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CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION ........................................................................................................... 2-1

2.2 MARKET AND TECHNOLOGY ASSESSMENT........................................................ 2-5

2.2.1 Market Assessment .......................................................................................................... 2-5

2.2.2 Technology Assessment................................................................................................... 2-5

2.3 SCREENING ANALYSIS .............................................................................................. 2-5

2.4 ENGINEERING ANALYSIS.......................................................................................... 2-6

2.5 MARKUPS ANALYSIS ................................................................................................. 2-6

2.6 ENERGY AND WATER USE ANALYSIS ................................................................... 2-7

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALSYIS ..................................... 2-7

2.8 SHIPMENTS ANALYSIS............................................................................................... 2-8

2.9 NATIONAL IMPACT ANALYSIS................................................................................ 2-8

2.9.1 National Energy and Water Savings................................................................................ 2-8

2.9.2 Net Present Value of Consumer Benefit.......................................................................... 2-9

2.10 CONSUMER SUBGROUP ANALYSIS ...................................................................... 2-10

2.11 MANUFACTURER IMPACT ANALYSIS.................................................................. 2-10

2.12 EMISSIONS ANALYSIS.............................................................................................. 2-10

2.13 MONETIZATION OF EMISSIONS REDUCTION BENEFITS................................. 2-11

2.14 UTILITY IMPACT ANALYSIS................................................................................... 2-12

2.15 EMPLOYMENT IMPACT ANALYSIS....................................................................... 2-13

2.16 REGULATORY IMPACT ANALYSIS........................................................................ 2-13

LIST OF FIGURES

Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process......................................... 2-2
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CHAPTER 2. ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

Section 6295(o)(2)(A) and 6316(a) of the Energy Policy and Conservation Act (EPCA), 

Pub. L. 94-163, 42 U.S.C. 6291 et seq. requires the U.S. Department of Energy (DOE) to set 

forth energy conservation standards that achieve the maximum improvement in energy efficiency 

that is technologically feasible and economically justified. This chapter describes the general 

analytical framework that DOE uses in developing such standards. The analytical framework is a 

description of the methodology, the analytical tools, and the relationships among the various 

analyses that are part of this rulemaking.

Figure 2.1.1 summarizes the analytical components of the standards-setting process. The 

focus of this figure is the center column, identified as “Analyses.” The columns labeled “Key 

Inputs” and “Key Outputs” show how the analyses fit into the rulemaking process, and how the 

analyses relate to each other. Key inputs are the types of data and information that the analyses 

require. Some key inputs exist in public databases; DOE collects other inputs from interested 

parties or other knowledgeable experts within the field. Key outputs are analytical results that 

feed directly into the standards-setting process. Dotted lines connecting analyses show types of 

information that feed from one analysis to another.

In this rulemaking, DOE proceeded directly to the Notice of Proposed Rulemaking 

(NOPR) stage after publishing the framework document; therefore, the analyses listed within the 

Preliminary Analysis period were conducted as part of the NOPR analysis.
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Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analyses

National Impact

Analysis

Energy Use

Revise Preliminary

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Product Designs

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

•Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail 

Prices

Design Energy/ Use

Advance Notice of Proposed Rulemaking (ANO)

• Efficiency/Performance

• Commercial Products

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review

Product Designs

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analyses

National Impact

Analysis

Energy Use

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Product Designs

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

•Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail 

Prices

Design Energy/ Use

Publication of Preliminary Analyses

• Efficiency/Performance

• Commercial Products

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review

Product Designs
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The analyses performed for this final rule and reported in this technical support document 

(TSD) are listed below.

 A market and technology assessment to characterize the relevant product markets and 

existing technology options, including prototype designs.

 A screening analysis to review each technology option to decide whether it is 

technologically feasible; is practical to manufacture, install, and service; would adversely 

affect product utility or product availability; or would have adverse effects on health and 

safety.

 An engineering analysis to develop cost-efficiency relationships, which indicate the 

manufacturer’s cost of achieving increased efficiency.

 A markups analysis to develop distribution channel markups that relate the manufacturer 

production cost (MPC) to the cost to the consumer.

 An analysis of the annual energy and water use of the considered products.

 Life-cycle cost (LCC) and payback period (PBP) analyses to calculate, at the consumer 

level, the discounted savings in operating costs (minus maintenance and repair costs) 

throughout the estimated average lifetime of the covered products, compared to any 

increase in purchase and installation cost likely to result directly from imposition of a 

given standard.

 A shipments analysis to forecast future shipments, which are then used to calculate the 

national impacts of standards on energy, net present value (NPV), and future 

manufacturer cash flows.

 A national impact analysis (NIA) to assess aggregate impacts at the national level of 

potential energy conservation standards for the considered products, as measured by the 

NPV of total consumer economic impacts and the national energy savings (NES).

 An LCC subgroup analysis to evaluate variations in consumer characteristics that might 

cause a standard to affect particular consumer subpopulations, such as low-income 

households, differently than the overall population.

 A manufacturer impact analysis to estimate the financial impact of standards on 

manufacturers and to calculate impacts on competition, employment, and manufacturing 

capacity.

 A utility impact analysis to estimate the effects of proposed standards on electric, gas, or 

oil utilities.
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 An employment impact analysis to assess the aggregate impacts on national employment.

 An emissions impact analysis to estimate the effects of amended standards on emissions 

of carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxides (NOX), mercury (Hg), 

methane (CH4), and nitrous oxide (N2O).

 An estimate of the monetary benefits of the reduced emissions of CO2 and NOX that are 

expected to result from the amended standard.

 A regulatory impact analysis to examine major alternatives to proposed amended energy 

conservation standards that potentially could achieve substantially the same regulatory 

goal at a lower cost.

DOE developed this analytical framework and documented its initial findings in the 

Energy Conservation Standards Rulemaking Framework Document for Commercial Clothes 

Washers (the framework document). DOE announced the availability of the framework 

document in a Notice of Public Meeting and Availability of a Framework Document published in 

the Federal Register on August 13, 2012. 77 FR 48108. DOE presented the analytical approach 

to interested parties during a public meeting on September 24, 2012. The framework document is 

available at

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0020-0001.
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2.2 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment characterizes the relevant product markets and 

existing technology options, including prototype designs, for the considered products.

2.2.1 Market Assessment

When DOE begins an energy conservation standards rulemaking, it develops information 

that provides an overall picture of the market for the products considered, including the nature of 

the products, the industry structure, and market characteristics for the products. This activity 

consists of both quantitative and qualitative efforts based primarily on publicly available 

information. The subjects addressed in the market assessment include manufacturers, trade 

associations, and the quantities and types of products sold and offered for sale. DOE examined 

both large and small and foreign and domestic manufacturers. DOE also examined publicly 

available data from the key trade association for this product category. DOE reviewed shipment 

data to evaluate annual shipment trends. Finally, DOE reviewed other energy efficiency 

programs from utilities, individual States, and other organizations. Chapter 3 of the TSD 

provides additional details on the market and technology assessment.

2.2.2 Technology Assessment

DOE typically uses information relating to existing and past technology options and 

prototype designs as inputs to determine what technologies manufacturers use to attain higher 

performance levels. In consultation with interested parties, DOE develops a list of technologies 

for consideration. Initially, these technologies encompass all those it believes are technologically 

feasible.

DOE developed its list of technologically feasible design options through consultation 

with manufacturers of components and systems, and from trade publications and technical 

papers. Since many options for improving product efficiency are available in existing units, 

product literature and direct examination provided additional information.

Chapter 3 of the TSD includes the detailed list of all the technology options.

2.3 SCREENING ANALYSIS

The screening analysis examines various technologies as to whether they: (1) are 

technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an 

adverse impact on product utility or availability; and (4) have adverse impacts on health and 

safety. DOE developed an initial list of efficiency-enhancement options from the technologies 

identified as technologically feasible in the technology assessment. Then DOE, in consultation 

with interested parties, reviewed the list to determine if these options are practicable to 

manufacture, install, and service, would adversely affect product utility or availability, or would 

have adverse impacts on health and safety. In addition, DOE removed from the list technology 
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options that lack energy consumption data as well as technology options whose energy 

consumption could not be adequately measured by existing DOE test procedures. In the 

engineering analysis, DOE further considered efficiency enhancement options that it did not 

screen out in the screening analysis. Chapter 4 of the TSD contains details on the screening 

analysis.

2.4 ENGINEERING ANALYSIS

The engineering analysis establishes the relationship between the manufacturing 

production cost (MPC) and the efficiency for each class of products. The purpose of the analysis 

is to estimate the incremental MPCs for a product that would result from increasing efficiency 

levels above the level of the baseline model in each product class. This relationship serves as the 

basis for cost/benefit calculations in terms of individual consumers, manufacturers, and the 

nation. Chapter 5 discusses the product classes DOE analyzed, the representative baseline units, 

the incremental efficiency levels, the methodology DOE used to develop the manufacturing 

production costs, the cost-efficiency curves, and the impact of efficiency improvements on the 

considered products.

The engineering analysis considered technologies not eliminated in the screening 

analysis, although certain technologies were not analyzed due to negligible incremental 

efficiency improvements or the inability of the existing DOE test procedures to measure any 

reduction in energy use. DOE considered the remaining technologies, designated as design 

options, in developing the cost-efficiency curves.

DOE typically structures its engineering analysis around one of three methodologies: (1) 

the design-option approach, which calculates the incremental costs of adding specific design 

options to a baseline model; (2) the efficiency-level approach, which calculates the relative costs 

of achieving increases in energy efficiency levels without regard to the particular design options 

used to achieve such increases; and/or (3) the reverse-engineering or cost-assessment approach, 

which involves a “bottom-up” manufacturing cost assessment based on a detailed bill of 

materials derived from tear-downs of the product being analyzed. DOE used a combination of 

these approaches for this rulemaking, as described in further detail in Chapter 5.

2.5 MARKUPS ANALYSIS

DOE performed a markup analysis to convert the manufacturer costs estimated in the 

engineering analysis to consumer prices, which then were used in the LCC and PBP and 

manufacturer impact analyses. DOE calculated markups for baseline products (baseline 

markups) and for more efficient products (incremental markups). The incremental markup relates 

the change in the manufacturer sales price of higher efficiency models (the incremental cost 

increase) to the change in the retailer or distributor sales price.
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To develop markups, DOE identified how the products are distributed from the 

manufacturer to the consumer. After establishing appropriate distribution channels, DOE relied

on economic data from the U.S. Census Bureau and other sources to determine how prices are 

marked up as the products pass from the manufacturer to the consumer. Chapter 6 of this TSD 

provides details on DOE’s development of markups.

2.6 ENERGY AND WATER USE ANALYSIS

DOE performed an energy and water use analysis to assess the energy and water savings 

potential from higher efficiency levels, providing the basis for the energy and water savings 

values used in the LCC and subsequent analyses. The goal of the energy and water use 

characterization is to generate a range of energy and water use values that reflects actual product 

use. Chapter 7 of this TSD provides more detail about DOE’s approach for characterizing energy 

and water use.

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALSYIS

New energy conservation standards usually decrease a product’s operating expenses, and 

usually increase its price. DOE analyzes the net effect of amended standards on consumers by 

evaluating the net life cycle cost (LCC). To evaluate the net LCC, DOE uses the cost-efficiency 

relationship derived in the engineering analysis and the energy and water costs derived from the 

energy and water use analysis. Inputs to the LCC calculation include the installed cost of a 

product to the consumer (consumer purchase price plus installation cost), operating expenses 

(energy expenses and maintenance costs), the lifetime of the unit, and a discount rate.

Because the installed cost of a product typically increases while operating costs typically 

decrease under new standards, there is a time in the life of products having higher-than-baseline 

efficiency when the net operating-cost benefit (in dollars) since the time of purchase is equal to 

the incremental first cost of purchasing the product. The time required for products to reach this 

cost-equivalence point is known as the payback period (PBP).

Recognizing that several inputs to determining consumer LCC and PBP are either 

variable or uncertain, DOE uses Monte Carlo simulation and probability distributions to model 

both the uncertainty and variability in inputs. DOE uses Microsoft Excel combined with Crystal 

Ball (a commercially available add-in program) to develop LCC and PBP spreadsheet models 

that incorporate both Monte Carlo simulation and probability distributions.

Chapter 8 of this TSD describes the results from the LCC and PBP analyses.
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2.8 SHIPMENTS ANALYSIS

Forecasts of product shipments are needed to calculate the national impacts of standards 

on energy use, NPV, and future manufacturer cash flows. DOE developed shipment forecasts 

based on an analysis of key market drivers. In DOE’s shipments model, shipments of products 

are driven by new construction, stock replacements, and other types of purchases.

The shipments models take an accounting approach, tracking market shares of each 

product class and the vintage of units in the existing 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. 

DOE also considers the impacts on shipments from changes in product purchase price 

and operating cost associated with higher energy efficiency levels. Chapter 9 of this TSD 

provides additional details on the shipments analysis.

2.9 NATIONAL IMPACT ANALYSIS

The national impact analysis (NIA) assesses the net present value (NPV), to the nation, of 

total consumer life-cycle cost (LCC) and net energy savings (NES). DOE determined both the 

NPV and NES for the efficiency levels considered for the product classes analyzed. To make the 

analysis more accessible and transparent to all interested parties, DOE prepared a Microsoft 

Excel spreadsheet model to forecast NES and the national consumer economic costs and savings 

resulting from new standards. The spreadsheet model uses as inputs typical values (as opposed to 

probability distributions). To assess the effect of input uncertainty on NES and NPV results, 

DOE may conduct sensitivity analyses by running scenarios on specific input variables. Chapter 

10 of this TSD provides additional details regarding the national impact analysis.

Several of the inputs for determining NES and NPV depend on the forecast trends in 

product energy efficiency. For the base case, DOE uses the efficiency distributions developed for 

the LCC analysis, and assumes some rate of change over the forecast period. In this analysis, 

DOE has used a roll-up scenario in developing its forecasts of efficiency trends after standards 

take effect. Under a roll-up scenario, all products that perform at levels below a prospective 

standard are moved, or rolled-up, to the minimum performance level allowed under the standard. 

Product efficiencies above the standard level under consideration would remain the same as 

before the revised standard takes effect.

2.9.1 National Energy and Water Savings 

The inputs for determining the national energy and water savings (NES) for each product 

class are: (1) annual energy and water consumption per unit, (2) shipments, (3) product stock, (4) 

national energy and water consumption, and (5) site-to-primary energy and full-fuel cycle 
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conversion factors for energy. DOE calculated national energy and water consumption by 

multiplying the number of units, or stock, of each product class (by vintage, or age) by the unit 

energy and water consumption (also by vintage). DOE calculated annual NES based on the 

difference in national energy and water consumption for the base case (without new efficiency 

standards) and for each efficiency standard being considered. 

DOE historically has presented NES in terms of primary energy savings. In response to the 

recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency Standards” appointed by the National Academy of Science, 

DOE announced its intention to use full-fuel-cycle (FFC) measures of energy use and 

greenhouse gas and other emissions in the national impact analyses and emissions analyses 

included in future energy conservation standards rulemakings. 76 FR 51281 (August 18, 2011). 

After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a 

statement of amended policy in the Federal Register in which DOE explained its determination 

that NEMS is the most appropriate tool for its FFC analysis and its intention to use NEMS for 

that purpose. 77 FR 49701 (August 17, 2012). The approach used for the final rule is described 

in appendix 10-A of the TSD. DOE estimated water consumption and savings based on site 

water use. DOE did not use a conversion factor for water because no such factor has been 

developed. Cumulative energy and water savings are the sum of the NES for each year.

2.9.2 Net Present Value of Consumer Benefit

The inputs for determining NPV of the total costs and benefits experienced by consumers 

are: (1) total annual installed cost, (2) total annual savings in operating costs, (3) a discount 

factor, (4) present value of costs, and (5) present value of savings. DOE calculated net savings 

each year as the difference in total savings in operating costs and total increases in installed costs 

between the base case and each standards case. DOE calculated savings over the life of each 

product class, accounting for differences in yearly energy rates. DOE calculated NPV as the 

difference between the present value of operating cost savings and the present value of total 

installed costs. DOE used a discount factor based on real discount rates of 3 percent and 7 

percent to discount future costs and savings to present values.

DOE calculated the difference in total installed cost between the base case and each 

standards case (i.e., after standards take effect). Because the more efficient products bought in 

the standards case usually cost more than products bought in the base case, cost increases appear 

as negative values in the NPV.

DOE expressed savings in operating costs as decreases associated with the lower energy 

consumption of products bought in the standards case compared to the base efficiency case. 

Total savings in operating costs are the product of savings per unit and the number of units of 

each vintage that survive in a given year.

Chapter 10 of this TSD provides additional details regarding the national impact analysis.
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2.10 CONSUMER SUBGROUP ANALYSIS

The consumer subgroup analysis evaluates economic impacts on selected groups of 

consumers who might be adversely affected by a change in the national energy conservation 

standards for the considered products. DOE evaluates impacts on particular subgroups of 

consumers primarily by analyzing the LCC impacts and PBP for those particular consumers 

using the LCC spreadsheet model. Chapter 11 of this TSD describes the consumer subgroup 

analysis.

2.11 MANUFACTURER IMPACT ANALYSIS 

The manufacturer impact analysis (MIA) assesses the impacts of new energy 

conservation standards on manufacturers of the considered products. Potential impacts include 

financial effects, both quantitative and qualitative, that might lead to changes in the 

manufacturing practices for these products. DOE identified these potential impacts through 

interviews with manufacturers and other interested parties.

DOE conducted the MIA in three phases, and further tailored the analytical framework 

based on interested parties’ comments. In Phase I, an industry profile was created to characterize 

the industry, and a preliminary MIA was conducted to identify important issues that required 

consideration. In Phase II, an industry cash flow model and an interview questionnaire were 

prepared to guide subsequent discussions. In Phase III, manufacturers were interviewed, and the 

impacts of standards were assessed both quantitatively and qualitatively. Industry and subgroup 

cash flow and NPV were assessed through use of the Government Regulatory Impact Model 

(GRIM). Then impacts on competition, manufacturing capacity, employment, and cumulative 

regulatory burden were assessed based on manufacturer interview feedback and discussions. 

DOE discusses its findings from the MIA in chapter 12 of the TSD.

2.12 EMISSIONS ANALYSIS

In the emissions analysis, DOE estimated the reduction in power-sector emissions of 

carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) 

attributable to potential energy conservation standards. In addition to estimating reductions in 

power plant emissions, DOE estimated the reductions in emissions from the activities 

(extracting, processing, and transporting) that provide the fuels needed by power plants. 

Emissions from those activities are referred to as upstream emissions. Together, the power plant 

and upstream emissions account for the full fuel cycle (FFC). In accordance with DOE’s FFC 

statement of policy (76 FR 51282 (August 18, 2011)), the FFC analysis includes impacts on 

emissions of methane and nitrous oxide, both of which are recognized as greenhouse gases

(GHG).
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DOE conducted the emissions analysis for CO2 and most of the other gases primarily 

based on emissions factors derived from the Energy Information Administration’s (EIA) Annual 

Energy Outlook 2014 (AEO 2014). EIA prepares the Annual Energy Outlook using the National 

Energy Modeling System (NEMS) for the given AEO year. Each annual version of NEMS 

incorporates the projected effects of current air quality regulations on emissions. AEO 2014

generally represents current legislation and environmental regulations, including recent 

government actions, for which implementing regulations were available as of October 31, 2013.

DOE estimated combustion emissions of CH4 and N2O using emissions intensity factors 

published by the Environmental Protection Agency's (EPA's) GHG Emissions Factors Hub.

1

Power plants may emit particulates from the smoke stack, which are known as emissions 

of direct particulate matter (PM). NEMS does not account for direct PM emissions from power 

plants. Almost all ambient PM from power plants is in the form of secondary sulfates and 

nitrates, primarily SO2 and NOX, which are produced at a significant distance from the power 

plant by complex atmospheric chemical reactions. The monetary benefits that DOE estimated for 

reductions in SO2 and NOX emissions resulting from standards (see section below) are related 

primarily to the health benefits of reduced ambient PM. 

Further detail regarding DOE's emissions analysis is provided in chapter 13 of this TSD.

2.13 MONETIZATION OF EMISSIONS REDUCTION BENEFITS

DOE assigned monetary values to the benefits likely to result from the reduced emissions 

of CO2 and NOX expected from each TSL considered for commercial and industrial pumps. To 

assign a monetary value of benefits resulting from reduced CO2 emissions, DOE used the most 

current Social Cost of Carbon (SCC) values developed and/or agreed on by an interagency 

process. The SCC is intended to be a monetary measure of the incremental damage resulting 

from GHG emissions, including, but not limited to, net loss in agricultural productivity, human 

health effects, property damage from sea level rise, and changes in ecosystem services. Any 

effort to quantify or monetize the harms associated with climate change raise serious questions of 

science, economics, and ethics. But with full regard for the limits of both quantification and 

monetization, the SCC can be used to estimate the social benefits of reductions in GHG 

emissions. 

In 2013 the Interagency Working Group on Social Cost of Carbon released an update of 

its previous report.2 The most recent estimates of the SCC in 2015, expressed in 2013$, are 

$12.0, $40.5, $62.4, and $119 per metric ton of CO2 avoided. For emissions reductions that occur 

in later years, those values increase in real terms. Additionally, the interagency group determined 

 

1 http://www.epa.gov/climateleadership/inventory/ghg-emissions.html. (Last accessed September 16, 2014.)

2 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. 

Interagency Working Group on Social Cost of Carbon, United States Government. Revised November 2013.

www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulatorimpact-analysis.pdf. (Last accessed September 16, 2014.)
2-12

that a range of values from 7 percent to 23 percent should be used to adjust the global SCC when

calculating domestic effects, although DOE gives preference to consideration of the global 

benefits of reducing CO2 emissions. 

DOE multiplied the CO2 emissions reduction estimated for each year by each of the four

SCC values for that year. To calculate a present value of the stream of monetary values, DOE 

discounted the values in each of the four cases using the discount rates that had been used to 

obtain the SCC values in each case. DOE recognizes that scientific and economic knowledge 

continues to evolve rapidly regarding the contribution of CO2 and other GHG to changes in the 

future global climate and the potential resulting damages to the world economy. Thus, the SCC 

values are subject to change. 

DOE also estimated the potential monetary benefits of reduced NOX emissions resulting 

from the TSLs considered. Estimates of monetary value of reducing NOX from stationary sources 

range from $476 to $4,893 per ton in 2013$.

3 DOE calculated monetary benefits using an 

average value for NOX emissions of $2,684 per short ton (2013$), and real discount rates of 3 

percent and 7 percent.

DOE is investigating appropriate valuations for Hg and SO2 emissions. For this 

rulemaking DOE has not monetized estimates of SO2 and Hg reductions.

Further detail on the monetization of emission reductions is provided in chapter 14 of this 

TSD.

2.14 UTILITY IMPACT ANALYSIS

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and 

generation attributable to each TSL for potential energy conservation standards. The utility 

impact analysis is based on output of the Energy Information Administration (EIA)’s National 

Energy Modeling System (NEMS). NEMS is a public-domain, multi-sectorial, partialequilibrium model of the U.S. energy sector. Each year, the EIA uses NEMS to produce an 

energy forecast for the United States (the Annual Energy Outlook). The EIA publishes a 

reference case, which incorporates all energy-related policies at the time of publication, and a 

variety of side cases that analyze the impact of different policies, energy prices, and market 

trends. As of 2014, DOE is using a new method based on results published for the AEO 2014

Reference case and a set of alternative cases that implement a variety of efficiency-related 

policies. Further detail is provided in chapter 15 of this TSD.

 

3 U.S. Office of Management and Budget–Office of Information and Regulatory Affairs. 2006 Report to Congress 

on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. 

Washington, D.C.
2-13

2.15 EMPLOYMENT IMPACT ANALYSIS

The adoption of energy conservation standards can affect employment both directly and 

indirectly. Direct employment effects are changes in the numbers of employees at the plants that 

produce commercial and industrial pumps. DOE evaluates direct employment impacts in the 

MIA. Indirect employment impacts may result when standards (1) cause expenditures to shift 

between goods (the substitution effect) or (2) impact income and overall expenditure levels (the 

income effect). DOE defines indirect employment impacts from standards as net jobs eliminated 

or created in the general economy as a result of increased spending driven by increased 

equipment costs and reduced spending on energy.

To investigate indirect employment impacts in the employment impact analysis, DOE 

uses the Pacific Northwest National Laboratory’s "Impact of Sector Energy Technologies” 

(ImSET) model.4 The ImSET model was developed for DOE’s Office of Planning, Budget, and 

Analysis to estimate the employment and income effects of energy-saving technologies in 

buildings, industry, and transportation. Compared with approaches that simply apply an

economic multiplier, ImSET allows for a more complete and automated analysis of the economic 

impacts of energy conservation investments. Further detail is provided in chapter 16 of this TSD.

2.16 REGULATORY IMPACT ANALYSIS

DOE prepared a regulatory impact analysis (RIA) under Executive Order 12866, 

“Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). The RIA addresses the 

potential for non-regulatory alternatives to energy conservation standards in improving the 

energy efficiency or reducing the energy consumption of the equipment covered under this 

rulemaking. DOE recognizes that voluntary or other non-regulatory efforts by manufacturers, 

utilities, and other interested parties can substantially affect energy efficiency or reduce energy

consumption. DOE bases its assessment on the recorded impacts of any such initiatives to date, 

but also considers information presented by interested parties regarding the impacts current

initiatives may have in the future. Further detail on the RIA is provided in chapter 17 of this

TSD.

 

4 M.J. Scott, O.V. Livingston, P.J. Balducci, J.M. Roop, and R.W. Schultz. ImSET 3.1: Impact of Sector Energy 

Technologies. PNNL-18412, Pacific Northwest National Laboratory. May 2009. 

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf. (Last accessed September 16, 2014.)