[Federal Register Volume 88, Number 69 (Tuesday, April 11, 2023)]
[Rules and Regulations]
[Pages 21752-21814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06499]
[[Page 21751]]
Vol. 88
Tuesday,
No. 69
April 11, 2023
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for Air
Cleaners; Final Rule
Federal Register / Vol. 88, No. 69 / Tuesday, April 11, 2023 / Rules
and Regulations
[[Page 21752]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2021-BT-STD-0035]
RIN 1904-AF46
Energy Conservation Program: Energy Conservation Standards for
Air Cleaners; Final Rule
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Direct final rule.
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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
authorizes the Secretary of Energy to classify additional types of
consumer products as covered products upon determining that:
classifying the product as a covered product is necessary for the
purposes of EPCA; and the average annual per-household energy use by
products of such type is likely to exceed 100 kilowatt-hours per year
(``kWh/yr''). In a final determination published on July 15, 2022, DOE
determined that classifying air cleaners as a covered product is
necessary or appropriate to carry out the purposes of EPCA, and that
the average U.S. household energy use for air cleaners is likely to
exceed 100 kWh/yr. In this direct final rule, DOE is establishing
energy conservation standards for air cleaners. DOE has determined that
energy conservation standards for these products will result in
significant conservation of energy, and are technologically feasible
and economically justified.
DATES: The effective date of this rule is August 9, 2023, unless
adverse comment is received by July 31, 2023. If adverse comments are
received that DOE determines may provide a reasonable basis for
withdrawal of the direct final rule, a timely withdrawal of this rule
will be published in the Federal Register. If no such adverse comments
are received, compliance with the standards established for air
cleaners in this direct final rule is required on and after December
31, 2023.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at www.regulations.gov. All documents in the docket are listed
in the www.regulations.gov index. However, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2021-BT-STD-0035. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.
For further information on how to submit a comment or review other
public comments and the docket, contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
[email protected].
FOR FURTHER INFORMATION CONTACT: Mr. Troy Watson, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington,
DC, 20585-0121. Telephone: (240) 449-9387. Email:
[email protected].
Ms. Amelia Whiting, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC,
20585-0121. Telephone: (202) 586-2588. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Direct Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Air Cleaners
3. Joint Proposal Submitted by the Joint Stakeholders
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency Levels
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Results
a. Product Class 1
b. Product Class 2
c. Product Class 3
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Manufacturer Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
[[Page 21753]]
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
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Air Cleaner
Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
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. Information Quality
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
On July 15, 2022, DOE published a final determination (``July 2022
Final Determination'') in which it determined that air cleaners qualify
as a ``covered product'' under the Energy Policy and Conservation Act,
as amended (``EPCA'').\1\ 87 FR 42297. DOE determined in the July 2022
Final Determination that coverage of air cleaners is necessary or
appropriate to carry out the purposes of EPCA, and that the average
U.S. household energy use for air cleaners is likely to exceed 100 kWh/
yr. Id. Currently, no energy conservation standards are prescribed by
DOE for air cleaners.
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B))
As previously mentioned, and under the authority provided by 42
U.S.C. 6295(p)(4), DOE is issuing this direct final rule establishing
energy conservation standards for air cleaners. These standard levels
were submitted jointly to DOE on August 23, 2022, by groups
representing manufacturers, energy and environmental advocates, and
consumer groups, hereinafter referred to as ``the Joint Stakeholders.''
\2\ This collective set of comments, titled ``Joint Statement of Joint
Stakeholder Proposal On Recommended Energy Conservation Standards And
Test Procedure For Consumer Room Air Cleaners'' (the ``Joint
Proposal''),\3\ recommends specific energy conservation standards for
air cleaners that, in the commenters' view, would satisfy the EPCA
requirements in 42 U.S.C. 6295(o). See sections II.B.3 and II.B.2 of
this document for a detailed discussion of the Joint Proposal and
history of the current rulemaking, respectively.
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\2\ The Joint Stakeholders include the Association of Home
Appliance Manufacturers (``AHAM''), Appliance Standards Awareness
Project (``ASAP''), American Council for an Energy-Efficient Economy
(``ACEEE''), Consumer Federation of America (``CFA''), Natural
Resources Defense Council (``NRDC''), the New York State Energy
Research and Development Authority (``NYSERDA''), and the Pacific
Gas and Electric Company (``PG&E''). AHAM is representing the
companies who manufacture consumer room air cleaners and are members
of the Portable Appliance Division (DOE has included names of all
manufacturers listed in the footnote on page 1 of the Joint Proposal
and the signatories listed on pages 13-14): 3M Co.; Access Business
Group, LLC; ACCO Brands Corporation; Air King, Air King Ventilation
Products; Airgle Corporation; Alticor, Inc.; Beijing Smartmi
Electronic Technology Co., Ltd.; BISSELL Inc.; Blueair Inc.; BSH
Home Appliances Corporation; De'Longhi America, Inc.; Dyson Limited;
Essick Air Products; Fellowes Inc.; Field Controls; Foxconn
Technology Group; GE Appliances, a Haier company; Gree Electric
Appliances Inc.; Groupe SEB; Guardian Technologies, LLC; Haier Smart
Home Co., Ltd.; Helen of Troy-Health & Home; iRobot; Lasko Products,
Inc.; Molekule Inc.; Newell Brands Inc.; Oransi LLC; Phillips
Domestic Appliances NA Corporation; SharkNinja Operating, LLC; Sharp
Electronics Corporation; Sharp Electronics of Canada Ltd.; Sunbeam
Products, Inc.; Trovac Industries Ltd; Vornado Air LLC; Whirlpool
Corporation; Winix Inc.; and Zojirushi America Corporation.
\3\ DOE Docket No. EERE-2021-BT-STD-0035-0016.
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After carefully considering the Joint Proposal, DOE determined that
the recommendations contained therein are compliant with 42 U.S.C.
6295(o), as required by 42 U.S.C. 6295(p)(4)(A)(i) for the issuance of
a direct final rule. As required by 42 U.S.C. 6295(p)(4)(A)(i), DOE is
simultaneously publishing, elsewhere in this issue of the Federal
Register, a notice of proposed rulemaking (``NOPR'') proposing that the
identical standard levels contained in this direct final rule be
adopted. Consistent with the statute, DOE is providing a 110-day public
comment period on the direct final rule. (42 U.S.C. 6295(p)(4)(B)) If
DOE determines that any comments received provide a reasonable basis
for withdrawal of the direct final rule under 42 U.S.C. 6295(o), DOE
will continue the rulemaking under the NOPR. (42 U.S.C. 6295(p)(4)(C))
See section II.A of this document for more details on DOE's statutory
authority.
This direct final rule documents DOE's analyses to objectively and
independently evaluate the energy savings potential, technological
feasibility, and economic justification of the standard levels
recommended in the Joint Proposal, as per the requirements of 42 U.S.C.
6295(o).
Ultimately, DOE found that the standard levels recommended in the
Joint Proposal would result in significant energy savings and are
technologically feasible and economically justified. Table I.1
documents the standards for air cleaners. The standards correspond to
the recommended trial standard level (``TSL'') 3 (as described in
section V.A of this document) and are expressed as an integrated energy
factor (``IEF'') in terms of PM2.5 \4\ clean air delivery
rate per watt (``PM2.5 CADR/W''), based on the product's
PM2.5 CADR. The standards are the same as those recommended
by the Joint Stakeholders, which consist of two-tiered (Tier 1 and Tier
2) standard levels. These standards apply to all products listed in
Table I.1 and manufactured in, or imported into, the United States
starting on December 31, 2023, for Tier 1 standards and on December 31,
2025, for Tier 2 standards.
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\4\ Section 2.8 of the industry standard AHAM AC-7-2022 defines
PM2.5 as particulate matter with an aerodynamic diameter
less than or equal to a nominal 2.5 micrometers as measured by a
reference method based on 40 CFR part 50, appendix I, and designated
in accordance with 40 CFR part 53 or by an equivalent method
designated in accordance with 40 CFR part 53.
[[Page 21754]]
Table I.1--Energy Conservation Standards for Air Cleaners
[Compliance starting December 31, 2023]
------------------------------------------------------------------------
IEF (PM2.5 CADR/W) \5\
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Product class Tier 1 December Tier 2 December
31, 2023 31, 2025
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PC1: 10 <= PM2.5 CADR < 100... 1.7 1.9
PC2: 100 <= PM2.5 CADR < 150.. 1.9 2.4
PC3: PM2.5 CADR >= 150........ 2.0 2.9
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A. Benefits and Costs to Consumers
Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of air cleaners, as measured by the
average life-cycle cost (``LCC'') savings and the simple payback period
(``PBP'').\6\ The average LCC savings are positive for all product
classes, and the PBP is less than the average lifetime of air cleaners,
which is estimated to be 9.0 years (see section IV.F of this document).
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\5\ These values from the Joint Proposal are rounded according
to the sampling plan in 10 CFR 429.68. The rounding has no
functional impact on the standards as compared to the levels in the
Joint Proposal.
\6\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.9 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this document).
Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers of Air Cleaners
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Average LCC
Air cleaners class Tier savings Simple payback
(2021$) period (years)
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Product Class 1: 10-100 PM2.5 CADR........... Tier 1.......................... $18 0.9
Tier 2.......................... 12 1.4
Product Class 2: 100-150 PM2.5 CADR.......... Tier 1.......................... 38 0.4
Tier 2.......................... 50 0.5
Product Class 3: 150+ PM2.5 CADR............. Tier 1.......................... 105 0.1
Tier 2.......................... 94 0.1
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DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year through the
end of the analysis period (2023-2057). Using a real discount rate of
6.6 percent, DOE estimates that the INPV for manufacturers of air
cleaners in the case without new standards is $1,565.9 million in
2021$. Under the adopted standards, DOE estimates the change in INPV to
range from -4.3 percent to -2.6 percent, which is approximately -$66.7
million to -$40.7 million. In order to bring products into compliance
with standards, it is estimated that industry will incur total
conversion costs of $57.3 million.
DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.
C. National Benefits and Costs \7\
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\7\ All monetary values in this document are expressed in 2021
dollars. and, where appropriate, are discounted to 2022 unless
explicitly stated otherwise.
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DOE's analyses indicate that the adopted energy conservation
standards for air cleaners would save a significant amount of energy.
Relative to the case without standards, the lifetime energy savings for
air cleaners purchased in the analysis period that begins in the
anticipated year of compliance with the standards (2024-2057), amount
to 1.80 quadrillion British thermal units (``Btu''), or quads.\8\ This
represents a cumulative savings of 27 percent relative to the energy
use of these products in the case without standards (referred to as the
``no-new-standards case'').
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\8\ The quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings includes the energy consumed in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.1 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the standards for air cleaners ranges from $5.8 billion (at
a 7-percent discount rate) to $13.7 billion (at a 3-percent discount
rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product costs for
air cleaners purchased in 2024-2057.
In addition, the adopted standards for air cleaners are projected
to yield significant environmental benefits. DOE estimates that the
standards will result in cumulative emission reductions (over the same
period as for energy savings) of 57.7 million metric tons (``Mt'') \9\
of carbon dioxide (``CO2''), 24.2 thousand tons of sulfur
dioxide (``SO2''), 91.2 thousand tons of nitrogen oxides
(``NOX''), 411.4 thousand tons of methane
(``CH4''), 0.6 thousand tons of nitrous oxide
(``N2O''), and 0.2 tons of mercury (``Hg'').\10\ The
estimated cumulative reduction in CO2 emissions through 2030
amounts to 2.5 million Mt, which is equivalent to the emissions
[[Page 21755]]
resulting from the annual electricity use of almost 500 thousand homes.
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\9\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\10\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2022 (``AEO2022''). AEO2022 represents current federal and
state legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO2022 assumptions that affect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (``GHG'') using four different estimates of the social
cost of CO2 (``SC-CO2''), the social cost of
methane (``SC-CH4''), and the social cost of nitrous oxide
(``SC-N2O''). Together these represent the social cost of
GHG (``SC-GHG'').\11\ DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(``IWG'').\12\ The derivation of these values is discussed in section
IV.L of this document. For presentational purposes, the climate
benefits associated with the average SC-GHG at a 3-percent discount
rate are estimated to be $2.8 billion. DOE does not have a single
central SC-GHG point estimate and it emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-
GHG estimates.
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\11\ To monetize the benefits of reducing greenhouse gas
emissions this analysis uses the interim estimates presented in the
Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the Interagency Working Group on the
Social Cost of Greenhouse Gases (IWG).
\12\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021 (``February 2021 SC-GHG TSD'').
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
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DOE estimated the monetary health benefits of SO2 and
NOX emissions reductions, using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document. DOE estimated the present value of the health benefits would
be $1.8 billion using a 7-percent discount rate, and $4.7 billion using
a 3-percent discount rate.\13\ DOE is currently only monetizing (for
SO2 and NOX) PM2.5 precursor health
benefits and (for NOX) ozone precursor health benefits, but
will continue to assess the ability to monetize other effects such as
health benefits from reductions in direct PM2.5 emissions.
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\13\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the economic benefits and costs expected to
result from the new standards for air cleaners. There are other
important unquantified effects, including certain unquantified climate
benefits, unquantified public health benefits from the reduction of
toxic air pollutants and other emissions, unquantified energy security
benefits, and distributional effects, among others.
Table I.3--Summary of Economic Benefits and Costs of Adopted Energy
Conservation Standards for Air Cleaners
------------------------------------------------------------------------
Billion
($2021)
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 14.1
Climate Benefits *...................................... 2.8
Health Benefits **...................................... 4.7
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Total Benefits [dagger]............................. 21.6
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Consumer Incremental Product Costs...................... 0.5
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Net Benefits........................................ 21.1
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 6.0
Climate Benefits * (3% discount rate)................... 2.8
Health Benefits **...................................... 1.8
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Total Benefits [dagger]............................. 10.6
------------------------------------------------------------------------
Consumer Incremental Product Costs...................... 0.2
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Net Benefits........................................ 10.3
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Note: This table presents the costs and benefits associated with product
name shipped in 2024-2057. These results include benefits to consumers
which accrue after 2057 from the products shipped in 2024-2057.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
discount rates; 95th percentile at 3-percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
shown, but DOE does not have a single central SC-GHG point estimate.
To monetize the benefits of reducing greenhouse gas emissions this
analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates Under Executive Order 13990 published in February 2021 by
the Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[[Page 21756]]
The benefits and costs of the standards can also be expressed in
terms of annualized values. The monetary values for the total
annualized net benefits are (1) the reduced consumer operating costs,
minus (2) the increase in product purchase prices and installation
costs, plus (3) the value of climate and health benefits of emission
reductions, all annualized.\14\
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\14\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2021, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2021. Using the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in the
compliance year, that yields the same present value.
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The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of air cleaners
shipped in 2024-2057. The benefits associated with reduced emissions
achieved as a result of the adopted standards are also calculated based
on the lifetime of air cleaners shipped in 2024-2057. DOE notes that
DOE used its typical analytical time horizon of 30-years and then added
4 additional years to reflect the early compliance dates that are part
of the standard level being adopted in this final rule. Total benefits
for both the 3-percent and 7-percent cases are presented using the
average GHG social costs with 3-percent discount rate. Estimates of SC-
GHG values are presented for all four discount rates in section V.C.2
of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the standard, expressed in terms of annualized values.
The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOX and SO2
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $19.8 million per year in increased equipment costs,
while the estimated annual benefits are $499 million in reduced
equipment operating costs, $136 million in climate benefits, and $149
million in health benefits. In this case, the net benefit would amount
to $764 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $23.4 million per year in increased
equipment costs, while the estimated annual benefits are $690 million
in reduced operating costs, $136 million in climate benefits, and $228
million in health benefits. In this case, the net benefit would amount
to $1,030 million per year.
Table I.4--Annualized Benefits and Costs of Adopted Standards for Air Cleaners
----------------------------------------------------------------------------------------------------------------
Million (2021$/year)
--------------------------------------------------------
Primary Low-net-benefits High-net-benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................ 689.7 623.7 773.4
Climate Benefits *..................................... 135.6 124.2 149.9
Health Benefits **..................................... 228.4 210.1 251.0
--------------------------------------------------------
Total Benefits [dagger]............................ 1,053.6 958.1 1,174.2
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs [Dagger]............ 23.4 22.8 24.7
--------------------------------------------------------
Net Benefits....................................... 1,030.2 935.3 1,149.5
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................ 498.8 459.8 546.9
Climate Benefits * (3% discount rate).................. 135.6 124.2 149.9
Health Benefits **..................................... 149.3 139.7 160.9
--------------------------------------------------------
Total Benefits [dagger]............................ 783.7 723.7 857.7
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs [Dagger]............ 19.8 19.3 20.7
--------------------------------------------------------
Net Benefits....................................... 763.9 704.4 837.0
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with air cleaners shipped in 2024-2057. These
results include benefits to consumers which accrue after 2057 from the products shipped in 2024-2057. The
Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in section IV.F.1 of this document. Note that the Benefits and
Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3-percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four
sets of SC-GHG estimates. To monetize the benefits of reducing greenhouse gas emissions this analysis uses the
interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the Interagency Working
Group on the Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as filter costs.
[[Page 21757]]
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.
D. Conclusion
DOE has determined that the Joint Proposal containing
recommendations with respect to energy conservation standards for air
cleaners was submitted jointly by interested persons that are fairly
representative of relevant points of view, in accordance with 42 U.S.C.
6295(p)(4)(A). After considering the analysis and weighing the benefits
and burdens, DOE has determined that the recommended standards are in
accordance with 42 U.S.C. 6295(o), which contains the criteria for
prescribing new or amended standards. Specifically, the Secretary has
determined that the adoption of the recommended standards would result
in the significant conservation of energy and is technologically
feasible and economically justified. In determining whether the
recommended standards are economically justified, the Secretary has
determined that the benefits of the recommended standards exceed the
burdens. Namely, the Secretary has concluded that the recommended
standards, when considering the benefits of energy savings, positive
NPV of consumer benefits, emission reductions, the estimated monetary
value of the emissions reductions, and positive average LCC savings,
would yield benefits outweighing the negative impacts on some consumers
and on manufacturers, including the conversion costs that could result
in a reduction in INPV for manufacturers.
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
standards for air cleaners is $19.8 million per year in increased
product costs, while the estimated annual benefits are $499 million in
reduced product operating costs, $136 million in climate benefits, and
$149 million in health benefits. The net benefit amounts to $764
million per year.
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\15\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------
\15\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 1.80 quads FFC, the equivalent of
the primary annual energy use of 19 million homes. The NPV of consumer
benefit for these projected energy savings is $5.8 billion using a
discount rate of 7 percent, and $13.7 billion using a discount rate of
3 percent. The cumulative emissions reductions associated with these
energy savings are 57.7 Mt of CO2, 24.2 thousand tons of
SO2, 91.2 thousand tons of NOX, 0.2 tons of Hg,
411.4 thousand tons of CH4, 0.6 thousand tons of
N2O. The estimated monetary value of the climate benefit
from reduced GHG emissions (associated with the average SC-GHG at a 3-
percent discount rate) is $2.8 billion. The estimated monetary value of
the health benefits from reduced SO2 and NOX
emissions is $1.8 billion using a 7 percent discount rate and $4.7
billion using a 3 percent discount rate. As such, DOE has determined
the energy savings from the standard levels adopted in this direct
final rule are ``significant'' within the meaning of 42 U.S.C.
6295(o)(3)(B). A more detailed discussion of the basis for these
conclusions is contained in the remainder of this document and the
accompanying technical support document (``TSD'').
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is
issuing this direct final rule establishing the energy conservation
standards for air cleaners. Consistent with this authority, DOE is also
publishing elsewhere in this issue of the Federal Register a notice of
proposed rulemaking proposing standards that are identical to those
contained in this direct final rule. See 42 U.S.C. 6295(p)(4)(A)(i).
II. Introduction
The following section briefly discusses the statutory authority
underlying this direct final rule, as well as some of the relevant
historical background related to the establishment of standards for air
cleaners.
A. Authority
EPCA grants DOE authority to prescribe an energy conservation
standard for any type (or class) of covered products of a type
specified in 42 U.S.C. 6292(a)(20) if the requirements of 42 U.S.C.
6295(o) and 42 U.S.C. 6295(p) are met and the Secretary determines
that--
(A) the average per household energy use within the United States
by products of such type (or class) exceeded 150 kWh (or its Btu
equivalent) for any 12-month period ending before such determination;
(B) the aggregate household energy use within the United States by
products of such type (or class) exceeded 4,200,000,000 kWh (or its Btu
equivalent) for any such 12-month period;
(C) substantial improvement in the energy efficiency of products of
such type (or class) is technologically feasible; and
(D) the application of a labeling rule under 42 U.S.C. 6294 to such
type (or class) is not likely to be sufficient to induce manufacturers
to produce, and consumers and other persons to purchase, covered
products of such type (or class) which achieve the maximum energy
efficiency which is technologically feasible and economically
justified. (42 U.S.C. 6295(l)(1))
The energy conservation program under EPCA, consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of the EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. (See 42 U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted
[[Page 21758]]
under EPCA and when making representations to the public regarding the
energy use or efficiency of those products. (42 U.S.C. 6293(c) and
6295(s)) Similarly, DOE must use these test procedures to determine
whether the products comply with standards adopted pursuant to EPCA.
(42 U.S.C. 6295(s)) The DOE test procedures for air cleaners appear at
title 10 of the Code of Federal Regulations (``CFR'') part 430, subpart
B, appendix FF (``appendix FF'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including air cleaners. Any new
or amended standard for a covered product must be designed to achieve
the maximum improvement in energy efficiency that the Secretary of
Energy determines is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B))
Furthermore, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard (1) for certain products,
including air cleaners, if no test procedure has been established for
the product, or (2) if DOE determines by rule that the standard is not
technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, DOE must determine whether the benefits of the
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make
this determination after receiving comments on the proposed standard,
and by considering, to the greatest extent practicable, the following
seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated
average life of the covered products in the type (or class) compared
to any increase in the price, initial charges, or maintenance
expenses for the covered products that are likely to result from the
standard;
(3) The total projected amount of energy (or as applicable,
water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the
covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (``Secretary'')
considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of products that has the same function or intended use if DOE
determines that products within such group (A) consume a different kind
of energy from that consumed by other covered products within such type
(or class); or (B) have a capacity or other performance-related feature
which other products within such type (or class) do not have and such
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In
determining whether a performance-related feature justifies a different
standard 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))
Additionally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) DOE's current test procedures for air cleaners
address standby mode and off mode energy use, through the IEF metric.
As IEF includes annual energy consumption in standby mode and off mode
as part of the annual energy consumption metric and DOE is adopting
standards for air cleaners based on IEF the standards in this direct
final rule account for standby mode and off mode energy use of an air
cleaner.
Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE
authority to issue a final rule (hereinafter referred to as a ``direct
final rule'') establishing an energy conservation standard on receipt
of a statement submitted jointly by interested persons that are fairly
representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates),
as determined by the Secretary, that contains recommendations with
respect to an energy or water conservation standard that are in
accordance with the requirements in 42 U.S.C. 6295(o). (42 U.S.C.
6295(p)(4))
A NOPR that proposes an identical energy efficiency standard must
be published simultaneously with the direct final rule, and DOE must
provide a public comment period of at least 110 days on the proposal.
(42 U.S.C. 6295(p)(4)(A)-(B)) Based on the comments received during
this period, the direct final rule will either become effective, or DOE
will withdraw it not later than 120 days after its issuance if (1) one
or more adverse comments is received, and (2) DOE determines that those
comments, when viewed in light of the rulemaking record related to the
direct final rule, may provide a reasonable basis for withdrawal of the
direct final rule under 42 U.S.C. 6295(o). (42 U.S.C. 6295(p)(4)(C))
Receipt of an alternative joint recommendation may also trigger a DOE
withdrawal of the direct final rule in the same manner. Id. After
withdrawing a direct final rule, DOE must proceed with the notice of
proposed rulemaking published simultaneously with the direct final rule
and publish in the Federal Register the reasons why the direct final
rule was withdrawn. Id.
DOE has previously explained its interpretation of its direct final
rule
[[Page 21759]]
authority. In a final rule amending the Department's ``Procedures,
Interpretations and Policies for Consideration of New or Revised Energy
Conservation Standards for Consumer Products'' at 10 CFR part 430,
subpart C, appendix A, DOE explained that, because the direct final
rule authority does not refer to any of the other requirements in EPCA,
DOE interprets that provision as not subject to any of those other
requirements. 86 FR 70892, 70912 (Dec. 13, 2021). Rather, DOE's
authority under 42 U.S.C. 6295(p)(4) is constrained only by the
requirements of 42 U.S.C. 6295(o). DOE's overarching statutory mandate
in issuing energy conservation standards is to choose a standard that
results in the maximum improvement in energy efficiency that is
technologically feasible and economically justified--a requirement
found in 42 U.S.C. 6295(o). Id.
B. Background
1. Current Standards
Air cleaners are not currently subject to federal energy
conservation standards. However, some states have adopted standards.
Specifically, the District of Columbia adopted standards in 2020,
Maryland adopted standards in 2022, and Nevada and New Jersey adopted
standards in 2021, as shown in Table II.1. The District of Columbia and
New Jersey State standards went into effect in 2022, while the Nevada
State standard is expected to go into effect in 2023 and the Maryland
State standard is expected to go into effect in 2024.
Table II.1--Air Cleaner Standards Adopted by the District of Columbia
and the States of Maryland, Nevada, and New Jersey
------------------------------------------------------------------------
Minimum smoke
Smoke CADR bins CADR/W
------------------------------------------------------------------------
30 <= PM2.5 CADR < 100................................ 1.7
100 <= PM2.5 CADR < 150............................... 1.9
PM2.5 CADR >= 150..................................... 2.0
------------------------------------------------------------------------
Note: These standards are based on smoke clean air delivery rate
(``CADR'') divided by the active mode power consumption in watts
(``W''), which is different from the IEF metric specified in appendix
FF.
Washington State adopted the standards shown in Table II.2 in 2022
with an effective date in 2024.
Table II.2--Air Cleaner Standards Adopted by Washington State
------------------------------------------------------------------------
Minimum smoke
Smoke CADR Bins CADR/W
------------------------------------------------------------------------
30 <= PM2.5 CADR < 100................................ 1.9
100 <= PM2.5 CADR < 150............................... 2.4
PM2.5 CADR >= 150..................................... 2.9
------------------------------------------------------------------------
Note: These standards are based on smoke CADR divided by the active mode
power consumption in W, which is different from the IEF metric
specified in appendix FF.
2. History of Standards Rulemaking for Air Cleaners
DOE has not previously conducted an energy conservation standards
rulemaking for air cleaners. On January 25, 2022, DOE published a
request for information (``January 2022 RFI''), seeking comments on
potential test procedure and energy conservation standards for air
cleaners. 87 FR 3702. In the January 2022 RFI, DOE requested
information to aid in the development of the technical and economic
analyses to support energy conservation standards for air cleaners,
should they be warranted. 87 FR 3702, 3705.
DOE determined in the July 2022 Final Determination that coverage
of air cleaners is necessary or appropriate to carry out the purposes
of EPCA; the average U.S. household energy use for air cleaners is
likely to exceed 100 kWh/yr; and thus, air cleaners qualify as a
``covered product'' under EPCA. 87 FR 42297.
On March 6, 2023, DOE published a final rule (``March 2023 TP Final
Rule'') establishing a new test procedure (TP) at appendix FF for air
cleaners that references the industry standard, Association of Home
Appliance Manufacturers (``AHAM'') AC-7-2022, ``Energy Test Method for
Consumer Room Air Cleaners'' and includes methods to (1) measure the
performance of the covered product and (2) use the measured results to
calculate an IEF to represent the energy efficiency of air cleaners. 88
FR 14014.
DOE received comments in response to the January 2022 RFI from the
interested parties listed in Table II.4.
Table II.4--List of Commenters With Written Submissions in Response to the January 2022 RFI
----------------------------------------------------------------------------------------------------------------
Docket
Commenter(s) Abbreviation No. Commenter type
----------------------------------------------------------------------------------------------------------------
ACEEE, ASAP, AHAM, CFA, and NRDC....... Joint Commenters.................. 8 Efficiency Organizations
and Trade Association.
Blueair IAQ............................ Blueair........................... 10 Manufacturer.
Electrolux Home Products Inc. North Electrolux........................ 6 Manufacturer.
America.
Daikin U.S. Corporation................ Daikin............................ 12 Manufacturer.
Lennox International Inc............... Lennox............................ 7 Manufacturer.
Madison Indoor Air Quality............. MIAQ.............................. 5 Manufacturer.
Molekule............................... Molekule.......................... 11 Manufacturer.
Northwest Energy Efficiency Alliance... NEEA.............................. 13 Efficiency Organization.
Pacific Gas and Electric Company, San CA IOUs........................... 9 Utilities.
Diego Gas and Electric, and Southern
California Edison; collectively, the
California Investor-Owned Utilities.
Synexis LLC............................ Synexis........................... 14 Manufacturer.
Trane Technologies..................... Trane............................. 3 Manufacturer.
Air-Conditioning, Heating, & AHRI.............................. 15 Trade Association.
Refrigeration Institute.
----------------------------------------------------------------------------------------------------------------
A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\16\
In response to the January 2022 RFI, DOE received certain
[[Page 21760]]
comments pertaining to the scope of coverage and definition for air
cleaners, which DOE addressed and discussed in the July 2022 Final
Determination. Additionally, DOE addressed comments pertaining to the
test procedure in a NOPR published on October 18, 2022 as part of the
test procedure rulemaking establishing appendix FF. 87 FR 63324. All
remaining comments provided by stakeholders in response to the January
2022 RFI are addressed in this direct final rule.
---------------------------------------------------------------------------
\16\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to determine
coverage for air cleaners. (Docket No. EERE-2021-BT-DET-0022, which
is maintained at www.regulations.gov). The references are arranged
as follows: (commenter name, comment docket ID number, page of that
document). When referring to comments received on another docket,
the docket number is included prior to the commenter's name.
---------------------------------------------------------------------------
3. Joint Proposal Submitted by the Joint Stakeholders
This section summarizes the recommendations included in the Joint
Proposal submitted by the Joint Stakeholders. The Joint Proposal
submitted by the Joint Stakeholders urged DOE to publish final rules
adopting the consumer room air cleaner test procedure and standards and
compliance dates contained in the Joint Proposal, as soon as possible,
but not later than December 31, 2022. (Joint Stakeholders, No. 16 at p.
1) The Joint Proposal also recommended that DOE adopt AHAM AC-7-2022 as
the DOE test procedure. (Id. at p. 6) In regards to energy conservation
standards, the Joint Proposal specified two-tiered Tier 1 and Tier 2
standard levels, as shown in Table II.5, for conventional room air
cleaners with proposed compliance dates of December 31, 2023, and
December 31, 2025, respectively. (Id. at p. 9)
Table II.5--Tier 1 and Tier 2 Standards Proposed by the Joint
Stakeholders in the Joint Proposal
------------------------------------------------------------------------
IEF (PM2.5 CADR/W) IEF (PM2.5 CADR/W)
Product description Tier 1 * Tier 2 **
------------------------------------------------------------------------
10 <= PM2.5 CADR < 100........ 1.69 1.89
100 <= PM2.5 CADR < 150....... 1.90 2.39
PM2.5 CADR >= 150............. 2.01 2.91
------------------------------------------------------------------------
* Tier 1 standards would have an effective date of December 31, 2023.
** Tier 2 standards would have an effective date of December 31, 2025.
The Tier 1 standards are equivalent to the state standards
established by the States of Maryland, Nevada, and New Jersey, and the
District of Columbia. (Id. at p. 9) Tier 2 standards are equivalent to
the voluntary standards specified in the U.S. Environmental Protection
Agency's (``EPA's'') ENERGY STAR Version 2.0 Room Air Cleaners
Specification, Rev. May 2022, (``ENERGY STAR V. 2.0'') and those
adopted by the State of Washington. (Id.) While the standards
established by the States and those specified in ENERGY STAR V. 2.0 are
based on smoke CADR and include only active mode energy consumption in
the calculation of the CADR/W metric, the Joint Stakeholders presented
data to show that there is a strong relationship between the
PM2.5 CADR calculation and the measured smoke and dust CADR
values. (Id. at p. 6) Additionally, DOE compared the IEF metric,
calculated using PM2.5 CADR and annual energy consumption in
active mode and standby mode (``AEC''), to the smoke CADR/W metric,
calculated using smoke CADR and active mode power consumption, using
the ENERGY STAR database,\17\ and found a strong relationship between
IEF and the CADR/W metric specified in ENERGY STAR V. 2.0 and the State
standards. The Joint Stakeholders stated that the Tier 1 and Tier 2
standards are estimated to save 1.9 quads of FFC energy nationally over
30 years of sales. (Id. at p. 9)
---------------------------------------------------------------------------
\17\ Available at: https://data.energystar.gov/Active-Specifications/ENERGY-STAR-Certified-Room-Air-Cleaners/jmck-i55n/data. Last accessed: December 2022.
---------------------------------------------------------------------------
After carefully considering the consensus recommendations for
establishing energy conservation standards for air cleaners submitted
by the Joint Stakeholders, DOE has determined that these
recommendations are in accordance with the statutory requirements of 42
U.S.C. 6295(p)(4) for the issuance of a direct final rule.
More specifically, these recommendations comprise a statement
submitted by interested persons who are fairly representative of
relevant points of view on this matter. In appendix A to subpart C of
10 CFR part 430 (``appendix A''), DOE explained that to be ``fairly
representative of relevant points of view,'' the group submitting a
joint statement must, where appropriate, include larger concerns and
small business in the regulated industry/manufacturer community, energy
advocates, energy utilities, consumers, and States. However, it will be
necessary to evaluate the meaning of ``fairly representative'' on a
case-by-case basis, subject to the circumstances of a particular
rulemaking, to determine whether fewer or additional parties must be
part of a joint statement in order to be ``fairly representative of
relevant points of view.'' Section 10 of appendix A. In reaching this
determination, DOE took into consideration the fact that the Joint
Stakeholders consist of representatives of manufacturers of the covered
product at issue, a state corporation, and efficiency advocates--all of
which are groups specifically identified by Congress as relevant
parties to any consensus recommendation. (42 U.S.C. 6295(p)(4)(A)) As
delineated above, the Joint Proposal was signed and submitted by a
broad cross-section of interests, including the trade association
representing small and large manufacturers who produce the subject
products, consumer groups, climate and health advocates, and energy-
efficiency advocacy organizations, each of which signed the Joint
Proposal on behalf of their respective manufacturers and efficiency
advocacy organizations, which includes consumer groups, utilities, and
a state corporation. Moreover, DOE does not read the statute as
requiring a statement submitted by all interested parties before the
Department may proceed with issuance of a direct final rule, nor does
appendix A require the statement be submitted by all interested parties
listed in the appendix. By explicit language of the statute, the
Secretary has the discretion to determine when a joint recommendation
for an energy or water conservation standard has met the requirement
for representativeness (i.e., ``as determined by the Secretary''). Id.
DOE also evaluated whether the recommendation satisfies 42 U.S.C.
6295(o), as applicable. In making this determination, DOE conducted an
analysis to evaluate whether the potential energy conservation
standards under consideration achieve the maximum improvement in energy
efficiency that is technologically feasible and economically justified
and result in significant energy conservation. The evaluation is the
[[Page 21761]]
same comprehensive approach that DOE typically conducts whenever it
considers potential energy conservation standards for a given type of
product or equipment.
Upon review, the Secretary determined that the Joint Proposal
comports with the standard-setting criteria set forth under 42 U.S.C.
6295(p)(4)(A). Accordingly, the consensus-recommended efficiency levels
were included as the ``recommended TSL'' for air cleaners (see section
V.A of this document for description of all of the considered TSLs).
The details regarding how the consensus-recommended TSLs comply with
the standard-setting criteria are discussed and demonstrated in the
relevant sections throughout this document.
In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have
been satisfied, the Secretary has determined that it is appropriate to
adopt the consensus-recommended new energy conservation standards for
air cleaners through this direct final rule. Also, in accordance with
the provisions described in section II.A of this document, DOE is
simultaneously publishing, elsewhere in this issue of the Federal
Register, a NOPR proposing that the identical standard levels contained
in this direct final rule be adopted.
III. General Discussion
DOE developed this direct final rule after considering oral and
written comments, data, and information that DOE received in response
to the January 2022 RFI from interested parties that represent a
variety of interests. The following discussion addresses issues raised
by these commenters.
A. General Comments
While DOE received comments in response to the January 2022 RFI
pertaining to the specific subtopics in section IV of this document,
DOE also received several general comments in response to the January
2022 RFI from interested parties regarding the rulemaking timing and
process. These comments are summarized and addressed in the following
paragraphs.
The Joint Commenters stated support for DOE's proposal to include
consumer room air cleaners as a covered product and indicated they were
working to negotiate possible Federal energy conservation standards for
consumer room air cleaners, along with an applicable test procedure for
DOE's consideration. (Joint Commenters, No. 8 at p.1) The CA IOUs also
stated that they were engaged with stakeholders on test procedures,
metrics, and efficiency standards for air cleaners. (CA IOUs, No. 9 at
pp. 1-2)
Trane commented that a new energy conservation standard for
consumer air cleaners is necessary because consumers need guidance at a
time of unprecedented energy bills and the opportunity to avoid
unnecessary energy consumption. (Trane, No. 3 at p. 2) Blueair also
commented that it supported energy conservation standards for air
cleaners, citing its own HEPASilentTM technology as proof
that reduced energy consumption and maximum clean air delivery were
compatible. Blueair also stated that it has demonstrated that it is
technologically possible to design and manufacture air cleaners with
reduced energy usage without loss of air cleaning performance.
(Blueair, No. 10 at p. 4) Synexis commented that energy conservation
standards for consumer air cleaners were economically justified,
technologically feasible, and would lead to energy savings. Synexis
commented that implementing uniform Federal test methods and standards
would likely reduce costs by standardizing the evaluation processes and
would provide common criteria so consumers can make informed decisions.
(Synexis, No. 14 at pp. 6-7)
NEEA stated its support for DOE's effort to adopt test procedures
and standards for air cleaners and shared sales data from 2015-2019
compiled from retail store sales in the U.S. Northwest. (NEEA, No. 13
at pp. 1-2) NEEA commented that the compiled data reflected the
dramatic increases in sales and usage of air cleaners caused by the
pandemic and wildfires, making a compelling case for DOE regulation.
(NEEA, No. 13 at p. 2) The CA IOUs also stated that the growth of air
cleaner usage has been accelerated because of the pandemic and
California wildfires, necessitating EPCA energy conservation standards.
(CA IOUs, No. 9 at p. 2)
DOE recognizes the comments supporting DOE regulation of air
cleaners, and as discussed elsewhere in this document, DOE has
determined that energy conservation standards for air cleaners are
economically justified, technologically feasible, and would result in
the significant conservation of energy.
Daikin commented that DOE's effort to initiate the test procedure
and energy conservation standards rulemakings for consumer air cleaners
was premature without first finalizing the coverage determination,
segmenting the market based on types of air cleaners, and identifying
the categories that would provide the most energy savings. (Daikin, No.
12 at p. 1) Daikin commented that since this is a new product
rulemaking, DOE must first finalize its coverage determination and then
a test procedure before establishing an energy conservation standard.
Daikin further commented that DOE should provide sufficient time to
comply with the test procedures before determining minimum efficiency
standards. Daikin additionally stated that there may be laboratory test
chamber shortages after a DOE test procedure is established. (Daikin,
No. 12 at p. 3)
DOE appreciates Daikin's concern over the timing and order of
rulemaking publications. DOE notes that the January 2022 RFI sought to
solicit general feedback on air cleaner test procedures and standards
only under the condition that air cleaners are determined to be a
covered product. DOE further notes that the July 2022 Final
Determination was published prior to DOE proposing a test procedure and
establishing an energy conservation standard. The timeline of this
rulemaking is accelerated compared to DOE's typical timeline in order
to follow as closely as possible the schedule outlined in the Joint
Proposal.
MIAQ also commented that it was disappointed by the shortening of
the 75-day comment period to 30 days for the January 2022 RFI and the
combination of the test procedure and standards rulemakings into a
single RFI. MIAQ commented that this impacted its ability to
investigate test laboratory capacity or capabilities. (MIAQ, No. 5 at
p. 2)
DOE notes that while it initially established a 30-day comment
period to allow DOE to review comments received in response to the
January 2022 RFI before finalizing its coverage determination, it
reopened the comment period to provide a 45-day extension. 87 FR 11326.
Lennox commented that DOE must maintain consumer utility of air
cleaners when promulgating new standards and must ensure that any new
standards are economically justified. (Lennox, No. 7 at p. 3)
DOE agrees with Lennox and, as discussed elsewhere in this
document, DOE screened out technology options from consideration that
would not maintain consumer utility. DOE is also establishing standards
that are economically justified and did not select more stringent
standards that would have negative economic impacts on consumers.
The Joint Stakeholders commented that the Joint Proposal comports
with the standards-setting criteria in EPCA and that the Joint Proposal
was designed to achieve the maximum improvement in energy efficiency
that is
[[Page 21762]]
technologically feasible and economically justified as required by 42
U.S.C. 6295(o). The Joint Stakeholders additionally stated that the
standards proposed in the Joint Proposal would decrease maximum energy
use of a covered product in both Tier 1 and Tier 2, and thus comply
with EPCA's prohibition against standards that increase maximum
allowable energy use of a covered product. 42 U.S.C. 6295(o)(1). (Joint
Stakeholders, No. 16 at pp. 11)
DOE agrees that the Joint Proposal provides standards criteria that
are technologically feasible and economically justified, as discussed
throughout this document. DOE believes the standards criteria set by
the Joint Proposal will provide an improvement in energy efficiency and
decrease maximum energy use of covered products.
B. Scope of Coverage
DOE has defined an ``air cleaner'' as a product for improving
indoor air quality, other than a central air conditioner, room air
conditioner, portable air conditioner, dehumidifier, or furnace, that
is an electrically-powered, self-contained, mechanically encased
assembly that contains means to remove, destroy, or deactivate
particulates, volatile organic compound (VOC), and/or microorganisms
from the air. 10 CFR 430.2. It excludes products that operate solely by
means of ultraviolet light without a fan for air circulation. Id.
In response to the January 2022 RFI, the Joint Commenters commented
that minimum energy conservation standards should apply to conventional
room air cleaners with a measured PM2.5 CADR of 10 or
greater in order to capture tabletop/desk portable room air cleaners.
(Joint Commenters, No. 8 at p. 4)
In the March 2023 TP Final Rule, DOE established the scope of the
air cleaners test procedure at appendix FF to ``conventional room air
cleaners,'' which are a subset of products that meet the definition of
``air cleaner'' as defined in 10 CFR 430.2. 88 FR 14014, 14044. DOE
established a definition for a conventional room air cleaner as a
consumer room air cleaner that (1) is a portable or wall mounted
(fixed) unit, excluding ceiling mounted unit, that plugs in to an
electrical outlet; (2) operates with a fan for air circulation; and (3)
contains means to remove, destroy, and/or deactivate particulates. The
term ``portable'' is defined in section 2.1.3.1 of AHAM AC-7-2022 and
``fixed'' is defined in section 2.1.3.2 of AHAM AC-7-2022. 88 FR 14014,
14044. The scope of appendix FF is limited to conventional room air
cleaners with smoke CADR and dust CADR greater than or equal to 10
cubic feet per minute (``cfm'') and less than or equal to 600 cfm.
This direct final rule covers those consumer products that meet the
definition of conventional room air cleaners with smoke CADR and dust
CADR greater than or equal to 10 cfm and less than or equal to 600 cfm
as defined in section 1 of appendix FF. As discussed in section III.C
of this document, PM2.5 CADR is calculated as the geometric
average of smoke CADR and dust CADR, which is very similar in value to
both the smoke CADR and dust CADR. Therefore, the scope of products
covered in this direct final rule is consumer products that meet the
definition of conventional room air cleaners with PM2.5 CADR
greater than or equal to 10 cfm and less than or equal to 600 cfm.
See section IV.A.1 of this document for discussion of the product
classes analyzed in this direct final rule.
C. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. DOE does not
currently prescribe energy conservation standards for air cleaners.
As stated, in the March 2023 TP Final Rule, DOE established a new
test procedure for air cleaners at appendix FF. 88 FR 14014.
Specifically, appendix FF establishes an IEF metric, expressed in terms
of PM2.5 CADR/W, which measures the reduction rate of
PM2.5 particulates in a given room volume per unit power.
The numerator of the IEF metric is PM2.5 CADR, which is the
geometric average of smoke CADR and dust CADR, where each of these CADR
metrics refers to the reduction rate of smoke and dust particles,
respectively, in a given room volume with the air cleaner operating.
The denominator of the IEF metric is the annual energy consumption in
active mode and standby mode (AEC) divided by the annual operating
hours in active mode.\18\
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\18\ For more details on the AEC and IEF metrics, refer to
section III.H of the March 2023 TP Final Rule. 88 FR 14014.
---------------------------------------------------------------------------
Additionally, DOE discussed in the March 2023 TP Final Rule that
for compliance with the standards in Tier 1 of the Joint Proposal, the
Joint Stakeholders recommended that DOE permit section 6.2 of AHAM AC-
1-2020 \19\ for dust CADR to be applied as an alternative for
calculating PM2.5 CADR. The Joint Stakeholders stated that
the dust CADR, determined according to section 6.2 of AHAM AC-1-2020,
is nearly identical to the subset dust CADR used to calculate
PM2.5 CADR. The Joint Stakeholders further stated that given
many products have already been tested per AHAM AC-1-2020, allowing
this alternative would ensure that manufacturers are not required to
retest using AHAM AC-7-2022 to demonstrate compliance with a new
standard on a short timeline. (Joint Stakeholders, No. 16 a p. 6); 88
FR 14014, 14030.
---------------------------------------------------------------------------
\19\ American National Standards Institute (``ANSI'')/AHAM
standard, ANSI/AHAM AC-1-2020 (``AHAM AC-1-2020''), ``Method for
Measuring Performance of Portable Household Electric Room Air
Cleaners''.
---------------------------------------------------------------------------
According to section 5.1.1 of appendix FF, PM2.5 CADR is
obtained by combining the CADR of smoke (which includes particle sizes
ranging from 0.1 to 0.5 micrometers (``[mu]m'')) with the CADR of dust
(which includes particle sizes ranging from 0.5 to 2.5 [mu]m) and
performing a geometric average calculation as follows:
[GRAPHIC] [TIFF OMITTED] TR11AP23.001
The tests to determine smoke CADR and dust CADR are specified in
sections 5 and 6 of AHAM AC-1-2020. The allowable particle size for
smoke particles is 0.1 to 1 [micro]m for the smoke CADR test in AHAM
AC-1-2020 and the allowable particle size for dust particles is 0.5 to
3 [micro]m for the dust CADR test in AHAM AC-1-2020. However, the
calculation of PM2.5 CADR in section 5.1.1 of appendix FF
specifies a narrower range of allowable particle sizes for the smoke
CADR and dust CADR than the smoke CADR and dust
[[Page 21763]]
CADR tests in sections 5 and 6, respectively, of AHAM AC-1-2020.
While the allowable smoke and dust particle size for the smoke CADR
and dust CADR tests in sections 5 and 6 of AHAM AC-1-2020 is larger
(i.e., 0.1 to 1 [micro]m for smoke particles and 0.5 to 3 [micro]m for
dust particles) than the allowable smoke and dust particle size for the
calculation of PM2.5 CADR in section 5.1.1 of appendix FF
(i.e., 0.1 to 0.5 [micro]m for smoke particles and 0.5 to 2.5 [micro]m
for dust particles), the subset smoke CADR and dust CADR used to
calculate PM2.5 are nearly identical to the smoke CADR and
dust CADR calculated according to sections 5 and 6 of AHAM AC-1-2020,
as shown in the figures included in the Joint Proposal.\20\
Accordingly, in the March 2023 TP Final Rule, DOE specified in section
5.1.2 of appendix FF that PM2.5 CADR may alternatively be
calculated using the full range of particles used to calculate smoke
CADR and dust CADR according to sections 5 and 6 of AHAM AC-1-2020,
respectively. 88 FR 14014. DOE additionally stated that it may revisit
allowing the use of both approaches to calculate PM2.5 CADR
in a future standards rulemaking. Id.
---------------------------------------------------------------------------
\20\ See Joint Stakeholders, No. 16 at p. 6.
---------------------------------------------------------------------------
In this direct final rule, DOE continues to allow the full range of
particles used to calculate smoke CADR and dust CADR according to
sections 5 and 6 of AHAM AC-1-2020, respectively, may be used to
determine compliance only with the Tier 1 standards specified in this
document. Compliance with Tier 2 standards must be determined using the
smoke and dust particle size specified in the calculation of
PM2.5 CADR in section 5.1.1 of appendix FF. This aligns with
the test parameters of the Joint Proposal and allows manufacturers more
time to adjust to the tighter particle size requirements specified in
AHAM AC-7-2022. Accordingly, DOE is amending section 5.1.2 of appendix
FF to specify that the alternate calculation for PM2.5 CADR
may be used for determining compliance only with Tier 1 standards
specified at 10 CFR 430.32(ee).
D. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A
to 10 CFR part 430, subpart C (``appendix A'').
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies.
Section 7(b)(2)-(5) of appendix A. Section IV.B of this document
discusses the results of the screening analysis for air cleaners,
particularly the designs DOE considered, those it screened out, and
those that are the basis for the standards considered in this
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the direct final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE prescribes new or amended standards for a type or class of
covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for air
cleaners, using the design parameters for the most efficient products
available on the market or in working prototypes. The max-tech levels
that DOE determined for this rulemaking are described in section IV.C
of this document and in chapter 5 of the direct final rule TSD.
E. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to air cleaners purchased in the 30-year period that begins in the
year of compliance with the standards (2024-2057 for the recommended
TSL, and 2028-2057 for the other TSLs).\21\ The savings are measured
over the entire lifetime of air cleaners purchased in the 30-year
analysis period. DOE quantified the energy savings attributable to each
TSL as the difference in energy consumption between each standards case
and the no-new-standards case. The no-new-standards case represents a
projection of energy consumption that reflects how the market for a
product would likely evolve in the absence of energy conservation
standards.
---------------------------------------------------------------------------
\21\ For the standards recommended in the Joint Proposal, DOE
considered an analysis period beginning in the year of compliance
with the Tier 1 standards (2024) and ending in the same year as the
30-year analysis periods considered for the other analyzed TSLs
(2057) to align the end dates of the analysis periods. DOE also
presents a sensitivity analysis that considers impacts for products
shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') from potential standards
for air cleaners. The NIA spreadsheet model (described in section IV.H
of this document) calculates energy savings in terms of site energy,
which is the energy directly consumed by products at the locations
where they are used. For electricity, DOE reports national energy
savings in terms of primary energy savings, which is the savings in the
energy that is used to generate and transmit the site electricity. For
natural gas, the primary energy savings are considered to be equal to
the site energy savings. DOE also calculates NES in terms of FFC energy
savings. The FFC metric includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and thus presents a more complete picture of the
impacts of energy conservation standards.\22\ DOE's approach is based
on the calculation of an FFC multiplier for each of the energy types
used by covered products or equipment. For more information on FFC
energy savings, see section IV.H.2 of this document.
---------------------------------------------------------------------------
\22\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------
2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B)).
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\23\ For
example, some
[[Page 21764]]
covered products and equipment have most of their energy consumption
occur during periods of peak energy demand. The impacts of these
products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis, taking into
account the significance of cumulative FFC national energy savings, the
cumulative FFC emissions reductions, and the need to confront the
global climate crisis, among other factors.
---------------------------------------------------------------------------
\23\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As stated, the standard levels adopted in this direct final rule
are projected to result in national energy savings of 1.80 quads of FFC
energy savings, the equivalent of the annual electricity use of 19
million homes. DOE has determined the energy savings from the standard
levels adopted in this direct final rule are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B).
F. Economic Justification
1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential new standards on
manufacturers, DOE conducts a manufacturer impact analysis (``MIA''),
as discussed in section IV.J of this document. DOE first uses an annual
cash-flow approach to determine the quantitative impacts. This step
includes both a short-term assessment--based on the cost and capital
requirements during the period between when a regulation is issued and
when entities must comply with the regulation--and a long-term
assessment over a 30-year period. The industry-wide impacts analyzed
include (1) INPV, which values the industry on the basis of expected
future cash flows; (2) cash flows by year; (3) changes in revenue and
income; and (4) other measures of impact, as appropriate. Second, DOE
analyzes and reports the impacts on different types of manufacturers,
including impacts on small manufacturers. Third, DOE considers the
impact of standards on domestic manufacturer employment and
manufacturing capacity, as well as the potential for standards to
result in plant closures and loss of capital investment. Finally, DOE
takes into account cumulative impacts of various DOE regulations and
other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered 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 product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. 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.
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
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first year of compliance with new
or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards adopted in this document would not
reduce the utility or performance of the products under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE will
transmit a copy of this direct final rule to the Attorney General with
a request that the Department of Justice (``DOJ'') provide its
determination on this issue. DOE will consider DOJ's comments on the
rule in determining whether to proceed with the direct final rule. DOE
will also publish and respond to the DOJ's comments in the Federal
Register in a separate notice.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or
[[Page 21765]]
amended standard is economically justified. (42 U.S.C.
6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards are
likely to provide improvements to the security and reliability of the
Nation's energy system. Reductions in the demand for electricity also
may result in reduced costs for maintaining the reliability of the
Nation's electricity system. DOE conducts a utility impact analysis to
estimate how standards may affect the Nation's needed power generation
capacity, as discussed in section IV.M of this document.
DOE maintains that environmental and public health effects
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The adopted standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and GHGs associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this document;
the estimated emissions impacts are reported in section V.B.6 of this
document. DOE also estimates the economic value of emissions reductions
resulting from the considered TSLs, as discussed in section IV.L of
this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential new or
amended energy conservation standards would have on the payback period
for consumers. These analyses include, but are not limited to, the 3-
year payback period contemplated under the rebuttable-presumption test.
In addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this document.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to air cleaners. Separate subsections address
each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The NIA uses a second spreadsheet set
that provides shipments projections and calculates NES and NPV of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (``GRIM''), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this rulemaking: www.regulations.gov/docket/EERE-2021-BT-STD-0035/document. Additionally, DOE used output
from the latest version of the Energy Information Administration's
(``EIA's'') Annual Energy Outlook (``AEO'') for the emissions and
utility impact analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include (1) a determination of the scope
of the rulemaking and product classes, (2) manufacturers and industry
structure, (3) existing efficiency programs, (4) shipments information,
(5) market and industry trends, and (6) technologies or design options
that could improve the energy efficiency of air cleaners. The key
findings of DOE's market assessment are summarized in the following
sections. See chapter 3 of the direct final rule TSD for further
discussion of the market and technology assessment.
1. Product Classes
When evaluating and establishing energy conservation standards, DOE
may establish separate standards for a group of covered products (i.e.,
establish a separate product class) if DOE determines that separate
standards are justified based on the type of energy used, or if DOE
determines that a product's capacity or other performance-related
feature justifies a different standard. (42 U.S.C. 6295(q)) In making a
determination whether a performance-related feature justifies a
different standard, DOE must consider such factors as the utility of
the feature to the consumer and other factors DOE determines are
appropriate. (Id.)
DOE currently does not specify any energy conservation standards or
associated product classes for air cleaners. In the January 2022 RFI,
DOE noted that it may use CADR as a measurement of capacity to
establish product classes. 87 FR 3702, 3711. DOE requested comment on
whether capacity or any other performance-related features, such as air
cleaning technology (i.e., whether the product destroys or deactivates
contaminants from the air or removes them), would justify establishing
different product classes. Id.
NEEA commented that, based on a review of NEEA Retail Products
Platform (``RPP'') sales data for air cleaners and sales from the
ENERGY STAR Retail Products Platform (``ESRPP'') data, product class
distinctions based on CADR and smoke CADR/W would be appropriate.
(NEEA, No. 13 at p. 3)
Trane commented that different classes of air cleaners could be
useful to consumers, who have varying performance goals. (Trane, No. 3
at p. 3)
Synexis stated that the definition of a standard should be
applicable to all devices operating in the air cleaning technology
space as sub-classes would likely confuse the issue and be difficult to
apply equally across all technologies. (Synexis, No. 14 at p. 7)
DOE agrees with NEEA and Trane's comments and, for reasons
discussed later in this section, is establishing three separate air
cleaner product classes based on CADR as a measurement of capacity.
DOE's testing and teardown
[[Page 21766]]
analysis showed that air cleaning technology, particularly UV and ion
generation, did not significantly impact the measured energy use or
efficiency of air cleaners. Accordingly, DOE is not establishing
additional product class distinction based on air cleaning technology.
Regarding Synexis' comment, DOE notes that energy conservation
standards are applicable to all conventional room air cleaners, as
defined in the March 2023 TP Final Rule, but that the applicable
standard level varies based on the product class. The standards are
technology-neutral, and apply to all configurations of conventional
room air cleaners with a PM2.5 CADR rating within the
specified ranges for the three product classes.
The Joint Stakeholders proposed product classes as shown in Table
IV.1 and noted that it was proposing separate product classes because
it is more difficult for smaller air cleaners to reach higher levels of
efficiency because smaller products require smaller components such as
fan blades. The Joint Stakeholders stated that as the blade design is
made more efficient despite its smaller diameter, the optimization
point is tight to achieve adequate air movement while not increasing
noise levels beyond a tolerable level. They further stated that this
makes achieving higher levels of efficiency a more difficult design
challenge while retaining the utility of the smaller size. (Joint
Stakeholders, No. 16 at pp. 9-10)
The Joint Stakeholders also stated that were smaller products
required to meet the same efficiency levels as larger and higher CADR/W
models, a greater change in efficiency of the motor would be necessary,
which could require more expensive motor technology that could lead to
standards that are not economically justified. The Joint Stakeholders
stated that the recommended product classes will help ensure that a
broad range of capacity changes remain available for consumers. (Joint
Stakeholders, No. 16 at p. 10)
Table IV.1--Joint Stakeholder Recommended Air Cleaner Product Classes
------------------------------------------------------------------------
Product class PM2.5 CADR bins
------------------------------------------------------------------------
PC1.............................. 10 <= PM2.5 CADR < 100.
PC2.............................. 100 <= PM2.5 CADR < 150.
PC3.............................. PM2.5 CADR >= 150.
------------------------------------------------------------------------
DOE notes that the product classes are defined based on
PM2.5 CADR, rather than smoke CADR as recommended by NEEA
and as specified in the ENERGY STAR V. 2.0 Specification. In the March
2023 TP Final Rule, DOE established the IEF metric based on
PM2.5 CADR, which is based on the geometric average of the
measured smoke CADR and dust CADR values, consistent with the Joint
Stakeholder recommendation.
As discussed in the following paragraphs, based on investigatory
testing, product teardowns, and a review of the ENERGY STAR V. 2.0
specification, DOE agrees with the Joint Stakeholders that reaching
higher efficiencies is more difficult for smaller capacity products due
to size and component constraints. Therefore, consistent with the Joint
Proposal, DOE is establishing three product classes for air cleaners as
shown in Table IV.1.
DOE determined the three product classes specified in Table IV.1 to
be appropriate based on an analysis of ENERGY STAR-qualified products.
As seen in Figure IV-1, the ENERGY STAR database shows that air cleaner
models at lower CADR values generally have lower efficiencies compared
to models at higher CADR. DOE expects that this is likely due to the
smaller motor and/or filter required for the lower-CADR units, which
are typically intended to be used in rooms with smaller areas (e.g.,
units in Product Class 1 would be recommended for a maximum room size
of 155 square feet). To achieve a certain level of cleaning
performance, a smaller unit would need to include more filtration by
volume in a more limited chassis space (i.e., the air cleaner cabinet).
This would increase the pressure drop across the filter, which would
require more blower power to maintain the same air delivery
performance. These factors impact the overall efficiency of the unit.
At higher CADR values (i.e., air cleaners designed for larger rooms),
the cabinet volume is much larger, which allows the incorporation of a
much larger filter (i.e., the filtration can be spread across a larger
filter area), thereby reducing the pressure drop across the filter and
necessary blower power, and therefore improving efficiency.
Establishing separate product classes for units that are intended
to be used in both smaller and larger rooms is necessary to maintain
consumer utility. For example, Product Class 1 units have a small
cabinet volume (<0.6 cubic feet (``ft\3\'')), are designed for use in a
single small room, such as a bathroom or bedroom (<155 sq. ft), and are
easily portable, which can allow product configurations such as
tabletop or wall plug-ins. Units with larger capacities and
corresponding larger cabinet volumes provide different utility to
consumers. Product Class 2 includes medium cabinet-sized units (0.6-1.2
ft\3\), which are designed for a larger room (155-235 sq. ft) such as a
kitchen or living space. The size and weight of these units generally
allow single-person portability without necessitating the use of
wheels. Finally, Product Class 3 units have a large cabinet (>1.2
ft\3\), are typically less portable than lower-capacity units, in some
cases being equipped with wheels to facilitate moving, and are designed
to be used for an extended duration in a large room (>235 sq. ft) such
as a classroom, office, or large living area. Establishing these
product classes is necessary because the three ranges of capacity each
provide distinct consumer utility in terms of the application based on
room size and portability of the unit and are associated with
inherently different efficiency due to the different filter size and
configurations that can be accommodated. Further, these product class
distinctions will help ensure that higher-capacity units installed in
smaller-sized rooms, which achieve higher efficiencies at the same
active mode power consumption than smaller-capacity units and which
warrant more stringent energy conservation standards, do not lead to
unnecessarily high AEC.
[[Page 21767]]
[GRAPHIC] [TIFF OMITTED] TR11AP23.002
Finally, DOE is establishing Product Class 1 with a
PM2.5 CADR lower limit of 10 cfm as opposed to 30 cfm, as
specified in the ENERGY STAR V. 2.0 specification, so that tabletop and
desktop portable room air cleaners as well as plug-in air cleaners,
which is a growing segment of the market, will be required to
demonstrate compliance with the adopted standards. DOE notes that the
PM2.5 CADR lower limit of 10 cfm for Product Class 1 is also
recommended by the Joint Stakeholders in the Joint Proposal.
2. Technology Options
In analyzing the feasibility of new energy conservation standards,
DOE uses information about technology options and prototype designs to
identify technologies that manufacturers could use to meet and/or
exceed a given energy conservation standard level. In the January 2022
RFI, DOE requested information on technologies that are used to improve
the energy efficiency of air cleaners. Specifically, DOE sought
information on the range of efficiencies or performance characteristics
that are available for each technology option. 87 FR 3702, 3711. For
each technology option suggested by stakeholders, DOE also sought
information regarding its market adoption, costs, and any concerns with
incorporating the technology into products (e.g., impacts on consumer
utility, potential safety concerns, manufacturing or production
challenges, etc.). 87 FR 3702, 3711-3712.
MIAQ and AHRI commented that they could not provide concrete
information on the availability or lack thereof of technologies for
improving energy efficiency of air cleaners for non-portable products
until DOE altered the scope and definitions to exclude products
inappropriate for regulation. MIAQ and AHRI noted that ducted products,
with fans primarily used for ventilating, cooling, and heating, employ
different technologies than portable products, with distinctly
different energy use patterns. (MIAQ, No. 5 at p. 8; AHRI, No. 15 at p.
9)
As discussed in section III.B of this document, the scope of this
standards rulemaking includes conventional room air cleaners with
PM2.5 CADR between 10 and 600 cfm (inclusive). Products not
meeting the definition of conventional room air cleaners, such as
ceiling-mounted and whole-home units are not included in the scope of
this rulemaking. Accordingly, DOE has analyzed technology options only
for conventional room air cleaners that are in the scope of this
standards rulemaking.
Trane commented that portable HEPA and other high filter efficiency
filter-based units should be prioritized highest in a new standard
because of their use in classrooms. (Trane, No. 3 at p. 2)
DOE is aware of the prevalence of HEPA filters in air cleaners, and
DOE's teardown sample largely comprised conventional room air cleaners
that utilize a HEPA filter or other high efficiency filters. The
teardown analysis confirmed that, by effectively removing
PM2.5 particulates, such high efficiency filters are a
technology option for improving air cleaner efficiency as measured
according to the DOE test procedure at appendix FF.
Synexis commented that safety standards should be considered for
air cleaners that generate hazardous by-products, such as ozone, which
can be harmful to humans at levels above established thresholds.
(Synexis, No. 14 at p. 7) Trane also commented that since certain air
cleaning devices, like electronic/reactive air cleaners, may produce
by-products such as ozone, organic acids, and ultrafine particles, this
fact complicates attempts at standards or creates a need for additional
standards. (Trane No. 3 at p. 2) DOE is aware that technology options
that generate ozone or other harmful by-products can have adverse
impacts on health or safety and, as discussed in section IV.B of this
document, DOE has screened-out such technology options accordingly.
In the market analysis and technology assessment, DOE identified 19
technology options for air cleaners, as shown in Table IV.2. These
technology options have been determined to improve the efficiency of
air cleaners, as measured by the DOE test procedure. In general, the
technology options with the most significant impact on efficiency
represent improvements to the filter and motor. The motor and filter
relationship is crucial to improving efficiency, as optimization of the
airflow across the filter is the largest factor contributing to an air
cleaner's active mode power consumption.
[[Page 21768]]
Table IV.2--Air Cleaner Technology Options
------------------------------------------------------------------------
-------------------------------------------------------------------------
1. High efficiency particulate air (``HEPA'')-type filter (99 percent of
0.2[mu]m particles).
2. True HEPA filter (99.97 percent of 0.3[mu]m particles).
3. Activated carbon filter.
4. High density polyethylene (``HDPE'') pre-filter.
5. Photoelectrochemical oxidation (``PECO'') filter.
6. Photocatalytic oxidation (``PCO'') filter.
7. Electrostatic/Polarizing media.
8. Filter shape.
9. Improved Motor Technologies.
10. Low standby-power electronic controls.
11. Direct double-ended blower assembly.
12. Ionization brush.
13. Ionization plates.
14. Air quality sensor.
15. Ozone generators.
16. Thermodynamic sterilization system (``TSS'').
17. Bioreactor.
------------------------------------------------------------------------
After identifying all potential technology options for improving
the efficiency of air cleaners, DOE performed a screening analysis (see
section IV.B of this document) to determine which technologies merited
further consideration in the engineering analysis.
B. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial products
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or result in the unavailability of any covered
product type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Safety of technologies. If it is determined that a technology
would have significant adverse impacts on health or safety, it will not
be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further, due to the
potential for monopolistic concerns. Sections 6(b)(3) and 7(b) of
appendix A.
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
In the January 2022 RFI, DOE requested feedback on whether any air
cleaner technology options would be screened out based on the five
screening criteria described in this section. DOE also requested
information on the technologies that would be screened out and the
screening criteria that would be applicable to each screened out
technology option. 87 FR 3702, 3712.
The subsequent paragraphs include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
Molekule commented that its PECO technology includes energy
requirements different from traditional air cleaners and requested an
exemption from Federal energy efficiency standards since its air
cleaners have been cleared by the U.S. Food and Drug Administration
(``FDA'') as Class II medical devices, which allows medical
professionals to use these devices in medical settings to purify the
air for viruses and bacteria. (Molekule, No. 11 at pp. 1-2) Molekule
commented that while the removal and destruction of airborne microbes
is a key benefit in medical settings, it is not measured by CADR tests
for particulate matter. Molekule further stated that any modifications
to meet DOE energy efficiency standards would be burdensome, requiring
the company to re-apply for FDA clearance. (Molekule, No. 11 at p. 3).
While FDA classification is not one of the five screening criteria that
DOE applies, DOE notes that it has screened out PECO technology because
it is a proprietary technology. DOE additionally notes that many air
cleaners are capable of removing or destroying contaminants other than
particulate matter (i.e., air cleaners that can remove, destroy, or
deactivate smoke, dust, or pollen may also remove, destroy or
deactivate microorganisms and/or gaseous pollutants) and that such air
cleaners would be in the scope of this rulemaking and subject to
applicable standards as long as the unit ``contains means to remove,
destroy, and/or deactivate particulates,'' as included in the
definition of a conventional room air cleaner.
Synexis commented that DOE should eliminate this criterion \24\
because it is in direct and fundamental conflict with intellectual
property rights. Synexis stated that if the United States government
grants monopolistic rights to certain technology options through the
patent process, then DOE should not eliminate those same technology
options. (Synexis, No. 14 at p. 7) DOE clarifies that the intent of the
unique-pathway proprietary technologies screening criterion is to
screen out proprietary technologies as a design pathway for achieving
higher efficiencies for the purposes of DOE's analysis only. That is,
if the only way to reach a given efficiency would be to utilize a
proprietary technology, DOE would not include it in its analysis
because manufacturers that do not have access to the proprietary
technology would not be able to meet the efficiency level under
consideration. This would not preclude manufacturers from utilizing
such technologies in their products. The intent of DOE's analysis is to
identify a pathway to achieve higher efficiencies that would generally
be available to all manufacturers, but DOE recognizes that
manufacturers may have more than one pathway to achieve higher
efficiencies, including using proprietary technologies.
---------------------------------------------------------------------------
\24\ DOE understands Synexis to be referring to the unique-
pathway proprietary technology screening criterion.
---------------------------------------------------------------------------
1. Screened-Out Technologies
Photoelectrochemical Oxidation
PECO is a type of photoreactor-based air purification, similar to
PCO technology (described in the next section) with some important
variations. PECO processes pollutants in a photoreactor that utilizes
photons to initiate a reaction that oxidizes and destroys organic
pollutants in the air. The reaction converts pollutants into non-toxic
substances. Specifically, PECO works by shining UV-A light on the
catalytic surface of the PECO filter. Once the catalyst is activated by
the UV-A light, it forms hydroxyl radicals that combine and react with
airborne
[[Page 21769]]
microbiological contaminants, which destroys them.
Since PECO technology is proprietary, DOE has screened out this
technology option as a unique pathway proprietary technology.
Photocatalytic Oxidation (PCO)
The PCO process is similar to PECO in that it utilizes UV radiation
combined with a catalyst to break down pollutants. The major difference
between PCO and PECO is the filter material, UV light, and subsequent
byproducts. While the PECO filter is a proprietary technology, PCO uses
a catalyst such as titanium dioxide. Additionally, PECO does not emit
any harmful byproducts such as ozone and formaldehyde as compared to
the catalysts on PCO filters. Finally, the PECO system utilizes a UV-A
light, instead of a UV-C light found in PCO systems.
When the titanium dioxide used with PCO is activated by UV-C
radiation, it forms oxidizing hydroxyl radicals which react with
pollutants. When a pollutant comes into contact with UV-activated
titanium dioxide, the reaction destroys the pollutant and releases non-
toxic compounds, such as carbon dioxide and water, as byproducts, as
well as certain harmful byproducts such as ozone and formaldehyde.
DOE is screening out the PCO technology option due to health and
safety concerns stemming from the byproducts generated by the reaction
of the PCO filter. Formaldehyde is a known human carcinogen that can
cause irritation of the skin, eyes, nose, and throat. High levels of
exposure may cause some types of cancers, according to EPA.\25\ For
ozone, DOE describes these concerns in more detail in the following
section.
---------------------------------------------------------------------------
\25\ www.epa.gov/sites/default/files/2016-09/documents/formaldehyde.pdf.
---------------------------------------------------------------------------
Ozone Generation
Ozone is a strong oxidizer and cleaning agent. Ozone generators
work by creating an electrical discharge to split oxygen molecules in
ambient air into single oxygen atoms, which then bind with existing
oxygen molecules in the air to form ozone. Ozone is highly unstable and
reactive, so after it is produced by the generator, it is released in
the air and is claimed to chemically react with air pollutants such as
chemicals, mold, viruses, bacteria, and odors.
DOE has identified concerns with air cleaners that rely on ozone
generation in terms of both efficacy and safety. The same chemical
properties that allow ozone to be highly reactive with organic material
in the air mean that ozone can impact organic material inside the
respiratory system. EPA investigated the use of ozone generation for
air cleaning and in a 1996 publication,\26\ determined that relatively
low amounts of ozone can pose harmful health effects such as decrease
in lung function, aggravation of asthma, throat irritation and
coughing, chest pain and shortness of breath, inflammation of lung
tissue and high susceptibility to respiratory infection. EPA further
researched the effectiveness of ozone at removing indoor air
contaminants and found that there is evidence to suggest that at
concentrations that do not exceed public health standards, ozone is not
effective at removing many odor-causing chemicals, viruses, bacteria,
mold, or other biological pollutants. Additionally, ozone does not
impact particulate matter such as dust or pollen.
---------------------------------------------------------------------------
\26\ www.epa.gov/indoor-air-quality-iaq/ozone-generators-are-sold-air-cleaners.
---------------------------------------------------------------------------
Due to these health and safety concerns associated with ozone and
lack of efficacy towards particulate removal, DOE has screened out this
technology option.
Thermodynamic Sterilization System (TSS)
DOE has identified air cleaners on the market that use TSS in a
ceramic core to destroy microorganisms and particle pollutants. These
air cleaners do not rely on filter media to trap or remove particles,
but rather utilize air convection to force air through the devices'
internal ceramic core which heats up to about 200 degrees Celsius
(``[deg]C'') (392 degrees Fahrenheit (``[deg]F'')) and incinerates
pollutants. Manufacturers of these air cleaners claim that TSS can kill
mold, bacteria, germs, and viruses and destroy pollutants such as dust,
pollen, pet dander, hair, and other airborne particulates. After the
air is heated and cleaned, it is immediately cooled using heat transfer
plates and released back out of the device.
TSS is a proprietary technology implemented by a single company.
Therefore, DOE has screened out this technology option as a unique
pathway proprietary technology.
Bioreactor
DOE has identified two air cleaner models on the market that
utilize a bioreactor system to produce clean air. The air cleaners that
use this technology option rely on convection and fans to draw large
particulate matter of over 0.5 microns such as dust and dander into the
bioreactor chamber. Smaller ultra-fine air pollutants and VOCs are
drawn into the chamber of the air purifier by a process of molecular
attraction through an electrostatic grounded air zone.
Once the various types of air contaminants are drawn into the
bioreactor, an activated solution of water, oxygen, enzymes, and the
trapped contaminants lead to an accelerated process of natural
oxidation that digests the air contaminants and breaks them down into
water, carbon dioxide, and base elements. This results in cleaner air
that is released from the air purifier.
Given the scarcity of models on the market with this technology,
DOE has screened out this technology option as it is not proven to be
practicable to manufacture, install, and service this technology on a
scale necessary to serve the relevant market at the time of the
compliance date of new standards.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concludes that
all of the other identified technologies listed in section IV.A.2 met
all five screening criteria to be examined further as design options in
DOE's direct final rule analysis. In summary, DOE did not screen out
the following technology options:
1. HEPA-type filter (99 percent of 0.2[mu]m particles)
2. True HEPA filter (99.97 percent of 0.3[mu]m particles)
3. Activated carbon filter
4. HDPE pre-filter
5. Electrostatic/Polarizing media
6. Filter shape
7. Improved Motor Technologies
8. Low standby-power electronic controls
9. Direct double ended blower assembly
10. Ionization brush
11. Ionization plates
12. Air quality sensor
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available products or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on consumer utility, product
availability, health, or safety). For additional details, see chapter 4
of the direct final rule TSD.
[[Page 21770]]
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of air cleaners. There are
two elements to consider in the engineering analysis; the selection of
efficiency levels to analyze (i.e., the ``efficiency analysis'') and
the determination of product cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
air cleaners, DOE considers technologies and design option combinations
not eliminated by the screening analysis. For each product class, DOE
estimates the baseline cost, as well as the incremental cost for the
product at efficiency levels above the baseline. The output of the
engineering analysis is a set of cost-efficiency ``curves'' that are
used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA).
Chapter 5 of the direct final rule TSD provides additional details
regarding the engineering analysis.
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to interpolate to define ``gap fill''
levels (to bridge large gaps between other identified efficiency
levels) and/or to extrapolate to the ``max-tech'' level (particularly
in cases where the ``max-tech'' level exceeds the maximum efficiency
level currently available on the market).
In this rulemaking, DOE primarily used the efficiency-level
approach. This approach involved reviewing the ENERGY STAR V. 2.0
database to identify the market distribution of existing products. DOE
also used the design-option approach, testing and physically
disassembling commercially available products to fill gaps where data
was not available from the efficiency-level approach (e.g., to identify
efficiency levels below the ENERGY STAR level). From this information,
DOE estimated the manufacturer production costs (``MPCs'') for a range
of products available at that time on the market. DOE then analyzed the
steps manufacturers took to improve product efficiencies. In its
analysis, DOE determined that manufacturers would likely rely on
certain design options to reach higher efficiencies. From this
information, DOE estimated the incremental cost and efficiency impacts
of incorporating specific design options at each efficiency level. This
section provides more detail on the development of efficiency levels
for the air cleaner engineering analysis.
In response to the January 2022 RFI, Molekule commented that air
cleaners that utilize combined technologies such as a fan and UV that
are intended to capture and destroy a wide range of potentially harmful
pollutants should be subject to adjusted requirements. Molekule
additionally commented that devices that feature technologies with
capabilities outside of AHAM AC-1 and its scope of smoke, dust, and
pollen test should receive an additional 15-percent energy allowance.
(Molekule, No. 11 at pp. 2, 5) Molekule commented that air cleaners
that are designed to work against contaminants such as microbes and
organic chemicals may require technology stacks and energy usage beyond
what is needed for mechanical filtration. Molekule further stated that
evaluating such air cleaners solely on particle removal efficiency
without considering these other pollutant classes is an inappropriate
measure of an air cleaner's energy efficiency relative to its potential
benefits. Molekule commented that many proposed and existing standards
for microbes and chemicals, including proposed AHAM AC-4 and AHAM AC-5
tests and NRCC_54013 \27\ protocol, will only gauge the initial
reduction of pollutants, while an important benefit of its devices is
the destruction of pollutants. (Molekule, No. 11 at p. 4) DOE notes
that the air cleaners test procedure at appendix FF requires that all
features pertaining to air cleaning (e.g., UV, ion generator, etc.)
must be activated and set to their highest setting during testing,
while features unrelated to air cleaning are disabled. That is, the air
cleaners test procedure already accounts for these technologies and to
the extent it is necessary, DOE's analysis accounts for the additional
energy consumed by such technologies. Regarding comments related to the
AHAM AC-4 and AHAM AC-5 industry test standards, DOE is not introducing
a test procedure for microbes and chemicals at this time and is not
establishing an additional energy allowance for products that target
these pollutants.
---------------------------------------------------------------------------
\27\ National Research Council Canada (``NRCC'')-54013, ``Method
for Testing Portable Air Cleaners,'' April 2011. Available online
at: https://nrc-publications.canada.ca/eng/view/ft/?id=cc1570e0-53cc-476d-b2ee-3e252d8bd739.
---------------------------------------------------------------------------
Molekule also commented that air cleaners that utilize automatic or
standby functionality should receive a credit and that DOE should delay
the implementation of energy conservation standards for such air
cleaners until the appropriate standards or credit has been determined.
(Molekule, No. 11 at p. 2) Molekule stated that energy efficiency
requirements should account for the typical operation of the air
cleaner rather than only the maximum performance mode, particularly for
air cleaners that employ air quality sensors. Molekule stated that the
continuous use case is to operate in ``Auto'' mode or at a level lower
than the maximum running speed and that its internal data indicates
that the use of Auto Mode, coupled with other common user behavior of
selecting speeds lower than the maximum speed, results in more than 50-
percent energy savings as compared to the energy use if the device was
operated continuously at maximum speed. (Molekule, No. 11 at p. 5) DOE
notes that the current test procedure at appendix FF requires all air
cleaners to be tested in the maximum performance mode, not in automatic
mode. Accordingly, a credit or separate standards are not necessary for
such units at this time. DOE is aware that an AHAM task force is
currently engaged in discussions to develop an industry test method to
test air cleaners in automatic mode, and DOE is participating in these
meetings. However, DOE's test procedure specifies testing only in
maximum performance mode (consistent with the existing industry
standard) and accordingly, DOE is not providing a credit for units with
automatic mode.
a. Baseline Efficiency Levels
For each product class, DOE generally selects a baseline model as a
reference
[[Page 21771]]
point for each class, and measures changes resulting from potential
energy conservation standards against the baseline. The baseline model
in each product class represents the characteristics of a product
typical of that class (e.g., capacity, physical size). Generally, a
baseline model is one that just meets current energy conservation
standards, or, if no standards are in place, the baseline is typically
the most common or least efficient unit on the market. In the January
2022 RFI, DOE requested feedback on appropriate baseline efficiency
levels for DOE to apply, and the product classes to which these
baseline efficiency levels would be applicable, in evaluating whether
to establish energy conservation standards for air cleaners. 87 FR
3702, 3712.
NEEA commented that using the ENERGY STAR V. 2.0 levels as the
baseline efficiency level would be appropriate because of the high
percentage of sales of ENERGY STAR units, comprising 87 percent of the
2015 room air cleaner sales. (NEEA, No. 13 at p. 4)
Based on publicly available data from ENERGY STAR and AHAM, DOE
estimated that 60 percent of air cleaners on the market do not meet the
ENERGY STAR V. 2.0 levels. Based on the large number of products
available on the market that do not meet the ENERGY STAR V. 2.0
specification, DOE is establishing the baseline efficiency levels below
the ENERGY STAR V. 2.0 levels.
As a first step to determine baseline and incremental efficiency
levels, DOE selected units for testing and teardowns using the AHAM
Verifide \28\ and ENERGY STAR databases and identified the CADR values
at which most models were clustered. The ENERGY STAR database includes
smoke CADR, dust CADR, and pollen CADR values in addition to providing
power consumption data, but the AHAM Verifide database includes only
smoke CADR, dust CADR, and pollen CADR values. Using these databases,
DOE selected a representative sample of products for testing and
teardowns. From its test sample, DOE identified a representative
nominal PM2.5 CADR value for each product class based on the
most commonly occurring PM2.5 CADR value for each product
class in its test sample, which are 50 CADR/W, 125 CADR/W, and 200
CADR/W for Product Class 1, Product Class 2, and Product Class 3,
respectively.
---------------------------------------------------------------------------
\28\ Available at: https://ahamverifide.org/directory-of-air-cleaners/. Last accessed: January 2022.
---------------------------------------------------------------------------
For each product class, DOE then selected the baseline efficiency
level based on a commercially available unit below the levels
established by certain States and the ENERGY STAR V. 2.0 level. Given
there is no database that contains energy use data for air cleaners
other than the ENERGY STAR database, which provides a list of products
that meet or exceed ENERGY STAR V. 2.0 levels, DOE identified the
baseline efficiency levels by testing a representative sample of
commercially available units that were not included in the ENERGY STAR
database. Through this approach, DOE was able to identify the baseline
efficiency level using the IEF of the least efficient unit tested in
each product class for Product Classes 1 and 3. For Product Class 2,
DOE did not identify any unit in its test sample with an IEF below the
State or ENERGY STAR levels from its limited test sample. Accordingly,
DOE used the baseline unit from Product Class 1, scaled to the
representative PM2.5 CADR for Product Class 2, to determine
a representative baseline unit for Product Class 2. Table IV.3
summarizes the baseline efficiency levels defined for each product
class:
Table IV.3--Baseline Efficiency Levels
------------------------------------------------------------------------
Product class PM2.5 CADR bins Minimum IEF
------------------------------------------------------------------------
PC1............................... 10 <= CADR < 100.... 1.53
PC2............................... 100 <= CADR < 150... 1.53
PC3............................... CADR >= 150......... 1.2
------------------------------------------------------------------------
b. Higher Efficiency Levels
In the January 2022 RFI, DOE requested feedback on design options
that manufacturers would use to increase energy efficiency in air
cleaners above the baseline, including information on the order in
which manufacturers would incorporate the different technologies to
incrementally improve efficiency of products. DOE also requested
feedback on whether the increased energy efficiency would lead to other
design changes that would not occur otherwise. DOE further requested
information regarding any potential impact of design options on a
manufacturer's ability to incorporate additional functions or
attributes in response to consumer demand and on whether certain design
options may not be applicable to (or incompatible with) certain types
of air cleaners. 87 FR 3702, 3713.
NEEA commented that it analyzed the ENERGY STAR database and
identified the max-tech units shown in Table IV.4 for each product
class:
Table IV.4--Max-Tech Units Identified by NEEA
----------------------------------------------------------------------------------------------------------------
PM2.5 CADR IEF * (PM2.5
Product class (cfm) CADR/W) AEC (kWh/year)
----------------------------------------------------------------------------------------------------------------
PC1: 10 <= PM2.5 CADR < 100................................... 91.2 9.9 55.0
PC2: 100 <= PM2.5 CADR < 150.................................. 120.0 12.5 57.2
PC3: PM2.5 CADR >= 150........................................ 424.3 14.0 180.2
----------------------------------------------------------------------------------------------------------------
* Note that NEEA provided each unit's CADR/W in terms of smoke CADR. DOE calculated the PM2.5 CADR values using
the information available from the ENERGY STAR database.
[[Page 21772]]
(NEEA, No. 13 at p. 5)
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product. Table IV.5 shows the units
that DOE determined to be the maximum available and max-tech units for
each product class. These units are the highest efficiency units
currently available on the market that provide complete consumer
utility. DOE is not aware of any additional technologies that could be
implemented to the identified units, and therefore has determined that
the units represent the max-tech efficiency level in each product
class. The following paragraphs in this section explain DOE's selection
of max-tech units as well as its reasons for deviating from the units
suggested by NEEA.
Table IV.5--Max-Tech Units Analyzed by DOE
----------------------------------------------------------------------------------------------------------------
Representative
Product class PM2.5 CADR IEF (PM2.5 CADR/ AEC (kWh/yr)
(cfm) W)
----------------------------------------------------------------------------------------------------------------
PC1: 10 <= PM2.5 CADR < 100................................... 50 5.4 54.1
PC2: 100 <= PM2.5 CADR < 150.................................. 125 12.8 57.3
PC3: PM2.5 CADR >= 150........................................ 200 7.4 157.6
----------------------------------------------------------------------------------------------------------------
DOE recognizes that the air cleaners included in NEEA's comment may
be the highest efficiency units available on the market for each
product class; however, as noted previously, DOE strived to select
units at the representative PM2.5 CADR value for each
product class, and especially at the max-tech. For Product Class 1 and
Product Class 3, the models suggested by NEEA have roughly twice the
capacity, expressed in terms of PM2.5 CADR, as the
representative capacities selected by DOE--91.2 cfm compared to DOE's
representative PM2.5 CADR value of 50 cfm for Product Class
1 and 424.3 cfm compared to DOE's representative PM2.5 CADR
value of 200 cfm for Product Class 3. For Product Class 2, the
PM2.5 CADR of the model suggested by NEEA falls within the
range of CADR values that DOE considered for its analysis and DOE's
max-tech unit for Product Class 2 is fairly similar to the unit
suggested by NEEA.
In addition to selecting units within a representative
PM2.5 CADR range for each product class, to determine its
max-tech units DOE also selected units that utilized a true HEPA
filter, which is a filter that is rated to remove at least 99.97
percent of particles that have a size of 0.3 [mu]m. DOE selected this
criterion because, according to EPA, the diameter specification of 0.3
[mu]m corresponds to the most penetrating particle size; that is,
particles of 0.3 [mu]m are the most difficult size particles to capture
and particles either larger or smaller than 0.3 [mu]m are generally
captured more easily.\29\ Therefore, DOE selected its max-tech unit to
include a true HEPA filter to ensure that there would not be any loss
in product utility at the selected max-tech efficiency level. The
Product Class 1 and Product Class 3 units suggested by NEEA do not
include a true HEPA filter and instead utilize ionic plates or a filter
that is rated to capture 98 percent of 5 [mu]m particles, neither of
which meet the rating requirement of a HEPA filter for capturing at
least 99.97 percent of particles that have a size of 0.3 [mu]m, which
DOE determined is required to maintain full consumer functionality. DOE
notes that the pressure drop across a HEPA filter would be greater due
to the design of such a filter, which would require a more powerful
motor to move the same quantity of air across the filter as compared to
a less effective filter.
---------------------------------------------------------------------------
\29\ www.epa.gov/indoor-air-quality-iaq/what-hepa-filter.
---------------------------------------------------------------------------
While the max-tech units selected by DOE for Product Class 2 and
Product Class 3 are the most-efficient units at the representative
PM2.5 CADR value, for Product Class 1, DOE observed another
unit that had a higher IEF compared to its selected unit. However, DOE
ultimately selected the unit shown in Table IV.5 because the other unit
did not include a true HEPA filter; instead, it included a filter that
is rated to remove only up to 97 percent of particles that have a size
of 0.3 [mu]m, which DOE determined did not maintain full consumer
functionality.
To establish other incremental higher efficiency levels between the
baseline and max-tech, DOE reviewed data in the ENERGY STAR database to
evaluate the range of efficiencies for air cleaners currently available
on the market. For all three product classes, DOE considered Efficiency
Level 1 (``EL 1'') to correspond to the level established by certain
States. EL 1 also corresponds to the Tier 1 level provided in the Joint
Proposal. DOE selected EL 2 for all product classes to correspond to
the ENERGY STAR V. 2.0 level, which is also the Tier 2 level provided
in the Joint Proposal. Finally, DOE identified EL 3 as a ``gap-fill''
level between EL 2 and max-tech (i.e., EL 4) based on number of
available models grouped (or ``clustered'') between EL 2 and max-tech
for each product class. Table IV.6 through Table IV.8 summarize the
efficiency levels analyzed for each product class.
Table IV.6--Efficiency Levels for Product Class 1
------------------------------------------------------------------------
Efficiency level IEF (PM2.5 CADR/
EL description W)
------------------------------------------------------------------------
Baseline...................... Minimum available from 1.5
tested units.
1............................. State Standard Levels; 1.7
Joint Proposal Tier 1.
2............................. ENERGY STAR V. 2.0; 1.9
Joint Proposal Tier 2.
3............................. Gap-fill.............. 3.4
4............................. Maximum available..... 5.4
------------------------------------------------------------------------
[[Page 21773]]
Table IV.7--Efficiency Levels for Product Class 2
------------------------------------------------------------------------
Efficiency level IEF (PM2.5 CADR/
EL description W)
------------------------------------------------------------------------
Baseline...................... Minimum available from 1.5
tested units.
1............................. State Standard Levels; 1.9
Joint Proposal Tier 1.
2............................. ENERGY STAR V. 2.0; 2.4
Joint Proposal Tier 2.
3............................. Gap-fill.............. 5.4
4............................. Maximum available..... 12.8
------------------------------------------------------------------------
Table IV.8--Efficiency Levels for Product Class 3
------------------------------------------------------------------------
Efficiency level IEF (PM2.5 CADR/
EL description W)
------------------------------------------------------------------------
Baseline...................... Minimum available from 1.2
tested units.
1............................. State Standard Levels; 2.0
Joint Proposal Tier 1.
2............................. ENERGY STAR V. 2.0; 2.9
Joint Proposal Tier 2.
3............................. Gap-fill.............. 6.6
4............................. Maximum available..... 7.4
------------------------------------------------------------------------
2. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, the availability and timeliness of purchasing the air cleaners
on the market. The cost approaches are summarized as follows:
Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated products such as
fluorescent lamps, which are infeasible to disassemble and for which
parts diagrams are unavailable) or cost-prohibitive and otherwise
impractical (e.g., large commercial boilers), DOE conducts price
surveys using publicly available pricing data published on major online
retailer websites and/or by soliciting prices from distributors and
other commercial channels.
In the present case, DOE conducted the analysis primarily using the
physical teardown approach. For each product class, DOE tore down a
representative sample of models spanning the entire range of efficiency
levels, as well as multiple manufacturers within each product class.
DOE aggregated the results so that the cost-efficiency relationship
developed for each product class reflects DOE's assessment of a market-
representative ``path'' to achieve each higher efficiency level. The
resulting bill of materials from each teardown provides the basis for
the MPC estimates. In addition to determining MPCs for each efficiency
level, DOE disaggregated the overall MPCs to find the filter costs,
which are used later in the LCC and PBP analyses.
The detailed description of DOE's determination of costs for
baseline and higher efficiency levels is provided in chapter 5 of the
direct final rule TSD.
In the January 2022 RFI, DOE sought input on the increase in MPC
associated with incorporating each particular design option. DOE also
requested information on the investments necessary to incorporate
specific design options, including, but not limited to, costs related
to new or modified tooling (if any), materials, engineering and
development efforts to implement each design option, and manufacturing/
production impacts. 87 FR 3702, 3713.
NEEA commented that it had analyzed the incremental cost of air
cleaners and found the incremental cost was $6.00 for large-capacity
room air cleaners and about $26 for smaller-capacity units. (NEEA, No.
13 at p. 5)
As discussed in the following sections, DOE's teardown results also
showed that incremental MPC between baseline and max-tech units for
Product Class 3 was much smaller compared to the incremental MPC
between baseline and max-tech units for Product Classes 1 and 2. DOE
estimated the incremental MPC between max-tech and baseline for Product
Classes 1 and 2 to be approximately $12, as compared to $26 as stated
by NEEA. This is likely due to the difference in how NEEA and DOE
conducted their analyses--DOE's analysis is based on MPC, which
accounts for the costs associated only with efficiency-related
components, while it is DOE's understanding that NEEA's analysis is
based on retail prices, which could include costs attributed to non-
efficiency-related features.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as incremental
MPCs associated with each efficiency level and product class. At each
efficiency level, DOE tore down a representative unit and excluded the
non-efficiency related components from the MPC calculation. Due to
slight variations in the PM2.5 CADR of each unit, DOE
applied a normalization to the MPCs using a single representative
PM2.5 CADR for each product class. See chapter 5 of the
direct final rule TSD for complete cost-efficiency results.
a. Product Class 1
Table IV.9 summarizes the MPCs at each efficiency level for Product
Class 1.
[[Page 21774]]
Table IV.9--Manufacturer Production Costs for Product Class 1
[2022$]
----------------------------------------------------------------------------------------------------------------
IEF (PM2.5 CADR/
EL W) MPC Incremental MPC
----------------------------------------------------------------------------------------------------------------
Baseline.................................................... 1.5 $31.24 ................
1........................................................... 1.7 32.25 $1.01
2........................................................... 1.9 33.39 2.15
3........................................................... 3.4 39.27 8.03
4........................................................... 5.4 44.06 12.82
----------------------------------------------------------------------------------------------------------------
The baseline unit in Product Class 1 is typically smaller than the
baseline units in the other two product classes and is equipped with a
shaded pole motor (``SPM'') and rectangular HEPA filter. At EL 1,
efficiency improvements are achievable by optimizing the motor-filter
relationship, typically by reducing the restriction of airflow (and
therefore, the pressure drop across the filter) by increasing the
surface area of the filter, reducing filter thickness, and/or
increasing air inlet/outlet size. Optimizing the air flow across the
filter enables reducing the size and power draw of the motor for an EL
1 unit. Other than alterations to the cabinet size to accommodate the
filter design, these changes do not significantly increase the MPC at
EL 1.
At EL 2, typically the SPM is upgraded to a permanent split
capacitor (``PSC'') motor, which improves overall efficiency while
increasing MPC slightly.
EL 3 and EL 4 units are typically designed to house a cylindrical
filter, and the cabinets of these units are also typically cylindrical
in shape. A cylindrical filter design further reduces the restriction
in air flow across the filter without compromising on performance
because a cylindrical shape allows for a much larger surface area for
the same volume of filter material. The larger surface area reduces the
resistance across the filter material, which reduces the pressure drop
and improves efficiency overall. EL 3 and EL 4 units also utilize a
variable-speed brushless direct-current (``BLDC'') motor, which is much
more efficient than an SPM or PSC motor. EL 4 units additionally
improve energy efficiency by further optimizing the motor-filter
relationship. The incremental costs associated with EL 3 and EL 4 are
typically much higher due to the significant motor upgrade and
cylindrical filter and case design.
b. Product Class 2
When selecting representative units for Product Class 2, DOE was
unable to identify commercially available units for the baseline and EL
1 due to lack of published data for units with efficiencies below the
ENERGY STAR V.2.0 level; the units that DOE selected for its test
sample based on product features did not have measured efficiencies at
EL 1 or lower. Therefore, DOE extrapolated costs from baseline and EL 1
units in Product Class 1 with similar measured IEFs as the Product
Class 2 baseline and EL 1 efficiency levels. Table IV.10 summarizes the
MPCs at each efficiency level for Product Class 2.
Table IV.10--Manufacturer Production Costs for Product Class 2
[2022$]
----------------------------------------------------------------------------------------------------------------
IEF (PM2.5 CADR/
EL W) MPC Incremental MPC
----------------------------------------------------------------------------------------------------------------
Baseline.................................................... 1.5 $42.97 ................
1........................................................... 1.9 44.26 $1.29
2........................................................... 2.4 45.62 2.65
3........................................................... 5.4 50.45 7.48
4........................................................... 12.8 55.55 12.58
----------------------------------------------------------------------------------------------------------------
DOE estimated that the typical baseline unit for Product Class 2 is
similar to the baseline unit from Product Class 1, although it has a
larger cabinet, rectangular filter, and SPM motor in order to achieve a
higher PM2.5 CADR value. At EL 1, DOE estimated that the air
cleaner would require a motor upgrade to a PSC motor to be able to
provide the increasing power required to maintain the desired IEF for
an EL 1 unit at a representative PM2.5 CADR value of 125. At
EL 2, DOE observed a direct, double-ended PSC motor with a blower on
each end, compared to a single-ended blower assembly in the lower-
efficiency units.
Similar to Product Class 1, the EL 3 and EL 4 units utilize a
cylindrical filter and cabinet to improve filter surface area and
airflow as well as a BLDC motor to improve efficiency. At EL 4, the
max-tech unit uses lower-standby power components along with
optimizations to the motor-filter relationship that allowed for the use
of a smaller motor due to a lower pressure drop across the filter.
c. Product Class 3
For Product Class 3, DOE was unable to identify and teardown an EL
1 unit, again due to a lack of published power consumption data for
commercially available units below ENERGY STAR V.2.0. Therefore, DOE
estimated the EL 1 MPC for Product Class 3 by developing a best-fit
curve from the IEF and MPCs of the other efficiency levels for Product
Class 3 and using this best-fit curve to estimate the MPC for EL 1.
Table IV.11 summarizes the MPCs at each efficiency level for the 150+
PM2.5 CADR product class.
[[Page 21775]]
Table IV.11--Manufacturer Production Costs for Product Class 3
[2022$]
----------------------------------------------------------------------------------------------------------------
IEF (PM2.5 CADR/
EL W) MPC Incremental MPC
----------------------------------------------------------------------------------------------------------------
Baseline.................................................... 1.2 $70.50 ................
1........................................................... 2.0 71.66 $1.17
2........................................................... 2.9 72.50 2.00
3........................................................... 6.6 74.33 3.84
4........................................................... 7.4 74.61 4.11
----------------------------------------------------------------------------------------------------------------
DOE estimated that the typical baseline unit for Product Class 3 is
equipped with an electronic interface, a PSC motor, and a rectangular
HEPA filter. For an EL 1 unit, DOE estimated that a PSC motor is still
used, but the motor-filter relationship is optimized along with lower-
standby power components to increase unit efficiency. The
representative EL 2 unit also uses a PSC motor; however, the unit has a
filter with a larger surface area and a larger case with larger air
inlets/outlets to improve airflow compared to the baseline and EL 1
units. The EL 3 and EL 4 units utilize a cylindrical HEPA filter and
BLDC motor to improve airflow through the filter while reducing power
consumption. However, the EL 3 and EL 4 units are typically smaller in
cabinet size compared to lower-efficiency units within Product Class 3.
Therefore, the incremental MPCs at EL 3 and EL 4 is smaller compared to
the incremental MPCs at EL 3 and EL 4 for the other two product
classes.
In addition to determining the MPCs for each representative unit at
each efficiency level, DOE also disaggregated the overall MPC at each
efficiency level to determine filter costs, which are used to determine
the maintenance and repair costs for the LCC and PBP. These costs are
shown in Table IV.12.
Table IV.12--Filter Costs (2022$) Disaggregated From Overall MPCs for Each Representative Unit
----------------------------------------------------------------------------------------------------------------
Efficiency level Product class 1 Product class 2 Product class 3
----------------------------------------------------------------------------------------------------------------
Baseline.................................................. $2.62 $5.83 $9.06
EL 1...................................................... 1.92 5.00 8.68
EL 2...................................................... 1.79 4.16 8.29
EL 3...................................................... 6.71 10.25 12.10
EL 4...................................................... 7.05 7.78 12.69
----------------------------------------------------------------------------------------------------------------
DOE observed that the filter MPC typically decreased going from
baseline to EL 2 and then increased for EL 3 and EL 4. This is because
the baseline unit typically has a larger rectangular filter compared to
EL 1 and EL 2 filters, leading to higher filter costs for the baseline
unit. EL 3 and EL 4 units have cylindrical filters with plastic casing,
compared to the paper/cardboard casing seen at baseline through EL 2,
both of which lead to much higher filter costs at these levels.
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce.
The detailed description of DOE's determination of costs for
baseline and higher efficiency levels is provided in chapter 5 of the
direct final rule TSD. The detailed description of DOE's determination
of the industry average manufacturer markup is provided in chapter 12
of the direct final rule TSD
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analysis. At each step in the distribution channel, companies
mark up the price of the product to cover business costs and profit
margin.
For air cleaners, DOE relied on the TechSci Research report,\30\
and manufacturer inputs from the manufacturer interviews to develop the
distribution channels and the corresponding market share. DOE developed
baseline and incremental markups for each link in the distribution
chains (after the product leaves the manufacturer). Baseline markups
are applied to the price of products with baseline efficiency, while
incremental markups are applied to the difference in price between
baseline and higher-efficiency models (the incremental cost increase).
The incremental markup is typically less than the baseline markup and
is designed to maintain similar per-unit operating profit before and
after new or amended standards.\31\
---------------------------------------------------------------------------
\30\ TechSci Research. 2022. United States air purifier market,
forecast and opportunity. June 2022. www.techsciresearch.com/report/us-air-purifier-market/3711.html.
\31\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
DOE relied on economic data from the U.S. Census Bureau to estimate
average baseline and incremental markups. Specifically, DOE used the
2017 Annual Retail Trade Survey for the ``Electronics and Appliance
Stores'' sector to develop retailer markups,\32\ and the 2017 Annual
Wholesale Trade Survey for both ``Machinery, equipment, and supplies
merchant wholesalers'' and ``Household appliances and electrical and
electronic goods merchant wholesalers'' business types to develop the
markups for distributors.\33\
---------------------------------------------------------------------------
\32\ U.S. Census Bureau, Annual Retail Trade Survey, 2017.
www.census.gov/programs-surveys/arts.html.
\33\ U.S. Census Bureau, Annual Wholesale Trade Survey, 2017.
www.census.gov/programs-surveys/awts.html.
---------------------------------------------------------------------------
To differentiate the retailer markups in the online and offline
retail channels,
[[Page 21776]]
DOE compared the retail prices of top-selling models provided in the
TechSci Research report from major home improvement centers (offline
retail sales) and e-commerce websites (online retail sales) and
estimated that the online retail prices are on average 1.1% lower than
the offline retail prices. Hence, DOE applied the price ratio to the
retailer markups estimated from the 2017 Annual Retail Trade Survey to
derive separate markups for the offline retail channel.
Chapter 6 of the direct final rule TSD provides details on DOE's
development of markups for air cleaners.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of air cleaners at different efficiencies in
representative U.S. single-family homes, multi-family residences,
mobile homes, and commercial buildings, and to assess the energy
savings potential of increased air cleaner efficiency. The energy use
analysis estimates the range of energy use of air cleaners in the field
(i.e., as they are actually used by consumers). The energy use analysis
provides the basis for other analyses DOE performed, particularly
assessments of the energy savings and the savings in consumer operating
costs that could result from adoption of amended or new standards.
DOE determined the annual energy consumption of air cleaners by
multiplying the per operating mode annual operating hours by the power
of standby and active modes. DOE used the Energy Information
Administration's (``EIA'') Residential Energy Consumption Survey
(``RECS'') 2020 \34\ data and EIA's Commercial Building Energy
Consumption Survey (``CBECS'') 2018 \35\ data to represent residential
and commercial consumer samples. In the absence of air cleaner
ownership and usage information in both datasets, for the residential
sector, DOE included all household samples, but adjusted the
residential sample weights based on the geographic distribution of air
cleaner stocks reported by TechSci Research, and the number of air
cleaners per sample based on household size. For the commercial sector,
DOE excluded the vacant and non-used buildings from the CBECS 2018
samples and adjusted the remaining building sample weights based on the
building occupancy, the square footage of the climate-controlled space,
and the stock distribution by building principal activity reported by
TechSci Research.
---------------------------------------------------------------------------
\34\ U.S. Department of Energy--Energy Information
Administration. Residential Energy Consumption Survey. 2020.
www.eia.gov/consumption/residential/data/2020/.
\35\ U.S. Department of Energy--Energy Information
Administration. Commercial Buildings Energy Consumption Survey.
2018. www.eia.gov/consumption/commercial/data/2018/.
---------------------------------------------------------------------------
Daikin requested that DOE disclose its methodology and results of
the Annual Energy Use assessment. Daikin recognizes that the actual
hours of operation will obviously have a significant impact on the
annual energy consumption of a product. (Daikin, No. 12 at p. 6) NEEA
stated it typically estimates average operation to be 8 hours per day
based on seasonal operation or part-day operation, but noted that the
Northwest Regional Technical Forum estimates 16 hours per day. (NEEA,
No. 11 at p. 5)
The DOE test procedure produces standardized results that can be
used to assess or compare the performance of products operating under
specified laboratory conditions. The test procedure assumes air
cleaners are used 16 hours of the day on active mode (maximum power)
and 8 hours on standby mode which aligns with the ENERGY STAR
description.\36\ Actual energy usage in the field often differs from
that estimated by the test procedure because of variation in operating
conditions, the behavior of users, and other factors.
---------------------------------------------------------------------------
\36\ ENERGY STAR Certified Room Air Cleaners Database.
Description of ``Annual Energy Use (kWh/yr)'' ``This is the
estimated annual energy use of the room air cleaner under typical
conditions, including the energy used in active modes and partial on
modes . . . The active mode [. . .] is on average 16 hours active
and 8 hours inactive per day. Actual energy consumption will vary
depending on various factors such as the amount of usage in active
model and the settings chosen.'' data.energystar.gov/Active-Specifications/ENERGY-STAR-Certified-Room-Air-Cleaners/jmck-i55n/data.
---------------------------------------------------------------------------
To estimate the actual annual air cleaner energy consumption in the
residential sector, DOE relied on the RECS 2020 consumer sample, in
conjunction with the county-based 2020 air quality data published by
the EPA,\37\ and a market research report conducted by Evergreen
Economics \38\ submitted by stakeholders to determine the annual
operating hours. DOE estimated that the air cleaners operated on
average 10.6 hours per day, and 248 days per year in the residential
sector.
---------------------------------------------------------------------------
\37\ U.S. Environmental Protection Agency. Air Quality System.
Air Quality Index per County. 2020. www.epa.gov/air-trends/air-quality-cities-and-counties.
\38\ Evergreen Economics. Air Purifier Study Results. February
8, 2021. The document can be found in docket, www.regulations.gov/comment/EERE-2021-BT-STD-0035-0009.
---------------------------------------------------------------------------
To determine the commercial sector air cleaner annual energy
consumption, DOE used the CBECS 2018 building sample regarding the
reported building principal activities, building schedule and occupancy
information. DOE estimated an average of 4,198 annual operating hours,
which is equivalent to 12.9 operating hours per day and 325 operating
days per year.
Chapter 7 of the direct final rule TSD provides details on DOE's
energy use analysis for air cleaners.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
air cleaners. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE used the following
two metrics to measure consumer impacts:
The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of total installed
cost (manufacturer selling price, distribution chain markups, sales
tax, and installation costs) plus operating costs (expenses for energy
use, maintenance, and repair). To compute the operating costs, DOE
discounts future operating costs to the time of purchase and sums them
over the lifetime of the 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
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of air cleaners in the absence of new
or amended energy conservation standards. In contrast, the PBP for a
given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of U.S.
households and commercial buildings. As stated previously, DOE
developed household samples from the RECS 2020 and commercial building
samples from the CBECS 2018. For each sample household, DOE determined
the energy consumption for the air cleaners and the appropriate energy
price. By developing a representative sample of households
[[Page 21777]]
and commercial buildings, the analysis captured the variability in
energy consumption and energy prices associated with the use of air
cleaners.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer
markups, and sales taxes--and filter costs. Inputs to the calculation
of operating expenses include annual energy consumption, energy prices
and price projections, repair and maintenance costs, product lifetimes,
and discount rates. DOE created distributions of values for product
lifetime, discount rates, and sales taxes, with probabilities attached
to each value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC 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 air cleaner user samples. For this
rulemaking, the Monte Carlo approach is implemented in MS Excel
together with the Crystal Ball\TM\ add-on.\39\ The model calculated the
LCC for products at each efficiency level for 10,000 housing units and
commercial building units per simulation run. The analytical results
include a distribution of 10,000 data points showing the range of LCC
savings for a given efficiency level relative to the no-new-standards
case efficiency distribution. In performing an iteration of the Monte
Carlo simulation for a given consumer, product efficiency is chosen
based on its probability. If the chosen product efficiency is greater
than or equal to the efficiency of the standard level under
consideration, the LCC calculation reveals that a consumer is not
impacted by the standard level. By accounting for consumers who already
purchase more-efficient products, DOE avoids overstating the potential
benefits from increasing product efficiency. DOE calculated the LCC for
consumers of air cleaners as if each were to purchase a new product in
the first year of required compliance with new or amended standards.
New standards apply to air cleaners manufactured five years after the
date on which any new standard is published. (42 U.S.C. 6295(l)(2))
However, on August 23, 2022, DOE received a Joint Proposal from the
Joint Stakeholders regarding energy conservation standards for air
cleaners recommending a two-tier approach. Therefore, DOE used 2024 and
2026 as the first years of compliance in one of the scenarios analyzed
based on the Joint Proposal's two-tier standard recommendation, and
used 2028 as the first year of compliance with any new standards for
air cleaners for the other scenarios analyzed based on the statutory
requirement.
---------------------------------------------------------------------------
\39\ Crystal Ball\TM\ is commercially-available software tool to
facilitate the creation of these types of models by generating
probability distributions and summarizing results within Excel,
available at www.oracle.com/technetwork/middleware/crystalball/overview/index.html (last accessed July 6, 2018).
---------------------------------------------------------------------------
Table IV.13 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the direct final rule TSD and its appendices.
Table IV.13--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost...................... Derived by multiplying MPCs by
manufacturer and retailer markups
and sales tax, as appropriate. Used
historical data to derive a price
scaling index to project product
costs.
Installation Cost................. No change with efficiency level.
Annual Energy Use................. The total annual energy use by
operating mode multiplied by the
hours per year. Variability: Based
on the RECS 2020 and CBECS 2018.
Energy Prices..................... Electricity: Based on Edison
Electric Institute data for 2021.
Variability: Regional energy prices
determined for 50 states and
Washington DC.
Energy Price Trends............... Based on AEO2022 price projections.
Repair and Maintenance Costs...... Considered filter change cost only.
Filter change frequency assumed to
be associated with usage. On
average 1.7 filters used per year
for residential sector and 2
filters used per year for
commercial sector.
Product Lifetime.................. Average: 9.0 years.
Discount Rates.................... Approach involves identifying all
possible debt or asset classes that
might be used to purchase the
considered appliances, or might be
affected indirectly. Primary data
source was the Federal Reserve
Board's Survey of Consumer
Finances.
Compliance Date................... 2024/2026 for tiered trial standard
level (TSL) and 2028 for the other
TSLs.
------------------------------------------------------------------------
* Not used for PBP calculation. References for the data sources
mentioned in this table are provided in the sections following the
table or in chapter 8 of the direct final rule TSD.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
Economic literature and historical data suggest that the real costs
of many products may trend downward over time according to ``learning''
or ``experience'' curves. An experience curve analysis implicitly
includes factors such as efficiencies in labor, capital investment,
automation, materials prices, distribution, and economies of scale at
an industry-wide level. To derive the learning rate parameter for air
cleaners, DOE obtained historical Producer Price Index (``PPI'') data
for air cleaners from the Bureau of Labor Statistics (``BLS''). A PPI
for ``small electric household appliances'' was available for the time
period between 1982 and 2015.\40\ However, the small electric household
appliances PPI was discontinued beyond 2015 due to insufficient sample
size. To extend the price index beyond 2015, DOE assumed that the more
aggregated product series, small electrical appliances price index, is
representative of the trend of small electric household appliances.
Inflation-adjusted price indices were calculated by dividing the PPI
series by the gross
[[Page 21778]]
domestic product index from Bureau of Economic Analysis for the same
years. Using data from 1982-2021, the estimated learning rate (defined
as the fractional reduction in price expected from each doubling of
cumulative production) is 6 percent. DOE assumed that the air cleaner
manufacturers do not typically manufacture the air filters themselves;
thus, DOE applied the price learning to the non-filter portion of the
cost only.
---------------------------------------------------------------------------
\40\ U.S. Bureau of Labor Statistics, PPI Industry Data, Small
electric household appliance manufacturers, Product series ID:
PCU33521033521014. Data series available at: www.bls.gov/ppi/.
---------------------------------------------------------------------------
2. Installation Cost
Installation costs include labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE found no data
showing that installation costs would be impacted with increased
efficiency levels.
3. Annual Energy Consumption
For each sampled household and commercial building, DOE determined
the energy consumption for air cleaners at different efficiency levels
using the approach described previously in section IV.E of this
document.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the product
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2021 using data from EEI Typical
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric
bills and average kWh costs to the customer as charged by investor-
owned utilities. For the residential sector, DOE calculated electricity
prices using the methodology described in Coughlin and Beraki
(2018).\41\ For the commercial sector, DOE calculated electricity
prices using the methodology described in Coughlin and Beraki
(2019).\42\
---------------------------------------------------------------------------
\41\ Coughlin, K. and B. Beraki. 2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169.
https://ees.lbl.gov/publications/residential-electricity-prices-review.
\42\ Coughlin, K. and B. Beraki. 2019. Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. https://ees.lbl.gov/publications/non-residential-electricity-prices.
---------------------------------------------------------------------------
To estimate energy prices in future years, DOE multiplied the 2021
energy prices by the projection of annual average price changes for
each of the nine census divisions from the reference case in AEO2022,
which has an end year of 2050.\43\ For the years after 2050, DOE held
constant the 2050 electricity prices.
---------------------------------------------------------------------------
\43\ U.S. Department of Energy--Energy Information
Administration. Annual Energy Outlook 2022 with Projections to 2050.
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last
accessed December 9, 2022).
---------------------------------------------------------------------------
See chapter 8 of the direct final rule TSD for details.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency products.
In this direct final rule analysis, DOE included no changes in
maintenance or repair costs for air cleaners that exceed the baseline
efficiency other than the filter change costs. As described in section
IV.C of this document, differences in filter size, shape, and material
lead to variations in filter costs at each efficiency level within each
product class. DOE determined that replacement filters have the same
distribution channels and markups as the air cleaner units. No price
learning was considered and applied to the filter change costs. Based
on the information received from the manufacturer interviews, for
commercial buildings, DOE estimated a flat filter change frequency of
twice per year. For the residential sector, DOE associated the filter
change frequency with the air cleaner usage. DOE correlated higher
filter change frequency with higher operating hours with the highest
frequency of once every six months and the lowest frequency of once per
year. This filter change rate aligns with the range suggested by
manufacturer interviews. DOE also takes into account that a small
percentage of consumers may never change the air cleaner filters.
6. Product Lifetime
For air cleaners, DOE developed a distribution of lifetimes from
which specific values are assigned to the appliances in the samples.
DOE ensured that the average lifetime estimate of 9 years aligned with
those lifetime estimates suggested by ENERGY STAR,\44\ and by CA IOUs
(who cited EPA and various State Technical Reference Manuals). (CA
IOUs, No. 9 at p. 2) NEEA also cited an estimated lifetime of 9 years.
(NEEA, No. 11 at p. 5)
---------------------------------------------------------------------------
\44\ Room Air Cleaners Final Version 2.0 Program Requirements--
Data and Analysis Package. October 2019. www.energystar.gov/products/spec/room_air_cleaners_version_2_0_pd.
---------------------------------------------------------------------------
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households and commercial buildings to estimate the present value of
future operating cost savings. DOE estimated a distribution of discount
rates for air cleaners based on the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\45\ The LCC analysis estimates net present value over the
lifetime of the product, so the appropriate discount rate will reflect
the general opportunity cost of household funds, taking this time scale
into account. Given the long time horizon modeled in the LCC, the
application of a marginal interest rate associated with an initial
source of funds is inaccurate. Regardless of the method of purchase,
consumers are expected to continue to rebalance their debt and asset
holdings over the LCC analysis period, based on the restrictions
consumers face in their debt payment requirements and the relative size
of the interest rates available on debts and assets. DOE estimates the
aggregate impact of this rebalancing using the historical distribution
of debts and assets.
---------------------------------------------------------------------------
\45\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; interest rates at which a
consumer is able to borrow or lend. The implicit discount rate is
not appropriate for the LCC analysis because it reflects a range of
factors that influence consumer purchase decisions, rather than the
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------
To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's triennial Survey of Consumer
[[Page 21779]]
Finances \46\ (``SCF'') starting in 1995 and ending in 2019. Using the
SCF and other sources, DOE developed a distribution of rates for each
type of debt and asset by income group to represent the rates that may
apply in the year in which standards would take effect. DOE assigned
each sample household a specific discount rate drawn from one of the
distributions. The average rate across all types of household debt and
equity and income groups, weighted by the shares of each type, is 4.3
percent.
---------------------------------------------------------------------------
\46\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------
For commercial consumers, DOE used the cost of capital to estimate
the present value of cash flows to be derived from a typical company
project or investment. Most companies use both debt and equity capital
to fund investments, so the cost of capital is the weighted-average
cost to the firm of equity and debt financing. This corporate finance
approach is referred to as the weighted-average cost of capital. DOE
used currently available economic data in developing discount rates.
See chapter 8 of the direct final rule TSD for further details on the
development of consumer discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
To estimate the energy efficiency distribution of air cleaners for
2028 (as well as 2024 and 2026), DOE combined market share information
submitted by manufacturers \47\ and model efficiency distribution from
the ENERGY STAR database, and assumed no annual efficiency improvement
for the no-new-standards case. The estimated market shares for the no-
new-standards case for air cleaners are shown in Table IV.14. See
chapter 8 of the direct final rule TSD for further information on the
derivation of the efficiency distributions.
---------------------------------------------------------------------------
\47\ https://www.regulations.gov/comment/EERE-2021-BT-STD-0035-0018.
Table IV.14--No-New-Standards Case Efficiency Distribution for Air Cleaners in 2028
(and in 2024 and 2026)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC PC1: 10-100 PM2.5 CADR PC2: 100-150 PM2.5 CADR PC3: 150+ PM2.5 CADR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Share 26% 24% 50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency Efficiency Efficiency
EL (PM2.5 CADR/W) Market share (PM2.5 CADR/W) Market share (PM2.5 CADR/W) Market share
(%) (%) (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................................... 1.53 28.0 1.53 24.4 1.20 22.2
1................................................. 1.69 42.1 1.90 36.6 2.01 33.3
2................................................. 1.89 19.1 2.39 28.1 2.91 37.7
3................................................. 3.37 7.5 5.44 10.5 6.55 3.1
4................................................. 5.40 3.3 12.75 0.4 7.41 3.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the air cleaner
purchased by each sample household and commercial building in the no-
new-standards case. The resulting percent shares within the sample
match the market shares in the efficiency distributions.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient products, compared to baseline products, through energy cost
savings. 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 for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs.
As noted previously, 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 first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (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 by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the standards would be
required.
G. Shipments Analysis
DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\48\
The shipments model takes an accounting approach, tracking market
shares of each product class and the vintage of units in the stock.
Stock accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------
\48\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
While demand for the replacement of existing products is dependent
only on past shipments and estimated product lifetimes, new demand must
be independently projected into the future. DOE projected new demand by
estimating new demand in 2020, and applying an annual growth rate. In
order to estimate new demand in 2020, DOE took estimates of past
shipments (2007-2020) from a EuroMonitor product sales
[[Page 21780]]
report \49\ and estimated lifetimes to calculate an amount of retiring
units in 2020. Overall new demand in 2020 was computed as the
difference between the EuroMonitor estimate of all units shipped that
year, and the estimated retirement demand. Separately, DOE estimated an
average annual shipments growth rate of 4.87 percent from the 2021-2028
shipments projection provided by EuroMonitor which is a more
conservative estimate compared to the 7 percent annual shipments growth
rate estimated by the TechSci Research report.\50\ New demand was
projected using this annual growth rate. In all shipments projection
years, based on the TechSci Research data, DOE assumed that 40 percent
of shipments were directed to the commercial sector, and 60 percent
were directed to the residential sector. For both sectors and based on
manufacturers data, DOE also estimated that 26 percent of shipments
were comprised of 10-99 CADR units, 24 percent were comprised of 100-
149 CADR units, and the remaining 50 percent were >=150 CADR units.
---------------------------------------------------------------------------
\49\ Euromonitor International. 2021. Air treatment products in
the U.S. December. www.euromonitor.com/air-treatment-products-in-the-us/report.
\50\ TechSci Research. 2022. United States air purifier market,
forecast and opportunity. June 2022. www.techsciresearch.com/report/us-air-purifier-market/3711.html.
---------------------------------------------------------------------------
H. National Impact Analysis
The NIA assesses the national energy savings (``NES'') and the NPV
from a national perspective of total consumer costs and savings that
would be expected to result from new or amended standards at specific
efficiency levels.\51\ (``Consumer'' in this context refers to
consumers of the product being regulated.) DOE calculates the NES and
NPV for the potential standard levels considered based on projections
of annual product shipments, along with the annual energy consumption
and total installed cost data from the energy use and LCC analyses. For
the present analysis, DOE projected the energy savings, operating cost
savings, product costs, and NPV of consumer benefits over the lifetime
of air cleaners sold through 2057.
---------------------------------------------------------------------------
\51\ The NIA accounts for impacts in the 50 states and U.S.
territories.
---------------------------------------------------------------------------
DOE evaluates the impacts of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.15 summarizes the inputs and methods DOE used for the NIA
analysis for the direct final rule. Discussion of these inputs and
methods follows Table IV.15. See chapter 10 of the direct final rule
TSD for further details.
Table IV.15--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments....................... Annual shipments from shipments model.
Compliance Date of Standard..... 2024/2026 (Tiered TSL), 2028 (other
TSLs).
Efficiency Trends............... No-new-standards case: fixed
efficiency distribution provided by
manufacturers with no annual
improvements.
Standard cases: No-new-standards case
market share below the standard level
is rolled up to the minimum
qualifying level.
Annual Energy Consumption per Annual weighted-average values are a
Unit. function of energy use at each TSL.
Total Installed Cost per Unit... Annual weighted-average values are a
function of cost at each TSL.
Incorporates projection of future
product prices based on historical
data.
Annual Energy Cost per Unit..... Annual weighted-average values as a
function of the annual energy
consumption per unit and energy
prices.
Repair and Maintenance Cost per Annual values estimated in the LCC
Unit. analysis do not change across the
analysis period except for the first
year.
Energy Price Trends............. AEO2022 projections (to 2050) and
constant values thereafter.
Energy Site-to-Primary and FFC A time-series conversion factor based
Conversion. on AEO2022.
Discount Rate................... Three and seven percent.
Present Year.................... 2022.
------------------------------------------------------------------------
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered product classes for the year of anticipated compliance with
a new standard. In the no-new-standards case, DOE determined that the
present efficiency distribution would remain fixed over time due to the
lack of evidence of efficiency improvement in the no-new-standards
case. The approach is further described in chapter 10 of the direct
final rule TSD.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2024 and 2026 for TSL3 and 2028 for
the other TSLs). In this scenario, the market shares of products in the
no-new-standards case that do not meet the standard under consideration
would ``roll up'' to meet
[[Page 21781]]
the new standard level, and the market share of products above the
standard would remain unchanged.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered products between each TSL
and the case with no new or amended energy conservation standards. DOE
calculated the national energy consumption by multiplying the number of
units (stock) of each product (by vintage or age) by the unit energy
consumption (also by vintage). DOE calculated annual NES based on the
difference in national energy consumption for the no-new-standards case
and for each higher efficiency standard case. DOE estimated energy
consumption and savings based on site energy and converted the
electricity consumption and savings to primary energy (i.e., the energy
consumed by power plants to generate site electricity) using annual
conversion factors derived from AEO2022. Cumulative energy savings are
the sum of the NES for each year over the timeframe of the analysis.
Use of higher-efficiency products is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the product due to the increase in efficiency and reduction in
operating cost. However, DOE did not find any data on a rebound effect
specific to air cleaners, and so applied no rebound for air cleaners.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (``NEMS'') is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \52\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the direct final rule TSD.
---------------------------------------------------------------------------
\52\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2018, DOE/EIA-0581(2019), April 2019.
Available at www.eia.gov/outlooks/aeo/nems/overview/pdf/0581(2018).pdf (last accessed December 5, 2022).
---------------------------------------------------------------------------
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are (1) total annual installed cost, (2) total
annual operating costs (energy costs and repair and maintenance costs),
and (3) a discount factor to calculate the present value of costs and
savings. DOE calculates net savings each year as the difference between
the no-new-standards case and each standards case in terms of total
savings in operating costs versus total increases in installed costs.
DOE calculates operating cost savings over the lifetime of each product
shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed air
cleaners price trends based on an experience curve that depends on
cumulative product shipments. DOE applied the same trends to the non-
filter part of the projected prices for each product class at each
considered efficiency level. By 2057, which is the end date of the
projection period, the average air cleaner price is projected to drop
17 percent relative to 2021. DOE's projection of product prices is
described in chapter 8 of the direct final rule TSD.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different product price
projections on the consumer NPV for the considered TSLs for air
cleaners. In addition to the default price trend, DOE considered two
product price sensitivity cases: (1) a high price decline case based on
the small electric household appliance PPI from 2014 to 2021, and (2) a
low price decline case based on the small electric household appliance
PPI from 2009 to 2014. The derivation of these price trends and the
results of these sensitivity cases are described in appendix 10C of the
direct final rule TSD.
The operating cost savings consist of repair and maintenance costs
savings, and energy cost savings. The repair and maintenance cost
savings are estimated based on the filter change frequency and costs in
the LCC analysis, which are held constant during the lifetime of the
air cleaner in the NIA except for the first year.\53\ Energy cost
savings are calculated using the estimated energy savings in each year
and the projected price of the appropriate form of energy. To estimate
energy prices in future years, DOE multiplied the average regional
energy prices by the projection of annual national-average residential
energy price changes in the Reference case from AEO2022, which has an
end year of 2050. To estimate price trends after 2050, the 2050 value
was used for all years. As part of the NIA, DOE also analyzed scenarios
that used inputs from variants of the AEO2022 Reference case that have
lower and higher economic growth. Those cases have lower and higher
energy price trends compared to the Reference case. NIA results based
on these cases are presented in appendix 10C of the direct final rule
TSD.
---------------------------------------------------------------------------
\53\ A new air cleaner unit usually comes with a new filter,
which is why the first year of operation has a lower repair and
maintenance cost compared to the other years during the lifetime of
a unit.
---------------------------------------------------------------------------
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
direct final rule, DOE estimated the NPV of consumer benefits using
both a 3-percent and a 7-percent real discount rate. DOE uses these
discount rates in accordance with guidance provided by the Office of
Management and Budget (``OMB'') to Federal agencies on the development
of regulatory analysis.\54\ The discount rates for the determination of
NPV are in contrast to the discount rates used in the LCC analysis,
which are designed to reflect a consumer's perspective. The 7-percent
real value is an estimate of the average before-tax rate of return to
private capital in the U.S. economy. The 3-percent real value
represents the ``social rate of time preference,'' which is the rate at
which society discounts future consumption flows to their present
value.
---------------------------------------------------------------------------
\54\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed
December 9, 2022).
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I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC
[[Page 21782]]
impacts and PBP for those particular consumers from alternative
standard levels. For this direct final rule, DOE analyzed the impacts
of the considered standard levels on three subgroups: (1) low-income
households, (2) senior-only households and (3) small businesses. There
may be other subgroups affected by standards for air cleaners, e.g.,
those with occupants who have chronic respiratory health conditions.
However, DOE does not have information indicating that these consumers
may be disproportionately affected by new air cleaner standards and DOE
did not analyze these consumers as a separate consumer subgroup. The
analysis used subsets of the RECS 2020 and CBECS 2018 samples composed
of households and commercial buildings that meet the criteria for the
considered subgroups. DOE used the LCC and PBP spreadsheet model to
estimate the impacts of the considered efficiency levels on these
subgroups. Chapter 11 in the direct final rule TSD describes the
consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of new
energy conservation standards on manufacturers of air cleaners and to
estimate the potential impacts of such standards on employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects and includes analyses of projected industry cash flows, the
INPV, investments in research and development (``R&D'') and
manufacturing capital, and domestic manufacturing employment.
Additionally, the MIA seeks to determine how new energy conservation
standards might affect manufacturing employment, capacity, and
competition, as well as how standards contribute to overall regulatory
burden. Finally, the MIA serves to identify any disproportionate
impacts on manufacturer subgroups, including small business
manufacturers.
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (``GRIM''), an industry cash flow model with
inputs specific to this rulemaking. The key GRIM inputs include data on
the industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various standards cases. To capture the
uncertainty relating to manufacturer pricing strategies following
standards, the GRIM estimates a range of possible impacts under
different manufacturer markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative impact of other DOE and
non-DOE regulations, and impacts on manufacturer subgroups. The
complete MIA is outlined in chapter 12 of the direct final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the air cleaners manufacturing
industry based on the market and technology assessment, preliminary
manufacturer interviews, and publicly-available information. This
included a top-down analysis of air cleaner manufacturers that DOE used
to derive preliminary financial inputs for the GRIM (e.g., revenues;
materials, labor, overhead, and depreciation expenses; selling,
general, and administrative expenses (``SG&A''); and R&D expenses). DOE
also used public sources of information to further calibrate its
initial characterization of the air cleaners manufacturing industry,
including results of the engineering analysis, the U.S. Census Bureau's
``Economic Census,'' \55\ and reports from Dunn & Bradstreet.\56\
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\55\ The U.S. Census Bureau. Quarterly Survey of Plant Capacity
Utilization. Available at www.census.gov/programs-surveys/qpc/data/tables.html.
\56\ The Dun & Bradstreet Hoovers login is available at
app.dnbhoovers.com.
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In Phase 2 of the MIA, DOE prepared a framework industry cash-flow
analysis to quantify the potential impacts of energy conservation
standards. The GRIM uses several factors to determine a series of
annual cash flows starting with the announcement of the standard and
extending over a 30-year period following the compliance date of the
standard. These factors include annual expected revenues, costs of
sales, SG&A and R&D expenses, taxes, and capital expenditures. In
general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute to manufacturers of air cleaners in order to develop other
key GRIM inputs, including product and capital conversion costs, and to
gather additional information on the anticipated effects of energy
conservation standards on revenues, direct employment, capital assets,
industry competitiveness, and subgroup impacts.
In Phase 3 of the MIA, DOE typically conducts structured, detailed
interviews with representative manufacturers. During these interviews,
DOE typically discusses engineering, manufacturing, procurement, and
financial topics to validate assumptions used in the GRIM and to
identify key issues or concerns. For this air cleaners rulemaking, DOE
conducted preliminary interviews that focused on key issues, product
classes, and the engineering analysis. As part of Phase 3, DOE also
evaluated subgroups of manufacturers that may be disproportionately
impacted by standards or that may not be accurately represented by the
average cost assumptions used to develop the industry cash flow
analysis. Such manufacturer subgroups may include small business
manufacturers, low-volume manufacturers (``LVMs''), niche players, and/
or manufacturers exhibiting a cost structure that largely differs from
the industry average. DOE identified one subgroup for a separate impact
analysis: small business manufacturers. The small business subgroup is
discussed in section VI.B, ``Review under the Regulatory Flexibility
Act'' and in chapter 12 of the direct final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to new
standards that result in a higher or lower industry value. The GRIM
uses a standard, annual discounted cash-flow analysis that incorporates
manufacturer costs, markups, shipments, and industry financial
information as inputs. The GRIM models changes in costs, distribution
of shipments, investments, and manufacturer margins that could result
from an energy conservation standard. The GRIM spreadsheet uses the
inputs to arrive at a series of annual cash flows, beginning in 2023
(the base
[[Page 21783]]
year of the analysis) and continuing to 2057. DOE calculated INPVs by
summing the stream of annual discounted cash flows during this period.
For manufacturers of air cleaners, DOE used a real discount rate of 6.6
percent. Given the lack of publicly-listed original equipment
manufacturers (OEMs) of air cleaners, DOE relied on industry parameters
from the portable air conditioners final rule published in January
2020. 85 FR 1378 (Jan. 9, 2020). In reviewing other appliance standards
rulemakings where DOE had sufficient data to estimate product-specific
manufacturer markups and other financial parameters, DOE found portable
air conditioners to be the most recent rulemaking covering a product
similar to air cleaners in terms of product and market attributes.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the energy
conservation standard on manufacturers. As discussed previously, DOE
developed critical GRIM inputs using a number of sources, including
publicly available data, results of the engineering analysis, and
information gathered from industry stakeholders during the course of
manufacturer interviews. The GRIM results are presented in section
V.B.2 of this document. Additional details about the GRIM, the discount
rate, and other financial parameters can be found in chapter 12 of the
direct final rule TSD.
a. Manufacturer Production Costs
Manufacturing more efficient products is typically more expensive
than manufacturing baseline products due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the manufacturer production costs (``MPCs'') of covered
products can affect the revenues, gross margins, and cash flow of the
industry.
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to interpolate to define ``gap fill''
levels (to bridge large gaps between other identified efficiency
levels) and/or to extrapolate to the ``max-tech'' level (particularly
in cases where the ``max-tech'' level exceeds the maximum efficiency
level currently available on the market).
In this rulemaking, DOE applied a hybrid approach of efficiency-
level and design-option approaches described above. This approach
involved reviewing publicly available efficiency data and physically
disassembling commercially available products. From this information,
DOE estimated the MPCs for a range of products available at that time
on the market. DOE then analyzed the steps manufacturers took to
improve product efficiencies. In its analysis, DOE determined that
manufacturers would likely rely on certain design options to reach
higher efficiencies. From this information, DOE estimated the cost and
efficiency impacts of incorporating specific design options at each
efficiency level. For a complete description of the MPCs, see chapter 5
of the direct final rule TSD.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level. Changes in sales volumes and efficiency mix over time
can significantly affect manufacturer finances. For this analysis, the
GRIM uses the NIA's annual shipment projections derived from the
shipments analysis from 2023 (the base year) to 2057 (the end year of
the analysis period). See chapter 9 of the direct final rule TSD for
additional details.
c. Product and Capital Conversion Costs
Energy conservation standards could cause manufacturers to incur
conversion costs to bring their production facilities and product
designs into compliance. DOE evaluated the level of conversion-related
expenditures that would be needed to comply with each considered
efficiency level in each product class. For the MIA, DOE classified
these conversion costs into two major groups: (1) capital conversion
costs; and (2) product conversion costs. Capital conversion costs are
investments in property, plant, and equipment necessary to adapt or
change existing production facilities such that new compliant product
designs can be fabricated and assembled. Product conversion costs are
investments in research, development, testing, marketing, and other
non-capitalized costs necessary to make product designs comply with
energy conservation standards.
To evaluate the level of product conversion costs industry would
likely incur to comply with n energy conservation standard, DOE
evaluated the testing costs for manufacturers to certify models to DOE
and the investments necessary to update product designed to comply with
standards. DOE relied on testing costs from the March 2023 TP Final
Rule, which estimated $6,000 for 3rd party lab testing of a basic
model. To estimate investment levels, DOE relied on financial
parameters to estimate annual spending on R&D; complexity of design
options; and percentage of industry shipments that would require
redesign. Product conversion costs by efficiency level are presented in
Table IV.16 through Table IV.18. To evaluate the level of capital
conversion costs for the industry, DOE relied on its product teardowns
and analysis of the equipment and tooling required to produce
conventional air cleaners. The conversion cost estimates are driven by
the number of injection mold dies that would require replacement as a
result of standards. Capital conversion costs by efficiency level are
presented in Table IV.16 through Table IV.18.
Table IV.16--Conversion Cost ($M) for PC1 (10 <= PM2.5 CADR <100)
------------------------------------------------------------------------
Product Capital
Efficiency level conversion conversion
cost cost
------------------------------------------------------------------------
1....................................... $3.6 $6.1
2....................................... 9.0 8.4
3....................................... 19.0 14.2
4....................................... 20.6 15.1
------------------------------------------------------------------------
[[Page 21784]]
Table IV.17--Conversion Cost ($M) for PC2 (100 <= PM2.5 CADR <150)
------------------------------------------------------------------------
Product Capital
Efficiency level conversion conversion
cost cost
------------------------------------------------------------------------
1....................................... $3.1 $5.6
2....................................... 7.8 7.6
3....................................... 26.7 13.9
4....................................... 29.8 15.0
------------------------------------------------------------------------
Table IV.18--Conversion Cost ($M) for PC3 (PM2.5 CADR >=150)
------------------------------------------------------------------------
Product Capital
Efficiency level conversion conversion
cost cost
------------------------------------------------------------------------
1....................................... $6.9 $5.5
2....................................... 17.2 7.3
3....................................... 48.5 14.3
4....................................... 50.1 14.7
------------------------------------------------------------------------
In general, DOE assumes all conversion-related investments occur
between the year of publication of the direct final rule and the year
by which manufacturers must comply with the new standard. For
additional information on the estimated capital and product conversion
costs, see chapter 12 of the direct final rule TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied manufacturer markups to the MPCs
estimated in the engineering analysis for each product class and
efficiency level. Modifying these manufacturer markups in the standards
case yields different sets of impacts on manufacturers. For the MIA,
DOE modeled two standards-case scenarios to represent uncertainty
regarding the potential impacts on prices and profitability for
manufacturers following the implementation of a energy conservation
standards: (1) a preservation of gross margin percentage scenario; and
(2) a preservation of operating profit scenario. These scenarios lead
to different manufacturer markup values that, when applied to the MPCs,
result in varying revenue and cash flow impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within a product class. As manufacturer production
costs increase with efficiency, this scenario implies that the per-unit
dollar profit will increase. DOE assumed a gross margin percentage of
31 percent for all air cleaners.\57\ This scenario represents a high
bound of industry profitability under an energy conservation standard.
---------------------------------------------------------------------------
\57\ The gross margin percentage of 31 percent is based on
manufacturer markup of 1.45.
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Under the preservation of operating profit scenario, as the cost of
production goes up under a standards case, manufacturers are generally
required to reduce their manufacturer markups to a level that maintains
base-case operating profit. DOE implemented this scenario in the GRIM
by lowering the manufacturer markups at each TSL to yield approximately
the same earnings before interest and taxes in the standards case as in
the no-new-standards case in the year after the expected compliance
date of the standards. The implicit assumption behind this scenario is
that the industry can only maintain its operating profit in absolute
dollars after the standard takes effect. A comparison of industry
financial impacts under the two scenarios is presented in section
V.B.2.a of this document.
3. Discussion of MIA Comments
In response to the request for comment published in January 2022,
Molekule stated manufacturers may incur costs if energy efficiency
redesign results in a repeat verification and testing for the Federal
Drug Administration (FDA)-cleared device requirements. Additionally,
manufacturers may need to re-submit new Premarket Notifications 510(k)
to the FDA. (Molekule, No. 11, pp. 3-4)
DOE evaluated the FDA requirements and does not anticipate air
cleaner standards affecting submissions of Premarket Notifications
510(k) because any design options that (1) significantly affect the
safety or effectiveness of the device or (2) change or modify the
intended use of the device would be screened out in the screening
analysis. Thus, DOE's analysis does not include costs for Premarket
Notifications 510(k) verification.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions in emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emission factors intended
to represent the marginal impacts of the change in electricity
consumption associated with amended or new standards. The methodology
is based on results published for the AEO, including a set of side
cases that implement a variety of efficiency-related policies. The
methodology is described in appendix 13A in the direct final rule TSD.
The analysis presented in this document uses projections from AEO2022.
Power sector emissions of CH4 and N2O from
fuel combustion are estimated using Emission Factors for Greenhouse Gas
Inventories published by EPA.\58\
---------------------------------------------------------------------------
\58\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12,
2021).
---------------------------------------------------------------------------
FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the direct final rule TSD.
The emissions intensity factors are expressed in terms of physical
units per megawatt-hours (``MWh'') or million British thermal units
(``MMBtu'') of site energy savings. For power sector emissions,
specific emissions intensity factors are calculated by sector and end
use. Total emissions reductions are estimated using the energy savings
calculated in the NIA.
[[Page 21785]]
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2022 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2022,
including the emissions control programs discussed in the following
paragraphs.\59\
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\59\ For further information, see the Assumptions to AEO2022
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed December 5, 2022).
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SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (``DC''). (42 U.S.C. 7651 et seq.)
SO2 emissions from numerous States in the eastern half of
the United States are also limited under the Cross-State Air Pollution
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these
States to reduce certain emissions, including annual SO2
emissions, and went into effect as of January 1, 2015.\60\ AEO2022
incorporates implementation of CSAPR, including the update to the CSAPR
ozone season program emission budgets and target dates issued in 2016.
81 FR 74504 (Oct. 26, 2016).\61\ Compliance with CSAPR is flexible
among EGUs and is enforced through the use of tradable emissions
allowances. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by another regulated
EGU.
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\60\ CSAPR requires states to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (``PM2.5'') pollution, in order
to address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program, 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
\61\ In Sept. 2019, the DC Court of Appeals remanded the 2016
CSAPR Update to EPA. In April 2021, EPA finalized the 2021 CSAPR
Update which resolved the interstate transport obligations of 21
states for the 2008 ozone NAAQS. 86 FR 23054 (April 30, 2021); see
also, 86 FR 29948 (June 4, 2021) (correction to preamble). The 2021
CSAPR Update became effective on June 29, 2021. The release of AEO
2022 in February 2021 predated the 2021 CSAPR Update.
---------------------------------------------------------------------------
However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final rule, EPA
established a standard for hydrogen chloride as a surrogate for acid
gas hazardous air pollutants (``HAP'') and also established a standard
for SO2 (a non-HAP acid gas) as an alternative equivalent
surrogate standard for acid gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas; thus SO2 emissions are
being reduced as a result of the control technologies installed on
coal-fired power plants to comply with the MATS requirements for acid
gas. In order to continue operating, coal plants must have either flue
gas desulfurization or dry sorbent injection systems installed. Both
technologies, which are used to reduce acid gas emissions, also reduce
SO2 emissions. Because of the emissions reductions under the
MATS, it is unlikely that excess SO2 emissions allowances
resulting from the lower electricity demand would be needed or used to
permit offsetting increases in SO2 emissions by another
regulated EGU. Therefore, energy conservation standards that decrease
electricity generation will generally reduce SO2 emissions.
DOE estimated SO2 emissions reduction using emissions
factors based on AEO2022.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOX
emissions would remain near the limit even if electricity generation
goes down. A different case could possibly result, depending on the
configuration of the power sector in the different regions and the need
for allowances, such that NOX emissions might not remain at
the limit in the case of lower electricity demand. In this case, energy
conservation standards might reduce NOX emissions in covered
States. Despite this possibility, DOE has chosen to be conservative in
its analysis and has maintained the assumption that standards will not
reduce NOX emissions in States covered by CSAPR. Energy
conservation standards would be expected to reduce NOX
emissions in the States not covered by CSAPR. DOE used AEO2022 data to
derive NOX emissions factors for the group of States not
covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO2022, which incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this direct final rule, for the
purpose of complying with the requirements of Executive Order 12866,
DOE considered the estimated monetary benefits from the reduced
emissions of CO2, CH4, N2O,
NOX, and SO2 that are expected to result from
each of the TSLs considered. In order to make this calculation
analogous to the calculation of the NPV of consumer benefit, DOE
considered the reduced emissions expected to result over the lifetime
of products shipped in the projection period for each TSL. This section
summarizes the basis for the values used for monetizing the emissions
benefits and presents the values considered in this direct final rule.
To monetize the benefits of reducing greenhouse gas emissions this
analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates Under Executive Order 13990 published in February 2021 by the
Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).
DOE requests comment on how to address the climate benefits and
other non-monetized effects of this direct final rule.
1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the SC of each pollutant (e.g., SC-CO2). These
estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
[[Page 21786]]
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive orders, and DOE would
reach the same conclusion presented in this direct final rule in the
absence of the social cost of greenhouse gases. That is, the social
costs of greenhouse gases, whether measured using the February 2021
interim estimates presented by the Interagency Working Group on the
Social Cost of Greenhouse Gases or by another means, did not affect the
rule ultimately published by DOE.
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions (i.e., SC-GHGs) using the
estimates presented in the Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990, published in February 2021 by the IWG. The SC-GHGs is the
monetary value of the net harm to society associated with a marginal
increase in emissions in a given year, or the benefit of avoiding that
increase. In principle, SC-GHGs includes the value of all climate
change impacts, including (but not limited to) changes in net
agricultural productivity, human health effects, property damage from
increased flood risk and natural disasters, disruption of energy
systems, risk of conflict, environmental migration, and the value of
ecosystem services. The SC-GHGs therefore, reflects the societal value
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting
benefit-cost analyses of policies that affect CO2,
N2O, and CH4 emissions. As a member of the IWG involved in
the development of the February 2021 SC-GHG TSD, DOE agrees that the
interim SC-GHG estimates represent the most appropriate estimate of the
SC-GHG until revised estimates have been developed reflecting the
latest, peer-reviewed science.
The SC-GHGs estimates presented here were developed over many
years, using transparent process, peer-reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, the IWG, that included the DOE and other
executive branch agencies and offices was established to ensure that
agencies were using the best available science and to promote
consistency in the social cost of carbon (SC-CO2) values
used across agencies. The IWG published SC-CO2 estimates in
2010 that were developed from an ensemble of three widely cited
integrated assessment models (IAMs) that estimate global climate
damages using highly aggregated representations of climate processes
and the global economy combined into a single modeling framework. The
three IAMs were run using a common set of input assumptions in each
model for future population, economic, and CO2 emissions
growth, as well as equilibrium climate sensitivity--a measure of the
globally averaged temperature response to increased atmospheric
CO2 concentrations. These estimates were updated in 2013
based on new versions of each IAM. In August 2016, the IWG published
estimates of the social cost of methane (SC-CH4) and nitrous
oxide (SC-N2O) using methodologies that are consistent with
the methodology underlying the SC-CO2 estimates. The
modeling approach that extends the IWG SC-CO2 methodology to
non-CO2 GHGs has undergone multiple stages of peer review.
The SC-CH4 and SC-N2O estimates were developed by
Marten et al.\62\ and underwent a standard double-blind peer review
process prior to journal publication. In 2015, as part of the response
to public comments received to a 2013 solicitation for comments on the
SC-CO2 estimates, the IWG announced a National Academies of
Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure
that the estimates continue to reflect the best available science and
methodologies. In January 2017, the National Academies released their
final report, Valuing Climate Damages: Updating Estimation of the
Social Cost of Carbon Dioxide, and recommended specific criteria for
future updates to the SC-CO2 estimates, a modeling framework
to satisfy the specified criteria, and both near-term updates and
longer-term research needs pertaining to various components of the
estimation process (National Academies, 2017).\63\ Shortly thereafter,
in March 2017, President Trump issued Executive Order 13783, which
disbanded the IWG, withdrew the previous TSDs, and directed agencies to
ensure SC-CO2 estimates used in regulatory analyses are
consistent with the guidance contained in OMB's Circular A-4,
``including with respect to the consideration of domestic versus
international impacts and the consideration of appropriate discount
rates'' (E.O. 13783, section 5(c)). Benefit-cost analyses following
E.O. 13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and
were calculated using two discount rates recommended by Circular A-4, 3
percent and 7 percent. All other methodological decisions and model
versions used in SC-GHG calculations remained the same as those used by
the IWG in 2010 and 2013, respectively.
---------------------------------------------------------------------------
\62\ Marten, A. L., E. A. Kopits, C. W. Griffiths, S. C.
Newbold, and A. Wolverton. Incremental CH4 and N2O mitigation
benefits consistent with the US Government's SC-CO2 estimates.
Climate Policy. 2015. 15(2): pp. 272-298.
\63\ National Academies of Sciences, Engineering, and Medicine.
Valuing Climate Damages: Updating Estimation of the Social Cost of
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------
On January 20, 2021, President Biden issued Executive Order 13990,
which re-established the IWG and directed it to ensure that the U.S.
Government's estimates of the social cost of carbon and other
greenhouse gases reflect the best available science and the
recommendations of the National Academies (2017). The IWG was tasked
with first reviewing the SC-GHG estimates currently used in Federal
analyses and publishing interim estimates within 30 days of the E.O.
that reflect the full impact of GHG emissions, including by taking
global damages into account. The interim SC-GHG estimates published in
February 2021 are used here to estimate the climate benefits for this
rulemaking. The E.O. instructs the IWG to undertake a fuller update of
the SC-GHG estimates by January 2022 that takes into consideration the
advice of the National Academies (2017) and other recent scientific
literature. The February 2021 SC-GHG TSD provides a complete discussion
of the IWG's initial review conducted under E.O. 13990. In particular,
the IWG found that the SC-GHG estimates used under E.O. 13783 fail to
reflect the full impact of GHG emissions in multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O.
13783 fail to fully capture many climate impacts that affect the
welfare of U.S. citizens and residents, and those impacts are better
reflected by global measures of the SC-GHG. Examples of omitted effects
from the E.O. 13783 estimates include direct effects on U.S. citizens,
assets, and investments located abroad, supply chains, U.S. military
assets and interests abroad, and tourism, and spillover pathways such
as economic and political destabilization and global migration that can
lead to adverse impacts on U.S. national security, public health, and
humanitarian concerns. In addition, assessing the benefits of U.S. GHG
mitigation activities requires consideration of how
[[Page 21787]]
those actions may affect mitigation activities by other countries, as
those international mitigation actions will provide a benefit to U.S.
citizens and residents by mitigating climate impacts that affect U.S.
citizens and residents. A wide range of scientific and economic experts
have emphasized the issue of reciprocity as support for considering
global damages of GHG emissions. If the United States does not consider
impacts on other countries, it is difficult to convince other countries
to consider the impacts of their emissions on the United States. The
only way to achieve an efficient allocation of resources for emissions
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of
damages. As a member of the IWG involved in the development of the
February 2021 SC-GHG TSD, DOE agrees with this assessment and,
therefore, in this direct final rule DOE centers attention on a global
measure of SC-GHG. This approach is the same as that taken in DOE
regulatory analyses from 2012 through 2016. A robust estimate of
climate damages that accrue only to U.S. citizens and residents does
not currently exist in the literature. As explained in the February
2021 TSD, existing estimates are both incomplete and an underestimate
of total damages that accrue to the citizens and residents of the U.S.
because they do not fully capture the regional interactions and
spillovers discussed above, nor do they include all of the important
physical, ecological, and economic impacts of climate change recognized
in the climate change literature. As noted in the February 2021 SC-GHG
TSD, the IWG will continue to review developments in the literature,
including more robust methodologies for estimating a U.S.-specific SC-
GHG value, and explore ways to better inform the public of the full
range of carbon impacts. As a member of the IWG, DOE will continue to
follow developments in the literature pertaining to this issue.
Second, the IWG found that the use of the social rate of return on
capital (7 percent under current OMB Circular A-4 guidance) to discount
the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies (2017) and the economic literature, the IWG continued to
conclude that the consumption rate of interest is the theoretically
appropriate discount rate in an intergenerational context,\64\ and
recommended that discount rate uncertainty and relevant aspects of
intergenerational ethical considerations be accounted for in selecting
future discount rates.
---------------------------------------------------------------------------
\64\ Interagency Working Group on Social Cost of Carbon. Social
Cost of Carbon for Regulatory Impact Analysis under Executive Order
12866. 2010. United States Government. (Last accessed April 15,
2022.) www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of
Carbon. Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. 2013. (Last accessed
April 15, 2022.) www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact; Interagency Working Group on
Social Cost of Greenhouse Gases, United States Government. Technical
Support Document: Technical Update on the Social Cost of Carbon for
Regulatory Impact Analysis-Under Executive Order 12866. August 2016.
(Last accessed January 18, 2022.) www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf; Interagency Working
Group on Social Cost of Greenhouse Gases, United States Government.
Addendum to Technical Support Document on Social Cost of Carbon for
Regulatory Impact Analysis under Executive Order 12866: Application
of the Methodology to Estimate the Social Cost of Methane and the
Social Cost of Nitrous Oxide. August 2016. (Last accessed January
18, 2022.) www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf.
---------------------------------------------------------------------------
Furthermore, the damage estimates developed for use in the SC-GHG
are estimated in consumption-equivalent terms, and so an application of
OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. DOE agrees with this
assessment and will continue to follow developments in the literature
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3% and 7% discount rates as
``default'' values, Circular A-4 also reminds agencies that ``different
regulations may call for different emphases in the analysis, depending
on the nature and complexity of the regulatory issues and the
sensitivity of the benefit and cost estimates to the key assumptions.''
On discounting, Circular A-4 recognizes that ``special ethical
considerations arise when comparing benefits and costs across
generations,'' and Circular A-4 acknowledges that analyses may
appropriately ``discount future costs and consumption benefits . . . at
a lower rate than for intragenerational analysis.'' In the 2015
Response to Comments on the Social Cost of Carbon for Regulatory Impact
Analysis, OMB, DOE, and the other IWG members recognized that
``Circular A-4 is a living document'' and ``the use of 7 percent is not
considered appropriate for intergenerational discounting. There is wide
support for this view in the academic literature, and it is recognized
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate
is not appropriate to apply to value the social cost of greenhouse
gases in the analysis presented in this analysis.
To calculate the present and annualized values of climate benefits,
DOE uses the same discount rate as the rate used to discount the value
of damages from future GHG emissions, for internal consistency. That
approach to discounting follows the same approach that the February
2021 TSD recommends ``to ensure internal consistency--i.e., future
damages from climate change using the SC-GHG at 2.5 percent should be
discounted to the base year of the analysis using the same 2.5 percent
rate.'' DOE has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can ``be combined in RIAs with
other cost and benefits estimates that may use different discount
rates.'' The National Academies reviewed several options, including
``presenting all discount rate combinations of other costs and benefits
with SC-GHG estimates.''
As a member of the IWG involved in the development of the February
2021 SC-GHG TSD, DOE agrees with the previous assessment and will
continue to follow developments in the literature pertaining to this
issue. While the IWG works to assess how best to incorporate the
latest, peer reviewed science to develop an updated set of SC-GHG
estimates, it set the interim estimates to be the most recent estimates
developed by the IWG prior to the group being disbanded in 2017. The
estimates rely on the same models and harmonized inputs and are
calculated using a range of discount rates. As explained in the
February 2021 SC-GHG TSD, the IWG has recommended that agencies revert
to the same set of four values drawn from the SC-GHG distributions
based on three discount rates as were used in regulatory analyses
between 2010 and 2016 and were subject to public comment. For each
discount rate, the IWG combined the distributions across models and
socioeconomic emissions scenarios (applying equal weight to each) and
then selected a set of four values recommended for use in benefit-cost
analyses: an average value resulting from the model runs for each of
three discount rates (2.5 percent, 3 percent, and 5 percent), plus a
fourth value, selected as the 95th percentile of estimates based on a 3
percent discount rate. The fourth value was included to provide
information on potentially higher-than-expected economic impacts from
climate change. As explained in
[[Page 21788]]
the February 2021 SC-GHG TSD, and DOE agrees, this update reflects the
immediate need to have an operational SC-GHG for use in regulatory
benefit-cost analyses and other applications that was developed using a
transparent process, peer-reviewed methodologies, and the science
available at the time of that process. Those estimates were subject to
public comment in the context of dozens of proposed rulemakings as well
as in a dedicated public comment period in 2013.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
lower.\65\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions''--i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic (both market and
nonmarket) damages--lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their
incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are
modeled, uncertainty in the extrapolation of damages to high
temperatures, and inadequate representation of the relationship between
the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as
inputs to the models do not reflect new information from the last
decade of scenario generation or the full range of projections. The
modeling limitations do not all work in the same direction in terms of
their influence on the SC-CO2 estimates. However, as
discussed in the February 2021 TSD, the IWG has recommended that, taken
together, the limitations suggest that the interim SC-GHG estimates
used in this direct final rule likely underestimate the damages from
GHG emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\65\ Interagency Working Group on Social Cost of Greenhouse
Gases (IWG). 2021. Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government. Available at:
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
\66\ For example, the February 2021 TSD discusses how the
understanding of discounting approaches suggests that discount rates
appropriate for intergenerational analysis in the context of climate
change may be lower than 3 percent.
\67\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 13,
2022).
\68\ Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf?so
urce=email.
---------------------------------------------------------------------------
DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this DFR are discussed in the
following sections, and the results of DOE's analyses estimating the
benefits of the reductions in emissions of these GHGs are presented in
section V.B.6 of this document.
a. Social Cost of Carbon
The SC-CO2 values used for this direct final rule were
based on the values in the IWG's February 2021 TSD. Table IV.19 shows
the updated sets of SC-CO2 estimates from the IWG's TSD in
5-year increments from 2020 to 2050. The full set of annual values that
DOE used is presented in Appendix 14-A of the direct final rule TSD.
For purposes of capturing the uncertainties involved in regulatory
impact analysis, DOE has determined it is appropriate to include all
four sets of SC-CO2 values, as recommended by the IWG.\66\
Table IV.19--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2021$ Per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2025............................................ 18 59 86 176
2030............................................ 20 64 93 194
2035............................................ 23 70 100 214
2040............................................ 26 76 107 234
2045............................................ 30 82 114 253
2050............................................ 33 88 121 271
----------------------------------------------------------------------------------------------------------------
For 2051 to 2070, DOE used SC-CO2 estimates published by
EPA, adjusted to 2021$.\67\ These estimates are based on methods,
assumptions, and parameters identical to the 2020-2050 estimates
published by the IWG.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2021$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. To calculate a present value of the stream of
monetary values, DOE discounted the values in each of the four cases
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
direct final rule were based on the values developed for the February
2021 TSD.\68\ Table IV.20 shows the updated sets of SC-CH4
and SC-N2O estimates from the latest interagency update in
5-year increments from 2020 to 2050. The full set of annual values used
is presented in Appendix 14-A of the direct final rule TSD. To capture
the uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as
[[Page 21789]]
recommended by the IWG. DOE derived values after 2050 using the
approach described above for the SC-CO2.
Table IV.20--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2020$ Per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 SC-N2O
-------------------------------------------------------------------------------------------------------
Discount rate and statistic Discount rate and statistic
-------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% 5% 3% 2.5% 3%
-------------------------------------------------------------------------------------------------------
95th 95th
Average Average Average percentile Average Average Average percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................ 670 1,500 2,000 3,900 5,800 18,000 27,000 48,000
2025............................................ 800 1,700 2,200 4,500 6,800 21,000 30,000 54,000
2030............................................ 940 2,000 2,500 5,200 7,800 23,000 33,000 60,000
2035............................................ 1,100 2,200 2,800 6,000 9,000 25,000 36,000 67,000
2040............................................ 1,300 2,500 3,100 6,700 10,000 28,000 39,000 74,000
2045............................................ 1,500 2,800 3,500 7,500 12,000 30,000 42,000 81,000
2050............................................ 1,700 3,100 3,800 8,200 13,000 33,000 45,000 88,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE
adjusted the values to 2021$ using the implicit price deflator for
gross domestic product (``GDP'') from the Bureau of Economic Analysis.
To calculate a present value of the stream of monetary values, DOE
discounted the values in each of the cases using the specific discount
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
For this direct final rule, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using the latest benefit-per-ton estimates for that sector
from the EPA's Benefits Mapping and Analysis Program.\69\ DOE used
EPA's values for PM2.5-related benefits associated with
NOX and SO2 and for ozone-related benefits
associated with NOX for 2025 and 2030, and 2040, calculated
with discount rates of 3 percent and 7 percent. DOE used linear
interpolation to define values for the years not given in the 2025 to
2040 range; for years beyond 2040 the values are held constant. DOE
derived values specific to the sector for air cleaners using a method
described in appendix 14B of the direct final rule TSD.
---------------------------------------------------------------------------
\69\ Estimating the Benefit per Ton of Reducing PM2.5
Precursors from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------
DOE multiplied the site emissions reduction (in tons) in each year
by the associated $/ton values, and then discounted each series using
discount rates of 3 percent and 7 percent as appropriate.
M. Utility Impact Analysis
The utility impact analysis estimates the changes in installed
electrical capacity and generation projected to result for each
considered TSL. The analysis is based on published output from the NEMS
associated with AEO2022. NEMS produces the AEO Reference case, as well
as a number of side cases that estimate the economy-wide impacts of
changes to energy supply and demand. For the current analysis, impacts
are quantified by comparing the levels of electricity sector
generation, installed capacity, fuel consumption and emissions in the
AEO2022 Reference case and various side cases. Details of the
methodology are provided in the appendices to chapters 13 and 15 of the
direct final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new or
amended energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are any changes in the number of employees of
manufacturers of the products subject to standards.\70\ The MIA
addresses those impacts. Indirect employment impacts are changes in
national employment that occur due to the shift in expenditures and
capital investment caused by the purchase and operation of more-
efficient appliances. Indirect employment impacts from standards
consist of the net jobs created or eliminated in the national economy,
other than in the manufacturing sector being regulated, caused by (1)
reduced spending by consumers on energy, (2) reduced spending on new
energy supply by the utility industry, (3) increased consumer spending
on the products to which the new standards apply and other goods and
services, and (4) the effects of those three factors throughout the
economy.
---------------------------------------------------------------------------
\70\ As defined in the U.S. Census Bureau's 2016 Annual Survey
of Manufactures, production workers include ``Workers (up through
the line-supervisor level) engaged in fabricating, processing,
assembling, inspecting, receiving, packing, warehousing, shipping
(but not delivering), maintenance, repair, janitorial, guard
services, product development, auxiliary production for plant's own
use (e.g., power plant), record keeping, and other closely
associated services (including truck drivers delivering ready-mixed
concrete)'' Non-production workers are defined as ``Supervision
above line-supervisor level, sales (including a driver salesperson),
sales delivery (truck drivers and helpers), advertising, credit,
collection, installation, and servicing of own products, clerical
and routine office functions, executive, purchasing, finance, legal,
personnel (including cafeteria, etc.), professional and technical.''
---------------------------------------------------------------------------
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (``BLS''). BLS regularly publishes its estimates of
the number of jobs per million dollars of economic activity in
different sectors of the
[[Page 21790]]
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.\71\
There are many reasons for these differences, including wage
differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS
data suggest that net national employment may increase due to shifts in
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------
\71\ See U.S. Department of Commerce-Bureau of Economic
Analysis. Regional Multipliers: A User Handbook for the Regional
Input-Output Modeling System (``RIMS II''). 1997. U.S. Government
Printing Office: Washington, DC. Available at www.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed July 1, 2021).
\72\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W.
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User's Guide. 2015. Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
\73\ EL 1 also corresponds to individual standards established
by certain states and the District of Columbia.
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this direct final rule using an input/output model
of the U.S. economy called Impact of Sector Energy Technologies version
4 (``ImSET'').\72\ ImSET is a special-purpose version of the ``U.S.
Benchmark National Input-Output'' (``I-O'') model, which was designed
to estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer- based I-O model
having structural coefficients that characterize economic flows among
187 sectors most relevant to industrial, commercial, and residential
building energy use.
DOE notes that ImSET is not a general equilibrium forecasting
model, and that the uncertainties involved in projecting employment
impacts, especially changes in the later years of the analysis. Because
ImSET does not incorporate price changes, the employment effects
predicted by ImSET may over-estimate actual job impacts over the long
run for this rule. Therefore, DOE used ImSET only to generate results
for near-term timeframes, where these uncertainties are reduced. For
more details on the employment impact analysis, see chapter 16 of the
direct final rule TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for air
cleaners. It addresses the TSLs examined by DOE, the projected impacts
of each of these levels if adopted as energy conservation standards for
air cleaners, and the standards levels that DOE is adopting in this
direct final rule. Additional details regarding DOE's analyses are
contained in the direct final rule TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates potential standards for
products and equipment by grouping individual efficiency levels for
each class into TSLs. Use of TSLs allows DOE to identify and consider
manufacturer cost interactions between the air cleaner product classes,
to the extent that there are such interactions, and market cross
elasticity from consumer purchasing decisions that may change when
different standard levels are set.
In the analysis conducted for this direct final rule, DOE analyzed
the benefits and burdens of five TSLs for air cleaners. DOE developed
TSLs that combine efficiency levels for each analyzed product class.
DOE presents the results for the TSLs in this document, while the
results for all efficiency levels that DOE analyzed are in the direct
final rule TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential energy conservation standards for
air cleaners. TSL 5 represents the maximum technologically feasible
(``max-tech'') energy efficiency for all product classes and
corresponds to EL 4 for all product classes. TSL 4 represents an
intermediate efficiency level and corresponds to EL 3 for all product
classes. TSL 3 corresponds to the two-tier approach from the Joint
Proposal which comprises efficiency level EL 1 \73\ for Tier 1
standards (going to effect in 2024) and the current ENERGY STAR V.2.0
efficiency level (EL 2) for Tier 2 standards (going to effect in 2026)
for all the product classes. TSL 2 comprises the current ENERGY STAR
V.2.0 efficiency level (EL 2) for all product classes. TSL 1 represents
EL 1 for all product classes. For all TSLs other than TSL 3, the
compliance year is considered to be 2028.
Table V.1--Trial Standard Levels for Air Cleaners
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1: 10-100 PM2.5 CADR PC2: 100-150 PM2.5 CADR PC2: 100-150 PM2.5 CADR
-----------------------------------------------------------------------------------------------------
TSL Compliance year Efficiency Efficiency Efficiency
Efficiency (PM2.5 CADR/W) Efficiency (PM2.5 CADR/W) Efficiency (PM2.5 CADR/W)
level level level
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................ 2028................... 1 1.7 1 1.9 1 2.0
2........................ 2028................... 2 1.9 2 2.4 2 2.9
3........................ 2024 (Tier 1).......... 1 1.7 1 1.9 1 2.0
2026 (Tier 2).......... 2 1.9 2 2.4 2 2.9
4........................ 2028................... 3 3.4 3 5.4 3 6.6
5........................ 2028................... 4 5.4 4 12.8 4 7.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on air cleaner consumers by
looking at the effects that potential standards at each TSL would have
on the LCC and PBP. DOE also examined the impacts of potential
standards on selected consumer subgroups. These analyses are discussed
in the following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) purchase price increases and (2) annual
[[Page 21791]]
operating costs decrease.\74\ Inputs used for calculating the LCC and
PBP include total installed costs (i.e., product price plus
installation costs), and operating costs (i.e., annual energy use,
energy prices, energy price trends, repair costs, and maintenance
costs). The LCC calculation also uses product lifetime and a discount
rate. Chapter 8 of the direct final rule TSD provides detailed
information on the LCC and PBP analyses.
---------------------------------------------------------------------------
\74\ For air cleaners, operating costs may increase at certain
efficiency levels as filter costs increase due to recurring costs
for filter replacements.
---------------------------------------------------------------------------
Table V.2 through Table V.7 show the LCC and PBP results for the
TSLs considered for each product class. In the first of each pair of
tables, the simple payback is measured relative to the baseline
product. In the second table, the impacts are measured relative to the
efficiency distribution in the no-new-standards case in the compliance
year (see section IV.F.8 of this document). Because some consumers
purchase products with higher efficiency in the no-new-standards case,
the average savings are less than the difference between the average
LCC of the baseline product and the average LCC at each TSL. The
savings refer only to consumers who are affected by a standard at a
given TSL. Those who already purchase a product with efficiency at or
above a given TSL are not affected. Consumers for whom the LCC
increases at a given TSL experience a net cost.
Table V.2--Average LCC and PBP Results for Product Class 1: 10-100 PM2.5 CADR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average lifetime
TSL * Efficiency level First year's Lifetime (years) (years)
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................... $64 $13 $117 $181 ................ 9.0
1 1........................... 65 11 98 163 0.9 9.0
2 2........................... 67 10 91 158 1.4 9.0
3 ** 1........................... 65 11 98 163 0.9 9.0
2........................... 67 10 91 158 1.4 9.0
4 3........................... 78 15 178 255 NA 9.0
5 4........................... 86 14 176 262 NA 9.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
* All TSLs except TSL 3 have a compliance year of 2028.
** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance year.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Product Class 1: 10-100 PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------------
TSL ** Efficiency level Percent of consumers
Average LCC savings * that experience net
(2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1.................................... 1 $18 0
2.................................... 2 12 6
3 ***................................ 1 18 0
2 12 6
4.................................... 3 (87) 88
5.................................... 4 (87) 94
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
Table V.4--Average LCC and PBP Results for Product Class 2: 100-150 PM2.5 CADR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average lifetime
TSL * Efficiency level First year's Lifetime (years) (years)
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................... $88 $31 $273 $361 ................ 9.0
1 1........................... 90 26 232 322 0.4 9.0
2 2........................... 92 22 195 287 0.5 9.0
3 ** 1........................... 90 26 232 322 0.4 9.0
2........................... 92 22 195 287 0.5 9.0
4 3........................... 101 24 280 381 NA 9.0
5 4........................... 109 17 207 317 1.6 9.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
* All TSLs except TSL 3 have a compliance year of 2028.
[[Page 21792]]
** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance year.
Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Product Class 2: 10-100 PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------------
TSL ** Efficiency level Percent of consumers
Average LCC savings * that experience net
(2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1.................................... 1 $38 0
2.................................... 2 50 0
3 ***................................ 1 38 0
2 50 0
4.................................... 3 (60) 75
5.................................... 4 11 54
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
Table V.6--Average LCC and PBP Results for Product Class 3: 150+ PM2.5 CADR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average lifetime
TSL * Efficiency level First year's Lifetime (years) (years)
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................... $144 $57 $485 $629 ................ 9.0
1 1........................... 146 41 377 523 0.1 9.0
2 2........................... 147 34 323 470 0.1 9.0
3 ** 1........................... 146 41 377 523 0.1 9.0
2........................... 147 34 323 470 0.1 9.0
4 3........................... 151 31 347 497 0.3 9.0
5 4........................... 151 31 354 505 0.3 9.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
* All TSLs except TSL 3 have a compliance year of 2028.
** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance year.
Table V.7--Average LCC Savings Relative to the No-New-Standards Case for Product Class 3: 10-100 PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------------------
TSL ** Efficiency level Percent of consumers
Average LCC savings * that experience net
(2021$) cost (%)
----------------------------------------------------------------------------------------------------------------
1.................................... 1 $105 0
2.................................... 2 94 0
3 ***................................ 1 105 0
2 94 0
4.................................... 3 29 50
5.................................... 4 20 56
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on low-income households, senior-only households, and
small businesses. Table V.8 through Table V.13 compare the average LCC
savings and PBP at each efficiency level for the consumer subgroups
with similar metrics for the entire consumer sample for all product
classes. In most cases, the average LCC savings and PBP for low-income
households and senior-only households at the considered efficiency
levels are not substantially different from the average for all
households. Chapter 11 of the direct final rule TSD presents the
complete LCC and PBP results for the subgroups.
[[Page 21793]]
Table V.8--Comparison of LCC Savings and PBP for Residential Consumer Subgroups and All Households; Product
Class 1: 10-100 PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only
TSL ** households households All households
[Dagger] Sec.
----------------------------------------------------------------------------------------------------------------
Average LCC Savings * (2021$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... $17 $19 $17
TSL 2........................................................... 10 13 11
TSL 3 ***....................................................... 17 19 17
10 13 11
TSL 4........................................................... (95) (87) (95)
TSL 5........................................................... (97) (85) (95)
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 1.2 1.0 1.2
TSL 2........................................................... 1.9 1.5 1.8
TSL 3 ***....................................................... 1.2 1.0 1.2
1.9 1.5 1.8
TSL 4........................................................... NA NA NA
TSL 5........................................................... NA NA NA
----------------------------------------------------------------------------------------------------------------
Consumers With Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 29 29 29
TSL 2........................................................... 61 64 63
TSL 3 ***....................................................... 29 29 29
61 64 63
TSL 4........................................................... 0 1 0
TSL 5........................................................... 1 2 1
----------------------------------------------------------------------------------------------------------------
Consumers With Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 0 0 0
TSL 2........................................................... 10 7 9
TSL 3 ***....................................................... 0 0 0
10 7 9
TSL 4........................................................... 89 89 89
TSL 5........................................................... 96 94 95
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
[Dagger] Low-income households represent 13.8 percent of all households for this product class.
Sec. Senior-only households represent 22.7 percent of all households for this product class.
Table V.9--Comparison of LCC Savings and PBP for Commercial Consumer
Subgroup and All Commercial Buildings; Product Class 1: 10-100 PM2.5
CADR
------------------------------------------------------------------------
Small
TSL ** business All commercial
[Dagger] buildings
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1................................... $18 $19
TSL 2................................... 14 14
TSL 3 ***............................... 18 19
14 14
TSL 4................................... (77) (77)
TSL 5................................... (75) (75)
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1................................... 0.7 0.7
TSL 2................................... 1.0 1.0
TSL 3 ***............................... 0.7 0.7
1.0 1.0
TSL 4................................... NA NA
TSL 5................................... NA NA
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1................................... 28 28
TSL 2................................... 68 68
TSL 3 ***............................... 28 28
[[Page 21794]]
68 68
TSL 4................................... 0 0
TSL 5................................... 3 3
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1................................... 0 0
TSL 2................................... 1 1
TSL 3 ***............................... 0 0
1 1
TSL 4................................... 87 86
TSL 5................................... 92 91
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The
second results row has a 2026 compliance year.
[Dagger] Small business buildings represent 70.9 percent of all
commercial buildings for this product class.
Table V.10--Comparison of LCC Savings and PBP for Residential Consumer Subgroups and All Households; Product
Class 2: 100-150 PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only
TSL ** households households All households
[Dagger] Sec.
----------------------------------------------------------------------------------------------------------------
Average LCC Savings * (2021$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 34 43 35
TSL 2........................................................... 44 56 46
TSL 3 ***....................................................... 34 43 35
44 56 46
TSL 4........................................................... (78) (54) (75)
TSL 5........................................................... (9) 23 (4)
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 0.6 0.4 0.6
TSL 2........................................................... 0.7 0.5 0.6
TSL 3 ***....................................................... 0.6 0.4 0.6
0.7 0.5 0.6
TSL 4........................................................... NA NA NA
TSL 5........................................................... NA 1.5 NA
----------------------------------------------------------------------------------------------------------------
Consumers With Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 24 24 24
TSL 2........................................................... 60 60 60
TSL 3 ***....................................................... 24 24 24
60 60 60
TSL 4........................................................... 8 15 8
TSL 5........................................................... 35 54 38
----------------------------------------------------------------------------------------------------------------
Consumers With Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 0 0 0
TSL 2........................................................... 0 0 0
TSL 3 ***....................................................... 0 0 0
0 0 0
TSL 4........................................................... 82 74 81
TSL 5........................................................... 64 46 61
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
[Dagger] Low-income households represent 13.8 percent of all households for this product class.
Sec. Senior-only households represent 22.7 percent of all households for this product class.
[[Page 21795]]
Table V.11--Comparison of LCC Savings and PBP for Consumer Subgroups and
All Commercial Buildings; Product Class 2: 100-150 PM2.5 CADR
------------------------------------------------------------------------
Small business All commercial
TSL ** [Dagger] buildings
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1................................... $44 $44
TSL 2................................... $57 $57
TSL 3 ***............................... $44 $44
$57 $57
TSL 4................................... ($38) ($38)
TSL 5................................... $32 $33
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1................................... 0.3 0.3
TSL 2................................... 0.3 0.3
TSL 3 ***............................... 0.3 0.3
0.3 0.3
TSL 4................................... NA NA
TSL 5................................... 1.1 1.0
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1................................... 23% 23%
TSL 2................................... 59% 59%
TSL 3 ***............................... 23% 23%
59% 59%
TSL 4................................... 20% 20%
TSL 5................................... 56% 55%
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1................................... 0% 0%
TSL 2................................... 0% 0%
TSL 3 ***............................... 0% 0%
0% 0%
TSL 4................................... 67% 67%
TSL 5................................... 41% 42%
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The
second results row has a 2026 compliance year.
[Dagger] Small business buildings represent 70.9 percent of all
commercial buildings for this product class.
Table V.12--Comparison of LCC Savings and PBP for Residential Consumer Subgroups and All Households; Product
Class 3: 150+ PM2.5 CADR
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only
TSL ** households households All households
[Dagger] Sec.
----------------------------------------------------------------------------------------------------------------
Average LCC Savings * (2021$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... $85 $127 $88
TSL 2........................................................... $76 $111 $80
TSL 3 ***....................................................... $85 $127 $88
$76 $111 $80
TSL 4........................................................... $2 $47 $7
TSL 5........................................................... ($7) $38 ($2)
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 0.2 0.1 0.2
TSL 2........................................................... 0.2 0.1 0.2
TSL 3 ***....................................................... 0.2 0.1 0.2
0.2 0.1 0.2
TSL 4........................................................... 0.4 0.2 0.4
TSL 5........................................................... NA 0.3 NA
----------------------------------------------------------------------------------------------------------------
Consumers With Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 22% 22% 22%
TSL 2........................................................... 56% 56% 56%
TSL 3 ***....................................................... 22% 22% 22%
56% 56% 56%
[[Page 21796]]
TSL 4........................................................... 32% 49% 35%
TSL 5........................................................... 29% 47% 32%
----------------------------------------------------------------------------------------------------------------
Consumers With Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................................... 0% 0% 0%
TSL 2........................................................... 0% 0% 0%
TSL 3 ***....................................................... 0% 0% 0%
0% 0% 0%
TSL 4........................................................... 61% 44% 59%
TSL 5........................................................... 67% 49% 64%
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The second results row has a 2026 compliance
year.
[Dagger] Low-income households represent 13.8 percent of all households for this product class.
Sec. Senior-only households represent 22.7 percent of all households for this product class.
Table V.13--Comparison of LCC Savings and PBP for Commercial Consumer
Subgroups and All Commercial Buildings; Product Class 3: 150+ PM2.5 CADR
------------------------------------------------------------------------
Small business All commercial
TSL ** [Dagger] buildings
------------------------------------------------------------------------
Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1................................... $133 $132
TSL 2................................... $117 $116
TSL 3 ***............................... $133 $132
$117 $116
TSL 4................................... $61 $61
TSL 5................................... $54 $54
------------------------------------------------------------------------
Payback Period (years)
------------------------------------------------------------------------
TSL 1................................... 0.1 0.1
TSL 2................................... 0.1 0.1
TSL 3 ***............................... 0.1 0.1
0.1 0.1
TSL 4................................... 0.2 0.2
TSL 5................................... 0.2 0.2
------------------------------------------------------------------------
Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1................................... 21% 21%
TSL 2................................... 55% 54%
TSL 3 ***............................... 21% 21%
55% 54%
TSL 4................................... 54% 54%
TSL 5................................... 51% 51%
------------------------------------------------------------------------
Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1................................... 0% 0%
TSL 2................................... 0% 0%
TSL 3 ***............................... 0% 0%
0% 0%
TSL 4................................... 37% 37%
TSL 5................................... 43% 43%
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 3 have a compliance year of 2028.
*** For TSL 3, the first results row has a 2024 compliance year. The
second results row has a 2026 compliance year.
[Dagger] Small business buildings represent 70.9 percent of all
commercial buildings for this product class.
c. Rebuttable Presumption Payback
As discussed in section III.F.2 of this document, EPCA establishes
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. (42 U.S.C.
6295(o)(2)(iii)) In calculating a rebuttable presumption payback period
for each of the
[[Page 21797]]
considered TSLs, DOE used discrete values, and, as required by EPCA,
based the energy use calculation on the DOE test procedures for air
cleaners. In contrast, the PBPs presented in section V.B.1.a were
calculated using distributions that reflect the range of energy use in
the field.
Table V.14 presents the rebuttable-presumption payback periods for
the considered TSLs for air cleaners. While DOE examined the
rebuttable-presumption criterion, it considered whether the standard
levels considered for this rule are economically justified through a
more detailed analysis of the economic impacts of those levels,
pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range
of impacts to the consumer, manufacturer, Nation, and environment. The
results of that analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level,
thereby supporting or rebutting the results of any preliminary
determination of economic justification.
Table V.14--Rebuttable-Presumption Payback Periods
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level (years)
-----------------------------------------------------------------------------------------------
Product class 3
1 2 -------------------------------- 4 5
Tier 1 Tier 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC 1: 10-100 PM2.5 CADR................................. 0.6 0.7 0.6 0.7 0.9 1.1
PC 2: 100-150 PM2.5 CADR................................ 0.2 0.2 0.2 0.2 0.3 0.4
PC 3: 150+ PM2.5 CADR................................... 0.0 0.0 0.0 0.0 0.1 0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of energy conservation
standards on manufacturers of air cleaners. The next section describes
the expected impacts on manufacturers at each considered TSL. Chapter
12 of the direct final rule TSD explains the analysis in further
detail.
a. Industry Cash Flow Analysis Results
In this section, DOE provides GRIM results from the analysis, which
examines changes in the industry that would result from a standard. The
following tables summarize the estimated financial impacts (represented
by changes in INPV) of potential energy conservation standards on
manufacturers of air cleaners, as well as the conversion costs that DOE
estimates manufacturers of air cleaners would incur at each TSL.
To evaluate the range of cash-flow impacts on the air cleaners
industry, DOE modeled two manufacturer markup scenarios to evaluate a
range of cash flow impacts on the air cleaners industry: (1) the
preservation of gross margin percentage and (2) the preservation of
operating profit, as discussed in section IV.J.2.d of this document. In
the preservation of gross margin percentage scenario, DOE applied a
gross margin percentage of 31 percent for all product classes and all
efficiency levels.\75\ As MPCs increase with efficiency, this scenario
implies that the absolute dollar markup will increase. This scenario
assumes that a manufacturer's absolute dollar markup would increase as
MPCs increase in the standards cases and represents the upper-bound to
industry profitability under potential new or amended energy
conservation standards.
---------------------------------------------------------------------------
\75\ The gross margin percentage of 31 percent is based on
manufacturer markup of 1.45.
---------------------------------------------------------------------------
The preservation of operating profit scenario reflects
manufacturers' concerns about their inability to maintain margins as
MPCs increase to reach more-stringent efficiency levels. In this
scenario, while manufacturers make the necessary investments required
to convert their facilities to produce compliant products, operating
profit does not change in absolute dollars and decreases as a
percentage of revenue. The preservation of operating profit scenario
results in the lower (or more severe) bound to impacts of potential
standards on industry.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding INPV for each TSL. INPV is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2023-2057). The ``change in INPV'' results refer to
the difference in industry value between the no-new-standards case and
standards case at each TSL. To provide perspective on the short-run
cash flow impact, DOE includes a comparison of free cash flow between
the no-new-standards case and the standards case at each TSL in the
year before standards would take effect. This figure provides an
understanding of the magnitude of the required conversion costs
relative to the cash flow generated by the industry in the no-new-
standards case.
Conversion costs are one-time investments for manufacturers to
bring their manufacturing facilities and product designs into
compliance with potential new or amended standards. As described in
section IV.J.2.c of this document, conversion cost investments occur
between the year of publication of the final rule and the year by which
manufacturers must comply with the new standard. The conversion costs
can have a significant impact on the short-term cash flow on the
industry and generally result in lower free cash flow in the period
between the publication of the final rule and the compliance date of
potential standards. Conversion costs are independent of the
manufacturer markup scenarios and are not presented as a range in this
analysis.
Table V.15 and Table V.16 show the MIA results for each TSL using
the manufacturer markup scenarios previously described.
[[Page 21798]]
Table V.15--Manufacturer Impact Analysis for Air Cleaners Under the Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new- Trial standard level
Units standards -------------------------------------------------------------------------
case 1 2 3 * 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................... 2021$ millions........... 1,565.9 1,535.7 1,528.0 1,525.2..................... 1,535.8 1,574.0
Change in INPV..................... 2021$ millions........... .............. (30.2) (37.9) (40.7)...................... (30.2) 8.1
%........................ .............. (1.9) (2.4) (2.6)....................... (1.9) 0.5
Free Cash Flow (2027).............. 2021$ millions........... 53.8 42.1 30.9 20.8 and 40.1 **............ (2.4) (6.0)
Change in Free Cash Flow (2027).... %........................ .............. (21.8) (42.6) (55.7) and (19.7) **........ (104.5) (111.2)
Product Conversion Costs........... 2021$ millions........... .............. 17.2 23.2 23.2........................ 42.4 44.7
Capital Conversion Costs........... 2021$ millions........... .............. 13.6 34.1 34.1........................ 94.1 100.5
-----------------------------------------------------------------------------------------
Total Conversion Costs......... 2021$ millions........... .............. 30.8 57.3 57.3........................ 136.6 145.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* TSL 3 represents the standards case presented in the Joint Proposal which corresponds to a two-tiered approach. Conversion costs reflect the sum of
Tier 1 and Tier 2 standards.
** The Free Cash Flow and % Change in Free Cash Flow for TSL 3 is presented to the years 2023 and 2025 due to the 2-step structure of the Joint
Proposal. DOE presents FCF in the year before the standard year.
Table V.16--Manufacturer Impact Analysis for Air Cleaners Under the Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new- Trial standard level
Units standards -------------------------------------------------------------------------
case 1 2 3 * 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................... 2021$ millions........... 1,565.9 1,528.3 1,503.5 1,499.2..................... 1,422.3 1,394.4
Change in INPV..................... 2021$ millions........... .............. (37.7) (62.4) (66.7)...................... (143.7) (171.5)
%........................ .............. (2.4) (4.0) (4.3)....................... (9.2) (11.0)
Free Cash Flow (2027).............. 2021$ millions........... 53.8 42.1 30.9 20.8 and 40.1 **............ (2.4) (6.0)
Change in Free Cash Flow (2027).... %........................ .............. (21.8) (42.6) (55.7) and (19.7) **........ (104.5) (111.2)
Product Conversion Costs........... 2021$ millions........... .............. 17.2 23.2 23.2........................ 42.4 44.7
Capital Conversion Costs........... 2021$ millions........... .............. 13.6 34.1 34.1........................ 94.1 100.5
-----------------------------------------------------------------------------------------
Total Conversion Costs......... 2021$ millions........... .............. 30.8 57.3 57.3........................ 136.6 145.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* TSL 3 represents the standards case presented in the Joint Proposal which corresponds to a two-tiered approach. Conversion costs reflect the sum of
Tier 1 and Tier 2 standards.
** The Free Cash Flow and % Change in Free Cash Flow for TSL 3 is presented to the years 2023 and 2025 due to the 2-step structure of the Joint
Proposal. DOE presents FCF in the year before the standard year.
At TSL 1, DOE estimates that impacts on INPV will range from -$30.2
million to -$37.7 million, or a change in INPV of -2.4 to -1.9 percent.
At TSL 1, industry free cash-flow is $42.1 million, which is a decrease
of approximately $11.7 million compared to the no-new-standards case
value of $53.8 million in 2027, the year leading up to the standards.
TSL 1 corresponds to EL 1 for all product classes. DOE noted in the
engineering analysis, section IV.C.3, the efficiency improvements at EL
1 are achievable by optimizing the fan motor-filter relationship. In
evaluating the design paths for optimization, DOE noted that increasing
the surface area of the filter would improve test performance, but
could also require changes to the injection molded component of air
cleaners. DOE estimated capital conversion costs based on the costs for
manufacturer to purchase new injection mold dies in order to
accommodate filters with greater surface area. Manufacturers using soft
tooling or that do not rely on injection molding would have lower
capital conversion costs than modeled by DOE. DOE estimated the product
conversion costs for testing all models, identifying product that would
not meet the standard, and redesigning that portion of market
offerings. DOE estimates capital conversion costs of $13.6 million and
product conversion costs of $17.2 million for the industry. Conversion
costs total $30.8 million.
At TSL 1, the shipment-weighted average MPC for all air cleaners is
expected to increase by 1 percent relative to the no-new-standards case
shipment-weighted average MPC for all air cleaners in 2028. Given this
relatively small increase in production costs, DOE does not project a
notable drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, the slight increase
in MSP is outweighed by the $30.8 million in conversion costs, causing
a negative change in INPV at TSL 1 under this scenario. Under the
preservation of operating profit scenario, the reduction in the
manufacturer markup and the $30.8 million in conversion costs incurred
by manufacturers cause a slightly negative change in INPV.
At TSL 2, the standard corresponds to current ENERGY STAR V.2.0
efficiency levels for air cleaners in all product classes. DOE
estimates that impacts on INPV will range from -$62.4 million to -$37.9
million, or a change in INPV of -4.0 to -2.4 percent. At TSL 2,
industry free cash-flow is $30.9 million, which is a decrease of
approximately $22.9 million compared to the no-new-standards case value
of $53.8 million in 2027, the year leading up to the standards.
TSL 2 corresponds to EL 2 for all product classes. A sizeable
portion of the market, approximately 40 percent, can currently meet the
TSL 2 level. Additionally, a substantial portion of existing models can
be updated to meet TSL 2 through optimization and improved components
rather than a full product redesign. In particular, manufacturers may
be able to leverage their existing cabinet designs. However, the
product interior may require updates to accommodate more efficient
motors and larger filters. Some manufacturers may be able to alter
existing tooling to accommodate minor changes in internal dimensions.
To avoid underestimating costs to industry, DOE estimated capital
conversion costs based on the cost to replace tooling--specifically
injection molding dies. Also, DOE estimated the product conversion
costs for testing all models,
[[Page 21799]]
identifying product that would not meet the standard, and redesigning
that portion of market offerings. Capital conversion costs may reach
$34.1 million and product conversion costs may reach $23.2 million for
the industry. Conversion costs total $57.3 million.
At TSL 2, the shipment-weighted average MPC for all air cleaners is
expected to increase by 2 percent relative to the no-new-standards case
shipment-weighted average MPC for all air cleaners in 2028. Given the
relatively small increase in production costs, DOE does not project a
notable drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, the slight increase
in MSP is outweighed by the $57.3 million in conversion costs, causing
a negative change in INPV at TSL 2 under this scenario. Under the
preservation of operating profit scenario, the manufacturer markup
decreases in 2029, the year after the analyzed compliance year. This
reduction in the manufacturer markup and the $57.3 million in
conversion costs incurred by manufacturers cause a negative change in
INPV at TSL 2 under the preservation of operating profit scenario.
At TSL 3, DOE estimates that impacts on INPV will range from -$66.7
million to -$40.7 million, or a change in INPV of -4.3 to -2.6 percent.
At TSL 3, industry free cash-flow is $40.1 million in 2027, which is a
decrease of approximately $9.9 million compared to the no-new-standards
case value of $53.8 million in 2027, the year leading up to the
standards.
For TSL 3, DOE analyzed the standards case presented in the Joint
Proposal which corresponds to a two-tier approach of the lowest
efficiency level (EL 1) \76\ for Tier 1 standards (going to effect in
2024) and the current ENERGY STAR V.2.0 efficiency level (EL 2) for
Tier 2 standards (going to effect in 2026) for all the product classes.
The industry impacts at TSL 3 are very similar to the impacts at TSL 2
because both scenarios result in standards at the Tier 2 level.
However, TSL 3 is a two-tier standard with earlier compliance dates.
While conversion costs for TSL 3 and TSL 2 are identical, the timing of
the costs are different. As a result, the earlier timing of conversion
costs result in lower INPV values at TSL 3 than at TSL 2. However,
industry may benefit from a national standard at Tier 1 in the 2024
timeframe in the form of potential reductions in stock keeping units
(SKUs), marketing and sales complexity, and reduced consumer confusion
associated with a patchwork of state-level energy performance standards
for air cleaners. The MIA does not attempt to calculate the cost
savings from industry that results from single national standard.
---------------------------------------------------------------------------
\76\ EL 1 also corresponds to individual standards established
by certain states and the District of Colombia.
---------------------------------------------------------------------------
At TSL 3, the shipment-weighted average MPC for all air cleaners is
expected to increase by 2 percent relative to the no-new-standards case
shipment-weighted average MPC for all air cleaners in 2028. Given the
relatively small increase in production costs, DOE does not project a
notable drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, the increase in MSP
is outweighed by the $57.3 million in conversion costs, causing a
negative change in INPV at TSL 3 under this scenario. Under the
preservation of operating profit scenario, the manufacturer markup
decreases in 2029, the year after the analyzed compliance year. This
reduction in the manufacturer markup and the $57.3 million in
conversion costs incurred by manufacturers cause a negative change in
INPV at TSL 3 under the preservation of operating profit scenario.
At TSL 4, DOE estimates that impacts on INPV will range from -
$143.7 million to -$30.2 million, or a change in INPV of -9.2 to -1.9
percent. At TSL 4, industry free cash-flow is -$2.4 million, which is a
decrease of approximately $56.2 million compared to the no-new-
standards case value of $53.8 million in 2027, the year leading up to
the standards.
At TSL 4, all three product classes would likely incorporate
cylindrical shaped filters and BLDC motors without an optimized motor-
filter relationship. The cylindrical filter, which reduces the pressure
drop across the filter because it allows for a larger surface area for
the same volume of filter material, provides the improvement in
efficiency at TSL 4 compared to TSL 3, which utilizes rectangular
shaped filters. However, most models on the market today do not use
BLDC motors and cannot accommodate cylindrical filters. Manufacturers
would incur conversion costs to redesign the product to incorporate a
different filter shape and more efficient components. Additionally,
manufacturers that own tooling would incur conversion costs for updated
cabinet designs. DOE estimates capital conversion costs of $94.1
million and product conversion of costs of $42.4 million. Conversion
costs total $136.6 million.
At TSL 4, the shipment-weighted average MPC for all air cleaners is
expected to increase by 8 percent relative to the no-new-standards case
shipment-weighted average MPC for all air cleaners in 2028. Given the
projected increase in production costs, DOE expects an estimated 4
percent drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, the increase in MSP
is outweighed by the $136.6 million in conversion costs, causing a
negative change in INPV at TSL 4 under this scenario. Under the
preservation of operating profit scenario, the manufacturer markup
decreases in 2029, the year after the analyzed compliance year. This
reduction in the manufacturer markup and the $136.6 million in
conversion costs incurred by manufacturers cause a negative change in
INPV at TSL 4 under the preservation of operating profit scenario.
At TSL 5, DOE estimates that impacts on INPV will range from -
$171.5 million to $8.1 million, or a change in INPV of -11.0 to 0.5
percent. At TSL 5, industry free cash-flow is -$6.0 million, which is a
decrease of approximately $59.8 million compared to the no-new-
standards case value of $53.8 million in 2027, the year leading up to
the standards.
At TSL 5, DOE's expected design path for TSL 5 incorporates
cylindrical shaped filters and BLDC motors with an optimized motor-
filter relationship. As noted for TSL 4, the adoption of cylindrical
filters would necessitate platform level redesign for most products on
the market. Additionally, the move to cylindrical filters could
necessitate significantly different cabinet designs. DOE estimates
capital conversion costs of $100.5 million and product conversion of
costs of $44.7 million. Conversion costs total $145.2 million.
At TSL 5, the shipment-weighted average MPC for all air cleaners is
expected to increase by 13 percent relative to the no-new-standards
case shipment-weighted average MPC for all air cleaners in 2028. Given
the projected increase in production costs, DOE expects an estimated 6
percent drop in shipments in the year the standard takes effect. In the
preservation of gross margin percentage scenario, INPV remains roughly
the same as in the no-new-standards scenario. Under the preservation of
operating profit scenario, reduction in the manufacturer markup,
reduction in shipments, and the $145.2 million in conversion costs
incurred by manufacturers cause a negative change in INPV at TSL 5.
[[Page 21800]]
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of energy
conservation standards on direct employment in the air cleaner
industry, DOE used the GRIM to estimate the domestic labor expenditures
and number of direct employees in the no-new-standards case and in each
of the standards cases during the analysis period. DOE calculated these
values using statistical data from the U.S. Census Bureau's 2020 Annual
Survey of Manufacturers (``ASM''),\77\ BLS employee compensation
data,\78\ results of the engineering analysis, and reports from Dunn &
Bradstreet.\79\
---------------------------------------------------------------------------
\77\ U.S. Census Bureau, Annual Survey of Manufacturers: Summary
Statistics for Industry Groups and Industries in the U.S.: 2018-
20201. Available at https://www.census.gov/data/tables/time-series/econ/asm/2018-2021-asm.html (last accessed June 29, 2022).
\78\ U.S. Bureau of Labor Statistics. Employer Costs for
Employee Compensation. June 17, 2021. Available at: www.bls.gov/news.release/pdf/ecec.pdf.
\79\ The Dun & Bradstreet Hoovers login is available at
app.dnbhoovers.com.
---------------------------------------------------------------------------
Labor expenditures related to product manufacturing depend on the
labor intensity of the product, the sales volume, and an assumption
that wages remain fixed in real terms over time. The total labor
expenditures in each year are calculated by multiplying the total MPCs
by the labor percentage of MPCs. The total labor expenditures in the
GRIM were then converted to total production employment levels by
dividing production labor expenditures by the average fully burdened
wage multiplied by the average number of hours worked per year per
production worker. To do this, DOE relied on the ASM inputs: Production
Workers Annual Wages, Production Workers Annual Hours, Production
Workers for Pay Period, and Number of Employees. DOE also relied on the
BLS employee compensation data to determine the fully burdened wage
ratio. The fully burdened wage ratio factors in paid leave,
supplemental pay, insurance, retirement and savings, and legally
required benefits.
The number of production employees is then multiplied by the U.S.
labor percentage to convert total production employment to total
domestic production employment. The U.S. labor percentage represents
the industry fraction of domestic manufacturing production capacity for
the covered product. This value is derived from manufacturer
interviews, product database analysis, and publicly available
information. DOE estimates that 2.5 percent of air cleaners are
produced domestically.
The domestic production employees estimate covers production line
workers, including line supervisors, who are directly involved in
fabricating and assembling products within the OEM facility. Workers
performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific products covered by
this rulemaking.
Non-production workers account for the remainder of the direct
employment figure. The non-production employees estimate covers
domestic workers who are not directly involved in the production
process, such as sales, engineering, human resources, and management.
Using the amount of domestic production workers calculated previously,
non-production domestic employees are extrapolated by multiplying the
ratio of non-production workers in the industry compared to production
employees. DOE assumes that this employee distribution ratio remains
constant between the no-new-standards case and standards cases.
Using the GRIM, DOE estimates in the absence of new energy
conservation standards there would be 58 domestic workers for air
cleaners in 2028. Table V.17 shows the range of the impacts of energy
conservation standards on U.S. manufacturing employment in the air
cleaner industry. The following discussion provides a qualitative
evaluation of the range of potential impacts presented in Table V.17.
Table V.17--Domestic Direct Employment Impacts for Air Cleaners Manufacturers in 2028
----------------------------------------------------------------------------------------------------------------
No-new- Trial standard level
standards ------------------------------------------------------
case 1 2 3 ** 4 5
----------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2028...... 58 59 59 59 59 59
Domestic Non-Production Workers in 2028.. 25 26 26 26 26 26
Total Direct Employment in 2028.......... 83 85 85 85 85 85
Potential Changes in Total Direct .............. (58) to 1 (58) to 1 (58) to 1 (58) to 1 (58) to 1
Employment in 2028......................
----------------------------------------------------------------------------------------------------------------
* Parentheses denote negative values.
** For TSL 3, Tier 2 standard goes into effect in 2026. DOE presents 2028 Direct Employment for consistent
comparison in this table.
The direct employment impacts shown in Table V.17 represent the
potential domestic employment changes that could result following the
compliance date of the air cleaner standards considered. The upper
bound estimate corresponds to an increase in the number of domestic
workers that would result from energy conservation standards if
manufacturers continue to produce the same scope of covered equipment
within the United States after compliance takes effect. The lower bound
estimate represents the maximum decrease in production workers if
manufacturing moved to lower labor-cost countries. Most manufacturers
currently produce their air cleaners in countries with lower labor
costs.
Of the 300 air cleaner brands DOE identified, the vast majority are
produced outside of the U.S. DOE identified 4 companies that have U.S.
manufacturing. These companies have distinct designs and manufacturing
processes from companies that import air cleaners. DOE found these
companies largely do not rely on injection molding, the production
process that drives capital expenditures resulting from the standard.
Additionally, DOE found many of these companies focus on air cleaners
for commercial applications. These companies leverage design and
production processes used for their commercial air cleaner models to
offer conventional air cleaners. Additionally, when product literature
with technical detail were available, DOE found that most conventional
air cleaners from these domestic manufacturers would likely meet
standards for TSLs 1, 2, and 3. DOE concludes it is unlikely these
companies would relocate production overseas solely due to the adoption
of this final rule.
Additional detail on the analysis of direct employment can be found
in chapter 12 of the direct final rule TSD.
[[Page 21801]]
Additionally, the employment impacts discussed in this section are
independent of the employment impacts from the broader U.S. economy,
which are documented in chapter 16 of the direct final rule TSD.
c. Impacts on Manufacturing Capacity
DOE did not observe any design options at the adopted level that
would require changes to the fundamental construction or manufacturing
of air cleaners. Generally, DOE observed incremental increases in
cabinet dimension, incremental changes in filter volume and dimension,
and improved motors or optimized motor/filter relationship in the more
efficient products meeting the adopted level. Changes in cabinet and
filter dimensions could require tooling adjustments and replacement,
which DOE accounted for in its analysis of conversion costs. However,
DOE's analysis does not suggest there would be design changes that
could lead to insufficient availability of product to meet market
demand.
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop industry cash-flow
estimates may not capture the differential impacts among subgroups of
manufacturers. Small manufacturers, niche players, or manufacturers
exhibiting a cost structure that differs substantially from the
industry average could be affected disproportionately. DOE investigated
small businesses as a manufacturer subgroup that could be
disproportionally impacted by energy conservation standards and could
merit additional analysis. DOE analyzes the impacts on small businesses
in a separate analysis in section VI.B of this document as part of the
Regulatory Flexibility Analysis. In summary, the Small Business
Administration (SBA) defines a ``small business'' as having 1,500
employees or less for North American Industry Classification System
(NAICS) 335210, ``Small Electrical Appliance Manufacturing.'' \80\
Based on this classification, DOE identified four domestic OEMs that
qualify as small businesses. For a discussion of the impacts on the
small business manufacturer subgroup, see chapter 12 of the direct
final rule TSD.
---------------------------------------------------------------------------
\80\ U.S. Small Business Administration. ``Table of Small
Business Size Standards.'' (Effective July 14, 2022). Available at:
www.sba.gov/document/support-table-size-standards (last accessed
September 28, 2022).
---------------------------------------------------------------------------
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves looking at the
cumulative impact of multiple DOE standards and the regulatory actions
of other Federal agencies and States that affect the manufacturers of a
covered product or equipment. While any one regulation may not impose a
significant burden on manufacturers, the combined effects of several
existing or impending regulations may have serious consequences for
some manufacturers, groups of manufacturers, or an entire industry.
Assessing the impact of a single regulation may overlook this
cumulative regulatory burden. In addition to energy conservation
standards, other regulations can significantly affect manufacturers'
financial operations. Multiple regulations affecting the same
manufacturer can strain profits and lead companies to abandon product
lines or markets with lower expected future returns than competing
products. For these reasons, DOE conducts an analysis of cumulative
regulatory burden as part of its rulemakings pertaining to appliance
efficiency.
Table V.18--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
Air Cleaner Original Equipment Manufacturers
----------------------------------------------------------------------------------------------------------------
Number of Industry
OEMs Approx. Industry conversion
Federal energy conservation standard Number of affected standards conversion costs/product
OEMs * from this year costs (Millions revenue ***
rule ** $) (%)
----------------------------------------------------------------------------------------------------------------
Residential Central Air Conditioners and 30 1 2023 $342.6 (2015$) 0.50
Heat Pumps 82 FR 1786 (January 6, 2017)...
Portable Air Conditioners 85 FR 1378 11 1 2025 320.90 (2015$) 6.70
(January 10, 2020)........................
Room Air Conditioners [dagger] 87 FR 20608 8 1 2026 22.80 (2020$) 0.50
(April 7, 2022)...........................
----------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule
contributing to cumulative regulatory burden.
** This column presents the number of manufacturers producing room air conditioner products that are also listed
as manufacturers in the listed energy conservation standard contributing to cumulative regulatory burden.
*** This column presents industry conversion costs as a percentage of product revenue during the conversion
period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant
products/equipment. The revenue used for this calculation is the revenue from just the covered product/
equipment associated with each row. The conversion period is the time frame over which conversion costs are
made and lasts from the publication year of the final rule to the compliance year of the final rule. The
conversion period typically ranges from 3 to 5 years, depending on the energy conservation standard.
[dagger] This rulemaking is in the proposed rule stage and all values are subject to change until finalized.
In a written comment, Lennox indicated heating, ventilation, air
conditioning, and refrigeration (HVACR) manufacturers may be facing DOE
standards for: Central Air Conditioners in 2023, Commercial Air
Conditioners in 2023, Commercial Warm Air Furnaces in 2023, Consumer
Furnaces, Air Cooled, Three-Phase, Small Commercial Air Conditioners
and Heat Pumps With a Cooling Capacity of Less Than 65,000 Btu/h and
Air-Cooled, Walk-In Coolers and Freezers, and Three-Phase, Variable
Refrigerant Flow Air Conditioners and Heat Pumps With a Cooling
Capacity of Less Than 65,000 Btu/h. The commenter also stated
manufacturers may be impacted by test procedures for Variable
Refrigerant Flow Air Conditioners and Heat Pumps, Commercial Warm Air
Furnaces, and Walk-In Coolers and Freezers. Lennox mentioned
manufacturers may also experience EPA Phase-down to lower global
warming potential (GWP) refrigerants to meet the American Innovation
and Manufacturing (AIM) Act objectives, National and Regional Cold
Climate Heat Pump Specifications, EPA Energy Star 6.0+ for Residential
[[Page 21802]]
HVAC, and EPA Energy Star 4.0 for Light Commercial HVAC. (Lennox, No.
7, pp. 3-4)
Regarding the other rulemakings mentioned, DOE examines Federal,
product-specific regulations that could affect air cleaner
manufacturers that take effect approximately three years before the
2024 compliance date and three years after the 2026 compliance date of
this final rule. In-duct devices, such as those offered by Lennox, were
not included within the proposed scope of the test procedure. 87 FR
63324, 63331.
3. National Impact Analysis
This section presents DOE's estimates of the national energy
savings and the NPV of consumer benefits that would result from each of
the TSLs considered as potential new or amended standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential standards
for air cleaners, DOE compared their energy consumption under the no-
new-standards case to their anticipated energy consumption under each
TSL. The savings are measured over the entire lifetime of products
purchased in the 30-year period that begins in the year of anticipated
compliance with standards (2024-2057 for TSL 3 and 2028-2057 for the
other TSLs). Table V.19 presents DOE's projections of the national
energy savings for each TSL considered for air cleaners. The savings
were calculated using the approach described in section IV.H.2 of this
document.
Table V.19--Cumulative National Energy Savings for Air Cleaners; 30 Years of Shipments Through 2057
----------------------------------------------------------------------------------------------------------------
Trial standard level (quads)
-------------------------------------------------------------------------------
1 2 3 * 4 5
----------------------------------------------------------------------------------------------------------------
Primary energy.................. 0.73 1.67 1.73 3.90 4.42
FFC energy...................... 0.76 1.73 1.80 4.05 4.59
----------------------------------------------------------------------------------------------------------------
* TSL3 has an analysis period of 2024-2057 to take into account the Joint Proposal recommended compliance dates
for the two-tiered approach and to align the end of the analysis period with the other TSLs.
OMB Circular A-4 \81\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9 years, rather than 30
years, of product shipments. The choice of a 9-year period is a proxy
for the timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards.\82\ The review timeframe established in EPCA is generally
not synchronized with the product lifetime, product manufacturing
cycles, or other factors specific to air cleaners. Thus, such results
are presented for informational purposes only and are not indicative of
any change in DOE's analytical methodology. The NES sensitivity
analysis results based on a 9-year analytical period are presented in
Table V.20. The impacts are counted over the lifetime of air cleaners
purchased in 2024-2036.
---------------------------------------------------------------------------
\81\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf
(last accessed December 5, 2022).
\82\ Section 325(m) of EPCA requires DOE to review its standards
at least once every 6 years, and requires, for certain products, a
3-year period after any new standard is promulgated before
compliance is required, except that in no case may any new standards
be required within 6 years of the compliance date of the previous
standards. While adding a 6-year review to the 3-year compliance
period adds up to 9 years, DOE notes that it may undertake reviews
at any time within the 6-year period and that the 3-year compliance
date may yield to the 6-year backstop. A 9-year analysis period may
not be appropriate given the variability that occurs in the timing
of standards reviews and the fact that for some products, the
compliance period is 5 years rather than 3 years.
Table V.20--Cumulative National Energy Savings for Air Cleaners; 9 Years of Shipments
[Through 2036]
----------------------------------------------------------------------------------------------------------------
Trial standard level (quads)
-------------------------------------------------------------------------------
1 2 3 * 4 5
----------------------------------------------------------------------------------------------------------------
Primary energy.................. 0.12 0.28 0.34 0.65 0.73
FFC energy...................... 0.13 0.29 0.36 0.68 0.76
----------------------------------------------------------------------------------------------------------------
* TSL3 has an analysis period of 2024-2036 to take into account the Joint Proposal recommended compliance dates
for the two-tiered approach and to align the end of the analysis period with the other TSLs.
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for air cleaners.
In accordance with OMB's guidelines on regulatory analysis,\83\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.21 shows the consumer NPV results with impacts counted
over the lifetime of products purchased through 2057.
---------------------------------------------------------------------------
\83\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf
(last accessed December 5, 2022).
[[Page 21803]]
Table V.21--Cumulative Net Present Value of Consumer Benefits for Air Cleaners; Shipments Through 2057
----------------------------------------------------------------------------------------------------------------
Trial standard level (billion 2021$)
Discount rate -------------------------------------------------------------------------------
1 2 3 * 4 5
----------------------------------------------------------------------------------------------------------------
3 percent....................... 5.4 12.8 13.7 (8.4) (4.5)
7 percent....................... 2.2 5.1 5.8 (3.4) (1.9)
----------------------------------------------------------------------------------------------------------------
* TSL3 has an analysis period of 2024-2057 to take into account the Joint Proposal recommended compliance dates
for the two-tiered approach and to align the end of the analysis period with the other TSLs.
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.22. The impacts are counted over the
lifetime of products purchased in 2024-2036. As mentioned previously,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology or decision
criteria.
Table V.22--Cumulative Net Present Value of Consumer Benefits for Air Cleaners; Shipments Through 2036
----------------------------------------------------------------------------------------------------------------
Trial standard level (billion 2021$)
Discount rate -------------------------------------------------------------------------------
1 2 3 * 4 5
----------------------------------------------------------------------------------------------------------------
3 percent....................... 1.3 3.1 4.0 (1.9) (0.9)
7 percent....................... 0.8 1.9 2.5 (1.2) (0.6)
----------------------------------------------------------------------------------------------------------------
* TSL3 has an analysis period of 2024-2036 to take into account the Joint Proposal recommended compliance dates
for the two-tiered approach and to align the end of the analysis period with the other TSLs.
The previous results reflect the use of a trend to estimate the
change in price for air cleaners over the analysis period (see section
IV.F.1 of this document). DOE also conducted a sensitivity analysis
that considered one scenario with a lower rate of price decline than
the reference case and one scenario with a higher rate of price decline
than the reference case. The results of these alternative cases are
presented in appendix 10C of the direct final rule TSD. In the high-
price-decline case, the NPV of consumer benefits is higher than in the
default case. In the low-price-decline case, the NPV of consumer
benefits is lower than in the default case.
c. Indirect Impacts on Employment
DOE estimates that energy conservation standards for air cleaners
will reduce energy expenditures for consumers of those products, with
the resulting net savings being redirected to other forms of economic
activity. These expected shifts in spending and economic activity could
affect the demand for labor. As described in section IV.N of this
document, DOE used an input/output model of the U.S. economy to
estimate indirect employment impacts of the TSLs that DOE considered.
There are uncertainties involved in projecting employment impacts,
especially changes in the later years of the analysis. Therefore, DOE
generated results for near-term timeframes (2024-2029 for TSL 3 and
2028-2033 for all other TSLs), where these uncertainties are reduced.
The results suggest that the adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the direct final rule TSD presents detailed
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
As discussed in section III.F.1.d of this document, DOE has
concluded that the standards adopted in this direct final rule will not
lessen the utility or performance of the air cleaners under
consideration in this rulemaking. Manufacturers of these products
currently offer units that meet or exceed the adopted standards.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new or amended standards. As discussed in section
III.F.1.e, the Attorney General determines the impact, if any, of any
lessening of competition likely to result from a standard and to
transmit such determination in writing to the Secretary within 60 days
of the publication of a rule, together with an analysis of the nature
and extent of the impact. To assist the Attorney General in making this
determination, DOE will provide the DOJ with copies of the direct final
rule and the TSD for review. DOE will also publish and respond to the
DOJ's comments in the Federal Register in a separate document. DOE
invites comment from the public regarding the competitive impacts that
are likely to result from this direct final rule. In addition,
stakeholders may also provide comments separately to DOJ regarding
these potential impacts. See the ADDRESSES section of the NOPR
published elsewhere in this issue of the Federal Register for
information to send comments to DOJ.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. Chapter 15 in the direct final
rule TSD presents the estimated impacts on electricity-generating
capacity, relative to the no-new-standards case, for the TSLs that DOE
considered in this rulemaking.
Energy conservation resulting from potential energy conservation
standards
[[Page 21804]]
for air cleaners is expected to yield environmental benefits in the
form of reduced emissions of certain air pollutants and greenhouse
gases. Table V.23 provides DOE's estimate of cumulative emissions
reductions expected to result from the TSLs considered in this
rulemaking. The emissions were calculated using the multipliers
discussed in section IV.K of this document. DOE reports annual
emissions reductions for each TSL in chapter 13 of the direct final
rule TSD.
Table V.23--Cumulative Emissions Reduction for Air cleaners Shipped From Compliance Year Through 2057
----------------------------------------------------------------------------------------------------------------
Trial standard level
-------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Electric Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 22.3 50.8 53.4 118.8 134.7
CH4 (thousand tons)............. 1.6 3.7 3.9 8.6 9.8
N2O (thousand tons)............. 0.2 0.5 0.5 1.2 1.4
SO2 (thousand tons)............. 9.9 22.5 23.9 52.6 59.6
NOX (thousand tons)............. 10.8 24.6 25.9 57.4 65.1
Hg (tons)....................... 0.1 0.1 0.2 0.3 0.4
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 1.8 4.1 4.3 9.6 10.9
CH4 (thousand tons)............. 171.4 391.1 407.5 914.1 1,036.3
N2O (thousand tons)............. 0.0 0.0 0.0 0.0 0.1
SO2 (thousand tons)............. 0.1 0.3 0.3 0.7 0.7
NOX (thousand tons)............. 27.4 62.6 65.2 146.3 165.8
Hg (tons)....................... 0.0 0.0 0.0 0.0 0.0
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 24.1 55.0 57.7 128.5 145.7
CH4 (thousand tons)............. 173.0 394.8 411.4 922.8 1,046.1
N2O (thousand tons)............. 0.2 0.5 0.6 1.2 1.4
SO2 (thousand tons)............. 10.0 22.8 24.2 53.2 60.4
NOX (thousand tons)............. 38.2 87.2 91.2 203.7 231.0
Hg (tons)....................... 0.1 0.1 0.2 0.3 0.4
----------------------------------------------------------------------------------------------------------------
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for air cleaners.
Section IV.L of this document discusses the estimated SC-CO2
values that DOE used. Table V.24 presents the value of CO2
emissions reduction at each TSL for each of the SC-CO2
cases. The time-series of annual values is presented for the selected
TSL in chapter 14 of the direct final rule TSD.
Table V.24--Present Value of CO2 Emissions Reduction for Air Cleaners Shipped From Compliance Year Through 2057
----------------------------------------------------------------------------------------------------------------
SC-CO2 Case
---------------------------------------------------------------
Discount rate and statistics (billion 2021$)
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
1............................................... 0.2 0.9 1.5 2.8
2............................................... 0.5 2.1 3.4 6.4
3............................................... 0.5 2.3 3.6 6.9
4............................................... 1.1 5.0 7.8 15.0
5............................................... 1.3 5.6 8.9 17.0
----------------------------------------------------------------------------------------------------------------
As discussed in section IV.L.2 of this document, DOE estimated the
climate benefits likely to result from the reduced emissions of methane
and N2O that DOE estimated for each of the considered TSLs
for air cleaners. Table V.25 presents the value of the CH4
emissions reduction at each TSL, and Table V.26 presents the value of
the N2O emissions reduction at each TSL. The time-series of
annual values is presented for the selected TSL in chapter 14 of the
direct final rule TSD.
[[Page 21805]]
Table V.25--Present Value of Methane Emissions Reduction for Air Cleaners Shipped From Compliance Year Through
2057
----------------------------------------------------------------------------------------------------------------
SC-CH4 Case
---------------------------------------------------------------
Discount rate and statistics (billion 2021$)
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
1............................................... 0.1 0.2 0.3 0.6
2............................................... 0.2 0.5 0.7 1.3
3............................................... 0.2 0.5 0.7 1.4
4............................................... 0.4 1.1 1.6 3.0
5............................................... 0.4 1.3 1.8 3.4
----------------------------------------------------------------------------------------------------------------
Table V.26--Present Value of Nitrous Oxide Emissions Reduction for Air Cleaners Shipped From Compliance Through
2057
----------------------------------------------------------------------------------------------------------------
SC-N2O Case
---------------------------------------------------------------
Discount rate and statistics (billion 2021$)
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
1............................................... 0.8 3.2 5.0 8.6
2............................................... 1.8 7.3 11.5 19.5
3............................................... 1.9 7.9 12.3 20.9
4............................................... 4.1 17.2 26.8 45.6
5............................................... 4.7 19.5 30.4 51.7
----------------------------------------------------------------------------------------------------------------
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
global and U.S. economy continues to evolve rapidly. Thus, any value
placed on reduced GHG emissions in this rulemaking is subject to
change. That said, because of omitted damages, DOE agrees with the IWG
that these estimates most likely underestimate the climate benefits of
greenhouse gas reductions. DOE, together with other Federal agencies,
will continue to review methodologies for estimating the monetary value
of reductions in CO2 and other GHG emissions. This ongoing
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues. DOE notes, however, that the
adopted standards would be economically justified even without
inclusion of monetized benefits of reduced GHG emissions.
DOE also estimated the monetary value of the economic benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for air cleaners. The
dollar-per-ton values that DOE used are discussed in section IV.L of
this document. Table V.27 presents the present value for NOX
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.28 presents similar results for
SO2 emissions reductions. The results in these tables
reflect application of EPA's low dollar-per-ton values, which DOE used
to be conservative. The time-series of annual values is presented for
the selected TSL in chapter 14 of the direct final rule TSD.
Table V.27--Present Value of NOX Emissions Reduction for Air Cleaners
Shipped From Compliance Year Through 2057
------------------------------------------------------------------------
7% discount 3% discount
TSL rate rate
------------------------------------------------------------------------
billion 2021$
------------------------------------------------------------------------
1....................................... 0.5 1.4
2....................................... 1.2 3.2
3....................................... 1.3 3.4
4....................................... 2.7 7.5
5....................................... 3.1 8.5
------------------------------------------------------------------------
Table V.28--Present Value of SO2 Emissions Reduction for Air Cleaners
Shipped From Compliance Year Through 2057
------------------------------------------------------------------------
7% discount 3% discount
TSL rate rate
------------------------------------------------------------------------
billion 2021$
------------------------------------------------------------------------
1....................................... 0.2 0.5
2....................................... 0.4 1.1
3....................................... 0.5 1.2
4....................................... 1.0 2.7
5....................................... 1.1 3.0
------------------------------------------------------------------------
DOE has not considered the monetary benefits of the reduction of Hg
for this direct final rule. Not all the public health and environmental
benefits from the reduction of greenhouse gases, NOX, and
SO2 are captured in the values previously mentioned, and
additional unquantified benefits from the reductions of those
pollutants as well as from the reduction of Hg, direct PM, and other
co-pollutants may be significant.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
[[Page 21806]]
8. Summary of Economic Impacts
Table V.29 presents the NPV values that result from adding the
monetized estimates of the potential economic, climate, and health
benefits resulting from reduced GHG and NOX and
SO2 emissions to the NPV of consumer benefits calculated for
each TSL considered in this rulemaking. The consumer benefits are
domestic U.S. monetary savings that occur as a result of purchasing the
covered air cleaners and are measured for the lifetime of products
shipped in 2024-2057. The climate benefits associated with reduced GHG
emissions resulting from the adopted standards are global benefits, and
are also calculated based on the lifetime of air cleaners shipped in
2024-2057.
Table V.29--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Using 3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......... 7.6 17.8 19.0 3.3 8.8
3% Average SC-GHG case.......... 8.5 19.8 21.1 7.9 14.0
2.5% Average SC-GHG case........ 9.1 21.2 22.7 11.3 17.8
3% 95th percentile SC-GHG case.. 10.7 24.9 26.6 19.9 27.6
----------------------------------------------------------------------------------------------------------------
Using 7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......... 3.1 7.3 8.2 1.8 3.9
3% Average SC-GHG case.......... 4.0 9.3 10.3 6.4 9.2
2.5% Average SC-GHG case........ 4.6 10.7 11.8 9.8 13.0
3% 95th percentile SC-GHG case.. 6.3 14.4 15.8 18.4 22.8
----------------------------------------------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered product
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
For this direct final rule, DOE considered the impacts of
establishing standards for air cleaners at each TSL, beginning with the
maximum technologically feasible level, to determine whether that level
was economically justified. Where the max-tech level was not justified,
DOE then considered the next most efficient level and undertook the
same evaluation until it reached the highest efficiency level that is
both technologically feasible and economically justified and saves a
significant amount of energy. DOE refers to this process as the ``walk-
down'' analysis.
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment.
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. There is evidence that consumers
undervalue future energy savings as a result of (1) a lack of
information; (2) a lack of sufficient salience of the long-term or
aggregate benefits; (3) a lack of sufficient savings to warrant
delaying or altering purchases; (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs; and (6) a divergence in incentives (for example, between
renters and owners, or builders and purchasers). Having 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.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forgo the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a standard decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the direct final rule TSD. However, DOE's current analysis does not
explicitly control for heterogeneity in consumer preferences,
preferences across subcategories of products or specific features, or
consumer price sensitivity variation according to household income.\84\
---------------------------------------------------------------------------
\84\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883.
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy conservation
standards, and potential enhancements to the methodology by
[[Page 21807]]
which these impacts are defined and estimated in the regulatory
process.\85\
---------------------------------------------------------------------------
\85\ Sanstad, A.H. Notes on the Economics of Household Energy
Consumption and Technology Choice. 2010. Lawrence Berkeley National
Laboratory. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed July 1, 2021).
---------------------------------------------------------------------------
DOE welcomes comments on how to more fully assess the potential
impact of energy conservation standards on consumer choice and how to
quantify this impact in its regulatory analysis in future rulemakings.
1. Benefits and Burdens of TSLs Considered for Air Cleaner Standards
Table V.30 and Table V.31 summarize the quantitative impacts
estimated for each TSL for air cleaners. The national impacts are
measured over the lifetime of air cleaners purchased in the analysis
period that begins in the anticipated year of compliance with standards
(2024-2057 for TSL3 and 2028-2057 for the other TSLs). The energy
savings, emissions reductions, and value of emissions reductions refer
to full-fuel-cycle results. DOE is exercising its own judgment in
presenting monetized benefits in accordance with the applicable
Executive orders and DOE would reach the same conclusion presented in
this document in the absence of the social cost of greenhouse gases,
including the Interim Estimates presented by the Interagency Working
Group. The efficiency levels contained in each TSL are described in
section V.A of this document.
Table V.30--Summary of Analytical Results for Air Cleaner TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads........................... 0.76 1.73 1.80 4.05 4.59
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 24.1 55.0 57.7 128.5 145.7
CH4 (thousand tons)............. 173.0 394.8 411.4 922.8 1,046.1
N2O (thousand tons)............. 0.2 0.5 0.6 1.2 1.4
SO2 (thousand tons)............. 10.0 22.8 24.2 53.2 60.4
NOX (thousand tons)............. 38.2 87.2 91.2 203.7 231.0
Hg (tons)....................... 0.1 0.1 0.2 0.3 0.4
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 5.6 13.2 14.1 (5.9) (0.8)
Climate Benefits *.............. 1.1 2.6 2.8 6.1 6.9
Health Benefits **.............. 1.9 4.4 4.7 10.2 11.6
Total Benefits [dagger]......... 8.6 20.2 21.6 10.4 17.7
Consumer Incremental Product 0.1 0.4 0.5 2.4 3.7
Costs..........................
Consumer Net Benefits........... 5.4 12.8 13.7 (8.4) (4.5)
Total Net Benefits.............. 8.5 19.8 21.1 7.9 14.0
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 2.2 5.3 6.0 (2.3) (0.2)
Climate Benefits *.............. 1.1 2.6 2.8 6.1 6.9
Health Benefits **.............. 0.7 1.6 1.8 3.7 4.2
Total Benefits [dagger]......... 4.1 9.5 10.6 7.5 10.9
Consumer Incremental Product 0.1 0.2 0.2 1.1 1.7
Costs..........................
Consumer Net Benefits........... 2.2 5.1 5.8 (3.4) (1.9)
Total Net Benefits.............. 4.0 9.3 10.3 6.4 9.2
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with air cleaners shipped from the compliance year
through 2057. These results include benefits to consumers which accrue after 2057 from the products shipped
starting in the compliance year up through 2057.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4, and SC-N2O. Together,
these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single
central SC-GHG point estimate. To monetize the benefits of reducing greenhouse gas emissions this analysis
uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the Interagency
Working Group on the Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.
[[Page 21808]]
Table V.31--Summary of Analytical Results for Air Cleaner TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 3
Category TSL 1 TSL 2 ---------------------------------------- TSL 4 TSL 5
Tier 1 Tier 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts:
Industry NPV (million 2021$) 1,528 to 1,536.... 1,504 to 1,528.... 1,479 to 1,479.... 1,499 to 1,525.... 1,422 to 1,536.... 1,394 to 1,574
(No-new-standards case INPV
= 1,565.94).
Industry NPV (% change)..... (2) to (2)........ (4) to (2)........ (2) to (2)........ (4) to (3)........ (9) to (2)........ (11) to
1
Consumer Average LCC Savings
(2021$):
PC1: 10 <= PM2.5 CADR < 100. $18............... $12............... $18............... $12............... ($87)............. ($87)
PC2: 100 <= PM2.5 CADR < 150 $38............... $50............... $38............... $50............... ($60)............. $11
PC3: PM2.5 CADR >= 150...... $105.............. $94............... $105.............. $94............... $29............... $20
Shipment-Weighted Average $67............... $62............... $67............... $62............... ($23)............. ($10)
\*\.
Consumer Simple PBP (years):
PC1: 10 <= PM2.5 CADR < 100. 0.9............... 1.4............... 0.9............... 1.4............... NA................ NA
PC2: 100 <= PM2.5 CADR < 150 0.4............... 0.5............... 0.4............... 0.5............... NA................ 1.6
PC3: PM2.5 CADR >= 150...... 0.1............... 0.1............... 0.1............... 0.1............... 0.3............... 0.3
Shipment-Weighted Average 0.4............... 0.5............... 0.4............... 0.5............... NA................ NA
\*\.
Percent of Consumers that
Experience a Net Cost:
PC1: 10 <= PM2.5 CADR < 100. 0%................ 6%................ 0%................ 6%................ 88%............... 94%
PC2: 100 <= PM2.5 CADR < 150 0%................ 0%................ 0%................ 0%................ 75%............... 54%
PC3: PM2.5 CADR >= 150...... 0%................ 0%................ 0%................ 0%................ 50%............... 56%
Shipment-Weighted Average 0%................ 1%................ 0%................ 1%................ 66%............... 65%
\*\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``NA'' means not applicable because there is no change in the standard at certain TSLs.
* Weighted by shares of each product class in total projected shipments in 2028.
DOE first considered TSL 5, which represents the max-tech
efficiency levels for all the three product classes. Specifically, for
all three product classes, DOE's expected design path for TSL 5 (which
represents EL 4 for all product classes) incorporates cylindrical
shaped filters and BLDC motors with an optimized motor-filter
relationship. In particular, the cylindrical filter, which reduces the
pressure drop across the filter because it allows for a larger surface
area for the same volume of filter material, optimized with the size of
the BLDC motor provides the improvement in efficiency at TSL 5 compared
to TSL 4. TSL 5 would save an estimated 4.59 quads of energy, an amount
DOE considers significant. Under TSL 5, the NPV of consumer benefit
would be -$1.9 billion using a discount rate of 7 percent, and -$4.5
billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 145.7 Mt of
CO2, 60.4 thousand tons of SO2, 231.0 thousand
tons of NOX, 0.4 tons of Hg, 1,046.1 thousand tons of
CH4, and 1.4 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 5 is $6.9 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 5 is $4.2 billion using a 7-percent discount rate and $11.6 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 5 is $9.2
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 5 is $14.0 billion. The estimated total
NPV is provided for additional information, however DOE primarily
relies upon the NPV of consumer benefits when determining whether a
standard level is economically justified.
At TSL 5, the average LCC impact is a loss of $87 for Product Class
1 (10 <= PM2.5 CADR < 100), an average LCC savings of $11
for Product Class 2 (100 <= PM2.5 CADR < 150), and an
average LCC savings of $20 for Product Class 3 (PM2.5 CADR
>= 150). The simple payback period cannot be calculated for Product
Class 1 due to the max-tech EL not being cost effective compared to the
baseline EL, and is 1.6 years for Product Class 2 and 0.3 years for
Product Class 3. The fraction of consumers experiencing a net LCC cost
is 94 percent for Product Class 1, 54 percent for Product Class 2 and
56 percent for Product Class 3.
For the low-income consumer group, the average LCC impact is a loss
of $97 for Product Class 1, an average LCC loss of $9 for Product Class
2, and an average LCC loss of $7 for Product Class 3. The simple
payback period cannot be calculated for Product Class 1 due to a higher
annual operating cost for the selected EL than the cost for baseline
units, and is 2.7 years and 0.5 years for Product Class 2 and Product
Class 3, respectively. The fraction of low-income consumers
experiencing a net LCC cost is 95 percent for Product Class 1, 64
percent for Product Class 2 and 67 percent for Product Class 3.
At TSL 5, the projected change in INPV ranges from a decrease of
$171.5 million to an increase of $8.1 million, which corresponds to a
decrease of 11.0 percent and an increase of 0.5 percent, respectively.
DOE estimates that industry may need to invest $145.2 million to comply
with standards set at TSL 5.
At TSL 5, compliant models are typically designed to house a
cylindrical filter, and the cabinets of these units are also typically
cylindrical in shape. The move to cylindrical designs would require
investment in new designs and new production tooling for most of the
industry, as only 3% of units shipped meet TSL 5 today. Manufacturers
would need to invest in both updated designs and updated cabinet
tooling. The vast majority of product is made from injection molded
plastic and DOE expect the need for new injection molding dies to drive
conversion cost for the industry.
The Secretary concludes that at TSL 5 for air cleaners, the
benefits of energy savings, emission reductions, and the estimated
monetary value of the emissions reductions would be outweighed by the
economic burden on many consumers (negative LCC savings of Product
Class 1, a majority of consumers with net costs for all three
[[Page 21809]]
product classes, and negative NPV of consumer benefits), and the
capital conversion costs and profit margin impacts that could result in
reductions in INPV for manufacturers.
DOE next considered TSL 4, which represents the second highest
efficiency levels. TSL 4 comprises EL 3 for all three product classes.
Specifically, DOE's expected design path for TSL 4 incorporates many of
the same technologies and design strategies as described for TSL 5. At
TSL 4, all three product classes would incorporate cylindrical shaped
filters and BLDC motors without an optimized motor-filter relationship.
The cylindrical filter, which reduces the pressure drop across the
filter because it allows for a larger surface area for the same volume
of filter material, provides the improvement in efficiency at TSL 4
compared to TSL 3 which utilizes rectangular shaped filters and less
efficient motor designs. TSL 4 would save an estimated 4.05 quads of
energy, an amount DOE considers significant. Under TSL 4, the NPV of
consumer benefit would be -$3.4 billion using a discount rate of 7
percent, and -$8.4 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 128.5 Mt of
CO2, 53.2 thousand tons of SO2, 203.7 thousand
tons of NOX, 0.3 tons of Hg, 922.8 thousand tons of
CH4, and 1.2 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 4 is $6.1 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $3.7 billion using a 7-percent discount rate and $10.2 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 4 is $6.4
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $7.9 billion. The estimated total
NPV is provided for additional information, however DOE primarily
relies upon the NPV of consumer benefits when determining whether a
standard level is economically justified.
At TSL 4, the average LCC impact is a loss of $87 for Product Class
1, an average LCC loss of $60 for Product Class 2 and an average
savings of $29 for Product Class 3. The simple payback period cannot be
calculated for Product Class 1 and Product Class 2 due to the higher
annual operating cost compared to the baseline units, and is 0.3 years
for Product Class 3. The fraction of consumers experiencing a net LCC
cost is 88 percent for Product Class 1, 75 percent for Product Class 2
and 50 percent for Product Class 3.
For the low-income consumer group, the average LCC impact is an
average loss of $95 for Product Class 1, an average LCC loss of $78 for
Product Class 2 and an average savings of $2 for Product Class 3. The
simple payback period cannot be calculated for Product Class 1 and
Product Class 2 due to a higher annual operating cost for the selected
EL than the cost for baseline units, and is 0.4 years for Product Class
3. The fraction of low-income consumers experiencing a net LCC cost is
89 percent for Product Class 1, 82 percent for Product Class 2 and 61
percent for Product Class 3.
At TSL 4, the projected change in INPV ranges from a decrease of
$143.7 million to a decrease of $30.2 million, which correspond to
decreases of 9.2 percent and 1.9 percent, respectively. Industry
conversion costs could reach $136.6 million at this TSL.
At TSL 4, compliant models are typically designed to house a
cylindrical filter, and the cabinets of these units are also typically
cylindrical in shape--much like TSL 5. Again, the major driver of
impacts to manufacturers is the move to cylindrical designs, requiring
redesign of products and investment in new production tooling for most
of the industry, as only 7% of sales meet TSL 4 today.
Based upon the previous considerations, the Secretary concludes
that at TSL 4 for air cleaners, the benefits of energy savings,
emission reductions, and the estimated monetary value of the health
benefits and climate benefits from emissions reductions would be
outweighed by negative LCC savings for Product Class 1 and Product
Class 2, the high percentage of consumers with net costs for all
product classes, negative NPV of consumer benefits, and the capital
conversion costs and profit margin impacts that could result in
reductions in INPV for manufacturers. Consequently, the Secretary has
tentatively concluded that TSL 4 is not economically justified.
DOE then considered the recommended TSL (TSL3), which represents
the Joint Proposal with EL 1 (Tier 1) going into effect in 2024
(compliance date December 31, 2023) and EL 2 (Tier 2) going into effect
in 2026 (compliance date December 31, 2025). EL 1 comprises the lowest
EL considered which aligns with the standards established by the States
of Maryland, Nevada, and New Jersey, and the District of Columbia. EL 2
comprises the current ENERGY STAR V. 2.0 level and the standard adopted
by the State of Washington. DOE's design path for TSL 3, which includes
both EL 1 and EL 2 for all three product classes, includes rectangular
shaped filters and either SPM or PSC motors. Specifically, for Product
Class 1, the Tier 1 standard, which is represented by EL 1, includes a
rectangular filter and SPM motor with an optimized motor-filter
relationship while the Tier 2 standard, which is represented by EL 2,
includes a rectangular filter and PSC motor, which is generally more
efficient than an SPM motor. For Product Class 2 and Product Class 3,
the Tier 1 standard, which is represented by EL 1, includes a
rectangular filter and PSC motor while the Tier 2 standard, which is
represented by EL 2, also includes a rectangular filter and PSC motor
but with an optimized motor-filter relationship, which improves the
efficiency of EL 2 over EL 1. TSL3 would save an estimated 1.80 quads
of energy, an amount DOE considers significant. Under TSL 3, the NPV of
consumer benefit would be $13.7 billion using a discount rate of 7
percent, and $5.8 billion using a discount rate of 3 percent.
The cumulative emissions reductions at the recommended TSL are 57.7
Mt of CO2, 24.2 thousand tons of SO2, 91.2
thousand tons of NOX, 0.2 tons of Hg, 411.4 thousand tons of
CH4, and 0.6 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
the recommended TSL is $2.8 billion. The estimated monetary value of
the health benefits from reduced SO2 and NOX
emissions at the recommended TSL is $1.8 billion using a 7-percent
discount rate and $4.7 billion using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at the recommended
TSL is $10.3 billion. Using a 3-percent discount rate for all benefits
and costs, the estimated total NPV at TSL 3 is $21.1 billion. The
estimated total NPV is provided for additional information, however DOE
primarily relies upon the NPV of consumer benefits when determining
whether a standard level is economically justified.
[[Page 21810]]
At the recommended TSL with the two-tier approach, the average LCC
impacts are average savings of $18 and $12 for Product Class 1, $38 and
$50 for Product Class 2, and $105 and $94 for Product Class 3, for Tier
1 and Tier 2 respectively. The simple payback periods are below 1.4
years for the two tiers of Product Class 1, below 0.5 years for the two
tiers of Product Class 2, and 0.1 for the two tiers of Product Class 3.
The fraction of consumers experiencing a net LCC cost is below 6
percent for the two tiers of all three product classes.
For the low-income consumer group, the average LCC impact is a
savings of $17 and $10 for the two tiers of Product Class 1, $34 and
$44 for the two tiers of Product Class 2, and $85 and $76 for the two
tiers of Product Class 3. The simple payback periods for the two-tier
approach are 1.2 years for Tier 1 and 1.9 years for Tier 2 for Product
Class 1, are 0.6 years and 0.7 years for Tier 1 and Tier 2 respectively
for Product Class 2, and is 0.2 years for both tiers of Product Class
3. The fraction of low-income consumers experiencing a net LCC cost is
10 percent for Tier 2 of Product Class 1, and 0 percent for Tier 1 of
Product Class 1 and all other tiers of the other product classes.
At the recommended TSL, the projected change in INPV ranges from a
decrease of $66.7 million to a decrease of $40.7 million, which
correspond to decreases of 4.3 percent and 2.6 percent, respectively.
Industry conversion costs could reach $57.3 million at this TSL.
A sizeable portion of the market, approximately 40 percent, can
currently meet the Tier 2 level. Additionally, a substantial portion of
existing models can be updated to meet Tier 2 through optimization and
improved components rather than a full product redesign. In particular,
manufacturers may be able to leverage their existing cabinet designs,
reducing the level of investment necessitated by the standard.
An even larger portion of the market, approximately 76 percent, can
meet the Tier 1 level today. Efficiency improvements to meet Tier 1 are
achievable by improving the motor or by optimizing the motor-filter
relationship, typically by reducing the restriction of airflow (and
therefore, the pressure drop across the filter) by increasing the
surface area of the filter, reducing filter thickness, and/or
increasing air inlet/outlet size. Manufacturer may be able to leverage
their existing cabinet designs, reducing the level of investment
necessitated by the standard.
After considering the analysis and weighing the benefits and
burdens, the Secretary has concluded that at a standard set at the
recommended TSL for air cleaners would be economically justified. At
this TSL, the average LCC savings for all three product classes are
positive. Only an estimated 6 percent of Product Class 1 consumers
experience a net cost. No Product Class 2 and Product Class 3 consumers
would experience net cost based on the estimates. The FFC national
energy savings are significant and the NPV of consumer benefits is
positive using both a 3-percent and 7-percent discount rate. At the
recommended TSL, the NPV of consumer benefits, even measured at the
more conservative discount rate of 7 percent, is over 84 times higher
than the maximum estimated manufacturers' loss in INPV. The standard
levels at the recommended TSL are economically justified even without
weighing the estimated monetary value of emissions reductions. When
those emissions reductions are included--representing $2.8 billion in
climate benefits (associated with the average SC-GHG at a 3-percent
discount rate), and $4.7 billion (using a 3-percent discount rate) or
$1.8 billion (using a 7-percent discount rate) in health benefits--the
rationale becomes stronger still.
As stated, DOE conducts the walk-down analysis to determine the TSL
that represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. Although DOE has not conducted a comparative analysis to select
the new energy conservation standards, DOE notes that as compared to
TSL 4 and TSL 5, TSL 3 has positive LCC savings for all selected
standards levels, a shorter payback period, smaller percentages of
consumers experiencing a net cost, a lower maximum decrease in INPV,
and lower manufacturer conversion costs.
Although DOE considered new standard levels for air cleaners by
grouping the efficiency levels for each product class into TSLs, DOE
analyzes and evaluates all possible ELs for each product class in its
analysis. For all three product classes, the adopted standard levels
represent units with rectangular filter shape with a PSC motor at EL 1
and an optimized motor-filter relationship at EL 2. Additionally, for
all three product classes the adopted standard levels represent the
maximum energy savings that does not result in a large percentage of
consumers experiencing a net LCC cost. TSL 3 would also realize an
additional 0.07 quads FFC energy savings compared to TSL 2, which
selects the same standard levels but with a later compliance date. The
efficiency levels at the specified standard levels result in positive
LCC savings for all three product classes, significantly reduce the
number of consumers experiencing a net cost, and reduce the decrease in
INPV and conversion costs to the point where DOE has concluded these
levels are economically justified, as discussed for TSL 3 in the
preceding paragraphs.
Therefore, based on the previous considerations, DOE adopts the
energy conservation standards for air cleaners at the recommended TSL.
The new energy conservation standards for air cleaners, which are
expressed in IEF using PM2.5 CADR/W, are shown in Table
V.32.
Table V.32--New Energy Conservation Standards for Air Cleaners
------------------------------------------------------------------------
IEF (PM2.5 CADR/W)
Product class -------------------------------
Tier 1 Tier 2
------------------------------------------------------------------------
PC1: 10 <= PM2.5 CADR < 100............. 1.7 1.9
PC2: 100 <= PM2.5 CADR < 150............ 1.9 2.4
PC3: PM2.5 CADR >= 150.................. 2.0 2.9
------------------------------------------------------------------------
2. Annualized Benefits and Costs of the Adopted Standards
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
(1) the annualized national economic value (expressed in 2021$) of the
benefits from operating products that meet the adopted standards
(consisting primarily of operating cost savings from using less
energy), minus increases in product purchase costs, and (2) the
annualized monetary value of the climate and health benefits.
[[Page 21811]]
Table V.33 shows the annualized values for air cleaners under the
recommended TSL, expressed in 2021$. The results under the primary
estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
standards adopted in this rule is $19.8 million per year in increased
product costs, while the estimated annual benefits are $499 million in
reduced product operating costs, $136 million in climate benefits, and
$149 million in health benefits. In this case, the net benefit amounts
to $764 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $23.4 million per year in increased
equipment costs, while the estimated annual benefits are $690 million
in reduced operating costs, $136 million in climate benefits, and $228
million in health benefits. In this case, the net benefit amounts to
$1,030 million per year.
Table V.33 Annualized Benefits and Costs of Adopted Standards (recommended TSL) for Air cleaners
----------------------------------------------------------------------------------------------------------------
Million (2021$/year)
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 689.7 623.7 773.4
Climate Benefits *.............................................. 135.6 124.2 149.9
Health Benefits **.............................................. 228.4 210.1 251.0
Total Benefits [dagger]......................................... 1,053.6 958.1 1,174.2
Consumer Incremental Product Costs[Dagger]...................... 23.4 22.8 24.7
Net Benefits.................................................... 1,030.2 935.3 1,149.5
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 498.8 459.8 546.9
Climate Benefits * (3% discount rate)........................... 135.6 124.2 149.9
Health Benefits **.............................................. 149.3 139.7 160.9
Total Benefit s[dagger]......................................... 783.7 723.7 857.7
Consumer Incremental Product Costs [Dagger]..................... 19.8 19.3 20.7
Net Benefits.................................................... 763.9 704.4 837.0
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with air cleaners shipped in 2024-2057. These
results include benefits to consumers which accrue after 2057 from the products shipped in 2024-2057. The
Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in section IV.F.1of this document. Note that the Benefits and
Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four
sets of SC-GHG estimates. To monetize the benefits of reducing greenhouse gas emissions this analysis uses the
interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the Interagency Working
Group on the Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as filter costs.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821
(Jan. 21, 2011), requires agencies, to the extent permitted by law, to
(1) propose or adopt a regulation only upon a reasoned determination
that its benefits justify its costs (recognizing that some benefits and
costs are difficult to quantify); (2) tailor regulations to impose the
least burden on society, consistent with obtaining regulatory
objectives, taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations; (3) select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity); (4) to the extent feasible, specify performance
objectives, rather than specifying the behavior or manner of compliance
that regulated entities must adopt; and (5) identify and assess
available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public. DOE emphasizes as well that E.O. 13563
requires agencies to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible. In its guidance, the Office of Information and Regulatory
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') has
emphasized that such techniques may include identifying changing future
compliance
[[Page 21812]]
costs that might result from technological innovation or anticipated
behavioral changes. For the reasons stated in this preamble, this final
regulatory action is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this final regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O.
12866, DOE has provided to OIRA an assessment, including the underlying
analysis, of benefits and costs anticipated from the final regulatory
action, together with, to the extent feasible, a quantification of
those costs; and an assessment, including the underlying analysis, of
costs and benefits of potentially effective and reasonably feasible
alternatives to the planned regulation, and an explanation why the
planned regulatory action is preferable to the identified potential
alternatives. These assessments are summarized in this preamble and
further detail can be found in the technical support document for this
rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (Aug. 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 website
(www.energy.gov/gc/office-general-counsel).
DOE is not obligated to prepare a regulatory flexibility analysis
for this rulemaking because there is not a requirement to publish a
general notice of proposed rulemaking under the Administrative
Procedure Act. See 5 U.S.C. 601(2), 603(a). As discussed previously,
DOE has determined that the August 2022 Joint Proposal meets the
necessary requirements under EPCA to issue this direct final rule for
energy conservation standards for air cleaners under the procedures in
42 U.S.C. 6295(p)(4). DOE notes that the NOPR for energy conservation
standards for air cleaners published elsewhere in this issue of the
Federal Register contains an IRFA.
C. Review Under the Paperwork Reduction Act
Manufacturers of air cleaners must certify to DOE that their
products comply with any applicable energy conservation standards. In
certifying compliance, manufacturers must test their products according
to the DOE test procedures for air cleaners, including any amendments
adopted for those test procedures. DOE has established regulations for
the certification and recordkeeping requirements for all covered
consumer products and commercial equipment, including air cleaners.
(See generally 10 CFR part 429) The collection-of-information
requirement for the certification and recordkeeping is subject to
review and approval by OMB under the Paperwork Reduction Act (``PRA'').
This requirement has been approved by OMB under OMB control number
1910-1400. Public reporting burden for the certification is estimated
to average 35 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
Certification data will be required for air cleaners; however, DOE
is not adopting certification or reporting requirements for air
cleaners in this direct final rule. Instead, DOE may consider proposals
to establish certification requirements and reporting for air cleaners
under a separate rulemaking regarding appliance and equipment
certification. DOE will address changes to OMB Control Number 1910-1400
at that time, as necessary.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act of 1969
(``NEPA''), DOE has analyzed this rule in accordance with NEPA and
DOE's NEPA implementing regulations (10 CFR part 1021). DOE has
determined that this rule qualifies for categorical exclusion under 10
CFR part 1021, subpart D, appendix B, B5.1, because it is a rulemaking
that establishes energy conservation standards for consumer products or
industrial equipment, none of the exceptions identified in B5.1(b)
apply, no extraordinary circumstances exist that require further
environmental analysis, and it meets the requirements for application
of a categorical exclusion. See 10 CFR 1021.410. Therefore, DOE has
determined that promulgation of this rule is not a major Federal action
significantly affecting the quality of the human environment within the
meaning of NEPA, and does not require an environmental assessment or an
environmental impact statement.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this rule and has determined
that it would not have a substantial direct effect on the relationship
between the National Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
EPCA governs and prescribes Federal preemption of State regulations as
to energy conservation for the products that are the subject of this
rule. States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297)
Therefore, no further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements:
[[Page 21813]]
(1) eliminate drafting errors and ambiguity, (2) write regulations to
minimize litigation, (3) provide a clear legal standard for affected
conduct rather than a general standard, and (4) promote simplification
and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review
required by section 3(a), section 3(b) of E.O. 12988 specifically
requires that Executive agencies make every reasonable effort to ensure
that the regulation (1) clearly specifies the preemptive effect, if
any, (2) clearly specifies any effect on existing Federal law or
regulation, (3) provides a clear legal standard for affected conduct
while promoting simplification and burden reduction, (4) specifies the
retroactive effect, if any, (5) adequately defines key terms, and (6)
addresses other important issues affecting clarity and general
draftsmanship under any guidelines issued by the Attorney General.
Section 3(c) of E.O. 12988 requires executive agencies to review
regulations in light of applicable standards in section 3(a) and
section 3(b) to determine whether they are met or it is unreasonable to
meet one or more of them. DOE has completed the required review and
determined that, to the extent permitted by law, this direct final rule
meets the relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, Sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
This rule does not contain a Federal intergovernmental mandate, nor
is it expected to require expenditures of $100 million or more in any
one year by the private sector.
As a result, the analytical requirements of UMRA do not apply.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277), requires Federal agencies to issue a
Family Policymaking Assessment for any rule that may affect family
well-being. This rule would not have any impact on the autonomy or
integrity of the family as an institution. Accordingly, DOE has
concluded that it is not necessary to prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this rule would not result in any
takings that might require compensation under the Fifth Amendment to
the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this direct final rule under the OMB and DOE guidelines and
has concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgates or is expected to lead to promulgation of a final
rule, and that (1) is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth
energy conservation standards for air cleaners, is not a significant
energy action because the standards are not likely to have a
significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this direct final rule.
L. Information Quality
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the
[[Page 21814]]
energy conservation standards development process and the analyses that
are typically used and prepared a report describing that peer
review.\86\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve the Department's analyses. DOE is
in the process of evaluating the resulting report.\87\
---------------------------------------------------------------------------
\86\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed July 19, 2022).
\87\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------
AHAM AC-1-2020 is already approved at the location where it appears
in the regulatory text.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is a ``major rule'' as
defined by 5 U.S.C. 804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this direct
final rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, Reporting and
recordkeeping requirements, and Small businesses.
Signing Authority
This document of the Department of Energy was signed on March 22,
2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for
Energy Efficiency and Renewable Energy, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on March 24, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE amends part 430 of
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations, as amended at 88 FR 14014 (March 6, 2023), as set forth
below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
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.
0
2. Amend appendix FF to subpart B of part 430 by revising section 5.1.2
to read as follows:
Appendix FF to Subpart B of Part 430--Uniform Test Method for Measuring
the Energy Consumption of Air Cleaners
* * * * *
5. * * *
5.1.2. For determining compliance only with the standards
specified in Sec. 430.32(ee)(1), PM2.5 CADR may
alternately be calculated using the smoke CADR and dust CADR values
determined according to Sections 5 and 6, respectively, of AHAM AC-
1-2020, according to the following equation:
[GRAPHIC] [TIFF OMITTED] TR11AP23.003
* * * * *
0
3. Amend Sec. 430.32 by adding paragraph (ee) to read as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(ee) Air cleaners. (1) Conventional room air cleaners as defined in
Sec. 430.2 with a PM2.5 clean air delivery rate (CADR)
between 10 and 600 (both inclusive) cubic feet per minute (cfm) and
manufactured on or after December 31, 2023, and before December 31,
2025, shall have an integrated energy factor (IEF) in PM2.5
CADR/W, as determined in Sec. 430.23(hh)(4) that meets or exceeds the
following values:
------------------------------------------------------------------------
IEF (PM2.5
Product capacity CADR/W)
------------------------------------------------------------------------
(i) 10 <=PM2.5 CADR <100................................ 1.7
(ii) 100 <=PM2.5 CADR <150.............................. 1.9
(iii) PM2.5 CADR >=150.................................. 2.0
------------------------------------------------------------------------
(2) Conventional room air cleaners as defined in Sec. 430.2 with a
PM2.5 clean air delivery rate (CADR) between 10 and 600
(both inclusive) cubic feet per minute (cfm) and manufactured on or
after December 31, 2025, shall have an integrated energy factor (IEF)
in PM2.5 CADR/W, as determined in Sec. 430.23(hh)(4) that
meets or exceeds the following values:
------------------------------------------------------------------------
IEF (PM2.5
Product capacity CADR/W)
------------------------------------------------------------------------
(i) 10 <=PM2.5 CADR <100................................ 1.9
(ii) 100 <=PM2.5 CADR <150.............................. 2.4
(iii) PM2.5 CADR >=150.................................. 2.9
------------------------------------------------------------------------
[FR Doc. 2023-06499 Filed 4-10-23; 8:45 am]
BILLING CODE 6450-01-P