[Federal Register Volume 89, Number 11 (Wednesday, January 17, 2024)]
[Rules and Regulations]
[Pages 3026-3116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28978]
[[Page 3025]]
Vol. 89
Wednesday,
No. 11
January 17, 2024
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for
Refrigerators, Refrigerator-Freezers, and Freezers; Direct Final Rule
Federal Register / Vol. 89, No. 11 / Wednesday, January 17, 2024 /
Rules and Regulations
[[Page 3026]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2017-BT-STD-0003]
RIN 1904-AF56
Energy Conservation Program: Energy Conservation Standards for
Refrigerators, Refrigerator-Freezers, and Freezers
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''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including
refrigerators, refrigerator-freezers, and freezers. In this direct
final rule, the U.S. Department of Energy (``DOE'') is adopting amended
energy conservation standards for refrigerators, refrigerator-freezers,
and freezers. DOE has determined that the amended energy conservation
standards for these products would result in significant conservation
of energy, and are technologically feasible and economically justified.
DATES: The effective date of this rule is May 16, 2024. The
incorporation by reference of certain material listed in the rule was
approved by the Director as of May 21, 2014, and November 12, 2021. If
adverse comments are received by May 6, 2024, and DOE determines that
such comments may provide a reasonable basis for withdrawal of the
direct final rule under 42 U.S.C. 6295(o), a timely withdrawal of this
rule will be published in the Federal Register. If no such adverse
comments are received, compliance with the amended standards
established for refrigerators, refrigerator-freezers, and freezers in
this direct final rule is required on and after January 31, 2029, for
the product classes listed in Table I.1 and January 31, 2030, for the
product classes listed in Table I.2.
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-2017-BT-STD-0003. 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. Lucas Adin, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-5904. Email: [email protected].
Mr. Matthew Schneider, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (240) 597-6265. 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 Consumer Refrigerators,
Refrigerator-Freezers, and Freezers
3. Joint Agreement Recommended Standard Levels
III. General Discussion
A. General Comments
B. Product Classes and 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
a. Product Classes With Automatic Icemakers
b. Special Door and Multi-Door Designs
c. Product Certification
d. Addition of Product Class 9A-BI
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Built-in Products
b. Baseline Efficiency/Energy Use
c. Higher Efficiency Levels
d. VIP Analysis and Max-Tech Levels
e. Variable-Speed Compressor Supply Chain
f. Product Classes 11 and 12 Alignment
2. Cost Analysis
3. Cost-Efficiency Results
4. Manufacturer Selling Price
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Adjusted Volume Distribution
2. Product Cost
3. Installation Cost
4. Annual Energy Consumption
5. Energy Prices
6. Maintenance and Repair Costs
7. Product Lifetime
8. Discount Rates
9. Energy Efficiency Distribution in the No-New-Standards Case
10. 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
[[Page 3027]]
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of 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 Refrigerator,
Refrigerator-Freezer, and Freezer Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
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 Executive Order 12630
I. Review Under the Treasury and General Government
Appropriations Act, 2001
J. Review Under Executive Order 13211
K. Information Quality
L. Congressional Notification
M. Materials Incorporated by Reference
VII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B of EPCA \2\ established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include refrigerators, refrigerator-
freezers, and freezers, the subject of this direct final rule. (42
U.S.C. 6292(a)(7))
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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.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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Pursuant to EPCA, any new or amended energy conservation standard
must, among other things, 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))
In light of the above and under the authority provided by 42 U.S.C.
6295(p)(4), DOE is issuing this direct final rule amending energy
conservation standards for refrigerators, refrigerator-freezers, and
freezers.
The adopted standard levels in this direct final rule were proposed
in a letter submitted to DOE jointly by groups representing
manufacturers, energy and environmental advocates, consumer groups, and
a utility. This letter, titled ``Energy Efficiency Agreement of 2023''
(hereafter, the ``Joint Agreement''),\3\ recommends specific energy
conservation standards for refrigerators, refrigerator-freezers, and
freezers that, in the commenters' view, would satisfy the EPCA
requirements in 42 U.S.C. 6295(o). DOE subsequently received letters of
support from states including California, Massachusetts, and New York
\4\ and utilities including San Diego Gas and Electric (``SDG&E'') and
Southern California Edison (``SCE'') \5\ advocating for the adoption of
the recommended standards and a follow-up letter from the parties to
the Joint Agreement that more specifically described the recommended
standards for refrigerators, refrigerator-freezers, and freezers, and
their rationale for entering into a negotiation to develop them.\6\
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\3\ This document is available in the docket at:
www.regulations.gov/document/EERE-2017-BT-STD-0003-0103.
\4\ This document is available in the docket at:
www.regulations.gov/document/EERE-2017-BT-STD-0003-0104.
\5\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0003-0107.
\6\ This document is available in the docket at:
www.regulations.gov/document/EERE-2017-BT-STD-0003-0105.
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In accordance with the direct final rule provisions at 42 U.S.C.
6295(p)(4), DOE has determined that the recommendations contained in
the Joint Agreement are compliant with 42 U.S.C. 6295(o). As required
by 42 U.S.C. 6295(p)(4)(A)(i), DOE is also simultaneously publishing a
notice of proposed rulemaking (``NOPR'') that contains identical
standards to those adopted in this direct final rule. Consistent with
the statute, DOE is providing a 110-day public comment period on the
direct final rule. (42 U.S.C. 6295(p)(4)(B)) 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) or any other applicable law,
DOE will publish the reasons for withdrawal and 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.
The amended standards that DOE is adopting in this direct final
rule are the efficiency levels recommended in the Joint Agreement
(shown in Tables I.1 and I.2) expressed in terms of kilowatt hours per
year (``kWh/yr'') as measured according to DOE's current refrigerator,
refrigerator-freezer, and freezer test procedures codified at title 10
of the Code of Federal Regulations (``CFR''), part 430, subpart B,
appendices A (``appendix A'') and B (``appendix B'').
The amended standards recommended in the Joint Agreement are
represented as trial standard level (``TSL'') 4 in this document
(hereinafter the ``Recommended TSL'') and are described in section V.A
of this document. These standards apply to all products listed in Table
I.1 and manufactured in, or imported into the United States starting on
January 31, 2029, and all products listed in Table I.2 and manufactured
in, or imported into, the United States starting on January 31, 2030.
[[Page 3028]]
Table I.1--Energy Conservation Standards for Consumer Refrigerators, Refrigerator-Freezers, and Freezers With Corresponding Door Coefficient Table
[Compliance starting January 31, 2029]
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Equations for maximum energy use (kWh/yr)
Product class (``PC'') ---------------------------------------------------------------------------------------------------------------
Based on AV (ft\3\) Based on av (L)
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3-BI. Built-in refrigerator-freezer-- 8.24AV + 238.4 + 28I.................................. 0.291av + 238.4 + 28I.
automatic defrost with top-mounted
freezer.
3A-BI. Built-in All-refrigerators-- (7.22AV + 205.7)*K3ABI................................ (0.255av + 205.7)*K3ABI.
automatic defrost.
4-BI. Built-In Refrigerator-freezers-- (8.79AV + 307.4)*K4BI + 28I........................... (0.310av + 307.4)*K4BI + 28I.
automatic defrost with side-mounted
freezer.
5-BI. Built-In Refrigerator-freezers-- (8.65AV + 309.9)*K5BI + 28I........................... (0.305av + 309.9)*K5BI + 28I.
automatic defrost with bottom-mounted
freezer.
5A. Refrigerator-freezer--automatic (7.76AV + 351.9)*K5A.................................. (0.274av + 351.9)*K5A.
defrost with bottom-mounted freezer
with through-the-door ice service.
5A-BI. Built-in refrigerator-freezer-- (8.21AV + 370.7)*K5ABI................................ (0.290av + 370.7)*K5ABI.
automatic defrost with bottom-mounted
freezer with through-the-door ice
service.
7-BI. Built-In Refrigerator-freezers-- (8.82AV + 384.1)*K7BI................................. (0.311av + 384.1)*K7BI.
automatic defrost with side-mounted
freezer.
8. Upright freezers with manual defrost. 5.57AV + 193.7........................................ 0.197av + 193.7.
9-BI. Built-In Upright freezers with (9.37AV + 247.9)*K9BI + 28I........................... (0.331av + 247.9)*K9BI + 28I.
automatic defrost.
9A-BI. Built-In Upright freezers with 9.86AV + 288.9........................................ 0.348av + 288.9.
automatic defrost with through-the-door
ice service.
10. Chest freezers and all other 7.29AV + 107.8........................................ 0.257av + 107.8.
freezers except compact freezers.
10A. Chest freezers with automatic 10.24AV + 148.1....................................... 0.362av + 148.1.
defrost.
11. Compact refrigerator-freezers and 7.68AV + 214.5........................................ 0.271av + 214.5.
refrigerators other than all-
refrigerators with manual defrost.
11A. Compact all-refrigerators--manual 6.66AV + 186.2........................................ 0.235av + 186.2.
defrost.
12. Compact refrigerator-freezers-- (5.32AV + 302.2)*K12.................................. (0.188av + 302.2)*K12.
partial automatic defrost.
13. Compact refrigerator-freezers-- 10.62AV + 305.3 + 28I................................. 0.375av + 305.3 + 28I.
automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerators-- (8.25AV + 233.4)*K13A................................. (0.291av + 233.4)*K13A.
automatic defrost.
14. Compact refrigerator-freezers-- 6.14AV + 411.2 + 28I.................................. 0.217av + 411.2 + 28I.
automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers-- 10.62AV + 305.3 + 28I................................. 0.375av + 305.3 + 28I.
automatic defrost with bottom-mounted
freezer.
16. Compact upright freezers with manual 7.35AV + 191.8........................................ 0.260av + 191.8.
defrost.
17. Compact upright freezers with 9.15AV + 316.7........................................ 0.323av + 316.7.
automatic defrost.
18. Compact chest freezers.............. 7.86AV + 107.8........................................ 0.278av + 107.8.
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AV = Total adjusted volume, expressed in ft\3\, as determined in appendices A and B of subpart B of 10 CFR part 430.
av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker.
Door Coefficients (e.g., K3ABI) are as defined in the following table.
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Products without a
Products with a transparent door Products without a transparent door
Door coefficient transparent door with a door-in- or door-in-door with added external
door doors
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K3ABI.............................. 1.10 1.0 1.0.
K4BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5A................................ 1.10 1.06 1 + 0.02 * (Nd-3).
K5ABI.............................. 1.10 1.06 1 + 0.02 * (Nd-3).
K7BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K9BI............................... 1.0 1.0 1 + 0.02 * (Nd-1).
K12................................ 1.0 1.0 1 + 0.02 * (Nd-1).
K13A............................... 1.10 1.0 1.0.
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Notes:
\1\ Nd is the number of external doors.
\2\ The maximum Nd values are 2 for K12, 3 for K9BI, and 5 for all other K values.
[[Page 3029]]
Table I.2--Energy Conservation Standards for Consumer Refrigerators, Refrigerator-Freezers, and Freezers With Corresponding Door Coefficient Table
[Compliance starting January 31, 2030]
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Equations for maximum energy use (kWh/yr)
Product class ---------------------------------------------------------------------------------------------------------------
Based on AV (ft\3\) Based on av (L)
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1. Refrigerator-freezers and 6.79AV + 191.3........................................ 0.240av + 191.3.
refrigerators other than all-
refrigerators with manual defrost.
1A. All-refrigerators--manual defrost... 5.77AV + 164.6........................................ 0.204av + 164.6.
2. Refrigerator-freezers--partial (6.79AV + 191.3)*K2................................... (0.240av + 191.3)*K2.
automatic defrost.
3. Refrigerator-freezers--automatic 6.86AV + 198.6 + 28I.................................. 0.242av + 198.6 + 28I.
defrost with top-mounted freezer.
3A. All-refrigerators--automatic defrost (6.01AV + 171.4)*K3A.................................. (0.212av + 171.4)*K3A.
4. Refrigerator-freezers--automatic (7.28AV + 254.9)*K4 + 28I............................. (0.257av + 254.9)*K4 + 28I.
defrost with side-mounted freezer.
5. Refrigerator-freezers--automatic (7.61AV + 272.6)*K5 + 28I............................. (0.269av + 272.6)*K5 + 28I.
defrost with bottom-mounted freezer.
6. Refrigerator-freezers--automatic 7.14AV + 280.0........................................ 0.252av + 280.0.
defrost with top-mounted freezer with
through-the-door ice service.
7. Refrigerator-freezers--automatic (7.31AV + 322.5)*K7................................... (0.258av + 322.5)*K7.
defrost with side-mounted freezer with
through-the-door ice service.
9. Upright freezers with automatic (7.33AV + 194.1)*K9 + 28I............................. (0.259av + 194.1)*K9 + 28I.
defrost.
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AV = Total adjusted volume, expressed in ft\3\, as determined in appendices A and B of subpart B of 10 CFR part 430.
Av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker.
Door Coefficients (e.g., K3A) are as defined in the following table.
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Products without a
Products with a transparent door Products without a transparent door
Door coefficient transparent door with a door-in- or door-in-door with added external
door doors
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K2................................. 1.0 1.0 1 + 0.02 * (Nd-1).
K4................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K3A................................ 1.10 1.0 1.0.
K5................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K7................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K9................................. 1.0 1.0 1 + 0.02 * (Nd-1).
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Notes:
\1\ Nd is the number of external doors.
\2\ The maximum Nd values are 2 for K2, and 5 for all other K values.
A. Benefits and Costs to Consumers
Table I.3 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of refrigerators, refrigerator-
freezers, and freezers, as measured by the average life-cycle cost
(``LCC'') savings and the simple payback period (``PBP'').\7\ The
average LCC savings are positive for all product classes for which a
standard is proposed, and the PBP is less than the average lifetime of
refrigerators, refrigerator-freezers, and freezers, which varies by
product class (see section IV.F.7 of this document).
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\7\ 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.3--Impacts of Energy Conservation Standards on Consumers of
Refrigerators, Refrigerator-Freezers, and Freezers
[The recommended TSL]
------------------------------------------------------------------------
Average LCC
Product class savings Simple payback
(2022$) period (years)
------------------------------------------------------------------------
PC 3.................................. 50.91 4.8
PC 5.................................. 55.23 5.6
PC 5BI................................ 91.13 2.1
PC 5A................................. 133.27 4.1
PC 7.................................. 142.56 1.6
PC 9.................................. 56.17 6.6
PC 10................................. N/A N/A
PC 11A (residential).................. 8.35 2.1
[[Page 3030]]
PC 11A (commercial)................... 3.16 3.2
PC 17................................. 36.86 4.1
PC 18................................. 23.55 4.1
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Note: The compliance year for the Recommended TSL (i.e., TSL 4) varies
by product class:
2029: PCs 5BI, 5A, 10, 11A, 17, and 18.
2030: PCs 3, 5, 7, and 9.
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 8
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\8\ All monetary values in this document are expressed in 2022
dollars.
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The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year (2023) through
the end of the analysis period, which is 30 years from the analyzed
compliance date.\9\ Using a real discount rate of 9.1 percent, DOE
estimates that the INPV for manufacturers of refrigerators,
refrigerator-freezers, and freezers in the case without amended
standards is $4.91 billion.\10\ Under the adopted standards, which
align with the Recommended TSL for refrigerators, refrigerator-
freezers, and freezers, DOE estimates the change in INPV to range from
-10.3 percent to -7.8 percent, which is approximately -$504.4 million
to -$383.5 million. In order to bring products into compliance with
amended standards, it is estimated that industry will incur total
conversion costs of $830.3 million.
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\9\ DOE's analysis period extends 30-years from the compliance
year. The analysis period ranges from 2023-2056 for the no-new-
standards case and all TSLs, except for TSL 4 (the Recommended TSL).
The analysis period for TSL 4 ranges from 2023-2058 for the product
classes listed in Table I.1 and 2023-2059 for the product classes
listed in Table I.2.
\10\ The no-new-standards case INPV of $4.91 billion reflects
the sum of discounted free cash flows from 2023-2056 (from direct
final rule publication to 30 years from the 2027 compliance date)
plus a discounted terminal value.
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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
DOE's analyses indicate that the adopted energy conservation
standards for refrigerators, refrigerator-freezers, and freezers would
save a significant amount of energy. Relative to the case without
amended standards, the lifetime energy savings for refrigerators,
refrigerator-freezers, and freezers purchased in the 30-year period
that begins in the anticipated year of compliance with amended
standards (2029-2058 for the product classes listed in Table I.1 and
2030-2059 for the product classes listed in Table I.2), amount to 5.6
quadrillion British thermal units (``Btu''), or quads.\11\ This
represents a savings of 11 percent relative to the energy use of these
products in the case without amended standards (referred to as the
``no-new-standards case'').
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\11\ 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 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the standards for refrigerators, refrigerator-freezers, and
freezers ranges from $9.0 billion (at a 7-percent discount rate) to
$27.0 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 refrigerators, refrigerator-
freezers, and freezers purchased in 2029-2058 for the product classes
listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
In addition, the adopted standards for refrigerators, refrigerator-
freezers, and freezers 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
100.8 million metric tons (``Mt'') \12\ of carbon dioxide
(``CO2''), 31.6 thousand tons of sulfur dioxide
(``SO2''), 186.1 thousand tons of nitrogen oxides
(``NOX''), 846.5 thousand tons of methane
(``CH4''), 1.0 thousand tons of nitrous oxide
(``N2O''), and 0.2 tons of mercury (``Hg'').\13\
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\12\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\13\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2023 (``AEO2023''). AEO2023 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 AEO2023 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''). DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(``IWG'').\14\ 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 $5.0 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.
---------------------------------------------------------------------------
\14\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG (``February 2021 SC-GHG TSD''). www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------
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 $3.4 billion using a 7-percent discount rate, and $9.8 billion using
a 3-percent
[[Page 3031]]
discount rate.\15\ DOE is currently only monetizing (for SO2
and NOX) PM2.5 precursor health benefits and (for
NOX) ozone precursor health benefits, but will continue to
assess the ability to monetize other effects such as health benefits
from reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------
\15\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------
Table I.4 summarizes the monetized benefits and costs expected to
result from the amended standards for refrigerators, refrigerator-
freezers, and freezers. There are other important unquantified effects,
including certain unquantified climate benefits, unquantified public
health benefits from the reduction of toxic air pollutants and other
emissions, unquantified energy security benefits, and distributional
effects, among others.
Table I.4--Summary of Monetized Benefits and Costs of Adopted Energy
Conservation Standards for Refrigerators, Refrigerator-Freezers, and
Freezers
[The recommended TSL]
------------------------------------------------------------------------
Billion
(2022$)
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 36.4
Climate Benefits *...................................... 5.0
Health Benefits **...................................... 9.8
---------------
Total Benefits [dagger]............................. 51.2
Consumer Incremental Product Costs [Dagger]............. 9.4
---------------
Net Benefits........................................ 41.8
Change in Producer Cashflow (INPV) [Dagger][Dagger]..... (0.50)-(0.38)
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 14.0
Climate Benefits * (3% discount rate)................... 5.0
Health Benefits **...................................... 3.4
---------------
Total Benefits [dagger]............................. 22.5
Consumer Incremental Product Costs [Dagger]............. 5.0
---------------
Net Benefits........................................ 17.5
Change in Producer Cashflow (INPV) [Dagger][Dagger]..... (0.50)-(0.38)
------------------------------------------------------------------------
Note: This table presents present value (in 2022$) of the costs and
benefits associated with refrigerators, refrigerator-freezers, and
freezers shipped in 2029-2058 for the product classes listed in Table
I.1 and shipped in 2030-2059 for the product classes listed in Table
I.2. These results include benefits which accrue after 2058/9 from the
products shipped in 2029/30-2058/9.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
discount rates; 95th percentile at 3-percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
shown; however DOE emphasizes the importance and value of considering
the benefits calculated using all four sets of SC-GHG estimates. To
monetize the benefits of reducing GHG emissions, this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
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.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life-
cycle costs analysis and national impact analysis as discussed in
detail below. See sections IV.F and IV.H of this document. DOE's
national impact analysis (``NIA'') includes all impacts (both costs
and benefits) along the distribution chain beginning with the
increased costs to the manufacturer to manufacture the product and
ending with the increase in price experienced by the consumer. DOE
also separately conducts a detailed analysis on the impacts on
manufacturers (the MIA). See section IV.J of this document. In the
detailed MIA, DOE models manufacturers' pricing decisions based on
assumptions regarding investments, conversion costs, cashflow, and
margins. The MIA produces a range of impacts, which is the rule's
expected impact on the INPV. The change in INPV is the present value
of all changes in industry cash flow, including changes in production
costs, capital expenditures, and manufacturer profit margins. Change
in INPV is calculated using the industry weighted average cost of
capital value of 9.1 percent that is estimated in the manufacturer
impact analysis (see chapter 12 of the direct final rule technical
support document (``TSD'') for a complete description of the industry
weighted average cost of capital). For refrigerators, refrigerator-
freezers, and freezers, those values are -$504 million to -$383
million. DOE accounts for that range of likely impacts in analyzing
whether a TSL is economically justified. See section V.C of this
document. DOE is presenting the range of impacts to the INPV under two
markup scenarios: the Preservation of Gross Margin scenario, which is
the manufacturer markup scenario used in the calculation of Consumer
Operating Cost Savings in this table, and the Preservation of
Operating Profit scenario, where DOE assumed manufacturers would not
be able to increase per-unit operating profit in proportion to
increases in manufacturer production costs. DOE includes the range of
estimated INPV in the above table, drawing on the MIA explained
further in section IV.J of this document, to provide additional
context for assessing the estimated impacts of this direct final rule
to society, including potential changes in production and consumption,
which is consistent with OMB's Circular A-4 and E.O. 12866. If DOE
were to include the INPV into the net benefit calculation for this
direct final rule, the net benefits would range from $41.3 billion to
$41.4 billion at 3-percent discount rate and would range from $17.0
billion to $17.1 billion at 7-percent discount rate. Parentheses ( )
indicate negative values.
[[Page 3032]]
The benefits and costs of the proposed 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.\16\
---------------------------------------------------------------------------
\16\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2022, 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 2022. Using the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in the
compliance year, that yields the same present value.
---------------------------------------------------------------------------
The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of refrigerators,
refrigerator-freezers, and freezers shipped in 2029-2058 for the
product classes listed in Table I.1 and shipped in 2030-2059 for the
product classes listed in Table I.2. The benefits associated with
reduced emissions achieved as a result of the adopted standards are
also calculated based on the lifetime of refrigerators, refrigerator-
freezers, and freezers shipped in 2029-2058 for the product classes
listed in Table I.1 and shipped in 2030-2059 for the product classes
listed in Table I.2. 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 IV.L of this document.
Table I.5 presents the total estimated monetized benefits and costs
associated with the proposed 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 $590.5 million per year in increased equipment costs,
while the estimated annual monetized benefits are $1.7 billion in
reduced equipment operating costs, $303.8 million in climate benefits,
and $410.6 million in health benefits. In this case, the net benefit
would amount to $1.8 billion per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $567.5 million per year in increased
equipment costs, while the estimated annual monetized benefits are $2.2
billion in reduced operating costs, $303.8 million in climate benefits,
and $592.9 million in health benefits. In this case, the net benefit
would amount to $2.5 billion per year.
Table I.5--Annualized Monetized Benefits and Costs of Adopted Standards for Refrigerators, Refrigerator-
Freezers, and Freezers
[TSL 4, the recommended TSL]
----------------------------------------------------------------------------------------------------------------
Million (2022$/year)
---------------------------------------------------------
Primary Low-net-benefits High-net-benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings....................... 2,200.5 2,023.9 2,326.6
Climate Benefits *.................................... 303.8 291.8 307.9
Health Benefits **.................................... 592.9 569.7 600.7
---------------------------------------------------------
Total Benefits [dagger]........................... 3,097.2 2,885.4 3,235.2
Consumer Incremental Product Costs [Dagger]........... 567.5 666.6 547.8
---------------------------------------------------------
Net Benefits...................................... 2,529.6 2,218.8 2,687.4
Change in Producer Cashflow (INPV) [Dagger][Dagger]... (49)-(37) (49)-(37) (49)-(37)
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings....................... 1,667.0 1,541.9 1,758.5
Climate Benefits * (3% discount rate)................. 303.8 291.8 307.9
Health Benefits **.................................... 410.6 395.8 415.7
---------------------------------------------------------
Total Benefits [dagger]........................... 2,381.4 2,229.5 2,482.0
Consumer Incremental Product Costs [Dagger]........... 590.5 677.9 569.6
---------------------------------------------------------
Net Benefits...................................... 1,790.9 1,551.6 1,912.5
Change in Producer Cashflow (INPV) [Dagger][Dagger]... (49)-(37) (49)-(37) (49)-(37)
----------------------------------------------------------------------------------------------------------------
Note: This table presents present value (in 2022$) of the costs and benefits associated with refrigerators,
refrigerator-freezers, and freezers shipped in 2029-2058 for the product classes listed in Table I.1 and
shipped in 2030-2059 for the product classes listed in Table I.2. These results include benefits which accrue
after 2056 from the products shipped in 2029-2058 for the product classes listed in Table I.1 and shipped in
2030-2059 for the product classes listed in Table I.2. The Primary, Low Net Benefits, and High Net Benefits
Estimates utilize projections of energy prices from the AEO2023 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.H.3 of this document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3-percent discount rate are shown; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane.
[[Page 3033]]
** 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 DOE does not have a single central SC-GHG point estimate.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life-cycle costs analysis and national
impact analysis as discussed in detail below. See sections IV.F and IV.H of this document. DOE's NIA includes
all impacts (both costs and benefits) along the distribution chain beginning with the increased costs to the
manufacturer to manufacture the product and ending with the increase in price experienced by the consumer. DOE
also separately conducts a detailed analysis on the impacts on manufacturers (the MIA). See section IV.J of
this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on assumptions regarding
investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts, which is the rule's
expected impact on the INPV. The change in INPV is the present value of all changes in industry cash flow,
including changes in production costs, capital expenditures, and manufacturer profit margins. The annualized
change in INPV is calculated using the industry weighted average cost of capital value of 9.1 percent that is
estimated in the manufacturer impact analysis (see chapter 12 of the direct final rule TSD for a complete
description of the industry weighted average cost of capital). For refrigerators, refrigerator-freezers, and
freezers, those values are -$48.7 million to -$37.0 million. DOE accounts for that range of likely impacts in
analyzing whether a TSL is economically justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin
scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings
in this table, and the Preservation of Operating Profit Markup scenario, where DOE assumed manufacturers would
not be able to increase per-unit operating profit in proportion to increases in manufacturer production costs.
DOE includes the range of estimated annualized change in INPV in the above table, drawing on the MIA explained
further in section IV.J of this document, to provide additional context for assessing the estimated impacts of
this direct final rule to society, including potential changes in production and consumption, which is
consistent with OMB's Circular A-4 and E.O. 12866. If DOE were to include the INPV into the annualized net
benefit calculation for this direct final rule, the annualized net benefits would range from $2,480.9 million
to $2,492.6 million at 3-percent discount rate and would range from $1,742.2 million to $1,753.9 million at 7-
percent discount rate. Parentheses ( ) indicate negative values.
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 Agreement 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 recommended standards 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 the maximum improvement in energy
efficiency that 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. The Secretary has further
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 that outweigh
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 refrigerators, refrigerator-freezers, and freezers is
$590.5 million per year in increased product costs, while the estimated
annual monetized benefits are $1.7 billion in reduced product operating
costs, $303.8 million in climate benefits, and $410.6 million in health
benefits. The net monetized benefit amounts to $1.8 billion 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.\17\ 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.
---------------------------------------------------------------------------
\17\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 5.6 quads (full-fuel cycle
(``FFC'')), the equivalent of the primary annual energy use of 37
million homes. In addition, they are projected to reduce CO2
emissions by 100.8 Mt. Based on these findings, DOE has determined the
energy savings from the standard levels adopted in this direct final
rule are ``significant'' within the meaning of 42 U.S.C. 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
TSD.\18\
---------------------------------------------------------------------------
\18\ The TSD is available in the docket for this rulemaking at
www.regulations.gov/docket/EERE-2017-BT-STD-0003/document.
---------------------------------------------------------------------------
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is
issuing this direct final rule amending the energy conservation
standards for refrigerators, refrigerator-freezers, and freezers.
Consistent with this authority, DOE is also simultaneously publishing
elsewhere in this Federal Register a NOPR proposing standards that are
identical to those contained in this direct final rule. See 42 U.S.C.
6295(p)(4)(A)(i).
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
refrigerators, refrigerator-freezers, and freezers.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. These products include refrigerators,
refrigerator-freezers, and freezers, the subject of this document. (42
U.S.C. 6292(a)(1)) EPCA prescribed energy conservation standards for
these products (42 U.S.C. 6295(b)(1)), and directed DOE to conduct
future rulemakings to determine whether to amend these standards. (42
U.S.C. 6295(b)(3)) EPCA further provides that, not later than 6 years
after the issuance of any final rule establishing or
[[Page 3034]]
amending a standard, DOE must publish either a notice of determination
that standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m)(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 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(Ir)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test
procedures for refrigerators, refrigerator-freezers, and freezers
appear at 10 CFR part 430, subpart B, appendix A, Uniform Test Method
for Measuring the Energy Consumption of Refrigerators, Refrigerator-
Freezers, and Miscellaneous Refrigeration Products (``appendix A''),
and appendix B, Uniform Test Method for Measuring the Energy
Consumption of Freezers (``appendix B'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including refrigerators,
refrigerator-freezers, and freezers. 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)(B))
Moreover, DOE may not prescribe a standard (1) for certain
products, including refrigerators, refrigerator-freezers, and freezers,
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))
EPCA specifies requirements when promulgating an energy
conservation standard for a covered product that has two or more
subcategories. A rule prescribing an energy conservation standard for a
type (or class) of product 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 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, final rules for new or amended energy conservation standards
promulgated after July 1, 2010, are 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,
[[Page 3035]]
adopt a separate standard for such energy use for that product. (42
U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures and standards
for refrigerators, refrigerator-freezers, and freezers address standby
mode and off mode energy use, as do the amended standards adopted in
this direct final rule.
Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE
authority to issue a final rule (i.e., a ``direct final rule'')
establishing an energy conservation standard upon receipt of a
statement submitted jointly by interested persons that are fairly
representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates),
as determined by the Secretary, that contains recommendations with
respect to an energy or water conservation standard. (42 U.S.C.
6295(p)(4)) Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also
determine whether a jointly-submitted recommendation for an energy or
water conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable.
The direct final rule must be published simultaneously with a NOPR
that proposes an energy or water conservation standard that is
identical to the standard established in the direct final rule, and DOE
must provide a public comment period of at least 110 days on this
proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) While DOE typically provides a
comment period of 60 days on proposed standards, for a NOPR
accompanying a direct final rule, DOE provides a comment period of the
same length as the comment period on the direct final rule--i.e., 110
days. Based on the comments received during this period, the direct
final rule will either become effective, or DOE will withdraw it not
later than 120 days after its issuance if: (1) one or more adverse
comments is received, and (2) DOE determines that those comments, when
viewed in light of the rulemaking record related to the direct final
rule, may provide a reasonable basis for withdrawal of the direct final
rule under 42 U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B), or any other
applicable law. (42 U.S.C. 6295(p)(4)(C)) Receipt of an alternative
joint recommendation may also trigger a DOE withdrawal of the direct
final rule in the same manner. (Id.)
DOE has previously explained its interpretation of its direct final
rule authority. In a final rule amending the Department's ``Procedures,
Interpretations and Policies for Consideration of New or Revised Energy
Conservation Standards for Consumer Products'' at 10 CFR part 430,
subpart C, appendix A, DOE noted that it may issue standards
recommended by interested persons that are fairly representative of
relative points of view as a direct final rule when the recommended
standards are in accordance with 42 U.S.C. 6295(o) or 6313(a)(6)(B), as
applicable. 86 FR 70892, 70912 (Dec. 13, 2021). But the direct final
rule provision in EPCA does not impose additional requirements
applicable to other standards rulemakings, which is consistent with the
unique circumstances of rules issued as consensus agreements under
DOE's direct final rule authority. Id. DOE's discretion remains bounded
by its statutory mandate to adopt a standard that results in the
maximum improvement in energy efficiency that is technologically
feasible and economically justified--a requirement found in 42 U.S.C.
6295(o). Id. As such, DOE's review and analysis of the Joint Agreement
is limited to whether the recommended standards satisfy the criteria in
42 U.S.C. 6295(o).
B. Background
1. Current Standards
In a final rule published on September 15, 2011 (``September 2011
Final Rule''), DOE prescribed the current energy conservation standards
for refrigerators, refrigerator-freezers, and freezers manufactured on
and after September 15, 2014. 76 FR 57516. These standards are set
forth in DOE's regulations at 10 CFR 430.32(a).
2. Current Test Procedure
On December 23, 2019, DOE published a test procedure NOPR
(``December 2019 TP NOPR'') proposing to amend residential
refrigerator, refrigerator-freezer, and freezer test procedure. 84 FR
70842. On October 12, 2021, DOE published a test procedure final rule
(``October 2021 TP Final Rule'') establishing test procedures for
refrigerators, refrigerator-freezers, and freezers, at 10 CFR part 430,
subpart B, appendices A (``appendix A'') and B (``appendix B''). 86 FR
56790. The test procedure adopted the latest version of the relevant
industry standard published by the Association of Home Appliance
Manufacturers (``AHAM''), updated in 2019, AHAM Standard HRF-1,
``Energy and Internal Volume of Refrigerating Appliances'' (``HRF-1-
2019''). 10 CFR 430.3(i)(4). The standard levels proposed in the NOPR
are based on the annual energy use (``AEU'') metrics as measured
according to appendices A and B.
History of Standards Rulemaking for Consumer Refrigerators,
Refrigerator-Freezers, and Freezers
The National Appliance Energy Conservation Act of 1987 (``NAECA''),
Public Law 100-12, amended EPCA to establish prescriptive standards for
refrigeration products, with requirements that DOE conduct two cycles
of rulemakings to determine whether to amend these standards (42 U.S.C.
6295 (b)(1), (2), (3)(A)(i), and (3)(B)-(C)). DOE completed the first
of these rulemaking cycles in 1989 and 1990 by adopting amended
performance standards for all refrigeration products manufactured on or
after January 1, 1993. 54 FR 47916 (November 17, 1989); 55 FR 42845
(October 24, 1990). DOE completed a second rulemaking cycle to amend
the standards for refrigeration products by issuing a final rule in
1997, which adopted the current standards for these products. 62 FR
23102 (April 28, 1997).
In 2005, DOE granted a petition, submitted by a coalition of state
governments, utility companies, consumer and low-income advocacy
groups, and environmental and energy efficiency organizations,
requesting a rulemaking to amend the standards for residential
refrigerator-freezers. DOE then conducted limited analyses to examine
the technological and economic feasibility of amended standards at the
ENERGY STAR levels that were in effect for 2005 for the two most
popular product classes of refrigerator-freezers. These analyses not
only identified potential energy savings, benefits, and burdens from
such standards, but also assessed other issues related to them.
DOE initiated a rulemaking and also published a notice announcing
the availability of the framework document and a public meeting to
discuss the document in September 2008. It also requested public
comment on the published document. 73 FR 54089 (September 18, 2008).
The framework document described the procedural and analytical
approaches that DOE anticipated using to evaluate energy conservation
standards for refrigeration products and identified various issues to
resolve during the rulemaking. DOE published a final rule on September
15, 2011, to satisfy the statutory requirement that DOE publish a final
rule to determine whether to amend the standards for refrigeration
products manufactured in 2014. (42 U.S.C. 6295(b)(4)) The limited 2005
analyses served as background for the more extensive analysis conducted
for final
[[Page 3036]]
rule published on September 15, 2011. 76 FR 57516.
4. The Joint Agreement
On September 25, 2023, DOE received a joint statement (i.e., the
Joint Agreement) recommending standards for refrigerators,
refrigerator-freezers, and freezers that was submitted by groups
representing manufacturers, energy and environmental advocates,
consumer groups, and a utility.\19\ In addition to the recommended
standards for refrigerators, refrigerator-freezers, and freezers, the
Joint Agreement also included separate recommendations for several
other covered products.\20\ And, while acknowledging that DOE may
implement these recommendations in separate rulemakings, the Joint
Agreement also stated that the recommendations were recommended as a
complete package and each recommendation is contingent upon the other
parts being implemented. DOE understands this to mean that the Joint
Agreement is contingent upon DOE initiating rulemaking processes to
adopt all of the recommended standards in the agreement. That is
distinguished from an agreement where issuance of an amended energy
conservation standard for a covered product is contingent on issuance
of amended energy conservation standards for the other covered
products. If the Joint Agreement were so construed, it would conflict
with the anti-backsliding provision in 42 U.S.C. 6295(o)(1), because it
would imply the possibility that, if DOE were unable to issue an
amended standard for a certain product, it would have to withdraw a
previously issued standard for one of the other products. The anti-
backsliding provision, however, prevents DOE from withdrawing or
amending an energy conservation standard to be less stringent. As a
result, DOE will be proceeding with individual rulemakings that will
evaluate each of the recommended standards separately under the
applicable statutory criteria. The Joint Agreement recommends amended
standard levels for refrigerators, refrigerator-freezers, and freezers
as presented in Table II.3. (Joint Agreement, No. 103 at p. 4) Details
of the Joint Agreement recommendations for other products are provided
in the Joint Agreement posted in the docket.\21\
---------------------------------------------------------------------------
\19\ The signatories to the Joint Agreement include AHAM,
American Council for an Energy-Efficient Economy, Alliance for Water
Efficiency, Appliance Standards Awareness Project, Consumer
Federation of America, Consumer Reports, Earthjustice, National
Consumer Law Center, Natural Resources Defense Council, Northwest
Energy Efficiency Alliance, and Pacific Gas and Electric Company.
Members of AHAM's Major Appliance Division that manufacture the
affected products include: Alliance Laundry Systems, LLC; Asko
Appliances AB; Beko US Inc.; Brown Stove Works, Inc.; BSH; Danby
Products, Ltd.; Electrolux Home Products, Inc.; Elicamex S.A. de
C.V.; Faber; Fotile America; GEA, a Haier Company; L'Atelier Paris
Haute Design LLG; LG Electronics USA; Liebherr USA, Co.; Midea
America Corp.; Miele, Inc.; Panasonic Appliances Refrigeration
Systems (PAPRSA) Corporation of America; Perlick Corporation;
Samsung; Sharp Electronics Corporation; Smeg S.p.A; Sub-Zero Group,
Inc.; The Middleby Corporation; U-Line Corporation; Viking Range,
LLC; and Whirlpool.
\20\ The Joint Agreement contained recommendations for 6 covered
products: refrigerators, refrigerator-freezers, and freezers;
clothes washers; clothes dryers; dishwashers; cooking products; and
miscellaneous refrigeration products.
\21\ The term sheet is available in the docket at:
www.regulations.gov/document/EERE-2017-BT-STD-0003-0103.
Table II.3--Recommended Amended Energy Conservation Standards for Residential Refrigerators, Refrigerator-Freezers, and Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product class Level (Based on AV (ft\3\)) Compliance date
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Refrigerator-freezers and 6.79AV + 191.3........................................ January 31, 2030.
refrigerators other than all-
refrigerators with manual defrost.
1A. All-refrigerators--manual defrost... 5.77AV + 164.6........................................
2. Refrigerator-freezers--partial (6.79AV + 191.3)*K2...................................
automatic defrost.
3. Refrigerator-freezers--automatic 6.86AV + 198.6 +28I...................................
defrost with top-mounted freezer.
3A. All-refrigerators--automatic defrost (6.01AV + 171.4)*K3A..................................
4. Refrigerator-freezers--automatic 7.28AV + 254.9........................................ January 31, 2030.
defrost with side-mounted freezer.
5. Refrigerator-freezers--automatic (7.61AV +272.6)*K5 + 28I.............................. January 31, 2030.
defrost with bottom-mounted freezer.
5A. Refrigerator-freezer--automatic (7.76AV + 351.9)*K5A.................................. January 31, 2029.
defrost with bottom-mounted freezer
with through-the-door ice service.
6. Refrigerator-freezers--automatic 7.14AV + 280.0........................................ January 31, 2030.
defrost with top-mounted freezer with
through-the-door ice service.
7. Refrigerator-freezers--automatic (7.31AV + 322.5)*K7................................... January 31, 2030.
defrost with side-mounted freezer with
through-the-door ice service.
8. Upright freezers with manual defrost. 5.57AV + 193.7........................................ January 31, 2029.
9. Upright freezers with automatic 7.33AV + 194.1 + 28I.................................. January 31, 2030.
defrost.
10. Chest freezers and all other 7.29AV + 107.8........................................ January 31, 2029.
freezers except compact freezers.
10A. Chest freezers with automatic 10.24AV + 148.1....................................... January 31, 2029.
defrost.
11. Compact refrigerator-freezers and 7.68AV + 214.5........................................ January 31, 2029.
refrigerators other than all-
refrigerators with manual defrost.
11A. Compact all-refrigerators--manual 6.66AV + 186.2........................................
defrost.
12. Compact refrigerator-freezers-- (5.32AV + 302.2)*K12.................................. January 31, 2029.
partial automatic defrost.
13. Compact refrigerator-freezers-- 10.62AV + 305.3 +28I.................................. January 31, 2029.
automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerators-- (8.25AV + 233.4)*K13A.................................
automatic defrost.
14. Compact refrigerator-freezers-- 6.14AV + 411.2 + 28I..................................
automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers-- 10.62AV + 305.3 + 28I.................................
automatic defrost with bottom-mounted
freezer.
16. Compact upright freezers with manual 7.35AV + 191.8........................................ January 31, 2029.
defrost.
17. Compact upright freezers with 9.15AV + 316.7........................................ January 31, 2029.
automatic defrost.
18. Compact chest freezers.............. 7.86AV + 107.8........................................ January 31, 2029.
[[Page 3037]]
3-BI. Built-in refrigerator-freezer-- 8.24AV + 238.4 + 28I.................................. January 31, 2029.
automatic defrost with top-mounted
freezer.
3A-BI. Built-in All-refrigerators-- (7.22AV + 205.7)*K3ABI................................
automatic defrost.
4-BI. Built-In Refrigerator-freezers-- 8.79AV + 307.4 + 28I.................................. January 31, 2029.
automatic defrost with side-mounted
freezer.
5-BI. Built-In Refrigerator-freezers-- (8.65AV + 309.9)*K5BI + 28I........................... January 31, 2029.
automatic defrost with bottom-mounted
freezer.
5A-BI. Built-in refrigerator-freezer-- (8.21AV + 370.7)*K5ABI................................ January 31, 2029.
automatic defrost with bottom-mounted
freezer with through-the-door ice
service.
7-BI. Built-In Refrigerator-freezers-- (8.82AV + 384.1)*K7BI................................. January 31, 2029.
automatic defrost with side-mounted
freezer.
9-BI. Built-In Upright freezers with 9.37AV + 247.9 + 28I.................................. January 31, 2029.
automatic defrost.
9A-BI. NEW PRODUCT CLASS: Upright built- 9.86AV + 288.9........................................ January 31, 2029.
in freezer w/auto defrost and through-
door-ice.
--------------------------------------------------------------------------------------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in appendices A and B of subpart B of 10 CFR part 430.
Av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker. Door Coefficients (e.g., K3A) are as defined in
Table I.2.
----------------------------------------------------------------------------------------------------------------
Products without a
Products with a transparent door Products without a transparent door
Door coefficient transparent door with a door-in- or door-in-door with added external
door doors
----------------------------------------------------------------------------------------------------------------
K2................................. N/A N/A 1 + 0.02 * (Nd-1).
K3A................................ 1.10 N/A N/A.
K3ABI.............................. 1.10 N/A N/A.
K13A............................... 1.10 N/A N/A.
K4................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K4BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K5BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5A................................ 1.10 1.06 1 + 0.02 * (Nd-3).
K5ABI.............................. 1.10 1.06 1 + 0.02 * (Nd-3).
K7................................. 1.10 1.06 1 + 0.02 * (Nd-2).
K7BI............................... 1.10 1.06 1 + 0.02 * (Nd-2).
K9................................. N/A N/A 1 + 0.02 * (Nd-1).
K9BI............................... N/A N/A 1 + 0.02 * (Nd-1).
K12................................ N/A N/A 1 + 0.02 * (Nd-1).
----------------------------------------------------------------------------------------------------------------
Note: Nd is the number of external doors.
DOE notes that it was conducting a rulemaking to consider amending
the standards for refrigerators, refrigerator-freezers, and freezers
when the Joint Agreement was submitted. As part of that process, on
February 27, 2023, DOE published a NOPR and announced a public webinar
(``February 2023 NOPR'') seeking comment on its proposed amended
standard to inform its decision consistent with its obligations under
EPCA and the Administrative Procedure Act (``APA''). 88 FR 12452. DOE
held a public webinar on April 11, 2023, to discuss and receive
comments on the NOPR and NOPR TSD. The NOPR TSD is available at:
www.regulations.gov/document/EERE-2017-BT-STD-0003-0045.
Although DOE is adopting the Joint Agreement as a direct final rule
and no longer proceeding with its own rulemaking, DOE did consider
relevant comments, data, and information obtained during that
rulemaking process in determining whether the recommended standards
from the Joint Agreement are in accordance with 42 U.S.C. 6295(o). Any
discussion of comments, data, or information in this direct final rule
that were obtained during DOE's own prior rulemaking will include a
parenthetical reference that provides the location of the item in the
public record.\22\
---------------------------------------------------------------------------
\22\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for refrigerators, refrigerator-
freezers, and freezers (Docket No. EERE-2017-BT-STD-0003, which is
maintained at www.regulations.gov). The references are arranged as
follows: (commenter name, comment docket ID number, page of that
document).
---------------------------------------------------------------------------
III. General Discussion
DOE is issuing this direct final rule after determining that the
recommended standards submitted in the Joint Agreement meet the
requirements in 42 U.S.C. 6295(p)(4). More specifically, DOE has
determined that the recommended standards were submitted by interested
persons that are fairly representative of relevant points of view and
the recommended standards satisfy the criteria in 42 U.S.C. 6295(o).
A. Scope of Coverage
This direct final rule covers those consumer products that meet the
definition of ``refrigerator, refrigerator-freezer, and freezer'' as
codified at 10 CFR 430.2.
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used, or by capacity, or based upon performance-related features that
justify a higher or lower standard. (42 U.S.C. 6295(q)) In making a
determination whether a performance-related feature justifies a
[[Page 3038]]
different standard, DOE must consider such factors as the utility of
the feature to the consumer and other factors DOE determines are
appropriate. Id.
The Joint Agreement proposed special door and multi-door energy
allowances for product classes if manufacturers offer models with those
features. Energy allowances applied to energy use equations correspond
to performance-related features that would then justify new product
classes for those configurations with special door and multi-door
designs. The proposed approach also embeds within the energy use
equations the difference between classes that are otherwise identical
except for presence of an icemaker, using a logical variable I (equal
to 1 for a product with an icemaker and equal to 0 for a product
without an icemaker) multiplied by the constant icemaker energy use
adder.
The structure simplification and amendments in the Joint Agreement
are consistent with those proposed by DOE in the February 2023 NOPR.
Based on the comments received in response to the February 2023 NOPR
and DOE's evaluation of the Joint Agreement, the direct final rule
adopts these changes. See section IV.A.1 of this document for further
detail and discussion regarding the product classes analyzed in this
direct final rule.
B. Fairly Representative of Relevant Points of View
Under the direct final rule provision in EPCA, recommended energy
conservation standards must be submitted 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 DOE. (42 U.S.C. 6295(p)(4)(A))
With respect to this requirement, DOE notes that the Joint Agreement
included a trade association, AHAM, which represents 20 manufacturers
of refrigerators, refrigerator-freezers, and freezers. The Joint
Agreement also included environmental and energy-efficiency advocacy
organizations, consumer advocacy organizations, and a gas and electric
utility company. Additionally, DOE received a letter in support of the
Joint Agreement from the States of New York, California, and
Massachusetts (see comment No. 104). DOE also received a letter in
support of the Joint Agreement from the gas and electric utility,
SDG&E, and the electric utility, SCE (see comment No. 107). As a
result, DOE has determined that the Joint Agreement was submitted by
interested persons who are fairly representative of relevant points of
view.
C. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A
to 10 CFR part 430, subpart C (``Process Rule'').
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 the Process Rule. Section IV.B of this document
discusses the results of the screening analysis for refrigerators,
refrigerator-freezers, and freezers, 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 proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(o)(2)(A)) Accordingly, in
the engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
refrigerators, refrigerator-freezers, and freezers, 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.
D. Energy Savings
1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to refrigerators, refrigerator-
freezers, and freezers purchased in the 30-year period that begins in
the year of compliance with the amended standards (2027-2056 for all
TSLs other than TSL 4; for TSL 4, 2029-2058 for the product classes
listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2).\23\ The savings are measured over the entire lifetime of
products 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 amended energy conservation standards.
---------------------------------------------------------------------------
\23\ 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 amended
standards for refrigerators, refrigerator-freezers, and freezers. 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 full-fuel cycle (``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.\24\ DOE's
approach is based on the calculation of an FFC multiplier for each of
the energy types used by covered products or
[[Page 3039]]
equipment. For more information on FFC energy savings, see section
IV.H.2 of this document.
---------------------------------------------------------------------------
\24\ 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.\25\ 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. However, residential
refrigerators, freezers, and refrigerator-freezers have loads that are
more consistent throughout the year. 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.
---------------------------------------------------------------------------
\25\ 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 5.6 quads (FFC),
the equivalent of the primary annual energy use of 37 million homes.
Based on the amount of FFC savings, the corresponding reduction in
emissions, and need to confront the global climate crisis, 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).
E. 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 amended standards on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed 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 payback period (``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 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
[[Page 3040]]
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 withdraw the direct final rule. DOE will also publish and
respond to the DOJ's comments in the Federal Register in a separate
document.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 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 benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The adopted standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases (``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 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 refrigerators, refrigerator-freezers, and
freezers. Separate subsections address each component of DOE's
analyses, including relevant comments DOE received during its separate
rulemaking to amend the energy conservation standards for
refrigerators, refrigerator-freezers, and freezers prior to receiving
the Joint Agreement.
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 national impacts analysis uses a
second spreadsheet set that provides shipments projections and
calculates national energy savings and net present value of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (``GRIM''), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this rulemaking: www.regulations.gov/docket/EERE-2017-BT-STD-0003. 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 refrigerators,
refrigerator-freezers, and freezers. 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
The Joint Agreement specifies 32 product classes for refrigerators,
refrigerator-freezers, and freezers. (Joint Agreement, No. 103 at p.
15-16) In particular, the Joint Agreement recommends a consolidated
product class representation which incorporates icemaker energy adders
and door allowances into the energy use equations for product classes
in which they are applicable. In addition, the Join Agreement proposes
a new product class--upright built-in freezers with automatic defrost
and through-the-door ice service (``9A-BI''). (Id.) In this direct
final rule, DOE is adopting the product classes from the Joint
Agreement, as listed in Table IV.1.
[[Page 3041]]
Table IV.1--Recommended Amended Energy Conservation Standards for
Residential Refrigerators, Refrigerator-freezers, and Freezers
------------------------------------------------------------------------
Product class
-------------------------------------------------------------------------
1. Refrigerator-freezers and refrigerators other than all-refrigerators
with manual defrost.
1A. All-refrigerators--manual defrost.
2. Refrigerator-freezers--partial automatic defrost.
3. Refrigerator-freezers--automatic defrost with top-mounted freezer.
3A. All-refrigerators--automatic defrost.
4. Refrigerator-freezers--automatic defrost with side-mounted freezer.
5. Refrigerator-freezers--automatic defrost with bottom-mounted freezer.
5A. Refrigerator-freezer--automatic defrost with bottom-mounted freezer
with through-the-door ice service.
6. Refrigerator-freezers--automatic defrost with top-mounted freezer
with through-the-door ice service.
7. Refrigerator-freezers--automatic defrost with side-mounted freezer
with through-the-door ice service.
8. Upright freezers with manual defrost.
9. Upright freezers with automatic defrost.
10. Chest freezers and all other freezers except compact freezers.
10A. Chest freezers with automatic defrost.
11. Compact refrigerator-freezers and refrigerators other than all-
refrigerators
with manual defrost.
11A. Compact all-refrigerators--manual defrost.
12. Compact refrigerator-freezers--partial automatic defrost.
13. Compact refrigerator-freezers--automatic defrost with top-mounted
freezer.
13A. Compact all-refrigerators--automatic defrost
14. Compact refrigerator-freezers--automatic defrost with side-mounted
freezer.
15. Compact refrigerator-freezers--automatic defrost with bottom-mounted
freezer.
16. Compact upright freezers with manual defrost.
17. Compact upright freezers with automatic defrost.
18. Compact chest freezers.
3-BI. Built-in refrigerator-freezer--automatic defrost with top-mounted
freezer.
3A-BI. Built-in All-refrigerators--automatic defrost.
4-BI. Built-In Refrigerator-freezers--automatic defrost with side-
mounted freezer.
5-BI. Built-In Refrigerator-freezers--automatic defrost with bottom-
mounted freezer.
5A-BI. Built-in refrigerator-freezer--automatic defrost with bottom-
mounted freezer with through-the-door ice service.
7-BI. Built-In Refrigerator-freezers--automatic defrost with side-
mounted freezer.
9-BI. Built-In Upright freezers with automatic defrost.
9A-BI. NEW PRODUCT CLASS:
Upright built-in freezer w/auto defrost and through-door-ice.
------------------------------------------------------------------------
DOE further notes that product classes established through EPCA's
direct final rule authority are not subject to the criteria specified
at 42 U.S.C. 6295(q)(1) for establishing product classes. Nevertheless,
in accordance with 42 U.S.C. 6295(o)(4)--which is applicable to direct
final rules--DOE has concluded that the standards adopted in this
direct final rule will not result in the unavailability in any covered
product type (or class) of performance characteristics, features,
sizes, capacities, and volumes that are substantially the same as those
generally available in the United States currently.\26\ DOE's findings
in this regard are discussed in detail in section V.B.4 of this
document.
---------------------------------------------------------------------------
\26\ EPCA specifies that DOE may not prescribe an amended or new
standard if the Secretary finds (and publishes such finding) that
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 at the time of the
Secretary's finding. (42 U.S.C. 6295(o)(4))
---------------------------------------------------------------------------
a. Product Classes With Automatic Icemakers
The Joint Agreement includes a proposed simplification of maximum
allowable energy and would express the maximum allowable energy use for
both icemaking and non-icemaking classes in the same equation, thus
consolidating the presentation of classes and their energy conservation
standards. The energy use equations will, for those classes that may or
may not have an icemaker, include a term equal to the icemaking energy
use adder multiplied by a factor that is defined to equal 1 for
products with icemakers and to equal zero for products without
icemakers. This approach does not combine classes that are the same
other than the presence of an icemaker, but does simplify the list of
classes and representation of their maximum allowable energy use,
providing for each set of classes with and without ice makers a single
equation for maximum energy use. (88 FR 12452)
DOE is adopting the Joint Agreement proposal to express the maximum
allowable energy use for any set of classes differing only in whether
the class includes an icemaker or not within a single equation. The
single equation does this by including the icemaker energy use adder
multiplied by logical variable I that is set equal to 1 for a product
with an icemaker present and 0 for a product without an icemaker.
b. Special Door and Multi-Door Designs
The Joint Agreement made recommendations to establish new product
classes for models that implement special and multi-door designs. The
standards for these product classes include energy allowances (i.e.,
specific increases in maximum allowable energy use) corresponding to
the specific performance-related features (i.e., door-in-door designs,
transparent doors, and multi-door designs). The allowances include a 2-
percent energy use allowance for each externally opening door in excess
of the typical minimum for the class, a 6-percent total energy use
allowance for a product with a door-in-door feature implemented in one
or more of its doors, and a 10-percent total energy use allowance for a
product with a transparent door or doors.
[[Page 3042]]
In this direct final rule, DOE is implementing the recommended
special door and multi-door energy allowances. DOE's direct rulemaking
authority under 42 U.S.C. 6295(p)(4) is constrained only by the
requirements of 42 U.S.C. 6295(o), which does not include the product
class requirements in 42 U.S.C. 6295(q). DOE is relying on the product
classes provided in the Joint Agreement for consideration in this rule,
but DOE notes that special doors (i.e., transparent doors and door-in-
door features) and multi-door setups constitute performance-related
features that provide consumer utility when implemented. Transparent
doors allow for partial view into the interior of fresh food
compartments without the need for a door opening. Door-in-door features
generally allow for access to a partially separated fresh food
compartment without the need to fully expose the main interior fresh
food compartment. Multi-door setups provide at least one additional
externally opening door accessing either an existing compartment or a
separate compartment, thus providing additional options for storage and
access to food for the consumer.
Furthermore, DOE's analysis of these features suggests that special
door and multi-door designs impact energy usage with some combinations
accounting for additional energy consumption of up to 25 percent (based
on CERA simulations).\27\ DOE notes that the additional energy usage
results from additional thermal load associated with additional gasket
length necessary for multi-door and door-in-door features, and
associated with the higher thermal conductivity of transparent doors
compared to solid doors of the same size. DOE also proposed similar
special door and multi-door energy allowances in the February 2023 NOPR
and finds that the recommended allowances in the Joint Agreement are
justifiable on a similar basis in light of the analysis DOE performed
to develop the allowances proposed in the NOPR. See chapter 5 of the
direct final rule TSD for more information on DOE's analysis of special
door and multi-door features.
---------------------------------------------------------------------------
\27\ CERA is an updated version of the Environmental Protection
Agency's Refrigerator Analysis (``ERA'') program. Earlier versions
have been used in previous refrigerator, refrigerator-freezer, and
freezer energy conservation standards rulemaking. CERA allows for
the simulation of thermal load on refrigerators, refrigerator-
freezers, and freezers based of the inputs given for various
parameters including cabinet design, compartment dimensions, door
design, operating temperatures, controls, anti-sweat heat, and more.
More information regarding the software is found in the direct final
rule TSD.
---------------------------------------------------------------------------
For the reasons previously discussed, DOE is adopting the Joint
Agreement recommendations to establish new product classes for models
that implement special and multi-door designs.
Energy Use Allowance--Application
AHAM, Sub Zero Group, Inc. (``Sub Zero''), and Samsung also
recommended that DOE apply the door coefficient to PC 4, PC 4-BI, PC 9,
and PC 9-BI, as these classes have products offering multi-door setups
or special doors that provide similar customer utility. (AHAM, No. 69
at p. 8; Sub Zero, No. 77 at p. 4; Samsung, No. 78 at p. 3) True
Manufacturing (``TRUE'') similarly stated that PC 4I and PC 4, and any
other product classes with transparent doors, should have the same
transparent door allowance as PC 5A and PC 5. (TRUE, No. 57 at pp. 1-2)
DOE's assessment regarding the energy impact of designs featuring
multi-door and special door setups warranted the proposal of energy
allowances for classes where such features are offered. DOE reviewed
the market and requested input from commenters related to existing
models on the market in an effort to assess the prevalence of multi-
door designs or special doors in products on the market today and
concluded that there likely exist such models in PC 4I, PC 4I-BI, PC 9,
and PC 9-BI that implement multi-door setups, special doors, or both.
Therefore, DOE is adopting the multi-door and transparent door energy
allowances for PC 4, PC 4I, PC 4-BI, PC 4I-BI, PC 9, and PC 9-BI
consistent with feature availability. PC 4, PC 4I, PC 4-BI, and PC 4I-
BI will be eligible for transparent door and multi-door allowances,
while PC 9, and PC 9-BI will be eligible for the multi-door allowance.
The magnitude and application of the allowances adopted for the
aforementioned product classes are consistent with those recommended in
the Joint Agreement. DOE notes that PC 4 and PC 4-BI will be eligible
for a 2 percent allowance for each additional door for products without
a transparent door or door-in-door with added external doors, a 6
percent allowance for products without a transparent door with a door-
in-door, or a 10 percent transparent door allowance for the use of a
qualifying transparent door. PC 9 and PC 9-BI will be eligible for a 2
percent allowance for each additional door up to two additional doors.
Energy Use Allowance--Definitions
The Joint Agreement includes the following recommended definition
for a transparent door:
Transparent door means a door for which 40 percent or more
of the surface area--as determined based on the area of the transparent
portion of the door divided by the product of the maximum width and
height dimension of the door--is transparent to allow viewing into the
refrigerated compartment.
Conceptually, the parties recommend that DOE clarify that
products with only very small door or drawers that are transparent
should not be included in this definition--i.e., the door must be large
enough to justify the allowance.
Upon further consideration of the February 2023 NOPR proposed
transparent door definition, the feedback received from stakeholders,
and the Joint Agreement submitted by interested parties, including
AHAM, DOE conducted further market research into available models with
transparent panels, generating a list of models from various
manufacturers and product classes representative of the units currently
on the market that implement transparent doors. From this list, DOE
determined transparent panel and door area based on product literature,
in-person measurements, or use of scaled photographs. DOE then
determined the percentage of the door covered by the transparent area
for each model considered. DOE found that the transparent door on a
French door configuration typically had roughly 40 percent or more of
the total outer door area transparent, consistent with the percentage
recommended in the Joint Agreement. Other configurations, such as two
door bottom-mount refrigerator-freezers and compact refrigerators had
54 percent or more of their outer door area transparent. Based on this
assessment and consideration of the Joint Agreement recommendations,
DOE is adopting a modified definition from the February 2023 NOPR for
transparent doors to better align with the products on the market, as
follows:
Transparent door means an external fresh food compartment door
which meets the following criteria:
The area of the transparent portion of the door is at
least 40 percent of the area of the door.
The area of the door is at least 50 percent of the sum of
the areas of all the external doors providing access to the fresh food
compartments and cooler compartments.
For the purposes of this evaluation, the area of a door is
determined as the product of the maximum height and maximum width
dimensions of the door, not considering potential extension of flaps
used to provide a seal to adjacent doors.
[[Page 3043]]
DOE notes that this amended transparent door definition not only
aligns with the typical implementation on the market, as previously
described, but also is a more straightforward approach compared to
those recommended and referenced by commenters. Specifically, DOE
expects that the suggested approach based on the internal cabinet
dimensions has some potential for questions about interpretation, given
the fact that the interior dimensions could vary from the front of the
cabinet to the rear. This could lead to varying internal cabinet area
determinations. Therefore, in order to eliminate this potential
variation, DOE is adopting the above definition and approach that
simplifies the determination of the transparent door area by measuring
and determining the area of the transparent portion divided by the
product of the maximum height and width dimensions of the door.
Energy Use Allowance--Summary
In summary, in this direct final rule DOE is adopting the multi-
door and special door energy use allowances as proposed in the Joint
Agreement, with the specified amendments as previously discussed.
c. Addition of Product Class 9A-BI
The Joint Agreement recommends the addition of a new product class
9A-BI (i.e., built-in upright freezers with automatic defrost and with
through-the-door ice service) and specific energy efficiency standards
for the new product class. The current energy conservation standards
for freezers do not include a separate product class for products of
this configuration, and DOE has not previously considered establishing
a separate product class for them because it has not been aware of the
existence of such products on the market, nor has it previously been
notified by any manufacturer of the potential introduction of such a
product. Under the current product class structure, any such product
would most appropriately fit into current class 9I-BI (i.e., built-in
upright freezers with automatic defrost with an automatic icemaker),
since there is no class that fits this description and also has
through-the-door ice service. Hence, in the absence of a product class
for this configuration, such products would be subject to the current
PC 9I-BI standards, which would, under the approach for designating
classes and standards provided in this direct final rule, correspond to
class grouping 9-BI with the icemaker variable I in the standards
equation equal to 1, indicating addition of the 28 kWh/year icemaker
energy use.
Considering that the recommendation carries support from a broad
cross-section of interests, including trade associations representing
these manufacturers, environmental and energy-efficiency advocacy
organizations, consumer advocates, and electric utility providers as
well as the support of several States, DOE believes it appropriate to
adopt this new product class, 9A-BI. DOE notes that the addition of a
PC 9A-BI, as suggested by the Joint Agreement, is warranted as the
application of a through-the-door icemaker constitutes a performance
related feature with consumer utility and is likely to be introduced on
the market in the near future.
DOE notes the standard as recommended by the Joint Agreement for PC
9A-BI is 5 percent higher than that of PC 9I-BI (built-in upright
freezers with automatic defrost with an automatic icemaker). When
considering class 9A-BI and 9I-BI, the key difference is the addition
of through-the-door ice service, and the potential additional thermal
load associated with its addition. Therefore, the 5 percent adjustment
between 9I-BI and 9A-BI can be attributed mainly to the addition of
through-the-door ice service. When comparing recommended standards to
other product classes in which the key difference is the addition of
through-the-door ice (i.e., 5I vs. 5A and 4I vs. 7), the 5 percent
adjustment remains consistent with DOE's adopted standards. As a result
of this consistency, DOE believes the recommended standard is
appropriate in its application.
Given the indication from the aforementioned stakeholders that such
a product class standard would be beneficial in its implementation, the
classification of through-the-door ice as a performance related
feature, and the recommendation's consistency with the other adopted
standards, DOE is adopting a PC 9A-BI standard in this direct final
rule.
See section V of this document for more information regarding the
TSL configuration and discussion of the adopted level for this product
class. See chapter 5 of the direct final rule TSD for more discussion
regarding the addition of this product class.
2. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified 37 technology options initially determined to improve the
efficiency of refrigerators, refrigerator-freezers, and freezers, as
measured by the DOE test procedure:
Table IV.1--Technology Options Identified in the NOPR
------------------------------------------------------------------------
-------------------------------------------------------------------------
Insulation:
1. Improved resistivity of insulation (insulation type).
2. Inert blowing fluid CO2.
3. Increased insulation thickness.
4. Gas-filled insulation panels.
5. Vacuum-insulated panels (``VIP'').
Gasket and Door Design:
6. Improved gaskets.
7. Double door gaskets.
8. Improved door face frame.
9. Reduced heat load for through-the-door (``TTD'') feature.
Anti-Sweat Heater:
10. Condenser hot gas (Refrigerant anti-sweat heating).
11. Electric anti-sweat heater sizing.
12. Electric heater controls.
Compressor:
13. Improved compressor efficiency.
14. Variable-speed compressors.
15. Linear compressors.
Evaporator:
16. Increased surface area.
17. Improved heat exchange.
[[Page 3044]]
Condenser:
18. Increased surface area.
19. Microchannel condenser.
20. Improved heat exchange.
21. Force convection condenser.
Defrost System:
22. Reduced energy for automatic defrost.
23. Adaptive defrost.
24. Condenser hot gas defrost.
Control System:
25. Electronic Temperature control.
26. Anti-Distribution control.
Other Technologies:
27. Fan and fan motor improvements.
28. Improved expansion valve.
29. Fluid control or solenoid off-cycle valve.
30. Alternative refrigerants.
31. Component location.
32. Phase change materials.
Alternative Refrigeration Cycles:
33. Ejector refrigerator.
34. Dual-evaporator systems.
35. Two-stage system.
36. Dual-loop system.
37. Lorenz-Meutzner cycle.
------------------------------------------------------------------------
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in 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.
10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
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.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
In conducting the screening analysis for this direct final rule,
DOE considered comments it had received in response to the screening
analysis conducted for the February 2023 NOPR.
In the February 2023 NOPR, DOE screened out the technologies
presented in Table II.2 on the basis of technological feasibility,
practicability to manufacture, install, and service, adverse impacts on
utility or availability, adverse impacts on health and safety, and/or
unique-pathway proprietary technologies.
Table IV.2--Technologies Screened-Out in the NOPR
------------------------------------------------------------------------
-------------------------------------------------------------------------
Improved Gaskets, Double Gaskets, and Improved Door Face Frame.
Linear Compressors.
Fluid Control or Solenoid Off-Cycle Valves.
Improved Evaporator Heat Exchange.
Improved Condenser Heat Exchange.
Forced-Convection Condenser.
Condenser Hot Gas Defrost.
Compressor Location at Top.
Evaporator Fan Motor Location Outside Cabinet.
Air Distribution Control.
Phase Change Materials.
Lorenz-Meutzner Cycle.
Dual-Loop Systems.
Two-Stage System.
Ejector Refrigerator.
[[Page 3045]]
Improved VIPs.
Inert Blowing Fluid CO2.
------------------------------------------------------------------------
GEA recommended that DOE screen out ``improved resistivity of
foam,'' which is primarily hydrofluoro-olefin (``HFO'') foams, as a
technology option. GEA stated that HFO foams represent a unique and
proprietary technology pathway and that the two listed by DOE in the
February 2023 NOPR TSD--Solstice LBA and Ecomate--should be excluded
through the technology screening analysis. GEA stated that Solstice
LBA, an HFO foam blowing agent is only produced by a single
manufacturer, Honeywell, and should therefore be screened out from
consideration in DOE's technology assessment in this rulemaking. GEA
noted that Ecomate has no proven commercialization in modern consumer
refrigerators or freezers. (GEA, No. 75 at pp. 4-5)
As discussed in the February 2023 NOPR, HFO foams are retained as a
design option and passed the screening analysis because the technology
option meets the five criteria previously mentioned. While GEA notes
Ecomate has no proven commercialization in modern consumer
refrigerators or freezer, as discussed in more detail in section
3.4.2.1 of the February 2023 NOPR TSD, improved resistivity foams such
as Solstice have been implemented in refrigerator-freezer models in the
United States, as of at least 2014 \28\ and DOE has not received
information regarding negative impacts to product utility or
impracticability to manufacture or service products using improved
resistivity foam. Some of the improved blowing agents reviewed by DOE
(e.g., CO2) have been found to be non-flammable and lower in
GWP than traditional insulation. DOE acknowledges that Solstice LBA is
patented by Honeywell but included other potential technologies such as
added carbon black and CO2 blowing agents in its assessment.
Therefore, as a technology option, DOE maintains that HFO foams meet
the prerequisites to be included past the screening analysis. However,
because DOE could not determine the type of foam used in the directly
analyzed models from teardowns or based on the feedback from
manufacturers, DOE found that there was an insufficient basis to
implement this design option as a means to increase energy efficiency
in either the February 2023 NOPR or this direct final rule analysis.
---------------------------------------------------------------------------
\28\ Whirlpool. ``Whirlpool Corporation Partners with Honeywell,
Announces Use of Next Generation Solstice[supreg] Liquid Blowing
Agent in U.S. Refrigerators,'' January 2014. www.prnewswire.com/news-releases/whirlpool-corporation-partners-with-honeywell-announces-use-of-next-generation-solstice-liquid-blowing-agent-in-us-refrigerators-241489581.html (accessed July 13, 2023).
---------------------------------------------------------------------------
An individual commented that microchannel condensers should not be
retained as a design option, citing issues with implementation in the
HVAC industry. The individual also stated that increased insulation
thickness should not be retained as a design option, citing lessening
of consumer utility. (Individual Commenter, No. 59 at p. 1)
DOE has observed implementation of microchannel heat exchangers in
PC 5I, PC 5A, and several built-in product classes. DOE has also
received no information regarding negative impacts in consumer utility
or safety, and therefore, DOE retained microchannel condensers as a
design option in this analysis As with the HFO foam design option,
while microchannel condensers passed the screening analysis, this
design option was not included as a design pathway to achieve higher
efficiency levels in the direct final rule analysis due to potential
system operation drawbacks including irregular refrigerant
distribution, greater refrigerant-side pressure drop, and greater air-
side pressure drop.\29\
---------------------------------------------------------------------------
\29\ Rametta, R.S., Boeng, J., and Melo, C. ``Theoretical and
Experimental Evaluation of Microchannel Condensers Applied to
Household Refrigerators,'' International Refrigeration and Air
Conditioning Conference, 2018, Paper 1843.
---------------------------------------------------------------------------
DOE expects that increased insulation thickness would impact either
the interior or exterior dimensions of a refrigerator, refrigerator-
freezer, or freezer, and as a result did not consider increased
insulation thickness as a design option to achieve the higher
efficiency levels for standard-size refrigerator-freezers. However, DOE
expects that there is potential to increase insulation thickness for
some types of freezers and compact refrigerators, given their typical
use in in spaces that allow increased exterior dimensions, and
therefore continues to consider increased thickness as a design option
to achieve higher efficiency levels for PC 10, PC 11A, and PC 18.
2. Remaining Technologies
Through a review of each technology, DOE concludes that all of the
other identified technologies listed in section IV.B.1 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:
Table IV.3--Technologies Remaining in the Direct Final Rule
------------------------------------------------------------------------
-------------------------------------------------------------------------
Insulation:
1. Improved resistivity of insulation (insulation type.
2. Increased insulation thickness.
3. Gas-filled insulation panels.
4. Vacuum-insulated panel.
Gasket and Door Design:
5. Reduced heat load for TTD feature.
Anti-Sweat Heater:
6. Refrigerant anti-sweat heating.
7. Electric anti-sweat heater sizing.
8. Electric heater controls.
Compressor:
9. Improved compressor efficiency.
10. Variable-speed compressors.
Evaporator:
11. Improved expansion valve.
[[Page 3046]]
12. Increased surface area.
13. Dual-evaporator systems.
Condenser:
14. Increased surface area.
15. Microchannel condenser.
Defrost System:
16. Reduced energy for automatic defrost.
17. Adaptive defrost.
Control System:
18. Electronic Temperature control.
Other Technologies:
19. Fan and fan motor improvements.
20. Alternative refrigerants.
------------------------------------------------------------------------
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.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of refrigerators,
refrigerator-freezers, and freezers. 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 products, 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/
equipment at efficiency levels above baseline. The output of the
engineering analysis is a set of cost-efficiency ``curves'' that are
used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA).
1. Efficiency 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 either to establish ``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 defining the efficiency levels for this direct final rule, DOE
considered comments it had received in response to the efficiency
levels proposed in the February 2023 NOPR.
For its analysis in this rulemaking, DOE used a combined efficiency
level and design option approach. First, an efficiency-level approach
was used to establish an analysis tied to existing products on the
market. A design option approach was used to extend the analysis
through ``built-down'' efficiency levels and ``built-up'' efficiency
levels where there were gaps in the range of efficiencies of products
that were reverse engineered. Products from PC 3, PC 5, PC 5A, PC 5-BI,
PC 7, PC 9, PC 10, PC 11A, and PC 18 were tested and torn down to
provide information to lay the groundwork for the analysis. Other
product classes such as 9-BI (and the new PC 9A-BI recommended by the
Joint Agreement) were not directly analyzed as a part of DOE's
analysis, as they were not deemed sufficiently representative of the
market. A number of other product classes were indirectly analyzed,
based on relevant directly analyzed product classes. DOE's analysis for
PC-9BI, for example, is based on the directly analyzed PC 9.
DOE used design option analysis techniques to extend the analysis
to higher efficiency levels and to fill any efficiency level gaps. DOE
generally focuses its analysis on product classes with higher market
share as their energy impact and associated energy savings are the most
significant. Therefore, for this direct final rule analysis DOE chose
to test and teardown units from the product classes listed above that
represent a significant market share, and extrapolated the analysis to
all other product classes that were not directly analyzed, as
appropriate.
a. Built-In Products
For the analysis supporting this direct final rule, DOE used an
assessment of PC 5-BI (built-in refrigerator-freezer with bottom-
mounted freezer) to address built-in products. DOE conducted analysis
for a representative 5-BI product and compared it to analysis conducted
for freestanding models of class 5. DOE concluded that a built-in model
that is comparable to a freestanding model except the built-in
configuration would have 5 percent higher energy use. Therefore, for
example, the potential reduction in energy use for built-in PC 5 units
would be 5 percent lower than their freestanding counterparts, based on
the implementation of the same design options to satisfy a higher
efficiency level. DOE has applied this 5-percent differential in
selecting standard levels for other built-in classes for which DOE did
not conduct direct analysis (e.g., PC 3A, PC 7, and PC 9). More
information on the analysis of built-in product classes is available in
the direct final rule TSD.
[[Page 3047]]
b. Baseline Efficiency/Energy Use
For each product/equipment class, DOE generally selects a baseline
model as a reference point for each class, and measures changes
resulting from potential energy conservation standards against the
baseline. The baseline model in each product/equipment class represents
the characteristics of a product/equipment typical of that class (e.g.,
capacity, physical size). Generally, a baseline model is one that just
meets current energy conservation standards, or, if no standards are in
place, the baseline is typically the most common or least efficient
unit on the market. When selecting units for the analysis DOE selects
units at baseline from various manufacturers for each directly analyzed
product class.
In determining the baseline efficiency level for this direct final
rule analysis, DOE maintained the same approach as the February 2023
NOPR, and considered the current Federal energy conservation standards
as the baseline level, expressed as maximum annual energy consumption
as a function of the product's adjusted volume, adjusting for the
change in the automatic icemaker energy contribution for product
classes that include this feature. The current standards incorporate an
allowance of a constant 84 kWh/yr icemaker adder for product classes
with automatic icemakers, consistent with the current test procedure,
which requires adding this amount of annual energy use to the product's
tested performance if the product has an automatic icemaker. DOE
adjusted the baseline energy usage levels for each class to account for
the planned revision in the test procedure to reduce the icemaker
energy use adder to 28 kWh/yr.\30\
---------------------------------------------------------------------------
\30\ See the October 12, 2021, final rule for test procedures
for refrigeration products for more information regarding the
adoption of the 28 kWh/yr icemaker adder. 86 FR 56790.
---------------------------------------------------------------------------
DOE directly analyzed a sample of market representative models from
within nine product classes from multiple manufactures. For most
product classes a single representative adjusted volume was analyzed,
though for PC 3, PC 5, and PC 11, DOE directly analyzed two
representative adjusted volumes within the product class. DOE tested
and tore down 13 baseline units to provide a basis for development of
the cost-efficiency curves. DOE's analysis assumed that all baseline
models implement R-600a refrigerant, based on feedback during
manufacturer interviews suggesting the industry has or is in the
process of shifting to low-GWP refrigerants, in particular away from R-
134a, in accordance with regulatory efforts to phasedown of
hydrofluorocarbons.\31\ Further information on the design
characteristics of specific analyzed baseline models is summarized in
the direct final rule TSD.
---------------------------------------------------------------------------
\31\ See www.regulations.gov/document/EPA-HQ-OAR-2021-0044-0223
for more information regarding the environmental protection agency's
final rule regarding the phasedown of hydrofluorocarbons.
---------------------------------------------------------------------------
BSH disagreed with DOE's use of HFO foam as representative of a
baseline refrigerator, refrigerator-freezer, and/or freezer's
insulation in the February 2023 NOPR, citing high environmental impact
of the insulation, and encouraged DOE to remove HFO foam from baseline
analysis. (BSH, No. 64 at pp. 1-2) AHAM also suggested that considering
HFO foam at baseline efficiency levels is inappropriate and result in
an artificially high baseline efficiency, excessively stringent
standards for high-volume product classes, and negative environmental
impacts. (AHAM, No. 69 at pp. 4-5)
DOE was unable to determine the type of insulation used in teardown
models and subsequently considered PU insulation at the baseline level
for all product classes in the February 2023 NOPR and in this direct
final rule. Furthermore, as described in section IV.B.2 of this
document, DOE retained the improved insulation resistivity design
option (i.e., HFOs) through the screening analysis, though DOE did not
utilize it as a design to achieve higher efficiency levels in the
engineering analysis. DOE further notes, that BSH and AHAM are parties
to the Joint Agreement and are supportive of the recommended standard
adopted in this direct final rule.
c. Higher Efficiency Levels
For this direct final rule, DOE maintained the same approach as the
February 2023 NOPR, and analyzed up to five incremental efficiency
levels beyond the baseline for each of the analyzed product classes.
For PC 3 and PC 7, DOE considered an efficiency level at roughly 5
percent more efficient than the current energy conservation standard.
For all product classes, DOE considered a level near 10 percent more
efficient than the current energy conservation standard, equivalent to
the current ENERGY STAR[supreg] level for refrigerators, refrigerator-
freezers, and freezers.\32\ DOE then extended the efficiency levels
(``ELs'') in steps of close to 5 percent of the current energy
conservation standard up to EL 4, using applicable technologies as
discussed in sections IV.A.2 and IV.B of this document. Finally, for
all product classes, EL 5 represents ``max-tech,'' using design option
analysis to extend the analysis beyond EL 4 using all applicable design
options, including the most efficient variable-speed compressors
available on the market, and considerable use of vacuum-insulated
panels (``VIPs'') in key areas of the cabinet walls and doors. The
efficiency levels analyzed beyond the baseline are shown in Table IV.4.
---------------------------------------------------------------------------
\32\ EnergyStar, ``Refrigerators & Freezers Key Product
Criteria,'' www.energystar.gov/products/appliances/refrigerators/key_product_criteria (accessed July 14, 2023).
[[Page 3048]]
Table IV.4--Incremental Efficiency Levels for Analyzed Products
[% Energy use less than baseline] \33\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Standard-size refrigerator Standard-size Compact refrigerators and freezers
----------------------------------------------------------------------------- freezers -------------------------------------------
Product Class (AV, ft) 5** 5** 5A** 5-BI ----------------------
3 (11.9) 3 (20.6) (23.0) (30.0) (35.0) (26.0) 7 (31.5) 9 (29.3) 10 (26.0) 11A (1.7) 11A (4.4) 17 (9.0) 18 (8.9)
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
EL 1............................................. 5% 5% 8% 7% * 11% * 10% 5% * 10% * 10% * 10% * 10% * 10% 10%
EL 2............................................. * 10% * 10% * 13% * 11% 16% 15% * 10% 15% 15% 15% 15% 15% 15%
EL 3............................................. 15% 15% 18% 15% 22% 16% 15% 20% 20% 20% 20% 20% 20%
EL 4............................................. 20% 20% 20% 17% ......... ......... 19% 25% 23% 32% 30% ......... 30%
EL 5............................................. 27% 28% ......... ......... ......... ......... 22% ......... ......... ......... ......... ......... .........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Efficiencies at or slightly better than the ENERGY STAR[supreg] efficiency of 10%
** Percentages are based on a 3-door configuration.
[[Page 3049]]
d. VIP Analysis and Max-Tech Levels
---------------------------------------------------------------------------
\33\ DOE notes the recommended TSL for this direct final rule is
TSL 4, discussed further in section V.A of this document.
---------------------------------------------------------------------------
As discussed in the previous section, DOE's NOPR analysis
considered the use of VIPs placed throughout the side walls and doors
at max-tech levels for many product classes.
AHAM disagreed with the extent of VIP use at higher efficiency
levels in the engineering analysis, asserting that DOE overestimates
the use and impact of VIPs in its analysis, despite acknowledging the
technology's limitations. AHAM cited panel cost, in the form of labor
and production costs, which are significant due to complex installation
requirements, processing controls, and quality checks. AHAM also cited
lower effectiveness in smaller units due to ``edge effects'' (i.e.,
heat around the edges caused by the membrane film that forms the walls
of the VIP). AHAM suggested that DOE not overestimate the impact of
VIPs in its analysis, considering that VIPs are not used in a majority
of products and manufacturers have reported varied levels of success
using the technology. (AHAM, No. 69 at pp. 5-6)
DOE's implementation of VIPs in the analyses at each stage of this
rulemaking is based on a combination of the best information gathered
from multiple sources related to cost, use, and energy efficiency
impacts. DOE did not specifically account for edge effect impacts on
thermal load for compact refrigerator, refrigerator-freezer, or freezer
models in its analysis. Regarding VIP pricing, DOE estimated VIP panel,
installation, processing, and quality check costs based on a number of
discussions with refrigerator manufacturers, VIP producers, and market
research. DOE conducted additional interviews and research in support
of this direct final rule, which further supported and solidified the
VIP cost estimates.
In manufacturer interviews, DOE also gathered information regarding
the implementation of VIPs (e.g., locations, number of panels, panel
area), and based on that information, DOE performed simulations to
estimate the energy impacts using CERA. CERA allowed DOE to analyze the
thermal load impact on a fresh food and/or freezer cabinet due to
different placements of VIP paneling throughout a cabinet (e.g., side
panels, doors, or both). DOE then compared the results from these
simulations to existing research into load reductions (which estimates
energy savings at around 30 percent) \34\ and based on both sources,
estimated that the full implementation of VIPs in existing cabinets can
reduce heat load by up to 23 percent. DOE did not specifically account
for edge effect impacts on thermal load for compact refrigerator,
refrigerator-freezer, or freezer models in its analysis. However, DOE
notes that the engineering analysis halves the thermal load impact as
observed in simulations in order to be conservative with energy savings
and to account for factors that are not captured in testing and/or
simulation (e.g., differences in VIP core material, VIP installation
method and location). DOE also notes VIPs are not implemented in most
classes until efficiency levels above that proposed in the February
2023 NOPR and adopted in this direct final rule.
---------------------------------------------------------------------------
\34\ ``Development of Nanoporous Materials for the Production of
Vacuum-Insulated Panels (VIPs),'' European Commission, January 2017.
Available at cordis.europa.eu/article/id/190833-insulation-
nanomaterials-for-energyefficient-refrigerators (last accessed
October 15, 2020).
---------------------------------------------------------------------------
Sub Zero commented that as a small, low-volume manufacturer of
niche built-in style refrigeration products, it is concerned that the
standards proposed in the February 2023 NOPR will create a significant
supply chain burden for them, as components like vacuum insulation
panels are supplied by a limited number of manufacturers, which will
impede their ability to deliver products to their consumers in a timely
manner. Sub Zero requested that DOE reduce the stringency level of
adopted standards for built-in products, to reduce these concerns. (Sub
Zero, No. 77 at p. 2)
To better characterize and understand the VIP market, DOE conducted
research and interviewed relevant VIP manufacturers to gather more data
regarding the current global VIP market, and to identify any potential
supply chain constraints related to the adoption of more stringent
energy conservation standards. DOE estimates that the current demand
for VIPs in the U.S. refrigerator market is roughly 1 to 3 million VIP
panels, whereas the global supply for VIPs is estimated to exceed 10
million panels. Despite relatively low demand for VIPs in the U.S.
market, there is notable VIP use in the European and Asian markets,
with supply available from at least three major VIP manufacturers.
Based on the information gathered, DOE expects that VIP production
lines can be quickly scaled up to meet demand of future amended
standards (within 1 to 2 years depending on the specific VIP design),
well within 3-year lead time between publication of amended standards
and the compliance date for those standards.
In response to stakeholder feedback on the February 2023 NOPR, DOE
carefully considered the use of VIPs in its analysis, generally
implementing VIPs at the highest efficiency levels as one of the last
design options considered. Therefore, based on the engineering analysis
and its consideration of VIPs, DOE expects that to meet the adopted
standards, manufacturers are likely to implement VIPs only in PC 5 (for
three-door, 30 AV configuration) and PC 5A, with partial VIP usage for
both classes.
e. Variable-Speed Compressor Supply Chain
Numerous commenters on the February 2023 NOPR suggested that supply
chains for VIPs and variable-speed compressor (``VSC'') may not support
the quantities of those components that may be required at the
efficiency levels proposed in the NOPR. AHAM recommended that DOE
conduct a review of component availability and supply chain capacity
for VSCs given the general global market trends for increasingly
stringent standards for cooling appliances, including both air
conditioning and refrigeration. (AHAM, No. 69 at p. 5) Whirlpool
further noted that the proposed standards may result in increased
component costs to manufacturers due to those same supply chain
constraints, especially given that VSCs would be necessary for nearly
all evaluated product classes. (Whirlpool, No. 70 at p. 5) Sub Zero
also expressed concern that the proposed standards will create a
significant supply chain burden for small, low-volume manufacturer of
niche market built-in style refrigeration products because VSCs are
provided by a limited number of suppliers. Sub Zero commented that the
proposed standards will impede the ability of these small manufacturers
to deliver to their niche consumers in a timely manner. (Sub Zero, No.
77 at p. 2)
Samsung supported DOE's proposed energy conservation standards for
refrigerators, refrigerator-freezers, and freezers and the use of VSC
technology as a significant energy-saving option. Samsung stated that
there is already significant market availability of VSCs, and a
regulatory certainty and 3-year compliance period would provide ample
time for manufacturers and suppliers to establish sufficient supply
availability of VSCs. (Samsung, No. 78 at p. 2)
In response to these comments, DOE interviewed relevant compressor
manufacturers to gather information
[[Page 3050]]
regarding the level of VSC implementation that would be required at the
efficiency levels in this rule, the current and predicted supply of
VSCs into the U.S. market, the predicted time to ramp up production of
VSCs, and pricing of VSC compressors and components. DOE notes that the
VSC compressors focused on in this supply chain analysis differ from
those utilized in air conditioners and other non-related cooling
appliances. VSC compressors utilized in refrigerators, refrigerator-
freezers, and freezers are generally different designs, are
manufactured in different factories, and are generally produced by
different manufacturers. Thus, based on the information provided by
these manufacturers, DOE has determined that the industry is able to
meet the increased demand of VSCs amid likely growing demand in the
U.S. market.
Based on manufacturer interviews, DOE estimates the current total
global demand for refrigerator, refrigerator-freezer, and freezer
compressors (all compressors, not just VSCs) is 230 million. Total
compressor production capacity is much higher than demand, with global
capacity for compressors estimated at over 400 million. Globally, there
has been a shift towards VSC utilization in response to increasing
energy efficiency regulations in the European Union (``EU'') and Japan.
Estimates project upwards of a quarter of the global market and a third
of the U.S. market currently utilize VSCs in refrigerators,
refrigerator-freezers, and freezers. Considering the U.S. market
accounts for an estimated 12 million consumer refrigeration products, a
conservative estimate puts U.S. current demand for VSC compressors at
roughly 4 million.
Given DOE's understanding of the compressor marketplace, the
expected time to build capacity to meet the new demand is expected to
be significantly shorter than the 5 and 6-year lead time between direct
final rule publication and the compliance date, with estimates ranging
from 8 months to 1 year. Compressor manufacturers indicated that VSC
production capacity has been increasing by 7 million per year between
2018 and 2022. Additionally, high-efficiency VSC compressor designs are
already developed and do not require additional qualification testing
before production. Research and development (``R&D'') time to develop
compressor designs is not required and thus would not be a factor
affecting availability.
DOE is aware that there have been supply constraints for VSCs
recently due to issues with electronic component supply caused by the
COVID-19 pandemic. Specifically, Chinese manufacturing and shipping of
compressors decreased significantly during COVID-related lockdowns
throughout the country between 2020 and 2022. Due to China's outsized
impact on global supply, the effects of lockdowns were felt globally.
Now that lockdowns have ended, however, the affected factories are open
again and in production. Compressor manufacturers also indicated that
they have been modifying sourcing strategies, in many cases
establishing their own electronic component assembly lines in order to
protect against potential future issues that could affect supply and
production of VSCs.
In considering all of the information provided by relevant
manufacturers of VSCs, DOE believes that significant increases in VSCs
in the U.S. market aligned with the standard levels adopted in this
direct final rule are well within the production capacity of the
compressor industry. DOE further notes, that AHAM, Whirlpool, Sub Zero,
and Samsung are parties to the Joint Agreement and are supportive of
the recommended standard adopted in this direct final rule.
f. Product Classes 11 and 12 Alignment
The Joint Agreement recommended that DOE adopt a level of 10
percent energy savings relative to the current PC 12 standard. In light
of the recommendation outlined in the Joint Agreement, and in
consideration of comments received in response to the February 2023
NOPR, DOE is adopting a percentage increase in efficiency for PC 12 at
10 percent lower relative to the current standard. Additionally, as
recommended in the Joint Agreement and proposed in the February 2023
NOPR, DOE is including a multi-door energy use allowance for PC 12 for
products with two doors.
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 product 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 direct final rule analysis, DOE conducted the analysis using
a combination of physical teardowns, catalog teardowns, and price
surveys. Where possible, physical teardowns were used to provide a
baseline of technology options and pricing for a specific product class
at a specific EL. Then with technology option information, DOE
estimated the cost of various design options including compressors,
VIPs, and insulation, by extrapolating the costs from price surveys.
With specific costs for technology options, DOE was then able to
``build-up'' or ``build-down'' from the various teardown models to
finish the cost-efficiency curves. DOE used this approach to calibrate
the analysis to certified or measured energy use of specific available
models where possible, while allowing a broader range of potential
efficiency levels to be considered.
The resulting bill of materials provides the basis for the
manufacturer production cost (``MPC'') estimates.
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce. DOE developed
an average manufacturer markup by examining the annual Securities and
Exchange Commission (``SEC'') 10-K reports filed by publicly traded
manufacturers primarily engaged in appliance manufacturing and whose
combined product range includes refrigerators, refrigerator-freezers,
and freezers.
3. Cost-Efficiency Results
The results of the engineering analysis are presented as cost-
efficiency data for each of the efficiency levels for each of the
analyzed product classes that were
[[Page 3051]]
analyzed. DOE developed estimates of MPCs for each unit in the teardown
sample, and also performed additional modeling based on representative
teardown samples, to extend the analysis to cover the range of
efficiency levels appropriate for a representative product. To estimate
the MPCs necessary to achieve higher efficiency levels, in particular
those beyond the highest-efficiency products in the test sample, DOE
considered design options that were most likely to be considered and
implemented by manufacturers to achieve the higher efficiency levels.
Based on input from manufacturers and an understanding of the markets,
DOE then estimated the costs associated with those design option to
determine the MPCs at each of the analyzed efficiency levels.
The efficiency levels and design option progression for the
analyzed standard-size refrigerator-freezers are presented in Table
IV.5. The cells in the table list the design options that DOE
considered at each higher efficiency level as compared with the next-
lower efficiency level. Similarly, the efficiency levels and design
options for standard-size freezers and Compact refrigerators,
refrigerator-freezers are presented in Table IV.6. The MPCs for the
analyzed product classes across the considered efficiency levels are
presented in Tables IV.7 and IV.8. See chapter 5 of the direct final
rule TSD for additional detail on the engineering analysis.
Table IV.5--Efficiency Levels and Design Options for Analyzed Standard-Size Refrigerator-Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product class (AV \5\) EL1 EL2 EL3 EL4 EL5
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 (11.9):
EL Percent \1\................. 5%.................... 10%................... 15%.................. 20%.................. 27%.
Design Options Added........... Variable Defrost; Higher-EER Single Highest-EER Single VIP side walls and Variable-speed
Higher-Energy Speed Compressor. Speed Compressor. doors. compressor
Efficiency Ratio system.\3\
(EER) Single Speed
Compressor.
3 (21.0):
EL Percent \1\................. 5%.................... 10%................... 15%.................. 20%.................. 28%.
Design Options Added........... Higher-EER Single Variable Defrost; Higher-EER 66% of Max-tech VIP VIP side walls and
Speed Compressor. Higher-EER Single Compressor; Variable- \4\. doors.
Speed Compressor. speed compressor
system \3\.
5 (23.0): \2\
EL Percent \1\................. 8%.................... 13%................... 18%.................. 20%..................
Design Options Added........... Higher-EER Single Brushless-DC Highest-EER VIP side walls and
Speed Compressor. Evaporator Fan Motor; Compressor; 50% of doors..
Higher-EER compressor Max-tech VIP.
Variable-speed
compressor system \3\.
5 (30.0): \2\
EL Percent \1\................. 7%.................... 11%................... 15%.................. 17%..................
Design Options Added........... Variable Speed Higher-EER Compressor; Higher-EER Highest-EER
Compressor System \6\. \6\ Brushless-DC Compressor; 50% of Compressor; VIP side
Evaporator Fan Motor; Max-tech VIP. walls and doors..
50% of Max-tech VIP
\6\.
5-BI (26.0):
EL Percent \1\................. 10%................... 15%................... 16%..................
Design Options Added........... Variable-speed 50% of Max-tech VIP VIP side walls and
compressor system \3\. \4\. doors..
5A (35.0): \2\
EL Percent \1\................. 11%................... 16%................... 22%..................
Design Options Added........... Higher-EER Compressor; Highest-EER VIP side walls and
Variable-speed Compressor; Variable doors..
compressor system \3\. Speed Compressor
System; 42% of Max-
tech VIP \4\.
7 (31.5):
EL Percent \1\................. 5%.................... 10%................... 15%.................. 19%.................. 22%.
Design Options Added........... Highest-EER Single Brushless-DC Highest-EER Variable 75% of Max-tech VIP VIP side walls and
Speed Compressor. Evaporator Fan Motor; Speed compressor \4\. doors.
Variable-speed system.
compressor system \3\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ Percent energy use less than baseline.
\2\ For three-door configuration.
\3\ Includes two-speed fan control.
\4\ The percentage of surface area of VIP as compared with the VIP surface area used in the maximum-technology design, for which VIP would be installed
for full coverage of the side walls and doors.
\5\ Adjusted Volume in cubic feet.
Table IV.6--Efficiency Levels and Design Options for Analyzed Standard-Size Freezers and Compact Refrigerators,
Refrigerator-Freezers, and Freezers
----------------------------------------------------------------------------------------------------------------
Product class (AV \4\) EL1 EL2 EL3 EL4
----------------------------------------------------------------------------------------------------------------
9 (29.3):
EL Percent \1\.............. 10%............... 15%............... 20%............... 25%.
Design Options Added........ Switch to forced- Highest-EER 37% of Max-tech VIP side walls and
convection Compressor; VIP \3\. door.
condenser; Variable-speed
Brushless-DC compressor system
Condenser and \2\.
Evaporator fans.
10 (26.0):
EL Percent \1\.............. 10%............... 15%............... 20%............... 23%.
Design Options Added........ Variable-speed Wall thickness Highest-EER VIP door.
compressor system increase; Compressor;
\2\. Brushless-DC Variable-speed
Evaporator Fan. compressor system.
11A (1.7):
EL Percent \1\.............. 10%............... 15%............... 20%............... 32%.
[[Page 3052]]
Design Options Added........ Wall thickness Higher-EER Single Higher-EER Single Highest-EER Single
increase. Speed Compressor. Speed Compressor; Speed Compressor.
VIP sides and
door.
11A (4.4):
EL Percent \1\.............. 10%............... 15%............... 20%............... 30%.
Design Options Added........ Higher-EER Single Wall thickness Higher-EER Single Variable-speed
Speed Compressor. increase. Speed Compressor. Compressor
System; \2\ VIP
sides walls and
door.
17 (9.0):
EL Percent \1\.............. 10%............... 15%............... 20%...............
Design Options Added........ Highest-EER 50% of Max-tech VIP side walls and
Compressor; VIP \3\. door panels..
Variable-speed
Compressor
System; \2\
Variable Defrost.
18 (8.9):
EL Percent \1\.............. 10%............... 15%............... 20%............... 30%.
Design Options Added........ Higher-EER Single Wall thickness Highest-EER Single Variable-speed
Speed Compressor. increase. Speed Compressor; Compressor
VIP door. System.\2\
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Percent energy use less than baseline.
\2\ Includes two-speed fan control.
\3\ The percentage of surface area of VIP as compared with the VIP surface area used in the maximum-technology
design, for which VIP would be installed for full coverage of the side walls and doors.
\4\ Adjusted Volume in cubic feet.
Table IV.7--Cost-Efficiency Curves for Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
Product Class (AV \3\) EL0 EL1 EL2 EL3 EL4 EL5
----------------------------------------------------------------------------------------------------------------
3 (11.9):
EL Percent \1\...................... 0% 5% 10% 15% 20% 27%
MPC................................. $368.51 $375.65 $377.11 $378.79 $434.79 $464.09
Incremental MPC..................... $0.00 $7.14 $8.60 $10.28 $66.28 $95.58
3 (21.0):
EL Percent \1\...................... 0% 5% 10% 15% 20% 28%
MPC................................. $454.50 $456.08 $473.88 $498.64 $544.91 $570.09
Incremental MPC..................... $0.00 $1.59 $19.38 $44.14 $90.42 $115.59
5 (23.0): \2\
EL Percent \1\...................... 0% 8% 13% 18% 20%
MPC................................. $662.58 $678.47 $696.39 $736.57 $755.49
Incremental MPC..................... $0.00 $15.89 $33.81 $73.99 $92.91
5 (30.0): \2\
EL Percent \1\...................... 0% 7% 11% 15% 17%
MPC................................. $705.12 $740.80 $763.71 $774.63 $807.62
Incremental MPC..................... $0.00 $35.68 $58.58 $69.51 $102.50
5-BI (26.0):
EL Percent \1\...................... 0% 10% 15% 16%
MPC................................. $829.20 $848.87 $883.70 $918.52
Incremental MPC..................... $0.00 $19.67 $54.50 $89.32
5A (35.0): \2\
EL Percent \1\...................... 0% 11% 16% 22%
MPC................................. $765.69 $786.68 $824.44 $871.93
Incremental MPC..................... $0.00 $21.00 $58.75 $106.24
7 (31.5):
EL Percent \1\...................... 0% 5% 10% 15% 19% 22%
MPC................................. $669.60 $671.85 $691.36 $692.20 $750.52 $770.32
Incremental MPC..................... $0.00 $2.26 $21.77 $22.60 $80.92 $100.72
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Percent energy use less than baseline.
\2\ For three-door configuration.
\3\ Adjusted volume in cubic feet.
Table IV.8--Cost-Efficiency Curves for Standard-Size Freezers and Compact Refrigerators, Refrigerator-Freezers,
and Freezers
----------------------------------------------------------------------------------------------------------------
Product class (AV \2\) EL0 EL1 EL2 EL3 EL4
----------------------------------------------------------------------------------------------------------------
9 (29.3):
EL Percent \1\.................................. 0% 10% 15% 20% 25%
MPC \2\......................................... $536.45 $553.18 $585.43 $614.85 $652.63
Incremental MPC................................. $0.00 $16.73 $48.97 $78.40 $116.17
[[Page 3053]]
10 (26.0):
EL Percent \1\.................................. 0% 10% 15% 20% 23%
MPC............................................. $522.18 $553.37 $577.47 $579.41 $602.71
Incremental MPC................................. $0.00 $31.19 $55.29 $57.23 $80.53
11A (1.7):
EL Percent \1\.................................. 0% 10% 15% 20% 32%
MPC............................................. $146.55 $151.55 $152.77 $176.94 $181.26
Incremental MPC................................. $0.00 $5.00 $6.22 $30.38 $34.70
11A (4.4):
EL Percent\1\................................... 0% 10% 15% 20% 30%
MPC............................................. $212.15 $214.64 $220.57 $231.84 $289.23
Incremental MPC................................. $0.00 $2.49 $8.42 $19.69 $77.08
17 (9.0):
EL Percent \1\.................................. 0% 10% 15% 20%
MPC............................................. $268.95 $294.85 $318.20 $341.55
Incremental MPC................................. $0.00 $25.91 $49.26 $72.61
18 (8.9):
EL Percent \1\.................................. 0% 10% 15% 20% 30%
MPC............................................. $256.22 $258.76 $268.00 $281.06 $311.99
Incremental MPC................................. $0.00 $2.54 $11.78 $24.84 $55.77
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Percent energy use less than baseline.
\2\ Adjusted volume in cubic feet.
4. Manufacturer Selling Price
To account for manufacturers' non-production costs and revenue
attributable to the product, DOE applies a multiplier (the manufacturer
markup) to the MPC. The resulting manufacturer selling price (``MSP'')
is the price at which the manufacturer distributes a unit into
commerce. DOE developed an average manufacturer markup by examining the
annual Securities and Exchange Commission (``SEC'') 10-K reports \35\
filed by publicly traded manufacturers primarily engaged in appliance
manufacturing and whose combined product range includes refrigerators,
refrigerator-freezers, and freezers. See chapter 12 of the direct final
rule TSD for additional detail on the manufacturer markup.
---------------------------------------------------------------------------
\35\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
www.sec.gov/edgar/search/ (last accessed July 1, 2022).
---------------------------------------------------------------------------
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, wholesaler 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 operating
profit.
For refrigerators, refrigerator-freezers, and freezers, the main
parties in the distribution chain are retailers, wholesalers, and
general contractors.
DOE developed baseline and incremental markups for each actor in
the distribution chain. 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.\36\
---------------------------------------------------------------------------
\36\ 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,\37\ the 2017 Annual
Wholesale Trade Survey for the ``household appliances, and electrical
and electronic goods merchant wholesalers'' sector to estimate
wholesaler markups,\38\ and the industry series for the ``residential
building construction'' sector published by the 2017 Economic Census to
derive general contractor markups.\39\ 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,\40\ the 2017 Annual Wholesale Trade Survey for the ``household
appliances, and electrical and electronic goods merchant wholesalers''
sector to estimate wholesaler markups,\41\ and the industry series for
the ``residential building construction'' sector published by the 2017
Economic Census to derive general contractor markups.\42\
---------------------------------------------------------------------------
\37\ U.S. Census Bureau, Annual Retail Trade Survey. 2017.
www.census.gov/programs-surveys/arts.html.
\38\ U.S. Census Bureau, Annual Wholesale Trade Survey. 2017.
www.census.gov/awts.
\39\ U.S. Census Bureau. 2017 Economic Census. www.census.gov/newsroom/press-kits/2020/2017-economic-census.html.
\40\ U.S. Census Bureau, Annual Retail Trade Survey. 2017.
www.census.gov/programs-surveys/arts.html.
\41\ U.S. Census Bureau, Annual Wholesale Trade Survey. 2017.
www.census.gov/awts.
\42\ U.S. Census Bureau. 2017 Economic Census. www.census.gov/newsroom/press-kits/2020/2017-economic-census.html.
---------------------------------------------------------------------------
In response to the February 2023 NOPR, AHAM commented on DOE's
reliance on the concept of incremental markups, stating that it is
based on discredited theory, and it is in contradiction to empirical
evidence provided by AHAM during the 2014
[[Page 3054]]
NOPR for Energy Conservation Standards for Residential Dishwashers.
(AHAM, No. 69 at p. 15-16)
DOE disagrees that the theory behind the concept of incremental
markups is discredited. DOE's incremental markup approach assumes that
an increase in profitability, which is implied by keeping a fixed
markup when the product price goes up, is unlikely to be viable over
time in a reasonably competitive market like household appliance
retailers. The Herfindahl-Hirschman Index (HHI) reported by the 2017
Economic Census indicates that household appliance stores sector (North
American Industry Classification System (NAICS) code 443141) is a
competitive marketplace.\43\ DOE recognizes that actors in the
distribution chains are likely to seek to maintain the same markup on
appliances in response to changes in manufacturer selling prices after
an amendment to energy conservation standards. However, DOE believes
that retail pricing is likely to adjust over time as those actors are
forces to readjust their markups to reach a medium-term equilibrium in
which per-unit profit is relatively unchanged before and after
standards are implemented.
---------------------------------------------------------------------------
\43\ 2017 Core Statistics Economic Census: Establishment and
Firm Size Statistics for the U.S. (NAICS 443141).
---------------------------------------------------------------------------
DOE acknowledges that markup practices in response to amended
standards are complex and varying with business conditions. However,
DOE's analysis necessarily considers a very simplified and hypothetical
version of the world of appliance retailing: namely, a situation in
which nothing changes except for those changes in appliance offerings
that occur in response to amended standards. Obtaining data on markup
practices in the situation described above is very challenging. Hence,
DOE continues to believe that its assumption that standards do not
facilitate a sustainable increase in profitability is reasonable.
Chapter 6 of the direct final rule TSD provides details on DOE's
development of markups for refrigerators, refrigerator-freezers, and
freezers.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of refrigerators, refrigerator-freezers, and
freezers at different efficiencies in representative U.S. single-family
homes, multi-family residences, and commercial buildings, and to assess
the energy savings potential of increased product efficiency. The
energy use analysis estimates the range of energy use of refrigerators,
refrigerator-freezers, and freezers 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.
The DOE test procedure produces standardized results that can be
used to assess or compare the performance of products operating under
specified conditions. 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. In the
case of refrigerators, refrigerator-freezers, and freezers, DOE used
usage adjustment factors (UAFs) in the February 2023 NOPR to address
the difference in field-metered energy consumption and the DOE test
results due to household-specific characteristics. 88 FR 12478-12479.
Specifically, DOE combined field-metered energy use data for full-
size refrigeration products from the September 2011 Final Rule, the
Northwest Energy Efficiency Alliance (``NEEA''), and the Florida Solar
Energy Center (``FSEC'') with estimates of the test energy use of each
field-metered unit. Then, DOE calculated a unit's UAF by dividing the
annual field-metered energy use by the annual energy consumption from
the DOE test procedure. DOE then used maximum likelihood estimation to
fit log-normal distributions to the empirical distributions of UAFs for
primary refrigerators and refrigerator-freezers, secondary
refrigerators and refrigerator-freezers, and freezers. DOE sampled UAFs
from these fitted log-normal distributions to estimate the actual
energy use of refrigeration products for the consumer sample. DOE did
not have adequate field-metering data to derive UAFs for compact
refrigeration products; therefore, DOE assumed the UAF of compact
refrigeration products was 1.0.
In response to the February 2023 NOPR, AHAM commented that DOE
relies heavily on the EIA's Residential Energy Consumption Survey
(``RECS'') data for estimating energy use and how consumption varies at
the household level. Specifically, AHAM expressed concern that the use
of RECS data to estimate energy consumption at the household level may
introduce ``outlier values,'' resulting in uncertainty and inaccuracies
(AHAM, No. 69 at pp. 17-18) In this direct final rule, as well as in
the February 2023 NOPR, DOE did not tie the energy consumption of
refrigerators, refrigerator-freezers, and freezers to RECS survey data.
88 FR 12452. No household or demographic information from RECS affects
the energy consumption of a particular household. Instead, as mentioned
above, DOE sampled from distributions of UAFs that were derived from
field-metering studies and assigned a randomly selected UAF to each
household. Randomly sampling from distributions of UAFs acknowledges
the inherent uncertainty in estimating the energy use for any
particular household, while capturing the aggregate impact of UAFs
measured in the field, and thus better approximates the most likely
distribution of field energy use values across the installed base of
products than relying strictly on survey data. DOE further notes, that
AHAM is a party to the Joint Agreement and is supportive of the
recommended standard adopted in this direct final rule.
Chapter 7 of the direct final rule TSD provides details on DOE's
energy use analysis for refrigerators, refrigerator-freezers, and
freezers.
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
refrigerators, refrigerator-freezers, and freezers. 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
[[Page 3055]]
the LCC in the no-new-standards case, which reflects the estimated
efficiency distribution of refrigerators, refrigerator-freezers, and
freezers 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
housing units (all product classes) and commercial buildings (PC 11A
only). DOE included commercial applications in the analysis of compact
refrigerators and refrigerator-freezers (PC 11A) because they are used
in both the residential and commercial sectors (e.g., hotel rooms and
higher-education dormitories). DOE developed household samples from the
2020 RECS and commercial building samples from the 2018 Commercial
Buildings Energy Consumption Survey (``CBECS''). For each sample
household or building, DOE determined the energy consumption for the
refrigerator, refrigerator-freezer, or freezer and the appropriate
electricity price and discount rate. By developing a representative
sample of households and buildings, the analysis captured the
variability in energy consumption, energy prices, and discount rates
associated with the use of refrigerators, refrigerator-freezers, and
freezers.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, distribution
chain markups, and sales taxes--and installation 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 refrigerator, refrigerator-freezer,
and freezer user samples. For this rulemaking, the Monte Carlo approach
is implemented in Python. The model calculated the LCC for products at
each efficiency level for 10,000 housing units or commercial buildings
per simulation run. The analytical results include a distribution of
10,000 data points showing the range of LCC savings for a given
efficiency level relative to the no-new-standards case efficiency
distribution. In performing an iteration of the Monte Carlo simulation
for a given 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 and PBP for consumers of
refrigerators, refrigerator-freezers, and freezers as if each were to
purchase a new product in the first year of required compliance with
new or amended standards. For all TSLs other than TSL 4 (the
Recommended TSL detailed in the Joint Agreement), any amended standards
were assumed to apply to refrigerators, refrigerator-freezers, and
freezers manufactured 3 years after the date on which any new or
amended standard is published. (42 U.S.C. 6295(m)(4)(A)(i)) Therefore,
DOE used 2027 as the first year of compliance with any amended
standards for refrigerators, refrigerator-freezers, and freezers for
all TSLs other than TSL 4. For TSL 4, DOE used 2029 as the first year
of compliance for representative PCs 5BI, 5A, 10, 11A, 17, and 18 and
2030 as the first year of compliance for the representative PCs 3, 5,
7, and 9, consistent with the Joint Agreement.
Table IV.9 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.9--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. Applied price
learning based on historical price index
data to project product costs. Applied
price trend to electronic controls used
on products with VSDs.
Installation Costs........... Assumed no change with efficiency level;
therefore, not included.
Annual Energy Use............ The total annual energy use multiplied by
a usage adjustment factor, which is
derived using field data.
Variability: Based on the product class
and field data.
Energy Prices................ Electricity: Based on Edison Electric
Institute (``EEI'') data for 2022.
Variability: Regional energy prices
determined for each Census Division and
large state.
Energy Price Trends.......... Based on AEO2023 price projections.
Repair and Maintenance Costs. Assumed no change with efficiency level
for maintenance costs. Repair costs
estimated for each product class and
efficiency level.
Product Lifetime............. Weibull distributions based on historical
shipments and age distribution of
installed stock.
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 (residential) and
Damadoran Online (commercial).
Compliance Date.............. 2027 for all TSLs other TSL 4. For TSL 4,
2029 for PCs 5BI, 5A, 10, 11A, 17, and
18 and 2030 for PCs 3, 5, 7, and 9.
------------------------------------------------------------------------
* 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.
In response to the February 2023 NOPR, an individual objected to
the LCC analysis for two reasons: (1) future dollars savings are not
the same as present-day dollars for purchase, which is especially
problematic for low-income individuals; and (2) some in the elderly
population would not live long enough to recover the incremental
installed cost due to an amended standard, resulting in ``age
discrimination.'' (Individual
[[Page 3056]]
Commenter, No. 59 at p. 2) In regard to future dollar savings vs.
present-day dollar savings for low-income households, DOE's low-income
consumer subgroup LCC analysis uses discount rates that are specific to
low-income households, resulting in higher discount rates for these
households, on average, compared to the full consumer sample used in
the standard LCC analysis. See section IV.I of this document as well as
chapter 11 of the direct final rule TSD for more details. In regard to
the incremental installed cost for low-income consumers, DOE notes that
many low-income consumers are renters who are typically not responsible
for purchasing refrigeration equipment (see the discussion in section
IV.I of this document as well as chapter 11 of the direct final rule
TSD). Moreover, the low-income subgroup results indicate that low-
income households, on average, are expected to experience higher LCC
savings and lower payback periods than the general population (see the
results in section V.B.1.b of this document). In regard to some
individuals not living long enough to recoup the incremental installed
cost due to an amended standard, DOE notes that even in such cases--
which could happen to non-elderly consumers as well--the equipment
would continue to reap energy savings, but for a new owner. Therefore,
DOE does not believe the LCC analysis discriminates against elderly
consumers relative to younger consumers in the general population.
AHAM commented that due to the skewed nature of the LCC savings
results, DOE should report median values rather than mean values.
(AHAM, No. 69 at p. 18) DOE notes that there are a variety of ways to
characterize distributions of impacts, and DOE considers the impacts of
a potential amended standard on refrigerators, refrigerator-freezers,
and freezers holistically. DOE also notes that the median LCC savings
for affected consumers are shown in the box-and-whisker plots in
chapter 8 of the direct final rule TSD.
AHAM also commented that DOE should be conducting a purchase
decision analysis in its LCC model to reflect the actual conditions and
expectations of the purchaser. (AHAM, No. 69 at p. 15) In the current
setup of LCC analysis, DOE is not explicitly modeling the purchase
decision made by purchasers when the standard becomes effective. DOE's
analysis is intended to model the range of individual outcomes likely
to result from a hypothetical amended energy conservation standard at
various levels of efficiency. DOE does not discount the consumer
decision theory established in the broad behavioral economics field,
but rather, notes that its methodological decision was made after
considering the existence of various systematic market failures and
their implication in rational versus actual purchase behavior.
Furthermore, the outcome of the LCC is not considered in isolation, but
in the context of the broader set of analyses, including the NIA.
Moreover, the type of data required to facilitate a robust consumer
choice modeling of a specific household appliance at the individual
household level is currently lacking and AHAM did not provide much
data. DOE further notes, that AHAM is a party to the Joint Agreement
and is supportive of the recommended standard adopted in this direct
final rule.
1. Adjusted Volume Distribution
DOE developed adjusted volume distributions within each PC
containing more than one representative unit to determine the
likelihood that a given purchaser would select each of the
representative units for a given PC from the engineering analysis. DOE
estimated the distribution of adjusted volumes for PC 3 and PC 5 based
on the capacity distribution reported in the TraQline[supreg]
refrigerator data spanning from Q1 2018 to Q1 2019.\44\ DOE estimated
the distribution of adjusted volumes for PC 11A based on the
distribution of models from DOE's Compliance Certification Management
System (``CCMS'') Database. Table IV.10 presents the adjusted volume
distribution of each of the PCs having more than one representative
unit. DOE assumed that the adjusted volume distribution remains
constant over the years considered in the analysis.
---------------------------------------------------------------------------
\44\ TraQline[supreg] is a quarterly market share tracker of
150,000+ consumers.
Table IV.10--Adjusted Volume Probability for Each Product Class Having
More Than One Representative Unit
------------------------------------------------------------------------
Probability
Adjusted volume (cu. ft.) (%)
------------------------------------------------------------------------
PC 3:
11.9.................................................. 22.3
20.6.................................................. 77.7
PC 5:
23.................................................... 34.7
30.................................................... 65.3
PC 11A:
1.7................................................... 84.7
4.4................................................... 15.3
------------------------------------------------------------------------
2. 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. 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.\45\ In the experience curve method, the real cost of
production is related to the cumulative production or ``experience''
with a manufactured product. DOE used historical Producer Price Index
(``PPI'') data for ``household refrigerator and home freezer
manufacturing'' from the Bureau of Labor Statistics' (``BLS'') spanning
the time period between 1981 and 2022 as a proxy of the production cost
for refrigerators, refrigerator-freezers and freezers.\46\ This is the
most representative and current price index for refrigerators,
refrigerator-freezers, and freezers. An inflation-adjusted price index
was calculated by dividing the PPI series by the gross domestic product
index from the Bureau of Economic Analysis for the same years. The
cumulative production of refrigerators, refrigerator-freezers, and
freezers were assembled from the annual shipments from the Association
of Household Appliance Manufacturers (AHAM) between 1951 and 2022, and
shipment estimates prior to 1951 using a trend analysis. The estimated
learning rate (defined as the fractional reduction in price expected
from each doubling of cumulative production) is 39.4 1.9
percent
---------------------------------------------------------------------------
\45\ Taylor, M. and Fujita, K.S. Accounting for Technological
Change in Regulatory Impact Analyses: The Learning Curve Technique.
LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA.
April 2013. Available at escholarship.org/uc/item/3c8709p4#page-1.
\46\ Household refrigerator and home freezer manufacturing PPI
series ID: PCU3352203352202. Available at www.bls.gov/ppi/.
---------------------------------------------------------------------------
DOE included variable-speed compressors as a technology option for
higher efficiency levels. To develop future prices specific for that
technology, DOE applied a separate price trend to the controls portion
of the variable-speed compressor, which represents part of the price
increment when moving from an efficiency level achieved with the
highest efficiency single-speed compressor to an efficiency
[[Page 3057]]
level with variable-speed compressor. DOE used PPI data on
``semiconductors and related device manufacturing'' between 1967 and
2022 to estimate the historic price trend of electronic components in
the control.\47\ The regression, performed as an exponential trend line
fit, results in an R-square of 0.99, with an annual price decline rate
of 6.3 percent. See chapter 8 of the TSD for further details on this
topic.
---------------------------------------------------------------------------
\47\ Semiconductors and related device manufacturing PPI series
ID: PCU334413334413; www.bls.gov/ppi/.
---------------------------------------------------------------------------
In response to the February 2023 NOPR, AHAM commented that there is
no theoretical underpinning for the implementation of an experience or
learning curve and the functional form it should take. In addition,
AHAM stated that the data that DOE used merely represents an empirical
relationship, and a clear connection between the actual products in
question and the data used needs to be made. AHAM noted that there is
little reason to support the concept that price learning through
manufacturing efficiencies should extend beyond the labor and materials
in the product itself, and that such a relationship should not hold for
other cost components. (AHAM, No. 69 at pp. 16-17)
DOE notes that there is considerable empirical evidence of
consistent price declines for appliances in the past few decades.
Several studies examined refrigerator retail prices during different
periods of time and showed that prices had been steadily falling while
efficiency had been increasing, for example Dale, et al. (2009) \48\
and Taylor, et al. (2015).\49\ As mentioned in Taylor and Fujita
(2013),\50\ Federal agencies have adopted different approaches to
account for ``the changing future compliance costs that might result
from technological innovation or anticipated behavioral changes.''
Given the limited data availability on historical manufacturing costs
broken by different components, DOE utilized the Producer Price Index
(``PPI'') published by the BLS as a proxy for manufacturing costs to
represent the analyzed product as a whole. While products may
experience varying degrees of price learning during different product
stages, DOE modeled the average learning rate based on the full
historical PPI series for ``household refrigerator and home freezer
manufacturing'' to capture the overall price evolution in relation to
the cumulative shipments. DOE also conducted sensitivity analyses that
are based on a particular segment of the PPI data for household
refrigerator manufacturing to investigate the impact of alternative
product price projections (low price learning and high price learning)
in the NIA of this direct final rule. DOE further notes, that AHAM is a
party to the Joint Agreement and is supportive of the recommended
standard adopted in this direct final rule.
---------------------------------------------------------------------------
\48\ Dale, L., C. Antinori, M. McNeil, James E. McMahon, and
K.S. Fujita. Retrospective evaluation of appliance price trends.
Energy Policy. 2009. 37 pp. 597-605.
\49\ Taylor, M., C.A. Spurlock, and H.-C. Yang. Confronting
Regulatory Cost and Quality Expectations. An Exploration of
Technical Change in Minimum Efficiency Performance Standards. 2015.
Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United
States). Report No. LBNL-1000576. Available at www.osti.gov/biblio/1235570/ (last accessed June 30, 2023).
\50\ Taylor, M. and K.S. Fujita. Accounting for Technological
Change in Regulatory Impact Analyses: The Learning Curve Technique.
2013. Lawrence Berkeley National Lab (LBNL), Berkeley, CA (United
States). Report No. LBNL-6195E. Available at escholarship.org/uc/3c8709p4 (last accessed July 20, 2023).
---------------------------------------------------------------------------
3. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE found no
evidence that installation costs for refrigerators, refrigerator-
freezers, and freezers would be impacted with increased efficiency
levels. As a result, DOE did not include installation costs in the LCC
and PBP analysis.
4. Annual Energy Consumption
For each sampled household or commercial building, DOE determined
the energy consumption for a refrigerator, refrigerator-freezer, or
freezer at different efficiency levels using the approach described
previously in section IV.E of this document.
5. 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 2022 using data from EEI Typical
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric
bills and average kilowatt-hour costs to the customer as charged by
investor-owned utilities. For the residential sector, DOE calculated
electricity prices using the methodology described in Coughlin and
Beraki (2018).\51\ For the commercial sector, DOE calculated
electricity prices using the methodology described in Coughlin and
Beraki (2019).\52\
---------------------------------------------------------------------------
\51\ 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.
Available at ees.lbl.gov/publications/residential-electricity-prices-review (last accessed July 10, 2023).
\52\ Coughlin, K. and B. Beraki. 2019. Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. Available at ees.lbl.gov/publications/non-residential-electricity-prices (last accessed July 10, 2023).
---------------------------------------------------------------------------
To estimate energy prices in future years, DOE multiplied the 2022
energy prices by the projection of annual average price changes for
each of the nine census divisions from the Reference case in AEO2023,
which has an end year of 2050.\53\ To estimate price trends after 2050,
DOE used the 2050 electricity prices, held constant.
---------------------------------------------------------------------------
\53\ U.S. Department of Energy--Energy Information
Administration. Annual Energy Outlook 2023 with Projections to 2050.
Washington, DC. Available at www.eia.gov/outlooks/aeo/ (last
accessed July 10, 2023).
---------------------------------------------------------------------------
6. 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. DOE is not aware of any data that suggest the cost
of maintenance changes as a function of efficiency for refrigerators,
refrigerator-freezers, and freezers. DOE therefore assumed that
maintenance costs are the same regardless of EL and do not impact the
LCC or PBP.
For the February 2023 NOPR as well as this direct final rule, DOE
developed a repair cost estimation method based on the average total
installed cost and average annual repair costs by PC and EL from the
September 2011 Final Rule. For each of three categories--standard-size
refrigerator-freezers, standard-size freezers, and compact
refrigeration products--DOE averaged the annual repair cost as a
fraction of the total installed cost at each EL. Based on this method,
DOE estimated consumers with standard-size refrigerator-freezers have
annual repair costs equal to 1.8 percent of their total installed cost,
consumers
[[Page 3058]]
with standard-size freezers have an annual repair cost of 0.8 percent
of their total installed cost, and consumers with compact refrigeration
products have an annual repair cost of 0.9 percent of their total
installed cost. Because high-efficiency products have a higher
installed cost, their estimated average annual repair costs are also
higher.
In response to the February 2023 NOPR, an individual commented that
product reliability is inversely related to the number of product
parts, and Strauch suggested that DOE use the MIL-HDBK-217 or the
Bellcore/Telcordia reliability guides to inform its maintenance and
repair cost analysis. (Individual Commenter, No. 59 at pp. 1-2) DOE
appreciates the recommendation, but notes that the data required to
properly use the MIL-HDBK-217 or Bellcore/Telcordia standards \54\
(e.g., parts count, parts stress conditions, and laboratory and field
failure rates of specific parts) is unavailable in the LCC analysis.
This is due to the fact that the LCC analyzes refrigerator,
refrigerator-freezer, and freezer representative units as opposed to
specific product models. Moreover, according to Hottinger Br[uuml]el &
Kj[aelig]r (``HBK'') there are a number of limitations to such
empirical methods, including: (1) the data used to inform these
traditional empirical models is typically outdated, (2) whereas the
models assume components fail independently of each other, in some
cases the overall system design is the causal factor, and (3) obtaining
high-quality field and manufacturing data to inform the adjustment
factors used in the models is difficult.\55\ For these reasons, for
this direct final rule analysis DOE continued to use the method used in
the February 2023 NOPR.
---------------------------------------------------------------------------
\54\ MIL-HDBK-217 is a handbook to establish and maintain
consistent and uniform methods for estimating the inherent
reliability of military electronic equipment and systems. Bellcore/
Telcordia is a similar reliability guide for the telecommunications
and electronics industry.
\55\ Available at www.hbkworld.com/en/knowledge/resource-center/articles/2022/mil-217-bellcore-telcordia-and-other-reliability-prediction-methods-for-electronic-products (last accessed July 13,
2023).
---------------------------------------------------------------------------
AHAM also commented that failed VIPs are unrepairable in the field
meaning manufacturers work to ensure VIPs will not fail prior to the
end of the product's useful life. (AHAM, No. 69 at p. 6) DOE
appreciates this information but notes that, due to a lack of available
data, the repair cost estimates used in the LCC analysis are not
component-specific.
7. Product Lifetime
DOE performed separate modeling of lifetime for standard-size
refrigerators and refrigerator-freezers, standard-size freezers, and
compact refrigeration products. For standard-size refrigerators,
refrigerator-freezers, and freezers, DOE estimated product lifetimes by
fitting a survival probability function to data on historical shipments
and the age distributions of installed stock from RECS 2005, RECS 2009,
RECS 2015, and RECS 2020. The survival function, which DOE assumed has
the form of a cumulative Weibull distribution, provides an average and
median lifetime. Moreover, the conversion from primary-to-secondary
refrigerator or refrigerator-freezer was also modeled as part of the
lifetime determination for standard-size refrigerators and
refrigerator-freezers.
For compact refrigerators, DOE estimated an average lifetime of 8.8
years using data on shipments and the number of units in use (stock).
For compact freezers, DOE did not have reliable stock data available to
compare against historical shipments. Therefore, DOE estimated an
average lifetime of 11.3 years by multiplying the average lifetime of
compact refrigerators by the ratio of the average lifetime of standard-
size freezers (18.4 years) to the average lifetime of standard-size
refrigerators and refrigerator-freezers (14.3 years).
In response to the February 2023 NOPR, an individual commented that
more stringent efficiency standards reduce the service lifetime of
refrigerators, refrigerator-freezers, and freezers. (Individual
Commenter, No. 59 at p. 1) DOE used the latest available data to inform
the lifetime distributions used in this direct final rule analysis, and
DOE does not have data to corroborate a causal connection between the
stringency of efficiency standards and the expected service lifetime of
refrigerators, refrigerator-freezers, and freezers. Therefore, DOE
continues to assume that amending the efficiency standards for
refrigerators, refrigerator-freezers, and freezers will not directly
impact the estimated service lifetime of these products.
8. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to residential and commercial consumers to estimate the present value
of future operating cost savings. DOE estimated distributions of
residential and commercial discount rates for refrigerators,
refrigerator-freezers, and freezers based on consumer financing costs
and the opportunity cost of consumer funds (for the residential sector)
and cost of capital of publicly traded firms (for the commercial
sector).
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\56\ 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.
---------------------------------------------------------------------------
\56\ 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 Finances
\57\ (``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 amended 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
[[Page 3059]]
approximately 4 percent (the average varies by PC).
---------------------------------------------------------------------------
\57\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. Available at www.federalreserve.gov/econresdata/scf/scfindex.htm (last accessed July 10, 2023).
---------------------------------------------------------------------------
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.
The average discount rate for the PC 11A commercial consumer sample is
6.8 percent.
In response to the February 2023 NOPR, AHAM commented that
operating costs and the depreciation of capital investments are
deductible costs for commercial end-users from Federal and State
corporate income taxes. AHAM suggested that DOE should incorporate the
effects of tax deductibility in the LCC analysis. (AHAM, No. 69 at p.
19) DOE responds that as noted in the comment, the estimation of
commercial discount rates accounts for the tax deductibility of the
energy costs and capital investment depreciation and therefore the net
present value of the future operating cost savings in the LCC analysis
should already reflect that effect.
In response to the February 2023 NOPR, AHAM further commented that
DOE used an inappropriate discount rate in its analysis of the effects
of standards on low-income households, claiming that it does not take
into account issues of capital availability or the non-financial costs
from a purchase. AHAM also presented data from their survey work with
Bellomy Research showing that the lowest 30 percent income groups have
no discretionary income to save, making it impossible for them to
rebalance their balance sheets after making a purchase. (AHAM, No. 69
at p. 11)
With respect to the issue of DOE's methodology for estimating
consumer discount rates, DOE maintains that the LCC is not predicting a
purchase decision, which DOE assumes to be AHAM's interpretation given
their focus on the availability of cash for appliance purchases.
Rather, the LCC estimates the net present value of the financial impact
of a given standard level over the lifetime of the product (i.e., 30
years) assuming the standard-compliant product has already been
installed and allows for comparison of this value across different
hypothetical minimum efficiency levels. It is applied to future-year
energy costs and non-energy operations and maintenance costs in order
to calculate the net present value of the appliance to a household at
the time of installation. The consumer discount rate reflects the
opportunity cost of receiving energy cost savings in the future, rather
than at the time of purchase and installation. The opportunity cost of
receiving operating cost savings in future years, rather than in the
first year of the modeled period, is dependent on the rate of return
that could be earned if invested into an interest-bearing asset or the
interest cost accrual avoided by paying down debt. Consumers in all
income bins generally hold a variety of assets (e.g., certificates of
deposit, stocks, bonds) and debts (e.g., mortgage, credit cards,
vehicle loan), which vary in amount over time as consumers allocate
their earnings, make new investments, etc. Thus, the consumer discount
rate is estimated as a weighted average of the rates and proportions of
the various types of assets and debts held by households in a given
income bin, as reported by the Survey of Consumer Finances. In the low-
income subgroup analysis, DOE specifically evaluated the impacts of
increased efficiency on low-income households using discount rates
estimated specifically for the low-income bin. DOE further notes, that
AHAM is a party to the Joint Agreement and is supportive of the
recommended standard adopted in this direct final rule.
See chapter 8 of the direct final rule TSD for further details on
the development of consumer discount rates.
9. 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 refrigerators,
refrigerator-freezers, and freezers, DOE used current shipments data
provided by AHAM in response to the NOPR for PCs 3, 5, 5A, 7, 9, 11A,
and 18, and model counts from DOE's CCMS database for PCs 5BI, 10, and
17. (AHAM, No. 69 at pp. 2-3) Models in the database were categorized
by capacity and assigned an efficiency level based on reported energy
use. In the absence of data on trends in efficiency, DOE assumed the
current efficiency distribution would be representative of the
efficiency distribution in the compliance year in the no-new-standards
case. The estimated market shares for the no-new-standards case for
refrigerators, refrigerator-freezers, and freezers are shown in Table
IV.11. See chapter 8 of the direct final rule TSD for further
information on the derivation of the efficiency distributions.
Table IV.11--No-New-Standards Case Efficiency Distributions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Market share (%)
adjusted ----------------------------------------------------------------------------
Product class volume
(cu. ft.) EL 0 EL 1 EL 2 EL 3 EL 4 EL 5 Total *
--------------------------------------------------------------------------------------------------------------------------------------------------------
3............................................................... 11.9 77.0 4.0 19.0 0.0 0.0 0.0 100.0
20.6 77.0 4.0 19.0 0.0 0.0 0.0 100.0
5............................................................... 23 90.0 7.0 2.0 0.5 0.5 ......... 100.0
30 90.0 7.0 2.0 0.5 0.5 ......... 100.0
5A.............................................................. 35 97.0 3.0 0.0 0.0 ......... ......... 100.0
5BI............................................................. 26 27.0 51.4 0.0 21.6 ......... ......... 100.0
7............................................................... 31.5 85.5 14.5 0.0 0.0 0.0 0.0 100.0
9............................................................... 29.3 83.0 16.0 0.0 0.0 1.0 ......... 100.0
10.............................................................. 26 95.3 4.7 0.0 0.0 0.0 ......... 100.0
11A............................................................. 1.7 0.0 100.0 0.0 0.0 0.0 ......... 100.0
4.4 0.0 100.0 0.0 0.0 0.0 ......... 100.0
17.............................................................. 9 19.4 58.2 13.4 9.0 ......... ......... 100.0
18.............................................................. 8.9 100.0 0.0 0.0 0.0 0.0 ......... 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 3060]]
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the refrigerator,
refrigerator-freezer, or freezer purchased by each sample household in
the no-new-standards case. The resulting percent shares within the
sample match the market shares in the efficiency distributions.
In the February 2023 NOPR, DOE performed a random assignment of
efficiency levels to consumers in its Monte Carlo sample. 88 FR 12452,
12484-12485. While DOE acknowledges that economic factors may play a
role when consumers decide on what type of refrigerator, refrigerator-
freezer, or freezer to install, assignment of refrigeration product
efficiency for a given installation, based solely on economic measures
such as life-cycle cost or simple payback period, most likely would not
fully and accurately reflect actual real-world installations. There are
a number of market failures discussed in the economics literature that
illustrate how purchasing decisions with respect to energy efficiency
are unlikely to be perfectly correlated with energy use, as described
below. DOE maintains that the method of assignment, which is in part
random, is a reasonable approach, because it simulates behavior in the
refrigeration product market, where market failures result in
purchasing decisions not being perfectly aligned with economic
interests, and is more realistic than relying only on apparent cost-
effectiveness criteria derived from the limited information in RECS.
DOE further emphasizes that its approach does not assume that all
purchasers of refrigeration products make economically irrational
decisions (i.e., the lack of a correlation is not the same as a
negative correlation). By using this approach, DOE acknowledges the
uncertainty inherent in the data and minimizes any bias in the analysis
by using random assignment, as opposed to assuming certain market
conditions that are unsupported given the available evidence.
The following discussion provides more detail about the various
market failures that affect refrigeration product purchases. First,
consumers are motivated by more than simple financial trade-offs. There
are consumers who are willing to pay a premium for more energy-
efficient products because they are environmentally conscious.\58\
There are also several behavioral factors that can influence the
purchasing decisions of complicated multi-attribute products, such as
refrigeration products. For example, consumers (or decision makers in
an organization) are highly influenced by choice architecture, defined
as the framing of the decision, the surrounding circumstances of the
purchase, the alternatives available, and how they are presented for
any given choice scenario.\59\ The same consumer or decision maker may
make different choices depending on the characteristics of the decision
context (e.g., the timing of the purchase, competing demands for
funds), which have nothing to do with the characteristics of the
alternatives themselves or their prices. Consumers or decision makers
also face a variety of other behavioral phenomena including loss
aversion, sensitivity to information salience, and other forms of
bounded rationality.\60\ Thaler, who won the Nobel Prize in Economics
in 2017 for his contributions to behavioral economics, and Sunstein
point out that these behavioral factors are strongest when the
decisions are complex and infrequent, when feedback on the decision is
muted and slow, and when there is a high degree of information
asymmetry.\61\ These characteristics describe almost all purchasing
situations of appliances and equipment, including refrigerators,
refrigerator-freezers, and freezers. The installation of a new or
replacement refrigeration products is done very infrequently, as
evidenced by the mean lifetime of 14.3 years for standard-size
refrigerators and refrigerator-freezers and 18.4 years for standard-
size freezers. Further, if the purchaser of the refrigerator,
refrigerator-freezer, or freezer is not the entity paying the energy
costs (e.g., a building owner and tenant), there may be little to no
feedback on the purchase. Additionally, there are systematic market
failures that are likely to contribute further complexity to how
products are chosen by consumers, as explained in the following
paragraphs. The first of these market failures--the split-incentive or
principal-agent problem--is likely to significantly affect
refrigerators, refrigerator-freezers, and freezers. The principal-agent
problem is a market failure that results when the consumer that
purchases the equipment does not internalize all of the costs
associated with operating the equipment. Instead, the user of the
product, who has no control over the purchase decision, pays the
operating costs. There is a high likelihood of split-incentive problems
in the case of rental properties where the landlord makes the choice of
what refrigeration product to install, whereas the renter is
responsible for paying energy bills.
---------------------------------------------------------------------------
\58\ Ward, D.O., Clark, C.D., Jensen, K.L., Yen, S.T., &
Russell, C.S. (2011): ``Factors influencing willingness-to pay for
the ENERGY STAR[supreg] label,'' Energy Policy, 39 (3), 1450-1458
(available at: www.sciencedirect.com/science/article/abs/pii/S0301421510009171) (last accessed August 1, 2023).
\59\ Thaler, R.H., Sunstein, C.R., and Balz, J.P. (2014).
``Choice Architecture'' in The Behavioral Foundations of Public
Policy, Eldar Shafir (ed).
\60\ Thaler, R.H., and Bernartzi, S. (2004). ``Save More
Tomorrow: Using Behavioral Economics in Increase Employee Savings,''
Journal of Political Economy 112(1), S164-S187. See also Klemick,
H., et al. (2015) ``Heavy-Duty Trucking and the Energy Efficiency
Paradox: Evidence from Focus Groups and Interviews,'' Transportation
Research Part A: Policy & Practice, 77, 154-166 (providing evidence
that loss aversion and other market failures can affect otherwise
profit-maximizing firms).
\61\ Thaler, R.H., and Sunstein, C.R. (2008). Nudge: Improving
Decisions on Health, Wealth, and Happiness. New Haven, CT: Yale
University Press.
---------------------------------------------------------------------------
In addition to the split-incentive problem, there are other market
failures that are likely to affect the choice of refrigerator,
refrigerator-freezer, or freezer product efficiency made by consumers.
For example, unplanned replacements due to unexpected failure of
equipment such as refrigeration products are strongly biased toward
like-for-like replacement (i.e., replacing the non-functioning
equipment with a similar or identical product). Time is a constraining
factor during unplanned replacements, and consumers may not consider
the full range of available options on the market, despite their
availability. The consideration of alternative product options is far
more likely for planned replacements and installations in new
construction.
Additionally, Davis and Metcalf \62\ conducted an experiment
demonstrating that, even when consumers are presented with energy
consumption information, the nature of the information available to
consumers (e.g., from EnergyGuide labels) results in an inefficient
allocation of energy efficiency across households with different usage
levels. Their findings indicate that households are likely to make
decisions regarding the efficiency of the air conditioning equipment of
their homes that do not result in the highest net present value for
their specific usage pattern (i.e., their decision is based on
imperfect information and, therefore, is not necessarily optimal).
Also, most consumers did not properly understand the labels
(specifically whether energy consumption and cost estimates were
national averages or specific to their
[[Page 3061]]
State). As such, consumers did not make the most informed decisions.
---------------------------------------------------------------------------
\62\ Davis, L.W., and G.E. Metcalf (2016): ``Does better
information lead to better choices? Evidence from energy-efficiency
labels,'' Journal of the Association of Environmental and Resource
Economists, 3(3), 589-625 (available at: www.journals.uchicago.edu/doi/full/10.1086/686252) (last accessed August 1, 2023).
---------------------------------------------------------------------------
In part because of the way information is presented, and in part
because of the way consumers process information, there is also a
market failure consisting of a systematic bias in the perception of
equipment energy usage, which can affect consumer choices. Attari et
al.\63\ show that consumers tend to underestimate the energy use of
large energy-intensive appliances (such as air conditioners,
dishwashers, and clothes dryers), but overestimate the energy use of
small appliances (such as light bulbs). Therefore, it is possible that
consumers systematically underestimate the energy use associated with
refrigerators, refrigerator-freezers, and freezers, resulting in less
cost-effective purchases.
---------------------------------------------------------------------------
\63\ Attari, S.Z., M.L. DeKay, C.I. Davidson, and W. Bruine de
Bruin (2010): ``Public perceptions of energy consumption and
savings.'' Proceedings of the National Academy of Sciences 107(37),
16054-16059 (available at: www.pnas.org/content/107/37/16054) (last
accessed August 1, 2023).
---------------------------------------------------------------------------
These market failures affect a sizeable share of the consumer
population. A study by Houde \64\ indicates that there is a significant
subset of consumers that appear to purchase appliances without taking
into account their energy efficiency and operating costs at all.
---------------------------------------------------------------------------
\64\ Houde, S. (2018): ``How Consumers Respond to Environmental
Certification and the Value of Energy Information,'' The RAND
Journal of Economics, 49 (2), 453-477 (available at:
onlinelibrary.wiley.com/doi/full/10.1111/1756-2171.12231) (last
accessed August 1, 2023).
---------------------------------------------------------------------------
The existence of market failures in the residential sector is well
supported by the economics literature and by a number of case studies.
If DOE developed an efficiency distribution that assigned refrigeration
product efficiency in the no-new-standards case solely according to
energy use or economic considerations such as life-cycle cost or
payback period, the resulting distribution of efficiencies within the
consumer sample would not reflect any of the market failures or
behavioral factors above. Thus, DOE concludes such a distribution would
not be representative of the refrigeration product market. Further,
even if a specific household is not subject to the market failures
above, the purchasing decision of refrigerator, refrigerator-freezer,
or freezer product efficiency can be highly complex and influenced by a
number of factors (e.g., aesthetics) not captured by the building
characteristics available in the RECS sample. These factors can lead to
households or building owners choosing a refrigeration product
efficiency that deviates from the efficiency predicted using only
energy use or economic considerations such as life-cycle cost or
payback period.
There is a complex set of behavioral factors, with sometimes
opposing effects, affecting the refrigeration product market. It is
impractical to model every consumer decision incorporating all of these
effects at this extreme level of granularity given the limited
available data. Given these myriad factors, DOE estimates the resulting
distribution of such a model, if it were possible, would be very
scattered with high variability. It is for this reason DOE utilizes a
random distribution (after accounting for efficiency market share
constraints) to approximate these effects. The methodology is not an
assertion of economic irrationality, but instead, it is a
methodological approximation of complex consumer behavior. The analysis
is neither biased toward high or low energy savings. The methodology
does not preferentially assign lower-efficiency refrigeration products
to households in the no-new-standards case where savings from the rule
would be greatest, nor does it preferentially assign lower-efficiency
refrigeration products to households in the no-new-standards case where
savings from the rule would be smallest. Some consumers were assigned
the refrigeration products that they would have chosen if they had
engaged in perfect economic considerations when purchasing the
products. Others were assigned less-efficient refrigeration products
even where a more-efficient product would eventually result in life-
cycle savings, simulating scenarios where, for example, various market
failures prevent consumers from realizing those savings. Still others
were assigned refrigeration products that were more efficient than one
would expect simply from life-cycle costs analysis, reflecting, say,
``green'' behavior, whereby consumers ascribe independent value to
minimizing harm to the environment.
10. 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 amended 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.\65\
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. For this direct final
rule, DOE excluded PC 9A--BI from the shipments analysis due to its
very small shipments volume.
---------------------------------------------------------------------------
\65\ 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.
---------------------------------------------------------------------------
Total shipments for each product category (i.e., standard-size
refrigerators and refrigerator-freezers, standard-size freezers,
compact refrigerators and refrigerator-freezers, and compact freezers)
are developed by considering the demand from various market segments.
For standard-size refrigerators and refrigerator-freezers, DOE
considered demand from replacements for units in stock that fail,
shipments to new construction, and the demand created by increased
saturation into existing households corresponding to
[[Page 3062]]
the conversion of a primary unit to secondary unit. For all other
product categories, DOE considered demand from replacements for units
in stock that fail, shipments to new construction, and shipments to
first-time owners in existing households. DOE calculated shipments due
to replacements using the retirement functions developed for the LCC
analysis (see chapter 8 of the direct final rule TSD for details). DOE
projected shipments to new construction using estimates for new housing
starts and the average saturation of each product category in new
households. Shipments to first-time owners were estimated by analyzing
the increasing penetration of products into existing households in each
product category. For standard-size refrigerators and refrigerator-
freezers, DOE estimated shipments from increased saturation
corresponding to the conversion of a primary unit to a secondary unit
utilizing the primary-to-secondary conversion function developed for
the LCC analysis. More detail on this methodology can be found in
chapter 8 of the direct final rule TSD.
For the direct final rule analysis, DOE incorporated data from
stakeholders into the shipments. Confidential aggregate historical
shipments data from 2015-2022 provided by AHAM were used to calibrate
the total shipments for standard-size refrigerator-freezers, compact
refrigerators, upright freezers, chest freezers, and built-in
refrigerator-freezers. For the direct final rule, DOE used the AHAM-
provided estimates for the efficiency distributions based on shipments
for standard-size refrigerator-freezers and compact freezers. (AHAM,
No. 69 at pp. 2-3)
Whirlpool requested that DOE provide data to indicate that there
would be no impact to appliance replacement at the proposed standard
level at TSL 5. (Whirlpool, No. 85 at pp. 8-9) DOE uses a price
elasticity of demand to address the impact of increased prices on
shipments based on an analysis using market-level appliance data
including refrigerators.\66\ DOE provides the description of the price
elasticity methodology in chapter 9 in the direct final rule TSD.
---------------------------------------------------------------------------
\66\ Fujita, K.S. Estimating Price Elasticity using Market-Level
Appliance Data. LBNL-188289. Lawrence Berkeley National Laboratory,
Berkeley, CA. August 2015. Available at escholarship.org/uc/item/1t65f9c3#main.
---------------------------------------------------------------------------
Chapter 9 in the direct final rule TSD provides further information
on the shipments analysis.
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.\67\ (``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 refrigerators, refrigerator-freezers, and freezers sold from 2027
through 2056 for all TSLs other than TSL 4, the Recommended TSL
detailed in the Joint Agreement. For TSL 4, DOE projected the energy
savings, operating cost savings, product costs, and NPV of consumer
benefits over the lifetime of refrigerators, refrigerator-freezers, and
freezers sold from 2029 through 2058 for the product classes listed in
Table I.1 and 2030 through 2059 for the product classes listed in Table
I.2.
---------------------------------------------------------------------------
\67\ 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, which is available in the docket, 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.12 summarizes the inputs and methods DOE used for the NIA
analysis for the direct final rule. Discussion of these inputs and
methods follows the table. See chapter 10 of the direct final rule TSD
for further details.
Table IV.12--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model.
Compliance Date of Standard....... 2027 for all TSLs other than TSL 4;
for TSL 4, 2029 for the product
classes listed in Table I.1 and
2030 for the product classes listed
in Table I.2.
Efficiency Trends................. No trend assumed.
Annual Energy Consumption per Unit Calculated for each efficiency level
based on inputs from energy use
analysis.
Total Installed Cost per Unit..... Prices for the year of compliance
are calculated in the LCC analysis.
Prices in subsequent years are
calculated incorporating price
learning based on historical data.
Annual Energy Cost per Unit....... Calculated for each efficiency level
using the energy use per unit, and
electricity prices and trends.
Repair and Maintenance Cost per Annual repair costs from LCC.
Unit.
Energy Price Trends............... AEO2023 projections (to 2050) and
fixed at 2050 thereafter.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO2023.
Discount Rate..................... Three and seven percent.
Present Year...................... 2023.
------------------------------------------------------------------------
[[Page 3063]]
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.9 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
an amended or new standard.
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. 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 the new standard level,
and the market share of products above the standard would remain
unchanged. In the absence of data on trends in efficiency, DOE assumed
no efficiency trend over the analysis period for both the no-new-
standards and standards cases. For a given case, market shares by
efficiency level were held fixed to their distribution in the
compliance year. The approach is further described in chapter 10 of the
direct final rule TSD.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered products between each
potential standards case (``TSL'') and the case with no new or amended
energy conservation standards. DOE calculated the national energy
consumption by multiplying the number of units (stock) of each 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
AEO2023. Cumulative energy savings are the sum of the NES for each year
over the timeframe of the analysis.
In this direct final rule analysis, DOE analyzed the energy and
economic impacts of a potential standard on all product classes in the
scope of refrigerators, refrigerator-freezers, and freezers. Results
for non-representative product classes (i.e., those not analyzed in the
engineering, energy use, and LCC analyses) are scaled using results for
the analyzed product class that best represents each non-representative
product class. For non-representative freestanding product classes,
energy use values are scaled by applying the ratio of the current
Federal standard baseline between the two product classes at a fixed
volume. For non-representative built-in product classes, DOE developed
energy scalars using the most similar freestanding representative
product class and assumed a 5-percent reduction in the increase in
efficiency at each EL relative to the corresponding EL for the
freestanding product class. For example, a 10-percent reduction in
energy use for PC 3 would correspond to a 5-percent reduction for PC 3-
BI. DOE assumes the incremental cost between efficiency levels is the
same for representative and non-representative product classes. See
chapter 10 of the direct final rule TSD for more details.
In this direct final rule, for the Recommended TSL (TSL 4), the
scaling of certain non-representative product classes (specifically PC
12, PC 4-BI, PC 7-BI, and PC 9-BI) has been modified from the February
2023 NOPR, consistent with the Joint Agreement. In the February 2023
NOPR, PC 12 was scaled to PC 11A with the same standard level for PC 12
as PC 11A under a given TSL. However, under the Joint Agreement, at the
Recommended TSL, PC 12 is scaled differently. At TSL 4, for PC 11A, the
standard is met at EL 2 and for PC 12, the standard level corresponds
to EL 1 for PC 11A. Thus, for TSL 4, DOE updated its scaling for PC 12
to reflect EL 1 rather than EL 2 from PC 11A. In the February 2023
NOPR, PC 4-BI and PC 7-BI were scaled to PC 7, and the standard level
under TSL 4 corresponded to EL 3 for PC 4-BI, PC 7-BI, and PC 7. Under
the Joint Agreement, at TSL 4, PC 7 continues to correspond to EL 3,
but PC 4-BI and PC 7-BI correspond to EL 4. Finally, in the February
2023 NOPR, PC 9--BI was scaled to PC 9, and both met the standard under
TSL 4 at EL1. At TSL4, the standard for PC 9 is met at EL 2 while PC-9
BI continues to be scaled to EL 1.
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. DOE did not find any
data on the rebound effect specific to refrigerators that would
indicate that consumers would alter their utilization of their product
as a result of an increase in efficiency. DOE assumed a rebound rate of
0. DOE did not receive any comments regarding this assumption in
response to the February 2023 NOPR.
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 statement of policy, 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 \68\ 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.
---------------------------------------------------------------------------
\68\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at www.eia.gov/forecasts/aeo/index.cfm (last accessed July
13, 2023).
---------------------------------------------------------------------------
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.2 of this document, DOE developed
refrigerators, refrigerator-freezers, and freezers price trends based
on an experience curve calculated using historical PPI data. For
efficiency levels with a single-speed compressor, DOE applied a price
trend
[[Page 3064]]
developed using the ``household refrigerator and home freezer
manufacturing'' PPI to the entire cost of the unit. For efficiency
levels with a variable-speed compressor, DOE applied a price trend
developed from the ``semiconductors and related device manufacturing''
PPI to the cost associated with the electronics used to control the
variable-speed compressor and the same price trend used for single-
speed compressor units to the non-controls portion of the cost of the
unit. By 2059, which is the end date of the projection period for the
Recommended TSL detailed in the Joint Agreement, the average single-
speed compressor refrigerators, refrigerator-freezers, and freezers
price is projected to drop 33-percent relative to 2030. 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
refrigerators, refrigerator-freezers, and freezers. In addition to the
default price trend, DOE considered two product price sensitivity
cases: For the single-speed compressor refrigerators, refrigerator-
freezers, and freezers and the non-variable-speed controls portion of
refrigerators, refrigerator-freezers, and freezers, DOE estimated the
high-price-decline and the low-price-decline scenarios based on
household refrigerator and home freezer PPI data limited to the period
between the period 1981-2008 and 2009-2021, respectively. For the
variable-speed controls portion of refrigerators, refrigerator-
freezers, and freezers, DOE estimated the high-price-decline and the
low-price-decline scenarios based on an exponential trend line fit of
the semiconductor PPI between the period 1994-2021 and 1967-1993,
respectively. 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 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
AEO2023, which has an end year of 2050. To estimate price trends after
2050, the 2046-2050 average was used for all years. As part of the NIA,
DOE also analyzed scenarios that used inputs from variants of the
AEO2023 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.
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.\69\ 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.
---------------------------------------------------------------------------
\69\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
georgewbush-whitehouse.archives.gov/omb/memoranda/m03-21.html (last
accessed July 10, 2023).
---------------------------------------------------------------------------
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels.
For this direct final rule, DOE analyzed the impacts of the
considered standard levels on low-income households and, for PC 11A, on
small businesses. For low-income households, the analysis used a subset
of the RECS 2020 sample composed of low-income households. DOE
separately analyzed different groups in the low-income household sample
using data from RECS on home ownership status and on who pays the
electricity bill. Low-income homeowners are analyzed equivalently to
how they are analyzed in the standard LCC analysis. Low-income renters
who do not pay their electricity bill are assumed to not be impacted by
any new or amended standards. In this case, the landlord purchases the
appliance and pays its operating costs, so is effectively the consumer
and the renter is not impacted. Low-income renters who do pay their
electricity bill are assumed to incur no first cost. DOE made this
assumption to acknowledge that the vast majority of low-income renters
may not pay to have their refrigerator, refrigerator-freezer, or
freezer replaced (that would be up to the landlord).
DOE notes that RECS 2020 indicates that a small fraction of low-
income households only have a single compact refrigerator and/or
freezer. Because this is the only refrigeration product in the
household, DOE assumed that the landlord typically supplies the
product. Additionally, RECS 2020 indicates that a small fraction of
low-income households have a refrigeration product that would be
categorized into PC 5, PC 5BI, or PC 5A. As a result, DOE did not do a
low-income subgroup analysis on PCs 5, 5BI, 5A, 11A, 17, and 18.
For small businesses, DOE used the same sample from CBECS 2018 that
was used in the standard LCC analysis but used discount rates specific
to small businesses. DOE used the LCC and PBP 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.
In response to the February 2023 NOPR, AHAM commented that amended
standards requiring more variable-speed compressors could lead to
higher upfront costs, disproportionately impacting low-income
consumers. (AHAM, No. 69 at p. 5) Whirlpool added that the proposed
standards would raise the cost of entry-level models, which are the
preferred models for low-income consumers. (Whirlpool, No. 70 at pp. 5-
6) As noted previously, many low-income consumers are renters who are
not expected to pay the incremental cost due to an amended standard.
For low-income homeowners who are expected to bear that incremental
cost, the analysis incorporates the higher incremental costs at each
considered TSL. DOE notes that at the Recommended TSL (TSL 4), the
estimated increase in installed cost relative to the baseline (EL 0)
product across PCs 3, 7, and 9 is less than $20. Moreover, in the
aggregate, DOE finds that low-income consumers have higher average LCC
savings and lower payback periods relative to the general population
(see the results in section
[[Page 3065]]
V.B.1.b of this document). DOE also finds that, in the aggregate, only
8.6 percent of impacted low-income consumers would experience a net
cost at TSL 4, meaning 91.4 percent would see no change or a net
benefit.
AHAM also commented that DOE has not supported its split-incentive
assumption for low-income renters (i.e., renters will reap benefits of
more efficient products through lower utility bills while landlords
have little to no incentive to purchase more efficient products) nor
has DOE considered the impact of amended standards on low-income
homeowners. (AHAM, No. 69 at p. 10) AHAM provided consumer research
results indicating that cost is the primary consideration for
households when purchasing a new refrigerator, low-income households
that make less than $25,000 per year would not be able to purchase a
new refrigerator, and 78 percent of such households would not pay $100
extra for a more efficient refrigerator that saved $50-$150 in utility
bills over 10 years. (AHAM, No. 69 at pp. 10-11) AHAM added that the
proposed standards in the February 2023 NOPR will result in
insignificant savings for consumers, which do not amount to a material
benefit, especially for low-income consumers. (AHAM, No. 69 at p. 15)
Whirlpool commented that DOE's assumption that landlords will absorb
increased appliance costs and not pass them on to tenants is incorrect.
(Whirlpool, No. 70 at p. 6)
The existence of a split-incentive across a substantial number of
U.S. households, in which a tenant pays for the cost of electricity
while the building owner furnishes appliances, has been identified
through a number of studies of residential appliance and equipment use
broadly. Building from early work including Jaffe and Stavins,\70\
Murtishaw and Sathaye \71\ discussed the presence of landlord-tenant
split incentives (i.e., the ``principal-agent problem''). While the
study did not solely focus on the low-income households, they estimated
that 33% of all residential refrigerator use is subject to the
principal-agent problem, largely within rental housing. Spurlock and
Fujita \72\ showed that 87% of low-income individuals who rented their
homes were found to pay the electricity bill resulting from their
energy use, such that they were likely subject to a scenario in which
their landlord purchased the appliance, but they paid the operating
costs. DOE notes that there continues to be a lack of data to
corroborate the notion that landlords pass on some, or all, of
increased appliance costs to tenants. Without representative data to
suggest otherwise, DOE has continued to analyze low-income renters
under the assumption that they pay no upfront costs under an amended
standard in this direct final rule. DOE further notes, that AHAM is a
party to the Joint Agreement and is supportive of the recommended
standard adopted in this direct final rule.
---------------------------------------------------------------------------
\70\ A.B. Jaffe and R.N. Stavins (1994). The energy-efficiency
gap What does it mean? Energy Policy, 22 (10) 804-810, 10.1016/0301-
4215(94)90138-4.
\71\ Murtishaw, S., & Sathaye, J. (2006). Quantifying the Effect
of the Principal-Agent Problem on US Residential Energy Use.
Lawrence Berkeley National Laboratory. Retrieved from https://escholarship.org/uc/item/6f14t11t.
\72\ Equity implications of market structure and appliance
energy efficiency regulation, Energy Policy, 165(112943), https://doi.org/10.1016/j.enpol.2022.112943.
---------------------------------------------------------------------------
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of refrigerators,
refrigerator-freezers, and freezers 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
amended 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 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 amended standards, the GRIM
estimates a range of possible impacts under different 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 refrigerators,
refrigerator-freezers, and freezers manufacturing industry based on the
market and technology assessment and publicly available information.
This included a top-down analysis of refrigerators, refrigerator-
freezers, and freezers 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 refrigerators, refrigerator-freezers, and
freezers manufacturing industry, including company filings of form 10-K
from the SEC,\73\ corporate annual reports, the U.S. Census Bureau's
Annual Survey of Manufactures (``ASM''),\74\ and reports from Dun &
Bradstreet.\75\
---------------------------------------------------------------------------
\73\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (``EDGAR'') system. Available at
www.sec.gov/edgar/search/ (last accessed July 5, 2023).
\74\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2021).'' Available at www.census.gov/programs-surveys/asm/data.html
(last accessed July 5, 2023).
\75\ The Dun & Bradstreet Hoovers login is available at:
app.dnbhoovers.com (last accessed July 5, 2023).
---------------------------------------------------------------------------
In Phase 2 of the MIA, DOE prepared a framework industry cash flow
analysis to quantify the potential impacts of amended energy
conservation standards. The GRIM uses several factors to determine a
series of annual cash flows starting with the announcement of the
standard and extending over a 30-year period following the compliance
date of the standard. These factors include annual expected revenues,
costs of sales, SG&A
[[Page 3066]]
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 refrigerators, refrigerator-freezers,
and freezers 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 conducted structured, detailed
interviews with representative manufacturers. During these interviews,
DOE discussed engineering, manufacturing, procurement, and financial
topics to validate assumptions used in the GRIM and to identify key
issues or concerns. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by amended
standards or that may not be accurately represented by the average cost
assumptions used to develop the industry cash flow analysis. Such
manufacturer subgroups may include small business manufacturers, low-
volume manufacturers (``LVMs''), niche players, and/or manufacturers
exhibiting a cost structure that largely differs from the industry
average. DOE identified two subgroups for a separate impact analysis:
small business manufacturers and domestic LVMs. The small business
subgroup is discussed in chapter 12 of the direct final rule TSD. The
domestic LVM subgroup is discussed in section V.B.2.d of this document
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
amended standards that result in a higher or lower industry value. The
GRIM uses a standard, annual discounted cash flow analysis that
incorporates manufacturer costs, manufacturer markups, shipments, and
industry financial information as inputs. The GRIM models change in
costs, distribution of shipments, investments, and manufacturer margins
that could result from an amended energy conservation standard. The
GRIM spreadsheet uses the inputs to arrive at a series of annual cash
flows, beginning in 2023 (the base year of the analysis) and continuing
30 years from the analyzed compliance year.\76\ DOE calculated INPVs by
summing the stream of annual discounted cash flows during this period.
For manufacturers of refrigerators, refrigerator-freezers, and
freezers, DOE used a real discount rate of 9.1 percent, which was
derived from industry financials and then modified according to
feedback received during manufacturer interviews.
---------------------------------------------------------------------------
\76\ For the no-new-standards case and all TSLs except for the
Recommended TSL, the analysis period ranges from 2023-2056. For the
Recommended TSL, the analysis period ranges from 2023-2058 for the
product classes listed in Table I.1 and 2023-2059 for the product
classes listed in Table I.2.
---------------------------------------------------------------------------
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
amended energy conservation standard on manufacturers. As discussed
previously, DOE developed critical GRIM inputs using a number of
sources, including publicly available data, results of the engineering
analysis, results of the shipments 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 MPCs of covered products can affect the revenues,
gross margins, and cash flow of the industry. 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 the base year (2023) to 30 years from the
analyzed compliance date.\77\ See chapter 9 of the direct final rule
TSD for additional details.
---------------------------------------------------------------------------
\77\ Id.
---------------------------------------------------------------------------
c. Product and Capital Conversion Costs
Amended 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) product conversion
costs; and (2) capital conversion costs. Product conversion costs are
investments in research, development, testing, marketing, and other
non-capitalized costs necessary to make product designs comply with
amended energy conservation standards. 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
DOE based its estimates of the product conversion costs necessary
to meet the varying efficiency levels on information from manufacturer
interviews, the design paths analyzed in the engineering analysis, and
market share and model count information. Generally, manufacturers
preferred to meet amended standards with design options that were
direct and relatively straight-forward component swaps, such as
incrementally more efficiency compressors. However, at higher
efficiency levels, manufacturers anticipated the need for platform
redesigns. Efficiency levels that potentially necessitate significantly
altered cabinet construction would require very large investments to
update designs. Manufacturers noted that increasing foam thickness
would require complete redesign of the cabinet, and potentially, the
liner and shelving, should there be changes in interior volume.
Additionally, extensive use of VIPs would require redesign of the
cabinet to maximize the benefits of VIPs.
Based on manufacturer feedback, DOE also estimated ``re-flooring''
costs associated with replacing obsolete display models in big-box
stores (e.g., Lowe's, Home Depot, Best Buy) due to
[[Page 3067]]
more stringent standards. Some manufacturers stated that with a new
product release, big-box retailers discount outdated display models,
and manufacturers share any losses associated with discounting the
retail price. The estimated re-flooring costs for each efficiency level
were incorporated into the product conversion cost estimates, as DOE
modeled the re-flooring costs as a marketing expense. Manufacturer data
was aggregated to protect confidential information.
DOE interviewed manufacturers accounting for approximately 81
percent of domestic refrigerator, refrigerator-freezer, and freezer
shipments. DOE scaled product conversion costs by model counts to
account for the portion of companies that were not interviewed. In
manufacturer interviews, DOE received feedback on the analyzed product
classes. For non-represented product classes, for which there was less
available data, DOE used model counts to scale the product conversion
cost estimates for analyzed product classes. See chapter 10 of the
direct final rule TSD for details on the mapping of analyzed product
classes to non-represented product classes. See chapter 12 of the
direct final rule TSD for details on product conversion costs.
Capital Conversion Costs
DOE relied on information derived from manufacturer interviews and
the engineering analysis to evaluate the level of capital conversion
costs manufacturers would likely incur at the considered standard
levels. During the interviews, manufacturers provided estimates and
descriptions of the required tooling and plant changes that would be
necessary to upgrade product lines to meet potential efficiency levels.
Based on these inputs, DOE modeled incremental capital conversion costs
for efficiency levels that could be reached with individual components
swaps. However, based on feedback, DOE modeled major capital conversion
costs when manufacturers would have to redesign their existing product
platforms. DOE used information from manufacturer interviews to
determine the cost of the manufacturing equipment and tooling necessary
to implement complete redesigns.
Increases in foam thickness require either reductions to interior
volume or increases to exterior volume. Since most refrigerators,
refrigerator-freezers, and freezers must fit within standard widths,
increases in foam thickness could result in the loss of interior
volume. The reduction of interior volume has significant consequences
for manufacturing. In addition to redesigning the cabinet to increase
the effectiveness of insulation, manufacturers must update all designs
and tooling associated with the interior of the product. This could
include the liner, shelving, drawers, and doors. Manufacturers would
need to invest in significant new tooling to accommodate the changes in
dimensions.
To minimize reductions to interior volume, manufacturers may choose
to adopt VIP technology. Extensive incorporation of VIPs into designs
require significant upfront capital due to differences in the handling,
storing, and manufacturing of VIPs as compared to typical polyurethane
foams. These investments are incorporated into the conversion costs
estimated in the MIA for efficiency levels that would likely
necessitate VIP technology. VIPs are relatively fragile and must be
protected from punctures and rough handling. If VIPs have leaks of any
size, the panel will eventually lose much of its thermal insulative
properties and structural strength. If already installed within a
cabinet wall, a punctured VIP may significantly reduce the structural
strength of the refrigerator, refrigerator-freezer, or freezer cabinet.
As a result, VIPs require cautious handling during the manufacturing
process. DOE did not receive detailed information about the percent of
VIPs that are punctured during the manufacturing process. Manufacturers
noted the need to allocate special warehouse space to ensure the VIPs
are not jostled or roughly handled in the manufacturing environment.
Furthermore, manufacturers anticipated the need for expansion of
warehouse space to accommodate the storage of VIPs. VIPs require
significantly more warehouse space than the polyurethane foams
currently used in most refrigerators, refrigerator-freezers, and
freezers. The application of VIPs can be challenging and requires
significant investment in hard-tooling or robotic systems to ensure the
panels are positioned properly within the cabinet or door.
Manufacturers noted that producing cabinets with VIPs is much more
labor- and time-intensive than producing cabinets with typical
polyurethane foams. Particularly in high-volume factories, which can
produce over a million refrigerator-freezers per year, the increase in
production time associated in increased VIP usage would necessitate
additional investment in manufacturing capacity to meet demand. The
cost of extending production lines varies greatly by manufacturer, as
it depends heavily on floor space availability in and around existing
manufacturing plants.
Higher volume manufacturers would generally have higher investments
as they have more production lines and greater production capacity. For
manufacturers of both PC 5 (``refrigerator-freezer--automatic defrost
with bottom-mounted freezer without an automatic ice maker'') and PC 5A
(``refrigerator-freezer--automatic defrost with bottom-mounted freezer
with through-the-door ice service''), cabinet changes in one product
class would likely necessitate improvements in the other product class
as they often share the same architecture, tooling, and production
lines.
DOE estimated industry capital conversion costs by extrapolating
the interviewed manufacturers' capital conversion costs for each
product class to account for the market share of companies that were
not interviewed. DOE used the shipments analysis to scale the capital
conversion cost estimates of the analyzed product class to account for
the non-represented product class. See chapter 12 of the direct final
rule TSD for additional details on capital conversion costs.
Manufacturers may follow different design paths to reach the
various efficiency levels analyzed. An individual manufacturer's
investments depend on a range of factors, including the company's
current product offerings and product platforms, existing production
facilities and infrastructure, and make vs. buy decisions for
components. DOE's conversion cost methodology incorporated feedback
from all manufacturers that took part in interviews and extrapolated
industry values. While industry average values may not represent any
single manufacturer, DOE's model provides reasonable estimates of
industry-level investments.
DOE adjusted the conversion cost estimates developed in support of
the February 2023 NOPR to 2022$ for this analysis.
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 or amended standard.
The conversion cost figures used in the GRIM can be found in section
V.B.2 of this document. For additional information on the estimated
capital and product conversion costs, see chapter 12 of the direct
final rule TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials,
[[Page 3068]]
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 amended energy
conservation standards: (1) a preservation-of-gross-margin-percentage
scenario; and (2) a preservation-of-operating-profit scenario. These
scenarios lead to different manufacturer markup values that, when
applied to the MPCs, result in varying revenue and cash flow impacts.
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
21 percent for all freestanding product classes and 29 percent for all
built-in product classes.\78\ Manufacturers tend to believe it is
optimistic to assume that they would be able to maintain the same gross
margin percentage as their production costs increase, particularly for
minimally efficient products. Therefore, this scenario represents a
high bound of industry profitability under an amended energy
conservation standard.
---------------------------------------------------------------------------
\78\ The gross margin percentages of 21 percent and 29 percent
are based on manufacturer markups of 1.26 and 1.40 percent,
respectively.
---------------------------------------------------------------------------
In the preservation-of-operating-profit scenario, as the cost of
production goes up under a standards case, manufacturers are generally
required to reduce their manufacturer markups 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 amended 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
For this direct final rule, DOE considered comments it had received
regarding its MIA presented in the February 2023 NOPR. The approach
used for this direct final rule is largely the same approach DOE had
used for the February 2023 NOPR analysis.
In response to the February 2023 NOPR, AHAM stated that
manufacturers may need to significantly redesign products in several
classes to comply with the proposed DOE standards. In some high-volume
product classes, AHAM asserted that there are no or very few shipments
of products that meet the proposed standards. AHAM stated that this
indicates that even when compliant models exist, they may not represent
real-world shipments. AHAM commented that for other product classes,
there is considerable variation in the availability of compliant models
and shipments. AHAM added that in many instances, there are few
compliant models and no reported shipments of compliant products,
suggesting that substantial redesign efforts may be required across the
market. (AHAM, No. 69 at pp. 2-3)
DOE relied on multiple sources, including feedback from
confidential manufacturer interviews and the design paths analyzed in
the engineering analysis, to estimate the likely levels of redesign and
investment required to meet each analyzed efficiency level. As
discussed in section IV.J.2.c of this document, meeting higher
efficiency levels may require product redesigns, particularly for
efficiency levels that necessitate changes to the cabinet structure
(i.e., changes to insulation such as increasing wall thickness or
incorporating VIPs). Those costs are incorporated into the MIA.
Regarding AHAM's concerns about low shipments at higher efficiency
levels, DOE incorporated data from stakeholders into the shipments
analysis for this direct final rule analysis. DOE used confidential
aggregate historical shipments data from 2015-2022 provided by AHAM to
calibrate the total shipments for standard-size refrigerator-freezers,
compact refrigerators, upright freezers, chest freezers, and built-in
refrigerator-freezers. For this direct final rule, DOE also used the
AHAM-provided estimates for the efficiency distributions based on
shipments for standard-size refrigerator-freezers and compact freezers.
See section IV.G of this document for additional information on the
shipments analysis.
In response to the February 2023 NOPR, Whirlpool commented that a
large decrease in INPV would stifle innovation as manufacturers would
be forced to invest product development resources to meet the amended
standards and potentially lay off U.S. production employees.
(Whirlpool, No. 70 at p. 5)
As discussed in section IV.J.2.c of this document, DOE's analysis
shows that as efficiency levels increase, more manufacturers would need
to dedicate more financial, engineering, laboratory, and marketing
resources to updating products to meet more stringent standards. DOE
accounts for those investments in the MIA (see section V.B.2.a of this
document). However, DOE disagrees with the assertion that redesigning
products to improve energy efficiency is in opposition to product
innovation. As indicated by manufacturers' participation in the
Environmental Protection Agency's (EPA) voluntary ENERGY STAR program
and the estimated shipments that meet ENERGY STAR levels, manufacturers
and consumers consider energy efficiency a product attribute. Of the 63
refrigerator, refrigerator-freezer, and freezer original equipment
manufacturers (OEMs) identified, approximately 46 OEMs manufacture
models that meet ENERGY STAR levels and certify those models with the
ENERGY STAR program. Approximately 22 percent of refrigerator,
refrigerator-freezer, and freezer shipments already meet ENERGY STAR
levels. Regarding the potential for a reduction in direct employment as
a result of amended standards, DOE provides a range of potential
quantitative impacts to direct employment and a discussion of the
potential qualitative impacts to direct employment in section V.B.2.b
of this document. Most major manufacturers with U.S. production
facilities currently produce a portion of their products outside of the
United States (e.g., Mexico). Adopting an amended standard that
necessitates large increases in labor content or large expenditures to
re-tool facilities could cause manufacturers to reevaluate domestic
production siting options. See section V.B.2.b of this document for
additional details on potential impacts to direct employment. DOE
further notes, that Whirlpool is a party to the Joint Agreement and is
supportive of the
[[Page 3069]]
recommended standard adopted in this direct final rule.
Whirlpool commented that adoption of the proposed standard levels
could make it difficult for multi-brand companies like Whirlpool to
differentiate their products and product lines from other manufacturers
as models become more technologically complex and costly. Whirlpool
added that this could lead to the elimination of certain product
segments and result in lost energy savings as consumers switch to more
energy-intensive product types. (Whirlpool, No. 70 at pp. 7-8)
DOE uses the GRIM, as described in section IV.J.2 of this document,
to determine the quantitative impacts on the refrigerators,
refrigerator-freezer, and freezer industry as a whole. DOE recognizes
that the industry impacts do not apply evenly across manufacturers.
Many manufacturers would need to update certain product designs to meet
amended standard levels. However, DOE expects that manufacturers would
still be able to differentiate their products and product lines by
various factors (e.g., price, technologies, consumer features, energy
efficiency). At the adopted level, all analyzed product classes will be
required to meet efficiency levels below max-tech levels. Thus, DOE
does not expect manufacturers would need to implement all analyzed
design options across their product portfolio to meet the adopted
levels. Furthermore, in this direct final rule, DOE is adopting the
Recommended TSL, which would require lower efficiency levels for high-
volume product classes such as PC 5A and PC 7, as compared to the
levels proposed in the February 2023 NOPR. Additionally, AHAM, a trade
organization representing the interests of their members, including
Whirlpool and other refrigerator, refrigerator-freezer, and freezer
OEMs, is a signatory of the Joint Agreement. As discussed in section
IV.A.1 of this document, DOE is adopting energy allowances for special
door and multi-door designs for some product classes. Therefore, DOE
expects that these types of features and others will remain prevalent
in the market and could offer means for product differentiation. See
section IV.A.1 of this document for additional information on the
energy use allowances.
The California Investor-Owned Utilities (``CA IOUs'') noted the
differences between PC 7 and PC 5A in DOE's proposed energy efficiency
standards for refrigerators, refrigerator-freezers, and freezers. The
CA IOUs commented that the main difference between the two classes is
the cost of moving to the VIP side walls and doors at max-tech EL, with
PC 7 having a substantially higher order of magnitude for capital
conversion costs compared to PC 5A. The CA IOUs recommended revising
the proposal to consider EL 5 for PC 7 instead of EL 4. The CA IOUs
requested that DOE elaborate on the reason for the differences in cost.
(CA IOUs, No. 72 at p. 5)
DOE relied on manufacturer feedback, among other sources, to derive
the estimated product and capital conversion costs at each efficiency
level for each directly analyzed product class. There are many reasons
why the incremental industry conversion costs at each efficiency level
could vary between product classes. These reasons include but are not
limited to differences in analyzed design options, production volume,
the number of models that would require redesign, the number of OEMs
engaged in manufacturing each product class, the age of the product
families and/or production equipment, and location of the production
facilities. For PC 7, manufacturers could include less VIPs to meet the
required efficiency level at EL 4 compared to EL 5. At EL 4, 75 percent
of the maximum area could incorporate VIPs whereas EL 5 could
incorporate VIPs for the maximum area on sidewalls and doors. As
discussed in section IV.J.2.c of this document, incorporation of VIPs
into designs requires significant upfront capital due to differences in
the handling, storing, and manufacturing of VIPs as compared to typical
polyurethane foams. DOE estimates the difference in capital conversion
costs to be $117.9 million between EL 4 and EL 5. For product
conversion costs, extensive use of VIPs would require redesign of the
cabinet to maximize the benefits of VIPs. DOE estimated the difference
to be $18.8 million between EL 4 and EL 5, which is attributed to
design efforts required to meet 75 percent of maximum area of VIPs at
EL 4 and the maximum area of VIPs at EL 5. Although manufacturers may
incorporate some VIPs (on side walls and doors) for EL 2 for PC 5A, EL
2 may be achieved by component swaps rather than product redesign based
on information gathered during manufacturer interviews. AHAM commented
the cumulative regulatory burden is significant for home appliance
manufacturers when redesigning products and product lines for consumer
clothes dryers, residential clothes washers, conventional cooking
products, refrigeration products, miscellaneous refrigeration products,
and room air conditioners. (AHAM, No. 69 at p. 20) AHAM asserted that
engineers will therefore need to spend all their time redesigning
products to meet more stringent energy efficiency standards, pulling
resources from other development efforts and business priorities. AHAM
suggested that DOE could reduce cumulative regulatory burden by spacing
out the timing of final rules, allowing more lead time by delaying the
publication of final rules in the Federal Register after they have been
issued, and reducing the stringency of standards such that fewer
products would require redesign. (Id. At p. 21) AHAM urged DOE to fully
review the cumulative impacts its rules will have on manufacturers (as
well as consumers). AHAM suggested that this review should include
examining the potential impact on the economy and inflation as a result
of reducing INPV so significantly. (Id. At p. 22)
DOE analyzes cumulative regulatory burden in accordance with
section 13(g) of the Process Rule. DOE details the rulemakings and
expected conversion expenses of Federal energy conservation standards
that could impact refrigerator, refrigerator-freezer, and freezer OEMs
that take effect approximately 3 years before the 2029 compliance date
and 3 years after the 2030 compliance date in section V.B.2.e of this
document. As shown in Table V.29 in section V.B.2.e of this document,
DOE considers the potential cumulative regulatory burden from other DOE
energy conservation standards rulemakings for consumer clothes dryers,
residential clothes washers, conventional cooking products,
refrigeration products, miscellaneous refrigeration products, and room
air conditioners in this direct final rule analysis. Regarding AHAM's
suggestion about spacing out the timing of final rules for home
appliance rulemakings, DOE has statutory requirements under EPCA on the
timing of rulemakings. For refrigerators, refrigerator-freezers, and
freezers, consumer conventional cooking products, residential clothes
washers, consumer clothes dryers, room air conditioners, and
dishwashers, amended standards apply to covered products manufactured 3
years after the date on which any new or amended standard is published.
(42 U.S.C. 6295(m)(4)(A)(i)) For miscellaneous refrigeration products,
amended standards apply 5 years after the date on which any new or
amended standard is published. (42 U.S.C. 6295(l)(2)) However, the
multi-product Joint Agreement recommends alternative compliance dates.
As discussed in section of this document, the Joint
[[Page 3070]]
Agreement recommendations are in accordance with the statutory
requirements of 42 U.S.C. 6295(p)(4) for the issuance of a direct final
rule. Therefore, as compared to the EPCA-required lead time,
manufacturers will have additional time to meet amended standards for
refrigerators, refrigerator-freezers, and freezers in this direct final
rule.
Regarding examining the cumulative impacts of energy conservation
standards rulemakings on manufacturers and consumers, DOE must follow
specific statutory criteria for prescribing new or amended standards
for covered products, including refrigerators, refrigerator-freezers,
and freezers. An amended standard must be designed to achieve the
maximum improvement in energy efficiency that is determined to be
technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) In its assessment of whether
standards are economically justified, DOE considers the impact of the
standard on manufacturers and consumers. DOE analyzes the impacts to
manufacturers in accordance with section 13 of the Process Rule and the
impacts to consumers in accordance with section 14 of the Process Rule.
Although DOE does not analyze the cumulative burden on consumers,
section V.B.1.a of this document discusses the economic impact of
amended standards on individual consumers, which is the main impact
consumers will face with a final amended energy conservation standard.
AHAM stated that it cannot comment on the accuracy of DOE's
approach for including how manufacturers might or might not recover
potential investments (i.e., the accuracy of DOE's manufacturer markup
scenarios) but that AHAM supports DOE's intent in the microwave ovens
supplemental notice of proposed rulemaking (``SNOPR'') (``August 2022
SNOPR'') energy conservation standards rulemaking to include those
costs and investments in the actual costs of products and retail
prices. 87 FR 52282. AHAM urged DOE to apply the same conceptual
approach used in the August 2022 SNOPR in this refrigerator/freezer and
all future rulemakings (i.e., to analyze a conversion-cost-recovery
manufacturer markup scenario). (AHAM, No. 69 at p. 18)
As discussed in section IV.J.2.d of this document, DOE modeled two
standards-case manufacturer markup scenarios to represent the
uncertainty regarding the potential impacts on prices and profitability
for manufacturers following the implementation of amended energy
conservation standards. For the February 2023 NOPR, DOE applied the
preservation-of-gross-margin-percentage scenario to reflect an upper
bound of industry profitability and a preservation-of-operating-profit
scenario to reflect a lower bound of industry profitability under
amended standards. DOE used these scenarios to reflect the range of
realistic profitability impacts under more stringent standards.
Manufacturing more efficient refrigerators, refrigerator-freezers, and
freezers is generally more expensive than manufacturing baseline
refrigerators, refrigerator-freezers, and freezers, as reflected by the
MPCs estimated in the engineering analysis. Under the preservation-of-
gross-margin scenario for refrigerators, refrigerator-freezers, and
freezers, incremental increases in MPCs at higher efficiency levels
result in an increase in per-unit dollar profit per unit sold. In
interviews, multiple manufacturers asserted that they would likely need
to reduce manufacturer markups under more stringent standards to remain
competitive in the marketplace. Therefore, the preservation of gross-
margin-scenario represents the upper bound of industry profitability
under amended standards. Applying the approach used in the microwave
ovens rulemaking (i.e., a conversion-cost-recovery scenario) would
result in manufacturers increasing manufacturer markups under amended
standards. Based on information gathered during confidential interviews
in support of the February 2023 NOPR and a review of financial
statements of companies engaged in manufacturing refrigerators,
refrigerator-freezers, and freezers, DOE does not expect that the
refrigerators, refrigerator-freezers, and freezers industry would
increase manufacturer markups under an amended standard. Furthermore,
in response to the February 2023 NOPR, DOE did not receive any public
or confidential data indicating that industry would increase
manufacturer markups in response to more stringent standards.
Therefore, DOE maintained the two manufacturer markup scenarios from
the February 2023 NOPR for this direct final rule analysis.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions in emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emissions intended to
represent the marginal impacts of the change in electricity consumption
associated with amended or new standards. The methodology is based on
results published for the AEO, including a set of side cases that
implement a variety of efficiency-related policies. The methodology is
described in appendix 13A in the direct final rule TSD. The analysis
presented in this notice uses projections from AEO2023. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (EPA).\79\
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\79\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12,
2021).
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FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the direct final rule TSD.
The emissions intensity factors are expressed in terms of physical
units per megawatt-hour (``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 national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2023 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2023,
including the emissions control programs discussed in the following
paragraphs.\80\
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\80\ For further information, see the Assumptions to AEO2023
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 July 13, 2023).
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[[Page 3071]]
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.\81\ AEO2023
incorporates implementation of CSAPR, including the update to the CSAPR
ozone season program emission budgets and target dates issued in 2016.
81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among
EGUs and is enforced through the use of tradable emissions allowances.
Under existing EPA regulations, for states subject to SO2
emissions limits under CSAPR, any excess SO2 emissions
allowances resulting from the lower electricity demand caused by the
adoption of an efficiency standard could be used to permit offsetting
increases in SO2 emissions by another regulated EGU.
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\81\ 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).
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However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants. 77 FR 9304 (Feb. 16, 2012). The direct final rule
establishes power plant emission standards for mercury, acid gases, and
non-mercury metallic toxic pollutants. 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 AEO2023.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOX
emissions would remain near the limit even if electricity generation
goes down. Depending on the configuration of the power sector in the
different regions and the need for allowances, however, NOX
emissions might not remain at the limit in the case of lower
electricity demand. That would mean that standards might reduce
NOX emissions in covered States. Despite this possibility,
DOE has chosen to be conservative in its analysis and has maintained
the assumption that standards will not reduce NOX emissions
in States covered by CSAPR. Standards would be expected to reduce
NOX emissions in the States not covered by CSAPR. DOE used
AEO2023 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
AEO2023, 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 GHG emissions, this analysis
uses the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
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
of conflict, environmental migration, and the value of ecosystem
services.
For this direct final rule, DOE considered comments it had received
regarding its approach for monetizing greenhouse gas emissions in the
February 2023 NOPR. The approach used for this direct final rule is
largely the same approach DOE had used for the February 2023 NOPR
analysis.
The attorneys general (AGs) of TN, AL, et al. commented that DOE's
misguided use of the SC-GHG estimates is a significant problem with the
proposed standards. The AGs of TN, AL, et al. attached as evidence
their comment letter in response to DOE's proposed standards for
consumer conventional cooking products, in which they expressed
detailed concerns about the IWG estimates. The AGs of TN, AL, et al.
noted that the reversal of the preliminary injunction that a coalition
of States received in Louisiana v. Biden, 585 F. Supp. 3d 840 (W.D. La.
2022) does not change the criticisms in the aforementioned comment
letter. (The AGs of TN, AL, et al., No. 68 at pp. 1-2)
The IWG's SC-GHG estimates 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.
A number of criticisms raised in the comment letter attached by the AGs
of TN, AL, et al. were addressed by the IWG in its February 2021 SC-GHG
TSD, and previous parts of this section summarized the IWG's
conclusions on
[[Page 3072]]
key issues, including the question of discount rates cited by the
Competitive Enterprise Institute (``CEI''). The IWG's 2016 TSD \82\ and
the 2017 National Academies report provide detailed discussions of the
ways in which the modeling underlying the development of the SC-GHG
estimates addressed quantified sources of uncertainty. In the February
2021 SC-GHG TSD, the IWG stated that the models used to produce the
interim estimates do not include all of the important physical,
ecological, and economic impacts of climate change recognized in the
climate change literature. For these same impacts, the science
underlying their ``damage functions'' lags behind the most recent
research. In the judgment of the IWG, these and other limitations
suggest that the range of four interim SC-GHG estimates presented in
the TSD likely underestimate societal damages from GHG emissions. The
IWG is in the process of assessing how best to incorporate the latest
peer-reviewed science and the recommendations of the National Academies
to develop an updated set of SC-GHG estimates.
---------------------------------------------------------------------------
\82\ Interagency Working Group on Social Cost of Greenhouse
Gases, United States Government. Technical Update on the Social Cost
of Carbon for Regulatory Impact Analysis Under Executive Order
12866. August 2016. Available at www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf (last accessed January
18, 2022).
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AHAM objected to DOE using the social cost of carbon and other
monetization of emissions reductions benefits in its analysis of the
factors EPCA requires DOE to balance in determining the appropriate
standard. AHAM stated that while it may be acceptable for DOE to
continue its current practice of examining the SCC and monetization of
other emissions reductions benefits as informational so long as the
underlying interagency analysis is transparent and vigorous, the
monetization analysis should not impact the TSLs DOE selects as a new
or amended standard. (AHAM, No. 69 at pp. 22-23) The AGs of TN, AL, et
al. stated that even if it is important to take into account emissions
reductions when considering the need for national energy conservation
(as DOE has claimed), the IWG estimates are unlawful and poor methods
for doing so. The AGs of TN, AL, et al. concluded that the IWG's SC-GHG
estimates are fundamentally flawed and are an unreliable metric on
which to base administrative action. (The AGs of TN, AL, et al., No. 68
at pp. 1-2)
As stated in section III.F.1.f of this document, DOE accounts for
the environmental and public health benefits associated with the more
efficient use of energy, including those connected to global climate
change, as they are important to take into account when considering the
need for national energy conservation. (See 42 U.S.C.
6295(o)(2)(B)(i)(IV)) In addition, Executive Order 13563, which was re-
affirmed on January 21, 2021, stated that each agency must, among other
things: ``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).'' For these reasons, DOE
includes the monetized value of emissions reductions in its evaluation
of potential standard levels. While the benefits associated with
reduction of GHG emissions inform DOE's evaluation of potential
standards, the action of proposing or adopting specific standards is
not ``based on'' the SC-GHG values, as DOE would reach the same
conclusion regarding the economic justification of standards presented
in this direct final rule without considering the social cost of
greenhouse gases.
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 proposed rulemaking 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 proposed by DOE.
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions using SC-GHG values that
were based on the interim values presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates under Executive Order 13990, published in February 2021 by
the IWG. The SC-GHG is the monetary value of the net harm to society
associated with a marginal increase in emissions in a given year, or
the benefit of avoiding that increase. In principle, the SC-GHG
includes the value of all climate change impacts, including (but not
limited to) changes in net agricultural productivity, human health
effects, property damage from increased flood risk and natural
disasters, disruption of energy systems, risk of conflict,
environmental migration, and the value of ecosystem services. The SC-
GHG therefore, reflects the societal value of reducing emissions of the
gas in question by one metric ton. The SC-GHG is the theoretically
appropriate value to use in conducting benefit-cost analyses of
policies that affect CO2, N2O, and CH4
emissions. As a member of the IWG involved in the development of the
February 2021 SC-GHG TSD, DOE 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-GHG 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.\83\ 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
[[Page 3073]]
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).\84\ 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 5I).
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.
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\83\ 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.
\84\ 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.
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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
proposed 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 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 proposed 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 SC-GHG 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,\85\ and
recommended that discount rate uncertainty and relevant aspects of
intergenerational ethical considerations be accounted for in selecting
future discount rates.
---------------------------------------------------------------------------
\85\ Interagency Working Group on Social Cost of Carbon, Social
Cost of Carbon for Regulatory Impact Analysis under Executive Order
12866 (2010) United States Government. Available at www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf (last
accessed Jan. 3, 2023); 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). 78 FR 70586
(November 26, 2013). Available at www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact (last accessed
April 15, 2022); 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). Available at www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf (last accessed Jan. 3, 2023);
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).
Available at www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf (last accessed Jan. 3, 2023).
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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
[[Page 3074]]
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-
percent and 7-percent 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-percent 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 SC-GHG 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
[regulatory impact analyses] 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 above 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 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.\86\ 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 SC-GHG 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.
---------------------------------------------------------------------------
\86\ Interagency Working Group on Social Cost of Greenhouse
Gases. 2021. Technical Support Document: Social Cost of Carbon,
Methane, and Nitrous Oxide Interim Estimates under Executive Order
13990. February. United States Government. Available at
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/ (last accessed July 12, 2023).
---------------------------------------------------------------------------
DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this NOPR 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 developed for the IWG's February 2021 SC-GHG TSD.
Table IV.13 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.
[[Page 3075]]
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.\87\
---------------------------------------------------------------------------
\87\ For example, the February 2021 SC-GHG 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.
Table IV.13--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
------------------------------------------------------------------
Year 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
2020......................................... 14 51 76 152
2025......................................... 17 56 83 169
2030......................................... 19 62 89 187
2035......................................... 22 67 96 206
2040......................................... 25 73 103 225
2045......................................... 28 79 110 242
2050......................................... 32 85 116 260
----------------------------------------------------------------------------------------------------------------
For 2051 to 2070, DOE used SC-CO2 estimates published by
EPA, adjusted to 2020$.\88\ These estimates are based on methods,
assumptions, and parameters identical to the 2020-2050 estimates
published by the IWG (which were based on EPA modeling). DOE expects
additional climate benefits to accrue for any longer-life
refrigerators, refrigerator-freezers, and freezers after 2070, but a
lack of available SC-CO2 estimates for emissions years
beyond 2070 prevents DOE from monetizing these potential benefits in
this analysis.
---------------------------------------------------------------------------
\88\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed January 13, 2023).
---------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2022$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. To calculate a present value of the stream of
monetary values, DOE discounted the values in each of the four cases
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
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 SC-GHG TSD. Table IV.14 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 recommended by
the IWG. DOE derived values after 2050 using the approach described
above for the SC-CO2.
Table IV.14--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 Discount rate and statistic SC-N2O Discount rate and statistic
-------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% 95th 5% 3% 2.5% 3% 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 2500 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 2022$ using the implicit price deflator for
gross domestic product (``GDP'') from the Bureau of Economic Analysis.
To calculate a present value of the stream of monetary values, DOE
discounted the values in each of the 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 the direct final rule, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using benefit-per-ton estimates for that sector from the
EPA's Benefits Mapping and Analysis Program.\89\ DOE used EPA's values
for PM2.5-related benefits associated with NOX
and SO2 and for ozone-related benefits associated with
NOX for 2025, 2030, and 2040, calculated with discount rates
of 3 percent and 7 percent. DOE used linear interpolation
[[Page 3076]]
to define values for the years not given in the 2025 to 2040 period;
for years beyond 2040, the values are held constant. DOE combined the
EPA benefit-per-ton estimates with regional information on electricity
consumption and emissions to define weighted-average national values
for NOX and SO2 as a function of sector (see
appendix 14B of the NOPR TSD).
---------------------------------------------------------------------------
\89\ Estimating the Benefit per Ton of Reducing PM2.5
Precursors from 21 Sectors. Available at www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors (last
accessed July 19, 2023).
---------------------------------------------------------------------------
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 AEO2023. 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
AEO2023 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. 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.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (``BLS''). BLS regularly publishes its estimates of
the number of jobs per million dollars of economic activity in
different sectors of the economy, as well as the jobs created elsewhere
in the economy by this same economic activity. Data from BLS indicate
that expenditures in the utility sector generally create fewer jobs
(both directly and indirectly) than expenditures in other sectors of
the economy.\90\ 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.
---------------------------------------------------------------------------
\90\ 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/sites/default/files/methodologies/RIMSII_User_Guide.pdf (last accessed
July 17, 2023).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this direct final rule using an input/output model
of the U.S. economy called Impact of Sector Energy Technologies version
4 (``ImSET'').\91\ 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.
---------------------------------------------------------------------------
\91\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W.
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User's Guide. 2015. Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and that 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 (2029/30-2033/4), where these uncertainties
are reduced. For more details on the employment impact analysis, see
chapter 16 of the direct final rule TSD.
O. Other Comments
As discussed previously, DOE considered relevant comments, data,
and information obtained during its own rulemaking process in
determining whether the recommended standards from the Joint Agreement
are in accordance with 42 U.S.C. 6295(o). And while some of those
comments were directed at specific aspects of DOE's analysis of the
Joint Agreement under 42 U.S.C. 6295(o), others were more generally
applicable to DOE's energy conservation standards rulemaking program as
a whole. The ensuing discussion focuses on these general comments
concerning energy conservation standards issued under EPCA.
1. Commerce Clause
The AGs of TN, AL, et al. commented that DOE's approach to
Congress's Commerce Clause is improper because precedent dictates that
Congress can only regulate intrastate activity under the Commerce
Clause when that activity ``substantially affects interstate
commerce.'' (AGs of TN, AL, et al., No. 0068 at pp. 3-5) The AGs of TN,
AL, et al. commented that for the proposed standards to reach the
intrastate market for refrigerators, refrigerator-freezers, and
freezers, DOE must show that the intrastate activity covered by 42
U.S.C. 6291(17) and 6302(5) substantially affects the interstate market
for those products and the proposed standards show no constitutional
basis for applying the standards to intrastate commerce in
refrigerators, refrigerator-freezers, and freezers. (Id.) The AGs of
TN, AL, et al. added that if such an
[[Page 3077]]
analysis showed the intrastate market did not substantially affect the
interstate market (and so was not properly the subject of Federal
regulation), then DOE would be obligated to redo its cost-benefit
analysis since the proposed standards would apply to a more limited set
of products--those traveling interstate. (Id.) Finally, the AGs of TN,
AL, et al. requested that even if DOE found that the intrastate market
substantially affected interstate commerce, DOE should nevertheless
exclude intrastate activities from the proposed standards to ``maintain
a healthy balance of power between the States and the Federal
Government.'' (Id. at 4-5)
DOE responds that it believes the scope of both the standard
proposed in the NOPR and the amended standard adopted in this direct
final rule properly includes all refrigerators, refrigerator-freezers,
and freezers distributed in commerce for personal use or consumption
because intrastate state activity regulated by 42 U.S.C. 6291(17) and
6302 is inseparable from and substantially affects interstate commerce.
DOE has clear authority under EPCA to regulate the energy use of a
variety of consumer products and certain commercial and industrial
equipment, including the subject refrigerators, refrigerator-freezers,
and freezers. See 42 U.S.C. 6295. Based on this statutory authority,
DOE has a long-standing practice of issuing standards with the same
scope as the standard in this direct final rule. For example, DOE has
maintained a similar scope of products in the final rule that
established the current standards for refrigerators, refrigerator-
freezers, and freezers, which was published on September 15, 2011 (76
FR 57516), and in the final rule establishing the preceding set of
standards for these products, published on April 28, 1997 (62 FR
23102). DOE disagrees with the AGs of TN, AL, et al.'s contention that
the Commerce Clause, the Tenth Amendment, the Major Questions Doctrine,
or any canons of statutory construction limit DOE's clear and long-
standing authority under EPCA to adopt the standard, including its
scope, in this direct final rule. A further discussion regarding the
AGs of TN, AL, et al.'s federalism concerns can be found at section
VI.E of this document.
2. National Academy of Sciences Report
The National Academies of Sciences, Engineering, and Medicine
(``NAS'') periodically appoint a committee to peer review the
assumptions, models, and methodologies that DOE uses in setting energy
conservation standards for covered products and equipment. The most
recent such peer review was conducted in a series of meetings in 2020,
and NAS issued the report \92\ in 2021 detailing its findings and
recommendations on how DOE can improve its analyses and align them with
best practices for cost-benefit analysis.
---------------------------------------------------------------------------
\92\ National Academies of Sciences, Engineering, and Medicine.
2021. Review of Methods Used by the U.S. Department of Energy in
Setting Appliance and Equipment Standards. Washington, DC: The
National Academies Press. Available at doi.org/10.17226/25992 (last
accessed August 2, 2023).
---------------------------------------------------------------------------
AHAM stated that despite previous requests from AHAM and others,
DOE has failed to review and incorporate the recommendations of the NAS
report, instead indicating that it will conduct a separate rulemaking
process without such a process having been initiated. (AHAM, No. 69 at
pp. 9-10) AHAM further stated that DOE seems to be ignoring the
recommendations in the NAS Report and even conducting analysis that is
opposite to the recommendations. AHAM commented that DOE cannot
continue to perpetuate the errors in its analytical approach that have
been pointed out by stakeholders and the NAS report as to do so will
lead to arbitrary and capricious rules. (Id.)
As discussed, the rulemaking process for establishing new or
amended standards for covered products and equipment are specified at
appendix A to subpart C of 10 CFR part 430. DOE periodically examines
and revises these provisions in separate rulemaking proceedings. The
recommendations provided in the 2011 NAS report, which pertain to the
processes by which DOE analyzes energy conservation standards, will be
considered by DOE in a separate rulemaking process.
3. Family Well-Being
The AGs of TN, AL, et al. submitted a joint comment that DOE's
proposed standards regulate an appliance that is commonly used in
family kitchens, and the costs they impose affect every family's
budget, forcing lower-income families to make difficult financial
decisions. Therefore, the AGs of TN, AL, et al. requested that DOE
provide the assessment required by section 654 of the Treasury and
General Government Appropriations Act, 1999, which considers the impact
of the Proposed Standards on family well-being. (The AGs of TN, AL, et
al., No. 68 at pp. 5-6)
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 proposed rule or policy that may affect
family well-being. Although this direct final rule would not have any
impact on the autonomy or integrity of the family as an institution as
defined, this rule could impact a family's well-being. When developing
a Family Policymaking Assessment, agencies must assess whether: (1) the
action strengthens or erodes the stability or safety of the family and,
particularly, the marital commitment; (2) the action strengthens or
erodes the authority and rights of parents in the education, nurture,
and supervision of their children; (3) the action helps the family
perform its functions, or substitutes governmental activity for the
function; (4) the action increases or decreases disposable income or
poverty of families and children; (5) the proposed benefits of the
action justify the financial impact on the family; (6) the action may
be carried out by State or local government or by the family; and
whether (7) the action establishes an implicit or explicit policy
concerning the relationship between the behavior and personal
responsibility of youth, and the norms of society.
DOE has considered how the proposed benefits of this rule compare
to the possible financial impact on a family (the only factor listed
that is relevant to this rule). As part of its rulemaking process, DOE
must determine whether the energy conservation standards contained in
this direct final rule are economically justified. As discussed in
section V.C.1 of this document, DOE has determined that the standards
are economically justified because the benefits to consumers far
outweigh the costs to manufacturers. Families will also see LCC savings
as a result of this rule. Moreover, as discussed further in section
V.B.1 of this document, DOE has determined that for the for low-income
households, average LCC savings and PBP at the considered efficiency
levels are improved (i.e., higher LCC savings and lower payback period)
as compared to the average for all households. Further, the standards
will also result in climate and health benefits for families. Numerous
individuals commented against proposed standards. Comments cited cost
increases on consumers, narrowing of consumer choice, and government
overregulation. (Individual Commenters, No. 47-53, 56, 58, 59 at p. 1)
As discussed in section II.A of this document, DOE conducted
numerous analyses in support of this direct final rule consistent with
EPCA, which requires that DOE consider many factors, including those
concerns raised
[[Page 3078]]
by commenters. Analyses include the potential negative impacts on
consumers and manufacturers and an assessment of the impact relative to
the cost and energy savings resulting from amended standards, which are
discussed in further detail in sections IV.F, IV.H, and IV.J of this
document. DOE conducted its engineering analysis to determine standards
that are applicable to reducing energy consumption while remaining
technologically feasible. The engineering analysis is discussed in
greater detail throughout section IV.C of this document. DOE notes that
the comments on government overregulation lack the necessary
specificity to properly address them in this context. However, as
mentioned above, DOE conducted the analysis in this rulemaking
consistent with the requirements in EPCA and those used in past
rulemakings for this product.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
refrigerators, refrigerator-freezers, and freezers. It addresses the
TSLs examined by DOE, the projected impacts of each of these levels if
adopted as energy conservation standards for refrigerators,
refrigerator-freezers, and freezers, 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 amended 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 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 six TSLs for refrigerators, refrigerator-
freezers, and freezers. DOE developed TSLs that combine efficiency
levels for each analyzed product class. TSL 1 represents a modest
increase in efficiency, corresponding to the lowest analyzed efficiency
level above the baseline for each analyzed product class. TSL 2
represents an increase in efficiency of 10 percent across the product
classes analyzed, consistent with ENERGY STAR requirements, except for
PC 10, for which a majority of consumers would experience a net cost at
all considered ELs. Efficiency improvements for product class 10 were
considered only for TSL 1 and max-tech TSL 6. TSL 3 increases the
stringency for PCs 5, 5A, 7, 11A, and 18 and increases NES while
keeping economic impacts on consumers relatively modest. TSL 4 is the
Recommended TSL detailed in the Joint Agreement. TSL 4 increases the
proposed standard level for PCs 3 and 9, as well as the expected NES,
while average LCC savings are positive for every product class. TSL 4
also corresponds to different compliance years than the other TSLs.
Rather than a compliance year of 2027, for TSL 4, 2029 is the
compliance year for the product classes listed in Table I.1 and 2030 is
the compliance year for the product classes listed in Table I.2. TSL 5
increases the proposed standard level for PC 5A and PC 7, decreases the
proposed standard level for PC 9, and increases the expected overall
NES, while average LCC savings remain positive for every product class.
TSL 6 represents max-tech. DOE presents the results for the TSLs in
this document, while the results for all efficiency levels that DOE
analyzed are in the direct final rule TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential amended energy conservation
standards for refrigerators, refrigerator-freezers, and freezers.
Table V.1--Trial Standard Levels for Refrigerators, Refrigerator-Freezers, and Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC 3 PC 5 PC5-BI PC 5A PC 7 PC 9 PC 10 PC 11A PC 17 PC 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1.......................... EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1 EL 1
TSL 2.......................... EL 2 EL 1 EL 1 EL 1 EL 2 EL 1 EL 0 * EL 1 EL 1 EL 1
TSL 3.......................... EL 2 EL 2 EL 1 EL 2 EL 3 EL 1 EL 0* EL 2 EL 1 EL 2
TSL 4 **....................... EL 3 EL 2 EL 1 EL 2 EL 3 EL 2 EL 0 * EL 2 EL 1 EL 2
TSL 5.......................... EL 3 EL 2 EL 1 EL 3 EL 4 EL 1 EL 0 * EL 2 EL 1 EL 2
TSL 6.......................... EL 5 EL 4 EL 3 EL 3 EL 5 EL 4 EL 4 EL 4 EL 3 EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE did not consider efficiency levels above baseline for PC 10 for TSLs 2-5.
** Recommended TSL from the Joint Agreement. This TSL also includes different standard levels for the non-representative PCs 4-BI, 5A-BI, 7-BI, 9-BI, 9A-
BI and 12. The compliance year varies by product class. See the Joint Agreement for details.
Section IV.C.3 shows the design options determined to be required
for representative products of each analyzed class as a function of the
TSLs.
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on refrigerator, refrigerator-
freezer, and freezer consumers by looking at the effects that potential
amended standards at each TSL would have on the LCC and PBP. DOE also
examined the impacts of potential standards on selected consumer
subgroups. These analyses are discussed in the following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., 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.
Tables V.2 through V.21 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 in the no-new-standards case in the compliance year
(see section IV.F.9 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
[[Page 3079]]
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 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 830.22 68.31 937.19 1,767.41 ........... 14.5
1........................................... 1 834.70 65.19 902.11 1,736.81 1.4 14.5
2-3......................................... 2 857.14 61.93 868.69 1,725.83 4.2 14.5
4........................................... 3 838.61 58.22 835.33 1,673.94 4.8 14.5
5........................................... 3 882.91 58.32 831.71 1,714.63 5.3 14.5
4 959.74 55.15 809.28 1,769.02 9.8 14.5
6........................................... 5 999.59 50.11 758.46 1,758.05 9.3 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Product Class 3
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 30.50 3.9
2-3.................................................... 2 40.14 17.3
4...................................................... 3 50.91 28.3
5...................................................... 3 43.46 34.2
4 -10.94 70.7
6...................................................... 5 0.03 67.1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.4--Average LCC and PBP Results for Product Class 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 1,312.92 103.02 1,441.88 2,754.80 ........... 14.5
1-2......................................... 1 1,343.59 95.86 1,364.05 2,707.64 4.3 14.5
3........................................... 2 1,382.17 91.75 1,323.25 2,705.42 6.1 14.5
4........................................... 2 1,313.51 91.73 1,329.76 2,643.28 5.6 14.5
5........................................... 2 1,382.17 91.75 1,323.25 2,705.42 6.1 14.5
3 1,433.17 87.11 1,278.50 2,711.67 7.6 14.5
6........................................... 4 1,464.67 85.43 1,264.79 2,729.46 8.6 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Product Class 5
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-2.................................................... 1 46.90 18.2
3...................................................... 2 45.47 39.4
4...................................................... 2 55.23 33.6
5...................................................... 2 45.47 39.4
3 38.19 52.8
6...................................................... 4 20.22 60.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
[[Page 3080]]
Table V.6--Average LCC and PBP Results for Product Class 5BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 1,579.54 106.75 1,534.74 3,114.28 ........... 14.5
1-3......................................... 1 1,603.84 96.55 1,420.31 3,024.15 2.4 14.5
4........................................... 1 1,550.34 96.23 1,423.25 2,973.59 2.1 14.5
5........................................... 1 1,603.84 96.55 1,420.31 3,024.15 2.4 14.5
2 1,659.01 91.45 1,371.03 3,030.04 5.2 14.5
6........................................... 3 1,714.16 90.43 1,369.31 3,083.47 8.2 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.7--Average LCC Savings Relative to the No-New-Standards Case for Product Class 5BI
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-3.................................................... 1 86.19 1.0
4...................................................... 1 91.13 0.5
5...................................................... 1 86.19 1.0
2 22.77 44.8
6...................................................... 3 -30.73 61.0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.8--Average LCC and PBP Results for Product Class 5A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 1,460.58 128.51 1,772.25 3,232.84 ........... 14.5
1-2......................................... 1 1,487.03 114.95 1,618.23 3,105.26 1.9 14.5
3........................................... 2 1,546.91 108.78 1,557.08 3,103.99 4.4 14.5
4........................................... 2 1,495.23 108.00 1,561.70 3,056.93 4.1 14.5
5-6......................................... 3 1,622.24 101.39 1,484.33 3,106.57 6.0 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.9--Average LCC Savings Relative to the No-New-Standards Case for Product Class 5A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-2.................................................... 1 127.59 1.2
3...................................................... 2 124.76 23.0
4...................................................... 2 133.27 19.8
5-6.................................................... 3 122.18 39.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.10--Average LCC and PBP Results for Product Class 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 1,278.19 107.33 1,475.40 2,753.59 ........... 14.5
1........................................... 1 1,281.77 102.46 1,419.59 2,701.36 0.7 14.5
[[Page 3081]]
2........................................... 2 1,305.88 97.68 1,368.72 2,674.59 2.9 14.5
3........................................... 3 1,307.20 92.09 1,304.25 2,611.45 1.9 14.5
4........................................... 3 1,242.09 91.60 1,310.33 2,552.41 1.6 14.5
5........................................... 4 1,399.77 87.83 1,271.83 2,671.59 6.2 14.5
6........................................... 5 1,431.19 84.98 1,244.65 2,675.84 6.8 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.11--Average LCC Savings Relative to the No-New-Standards Case for Product Class 7
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 52.10 0.0
2...................................................... 2 70.96 9.6
3...................................................... 3 134.10 1.2
4...................................................... 3 142.56 0.5
5...................................................... 4 73.96 42.6
6...................................................... 5 69.71 48.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.12--Average LCC and PBP Results for Product Class 9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 1,023.63 70.01 1,072.00 2,095.63 ........... 18.5
1-3......................................... 1 1,050.17 63.46 983.71 2,033.88 4.1 18.5
4........................................... 2 1,039.42 60.04 950.64 1,990.06 6.6 18.5
5........................................... 1 1,050.17 63.46 983.71 2,033.88 4.1 18.5
3 1,141.15 56.64 897.84 2,039.00 8.8 18.5
6........................................... 4 1,201.08 53.36 858.25 2,059.33 10.7 18.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
Table V.13--Average LCC Savings Relative to the No-New-Standards Case for Product Class 9
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-3.................................................... 1 62.02 12.2
4...................................................... 2 56.17 39.1
5...................................................... 1 62.02 12.2
3 46.62 52.2
6...................................................... 4 26.33 61.0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2030.
[[Page 3082]]
Table V.14--Average LCC and PBP Results for Product Class 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................... 1 1,037.56 38.90 638.00 1,675.56 11.2 18.5
2-3......................................... Baseline 994.99 42.72 686.42 1,681.41 ........... 18.5
4........................................... Baseline 963.19 42.36 688.01 1,651.20 ........... 18.5
5........................................... Baseline 994.99 42.72 686.42 1,681.41 ........... 18.5
2 1,075.74 36.64 610.58 1,686.33 13.3 18.5
3 1,078.80 34.66 583.52 1,662.32 10.4 18.5
6........................................... 4 1,115.72 33.71 574.13 1,689.85 13.4 18.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.15--Average LCC Savings Relative to the No-New-Standards Case for Product Class 10
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 5.94 57.5
2 -5.13 69.8
3 18.87 57.4
6...................................................... 4 -8.65 70.0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All results in this table assume a compliance year of 2027.
Table V.16--Average LCC and PBP Results for Product Class 11A
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Residential:
Baseline 298.57 35.44 288.26 586.83 ........... 8.9
1-2..................................... 1 305.89 32.01 262.49 568.38 2.1 8.9
3....................................... 2 308.97 30.52 251.30 560.27 2.1 8.9
4....................................... 2 299.10 30.33 253.30 552.40 2.1 8.9
5....................................... 2 308.97 30.52 251.30 560.27 2.1 8.9
3 344.16 28.67 239.20 583.36 6.7 8.9
6....................................... 4 362.81 24.73 210.23 573.04 6.0 8.9
Commercial:
Baseline 299.37 25.22 179.75 479.12 ........... 8.9
1-2..................................... 1 306.71 22.99 165.59 472.30 3.3 8.9
3....................................... 2 309.79 22.03 159.45 469.24 3.3 8.9
4....................................... 2 299.89 21.52 158.91 458.81 3.2 8.9
5....................................... 2 309.79 22.03 159.45 469.24 3.3 8.9
3 345.08 20.82 153.37 498.45 10.4 8.9
6....................................... 4 363.77 18.27 137.64 501.41 9.3 8.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.17--Average LCC Savings Relative to the No-New-Standards Case for Product Class 11A
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
Residential:
1-2................................................ 1 0.00 0.0
3.................................................. 2 8.11 8.4
4.................................................. 2 8.35 8.0
5.................................................. 2 8.11 8.4
3 -14.97 84.8
6.................................................. 4 -4.66 61.7
[[Page 3083]]
Commercial:
1-2................................................ 1 0.00 0.0
3.................................................. 2 3.06 16.1
4.................................................. 2 3.16 15.7
5.................................................. 2 3.06 16.1
3 -26.15 99.3
6.................................................. 4 -29.11 92.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.18--Average LCC and PBP Results for Product Class 17
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 514.48 73.65 739.82 1,254.30 ........... 11.5
1-3......................................... 1 548.82 66.16 670.81 1,219.62 4.6 11.5
4........................................... 1 529.02 65.85 677.65 1,206.67 4.1 11.5
5........................................... 1 548.82 66.16 670.81 1,219.62 4.6 11.5
2 585.96 62.52 638.75 1,224.71 6.4 11.5
6........................................... 3 623.09 58.56 603.65 1,226.75 7.2 11.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.19--Average LCC Savings Relative to the No-New-Standards Case for Product Class 17
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-3.................................................... 1 32.29 5.6
4...................................................... 1 36.86 4.5
5...................................................... 1 32.29 5.6
2 2.62 52.0
6...................................................... 3 0.26 61.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
Table V.20--Average LCC and PBP Results for Product Class 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
----------------------------------------------------
First Simple Average
TSL * Efficiency level Installed year's Lifetime payback lifetime
cost operating operating LCC years years
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline 487.72 31.07 329.24 816.96 ........... 11.5
1-2......................................... 1 491.75 28.09 301.39 793.14 1.4 11.5
3........................................... 2 506.37 26.58 288.10 794.47 4.2 11.5
4........................................... 2 490.19 26.33 289.27 779.46 4.1 11.5
5........................................... 2 506.37 26.58 288.10 794.47 4.2 11.5
3 527.04 25.26 277.15 804.19 6.8 11.5
6........................................... 4 569.15 22.39 253.14 822.29 9.4 11.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
[[Page 3084]]
Table V.21--Average LCC Savings Relative to the No-New-Standards Case for Product Class 18
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL ** Efficiency level Average LCC consumers that
savings * 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1-2.................................................... 1 23.82 0.8
3...................................................... 2 22.49 18.9
4...................................................... 2 23.55 17.6
5...................................................... 2 22.49 18.9
3 12.77 45.6
6...................................................... 4 -5.34 68.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All TSLs except TSL 4 have a compliance year of 2027; TSL 4 has a compliance year of 2029.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on low-income households and small businesses. Table
V.22 compares the average LCC savings and PBP at each efficiency level
for the low-income consumer subgroup with similar metrics for the
entire consumer sample for PCs 3, 7, 9, and 10 (see section IV.I for an
explanation of why other product classes are excluded). Table V.23
provides a similar comparison for PC 11A for the small business
subgroup. In all cases, the average LCC savings and PBP for low-income
households at the considered efficiency levels are improved (i.e.,
higher LCC savings and lower payback period) from the average for all
households. The LCC savings and payback period results for the small
business subgroup for PC 11A are similar to those for all businesses.
Chapter 11 of the direct final rule TSD presents the complete LCC and
PBP results for the subgroups.
Table V.22--Comparison of LCC Savings and PBP for Low-Income Consumer Subgroup and All Consumers
----------------------------------------------------------------------------------------------------------------
Average LCC savings * 2022$ Simple payback period years
---------------------------------------------------------------
TSL ** Low-income Low-income
households All households households All households
----------------------------------------------------------------------------------------------------------------
Product Class 3:
1........................................... 32.24 30.50 0.4 1.4
2-3......................................... 58.01 40.14 1.3 4.2
4........................................... 80.07 50.91 1.4 4.8
5........................................... 76.69 43.46 1.6 5.3
6........................................... 123.04 0.03 2.8 9.3
Product Class 7:
1........................................... 56.76 52.10 0.5 0.7
2........................................... 87.29 70.96 1.8 2.9
3........................................... 154.61 134.10 1.2 1.9
4........................................... 161.87 142.56 1.0 1.6
5........................................... 132.77 73.96 3.9 6.2
6........................................... 142.45 69.71 4.2 6.8
Product Class 9:
1-3......................................... 65.99 62.02 2.8 4.1
4........................................... 69.62 56.17 4.6 6.6
5........................................... 65.99 62.02 2.8 4.1
6........................................... 72.77 26.33 7.4 10.7
Product Class 10:
1........................................... 22.75 5.94 6.4 11.2
2-5......................................... N/A N/A N/A N/A
6........................................... 39.03 -8.65 7.6 13.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** The compliance year for TSLs 1-3 and 5-6 is 2027; the compliance year for TSL 4 varies by product class:
2029: PC 10; 2030: PCs 3, 7, and 9.
Table V.23--Comparison of LCC Savings and PBP for Small Business Consumer Subgroup and All Businesses
----------------------------------------------------------------------------------------------------------------
Average LCC savings * 2022$ Simple payback period years
---------------------------------------------------------------
TSL ** Small Small
businesses All businesses businesses All businesses
----------------------------------------------------------------------------------------------------------------
Product Class 11A:
1-2......................................... 0.00 0.00 3.3 3.3
[[Page 3085]]
3........................................... 2.54 3.06 3.2 3.3
4........................................... 2.64 3.16 3.2 3.2
5........................................... 2.54 3.06 3.2 3.3
6........................................... -31.43 -29.11 9.2 9.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** The compliance year for TSLs 1-3 and 5-6 is 2027; the compliance year for TSL 4 is 2029.
c. Rebuttable Presumption Payback
As discussed in section IV.F.10 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. In calculating a
rebuttable-presumption payback period for each of the considered TSLs,
DOE used discrete values, and, as required by EPCA, based the energy
use calculation on the DOE test procedures for refrigerators,
refrigerator-freezers, and freezers. In contrast, the PBPs presented in
section V.B.1.a of this document were calculated using distributions
that reflect the range of energy use in the field.
Table V.24 presents the rebuttable-presumption payback periods for
the considered TSLs for refrigerators, refrigerator-freezers, and
freezers. 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.24--Rebuttable-Presumption Payback Periods
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC 11A
TSL * PC 3 PC 5 PC 5BI PC 5A PC 7 PC 9 PC 10 ---------------------- PC 17 PC 18
Res. Com.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.............................. 1.5 4.5 2.5 2.0 0.7 3.7 10.2 1.9 2.8 3.9 1.2
2.............................. 4.3 4.5 2.5 2.0 2.9 3.7 ......... 1.9 2.8 3.9 1.2
3.............................. 4.3 6.4 2.5 4.5 1.9 3.7 ......... 1.9 2.8 3.9 3.7
4.............................. 4.9 5.8 2.2 4.2 1.6 6.0 ......... 1.8 2.7 3.5 3.6
5.............................. 5.4 6.4 2.5 6.1 6.3 3.7 ......... 1.9 2.8 3.9 3.7
6.............................. 9.6 9.0 8.6 6.1 6.9 9.7 12.2 5.3 7.9 6.2 8.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The compliance year for TSLs 1-3 and 5-6 is 2027; the compliance year for TSL 4 varies by product class: 2029: PCs 5BI, 5A, 10, 11A, 17, and 18; 2030:
PCs 3, 5, 7, and 9.
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of refrigerators, refrigerator-
freezers, and freezers. 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 amended energy conservation standards
on manufacturers of refrigerators, refrigerator-freezers, and freezers,
as well as the conversion costs that DOE estimates manufacturers of
refrigerators, refrigerator-freezers, and freezers would incur at each
TSL.
The impact of potential amended energy conservation standards was
analyzed under two scenarios: (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. The preservation-of-gross-margin
percentages applies a ``gross margin percentage'' of 21 percent for all
freestanding product classes and 29 percent for all built-in product
classes, across all efficiency levels.\93\ This scenario assumes that a
manufacturer's per-unit dollar profit 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.
---------------------------------------------------------------------------
\93\ The gross margin percentages of 21 percent and 29 percent
are based on manufacturer markups of 1.26 and 1.40 percent,
respectively.
---------------------------------------------------------------------------
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
amended 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 (30 years from the analyzed compliance
[[Page 3086]]
year).\94\ 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 amended
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.
---------------------------------------------------------------------------
\94\ The analysis period ranges from 2023-2056 for the no-new-
standards case and all TSLs, except for TSL 4 (the Recommended TSL).
The analysis period for the Recommended TSL ranges from 2023-2058
for the product classes listed in Table I.1 and 2023-2059 for the
product classes listed in Table I.2.
---------------------------------------------------------------------------
Conversion costs are one-time investments for manufacturers to
bring their manufacturing facilities and product designs into
compliance with potential amended standards. As described in section
IV.J.2.c of this document, conversion cost investments occur between
the year of publication of the direct final rule and the year by which
manufacturers must comply with the new standard. The conversion costs
can have a significant impact on the short-term cash flow of the
industry and generally result in lower free cash flow in the period
between the publication of the direct final rule and the compliance
date of potential amended standards. Conversion costs are independent
of the manufacturer markup scenarios and are not presented as a range
in this analysis.
Table V.25--Manufacturer Impact Analysis Results for Refrigerators, Refrigerator-Freezers, and Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-
Unit standards TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
case
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV................................ 2022$ Million.......... 4,905.8 4,841.5 to 4,798.5 to 4,387.6 to 4,401.3 to 3,839.9 to 3,080.1 to
4,891.4 4,870.1 4,514.7 4,522.3 4,061.6 3,604.0
Change in INPV *.................... %...................... ........... (1.3) to (2.2) to (10.6) to (10.3) to (21.7) to (37.2) to
(0.3) (0.7) (8.0) (7.8) (17.2) (26.5)
Free Cash Flow (2026) **............ 2022$ Million.......... *** 414.5 385.3 363.3 137.8 195.3 (166.2) (581.0)
Change in Free Cash Flow (2026) **.. %...................... ........... (7.0) (12.4) (66.7) (51.7) (140.1) (240.2)
Capital Conversion Costs............ 2022$ Million.......... ........... 10.8 22.3 378.1 471.8 945.3 1,677.2
Product Conversion Costs............ 2022$ Million.......... ........... 71.7 121.7 314.7 358.5 458.7 711.4
Total Conversion Costs.............. 2022$ Million.......... ........... 82.5 144.0 692.8 830.3 1,404.0 2,388.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses denote negative (-) values.
** TSL 4 (i.e., the Recommended TSL) represents the change in free cash flow in 2029.
*** In 2029, the no-new-standards case free cash flow is $413.1 million.
The following cash flow discussion refers to product classes as
defined in Table I.1 in section I of this document and the efficiency
levels and design options as detailed in Tables IV.5 through IV.7 in
section IV.C.3 of this document.
At TSL 1, the standard represents a modest increase in efficiency,
corresponding to the lowest analyzed efficiency level above the
baseline for each analyzed product class. The change in INPV is
expected to range from -1.3 to -0.3 percent. At this level, free cash
flow is estimated to decrease by 7.0 percent compared to the no-new-
standards case value of $414.5 million in the year 2026, the year
before the 2027 standards year. Currently, approximately 24 percent of
domestic refrigerator, refrigerator-freezer, and freezer shipments meet
the efficiencies required at TSL 1. See Table V.27 for the percentage
of 2023 shipments that meet each TSL by product class.
The design options DOE analyzed primarily included implementing
more efficient single-speed compressors. For PC 5,\95\ PC 5A, PC 5-BI,
PC 10, and PC 17, the design options analyzed included implementing
higher-efficiency variable-speed compressors. DOE also analyzed
implementing BLDC fan motors and variable defrost for some product
classes. DOE expects manufacturers would likely need to increase wall
thickness for some of PC 11A models to meet TSL 1 efficiencies. At this
level, capital conversion costs are minimal since most manufacturers
can achieve TSL 1 efficiencies with relatively minor component changes.
Product conversion costs may be necessary for developing, qualifying,
sourcing, and testing new components. DOE expects industry to incur
some re-flooring costs as manufacturers redesign baseline products to
meet the efficiency levels required by TSL 1. DOE estimates capital
conversion costs of $10.8 million and product conversion costs of $71.7
million. Conversion costs total $82.5 million.
---------------------------------------------------------------------------
\95\ The engineering analysis modeled PC 5 (23.0 AV) as
requiring a higher-efficiency single-speed compressor to meet TSL 1
efficiencies and modeled PC 5 (30.0 AV) as requiring a variable-
speed compressor system to meet TSL 1 efficiencies.
---------------------------------------------------------------------------
At TSL 1, the shipment-weighted average MPC for all refrigerators,
refrigerator-freezers, and freezers is expected to increase by 1.6
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2027.
In the preservation-of-gross-margin percentage scenario, the minor
increase in cashflow from the higher MSP is slightly outweighed by the
$82.5 million in conversion costs, causing a negligible change in INPV
at TSL 1 under this scenario. Under the preservation-of-operating-
profit scenario, manufacturers earn the same per-unit operating profit
as would be earned in the no-new-standards case, but manufacturers do
not earn additional profit from their investments. In this scenario,
the manufacturer markup decreases in 2028, the year after the analyzed
2027 compliance year. This reduction in the manufacturer markup and the
$82.5 million in conversion costs incurred by manufacturers cause a
slightly negative change in INPV at TSL 1 under the preservation-of-
operating-profit scenario. See section IV.J.2.d of this document for
details on the manufacturer markup scenarios.
At TSL 2, the standard represents an increase in efficiency of
approximately 10 percent across all analyzed product classes,
consistent with ENERGY STAR requirements, except for PC 10. The change
in INPV is expected to range from -2.2 to -0.7 percent. At this level,
free cash flow is estimated to decrease by 12.4 percent compared to the
no-new-standards case value of $414.5 million in the year 2026, the
year before the 2027 standards year. Currently, approximately 26
percent of domestic refrigerator, refrigerator-
[[Page 3087]]
freezer, and freezer shipments meet the efficiencies required at TSL 2.
The design options DOE analyzed include implementing similar design
options as TSL 1, such as more efficient compressors, BLDC fans, and
variable defrost. For PC 3, the design options included implementing
incrementally more efficient single-speed compressors and variable
defrost. For PC 7, the design options analyzed included implementing
variable-speed compressors. For PC 3 and PC 7, TSL 2 corresponds to EL
2. For PC 10, TSL 2 corresponds to baseline efficiency. For the
remaining product classes, the efficiencies required at TSL 2 are the
same as TSL 1. The increase in conversion costs from the prior TSL is
entirely due to the increased efficiencies required for PC 3 and PC 7.
Capital conversion costs may be necessary for updated tooling and
additional stations to test more variable-speed compressors. Product
conversion costs may be necessary for developing, qualifying, sourcing,
and testing variable-speed compressors and associated electronics. DOE
expects industry to incur slightly more re-flooring costs compared to
TSL 1. DOE estimates capital conversion costs of $22.3 million and
product conversion costs of $121.7 million. Conversion costs total
$144.0 million.
At TSL 2, the shipment-weighted average MPC for all refrigerators,
refrigerator-freezers, and freezers is expected to increase by 2.3
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2027.
In the preservation-of-gross-margin-percentage scenario, the slight
increase in cashflow from the higher MSP is outweighed by the $144.0
million in conversion costs, causing a slightly negative change in INPV
at TSL 2 under this scenario. Under the preservation-of-operating-
profit scenario, the manufacturer markup decreases in 2028. This
reduction in the manufacturer markup and the $144.0 million in
conversion costs incurred by manufacturers cause a slightly negative
change in INPV at TSL 2 under the preservation-of-operating-profit
scenario.
At TSL 3, the standard represents an increased stringency for PC 5,
PC 5A, PC 7, PC 11A, and PC 18 and increased NES while keeping economic
impacts on consumers modest. The change in INPV is expected to range
from -10.6 to -8.0 percent. At this level, free cash flow is estimated
to decrease by 66.7 percent compared to the no-new-standards case value
of $414.5 million in the year 2026, the year before the 2027 standards
year. Currently, approximately 18 percent of domestic refrigerator,
refrigerator-freezer, and freezer shipments meet the efficiencies
required at TSL 3.
In addition to the design options DOE analyzed at TSL 2, the design
options analyzed for PC 5 include implementing higher-efficiency
variable-speed compressors and incorporating partial VIP for larger
capacity (i.e., adjusted volume) products. DOE expects that PC 5A
products would likely also need to incorporate some partial VIP. For PC
7, the deign options analyzed included implementing more efficient
variable-speed compressors. Additionally, for the compact-size PC 18,
DOE expects manufacturers may need to increase cabinet wall thickness.
For PC 5, PC 5A, PC 11A, and PC 18, TSL 3 corresponds to EL 2. For PC
7, TSL 3 corresponds to EL 3. For the remaining product classes, the
efficiencies required at TSL 3 are the same as TSL 2. The increase in
conversion costs from the prior TSL are driven by the efficiencies
required for PC 5 and PC 5A due to their large market share (together,
these product classes account for approximately 30 percent of total
shipments) and the design options required to meet this level. Capital
conversion costs may be necessary for new tooling for VIP placement as
well as new testing stations for high-efficiency components. Product
conversion costs may be necessary for developing, qualifying, sourcing,
and testing new components. For products implementing VIPs, product
conversion costs may be necessary for prototyping and testing for VIP
placement, design, and sizing. For PC 5 and PC 5A, DOE understands the
two product classes often share the same production lines, with shared
cabinet architecture and tooling. DOE expects manufacturers would
likely need to incorporate some VIPs into PC 5A designs, but not to the
extent required at TSL 5 and TSL 6. Thus, for the 10 OEMs that
manufacture both PC 5 and PC 5A, DOE expects manufacturers could
implement similar cabinet upgrades (i.e., partial VIP) for PC 5 and PC
5A designs to achieve the efficiencies required at this level. DOE
expects industry to incur re-flooring costs as manufacturers redesign
their products to meet the efficiency levels required by TSL 3. DOE
estimates capital conversion costs of $378.1 million and product
conversion costs of $314.7 million. Conversion costs total $629.8
million.
At TSL 3, the shipment-weighted average MPC for all refrigerators,
refrigerator-freezers, and freezers is expected to increase by 4.0
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2027.
In the preservation-of-gross-margin-percentage scenario, the increase
in cashflow from the higher MSP is outweighed by the $692.8 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 2028. This reduction in the
manufacturer markup and the $692.8 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 (i.e., the Recommended TSL), the standard represents an
increased stringency for PC 3 and PC 9, as well as the expected NES,
while maintaining positive average LCC savings for every analyzed
product class. The change in INPV is expected to range from -10.3 to -
7.8 percent. At this level, free cash flow is estimated to decrease by
51.7 percent compared to the no-new-standards case value of $413.1
million in the year 2029, the year before the 2030 standards year.\96\
Currently, approximately 14 percent of domestic refrigerator,
refrigerator-freezer, and freezer shipments meet the efficiencies
required at TSL 4.
---------------------------------------------------------------------------
\96\ For the Recommended TSL, the compliance year varies by
product class. For the product classes listed in Table I.1, the
analyzed compliance year is 2029. For the product classes listed in
Table I.2, the analyzed compliance year is 2030. The product classes
associated with the 2030 compliance year account for approximately
68 percent of total shipments.
---------------------------------------------------------------------------
In addition to the design options DOE analyzed at TSL 3, the design
options analyzed for PC 3 products include implementing the highest-EER
single-speed compressors or variable-speed compressors. For PC 9, the
design options analyzed included the highest-EER variable-speed
compressors. For PC 3, TSL 4 corresponds to EL 3. For PC 9, TSL 4
corresponds to EL 2. For the remaining directly analyzed product
classes, the efficiencies required at TSL 4 are the same as TSL 3. At
this level, the increase in conversion costs is entirely driven by the
higher efficiency levels required for PC 3 and PC 9, which together
account for approximately 33 percent of current industry shipments.
Many manufacturers of these product classes would need to update their
platforms to integrate variable-speed compressors. For PC 5 and PC 5A,
DOE understands the two product classes often share the same production
lines, with shared cabinet architecture and tooling. DOE expects
industry to incur
[[Page 3088]]
more re-flooring costs compared to TSL 3. DOE estimates capital
conversion costs of $471.8 million and product conversion costs of
$358.5 million. Conversion costs total $830.3 million.
At TSL 4, the shipment-weighted average MPC for all refrigerator,
refrigerator-freezers, and freezers is expected to increase by 4.8
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2030.
In the preservation-of-gross-margin-percentage scenario, the increase
in cashflow from the higher MSP is outweighed by the $830.3 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 2031, the year after the analyzed 2030
compliance year.\97\ This reduction in the manufacturer markup and the
$830.3 million in conversion costs incurred by manufacturers cause a
negative change in INPV at TSL 4 under the preservation-of-operating-
profit scenario.
---------------------------------------------------------------------------
\97\ The compliance year for the Recommended TSL varies by
product class. For PC 1, PC 1A, PC 2, PC 3, PC 3A, PC 4, PC 5, PC 6,
PC 7, and PC 9, the compliance year is 2030. For the remaining
product classes, the compliance year is 2029.
---------------------------------------------------------------------------
At TSL 5, the standard represents the maximum NPV. The change in
INPV is expected to range from -21.7 to -17.2 percent. At this level,
free cash flow is estimated to decrease by 140.1 percent compared to
the no-new-standards case value of $414.5 million in the year 2026, the
year before the 2027 standards year. Currently, approximately 14
percent of domestic refrigerator, refrigerator-freezer, and freezer
shipments meet the efficiencies required at TSL 5.
In addition to the design options DOE analyzed at TSL 4, the design
options analyzed for PC 5A includes implementing VIPs on all of the
cabinet surface (side walls and doors) and for PC 7 includes
implementing VIPs on roughly 75 percent of the cabinet surface. For PC
5A, TSL 5 corresponds to EL 3. For PC 7, TSL 5 corresponds to EL 4. For
PC 9, TSL 5 corresponds to EL 1, the same efficiency level required for
TSL 3. For the remaining product classes, the efficiencies required at
TSL 5 are the same as TSL 4. The increase in conversion costs compared
to the prior TSL is entirely driven by the higher efficiency level
required for PC 5A and PC 7, which likely necessitates incorporating
some VIPs. In interviews, some manufacturers stated that their existing
PC 5A and PC 7 platforms cannot reach this efficiency level and would
require a platform redesign, which would likely mean new cases, liners,
and fixtures. DOE expects slightly more re-flooring costs compared to
the prior TSL as manufacturers redesign products to meet the required
efficiencies. DOE estimates capital conversion costs of $945.3 million
and product conversion costs of $458.7 million. Conversion costs total
$1.40 billion.
At TSL 5, the large conversion costs result in a free cash flow
dropping below zero in the years before the standards year. The
negative free cash flow calculation indicates manufacturers may need to
access cash reserves or outside capital to finance conversion efforts.
At TSL 5, the shipment-weighted average MPC for all refrigerators,
refrigerator-freezers, and freezers is expected to increase by 7.0
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2027.
In the preservation-of-gross-margin-percentage scenario, the increase
in cashflow from the higher MSP is outweighed by the $1.40 billion in
conversion costs, causing a moderately negative change in INPV at TSL 5
under this scenario. Under the preservation-of-operating-profit
scenario, the manufacturer markup decreases in 2028. This reduction in
the manufacturer markup and the $1.40 billion in conversion costs
incurred by manufacturers cause a large decrease in INPV at TSL 5 under
the preservation-of-operating-profit scenario.
At TSL 6, the standard reflects max-tech for all product classes.
The change in INPV is expected to range from -37.2 to -26.5 percent. At
this level, free cash flow is estimated to decrease by 240.2 percent
compared to the no-new-standards case value of $414.5 million in the
year 2026, the year before the 2027 standards year. Currently,
approximately 0.9 percent of domestic refrigerator, refrigerator-
freezer, and freezer shipments meet the efficiencies required at TSL 6.
At max-tech levels, manufacturers would likely need to implement
the best-available-efficiency VSC, forced-convection heat exchangers
with multi-speed BLDC fans, variable defrost, and increase in cabinet
wall thickness for some classes (e.g., compact refrigerators and both
standard-size and compact chest freezers). Manufacturers would also
likely incorporate VIP doors for PC 10 and PC 18 and VIPs for roughly
half the cabinet surface (typically side walls and doors for an upright
cabinet) for all other classes. At TSL 6, only a few manufacturers
offer any products that meet the efficiencies required. For PC 3, which
accounts for approximately 25 percent of annual shipments, no OEMs
currently offer products that meet the efficiency level required. For
PC 5, which accounts for approximately 21 percent of annual shipments,
DOE estimates that seven out of 22 OEMs currently offer products that
meet the efficiency level required. For PC 7, which accounts for
approximately 11 percent of annual shipments, only one out of the 11
OEMs currently offers products that meet the efficiency level required.
The efficiencies required by TSL 6 could require a major renovation
of existing facilities and completely new refrigerator, refrigerator-
freezer, and freezer platforms for many OEMs. In interviews, some
manufacturers stated that they are physically constrained at their
current production location and would therefore need to expand their
existing production facility or move to an entirely new facility. These
manufacturers stated that their current manufacturing locations are at
capacity and cannot accommodate the additional labor required to
implement VIPs. DOE expects industry to incur more re-flooring costs
compared to TSL 5 as all display models below max-tech efficiency would
need to be replaced due to the more stringent standard. DOE estimates
capital conversion costs of $1.68 billion and product conversion costs
of $711.4 million. Conversion costs total $2.39 billion.
At TSL 6, the large conversion costs result in a free cash flow
dropping below zero in the years before the 2027 standards year. The
negative free cash flow calculation indicates manufacturers may need to
access cash reserves or outside capital to finance conversion efforts.
At TSL 6, the shipment-weighted average MPC for all refrigerators,
refrigerator-freezers, and freezers is expected to increase by 16.8
percent relative to the no-new-standards case shipment-weighted average
MPC for all refrigerators, refrigerator-freezers, and freezers in 2027.
In the preservation-of-gross-margin-percentage scenario, the increase
in cashflow from the higher MSP is outweighed by the $2.39 billion in
conversion costs, causing a large negative change in INPV at TSL 6
under this scenario. Under the preservation-of-operating-profit
scenario, the manufacturer markup decreases in 2028. This reduction in
the manufacturer markup and the $2.39 billion in conversion costs
incurred by manufacturers causes a significant decrease in INPV at TSL
6 under the preservation-of-operating-profit scenario.
[[Page 3089]]
Table V.26--Percentages of 2023 Shipments That Meet Each TSL by Product Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Directly analyzed equipment class TSL 1 (%) TSL 2 (%) TSL 3 (%) TSL 4 (%) TSL 5 (%) TSL 6 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC 3.................................................... 23.0 19.0 19.0 0.0 0.0 0.0
PC 5.................................................... 10.0 10.0 3.0 3.0 3.0 0.5
PC 5A................................................... 3.0 3.0 0.0 0.0 0.0 0.0
PC 7.................................................... 14.5 0.0 0.0 0.0 0.0 0.0
PC 5 BI................................................. 73.0 73.0 73.0 73.0 73.0 21.6
PC 9.................................................... 17.0 17.0 17.0 1.0 17.0 1.0
PC 10................................................... 4.7 100.0 100.0 100.0 100.0 0.0
PC 11A.................................................. 100.0 100.0 0.0 0.0 0.0 0.0
PC 17................................................... 80.6 80.6 80.6 80.6 80.6 9.0
PC 18................................................... 0.0 0.0 0.0 0.0 0.0 0.0
-----------------------------------------------------------------------------------------------
Overall Industry *.................................. 24.4 26.4 18.5 14.1 13.6 0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects the percent of industry shipments for all product classes that meet each TSL, including the product classes that were not directly analyzed
(i.e., non-representative classes).
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment in the refrigerators,
refrigerator-freezers, and freezers 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. For the direct final rule, DOE used the most up-
to-date information available. DOE calculated these values using
statistical data from the 2021 ASM,\98\ BLS employee compensation
data,\99\ results of the engineering analysis, and manufacturer
interviews conducted in support of the February 2023 NOPR.
---------------------------------------------------------------------------
\98\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2021).'' Available at www.census.gov/programs-surveys/asm/data.html
(last accessed July 5, 2023).
\99\ U.S. Bureau of Labor Statistics. Employer Costs for
Employee Compensation--March 2023. June 16, 2023. Available at
www.bls.gov/news.release/pdf/ecec.pdf (last accessed July 5, 2023).
---------------------------------------------------------------------------
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. Consistent with the February 2023 NOPR, DOE estimates that
28 percent of refrigerators, refrigerator-freezers, and freezers 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.\100\ Using the amount of domestic production workers
calculated above, 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.
---------------------------------------------------------------------------
\100\ The comprehensive description of production and non-
production workers is available at ``Definitions and Instructions
for the Annual Survey of Manufacturers, MA-10000'' (pp. 13-14)
www2.census.gov/programs-surveys/asm/technical-documentation/questionnaire/2021/instructions/MA_10000_Instructions.pdf (last
accessed September 9, 2023).
---------------------------------------------------------------------------
Using the GRIM, DOE estimates in the absence of new energy
conservation standards there would be 6,366 domestic production and
non-production workers for refrigerators, refrigerator-freezers, and
freezers in 2027. Table V.27 shows the range of the impacts of energy
conservation standards on U.S. manufacturing employment in the
refrigerator, refrigerator-freezer, and freezer industry. The following
discussion provides a qualitative evaluation of the range of potential
impacts presented in Table V.27.
[[Page 3090]]
Table V.27--Domestic Direct Employment Impacts for Refrigerator, Refrigerator-Freezer, and Freezer Manufacturers in the Analyzed Compliance Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-
standards case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Employment in 2027 * 6,366 6,403 6,405 6,526 6,494 6,740 7,571
(Production Workers + Non-Production
Workers).............................
Potential Changes in Direct Employment .............. (5,683) to 37 (5,683) to 39 (5,683) to 160 (5,683) to 166 (5,683) to 374 (5,683) to 1,205
Workers **...........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 4 (the Recommended TSL), the direct employment values reflect 2030 estimates.
** DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.
The direct employment impacts shown in Table V.27 represent the
potential domestic employment changes that could result following the
compliance date for the refrigerator, refrigerator-freezer, and freezer
product classes in this direct final rule. The upper bound estimate
corresponds to an increase in the number of domestic workers that would
result from amended energy conservation standards if manufacturers
continue to produce the same scope of covered products 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 at least a portion of their refrigerators, refrigerator-
freezers, and freezers in countries with lower labor costs. Adopting an
amended standard that necessitates large increases in labor content or
large expenditures to re-tool facilities could cause manufacturers to
reevaluate domestic production siting options. At the Recommended TSL
(TSL 4), DOE expects some manufacturers would need to implement
insulation changes (e.g., VIPs and/or increasing wall thickness) into
certain product classes, which could require additional labor content
and capital investment. For the high-volume product classes, DOE
expects that PC 5A and some PC 5 models \101\ would likely require
implementing partial VIPs to meet TSL 4 efficiencies. DOE estimates the
products that would likely require some VIPs to meet TSL 4 efficiencies
collectively account for approximately 24 percent of industry
shipments. Based on information gathered during confidential
manufacturer interviews and public sources, DOE understands that a
portion of PC 5 and PC 5A products are currently manufactured in the
United States. Although it is possible that amended standards in this
rulemaking and other DOE rulemakings could factor into production
siting locations due to the level of investment and additional labor
content required. However, based on information gathered during
confidential manufacturer interviews, DOE does not expect most
manufacturers would shift domestic production outside of the United
States solely as a result of this direct final rule.
---------------------------------------------------------------------------
\101\ The design path analyzed in DOE's engineering analysis for
PC 5 with a 3-door configuration (adjusted volume of 30 ft\3\) would
likely require some VIPs at TSL 4 (EL 2). See section IV.C.2 of this
document for the analyzed design options at each efficiency level
for the directly analyzed product classes.
---------------------------------------------------------------------------
Additional detail on the analysis of direct employment can be found
in chapter 12 of the direct final rule TSD. Additionally, the
employment impacts discussed in this section are independent of the
employment impacts from the broader U.S. economy, which are documented
in chapter 16 of the direct final rule TSD.
c. Impacts on Manufacturing Capacity
In interviews, some manufacturers noted potential capacity concerns
related to implementing VIPs, particularly for high-volume product
lines (i.e., PC 3, PC 5, PC 5A, and PC 7). These manufacturers noted
that incorporating VIPs (or additional VIPs) is labor intensive.
Implementing VIPs requires additional labor associated with initial
quality control inspections, placement, and post-foam inspections.
These manufacturers noted they are physically constrained at some
factories and do not have the ability to extend production lines to
accommodate additional labor content. As discussed in section V.B.2.a
of this document, some manufacturers noted that the only way to
maintain current production levels would be to expand the existing
footprint, build a mezzanine, or move to a new production facility. In
interviews, some manufacturers expressed concerns at the max-tech
efficiencies for top-mount (TSL 6), bottom-mount with through-the-door
ice service (TSL 5), bottom-mount without through-the-door ice service
(TSL 6), and side-by-side (TSL 6) standard-size refrigerator-freezers,
and stated that the 3-year period between the announcement of the
direct final rule and the compliance date of the amended energy
conservation standard might be insufficient to update existing plants
or build new facilities to accommodate the additional labor required to
manufacture the necessary number of products to meet demand. In this
direct final rule, DOE adopts TSL 4 (the Recommended TSL). At the
adopted level, the max-tech efficiencies are not required for any of
the analyzed product classes, including the high-volume product classes
manufacturers expressed concerns about during confidential interviews.
Furthermore, compliance with amended standards would not be required
until 2030 for freestanding top-mount product classes (i.e., PC 1, PC
1A, PC 2, PC 3, PC 3A, PC 6), freestanding side-by-side product classes
(i.e., PC 4, PC 7), and freestanding bottom-mount without through-the-
door ice service product class (i.e., PC 5), and 2029 for the remaining
product classes. Compared to TSLs with a 2027 compliance date,
manufacturers would have additional time to update production
facilities and redesign products to meet amended standards. The
Recommended TSL's compliance dates would provide manufacturers the
opportunity to spread capital requirements, engineering resources, and
conversion activities over a longer period of time.
In response to the February 2023 NOPR, AHAM, Whirlpool, GEA, and
Sub Zero expressed concerns that the supply of high-efficiency
components such as VIPs and VSCs would not be able to ramp up in the 3-
year compliance period to meet the expected consumer demand for
refrigerators, refrigerator-freezers, and freezers. (AHAM, No. 69 at p.
5; Whirlpool, No. 70 at p. 5; GEA, No. 75 at p. 2; and Sub Zero, No. 77
at p. 2) Conversely, Samsung commented that the industry has a
significant amount of VSCs available for purchase, and that the 3-year
compliance period is acceptable for manufacturers and suppliers to
establish sufficient availability of VSCs. (Samsung, No. 78 at p. 3)
In support of this analysis, DOE conducted research and interviewed
[[Page 3091]]
VSC and VIP component suppliers to gather additional information on the
global market capacity for these high-efficiency components. Based on
the information gathered, DOE expects that VIP production lines can be
quickly scaled up to meet demand of future amended standards (within 1
to 2 years depending on the specific VIP design). For VSCs, based on
supplier information on the global refrigerator VSC production
capacity, supply constraints, and ramp-up time, DOE determined that the
industry can meet the increased demand of VSCs that may result due to
the adoption of more stringent standards within the necessary
compliance period, with an estimated 8 to 12 month VSC production ramp-
up, as needed.
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 also identified the domestic LVM
subgroup as a potential manufacturer subgroup that could be adversely
impacted by energy conservation standards based on the results of the
industry characterization.
Small Businesses
DOE analyzes the impacts on small businesses in a separate analysis
for the standards proposed in the NOPR published elsewhere in this
issue of the Federal Register and in chapter 12 of the direct final
rule TSD. In summary, the Small Business Administration (``SBA'')
defines a ``small business'' as having 1,500 employees or less for
NAICS 335220, ``Major Household Appliance Manufacturing.'' Based on
this classification, DOE identified one domestic OEM that qualifies as
a small business. For a discussion of the impacts on the small business
manufacturer subgroup, see chapter 12 of the direct final rule TSD.
Domestic, Low-Volume Manufacturers
In addition to the small business subgroup, DOE identified domestic
LVMs as a manufacturer subgroup that may experience differential
impacts due to amended standards. DOE identified three domestic LVMs of
refrigerators, refrigerator-freezers, and freezers that would
potentially face more challenges with meeting amended standards than
other larger OEMs of the covered products.
Although these LVMs do not qualify as small businesses according to
the SBA criteria previously discussed (i.e., employee count exceeds
1,500), these manufacturers are significantly smaller in terms of
annual revenues than the larger, diversified manufacturers selling
refrigerators, refrigerator-freezers, and freezers in the United
States. The domestic LVM subgroup consists of refrigerator,
refrigerator-freezer, and freezer manufacturers that primarily sell
high-end, built-in or fully integrated consumer refrigeration products
(``undercounter'' and standard-size) as well as miscellaneous
refrigeration products, commercial refrigeration equipment, and cooking
products. Specifically, manufacturers indicated during confidential
interviews that the fully integrated compact (``undercounter'')
products produced by the domestic LVMs are niche products and are more
expensive to produce (and, therefore, have higher selling prices) than
the majority of the compact products sold in the United States.
Table V.28 lists the range of product offerings and estimated total
company annual revenue for the three domestic LVMs identified. These
three manufacturers account for approximately 1 percent of the overall
domestic refrigerator, refrigerator-freezer, and freezer shipments.
This table also contains the range of total company annual revenue for
the five largest appliance manufacturers selling refrigerators,
refrigerator-freezers, and freezers in the U.S. market. These five
appliance manufacturers account for approximately 95 percent of the
overall domestic refrigerator, refrigerator-freezer, and freezer
shipments.
Table V.28--Revenues and Product Offerings of Low-Volume Manufacturers
and Large Manufacturers of Refrigerators, Refrigerator-Freezers, and
Freezers
------------------------------------------------------------------------
Estimated range Refrigerator,
of annual company refrigerator-freezer,
Manufacturer type revenue * (2022$ and freezer product
millions) offerings
------------------------------------------------------------------------
Domestic LVMs................. $186 to $4,030... High-end, built-in or
fully integrated
``undercounter'' or
standard-size
refrigeration
products (e.g., PC 5-
BI, PC 13A, PC 14).
Large Appliance Manufacturers. $15,730 to Wide range of
$164,030. freestanding,
standard-size
refrigerator-
freezers and
freezers. (e.g., PC
3, PC 5, PC 5A, PC
7, PC 10) Most also
offer premium brands
for standard-size
built-in products.
------------------------------------------------------------------------
* Revenue estimates refer to the total annual company revenue of the
parent company and any associated subsidiaries.
LVMs may be disproportionately affected by conversion costs.
Product redesign, testing, and certification costs tend to be fixed per
basic model and do not scale with sales volume. Both large
manufacturers and LVMs must make investments in R&D to redesign their
products, but LVMs lack the sales volumes to sufficiently recoup these
upfront investments without substantially marking up their products'
selling prices. LVMs may also face challenges related to purchasing
power and a less robust supply chain for key technologies or
components, as compared to larger manufacturers. DOE notes that
domestic LVMs have access to the same technology options as larger
appliance manufacturers, the challenge with redesigning products to
meet amended standards relates to scale and their ability to recover
investments necessitated by more stringent standards.
Although domestic, low-volume manufacturers would likely face
additional challenges meeting amended standards for the built-in and
compact (``undercounter'') refrigerator, refrigerator-freezer, and
freezer product classes compared to other refrigerator, refrigerator-
freezer, and freezer manufacturers, some of the adopted amendments may
be beneficial for domestic LVMs. As discussed in section IV.A.1 of this
document, DOE is proposing to incorporate certain energy use allowances
for products with special doors and multi-door designs. A review of the
three domestic LVM's product offerings and information gathered in
confidential interviews
[[Page 3092]]
indicates transparent door designs are particularly prevalent in their
products. See section IV.A.1 of this document for additional details on
energy use allowances for products with special doors and multi-door
designs.
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.
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.
For the cumulative regulatory burden analysis, DOE examines
Federal, product-specific regulations that could affect refrigerator,
refrigerator-freezer, and freezer manufacturers that take effect
approximately 3 years before the 2029 compliance date and 3 years after
the after the 2030 compliance date (2026 to 2033). This information is
presented in Table V.29.
Table V.29--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
Refrigerator, Refrigerator-Freezer, and Freezer Original Equipment Manufacturers
----------------------------------------------------------------------------------------------------------------
Industry
Number of OEMs Approximate Industry conversion
Federal Energy Conservation Number of OEMs affected by standards conversion costs costs/
Standard * this rule ** compliance (Millions) equipment
year revenue ***
----------------------------------------------------------------------------------------------------------------
Portable Air Conditioners; 85 9 2 2025 $320.9 (2015$) 6.7
FR 1378 (January 10, 2020)..
Consumer Conventional Cooking 34 12 2027 183.4 (2021$) 1.2
Products; 88 FR 6818
[dagger] (February 1, 2023).
Residential Clothes Washers; 19 14 2027 690.8 (2021$) 5.2
[dagger] 88 FR 13520 (March
3, 2023)....................
Consumer Clothes Dryers; 15 11 2027 149.7 (2020$) 1.8
[dagger] 87 FR 51734 (August
23, 2022)...................
Miscellaneous Refrigeration 38 23 2029 126.9 (2021$) 3.1
Products; [dagger] 88 FR
19382 (March 31, 2023)......
Automatic Commercial Ice 23 6 2027 15.9 (2022$) 0.6
Makers; [dagger] 88 FR 30508
(May 11, 2023)..............
Dishwashers; [dagger] 88 FR 21 16 2027 125.6 (2021$) 2.1
32514 (May 19, 2023)........
Refrigerated Bottled or 5 1 2028 1.5 (2022$) 0.2
Canned Beverage Vending
Machines; [dagger] 88 FR
33968 (May 25, 2023)........
Room Air Conditioners; 88 FR 8 4 2026 24.8 (2021$) 0.4
34298 (May 26, 2023)........
Microwave Ovens; 88 FR 39912 18 12 2026 46.1 (2021$) 0.7
(June 20, 2023).............
Walk-in Coolers and Freezers; 79 1 2027 89.0 (2022$) 0.8
[dagger] 88 FR 60746
(September 5, 2023).........
Commercial Water Heating 15 1 2026 42.7 (2022$) 3.8
Equipment; 88 FR 69686
(October 6, 2023)...........
Consumer Water Heaters; 22 3 2030 228.1 (2022$) 1.1
[dagger] 88 FR 49058 (July
27, 2023)...................
Consumer Boilers; [dagger] 88 24 1 2030 98.0 (2022$) 3.6
FR 55128 (August 14, 2023)..
Commercial Refrigerators, 83 10 2028 226.4 (2022$) 1.6
Refrigerator-Freezers, and
Freezers; [dagger] 88 FR
70196 (October 10, 2023)....
Dehumidifiers; [dagger] 88 FR 20 4 2028 6.9 (2022$) 0.4
76510 (November 6, 2023)....
Consumer Furnaces [Dagger]... 15 1 2029 162.0 (2022$) 1.8
----------------------------------------------------------------------------------------------------------------
* This column presents the total number of OEMs identified in the energy conservation standard rule that is
contributing to cumulative regulatory burden.
** This column presents the number of OEMs producing refrigerators, refrigerator-freezers, and freezers that are
also listed as OEMs in the identified energy conservation standard that is contributing to cumulative
regulatory burden.
*** This column presents industry conversion costs as a percentage of equipment revenue during the conversion
period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant
products/equipment. The revenue used for this calculation is the revenue from just the covered product/
equipment associated with each row. The conversion period is the time frame over which conversion costs are
made and lasts from the publication year of the final rule to the compliance year of the energy conservation
standard. The conversion period typically ranges from 3 to 5 years, depending on the rulemaking.
[dagger] These rulemakings are at the NOPR stage, and all values are subject to change until finalized through
publication of a final rule.
[Dagger] At the time of issuance of this refrigerator, refrigerator-freezer, and freezer direct final rule, the
consumer furnace final rule has been issued and is pending publication in the Federal Register. Once
published, the final rule pertaining to gas-fired consumer furnaces will be available at: www.regulations.gov/docket/EERE-2014-BT-STD-0031/document.
As shown in Table V.29, the ongoing rulemakings with the largest
overlap of refrigerator, refrigerator-freezer, and freezer OEMs include
miscellaneous refrigeration products, consumer conventional cooking
products, residential clothes washers, consumer clothes dryers, and
dishwashers, which are all part of the multi-product Joint Agreement
submitted by interested parties. As detailed in the multi-product Joint
Agreement, the signatories indicated that their recommendations should
be considered a ``complete package.'' The signatories further stated
that ``each part of this agreement is contingent upon the other parts
being implemented.'' (Joint Agreement, No. 103 at p. 3)
The multi-product Joint Agreement states the ``jointly recommended
[[Page 3093]]
compliance dates will achieve the overall energy and economic benefits
of this agreement while allowing necessary lead-times for manufacturers
to redesign products and retool manufacturing plants to meet the
recommended standards across product categories.'' (Joint Agreement,
No. 103 at p. 2) The staggered compliance dates help mitigate
manufacturers' concerns about their ability to allocate sufficient
resources to comply with multiple concurrent amended standards and
about the need to align compliance dates for products that are
typically designed or sold as matched pairs (such as RCWs and consumer
clothes dryers). See section IV.J.3 of this document for stakeholder
comments about cumulative regulatory burden. See Table V.30 for a
comparison of the estimated compliance dates based on EPCA-specified
timelines and the compliance dates detailed in the Joint Agreement.
Table V.30--Expected Compliance Dates for Multi-Product Joint Agreement
------------------------------------------------------------------------
Estimated
compliance year Compliance year in
Rulemaking based on EPCA the joint agreement
requirements
------------------------------------------------------------------------
Consumer Clothes Dryers......... 2027 2028
RCWs............................ 2027 2028
Consumer Conventional Cooking 2027 2028
Products.
Dishwashers..................... 2027 2027 *
Refrigerators, Refrigerator- 2027 2029 or 2030
Freezers, and Freezers. depending on the
product class
Miscellaneous Refrigeration 2029 2029
Products.
------------------------------------------------------------------------
* Estimated compliance year. The Joint Agreement states, ``3 years after
the publication of a final rule in the Federal Register.'' (Joint
Agreement, No. 103 at p. 2).
3. National Impact Analysis
This section presents DOE's estimates of the national energy
savings and the NPV of consumer benefits that would result from each of
the TSLs considered as potential amended standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential amended
standards for refrigerators, refrigerator-freezers, and freezers, 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 amended
standards (2027-2056 for all TSLs other than TSL 4; for TSL 4, 2029-
2058 for the product classes listed in Table I.1 and 2030-2059 for the
product classes listed in Table I.2). Tables V.30 and V.31 present
DOE's projections of the national energy savings for each TSL
considered for refrigerators, refrigerator-freezers, and freezers. The
savings were calculated using the approach described in section IV.H.2
of this document.
Table V.31--Cumulative National Energy Savings for Freestanding Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard size refrigerator-freezers Standard size freezers Compact
--------------------------------------------------------------------------------------------------
Top mount Bottom Bottom Side-by- Upright Chest Refrigerators Freezers
TSL ------------- mount mount with side ---------------------------------------------------- Total
PC 1, 1A, --------- TTD ------------ PC 11, 11A,
2, 3, 3A, PC 5 ------------ PC 4, 4I, PC 8 and 9 PC 10 and 12, 13, 13A, PC 16, 17,
3I, and 6 and 5I PC 5A and 7 10A 14, and 15 and 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
(quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy..................... 1 0.352 0.756 0.682 0.326 0.327 0.151 0.022 0.064 2.680
2 0.738 0.756 0.682 0.699 0.316 0.000 0.022 0.064 3.278
3 0.738 1.223 1.002 1.136 0.316 0.000 0.062 0.094 4.571
4 1.310 1.263 1.023 1.173 0.512 0.000 0.049 0.096 5.427
5 1.269 1.223 1.383 1.469 0.316 0.000 0.062 0.094 5.816
6 2.442 1.950 1.383 1.687 0.916 0.365 0.310 0.195 9.248
FFC................................ 1 0.361 0.777 0.701 0.335 0.336 0.155 0.023 0.065 2.753
2 0.758 0.777 0.701 0.718 0.324 0.000 0.023 0.065 3.367
3 0.758 1.257 1.029 1.167 0.324 0.000 0.063 0.097 4.696
4 1.346 1.298 1.051 1.205 0.526 0.000 0.050 0.099 5.574
5 1.303 1.257 1.421 1.509 0.324 0.000 0.063 0.097 5.974
6 2.508 2.003 1.421 1.733 0.940 0.375 0.318 0.200 9.500
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
Table V.32--Cumulative National Energy Savings for Built-In Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in
----------------------------------------------------------------------
All refrigerator Bottom-mount Side-by-side Upright
------------------- refrigerator refrigerator- freezers
TSL ------------------- freezers ------------- Total
-------------------
PC 3A-BI PC 5-BI, 5I-BI PC 4-BI, 4I-BI, PC 9-BI
and 7-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
(quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 3094]]
Primary Energy.......................................... 1 0.000 0.007 0.000 0.000 0.007
2 0.005 0.007 0.005 0.000 0.017
3 0.005 0.007 0.012 0.000 0.024
4 0.011 0.007 0.017 0.000 0.036
5 0.011 0.007 0.017 0.000 0.035
6 0.028 0.018 0.021 0.001 0.067
FFC..................................................... 1 0.000 0.007 0.000 0.000 0.007
2 0.005 0.007 0.005 0.000 0.017
3 0.005 0.007 0.012 0.000 0.024
4 0.012 0.007 0.018 0.000 0.037
5 0.011 0.007 0.017 0.000 0.036
6 0.028 0.018 0.021 0.001 0.069
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
OMB Circular A-4 \102\ 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.\103\ The review timeframe established in EPCA is generally
not synchronized with the product lifetime, product manufacturing
cycles, or other factors specific to refrigerators, refrigerator-
freezers, and freezers. 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 Tables V.32 and
V.33. The impacts are counted over the lifetime of refrigerators,
refrigerator-freezers, and freezers purchased 2027-2035 for all TSLs
except TSL 4; for TSL 4, 2029-2037 for the product classes listed in
Table I.1 and 2030-2038 for the product classes listed in Table I.2.
---------------------------------------------------------------------------
\102\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. Available at https://www.whitehouse.gov/omb/information-for-agencies/circulars/ (last accessed July 13, 2023).
DOE used the prior version of Circular A-4 (2003) as a result of the
effective date of the new version.
\103\ 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.33--Cumulative National Energy Savings for Freestanding Refrigerators, Refrigerator-Freezers, and Freezers; 9 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard size refrigerator-freezers Standard size freezers Compact
--------------------------------------------------------------------------------------------------
Top mount Bottom Bottom Side-by- Upright Chest Refrigerators Freezers
TSL ------------- mount mount with side ---------------------------------------------------- Total
PC 1, 1A, --------- TTD ------------ PC 11, 11A,
2, 3, 3A, PC 5 ------------ PC 4, 4I, PC 8 and 9 PC 10 and 12, 13, 13A, PC 16, 17,
3I, and 6 and 5I PC 5A and 7 10A 14, and 15 and 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy..................... 1 0.094 0.202 0.182 0.087 0.089 0.041 0.006 0.017 0.718
2 0.197 0.202 0.182 0.187 0.086 0.000 0.006 0.017 0.876
3 0.197 0.326 0.267 0.303 0.086 0.000 0.015 0.025 1.220
4 0.351 0.338 0.274 0.314 0.141 0.000 0.012 0.025 1.454
5 0.338 0.326 0.369 0.391 0.086 0.000 0.015 0.025 1.551
6 0.647 0.519 0.369 0.449 0.249 0.100 0.077 0.051 2.460
FFC................................ 1 0.097 0.208 0.187 0.089 0.092 0.042 0.006 0.017 0.738
2 0.203 0.208 0.187 0.192 0.089 0.000 0.006 0.017 0.901
3 0.203 0.335 0.275 0.312 0.089 0.000 0.016 0.025 1.255
4 0.360 0.347 0.281 0.323 0.145 0.000 0.013 0.026 1.494
5 0.348 0.335 0.379 0.402 0.089 0.000 0.016 0.025 1.595
6 0.666 0.533 0.379 0.462 0.256 0.103 0.079 0.052 2.530
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2035 for all TSLs except TSL 4; for TSL 4, 2029-2037 for the product classes listed in Table I.1 and 2030-2038 for the product classes listed in
Table I.2.
[[Page 3095]]
Table V.34--Cumulative National Energy Savings for Built-In Refrigerators, Refrigerator-Freezers, and Freezers; 9 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in
----------------------------------------------------------------------
All refrigerator Bottom-mount Side-by-side Upright
------------------- refrigerator refrigerator- freezers
TSL ------------------- freezers ------------- Total
-------------------
PC 3A-BI PC 5-BI, 5I-BI PC 4-BI, 4I-BI, PC 9-BI
and 7-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
(quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy.......................................... 1 0.000 0.002 0.000 0.000 0.002
2 0.001 0.002 0.001 0.000 0.004
3 0.001 0.002 0.003 0.000 0.006
4 0.003 0.002 0.005 0.000 0.010
5 0.003 0.002 0.005 0.000 0.009
6 0.007 0.005 0.005 0.000 0.018
FFC..................................................... 1 0.000 0.002 0.000 0.000 0.002
2 0.001 0.002 0.001 0.000 0.005
3 0.001 0.002 0.003 0.000 0.006
4 0.003 0.002 0.005 0.000 0.010
5 0.003 0.002 0.005 0.000 0.010
6 0.008 0.005 0.006 0.000 0.018
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2035 for all TSLs except TSL 4; for TSL 4, 2029-2037 for the product classes listed in Table I.1 and 2030-2038 for the product classes listed in
Table I.2
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 refrigerators,
refrigerator-freezers, and freezers. In accordance with OMB's
guidelines on regulatory analysis,\104\ DOE calculated NPV using both a
7-percent and a 3-percent real discount rate. Tables V.34 and V.35 show
the consumer NPV results with impacts counted over the lifetime of
products purchased in 2027-2056 for all TSLs except TSL 4; for TSL 4,
2029-2058 for the product classes listed in Table I.1 and 2030-2059 for
the product classes listed in Table I.2.
---------------------------------------------------------------------------
\104\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003.
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed
July 1, 2021).
Table V.35--Cumulative Net Present Value of Consumer Benefits for Freestanding Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of Shipments
*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard size refrigerator-freezers Standard size freezers Compact
--------------------------------------------------------------------------------------------------
Top mount Bottom Bottom Side-by- Upright Chest Refrigerators Freezers
TSL ------------- mount mount with side ---------------------------------------------------- Total
PC 1, 1A, --------- TTD ------------ PC 11, 11A,
2, 3, 3A, PC 5 ------------ PC 4, 4I, PC 8 and 9 PC 10 and 12, 13, 13A, PC 16, 17,
3I, and 6 and 5I PC 5A and 7 10A 14, and 15 and 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Billion $2022)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent.......................... 1 2.46 4.45 4.70 2.24 1.63 0.44 0.06 0.42 16.41
2 3.87 4.45 4.70 4.24 1.59 0.00 0.06 0.42 19.33
3 3.87 5.65 5.28 7.37 1.59 0.00 0.28 0.47 24.51
4 6.20 5.69 5.21 7.12 1.96 0.00 0.20 0.46 26.84
5 6.26 5.65 5.87 5.54 1.59 0.00 0.28 0.47 25.66
6 5.27 5.48 5.87 5.71 2.18 0.54 -0.20 0.48 25.33
7 percent.......................... 1 1.01 1.68 1.92 0.94 0.58 0.09 0.02 0.18 6.42
2 1.43 1.68 1.92 1.68 0.57 0.00 0.02 0.18 7.47
3 1.43 1.87 1.95 3.01 0.57 0.00 0.11 0.18 9.12
4 2.01 1.76 1.81 2.63 0.55 0.00 0.07 0.17 9.00
5 2.20 1.87 1.93 1.73 0.57 0.00 0.11 0.18 8.59
6 0.58 1.09 1.93 1.64 0.28 -0.06 -0.33 0.09 5.24
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
Table V.36--Cumulative Net Present Value of Consumer Benefits for Built-In Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in
----------------------------------------------------------------------
All refrigerator Bottom-mount Side-by-side Upright
------------------- refrigerator refrigerator- freezers
TSL ------------------- freezers ------------- Total
-------------------
PC 3A-BI PC 5-BI, 5I-BI PC 4-BI, 4I-BI, PC 9-BI
and 7-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Billion $2022)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent............................................... 1 0.00 0.05 0.00 0.00 0.05
2 0.01 0.05 0.02 0.00 0.09
[[Page 3096]]
3 0.01 0.05 0.07 0.00 0.13
4 0.04 0.05 0.05 0.00 0.14
5 0.04 0.05 0.05 0.00 0.14
6 0.03 0.01 0.06 0.00 0.10
7 percent............................................... 1 0.00 0.02 0.00 0.00 0.02
2 0.00 0.02 0.01 0.00 0.03
3 0.00 0.02 0.03 0.00 0.05
4 0.01 0.02 0.01 0.00 0.04
5 0.01 0.02 0.01 0.00 0.04
6 -0.01 -0.01 0.01 0.00 -0.01
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
The NPV results based on the aforementioned 9-year analytical
period are presented in Tables V.36 and V.37. The impacts are counted
over the lifetime of products purchased in 2027-2035 for all TSLs
except TSL 4; for TSL 4, 2029-2037 for the product classes listed in
Table I.1 and 2030-2038 for the product classes listed in Table I.2. 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.37--Cumulative Net Present Value of Consumer Benefits for Consumer Benefits for Freestanding Refrigerators, Refrigerator-Freezers, and Freezers;
9 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard size refrigerator-freezers Standard size freezers Compact
--------------------------------------------------------------------------------------------------
Top mount Bottom Bottom Side-by- Upright Chest Refrigerators Freezers
Discount rate TSL ------------- mount mount with side ---------------------------------------------------- Total
PC 1, 1A, --------- TTD ------------ PC 11, 11A,
2, 3, 3A, PC 5 ------------ PC 4, 4I, PC 8 and 9 PC 10 and 12, 13, 13A, PC 16, 17,
3I, and 6 and 5I PC 5A and 7 10A 14, and 15 and 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Billion $2022)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent.......................... 1 0.85 1.40 1.56 0.78 0.56 0.10 0.01 0.14 5.40
2 1.26 1.40 1.56 1.36 0.55 0.00 0.01 0.14 6.28
3 1.26 1.64 1.68 2.46 0.55 0.00 0.08 0.15 7.81
4 1.96 1.74 1.69 2.43 0.62 0.00 0.05 0.15 8.64
5 1.89 1.64 1.76 1.60 0.55 0.00 0.08 0.15 7.67
6 1.00 1.28 1.76 1.59 0.54 0.07 -0.21 0.09 6.13
7 percent.......................... 1 0.47 0.70 0.87 0.45 0.26 0.01 0.00 0.08 2.84
2 0.62 0.70 0.87 0.73 0.26 0.00 0.00 0.08 3.26
3 0.62 0.69 0.83 1.36 0.26 0.00 0.04 0.08 3.88
4 0.84 0.70 0.79 1.21 0.22 0.00 0.03 0.07 3.86
5 0.87 0.69 0.75 0.63 0.26 0.00 0.04 0.08 3.31
6 -0.21 0.15 0.75 0.54 -0.01 -0.10 -0.23 0.00 0.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2035 for all TSLs except TSL 4; for TSL 4, 2029-2037 for the product classes listed in Table I.1 and 2030-2038 for the product classes listed in
Table I.2.
Table V.38--Cumulative Net Present Value of Consumer Benefits for Consumer Benefits for Built-In Refrigerators, Refrigerator-Freezers, and Freezers; 9
Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in
----------------------------------------------------------------------
All refrigerator Bottom-mount Side-by-side Upright
------------------- refrigerator refrigerator- freezers
TSL ------------------- freezers ------------- Total
-------------------
PC 3A-BI PC 5-BI, 5I-BI PC 4-BI, 4I-BI, PC 9-BI
and 7-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Billion $2022)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent............................................... 1 0.00 0.02 0.00 0.00 0.02
2 0.00 0.02 0.01 0.00 0.03
3 0.00 0.02 0.02 0.00 0.04
4 0.01 0.02 0.01 0.00 0.04
5 0.01 0.02 0.01 0.00 0.04
6 0.00 0.00 0.01 0.00 0.01
7 percent............................................... 1 0.00 0.01 0.00 0.00 0.01
2 0.00 0.01 0.00 0.00 0.01
3 0.00 0.01 0.01 0.00 0.02
4 0.00 0.01 0.00 0.00 0.02
5 0.00 0.01 0.00 0.00 0.02
[[Page 3097]]
6 -0.01 -0.01 0.00 0.00 -0.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2035 for all TSLs except TSL 4; for TSL 4, 2029-2037 for the product classes listed in Table I.1 and 2030-2038 for the product classes listed in
Table I.2.
The previous results reflect the use of a default trend to estimate
the change in price for refrigerators, refrigerator-freezers, and
freezers over the analysis period (see section IV.H.3 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 amended energy conservation standards for
refrigerators, refrigerator-freezers, and freezers 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 (2029/30-2033/34), 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 refrigerators, refrigerator-
freezers, and freezers 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, EPCA directs the Attorney General of the United States
(``Attorney General'') to determine the impact, if any, of any
lessening of competition likely to result from a proposed standard and
to transmit such determination in writing to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. To assist the Attorney General
in making this determination, DOE is providing DOJ with copies of this
direct final rule and the TSD for review.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. Chapter 15 in the direct final
rule TSD presents the estimated impacts on electricity generating
capacity, relative to the no-new-standards case, for the TSLs that DOE
considered in this rulemaking.
Energy conservation resulting from potential energy conservation
standards for refrigerators, refrigerator-freezers, and freezers is
expected to yield environmental benefits in the form of reduced
emissions of certain air pollutants and greenhouse gases. Table V.38
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. DOE reports
annual emissions reductions for each TSL in chapter 13 of the direct
final rule TSD.
Table V.39--Cumulative Emissions Reduction for Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of Shipments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
-----------------------------------------------------------------------------------------------
1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 46.21 56.73 79.15 91.53 100.79 160.31
CH4 (thousand tons)..................................... 3.48 4.28 5.97 6.80 7.60 12.08
N2O (thousand tons)..................................... 0.48 0.60 0.83 0.95 1.06 1.68
NOX (thousand tons)..................................... 21.81 26.81 37.42 42.15 47.66 75.73
SO2 (thousand tons)..................................... 15.72 19.30 26.93 31.03 34.29 54.53
[[Page 3098]]
Hg (tons)............................................... 0.11 0.13 0.19 0.22 0.24 0.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 4.58 5.62 7.83 9.22 9.98 15.88
CH4 (thousand tons)..................................... 416.14 510.42 711.93 839.67 906.55 1443.16
N2O (thousand tons)..................................... 0.02 0.03 0.03 0.04 0.04 0.07
NOX (thousand tons)..................................... 71.35 87.52 122.07 143.96 155.44 247.45
SO2 (thousand tons)..................................... 0.27 0.34 0.47 0.54 0.60 0.95
Hg (tons)............................................... 0.00 0.00 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 50.79 62.34 86.98 100.76 110.76 176.19
CH4 (thousand tons)..................................... 419.63 514.70 717.90 846.48 914.15 1455.24
N2O (thousand tons)..................................... 0.50 0.62 0.87 0.99 1.10 1.75
NOX (thousand tons)..................................... 93.17 114.33 159.50 186.11 203.10 323.18
SO2 (thousand tons)..................................... 16.00 19.64 27.40 31.57 34.89 55.49
Hg (tons)............................................... 0.11 0.13 0.19 0.22 0.24 0.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in
Table I.2.
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 refrigerators,
refrigerator-freezers, and freezers. Section IV.L of this document
discusses the estimated SC-CO2 values that DOE used. Table
V.39 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.40--Present Monetized Value of CO2 Emissions Reduction for Refrigerators, Refrigerator-Freezers, and
Freezers; 30 Years of Shipments *
----------------------------------------------------------------------------------------------------------------
SC-CO2 Case Discount rate and statistics
------------------------------------------------------------------
TSL 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
(Billion 2022$)
------------------------------------------------------------------
1............................................ 0.49 2.11 3.30 6.39
2............................................ 0.60 2.60 4.07 7.89
3............................................ 0.85 3.64 5.69 11.03
4............................................ 0.89 3.93 6.21 11.92
5............................................ 1.08 4.63 7.25 14.06
6............................................ 1.70 7.34 11.49 22.26
----------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-
2059 for the product classes listed in Table I.2.
As discussed in section IV.L.2, 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
refrigerators, refrigerator-freezers, and freezers. Table V.40 presents
the value of the CH4 emissions reduction at each TSL, and
Table V.41 presents the value of the N2O emissions reduction
at each TSL. The time-series of annual values is presented for the
selected TSL in chapter 14 of the direct final rule TSD.
Table V.41--Present Monetized Value of Methane Emissions Reduction for Refrigerators, Refrigerator-Freezers, and
Freezers; 30 Years of Shipments *
----------------------------------------------------------------------------------------------------------------
SC-CH4 Case Discount rate and statistics
------------------------------------------------------------------
TSL 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
(Billion 2022$)
------------------------------------------------------------------
[[Page 3099]]
1............................................ 0.18 0.56 0.78 1.47
2............................................ 0.23 0.68 0.96 1.81
3............................................ 0.32 0.96 1.34 2.53
4............................................ 0.34 1.07 1.51 2.84
5............................................ 0.40 1.22 1.70 3.22
6............................................ 0.64 1.93 2.70 5.11
----------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-
2059 for the product classes listed in Table I.2.
Table V.42--Present Monetized Value of Nitrous Oxide Emissions Reduction for Refrigerators, Refrigerator-
Freezers, and Freezers; 30 Years of Shipments *
----------------------------------------------------------------------------------------------------------------
SC-N2O Case Discount rate and statistics
---------------------------------------------------------------
TSL 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
(Billion 2022$)
---------------------------------------------------------------
1............................................... 0.00 0.01 0.01 0.02
2............................................... 0.00 0.01 0.01 0.02
3............................................... 0.00 0.01 0.02 0.03
4............................................... 0.00 0.01 0.02 0.04
5............................................... 0.00 0.02 0.03 0.04
6............................................... 0.01 0.03 0.04 0.07
----------------------------------------------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-
2059 for the product classes listed in Table I.2.
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. 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 refrigerators,
refrigerator-freezers, and freezers. The dollar-per-ton values that DOE
used are discussed in section IV.L of this document. Table V.42
presents the present value for NOX emissions reduction for
each TSL calculated using 7-percent and 3-percent discount rates, and
Table V.43 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.43--Present Monetized Value of NOX Emissions Reduction for
Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of
Shipments *
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
(million 2022$)
-------------------------------
1....................................... 4,225.06 1,638.96
2....................................... 5,207.05 2,026.87
3....................................... 7,278.46 2,837.92
4....................................... 7,910.68 2,778.25
5....................................... 9,271.74 3,615.51
6....................................... 14,703.70 5,718.41
------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the
product classes listed in Table I.1 and 2030-2059 for the product
classes listed in Table I.2.
[[Page 3100]]
Table V.44--Present Monetized Value of SO2 Emissions Reduction for
Refrigerators, Refrigerator-Freezers, and Freezers; 30 Years of
Shipments *
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
(million 2022$)
-------------------------------
1....................................... 1,017.36 401.52
2....................................... 1,254.07 496.67
3....................................... 1,752.92 695.41
4....................................... 1,886.57 670.36
5....................................... 2,233.05 885.97
6....................................... 3,539.43 1,400.46
------------------------------------------------------------------------
* 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the
product classes listed in Table I.1 and 2030-2059 for the product
classes listed in Table I.2.
Not all the public health and environmental benefits from the
reduction of greenhouse gases, NOX, and SO2 are
captured in the values above, and additional unquantified benefits from
the reductions of those pollutants as well as from the reduction of
direct PM and other co-pollutants may be significant. DOE has not
included monetary benefits of the reduction of Hg emissions because the
amount of reduction is very small.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of Economic Impacts
Table V.44 presents the NPV values that result from adding the
estimates of the economic 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 refrigerators, refrigerator-freezers,
and freezers, and are measured for the lifetime of products shipped in
2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058 for the
product classes listed in Table I.1 and 2030-2059 for the product
classes listed in Table I.2.
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 refrigerators, refrigerator-
freezers, and freezers shipped during the period 2027-2056 for all TSLs
except TSL 4; for TSL 4, 2029-2058 for the product classes listed in
Table I.1 and 2030-2059 for the product classes listed in Table I.2.
Table V.45--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
----------------------------------------------------------------------------------------------------------------
Using 3% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case............ 22.37 26.71 34.85 38.01 38.79 46.02
3% Average SC-GHG case............ 24.37 29.17 38.29 41.80 43.17 52.96
2.5% Average SC-GHG case.......... 25.78 30.92 40.73 44.52 46.28 57.89
3% 95th percentile SC-GHG case.... 29.58 35.60 47.28 51.57 54.63 71.11
----------------------------------------------------------------------------------------------------------------
Using 7% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case............ 9.15 10.86 13.87 13.72 14.63 14.70
3% Average SC-GHG case............ 11.15 13.32 17.31 17.51 19.01 21.64
2.5% Average SC-GHG case.......... 12.56 15.06 19.75 20.23 22.12 26.57
3% 95th percentile SC-GHG case.... 16.36 19.75 26.30 27.28 30.46 39.79
----------------------------------------------------------------------------------------------------------------
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 amended
standards for refrigerators, refrigerator-freezers, and freezers at
each TSL, beginning with the maximum technologically feasible level, to
determine whether that level was economically justified. Where the max-
tech level was not justified, DOE then considered the next most
efficient level and undertook the same evaluation until it reached the
highest efficiency level that is both technologically feasible and
economically justified and saves a significant amount of energy.
To aid the reader 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
[[Page 3101]]
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 forego 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.\105\
---------------------------------------------------------------------------
\105\ 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 which these
impacts are defined and estimated in the regulatory process.\106\ 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.
---------------------------------------------------------------------------
\106\ Sanstad, A.H. Notes on the Economics of Household Energy
Consumption and Technology Choice. 2010. Lawrence Berkeley National
Laboratory. Available at www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed July
1, 2021).
---------------------------------------------------------------------------
1. Benefits and Burdens of TSLs Considered for Refrigerator,
Refrigerator-Freezer, and Freezer Standards
Tables V.46 and V.47 summarize the quantitative impacts estimated
for each TSL for refrigerators, refrigerator-freezers, and freezers.
The national impacts are measured over the lifetime of refrigerators,
refrigerator-freezers, and freezers purchased in the 30-year period
that begins in the anticipated year of compliance with amended
standards (2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-2058
for the product classes listed in Table I.1 and 2030-2059 for the
product classes listed in Table I.2). The energy savings, emissions
reductions, and value of emissions reductions refer to full-fuel-cycle
results. DOE is presenting monetized benefits of GHG emissions
reductions in accordance with the applicable Executive orders and DOE
would reach the same conclusion presented in this direct final rule 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.46--Summary of Analytical Results for Refrigerator, Refrigerator-Freezer, and Freezer TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quads................................................... 2.76 3.38 4.72 5.61 6.01 9.57
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............................... 50.79 62.34 86.98 100.76 110.76 176.19
CH4 (thousand tons)..................................... 419.63 514.70 717.90 846.48 914.15 1455.24
N2O (thousand tons)..................................... 0.50 0.62 0.87 0.99 1.10 1.75
SO2 (thousand tons)..................................... 16.00 19.64 27.40 31.57 34.89 55.49
NOX (thousand tons)..................................... 93.17 114.33 159.50 186.11 203.10 323.18
Hg (tons)............................................... 0.11 0.13 0.19 0.22 0.24 0.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (3% discount rate, billion 2022$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 19.68 24.06 33.21 36.36 41.23 63.08
Climate Benefits *...................................... 2.67 3.29 4.60 5.02 5.87 9.29
Health Benefits **...................................... 5.24 6.46 9.03 9.80 11.50 18.24
-----------------------------------------------------------------------------------------------
Total Benefits [dagger]............................. 27.60 33.81 46.85 51.18 58.60 90.61
Consumer Incremental Product Costs [Dagger]............. 3.23 4.64 8.56 9.38 15.43 37.66
[[Page 3102]]
Consumer Net Benefits................................... 16.45 19.42 24.65 26.98 25.80 25.42
-----------------------------------------------------------------------------------------------
Total Net Benefits.................................. 24.37 29.17 38.29 41.80 43.17 52.96
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (7% discount rate, billion 2022$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 8.36 10.25 14.17 14.00 17.60 26.88
Climate Benefits *...................................... 2.67 3.29 4.60 5.02 5.87 9.29
Health Benefits **...................................... 2.04 2.52 3.53 3.45 4.50 7.12
-----------------------------------------------------------------------------------------------
Total Benefits [dagger]............................. 13.07 16.06 22.31 22.47 27.97 43.29
Consumer Incremental Product Costs [Dagger]............. 1.92 2.75 5.00 4.96 8.96 21.65
Consumer Net Benefits................................... 6.44 7.50 9.17 9.04 8.64 5.23
-----------------------------------------------------------------------------------------------
Total Net Benefits.................................. 11.15 13.32 17.31 17.51 19.01 21.64
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer refrigerators, refrigerator-freezers, and freezers shipped in 2027-2056 for
all TSLs except TSL 4; for TSL 4, 2029-2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in Table I.2.
These results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056 for all TSLs except TSL 4; for TSL 4, 2029-
2058 for the product classes listed in Table I.1 and 2030-2059 for the product classes listed in Table I.2.
* 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; however, DOE
emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of
reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing (for 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.
Table V.47--Summary of Analytical Results for Refrigerator, Refrigerator-Freezer, and Freezer TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts:
Industry NPV (million 2022$) (No- 4,841.5 to 4,798.5 to 4,387.6 to 4,401.3 to 3,839.9 to 3,080.1 to
new-standards case INPV = 4,891.4 4,870.1 4,514.7 4,522.3 4,061.6 3,604.0
4,905.8).........................
Industry NPV (% change)........... (1.3) to (0.3) (2.2) to (0.7) (10.6) to (8.0) (10.3) to (7.8) (21.7) to (17.2) (37.2) to (26.5)
Consumer Average LCC Savings (2022$):
PC 3.............................. 30.50 40.14 40.14 50.91 43.46 0.03
PC 5.............................. 46.90 46.90 45.47 55.23 45.47 20.22
PC 5BI............................ 86.19 86.19 86.19 91.13 86.19 (30.73)
PC 5A............................. 127.59 127.59 124.76 133.27 122.18 122.18
PC 7.............................. 52.10 70.96 134.10 142.56 73.96 69.71
PC 9.............................. 62.02 62.02 62.02 56.17 62.02 26.33
PC 10............................. 5.94 N/A N/A N/A N/A (8.65)
PC 11A (residential).............. 0.00 0.00 8.11 8.35 8.11 (4.66)
PC 11A (commercial)............... 0.00 0.00 3.06 3.16 3.06 (29.11)
PC 17............................. 32.29 32.29 32.29 36.86 32.29 0.26
PC 18............................. 23.82 23.82 22.49 23.55 22.49 (5.34)
Shipment-Weighted Average *....... 47.08 55.22 63.46 70.88 55.93 27.51
Consumer Simple PBP (years):
PC 3.............................. 1.4 4.2 4.2 4.8 5.3 9.3
PC 5.............................. 4.3 4.3 6.1 5.6 6.1 8.6
PC 5BI............................ 2.4 2.4 2.4 2.1 2.4 8.2
PC 5A............................. 1.9 1.9 4.4 4.1 6.0 6.0
PC 7.............................. 0.7 2.9 1.9 1.6 6.2 6.8
PC 9.............................. 4.1 4.1 4.1 6.6 4.1 10.7
PC 10............................. 11.2 N/A N/A N/A N/A 13.4
PC 11A (residential).............. 2.1 2.1 2.1 2.1 2.1 6.0
PC 11A (commercial)............... 3.3 3.3 3.3 3.2 3.3 9.3
PC 17............................. 4.6 4.6 4.6 4.1 4.6 7.2
PC 18............................. 1.4 1.4 4.2 4.1 4.2 9.4
Shipment-Weighted Average *....... 3.0 3.6 4.3 4.5 5.4 8.7
Percent of Consumers that Experience a
Net Cost:
PC 3.............................. 3.9 17.3 17.3 28.3 34.2 67.1
PC 5.............................. 18.2 18.2 39.4 33.6 39.4 60.3
PC 5BI............................ 1.0 1.0 1.0 0.5 1.0 61.0
PC 5A............................. 1.2 1.2 23.0 19.8 39.4 39.4
PC 7.............................. 0.0 9.6 1.2 0.5 42.6 48.3
PC 9.............................. 12.2 12.2 12.2 39.1 12.2 61.0
[[Page 3103]]
PC 10............................. 57.5 N/A N/A N/A N/A 70.0
PC 11A (residential).............. 0.0 0.0 8.4 8.0 8.4 61.7
PC 11A (commercial)............... 0.0 0.0 16.1 15.7 16.1 92.7
PC 17............................. 5.6 5.6 5.6 4.5 5.6 61.5
PC 18............................. 0.8 0.8 18.9 17.6 18.9 68.5
Shipment-Weighted Average *....... 10.2 12.7 20.5 24.4 33.2 60.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``N/A'' 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 2027 for all TSLs except TSL 4; for TSL 4, 2029 for PCs 5BI, 5A, 10, 11A, 17,
and 18, and 2030 for PCs 3, 5, 7, and 9.
DOE first considered TSL 6, which represents the max-tech
efficiency levels. At this level, DOE expects that all product classes
would require VIPs and most would require VSCs. For most product
classes, this represents the use of VIPs for roughly half the cabinet
surface (typically side walls and doors for an upright cabinet), the
best-available-efficiency variable-speed compressor, forced-convection
heat exchangers with multi-speed BLDC fans, variable defrost, and
increase in cabinet wall thickness for some classes (e.g., compact
refrigerators and both standard-size and compact chest freezers). DOE
estimates that less than 1 percent of annual shipments across all
refrigerator, refrigerator-freezer, and freezer product classes
currently meet the max-tech efficiencies required. TSL 6 would save an
estimated 9.57 quads of energy, an amount DOE considers significant.
Under TSL 6, the NPV of consumer benefit would be $5.23 billion using a
discount rate of 7 percent, and $25.42 billion using a discount rate of
3 percent.
The cumulative emissions reductions at TSL 6 are 176 Mt of
CO2, 55.5 thousand tons of SO2, 323 thousand tons
of NOX, 0.38 tons of Hg, 1,455 thousand tons of
CH4, and 1.75 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 6 is $9.29 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 6 is $7.12 billion using a 7-percent discount rate and $18.24
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 6 is $21.64
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 6 is $52.96 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 6, for the largest product classes, which are 3, 5, 5A, and
7 and together account for approximately 76 percent of annual
shipments, there is a life-cycle cost savings of $0.03, $20.22,
$122.18, and $69.71 and a payback period of 9.3 years, 8.6 years, 6.0
years and 6.8 years, respectively. However, for these product classes,
the fraction of customers experiencing a net LCC cost is 67.1 percent,
60.3 percent, 39.4 percent and 48.3 percent with increases in first
cost of $169.37, $151.75, $161.65, and $153.01, respectively. Overall,
a majority of refrigerators, refrigerator-freezers, and freezers
consumers (60 percent) would experience a net cost and the average LCC
savings would be negative for PC 5BI, PC 10, PC 11A, and PC 18.
Additionally, 35 percent of low-income households with a side-by-side
refrigerator-freezer (represented by PC 7 and used by 19 percent of
low-income households) would experience a net cost.
At TSL 6, the projected change in INPV ranges from a decrease of
$1.83 billion to a decrease of $1.30 billion, which corresponds to
decreases of 37.2 percent and 26.5 percent, respectively. Industry
conversion costs could reach $2.39 billion as manufacturers work to
redesign their portfolio of model offerings and re-tool entire
factories to comply with amended standards at TSL 6.
DOE estimates that less than 1 percent of refrigerator,
refrigerator-freezer, and freezer current annual shipments meet the
max-tech levels. At TSL 6, only a few manufacturers offer any standard-
size products that meet the efficiencies required. For PC 3, which
accounts for approximately 25 percent of annual shipments, no OEMs
currently offer products that meet the efficiency level required. For
PC 5, which accounts for approximately 21 percent of annual shipments,
DOE estimates that seven out of 22 OEMs currently offer products that
meet the efficiency level required. For PC 7, which accounts for
approximately 11 percent of annual shipments, only one out of 11 OEMs
currently offers products that meet the efficiency level required.
At max-tech, manufacturers would likely need to implement all the
most efficient design options in the engineering analysis. In
interviews, manufacturer indicated they would redesign all product
platforms and dramatically update manufacturing facilities to meet max-
tech for all approximately 17.0 million annual shipments of
refrigerators, refrigerator-freezers, and freezers.\107\
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\107\ Current shipments calculations relied on shipments in the
year 2023.
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In particular, increased incorporation of VIPs could increase the
expense of adapting manufacturing plants. As discussed in section
IV.J.2.c of this document, DOE expects manufacturers would likely adopt
VIP technology to improve thermal insulation while minimizing loss to
the interior volume for their products. Extensive incorporation of VIPs
requires significant capital expenditures due to the need for more
careful product handling and conveyor, increased warehousing
requirements, investments in tooling necessary for the VIP installation
process, and adding production line capacity to compensate for more
time-intensive manufacturing associated with VIPs. Manufacturers with
facilities that have limited space and few options to expand may
consider greenfield projects. In interviews, several manufacturers
expressed concerns about their ability to produce sufficient quantities
of refrigerators, refrigerator-freezers, and freezers at max-tech given
the required scale of investment, redesign effort, and 3-year
compliance timeline.
[[Page 3104]]
The Secretary concludes that at TSL 6 for refrigerators,
refrigerator-freezers, and freezers, the benefits of energy savings,
positive NPV of consumer benefits, emission reductions, and the
estimated monetary value of the emissions reductions would be
outweighed by the economic burden on many consumers, and the impacts on
manufacturers, including the large potential reduction in INPV and the
lack of manufacturers currently offering products meeting the
efficiency levels required at this TSL. At TSL 6, a majority of
refrigerator, refrigerator-freezer, and freezers consumers (60 percent)
would experience a net cost and the average LCC savings would be
negative for PC 5BI, PC 10, PC 11A, and PC 18. Additionally,
manufacturers would need to make significant upfront investments to
update product lines and manufacturing facilities. Manufacturers
expressed concern that they would not be able to complete product and
production line updates within the 3-year conversion period.
Consequently, the Secretary has concluded that TSL 6 is not
economically justified.
DOE then considered TSL 5 for refrigerators, refrigerator-freezers,
and freezers. For classes other than refrigerator-freezers with bottom-
mounted freezers and through-the-door ice service (PC 5A), this TSL
represents efficiency levels less than max-tech. TSL 5 represents
similar design options as max-tech, but generally incorporates the use
of high-efficiency compressors (single speed compressors or VSCs)
rather than maximum efficiency VSCs, incorporates VIPs in fewer product
classes, and incorporates less VIP surface area for the product classes
requiring the use of VIPs as compared to TSL 6. TSL 5 would save an
estimated 6.01 quads of energy, an amount DOE considers significant.
Under TSL 5, the NPV of consumer benefit would be $8.64 billion using a
discount rate of 7 percent, and $25.80 billion using a discount rate of
3 percent.
The cumulative emissions reductions at TSL 5 are 111 Mt of
CO2, 34.9 thousand tons of SO2, 203 thousand tons
of NOX, 0.24 tons of Hg, 914 thousand tons of
CH4, and 1.10 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 $5.87 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 5 is $4.50 billion using a 7-percent discount rate and $11.50
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 $19.01
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 5 is $43.17 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, for the largest product classes, which are 3, 5, 5A, and
7, there is a life-cycle cost savings of $43.46, $45.47, $122.18, and
$73.96 and a payback period of 5.3 years, 6.1 years, 6.0 years and 6.2
years, respectively. For these product classes, the fraction of
customers experiencing a net LCC cost is 34.2 percent, 39.4 percent,
39.4 percent and 42.6 percent with increases in first cost of $52.69,
$69.25, $161.65, and $121.58, respectively. Overall, 33 percent of
refrigerators, refrigerator-freezers, and freezers consumers would
experience a net cost and the average LCC savings are positive for all
product classes.
At TSL 5, an estimated 16 percent of all low-income households
experience a net cost, including 11 percent of low-income households
with a top-mount or single-door refrigerator-freezer (represented by PC
3 and used by 72 percent of low-income households) and 32 percent of
low-income households with a side-by-side refrigerator-freezer
(represented by PC 7 and used by 19 percent of low-income households).
More than half of low-income PC 7 consumers with a net cost experience
a net cost of at least $40 and while low-income PC 7 consumers
experience an average LCC savings of $132.77 at TSL 5, there are larger
average LCC savings at TSL 4 ($161.87) and substantially fewer low-
income PC 7 consumers would experience a net cost (0.6 percent) at that
TSL. Further, the incremental increase in purchase price at TSL 5 for
PC 7 is $121.58, which may be difficult for low-income homeowners to
afford.
At TSL 5, the projected change in INPV ranges from a decrease of
$1.07 billion to a decrease of $844.2 million, which corresponds to
decreases of 21.7 percent and 17.2 percent, respectively. DOE estimates
that industry must invest $1.40 billion to comply with standards set at
TSL 5.
DOE estimates that approximately 14 percent of refrigerator,
refrigerator-freezer, and freezer annual shipments meet the TSL 5
efficiencies. For standard-size refrigerator-freezers, which account
for approximately 70 percent of total annual shipments, approximately 1
percent of shipments meet the efficiencies required at TSL 5. Compared
to max-tech, more manufacturers offer standard-size refrigerator-
freezer products that meet the required efficiencies, however, many
manufacturers do not offer products that meet this level. Of the 22
OEMs offering PC 3 products, three OEMs offer models that meet the
efficiency level required. Of the 22 OEMs offering PC 5 products, 14
OEMs offer models that meet the efficiency level required. Of the 11
OEMs offering PC 7 products, only one OEM offers models that meet the
efficiency level required.
The manufacturers that do not currently offer models that meet TSL
5 efficiencies would need to develop new product platforms. Updates
could include incorporating variable defrost, BLDC evaporator fan
motors, and high-efficiency VSCs. Additionally, some product classes
could require the use of VIPs. DOE expects manufacturers would likely
need to incorporate some VIPs into PC 5 and PC 7 designs, but not to
the extent required at max-tech. However, DOE expects manufacturers
would need to incorporate the max-tech design options for PC 5A, which
includes the use of VIPs for roughly half the cabinet surface (side
walls and doors) to meet TSL 5 efficiencies. As discussed in section
IV.J.2.c of this document, the inclusion of VIPs in product design
necessitates large investments in tooling and significant changes to
production plants. Furthermore, given that only 1 percent of current
standard-size refrigerator-freezer shipments meet TSL 5 efficiency
levels, the manufacturers that are currently able to meet TSL 5 would
need to scale up manufacturing capacity of compliant models. DOE
anticipates conversion costs as high as $1.40 billion because the
majority of product platforms in the industry would require redesign
and investment.
The Secretary concludes that at TSL 5 for refrigerators,
refrigerator-freezers, and freezers, the benefits of energy savings,
positive NPV of consumer benefits, emission reductions, and the
estimated monetary value of the emissions reductions would be
outweighed by the economic burden on consumers, particularly low-income
consumers of side-by-side refrigerator-freezers, and the impacts on
manufacturers, including the large potential reduction in INPV and the
lack of manufacturers currently offering
[[Page 3105]]
standard-size refrigerator-freezer products meeting the efficiency
levels required at this TSL. Specifically, only one OEM currently
offers any PC 7 models that meet the TSL 5 efficiencies. At TSL 5, 32
percent of low-income PC 7 consumers would experience a net cost and
the incremental increase in purchase price of $121.58 may be difficult
for low-income homeowners to afford. Consequently, the Secretary has
concluded that TSL 5 is not economically justified.
DOE then considered the Recommended TSL (i.e., TSL 4). For
representative product classes other than PC 5A, PC 7, and PC 9, this
TSL represents the same efficiency levels as TSL 5.\108\ Thus, the
Recommended TSL represents similar design options as TSL 5, except for
PC 5A, PC 7, and PC 9. For PC 7, DOE expects manufacturers would not
require the use of VIPs to meet the required efficiency level. For PC
5A, DOE expects manufacturers would require less VIP surface area to
meet the required efficiency level. For PC 9, DOE expects manufacturers
to implement variable speed compressor systems to meet required
standards. DOE estimates that approximately 14 percent of annual
shipments across all refrigerator, refrigerator-freezer, and freezer
product classes currently meet the efficiencies required. For the
Recommended TSL, DOE's analysis utilized the January 31, 2029 (or
January 31, 2030, for some product classes) compliance dates specified
in the Joint Agreement. The Recommended TSL would save an estimated
5.61 quads of energy, an amount DOE considers significant. Under the
Recommended TSL, the NPV of consumer benefit would be $9.04 billion
using a discount rate of 7 percent, and $26.98 billion using a discount
rate of 3 percent.
---------------------------------------------------------------------------
\108\ For all TSLs except the Recommended TSL, the efficiency
levels required for non-representative product classes are the same
as the efficiency levels required for the associated directly
analyzed product classes. However, as noted in section V.A of this
document, the Recommended TSL from the Joint Agreement includes
standard levels for some non-representative product classes that
differ from their associated representative product class. Thus, in
addition to the representative PC 5A, PC 7, and PC 9, the efficiency
levels required for non-representative PC 9A-BI and PC 12 at the
Recommended TSL also differ from the efficiency levels required at
TSL 5.
---------------------------------------------------------------------------
The cumulative emissions reductions at the Recommended TSL are 101
Mt of CO2, 31.6 thousand tons of SO2, 186
thousand tons of NOX, 0.22 tons of Hg, 846.5 thousand tons
of CH4, and 0.99 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 $5.02 billion. The estimated monetary
value of the health benefits from reduced SO2 and
NOX emissions at the Recommended TSL is $3.45 billion using
a 7-percent discount rate and $9.80 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 $17.51 billion. Using a 3-percent discount rate for all benefits
and costs, the estimated total NPV at the Recommended TSL is $41.80
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 the Recommended TSL, for the largest product classes, which are
3, 5, 5A, and 7, there is a life-cycle cost savings of $50.91, $55.23,
$133.27, and $142.56 and a payback period of 4.8 years, 5.6 years, 4.1
years, and 1.6 years, respectively. For these product classes, the
fraction of customers experiencing a net LCC cost is 28.3 percent, 33.6
percent, 19.8 percent, and 0.5 percent with increases in first cost of
$47.67, $62.72, $81.32, and $24.39, respectively. Overall, 24.4 percent
of refrigerators, refrigerator-freezers, and freezers consumers would
experience a net cost and the average LCC savings are positive for all
product classes.
At the Recommended TSL, 9 percent of low-income households with a
top-mount or single-door refrigerator-freezer (represented by PC 3 and
used by 72 percent of low-income households) and 0.6 percent of low-
income households with a side-by-side refrigerator-freezer (represented
by PC 7 and used by 19 percent of low-income households) experience a
net cost. Additionally, the incremental increase in purchase price is
$24.39 for low-income PC 7 homeowners at the Recommended TSL,
substantially lower than the incremental increase in purchase price of
$121.58 at TSL 5.
At the Recommended TSL, the projected change in INPV ranges from a
decrease of $504.4 million to a decrease of $383.5 million, which
correspond to decreases of 10.3 percent and 7.8 percent, respectively.
DOE estimates that industry must invest $830.3 million comply with
standards set at the Recommended TSL. DOE estimates that approximately
14 percent of refrigerator, refrigerator-freezer, and freezer annual
shipments meet the Recommended TSL efficiencies.
Compared to TSL 5, more manufacturers offer standard-size
refrigerator freezer products that meet the required efficiencies since
PC 7 has a lower required efficiency level at the Recommended TSL. For
PC 7, which accounts for 11 percent of shipments, three OEMs offer
products that meet the efficiency level required. Furthermore, DOE does
not expect manufacturers would need to incorporate VIPs into PC 7
designs to meet the efficiencies required at the Recommended TSL. For
PC 5 and PC 5A, DOE understands the two product classes often share the
same production lines, with shared cabinet architecture and tooling.
DOE expects manufacturers would likely need to incorporate some VIPs
into PC 5A designs, but not to the extent required at TSL 5 and TSL 6.
Thus, for the 10 OEMs that manufacture both PC 5 and PC 5A, DOE expects
manufacturers could implement similar cabinet upgrades (i.e., partial
VIP) for PC 5 and PC 5A designs to achieve the efficiencies required at
this level.
For all TSLs considered in this direct final rule--except for the
Recommended TSL--DOE is bound by the 3-year lead time requirements in
EPCA when determining compliance dates (i.e., compliance with amended
standards required in 2027). For the Recommended TSL, DOE's analysis
utilized the January 31, 2029 (or January 31, 2030, for some product
classes) compliance dates specified in the Joint Agreement as they were
an integral part of the multi-product joint recommendation. These
compliance dates provide manufacturers the flexibility to spread
capital requirements, engineering resources, and other conversion
activities over a longer period of time depending on the individual
needs of each manufacturer. Furthermore, these delayed compliance dates
provide additional lead time and certainty for suppliers of components
that improve efficiency. The Recommended TSL mitigates risks raised by
AHAM and multiple manufacturers in response to the February 2023 NOPR
regarding the ability for VSC and VIP component suppliers to increase
supply of these key components in the 3-year lead time required by
EPCA.
After considering the analysis and weighing the benefits and
burdens, the Secretary has concluded that a standard set at the
Recommended TSL for refrigerators, refrigerator-freezers, and freezers
is economically justified. At this TSL, the average LCC savings are
positive for all product classes for
[[Page 3106]]
which an amended standard is considered. An estimated 24.4 percent of
all refrigerator, refrigerator-freezer, and freezer consumers
experience a net cost. An estimated 9 percent of low-income households
with a top-mount or single-door refrigerator-freezer (represented by PC
3 and used by 72 percent of low-income households) and 0.6 percent of
low-income households with a side-by-side refrigerator-freezer
(represented by PC 7 and used by 19 percent of low-income households),
experience a net cost, which is a significantly lower percentage than
under TSL 5. DOE notes that for low-income PC 7 consumers, as well as
across all PC 7 consumers, the Recommended TSL represents the largest
average LCC savings of any TSL. The FFC national energy savings are
significant and the NPV of consumer benefits is positive at the
Recommended TSL using both a 3-percent and 7-percent discount rate.
Notably, the benefits to consumers vastly outweigh the cost to
manufacturers. At the Recommended TSL, the NPV of consumer benefits,
even measured at the more conservative discount rate of 7 percent is
over 17 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 $5.02 billion in climate benefits (associated with the
average SC-GHG at a 3-percent discount rate), and $9.80 billion (using
a 3-percent discount rate) or $3.45 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. DOE notes 72 percent of low-income households have a top-mount
refrigerator-freezer (represented by PC 3) and that an estimated 9
percent of low-income PC 3 households experience a net cost at the
Recommended TSL, whereas an estimated 6 percent of low-income
households with a top-mount refrigerator-freezer experience a net cost
at TSL 3. However, the average LCC savings for low-income PC 3
consumers are $22.05 higher at the Recommended TSL than at TSL 3.
Further, compared to TSL 3, it is estimated that the Recommended TSL
would result in additional FFC national energy savings of 0.9 quads.
These additional savings and benefits at the Recommended TSL are
significant. DOE considers the impacts to be, as a whole, economically
justified at the Recommended TSL.
Although DOE considered amended standard levels for refrigerators,
refrigerator-freezers, and freezers by grouping the efficiency levels
for each product class into TSLs, DOE evaluates all analyzed efficiency
levels in its analysis. In general, the standard level represents the
maximum energy savings that does not result in a large percentage of
consumers experiencing a net LCC cost. For example, for PC 5, more than
half of consumers experience a net cost at EL 3. In the case of PC 7,
for which DOE found that a relatively higher percentage of low-income
consumers may experience net costs at higher efficiency levels, at the
standard level chosen, 0.6 percent of low-income households with side-
by-side refrigerator-freezers will experience a potential burden. The
ELs at the standard level result in positive LCC savings for all
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 they are economically
justified, as discussed for the Recommended TSL in the preceding
paragraphs.
Therefore, based on the previous considerations, DOE adopts the
energy conservation standards for refrigerators, refrigerator-freezers,
and freezers at the Recommended TSL.
While DOE considered each potential TSL under the criteria laid out
in 42 U.S.C. 6295(o) as discussed above, DOE notes that the Recommended
TSL for refrigerators, refrigerator-freezers, and freezers adopted in
this direct final rule is part of a multi-product Joint Agreement
covering six rulemakings (refrigerators, refrigerator-freezers, and
freezers; miscellaneous refrigeration products; conventional cooking
products; residential clothes washers; consumer clothes dryers; and
dishwashers). The signatories indicate that the Joint Agreement for the
six rulemakings should be considered as a joint statement of
recommended standards, to be adopted in its entirety. As discussed in
section V.B.2.e of this document, many refrigerator, refrigerator-
freezer, and freezer OEMs also manufacture miscellaneous refrigeration
products, conventional cooking products, residential clothes washers,
consumer clothes dryers, and dishwashers. Rather than requiring
compliance with five amended standards in a single year (2027),\109\
the negotiated multi-product Joint Agreement staggers the compliance
dates for the five amended standards over a 4-year period (2027-2030).
In response to the February 2023 NOPR, AHAM and individual
manufacturers expressed concerns about the timing of ongoing home
appliance rulemakings. Specifically, AHAM commented that the
combination of the stringency of DOE's proposals, the short lead-in
time required under EPCA to comply with standards, and the overlapping
timeframe of multiple standards affecting the same manufacturers
represents significant cumulative regulatory burden for the home
appliance industry. (AHAM, No. 69 at pp. 20-21) AHAM has submitted
similar comments to other ongoing consumer product rulemakings.\110\ As
AHAM is a key signatory of the Joint Agreement, DOE understands that
the compliance dates recommended in the Joint Agreement would help
reduce cumulative regulatory burden. These compliance dates help
relieve concern on the part of some manufacturers about their ability
to allocate sufficient resources to comply with multiple concurrent
amended standards, about the need to align compliance dates for
products that are typically designed or sold as matched pairs, and
about the ability of their suppliers to ramp up production of key
components. The Joint Agreement also provides additional years of
regulatory certainty for manufacturers and their suppliers while still
achieving the maximum improvement in energy efficiency that is
technologically feasible and economically justified.
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\109\ The refrigerators, refrigerator-freezers, and freezers (88
FR 12452); consumer conventional cooking products (88 FR 6818);
residential clothes washers (88 FR 13520); consumer clothes dryers
(87 FR 51734); and dishwashers (88 FR 32514) utilized a 2027
compliance year for analysis at the proposed rule stage.
Miscellaneous refrigeration products (88 FR 12452) utilized a 2029
compliance year for the NOPR analysis.
\110\ AHAM has submitted written comments regarding cumulative
regulatory burden for the other five rulemakings included in the
multi-product Joint Agreement. AHAM's written comments on cumulative
regulatory burden are available at: www.regulations.gov/comment/EERE-2020-BT-STD-0039-0031 (pp. 12-15) for miscellaneous
refrigeration products; www.regulations.gov/comment/EERE-2014-BT-STD-0005-2285 (pp. 44-27) for consumer conventional cooking
products; www.regulations.gov/comment/EERE-2017-BT-STD-0014-0464
(pp. 40-44) for residential clothes washers; www.regulations.gov/comment/EERE-2014-BT-STD-0058-0046 (pp. 12-13) for consumer clothes
dryers; and www.regulations.gov/comment/EERE-2019-BT-STD-0039-0051
(pp. 21-24) for dishwashers.
---------------------------------------------------------------------------
The amended energy conservation standards for refrigerators,
refrigerator-freezers, and freezers, which are
[[Page 3107]]
expressed as kWh/yr, are shown in Table V.48.
Table V.48--Amended Energy Conservation Standards for Refrigerators,
Refrigerator-Freezers, and Freezers
------------------------------------------------------------------------
Equations for maximum energy use (kWh/
yr)
Product class ---------------------------------------
Based on AV
(ft\3\) Based on av (L)
------------------------------------------------------------------------
1. Refrigerator-freezers and 6.79AV + 191.3.... 0.240av + 191.3.
refrigerators other than all-
refrigerators with manual
defrost.
1A. All-refrigerators--manual 5.77AV + 164.6.... 0.204av + 164.6.
defrost.
2. Refrigerator-freezers-- (6.79AV + (0.240av +
partial automatic defrost. 191.3)*K2. 191.3)*K2.
3. Refrigerator-freezers-- 6.86AV + 198.6 + 0.242av + 198.6 +
automatic defrost with top- 28I. 28I.
mounted freezer.
3-BI. Built-in refrigerator- 8.24AV + 238.4 + 0.291av + 238.4 +
freezer--automatic defrost with 28I. 28I.
top-mounted freezer.
3A. All-refrigerators--automatic (6.01AV + (0.212av +
defrost. 171.4)*K3A. 171.4)*K3A.
3A-BI. Built-in All- (7.22AV + (0.255av +
refrigerators--automatic 205.7)*K3ABI. 205.7)*K3ABI.
defrost.
4. Refrigerator-freezers-- (6.89AV + (0.243av +
automatic defrost with side- 241.2)*K4 + 28I. 241.2)*K4 + 28I.
mounted freezer.
4-BI. Built-In Refrigerator- (8.79AV + (0.310av +
freezers--automatic defrost 307.4)*K4BI + 28I. 307.4)*K4BI +
with side-mounted freezer. 28I.
5. Refrigerator-freezers-- (7.79AV + (0.275av +
automatic defrost with bottom- 279.0)*K5 + 28I. 279.0)*K5 + 28I.
mounted freezer.
5-BI. Built-In Refrigerator- (8.46AV + (0.299av +
freezers--automatic defrost 303.2)*K5BI + 28I. 303.2)*K5BI +
with bottom-mounted freezer. 28I.
5A. Refrigerator-freezer-- (7.22AV + (0.255av +
automatic defrost with bottom- 327.1)*K5A. 327.1)*K5A.
mounted freezer with through-
the-door ice service.
5A-BI. Built-in refrigerator- (8.16AV + (0.288av +
freezer--automatic defrost with 368.4)*K5ABI. 368.4)*K5ABI.
bottom-mounted freezer with
through-the-door ice service.
6. Refrigerator-freezers-- 7.14AV + 280.0.... 0.252av + 280.0.
automatic defrost with top-
mounted freezer with through-
the-door ice service.
7. Refrigerator-freezers-- (6.92AV + (0.244av +
automatic defrost with side- 305.2)*K7. 305.2)*K7.
mounted freezer with through-
the-door ice service.
7-BI. Built-In Refrigerator- (8.82AV + (0.311av +
freezers--automatic defrost 384.1)*K7BI. 384.1)*K7BI.
with side-mounted freezer.
8. Upright freezers with manual 5.57AV + 193.7.... 0.197av + 193.7.
defrost.
9. Upright freezers with (7.76AV + (0.274av +
automatic defrost. 205.5)*K9 + 28I. 205.5)*K9 + 28I.
9-BI. Built-In Upright freezers (9.37AV + (0.331av +
with automatic defrost. 247.9)*K9BI + 28I. 247.9)*K9BI +
28I.
10. Chest freezers and all other 7.29AV + 107.8.... 0.257av + 107.8.
freezers except compact
freezers.
10A. Chest freezers with 10.24AV + 148.1... 0.362av + 148.1.
automatic defrost.
11. Compact refrigerator- 7.68AV + 214.5.... 0.271av + 214.5.
freezers and refrigerators
other than all-refrigerators
with manual defrost.
11A. Compact all-refrigerators-- 6.66AV + 186.2.... 0.235av + 186.2.
manual defrost.
12. Compact refrigerator- 5.02AV + 285.4.... 0.177av + 285.4.
freezers--partial automatic
defrost.
13. Compact refrigerator- 10.62AV + 305.3 + 0.375av + 305.3 +
freezers--automatic defrost 28I. 28I.
with top-mounted freezer.
13A. Compact all-refrigerators-- (7.79AV + (0.275av +
automatic defrost. 220.4)*K13A. 220.4)*K13A.
14. Compact refrigerator- 6.14AV + 411.2 + 0.217av + 411.2 +
freezers--automatic defrost 28I. 28I.
with side-mounted freezer.
15. Compact refrigerator- 10.62AV + 305.3 + 0.375av + 305.3 +
freezers--automatic defrost 28I. 28I.
with bottom-mounted freezer.
16. Compact upright freezers 7.35AV + 191.8.... 0.260av + 191.8.
with manual defrost.
17. Compact upright freezers 9.15AV + 316.7.... 0.323av + 316.7.
with automatic defrost.
18. Compact chest freezers...... 7.86AV + 107.8.... 0.278av + 107.8.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendices A and B of subpart B of 10 CFR part 430.
Av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product
without an automatic icemaker.
Door Coefficients (e.g., K3A) are as defined in the table below.
----------------------------------------------------------------------------------------------------------------
Products without Products without a
Products with a a transparent transparent door or door-in-
Door coefficient transparent door door with a door- door with added external
in-door doors
----------------------------------------------------------------------------------------------------------------
K2......................................... 1.0 1.0 1 + 0.02 * (Nd-1).
K3A........................................ 1.10 1.0 1.0.
K3ABI...................................... 1.10 1.0 1.0.
K4......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K4BI....................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5BI....................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5A........................................ 1.10 1.06 1 + 0.02 * (Nd-3).
K5ABI...................................... 1.10 1.06 1 + 0.02 * (Nd-3).
K7......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K7BI....................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K9......................................... 1.0 1.0 1 + 0.02 * (Nd-1).
[[Page 3108]]
K9BI....................................... 1.0 1.0 1 + 0.02 * (Nd-1).
K12........................................ 1.0 1.0 1 + 0.02 * (Nd-1).
K13A....................................... 1.10 1.0 1.0.
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Nd is the number of external doors.
\2\ The maximum Nd values are 2 for K2 and K12, 3 for K9BI, and 5 for all other K values.
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 2022$) of the
benefits from operating products that meet the adopted standards
(consisting primarily of operating cost savings from using less
energy), minus increases in product purchase costs, and (2) the
annualized monetary value of the climate and health benefits.
Table V.49 shows the annualized values for consumer refrigerator,
refrigerator-freezers, and freezers under the Recommended TSL expressed
in 2022$. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOX and SO2
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $590.5 million per year in increased equipment costs,
while the estimated annual monetized benefits are $1.7 billion in
reduced equipment operating costs, $303.8 million in climate benefits,
and $410.6 million in health benefits. In this case, the net benefit
would amount to $1.8 billion per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $567.5 million per year in increased
equipment costs, while the estimated annual monetized benefits are $2.2
billion in reduced operating costs, $303.8 million in climate benefits,
and $592.9 million in health benefits. In this case, the net benefit
would amount to $2.5 billion per year.
Table V.49--Annualized Benefits and Costs of Adopted Standards (the Recommended TSL) for Consumer Refrigerators,
Refrigerator-Freezers, and Freezers
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low- net- High- net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate:
Consumer Operating Cost Savings............................. 2,200.5 2,023.9 2,326.6
Climate Benefits *.......................................... 303.8 291.8 307.9
Health Benefits **.......................................... 592.9 569.7 600.7
-----------------------------------------------
Total Benefits [dagger]................................. 3,097.2 2,885.4 3,235.2
Consumer Incremental Product Costs [Dagger]................. 567.5 666.6 547.8
-----------------------------------------------
Net Benefits............................................ 2,529.6 2,218.8 2,687.4
Change in Producer Cashflow (INPV [Dagger][Dagger])............. (49) to (37) (49) to (37) (49) to (37)
----------------------------------------------------------------------------------------------------------------
7% discount rate:
Consumer Operating Cost Savings............................. 1,667.0 1,541.9 1,758.5
Climate Benefits * (3% discount rate)....................... 303.8 291.8 307.9
Health Benefits **.......................................... 410.6 395.8 415.7
-----------------------------------------------
Total Benefits [dagger]................................. 2,381.4 2,229.5 2,482.0
Consumer Incremental Product Costs [Dagger]................. 590.5 677.9 569.6
-----------------------------------------------
Net Benefits............................................ 1,790.9 1,551.6 1,912.5
Change in Producer Cashflow (INPV [Dagger][Dagger])............. (49) to (37) (49) to (37) (49) to (37)
----------------------------------------------------------------------------------------------------------------
Note: This table presents present value (in 2022$) of the costs and benefits associated with refrigerators,
refrigerator-freezers, and freezers shipped in 2029-2058 for the product classes listed in Table I.1 and
shipped in 2030-2059 for the product classes listed in Table I.2. These results include benefits which accrue
after 2056 from the products shipped in 2029-2058 for the product classes listed in Table I.1 and shipped in
2030-2059 for the product classes listed in Table I.2. The Primary, Low Net Benefits, and High Net Benefits
Estimates utilize projections of energy prices from the AEO2023 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.H.3 of this document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3-percent discount rate are shown; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane.
** 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.
[[Page 3109]]
[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 DOE does not have a single central SC-GHG point estimate.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life-cycle costs analysis and national
impact analysis as discussed in detail below. See sections IV.F and IV.H of this document. DOE's NIA includes
all impacts (both costs and benefits) along the distribution chain beginning with the increased costs to the
manufacturer to manufacture the product and ending with the increase in price experienced by the consumer. DOE
also separately conducts a detailed analysis on the impacts on manufacturers (the MIA). See section IV.J of
this document. In the detailed MIA, DOE models manufacturers' pricing decisions based on assumptions regarding
investments, conversion costs, cashflow, and margins. The MIA produces a range of impacts, which is the rule's
expected impact on the INPV. The change in INPV is the present value of all changes in industry cash flow,
including changes in production costs, capital expenditures, and manufacturer profit margins. The annualized
change in INPV is calculated using the industry weighted average cost of capital value of 9.1 percent that is
estimated in the manufacturer impact analysis (see chapter 12 of the direct final rule TSD for a complete
description of the industry weighted average cost of capital). For refrigerators, refrigerator-freezers, and
freezers, those values are -$48.7 million to -$37.0 million. DOE accounts for that range of likely impacts in
analyzing whether a TSL is economically justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin
scenario, which is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings
in this table, and the Preservation of Operating Profit Markup scenario, where DOE assumed manufacturers would
not be able to increase per-unit operating profit in proportion to increases in manufacturer production costs.
DOE includes the range of estimated annualized change in INPV in the above table, drawing on the MIA explained
further in section IV.J of this document, to provide additional context for assessing the estimated impacts of
this direct final rule to society, including potential changes in production and consumption, which is
consistent with OMB's Circular A-4 and E.O. 12866. If DOE were to include the INPV into the annualized net
benefit calculation for this direct final rule, the annualized net benefits would range from $2,480.9 million
to $2,492.6 million at 3-percent discount rate and would range from $1,742.2 million to $1,753.9 million at 7-
percent discount rate. Parentheses ( ) indicate negative values.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving
Regulation and Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011), and
amended by E.O. 14094, ``Modernizing Regulatory Review,'' 88 FR 21879
(April 11, 2023), requires agencies, to the extent permitted by law, to
(1) propose or adopt a regulation only upon a reasoned determination
that its benefits justify its costs (recognizing that some benefits and
costs are difficult to quantify); (2) tailor regulations to impose the
least burden on society, consistent with obtaining regulatory
objectives, taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations; (3) select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity); (4) to the extent feasible, specify performance
objectives, rather than specifying the behavior or manner of compliance
that regulated entities must adopt; and (5) identify and assess
available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public. DOE emphasizes as well that E.O. 13563
requires agencies to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible. In its guidance, the Office of Information and Regulatory
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the 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 Joint Agreement meets the necessary
requirements under EPCA to issue this direct final rule for energy
conservation standards for refrigerators, refrigerator-freezers, and
freezers under the procedures in 42 U.S.C. 6295(p)(4). DOE notes that
the NOPR for energy conservation standards for refrigerators,
refrigerator-freezers, and freezers published elsewhere in the Federal
Register contains an IRFA.
C. Review Under the Paperwork Reduction Act
Manufacturers of consumer refrigerators, refrigerator-freezers, and
freezers 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 consumer refrigerators, refrigerator-freezers, and
freezers, 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 consumer refrigerators, refrigerator-freezers, and
freezers. (See
[[Page 3110]]
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.
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.
In the February 2023 NOPR, DOE tentatively determined that the
proposed rule would not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. 88 FR 13616. Furthermore, DOE stated that EPCA
governs and prescribes Federal preemption of State regulations as to
energy conservation for the products that are the subject of this
proposed rule and that States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA. Id.
(citing 42 U.S.C. 6297). Accordingly, DOE concluded that no further
action was required by E.O. 13132.
The AGs of TN, AL, et al. submitted a joint comment that DOE's
analysis is woefully deficient. The AGs of TN, AL, et al. commented
that this determination is incorrect because, in their view, the
Proposed Standards have significant federalism implications within the
meaning of Executive Order 13132. The AGs of TN, AL, et al. go on to
state that if the Proposed Standards are promulgated, ``[a]ny State
regulation which sets forth procurement standards'' relating to
refrigerators, refrigerator-freezers, or freezers, is ``superseded''
unless those ``standards are more stringent than the corresponding
Federal energy conservation standards. The AGs of TN, AL, et al. argue
that preempting--even in part--State procurement rules is plainly a
direct effect on the States and alters the federal-state relationship
by directly regulating the States. See Exec. Order No. 13132 Sec.
6(c).'' (The AGs of TN, AL, et al., No. 68 at p. 3) Further, the AGs of
TN, et al., argue that section 6(b) of E.O. 13132 applies because
states are purchasers of refrigerators, refrigerator-freezers, and
freezers; therefore, reliance interests are implicated and subject the
states to substantial direct compliance costs. (Id. at 2-3)
DOE reiterates that this direct final rule does not have
significant federalism implications. DOE has examined this rule and has
determined that it would not have a substantial direct effect on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. EPCA governs and expressly prescribes
Federal preemption of State regulations as to energy conservation for
the products that are the subject of this direct final rule. States can
petition DOE for exemption from such preemption to the extent, and
based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no
further action is required by Executive Order 13132.
Even if DOE were to find otherwise, with regards to the AGs of TN,
AL et al.'s arguments regarding section 6(c) of E.O. 13132, DOE notes
that the AGs of TN, AL et al. do not provide any examples of a state
procurement rule that conflicts with the standards adopted in this
rulemaking and DOE is not aware of any such conflicts. While it is
possible that a State may have to revise its procurement standards to
reflect the new standards, States can petition DOE for exemption from
such preemption to the extent, and based on criteria, set forth in
EPCA. Absent such information, DOE concludes that no further action
would be required by E.O. 13132 even if the Executive order were
applicable here. Moreover, assuming the hypothetical preemption alleged
by the AGs of TN, AL et al. were to present itself, DOE notes that,
like all interested parties, states were presented with an opportunity
to engage in the rulemaking process early in the development of the
proposed rule. Prior to publishing the proposed rulemaking, on November
15, 2019, DOE published and sought public comment on a request for
information (``RFI'') to collect data and information to help DOE
determine whether any new or amended standards for consumer
refrigerators, refrigerator-freezers, and freezers would result in a
significant amount of additional energy savings and whether those
standards would be technologically feasible and economically justified.
84 FR 62470 (``November 2019 RFI''). DOE then published a notice of
public meeting and availability of the preliminary TSD on October 15,
2021, and sought public comment again. (``October 2021 Preliminary
Analysis''). 86 FR 57378. DOE then held a public meeting on December 1,
2021, to discuss and receive comments on the preliminary TSD, which was
open to the public, including state agencies. As such, states were
provided the opportunity for meaningful and substantial input as
envisioned by the Executive order.
With regards to the AGs of TN, AL et al.'s arguments regarding
section 6(b) of E.O. 13132, the potential effect alleged by the AGs of
TN, AL, et al. is the same
[[Page 3111]]
effect experienced by all refrigerator consumers--models manufactured
after a specific date must meet revised efficiency standards. This
impact does not constitute a ``substantial'' impact as required by the
Executive order. Further, contrary to the assertions of the AGs of TN
et al., the direct final rule is required by law. As noted previously,
where DOE determines that a proposed amended standard is designed to
achieve the maximum improvement in energy efficiency and is both
technologically feasible and economically justified, it must adopt it.
Therefore, section 6(b) is inapplicable. E.O. 13132, section6(b)
(applicable to regulation ``that is not required by statute'').
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: (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.
DOE has concluded that this direct final rule may require
expenditures of $100 million or more in any one year by the private
sector. Such expenditures may include (1) investment in research and
development and in capital expenditures by consumer refrigerators,
refrigerator-freezers, and freezers manufacturers in the years between
the direct final rule and the compliance date for the new standards and
(2) incremental additional expenditures by consumers to purchase
higher-efficiency consumer refrigerators, refrigerator-freezers, and
freezers, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the direct final rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and the TSD for this
direct final rule respond to those requirements.
Under section 205 of UMRA, DOE is obligated to identify and
consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m),
this direct final rule establishes amended energy conservation
standards for consumer refrigerators, refrigerator-freezers, and
freezers that are designed to achieve the maximum improvement in energy
efficiency that DOE has determined to be both technologically feasible
and economically justified, as required by sections 6295(o)(2)(A) and
6295(o)(3)(B). A full discussion of the alternatives considered by DOE
is presented in chapter 17 of the TSD for this direct final rule.
H. Review Under 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.
I. 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.
J. 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
[[Page 3112]]
Effects for any significant energy action. A ``significant energy
action'' is defined as any action by an agency that promulgates or is
expected to lead to promulgation of a final rule, and that (1) is a
significant regulatory action under Executive Order 12866, or any
successor order; and (2) is likely to have a significant adverse effect
on the supply, distribution, or use of energy, or (3) is designated by
the Administrator of OIRA as a significant energy action. For any
significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the
proposal be implemented, and of reasonable alternatives to the action
and their expected benefits on energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth
amended energy conservation standards for consumer refrigerators,
refrigerator-freezers, and freezers, 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.
K. 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 energy conservation standards development process and the analyses
that are typically used and prepared a report describing that peer
review.\111\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve DOE's analyses. DOE is in the
process of evaluating the resulting report.\112\
---------------------------------------------------------------------------
\111\ 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 August 2, 2023).
\112\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------
L. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that the Office of Information and Regulatory Affairs has
determined that this action meets the criteria set forth in 5 U.S.C.
804(2).
M. Materials Incorporated by Reference
The following standards appear in the amendatory text of this
document and were previously approved for the locations in which they
appear: AS/NZS 4474.1:2007; HRF-1-2019.
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, Small businesses.
Signing Authority
This document of the Department of Energy was signed on December
28, 2023, by Jeffrey Marootian, Principal Deputy Assistant Secretary
for Energy Efficiency and Renewable Energy, pursuant to delegated
authority from the Secretary of Energy. That document with the original
signature and date is maintained by DOE. For administrative purposes
only, and in compliance with requirements of the Office of the Federal
Register, the undersigned DOE Federal Register Liaison Officer has been
authorized to sign and submit the document in electronic format for
publication, as an official document of the Department of Energy. This
administrative process in no way alters the legal effect of this
document upon publication in the Federal Register.
Signed in Washington, DC, on December 29, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, DOE amends part 430 of
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
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 A to subpart B of part 430 by:
0
a. In section 1:
0
i. In paragraph (b)(i), removing the text ``5.3(e)'' and adding in its
place the text ``5.5''; and
0
ii. Removing the undesignated paragraph immediately following paragraph
(b)(ii);
0
b. In section 3, adding in alphabetical order definitions for ``Door-
in-door'' and ``Transparent door'';
0
c. In section 5.3:
0
i. Removing paragraphs (a) and (f); and
0
ii. Redesignating paragraphs (b) through (e) as paragraphs (a) through
(d); and
0
d. Adding sections 5.4 and 5.5.
The additions read as follows:
Appendix A to Subpart B of Part 430--Uniform Test Method for Measuring
the Energy Consumption of Refrigerators, Refrigerator-Freezers, and
Miscellaneous Refrigeration Products
* * * * *
3. * * *
Door-in-door means a set of doors or an outer door and inner
drawer for which--
(a) Both doors (or both the door and the drawer) must be opened
to provide access to the interior through a single opening;
(b) Gaskets for both doors (or both the door and the drawer) are
exposed to external ambient conditions on the outside around the
full perimeter of the respective openings; and
(c) The space between the two doors (or between the door and the
drawer) achieves temperature levels consistent with the temperature
requirements of the interior
[[Page 3113]]
compartment to which the door-in-door provides access.
* * * * *
Transparent door means an external fresh food compartment door
which meets the following criteria:
(a) The area of the transparent portion of the door is at least
40 percent of the area of the door.
(b) The area of the door is at least 50 percent of the sum of
the areas of all the external doors providing access to the fresh
food compartments and cooler compartments.
(c) For the purposes of this evaluation, the area of a door is
determined as the product of the maximum height and maximum width
dimensions of the door, not considering potential extension of flaps
used to provide a seal to adjacent doors.
* * * * *
5. * * *
5.4. Icemaker Energy Use
(a) For refrigerators and refrigerator-freezers: To demonstrate
compliance with the energy conservation standards at Sec. 430.32(a)
applicable to products manufactured on or after September 15, 2014,
but before the compliance date of any amended standards published
after January 1, 2022, IET, expressed in kilowatt-hours per cycle,
equals 0.23 for a product with one or more automatic icemakers and
otherwise equals 0 (zero). To demonstrate compliance with any
amended standards published after January 1, 2022, IET, expressed in
kilowatt-hours per cycle, is as defined in section 5.9.2.1 of HRF-1-
2019.
(b) For miscellaneous refrigeration products: To demonstrate
compliance with the energy conservation standards at Sec.
430.32(aa) applicable to products manufactured on or after October
28, 2019, IET, expressed in kilowatt-hours per cycle, equals 0.23
for a product with one or more automatic icemakers and otherwise
equals 0 (zero).
5.5. Triangulation Method
If the three-point interpolation method of section 5.2(b) of
this appendix is used for setting temperature controls, the average
per-cycle energy consumption shall be defined as follows:
E = EX + IET
Where:
E is defined in section 5.9.1.1 of HRF-1-2019;
IET is defined in section 5.4 of this appendix; and
EX is defined and calculated as described in appendix M,
section M4(a) of AS/NZS 4474.1:2007. The target temperatures
txA and txB defined in section M4(a)(i) of AS/
NZS 4474.1:2007 shall be the standardized temperatures defined in
section 5.6 of HRF-1-2019.
* * * * *
0
3. Amend appendix B to subpart B of part 430 by:
0
a. In section 5.3:
0
i. Removing paragraph (a); and
0
ii. Redesignating paragraphs (b) and (c) as paragraphs (a) and (b); and
0
b. Adding section 5.4.
The addition reads as follows:
Appendix B to Subpart B of Part 430--Uniform Test Method for Measuring
the Energy Consumption of Freezers
* * * * *
5. * * *
5.4. Icemaker Energy Use
For freezers: To demonstrate compliance with the energy
conservation standards at Sec. 430.32(a) applicable to products
manufactured on or after September 15, 2014, but before the
compliance date of any amended standards published after January 1,
2022, IET, expressed in kilowatt-hours per cycle, equals 0.23 for a
product with one or more automatic icemakers and otherwise equals 0
(zero). To demonstrate compliance with any amended standards
published after January 1, 2022, IET, expressed in kilowatt-hours
per cycle, is as defined in section 5.9.2.1 of HRF-1-2019.
* * * * *
0
4. Amend Sec. 430.32 by:
0
a. Redesignating table 3 to paragraph (b) and table 4 to paragraph
(b)(2) as table 6 to paragraph (b)(1) and table 7 to paragraph (b)(2);
and
0
b. Revising paragraph (a).
The revision reads as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(a) Refrigerators/refrigerator-freezers/freezers. The standards in
this paragraph (a) do not apply to refrigerators and refrigerator-
freezers with total refrigerated volume exceeding 39 cubic feet (1104
liters) or freezers with total refrigerated volume exceeding 30 cubic
feet (850 liters). The energy standards as determined by the equations
of the following table(s) shall be rounded off to the nearest kWh per
year. If the equation calculation is halfway between the nearest two
kWh per year values, the standard shall be rounded up to the higher of
these values.
(1) The following standards apply to products manufactured on or
before September 15, 2014, and before the 2029/2030 compliance dates
depending on product class (see paragraphs (a)(2) and (3) of this
section).
Table 1 to Paragraph (a)(1)
------------------------------------------------------------------------
Equations for maximum energy use (kWh/
yr)
Product class ---------------------------------------
Based on AV
(ft\3\) Based on av (L)
------------------------------------------------------------------------
1. Refrigerators and 7.99AV + 225.0.... 0.282av + 225.0.
refrigerator-freezers with
manual defrost.
1A. All-refrigerators--manual 6.79AV + 193.6.... 0.240av + 193.6.
defrost.
2. Refrigerator-freezers-- 7.99AV + 225.0.... 0.282av + 225.0.
partial automatic defrost.
3. Refrigerator-freezers-- 8.07AV + 233.7.... 0.285av + 233.7.
automatic defrost with top-
mounted freezer without an
automatic icemaker.
3-BI. Built-in refrigerator- 9.15AV + 264.9.... 0.323av + 264.9.
freezer--automatic defrost with
top-mounted freezer without an
automatic icemaker.
3I. Refrigerator-freezers-- 8.07AV + 317.7.... 0.285av + 317.7.
automatic defrost with top-
mounted freezer with an
automatic icemaker without
through-the-door ice service.
3I-BI. Built-in refrigerator- 9.15AV + 348.9.... 0.323av + 348.9.
freezers--automatic defrost
with top-mounted freezer with
an automatic icemaker without
through-the-door ice service.
3A. All-refrigerators--automatic 7.07AV + 201.6.... 0.250av + 201.6.
defrost.
3A-BI. Built-in All- 8.02AV + 228.5.... 0.283av + 228.5.
refrigerators--automatic
defrost.
4. Refrigerator-freezers-- 8.51AV + 297.8.... 0.301av + 297.8.
automatic defrost with side-
mounted freezer without an
automatic icemaker.
4-BI. Built-In Refrigerator- 10.22AV + 357.4... 0.361av + 357.4.
freezers--automatic defrost
with side-mounted freezer
without an automatic icemaker.
4I. Refrigerator-freezers-- 8.51AV + 381.8.... 0.301av + 381.8.
automatic defrost with side-
mounted freezer with an
automatic icemaker without
through-the-door ice service.
4I-BI. Built-In Refrigerator- 10.22AV + 441.4.2. 0.361av + 441.4.
freezers--automatic defrost
with side-mounted freezer with
an automatic icemaker without
through-the-door ice service.
[[Page 3114]]
5. Refrigerator-freezers-- 8.85AV + 317.0.... 0.312av + 317.0.
automatic defrost with bottom-
mounted freezer without an
automatic icemaker.
5-BI. Built-In Refrigerator- 9.40AV + 336.9.... 0.332av + 336.9.
freezers--automatic defrost
with bottom-mounted freezer
without an automatic icemaker.
5I. Refrigerator-freezers-- 8.85AV + 401.0.... 0.312av + 401.0.
automatic defrost with bottom-
mounted freezer with an
automatic icemaker without
through-the-door ice service.
5I-BI. Built-In Refrigerator- 9.40AV + 420.9.... 0.332av + 420.9.
freezers--automatic defrost
with bottom-mounted freezer
with an automatic icemaker
without through-the-door ice
service.
5A. Refrigerator-freezer-- 9.25AV + 475.4.... 0.327av + 475.4.
automatic defrost with bottom-
mounted freezer with through-
the-door ice service.
5A-BI. Built-in refrigerator- 9.83AV + 499.9.... 0.347av + 499.9.
freezer--automatic defrost with
bottom-mounted freezer with
through-the-door ice service.
6. Refrigerator-freezers-- 8.40AV + 385.4.... 0.297av + 385.4.
automatic defrost with top-
mounted freezer with through-
the-door ice service.
7. Refrigerator-freezers-- 8.54AV + 432.8.... 0.302av + 431.1.
automatic defrost with side-
mounted freezer with through-
the-door ice service.
7-BI. Built-In Refrigerator- 10.25AV + 502.6... 0.362av + 502.6.
freezers--automatic defrost
with side-mounted freezer with
through-the-door ice service.
8. Upright freezers with manual 5.57AV + 193.7.... 0.197av + 193.7.
defrost.
9. Upright freezers with 8.62AV + 228.3.... 0.305av + 228.3.
automatic defrost without an
automatic icemaker.
9I. Upright freezers with 8.62AV + 312.3.... 0.305av + 312.3.
automatic defrost with an
automatic icemaker.
9-BI. Built-In Upright freezers 9.86AV + 260.9.... 0.348av + 260.6.
with automatic defrost without
an automatic icemaker.
9I-BI. Built-In Upright freezers 9.86AV + 344.9.... 0.348av + 344.9.
with automatic defrost with an
automatic icemaker.
10. Chest freezers and all other 7.29AV + 107.8.... 0.257av + 107.8.
freezers except compact
freezers.
10A. Chest freezers with 10.24AV + 148.1... 0.362av + 148.1.
automatic defrost.
11. Compact refrigerators and 9.03AV + 252.3.... 0.319av + 252.3.
refrigerator-freezers with
manual defrost.
11A.Compact refrigerators and 7.84AV + 219.1.... 0.277av + 219.1.
refrigerator-freezers with
manual defrost.
12. Compact refrigerator- 5.91AV + 335.8.... 0.209av + 335.8.
freezers--partial automatic
defrost.
13. Compact refrigerator- 11.80AV + 339.2... 0.417av + 339.2.
freezers--automatic defrost
with top-mounted freezer.
13I. Compact refrigerator- 11.80AV + 423.2... 0.417av + 423.2.
freezers--automatic defrost
with top-mounted freezer with
an automatic icemaker.
13A. Compact all-refrigerator-- 9.17AV + 259.3.... 0.324av + 259.3.
automatic defrost.
14. Compact refrigerator- 6.82AV + 456.9.... 0.241av + 456.9.
freezers--automatic defrost
with side-mounted freezer.
14I. Compact refrigerator- 6.82AV + 540.9.... 0.241av + 540.9.
freezers--automatic defrost
with side-mounted freezer with
an automatic icemaker.
15. Compact refrigerator- 11.80AV + 339.2... 0.417av + 339.2.
freezers--automatic defrost
with bottom-mounted freezer.
15I. Compact refrigerator- 11.80AV + 423.2... 0.417av + 423.2.
freezers--automatic defrost
with bottom-mounted freezer
with an automatic icemaker.
16. Compact upright freezers 8.65AV + 225.7.... 0.306av + 225.7.
with manual defrost.
17. Compact upright freezers 10.17AV + 351.9... 0.359av + 351.9.
with automatic defrost.
18. Compact chest freezers...... 9.25AV + 136.8.... 0.327av + 136.8.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendices A and B to subpart B of this part.
av = Total adjusted volume, expressed in Liters.
(2) The following standards apply to products manufactured on or
after January 31, 2029.
Table 2 to Paragraph (a)(2)
------------------------------------------------------------------------
Equations for maximum energy use (kWh/
yr)
Product class ---------------------------------------
Based on AV
(ft\3\) Based on av (L)
------------------------------------------------------------------------
3-BI. Built-in refrigerator- 8.24AV + 238.4 + 0.291av + 238.4 +
freezer--automatic defrost with 28I. 28I.
top-mounted freezer.
3A-BI. Built-in All- (7.22AV + (0.255av +
refrigerators--automatic 205.7)*K3ABI. 205.7)*K3ABI.
defrost.
4-BI. Built-In Refrigerator- (8.79AV + (0.310av +
freezers--automatic defrost 307.4)*K4BI + 28I. 307.4)*K4BI +
with side-mounted freezer. 28I.
5-BI. Built-In Refrigerator- (8.65AV + (0.305av +
freezers--automatic defrost 309.9)*K5BI + 28I. 309.9)*K5BI +
with bottom-mounted freezer. 28I.
[[Page 3115]]
5A. Refrigerator-freezer-- (7.76AV + (0.274av +
automatic defrost with bottom- 351.9)*K5A. 351.9)*K5A.
mounted freezer with through-
the-door ice service.
5A-BI. Built-in refrigerator- (8.21AV + (0.290av +
freezer--automatic defrost with 370.7)*K5ABI. 370.7)*K5ABI.
bottom-mounted freezer with
through-the-door ice service.
7-BI. Built-In Refrigerator- (8.82AV + (0.311av +
freezers--automatic defrost 384.1)*K7BI. 384.1)*K7BI.
with side-mounted freezer.
8. Upright freezers with manual 5.57AV + 193.7.... 0.197av + 193.7.
defrost.
9-BI. Built-In Upright freezers (9.37AV + (0.331av +
with automatic defrost. 247.9)*K9BI + 28I. 247.9)*K9BI +
28I.
9A-BI. Built-In Upright freezers 9.86AV + 288.9.... 0.348av + 288.9.
with automatic defrost with
through-the-door ice service.
10. Chest freezers and all other 7.29AV + 107.8.... 0.257av + 107.8.
freezers except compact
freezers.
10A. Chest freezers with 10.24AV + 148.1... 0.362av + 148.1.
automatic defrost.
11. Compact refrigerator- 7.68AV + 214.5.... 0.271av + 214.5.
freezers and refrigerators
other than all-refrigerators
with manual defrost.
11A. Compact all-refrigerators-- 6.66AV + 186.2.... 0.235av + 186.2.
manual defrost.
12. Compact refrigerator- (5.32AV + (0.188av +
freezers--partial automatic 302.2)*K12. 302.2)*K12.
defrost.
13. Compact refrigerator- 10.62AV + 305.3 + 0.375av + 305.3 +
freezers--automatic defrost 28I. 28I.
with top-mounted freezer.
13A. Compact all-refrigerators-- (8.25AV + (0.291av +
automatic defrost. 233.4)*K13A. 233.4)*K13A.
14. Compact refrigerator- 6.14AV + 411.2 + 0.217av + 411.2 +
freezers--automatic defrost 28I. 28I.
with side-mounted freezer.
15. Compact refrigerator- 10.62AV + 305.3 + 0.375av + 305.3 +
freezers--automatic defrost 28I. 28I.
with bottom-mounted freezer.
16. Compact upright freezers 7.35AV + 191.8.... 0.260av + 191.8.
with manual defrost.
17. Compact upright freezers 9.15AV + 316.7.... 0.323av + 316.7.
with automatic defrost.
18. Compact chest freezers...... 7.86AV + 107.8.... 0.278av + 107.8.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendices A and B to subpart B of 10 CFR part 430.
av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product
without an automatic icemaker.
Door Coefficients (e.g., K3ABI) are as defined in the following table.
Table 3 to Paragraph (a)(2)
----------------------------------------------------------------------------------------------------------------
Products
Products with without a Products without a transparent
Door coefficient a transparent transparent door or door-in-door with added
door door with a external doors
door-in-door
----------------------------------------------------------------------------------------------------------------
K3ABI......................................... 1.10 1.0 1.0.
K4BI.......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5BI.......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K5A........................................... 1.10 1.06 1 + 0.02 * (Nd-3).
K5ABI......................................... 1.10 1.06 1 + 0.02 * (Nd-3).
K7BI.......................................... 1.10 1.06 1 + 0.02 * (Nd-2).
K9BI.......................................... 1.0 1.0 1 + 0.02 * (Nd-1).
K12........................................... 1.0 1.0 1 + 0.02 * (Nd-1).
K13A.......................................... 1.10 1.0 1.0
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Nd is the number of external doors.
\2\ The maximum Nd values are 2 for K12, 3 for K9BI, and 5 for all other K values.
(3) The following standards apply to products manufactured on or
after January 31, 2030.
Table 4 to Paragraph (a)(3)
------------------------------------------------------------------------
Equations for maximum energy use (kWh/
yr)
Product class ---------------------------------------
Based on AV
(ft\3\) Based on av (L)
------------------------------------------------------------------------
1. Refrigerator-freezers and 6.79AV + 191.3.... 0.240av + 191.3.
refrigerators other than all-
refrigerators with manual
defrost.
1A. All-refrigerators--manual 5.77AV + 164.6.... 0.204av + 164.6.
defrost.
[[Page 3116]]
2. Refrigerator-freezers-- (6.79AV + (0.240av +
partial automatic defrost. 191.3)*K2. 191.3)*K2.
3. Refrigerator-freezers-- 6.86AV + 198.6 + 0.242av + 198.6 +
automatic defrost with top- 28I. 28I.
mounted freezer.
3A. All-refrigerators--automatic (6.01AV + (0.212av +
defrost. 171.4)*K3A. 171.4)*K3A.
4. Refrigerator-freezers-- (7.28AV + (0.257av +
automatic defrost with side- 254.9)*K4 + 28I. 254.9)*K4 + 28I.
mounted freezer.
5. Refrigerator-freezers-- (7.61AV + (0.269av +
automatic defrost with bottom- 272.6)*K5 + 28I. 272.6)*K5 + 28I.
mounted freezer.
6. Refrigerator-freezers-- 7.14AV + 280.0.... 0.252av + 280.0.
automatic defrost with top-
mounted freezer with through-
the-door ice service.
7. Refrigerator-freezers-- (7.31AV + (0.258av +
automatic defrost with side- 322.5)*K7. 322.5)*K7.
mounted freezer with through-
the-door ice service.
9. Upright freezers with (7.33AV + (0.259av +
automatic defrost. 194.1)*K9 + 28I. 194.1)*K9 + 28I.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
appendices A and B to subpart B of this part.
av = Total adjusted volume, expressed in Liters.
I = 1 for a product with an automatic icemaker and = 0 for a product
without an automatic icemaker.
Door Coefficients (e.g., K3A) are as defined in the following table.
Table 5 to Paragraph (a)(3)
----------------------------------------------------------------------------------------------------------------
Products
Products with without a Products without a transparent
Door coefficient a transparent transparent door or door-in-door with added
door door with a external doors
door-in-door
----------------------------------------------------------------------------------------------------------------
K2............................................ 1.0 1.0 1 + 0.02 * (Nd-1).
K3A........................................... 1.10 1.0 1.0.
K4............................................ 1.10 1.06 1 + 0.02 * (Nd-2).
K5............................................ 1.10 1.06 1 + 0.02 * (Nd-2).
K7............................................ 1.10 1.06 1 + 0.02 * (Nd-2).
K9............................................ 1.0 1.0 1 + 0.02 * (Nd-1).
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Nd is the number of external doors.
\2\ The maximum Nd values are 2 for K2, and 5 for all other K values.
* * * * *
[FR Doc. 2023-28978 Filed 1-16-24; 8:45 am]
BILLING CODE 6450-01-P