[Federal Register Volume 75, Number 186 (Monday, September 27, 2010)]
[Proposed Rules]
[Pages 59470-59577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23692]
[[Page 59469]]
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Part IV
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for
Residential Refrigerators, Refrigerator-Freezers, and Freezers;
Proposed Rule
Federal Register / Vol. 75 , No. 186 / Monday, September 27, 2010 /
Proposed Rules
[[Page 59470]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[Docket Number EE-2008-BT-STD-0012]
RIN 1904-AB79
Energy Conservation Program: Energy Conservation Standards for
Residential Refrigerators, Refrigerator-Freezers, and Freezers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking (NOPR) and public meeting.
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SUMMARY: The Energy Policy and Conservation Act (EPCA) prescribes
energy conservation standards for various consumer products and
commercial and industrial equipment, including residential
refrigerators, refrigerator-freezers, and freezers. EPCA also requires
the U.S. Department of Energy (DOE) to determine whether more
stringent, amended standards for these products are technologically
feasible and economically justified, and would save a significant
amount of energy. In this NOPR, DOE proposes amended energy
conservation standards for residential refrigerators, refrigerator-
freezers, and freezers. The NOPR also announces a public meeting to
receive comment on these proposed standards and associated analyses and
results.
DATES: DOE will hold a public meeting on Thursday, October 14, 2010,
from 9 a.m. to 4 p.m., in Washington, DC. DOE must receive requests to
speak at the public meeting before 4 p.m., Thursday, September 30,
2010. Additionally, DOE plans to conduct the public meeting via
webinar. To participate via webinar, DOE must be notified by no later
than Thursday, October 7, 2010. Participants seeking to present
statements in person during the meeting must submit to DOE a signed
original and an electronic copy of statements to be given at the public
meeting before 4 p.m., Thursday, October 7, 2010.
DOE will accept comments, data, and information regarding this
notice of proposed rulemaking (NOPR) before and after the public
meeting, but no later than November 26, 2010. See section VII, ``Public
Participation,'' for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW.,
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at
(202) 586-2945. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures,
requiring a 30-day advance notice. Any foreign national wishing to
participate in the meeting should advise DOE as soon as possible by
contacting Ms. Brenda Edwards at (202) 586-2945 to initiate the
necessary procedures.
Any comments submitted must identify the NOPR for Energy
Conservation Standards for Refrigerators, Refrigerator-Freezers, and
Freezers, and provide docket number EE-2008-BT-STD-0012 and/or
regulatory information number (RIN) number 1904-AB79. Comments may be
submitted using any of the following methods:
1. Federal eRulemaking Portal: http://www.regulations.gov. Follow
the instructions for submitting comments.
2. E-mail: [email protected]. Include the docket
number and/or RIN in the subject line of the message.
3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW.,
Washington, DC 20585-0121. Please submit one signed original paper
copy.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. Please submit one
signed original paper copy.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section VII of this document
(Public Participation).
Docket: For access to the docket to read background documents or
comments received, visit the U.S. Department of Energy, Resource Room
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, Washington, DC, (202) 586-2945, between 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays. Please call Ms. Brenda Edwards
at the above telephone number for additional information regarding
visiting the Resource Room.
FOR FURTHER INFORMATION CONTACT: Subid Wagley, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington,
DC 20585-0121, 202-287-1414, e-mail: [email protected] or Michael
Kido, U.S. Department of Energy, Office of the General Counsel, GC-71,
1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-
9507, e-mail: [email protected].
For information on how to submit or review public comments and on
how to participate in the public meeting, contact Ms. Brenda Edwards,
U.S. Department of Energy, Office of Energy Efficiency and Renewable
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue,
SW., Washington, DC 20585-0121. Telephone: (202) 586-2945. E-mail:
[email protected]
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Refrigerators,
Refrigerator-Freezers, and Freezers
III. General Discussion
A. Test Procedures
1. Test Procedure Rulemaking Schedule
2. Icemaking
3. Circumvention
4. Variable Anti-Sweat Heater Control
5. Standby and Off Mode Energy Use
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion
A. Market and Technology Assessment
1. Exclusion of Wine Coolers From This Rulemaking
2. Product Classes
a. French Door Refrigerators With Through-the-Door Ice Service
b. Chest Freezers With Automatic Defrost
c. All-Refrigerators
d. Products With Automatic Icemakers
e. Built-In Products
f. Combining Product Classes 2 With 1, and 12 With 11
g. Modification of the Definition for Compact Products
B. Screening Analysis
1. Discussion of Comments
a. Alternative Refrigerants
b. Alternative Foam-Blowing Agents
c. Vacuum-Insulated Panels
2. Technologies Considered
C. Engineering Analysis
1. Product Classes Analyzed/Representative Products
2. Baseline Energy Use Curves
a. Baseline Energy Use Under the Proposed New Test Procedure
[[Page 59471]]
b. Change of Energy Use Equation Slope
c. Energy Use Measurement Changes Associated With Other Test
Procedure Changes
3. Efficiency Levels Analyzed
4. Engineering Analysis Treatment of Design Options
a. Heat Exchangers
b. Variable Speed Compressors for Compact Products
c. Variable Anti-Sweat Heaters
d. Vacuum-Insulated Panels
5. Energy Modeling
6. Cost-Efficiency Curves
7. Development of Standards for Low-Volume Products
D. Markups To Determine Product Cost
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analyses
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Energy Price Projections
6. Maintenance and Repair Costs
7. Product Lifetime
8. Discount Rates
9. Compliance Date of Amended Standards
10. Base Case Efficiency Distribution
11. Inputs to Payback Period Analysis
12. Rebuttable-Presumption Payback Period
G. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Shipments
2. Forecasted Efficiency in the Base Case and Standards Cases
3. Site-to-Source Energy Conversion
4. Discount Rates
5. Benefits From Effects of Standards on Energy Prices
H. Consumer Subgroup Analysis
I. Manufacturer Impact Analysis
1. Overview
a. Phase 1: Industry Profile
b. Phase 2: Industry Cash-Flow Analysis
c. Phase 3: Subgroup Impact Analysis
2. GRIM Analysis
a. GRIM Key Inputs
b. GRIM Scenarios
3. Discussion of Comments
a. Potential Regulation of HFCs
b. Manufacturer Tax Credits
c. Standards-Induced Versus Normal Capital Conversion Costs
d. Manufacturer Markups
4. Manufacturer Interviews
a. Potential for Significant Changes to Manufacturing Facilities
b. VIPs
c. Impact on U.S. Production and Jobs
d. Impacts to Product Utility
e. Technical Difficulties Associated With Higher Efficiency
Levels
f. Changes in Consumer Behavior
g. Separate Product Classes for Built-Ins
h. Test Procedure Concerns
J. Employment Impact Analysis
K. Utility Impact Analysis
L. Environmental Analysis
M. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
c. Current Approach and Key Assumptions
2. Valuation of Other Emissions Reductions
N. Demand Response
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Cash-Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Sub-Group of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
C. Proposed Standards
1. Standard-Size Refrigerator-Freezers
2. Standard-Size Freezers
3. Compact Refrigeration Products
4. Built-In Refrigeration Products
5. Summary of Benefits and Costs (Annualized) of Proposed
Standards
6. Energy Standard Round-off
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Requests To Speak
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
The Energy Policy and Conservation Act (42 U.S.C. 6291 et seq.;
EPCA or the Act), as amended, provides that any new or amended energy
conservation standard DOE prescribes for certain consumer products,
such as residential refrigerators, refrigerator-freezers, and freezers
(collectively referred to in this document as ``refrigeration
products''), shall be designed to ``achieve the maximum improvement in
energy efficiency * * * which the Secretary determines is
technologically feasible and economically justified.'' (42 U.S.C.
6295(o)(2)(A)) The new or amended standard must ``result in significant
conservation of energy.'' (42 U.S.C. 6295(o)(3)(B)) In accordance with
these and other statutory provisions discussed in this notice, DOE
proposes amended energy conservation standards for refrigeration
products. The proposed standards, which are the maximum allowable
energy use expressed as a function of the calculated adjusted volume of
a given product, are shown in Table I.1. These proposed standards, if
adopted, would apply to all products listed in Table I.1 and
manufactured in, or imported into, the United States on or after
January 1, 2014.
Table I.1--Proposed Refrigeration Product Energy Conservation Standards
[Effective starting 1/1/2014]
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Equations for maximum energy use (kWh/yr)
Product class ------------------------------------------------------------------------
based on AV (ft\3\) based on av (L)
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1. Refrigerators and refrigerator- 7.99AV + 225.0 0.282av + 225.0
freezers with manual defrost.
1A. All-refrigerators--manual defrost.. 6.79AV + 193.6 0.240av + 193.6
2. Refrigerator-freezers--partial 7.99AV + 225.0 0.282av + 225.0
automatic defrost.
3. Refrigerator-freezers--automatic 8.04AV + 232.7 0.284av + 232.7
defrost with top-mounted freezer
without an automatic icemaker.
3-BI. Built-in refrigerator-freezer-- 8.57AV + 248.2 0.303av + 248.2
automatic defrost with top-mounted
freezer without an automatic icemaker.
[[Page 59472]]
3I. Refrigerator-freezers--automatic 8.04AV + 316.7 0.284av + 316.7
defrost with top-mounted freezer with
an automatic icemaker without through-
the-door ice service.
3I-BI. Built-in refrigerator-freezers-- 8.57AV + 332.2 0.303av + 332.2
automatic defrost with top-mounted
freezer with an automatic icemaker
without through-the-door ice service.
3A. All-refrigerators--automatic 7.07AV + 201.6 0.250av + 201.6
defrost.
3A-BI. Built-in All-refrigerators-- 7.55AV + 215.1 0.266av + 215.1
automatic defrost.
4. Refrigerator-freezers--automatic 8.48AV + 296.5 0.299av + 296.5
defrost with side-mounted freezer
without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers-- 9.04AV + 316.2 0.319av + 316.2
automatic defrost with side-mounted
freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic 8.48AV + 380.5 0.299av + 380.5
defrost with side-mounted freezer with
an automatic icemaker without through-
the-door ice service.
4I-BI. Built-In Refrigerator-freezers-- 9.04AV + 400.2 0.319av + 400.2
automatic defrost with side-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5. Refrigerator-freezers--automatic 8.80AV + 315.4 0.311av + 315.4
defrost with bottom-mounted freezer
without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers-- 9.35AV + 335.1 0.330av + 335.1
automatic defrost with bottom-mounted
freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic 8.80AV + 399.4 0.311av + 399.4
defrost with bottom-mounted freezer
with an automatic icemaker without
through-the-door ice service.
5I-BI. Built-In Refrigerator-freezers-- 9.35AV + 419.1 0.330av + 419.1
automatic defrost with bottom-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5A. Refrigerator-freezer--automatic 9.15AV + 471.3 0.323av + 471.3
defrost with bottom-mounted freezer
with through-the-door ice service.
5A-BI. Built-in refrigerator-freezer-- 9.72AV + 4955. 0.343av + 495.5
automatic defrost with bottom-mounted
freezer with through-the-door ice
service.
6. Refrigerator-freezers--automatic 8.36AV + 384.1 0.295av + 384.1
defrost with top-mounted freezer with
through-the-door ice service.
7. Refrigerator-freezers--automatic 8.50AV + 431.1 0.300av + 431.1
defrost with side-mounted freezer with
through-the-door ice service.
7-BI. Built-In Refrigerator-freezers-- 9.07AV + 454.3 0.320av + 454.3
automatic defrost with side-mounted
freezer with through-the-door ice
service.
8. Upright freezers with manual defrost 5.57AV + 193.7 0.197av + 193.7
9. Upright freezers with automatic 8.62AV + 228.3 0.305av + 228.3
defrost without an automatic icemaker.
9-BI. Built-In Upright freezers with 9.24AV + 244.6 0.326av + 244.6
automatic defrost without an automatic
icemaker.
10. Chest freezers and all other 7.29AV + 107.8 0.257av + 107.8
freezers except compact freezers.
10A. Chest freezers with automatic 10.24AV + 148.1 0.362av + 148.1
defrost.
11. Compact refrigerators and 9.03AV + 252.3 0.319av + 252.3
refrigerator-freezers with manual
defrost.
11A.Compact refrigerators and 7.84AV + 219.1 0.277av + 219.1
refrigerator-freezers with manual
defrost.
12. Compact refrigerator-freezers-- 5.91AV + 335.8 0.209av + 335.8
partial automatic defrost.
13. Compact refrigerator-freezers-- 11.80AV + 339.2 0.417av + 339.2
automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerator-- 9.17AV + 259.3 0.324av + 259.3
automatic defrost.
14. Compact refrigerator-freezers-- 6.82AV + 456.9 0.241av + 456.9
automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers-- 12.88AV + 368.7 0.455av + 368.7
automatic defrost with bottom-mounted
freezer.
16. Compact upright freezers with 8.65AV + 225.7 0.306av + 225.7
manual defrost.
17. Compact upright freezers with 10.17AV + 351.9 0.359av + 351.9
automatic defrost.
18. Compact chest freezers............. 9.25AV + 136.8 0.327av + 136.8
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AV = adjusted volume in cubic feet; av = adjusted volume in liters.
DOE's analyses indicate that the proposed standards would save a
significant amount of energy--an estimated 4.48 quads of cumulative
energy over 30 years (2014 through 2043). This amount is equivalent to
three times the total energy used annually for refrigeration and
freezers in U.S. homes.
The cumulative national net present value (NPV) of total consumer
costs and savings of the proposed standards for products shipped in
2014-2043, in 2009$, ranges from $2.44 billion (at a 7-percent discount
rate) to $18.57 billion (at a 3-percent discount rate).\1\ The net
present value (NPV) is the estimated total value of future operating-
cost savings during the analysis period, minus the estimated increased
product costs, discounted to 2010. The industry net present value
(INPV) is the sum of the discounted cash flows to the industry from the
base year through the end of the analysis period (2010 to 2043). Using
a real discount rate of 7.2 percent, DOE estimates that INPV for
manufacturers of all refrigeration products in the base case is $4.434
billion in 2009$. If DOE adopts the proposed standards, it expects that
manufacturers may lose 11 to 22 percent of their INPV, or approximately
$0.495 to $0.995 billion. Using a 7-percent discount rate, the NPV of
consumer costs and savings from today's proposed standards would amount
to 2.5 to 4.9 times the total estimated industry losses. Using a 3-
percent discount rate, the NPV would
[[Page 59473]]
amount to 19 to 38 times the total estimated industry losses.
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\1\ DOE uses discount rates of 7 and 3 percent based on guidance
from the Office of Management and Budget. See section IV.G for
further information.
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The projected economic impacts of the proposed standards on
individual consumers are generally positive. For example, the estimated
average life-cycle cost (LCC) savings are $22 for top-mount
refrigerator-freezers, $19 for bottom-mount refrigerator-freezers, $37
for side-by-side refrigerator-freezers, $148 for upright freezers, $56
for chest freezers, $10 for compact refrigerators, $11 for compact
freezers, and from $0 to $116 for built-in refrigeration products,
depending on the product class.\2\
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\2\ The LCC is the total consumer expense over the life of a
product, consisting of purchase and installation costs plus
operating costs (expenses for energy use, maintenance and repair).
To compute the operating costs, DOE discounts future operating costs
to the time of purchase and sums them over the lifetime of the
product.
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In addition, the proposed standards would have significant
environmental benefits. The energy saved is in the form of electricity
and DOE expects the energy savings from the proposed standards to
eliminate the need for approximately 4.2 gigawatts (GW) of generating
capacity by 2043. The savings would result in cumulative greenhouse gas
emission reductions of 305 million metric tons (Mt \3\) of carbon
dioxide (CO2) in 2014-2043. During this period, the proposed
standards would result in emissions reductions of 245 kilotons (kt) of
nitrogen oxides (NOX) and 1.55 tons (t) of mercury (Hg). DOE
estimates the net present monetary value of the CO2
emissions reduction is between $1.04 and $16.22 billion, expressed in
2009$ and discounted to 2010. DOE also estimates the net present
monetary value of the NOX emissions reduction, expressed in
2009$ and discounted to 2010, is between $22 and $229 million at a 7-
percent discount rate, and between $53 and $546 million at a 3-percent
discount rate.
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\3\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are given in short tons.
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DOE estimates emissions reduction benefits according to a multi-
step approach. First, DOE analyzes monetized emissions benefits
separately from the NPV of consumer benefits. Second, DOE calculates
emissions relative to an ``existing regulations'' baseline determined
by the most recent version of the Annual Energy Outlook forecast. The
base case emissions scenario is described at http://www.eia.doe.gov/oiaf/aeo/pdf/trend_6.pdf. Finally, any emissions reductions are in
addition to the regulatory emissions reductions modeled in AEO. DOE
calculates this value by doing a perturbation of the base case AEO
forecast as described in the TSD chapter 15 at section 15.2.4. As noted
in section 15.2.4 of TSD chapter 15, the baseline accounts for
regulatory emissions reductions through 2008, including CAIR but not
CAMR. Subsequent regulations, including the currently proposed CAIR
replacement rule, the Clean Air Transport Rule, do not appear in the
baseline. DOE requests comment on its baseline treatment of regulatory
emissions reductions. See Issue 1 under ``Issues on Which DOE Seeks
Comment'' in section VII.E.
The benefits and costs of today's proposed standards can also be
expressed in terms of annualized values over the 2014-2043 period.
Estimates of annualized values are shown in Table I.2. The annualized
monetary values are the sum of (1) the annualized national economic
value, expressed in 2009$, of the benefits from operating products that
meet the proposed standards (consisting primarily of operating cost
savings from using less energy, minus increases in equipment purchase
costs, which is another way of representing consumer NPV), and (2) the
monetary value of the benefits of emission reductions, including
CO2 emission reductions.\4\ The value of the CO2
reductions, otherwise known as the Social Cost of Carbon (SCC), is
calculated using a range of values per metric ton of CO2
developed by a recent interagency process. The monetary costs and
benefits of cumulative emissions reductions are reported in 2009$ to
permit comparisons with the other costs and benefits in the same dollar
units. The derivation of the SCC values is discussed in section IV.M.
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\4\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE
calculated a present value for the time-series of costs and benefits
using a discount rate of either three or seven percent. From the
present value, DOE then calculated the fixed annual payment over the
analysis time period (2014 through 2043) that yielded the same
present value. The fixed annual payment is the annualized value.
Although DOE calculated annualized values, this does not imply that
the time-series of cost and benefits from which the annualized
values were determined is a steady stream of payments.
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Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use quite different time frames for analysis. The national
operating cost savings is measured for the lifetime of refrigeration
products shipped in 2014-2043. The SCC values, on the other hand,
reflect the present value of all future climate-related impacts
resulting from the emission of one ton of carbon dioxide in each year.
These impacts go well beyond 2100.
Using a 7-percent discount rate and the SCC value of $21.40/ton in
2010 (in 2007$), which is discounted at 3 percent (see note below in
Table I.2), the cost of the standards proposed in today's rule is
$1,841 million per year in increased equipment costs, while the
annualized benefits are $2,112 million per year in reduced equipment
operating costs, $316 million in CO2 reductions, and $7
million in reduced NOX emissions. In this case, the net
benefit amounts to $594 million per year. Using a 3-percent discount
rate and the SCC value of $21.40/ton in 2010 (in 2007$), the cost of
the standards proposed in today's rule is $1,849 million per year in
increased equipment costs, while the benefits are $2,929 million per
year in reduced operating costs, $316 million in CO2
reductions, and $33 million in reduced NOX emissions. At a
3-percent discount rate, the net benefit amounts to $1,429 million per
year.
Table I.2--Annualized Benefits and Costs of Proposed Standards for Refrigeration Products for 2014-2043 Period
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Monetized (million 2009$/year)
--------------------------------------
Discount rate Primary Low High
estimate* estimate* estimate*
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings........... 7%.................................... 2,112 1,852 2,377
[[Page 59474]]
3%.................................... 2,929 2,520 3,335
CO2 Reduction at $4.7/th **...... 5%.................................... 85 85 85
CO2 Reduction at $21.4/th **..... 3%.................................... 316 316 316
CO2 Reduction at $35.1/th **..... 2.5%.................................. 492 492 492
CO2 Reduction at $64.9/th **..... 3%.................................... 963 963 963
NOX Reduction at $2,519/th **.... 7%.................................... 7 7 7
3%.................................... 33% 33 33
Total (Operating Cost 7% plus CO2 range..................... 2,204-3,082 1,944-2,822 2,469-3,348
Savings, CO2 Reduction and
NOX Reduction) [dagger].
7%.................................... 2,435 2,175 2,700
3%.................................... 3,278 2,869 3,684
3% plus CO2 range..................... 3,047-3,925 2,638-3,516 3,453-4,331
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Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs........ 7%.................................... 1,841 1,733 1,950
3%.................................... 1,849 1,729 1,969
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Net Benefits/Costs
----------------------------------------------------------------------------------------------------------------
Total (Operating Cost 7% plus CO2 range..................... 363-1,241 211-1,089 519-1,397
Savings, CO2 Reduction and
NOX Reduction, minus
Incremental Product Costs)
[dagger].
7%.................................... 594 442 750
3%.................................... 1,429 1,140 1,714
3% plus CO2 range..................... 1,198-2,076 909-1,787 1,483-2,362
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* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010
Reference case, Low Economic Growth case, and Low Economic Growth case, respectively.
** The CO2 values represent global monetized values (in 2007$) of the social cost of CO2 emissions in 2010 under
several scenarios. The values of $4.70, $21.40, and $35.10 per ton are the averages of SCC distributions
calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $64.90 per ton represents the
95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2009$) is
the average of the low and high values used in DOE's analysis. NOX savings are in addition to the regulatory
emissions reductions modeled in the Annual Energy Outlook forecast.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount
rate, which is $21.40/ton in 2010 (in 2007$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2
range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
are added to the full range of CO2 values with the $4.70/ton value at the low end, and the $64.90/ton value at
the high end.
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. DOE further notes that products
achieving these standard levels are already commercially available for
at least some, if not most, product classes covered by today's
proposal. Based on the analyses described above, DOE found the benefits
of the proposed standards to the Nation (energy savings, positive NPV
of consumer benefits, consumer LCC savings, and emission reductions)
outweigh the burdens (loss of INPV for manufacturers and LCC increases
for some consumers).
DOE also considered lower energy use levels as trial standard
levels, and is still considering them in this rulemaking. However, DOE
has tentatively concluded that the potential burdens of the lower
energy use levels would outweigh the projected benefits. Based on
consideration of the public comments DOE receives in response to this
notice and related information collected and analyzed during the course
of this rulemaking effort, DOE may adopt energy use levels presented in
this notice that are either higher or lower than the proposed
standards, or some combination of level(s) that incorporate the
proposed standards in part.
II. Introduction
The following section briefly discusses the statutory authority
underlying today's proposal as well as some of the relevant historical
background related to the establishment of standards for refrigeration
products.
A. Authority
Title III of EPCA sets forth a variety of provisions designed to
improve energy efficiency. Part A of title III (42 U.S.C. 6291-6309)
provides for the Energy Conservation Program for Consumer Products
Other than Automobiles.\5\ EPCA covers consumer products and certain
commercial equipment (referred to collectively hereafter as ``covered
products''), including the types of refrigeration products that are the
subject of this rulemaking. (42 U.S.C. 6292(a)(1)) EPCA prescribed
energy conservation standards for these products (42 U.S.C. 6295(b)(1)-
(2)), and directed DOE to conduct three cycles of rulemakings to
determine whether to amend these standards. (42 U.S.C.
6295(b)(3)(A)(i), (b)(3)(B)-(C), and (b)(4)) As explained in further
detail in section II.B, this rulemaking represents the third round of
amendments to the standards for refrigeration products under 42 U.S.C.
6295(b). (DOE notes that under 42 U.S.C. 6295(m), the agency must
periodically review its already established energy conservation
standards for a covered product. Under this requirement, the next
review that
[[Page 59475]]
DOE would need to conduct would occur no later than six years from the
issuance of a final rule establishing or amending a standard for a
covered product.)
---------------------------------------------------------------------------
\5\ This part was titled Part B in EPCA, but was subsequently
codified as Part A in the U.S. Code for editorial reasons.
---------------------------------------------------------------------------
Under the Act, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing, (2) labeling,
(3) the establishment of Federal energy conservation standards, and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is responsible for labeling, and DOE implements the remainder of
the program. Section 323 of the Act authorizes DOE, subject to certain
criteria and conditions, to develop test procedures to measure the
energy efficiency, energy use, or estimated annual operating cost of
each covered product. (42 U.S.C. 6293) Manufacturers of covered
products must use the prescribed DOE test procedure as the basis for
certifying to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use of efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted under EPCA. Id. The test procedures for refrigeration
products currently appear at title 10, Code of Federal Regulations
(CFR), part 430, subpart B, appendices A1 and B1, respectively. (These
procedures are undergoing possible amendments and may ultimately be
recodified as part of new appendices A and B. See 75 FR 29824 (May 27,
2010) (discussing possible amendments to the test procedures for
refrigeration products).
EPCA provides criteria for prescribing amended standards for
covered products. As indicated above, any amended standard for a
covered product must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, EPCA precludes DOE
from adopting any standard that would not result in the significant
conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not
prescribe a standard: (1) For certain products, including refrigeration
products, if no test procedure has been established for the product, or
(2) if DOE determines by rule that the proposed standard is not
technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(A)-(B)) The Act also provides that, in deciding whether a
proposed standard is economically justified, DOE must determine whether
the benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must do so after receiving comments on the
proposed standard, and by considering, to the greatest extent
practicable, the following seven factors:
1. The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the imposition of the
standard;
3. The total projected amount of energy savings likely to result
directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the covered
products likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe a new
standard if interested persons have established by a preponderance of
the evidence that the standard is likely to result in the
unavailability in the United States of any covered product type (or
class) with performance characteristics, features, sizes, capacities,
and volumes that are substantially the same as those generally
available in the United States. (42 U.S.C. 6295(o)(4))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).
Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when
promulgating a standard for a type or class of covered product that has
two or more subcategories. DOE must specify a different standard level
than that which applies generally to such type or class of products
``for any group of covered products which have the same function or
intended use, if * * * products within such group--(A) consume a
different kind of energy from that consumed by other covered products
within such type (or class); or (B) have a capacity or other
performance-related feature which other products within such type (or
class) do not have and such feature justifies a higher or lower
standard'' than applies or will apply to the other products within that
type or class. Id. In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
``consider such factors as the utility to the consumer of such a
feature'' and other factors DOE deems appropriate. Id. Any rule
prescribing such a standard must include an explanation of the basis on
which such higher or lower level was established. (42 U.S.C.
6295(q)(2)).
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions of section 327(d)
of the Act. (42 U.S.C. 6297(d))
Finally, Section 310(3) of the Energy Independence and Security Act
of 2007 (EISA 2007; Pub. L. 110-140 (codified at 42 U.S.C. 6295(gg)))
amended EPCA to require that energy conservation standards address
standby mode and off mode energy use. Specifically, when DOE adopts a
standard for a covered product after July 1, 2010, it must, if
justified by the criteria for adoption of standards in section 325(o)
of EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode
energy use into the standard, if feasible, or adopt a separate standard
for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B))
DOE's current test procedures and standards for refrigeration products
address standby and off mode energy use. In this rulemaking, DOE
intends to incorporate such energy use into any amended standard it
adopts in the final rule, which is scheduled to be issued by December
31, 2010.
[[Page 59476]]
B. Background
1. Current Standards
In a final rule published on April 28, 1997 (1997 Final Rule), DOE
prescribed the current energy conservation standards for refrigeration
products manufactured on or after July 1, 2001. 62 FR 23102. This final
rule completed the second round of rulemaking to amend the standards
for refrigeration products, required under 42 U.S.C. 6295(b)(3)(B)-(C).
The standards consist of separate equations for each product class.
Each equation provides a means to calculate the maximum levels of
energy use permitted under the regulations. These levels vary based on
the storage volume of the refrigeration product and on the particular
characteristics and features included in a given product (i.e., based
on product class). 10 CFR 430.32(a). The current standards are set
forth in Table II.1. DOE notes that the standard levels denoted in the
proposed product classes listed as 5A and 10A were established by the
Office of Hearings and Appeals through that Office's exception relief
process.
Table II.1--Federal Energy Efficiency Standards for Refrigerators,
Refrigerator-Freezers, and Freezers
------------------------------------------------------------------------
Energy standard equations for
maximum energy use (kWh/yr)
Product class ---------------------------------
Made effective by the 1997 final
rule
------------------------------------------------------------------------
1. Refrigerators and refrigerator- 8.82AV+248.4
freezers with manual defrost. 0.31av+248.4
2. Refrigerator-freezers--partial 8.82AV+248.4
automatic defrost. 0.31av+248.4
3. Refrigerator-freezers--automatic 9.80AV+276.0
defrost with top-mounted freezer 0.35av+276.0
without through-the-door ice service
and all-refrigerator--automatic
defrost.
4. Refrigerator-freezers--automatic 4.91AV+507.5
defrost with side-mounted freezer 0.17av+507.5
without through-the-door ice service.
5. Refrigerator-freezers--automatic 4.60AV+459.0
defrost with bottom-mounted freezer 0.16av+459.0
without through-the-door ice service.
6. Refrigerator-freezers--automatic 10.20AV+356.0
defrost with top-mounted freezer with 0.36av+356.0
through-the-door ice service.
7. Refrigerator-freezers--automatic 10.10AV+406.0
defrost with side-mounted freezer 0.36av+406.0
with through-the-door ice service.
8. Upright freezers with manual 7.55AV+258.3
defrost. 0.27av+258.3
9. Upright freezers with automatic 12.43AV+326.1
defrost. 0.44av+326.1
10. Chest freezers and all other 9.88AV+143.7
freezers except compact freezers. 0.35av+143.7
11. Compact refrigerators and 10.70AV+299.0
refrigerator-freezers with manual 0.38av+299.0
defrost.
12. Compact refrigerator-freezer-- 7.00AV+398.0
partial automatic defrost. 0.25av+398.0
13. Compact refrigerator-freezers-- 12.70AV+355.0
automatic defrost with top-mounted 0.45av+355.0
freezer and compact all-refrigerator--
automatic defrost.
14. Compact refrigerator-freezers-- 7.60AV+501.0
automatic defrost with side-mounted 0.27av+501.0
freezer.
15. Compact refrigerator-freezers-- 13.10AV+367.0
automatic defrost with bottom-mounted 0.46av+367.0
freezer.
16. Compact upright freezers with 9.78AV+250.8
manual defrost. 0.35av+250.8
17. Compact upright freezers with 11.40AV+391.0
automatic defrost. 0.40av+391.0
18. Compact chest freezers............ 10.45AV+152.0
0.37av+152.0
------------------------------------------------------------------------
Made effective
Product class through OHA
exception relief
------------------------------------------------------------------------
5A. Refrigerator-freezer--automatic 5.0AV+539.0
defrost with bottom-mounted freezer 0.18av+539.0
with through-the-door ice service.
10A. Chest freezers with automatic 14.76AV+211.5
defrost. 0.52av+211.5
------------------------------------------------------------------------
AV: Adjusted Volume in ft\3\; av: Adjusted Volume in liters (L).
[[Page 59477]]
2. History of Standards Rulemaking for Refrigerators, Refrigerator-
Freezers, and Freezers
The amendments made to EPCA by the National Appliance Energy
Conservation Act of 1987 (NAECA; Pub. L. 100-12) included mandatory
energy conservation standards for refrigeration products and
requirements that DOE conduct two cycles of rulemakings to determine
whether to amend these standards. (42 U.S.C. 6295(b)(1), (2),
(3)(A)(i), and (3)(B)-(C)) DOE completed the first of these rulemaking
cycles in 1989 and 1990 by adopting amended performance standards for
all refrigeration products manufactured on or after January 1, 1993. 54
FR 47916 (November 17, 1989); 55 FR 42845 (October 24, 1990). As
indicated above, DOE completed a second rulemaking cycle to amend the
standards for refrigeration products by issuing a final rule in 1997,
which adopted the current standards for these products. 62 FR 23102
(April 28, 1997).
In 2005, DOE granted a petition, submitted by a coalition of state
governments, utility companies, consumer and low-income advocacy
groups, and environmental and energy efficiency organizations,
requesting that it conduct a rulemaking to amend the standards for
residential refrigerator-freezers.\6\ DOE then conducted limited
analyses to examine the technological and economic feasibility of
amended standards at the ENERGY STAR levels that were in effect for
2005 for the two most popular product classes of refrigerator-freezers.
These analyses identified potential energy savings and other potential
benefits and burdens from such standards, and assessed other issues
associated with such standards. Most recently, DOE has undertaken this
rulemaking to satisfy the statutory requirement that DOE publish a
final rule no later than December 31, 2010, to determine whether to
amend the standards for refrigeration products manufactured on or after
January 1, 2014. (42 U.S.C. 6295(b)(4))
---------------------------------------------------------------------------
\6\ The petition, submitted June 1, 2004, can be viewed at
http://www.standardsasap.org/documents/rfdoe.pdf (last accessed
August 18, 2010).
---------------------------------------------------------------------------
DOE initiated this rulemaking on September 18, 2008, by publishing
on its Web site its ``Rulemaking Framework Document for Refrigerators,
Refrigerator-Freezers, and Freezers.'' (A PDF of the framework document
is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framework.pdf). DOE
also published a notice announcing the availability of the framework
document and a public meeting to discuss the document. It also
requested public comment on the document. 73 FR 54089 (September 18,
2008). The framework document described the procedural and analytical
approaches that DOE anticipated using to evaluate energy conservation
standards for refrigeration products and identified various issues to
be resolved in conducting the rulemaking.
On September 29, 2008, DOE held the framework document public
meeting. At that meeting, DOE discussed the issues detailed in the
framework document and described the analyses the agency planned to
conduct during the rulemaking. Through the public meeting, DOE sought
feedback from interested parties on these subjects and provided
information regarding the rulemaking process that DOE would follow.
Interested parties discussed the following major issues at the public
meeting: Test procedure revisions; product classes; technology options;
approaches to the engineering, life-cycle cost, and payback period
analyses; efficiency levels analyzed in the engineering analysis; and
the approach for estimating typical energy consumption. At the meeting,
and during the related comment period, DOE received many comments that
helped it identify and resolve issues involved in this rulemaking.
DOE then gathered additional information and performed preliminary
analyses for the purpose of developing potential amended energy
conservation standards for refrigeration products. This process
culminated in DOE's announcement of the preliminary analysis public
meeting, at which DOE would discuss and receive comments on the
following matters: The product classes DOE analyzed; the analytical
framework, models, and tools that DOE was using to evaluate standards;
the results of the preliminary analyses performed by DOE; and potential
standard levels that DOE could consider. 74 FR 58915 (November 16,
2009) (the November 2009 notice). DOE also invited written comments on
these subjects and announced the availability on its Web site of a
preliminary technical support document (preliminary TSD) it had
prepared to inform interested parties and enable them to provide
comments. Id. (The preliminary TSD is available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ref_frz_prenopr_prelim_tsd.pdf.) Finally, DOE stated its interest
in receiving views concerning other relevant issues that participants
believed would affect energy conservation standards for refrigeration
products, or that DOE should address in this NOPR. Id. at 58917-18.
The preliminary TSD provided an overview of the activities DOE
undertook in developing standards for the refrigeration products, and
discussed the comments DOE received in response to the framework
document. It also described the analytical framework that DOE used (and
continues to use) in this rulemaking, including a description of the
methodology, the analytical tools, and the relationships among the
various analyses that are part of the rulemaking. The preliminary TSD
presented and described in detail each analysis DOE had performed up to
that point, including descriptions of inputs, sources, methodologies,
and results. These analyses were as follows:
A market and technology assessment addressed the scope of
this rulemaking, identified the potential classes for refrigeration
products, characterized the markets for these products, and reviewed
techniques and approaches for improving their efficiency;
A screening analysis reviewed technology options to
improve the efficiency of refrigeration products, and weighed these
options against DOE's four prescribed screening criteria: (1)
Technological feasibility, (2) practicability to manufacture, install,
and service, (3) impacts on equipment utility or equipment
availability, (4) adverse impacts on health or safety;
An engineering analysis estimated the increases in
manufacturer selling prices (MSPs) associated with more energy-
efficient refrigeration products;
An energy use analysis estimated the annual energy use in
the field of refrigeration products as a function of efficiency levels;
A markups analysis converted estimated manufacturer
selling price (MSP) increases derived from the engineering analysis to
consumer prices;
A life-cycle cost analysis calculated, at the consumer
level, the discounted savings in operating costs throughout the
estimated average life of the product, compared to any increase in
installed costs likely to result directly from the imposition of a
given standard;
A payback period (PBP) analysis estimated the amount of
time it would take consumers to recover the higher expense of
purchasing more energy efficient products through lower operating
costs;
A shipments analysis estimated shipments of the
refrigeration products over the 30-year analysis period (2014-
[[Page 59478]]
2043), which were used in performing the national impact analysis
(NIA);
A national impact analysis assessed the national energy
savings, and the national net present value of total consumer costs and
savings, expected to result from specific, potential energy
conservation standards for refrigeration products;
A preliminary manufacturer impact analysis took the
initial steps in evaluating the effects new efficiency standards may
have on manufacturers.
In the November 2009 notice, DOE summarized the nature and function
of the following analyses: (1) Engineering, (2) energy use
characterization, (3) markups to determine installed prices, (4) LCC
and PBP analyses, and (5) national impact analysis. Id. at 58917.
The preliminary analysis public meeting announced in the November
2009 notice took place on December 10, 2009. At this meeting, DOE
presented the methodologies and results of the analyses set forth in
the preliminary TSD. Major topics discussed at the meeting included
test procedure revisions, product classes (including wine coolers, all-
refrigerators,\7\ and built-in refrigeration products), the use of
alternative foam blowing agents and refrigerants, engineering analysis
tools, the use of VIPs, mark-ups, field energy consumption, life-cycle
cost inputs, efficiency distribution forecasts, and trial standard
level selection criteria. DOE also discussed plans for conducting the
NOPR analyses. The comments received since publication of the November
2009 notice, including those received at the preliminary analysis
public meeting, have contributed to DOE's proposed resolution of the
issues in this rulemaking. This NOPR quotes and summarizes many of
these comments, and responds to the issues they raised. A parenthetical
reference at the end of a quotation or paraphrase provides the location
of the item in the public record.
---------------------------------------------------------------------------
\7\ An ``all-refrigerator'' is defined as ``an electric
refrigerator which does not include a compartment for the freezing
and long time storage of food at temperatures below 32 [deg]F (0.0
[deg]C). It may include a compartment of 0.50 cubic feet capacity
(14.2 liters) or less for the freezing and storage of ice.'' (10 CFR
part 430, subpart B, appendix A1, section 1.4).
---------------------------------------------------------------------------
In response to the preliminary analysis, DOE also received a
comment submitted by groups representing manufacturers (Association of
Home Appliance Manufacturers, Whirlpool, General Electric Company (GE),
Electrolux, LG Electronics, BSH, Alliance Laundry, Viking Range, Sub-
Zero Wolf, Friedrich A/C, U-Line, Samsung, Sharp Electronics, Miele,
Heat Controller, AGA Marvel, Brown Stove, Haier, Fagor America, Airwell
Group, Arcelik, Fisher & Paykel, Scotsman Ice, Indesit, Kuppersbusch,
Kelon, DeLonghi); energy and environmental advocates (American Council
for an Energy Efficient Economy, Appliance Standards Awareness Project,
Natural Resources Defense Council, Alliance to Save Energy, Alliance
for Water Efficiency, Northwest Power and Conservation Council,
Northeast Energy Efficiency Partnerships); and consumer groups
(Consumer Federation of America, National Consumer Law Center). This
collective set of comments, which DOE refers to in this notice as the
``Joint Comments'' \8\ recommends specific energy conservation
standards for refrigeration products that, in the commenters' view,
would satisfy the requirements under EPCA. DOE neither organized nor
was a member of the group but sent staff to observe some meetings and
made its contractors available to perform data processing. Consistent
with its legal obligations when developing an energy conservation
standard, DOE is providing the public with the opportunity to comment
on the proposed levels that DOE is considering adopting for
refrigeration products, which mirror those recommended in the Joint
Comments. As DOE has not yet reached a final decision on the levels it
should prescribe, DOE invites comment on these proposed levels,
possible alternative levels, and all other aspects presented in today's
NOPR.
---------------------------------------------------------------------------
\8\ DOE Docket No. EERE-2008-BT-STD-0012, Comment 49. DOE
considered the Joint Comments to supersede earlier comments by the
listed parties regarding issues subsequently discussed in the Joint
Comments.
---------------------------------------------------------------------------
III. General Discussion
The following section discusses various technical aspects related
to this proposed rulemaking. In particular, it addresses aspects
involving the test procedures for refrigeration products, the
technological feasibility of potential standards to assign to these
products, and the potential energy savings and economic justification
for prescribing the proposed amended standards for refrigeration
products.
A. Test Procedures
As noted above, DOE's current test procedures for refrigeration
products appear at 10 CFR part 430, subpart B, appendices A1 (for
refrigerators and refrigerator-freezers) and B1 (for freezers). DOE
recently issued a NOPR in which it proposed to amend these appendices,
and to create new Appendices A and B, applicable to refrigerators/
refrigerator-freezers and freezers, respectively, for products covered
by today's proposed standards, (i.e., those manufactured on or after
January 1, 2014). 75 FR 29824 (May 27, 2010). While the proposed test
procedures would retain or revise many of the provisions currently in
appendices A1 and B1, they would also add some new procedures. Most of
the revisions and additions would apply to all refrigeration products,
and would be reflected in both new appendices, as follows: Updating
references to the Association of Home Appliance Manufacturers (AHAM)
HRF-1 test standard; incorporating icemaking energy use into the energy
use metric for products with automatic icemakers; clarifying the
procedures for test sample preparation; modifying the test methods for
convertible compartments and special-purpose compartments; modifying
the anti-sweat heater definition to include those heaters that prevent
sweat (i.e., moisture condensation) on interior surfaces; establishing
new compartment temperatures and volume calculation methods; modifying
the test methods for advanced defrost systems; eliminating the optional
third part of the test method for products with variable defrost
systems; and adjusting and correcting the various energy use equations
included in the test procedure regulatory text. Id.
DOE also proposed to adopt language in a new appendix A to
incorporate test methods for products equipped with variable anti-sweat
heater control systems that are currently addressed in waivers. These
waivers apply only to refrigerators and refrigerator-freezers. Id. at
29835-37.
Finally, DOE proposed to amend certain other provisions to clarify
that combination freezer-wine storage products are not subject to the
standards for refrigerator-freezers and to require manufacturers and
private labelers to include additional information when they certify to
DOE the compliance of refrigeration products that use advanced
controls. Id. at 29829 and 29841-42.
The test procedure NOPR public meeting was held June 22, 2010. DOE
received numerous comments from stakeholders at this meeting,
addressing all aspects of the proposed test procedure amendments. The
comment period for the test procedure rulemaking ended on August 10,
2010. Id. at 29824.
1. Test Procedure Rulemaking Schedule
The preliminary analysis documents were published, and the
preliminary analysis public meeting was held, prior to publication of
the test procedure
[[Page 59479]]
NOPR describing the amended test procedure on which the preliminary
analysis was based. Because of this situation, AHAM commented that it
was difficult for it to comment fully on the preliminary analysis
because the specific test procedure changes were not yet known. (AHAM,
Public Meeting Transcript, No. 28 at p. 17) \9\ Edison Electric
Institute (EEI) expressed concern about completion of the energy
standards rulemaking, since the test procedure NOPR had not yet been
published. (EEI, Public Meeting Transcript, No. 28 at p. 25) The
Appliance Standards Awareness Project (ASAP) commented that test
procedure rulemakings have been completed by the time of the energy
standards NOPR in the past, and that this is a reasonable approach.
(ASAP, Public Meeting Transcript, No. 28 at p. 26)
---------------------------------------------------------------------------
\9\ Comments made during the public meeting are cited as
(Commenter acronym, Public Meeting Transcript, No. 28 at [pages in
the transcript at which the comment appears]).
---------------------------------------------------------------------------
While DOE acknowledges the advantages of publishing the test
procedure rulemaking prior to discussing the preliminary analysis, the
agency is working diligently to complete all of the rulemakings related
to refrigeration products within the statutorily mandated schedule. DOE
notes that under EPCA, an amended or new energy conservation standard
may not be prescribed unless a test procedure for the regulated product
has been prescribed. See 42 U.S.C. 6295(o)(3). DOE has every intention
of complying with this requirement.
2. Icemaking
DOE received numerous comments regarding energy use attributable to
icemaking during the preliminary analysis phase of this rulemaking.
Stakeholders generally agreed that icemaking energy use should be
incorporated into the energy use metric for refrigeration products.
American Council for an Energy Efficient Economy (ACEEE) and ASAP
submitted a joint comment (hereafter referred to as ACEEE/ASAP) urging
that icemaker energy use and losses associated with through-the-door
ice and water service be incorporated into the test method and
rulemaking. (ACEEE/ASAP, No. 43 at p. 1) \10\ These commenters added
that water service as well as ice service should be included in the
refrigeration product energy use metric. (Id. at 1-2) A group of
California utilities consisting of Pacific Gas and Electric, San Diego
Gas and Electric, Southern California Gas Company, and Southern
California Edison, collectively organized as the California Investor
Owned Utilities (IOU), commented that the energy associated with
operating automatic ice makers should be addressed, because operational
automatic ice makers contribute significantly to the refrigerator
energy consumption. (IOU, No. 36 at p. 2) IOU also commented that
energy use associated with water dispensing should be considered in the
test procedure. (IOU, No. 36 at p. 6) The Natural Resources Defense
Council (NRDC) agreed with the guidance DOE developed on how to treat
icemakers during testing (75 FR 2122 (January 14, 2010)), and commented
that the guidance will be adequate for use in this rulemaking. NRDC
added that it is imperative that DOE revise the test procedure to
include ice maker energy usage in the next standard. (NRDC, No. 39 at
p. 2) Support for incorporating icemaking energy use explicitly in the
energy metric was also expressed by LG Electronics U.S.A. (LG),
Northeast Energy Efficiency Partnerships (NEEP), Northwest Power and
Conservation Council (NPCC), ASAP, and in unpaginated comments
submitted by Sub Zero-Wolf, Inc. (Sub Zero). (LG, No. 41 at p. 1; NEEP,
No. 38 at p. 1; NPCC, No. 33 at p. 1; ASAP, Public Meeting Transcript,
No. 28 at p. 28; Sub Zero, No. 40 at p. 2)
---------------------------------------------------------------------------
\10\ Written comments are cited as (Commenter acronym, No.
[assigned comment number in the docket] at p. [page number at which
the comment appears]).
---------------------------------------------------------------------------
Regarding the inclusion of a method in the test procedure for
measuring the energy use attributable to water dispensing, DOE is
unaware of any publicly available information about the daily water
usage by consumers using water dispenser-equipped refrigeration
products. DOE developed a preliminary estimate for this energy use as
follows. Assuming an average consumption of 0.63 gallons per standard
size refrigerator per day,\11\ a water temperature of 70 [deg]F when
entering the system (typical household ambient temperature to which the
water in the refrigerator supply tubing would equilibrate between
icemaking cycles) and a dispensed temperature of 39 [deg]F (the
standardized temperature for the fresh food compartment in the HRF-1-
2008 test procedure), and a refrigeration system EER \12\ of 5 Btu/hr-
W, this energy use is equal to 12 kWh per year, roughly 2.5 percent of
the average energy use of a typical refrigerator-freezer. Based on
these data, there appears to be limited potential for savings from
increasing the efficiency of the cooling and processing of the
dispensed water. Although solenoid valves are energized while water is
dispersed, the duration of valve actuation is so short that the valves
do not contribute significantly to energy use. The only significant
energy use attributable to water dispensation by the refrigeration
system is for cooling the water. Unlike with the case of automatic
icemaking, in which electric heaters are typically used to free ice
from an ice mold, there is no obvious portion of the energy use that
can be reduced or eliminated by improving component efficiency. Based
on the limited amount of available data, DOE currently lacks sufficient
information regarding the level of water consumption associated with
water dispenser-equipped refrigeration equipment to either develop a
test procedure or set a standard within the context of the agency's
current rulemaking activities. DOE may consider the adoption of such a
method in a future rulemaking to amend its test procedures.
---------------------------------------------------------------------------
\11\ Based on 0.22 gallons of drinking water per person per day
(Am J Physiol Regul Integr Comp Physiol 283: R993-R1004, 2002.) and
2.89 people per household with a standard sized refrigerator (2005
RECS data for standard-size refrigerators with TTD ice.).
\12\ EER, the energy efficiency ratio, is a measure of the
efficiency of a compressor or a refrigeration system, being equal to
the delivered cooling in British Thermal Units per hour (Btu/hr)
divided by the compressor or system power input in Watts (W). The
value 5 Btu/hr-W is based on a typical EER of 5.5 Btu/hr-W for the
compressor of a baseline standard-size refrigerator (See NOPR TSD
Chapter 5, Engineering Analysis, section 5.8.4), with some reduction
of this efficiency associated with the additional power input of the
evaporator and condenser fans.
---------------------------------------------------------------------------
Several stakeholders highlighted the challenges involved in the
development of a test procedure for icemaking energy use. AHAM
commented that developing a procedure to determine automatic icemaking
energy consumption would be complex, and that any such procedure must
be robust and repeatable. (AHAM, No. 34 at p. 2) GE commented that it
is critical that DOE insist on a robust, repeatable procedure that
minimizes variability for calculating icemaker energy prior to
inclusion in any standards. (GE, No. 37 at p. 1) LG commented on the
complexity of such a procedure and also emphasized that any such
procedure that DOE adopts be verifiable, repeatable, and reliable. (LG,
No. 41 at p. 3) Other stakeholders commenting on the complexity of
development of an icemaking test procedure include Sub Zero and AHAM.
(Sub Zero, No. 40 at p. 3; Sub Zero, Public Meeting Transcript, No. 28
at p. 29; AHAM, Public Meeting Transcript, at pp. 30, 31)
AHAM's ongoing work to develop a test procedure to measure
icemaking energy use was mentioned at the public
[[Page 59480]]
meeting. (Public Meeting Transcript, No. 28 at pp. 28-33) AHAM noted
that there was significant variation in the initial measurements made
by AHAM members to assess a preliminary icemaking energy use test
procedure and that additional work is required to better understand the
reasons for this variation. (See ``AHAM Update to DOE on Status of Ice
Maker Energy Test Procedure,'' 11/19/2009, No. 46) AHAM further
commented that the next step is to complete round robin evaluation,
which is expected to take 3 to 4 months. The initial measurements made
by AHAM members did not explore the potential impact of volume or
product type on automatic ice maker energy use and provided no
indication of how icemaker energy might be incorporated into the
baseline energy efficiency curves. Additional testing to provide this
information is expected to take another 4 months. (AHAM, No. 34 at p.
2) The projected date of completion of this process, based on the
January 15 date of the comments, was at best the middle of August 2010.
Given the complexity of this test procedure development work, many
stakeholders suggested that finalizing a standard in 2010 based on a
test procedure which includes a measurement of icemaking energy use is
not critical for purposes of setting appropriate energy efficiency
levels. Stakeholders who held this view included ACEEE/ASAP, GE, NRDC,
and Sub Zero. (ACEEE/ASAP, No. 43 at p. 1-2; GE, No. 37 at p. 1; NRDC,
No. 39 at p. 2; Sub Zero, No. 40 at p. 3) NEEP disagreed with this
viewpoint and commented that DOE should consider imposing a deadline
for the industry-led process to finalize an updated test procedure that
incorporates icemaking energy use, after which DOE should quickly
finalize a procedure to incorporate into its regulations. NEEP also
suggested that a test procedure update prior to promulgation of
standards was a more ideal solution. (NEEP, No. 38 at p. 1) Sub Zero
and NEEP commented that a short delay in publication of the final rule
for this rulemaking would be acceptable if necessary to allow
sufficient time to develop the icemaking test procedure. (Sub Zero, No.
40 at p. 3; NEEP, No. 38 at p. 2)
Several stakeholder comments addressed details associated with an
icemaking test procedure. AHAM commented that the energy use metric
should be expressed in annual kWh per year. (AHAM, Public Meeting
Transcript, No. 28 at p. 32) The AHAM draft proposal is based on
converting a measurement of the energy required to produce one pound of
ice by a production quantity of 1.8 pounds per day to determine annual
icemaking energy use. (AHAM, No. 34 at p. 2) IOU recommended
consideration of either a ``kWh per pound of ice'' metric or a ``kWh
per year'' metric. (IOU, No. 36 at pp. 2-3) In light of these comments,
DOE proposes to establish an annual energy use for ice that will be
added to the energy use measured using the current test procedure (or
an amended version of the current procedure) to provide a total annual
energy use metric that includes the energy associated with icemaking.
Additionally, AHAM commented that ``the test procedure may need to
allow manufacturers to subtract the thermodynamic energy required to
convert water to ice, so that this energy is not targeted for energy
efficiency improvements.'' (AHAM, No. 34 at p. 2) However, AHAM
acknowledged that the theoretical efficiency depends on the Coefficient
of Performance (COP) \13\ of the particular refrigerator-freezer, which
can vary. (Id.) Consideration of the COP in this context is important,
because the AHAM comment implication is that the thermodynamic energy
required to convert water to ice is independent of refrigerator design.
On the contrary, this energy use is indirectly proportional to the COP,
which is a characteristic of the refrigerator's design. However, EPCA
requires that test procedures ``shall be reasonably designed to produce
test results which measure energy efficiency, energy use * * * or
estimated annual operating cost of a covered product during a
representative average use cycle or period of use * * *'' (42 U.S.C.
6293(b)(3)). This statutory provision calls for measuring energy use,
and does not single out for incorporation into the test procedure only
that portion of the energy use that could be eliminated or reduced
through design modifications. DOE tentatively interpreted this
requirement to mean that the test procedure must measure all of the
energy use associated with a given product function.
---------------------------------------------------------------------------
\13\ Coefficient of Performance, equal to cooling energy
delivered by the refrigeration product divided by energy input. This
is related to EER, explained above, by the conversion of the units
of energy input from British Thermal Units (Btu) to Watt-Hours (W-
h).
---------------------------------------------------------------------------
LG commented that an icemaking test procedure should consider the
potential overlap of icemaking and defrost periods. (LG, No. 41 at p.
3) DOE interprets this comment as addressing the fact that achieving
steady state operation during icemaking may take a long time to
achieve--possibly longer than the elapsed time between defrosts. Hence,
the energy use increment associated with icemaking is difficult to
distinguish from the energy use increment associated with defrost. DOE
is not at this time considering this level of detail regarding a
potential icemaking test.
Both AHAM and Sub Zero mentioned the need to consider manual as
well as automatic icemaking. (AHAM, Public Meeting Transcript, No. 28
at p. 32; Sub Zero, No. 40 at p. 3) DOE notes that there is limited
information available regarding the energy use of automatic icemakers,
while there is no publicly available information regarding the energy
use involved in manual icemaking. Hence, DOE is examining the
possibility of incorporating the energy use of automatic icemakers into
the energy use metric while leaving open for the time being the
treatment of energy use related to manual icemaking.
DOE plans to incorporate icemaking energy use into the energy use
metric for refrigeration products. However, DOE acknowledges the
challenges in developing an accurate and repeatable test procedure and
the need to avoid uncontrolled variability in energy test results
associated with adopting a premature procedure. DOE also seeks to
address this aspect of energy consumption and to improve the accuracy
of representations of energy use (i.e., on the EnergyGuide label used
to inform consumers regarding product energy use) and has attempted to
lay the initial foundations for an improved measurement by proposing a
fixed placeholder representing icemaking energy use in kWh per year for
all products equipped with an automatic icemaker. 75 FR 29846-47 (May
27, 2010). The proposed placeholder value is equal to the average
reported by AHAM of measurements made using a draft icemaking energy
use test procedure. (``AHAM Update to DOE on Status of Ice Maker Energy
Test Procedure,'' No. 46 at p. 11) DOE intends to closely monitor
industry efforts in developing a method of measuring icemaking energy
use and may propose the incorporation of such a measurement into the
test procedure and energy conservation standard at the appropriate
time.
Stakeholders also commented regarding the approach used to set
standards for icemaking energy use or to adjustment of energy standards
to include icemaking energy use. DOE sought input regarding an
appropriate method to establish maximum icemaking energy use as a
function of product class and adjusted volume, as well as the available
technology options to reduce icemaking energy use.
[[Page 59481]]
(Preliminary Analysis Public Meeting Presentation, No. 26 at p. 19) EEI
commented that maximum icemaking energy is more a function of the
number and characteristics of occupants/users than it is a function of
volume. (EEI, Public Meeting Transcript, No. 28 at p. 34) DOE agrees
with this comment, but notes that energy conservation standards,
defined by EPCA as ``a performance standard which prescribes a minimum
level of energy efficiency or a maximum quantity of energy use * * *
for a covered product * * *'' (42 U.S.C. 6291(6)(A)), do not address
characteristics of the product purchasers or users. IOU commented that
ice maker efficiency is directly affected by refrigeration system
efficiency, ice maker component efficiency, allowable sub freezing
temperature, and ice maker type. (IOU, No. 36 at p. 6) Stakeholders
including AHAM, GE, and Whirlpool commented that it is premature to
evaluate design options for reducing icemaking energy use and/or to set
standards for icemaking at other than current baseline levels. (AHAM,
No. 34 at p. 3; AHAM, Public Meeting Transcript, No. 28 at pp. 32, 33;
GE, No. 37 at p. 1; Whirlpool, No. 31 at p. 5) AHAM further elaborated
that a necessary first step before setting standards for icemaking
would be to develop a robust test procedure and to establish that
function's baseline energy use. In AHAM's view, the evaluation of
design options and the potential for energy use reduction should be
considered for a future rulemaking after fully demonstrating the
validity of the test procedure (AHAM, No. 34 at p. 3)
DOE agrees that proposing a standard level for icemaking energy use
is premature prior to the development of a test procedure that can be
used to evaluate baseline icemaking energy use. EPCA prohibits the
establishment of energy conservation standards for refrigeration
products if no test procedure has been prescribed. See 42 U.S.C.
6295(o)(3)(A). DOE's proposed approach of assigning a fixed quantity of
energy to icemaking in the test procedure in lieu of a test that
measures each product's icemaking efficiency for comparison with a
standard would provide information to consumers regarding the
additional energy use associated with icemaking, since the energy use
measurement reported on EnergyGuide labels will include this component.
This proposed method would also give the industry additional time in
which to perfect its test procedure to address this particular energy-
consuming component.
The test procedure, which is the basis for the engineering
analysis, does not consider variation of icemaking energy use as a
function of product characteristics (other than the presence of an
automatic icemaker). For that reason, DOE stated during the preliminary
analysis public meeting that the engineering analysis does not consider
icemaking. (Public Meeting Transcript, No. 28 at p. 27) NPCC pointed
out that DOE's energy use analysis (see chapter 7 of the preliminary
TSD) does address icemaking energy use through application in the
calculations of the Usage Adjustment Factor (UAF) that converts energy
test measurements to field energy use. (NPCC, Public Meeting
Transcript, No. 28 at p. 27) DOE agrees that the usage adjustment
factors (UAF) incorporate an adjustment to include icemaking energy
use. (See Preliminary TSD, No. 22 at p. 7-6.) In the preliminary LCC
analysis, DOE calculated energy savings by multiplying the energy use
reduction under consideration (e.g., 20-percent energy use reduction)
by multiplying this percentage reduction by all of the calculated
baseline field energy use, including icemaking energy use for products
having automatic icemakers. In contrast, the NOPR analysis separated
icemaking energy use from consideration of energy use reduction as much
as possible, which is consistent with the proposal DOE is currently
considering to incorporate icemaking energy use into the test
procedure. This process is described more fully in the NOPR TSD.
3. Circumvention
Consumers Union submitted comments that specifically addressed
circumvention. Key points made in its submittal included the following:
Test procedures need to keep up with product development
and must be continually updated and strengthened. Test procedures must
be updated more frequently. (Consumers Union, No. 44 at pp. 5, 6)
Regulations should explicitly provide a procedure for DOE
to quickly close testing loopholes and to hold manufacturers
accountable for any intentional manipulation of test procedures.
(Consumers Union, No. 44 at pp. 5, 6)
The test procedure should require compartment temperatures
to be within a smaller range of acceptable values, such as within +/-
2[deg] F of ideal storage values. (Consumers Union, No. 44 at p. 5)
The test procedure should reflect typical consumer
conditions by explicitly forbidding any special energy savings at test
temperatures, settings, or conditions that consumers are unlikely to
experience. (Consumers Union, No. 44 at p. 5)
DOE acknowledges the need to update test procedures more
frequently. DOE also acknowledges that enforcement and verification
activities are needed to ensure that manufacturers cannot circumvent
the test procedure. To this end, DOE is examining a variety of options
to address these concerns and notes that its concurrent test procedure
rulemaking would likely deal with these issues. Additionally, by
statute, the agency is obligated to update its test procedure at least
once every seven years, which DOE has every intention to fulfill. See
42 U.S.C. 6293(b).
4. Variable Anti-Sweat Heater Control
Anti-sweat heaters are used to prevent the condensation of moisture
on refrigeration product surfaces. Such accumulation of moisture as
liquid droplets is undesirable because (1) It is unsightly, (2) it
encourages mold growth, and (3) the water drops can fall to the floor
and create a slip hazard. These heaters are often electricity-consuming
resistance heaters. However, many refrigeration products also use waste
heat from the refrigeration system to provide anti-sweat heating
functions. This is accomplished by routing hot gas or warm liquid
refrigerant tubing in the regions of the cabinet that require anti-
sweat heating.
GE and AHAM both supported DOE's proposal to amend the current test
procedure to address the treatment of products equipped with a variable
anti-sweat heater control system. These systems control anti-sweat
heater operation by reducing or eliminating their energy use when
ambient conditions, such as humidity, indicate that heater operation at
full load is unnecessary. (GE, No. 37 at p. 2; AHAM, No. 34 at p. 10)
DOE notes that, while it plans to modify the current test procedure to
enable it to address variable anti-sweat heater control systems, the
agency may choose not to directly incorporate the current waiver
language covering these types of systems into the test procedure. See,
e.g., variable antisweat heater waivers published at 73 FR 10425
(February 27, 2008) and 74 FR 20695 (May 5, 2009). DOE proposed as part
of its test procedure amendments to incorporate a modified version of
that procedure (see 75 FR 29835-37 (May 27, 2010)), and is considering
public comments in finalizing those amendments.
5. Standby and Off Mode Energy Use
DOE also notes that EPCA, as amended by EISA 2007, requires DOE to
[[Page 59482]]
amend its test procedures for all covered products, including those for
refrigeration products, to include measurement of standby mode and off
mode energy consumption, except where current test procedures fully
address such energy consumption. (42 U.S.C. 6295(gg)(2)) As indicated
above, DOE's current test procedures for refrigeration products fully
address standby and off mode energy use, and any amended test procedure
that DOE adopts for these products will continue to do so.
B. Technological Feasibility
1. General
In each standards rulemaking, DOE conducts a screening analysis
based on information gathered on all current technology options and
prototype designs that have the potential to improve product or
equipment efficiency. To conduct the analysis, DOE develops a list of
design options for consideration in consultation with manufacturers,
design engineers, and other interested parties. DOE then determines
which of these means for improving efficiency are technologically
feasible. DOE considers a design option to be technologically feasible
if it is currently in use by the relevant industry, or if a working
prototype exists. See 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(i) (providing that ``[t]echnologies incorporated in
commercially available products or in working prototypes will be
considered technologically feasible.'')
Once DOE has determined that particular design options are
technologically feasible, it evaluates each of these design options
using the following additional screening criteria: (1) Practicability
to manufacture, install, or service; (2) adverse impacts on product
utility or availability; and (3) adverse impacts on health or safety.
(10 CFR part 430, subpart C, appendix A, section 4(a)(4)). Section IV.B
of this notice discusses the results of the screening analysis for
refrigeration products, particularly the designs DOE considered, those
it screened out, and those that are the basis for the trial standard
levels (TSLs) in this rulemaking. For further details on the screening
analysis for this rulemaking, see chapter 4, Screening Analysis, of the
NOPR TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt (or not adopt) an amended standard for a
type or class of covered product, it must ``determine the maximum
improvement in energy efficiency or maximum reduction in energy use
that is technologically feasible'' for such product. (42 U.S.C.
6295(p)(1)) Accordingly, DOE determined the maximum technologically
feasible (hereafter max-tech) reductions in energy use for
refrigeration products in the engineering analysis.
As described in the preliminary TSD, DOE conducted a full analysis
of a set of product classes that comprise a large percentage of product
shipments in the market today. DOE's approach for extending proposed
standard levels established for these product classes to the non-
analyzed product classes is described in chapter 2, Analytical
Framework, of the preliminary TSD, in section 2.15. However, this
section of this notice reports the max-tech efficiency levels only for
the directly analyzed product classes.
DOE used the proposed test procedures that would apply once
manufacturers must comply with the new standard to determine the max-
tech efficiency levels of the directly analyzed product classes. The
efficiency levels are defined as reductions in that portion of the
energy use not associated with icemaking. As described in section
III.A, above, the energy use associated with icemaking under the
proposed test procedure is a fixed quantity not correlated with an
efficiency level. Separating this fixed quantity of energy use from the
definition of efficiency level allows a more direct comparison of
products, irrespective of whether a given product is equipped with an
automatic icemaker. This approach also allows DOE to compare the
efficiency levels based on the proposed test procedure (i.e.,
projections of possible energy use reductions) against the energy use
based on the existing test procedure and current standard.\14\
---------------------------------------------------------------------------
\14\ In other words, a product with energy usage that is a
certain percentage below the current energy standard should remain
the same percentage below the baseline energy use under the proposed
test procedure after subtracting icemaking energy use. Hence, the
max-tech levels expressed as percentage of energy use reduction
should be the same for both sets of test procedures.
---------------------------------------------------------------------------
DOE used the full set of design options considered applicable for
these products classes to determine the max-tech efficiency levels for
the analyzed product classes. (See chapter 5 of the NOPR TSD, section
5.4.4.) Table III.1 lists the max-tech levels that DOE determined for
this rulemaking. The table also presents the max-tech levels that are
commercially available. The max-tech levels differ from those presented
in the preliminary TSD, and are generally lower (i.e., the percent
energy use reductions are lower for the NOPR analysis, thus the max-
tech energy use is higher). The reduction in the max-tech efficiency
levels is due to the revisions DOE implemented in the NOPR engineering
analysis to address new information obtained during this phase of the
work.
Table III.1--Max-Tech Efficiency Levels for the Refrigeration Products Rulemaking
----------------------------------------------------------------------------------------------------------------
Efficiency level (percent
energy use reduction)
-------------------------------
Product class Description Max tech
DOE analysis commercially
(in percent) available (in
percent)
----------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
3...................................... Refrigerator-freezers--automatic 36 30
defrost with top-mounted freezer
without through-the-door ice service.
5...................................... Refrigerator-freezers--automatic 36 33
defrost with bottom-mounted freezer
without through-the-door ice service.
7...................................... Refrigerator-freezers--automatic 33 32
defrost with side-mounted freezer with
through-the-door ice service.
----------------------------------------------------------------------------------------------------------------
[[Page 59483]]
Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
9...................................... Upright freezers with automatic defrost 44 27
10..................................... Chest freezers and all other freezers 41 16
except compact freezers.
----------------------------------------------------------------------------------------------------------------
Compact Products
----------------------------------------------------------------------------------------------------------------
11..................................... Compact refrigerators and refrigerator- 59 27
freezers with manual defrost.
18..................................... Compact chest freezers................. 42 23
----------------------------------------------------------------------------------------------------------------
Built-In Products
----------------------------------------------------------------------------------------------------------------
3A-BI.................................. Built-In All-refrigerators--automatic 28 31
defrost.
5-BI................................... Built-In Refrigerator-freezers-- 27 27
automatic defrost with bottom-mounted
freezer without through-the-door ice
service.
7-BI................................... Built-In Refrigerator-freezers-- 22 21
automatic defrost with side-mounted
freezer with through-the-door ice
service.
9-BI................................... Built-In Upright freezers with 27 27
automatic defrost.
----------------------------------------------------------------------------------------------------------------
The max-tech efficiency levels identified for commercially
available products are in most cases different from the max-tech levels
shown in Table III.1. These levels are significantly higher than the
commercially available max-tech levels for product classes 9 (upright
freezers with automatic defrost), 10 (chest freezers), 11 (compact
refrigerators and refrigerator-freezers with manual defrost), and 18
(compact chest freezers). DOE determined that higher max-tech levels
for these products were possible because the commercially available
products generally do not use all of the energy efficient design
options considered in the DOE max-tech analyses. Prototypes with the
DOE max-tech levels have not been identified, but the design options
are all used in commercially available products.
DOE determined the max-tech levels using the EPA Refrigerator
Analysis (ERA) program to conduct energy modeling. DOE conducted this
energy modeling for specific products examined during the engineering
analysis. DOE created energy models for the existing products and
adjusted these models to represent modified designs using the screened-
in design options. The max-tech levels represent the most efficient
design option combinations applicable for the analyzed products. This
process is described in the NOPR TSD in chapter 5, Engineering Analysis
in sections 5.4.4 and 5.7. DOE considered different sets of design
options for each product class, as indicated in Table III.2,
Table III.2--Design Options Considered for Max Tech
--------------------------------------------------------------------------------------------------------------------------------------------------------
Design option
--------------------------------------------------------------------------------------------------------------------------
Product class Heat Vacuum Variable Variable anti-
BLDC* fan exchanger Thicker walls insulation speed Adaptive sweat heater Isobutane
motors improvement panels (VIPs) compressor defrost control refrigerant
--------------------------------------------------------------------------------------------------------------------------------------------------------
3............................ [radic] [radic] .............. [radic] [radic] [radic] ............. .............
5............................ [radic] [radic] .............. [radic] [radic] [radic] [radic] .............
7............................ [radic] [radic] .............. [radic] [radic] [radic] [radic] .............
9............................ [radic] [radic] [radic] [radic] [radic] [radic] ............. .............
10........................... .............. [radic] [radic] [radic] [radic] ............. ............. .............
11........................... .............. [radic] [radic] [radic] [radic] ............. ............. [radic]
18........................... .............. [radic] [radic] [radic] [radic] ............. ............. .............
3A-BI........................ [radic] [radic] .............. [radic] [radic] [radic] ............. .............
5-BI......................... [radic] [radic] .............. [radic] [radic] [radic] [radic] .............
7-BI......................... [radic] [radic] .............. [radic] [radic] [radic] [radic] .............
9-BI......................... [radic] [radic] .............. [radic] [radic] [radic] ............. .............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Brushless-Direct-Current.
Stakeholder comments and questions regarding the preliminary
analysis max-tech levels primarily address (a) The validity of max tech
that is calculated based on technology options that are used in
commercialized products but which is not achieved in actual products or
prototypes, (b) the validity of consideration of variable speed
compressors for compact products, (c) whether some of the design
options, particularly heat exchanger size increases, would fit
physically in the products, and (d) the validation of the energy
modeling predictions. Comments falling under categories (b) through (d)
address engineering analysis issues and are discussed in section IV.C,
below.
Some stakeholders questioned DOE's use of energy analysis based on
design options used in commercial products to determine max-tech levels
rather than the maximum efficiency levels of available products.
[[Page 59484]]
AHAM questioned DOE's use of the max-tech evaluation. AHAM supports
DOE's historical approach of using the max-tech reference to identify
those units in the market that have achieved the maximum efficiency.
(AHAM, No. 34 at pp. 10, 15)
GE also pointed out the discrepancy between the commercially
available max-tech level and the theoretical max-tech level. (GE,
Public Meeting Transcript, No. 28 at p. 77) GE mentioned that DOE has
not provided a detailed comparison of the maximum efficiency levels
currently available in the market with the model-based max tech. (Id.)
In written comments, GE also stated that DOE should not use theoretical
max-tech levels not yet proven as viable alternatives in the
marketplace and noted that there may be some instances where the
inclusion of certain designs options may not yield additive
improvements in efficiency. (GE, No. 37 at p. 2)
While DOE has often selected max-tech levels that are based on
commercially available efficiency levels, max-tech selections are not
required to be limited to commercially available products or
prototypes. DOE follows a prescribed method for evaluating
technologies, which is laid out in 10 CFR part 430, subpart C, appendix
A. When DOE evaluates design options in ascertaining max-tech levels,
these options are ones that have been incorporated into commercial
products or in working prototypes. See, e.g., 10 CFR part 430, subpart
C, appendix A, section 4(a)(4)(i) and 5(b)(1). The range of candidate
standard levels will typically include the most energy efficient
combination of design options. 10 CFR part 430, subpart C, appendix A,
section 5(c)(3)(i)(A). Because all of the design options represented by
the max-tech levels examined by DOE are in use in the marketplace, DOE
is considering max-tech levels that employ combinations of these design
options, which, for some of the product classes, are not currently
found in the marketplace. DOE considered in the analysis whether the
chosen design options used for the max-tech analyses can be combined
and concluded that the chosen combinations are valid. For example, when
considering VIPs, DOE adjusted the analysis to remove some conventional
insulation, and when considering variable-speed compressors, DOE
removed high-efficiency single-speed compressor design options.
DOE requests comment on the max-tech levels identified and on the
combinations of design options considered applicable to achieve max-
tech designs. DOE requests that comments also address as appropriate
the differences in applicable design options for different product
classes. See Issue 2 under ``Issues on Which DOE Seeks Comment'' in
section VII.E. Based on comments received in response to these issues,
DOE may make adjustments to its proposed levels.
C. Energy Savings
1. Determination of Savings
DOE used its NIA spreadsheet model to estimate energy savings from
amended standards for the refrigeration products that are the subject
of this rulemaking.\15\ For each TSL, DOE forecasted energy savings
beginning in 2014, the year that manufacturers would be required to
comply with amended standards, and ending in 2043. DOE quantified the
energy savings attributable to each TSL as the difference in energy
consumption between the standards case and the base case. The base case
represents the forecast of energy consumption in the absence of amended
mandatory efficiency standards, and considers market demand for more-
efficient products.
---------------------------------------------------------------------------
\15\ The NIA spreadsheet model is described in section IV.G of
this notice.
---------------------------------------------------------------------------
The NIA spreadsheet model calculates the electricity savings in
``site energy'' expressed in kilowatt-hours (kWh). Site energy is the
energy directly consumed by refrigeration products at the locations
where they are used. DOE reports national energy savings on an annual
basis in terms of the aggregated source (primary) energy savings, which
is the savings in the energy that is used to generate and transmit the
site energy. (See TSD chapter 10.) To convert site energy to source
energy, DOE derived annual conversion factors from the model used to
prepare the Energy Information Administration's (EIA) Annual Energy
Outlook 2010 (AEO2010).
2. Significance of Savings
As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting
a standard for a covered product if such standard would not result in
``significant'' energy savings. While the term ``significant'' is not
defined in the Act, the U.S. Court of Appeals, in Natural Resources
Defense Council v. Herrington, 768 F.2d 1355, 1373 (DC Cir. 1985),
indicated that Congress intended ``significant'' energy savings in this
context to be savings that were not ``genuinely trivial.'' The energy
savings for all of the TSLs considered in this rulemaking are
nontrivial, and, therefore, DOE considers them ``significant'' within
the meaning of section 325 of EPCA.
D. Economic Justification
1. Specific Criteria
As noted in section II.B, EPCA provides seven factors to be
evaluated in determining whether a potential energy conservation
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of an amended standard on manufacturers,
DOE first determines the quantitative impacts using an annual cash-flow
approach. This step includes both a short-term assessment--based on the
cost and capital requirements during the period between the issuance of
a regulation and when entities must comply with the regulation--and a
long-term assessment over a 30-year analysis period. The industry-wide
impacts analyzed include INPV (which values the industry on the basis
of expected future cash flows), cash flows by year, changes in revenue
and income, and other measures of impact, as appropriate. Second, DOE
analyzes and reports the impacts on different types of manufacturers,
paying particular attention to impacts on small manufacturers. Third,
DOE considers the impact of standards on domestic manufacturer
employment and manufacturing capacity, as well as the potential for
standards to result in plant closures and loss of capital investment.
Finally, DOE takes into account cumulative impacts of different DOE
regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and the PBP associated with new or amended standards.
The LCC, which is separately specified in EPCA as one of the seven
factors to be considered in determining the economic justification for
a new or amended standard, 42 U.S.C. 6295(o)(2)(B)(i)(II), is discussed
in the following section. For consumers in the aggregate, DOE also
calculates the national net present value of the economic impacts on
consumers over the forecast period used in a particular rulemaking.
b. Life-Cycle Costs
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy and
maintenance and
[[Page 59485]]
repair expenditures) discounted over the lifetime of the product. The
LCC savings for the considered efficiency levels are calculated
relative to a base case that reflects likely trends in the absence of
amended standards. The LCC analysis requires a variety of inputs, such
as product prices, product energy consumption, energy prices,
maintenance and repair costs, product lifetime, and consumer discount
rates. DOE assumed in its analysis that consumers will purchase the
considered products in 2014.
To account for uncertainty and variability in specific inputs, such
as product lifetime and discount rate, DOE uses a distribution of
values with probabilities attached to each value. A distinct advantage
of this approach is that DOE can identify the percentage of consumers
estimated to receive LCC savings or experience an LCC increase, in
addition to the average LCC savings associated with a particular
standard level. In addition to identifying ranges of impacts, DOE
evaluates the LCC impacts of potential standards on identifiable
subgroups of consumers that may be disproportionately affected by a
national standard.
c. Energy Savings
While significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE uses
the NIA spreadsheet results in its consideration of total projected
energy savings.
d. Lessening of Utility or Performance of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE sought to
develop standards for refrigeration products that would not lessen the
utility or performance of these products. None of the TSLs presented in
today's NOPR would substantially reduce the utility or performance of
the products under consideration in the rulemaking. However,
manufacturers may reduce the availability of features that increase
energy use, such as multiple drawers, in response to amended standards.
(42 U.S.C. 6295(o)(2)(B)(i)(IV))
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It also directs the Attorney General
of the United States (Attorney General) to determine the impact, if
any, of any lessening of competition likely to result from a proposed
standard and to transmit such determination to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V)
and (B)(ii)) DOE has transmitted a copy of today's proposed rule to the
Attorney General and has requested that the Department of Justice (DOJ)
provide its determination on this issue. DOE will address the Attorney
General's determination in the final rule.
f. Need for National Energy Conservation
Certain benefits of the proposed standards are likely to be
reflected in improvements to the security and reliability of the
Nation's energy system. Reductions in the demand for electricity may
also result in reduced costs for maintaining the reliability of the
Nation's electricity system. DOE conducts a utility impact analysis to
estimate how standards may affect the Nation's needed power generation
capacity.
Energy savings from the proposed standards are also likely to
result in environmental benefits in the form of reduced emissions of
air pollutants and greenhouse gases associated with energy production.
DOE reports the environmental effects from the proposed standards for
refrigeration products, and from each TSL it considered, in the
environmental assessment contained in chapter 15 in the NOPR TSD. DOE
also reports estimates of the economic value of emissions reductions
resulting from the considered TSLs.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
In developing the proposals of this notice, DOE has also considered the
comments of the stakeholders, including those raised in the Joint
Comments.
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first-year of energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the payback period for
consumers of potential amended energy conservation standards. These
analyses include, but are not limited to, the 3-year payback period
contemplated under the rebuttable presumption test. However, DOE
routinely conducts an economic analysis that considers the full range
of impacts to the consumer, manufacturer, Nation, and environment, as
required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis
serve as the basis for DOE to definitively evaluate the economic
justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic
justification). The rebuttable presumption payback calculation is
discussed in section IV.F.12 of this NOPR and chapter 8 of the NOPR
TSD.
IV. Methodology and Discussion
DOE used two spreadsheet tools to estimate the impact of today's
proposed standards. The first spreadsheet calculates LCCs and payback
periods of potential new energy conservation standards. The second
provides shipments forecasts, and then calculates national energy
savings and net present value impacts of potential new energy
conservation standards. DOE also assessed manufacturer impacts, largely
through use of the Government Regulatory Impact Model (GRIM). The two
spreadsheets will be made available online at the rulemaking Web site:
http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers.html.
Additionally, DOE estimated the impacts on utilities and the
environment of energy efficiency standards for refrigeration products.
DOE used a version of EIA's National Energy Modeling System (NEMS) for
the utility and environmental analyses. The NEMS model simulates the
energy sector of the U.S. economy. EIA uses NEMS to prepare its Annual
Energy Outlook, a widely known energy forecast for the United States.
The version of NEMS used for appliance standards analysis is called
NEMS-BT,\16\ and is based on the AEO version with minor
modifications.\17\ The
[[Page 59486]]
NEMS-BT offers a sophisticated picture of the effect of standards
because it accounts for the interactions between the various energy
supply and demand sectors and the economy as a whole.
---------------------------------------------------------------------------
\16\ BT stands for DOE's Building Technologies Program.
\17\ The EIA allows the use of the name ``NEMS'' to describe
only an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the
model as used here. For more information on NEMS, refer to The
National Energy Modeling System: An Overview, DOE/EIA-0581 (98)
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
---------------------------------------------------------------------------
A. Market and Technology Assessment
When beginning an energy conservation standards rulemaking, DOE
develops information that provides an overall picture of the market for
the products concerned, including the purpose of the products, the
industry structure, and market characteristics. This activity includes
both quantitative and qualitative assessments, based primarily on
publicly available information. The subjects addressed in the market
and technology assessment for this rulemaking include product classes
and manufacturers; quantities, and types of products sold and offered
for sale; retail market trends; regulatory and non-regulatory programs;
and technologies or design options that could improve the energy
efficiency of the product(s) under examination. See chapter 3, Market
and Technology Assessment, of the NOPR TSD for further discussion of
the market and technology assessment.
Discussion presented in this section of today's NOPR primarily
addresses the scope of coverage of refrigeration products and the
product class structure. Both of these issues were discussed at length
during the preliminary analysis public meeting. DOE is proposing
several modifications of the product class structure, as discussed in
section IV.A.2, Below.
1. Exclusion of Wine Coolers From This Rulemaking
During the preliminary analysis, DOE considered whether wine
coolers are covered products under EPCA, and whether they would be
considered in this rulemaking. DOE modified the definition of
``Electric Refrigerator'' on November 19, 2001, by limiting the
definition to products designed for the refrigerated storage of food at
temperatures above 32 [deg]F and below 39 [deg]F. 66 FR 57845, 57848
(November 19, 2001). The modification imposed an upper limit on the
applicable storage temperature range, thus eliminating wine storage
products, which operate with storage temperatures above 40 [deg]F (and
generally near 55 [deg]F) from consideration as electric refrigerators.
The industry generally urged DOE to consider wine coolers within the
scope of its rulemaking. (AHAM, No. 34 at p. 9; Sub Zero, Public
Meeting Transcript, No. 28 at p. 108; Sub Zero, No. 40 at p. 9;
Whirlpool, No. 31 at p. 2) AHAM further argued that DOE does have the
authority to regulate wine coolers, and stated that regulation of wine
coolers under a DOE standard is important to prevent manufacturers from
having to meet multiple State requirements. (AHAM, Public Meeting
Transcript, No. 28 at p. 36) Sub Zero suggested that DOE establish a
standard that is consistent with current standards set by the
California Energy Commission (CEC) and Natural Resources Canada
(NRCan), and also argued that no State or foreign requirement should
set a de facto national standard for any appliance. (Sub Zero, No. 40
at p. 9) Other commenters, IOU and Energy Solutions, representing
Pacific Gas and Electric (PG&E), supported DOE's proposal. (IOU, No. 36
at p. 12; PG&E, Public Meeting Transcript, No. 28 at p. 36)
DOE notes that residential wine coolers are appliances designed for
the storage of wine at a temperature of approximately 55 [deg]F.
Because they are neither designed for food storage, nor maintain
storage temperatures below 39 [deg]F, they are not ``electric
refrigerators'' as defined in 10 CFR 430.2. Since EPCA does not define
the term ``refrigerators'' or ``refrigeration products,'' a definition
could be developed to account for those products that operate with
warmer compartment temperature ranges, including wine storage products.
DOE may consider such a change in a future rulemaking.
2. Product Classes
In evaluating and establishing energy conservation standards, DOE
generally divides covered products into classes by the type of energy
used, or by capacity or other performance-related feature that
justifies a different standard for those products. (See 42 U.S.C.
6295(q)). In deciding whether a feature justifies a different standard,
DOE must consider factors such as the utility of the feature to users.
(Id.) DOE normally establishes different energy conservation standards
for different product classes based on these criteria. The CFR sets
forth 18 product classes for refrigerators, refrigerator-freezers, and
freezers.\18\ These classes are based on the following characteristics:
type of unit (refrigerator, refrigerator-freezer, or freezer), size of
the cabinet (standard or compact), type of defrost system (manual,
partial, or automatic), presence or absence of through-the-door (TTD)
ice service, and placement of the fresh food and freezer compartments
for refrigerator-freezers (top, side, bottom).
---------------------------------------------------------------------------
\18\ Title 10--Energy, Chapter II--Department of Energy, Part
430--Energy Conservation Program for Consumer Products, Subpart A--
General Provisions, Section 430.32--Energy and Water Conservation
Standards and Effective Dates.
---------------------------------------------------------------------------
DOE proposes to create 19 new product classes to account for the
increasingly wider number of variants of products. Six new product
classes were discussed and proposed in the preliminary analysis phase.
Table IV.1 presents the product classes under consideration in this
rulemaking, including both current and proposed classes. Note that the
designation of some of the current product classes has changed in order
to address the proposed division of these product classes. The
subsections below provide additional details and discussion of comments
relating to the product classes under consideration.
Table IV.1--Proposed Product Classes for Refrigeration Products
------------------------------------------------------------------------
Number Product class
------------------------------------------------------------------------
Classes listed in the CFR
------------------------------------------------------------------------
1............................ Refrigerators and refrigerator-freezers
with manual defrost.
2............................ Refrigerator-freezers--partial automatic
defrost.
3............................ Refrigerator-freezers--automatic defrost
with top-mounted freezer without an
automatic icemaker.
4............................ Refrigerator-freezers--automatic defrost
with side-mounted freezer without an
automatic icemaker.
5............................ Refrigerator-freezers--automatic defrost
with bottom-mounted freezer without an
automatic icemaker.
6............................ Refrigerator-freezers--automatic defrost
with top-mounted freezer with through-
the-door ice service.
7............................ Refrigerator-freezers--automatic defrost
with side-mounted freezer with through-
the-door ice service.
[[Page 59487]]
8............................ Upright freezers with manual defrost.
9............................ Upright freezers with automatic defrost
without an automatic icemaker.
10........................... Chest freezers with manual defrost and
all other freezers except compact
freezers.
11........................... Compact refrigerators and refrigerator-
freezers with manual defrost.
12........................... Compact refrigerator-freezers--partial
automatic defrost.
13........................... Compact refrigerator-freezers--automatic
defrost with top-mounted freezer.
14........................... Compact refrigerator-freezers--automatic
defrost with side-mounted freezer.
15........................... Compact refrigerator-freezers--automatic
defrost with bottom-mounted freezer.
16........................... Compact upright freezers with manual
defrost.
17........................... Compact upright freezers with automatic
defrost.
18........................... Compact chest freezers.
------------------------------------------------------------------------
Product classes proposed to be established in this rulemaking and
introduced in the preliminary TSD
------------------------------------------------------------------------
1A........................... All-refrigerators--manual defrost.
3A........................... All-refrigerators--automatic defrost.
5A........................... Refrigerator-freezers--automatic defrost
with bottom-mounted freezer with through-
the-door ice service.
10A.......................... Chest freezers with automatic defrost.
11A.......................... Compact all-refrigerators--manual
defrost.
13A.......................... Compact all-refrigerators--automatic
defrost.
------------------------------------------------------------------------
Additional product classes proposed to be established in this rulemaking
------------------------------------------------------------------------
3-BI......................... Built-in refrigerator-freezer--automatic
defrost with top-mounted freezer without
an automatic icemaker.
3I........................... Refrigerator-freezers--automatic defrost
with top-mounted freezer with an
automatic icemaker without through-the-
door ice service.
3I-BI........................ Built-in refrigerator-freezers--automatic
defrost with top-mounted freezer with an
automatic icemaker without through-the-
door ice service.
3A-BI........................ Built-in all-refrigerators--automatic
defrost.
4I........................... Refrigerator-freezers--automatic defrost
with side-mounted freezer with an
automatic icemaker without through-the-
door ice service.
4-BI......................... Built-in refrigerator-freezers--automatic
defrost with side-mounted freezer
without an automatic icemaker.
4I-BI........................ Built-in refrigerator-freezers--automatic
defrost with side-mounted freezer with
an automatic icemaker without through-
the-door ice service.
5I........................... Refrigerator-freezers--automatic defrost
with bottom-mounted freezer with an
automatic icemaker without through-the-
door ice service.
5-BI......................... Built-in refrigerator-freezers--automatic
defrost with bottom-mounted freezer
without an automatic icemaker.
5I-BI........................ Built-in refrigerator-freezers--automatic
defrost with bottom-mounted freezer with
an automatic icemaker without through-
the-door ice service.
5A-BI........................ Built-in refrigerator-freezer--automatic
defrost with bottom-mounted freezer with
through-the-door ice service.
7-BI......................... Built-in refrigerator-freezers--automatic
defrost with side-mounted freezer with
through-the-door ice service.
9-BI......................... Built-in upright freezers with automatic
defrost without an automatic icemaker.
------------------------------------------------------------------------
DOE proposed six new product classes in the preliminary TSD. Two of
these, product class 5A, ``automatic defrost refrigerator-freezers with
bottom-mounted freezer with through-the-door ice service,'' and product
class 10A, ``chest freezers with automatic defrost,'' were identified
in the framework document as product classes 19 and 20. DOE modified
the designation of these product classes in order to maintain
consistency with the product class designations adopted by Canada. DOE
received comments from AHAM and Whirlpool supporting this modification.
(AHAM, Public Meeting Transcript, No. 28 at pp. 40; AHAM, No. 34 at p.
3; Whirlpool, No. 31 at p. 1)
Four additional product classes proposed in the preliminary TSD are
all-refrigerators. As described below, the proposed new test procedure
has led to DOE's proposal to establish separate product classes for
these products.
As part of today's NOPR, DOE proposes 13 additional new product
classes. These classes are based on incorporation of icemaking energy
use into the test procedure, and the need to address the different
consumer utility and energy use characteristics of built-in products.
EPCA requires that the establishment of separate product classes be
based on either (A) consumption of a different kind of energy from that
consumed by other covered products within such type (or class); or (B)
a capacity or other performance-related feature which other products
within such type (or class) do not have, where such feature justifies a
higher or lower standard from that which applies to other products
within such type (or class). (42 U.S.C. 6295(q)). The second of these
criteria is applicable to all of the new product classes proposed in
this rulemaking.
a. French Door Refrigerators With Through-the-Door Ice Service
DOE proposes to establish a new product class 5A (refrigerator-
freezers--automatic defrost with bottom-mounted freezer with through-
the-door ice service). Most, if not all, products of this class have a
pair of French doors rather than a single door serving the upper fresh
food compartment. Products of class 5A have TTD ice service features
which are not present in current product class 5 (refrigerator-
freezers--automatic defrost with bottom-mounted freezer without
through-the-door ice service). These added features increase energy use
because of the thermal load associated with the TTD dispenser
penetration and the anti-sweat heater energy generally used in this
area of the product. See, e.g., Decision and Order (Maytag
Corporation), Office of Hearings and Appeals, Case No. TEE-0022
(published August 11, 2005) (granting
[[Page 59488]]
exception relief to Maytag and creating a revised energy equation to
permit the sale of refrigerator-freezers equipped with a bottom-mounted
freezer and through-the-door ice service). Hence, because of the
presence of this capability, DOE has determined that these unique
features merit a separate product class and justify a separate maximum
energy use standard.
b. Chest Freezers With Automatic Defrost
Products of class 10A (chest freezers with automatic defrost)
include an automatic defrost function, a feature not present in chest
freezers with manual defrost. Automatic, as opposed to manual, defrost
is recognized as a feature with distinct consumer utility that
increases energy use, justifying a separate energy use standard. See,
e.g., Decision and Order (Electrolux Home Products, Inc.), Office of
Hearings and Appeals, Case No. TEE-0012 (published September 13, 2004).
c. All-Refrigerators
DOE proposes establishing four new all-refrigerator product classes
to separate these products from their current product classes. These
current product classes--1 (refrigerators and refrigerator-freezers
with manual defrost), 3 (refrigerator-freezers--automatic defrost with
top-mounted freezer without through-the-door ice service and all-
refrigerators--automatic defrost), 11 (compact refrigerators and
refrigerator-freezers with manual defrost), and 13 (compact
refrigerator-freezers--automatic defrost with top-mounted freezer and
compact all-refrigerator--automatic defrost)--include refrigerators
with freezer compartments (``basic refrigerators''), refrigerator-
freezers, and all-refrigerators. The proposed test procedure changes
described in section III.A will result in significantly higher measured
energy use for basic refrigerators and refrigerator-freezers, and
somewhat less energy use for all-refrigerators. At this time, DOE
believes that these differences in energy use characteristics under the
proposed new test procedures, combined with the distinct utility
difference associated with presence of a freezer compartment (of 0.5
cubic foot size or greater) satisfy the criteria under EPCA to
establish separate product classes. (See 42 U.S.C. 6295(q)(1)(B)). DOE
received comments supporting this proposal from AHAM and Whirlpool
(AHAM, Public Meeting Transcript, No. 28 at p. 40; AHAM, No. 34 at p.
4; Whirlpool, Public Meeting Transcript, No. 28 at pp. 41-42) Whirlpool
clarified in written comments that separate product classes should not
be added for multi-door refrigerators (Whirlpool, No. 31 at p. 1).
DOE's proposal to separate all-refrigerators from the product
classes that currently include all-refrigerators, refrigerator-
freezers, and basic refrigerators is based on the performance afforded
by the freezer compartments of refrigerator-freezers and basic
refrigerators. All-refrigerators were not explicitly mentioned when the
1990 energy standard was established. 54 FR 6062, 6077 (February 7,
1989). Product class 1 includes all-refrigerators with manual defrost,
since ``all-refrigerator'' is a sub-category of ``refrigerator.'' That
final rule did not explicitly recognize the existence of all-
refrigerators with automatic defrost. (Id.) These products were
subsequently added to product class 3 starting with the 1993 standard.
54 FR 47916 (November 17, 1989). The NOPR for that final rule, made
this change in response to comments received from Whirlpool and AHAM.
53 FR 48798, 48809 (December 2, 1988). When compact products were later
separated from standard-size products with the 2001 standard, the
compact all-refrigerators became part of product classes 11 (for manual
defrost products) and 13 (for automatic defrost products). 62 FR 23102
(April 28, 1997).
Under the proposed test procedures that underpin today's proposed
levels, the energy use characteristics of all-refrigerators will not be
consistent with the refrigerator-freezers and basic refrigerators of
the same current product classes. Specifically, the measured energy use
of all-refrigerators is expected to decrease under the proposed new
test procedures, while the measured energy use of refrigerator-freezers
and basic refrigerators is expected to increase significantly (See the
preliminary TSD chapter 5, Engineering Analysis, section 5.4.2.1).
Since the freezer compartments of refrigerator-freezers and basic
refrigerators provide a different level of consumer utility than all-
refrigerators, and because the product differences also contribute to
different efficiency characteristics, DOE tentatively believes that
separating these product classes is justified under EPCA. See 42 U.S.C.
6295(q).
With respect to the treatment of those products equipped with off-
cycle defrost, DOE sought comment on whether stakeholders agree with
the agency's interpretation that this feature is a form of automatic
defrost and whether the proposed product class 1A (all-refrigerators
with manual defrost) is needed. In products with off-cycle defrost, the
evaporator warms above freezing temperature when the compressor turns
off, thus allowing the frost to melt. Such defrost systems are used
only in all-refrigerators or fresh food compartments of refrigerator-
freezers, because the compartment temperature must be above 32 [deg]F
for the evaporator to warm above freezing. The proposed product class
1A includes standard-size all-refrigerators with manual defrost. If
off-cycle defrost is treated as automatic defrost rather than manual
defrost, product class 1A would consist primarily of refrigerators with
roll-bond evaporators enclosing freezer compartments with a size of
less than 0.5 cubic foot. During the preliminary analysis discussion,
DOE was unaware of whether standard-size products with such small
freezer compartments exist and requested comment on these issues for
this reason.
AHAM commented during the public meeting that it considers off-
cycle defrost to be automatic defrost, but that it was not aware of any
all-refrigerator products with manual defrost (AHAM, Public Meeting
Transcript, No. 28 at p. 40) However, Sanyo E&E Corporation (Sanyo)
indicated in written comments that it manufacturers such products
(Sanyo, No. 32 at p. 3) Based on this information, DOE proposes that
product class 1A be established in addition to the other all-
refrigerator product classes.
ASAP urged DOE to avoid introducing too many product classes, and
that streamlining product classes has been shown to reduce overall
energy consumption. (ASAP, Public Meeting Transcript, No. 28 at p. 41)
DOE believes that each of its proposed product classes is needed to
ensure that meaningful efficiency levels will be established for each
of these products. Because the measured energy use of products with
freezer compartments larger than 0.5 cubic foot is expected to increase
roughly 15 percent under the proposed new test procedure and the energy
use of all-refrigerators is expected to decrease roughly 3 percent (see
chapter 5, Engineering Analysis, of the preliminary TSD, section
5.4.2.1), the energy use characteristics of the former group of
products will determine the new standards for these product classes.
The proposed test procedure would be more representative of field
energy use differences of these product classes and would show higher
energy use for basic refrigerators and refrigerator-freezers than all-
refrigerators. Accordingly, by DOE's estimates, the potential energy
savings associated with all-refrigerators resulting from the new energy
standard would be roughly 18 percent less if DOE
[[Page 59489]]
retains the current product class structure than they would be if DOE
establishes separate all-refrigerator product classes.
d. Products With Automatic Icemakers
The test procedure proposed to apply to refrigeration products
covered under the proposed new energy conservation standards
incorporates energy use associated with automatic icemaking. 75 FR
29846 (May 27, 2010). DOE considers an automatic icemaker to be a
feature that provides unique consumer utility. Products equipped with
an automatic icemaker would have energy characteristics that are
distinct from those without one because the energy use measured under
the proposed test procedure depends on the presence of an automatic
icemaker. Therefore, DOE tentatively concludes that establishing
product class distinctions based on the presence of an automatic
icemaker is justified. (See 42 U.S.C. 6295(q).)
Some of the existing product classes denote products that
inherently have automatic icemakers. These include product classes 6
(refrigerator-freezers--automatic defrost with top-mounted freezer with
through-the-door ice service) and 7 (refrigerator-freezers--automatic
defrost with side-mounted freezer with through-the-door ice service).
However, some of the other product classes denote products that may or
may not include automatic icemakers. For these products, DOE proposes
to establish new product classes, as indicated in Table IV.1, above.
These proposed new product classes include conventional (free-standing)
and built-in classes of refrigerator-freezers with automatic defrost.
Built-in product classes are discussed further in section IV.A.2.e
below.
DOE requests comments on its proposal to establish product classes
for products with automatic icemakers, including DOE's proposed
approach to account for icemakers in the product class structure. See
Issue 3 under ``Issues on Which DOE Seeks Comment'' in section VII.E of
this NOPR. The classes and levels that DOE ultimately adopts may be
adjusted from the proposal based on the comments an information DOE
receives and gathers.
e. Built-In Products
DOE received several comments on the possible establishment of
separate product classes for built-in refrigeration products. Sub Zero
supported establishing separate product classes, citing (i) inherent
design differences between built-in and free-standing products that
make attaining higher efficiency levels more difficult for built-ins
(the efficiency level difference was quantified as about 15 percent),
(ii) limited design options for improving built-in unit efficiency,
(iii) the unique utility of these products, not offered by conventional
units, which, in Sub Zero's view, satisfies the criteria under EPCA to
justify creating a new product class, and (iv) the precedent set in the
previous refrigeration product rulemaking, where separate product
classes were established for compact refrigerators. (Sub Zero, Public
Meeting Transcript, No. 28 at pp. 101-04; Sub Zero, No. 40 at pp. 5-7)
In Sub Zero's view, the unique consumer utility offered by built-ins is
their ability to fit seamlessly into the surrounding kitchen cabinetry.
(Sub-Zero, No. 40 at p. 6) Sub Zero also commented that built-ins have
numerous differences when compared to their free-standing counterparts.
Typically, built-in units have more doors and drawers than other
products, and may also have glass doors and several different
temperature compartments. (Id.) Sub Zero supported these statements
with additional comments and concluded that DOE's decision on whether
to create product classes for built-in units is pivotal to Sub Zero's
ability to compete in the market. (Sub Zero, Public Meeting Transcript,
No. 28 at p. 104; Sub Zero, No. 40 at p. 7)
AHAM, Whirlpool, and Sanyo all submitted comments supporting Sub
Zero's request for separate product classes for built-in units. (AHAM,
Public Meeting Transcript, No. 28 at pp. 104-05; AHAM, No. 34 at p. 8;
Whirlpool, No. 31 at p. 4; and Sanyo, No. 32 at p. 2) AHAM supported
Sub Zero's statement that built-in products provide an important
utility to a subset of refrigeration product consumers. (AHAM, No. 34
at p. 8) Whirlpool agreed that the characteristics of built-in units
are sufficiently different from free-standing models, and noted that
built-ins have significantly different cost requirements to reach
higher efficiencies. (Whirlpool, No. 31 at p. 4) Sanyo stated that the
design issues affecting standard-sized built-in models affect compact
built-ins as well. (Sanyo, No. 32 at p. 2)
To address the built-in issue, AHAM suggested a definition for
built-in products:
Refrigerators, freezers and refrigerators with freezer units
that are 7.75 cubic feet or greater; are totally encased by
cabinetry or panels by either accepting a custom front panel or
being equipped with an integral factory-finished face; are intended
to be securely fastened to adjacent cabinetry, walls or floor; has
sides which are not fully finished and are not intended to be
visible after installation.
(AHAM, No. 34 at p. 8)
Despite these comments in favor of establishing a separate built-in
class, DOE also received a number of comments opposing this approach.
In their joint comments, ACEEE and ASAP voiced concern that lower
standards for built-in products would lead to a consumer shift toward
the built-in segment, thereby reducing the projected energy savings
from the standard. (ACEEE/ASAP, No. 43 at p. 5) IOU agreed with the
ACEEE/ASAP concern regarding an increasing built-in market share and
noted that the incremental cost and associated price increase that
manufacturers would incur to design built-in products that would
satisfy the same level of efficiency as their free-standing
counterparts is likely to be small when compared to the final retail
price. Additionally, IOU, along with Earthjustice and NRDC, indicated
that built-in products provide essentially the same amenity and service
as free-standing products, and do not warrant separate product classes
on the basis of offering a unique customer utility. (IOU, No. 36 at p.
11; Earthjustice, No. 35 at pp. 1-5; NRDC, No. 39 at p. 2)
Requirements for consideration of separate product classes are
addressed in 42 U.S.C. 6295(q). That section provides that when
creating a separate class of products, certain criteria must be met:
(q) Special rule for certain types or classes of products.
(1) A rule prescribing an energy conservation standard for a
type (or class) of covered products shall specify a level of energy
use or efficiency higher or lower than that which applies (or would
apply) for such type (or class) for any group of covered products
which have the same function or intended use, if the Secretary
determines that covered products within such group--
(A) Consume a different kind of energy from that consumed by
other covered products within such type (or class); or
(B) Have a capacity or other performance-related feature which
other products within such type (or class) do not have and such
feature justifies a higher or lower standard from that which applies
(or will apply) to other products within such type (or class).
In making a determination under this paragraph concerning
whether a performance-related feature justifies the establishment of
a higher or lower standard, the Secretary shall consider such
factors as the utility to the consumer of such a feature, and such
other factors as the Secretary deems appropriate.
(2) Any rule prescribing a higher or lower level of energy use
or efficiency under paragraph (1) shall include an explanation of
the basis on which such higher or lower level was established.
[[Page 59490]]
(42 U.S.C. 6295(q))
Based on the available facts currently before DOE, built-in
products appear to provide unique consumer utility by enabling
consumers to build these products seamlessly into their kitchen
cabinetry. These products are designed with standard dimensions to fit
standard cabinet sizes, including a shallow depth of 24 inches. As Sub-
Zero pointed out, many of the design differences that permit this
capability also have an impact on energy use. DOE's analysis confirms
the increased difficulty these products have as compared with
freestanding units in achieving further reductions in energy use. This
information is presented in detail in the NOPR TSD, and some of the
information is summarized below in this section.
However, the use of glass doors or additional doors and drawers do
not appear to be unique to built-in products. DOE's Web site research
of the product offerings of four built-in manufacturers (Sub Zero, GE
Monogram, Kitchenaid, and Viking, Web sites accessed June 3, 2010)
showed that most built-in products do not have these features (``Online
Research on Built-in Refrigeration Features'', No. 51). Table IV.2
shows the results of a review of built-in products on the Web sites of
these four major manufacturers of built-in refrigeration products. A
very limited number of the available products (13 out of 116) had these
special features. Additionally, DOE's review of product offerings of
conventional free-standing products shows that many product offerings
have French doors or multiple drawers. Because these features are
neither exclusive to built-ins nor shared by a vast majority of built-
ins, DOE does not consider these features to be particularly relevant
to the consideration of the consumer utility provided by built-in
products.
Table IV.2--Built-In Product Special Features
----------------------------------------------------------------------------------------------------------------
One extra door and
Glass window One extra drawer French doors three extra drawers Number of products
----------------------------------------------------------------------------------------------------------------
X ..................... ..................... ..................... 3
X ..................... ..................... X 1
X ..................... ..................... 6
..................... X ..................... 2
..................... ..................... X 1
----------------------------------------------------------------------------------------------------------------
No special features 103
----------------------------------------------------------------------------------------------------------------
Total number of products 116
----------------------------------------------------------------------------------------------------------------
Note: Based on products on the Web sites of four key manufacturers of built-in refrigeration products.
As noted above, in addition to providing special consumer utility,
EPCA requires that the consumer utility offered by the product form the
basis for the different efficiency characteristics that would merit the
creation of a separate product class. Sub Zero's comments to DOE have
enumerated the design differences associated with the utility provided
by built-in products that affect their energy efficiency, including the
following:
1. Built-ins are typically constrained by kitchen cabinetry,
which can increase the exterior surface area and the door perimeter
length per interior volume, and also limit manufacturers' ability to
increase wall thickness for built-in products more so than for
conventional products because depth increase is limited by the
standard cabinetry depth.
2. Built-ins have more complex hinge motion to avoid adjacent
cabinets, which increases the size of the hinge hardware embedded in
the cabinet walls, thus increasing thermal loss.
3. Air flow is more restricted for built-ins, since the
installation imposes more limits on access for air movement.
Condenser air flow is often in and out of the front of the condenser
area, thus reducing condenser air flow rate.
(Sub-Zero, No. 40 at p. 6)
In addition, some built-in products use hot gas rather than warm
liquid anti-sweat heating loops. Nearly all conventional free-standing
products with refrigerant anti-sweat loop use warm liquid. Warm liquid
loops use refrigerant liquid that has left the condenser to warm the
surfaces in question, while hot gas loops use hot gas that has not yet
entered the condenser. Because the hot gas refrigerant is at a higher
temperature than the warm liquid used in a warm liquid loop, it can
transfer significantly more heat to the heated surface and, in turn, to
the cabinet interior. Hot gas loops are sometimes used in built-ins
because the paneling mounted on the doors blocks the door frame
surfaces from being warmed by ambient air, which more readily leads to
condensation during field use (i.e., in a customer's home). This design
can increase cabinet load, resulting in a higher measured energy
use.\19\
---------------------------------------------------------------------------
\19\ Cabinet load refers to the thermal load (heat) entering the
cabinet. The refrigeration system must remove this load from the
cabinet to maintain compartment temperatures, and it expends energy
in doing so.
---------------------------------------------------------------------------
DOE analyzed four built-in products for the NOPR to determine
whether their efficiency characteristics differ significantly from
those of conventional free-standing products. These four products
represent four key product classes for built-in products, all of
standard (not compact) size: All-refrigerator--automatic defrost
(proposed product class 3A), refrigerator-freezers--automatic defrost
with bottom-mounted freezer without through-the-door ice service
(product class 5), refrigerator-freezers--automatic defrost with side-
mounted freezer with through-the-door ice service (product class 7),
and upright freezers with automatic defrost (product class 9). DOE
compared the results of these analyses with those conducted for
conventional (free-standing) products for product classes 3
(refrigerator-freezer--automatic defrost with top-mounted freezer
without through-the-door ice service), 5, 7, and 9.
Product class 3 under the current standard includes both all-
refrigerator--automatic defrost and refrigerator-freezer--automatic
defrost with top-mounted freezer without through-the-door ice service.
Because there are very few shipments of built-in top-mount
refrigerators, and all-refrigerators are a minority product for the
free-standing market, DOE compared a conventional top-mount
refrigerator with the built-in all-refrigerator.
DOE analyzed two conventional products of each examined product
class. The max-tech levels for the analyzed built-ins and conventional
products are compared in Table IV.3. The max-tech levels for the built-
in
[[Page 59491]]
products are significantly lower than those for the conventional
products, by roughly 10 percent for the refrigerator-freezers (product
classes 5 and 7) and 15 percent for the upright freezers (product class
9). The difference is greater for upright freezers because DOE
considered wall thickness increases appropriate for conventional
upright freezers but not for built-in upright freezers, due to the
limited-space kitchen installation typical for built-in upright
freezers.
Table IV.3--Max-Tech Differences between Built-In and Conventional Products
----------------------------------------------------------------------------------------------------------------
Built-in: 3A
Product class conventional: 3 5 (see Note 1) 7 9
----------------------------------------------------------------------------------------------------------------
Design Options.................. Larger Larger Larger Larger
Heat Exchangers. Heat Exchangers. Heat Exchangers.. Heat Exchangers
BLDC Fan BLDC Fan BLDC Fan BLDC Fan
Motors. Motors. Motors.. Motors
VIPs (see VIPs (see VIPs (see VIPs (see
Note 2). Note 2). Note 2).. Note 2)
Variable- Variable- Variable- Variable-
Speed Compressors. Speed Compressors. Speed Speed Compressors
Adaptive Adaptive Compressors.. Adaptive
Defrost. Defrost. Adaptive Defrost
Variable Defrost.. Forced
Anti-Sweat Heater Variable Convection
Control (see Note Anti-Sweat Heater Condenser (see
4). Control for Ice Note 5).
Dispenser. Wall
Thickness
Increase (see
Note 6).
----------------------------------------------------------------------------------------------------------------
Percentage energy use lower than a baseline-efficiency product
----------------------------------------------------------------------------------------------------------------
Built-In Max Tech............... 29% 27% 22% 27%
Conventional Max Tech........... 36% 36% 33% 44%
----------------------------------------------------------------------------------------------------------------
Notes:
1. Percentage reduction is from reference standard curve with increased slope for product class 5.
2. VIPs applied fully to doors and to half of cabinet.
3. Many of the design options such as BLDC fan motors and adaptive defrost are already present in baseline-
efficiency built-in products.
4. Variable Anti-Sweat Heater control was not considered for the built-in products of product class 5, since
French doors are not common for product class 5 built-ins.
5. Forced convection condenser already present in the baseline built-in upright freezer.
6. Wall thickness increase considered only for the conventional upright freezer, since the built-in upright
freezer is designed primarily for installation in a kitchen, where limitations to product growth apply.
Information provided by built-in unit manufacturers during the NOPR
Manufacturer Impact Analysis (MIA) discussions is generally consistent
with the design differences between built-in and conventional products
shown in the detailed analysis described above. For example, achieving
the ENERGY STAR efficiency level for built-in standard-size
refrigerator-freezers generally requires use of variable-speed
compressors, VIPs, or both. In contrast, conventional standard-size
refrigerator-freezers generally achieve this efficiency level without
use of either of these design options. This situation leaves fewer
options available for further efficiency improvements for built-in
products. Accordingly, based on this information, there do not appear
to be additional design options currently available to enable
manufacturers to produce built-ins to an efficiency level matching
their free-standing counterparts.
Moreover, the unique consumer utility offered by built-in products
is demonstrated in part by the higher costs some customers are willing
to pay to obtain this utility. While cost difference alone is generally
not considered to be basis for consumer utility, the significantly
higher price paid by consumers for built-in products can be considered
an indicator that consumers value the utility associated with the
built-in design. The cost difference between built-in and conventional
products is presented in Table IV.4 for product classes 4
(refrigerator-freezers--automatic defrost with side-mounted freezer
without through-the-door ice service), 5, 7, and 9. This comparison is
based on proprietary retail price data collected by The NPD Group,
which includes retail purchase price information for millions of
purchases of refrigeration products. The comparison between the built-
in and conventional product types is based on separate consideration of
brands that include only built-in products and brands that include only
conventional products. Brands that include both built-in and
conventional products (e.g., KitchenAid) are not represented in the
table because the NPD Group dataset does not clearly distinguish built-
in status in the data of such brands. The data show that built-in
product average prices are approximately $3,500 to $6,200 higher than
those of conventional products.
Table IV.4--Built-In Product Cost Compared With Conventional Products
----------------------------------------------------------------------------------------------------------------
Product class Product class Product class Product class
4 5 7 9
----------------------------------------------------------------------------------------------------------------
Built-In Median................................. $6,214 $5,190 $6,637 $3,181
Average......................................... 7,017 4,983 7,213 4,062
Std. Deviation.................................. 1,990 817 1,018 1,023
Conventional Median............................. 1,073 797 1,019 509
Average......................................... 2,220 852 1,048 520
Std. Deviation.................................. 1,333 239 485 209
----------------------------------------------------------------------------------------------------------------
Source: NPD, 2007-2008.
[[Page 59492]]
DOE notes that retail price differences alone do not form the basis
for consumer utility. In the commercial clothes washer (CCW)
rulemaking, Alliance Laundry Systems (Alliance) asserted that the
ability to load a clothes washer from the top is a ``feature'' within
the meaning of 42 U.S.C. 6295 because it provides consumers the
opportunity to purchase lower cost CCWs. 75 FR 1122, 1130 (January 8,
2010). DOE disagreed and noted that while price is an important
consideration to consumers, DOE accounts for these consumer impacts in
its LCC and PBP analyses. 75 FR 1134.
In the case of built-in refrigeration products, the facts suggest
that the higher price paid for a built-in unit reflects the view of
consumers that these products have a special utility when compared to
free-standing equivalent products. As a result, unlike in the case of
commercial clothes washers, where pricing itself was alleged to be a
critical feature within the meaning of EPCA, pricing with respect to
built-in products reflects the additional utility provided by these
units. This price differential between built-in and stand-alone units
indicates that consumers believe that built-in products offer a unique
utility or other performance characteristic not offered by stand-alone
units--in this case, that utility or performance would be the seamless
integration of refrigeration products into kitchen cabinetry and the
surrounding environment.
In summary, DOE tentatively concludes that built-in products
provide consumer utility associated with the ability to build the
products into the kitchen cabinetry, an attribute that is not provided
by other products, and that the design details associated with this
product characteristic result in the reduced efficiency of these
products. DOE has tentatively concluded that these criteria satisfy 42
U.S.C. 6295(q) and is tentatively proposing the creation of a separate
built-in product class.
DOE also proposes to adopt a modified version of the draft
definition developed by AHAM for built-in products cited above, which
would read as follows (changes from the AHAM draft are shown with
italics for additions and bracketed text for deletions):
Built-In Refrigerator/Refrigerator-Freezer/Freezer means any
refrigerator, refrigerator-freezer or freezer with 7.75 cubic feet
or greater total volume and 24 inches or less depth not including
handles and not including custom front panels; is designed to be
[totally] encased on the sides and rear by cabinetry [or panels by
either accepting a custom front panel or being equipped with an
integral factor-finish face]; is designed [intended] to be securely
fastened to adjacent cabinetry, walls or floor; and has sides which
are not fully finished and are not designed to be visible after
installation.
DOE considered AHAM's draft definition's exclusion of products with
volumes less than 7.75 cubic feet. This limitation would exclude
compact products, which are currently defined as having total volume
less than 7.75 cubic feet and height less than 36 inches. (10 CFR
430.2). The draft definition would also exclude non-compact products
that have volume less than 7.75 cubic feet (such products would exceed
36 inches in height). DOE proposes retaining the AHAM draft
definition's omission of additional clarification regarding the 36-inch
height limitation because DOE proposes to remove this limitation from
the definition of compact products (see section IV.A.2.g, below). Sanyo
suggested that DOE consider compact products as part of any built-in
product classes that the agency establishes. (Sanyo, No. 32 at p. 2)
However, DOE notes that special consideration for compact products was
provided when the current energy standards were established in 1997. 62
FR 23102 (April 28, 1997). In particular, DOE created separate product
classes with less stringent standards for all compact refrigeration
products to address their particular characteristics. (Id.) As
discussed in section IV.A.2.g, the arguments for creating separate
product classes for compact products at that time emphasized the issues
associated with undercounter products (essentially built-in compact
products) rather than compact products in general. For this reason, in
DOE's view, the relief sought by Sanyo for compact built-in products
has already been provided and, under the available facts, no additional
consideration appears to be merited at this time.
Further, DOE understands that undercounter products are generally
sold with finished sides to permit both free-standing and undercounter
use. As a result, these products would not meet the proposed built-in
definition. DOE does not propose relaxing the requirement for
unfinished sides to allow for the inclusion of undercounter products.
DOE is declining to take this step to prevent potential gaming by
manufacturers seeking to claim their conventional products as built-in
units.
DOE also proposes to include a depth limitation in the definition
for built-in products. The consumer utility and energy impacts
associated with the depth limitation are highlighted in stakeholder
comments (see, e.g., Sub Zero, No. 40 at p. 6). Investigation of
dimensional data for built-in products shows that nearly all of these
products have a 24-inch depth. DOE requests comments on whether any
adjustment of the 24-inch dimension specified in the proposed
definition should be made. See Issue 4 under ``Issues on Which DOE
Seeks Comment'' in section VII.E of this NOPR.
DOE does not propose to adopt the portion of AHAM's proposed built-
in definition that addresses the front portion of the product--i.e.,
``* * * by either accepting a custom front panel or being equipped with
an integral factory[hyphen]finished face * * *'') DOE declines to adopt
this aspect of AHAM's definition because it does not distinguish built-
in products from conventional free-standing products, which generally
have an integral factory-finished face.
DOE is aware of the potential that manufacturers may attempt to
apply the proposed definition in order to avail themselves of the more
lenient efficiency levels that DOE proposes to permit built-in units to
meet. DOE tentatively believes that the modified definition presented
above provides sufficient protection against such improper use of the
definition. DOE requests comment on whether the proposed definition is
adequate to prevent potential gaming or whether changes are needed to
further strengthen it while avoiding disqualifying any legitimate
built-in products. (See Issue 4 under ``Issues on Which DOE Seeks
Comment'' in section VII.E of this NOPR.)
DOE's investigation of the built-in market through examination of
built-in product offerings and discussion with manufacturers shows that
the key standard-size built-in product classes include current product
classes 4, 5, 7, 9, and the all-refrigerators associated with current
product class 3. DOE proposes establishing seven new built-in product
classes, as listed in Table IV.1, above. Two of these product classes
address the need to separate products with automatic icemakers from
those without automatic icemakers, as described in section IV.A.2.d
above.
DOE requests comment on its proposal to establish separate product
classes for built-in products. (See Issue 4 under ``Issues on Which DOE
Seeks Comment'' in section VII.E of this NOPR.) As with all other
aspects of this proposal, DOE may adjust its treatment of built-in
products depending on the comments and information it receives in
response to the NOPR.
DOE also requests comment on whether any additional product classes
are required to fully address icemaking
[[Page 59493]]
and built-in products. (See Issue 5 under ``Issues on Which DOE Seeks
Comment'' in section VII.E of this NOPR.)
f. Combining Product Classes 2 With 1, and 12 With 11
In the preliminary analysis phase, DOE proposed combining product
class 2 (refrigerator-freezers--partial automatic defrost) with product
class 1 (refrigerators and refrigerator-freezers with manual defrost);
and product class 12 (compact refrigerator-freezers--partial automatic
defrost), with product class 11 (refrigerators and refrigerator-
freezers with manual defrost). DOE noted that units in product classes
2 and 12 contain freezer compartments that undergo manual defrost and
fresh food compartments that undergo off-cycle defrost, a process which
does not require additional energy to defrost. Hence, the defrost
energy consumption for these units is expected to be the same as it
would be for an identical unit in either product class 1 or 11.
Additionally, DOE noted that shipments for product classes 1 and 2
are very low (representing roughly 0.1 percent of shipments), and the
energy consumption standards for those product classes are identical.
The shipments for product class 12 are also very low (representing less
than 0.1 percent of shipments).
Finally, DOE noted that although the energy consumption standard
for product class 12 is currently at a higher energy level than for
product class 11, there is no obvious technical basis for this
distinction. AHAM supported DOE's proposal to combine these pairs of
product classes into two classes (AHAM, Public Meeting Transcript, No.
28 at p. 40 and No. 34 at p. 4) The Joint Comments that DOE received,
to which AHAM was a signatory, suggested that DOE continue to maintain
these separate classes.
DOE requests comment on whether these proposed combinations
(combining product class 2 with product class 1 and combining product
class 12 with product class 11) should be adopted. DOE notes that the
Joint Comments suggested maintaining the current separation.\20\ (See
Issue 6 under ``Issues on Which DOE Seeks Comment'' in section VII.E of
this NOPR.) This approach may be adjusted based on comments and
information submitted in response to today's NOPR.
---------------------------------------------------------------------------
\20\ DOE Docket No. EERE-2008-BT-STD-0012, Comment 49.
---------------------------------------------------------------------------
g. Modification of the Definition for Compact Products
Sanyo suggested in its comments that DOE remove the current 36 inch
height limit for compact products. Sanyo stated that this requirement
qualifies some Sanyo products as standard-size units even though they
meet the volume provision under the compact unit definition. The energy
consumption standards for standard-size products are more stringent
than the standards for compact products. Sanyo believes that energy
consumption is strongly correlated with volume, and only minimally
correlated with height. (Sanyo, No. 32 at p. 2)
DOE recognizes that a relationship between energy consumption and
internal volume exists. DOE notes that the compact product classes were
created as part of the rulemaking establishing the 2001 energy
standards. As DOE explained in a July 1995 NOPR, these classes were
created because fewer design options exist for reducing the energy
consumption in these products. 60 FR 37388, 37396 (July 20, 1995). The
July 1995 NOPR discussed this 36-inch limitation within the context of
insulation thickness and noted that issues related to the increase in
insulation thickness in top and bottom panels ``is recognized in the
new definition of the compact class as limited to models below 36
inches in height.'' 60 FR 37397. U-Line comments summarized in the 1995
NOPR indicated that ``consumer uses of undercounter refrigerators and
freezers will not permit increased exterior cabinet dimensions;
exterior cabinet dimensions cannot exceed 24 inches in depth and width
and 34 inches in height.'' (Id.)
However, the majority of compact products are not undercounter
products with these specified dimensions. For example, the external
dimensions of the compact products examined for reverse engineering
during the engineering analysis, are summarized in Table IV.5.\21\ Some
of these products are smaller than the undercounter maximum dimensions
and some are larger. If smaller, increasing the height of these
products to a 34-inch height and/or 24-inch depth or width would be
possible. If larger, the product would not be used in the restricted
undercounter application. The chest freezers would not be used in
undercounter applications in any case because such installation would
interfere with door operation, since the doors of chest freezer open
upwards. As a result, DOE believes that the absolute restriction on
external size increase suggested by the undercounter dimension limits
(i.e., 24 inches and 34 inches) does not apply to these products.
Hence, DOE tentatively concludes that, while the 36-inch height
limitation may be relevant for undercounter products, it is not
relevant for compact products in general.
---------------------------------------------------------------------------
\21\ Throughout this notice the term ``reverse-engineered
product'' refers to the products purchased and examined (reverse
engineered) as part of the engineering analysis. Many of these
products were entirely dismantled (torn down) to completely examine
manufacturing details.
Table IV.5--External Dimensions of Compact Reverse-Engineered Products
----------------------------------------------------------------------------------------------------------------
Product Height (inches) Width (inches) Depth (inches) \1\
----------------------------------------------------------------------------------------------------------------
1.7 cubic foot refrigerator......................... 18.5 17.5 17.6
4 cubic foot refrigerator........................... 32.9 18.6 17.5
4 cubic foot ENERGY STAR refrigerator............... 33.0 19.5 19.8
3.4 cubic foot chest freezer........................ 32.0 21.0 23.0
7 cubic foot chest freezer.......................... 31.5 36.5 20.4
Second 7 cubic foot chest freezer................... 31.0 37.0 23.0
----------------------------------------------------------------------------------------------------------------
\1\ Depth does not include door handle and condenser (if applicable).
Basic thermal considerations also suggest that the 36-inch
limitation is not a particularly reliable indicator of the potential
for energy use reduction. For example, consider two 7-cubic foot volume
products, one 40 inches high and the other 30 inches high, both with a
depth of 20 inches. Assuming a 1.5-inch insulation thickness and
ignoring the volume associated with the evaporator, the 40-inch product
would have an insulated surface area of 28
[[Page 59494]]
square feet (based on external dimensions) and door gasket perimeter
length of 121 inches, while the 30-inch product would have both less
surface area (27 square feet) and less door gasket perimeter length
(114 inches). DOE expects that the taller product would have a greater
thermal load as a result (because of the greater surface area and door
perimeter length), yet it would not be considered a compact product
under the current definition and would, thus, have to satisfy a more
stringent energy standard. This example shows that basic theoretical
considerations do not support the 36-inch limitation.
Because the justification of limited undercounter space that led to
the 36-inch limitation does not apply to most compact products, and
because basic thermal considerations suggest that the limitation does
not have a firm theoretical basis, DOE proposes to eliminate the
limitation from the definition of compact products. DOE requests
comment on its proposal to eliminate the 36-inch height limitation for
compact products. (See Issue 7 under ``Issues on Which DOE Seeks
Comment'' in section VII.E of this NOPR.)
B. Screening Analysis
DOE uses the following four screening criteria to determine which
design options are suitable for further consideration in a standards
rulemaking:
1. Technological feasibility. DOE will consider technologies
incorporated in commercially available products or in working
prototypes to be technologically feasible.
2. Practicability to manufacture, install, and service. If mass
production and reliable installation and servicing of a technology in
commercially available products could be achieved on the scale
necessary to serve the relevant market at the time the standard comes
into effect, DOE would consider that technology practicable to
manufacture, install, and service.
3. Adverse impacts on product utility or product availability. If
DOE determines that a technology would have significant adverse impact
on the utility of the product to significant subgroups of consumers, or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not
consider this technology further.
4. Adverse impacts on health or safety. If DOE determines that a
technology will have significant adverse impacts on health or safety,
it will not consider this technology further.
10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b)
In the framework document \22\ and accompanying public workshop
held on September 29, 2008, DOE identified the technologies for
improving refrigeration product efficiency that were under
consideration for the rulemaking analyses. These technologies are
listed in Table IV.6. Please see chapter 3 of the NOPR TSD for detailed
descriptions of these technology options.
---------------------------------------------------------------------------
\22\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framework.pdf.
Table IV.6--Technologies DOE Considered for Residential Refrigeration
Products
------------------------------------------------------------------------
------------------------------------------------------------------------
Insulation: Expansion Valve:
Improved resistivity of insulation Improved expansion valves
Increased insulation thickness Cycling Losses:
VIPs Fluid control or solenoid
valve
Gas-filled panels Defrost System:
Gasket and Door Design: Reduced energy for
automatic defrost
Improved gaskets Adaptive defrost
Double door gaskets Condenser hot gas
Improved door face frame Control System:
Reduced heat load for TTD feature Temperature control
Anti-Sweat Heater: Air-distribution control
Condenser hot gas Other Technologies:
Electric heater sizing Alternative refrigerants
Electric heater controls Component location
Compressor: Alternative Refrigeration
Cycles:
Improved compressor efficiency Lorenz-Meutzner cycle
Variable-speed compressors Dual-loop system
Linear compressors Two-stage system
Evaporator: Control valve system
Increased surface area Ejector refrigerator
Improved heat exchange Tandem system
Condenser: Alternative Refrigeration
Systems:
Increased surface area Stirling cycle
Improved heat exchange Thermoelectric
Force convection condenser Thermoacoustic
Fans and Fan Motor:
Evaporator fan and fan motor
improvements
Condenser fan and fan motor
improvements
------------------------------------------------------------------------
DOE requested, but did not receive any comments, at either the
framework workshop or during the framework comment period identifying
additional technologies not mentioned that should be considered.
Likewise, DOE received no comments recommending additional technologies
during the preliminary analysis public meeting or comment period.
As described in chapter 4, Screening Analysis of the NOPR TSD, DOE
screened out several of the technologies listed in Table IV.6 from
consideration in this rulemaking based on one or more
[[Page 59495]]
of the screening criteria described above. A summary of the screening
analysis identifying technologies that were screened out and the EPCA
criteria used for the screening is presented in Table IV.7. The
checkmarks in the table indicate which screening criteria were used to
screen out the listed technologies. For greater detail regarding the
screening analysis, see chapter 4 of the NOPR TSD.
Table IV.7--Summary of Screening Analysis
----------------------------------------------------------------------------------------------------------------
EPCA criteria for screening
-------------------------------------------------------------------------------
Practicability to
Excluded technology option Technological manufacture, Adverse impacts on Adverse impacts on
feasibility install, and product utility health and safety
service
----------------------------------------------------------------------------------------------------------------
Improved Insulation Resistivity. [radic]
Gas-Filled Panels............... .................. [radic] [radic]
Improved Gaskets, Double .................. [radic] [radic]
Gaskets, Improved Door Frame.
Linear Compressors.............. [radic]
Improved Evaporator Heat [radic] .................. [radic]
Exchange.
Improved Condenser Heat Exchange [radic] .................. [radic]
Component Location.............. .................. [radic] [radic] [radic]
Lorenz-Meutzner Cycle........... [radic] [radic]
Two-Stage System................ [radic] [radic]
Control Valve System and Tandem [radic] [radic]
System.
Ejector Refrigerator............ [radic] [radic]
Stirling Cycle.................. [radic] [radic]
Thermoelectric.................. [radic] [radic]
Thermoacoustic.................. [radic] [radic]
----------------------------------------------------------------------------------------------------------------
In addition to this screening, DOE did not analyze a number of
technologies in the engineering analysis because they were judged
unsuitable for improving the measured energy use of refrigeration
products for one or more of the following reasons:
Technology already used in baseline products and incapable
of generating additional energy efficiency or reducing energy
consumption.
Technology does not reduce energy use.
Insufficient data available demonstrating benefit of the
technology.
The technologies not analyzed for these reasons include Improved
Expansion Valve, Off-Cycle Valve, Reduced Energy for Automatic Defrost,
Condenser Hot Gas Defrost, Reduced Heat Load for TTD Feature, Warm
Liquid or Hot Gas Refrigerant Anti-Sweat Heating, Electric Anti-Sweat
Heater Sizing, Electronic Temperature Control, Air Distribution
Control, Fan Blade Improvements, and Dual Loop System. Chapter 4 of the
NOPR TSD discusses the reasons for not analyzing these technologies in
greater detail.
1. Discussion of Comments
AHAM commented that efficiency levels based on noteworthy
technologies can have implications on competition within the market,
since technologies may be proprietary or in limited supply (AHAM, No.
34 at p. 15) AHAM specifically pointed out VIPs as an example of such a
technology. (Id.) Neither EPCA nor the CFR (i.e., 10 CFR part 430,
subpart C, appendix A) identify the proprietary status of a technology
as a reason for screening out technologies. If a technology is in
sufficiently limited supply to make its use in manufacturing of
products impractical, DOE has the option of screening out such a
technology based on one of the EPCA screening criteria. While
proprietary status is not a filter for screening out potential
technologies, DOE is required to consider ``the impact of any lessening
of competition * * * that is likely to result from the imposition of
the standard'' (42 U.S.C. 6295(o)(2)(B)(i)(V)). Section IV.B.1.c below,
discusses VIPs. DOE considered whether any others selected design
options may be screened out based on supply constraints or whether
their use might impact competition. DOE tentatively concluded that
these screening criteria did not preclude further consideration of the
selected design options in the analysis.
During the NOPR phase manufacturer interviews, some manufacturers
expressed concerns that the supply of the highest-efficiency
compressors and/or variable-speed compressors might be limited. Initial
investigation of the compressor vendors supplying high-efficiency
compressors and variable speed compressors during the preliminary
analysis phase indicated that one compressor supplier, Embraco, served
as the primary source for these components. Embraco is a business unit
of Whirlpool S/A, a majority-owned subsidiary of the Whirlpool
Corporation. Discussions with compressor manufacturers during the NOPR
phase of the rulemaking indicated that most manufacturers are planning
to commercialize high-efficiency compressors that would match the peak
performance under consideration in the NOPR analysis and that these
compressors would be available well before the arrival of the 2014
compliance date that would apply to the final rule under development.
In addition, DOE is aware that these other manufacturers have been
developing and perfecting variable-speed compressors for over ten
years. Information gathered during the NOPR phase indicates that these
manufacturers are prepared to commercialize this technology and ramp up
production as the market for such compressors emerges and grows.
Based on all of this information, DOE tentatively concludes that
neither high-efficiency compressors nor variable-speed compressors
would be in limited supply if the efficiency levels selected by DOE
were to require the use of these types of compressors. DOE requests
comment on these findings, including information that would confirm or
cast doubt on DOE's conclusions regarding compressor supply. (See Issue
8 under ``Issues on Which DOE Seeks Comment'' in section VII.E of this
NOPR.)
DOE's review of the screened-in technologies did not reveal that
they would involve the use of proprietary technologies or that they
would be in short supply, or that their use would lead to a lessening
of competition.
Additionally, DOE received comments on the screening analysis
[[Page 59496]]
from several interested parties primarily addressing the following
design options: alternative refrigerants, alternative foam-blowing
agents, and VIPs. The following sections describe the comments
associated with these design options in detail.
a. Alternative Refrigerants
Most refrigeration products sold in the U.S. currently use HFC-134a
refrigerant, a hydrofluorocarbon (HFC) with a high global warming
potential (GWP).
ACEEE, ASAP, Earthjustice, and the Natural Resources Defense
Council (NRDC) all stated that DOE must consider hydrocarbon
refrigerants as a design option because hydrocarbons are in widespread
use overseas (ACEEE/ASAP, No. 43 at pp. 4-5; Earthjustice, No. 35 at p.
5; NRDC, No. 39 at p. 7) Earthjustice and NRDC both also claimed that
DOE has not provided evidence to support the exclusion of isobutane
\23\ as an alternative refrigerant. (Earthjustice, No. 35 at p. 5;
NRDC, No. 39 at p. 7) AHAM commented that the relevant safety
standard--Underwriters Laboratories (UL) Standard 250, ``Household
Refrigerators and Freezers'' (UL 250) \24\--currently limits the
quantity of hydrocarbon refrigerants permitted to be used in
refrigeration products to 50 grams.\25\ AHAM suggested that this
quantity of refrigerant is insufficient for most typical refrigeration
products and that UL had recently reopened the rulemaking process for
UL 250 under a proposal calling for a higher hydrocarbon limit. (AHAM,
Public Meeting Transcript, No. 28 at p. 49-50) GE stated that although
the UL restriction may make it difficult to use isobutane, it does not
make it impossible, and that UL may consider increasing the limit. (GE,
Public Meeting Transcript, No. 28 at p. 50) Sub Zero agreed with GE's
comment but pointed out that there can be a significant capital
expenditure associated with adopting isobutane refrigerant or
hydrocarbon blowing agents. (Sub Zero, Public Meeting Transcript, No.
28 at p. 50)
---------------------------------------------------------------------------
\23\ Isobutane, also known as R-600a, is used as a refrigerant
in a large percentage of the world's refrigeration products,
particularly in Europe, where it was first adopted in the 1990s.
\24\ This UL safety standard sets numerous requirements for
refrigeration products and details tests for evaluating compliance
with many of the requirements.
\25\ The isobutane limitation of UL 250 specifies 50 grams
maximum leakage during a system breach. Because some of the
refrigerant remains in the system in such a scenario, the total
allowable charge is somewhat higher than 50 grams under this
standard, generally in a range approaching 60 grams.
---------------------------------------------------------------------------
Many of the comments addressed issues with HFCs used both as
refrigerant and as a blowing agent. These comments are presented in
this section, but they apply equally to section IV.B.1.b, below, which
addresses blowing agents.
Many stakeholders noted the trend away from HFC use both worldwide
and in the United States. The stakeholders commented that DOE's
analysis should more thoroughly consider this trend in order to avoid
becoming immediately outdated, and that DOE should develop cost-
efficiency analyses that account for a mandated phase-down of HFC
substances. (GE, Public Meeting Transcript, No. 28 at pp. 47-48; AHAM,
Public Meeting Transcript, No. 28 at p. 18; Greenpeace, Public Meeting
Transcript, No. 28 at pp. 50-51; ACEEE/ASAP, No. 43 at p. 5; Sub-Zero,
No. 40 at p. 7; Greenpeace, No. 42 at pp. 1, 2; GE, No. 37 at p. 2;
NRDC, No. 39 at p. 7; Whirlpool, No. 31 at pp. 4, 5; AHAM, No. 34 at
pp. 8-9)
AHAM commented that upcoming regulations and legislation on the
phase-down of HFCs could have a substantial impact on efficiency in the
refrigeration products industry (AHAM, Public Meeting Transcript, No.
28 at p. 18) AHAM, Whirlpool, and Sub Zero further stated that they
believe a phase-down of HFCs would have a net negative impact on energy
efficiency and manufacturing cost (AHAM, No. 34 at pp. 8-9; Sub Zero,
No. 40 at p. 7; Whirlpool, No. 31 at pp. 4-5) AHAM and Whirlpool also
argued that any analysis that does not account for an HFC phase-down
would likely result in energy consumption standards that are
unattainable (AHAM, No. 34 at p. 9; Whirlpool, No. 31 at pp. 4-5)
GE suggested that DOE consider the positions of the current
administration and the Environmental Protection Agency (EPA) on HFCs
and other macro trends that GE asserts will significantly impact the
industry. (GE, Public Meeting Transcript, No. 28 at pp. 47-48) For this
rulemaking, GE commented that it is important for DOE to evaluate the
potential industry impact of the HFC phase-down from a technical and
economic perspective to avoid creating a disincentive for manufacturers
to employ low-GWP foams and refrigerants. GE commented that DOE should
recognize the potential environmental benefits that could be realized
in a transition to low-GWP foams and refrigerants. (GE, No. 37 at p. 2)
Comments from the IOUs supported DOE's use of HFCs in the baseline
analysis but encouraged consideration of discontinued or reduced use of
HFCs in case legislation is enacted or regulations established limiting
their use (IOU, No. 36 at p. 12) Whirlpool stated that it would not
switch to non-GWP substances, because of the costs associated with
doing so, unless this is required by legislation (Whirlpool, No. 31 at
p. 5)
DOE eliminated alternative refrigerants as a design option for most
product classes because the available alternatives are either banned,
have lower thermodynamic efficiencies, or, as in the case of
hydrocarbons, are currently only allowed in limited quantities due to
UL safety requirements. The UL proposal for modification of UL 250
calls for transition from an allowance of 50 g refrigerant being
permitted to escape from a refrigeration product in case of a leak to a
higher limit of 60 g total charge.\26\ This proposed change would not
significantly affect the amount of refrigerant that can be used because
roughly 10 g remains absorbed in the compressor oil during a typical
catastrophic leak. DOE notes that UL had not made a final determination
regarding changes to UL 250 at the time of the preparation of this
notice. UL has indicated that due to the large number of comments to
the proposals, UL's next step would be to convene a Standards Technical
Panel meeting, which would likely be held no earlier than September
2010.\26\
---------------------------------------------------------------------------
\26\ Personal communication with Randall J. Haseman of
Underwriters Laboratories, February 1, 2010 and June 28, 2010.
---------------------------------------------------------------------------
DOE also considered EPA's recently published proposed rule
addressing hydrocarbon refrigerants, which includes a proposal to
include isobutane on the EPA's Significant New Alternatives Policy
(SNAP) program list of allowed alternative refrigerants. 75 FR 25799
(May 10, 2010). The EPA proposal calls for a total charge limit of 57 g
of isobutane. Id. at 25803. No final rule had issued at the time of the
preparation of this notice.
DOE calculated the potential range of isobutane charge levels that
could replace the HFC-134a refrigerant in the products purchased for
reverse engineering. DOE converted the actual charge of each reverse-
engineered product to an equivalent isobutane charge (measured in
grams), by adjusting for the lower density of isobutane. The equivalent
isobutane charge levels for these products were in excess of both the
EPA-proposed limit and the charge limit in the UL 250 standard for all
of the products covered by today's NOPR except in the case of compact
refrigerators. In order for a
[[Page 59497]]
standard-size refrigerator-freezer to meet those charge levels, it
would be necessary to make engineering changes such as adding a second
refrigerant loop. Such a design change would reduce useful interior
volume in the appliance, which represents a reduction in consumer
utility. DOE is under general legal obligations to avoid promulgating
standards that would either reduce the utility of a product, 42 U.S.C.
6295(o)(2)(B)(i)(IV) or eliminate those products with capacities and
volumes available at the time that DOE establishes its standard, 42
U.S.C. 6295(o)(4). Therefore, DOE considered use of isobutane
refrigerant as a design option only for compact refrigerators.
DOE requests comment on the consideration of conversion to use of
isobutane refrigerant as a design option only for compact
refrigerators. (See Issue 9 under ``Issues on Which DOE Seeks Comment''
in section VII.E of this NOPR.)
b. Alternative Foam-Blowing Agents
Blowing agents are included in the materials that are used to form
insulation during the manufacturing process. The blowing agents help
form the closed cell microstructure of the insulation as the blowing
agent gases expand after the insulation components are injected into
the wall cavities. Manufacturers selling refrigeration products in the
U.S. market have predominantly used HFC blowing agents since 2003,
which is when the EPA imposed a ban on the primary
hydrochlorofluorocarbon (HCFC) blowing agent most manufacturers were
using at the time. See 58 FR 65018 (December 10, 1993) (phasing out
production of HCFC-141b through the accelerated phase out rule
promulgated under section 606 of the Clean Air Act). In response, some
manufacturers have started using cyclopentane as a blowing agent rather
than HFCs because of its much lower GWP. However, insulation made using
cyclopentane during the blowing process has higher conductivity (see
for example the preliminary TSD chapter 3, Table 3.3.2), leading to
higher energy use.
DOE received many comments encouraging DOE to consider the shift
from HFCs to refrigerants and/or blowing agents with low GWP in
refrigeration products. These comments are cited in section IV.B.1.a,
above. None of the comments specifically indicated that use of
alternative foam-blowing agents would reduce energy use. DOE has
investigated this issue and has concluded that use of alternative foam-
blowing agents would not reduce energy use (see chapter 3 of the NOPR
TSD, section 3.3.2.1, for more detail). Hence, DOE did not treat
alternative foam-blowing agents as a design option in its analyses.
DOE recognizes that possible legislation or regulations limiting
the use of HFCs would have an impact on the industry's transition to
higher efficiency designs and, depending on the performance impact of
insulation made without HFCs, may reduce the potential for efficiency
improvement. Given that this step has not occurred, DOE believes that
basing energy conservation standards on the uncertain prospect of
passage of certain legislation would be speculative. DOE is, however,
prepared to address this issue by evaluating the efficiency improvement
and trial standard levels for products using alternative foam
insulation materials, if legislation or some other legal requirements
banning HFCs should be enacted or otherwise become effective.
c. Vacuum-Insulated Panels
DOE received comments concerning the viability of VIPs as a design
option. These comments, examined below, addressed the supply,
longevity, durability, and cost of VIPs.
NPCC and ASAP emphasize that the standards are not prescriptive,
and therefore manufacturers are not required to use VIPs to meet the
standard even if the design options analysis has used VIPs (NPCC, No.
33 at p. 3; ASAP, Public Meeting Transcript, No. 28 at p. 96) DOE
agrees with this statement, but without being able to show that
alternative design paths can be used to reach certain efficiency levels
without VIPs, the viability of this technology must be considered when
contemplating these levels.
VIP Supply
AHAM, LG, Sub Zero, and Whirlpool expressed concern regarding the
ability of VIP vendors to keep up with the demand that might be
generated by more stringent energy conservation standards for
refrigeration products (AHAM, Public Meeting Transcript, No. 28 at p.
94; Sub Zero, Public Meeting Transcript, No. 28 at p. 97; LG, No. 41 at
p. 4; Sub Zero, No. 40 at p.4; Whirlpool, No. 31 at p. 4; AHAM, No. 34
at pp. 6, 7) Some of these comments raise the concern that VIP costs
could increase to levels significantly greater than the levels DOE used
in its analysis (AHAM, Public Meeting Transcript, No. 28 at p. 94;
Whirlpool, No. 31 at p. 4; AHAM, No. 34 at pp. 6, 7) AHAM, LG,
Whirlpool, and Sub Zero recommended that DOE assess the market's
ability to mass-produce VIPs (AHAM, Public Meeting Transcript, No. 28
at p. 94; Sub Zero, Public Meeting Transcript, No. 28 at p. 97; LG, No.
41 at p. 4; Sub Zero, No. 40 at p. 4; Whirlpool, No. 31 at p. 4; AHAM,
No. 34 at pp. 6-7) An additional factor cited by stakeholders that
could potentially exacerbate any VIP supply issue is the increase in
stringency of refrigeration product standards in other regions of the
world, such as India and Europe. (Whirlpool, Public Meeting Transcript,
No. 28 at p. 95; AHAM, Public Meeting Transcript, No. 28 at p. 94)
Whirlpool commented that it is expensive to increase VIP production
capacity (Whirlpool, No. 31 at p. 4)
In contrast, IOU, ACEEE/ASAP, NRDC, and NPCC stated that the VIP
industry is prepared to ramp up production to meet the high demand
predicted for the refrigeration industry (IOU, No. 36 at p. 9; ACEEE/
ASAP, No. 43 at pp. 2-4; NRDC, No. 39 at p. 3; NPCC, No. 33 at p. 2)
IOU estimated that demand would rise to the low millions to tens of
millions of panels at most based on the results of the preliminary DOE
analysis (IOU, No. 36 at p. 9) IOU also noted that there is rising
interest for VIP use as building insulation, which could further
stimulate growth in the market. (IOU, No. 36 at p. 10) ACEEE/ASAP also
reported that the VIP manufacturers were confident about scaling up to
meet global demand (ACEEE/ASAP, No. 43 at p. 4)
As Sub Zero notes, manufacturers have installed VIPs in
refrigeration products for at least 20 years. (Sub Zero, No. 40 at p.
4) Sub Zero, which has installed VIPs in their products for the past 10
years, commented that three VIP suppliers are confident that they can
meet the expected VIP demand, but that it is unclear whether they could
meet the potential demand associated with major manufacturers and
millions of refrigeration products. (Id.) IOU and the ACEEE/ASAP joint
comment stated that VIPs have been incorporated into various new
refrigerator models (IOU, No. 36 at p. 7; ACEEE/ASAP, No. 43 at p. 4)
Several adjustments made to the assumptions in the engineering
analysis reduced the relative importance of VIPs in meeting the
proposed standard levels decreased when compared to the preliminary.
Specifically, the adjustments involved reduced panel coverage, reduced
effectiveness, and application only after all other design options were
considered. (Details about the changes in relevant assumptions can be
found in chapter 5, section 5.8.3 of the NOPR TSD.) In response to
stakeholder comments, DOE conducted an assessment of the VIP market and
the
[[Page 59498]]
potential ramp-up required by proposed standards and concluded that the
market does not show ramp-up to be a critical issue leading to price
pressure. From this analysis, DOE does not expect the estimated lead
time for expanded VIP production to limit the availability of VIPs at
mass-production levels.
DOE contacted several VIP suppliers during the NOPR analysis phase
to better assess the current production capacity and the ability of the
industry to ramp up to expected demand by 2014. These suppliers include
Porextherm (Germany), Va-Q-tec (Germany), ThermoCor (U.S.), NanoPore
Insulation LLC (U.S.), Glacier Bay (U.S.), and ThermalVisions (U.S.).
DOE did not receive a response from any Asian companies it attempted to
contact during this phase, but Porextherm estimated that there are five
VIP producers based in China and Japan.
DOE estimates the current worldwide VIP market to be in the range
of 2.5 to 5 million square meters based on input from VIP
manufacturers. Va-Q-tec estimated that world demand is approximately 2
million square meters. ThermoCor estimated it to be about 5 million
square meters. Other vendors interviewed declined to provide estimates.
ThermoCor noted that most of the growth in the U.S. market has
happened since 2008, driven largely by the Federal manufacturer tax
credit available for high efficiency refrigerators. (Energy Improvement
and Extension Act of 2008, Pub. L. 110-343, Div. B, Sec. 305 (October
3, 2008)) In the U.S., major refrigerator manufacturers have started
using VIPs in commodity models in addition to higher end products as a
result of the manufacturer tax credit (available from 2008-2010).
Manufacturers can receive $200 per unit for units with energy use at
least 30 percent lower than the standard. Va-Q-tec stated that the VIP
demand was largely concentrated in Japan prior to 2008, and that the
U.S. tax credit rapidly changed the landscape for VIP manufacturers,
creating much greater demand. The VIP industry responded with a
dramatic ramp-up in production, which demonstrates the industry's
ability to respond quickly to rapid increases in demand.
DOE estimates that approximately 5.8 million square meters of VIPs
would be needed in the U.S. to meet the proposed standard levels in
2014 based on the design options presented in the NOPR engineering
analysis (see the discussion of this estimate in TSD appendix 4-A,
Investigation of VIP Supply, section 4-A-2).
DOE also considered the potential increase in demand for VIPs in
Europe and India, as highlighted by stakeholders during the preliminary
analysis public meeting (Whirlpool, Public Meeting Transcript, No. 28
at p. 95; AHAM, Public Meeting Transcript, No. 28 at p. 94)
As part of this examination, DOE reviewed a variety of European
directives aimed at improving energy efficiency. The European Energy
Labeling Directive (94/2/EC) for cold appliances, which was issued by
the European Commission on January 21, 1994, established 7 efficiency
levels for these products, from least efficient (G) to most efficient
(A). In 2003, additional higher efficiency levels A+ and A++ were
established. These levels all represent different percentages of
reference energy use (representative energy use when the labeling
directive was first established), called Energy Efficiency Index (EEI).
The levels range from less than 30 percent of the reference value for
A++ (the most efficient) to 125 percent of the reference value for G.
The European Union established efficiency standards for residential
refrigeration products with EU Council Directive 96/57/EC, dated
September 3,1996. Maximum energy use standards were established for 10
``product categories,'' the equivalent of the different product classes
associated with DOE regulations. Commission Regulation (EC) No 643/2009
requires that the maximum allowable EEI will be 55 starting July 1,
2010 (``European Commission Regulation 643/2009'', No. 52). This level
will drop to 44 on July 1, 2012, and to 42 (equivalent to current
efficiency level A+) on July 1, 2014.
DOE received estimates from various VIP manufacturers that European
demand is expected to rise to 2-5 million square meters in response to
the new standards. Information obtained from a manufacturer that has
used VIPs in multiple products suggests that VIPs will be used
primarily for A++ products, which may be considered the equivalent of
the U.S. ENERGY STAR products.
Along similar lines, India introduced a labeling program in 2006
that was initially voluntary but became mandatory in January 2010
(``Indian Refrigerator Regulations'', No. 53). The program establishes
efficiency levels represented by ranges of energy use. The product
label is required to indicate the product's efficiency level. The
allowable maximum energy use values associated with the efficiency
levels are scheduled to be reduced in three steps between 2010 and
2014. Based on discussions with manufacturers, India's proposed
standards for 2014 are not expected to be as stringent as those in the
U.S. or Europe, and are not expected to require use of VIPs.
Based on the available data, DOE estimates that the potential VIP
demand for the U.S. and Europe would reach an annual level of roughly
10 million to 15 million square meters. While this represents
significant growth compared to the current market, it is consistent
with the growth that the market has experienced recently for which VIP
vendors have successfully ramped up their production.
Several VIP manufacturers are currently expanding their facilities,
while others have plans to expand if the increased demand becomes more
reliable. Overall, the VIP manufacturers interviewed were confident
that neither the time nor the capital investment is a limiting factor
as long as they have a stable backlog. Five of the manufacturers
interviewed have recently undergone significant expansion efforts. One
manufacturer has increased its production capacity by 10 times between
2008 and spring 2010 to reach a level of about 1.5 million square
meters. Two other manufacturers have doubled their capacities in the
past 9 months, one reaching 1 million square meters and another
reaching 120,000 square meters. A fourth manufacturer has reached the
capacity of about 300,000 square meters over the past 1.5 years.
Lastly, as mentioned by ACEEE/ASAP, NanoPore has recently doubled its
capacity and has plans to expand to 0.9 million square meters of
capacity by 2010. (ACEEE/ASAP, No. 43 at p. 4)
VIP manufacturer estimates of the time required to bring a new
plant on-line ranged from 6 to 18 months. The required time depends on
whether existing production technology is replicated, or whether
further improvements in production technology are designed and
incorporated into new plants. Possible improvements include increased
automation of the panel assembly and a shift to continuous rather than
batch processing. Automation may involve the drying of the core
material and the cutting of the bag and core. DOE visited a VIP
production facility during the course of this investigation and
concluded that the estimates provided by VIP vendors of time required
to bring new production capacity online are consistent with the
production process, given the equipment used.
Sub Zero noted that large volume refrigerator manufacturers could
produce VIPs in-house to control costs, though Sub Zero and other small
manufacturers would not have that ability (Sub Zero, No. 40 at p. 4)
[[Page 59499]]
ThermoCor agreed that large manufacturers would have the means to
develop VIP production capability in-house by 2014. Several VIP
manufacturers have considered joint ventures and licensing
opportunities with refrigerator manufacturers. Manufacturers of VIPs
suggest that transferring the knowledge and expertise of VIP production
would be a straightforward process. A new VIP fabrication facility
would need to have a production capacity between 300,000 and 1.5
million square meters per year to be cost-effective at today's VIP
price levels. The capacity will typically vary based on the
manufacturer, the panel type, and the facility location.
VIP manufacturers do not anticipate the supply of raw materials to
be an issue as production ramps up. The industry uses multiple
suppliers for both the barrier film and the fill material. Materials
used for the fill include glass fiber, fumed silica, and aerogel. Glass
fiber is produced for a wide range of uses worldwide. Fumed silica,
used as fill by some VIP manufacturers, currently is produced on a much
smaller scale. Asked if the more limited range of uses of fumed silica
could present material supply issues due to capacity ramp-up delays or
intellectual property issues, Porextherm noted that intellectual
property issues would not prevent new suppliers from building new fumed
silica plants, citing several new production facilities that have come
online recently in Asia. Porextherm also noted that the solar collector
industry in particular is helping to expand the production of pure
silica, which produces fumed silica as a by-product. Va-Q-tec estimates
that it would take approximately 2.5 years to build a new fumed silica
plant, but that current worldwide production capacity is sufficient to
provide enough fumed silica for production of 100 million m\2\ of VIPs
annually. Thermal Visions did not anticipate suppliers needing more
than one year to respond to the ramp-up in production.
NRDC recommended that DOE explore other applications in which
durable vacuum-sealing is required in large production volumes for
lessons and strategies (NRDC, No. 39 at p. 4) DOE interprets this
comment to mean that the production technologies required for this
aspect of VIP production may have already been developed for other
industries, thus potentially limiting the required time to development
the process for the VIP industry. Through its research discussed above,
DOE confirmed that current technology is already enabling mass
production of VIPs, so an additional survey of other applications was
unnecessary.
In summary, based on all of the above, DOE tentatively concludes
that the VIP industry has the ability to increase production to meet
the potential demand for VIPs within the three year gap between the
final rule's issuance and the compliance date for any amended standard.
VIP Longevity
AHAM questioned whether the average lifetime of VIPs is consistent
with lifetime expectations for refrigeration products (AHAM, Public
Meeting Transcript, No. 28 at p. 94-95) In response, DOE investigated
the issue of VIP longevity in more depth. ACEEE and ASAP commented that
VIP manufacturers have used accelerated aging techniques to estimate
panel life. Manufacturers have estimated lifetimes between 20 and 50
years for silica core panels, and generally up to 15 years for panels
constructed of other core materials. (ACEEE/ASAP, No. 43 at p. 3)
ThermoCor and Va-Q-tec provided data on VIP degradation. ThermoCor
panels, which have a glass fiber core, have been shown to retain about
75 percent of their insulation value over 10 years, a finding
extrapolated from 7 years of data collected from panels aged at room
temperature. Va-Q-tec determined that their panels would yield a 15
percent increase in thermal conductivity over 15 years, based on 7
years of observation of panels held in storage (``Va-q-tec Lifetime
Analysis'', No. 55). In both cases, the data suggest that the
degradation in insulation value is similar to that of polyurethane foam
(Wilkes 2001),\27\ the insulating material used currently in nearly all
products, and the insulation value would remain well above that of the
baseline polyurethane foam for the lifetime of the refrigerator. As
such, DOE did not factor VIP degradation into its analysis.
---------------------------------------------------------------------------
\27\ Wilkes, K., et al. ``Aging of Polyurethane Foam Insulation
in Simulated Refrigerator Panels--One-Year Results with Third-
Generation Blowing Agents.'' 29 Sep. 1999. http://www.ornl.gov/webworks/cpr/pres/107629.pdf. Accessed 14 June 2010.
---------------------------------------------------------------------------
VIP Quality and Durability
AHAM and LG expressed concern that a short transition time to mass
produce VIPs would adversely impact their quality (AHAM, No. 34 at p.
7; LG, No. 41 at p. 4) Sub Zero commented that there is a significant
learning curve for commercialization of VIPs that will be steepened if
standards require the wholesale transition to use of VIPs (Sub Zero,
No. 40 at p. 4).
Sub Zero also pointed out that shipping and handling may weaken a
panel, causing it to fail slowly, without becoming apparent during
visual inspections prior to installation. In addition, Sub Zero
commented that panel installation is more critical to performance and
reliability than it is for most other components, contributing to a
steepened learning curve. In Sub Zero's experience, VIP failure can
cause the wall to bulge, leading to higher rejection rates,
installation problems for built-ins, condensation, and compromised door
structures. Sub Zero added, however, that their own service records for
VIPs indicate that these panels have performed well in the field. (Sub
Zero, No. 40 at p. 4; Sub Zero, Public Meeting Transcript, No. 28 at p.
105)
The IOUs asserted that technological advancements have occurred in
core materials, external barriers, and methods to maintain vacuum
integrity, all of which would help to improve panel durability.
Additionally, VIP manufacturers are taking steps to maintain quality
throughout the installation process, including the use of on-site
quality checking devices and training programs for workers to help
ensure that proper handling techniques are used. Also, the IOUs pointed
out that some products have high insulation values even when the vacuum
has been compromised (IOU, No. 36 at pp. 6-8) NRDC commented that the
risk of premature failure is overstated given the ample opportunities
for detection (NRDC, No. 39 at p. 4) NPCC concurred that concerns over
VIP durability are overstated, but recommended that DOE assess
efficiency improvements feasible without VIPs to identify efficiency
levels that are particularly ``robust''. (NPCC, No. 33 at p. 2-3)
DOE acknowledges that VIPs are more sensitive to handling issues
during transport and installation when compared to other components.
With this fact in mind, DOE still anticipates that manufacturers will
make adjustments to their handling procedures to improve success rates
of applying VIPs to their products, including taking those needed steps
to ensure that VIPs remain intact after fabricating a refrigeration
product. DOE also believes that innovations such as (1) the rapid VIP
integrity testing system that one VIP manufacturer has developed for
installation into each panel, which allows verification of each panel's
integrity even after installation into the product, and (2) the
compartmentalized design of another available VIP technology that
limits performance degradation to a small
[[Page 59500]]
region of a VIP will mitigate the potential impacts of VIP damage prior
to installation. DOE believes that, after installation, VIPs would
likely be very well protected from damage because they are encased
inside the product walls or door, protected on one side by the
product's external shell (or interior liner) and on the other side by
the polyurethane foam insulation. DOE notes that its discussions with
manufacturers did not reveal a single instance in which a VIP field
failure occurred. While this tentative finding does not imply that
there have been no failures, DOE believes, based on the information
made available for review, that this particular issue has had minimal
to no impact on manufacturer warranty or maintenance costs. DOE
tentatively concludes that the risk of VIP failure is an issue that can
be sufficiently addressed through design innovations and careful
handling procedures during the manufacturing process.
VIP Cost Assumptions
Several specific comments were made regarding VIP cost assumptions.
These comments address treatment of the technology in the engineering
analysis, and are addressed later in section IV.C.4.d, below.
DOE requests comment and information on aspects of VIP technology
that affect its suitability for consideration as a design option.
Particularly, DOE seeks any new information not already discussed or
considered in the rulemaking. (See Issue 10 under ``Issues on Which DOE
Seeks Comment'' in section VII.E of this NOPR.)
2. Technologies Considered
DOE has tentatively concluded that: (1) All of the efficiency
levels discussed in today's NOPR are technologically feasible; (2)
products at these efficiency levels could be manufactured, installed,
and serviced on a scale needed to serve the relevant markets; (3) these
efficiency levels would not force manufacturers to use technologies
that would adversely affect product utility or availability; and (4)
these efficiency levels would not adversely affect consumer health or
safety. Thus, the efficiency levels that DOE analyzed and is discussing
in this notice are all achievable using ''screened in'' technology
options identified through the screening analysis. The technologies DOE
considered for each group of products are shown in Table IV.8.
Table IV.8--Technologies Considered by DOE for Residential Refrigeration Products, by Product Group
----------------------------------------------------------------------------------------------------------------
Standard-size
Design option refrigerator- Standard-size Compact Compact freezers
freezers freezers refrigerators
----------------------------------------------------------------------------------------------------------------
Increased Insulation Thickness.. .................. [radic] [radic] [radic]
(see Note 1)......
Isobutane Refrigerant........... .................. .................. [radic]
VIPs............................ [radic] [radic] [radic] [radic]
Improved Compressor Efficiency.. [radic] [radic] [radic] [radic]
Variable-Speed Compressor....... [radic] [radic] [radic] [radic]
Increased Evaporator Surface [radic] [radic] [radic] [radic]
Area.
Increased Condenser Surface Area [radic] [radic] [radic] [radic]
Forced Convection Condenser..... .................. [radic]
Brushless DC Evaporator Fan..... [radic] [radic]
Brushless DC Condenser Fan...... [radic] [radic]
Adaptive Defrost................ [radic] [radic]
Variable Anti-Sweat Heater [radic]
Control.
----------------------------------------------------------------------------------------------------------------
Note 1: Increased Insulation Thickness was not considered for built-in, standard-size freezers.
C. Engineering Analysis
The engineering analysis uses cost-efficiency relationships to show
the manufacturing cost increases associated with achieving increased
efficiency. DOE has identified the following three methodologies to
generate the manufacturing costs needed for the engineering analysis:
(1) The design-option approach, which provides the incremental costs of
adding to a baseline model design options that will improve its
efficiency; (2) the efficiency-level approach, which provides the
relative costs of achieving increases in energy efficiency levels,
without regard to the particular design options used to achieve such
increases; and (3) the cost-assessment (or reverse engineering)
approach, which provides ``bottom-up'' manufacturing cost assessments
for achieving various levels of increased efficiency, based on detailed
data as to costs for parts and material, labor, shipping/packaging, and
investment for models that operate at particular efficiency levels.
DOE conducted the engineering analysis for this rulemaking using a
combined efficiency level/design option/reverse engineering approach.
DOE defined efficiency levels using percentages representing energy use
reductions. The reductions are defined to apply to energy use (not
including icemaking energy use) measured using the proposed new test
procedure, DOE's premise that efficiency levels expressed as a
percentage of energy use lower than that of baseline products are
equivalent when calculated based on both the current test procedure and
the proposed new test procedure (without icemaking energy use) allowed
DOE to compare information developed from different sources. However,
DOE's analysis is based on the efficiency improvements associated with
groups of design options. DOE developed estimates for efficiency
improvements for design options through energy use modeling analysis
conducted for selected reverse-engineered products. The energy models
were first established based on the existing product designs, and the
models were subsequently adjusted to reflect application of the groups
of design options considered for analysis. DOE based some of the design
option information on data gained through reverse-engineering analysis,
but also used other sources, such as component vendor inquiries and
discussions with manufacturers as appropriate. Details of the
engineering analysis are provided in the NOPR TSD chapter 5.
DOE received several comments from interested parties on its
approach to the engineering analysis, as described below.
1. Product Classes Analyzed/Representative Products
DOE initially selected seven key product classes for direct
analysis.
[[Page 59501]]
These product classes are summarized in Table IV.9. The direct analysis
included reverse engineering, manufacturing cost modeling, and energy
use modeling.
Table IV.9--Product Classes Directly Analyzed in the Preliminary
Engineering Analysis
------------------------------------------------------------------------
Product category Product class
------------------------------------------------------------------------
Standard-size refrigerators and 3. Refrigerator-freezer--
refrigerator-freezers. automatic defrost with top-
mounted freezer without
through-the-door ice service.
5. Refrigerator-freezers--
automatic defrost with bottom-
mounted freezer without
through-the-door ice service.
7. Refrigerator-freezers--
automatic defrost with side-
mounted freezer with through-
the-door ice service.
Standard-size freezers................. 9. Upright freezers with
automatic defrost.
10. Chest freezers and all
other freezers except compact
freezers.
Compact refrigerators.................. 11. Compact refrigerators and
refrigerator-freezers with
manual defrost.
Compact freezers....................... 18. Compact chest freezers.
------------------------------------------------------------------------
DOE selected representative products from each of these product
classes to analyze and assess the products' potential for energy use
reduction. DOE selected these products by reviewing product offerings
on manufacturer and retailer Web sites and selecting products for
analysis that had features affecting energy use that are typical for
the product classes. DOE selected products of two volumes for each
analyzed product class and attempted to select two products of one of
these volumes to serve as a product pair. Each product of this pair
would be nearly identical in design except that one would be rated at
the maximum allowable energy use and the other would satisfy the ENERGY
STAR requirements. DOE presented these representative product
selections at the Framework Workshop. For these directly-analyzed
product classes, DOE developed two cost-efficiency curves for each
class based on two of the three products purchased for reverse
engineering that represented distinct designs. (The third reverse-
engineered product of each class, as mentioned above, was typically a
variant of one of the other products, and full analysis of this third
product would not have provided additional useful information.)
During the preliminary analysis public meeting, DOE again requested
comment on the variation present in refrigeration product design, and
the distribution of incremental costs to achieve energy use reductions
as compared to the designs selected for analysis.
AHAM commented that it is unable to provide detailed design data
for its members, because such data are impossible to aggregate. AHAM
suggested that DOE work with individual manufacturers during the MIA
interviews to obtain this specific information. (AHAM, Public Meeting
Transcript, No. 28 at p. 55; AHAM, No. 34 at p. 5) Whirlpool commented
that detailed study would be required to gather such information, and
this analysis should be discussed in NOPR-phase manufacturer
interviews. (Whirlpool, No. 31 at p. 2) LG suggested that DOE review
company Web sites to determine product design options. (LG, Public
Meeting Transcript, No. 28 at p. 56)
DOE discussed with individual manufacturers the improvement
potential of design options and the design option groupings required to
achieve different efficiency levels for different product classes
during the MIA interviews. Alone, this information was insufficient to
clearly identify the design option pathways required to achieve all of
the considered efficiency levels, but DOE made many engineering
analysis adjustments based on the information gathered in these
discussions (see Table IV.10 for a summary of key changes in the
analysis).
Based on the manufacturer discussions and accompanying analytical
work, DOE concluded that the average characteristics of the products
initially purchased for reverse engineering and subsequently used as
the basis for the engineering analyses provide a reasonable
representation of baseline products. DOE calculated the representative
engineering cost-efficiency curve for each product class listed in
Table IV.9, above, as the average of the two cost-efficiency curves
developed for the two reverse-engineered products of that class.
Regarding LG's suggestion that DOE examine manufacturer Web sites to
obtain the information sought for its analysis, DOE notes that the
detailed information DOE requires for its analysis is unavailable on
these Web sites.
Table IV.10--Summary of Key Adjustments to the Engineering Analysis
------------------------------------------------------------------------
Changes for the
Parameter(s) Preliminary proposed rule
------------------------------------------------------------------------
VIP Surface Coverage.......... Full product Full coverage of
coverage, except doors, 50% coverage
for chest of cabinet to assure
freezer walls. structural
integrity,
preference for
coverage of freezer
compartments, no
change to exception
for chest freezer
walls.
VIP Effectiveness............. Full 50% of ERA energy
effectiveness as model effectiveness
determined by to better match
the ERA energy results reported by
model. manufacturers.
Cost Increase for Higher- ................. Adjusted based on
Efficiency Components. additional
information.
Conversion Costs for Increase Based on Increased due to
of Door and Cabinet Manufacturing updating of
Insulation Thickness. Cost Model. production equipment
costs in
manufacturing cost
model. Shift in
allocation of this
cost to increase the
portion allocated to
the door thickness
increase.
[[Page 59502]]
Heat Exchanger (Condenser and Application of a Application of this
Evaporator) Size Increase. 20% increase in design option based
the UA value on examination of
(inverse of product design
thermal details only for
resistance) of products for which
the heat size increase was
exchangers. possible. Direct
modeling of heat
exchanger
performance based on
selected geometry
changes. Increase of
fan power
requirement for heat
exchanger depth
increases.
Standby Power for Variable Not included..... Addition of 1.5W load
Speed Controls. outside the cabinet
for products not
already having
electronic control.
Variable Speed Compressor Inconsistent Fan operation at
System Fan Control. selection of fan reduced speed to
speed. deliver reduced air
flow at 50% power
input consistent
with cubic fan law.
Variable Speed Compressor ................. Degradation of
Performance for Compact compressor capacity
Products. in ERA energy
modeling based on
performance data
obtained from a
manufacturer.
Isobutane Refrigerant......... Not considered... Consideration of
isobutane
refrigerant for
compact
refrigerators, with
5% energy use
reduction.
Variable Anti-Sweat Heater Considered for Considered for
Control. product class 5 product classes 5 *
*. and 7 **.
Baseline Anti-Sweat Heater ................. Baseline average
Operation (Product Class 5* wattage reduced for
only). both directly
analyzed products.
Variable Defrost Compressor 38 hours......... 30 hours; Also,
Run time between defrosts. adjustment made in
this value when
converting to
variable speed
compressors to avoid
modeling excessive
defrost frequency.
------------------------------------------------------------------------
* Refrigerator-freezers--automatic defrost with bottom-mounted freezer
without through-the-door ice service.
** Refrigerator-freezers--automatic defrost with side-mounted freezer
with through-the-door ice service.
DOE also analyzed four product classes of built-in products (see
Table IV.11). DOE selected one representative built-in product for
analysis for each of these product classes. DOE judged the
representativeness of these product selections based on discussions
with manufacturers regarding design option groupings required to meet
key efficiency levels with built-in products.
Table IV.11--Built-In Product Classes Analyzed
------------------------------------------------------------------------
Product category Product class
------------------------------------------------------------------------
Standard-size refrigerators and 3A-BI. All Refrigerators with
refrigerator-freezers. automatic defrost.
5-BI. Refrigerator-freezers--
automatic defrost with bottom-
mounted freezer without
through-the-door ice service.
7-BI. Refrigerator-freezers--
automatic defrost with side-
mounted freezer with through-
the-door ice service.
Standard-size freezers................. 9-BI. Upright freezers with
automatic defrost.
------------------------------------------------------------------------
DOE's proposal to directly analyze a limited number of product
classes was initially presented in the framework document and discussed
at the framework workshop. (``Framework Document Public Meeting on
Energy Conservation Standards for Refrigerators, Refrigerator-Freezers,
and Freezers,'' No. 6 at p. 45) DOE did not conduct a full analysis of
all product classes in light of limited resources and the limited value
this additional data would have yielded given the small number of
product shipments associated with the non-analyzed product classes.
Instead, DOE developed an approach to extend the energy standards to
these product classes. Discussion of this extension of the standards
and associated comments is presented in section IV.C.7, below.
2. Baseline Energy Use Curves
a. Baseline Energy Use Under the Proposed New Test Procedure
As described in section III.A, above, DOE has proposed new test
procedures for refrigeration products that will affect their measured
energy use. DOE developed equations for baseline product energy use as
a function of adjusted volume under the proposed new test procedures
(which excludes the energy required to make ice--i.e., icemaking energy
use) based on information provided by AHAM, as described in chapter 5,
section 5.4.2, of the preliminary TSD. (Icemaking energy is the
additional energy used to produce ice, which is distinct from the
energy expended by an automatic ice dispensing system to dispense ice.)
These equations address the test procedure changes associated with
compartment temperatures and volume calculation method.
DOE sought comment on the proposed baseline energy use/adjusted
volume relationships under the proposed new test procedure. AHAM and
Whirlpool supported the DOE approach and found it to be well-summarized
and sufficiently rigorous. (AHAM, No. 34 at p. 5 and Public Meeting
Transcript, No. 28 at p. 61; Whirlpool, No. 31 at p. 1)
LG questioned the development of baseline energy use equations that
do not include automatic icemaker energy use for products with
automatic icemakers and suggested that the energy use of automatic
icemakers should be included in the DOE analysis and in the baseline
energy use equations. (LG, Public Meeting Transcript, No. 28 at p. 60)
The LG comment also suggests that it would not be possible to develop a
baseline energy use equation prior to finalization of the applicable
test procedure, indicating that the portion of the measurement
associated with automatic icemakers is still in development. (Id.)
The proposed test procedure includes a value for icemaking energy
use for those products that have automatic icemakers. 75 FR 29846 (May
27, 2010). However, the discussion regarding efficiency levels is based
on the percentages of energy use reductions from baseline energy use
excluding
[[Page 59503]]
icemaking energy use. In this context, icemaking energy use is the 84
kWh assigned to icemaking in the proposed test procedure. Id. at 29847.
As described in section III.A, above, sufficient information is
unavailable to accurately determine the variation of icemaking energy
use as a function of efficiency level. Hence, DOE is not considering
reductions of the 84 kWh allocated to icemaking energy use as part of
this standard. Instead, the examined energy use reductions exclude
icemaking energy use. DOE believes this treatment also allows more
meaningful comparisons to other information sources, such as
information obtained from discussions with manufacturers regarding
design option groups required to achieve efficiency levels.
Electrolux requested that DOE clarify its definition of baseline
energy use, as referenced throughout the preliminary TSD. (Electrolux,
Public Meeting Transcript, No. 28 at pp. 62-63) Sub Zero also commented
that it is unclear in the preliminary TSD whether references to
baseline energy refer to calculations under the current test procedure
or under the proposed test procedure. (Sub Zero, Public Meeting
Transcript, No. 28 at pp. 63-66)
DOE interprets these comments to mean that the preliminary TSD did
not clearly explain in its discussion of cost-efficiency curves and
efficiency levels whether the examined percentage energy use reductions
applied to the current energy standard (i.e., a baseline product tested
using the current test procedure) or to a baseline product tested under
the new proposed test procedure. To clarify stakeholders' concerns, DOE
notes that standards determined by reducing the current standard levels
by the stated percentage reductions applied to products tested under
the proposed new test procedure would have hidden in them the
additional energy use reductions associated with the impacts of
applying the proposed new test procedure. The equation below indicates,
for products with automatic icemakers, how energy use associated with
the analyzed efficiency levels would be calculated. For products
without automatic icemakers, the icemaking energy use would not be
added (i.e., the last term in the expression would be eliminated).
TECEL+ICE,NEW = TECSTD,NEW x (1 - R) + TECICE
Where:
TECEL+ICE,NEW = Test energy consumption at a given efficiency level,
including icemaking energy consumption, using the new test procedure
TECSTD,NEW = Test energy consumption under the current standard, not
including icemaking energy consumption, using the new test procedure
R = Reduction in energy consumption (expressed as fraction) due to
efficiency improvements at a given efficiency level
TECICE = Icemaking test energy consumption
DOE conducted the analysis based on the proposed new test
procedure. However, as discussed, DOE applies the energy use reduction
associated with the efficiency level to the baseline energy use,
excluding icemaking energy use. For the purposes of this discussion,
DOE defines the Proposed Procedure Reduced Baseline Energy Use as the
representative energy use \28\ not including the icemaking energy use
of a minimally compliant product measured under the proposed new test
procedure. For a product with a 20 percent efficiency level (i.e., with
energy use 20 percent lower than the maximum allowable energy use) and
with an automatic icemaker, the energy use measured under the proposed
test procedure would be equal to the icemaking energy use plus 80
percent of the Proposed Procedure Reduced Baseline Energy Use.
Equations representing the Proposed Procedure Reduced Baseline Energy
Use are presented in Table 5.4.10 of the preliminary TSD. For a product
at a 20 percent efficiency level without an automatic icemaker, the
energy measured under the proposed new test procedure would be 80
percent of the Proposed Procedure Reduced Baseline Energy Use.
---------------------------------------------------------------------------
\28\ The word ``representative'' is inserted here to indicate
that the Proposed Procedure Reduced Baseline Energy Use is intended
to be representative of the products in a product class, rather than
applying to any one particular product that is minimally-compliant
under the current standard. This distinction is made because there
is variation in the change in measured energy use when applying the
proposed test procedure.
---------------------------------------------------------------------------
Whirlpool questioned the change in adjusted volume for product
class 7 (refrigerator-freezers--automatic defrost with side-mounted
freezer with through-the-door ice service) associated with the new test
procedure, as reported in the preliminary TSD (Tables 5.4.5 through
5.4.7), suggesting that the new volume calculation method, which has
eliminated the insulating hump and cup recess areas from the volume
calculation, should result in lower volumes. The cup recess area is the
recess on the outside of the product under the dispenser, where a cup
would be placed to fill it with ice or water. The insulating hump is
the ``bulge'' towards the inside of product that is necessary to
provide insulation around the back of the cup recess and around the ice
dispensing chute. (Whirlpool, Public Meeting Transcript, No. 28 at pp.
58-59)
DOE notes that the data associated with the tables were provided by
AHAM as aggregated data, which limited the extent to which DOE could
draw conclusions about these data. However, the information indicates
that the average freezer volume for the 24 examined product class 7
samples dropped from 9.3 cubic feet under the current test procedure to
9.0 cubic feet under the proposed new test procedure, consistent with
expectations of a reduction in volume. The larger volume adjustment
factor associated with the proposed new test temperatures (the volume
adjustment factor for the freezer compartment increases from 1.63 to
1.76 under the proposed test procedure) more than compensates for the
reduction in volume and results in a small increase in adjusted volume.
b. Change of Energy Use Equation Slope
The energy standards for refrigeration products are expressed as a
product's adjusted volume multiplied by a parameter called the slope
and added to another parameter called the intercept. Energy use is
expressed using an equation rather than as a fixed value to reflect the
fact that a larger product consumes more energy. An energy use equation
with a larger slope means that energy use increases more rapidly as the
size increases (i.e., is more sensitive to product size), while a lower
slope means that energy use increases less rapidly. Different slope and
intercept parameters are established to represent the energy standard
for each product class. Casting the energy standards in this fashion
allows DOE to set a standard for each product class as a single
relationship applicable for a wide range of product volumes, rather
than providing separate standards for many limited volume ranges.
Based on information derived from energy use modeling, the
preliminary TSD (see chapter 5, section 5.4.2) suggested that the
slopes for at least some of the examined products may need adjustment.
DOE sought comment on whether to adjust the slopes of the baseline
energy use curves under the new test procedure for any of the proposed
product classes.
AHAM requested additional information on (a) How product classes
were selected for evaluating the slope adjustment, (b) how the modified
slopes were determined, and (c) how the intercepts would change with
proposed slope changes. (AHAM, No. 34 at p. 6 and Public Meeting
Transcript, No. 28 at pp. 68-69) AHAM supported DOE's proposal to
increase the slope for
[[Page 59504]]
current product class 5 (refrigerator-freezers--automatic defrost with
bottom-mounted freezer without through-the-door ice service) to 12.3
assuming the intercept value remains the same, since the slope for this
product class was 16.5 in 1993 and it dropped to 4.6 with the 2001
rulemaking, thus making the standard more stringent for large products
than for small products. (AHAM, No. 34 at p. 6 and Public Meeting
Transcript, No. 28 at p. 68) AHAM expressed concerns about the slopes
for the product classes the preliminary TSD did not analyze, such as
product classes 17 (compact upright freezers with automatic defrost),
3A (all-refrigerators--automatic defrost), 5A (refrigerator-freezer--
automatic defrost with bottom-mounted freezer with through-the-door ice
service), 10A (chest freezers with automatic defrost), and 11A (compact
refrigerators and refrigerator-freezers with manual defrost). However,
AHAM's comments regarding product class 17 appear to address the
magnitude of the energy standard rather than the slope of the energy
use equation for this product class. (AHAM, Public Meeting Transcript,
No. 28 at p. 69) Finally, AHAM commented that the slopes determined
using energy modeling should be validated if possible to determine if
the proposed slope values are realistic. (AHAM, Public Meeting
Transcript, No. 28 at p. 68) Whirlpool commented that the preliminary
TSD provides insufficient information on the assessment of energy
equation slopes to allow the company to either support or reject of the
proposal. (Whirlpool, No. 31 at p. 1)
DOE presented during the preliminary analysis meeting background
information regarding the slopes of different product classes based on
energy modeling. DOE highlighted the need to obtain data and feedback
to properly assess which slopes should change and what the new slope
and intercept values should be. DOE explicitly asked for information
that might help in making slope adjustments at the preliminary analysis
public meeting and as part of the preliminary analysis comment period,
but did not receive any relevant data at that time. DOE also asked for
data on this topic during the NOPR phase manufacturer interviews and
received information for two pairs of product class 5 products. As
described in the NOPR TSD in chapter 5, section 5.4.2, DOE incorporated
this information into its evaluation of the applicable energy
efficiency equation for this product class. DOE proposes to apply the
slope for product class 7 (refrigerator-freezers--automatic defrost
with side-mounted freezer with through-the-door ice service) to product
class 4 (refrigerator-freezers--automatic defrost with side-mounted
freezer without through-the-door ice service) because the presence of
through-the-door ice features for product class 7 products should have
only a limited impact on the increase in energy use associated with
cabinet growth, which the slope represents. These adjustments are also
described in section 5.4.2 of chapter 5 of the NOPR TSD. Otherwise, DOE
is not proposing any slope changes based solely on energy modeling
information. DOE will consider modifying its slope and intercept values
if sufficient data are received.
In assessing possible slope changes, DOE primarily chose products
for which energy use models had already been prepared as part of the
preliminary analysis. As described in the preliminary TSD, chapter 5,
section 5.4.2, the analysis started with the energy models of
minimally-compliant products based on the two reverse-engineered
products for each product class DOE examined. DOE examined the trend in
calculated energy use as the product size changes with insulation
thickness remaining constant. For the smaller of the two reverse-
engineered products, DOE examined the trend as size increases, and for
the larger of the two products, DOE examined the trend as size
decreases. DOE averaged these two results.
For the analysis of compact refrigerators, DOE considered the
change in efficiency of typically available compressors sized
appropriately for the products examined. For standard-size products,
DOE used a constant compressor efficiency in the analysis. DOE selected
this approach based on observed data indicating that compressor
efficiency does not vary significantly in the capacity range suitable
for most standard-size products (see, e.g., Figure 5.8.1 of chapter 5
of the preliminary TSD).
The preliminary TSD did not address the approach for determining
new intercepts for baseline energy use equations with modified slopes.
Changing the slope without a corresponding change to the intercept
value would result in a dramatic increase or decrease in the calculated
baseline energy use. For example, consider the preliminary baseline
energy use equation for product class 5, which is 5.32 x AV + 542.5.
DOE proposes to change this slope from 5.32 to 11.0. If the intercept
remains equal to 542.5, the calculated energy use of a product with an
adjusted volume equal to 20 would increase from 648.9 to 762.5, an
increase of 17.5 percent. A lower intercept would be needed in order to
offset this change and permit the calculated baseline energy use for
products with typical adjusted volumes to remain constant. Without this
corresponding adjustment, the resulting equation would not be
representative of baseline product energy use. For a product with an
adjusted volume equal to 20, an intercept equal to 428.9 would assure
that the energy use remains 648.9.
Rather than keep the same intercept value, as suggested by AHAM
(AHAM, No. 34 at p. 6), DOE proposes, in developing a new baseline
energy use equation, that the calculated baseline energy use for the
typically-shipped range of products of the class remains constant.
Ideally, this approach would require knowledge of shipment quantities
for the product class disaggregated by adjusted volume. DOE does not
have access to such shipment data and cannot conduct a calculation to
determine an intercept that is known to result in zero change in the
shipment-weighted average baseline energy use. To work around this
limitation, DOE proposes to select a new intercept so that the increase
in the baseline energy calculated for the largest adjusted volume
(based on the new proposed test procedure with its modified volume
adjustment factor) typical for the examined product class is equal to
the decrease in the baseline energy use for the smallest adjusted
volume typical for that product class. For product class 5, DOE
selected representative minimum and maximum adjusted volumes for this
calculation equal to the adjusted volumes of the 18.5 and 25 cubic foot
reverse engineered products. The adjusted volumes for these products
are 22.4 and 29.8 cubic feet. With the proposed new intercept of 394.2,
the baseline energy use for the smaller product decreases 21.2 kWh from
661.6 to 640.4 kWh, while the baseline energy use for the larger
product increases 21.2 kWh from 701.3 to 722.5 kWh. A similar approach
is proposed for product class 4, as described in section 5.4.2 of
chapter 5 of the NOPR TSD. The chapter also discusses development of a
baseline energy use equation for product class 5A. DOE's Proposed
Procedure Reduced Baseline Energy Use equations for all of the proposed
product classes are presented in Table 5.4.12 of chapter 5 of the NOPR
TSD. These equations are the basis for development of the energy
standards in this NOPR.
[[Page 59505]]
DOE requests comment on the approach used to develop Proposed
Procedure Reduced Baseline Energy Use equations with adjusted slopes
for product classes 4, 5, and 5A. DOE also seeks relevant data that
would allow more rigorous adjustment of the curve intercept to ensure
that the shipment-weighted average impact of the slope change would be
neutral (i.e., zero change) with respect to energy use. DOE also seeks
any additional information that would support similar development of
adjusted-slope baseline energy curves for other product classes. (See
Issue 11 under ``Issues on Which DOE Seeks Comment'' in section VII.E
of this NOPR.)
c. Energy Use Measurement Changes Associated With Other Test Procedure
Changes
As described in section IV.C.2.a, above, DOE developed the Proposed
Procedure Reduced Baseline Energy Use equations based on energy use
measurement changes associated with proposed test procedure changes
associated with compartment temperatures and volume calculation
methods. DOE calculated the new energy conservation standards proposed
in this notice by applying efficiency level percentages to the Proposed
Procedure Reduced Baseline Energy Use equations. Section III. A, above,
describes the test procedure rulemaking and its associated NOPR, which
has proposed numerous test procedure changes in addition to the
compartment temperature and volume calculation method changes. The test
procedure final rule has not yet been published. However, DOE
tentatively concludes, based on its analysis and the comments received
in response to the proposed procedure, that none of these other
proposed test procedure changes will affect measured energy use.
Therefore, DOE has used the Proposed Procedure Reduced Baseline Energy
Use equations developed during the preliminary analysis (subject to
changes in some of these equations to address equation slope) to
establish the proposed standards in this notice.
3. Efficiency Levels Analyzed
DOE selected baseline products as reference points for all of the
product classes and compared these baselines to projected changes
resulting from using energy saving design options. The baseline
products in each product class represent the common characteristics of
equipment in that class.
DOE established a series of incremental efficiency levels for which
it has developed incremental cost data and quantified the cost-
efficiency relationship for each of the eleven analyzed product
classes. In each product class, the highest efficiency level is the
max-tech level, which represents the theoretical maximum possible
efficiency if all available design options are incorporated. Because
the two products selected for reverse engineering for each of the seven
conventional (free-standing) product classes had differing
characteristics, the max-tech levels for the two products were not the
same. DOE did not consider that the higher of the two max-tech levels
would be representative of the entire product class. Instead, DOE
calculated max tech for the product class as the average of the max-
tech levels for the two products analyzed.
DOE sought comment on the incremental efficiency levels and the
max-tech level for each product class. Stakeholders primarily made
comments about the max-tech levels. The comments primarily addressed
(a) Validity of max tech that is calculated based on technology options
that are used in commercialized products but whose combinations in the
max-tech designs may not be represented by products or prototypes, (b)
validity of DOE's consideration of variable speed compressors for
compact products, (c) questions regarding whether some of the design
options, particularly heat exchanger size increases, fit physically in
the products, and (d) questions regarding validation of the energy
modeling predictions. The specific comments are detailed below. The
comments described by topics (b) and (c) address the treatment in the
engineering analysis of design options that have been screened-in, and
are discussed in section IV.C.4, below. DOE modified its treatment of
some of these design options in the NOPR analysis, which resulted in
adjusting the max-tech levels. The comments described by topic (d)
address validation of the energy modeling tool DOE used in the analysis
and are discussed in section IV.C.5, below. Comments that specifically
address max-tech levels but not energy model validation or treatment of
design options in the analysis are discussed in section III.B.2, above.
4. Engineering Analysis Treatment of Design Options
GE recommended that DOE reevaluate its assumptions underlying the
technologies included in the max-tech levels, because some of the
design options are not feasible for certain product classes and some
design options are not as effective when combined with other design
options. (GE, No. 37 at p. 2) But GE did not identify specific options
it believed were problematic. DOE cannot directly respond to comments
that do not address particular design options in question and the
specific concerns with the way they were evaluated. The energy modeling
used to determine impacts of groups of design options modeled the
design option groups rather than modeling each design option
individually. The modeling showed the reduced effectiveness of design
options added after other design options had already been considered.
This resulted in less reduction in energy use for such design option
groups. Hence, the analysis captured the reduced effectiveness
associated with the grouping of design options and DOE did not modify
its analysis in response to this comment.
a. Heat Exchangers
AHAM, Sub Zero, and GE commented that some of the design options
considered could not be implemented due to cabinet size limitations.
(AHAM, Public Meeting Transcript, No. 28 p. 73; Sub Zero, Public
Meeting Transcript, No. 28 p. 73; GE, Public Meeting Transcript, No. 28
p. 74) GE did not offer any specifics in its statements or comments.
When asked to identify specific design options that were size-
dependent, Sub Zero cited heat exchangers (Sub Zero, Public Meeting
Transcript, No. 28 p. 73) As a result, DOE revised its assessment of
the benefits from increased heat exchanger sizes in the NOPR analysis
by (a) evaluating the potential to increase heat exchanger size in each
analyzed product based on the reverse-engineered product details and
limiting the size increase--in some cases, to no increase--and (b)
revising the analysis to analyze the heat transfer benefit, the
increase in refrigerant-side pressure drop, and the added airside
pressure drop and/or possible fan power increase associated with the
change. DOE adopted the latter approach rather than applying a factor
representing an increase in performance, as was done for the
preliminary engineering analysis. This revised assessment is discussed
in detail in chapter 5 of the NOPR TSD in sections 5.8.6 and 5.8.7.
b. Variable Speed Compressors for Compact Products
Whirlpool and Electrolux commented that variable speed compressors
may not be available in the market for product class 11 (compact
refrigerators and refrigerator-freezers with manual defrost).
(Whirlpool, Public Meeting
[[Page 59506]]
Transcript, No. 28 at p. 75; Electrolux, Public Meeting Transcript, No.
28 at p. 75) DOE utilized performance data for commercialized variable-
speed compressors in its analysis. For the compact product classes, DOE
considered the smallest-capacity variable speed compressors operating
at their lowest rated speed. For the smallest compact refrigerator
analyzed, DOE considered replacement of the baseline compressor,
nominally rated at 211 Btu/hr capacity and an EER of 3.02 Btu/hr-W,
with a variable speed compressor with ratings of 139 Btu/hr capacity
and 4.96 Btu/hr-W EER at low speed (capacity, power input, and EER all
vary as compressor speed varies). DOE confirmed with the compressor
vendor that these compressors can be used in this fashion, although
doing so may not be cost effective. Based on data provided by a
manufacturer, DOE also degraded the modeled performance of variable
speed compressors when applied to compact products, by reducing their
modeled capacity by 11 percent.
c. Variable Anti-Sweat Heaters
Whirlpool commented that the variable anti-sweat heater design
option would apply to product class 7 (refrigerator-freezers--automatic
defrost with side-mounted freezer with through-the-door ice service)
and possibly 6 (refrigerator-freezers--automatic defrost with top-
mounted freezer with through-the-door ice service), in addition to
product class 5 (refrigerator-freezers--automatic defrost with bottom-
mounted freezer without through-the-door ice service). (Whirlpool,
Public Meeting Transcript, No. 28 at pp. 44-45) In response, DOE
included this design option for analysis of product class 7. The design
option had already been incorporated into the analysis for product
class 5, with respect to the gasket heaters used between this product
class's French Doors (see Preliminary TSD, chapter 5, section 5.8.9).
DOE did not develop cost-efficiency curves for product class 6, as this
was not one of the directly-analyzed product classes (see section
IV.C.1, above).
d. Vacuum-Insulated Panels
Section IV.B.1.c, above, discusses VIPs from the perspective of the
screening analysis. As described in that section, VIPs were not
screened out for the NOPR analysis. This section addresses comments
associated with the treatment of VIP technology in the engineering
analysis.
AHAM stated that the VIP application cost is higher for cabinets
than it is for doors and questioned whether DOE had incorporated the
additional cost in its analysis (AHAM, Public Meeting Transcript, No.
28 at p. 94; AHAM, No. 34 at p. 7) In addressing this issue, DOE
assumed for the preliminary analysis that VIP installation in a cabinet
requires 10 times as much labor as installation in a door. Information
DOE obtained during manufacturer interviews during the NOPR suggests
that its labor cost estimates are appropriate. DOE used these
assumptions in calculating its VIP labor cost assumptions in the NOPR
analysis.
LG urged DOE to study the incremental installation, maintenance,
and service costs for products using VIPs. (LG, No. 41 at p. 4) As
discussed in more detail in chapter 5 of the NOPR TSD, the VIP cost
estimate includes labor costs and a cost contribution attributable to
overhead and capital costs. As discussed in section IV.B.1.c, above, no
information is available regarding any VIP field failure. DOE is also
unaware of any specific maintenance or service costs associated with
VIPs. Hence, DOE did not include these costs in the analyses for VIPs.
Sub Zero commented that VIP costs offered by three different VIP
manufacturers are similar, indicating that an industry standard has
been established at present levels of technology, maturity, and volume.
It added that costs may rise to ensure that shipping and handling are
conducted in a way that does not damage the panels. (Sub Zero, No. 40
at p. 4) IOU agrees with the costs used by DOE in the preliminary
analysis and expects that costs will likely decline in the future due
to economies-of-scale (IOU, No. 36 at p. 10) ThermoCor, a VIP vendor
contacted as part of DOE's investigation of VIP supply issues (see
section IV.B.1.c, above), expects the increase in supply to drive down
raw material prices and the transition to increased automation to
reduce production cost. DOE did not change the VIP cost assumptions
from the preliminary analysis, because, based on available information,
(1) DOE expects that VIP production capacity can be increased as needed
within the necessary timeframe, thus avoiding a supply/demand imbalance
that would lead to cost increases, and (2) adjustments to shipping
costs to reduce VIP failure risk during transport are insignificant
compared to overall VIP application cost. (DOE projects that if, in
order to account for the need for special handling, transport costs are
twice as high as normal bulk materials transport costs via truck, they
would still only amount to about 2 percent of total VIP costs).
IOU predicted that the cost premium for VIPs could become less
significant under future regulations that require manufacturers to
switch from HFC blowing agents to alternatives (IOU, No. 36 at p. 10)
DOE does not agree with this statement. Information obtained through
manufacturer interviews and discussion with an insulation vendor
indicates that material cost for insulation made using HFC-245fa is
more expensive than for insulation made using the most likely
replacement blowing agent, cyclopentane. Hence, the cost premium for
VIPs may more likely increase slightly. As an example, HFC-245fa may
represent 12.5 percent of the mass of the foam insulation. At a cost of
roughly $5/lb and insulation density of roughly 2 pounds per cubic
foot, the blowing agent represents $1.25 per cubic foot of insulation.
Cyclopentane costs roughly $1 per pound. Hence, when switching to
cyclopentane-blown insulation, the blowing agent represents $0.25 per
cubic foot of insulation. DOE used a VIP price in its analysis of $3.19
per square foot at a thickness of one-half inch--this is equal to
$76.56 per cubic foot on a volume basis. The total cost of the
displaced HFC-245fa foam insulation when applying VIPs is roughly 2
percent of the VIP cost, or $1.53. Hence, switch from HFC-245fa to
cyclopentane blowing agent will increase the cost of the use of VIPs
from $75.03 to $76.03 per cubic foot. This increase is very small
compared to the overall cost of implementing VIPs.
The IOU comment also suggests that VIPs could be used to maintain
thermal performance with reduced impact on external size or internal
volume (IOU, No. 36 at p. 10) DOE agrees with this statement, and
expects that some manufacturers might use this approach to maintain
internal volume. However, this possibility has no bearing on DOE's
engineering analysis, in which DOE must determine the most cost
effective groups of screened-in design options that are needed to
achieve each considered efficiency level.
NRDC stated that VIPs could alleviate some of the cost burden
associated with potential climate change legislation or regulation that
would increase the cost of HFC blowing agents by reducing the amount of
foam insulation needed (NRDC, No. 39 at p. 4) At this time, DOE does
not believe that a scenario involving limits on HFC use would involve
manufacturers switching to increased use of VIPs while continuing to
use HFC blowing agent. Instead, the available information leads DOE to
predict that manufacturers would
[[Page 59507]]
instead switch to insulation not containing HFC blowing agent, since
this approach is much more cost effective than the adoption of VIPs.
This result assumes that additional moderate-cost design options can be
applied to make up for any efficiency loss associated with the switch
to alternative blowing agents. DOE believes that VIPs would be used
only if they are the most cost-effective design option for making up
this efficiency difference.
DOE requests comment on its treatment of design options in the
engineering analysis. (See Issue 12 under ``Issues on Which DOE Seeks
Comment'' in section VII.E of this NOPR, below.)
5. Energy Modeling
DOE upgraded the ERA program used in the previous refrigerator
rulemaking in preparation for the energy analysis conducted for this
rulemaking. Upgrades, including use of heat exchanger models based on
more recent literature and development for a Windows platform are
described in more detail in appendix 5-B of the NOPR TSD. The program
has also been made available on the DOE rulemaking Web site at the
following URL: http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers_prelim_analytical_spreadsheets.html.
Sub Zero asked DOE whether and to what extent it used actual test
data to calibrate ERA models, and how well it predicted performance
over a range of operating conditions. (Sub Zero, No. 40 at p. 8) AHAM
questioned the evaluation of design options and requested that the ERA
simulation program be made available. (AHAM, No. 34 at p. 10)
Electrolux also posed questions regarding calibration of the ERA model
and asked whether the model could be made available. (Electrolux,
Public Meeting Transcript, No. 28 at p. 76)
DOE notes that the ERA program has been posted on the DOE's
rulemaking Web site since the end of February 2010. Additionally, the
preliminary TSD described many of the inputs that were used in
developing of the energy use models for the reverse-engineered products
that served as the basis of DOE's efficiency improvement calculations.
DOE tested many of the reverse-engineered products, including tests for
standard-size refrigerator-freezers for both the current test procedure
compartment temperatures and the proposed new compartment temperatures.
DOE instructed the test facility to measure refrigerant tube
temperatures during these tests to indicate refrigerant conditions
during compressor on-cycles. DOE measured the power input of fans as
part of the reverse-engineering process, and used this information as
input for the models. DOE also used the compressor power input during
on-cycles during testing to help calibrate teardown product energy
models. DOE adjusted input data for the energy models based on all
available information to obtain energy use estimates within a few
percentage points of the rated or measured energy of the products
analyzed. In some cases, DOE adjusted the input using additional load
and/or other input factors to degrade or improve system or cabinet
thermal performance to match measured energy use or operating
parameters. Examples include (1) boost of performance of one style of
condenser to match measured condensing temperature and compressor power
input during the on-cycle, and (2) addition of thermal load for some
products, particularly side-mount refrigerator-freezers and upright
freezers, to match total energy use. The energy model input data for
the reverse-engineered products are presented in appendix 5-A of the
NOPR TSD.
DOE also examined whether model predictions for the design options
groups required to achieve higher efficiency levels matched the design
options used in actual products, where such information was available.
For example, DOE obtained information from manufacturers during the
NOPR phase discussions regarding the combination of design options
required to achieve a 30 percent reduction in energy use in standard-
size refrigerator-freezers as compared with the current standard.
Achieving this level generally required using the highest-efficiency
single-speed compressors, brushless-DC fan motors, and substantial use
of VIPs. The energy model results were consistent with this
information.
DOE requests comments, information, and data that would help adjust
its energy modeling input and/or results that would allow more accurate
representation of the energy use impacts of design options using the
ERA energy model. (See Issue 13 under ``Issues on Which DOE Seeks
Comment'' in section VII.E of this NOPR, below.)
6. Cost-Efficiency Curves
Chapter 5 of the NOPR TSD provides the full list of manufacturer
production costs (MPCs) and MSPs at each efficiency level for each
analyzed product class.
ACEEE/ASAP stated that DOE should not rely principally on
manufacturer-provided cost curves. (ACEEE/ASAP, No. 43 at p. 6) This
comment addresses the variation in the cost information provided to DOE
by AHAM. ACEEE/ASAP cited (a) the lack of transparency of consolidated
data provided by AHAM and (b) the expectation that such data do not
accurately predict future costs as reasons why DOE should not rely on
these data. The commenters urged DOE to use the lowest cost information
provided by any manufacturer, since other manufacturers would have to
adopt the lowest-cost design approaches to remain competitive, or they
would lose market share, thus increasing the representativeness of the
lowest-cost designs. (Id.) AHAM expressed concerns regarding how
manufacturers reported cost data and will reevaluate its submissions to
DOE. (AHAM, Public Meeting Transcript, No. 28 at pp. 89-90)
DOE has not received updated information. Because of the questions
cited above regarding AHAM's data collection and aggregation, DOE has
not attempted to present comparisons of DOE's NOPR analysis results
with the preliminary analysis data provided by AHAM. DOE has developed
curves representing the cost of achieving the analyzed efficiency
levels using manufacturing cost modeling and energy modeling based on
reverse engineering. DOE used its own curves in the downstream analyses
such as the LCC/PBP and NIA analyses.
AHAM and GE requested clarification regarding the cost-efficiency
curve presented on page 55 of the preliminary TSD, specifically asking
which of the two design options labeled ``VIP to FZR door'' was
actually the ``VIP to FZR door'' design option. (AHAM, No. 34 at p. 10;
GE, Public Meeting Transcript, No. 28 at p. 85) DOE has since adjusted
the analyses on which this comment was based (see the changes made to
analyses between the preliminary analysis and NOPR phases listed in
Table IV.10, above). Accordingly, this comment has been superseded by
intervening events.
7. Development of Standards for Low-Volume Products
DOE sought comment on its approach to developing energy standards
for low-volume products. Sub Zero commented on the high degree of
uncertainty of the analysis which was based on computer models and
selective teardowns, and suggested adding margins of uncertainty to the
results. (Sub Zero, No. 40 at p. 3-4) AHAM recommended that DOE
generate cost-efficiency curves for all product classes, since low
shipment product classes (i.e., low-volume compacts) have much smaller
economies of scale and greater design
[[Page 59508]]
challenges due to size and special constraints. As a result, these
product classes have much higher costs and reduced energy efficiency
improvements compared to the high-volume product classes. AHAM
suggested that DOE request data to estimate cost-efficiency curves for
low-volume products during MIA interviews. Finally, AHAM stressed that
low-volume product classes can make up a major portion of a niche
manufacturer's sales, so it is critical to evaluate these product
classes as realistically as possible to be fair to these manufacturers.
(AHAM, Public Meeting Transcript, No. 28 at pp. 98, 99 and No. 34 at
pp. 7-8) Whirlpool agreed with AHAM and offered to provide data for all
product classes in an effort to help DOE model low-volume product
classes accurately. (Whirlpool, No. 31 at p. 2)
In response, DOE adopted AHAM's suggestion for certain low-volume
products such as built-ins, for which DOE obtained detailed engineering
data from a built-in manufacturer to allow development of cost-
efficiency curves. However, because of limited resources, DOE cannot
conduct a complete analysis for every product variation. DOE explained
the proposed approach thoroughly during the framework meeting and in
the framework document and was not urged by stakeholders at that time
to consider detailed analyses of more product classes.
D. Markups To Determine Product Cost
The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer cost
derived in the engineering analysis to consumer prices. DOE determined
the distribution channels for refrigeration products and the markups
associated with the main parties in the distribution chain,
manufacturers and retailers. DOE developed an average manufacturer
markup by examining the annual Securities and Exchange Commission (SEC)
10-K reports filed by four publicly-traded manufacturers primarily
engaged in appliance manufacturing and whose combined product range
includes residential refrigeration products. For retailers, DOE
developed separate markups for baseline products (baseline markups) and
for the incremental cost of more-efficient products (incremental
markups). Incremental markups are coefficients that relate the change
in the manufacturer sales price of higher-efficiency models to the
change in the retailer sales price.
Commenting on the preliminary TSD, AHAM filed supplemental comments
that criticized DOE's application of ``incremental'' markups to the
incremental manufacturer selling price of products more efficient than
the baseline products. (AHAM, No. 34 at p. 14) In Exhibit B
accompanying this comment, AHAM stated that (1) DOE provides no
empirical evidence to validate that retailers obtain only incremental
markups on products with greater features and costs; and (2) DOE is
asserting a normative approach without any support showing that its
model reflects actual retail practices. These comments effectively
criticized two of the key assumptions in DOE's theoretical construct.
The first of these assumptions is that the costs incurred by appliance
retailers can be divided into costs that vary in proportion to the MSP
(variable costs), and costs that do not vary with the MSP (fixed
costs). The second of these assumptions is that retailer prices vary in
proportion to retailer costs that are included in the balance sheets.
Regarding the first assumption, AHAM stated that DOE has offered no
evidence that the fixed/variable cost mix of a retailer has anything to
do in practice with the markups that will be earned by a retailer on
products that meet a new energy conservation standard. It added that
DOE uses a ``spurious analogy'' of HVAC contractors as a basis for
considering the costs of a retailer, and that DOE did not analyze the
actual drivers of retail costs, where the cost structure has
considerably different characteristics from those of an HVAC
contractor. It stated that DOE has not presented any data or analysis
that would yield a fixed versus variable cost allocation applicable to
retailers. Regarding DOE's second assumption, AHAM stated that DOE's
approach depends on the presence of a relatively high level of
competition in the retail industry. AHAM presented data showing that
the four firm concentration ratio (FFCR) of the sectors that sell major
appliances ranges from 42 to 65 percent, which verges on the standard
definition of an oligopoly.\29\
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\29\ The FFCR represents the market share of the four largest
firms in the relevant sector. Generally, an FFCR of less than 40
percent indicates that a sector is not concentrated and an FFCR of
more than 70 percent indicates that a sector is highly concentrated.
---------------------------------------------------------------------------
In conclusion, AHAM viewed DOE's incremental markup approach as
lacking a credible theoretical underpinning and demonstrated
reliability and asserted that the data required for the approach are
not available. AHAM stated that DOE should return to its traditional
practice of using average markups for both the baseline products and
for the added costs of efficiency improvements. In AHAM's view, the
stability of markups in the retailing sectors leads to the reasonable
inference that such markups will continue and apply to higher-
efficiency products in the future when they become the bulk of sales
under amended standards. (AHAM, No. 34, Exhibit B, p. 12) In addition
to AHAM's comment, GE expressed concerns with the assumptions DOE is
using in proposing a lower markup on energy efficiency improvements.
(GE, No. 37 at pp. 2-3)
In response to the above comments, DOE extensively reviewed its
incremental markup approach. It assembled and analyzed relevant data
from other retail sectors, and held preliminary discussions with an
expert retailing consultant. As a result of this research, DOE found
that empirical evidence is lacking with respect to appliance retailer
markup practices when a product increases in cost (due to increased
efficiency or other factors). DOE understands that real-world retailer
markup practices vary depending on market conditions and on the
magnitude of the change in cost of goods sold (CGS) associated with an
increase in appliance efficiency.
Given this uncertainty with respect to actual markup practices in
appliance retailing, DOE uses an approach that reflects two key
concepts. First, changes in the efficiency of the appliances sold are
not expected to increase economic profits. Thus, DOE calculates
markups/gross margins to allow cost recovery for retailers (including
changes in the cost of capital) without changes in company profits.
Second, efficiency improvements only impact some distribution costs.
DOE sets markups to cover only the variable costs expected to change
with efficiency.
DOE's separation of operating expenses into fixed and variable
components to estimate an incremental markup follows from the above
concepts. DOE defines fixed expenses as including labor and occupancy
expenses because these costs are not likely to increase as a result of
a rise in CGS due to amended efficiency standards. All other expenses,
as well as the net profit, are assumed to vary in proportion to the
change in CGS. DOE acknowledges that its allocation of expenses into
fixed and variable categories is based largely on limited information
and seeks additional information from interested parties to help refine
its allocation approach.
[[Page 59509]]
DOE's method results in an outcome in which retailers are assumed
to cover their costs while maintaining their profit margins when the
CGS of appliances changes. Market competition is a main reason why DOE
believes that profit margins would not change in a significant way.
Regarding AHAM's assertion that the degree of competition in appliance
retailing is not sufficient to support DOE's model, DOE believes that
AHAM's measure of competition is faulty. AHAM measured the FFCR of
three retail channels: Electronics and Appliance Stores, Building and
Material and Supplies Dealers, and General Merchandise Stores. These
values represent competitiveness within each sector, but refrigerators
are sold across all three sectors, preventing major retailers in each
sector from exercising significant market power. To properly measure
the competitiveness within appliance retailing, DOE believes that one
should measure the FFCR for only the appliance sub-sector within the
above channels, and accordingly estimated the ``appliance sales'' FFCR,
equal to the sector FFCR times the percent of appliance sales within
each sector. DOE estimated that these sub-sector FFCRs are under the 40
percent threshold. Furthermore, ``Household Appliance Stores,'' a
subsector of the Electronics and Appliance Stores sector that
specifically represents appliance retailers, rather than computer or
other electronics stores, has an FFCR of 17 percent, signifying an
unconcentrated sector.
Regarding AHAM's observation about the relative stability of
average markups for the major retail channels that sell home
appliances, DOE believes that the usefulness of this information for
estimating markups on specific product lines is limited. The markups
implied by gross margin at the level of major retail channels \30\ are
averaged over multiple product lines and many different store types.
The empirical data at this level do not provide useful guidance for
estimating what happens to the markup on specific products when their
costs change. Applying the same markup as CGS increases, as AHAM
recommends, would mean that the rise in CGS associated with higher-
efficiency products would translate into higher retail gross margins
for that product line. Since the majority of operating expenses would
not be affected by the rise in CGS, the result would be an increase in
net profit as a share of sales. While such an outcome could occur in
the short run, DOE believes that competitive forces in the market would
tend to decrease the profit margin over time.
---------------------------------------------------------------------------
\30\ The channels for which AHAM provided gross margin data for
1993-2007 are Electronics and Appliance Stores, General Merchandise
Stores, and Building Material and Supplies Dealers. According to
AHAM, these channels accounted for 43%, 31% and 17% of major
appliance sales in 2007, respectively.
---------------------------------------------------------------------------
Based on the above considerations, DOE has decided to continue to
apply an incremental markup to the incremental MSP of products with
higher efficiency than the baseline products. As part of its review,
DOE developed a new breakdown into fixed and variable components using
the latest expense data provided by the U.S. Census for Electronics and
Appliance Stores, which cover 2002. The newly-derived incremental
markup, which would be applied to an incremental change in CGS, is
1.17, which is slightly higher than the value of 1.15 that DOE used in
the preliminary analysis. Chapter 6 of the NOPR TSD provides a
description of both the method and its current application using the
afore-mentioned data.
DOE requests information regarding the response of retailers to
incremental change in the CGS of appliances associated with energy
conservation standards. (See Issue 14 under ``Issues on Which DOE Seeks
Comment'' in section VII.E, below.)
Chapter 6 of the NOPR TSD provides additional detail on the markups
analysis.
E. Energy Use Analysis
DOE's analysis of the energy use of refrigeration products
estimated the annual energy use of products in the field that would
meet the considered efficiency levels, i.e., as they are actually used
by consumers. The energy use analysis provides the basis for other
analyses DOE performs, particularly assessments of the energy-savings
and the savings in consumer operating costs that could result from
DOE's adoption of amended standard levels. In contrast to the DOE test
procedure, which provides standardized results that can serve as the
basis for comparing the performance of different appliances used under
the same conditions, the energy use analysis seeks to capture the range
of operating conditions for refrigeration products in U.S. homes.
To determine the field energy use of products that would meet
possible amended standard levels, DOE used data from the Energy
Information Administration (EIA)'s 2005 Residential Energy Consumption
Survey (RECS), which was the most recent such survey available at the
time of DOE's analysis.\31\ RECS is a national sample survey of housing
units that collects statistical information on the consumption of and
expenditures for energy in housing units along with data on energy-
related characteristics of the housing units and occupants. RECS
provides sufficient information to establish the type (product class)
of refrigeration product used in each household, and also provides an
estimate of the household's energy consumption attributable to
``refrigerators'' or ``freezers''. As a result, DOE was able to develop
household samples for the representative product classes for standard-
size units. DOE did not use RECS for compact refrigerators and freezers
because a large fraction of these products are used outside the
residential sector. Instead, it based the energy use for these products
on the DOE test procedure.
---------------------------------------------------------------------------
\31\ For information on RECS, see http://www.eia.doe.gov/emeu/recs/.
---------------------------------------------------------------------------
The preliminary analysis treated the energy consumption attributed
by RECS to refrigerators or freezers as the field energy consumption,
referred to as FECRECS, of the refrigeration product(s) in each sample
household. DOE derived a multiplicative `usage adjustment factor' (UAF)
that relates this quantity to the estimated test energy consumption of
the products in each household. To develop a UAF for each RECS
household, DOE utilized information that RECS provides on the size
(i.e., volume), age and the product class of the refrigeration product
in use. DOE determined, for each household's unit, the corresponding
maximum allowable tested energy consumption, referred to as TECSTD,
based on the energy conservation standard that was in effect at the
time the household purchased the refrigeration product. Using FECRECS
and TECSTD, DOE then developed the UAF for each household to capture
the combined effects of consumer behavior (e.g., door openings),
operating conditions (e.g., room temperature and humidity), and product
characteristics (e.g., efficiency relative to the minimum allowable).
The UAF represents the adjustment that needs to be made to the maximum
allowable tested energy use to arrive at the field energy consumption
of the refrigeration product.
Commenting on the preliminary TSD, AHAM criticized DOE's proposed
approach for estimating the energy use of refrigerator[hyphen]freezers,
and stated that DOE should instead rely on the test procedure. (AHAM,
No. 34 at pp. 11-12) Accompanying its comment, AHAM submitted Exhibit
A, which elaborated
[[Page 59510]]
on AHAM's concerns criticisms.\32\ In AHAM's view:
---------------------------------------------------------------------------
\32\ Exhibit A: Evaluation of the Proposed Use by the Department
of Energy of RECS Data in its Energy Use Determination Under the
Preliminary Technical Support Document (TSD) for Refrigerators,
Freezers and Refrigerator[hyphen]Freezers.
---------------------------------------------------------------------------
1. RECS data has served well as a directional, general guidance
tool in energy policymaking, but the preliminary TSD proposes an
unprecedented use of these data in a specific appliance energy
efficiency rulemaking.
2. Use of RECS data to set a refrigerator/freezer standard is
improper, legally flawed and is arbitrary and capricious. The proposed
RECS data approach operates as a ``black box,'' the inner workings of
which are not well understood. The input data are not direct and actual
measurements of energy use, but rather statistical inferences.
3. While the current, long-standing methodology that relies on the
test procedure for determining future energy savings and PBP under a
new or amended efficiency standard has a very clear basis in current
law, the preliminary TSD proposal to use RECS data does not.
4. Because of its statistical deficiencies, the UAF approach does
not permit the Secretary to rationally and substantially meet his legal
obligation in this rulemaking to determine savings in operating costs
and total projected amount of energy savings likely to result directly
from imposition of the standard.
5. Rather than use RECS data, as the preliminary TSD proposes, DOE
should amend and use the test procedure.
Whirlpool and LG also questioned DOE's approach, and recommended
that DOE should use the test procedure and drop UAFs from the analysis.
(Whirlpool, No. 31 at p. 2; LG, No. 41 at p. 1)
In response, DOE first addresses the appropriateness of using RECS
data to estimate appliance energy use (AHAM's points 1 and 3, above).
As further discussed below, DOE has used RECS data to help determine
the energy use of covered products in many residential appliance
standards rulemakings over the past decade. Regarding the legal basis
for using RECS data, DOE uses RECS data because it helps DOE to
evaluate two of the factors that EPCA directs the Secretary to consider
in determining whether an energy conservation standard for a particular
covered product is economically justified. The first of these is the
economic impact of potential standards on the manufacturers and the
consumers of the covered products. (42 U.S.C. 6295(o)(2)(B)(i)(I)) The
second factor is the savings in operating costs throughout the
estimated average life of the covered product in the type (or class)
compared to any increase in the price of, or in the initial charges
for, or maintenance expenses of, the covered products which are likely
to result from the imposition of the standard. (42 U.S.C.
6295(o)(2)(B)(i)(II))
To evaluate economic impacts on consumers and the savings in
operating costs as accurately as possible, DOE needs to determine the
energy savings that are likely to result from a given standard. Such a
determination requires knowledge of actual use of covered products by
consumers. RECS provides information that helps DOE to determine such
use.
In addition, DOE uses RECS data because it is consistent with the
guidance contained in 10 CFR part 430, subpart C, appendix A--
Procedures, Interpretations and Policies for Consideration of New or
Revised Energy Conservation Standards for Consumer Products.
Specifically, section 11 of appendix A lists variation in consumer
impacts as one of the principles for the analysis of impacts on
consumers. Because RECS is a representative sample of U.S. households
that provides considerable information about each household in the
sample, it allows DOE to evaluate factors that contribute to variation
in the energy use of covered products. In turn, this allows DOE to
estimate the fraction of consumers that will benefit from standards at
various efficiency levels.
Consistent with the statute and DOE's regulatory guidance, DOE has
used RECS data in a variety of ways over the past decade. In most
cases, DOE has used the relevant DOE test procedure or a similar
procedure as the basis for energy use calculation, and used RECS data
to provide a range for key input variables concerning the operation of
covered products. Examples include the standards rulemaking for water
heaters concluded in 2001 (66 FR 4474 (January 17, 2001)), and in the
recently-concluded rulemaking that amended standards for water heaters
(75 FR 20112 (April 16, 2010)). In both rulemakings, DOE used data for
each of the households in the RECS sample to estimate the amount of
household daily hot water use, and to specify certain factors that
affect water heater operating conditions.
Additionally, DOE's 2001 final rule for central air conditioners
and heat pumps relied on annual energy use based on the annual end-use
energy consumption values in RECS. 66 FR 7170 (January 22, 2001). DOE
determined that basing the energy use on RECS household data provided a
more accurate measure of the savings possible from more-efficient
equipment, and accounted for variability due to climatic conditions and
consumer behavior. The particular use of RECS data in the preliminary
TSD to derive UAFs reflected a new analytical approach, but it was
consistent with the purposes underlying DOE's use of RECS in previous
rulemakings.
Regarding AHAM's recommendation that DOE should use the amended
test procedure for refrigerator-freezers to estimate energy use for the
purposes of its analysis of standards, test procedures must be
reasonably designed to produce test results which measure energy
efficiency, energy use or estimated annual operating cost of a covered
product during a representative average use cycle or period of use. (42
U.S.C. 6293(b)(3)) Relying solely on a representative average use cycle
or period of use does not provide an accurate measure of the possible
energy savings since this approach inadequately evaluates the economic
impact of the standard on consumers, and the savings in operating costs
throughout the estimated life of the product--two factors under EPCA
that DOE must consider when promulgating an amended energy conservation
standard. Further, the approach suggested by AHAM would not account for
the variability stemming from household differences or be consistent
with the above-cited guidance contained in 10 CFR part 430, subpart C,
appendix A. In contrast, the approach that DOE has used in residential
product rulemakings for over a decade accounts for all of these
factors.
DOE applies the test procedure to ascertain whether the consumer
costs associated with the purchase of a product that complies with the
proposed standard level is less than three times the value of the
energy savings the consumer will receive during the first year of
ownership. (42 U.S.C. 6295(o)(2)(B)(iii)) This calculation is separate
from the payback periods calculated in the LCC and payback period
analysis, as the latter is intended to assess the economic impact of
potential standards on the consumers of the covered products. Both
calculations are part of DOE's routine analysis when evaluating
potential standards for a given product.
AHAM also questioned how DOE justifies using the test procedure to
carry out its engineering analysis and manufacturing impact analysis
while using a different set of values for
[[Page 59511]]
carrying out a life-cycle cost and national impact analysis. (AHAM, No.
34 at p. 11) In the engineering analysis, DOE uses the test procedure
to evaluate the relative improvement in energy efficiency provided by
different design options. The manufacturing impact analysis uses the
same cost-efficiency curves developed in the engineering analysis to
calculate industry revenue. DOE does not rely solely on the test
procedure in the LCC and payback period analysis or the national impact
analysis for the reasons stated above.
AHAM's criticism of the statistical technique that DOE used to
develop UAFs for refrigerator-freezers was echoed by other interested
parties who raised issues regarding use of the RECS data. Whirlpool and
GE stated that DOE should refrain from using RECS data for the
rulemaking because it will be outdated and it does not discriminate
between top- and bottom-mount refrigerators. (GE, No. 37 at p. 2;
Whirlpool, No. 31 at p. 2) LG also commented that the RECS data are
outdated, as many factors involved in household usage have changed
since 2005. (LG, No. 41 at p. 2)
ACEEE supported DOE's efforts to develop UAFs to capture the
difference between measured energy use in the lab and in-field energy
use, but commented that the suggested approach is flawed. It urged DOE
to look for any existing sets of metered field data that can be used to
develop UAFs. (ACEEE, No. 43 at p. 2) NRDC also cautioned against the
use of RECS data without metered data to help justify the conclusions,
and urged DOE to collect metered data and explore all other data
sources to keep the UAFs in perspective. (NRDC, No. 39 at p. 6) The
IOUs also supported use of UAFs, but stated that ideally they should be
based on metered data. (IOU, No. 36 at p. 10) NEEP expressed its
general support for DOE's approach, but cautioned that RECS data
misrepresents refrigeration-only energy use because it includes the
energy used for icemaking. NEEP recommended taking icemaking energy use
in the RECS data into account when developing UAFs. (NEEP, No. 38 at p.
2) Similarly, NPCC supported DOE's effort to estimate in situ energy
use, but stated that DOE's use of statistical regression may result in
exaggerated differences between test and field energy use. It stated
that UAFs should be based on metered energy use or a regression that
permits isolation of icemaking energy use. (NPCC, No. 33 at p. 2)
For the reasons previously discussed, DOE believes that, in
general, using RECS data in the estimation of field energy use of
refrigeration products is valid. However, it acknowledges that the
approach used in the preliminary analysis has shortcomings. Recognition
of these shortcomings, combined with the urging of several interested
parties that DOE should look for existing sets of metered field data,
prompted DOE to develop a new approach for the NOPR to estimate energy
use of refrigeration products in U.S. homes. This approach involved
collecting field-metered electricity use data for residential
refrigeration products.
DOE was able to obtain data from seven studies, including about 100
data points that DOE collected itself. A total of 1,967 data points
were collected that included units from all representative product
classes except compact freezers, and spanned a variety of collection
years, unit ages, U.S. locations and household populations, including
some units used in commercial settings (e.g., offices and hotels). DOE
made various adjustments to the raw data, including extrapolation to
annual electricity consumption where necessary.
Test energy consumption was obtained for each unit. From
identifying information about each unit, test energy consumption was
estimated for each unit and the UAF was calculated as the ratio of
metered energy use to test energy use. The data were pooled into four
categories: primary refrigerators, secondary refrigerators, freezers
and compact refrigerators. Although DOE considered including data for
compact refrigerators in the final analysis, it decided not to include
those data due to concerns over data quality and representativeness.
For each category, DOE performed weighted least-squares regressions
on numerous variables of potential interest in order to construct a
function that predicts the UAF based on household and climate
variables. DOE selected for final evaluation a small number of
variables for which the regression results had sufficient statistical
significance, and that could be obtained or reasonably inferred from
RECS variables. Within each of the three product categories modeled,
DOE used the appropriate set of regression coefficients, along with
values for the relevant variables specific to each household to
generate UAF estimates for each RECS household. For compact
refrigeration products, a UAF of 1 was used.
Using the UAF derived for each RECS household, DOE determined the
field energy consumption in each household of a new refrigeration
product at each considered efficiency level using the following
equation:
FECEL = FECRECS (1-R) = UAFRECS TECRECS (1-
R)
Where:
FECEL = new refrigeration product's field energy consumption at a
given efficiency level;
FECRECS = new refrigeration product's field energy consumption at
baseline efficiency level;
R = reduction in energy consumption (expressed as fraction) due to
efficiency improvements;
UAFRECS = usage adjustment factor specific to RECS household;
TECRECS = maximum allowable test energy consumption for the new
baseline refrigeration product.
In order to make the 2005 RECS sample more representative of
current refrigeration products, DOE made two modifications. First, DOE
modified the RECS weights for top- vs. bottom-mount refrigerators in
order to reflect current information on the relationship between income
and refrigerator door style (i.e., top- or bottom-mount) provided by
AHAM in 2010. Second, DOE examined recent data from three sources \33\
to scale the average interior volume of standard-size refrigerator-
freezers from the 2005 RECS data. The average scaled volumes for
product classes 3 (refrigerator-freezer--automatic defrost with top-
mounted freezer without through-the-door ice service), 5 (refrigerator-
freezers--automatic defrost with bottom-mounted freezer without
through-the-door ice service) and 7 (refrigerator-freezers--automatic
defrost with side-mounted freezer with through-the-door ice service)
are now 18.3, 20.9 and 24.8 cubic feet, respectively (approximately 2,
16 and 18 percent higher, respectively, than in the preliminary
analysis). As for other factors affecting household usage, the field
metered data indicate no significant differences in UAF with respect to
survey year after 1993. DOE requests comments on the weighting of the
RECS sample using income relationships and volume scaling. (See Issue
15 under ``Issues on Which DOE Seeks Comment'' in section VII.E,
below.)
---------------------------------------------------------------------------
\33\ California Energy Commission, Appliances Database--
Refrigeration, 1998-2009. http://www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/ (Last accessed April 25,
2009); The NPD Group, Inc., The NPD Group/NPD Houseworld--POS,
Refrigerators, January-December 2008, 2007-2008, Port Washington,
NY; and Association of Home Appliance Manufacturers, data from 2005-
2008, memoranda dated January 19, 2009 and March 26, 2010,
Washington, DC.
---------------------------------------------------------------------------
For compact refrigerators, DOE used a UAF of 1 in the preliminary
analysis. AHAM commented that it supports using UAF of 1 for compact
refrigeration
[[Page 59512]]
products. (AHAM, No. 34 at p. 12) Because DOE has concerns about the
reliability of the metered data for compact refrigerators, it continued
to use a UAF of 1 for the NOPR analysis.
Table IV.12 presents a comparison of the UAFs calculated using the
above approach with those calculated for the preliminary TSD. The
average UAFs in the NOPR analysis are less than those used in the
preliminary TSD, particularly for standard-size freezers. DOE requests
comments on its approach for developing UAFs using field-metered data.
(See Issue 16 under ``Issues on Which DOE Seeks Comment'' in section
VII.E, below.)
Table IV.12--Average Unit Adjustment Factors Used in the Energy Use Analysis
----------------------------------------------------------------------------------------------------------------
Product class
------------------------------------------------------- Preliminary TSD NOPR
Number Description
----------------------------------------------------------------------------------------------------------------
3.................... Refrigerator-freezer--automatic 1.23 0.93 (0.82 to 1.04) *
defrost with top-mounted
freezer without through-the-
door ice service.
5.................... Refrigerator-freezers-- 1.08 0.92 (0.81 to 1.02) *
automatic defrost with bottom-
mounted freezer without
through-the-door ice service.
7.................... Refrigerator-freezers-- 1.44 0.94 (0.84 to 1.03) *
automatic defrost with side-
mounted freezer with through-
the-door ice service.
9.................... Upright freezers with automatic 1.37 0.85
defrost.
10................... Chest freezers................. 1.48 0.89
11................... Compact refrigerators and 1.00 1.00
refrigerator-freezers with
manual defrost.
18................... Compact chest freezers......... 1.00 1.00
----------------------------------------------------------------------------------------------------------------
* Averages are based on lifetime distribution and include conversion to 2nd refrigerators. Range indicates
average UAF in year 1 (minimum) and year 20 (maximum).
Whirlpool stated that DOE used a flawed approach in backing out
icemaker energy use by identifying products with TTD ice as ice-making
products and counting other types as not having an ice maker.
(Whirlpool, No. 31 at p. 3) In fact, DOE made no such adjustments in
deriving UAF data in the preliminary analysis. However, DOE was able to
obtain from the field-metered data an average value for TTD icemaking
energy consumption, which was subsequently removed for the purpose of
calculating average UAFs. There were no data available in the metered
data or in the 2005 RECS data to indicate whether an automatic icemaker
was present. The revised UAF distributions implicitly include an
uncertainty due to the possible presence of non-TTD automatic
icemaking.
A detailed description of DOE's energy use analysis for
refrigeration products is given in chapter 7 of the NOPR TSD.
F. Life-Cycle Cost and Payback Period Analyses
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
refrigeration products. The LCC is the total consumer expense over the
life of a product, consisting of purchase and installation costs plus
operating costs (expenses for energy use, maintenance and repair). To
compute the operating costs, DOE discounts future operating costs to
the time of purchase and sums them over the lifetime of the product.
The PBP is the estimated amount of time (in years) it takes consumers
to recover the increased purchase cost (including installation) of a
more efficient product through lower operating costs. DOE calculates
the PBP by dividing the change in purchase cost (normally higher) due
to a more stringent standard by the change in average annual operating
cost (normally lower) that results from the standard.
For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case appliance efficiency
levels. The base-case estimate reflects the market in the absence of
amended energy conservation standards, including the market for
products that exceed the current energy conservation standards.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units. For the preliminary analysis and the analysis for
today's proposed rule, DOE developed household samples from the 2005
RECS. For each sampled household, DOE determined the energy consumption
for the refrigeration product and the electricity price. By developing
a representative sample of households, the analysis captured the
variability in energy consumption and energy prices associated with the
use of residential refrigeration products.
Inputs to the calculation of total installed cost include the cost
of the product--which includes manufacturer selling prices, retailer
markups, and sales taxes--and installation costs. Inputs to the
calculation of operating costs include annual energy consumption,
energy prices and price projections, repair and maintenance costs,
product lifetimes, discount rates, and the year that proposed standards
take effect. DOE determined the operating costs for each sampled
household using that household's unique energy consumption and the
household's energy price. DOE created distributions of values for some
inputs, with probabilities attached to each value, to account for their
uncertainty and variability. DOE used probability distributions to
characterize product lifetime, discount rates, and sales taxes.
The computer model DOE uses to calculate the LCC and PBP, which
incorporates Crystal Ball (a commercially available software program)
relies on a Monte Carlo simulation to incorporate uncertainty and
variability into the analysis. The Monte Carlo simulations randomly
sample input values from the probability distributions and household
samples. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 housing units per simulation run. Details
of the spreadsheet model, and of all the inputs to the LCC and PBP
analyses, are contained in TSD chapter 8 and its appendices.
Table IV.13 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The table provides the data and
approach DOE used for the preliminary TSD, as well as the changes made
for today's NOPR. The subsections that follow discuss the initial
inputs and the changes DOE made to them.
[[Page 59513]]
Table IV.13--Summary of Inputs and Key Assumptions in the LCC and PBP Analysis*
----------------------------------------------------------------------------------------------------------------
Inputs Preliminary TSD Changes for the proposed rule
----------------------------------------------------------------------------------------------------------------
Installed Costs
----------------------------------------------------------------------------------------------------------------
Product Cost.................... Derived by multiplying Incremental retail markup changed as described in
manufacturer cost by section IV.D.
manufacturer and
retailer markups and
sales tax, as
appropriate.
----------------------------------------------------------------------------------------------------------------
Operating Costs
----------------------------------------------------------------------------------------------------------------
Annual Energy Use............... Based on energy use Based on a multiple linear regression of field-
given in 2005 RECS for metered energy use data, adjusted using a UAF
refrigerators or function based on 2005 RECS household
freezers, adjusted characteristics.
using a `usage
adjustment factor'
(UAF) that adjusts the
energy use from its
test energy
consumption to reflect
field conditions.
Energy Prices................... Electricity: Based on Electricity: Updated using Form 861 data for 2007.
EIA's Form 861 data
for 2006.
Variability: Regional Variability: No change.
energy prices
determined for 13
regions.
Energy Price Trends............. Forecasted using Annual Forecasts updated using AEO2010.
Energy Outlook 2009
AEO2009.
Repair and Maintenance Costs.... Not included........... Used repair cost estimation method that estimates the
rate of failure for selected components along with
the incremental cost of repair or replacement
compared to the baseline product.
----------------------------------------------------------------------------------------------------------------
Present Value of Operating Cost Savings
----------------------------------------------------------------------------------------------------------------
Product Lifetime................ Estimated using survey No change.
results from RECS
(1990, 1993, 1997,
2001, 2005) and the
U.S. Census American
Housing Survey (2005,
2007), along with
historic data on
appliance shipments.
Variability:
Characterized using
Weibull probability
distributions..
Discount Rates.................. Approach involves No change.
identifying all
possible debt or asset
classes that might be
used to purchase the
considered appliances,
or might be affected
indirectly. Primary
data source was the
Federal Reserve
Board's SCF ** for
1989, 1992, 1995,
1998, 2001, 2004 and
2007.
Compliance Date of New Standard. 2014................... No change.
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table or in
chapter 8 of the NOPR TSD.
** Survey of Consumer Finances.
1. Product Cost
To calculate consumer product costs, DOE multiplied the
manufacturer selling prices developed in the engineering analysis by
the supply-chain markups described above (along with sales taxes). DOE
used different markups for baseline products and higher-efficiency
products, because DOE applies an incremental markup to the MSP increase
associated with higher-efficiency products.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment. DOE did not
include installation cost for refrigeration products because it
understands that this cost would be the same at all of the considered
efficiency levels.
3. Annual Energy Consumption
For each sampled household, DOE determined the energy consumption
for a refrigeration product at different efficiency levels using the
approach described above in section IV.E.
4. Energy Prices
DOE derived average energy prices for 13 geographic areas
consisting of the nine U.S. Census divisions, with four large States
(New York, Florida, Texas, and California) treated separately. For
Census divisions containing one of these large States, DOE calculated
the regional average excluding the data for the large State.
DOE estimated average residential electricity prices for each of
the 13 geographic areas based on data from EIA Form 861, ``Annual
Electric Power Industry Database.'' DOE calculated an average annual
regional residential electricity price by: (1) Estimating an average
residential price for each utility (by dividing the residential
revenues by residential sales); and (2) weighting each utility by the
number of residential consumers served in that region (based on EIA
Form 861). DOE calculated average commercial electricity prices in a
similar manner. For the preliminary TSD, DOE used EIA data for 2006.
The NOPR analysis used the data for 2007.
5. Energy Price Projections
To estimate energy prices in future years for the preliminary TSD,
DOE multiplied the above average regional electricity prices by the
forecast of annual average residential electricity price changes in the
Reference Case from AEO2009.\34\ AEO2009 forecasted prices through
2030. For today's proposed rule, DOE updated its energy price forecasts
using AEO2010, which has an end year of 2035.\35\ To estimate the
electricity price trend after 2035, DOE used the average annual rate of
change in prices from 2020 to 2035. DOE intends to update its energy
price forecasts for the final rule based on the latest available AEO.
---------------------------------------------------------------------------
\34\ The spreadsheet tool that DOE used to conduct the LCC and
PBP analyses allows users to select price forecasts from either
AEO's High Economic Growth or Low Economic Growth Cases. Users can
thereby estimate the sensitivity of the LCC and PBP results to
different energy price forecasts.
\35\ U.S. Energy Information Administration. Annual Energy
Outlook 2010. Washington, DC. April 2010.
---------------------------------------------------------------------------
[[Page 59514]]
6. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing components
that have failed in the appliance, whereas maintenance costs are
associated with maintaining the operation of the equipment. In its
preliminary analysis, DOE did not include repair and maintenance costs
because it did not have information suggesting that these costs would
change with higher efficiency levels. Commenting on this approach,
Whirlpool stated that maintenance and repair costs could be at least
double current levels if there is greater reliance on more complex
technologies to meet new efficiency levels, as such technologies have a
higher cost of replacement components and may require additional
training of service technicians. (Whirlpool, No. 31 at p. 3) AHAM
stated that higher efficiency products typically contain more
components that may need repair and have a higher individual component
cost. (AHAM, No. 34 at p. 13) In contrast, ACEEE supported DOE's
finding that repair and maintenance costs do not vary with efficiency
level. (ACEEE, No. 43 at p. 6)
For the NOPR, DOE developed a new repair cost estimation method
that estimates the rate of failure for selected components (compressor,
evaporator, condenser, evaporator fan, condenser fan, electronics and
automatic icemaker). The estimated average annual repair cost for a
given efficiency level can be expressed as the product of two elements:
the average rate of repair of a component (expressed as annual
probability of failure) times the incremental cost of repair or
replacement compared to the baseline product.
DOE obtained repair rates for some components from a prior DOE
rulemaking for commercial refrigeration equipment,\36\ and used these
rates to make estimates of repair rates for some other components. In
addition, DOE obtained cumulative total annual repair rates for
standard-size refrigerator-freezers for units up to five years old from
Consumer Reports magazine. DOE used these data to adjust the repair
rates estimated for specific components for each product class. DOE was
not able to determine a clear trend in repair rate with age, so it used
the average repair rate for all years for each product class. For
product classes not covered by the Consumer Reports data, DOE used the
average repair rate for standard-size refrigerator-freezers.
---------------------------------------------------------------------------
\36\ Commercial Refrigeration Equipment Final Rule Technical
Support Document. Available at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/refrig_equip_final_rule_tsd.html.
---------------------------------------------------------------------------
To estimate the total annual repair cost for the baseline products,
DOE used retail repair costs by component from data reported by Best
Buy Co., Inc. Detailed data on incremental MSP for components was
available from the engineering analysis by product class and efficiency
level. To convert these values to repair costs, DOE derived the cost to
the contractor, and then scaled it to account for the contractor
markup.
Nearly all residential refrigerators are sold with a one-year
repair warranty. Based on this fact, DOE assumed there were no repair
costs for consumers during the first year of operation and the annual
average incremental repair cost as calculated above was imposed for all
subsequent years of the lifetime of the product. Table IV.14 shows the
annual average incremental repair cost by efficiency level for product
classes 3 (refrigerator-freezer--automatic defrost with top-mounted
freezer without through-the-door ice service), 5 (refrigerator-
freezers--automatic defrost with bottom-mounted freezer without
through-the-door ice service), and 7 (refrigerator-freezers--automatic
defrost with side-mounted freezer with through-the-door ice service).
DOE requests comments on its derivation of repair costs. (See Issue 17
under ``Issues on Which DOE Seeks Comment'' in section VII.E, below.)
Table IV.14--Annual Average Incremental Repair Cost by Efficiency Level for Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
Product class 3 Product class 5 Product class 7
Efficiency level (% less than baseline energy use) ($) ($) ($)
----------------------------------------------------------------------------------------------------------------
Baseline............................................... ................. ................. .................
1 (10)................................................. $0.04 $0.22 $0.09
2 (15)................................................. 0.08 0.33 0.21
3 (20)................................................. 0.37 0.42 0.36
4 (25)................................................. 0.40 0.76 0.73
5 (30)................................................. 0.43 1.32 1.10
6 (33-36) *............................................ 0.67 1.76 1.10
----------------------------------------------------------------------------------------------------------------
* Max-tech level varies with product class.
7. Product Lifetime
Because the basis for lifetime estimates in the literature for
refrigeration products is uncertain, DOE used other data sources to
estimate the distribution of standard-size refrigerator and freezer
lifetimes in the field for both the preliminary analysis and today's
NOPR. By combining survey results from various years of RECS and the
U.S. Census's American Housing Survey \37\ with the known history of
appliance shipments, DOE estimated the fraction of appliances of a
given age still in operation. The survival function, which DOE assumed
has the form of a cumulative Weibull distribution, provides an average
and median appliance lifetime.
---------------------------------------------------------------------------
\37\ U.S. Census Bureau, American Housing Survey. Available at:
http://www.census.gov/hhes/www/housing/ahs/ahs.html.
---------------------------------------------------------------------------
For compact refrigerators, DOE estimated an average lifetime of 5.6
years in the preliminary analysis using data on shipments and the
stock-in-place (i.e., the number of units in use). NRDC commented that
the estimated lifetime for compact refrigerators is too low and that
``the industry suggested'' life of ten years is more accurate. (NRDC,
No. 39 at p. 6) In contrast, AHAM and Whirlpool supported DOE's
estimate. (AHAM, No. 34 at p. 13; Whirlpool, No. 31 at p. 3) DOE found
that, given the data on historic shipments of compact refrigerators,
using a longer lifetime would result in an equipment stock that is far
larger than the stock given by 2005 RECS and EIA's 2003 Commercial
Building Energy Consumption Survey. Since the estimate used in the
preliminary analysis provides a reasonable match between shipments and
the stock, DOE used the same lifetime distribution for the NOPR.
[[Page 59515]]
See chapter 8 of the NOPR TSD for further details on the method and
sources DOE used to develop product lifetimes.
8. Discount Rates
To establish discount rates for the LCC analysis, DOE identified
all debt or asset classes that might be used to purchase refrigeration
products, including household assets that might be affected indirectly.
DOE used data from the Federal Reserve Board's ``Survey of Consumer
Finances'' (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007 to
estimate the average percentages of the various debt and equity classes
in the average U.S. household portfolios. DOE used SCF data and other
sources to develop distributions of interest or return rates associated
with each type of equity and debt. The average rate across all types of
household debt and equity, weighted by the shares of each class, is 5.1
percent. While this value corresponds to the average discount rate, DOE
assigned each sample household a specific discount rate drawn from the
distributions.
DOE derived the discount rate for commercial-sector compact
refrigeration products from the cost of capital of publicly-traded
firms in the sectors that purchase those products (these include
lodging and other commercial sectors). The firms typically finance
equipment purchases through debt and/or equity capital. DOE estimated
the cost of the firms' capital as the weighted average of the cost of
equity financing and the cost of debt financing for recent years for
which data were available (2001 through 2008). The estimated average
discount rate for companies that purchase compact refrigeration
products is 6.2 percent.
See chapter 8 in the NOPR TSD for further details on the
development of discount rates for refrigeration products.
9. Compliance Date of Amended Standards
In the context of EPCA, the compliance date is the future date when
parties subject to the requirements of a new standard must begin to
comply. As described in DOE's semi-annual implementation report for
energy conservation standards activities submitted to Congress, a final
rule for the refrigeration products that are the subject of this
rulemaking is scheduled to be completed by December 31, 2010.
Compliance with amended standards for refrigeration products
promulgated by DOE would be required three years after the final rule
is published in the Federal Register. DOE calculated the LCC and PBP
for refrigeration products as if consumers would purchase new products
in the year compliance with the standard is required.
10. Base Case Efficiency Distribution
To accurately estimate the share of consumers that would be
affected by a standard at a particular efficiency level, DOE's LCC
analysis considered the projected distribution of product efficiencies
that consumers purchase under the base case (i.e., the case without new
energy efficiency standards). DOE refers to this distribution of
product of efficiencies as a base-case efficiency distribution. DOE
developed base-case efficiency distributions for each of the seven
representative product classes. These distributions were developed from
industry-supplied data for the year 2007 and were comprised of product
efficiencies ranging from existing baseline levels (i.e., meeting
existing energy conservation standards) to levels meeting and exceeding
ENERGY STAR levels. DOE then projected these distributions to the year
that new standards are assumed to become effective (2014). To forecast
the base-case efficiency distribution for each representative product
class in the preliminary analysis, DOE accounted for change in the
market shares of ENERGY STAR appliances based on historical trends.
In the preliminary analysis public meeting, ASAP and Whirlpool
questioned DOE's forecast that, in 2014, ENERGY STAR products would
reach a market share of 88 percent for bottom-mount refrigerator-
freezers. (ASAP, No. 28 at p. 179-180; Whirlpool, No. 28 at p. 180) In
their comments, AHAM, GE and Whirlpool expressed doubt with respect to
DOE's forecast, and AHAM and GE noted that consumer payback diminishes
at higher efficiency levels. (GE, No. 37 at p. 2; Whirlpool, No. 31 at
p. 3; AHAM, No. 34 at p. 14)
Based on the comments and shipments data for 2008, DOE modified its
approach for estimating base-case efficiency distributions for the NOPR
analysis. DOE agrees that because the current ENERGY STAR efficiency
level is higher than it was prior to the requirements established in
2008, the growth in market share may be slower. To address this issue,
DOE adopted a projected market share of ENERGY STAR models in 2014
(under current requirements) that is equal to the average of ENERGY
STAR market shares in 2007 (the last year under the old requirements)
and 2008 (when current requirements took effect). With this approach,
the ENERGY STAR market shares for product class 3 (refrigerator-
freezer--automatic defrost with top-mounted freezer without through-
the-door ice service) and product class 5 (refrigerator-freezers--
automatic defrost with bottom-mounted freezer without through-the-door
ice service) grow more slowly between 2008 and 2014 than they had under
the old requirements before 2008. ENERGY STAR products reach a market
share in 2014 of 8 percent for product class 3 and 68 percent for
bottom-mount refrigerator-freezers. For standard-size freezers and
compact products, DOE maintained the same approach for the NOPR as it
used in the preliminary analysis.
For further information on DOE's estimate of base-case efficiency
distributions, see chapter 8 of the NOPR TSD. DOE requests comments on
its approach for estimating base-case efficiency distributions. (See
Issue 18 under ``Issues on Which DOE Seeks Comment'' in section VII.E
of this NOPR, below.)
11. Inputs to Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more-efficient products,
compared to baseline products, through energy cost savings. The simple
payback period does not account for changes in operating expense over
time or the time value of money. Payback periods are expressed in
years. Payback periods that exceed the life of the product mean that
the increased total installed cost is not recovered in reduced
operating expenses.
The inputs to the PBP calculation are the total installed cost of
the equipment to the customer for each efficiency level and the average
annual operating expenditures for each efficiency level. The PBP
calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
12. Rebuttable-Presumption Payback Period
As noted above, EPCA, as amended, establishes a rebuttable
presumption that a standard is economically justified if the Secretary
finds that the additional cost to the consumer of purchasing a product
complying with an energy conservation standard level will be less than
three times the value of the energy (and, as applicable, water) savings
during the first year that the consumer will receive as a result of the
standard, as calculated under the test procedure in place for that
standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency
level, DOE determined the value of the first year's energy savings
[[Page 59516]]
by calculating the quantity of those savings in accordance with the
applicable DOE test procedure, and multiplying that amount by the
average energy price forecast for the year in which compliance with the
amended standard would be required.
G. National Impact Analysis-National Energy Savings and Net Present
Value Analysis
DOE's NIA assessed the national energy savings (NES) and the
national NPV of total consumer costs and savings that would be expected
to result from amended standards at specific efficiency levels.
(``Consumer'' in this context refers to consumers of the product being
regulated.)
To make the analysis more accessible and transparent to all
interested parties, DOE used an MS Excel spreadsheet model to calculate
the energy savings and the national consumer costs and savings from
each TSL. MS Excel is the most widely used spreadsheet calculation tool
in the United States and there is general familiarity with its basic
features. Thus, DOE's use of MS Excel as the basis for the spreadsheet
models provides interested parties with access to the models within a
familiar context. In addition, the TSD and other documentation that DOE
provides during the rulemaking help explain the models and how to use
them, and interested parties can review DOE's analyses by changing
various input quantities within the spreadsheet.
DOE used the NIA spreadsheet to calculate the NES and NPV, based on
the annual energy consumption and total installed cost data from the
energy use characterization and the LCC analysis. DOE forecasted the
energy savings, energy cost savings, product costs, and NPV of consumer
benefits for each product class for products sold from 2014 through
2043. The forecasts provided annual and cumulative values for all four
output parameters. In addition, DOE used its NIA spreadsheet to analyze
scenarios that used inputs from the AEO2010 Low Economic Growth and
High Economic Growth cases. These cases have higher and lower energy
price trends compared to the Reference case, as well as higher and
lower housing starts, which result in higher and lower appliance
shipments to new homes. NIA results based on these cases are presented
in appendix 10-A of the NOPR TSD.
DOE evaluated the impacts of amended standards for refrigeration
products by comparing base-case projections with standards-case
projections. The base-case projections characterize energy use and
consumer costs for each product class in the absence of amended energy
conservation standards. DOE compared these projections with projections
characterizing the market for each product class if DOE were to adopt
amended standards at specific energy efficiency levels (i.e., the
standards cases) for that class.
Table IV.15 summarizes the approach and data DOE used to derive the
inputs to the NES and NPV analyses for the preliminary analysis and the
changes to the analyses for the proposed rule. A discussion of these
inputs and changes follows the table. See chapter 10 of the NOPR TSD
for further details.
Table IV.15--Approach and Data Used for National Energy Savings and Consumer Net Present Value Analyses
----------------------------------------------------------------------------------------------------------------
Inputs Preliminary TSD Changes for the proposed rule
----------------------------------------------------------------------------------------------------------------
Shipments....................... Annual shipments from No change in approach; used 2008 data to estimate the
shipments model. ratio of bottom[hyphen]mount share to side-by-side
share.
Compliance Date of Standard..... 2014................... No change.
Base-Case Forecasted Used a ``roll-up + No change in basic approach; modified efficiency
Efficiencies. ENERGY STAR'' scenario distributions based on new information.
to establish the
distribution of
efficiencies.
Standards-Case Forecasted Used a ``roll-up + No change in basic approach; modified efficiency
Efficiencies. ENERGY STAR'' scenario distributions based on new information.
to establish the
distribution of
efficiencies.
Annual Energy Consumption per Annual weighted-average No change.
Unit. values as a function
of SWEUF.*
Total Installed Cost per Unit... Annual weighted-average No change.
values as a function
of SWEUF.*
Energy Cost per Unit............ Annual weighted-average No change.
values as a function
of the annual energy
consumption per unit
and energy prices.
Repair and Maintenance Cost per Annual values as a No change.
Unit. function of efficiency
level.
Escalation of Energy Prices..... AEO2009 forecasts (to Updated using AEO2010 forecasts.
2035) and
extrapolation through
2043.
Energy Site-to-Source Conversion Varies yearly and is No change.
Factor. generated by DOE/EIA's
NEMS.
Discount Rate................... Three and seven percent No change.
real.
Present Year.................... Future expenses are No change.
discounted to 2010,
when the final rule
will be published.
----------------------------------------------------------------------------------------------------------------
* Shipments-Weighted Energy Use Factor
1. Shipments
The shipments portion of the NIA spreadsheet is a model that uses
historical data as a basis for projecting future shipments of the
products that are the subject of this rulemaking. In projecting
shipments for refrigeration products, DOE accounted for installations
in new homes and replacement of failed equipment. In addition, for
standard-size refrigerator-freezers, DOE estimated purchases driven by
the conversion of a first refrigerator to a second refrigerator. It
also estimated purchases by existing households who enter the market as
new owners for standard-size freezers.
In the preliminary analysis, DOE examined the historical trends in
the market shares of different refrigerator-freezer configurations to
disaggregate the total shipments of refrigerator-freezers into the
three considered refrigerator-freezer product categories (top-mount,
bottom-mount and side-by-side configurations). The market share of
side-by-side refrigerator-freezer models has grown significantly during
the past two decades. Bottom-freezer
[[Page 59517]]
models historically had a small market share, but that share has also
grown in recent years. However, DOE had insufficient data to forecast
long-term growth of this product class, so DOE assumed that consumer
behavior related to bottom-mount models in the future would mirror
behavior regarding side-by-side models. DOE developed a model to
forecast the combined bottom-mount and side-by-side market shares
throughout the 30-year forecast period (beginning in 2014), and assumed
that the ratio of bottom-mount share to side-by-side share would remain
constant at the 2007 level (the last year for which DOE had
disaggregated data).
AHAM commented that DOE's forecasted shares look realistic, but it
suggested that DOE consider generating a separate forecast for bottom-
mount refrigerator-freezers. (AHAM, No. 34 at p. 14) Whirlpool stated
that DOE's approach is directionally correct, but in recent years the
decline in top-mount sales and the rise in bottom-mount sales have been
more pronounced. It also suggested that DOE should forecast bottom-
mount sales separately and reassess the proportion of top-mount sales.
(Whirlpool, No. 31 at p. 4)
As discussed above, DOE was not able to obtain sufficient
information to separately forecast sales of bottom-mount refrigerator-
freezers. Therefore, it retained the approach used for the preliminary
analysis in conducting the NOPR analysis, but it used 2008 data to
estimate the ratio of bottom-mount share to side-by-side share.
To estimate the effects on product shipments from increases in
product price projected to accompany amended standards at higher
efficiency levels, DOE applied a price elasticity parameter. It
estimated this parameter with a regression analysis that used purchase
price and efficiency data specific to residential refrigerators,
clothes washers, and dishwashers over the period 1980-2002. The
estimated ``relative price elasticity'' incorporates the impacts from
purchase price, operating cost, and household income, and it also
declines over time. DOE estimated shipments in each standards case
using the relative price elasticity along with the change in the
relative price between a standards case and the base case.
ACEEE commented that DOE should revisit its estimates of price
elasticity to avoid overstating the impact of standards on future
refrigerator sales. It noted that refrigerators are different from
clothes washers and dishwashers because consumers have few, if any,
alternatives for storing perishable foods. It recommended that DOE
consider refrigerator shipments for new construction to be inelastic
and that DOE should use a significantly lower price elasticity for
replacement purchases. (ACEEE, No. 43 at p. 5) NPCC and the IOUs made
similar comments. (NPCC, No. 33 at p. 3; IOUs, No. 36 at p. 12)
Earthjustice commented that the price elasticity for refrigerators is
less elastic than for other white goods (i.e., large electrical home
appliances that are typically finished in white enamel), and it should
not be applied to new construction. (Earthjustice, No. 35 at p. 6)
In response, DOE believes that the price elasticity calculated
using the full data set for refrigerators, clothes washers, and
dishwashers is more robust than an elasticity calculated only for
refrigerators because it is based on a larger data sample. Furthermore,
the elasticity calculated only for refrigerators is not very different
from the value derived from the combined appliance regression equation.
DOE does not agree with the comment that there would be no sensitivity
to product price of refrigerator shipments for new homes because there
is some discretion regarding purchase of a second unit. Furthermore,
since DOE derived its price elasticity using data for all shipments, it
is appropriate to apply the parameter to total shipments (rather than
total shipments excluding shipments to new homes). Based on the above
considerations, DOE retained the approach used for the preliminary
analysis in the NOPR analysis.
For details on the shipments analysis, see chapter 9 of the NOPR
TSD.
2. Forecasted Efficiency in the Base Case and Standards Cases
A key component of the NIA is the trend in energy efficiency
forecasted for the base case (without new standards) and each of the
standards cases. To forecast the base-case efficiency distribution for
each representative product class, DOE accounted for change in the
market shares of ENERGY STAR appliances based on historical trends. For
its determination of standards-case efficiency distributions, DOE used
a ``roll-up + ENERGY STAR'' scenario to establish the distribution of
efficiencies for the year in which compliance with amended standards is
required (i.e., 2014). DOE assumed that product efficiencies in the
base case that did not meet the standard level under consideration
would ``roll up'' to meet the new standard level in 2014. It further
assumed that the ENERGY STAR program and related efforts would continue
to promote efficient appliances after the introduction of amended
standards in 2014, and that this would lead to increased market shares
for products with an efficiency level above the standard level.
For the NOPR analysis, DOE used the same basic approach, but, as
discussed below, it modified its base-case and standards-case
efficiency distributions based on information obtained in discussion
with ENERGY STAR program staff.
To project the efficiency distributions after 2014 for the base
case, DOE first considered the potential for changes in ENERGY STAR
qualification levels. DOE assumed that, in the absence of a new
standard, the ENERGY STAR program would re-examine and possibly revise
its qualification levels regardless of the market share in 2014. When
setting a minimum product efficiency level for ENERGY STAR
qualification, one important metric is that the average payback period
compared to the current standard level should not exceed five years.
Using the payback period calculation described in section IV.F, DOE
applied this criterion to all product classes to evaluate the extent to
which the current ENERGY STAR efficiency levels would be increased in
the future.
DOE then estimated the market shares for ENERGY STAR products in
2021 based on past experience in the market for these products. As in
the preliminary analysis, rather than make long-term projections based
on limited information, DOE assumed there would be no further change in
market shares between 2021 and the end of the forecast period. DOE
recognizes that some change in shares is likely to occur in reality.
However, since DOE used the same assumption in the standards cases, the
accuracy of the assumption makes no difference to the analysis of
energy savings.
For the standards cases (also referred to as candidate standard
levels, or CSLs), DOE used the same approach as for the base case and
assumed that in the case of amended standards, the ENERGY STAR program
would re-evaluate its qualifying levels for all product classes using
the five-year payback period criterion. For each CSL, DOE identified
the maximum efficiency level with a payback of five years or less. If
that level was below the current ENERGY STAR level, DOE maintained the
current ENERGY STAR level. At higher CSLs, there is no efficiency level
above the standard level with a payback period of less than 5 years.
DOE assumed that the ENERGY STAR program would be suspended with
standards at higher CSLs on a product-class specific basis. This result
is projected to occur for all product classes
[[Page 59518]]
at CSL 3 and above; for product classes 9 (upright freezers with
automatic defrost) and 10 (chest freezers and all other freezers except
compact freezers), it occurs at lower CSLs. The market share estimates
for ENERGY STAR products in 2021 and beyond were based on a similar
approach as for the base case.
For further details about the forecasted efficiency distributions,
see chapter 10 of the NOPR TSD. DOE requests comments on its approach
for forecasting base-case and standards-case efficiency distributions.
(See Issue 19 under ``Issues on Which DOE Seeks Comment'' in section
VII.E of this NOPR.)
3. Site-to-Source Energy Conversion
To estimate the national energy savings expected from appliance
standards, DOE uses a multiplicative factor to convert site energy
consumption (at the home or commercial building) into primary or source
energy consumption (the energy required to convert and deliver the site
energy). These conversion factors account for the energy used at power
plants to generate electricity and losses in transmission and
distribution, as well as for natural gas losses from pipeline leakage
and energy used for pumping. For electricity, the conversion factors
vary over time due to projected changes in generation sources (i.e.,
the power plant types projected to provide electricity to the country).
The factors that DOE developed are marginal values, which represent the
response of the system to an incremental decrease in consumption
associated with appliance standards.
In the preliminary analysis, DOE used annual site-to-source
conversion factors based on the version of NEMS that corresponds to
AEO2009. For today's NOPR, DOE updated its conversion factors based on
AEO2010, which provides energy forecasts through 2035. For 2036-2043,
DOE used conversion factors that remain constant at the 2035 values.
In response to a request from DOE's Office of Energy Efficiency and
Renewable Energy (EERE), the National Research Council (NRC) appointed
a committee on ``Point-of-Use and Full-Fuel-Cycle Measurement
Approaches to Energy Efficiency Standards'' to conduct a study required
by section 1802 of the Energy Policy Act of 2005 (Pub. L. 109-58
(August 8, 2005)). The fundamental task before the committee was to
evaluate the methodology used for setting energy efficiency standards
and to comment on whether site (point-of-use) or source (full-fuel-
cycle) measures of energy savings would better support rulemaking
efforts to achieve energy conservation goals. The NRC committee defined
site (point-of-use) energy consumption as reflecting the use of
electricity, natural gas, propane, and/or fuel oil by an appliance at
the site where the appliance is operated. Full-fuel-cycle energy
consumption was defined as including, in addition to site energy use,
the following: energy consumed in the extraction, processing, and
transport of primary fuels such as coal, oil, and natural gas; energy
losses in thermal combustion in power generation plants; and energy
losses in transmission and distribution to homes and commercial
buildings.\38\
---------------------------------------------------------------------------
\38\ The National Academies, Board on Energy and Environmental
Systems, Letter to Dr. John Mizroch, Acting Assistant Secretary,
U.S. DOE, Office of EERE from James W. Dally, Chair, Committee on
Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards, May 15, 2009.
---------------------------------------------------------------------------
In evaluating the merits of using point-of-use and full-fuel-cycle
measures, the NRC committee noted that DOE uses what the committee
referred to as ``extended site'' energy consumption to assess the
impact of energy use on the economy, energy security, and environmental
quality. The extended site measure of energy consumption includes the
energy consumed during the generation, transmission, and distribution
of electricity but, unlike the full-fuel-cycle measure, does not
include the energy consumed in extracting, processing, and transporting
primary fuels. A majority of the NRC committee concluded that extended
site energy consumption understates the total energy consumed to make
an appliance operational at the site. As a result, the NRC committee
recommended that DOE consider shifting its analytical approach over
time to use a full-fuel-cycle measure of energy consumption when
assessing national and environmental impacts, especially with respect
to the calculation of greenhouse gas emissions. The NRC committee also
recommended that DOE provide more comprehensive information to the
public through labels and other means, such as an enhanced Web site.
For those appliances that use multiple fuels (e.g., water heaters), the
NRC committee indicated that measuring full-fuel-cycle energy
consumption would provide a more complete picture of energy consumed
and permit comparisons across many different appliances, as well as an
improved assessment of impacts. The NRC committee also acknowledged the
complexities inherent in developing a full-fuel-cycle measure of energy
use and stated that a majority of the committee recommended a gradual
transition from extended site to full-fuel-cycle measurement.
DOE acknowledges that its site-to-source conversion factors do not
capture all of the energy consumed in extracting, processing, and
transporting primary fuels. DOE also agrees with the NRC committee's
conclusion that developing site-to-source conversion factors that
capture the energy associated with the extraction, processing, and
transportation of primary fuels is inherently complex and difficult.
However, in implementing the NRC committee's recommendation to
gradually shift its analytical approach, DOE has performed some
preliminary evaluation of a full-fuel-cycle measure of energy use.
Based on two studies completed by the National Renewable Energy
Laboratory (NREL) in 1999 and 2000, DOE estimated the ratio of the
energy used upstream to the energy content of the coal or natural gas
delivered to power plants. For coal, the NREL analysis considered
typical mining practices and mine-to-plant transportation distances,
and used data for the State of Illinois. Based on data in this report,
the estimated multiplicative factor for coal is 1.08 (i.e., it takes
approximately 1.08 units of coal energy equivalent to provide 1 unit of
coal to a power plant). A similar analysis of the energy consumed in
upstream processes needed to produce and deliver natural gas to a power
plant yielded a multiplicative factor of 1.19.\39\
---------------------------------------------------------------------------
\39\ For further information on the NREL studies, please see:
Spath, Pamela L., Margaret K. Mann, and Dawn Kerr, Life Cycle
Assessment of Coal-fired Power Production, NREL/TP-570-25119, June
1999; and Spath, Pamela L. and Margaret K. Mann, Life Cycle
Assessment of a Natural Gas Combined-Cycle Power Generation System,
NREL/TP-570-27715, September 2000.
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While the above factors are indicative of the magnitude of the
impacts of using full-fuel-cycle measures of energy use, there are two
issues that warrant further study. The first is refinement of the
estimates of the multiplicative factors, particularly to incorporate
regional variation. The second is developing forecasts of the
multiplicative factors over the time frames used in the rulemaking
analyses, typically ten to fifty years. The existing NEMS forecast of
power plant electricity generation by fuel type can be used to estimate
the impact of a changing mix of fuels. However, NEMS provides no
information on potential changes to the relative ease with which the
different fuels can be extracted and processed, which shape the
multiplicative factors.
[[Page 59519]]
DOE intends to further evaluate the viability of using full-fuel-cycle
measures of energy consumption for assessment of national and
environmental impacts of appliance standards.
4. Discount Rates
DOE multiplies monetary values in future years by the discount
factor to determine the present value. For the preliminary analysis and
today's NOPR, DOE estimated the NPV of appliance consumer benefits
using both a 3-percent and a 7-percent real discount rate. DOE uses
these discount rates in accordance with guidance provided by the Office
of Management and Budget (OMB) to Federal agencies on the development
of regulatory analysis (OMB Circular A-4 (Sept. 17, 2003), section E,
``Identifying and Measuring Benefits and Costs'').
5. Benefits From Effects of Standards on Energy Prices
Reduction in electricity consumption associated with amended
standards for refrigeration products could reduce the electricity
prices charged to consumers in all sectors of the economy and thereby
reduce their electricity expenditures. In chapter 2 of the preliminary
TSD, DOE explained that, because the power industry is a complex mix of
fuel and equipment suppliers, electricity producers and distributors,
it did not plan to estimate the value of potentially reduced
electricity costs for all consumers associated with amended standards
for refrigeration products.
Commenting on this decision, NRDC urged DOE to not ignore the
benefits to consumers from reduced electricity rates and avoided new
capacity construction due to amended standards for refrigeration
products. (NRDC, No. 39 at pp. 5-6) Earthjustice, NEEP, and the IOUs
stated that DOE should account for the economic value of avoided
investments in electric utility capacity resulting from the standards
under consideration. (Earthjustice, No. 35 at p. 6; NEEP, No. 38 at p.
2; IOUs, No. 36 at pp. 12-13) Similarly, NPCC stated that DOE should
estimate the economic benefits of the reduced need for new electric
power plants and infrastructure and include these in its utility
impacts analysis. (NPCC, No. 33 at pp. 4-5)
For the NOPR, DOE incorporated the same approach that it did in the
recently-promulgated final rule for residential heating products. 75 FR
20112 (April 16, 2010). As part of the utility impact analysis
(described in section IV.K below), DOE used NEMS-BT to assess the
impacts of the reduced need for new electric power plants and
infrastructure projected to result from standards. In NEMS-BT, changes
in power generation infrastructure affect utility revenue requirements,
which in turn affect electricity prices. DOE estimated the impact on
electricity prices associated with each considered TSL.
Although the aggregate benefits for all electricity users are
potentially large, there may be negative effects on the actors involved
in electricity supply. The electric power industry is a complex mix of
power plant providers, fuel suppliers, electricity generators, and
electricity distributors. While the distribution of electricity is
regulated everywhere, the institutional structure of the power sector
varies, and has changed over time. For these reasons, an assessment of
impacts on the actors involved in electricity supply from reduction in
electricity demand associated with energy conservation standards is
beyond the scope of this rulemaking.
In considering the potential benefits to electricity users, DOE
takes under advisement the guidance provided by OMB on the development
of regulatory analysis. Specifically, at page 38, Circular A-4
instructs that transfers should be excluded from the estimates of the
benefits and costs of a regulation. Because there is uncertainty about
the extent to which the calculated impacts from reduced electricity
prices are a transfer from the actors involved in electricity supply to
electricity consumers, DOE has concluded that, at present, it should
not give a heavy weight to this factor in its consideration of the
economic justification of standards on refrigeration products. DOE is
continuing to investigate the extent to which electricity price changes
projected to result from standards represent a net gain to society.
H. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
consumers, DOE evaluates the impact on identifiable sub-groups of
consumers that may be disproportionately affected by a national
standard. DOE evaluates impacts on particular sub-groups of consumers
primarily by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels. For the NOPR, DOE analyzed
the impacts of the considered standard levels on low-income consumers
and senior citizens. DOE did not estimate impacts for compact
refrigeration products because the household sample sizes were not
large enough to yield meaningful results.
Chapter 2 of the preliminary TSD notes that did not plan to analyze
renters as a sub-group. NRDC disagreed with DOE's view that renters do
not warrant a sub-group analysis, as they may be more positively
affected by higher standards than the population of all consumers.
(NRDC, No. 39 at pp. 4-5) NRDC provided no supporting data for its
assertion. DOE notes that, in most cases, renters pay the electricity
bill but do not own the refrigerator in their home. To some extent, the
higher cost of a more-efficient refrigerator-freezer incurred by the
building owner would likely be passed on to the renter through
increased rent. Because DOE is not aware of information that would
allow it to reliably assess the extent to which such ``pass-through''
would occur, it is not able to quantitatively analyze the impacts of
alternative standard levels on renters. To the extent that ``pass-
through'' of the incremental cost of of a more-efficient refrigerator-
freezer does not occur, DOE acknowledges that renters would likely
experience more favorable LCC impacts than non-renters.
Chapter 11 in the NOPR describes the consumer sub-group analysis.
I. Manufacturer Impact Analysis
The following sections address the various steps taken to analyze
the impacts of standards on manufacturers. These steps include
conducting a series of analyses, interviewing manufacturers, and
evaluating the comments received from interested parties up to this
point during the course of this rulemaking.
1. Overview
In determining whether an amended energy conservation standard for
residential refrigeration products subject to this rulemaking is
economically justified, the Secretary is required to consider ``the
economic impact of the standard on the manufacturers and on the
consumers of the products subject to such standard.'' (42 U.S.C.
6295(o)(2)(B)(i)(I)) The statute also calls for an assessment of the
impact of any lessening of competition as determined by the Attorney
General that is likely to result from the adoption of a standard. (42
U.S.C. 6295(o)(2)(B)(i)(V)) DOE conducted the MIA to estimate the
financial impact of amended energy conservation standards on
manufacturers of residential refrigeration products, and to assess the
impacts of such standards on employment and manufacturing capacity.
The MIA is both a quantitative and qualitative analysis. The
quantitative
[[Page 59520]]
part of the MIA relies on the Government Regulatory Impact Model
(GRIM), an industry cash-flow model customized for the residential
refrigeration products covered in this rulemaking. See section IV.I.2,
below, for details on the GRIM analysis. The qualitative part of the
MIA addresses factors such as product characteristics, characteristics
of particular firms, and market trends. The qualitative discussion also
includes an assessment of the impacts of standards on manufacturer
subgroups. The complete MIA is discussed in chapter 12 of the NOPR TSD.
DOE conducted the MIA in the three phases described below.
a. Phase 1: Industry Profile
In Phase 1 of the MIA, DOE prepared a profile of the residential
refrigeration industry based on the market and technology assessment
prepared for this rulemaking. Before initiating the detailed impact
studies, DOE collected information on the present and past structure
and market characteristics of each industry. This information included
market share data, product shipments, manufacturer markups, and the
cost structure for various manufacturers. The industry profile
includes: (1) Further detail on the overall market and product
characteristics; (2) estimated manufacturer market shares; (3)
financial parameters such as net plant, property, and equipment;
selling, general and administrative (SG&A) expenses; cost of goods
sold, etc.; and (4) trends in the number of firms, market, and product
characteristics. The industry profile included a top-down cost analysis
of residential refrigeration manufacturers that DOE used to derive
preliminary financial inputs for the GRIM (e.g., revenues,
depreciation, SG&A, and research and development (R&D) expenses). DOE
also used public sources of information to further calibrate its
initial characterization of each industry, including Security and
Exchange Commission 10-K filings (available at http://www.sec.gov),
Standard & Poor's stock reports (available at http://www2.standardandpoors.com), and corporate annual reports. DOE
supplemented this public information with data released by privately
held companies.
b. Phase 2: Industry Cash-Flow Analysis
Phase 2 focused on the financial impacts of potential amended
energy conservation standards on the industry as a whole. More
stringent energy conservation standards can affect manufacturer cash
flows in three distinct ways: (1) By creating a need for increased
investment, (2) by raising production costs per unit, and (3) by
altering revenue due to higher per-unit prices and/or possible changes
in sales volumes. To quantify these impacts, DOE used the GRIM to
perform a cash-flow analysis for residential refrigerators, freezers,
and refrigerator-freezers. In performing these analyses, DOE used the
financial values derived during Phase 1 and the shipment scenarios used
in the NIA.
c. Phase 3: Subgroup Impact Analysis
Using average cost assumptions to develop an industry-cash-flow
estimate may not adequately assess differential impacts of amended
energy conservation standards among manufacturer subgroups. For
example, small manufacturers, niche players, or manufacturers
exhibiting a cost structure that differs significantly from the
industry average could be more negatively affected. To address this
possible impact, DOE used the results of the industry characterization
analysis in Phase 1 to group manufacturers that exhibit similar
production and cost structure characteristics. During the manufacturer
interviews, DOE discussed financial topics specific to each
manufacturer and obtained each manufacturer's view of the industry as a
whole.
DOE reports the MIA impacts of amended energy conservation
standards by grouping together the impacts on manufacturers of certain
product classes. DOE presents the industry impacts by the major product
types (i.e., standard size refrigerator-freezers, standard size
freezers, compact refrigerators and freezers, and built-in
refrigeration products). These product groupings represent markets that
are served by the same manufacturers. By segmenting the results into
these product types, DOE is able to discuss how these subgroups of
manufacturers will be impacted by amended energy conservation
standards.
DOE also investigated whether small business manufacturers should
be analyzed as a manufacturer subgroup. During its research, DOE
identified only one company which manufactures products covered by this
rulemaking and qualifies as a small business under the applicable Small
Business Administration (SBA) definition. DOE did not analyze a
separate subgroup of small business manufacturer for this NOPR because
this rulemaking will not have a significant economic impact on a
substantial number of small entities. See section VI.B of today's NOPR,
below, for more information on this determination.
A second potential subgroup would be manufacturers of built-in
refrigeration products. However, because DOE is establishing separate
product classes for built-in products, DOE is already presenting
separate results and impacts for this potential manufacturer subgroup.
The impacts on the manufacturers of these niche products are therefore
already characterized in the broader MIA and do not require an explicit
subgroup analysis.
2. GRIM Analysis
DOE uses the GRIM to quantify the changes in cash flow that result
in a higher or lower industry value. The GRIM analysis is a standard,
annual cash-flow analysis that incorporates manufacturer costs,
manufacturer selling prices, shipments, and industry financial
information as inputs, and models changes in costs, distribution of
shipments, investments, and manufacturer margins that would result from
amended energy conservation standards. The GRIM spreadsheet uses the
inputs to arrive at a series of annual cash flows, beginning with the
base year of the analysis, 2010 (which accounts for the investments
needed to bring products into compliance by 2014), and continuing to
2043. DOE calculated INPVs by summing the stream of annual discounted
cash flows during this period. For residential refrigeration products,
DOE uses a real discount rate of 7.2 percent for all products.
DOE used the GRIM to calculate cash flows using standard accounting
principles and to compare changes in INPV between a base case and
various TSLs (the standards cases). The difference in INPV between the
base and standards cases represents the financial impact of the amended
standard on manufacturers. DOE collected this information from a number
of sources, including publicly available data and interviews with a
number of manufacturers (described in the next section). Additional
details about the GRIM can be found in chapter 12 of the NOPR TSD.
In conducting its analysis, DOE treated certain product classes of
residential refrigeration products separately. For example, DOE created
specialized interview guides for different groups of product classes:
one for standard-size products, one for compact products, and one for
all products. Additionally, DOE grouped product classes made by the
same manufacturers; this allowed DOE to better understand the impacts
on manufacturers of these product classes.
[[Page 59521]]
Similarly, in this notice, DOE presents the MIA results for
standard-size refrigerator-freezers, standard-size freezers, compact
refrigerators and freezers, and built-in refrigeration products
separately. Each of the four groups of product classes and results is
based on a unique set of considered TSLs. DOE describes the TSLs in
section V.A of today's NOPR, below. Because the combinations of
efficiency levels that compose a TSL can make it more difficult to
discuss the required efficiencies for each product class, DOE presents
the MIA results in section V.B.2 of today's NOPR, below and chapter 12
of the NOPR TSD by groups of manufacturers that make the covered
products. DOE presents the MIA results for standard-size refrigerator-
freezers, standard-size freezers, compact refrigerators and freezers,
and built-in refrigeration products separately.
a. GRIM Key Inputs
i. Manufacturer Production Costs
Manufacturing a higher-efficiency product is typically more
expensive than manufacturing a baseline product due to the use of more
complex components and higher-cost raw materials. The changes in the
MPCs of the analyzed products can affect revenues, gross margins, and
cash flow of the industry, making these product cost data key GRIM
inputs for DOE's analysis.
DOE used the MPCs calculated in the engineering analysis for the
residential refrigeration products, as described in section IV.C,
above, and further detailed in chapter 5, section 5.9, of the NOPR TSD.
To calculate baseline MPCs, DOE followed a three step process.
First, DOE derived each of the baseline products' retail price from the
NPD market data described in section IV.F.1, above. Next, DOE
discounted these baseline retail prices by the sales tax and retail
markup to arrive at the baseline MSPs. Next, DOE discounted the
baseline MSPs by the manufacturer markup to arrive at the average
baseline MPCs. For all non-built-in product classes, DOE used a 1.26
manufacturer markup to calculate baseline MPCs and MSPs. (DOE received
comments on the manufacturer markup and DOE describes the methodology
used to calculate this figure in section IV.I.3.d, below.) Because
built-in product classes are high-end products that are made in much
lower production volumes, DOE used a different cost structure for these
products than for the other product classes. DOE used information
submitted during manufacturer interviews to estimate that a typical
baseline manufacturer markup for built-in products is 1.40. To
calculate baseline MPCs for the built-in product classes, DOE
discounted the NPD baseline retail prices by the 1.40 manufacturer
markup and a distributor markup to account for products sold through
that distribution chain.
DOE also used the information from its tear-down analysis to verify
the accuracy of the markup information and cost data for the units it
tore down. In addition, DOE used the tear-down cost data to
disaggregate the MPCs into material, labor, and overhead costs. To
calculate the MPCs for products above the baseline, DOE added the
incremental material, labor, and overhead costs from the engineering
cost efficiency curves to the baseline MPCs.
ii. Base-Case Shipments Forecast
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of these values by efficiency
level. Changes in the efficiency mix at each standard level affect
manufacturer finances. For this analysis, the GRIM uses the NIA
shipments forecasts from 2010 to 2043, the end of the analysis period.
In the shipments analysis, DOE also estimated the distribution of
efficiencies in the base case for all product classes. See section
IV.G.1, above, for additional details.
iii. Product and Capital Conversion Costs
Amended energy conservation standards will cause manufacturers to
incur one-time conversion costs to bring their production facilities
and product designs into compliance. For the MIA, DOE classified these
one-time conversion costs into two major groups: (1) Product conversion
costs and (2) capital conversion costs. Product conversion costs are
one-time investments in research, development, testing, marketing, and
other non-capitalized costs focused on making product designs comply
with the amended energy conservation standard. Capital conversion costs
are one-time investments in property, plant, and equipment to adapt or
change existing production facilities so that new product designs can
be fabricated and assembled.
DOE based its estimates of the product conversion costs that would
be required to meet each TSL on information obtained from manufacturer
interviews, the design pathways analyzed in the engineering analysis,
and market information about the number of platform and product
families for each manufacturer. DOE assigned estimates for the total
product development required for each design option based on the
necessary engineering resources required to implement each design
option across a product platform. DOE multiplied the estimate by the
number of platforms and product families for each manufacturer. DOE
also assumed that VIP use and/or wall thickness increases would require
more significant changes to existing platforms than other design
options that amount to component swaps. For wall thickness increases,
DOE used product development efforts that were analogous to designing a
new platform. For VIPs, which are not yet common on large-scale
production lines for most products in the industry, DOE assumed more
substantial product development costs than required for component
swaps. However, DOE also assumed that manufacturers' recent experience
with the technology would indicate that less effort would be required
for incorporating VIPs than for designing completely new products.
Finally, DOE estimated industry product conversion costs by
extrapolating the interviewed manufacturers' product conversion costs
for each product class to account for the market share of companies
that were not interviewed. DOE's estimates of the product conversion
costs for all of the refrigeration products addressed in this
rulemaking can be found in section V.B.2, below, of today's NOPR and in
chapter 12 of the NOPR TSD. Chapter 12 of the NOPR TSD also contains
more detail on the assumptions DOE used to calculate the product
conversion costs for each design option and other details about the
product conversion costs.
As discussed above, to calculate industry cash flow impacts DOE
also estimated the capital conversion costs manufacturers would incur
to comply with potential amended energy conservation standards. During
interviews, DOE asked manufacturers to estimate the capital conversion
costs required to expand the production of higher-efficiency products
or to quantify the required tooling and plant changes if product lines
meeting the potential required efficiency level do not currently exist.
As with product conversion costs, DOE based its capital conversion cost
estimates on these interviews and assumptions from the engineering
analysis. DOE assumed that most component changes, while requiring
moderate product conversion costs, would not require changes to
existing production lines and equipment, and therefore not require
[[Page 59522]]
additional capital expenditures because one-for-one component swaps
would not require changes to existing production equipment.
However, DOE calculated and included in its analysis the capital
conversion costs required for design options that involved VIPs, wall
thickness increases, and changes to heat exchangers. For changes to
heat exchangers, DOE estimated the tooling investment required for the
fabrication equipment and the consequent slight changes to the internal
dimensions of the existing products. These tooling changes would likely
include purchasing new dies or plastic molds for a small change in
internal dimensions or shelving. For VIPs and wall thickness increases,
DOE estimated the cost of the equipment required to manufacture new
product lines because DOE assumed that these design changes would be
extremely disruptive to current operations. Because the changes
required to implement these design options would greatly change
existing products, DOE expects that the capital conversion costs would
be closer to purchasing new production equipment. DOE also used the
assumptions from the engineering analysis regarding the incremental
depreciation costs for adding additional VIPs and manufacturer market
shares to calculate incremental equipment necessary for adding more
VIPs.
DOE's estimates of the capital conversion costs for all of the
residential refrigeration products can be found in section V.B.2,
below, of today's NOPR and in chapter 12 of the NOPR TSD.
b. GRIM Scenarios
i. Residential Refrigeration Shipment Forecasts
The GRIM used the shipments developed in the NIA for standard-size
refrigerator-freezers, standard-size freezers, compact refrigerators
and freezers, and built-in refrigeration products. To determine
efficiency distributions for the standards case, DOE used a ``roll-up +
market shift'' scenario for 2014, the year that revised standards are
assumed to become effective, through 2043. DOE assumed that product
efficiencies in the base case that did not meet the standard under
consideration would roll up to meet the new standard in 2014. DOE
further assumed that revised standards would result in a market shift
such that market shares of products with efficiency better than the
standard would gradually increase because the ENERGY STAR program would
continue to promote efficient appliances after revised standards are
introduced in 2014. See section IV.G.1 of this NOPR, above, and chapter
10 of the NOPR TSD for more information on the residential
refrigeration standards-case shipment scenarios.
ii. Markup Scenarios
As discussed above, manufacturer selling prices (MSPs) include
direct manufacturing production costs (i.e., labor, material, and
overhead estimated in DOE's MPCs) and all non-production costs (i.e.,
SG&A, R&D, and interest), along with profit. To calculate the MSPs in
the GRIM, DOE applied markups to the MPCs estimated in the engineering
analysis for each product class and efficiency level. Modifying these
markups in the standards case yields different sets of impacts on
manufacturers. For the MIA, DOE modeled two standards-case markup
scenarios to represent the uncertainty regarding the potential impacts
on prices and profitability for manufacturers following the
implementation of amended energy conservation standards: (1) A flat
markup scenario, and (2) a preservation of operation profit scenario.
These scenarios lead to different markups values, which, when applied
to the inputted MPCs, result in varying revenue and cash flow impacts.
The flat markup scenario assumes that the cost of goods sold for
each product is marked up by a flat percentage to cover standard SG&A
expenses, R&D expenses, and profit. The flat markup scenario uses the
baseline manufacturer markup (discussed in chapter 6 of the TSD) for
all products in both the base case and the standards case. To derive
this percentage, DOE evaluated publicly available financial information
for manufacturers of white goods. DOE also requested feedback on this
value during manufacturer interviews. This scenario represents the
upper bound of industry profitability in the standards case because
manufacturers are able to fully pass through additional costs due to
standards to their customers.
DOE also modeled a lower bound profitability scenario. During
interviews, multiple manufacturers stated that higher production costs
could severely harm profitability. Because of the highly competitive
market, several manufacturers suggested that the additional costs
required at higher efficiencies could not be fully passed through to
customers. In particular, several manufacturers noted their customer
base is composed of a limited number of retailers that have substantial
buying power. They also noted that the average costs of refrigeration
products within product categories have been fairly constant or fallen
even as new products and additional features have been added. Finally,
manufacturers noted that their retail customers price products at fixed
(or ``sticky'') price points with step-increases to premium price
points reflecting different bundles of features.
Because of the market dynamics among manufacturers and retailers,
and because of the pressure to keep the current price points fixed for
a given bundle of features, DOE also modeled the preservation of
operating profit markup scenario. In this scenario, the manufacturer
markups are lowered such that, in the standards case, manufacturers are
only able to maintain the base-case total operating profit in absolute
dollars, despite higher product costs and investment. DOE implemented
this scenario in GRIM by lowering the manufacturer markups at each TSL
to yield approximately the same earnings before interest and taxes in
the standards case in the year after the compliance date of the amended
standards as in the base case. This scenario represents the lower bound
of industry profitability following amended energy conservation
standards because higher production costs and the investments required
to comply with the amended energy conservation standard do not yield
additional operating profit.
3. Discussion of Comments
During the December 2009 public meeting, interested parties
commented on the assumptions and results of the preliminary analysis.
Oral and written comments discussed several topics, including pending
legislation resulting in a phase-down of HFCs, manufacturer tax
credits, the cumulative regulatory burden on manufacturers, and
standards-driven investments. DOE addresses these comments below.
a. Potential Regulation of HFCs
Several manufacturers expressed concern about the impact of a
potential phase-down of HFCs, a possible scenario in light of pending
climate legislation contained in the bill proposing enactment of the
American Clean Energy and Security Act of 2009 (H.R. 2454). GE stated
that if DOE did not recognize the trend toward HFC limits in its
analysis, the department would risk creating a disincentive for
manufacturers to employ low-GWP foams and refrigerants. GE noted the
industry's concern about HFC limits reflects not only the pending
climate legislation but also regulation from the EPA as well as the
Montreal Protocol.
[[Page 59523]]
As such, GE argued DOE should evaluate the impact of the potential
phase-down on the industry from a technical and economic perspective.
(GE, No. 37 at p. 2; GE, Public Meeting Transcript, No. 28 at p. 47-48)
AHAM reiterated that the phase-down of HFCs would have a substantial
cost impact on the industry. (AHAM, Public Meeting Transcript, No. 28
at p. 18) Sub Zero added that the capital investment of the potential
switch to hydrocarbons (i.e., non-HFCs) should be considered in DOE's
analysis. (Sub Zero, Public Meeting Transcript, No. 28 at p. 50).
DOE acknowledges that an HFC phase-out or similar legislation
requiring a refrigerant or blowing agent change could necessitate
substantial changes for residential refrigeration products. DOE has
monitored legislation and rulemakings from UL, EPA, and Congress to
understand what HFC limitations might go into effect in the near term
and what changes are being proposed for use of alternatives. EPA has
proposed allowing use of isobutane refrigerant in residential
refrigeration products up to a charge limit of 57 grams. 75 FR 25803
(May 10, 2010). DOE has included this refrigerant as a design option
where appropriate and is prepared to evaluate the impact of HFC phase-
out legislation, if it is enacted.
b. Manufacturer Tax Credits
ACEEE stated that manufacturer tax credits in the pending climate
legislation for higher efficiency products should be taken into account
in DOE's analysis. (ACEEE, Public Meeting Transcript, No. 28 at p. 209)
NEEP also stated that manufacturer tax credits and market pull programs
reduce transition costs for manufacturers as they help build the demand
and manufacturing capabilities at the higher end efficiencies. (NEEP,
No. 38 at pp. 2-3)
DOE agrees that manufacturer tax credits help offset the costs of
developing higher efficiency products. DOE includes the benefit of tax
credits earned by the industry in 2010 under the provisions of the
Energy Improvement and Extension Act of 2008 (EIEA 2008), Pub. L. 110-
343, Div. B, Sec. 305 (October 3, 2008), in the GRIM calculations.
Using publicly available information and recent SEC filings, DOE
estimated manufacturers' market shares and shipment projections in 2010
and calculated the Federal production tax credits based on shipments of
30-percent efficiency level units--those units which qualified for the
tax credit in 2010. DOE's analysis suggests that manufacturers will
collect approximately $37 million in Federal production tax credits in
2010 from the provisions of EIEA 2008. In the GRIM, DOE accounts for
the Federal production tax credit as a direct cash benefit in the base
and standards cases that directly increases INPV. Because 2010 is the
base year to which industry cash flows are discounted, any Federal
production tax credits received prior to 2010 fall outside of the
analysis period. These tax credits are consequently not considered in
the INPV analysis. However, any tax benefit received in 2010 falls
within the analysis period and, hence, increases industry value
(potentially mitigating the impacts on manufacturers due to energy
conservation standards). The estimated $37 million benefit to
manufacturers does not significantly impact the INPV calculated by DOE.
DOE believes that ACEEE, in its comments related to pending
legislation, was referring to the tax credits that would impact
manufacturers of residential refrigerators in the American Clean Energy
and Security Act of 2009 that passed the House of Representatives on
June 26, 2009. That bill (H.R. 2454) contained provisions that provide
bonus payments for the production of superefficient best-in-class
products for years 2011-2013. The impacts of these tax credit
provisions under H.R. 2454 are not quantified in the GRIM, as the
legislation is still pending. It would be highly speculative to try to
predict the passage of such legislation, much less the details of its
provisions, all of which are highly uncertain. Appendix 12-C of the
NOPR TSD discusses in detail the tax credits currently available to
residential refrigeration product manufacturers and their impacts.
DOE research suggests that Federal production tax credits and other
market pull programs such as ENERGY STAR have helped spur the
development and market acceptance of more advanced technologies in
residential refrigeration products. However, such tax credits and other
market pull programs would not substantially defray the capital
conversion costs required if all products were required to employ a
given technology. Much higher production volumes would be required
under a national standard and would require manufacturers to upgrade
each of their production lines, rather than selectively improve the
products that could reach the qualifying level most economically.
Furthermore, the actual design pathway manufacturers may take to
achieve the proposed efficiency levels on a national scale could vary
from those pathways manufacturers have taken to produce the much
smaller subset of tax-credit qualifying products today. For example, if
manufacturers no longer received a production credit for products under
a national standard, any of the additional costs that could not be
passed to consumers could cause manufacturers to consider more capital
intense design pathways that would result in lower per unit costs.
Therefore, the tax credits have helped to alleviate a portion of the
product conversion costs required by amended energy conservation
standards by providing manufacturers with experience implementing more
efficient technology. DOE has taken this experience using advanced
technology into account in its methodology for calculating product
conversion costs. However, the production tax credits have not driven
wholesale adoption of the new technology or caused manufacturers to
make substantial changes to their production facilities to use these
technologies on a wide scale.
c. Standards-Induced Versus Normal Capital Conversion Costs
ASAP noted that not all capital investments that manufacturers
would make to comply with potential amended standards should be
directly attributed to the standards, since a certain amount of
investment in plants and equipment is a necessary cost of doing
business. ASAP urged DOE to be careful to disaggregate incremental
impacts due to the standards in the MIA. (ASAP, Public Meeting
Transcript, No. 28 at pp. 209-11)
In its analysis, DOE separates capital conversion costs that are
directly attributable to standards from normal capital expenditures.
The equipment with remaining useful life that is not repurposed is
counted as stranded assets (i.e., net plant, property, and equipment
that have not been fully depreciated that can no longer be used in the
production of standards-compliant products). DOE estimates that capital
conversion costs at today's proposed level are $895 million out of a
net PPE of $1,529 million. Typical capital expenditures in the base
year are $252 million. DOE also notes that the promulgation of a
standard that would require VIPs or wall thickness increases could be
extremely disruptive to existing facilities. These types of capital
costs would not be attributed to ongoing capital expenses (to replace
worn equipment and tooling for new products, for example). These plant
modification and equipment changes would be attributable to a potential
amended energy conservation standard. A discussion of DOE's methodology
in developing capital and product conversion costs for residential
[[Page 59524]]
refrigeration manufacturers is located in section IV.I.2.a, above, of
today's NOPR and in chapter 12 of the NOPR TSD.
d. Manufacturer Markups
AHAM stated that DOE did not show any empirical support for the
manufacturer markup used in the preliminary TSD and requested that DOE
provide more information with respect to how the manufacturer markup
was determined. (AHAM, No. 34 at p. 14) GE and Sub Zero also requested
that DOE qualify how it determined its markups, including the
manufacturer markups. (GE, No. 37 at p. 2-3; Sub Zero, No. 40 at p. 9;
Sub Zero, Public Meeting Transcript, No. 28 at p. 112)
In developing the baseline manufacturer markup of 1.26 used in
DOE's analysis, DOE began by researching the annual 10-K reports filed
with the Securities and Exchange Commission by residential white goods
manufacturers to determine an industry-wide market-share weighted
markup. This baseline manufacturer markup was used for the 2009 final
rule for cooking products and the 2010 commercial clothes washers final
rule. 74 FR 16040 (April 8, 2009); 75 FR 1122 (January 8, 2010).
Because all publicly traded companies that manufacture residential
refrigeration equipment also manufacture a number of other appliances,
and because the 1.26 baseline manufacturer markup had already been
vetted during the rulemakings for these other products and equipment,
DOE used the same baseline manufacturer markup as an initial estimate
for residential refrigeration products. A description of the
methodology used to calculate this baseline manufacturer markup can be
found in the NOPR and NOPR TSD for these rulemakings. See 73 FR 62034
(October 17, 2008) and the related TSD, available at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html. DOE requested manufacturer feedback on the
accuracy of this estimate and other financial assumptions during DOE's
confidential manufacturer impact analysis interviews.
Finally, as discussed above in section IV.I.2.b, above, in the
standards case, DOE modeled manufacturers' concerns about potential
profitability impacts due to amended energy conservation standards in
its preservation of operating profit markup scenario. DOE continues to
welcome feedback on any of the assumptions it used for its baseline
manufacturer markups and its markup scenarios.
4. Manufacturer Interviews
DOE interviewed manufacturers representing more than 95 percent of
standard-size refrigerator-freezer sales, approximately 95 percent of
standard-size freezer sales, about 75 percent of compact refrigerator
and freezer sales, and more than 95 percent of built-in refrigeration
products. These interviews were in addition to those DOE conducted as
part of the engineering analysis. DOE contacted companies from its
database of manufacturers, which provided a representative sample of
each industry. DOE used these interviews to tailor the GRIM to
incorporate unique financial characteristics for the residential
refrigeration industry. All interviews provided information that DOE
used to evaluate the impacts of potential amended energy conservation
standards on manufacturer cash flows, manufacturing capacities, and
employment levels. Before each telephone interview or site visit, DOE
provided company representatives with an interview guide that included
the topics for which DOE sought input. The MIA interview topics
included: (1) Key issues to this rulemaking; (2) a company overview and
organizational characteristics; (3) engineering analysis and life cycle
cost analysis follow-up; (4) manufacturer markups and profitability;
(5) shipment projections; (6) financial parameters; (7) conversion
costs; (8) cumulative regulatory burden; (9) possible impacts from
potential HFC regulations; (10) direct employment impact assessment;
(11) exports, foreign competition, and outsourcing; (12) consolidation;
and (13) impacts on small business. Appendix 12-A of the NOPR TSD
contains the three interview guides DOE used to conduct the MIA
interviews.
In the manufacturer interviews, DOE asked manufacturers to describe
their major concerns about this rulemaking. The following sections
describe the most significant issues identified by manufacturers. These
summaries are provided in aggregate to protect manufacturer
confidentiality. DOE also includes additional concerns in chapter 12 of
the NOPR TSD.
a. Potential for Significant Changes to Manufacturing Facilities
A number of manufacturers indicated that conversion costs would be
exponentially greater if the adopted standards require significant
rather than incremental increases in efficiency. While DOE does not
analyze design options that would lower consumer utility, manufacturers
indicated that for some product classes they would consider wall
thickness increases if they resulted in lower per unit costs. However,
manufacturers also indicated that wall thickness increases in response
to more stringent energy standards would be extremely capital
intensive. Changing the wall thickness of refrigeration products would
require extensive investments to completely replace injection molding
equipment, interior fabrication feeder lines and equipment, and foaming
fixtures on every production line. Such substantial changes would
require many times the investment required for incremental efficiency
improvements. For example, the design and implementation of a new heat
exchanger design would only require new fabrication tooling for the
component and slight adjustments to production line tooling but would
leave most of the existing production equipment intact. Smaller
manufacturers were generally concerned that conversion costs would
disproportionately impact their operations since comparable product and
capital conversion costs would be spread over a smaller shipment
volume.
Additionally, several manufacturers stated that new standards could
increase the total steady state invested capital necessary to maintain
current production levels. As an example, many plants leverage
economies of scale by utilizing a shared front end of production
(cabinet and door bending, for example) to serve multiple product
lines. These economies would be forfeited if amended standards
disproportionately affected one product class utilizing the shared
front end. As such, manufacturing plants could have relatively lower
capital intensity following standards.
b. VIPs
Manufacturers were also concerned about potential issues with a
standard that effectively required the widespread adoption of VIPs. In
particular, the material costs of VIPs would add significant costs to
the products, especially at the retail level. Manufacturers were
concerned that using this design option in product classes that
historically have been low-cost options could have unintended
consequences such as inducing consumers to prolong the life of the
products or switch to less profitable products. Manufacturers were also
concerned about the additional labor that is required to install VIPs.
Additional production steps would be required with VIPs, which involve
greater care in handling to prevent damaging the components. While less
of
[[Page 59525]]
a concern on lower volume products, the additional production steps on
high-speed production lines would add tremendous complexity. The
additional production steps and slower line rates would lengthen the
production lines and require additional equipment.
Manufacturers were also concerned about the ability of VIP
suppliers to ramp up production to meet necessary demand from more
stringent standards.
Finally, manufacturers indicated that their experience with VIPs
has revealed a range of efficiency improvements--all of which point to
lower benefits than the theoretical potential of VIPs. They also
expressed concern about the degradation of the panels over the lifetime
of their products. Because of the range of efficiency improvements in
practice, some manufacturers indicated they could elect to employ other
design pathways that would eliminate these potential problems with the
technology.
c. Impact on U.S. Production and Jobs
Manufacturers generally agreed that potential standards that would
require substantial capital conversion costs would lower U.S.
production and employment. Depending on the level of these
expenditures, some manufacturers stated that new investments would not
be made in the U.S., given the lower labor costs overseas. Margins are
already thin for certain product classes, and manufacturers believed
that higher standards could further reduce profitability. The lower
labor costs available overseas could offset some of the impact on
profitability, especially for their lower margin product lines. Some
manufacturers stated they could also choose to source or drop
altogether certain product lines they currently manufacture if they did
not believe they could recoup the capital investments required to meet
amended energy conservation standards on those lines. Any decision to
drop or source more product lines would also lead to less domestic
production and fewer domestic jobs.
d. Impacts to Product Utility
Several manufacturers expressed concern that more stringent energy
standards could impact the utility of their products. Most residential
kitchens have standardized size openings for refrigerators, which would
force any wall thickness growth inward and decrease internal volume.
While this scenario was not analyzed as a design option for all
products, manufacturers indicated some in the industry could elect to
use thicker walls to meet new standards for full size refrigerator-
freezers. Finally, several manufacturers indicated that other product
features currently available may have to be removed in order to both
meet new standard levels and maintain product prices that would be
acceptable to consumers. Examples of these features that industry cited
included ice and water dispensers, glass doors, soda can dispensers,
crisper compartments, anti-sweat features, and food preservation
capabilities.
Manufacturers also expressed concern that the energy savings from
more stringent energy conservation standards would not be great enough
to justify passing through the added costs to consumers. Currently,
manufacturers bundle higher efficiency with other desirable features to
justify higher prices for those ENERGY STAR models. According to
manufacturers, if amended standards cause prices to rise even higher,
the lower operating costs would not justify higher prices, since the
savings as a percentage of the purchase price would be very low.
Therefore, the increased cost of meeting more stringent efficiency
requirements may cause manufacturers to reduce the number of other
features bundled with these products in order to retain a reasonable
price point, causing consumer utility to decline.
The value of future ENERGY STAR levels is also a concern for
manufacturers. Many retailers and other distribution channels require
ENERGY STAR products. Since the features bundled with ENERGY STAR
products are the greatest justification for the added costs,
manufacturers were concerned that a higher ENERGY STAR level after
potentially stricter standards would offer less value to consumers.
Consumers would save less energy relative to the added efficiency costs
or would have a product with fewer features.
Manufacturers also stated that the financial burden of developing
products to meet amended energy conservation standards has an
opportunity cost due to limited capital and R&D dollars. Investments
incurred to meet amended standards reflect foregone investments in
innovation and the development of new features that consumers value and
on which manufacturers earn a premium.
e. Technical Difficulties Associated With Higher Efficiency Levels
Many manufacturers expressed concerns about the technical
difficulties involved in achieving new standards that are significantly
more stringent than current levels. Manufacturers were concerned there
might not be adequate supplies of particular components. In particular
they were concerned about supplies of high efficiency compressors and
VIPs, for all product classes, and especially at higher efficiency
levels that would increase the demand for these components many times
over current levels. Manufacturers also stated that there are fewer
low-cost technology improvements available than there were during past
rulemakings. Compact units, in general, pose an additional challenge
because there are fewer low-capacity compressors with sufficiently high
EER ratings. Specifically, compact freezers were cited as a product
class in which it would be especially difficult to make significant
energy improvements. Current standards for compact freezers are already
more stringent relative to capacity than are standards for compact
refrigerators.
f. Changes in Consumer Behavior
Several manufacturers noted that higher consumer prices resulting
from amended energy conservation standards could result in product
switching between lines of standard-size refrigerator-freezers.
Currently, top-mount refrigerator-freezers are inexpensive commodity
products, on which manufacturers said they make little to no profit
margin. Instead, manufacturers earn a profit on more expensive and more
feature-loaded side-mount and bottom-mount refrigerator-freezers.
Manufacturers are concerned that if amended energy conservation
standards cause retail prices to increase across product classes, many
consumers will no longer be willing to pay the premium for side-mount
and bottom-mount refrigerator-freezers and will switch to buying the
less expensive and less profitable top-mount refrigerator-freezers.
Similarly, a number of manufacturers expressed concern that higher
retail prices could alter consumers' decisions to repair or replace
their standard-size refrigerator-freezers. Many consumers who in the
base case would buy a new refrigerator when their current unit fails
would instead opt to repair their existing unit in the potential
standards case due to the higher cost of purchasing a new unit. This
decision would result in lower shipments for manufacturers and would
leave less efficient units in the existing stock.
g. Separate Product Classes for Built-Ins
Most manufacturers expressed their support for separate product
classes for built-in refrigerators and freezers. Manufacturers stated
that built-in units are inherently less efficient than their free-
standing counterparts for several reasons, including more limited air
[[Page 59526]]
flow. Because of such limitations, the incremental costs of improving
efficiency are higher at every efficiency level. Built-in manufacturers
also believed that their components costs per unit were higher than for
conventional products due to less bulk purchasing power. Built-in
manufacturers also argued that their products offer distinct utility
(i.e., the ability to build products into the kitchen cabinetry),
justifying the need for separate product classes for built-ins. Without
separate product classes for built-ins, depending on the stringency of
new standards, some or all built-in models could disappear from the
market because of the designs' inability to satisfy the proposed
standards for free-standing equivalent models. Built-in manufacturers
also suggested that an average correction based on conventional free-
standing products could be an appropriate means of accounting for the
inherently lower efficiency of built-in products.
h. Test Procedure Concerns
Many manufacturers expressed concerns over the test procedures for
refrigerators and freezers. Several stated that icemaking energy use,
which represents a large portion of unit energy consumption, should be
included in the amended test procedure to reward more efficient
icemakers. However, manufacturers acknowledged that testing icemaker
energy use is difficult. All manufacturers wanted to ensure that tests
for icemaking energy are repeatable and could be implemented correctly.
Manufacturers also did not want a test for icemaking energy use to
result in the elimination of TTD units.
J. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts consist of
direct and indirect impacts. Direct employment impacts are any changes
in the number of employees of manufacturers of the appliance products
which are the subject of this rulemaking, their suppliers, and related
service firms. Indirect employment impacts are changes in national
employment that occur due to the shift in expenditures and capital
investment caused by the purchase and operation of more-efficient
appliances. The MIA addresses the direct employment impacts that
concern manufacturers of refrigeration products. The employment impact
analysis addresses the indirect employment impacts.
Indirect employment impacts from standards consist of the net jobs
created or eliminated in the national economy, other than in the
manufacturing sector being regulated, due to: (1) Reduced spending by
end users on energy; (2) reduced spending on new energy supply by the
utility industry; (3) increased spending on new products to which the
new standards apply; and (4) the effects of those three factors
throughout the economy. DOE expects the net monetary savings from
standards to be redirected to other forms of economic activity. DOE
also expects these shifts in spending and economic activity to affect
the demand for labor in the short term, as explained below.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sectoral
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS).\40\ The BLS regularly publishes its estimates
of the number of jobs per million dollars of economic activity in
different sectors of the economy, as well as the jobs created elsewhere
in the economy by this same economic activity. Data from BLS indicate
that expenditures in the utility sector generally create fewer jobs
(both directly and indirectly) than expenditures in other sectors of
the economy. There are many reasons for these differences, including
wage differences and the fact that the utility sector is more capital
intensive and less labor intensive than other sectors.\41\
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\40\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by e-mail to [email protected]. Available at: http://www.bls.gov/news.release/prin1.nr0.htm.
\41\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------
Energy conservation standards have the effect of reducing consumer
utility bills. Because reduced consumer expenditures for energy likely
lead to increased expenditures in other sectors of the economy, the
general effect of efficiency standards is to shift economic activity
from a less labor-intensive sector (i.e., the utility sector) to more
labor-intensive sectors (e.g., the retail and service sectors). Thus,
based on the BLS data alone, DOE believes net national employment will
increase due to shifts in economic activity resulting from amended
standards for refrigeration products.
For the standards considered in today's NOPR, DOE estimated
indirect national employment impacts using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies (ImSET). ImSET
is a spreadsheet model of the U.S. economy that focuses on 187 sectors
most relevant to industrial, commercial, and residential building
energy use.\42\ ImSET is a special purpose version of the ``U.S.
Benchmark National Input-Output'' (I-O) model, which has been designed
to estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer-based I-O model
with structural coefficients to characterize economic flows among the
187 sectors. ImSET's national economic I-O structure is based on a 2002
U.S. benchmark table, specially aggregated to the 187 sectors. DOE
estimated changes in expenditures using the NIA spreadsheet. Using
ImSET, DOE then estimated the net national, indirect employment impacts
by sector of potential amended efficiency standards for refrigeration
products.
---------------------------------------------------------------------------
\42\ J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1:
Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest
National Laboratory, 2009. Available at: http://www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.
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For more details on the employment impact analysis, see TSD chapter
13.
K. Utility Impact Analysis
The utility impact analysis estimates several important effects on
the utility industry that would result from the adoption of new or
amended standards. For this analysis, DOE used the NEMS-BT model to
generate forecasts of electricity consumption, electricity generation
by plant type, and electric generating capacity by plant type, that
would result from each TSL. DOE obtained the energy savings inputs
associated with efficiency improvements to considered products from the
NIA. DOE conducts the utility impact analysis as a scenario that
departs from the latest AEO2010 Reference case. In other words, the
estimated impacts of a proposed standard are the differences between
values forecasted by NEMS-BT and the values in the AEO2010 Reference
case.
As part of the utility impact analysis, DOE used NEMS-BT to assess
the impacts on electricity prices of the reduced need for new electric
power plants and infrastructure projected to result from the considered
standards. In NEMS-BT, changes in power generation infrastructure
affect utility revenue requirements, which in turn affect electricity
prices. DOE estimated the change in electricity prices projected to
result over time from each TSL.
[[Page 59527]]
Chapter 14 of the TSD accompanying this notice describes the
utility impact analysis.
L. Environmental Analysis
Pursuant to the National Environmental Policy Act of 1969 and the
requirements of 42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a), DOE has
prepared a draft environmental assessment (EA) of the impacts of the
potential standards for refrigeration products in today's proposed
rule, which it has included as chapter 15 of the NOPR TSD.
In the EA, DOE estimated the reduction in power sector emissions of
CO2, NOX, and Hg using the NEMS-BT computer
model. In the EA, NEMS-BT is run similarly to the AEO NEMS, except that
refrigeration product energy use is reduced by the amount of energy
saved (by fuel type) due to each TSL. The inputs of national energy
savings come from the NIA spreadsheet model, and the output is the
forecasted physical emissions. NEMS-BT tracks CO2 emissions
using a detailed module that provides results with broad coverage of
all sectors and inclusion of interactive effects. The net benefit of
the standards in today's proposed rule is the difference between the
forecasted emissions estimated by NEMS-BT at each TSL and the AEO2010
Reference Case. For the final rule, DOE intends to revise the emissions
analysis using the most current AEO.
DOE has preliminarily determined that sulfur dioxide
(SO2) emissions from affected Electric Generating Units
(EGUs) are subject to nationwide and regional emissions cap and trading
programs that create uncertainty about the standards' impact on
SO2 emissions. Title IV of the Clean Air Act sets an annual
emissions cap on SO2 for all affected EGUs. SO2
emissions from 28 eastern States and the District of Columbia (DC) are
also limited under the Clean Air Interstate Rule (CAIR). Published in
the Federal Register on May 12, 2005, CAIR creates an allowance-based
trading program that will gradually replace the Title IV program in
those States and DC. 70 FR 25162. (The recent legal history surrounding
CAIR is discussed below.) The attainment of the emissions caps is
flexible among EGUs and is enforced through the use of emissions
allowances and tradable permits. Under existing EPA regulations, any
excess SO2 emission allowances resulting from the lower
electricity demand caused by the imposition of an efficiency standard
could be used to permit offsetting increases in SO2
emissions by any regulated EGU. However, if the standard resulted in a
permanent increase in the quantity of unused emission allowances, there
would be an overall reduction in SO2 emissions from the
standards. While there remains some uncertainty about the ultimate
effects of efficiency standards on SO2 emissions covered by
the existing cap and trade system, the NEMS-BT modeling system that DOE
uses to forecast emissions reductions currently indicates that no
physical reductions in power sector emissions would occur for
SO2.
NEMS-BT also has an algorithm for estimating NOX
emissions from power generation. The impact of these emissions,
however, will be affected by the CAIR. Much like SO2,
NOX emissions from 28 eastern States and DC are limited
under the CAIR. Although CAIR has been remanded to EPA by the DC
Circuit, it will remain in effect until it is replaced by a rule
consistent with the Court's July 11, 2008, opinion in North Carolina v.
EPA, 531 F.3d 896 (DC Cir. 2008); see also North Carolina v. EPA, 550
F.3d 1176 (DC Cir. 2008). Because all States covered by CAIR opted to
reduce NOX emissions through participation in cap-and-trade
programs for electric generating units, emissions from these sources
are capped across the CAIR region.
In the 28 eastern States and DC where CAIR is in effect, DOE's
forecasts indicate that because of the permanent cap no NOX
emissions reductions will occur due to energy conservation standards.
If their impact on electricity demand is large enough energy
conservation standards have the potential to produce an
environmentally-related economic impact in the form of lower prices for
NOX emissions allowances. However, DOE has preliminarily
concluded the proposed standard would not have such an effect because
the estimated reduction in NOX emissions or the
corresponding allowance credits in States covered by the CAIR cap would
be too small to affect allowance prices for NOX under the
CAIR. The proposed standards would reduce NOX emissions in
those 22 States not affected by the CAIR. As a result, DOE used NEMS-BT
to forecast emission reductions from the standards that are considered
in today's NOPR.
Similar to emissions of SO2 and NOX, future
emissions of Hg would have been subject to emissions caps. The Clean
Air Mercury Rule (CAMR) would have permanently capped emissions of
mercury for new and existing coal-fired plants in all States beginning
in 2010. 70 FR 28606 (May 18, 2005). However, the CAMR was vacated by
the DC Circuit in its decision in New Jersey v. Environmental
Protection Agency. 517 F 3d 574 (DC Cir. 2008) Thus, DOE was able to
use the NEMS-BT model, which reflects the fact that CAMR was vacated
and does not incorporate CAMR emission caps, to estimate the changes in
Hg emissions resulting from the proposed rule. However, DOE continues
to review the impact of rules that reduce energy consumption on Hg
emissions, and may revise its assessment of Hg emission reductions in
future rulemakings.
Commenting on the preliminary analysis, Whirlpool stated that
analysis of CO2 emissions is only complete if the changes in
CO2 emissions resulting from manufacturing and transporting
the higher efficiency products are also included. (Whirlpool, No. 31 at
p. 5) AHAM made a similar point. (AHAM, No. 34 at p. 15) In response,
DOE notes that the inputs to the EA for national energy savings come
from the NIA. In the NIA, DOE only accounts for primary energy savings
associated with considered standards. In so doing, EPCA directs DOE to
consider (when determining whether a standard is economically
justified) ``the total projected amount of energy * * * savings likely
to result directly from the imposition of the standard.'' 42 U.S.C.
6295(o)(2)(B)(i)(III) DOE interprets ``directly from the imposition of
the standard'' to include energy used in the generation, transmission,
and distribution of fuels used by appliances. In addition, DOE is
evaluating the full-fuel-cycle measure, which includes the energy
consumed in extracting, processing, and transporting primary fuels (see
section IV.G.3). Both DOE's current accounting of primary energy
savings and the full-fuel-cycle measure are directly linked to the
energy used by appliances. In contrast, energy used in manufacturing
and transporting appliances is a step removed from the energy used by
appliances. Thus, DOE did not consider such energy use in either the
NIA or the EA.
M. Monetizing Carbon Dioxide and Other Emissions Impacts
As part the development of this proposed rule, DOE considered the
estimated monetary benefits likely to result from the reduced emissions
of CO2 and other pollutants that are expected to result from
each of the TSLs considered. This section summarizes the basis for the
estimated monetary values used for each of these emissions and presents
the benefits estimates considered.
For today's NOPR, DOE is relying on a set of values for the social
cost of carbon (SCC) that were developed by an
[[Page 59528]]
interagency process. A summary of the basis for these new values is
provided below, and a more detailed description of the methodologies
used is provided in appendix 15-A of the NOPR TSD.
1. Social Cost of Carbon
Under Executive Order 12866, 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 social monetized benefits of reducing
CO2 emissions into cost-benefit analyses of regulatory
actions that have small, or ``marginal,'' impacts on cumulative global
emissions. 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.
The interagency group selected four SCC values for use in
regulatory analyses. Three values are based on the average SCC from
three integrated assessment models, at discount rates of 2.5, 3, and 5
percent. The fourth value, 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. For emissions
(or emission reductions) that occur in later years, these values grow
in real terms over time, as depicted in Table IV.16.
Table IV.16--Social Cost of CO2, 2010-2050
[In 2007 dollars per metric ton]
------------------------------------------------------------------------
Discount rate
-------------------------------------------------------------------------
5% Avg 3% Avg 2.5% Avg 3% 95th
------------------------------------------------------------------------
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
------------------------------------------------------------------------
a. Monetizing Carbon Dioxide Emissions
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 social cost of
carbon are provided in dollars per metric ton of carbon dioxide.
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of serious
challenges. A recent report from the National Research Council \43\
points out that any assessment will suffer from uncertainty,
speculation, and lack of information about (1) Future emissions of
greenhouse gases, (2) the effects of past and future emissions on the
climate system, (3) the impact of changes in climate on the physical
and biological environment, and (4) the translation of these
environmental impacts into economic damages. As a result, any effort to
quantify and monetize the harms associated with climate change will
raise serious questions of science, economics, and ethics and should be
viewed as provisional.
---------------------------------------------------------------------------
\43\ National Research Council. Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use. National Academies Press:
Washington, DC. 2009.
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Despite the serious limits in the areas of both quantification and
monetization, SCC estimates can be useful in estimating the social
benefits of reducing carbon dioxide emissions. Under Executive Order
12866, agencies are required, to the extent permitted by law, ``to
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 make it possible for
agencies to incorporate the social benefits from reducing carbon
dioxide emissions into cost-benefit analyses of regulatory actions that
have small, or ``marginal,'' impacts on cumulative global emissions.
Most Federal regulatory actions can be expected to have marginal
impacts on global emissions.
For such policies, the benefits from reduced (or costs from
increased) emissions in any future year can be estimated by multiplying
the change in emissions in that year by the SCC value appropriate for
that year. The net present value of the benefits can then be calculated
by multiplying each of these future benefits by an appropriate discount
factor and summing across all affected years. This approach assumes
that the marginal damages from increased emissions are constant for
small departures from the baseline emissions path, an approximation
that is reasonable for policies that have effects on emissions that are
small relative to cumulative global carbon dioxide emissions. For
policies that have a large (non-marginal) impact on global cumulative
emissions, there is a separate question of whether the SCC is an
appropriate tool for calculating the benefits of reduced emissions. DOE
does not attempt to answer that question here.
At the time of the preparation of this notice, the most recent
interagency estimates of the potential global benefits resulting from
reduced CO2 emissions in 2010 were $4.7, $21.4, $35.1, and
$64.9 per metric ton in 2007 dollars. These values were adjusted to
2009$ using the standard GDP deflator value for 2008 and 2009. For
emissions (or emission reductions) that occur in later years, these
values grow in real terms over time. Additionally, the interagency
group determined that a range of values from 7 percent to 23 percent
should be used to adjust the global SCC to calculate domestic effects,
although preference is given to consideration of the global benefits of
reducing CO2 emissions.
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. Specifically, the interagency group has set a preliminary
goal of revisiting the SCC values within two years or at such time as
substantially updated models become available, and to continue to
support research in this area. In the meantime,
[[Page 59529]]
the interagency group will continue to explore the issues raised by
this analysis and consider public comments as part of the ongoing
interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
To date, economic analyses for Federal regulations have used a wide
range of values to estimate the benefits associated with reducing
carbon dioxide emissions. In the final model year 2011 CAFE rule, the
Department of Transportation (DOT) used both a ``domestic'' SCC value
of $2 per ton of CO2 and a ``global'' SCC value of $33 per
ton of CO2 for 2007 emission reductions (in 2007 dollars),
increasing both values at 2.4 percent per year. It also included a
sensitivity analysis at $80 per 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 carbon dioxide emissions, while a
global SCC value is meant to reflect the value of damages worldwide.
A 2008 regulation proposed by DOT assumed a domestic SCC value of
$7 per ton CO2 (in 2006 dollars) for 2011 emission
reductions (with a range of $0-$14 for sensitivity analysis), also
increasing at 2.4 percent per year. A regulation finalized by DOE in
October of 2008 used a domestic SCC range of $0 to $20 per ton
CO2 for 2007 emission reductions (in 2007 dollars). In
addition, EPA's 2008 Advance Notice of Proposed Rulemaking for
Greenhouse Gases identified what it described as ``very preliminary''
SCC estimates subject to revision. EPA's global mean values were $68
and $40 per ton CO2 for discount rates of approximately 2
percent and 3 percent, respectively (in 2006 dollars for 2007
emissions).
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the interagency group 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 dollars) of $55, $33, $19, $10, and $5 per ton of CO2.
The $33 and $5 values represented model-weighted means of the published
estimates produced from the most recently available versions of three
integrated assessment models--DICE, PAGE, and FUND--at approximately 3
and 5 percent discount rates. The $55 and $10 values were derived by
adjusting the published estimates for uncertainty in the discount rate
(using factors developed by Newell and Pizer (2003)) at 3 and 5 percent
discount rates, respectively. The $19 value was chosen as a central
value between the $5 and $33 per ton estimates. All of these values
were assumed to increase at 3 percent annually to represent growth in
incremental damages over time as the magnitude of climate change
increases.
These interim values represent 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 and were offered for
public comment in connection with proposed rules, including the joint
EPA-DOT fuel economy and CO2 tailpipe emission proposed
rules.
c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields.
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects. There are a number of concerns and problems that
should be addressed by the research community, including research
programs housed in many of the agencies participating in the
interagency process to estimate the SCC.
The U.S. Government will periodically review and reconsider
estimates of the SCC used for cost-benefit analyses to reflect
increasing knowledge of the science and economics of climate impacts,
as well as improvements in modeling. In this context, statements
recognizing the limitations of the analysis and calling for further
research take on exceptional significance. The interagency group offers
the new SCC values with all due humility about the uncertainties
embedded in them and with a sincere promise to continue work to improve
them.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the most recent values
identified by the interagency process, adjusted to 2009$ using the
standard GDP deflator values for 2008 and 2009. For each of the four
cases specified, the values used for emissions in 2010 were $4.9,
$22.1, $36.3, and $67.1 per metric ton avoided (expressed in 2009$). To
monetize the CO2 emissions reductions expected to result
from amended standards for refrigeration products in 2014-2043, DOE
used the values identified in Table A1 of the ``Social Cost of Carbon
for Regulatory Impact Analysis Under Executive Order 12866,'' which is
reprinted in appendix 15-A of the NOPR TSD for the full range of annual
SCC estimates from 2010 to 2050. To calculate a present value of the
stream of monetary values, DOE discounted the values in each of the
four cases using the discount rates that had been used to obtain the
SCC values in each case.
2. Valuation of Other Emissions Reductions
As previously stated, DOE's analysis assumed the presence of
nationwide emission caps on SO2 and caps on NOX
emissions in the 28 States covered by the CAIR. In the presence of
these caps, the NEMS-BT modeling system that DOE used to forecast
emissions reduction indicated that no physical reductions in power
sector emissions would occur for SO2, but that the standards
could put slight downward pressure on the prices of emissions
allowances in cap-and-trade markets. Estimating this effect is very
difficult because such factors as credit banking can change the
trajectory of prices. From its modeling to date, DOE is unable to
estimate a benefit from SO2 emissions reductions at this
time. See the environmental assessment, chapter 15 in the NOPR TSD for
further details.
DOE also investigated the potential monetary benefit of reduced
NOX emissions from the TSLs it considered. As noted above,
new or amended energy conservation standards would reduce
NOX emissions in those 22 States that are not affected by
the CAIR, in addition to the reduction in site NOX emissions
nationwide. DOE estimated the monetized value of NOX
emissions reductions resulting from each of the TSLs considered for
today's NOPR
[[Page 59530]]
based on environmental damage estimates from the available literature.
Available estimates suggest a very wide range of monetary values,
ranging from $370 per ton to $3,800 per ton of NOX from
stationary sources, measured in 2001$ (equivalent to a range of $447 to
$4,591 per ton in 2009$).\44\ In accordance with U.S. Office of
Management and Budget (OMB) guidance,\45\ DOE conducted two
calculations of the monetary benefits derived using each of the
economic values used for NOX, one using a real discount rate
of 3 percent and another using a real discount rate of 7 percent.
---------------------------------------------------------------------------
\44\ Refer to the OMB, Office of Information and Regulatory
Affairs, ``2006 Report to Congress on the Costs and Benefits of
Federal Regulations and Unfunded Mandates on State, Local, and
Tribal Entities,'' Washington, DC, for additional information.
\45\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------
DOE is aware of multiple agency efforts to determine the
appropriate range of values to use in evaluating the potential economic
benefits of reduced Hg emissions. DOE has decided to await further
guidance regarding consistent valuation and reporting of Hg emissions
before it once again monetizes Hg in its rulemakings.
N. Demand Response
This section discusses comments received regarding demand response
or smart grid controls. These are controls that can react to signals
from utilities or other external organizations and adapt the product
operation. This capability might be used to allow utilities to reduce
energy use during peak demand hours by reducing the power input of many
connected appliances.
DOE received comments from LG urging consideration of smart grid
controls for refrigeration products when setting standards. LG
commented that the investment required to meet new energy standards may
displace the investment to develop and implement smart grid
refrigeration products, thus limiting the potential to meet DOE's goals
for establishment of a smart grid. (LG, No. 41 at p. 5) DOE received
some additional information regarding smart grid issues during NOPR
phase interviews with manufacturers. This information did not clearly
indicate that smart grid controls could provide significant benefits
when used in refrigeration products that are comparable to the benefits
associated with energy use reductions that are proposed in this notice.
Some of the potential benefits, such as the initiation of defrost only
during off-peak periods could be implemented without the use of smart
grid controls. Because of the uncertain value of the smart grid
benefits, DOE did not consider the possible offset of smart grid
development investment when selecting proposed standard levels.
The U.S. Navy (USN) commented that DOE should consider implementing
a credit or other form of encouragement for demand response
technologies in the energy conservation standard or other standards, or
in voluntary programs such as ENERGY STAR. (USN, No. FDMS Draft 0022.1
at p. 2) IOU commented that DOE should include as part of any standard
a requirement that refrigeration products include a demand response
feature. (IOU, No. 36 at p. 13) IOU asked for a response to this
comment and requested that the response indicate whether States would
be allowed to implement demand response requirements if DOE does not do
so. (Id.)
The requirement to include demand response capability in a product
constitutes a design requirement that a product include such a feature.
EPCA allows establishment of design requirements, but only for certain
products. EPCA defines ``energy conservation standard'' as:
(A) a performance standard which prescribes a minimum level of
energy efficiency or a maximum quantity of energy use, or, in the
case of showerheads, faucets, water closets, and urinals, water use,
for a covered product, determined in accordance with test procedures
prescribed under section 6293 of this title; or
(B) a design requirement for the products specified in
paragraphs (6), (7), (8), (10), (15), (16), (17), and (19) of
section 6292(a) of this title * * *
42 U.S.C. 6291(6)
Refrigeration products do not belong to the group of products for
which DOE can set design requirements (such as demand response
capability) under 6291(6)(B). Based on this limitation and the
available facts, it is DOE's tentative view that a demand response
requirement cannot be included as part of today's NOPR.
DOE next considered whether a credit may be allowed for demand
response features. DOE understands that such features, when applied to
refrigeration products, could be used to reduce energy costs by
shifting portions of the energy use associated with defrost or
icemaking to times when the electricity cost is lower, but that they
would not contribute significantly to reduction of energy use. EPCA
does not allow establishment of energy conservation standards if, ``the
establishment of such standard will not result in significant
conservation of energy'' (42 U.S.C. 6295(o)(3)(B)). Hence, DOE cannot
consider implementing a credit in the energy conservation standards for
refrigeration products to encourage use of this technology.
DOE and other agencies are not prohibited from developing voluntary
programs to encourage use of demand response technology. However, such
programs are not the subject matter of this notice.
EPCA's requirement on preemption on or after the compliance date
for Federal energy conservation standards for a given product states
that ``no State regulation concerning the energy efficiency, energy
use, or water use of such covered product shall be effective with
respect to such product * * *'' (42 U.S.C. 6297(c)). EPCA provides a
number of exceptions to this requirement, but none of these apply to
refrigeration products. DOE interprets ``regulation concerning energy
use'' to be equivalent to ``energy conservation standard''. The title
of section 6297(c), ``General rule of preemption for energy
conservation standards when Federal standard becomes effective for
product,'' further clarifies that this section addresses energy
conservation standards, which would mean, in this instance, a
performance-based standard. Based on the limited facts made available
to DOE, a design requirement would not likely meet this requirement.
Preemption under these conditions would not likely apply.
V. Analytical Results
The following section addresses the results from DOE's analyses
with respect to potential energy efficiency standards for the various
product classes examined as part of this rulemaking. Issues discussed
include the trial standard levels examined by DOE, the projected
impacts of each of these levels if adopted as energy efficiency
standards for refrigeration products, and the standards levels that DOE
is tentatively proposing in today's NOPR. Additional details regarding
the analyses conducted by the agency are contained in the publicly
available NOPR TSD supporting this notice.
A. Trial Standard Levels
DOE analyzed the benefits and burdens of a number of TSLs for the
refrigeration products that are the subject of today's proposed rule. A
description of each TSL DOE analyzed is provided below. DOE attempted
to limit the number of TSLs considered for the NOPR by excluding
efficiency levels that do not exhibit significantly different economic
and/or engineering characteristics from the efficiency levels
[[Page 59531]]
already selected as a TSL. While DOE only presents the results for
those efficiency levels in TSL combinations in today's NOPR, DOE
presents the results for all efficiency levels that it analyzed in the
NOPR TSD.
Table V.1 presents the TSLs and the corresponding product class
efficiencies for standard-size refrigerator-freezers. TSL 1 consists of
those efficiency levels that meet current ENERGY STAR criteria. TSL 2
consists of the highest efficiency levels for which the consumer NPV is
positive, using a 7-percent discount rate. TSL 3 consists of the
highest efficiency levels for which the consumer NPV is positive, using
a 3-percent discount rate, as well as the levels recommended in the
Joint Comments. TSL 4 consists of those efficiency levels that yield
energy use 30 percent below the baseline products. TSL 5 consists of
the max-tech efficiency levels.
Table V.1--Trial Standard Levels for Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
Top-mount refrigerator- Bottom-mount Side-by-side
freezers refrigerator-freezers refrigerator-freezers
Trial standard level --------------------------------------------------------------------------------
Product classes 1, 1A, 2, Product classes 5, 5A, Product classes 4, 4I,
3, 3A, 3I and 6 and 5I and 7
----------------------------------------------------------------------------------------------------------------
Efficiency Level (% less than baseline energy use)
--------------------------------------------------------------------------------
1.............................. 3 (20) 3 (20) 3 (20)
2.............................. 3(20) 3 (20) 4 (25)
3.............................. 4 (25) * 3 (20) 4 (25)
4.............................. 5 (30) 5 (30) 5 (30)
5.............................. 6 (36) 6 (36) 6 (33)
----------------------------------------------------------------------------------------------------------------
* Level for product classes 1, 1A, and 2 is 20%.
Table V.2 presents the TSLs and the corresponding product class
efficiencies for standard-size freezers. TSL 1 consists of those
efficiency levels that yield energy use 20 percent below the baseline
products. TSL 2 consists of the levels recommended in the Joint
Comments. TSL 3 consists of incrementally higher efficiency levels than
the preceding TSL. TSL 4 consists of the efficiency levels for which
the consumer NPV is positive, using a 7-percent discount rate. TSL 5
consists of the max-tech efficiency levels, which are also the
efficiency levels for which the consumer NPV is positive, using a 3-
percent discount rate.
Table V.2--Trial Standard Levels for Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
Upright freezers Chest freezers
--------------------------------------------------------------------------------
Trial standard level Product classes 10 and
Product class 9 Product class 8 10A
----------------------------------------------------------------------------------------------------------------
Efficiency Level (% less than baseline energy use)
--------------------------------------------------------------------------------
1.............................. 3 (20) 3 (20) 3 (20)
2.............................. 5 (30) 4 (25) *4 (25)
3.............................. 6 (35) 5 (30) 5 (30)
4.............................. 7 (40) 6 (35) 6 (35)
5.............................. 8 (44) 7 (41) 7 (41)
----------------------------------------------------------------------------------------------------------------
* Level for product class 10A is 30%.
Table V.3 presents the TSLs and the corresponding product class
efficiencies for compact refrigeration products. TSL 1 consists of
efficiency levels that meet current ENERGY STAR criteria for some
compact refrigerators (product classes 11, 11A, 12 and 13A), and
efficiency levels that are 10 percent below the baseline energy use for
other compact refrigerators (product classes 13, 14, and 15) and
compact freezers (product classes 16, 17, and 18). TSL 2 consists of
the levels recommended in the Joint Comments. TSL 3 consists of the
highest efficiency levels for which the consumer NPV is positive, using
both a 3-percent and a 7-percent discount rate. TSL 4 consists of
incrementally higher efficiency levels than TSL 3. TSL 5 consists of
the max-tech efficiency levels.
Table V.3--Trial Standard Levels for Compact Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Compact refrigerators and refrigerator-freezers Compact freezers
--------------------------------------------------------------------------------
Trial standard level Product classes 11, 11A, Product classes 13, 14, Product classes 16, 17,
12, and 13A and 15 18
----------------------------------------------------------------------------------------------------------------
Efficiency Level (% less than baseline energy use)
--------------------------------------------------------------------------------
1.............................. 3 (20) 1 (10) 1 (10)
2.............................. 4 (25) *2 (15) 1 (10)
3.............................. 5 (30) 2 (15) 2 (15)
4.............................. 7 (40) 4 (25) 4 (25)
[[Page 59532]]
5.............................. 10 (59) 7 (42) 7 (42)
----------------------------------------------------------------------------------------------------------------
* Level for product class 14 is 20%.
Table V.4 presents the TSLs and the corresponding product class
efficiencies for built-in refrigeration products. TSL 1 consists of the
efficiency levels that are 10 percent better than the current standard.
TSL 2 consists of the highest efficiency levels for which the consumer
NPV is positive, using both a 3-percent and a 7-percent discount rate.
TSL 3 consists of the levels recommended in the Joint Comments. TSL 4
consists of incrementally higher efficiency levels than TSL 3. TSL 5
consists of the max-tech efficiency levels.
Table V.4--Trial Standard Levels for Built-in Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Built-in all- Built-in bottom- Built-in side-by- Built-in
refrigerators mount refrigerator- side refrigerator- upright
------------------- freezers freezers freezers
Trial standard level ------------------------------------------------------
Product class 3A- Product classes 5- Product classes 4- Product
BI BI and 5I-BI BI, 4I-BI and 7-BI class 9-BI
----------------------------------------------------------------------------------------------------------------
Efficiency Level (% less than baseline energy use)
-------------------------------------------------------------------------
1..................................... 1 (10) 1 (10) 1 (10) 1 (10)
2..................................... 2 (15) 2 (15) 1 (10) 3 (20)
3..................................... 3 (20) 2 (15) 3 (20) 4 (25)
4..................................... 4 (25) 4 (25) 3 (20) 4 (25)
5..................................... 5 (29) 5 (27) 4 (22) 5 (27)
----------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
Consumers affected by new or amended standards usually experience
higher purchase prices and lower operating costs. DOE evaluates these
impacts on individual consumers by calculating changes in life-cycle
costs (LCC) and the payback period (PBP) associated with potential
standard levels. Using the approach described in section IV.F, DOE
calculated the LCC impacts and PBPs for the efficiency levels
considered in this rulemaking. For each representative product class,
DOE's analysis provided several outputs for each TSL, which are
reported in Table V.5 through Table V.15. Each table includes the
average total LCC and the average LCC savings, as well as the fraction
of product consumers for which the LCC will either decrease (net
benefit), increase (net cost), or exhibit no change (no impact)
relative to the product purchased in the base case. The last output in
the tables is the median PBP for the consumer purchasing a design that
complies with a given TSL. The results for each TSL are relative to the
energy efficiency distribution in the base case (no amended standards).
DOE based the LCC and PBP analyses on energy consumption under
conditions of actual product use, whereas it based the rebuttable
presumption PBPs on energy consumption under conditions prescribed by
the DOE test procedure, as required by EPCA. (42 U.S.C.
6295(o)(2)(B)(iii))
Table V.5--Product Class 3, Top-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $543 $750 $1,293 ........... ........... ........... ........... ...........
1 (10)......... 555 696 1,251 $42 1.7% 21.6% 76.8% 2.7
2 (15)......... 563 668 1,231 62 2.3 17.4 80.3 3.0
1, 2........................... 3 (20)......... 624 640 1,264 29 42.3 8.1 49.6 9.2
3.............................. 4 (25)......... 667 605 1,272 22 54.9 0.0 45.1 10.9
4.............................. 5 (30)......... 759 571 1,330 -37 73.8 0.0 26.2 15.4
5.............................. 6 (36)......... 892 535 1,427 -133 85.4 0.0 14.6 20.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 59533]]
Table V.6--Product Class 5, Bottom-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $945 $917 $1,862 ........... ........... ........... ........... ...........
1 (10)......... 947 908 1,856 $8 0.2 86.9 12.9 2.5
2 (15)......... 949 904 1,853 12 0.3 86.9 12.9 2.7
1, 2, 3........................ 3 (20)......... 955 892 1,847 19 4.5 67.8 27.7 4.9
4 (25)......... 1,020 853 1,873 -8 75.0 0.0 25.0 17.5
4.............................. 5 (30)......... 1,127 817 1,945 -79 88.2 0.0 11.8 24.8
5.............................. 6 (36)......... 1,276 770 2,046 -180 93.3 0.0 6.7 29.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.7--Product Class 7, Side-by-Side Refrigerator-Freezers With Through-the-Door Ice Service: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $1,152 $1,178 $2,330 ........... ........... ........... ........... ...........
1 (10)......... 1,155 1,156 2,310 $20 0.1 78.1 21.8 1.5
2 (15)......... 1,160 1,132 2,292 40 0.5 51.7 47.8 2.4
1.............................. 3 (20)......... 1,179 1,100 2,279 53 7.3 36.9 55.8 4.8
2, 3........................... 4 (25)......... 1,244 1,051 2,295 37 50.8 0.0 49.2 10.9
4.............................. 5 (30)......... 1,385 1,002 2,387 -55 77.7 0.0 22.3 18.6
5.............................. 6 (33)......... 1,496 970 2,466 -134 86.2 0.0 13.9 22.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.8--Product Class 9, Upright Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $560 $969 $1,529 ........... ........... ........... ........... ...........
1 (10)......... 571 897 1,468 $62 1.7 19.9 78.5 2.3
2 (15)......... 592 852 1,445 85 9.7 1.7 88.6 4.3
1.............................. 3 (20)......... 611 807 1,418 111 11.7 0.6 87.8 4.8
4 (25)......... 640 760 1,401 128 16.2 0.4 83.4 5.8
2.............................. 5 (30)......... 667 714 1,381 148 18.7 0.2 81.1 6.2
3.............................. 6 (35)......... 727 673 1,399 130 30.8 0.0 69.2 8.4
4.............................. 7 (40)......... 810 632 1,442 87 45.0 0.0 55.0 11.0
5.............................. 8 (44)......... 994 599 1,593 -63 70.2 0.0 29.8 17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.9--Product Class 10, Chest Freezer: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $407 $578 $985 ........... ........... ........... ........... ...........
1 (10)......... 414 533 946 $38 0.0 16.2 83.8 2.1
2 (15)......... 424 506 930 55 0.7 1.2 98.1 3.4
1.............................. 3 (20)......... 436 479 915 70 1.6 0.2 98.2 4.2
2.............................. 4 (25)......... 483 451 935 50 25.8 0.2 74.0 8.7
3.............................. 5 (30)......... 504 424 928 56 28.3 0.2 71.5 9.1
4.............................. 6 (35)......... 565 404 968 17 53.5 0.0 46.5 13.1
5.............................. 7 (41)......... 687 369 1,055 -71 79.0 0.0 21.0 19.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 59534]]
Table V.10--Product Class 11, Compact Refrigerators: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $146 $165 $311 ........... ........... ........... ........... ...........
1 (10)......... 151 150 301 $10 11.9 1.6 86.5 2.0
2 (15)......... 156 142 297 13 17.0 1.4 81.6 2.3
1.............................. 3 (20)......... 162 134 296 15 24.4 1.4 74.2 2.8
2.............................. 4 (25)......... 174 126 300 10 43.3 1.0 55.7 3.9
3.............................. 5 (30)......... 184 118 302 8 50.6 0.9 48.5 4.4
6 (35)......... 212 111 324 -13 77.2 0.0 22.8 6.7
4.............................. 7 (40)......... 221 103 324 -13 76.1 0.0 23.9 6.5
8 (45)......... 255 97 351 -41 87.4 0.0 12.6 8.6
9 (50)......... 274 88 362 -51 88.8 0.0 11.2 9.0
5.............................. 10 (59)........ 341 75 416 -105 93.8 0.0 6.2 11.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.11--Product Class 18, Compact Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $202 $200 $402 ........... ........... ........... ........... ...........
1, 2........................... 1 (10)......... 209 182 391 $11 9.9 4.7 85.4 2.5
3.............................. 2 (15)......... 223 172 395 7 40.6 0.0 59.4 4.6
3 (20)......... 268 163 430 -29 91.1 0.0 8.9 10.9
4.............................. 4 (25)......... 279 153 432 -30 88.5 0.0 11.5 10.0
5 (30)......... 312 146 458 -57 94.6 0.0 5.4 12.6
6 (35)......... 320 137 457 -55 92.7 0.0 7.3 11.5
5.............................. 7 (42)......... 399 124 523 -121 97.8 0.0 2.3 15.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.12--Product Class 3A-BI, Built-In All-Refrigerators: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
Efficiency ------------------------------------------------------------------------------------------- period
Trial standard level level (% less Discounted Average % of households that experience (years)
than baseline Installed operating LCC savings ---------------------------------------------------
energy use) cost cost 2009$ Net cost No impact Net benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....... $4,676 $776 $5,451 ........... ........... ........... ........... ...........
1.............................. 1 (10)......... 4,683 721 5,404 $47 0.3 22.6 77.2 1.6
2.............................. 2 (15)......... 4,696 693 5,388 63 2.6 18.4 79.0 3.0
3.............................. 3 (20)......... 4,826 660 5,486 -34 69.1 9.1 21.9 15.9
4.............................. 4 (25)......... 5,017 629 5,646 -195 94.5 0.0 5.5 29.7
5.............................. 5 (29)......... 5,162 607 5,769 -318 97.2 0.0 2.8 36.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.13--Product Class 5-BI, Built-In Bottom-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
------------------------------------------------------------------------------ period
Efficiency level (% less than % of Households that experience (years)
Trial standard level baseline energy use) Installed Discounted Average -------------------------------------------
cost operating LCC savings Net
cost 2009$ Net cost No impact benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................... $5,386 $908 $6,294
1.......................... 1 (10)............................ 5,390 899 6,289 $7 1.2 87.1 11.7 4.4
2, 3....................... 2 (15)............................ 5,401 906 6,307 0 8.2 87.0 4.8 12.9
3 (20)............................ 5,435 892 6,328 -21 29.3 67.5 3.3 26.2
4.......................... 4 (25)............................ 5,607 864 6,471 -164 99.0 0.0 1.1 62.8
5.......................... 5 (27)............................ 5,706 845 6,551 -244 99.3 0.0 0.7 61.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 59535]]
Table V.14--Product Class 7-BI, Built-In Side-by-Side Refrigerator-Freezers With Through-the-Door Ice Service: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
------------------------------------------------------------------------------ period
Efficiency level (% less than % of Households that experience (years)
Trial standard level baseline energy use) Installed Discounted Average -------------------------------------------
cost operating LCC savings Net
cost 2009$ Net cost No impact benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................... $7,887 $1,293 $9,180
1, 2....................... 1 (10)............................ 7,902 1,276 9,178 $7 8.0 78.5 13.5 8.7
2 (15)............................ 7,947 1,261 9,208 -18 39.8 52.4 7.8 21.0
3, 4....................... 3 (20)............................ 8,078 1,228 9,306 -116 60.2 37.2 2.5 36.7
5.......................... 4 (22)............................ 8,197 1,211 9,409 -219 98.8 0.0 1.2 60.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.15--Product Class 9-BI, Built-In Upright Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost 2009$ Life-cycle cost savings Payback
------------------------------------------------------------------------------ period
Efficiency level (% less than % of Households that experience (years)
Trial standard level baseline energy use) Installed Discounted Average -------------------------------------------
cost operating LCC savings Net
cost 2009$ Net cost No impact benefit Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................... $4,383 $947 $5,330
1.......................... 1 (10)............................ 4,400 876 5,276 $54 4.3 19.9 75.8 3.4
2 (15)............................ 4,415 834 5,249 82 8.6 1.7 89.7 4.3
2.......................... 3 (20)............................ 4,509 797 5,306 24 53.1 0.6 46.3 12.8
3, 4....................... 4 (25)............................ 4,657 752 5,409 -78 78.2 0.5 21.3 21.1
5.......................... 5 (27)............................ 4,770 730 5,500 -169 87.1 0.3 12.6 26.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Consumer Subgroup Analysis
As described in section IV.H, DOE determined the impact of the
considered TSLs on low-income households and senior-only households.
DOE did not estimate impacts for compact refrigeration products because
the household sample sizes were not large enough to yield meaningful
results.
Table V.16 through Table V.18 compare the average LCC savings at
each efficiency level for the two consumer subgroups with the average
LCC savings for the entire sample for each representative product
class. In general, the average LCC savings for low-income households
and senior-only households at the considered efficiency levels are not
substantially different from the average for all households. Chapter 11
of the NOPR TSD presents the complete LCC and PBP results for the two
subgroups.
Table V.16--Standard-Size Refrigerator-Freezers: Comparison of Average LCC Savings for Consumer Subgroups and
All Households
----------------------------------------------------------------------------------------------------------------
Top-mount Bottom-mount Side-by-side
refrigerator-freezers refrigerator-freezers refrigerator-freezers
--------------------------------------------------------------------
Efficiency level (% less than baseline Product class 3 Product class 5 Product class 7
energy use) --------------------------------------------------------------------
Low- Low- Low-
Senior income All Senior income All Senior income All
----------------------------------------------------------------------------------------------------------------
1 (10)..................................... $40 $44 $42 $53 $9 $8 $20 $21 $20
2 (15)..................................... 58 65 61 77 13 12 40 41 40
3 (20)..................................... 22 32 28 90 20 19 53 55 53
4 (25)..................................... 12 25 20 62 -7 -8 37 36 37
5 (30)..................................... -49 -33 -38 -2 -78 -79 -55 -59 -55
6 (36/36/33)............................... -149 -129 -135 -29 -180 -180 -134 -140 -134
----------------------------------------------------------------------------------------------------------------
Table V.17--Standard-Size Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
Upright freezers Chest freezers
-----------------------------------------------------------------------------
Efficiency level (% less than Product class 9 Product class 10
baseline energy use) -----------------------------------------------------------------------------
Senior Low-income All Senior Low-income All
----------------------------------------------------------------------------------------------------------------
1 (10)............................ $62 $58 $61 $38 $37 $38
2 (15)............................ 85 79 83 55 53 55
3 (20)............................ 111 102 109 70 68 70
4 (25)............................ 128 117 126 50 47 50
5 (30)............................ 148 134 146 56 53 56
6 (35)............................ 130 113 127 17 12 17
7 (40/41)......................... 87 68 84 -71 -76 -71
8 (44)............................ -63 -85 -71 ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
[[Page 59536]]
Table V.18--Built-In Refrigeration Products: Comparison of Average LCC Savings for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in all Built-in bottom-mount Built-in side-by-side Built-in upright
refrigerators refrigerator-freezers refrigerator-freezers freezers
-----------------------------------------------------------------------------------------------
Efficiency level (% less than baseline energy use) Product class 3A-BI Product class 5-BI Product class 7-BI Product class 9-BI
-----------------------------------------------------------------------------------------------
Low- Low- Low- Low-
Senior income All Senior income All Senior income All Senior income All
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 (10).................................................. $44 $49 $47 $6 $7 $7 $7 $6 $7 $54 $50 $54
2 (15).................................................. 58 65 63 -3 -1 0 -18 -24 -18 82 74 82
3 (20).................................................. -47 -37 -34 -26 -24 -21 -116 -135 -116 24 13 24
4 (25).................................................. -211 -198 -195 -173 -167 -164 -219 -239 -219 -78 -93 -78
5 (29/27/22/27)......................................... -337 -321 -318 -255 -247 -244 ...... ...... ...... -169 -185 -169
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in section III.D.2, EPCA provides a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for a product that meets the
standard is less than three times the value of the first-year energy
savings resulting from the standard. In calculating a rebuttable
presumption payback period for the considered standard levels, DOE used
discrete values rather than distributions for input values, and, as
required by EPCA, based the energy use calculation on the DOE test
procedures for refrigeration products. As a result, DOE calculated a
single rebuttable presumption payback value, and not a distribution of
payback periods, for each efficiency level. Tables V.19 through V.22
present the average rebuttable presumption payback periods for those
efficiency levels where the increased purchase cost for a product that
meets a standard at that level is less than three times the value of
the first-year energy savings resulting from the standard.
Table V.19--Standard-Size Refrigerator-Freezers: Efficiency Levels With Rebuttable Payback Period Less Than
Three Years
----------------------------------------------------------------------------------------------------------------
Product class 3: Top-mount refrigerator-freezer Product class 5: Bottom- Product class 7: Side-by-
------------------------------------------------------------- mount refrigerator- side refrigerator-
freezer freezer with TTD*
---------------------------------------------------
Efficiency Efficiency
Efficiency level (% less than baseline energy PBP years level (% level (%
use) less than PBP years less than PBP years
baseline baseline
energy use) energy use)
----------------------------------------------------------------------------------------------------------------
1 (10)......................................... 2.4 1 (10) 2.1 1 (10) 1.4
2 (15)......................................... 2.6 2 (15) 2.4 2 (15) 1.7
........... ........... ........... 3 (20) 2.9
----------------------------------------------------------------------------------------------------------------
* Through-the-door ice service.
Table V.20--Standard-Size Freezers: Efficiency Levels With Rebuttable Payback Period Less Than Three Years
----------------------------------------------------------------------------------------------------------------
Product class 9: upright freezer Product class 10: chest freezer
----------------------------------------------------------------------------------------------------------------
Efficiency level (%
Efficiency level (% less than PBP years less than baseline PBP years
baseline energy use) energy use)
----------------------------------------------------------------------------------------------------------------
1 (10)............................... 1.9 1 (10) 1.8
....................... 2 (15) 2.7
----------------------------------------------------------------------------------------------------------------
Table V.21--Compact Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three
Years
----------------------------------------------------------------------------------------------------------------
Product class 11: compact refrigerator Product class 18: compact freezer
----------------------------------------------------------------------------------------------------------------
Efficiency level (%
Efficiency level (% less than PBP years less than baseline PBP years
baseline energy use) energy use)
----------------------------------------------------------------------------------------------------------------
1 (10)............................... 1.8 1 (10) 2.0
2 (15)............................... 2.1 ....................... .......................
3 (20)............................... 2.7 ....................... .......................
----------------------------------------------------------------------------------------------------------------
[[Page 59537]]
Table V.22--Built-In Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three Years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product class 3A-BI: built-in all-refrigerator Product class 5-BI: Product class 7-BI: Product class 9-BI:
--------------------------------------------------------------------------- built-in bottom-mount built-in side-by-side built-in upright freezer
refrigerator-freezer refrigerator-freezer -------------------------
-------------------------- with TTD *
-------------------------- Efficiency
Efficiency Efficiency level (%
Efficiency level (% less than baseline energy use) PBP years level (% level (% less than PBP years
less than PBP years less than PBP years baseline
baseline baseline energy use)
energy use) energy use)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 (10)....................................................... 1.5 1 (10) ........... 1 (10) ........... 1 (10) 2.7
2 (15)....................................................... 2.6 ........... ........... ........... ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Through-the-door ice service.
While DOE examined the rebuttable-presumption criterion, it
considered whether the standard levels considered for today's rule are
economically justified through a more detailed analysis of the economic
impacts of these levels pursuant to 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level
(thereby supporting or rebutting the results of any preliminary
determination of economic justification).
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of residential refrigeration
products. The section below describes the expected impacts on
manufacturers at each potential TSL.
a. Cash-Flow Analysis Results
The tables below depict the financial impacts on manufacturers
(represented by changes in INPV) and the conversion costs DOE estimates
manufacturers would incur at each TSL. DOE shows four sets of results,
corresponding to the four sets of TSLs considered in this rulemaking.
Each set of TSLs reflect the impacts on manufacturers of a certain
group of product classes.
The INPV results refer to the difference in industry value between
the base case and the standards case, which DOE calculated by summing
the discounted industry cash flows from the base year (2010) through
the end of the analysis period. The discussion also notes the
difference in cash flow between the base case and the standards case in
the year before the compliance date of potential amended energy
conservation standards. This figure provides a proxy for the magnitude
of the required conversion costs, relative to the cash flow generated
by the industry in the base case. In its discussion of the MIA results,
DOE frequently references the common technology options that achieve
the efficiencies required by a given TSL in the relevant representative
product classes. To find to a complete description of technology
options and the required efficiencies at each TSL, see section IV.B.2
of today's NOPR and appendix 5-A of the TSD.
Each set of results below shows two tables of INPV impacts: The
first table reflects the lower (less severe) bound of impacts and the
second represents the upper bound. To evaluate this range of cash-flow
impacts on the residential refrigeration products industry, DOE modeled
two different scenarios using different markup assumptions. These
assumptions correspond to the bounds of a range of market responses
that DOE anticipates could occur in the standards case. Each scenario
results in a unique set of cash flows and corresponding industry value
at each TSL.
To assess the lower (less severe) end of the range of potential
impacts, DOE modeled the flat markup scenario. The flat markup scenario
assumes that in the standards case manufacturers would be able to pass
the higher production costs required for more efficient products on to
their customers. Specifically, the industry would be able to maintain
its average base-case gross margin, as a percentage of revenue, despite
higher product costs. In general, the larger the product price
increases, the less likely manufacturers are to achieve the cash flow
from operations calculated in this scenario because the less likely it
is that manufacturers would be able to fully markup these larger cost
increases.
Through its discussions with manufacturers, DOE found that overall
profit is driven more by bundles of product features, such as stainless
steel exteriors, ice dispensers, and digital displays, than by energy
efficiency characteristics. In other words, more efficient products
command higher prices, but these prices are driven by the many other
features that are also bundled with efficiency. However, the overall
profit margin percentage does widely vary even if the dollar profit per
unit increases for products with these additional features.
Manufacturers are skeptical that customers would accept higher prices
for increased energy efficiency because it does not command higher
margins in the current market. Under such a scenario, it follows that
the large retailers that compose the relatively concentrated customer
base of the industry would not accept manufacturers fully passing
through the additional cost of improved efficiency because consumers
would be wary of higher prices without additional features. Therefore,
to assess the higher (more severe) end of the range of potential
impacts, DOE modeled the preservation of operating profit markup
scenario in which higher energy conservation standards result in lower
manufacturer markups. This scenario models manufacturers' concerns that
the higher costs of more efficient technology would harm profitability
if the full cost increases cannot be passed on. The scenario represents
the upper end of the range of potential impacts on manufacturers
because no additional operating profit is earned on the investments
required to meet the proposed amended energy conservation standards,
while higher production costs erode profit margins and result in lower
cash flows from operations.
DOE used the main NIA shipment scenario for both the lower- and
higher-bound MIA scenarios that were used to characterize the potential
INPV impacts. The shipment forecast is an important driver of the INPV
results below. The main NIA shipment scenario includes a price
elasticity effect, meaning higher prices in the standards case result
in lower shipments. Lower shipments also reduce industry revenue, and,
in turn, INPV.
i. Cash-Flow Analysis Results for Standard-Size Refrigerator-Freezers
[[Page 59538]]
Table V.23--Manufacturer Impact Analysis for Standard-Size Refrigerator-Freezers--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 3,173 3,088 2,997 2,886 2,530 2,344
Change in INPV............................. (2009$ millions)............. ........... (84.8) (175.9) (287.5) (643.0) (828.9)
(%).......................... ........... -2.7% -5.5% -9.1% -20.3% -26.1%
Product Conversion Costs................... (2009$ millions)............. ........... 153 197 229 348 406
Capital Conversion Costs................... (2009$ millions)............. ........... 229 393 620 1,405 2,013
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 382 590 848 1,753 2,419
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.24--Manufacturer Impact Analysis for Standard-Size Refrigerator-Freezers--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 3,173 2,871 2,713 2,511 1,676 1,018
Change in INPV............................. (2009$ millions)............. ........... (301.7) (459.8) (662.1) (1,496.8) (2,154.7)
(%).......................... ........... -9.5% -14.5% -20.9% -47.2% -67.9%
Product Conversion Costs................... (2009$ millions)............. ........... 153 197 229 348 406
Capital Conversion Costs................... (2009$ millions)............. ........... 229 393 620 1,405 2,013
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 382 590 848 1,753 2,419
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 represents the current ENERGY STAR level for standard-size
refrigerator-freezers or a 20 percent reduction in measured energy
consumption over the current energy conservation standards for the
analyzed product class 3 (automatic defrost with top-mounted freezer
without through-the-door ice service), product class 5 (automatic
defrost with bottom-mounted freezer without through-the-door ice
service), and product class 7 (automatic defrost with side-mounted
freezer with through-the-door ice service). At TSL 1, DOE estimates
impacts on INPV to range -$84.8 million to -$301.7 million, or a change
in INPV of -2.7 percent to -9.5 percent. At this proposed level,
industry free cash flow is estimated to decrease by approximately 64.8
percent to $71.3 million, compared to the base-case value of $202.6
million in the year leading up to the proposed energy conservation
standards.
The INPV impacts at TSL 1 are relatively minor, in part because the
vast majority of manufacturers produce ENERGY STAR units in significant
volumes, particularly for product class 5 and 7. Approximately 42
percent of product class 7 shipments and 47 percent of product class 5
shipments currently meet this TSL. By contrast, the vast majority of
product class 3 shipments are baseline units. Additionally, most of the
design options DOE analyzed at this proposed level are one-for-one
component swaps, including more efficient compressors and brushless DC
condenser and evaporator fan motors, which require only modest changes
to the manufacturing process at TSL 1. As such, DOE estimated total
product conversion costs of $153 million and capital conversion costs
of $229 million.
While substantial on a nominal basis, the total conversion costs
are relatively low compared to the industry value of $3.2 billion. The
total conversion costs at TSL 1 are mostly driven by the design options
that manufacturers could use to improve the efficiency of the smaller-
sized units of the product classes analyzed. For example, the analyzed
design options for the 22 cubic foot product class 7 unit included a
VIP in the freezer door, while the 26 cubic foot product class 7 unit
only analyzed less costly component swaps. VIP implementation would
require significant capital and product conversion costs because
additional production steps are required to hold and bind each panel in
its location before the product is foamed. Each additional step
requires more equipment to lengthen production lines and, because of
lower throughput, more production lines for each manufacturer to
maintain similar shipment volumes. Some manufacturers have experience
with VIPs, but DOE expects substantial engineering and testing
resources would be required for their use in new platforms and/or at
higher production volumes.
Similarly, the 16 cubic foot product class 3 unit uses a variable
speed compressor as a design option. While not a capital intensive
solution, variable speed compressors would require substantial
engineering time to integrate the complex component, especially if
electronic control systems would also be required. Because these
changes are more complex than the other analyzed design options, more
than three-quarters of the conversion costs for TSL 1 are attributable
to the use of the VIPs and variable speed compressors in the smaller-
volume product class 7 and product class 3 units, respectively.
The flat markup scenario shows slightly negative impacts at TSL 1,
indicating that the outlays for conversion costs marginally outweigh
any additional profit earned on incrementally higher variable costs. On
a shipment-weighted basis, the average MPC for standard-size
refrigerator-freezers increases by 10 percent at TSL 1. These small
component cost changes are not significant enough to fully recoup these
investments even if manufacturers earn additional profit on these
costs, as the flat markup scenario assumes. Hence, there is a slight
negative impact, even in the upper-bound scenario, at TSL 1.
[[Page 59539]]
The efficiency requirements for product class 3 and product class 5
refrigerator-freezers are the same at TSL 2 as TSL 1. However, the
efficiency requirements for product class 7 increase to a 25 percent
reduction in measured energy consumption from current energy
conservation standards. DOE estimates the INPV impacts at TSL 2 range
from -$175.9 million to -$459.8 million, or a change in INPV of -5.5
percent to -14.5 percent. At this proposed level, the industry cash
flow is estimated to decrease by approximately 102.8 percent to -$5.7
million, compared to the base-case value of $202.6 million in the year
leading up to the proposed energy conservation standard.
The additional impacts at TSL 2 relative to TSL 1 result from the
further improvements manufacturers must make to product class 7
refrigerator-freezers to achieve a 25 percent energy reduction, as very
few shipments of product class 7 currently exceed the ENERGY STAR
level. Specifically, for the 22-cubic foot product, the design options
DOE analyzed include a variable speed compressor and a VIP in the
freezer cabinet, instead of the door as in TSL 1. For the 26-cubic foot
product class 7 unit, the design options analyzed include a VIP in the
freezer door in addition to additional component swaps and the
component swaps needed to meet TSL 1. Total conversion costs increase
by $208 million compared to TSL 1, which is largely driven by the
initial use of VIPs in the 26-cubic foot product class 7 unit. Besides
these specific changes to side-by-side units, at TSL 2 most production
lines of standard-size refrigerator-freezers do not use of VIPs or
other very costly components, mitigating some of the disruption to
current facilities. Consequently, the INPV impacts, while greater than
at TSL 1, are still relatively moderate compared to the value of the
industry.
At TSL 2, the INPV in the flat markup is lower than at TSL 1, which
means the additional conversion costs to add more VIPs leaves
manufacturers worse off even if they can earn additional profit on
these costly components. In the preservation of operating profit markup
scenario, the industry earns no additional profit on this greater
investment, lowering cash flow from operations in the standards case
and resulting in greater INPV impacts.
The efficiency requirements for product class 5 and product class 7
refrigerator-freezers are the same at TSL 3 as TSL 2. However, the
efficiency requirements for product class 3 increase to a 25 percent
reduction in measured energy consumption from current energy
conservation standards. TSL 3 represents a 25 percent reduction in
measured energy consumption over the current energy conservation
standards both product class 3 and product class 7. In addition, TSL 3
represents a 20 percent reduction in measured energy consumption for
the unanalyzed product classes 1, 1A, and 2. DOE estimates the INPV
impacts at TSL 3 to range from -$287.5 million to -$662.1 million, or a
change in INPV of -9.1 percent to -20.9 percent. At this proposed
level, the industry cash flow is estimated to decrease by approximately
151.6 percent to -$104.5 million, compared to the base-case value of
$202.6 million in the year leading up to the standards.
The additional negative impacts on industry cash flow result from
the changes to product class 3 refrigerator-freezers to reach a 25
percent reduction in energy use (side-by-side products met this
proposed level at TSL 2). Specifically, the design options DOE analyzes
at TSL 3 for 16 cubic foot top-mount refrigerator-freezers include the
use of VIPs for the first time (in the freezer cabinet), in addition to
the component swaps discussed above. In total, DOE estimates product
conversion costs of $229 million and capital conversion costs of $620
million at TSL 3. The high cost to purchase new production equipment
and the large engineering effort to manufacture new platforms for these
smaller-sized product class 3 units drive the vast majority of this
additional $258 million in conversion costs that DOE estimates
manufacturers would incur at TSL 3. Because the smaller size top-mounts
account for a large percentage of total shipments, the production
equipment necessary to implement new platforms for these products is
costly.
While production of units meeting TSL 3 is fairly limited, several
manufacturers have introduced products that meet this proposed level in
response to Federal production tax credits. This experience mitigates
some of the product conversion costs by giving manufacturers some
experience with the newer technologies. However, the more severe
impacts at TSL 3, relative to TSL 2, are due to the incremental outlays
for conversion costs to make the changes described above. In
particular, any experience with VIPs on some products does not lower
the substantial capital conversion necessary to purchase production
equipment necessary to manufacture products that are substantially
different from existing products.
As mentioned above, the preservation of operating profit markup
scenario assumes no additional profit is earned on the higher
production costs, which lower profit margins as a percentage of revenue
and leads to worse impacts on INPV. In the flat markup scenario, the
impact of the investments is mitigated by the assumption that
manufacturers can earn a similar profit margin as a percentage of
revenues on their higher variable costs. At TSL 3 MPCs increase by an
average of 16 percent over the base case, leading to additional per-
unit profit in this scenario. However, the magnitude of the conversion
investments still leads to negative INPV impacts even if additional
profit is earned on the incremental manufacturing costs. The lower
industry shipments driven by the relative price elasticity assumption
account for approximately 19 percent of the impact in the flat markup
scenario.
TSL 4 represents a 30 percent reduction in measured energy
consumption over the current energy conservation standards for product
class 3, product class 5, and product class 7. DOE estimates the INPV
impacts at TSL 4 to range from -$643.0 million to -$1,496.8 million, or
a change in INPV of -20.3 percent to -47.2 percent. At this proposed
level, the industry cash flow is estimated to decrease by approximately
a factor of 3.2 to -$449.6 million, compared to the base-case value of
$202.6 million in the year leading up to the proposed energy
conservation standards.
At TSL 4, significant changes to the manufacturing process are
necessary for all refrigerator-freezers. A 30 percent reduction in
energy consumption is the max available top-mount on the market; the
maximum available side-by-side and bottom-mount only slightly exceed a
30 percent reduction. The design options DOE analyzed for all standard-
size products--with the exception of the 25 cubic foot product class 5
unit--use multiple VIPs in the fresh food compartment, freezer doors,
and cabinets to reach 30 percent efficiency level. The design options
also include the use of variable speed compressors for all units
analyzed except the 21 cubic foot product class 3 unit. These product
changes substantially increase the variable costs across nearly all
platforms at this TSL.
While products that meet the efficiency requirements of TSL 4 are
not in widespread production, several manufacturers produce units at
these efficiencies due to tax credit incentives. However, at TSL 4 most
manufacturers expect to completely redesign existing production lines
if the proposed energy
[[Page 59540]]
conservation standards were set at levels that necessitated these
changes across most or all of their products. Manufacturers would need
to purchase injection molding equipment, cabinet bending equipment, and
other equipment for interior tooling as they would need to create new
molds for these production lines. These changes drive DOE's estimate of
the large product and capital conversion costs at TSL 4 ($348 million
and $1,405 million, respectively). The significant incremental
investment relative to TSL 3 results, in large part, from the design
option of adding VIPs to the 21 cubic foot analyzed product class 3
unit. This top-mounted refrigerator-freezer represents a substantial
portion of the market and manufacturers would have to completely
redesign these platforms.
As a result of the large investment necessary to meet this proposed
level, some manufacturers could move production to Mexico or other
lower-labor-costs countries to achieve cost savings for labor
expenditures. (More information on employment impacts is provided in
section V.B.2.b.) In addition to the large capital conversion costs,
the shipment-weighted average MPC increases by approximately 36 percent
at TSL 4 compared to the base case. However, the magnitude of the
conversion costs at TSL 4 are so large that even if manufacturers can
reap additional profit from these higher product costs (as in the flat
markup scenario), they would still be substantially impacted, as shown
by the negative INPV results in the flat markup scenario. Additionally,
the 36 percent increase in MPC drives shipments lower due to the price
elasticity. Lower industry volume due to the decline in shipments
accounts for approximately one-quarter of the change in industry value
in the flat markup scenario. The large, negative impact on INPV is even
greater under the preservation of operating profit markup scenario due
to the inability to pass on the higher costs of expensive design
options such as variable speed compressors and VIPs.
TSL 5 represents max tech for all standard-size refrigerator-
freezers. The max-tech level corresponds to reductions in measured
energy consumption of 36 percent, 36 percent, and 33 percent over the
current energy conservation standards for product class 3, product
class 5, and product class 7, respectively. DOE estimates the INPV
impacts at TSL 5 to range from -$828.9 million to -$2,154.7 million, or
a change in INPV of -26.1 percent to -67.9 percent. At this proposed
level, the industry cash flow is estimated to decrease by a factor of
approximately 4.5 to -$707.8 million, compared to the base-case value
of $202.6 million in the year leading up to the proposed energy
conservation standards.
No products that meet TSL 5 are currently offered on the U.S.
market. At TSL 5, the changes required to meet this proposed level are
similar to those at TSL 4, as complete redesigns of all platforms would
be required.TSL 5 requires much more extensive use of VIPs, however.
The higher conversion costs at TSL 5 are primarily due to the use of
VIPs in additional locations in the door, cabinet and freezer, whereas
at TSL 4 some of the analyzed design options of the larger-sized units
included limited or no VIP use. This would require manufacturers to
further lengthen assembly lines and even modify or move their entire
facilities, driving the $2,419 million conversion cost estimate at this
proposed level. As with TSL 4, at TSL 5 some manufacturers could elect
to move production out of the U.S. to offset some of the addition
product costs. At TSL 5, DOE estimates MPCs increase by approximately
58 percent compared to the base case. Similar to TSL 4, this
substantially reduces shipments due to the price elasticity effect and
exacerbates the industry impacts in both markup scenarios.
As with other TSLs, the impact on INPV is mitigated under the flat
markup scenario because manufacturers are able to fully pass on the
large increase in MPC to consumers, thereby increasing manufacturers'
gross profit in absolute terms. However, even assuming manufacturers
could earn the same gross margin percentage per unit on those higher
costs, the capital and product conversion costs cause negative INPV
impacts, as shown by the 26.15 percent decline in INPV in the flat
markup scenario. This large impact even in the lower bound scenario
demonstrates that the large conversion costs to redesign all existing
platforms results in substantial harm even if manufacturers earn a
historical margin on these additional costs. Due to the extremely large
cost increases at the max-tech level, it is more unlikely at TSL 5 that
manufacturers could fully pass through the increase production costs.
If margins are impacted, TSL 5 would result in a substantial INPV loss
under this scenario.
ii. Cash-Flow Analysis Results for Standard-Size Freezers
Table V.25--Manufacturer Impact Analysis for Standard-Size Freezers--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 403 378 292 308 344 300
Change in INPV............................. (2009$ millions)............. ........... (24.9) (110.6) (94.5) (59.0) (102.4)
(%).......................... ........... -6.2% -27.5% -23.5% -14.6% -25.4%
Product Conversion Costs................... (2009$ millions)............. ........... 22 51 55 63 70
Capital Conversion Costs................... (2009$ millions)............. ........... 50 175 182 183 320
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 72 226 237 247 390
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.26--Manufacturer Impact Analysis for Standard-Size Freezers--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 403 345 217 202 184 37
Change in INPV............................. (2009$ millions)............. ........... (57.3) (186.0) (201.1) (218.9) (365.1)
[[Page 59541]]
(%).......................... ........... -14.2% -46.2% -49.9% -54.4% -90.7%
Product Conversion Costs................... (2009$ millions)............. ........... 22 51 55 63 70
Capital Conversion Costs................... (2009$ millions)............. ........... 50 175 182 183 320
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 72 226 237 247 390
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 represents a 20 percent reduction in measured energy use over
the current energy conservation standards for the analyzed product
class 9 (upright freezers with automatic defrost) and product class 10
(chest freezers and all other freezers except compact freezers). DOE
estimates the INPV impacts at TSL 1 to range from -$24.9 million to -
$57.3 million, or a change in INPV of -6.2 percent to -14.2 percent. At
this proposed level, the industry cash flow is estimated to decrease by
approximately 100.4 percent to -$0.1 million, compared to the base-case
value of $25.7 million in the year leading up to the proposed energy
conservation standards.
While products meeting TSL 1 are only currently produced in limited
volumes, the changes in the manufacturing process would not require
completely new platforms to meet the energy requirements at this TSL.
For most standard-size freezer platforms, the design options DOE
analyzed include the use of brushless DC evaporator fan motors and
compressors with higher EERs. However, the design options to meet this
efficiency level also include increasing door insulation thickness for
all analyzed products except the 20 cubic foot product class 10 unit.
Increasing door insulation thickness drives the majority of the
conversion cost outlay DOE estimates manufacturers would incur at TSL
1. To increase door insulation thickness, manufacturers would need to
purchase new equipment tooling equipment for their door assembly. DOE
estimates that these changes would result in product conversion costs
of $22 million and capital conversion costs of $50 million at TSL 1.
However, the conversion costs are somewhat mitigated at TSL 1 because
the design options analyzed would not change the production equipment
for the cabinet.
At TSL 1, variable costs increase by approximately 10 percent
relative to base case MPCs. The flat markup scenario shows less severe
impacts because it assumes manufacturers can pass on these
substantially higher product costs and maintain gross margin
percentages. Additionally, the reduction in shipments due to the price
elasticity has only a marginally negative effect at this proposed
level. The relatively large conversion costs decrease industry value
under both markup scenarios and account for a substantial portion of
the INPV impacts especially if manufacturers are not able to earn any
additional profit on the higher production costs (the preservation of
operating profit scenario).
TSL 2 represents a 30 percent reduction in measured energy
consumption over the current energy conservation standards for product
class 9 and 25 percent for product class 10. TSL 2 also represents a 25
percent reduction in measured energy consumption for the unanalyzed
product class 8 (upright freezers with manual defrost) and a 30 percent
reduction for the analyzed product class 10A (chest freezers with
automatic defrost). DOE estimates the INPV impacts at TSL 2 to range
from -$110.6 million to -186.0 million, or a change in INPV of -27.5
percent to -46.2 percent. At this proposed level, the industry cash
flow is estimated to decrease by approximately a factor of 3.2 to -
$57.5 million, compared to the base-case value of $25.7 million in the
year leading up to the proposed energy conservation standards.
The vast majority of the standard-size freezer market does not
currently meet the efficiency requirements at TSL 2. DOE's design
options assume that, in addition to the component swaps noted above,
manufacturers would increase the insulation thickness of both the door
and cabinet. As a result, product redesigns are expected across most
platforms, which could substantially disrupting current manufacturing
processes. These changes account for the majority of DOE's estimates
for total product conversion costs of $51 million and capital
conversion costs of $175 million, an increase over TSL 1 of $29 million
and $125 million, respectively. The magnitude of the investments,
relative to the industry value, results in severe INPV impacts. Even if
manufacturers are able to pass on the estimated 24 percent increase in
product costs onto their customers, the large product and capital
conversion costs resulting from increased insulation thickness decrease
INPV. If manufacturers are not able to pass on these costs, as shown by
the preservation of operating profit scenario, INPV impacts are
projected to be severe.
TSL 3 represents a 35 percent reduction in measured energy use over
the current energy conservation standards for product class 9 and a 30
percent reduction for product class 10. DOE estimates the INPV impacts
at TSL 3 to range from -$94.5 million to -$201.1 million, or a change
in INPV of -23.5 percent to -49.9 percent. At this proposed level, the
industry cash flow is estimated to decrease by a factor of
approximately 3.4 to -$61.3 million, compared to the base-case value of
$25.7 million in the year leading up to the proposed energy
conservation standards.
The efficiency requirements at TSL 3 are more stringent than the
max available products in the market for product class 9 and product
class 10. The impacts at TSL 3 are similar to those at TSL 2 because
the design options analyzed by DOE already required platform redesigns
at TSL 2. However, the additional design options analyzed at TSL 3 also
include a variable speed compressor in the 14-cubic foot product class
9 unit and VIPs in the bottom wall of the 20-cubic foot product class
10 unit. These design options substantially increase the variable costs
associated with these products but do not greatly change the product
and capital conversion costs. The average MPC of a standard-size
freezer shipped at TSL 3 is estimated to be approximately 34 percent
more expensive than in the base case, leading to a 9 percent decline in
shipments due
[[Page 59542]]
to the price elasticity assumption in 2014 alone.
The impacts at TSL 3 under the flat markup scenario become less
severe than at TSL 2 because the scenario assumes manufacturers can
fully pass on the added cost to consumers, while investments do not
significantly increase from TSL 2 to TSL 3. However, under the
preservation of operating profit markup scenario, manufacturers do not
receive any extra profit on units of higher cost, resulting in worse
INPV impacts at TSL 3 than at TSL 2.
TSL 4 represents a 40 percent reduction in measured energy use over
the current energy conservation standards for product class 9 and a 35
percent reduction for product class 10. DOE estimates the INPV impacts
at TSL 4 to range from -$59.0 million to -$218.9 million, or a change
in INPV of -14.6 percent to -54.4 percent. At this proposed level, the
industry cash flow is estimated to decrease by a factor of
approximately 3.5 to -$64.0 million, compared to the base-case value of
$25.7 million in the year leading up to the proposed energy
conservation standards.
At TSL 4, the design options DOE analyzed include the addition of a
variable speed compressor for the 20-cubic foot product class 9 unit,
the 15-cubic foot product class 10 unit, and the 20-cubic foot product
class 10 unit. For the 14 cubic foot product class 9 unit, the design
options analyzed were even thicker wall cabinet insulation and the
implementation of VIPs.
The relative impacts at TSL 4 are also caused by the incremental
MPCs compared to the conversion costs to implement these design
options. Outlays for conversion costs increase only slightly at TSL 4
(by 4 percent, compared to TSL 3) while variable costs increase
substantially (by approximately 50 percent compared to the baseline)
due to the addition of variable speed compressors and VIPs. Because
manufacturers earn incrementally more profit on each unit at TSL 4
compared to TSL 3 in the flat markup scenario--without substantial
changes to conversion costs--further declines in industry value, though
still substantial, are mitigated in this scenario. However,
manufacturers expressed skepticism that such large cost increases could
be passed on. This view is reflected by the severely negative results
in the preservation of operating profit scenario.
TSL 5 represents max tech for the standard-size freezer product
classes. This TSL reflects a 44 percent reduction in measured energy
use for product class 9 and a 41 percent reduction for product class
10. DOE estimates the INPV impacts at TSL 5 to range from -$102.4
million to -$365.1 million, or a change in INPV of -25.4 percent to -
90.7 percent. At this proposed level, the industry cash flow is
estimated to decrease by a factor of approximately 5.7 to -$120.3
million, compared to the base-case value of $25.7 million in the year
leading up to the proposed energy conservation standards.
To achieve the max-tech level at TSL 5, DOE analyzed design options
that include the widespread implementation of multiple VIPs on all
standard-size freezers, in addition to the use of more efficient
components and thicker insulation already necessary to achieve the
efficiency requirements at TSL 4. DOE estimated that TSL 5 would
require product and capital conversion costs of $70 million and $320
million, respectively. These large conversion costs result from the
changes associated with multiple VIP implementation and wall thickness
increases. In addition, DOE estimates that product costs would almost
double base-case MPCs, driven by the use of variable speed compressors
and VIPs in the doors and cabinet of all product lines. As a result,
INPV decreases substantially from TSL 4 to TSL 5.
iii. Cash-Flow Analysis Results for Compact Refrigeration Products
Table V.27--Manufacturer Impact Analysis for Compact Refrigeration Products--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 200 185 169 143 170 67
Change in INPV............................. (2009$ millions)............. ........... (14.3) (30.8) (56.8) (29.6) (133.0)
(%).......................... ........... -7.2% -15.4% -28.4% -14.8% -66.6%
Product Conversion Costs................... (2009$ millions)............. ........... 15 35 41 48 67
Capital Conversion Costs................... (2009$ millions)............. ........... 24 46 76 71 220
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 39 80 118 119 287
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.28--Manufacturer Impact Analysis for Compact Refrigeration Products--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial Standard Level
Units Base Case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 200 168 133 101 85 (96)
Change in INPV............................. (2009$ millions)............. ........... (32.1) (66.7) (99.2) (114.4) (295.6)
(%).......................... ........... -16.1% -33.4% -49.6% -57.3% -148.0%
Product Conversion Costs................... (2009$ millions)............. ........... 15 35 41 48 67
Capital Conversion Costs................... (2009$ millions)............. ........... 24 46 76 71 220
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 39 80 118 119 287
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 represents a 20 percent reduction in measured energy use over
the current energy conservation standards for product class 11 (compact
refrigerators and refrigerator-freezers with manual defrost) and a 10
percent
[[Page 59543]]
reduction for product class 18 (compact chest freezers). DOE estimates
the INPV impacts at TSL 1 to range from -$14.3 million to -$32.1
million, or a change in INPV of -7.2 percent to -16.1 percent. At this
proposed level, industry cash flow is estimated to decrease by
approximately 112.9 percent to -$1.5 million, compared to the base-case
value of $11.9 million in the year leading up to the proposed energy
conservation standards. A small percentage of product class 18
shipments currently meet this TSL, but most product class 11 shipments
are baseline units.
The design options analyzed by DOE at TSL 1 assumed that more
significant changes in the manufacturing process would be required for
product class 11, while product class 18 would only require increased
compressor efficiency. For product class 11, DOE analyzed several
design options that represent component changes, such as a more
efficient compressor and increased heat exchanger area, which do not
have a significant impact on consumer prices or conversion costs.
However, DOE also analyzed increasing door insulation thickness for
product class 11, which drives the bulk of the estimated $15 million
and $24 million outlays for product conversion and capital conversion
costs, respectively. As described for standard-size refrigerator-
freezers and standard-size freezers, increasing insulation thickness
requires manufacturers to invest in injection molding equipment and
other equipment for interior tooling to manufacturer products with
different door dimensions. The overall impacts at TSL 1 are relatively
moderate because the conversion costs are still small compared to the
industry value of $200 million.
The higher production costs at TSL 1 do not have a substantial
impact on INPV at TSL 1. The MPC of compact refrigeration products on a
shipment-weighted basis increases 11 percent over the base case at TSL
1. The combined INPV impacts are greater under the preservation of
operating profit scenario since manufacturers cannot pass on any of the
added cost to consumers under that scenario, resulting in lower cash
flows from operations. However, because production costs do not greatly
increase at TSL 1, the impacts on INPV are relatively low under this
scenario as well.
TSL 2 represents a 25 percent reduction in measured energy use over
the current energy conservation standards for product class 11 and a 10
percent reduction for product class 18. TSL 2 also represents a 15
percent reduction in measured energy consumption for the analyzed
product classes 13 and 15, and a 20 percent reduction for the
unanalyzed product class 14. DOE estimates the INPV impacts at TSL 2 to
range from -$30.8 million to -$66.7 million, or a change in INPV of -
15.4 percent to -33.4 percent. At this proposed level, the industry
cash flow is estimated to decrease by approximately 230.1 percent to -
$15.4 million, compared to the base-case value of $11.9 million in the
year leading up to the proposed energy conservation standards.
At TSL 2, further changes are required for product class 11. In
addition to component swaps, the design options analyzed by DOE also
include thicker cabinet insulation. As discussed for TSL 1, increasing
insulation thickness significantly impacts product and capital
conversion costs, but much more so when adding insulation to the
cabinet (as opposed to the door). To increase the insulation thickness
of the cabinet, manufacturers must replace virtually all stamping
equipment which greatly increases the capital conversion costs.
Additionally, DOE analyzed the use of isobutane refrigerant as a design
option for the 4-cubic foot product class 11 unit. At TSL 2, a
substantial portion of the investment to reach TSL 2 would likely go
towards training service technicians to handle the explosive
refrigerant. As a result of thicker cabinet insulation and conversion
to isobutane, product conversion and capital conversion costs roughly
double at TSL 2 (to $35 million for product conversion costs and $46
million for capital conversion costs). The shipment-weighted MPC
increased 22 percent at TSL 2 compared to baseline costs, which also
contributed to the more severe impacts projected under the preservation
of operation profit scenario if manufacturers do not earn additional
profit on these higher costs.
TSL 3 represents a 30 percent reduction in measured energy use over
the current energy conservation standards for product class 11 and a 15
percent reduction for product class 18. DOE estimates the INPV impacts
at TSL 3 to range from -$56.8 million to -$99.2 million, or a change in
INPV of -28.4 percent to -49.6 percent. At this proposed level, the
industry cash flow is estimated to decrease by a factor of
approximately 3.5 to -$29.4 million, compared to the base-case value of
$11.9 million in the year leading up to the proposed energy
conservation standards.
At TSL 3, the design options analyzed for both product class 18
units include thicker door insulation, which further increases the
capital conversion costs over TSL 1 and TSL 2, where this was not
analyzed as a design option. The additional impacts at TSL 3 are also
due to more stringent requirements for product class 11. A 30 percent
reduction for product class 11 is greater than the most efficient units
on the market today. For both analyzed sizes of product class 11, DOE
analyzed the design option of thicker insulation in the cabinet for
both units analyzed. The net effect is a large increase in conversion
costs due to the much higher cost of the equipment necessary to
manufacture the cabinet. At TSL 3, DOE estimated total product
conversion costs of $41 million and capital conversion costs of $76
million, a 46 percent total increase in conversion costs over TSL 2.
The effect of the design changes at TSL 3 on shipment-weighted unit
cost is a 27 percent increase over the baseline MPC. The magnitude of
the investments relative to the industry value leads to significant
impacts, although they are moderated somewhat in the flat markup
because manufacturers earn additional profit on the investments.
TSL 4 represents a 40 percent reduction in measured energy use over
the current energy conservation standards for product class 11 and a 25
percent reduction for product class 18. DOE estimates the INPV impacts
at TSL 4 to range from -$29.6 million to -$114.4 million, or a change
in INPV of -14.8 percent to -57.3 percent. At this proposed level, the
industry cash flow is estimated to decrease by approximately 344.1
percent to -$29.0 million, compared to the base-case value of $11.9
million in the year leading up to the proposed energy conservation
standards.
The design options analyzed at TSL 4 would also severely disrupt
current manufacturing processes. For the 1.7-cubic foot product class
11 unit, DOE analyzed a variable speed compressor and isobutane
refrigerant as design options. For the 4 cubic foot product class 11
unit and the 7-cubic foot product class 18 unit, DOE analyzed thicker
insulation in the cabinets. For 3.4-cubic foot product class 18 unit,
DOE analyzed both an increase to cabinet insulation thickness and VIPs
in the bottom wall as design options. Although increasing insulation
thickness, converting to isobutane, and implementing VIPs all would
necessitate large conversion costs, capital conversion costs decrease
slightly from TSL 3 to TSL 4 because of the removal of all previous
design options in the 1.7-cubic foot unit. In other words, the design
options analyzed for this unit cause less
[[Page 59544]]
substantial changes to existing production equipment, but would also
require a large investment by manufacturers to train service
technicians to deal with the explosive refrigerant. Because this would
require a large outlay for product conversion costs, total conversion
costs are roughly the same at TSL 3 and TSL 4. The addition of a
variable speed compressor in the smaller product class 11 unit analyzed
also has a substantial impact on unit price because of its high
component cost. At TSL 4, the shipment-weighted MPC is 60 percent
higher than the baseline MPC. These cost increases are projected to
cause a 16 percent decrease in shipments at TSL 4 in 2014 alone. Over
time, the decline in shipments is a big contributor to the negative
impacts on INPV in both markup scenarios.
The large conversion costs and higher prices leading to lower
shipments cause a decrease in INPV from TSL 3 to TSL 4 under the
preservation of operating profit markup scenario (since this scenario
assumes higher production costs are not passed on to consumers).
However, under the flat markup scenario, manufacturers are able to earn
additional profit on the new high-cost components such as variable
speed compressors, resulting in an increase in INPV from TSL 3 to TSL
4.
TSL 5 represents max tech for both product classes 11 and 18. The
max-tech level corresponds to a 59 percent and 42 percent reduction in
measured energy use for product class 11 and product class 18,
respectively. DOE estimates the INPV impacts at TSL 5 to range from -
$133.0 million to -$295.6 million, or a change in INPV of -66.6 percent
to -148.0 percent. At this proposed level, the industry cash flow is
estimated to decrease approximately nine-fold to -$95.7 million,
compared to the base-case value of $11.9 million in the year leading up
to the proposed energy conservation standards.
The design options DOE analyzed include the use of VIPs for all
analyzed product class 11 and 18 units to reach max-tech efficiency
levels. Additionally, the design options analyzed for some products
also included other costly changes. For the 1.7-cubic foot product
class 11 unit, the design options analyzed included multiple VIPs, a
larger heat exchanger, and thicker insulation. The design options
analyzed for the 4-cubic foot product class 11 unit also included a
variable speed compressor and thicker insulation. For product class 18,
DOE assumed that manufacturers would remove the design options
necessary to meet TSLs 1 through 4 and add a variable speed compressor
and thicker insulation for both analyzed products. These significant
changes greatly increase the investment required to manufacture
standards-compliant products. DOE estimated that product conversion
costs would be $67 million at TSL 5, an increase of almost 40 percent
over TSL 4. DOE also estimated that capital conversion costs would be
$220 million, a more than three-fold increase over TSL 4. This drastic
increase in conversion costs demonstrates the significant investments
required by implementing widespread use of VIPs and increasing wall
thickness.
At TSL 5, the shipment-weighted MPC increases by over 150 percent
over the baseline due to the high material costs of VIPs and variable
speed compressors. These large jumps cause shipments to decrease by 42
percent due to the price elasticity in 2014 alone. As a result of lower
industry shipments and extremely high conversion costs, INPV decreases
substantially from TSL 4 to TSL 5 and becomes negative under the
preservation of operating profit scenario, which indicates the industry
loses more than its base-case value in the standards case under this
scenario.
iv. Cash-Flow Analysis Results for Built-In Refrigeration Products
Table V.29--Manufacturer Impact Analysis for Built-In Refrigeration Products--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 658 607 604 593 579 574
Change in INPV............................. (2009$ millions)............. ........... (51.7) (54.7) (65.8) (79.7) (84.9)
(%).......................... ........... -7.9% -8.3% -10.0% -12.1% -12.9%
Product Conversion Costs................... (2009$ millions)............. ........... 41 51 65 75 87
Capital Conversion Costs................... (2009$ millions)............. ........... 40 38 55 74 84
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 81 89 119 149 171
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.30--Manufacturer Impact Analysis for Built-In Refrigeration Products--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................... (2009$ millions)............. 658 606 601 578 555 538
Change in INPV............................. (2009$ millions)............. ........... (52.9) (57.0) (80.5) (103.0) (120.3)
(%).......................... ........... -8.0% -8.7% -12.2% -15.6% -18.3%
Product Conversion Costs................... (2009$ millions)............. ........... 41 51 65 75 87
Capital Conversion Costs................... (2009$ millions)............. ........... 40 38 55 74 84
------------------------------------------------------------------------------------------------------------
Total Conversion Costs................. (2009$ millions)............. ........... 81 89 119 149 171
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 represents a 10 percent reduction in measured energy use over
the current energy conservation standards for product class 3A-BI
(built-in all-refrigerators--automatic defrost), product class 5-BI
(built-in refrigerator-
[[Page 59545]]
freezers--automatic defrost with bottom-mounted freezer without an
automatic icemaker), product class 7-BI (built-in refrigerator-
freezers--automatic defrost with side-mounted freezer with through-the-
door ice service), and product class 9-BI (built-in upright freezers
with automatic defrost without an automatic icemaker). DOE estimates
the INPV impacts at TSL 1 to range from -$51.7 million to -$52.9
million, or a change in INPV of -7.9 percent to -8.0 percent. At this
proposed level, the industry cash flow is estimated to decrease by
approximately 63.9 percent to $15.0 million, compared to the base-case
value of $41.5 million in the year leading up to the proposed energy
conservation standards.
At TSL 1, the design options that DOE analyzes result in moderate
changes in the manufacturing process for built-in refrigeration
products. For product classes 3A-BI and 9-BI, the design options that
DOE analyzed to reach TSL 1 included the use of more efficient
components that do not require significant changes to the manufacturing
process. However, for product class 5-BI and product class 7-BI, the
design options DOE analyzed also include the use of VIPs in the freezer
door. While these components add to the overall costs of production,
the added costs represent a small percentage of the total cost of a
built-in refrigeration product. These cost deltas are low compared to
the overall cost of the products and result in small impacts even if no
additional profit is earned on the incremental MPCs. The estimated
product conversion costs for all built-in refrigeration products at TSL
1 are $41 million and the estimated capital conversion costs are $40
million. The implementation of VIPs represents a substantial part of
the conversion costs, but several built-in refrigeration manufacturers
have products that use similar technology, which helps to mitigate some
of the product conversion costs that would be required to design
products from the ground up.
TSL 2 represents a 15 percent reduction in measured energy use for
product class 3A-BI and product class 5-BI. For product classes 7-BI
and 9-BI, TSL 2 represents a reduction of 10 percent and 20 percent,
respectively. DOE estimates the INPV impacts at TSL 2 to range from -
$54.7 million to -$57.0 million, or a change in INPV of -8.3 percent to
-8.7 percent. At this proposed level, the industry cash flow is
estimated to decrease by approximately 68.0 percent to $13.3 million,
compared to the base-case value of $41.5 million in the year leading up
to the proposed energy conservation standards.
The efficiency requirements for product class 7-BI refrigerator-
freezers do not change from TSL 1 to TSL 2, but the efficiency
requirements for all other analyzed built-in product classes increase.
The design options that DOE analyzes at TSL 2 for product classes 3A-BI
and 7-BI still only include component swaps to reach a 15 percent
efficiency improvement. Product class 5-BI uses a variable speed
compressor in the freezer with a brushless DC condenser fan motor, but
no longer use the VIPs used to reach TSL 1. The design options analyzed
for product class 9-BI include a brushless DC evaporator and condenser
fan motor, a larger condenser, a variable speed compressor, and a VIP
in the upper door. Because product class 5-BI no longer uses VIPs and
fewer changes to existing products are necessary, the overall impact is
a slight decrease in capital conversion costs from $40 million at TSL 1
to $38 million at TSL 2. Product conversion costs increase to $51
million at TSL 2 because additional engineering time would be required
to implement the additional component changes. However, because the
complexity of the changes to the products and production facilities are
similar at TSL 1 and TSL 2, there is only a small decrease in INPV from
TSL 1 to TSL 2.
TSL 3 represents a 20 percent reduction in measured energy use for
product class 3A-BI and product class 7-BI. For product classes 5-BI
and 9-BI, TSL 2 represents a reduction of 15 percent and 25 percent,
respectively. DOE estimates the INPV impacts at TSL 3 to range from -
$65.8 million to -$80.5 million, or a change in INPV of -10.0 percent
to -12.2 percent. At this proposed level, the industry cash flow is
estimated to decrease by approximately 93.0 percent to $2.9 million,
compared to the base-case value of $41.5 million in the year leading up
to the proposed energy conservation standards.
The efficiency requirements for product class 5-BI do not change
from TSL 2 to TSL 3. However, the design options for all other built-in
refrigeration products at TSL 3 include the implementation of VIPs. The
widespread implementation of VIPs increases product and capital
conversion costs, which are estimated to be $65 million and $55 million
at TSL 3, respectively. Substantial changes to existing production
facilities would be required to manufacture products that meet the
required efficiencies at TSL 3. Most of the capital conversion costs
involve purchasing new production equipment and would result in high
stranded assets. The extensive changes that manufacturers would be
required to make to existing facilities and the projected erosion of
profitability if the additional production cost of implementing VIPs
does not yield additional profit result in a projected decrease in INPV
from TSL 3 to TSL 4. However, the industry value is high relative to
the required capital conversion costs and the cost of the additional
VIP panels is relatively small compared to the overall cost of the
products, which helps to mitigate some of the negative impacts caused
by these changes.
TSL 4 represents a 25 percent reduction in measured energy use over
the current energy conservation standards for the following product
classes: 3A-BI, 5-BI, and 9-BI. For product class 7-BI, TSL 4
represents a 20 percent reduction in measured energy use from current
energy conservation standards. DOE estimates the INPV impacts at TSL 4
to range from -$79.7 million to -$103.0 million, or a change in INPV of
-12.1 percent to -15.6 percent. At this proposed level, the industry
cash flow is estimated to decrease by approximately 117.8 percent to -
$7.4 million, compared to the base-case value of $41.5 million in the
year leading up to the proposed energy conservation standards.
The efficiency requirements for product class 7-BI do not change
from TSL 3 to TSL 4. The design options for the other built-in
refrigeration products all include the addition of more VIPs to reach
TSL 4. The design options analyzed for product classes 3A-BI and 5-BI
also include using a variable speed compressor. The complexity of
implementing multiple component swaps and the additional production
equipment necessary to use additional VIPs increases both the product
and capital conversion costs. These costs are estimated to be $75
million and $74 million at TSL 4, respectively, and result in a
decrease in INPV from TSL 3 to TSL 4.
TSL 5 represents max tech for the four built-in product classes.
This proposed level represents a reduction in measured energy use of 29
percent, 27 percent, 22 percent, and 27 percent, respectively, for
product classes 3A-BI, 5-BI, 7-BI, and 9-BI. DOE estimates the INPV
impacts at TSL 5 to range from -$84.9 million to -$120.3 million, or a
change in INPV of -12.9 percent to -18.3 percent. At this proposed
level, the industry cash flow is estimated to decrease by approximately
135.1 percent to -$14.6 million, compared to
[[Page 59546]]
the base-case value of $41.5 million in the year leading up to the
proposed energy conservation standards.
The design options analyzed by DOE include the widespread use of
VIPs to achieve the max-tech efficiency levels at TSL 5. Additionally,
product class 3A-BI uses multiple variable speed compressors. Since the
implementation of VIPs is both research and capital intensive, product
and capital conversion costs increase to $87 million and $84 million,
respectively. The complexity of implementing multiple component swaps
and the additional production equipment necessary to use additional
VIPs increases both the product and capital costs.
b. Impacts on Employment
DOE quantitatively assessed the impacts of potential amended energy
conservation standards on employment. DOE used the GRIM to estimate the
domestic labor expenditures and number of domestic production workers
in the base case and at each TSL from 2010 to 2043. DOE used
statistical data from the most recent U.S. Census Bureau's 2007
Economic Census, the results of the engineering analysis, and
interviews with manufacturers to determine the inputs necessary to
calculate industry-wide labor expenditures and domestic employment
levels. Labor expenditures involved with the manufacture of the product
are a function of the labor intensity of the product, the sales volume,
and an assumption that wages remain fixed in real terms over time.
In each GRIM, DOE used the labor content of each product and the
manufacturing production costs from the engineering analysis to
estimate the annual labor expenditures in the residential refrigeration
product industry. DOE used Census data and interviews with
manufacturers to estimate the portion of the total labor expenditures
that is attributable to U.S. (i.e., domestic) labor.
The production worker estimates in this section only cover workers
up to the line-supervisor level who are directly involved in
fabricating and assembling a product within an Original Equipment
Manufacturer (OEM) facility. Workers performing services that are
closely associated with production operations, such as material handing
with a forklift, are also included as production labor. DOE's estimates
only account for production workers who manufacture the specific
products covered by this rulemaking. For example, a worker on a wine
cooler line would not be included with the estimate of the number of
residential refrigeration workers.
The employment impacts shown in Table V.31 through Table V.34
represent the potential production employment that could result
following amended energy conservation standards. The upper end of the
results in these tables estimates the maximum change in the number of
production workers after amended energy conservation standards must be
met. The upper end of the results assumes manufacturers would continue
to produce the same scope of covered products in the same production
facilities. The upper end of the range also assumes that domestic
production does not shift to lower-labor-cost countries. Because there
is a real risk of manufacturers evaluating sourcing decisions in
response to amended energy conservation standards, the lower end of the
range of employment results in Table V.31 through Table V.34 includes
the estimated total number of U.S. production workers in the industry
who could lose their jobs if all existing production were moved outside
of the U.S. While the results present a range of employment impacts
following the compliance date of amended energy conservation standards,
the discussion below also includes a qualitative discussion of the
likelihood of negative employment impacts at the various TSLs. Finally,
the employment impacts shown are independent of the employment impacts
from the broader U.S. economy, which are documented in chapter 13,
Employment Impact Analysis, of the NOPR TSD.
i. Standard-Size Refrigerator-Freezer Employment Impacts
Using the GRIM, DOE estimates that in the absence of amended energy
conservation standards, there would be 8,517 domestic production
workers involved in manufacturing standard-size refrigerator-freezers
in 2014. Using 2007 Census Bureau data and interviews with
manufacturers, DOE estimates that approximately 42 percent of standard-
size refrigerator-freezers sold in the United States are manufactured
domestically. Table V.31 shows the range of the impacts of potential
amended energy conservation standards on U.S. production workers in the
standard-size refrigerator-freezer market.
Table V.31--Potential Changes in the Total Number of Domestic Standard-Size Refrigerator-Freezer Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------------------------------
Base case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 8,517 8,300 8,258 8,309 8,236 8,088
2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers ............... (217)-(8,517) (259)-(8,517) (208)-(8,517) (281)-(8,517) (429)-(8,517)
in 2014 *........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
All examined TSLs show relatively minor impacts on domestic
employment levels at the lower end of the range. Most of the design
options used in the engineering analysis involve the swapping of
components in baseline units with more efficient parts for top-mounted,
side-by-side, and bottom-mounted refrigerator-freezers. These component
swaps for these design options add primarily material costs and do not
greatly impact the labor content of the baseline products. The
relatively small decreases in domestic production employment for the
lower end of the range of the employment impacts arise from higher
product prices lowering shipments the year the standard becomes
effective. At these higher TSLs, the effects of lower shipments more
than offset the additional product labor that is required to
manufacture products that use VIP panels.
During interviews, manufacturers indicated that their domestic
employment levels could be impacted under two scenarios: (1) The
[[Page 59547]]
widespread adoption of VIPs or (2) significant capital conversion costs
that would force them to consider non-domestic manufacturing locations
once the compliance date for the amended energy conservation standards
arrive. The widespread adoption of VIPs would increase the labor
content of today's products. The labor content of products with VIPs
increases because of the extra handling steps that would be required to
ensure that VIPs are not damaged during production. Because of the
competitive nature of the industry, manufacturers believed the extra
labor costs could force them to move their remaining domestic
production to Mexico to take advantage of the cheaper labor.
Manufacturers also indicated that large conversion costs would
likely force them to consider investing in lower-labor-cost countries.
For most product categories, there is a range of efficiency levels that
can be met with relatively low-cost components (as analyzed in the
engineering analysis). Beyond these levels, manufacturers would need to
decide to follow the MPC design options analyzed in the engineering
analysis for each product category. Manufacturers indicated the
analyzed design options that use multiple VIPs would involve
significant capital conversion costs and add very large material costs
to their products that would likely result in the relocation of their
production facilities abroad. However, manufacturers indicated they
would face even larger capital conversion costs at lower efficiencies
if they redesigned their products with thicker walls. While not
analyzed as a design option for standard-size refrigerator-freezers,
increasing wall thickness would likely result in moving domestic
production outside of the U.S. at lower efficiency levels.
ii. Standard-Size Freezer Employment Impacts
Using the GRIM, DOE estimates that, in the absence of amended
energy conservation standards, there would be 1,904 standard-size
freezer production workers in the U.S. in 2014. Using the 2007 Census
data and interviews with manufacturers, DOE estimates that
approximately 80 percent of standard-size freezers sold in the United
States are manufactured domestically. Table V.32 shows the impacts of
amended energy conservation standards on U.S. production workers in the
standard-size freezer market.
Table V.32--Potential Changes in the Total Number of Domestic Standard-Size Freezer Production Workers in 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------------------------------
Base case 1 2 3 4 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2014 (without 1,904 1,850 1,781 1,734 1,634 1,508
changes in production locations)...........................
Potential Changes in Domestic Production Workers in 2014 *.. ............... (54)-(1,904) (123)-(1,904) (170)-(1,904) (270)-(1,904) (396)-(1,904)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
Similar to standard-size refrigerator-freezers, there are
relatively small decreases in employment at the lower end of the range
of employment impacts. These slight declines are caused by higher
prices that drive lower shipments once manufacturers must meet the
amended energy conservation standard. Standard-size freezer
manufacturers also indicated that domestic production could be shifted
abroad with any efficiency level that required large capital conversion
costs. At TSL 1, DOE does not expect substantial changes to domestic
employment in the standard-size freezer market if manufacturers use the
design options listed in the engineering analysis to reach the
efficiency requirements at this TSL.
However, at TSL 2 through TSL 5, manufacturers indicated that there
could be domestic employment impacts depending on the design pathway
used to reach the required efficiencies. At TSL 2 and above, the
engineering analysis assumes that manufacturers would have to use wall
thickness changes to reach the required efficiencies. Manufacturers
indicated that because these products are typically low-end, they would
likely follow the design pathways in the engineering analysis and
increase the wall insulation thickness to reach higher efficiencies in
order to avoid having to pass large price increases on to consumers.
While this would result in extremely large conversion costs and would
more likely lead to manufacturers moving production abroad,
manufacturers believed this strategy would help to maintain sales
volumes.
iii. Compact Refrigeration Product Employment Impacts
DOE's research suggests that a limited percentage of compact
refrigerators and refrigerator-freezers are made domestically (see
Table V.33). The overwhelming majority of products are imported.
Manufacturers with domestic manufacturing facilities tend to source or
import their compact products. The small employment numbers are mostly
from remaining domestic production of compact chest freezers. As a
result, amended energy conservation standards for compact refrigerators
or refrigerator-freezers are unlikely to noticeably alter domestic
employment levels.
Table V.33--Potential Changes in the Total Number of Domestic Compact Refrigeration Product Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------
Base case 1 2 3 4 5
----------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2014 31 30 29 29 28 46
(without changes in production locations)..........
[[Page 59548]]
Potential Changes in Domestic Production Workers in ........... (1)-(31) (2)-(31) (2)-(31) (3)-(31) 15-(31)
2014*..............................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
iv. Built-In Refrigeration Product Employment Impacts
Using the GRIM, DOE estimates that, in the absence of amended
energy conservation standards, there would be 1,320 U.S. workers
manufacturing built-in refrigeration products in 2014. Using the 2007
Census data and interviews with manufacturers, DOE estimates that
approximately 94 percent of the built-in refrigeration products sold in
the United States are manufactured domestically. Table V.34 shows the
impacts of amended energy conservation standards on U.S. production
workers in the built-in refrigeration market.
Table V.34--Potential Changes in the Total Number of Domestic Built-In Refrigeration Product Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------------------------
Base case 1 2 3 4 5
----------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic 1,320 1,320 1,319 1,327 1,331 1,357
Production Workers in 2014
(without changes in
production locations)......
Potential Changes in .............. 0-(1,320) (1)-(1,320) 7-(1,320) 11-(1,320) 37-(1,320)
Domestic Production Workers
in 2014*...................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
Employment in the built-in refrigeration market follows a pattern
similar to that seen in the market for standard-size refrigerator-
freezers and standard-size freezers at lower TSLs. At TSL 1 and TSL 2,
higher prices result in fewer shipments, and a consequent reduction in
labor expenditures that more than offsets the additional labor required
to manufacture products with VIPs. However, at TSL 3 and above, the use
of additional VIPs in built-in refrigeration products requires enough
additional labor to cause a slight increase in the number of domestic
production workers. Because built-in products are high-end products
with far fewer shipments, it is less likely that manufacturers would
choose to move all production facilities in response to amended energy
conservation standards. The higher margins and profit earned in this
market also make it more likely that manufacturers could earn a return
on the investments required to reach the amended energy conservation
standards and invest in existing facilities rather than move production
abroad.
c. Impacts on Manufacturing Capacity
Manufacturers indicated that design changes involving thicker walls
or multiple VIP panels would require substantial changes to their
current manufacturing process. While these technologies would require
the purchase of millions of dollars of production equipment, most
manufacturers indicated they would likely be able to make the required
changes in between the announcement of the final rule and compliance
date of an amended energy conservation standard. For most product
classes, the design changes and investments required by the proposed
rule are similar in magnitude to the introduction of a new product
line. Manufacturers have experience with the design options involving
VIPs, but not at the scale that would be required if the proposed
rule's provisions are adopted. The primary capacity concern of
manufacturers is the ability of their suppliers, particularly
manufacturers of VIPs and more efficient compressors, to ramp up
production in time to meet the amended energy conservation standard.
DOE analyzed VIP supply issues in section IV.B.1.c. Issues associated
with supply of compressors are discussed in section IV.B.1, above.
d. Impacts on Sub-Group of Manufacturers
As discussed in section IV.I.1.c, using average cost assumptions to
develop an industry cash-flow estimate is inadequate for assessing
differential impacts among manufacturer subgroups. Small manufacturers,
niche equipment manufacturers, and manufacturers that exhibit a cost
structure substantially different from the industry average could be
affected disproportionately. For this rulemaking, DOE used the results
of the industry characterization to identify any subgroups of
refrigerator manufacturers that exhibit similar characteristics
different from the industry as a whole. The only such subgroup DOE
identified was built-in manufacturers.
However, as discussed previously, DOE is proposing to establish
separate product classes for built-in products and is presenting
separate analytical results for those products classes. Therefore, the
MIA results DOE presents for those product classes already allow DOE to
examine the MIA impacts on this potential manufacturer subgroup.
Section V.B.2 presents a more detailed discussion of the results for
built-in product classes.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of several impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy
[[Page 59549]]
conservation standards, other regulations can significantly affect
manufacturers' financial health. Multiple regulations affecting the
same manufacturer can strain profits and can lead companies to abandon
product lines or markets with lower expected future returns than
competing products. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
During previous stages of this rulemaking DOE identified a number
of requirements with which manufacturers of these refrigeration
products must comply and which take effect within three years of the
anticipated effective date of the amended standards. The following
section briefly addresses comments DOE received with respect to
cumulative regulatory burden and summarizes other key related concerns
manufacturers raised during interviews.
Sub Zero stated that the cumulative regulatory burden is a serious
concern for appliance manufacturers. Sub Zero recommended that DOE
include the cost and burden of these upcoming requirements when
assessing manufacturers' capacity to meet proposed new standards. (Sub
Zero, No. 40 at p. 9)
DOE notes that it routinely assesses the cumulative regulatory
burden on manufacturers in its analysis and the results of this
assessment are discussed in this section of today's NOPR and in chapter
12 of the NOPR TSD. The cumulative regulatory burden section of the TSD
shows that manufacturers of residential refrigeration products also
have significant market shares of other products will be affected by
either ongoing or pending rulemakings that will establish amended
energy conservation standards. These parallel rulemakings will likely
require manufacturers to comply with amended standards within three
years of the anticipated compliance date for residential refrigeration
products.
Part of this assessment included investigating and tracking what
manufacturers expressed during interviews as one of the most critical
potential elements of regulatory burden--the near-term possibility of
changes to HFC availability. As stated in section IV.B.1.b, DOE is
prepared to address this issue by evaluating the efficiency improvement
and trial standard levels for products using alternative foam
insulation materials, if legislation or some other legal requirements
banning HFCs should be enacted or otherwise effective. A further
complication that DOE tracked was the use of isobutane refrigerant as a
design option. Isobutane could be used as an alternative refrigerant to
the HFC-based refrigerants currently used by the industry. The current
limit for an isobutane charge appears to be sufficient as a design
option only for smaller products (see the discussion in section
IV.B.1.a).
Several manufacturers also expressed concern during interviews
about the overall volume of DOE energy conservation standards with
which they must comply. Most refrigerator manufacturers also make a
full range of appliances and share engineering and other resources with
these other internal manufacturing divisions for different appliances
(including certification testing for regulatory compliance). Many of
these other appliances, such as kitchen ranges and ovens, clothes
washers, clothes dryers, and microwave ovens, are also subject to
recently amended or soon-to-be amended Federal energy conservation
standards. Some of the test procedures for these other products are
also currently being amended through ongoing rulemakings that would, if
adopted, incorporate standby and off mode energy consumption
measurements.\46\ Manufacturers were concerned that the other products
facing amended or new energy conservation standards would compete for
the same engineering and financial resources, especially if the
proposed refrigeration product standards would cause manufacturers to
build new production lines instead of repurposing existing ones.
---------------------------------------------------------------------------
\46\ The schedule for all DOE rulemakings can be found at http://www1.eere.energy.gov/buildings/appliance_standards/schedule_setting.html.
---------------------------------------------------------------------------
While DOE acknowledges that rulemakings for other covered products
could affect the resources available to residential refrigeration
manufacturers, DOE has not included manufacturers' conversion costs
related to complying with other rulemakings as a cash outflow in the
GRIM. This method is consistent with how DOE treats revenue generated
from sales of those products. However, DOE addresses the residential
refrigeration manufacturers' conversion costs related to complying with
other DOE rulemakings that have compliance dates falling within three
years of the anticipated compliance date of this rulemaking in chapter
12 of the NOPR TSD. DOE has quantified these other conversion costs
where applicable and considered those costs in its decision to propose
the levels presented in today's rulemaking.
Manufacturers also expressed concern about the increasing
stringency of international energy efficiency standards and materials
requirements. Specifically, changing energy standards in Canada and
elsewhere abroad also increase the regulatory burden on manufacturers
by duplicating testing requirements. Many manufacturers would prefer
more global standardization and harmonization of standards and testing.
Variations among testing requirements often require that manufacturers
refit or redesign test facilities so that tests tailored for specific
testing requirements can be performed. The resources expended on these
refits or redesigns could have been used for new product development.
Examples of European standards that create additional compliance costs
for manufacturers that compete in Europe include the Restriction on the
use of Hazardous Substances (RoHS), Waste Electrical and Electronic
Equipment (WEEE), and the Registration, Evaluation, Authorization, and
restriction of Chemicals (REACH).
DOE discusses these and other requirements, and includes the full
details of the cumulative regulatory burden, in chapter 12 of the NOPR
TSD.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the national energy savings attributable to potential
standards for refrigeration products, DOE compared the energy
consumption of these products under the base case to their anticipated
energy consumption under each TSL. Tables V.35 through V.38 present
DOE's forecasts of the national energy savings for each TSL, which were
calculated using the approach described in section IV.G. Chapter 10 of
the NOPR TSD presents tables that also show the magnitude of the energy
savings if the savings are discounted at rates of seven and three
percent. Discounted energy savings represent a policy perspective in
which energy savings realized farther in the future are less
significant than energy savings realized in the nearer term.
[[Page 59550]]
Table V.35--Standard-Size Refrigerator-Freezers: Cumulative National Energy Savings in Quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-mount refrigerator- Bottom-mount refrigerator- Side-by-side refrigerator-
freezers freezers freezers
Trial standard level -----------------------------------------------------------------------------------------
Product classes 1, 1A, 2, 3, Product classes 5, 5A, and
3A, 3I and 6 5I Product classes 4, 4I, and 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................. 1.62 0.09 0.54
2............................................................. 1.62 0.09 0.88
3............................................................. 2.07 0.09 0.88
4............................................................. 2.49 0.45 1.20
5............................................................. 2.90 0.65 1.39
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.36--Standard-Size Freezers: Cumulative National Energy Savings
in Quads
------------------------------------------------------------------------
Upright Chest freezers
freezers ----------------
Trial standard level -----------------
Product classes Product classes
8 and 9 10 and 10A
------------------------------------------------------------------------
1..................................... 0.43 0.28
2..................................... 0.66 0.36
3..................................... 0.77 0.43
4..................................... 0.86 0.49
5..................................... 0.89 0.56
------------------------------------------------------------------------
Table V.37--Compact Refrigeration Products: Cumulative National Energy
Savings in Quads
------------------------------------------------------------------------
Compact Compact
refrigerators freezers
---------------------------------
Trial standard level Product classes
11, 11A, 12, Product classes
13, 13A, 14, 16, 17, 18
and 15
------------------------------------------------------------------------
1..................................... 0.27 0.03
2..................................... 0.34 0.03
3..................................... 0.39 0.04
4..................................... 0.47 0.07
5..................................... 0.50 0.09
------------------------------------------------------------------------
Table V.38--Built-In Refrigeration Products: Cumulative National Energy Savings in Quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in all Built-in bottom-mount Built-in side-by-side Built-in upright
refrigerators refrigerator-freezers refrigerator-freezers freezers
Trial standard level -----------------------------------------------------------------------------------------------------------
Product classes 5-BI and Product classes 4-BI, 4I-
Product class 3A-BI 5I-BI BI and 7-BI Product class 9-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................... 0.00 0.00 0.01 0.00
2........................................... 0.01 0.00 0.01 0.01
3........................................... 0.01 0.00 0.03 0.01
4........................................... 0.01 0.01 0.03 0.01
5........................................... 0.01 0.02 0.04 0.01
--------------------------------------------------------------------------------------------------------------------------------------------------------
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV to the Nation of the total costs
and savings for consumers that would result from particular standard
levels for refrigeration products. In accordance with the OMB's
guidelines on regulatory analysis (OMB Circular A-4, section E,
September 17, 2003), 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, and reflects the returns on real estate and small business
capital as well as corporate capital. DOE used this discount rate to
approximate the opportunity cost of capital in the private sector,
since recent OMB analysis has found the average rate of return on
capital to be near this rate. In addition, DOE used the 3-percent rate
to capture the potential effects of standards on private consumption
(e.g., through higher prices for products and the purchase of reduced
amounts of energy). This rate represents the rate at which society
discounts future consumption flows to their present value. It can be
approximated by the real rate of return on long-term government debt
(i.e., yield on 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 last 30 years.
Tables V.39 through V.46 show the consumer NPV results for each TSL
DOE considered for refrigeration products, using both a 7-percent and a
3-percent discount rate. In each case, the impacts cover the lifetime
of products purchased in 2014-2043. See
[[Page 59551]]
chapter 10 of the NOPR TSD for more detailed NPV results.
Table V.39--Cumulative Net Present Value of Consumer Benefits for Standard-Size Refrigerator-Freezers, 3-Percent
Discount Rate
----------------------------------------------------------------------------------------------------------------
Top-mount refrigerator- Bottom-mount Side-by-side
freezers refrigerator-freezers refrigerator-freezers
Trial standard level -----------------------------------------------------------------------------
Product class 1, 1A, 2, Product classes 5, 5A, Product classes 4, 4I,
3, 3A, 3I and 6 and 5I and 7
----------------------------------------------------------------------------------------------------------------
billion 2009 dollars
-----------------------------------------------------------------------------
1................................. 6.68 0.79 4.37
2................................. 6.68 0.79 3.62
3................................. 6.00 0.79 3.62
4................................. (1.95) (3.22) (2.35)
5................................. (14.63) (7.32) (7.38)
----------------------------------------------------------------------------------------------------------------
Table V.40--Cumulative Net Present Value of Consumer Benefits for Standard-Size Refrigerator-Freezers, 7-Percent
Discount Rate
----------------------------------------------------------------------------------------------------------------
Top-mount refrigerator- Bottom-mount Side-by-side
freezers refrigerator-freezers refrigerator-freezers
Trial standard level -----------------------------------------------------------------------------
Product classes 1, 1A, Product classes 5, 5A, Product classes 4, 4I,
2, 3, 3A, 3I and 6 and 5I and 7
----------------------------------------------------------------------------------------------------------------
billion 2009 dollars
-----------------------------------------------------------------------------
1................................. 0.85 0.27 1.42
2................................. 0.85 0.27 0.46
3................................. (0.32) 0.27 0.46
4................................. (5.36) (2.43) (3.26)
5................................. (12.86) (4.95) (6.26)
----------------------------------------------------------------------------------------------------------------
Table V.41--Cumulative Net Present Value of Consumer Benefits for
Standard-Size Freezers, 3-Percent Discount Rate
------------------------------------------------------------------------
Upright Chest freezers
freezers -----------------
Trial standard level -----------------
Product classes Product classes
8 and 9 10 and 10A
------------------------------------------------------------------------
billion 2009 dollars
----------------------------------
1.................................... 3.91 2.74
2.................................... 5.42 2.37
3.................................... 5.13 2.75
4.................................... 4.20 1.82
5.................................... 0.67 (0.16)
------------------------------------------------------------------------
Table V.42--Cumulative Net Present Value of Consumer Benefits for
Standard-Size Freezers, 7-Percent Discount Rate
------------------------------------------------------------------------
Upright freezers Chest freezers
-----------------------------------
Trial standard level Product classes Product classes
8 and 9 10 and 10A
------------------------------------------------------------------------
billion 2009 dollars
-----------------------------------
1................................... 1.25 0.90
2................................... 1.57 0.54
3................................... 1.22 0.59
4................................... 0.55 0.00
5................................... (1.42) (1.21)
------------------------------------------------------------------------
[[Page 59552]]
Table V.43--Cumulative Net Present Value of Consumer Benefits for
Compact Refrigeration Products, 3-Percent Discount Rate
------------------------------------------------------------------------
Compact Compact
refrigerators freezers
-----------------------------------
Trial standard level Product classes
11, 11A, 12, 13, Product classes
13A, 14, and 15 16, 17, 18
------------------------------------------------------------------------
billion 2009 dollars
-----------------------------------
1................................... 1.25 0.17
2................................... 0.69 0.17
3................................... 0.82 0.14
4................................... (0.64) (0.25)
5................................... (4.49) (0.96)
------------------------------------------------------------------------
Table V.44--Cumulative Net Present Value of Consumer Benefits for
Compact Refrigeration Products, 7-Percent Discount Rate
------------------------------------------------------------------------
Compact Compact
refrigerators freezers
-----------------------------------
Trial standard level Product classes
11, 11A, 12, 13, Product classes
13A, 14, and 15 16, 17, 18
------------------------------------------------------------------------
billion 2009 dollars
-----------------------------------
1................................... 0.50 0.07
2................................... 0.18 0.07
3................................... 0.22 0.04
4................................... (0.59) (0.19)
5................................... (2.68) (0.60)
------------------------------------------------------------------------
Table V.45--Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 3-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in all Built-in bottom-mount Built-in side-by-side Built-in upright freezers
refrigerators refrigerator-freezers refrigerator-freezers ---------------------------
Trial standard level ------------------------------------------------------------------------------------
Product classes 5-BI and Product classes 4-BI, 4I- Product class 9-BI
Product class 3A-BI 5I-BI BI and 7-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
billion 2009 dollars
---------------------------------------------------------------------------------------------------------------
1....................................... 0.03 0.02 0.04 0.04
2....................................... 0.05 0.00 0.04 0.04
3....................................... (0.01) 0.00 (0.43) (0.02)
4....................................... (0.10) (0.36) (0.43) (0.02)
5....................................... (0.17) (0.54) (0.83) (0.07)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.46--Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 7-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in all refrigerators Built-in bottom-mount Built-in side-by-side Built-in upright freezers
(3A-BI) refrigerator-freezers refrigerator-freezers (9-BI)
Trial standard level ---------------------------------------------------------------------------------------------------------------
Product classes 5-BI and Product classes 4-BI, 4I-
Product class 3A-BI 5I-BI BI and 7-BI Product class 9-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
billion 2009 dollars
---------------------------------------------------------------------------------------------------------------
1....................................... 0.01 0.01 0.01 0.02
2....................................... 0.02 (0.00) 0.01 0.00
3....................................... (0.02) (0.00) (0.28) (0.03)
4....................................... (0.07) (0.21) (0.28) (0.03)
5....................................... (0.11) (0.32) (0.51) (0.06)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 59553]]
c. Indirect Impacts on Employment
DOE develops estimates of the indirect employment impacts of
potential standards on the economy in general. As discussed above, DOE
expects amended energy conservation standards for refrigeration
products to reduce energy bills for consumers and the resulting net
savings to be redirected to other forms of economic activity. These
expected shifts in spending and economic activity could affect the
demand for labor. As described in section IV.J, above, to estimate
these effects DOE used an input/output model of the U.S. economy. Table
V.47 presents the estimated net indirect employment impacts in 2020 and
2043 for the TSLs that DOE considered in this rulemaking. Chapter 13 of
the NOPR TSD presents more detailed results.
Table V.47--Net Increase in Jobs from Indirect Employment Effects Under Refrigeration Product TSLs
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
thousands
-------------------------------------------------------------------------------
Standard-Size Refrigerator-
Freezers:
2020........................ 1.30 1.07 0.74 -2.87 -7.16
2043........................ 10.99 12.05 13.49 12.95 10.34
Standard-Size Freezers:
2020........................ 0.72 0.69 0.69 0.18 -0.97
2043........................ 4.34 5.79 5.79 6.77 5.80
Compact Refrigeration Products:
2020........................ 0.46 0.43 0.49 0.29 -0.45
2043........................ 1.24 1.26 1.44 1.21 0.14
Built-In Refrigeration Products:
2020........................ 0.02 0.01 -0.10 -0.18 -0.31
2043........................ 0.10 0.13 0.08 0.01 -0.13
----------------------------------------------------------------------------------------------------------------
The input/output model suggests that today's proposed standards are
likely to increase the net demand for labor in the economy. However,
the model suggests that the projected gains are very small relative to
total national employment (currently approximately 120 million).
Moreover, neither the BLS data nor the input/output model DOE uses
includes the quality or wage level of the jobs. Therefore, because the
analysis indicates an increased demand for labor would likely result
from the amended energy conservation standards under consideration in
this rulemaking, DOE has tentatively concluded that the proposed
standards are likely to produce employment benefits sufficient to
offset fully any adverse impacts on employment in the manufacturing
industry for the refrigeration products that are the subject of this
rulemaking.
4. Impact on Utility or Performance of Products
As presented in section III.D.1.d of this notice, DOE concluded
that none of the TSLs considered in this notice would substantially
reduce the utility or performance of the products under consideration
in this rulemaking. However, manufacturers may reduce the availability
of features that increase energy use, such as multiple drawers.
Manufacturers currently offer refrigeration products that meet or
exceed the proposed standards for most of the product classes. (42
U.S.C. 6295(o)(2)(B)(i)(IV))
5. Impact of Any Lessening of Competition
DOE has also considered any lessening of competition that is likely
to result from amended standards. The Attorney General determines the
impact, if any, of any lessening of competition likely to result from a
proposed standard, and transmits such determination to the Secretary,
together with an analysis of the nature and extent of such impact. (42
U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
To assist the Attorney General in making such determination, DOE
has provided DOJ with copies of this NOPR and the TSD for review. DOE
will consider DOJ's comments on the proposed rule in preparing the
final rule, and DOE will publish and respond to DOJ's comments in that
document.
6. Need of the Nation to Conserve Energy
An improvement in the energy efficiency of the products subject to
today's rule is likely to improve the security of the Nation's energy
system by reducing overall demand for energy. Reduced electricity
demand may also improve the reliability of the electricity system. As a
measure of this reduced demand, Table V.48 presents the estimated
reduction in generating capacity in 2043 for the TSLs that DOE
considered in this rulemaking.
Table V.48--Reduction in Electric Generating Capacity in 2043 Under Refrigeration Product TSLs
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Gigawatts
-------------------------------------------------------------------------------
Standard-Size Refrigerator- 2.28 2.63 3.10 4.23 5.07
Freezers.......................
Standard-Size Freezers.......... 0.740 0.740 1.25 1.42 1.53
Compact Refrigeration Products.. 0.271 0.324 0.383 0.475 0.506
Built-In Refrigeration Products. 0.019 0.027 0.054 0.067 0.080
----------------------------------------------------------------------------------------------------------------
DOE used NEMS-BT to assess the impacts on electricity prices of the
reduced need for new electric power plants and infrastructure projected
to result from standards. The projected impacts on prices, and their
value to
[[Page 59554]]
electricity consumers, are presented in chapter 14 and chapter 10,
respectively, of the NOPR TSD. Although the aggregate benefits for all
electricity users are potentially large, there may be negative effects
on the actors involved in electricity supply. Because there is
uncertainty about the extent to which the calculated impacts from
reduced electricity prices would be a transfer from the actors involved
in electricity supply to electricity consumers, DOE has concluded that,
at present, it should not assign a heavy weight to this factor in
considering the economic justification of standards on refrigeration
products.
Energy savings from amended standards for refrigeration products
could also produce environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases associated with
electricity production. Table V.49 provides DOE's estimate of
cumulative CO2, NOX, and Hg emissions reductions
projected to result from the TSLs considered in this rulemaking. DOE
reports annual CO2, NOX, and Hg emissions
reductions for each TSL in chapter 15 of the NOPR TSD.
As discussed in section IV.M, DOE did not report SO2
emissions reductions from power plants because there is uncertainty
about the effect of energy conservation standards on the overall level
of SO2 emissions in the United States due to SO2
emissions caps. DOE also 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.
Table V.49--Summary of Emissions Reduction Estimated for Refrigeration Product TSLs (Cumulative for 2014 Through
2043)
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-
Freezers:
CO2 (Mt).................... 154 177 208 283 338
NOX (kt).................... 124 142 168 228 272
Hg (t)...................... 0.79 0.91 1.07 1.45 1.73
Standard-Size Freezers:
CO2 (Mt).................... 48 69 81 92 99
NOX (kt).................... 39 55 65 74 79
Hg (t)...................... 0.24 0.34 0.41 0.47 0.50
Compact Refrigeration Products:
CO2 (Mt).................... 20 24 28 35 39
NOX (kt).................... 16 19 23 28 31
Hg (t)...................... 0.10 0.12 0.15 0.19 0.21
Built-In Refrigeration Products:
CO2 (Mt).................... 1.23 1.79 3.58 4.45 5.32
NOX (kt).................... 0.99 1.44 2.88 3.58 4.28
Hg (t)...................... 0.01 0.01 0.02 0.02 0.03
----------------------------------------------------------------------------------------------------------------
As part the analysis for this proposed rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX that DOE estimated for each of the TSLs considered.
As discussed in section IV.M, DOE used values for the SCC developed by
an interagency process. The four values for CO2 emissions
reductions resulting from that process (expressed in 2007$) are $4.7/
ton (the average value from a distribution that uses a 5-percent
discount rate), $21.4/ton (the average value from a distribution that
uses a 3-percent discount rate), $35.1/ton (the average value from a
distribution that uses a 2.5-percent discount rate), and $64.9/ton (the
95th-percentile value from a distribution that uses a 3-percent
discount rate). These values correspond to the value of emission
reductions in 2010; the values for later years are higher due to
increasing damages as the magnitude of climate change increases.
Table V.50 through Table V.53 present the global values of
CO2 emissions reductions at each TSL. For each of the four
cases, DOE calculated a present value of the stream of annual values
using the same discount rate as was used in the studies upon which the
dollar-per-ton values are based. DOE calculated domestic values as a
range from 7 percent to 23 percent of the global values, and these
results are presented in Table V.54 through Table V.57.
Table V.50--Standard-Size Refrigerator-Freezers: Estimates of Global Present Value of CO2 Emissions Reduction in
2014-2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$
-----------------------------------------------------------------------
TSL 3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average * rate, average * rate, average * percentile *
----------------------------------------------------------------------------------------------------------------
1....................................... 526 2,696 4,570 8,223
2....................................... 605 3,104 5,261 9,465
3....................................... 713 3,653 6,192 11,140
4....................................... 970 4,975 8,432 15,170
5....................................... 1,160 5,947 10,080 18,135
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution. Values presented in the table are based on escalating 2007$ to
2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
[[Page 59555]]
Table V.51--Standard-Size Freezers: Estimates of Global Present Value of CO2 Emissions Reduction in 2014-2043
Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
----------------------------------------------------------------------------------------------------------------
1............................................... 164 840 1,425 2,562
2............................................... 234 1,205 2,043 3,673
3............................................... 277 1,421 2,409 4,332
4............................................... 314 1,615 2,738 4,923
5............................................... 337 1,733 2,938 5,283
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution. Values presented in the table are based on escalating 2007$ to
2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
Table V.52--Compact Refrigeration Products: Estimates of Global Present Value of CO2 Emissions Reduction in 2014-
2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
----------------------------------------------------------------------------------------------------------------
1............................................... 65 333 564 1,015
2............................................... 78 400 678 1,220
3............................................... 93 475 804 1,448
4............................................... 117 598 1,013 1,823
5............................................... 130 665 1,126 2,029
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution. Values presented in the table are based on escalating 2007$ to
2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
Table V.53--Built-In Refrigeration Products: Estimates of Global Present Value of CO2 Emissions Reduction in
2014-2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
----------------------------------------------------------------------------------------------------------------
1............................................... 4 22 37 66
2............................................... 6 31 53 96
3............................................... 12 63 106 191
4............................................... 15 78 132 238
5............................................... 18 93 158 284
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution. Values presented in the table are based on escalating 2007$ to
2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
Table V.54--Standard-Size Refrigerator-Freezers: Estimates of Domestic Present Value of CO2 Emissions Reduction
in 2014-2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$ *
-------------------------------------------------------------------------------
TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average ** average ** rate, average ** 95th percentile **
----------------------------------------------------------------------------------------------------------------
1............................... 37 to 121......... 189 to 620........ 320 to 1,051...... 576 to 1,891.
2............................... 42 to 139......... 217 to 714........ 368 to 1,210...... 663 to 2,177.
3............................... 50 to 164......... 256 to 840........ 433 to 1,424...... 780 to 2,562.
4............................... 68 to 223......... 348 to 1,144...... 590 to 1,939...... 1,062 to 3,489.
5............................... 81 to 267......... 416 to 1,368...... 706 to 2,318...... 1,269 to 4,171.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
drawn from a different part of the distribution. Values presented in the table are based on escalating 2007$
to 2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
[[Page 59556]]
Table V.55--Standard-Size Freezers: Estimates of Domestic Present Value of CO2 Emissions Reduction in 2014-2043
Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$ *
-------------------------------------------------------------------------------
TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average ** average ** rate, average ** 95th percentile **
----------------------------------------------------------------------------------------------------------------
1............................... 11 to 38.......... 59 to 193......... 100 to 328........ 179 to 589.
2............................... 16 to 54.......... 84 to 277......... 143 to 470........ 257 to 845.
3............................... 19 to 64.......... 99 to 327......... 169 to 554........ 303 to 996.
4............................... 22 to 72.......... 113 to 371........ 192 to 630........ 345 to 1,132.
5............................... 24 to 78.......... 121 to 398........ 206 to 676........ 370 to 1,215.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
drawn from a different part of the distribution. Values presented in the table are based on escalating 2007$
to 2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
Table V.56--Compact Refrigeration Products: Estimates of Domestic Present Value of CO2 Emissions Reduction in
2014-2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$ *
-------------------------------------------------------------------------------
TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average ** average ** rate, average ** 95th percentile **
----------------------------------------------------------------------------------------------------------------
1............................... 5 to 15........... 23 to 77.......... 39 to 130......... 71 to 233.
2............................... 5 to 18........... 28 to 92.......... 47 to 156......... 85 to 281.
3............................... 6 to 21........... 33 to 109......... 56 to 185......... 101 to 333.
4............................... 8 to 27........... 42 to 137......... 71 to 233......... 128 to 419.
5............................... 9 to 30........... 47 to 153......... 79 to 259......... 142 to 467.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
drawn from a different part of the distribution. Values presented in the table are based on escalating 2007$
to 2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
Table V.57--Built-In Refrigeration Products: Estimates of Domestic Present Value of CO2 Emissions Reduction in
2014-2043 Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2009$ *
-------------------------------------------------------------------------------
TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average** average** rate, average** 95th percentile**
----------------------------------------------------------------------------------------------------------------
1............................... 0 to 1............ 2 to 5............ 3 to 8............ 5 to 15.
2............................... 0 to 1............ 2 to 7............ 4 to 12........... 7 to 22.
3............................... 1 to 3............ 4 to 14........... 7 to 24........... 13 to 43.
4............................... 1 to 4............ 5 to 18........... 9 to 30........... 17 to 55.
5............................... 1 to 4............ 7 to 21........... 11 to 36.......... 20 to 65.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
drawn from a different part of the distribution. Values presented in the table are based on escalating 2007$
to 2009$ for consistency with other values presented in this notice, and incorporate the escalation of the SCC
over time.
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 continues to evolve rapidly. Thus, any value placed in
this rulemaking on reducing CO2 emissions is subject to
change. DOE, together with other Federal agencies, will continue to
review various methodologies for estimating the monetary value of
reductions in CO2 and other GHG emissions. This ongoing
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this NOPR the most
recent values and analyses resulting from the ongoing 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 refrigeration
products. The dollar-per-ton values that DOE used are discussed in
section IV.M. Table V.58 presents the cumulative present values for
each TSL calculated using seven-percent and three-percent discount
rates.
[[Page 59557]]
Table V.58--Estimates of Present Value of NOX Emissions Reduction in 2014-2043 Under Refrigeration Product Trial Standard Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
million 2009$
--------------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-
Freezers:
Using 7% discount rate......... 11 to 117............. 13 to 135............. 15 to 159............ 21 to 217............ 25 to 260.
Using 3% discount rate......... 27 to 278............. 31 to 320............. 37 to 376............ 50 to 513............ 60 to 614.
Standard-Size Freezers:
Using 7% discount rate......... 3.5 to 36............. 5.0 to 52............. 5.9 to 61............ 6.8 to 69............ 7.3 to 75.
Using 3% discount rate......... 8.4 to 86............. 12 to 123............. 14 to 146............ 16 to 166............ 17 to 178.
Compact Refrigeration Products:
Using 7% discount rate......... 1.3 to 13............. 1.5 to 16............. 1.8 to 19............ 2.3 to 24............ 2.7 to 28.
Using 3% discount rate......... 3.3 to 33............. 3.9 to 40............. 4.7 to 48............ 5.9 to 60............ 6.6 to 68.
Built-In Refrigeration Products:
Using 7% discount rate......... 0.1 to 0.9............ 0.1 to 1.4............ 0.3 to 2.7........... 0.3 to 3.4........... 0.4 to 4.0.
Using 3% discount rate......... 0.2 to 2.2............ 0.3 to 3.2............ 0.6 to 6.5........... 0.8 to 8.0........... 0.9 to 9.6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.59 shows an example of the calculation of the combined NPV including
benefits from emissions reductions for the case of TSL 3 for standard-
size refrigerator-freezers. Table V.60 and Table V.61 present the NPV
values that would result if DOE were to add the estimates of the
potential economic benefits resulting from reduced CO2 and
NOX emissions in each of four valuation scenarios to the NPV
of consumer savings calculated for each TSL considered in this
rulemaking, at both a seven-percent and three-percent discount rate.
The CO2 values used in the columns of each table correspond
to the four scenarios for the valuation of CO2 emission
reductions presented in section IV.M.
Table V.59--Adding Net Present Value of Consumer Savings to Present
Value of Monetized Benefits from CO2 and NOX Emissions Reductions at TSL
3 for Standard-Size Refrigerator-Freezers
------------------------------------------------------------------------
Present value Discount rate
Category billion 2009$ (in percent)
------------------------------------------------------------------------
Benefits:
Operating Cost Savings......... 13.62 7
34.75 3
CO2 Reduction Monetized Value 0.713 5
(at $4.7/Metric Ton)*.........
CO2 Reduction Monetized Value 3.65 3
(at $21.4/Metric Ton)*........
CO2 Reduction Monetized Value 6.19 2.5
(at $35.1/Metric Ton)*........
CO2 Reduction Monetized Value 11.14 3
(at $64.9/Metric Ton)*........
NOX Reduction Monetized Value 0.087 7
(at $2,519/Ton)*..............
0.206 3
------------------------------------
Total Monetary Benefits**.. 17.36 7
38.61 3
------------------------------------
Costs:
Total Incremental Installed 13.21 7
Costs.........................
24.35 3
Net Benefits/Costs:
Including CO2 and NOX**........ 4.15 7
14.26 3
------------------------------------------------------------------------
* These values represent global values (in 2007$) of the social cost of
CO2 emissions in 2010 under several scenarios. The values of $4.7,
$21.4, and $35.1 per ton are the averages of SCC distributions
calculated using 5%, 3%, and 2.5% discount rates, respectively. The
value of $64.9 per ton represents the 95th percentile of the SCC
distribution calculated using a 3% discount rate. See section IV.M for
details. The value for NOX (in 2009$) is the average of the low and
high values used in DOE's analysis.
** Total Monetary Benefits for both the 3% and 7% cases utilize the
central estimate of social cost of CO2 emissions calculated at a 3%
discount rate, which is equal to $21.4/ton in 2010 (in 2007$).
[[Page 59558]]
Table V.60--Estimates of Adding Net Present Value of Consumer Savings (at 7% Discount Rate) to Net Present Value
of Monetized Benefits From CO2 and NOX Emissions Reductions at Trial Standard Levels for Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
---------------------------------------------------------------------------
SCC value of $4.7/ SCC value of SCC value of SCC value of
TSL metric ton CO2* $21.4/metric ton $35.1/metric ton $64.9/metric ton
and low value for CO2* and medium CO2* and Medium CO2* and High
NOX** billion value for NOX** Value for NOX** Value for NOX**
2009$ billion 2009$ billion 2009$ billion 2009$
----------------------------------------------------------------------------------------------------------------
1................................... 6.07 9.28 11.98 17.33
2................................... 5.03 8.94 12.24 18.75
3................................... 3.27 7.90 11.81 19.52
4................................... (10.43) (4.43) 0.62 10.60
5................................... (29.30) (22.33) (16.47) (4.86)
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2007$. Their present values have been
calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of
these values.
** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX
emissions. High Value corresponds to $4,591 per ton of NOX emissions.
Table V.61--Estimates of Adding Net Present Value of Consumer Savings (at 3% Discount Rate) to Net Present Value
of Monetized Benefits from CO2 and NOX Emissions Reductions at Trial Standard Levels for Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with:
---------------------------------------------------------------------------
SCC value of $4.7/ SCC value of SCC value of SCC value of
TSL metric ton CO2* $21.4/metric ton $35.1/metric ton $64.9/metric ton
and low value for CO2* and medium CO2* and Medium CO2* and High
NOX** billion value for NOX** Value for NOX** Value for NOX**
2009$ billion 2009$ billion 2009$ billion 2009$
----------------------------------------------------------------------------------------------------------------
1................................... 20.82 24.14 26.85 32.30
2................................... 21.04 25.09 28.39 35.04
3................................... 19.93 24.72 28.62 36.49
4................................... (1.80) 4.40 9.45 19.65
5................................... (34.16) (26.96) (21.09) (9.25)
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2007$. Their present values have been
calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of
these values.
** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX
emissions. High Value corresponds to $4,591 per ton of NOX emissions.
Although adding the value of consumer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating savings are domestic U.S.
consumer monetary savings that occur as a result of market transactions
while the value of CO2 reductions is based on a global
value. Second, the assessments of operating cost savings and
CO2 savings are performed with different methods that use
quite different time frames for analysis. The national operating cost
savings is measured for the lifetime of refrigeration products shipped
in 2014-2043. The SCC values, on the other hand, reflect the present
value of all future climate-related impacts resulting from the emission
of one ton of carbon dioxide in each year. These impacts go well beyond
2100.
7. Other Factors
The Secretary, in determining whether a standard is economically
justified, may consider any other factors that he deems to be relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(VI))) DOE is aware of pending legislation
that proposes to phase out substances with significant GWP and that
HFCs are included in the list of substances to be phased out. DOE
recognizes the significance that such legislation would have to the
refrigeration products industry and the impact it would have on the
ability of manufacturers to meet energy conservation standards. Given
the uncertainty regarding such legislation, however, DOE did not factor
the impact of potential HFC limitations in developing the proposed
levels presented in today's NOPR.
C. Proposed Standards
When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered product shall be designed to achieve the maximum improvement in
energy efficiency that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In
determining whether a standard is economically justified, the Secretary
must determine whether the benefits of the standard exceed its burdens
to the greatest extent practicable, in light of the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also ``result in significant conservation of
energy.'' (42 U.S.C. 6295(o)(3)(B))
For today's NOPR, DOE considered the impacts of standards at each
trial standard level, beginning with the maximum technologically
feasible level, to determine whether that level was economically
justified. Where the max-tech level was not justified, DOE then
considered the next most efficient level and undertook the same
evaluation until it reached the most efficient level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
For ease of presentation, DOE separately discusses the benefits
and/or
[[Page 59559]]
burdens of each trial standard level for standard-size refrigerator-
freezers, standard-size freezers, compact refrigeration products, and
built-in refrigeration products. To aid the reader as DOE discusses the
benefits and/or burdens of each trial standard level, tables present a
summary of the results of DOE's quantitative analysis for each TSL.
In addition to the quantitative results presented in the tables,
DOE also considers other burdens and benefits that affect economic
justification. These include the impacts on identifiable subgroups of
consumers, such as low-income households and seniors, who may be
disproportionately affected by a national standard. Section V.B.1
presents the estimated impacts of each TSL for these subgroups.
DOE notes that the proposed standards set forth in the Joint
Comments were also carefully considered by the agency. These suggested
standards, along with the comments from all interested parties and the
agency's analytical work developed in preparation of today's NOPR, were
considered during the development of the standards being proposed
today. DOE is giving serious consideration to these suggested standards
as well as alternative standards that differ from them. As with other
aspects of this proposal, the agency solicits comments from interested
parties on these proposed standards as well as any other issues
commenters believe merit consideration.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. This undervaluation suggests that
regulation that promotes energy efficiency can produce significant net
private gains (as well as producing social gains by, for example,
reducing pollution). There is evidence that consumers undervalue future
energy savings as a result of (1) A lack of information, (2) a lack of
sufficient savings to warrant delaying or altering purchases (e.g. an
inefficient ventilation fan in a new building or the delayed
replacement of a water pump), (3) inconsistent (e.g. excessive short-
term) weighting of future energy cost savings relative to available
returns on other investments, (4) computational or other difficulties
associated with the evaluation of relevant tradeoffs, and (5) a
divergence in incentives (e.g. renter versus owner; builder v.
purchaser). Other literature indicates that with less than perfect
foresight and a high degree of uncertainty about the future, consumers
may trade off these types of investments at a higher than expected rate
between current consumption and uncertain future energy cost savings.
While DOE is not prepared at present to provide a fuller quantifiable
framework for this discussion at this time, DOE seeks comments on how
to assess these possibilities.
1. Standard-Size Refrigerator-Freezers
Table V.62 presents a summary of the quantitative impacts estimated
for each TSL for standard-size refrigerator-freezers. The efficiency
levels contained in each TSL are described in section V.A.
Table V.62--Summary of Results for Standard-Size Refrigerator-Freezers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads)... 2.25.......................... 2.59.......................... 3.05.......................... 4.14......................... 4.94
NPV of Consumer Benefits (2009$
billion):
3% discount rate.............. 11.83......................... 11.08......................... 10.40......................... (7.51)....................... (29.33)
7% discount rate.............. 2.53.......................... 1.58.......................... 0.41.......................... (11.05)...................... (24.08)
Industry Impacts:
Standard-Size Refrigerator-
Freezers:
Industry NPV (2009$ (84.8) to (301.7)............. (175.9) to (459.8)............ (287.5) to (662.1)............ (643.0) to (1,496.8)......... (828.9) to (2,154.7)
million).
Industry NPV (% change)... (2.7) to (9.5)................ (5.5) to (14.5)............... (9.1) to (20.9)............... (20.3) to (47.2)............. (26.1) to (67.9)
Cumulative Emissions Reduction:
CO2 (Mt)...................... 154........................... 177........................... 208........................... 283.......................... 338
NOX (kt)...................... 124........................... 142........................... 168........................... 228.......................... 272
Hg (t)........................ 0.79.......................... 0.91.......................... 1.07.......................... 1.45......................... 1.73
Value of Cumulative Emissions
Reduction:
CO2 (2009$ billion)*.......... 0.53 to 8.22.................. 0.61 to 9.47.................. 0.71 to 11.14................. 0.97 to 15.17................ 1.16 to 18.14
NOX--3% discount rate (2009$ 27 to 278..................... 31 to 320..................... 37 to 376..................... 50 to 513.................... 60 to 614
million).
NOX--7% discount rate (2009$ 11 to 117..................... 13 to 135..................... 15 to 159..................... 21 to 217.................... 25 to 260
million).
Mean LCC Savings** (2009$):
Top-Mount Refrigerator- 29............................ 29............................ 22............................ (37)......................... (133)
Freezers.
Bottom-Mount Refrigerator- 19............................ 19............................ 19............................ (79)......................... (180)
Freezers.
Side-by-Side Refrigerator- 53............................ 37............................ 37............................ (55)......................... (134)
Freezers.
Median PBP (years):
Top-Mount Refrigerator- 9.2........................... 9.2........................... 10.9.......................... 15.4......................... 20.5
Freezers
Bottom-Mount Refrigerator- 4.9........................... 4.9........................... 4.9........................... 24.8......................... 29.0
Freezers.
[[Page 59560]]
Side-by-Side Refrigerator- 4.8........................... 10.9.......................... 10.9.......................... 18.6......................... 22.6
Freezers.
Distribution of Consumer LCC
Impacts:
Top-Mount Refrigerator-
Freezers:
Net Cost (%).............. 42.3.......................... 42.3.......................... 54.9.......................... 73.8......................... 85.4
No Impact (%)............. 8.1........................... 8.1........................... 0.0........................... 0.0.......................... 0.0
Net Benefit (%)........... 49.6.......................... 49.6.......................... 45.1.......................... 26.2......................... 14.6
Bottom-Mount Refrigerator-
Freezers:
Net Cost (%).............. 4.5........................... 4.5........................... 4.5........................... 88.2......................... 93.3
No Impact (%)............. 67.8.......................... 67.8.......................... 67.8.......................... 0.0.......................... 0.0
Net Benefit (%)........... 27.7.......................... 27.7.......................... 27.7.......................... 11.8......................... 6.7
Side-by-Side Refrigerator-
Freezers:
Net Cost (%).............. 7.3........................... 50.8.......................... 50.8.......................... 77.7......................... 86.2
No Impact (%)............. 36.9.......................... 0.0........................... 0.0........................... 0.0.......................... 0.0
Net Benefit (%)........... 55.8.......................... 49.2.......................... 49.2.......................... 22.3......................... 13.9
Generation Capacity Reduction 2.28.......................... 2.63.......................... 3.10.......................... 4.23......................... 5.07
(GW).[dagger]
Employment Impacts:
Total Potential Changes in (0.22) to (8.52).............. (0.26) to (8.52).............. (0.21) to (8.52).............. (0.28) to (8.52)............. (0.43) to (8.52)
Domestic Production Workers
in 2014 (thousands).
Indirect Domestic Jobs 10.99......................... 12.05......................... 13.49......................... 12.95........................ 10.34
(thousands).[dagger]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 4.94 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be -$24.08 billion, using a discount rate of 7 percent, and -$29.33
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 338 Mt of
CO2, 272 kt of NOX, and 1.73 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 5 ranges from $1.16 billion to $18.14 billion. Total
generating capacity in 2043 is estimated to decrease by 5.07 GW under
TSL 5.
At TSL 5, the average LCC impact is a cost (LCC increase) of $133
for top-mount refrigerator-freezers, a cost of $180 for bottom-mount
refrigerator-freezers, and a cost of $134 for side-by-side
refrigerator-freezers. The median payback period is 21 years for top-
mount refrigerator-freezers, 29 years for bottom-mount refrigerator-
freezers, and 23 years for side-by-side refrigerator-freezers. The
fraction of consumers experiencing an LCC benefit is 15 percent for
top-mount refrigerator-freezers, 7 percent for bottom-mount
refrigerator-freezers, and 14 percent for side-by-side refrigerator-
freezers. The fraction of consumers experiencing an LCC cost is 85
percent for top-mount refrigerator-freezers, 93 percent for bottom-
mount refrigerator-freezers, and 86 percent for side-by-side
refrigerator-freezers.
At TSL 5, the projected change in INPV ranges from a decrease of
$828.9 million to a decrease of $2,154.7 million. At TSL 5, DOE
recognizes the risk of very large negative impacts if manufacturers'
expectations concerning reduced profit margins are realized. If the
high end of the range of impacts is reached as DOE expects, TSL 5 could
result in a net loss of 68 percent in INPV to standard-size
refrigerator-freezer manufacturers.
The Secretary tentatively concludes that at TSL 5 for standard-size
refrigerator-freezers, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the large increases in product
cost, and the capital conversion costs and profit margin impacts that
could result in a very large reduction in INPV for the manufacturers.
Consequently, the Secretary has tentatively concluded that TSL 5 is not
economically justified.
DOE then considered TSL 4. TSL 4 would save 4.14 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be -$11.05 billion, using a discount rate of 7 percent,
and -$7.51 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 283 Mt of
CO2, 228 kt of NOX, and 1.45 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 4 ranges from $0.97 billion to $15.17 billion. Total
generating capacity in 2043 is estimated to decrease by 4.23 GW under
TSL 4.
At TSL 4, DOE projects that the average LCC impact is a cost (LCC
increase) of $37 for top-mount refrigerator-freezers, a cost of $79 for
bottom-mount refrigerator-freezers, and a cost of $55 for side-by-side
refrigerator-freezers. The median payback period is 15 years for top-
mount refrigerator-freezers, 25 years for bottom-mount refrigerator-
freezers, and 19 years for side-by-side refrigerator-freezers. The
fraction of consumers experiencing an LCC benefit is 26 percent for
top-mount refrigerator-freezers, 12 percent for bottom-mount
[[Page 59561]]
refrigerator-freezers, and 22 percent for side-by-side refrigerator-
freezers. The fraction of consumers experiencing an LCC cost is 74
percent for top-mount refrigerator-freezers, 88 percent for bottom-
mount refrigerator-freezers, and 78 percent for side-by-side
refrigerator-freezers.
At TSL 4, the projected change in INPV ranges from a decrease of
$643.0 million to a decrease of $1,496.8 million. DOE recognizes the
risk of large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. If the high end of the
range of impacts is reached as DOE expects, TSL 4 could result in a net
loss of 47 percent in INPV to standard-size refrigerator-freezer
manufacturers.
The Secretary tentatively concludes that at TSL 4 for standard-size
refrigerator-freezers, the benefits of energy savings, generating
capacity reductions, and emission reductions and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the large increases in product
cost, and the capital conversion costs and profit margin impacts that
could result in a substantial reduction in INPV for the manufacturers.
Consequently, the Secretary has tentatively concluded that TSL 4 is not
economically justified.
DOE then considered TSL 3. TSL 3 would save 3.05 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
benefit would be $0.41 billion, using a discount rate of 7 percent, and
$10.40 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 208 Mt of
CO2, 168 kt of NOX, and 1.07 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 3 ranges from $0.71 billion to $11.14 billion. Total
generating capacity in 2043 is estimated to decrease by 3.10 GW under
TSL 3.
At TSL 3, the average LCC impact is a gain (consumer savings) of
$22 for top-mount refrigerator-freezers, a gain of $19 for bottom-mount
refrigerator-freezers, and a gain of $37 for side-by-side refrigerator-
freezers. The median payback period is 11 years for top-mount
refrigerator-freezers, 5 years for bottom-mount refrigerator-freezers,
and 11 years for side-by-side refrigerator-freezers. The fraction of
consumers experiencing an LCC benefit is 45 percent for top-mount
refrigerator-freezers, 28 percent for bottom-mount refrigerator-
freezers, and 49 percent for side-by-side refrigerator-freezers. The
fraction of consumers experiencing an LCC cost is 55 percent for top-
mount refrigerator-freezers, 5 percent for bottom-mount refrigerator-
freezers, and 51 percent for side-by-side refrigerator-freezers.
At TSL 3, the projected change in INPV ranges from a decrease of
$287.5 million to a decrease of $662.1 million. DOE recognizes the risk
of negative impacts if manufacturers' expectations concerning reduced
profit margins are realized. If the high end of the range of impacts is
reached as DOE expects, TSL 3 could result in a net loss of 21 percent
in INPV to standard-size refrigerator-freezer manufacturers.
The Secretary tentatively concludes that at TSL 3 for standard-size
refrigerator-freezers, the benefits of energy savings, positive NPV of
consumer benefits, generating capacity reductions, emission reductions,
and the estimated monetary value of the CO2 emissions
reductions outweigh the economic burden on a significant fraction of
consumers due to the increases in product cost, and the capital
conversion costs and profit margin impacts that could result in a
reduction in INPV for the manufacturers. In addition to the
aforementioned benefits of the proposed standards, DOE notes that the
efficiency levels in TSL 3 correspond to the recommended levels in the
Joint Comments.
After considering the analysis, comments to the November 2009
notice and the preliminary TSD, and the benefits and burdens of TSL 3,
the Secretary tentatively concludes that this trial standard level will
offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in the significant
conservation of energy. Therefore, DOE today proposes to adopt TSL 3
for standard-size refrigerator-freezers. The proposed amended energy
conservation standards for standard-size refrigerator-freezers,
expressed as equations for maximum energy use, are shown in Table V.63.
Table V.63--Proposed Standards for Standard-Size Refrigerators and Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
Equations for maximum energy use (kWh/yr)
Product class ----------------------------------------------------------------------
based on AV (ft\3\) based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerators and refrigerator- 7.99AV + 225.0.................... 0.282av + 225.0
freezers with manual defrost.
1A. All-refrigerators--manual defrost.... 6.79AV + 193.6.................... 0.240av + 193.6
2. Refrigerator-freezers--partial 7.99AV + 225.0.................... 0.282av + 225.0
automatic defrost.
3. Refrigerator-freezers--automatic 8.04AV + 232.7.................... 0.284av + 232.7
defrost with top-mounted freezer without
an automatic icemaker.
3I. Refrigerator-freezers--automatic 8.04AV + 316.7.................... 0.284av + 316.7
defrost with top-mounted freezer with an
automatic icemaker without through-the-
door ice service.
3A. All-refrigerators--automatic defrost. 7.07AV + 201.6.................... 0.250av + 201.6
4. Refrigerator-freezers--automatic 8.48AV + 296.5.................... 0.299av + 296.5
defrost with side-mounted freezer
without an automatic icemaker.
4I. Refrigerator-freezers--automatic 8.48AV + 380.5.................... 0.299av + 380.5
defrost with side-mounted freezer with
an automatic icemaker without through-
the-door ice service.
5. Refrigerator-freezers--automatic 8.80AV + 315.4.................... 0.311av + 315.4
defrost with bottom-mounted freezer
without an automatic icemaker.
5I. Refrigerator-freezers--automatic 8.80AV + 399.4.................... 0.311av + 399.4
defrost with bottom-mounted freezer with
an automatic icemaker without through-
the-door ice service.
5A. Refrigerator-freezer--automatic 9.15AV + 471.3.................... 0.323av + 471.3
defrost with bottom-mounted freezer with
through-the-door ice service.
6. Refrigerator-freezers--automatic 8.36AV + 384.1.................... 0.295av + 384.1
defrost with top-mounted freezer with
through-the-door ice service.
7. Refrigerator-freezers--automatic 8.50AV + 431.1.................... 0.300av + 431.1
defrost with side-mounted freezer with
through-the-door ice service.
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters.
[[Page 59562]]
2. Standard-Size Freezers
Table V.64 presents a summary of the quantitative impacts estimated
for each TSL for standard-size freezers. The efficiency levels
contained in each TSL are described in section V.A.
Table V.64--Summary of Results for Standard-Size Freezers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads)... 0.71.......................... 1.01.......................... 1.19.......................... 1.35......................... 1.45
NPV of Consumer Benefits (2009$
billion):
3% discount rate.............. 6.64.......................... 7.78.......................... 7.87.......................... 6.02......................... 0.51
7% discount rate.............. 2.14.......................... 2.12.......................... 1.81.......................... 0.55......................... (2.63)
Industry Impacts:
Standard-Size Freezers:
Industry NPV (2009$ (24.9) to (57.3).............. (110.6) to (186.0)............ (94.5) to (201.1)............. (59.0) to (218.9)............ (102.4) to (365.1)
million).
Industry NPV (% change)... (6.2) to (14.2)............... (27.5) to (46.2).............. (23.5) to (49.9).............. (14.6) to (54.4)............. (25.4) to (90.7)
Cumulative Emissions Reduction:
CO2 (Mt)...................... 48............................ 69............................ 81............................ 92........................... 99
NOX (kt)...................... 39............................ 55............................ 65............................ 74........................... 79
Hg (t)........................ 0.24.......................... 0.34.......................... 0.41.......................... 0.47......................... 0.50
Value of Cumulative Emissions
Reduction:
CO2 (2009$ billion)*.......... 0.16 to 2.56.................. 0.23 to 3.67.................. 0.27 to 4.33.................. 0.31 to 4.92................. 0.33 to 5.28
NOX--3% discount rate (2009$ 8.4 to 86..................... 12 to 123..................... 14 to 143..................... 16 to 166.................... 17 to 178
million).
NOX--7% discount rate (2009$ 3.5 to 36..................... 5.0 to 52..................... 5.9 to 61..................... 6.8 to 69.................... 7.3 to 75
million).
Mean LCC Savings** (2009$):
Upright Freezers.............. 111........................... 148........................... 130........................... 87........................... (63)
Chest Freezers................ 70............................ 50............................ 56............................ 17........................... (71)
Median PBP (years):
Upright Freezers.............. 4.8........................... 6.2........................... 8.4........................... 11.0......................... 17.4
Chest Freezers................ 4.2........................... 8.7........................... 9.1........................... 13.1......................... 19.3
Distribution of Consumer LCC
Impacts:
Upright Freezers:
Net Cost (%).............. 11.7.......................... 18.7.......................... 30.8.......................... 45.0......................... 70.2
No Impact (%)............. 0.6........................... 0.2........................... 0.0........................... 0.0.......................... 0.0
Net Benefit (%)........... 87.8.......................... 81.1.......................... 69.2.......................... 55.0......................... 29.8
Chest Freezers: .............................. .............................. .............................. ............................. .............................
Net Cost (%).............. 1.6........................... 25.8.......................... 28.3.......................... 53.5......................... 79.0
No Impact (%)............. 0.2........................... 0.2........................... 0.2........................... 0.0.......................... 0.0
Net Benefit (%)........... 98.2.......................... 74.0.......................... 71.5.......................... 46.5......................... 21.0
Generation Capacity Reduction 0.74.......................... 0.74.......................... 1.25.......................... 1.42......................... 1.53
(GW)[dagger].
Employment Impacts:
Total Potential Changes in (0.05) to (1.90).............. (0.12) to (1.90).............. (0.17) to (1.90).............. (0.27) to (1.90)............. (0.40) to (1.90)
Domestic Production Workers
in 2014 (thousands).
Indirect Domestic Jobs 4.34.......................... 5.79.......................... 5.79.......................... 6.77......................... 5.80
(thousands)[dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
*Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
**For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 1.45 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be -$2.63 billion, using a discount rate of 7 percent, and $0.51
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 99 Mt of
CO2, 79 kt of NOX, and 0.50 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 5 ranges from $0.33 billion to $5.28 billion. Total
generating capacity in 2043 is estimated to decrease by 1.53 GW under
TSL 5.
At TSL 5, the average LCC impact is a cost (LCC increase) of $63
for upright freezers, and a cost of $71 for chest freezers. The median
payback period is 17 years for upright freezers and 19 years for chest
freezers. The fraction of consumers experiencing an LCC benefit is 30
percent for upright freezers and 21 percent for chest freezers. The
fraction of consumers experiencing an LCC cost is 70 percent for
upright freezers and 79 percent for chest freezers.
[[Page 59563]]
At TSL 5, the projected change in INPV ranges from a decrease of
$102.4 million to a decrease of $365.1 million. DOE recognizes the risk
of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. Standards at TSL 5
would require efficiency levels that are far higher than the most
efficient products currently available on the market. Manufacturing
products to meet standards at TSL 5 would require large investments in
product redesign and conversion of facilities. Because standard-size
freezers are currently low-cost, low-margin products, there is a
limited ability to pass on to consumers the required conversion costs
and added product costs associated with efficiency-improving
technologies for freezers. If the high end of the range of impacts is
reached as DOE expects, TSL 5 could result in a net loss of 91 percent
in INPV to standard-size freezer manufacturers.
The Secretary tentatively concludes that at TSL 5 for standard-size
freezers, the benefits of energy savings, positive NPV of consumer
benefits, generating capacity reductions, emission reductions, and the
estimated monetary value of the CO2 emissions reductions
would be outweighed by the economic burden on a significant fraction of
consumers due to the large increases in product cost, and the capital
conversion costs and profit margin impacts that could result in a very
large reduction in INPV for the manufacturers. Consequently, the
Secretary has tentatively concluded that TSL 5 is not economically
justified.
DOE then considered TSL 4. TSL 4 would save 1.35 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be $0.55 billion, using a discount rate of 7 percent, and
$6.02 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 92 Mt of
CO2, 74 kt of NOX, and 0.47 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 4 ranges from $0.31 billion to $4.92 billion. Total
generating capacity in 2043 is estimated to decrease by 1.42 GW under
TSL 4.
At TSL 4, the average LCC impact is a gain (consumer savings) of
$87 for upright freezers and a gain of $17 for chest freezers. The
median payback period is 11 years for upright freezers and 13 years for
chest freezers. The fraction of consumers experiencing an LCC benefit
is 55 percent for upright freezers and 47 percent for chest freezers.
The fraction of consumers experiencing an LCC cost is 45 percent for
upright freezers and 54 percent for chest freezers.
At TSL 4, the projected change in INPV ranges from a decrease of
$59.0 million to a decrease of $218.9 million. DOE recognizes the risk
of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. Standards at TSL 4
would require efficiency levels that are substantially higher than the
most efficient products currently available on the market.
Manufacturing products to meet standards at TSL 4 would require large
investments in product redesign and conversion of facilities. Because
standard-size freezers are currently low-cost, low-margin products,
there is a limited ability to pass on to consumers the required
conversion costs and added product costs associated with efficiency-
improving technologies for freezers. If the high end of the range of
impacts is reached as DOE expects, TSL 4 could result in a net loss of
54 percent in INPV to standard-size freezer manufacturers.
The Secretary tentatively concludes that at TSL 4 for standard-size
freezers, the benefits of energy savings, positive NPV of consumer
benefits, generating capacity reductions, emission reductions, the
estimated monetary value of the cumulative CO2 emissions
reductions, and the economic benefit on a significant fraction of
upright freezer consumers would be outweighed by the economic burden on
a significant fraction of chest freezer consumers due to the increase
in product cost, and the large capital conversion costs and margin
impacts that could result in a large reduction in INPV for the
manufacturers.
DOE then considered TSL 3. TSL 3 would save 1.19 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
benefit would be $1.81 billion, using a discount rate of 7 percent, and
$7.87 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 81 Mt of
CO2, 65 kt of NOX, and 0.41 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 3 ranges from $0.27 billion to $4.33 billion. Total
generating capacity in 2043 is estimated to decrease by 1.25 GW under
TSL 3.
At TSL 3, the average LCC impact is a gain (consumer savings) of
$130 for upright freezers and a gain of $56 for chest freezers. The
median payback period is 8 years for upright freezers and 9 years for
chest freezers. The fraction of consumers experiencing an LCC benefit
is 69 percent for upright freezers and 72 percent for chest freezers.
The fraction of consumers experiencing an LCC cost is 31 percent for
upright freezers and 28 percent for chest freezers.
At TSL 3, the projected change in INPV ranges from a decrease of
$94.5 million to a decrease of $201.1 million. DOE recognizes the risk
of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. Standards at TSL 3
would require efficiency levels that are substantially higher than the
most efficient products currently available on the market. Similar to
the case of TSL 4, manufacturing products to meet standards at TSL 3
would require large investments in product redesign and conversion of
facilities. Because standard-size freezers are currently low-cost, low-
margin products, there is a limited ability to pass on to consumers the
required conversion costs and added product costs associated with
efficiency-improving technologies for freezers. If the high end of the
range of impacts is reached as DOE expects, TSL 3 could result in a net
loss of 50 percent in INPV to standard-size freezer manufacturers.
The Secretary tentatively concludes that at TSL 3 for standard-size
freezers, the benefits of energy savings, positive NPV of consumer
benefits, generating capacity reductions, emission reductions, the
estimated monetary value of the cumulative CO2 emissions
reductions, and the economic benefit for a significant fraction of
freezer consumers would be outweighed by the large capital conversion
costs and profit margin impacts that could result in a large reduction
in INPV for the manufacturers.
DOE then considered TSL 2. TSL 2 would save 1.01 quads of energy,
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefit would be $2.12 billion, using a discount rate of 7 percent, and
$7.78 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 69 Mt of
CO2, 55kt of NOX, and 0.34 t of Hg. The estimated
monetary value of the cumulative CO2 emissions reductions at
TSL 2 ranges from $0.23 billion to $3.67 billion. Total generating
capacity in 2043 is estimated to decrease by 0.74 GW under TSL 2.
At TSL 2, the average LCC impact is a gain (consumer savings) of
$148 for upright freezers and a gain of $50 for chest freezers. The
median payback period is 6 years for upright freezers and 9 years for
chest freezers. The fraction of consumers experiencing an LCC benefit
is 81 percent for upright freezers and 74 percent for chest freezers.
The fraction of consumers experiencing an LCC cost is 19 percent for
upright
[[Page 59564]]
freezers and 26 percent for chest freezers.
DOE estimated the projected change in INPV ranges from a decrease
of $110.6 million to a decrease of $186.0 million. At TSL 2, DOE
recognizes the risk of negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. Standards at TSL 2
would pose many of the same issues as discussed above for TSL3, but the
projected negative impacts are somewhat less. If the high end of the
range of impacts is reached as DOE expects, TSL 2 could result in a net
loss of 46 percent in INPV to standard-size freezer manufacturers.
The Secretary tentatively concludes that at TSL 2 for standard-size
freezers, the benefits of energy savings, positive NPV of consumer
benefits, generating capacity reductions, emission reductions, the
estimated monetary value of the cumulative CO2 emissions
reductions, and the economic benefit for a significant fraction of
freezer consumers would outweigh the capital conversion costs and
profit margin impacts that could result in a reduction in INPV for the
manufacturers. In addition to the aforementioned benefits of the
proposed standards, DOE notes that the efficiency levels in TSL 2
correspond to the recommended levels in the Joint Comments.
After considering the analysis, comments on the November 2009
notice and the preliminary TSD, and the benefits and burdens of TSL 2,
the Secretary tentatively concludes that this trial standard level will
offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in significant
conservation of energy. Therefore, DOE today proposes to adopt TSL 2
for standard-size freezers. The proposed amended energy conservation
standards for standard-size freezers, expressed as equations for
maximum energy use, are shown in Table V.65.
Table V.65--Proposed Standards for Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
Equations for maximum energy use (kWh/yr)
Product class ----------------------------------------------------------------------
based on AV (ft \3\) based on av (L)
----------------------------------------------------------------------------------------------------------------
8. Upright freezers with manual defrost.. 5.57AV + 193.7 0.197av + 193.7
9. Upright freezers with automatic 8.62AV + 228.3 0.305av + 228.3
defrost without an automatic icemaker.
10. Chest freezers and all other freezers 7.29AV + 107.8 0.257av + 107.8
except compact freezers.
10A. Chest freezers with automatic 10.24AV + 148.1 0.362av + 148.1
defrost.
----------------------------------------------------------------------------------------------------------------
AV= adjusted volume in cubic feet; av = adjusted volume in liters.
3. Compact Refrigeration Products
Table V.66 presents a summary of the quantitative impacts estimated
for each TSL for compact refrigeration products. The efficiency levels
contained in each TSL are described in section V.A.
Table V.66--Summary of Results for Compact Refrigeration Products
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads)... 0.30.......................... 0.37.......................... 0.43.......................... 0.54......................... 0.59
NPV of Consumer Benefits (2009$
billion):
3% discount rate.............. 1.42.......................... 0.86.......................... 0.96.......................... (0.89)....................... (5.45)
7% discount rate.............. 0.58.......................... 0.25.......................... 0.27.......................... (0.78)....................... (3.28)
Industry Impacts
Compact Refrigeration Products:
Industry NPV (2009$ million).. (14.3) to (32.1).............. (30.8) to (66.7).............. (56.8) to (99.2).............. (29.6) to (114.4)............ (133.0) to (295.6)
Industry NPV (% change)....... (7.2) to (16.1)............... (15.4) to (33.4).............. (28.4) to (49.6).............. (14.8) to (57.3)............. (66.6) to (148.0)
Cumulative Emissions Reduction:
CO2 (Mt)...................... 20............................ 24............................ 28............................ 35........................... 39
NOX (kt)...................... 16............................ 19............................ 23............................ 28........................... 31
Hg (t)........................ 0.10.......................... 0.12.......................... 0.15.......................... 0.19......................... 0.21
Value of Cumulative Emissions
Reduction:
CO2 (2009$ billion)*.......... 0.07 to 1.02.................. 0.08 to 1.22.................. 0.10 to 1.45.................. 0.12 to 1.82................. 0.13 to 2.03
NOX--3% discount rate (2009$ 3.3 to 33..................... 3.9 to 40..................... 4.7 to 48..................... 5.9 to 60.................... 6.6 to 68
million).
NOX--7% discount rate (2009$ 1.3 to 13..................... 1.5 to 16..................... 1.8 to 19..................... 2.3 to 24.................... 2.7 to 28
million).
Mean LCC Savings** (2009$):
Compact Refrigerators......... 15............................ 10............................ 8............................. (13)......................... (105)
Compact Freezers.............. 11............................ 11............................ 7............................. (30)......................... (121)
Median PBP (years):
Compact Refrigerators......... 2.8........................... 3.9........................... 4.4........................... 6.5.......................... 11.6
Compact Freezers.............. 2.5........................... 2.5........................... 4.6........................... 10.0......................... 15.9
Distribution of Consumer LCC
Impacts:
[[Page 59565]]
Compact Refrigerators
Net Cost (%).............. 24.4.......................... 43.3.......................... 50.6.......................... 76.1......................... 93.8
No Impact (%)............. 1.4........................... 1.0........................... 0.9........................... 0.0.......................... 0.0
Net Benefit (%)........... 74.2.......................... 55.7.......................... 48.5.......................... 23.9......................... 6.2
Compact Freezers
Net Cost (%).............. 9.9........................... 9.9........................... 40.6.......................... 88.5......................... 97.8
No Impact (%)............. 4.7........................... 4.7........................... 0.0........................... 0.0.......................... 0.0
Net Benefit (%)........... 85.4.......................... 85.4.......................... 59.4.......................... 11.5......................... 2.3
Generation Capacity Reduction (GW) 0.02.......................... 0.32.......................... 0.38.......................... 0.48......................... 0.51
[dagger].
Employment Impacts:
Total Potential Changes in (0.00) to (0.03).............. (0.00) to (0.03).............. (0.00) to (0.03).............. (0.00) to (0.03)............. (0.02) to (0.03)
Domestic Production Workers
in 2014 (thousands).
Indirect Domestic Jobs 1.24.......................... 1.26.......................... 1.44.......................... 1.21......................... 0.14
(thousands) [dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 0.59 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be -$3.28 billion, using a discount rate of 7 percent, and -$5.45
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 39 Mt of
CO2, 31 kt of NOX, and 0.21 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 5 ranges from $0.13 billion to $2.03 billion. Total
generating capacity in 2043 is estimated to decrease by 0.51 GW under
TSL 5.
At TSL 5, the average LCC impact is a cost (LCC increase) of $105
for compact refrigerators and a cost of $121 for compact freezers. The
median payback period is 12 years for compact refrigerators and 16
years for compact freezers. The fraction of consumers experiencing an
LCC benefit is 6 percent for compact refrigerators and 2 percent for
compact freezers. The fraction of consumers experiencing an LCC cost is
94 percent for compact refrigerators and 98 percent for compact
freezers.
At TSL 5, the projected change in INPV ranges from a decrease of
$133.0 million to a decrease of $295.6 million. DOE recognizes the risk
of very large negative impacts if manufacturers' expectations
concerning reduced profit margins are realized. Manufacturing products
to meet standards at TSL 5 would require large investments in product
redesign and conversion of facilities. Because compact refrigeration
products are currently low-cost, low-margin products, there is a
limited ability to pass on to consumers the required conversion costs
and added product costs associated with efficiency-improving
technologies. If the high end of the range of impacts is reached as DOE
expects, TSL 5 could result in a net loss of 148.0 percent in INPV to
compact refrigeration product manufacturers.
The Secretary tentatively concludes that at TSL 5 for compact
refrigeration products, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the increases in product cost,
the capital conversion costs and profit margin impacts that could
result in a large reduction in INPV for the manufacturers.
Consequently, the Secretary has tentatively concluded that TSL 5 is not
economically justified.
DOE then considered TSL 4. TSL 4 would save 0.54 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be -$0.78 billion, using a discount rate of 7 percent,
and -$0.89 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 35 Mt of
CO2, 28 kt of NOX, and 0.19 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 4 ranges from $0.12 billion to $1.82 billion. Total
generating capacity in 2043 is estimated to decrease by 0.48 GW under
TSL 4.
At TSL 4, the average LCC impact is a cost (LCC increase) of $13
for compact refrigerators and a cost of $30 for compact freezers. The
median payback period is 7 years for compact refrigerators and 10 years
for compact freezers. The fraction of consumers experiencing an LCC
benefit is 24 percent for compact refrigerators and 12 percent for
compact freezers. The fraction of consumers experiencing an LCC cost is
76 percent for compact refrigerators and 89 percent for compact
freezers.
At TSL 4, the projected change in INPV ranges from a decrease of
$29.6 million to a decrease of $114.4 million. DOE recognizes the risk
of very large negative impacts if manufacturers' expectations about
reduced profit margins are realized. Manufacturing products to meet
standards at TSL 4 would require large investments in product redesign
and conversion of facilities. Because compact refrigeration products
are currently low-cost, low-margin products, there is a limited ability
to pass on to consumers the required conversion costs and added product
costs associated with efficiency-improving technologies. If the high
end of the range of impacts is reached as DOE expects, TSL 4 could
result in a net loss of 57 percent in INPV to compact refrigeration
product manufacturers.
The Secretary tentatively concludes that at TSL 4 for compact
refrigeration products, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the increases in product
costs, and the capital conversion costs and profit
[[Page 59566]]
margin impacts that could result in a large reduction in INPV for the
manufacturers. Consequently, the Secretary has tentatively concluded
that TSL 4 is not economically justified.
DOE then considered TSL 3. TSL 3 would save 0.43 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
benefit would be $0.27 billion, using a discount rate of 7 percent, and
$0.96 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 28 Mt of
CO2, 23 kt of NOX, and 0.15 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 3 ranges from $0.10 billion to $1.45 billion. Total
generating capacity in 2043 is estimated to decrease by 0.38 GW under
TSL 3.
At TSL 3, the average LCC impact is a gain (consumer savings) of $8
for compact refrigerators and a gain of $7 for compact freezers. The
median payback period is 4 years for compact refrigerators and 5 years
for compact freezers. The fraction of consumers experiencing an LCC
benefit is 49 percent for compact refrigerators and 59 percent for
compact freezers. The fraction of consumers experiencing an LCC cost is
51 percent for compact refrigerators and 41 percent for compact
freezers.
At TSL 3, the projected change in INPV ranges from a decrease of
$56.8 million to a decrease of $99.2 million. DOE recognizes the risk
of large negative impacts if manufacturers' expectations about reduced
profit margins are realized. Manufacturing products to meet standards
at TSL 3 would require large investments in product redesign and
conversion of facilities. Because compact refrigeration products are
currently low-cost, low-margin products, there is a limited ability to
pass on to consumers the required conversion costs and added product
costs associated with efficiency-improving technologies. If the high
end of the range of impacts is reached as DOE expects, TSL 3 could
result in a net loss of 50 percent in INPV to compact refrigeration
product manufacturers.
The Secretary tentatively concludes that at TSL 3 for compact
refrigeration products, the benefits of energy savings, positive NPV of
consumer benefits, generating capacity reductions, emission reductions,
and the estimated monetary value of the cumulative CO2
emissions reductions would be outweighed by the economic burden on a
significant fraction of consumers due to the increases in product
costs, and by the capital conversion costs and profit margin impacts
that could result in a large reduction in INPV for the manufacturers.
Consequently, the Secretary has tentatively concluded that TSL 3 is not
economically justified.
DOE then considered TSL 2. TSL 2 would save 0.37 quads of energy,
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefit would be $0.25 billion, using a discount rate of 7 percent, and
$0.86 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 24 Mt of
CO2, 19 kt of NOX, and 0.12 t of Hg. The
estimated monetary value of the cumulative CO2 emissions
reductions at TSL 2 ranges from $0.08 billion to $1.22 billion. Total
generating capacity in 2043 is estimated to decrease by 0.32 GW under
TSL 2.
At TSL 2, the average LCC impact is a gain (consumer savings) of
$10 for compact refrigerators and a gain of $11 for compact freezers.
The median payback period is 4 years for compact refrigerators and 3
years for compact freezers. The fraction of consumers experiencing an
LCC benefit is 56 percent for compact refrigerators and 85 percent for
compact freezers. The fraction of consumers experiencing an LCC cost is
43 percent for compact refrigerators and 10 percent for compact
freezers.
At TSL 2, the projected change in INPV ranges from a decrease of
$30.8 million to a decrease of $66.7 million. DOE recognizes the risk
of negative impacts if manufacturers' expectations about reduced profit
margins are realized. Manufacturing products to meet standards at TSL 2
would require investments in product redesign and conversion of
facilities. Because compact refrigeration products are currently low-
cost, low-margin products, there is a limited ability to pass on to
consumers the required conversion costs and added product costs
associated with efficiency-improving technologies. If the high end of
the range of impacts is reached as DOE expects, TSL 2 could result in a
net loss of 33 percent in INPV to compact refrigeration product
manufacturers.
The Secretary tentatively concludes that at TSL 2 for compact
refrigeration products, the benefits of energy savings, positive NPV of
consumer benefits, generating capacity reductions, emission reductions,
the estimated monetary value of the cumulative CO2 emissions
reductions, and the economic benefit to a significant fraction of
consumers would outweigh the capital conversion costs that could result
in a reduction in INPV for the manufacturers. In addition to the
aforementioned benefits of the proposed standards, DOE notes that the
efficiency levels in TSL 2 correspond to the recommended levels in the
Joint Comments.
After considering the analysis, comments on the November 2009
notice and the preliminary TSD, and the benefits and burdens of TSL 2,
the Secretary tentatively concludes that this trial standard level will
offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in significant
conservation of energy. Therefore, DOE today proposes to adopt TSL 2
for compact refrigeration products. The proposed amended energy
conservation standards for compact refrigeration products, expressed as
equations for maximum energy use, are shown in Table V.67.
Table V.67--Proposed Standards for Compact Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Equations for maximum energy use (kWh/yr)
Product class ----------------------------------------------------------------------
based on AV (ft\3\) based on av (L)
----------------------------------------------------------------------------------------------------------------
11. Compact refrigerators and 9.03AV + 252.3 0.319av + 252.3
refrigerator-freezers with manual
defrost.
11A. Compact refrigerators and 7.84AV + 219.1 0.277av + 219.1
refrigerator-freezers with manual
defrost.
12. Compact refrigerator-freezers-- 5.91AV + 335.8 0.209av + 335.8
partial automatic defrost.
13. Compact refrigerator-freezers-- 11.80AV + 339.2 0.417av + 339.2
automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerator--automatic 9.17AV + 259.3 0.324av + 259.3
defrost.
14. Compact refrigerator-freezers-- 6.82AV + 456.9 0.241av + 456.9
automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers-- 12.88AV + 368.7 0.455av + 368.7
automatic defrost with bottom-mounted
freezer.
16. Compact upright freezers with manual 8.65AV + 225.7 0.306av + 225.7
defrost.
17. Compact upright freezers with 10.17AV + 351.9 0.359av + 351.9
automatic defrost.
[[Page 59567]]
18. Compact chest freezers............... 9.25AV + 136.8 0.327av + 136.8
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters
4. Built-In Refrigeration Products
Table V.68 presents a summary of the quantitative impacts estimated
for each TSL for built-in refrigeration products. The efficiency levels
contained in each TSL are described in section V.A.
Table V.68--Summary of Results for Built-in Refrigeration Products
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads)... 0.02.......................... 0.03.......................... 0.05......................... 0.07......................... 0.08
NPV of Consumer Benefits (2009$
billion):
3% discount rate.............. 0.13.......................... 0.12.......................... (0.46)....................... (0.91)....................... (1.62)
7% discount rate.............. 0.04.......................... 0.02.......................... (0.34)....................... (0.60)....................... (1.00)
Industry Impacts:
Built-in Refrigeration Products:
Industry NPV (2009$ (51.7) to (52.9).............. (54.7) to (57.0).............. (65.8) to (80.5)............. (79.7) to (103.0)............ (84.9) to (120.3)
million).
Industry NPV (% change)... (7.9) to (8.0)................ (8.3) to (8.7)................ (10.0) to (12.2)............. (12.1) to (15.6)............. (12.9) to (18.3)
Cumulative Emissions Reduction:
CO2 (Mt)...................... 1............................. 2............................. 4............................ 5............................ 5
NOX (kt)...................... 1............................. 1............................. 3............................ 4............................ 4
Hg (t)........................ 0.01.......................... 0.01.......................... 0.02......................... 0.02......................... 0.03
Value of Cumulative Emissions
Reduction
CO2 (2009$ billion)*.......... 0.00 to 0.07.................. 0.01 to 0.10.................. 0.01 to 0.19................. 0.02 to 0.24................. 0.02 to 0.28
NOX--3% discount rate (2009$ 0 to 2........................ 0 to 3........................ 1 to 7....................... 1 to 8....................... 1 to 10
million).
NOX--7% discount rate (2009$ 0 to 1........................ 0 to 1........................ 0 to 3....................... 0 to 3....................... 0 to 4
million).
Mean LCC Savings** (2009$):
Built-in All-Refrigerators: 47............................ 63............................ (34)......................... (195)........................ (318)
Built-in Bottom-Mount 7............................. 0............................. 0............................ (164)........................ (244)
Refrigerator-Freezers:
Built-in Side-by-Side 7............................. 7............................. (116)........................ (116)........................ (219)
Refrigerator-Freezers:
Built-in Upright Freezers: 54............................ 24............................ (78)......................... (78)......................... (169)
Median PBP (years):
Built-in All-Refrigerators.... 1.6........................... 3.0........................... 15.9......................... 29.7......................... 36.7
Built-in Bottom-Mount 4.4........................... 12.9.......................... 12.9......................... 62.8......................... 61.8
Refrigerator-Freezers.
Built-in Side-by-Side 8.7........................... 8.7........................... 36.7......................... 36.7......................... 60.0
Refrigerator-Freezers.
Built-in Upright Freezers..... 3.4........................... 12.8.......................... 21.1......................... 21.1......................... 26.8
Distribution of Consumer LCC
Impacts:
Built-in All-Refrigerators
Net Cost (%).............. 0.3........................... 2.6........................... 69.1......................... 94.5......................... 97.2
No Impact (%)............. 22.6.......................... 18.4.......................... 9.1.......................... 0.0.......................... 0.0
Net Benefit (%)........... 77.2.......................... 79.0.......................... 21.9......................... 5.5.......................... 2.8
Built-in Bottom-Mount
Refrigerator-Freezers
Net Cost (%).............. 1.2........................... 8.2........................... 8.2.......................... 99.0......................... 99.3
No Impact (%)............. 87.1.......................... 87.0.......................... 87.0......................... 0.0.......................... 0.0
Net Benefit (%)........... 11.7.......................... 4.8........................... 4.8.......................... 1.1.......................... 0.7
Built-in Side-by-Side
Refrigerator-Freezers
Net Cost (%).............. 8.0........................... 8.0........................... 60.2......................... 60.2......................... 98.8
No Impact (%)............. 78.5.......................... 78.5.......................... 37.2......................... 37.2......................... 0.0
Net Benefit (%)........... 13.5.......................... 13.5.......................... 2.5.......................... 2.5.......................... 1.2
Built-in Upright Freezers
[[Page 59568]]
Net Cost (%).............. 4.3........................... 53.1.......................... 78.2......................... 78.2......................... 87.1
No Impact (%)............. 19.9.......................... 0.6........................... 0.5.......................... 0.5.......................... 0.3
Net Benefit (%)........... 75.8.......................... 46.3.......................... 21.3......................... 21.3......................... 12.6
Generation Capacity Reduction (GW) 0.02.......................... 0.03.......................... 0.05......................... 0.07......................... 0.08
[dagger].
Employment Impacts:
Total Potential Changes in 0.00 to (1.32)................ (0.00) to (1.32).............. 0.01 to (1.32)............... 0.01 to (1.32)............... 0.04 to (1.32)
Domestic Production Workers
in 2014 (thousands).
Indirect Domestic Jobs 0.10.......................... 0.13.......................... 0.08......................... 0.01......................... (0.13)
(thousands) [dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.
DOE first considered TSL 5, which represents the max-tech
efficiency levels. TSL 5 would save 0.08 quads of energy, an amount DOE
considers significant. Under TSL 5, the NPV of consumer benefit would
be -$1.00 billion, using a discount rate of 7 percent, and -$1.62
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 5 Mt of
CO2, 4 kt of NOX, and 0.03 t of Hg. The estimated
monetary value of the cumulative CO2 emissions reductions at
TSL 5 ranges from $0.02 billion to $0.28 billion. Total generating
capacity in 2043 is estimated to decrease by 0.08 GW under TSL 5.
At TSL 5, the average LCC impact is a cost (LCC increase) of $318
for built-in all-refrigerators, a cost of $244 for built-in bottom-
mount refrigerator-freezers, a cost of $219 for built-in side-by-side
refrigerator-freezers, and a cost of $169 for built-in upright
freezers. The median payback period is 37 years for built-in all-
refrigerators, 62 years for built-in bottom-mount refrigerator-
freezers, 60 years for built-in side-by-side refrigerator-freezers, and
27 years for built-in upright freezers. The fraction of consumers
experiencing an LCC benefit is 3 percent for built-in all-
refrigerators, 1 percent for built-in bottom-mount refrigerator-
freezers, 1 percent for built-in side-by-side refrigerator-freezers,
and 13 percent for built-in upright freezers. The fraction of consumers
experiencing an LCC cost is 97 percent for built-in all-refrigerators,
99 percent for built-in bottom-mount refrigerator-freezers, 99 percent
for built-in side-by-side refrigerator-freezers, and 87 percent for
built-in upright freezers.
At TSL 5, the projected change in INPV ranges from a decrease of
$84.9 million to a decrease of $120.3 million. If the high end of the
range of impacts is reached as DOE expects, TSL 5 could result in a net
loss of 18 percent in INPV to built-in refrigeration product
manufacturers.
The Secretary tentatively concludes that at TSL 5 for built-in
refrigeration products, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the large increases in product
cost, and the capital conversion costs and profit margin impacts that
could result in a reduction in INPV for the manufacturers.
Consequently, the Secretary has tentatively concluded that TSL 5 is not
economically justified.
DOE then considered TSL 4. TSL 4 would save 0.07 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be -$0.60 billion, using a discount rate of 7 percent,
and -$0.91 billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 5 Mt of
CO2, 4 kt of NOX, and 0.02 t of Hg. The estimated
monetary value of the cumulative CO2 emissions reductions at
TSL 4 ranges from $0.02 billion to $0.24 billion. Total generating
capacity in 2043 is estimated to decrease by 0.07 GW under TSL 4.
At TSL 4, DOE projects that the average LCC impact is a cost (LCC
increase) of $195 for built-in all-refrigerators, a cost of $164 for
built-in bottom-mount refrigerator-freezers, a cost of $116 for built-
in side-by-side refrigerator-freezers, and a cost of $78 for built-in
upright freezers. The median payback period is 30 years for built-in
all-refrigerators, 63 years for built-in bottom-mount refrigerator-
freezers, 37 years for built-in side-by-side refrigerator-freezers, and
21 years for built-in upright freezers. The fraction of consumers
experiencing an LCC benefit is 6 percent for built-in all-
refrigerators, 1 percent for built-in bottom-mount refrigerator-
freezers, 3 percent for built-in side-by-side refrigerator-freezers,
and 21 percent for built-in upright freezers. The fraction of consumers
experiencing an LCC cost is 95 percent for built-in all-refrigerators,
99 percent for built-in bottom-mount refrigerator-freezers, 60 percent
for built-in side-by-side refrigerator-freezers, and 78 percent for
built-in upright freezers.
At TSL 4, the projected change in INPV ranges from a decrease of
$79.7 million to a decrease of $103.0 million. If the high end of the
range of impacts is reached as DOE expects, TSL 4 could result in a net
loss of 16 percent in INPV to built-in refrigeration product
manufacturers.
The Secretary tentatively concludes that at TSL 4 for built-in
refrigeration products, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a
significant fraction of consumers due to the increases in product cost,
and the capital conversion costs and profit margin impacts that could
result in a reduction in INPV for the manufacturers. Consequently, the
Secretary has tentatively concluded that TSL 4 is not economically
justified.
DOE then considered TSL 3. TSL 3 would save 0.05 quads of energy,
an amount DOE considers significant. Under TSL 3, the NPV of consumer
benefit would be -$0.34 billion, using a discount rate of 7 percent,
and -$0.46
[[Page 59569]]
billion, using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 4 Mt of
CO2, 3 kt of NOX, and 0.02 t of Hg. The estimated
monetary value of the cumulative CO2 emissions reduction at
TSL 3 ranges from $0.01 billion to $0.19 billion. Total generating
capacity in 2043 is estimated to decrease by 0.05 GW under TSL 3.
At TSL 3, the average LCC impact is a cost (LCC increase) of $34
for built-in all-refrigerators, a cost of $0 for built-in bottom-mount
refrigerator-freezers, a cost of $116 for built-in side-by-side
refrigerator-freezers, and a cost of $78 for built-in upright freezers.
The median payback period is 16 years for built-in all-refrigerators,
13 years for built-in bottom-mount refrigerator-freezers, 37 years for
built-in side-by-side refrigerator-freezers, and 21 years for built-in
upright freezers. The fraction of consumers experiencing an LCC benefit
is 22 percent for built-in all-refrigerators, 5 percent for built-in
bottom-mount refrigerator-freezers, 3 percent for built-in side-by-side
refrigerator-freezers, and 21 percent for built-in upright freezers.
The fraction of consumers experiencing an LCC cost is 69 percent for
built-in all-refrigerators, 8 percent for built-in bottom-mount
refrigerator-freezers, 60 percent for built-in side-by-side
refrigerator-freezers, and 78 percent for built-in upright freezers.
Although a significant fraction of consumers would experience an LCC
cost, in the majority of cases the cost as a percentage of the purchase
price (which ranges from approximately $4,500 to $8,000) is small.
At TSL 3, the projected change in INPV ranges from a decrease of
$65.8 million to a decrease of $80.5 million. If the high end of the
range of impacts is reached as DOE expects, TSL 3 could result in a net
loss of 12 percent in INPV to built-in refrigeration product
manufacturers.
The Secretary tentatively concludes that at TSL 3 for built-in
refrigeration products, the benefits of energy savings, generating
capacity reductions, emission reductions, and the estimated monetary
value of the CO2 emissions reductions would outweigh the
negative NPV of consumer benefits, the slight economic burden on a
significant fraction of consumers due to the increases in product cost,
and the capital conversion costs and profit margin impacts that could
result in a reduction in INPV for the manufacturers. In addition to the
aforementioned benefits of the proposed standards, DOE notes that the
efficiency levels in TSL 3 correspond to the recommended levels in the
Joint Comments.
After considering the analysis, comments on the November 2009
notice and the preliminary TSD, and the benefits and burdens of TSL 3,
the Secretary tentatively concludes that this trial standard level will
offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in significant
conservation of energy. Therefore, DOE today proposes to adopt TSL 3
for built-in refrigeration products. The proposed amended energy
conservation standards for built-in refrigeration products, expressed
as equations for maximum energy use, are shown in Table V.69.
DOE requests comment on the considerations leading to the above
conclusion, particularly regarding the negative net consumer impacts of
the proposed standards for built-in refrigeration products. (See Issue
20 under ``Issues on Which DOE Seeks Comment'' in section VII.E of this
NOPR, below.)
Table V.69--Proposed Standards for Built-In Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Equations for maximum energy use (kWh/yr)
Product class ----------------------------------------------------------------------
Based on AV (ft\3\) Based on av (L)
----------------------------------------------------------------------------------------------------------------
3-BI. Built-in refrigerator-freezer-- 8.57AV + 248.2 0.303av + 248.2
automatic defrost with top-mounted
freezer without an automatic icemaker.
3I-BI. Built-in refrigerator-freezers-- 8.57AV + 332.2 0.303av + 332.2
automatic defrost with top-mounted
freezer with an automatic icemaker
without through-the-door ice service.
3A-BI. Built-in all-refrigerators-- 7.55AV + 215.1 0.266av + 215.1
automatic defrost.
4-BI. Built-in refrigerator-freezers-- 9.04AV + 316.2 0.319av + 316.2
automatic defrost with side-mounted
freezer without an automatic icemaker.
4I-BI. Built-in refrigerator-freezers-- 9.04AV + 400.2 0.319av + 400.2
automatic defrost with side-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5-BI. Built-in refrigerator-freezers-- 9.35AV + 335.1 0.330av + 335.1
automatic defrost with bottom-mounted
freezer without an automatic icemaker.
5I-BI. Built-in refrigerator-freezers-- 9.35AV + 419.1 0.330av + 419.1
automatic defrost with bottom-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5A-BI. Built-in refrigerator-freezer-- 9.72AV + 495.5 0.343av + 495.5
automatic defrost with bottom-mounted
freezer with through-the-door ice
service.
7-BI. Built-in refrigerator-freezers-- 9.07AV + 454.3 0.320av + 454.3
automatic defrost with side-mounted
freezer with through-the-door ice
service.
9-BI. Built-in upright freezers with 9.24AV + 244.6 0.326av + 244.6
automatic defrost without an automatic
icemaker.
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters
5. Summary of Benefits and Costs (Annualized) of Proposed Standards
The benefits and costs of today's proposed standards can also be
expressed in terms of annualized values over the 2014-2043 period.
Estimates of annualized values are shown in Table V.70. The annualized
monetary values are the sum of (1) the annualized national economic
value, expressed in 2009$, of the benefits from operating products that
meet the proposed standards (consisting primarily of operating cost
savings from using less energy, minus increases in equipment purchase
costs, which is another way of representing consumer NPV), and (2) the
monetary value of the benefits of emission reductions, including
CO2 emission reductions.\47\ The value of the
[[Page 59570]]
CO2 reductions, otherwise known as the Social Cost of Carbon
(SCC), is calculated using a range of values per metric ton of
CO2 developed by a recent interagency process. The monetary
costs and benefits of cumulative emissions reductions are reported in
2009$ to permit comparisons with the other costs and benefits in the
same dollar units.
---------------------------------------------------------------------------
\47\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value for the time-series of costs and benefits
using a discount rate of either three or seven percent. From the
present value, DOE then calculated the fixed annual payment over the
analysis time period (2014 through 2043) that yielded the same
present value. The fixed annual payment is the annualized value.
Although DOE calculated annualized values, this does not imply that
the time-series of cost and benefits from which the annualized
values were determined is a steady stream of payments.
---------------------------------------------------------------------------
Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and CO2 savings are performed with different methods
that use quite different timeframes for analysis. The national
operating cost savings is measured for the lifetime of refrigeration
products shipped in 2014-2043. The SCC values, on the other hand,
reflect the present value of all future climate-related impacts
resulting from the emission of one ton of carbon dioxide in each year.
These impacts go well beyond 2100.
Using a 7-percent discount rate and the SCC value of $21.40/ton in
2010 (in 2007$), the cost of the standards proposed in today's rule is
$1,841 million per year in increased equipment costs, while the
annualized benefits are $2,112 million per year in reduced equipment
operating costs, $316 million in CO2 reductions, and $7
million in reduced NOX emissions. In this case, the net
benefit amounts to $594 million per year. Using a 3-percent discount
rate and the SCC value of $21.40/ton in 2010 (in 2007$), the cost of
the standards proposed in today's rule is $1,849 million per year in
increased equipment costs, while the benefits are $2,929 million per
year in reduced operating costs, $316 million in CO2
reductions, and $33 million in reduced NOX emissions. At a
3-percent discount rate, the net benefit amounts to $1,429 million per
year.
Table V.70--Annualized Benefits and Costs of Proposed Standards for Refrigeration Products for 2014-2043 Period
----------------------------------------------------------------------------------------------------------------
Primary
Discount rate estimate * Low estimate * High estimate *
----------------------------------------------------------------------------------------------------------------
Monetized (million 2009$/year)
-----------------------------------------------------
Benefits:
Operating Cost Savings......... 7%................... 2112 1852 2377
3%................... 2929 2520 3335
CO2 Reduction at $4.7/t **..... 5%................... 85 85 85
CO2 Reduction at $21.4/t **.... 3%................... 316 316 316
CO2 Reduction at $35.1/t **.... 2.5%................. 492 492 492
CO2 Reduction at $64.9/t **.... 3%................... 963 963 963
NOX Reduction at $2,519/t **... 7%................... 7 7 7
3%................... 33 33 33
Total [dagger]............. 7% plus CO2 range.... 2204-3082 1944-2822 2469-3348
7%................... 2435 2175 2700
3%................... 3278 2869 3684
3% plus CO2 range.... 3047-3925 2638-3516 3453-4331
Costs:
Incremental Product Costs...... 7%................... 1841 1733 1950
3%................... 1849 1729 1969
Net Benefits/Costs:
Total [dagger]................. 7% plus CO2 range.... 363-1241 211-1089 519-1397
7%................... 594 442 750
3%................... 1429 1140 1714
3% plus CO2 range.... 1198-2076 909-1787 1483-2362
----------------------------------------------------------------------------------------------------------------
* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010
Reference case, Low Economic Growth case, and Low Economic Growth case, respectively.
** The CO2 values represent global values (in 2007$) of the social cost of CO2 emissions in 2010 under several
scenarios. The values of $4.70, $21.40, and $35.10 per ton are the averages of SCC distributions calculated
using 5%, 3%, and 2.5% discount rates, respectively. The value of $64.90 per ton represents the 95th
percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2009$) is the
average of the low and high values used in DOE's analysis. NOX savings are in addition to the regulatory
emissions reductions modeled in the Annual Energy Outlook forecast.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount
rate, which is $21.40/ton in 2010 (in 2007$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2
range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
are added to the full range of CO2 values with the $4.70/ton value at the low end, and the $64.90/ton value at
the high end.
6. Energy Standard Round-Off
The rounding off of energy use measurements for refrigeration
products is discussed in the test procedure NOPR published on May 27,
2010. 75 FR 29824, 29849. Comments received from stakeholders during
the test procedure rulemaking comment period support rounding off such
measurements to the nearest kWh per year. (Whirlpool, Refrigerator Test
Procedure Rulemaking No. 12 at p. 7; AHAM, Refrigerator Test Procedure
Rulemaking No. 16 at pp. 10, 11) The test procedure NOPR mentions that,
if the test procedure calls for such round off, the energy standard
would also need to include round off, in order to avoid noncompliance
associated with inconsistency between the two rules. For example, if
the energy standard was 500.7 kWh for a product whose energy use
measurement was 500.6 kWh, rounding the measurement to 501 kWh might
appear to show energy use higher
[[Page 59571]]
than the maximum allowable under the standard.
DOE expects to implement rounding off of energy use measurements in
the refrigeration product test procedure. Hence, DOE also proposes such
round off for the energy standard. DOE proposes to implement this by
including in 10 CFR part 430.32(a) the following statement: ``The
energy standards as determined by the equations of the following table
shall be rounded off to the nearest kWh per year.''
DOE requests comment on this proposal for round off of the energy
standard. (See Issue 21 under ``Issues on Which DOE Seeks Comment'' in
section VII.E of this NOPR, below.)
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
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 today's standards address are as follows:
(1) There is a lack of consumer information and/or information
processing capability about energy efficiency opportunities in the home
appliance market.
(2) There is asymmetric information (one party to a transaction has
more and better information than the other) and/or high transactions
costs (costs of gathering information and effecting exchanges of goods
and services).
(3) There are external benefits resulting from improved energy
efficiency of heating products that are not captured by the users of
such equipment. These benefits include externalities related to
environmental protection and energy security that are not reflected in
energy prices, such as reduced emissions of greenhouse gases.
In addition, DOE has determined that today's regulatory action is
an ``economically significant regulatory action'' under section 3(f)(1)
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive
Order requires that DOE prepare a regulatory impact analysis (RIA) on
today's rule and that the Office of Information and Regulatory Affairs
(OIRA) in the Office of Management and Budget (OMB) review this rule.
DOE presented to OIRA for review the draft rule and other documents
prepared for this rulemaking, including the RIA, and has included these
documents in the rulemaking record. The assessments prepared pursuant
to Executive Order 12866 can be found in the technical support document
(Chapter 16) for this rulemaking. They are available for public review
in the Resource Room of DOE's Building Technologies Program, 950
L'Enfant Plaza, SW., Suite 600, Washington, DC 20024, (202) 586-2945,
between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays.
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://www.gc.doe.gov).
For manufacturers of residential refrigerators, refrigerator-
freezers, and freezers, 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, 30850 (May 15,
2000), as amended at 65 FR 53533, 53545 (September 5, 2000) and
codified at 13 CFR part 121. The size standards are listed by North
American Industry Classification System (NAICS) code and industry
description and are available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. Residential
refrigeration product manufacturing is classified under NAICS 335222,
``Household Refrigerator and Home Freezer Manufacturing.'' The SBA sets
a threshold of 1,000 employees or less for an entity to be considered
as a small business for this category.
DOE reviewed the potential standard levels considered in today's
NOPR under the provisions of the Regulatory Flexibility Act and the
procedures and policies published on February 19, 2003. To better
assess the potential impacts of this rulemaking on small entities, DOE
conducted a more focused inquiry of the companies that could be small
business manufacturers of products covered by this rulemaking. During
its market survey, DOE used all available public information to
identify potential small manufacturers. DOE's research involved
industry trade association membership directories (including AHAM),
product databases (e.g., FTC, The Thomas Register, CEC, and ENERGY STAR
databases), individual company Web sites, and marketing research tools
(e.g., Dunn and Bradstreet reports) to create a list of every company
that manufactures or sells residential refrigeration products covered
by this rulemaking. DOE also asked stakeholders and industry
representatives if they were aware of any additional small
manufacturers during manufacturer interviews and at DOE public
meetings. DOE reviewed all publicly-available data and contacted
various companies on its complete list of manufacturers, as necessary,
to determine whether they met the SBA's definition of a small business
manufacturer of covered residential refrigeration products. DOE
screened out companies that do not offer products covered by this
rulemaking, do not meet the definition of a ``small business,'' or are
foreign owned and operated.
DOE initially identified at least 65 distinct brands of residential
refrigeration products sold in the U.S. by 47 parent companies. Out of
these 47 companies, DOE determined that the majority (31 of 47) were
distributors or resellers of branded products rather than original
equipment manufacturers. Of the 16 manufacturers, DOE found 15 to be
either large manufacturers or foreign-owned and operated. Thus, DOE
identified one small residential refrigeration product manufacturer
that produces covered products and can be considered a small business.
Next, DOE contacted this potential small business manufacturer to
request an interview about the possible impacts on small business
manufacturers generally. From these discussions, DOE determined the
expected impacts of the rule on affected small entities and whether an
initial regulatory flexibility analysis was needed (i.e., whether DOE
could certify that this rulemaking would not have a significant
economic impact on a substantial number of small entities).
The majority of residential refrigeration products are currently
manufactured in the United States, though production for the domestic
market has increasingly been relocated
[[Page 59572]]
to Mexico. For standard-size refrigerator-freezers, three large
manufacturers control the overwhelming majority of sales. Many foreign-
owned manufacturers of standard-size refrigerator-freezers offer
products for sale in the United States and constitute part of the
remaining domestic standard-size refrigerator-freezer market. These
products are either manufactured domestically or imported depending on
the specific manufacturer. Additionally, several domestic companies
focus on premium built-in standard-size refrigerator-freezers, which
represent the remainder of the market. None of the standard-size
refrigerator manufacturers DOE identified are small business
manufacturers.
For standard-size freezers, one large manufacturer controls the
majority of the market. Another domestic manufacturer with a
significant standard-size freezer market share recently went out of
business, but its market share is expected to be taken by other large
manufacturers of refrigeration products. The remaining market share is
spread in small percentages across foreign-owned and foreign-operated
manufacturers and some of the same niche manufacturers that produce
premium built-in standard-size refrigerator-freezers. None of the
standard-size freezer manufacturers identified by DOE are small
business manufacturers.
The majority of compact refrigeration products are imported, and
market share is divided among many domestic and foreign manufacturers.
Several manufacturers who still produce compact products domestically
focus on the premium niche market of undercounter refrigerators and
freezers. Undercounter refrigerator and freezers are high-end products
that are meant to be either free-standing or recessed. Based on its
market research, the one small business manufacturer of residential
refrigeration products identified by DOE is a niche manufacturer that
produces these premium undercounter units. The company manufactures
primarily products that are covered by this rulemaking, such as
undercounter refrigerators and refrigerator-freezers, plus several
products outside of the scope of coverage for this rulemaking, such as
ice makers and wine coolers. The small business manufacturer currently
offers five basic ENERGY STAR models (13 individual products) but many
of its product lines may need upgrading or may be discontinued in
response to the proposed energy conservation standards.
DOE does not believe the small business manufacturer will be
differentially impacted by the proposed energy conservation standard.
The small business manufacturer has the largest market share of
undercounter refrigerator and freezers. Since undercounter units are a
very small segment of compact refrigerators and freezers, the small
business manufacturer is the market leader of a very small segment of
compact products. The company represents an even smaller percentage of
total shipments of covered products. Many of the other undercounter
manufacturers, while not technically small businesses by the SBA
definition, also have low overall production volumes. Finally, the
undercounter market is a niche market that does not compete with
overall compact refrigeration sales. Undercounter products are luxury
items purchased by consumers that are typically less concerned about
first costs compared to purchasers of other residential refrigeration
products. While most compact sales are inexpensive products with retail
prices in the low hundreds of dollars, undercounter products typically
cost many times that. Despite the small size of this niche market, the
much higher sales price and lower volumes indicate that profit margins
are likely higher.
Since only one small business manufacturer would potentially be
impacted by the proposed energy conservation standards in today's rule
and that manufacturer represents a small percentage of covered products
is a leader in a niche market, DOE believes that these combined factors
make it likely that the manufacturer would not be differentially
impacted compared to its competition. As a result, DOE certifies that
the standards for residential refrigeration products set forth in the
proposed rule, if promulgated, would not have a significant economic
impact on a substantial number of small entities. Accordingly, DOE has
not prepared a regulatory flexibility analysis for this rulemaking. DOE
will transmit the certification and supporting statement of factual
basis to the Chief Counsel for Advocacy of the Small Business
Administration for review under 5 U.S.C. 605(b).
DOE requests comment on the above analysis, as well as any
information concerning small businesses that could be impacted by this
rulemaking and the nature and extent of those potential impacts of the
proposed energy conservation standards on small residential
refrigeration product manufacturers. (See Issue 22 under ``Issues on
Which DOE Seeks Comment'' in section VII.E of this NOPR, below.)
C. Review Under the Paperwork Reduction Act
This rulemaking will impose no new information or record keeping
requirements. Accordingly, OMB clearance is not required under the
Paperwork Reduction Act. (44 U.S.C. 3501 et seq.)
D. Review Under the National Environmental Policy Act of 1969
DOE has prepared a draft environmental assessment (EA) of the
impacts of the proposed rule pursuant to the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.), the regulations of the
Council on Environmental Quality (40 CFR parts 1500-1508), and DOE's
regulations for compliance with the National Environmental Policy Act
of 1969 (10 CFR part 1021). This assessment includes an examination of
the potential effects of emission reductions likely to result from the
rule in the context of global climate change, as well as other types of
environmental impacts. The draft EA has been included as chapter 15 of
the NOPR TSD. Before issuing a final rule for refrigeration products,
DOE will consider public comments and, as appropriate, determine
whether to issue a finding of no significant impact (FONSI) as part of
a final EA or to prepare an environmental impact statement (EIS) for
this rulemaking.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10,
1999) imposes certain requirements on agencies formulating and
implementing policies or regulations that preempt State law or that
have federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. EPCA governs and
prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of today's proposed
rule. States can petition DOE for exemption from such preemption to
[[Page 59573]]
the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297)
No further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' imposes on Federal agencies the general duty
to adhere to the following requirements: (1) Eliminate drafting errors
and ambiguity; (2) write regulations to minimize litigation; and (3)
provide a clear legal standard for affected conduct rather than a
general standard and promote simplification and burden reduction. 61 FR
4729 (February 7, 1996). Section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
this proposed rule meets the relevant standards of Executive Order
12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect small governments. On March 18, 1997,
DOE published a statement of policy on its process for
intergovernmental consultation under UMRA. 62 FR 12820; also available
at http://www.gc.doe.gov.
Although today's proposed rule does not contain a Federal
intergovernmental mandate, it may impose expenditures of $100 million
or more on the private sector. Specifically, the proposed rule will
likely result in a final rule that could impose expenditures of $100
million or more. Such expenditures may include (1) investment in
research and development and in capital expenditures by refrigeration
product manufacturers in the years between the final rule and the
compliance date for the new standard, and (2) incremental additional
expenditures by consumers to purchase higher-efficiency refrigeration
products, starting in 2014.
Section 202 of UMRA authorizes an agency to respond to the content
requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. 2 U.S.C. 1532(c). The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of the notice of proposed rulemaking
and the ``Regulatory Impact Analysis'' section of the TSD for this
proposed rule respond to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. 2 U.S.C. 1535(a). DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise or the selection of such an alternative
is inconsistent with law. As required by 42 U.S.C. 6295(h) and (o),
6313(e), and 6316(a), today's proposed rule would establish energy
conservation standards for residential refrigeration products that are
designed to achieve the maximum improvement in energy efficiency that
DOE has determined to be both technologically feasible and economically
justified. A full discussion of the alternatives considered by DOE is
presented in the ``Regulatory Impact Analysis'' section of the TSD for
today's proposed rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
DOE has determined, under Executive Order 12630, ``Governmental
Actions and Interference with Constitutionally Protected Property
Rights'' 53 FR 8859 (March 18, 1988), that this regulation would not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most
disseminations of information to the public under guidelines
established by each agency pursuant to general guidelines issued by
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002),
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002).
DOE has reviewed today's NOPR under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that (1) Is a significant regulatory action under
Executive Order 12866, or any successor
[[Page 59574]]
order; and (2) is likely to have a significant adverse effect on the
supply, distribution, or use of energy, or (3) is designated by the
Administrator of OIRA as a significant energy action. For any proposed
significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the
proposal be implemented, and of reasonable alternatives to the action
and their expected benefits on energy supply, distribution, and use.
DOE has tentatively concluded that today's regulatory action, which
sets forth energy conservation standards for refrigeration products, is
not a significant energy action because the proposed standards are not
likely to have a significant adverse effect on the supply,
distribution, or use of energy, nor has it been designated as such by
the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on the proposed rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology (OSTP), issued its Final Information Quality
Bulletin for Peer Review (the Bulletin). 70 FR 2664 (January 14, 2005).
The Bulletin establishes that certain scientific information shall be
peer reviewed by qualified specialists before it is disseminated by the
Federal Government, including influential scientific information
related to agency regulatory actions. The purpose of the bulletin is to
enhance the quality and credibility of the Government's scientific
information. Under the Bulletin, the energy conservation standards
rulemaking analyses are ``influential scientific information,'' which
the Bulletin defines as ``scientific information the agency reasonably
can determine will have or does have a clear and substantial impact on
important public policies or private sector decisions.'' 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site: http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
VII. Public Participation
A. Attendance at Public Meeting
The time, date and location of the public meeting are listed in the
DATES and ADDRESSES sections at the beginning of this document. To
attend the public meeting, please notify Ms. Brenda Edwards at (202)
586-2945 or [email protected]. As explained in the ADDRESSES
section, foreign nationals visiting DOE Headquarters are subject to
advance security screening procedures.
B. Procedure for Submitting Requests To Speak
Any person who has an interest in today's NOPR, or who is a
representative of a group or class of persons that has an interest in
these issues, may request an opportunity to make an oral presentation.
Such persons may hand-deliver requests to speak, along with a computer
diskette or CD in WordPerfect, Microsoft Word, PDF, or text (ASCII)
file format, to the address shown in the ADDRESSES section at the
beginning between the hours of 9 a.m. and 4 p.m., Monday through
Friday, except Federal holidays. Requests may also be sent by mail, or
by e-mail to: [email protected].
Persons requesting an opportunity to speak should briefly describe
the nature of their interest in this rulemaking and provide a telephone
number for contact. DOE requests persons scheduled to make an oral
presentation to submit an advance copy of their statements at least one
week before the public meeting. At its discretion, DOE may permit any
person who cannot supply an advance copy of their statement to
participate, if that person has made advance alternative arrangements
with the Building Technologies Program. The request to give an oral
presentation should ask for such alternative arrangements.
C. Conduct of Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of
EPCA, 42 U.S.C. 6306. A court reporter will be present to record the
proceedings and prepare a transcript. DOE reserves the right to
schedule the order of presentations and to establish the procedures
governing the conduct of the public meeting. After the public meeting,
interested parties may submit further comments on the proceedings as
well as on any aspect of the rulemaking until the end of the comment
period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for presentations by participants, and
encourage all interested parties to share their views on issues
affecting this rulemaking. Each participant will be allowed to make a
prepared general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will permit other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
DOE will make the entire record of this proposed rulemaking,
including the transcript from the public meeting, available for
inspection at the U.S. Department of Energy, Resource Room of the
Building Technologies Program, 950 L'Enfant Plaza, SW., Washington, DC
20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through
Friday, except Federal holidays. Any person may buy a copy of the
transcript from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding the
proposed rule before or after the public meeting, but no later than the
date provided at the beginning of this NOPR. Comments, data, and other
information submitted to DOE's e-mail address for this rulemaking
should be provided in WordPerfect, Microsoft Word, PDF, or text (ASCII)
file format. Interested parties should avoid the use of special
characters or any form of encryption
[[Page 59575]]
and, wherever possible, comments should carry the electronic signature
of the author. Absent an electronic signature, comments submitted
electronically must be followed and authenticated by submitting a
signed original paper document to the address provided at the beginning
of this notice. Comments, data, and information submitted to DOE via
mail or hand delivery/courier should include one signed original paper
copy. No telefacsimiles (faxes) will be accepted.
According to 10 CFR 1004.11, any person submitting information that
he or she believes to be confidential and exempt by law from public
disclosure should submit two copies: one copy of the document including
all the information believed to be confidential, and one copy of the
document with the information believed to be confidential deleted. DOE
will make its own determination about the confidential status of the
information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
E. Issues on Which DOE Seeks Comment
In addition to the issues that DOE has identified throughout the
earlier portions of this preamble, DOE is particularly interested in
receiving comments and views of interested parties concerning the
following issues:
1. DOE requests comment on its baseline treatment of regulatory
emissions reductions.
2. DOE requests comment on the max-tech levels identified, and on
the combinations of design options considered applicable to achieve
max-tech designs. DOE requests that comments also address as
appropriate the differences in applicable design options for different
product classes.
3. DOE requests comments on the establishment of product classes
for refrigeration products with automatic icemakers, including comment
on the approach DOE proposes to use to account for icemakers in the
product class structure.
4. DOE requests comment on the proposal to establish separate
product classes for built-in refrigeration products. DOE also requests
comment on the proposed definition for built-in products, including
what changes could be made to further strengthen it while not
disqualifying any true built-in products, and whether any adjustment of
the 24-inch dimension specified in the proposed definition should be
made.
5. DOE requests comment on whether any additional product classes
are required to fully address icemaking and built-in products.
6. DOE requests comment on the proposal to combine product class 2
(refrigerator-freezer--partial automatic defrost) with product class 1
(refrigerators and refrigerator-freezers with manual defrost) and the
proposal to combine product class 12 (compact refrigerator-freezer--
partial automatic defrost) with product class 11 (compact refrigerators
and refrigerator-freezers with manual defrost).
7. DOE requests comment on the proposal to eliminate the current
36-inch height limitation for compact products.
8. DOE requests comment on DOE's findings regarding projections
regarding supply of high-efficiency and variable-speed compressors. In
particular, DOE seeks information that would confirm or cast doubt on
DOE's conclusions regarding compressor supply.
9. DOE requests comment on the consideration of use of isobutane
refrigerant as a design option only for compact refrigerators.
10. DOE requests comment and information on aspects of VIP
technology that affect its suitability for consideration as a design
option. DOE in particular seeks any new information not already
discussed or considered in the rulemaking.
11. DOE requests comment on the approach used to develop Proposed
Procedure Reduced Baseline Energy Use equations with adjusted slopes
for product classes 4 (refrigerator-freezers--automatic defrost with
side-mounted freezer without through-the-door ice service), 5
(refrigerator-freezers--automatic defrost with bottom-mounted freezer
without through-the-door ice service), and 5A (refrigerator-freezers--
automatic defrost with bottom-mounted freezer with through-the-door ice
service). DOE also seeks relevant data that would allow adjustment of
the curve intercept so that the shipment-weighted average impact of the
slope change would be neutral (i.e., zero change) with respect to
energy use. DOE also seeks any additional information that would
support similar development of adjusted-slope baseline energy curves
for other product classes.
12. DOE requests comment on its treatment of design options in the
engineering analysis.
13. DOE requests comments, information, and data that would inform
adjustment of energy modeling input and/or results that would allow
more accurate representation of the energy use impacts of design
options using the ERA energy model.
14. DOE requests information regarding the response of retailers to
incremental change in the CGS of appliances associated with proposed
energy conservation standards.
15. DOE requests comment on the weighting of the 2005 RECS sample
using income relationships and volume scaling.
16. DOE requests comments on its approach for developing UAFs using
field-metered data.
17. DOE requests comment on the approach used for estimating repair
costs.
18. DOE requests comments on its approach for estimating base-case
efficiency distributions.
19. DOE requests comments on its approach for forecasting base-case
and standards-case efficiency distributions.
20. DOE requests comment on its considerations leading to the
proposed standards for built-in refrigeration products, particularly
regarding the negative net consumer impacts of the proposed standards.
21. DOE requests comment on the proposal for round off of the
energy standard.
22. DOE requests comment on the regulatory flexibility
determination, as well as any information concerning small businesses
that could be impacted by this rulemaking and the nature and extent of
those potential impacts of the proposed energy conservation standards
on small residential refrigeration product manufacturers.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's
proposed rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Reporting and
recordkeeping requirements, and Small businesses.
[[Page 59576]]
Issued in Washington, DC, on August 27, 2010.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, DOE proposes to amend
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
1. The authority citation for part 430 continues to read as
follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
2. In Sec. 430.2, add the definition for ``Built-in refrigerator/
refrigerator-freezer/freezer,'' in alphabetical order, and revise the
definition for ``Compact refrigerator/refrigerator-freezer/freezer'' to
read as follows:
Sec. 430.2 Definitions.
* * * * *
Built-in refrigerator/refrigerator-freezer/freezer means any
refrigerator, refrigerator-freezer or freezer with 7.75 cubic feet or
greater total volume and 24 inches or less depth not including handles
and not including custom front panels; is designed to be encased on the
sides and rear by cabinetry; is designed to be securely fastened to
adjacent cabinetry, walls or floor; and has sides which are not fully
finished and are not designed to be visible after installation.
* * * * *
Compact refrigerator/refrigerator-freezer/freezer means any
refrigerator, refrigerator-freezer or freezer with total volume less
than 7.75 cubic foot (220 liters) (rated volume as determined in
appendix A1 and B1 of subpart B of this part).
* * * * *
3. In Sec. 430.32 revise paragraph (a) to read as follows:
Sec. 430.32 Energy and water conservation standards and their
effective dates.
* * * * *
(a) Refrigerators/refrigerator-freezers/freezers. These standards
do not apply to refrigerators and refrigerator-freezers with total
refrigerated volume exceeding 39 cubic foot (1104 liters) or freezers
with total refrigerated volume exceeding 30 cubic foot (850 liters).
The energy standards as determined by the equations of the following
table shall be rounded off to the nearest kWh per year.
----------------------------------------------------------------------------------------------------------------
Equations for maximum energy use (kWh/yr)
Product class ----------------------------------------------------------------------
based on AV (ft\3\) based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerators and refrigerator- 7.99AV + 225.0 0.282av + 225.0
freezers with manual defrost.
1A. All-refrigerators--manual defrost.... 6.79AV + 193.6 0.240av + 193.6
2. Refrigerator-freezers--partial 7.99AV + 225.0 0.282av + 225.0
automatic defrost.
3. Refrigerator-freezers--automatic 8.04AV + 232.7 0.284av + 232.7
defrost with top-mounted freezer without
an automatic icemaker.
3-BI. Built-in refrigerator-freezer-- 8.57AV + 248.2 0.303av + 248.2
automatic defrost with top-mounted
freezer without an automatic icemaker.
3I. Refrigerator-freezers--automatic 8.04AV + 316.7 0.284av + 316.7
defrost with top-mounted freezer with an
automatic icemaker without through-the-
door ice service.
3I-BI. Built-in refrigerator-freezers-- 8.57AV + 332.2 0.303av + 332.2
automatic defrost with top-mounted
freezer with an automatic icemaker
without through-the-door ice service.
3A. All-refrigerators--automatic defrost. 7.07AV + 201.6 0.250av + 201.6
3A-BI. Built-in All-refrigerators-- 7.55AV + 215.1 0.266av + 215.1
automatic defrost.
4. Refrigerator-freezers--automatic 8.48AV + 296.5 0.299av + 296.5
defrost with side-mounted freezer
without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers-- 9.04AV + 316.2 0.319av + 316.2
automatic defrost with side-mounted
freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic 8.48AV + 380.5 0.299av + 380.5
defrost with side-mounted freezer with
an automatic icemaker without through-
the-door ice service.
4I-BI. Built-In Refrigerator-freezers-- 9.04AV + 400.2 0.319av + 400.2
automatic defrost with side-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5. Refrigerator-freezers--automatic 8.80AV + 315.4 0.311av + 315.4
defrost with bottom-mounted freezer
without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers-- 9.35AV + 335.1 0.330av + 335.1
automatic defrost with bottom-mounted
freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic 8.80AV + 399.4 0.311av + 399.4
defrost with bottom-mounted freezer with
an automatic icemaker without through-
the-door ice service.
5I-BI. Built-In Refrigerator-freezers-- 9.35AV + 419.1 0.330av + 419.1
automatic defrost with bottom-mounted
freezer with an automatic icemaker
without through-the-door ice service.
5A. Refrigerator-freezer--automatic 9.15AV + 471.3 0.323av + 471.3
defrost with bottom-mounted freezer with
through-the-door ice service.
5A-BI. Built-in refrigerator-freezer-- 9.72AV + 495.5 0.343av + 495.5
automatic defrost with bottom-mounted
freezer with through-the-door ice
service.
6. Refrigerator-freezers--automatic 8.36AV + 384.1 0.295av + 384.1
defrost with top-mounted freezer with
through-the-door ice service.
7. Refrigerator-freezers--automatic 8.50AV + 431.1 0.300av + 431.1
defrost with side-mounted freezer with
through-the-door ice service.
7-BI. Built-In Refrigerator-freezers-- 9.07AV + 454.3 0.320av + 454.3
automatic defrost with side-mounted
freezer with through-the-door ice
service.
8. Upright freezers with manual defrost.. 5.57AV + 193.7 0.197av + 193.7
9. Upright freezers with automatic 8.62AV + 228.3 0.305av + 228.3
defrost without an automatic icemaker.
9-BI. Built-In Upright freezers with 9.24AV + 244.6 0.326av + 244.6
automatic defrost without an automatic
icemaker.
10. Chest freezers and all other freezers 7.29AV + 107.8 0.257av + 107.8
except compact freezers.
10A. Chest freezers with automatic 10.24AV + 148.1 0.362av + 148.1
defrost.
11. Compact refrigerators and 9.03AV + 252.3 0.319av + 252.3
refrigerator-freezers with manual
defrost.
11A. Compact refrigerators and 7.84AV + 219.1 0.277av + 219.1
refrigerator-freezers with manual
defrost.
12. Compact refrigerator-freezers-- 5.91AV + 335.8 0.209av + 335.8
partial automatic defrost.
13. Compact refrigerator-freezers-- 11.80AV + 339.2 0.417av + 339.2
automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerator--automatic 9.17AV + 259.3 0.324av + 259.3
defrost.
14. Compact refrigerator-freezers-- 6.82AV + 456.9 0.241av + 456.9
automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers-- 12.88AV + 368.7 0.455av + 368.7
automatic defrost with bottom-mounted
freezer.
[[Page 59577]]
16. Compact upright freezers with manual 8.65AV + 225.7 0.306av + 225.7
defrost.
17. Compact upright freezers with 10.17AV + 351.9 0.359av + 351.9
automatic defrost.
18. Compact chest freezers............... 9.25AV + 136.8 0.327av + 136.8
----------------------------------------------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in Appendices A and B of subpart B of this part.
av = Total adjusted volume, expressed in Liters.
* * * * *
[FR Doc. 2010-23692 Filed 9-20-10; 4:15 pm]
BILLING CODE 6450-01-P