No. 50 at p. 8)
In response to these comments regarding the appropriate compliance
date for residential furnace fan standards, DOE agrees with the joint
commenters' observation that under 42 U.S.C. 6295(m)(4)(A)(ii), EPCA
does not specify furnace fans as a product with a 5-year lead time. DOE
does not agree with Goodman's interpretation of 42 U.S.C. 6295(m)(4) as
prohibiting a compliance date prior to January 2021. DOE has
tentatively concluded that 42 U.S.C. 6295(m)(4) is only applicable to
amendments to existing standards, and residential furnace fans are
covered products that have not been previously regulated. Furnace fans
are explicitly addressed only at 42 U.S.C. 6295(f)(4)(D), which does
not specify any compliance dates. Therefore, since EPCA does not
mandate a specific lead time for furnace fans, DOE considered the
actions required by manufacturers to comply with the proposed standard
to determine an appropriate lead-time. During manufacturer interviews,
DOE found that standards would result in manufacturers' extending R&D
beyond the furnace fan assembly to understand the impacts on the design
and performance of the furnace or modular blower in which the furnace
fan is integrated. To comply with the proposed standard, manufacturers
may have to alter not only the designs and fabrication processes for
the furnace fan assembly, but also for the furnace or modular blower
into which the furnace fan is integrated. Similar products that require
similar actions for compliance typically have lead times of five years.
For these reasons, DOE selected a 5-year compliance date.
d. Small Businesses
DOE received comments regarding its analysis of small businesses.
Mortex formally requested that DOE prepare a regulatory flexibility
analysis since it believes that DOE has not certified that the
amendments in the test procedure proposed rule do not have a
significant economic impact on a substantial number of small entities.
(Mortex, No. 59 at p. 3) During the preliminary analysis public
meeting, Unico asked whether small manufacturers will be included in
DOE's cost-benefit analysis. (Unico, No. 43 at p. 56) However,
Ingersoll Rand is concerned that DOE limits the manufacturer analysis
to only small manufacturers. (Ingersoll Rand, No. 57 at p. 2)
For the manufacturer impact analysis, DOE determined the impact of
a new standard on the entire residential furnace fans industry,
including manufacturers of all sizes. However, DOE also evaluated
subgroups of manufacturers that may be disproportionately impacted by
new standards. For this rulemaking, DOE identified small businesses as
a subgroup and discusses the impacts on
[[Page 64104]]
this subgroup in the initial regulatory flexibility analysis, which can
be found in section VI.B of this notice. DOE's decision to prepare a
regulatory flexibility analysis for the residential furnace fans
standards rulemaking NOPR is separate from its decision to not prepare
a regulatory flexibility analysis for the residential furnace fans test
procedures NOPR. DOE did previously certify to SBA that its proposed
test procedure for residential furnace fans would not have a
significant economic impact on a substantial number of small entities.
e. Conversion Costs
Several manufacturers expressed concern as to the capital
conversion costs that may be associated with a new standard. Rheem
stated that stringent standards may require significant capital
conversion costs and that this is a key issue for the MIA. (Rheem, No.
54 at p. 16) Morrison expressed a similar concern, stating that
manufacturers may incur significant capital conversion costs at
``overly burdensome'' regulation levels. (Morrison, No. 58 at p. 9)
DOE acknowledges manufacturers' concerns regarding capital
conversion costs and carefully took this matter into account in
developing its proposal. During manufacturer interviews, DOE requested
information about potential conversion costs at each efficiency level
for each product class. DOE evaluated the information gathered during
the interviews, as well as data from the engineering analysis, to
determine capital conversion costs. Conversion costs are discussed in
detail in section V.B.2.a of this notice and in chapter 12 of the TSD.
4. Manufacturer Interviews
DOE considers the manufacturer of the HVAC product in which the
residential furnace fan is integrated to be the furnace fan
manufacturer. DOE is aware that HVAC product manufacturers purchase
many of the components in the furnace fan assembly (e.g., the motor and
impeller) from separate component manufacturers. However, the HVAC
product manufacturer determines the design requirements, selects the
purchased components based on these requirements, and performs the
final assembly and integration of the fan assembly into the HVAC
product. For these reasons, DOE considers the HVAC product manufacturer
to be the furnace fan manufacturer. Accordingly, DOE interviewed
manufacturers representing approximately 90 percent of residential gas
furnace and central air conditioner sales, approximately 15 percent of
residential oil furnace sales, \50\ over 85 percent of electric
furnace/modular blower sales, and approximately 90 percent of
manufactured home furnace sales. These interviews were in addition to
those DOE conducted as part of the engineering analysis. The
information gathered during these interviews enabled DOE to tailor the
GRIM to reflect the unique financial characteristics of the residential
furnace fan industry. All interviews provided information that DOE used
to evaluate the impacts of potential new energy conservation standards
on manufacturer cash flows, manufacturing capacities, and employment
levels.
---------------------------------------------------------------------------
\50\ DOE did reach out to a number of residential oil-fired
furnace manufacturers, but most declined to be interviewed. However,
DOE notes that fan assemblies and the processes by which they are
fabricated do not change significantly across furnace type.
---------------------------------------------------------------------------
During the manufacturer interviews, DOE asked manufacturers to
describe their major concerns about this rulemaking. The following
sections describe the most significant issues identified by
manufacturers. DOE also considered all other concerns expressed by
manufacturers in its analyses. However, manufacturer interviews are
conducted under non-disclosure agreements (NDAs), so DOE does not
document these discussions in the same way that it does public comments
in the comment summaries and DOE's responses throughout the rest of
this notice.
a. Testing and Certification Burdens
All interviewed manufacturers expressed concerns about testing and
certification burdens. In particular, manufacturers were concerned
about the additional time required to test products for compliance with
the new standard. Because the test procedure proposed in the May 15,
2012 furnace fan test procedure NOPR (77 FR 28674) is different from
testing methods that are currently being used for residential furnaces,
manufacturers argued that a significant amount of time would need to be
invested. Some manufacturers suggested that the testing burden could be
reduced if the testing for FER could be coordinated with testing for
AFUE. In general, manufacturers were more concerned about the
additional time and labor required to conduct the testing rather than
the cost of testing equipment and stations, which were expected to be
minimal.
As explained in section IV.K.3.a, DOE recognizes the concerns that
manufacturers have regarding test burden and has issued a test
procedure SNOPR that would align the proposed residential furnace fan
test procedure with the DOE test procedure for residential furnaces,
thereby reducing the burden on manufacturers. 78 FR 19606 (April 2,
2013).
b. Market Size
During interviews, manufacturers raised concerns about the
potential of new furnace fan energy conservations standards to cause
the residential furnace fan market to contract. Manufacturers claimed
that an increase in overall product costs, resulting from component
changes or increased test burden, would lead to a reduced volume of
furnace sales. They stated that higher costs could drive consumers to
purchase refurbished or repaired units instead of new products. Higher
costs might also push consumers towards using alternative heating
technologies (e.g., space heaters or radiant heat) which may be less
efficient. One manufacturer also noted that the market for residential
furnace fan products has already shrunk 6-7 percent and is expected to
have slow growth over the next few years. Given that manufacturers
expect slow or no growth in the near future for most of the product
classes even without new energy conservation standards, the addition of
new standards could lead to further market contraction.
Although the production costs for furnace fans are estimated to
increase with higher efficiency levels, DOE does not expect overall
shipments of furnaces to decrease due to an increase in standards. On
the contrary, based on the shipments analysis, total shipments for the
furnace fan industry are not expected to decrease in the years
following the standards compliance year. Chapter 9 of the NOPR TSD
provides more information on shipment estimates during the analysis
period.
c. Cumulative Regulatory Burden
DOE identified a number of cumulative regulations that may affect
residential furnace fan manufacturers. Interviewed manufacturers
mentioned the following regulations as potentially having an impact and
contributing to burden: (1) DOE Energy Conservation Standards for
Furnaces and Central Air Conditioners and Heat Pumps; (2) DOE's
Certification, Compliance, and Enforcement rulemaking; (3) DOE's
Alternative Efficiency Determination Methods and Alternate Rating
Methods rulemaking; (4) EPA's phaseout of Hydrochlorofluorocarbons
(HCFCs); (5) EPA's Energy Star program; (6) State regulations such as
California Title 24; (7) the South Coast Air Quality Management
District Rule 1111; (8) Canadian energy efficiency regulations;
[[Page 64105]]
and (9) ASHRAE Standard 90.1. Some manufacturers indicated that the
largest portion of their research and development budget goes toward
meeting the various DOE standards. One manufacturer also recommended
that DOE standards should be spread apart by at least five year periods
so that manufacturers can allocate appropriate time to meet standards
and develop new products.
DOE also asked manufacturers under what circumstances they would be
able to coordinate expenditures related to other regulations.
Manufacturers emphasized the benefits of having fewer metrics to
evaluate and limiting the scope of coverage for residential furnace
fans to strictly those units housed in furnaces. In addition,
manufacturers requested that DOE consider harmonizing with
international standards to lessen the cumulative burden. Manufacturers
also requested that the compliance date for some standards be pushed
out to allow enough time for product development and limit stranded
assets.
DOE recognizes and takes into account the cumulative cost of
multiple regulations on manufacturers in the cumulative regulatory
burden section of its analysis. Further information on cumulative
regulatory burden can be found in section V.B.2.e of this notice and in
chapter 12 of the NOPR TSD.
d. Consumer Confusion
In addition to the regulatory burden imposed by multiple standards,
manufacturers were concerned with issues arising from multiple metrics
that all apply to a single product. Furnaces alone already have energy
efficiency rating metrics for AFUE and standby power, so with an
additional FER metric, furnaces would be labeled with three different
metrics. Manufacturers stated during interviews that three metrics are
too many for a single product, and that consumers who use these rating
metrics to evaluate and compare product performance may get confused if
multiple metrics are labeled on one furnace. Manufacturers recommended
that DOE should focus on the thermal performance of the furnace and not
the fan energy consumption, which is a small fraction of a furnace's
overall energy use.
In response, DOE is required by EPCA to consider and establish
energy conservation standards for residential furnace fans by December
31, 2013. (42 U.S.C. 6295(f)(4)(D)) DOE is also required to develop
test procedures to measure the energy efficiency, energy use, or
estimated annual operating cost of each covered product prior to the
adoption of an energy conservation standard. (42 U.S.C. 6295(o)(3)(A)
and (r)) Pursuant to these statutory requirements in EPCA, DOE proposes
new energy conservation standards in this notice, based on its proposed
rating metric (FER). DOE requests comment and information on the
potential for significant consumer confusion regarding the FER metric
for residential furnace fans.
e. Motors
Manufacturers questioned the use of X13 and ECM motors as a design
option to improve furnace fan efficiency. As these motors employ more
complex controls and have higher maintenance costs than PSC motors, it
was suggested that long-term reliability may be an issue. Manufacturers
expect that the number of warranty claims, as well as warranty-
associated costs, would increase if use of X13s and ECMs increased.
X13s and ECMs are also more-expensive components that would increase
the initial cost of the products in which they are used. Since these
motors would increase product price but reduce reliability,
manufacturers anticipate more consumers seeking to repair or refurbish
existing products rather than purchase new ones. Furthermore,
manufacturers may face challenges in obtaining a sufficient supply of
motors due to the potential supply limitations of ECMs.
DOE recognizes the concerns that manufacturers have about the
reliability of ECM motors. However, DOE did not receive sufficient
quantitative data from manufacturers regarding the failure rates and
number of warranty claims for the different motor types to make any
firm conclusions about their reliability. Consequently, DOE retained
X13 and ECM motors as a design option for consideration.
K. Emissions Analysis
In the emissions analysis, DOE estimates the reduction in power
sector emissions of carbon dioxide (CO2), nitrogen oxides
(NOX), sulfur dioxide (SO2), and mercury (Hg)
from potential energy conservation standards for the considered
products. In addition to estimating impacts of standards on power
sector emissions, DOE estimated emissions impacts in production
activities (extracting, processing, and transporting fuels) that
provide the energy inputs to power plants. These are referred to as
``upstream'' emissions. Together, these emissions account for the full-
fuel-cycle. In accordance with DOE's FFC Statement of Policy (76 FR
51281 (August 18, 2011)), this FFC analysis also includes impacts on
emissions of methane (CH4) and nitrous oxide
(N2O), both of which are recognized as greenhouse gases.
DOE conducted the emissions analysis using emissions factors that
were derived from data in EIA's AEO 2012, supplemented by data from
other sources. DOE developed separate emissions factors for power
sector emissions and upstream emissions. For residential furnace fans,
DOE also calculated site and upstream emissions from the additional use
of natural gas associated with some of the efficiency levels. The
method that DOE used to derive emissions factors is described in
chapter 13 of the NOPR TSD.
For CH4 and N2O, DOE calculated emissions
reduction in tons and also in terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted to CO2eq
by multiplying the tons of the gas by the gas's global warming
potential (GWP) over a 100-year time horizon. Based on the Fourth
Assessment Report of the Intergovernmental Panel on Climate Change,\51\
DOE used GWP values of 25 for CH4 and 298 for
N2O.
---------------------------------------------------------------------------
\51\ Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R.
Betts, D. W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J.
Nganga, R. Prinn, G. Raga, M. Schulz and R. Van Dorland. 2007:
Changes in Atmospheric Constituents and in Radiative Forcing. In
Climate Change 2007: The Physical Science Basis. Contribution of
Working Group I to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change. S. Solomon, D. Qin, M.
Manning, Z. Chen, M. Marquis, K. B. Averyt, M.Tignor and H. L.
Miller, Editors. 2007. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA. p. 212.
---------------------------------------------------------------------------
EIA prepares the Annual Energy Outlook using NEMS. Each annual
version of NEMS incorporates the projected impacts of existing air
quality regulations on emissions. AEO 2012 generally represents current
legislation and environmental regulations, including recent government
actions, for which implementing regulations were available as of
December 31, 2011.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and the
District of Columbia (D.C.). SO2 emissions from 28 eastern
States and D.C. were also limited under the Clean Air Interstate Rule
(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based
trading program that operates along with the Title IV program.\52\ On
[[Page 64106]]
July 6, 2011, EPA issued a replacement for CAIR, the Cross-State Air
Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21,
2012, the D.C. Circuit issued a decision to vacate CSAPR, and ordered
EPA to continue administering CAIR.\53\
---------------------------------------------------------------------------
\52\ CAIR was remanded to the U.S. Environmental Protection
Agency (EPA) by the U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit) but it remained in effect. See North
Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v.
EPA, 531 F.3d 896 (D.C. Cir. 2008).
\53\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012) cert. granted, 81 USLW 3567 (U.S. Jun. 24 2013)
(No. 12-1182).
---------------------------------------------------------------------------
AEO 2012 had been finalized prior to CSAPR being vacated. The AEO
2012 emissions factors used for this NOPR assume the implementation of
CSAPR. As a result, for the purpose of calculating emissions reductions
of SO2 and NOX in this NOPR, DOE refers to
impacts under CSAPR even though CSAPR is not currently in effect. This
should not alter the accuracy of DOE's projections, however, because
DOE expects that the impacts of energy conservation standards on
SO2 and NOX emissions would be similar regardless
of whether CAIR or CSAPR are in effect.\54\
---------------------------------------------------------------------------
\54\ This is because SO2 emissions will be well below
the cap under either rule, such that emissions reductions will be
realized to the same extent; the caps on NOX emissions in
the 22 states regulated under both rules will have the same effect
such that reductions in electricity generation from efficiency
standards would result in little change in NOX levels (as
explained further below).
---------------------------------------------------------------------------
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an energy conservation standard could be used to
permit offsetting increases in SO2 emissions by any
regulated EGU. In past rulemakings, DOE recognized that there was
uncertainty about the effects of efficiency standards on SO2
emissions covered by the existing cap-and-trade system, but it
concluded that negligible reductions in power sector SO2
emissions would occur as a result of standards.
Beginning in 2015, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants,
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16,
2012). In the final MATS rule, EPA established a standard for hydrogen
chloride as a surrogate for acid gas hazardous air pollutants (HAP),
and also established a standard for SO2 (a non-HAP acid gas)
as an alternative equivalent surrogate standard for acid gas HAP. The
same controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions will be reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. AEO 2012 assumes that, in order to
continue operating, coal plants must have either flue gas
desulfurization or dry sorbent injection systems installed by 2015.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Under the MATS, NEMS shows a reduction
in SO2 emissions when electricity demand decreases (e.g., as
a result of energy efficiency standards). Emissions will be far below
the cap established by CSAPR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that efficiency standards will reduce SO2
emissions in 2015 and beyond.
CSAPR established a cap on NOX emissions in 28 eastern
States and the District of Columbia. Energy conservation standards are
expected to have little effect on NOX emissions in those
States covered by CSAPR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions. However,
standards would be expected to reduce NOX emissions in the
States not affected by the caps, so DOE estimated NOX
emissions reductions from the potential standards considered in this
NOPR for these States where emissions are not capped.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps, and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. For this rulemaking, DOE
estimated mercury emissions reduction using emissions factors based on
AEO 2012, which incorporates the MATS.
Power plants may emit particulates from the smoke stack, which are
known as direct particulate matter (PM) emissions. NEMS does not
account for direct p.m. emissions from power plants. DOE is
investigating the possibility of using other methods to estimate
reduction in p.m. emissions due to standards. The great majority of
ambient p.m. associated with power plants is in the form of secondary
sulfates and nitrates, which are produced at a significant distance
from power plants by complex atmospheric chemical reactions that often
involve the gaseous emissions of power plants, mainly SO2
and NOX. The monetary benefits that DOE estimates for
reductions in SO2 and NOX emissions resulting
from standards are in fact primarily related to the health benefits of
reduced ambient PM.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this NOPR, DOE considered the
estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the considered efficiency levels. In order to make this calculation
similar to the calculation of the NPV of consumer benefit, DOE
considered the reduced emissions expected to result over the lifetime
of products shipped in the forecast period for each efficiency level.
This section summarizes the basis for the monetary values used for
CO2 and NOX emissions and presents the values
considered in this rulemaking.
For this NOPR, DOE is relying on a set of values for the social
cost of carbon (SCC) that was developed by an interagency process. A
summary of the basis for those values is provided below, and a more
detailed description of the methodologies used is provided as an
appendix to chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of carbon dioxide. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in carbon dioxide emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to
the extent permitted by law, assess both the costs and the benefits of
the intended regulation and, recognizing that some costs and benefits
are difficult to quantify, propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs. The purpose of the SCC estimates presented here is
to allow agencies to incorporate the monetized social benefits of
reducing CO2 emissions into cost-benefit analyses of
regulatory actions that have small, or ``marginal,'' impacts on
cumulative global emissions. The
[[Page 64107]]
estimates are presented with an acknowledgement of the many
uncertainties involved and with a clear understanding that they should
be updated over time to reflect increasing knowledge of the science and
economics of climate impacts.
As part of the interagency process that developed the SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of serious
challenges. A recent report from the National Research Council points
out that any assessment will suffer from uncertainty, speculation, and
lack of information about: (1) Future emissions of greenhouse gases;
(2) the effects of past and future emissions on the climate system; (3)
the impact of changes in climate on the physical and biological
environment; and (4) the translation of these environmental impacts
into economic damages. As a result, any effort to quantify and monetize
the harms associated with climate change will raise serious questions
of science, economics, and ethics and should be viewed as provisional.
Despite the serious limits of both quantification and monetization,
SCC estimates can be useful in estimating the social benefits of
reducing carbon dioxide emissions. Most Federal regulatory actions can
be expected to have marginal impacts on global emissions. For such
policies, the agency can estimate the benefits from reduced emissions
in any future year by multiplying the change in emissions in that year
by the SCC value appropriate for that year. The net present value of
the benefits can then be calculated by multiplying the future benefits
by an appropriate discount factor and summing across all affected
years. This approach assumes that the marginal damages from increased
emissions are constant for small departures from the baseline emissions
path, an approximation that is reasonable for policies that have
effects on emissions that are small relative to cumulative global
carbon dioxide emissions. For policies that have a large (non-marginal)
impact on global cumulative emissions, there is a separate question of
whether the SCC is an appropriate tool for calculating the benefits of
reduced emissions. This concern is not applicable to this rulemaking,
however.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
Economic analyses for Federal regulations have used a wide range of
values to estimate the benefits associated with reducing carbon dioxide
emissions. In the final model year 2011 CAFE rule, the U.S. Department
of Transportation (DOT) used both a ``domestic'' SCC value of $2 per
metric ton of CO2 and a ``global'' SCC value of $33 per
metric ton of CO2 for 2007 emission reductions (in 2007$),
increasing both values at 2.4 percent per year. DOT also included a
sensitivity analysis at $80 per metric ton of CO2.\55\ A
2008 regulation proposed by DOT assumed a domestic SCC value of $7 per
metric ton of CO2 (in 2006$) for 2011 emission reductions
(with a range of $0-$14 for sensitivity analysis), also increasing at
2.4 percent per year.\56\ A regulation for packaged terminal air
conditioners and packaged terminal heat pumps finalized by DOE in
October of 2008 used a domestic SCC range of $0 to $20 per metric ton
CO2 for 2007 emission reductions (in 2007$). 73 FR 58772,
58814 (Oct. 7, 2008). In addition, EPA's 2008 Advance Notice of
Proposed Rulemaking on Regulating Greenhouse Gas Emissions Under the
Clean Air Act identified what it described as ``very preliminary'' SCC
estimates subject to revision. 73 FR 44354 (July 30, 2008). EPA's
global mean values were $68 and $40 per metric ton CO2 for
discount rates of approximately 2 percent and 3 percent, respectively
(in 2006$ for 2007 emissions).
---------------------------------------------------------------------------
\55\ See Average Fuel Economy Standards Passenger Cars and Light
Trucks Model Year 2011, 74 FR 14196 (March 30, 2009) (Final Rule);
Final Environmental Impact Statement Corporate Average Fuel Economy
Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at
3-90 (Oct. 2008) (Available at: http://www.nhtsa.gov/fuel-economy)
(Last accessed December 2012).
\56\ See Average Fuel Economy Standards, Passenger Cars and
Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008)
(Proposed Rule); Draft Environmental Impact Statement Corporate
Average Fuel Economy Standards, Passenger Cars and Light Trucks,
Model Years 2011-2015 at 3-58 (June 2008) (Available at: http://www.nhtsa.gov/fuel-economy) (Last accessed December 2012).
---------------------------------------------------------------------------
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for
the rulemaking process, to quantify avoided climate change damages from
reduced CO2 emissions. The interagency group did not
undertake any original analysis. Instead, it combined SCC estimates
from the existing literature to use as interim values until a more
comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per metric ton of CO2. These interim values
represented the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: the FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change. Each model
was given equal weight in the SCC values that were developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: Climate sensitivity, socio-economic and emissions
trajectories, and discount
[[Page 64108]]
rates. A probability distribution for climate sensitivity was specified
as an input into all three models. In addition, the interagency group
used a range of scenarios for the socio-economic parameters and a range
of values for the discount rate. All other model features were left
unchanged, relying on the model developers' best estimates and
judgments.
The interagency group selected four sets of SCC values for use in
regulatory analyses. Three sets of values are based on the average SCC
from three integrated assessment models, at discount rates of 2.5
percent, 3 percent, and 5 percent. The fourth set, which represents the
95th-percentile SCC estimate across all three models at a 3-percent
discount rate, is included to represent higher-than-expected impacts
from climate change further out in the tails of the SCC distribution.
The values grow in real terms over time. Additionally, the interagency
group determined that a range of values from 7 percent to 23 percent
should be used to adjust the global SCC to calculate domestic effects,
although preference is given to consideration of the global benefits of
reducing CO2 emissions. Table IV.10 presents the values in
the 2010 interagency group report,\57\ which is reproduced in appendix
14-A of the NOPR TSD.
---------------------------------------------------------------------------
\57\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government, February 2010. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.
Table IV.10--Annual SCC Values From 2010 Interagency Report, 2010-2050
[In 2007 Dollars per Metric Ton CO[ihel2]]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 4.7 21.4 35.1 64.9
2015............................................ 5.7 23.8 38.4 72.8
2020............................................ 6.8 26.3 41.7 80.7
2025............................................ 8.2 29.6 45.9 90.4
2030............................................ 9.7 32.8 50.0 100.0
2035............................................ 11.2 36.0 54.2 109.7
2040............................................ 12.7 39.2 58.4 119.3
2045............................................ 14.2 42.1 61.7 127.8
2050............................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
The SCC values used for this notice were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature.\58\ Table IV.11 shows
the updated sets of SCC estimates in five-year increments from 2010 to
2050. Appendix 14-B of the NOPR TSD provides the full set of SCC
estimates, as well as the 2013 report from the interagency group. The
central value that emerges is the average SCC across models at the 3-
percent discount rate. However, for purposes of capturing the
uncertainties involved in regulatory impact analysis, the interagency
group emphasizes the importance of including all four sets of SCC
values.
---------------------------------------------------------------------------
\58\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government.
May 2013. http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf.
Table IV.11--Annual SCC Values From 2013 Interagency Update, 2010-2050
[In 2007 Dollars per Metric Ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate %
---------------------------------------------------------------
5 3 2.5 3
Year ---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 11 33 52 90
2015............................................ 12 38 58 109
2020............................................ 12 43 65 129
2025............................................ 14 48 70 144
2030............................................ 16 52 76 159
2035............................................ 19 57 81 176
2040............................................ 21 62 87 192
2045............................................ 24 66 92 206
2050............................................ 27 71 98 221
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects.
[[Page 64109]]
There are a number of concerns and problems that should be addressed by
the research community, including research programs housed in many of
the Federal agencies participating in the interagency process to
estimate the SCC. The interagency group intends to periodically review
and reconsider those estimates to reflect increasing knowledge of the
science and economics of climate impacts, as well as improvements in
modeling.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the values from the
2013 interagency report, adjusted to 2012$ using the Gross Domestic
Product price deflator. For each of the four cases specified, the
values used for emissions in 2015 were $12.9, $40.8, $62.2, and $117
per metric ton avoided (values expressed in 2012$). DOE derived values
after 2050 using the relevant growth rates for the 2040-2050 period in
the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
AHRI agreed that the monetization of emission reductions is an
important factor to consider, but it stated that DOE has no statutory
responsibility to establish a monetary value for potential
environmental benefits of appliance and equipment standards. It added
that there is currently no consensus on any single estimate of the
value of CO2 emissions, and, therefore, DOE should not
indulge in speculation to determine a value when it has no statutory
obligation to do so. (AHRI, No. 48 at p. 7)
In response, it is noted that EPCA directs DOE to achieve the
maximum improvement in energy efficiency that is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) DOE
determines whether a standard is economically justified by considering,
to the greatest extent practicable, a number of factors. (42 U.S.C.
6295(o)(2)(B)(i)(I)-(VII)) Among these factors is ``other factors the
Secretary [of Energy] considers relevant.'' The Secretary considers the
economic benefits that may accrue to society from reduction of
CO2 emissions a relevant factor. DOE further notes that the
incorporation of environmental externalities, such as damage from
climate change, is a well-established principle in cost-benefit
analysis by Federal agencies. DOE acknowledges that the value to place
on a ton of avoided CO2 emissions in future years is very
uncertain, and for this reason it uses a wide range of monetary values
(from $12.9 per ton to $117 per ton for emissions avoided in 2015).
AHRI also stated that DOE should not allow evaluation of
environmental impacts to negate or make moot what has always been, and
should remain, the core analysis in appliance and equipment standards
rulemakings: The consumer payback period and life-cycle cost analysis.
(AHRI, No. 48 at p. 7) In response, DOE notes that environmental and
other impacts associated with reduced emissions are but one of the
factors that DOE considers in determining whether a standard is
economically justified.
2. Valuation of Other Emissions Reductions
DOE investigated the potential monetary benefit of reduced
NOX emissions from the potential standards it considered. As
noted above, DOE has taken into account how new energy conservation
standards would reduce NOX emissions in those 22 States not
affected by the CSAPR. DOE estimated the monetized value of
NOX emissions reductions resulting from each of the TSLs
considered for this NOPR based on estimates found in the relevant
scientific literature. Available estimates suggest a wide range of
benefit per ton values for NOX from stationary sources,
ranging from $468 to $4,809 per ton in 2012$.\59\ DOE calculated the
monetary benefits from NOX reductions using an average
benefit per ton value for NOX and discount rates of 3
percent and 7 percent.\60\
---------------------------------------------------------------------------
\59\ U.S. Office of Management and Budget, Office of Information
and Regulatory Affairs, 2006 Report to Congress on the Costs and
Benefits of Federal Regulations and Unfunded Mandates on State,
Local, and Tribal Entities (2006).
\60\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------
DOE did not monetize Hg or SO2 emission reductions for
this NOPR because it is currently evaluating appropriate valuation of
reduction in these emissions.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the power
generation industry that would result from the adoption of new or
amended energy conservation standards. In the utility impact analysis,
DOE analyzes the changes in electric installed capacity and generation
that result for each trial standard level. The utility impact analysis
uses a variant of NEMS, which is a public domain, multi-sectored,
partial equilibrium model of the U.S. energy sector. DOE uses a variant
of this model, referred to as NEMS-BT,\61\ to account for selected
utility impacts of new or amended energy conservation standards. DOE's
analysis consists of a comparison between model results for the most
recent AEO Reference Case and for cases in which energy use is
decremented to reflect the impact of potential standards. The energy
savings inputs associated with each TSL come from the NIA. Chapter 15
of the NOPR TSD describes the utility impact analysis in further
detail.
---------------------------------------------------------------------------
\61\ DOE/EIA approves use of the name NEMS to describe only an
official version of the model without any modification to code or
data. Because this analysis entails some minor code modifications
and the model is run under various policy scenarios that are
variations on DOE/EIA assumptions, DOE refers to it by the name
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under
whose aegis this work has been performed).
---------------------------------------------------------------------------
NEEP recommended estimating the value of capacity reduction due to
appliance standards as part of the NOPR, because reducing the need for
electricity capacity is an important benefit that minimum efficiency
standards bring to the country and various regions. Noting that the
NOPR provides estimates of the expected reduction in electricity
capacity due to residential furnace fan standards, NEEP urged the
Department to also include a financial benefit estimate associated with
these capacity reductions. (NEEP, No. 51 at p. 3)
For the NOPR, DOE used NEMS-BT, along with EIA data on the capital
cost of various power plant types, to estimate the reduction in
national expenditures for electricity generating capacity due to
potential residential furnace fan standards. The method used and the
results are described in chapter 15 of the NOPR TSD.
DOE is evaluating whether parts of the cost reduction are a
transfer and thus, according to guidance provided by OMB to Federal
agencies, should not be included in the estimates of the benefits and
costs of a regulation.\62\ Transfer payments are monetary payments from
one group to another that do not affect total resources available to
society (i.e., exchanges that neither decrease nor increase total
welfare). Benefits occur when savings to consumers result from real
savings to producers, which increases societal benefits. Cost savings
from reduced or delayed capital expenditure on power plants are a
benefit, and not a transfer, to the extent that the reduced expenditure
provides savings to both producers and consumers without affecting
other
[[Page 64110]]
groups. There would be a transfer to the extent that the delayed
construction caused some other group (e.g., equipment suppliers or
landowners who might have assets committed to the projects) to realize
a lower return on those assets. DOE is evaluating these issues to
determine the extent to which the cost savings from delayed capital
expenditure on power plants are a benefit to society.\63\
---------------------------------------------------------------------------
\62\ OMB Circular A-4 (Sept. 17, 2003), p. 38.
\63\ Although delayed investment implies a savings in total
cost, the savings may be less than the savings in capital cost
because the delay may also cause increases in other costs. For
example, if the delayed investment was the replacement of an
existing facility with a larger, more-efficient facility, the
increased cost of operating the old facility during the period of
delay might offset much of the savings from delayed investment. That
the project was delayed is evidence that doing so decreased overall
cost, but it does not indicate that the decrease was equal to the
entire savings in capital cost.
---------------------------------------------------------------------------
EEI stated that as part of its analysis on the potential impact of
new residential furnace fan efficiency standards on utilities, DOE
should consider the impacts of increased demands on gas and oil
systems, especially during peak fossil fuel demand days. (EEI, No. 65
at p. 2) In response, DOE has tentatively concluded that the increase
in gas and oil use associated with higher furnace fan efficiency levels
is expected to be very small in the context of overall gas and oil
demand, and as such, DOE believes that the impact on gas and oil
systems would be insignificant.
EEI stated that with respect to electric utilities, DOE should
ensure that it does not overestimate the potential for residential
furnace fan energy conservation standards to reduce peak load demand.
According to EEI, the vast majority of electric utilities in the U.S.
reach peak demand during the summer air conditioning season. (EEI, No.
65 at p. 2) In response, DOE's analysis with NEMS uses a demand load
shape that approximates the daily and seasonal load of residential
furnace fans. Thus, the resulting estimates of changes in generating
capacity due to higher residential furnace fan efficiency are
reasonable.
N. Employment Impact Analysis
Employment impacts from new or amended energy conservation
standards include direct and indirect impacts. Direct employment
impacts are any changes in the number of employees of manufacturers of
the products subject to standards; the MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more-efficient appliances. Indirect
employment impacts from standards consist of the jobs created or
eliminated in the national economy due to: (1) Reduced spending by end
users on energy; (2) reduced spending on new energy supply by the
utility industry; (3) increased consumer spending on the purchase of
new products; and (4) the effects of those three factors throughout the
economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS). BLS regularly publishes its estimates of the
number of jobs per million dollars of economic activity in different
sectors of the economy, as well as the jobs created elsewhere in the
economy by this same economic activity. Data from BLS indicate that
expenditures in the utility sector generally create fewer jobs (both
directly and indirectly) than expenditures in other sectors of the
economy.\64\ There are many reasons for these differences, including
wage differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based
on the BLS data alone, DOE believes net national employment may
increase because of shifts in economic activity resulting from energy
conservation standards for residential furnace fans.
---------------------------------------------------------------------------
\64\ See Bureau of Economic Analysis, ``Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II),'' U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
For the standard levels considered in this NOPR, DOE estimated
indirect national employment impacts using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies version 3.1.1
(ImSET).\65\ ImSET is a special-purpose version of the ``U.S. Benchmark
National Input-Output'' (I-O) model, which was designed to estimate the
national employment and income effects of energy-saving technologies.
The ImSET software includes a computer-based I-O model having
structural coefficients that characterize economic flows among the 187
sectors. ImSET's national economic I-O structure is based on a 2002
U.S. benchmark table, specially aggregated to the 187 sectors most
relevant to industrial, commercial, and residential building energy
use. DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run. For the NOPR, DOE used ImSET only to
estimate short-term (2019 and 2024) employment impacts.
---------------------------------------------------------------------------
\65\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact
of Sector Energy Technologies, PNNL-18412, Pacific Northwest
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------
For more details on the employment impact analysis, see chapter 16
of the NOPR TSD.
V. Analytical Results and Conclusions
This section addresses the results from DOE's analyses with respect
to potential energy conservation standards for residential furnace
fans. It addresses the TSLs examined by DOE, the projected impacts of
each of these levels if adopted as energy conservation standards for
furnace fans, and the proposed standard levels that DOE sets forth in
this NOPR. Additional details regarding DOE's analyses are contained in
the TSD supporting this notice.
A. Trial Standard Levels
DOE developed trial standard levels (TSLs) that combine efficiency
levels for each product class of residential furnace fans. Table V.1
presents the efficiency levels for each product class in each TSL. TSL
6 consists of the max-tech efficiency levels. TSL 5 consists of those
efficiency levels that provide the maximum NPV using a 7-percent
discount rate (see section V.B.3 for NPV results). TSL 4 consists of
those efficiency levels that provide the highest NPV using a 7-percent
discount rate, and that also result in a higher percentage of consumers
that receive an LCC benefit than experience an LCC loss (see section
V.B.1 for LCC results). TSL 3 uses efficiency level 3 for all product
classes. TSL 2 consists of efficiency levels that are the same as TSL 3
for non-weatherized gas furnace fans, weatherized gas furnace fans, and
electric furnace fans, but are at efficiency level 1 for oil-fired
furnace fans and manufactured home furnace fans. TSL 1 consists of the
most common efficiency levels in the current
[[Page 64111]]
market. In summary, Table V.1 presents the six TSLs which DOE has
identified for residential furnace fans, including the efficiency level
associated with each TSL, the technology options anticipated to achieve
those levels, and the expected resulting percentage reduction in FER
from the baseline corresponding to each efficiency level.
Table V.1--Trial Standard Levels for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
Trial standard levels (Efficiency Level)*
Product class -----------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 1 3 3 4 4 6
Fan..........................................
Non-weatherized, Condensing Gas Furnace Fan... 1 3 3 4 4 6
Weatherized Non-Condensing Gas Furnace Fan.... 1 3 3 4 4 6
Non-Weatherized, Non-Condensing Oil Furnace 1 1 3 1 3 6
Fan..........................................
Non-weatherized Electric Furnace/Modular 1 3 3 4 4 6
Blower Fan...................................
Manufactured Home Non-Weatherized, Non- 1 1 3 1 3 6
Condensing Gas Furnace Fan...................
Manufactured Home Non-Weatherized, Condensing 1 1 3 1 3 6
Gas Furnace Fan..............................
Manufactured Home Electric Furnace/Modular 1 1 3 4 4 6
Blower Fan...................................
----------------------------------------------------------------------------------------------------------------
* Efficiency level (EL) 1 = Improved PSC (12 percent). (For each EL, the percentages given refer to percent
reduction in FER from the baseline level.) EL 2 = Inverter-driven PSC (25 percent). EL 3 = Constant-torque BPM
motor (38 percent). EL 4 = Constant-torque BPM motor + Multi-Staging (51 percent). EL 5 = Constant-airflow BPM
motor (57 percent). EL 6 = Constant-airflow BPM motor + Multi-Staging (61 percent).
B. Economic Justification and Energy Savings
1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
To evaluate the economic impact of the considered efficiency levels
on consumers, DOE conducted an LCC analysis for each efficiency level.
More-efficient residential furnace fans would affect these consumers in
two ways: (1) Annual operating expense would decrease; and (2) purchase
price would increase. Inputs used for calculating the LCC include total
installed costs (i.e., equipment price plus installation costs),
operating expenses (i.e., energy costs, repair costs, and maintenance
costs), product lifetime, and discount rates.
The output of the LCC model is a mean LCC savings (or cost) for
each product class, relative to the base case efficiency distribution
for residential furnace fans. The LCC analysis also provides
information on the percentage of consumers for whom an increase in the
minimum efficiency standard would have a positive impact (net benefit),
a negative impact (net cost), or no impact.
DOE also performed a PBP analysis as part of the LCC analysis. The
PBP is the number of years it would take for the consumer to recover
the increased costs of higher-efficiency products as a result of energy
savings based on the operating cost savings. The PBP is an economic
benefit-cost measure that uses benefits and costs without discounting.
Chapter 8 of the NOPR TSD provides detailed information on the LCC and
PBP analyses.
DOE's LCC and PBP analyses provide five key outputs for each
efficiency level above the baseline, as reported in Table V.2 through
Table V.9 for the considered TSLs. (Results for all efficiency levels
are reported in chapter 8 of the NOPR TSD.) These outputs include the
proportion of residential furnace fan purchases in which the purchase
of a furnace fan compliant with the new energy conservation standard
creates a net LCC increase, no impact, or a net LCC savings for the
consumer. Another output is the average LCC savings from standards-
compliant products, as well as the median PBP for the consumer
investment in standards-compliant products. Savings are measured
relative to the base case efficiency distribution (see section IV.F.4),
not the baseline efficiency level.
Table V.2--LCC and PBP Results for Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ Period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $343 $2,146 $2,489 $0 0 100 0 ..........
1........................................... 1 354 1,943 2,297 64 2 68 30 1.34
2........................................... .......... 403 1,649 2,052 253 25 25 50 3.98
3........................................... 2, 3 414 1,389 1,803 442 18 25 57 2.69
4........................................... 4, 5 496 1,273 1,769 474 33 14 53 5.38
5........................................... .......... 662 1,333 1,995 275 53 12 35 11.53
6........................................... 6 697 1,260 1,957 313 58 0 42 11.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 64112]]
Table V.3--LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $339 $2,259 $2,598 $0 0 100 0 ..........
1........................................... 1 351 2,066 2,417 49 1 75 24 1.35
2........................................... .......... 398 1,775 2,173 203 21 41 38 4.13
3........................................... 2, 3 408 1,506 1,914 361 10 41 49 2.73
4........................................... 4, 5 490 1,414 1,904 371 24 34 42 5.39
5........................................... .......... 658 1,488 2,146 199 45 29 27 11.73
6........................................... 6 692 1,415 2,107 238 57 0 43 11.03
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.4--LCC and PBP Results for Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $329 $1,944 $2,273 $0 0 100 0 ..........
1........................................... 1 340 1,759 2,099 35 0 81 18 1.27
2........................................... .......... 387 1,549 1,936 104 13 56 31 4.94
3........................................... 2, 3 397 1,276 1,673 228 7 56 37 2.65
4........................................... 4, 5 476 1,170 1,645 247 25 33 41 6.39
5........................................... .......... 636 1,290 1,926 39 51 27 22 15.53
6........................................... 6 670 1,228 1,898 67 63 0 37 13.32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.5--LCC and PBP Results for Non-Weatherized, Non-Condensing Oil Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $387 $2,540 $2,927 $0 0 100 0 ..........
1........................................... 1, 2, 4 404 2,389 2,794 40 12 71 18 5.49
2........................................... .......... 470 2,042 2,512 245 46 28 26 12.33
3........................................... 3, 5 482 1,896 2,378 344 43 28 29 6.97
4........................................... .......... 570 1,833 2,402 326 49 28 23 12.07
5........................................... .......... 798 1,887 2,685 120 58 28 14 27.47
6........................................... 6 833 1,840 2,673 132 79 0 21 25.41
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.6--LCC and PBP Results for Non-Weatherized Electric Furnace/Modular Blower Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-Cycle Cost Savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $241 $1,198 $1,439 $0 0 100 0 ..........
1........................................... 1 252 1,100 1,352 21 5 73 21 2.39
2........................................... .......... 295 954 1,249 84 28 37 34 6.16
3........................................... 2, 3 294 830 1,124 160 20 37 42 3.15
4........................................... 4, 5 315 771 1,086 185 27 25 48 3.55
5........................................... .......... 450 855 1,305 18 52 25 23 12.83
6........................................... 6 482 824 1,306 17 68 0 32 13.45
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 64113]]
Table V.7--LCC and PBP Results for Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $254 $1,144 $1,398 $0 0 100 0 ..........
1........................................... 1, 2, 4 265 1,070 1,335 26 13 56 32 3.35
2........................................... .......... 310 955 1,265 97 62 0 38 10.74
3........................................... 3, 5 315 901 1,216 146 58 0 42 7.02
4........................................... .......... 391 876 1,267 95 70 0 30 13.10
5........................................... .......... 537 927 1,464 (102) 85 0 15 26.22
6........................................... 6 569 909 1,478 (116) 85 0 15 26.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Parentheses indicate negative values.
Table V.8--LCC and PBP Results for Manufactured Home Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $271 $1,355 $1,626 $0 0 100 0 ..........
1........................................... 1, 2, 4 282 1,261 1,543 27 7 68 26 2.73
2........................................... .......... 326 1,123 1,449 96 43 29 28 10.47
3........................................... 3, 5 334 1,039 1,373 152 38 29 32 6.46
4........................................... .......... 410 1,005 1,416 111 68 4 27 14.82
5........................................... .......... 564 1,053 1,618 (82) 82 4 14 34.31
6........................................... 6 597 1,025 1,622 (86) 84 0 16 32.23
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Table V.9--LCC and PBP Results for Manufactured Home Electric Furnace/Modular Blower Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2012$ Life-cycle cost savings
------------------------------------------------------------------------------------ Median
% of Consumers that experience payback
Efficiency level TSL Installed Discounted Average ------------------------------------ period
cost operating LCC savings Net years
cost 2012$* Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................................... .......... $192 $663 $855 $0 0 100 0 ..........
1........................................... 1, 2 202 608 810 14 8 71 21 2.49
2........................................... .......... 243 561 804 20 37 38 25 9.99
3........................................... 3 241 499 739 64 28 38 34 4.35
4........................................... 4, 5 259 464 723 78 34 26 40 4.61
5........................................... .......... 382 539 921 (70) 59 26 15 16.75
6........................................... 6 412 525 937 (86) 82 0 18 17.11
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
The results in the above tables reflect the assumptions for use of
constant circulation in the proposed DOE test procedure for furnace
fans. As discussed in section IV.E, DOE also performed a sensitivity
analysis for non-weatherized gas furnace fans to estimate the effect on
the LCC results if it assumed half as much use of continuous
circulation.\66\ Under this revised assumption, for non-weatherized,
non-condensing gas furnace fans, the average LCC savings decline
somewhat in the sensitivity analysis, and the share of consumers that
experience an LCC benefit declines slightly (see Table V.10). The same
changes occur for non-weatherized, condensing gas furnace fans, but the
magnitude of the effect is somewhat larger than for non-condensing gas
furnace fans (see Table V.11).
---------------------------------------------------------------------------
\66\ Non-weatherized gas furnace fans account for the vast
majority of furnace fans used in constant-circulation mode.
[[Page 64114]]
Table V.10--LCC and PBP Results for Non-Weatherized, Non-Condensing Gas Furnace Fans Under Alternative Constant-Circulation Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
Constant-circulation scenario
-----------------------------------------------------------------------------------------------
Current test procedure assumptions Half of current test procedure assumptions
-----------------------------------------------------------------------------------------------
Efficiency level TSL Average % of Consumers that experience Average % of Consumers that experience
LCC ------------------------------------ LCC -----------------------------------
savings Net savings Net
2012$ Net cost No impact benefit 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................... 1 64 2 68 30 59 2 68 29
2........................................... .......... 253 25 25 50 189 27 25 48
3........................................... 2, 3 442 18 25 57 362 19 25 56
4........................................... 4, 5 474 33 14 53 376 34 14 51
5........................................... .......... 275 53 12 35 173 55 12 33
6........................................... 6 313 58 0 42 204 60 0 40
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.11--LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace Fans Under Alternative Constant-Circulation Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
Constant-circulation scenario
-----------------------------------------------------------------------------------------------
Current test procedure assumptions Half of current test procedure assumptions
-----------------------------------------------------------------------------------------------
Efficiency level TSL Average % of Consumers that experience Average % of Consumers that experience
LCC ------------------------------------ LCC -----------------------------------
savings Net savings Net
2012$ Net cost No impact benefit 2012$ Net cost No impact benefit
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................... 1 49 1 75 24 41 1 75 24
2........................................... .......... 203 21 41 38 127 22 41 37
3........................................... 2, 3 361 10 41 49 266 11 41 48
4........................................... 4, 5 371 24 34 42 256 25 34 40
5........................................... .......... 199 45 29 27 78 47 29 24
6........................................... 6 238 57 0 43 107 60 0 40
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Consumer Subgroup Analysis
DOE estimated the impacts of the considered efficiency levels
(TSLs) on the following consumer subgroups: (1) Senior-only households;
and (2) low-income households. The results of the consumer subgroup
analysis indicate that for residential furnace fans, senior-only
households and low-income households experience lower average LCC
savings and longer payback periods than consumers overall, with the
difference being larger for low-income households. The difference
between the two subgroups and all consumers is larger for non-
weatherized, non-condensing gas furnace fans (see Table V.12) than for
non-weatherized, condensing gas furnace fans (see Table V.13). Chapter
11 of the NOPR TSD provides more detailed discussion on the consumer
subgroup analysis and results for the other product classes.
Table V.12--Comparison of Impacts for Consumer Subgroups With All Consumers, Non-Weatherized, Non-Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings 2012$ Median payback period years
---------------------------------------------------------------------------------------------------------------------------
Efficiency level All
TSL Senior-only Low income All consumers All consumers Senior-only Low-income consumers
----------------------------------------------------------------------------------------------------------------------------------------------- -----------
1.............................. 1 47 35 64 1.8 2.1 1.3
2.............................. .............. 200 123 253 5.4 6.3 4.0
3.............................. 2, 3 344 232 442 3.7 3.8 2.7
4.............................. 4, 5 343 206 474 7.2 7.8 5.4
5.............................. .............. 142 7 275 15.6 17.2 11.5
6.............................. 6 164 14 313 15.3 16.5 11.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.13--Comparison of Impacts for Consumer Subgroups With All Consumers, Non-Weatherized, Condensing Gas Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings 2012$ Median payback period years
Efficiency Level ---------------------------------------------------------------------------------------------------------------
TSL Senior-only Low-income All consumers Senior-only Low-income All consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 1 41 32 49 1.6 2.2 1.4
2....................................... .............. 173 129 203 5.1 6.6 4.1
3....................................... 2, 3 313 245 361 3.2 4.0 2.7
4....................................... 4, 5 301 212 371 6.6 8.5 5.4
[[Page 64115]]
5....................................... .............. 121 35 199 14.5 18.3 11.7
6....................................... 6 151 52 238 12.2 16.4 11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in section IV.F.5, EPCA provides a rebuttable
presumption that, in essence, an energy conservation standard is
economically justified if the increased purchase cost for a product
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard. However, DOE
routinely conducts a full economic analysis that considers the full
range of impacts, including those to the consumer, manufacturer,
Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i).
The results of this analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level,
thereby supporting or rebutting the results of any preliminary
determination of economic justification. For comparison with the more
detailed analytical results, DOE calculated a rebuttable presumption
payback period for each TSL. Table V.14 shows the rebuttable
presumption payback periods for the residential furnace fans product
classes.
Table V.14--Rebuttable Presumption Payback Periods for Residential Furnace Fan Product Classes
----------------------------------------------------------------------------------------------------------------
Rebuttable presumption payback years
Product class -----------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 1.13 1.65 1.65 3.08 3.08 6.21
Fan..........................................
Non-weatherized, Condensing Gas Furnace Fan... 1.06 1.49 1.49 2.82 2.82 5.72
Weatherized Non-Condensing Gas Furnace Fan.... 1.41 2.02 2.02 3.78 3.78 7.62
Non-Weatherized, Non-Condensing Oil Furnace 1.84 1.84 2.46 1.84 2.46 8.16
Fan..........................................
Non-weatherized Electric Furnace/Modular 1.14 1.60 1.60 1.80 1.80 4.97
Blower Fan...................................
Manufactured Home Non-Weatherized, Non- 1.33 1.33 1.91 1.33 1.91 7.26
Condensing Gas Furnace Fan...................
Manufactured Home Non-Weatherized, Condensing 1.25 1.25 1.79 1.25 1.79 6.85
Gas Furnace Fan..............................
Manufactured Home Electric Furnace/Modular 1.51 1.51 2.13 2.39 2.39 6.59
Blower Fan...................................
----------------------------------------------------------------------------------------------------------------
2. Economic Impact on Manufacturers
As noted above, DOE performed an MIA to estimate the impact of new
energy conservation standards on manufacturers of residential furnace
fans. The following section describes the expected impacts on
manufacturers at each considered TSL. Chapter 12 of the NOPR TSD
explains the analysis in further detail.
a. Industry Cash-Flow Analysis Results
Table V.15 and Table V.16 depict the financial impacts (represented
by changes in INPV) of new energy standards on manufacturers of
residential furnace fans, as well as the conversion costs that DOE
expects manufacturers would incur for all product classes at each TSL.
To evaluate the range of cash flow impacts on the residential furnace
fans industry, DOE modeled two different mark-up scenarios using
different assumptions that correspond to the range of anticipated
market responses to potential new energy conservation standards: (1)
The preservation of gross margin percentage; and (2) the preservation
of operating profit. Each of these scenarios is discussed immediately
below.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled a preservation of gross margin percentage markup
scenario, in which a uniform ``gross margin percentage'' markup is
applied across all potential efficiency levels. In this scenario, DOE
assumed that a manufacturer's absolute dollar markup would increase as
production costs increase in the standards case.
To assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of operating profit markup
scenario, which assumes that manufacturers would be able to earn the
same operating margin in absolute dollars in the standards case as in
the base case. In this scenario, while manufacturers make the necessary
investments required to convert their facilities to produce new
standards-compliant products, operating profit does not change in
absolute dollars and decreases as a percentage of revenue.
The set of results below shows potential INPV impacts for
residential furnace fan manufacturers; Table V.15 reflects the lower
bound of impacts, and Table V.16 represents the upper bound.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding industry values at each TSL. In the following
discussion, the INPV results refer to the difference in industry value
between the base case and each standards case that results from the sum
of discounted cash flows from the base year 2013 through 2048, the end
of the analysis period. To provide perspective on the short-run cash
flow impact, DOE includes in the discussion of the results below a
comparison of free cash flow between the base case and the standards
case at each TSL in the year before new standards would take effect.
This figure provides an understanding of the magnitude of the required
conversion costs relative to the cash flow generated by the industry in
the base case.
[[Page 64116]]
Table V.15--Manufacturer Impact Analysis for Residential Furnace Fans--Preservation of Gross Margin Percentage Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case -----------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................ 2012$ Millions......... 252.2 252.9 265.7 265.1 286.0 286.5 310.4
Change in INPV...................... 2012$ Millions......... ........... 0.7 13.5 12.9 33.8 34.2 58.2
(%).................... ........... 0.3 5.3 5.1 13.4 13.6 23.1
Product Conversion Costs............ 2012$ Millions......... ........... 1.1 2.8 2.9 3.1 3.2 9.3
Capital Conversion Costs............ 2012$ Millions......... ........... ........... ........... ........... ........... ........... 155.0
Total Conversion Costs.............. 2012$ Millions......... ........... 1.1 2.8 2.9 3.1 3.2 164.3
Free Cash Flow...................... 2012$ Millions......... 12.12 11.78 11.28 11.25 11.17 11.15 (60.44)
Free Cash Flow (change from Base %...................... 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66)
Case).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
Table V.16--Manufacturer Impact Analysis for Residential Furnace Fans--Preservation of Operating Profit Markup Scenario*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case -----------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................ 2012$ Millions......... 252.2 249.2 225.5 223.6 197.8 196.7 82.1
Change in INPV...................... 2012$ Millions......... ........... (3.0) (26.7) (28.6) (54.4) (55.5) (170.1)
(%).................... ........... (1.2) (10.6) (11.3) (21.6) (22.0) (67.5)
Product Conversion Costs............ 2012$ Millions......... ........... 1.1 2.8 2.9 3.1 3.2 9.3
Capital Conversion Costs............ 2012$ Millions......... ........... ........... ........... ........... ........... ........... 155.0
Total Conversion Costs.............. 2012$ Millions......... ........... 1.1 2.8 2.9 3.1 3.2 164.3
Free Cash Flow...................... 2012$ Millions......... 12.12 11.78 11.28 11.25 11.17 11.15 (60.44)
Free Cash Flow (change from Base %...................... 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66)
Case).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
TSL 1 represents the most common efficiency levels in the current
market for all product classes. At TSL 1, DOE estimates impacts on INPV
for residential furnace fan manufacturers to range from -$3.0 million
to $0.7 million, or a change in INPV of -1.2 percent to 0.3 percent. At
this potential standard level, industry free cash flow is estimated to
decrease by approximately 2.8 percent to $11.78 million, compared to
the base-case value of $12.12 million in the year before the compliance
date (2018).
DOE anticipates no capital conversion costs at TSL 1, because
manufacturers would be able to use a different motor type without
making significant changes to their manufacturing equipment or
production processes. DOE anticipates minor product conversion costs
associated with redesigning products that are currently below the
proposed efficiency level and updating product literature.
TSL 2 represents EL 1 for the oil and manufactured home product
classes, and EL 3 for all other product classes. At TSL 2, DOE
estimates impacts on INPV for residential furnace fan manufacturers to
range from -$26.7 million to $13.5 million, or a change in INPV of -
10.6 percent to 5.3 percent. At this potential standard level, industry
free cash flow is estimated to decrease by approximately 6.9 percent to
$11.28 million, compared to the base-case value of $12.12 million in
the year before the compliance date (2018).
DOE anticipates no capital conversion costs at TSL 2, because
manufacturers would be able to use a different motor type without
making significant changes to their manufacturing equipment or
production processes. DOE anticipates product conversion costs at TSL 2
to be higher than those at TSL 1, because more products in the market
(with the exception of oil furnaces and manufactured housing products)
would need to be redesigned in order to meet the higher proposed
efficiency levels. Additional product literature would also need to be
updated for the redesigned products.
TSL 3 represents EL 3 for all product classes. At TSL 3, DOE
estimates impacts on INPV for residential furnace fan manufacturers to
range from -$28.6 million to $12.9 million, or a change in INPV of -
11.3 percent to 5.1 percent. At this potential standard level, industry
free cash flow is estimated to decrease by approximately 7.2 percent to
$11.25 million, compared to the base-case value of $12.12 million in
the year before the compliance date (2018).
DOE anticipates no capital conversion costs at TSL 3, because
manufacturers would be able to use a different motor type without
making significant changes to their manufacturing equipment or
production processes. DOE anticipates product conversion costs at TSL 3
to be slightly higher than those at TSL 2 because more manufactured
housing products in the market would need to be
[[Page 64117]]
redesigned in order to meet the higher proposed efficiency levels.
Additional product literature would also need to be updated for the
redesigned products.
TSL 4 represents the efficiency levels that provide the highest NPV
using a 7-percent discount rate, and that also result in a higher
percentage of consumers receiving an LCC benefit rather than an LCC
loss. At TSL 4, DOE estimates impacts on INPV for residential furnace
fan manufacturers to range from -$54.4 million to $33.8 million, or a
change in INPV of -21.6 percent to 13.4 percent. At this potential
standard level, industry free cash flow is estimated to decrease by
approximately 7.9 percent to $11.17 million, compared to the base-case
value of $12.12 million in the year before the compliance date (2018).
DOE anticipates no capital conversion costs at TSL 4, because
manufacturers would be able to use a different motor type without
making significant changes to their manufacturing equipment or
production processes. DOE anticipates product conversion costs at TSL 4
to be higher than those at TSL 3, because more products in the market
(with the exception of oil furnaces) would need to be redesigned in
order to meet the higher proposed efficiency levels. Additional product
literature would also need to be updated for the redesigned products.
TSL 5 represents the efficiency levels that provide the maximum NPV
using a 7-percent discount rate. At TSL 5, DOE estimates impacts on
INPV for residential furnace fan manufacturers to range from -$55.5
million to $34.2 million, or a change in INPV of -22.0 percent to 13.6
percent. At this potential standard level, industry free cash flow is
estimated to decrease by approximately 8.0 percent to $11.15 million,
compared to the base-case value of $12.12 million in the year before
the compliance date (2018).
DOE anticipates no capital conversion costs at TSL 5, because
manufacturers would be able to use a different motor type without
making significant changes to their manufacturing equipment or
production processes. DOE anticipates product conversion costs at TSL 5
to be slightly higher than those at TSL 4, because more oil furnaces
and manufactured housing electric furnaces in the market would need to
be redesigned in order to meet the higher proposed efficiency levels.
Additional product literature would also need to be updated for the
redesigned products.
TSL 6 represents the max-tech efficiency level for all product
classes. At TSL 6, DOE estimates impacts on INPV for residential
furnace fan manufacturers to range from -$170.1 million to $58.2
million, or a change in INPV of -67.5 percent to 23.1 percent. At this
potential standard level, industry free cash flow is estimated to
decrease by approximately 598.7 percent to -$60.44 million, compared to
the base-case value of $12.12 million in the year before the compliance
date (2018).
DOE anticipates very high capital conversion costs at TSL 6 because
manufacturers would need to make significant changes to their
manufacturing equipment and production processes in order to
accommodate the use of backward-inclined impellers. This design option
would require modifying, or potentially eliminating, current fan
housings. DOE also anticipates high product conversion costs to develop
new designs with backward-inclined impellers for all their products.
Some manufacturers may also have stranded assets from specialized
machines for building fan housing that can no longer be used.
b. Impacts on Employment
To quantitatively assess the impacts of energy conservation
standards on direct employment in the residential furnace fan industry,
DOE used the GRIM to estimate the domestic labor expenditures and
number of employees in the base case and at each TSL from 2013 through
2048. DOE used statistical data from the U.S. Census Bureau's 2011
Annual Survey of Manufacturers (ASM),\67\ the results of the
engineering analysis, and interviews with manufacturers to determine
the inputs necessary to calculate industry-wide labor expenditures and
domestic employment levels. Labor expenditures related to manufacturing
of the product are a function of the labor intensity of the product,
the sales volume, and an assumption that wages remain fixed in real
terms over time. The total labor expenditures in each year are
calculated by multiplying the MPCs by the labor percentage of MPCs.
---------------------------------------------------------------------------
\67\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau
(2011) (Available at: http://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------
The total labor expenditures in the GRIM were then converted to
domestic production employment levels by dividing production labor
expenditures by the annual payment per production worker (production
worker hours times the labor rate found in the U.S. Census Bureau's
2011 ASM). The estimates of production workers in this section cover
workers, including line-supervisors who are directly involved in
fabricating and assembling a product within the manufacturing facility.
Workers performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific products covered by
this rulemaking.
The total direct employment impacts calculated in the GRIM are the
sum of the changes in the number of production workers resulting from
the new energy conservation standards for residential furnace fans, as
compared to the base case.
For residential furnace fans, DOE does not expect significant
changes in domestic employment levels from baseline to EL 5. One
manufacturer commented during interviews that employment may be
affected if their profit margins decreased due to a new standard, in
which case consideration may be given to moving production facilities
to another country, but changes in employment due to standards are
generally not a major concern for manufacturers of residential furnace
fans, because all efficiency levels from baseline to EL 5 can be
achieved by substituting a higher-efficiency component for an existing
component. DOE found during manufacturer interviews that the assembly
processes for integrating the higher-efficiency components do not
differ significantly from those used for existing components. For
instance, manufacturers design their housings and motor mounts to be
compatible with all motor types. Consequently, no additional labor is
required to integrate higher-efficiency motors and controls to reach EL
1 through EL 3, and labor costs will be equivalent to the baseline at
those levels. The same is true for integration of components that
enable multi-stage heating capabilities (in addition to higher-
efficiency motors) to reach EL 4 and EL 5.
The only standard level at which significant changes in employment
would possibly be expected to occur is at EL6, the max-tech level. At
EL 6, DOE estimates increases in labor costs because backwards-inclined
impeller assemblies are heavier and require more robust mounting
approaches than are currently used for forward-curved impeller
assemblies. The alternate mounting approaches needed to integrate
backward-inclined impeller assemblies could require manufacturers to
modify their current assembly processes, resulting in increased labor.
However, DOE received limited feedback from manufacturers regarding the
labor required to produce furnace
[[Page 64118]]
fans with backward-curved impellers, because they generally do not have
any experience in working with this design option.
DOE notes that the employment impacts discussed here are
independent of the indirect employment impacts to the broader U.S.
economy, which are documented in chapter 15 of the NOPR TSD.
c. Impacts on Manufacturing Capacity
According to the residential furnace fan manufacturers interviewed,
the new energy conservation standards proposed in this NOPR would not
significantly affect manufacturers' production capacities. Some
manufacturers mentioned that capacity could potentially be impacted by
additional testing requirements and bottlenecks with sourcing if motor
suppliers cannot keep up with demand, but concerns were not generally
expressed about manufacturing capacity until max-tech levels. Thus, at
the proposed TSL, DOE believes manufacturers would be able to maintain
manufacturing capacity levels and continue to meet market demand under
new energy conservation standards.
d. Impacts on Subgroups of Manufacturers
Small manufacturers, niche equipment manufacturers, and
manufacturers exhibiting a cost structure substantially different from
the industry average could be affected disproportionately. As discussed
in section IV.J using average cost assumptions developed for an
industry cash-flow estimate is inadequate to assess differential
impacts among manufacturer subgroups.
For the residential furnace fans industry, DOE identified and
evaluated the impact of new energy conservation standards on one
subgroup, specifically small manufacturers. The SBA defines a ``small
business'' as having 750 employees or less for NAICS 333415, ``Air-
Conditioning and Warm Air Heating Equipment and Commercial and
Industrial Refrigeration Equipment Manufacturing.'' Based on this
definition, DOE identified 14 manufacturers in the residential furnace
fans industry that qualify as small businesses. For a discussion of the
impacts on the small manufacturer subgroup, see the regulatory
flexibility analysis in section VI.B of this notice and chapter 12 of
the NOPR TSD.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of recent or impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly
affect manufacturers' financial operations. Multiple regulations
affecting the same manufacturer can strain profits and lead companies
to abandon product lines or markets with lower expected future returns
than competing products. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
During previous stages of this rulemaking, DOE identified a number
of requirements in addition to new energy conservation standards for
residential furnace fans. The following section briefly summarizes
those identified regulatory requirements and addresses comments DOE
received with respect to cumulative regulatory burden, as well as other
key related concerns that manufacturers raised during interviews.
DOE Certification, Compliance, and Enforcement (CC&E) Rule
This notice proposes CC&E requirements for residential furnace
fans. In addition, the April 2, 2013 test procedure SNOPR included
proposed sampling requirements for CC&E testing of residential furnace
fans that mandate that, unless otherwise specified, a minimum of two
units need to be tested for each basic model. 78 FR 19606, 19625.
Manufacturers indicated during interviews that the regulatory
burden from certification and compliance testing is one of the biggest
problems they face. One manufacturer stated that it could potentially
shut down the industry due to the large number of basic models that
need to be tested. DOE recognizes that the CC&E requirements contribute
to cumulative regulatory burden. However, for the reasons discussed in
section IV.J.3, DOE does not find that testing furnace fans according
to its proposed test procedure would be unduly burdensome.
DOE Energy Conservation Standards for Furnaces and Central Air
Conditioners and Heat Pumps
On June 27, 2011, DOE published a direct final rule in the Federal
Register to amend the energy conservation standards for residential
furnaces, central air conditioners, and heat pumps (the ``HVAC rule'').
76 FR 37408. In addition to setting a base national standard, the June
27, 2011 direct final rule also implemented regional standard levels,
where the minimum efficiency level for a product is determined by the
geographic region in which it is sold. (DOE subsequently confirmed
adoption of these standards through publication of a notice of
effective date and compliance dates for this rulemaking in the Federal
Register on October 31, 2011. 76 FR 67037.) Compliance with these
standards was required on May 1, 2013 for non-weatherized furnaces and
will be required on January 1, 2015 for weatherized furnaces, central
air conditioners, and heat pumps.\68\
---------------------------------------------------------------------------
\68\ DOE notes that the American Public Gas Association (APGA)
brought a lawsuit challenging the energy conservation standards
pertaining to non-weatherized gas furnaces, and that lawsuit is
currently pending before the U.S. Court of Appeals for the District
of Columbia Circuit (D.C. Circuit). There is also a settlement
agreement before the Court regarding this matter. On May 1, 2013,
the D.C. Circuit granted a motion requesting a stay of the May 1,
2013 compliance date for non-weatherized gas furnaces. In its order,
the Court stayed the compliance deadline for six months following
the issuance of any opinion by the Court in this case upholding the
standards.
---------------------------------------------------------------------------
Since furnace fan manufacturers are also manufacturers of the HVAC
product in which the furnace fan is used, furnace fan manufacturers are
subject to the amended energy conservation standards for residential
furnaces, central air conditioners, and heat pumps. At the minimum
energy efficiency levels selected for the direct final rule, DOE
estimated that the total industry investment required to meet the
amended energy conservation standards would be $28 million (in 2009$).
At the minimum energy efficiency levels selected for this notice of
proposed rulemaking, DOE estimates that the total industry investment
would be $3.1 million. Manufacturers of furnace fans face product
conversion costs related to standards for furnace fans, as well as
product and capital conversion costs related to standards for
residential furnaces, central air conditioners, and heat pumps.
The direct final rule for energy conservation standards for
residential furnaces, central air conditioners, and heat pumps includes
standards for energy efficiency as well as standards for standby mode
and off mode energy consumption. DOE has completed a test procedure
final rule for standby mode and off mode energy consumption in
residential furnaces. 77 FR 76831 (Dec. 31, 2012). DOE is also
preparing a test procedure for standby mode and off mode energy
consumption in residential central air conditioners and heat pumps.
[[Page 64119]]
EPA Phaseout of Hydrochlorofluorocarbons (HCFCs)
The U.S. is obligated under the Montreal Protocol to limit
production and consumption of HCFCs through incremental reductions,
culminating in a complete phaseout of HCFCs by 2030. On December 15,
2009, EPA published the ``2010 HCFC Allocation Rule,'' which allocates
production and consumption allowances for HCFC-22 for each year between
2010 and 2014. 74 FR 66412. On January 4. 2012, EPA published the
``2012 HCFC Allocation Proposed Rule,'' which proposes to lift the
regulatory ban on the production and consumption of HCFC-22 (following
a court decision \69\ in August 2010 to vacate a portion of the ``2010
HCFC Allocation Rule'') by establishing company-by-company HCFC-22
baselines and allocating allowances for 2012-2014. 77 FR 237.
---------------------------------------------------------------------------
\69\ See Arkema v. EPA, 618 F.3d 1 (D.C. Cir. 2010).
---------------------------------------------------------------------------
HCFC-22, which is also known as R-22, is a popular refrigerant that
is commonly used in air-conditioning products. Manufacturers of
residential furnace fans who also manufacture residential central air
conditioners must comply with the allowances established by the
allocation rule, thereby facing a cumulative regulatory burden.
EPA ENERGY STAR
During interviews, some manufacturers stated that ENERGY STAR
specifications for residential furnaces, central air conditioners, and
heat pumps would be a source of cumulative regulatory burden. ENERGY
STAR specifications are as follows:
Table V.17--ENERGY STAR Specifications for HVAC Products That Use
Furnace Fans
------------------------------------------------------------------------
------------------------------------------------------------------------
Gas Furnaces......................... Rating of 90% AFUE or greater for
U.S. South gas furnaces.
Rating of 95% AFUE or greater for
U.S. North gas furnaces.
Less than or equal to 2.0%
furnace fan efficiency.*
Oil Furnaces......................... Rating of 85% AFUE or greater.
Less than or equal to 2.0%
furnace fan efficiency.*
Air-Source Heat Pumps................ >= 8.2 HSPF/>=14.5 SEER/>=12 EER
for split systems.
>= 8.0 HSPF/>=14 SEER/>=11 EER
for single-package equipment.
Central Air Conditioners............. >=14.5 SEER/>=12 EER for split
systems.
>=14 SEER/>=11 EER for single-
package equipment.
------------------------------------------------------------------------
* Furnace fan efficiency in this context is furnace fan electrical
consumption as a percentage of total furnace energy consumption in
heating mode.
DOE realizes that the cumulative effect of several regulations on
an industry may significantly increase the burden faced by
manufacturers that need to comply with multiple regulations and
certification programs from different organizations and levels of
government. However, DOE notes that certain standards, such as ENERGY
STAR, are optional for manufacturers. Furthermore, for certain products
listed in the table above, ENERGY STAR standards are equivalent to the
standards set in DOE's June 27, 2011 direct final rule for energy
conservation standards for residential furnaces, central air
conditioners, and heat pumps.
Canadian Energy Efficiency Regulations
In June 2010, the Office of Energy Efficiency of National Resources
Canada (NRCan) published a bulletin to announce the proposal of new
electricity reporting requirements for air handlers used in residential
central heating and cooling systems that are imported into Canada for
sale or lease.\70\ In November 2011, NRCan published a regulatory
update which stated that NRCan intends to apply reporting requirements
to only air handlers used in residential gas furnaces, and that
requirements for air handlers used in other heating and cooling systems
would be expanded in a future regulatory amendment. \71\ In this
update, NRCan proposed to use Canadian Standards Association (CSA)
C823-11 (Performance of air handlers in residential space conditioning
systems) as the test method for determining efficiency. Consequently,
manufacturers of furnace fans used in residential gas furnaces may face
additional reporting requirements if they sell their products in
Canada.
---------------------------------------------------------------------------
\70\ Air Handlers--June 2010, Natural Resources Canada
(Available at: http://oee.nrcan.gc.ca/regulations/bulletins/14551)
(Last accessed May 6, 2013).
\71\ Regulatory Update--November 2011, Natural Resources Canada
(Available at: http://oee.nrcan.gc.ca/regulations/bulletins/17839)
(Last accessed May 6, 2013).
---------------------------------------------------------------------------
California Title 24
Title 24, Part 6, of the California Code of Regulations includes
building energy efficiency standards for residential and nonresidential
buildings. The California Energy Commission (CEC) published new
standards in 2008, which became effective January 1, 2010, that include
watts per cubic foot per minute (W/CFM) limits for fans used in
central, residential HVAC systems.\72\
---------------------------------------------------------------------------
\72\ Building Energy Efficiency Program, California Energy
Commission (Available at: http://www.energy.ca.gov/title24/) (Last
accessed May 6, 2013).
---------------------------------------------------------------------------
ASHRAE Standard 90.1
ASHRAE Standard 90.1, ``Energy Standard for Buildings Except Low-
Rise Residential Buildings,'' sets minimum efficiency standards for
buildings, except low-rise residential buildings. On May 16, 2012, DOE
published the final rule in the Federal Register for Energy
Conservation Standards and Test Procedures for Commercial Heating, Air-
Conditioning, and Water-Heating Equipment, through which DOE adopted
the efficiency levels specified in ASHRAE Standard 90.1-2010. 77 FR
28928.
Included in the ASHRAE standards are minimum efficiency levels for
commercial heating, air-conditioning, and water-heating equipment.
Several manufacturers of residential furnace fans also manufacture this
equipment.
Low-NOX Requirements
Rule 1111 of the South Coast Air Quality Management District (AQMD)
currently requires residential furnaces installed in the District to
meet a NOX emission limit of 40 nanograms per joule (ng/J)
of heat output.\73\ The development of this rule is an ongoing process
to evaluate low-NOX technologies for combustion equipment.
In 1983, the rule was amended to limit applicability to furnaces with a
heat input of less than 175,000 Btu per hour, or for combination
heating and cooling units, a cooling rate of less than 65,000 Btu per
hour.\74\ However, the rule was again amended in 2009 to establish a
[[Page 64120]]
new limit of 14 ng/J for non-condensing, condensing, weatherized, and
mobile home furnaces, with the following compliance schedule: \75\
---------------------------------------------------------------------------
\73\ South Coast AQMD List of Current Rules, California
Environmental Protection Agency Air Resouorces Board (Available at:
http://www.arb.ca.gov/drdb/sc/cur.htm) (Last accessed May 6, 2013).
\74\ See https://aqmd.gov/hb/attachments/2011-2015/2013Mar/2013-Mar1-019.pdf.
\75\ See http://www.arb.ca.gov/DRDB/SC/CURHTML/R1111.pdf.
Table V.18--Low NOX Compliance Schedule
------------------------------------------------------------------------
Compliance date Furnace type
------------------------------------------------------------------------
Oct 1, 2014............................... Condensing Furnace.
Oct 1, 2015............................... Non-condensing Furnace.
Oct 1, 2016............................... Weatherized Furnace.
Oct 1, 2018............................... Mobile Home Furnace.
------------------------------------------------------------------------
The Proposed Amended Rule (PAR) 1111 affects manufacturers,
distributors, wholesalers, builders, and installers of residential
furnaces. AHRI indicates that, although there are currently no
manufacturers of fan-type gas-fired residential furnaces within the
AQMD jurisdiction, some of these manufacturers do sell and distribute
products installed in this District.
PAR 1111 also provides manufacturers with an alternative compliance
option. For any furnace type, a manufacturer may request a delayed
compliance date of up to three years if they submit a plan and pay an
emission mitigation fee.
DOE discusses these and other requirements, and includes the full
details of the cumulative regulatory burden analysis, in chapter 12 of
the NOPR TSD. DOE also discusses the impacts on the small manufacturer
subgroup in the regulatory flexibility analysis in section VI.B of this
NOPR.
3. National Impact Analysis
a. Significance of Energy Savings
For each TSL, DOE projected energy savings for residential furnace
fans purchased in the 30-year period that begins in the first full year
of compliance with amended standards (2019-2048). The savings are
measured over the entire lifetime of products purchased in the 30-year
period. DOE quantified the energy savings attributable to each TSL as
the difference in energy consumption between each standards case and
the base case. Table V.19 presents the estimated primary energy savings
for each considered TSL, and Table V.20 presents the estimated FFC
energy savings for each considered TSL. The energy savings in the
tables below are net savings that reflect the subtraction of the
additional gas or oil used by the furnace associated with higher-
efficiency furnace fans. With improved fan efficiency, there is less
heat from the motor, which means that the furnace needs to operate
more. The approach for estimating national energy savings is further
described in section IV.H.1.
The difference between primary energy savings and FFC energy
savings for all TSLs is small (less than 1%), because the upstream
energy savings associated with the electricity savings are partially
(or fully, for TSL 2 and 3) offset by the upstream energy use from the
additional gas or oil used by the furnace due to higher-efficiency
furnace fans. The ranking of TSLs is not impacted by the use of FFC
energy savings.
Table V.19--Cumulative National Primary Energy Savings for Trial Standard Levels for Residential Furnace Fans
Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level quads
Product class -----------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 0.254 1.021 1.021 1.861 1.861 2.404
Fan..........................................
Non-weatherized, Condensing Gas Furnace Fan... 0.276 0.877 0.877 2.003 2.003 2.793
Weatherized Non-Condensing Gas Furnace Fan.... 0.032 0.138 0.138 0.264 0.264 0.338
Non-Weatherized, Non-Condensing Oil Furnace 0.005 0.005 0.025 0.005 0.025 0.051
Fan..........................................
Non-weatherized Electric Furnace/Modular 0.042 0.202 0.202 0.357 0.357 0.451
Blower Fan...................................
Manufactured Home Non-Weatherized, Non- 0.010 0.010 0.039 0.010 0.039 0.089
Condensing Gas Furnace Fan...................
Manufactured Home Non-Weatherized, Condensing 0.002 0.002 0.008 0.002 0.008 0.022
Gas Furnace Fan..............................
Manufactured Home Electric Furnace/Modular 0.009 0.009 0.034 0.060 0.060 0.073
Blower Fan...................................
-----------------------------------------------------------------
Total--All Classes........................ 0.631 2.265 2.344 4.562 4.617 6.221
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.
Table V.20--Cumulative National Full-Fuel-Cycle Energy Savings for Trial Standard Levels for Residential Furnace
Fans Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level quads
Product class -----------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 0.256 1.021 1.021 1.870 1.870 2.421
Fan..........................................
Non-Weatherized, Condensing Gas Furnace Fan... 0.277 0.866 0.866 2.005 2.005 2.802
Weatherized Non-Condensing Gas Furnace Fan.... 0.032 0.138 0.138 0.266 0.266 0.340
Non-Weatherized, Non-Condensing Oil Furnace 0.005 0.005 0.024 0.005 0.024 0.050
Fan..........................................
Non-Weatherized Electric Furnace/Modular 0.042 0.202 0.202 0.357 0.357 0.452
Blower Fan...................................
Manufactured Home Non-Weatherized, Non- 0.010 0.010 0.039 0.010 0.039 0.089
Condensing Gas Furnace Fan...................
Manufactured Home Non-Weatherized, Condensing 0.002 0.002 0.008 0.002 0.008 0.022
Gas Furnace Fan..............................
Manufactured Home Electric Furnace/Modular 0.010 0.010 0.034 0.061 0.061 0.074
Blower Fan...................................
-----------------------------------------------------------------
[[Page 64121]]
Total--All Classes........................ 0.635 2.254 2.332 4.576 4.629 6.250
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.
OMB Circular A-4 \76\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9 rather than 30 years of
product shipments. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards.\77\ We would note that the review timeframe established in
EPCA generally does not overlap with the product lifetime, product
manufacturing cycles, or other factors specific to residential furnace
fans. Thus, such results are presented for informational purposes only
and are not indicative of any change in DOE's analytical methodology.
The NES results based on a 9-year analytical period are presented in
Table V.21. The impacts are counted over the lifetime of products
purchased in 2019-2027.
---------------------------------------------------------------------------
\76\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis'' (Sept. 17, 2003) (Last accessed September 17,
2013 from http://www.whitehouse.gov/omb/circulars_a004_a-4/).
\77\ EPCA requires DOE to review its energy conservation
standards at least once every 6 years, and requires, for certain
products, a 3-year period after any new standard is promulgated
before compliance is required, except that in no case may any new
standards be required within 6 years of the compliance date of the
previous standards. (42 U.S.C. 6295(m)) While adding a 6-year review
to the 3-year compliance period adds up to 9 years, DOE notes that
it may undertake reviews at any time within the 6-year period and
that the 3-year compliance date may yield to the 6-year backstop. A
9-year analysis period may not be appropriate given the variability
that occurs in the timing of standards reviews and the fact that for
some consumer products, the compliance period is 5 years rather than
3 years.
Table V.21--Cumulative National Primary Energy Savings for Trial Standard Levels for Residential Furnace Fans
Sold in 2019-2027
----------------------------------------------------------------------------------------------------------------
Trial standard level quads
Product class -----------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 0.085 0.348 0.348 0.642 0.642 0.846
Fan..........................................
Non-Weatherized, Condensing Gas Furnace Fan... 0.076 0.239 0.239 0.545 0.545 0.755
Weatherized Non-Condensing Gas Furnace Fan.... 0.010 0.046 0.046 0.086 0.086 0.111
Non-Weatherized, Non-Condensing Oil Furnace 0.002 0.002 0.009 0.002 0.009 0.021
Fan..........................................
Non-Weatherized Electric Furnace/Modular 0.012 0.058 0.058 0.102 0.102 0.130
Blower Fan...................................
Manufactured Home Non-Weatherized, Non- 0.003 0.003 0.013 0.003 0.013 0.030
Condensing Gas Furnace Fan...................
Manufactured Home Non-Weatherized, Condensing 0.001 0.001 0.002 0.001 0.002 0.006
Gas Furnace Fan..............................
Manufactured Home Electric Furnace/Modular 0.003 0.003 0.012 0.020 0.020 0.025
Blower Fan...................................
-----------------------------------------------------------------
Total--All Classes........................ 0.193 0.700 0.727 1.402 1.421 1.924
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.
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 residential
furnace fans. In accordance with OMB's guidelines on regulatory
analysis,\78\ DOE calculated NPV using both a 7-percent and a 3-percent
real discount rate. Table V.22 shows the consumer NPV results for each
TSL considered for residential furnace fans. In each case, the impacts
cover the lifetime of products purchased in 2019-2048.
---------------------------------------------------------------------------
\78\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4).
Table V.22--Cumulative Net Present Value of Consumer Benefit for Trial Standard Levels for Residential Furnace
Fans Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
Trial standard level
------------------------------------------------------------------
Product class Discount rate Billion 2012$ *
% ------------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non- 3 1.46 9.86 9.86 11.09 11.09 8.28
Condensing Gas Furnace Fan..
Non-Weatherized, Condensing .............. 1.49 11.16 11.16 12.23 12.23 9.20
Gas Furnace Fan.............
[[Page 64122]]
Weatherized Non-Condensing .............. 0.17 1.12 1.12 1.30 1.30 0.49
Gas Furnace Fan.............
Non-Weatherized, Non- .............. 0.02 0.02 0.19 0.02 0.19 0.10
Condensing Oil Furnace Fan..
Non-Weatherized Electric .............. 0.15 1.05 1.05 1.29 1.29 0.12
Furnace/Modular Blower Fan..
Manufactured Home Non- .............. 0.04 0.04 0.25 0.04 0.25 (0.06)
Weatherized, Non-Condensing
Gas Furnace Fan.............
Manufactured Home Non- .............. 0.01 0.01 0.05 0.01 0.05 (0.02)
Weatherized, Condensing Gas
Furnace Fan.................
Manufactured Home Electric .............. 0.03 0.03 0.13 0.17 0.17 (0.17)
Furnace/Modular Blower Fan..
----------------------------------------------------------------------------------
Total--All Classes....... .............. 3.37 23.30 23.81 26.16 26.57 17.95
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non- 7 0.53 3.52 3.52 3.71 3.71 1.98
Condensing Gas Furnace Fan..
Non-Weatherized, Condensing .............. 0.51 3.78 3.78 3.91 3.91 2.11
Gas Furnace Fan.............
Weatherized Non-Condensing .............. 0.06 0.39 0.39 0.41 0.41 (0.01)
Gas Furnace Fan.............
Non-Weatherized, Non- .............. 0.01 0.01 0.07 0.01 0.07 0.01
Condensing Oil Furnace Fan..
Non-Weatherized Electric .............. 0.05 0.33 0.33 0.40 0.40 (0.20)
Furnace/Modular Blower Fan..
Manufactured Home Non- .............. 0.02 0.02 0.08 0.02 0.08 (0.09)
Weatherized, Non-Condensing
Gas Furnace Fan.............
Manufactured Home Non- .............. 0.00 0.00 0.02 0.00 0.02 (0.02)
Weatherized, Condensing Gas
Furnace Fan.................
Manufactured Home Electric .............. 0.01 0.01 0.04 0.05 0.05 (0.13)
Furnace/Modular Blower Fan..
----------------------------------------------------------------------------------
Total--All Classes....... .............. 1.19 8.07 8.23 8.51 8.64 3.65
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.23. The impacts are counted over the
lifetime of products purchased in 2019-2027. As mentioned previously,
this information is presented for informational purposes only and is
not indicative of any change in DOE's analytical methodology or
decision criteria.
Table V.23--Cumulative Net Present Value of Consumer Benefit for Trial Standard Levels for Residential Furnace
Fans Sold in 2019-2027
----------------------------------------------------------------------------------------------------------------
Trial standard level
------------------------------------------------------------------
Product class Discount rate Billion 2012$ *
% ------------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non- 3 0.63 4.32 4.32 4.88 4.88 3.75
Condensing Gas Furnace Fan..
Non-Weatherized, Condensing .............. 0.55 4.11 4.11 4.51 4.51 3.51
Gas Furnace Fan.............
Weatherized Non-Condensing .............. 0.07 0.48 0.48 0.56 0.56 0.27
Gas Furnace Fan.............
Non-Weatherized, Non- .............. 0.01 0.01 0.09 0.01 0.09 0.07
Condensing Oil Furnace Fan..
Non-Weatherized Electric .............. 0.05 0.39 0.39 0.48 0.48 0.04
Furnace/Modular Blower Fan..
Manufactured Home Non- .............. 0.02 0.02 0.11 0.02 0.11 (0.01)
Weatherized, Non-Condensing
Gas Furnace Fan.............
Manufactured Home Non- .............. 0.00 0.00 0.02 0.00 0.02 0.00
Weatherized, Condensing Gas
Furnace Fan.................
Manufactured Home Electric .............. 0.01 0.01 0.06 0.07 0.07 (0.07)
Furnace/Modular Blower Fan..
----------------------------------------------------------------------------------
Total--All Classes........... .............. 1.35 9.36 9.59 10.53 10.72 7.55
----------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non- 7 0.29 1.98 1.98 2.09 2.09 1.17
Condensing Gas Furnace Fan..
Non-Weatherized, Condensing .............. 0.26 1.87 1.87 1.94 1.94 1.11
Gas Furnace Fan.............
Weatherized Non-Condensing .............. 0.03 0.22 0.22 0.23 0.23 0.02
Gas Furnace Fan.............
Non-Weatherized, Non- .............. 0.00 0.00 0.04 0.00 0.04 0.02
Condensing Oil Furnace Fan..
[[Page 64123]]
Non-Weatherized Electric .............. 0.02 0.17 0.17 0.20 0.20 (0.10)
Furnace/Modular Blower Fan..
Manufactured Home Non- .............. 0.01 0.01 0.05 0.01 0.05 (0.05)
Weatherized, Non-Condensing
Gas Furnace Fan.............
Manufactured Home Non- .............. 0.00 0.00 0.01 0.00 0.01 (0.01)
Weatherized, Condensing Gas
Furnace Fan.................
Manufactured Home Electric .............. 0.01 0.01 0.02 0.03 0.03 (0.07)
Furnace/Modular Blower Fan..
----------------------------------------------------------------------------------
Total--All Classes....... .............. 0.63 4.26 4.35 4.50 4.58 2.09
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
As noted in section IV.H.2, DOE assumed no change in residential
furnace fan prices over the 2019-2048 period. In addition, DOE
conducted a sensitivity analysis using alternative price trends: One in
which prices decline over time, and one in which prices increase over
time. These price trends, and the NPV results from the associated
sensitivity cases, are described in Appendix 10-C of the NOPR TSD.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for residential furnace
fans to reduce energy costs for consumers, with the resulting net
savings being redirected to other forms of economic activity. Those
shifts in spending and economic activity could affect the demand for
labor. As described in section IV.N, DOE used an input/output model of
the U.S. economy to estimate indirect employment impacts of the TSLs
that DOE considered in this rulemaking. DOE understands that there are
uncertainties involved in projecting employment impacts, especially
changes in the later years of the analysis. Therefore, DOE generated
results for near-term time frames (2019 and 2024), where these
uncertainties are reduced.
The results suggest that the proposed standards would be likely to
have negligible impact on the net demand for labor in the economy. The
net change in jobs is so small that it would be imperceptible in
national labor statistics and might be offset by other, unanticipated
effects on employment. Chapter 16 of the NOPR TSD presents more
detailed results about anticipated indirect employment impacts.
4. Impact on Product Utility or Performance
DOE has tentatively concluded that the standards it is proposing in
this NOPR would not lessen the utility or performance of residential
furnace fans.
5. Impact of Any Lessening of Competition
DOE has also considered any lessening of competition that is likely
to result from new and amended standards. The Attorney General
determines the impact, if any, of any lessening of competition likely
to result from a proposed standard, and transmits such determination in
writing to the Secretary, together with an analysis of the nature and
extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))
To assist the Attorney General in making such a determination, DOE
has provided DOJ with copies of this notice and the TSD for review. DOE
will consider DOJ's comments on the proposed rule in preparing the
final rule, and DOE will publish and respond to DOJ's comments in that
document.
6. Need of the Nation to Conserve Energy
An improvement in the energy efficiency of the products subject to
this rule is likely to improve the security of the nation's energy
system by reducing overall demand for energy. Reduction in the growth
of electricity demand resulting from energy conservation standards may
also improve the reliability of the electricity system. Reductions in
national electric generating capacity estimated for each considered TSL
are reported in chapter 15 of the NOPR TSD.
Energy savings from standards for the residential furnace fan
products covered in this NOPR could also produce environmental benefits
in the form of reduced emissions of air pollutants and greenhouse gases
associated with electricity production. Table V.24 provides DOE's
estimate of cumulative emissions reductions projected to result from
the TSLs considered in this rulemaking. The table includes both power
sector emissions and upstream emissions. The emissions were calculated
using the multipliers discussed in section IV.K. DOE reports annual
emissions reductions for each TSL in chapter 13 of the NOPR TSD.
As discussed in section IV.K, DOE did not include NOX
emissions reduction from power plants in States subject to CSAPR,
because an energy conservation standard would not affect the overall
level of NOX emissions in those States due to the emissions
caps mandated by CSAPR. For SO2, projected emissions will be
far below the cap established by CSAPR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that efficiency standards will reduce SO2
emissions.
[[Page 64124]]
Table V.24--Cumulative Emissions Reduction for Potential Standards for Residential Furnace Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL
-----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Emissions *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 57.12 214.17 221.76 416.41 421.74 563.75
SO2 (thousand tons)..................................... 31.17 117.04 121.28 227.23 230.23 307.77
NOX (thousand tons)..................................... 30.66 122.38 126.31 227.18 229.86 303.72
Hg (tons)............................................... 0.24 0.95 0.98 1.76 1.79 2.36
N2O (thousand tons)..................................... 0.67 2.65 2.75 4.96 5.03 6.66
CH4 (thousand tons)..................................... 4.65 18.24 18.91 34.24 34.72 46.01
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 1.88 5.99 6.11 13.37 13.42 18.50
SO2 (thousand tons)..................................... 12.18 38.30 39.17 86.23 86.63 119.61
NOX (thousand tons)..................................... 0.50 2.00 2.04 3.72 3.75 4.95
Hg (tons)............................................... 0.00 0.00 0.00 0.01 0.01 0.01
N2O (thousand tons)..................................... 0.02 0.09 0.09 0.16 0.17 0.22
CH4 (thousand tons)..................................... 127.91 352.80 365.71 879.41 887.59 1249.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 59.01 220.16 227.87 429.78 435.16 582.25
SO2 (thousand tons)..................................... 43.36 155.34 160.44 313.46 316.86 427.38
NOX (thousand tons)..................................... 31.16 124.38 128.35 230.90 233.60 308.67
Hg (tons)............................................... 0.24 0.95 0.99 1.77 1.80 2.38
N2O (thousand tons)..................................... 0.70 2.74 2.84 5.12 5.19 6.88
N2O thousand tons CO2eq**............................... 207.2 816.0 845.0 1527.0 1547.7 2049.3
CH4 (thousand tons)..................................... 132.56 371.04 384.62 913.65 922.31 1295.3
CH4 million tons CO2eq**................................ 3.314 9.276 9.616 22.84 23.06 32.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Includes emissions from additional gas use associated with more-efficient furnace fans.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
As part of the analysis for this NOPR, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX estimated for each of the TSLs considered for
residential furnace fans. As discussed in section IV.L, for
CO2, DOE used four sets of values for the SCC developed by
an interagency process. Three sets of values are based on the average
SCC from three integrated assessment models, at discount rates of 2.5
percent, 3 percent, and 5 percent. The fourth set represents the 95th-
percentile SCC estimate across all three models at a 3-percent discount
rate. The SCC values for CO2 emissions reductions in 2015,
expressed in 2012$, are $12.9/ton, $40.8/ton, $62.2/ton, and $117/ton.
The values for later years are higher due to increasing damages as the
magnitude of projected climate change increases. Table V.25 presents
the global value of CO2 emissions reductions at each TSL.
DOE calculated domestic values as a range from 7 percent to 23 percent
of the global values, and these results are presented in chapter 14 of
the NOPR TSD.
Table V.25--Global Present Value of CO2 Emissions Reduction for Potential Standards for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
SCC Case *
---------------------------------------------------------------
Million 2012$
TSL ---------------------------------------------------------------
3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
Primary Energy Emissions **
----------------------------------------------------------------------------------------------------------------
1............................................... 298.5 1531.1 2498.9 4724.6
2............................................... 1121.1 5746.8 9377.5 17732.7
3............................................... 1161.1 5951.3 9710.9 18363.5
4............................................... 2177.1 11165.3 18221.5 34451.9
5............................................... 2205.1 11308.6 18455.1 34893.8
6............................................... 2943.6 15103.4 24651.6 46603.0
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 9.9 50.5 82.4 155.9
2............................................... 31.3 160.5 261.9 495.0
3............................................... 32.0 163.9 267.5 505.7
4............................................... 70.0 358.6 585.1 1106.2
[[Page 64125]]
5............................................... 70.3 360.1 587.6 1110.8
6............................................... 97.0 496.6 810.1 1531.5
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 308.3 1581.7 2581.3 4880.5
2............................................... 1152.4 5907.3 9639.4 18227.7
3............................................... 1193.1 6115.2 9978.5 18869.2
4............................................... 2247.2 11524.0 18806.6 35558.1
5............................................... 2275.5 11668.7 19042.7 36004.6
6............................................... 3040.6 15599.9 25461.7 48134.5
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.9, $40.8, $62.2, and $117
per metric ton (2012$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).
** Includes site emissions from additional use of natural gas associated with more-efficient furnace fans.
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other greenhouse gas (GHG) emissions
to changes in the future global climate and the potential resulting
damages to the world economy continues to evolve rapidly. Thus, any
value placed in this rulemaking on reducing CO2 emissions is
subject to change. DOE, together with other Federal agencies, will
continue to review various methodologies for estimating the monetary
value of reductions in CO2 and other GHG emissions. This
ongoing review will consider the comments on this subject that are part
of the public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this NOPR the most
recent values and analyses resulting from the interagency review
process.
DOE also estimated a range for the cumulative monetary value of the
economic benefits associated with NOX emissions reductions
anticipated to result from standards for the residential furnace fan
products that are the subject of this NOPR. The dollar-per-ton values
that DOE used are discussed in section IV.L. Table V.26 presents the
present value of cumulative NOX emissions reductions for
each TSL calculated using the average dollar-per-ton values and 7-
percent and 3-percent discount rates.
Table V.26--Present Value of NOX Emissions Reduction for Potential
Standards for Residential Furnace Fans
------------------------------------------------------------------------
million 2012$
-------------------------------
TSL 3% Discount 7% Discount
rate Rate
------------------------------------------------------------------------
Power Sector and Site Emissions *
------------------------------------------------------------------------
1....................................... 31.0 10.7
2....................................... 116.4 40.0
3....................................... 120.7 41.4
4....................................... 226.2 77.8
5....................................... 229.2 78.8
6....................................... 306.1 105.3
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1....................................... 12.4 4.4
2....................................... 39.0 13.9
3....................................... 39.9 14.3
4....................................... 88.0 31.6
5....................................... 88.4 31.7
6....................................... 122.3 44.0
------------------------------------------------------------------------
Total Emissions **
------------------------------------------------------------------------
1....................................... 43.4 15.1
2....................................... 155.4 53.9
3....................................... 160.5 55.7
4....................................... 314.2 109.4
5....................................... 317.6 110.6
6....................................... 428.3 149.3
------------------------------------------------------------------------
* Includes site emissions from additional use of natural gas associated
with more-efficient furnace fans.
** Components may not sum to total due to rounding.
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.27 presents the NPV values that result from adding the estimates of
the potential economic benefits resulting from reduced full-fuel-cycle
CO2 and NOX emissions in each of four valuation
scenarios to the NPV of consumer savings calculated for each TSL
considered in this rulemaking, at both a 7-percent and a 3-percent
discount rate. The CO2 values used in the columns of each
table correspond to the four scenarios for the valuation of
CO2 emission reductions discussed above.
[[Page 64126]]
Table V.27--Potential Standards for Residential Furnace Fans: Net Present Value of Consumer Savings Combined
with Present Value of Monetized Benefits from CO2 and NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% Discount Rate added with:
---------------------------------------------------------------
SCC Case $12.9/ SCC Case $40.8/ SCC Case $62.2/ SCC Case $117/
TSL metric ton metric ton metric ton metric ton
CO2* and Low CO2* and CO2* and CO2* and High
Value for NOX Medium Value Medium Value Value for NOX
** for NOX ** for NOX ** **
----------------------------------------------------------------------------------------------------------------
billion 2012$
---------------------------------------------------------------
1............................................... 3.7 5.0 6.0 8.3
2............................................... 24.5 29.4 33.1 41.8
3............................................... 25.0 30.1 34.0 43.0
4............................................... 28.5 38.0 45.3 62.3
5............................................... 28.9 38.6 45.9 63.2
6............................................... 21.1 34.0 43.8 66.9
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% Discount Rate added with:
---------------------------------------------------------------
TSL SCC Case $12.9/ SCC Case $40.8/ SCC Case $62.2/ SCC Case $117/
metric ton metric ton metric ton metric ton
CO2* and Low CO2* and CO2* and CO2* and High
Value for NOX Medium Value Medium Value Value for NOX
** for NOX ** for NOX ** **
sbillion 2012$
---------------------------------------------------------------
1............................................... 1.5 2.8 3.8 6.1
2............................................... 9.2 14.0 17.8 26.4
3............................................... 9.4 14.4 18.3 27.2
4............................................... 10.8 20.1 27.4 44.3
5............................................... 10.9 20.4 27.8 44.8
6............................................... 6.7 19.4 29.3 52.1
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2012$.
** Low Value corresponds to $468 per ton of NOX emissions. Medium Value corresponds to $2,639 per ton, and High
Value corresponds to $4,809 per ton.
Although adding the value of consumer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. consumer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
the SCC are performed with different methods that use quite different
time frames for analysis. The national operating cost savings is
measured for the lifetime of products shipped in 2019-2048. The SCC
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of
CO2 in each year. Because of the long residence time of
CO2 in the atmosphere, these impacts continue well beyond
2100.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) No
other factors were considered in this analysis.
C. Proposed Standards
When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered product shall be designed to achieve the maximum improvement in
energy efficiency that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In
determining whether a standard is economically justified, the Secretary
must determine whether the benefits of the standard exceed its burdens
by, to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also ``result in significant conservation of
energy.'' (42 U.S.C. 6295(o)(3)(B))
For this NOPR, DOE considered the impacts of standards at each TSL,
beginning with the maximum technologically feasible level, to determine
whether that level was economically justified. Where the max-tech level
was not justified, DOE then considered the next most efficient level
and undertook the same evaluation until it reached the highest
efficiency level that is both technologically feasible and economically
justified and saves a significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, tables in this section summarize the quantitative analytical
results for each TSL, based on the assumptions and methodology
discussed herein. The efficiency levels contained in each TSL are
described in section V.A. In addition to the quantitative results
presented in the tables, DOE also considers other burdens and benefits
that affect economic justification. These include the impacts on
identifiable subgroups of consumers who may be disproportionately
affected by a national standard, and impacts on employment. Section
V.B.1.b presents the estimated impacts of each TSL for these subgroups.
DOE discusses the impacts on direct employment in residential furnace
fan manufacturing in section V.B.2.b, and discusses the indirect
employment impacts in section V.B.3.c.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off
[[Page 64127]]
upfront costs and energy savings in the absence of government
intervention. Much of this literature attempts to explain why consumers
appear to undervalue energy efficiency improvements. There is evidence
that consumers undervalue future energy savings as a result of: (1) A
lack of information; (2) a lack of sufficient salience of the long-term
or aggregate benefits; (3) a lack of sufficient savings to warrant
delaying or altering purchases; (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs; and (6) a divergence in incentives (for example, renter
versus owner or builder versus purchaser). Other literature indicates
that with less than perfect foresight and a high degree of uncertainty
about the future, consumers may trade off at a higher than expected
rate between current consumption and uncertain future energy cost
savings. This undervaluation suggests that regulation that promotes
energy efficiency can produce significant net private gains (as well as
producing social gains by, for example, reducing pollution).
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego a
purchase of a product in the standards case, this decreases sales for
product manufacturers and the cost to manufacturers is included in the
MIA. Second, DOE accounts for energy savings attributable only to
products actually used by consumers in the standards case; if a
standard decreases the number of products purchased by consumers, this
decreases the potential energy savings from an energy conservation
standard. DOE provides estimates of changes in the volume of product
purchases in chapter 9 of the NOPR TSD. DOE's current analysis does not
explicitly control for heterogeneity in consumer preferences,
preferences across subcategories of products or specific features, or
consumer price sensitivity variation according to household income
(Reiss and White, 2005).\79\
---------------------------------------------------------------------------
\79\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance standards, and
potential enhancements to the methodology by which these impacts are
defined and estimated in the regulatory process.\80\ DOE welcomes
comments on how to more fully assess the potential impact of energy
conservation standards on consumer choice and how to quantify this
impact in its regulatory analysis.
---------------------------------------------------------------------------
\80\ Alan Sanstad, Notes on the Economics of Household Energy
Consumption and Technology Choice. Lawrence Berkeley National
Laboratory (2010) (Available at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (Last
accessed May 3, 2013).
---------------------------------------------------------------------------
1. Benefits and Burdens of Trial Standard Levels Considered for
Residential Furnace Fans
Table V.28 through Table V.30 summarize the quantitative impacts
estimated for each TSL for residential furnace fans. The national
impacts are measured over the lifetime of furnace fans purchased in the
30-year period that begins in the first full year of compliance with
amended standards (2019-2048). The energy savings, emissions
reductions, and value of emissions reductions refer to full-fuel-cycle
results. Results that refer to primary energy savings are presented in
chapter 10 of the NOPR TSD.
Table V.28--Summary of Analytical Results for Residential Furnace Fan Standards: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Full-Fuel-Cycle Energy Savings quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.635 2.254 2.332 4.576 4.629 6.250
--------------------------------------------------------------------------------------------------------------------------------------------------------
NPV of Consumer Benefits 2012$ billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate............................ 3.37 23.30 23.81 26.16 26.57 17.95
7% discount rate............................ 1.19 8.07 8.23 8.51 8.64 3.65
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons..................... 59.01 220.2 227.9 429.8 435.2 582.3
SO2 thousand tons........................... 43.36 155.3 160.4 313.5 316.9 427.4
NOX thousand tons........................... 31.16 124.4 128.4 230.9 233.6 308.7
Hg tons..................................... 0.24 0.95 0.99 1.77 1.80 2.38
N2O thousand tons........................... 0.70 2.74 2.84 5.12 5.19 6.88
N2O thousand tons CO2eq*.................... 207.2 816.0 845.0 1527.0 1547.7 2049.3
CH4 thousand tons........................... 132.6 371.0 384.6 913.7 922.3 1295
CH4 million tons CO2eq*..................... 3.314 9.276 9.616 22.84 23.06 32.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction (Total FFC Emissions) 2012$ billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 **...................................... 0.308 to 4.880 1.152 to 18.23 1.193 to 18.87 2.247 to 35.56 2.275 to 36.01 3.041 to 48.13
NOX--3% discount rate....................... 0.043 0.155 0.161 0.314 0.318 0.428
NOX--7% discount rate....................... 0.015 0.054 0.056 0.109 0.111 0.149
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on interagency estimates of the global benefit of reduced CO2 emissions.
[[Page 64128]]
Table V.29--Summary of Analytical Results for Residential Furnace Fan Standards: Manufacturer and Average or Median Consumer Impacts*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV 2012$ million.................. (3.0) to 0.7 (26.7) to 13.5 (28.6) to 12.9 (54.4) to 33.8 (55.5) to 34.2 (170.1) to 58.2
Industry NPV % change....................... (1.2) to 0.3 (10.6) to 5.3 (11.3) to 5.1 (21.6) to 13.4 (22.0) to 13.6 (67.5) to 23.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings 2012$
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace $64 $442 $442 $474 $474 $313
Fan........................................
Non-Weatherized, Condensing Gas Furnace Fan. 49 361 361 371 371 238
Weatherized Non-Condensing Gas Furnace Fan.. 35 228 228 247 247 67
Non-Weatherized, Non-Condensing Oil Furnace 40 40 344 40 344 132
Fan........................................
Non-Weatherized Electric Furnace/Modular 21 160 160 185 185 17
Blower Fan.................................
Manufactured Home Non-Weatherized, Non- 26 26 146 26 146 (116)
Condensing Gas Furnace Fan.................
Manufactured Home Non-Weatherized, 27 27 152 27 152 (86)
Condensing Gas Furnace Fan.................
Manufactured Home Electric Furnace/Modular 14 14 64 78 78 (86)
Blower Fan.................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Median PBP years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace 1.34 2.69 2.69 5.38 5.38 11.20
Fan........................................
Non-Weatherized, Condensing Gas Furnace Fan. 1.35 2.73 2.73 5.39 5.39 11.03
Weatherized Non-Condensing Gas Furnace Fan.. 1.27 2.65 2.65 6.39 6.39 13.32
Non-Weatherized, Non-Condensing Oil Furnace 5.49 5.49 6.97 5.49 6.97 25.41
Fan........................................
Non-Weatherized Electric Furnace/Modular 2.39 3.15 3.15 3.55 3.55 13.45
Blower Fan.................................
Manufactured Home Non-Weatherized, Non- 3.35 3.35 7.02 3.35 7.02 26.73
Condensing Gas Furnace Fan.................
Manufactured Home Non-Weatherized, 2.73 2.73 6.46 2.73 6.46 32.23
Condensing Gas Furnace Fan.................
Manufactured Home Electric Furnace/Modular 2.49 2.49 4.35 4.61 4.61 17.11
Blower Fan.................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
[[Page 64129]]
Table V.30--Summary of Analytical Results for Residential Furnace Fan Standards: Distribution of Consumer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
Product Class (percent) (percent) (percent) (percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Gas Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 2 18 18 33 33 58
No Impact............................................... 68 25 25 14 14 0
Net Benefit............................................. 30 57 57 53 53 42
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Condensing Gas Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 1 10 10 24 24 57
No Impact............................................... 75 41 41 34 34 0
Net Benefit............................................. 24 49 49 42 42 43
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weatherized Non-Condensing Gas Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 0 7 7 25 25 63
No Impact............................................... 81 56 56 33 33 0
Net Benefit............................................. 18 37 37 41 41 37
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized, Non-Condensing Oil Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 12 12 43 12 43 79
No Impact............................................... 71 71 28 71 28 0
Net Benefit............................................. 18 18 29 18 29 21
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Weatherized Electric Furnace/Modular Blower Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 5 20 20 27 27 68
No Impact............................................... 73 37 37 25 25 0
Net Benefit............................................. 21 42 42 48 48 32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 13 13 58 13 58 85
No Impact............................................... 56 56 0 56 0 0
Net Benefit............................................. 32 32 42 32 42 15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 7 7 38 7 38 84
No Impact............................................... 68 68 29 68 29 0
Net Benefit............................................. 26 26 32 26 32 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufactured Home Electric Furnace/Modular Blower Fan
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost................................................ 8 8 28 34 34 82
No Impact............................................... 71 71 38 26 26 0
Net Benefit............................................. 21 21 34 40 40 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.
First, DOE considered TSL 6, which would save an estimated total of
6.25 quads of energy, an amount DOE considers significant. TSL 6 has an
estimated NPV of consumer benefit of $3.65 billion using a 7-percent
discount rate, and $17.95 billion using a 3-percent discount rate.
The cumulative CO2 emissions reduction at TSL 6 is 582.3
million metric tons. The estimated monetary value of the CO2
emissions reductions ranges from $3.041 billion to $48.13 billion. The
other emissions reductions are 427.4 thousand tons of SO2,
308.7 thousand tons of NOX, 2.38 tons of Hg, 6.88 thousand
tons of N2O, and 1.295 thousand tons of CH4.
At TSL 6, the average LCC savings are positive for Non-weatherized,
Non-condensing Gas Furnace Fans, Non-weatherized, Condensing Gas
Furnace Fans, Weatherized Non-Condensing Gas Furnace Fan, Non-
Weatherized, Non-Condensing Oil Furnace Fan, and Non-weatherized
Electric Furnace/Modular Blower Fans. The LCC savings are negative for
Manufactured Home Non-weatherized, Non-condensing Gas Furnace Fans,
Manufactured Home Non-weatherized, Condensing Gas Furnace Fans, and
Manufactured Home Electric Furnace/Modular Blower Fans. The median
payback period is lower than the median product lifetime (which is 22.6
years for gas and electric furnace fans) for all of the product
classes. The share of consumers experiencing an LCC cost (increase in
LCC) is higher than the share experiencing an LCC benefit (decrease in
LCC) for all of the product classes.
At TSL 6, manufacturers may expect diminished profitability due to
large increases in product costs, stranded assets, capital investments
in equipment and tooling, and expenditures related to engineering and
testing. The projected change in INPV ranges from a decrease of $170.1
million to an increase of $58.2 million based on DOE's manufacturer
markup scenarios. The upper bound of $58.2 million is considered an
optimistic scenario for manufacturers
[[Page 64130]]
because it assumes manufacturers can fully pass on substantial
increases in product costs. DOE recognizes the risk of large negative
impacts on industry if manufacturers' expectations concerning reduced
profit margins are realized. TSL 6 could reduce INPV in the residential
furnace fan industry by up to 67.5 percent if impacts reach the lower
bound of the range.
Accordingly, the Secretary tentatively concludes that at TSL 6 for
residential furnace fans, the benefits of significant energy savings,
positive NPV of consumer benefit, emission reductions and the estimated
monetary value of the CO2 emissions reductions, as well as
positive average LCC savings for most product classes would be
outweighed by the high percentage of consumers that would experience an
LCC cost in all of the product classes, and the substantial reduction
in INPV for manufacturers. Consequently, DOE has concluded that TSL 6
is not economically justified.
Next, DOE considered TSL 5, which would save an estimated total of
4.629 quads of energy, an amount DOE considers significant. TSL 5 has
an estimated NPV of consumer benefit of $8.64 billion using a 7-percent
discount rate, and $26.57 billion using a 3-percent discount rate.
The cumulative CO2 emissions reduction at TSL 5 is 435.2
million metric tons. The estimated monetary value of the CO2
emissions reductions ranges from $2.275 billion to $36.01 billion. The
other emissions reductions are 316.9 thousand tons of SO2,
233.6 thousand tons of NOX, 1.80 tons of Hg, 5.19 thousand
tons of N2O, and 922.3 thousand tons of CH4.
At TSL 5, the average LCC savings are positive for all of the
product classes. The median payback period is lower than the average
product lifetime for all of the product classes. The share of consumers
experiencing an LCC benefit (decrease in LCC) is higher than the share
experiencing an LCC cost (increase in LCC) for five of the product
classes (Non-Weatherized, Non-Condensing Gas Furnace Fans, Non-
weatherized, Condensing Gas Furnace Fans, Weatherized Non-Condensing
Gas Furnace Fans, Non-weatherized Electric Furnace/Modular Blower Fans,
and Manufactured Home Electric Furnace/Modular Blower Fans), but lower
for the other three product classes.
At TSL 5, the projected change in INPV ranges from a decrease of
$55.5 million to an increase of $34.2 million. At TSL 5, DOE recognizes
the risk of negative impacts if manufacturers' expectations concerning
reduced profit margins are realized. If the lower bound of the range of
impacts is reached, as DOE expects, TSL 5 could result in a net loss of
22.0 percent in INPV for residential furnace fan manufacturers.
Accordingly, the Secretary tentatively concludes that at TSL 5 for
residential furnace fans, the benefits of significant energy savings,
positive NPV of consumer benefit, positive average LCC savings for all
of the product classes, emission reductions and the estimated monetary
value of the CO2 emissions reductions, would be outweighed
by the high percentage of consumers that would be negatively impacted
for some of the product classes, and the substantial reduction in INPV
for manufacturers. Consequently, DOE has concluded that TSL 5 is not
economically justified.
Next, DOE considered TSL 4, which would save an estimated total of
4.576 quads of energy, an amount DOE considers significant. TSL 4 has
an estimated NPV of consumer benefit of $8.51 billion using a 7-percent
discount rate, and $26.16 billion using a 3-percent discount rate.
The cumulative CO2 emissions reduction at TSL 4 is 429.8
million metric tons. The estimated monetary value of the CO2
emissions reductions ranges from $2.247 billion to $35.56 billion. The
other emissions reductions are 313.5 thousand tons of SO2,
230.9 thousand tons of NOX, 1.77 tons of Hg, 5.12 thousand
tons of N2O, and 913.7 thousand tons of CH4.
At TSL 4, the average LCC savings are positive for all of the
product classes. The median payback period is lower than the average
product lifetime for all of the product classes. The share of consumers
experiencing an LCC benefit (decrease in LCC) is higher than the share
experiencing an LCC cost (increase in LCC) for all of the product
classes.
At TSL 4, the projected change in INPV ranges from a decrease of
$54.4 million to an increase of $33.8 million. At TSL 4, DOE recognizes
the risk of negative impacts if manufacturers' expectations concerning
reduced profit margins are realized. If the lower bound of the range of
impacts is reached, as DOE expects, TSL 4 could result in a net loss of
21.6 percent in INPV for residential furnace fan manufacturers.
After considering the analysis and weighing the benefits and the
burdens, the Secretary tentatively concludes that at TSL 4 for
residential furnace fans, the benefits of significant energy savings,
positive NPV of consumer benefit, positive average LCC savings for all
of the product classes, emission reductions and the estimated monetary
value of the CO2 emissions reductions would outweigh the
reduction in INPV for manufacturers. The Secretary has tentatively
concluded that TSL 4 would save a significant amount of energy and is
technologically feasible and economically justified. Therefore, DOE
today proposes to adopt the energy conservation standards for
residential furnace fans at TSL 4. Table V.31 presents the proposed
energy conservation standards for residential furnace fans.
Table V.31--Proposed Energy Conservation Standards for Residential
Furnace Fans
------------------------------------------------------------------------
Product class Proposed standard: FER * (W/1000 cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing FER = 0.029 x QMax + 180.
Gas Furnace Fan.
Non-weatherized, Condensing Gas FER = 0.029 x QMax + 196.
Furnace Fan.
Weatherized Non-Condensing Gas FER = 0.029 x QMax + 135.
Furnace Fan.
Non-Weatherized, Non-Condensing FER = 0.051 x QMax + 301.
Oil Furnace Fan.
Non-weatherized Electric Furnace/ FER = 0.029 x QMax + 165.
Modular Blower Fan.
Manufactured Home Non- FER = 0.051 x QMax + 242.
Weatherized, Non-Condensing Gas
Furnace Fan.
Manufactured Home Non- FER = 0.051 x QMax + 262.
Weatherized, Condensing Gas
Furnace Fan.
Manufactured Home Electric FER = 0.029 x QMax + 105.
Furnace/Modular Blower Fan.
Manufactured Home Weatherized Reserved.
Non-Condensing Gas Furnace Fan.
Manufactured Home Non- Reserved.
Weatherized Non-Condensing Oil
Furnace Fan.
------------------------------------------------------------------------
* QMax is the airflow, in cfm, at the maximum airflow-control setting
measured using the proposed DOE test procedure. 78 FR 19606, 19627
(April 2, 2013).
[[Page 64131]]
2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
The benefits and costs of these proposed standards can also be
expressed in terms of annualized values. The annualized monetary values
are the sum of: (1) the annualized national economic value, expressed
in 2012$, of the benefits from operating products that meet the
proposed standards (consisting primarily of operating cost savings from
using less energy, minus increases in equipment purchase costs, which
is another way of representing consumer NPV), and (2) the monetary
value of the benefits of emission reductions, including CO2
emission reductions.\81\ The value of the CO2 reductions,
otherwise known as the Social Cost of Carbon (SCC), is calculated using
a range of values per metric ton of CO2 developed by a
recent interagency process.
---------------------------------------------------------------------------
\81\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2013, the year used for discounting
the NPV of total consumer costs and savings, for the time-series of
costs and benefits using discount rates of 3 and 7 percent for all
costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates. From
the present value, DOE then calculated the fixed annual payment over
a 30-year period, starting in 2013, that yields the same present
value. The fixed annual payment is the annualized value. Although
DOE calculated annualized values, this does not imply that the time-
series of cost and benefits from which the annualized values were
determined would be a steady stream of payments.
---------------------------------------------------------------------------
Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and SCC are performed with different methods that use different
time frames for analysis. The national operating cost savings is
measured for the lifetime of products shipped in 2019-2048. The SCC
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of
CO2 in each year over a very long period.
Table V.32 shows the annualized values for the proposed standards
for residential furnace fans. The results under the primary estimate
are as follows. (All monetary values below are expressed in 2012$.)
Using a 7-percent discount rate for benefits and costs other than
CO2 reduction (for which DOE used a 3-percent discount rate
along with the SCC series corresponding to a value of $40.8/ton in
2015), the cost of the residential furnace fan standards proposed in
this rule is $231 million per year in increased equipment costs, while
the benefits are $872 million per year in reduced equipment operating
costs, $571 million in CO2 reductions, and $8.24 million in
reduced NOX emissions. In this case, the net benefit amounts
to $1,220 million per year.
Using a 3-percent discount rate for all benefits and costs and the
SCC series corresponding to a value of $40.8/ton in 2015, Table V.32
shows the cost of the residential furnace fans standards proposed in
this rule is $290 million per year in increased equipment costs, while
the benefits are $1585 million per year in reduced operating costs,
$571 million in CO2 reductions, and $15.56 million in
reduced NOX emissions. In this case, the net benefit amounts
to $1,882 million per year.
Table V.32--Annualized Benefits and Costs of Proposed Standards (TSL 4) for Residential Furnace Fans
----------------------------------------------------------------------------------------------------------------
million 2012$/year
-----------------------------------------------------------
Discount Rate Low net benefits High net benefits
Primary estimate * estimate estimate
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings.......... 7%................ 872............... 710............... 1082
3%................ 1585.............. 1264.............. 2011
CO2 Reduction Monetized Value 5%................ 139............... 117............... 171
($12.9/t case) **.
CO2 Reduction Monetized Value 3%................ 571............... 477............... 702
($40.8/t case)**.
CO2 Reduction Monetized Value 2.5%.............. 877............... 732............... 1079
($62.2/t case)**.
CO2 Reduction Monetized Value 3%................ 1761.............. 1471.............. 2167
($117/t case)**.
NOX Reduction Monetized Value 7%................ 8.24.............. 6.97.............. 9.99
(at $2,639/ton)**.
3%................ 15.56............. 13.03............. 19.09
Total Benefits [dagger]......... 7% plus CO2 range. 1,019 to 2,641.... 834 to 2,188...... 1,263 to 3,259
7%................ 1,451............. 1,194............. 1,794
3% plus CO2 range. 1,740 to 3,362.... 1,394 to 2,748.... 2,201 to 4,197
3%................ 2,172............. 1,754............. 2,732
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs....... 7%................ 231............... 273............... 201
3%................ 290............... 346............... 250
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger].................. 7% plus CO2 range. 788 to 2,410...... 561 to 1,915...... 1,062 to 3,058
7%................ 1,220............. 921............... 1,593
3% plus CO2 range. 1,450 to 3,072.... 1,047 to 2,402.... 1,951 to 3,947
[[Page 64132]]
3%................ 1,882............. 1,407............. 2,482
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 2019-
2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019-
2048. Costs incurred by manufacturers, some of which may be incurred in preparation for the rule, are not
directly included, but are indirectly included as part of incremental equipment costs. The Primary, Low
Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO
2012 Reference case, Low Estimate, and High Estimate, respectively. Incremental product costs reflect a
constant product price trend in the Primary Estimate, an increasing price trend in the Low Benefits Estimate,
and a decreasing price trend in the High Benefits Estimate.
** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. The first three
cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively.
The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate.
The SCC values increase over time. The value for NOX (in 2012$) is the average of the low and high values used
in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of
$40.8/t in 2015. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and
NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of
CO2 values.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems these proposed standards address are as follows:
(1) There is a lack of consumer information and/or information
processing capability about energy efficiency opportunities in the home
appliance market.
(2) There is asymmetric information (one party to a transaction has
more and better information than the other) and/or high transactions
costs (costs of gathering information and effecting exchanges of goods
and services).
(3) There are external benefits resulting from improved energy
efficiency of residential furnace fans that are not captured by the
users of such equipment. These benefits include externalities related
to environmental protection and energy security that are not reflected
in energy prices, such as reduced emissions of greenhouse gases.
In addition, DOE has determined that this regulatory action is an
``economically significant regulatory action'' under section 3(f)(1) of
Executive Order 12866. Accordingly, section 6(a)(3) of the Executive
Order requires that DOE prepare a regulatory impact analysis (RIA) on
this rule and that the Office of Information and Regulatory Affairs
(OIRA) in the Office of Management and Budget (OMB) review this rule.
DOE presented to OIRA for review the draft rule and other documents
prepared for this rulemaking, including the RIA, and has included these
documents in the rulemaking record. The assessments prepared pursuant
to Executive Order 12866 can be found in the technical support document
for this rulemaking.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)).
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, the Office of Information and Regulatory Affairs has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
DOE believes that this NOPR is consistent with these principles,
including the requirement that, to the extent permitted by law,
benefits justify costs and that net benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, unless the
agency certifies that the rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
As required by Executive Order 13272, ``Proper Consideration of Small
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE
published procedures and policies on February 19, 2003, to ensure that
the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE
has prepared the following IRFA for the products that are the subject
of this rulemaking.
[[Page 64133]]
1. Description and Estimated Number of Small Entities Regulated
a. Methodology for Estimating the Number of Small Entities
For the manufacturers of residential furnace fans, the Small
Business Administration (SBA) has set a size threshold, which defines
those entities classified as ``small businesses'' for the purposes of
the statute. DOE used the SBA's small business size standards to
determine whether any small entities would be subject to the
requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended
at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121.
The size standards are listed by NAICS code and industry description
and are available at: www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. Residential furnace fan
manufacturing is classified under NAICS 333415, ``Air-Conditioning and
Warm Air Heating Equipment and Commercial and Industrial Refrigeration
Equipment Manufacturing.'' The SBA sets a threshold of 750 employees or
less for an entity to be considered as a small business for this
category.
To estimate the number of companies that could be small business
manufacturers of products covered by this rulemaking, DOE conducted a
market survey using available public information to identify potential
small manufacturers. DOE's research involved industry trade association
membership directories (including AHRI), public databases (e.g., AHRI
Directory,\82\ the SBA Database \83\), individual company Web sites,
and market research tools (e.g., Hoovers reports) to create a list of
companies that manufacture or sell products covered by this rulemaking.
DOE also asked stakeholders and industry representatives if they were
aware of any other small manufacturers during manufacturer interviews
and at DOE public meetings. DOE reviewed publicly-available data and
contacted select companies on its list, as necessary, to determine
whether they met the SBA's definition of a small business manufacturer
of covered residential furnace fans. DOE screened out companies that do
not offer products covered by this rulemaking, do not meet the
definition of a ``small business,'' or are foreign owned and operated.
---------------------------------------------------------------------------
\82\ See www.ahridirectory.org/ahriDirectory/pages/home.aspx.
\83\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
---------------------------------------------------------------------------
DOE initially identified at least 40 potential manufacturers of
residential furnace fan products sold in the U.S. DOE then determined
that 26 were large manufacturers, manufacturers that are foreign owned
and operated, or manufacturers that do not produce products covered by
this rulemaking. DOE was able to determine that approximately 14
manufacturers meet the SBA's definition of a ``small business'' and
manufacture products covered by this rulemaking.
b. Manufacturer Participation
Before issuing this NOPR, DOE attempted to contact all the small
business manufacturers of residential furnace fans it had identified.
One of the small businesses consented to being interviewed during the
MIA interviews. DOE also obtained information about small business
impacts while interviewing large manufacturers.
c. Industry Structure
The 14 identified domestic manufacturers of residential furnace
fans that qualify as small businesses under the SBA size standard
account for a small fraction of industry shipments. Generally,
manufacturers of furnaces are also manufacturers of furnace fan
products. The market for domestic gas furnaces is almost completely
held by seven large manufacturers, and small manufacturers in total
account for only 1 percent of the market. These seven large
manufacturers also control 97 percent of the market for central air
conditioners. The market for manufactured home furnaces is primarily
held by one large manufacturer. In contrast, the market for domestic
oil furnaces is almost entirely comprised of small manufacturers.
d. Comparison Between Large and Small Entities
The proposed standards for residential furnace fans could cause
small manufacturers to be at a disadvantage relative to large
manufacturers. One way in which small manufacturers could be at a
disadvantage is that they may be disproportionately affected by product
conversion costs. Product redesign, testing, and certification costs
tend to be fixed and do not scale with sales volume. For each product
model, small businesses must make investments in research and
development to redesign their products, but because they have lower
sales volumes, they must spread these costs across fewer units. In
addition, because small manufacturers have fewer engineers than large
manufacturers, they would need to allocate a greater portion of their
available resources to meet a standard. Since engineers may need to
spend more time redesigning and testing existing models as a result of
the new standard, they may have less time to develop new products.
Furthermore, smaller manufacturers may lack the purchasing power of
larger manufacturers. For example, since motor suppliers give discounts
to manufacturers based on the number of motors they purchase, larger
manufacturers may have a pricing advantage because they have higher
volume purchases. This purchasing power differential between high-
volume and low-volume orders applies to other furnace fan components as
well, including the impeller fan blade, transformer, and capacitor.
2. Description and Estimate of Compliance Requirements
Since the proposed standard for residential furnace fans could
cause small manufacturers to be at a disadvantage relative to large
manufacturers, DOE cannot certify that the proposed standards would not
have a significant impact on a significant number of small businesses,
and consequently, DOE has prepared this IRFA.
At TSL 4, the level proposed in this notice, DOE estimates no
capital conversion costs and product conversion costs of $0.014 million
for a typical small manufacturer, compared to product conversion costs
of $0.431 million for a typical large manufacturer. These costs and
their impacts are described in detail below.
To estimate how small manufacturers would be potentially impacted,
DOE used the market share of small manufacturers to estimate the annual
revenue, earnings before interest and tax (EBIT), and research and
development (R&D) expense for a typical small manufacturer. DOE then
compared these costs to the required product conversion costs at each
TSL for both an average small manufacturer and an average large
manufacturer (see Tables VI.1 and Table VI.2). In the following tables,
TSL 4 represents the proposed standard.
Although conversion costs can be considered substantial for all
companies, the impacts could be relatively greater for a typical small
manufacturer because of much lower production volumes and the
relatively fixed nature of the R&D resources required per model. Small
manufacturers also have less engineering staff and lower R&D budgets.
As a result, the product conversion costs incurred by a small
manufacturer would likely be a larger percentage of its revenues, R&D
[[Page 64134]]
expenses, and EBIT, than those for a large manufacturer. Table VI.1
shows the product conversion costs for a typical large manufacturer
versus those of a typical small manufacturer. Table VI.2 compares the
total conversion costs of a typical large manufacturer as a percentage
of annual R&D expense, annual revenue, and EBIT to those of a typical
small manufacturer.
Table VI.1--Comparison of a Typical Small and Large Residential Furnace
Fan Manufacturer's Product Conversion Costs
------------------------------------------------------------------------
Product Product
conversion costs conversion costs
for a typical for a typical
large small
manufacturer manufacturer
(2012$ millions) (2012$ millions)
------------------------------------------------------------------------
Baseline.......................... $0.000 $0.000
TSL 1............................. 0.154 0.007
TSL 2............................. 0.378 0.012
TSL 3............................. 0.391 0.014
TSL 4............................. 0.431 0.014
TSL 5............................. 0.438 0.019
TSL 6............................. 1.261 0.045
------------------------------------------------------------------------
Table VI.2--Comparison of a Typical Small and Large Residential Furnace Fan Manufacturer's Product Conversion Costs to Annual R&D Expense, Annual
Revenue, and EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large manufacturer Small manufacturer
-----------------------------------------------------------------------------------------------
Product Product Product Product
conversion conversion Product conversion conversion Product
costs as a costs as a conversion costs as a costs as a conversion
percentage of percentage of costs as a percentage of percentage of costs as a
annual R&D annual percentage of annual R&D annual percentage of
expense revenue annual EBIT expense revenue annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 0.0 0.0 0.0 0.0 0.0 0.0
TSL 1................................................... 14.7 0.3 4.0 137.9 2.6 37.4
TSL 2................................................... 36.1 0.7 9.8 226.3 4.3 61.4
TSL 3................................................... 37.3 0.7 10.1 267.7 5.1 72.7
TSL 4................................................... 41.1 0.8 11.2 267.7 5.1 72.7
TSL 5................................................... 41.8 0.8 11.3 368.4 7.0 100.0
TSL 6................................................... 120.4 2.3 32.7 850.6 16.2 230.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Based on the results in Table VI.1 and Table VI.2, DOE understands
that the potential product conversions costs faced by small
manufacturers may be proportionally greater than those faced by larger
manufacturers. However, the total cost at TSL 4 of approximately
$14,000 per small manufacturer is still a small percentage of a small
manufacturer's total annual revenues (5.1 percent) and product
conversion costs would also only be a one-time expense. Furthermore,
TSLs lower than the proposed TSL would not result in significantly
lower product conversion costs for small manufacturers.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate,
overlap, or conflict with the rule being proposed today.
4. Significant Alternatives to the Rule
The discussion above analyzes impacts on small businesses that
would result from the other TSLs DOE considered. Although TSLs lower
than the proposed TSLs would be expected to reduce the impacts on small
entities, DOE is required by EPCA to establish standards that achieve
the maximum improvement in energy efficiency that is technically
feasible and economically justified, and result in a significant
conservation of energy. Thus, DOE rejected the lower TSLs.
In addition to the other TSLs being considered, the NOPR TSD
includes a regulatory impact analysis in chapter 17. For residential
furnace fans, this report discusses the following policy alternatives:
(1) No standard, (2) consumer rebates, (3) consumer tax credits, (4)
manufacturer tax credits, and (5) early replacement. DOE does not
intend to consider these alternatives further because they are either
not feasible to implement without authority and funding from Congress,
or are expected to result in energy savings that are much smaller
(ranging from less than 1 percent to approximately 33 percent) than
those that would be achieved by the proposed energy conservation
standards.
DOE continues to seek input from small businesses that would be
affected by this rulemaking and will consider comments received in the
development of any final rule.
C. Review Under the Paperwork Reduction Act of 1995
1. Description of the Requirements
DOE is developing regulations to implement reporting requirements
for energy conservation, water conservation, and design standards, and
to address other matters including compliance certification, prohibited
actions, and enforcement procedures for covered consumer products and
commercial and industrial equipment covered by EPCA, including furnace
fans. DOE will send an information collection approval to OMB under
Control Number 1910-1400.
[[Page 64135]]
2. Method of Collection
DOE is proposing that respondents must submit electronic forms
using DOE's on-line Compliance Certification Management System (CCMS)
system.
3. Data
The following are DOE estimates of the total annual reporting and
recordkeeping burden imposed on manufacturers of residential furnace
fans subject to the proposed certification provisions in this notice.
These estimates take into account the time necessary to develop testing
documentation, maintain all the documentation supporting the
development of the certified rating for each basic model, complete the
certification, and submit all required documents to DOE electronically.
OMB Control Number: 1910-1400.
Form Number: None.
Type of Review: Regular submission.
Affected Public: Manufacturers of residential furnace fans covered
by this rulemaking.
Estimated Number of Respondents: 37.
Estimated Time per Response: Certification reports, 20 hours.
Estimated Total Annual Burden Hours: 740.
Estimated Total Annual Cost to the Manufacturers: $55,000 in
recordkeeping/reporting costs.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the proposed rule fits within the category of
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets
the requirements for application of a CX. See 10 CFR Part 1021, App. B,
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The proposed rule fits
within the category of actions because it is a rulemaking that
establishes energy conservation standards for consumer products or
industrial equipment, and for which none of the exceptions identified
in CX B5.1(b) apply. Therefore, DOE has made a CX determination for
this rulemaking, and DOE does not need to prepare an Environmental
Assessment or Environmental Impact Statement for this proposed rule.
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 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 that it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
proposed rule and has tentatively determined that it would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. EPCA
governs and prescribes Federal preemption of State regulations as to
energy conservation for the products that are the subject of this
proposed rule. States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA. (42
U.S.C. 6297) Therefore, Executive Order 13132 requires no further
action.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' imposes on Federal agencies the general duty
to adhere to the following requirements: (1) Eliminate drafting errors
and ambiguity; (2) write regulations to minimize litigation; (3)
provide a clear legal standard for affected conduct rather than a
general standard; and (4) promote simplification and burden reduction.
61 FR 4729 (Feb. 7, 1996). Regarding the review required by section
3(a), section 3(b) of Executive Order 12988 specifically requires that
Executive agencies make every reasonable effort to ensure that the
regulation: (1) Clearly specifies the preemptive effect, if any; (2)
clearly specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires Executive agencies to review regulations
in light of applicable standards in section 3(a) and section 3(b) to
determine whether they are met or it is unreasonable to meet one or
more of them. DOE has completed the required review and determined
that, to the extent permitted by law, this proposed rule meets the
relevant standards of Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect 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
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
Although this proposed rule, which proposes new energy conservation
standards for residential furnace fans, does not contain a Federal
intergovernmental mandate, it may require annual expenditures of $100
million or more by the private sector. Specifically, the proposed rule
would likely result in a final rule that could
[[Page 64136]]
require expenditures of $100 million or more, including: (1) Investment
in research and development and in capital expenditures by residential
furnace fans manufacturers in the years between the final rule and the
compliance date for the new standards, and (2) incremental additional
expenditures by consumers to purchase higher-efficiency residential
furnace fans, starting at the compliance date for the applicable
standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. 2 U.S.C. 1532(c). The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of the NOPR and the ``Regulatory
Impact Analysis'' section of the TSD for this proposed rule respond to
those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. 2 U.S.C. 1535(a). DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the proposed rule unless DOE publishes
an explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(f)
and (o), this proposed rule would establish energy conservation
standards for residential furnace fans that are designed to achieve the
maximum improvement in energy efficiency that DOE has determined to be
both technologically feasible and economically justified. A full
discussion of the alternatives considered by DOE is presented in the
``Regulatory Impact Analysis'' section of the TSD for this proposed
rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (March 15, 1988), DOE has determined that this proposed rule would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review
most disseminations of information to the public under information
quality guidelines established by each agency pursuant to general
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446
(Oct. 7, 2002). DOE has reviewed this NOPR under the OMB and DOE
guidelines and has concluded that it is consistent with applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
DOE has tentatively concluded that this regulatory action, which
sets forth proposed energy conservation standards for residential
furnace fans, is not a significant energy action because the proposed
standards are not likely to have a significant adverse effect on the
supply, distribution, or use of energy, nor has it been designated as
such by the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on this proposed rule.
L. 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.'' Id. at 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site:
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
VII. Public Participation
A. Attendance at the Public Meeting
The time, date, and location of the public meeting are listed in
the DATES and ADDRESSES sections at the beginning of this notice. If
you plan to attend the public meeting, please notify Ms. Brenda Edwards
at (202) 586-2945 or [email protected]. As explained in the
ADDRESSES section, foreign nationals visiting DOE
[[Page 64137]]
Headquarters are subject to advance security screening procedures. Any
foreign national wishing to participate in the meeting should advise
DOE of this fact as soon as possible by contacting Ms. Brenda Edwards
to initiate the necessary procedures.
In addition, you can attend the public meeting via webinar. Webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants will be
published on DOE's Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/42. Participants are
responsible for ensuring their systems are compatible with the webinar
software.
B. Procedure for Submitting Requests To Speak and Prepared General
Statements for Distribution
Any person who has an interest in the topics addressed in this
notice, or who is representative of a group or class of persons that
has an interest in these issues, may request an opportunity to make an
oral presentation at the public meeting. Such persons may hand-deliver
requests to speak to the address shown in the ADDRESSES section at the
beginning of this notice between 9:00 a.m. and 4:00 p.m., Monday
through Friday, except Federal holidays. Requests may also be sent by
mail or email to: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue
SW., Washington, DC 20585-0121, or [email protected]. Persons
who wish to speak should include with their request a computer diskette
or CD-ROM in WordPerfect, Microsoft Word, PDF, or text (ASCII) file
format that briefly describes the nature of their interest in this
rulemaking and the topics they wish to discuss. Such persons should
also provide a daytime telephone number where they can be reached.
DOE requests persons scheduled to make an oral presentation to
submit an advance copy of their statements at least one week before the
public meeting. DOE may permit persons who cannot supply an advance
copy of their statement to participate, if those persons have made
advance alternative arrangements with the Building Technologies
Program. As necessary, requests to give an oral presentation should ask
for such alternative arrangements.
C. Conduct of the Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA (42 U.S.C.
6306). A court reporter will be present to record the proceedings and
prepare a transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the public meeting. There shall not be discussion of proprietary
information, costs or prices, market share, or other commercial matters
regulated by U.S. anti-trust laws. After the public meeting, interested
parties may submit further comments on the proceedings, as well as on
any aspect of the rulemaking, until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will allow, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this notice and will be accessible on the DOE Web site. In addition,
any person may buy a copy of the transcript from the transcribing
reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments, data, and other
information using any of the methods described in the ADDRESSES section
at the beginning of this notice.
Submitting comments via www.regulations.gov. The
www.regulations.gov Web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
www.regulations.gov cannot be claimed as CBI. Comments received through
the Web site will waive any CBI claims for the information submitted.
For information on submitting CBI, see the Confidential Business
Information section below.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery/courier, or
mail also will be posted to www.regulations.gov. If you
[[Page 64138]]
do not want your personal contact information to be publicly viewable,
do not include it in your comment or any accompanying documents.
Instead, provide your contact information in a cover letter. Include
your first and last names, email address, telephone number, and
optional mailing address. The cover letter will not be publicly
viewable as long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via mail or hand
delivery/courier, please provide all items on a CD, if feasible, in
which case it is not necessary to submit printed copies. No
telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email, postal mail, or hand delivery/courier two well-marked copies:
One copy of the document marked ``confidential'' including all the
information believed to be confidential, and one copy of the document
marked ``non-confidential'' with the information believed to be
confidential deleted. Submit these documents via email or on a CD, if
feasible. DOE will make its own determination about the confidential
status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
E. Issues on Which DOE Seeks Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
1. Additional FER value data that are generated using the DOE
residential furnace fans test procedure proposed in the April 2, 2013
SNOPR (78 FR 19606), as well as the product class, measured airflow
capacity in the maximum airflow control setting, and technology options
of the model for which each FER value is calculated.
2. DOE's methodology for accounting for the relationship between
FER and airflow capacity, and the resulting efficiency levels that are
represented by equations for FER as a function of airflow capacity.
(See Chapter 5 of the NOPR TSD)
3. The reasonableness of the values that DOE used to characterize
the rebound effect with higher-efficiency residential furnace fans.
4. DOE's estimate of the base-case efficiency distribution of
residential furnace fans in 2018.
5. The long-term market penetration of higher-efficiency
residential furnace fans.
6. DOE performed physical teardowns on a selection of units
currently on the market. From the bills of materials and cost model
developed using this teardown data, DOE calculated an estimate of the
manufacturer production cost for each covered product class in the
engineering analysis. DOE also developed estimates of the costs for
components that affect energy consumption, namely those it considered
as design options. These estimates were obtained from a combination of
sources, including publicly available prices from vendors and
confidential estimates provided by manufacturers. These price data are
aggregated for use in the engineering analysis. DOE seeks comment and
data regarding the manufacturer production costs for furnace fan
equipment and components and the technological feasibility of applying
technologies identified in the engineering analysis to meet the
proposed standards.
7. To estimate the impact on shipments of the price increase for
the considered efficiency levels, DOE used the relative price
elasticity approach that was applied in the 2011 energy conservation
standards rulemaking for residential furnaces. DOE welcomes stakeholder
input and estimates on the effect of amended standards on future
furnace fan equipment shipments. DOE also welcomes input and data on
the demand elasticity estimates used in the analysis.
8. DOE requests comment on whether there are features or attributes
of the more energy-efficient furnace fans that manufacturers would
produce to meet the standards in this proposed rule that might affect
how they would be used by consumers. DOE requests comment specifically
on how any such effects should be weighed in the choice of standards
for furnace fans for the final rule.
9. For this rulemaking, DOE analyzed the effects of this proposal
assuming that the furnace fans would be available to purchase for 30
years, and it undertook a sensitivity analysis using 9 years rather
than 30 years of product shipments. The choice of a 30-year period of
shipments is consistent with the DOE analysis for other products and
commercial equipment. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards. We are seeking input, information and data on whether there
are ways to refine the analytic timeline further.
10. DOE defines lifetime as the age at which residential furnace
fan equipment is retired from service. DOE modeled furnace fan lifetime
based on the distribution of furnace lifetimes developed for the recent
energy conservation standards rulemaking for residential furnaces. DOE
welcomes further input on the average equipment lifetimes for the LCC
analysis and NIA.
11. DOE solicits comment on the application of the new SCC values
used to determine the social benefits of CO2 emissions
reductions over the rulemaking analysis period. The rulemaking analysis
period covers from 2017 to 2046 plus an additional 50 years to account
for the lifetime operation of the equipment purchased in that period.
In particular, the agency solicits comment on its derivation of SCC
values after 2050, where the agency applied the average annual growth
rate
[[Page 64139]]
of the SCC estimates in 2040-2050 associated with each of the four sets
of values.
12. The agency also seeks input on the cumulative regulatory burden
that may be imposed on industry either from recently implemented
rulemakings for these products or other rulemakings that affect the
same industry.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking.
List of Subjects
10 CFR Part 429
Administrative practice and procedure, Commercial equipment,
Confidential business information, Energy conservation, Household
appliances, Imports, Reporting and recordkeeping requirements.
10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Intergovernmental relations, Small businesses.
Issued in Washington, DC, on September 30, 2013.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons stated in the preamble, DOE proposes to amend parts
429 and 430 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, as set forth below:
PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 429 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 429.12 is amended by:
0
a. Amending paragraph (d) table, first column, second row (i.e., for
products with a submission deadline of May 1st) by removing the word
``and'' and by adding ``and Residential furnace fans'' at the end of
the listed products.
0
b. Removing in paragraph (b)(13) ``429.54'' and adding in its place
429.58''; and
0
c. Adding reserved paragraph (i)(5) and adding paragraph (i)(6).
The addition reads as follows:
Sec. 429.12 General requirements applicable to certification reports.
* * * * *
(i) * * *
(5) [Reserved]
(6) Residential furnace fans, [date five years after publication of
the final rule].
0
3. Section 429.58 is added to read as follows:
Sec. 429.58 Furnace fans.
(a) [Reserved]
(b) Certification reports. (1) The requirements of Sec. 429.12 of
this part are applicable to residential furnace fans; and
(2) Pursuant to Sec. 429.12(b)(13) of this part, a certification
report shall include the following public product-specific information:
The fan energy rating (FER) in watts per thousand cubic feet per minute
(W/1000 cfm); the calculated maximum airflow at the reference system
external static pressure (ESP) in cubic feet per minute (cfm); the
control system configuration for achieving the heating and constant-
circulation airflow-control settings required for determining FER as
specified in the furnace fan test procedure (10 CFR part 430, subpart
B, appendix AA); the measured steady-state gas, oil, or electric heat
input rate (QIN) in the heating setting required for
determining FER; and for modular blowers, the manufacturer and model
number of the electric heat resistance kit with which it is equipped
for certification testing.
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
4. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
5. Section 430.32 is amended by adding paragraph (y) to read as
follows:
Sec. 430.32 Energy and water conservation standards and their
effective dates.
* * * * *
(y) Residential furnace fans. Residential furnace fans manufactured
on or after (date five years after date of final rule publication in
the Federal Register), shall have a fan energy rating (FER) value that
meets or is less than the following values:
------------------------------------------------------------------------
Product class FER * (watts/cfm)
------------------------------------------------------------------------
Non-Weatherized, Non-Condensing FER = 0.029 x QMax + 180.
Gas Furnace Fan (NWG-NC).
Non-Weatherized, Condensing Gas FER = 0.029 x QMax + 196.
Furnace Fan (NWG-C).
Weatherized Non-Condensing Gas FER = 0.029 x QMax + 135.
Furnace Fan (WG-NC).
Non-Weatherized, Non-Condensing FER = 0.051 x QMax + 301.
Oil Furnace Fan (NWO-NC).
Non-Weatherized Electric Furnace/ FER = 0.029 x QMax + 165.
Modular Blower Fan (NWEF/NWMB).
Manufactured Home Non- FER = 0.051 x QMax + 242.
Weatherized, Non-Condensing Gas
Furnace Fan (MH-NWG-NC).
Manufactured Home Non- FER = 0.051 x QMax + 262.
Weatherized, Condensing Gas
Furnace Fan (MH-NWG-C).
Manufactured Home Electric FER = 0.029 x QMax + 105.
Furnace/Modular Blower Fan (MH-
EF/MB).
Manufactured Home Non- Reserved.
Weatherized Oil Furnace Fan (MH-
NWO).
Manufactured Home Weatherized Reserved.
Gas Furnace Fan (MH-WG).
------------------------------------------------------------------------
* QMax is the airflow, in cfm, at the maximum airflow-control setting.
* * * * *
[FR Doc. 2013-24613 Filed 10-24-13; 8:45 am]
BILLING CODE 6450-01-P