[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Rules and Regulations]
[Pages 42614-42668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16927]
[[Page 42613]]
Vol. 80
Friday,
No. 137
July 17, 2015
Part II
Department of Energy
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10 CFR Part 431
Energy Conservation Program for Certain Industrial Equipment: Energy
Conservation Standards and Test Procedures for Commercial Heating, Air-
Conditioning, and Water-Heating Equipment; Final Rule
Federal Register / Vol. 80 , No. 137 / Friday, July 17, 2015 / Rules
and Regulations
[[Page 42614]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket No. EERE-2014-BT-STD-0015]
RIN 1904-AD23
Energy Conservation Program for Certain Industrial Equipment:
Energy Conservation Standards and Test Procedures for Commercial
Heating, Air-Conditioning, and Water-Heating Equipment
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Energy (DOE) is amending its energy
conservation standards for small three-phase commercial air-cooled air
conditioners (single package only) and heat pumps (single package and
split system) less than 65,000 Btu/h; water-source heat pumps; and
commercial oil-fired storage water heaters. Pursuant to the Energy
Policy and Conservation Act of 1975 (EPCA), as amended, DOE must assess
whether the uniform national standards for these covered equipment need
to be updated each time the corresponding industry standard--the
American National Standards Institute (ANSI)/American Society of
Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/
Illuminating Engineering Society of North America (IESNA) Standard 90.1
(ASHRAE Standard 90.1)--is amended, which most recently occurred on
October 9, 2013. Under EPCA, DOE may only adopt more stringent
standards if there is clear and convincing evidence showing that more
stringent amended standards would be technologically feasible and
economically justified, and would save a significant additional amount
of energy. The levels DOE is adopting are the same as the efficiency
levels specified in ASHRAE Standard 90.1-2013. DOE has determined that
the ASHRAE Standard 90.1-2013 efficiency levels for the equipment types
listed above are more stringent than existing Federal energy
conservation standards and will result in economic and energy savings
compared existing energy conservation standards. Furthermore, DOE has
concluded that clear and convincing evidence does not exist that would
justify more-stringent standard levels than the efficiency levels in
ASHRAE Standard 90.1-2013 for any of the equipment classes. DOE has
also determined that the standards for small three-phase commercial
air-cooled air conditioners (split system) do not need to be amended.
DOE is also updating the current Federal test procedure for commercial
warm-air furnaces to incorporate by reference the most current version
of the American National Standards Institute (ANSI) Z21.47, Gas-fired
central furnaces, specified in ASHRAE Standard 90.1, and the most
current version of ASHRAE 103, Method of Testing for Annual Fuel
Utilization Efficiency of Residential Central Furnaces and Boilers.
DATES: The effective date of this rule is September 15, 2015.
Compliance with the amended standards established for water-source heat
pumps and commercial oil-fired storage water heaters in this final rule
is required on and after October 9, 2015. Compliance with the amended
standards established for small three-phase commercial air-cooled air
conditioners (single package only) and heat pumps (single package and
split system) less than 65,000 Btu/h in this final rule is required on
and after January 1, 2017. The incorporation by reference of certain
publications listed in this rule was approved by the Director of the
Federal Register as of September 15, 2015.
ADDRESSES: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at www.regulations.gov.
All documents in the docket are listed in the www.regulations.gov
index. However, some documents listed in the index may not be publicly
available, such as those containing information that is exempt from
public disclosure.
A link to the docket Web page can be found at: www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0015. The www.regulations.gov Web
page will contain instructions on how to access all documents,
including public comments, in the docket.
For further information on how to review the docket, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT:
Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone:
(202) 586-6590. Email: [email protected].
Ms. Johanna Hariharan, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 287-6307. Email: [email protected].
SUPPLEMENTARY INFORMATION: This final rule incorporates by reference
the following industry standards into part 431:
ANSI Z21.47-2012, ``Standard for Gas-Fired Central
Furnaces'', approved on March 27, 2012.
Copies of ANSI Z21.47-2012 can be obtained from ANSI. American
National Standards Institute. 25 W. 43rd Street, 4th Floor, New York,
NY 10036. (212) 642-4900, or by going to http://www.ansi.org.
ASHRAE Standard 103-2007, ``Method of Testing for Annual
Fuel Utilization Efficiency of Residential Central Furnaces and
Boilers,'' sections 7.2.2.4, 7.8, 9.2, and 11.3.7, approved on June 27,
2007.
Copies of ASHRAE Standard 103-2007 can be obtained from ASHRAE.
American Society of Heating, Refrigerating and Air-Conditioning
Engineers Inc., 1791 Tullie Circle NE., Atlanta, Georgia 30329. (404)
636-8400, or by going to http://www.ashrae.org.
These standards are described in section IX.N.
Table of Contents
I. Synopsis of the Final Rule
II. Introduction
A. Authority
B. Background
1. ASHRAE Standard 90.1-2013
2. Previous Rulemaking Documents
3. Compliance Dates for Amended Federal Test Procedures, Amended
Federal Energy Conservation Standards, and Representations for
Certain ASHRAE Equipment
III. General Discussion of Comments Received
A. General Discussion of the Changes in ASHRAE Standard 90.1-
2013 and Determination of Scope for Further Rulemaking Activity
B. The Proposed Energy Conservation Standards
IV. Test Procedure Amendments and Discussion of Related Comments
V. Methodology for Small Commercial Air-Cooled Air Conditioners and
Heat Pumps Less Than 65,000 Btu/h
A. Market Assessment
1. Equipment Classes
2. Review of Current Market
a. Trade Association Information
b. Manufacturer Information
c. Market Data
B. Engineering Analysis
1. Approach
2. Baseline Equipment
3. Identification of Increased Efficiency Levels for Analysis
4. Engineering Analysis Results
a. Manufacturer Markups
b. Shipping Costs
C. Markups Analysis
D. Energy Use Analysis
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E. Life-Cycle Cost and Payback Period Analysis
1. Equipment Costs
2. Installation Costs
3. Unit Energy Consumption
4. Electricity Prices and Electricity Price Trends
5. Maintenance Costs
6. Repair Costs
7. Equipment Lifetime
8. Discount Rate
9. Base-Case Market Efficiency Distribution
10. Compliance Date
11. Payback Period Inputs
F. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Approach
2. Shipments Analysis
3. Base-Case and Standards-Case Forecasted Distribution of
Efficiencies
4. National Energy Savings and Net Present Value
VI. Methodology for Water-Source Heat Pumps
A. Market Assessment
1. Equipment Classes
2. Review of Current Market
a. Trade Association Information
b. Manufacturer Information
c. Market Data
B. Engineering Analysis
1. Approach
2. Baseline Equipment
3. Identification of Increased Efficiency Levels for Analysis
4. Engineering Analysis Results
a. Manufacturer Markups
b. Shipping Costs
C. Markups Analysis
D. Energy Use Analysis
E. Life-Cycle Cost and Payback Period Analysis
1. Equipment Costs
2. Installation Costs
3. Unit Energy Consumption
4. Electricity Prices and Electricity Price Trends
5. Maintenance Costs
6. Repair Costs
7. Equipment Lifetime
8. Discount Rate
9. Base-Case Market Efficiency Distribution
10. Compliance Date
11. Payback Period Inputs
F. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Approach
2. Shipments Analysis
3. Base-Case and Standards-Case Forecasted Distribution of
Efficiencies
4. National Energy Savings and Net Present Value
VII. Methodology for Emissions Analysis and Monetizing Carbon
Dioxide and Other Emissions Impacts
A. Emissions Analysis
B. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Development of Social Cost of Carbon Values
c. Current Approach and Key Assumptions
2. Valuation of Other Emissions Reductions
VIII. Analytical Results and Conclusions
A. Efficiency Levels Analyzed
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps
Less Than 65,000 Btu/h
2. Water-Source Heat Pumps
3. Commercial Oil-Fired Storage Water Heaters
B. Energy Savings and Economic Justification
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps
Less Than 65,000 Btu/h
a. Economic Impacts on Commercial Customers
b. National Impact Analysis
2. Water-Source Heat Pumps
a. Economic Impacts on Commercial Customers
b. National Impact Analysis
3. Commercial Oil-Fired Storage Water Heaters
C. Need of the Nation To Conserve Energy
D. Amended Energy Conservation Standards
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps
Less Than 65,000 Btu/h
2. Water-Source Heat Pumps
3. Commercial Oil-Fired Storage Water Heaters
IX. Procedural Issues and Regulatory Review
A. Review Under Executive Order 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
M. Congressional Notification
N. Description of Materials Incorporated by Reference
X. Approval of the Office of the Secretary
I. Synopsis of the Final Rule
Title III, Part C \1\ of the Energy Policy and Conservation Act of
1975 (``EPCA'' or ``the Act''), Public Law 94-163, (42 U.S.C. 6311-
6317, as codified), added by Public Law 95-619, Title IV, section
441(a), established the Energy Conservation Program for Certain
Industrial Equipment, which sets forth a variety of provisions designed
to improve energy efficiency.\2\ These encompass several types of
commercial heating, air-conditioning, and water-heating equipment,
including those that are the subject of this rulemaking. (42 U.S.C.
6311(1)(B) and (K)) EPCA, as amended, also requires the U.S. Department
of Energy (DOE) to consider amending the existing Federal energy
conservation standard for certain types of listed commercial and
industrial equipment (generally, commercial water heaters, commercial
packaged boilers, commercial air-conditioning and heating equipment,
and packaged terminal air conditioners and heat pumps) each time the
American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ASHRAE) Standard 90.1, Energy Standard for Buildings Except
Low-Rise Residential Buildings, is amended with respect to such
equipment. (42 U.S.C. 6313(a)(6)(A)) For each type of equipment, EPCA
directs that if ASHRAE Standard 90.1 is amended, DOE must adopt amended
energy conservation standards at the new efficiency level in ASHRAE
Standard 90.1, unless clear and convincing evidence supports a
determination that adoption of a more-stringent efficiency level as a
national standard would produce significant additional energy savings
and be technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the
efficiency levels specified in the amended ASHRAE Standard 90.1, DOE
must establish such standard not later than 18 months after publication
of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If
DOE determines that a more-stringent standard is appropriate under the
statutory criteria, DOE must establish such more-stringent standard not
later than 30 months after publication of the revised ASHRAE Standard
90.1. (42 U.S.C. 6313(a)(6)(B)) ASHRAE officially released ASHRAE
Standard 90.1-2013 on October 9, 2013, thereby triggering DOE's
previously referenced obligations pursuant to EPCA to determine for
those types of equipment with efficiency level or design requirement
changes beyond the current Federal standard, whether: (1) The amended
industry standard should be adopted; or (2) clear and convincing
evidence exists to justify more-stringent standard levels.
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part C was redesignated Part A-1.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Efficiency Improvement Act of 2014,
Public Law 112-210 (Apr. 30, 2015).
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DOE published a notice of proposed rulemaking on January 8, 2015,
in the Federal Register, describing DOE's determination of scope for
considering amended energy conservation standards with respect to
certain heating, ventilating, air-conditioning, and water-
[[Page 42616]]
heating equipment addressed in ASHRAE Standard 90.1-2013. 80 FR 1171,
1180-1186. ASHRAE Standard 90.1-2013 amended its efficiency levels for
small three-phase air-cooled air conditioners (single package only) and
heat pumps (single package and split system) less than 65,000 Btu/h,
water-source heat pumps, commercial oil-fired storage water heaters,
single package vertical units, and packaged terminal air conditioners.
ASHRAE Standard 90.1-2013 also updated its referenced test procedures
for several equipment types.
In determining the scope of the rulemaking, DOE is statutorily
required to ascertain whether the revised ASHRAE efficiency levels have
become more stringent, thereby ensuring that any new amended national
standard would not result in prohibited ``backsliding.'' For those
equipment classes for which ASHRAE set more-stringent efficiency levels
\3\ (i.e., small three-phase air-cooled air conditioners (single
package only) and heat pumps (single package and split system) less
than 65,000 Btu/h; water-source heat pumps; commercial oil-fired
storage water heaters; single package vertical units; and packaged
terminal air conditioners), DOE analyzed the energy savings potential
of amended national energy conservation standards (at both the new
ASHRAE Standard 90.1 efficiency levels and more-stringent efficiency
levels) in the April 11, 2014 notice of data availability (NODA) (79 FR
20114) and, except for single package vertical units and packaged
terminal air conditioners, which are considered in separate
rulemakings,\4\ in the January 8, 2015 NOPR (80 FR 1171). For equipment
where more-stringent standard levels than the ASHRAE efficiency levels
would result in significant energy savings (i.e., small three-phase
air-cooled air conditioners and heat pumps less than 65,000 Btu/h and
water-source heat pumps), DOE analyzed the economic justification for
more-stringent levels in the January 2015 NOPR. 80 FR 1171, 1213-1220
(Jan. 15, 2015).
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\3\ ASHRAE Standard 90.1-2013 did not change any of the design
requirements for the commercial (HVAC) and water-heating equipment
covered by EPCA.
\4\ See Packaged Terminal Air Conditioners and Heat Pumps
Standards Rulemaking Web page: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/64 and Single Package
Vertical Air Conditioners and Heat Pumps Standards Rulemaking Web
page: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=107.
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This final rule applies to three classes of small three-phase air-
cooled air conditioners and heat pumps less than 65,000 Btu/h, three
classes of water-source heat pumps, and one class of commercial oil-
fired storage water heaters, which satisfy all applicable requirements
of EPCA and will result in energy savings where models exist below the
revised efficiency levels. DOE has concluded that, based on the
information presented and its analyses, there is not clear and
convincing evidence justifying adoption of more-stringent efficiency
levels for this equipment.
It is noted that DOE's current regulations for have a single
equipment class for small, three-phase commercial air-cooled air
conditioners less than 65,000 Btu/h, which covers both split-system and
single-package models. Although ASHRAE Standard 90.1-2013 did not amend
standard levels for the split-system models within that equipment
class, it did so for the single-package models. Given this split, in
this final rule, DOE is once again separating these two types of
equipment into separate equipment classes. However, following the
evaluation of amended standards for split-system models under the six-
year-lookback provision at 42 U.S.C. 6313(a)(6)(C), DOE has concluded
that there is not clear and convincing evidence that would justify
adoption of more-stringent efficiency levels for small three-phase
split-system air-cooled air conditioners less than 65,000 Btu/h, where
the efficiency level in ASHRAE 90.1-2013 is the same as the current
Federal energy conservation standards.
Thus, in accordance with the criteria discussed elsewhere in this
document, DOE is amending the energy conservation standards for three
classes of small three-phase air-cooled air conditioners and heat pumps
less than 65,000 Btu/h, three classes of water-source heat pumps, and
one class of commercial oil-fired storage water heaters by adopting the
efficiency levels specified by ASHRAE Standard 90.1-2013, as shown in
Table I.1. Pursuant to EPCA, the amended standards apply to all
equipment listed in Table I.1 and manufactured in, or imported into,
the United States on or after the date two years after the effective
date specified in ASHRAE Standard 90.1-2013 (i.e., by January 1, 2017
for small air-cooled air conditioners and heat pumps and by October 9,
2015 for water-source heat pumps and oil-fired storage water heaters).
(42 U.S.C. 6313(a)(6)(D)(i)) DOE is making a determination that
standards for split-system air-cooled air conditioners less than 65,000
Btu/h do not need to be amended.
Table I.1--Current and Amended Energy Conservation Standards for Specific Types of Commercial Equipment
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Current Federal Amended Federal Compliance date of amended
Equipment class Energy Conservation Energy Conservation Federal Energy Conservation
standard standard standard
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Three-Phase Air-Cooled Single- 13.0 SEER............ 14.0 SEER............ January 1, 2017.
Package Air Conditioners <65,000
Btu/h.
Three-Phase Air-Cooled Single- 13.0 SEER, 7.7 HSPF.. 14.0 SEER, 8.0 HSPF.. January 1, 2017.
Package Heat Pumps <65,000 Btu/h.
Three-Phase Air-Cooled Split- 13.0 SEER, 7.7 HSPF.. 14.0 SEER, 8.2 HSPF.. January 1, 2017.
System Heat Pumps <65,000 Btu/h.
Oil-Fired Storage Water Heaters 78% Et............... 80% Et............... October 9, 2015.
>105,000 Btu/h and <4,000 Btu/h/
gal.
Water-Source (Water-to-Air, Water- 11.2 EER, 4.2 COP.... 12.2 EER, 4.3 COP.... October 9, 2015.
Loop) Heat Pumps <17,000 Btu/h.
Water-Source (Water-to-Air, Water- 12.0 EER, 4.2 COP.... 13.0 EER, 4.3 COP.... October 9, 2015.
Loop) Heat Pumps >=17,000 and
<65,000 Btu/h.
Water-Source (Water-to-Air, Water- 12.0 EER, 4.2 COP.... 13.0 EER, 4.3 COP.... October 9, 2015.
Loop) Heat Pumps >=65,000 and
<135,000 Btu/h.
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[[Page 42617]]
In addition, DOE is adopting amendments to its test procedures for
commercial warm-air furnaces, which manufacturers will be required to
use to certify compliance with energy conservation standards mandated
under EPCA. See 42 U.S.C. 6314(a)(1)(A) and (4)(B)) and 10 CFR parts
429 and 431. Specifically, these amendments, which were proposed in the
January 2015 NOPR, update the citations and incorporations by reference
in DOE's regulations to the most recent version of American National
Standards Institute (ANSI) Z21.47, Standard for Gas-Fired Central
Furnaces (i.e., ANSI Z21.47-2012), and to the most recent version of
ASHRAE 103, Method of Testing for Annual Fuel Utilization Efficiency of
Residential Central Furnaces and Boiler (i.e., ASHRAE 103-2007). This
final rule satisfies the requirement to review the test procedures for
commercial warm-air furnaces within seven years. 42 U.S.C.
6314(a)(1)(A).
II. Introduction
The following section briefly discusses the statutory authority
underlying today's proposal, as well as some of the relevant historical
background related to the establishment of standards for small three-
phase air-cooled air conditioners and heat pumps less than 65,000 Btu/
h, water-source heat pumps, and commercial oil-fired storage water
heaters.
A. Authority
Title III, Part C \5\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6311-6317, as
codified), added by Public Law 95-619, Title IV, section 441(a),
established the Energy Conservation Program for Certain Industrial
Equipment, which includes the commercial heating, air-conditioning, and
water-heating equipment that is the subject of this rulemaking.\6\ In
general, this program addresses the energy efficiency of certain types
of commercial and industrial equipment. Relevant provisions of the Act
specifically include definitions (42 U.S.C. 6311), energy conservation
standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labelling
provisions (42 U.S.C. 6315), and the authority to require information
and reports from manufacturers (42 U.S.C. 6316).
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\5\ For editorial reasons, upon codification in the U.S. Code,
Part C was redesignated Part A-1.
\6\ All references to EPCA in this document refer to the statute
as amended through the American Energy Manufacturing Technical
Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012).
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EPCA contains mandatory energy conservation standards for
commercial heating, air-conditioning, and water-heating equipment. (42
U.S.C. 6313(a)) Specifically, the statute sets standards for small,
large, and very large commercial package air-conditioning and heating
equipment, packaged terminal air conditioners (PTACs), packaged
terminal heat pumps (PTHPs), warm-air furnaces, packaged boilers,
storage water heaters, instantaneous water heaters, and unfired hot
water storage tanks. Id. In doing so, EPCA established Federal energy
conservation standards that generally correspond to the levels in
ASHRAE Standard 90.1, as in effect on October 24, 1992 (i.e., ASHRAE
Standard 90.1-1989), for each type of covered equipment listed in 42
U.S.C. 6313(a). The Energy Independence and Security Act of 2007 (EISA
2007) amended EPCA by adding definitions and setting minimum energy
conservation standards for single-package vertical air conditioners
(SPVACs) and single-package vertical heat pumps (SPVHPs). (42 U.S.C.
6313(a)(10)(A)) The efficiency standards for SPVACs and SPVHPs
established by EISA 2007 correspond to the levels contained in ASHRAE
Standard 90.1-2004, which originated as addendum ``d'' to ASHRAE
Standard 90.1-2001.
In acknowledgement of technological changes that yield energy
efficiency benefits, the U.S. Congress further directed DOE through
EPCA to consider amending the existing Federal energy conservation
standard for each type of equipment listed, each time ASHRAE Standard
90.1 is amended with respect to such equipment. (42 U.S.C.
6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE
Standard 90.1 is amended,\7\ DOE must publish in the Federal Register
an analysis of the energy savings potential of amended energy
efficiency standards within 180 days of the amendment of ASHRAE
Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that
DOE must adopt amended standards at the new efficiency level in ASHRAE
Standard 90.1, unless clear and convincing evidence supports a
determination that adoption of a more-stringent level would produce
significant additional energy savings and be technologically feasible
and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE
decides to adopt as a national standard the efficiency levels specified
in the amended ASHRAE Standard 90.1, DOE must establish such standard
not later than 18 months after publication of the amended industry
standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) However, if DOE determines
that a more-stringent standard is justified under 42 U.S.C.
6313(a)(6)(A)(ii)(II), then it must establish such more-stringent
standard not later than 30 months after publication of the amended
ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) In addition, DOE notes
that pursuant to the EISA 2007 amendments to EPCA, under 42 U.S.C.
6313(a)(6)(C), the agency must periodically review its already-
established energy conservation standards for ASHRAE equipment. In
December 2012, this provision was further amended by the American
Energy Manufacturing Technical Corrections Act (AEMTCA) to clarify that
DOE's periodic review of ASHRAE equipment must occur ``[e]very six
years.'' (42 U.S.C. 6313(a)(6)(C)(i))
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\7\ Although EPCA does not explicitly define the term
``amended'' in the context of ASHRAE Standard 90.1, DOE provided its
interpretation of what would constitute an ``amended standard'' in a
final rule published in the Federal Register on March 7, 2007
(hereafter referred to as the ``March 2007 final rule''). 72 FR
10038. In that rule, DOE stated that the statutory trigger requiring
DOE to adopt uniform national standards based on ASHRAE action is
for ASHRAE to change a standard for any of the equipment listed in
EPCA section 342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by
increasing the energy efficiency level for that equipment type. Id.
at 10042. In other words, if the revised ASHRAE Standard 90.1 leaves
the standard level unchanged or lowers the standard, as compared to
the level specified by the national standard adopted pursuant to
EPCA, DOE does not have the authority to conduct a rulemaking to
consider a higher standard for that equipment pursuant to 42 U.S.C.
6313(a)(6)(A). DOE subsequently reiterated this position in a final
rule published in the Federal Register on July 22, 2009 (74 FR
36312, 36313) and again on May 16, 2012 (77 FR 28928, 28937).
However, in the AEMTCA amendments to EPCA in 2012, Congress modified
several provisions related to ASHRAE Standard 90.1 equipment. In
relevant part, DOE now must act whenever ASHRAE Standard 90.1's
``standard levels or design requirements under that standard'' are
amended. (42 U.S.C. 6313(a)(6)(A)(i)) Furthermore, DOE is now
required to conduct an evaluation of each class of covered equipment
in ASHRAE Standard 90.1 ``every 6 years.'' (42 U.S.C.
6313(a)(6)(C)(i)) For any covered equipment for which more than 6
years has elapsed since issuance of the most recent final rule
establishing or amending a standard for such equipment, DOE must
publish either the required notice of determination that standards
do not need to be amended or a NOPR with proposed standards by
December 31, 2013. (42 U.S.C. 6313(a)(6)(C)(vi)) DOE has
incorporated these new statutory mandates into its rulemaking
process for covered ASHRAE 90.1 equipment.
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AEMTCA also modified EPCA to specify that any amendment to the
design requirements with respect to the ASHRAE equipment would trigger
DOE review of the potential energy savings under U.S.C.
6313(a)(6)(A)(i). Additionally, AEMTCA amended EPCA to require that if
DOE proposes an amended standard for ASHRAE equipment at levels more
stringent than
[[Page 42618]]
those in ASHRAE Standard 90.1, DOE, in deciding whether a standard is
economically justified, must determine, after receiving comments on the
proposed standard, whether the benefits of the standard exceed its
burdens by considering, to the maximum extent practicable, 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 product in the type (or class) compared to any increase in
the price, initial charges, or maintenance expenses of the products
likely to result from the standard;
(3) The total projected amount of energy savings likely to result
directly from the standard;
(4) Any lessening of the utility or the performance of the 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 conservation; and
(7) Other factors the Secretary considers relevant. (42 U.S.C.
6313(a)(6)(B)(ii))
EPCA also requires that if a test procedure referenced in ASHRAE
Standard 90.1 is updated, DOE must update its test procedure to be
consistent with the amended test procedure in ASHRAE Standard 90.1,
unless DOE determines that the amended test procedure is not reasonably
designed to produce test results that reflect the energy efficiency,
energy use, or estimated operating costs of the ASHRAE equipment during
a representative average use cycle. In addition, DOE must determine
that the amended test procedure is not unduly burdensome to conduct.
(42 U.S.C. 6314(a)(2) and(4))
Additionally, EISA 2007 amended EPCA to require that at least once
every seven years, DOE must conduct an evaluation of the test
procedures for all covered equipment and either amend test procedures
(if the Secretary determines that amended test procedures would more
accurately or fully comply with the requirements of 42 U.S.C.
6314(a)(2)-(3)) or publish notice in the Federal Register of any
determination not to amend a test procedure. (42 U.S.C. 6314(a)(1)(A))
This final rule resulting satisfies the requirement to review the test
procedures for commercial warm-air furnaces within seven years.
On October 9, 2013 ASHRAE officially released and made public
ASHRAE Standard 90.1-2013. This action triggered DOE's obligations
under 42 U.S.C. 6313(a)(6), as outlined previously.
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6313(a)(6)(B)(iii)(I)) Also, the Secretary may not
prescribe an amended or new standard if interested persons have
established by a preponderance of the evidence that such standard would
likely 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 at the time of the Secretary's finding. (42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa))
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 (and, as applicable, water) savings
during the first year that the consumer will receive as a result of the
standard, as calculated under the applicable test procedure.
Additionally, when a type or class of covered equipment such as
ASHRAE equipment, has two or more subcategories, DOE often specifies
more than one standard level. DOE generally will adopt a different
standard level than that which applies generally to such type or class
of products for any group of covered products that have 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 which justifies a higher or
lower standard. In determining whether a performance-related feature
justifies a different standard for a group of products, DOE generally
considers such factors as the utility to the consumer of the feature
and other factors DOE deems appropriate. In a rule prescribing such a
standard, DOE includes an explanation of the basis on which such higher
or lower level was established. DOE plans to follow a similar process
in the context of this rulemaking.
B. Background
1. ASHRAE Standard 90.1-2013
As noted previously, ASHRAE released a new version of ASHRAE
Standard 90.1 on October 9, 2013 (ASHRAE Standard 90.1-2013). The
ASHRAE standard addresses efficiency levels for many types of
commercial heating, ventilating, air-conditioning (HVAC), and water-
heating equipment covered by EPCA. ASHRAE Standard 90.1-2013 revised
its efficiency levels for certain commercial equipment, but for the
remaining equipment, ASHRAE left in place the preexisting levels (i.e.,
the efficiency levels in ASHRAE Standard 90.1-2010). Specifically,
ASHRAE updated its efficiency levels for small three-phase air-cooled
air conditioners (single package only) and heat pumps (single package
and split system) less than 65,000 Btu/h; water-source heat pumps;
commercial oil-fired storage water heaters; single package vertical
units; and packaged terminal air conditioners. ASHRAE Standard 90.1-
2013 did not change any of the design requirements for the commercial
HVAC and water heating equipment covered by EPCA. See 80 FR 1171, 1177-
1178 (Jan. 8, 2015).
2. Previous Rulemaking Documents
On April 11, 2014, DOE published a notice of data availability
(April 2014 NODA) in the Federal Register and requested public comment
as a preliminary step required pursuant to EPCA when DOE considers
amended energy conservation standards for certain types of commercial
equipment covered by ASHRAE Standard 90.1. 79 FR 20114. Specifically,
the April 2014 NODA presented for public comment DOE's analysis of the
potential energy savings estimates related to amended national energy
conservation standards for the types of commercial equipment for which
DOE was triggered by ASHRAE action, based on: (1) The modified
efficiency levels contained within ASHRAE Standard 90.1-2013; and (2)
more-stringent efficiency levels. Id. at 20134-20136. DOE has described
these analyses and preliminary conclusions and sought input from
interested parties, including the submission of data and other relevant
information. Id.
In addition, DOE presented a discussion in the April 2014 NODA of
the changes found in ASHRAE Standard 90.1-2013. Id. at 20119-20125. The
April 2014 NODA includes a description of DOE's evaluation of each
[[Page 42619]]
ASHRAE equipment type in order for DOE to determine whether the
amendments in ASHRAE Standard 90.1-2013 have increased efficiency
levels or changed design requirements. As an initial matter, DOE sought
to determine which requirements for covered equipment in ASHRAE
Standard 90.1, if any: (1) Have been revised solely to reflect the
level of the current Federal energy conservation standard (where ASHRAE
is merely ``catching up'' to the current national standard); (2) have
been revised but with a reduction in stringency; or (3) have had any
other revisions made that do not change the standard's stringency, in
which case, DOE is not triggered to act under 42 U.S.C. 6313(a)(6) for
that particular equipment type. For those types of equipment in ASHRAE
Standard 90.1 for which ASHRAE actually increased efficiency levels
above the current Federal standard, DOE subjected that equipment to the
potential energy savings analysis discussed previously and presented
the results in the April 2014 NODA for public comment. 79 FR 20114,
20134-20136 (April 11, 2014). Lastly, DOE presented an initial
assessment of the test procedure changes included in ASHRAE Standard
90.1-2013. Id. at 20124-20125.
Following the NODA, DOE published a notice of proposed rulemaking
(NOPR) in the Federal Register on January 8, 2015 (the January 2015
NOPR), and requested public comment. 80 FR 1171. In the January 2015
NOPR, DOE proposed amended energy conservation standards for small
three-phase air-cooled air conditioners (single package only) and heat
pumps (single package and split system) less than 65,000 Btu/h; water-
source heat pumps; and commercial oil-fired storage water heaters. As
noted previously, packaged terminal air conditioners and single package
vertical units were considered in separate rulemakings.
In addition, DOE's NOPR also proposed adopting amended test
procedures for commercial warm-air furnaces.
3. Compliance Dates for Amended Federal Test Procedures, Amended
Federal Energy Conservation Standards, and Representations for Certain
ASHRAE Equipment
This final rule specifies the compliance dates for amended energy
conservation standards as shown in Table I.1. In addition, compliance
with the amended test procedure for commercial warm-air furnaces is
required on or after July 11, 2016.
III. General Discussion of Comments Received
In response to its request for comment on the January 2015 NOPR,
DOE received eight comments from manufacturers, trade associations,
utilities, and energy efficiency advocates. Commenters included: Lennox
International Inc.; Goodman Global, Inc.; California Investor-Owned
Utilities (CA IOUs); a group including Appliance Standards Awareness
Project (ASAP), the American Council for an Energy-Efficient Economy
(ACEEE), Alliance to Save Energy (ASE), and the Natural Resources
Defense Council (NRDC) (jointly referred to as the Advocates); the Air-
conditioning, Heating, and Refrigeration Institute (AHRI); United
Technologies (UTC)--Carrier; Northwest Energy Efficiency Alliance
(NEEA); and a group of 12 associations led by the U.S. Chamber of
Commerce (jointly referred to as the Associations). As discussed
previously, these comments are available in the docket for this
rulemaking and may be reviewed as described in the ADDRESSES section.
The following section summarizes the issues raised in these comments,
along with DOE's responses.
A. General Discussion of the Changes in ASHRAE Standard 90.1-2013 and
Determination of Scope for Further Rulemaking Activity
As discussed previously, before beginning an analysis of the
potential economic impacts and energy savings that would result from
adopting the efficiency levels specified by ASHRAE Standard 90.1-2013
or more-stringent efficiency levels, DOE first sought to determine
whether or not the ASHRAE Standard 90.1-2013 efficiency levels actually
represented an increase in efficiency above the current Federal
standard levels. DOE discussed each equipment class for which the
ASHRAE Standard 90.1-2013 efficiency level differs from the current
Federal standard level, along with DOE's preliminary conclusion as to
the action DOE is taking with respect to that equipment in the January
2015 NOPR. See 80 FR 1171, 1180-1185 (Jan. 8, 2015). (Once again, DOE
notes that ASHRAE Standard 90.1-2013 did not change any of the design
requirements for the commercial HVAC and water-heating equipment
covered by EPCA, so DOE did not conduct further analysis in the NOPR on
that basis.) DOE tentatively concluded from this analysis that the only
efficiency levels that represented an increase in efficiency above the
current Federal standards were those for small three-phase air-cooled
air conditioners (single package only) and heat pumps (single package
and split system) less than 65,000 Btu/h; water-source heat pumps,
commercial oil-fired storage water heaters; single package vertical
units, and packaged terminal air conditioners. For a more detailed
discussion of this approach, readers should refer to the preamble to
the January 2015 NOPR. See Id. DOE did not receive any comments on this
approach.
B. The Proposed Energy Conservation Standards
In the January 2015 NOPR, DOE proposed to adopt the efficiency
levels in ASHRAE Standard 90.1-2013 for small three-phase air-cooled
air conditioners (single package only) and heat pumps (single package
and split system) less than 65,000 Btu/h; water-source heat pumps; and
commercial oil-fired storage water heaters. 80 FR 1171, 1224-1227 (Jan.
8, 2015). Several commenters expressed support for DOE's proposal to
adopt the efficiency levels in ASHRAE 90.1-2013 for small three-phase
commercial air conditioners and heat pumps less than 65,000 Btu/h
(e.g., AHRI, No. 38 at p. 1; Goodman Global, Inc., No. 42 at p. 1;
Lennox International Inc., No. 36 at p. 2). AHRI and Lennox
International also agreed that standards for split-system air-cooled
air conditioners less than 65,000 Btu/h do not need to be amended
(AHRI, No. 38 at p. 2; Lennox International Inc., No. 36 at p. 3),
Finally, AHRI supported the ASHRAE 90.1-2013 levels for water-source
heat pumps and commercial oil-fired storage water heaters as well
(AHRI, No. 38 at p. 1).
On the other hand, the Advocates, NEEA, and the CA IOUs commented
that DOE should adopt higher standards than those in ASHRAE 90.1-2013
for water-source heat pumps between 17,000 and 65,000 Btu/h.
(Advocates, No. 39 at p. 2; CA IOUs, No. 40 at p. 2; NEEA, No. 41 at p.
2) The Advocates and CA IOUs noted that for that equipment class,
efficiency level 2 is cost effective at both 3 and 7 percent discount
rates, while efficiency level 3, which would save additional energy,
would not result in a net cost to consumers. (Advocates, No. 39 at p.
2; CA IOUs, No. 40 at p. 2) NEEA noted that the energy savings
available supported a more in depth analysis of the economic
justification and energy analysis for this equipment class (NEEA, No.
41 at p. 2)
In response to the submitted comments, DOE maintains its position
of adopting the efficiency levels in ASHRAE 90.1-2013 for all equipment
in
[[Page 42620]]
this rulemaking and not amending the standards for split-system air-
cooled air conditioners less than 65,000 Btu/h. DOE notes that despite
the positive economic benefits for water-source heat pumps 17,000 to
65,000 Btu/h at efficiency levels higher than those in ASHRAE 90.1-
2013, the uncertainty present in the energy use, shipments, and
national impact analyses are too great to provide clear and convincing
evidence to adopt more stringent energy conservation standards.
Furthermore, following the NOPR, DOE did not receive any additional
data or information that would allow it to conduct more in-depth
analysis for this equipment. See section VIII.D.2 for further
information.
IV. Test Procedure Amendments and Discussion of Related Comments
EPCA requires the Secretary to amend the DOE test procedures for
covered ASHRAE equipment to the latest version of those generally
accepted industry testing procedures or the rating procedures developed
or recognized by AHRI or by ASHRAE, as referenced by ASHRAE/IES
Standard 90.1, unless the Secretary determines by rule published in the
Federal Register and supported by clear and convincing evidence that
the latest version of the industry test procedure does not meet the
requirements for test procedures described in paragraphs (2) and (3) of
42 U.S.C. 6314(a).\8\ (42 U.S.C. 6314(a)(4)(B))
---------------------------------------------------------------------------
\8\ (2) Test procedures prescribed in accordance with this
section shall be reasonably designed to produce test results which
reflect energy efficiency, energy use, and estimated operating costs
of a type of industrial equipment (or class thereof) during a
representative average use cycle (as determined by the Secretary),
and shall not be unduly burdensome to conduct. (3) If the test
procedure is a procedure for determining estimated annual operating
costs, such procedure shall provide that such costs shall be
calculated from measurements of energy use in a representative
average-use cycle (as determined by the Secretary), and from
representative average unit costs of the energy needed to operate
such equipment during such cycle. The Secretary shall provide
information to manufacturers of covered equipment respecting
representative average unit costs of energy.
---------------------------------------------------------------------------
In the January 2015 NOPR, in keeping with EPCA's mandate to
incorporate the latest version of the applicable industry test
procedure pursuant to 42 U.S.C. 6314(a)(4)(B), DOE proposed to update
its commercial warm air furnace test procedure by incorporating by
reference ANSI (American National Standards Institute) Z21.47-2012,
Standard for Gas-Fired Central Furnaces. 80 FR 1171, 1185-1186 (Jan. 8,
2015). DOE determined that the changes to the 2012 version do not
impact those provisions of that industry test procedure that are used
under the DOE test procedure for gas-fired warm air furnaces, and,
therefore, such changes do not affect the energy efficiency ratings for
gas-fired furnaces. As such, DOE anticipated no substantive change or
increase in test burden to be associated with this test procedure
amendment for warm air furnaces.
DOE is also required to review the test procedures for covered
ASHRAE equipment at least once every seven years. (42 U.S.C.
6314(a)(1)(A)) In addition to the updates to the referenced standards
discussed previously, In the January 2015 NOPR, DOE also proposed to
update the citations and incorporations by reference in DOE's
regulations for commercial warm-air furnaces to the most recent version
of ASHRAE 103, Method of Testing for Annual Fuel Utilization Efficiency
of Residential Central Furnaces and Boiler (i.e., ASHRAE 103-2007). 80
FR 1171, 1185-1186 (Jan. 8, 2015). The applicable sections of this
standard include measurement of condensate and calculation of
additional heat gain and heat losses for condensing furnaces. DOE noted
that the most recent version does not contain any updates to the
sections currently referenced by the DOE test procedure, so no
additional burden would be expected to result from this test procedure
update.
In response to the NOPR, Lennox International agreed with DOE's
proposal to incorporate the latest versions of ANSI Z21.47 and ASHRAE
103 by reference as the applicable test procedure for commercial warm-
air furnaces. (Lennox International Inc., No. 36 at p. 2) DOE adopts
these updates in this final rule.
DOE is aware that some commercial furnaces are designed for make-up
air heating (i.e., heating 100 percent outdoor air). DOE defines
``commercial warm air furnace'' at 10 CFR 431.72 as self-contained oil-
fired or gas-fired furnaces designed to supply heated air through ducts
to spaces that require it, with a capacity (rated maximum input) at or
above 225,000 Btu/h. Further, DOE's definitions specify that this
equipment includes combination warm air furnace/electric air
conditioning units but does not include unit heaters and duct furnaces.
Given the characteristics of this category of commercial furnaces, DOE
concludes that gas-fired and oil-fired commercial furnaces that are
designed for make-up air heating and that have input ratings at or
above 225,000 Btu/h meet the definition of ``commercial warm air
furnace'' because they are self-contained units that supply heated air
through ducts. Consequently, DOE is clarifying that commercial warm air
furnaces that are designed for make-up air heating are subject to DOE's
regulatory requirements, including being tested according to the test
procedure specified in 10 CFR 431.76.
V. Methodology for Small Commercial Air-Cooled Air Conditioners and
Heat Pumps Less Than 65,000 Btu/h
This section addresses the analyses DOE has performed for this
rulemaking with respect to small commercial air-cooled air conditioners
and heat pumps less than 65,000 Btu/h. A separate subsection addresses
each analysis. In overview, DOE used a spreadsheet to calculate the
life-cycle cost (LCC) and payback periods (PBPs) of potential energy
conservation standards. DOE used another spreadsheet to provide
shipments projections and then calculate national energy savings and
net present value impacts of potential amended energy conservation
standards.
A. Market Assessment
To begin its review of the ASHRAE Standard 90.1-2013 efficiency
levels, DOE developed information that provides an overall picture of
the market for the equipment concerned, including the purpose of the
equipment, the industry structure, and market characteristics. This
activity included both quantitative and qualitative assessments based
primarily on publicly available information. The subjects addressed in
the market assessment for this rulemaking include equipment classes,
manufacturers, quantities, and types of equipment sold and offered for
sale. The key findings of DOE's market assessment are summarized in the
following sections. For additional detail, see chapter 2 of the final
rule technical support document (TSD).
1. Equipment Classes
The Federal energy conservation standards for air-cooled air
conditioners and heat pumps are differentiated based on the cooling
capacity (i.e., small, large, or very large). For small equipment,
there is an additional disaggregation into: (1) equipment less than
65,000 Btu/h and (2) equipment greater than or equal to 65,000 Btu/h
and less than 135,000 Btu/h. ASHRAE Standard 90.1-2013 also
differentiates the equipment that is less than 65,000 Btu/h into split
system and single package subcategories. In the past, DOE has followed
the same disaggregation. However, when EISA 2007 increased the
efficiency levels to identical levels across single package and split
system equipment, effective in 2008, DOE
[[Page 42621]]
combined the equipment classes in the CFR, resulting in only two
equipment classes, one for air conditioners and one for heat pumps. 74
FR 12058, 12074 (March 23, 2009). Because ASHRAE 90.1-2013 has
increased the standard for only single package air conditioners, and
has increased the HSPF level to a more stringent level for split system
heat pumps than for single package heat pumps, and DOE is obligated to
adopt, at a minimum, the increased level in ASHRAE 90.1-2013 for that
equipment class, DOE proposed in the January 2015 NOPR re-creating
separate equipment classes for single package and split system
equipment in the overall equipment classes of small commercial package
air conditioners and heat pumps (three-phase air-cooled) less than
65,000 Btu/h. 80 FR 1171, 1186-1187 (Jan. 8, 2015). In response, AHRI
supported DOE's proposal to re-create separate equipment classes for
single package and split system air conditioning and heating equipment
(air-cooled, three-phase). (AHRI, No. 38 at p. 1). In this final rule,
DOE adopts these amended equipment classes, as shown in Table V.1.
Table V.1--Amended Equipment Classes for Small Commercial Packaged Air-
Conditioning and Heating Equipment <65,000 Btu/h
------------------------------------------------------------------------
Product Cooling capacity Sub-category
------------------------------------------------------------------------
Small Commercial Packaged Air <65,000 Btu/h.... AC.
Conditioning and Heating HP.
Equipment (Air-Cooled, 3-Phase,
Split System).
Small Commercial Packaged Air <65,000 Btu/h.... AC.
Conditioning and Heating HP.
Equipment (Air-Cooled, 3-Phase,
Single Package).
------------------------------------------------------------------------
2. Review of Current Market
In order to obtain the information needed for the market assessment
for this rulemaking, DOE consulted a variety of sources, including
manufacturer literature, manufacturer Web sites, and the AHRI-certified
directory.\9\ The information DOE gathered serves as resource material
throughout the rulemaking. The sections below provide an overview of
the market assessment, and chapter 2 of the final rule TSD provides
additional detail on the market assessment, including citations to
relevant sources.
---------------------------------------------------------------------------
\9\ AHRI Directory of Certified Product Performance (2013)
(Available at: www.ahridirectory.org) (Last accessed November 11,
2013).
---------------------------------------------------------------------------
a. Trade Association Information
DOE researched various trade groups representing manufacturers,
distributors, and installers of the various types of equipment being
analyzed in this rulemaking. AHRI is one of the largest trade
associations for manufacturers of space heating, cooling, and water
heating equipment, representing more than 90 percent of the residential
and commercial air conditioning, space heating, water heating, and
commercial refrigeration equipment manufactured in the United
States.\10\ AHRI also develops and publishes test procedure standards
for measuring and certifying the performance of residential and
commercial HVAC equipment and coordinates with the International
Organization for Standardization (ISO) to help harmonize U.S. standards
with international standards, if feasible. AHRI also maintains the AHRI
Directory of Certified Product Performance, which is a database that
lists all the products and equipment that have been certified by AHRI,
thereby providing equipment ratings for all manufacturers who elect to
participate in the program. DOE utilized this database in developing
base-case efficiency distributions.
---------------------------------------------------------------------------
\10\ Air-Conditioning, Heating, and Refrigeration Institute Web
site, About Us (2013) (Available at: www.ari.org/site/318/About-Us)
(Last accessed December 18, 2014).
---------------------------------------------------------------------------
The Heating, Air-conditioning and Refrigeration Distributors
International (HARDI) is a trade association that represents over 450
wholesale heating, ventilating, air-conditioning, and refrigeration
(HVACR) companies, plus over 300 manufacturing associates and nearly
140 manufacturing representatives. HARDI estimates that 80 percent of
the revenue of HVACR systems goes through its members.\11\ DOE did not
utilize HARDI data for this rule.
---------------------------------------------------------------------------
\11\ Heating, Air-conditioning & Refrigeration Distributors
International Web site, About HARDI (2014) (Available at:
www.hardinet.org/about-hardi-0) (Last accessed February 10, 2014).
---------------------------------------------------------------------------
The Air Conditioning Contractors of America (ACCA) is another trade
association whose members include over 4,000 contractors and 60,000
professionals in the indoor environment and energy service community.
According to their Web site, ACCA provides contractors with technical,
legal, and market resources, helping to promote good practices and to
keep buildings safe, clean, and affordable.\12\ DOE did not use ACCA
data for this rule.
---------------------------------------------------------------------------
\12\ Air Conditioning Contractors of America Web site, About
ACCA (2014) (Available at: www.acca.org/acca) (Last accessed
February 10, 2014).
---------------------------------------------------------------------------
b. Manufacturer Information
DOE reviewed data for air-cooled commercial air conditioners and
heat pumps currently on the market by examining the AHRI Directory of
Certified Product Performance. DOE identified 23 parent companies
(comprising 61 manufacturers) of small three-phase air-cooled air
conditioners and heat pumps, which are listed in chapter 2 of the final
rule TSD. Of these manufacturers, five were identified as small
businesses based upon number of employees and the employee thresholds
set by the Small Business Administration. More details on this analysis
can be found below in section IX.B.
c. Market Data
DOE reviewed the AHRI database to characterize the efficiency and
performance of small commercial air-cooled air conditioners and heat
pumps less than 65,000 Btu/h models currently on the market. The full
results of this market characterization are found in chapter 2 of the
final rule TSD. For split-system air conditioners, the average SEER
value was 13.9, and 120 models (0.1 percent of the total models) have
SEER ratings below the ASHRAE Standard 90.1-2013 level of 13.0 SEER.
For single-package air conditioners, the average SEER value was 14.3,
and 1,450 models (45 percent of the total models) have SEER ratings
below the ASHRAE Standard 90.1-2013 level of 14.0 SEER.
For single-package heat pumps, the average SEER value is 14.0. Of
the models identified by DOE, 653 models (54 percent of the total
models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of
14.0 SEER. The average HSPF value for this equipment class is 7.9. Of
the models identified by DOE, 632 models (52 percent of the total
models) have HSPF ratings below the ASHRAE Standard 90.1-2013 levels of
8.0. For split-system
[[Page 42622]]
heat pumps, the average SEER value for this equipment class is 13.7. Of
the models identified by DOE, 30,009 models (64 percent of the total
models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of
14.0. The average HSPF for this equipment class is 7.9. Of the models
identified by DOE, 36,902 models (79 percent of the total models) have
HSPF ratings below the ASHRAE Standard 90.1-2013 level of 8.2. For more
information on market performance data, see chapter 2 of the final rule
TSD.
B. Engineering Analysis
The engineering analysis establishes the relationship between an
increase in energy efficiency and the increase in cost (manufacturer
selling price (MSP)) of a piece of equipment DOE is evaluating for
potential amended energy conservation standards. This relationship
serves as the basis for cost-benefit calculations for individual
consumers, manufacturers, and the Nation. The engineering analysis
identifies representative baseline equipment, which is the starting
point for analyzing possible energy efficiency improvements. For
covered ASHRAE equipment, DOE sets the baseline for analysis at the
ASHRAE Standard 90.1 efficiency level, because by statute, DOE cannot
adopt any level below the revised ASHRAE level. The engineering
analysis then identifies higher efficiency levels and the incremental
increase in product cost associated with achieving the higher
efficiency levels. After identifying the baseline models and cost of
achieving increased efficiency, DOE estimates the additional costs to
the commercial consumer through an analysis of contractor costs and
markups and uses that information in the downstream analyses to examine
the costs and benefits associated with increased equipment efficiency.
DOE typically structures its engineering analysis around one of
three methodologies: (1) The design-option approach, which calculates
the incremental costs of adding specific design options to a baseline
model; (2) the efficiency-level approach, which calculates the relative
costs of achieving increases in energy efficiency levels without regard
to the particular design options used to achieve such increases; and/or
(3) the reverse-engineering or cost-assessment approach, which involves
a ``bottom-up'' manufacturing cost assessment based on a detailed bill
of materials derived from teardowns of the equipment being analyzed. A
supplementary method called a catalog teardown uses published
manufacturer catalogs and supplementary component data to estimate the
major physical differences between a piece of equipment that has been
physically disassembled and another piece of similar equipment for
which catalog data are available to determine the cost of the latter
equipment. Deciding which methodology to use for the engineering
analysis depends on the equipment, the design options under study, and
any historical data upon which DOE may draw.
1. Approach
As explained in the January 2015 NOPR, DOE used a combination of
the efficiency-level and the cost-assessment approach for this
analysis. 80 FR 1171, 1187-1188 (Jan. 8, 2015). DOE used the
efficiency-level approach to identify incremental improvements in
efficiency for each equipment class and the cost-assessment approach to
develop a cost for each efficiency level. The efficiency levels that
DOE considered in the engineering analysis were representative of
three-phase central air conditioners and heat pumps currently produced
by manufacturers at the time the engineering analysis was developed.
DOE relied on data reported in the AHRI Directory of Certified Product
Performance to select representative efficiency levels.
DOE generated a bill of materials (BOM) for each representative
product that it disassembled. DOE did this for multiple manufacturers'
products that span a range of efficiency levels for the equipment
classes that are analyzed in this rulemaking. The BOMs describe the
manufacture of the equipment in detail, listing all parts and including
all manufacturing steps required to make each part and to assemble the
unit. DOE also conducted catalog teardowns to supplement the
information obtained directly from physical teardowns. Subsequently,
DOE developed a cost model that calculates manufacturer production cost
(MPC) for each unit, based on the detailed BOM data. Chapter 3 of the
final rule TSD describes DOE's cost model in greater detail. The
calculated costs were plotted as a function of the equipment efficiency
levels (based on rated efficiency) to create cost-efficiency curves.
DOE notes that the costs at some efficiency levels were interpolated or
extrapolated based on the available physical and catalog teardown data.
DOE developed cost-efficiency curves for a representative capacity
of three tons, which it decided well represents the range of capacities
on the market for commercial three-phase products. Because other
capacity levels had similar designs and efficiency levels, cost-
efficiency curves were not developed for any other capacities. Instead,
DOE was able to utilize the cost-efficiency curve for the
representative capacity and apply it to all three-phase products.
DOE based the cost-efficiency relationship for three-phase central
air conditioners and heat pumps on reverse engineering conducted for
the June 2011 direct final rule (DFR) for single-phase central air
conditioners and heat pumps. 76 FR 37408. DOE researched manufacturer
literature and noticed that most model numbers between single-phase
products and three-phase equipment were interchangeable, with only a
single-digit difference in the model number for the supply voltage.
Although three-phase equipment contains three-phase compressors instead
of single-phase compressors, DOE did not notice any inconsistency in
energy efficiency ratings between single-phase products and three-phase
equipment. To supplement the 2011 DFR data (29 physical teardowns and
12 catalog teardowns), DOE completed one physical teardown and seven
catalog teardowns of three-phase equipment. This approach allowed DOE
to provide an estimate of equipment prices at different efficiencies
and spanned a range of technologies currently on the market that are
used to achieve the increased efficiency levels.
2. Baseline Equipment
DOE selected baseline efficiency levels as reference points for
each equipment class, against which it measured changes resulting from
potential amended energy conservation standards. DOE defined the
baseline efficiency levels as reference points to compare the
technology, energy savings, and cost of equipment with higher energy
efficiency levels. Typically, units at the baseline efficiency level
just meet Federal energy conservation standards and provide basic
consumer utility. However, EPCA requires that DOE must adopt either the
ASHRAE Standard 90.1-2013 levels or more-stringent levels. Therefore,
because the ASHRAE Standard 90.1-2013 levels were the lowest levels
that DOE could adopt, DOE used those levels as the reference points
against which more-stringent levels were evaluated.
[[Page 42623]]
Table V.2--Current Baseline and ASHRAE Efficiency Levels for Small Commercial Air-Cooled Air Conditioners and
Heat Pumps With Rated Cooling Capacities Less Than 65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Single-package Single-package
Split-system AC AC Split-system HP HP
----------------------------------------------------------------------------------------------------------------
SEER
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard.............. 13.0 13.0 13.0 13.0
Baseline--ASHRAE Standard............... 13.0 14.0 14.0 14.0
----------------------------------------------------------------------------------------------------------------
HSPF
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard.............. ................ ................ 7.7 7.7
Baseline--ASHRAE Standard............... ................ ................ 8.2 8.0
----------------------------------------------------------------------------------------------------------------
Table V.3 shows the current baseline and ASHRAE efficiency levels
for each equipment class of small commercial air-cooled air
conditioners and heat pumps <65,000 Btu/h.
Table V.3--Baseline Efficiency Levels for Small Commercial Air-Cooled Air Conditioners (AC) and Heat Pumps (HP)
<65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Single-package Single-package
Split-system AC AC Split-system HP HP
----------------------------------------------------------------------------------------------------------------
SEER
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard.............. 13.0 13.0 13.0 13.0
Baseline--ASHRAE Standard............... 13.0 14.0 14.0 14.0
----------------------------------------------------------------------------------------------------------------
HSPF
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard.............. ................ ................ 7.7 7.7
Baseline--ASHRAE Standard............... ................ ................ 8.2 8.0
----------------------------------------------------------------------------------------------------------------
3. Identification of Increased Efficiency Levels for Analysis
DOE analyzed several efficiency levels and obtained incremental
cost data for the four equipment classes under consideration. Table
V.44 presents the efficiency levels examined for each equipment class.
As part of the engineering analyses, DOE considered up to six
efficiency levels beyond the baseline for each equipment class. DOE
derived the maximum technologically feasible (``max-tech'') level from
the market maximum in the AHRI Certified Directory,\13\ as of November
2013. The highest available efficiency level for split-system heat
pumps was 16.2 SEER, compared to 18.05 SEER for single-package heat
pumps. In the January 2014 NOPR, DOE tentatively determined the ``max-
tech'' level for single-package air conditioners to be 19.15. 80 FR
1171, 1189 (Jan. 8, 2015). DOE also determined that split-system air
conditioners are capable of reaching the same efficiency levels as
single-package units. Id. For the engineering analysis, DOE rounded the
``max-tech'' levels to integer values of 18 and 19 for split-system and
single-package heat pumps, and split-system and single-package air
conditioners, respectively. The impact of this rounding, which results
in efficiency levels that are whole-number values of SEER, is minimal.
DOE did not receive any comments on its tentative determination for
max-tech levels for single-package and split-system heat pumps and air
conditioners and thus maintained its analysis in this final rule.
---------------------------------------------------------------------------
\13\ The AHRI Certified Directory is available at http://www.ahridirectory.org/ahridirectory/pages/home.aspx.
---------------------------------------------------------------------------
The final efficiency levels for each equipment class are presented
below in Table V.4. For additional details on the efficiency levels
selected for analysis, see chapter 3 of the final rule TSD.
Table V.4--Efficiency Levels for Small Commercial Air-Cooled Air Conditioners and Heat Pumps <65,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Split-system Single-package Split-system HP Single-package HP
AC AC ---------------------------------------------------------------
Efficiency level ----------------------------------
SEER SEER SEER HSPF SEER HSPF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal Baseline...................................... 13 13 13 7.7 13 7.7
0--ASHRAE Baseline *.................................. 14 14 14 8.2 14 8.0
1..................................................... 15 15 15 8.5 15 8.4
2..................................................... 16 16 16 8.7 16 8.8
3..................................................... 17 17 17 9.0 17 8.9
4 **.................................................. 18 18 18 9.2 18 9.1
[[Page 42624]]
5 ***................................................. 19 19 .............. .............. .............. ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For consistency across equipment classes, DOE refers to 14 SEER as EL 0, which is only the ASHRAE Baseline for three of the equipment classes,
excluding split-system AC.
** Efficiency Level 4 is ``Max-Tech'' for HP equipment classes.
*** Efficiency Level 5 is ``Max-Tech'' for AC equipment classes.
4. Engineering Analysis Results
The results of the engineering analysis are cost-efficiency curves
based on results from the cost models for analyzed units. DOE's
calculated MPCs for small commercial air conditioners and heat pumps
less than 65,000 Btu/h are shown in Table V.5 through Table V.8, and
further details on the calculation of these curves can be found in
chapter 3 of the final rule TSD. DOE used the cost-efficiency curves
from the engineering analysis as an input for the life-cycle cost and
payback period analyses.
Table V.5--Manufacturer Production Costs for Three-Ton Split-System
Commercial Air-Cooled Air Conditioners
------------------------------------------------------------------------
MPC
SEER [2014$]
------------------------------------------------------------------------
13........................................................... $855
14........................................................... 937
15........................................................... 1,023
16........................................................... 1,115
17........................................................... 1,212
18........................................................... 1,316
19........................................................... 1,427
------------------------------------------------------------------------
Table V.6--Manufacturer Production Costs for Three-Ton Single-Package
Commercial Air-Cooled Air Conditioners
------------------------------------------------------------------------
MPC
SEER [2014$]
------------------------------------------------------------------------
13........................................................... $1,003
14........................................................... 1,122
15........................................................... 1,241
16........................................................... 1,361
17........................................................... 1,480
18........................................................... 1,599
19........................................................... 1,719
------------------------------------------------------------------------
Table V.7--Manufacturer Production Costs for Three-Ton Split-System
Commercial Air-Cooled Heat Pumps
------------------------------------------------------------------------
MPC
SEER HSPF [2014$]
------------------------------------------------------------------------
13................................................ 7.7 $1,068
14................................................ 8.2 1,154
15................................................ 8.5 1,244
16................................................ 8.7 1,377
17................................................ 9.0 1,486
18................................................ 9.2 1,601
------------------------------------------------------------------------
Table V.8--Manufacturer Production Costs for Three-Ton Single-Package
Commercial Air-Cooled Heat Pumps
------------------------------------------------------------------------
MPC
SEER HSPF [2014$]
------------------------------------------------------------------------
13................................................ 7.7 $1,239
14................................................ 8.0 1,372
15................................................ 8.4 1,504
16................................................ 8.8 1,637
17................................................ 8.9 1,769
18................................................ 9.1 1,902
------------------------------------------------------------------------
a. Manufacturer Markups
DOE applies a non-production cost multiplier (the manufacturer
markup) to the full MPC to account for corporate non-production costs
and profit. The resulting manufacturer selling price (MSP) is the price
at which the manufacturer can recover all production and nonproduction
costs and earn a profit. To meet new or amended energy conservation
standards, manufacturers often introduce design changes to their
equipment lines that result in increased manufacturer production costs.
Depending on the competitive environment for these particular types of
equipment, some or all of the increased production costs may be passed
from manufacturers to retailers and eventually to commercial consumers
in the form of higher purchase prices. As production costs increase,
manufacturers typically incur additional overhead. The MSP should be
high enough to recover the full cost of the equipment (i.e., full
production and non-production costs) and yield a profit. The
manufacturer markup has an important bearing on profitability. A high
markup under a standards scenario suggests manufacturers can pass along
the increased variable costs and some of the capital and product
conversion costs (the one-time expenditures) to the consumer. A low
markup suggests that manufacturers will not be able to recover as much
of the necessary investment in plants and equipment.
For small commercial air-cooled air-conditioners and heat pumps,
DOE used a manufacturer markup of 1.3, as developed for the 2011 direct
final rule for single-phase central air conditioners and heat pumps. 76
FR 37408 (June 27, 2011). This markup was calculated using U.S.
Security and Exchange Commission (SEC) 10-K reports for publicly-owned
heating and cooling companies, as well as feedback from manufacturer
interviews. See chapter 3 of the final rule TSD for more details about
the methodology DOE used to determine the manufacturing markup.
b. Shipping Costs
Manufacturers of commercial HVAC products typically pay for freight
(shipping) to the first step in the distribution chain. Freight is not
a manufacturing cost, but because it is a substantial cost incurred by
the manufacturer, DOE accounts for shipping costs separately from other
non-production costs that comprise the manufacturer markup. DOE
calculated the MSP for small commercial air-cooled air-conditioners and
heat pumps by multiplying the MPC at each efficiency level (determined
from the cost model) by the manufacturer markup and adding shipping
costs for equipment at the given efficiency level. More specifically,
DOE calculated shipping costs at each efficiency level based on a
typical 53-foot straight-frame trailer with a storage volume of 4,240
cubic feet. DOE examined the sizes of small commercial air-cooled air-
conditioners and heat pumps and determined the number of units that
[[Page 42625]]
would fit in each trailer, based on assumptions about the arrangement
of units in the trailer. See chapter 3 of the final rule TSD for more
details about the methodology DOE used to determine the shipping costs.
C. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer selling
price derived in the engineering analysis to commercial consumer
prices. (``Commercial consumer'' refers to purchasers of the equipment
being regulated.) DOE calculates overall baseline and incremental
markups based on the equipment markups at each step in the distribution
chain. The incremental markup relates the change in the manufacturer
sales price of higher-efficiency models (the incremental cost increase)
to the change in the commercial consumer price.
In the 2014 NOPR for Central Unitary Air Conditioners (CUAC), which
includes equipment similar to but larger than that in this rulemaking,
DOE determined that there are three types of distribution channels to
describe how the equipment passes from the manufacturer to the
commercial consumer. 79 FR 58948, 58975 (Sept. 30, 2014). In the new
construction market, the manufacturer sells the equipment to a
wholesaler. The wholesaler sells the equipment to a mechanical
contractor, who sells it to a general contractor, who in turn sells the
equipment to the commercial consumer or end user as part of the
building. In the replacement market, the manufacturer sells to a
wholesaler, who sells to a mechanical contractor, who in turn sells the
equipment to the commercial consumer or end user. In the third
distribution channel, used in both the new construction and replacement
markets, the manufacturer sells the equipment directly to the customer
through a national account.
In the analysis for this Final Rule and in the January 2015 NOPR,
DOE used two of the three distribution channels described above to
determine the markups. Given the small cooling capacities of air
conditioners and heat pumps less than 65,000 Btu/h, DOE did not use the
national accounts distribution chain in the markups analysis. National
accounts are composed of large commercial consumers of HVAC equipment
that negotiate equipment prices directly with the manufacturers, such
as national retail chains. The end market consumers of three-ton
central air conditioners and heat pumps are small offices and small
retailers and do not fit the profile of large national chains. 80 FR
1171, 1191 (Jan. 8, 2015).
In the 2014 CUAC NOPR, based on information that equipment
manufacturers provided, commercial consumers were estimated to purchase
50 percent of the covered equipment through small mechanical
contractors, 32.5 percent through large mechanical contractors, and the
remaining 17.5 percent through national accounts. 79 FR 58948, 58976
(Sept. 30, 2014). For this analysis, DOE removed the national accounts
distribution channel and recalculated the size of the small and large
mechanical contractor distribution channels assuming they make up the
entire market. Therefore, the small mechanical distribution chain
accounts for 61 percent of equipment purchases (i.e., 50 percent
divided by the sum of 50 percent and 32.5 percent), and the large
mechanical contractor distribution chain represents 39 percent of
purchases.
In this Final Rule and in the January 2015 NOPR, DOE used the
markups from the 2014 CUAC NOPR, for which DOE utilized updated
versions of: (1) The Heating, Air Conditioning & Refrigeration
Distributors International 2010 Profit Report to develop wholesaler
markups; (2) the Air Conditioning Contractors of America's (ACCA) 2005
Financial Analysis for the HVACR Contracting Industry to develop
mechanical contractor markups; and (3) U.S. Census Bureau economic data
for the commercial and institutional building construction industry to
develop general contractor markups.\14\ 80 FR 1171, 1191 (Jan. 8,
2015).
---------------------------------------------------------------------------
\14\ U.S. Census Bureau, 2007 Economic Census, Construction
Industry Series and Wholesale Trade Subject Series (Available at:
www.census.gov/econ/census/data/historical_data.html).
---------------------------------------------------------------------------
Chapter 5 of the final rule TSD provides further detail on the
estimation of markups.
D. Energy Use Analysis
The energy use analysis provides estimates of the annual energy
consumption of small air-cooled air conditioners and heat pumps with
cooling capacities less than 65,000 btu/h at the considered efficiency
levels. DOE uses these values in the LCC and PBP analyses and in the
NIA.
The cooling unit energy consumption (UEC) by equipment type and
efficiency level came from the national impact analysis associated with
the 2011 direct final rule (DFR) for residential central air
conditioners and heat pumps. (EERE-2011-BT-STD-0011-0011).
Specifically, DOE used the UECs for single-phase equipment installed in
commercial buildings. The UECs for split system and single package
equipment were similar in the 2011 analysis for lower efficiency
levels, but at higher efficiency levels, the only UEC s available were
for split-system equipment. DOE assumed that the similarities at lower
levels could be expected to hold at higher efficiency levels;
therefore, DOE used the UECs for split equipment for all equipment
classes in this final rule, including split system and single package.
In order to assess variability in the cooling UEC by region and
building type, DOE used a Pacific Northwest National Laboratory report
\15\ that estimated the annual energy usage of space cooling and
heating products using a Full Load Equivalent Operating Hour (FLEOH)
approach. DOE normalized the provided FLEOHs to the UEC data discussed
above to vary the average UEC across region and building type. The
building types used in this analysis are small retail establishments
and small offices.
---------------------------------------------------------------------------
\15\ See Appendix D of the 2000 Screening Analysis for EPACT-
Covered Commercial HVAC and Water-Heating Equipment. (EERE-2006-STD-
0098-0015)
---------------------------------------------------------------------------
DOE reviewed the results of the simulations for the 2011 DFR and
determined that the heating loads for these small commercial
applications are extremely low (less than 500 kwh/year). As a result,
DOE did not include any energy savings in the analysis for this Final
Rule due to the increase in HSPF for this equipment. Chapter 4 of the
final rule TSD provides further detail on energy use analysis.
E. Life-Cycle Cost and Payback Period Analysis
The purpose of the LCC and PBP analysis is to analyze the effects
of potential amended energy conservation standards on commercial
consumers of small commercial air-cooled air conditioners and heat
pumps less than 65,000 btu/h by determining how a potential amended
standard affects their operating expenses (usually decreased) and their
total installed costs (usually increased).
The LCC is the total consumer expense over the life of the
equipment, consisting of equipment and installation costs plus
operating costs (i.e., expenses for energy use, maintenance, and
repair). DOE discounts future operating costs to the time of purchase
using commercial consumer discount rates. The PBP is the estimated
amount of time (in years) it takes commercial consumers to recover the
increased total installed cost (including equipment and
[[Page 42626]]
installation costs) of a more-efficient type of equipment through lower
operating costs. DOE calculates the PBP by dividing the change in total
installed cost (normally higher) due to a standard by the change in
annual operating cost (normally lower) that results from the potential
standard. However, unlike the LCC, DOE only considers the first year's
operating expenses in the PBP calculation. Because the PBP does not
account for changes in operating expenses over time or the time value
of money, it is also referred to as a simple PBP.
For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case efficiency level. For
split-system air conditioners, for which ASHRAE did not increase
efficiency levels, the base-case estimate reflects the market in the
absence of amended energy conservation standards, including the market
for equipment that exceeds the current energy conservation standards.
For single-package air conditioners, split-system heat pumps, and
single-package heat pumps, the base-case estimate reflects the market
in the case where the ASHRAE 90.1-2013 level becomes the Federal
minimum, and the LCC calculates the LCC savings likely to result from
higher efficiency levels compared with the ASHRAE base-case.
DOE conducted an LCC and PBP analysis for small commercial air-
cooled air conditioners and heat pumps less than 65,000 btu/h using a
computer spreadsheet model. When combined with Crystal Ball (a
commercially-available software program), the LCC and PBP model
generates a Monte Carlo simulation to perform the analyses by
incorporating uncertainty and variability considerations in certain of
the key parameters as discussed below. Inputs to the LCC and PBP
analysis are categorized as: (1) Inputs for establishing the total
installed cost and (2) inputs for calculating the operating expense.
The following sections contain brief discussions of the inputs and key
assumptions of DOE's LCC and PBP analysis. They are also described in
detail in chapter 6 of the final rule TSD.
1. Equipment Costs
In the LCC and PBP analysis, the equipment costs faced by
purchasers of small air-cooled air conditioning and heat pump equipment
are derived from the MSPs estimated in the engineering analysis, the
overall markups estimated in the markups analysis, and sales tax.
To develop an equipment price trend for the final rule, DOE derived
an inflation-adjusted index of the producer price index (PPI) for
``unitary air-conditioners, except air source heat pumps'' from 1978 to
2013, which is the PPI series most relevant to small air-cooled air-
conditioning equipment. The PPI index for heat pumps covered too short
a time period to provide a useful picture of pricing trends, so the
air-conditioner time series was used for both air conditioners and heat
pumps. DOE expects this to be a reasonably accurate assessment for heat
pumps because heat pumps are produced by the same manufacturers as air-
conditioners and contain most of the same components. Although the
overall PPI index shows a long-term declining trend, data for the last
decade have shown a flat-to-slightly-rising trend. Given the
uncertainty as to which of the trends will prevail in coming years, DOE
chose to apply a constant price trend (at 2014 levels) for the final
rule. See chapter 6 of the final rule TSD for more information on the
price trends.
2. Installation Costs
DOE derived national average installation costs for small air-
cooled air conditioning and heat pump equipment from data provided in
RS Means 2013.\16\ RS Means provides estimates for installation costs
for the subject equipment by equipment capacity, as well as cost
indices that reflect the variation in installation costs for 656 cities
in the United States. The RS Means data identify several cities in all
50 States and the District of Columbia. DOE incorporated location-based
cost indices into the analysis to capture variation in installation
costs, depending on the location of the consumer.
---------------------------------------------------------------------------
\16\ RS Means Mechanical Cost Data 2013. Reed Construction Data,
LLC (2012).
---------------------------------------------------------------------------
Based on these data, DOE concluded that data for 3-ton rooftop air
conditioners would be sufficiently representative of the installation
costs for air conditioners less than 65,000 btu/h. For heat pumps, DOE
used the installation costs for 3-ton air-source heat pumps.
DOE also varied installation cost as a function of equipment
weight. Because weight tends to increase with equipment efficiency,
installation cost increased with equipment efficiency. The weight of
the equipment in each class and efficiency level was determined through
the engineering analysis.
3. Unit Energy Consumption
The calculation of annual per-unit energy consumption by each class
of the subject small air-cooled air conditioning and heating equipment
at each considered efficiency level is based on the energy use analysis
as described above in section V.D and in chapter 4 of the final rule
TSD.
4. Electricity Prices and Electricity Price Trends
DOE used average and marginal electricity prices by Census Division
based on tariffs from a representative sample of electric utilities.
This approach calculates energy expenses based on actual commercial
building average and marginal electricity prices that customers are
paying.\17\ The Commercial Buildings Energy Consumption Survey (CBECS)
1992 and CBECS 1995 surveys provide monthly electricity consumption and
demand for a large sample of buildings. DOE used these values to help
develop usage patterns associated with various building types. Using
these monthly values in conjunction with the tariff data, DOE
calculated monthly electricity bills for each building. The average
price of electricity is defined as the total electricity bill divided
by total electricity consumption. From this average price, the marginal
price for electricity consumption was determined by applying a 5-
percent decrement to the average CBECS consumption data and
recalculating the electricity bill. Using building location and the
prices derived from the above method, an average and marginal price was
determined for each region of the U.S.
---------------------------------------------------------------------------
\17\ Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and
J.E. McMahon, ``Tariff-based Analysis of Commercial Building
Electricity Prices'' (2008) Lawrence Berkeley National Laboratory:
Berkeley, CA. Report No. LBNL-55551.
---------------------------------------------------------------------------
The average electricity price multiplied by the baseline
electricity consumption for each equipment class defines the baseline
LCC. For each efficiency level, the operating cost savings are
calculated by multiplying the electricity consumption savings (relative
to the baseline) by the marginal consumption price.
For this final rule, DOE updated the tariff-based prices to 2014
dollars and projected future electricity prices using trends in average
commercial electricity price from Annual Energy Outlook (AEO) 2014. An
examination of data published by the Edison Electric Institute \18\
indicates that the rate of increase of marginal and average prices is
not significantly different, so the same factor was used for both
pricing estimates.
---------------------------------------------------------------------------
\18\ Edison Electric Institute, EEI Typical Bills and Average
Rates Report (bi-annual, 2007-2012).
---------------------------------------------------------------------------
For further discussion of electricity prices, see chapter 6 of the
final rule TSD.
[[Page 42627]]
5. Maintenance Costs
Maintenance costs are costs to the commercial consumer of ensuring
continued operation of the equipment (e.g., checking and maintaining
refrigerant charge levels and cleaning heat-exchanger coils). DOE
derived annualized maintenance costs for small commercial air-cooled
air conditioners and heat pumps from RS Means data.\19\ These data
provided estimates of person-hours, labor rates, and materials required
to maintain commercial air-conditioning and heating equipment. The
estimated annualized maintenance cost, in 2014 dollars, is $302 for air
conditioners rated between 36,000 Btu/h and 288,000 Btu/h and $334 for
heat pumps rated between 36,000 Btu/h and 288,000 Btu/h; this capacity
range includes the equipment that is the subject of this final rule.
DOE assumed that the maintenance costs do not vary with efficiency
level.
---------------------------------------------------------------------------
\19\ RS Means Facilities Maintenance & Repair Cost Data 2013.
Reed Construction Data, LLC. (2012).
---------------------------------------------------------------------------
6. Repair Costs
Repair costs are costs to the commercial consumer associated with
repairing or replacing components that have failed. DOE utilized RS
Means \20\ to find the repair costs for small commercial air-cooled air
conditioners and heat pumps. For air conditioners, DOE used the repair
costs for a 3-ton, single-zone rooftop unit. For heat pumps, DOE took
the repair costs for 1.5-ton, 5-ton, and 10-ton air-to-air heat pumps
and linearly scaled the repair costs to derive a 3-ton repair cost. DOE
assumed that the repair would be a one-time event in year 10 of the
equipment life. DOE then annualized the present value of the cost over
the average equipment life of 19 or 16 years (for air conditioners and
heat pumps, respectively) to obtain an annualized equivalent repair
cost. This value, in 2014 dollars, ranges from $143 to $157 at the
baseline level, depending on equipment class. The materials portion of
the repair cost was scaled with the percentage increase in
manufacturers' production cost by efficiency level. The labor cost was
held constant across efficiency levels. This annualized repair cost was
then added to the maintenance cost to create an annual ``maintenance
and repair cost'' for the lifetime of the equipment. For further
discussion of how DOE derived and implemented repair costs, see chapter
6 of the final rule TSD.
---------------------------------------------------------------------------
\20\ Id.
---------------------------------------------------------------------------
7. Equipment Lifetime
Equipment lifetime is the age at which the subject small air-cooled
air conditioners and heat pumps less than 65,000 Btu/h are retired from
service. DOE based equipment lifetime on a retirement function in the
form of a Weibull probability distribution. DOE used the inputs from
the 2011 DFR technical support document for central air conditioners
and heat pumps, which represented a mean lifetime of 19.01 years for
air conditioners and 16.24 years for heat pumps, and used the same
values for units in both residential and commercial applications.
(EERE-2011-BT-STD-0011-0012) Given the similarity of such equipment
types, DOE believes the lifetime for single-phase equipment is a
reasonable approximation of the lifetime for similar three-phase
equipment.
8. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to estimate their present value. The cost of capital
commonly is used to estimate the present value of cash flows to be
derived from a typical company project or investment. Most companies
use both debt and equity capital to fund investments, so the cost of
capital is the weighted-average cost to the firm of equity and debt
financing. DOE uses the capital asset pricing model (CAPM) to calculate
the equity capital component, and financial data sources to calculate
the cost of debt financing.
DOE derived the discount rates by estimating the weighted-average
cost of capital (WACC) of companies that purchase air-cooled air-
conditioning equipment. More details regarding DOE's estimates of
commercial consumer discount rates are provided in chapter 6 of the
final rule TSD.
9. Base-Case Market Efficiency Distribution
For the LCC analysis, DOE analyzes the considered efficiency levels
relative to a base case (i.e., the case without amended energy
efficiency standards, in this case the current Federal standards for
split-system air conditioners, and the default scenario in which DOE is
required to adopt the efficiency levels in ASHRAE 90.1-2013 for the
three equipment classes triggered by ASHRAE). This analysis requires an
estimate of the distribution of equipment efficiencies in the base case
(i.e., what consumers would have purchased in the compliance year in
the absence of amended standards for split-system air conditioners, or
amended standards more stringent than those in ASHRAE 90.1-2013 for the
three triggered equipment classes). DOE refers to this distribution of
equipment energy efficiencies as the base-case efficiency distribution.
For more information on the development of the base-case distribution,
see section V.F.3 and chapter 6 of the final rule TSD.
10. Compliance Date
DOE calculated the LCC and PBP for all commercial consumers as if
each were to purchase new equipment in the year that compliance with
amended standards is required. Generally, covered equipment to which a
new or amended energy conservation standard applies must comply with
the standard if such equipment is manufactured or imported on or after
a specified date. EPCA states that compliance with any such standards
shall be required on or after a date which is two or three years
(depending on equipment size) after the compliance date of the
applicable minimum energy efficiency requirement in the amended ASHRAE/
IES standard. (42 U.S.C. 6313(a)(6)(D)) Given the equipment size at
issue here, DOE has applied the two-year implementation period to
determine the compliance date of any energy conservation standard equal
to the efficiency levels specified by ASHRAE Standard 90.1-2013
proposed by this rulemaking. Thus, the compliance date of this final
rule for small commercial air-cooled air conditioners and heat pumps
less than 65,000 Btu/h manufactured on or after January 1, 2017, which
is two years after the date specified in ASHRAE Standard 90.1-2013.
Economic justification is not required for DOE to adopt the
efficiency levels in ASHRAE 90.1-2013, as DOE is statutorily required
to, at a minimum, adopt those levels. Therefore, DOE did not perform an
LCC analysis on the ASHRAE Standard 90.1-2013 levels, and for purposes
of the LCC analysis, DOE used 2020 as the first year of compliance with
amended standards.
11. Payback Period Inputs
The payback period is the amount of time it takes the commercial
consumer to recover the additional installed cost of more-efficient
equipment, compared to baseline equipment, through energy cost savings.
Payback periods are expressed in years. Payback periods that exceed the
life of the equipment mean that the increased total installed cost is
not recovered in reduced operating expenses.
Similar to the LCC, the inputs to the PBP calculation are the total
installed cost of the equipment to the commercial consumer for each
efficiency level and
[[Page 42628]]
the average annual operating expenditures for each efficiency level for
each building type and Census Division, weighted by the probability of
shipment to each market. The PBP calculation uses the same inputs as
the LCC analysis, except that discount rates are not needed. Because
the simple PBP does not take into account changes in operating expenses
over time or the time value of money, DOE considered only the first
year's operating expenses to calculate the PBP, unlike the LCC, which
is calculated over the lifetime of the equipment. Chapter 6 of the
final rule TSD provides additional detail about the PBP.
F. National Impact Analysis--National Energy Savings and Net Present
Value Analysis
The national impact analysis (NIA) evaluates the effects of a
considered energy conservation standard from a national perspective
rather than from the consumer perspective represented by the LCC. This
analysis assesses the net present value (NPV) (future amounts
discounted to the present) and the national energy savings (NES) of
total commercial consumer costs and savings, which are expected to
result from amended standards at specific efficiency levels. For each
efficiency level analyzed, DOE calculated the NPV and NES for adopting
more-stringent standards than the efficiency levels specified in ASHRAE
Standard 90.1-2013.
The NES refers to cumulative energy savings from 2017 through 2046
for the three equipment classes triggered by ASHRAE; however when
evaluating more-stringent standards, energy savings do not begin
accruing until the later compliance date of 2020. DOE calculated new
energy savings in each year relative to a base case, defined as DOE
adoption of the efficiency levels specified by ASHRAE Standard 90.1-
2013. DOE also calculated energy savings from adopting efficiency
levels specified by ASHRAE Standard 90.1-2013 compared to the EPCA base
case (i.e., the current Federal standards).
For split-system air conditioners, the NES refers to cumulative
energy savings from 2019 through 2048 for all standards cases. DOE
calculated new energy savings in each year relative to a base case,
defined as the current Federal standards, which are equivalent to the
efficiency levels specified by ASHRAE Standard 90.1-2013.
The NPV refers to cumulative monetary savings. DOE calculated net
monetary savings in each year relative to the base case (ASHRAE
Standard 90.1-2013) as the difference between total operating cost
savings and increases in total installed cost. Cumulative savings are
the sum of the annual NPV over the specified period. DOE accounted for
operating cost savings until past 2100, when the equipment installed in
the 30th year after the compliance date of the amended standards should
be retired.
1. Approach
The NES and NPV are a function of the total number of units in use
and their efficiencies. Both the NES and NPV depend on annual shipments
and equipment lifetime. Both calculations start by using the shipments
estimate and the quantity of units in service derived from the
shipments model.
With regard to estimating the NES, because more-efficient air
conditioners and heat pumps are expected to gradually replace less-
efficient ones, the energy per unit of capacity used by the air
conditioners and heat pumps in service gradually decreases in the
standards case relative to the base case. DOE calculated the NES by
subtracting energy use under a standards-case scenario from energy use
in a base-case scenario.
Unit energy savings for each equipment class are taken from the LCC
spreadsheet for each efficiency level and weighted based on market
efficiency distributions. To estimate the total energy savings for each
efficiency level, DOE first calculated the national site energy
consumption (i.e., the energy directly consumed by the units of
equipment in operation) for each class of air conditioner and heat
pumps for each year of the analysis period. The NES and NPV analysis
periods begin with the earliest expected compliance date of amended
Federal energy conservation standards (i.e., 2017 for the equipment
classes triggered by ASHRAE, since DOE is adopting the baseline ASHRAE
Standard 90.1-2013 efficiency levels). For the analysis of DOE's
potential adoption of more-stringent efficiency levels for the
equipment classes triggered by ASHRAE, the earliest compliance date
would be 2020, four years after DOE would likely issue a final rule
requiring such standards. Second, DOE determined the annual site energy
savings, consisting of the difference in site energy consumption
between the base case and the standards case for each class of small
commercial air conditioner and heat pump less than 65,000 Btu/h. Third,
DOE converted the annual site energy savings into the annual primary
and FFC energy savings using annual conversion factors derived from the
AEO 2014 version of the Energy Information Administration's (EIA)
National Energy Modeling System (NEMS). Finally, DOE summed the annual
primary and FFC energy savings from 2017 to 2046 to calculate the total
NES for that period. DOE performed these calculations for each
efficiency level considered for small commercial air conditioners and
heat pumps in this rulemaking.
DOE considered whether a rebound effect is applicable in its NES
analysis. A rebound effect occurs when an increase in equipment
efficiency leads to an increased demand for its service. The NEMS model
assumes a certain elasticity factor to account for an increased demand
for service due to the increase in cooling (or heating) efficiency.\21\
EIA refers to this as an efficiency rebound. For the small commercial
air conditioning and heating equipment market, there are two ways that
a rebound effect could occur: (1) Increased use of the air conditioning
equipment within the commercial buildings in which they are installed;
and (2) additional instances of air conditioning of building spaces
that were not being cooled before.
---------------------------------------------------------------------------
\21\ An overview of the NEMS model and documentation is found at
http://www.eia.doe.gov/oiaf/aeo/overview/index.html.
---------------------------------------------------------------------------
DOE does not expect either of these instances to occur because the
annual energy use for this equipment is very low; therefore, the energy
cost savings from more-efficient equipment would likely not be high
enough to induce a commercial consumer to increase the use of the
equipment, either in a previously-cooled space or another previously-
uncooled space. Therefore, DOE did not assume a rebound effect in the
January 2015 NOPR analysis. DOE sought input from interested parties on
whether there will be a rebound effect for improvements in the
efficiency of small commercial air conditioners and heat pumps, but did
not receive any comment. As a result, DOE has maintained its assumption
in this final rule.
To estimate NPV, DOE calculated the net impact as the difference
between net operating cost savings (including electricity cost savings
and increased repair costs) and increases in total installed costs
(including customer prices). DOE calculated the NPV of each considered
standard level over the life of the equipment using the following three
steps. First, DOE determined the difference between the equipment costs
under the standard-level case and the base case in order to obtain the
net equipment cost increase resulting from the higher standard level.
As noted in
[[Page 42629]]
section V.E.1, DOE used a constant price assumption as the default
price forecast. Second, DOE determined the difference between the base-
case operating costs and the standard-level operating costs in order to
obtain the net operating cost savings from each higher efficiency
level. Third, DOE determined the difference between the net operating
cost savings and the net equipment cost increase in order to obtain the
net savings (or expense) for each year. DOE then discounted the annual
net savings (or expenses) to 2015 for air conditioners and heat pumps
bought on or after 2017 (or 2019) and summed the discounted values to
provide the NPV of an efficiency level. An NPV greater than zero shows
net savings (i.e., the efficiency level would reduce commercial
consumer expenditures relative to the base case in present value
terms). An NPV that is less than zero indicates that the efficiency
level would result in a net increase in commercial consumer
expenditures in present value terms.
To make the analysis more transparent to all interested parties,
DOE used a commercially-available spreadsheet tool to calculate the
energy savings and the national economic costs and savings from
potential amended standards. Interested parties can review DOE's
analyses by changing various input quantities within the spreadsheet.
Unlike the LCC analysis, the NES spreadsheet does not use
distributions for inputs or outputs, but relies on national average
first costs and energy costs developed from the LCC spreadsheet. DOE
used the NES spreadsheet to perform calculations of energy savings and
NPV using the annual energy consumption and total installed cost data
from the LCC analysis. DOE projected the energy savings, energy cost
savings, equipment costs, and NPV of benefits for equipment sold in
each small commercial air-cooled air conditioner and heat pump class
from 2017 through 2046. The projections provided annual and cumulative
values for all four output parameters described previously.
2. Shipments Analysis
Equipment shipments are an important element in the estimate of the
future impact of a potential energy conservation standard. DOE
developed shipment projections for small commercial air-cooled air
conditioners and heat pumps less than 65,000 Btu/h and, in turn,
calculated equipment stock over the course of the analysis period by
assuming a Weibull distribution with an average 19-year equipment life
for air conditioners and a 16-year life for heat pumps. (See section
V.E.7 for more information on lifetime.) DOE used the shipments
projection and the equipment stock to determine the NES. The shipments
portion of the spreadsheet model projects small commercial air-cooled
air conditioner and heat pump shipments through 2046.
DOE relied on 1999 shipment estimates along with trends from the
U.S. Census and AEO 2014 to estimate shipments for this equipment.
Table V.99 shows the 1999 shipments estimates from the 2000 Screening
Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment
(EERE-2006-STD-0098-0015). While the U.S. Census provides shipments
data for air-cooled equipment less than 65,000 Btu/h, it does not
disaggregate the shipments into single-phase and three-phase.
Therefore, DOE used the Census data from 1999 to 2010 \22\ as a trend
from which to extrapolate DOE's 1999 estimated shipments data (which is
divided by equipment class) for three-phase equipment shipments between
2000 to 2010.
---------------------------------------------------------------------------
\22\ U.S. Census Bureau, Current Industrial Reports for
Refrigeration, Air Conditioning, and Warm Air Heating Equipment,
MA333M. Note that the current industrial reports were discontinued
in 2010, so more recent data are not available. (Available at:
http://www.census.gov/manufacturing/cir/historical_data/ma333m/index.html).
Table V.9--DOE Estimated Shipments of Small Three-Phase Commercial Air
Conditioners and Heat Pumps <65,000 Btu/h
------------------------------------------------------------------------
Equipment class 1999
------------------------------------------------------------------------
Three-Phase Air-Cooled Split-System Air Conditioners 91,598
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Single-Package Air Conditioners 213,728
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Split-System Heat Pumps <65,000 11,903
Btu/h..................................................
Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 27,773
Btu/h..................................................
------------------------------------------------------------------------
Because the Census data end in 2010, DOE cannot use those data to
determine whether shipments continue to decline past 2010. Therefore,
DOE reviewed AHRI's monthly shipments data for the broader category of
central air conditioners and heat pumps to determine more recent
trends.\23\ DOE found that the average annual growth rate from 2005 to
2010 was -12 percent for air conditioners and -4 percent for heat
pumps. However, the average annual growth rate from 2010 to 2014 was 7
percent for air conditioners and 8 percent for heat pumps. These data
indicate that the decline in shipments through 2010 has stopped and has
in fact begun to reverse. Therefore, DOE used the AHRI-reported growth
rates from 2010 to 2011 (10 percent for air conditioners and 1 percent
for heat pumps) to scale its projected 2010 shipments to 2011, at which
time it could begin projecting shipments using AEO 2014 forecasts (2011
through 2040) for commercial floor space. DOE assumed that shipments of
small commercial air-cooled air conditioners and heat pumps would be
related to the growth of commercial floor space. DOE used this
projection, with an average annual growth rate of 1 percent, to project
shipments for each of the four equipment classes through 2040. For
years beyond 2040, DOE also applied an average annual growth rate of 1
percent.
---------------------------------------------------------------------------
\23\ AHRI, HVACR & Water Heating Industry Statistical Profile
(2012) (Available at: http://www.ari.org/site/883/Resources/Statistics/AHRI-Industry-Statistical-Profile). See also AHRI Monthly
Shipments: http://www.ari.org/site/498/Resources/Statistics/Monthly-Shipments; especially December 2013 release: http://www.ari.org/App_Content/ahri/files/Statistics/Monthly%20Shipments/2013/December2013.pdf; May 2014 release: http://www.ari.org/App_Content/ahri/files/Statistics/Monthly%20Shipments/2014/May2014.pdf.
---------------------------------------------------------------------------
Table V.10 shows the projected shipments for the different
equipment classes of small commercial air-cooled air conditioners and
heat pumps less than 65,000 Btu/h for selected years from 2017 to 2046,
as well as the cumulative shipments. As equipment purchase price and
repair costs increase with efficiency, DOE recognizes that higher first
costs and repair costs can result in a drop in shipments. However, in
the January 2015 NOPR, DOE had no basis for estimating the elasticity
of shipments for small commercial air-cooled air conditioners and heat
pumps less than 65,000 Btu/h as a function of first costs, repair
costs, or operating costs. In addition, because air-cooled air
conditioners are likely the lowest-cost option for air conditioning
small office and retail applications, DOE tentatively concluded in the
NOPR that it is unlikely that shipments would change as a result of
higher first costs and repair costs. Therefore, DOE presumed that the
shipments projection would not change with higher standard levels. 80
FR 1171, 1196 (Jan. 8, 2015).
DOE sought input on this assumption. In response, Lennox
International commented that more stringent efficiency levels increase
equipment costs and reduce demand, citing the decline in residential
central air conditioner shipments when SEER requirements were raised
from 10 to 13.
[[Page 42630]]
Lennox also noted that higher prices also lead to more repairs, which
reduces energy savings benefits. (Lennox International, No. 36 at p. 2-
3)
DOE acknowledges Lennox's concerns. However, DOE does not have data
available to estimate the price elasticity for this equipment.
Furthermore, DOE does not believe that the commercial market would
necessarily respond in a similar manner to an increased standard as
would the residential market. Given that even without a drop in
shipments, none of the efficiency levels in the NOPR were determined to
be economically justified, DOE has not revised its shipments estimates
for the final rule.
Chapter 7 of the final rule TSD provides additional details on the
shipments projections.
Table V.10--Shipments Projection for Small Commercial Air-Cooled Air Conditioners and Heat Pumps <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units shipped by year and equipment class
--------------------------------------------------------------------------------------------
Equipment Cumulative
2017 2020 2025 2030 2035 2040 2046 shipments
(2017-2046) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Three-Phase Air-Cooled Split-System Air Conditioners 80,210 83,175 87,651 91,610 96,170 101,593 107,802 2,806,115
<65,000 Btu/h.............................................
Three-Phase Air-Cooled Single-Package Air Conditioners 122,271 126,790 133,613 139,649 146,600 154,867 164,332 4,277,584
<65,000 Btu/h.............................................
Three-Phase Air-Cooled Split-System Heat Pumps <65,000 Btu/ 19,634 20,360 21,455 22,424 23,541 24,868 26,388 686,883
h.........................................................
Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 25,157 26,086 27,490 28,732 30,162 31,863 33,810 880,091
Btu/h.....................................................
--------------------------------------------------------------------------------------------
Total.................................................. 247,272 256,411 270,210 282,415 296,473 313,191 332,333 8,650,673
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note that the analysis period for split-system air conditioners is 2019-2048, but for comparison purposes, the same time period for cumulative
shipments is shown for each equipment class.
3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies
DOE developed base-case efficiency distributions based on model
availability in the AHRI Certified Directory. DOE bundled the
efficiency levels into ``efficiency ranges'' and determined the
percentage of models within each range. DOE applied the percentages of
models within each efficiency range to the total unit shipments for a
given equipment class to estimate the distribution of shipments within
the base case.
In the January 2015 NOPR, DOE estimated a base-case efficiency
trend of an increase of approximately 1 SEER every 35 years, based on
the EER trend from 2012 to 2035 found in the Commercial Unitary Air
Conditioner Advance Notice of Proposed Rulemaking (ANOPR).\24\ DOE used
this same trend in the standards-case scenarios. 80 FR 1171, 1197 (Jan.
8, 2015). DOE requested comment on the estimated efficiency trend but
did not receive any comments. As a result, DOE used this same trend in
its final rule analysis.
---------------------------------------------------------------------------
\24\ See DOE's technical support document underlying DOE's July
29, 2004 ANOPR. 69 FR 45460 (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0103-0078). DOE
assumed that the EER trend would reasonably represent a SEER trend.
---------------------------------------------------------------------------
In addition, DOE used a ``roll-up'' scenario to establish the
market shares by efficiency level for the year that compliance would be
required with amended standards (i.e., 2017 for adoption of efficiency
levels in ASHRAE Standard 90.1-2013). Table V.8 presents the estimated
base-case efficiency market shares for each small commercial air-cooled
air conditioner and heat pump equipment class.
Table V.11--Base-Case Efficiency Market Shares for Small Commercial Air-Cooled Air Conditioners and Heat Pumps <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Three-phase air-cooled split-system air conditioners Three-phase air-cooled single- Three-phase air-cooled split- Three-phase air-cooled single-
<65,000 Btu/h (2019) package air conditioners system heat pumps 65,000 Btu/h package heat pumps <65,000 Btu/
--------------------------------------------------------- <65,000 Btu/h (2020) (2020) h (2020)
-----------------------------------------------------------------------------------------------
SEER Market share Market share Market share Market share
(%) SEER (%) SEER (%) SEER (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
13...................................... 26 13 0 13 0 13 0
14...................................... 50 14 52 14 80 14 69
15...................................... 22 15 30 15 19 15 21
16...................................... 2 16 7 16 1 16 9
17...................................... 0 17 4 17 0 17 1
18...................................... 0 18 7 18 0 18 1
19...................................... 0 19 0 .............. .............. .............. ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The 0% market share at 13.0 SEER for three equipment classes is accounting for the default adoption of ASHRAE Standard 90.1-2013 levels in 2017.
4. National Energy Savings and Net Present Value
The stock of small commercial air-cooled air conditioner and heat
pump equipment less than 65,000 Btu/h is the total number of units in
each equipment class purchased or shipped from previous years that have
survived until
[[Page 42631]]
a given point. The NES spreadsheet,\25\ through use of the shipments
model, keeps track of the total number of units shipped each year. For
purposes of the NES and NPV analyses, DOE assumes that shipments of air
conditioner and heat pump units survive for an average of 19 years and
16 years, respectively, following a Weibull distribution, at the end of
which time they are removed from service.
---------------------------------------------------------------------------
\25\ The NES spreadsheet can be found in the docket for the
ASHRAE rulemaking at: www.regulations.gov/#!docketDetail;D=EERE-
2014-BT-STD-0015.
---------------------------------------------------------------------------
The national annual energy consumption is the product of the annual
unit energy consumption and the number of units of each vintage in the
stock, summed over all vintages. This approach accounts for differences
in unit energy consumption from year to year. In determining national
annual energy consumption, 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 2014 version of NEMS. Cumulative energy savings are the sum of
the NES for each year over the timeframe of the analysis.
In response to the recommendations of a committee on ``Point-of-Use
and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency
Standards'' appointed by the National Academy of Sciences, DOE
announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in the Federal Register in which DOE
explained its determination that NEMS is the most appropriate tool for
its FFC analysis and its intention to use NEMS for that purpose. 77 FR
49701 (Aug. 17, 2012). The approach used for this final rule is
described in Appendix 8A of the final rule TSD.
In accordance with the OMB's guidelines on regulatory analysis, DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. The 7-percent rate is an estimate of the average before-tax rate
of return on private capital in the U.S. economy. DOE used this
discount rate to approximate the opportunity cost of capital in the
private sector, because recent OMB analysis has found the average rate
of return on capital to be near this rate. DOE used the 3-percent rate
to capture the potential effects of standards on private consumption
(e.g., through higher prices for products and reduced purchases of
energy). This rate represents the rate at which society discounts
future consumption flows to their present value. This rate can be
approximated by the real rate of return on long-term government debt
(i.e., yield on United States Treasury notes minus annual rate of
change in the Consumer Price Index), which has averaged about 3 percent
on a pre-tax basis for the past 30 years.
Table V.12 summarizes the inputs to the NES spreadsheet model along
with a brief description of the data sources. The results of DOE's NES
and NPV analysis are summarized in section VIII.B.1.b and described in
detail in chapter 8 of the final rule TSD.
Table V.12--Summary of Small Commercial Air-Cooled Air Conditioner and Heat Pumps <65,000 Btu/h NES and NPV
Model Inputs
----------------------------------------------------------------------------------------------------------------
Inputs Description
----------------------------------------------------------------------------------------------------------------
Shipments.............................. Annual shipments based on U.S. Census, AHRI monthly shipment reports,
and AEO2014 forecasts of commercial floor space. (See chapter 7 of the
final rule TSD.)
Compliance Date of Standard............ 2020 for adoption of a more-stringent efficiency level than those
specified by ASHRAE Standard 90.1-2013 for the three equipment classes
triggered by ASHRAE.
2017 for adoption of the efficiency levels specified by ASHRAE Standard
90.1-2013.
2019 for split-system air conditioners.
Base-Case Efficiencies................. Distribution of base-case shipments by efficiency level, with
efficiency trend of an increase of 1 EER every 35 years.
Standards-Case Efficiencies............ Distribution of shipments by efficiency level for each standards case.
In compliance year, units below the standard level ``roll-up'' to meet
the standard. Efficiency trend of an increase of 1 EER every 35 years.
Annual Energy Use per Unit............. Annual national weighted-average values are a function of efficiency
level. (See chapter 4 of the final rule TSD.)
Total Installed Cost per Unit.......... Annual weighted-average values are a function of efficiency level. (See
chapter 5 of the final rule TSD.)
Annualized Maintenance and Repair Costs Annual weighted-average values are a function of efficiency level. (See
per Unit. chapter 5 of the final rule TSD.)
Escalation of Fuel Prices.............. AEO2014 forecasts (to 2040) and extrapolation for beyond 2040. (See
chapter 8 of the final rule TSD.)
Site to Primary and FFC Conversion..... Based on AEO2014 forecasts (to 2040) and extrapolation for beyond 2040.
(See chapter 8 of the final rule TSD.)
Discount Rate.......................... 3 percent and 7 percent real.
Present Year........................... Future costs are discounted to 2015.
----------------------------------------------------------------------------------------------------------------
VI. Methodology for Water-Source Heat Pumps
This section addresses the analyses DOE has performed for this
rulemaking with respect to water-source heat pumps. A separate
subsection addresses each analysis. In overview, DOE used a spreadsheet
to calculate the LCC and PBPs of potential energy conservation
standards. DOE used another spreadsheet to provide shipments
projections and then calculate national energy savings and net present
value impacts of potential amended energy conservation standards.
A. Market Assessment
To begin its review of the ASHRAE Standard 90.1-2013 efficiency
levels, DOE developed information that provides an overall picture of
the market for the equipment concerned, including the purpose of the
equipment, the industry structure, and market characteristics. This
activity included both quantitative and qualitative assessments based
primarily on publicly-available information. The subjects addressed in
the market assessment for this rulemaking include
[[Page 42632]]
equipment classes, manufacturers, quantities, and types of equipment
sold and offered for sale. The key findings of DOE's market assessment
are summarized subsequently. For additional detail, see chapter 2 of
the final rule TSD.
As proposed in the January 2015 NOPR, DOE is adopting the following
definition for water-source heat pumps, adapted from the ASHRAE
Handbook \26\ and specifically referencing the new nomenclature
included in ASHRAE 90.1-2013: ``Water-source heat pump means a single-
phase or three-phase reverse-cycle heat pump of all capacities (up to
760,000 Btu/h) that uses a circulating water loop as the heat source
for heating and as the heat sink for cooling. The main components are a
compressor, refrigerant-to-water heat exchanger, refrigerant-to-air
heat exchanger, refrigerant expansion devices, refrigerant reversing
valve, and indoor fan. Such equipment includes, but is not limited to,
water-to-air water-loop heat pumps.'' 80 FR 1171, 1182-1183 (Jan. 8,
2015).
---------------------------------------------------------------------------
\26\ 2012 ASHRAE Handbook, Heating, Ventilating, and Air-
Conditioning Systems and Equipment. ASHRAE, Chapter 9 (Available at:
https://www.ashrae.org/resources_publications/description-of-the-2012-ashrae-handbook-hvac-systems-and-equipment).
---------------------------------------------------------------------------
1. Equipment Classes
EPCA and ASHRAE Standard 90.1-2013 both divide water-source heat
pumps into three categories based on the following cooling capacity
ranges: (1) <17,000 Btu/h; (2) >=17,000 and <65,000 Btu/h; and (3)
>=65,000 and <135,000 Btu/h. ASHRAE 90.1-2013 revised the nomenclature
for these equipment classes to refer to ``water-to-air, water-loop.''
In this document, DOE is revising the nomenclature for these equipment
classes (but not the broader category) to match that used by ASHRAE.
Specifically, DOE revises Table 1 to 10 CFR 431.96 and Tables 1 and 2
to 10 CFR 431.97 to refer to ``water-source (water-to-air, water-
loop)'' heat pumps rather than simply ``water-source'' heat pumps.
Throughout this final rule, any reference to water-source heat pump
equipment classes should be considered as referring to water-to-air,
water-loop heat pumps.
2. Review of Current Market
In order to obtain the information needed for the market assessment
for this rulemaking, DOE consulted a variety of sources, including
manufacturer literature, manufacturer Web sites, and the AHRI certified
directory.\27\ The information DOE gathered serves as resource material
throughout the rulemaking. The sections that follow provide an overview
of the market assessment, and chapter 2 of the final rule TSD provides
additional detail on the market assessment, including citations to
relevant sources.
---------------------------------------------------------------------------
\27\ AHRI Directory of Certified Product Performance (2013)
(Available at: www.ahridirectory.org) (Last accessed November 11,
2013).
---------------------------------------------------------------------------
a. Trade Association Information
DOE identified the same trade groups relevant to water-source heat
pumps as to those listed in section V.A.2.a for small air-cooled air
conditioners and heat pumps, namely AHRI, HARDI, and ACCA. DOE used
data available from AHRI in its analysis, as described in the next
section.
b. Manufacturer Information
DOE reviewed data for water-source (water-to-air, water-loop) heat
pumps currently on the market by examining the AHRI Directory of
Certified Product Performance. DOE identified 18 parent companies
(comprising 21 manufacturers) of water-source (water-to-air, water-
loop) heat pumps, which are listed in chapter 2 of the final rule TSD.
Of these manufacturers, seven were identified as small businesses based
upon number of employees and the employee thresholds set by the Small
Business Administration. More details on this analysis can be found
below in section IX.B.
c. Market Data
DOE reviewed the AHRI database to characterize the efficiency and
performance of water-source (water-to-air, water-loop) heat pump models
currently on the market. The full results of this market
characterization are found in chapter 2 of the final rule TSD. For
water-source heat pumps less than 17,000 Btu/h, the average EER was
13.8, and the average coefficient of performance (COP) was 4.7. Of the
models identified by DOE, 34 (six percent of the total models) have
EERs rated below the ASHRAE Standard 90.1-2013 levels, and 30 (five
percent of the total models) have COPs rated below the ASHRAE Standard
90.1-2013 levels. For water-source heat pumps greater than or equal to
17,000 Btu/h and less than 65,000 Btu/h, the average EER was 15.2, and
the average COP was 4.9. Of the models identified by DOE, 72 (two
percent of the total models) have EERs rated below the ASHRAE Standard
90.1-2013 levels, and 133 (four percent of the total models) have COPs
rated below the ASHRAE Standard 90.1-2013 levels. For water-source heat
pumps greater than or equal to 65,000 Btu/h and less than 135,000 Btu/
h, the average EER was 14.7, and the average COP was 4.8. Of the models
identified by DOE, five (one percent of the total models) have EERs
rated below the ASHRAE Standard 90.1-2013 levels, and two (0.5 percent
of the total models) have COPs rated below the ASHRAE Standard 90.1-
2013 levels.
B. Engineering Analysis
The engineering analysis establishes the relationship between an
increase in energy efficiency and the increase in cost (manufacturer
selling price (MSP)) of a piece of equipment DOE is evaluating for
potential amended energy conservation standards. This relationship
serves as the basis for cost-benefit calculations for individual
consumers, manufacturers, and the Nation. The engineering analysis
identifies representative baseline equipment, which is the starting
point for analyzing possible energy efficiency improvements. For
covered ASHRAE equipment, DOE sets the baseline for analysis at the
ASHRAE Standard 90.1 efficiency level, because by statute, DOE cannot
adopt any level below the revised ASHRAE level. The engineering
analysis then identifies higher efficiency levels and the incremental
increase in product cost associated with achieving the higher
efficiency levels. After identifying the baseline models and cost of
achieving increased efficiency, DOE estimates the additional costs to
the commercial consumer through an analysis of contractor costs and
markups, and uses that information in the downstream analyses to
examine the costs and benefits associated with increased equipment
efficiency.
DOE typically structures its engineering analysis around one of
three methodologies: (1) The design-option approach, which calculates
the incremental costs of adding specific design options to a baseline
model; (2) the efficiency-level approach, which calculates the relative
costs of achieving increases in energy efficiency levels without regard
to the particular design options used to achieve such increases; and/or
(3) the reverse-engineering or cost-assessment approach, which involves
a ``bottom-up'' manufacturing cost assessment based on a detailed bill
of materials derived from teardowns of the equipment being analyzed. A
supplementary method called a catalog teardown uses published
manufacturer catalogs and supplementary component data to estimate the
major physical differences between a piece of equipment that has been
physically
[[Page 42633]]
disassembled and another piece of similar equipment for which catalog
data are available to determine the cost of the latter equipment.
Deciding which methodology to use for the engineering analysis depends
on the equipment, the design options under study, and any historical
data upon which DOE may draw.
1. Approach
As discussed in the January 2015 NOPR, DOE used a combination of
the efficiency-level approach and the cost-assessment approach. 80 FR
1171, 1200 (Jan. 8, 2015). DOE used the efficiency-level approach to
identify incremental improvements in efficiency for each equipment
class and the cost-assessment approach to develop a cost for each
efficiency level. The efficiency levels that DOE considered in the
engineering analysis were representative of commercial water-source
heat pumps currently produced by manufacturers at the time the
engineering analysis was developed. DOE relied on data reported in the
AHRI Directory of Certified Product Performance to select
representative efficiency levels. This directory reported EER, COP,
heating and cooling capacities, and other data for all three
application types (water-loop, ground-water, ground-loop) for all AHRI-
certified units. After identifying representative efficiency levels,
DOE used a catalog teardown or ``virtual teardown'' approach to
estimate equipment costs at each level. DOE obtained general
descriptions of key water-source heat pump components in product
literature and used data collected for dozens of HVAC products to
characterize the components' design details. This approach was used
instead of the physical teardown approach due to time constraints.
In the January 2015 NOPR, DOE noted the drawbacks to using a
catalog teardown approach. 80 FR 1171, 1200 (Jan. 8, 2015). However,
DOE tentatively concluded the approach provided a reasonable
approximation of all cost increases associated with efficiency
increases. DOE did not receive any comments that rejected this
conclusion, and therefore, adopts it in this Final Rule.
After selecting efficiency levels for each capacity class, as
described in the sections that follow, DOE selected products for the
catalog teardown analysis that corresponded to the representative
efficiencies and cooling capacities. The engineering analysis included
data for over 60 water-source heat pumps. DOE calculated the MPC for
products spanning the full range of efficiencies from the baseline to
the max-tech level for each analyzed equipment class. In some cases,
catalog data providing sufficient information for cost analysis were
not available at each efficiency level under consideration. Hence, DOE
calculated the costs for some of the efficiency levels based on the
cost/efficiency trends observed for other efficiency levels for which
such catalog data were available. The engineering analysis is described
in more detail in chapter 3 of the final rule TSD.
2. Baseline Equipment
DOE selected baseline efficiency levels as reference points for
each equipment class, against which it measured changes resulting from
potential amended energy conservation standards. DOE defined the
baseline efficiency levels as reference points to compare the
technology, energy savings, and cost of equipment with higher energy
efficiency levels. Typically, units at the baseline efficiency level
just meet Federal energy conservation standards and provide basic
consumer utility. However, EPCA requires that DOE must adopt either the
ASHRAE Standard 90.1-2013 levels or more-stringent levels. Therefore,
because the ASHRAE Standard 90.1-2013 levels were the lowest levels
that DOE could adopt, DOE used those levels as the reference points
against which more-stringent levels could be evaluated. Table VI.1
shows the current baseline and ASHRAE efficiency levels for each water-
source heat pump equipment class. In Table VI.2 below, the ASHRAE
levels are designated ``0'' and more-stringent levels are designated 1,
2, and so on.
Table VI.1--Baseline Efficiency Levels for Water-Source Heat Pumps
----------------------------------------------------------------------------------------------------------------
Water-source Water-source Water-source
(water-to-air, (water-to-air, (water-to-air,
water-loop) heat water-loop) heat water-loop) heat
pumps <17,000 Btu/ pumps >=17,000 pumps >=65,000 and
h and <65,000 Btu/h <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Efficiency Level (EER)
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard............................ 11.2 12.0 12.0
Baseline--ASHRAE Standard............................. 12.2 13.0 13.0
----------------------------------------------------------------------------------------------------------------
3. Identification of Increased Efficiency Levels for Analysis
DOE developed and considered potential increased energy efficiency
levels for each equipment class. These more-stringent efficiency levels
are representative of efficiency levels along the technology paths that
manufacturers of residential heating products commonly use to maintain
cost-effective designs while increasing energy efficiency. DOE
developed more-stringent energy efficiency levels for each of the
equipment classes, based on a review of AHRI's Directory of Certified
Product Performance, manufacturer catalogs, and other publicly-
available literature. The efficiency levels selected for analysis for
each water-source heat pump equipment class are shown in Table VI.2.
Chapter 3 of the final rule TSD shows additional details on the
efficiency levels selected for analysis.
[[Page 42634]]
Table VI.2--Efficiency Levels for Analysis of Water-Source Heat Pumps
----------------------------------------------------------------------------------------------------------------
Water-source Water-source Water-source
(water-to-air, (water-to-air, (water-to-air,
water-loop) heat water-loop) heat water-loop) heat
pumps <17,000 Btu/ pumps >=17,000 pumps >=65,000 and
h and <65,000 Btu/h <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Efficiency Level (EER, Btu/W-h)
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard............................ 11.2 12.0 12.0
Baseline--ASHRAE Level (0)............................ 12.2 13.0 13.0
Efficiency Level 1.................................... 13.0 14.6 14.0
Efficiency Level 2.................................... 14.0 16.6 15.0
Efficiency Level 3.................................... 15.7 18.0 16.0
Efficiency Level 4*................................... 16.5 19.2 17.2
Efficiency Level 5**.................................. 18.1 21.6 -
----------------------------------------------------------------------------------------------------------------
* Efficiency Level 4 is ``Max-Tech'' for the largest equipment classes.
** Efficiency Level 5 is ``Max-Tech'' for the two smaller equipment classes.
4. Engineering Analysis Results
The results of the engineering analysis are cost-efficiency curves
based on results from the cost models for analyzed units. DOE's
calculated MPCs for the three analyzed classes of water-source heat
pumps are shown in Table VI.3. DOE used the cost-efficiency curves from
the engineering analysis as an input for the life-cycle cost and PBP
analysis. Further details regarding MPCs for water-source heat pumps
may be found in chapter 3 of the final rule TSD.
Table VI.3--Manufacturer Production Costs for Water-Source Heat Pumps
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water-source (water-to-air, water- Water-source (water-to-air, water- Water-source (water-to-air, water-
loop) heat pumps <17,000 Btu/h loop) heat pumps >=17,000 and loop) heat pumps >=65,000 and
------------------------------------ <65,000 Btu/h <135,000 Btu/h
-----------------------------------------------------------------------
EER MPC (2014$) EER MPC (2014$) EER MPC (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE--Level 0............................. 12.2 860 13.0 1,346 13.0 3,274
Efficiency Level 1.......................... 13.0 904 14.6 1,463 14.0 3,660
Efficiency Level 2.......................... 14.0 960 16.6 1,609 15.0 4,045
Efficiency Level 3.......................... 15.7 1,053 18.0 1,711 16.0 4,431
Efficiency Level 4.......................... 16.5 1,097 19.2 1,798 17.2 4,893
Efficiency Level 5.......................... 18.1 1,185 21.6 1,974 ................ ................
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. Manufacturer Markups
As discussed in detail in section V.B.4.a, DOE applies a non-
production cost multiplier (the manufacturer markup) to the full MPC to
account for corporate non-production costs and profit. The resulting
manufacturer selling price (MSP) is the price at which the manufacturer
can recover all production and nonproduction costs and earn a profit.
Because water-source heat pumps and commercial air-cooled equipment are
sold by similar heating and cooling product manufacturers, DOE used the
same manufacturer markup of 1.3 that was developed for small commercial
air-cooled air-conditioners and heat pumps, as described in chapter 3
of the final rule TSD.
b. Shipping Costs
Manufacturers of commercial HVAC equipment typically pay for
freight (shipping) to the first step in the distribution chain. Freight
is not a manufacturing cost, but because it is a substantial cost
incurred by the manufacturer, DOE accounts for shipping costs
separately from other non-production costs that comprise the
manufacturer markup. DOE calculated the MSP for water-source heat pumps
by multiplying the MPC at each efficiency level (determined from the
cost model) by the manufacturer markup and adding shipping costs.
Shipping costs for water-source heat pumps were calculated similarly to
those for small commercial air-cooled air-conditioners and heat pumps
described in section V.B.4.b. See chapter 3 of the final rule TSD for
more details about DOE's shipping cost assumptions and the shipping
costs per unit for each water-source heat pump product class.
C. Markups Analysis
The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer selling
price derived in the engineering analysis to commercial consumer
prices.\28\ DOE calculates overall baseline and incremental markups
based on the equipment markups at each step in the distribution chain.
The incremental markup relates the change in the manufacturer sales
price of higher-efficiency models (the incremental cost increase) to
the change in the commercial consumer price.
---------------------------------------------------------------------------
\28\ ``Commercial consumer'' refers to purchasers of the
equipment being regulated.
---------------------------------------------------------------------------
For water-source heat pumps, DOE used the same markups that DOE
developed for small commercial air-cooled air-conditioners and heat
pumps, as discussed in section V.C. DOE understands that all the types
of equipment move through the same distribution channels and that,
therefore, using the same markups is reasonable. In addition, DOE's
development of markups within those channels is at the broader
equipment category level, in this case heating, ventilation, and air-
conditioning equipment. As with small commercial air-cooled equipment,
in the January 2015 NOPR, DOE did not use national accounts in its
markups analysis for water-source heat pumps, because DOE does not
believe that the commercial consumers of water-source heat pump
[[Page 42635]]
equipment less than 135,000 Btu/h would typically be national retail
chains that negotiate directly with manufacturers. 80 FR 1171, 1202.
DOE sought comment on whether the use of national accounts would be
appropriate in this analysis. DOE did not receive any comments, and as
such has retained its approach in this final rule.
Chapter 6 of the final rule TSD provides further detail on the
estimation of markups.
D. Energy Use Analysis
The energy use analysis provides estimates of the annual energy
consumption of water-source heat pumps at the considered efficiency
levels. DOE uses these values in the LCC and PBP analyses and in the
NIA.
The cooling unit energy consumption (UEC) by equipment type and
efficiency level used in the January 2015 NOPR came from Appendix D of
the 2000 Screening Analysis for EPACT-Covered Commercial HVAC and
Water-Heating Equipment. (EERE-2006-STD-0098-0015). 80 FR 1171, 1202.
Where identical efficiency levels were available, DOE used the UEC
directly from the screening analysis. For additional efficiency levels,
DOE scaled the UECs based on the ratio of EER, as was done in the
original analysis. DOE also adjusted the cooling energy use from the
2000 Screening Analysis using factors from the NEMS commercial demand
module that account for improvements in building shell characteristics
and changes in internal load as a function of region and building
activity.
In response to the January 2015 NOPR, NEEA commented that DOE
should revise its energy analysis for water-source heat pumps by
factoring in the oversizing of equipment, which leads to additional
energy use. In addition, NEEA also noted that in the field, FLEOH does
not scale proportionally with EER at higher EER levels, instead
decreasing at a higher rate as a result of better part load
performance. (NEEA, No. 41 at p. 2) DOE acknowledges that the original
2000 Screening Analysis sized equipment based on design-day peak load
and did not explicitly account for oversizing, and as such may be a
conservative estimate of energy usage. However, the uncertainty in the
energy use analysis that was cited in the January 2015 NOPR extends
well beyond the sizing factors. 80 FR 1171, 1225-1226 (Jan. 8, 2015).
For example, DOE has no data on distribution by building type or field
data to corroborate UEC estimates or simulations results. Furthermore,
DOE has no data with which to modify the scaling of UEC with EER. While
altering its assumptions on sizing and UEC scaling could impact the
analytical results, it would not change DOE's fundamental determination
that there is too much uncertainty in the energy use and other analyses
to justify a standard level more stringent than those in ASHRAE 90.1-
2013. Therefore, given the lack of available data and lack of potential
impact on the policy decision, DOE has not modified the cooling side
energy use for the final rule.
In the January 2015 NOPR, to characterize the heating-side
performance, DOE analyzed CBECS 2003 data to develop a national-average
annual energy use per square foot for buildings that use heat pumps. 80
FR 1171, 1202 (Jan. 8, 2015). DOE assumed that the average COP of the
commercial unitary heat pump (CUHP) was 2.9.\29\ DOE converted the
energy use per square foot value to annual energy use per ton using a
ton-per-square-foot relationship derived from the energy use analysis
in the 2014 CUAC NOPR. (EERE-2013-BT-STD-0007-0027) Although this
analysis in the NOPR related to equipment larger than some of the
equipment that is the subject of this final rule and is directly
applicable only to air-source heat pumps rather than water-source heat
pumps, DOE assumed that this estimate was sufficiently representative
of the heating energy use for all three classes of water-source heat
pumps. DOE sought comment on this issue but did not receive any. As a
result, DOE has retained this approach for the final rule.
---------------------------------------------------------------------------
\29\ A heating efficiency of 2.9 COP corresponds to the existing
minimum heating efficiency standard for commercial unitary heat
pumps, a value which DOE believes is representative of the heat pump
stock characterized by CBECS.
---------------------------------------------------------------------------
Because equipment energy use is a function of efficiency, DOE
assumed that the annual heating energy consumption of a unit scales
proportionally with its heating COP efficiency level. Finally, to
determine the COPs of units with given EERs, DOE correlated COP to EER
based on the AHRI Certified Equipment Database.\30\ Thus, for any given
cooling efficiency of a water-source heat pump, DOE was able to use
this method to establish the corresponding heating efficiency, and, in
turn, the associated annual heating energy consumption.
---------------------------------------------------------------------------
\30\ See: http://www.ahridirectory.org/ahridirectory/pages/homeM.aspx.
---------------------------------------------------------------------------
In order to create variability in the cooling and heating UECs by
region and building type, in the January 2015 NOPR, DOE used a Pacific
Northwest National Laboratory report \31\ that estimated the annual
energy usage of space cooling and heating products using a Full Load
Equivalent Operating Hour (FLEOH) approach. 80 FR 1171, 1202-1203 (Jan.
8, 2015). DOE normalized the provided FLEOHs to the UECs taken from the
2011 DFR for central air conditioners and heat pumps to vary the
average UEC across region and building type. DOE used the following
building types: office, education, lodging, multi-family apartments,
and healthcare. 80 FR at 1203. DOE sought comment on whether these
building types are appropriate or whether there are other building
types that should be considered for the water-source heat pump
analysis. DOE did not receive any comments on this issue and retained
the same building types for this final rule analysis.
---------------------------------------------------------------------------
\31\ See Appendix D of the 2000 Screening Analysis for EPACT-
Covered Commercial HVAC and Water-Heating Equipment. (EERE-2006-STD-
0098-0015)
---------------------------------------------------------------------------
E. Life-Cycle Cost and Payback Period Analysis
The purpose of the LCC and PBP analysis is to analyze the effects
of potential amended energy conservation standards on commercial
consumers of water-source heat pumps by determining how a potential
amended standard affects their operating expenses (usually decreased)
and their total installed costs (usually increased).
The LCC is the total consumer expense over the life of the
equipment, consisting of equipment and installation costs plus
operating costs (i.e., expenses for energy use, maintenance, and
repair). DOE discounts future operating costs to the time of purchase
using commercial consumer discount rates. The PBP is the estimated
amount of time (in years) it takes commercial consumers to recover the
increased total installed cost (including equipment and installation
costs) of a more-efficient type of equipment through lower operating
costs. DOE calculates the PBP by dividing the change in total installed
cost (normally higher) due to a standard by the change in annual
operating cost (normally lower) that results from the potential
standard. However, unlike the LCC, DOE only considers the first year's
operating expenses in the PBP calculation. Because the PBP does not
account for changes in operating expense over time or the time value of
money, it is also referred to as a simple PBP.
For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case efficiency level. For
water-source
[[Page 42636]]
heat pumps, the base-case estimate reflects the market in the case
where the ASHRAE level becomes the Federal minimum, and the LCC
calculates the LCC savings likely to result from higher efficiency
levels compared with the ASHRAE base case.
DOE conducted an LCC and PBP analysis for water-source heat pumps
using a computer spreadsheet model. When combined with Crystal Ball (a
commercially-available software program), the LCC and PBP model
generates a Monte Carlo simulation to perform the analyses by
incorporating uncertainty and variability considerations in certain of
the key parameters as discussed below. Inputs to the LCC and PBP
analysis are categorized as: (1) Inputs for establishing the total
installed cost and (2) inputs for calculating the operating expense.
The following sections contain brief discussions of comments on the
inputs and key assumptions of DOE's LCC and PBP analysis and explain
how DOE took these comments into consideration. They are also described
in detail in chapter 6 of the final rule TSD.
1. Equipment Costs
In the LCC and PBP analysis, the equipment costs faced by
purchasers of water-source heat pumps are derived from the MSPs
estimated in the engineering analysis, the overall markups estimated in
the markups analysis, and sales tax.
To develop an equipment price trend, DOE derived an inflation-
adjusted index of the PPI for ``all other miscellaneous refrigeration
and air-conditioning equipment'' from 1990-2013, which is the PPI
series most relevant to water-source heat pumps. Although the
inflation-adjusted index shows a declining trend from 1990 to 2004,
data since 2008 have shown a flat-to-slightly rising trend. Given the
uncertainty as to which of the trends will prevail in coming years, DOE
chose to apply a constant price trend (at 2013 levels) for each
efficiency level in each equipment class for the final rule. See
chapter 6 of the final rule TSD for more information on the price
trends.
2. Installation Costs
DOE derived installation costs for water-source heat pump equipment
from current RS Means data (2013).\32\ RS Means provides estimates for
installation costs for the subject equipment by equipment capacity, as
well as cost indices that reflect the variation in installation costs
for 656 cities in the United States. The RS Means data identify several
cities in all 50 States and the District of Columbia. DOE incorporated
location-based cost indices into the analysis to capture variation in
installation costs, depending on the location of the consumer.
---------------------------------------------------------------------------
\32\ RS Means Mechanical Cost Data 2013. Reed Construction Data,
LLC. (2012).
---------------------------------------------------------------------------
Based on these data, DOE concluded that data for 1-ton, 3-ton, and
7.5-ton water-source heat pumps would be sufficiently representative of
the installation costs for of water-source heat pumps with capacities
of less than 17,000 btu/h, greater than or equal to 17,000 and less
than 65,000 btu/h, and greater than or equal to 65,000 and less than
135,000 btu/h, respectively.
DOE also varied installation cost as a function of equipment
weight. Because weight tends to increase with equipment efficiency,
installation cost increased with equipment efficiency. The weight of
the equipment in each class and efficiency level was determined through
the engineering analysis.
3. Unit Energy Consumption
The calculation of annual per-unit energy consumption by each class
of the subject water-source heat pumps at each considered efficiency
level based on the energy use analysis is described above in section
VI.D and in chapter 4 of the final rule TSD.
4. Electricity Prices and Electricity Price Trends
DOE used the same average and marginal electricity prices and
electricity price trends as discussed in the methodology for small
commercial air-cooled air conditioners and heat pumps (see section
V.E.4). These data were developed for the broader commercial air-
conditioning category and, thus, are also relevant to water-source heat
pumps.
5. Maintenance Costs
Maintenance costs are costs to the commercial consumer of ensuring
continued operation of the equipment (e.g., checking and maintaining
refrigerant charge levels and cleaning heat-exchanger coils). Because
RS Means does not provide maintenance costs for water-source heat
pumps, DOE used annualized maintenance costs for air-source heat pumps,
the closest related equipment category, derived from RS Means data.\33\
80 FR 1171, 1203-1204 (Jan. 8, 2015). DOE does not expect the
maintenance costs for water-source heat pumps to differ significantly
from those for air-source heat pumps. These data provided estimates of
person-hours, labor rates, and materials required to maintain
commercial air-source heat pumps. The estimated annualized maintenance
cost, in 2014 dollars, is $334 for a heat pump rated up to 60,000 btu/h
and $404 for a heat pump rated greater than 60,000 btu/h. DOE applied
the former cost to water-source heat pumps less than 17,000 Btu/h and
heat pumps greater than or equal to 17,000 and less than 65,000 Btu/h.
DOE applied the latter cost to water-source heat pumps greater than or
equal to 65,000 Btu/h and less than 135,000 Btu/h. DOE requested
comment on how maintenance costs for water-source heat pumps might be
expected to differ from that for air-source heat pumps. DOE did not
receive any comments, and as such has retained the same approach in the
final rule.
---------------------------------------------------------------------------
\33\ RS Means Facilities Maintenance & Repair Cost Data 2013.
Reed Construction Data, LLC. (2012).
---------------------------------------------------------------------------
6. Repair Costs
Repair costs are costs to the commercial consumer associated with
repairing or replacing components that have failed. As with maintenance
costs, RS Means does not provide repair costs for water-source heat
pumps. Therefore, DOE assumed the repair costs for water-source heat
pumps would be similar to air-source units and utilized RS Means\34\ to
find the repair costs for air-source heat pumps. 80 FR 1171, 1204 (Jan.
8, 2015). DOE does not expect the repair costs for water-source heat
pumps to differ significantly from those for air-source heat pumps. DOE
took the repair costs for 1.5-ton, 5-ton, and 10-ton air to air heat
pumps and linearly scaled the repair costs to derive repair costs for
1-ton, 3-ton, and 7.5-ton equipment. DOE assumed that the repair would
be a one-time event in year 10 of the equipment life. DOE then
annualized the present value of the cost over the average equipment
life (see next section) to obtain an annualized equivalent repair cost.
This value, in 2014 dollars, ranged from $93 to $240 for the ASHRAE
baseline, depending on equipment class. The materials portion of the
repair cost was scaled with the percentage increase in manufacturers'
production cost by efficiency level. The labor cost was held constant
across efficiency levels. This annualized repair cost was then added to
the maintenance cost to create an annual ``maintenance and repair
cost'' for the lifetime of the equipment. In the January 2015 NOPR, DOE
requested comment on how repair costs for water-source heat pumps might
be expected to differ from that for air-source heat
[[Page 42637]]
pumps. 80 FR 1171, 1204 (Jan. 8, 2015). DOE did not receive comment and
as such, retained the same approach for the final rule. For further
discussion of how DOE derived and implemented repair costs, see chapter
8 of the final rule TSD.
---------------------------------------------------------------------------
\34\ Id.
---------------------------------------------------------------------------
7. Equipment Lifetime
Equipment lifetime is the age at which the subject water-source
heat pumps are retired from service. In the January 2015 NOPR, DOE
based equipment lifetime on a retirement function in the form of a
Weibull probability distribution, with a mean of 19 years. 80 FR 1171,
1204 (Jan. 8, 2015). Because a function specific to water-source heat
pumps was not available, DOE used the function for air-cooled air
conditioners presented in the 2011 DFR (EERE-2011-BT-STD-0011-0012), as
it is for similar equipment and represented the desired mean lifetime
of 19 years. In the NOPR, DOE requested data and information that would
help it develop a retirement function specific to water-source heat
pumps. DOE did not receive any comments, and as such retained the same
Weibull distribution in the final rule.
8. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to estimate their present value. The cost of capital
commonly is used to estimate the present value of cash flows to be
derived from a typical company project or investment. Most companies
use both debt and equity capital to fund investments, so the cost of
capital is the weighted-average cost of capital (WACC) to the firm of
equity and debt financing. DOE uses the capital asset pricing model
(CAPM) to calculate the equity capital component, and financial data
sources to calculate the cost of debt financing.
DOE derived the discount rates by estimating the cost of capital of
companies that purchase water-source heat pump equipment. More details
regarding DOE's estimates of commercial consumer discount rates are
provided in chapter 6 of the final rule TSD.
9. Base-Case Market Efficiency Distribution
For the LCC analysis, DOE analyzes the considered efficiency levels
relative to a base case (i.e., the case without amended energy
efficiency standards, in this case the default scenario in which DOE is
statutorily required to adopt the efficiency levels in ASHRAE 90.1-
2013). This analysis requires an estimate of the distribution of
equipment efficiencies in the base case (i.e., what consumers would
have purchased in the compliance year in the absence of amended
standards more stringent than those in ASHRAE 90.1-2013). DOE refers to
this distribution of equipment energy efficiencies as the base-case
efficiency distribution. For more information on the development of the
base-case distribution, see section VI.F.3 and chapter 6 of the final
rule TSD.
10. Compliance Date
DOE calculated the LCC and PBP for all commercial consumers as if
each were to purchase new equipment in the year that compliance with
amended standards is required. Generally, covered equipment to which a
new or amended energy conservation standard applies must comply with
the standard if such equipment is manufactured or imported on or after
a specified date. In this final rule, DOE has evaluated whether more-
stringent efficiency levels than those in ASHRAE Standard 90.1-2013
would be technologically feasible, economically justified, and result
in a significant additional amount of energy savings and has declined
to implement more stringent efficiency levels. EPCA states that
compliance with any such standards shall be required on or after a date
which is two or three years (depending on equipment size) after the
compliance date of the applicable minimum energy efficiency requirement
in the amended ASHRAE/IES standard. (42 U.S.C. 6313(a)(6)(D)) Given the
equipment size at issue here, DOE has applied the two-year
implementation period to water-source heat pumps manufactured on or
after October 9, 2015, which is two years after the publication date of
ASHRAE Standard 90.1-2013.
Economic justification is not required for DOE to adopt the
efficiency levels in ASHRAE 90.1-2013, as DOE is statutorily required
to, at a minimum, adopt those levels. Therefore, DOE did not perform an
LCC analysis on the ASHRAE Standard 90.1-2013 levels, and, for purposes
of the LCC analysis, DOE used 2020 as the first year of compliance with
amended standards.
11. Payback Period Inputs
The payback period is the amount of time it takes the commercial
consumer to recover the additional installed cost of more-efficient
equipment, compared to baseline equipment, through energy cost savings.
Payback periods are expressed in years. Payback periods that exceed the
life of the equipment mean that the increased total installed cost is
not recovered in reduced operating expenses.
Similar to the LCC, the inputs to the PBP calculation are the total
installed cost of the equipment to the commercial consumer for each
efficiency level and the average annual operating expenditures for each
efficiency level for each building type and Census Division, weighted
by the probability of shipment to each market. The PBP calculation uses
the same inputs as the LCC analysis, except that discount rates are not
needed. Because the simple PBP does not take into account changes in
operating expenses over time or the time value of money, DOE considered
only the first year's operating expenses to calculate the PBP, unlike
the LCC, which is calculated over the lifetime of the equipment.
Chapter 6 of the final rule TSD provides additional detail about the
PBP.
F. National Impact Analysis--National Energy Savings and Net Present
Value Analysis
The NIA evaluates the effects of a considered energy conservation
standard from a national perspective rather than from the consumer
perspective represented by the LCC. This analysis assesses the NPV
(future amounts discounted to the present) and the NES of total
commercial consumer costs and savings, which are expected to result
from amended standards at specific efficiency levels. For each
efficiency level analyzed, DOE calculated the NPV and NES for adopting
more-stringent standards than the efficiency levels specified in ASHRAE
Standard 90.1-2013.
The NES refers to cumulative energy savings from 2016 through 2045;
\35\ however, when evaluating more-stringent standards, energy savings
do not begin accruing until the later compliance date of 2020. DOE
calculated new energy savings in each year relative to a base case,
defined as DOE adoption of the efficiency levels specified by ASHRAE
Standard 90.1-2013. DOE also calculated energy savings from adopting
efficiency levels specified by ASHRAE Standard 90.1-2013 compared to
the EPCA base case (i.e., the current Federal standards).
---------------------------------------------------------------------------
\35\ Although the expected compliance date for adoption of the
efficiency levels in ASHRAE Standard 90.1-2013 is October 9, 2015,
DOE began its analysis period in 2016 to avoid ascribing savings to
the three-quarters of 2015 prior to the compliance date.
---------------------------------------------------------------------------
The NPV refers to cumulative monetary savings. DOE calculated net
monetary savings in each year relative to the base case (ASHRAE
Standard 90.1-2013) as the difference between total operating cost
savings and increases in total installed cost.
[[Page 42638]]
Cumulative savings are the sum of the annual NPV over the specified
period. DOE accounted for operating cost savings until past 2100, when
the equipment installed in the thirtieth year after the compliance date
of the amended standards should be retired.
1. Approach
The NES and NPV are a function of the total number of units and
their efficiencies. Both the NES and NPV depend on annual shipments and
equipment lifetime. Both calculations start by using the shipments
estimate and the quantity of units in service derived from the
shipments model. DOE used the same approach to determine NES and NPV
for water-source heat pumps which was used for small commercial air-
cooled air-conditioning and heating equipment, as described in section
V.F.1. In this case, the analysis period runs from 2016 through 2045.
In the January 2015 NOPR, DOE considered whether a rebound effect
is applicable in its NES analysis, a concept explained in detail in
section V.F. 1. 80 FR 1171, 1205 (Jan. 8, 2015). DOE did not expect
commercial consumers with water-source heat pump equipment to increase
their use of the equipment, either in a previously cooled space or
another previously uncooled space. Water-source heat pumps are part of
engineered water-loop systems designed for specific applications. It is
highly unlikely that the operation or installation of these systems
would be changed simply as a result of energy cost savings. Therefore,
DOE did not assume a rebound effect in the NOPR analysis. DOE sought
input from interested parties on whether there will be a rebound effect
for improvements in the efficiency of water-source heat pumps, but did
not receive any comment. As a result, DOE retained its assumptions in
this final rule.
2. Shipments Analysis
Equipment shipments are an important element in the estimate of the
future impact of a potential energy conservation standard. DOE
developed shipment projections for water-source heat pumps and, in
turn, calculated equipment stock over the course of the analysis period
by assuming a Weibull distribution with an average 19-year equipment
life. (See section V.E.7 for more information on equipment lifetime.)
DOE used the shipments projection and the equipment stock to determine
the NES. The shipments portion of the spreadsheet model projects water-
source heat pump shipments through 2045.
DOE based its shipments analysis for water-source heat pumps on
data from the U.S. Census. The U.S. Census published historical (1980,
1983-1994, 1997-2006, and 2008-2010) water-source heat pump shipment
data.\36\ Table VI.4 exhibits the shipment data provided for a
selection of years. DOE analyzed data from the years 1990-2010 to
establish a trend from which to project shipments beyond 2010. DOE used
a linear trend. Because the Census data do not distinguish between
equipment capacities, DOE used the shipments data by equipment class
provided by AHRI in 1999, and published in the 2000 Screening Analysis
for EPACT-Covered Commercial HVAC and Water-Heating Equipment (EERE-
2006-STD-0098-0015), to distribute the total water-source heat pump
shipments to individual equipment classes. Table VI.5 exhibits the
shipment data provided for 1999. DOE assumed that this distribution of
shipments across the various equipment classes remained constant and
has used this same distribution in its projection of future shipments
of water-source heat pumps. The complete historical data set and the
projected shipments for each equipment class can be found in the
chapter 7 of the final rule TSD.
---------------------------------------------------------------------------
\36\ U.S. Census Bureau, Current Industrial Reports for
Refrigeration, Air Conditioning, and Warm Air Heating Equipment,
MA333M. Note that the current industrial reports were discontinued
in 2010, so more recent data are not available (Available at: http://www.census.gov/manufacturing/cir/historical_data/ma333m/index.html).
Table VI.4--Total Shipments of Water-Source Heat Pumps
[Census product code: 333415E181]
------------------------------------------------------------------------
1989 1999 2009
------------------------------------------------------------------------
Total.................................. 157,080 120,545 180,101
------------------------------------------------------------------------
Table VI.5--Total Shipments of Water-Source Heat Pumps (AHRI)
------------------------------------------------------------------------
Equipment class 1999 Percent
------------------------------------------------------------------------
WSHP <17000 Btu/h................................... 41,000 31
WSHP 17000-65000 Btu/h.............................. 86,000 65
WSHP 65000-135000 Btu/h............................. 5,000 4
------------------------------------------------------------------------
Table VI.6 shows the projected shipments for the different
equipment classes of water-source heat pumps for selected years from
2016 to 2045, as well as the cumulative shipments.
Table VI.6--Shipments Projection for Water-Source Heat Pumps
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units shipped by year and equipment class
------------------------------------------------------------------------------------------
Equipment Cumulative
2016 2020 2025 2030 2035 2040 2045 shipments
(2016-2045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
WSHP <17000 Btu/h............................................ 62,934 68,072 74,495 80,918 87,341 93,764 100,187 2,446,810
WSHP 17000-65000 Btu/h....................................... 132,007 142,785 156,258 169,731 183,203 196,676 210,148 5,132,334
WSHP 65000-135000 Btu/h...................................... 7,675 8,301 9,085 9,868 10,651 11,435 12,218 7,579,144
------------------------------------------------------------------------------------------
Total.................................................... 202,616 219,159 239,838 260,517 281,195 301,874 322,553 7,877,536
--------------------------------------------------------------------------------------------------------------------------------------------------------
As equipment purchase price and repair costs increase with
efficiency, DOE recognizes that higher first costs and repair costs can
result in a drop in shipments. However, in the January 2015 NOPR, DOE
had no basis for estimating the elasticity of shipments for water-
source heat pumps as a function of first costs, repair costs, or
operating costs. 80 FR 1171, 1206 (Jan. 8, 2015). In addition, because
water-source heat pumps are often installed for their higher efficiency
as compared to air-cooled equipment, DOE had tentatively concluded in
the January 2015 NOPR that it was unlikely that shipments would change
as a result of higher first costs and repair costs. Therefore, DOE
presumed that the shipments projection would not change with higher
standard levels. DOE sought input on this assumption in the January
2015 NOPR. Id. As noted in section V.F.2, in response, Lennox
International commented that they with increased costs they expected a
drop in shipments
[[Page 42639]]
and an increase in repairs. (Lennox International, No. 36 at p. 2-3)
DOE acknowledges Lennox's concerns. However, DOE does not have data
available to estimate the price elasticity for this equipment. Given
that even without a drop in shipments, none of the efficiency levels in
the January 2015 NOPR were determined to be economically justified, DOE
has not revised its shipments estimates for this final rule. Chapter 7
of the final rule TSD provides additional details on the shipments
forecasts.
3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies
DOE estimated base-case efficiency distributions based on model
availability in the AHRI certified directory. In the January 2015 NOPR,
DOE also estimated a base-case efficiency trend of an increase of
approximately 1 EER every 35 years, based on the trend from 2012 to
2035 found in the Commercial Unitary Air Conditioner Advance Notice of
Proposed Rulemaking (ANOPR).\37\ 80 FR 1171, 1207 (Jan. 8, 2015). DOE
used this same trend in the standards-case scenarios. DOE requested
comment on its estimated efficiency trends, but did not receive any. As
a result, DOE used the same trend for this final rule.
---------------------------------------------------------------------------
\37\ See DOE's technical support document underlying DOE's July
29, 2004 ANOPR. 69 FR 45460 (Available at: www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0103-0078).
---------------------------------------------------------------------------
For each efficiency level analyzed, DOE used a ``roll-up'' scenario
to establish the market shares by efficiency level for the first full
year that compliance would be required with amended standards (i.e.,
2016 for adoption of efficiency levels in ASHRAE Standard 90.1-2013 or
2020 if DOE adopts more-stringent efficiency levels than those in
ASHRAE Standard 90.1-2013). Table VI.7 presents the estimated base-case
efficiency market shares for each water-source heat pump equipment
class.
Table VI.7--Base-Case Efficiency Market Shares in 2020 for Water-Source Heat Pumps
----------------------------------------------------------------------------------------------------------------
Water-source (water-to-air, water-loop) heat Water-source (water-to-air, Water-source (water-to-air,
pumps <17,000 Btu/h water-loop) heat pumps water-loop) heat pumps
------------------------------------------------- >=17,000 and <65,000 Btu/h >=65,000 and <135,000 Btu/h
---------------------------------------------------------------
EER Market share Market share Market share
(percent) EER (percent) EER (percent)
----------------------------------------------------------------------------------------------------------------
11.2............................ 0.0 12.0 0.0 12.0 0.0
12.2............................ 0.7 13.0 7.6 13.0 0.0
13.0............................ 49.7 14.6 55.1 14.0 29.8
14.0............................ 22.0 16.6 25.0 15.0 48.5
15.7............................ 20.5 18.0 8.9 16.0 20.1
16.5............................ 4.9 19.2 2.5 17.0 1.7
18.1............................ 2.3 21.6 1.0 .............. ..............
----------------------------------------------------------------------------------------------------------------
Note: The 0% market share at the first listed EER level is accounting for the default adoption of ASHRAE
Standard 90.1-2013 levels in 2016.
4. National Energy Savings and Net Present Value
The stock of water-source heat pump equipment is the total number
of units in each equipment class purchased or shipped from previous
years that have survived until a given point in time. The NES
spreadsheet,\38\ through use of the shipments model, keeps track of the
total number of units shipped each year. For purposes of the NES and
NPV analyses, DOE assumes that shipments of water-source heat pump
units survive for an average of 19 years, following a Weibull
distribution, at the end of which time they are removed from service.
---------------------------------------------------------------------------
\38\ The NES spreadsheet can be found in the docket for the
ASHRAE rulemaking at: www.regulations.gov/#!docketDetail;D=EERE-
2014-BT-STD-0015.
---------------------------------------------------------------------------
The national annual energy consumption is the product of the annual
unit energy consumption and the number of units of each vintage in the
stock, summed over all vintages. This approach accounts for differences
in unit energy consumption from year to year. In determining national
annual energy consumption, 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 2014 version of NEMS. Cumulative energy savings are the sum of
the NES for each year over the timeframe of the analysis.
In response to the recommendations of a committee on ``Point-of-Use
and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency
Standards'' appointed by the National Academy of Sciences, DOE
announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in the Federal Register in which DOE
explained its determination that NEMS is the most appropriate tool for
its FFC analysis and its intention to use NEMS for that purpose. 77 FR
49701 (Aug. 17, 2012). The approach used for this final rule is
described in Appendix 8A of the final rule TSD.
Table VI.8 summarizes the inputs to the NES spreadsheet model along
with a brief description of the data sources. The results of DOE's NES
and NPV analysis are summarized in section VIII.B.2.b and described in
detail in chapter 7 of the final rule TSD.
Table VI.8--Summary of Water-Source Heat Pump NES and NPV Model Inputs
------------------------------------------------------------------------
Inputs Description
------------------------------------------------------------------------
Shipments......................... Annual shipments based on U.S.
Census data. (See chapter 7 of the
final rule TSD.)
[[Page 42640]]
Compliance Date of Standard....... 2020 for adoption of a more-
stringent efficiency level than
those specified by ASHRAE Standard
90.1-2013.
2016 for adoption of the efficiency
levels specified by ASHRAE Standard
90.1-2013.
Base-Case Efficiencies............ Distribution of base-case shipments
by efficiency level, with
efficiency trend of an increase of
1 EER every 35 years.
Standards-Case Efficiencies....... Distribution of shipments by
efficiency level for each standards
case. In compliance year, units
below the standard level ``roll-
up'' to meet the standard.
Efficiency trend of an increase of
1 EER every 35 years.
Annual Energy Use per Unit........ Annual national weighted-average
values are a function of efficiency
level. (See chapter 4 of the final
rule TSD.)
Total Installed Cost per Unit..... Annual weighted-average values are a
function of efficiency level. (See
chapter 5 of the final rule TSD.)
Annualized Maintenance and Repair Annual weighted-average values are a
Costs per Unit. function of efficiency level. (See
chapter 5 of the final rule TSD.)
Escalation of Fuel Prices......... AEO2014 forecasts (to 2040) and
extrapolation for beyond 2040. (See
chapter 8 of the final rule TSD.)
Site to Primary and FFC Conversion Based on AEO2014 forecasts (to 2040)
and extrapolation for beyond 2040.
(See chapter 8 of the final rule
TSD.)
Discount Rate..................... 3 percent and 7 percent real.
Present Year...................... Future costs are discounted to 2015.
------------------------------------------------------------------------
VII. Methodology for Emissions Analysis and Monetizing Carbon Dioxide
and Other Emissions Impacts
A. 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 amended energy conservation standards for the ASHRAE
equipment that is the subject of this document. In addition, DOE
estimates emissions impacts in production activities (extracting,
processing, and transporting fuels) that provide the energy inputs to
power plants. These are referred to as ``upstream'' emissions.
Together, these emissions account for the full-fuel cycle (FFC). In
accordance with DOE's FFC Statement of Policy (76 FR 51281 (Aug. 18,
2011) as amended at 77 FR 49701 (August 17, 2012)), the FFC analysis
also includes impacts on emissions of methane (CH4) and
nitrous oxide (N2O), both of which are recognized as
greenhouse gases. The combustion emissions factors and the method DOE
used to derive upstream emissions factors are described in chapter 9 of
the final rule TSD. The cumulative emissions reduction estimated for
the subject ASHRAE equipment is presented in section VIII.C.
DOE primarily conducted the emissions analysis using emissions
factors for CO2 and most of the other gases derived from
data in AEO 2014. Combustion emissions of CH4 and
N2O were estimated using emissions intensity factors
published by the U.S. Environmental Protection Agency (EPA) in its
Greenhouse Gas (GHG) Emissions Factors Hub.\39\ DOE developed separate
emissions factors for power sector emissions and upstream emissions.
The method that DOE used to derive emissions factors is described in
chapter 9 of the final rule TSD.
---------------------------------------------------------------------------
\39\ See http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------
EIA prepares the AEO using NEMS. Each annual version of NEMS
incorporates the projected impacts of existing air quality regulations
on emissions. AEO 2014 generally represents current legislation and
environmental regulations, including recent government actions, for
which implementing regulations were available as of October 31, 2013.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and the
District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from 28 eastern States and DC were also limited under the
Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR,
which created an allowance-based trading program that operates along
with the Title IV program, was remanded to the EPA by the U.S. Court of
Appeals for the District of Columbia Circuit, but it remained in
effect.\40\ In 2011, EPA issued a replacement for CAIR, the Cross-State
Air Pollution Rule (CSAPR). 76 FR 48208 (Aug. 8, 2011). On August 21,
2012, the D.C. Circuit issued a decision to vacate CSAPR.\41\ The court
ordered EPA to continue administering CAIR. The emissions factors used
for this final rule, which are based on AEO 2014, assume that CAIR
remains a binding regulation through 2040.\42\
---------------------------------------------------------------------------
\40\ 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).
\41\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696,
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
\42\ On April 29, 2014, the U.S. Supreme Court reversed the
judgment of the D.C. Circuit and remanded the case for further
proceedings consistent with the Supreme Court's opinion. The Supreme
Court held in part that EPA's methodology for quantifying emissions
that must be eliminated in certain states due to their impacts in
other downwind states was based on a permissible, workable, and
equitable interpretation of the Clean Air Act provision that
provides statutory authority for CSAPR. See EPA v. EME Homer City
Generation, No 12-1182, slip op. at 32 (U.S. April 29, 2014). On
October 23, 2014, the D.C. Circuit lifted the stay of CSAPR.
Pursuant to this action, CSAPR will go into effect (and the Clean
Air Interstate Rule will sunset) as of January 1, 2015. However,
because DOE used emissions factors based on AEO 2014 for this final
rule, the analysis assumes that CAIR, not CSAPR, is the regulation
in force. The difference between CAIR and CSAPR is not relevant for
the purpose of DOE's analysis of SO2 emissions.
---------------------------------------------------------------------------
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Beginning in 2016, however, SO2 emissions will
decline significantly as a result of the Mercury and Air Toxics
Standards (MATS) for power plants. 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 2014 assumes that, in order to
continue operating, coal plants must have either flue gas
[[Page 42641]]
desulfurization or dry sorbent injection systems installed by 2016.
Both technologies are used to reduce acid gas emissions, and also
reduce SO2 emissions. Under the MATS, emissions will be far
below the cap established by CAIR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by any regulated EGU. Therefore,
DOE believes that energy efficiency standards will reduce
SO2 emissions in 2016 and beyond.
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia.\43\ Energy conservation standards
are expected to have little effect on NOX emissions in those
States covered by CAIR, because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions. However,
standards would be expected to reduce NOX emissions in the
States not affected by the caps, so DOE estimated NOX
emissions reductions from the standards considered in this final rule
for these States.
---------------------------------------------------------------------------
\43\ CSAPR also applies to NOX, and it would
supersede the regulation of NOX under CAIR. As stated
previously, the current analysis assumes that CAIR, not CSAPR, is
the regulation in force. The difference between CAIR and CSAPR with
regard to DOE's analysis of NOX is slight.
---------------------------------------------------------------------------
The MATS limit mercury emissions from power plants, but they do not
include emissions caps. DOE estimated mercury emissions using emissions
factors based on AEO 2014, which incorporates the MATS.
B. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this final rule, DOE considered the
estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the efficiency levels considered. In order to make this calculation
analogous to the calculation of the NPV of consumer benefit, DOE
considered the reduced emissions expected to result over the lifetime
of equipment shipped in the forecast period for each efficiency level.
This section summarizes the basis for the monetary values used for each
of these emissions and presents the values considered in this final
rule.
For this final rule, DOE relied on a set of values for the social
cost of carbon (SCC) that was developed by a Federal interagency
process. The basis for these values is summarized in the next section,
and a more detailed description of the methodologies used is provided
as an appendix to chapter 10 of the final rule 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 CO2. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in CO2 emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b) of Executive Order 12866, ``Regulatory Planning
and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent
permitted by law, ``assess both the costs and the benefits of the
intended regulation and, recognizing that some costs and benefits are
difficult to quantify, propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs.'' The purpose of the SCC estimates presented here is
to allow agencies to incorporate the monetized social benefits of
reducing CO2 emissions into cost-benefit analyses of
regulatory actions. The estimates are presented with an acknowledgement
of the many uncertainties involved and with a clear understanding that
they should be updated over time to reflect increasing knowledge of the
science and economics of climate impacts.
As part of the interagency process that developed these 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
CO2 emissions, the analyst faces a number of challenges. A
report from the National Research Council \44\ points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) future emissions of GHGs; (2) the effects of
past and future emissions on the climate system; (3) the impact of
changes in climate on the physical and biological environment; and (4)
the translation of these environmental impacts into economic damages.
As a result, any effort to quantify and monetize the harms associated
with climate change will raise questions of science, economics, and
ethics and should be viewed as provisional.
---------------------------------------------------------------------------
\44\ National Research Council, Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use, National Academies Press:
Washington, DC (2009).
---------------------------------------------------------------------------
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
CO2 emissions. The agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across Federal 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,
[[Page 42642]]
$33, $19, $10, and $5 per metric ton of CO2. These interim
values represented the first sustained interagency effort within the
U.S. government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
c. Current Approach and Key Assumptions
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: The FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change (IPCC).
Each model was given equal weight in the SCC values that were
developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models, while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: Climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for
use in regulatory analyses. Three sets of values are based on the
average SCC from the three integrated assessment models, at discount
rates of 2.5, 3, and 5 percent. The fourth set, which represents the
95th percentile SCC estimate across all three models at a 3-percent
discount rate, was 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,\45\ although preference is given to consideration of the
global benefits of reducing CO2 emissions. Table VII.1
presents the values in the 2010 interagency group report,\46\ which is
reproduced in appendix 10A of the final rule TSD.
---------------------------------------------------------------------------
\45\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
\46\ 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) (Available at:
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
Table VII.1--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
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 document were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature.\47\
---------------------------------------------------------------------------
\47\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, United States Government
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
---------------------------------------------------------------------------
Table VII.2 shows the updated sets of SCC estimates from the 2013
interagency update in 5-year increments from 2010 to 2050. The full set
of annual SCC estimates between 2010 and 2050 is reported in appendix
10B of the final rule TSD. 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.
[[Page 42643]]
Table VII.2--Annual SCC Values From 2013 Interagency Report, 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 11 32 51 89
2015............................................ 11 37 57 109
2020............................................ 12 43 64 128
2025............................................ 14 47 69 143
2030............................................ 16 52 75 159
2035............................................ 19 56 80 175
2040............................................ 21 61 86 191
2045............................................ 24 66 92 206
2050............................................ 26 71 97 220
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable because they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The 2009 National
Research Council report mentioned previously points out that there is
tension between the goal of producing quantified estimates of the
economic damages from an incremental ton of carbon and the limits of
existing efforts to model these effects. There are a number of
analytical challenges that are being addressed by the research
community, including research programs housed in many of the Federal
agencies participating in the interagency process to estimate the SCC.
The interagency group intends to periodically review and reconsider
those estimates to reflect increasing knowledge of the science and
economics of climate impacts, as well as improvements in modeling.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the values from the
2013 interagency report adjusted to 2014$ using the implicit price
deflator for gross domestic product (GDP) from the Bureau of Economic
Analysis. For each of the four sets of SCC cases specified, the values
for emissions in 2015 were $12.2, $41.2, $63.4, and $121 per metric ton
avoided (values expressed in 2014$). 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 was used to obtain the SCC values in each case.
In response to the NOPR, the Associations stated that DOE should
not use SCC values to establish monetary figures for emissions
reductions until the SCC undergoes a more rigorous notice, review, and
comment process. (The Associations, No. 37 at p. 4) In conducting the
interagency process that developed the SCC values, 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. Key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates. These uncertainties and model differences are discussed in
the interagency working group's reports, which are reproduced in
appendix 10A and 10B of the final rule TSD, as are the major
assumptions. The 2010 SCC values have been used in a number of Federal
rulemakings in which the public had opportunity to comment. In November
2013, the OMB announced a new opportunity for public comment on the TSD
underlying the revised SCC estimates. See 78 FR 70586 (Nov. 26, 2013).
OMB is currently reviewing comments and considering whether further
revisions to the 2013 SCC estimates are warranted. DOE stands ready to
work with OMB and the other members of the interagency working group on
further review and revision of the SCC estimates as appropriate.
2. Valuation of Other Emissions Reductions
As noted previously, DOE has taken into account how considered
energy conservation standards would reduce site NOX
emissions nationwide and increase power sector NOX emissions
in those 22 States not affected by the CAIR. DOE estimated the
monetized value of net NOX emissions reductions resulting
from each of the efficiency levels considered for this final rule based
on estimates found in the relevant scientific literature. Estimates of
monetary value for reducing NOX from stationary sources
range from $484 to $4,971 per ton in 2014$.\48\ DOE calculated monetary
benefits using a medium value for NOX emissions of $2,727
per short ton (in 2014$) and real discount rates of 3 percent and 7
percent.
---------------------------------------------------------------------------
\48\ 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) (Available at: www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf).
---------------------------------------------------------------------------
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. DOE has not included monetization of those emissions in
the current analysis.
VIII. Analytical Results and Conclusions
A. Efficiency Levels Analyzed
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less
Than 65,000 Btu/h
The methodology for small commercial air-cooled air conditioners
and heat pumps less than 65,000 Btu/h was presented in section V of
this this final rule. Table VIII.1 presents the market baseline
efficiency level and the higher efficiency levels analyzed for each
equipment class of small commercial air-cooled air conditioners and
heat pumps less than 65,000 Btu/h subject to this rule. The EPCA
baseline efficiency levels correspond to the lowest efficiency levels
currently available on the market. The efficiency levels above the
baseline represent efficiency levels specified by ASHRAE
[[Page 42644]]
Standard 90.1-2013 and efficiency levels more stringent than those
specified in ASHRAE Standard 90.1-2013 where equipment is currently
available on the market. Note that for the energy savings and economic
analysis, efficiency levels above those specified in ASHRAE Standard
90.1-2013 are compared to ASHRAE Standard 90.1-2013 as the baseline
rather than the EPCA baseline (i.e., the current Federal standards).
For split-system air conditioners, for which ASHRAE 90.1-2013 did not
change the efficiency level, all efficiency levels are compared to the
Federal or EPCA baseline.
Table VIII.1--Efficiency Levels Analyzed for Small Commercial Air-Cooled Air Conditioners and Heat Pumps <65,000
Btu/h
----------------------------------------------------------------------------------------------------------------
Small three-phase Small three-phase Small three-phase
air-cooled split- air-cooled single- Small three-phase air-cooled single-
system air package air air-cooled split- package heat
conditioners conditioners system heat pumps pumps <65,000 Btu/
<65,000 Btu/h <65,000 Btu/h <65,000 Btu/h h
----------------------------------------------------------------------------------------------------------------
Efficiency Level (SEER/HSPF)
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard.......... 13 13 13/7.7 13/7.7
ASHRAE Level (0).................... * 14 14 14/8.2 14/8.0
Efficiency Level 1.................. 15 15 15/8.5 15/8.4
Efficiency Level 2.................. 16 16 16/8.7 16/8.8
Efficiency Level 3.................. 17 17 17/9.0 17/8.9
Efficiency Level 4 **............... 18 18 18.0/9.2 18.0/9.1
Efficiency Level 5 ***.............. 19 19 ................. .................
----------------------------------------------------------------------------------------------------------------
* For split system air conditioners, the ASHRAE level is 13.0 SEER. DOE analyzed the 14.0 SEER level as a level
more stringent than ASHRAE, but designated it as efficiency level 0 for consistency in SEER level across
equipment classes.
** Efficiency Level 4 is ``Max-Tech'' for HP equipment classes.
*** Efficiency Level 5 is ``Max-Tech'' for AC equipment classes.
2. Water-Source Heat Pumps
The methodology for water-source heat pumps was presented in
section VI of this final rule. Table VIII.2 presents the baseline
efficiency level and the more-stringent efficiency levels analyzed for
each equipment class of water-source heat pumps subject to this rule.
The baseline efficiency levels correspond to the lowest efficiency
levels currently available on the market. The efficiency levels above
the baseline represent efficiency levels specified in ASHRAE Standard
90.1-2013 and more-stringent efficiency levels where equipment is
currently available on the market.
Table VIII.2--Efficiency Levels Analyzed for Water-Source Heat Pumps
----------------------------------------------------------------------------------------------------------------
Water-source
Water-source Water-source (water-to-air,
(water-to-air, (water-to-air, water-loop) heat
water-loop) heat water-loop) heat pumps >=65,000
pumps <17,000 Btu/ pumps >=17,000 and <135,000 Btu/
h and <65,000 Btu/h h
----------------------------------------------------------------------------------------------------------------
Efficiency Level (EER/COP)
----------------------------------------------------------------------------------------------------------------
Baseline--Federal Standard............................. 11.2/4.2 12.0/4.2 12.0/4.2
ASHRAE Level (0)....................................... 12.2/4.3 13.0/4.3 13.0/4.3
Efficiency Level 1..................................... 13.0/4.6 14.6/4.8 14.0/4.7
Efficiency Level 2..................................... 14.0/4.8 16.6/5.3 15.0/4.8
Efficiency Level 3..................................... 15.7/5.1 18.0/5.6 16.0/5.0
Efficiency Level 4 *................................... 16.5/5.3 19.2/5.9 17.2/5.1
Efficiency Level 5 **.................................. 18.1/5.6 21.6/6.5 .................
----------------------------------------------------------------------------------------------------------------
* Efficiency Level 4 is ``Max-Tech'' for the largest equipment class.
** Efficiency Level 5 is ``Max-Tech'' for the two smaller equipment classes.
3. Commercial Oil-Fired Storage Water Heaters
Table VIII.3 presents the baseline efficiency level and the more-
stringent efficiency levels analyzed for the class of oil-fired storage
water heaters subject to this rule. The baseline efficiency levels
correspond to the lowest efficiency levels currently available on the
market. The efficiency levels above the baseline represent efficiency
levels specified in ASHRAE Standard 90.1-2013 and more-stringent
efficiency levels where equipment is currently available on the market.
Table VIII.3--Efficiency Levels Analyzed for Commercial Oil-Fired
Storage Water-Heating Equipment
------------------------------------------------------------------------
Oil-fired
storage water-
heating
equipment
(>105,000 Btu/h
and <4,000 Btu/h/
gal) (%)
------------------------------------------------------------------------
Efficiency Level (Et)
------------------------------------------------------------------------
Baseline--Federal Standard............................ 78
[[Page 42645]]
ASHRAE Level (0)...................................... 80
Efficiency Level 1.................................... 81
Efficiency Level 2--``Max-Tech'' -.................... 82
------------------------------------------------------------------------
B. Energy Savings and Economic Justification
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less
Than 65,000 Btu/h
a. Economic Impacts on Commercial Customers
1. Life-Cycle Cost and Payback Period
To evaluate the net economic impact of potential amended energy
conservation standards on commercial consumers of small commercial air-
cooled air conditioners and heat pumps, DOE conducted LCC and PBP
analyses for each efficiency level. In general, higher-efficiency
equipment would affect commercial consumers in two ways: (1) Purchase
price would increase, and (2) annual operating costs would decrease.
Inputs used for calculating the LCC and PBP include total installed
costs (i.e., equipment price plus installation costs), and operating
costs (i.e., annual energy usage, energy prices, energy price trends,
repair costs, and maintenance costs). The LCC calculation also uses
equipment lifetime and a discount rate.
The output of the LCC model is a mean LCC savings (or cost \49\)
for each equipment class, relative to the baseline small commercial
air-cooled air conditioner and heat pump efficiency level. The LCC
analysis also provides information on the percentage of commercial
consumers that are negatively affected by an increase in the minimum
efficiency standard.
---------------------------------------------------------------------------
\49\ An LCC cost is shown as a negative savings in the results
presented.
---------------------------------------------------------------------------
DOE also performed a PBP analysis as part of the LCC analysis. The
PBP is the number of years it would take for the commercial consumer to
recover the increased costs of higher-efficiency equipment 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 6 of the final rule TSD provides detailed
information on the LCC and PBP analyses.
DOE's LCC and PBP analyses provided five key outputs for each
efficiency level above the baseline (i.e., efficiency levels above the
current Federal standard for split-system air conditioners or
efficiency levels more stringent than those in ASHRAE Standard 90.1-
2013 for the three triggered equipment classes), as reported in Table
VIII.4 through Table VIII.11 below. These outputs include the
proportion of small commercial air-cooled air conditioner and heat pump
purchases in which the purchase of such a unit that is compliant with
the amended energy conservation standard creates a net LCC increase, no
impact, or a net LCC savings for the commercial consumer. Another
output is the average net LCC savings from standard-compliant
equipment, as well as the average PBP for the consumer investment in
standard-compliant equipment.
Chapter 6 of the final rule TSD provides detailed information on
the LCC and PBP analyses.
Table VIII.4 through Table VIII.11 show the LCC and PBP results for
all efficiency levels considered for each class of small commercial
air-cooled air conditioner and heat pump in this final rule. In the
first of each pair of tables, the simple payback is measured relative
to the baseline equipment (i.e., equipment at the current Federal
standards for split-system air conditioners or equipment with the
efficiency levels required in ASHRAE Standard 90.1-2013 for the three
triggered equipment classes). In the second tables, the LCC savings are
measured relative to the base-case efficiency distribution in the
compliance year (i.e., the range of equipment expected to be on the
market in the absence of amended standards for split-system air
conditioners or the default case where DOE adopts the efficiency levels
in ASHRAE Standard 90.1-2013 for the three triggered equipment
classes).
Table VIII.4--Average LCC and PBP Results by Efficiency Level for Small Three-Phase Air-Cooled Split-System Air Conditioners <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ $3,901 $776 $7,532 $11,433 N/A 19
0....................................................... 4,150 773 7,497 11,647 68 19
1....................................................... 4,401 766 7,433 11,834 49 19
2....................................................... 4,670 760 7,373 12,043 47 19
3....................................................... 4,927 763 7,409 12,335 80 19
4....................................................... 5,194 768 7,449 12,643 148 19
5....................................................... 5,474 774 7,507 12,981 560 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
[[Page 42646]]
Table VIII.5--LCC Savings Relative to the Base-Case Efficiency
Distribution for Small Three-Phase Air-Cooled Split-System Air
Conditioners <65,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
0............................................. 26 ($56)
1............................................. 75 (198)
2............................................. 97 (402)
3............................................. 100 (695)
4............................................. 100 (1,002)
5............................................. 100 (1,341)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
Table VIII.6--Average LCC and PBP Results by Efficiency Level for Small Three-Phase Air-Cooled Single-Package Air Conditioners <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $4,781 $772 $7,516 $12,297 N/A 19
1....................................................... 5,090 758 7,381 12,471 22 19
2....................................................... 5,400 753 7,329 12,729 32 19
3....................................................... 5,702 757 7,368 13,070 61 19
4....................................................... 6,007 761 7,407 13,414 110 19
5....................................................... 6,375 766 7,457 13,833 270 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
Table VIII.7--LCC Savings Relative to the Base-Case Efficiency
Distribution for Small Three-Phase Air-Cooled Single-Package Air
Conditioners <65,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. 49 ($89)
2............................................. 81 (299)
3............................................. 89 (602)
4............................................. 93 (922)
5............................................. 100 (1,340)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
Table VIII.8--Average LCC and PBP Results by Efficiency Level for Small Three-Phase Air-Cooled Split-System Heat Pumps <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $4,513 $796 $7,070 $11,584 N/A 16
1....................................................... 4,774 783 6,957 11,731 20 16
2....................................................... 5,118 777 6,906 12,024 33 16
3....................................................... 5,401 778 6,911 12,312 49 16
4....................................................... 5,694 778 6,918 12,612 69 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
[[Page 42647]]
Table VIII.9--LCC Savings Relative to the Base-Case Efficiency
Distribution for Small Three-Phase Air-Cooled Split-System Heat Pumps
<65,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. 75 ($118)
2............................................. 99 (410)
3............................................. 100 (697)
4............................................. 100 (997)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
Table VIII.10--Average LCC and PBP Results by Efficiency Level for Small Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $5,155 $797 $7,084 $12,239 N/A 16
1....................................................... 5,499 784 6,969 12,468 27 16
2....................................................... 5,830 777 6,909 12,739 34 16
3....................................................... 6,161 778 6,916 13,077 53 16
4....................................................... 6,550 779 6,923 13,473 77 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
Table VIII.11--LCC Savings Relative to the Base-Case Efficiency
Distribution for Small Three-Phase Air-Cooled Single-Package Heat Pumps
<65,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. 68 ($158)
2............................................. 90 (402)
3............................................. 99 (735)
4............................................. 99 (1,128)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
b. National Impact Analysis
1. Amount and Significance of Energy Savings
To estimate the lifetime energy savings for equipment shipped
through 2046 (or 2048) due to amended energy conservation standards,
DOE compared the energy consumption of small commercial air-cooled air
conditioners and heat pumps less than 65,000 Btu/h under the ASHRAE
Standard 90.1-2013 efficiency levels (or current Federal levels for
split-system air conditioners) to energy consumption of the same small
commercial air-cooled air conditioners and heat pumps under more-
stringent efficiency standards. For the three equipment classes
triggered by ASHRAE, DOE also compared the energy consumption of those
small commercial air-cooled air conditioners and heat pumps under the
ASHRAE Standard 90.1-2013 efficiency levels to energy consumption of
small commercial air-cooled air conditioners and heat pumps under the
current EPCA base case (i.e., under current Federal standards). DOE
examined up to five efficiency levels higher than those of ASHRAE
Standard 90.1-2013. Table VIII.12 through Table VIII.15 show the
projected national energy savings at each of the considered standard
levels. (See chapter 8 of the final rule TSD.)
Table VIII.12--Potential Energy Savings for Small Three-Phase Air-Cooled
Split-System Air Conditioners <65,000 Btu/h
------------------------------------------------------------------------
Primary energy FFC Energy
savings savings
Efficiency level estimate estimate
(quads) (quads)
------------------------------------------------------------------------
Level 0-14 SEER......................... 0.02 0.02
Level 1-15 SEER......................... 0.08 0.08
Level 2-16 SEER......................... 0.13 0.14
Level 3-17 SEER......................... 0.16 0.17
Level 4-18 SEER......................... 0.18 0.19
Level 5-``Max-Tech''-19 SEER............ 0.19 0.20
------------------------------------------------------------------------
[[Page 42648]]
Table VIII.13--Potential Energy Savings for Small Three-Phase Air-Cooled
Single-Package Air Conditioners <65,000 Btu/h
------------------------------------------------------------------------
Primary energy FFC Energy
savings savings
Efficiency level estimate\*\ estimate\*\
(quads) (quads)
------------------------------------------------------------------------
Level 0-ASHRAE-14 SEER.................. 0.04 0.04
Level 1-15 SEER......................... 0.05 0.06
Level 2-16 SEER......................... 0.11 0.12
Level 3-17 SEER......................... 0.15 0.15
Level 4-18 SEER......................... 0.18 0.18
Level 5-``Max-Tech''-19 SEER............ 0.19 0.20
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
Table VIII.14--Potential Energy Savings for Small Three-Phase Air-Cooled
Split-System Heat Pumps <65,000 Btu/h
------------------------------------------------------------------------
Primary energy FFC Energy
savings savings
Efficiency level estimate\*\ estimate\*\
(quads) (quads)
------------------------------------------------------------------------
Level 0-ASHRAE-14 SEER.................. 0.01 0.01
Level 1-15 SEER......................... 0.01 0.01
Level 2-16 SEER......................... 0.02 0.02
Level 3-17 SEER......................... 0.03 0.03
Level 4-``Max-Tech''-18 SEER............ 0.03 0.03
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
Table VIII.15--Potential Energy Savings for Small Three-Phase Air-Cooled
Single-Package Heat Pumps <65,000 Btu/h
------------------------------------------------------------------------
Primary energy FFC Energy
savings savings
Efficiency level estimate\*\ estimate\*\
(quads) (quads)
------------------------------------------------------------------------
Level 0-ASHRAE-14 SEER.................. 0.01 0.01
Level 1-15 SEER......................... 0.01 0.01
Level 2-16 SEER......................... 0.02 0.02
Level 3-17 SEER......................... 0.03 0.03
Level 4-``Max-Tech''-18 SEER............ 0.04 0.04
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
2. Net Present Value of Customer Costs and Benefits
The NPV analysis is a measure of the cumulative commercial consumer
benefit or cost of standards to the Nation. In accordance with OMB's
guidelines on regulatory analysis (OMB Circular A-4, section E (Sept.
17, 2003)), DOE calculated NPV using both a 7-percent and a 3-percent
real discount rate. Table VIII.16 and Table VIII.17 provide an overview
of the NPV results. (See chapter 8 of the final rule TSD for further
detail.)
Table VIII.16--Summary of Cumulative Net Present Value for Small Three-Phase Air-Cooled Air Conditioners and Heat Pumps <65,000 Btu/h
(Discounted at Seven Percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency
Equipment class level 0 level 1 level 2 level 3 level 4 level 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Present Value (Billion 2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Three-Phase Air-Cooled Split-System Air Conditioners (0.05) (0.18) (0.38) (0.66) (0.95) (1.17)
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Single-Package Air Conditioners N/A\*\ (0.14) (0.43) (0.82) (1.25) (1.63)
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Split-System Heat Pumps <65,000 N/A\*\ (0.03) (0.09) (0.15) (0.19) N/A\**\
Btu/h..................................................
[[Page 42649]]
Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 N/A\*\ (0.04) (0.11) (0.20) (0.28) N/A\**\
Btu/h..................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Numbers in parentheses indicate negative NPV.
The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013 were calculated relative to the efficiency
levels that would result if ASHRAE Standard 90.1-2013 standards were adopted.
* Economic analysis was not conducted for the ASHRAE levels (EL 0).
** The max-tech level for this equipment class is EL 4.
Table VIII.17--Summary of Cumulative Net Present Value for Small Three-Phase Air-Cooled Air Conditioners and Heat Pumps <65,000 Btu/h (Discounted at
Three Percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency
Equipment class level 0 level 1 level 2 level 3 level 4 level 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Present Value (Billion 2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Three-Phase Air-Cooled Split-System Air Conditioners (0.07) (0.27) (0.64) (1.15) (1.71) (2.09)
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Single-Package Air Conditioners N/A\*\ (0.21) (0.74) (1.47) (2.30) (2.96)
<65,000 Btu/h..........................................
Three-Phase Air-Cooled Split-System Heat Pumps <65,000 N/A\*\ (0.05) (0.15) (0.26) (0.33) N/A\**\
Btu/h..................................................
Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 N/A\*\ (0.07) (0.19) (0.35) (0.48) N/A\**\
Btu/h..................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Numbers in parentheses indicate negative NPV. The net present value for efficiency levels more stringent than those specified by ASHRAE Standard
90.1-2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards were adopted.
* Economic analysis was not conducted for the ASHRAE levels (EL 0).
** The max-tech level for this equipment class is EL 4.
2. Water-Source Heat Pumps
a. Economic Impacts on Commercial Customers
1. Life-Cycle Cost and Payback Period
Table VIII.18 through Table VIII.23 show the LCC and PBP results
for all efficiency levels considered for each class of water-source
heat pump in this final rule. In the first of each pair of tables, the
simple payback is measured relative to the baseline equipment (i.e.,
equipment with the efficiency level specified in ASHRAE Standard 90.1-
2013). In the second tables, the LCC savings are measured relative to
the base-case efficiency distribution in the compliance year (i.e., the
range of equipment expected to be on the market in the default case
where DOE adopts the efficiency levels in ASHRAE Standard 90.1-2013).
Table VIII.18--Average LCC and PBP Results by Efficiency Level for Water-Source Heat Pumps (Water-to-Air, Water-Loop) <17,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $3,216 $654 $7,692 $10,908 -- 19
1....................................................... 3,354 645 7,578 10,932 14 19
2....................................................... 3,530 638 7,492 11,022 19 19
3....................................................... 3,822 628 7,377 11,199 23 19
4....................................................... 3,958 624 7,334 11,292 25 19
5....................................................... 4,233 618 7,263 11,496 28 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
[[Page 42650]]
Table VIII.19--LCC Savings Relative to the Base-Case Efficiency
Distribution for Water-Source (Water-to-Air, Water-Loop) Heat Pumps
<17,000 Btu//h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. 0 ($0)
2............................................. 46 (46)
3............................................. 68 (175)
4............................................. 89 (262)
5............................................. 95 (462)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
Table VIII.20--Average LCC and PBP Results by Efficiency Level for Water-Source (Water-to-Air, Water-Loop) Heat Pumps >=17,000 Btu/h and <65,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $4,882 $1,118 $13,169 $18,052 -- 19
1....................................................... 5,162 1,075 12,655 17,817 6.4 19
2....................................................... 5,513 1,039 12,232 17,745 8.0 19
3....................................................... 5,758 1,023 12,041 17,799 9.2 19
4....................................................... 5,968 1,013 11,930 17,898 10 19
5....................................................... 6,392 997 11,732 18,124 12 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
Table VIII.21--LCC Savings Relative to the Base-Case Efficiency
Distribution for Water-Source (Water-to-Air, Water-Loop) Heat Pumps
>=17,000 Btu/h and <65,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings*
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. 2 19
2............................................. 29 64
3............................................. 52 17
4............................................. 66 (78)
5............................................. 76 (303)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
Table VIII.22--Average LCC and PBP Results by Efficiency Level for Water-Source (Water-to-Air, Water-Loop) Heat Pumps >=65,000 Btu/h and <135,000 Btu/h
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2014$
---------------------------------------------------------------- Simple Average
Efficiency level First year's Lifetime payback years lifetime
Installed cost operating cost operating cost LCC years
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASHRAE Baseline......................................... $12,005 $2,202 $25,958 $37,963 -- 19
1....................................................... 12,961 2,126 25,065 38,026 13 19
2....................................................... 13,919 2,087 24,599 38,518 17 19
3....................................................... 14,830 2,054 24,213 39,042 19 19
[[Page 42651]]
4....................................................... 15,977 2,022 23,834 39,811 22 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. The PBP is
measured relative to the baseline equipment.
Table VIII.23--LCC Savings Relative to the Base-Case Efficiency
Distribution for Water-Source (Water-to-Air, Water-Loop) Heat Pumps
>=65,000 Btu/h and <135,000 Btu/h
------------------------------------------------------------------------
Life-cycle cost savings
-------------------------
% of Average
customers savings *
Efficiency level that ------------
experience
------------- 2014$
Net cost
------------------------------------------------------------------------
1............................................. ** 0 ** $0
2............................................. 27 (148)
3............................................. 72 (560)
4............................................. 93 (1,315)
------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).
** The base-case efficiency distribution has 0-percent market share at
the ASHRAE baseline; therefore, there are no savings for EL1.
b. National Impact Analysis
1. Amount and Significance of Energy Savings
To estimate the lifetime energy savings for equipment shipped
through 2045 due to amended energy conservation standards, DOE compared
the energy consumption of commercial water-source heat pumps under the
ASHRAE Standard 90.1-2013 efficiency levels to energy consumption of
the same water-source heat pumps under more-stringent efficiency
standards. DOE also compared the energy consumption of those commercial
water-source heat pumps under the ASHRAE Standard 90.1-2013 efficiency
levels to energy consumption of commercial water-source heat pumps
under the current EPCA base case (i.e., under current Federal
standards). DOE examined up to five efficiency levels higher than those
of ASHRAE Standard 90.1-2013. Table VIII.24 through Table VIII.26 show
the projected national energy savings at each of the considered
standard levels. (See chapter 8 of the final rule TSD.)
Table VIII.24--Potential Energy Savings for Water-Source (Water-to-Air,
Water-Loop) Heat Pumps <17,000 Btu/h
------------------------------------------------------------------------
Primary energy
Efficiency level savings estimate * FFC Energy savings
(quads) estimate * (quads)
------------------------------------------------------------------------
Level 0--ASHRAE--12.2 EER **.... .................. ..................
Level 1--13.0 EER............... 0.0002 0.0002
Level 2--14.0 EER............... 0.02 0.02
Level 3--15.7 EER............... 0.06 0.06
Level 4--16.5 EER............... 0.08 0.08
Level 5--``Max-Tech''--18.1 EER. 0.11 0.11
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
** The base-case efficiency distribution has 0-percent market share at
the Federal baseline; therefore, there are no savings for the ASHRAE
level.
Table VIII.25--Potential Energy Savings for Water-Source (Water-to-Air,
Water-Loop) Heat Pumps >=17,000 and <65,000 Btu/h
------------------------------------------------------------------------
Primary energy
Efficiency level savings estimate * FFC Energy savings
(quads) estimate * (quads)
------------------------------------------------------------------------
Level 0--ASHRAE--13.0 EER **.... .................. ..................
Level 1--14.6 EER............... 0.02 0.03
Level 2--16.6 EER............... 0.26 0.27
Level 3--18.0 EER............... 0.45 0.47
Level 4--19.2 EER............... 0.60 0.63
Level 5--``Max-Tech''--21.6 EER. 0.83 0.87
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
** The base-case efficiency distribution has 0-percent market share at
the Federal baseline; therefore, there are no savings for the ASHRAE
level.
[[Page 42652]]
Table VIII.26--Potential Energy Savings for Water-Source (Water-to-Air,
Water-Loop) Heat Pumps >=65,000 and <135,000 Btu/h
------------------------------------------------------------------------
Primary energy
Efficiency level savings estimate * FFC Energy savings
(quads) estimate * (quads)
------------------------------------------------------------------------
Level 0--ASHRAE--13.0 EER **.... .................. ..................
Level 1--14.0 EER **............ .................. ..................
Level 2--15.0 EER............... 0.01 0.01
Level 3--16.0 EER............... 0.03 0.03
Level 4--``Max-Tech''--17.2 EER. 0.05 0.05
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
** The base-case efficiency distribution has 0-percent market share at
the Federal baseline and the ASHRAE baseline; therefore, there are no
savings for the ASHRAE level or EL1.
2. Net Present Value of Customer Costs and Benefits
Table VIII.27 and Table VIII.28 provide an overview of the NPV
results. (See chapter 8 of the final rule TSD for further detail.)
Table VIII.27--Summary of Cumulative Net Present Value for Water-Source (Water-to-Air, Water-Loop) Heat Pumps
(Discounted at Seven Percent)
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2014$)
-------------------------------------------------------------------------------
Equipment class Efficiency Efficiency Efficiency Efficiency Efficiency
level 1 level 2 level 3 level 4 level 5
----------------------------------------------------------------------------------------------------------------
Water-Source (Water-to-Air, (0.00) (0.04) (0.14) (0.21) (0.33)
Water-Loop) HP <17,000 Btu/h...
Water-Source (Water-to-Air, 0.01 0.00 (0.11) (0.27) (0.59)
Water-Loop) HP >=17,000 to
<65,000 Btu/h..................
Water-Source (Water-to-Air, (\*\) (0.01) (0.06) (0.11) N/A **
Water-Loop) HP >=65,000 to
135,000 Btu/h..................
----------------------------------------------------------------------------------------------------------------
Notes: Numbers in parentheses indicate negative NPV.
The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013
were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards
were adopted. Economic analysis was not conducted for the ASHRAE levels (EL 0).
* The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are
no savings for EL1.
** The max-tech level for this equipment class is EL 4.
Table VIII.28--Summary of Cumulative Net Present Value for Water-Source (Water-to-Air, Water-Loop) Heat Pumps
(Discounted at Three Percent)
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2014$)
-------------------------------------------------------------------------------
Equipment class Efficiency Efficiency Efficiency Efficiency Efficiency
level 1 level 2 level 3 level 4 level 5
----------------------------------------------------------------------------------------------------------------
Water-Source (Water-to-Air, (0.00) (0.05) (0.20) (0.30) (0.49)
Water-Loop) HP <17,000 Btu/h...
Water-Source (Water-to-Air, 0.03 0.26 0.21 0.03 (0.37)
Water-Loop) HP >=17,000 to
<65,000 Btu/h..................
Water-Source (Water-to-Air, (*) (0.02) (0.08) (0.15) ** N/A
Water-Loop) HP >=65,000 to
135,000 Btu/h..................
----------------------------------------------------------------------------------------------------------------
Notes: Numbers in parentheses indicate negative NPV.
The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013
were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards
were adopted. Economic analysis was not conducted for the ASHRAE levels (EL 0).
* The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are
no savings for EL1.
** The max-tech level for this equipment class is EL 4.
3. Commercial Oil-Fired Storage Water Heaters
DOE estimated the potential primary energy savings in quads (i.e.,
10\15\ Btu) for each efficiency level considered within each equipment
class analyzed. Table VIII.29 shows the potential energy savings
resulting from the analyses conducted as part of the April 2014 NODA.
79 FR 20114, 20136 (April 11, 2014).
[[Page 42653]]
Table VIII.29--Potential Energy Savings Estimates for Commercial Oil-
Fired Storage Water Heaters >105,000 Btu/h and <4,000 Btu/h/gal
------------------------------------------------------------------------
Primary energy
Efficiency level savings estimate * FFC Energy savings
(Quads) estimate * (Quads)
------------------------------------------------------------------------
Level 0--ASHRAE--80% Et......... 0.002 0.002
Level 1--81% Et................. 0.001 0.001
Level 2--``Max-Tech''--82% Et... 0.002 0.002
------------------------------------------------------------------------
* The potential energy savings for efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
DOE did not conduct an economic analysis for this oil-fired storage
water heater equipment category because of the minimal energy savings.
C. Need of the Nation To Conserve Energy
An improvement in the energy efficiency of the equipment subject to
this rule, where economically justified, is likely to improve the
security of the nation's energy system by reducing overall demand for
energy, to strengthen the economy, and to reduce the environmental
impacts or costs of energy production. Reduced electricity demand may
also improve the reliability of the electricity system, particularly
during peak-load periods. Reductions in national electric generating
capacity estimated for each efficiency level considered in this
rulemaking, throughout the same analysis period as the NIA, are
reported in chapter 11 of the final rule TSD.
Energy savings from amended standards for the small air-cooled air
conditioners and heat pumps less than 65,000 Btu/h, water-source heat
pumps, and oil-fired storage water heaters covered in this final rule
could also produce environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases.
Table VIII.30 and Table VIII.31 provide DOE's estimate of
cumulative emissions reductions projected to result from the efficiency
levels analyzed in this rulemaking.\50\ The tables include both power
sector emissions and upstream emissions. The upstream emissions were
calculated using the multipliers discussed in section VII.A. DOE
reports annual CO2, NOX, and Hg emissions
reductions for each efficiency level in chapter 9 of the final rule
TSD. As discussed in section VII.A, DOE did not include NOX
emissions reduction from power plants in States subject to CAIR,
because an energy conservation standard would not affect the overall
level of NOX emissions in those States due to the emissions
caps mandated by CAIR.
---------------------------------------------------------------------------
\50\ Because DOE did not conduct additional analysis for oil-
fired storage water heaters, estimates of environmental benefits for
amended standards for that equipment type are not shown here.
Table VIII.30--Cumulative Emissions Reduction for Potential Standards for Small Three-Phase Air-Cooled Air Conditioners and Heat Pumps <65,000 Btu/h
(2017-2046 for ASHRAE Level; 2020-2046 for More-Stringent Levels; 2019-2048 for Split-System Air Conditioners)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level
-----------------------------------------------------------------------------------------------
ASHRAE/0 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 3.7 8.9 16.8 20.8 24.3 25.9
SO2 (thousand tons)..................................... 2.9 6.9 13.0 16.1 18.8 20.1
NOX (thousand tons)..................................... 2.8 6.7 12.6 15.6 18.2 19.4
Hg (tons)............................................... 0.01 0.02 0.04 0.05 0.06 0.06
N2O (thousand tons)..................................... 0.05 0.13 0.24 0.30 0.35 0.37
CH4 (thousand tons)..................................... 0.38 0.90 1.69 2.10 2.45 2.61
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 0.22 0.54 1.00 1.24 1.45 1.54
SO2 (thousand tons)..................................... 0.04 0.09 0.17 0.22 0.25 0.27
NOX (thousand tons)..................................... 3.2 7.6 14.3 17.7 20.7 22.0
Hg (tons)............................................... 0.0001 0.0002 0.0004 0.0005 0.0006 0.0006
N2O (thousand tons)..................................... 0.002 0.005 0.009 0.011 0.012 0.013
CH4 (thousand tons)..................................... 19 45 83 103 121 128
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 4.0 9.5 17.8 22.1 25.8 27.4
SO2 (thousand tons)..................................... 2.9 7.0 13.2 16.4 19.1 20.3
NOX (thousand tons)..................................... 6.0 14.3 26.8 33.4 38.9 41.4
Hg (tons)............................................... 0.01 0.02 0.04 0.05 0.06 0.06
N2O (thousand tons)..................................... 0.06 0.13 0.25 0.31 0.36 0.39
CH4 (thousand tons)..................................... 19 45 85 105 123 131
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards were adopted.
[[Page 42654]]
Table VIII.31--Cumulative Emissions Reduction for Potential Standards for Water-Source Heat Pumps (2016-2045 for ASHRAE Level; 2020-2045 for More-
Stringent Levels)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level
-----------------------------------------------------------------------------------------------
ASHRAE/0 \*\ 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... -- 1.4 16.3 30.5 41.5 56.7
SO2 (thousand tons)..................................... -- 1.1 12.9 24.1 32.9 44.9
NOX (thousand tons)..................................... -- 1.1 12.3 23.1 31.4 42.9
Hg (tons)............................................... -- 0.003 0.040 0.074 0.101 0.139
N2O (thousand tons)..................................... -- 0.02 0.23 0.44 0.60 0.81
CH4 (thousand tons)..................................... -- 0.14 1.63 3.06 4.16 5.68
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... -- 0.08 0.97 1.81 2.47 3.36
SO2 (thousand tons)..................................... -- 0.01 0.17 0.32 0.43 0.59
NOX (thousand tons)..................................... -- 1.2 13.8 25.9 35.2 48.0
Hg (tons)............................................... -- 0.00003 0.00037 0.00070 0.00095 0.00129
N2O (thousand tons)..................................... -- 0.001 0.008 0.016 0.021 0.029
CH4 (thousand tons)..................................... -- 7.0 80.4 150.7 205.0 279.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... -- 1.5 17.3 32.3 44.0 60.1
SO2 (thousand tons)..................................... -- 1.1 13.1 24.5 33.3 45.5
NOX (thousand tons)..................................... -- 2.3 26.1 48.9 66.6 90.9
Hg (tons)............................................... -- 0.004 0.040 0.075 0.102 0.140
N2O (thousand tons)..................................... -- 0.02 0.24 0.45 0.62 0.84
CH4 (thousand tons)..................................... -- 7.2 82.0 153.8 209.1 285.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1-2013 were calculated relative
to the efficiency levels that would result if ASHRAE Standard 90.1-2013 standards were adopted.
* There are no reductions for the ASHRAE level because there is no market share projected at the Federal baseline in the base case.
As part of the analysis for this final rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX estimated for each of the efficiency levels analyzed
for small air-cooled air conditioners and heat pumps less than 65,000
Btu/h, water-source heat pumps, and oil-fired storage water heaters. As
discussed in section VII.B.1, for CO2, DOE used values for
the SCC developed by an interagency process. The interagency group
selected four sets of SCC values for use in regulatory analyses. Three
sets 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 temperature change further out in the
tails of the SCC distribution. The four SCC values for CO2
emissions reductions in 2015, expressed in 2014$, are $12.2/ton, $41.2/
ton, $63.4/ton, and $121/ton. The values for later years are higher due
to increasing emissions-related costs as the magnitude of projected
climate change increases.
Table VIII.32 and Table VIII.33 present the global value of
CO2 emissions reductions at each efficiency level. For each
of the four cases, DOE calculated a present value of the stream of
annual values using the same discount rate as was used in the studies
upon which the dollar-per-ton values are based. DOE calculated domestic
values as a range from 7 percent to 23 percent of the global values,
and these results are presented in chapter 10 of the final rule TSD.
Table VIII.32--Global Present Value of CO2 Emissions Reduction for Potential Standards for Small Three-Phase Air-
Cooled Air Conditioners and Heat Pumps <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
SCC Scenario*
---------------------------------------------------------------
Efficiency level 3% Discount
5% Discount 3% Discount 2.5% Discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
million 2014$
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0........................................ 24 115 184 356
1............................................... 57 273 437 846
2............................................... 110 521 832 1,613
3............................................... 136 646 1,031 1,999
4............................................... 159 754 1,204 2,334
5............................................... 170 804 1,283 2,489
----------------------------------------------------------------------------------------------------------------
[[Page 42655]]
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0........................................ 1.4 6.8 11 21
1............................................... 3.3 16 26 50
2............................................... 6.4 31 49 95
3............................................... 7.9 38 61 118
4............................................... 9.3 44 71 138
5............................................... 10 47 76 147
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0........................................ 25 122 195 377
1............................................... 60 289 463 896
2............................................... 116 552 881 1,708
3............................................... 144 684 1,092 2,117
4............................................... 168 799 1,275 2,472
5............................................... 179 851 1,359 2,635
----------------------------------------------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE
Standard 90.1-2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.2, $63.4 and $121
per metric ton (2014$).
Table VIII.33--Global Present Value of CO2 Emissions Reduction for Potential Standards for Water-Source Heat
Pumps
----------------------------------------------------------------------------------------------------------------
SCC Scenario *
---------------------------------------------------------------
Efficiency level 3% Discount
5% Discount 3% Discount 2.5% Discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
million 2014$
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0**...................................... -- -- -- --
1............................................... 9.3 44 71 137
2............................................... 106 504 805 1,560
3............................................... 198 943 1,507 2,922
4............................................... 270 1,285 2,052 3,979
5............................................... 370 1,758 2,808 5,446
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0**...................................... -- -- -- --
1............................................... 0.5 2.6 4.1 8.0
2............................................... 6.1 30 47 92
3............................................... 12 55 89 172
4............................................... 16 75 121 234
5............................................... 21 103 165 320
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
ASHRAE/0**...................................... -- -- -- --
1............................................... 9.8 47 75 145
2............................................... 112 533 852 1,652
3............................................... 209 999 1,596 3,094
4............................................... 285 1,360 2,173 4,213
5............................................... 391 1,862 2,973 5,765
----------------------------------------------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE
Standard 90.1-2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1-
2013 standards were adopted.
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.2, $63.4 and $121
per metric ton (2014$).
** There are no reductions for the ASHRAE level because there is no market share projected at the Federal
baseline in the base case.
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy
[[Page 42656]]
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 final rule 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 amended standards for the small air-cooled
air conditioners and heat pumps less than 65,000 Btu/h, water-source
heat pumps, and oil-fired storage water heaters that are the subject of
this final rule. The dollar-per-ton values that DOE used are discussed
in section VII.B.2.
Table VIII.34 and Table VIII.35 present the present value of
cumulative NOX emissions reductions for each efficiency
level calculated using the average dollar-per-ton values and 7-percent
and 3-percent discount rates.
Table VIII.34--Present Value of NOX Emissions Reduction for Potential
Standards for Small Three-Phase Air-Cooled Air Conditioners and Heat
Pumps <65,000 Btu/h
[(2017-2046 for ASHRAE level; 2020-2046 for more-stringent levels; 2019-
2048 for split-system air conditioners)]
------------------------------------------------------------------------
3% Discount 7% Discount
Efficiency level rate rate
------------------------------------------------------------------------
million 2014$
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
ASHRAE/0................................ 3.5 1.5
1....................................... 8.2 3.5
2....................................... 16 7.0
3....................................... 20 8.6
4....................................... 23 10
5....................................... 25 11
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
ASHRAE/0................................ 3.8 1.5
1....................................... 9.0 3.6
2....................................... 17 7.2
3....................................... 22 8.9
4....................................... 25 10
5....................................... 27 11
------------------------------------------------------------------------
Total FFC Emissions
------------------------------------------------------------------------
ASHRAE/0................................ 7.3 3.0
1....................................... 17 7.1
2....................................... 33 14
3....................................... 41 17
4....................................... 48 20
5....................................... 51 22
------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more
stringent than those specified by ASHRAE Standard 90.1-2013 were
calculated relative to the efficiency levels that would result if
ASHRAE Standard 90.1-2013 standards were adopted.
Table VIII.35--Present Value of NOX Emissions Reduction for Potential
Standards for Water-Source Heat Pumps
[(2016-2045 for ASHRAE level; 2020-2045 for more-stringent levels)]
------------------------------------------------------------------------
3% Discount 7% Discount
Efficiency level rate rate
------------------------------------------------------------------------
million 2014$
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
ASHRAE/0 *.............................. .............. ..............
1....................................... 1.4 0.6
2....................................... 15 6.6
3....................................... 29 12
4....................................... 39 17
5....................................... 54 23
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
ASHRAE/0 *.............................. .............. ..............
1....................................... 1.5 0.6
[[Page 42657]]
2....................................... 17 6.7
3....................................... 31 13
4....................................... 42 17
5....................................... 58 24
------------------------------------------------------------------------
Total FFC Emissions
------------------------------------------------------------------------
ASHRAE/0 *.............................. .............. ..............
1....................................... 2.8 1.2
2....................................... 32 13
3....................................... 60 25
4....................................... 82 34
5....................................... 112 47
------------------------------------------------------------------------
Note: The potential emissions reduction for efficiency levels more
stringent than those specified by ASHRAE Standard 90.1-2013 were
calculated relative to the efficiency levels that would result if
ASHRAE Standard 90.1-2013 standards were adopted.
* There are no reductions for the ASHRAE level because there is no
market share projected at the Federal baseline in the base case.
D. Amended Energy Conservation Standards
1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less
Than 65,000 Btu/h
As noted previously, EPCA specifies that, for any commercial and
industrial equipment addressed under 42 U.S.C. 6313(a)(6)(A)(i), DOE
may prescribe an energy conservation standard more stringent than the
level for such equipment in ASHRAE Standard 90.1, as amended, only if
``clear and convincing evidence'' shows that a more-stringent standard
would result in significant additional conservation of energy and is
technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) This requirement also applies to split-system
air conditioners evaluated under the 6-year look back. (42 U.S.C.
6313)(a)(6)(C)(i)(II))
In evaluating more-stringent efficiency levels than those specified
by ASHRAE Standard 90.1-2013 for small air-cooled air conditioners and
heat pumps less than 65,000 Btu/h, DOE reviewed the results in terms of
their technological feasibility, significance of energy savings, and
economic justification.
DOE has concluded that all of the SEER and HSPF levels considered
by DOE are technologically feasible, as units with equivalent
efficiency appeared to be available in the current market at all levels
examined.
DOE examined the potential energy savings that would result from
the efficiency levels specified in ASHRAE Standard 90.1-2013 and
compared these to the potential energy savings that would result from
efficiency levels more stringent than those in ASHRAE Standard 90.1-
2013. DOE estimates that 0.05 quads of energy would be saved if DOE
adopts the efficiency levels set in ASHRAE Standard 90.1-2013 for each
small air-cooled air conditioner and heat pump class specified in that
standard. If DOE were to adopt efficiency levels more stringent than
those specified by ASHRAE Standard 90.1-2013, the potential additional
energy savings range from 0.02 quads to 0.45 quads. Associated with
proposing more-stringent efficiency levels for the three triggered
equipment classes is a three-year delay in implementation compared to
the adoption of energy conservation standards at the levels specified
in ASHRAE Standard 90.1-2013 (see section V.E.10). This delay in
implementation of amended energy conservation standards would result in
a small amount of energy savings being lost in the first years (2017
through 2020) compared to the savings from adopting the levels in
ASHRAE Standard 90.1-2013; however, this loss may be compensated for by
increased savings in later years. Taken in isolation, the energy
savings associated with more-stringent standards might be considered
significant enough to warrant adoption of such standards. However, as
noted previously, energy savings are not the only factor that DOE must
consider.
In considering whether potential standards are economically
justified, DOE also examined the LCC savings and national NPV that
would result from adopting efficiency levels more stringent than those
set forth in ASHRAE Standard 90.1-2013. The analytical results show
negative average LCC savings and negative national NPV at both 7-
percent and 3-percent discount rate for all efficiency levels in all
four equipment classes. These results indicate that adoption of
efficiency levels more stringent than those in ASHRAE Standard 90.1-
2013 as Federal energy conservation standards would likely lead to
negative economic outcomes for the Nation. Consequently, this criterion
for adoption of more-stringent standard levels does not appear to have
been met.
As such, DOE does not have ``clear and convincing evidence'' that
any significant additional conservation of energy that would result
from adoption of more-stringent efficiency levels than those specified
in ASHRAE Standard 90.1-2013 would be economically justified. Comments
on the NOPR did not provide any additional information to alter this
conclusion. Therefore, DOE is adopting amended energy efficiency levels
for this equipment as set forth in ASHRAE Standard 90.1-2013. For
split-system air conditioners, for which the efficiency level was not
updated in ASHRAE Standard 90.1-2013, DOE is making a determination
that standards for the product do not need to be amended for the
reasons stated above. Table VIII.36 presents the amended energy
conservation standards and compliance dates for small air-cooled air
conditioners and heat pumps less than 65,000 Btu/h.
[[Page 42658]]
Table VIII.36--Amended Energy Conservation Standards for Small Three-Phase Air-Cooled Air Conditioners and Heat
Pumps <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Equipment type Efficiency level Compliance date
----------------------------------------------------------------------------------------------------------------
Three-Phase Air-Cooled Split 13.0 SEER *........................... June 16, 2008.
System Air Conditioners <65,000
Btu/h.
Three-Phase Air-Cooled Single 14.0 SEER............................. January 1, 2017.
Package Air Conditioners <65,000
Btu/h.
Three-Phase Air-Cooled Split 14.0 SEER, 8.2 HSPF................... January 1, 2017.
System Heat Pumps <65,000 Btu/h.
Three-Phase Air-Cooled Single 14.0 SEER, 8.0 HSPF................... January 1, 2017.
Package Heat Pumps <65,000 Btu/h.
----------------------------------------------------------------------------------------------------------------
* 13.0 SEER is the existing Federal minimum energy conservation standard for three-phase air-cooled split system
air conditioners <65,000 Btu/h.
2. Water-Source Heat Pumps
In evaluating more-stringent efficiency levels for water-source
heat pumps than those specified by ASHRAE Standard 90.1-2013, DOE
reviewed the results in terms of their technological feasibility,
significance of energy savings, and economic justification.
DOE has concluded that all of the EER and COP levels considered by
DOE are technologically feasible, as units with equivalent efficiency
appeared to be available in the current market at all levels examined.
DOE examined the potential energy savings that would result from
the efficiency levels specified in ASHRAE Standard 90.1-2013 and
compared these to the potential energy savings that would result from
efficiency levels more stringent than those in ASHRAE Standard 90.1-
2013. DOE does not estimate any energy savings from adopting the levels
set in ASHRAE Standard 90.1-2013, as very few models exist on the
market below that level, and by 2020, DOE expects those models to be
off the market. If DOE were to adopt efficiency levels more stringent
than those specified by ASHRAE Standard 90.1-2013, the potential
additional energy savings range from 0.03 quads to 1.0 quads.
Associated with proposing more-stringent efficiency levels is a four-
and-a-half-year delay in implementation compared to the adoption of
energy conservation standards at the levels specified in ASHRAE
Standard 90.1-2013 (see section VI.E.10). This delay in implementation
of amended energy conservation standards would result in a small amount
of energy savings being lost in the first years (2016 through 2020)
compared to the savings from adopting the levels in ASHRAE Standard
90.1-2013; however, this loss may be compensated for by increased
savings in later years. Taken in isolation, the energy savings
associated with more-stringent standards might be considered
significant enough to warrant adoption of such standards. However, as
noted above, energy savings are not the only factor that DOE must
consider.
In considering whether potential standards are economically
justified, DOE also examined the NPV that would result from adopting
efficiency levels more stringent than those set forth in ASHRAE
Standard 90.1-2013. With a 7-percent discount rate, EL 1 results in
positive NPV, and ELs 2 through 5 result in negative NPV. With a 3-
percent discount rate, ELs 1 and 2 create positive NPV, while ELs 3
through 5 result in negative NPVs. These results indicate that adoption
of efficiency levels more stringent than those in ASHRAE Standard 90.1-
2013 as Federal energy conservation standards might lead to negative
economic outcomes for the Nation, except at EL1, which offers very
little energy savings.
Furthermore, although DOE based it analyses on the best available
data when examining the potential energy savings and the economic
justification of efficiency levels more stringent than those specified
in ASHRAE Standard 90.1-2013, DOE believes there are several
limitations regarding that data which should be considered before
proposing amended energy conservation standards for water-source heat
pumps.
First, DOE reexamined the uncertainty in its analysis of water-
source heat pumps. As noted in section VI.D, DOE relied on cooling
energy use estimates from a 2000 study. While DOE applied a scaling
factor to attempt to account for changes in buildings since 2000, this
is only a rough estimate. DOE considered running building simulations
by applying a water-source heat pump module to reference buildings.
However, DOE has been unable to obtain reliable information on the
distribution of water-source heat pump applications. Therefore, it is
not clear which building types would be most useful to simulate and how
DOE would weight the results of the simulations. Furthermore, DOE has
no field data with which to corroborate the results of the simulations.
The analysis of heating energy use is also very uncertain; DOE relied
on estimates for air-source heat pumps, but it is unclear whether
water-source heat pumps would have similar heating usage, as they tend
to be used in different applications. Any inaccuracy in UEC directly
impacts the energy savings estimates and consumer impacts.
Second, in developing its analysis, DOE made refinements to various
inputs, such as heating UEC and repair cost. DOE observed that the NPV
results were highly sensitive to small changes in these inputs, with
NPV for EL 2, for example, changing from positive to negative and back
over several iterations. This model sensitivity, combined with high
uncertainty in various inputs, makes it difficult for DOE to determine
that the results provide clear and convincing evidence that higher
standards would be economically justified.
Third, DOE relied on shipments estimates from the U.S. Census. As
noted in the January 2015 NOPR, these estimates are considerably higher
than those found in an EIA report. 80 FR 1171, 1206. Furthermore, DOE
disaggregated the shipments into equipment class using data from over a
decade ago. Although DOE requested comment, DOE has not received any
information or data regarding the shipments of this equipment. Any
inaccuracy in the shipment projection in total or by equipment class
contributes to the uncertainty of the energy savings results and, thus,
makes it difficult for DOE to determine that any additional energy
savings are significant.
Fourth, due to the limited data on the existing distribution of
shipments by efficiency level or historical efficiency trends, DOE was
not able to assess possible future changes in either the available
efficiencies of equipment in the water-source heat pump market or the
sales distribution of shipments by efficiency level in the absence of
setting more-stringent standards. Instead, DOE applied an efficiency
trend from a commercial air conditioner rulemaking published 10 years
ago. DOE recognizes that manufacturers may continue to make future
improvements in water-source heat pump efficiencies even in the absence
of mandated energy conservation standards. In particular,
[[Page 42659]]
water-source heat pumps tend to be a fairly efficient product, and the
distribution of model availability indicates that many commercial
consumers are already purchasing equipment well above the baseline.
Consequently, it is likely that the true improvements in efficiency in
the absence of a standard may be higher than estimated. This
possibility increases the uncertainty of the energy savings estimates.
To the extent that manufacturers improve equipment efficiency and
commercial consumers choose to purchase improved products in the
absence of standards, the energy savings estimates would likely be
reduced.
In light of the above, DOE would again restate the statutory test
for adopting energy conservation standards more stringent than the
levels in ASHRAE Standard 90.1. DOE must have ``clear and convincing''
evidence in order to propose efficiency levels more stringent than
those specified in ASHRAE Standard 90.1-2013, and for the reasons
explained in this document, the totality of information does not meet
the level necessary to support these more-stringent efficiency levels
for water-source heat pumps. Consequently, although certain
stakeholders have recommended that DOE adopt higher efficiency levels
for one water-source heat pump class (as discussed in section III.B),
DOE has decided to adopt the efficiency levels in ASHRAE Standard 90.1-
2013 as amended energy conservation standards for all three water-
source heat pump equipment classes. Accordingly, Table VIII.37 presents
the amended energy conservation standards and compliance dates for
water-source heat pumps.
Table VIII.37--Amended Energy Conservation Standards for Water-Source Heat Pumps
----------------------------------------------------------------------------------------------------------------
Equipment type Efficiency level Compliance date
----------------------------------------------------------------------------------------------------------------
Water-Source (Water-to-Air, Water- 12.2 EER, 4.3 COP..................... October 9, 2015.
Loop) HP <17,000 Btu/h.
Water-Source (Water-to-Air, Water- 13.0 EER, 4.3 COP..................... October 9, 2015.
Loop) HP >=17,000 to <65,000 Btu/
h.
Water-Source (Water-to-Air, Water- 13.0 EER, 4.3 COP..................... October 9, 2015.
Loop) HP >=65,000 to 135,000 Btu/
h.
----------------------------------------------------------------------------------------------------------------
3. Commercial Oil-Fired Storage Water Heaters
EPCA specifies that, for any commercial and industrial equipment
addressed under 42 U.S.C. 6313(a)(6)(A)(i), DOE may prescribe an energy
conservation standard more stringent than the level for such equipment
in ASHRAE Standard 90.1, as amended, only if ``clear and convincing
evidence'' shows that a more-stringent standard would result in
significant additional conservation of energy and is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II))
In evaluating more-stringent efficiency levels for oil-fired
storage water-heating equipment than those specified by ASHRAE Standard
90.1-2013, DOE reviewed the results in terms of the significance of
their additional energy savings. DOE believes that the energy savings
from increasing national energy conservation standards for oil-fired
storage water heaters above the levels specified by ASHRAE Standard
90.1-2013 would be minimal. As noted in the January 2015 NOPR, DOE does
not have ``clear and convincing evidence'' that significant additional
conservation of energy would result from adoption of more-stringent
standard levels. 80 FR 1171, 1226-27. Comments on the NOPR did not
provide any additional information to alter this conclusion. Therefore,
DOE did not examine whether the levels are economically justified, and
DOE is adopting the energy efficiency levels for this equipment type as
set forth in ASHRAE Standard 90.1-2013. Table VIII.38 presents the
amended energy conservation standard and compliance date for oil-fired
storage water heaters.
Table VIII.38--Amended Energy Conservation Standards for Oil-Fired Storage Water Heaters
----------------------------------------------------------------------------------------------------------------
Equipment type Efficiency level (Et) Compliance date
----------------------------------------------------------------------------------------------------------------
Oil-Fired Storage Water Heaters 80%................................... October 9, 2015.
>105,000 Btu/h and <4,000 Btu/h/
gal.
----------------------------------------------------------------------------------------------------------------
IX. Procedural Issues and Regulatory Review
A. Review Under Executive Order 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 that the adopted standards for small air-cooled air
conditioners and heat pumps less than 65,000 Btu/h, water-source heat
pumps, and oil-fired storage water heaters address are as follows:
(1) Insufficient information and the high costs of gathering and
analyzing relevant information leads some consumers to miss
opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when the equipment purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of small air-cooled air conditioners and heat pumps less
than 65,000 Btu/h, water-source heat pumps, and oil-fired storage water
heaters that are not captured by the users of such equipment. These
benefits include externalities related to public health, environmental
protection, and national energy security that are not reflected in
energy prices, such as reduced emissions of air pollutants and
greenhouse gases that impact human health and global warming. DOE
attempts to quantify some of the external benefits through use of
social cost of carbon values.
In addition, DOE has determined that the proposed regulatory action
is not a ``significant regulatory action'' under section 3(f)(1) of
Executive Order 12866. Accordingly, DOE has not prepared a regulatory
impact analysis (RIA) for this rule, and the Office of Information and
Regulatory Affairs (OIRA) in the Office
[[Page 42660]]
of Management and Budget (OMB) has not reviewed this rule.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011) EO 13563
is supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than 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, OIRA 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 final rule 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).
For manufacturers of small air-cooled air conditioners and heat
pumps less than 65,000 Btu/h, water-source heat pumps, and oil-fired
storage water heaters, 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 77 FR
49991, 50000 (August 20, 2012), as codified at 13 CFR part 121. The
size standards are listed by North American Industry Classification
System (NAICS) code and industry description and are available at
http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf. The
ASHRAE equipment covered by this rule are classified under NAICS
333318, ``Other Commercial and Service Industry Machinery
Manufacturing'' (oil-fired water heaters) and NAICS 333415, ``Air-
Conditioning and Warm Air Heating Equipment and Commercial and
Industrial Refrigeration Equipment Manufacturing'' (all other equipment
addressed by the notice). For an entity to be considered as a small
business, the SBA sets a threshold of 1,000 employees or fewer for the
first category including commercial water heaters and 750 employees or
fewer for the second category.
DOE examined each of the manufacturers it found during its market
assessment and used publicly-available information to determine if any
manufacturers identified qualify as a small business under the SBA
guidelines discussed previously. (For a list of all manufacturers of
ASHRAE equipment covered by this rule, see chapter 2 of the final rule
TSD.) DOE's research involved individual company Web sites and
marketing research tools (e.g., Hoovers reports \51\) to create a list
of companies that manufacture the types of ASHRAE equipment affected by
this rule. DOE screened out companies that do not have domestic
manufacturing operations for ASHRAE equipment (i.e., manufacturers that
produce all of their ASHRAE equipment internationally). DOE also did
not consider manufacturers that are subsidiaries of parent companies
that exceed the applicable 1000-employee or 750-employee threshold set
by the SBA to be small businesses. DOE identified 16 companies that
qualify as small manufacturers: 5 central air conditioner manufacturers
(of the 23 total identified), 7 water-source heat pump manufacturers
(of the 18 total identified), and 7 oil-fired storage water heater
manufacturers (of the 10 total identified). Please note that there are
3 small manufacturers that produce equipment in more than one of these
categories.
---------------------------------------------------------------------------
\51\ For more information see: http://www.hoovers.com/.
---------------------------------------------------------------------------
Based on reviews of product listing data in the AHRI Directory for
commercial equipment, DOE estimates that small manufacturers account
for less than 1 percent of the market for covered three-phase central
air conditioner equipment and less than 5 percent of the market for
covered water-source heat pump equipment. In the oil-fired storage
water heat market, DOE understands that one of the small manufacturers
is a significant player in the market. That manufacturer accounts for
34 percent of product listings. DOE believes that the remaining oil-
fired storage water heater manufacturers account for less than 5
percent of the market.
DOE has reviewed this rule under the provisions of the Regulatory
Flexibility Act and the policies and procedures published on February
19, 2003. 68 FR 7990. As part of this rulemaking, DOE examined the
potential impacts of amended standard levels on manufacturers, as well
as the potential implications of the proposed revisions to the
commercial warm air furnace test procedures on compliance burdens.
DOE examined the impact of raising the standards to the amended
levels by examining the distribution of efficiencies of commercially-
available models in the AHRI Directory. For water-source heat pumps and
oil-fired storage water heaters, DOE found that all manufacturers in
the directory, including the small manufacturers, already offer
equipment at and above the amended standards. While these small
manufacturers would have to discontinue a fraction of their models in
order to comply with the standards adopted in this rulemaking, DOE does
not believe that there would be a significant burden placed on
industry,
[[Page 42661]]
as the market would shift to the new baseline levels when compliance
with the new standards is required.
For small commercial air-cooled air conditioners and heat pumps,
DOE found one small manufacturer of single-package units in the
directory with no models that could meet the adopted ASHRAE levels.
To estimate the impacts of the amended standard, DOE researched
prior energy conservation standard analyses of the covered equipment,
as well as any analyses of comparable single-phase products. The 2011
direct final rule for residential furnaces, central air conditioners,
and heat pumps included analysis for a 14 SEER efficiency level for
split-system as well as single-package air conditioners and heat pumps.
76 FR 37408 (June 27, 2011). The 2011 analysis indicated that
manufacturers would need to include additional heat exchanger surface
area and to include modulating components to reach the 14 SEER level
from a 13 SEER baseline. The 2011 analyses further concluded that these
improvements could be made without significant investments in equipment
and production assets. The amended levels for oil-fired storage water
heaters or water-source heat pumps have not been analyzed as a part of
any prior energy conservation standard rulemakings.
However, DOE understands that the ASHRAE standards were developed
through an industry consensus process, which included consideration of
manufacturer input, including the impacts to small manufacturers, when
increasing the efficiency of equipment. Because EPCA requires DOE to
adopt the ASHRAE levels or to propose higher standards, DOE is limited
in terms of the steps it can take to mitigate impacts to small
businesses, but DOE reasons that such mitigation has already occurred
since small manufacturers had input into the development of the
industry consensus standard that DOE is statutorily required to adopt.
As for the specific changes being adopted for the commercial warm
air furnace test procedure, the test procedures (ANSI Z21.47-2012 and
ASHRAE 103-2007) that DOE is incorporating by reference do not include
any updates to the methodology in those sections utilized in the DOE
test procedure. Thus, DOE has concluded that this test procedure
rulemaking would keep the DOE test procedure current with the latest
version of the applicable industry testing standards, but it will not
change the methodology used to generate ratings of commercial warm air
furnaces. Consequently, the test procedure amendments would not be
expected to have a substantive impact on manufacturers, either large or
small.
For the reasons stated previously, DOE did not prepare an initial
regulatory flexibility analysis for the final rule. DOE will transmit
its certification and a supporting statement of factual basis to the
Chief Counsel for Advocacy of the SBA for review pursuant to 5 U.S.C.
605(b).
C. Review Under the Paperwork Reduction Act of 1995
Manufacturers of the ASHRAE equipment subject to this final rule
must certify to DOE that their equipment complies with any applicable
energy conservation standards. In certifying compliance, manufacturers
must test their equipment according to the applicable DOE test
procedures for the relevant ASHRAE equipment, including any amendments
adopted for those test procedures. DOE has established regulations for
the certification and recordkeeping requirements for all covered
consumer products and commercial equipment, including the ASHRAE
equipment in this final rule. 76 FR 12422 (March 7, 2011); 80 FR 5099
(Jan. 30, 2015). The collection-of-information requirement for the
certification and recordkeeping is subject to review and approval by
OMB under the Paperwork Reduction Act (PRA). This requirement has been
approved by OMB under OMB control number 1910-1400. Public reporting
burden for the certification is estimated to average 30 hours per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the 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 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 rule. DOE's CX determination for this rule is
available at http://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have Federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
rule and has determined that it would not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. EPCA governs
and prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of this final rule.
States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297)
Therefore, no further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of 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
[[Page 42662]]
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 final 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 regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this final rule contains neither an
intergovernmental mandate nor a mandate that may result in the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year.
Accordingly, no assessment or analysis is required under the UMRA.
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 18, 1988), DOE has determined that this 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 final rule under the OMB
and DOE guidelines and has concluded that it is consistent with
applicable policies in those guidelines.
K. Review Under Executive Order 13211
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 significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth
amended energy conservation standards for certain types of ASHRAE
equipment, is not a significant energy action because the standards are
not a significant regulatory action under Executive Order 12866 and are
not likely to have a significant adverse effect on the supply,
distribution, or use of energy, nor has it been designated as such by
the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on the final rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' Id at FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent
[[Page 42663]]
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.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
N. Description of Materials Incorporated by Reference
In this final rule, DOE updates its incorporations by reference to
two industry standards related to the test procedure for commercial
warm-air furnaces in 10 CFR 431.76. These standards include ANSI
Z21.47-2012, ``Standards for Gas-Fired Central Furnaces,'' and ASHRAE
Standard 103-2007, ``Method of Testing for Annual Fuel Utilization
Efficiency of Residential Central Furnaces and Boilers.'' sections
7.2.2.4, 7.8, 9.2, and 11.3.7. These are the most up-to-date industry-
accepted standards used by manufacturers when testing furnaces in the
United States. DOE previously referenced earlier versions of these same
industry standards.
X. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Incorporation by reference, Reporting
and recordkeeping requirements.
Issued in Washington, DC, on June 30, 2015.
David T. Danielson,
Assistant Secretary of Energy, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE amends part 431 of
Chapter II, Subchapter D, of Title 10 of the Code of Federal
Regulations as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 431.75 is amended by revising paragraphs (b) and (c) to read
as follows:
Sec. 431.75 Materials incorporated by reference.
* * * * *
(b) ANSI. American National Standards Institute. 25 W. 43rd Street,
4th Floor, New York, NY 10036. (212) 642-4900 or go to http://www.ansi.org.
(1) ANSI Z21.47-2012, (``ANSI Z21.47'') ``Standard for Gas-fired
Central Furnaces,'' approved March 27, 2012, IBR approved for Sec.
431.76.
(2) [Reserved]
(c) ASHRAE. American Society of Heating, Refrigerating and Air-
Conditioning Engineers Inc., 1791 Tullie Circle NE., Atlanta, Georgia
30329, (404) 636-8400, or go to: http://www.ashrae.org.
(1) ANSI/ASHRAE Standard 103-2007, (``ASHRAE 103''), ``Method of
Testing for Annual Fuel Utilization Efficiency of Residential Central
Furnaces and Boilers,'' sections 7.2.2.4, 7.8, 9.2, and 11.3.7,
approved June 27, 2007, IBR approved for Sec. 431.76.
(2) [Reserved]
* * * * *
0
3. Section 431.76 is revised to read as follows:
Sec. 431.76 Uniform test method for the measurement of energy
efficiency of commercial warm air furnaces.
(a) Scope. This section covers the test requirements used to
measure the energy efficiency of commercial warm air furnaces with a
rated maximum input of 225,000 Btu per hour or more. On and after July
11, 2016, any representations made with respect to the energy use or
efficiency of commercial warm air furnaces must be made in accordance
with the results of testing pursuant to this section. At that time, you
must use the relevant procedures in ANSI Z21.47 or UL 727-2006
(incorporated by reference, see Sec. 431.75). On and after August 17,
2015 and prior to July 11, 2016, manufacturers must test commercial
warm air furnaces in accordance with this amended section or the
section as it appeared at 10 CFR part 430, subpart B in the 10 CFR
parts 200 to 499 edition revised January 1, 2014. DOE notes that,
because testing under this section is required as of July 11, 2016,
manufacturers may wish to begin using this amended test procedure
immediately. Any representations made with respect to the energy use or
efficiency of such commercial warm air furnaces must be made in
accordance with whichever version is selected.
(b) Testing. Where this section prescribes use of ANSI Z21.47 or UL
727-2006 (incorporated by reference, see Sec. 431.75), perform only
the procedures pertinent to the measurement of the steady-state
efficiency, as specified in paragraph (c) of this section.
(c) Test set-up. (1) Test set-up for gas-fired commercial warm air
furnaces. The test set-up, including flue requirement, instrumentation,
test conditions, and measurements for determining thermal efficiency is
as specified in sections 1.1 (Scope), 2.1 (General), 2.2 (Basic Test
Arrangements), 2.3 (Test Ducts and Plenums), 2.4 (Test Gases), 2.5
(Test Pressures and Burner Adjustments), 2.6 (Static Pressure and Air
Flow Adjustments), 2.39 (Thermal Efficiency), and 4.2.1 (Basic Test
Arrangements for Direct Vent Central Furnaces) of ANSI Z21.47
(incorporated by reference, see Sec. 431.75). The thermal efficiency
test must be conducted only at the normal inlet test pressure, as
specified in section 2.5.1 of ANSI Z21.47, and at the maximum hourly
Btu input rating specified by the manufacturer for the product being
tested.
(2) Test setup for oil-fired commercial warm air furnaces. The test
setup, including flue requirement, instrumentation, test conditions,
and measurement for measuring thermal efficiency is as specified in
sections 1 (Scope), 2 (Units of Measurement), 3 (Glossary), 37
(General), 38 and 39 (Test Installation), 40 (Instrumentation, except
40.4 and 40.6.2 through 40.6.7, which are not required for the thermal
efficiency test), 41 (Initial Test Conditions), 42 (Combustion Test--
Burner and Furnace), 43.2 (Operation Tests), 44 (Limit Control Cutout
Test), 45 (Continuity of Operation Test), and 46 (Air Flow, Downflow or
Horizontal Furnace Test), of UL 727-2006 (incorporated by reference,
see Sec. 431.75). You must conduct a fuel oil analysis for heating
value, hydrogen content, carbon content, pounds per gallon, and
American Petroleum Institute (API) gravity as specified in section
8.2.2 of HI BTS-2000 (incorporated by reference, see Sec. 431.75). The
steady-state combustion conditions, specified in Section 42.1 of UL
727-2006, are attained when variations of not more than 5[emsp14][deg]F
in the
[[Page 42664]]
measured flue gas temperature occur for three consecutive readings
taken 15 minutes apart.
(d) Additional test measurements--(1) Measurement of flue
CO2 (carbon dioxide) for oil-fired commercial warm air
furnaces. In addition to the flue temperature measurement specified in
section 40.6.8 of UL 727-2006 (incorporated by reference, see Sec.
431.75), you must locate one or two sampling tubes within six inches
downstream from the flue temperature probe (as indicated on Figure 40.3
of UL 727-2006). If you use an open end tube, it must project into the
flue one-third of the chimney connector diameter. If you use other
methods of sampling CO2, you must place the sampling tube so
as to obtain an average sample. There must be no air leak between the
temperature probe and the sampling tube location. You must collect the
flue gas sample at the same time the flue gas temperature is recorded.
The CO2 concentration of the flue gas must be as specified
by the manufacturer for the product being tested, with a tolerance of
0.1 percent. You must determine the flue CO2
using an instrument with a reading error no greater than 0.1 percent.
(2) Procedure for the measurement of condensate for a gas-fired
condensing commercial warm air furnace. The test procedure for the
measurement of the condensate from the flue gas under steady-state
operation must be conducted as specified in sections 7.2.2.4, 7.8, and
9.2 of ASHRAE 103 (incorporated by reference, see Sec. 431.75) under
the maximum rated input conditions. You must conduct this condensate
measurement for an additional 30 minutes of steady-state operation
after completion of the steady-state thermal efficiency test specified
in paragraph (c) of this section.
(e) Calculation of thermal efficiency --(1) Gas-fired commercial
warm air furnaces. You must use the calculation procedure specified in
section 2.39, Thermal Efficiency, of ANSI Z21.47 (incorporated by
reference, see Sec. 431.75).
(2) Oil-fired commercial warm air furnaces. You must calculate the
percent flue loss (in percent of heat input rate) by following the
procedure specified in sections 11.1.4, 11.1.5, and 11.1.6.2 of the HI
BTS-2000 (incorporated by reference, see Sec. 431.75). The thermal
efficiency must be calculated as: Thermal Efficiency (percent) = 100
percent - flue loss (in percent).
(f) Procedure for the calculation of the additional heat gain and
heat loss, and adjustment to the thermal efficiency, for a condensing
commercial warm air furnace. (1) You must calculate the latent heat
gain from the condensation of the water vapor in the flue gas, and
calculate heat loss due to the flue condensate down the drain, as
specified in sections 11.3.7.1 and 11.3.7.2 of ASHRAE 103 (incorporated
by reference, see Sec. 431.75), with the exception that in the
equation for the heat loss due to hot condensate flowing down the drain
in section 11.3.7.2, the assumed indoor temperature of 70[emsp14][deg]F
and the temperature term TOA must be replaced by the
measured room temperature as specified in section 2.2.8 of ANSI Z21.47
(incorporated by reference, see Sec. 431.75).
(2) Adjustment to the thermal efficiency for condensing furnaces.
You must adjust the thermal efficiency as calculated in paragraph
(e)(1) of this section by adding the latent gain, expressed in percent,
from the condensation of the water vapor in the flue gas, and
subtracting the heat loss (due to the flue condensate down the drain),
also expressed in percent, both as calculated in paragraph (f)(1) of
this section, to obtain the thermal efficiency of a condensing furnace.
0
4. Section 431.92 is amended by adding in alphabetical order the
definition of ``water-source heat pump'' to read as follows:
Sec. 431.92 Definitions concerning commercial air conditioners and
heat pumps.
* * * * *
Water-source heat pump means a single-phase or three-phase reverse-
cycle heat pump that uses a circulating water loop as the heat source
for heating and as the heat sink for cooling. The main components are a
compressor, refrigerant-to-water heat exchanger, refrigerant-to-air
heat exchanger, refrigerant expansion devices, refrigerant reversing
valve, and indoor fan. Such equipment includes, but is not limited to,
water-to-air water-loop heat pumps.
0
5. Section 431.97 is amended by:
0
a. Revising paragraph (b);
0
b. Redesignating Tables 4 through 8 in paragraphs (c), (d), (e) and
(f), as Tables 5 through 9 respectively; and
0
c. Revising the introductory text of paragraph (c).
The revisions read as follows:
Sec. 431.97 Energy efficiency standards and their compliance dates.
* * * * *
(b) Each commercial air conditioner or heat pump (not including
single package vertical air conditioners and single package vertical
heat pumps, packaged terminal air conditioners and packaged terminal
heat pumps, computer room air conditioners, and variable refrigerant
flow systems) manufactured on or after the compliance date listed in
the corresponding table must meet the applicable minimum energy
efficiency standard level(s) set forth in Tables 1, 2, 3, and 4 of this
section.
Table 1 to Sec. 431.97--Minimum Cooling Efficiency Standards for Air-Conditioning and Heating Equipment (Not Including Single Package Vertical Air
Conditioners and Single Package Vertical Heat Pumps, Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps, Computer Room Air
Conditioners, and Variable Refrigerant Flow Multi-Split Air Conditioners and Heat Pumps)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance date:
Equipment category Cooling capacity Sub-category Heating type Efficiency level equipment manufactured
on and after. . .
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h......... AC All........................ SEER = 13............. June 16, 2008.
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Split-
System).
HP All........................ SEER = 13............. June 16, 2008 \1\.
Small Commercial Packaged Air- <65,000 Btu/h......... AC All........................ SEER = 13............. June 16, 2008 \1\.
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Single-
Package).
[[Page 42665]]
HP All........................ SEER = 13............. June 16, 2008 \1\.
Small Commercial Packaged Air- >=65,000 Btu/h and AC No Heating or Electric EER = 11.2............ January 1, 2010.
Conditioning and Heating Equipment <135,000 Btu/h. Resistance Heating.
(Air-Cooled).
All Other Types of Heating. EER = 11.0............ January 1, 2010.
HP No Heating or Electric EER = 11.0............ January 1, 2010.
Resistance Heating.
All Other Types of Heating. EER = 10.8............ January 1, 2010.
Large Commercial Packaged Air- >=135,000 Btu/h and AC No Heating or Electric EER = 11.0............ January 1, 2010.
Conditioning and Heating Equipment <240,000 Btu/h. Resistance Heating.
(Air-Cooled).
All Other Types of Heating. EER = 10.8............ January 1, 2010.
HP No Heating or Electric EER = 10.6............ January 1, 2010.
Resistance Heating.
All Other Types of Heating. EER = 10.4............ January 1, 2010.
Very Large Commercial Packaged Air- >=240,000 Btu/h and AC No Heating or Electric EER = 10.0............ January 1, 2010.
Conditioning and Heating Equipment <760,000 Btu/h. Resistance Heating.
(Air-Cooled).
All Other Types of Heating. EER = 9.8............. January 1, 2010.
HP No Heating or Electric EER = 9.5............. January 1, 2010.
Resistance Heating.
All Other Types of Heating. EER = 9.3............. January 1, 2010.
Small Commercial Package Air- <65,000 Btu/h......... AC All........................ EER = 12.1............ October 29, 2003.
Conditioning and Heating Equipment
(Water-Cooled).
>=65,000 Btu/h and AC No Heating or Electric EER = 12.1............ June 1, 2013.
<135,000 Btu/h. Resistance Heating.
All Other Types of Heating. EER = 11.9............ June 1, 2013.
Large Commercial Package Air- >=135,000 and <240,000 AC No Heating or Electric EER = 12.5............ June 1, 2014.
Conditioning and Heating Equipment Btu/h. Resistance Heating.
(Water-Cooled).
All Other Types of Heating. EER = 12.3............ June 1, 2014.
Very Large Commercial Package Air- >=240,000 and <760,000 AC No Heating or Electric EER = 12.4............ June 1, 2014.
Conditioning and Heating Equipment Btu/h. Resistance Heating.
(Water-Cooled).
All Other Types of Heating. EER = 12.2............ June 1, 2014.
Small Commercial Package Air- <65,000 Btu/h......... AC All........................ EER = 12.1............ October 29, 2003.
Conditioning and Heating Equipment
(Evaporatively-Cooled).
>=65,000 and <135,000 AC No Heating or Electric EER = 12.1............ June 1, 2013.
Btu/h. Resistance Heating.
All Other Types of Heating. EER = 11.9............ June 1, 2013.
Large Commercial Package Air- >=135,000 and <240,000 AC No Heating or Electric EER = 12.0............ June 1, 2014.
Conditioning and Heating Equipment Btu/h. Resistance Heating.
(Evaporatively-Cooled).
All Other Types of Heating. EER = 11.8............ June 1, 2014.
Very Large Commercial Package Air- >=240,000 and <760,000 AC No Heating or Electric EER = 11.9............ June 1, 2014.
Conditioning and Heating Equipment Btu/h. Resistance Heating.
(Evaporatively-Cooled).
All Other Types of Heating. EER = 11.7............ June 1, 2014.
Small Commercial Packaged Air- <17,000 Btu/h......... HP All........................ EER = 11.2............ October 29, 2003 \2\.
Conditioning and Heating Equipment
(Water-Source: Water-to-Air, Water-
Loop).
>=17,000 Btu/h and HP All........................ EER = 12.0............ October 29, 2003 \2\.
<65,000 Btu/h.
[[Page 42666]]
>=65,000 Btu/h and HP All........................ EER = 12.0............ October 29, 2003 \2\.
<135,000 Btu/h.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2017. See Table 3 of this section for updated efficiency standards.
\2\ And manufactured before October 9, 2015. See Table 3 of this section for updated efficiency standards.
Table 2 to Sec. 431.97--Minimum Heating Efficiency Standards for Air-Conditioning and Heating Equipment (Heat
Pumps)
----------------------------------------------------------------------------------------------------------------
Compliance date:
Equipment category Cooling capacity Efficiency level equipment manufactured
on and after. . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h.......... HSPF = 7.7............. June 16, 2008.\1\
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Split-System).
Small Commercial Packaged Air- <65,000 Btu/h.......... HSPF = 7.7............. June 16, 2008.\1\
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Single-
Package).
Small Commercial Packaged Air- >=65,000 Btu/h and COP = 3.3.............. January 1, 2010.
Conditioning and Heating Equipment <135,000 Btu/h.
(Air-Cooled).
Large Commercial Packaged Air- >=135,000 Btu/h and COP = 3.2.............. January 1, 2010.
Conditioning and Heating Equipment <240,000 Btu/h.
(Air-Cooled).
Very Large Commercial Packaged Air- >=240,000 Btu/h and COP = 3.2.............. January 1, 2010.
Conditioning and Heating Equipment <760,000 Btu/h.
(Air-Cooled).
Small Commercial Packaged Air- <135,000 Btu/h......... COP = 4.2.............. October 29, 2003.\2\
Conditioning and Heating Equipment
(Water-Source: Water-to-Air, Water-
Loop).
----------------------------------------------------------------------------------------------------------------
\1\ And manufactured before January 1, 2017. See Table 3 of this section for updated efficiency standards.
\2\ And manufactured before October 9, 2015. See Table 3 of this section for updated efficiency standards.
Table 3 to Sec. 431.97--Updates to the Minimum Cooling Efficiency Standards for Certain Air-Conditioning and
Heating Equipment
----------------------------------------------------------------------------------------------------------------
Compliance
Cooling Efficiency date: equipment
Equipment category capacity Sub-category Heating type level manufactured on
and after
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h.. AC All SEER = 13.0.... June 16, 2008.
Conditioning and Heating
Equipment (Air-Cooled, 3-
Phase, Split-System).
............... HP All SEER = 14.0.... January 1,
2017.
Small Commercial Packaged Air- <65,000 Btu/h.. AC All SEER = 14.0.... January 1,
Conditioning and Heating 2017.
Equipment (Air-Cooled, 3-
Phase, Single-Package).
............... HP All SEER = 14.0.... January 1,
2017.
Small Commercial Packaged Air- <17,000 Btu/h.. HP All EER = 12.2..... October 9,
Conditioning and Heating 2015.
Equipment (Water-Source:
Water-to-Air, Water-Loop).
>=17,000 Btu/h HP All EER = 13.0..... October 9,
and <65,000 2015.
Btu/h.
>=65,000 Btu/h HP All EER = 13.0..... October 9,
and <135,000 2015.
Btu/h.
----------------------------------------------------------------------------------------------------------------
[[Page 42667]]
Table 4 to Sec. 431.97--Updates to the Minimum Heating Efficiency Standards for Certain Air-Conditioning and
Heating Equipment (Heat Pumps)
----------------------------------------------------------------------------------------------------------------
Compliance date:
Equipment category Cooling capacity Efficiency level equipment manufactured
on and after . . .
----------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air- <65,000 Btu/h.......... HSPF = 8.2............. January 1, 2017.
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Split-System).
Small Commercial Packaged Air- <65,000 Btu/h.......... HSPF = 8.0............. January 1, 2017.
Conditioning and Heating Equipment
(Air-Cooled, 3-Phase, Single-
Package).
Small Commercial Packaged Air- <135,000 Btu/h......... COP = 4.3.............. October 9, 2015.
Conditioning and Heating Equipment
(Water-Source: Water-to-Air, Water-
Loop).
----------------------------------------------------------------------------------------------------------------
(c) Each packaged terminal air conditioner (PTAC) and packaged
terminal heat pump (PTHP) manufactured on or after January 1, 1994, and
before October 8, 2012 (for standard size PTACs and PTHPs) and before
October 7, 2010 (for non-standard size PTACs and PTHPs) must meet the
applicable minimum energy efficiency standard level(s) set forth in
Table 5 of this section. Each PTAC and PTHP manufactured on or after
October 8, 2012 (for standard size PTACs and PTHPs) and on or after
October 7, 2010 (for non-standard size PTACs and PTHPs) must meet the
applicable minimum energy efficiency standard level(s) set forth in
Table 6 of this section.
* * * * *
0
6. Section 431.110 is amended by revising the table to read as follows:
Sec. 431.110 Energy conservation standards and their effective dates.
* * * * *
----------------------------------------------------------------------------------------------------------------
Energy conservation standard \a\
------------------------------------------------------
Minimum
thermal Minimum
efficiency thermal
Maximum standby loss (equipment efficiency
Equipment category Size \c\ (equipment manufactured (equipment
manufactured on and on and after manufactured
after October 29, October 29, on and after
2003) \b\ 2003 and October 9,
before October 2015) \b\
9, 2015) \b\
----------------------------------------------------------------------------------------------------------------
Electric storage water heaters.... All.................. 0.30 + 27/Vm (%/hr).. N/A N/A
Gas-fired storage water heaters... <=155,000 Btu/hr..... Q/800 + 80% 80%
110(Vr)[frac12] (Btu/
hr).
>155,000 Btu/hr...... Q/800 + 80% 80%
110(Vr)[frac12] (Btu/
hr).
Oil-fired storage water heaters... <=155,000 Btu/hr..... Q/800 + 78% 80%
110(Vr)[frac12] (Btu/
hr).
>155,000 Btu/hr...... Q/800 + 78% 80%
110(Vr)[frac12] (Btu/
hr).
Gas-fired instantaneous water <10 gal.............. N/A.................. 80% 80%
heaters and hot water supply
boilers.
>=10 gal............. Q/800 + 80% 80%
110(Vr)[frac12] (Btu/
hr).
Oil-fired instantaneous water <10 gal.............. N/A.................. 80% 80%
heaters and hot water supply
boilers.
>=10 gal............. Q/800 + 78% 78%
110(Vr)[frac12] (Btu/
hr).
----------------------------------------------------------------------------------------------------------------
Minimum thermal
Equipment Category Size insulation
------------------------------------------------------------------------
Unfired hot water storage tank.. All............... R-12.5
------------------------------------------------------------------------
\a\Vm is the measured storage volume, and Vr is the rated volume, both
in gallons. Q is the nameplate input rate in Btu/hr.
\b\ For hot water supply boilers with a capacity of less than 10
gallons: (1) The standards are mandatory for products manufactured on
and after October 21, 2005, and (2) products manufactured prior to
that date, and on or after October 23, 2003, must meet either the
standards listed in this table or the applicable standards in subpart
E of this part for a ``commercial packaged boiler.''
\c\ Water heaters and hot water supply boilers having more than 140
gallons of storage capacity need not meet the standby loss requirement
if: (1) The tank surface area is thermally insulated to R-12.5 or
more; (2) a standing pilot light is not used; and (3) for gas or oil-
fired storage water heaters, they have a fire damper or fan assisted
combustion.
Note: The following letter will not appear in the Code of
Federal Regulations.
March 24, 2015
Anne Harkavy
Deputy General Counsel for Litigation, Regulation and Enforcement
U.S. Department of Energy Washington, DC
Dear Deputy General Counsel Harkavy: I am responding to your
January 2, 2015 letter seeking the views of the Attorney General about
the potential impact on competition of proposed energy conservation
standards for certain types of commercial heating, air-conditioning,
and water-heating equipment. Your request was submitted under Section
325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as
amended 42 U.S.C. 6295(o)(2)(B)(i)(V), which requires the Attorney
General to make a determination of the impact of any lessening of
competition that is likely to result from the imposition of proposed
energy conservation standards. The Attorney General's responsibility
for responding to requests from other departments about the effect
[[Page 42668]]
of a program on competition has been delegated to the Assistant
Attorney General for the Antitrust Division in 28 CFR 0.40(g).
In conducting its analysis, the Antitrust Division examines whether
a proposed standard may lessen competition, for example, by
substantially limiting consumer choice, by placing certain
manufacturers at an unjustified competitive disadvantage, or by
inducing avoidable inefficiencies in production or distribution of
particular products. A lessening of competition could result in higher
prices to manufacturers and consumers, and perhaps thwart the intent of
the revised standards by inducing substitution to less efficient
products.
We have reviewed the proposed standards contained in the Notice of
Proposed Rulemaking (80 FR January 8, 2015) (NOPR). We have also
reviewed supplementary information submitted to the Attorney General by
the Department of Energy, including a transcript of the public meeting
held on the proposed standards on February 6, 2015 Based on this
review, our conclusion is that the proposed energy conservation
standards for commercial heating, air-conditioning, and water-heating
equipment are unlikely to have a significant adverse impact on
competition.
Sincerely,
William J. Baer
[FR Doc. 2015-16927 Filed 7-16-15; 8:45 am]
BILLING CODE 6450-01-P