After a regulatory action has been completed, Executive Order 12866 requires agencies 

to identify the substantive changes between the draft submitted to Office of Information 

and Regulatory Affairs (OIRA) for review and the action subsequently announced, and to 

identify those changes made at the suggestion or recommendation of OIRA. The 

document below provides more information. 
1

[6450-01-P]

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE–2010–BT–STD–0011]

RIN: 1904–AC22

Energy Conservation Program for Consumer Products: Energy Conservation 

Standards for Residential Furnace Fans

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Notice of proposed rulemaking and announcement of public meeting.

SUMMARY: Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), as 

amended, the U.S. Department of Energy (DOE) must prescribe energy conservation 

standards for various consumer products and certain commercial and industrial 

equipment, including residential furnace fans. EPCA requires DOE to determine whether 

such standards would be technologically feasible and economically justified, and would 

save a significant amount of energy. In this notice, DOE is proposing new energy 

conservation standards for residential furnace fans. The notice also announces a public 

meeting to receive comment on these proposed standards and associated analyses and 

results.
2

DATES: Meeting

VII

: DOE will hold a public meeting on [Day of week, Month, Day, Year], 

from 9:00 a.m. to 4:00 p.m., in Washington, DC. The meeting will also be broadcast as a 

webinar. See section , “Public Participation,” for webinar registration information, 

participant instructions, and information about the capabilities available to webinar 

participants. 

Comments

VII

: DOE will accept comments, data, and information regarding this 

notice of proposed rulemaking (NOPR) before and after the public meeting, but no later 

than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER]. See section , “Public Participation,” for details.

ADDRESSES: The public meeting will be held at the U.S. Department of Energy, 

Forrestal Building, Room [NUMBER], 1000 Independence Avenue, SW., Washington, 

DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586–2945. Please note 

that foreign nationals visiting DOE Headquarters are subject to advance security 

screening procedures. Any foreign national wishing to participate in the meeting should 

advise DOE as soon as possible by contacting Ms. Edwards at the phone number above to 

initiate the necessary procedures. Please also note that any person wishing to bring a 

laptop computer into the Forrestal Building will be required to obtain a property pass. 

Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also

attend the public meeting via webinar. For more information, refer to section VII, 

“Public Participation,” near the end of this notice. 
3

Instructions: Any comments submitted must identify the NOPR for Energy 

Conservation Standards for Residential Furnace Fans, and provide docket number EE2010–BT–STD–0011 and/or regulatory information number (RIN) 1904-AC22.

Comments may be submitted using any of the following methods: 

1. Federal eRulemaking Portal: www.regulations.gov. Follow the instructions for 

submitting comments. 

2. E-mail: residential_furnace_fans@ee.doe.gov. Include the docket number and/or 

RIN in the subject line of the message. Submit electronic comments in Word 

Perfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special 

characters or any form of encryption.

3. Postal Mail

4.

: Ms. Brenda Edwards, U.S. Department of Energy, Building 

Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW., 

Washington, DC, 20585-0121. If possible, please submit all items on a compact 

disc (CD), in which case it is not necessary to include printed copies.

Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of Energy, 

Building Technologies Program, 950 L’Enfant Plaza, SW., Suite 600, 

Washington, DC, 20024. Telephone: (202) 586-2945. If possible, please submit 

all items on a CD, in which case it is not necessary to include printed copies.

Written comments regarding the burden-hour estimates or other aspects of the 

collection-of-information requirements contained in this proposed rule may be submitted 
4

to Office of Energy Efficiency and Renewable Energy through the methods listed above 

and by e-mail to Chad_S._Whiteman @omb.eop.gov.

No telefacsimilies (faxes) will be accepted. For detailed instructions on 

submitting comments and additional information on the rulemaking process, see section 

VII of this document (Public Participation).

Docket: The docket is available for review at www.regulations.gov, including 

Federal Register notices, framework documents, public meeting attendee lists and 

transcripts, comments, and other supporting documents/materials. 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. 

A link to the docket web page can be found at: 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41. 

This web page contains a link to the docket for this notice on the www.regulations.gov

site. The www.regulations.gov web page contains simple instructions on how to access 

all documents, including public comments, in the docket. See section VII, “Public 

Participation,” for further information on how to submit comments through 

www.regulations.gov. 
5

For further information on how to submit a comment, review other public 

comments and the docket, or participate in the public meeting, contact Ms. Brenda 

Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Ron Majette, U.S. Department 

of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies 

Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC, 20585-0121. 

Telephone: (202) 586-7935. E-mail: Ronald.Majette@ee.doe.gov. 

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-71, 

1000 Independence Avenue, SW., Washington, DC, 20585-0121. Telephone: (202) 586-

9507. E-mail: Eric.Stas@hq.doe.gov. 

For information on how to submit or review public comments, contact Ms. 

Brenda Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Residential Furnace Fans

III. General Discussion

A. Test Procedure
6

B. Product Classes and Scope of Coverage

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Products

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion

A. Market and Technology Assessment

1. Definition and Scope of Coverage

2. Product Classes

3. Technology Options

a. Fan Housing and Airflow Path Design Improvements

b. Inverter Controls for PSC Motors

c. High-Efficiency Motors

d. Multi-Stage or Modulating Heating Controls

e. Backward-Inclined Impellers

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

a. High-Efficiency Motors

b. Backward-Inclined Impellers

C. Engineering Analysis

1. Efficiency Levels

a. Baseline

b. Percent Reduction in FER

2. Manufacturer Production Cost (MPC)

a. Production Volume Impacts on MPC

b. Inverter-Driven PSC Costs

c. Furnace Fan Motor MPC

d. Motor Control Costs

e. Backward-Inclined Impeller MPC

D. Markups Analysis

E. Energy Use Analysis

F. Life-Cycle Cost and Payback Period Analysis

1. Installed Cost
7

2. Operating Costs

3. Other Inputs

4. Base-Case Efficiency Distribution

5. Rebuttable Presumption Payback Period

G. Shipments Analysis

H. National Impact Analysis

1. National Energy Savings Analysis

2. Net Present Value Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Discussion of Comments

a. Testing and Certification Burdens

b. Cumulative Regulatory Burden

c. Compliance Date and Implementation Period

d. Small Businesses

e. Conversion Costs

4. Manufacturer Interviews

a. Testing and Certification Burdens

b. Market Size

c. Cumulative Regulatory Burden

d. Consumer Confusion

e. Motors

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions

b. Social Cost of Carbon Values Used in Past Regulatory Analyses

c. Current Approach and Key Assumptions

2. Valuation of Other Emissions Reductions

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 Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Employment

c. Impacts on Manufacturing Capacity
8

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 Product Utility or Performance

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

C. Proposed Standards

1. Benefits and Burdens of Trial Standard Levels Considered for Residential 

Furnace Fans

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Requests to Speak and Prepared General Statements For 

Distribution

C. Conduct of the Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule 

Title III, Part B1

 1

 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

of the Energy Policy and Conservation Act of 1975 (EPCA or 

the Act), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy 
9

Conservation Program for Consumer Products Other Than Automobiles, a program 

covering most major household appliances, including the residential furnace fans that are 

the focus of this notice. Pursuant to EPCA, any new or amended energy conservation 

standard that DOE prescribes for certain products, such as residential furnace fans, shall 

be designed to achieve the maximum improvement in energy efficiency that is 

technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))

Furthermore, the new or amended standard must result in a significant conservation of 

energy. (42 U.S.C. 6295(o)(3)(B)) EPCA specifically provides that DOE must consider 

and prescribe energy conservation standards or energy use standards for electricity used 

for purposes of circulating air through duct work (products for which DOE has adopted 

the term “furnace fans” as shorthand) not later than December 31, 2013. (42 U.S.C. 

6295(f)(4)(D))

In accordance with these and other statutory provisions discussed in this notice, 

DOE is proposing new energy conservation standards for residential furnace fans. Table 

I.1 below presents the proposed standards, which represent the “estimated annual 

electrical energy consumption” normalized by the estimated total number of annual 

operating hours (1870) and the airflow in the maximum airflow-control setting to produce 

a fan energy rating (FER). These proposed standards, if adopted, would apply to all 

products listed in Table I.1 and manufactured in, or imported into, the United States on or 

after the date five years from the publication of the final rule.
10

Table I.1. Proposed Energy Conservation Standards for Residential Furnace Fans 

(Compliance Starting Five Years from Final Rule Publication)

Product 

Class

Product Class Description Proposed Standard:

FER* (W/1000 cfm)

1 Non-Weatherized, Non-Condensing Gas

Furnace Fan (NWG-NC) FER = 0.029 x QMax + 180

2 Non-Weatherized, Condensing Gas Furnace

Fan (NWG-C) FER = 0.029 x QMax + 196

3 Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC) FER = 0.029 x QMax + 135

4 Non-Weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC) FER = 0.051 x QMax + 301

5 Non-Weatherized Electric Furnace / Modular

Blower Fan (NWEF/NWMB) FER = 0.029 x QMax + 165

6 Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWGNC) FER = 0.051 x QMax + 242

7 Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fan (MH-NWG-C) FER = 0.051 x QMax + 262

8 Manufactured Home Electric Furnace/

Modular Blower Fan (MH-EF/MB) FER = 0.029 x QMax + 105

9 Manufactured Home Weatherized Gas 

Furnace Fan (MH-WG) Reserved

10 Manufactured Home Non-Weatherized Oil 

Furnace Fan (MH-NWO) Reserved

*

QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test 

procedure. 78 FR 19606, 19627 (April 2, 2013).

A.

Table I.2

Benefits and Costs to Consumers

presents DOE’s evaluation of the economic impacts of the proposed 

standards on consumers of residential furnace fans, as measured by the average life-cycle 

cost (LCC) savings and the median payback period (PBP). In overview, the average LCC 

savings are positive for all product classes.
11

Table I.2 Impacts of Proposed Standards on Consumers of Residential Furnace 

Fans

Product Class Average LCC 

Savings (2012$)

Median Payback 

Period (years)

Non-Weatherized, Non-Condensing Gas 

Furnace Fan (NWG-NC) 474 5.38

Non-Weatherized, Condensing Gas Furnace 

Fan (NWG-C) 371 5.39

Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC) 247 6.39

Non-Weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC) 40 5.49

Non-Weatherized Electric Furnace / Modular 

Blower Fan (NWEF/NWMB) 185 3.55

Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWGNC) 26 3.35

Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fan (MH-NWG-C) 27 2.73

Manufactured Home Electric Furnace/

Modular Blower Fan (MH-EF/MB) 78 4.61

B.

The industry net present value (INPV) is the sum of the discounted cash flows to 

the industry from the base year through the end of the analysis period (2013 to 2048). 

Using a real discount rate of 7.8 percent, DOE estimates that the INPV for manufacturers 

of residential furnace fans is $252.2 million in 2012$. Under the proposed standards, 

DOE expects that manufacturers may lose up to 21.6 percent of their INPV, which is 

approximately $54.4 million. Total conversion costs incurred by industry prior to the 

compliance date are expected to reach $3.1 million..

Impact on Manufacturers

Comment [A1]: Change recommended by OIRA.
12

C.

DOE’s analyses indicate that the proposed standards would save a significant 

amount of energy. The cumulative energy savings for residential furnace fan products

purchased in the 30-year period that begins in the first full year of compliance with new

standards (2019–2048) amount to 4.58 quads.

National Benefits and Costs

2 ThisFor comparison, the estimated annual 

energy savings in 2030 (0.074 quads) is equivalentequal to approximately 230.3 percent 

of total U.S.projected residential energy use in 20122030.

3

The cumulative net present value (NPV) of total consumer costs and savings for

the proposed residential furnace fan standards in 2012$ ranges from $8.51 billion (at a 7-

percent discount rate) to $26.16 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 residential furnace fans purchased in 2019–2048, discounted 

to 2013. 

In addition, the proposed standards would have significant environmental 

benefits. 4 The energy savings would result in cumulative emission reductions of 429.8

million metric tons (Mt)5

 2 A quad is equal to 1015 British thermal units (Btu).

of carbon dioxide (CO2), 230.9 thousand tons of nitrogen 

oxides (NOX), 313.5 thousand tons of sulfur dioxide (SO2), and 1.77 tons of mercury 

3 Energy Information Administration (EIA), Monthly Energy Review: Table 2.2 Residential Energy 

Consumption (May 17, 2013) (Available at: http://www.eia.gov/totalenergy/data/monthly/pdf/sec2_5.pdf).

Projected residential energy use in 2030 in the Annual Energy Outlook 2013 is 21.65 quads. 4 DOE calculates emissions reductions relative to the Annual Energy Outlook 2012 (AEO 2012) Reference 

case, which incorporated projected effects of all emissions regulations promulgated as of January 31, 2012. 5 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO2 are presented in short 

tons.

Comment [A2]: Change recommended by OIRA.

Comment [A3]: Change recommended by OIRA.

Comment [A4]: Change recommended by OIRA.

Comment [A5]: Change recommended by OIRA.

Comment [A6]: Change recommended by OIRA.

Comment [A7]: Change recommended by OIRA.

Comment [A8]: Change recommended by OIRA.
13

(Hg), 913.7 thousand tons of methane (CH4), and 5.12 thousand tons of nitrous oxide 

(N2O).

6

The value of the CO2 reductions is calculated using a range of values per metric 

ton of CO2 (otherwise known as the Social Cost of Carbon, or SCC) developed by an

interagency process. TheFor today’s NOPR, DOE used an updated set of SCC values7

(the derivation of the SCC values is discussed in section IV.L). DOE estimates that the 

present monetary value of the CO2 emissions reduction is between $2.25 and $35.56

billion, expressed in 2012$ and discounted to 2013. DOE also estimates the net present 

monetary value of the NOX emissions reduction, expressed in 2012$ and discounted to 

2013, is $0.109 billion at a 7-percent discount rate and $0.314 billion at a 3-percent 

discount rate.8

Table I.3 summarizes the national economic benefits and costs expected to result 

from today’s proposed standards for residential furnace fans.

 6 DOE calculates emissions reductions relative to the Annual Energy Outlook 2012 (AEO 2012) Reference 

case, which incorporated projected effects of all emissions regulations promulgated as of January 31, 2012.

DOE also estimated CO2 and, for CH4 and N2O, CO2 equivalent (CO2eq) emissions that occur through 

2030. The estimated emissions reductions through 2030 are 40 million metric tons CO2, 2.3 million tons 

CO2eq for CH4, and 167 thousand tons CO2eq for N2O. 7 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 

12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 

2013)(Available at: 

http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf

).

8 DOE did not monetize Hg or SO2 emission reductions for today’s NOPR because it is currently evaluating 

appropriate valuation of reduction in these emissions.

Comment [A9]: Change recommended by OIRA.

Comment [A10]: Change recommended by 

OIRA.

Formatted: Not Highlight
14

Table I.3: Summary of National Economic Benefits and Costs of Proposed 

Residential Furnace Fans Energy Conservation Standards (TSL 4)), in Billion 

2012$*

Category Present Value Discount 

Billion 2012$ Rate

Benefits

Consumer Operating Cost Savings 11.6 7%

32.0 3%

CO2 Reduction Monetized Value ($12.9/t 

case)*)** 2.2 5%

CO2 Reduction Monetized Value ($40.8/t 

case)*)** 11.5 3%

CO2 Reduction Monetized Value ($62.2/t 

case)*)** 18.8 2.5%

CO2 Reduction Monetized Value ($117/t 

case)*)** 35.6 3%

NOX Reduction Monetized Value (at 

$2,639/ton)**)

0.1 7%

0.3 3%

Total Benefits†

23.2 7%

43.8 3%

Costs

Consumer Incremental Installed Costs 3.1 7%

5.8 3%

Net Benefits

Including CO2 and NOX Reduction Monetized 

Value 

20.1 7%

38.0 3%

** This table presents the costs and benefits associated with residential furnace fans shipped in 2019−2048. 

These results include benefits to consumers which accrue after 2048 from the products purchased in 

2019−2048. The results account for the incremental variable and fixed costs incurred by manufacturers due

to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2012$, in 2015 under several 

scenarios. of the updated SCC values. The first three cases use the averages of SCC distributions calculated 

using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the 

SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an 

escalation factor.

** The value representsfor NOX is the average of the low and high NOX values used in DOE’s analysis.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value in 

2015 of $40.8/t.

Comment [A11]: Change recommended by 

OIRA.

Comment [A12]: Change recommended by 

OIRA.

Comment [A13]: Change recommended by 

OIRA.

Comment [A14]: Change recommended by 

OIRA.

Comment [A15]: Change recommended by 

OIRA.

Comment [A16]: Change recommended by 

OIRA.

Comment [A17]: Change recommended by 

OIRA.

Comment [A18]: Change recommended by 

OIRA.

Comment [A19]: Change recommended by 

OIRA.

Comment [A20]: Change recommended by 

OIRA.
15

The benefits and costs of today’s proposed standards, for products sold in 2019-

2048, can also be expressed in terms of annualized values. The annualized monetary 

values are the sum of: (1) the annualized national economic value of the benefits from 

consumer operation of products that meet the proposed standards (consisting primarily of 

operating cost savings from using less energy, minus increases in equipment purchase 

and installation costs, which is another way of representing consumer NPV); and (2) the 

annualized monetary value of the benefits of emission reductions, including CO2

emission reductions.9

Although combining the values of operating savings and CO2 emission reductions 

provides a useful perspective, two issues should be considered. First, the national 

operating savings are domestic U.S. consumer monetary savings that occur as a result of

market transactions, whereas the value of CO2 reductions is based on a global value. 

Second, the assessments of operating cost savings and CO2 savings are performed with 

different methods that use different time frames for analysis. The national operating cost 

savings is measured for the lifetime of residential furnace fans shipped in 2019–2048. 

 9 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized 

values. First, DOE calculated a present value in 2013, the present year used for discounting the NPV of 

total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and 

seven percent for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used a 

range of discount rates, as shown in Table I.4. From the present value, DOE then calculated the fixed 

annual payment over a 30-year period (2019 through 2048) that yields the same present value. The fixed 

annual payment is the annualized value. Although DOE calculated annualized values, this does not imply 

that the time-series of cost and benefits from which the annualized values were determined is a steady 

stream of payments.

Formatted: Indent: First line: 0.5", Don't

adjust space between Latin and Asian text

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16

The SCC values, on the other hand, reflect the present value of some future climaterelated impacts resulting from the emission of one ton of carbon dioxide in each year.

These impacts continue well beyond 2100.

The benefits and costs of today’s proposed standards, for products sold in 2019-

2048, can also be expressed in terms of annualized values. The annualized monetary 

values are the sum of: (1) the annualized national economic value of the benefits from 

consumer operation of products that meet the proposed standards (consisting primarily of 

operating cost savings from using less energy, minus increases in equipment purchase 

and installation costs, which is another way of representing consumer NPV); and (2) the 

annualized monetary value of the benefits of emission reductions, including CO2

emission reductions.10

Estimates of annualized benefits and costs of the proposed standards are shown in 

Table I.4. The results under the primary estimate are as follows. (All monetary values 

below are expressed in 2012$.) Using a 7-percent discount rate for benefits and costs 

other than CO2 reduction (for which DOE used a 3-percent discount rate along with the 

SCC series corresponding to a value of $40.8/ton in 2015), the cost of the residential 

 10 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized 

values. First, DOE calculated a present value in 2013, the present year used for discounting the NPV of 

total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and 

seven percent for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used a 

range of discount rates, as shown in Table I.4. From the present value, DOE then calculated the fixed 

annual payment over a 30-year period (2019 through 2048) that yields the same present value. The fixed 

annual payment is the annualized value. Although DOE calculated annualized values, this does not imply 

that the time-series of cost and benefits from which the annualized values were determined is a steady 

stream of payments.

Formatted: Font: Not Bold

Formatted: Indent: First line: 0.5"

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adjust space between Latin and Asian text

Comment [A21]: Change in paragraph location 

recommended by OIRA.

Formatted: Font: Bold
17

furnace fan standards proposed in today’s rule is $231 million per year in increased 

equipment costs, while the benefits are $872 million per year in reduced equipment 

operating costs, $571 million in CO2 reductions, and $8.24 million in reduced NOX

emissions. In this case, the net benefit amounts to $1,220 million per year. Using a 3-

percent discount rate for all benefits and costs and the SCC series corresponding to a 

value of $40.8/ton in 2015, the cost of the residential furnace fans standards proposed in 

today’s rule is $290 million per year in increased equipment costs, while the benefits are 

$1,585 million per year in reduced operating costs, $571 million in CO2 reductions, and 

$15.56 million in reduced NOX emissions. In this case, the net benefit amounts to $1,882 

million per year.
18

Table I.4: Annualized Benefits and Costs of Proposed Standards for Residential 

Furnace Fans (TSL 4)), in Million 2012$

Discount 

Rate

Primary 

Estimate*

Low Net 

Benefits 

Estimate

High Net 

Benefits 

Estimate

million 2012$/year

Benefits

Consumer Operating Cost 

Savings

7% 872 710 1082

3% 1585 1264 2011

CO2 Reduction Monetized 

Value ($12.9/t case)** 5% 139 117 171

CO2 Reduction Monetized 

Value ($40.8/t case)** 3% 571 477 702

CO2 Reduction Monetized 

Value ($62.2/t case)** 2.5% 877 732 1079

CO2 Reduction Monetized 

Value ($117/t case)** 3% 1761 1471 2167

NOX Reduction Monetized 

Value (at $2,639/ton)**

7% 8.24 6.97 9.99

3% 15.56 13.03 19.09

Total Benefits†

7% plus 

CO2 range

1,019 to 

2,641 834 to 2,188 1,263 to 3,259

7% 1,451 1,194 1,794

3% plus 

CO2 range

1,740 to 

3,362

1,394 to 

2,748 2,201 to 4,197

3% 2,172 1,754 2,732

Costs

Consumer Incremental 

ProductInstalled Costs

7% 231 273 201

3% 290 346 250

Net Benefits

Total†

7% plus 

CO2 range 788 to 2,410 561 to 1,915 1,062 to 3,058

7% 1,220 921 1,593

3% plus 

CO2 range

1,450 to 

3,072

1,047 to 

2,402 1,951 to 3,947

3% 1,882 1,407 2,482

Comment [A22]: Change recommended by 

OIRA.

Comment [A23]: Change recommended by 

OIRA.

Formatted: Subscript

Comment [A24]: Change recommended by 

OIRA.

Comment [A25]: Change recommended by 

OIRA.
19

* This table presents the annualized costs and benefits associated with residential furnace fans shipped in

2019−2048. These results include benefits to consumers which accrue after 2048 from the products

purchased in 2019−2048. CostsThe results account for the incremental variable and fixed costs incurred by 

manufacturers due to the standard, some of which may be incurred in preparation for the rule, are not 

directly included, but are indirectly included as part of incremental equipment costs. The Primary, Low 

Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO

2012

** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. The first 

three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, 

respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% 

discount rate. The SCC values increase over time. The value for NOX (in 2012$) is the average of the low 

and high values used in DOE’s analysis.

Reference case, Low Estimate, and High Estimate, respectively. Incremental product costs reflect a 

constant product price trend in the Primary Estimate, an increasing price trend in the Low Benefits 

Estimate, and a decreasing price trend in the High Benefits Estimate. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of 

$40.8/t in 2015. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost and 

NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of 

CO2 values.

DOE has tentatively concluded that the proposed standards represent the 

maximum improvement in energy efficiency that is technologically feasible and 

economically justified, and would result in the significant conservation of energy. DOE 

further notes that products achieving these standard levels are already commercially 

available for at least some, if not most, product classes covered by today’s proposal.

Based on the analyses described above, DOE has tentatively concluded that the benefits

of the proposed standards to the Nation (energy savings, positive NPV of consumer

benefits, consumer LCC savings, and emission reductions) would outweigh the burdens 

(loss of INPV for manufacturers and LCC increases for some consumers). 

DOE also considered more-stringent energy efficiency levels as trial standard 

levels, and is still considering them in this rulemaking. However, DOE has tentatively 

concluded that the potential burdens of the more-stringent energy efficiency levels would 

Comment [A26]: Change recommended by 

OIRA.

Comment [A27]: Change recommended by 

OIRA.

Comment [A28]: Change recommended by 

OIRA.
20

outweigh the projected benefits. Based on consideration of the public comments DOE 

receives in response to this notice and related information collected and analyzed during 

the course of this rulemaking effort, DOE may adopt energy efficiency levels presented 

in this notice that are either higher or lower than the proposed standards, or some 

combination of level(s) that incorporate the proposed standards in part.

II. Introduction

The following section briefly discusses the statutory authority underlying today’s 

proposal, as well as some of the relevant historical background related to the 

establishment of standards for residential furnace fans.

A.

Title III, Part B

Authority

11 of the Energy Policy and Conservation Act of 1975 (EPCA or 

the Act), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy 

Conservation Program for Consumer Products Other Than Automobiles, a program 

covering most major household appliances (collectively referred to as “covered 

products”).

12 These include products that use electricity for purposes of circulating air 

through duct work, hereafter referred to as “residential furnace fans” or simply “furnace 

fans,” the subject of this rulemaking. (42 U.S.C. 6295(f)(4)(D))

 11 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. 12 All references to EPCA in this document refer to the statute as amended through the American Energy 

Manufacturing Technical Corrections Act, Pub. L. 112-210 (enacted December 18, 2012).
21

Pursuant to EPCA, DOE’s energy conservation program for covered products 

consists essentially of four parts: (1) testing; (2) labeling; (3) the establishment of Federal 

energy conservation standards; and (4) certification and enforcement procedures. The 

Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE 

implements the remainder of the program. Subject to certain criteria and conditions, 

DOE is required by EPCA to consider and establish energy conservation standards for 

residential furnace fans by December 31, 2013. (42 U.S.C. 6295(f)(4)(D)) DOE is also 

required to develop test procedures to measure the energy efficiency, energy use, or 

estimated annual operating cost of each covered product prior to the adoption of an 

energy conservation standard. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of 

covered products must use the prescribed DOE test procedure as the basis for certifying 

to DOE that their products comply with the applicable energy conservation standards 

adopted 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)) DOE does not currently have a test 

procedure for furnace fans. Accordingly, to fulfill the statutory requirements, DOE is 

simultaneously conducting a test procedure rulemaking for residential furnace fans. DOE 

published a notice of proposed rulemaking (NOPR) in the Federal Register for a 

residential furnace fans test procedure on May 15, 2012. 77 FR 28674. After 

considering public comments, DOE subsequently published in the Federal Register a 

supplemental notice of proposed rulemaking (SNOPR) on April 2, 2013, which contained 

a revised test procedure proposal for furnace fans. 78 FR 19606. In accordance with the 
22

statutory requirements outlined in EPCA, DOE will establish a test procedure for 

residential furnace fans at or before the time it prescribes furnace fan energy conservation 

standards Details on the furnace fan test procedure rulemaking are available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/40.

DOE must follow specific statutory criteria for prescribing new or amended 

standards for covered products, including residential furnace fans. As indicated above, 

any new or amended standard for a covered product must be designed to achieve the 

maximum improvement in energy efficiency that is technologically feasible and 

economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may 

not adopt any standard that would not result in the significant conservation of energy. 

(42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) for certain 

products, including residential furnace fans, if no test procedure has been established for 

the product, or (2) if DOE determines by rule that the proposed standard is not 

technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In 

deciding whether a proposed standard is economically justified, after receiving comments 

on the proposed standard, DOE must determine whether the benefits of the standard 

exceed its burdens by, to the greatest extent practicable, considering the following seven 

factors:

(1) The economic impact of the standard on manufacturers and consumers of the 

products subject to the standard;

Comment [A29]: Change recommended by 

OIRA.
23

(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))

EPCA, as codified, also contains what is known as an “anti-backsliding” 

provision, which prevents the Secretary from prescribing any 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 of any covered product type (or class) of performance characteristics 
24

(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))

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. 

(See 42 U.S.C. 6295(o)(2)(B)(iii))

Additionally, under 42 U.S.C. 6295(q)(1), the statute specifies requirements when 

promulgating an energy conservation standard for a covered product that has two or more 

subcategories. DOE must specify a different standard level for a type or class of covered 

product 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 level,

DOE must consider such factors as the utility to the consumer of the 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))
25

Federal energy conservation requirements generally supersede State laws or 

regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 

6297(a)–(c)) DOE may, however, grant waivers of Federal preemption for particular 

State laws or regulations, in accordance with the procedures and other provisions set forth 

under 42 U.S.C. 6297(d)).

Finally, pursuant to the amendments contained in the Energy Independence and 

Security Act of 2007 (EISA 2007), Pub. L. 110-140, any final rule for new or amended 

energy conservation standards promulgated after July 1, 2010, is required to address 

standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when 

DOE adopts a standard for a covered product after that date, it must, if justified by the 

criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby 

mode and off mode energy use into a single standard, or, if that is not feasible, adopt a 

separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) 

The proposed furnace fan energy rating metric would not account for the electrical 

energy consumption in standby mode and off mode, because energy consumption in 

those modes is already fully accounted for in the DOE energy conservation standards 

rulemaking for residential furnaces and residential central air conditioners (CAC) and 

heat pumps (HP). 76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011). 

Manufacturers will be required to use the new metrics and methods adopted in those 

rulemakings for the purposes of certifying to DOE that their products comply with the 

applicable energy conservation standards adopted pursuant to EPCA and for making 
26

representations about the efficiency of those products. (42 U.S.C. 6293(c); 42 U.S.C. 

6295(s))

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued 

on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)). Executive Order 13563 is 

supplemental to and explicitly reaffirms the principles, structures, and definitions 

governing regulatory review established in Executive Order 12866. To the extent 

permitted by law, agencies are required by Executive Order 13563 to: (1) propose or 

adopt a regulation only upon a reasoned determination that its benefits justify its costs 

(recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations 

to impose the least burden on society, consistent with obtaining regulatory objectives, 

taking into account, among other things, and to the extent practicable, the costs of 

cumulative regulations; (3) select, in choosing among alternative regulatory approaches, 

those approaches that maximize net benefits (including potential economic, 

environmental, public health and safety, and other advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify performance objectives, rather than specifying 

the behavior or manner of compliance that regulated entities must adopt; and (5) identify 

and assess available alternatives to direct regulation, including providing economic 

incentives to encourage the desired behavior, such as user fees or marketable permits, or 

providing information upon which choices can be made by the public. 

DOE emphasizes as well that Executive Order 13563 requires agencies to use the 

best available techniques to quantify anticipated present and future benefits and costs as 
27

accurately as possible. In its guidance, the Office of Information and Regulatory Affairs

(OIRA), within 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, DOE believes that today’s NOPR is consistent with these 

principles, including the requirement that, to the extent permitted by law, benefits justify 

costs and that net benefits are maximized. Consistent with Executive Order 13563, and 

the range of impacts analyzed in this rulemaking, the energy conservation standard 

proposed herein by DOE would achieve maximum net benefits.

B. Background

1. Current Standards

Currently, no Federal energy conservation standards apply to residential furnace 

fans. 

2. History of Standards Rulemaking for Residential Furnace Fans

Pursuant to 42 U.S.C. 6295(f)(4)(D), DOE must consider and prescribe new 

energy conservation standards or energy use standards for electricity used for purposes of 

circulating air through duct work. DOE has interpreted this statutory language to allow 

regulation of the electricity use of any electrically-powered device applied to residential 

central heating, ventilation, and air-conditioning (HVAC) systems for the purpose of 

circulating air through duct work.

Comment [A30]: Change (deletion) 

recommended by OIRA.

Formatted: Normal, Line spacing: Double
28

DOE initiated the current rulemaking by issuing an analytical Framework

Document, “Rulemaking Framework for Furnace Fans” (June 1, 2010). DOE then 

published the Notice of Public Meeting and Availability of the Framework Document for 

furnace fans in the Federal Register on June 3, 2010. 75 FR 31323. See 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41.

The Framework Document explained the issues, analyses, and process that DOE 

anticipated using to develop energy conservation standards for residential furnace fans. 

DOE held a public meeting on June 18, 2010 to solicit comments from interested parties 

regarding DOE’s analytical approach. DOE originally scheduled the comment period on 

the Framework Document to close on July 6, 2010, but due to the large number and broad 

scope of questions and issues raised, DOE subsequently published a notice in the Federal

Register reopening the comment period from July 15, 2010 until July 27, 2010, to allow 

additional time for interested parties to submit comments. 75 FR 41102 (July 15, 2010). 

As a concurrent effort to the residential furnace fan energy conservation standard

rulemaking, DOE also initiated a test procedure rulemaking for residential furnace fans.

On May 15, 2012, DOE published a notice of proposed rulemaking for the test procedure 

in the Federal Register. 77 FR 28674. In that NOPR, DOE proposed to establish 

methods to measure the performance of covered furnace fans and to obtain a value for the 

proposed metric, referred to as the “fan efficiency rating” (FER).

13

 13 In the May 15, 2012 NOPR for the test procedure, DOE referred to FER as “fan efficiency rating.” 

However, in the April 2, 2013 test procedure SNOPR, DOE proposed to rename the metric as “fan energy 

rating,” thereby keeping the same abbreviation (FER).

DOE held the test 
29

procedure NOPR public meeting on June 15, 2012, and the comment period closed on 

July 30, 2012. After receiving comments on the NOPR alleging significant manufacturer 

burden associated with the proposed test procedure, DOE determined that an alternative 

test method should be developed. DOE published in the Federal Register a supplemental 

notice of proposed rulemaking (an SNOPR) on April 2, 2013, which contained its revised 

test procedure proposal and an explanation of the changes intended to reduce burden. 78 

FR 19606. DOE proposed to adopt a modified version of the alternative test method 

recommended by the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) and 

other furnace fan manufacturers to rate the electrical energy consumption of furnace fans. 

DOE has tentatively concluded that the AHRI-proposed method provides a framework 

for accurate and repeatable determinations of FER that is comparable to the test method 

previously proposed by DOE, but at a significantly reduced test burden. As required by 

EPCA, DOE will complete its final rule for residential furnace fan test procedures in 

advance of the final rule adopting energy conservation standards for those products. (42 

U.S.C. 6295(o)(3)(A) and (r))

To further develop the energy conservation standards for residential furnace fans, 

DOE gathered additional information and performed a preliminary technical analysis.

This process culminated in publication in the Federal Register

Comment [A31]: Change recommended by 

OIRA.

of a Notice of Public 

Meeting and the Availability of the Preliminary Technical Support Document (TSD) on 

July 10, 2012. 77 FR 40530. In that document, DOE requested comment on the 

following matters discussed in the TSD: (1) the selected product classes; (2) the 

analytical framework, models, and tools that DOE is using to evaluate standards; and (3) 

Comment [A32]: Change recommended by 

OIRA.
30

the results of the preliminary analyses performed by DOE. Id. DOE also invited written 

comments on these subjects, as well as any other relevant issues, and announced the 

availability of the TSD on its website. Id. at 40530-31. A PDF copy of the preliminary 

TSD is available at http://www.regulations.gov/#!documentDetail;D=EERE-2010-BTSTD-0011-0037.

The preliminary TSD provided an overview of the activities DOE undertook in 

developing potential energy conservation standards for residential furnace fans, and 

discussed the comments DOE received in response to the Framework Document. It also 

described the analytical methodology that DOE used and each analysis DOE had 

performed up to that point. These analyses were as follows:

• A market and technology assessment addressed the scope of this rulemaking, 

identified the potential product classes of residential furnace fans, characterized 

the markets for these products, and reviewed techniques and approaches for 

improving their efficiency;

• A screening analysis reviewed technology options to improve the efficiency of 

furnace fans, and weighed these options against DOE’s four prescribed screening 

criteria;

• An engineering analysis estimated the increase in manufacturer selling prices 

(MSPs) associated with more energy-efficient furnace fans;

• An energy use analysis estimated the annual energy use of furnace fans at various 

potential standard levels;

• A markups analysis converted estimated MSPs to consumer-installed prices.
31

• A life-cycle cost (LCC) analysis calculated, at the consumer level, the discounted 

savings in operating costs throughout the estimated average life of the product, 

compared to any increase in installed costs likely to result directly from the 

adoption of a given standard;

• A payback period (PBP) analysis estimated the amount of time it would take 

consumers to recover the higher expense of purchasing more-energy-efficient 

products through lower operating costs;

• A shipments analysis estimated shipments of residential furnace fans over the 

time period examined in the analysis (30 years), which were used in performing 

the national impact analysis;

• A national impact analysis assessed the aggregate impacts at the national level of 

potential energy conservation standards for residential furnace fans, as measured 

by the net present value of total consumer economic impacts and national energy 

savings; and

• A preliminary manufacturer impact analysis took the initial steps in evaluating 

the effects new energy conservation standards may have on furnace fan

manufacturers.

The nature and function of the analyses in this rulemaking, including the 

engineering analysis, energy-use characterization, markups to determine installed prices, 

LCC and PBP analyses, and national impact analysis, are summarized in the July 2012 

notice. 77 FR 40530, 40532-33 (July 10, 2012).
32

The preliminary analysis public meeting took place on July 27, 2012. At this 

meeting, DOE presented the methodologies and results of the analyses set forth in the 

preliminary TSD. The numerous comments received since publication of the July 2012 

notice, including those received at the preliminary analysis public meeting, have 

contributed to DOE’s proposed resolution of the issues noted by interested parties. 

The submitted comments include a joint comment from the American Council for 

an Energy-Efficiency Economy (ACEEE), Adjuvant Consulting, on behalf of the 

Northwest Energy Efficiency Alliance (NEEA), the Appliance Standards Awareness 

Project (ASAP), the National Consumer Law Center (NCLC), and the Natural Resources 

Defense Council (NRDC); a comment from the Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI); a second joint comment from California Investor-Owned 

Utilities (CA IOUs) including Pacific Gas and Electric Company (PG&E), Southern 

California Edison (SCE), Southern California Gas Company, and San Diego Gas and 

Electric (SDGE); a comment from Earthjustice; a comment from ebm-papst Inc. (ebmpapst); a comment from Edison Electric Institute (EEI); and a comment from the 

Northeast Energy Efficiency Partnership (NEEP). Manufacturers submitting written 

comments included: First Company, Goodman Global, Inc. (Goodman), Ingersoll Rand, 

Lennox International, Inc. (Lennox), Morrison Products, Inc. (Morrison), Mortex 

Product, Inc. (Mortex), National Motor Corporation (NMC), and Rheem Manufacturing 

Company (Rheem). Comments made during the public meeting by those not already 

listed include the U.S. Environmental Protection Agency (EPA), the motor manufacturer 

Regal Beloit, and Unico Incorporated. This NOPR summarizes and responds to the 
33

issues raised in these comments. A parenthetical reference at the end of a quotation or 

paraphrase provides the location of the item in the public record.

III. General Discussion

A.

In the SNOPR for the residential furnace fan test procedure published in the 

Test Procedure

Federal Register on April 2, 2013 (78 FR 19606), DOE proposed to adopt a modified 

version of a test method recommended by AHRI and supported by other furnace fan 

manufacturers in the written comments on the May 2012 Test Procedure NOPR. (Docket 

No. EERE-2010-BT-TP-0010, AHRI, No. 16 at p. 3) DOE agrees with AHRI’s 

assessment that its method provides a framework for accurate and repeatable 

determinations of FER that is comparable to the test method previously proposed by 

DOE, but at a significantly reduced test burden. In general, the test burden of the AHRI 

method is reduced relative to the test procedure originally proposed in the NOPR because 

it: (1) does not require airflow to be measured directly; (2) avoids the need to make 

multiple determinations in each airflow-control setting because outlet restrictions to 

achieve the specified reference system external static pressure (ESP) would be set in the 

maximum airflow-control setting and maintained for measurements in subsequent 

airflow-control settings; and (3) can be conducted using the test setup currently required 

to rate furnace annual fuel utilization efficiency (AFUE) for compliance with residential 

furnace standards.
34

In the April 2, 2013 test procedure SNOPR, DOE proposed to incorporate by 

reference the definitions, test setup and equipment, and procedures for measuring steadystate combustion efficiency provisions of American National Standards Institute (ANSI)/

American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) 

Standard 103-2007, Method of Testing for Annual Fuel Utilization Efficiency of 

Residential Central Furnaces and Boilers (ASHRAE Standard 103). In addition to these 

provisions, DOE proposed additional provisions for apparatuses and procedures for 

measuring throughput temperature, external static pressure, and furnace fan electrical 

input power. DOE also proposed calculations to derive FER based on the results of 

testing for each basic model. 78 FR 19606, 19608-09 (April 2, 2013).

In the SNOPR, DOE proposed to define “fan energy rating” (FER) as the 

estimated annual electrical energy consumption of the furnace fan normalized by: (a) the 

estimated total number of annual fan operating hours (1,870);14 and (b) the airflow in the 

maximum airflow-control setting. Id.at 19608. The estimated annual electrical energy 

consumption, as proposed, is a weighted average of the furnace fan electrical input power 

(in Watts) measured separately for multiple airflow-control settings at different external 

static pressures (ESPs). These ESPs are determined by a reference system that represents 

national average duct work system characteristics. Id. Table III.1 below includes the 

proposed reference system ESP values by installation type.

 14 Details about the derivation of operating hours used to calculate FER are found in the test procedure 

NOPR. 77 FR 28674, 28680 (May 15, 2012).

Comment [A33]: Change (added footnote) 

recommended by OIRA.
35

Table III.1: Proposed Reference System ESP Values by Furnace Fan Installation 

Type

Installation Type

Weighted Average ESP

(in. w.c.)

Units with an internal evaporator coil 0.50

Units designed to be paired with an evaporator coil 0.65

Units installed in a manufactured homes15 0.30

The proposed rated airflow-control settings correspond to operation in cooling 

mode (which DOE finds is predominantly associated with the maximum airflow-control 

setting), heating mode, and constant-circulation mode. Table III.2 illustrates the airflowcontrol settings that would be rated for various product types. 

Table III.2: Proposed Rated Airflow-control Settings by Product Type

Product Type

Rated Airflow-control 

Setting 1

Rated Airflow-control 

Setting 2

Rated Airflow-control 

Setting 3

Single-stage 

Heating

Default constantcirculation Default heat Absolute maximum

Multi-stage or 

Modulating Heating

Default constantcirculation Default low heat Absolute maximum

As shown in Table III.2, for products with single-stage heating, the three proposed 

rated airflow-control settings are the default constant-circulation setting, the default 

heating setting, and the absolute maximum setting. 78 FR 19606, 19609 (April 2, 2013).

For products with multi-stage heating or modulating heating, the proposed rated airflowcontrol settings are the default constant-circulation setting, the default low heating 

setting, and the absolute maximum setting. The absolute lowest default airflow-control 

 15 Manufactured home external static pressure is much lower than non-manufactured home installations 

because there is no return air duct work in manufactured homes. Also, the United States Department of 

Housing and Urban Development (HUD) requirements for manufactured homes stipulate that the duct work 

for cooling should be set at 0.3 in. w.c.
36

setting is used to represent constant circulation if a default constant-circulation setting is 

not specified. DOE proposed to define “default airflow-control settings” as the airflowcontrol settings specified for installed use by the manufacturer in the product literature 

shipped with the product in which the furnace fan is integrated. Id. Manufacturers 

typically provide detailed instructions for setting the default heating airflow-control

setting to ensure that the product in which the furnace fan is integrated operates safely. 

Manufacturer installation guides also provide detailed instructions regarding compatible 

thermostats and how to wire them to achieve the specified default settings. 

In the SNOPR, DOE proposed to weight the Watt measurements using designated 

annual operating hours for each function (i.e.

Table III.3

, cooling, heating, and constant circulation) 

that are intended to represent national average operation. shows the proposed 

estimated national average operating hours for each function to be used to calculate FER.

Table III.3: Estimated National Average Operating Hour Values for Calculating 

FER

Operating Mode Variable

Single-stage 

(hours)

Multi-stage or 

Modulating 

(hours)

Heating HH (heating hours) 830 830/HCR (heat 

capacity ratio)

Cooling CH (cooling hours) 640 640

Constant Circulation

CCH (constantcirculation hours) 400 400

Total 1,870 (830/HCR) + 1,040

The specified operating hours for the heating mode for multi-stage heating or 

modulating heating products are divided by the heat capacity ratio (HCR) to account for 

variation in time spent in this mode associated with turndown of heating output. The 

Comment [A34]: Change recommended by 

OIRA.
37

HCR is the ratio of the reduced heat output capacity to maximum heat output capacity. 

The proposed FER equation is:

Where:

CH= annual furnace fan cooling operating hours;

EMax= furnace fan electrical consumption at maximum airflow-control setting operating 

point;

HH= annual furnace fan heating operating hours;

EHeat= furnace fan electrical consumption at the default heating airflow-control setting 

operating point for units with single-stage heating or the default low-heating airflow 

control setting operating point for units with multi-stage heating;

CHH= annual furnace fan constant circulation hours;

ECirc= furnace fan electrical consumption at the default constant-circulation airflowcontrol setting operating point (or minimum airflow-control setting operating point 

if a default constant-circulation airflow-control setting is not specified);

QMax= airflow at maximum airflow-control setting operating point; and

1000= constant to put metric in terms of watts/1000cfm, which is consistent with industry 

practice.

The public meeting for the energy conservation standards preliminary analysis 

occurred only two months after the public meeting for the test procedure NOPR. At the 
38

time of the preliminary analysis meeting, the comment period for the test procedure 

NOPR was still open. Consequently, many of the written comments and oral comments 

made during the preliminary analysis public meeting focused on test procedure issues and 

echoed comments in the test procedure rulemaking proceeding. While these test 

procedure issues are germane to the regulation of residential furnace fans more broadly, 

they are beyond the scope of the present energy conservation standards rulemaking. 

Accordingly, DOE addressed these test procedure-related comments, with detailed 

responses, in the April 2, 2013 test procedure SNOPR. Any additional comments made 

during the preliminary analysis relating to the test procedure that were not discussed in 

the test procedure SNOPR (i.e., did not result in changes to DOE’s proposed test 

procedure) will be addressed in the test procedure final rule. 

 

B.

Although the title of 42 U.S.C 6295(f) refers to “furnaces and boilers,” DOE notes 

that 42 U.S.C. 6295(f)(4)(D) was written using notably broader language than the other 

provisions within the same section. Specifically, that statutory provision directs DOE to 

“consider and prescribe energy conservation standards or energy use standards for 

electricity used for purposes of circulating air through duct work.” Such language could 

be interpreted as encompassing electrically-powered devices used in any residential 

HVAC product to circulate air through duct work, not just furnaces, and DOE has 

received numerous comments on both sides of this issue. At the present time, however, 

DOE is only proposing to cover those circulation fans that are used in furnaces and 

Product Classes and Scope of Coverage
39

modular blowers. DOE is using the term “modular blower” to refer to HVAC products 

powered by single-phase electricity that comprise an encased circulation blower that is 

intended to be the principal air-circulation source for the living space of a residence. A 

modular blower is not contained within the same cabinet as a residential furnace, CAC, or 

heat pump. Instead, modular blowers are designed to be paired with separate residential 

HVAC products that provide heating and cooling, typically a separate CAC/HP coil-only 

unit. DOE finds that modular blowers and electric furnaces are very similar in design. In 

many cases, the only difference between a modular blower and electric furnace is the 

presence of an electric resistance heating kit. DOE is aware that some modular blower 

manufacturers offer electric resistance heating kits to be installed in their modular blower 

models so that the modular blowers can be converted to stand-alone electric furnaces. In 

addition, FER values for modular blowers can be easily calculated using the proposed test 

procedure. DOE proposes to address the furnace fans used in modular blowers in this 

rulemaking for these reasons. As a result of the extent of the current rulemaking, DOE is 

not addressing public comments that pertain to fans in other types of HVAC products.

When evaluating and establishing energy conservation standards, DOE divides 

covered products into product classes by the type of energy used or by capacity or other 

performance-related features that justify a different standard. In making a determination 

whether a performance-related feature justifies a different standard, DOE must consider 

such factors as the utility to the consumer of the feature and other factors DOE 

determines are appropriate. (42 U.S.C. 6295(q)) For this rulemaking, DOE proposes to 

differentiate between product classes based on internal structure and application-specific 
40

design differences that impact furnace fan energy consumption. Details regarding how

internal structure and application-specific design differences that impact furnace fan 

energy consumption are included in chapter 3 of the NOPR technical support document 

(TSD). DOE proposes the following product classes for this rulemaking.

• Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)

• Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)

• Weatherized Non-Condensing Gas Furnace Fan (WG-NC)

• Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)

• Non-Weatherized Electric Furnace / Modular Blower Fan 

(NWEF/NWMB)

• Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace 

Fan (MH-NWG-NC)

• Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan 

(MH-NWG-C)

• Manufactured Home Electric Furnace / Modular Blower Fan (MHEF/MB)

• Manufactured Home Weatherized Gas Furnace Fan (MH-WG)

• Manufactured Home Non-Weatherized Oil Furnace Fan (MH-NWO)

Each product class title includes descriptors that indicate the application-specific 

design and internal structure of its included products. “Weatherized” and “nonweatherized” are descriptors that indicate whether the HVAC product is installed 
41

outdoors or indoors, respectively. Weatherized products also include an internal 

evaporator coil, while non-weatherized products are not shipped with an evaporator coil 

but may be designed to be paired with one. “Condensing” refers to the presence of a 

secondary, condensing heat exchanger in addition to the primary combustion heat 

exchanger in certain furnaces. The presence of an evaporator coil or secondary heat 

exchanger significantly impacts the internal structure of an HVAC product, and in turn,

the energy performance of the furnace fan integrated in that HVAC product.

“Manufactured home” products meet certain design requirements that allow them to be 

installed in manufactured homes (e.g., a more compact cabinet size). Descriptors for

“gas,” “oil,” or “electric” indicate the type of fuel that the HVAC product uses to produce 

heat, which determines the type and geometry of the primary heat exchanger used in the 

HVAC product. 

C.

1. General

Technological Feasibility

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 
42

incorporated in commercially-available products or in working prototypes to be 

technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

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; and (3) adverse impacts on health or safety. 10 

CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Additionally, it is DOE 

policy not to include in its analysis any proprietary technology that is a unique pathway 

to achieving a certain efficiency level. Section IV.B of this notice discusses the results of 

the screening analysis for residential furnace fans, particularly the designs DOE 

considered, those it screened out, and those that are the basis for the trial standard levels 

(TSLs) in this rulemaking. For further details on the screening analysis for this 

rulemaking, see chapter 4 of the NOPR TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt a new standard for a type or class of covered 

product, it must determine the maximum improvement in energy efficiency or maximum 

reduction in energy use that is technologically feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum 

technologically feasible (“max-tech”) improvements in energy efficiency for residential 

furnace fans, 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 
43

rulemaking are described in section IV.C of this proposed rule and in chapter 5 of the 

NOPR TSD.

D.

1. Determination of Savings

Energy Savings

For each TSL, DOE projected energy savings from the products that are the 

subject of this rulemaking purchased in the 30-year period that begins in the anticipated 

year of compliance with new standards (2019–2048). These savings are measured over 

the entire lifetime of products purchased in the 30-year analysis period.16 DOE 

quantified the energy savings attributable to each TSL as the difference in energy 

consumption between each standards case and the base case. The base case represents a 

projection of energy consumption in the absence of mandatory energy conservation 

standards, and it considers market forces and policies that affect demand for moreefficient products. 

DOE used its national impact analysis (NIA) spreadsheet model to estimate 

energy savings from potential standards for the products that are the subject of this 

rulemaking. The NIA spreadsheet model (described in section IV.H of this notice) 

calculates energy savings in site energy, which is the energy directly consumed by 

products at the locations where they are used. DOE reports national energy savings on an 

 16 In the past, DOE presented energy savings results for only the 30-year period that begins in the year of 

compliance. In the calculation of economic impacts, however, DOE considered operating cost savings 

measured over the entire lifetime of products purchased in the 30-year period. DOE has chosen to modify 

its presentation of national energy savings to be consistent with the approach used for its national economic 

analysis.
44

annual basis in terms of the primary (source) energy savings, which is the savings in the 

energy that is used to generate and transmit the site energy. To convert site energy to 

primary energy, DOE derived annual conversion factors from the model used to prepare 

the Energy Information Administration’s (EIA’s) Annual Energy Outlook 2012 (AEO 

2012).

DOE has begun to also estimate energy savings using full-fuel-cycle metrics. 76 

FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (August 17, 2012). The full-fuelcycle (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 efficiency standards. DOE’s approach is based 

on calculation of an FFC multiplier for each of the primary fuels used by covered 

products and equipment, as presented in DOE’s statement of policy published in the 

Federal Register on August 17, 2012. 77 FR 49701. For more information on FFC 

energy savings, see section IV.H.1.

2. Significance of Savings

As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting a standard 

for a covered product unless such standard would result in “significant” energy savings. 

Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for 

the District of Columbia Circuit, in Natural Resources Defense Council v. Herrington, 

768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended “significant” 

energy savings in this context to be savings that were not “genuinely trivial.” The energy 
45

savings for all of the TSLs considered in this rulemaking are nontrivial, and, therefore, 

DOE considers them “significant” within the meaning of section 325 of EPCA.

E.

1. Specific Criteria

Economic Justification

As discussed above, 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 a potential new or amended standard on 

manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in 

section IV.J. 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) industry net present value (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, 
46

as well as the potential for standards to result in plant closures and loss of capital 

investment, as discussed in section IV.N. 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 

life-cycle cost (LCC) and payback period (PBP) associated with new or amended 

standards. The LCC, which is specified separately in EPCA as one of the seven factors to 

be considered in determining the economic justification for a new or amended standard, 

42 U.S.C. 6295(o)(2)(B)(i)(II), is discussed in the following section. For consumers in 

the aggregate, DOE also calculates the national net present value of the economic impacts 

applicable to a particular rulemaking.

b. Life-Cycle Costs

The LCC is the sum of the purchase price of a product (including its installation) 

and the operating expense (including energy, maintenance, and repair expenditures) 

discounted over the lifetime of the product. The LCC savings for the considered 

efficiency levels are calculated relative to a base case that reflects projected market trends 

in the absence of standards. The LCC analysis requires a variety of inputs, such as 

product prices, product energy consumption, energy prices, maintenance and repair costs, 

product lifetime, and consumer discount rates. For its analysis, DOE assumes that 

consumers will purchase the considered products in the first year of compliance with new 

standards. 
47

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. DOE identifies the percentage of consumers estimated to receive LCC 

savings or experience an LCC increase, in addition to the average LCC savings 

associated with a particular standard level. DOE also evaluates the LCC impacts of 

potential standards on identifiable subgroups of consumers that may be affected 

disproportionately by a national standard. DOE’s LCC analysis is discussed in further 

detail in section IV.F.

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, DOE uses the NIA spreadsheet to project national energy 

savings.

d. Lessening of Utility or Performance of Products

In establishing classes of products, and in evaluating design options and the 

impact of potential standard levels, DOE 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)) The standards proposed in today’s notice will not reduce the utility 

or performance of the products under consideration in this rulemaking.
48

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition that is likely to result 

from standards. It also directs the Attorney General of the United States (Attorney 

General) to determine the impact, if any, of any lessening of competition likely to result 

from a proposed standard and to transmit such determination to the Secretary within 60

days of the publication of a proposed rule, together with an analysis of the nature and 

extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii)) DOE will transmit a copy 

of today’s proposed rule to the Attorney General with a request that the Department of 

Justice (DOJ) provide its determination on this issue. DOE will publish and respond to

the Attorney General’s determination in the final rule.

f. Need for National Energy Conservation

In evaluating the need for national energy conservation, DOE notes that the 

energy savings from the proposed standards are likely to provide improvements to the 

security and reliability of the nation’s energy system. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) 

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. 

The proposed standards also are likely to result in environmental benefits in the 

form of reduced emissions of air pollutants and greenhouse gases associated with energy 
49

production. DOE reports the emissions impacts from each TSL it considered in section 

IV.K of this notice. DOE also reports estimates of the economic value of emissions 

reductions resulting from the considered TSLs, as discussed in section IV.L.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is 

economically justified, to consider any other factors that the Secretary deems to be 

relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any 

relevant information regarding economic justification that does not fit into the other 

categories described above, 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 analysis 

generates values used to determine which of the considered standard levels meet the 

three-year payback period contemplated under the rebuttable presumption test. The 

rebuttable presumption payback calculation is discussed in section V.B.1 of this notice.

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 
50

evaluation of the economic justification for a potential standard level (thereby supporting 

or rebutting the results of any preliminary determination of economic justification). 

IV. Methodology and Discussion

This section addresses the analyses DOE has performed for this rulemaking with 

regard to residential furnace fans. After a brief discussion of the spreadsheet tools and 

models used, separate subsections will address each component of DOE’s analysis.

DOE used three spreadsheet tools to estimate the impact of today’s proposed 

standards. The first spreadsheet calculates LCCs and payback periods of potential 

standards. The second provides shipments forecasts, and then calculates national energy 

savings and net present value impacts of potential standards. Finally, DOE assessed 

manufacturer impacts, largely through use of the Government Regulatory Impact Model 

(GRIM). All three spreadsheet tools are available online at the rulemaking portion of 

DOE’s website: 

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/41.

Additionally, DOE estimated the impacts on utilities and the environment that 

would be likely to result from potential standards for residential furnace fans. DOE used 

a version of EIA’s National Energy Modeling System (NEMS) for the utility and 
51

environmental analyses. 17 The NEMS simulates the energy sector of the U.S. economy. 

EIA uses NEMS to prepare its Annual Energy Outlook, a widely-known energy forecast 

for the United States. NEMS offers a sophisticated picture of the effect of standards 

because it accounts for the interactions between the various energy supply and demand 

sectors and the economy as a whole.

A.

DOE develops information 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 residential furnace fans rulemaking include: (1) a determination of the 

scope of this rulemaking; (2) product classes and manufacturers; (3) quantities and types 

of products sold and offered for sale; (4) retail market trends; (5) regulatory and nonregulatory programs; and (6) technologies or design options that could improve the 

energy efficiency of the product(s) under examination. The key findings of DOE’s 

market assessment are summarized below. See chapter 3 of the NOPR TSD for further 

discussion of the market and technology assessment.

Market and Technology Assessment

 17 For more information on NEMS, refer to the U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary is National Energy Modeling System: An Overview 

2003, DOE/EIA-0581(2003) (March, 2003). 
52

1. Definition and Scope of Coverage

EPCA provides DOE with the authority to consider and prescribe new energy 

conservation standards for electricity used to circulate air through duct work. (42 U.S.C. 

6295(f)(4)(D)) In the preliminary analysis, DOE defined a “furnace fan” as “any 

electrically-powered device used in residential, central heating, ventilation, and airconditioning (HVAC) systems for the purpose of circulating air through duct work.” 77 

FR 40530, 40532 (July 10, 2012). DOE considered a typical furnace fan as consisting of 

a fan motor and its controls, an impeller, and a housing, all of which are components of 

an HVAC product that includes additional components, including the cabinet.

Interested parties disagreed with DOE’s approach to set component-level 

regulations, which they warned would ignore system effects that could impact both fan 

and system energy consumption. CA IOUs suggested that “furnace fan” be defined as a 

unit consisting of a fan motor, its controls, an impeller, shroud, and cabinet that houses 

all of the heat exchange material for the furnace. According to CA IOUs, their suggested 

definition would reduce ambiguity and ensure that the components in HVAC products 

that affect furnace fan energy consumption are considered in this rulemaking. (CA IOUs, 

No. 56 at p. 1) Ingersoll Rand went further and suggested a system-level regulatory 

approach, where the entire duct and furnace system would be regulated, maintaining that 

such approach would produce a more useful metric to consumers when evaluating 

performance. (Ingersoll Rand, No. 43 at p. 42) Conversely, NEEP observed that by 

regulating fan energy use separately, the individual efficiency of the component is 

considered when it would otherwise be ignored by manufacturers. (NEEP, No. 51 at p. 
53

3) Rheem commented that some designs require higher air velocity to improve heat 

transfer but also require more electrical consumption to drive the blower at the higher 

velocity. (Rheem, No. 43 at p. 63) Rheem commented that turbulent flow is 

considerably more efficient for heat transfer than laminar flow, but more energy is 

required to move turbulent air. (Rheem, No. 54 at p. 10) Similarly, Lennox and 

Morrison commented that in order to improve heating and cooling efficiency, often a 

second heating coil is added, but this also leads to higher electrical consumption by the 

furnace fan. (Lennox, No. 43 at p. 64; Morrison, No. 43 at p. 64) Ingersoll Rand argued 

that as the efficiency of the furnace fan motor increases, it dissipates less heat and a 

furnace consumes more gas to compensate and meet house heat load. (Ingersoll Rand, 

No. 43 at p. 66)

In response, DOE is required by EPCA to consider and prescribe new energy 

conservation standards or energy use standards for electricity used for purposes of 

circulating air through duct work. (42 U.S.C. 6295(f)(4)(D)) Pursuant to this statutory 

mandate, DOE plans to establish energy conservation standards for circulation fans used 

in residential central HVAC systems. DOE does not interpret its authority as including 

the duct work itself. DOE is aware that component-level regulations could have systemlevel impacts. Accordingly, DOE plans to conduct its analyses and set standards in such 

a way that meets the statutory requirements set forth by EPCA without ignoring system 

effects, which otherwise might compromise the thermal performance of the HVAC 

products that incorporate furnace fans. For example, the proposed test procedure outlined 

in the April 2, 2013 SNOPR specifies that the furnace fan be tested as factory-installed in 
54

the HVAC product, thereby enabling the rating metric to account for system effects on 

airflow delivery and, ultimately, energy performance. 78 FR 19606, 19612-13. In 

addition, the product class structure allows for differentiation of products with designs 

that achieve higher thermal efficiency but may have lower fan performance, such as 

condensing furnaces. 

The scope of the preliminary analysis included furnace fans used in furnaces, 

modular blowers, and hydronic air handlers. Even though DOE has interpreted its 

authority as encompassing any electrically-powered device used in residential HVAC 

products to circulate air through duct work, the preliminary analysis scope excluded 

single package central air conditioners (CAC) and heat pumps (HP) and split-system 

CAC/HP blower-coil units. At the time of the preliminary analysis, DOE determined that 

it may consider these and other such products in a future rulemaking as data and 

information to develop credible analyses becomes available. 

Efficiency advocates expressed concern at the exclusion of packaged and splitsystem CAC products because they believe current standards for these products do not 

maximize the technologically feasible and economically justified energy savings for the 

circulation fans integrated in these products. ASAP and Adjuvant stated that the metric 

used for CAC products does not accurately represent field conditions and requested that 

they be added to the scope. (ASAP, No. 43 at p. 17; Adjuvant, No. 43 at p. 39) 

Specifically, efficiency advocates found that the reference external static pressures 

(ESPs) used to determine the seasonal energy efficiency ratio (SEER) and heating 
55

seasonal performance factor (HSPF), which already rate these products, did not reflect 

field-installed conditions. (ASAP, No. 43 at p. 38; Earthjustice, No. 49 at p. 1) In a joint 

comment from ACEEE, ASAP, NCLC, NEEA, and NRDC (hereafter referred to as 

ACEEE, et al.), in addition to a comment from CA IOU, efficiency advocates and 

utilitiesstated that the reference ESP of 0.1 – 0.2 in. w.c. was too low when compared to 

the average field ESP of 0.73 in. w.c. identified in the TSD. (ACEEE, et al., No. 55 at p. 

1; CA IOU, No. 56 at p. 2) ACEEE, et al. also noted that SEER and HSPF do not 

account for continuous-circulation operation which is expected to increase as stricter 

building codes call for tighter building envelopes. (ACEEE, et al., No. 55 at p. 2; CA 

IOU, No. 56 at p. 3) NEEP commented that SEER and HSPF do not reward for any 

efficiency gains made by the furnace fan. (NEEP, No. 51 at p. 3) By excluding these 

products from the analysis, ACEEE, et al. argued that DOE is ignoring a significant 

fraction of the furnace fan market. (ACEEE, et al., No. 55 at p. 1)

In contrast, many manufacturers believe that the scope of coverage presented in 

the preliminary analysis exceeds the statutory authority granted to DOE because the 

statutory language for this rulemaking is found in 42 U.S.C 6295(f) under the title 

“Standards for furnaces and boilers.” Consequently, manufacturers stated that DOE

should not include any non-furnace products such as central air conditioners, heat pumps, 

or condensing unit-blower-coil combinations. Lennox, Mortex, and First Co. explicitly 

stated that no equipment other than residential furnaces and boilers should be included, as 

doing so is beyond DOE’s statutory authority. (Lennox, No. 47 at p. 4; Mortex, No. 59 at 

p. 1; First Co., No. 53 at p. 1) Mortex further stated that the electricity used to circulate 
56

air through duct work is already adequately accounted for in existing energy efficiency 

metrics, and that if DOE insists on proceeding on new energy conservation standards for 

furnace fans, DOE should limit it to residential warm air furnaces until there is a change 

made by Congress to include additional products. (Mortex, No. 59 at p. 1) Goodman and 

Ingersoll Rand argued that packaged equipment and air handlers should not be included 

in the scope because the electrical energy consumed by these products to circulate air 

through duct work is already accounted for in SEER and HSPF. (Goodman, No. 50 at p. 

7; Ingersoll Rand, No. 57 at pp. A-1) Rheem and Morrison recommended that hydronic 

air handlers and modular blowers be excluded from the scope because these products 

have not been previously covered by an energy conservation standard and cannot be 

defined as furnaces. (Morrison, No. 43 at p. 94; Morrison, No. 58 at p. 9; Rheem, No. 54 

at p. 2)

Manufacturers also argued that the electricity used to circulate air through duct 

work for warm air furnaces with cooling capabilities is already covered by SEER. 

(Goodman, No. 50 at p. 7; Mortex, No. 59 at p. 1) Additionally, for a residential warm 

air furnace, Mortex stated that Eae already accounts for heating-mode-related energy 

consumption, including energy consumed by the fan. (Mortex, No. 59 at p. 2) 

Additionally, by including annual furnace fan cooling and heating electricity 

consumption in the FER metric, central air conditioner and heat pumps products will be 

covered by multiple metrics. (Goodman, No. 50 at p. 6; Mortex, No. 59 at p. 2)
57

As discussed in the furnace fan test procedure April 2, 2013 SNOPR, DOE notes

that, although the title of this statutory section refers to “furnaces and boilers,” the 

applicable provision at 42 U.S.C. 6295(f)(4)(D) was written using notably broader 

language than the other provisions within the same section. 78 FR 19606, 19611.

Specifically, that statutory provision directs DOE to “consider and prescribe energy 

conservation standards or energy use standards for electricity used for purposes of 

circulating air through duct work.” Such language could be interpreted as encompassing 

electrically-powered devices used in any residential HVAC product to circulate air 

through duct work, not just furnaces, and DOE has received numerous comments on both 

sides of this issue. At the present time, however, DOE is only proposing energy 

conservation standards for those circulation fans that are used in residential furnaces and 

modular blowers (see discussion below). As a result, DOE is not addressing public 

comments that pertain to fans in other types of HVAC products. The following list 

describes the furnace fans which DOE proposes to address in this rulemaking.

• Products addressed in this rulemaking

•

: furnace fans used in weatherized and nonweatherized gas furnaces, oil furnaces, electric furnaces, and modular blowers.

Products not addressed in this rulemaking: furnace fans used in other products, 

such as split-system CAC and heat pump air handlers, through-the-wall air 

handlers, small-duct, high-velocity (SDHV) air handlers, energy recovery 

ventilators (ERVs), heat recovery ventilators (HRVs), draft inducer fans, exhaust 

fans, or hydronic air handlers.
58

DOE is using the term “modular blower” to refer to HVAC products powered by 

single-phase electricity that comprise an encased circulation blower that is intended to be 

the principal air circulation source for the living space of a residence. A modular blower 

is not contained within the same cabinet as a residential furnace, CAC, or heat pump. 

Instead, modular blowers are designed to be paired with separate residential HVAC 

products that provide heating and cooling, typically a separate CAC/HP coil-only unit. 

DOE finds that modular blowers and electric furnaces are very similar in design. In many 

cases, the only difference between a modular blower and electric furnace is the presence 

of an electric resistance heating kit. DOE is aware that some modular blower 

manufacturers offer electric resistance heating kits to be installed in their modular blower 

models so that the modular blowers can be converted to stand-alone electric furnaces. In 

addition, FER values for modular blowers can be easily calculated using the proposed test 

procedure. DOE proposes to address the furnace fans used in modular blowers in this 

rulemaking for these reasons. 

After considering available information and public comments regarding fan 

operation in cooling mode, DOE maintains its proposal to account for the electrical 

consumption of furnace fans while performing all active mode functions (i.e., heating, 

cooling, and constant circulation). DOE recognizes that furnace fans are used not just for 

circulating air through duct work during heating operation, but also for circulating air 

during cooling and constant-circulation operation. DOE anticipates that higher airflowcontrol settings are factory set for cooling operation. Therefore, DOE expects that the 

electrical energy consumption of a furnace fan is generally higher while performing the 
59

cooling function. Additionally, the design of the fan as well as its typical operating 

characteristics (i.e., ESP levels during operation in different modes) is directly related to 

the performance requirements in cooling mode. DOE is also concerned that excluding 

some functions from consideration in rating furnace fan performance would incentivize 

manufacturers to design fans that are optimized to perform efficiently at the selected 

rating airflow-control settings but that are not efficient over the broad range of field 

operating conditions. In DOE’s view, in order to obtain a complete assessment of overall 

performance and a metric that reflects the product’s electrical energy consumption during 

a representative average use cycle, the metric must account for electrical consumption in 

a set of airflow-control settings that spans all active mode functions. This would ensure a 

more accurate accounting of the benefits of improved furnace fans. 

DOE is aware that fan electrical consumption is accounted for in the SEER and 

HSPF metrics that DOE uses for CAC and heat pump products. However, DOE does not 

agree with manufacturers’ comments suggesting that the electricity used to circulate air 

through duct work is already adequately accounted for in existing energy efficiency 

metrics of other covered products, particularly the SEER and HSPF metrics of CAC/HP.

This is because SEER and HSPF are used to test cooling and heating performance of a 

CAC or heat pump product, whereas FER rates airflow performance of a furnace fan 

product. While furnace fan airflow performance contributes to cooling and heating 

performance, manufacturers can improve SEER and HSPF without improving fan 

performance. In short, SEER and HSPF-based standards do not directly regulate the 

efficiency of furnace fans, as required by 42 U.S.C. 6295(f)(4)(D). DOE recognizes that 
60

the energy savings in cooling mode from higher-efficiency furnace fans used in some 

higher-efficiency CAC and heat pumps is already accounted for in the analysis of energy 

conservation standards for those products. As a result, DOE conducted its analysis in this 

current rulemaking in such a way as to avoid double-counting these benefits by excluding 

furnace fan electricity savings that were already included in DOE’s analyses for CAC and 

heat pump products. Chapter 7 of the NOPR TSD provides a more detailed discussion of 

this issue.

2. Product Classes

DOE identified nine key product classes in the preliminary analysis, each of 

which was assigned its own candidate energy conservation standard and baseline FER. 

DOE identified twelve additional product classes that represent significantly fewer 

shipments and significantly less overall energy use. DOE grouped each non-key product 

class with a key product class to which it is closely related in application-specific design

and internal structure (i.e., the primary criteria used to differentiate between product 

classes). DOE assigned the analytical results of each key product class to the non-key 

product classes with which it is grouped because DOE expected the energy use and 

incremental manufacturer production costs (MPCs) of improving efficiency to be similar 

within each grouping. Table IV.1 lists the 21 preliminary analysis product classes. 

Table IV.1: Preliminary Analysis Product Classes

Key Product Class Additional Product Classes

Non-Weatherized, Non-Condensing Gas 

Furnace Fan (NWG-NC)

Non-weatherized, Condensing Gas Furnace 
61

Fan (NWG-C)

Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC)

Weatherized, Non-Condensing Oil Furnace 

Fan (WO-NC)

Weatherized Electric Furnace/Modular Blower 

Fan (WEF/WMB)

Manufactured Home Weatherized Gas Furnace 

Fan (MH-WG)

Manufactured Home Weatherized Oil Furnace 

Fan (MH-WO)

Manufactured Home Weatherized Electric 

Furnace/Modular Blower Fan (MHWEF/WMB)

Non-weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC)

Non-Weatherized, Condensing Oil Furnace 

Fan (NWO-C)

Manufactured Home Non-Weatherized Oil 

Furnace Fan (MH-NWO)

Non-weatherized Electric Furnace / Modular 

Blower Fan (NWEF/NWMB)

Heat/Cool Hydronic Air Handler Fan (HAHHC)

Heat-Only Hydronic Air Handler Fan (HAHH)

Hydronic Air Handler Fan with Coil (HAH-C)

Manufactured Home Heat/Cool Hydronic Air 

Handler Fan (MH-HAH-HC)

Manufactured Home Heat-Only Hydronic Air 

Handler Fan (MH-HAH-H)

Manufactured Home Hydronic Air Handler 

Fan with Coil (MH-HAH-C)

Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWGNC)

Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fan (MH-NWG-C)

Manufactured Home Electric Furnace/ 

Modular Blower Fan (MH-EF/MB)

Goodman and Rheem agreed that the selected key product classes are an accurate 

representation of the market, with Rheem commenting that it manufactures six of the nine 

proposed key product classes. (Goodman, No. 50 at p. 1; Rheem, No. 54 at p. 4) NEEP 

found that the proposed key product class structure appropriately allows for 
62

differentiation of products with higher thermal efficiency. (NEEP, No. 51 at p. 2) 

Goodman, Rheem, and Ingersoll Rand disagreed with DOE’s approach to specify 

additional product classes within a key product class, stating that shipment data indicates 

that the additional product classes are too small to be covered. (Goodman, No. 50 at p. 1; 

Ingersoll Rand, No. 57 at pp. A-1; Rheem, No. 54 at p. 4)

Mortex expressed concern that the key product classes only represent furnace fan 

products with the most shipments and, if the energy conservation standards are set 

inappropriately high for these key product classes, the additional products classes (some 

of which serve unique applications) may also have trouble meeting any scaled standards 

levels based thereon. (Mortex, No. 43 at p. 53) 

DOE agrees with Goodman, Rheem, and Ingersoll Rand that the additional 

product classes represent products with few and in many cases, no shipments. Individual 

discussions with manufacturers for the MIA confirm DOE’s assumption. Additionally, 

review of the AHRI appliance directory reveals that only two of the additional product 

classes have active models listed: (1) manufactured home weatherized gas furnace fans 

(MH-WG) and (2) manufactured home non-weatherized oil furnace fans (MH-NWO). 

The number of active basic models for MH-WG and MH-NWO are 4 and 16, 

respectively. For this reason, DOE proposes to eliminate the additional product classes

except for MH-WG and MH-NWO. Due to the limited number of basic models for MHWG and MH-NWO, DOE did not have data to directly analyze and establish standards 

for these additional product classes. As a result, DOE proposes to reserve space to 
63

establish standards for MH-WG and MH-NWO furnace fans in the future as sufficient 

data become available.

As discussed previously in section IV.A.1, DOE proposes to also exclude 

hydronic air handlers from consideration in this rulemaking, thereby further reducing the 

number of product classes addressed by this rulemaking to eight. Table IV.2 includes a 

list of the revised set of product classes for residential furnace fans.

Table IV.2: Proposed Product Classes for Residential Furnace Fans

Product Class

Non-Weatherized, Non-Condensing Gas Furnace Fan (NWG-NC)

Non-Weatherized, Condensing Gas Furnace Fan (NWG-C)

Weatherized Non-Condensing Gas Furnace Fan (WG-NC)

Non-Weatherized, Non-Condensing Oil Furnace Fan (NWO-NC)

Non-Weatherized Electric Furnace / Modular Blower Fan (NWEF/NWMB)

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan 

(MH-NWG-NC)

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan (MHNWG-C)

Manufactured Home Electric Furnace / Modular Blower Fan (MH-EF/MB)

Manufactured Home Weatherized Gas Furnace Fan (MH-WG)

Manufactured Home Non-Weatherized Oil Furnace Fan (MH-NWO)

3. Technology Options

In the preliminary analysis, DOE considered seven technology options that would 

be expected to improve the efficiency of furnace fans: (1) fan housing and airflow path 

design modifications; (2) high-efficiency fan motors (in some cases paired with multistage or modulating heating controls); (3) inverter-driven permanent-split capacitor

(PSC) fan motors; (4) backward-inclined impellers; (5) constant-airflow brushless 

permanent magnet (BPM) motor control relays; (6) toroidal transformers; and (7) 
64

switching mode power supplies. Since that time, DOE notes that its proposed scope of 

coverage no longer includes hydronic air handlers, the only furnace fan product class for 

which standby mode and off mode energy consumption is not accounted for in a separate 

DOE rulemaking. Consequently, the standby mode and off mode technology options 

(options 5 through 7 in the list above) are no longer applicable, because energy 

consumption in those modes is already fully accounted for in the DOE energy 

conservation standards rulemaking for residential furnaces and residential CAC and HP 

for the remaining proposed product classes. 76 FR 37408 (June 27, 2011); 76 FR 67037 

(Oct. 31, 2011). In addition, DOE found that multi-staging and modulating heating 

controls can also improve FER, so hence DOE evaluated multi-staging and modulating 

heating controls as a separate technology option for the NOPR. Thus, the resultant list of 

potential technology options identified for the NOPR include: (1) fan housing and airflow 

path design modifications; (2) inverter-driven PSC fan motors; (3) high-efficiency fan 

motors; (4) multi-staging and modulating heating controls; and (5) backward-inclined 

impellers. Each identified technology option is discussed below and in more detail in 

chapter 3 of the NOPR TSD.

a. Fan Housing and Airflow Path Design Improvements

The preliminary analysis identified fan housing and airflow path design 

modifications as potential technology options for improving the energy efficiency of 

furnace fans. Optimizing the shape of the inlet cone18

 18 The inlet cone is the opening of the furnace fan housing through which return air enters the housing. The 

inlet cone is typically curved inward, forming a cone-like shape around the perimeter of the opening, to 

provide a smooth surface to direct air from outside the housing to inside the housing and into the impeller.

of the fan housing, minimizing 
65

gaps between the impeller and fan housing inlet, and optimizing cut-off location and 

manufacturing tolerances were identified as enhancements to a fan housing that could 

improve efficiency. Separately, modification of elements in the airflow path, such as the 

heat exchanger, could reduce internal static pressure and as a result, reduce energy 

consumption. Manufacturer input was requested to determine the use and practicability 

of these potential technology options. 

ASAP expressed support for DOE’s consideration of the aerodynamics of furnace 

fan cabinets in its initial analysis of technology options. (ASAP, No. 43 at p. 16) In 

particular, ASAP cited a 2003 GE study19 that quantified energy savings produced by 

modifying fan housing as justification for its inclusion as an option. (ASAP, No. 43 at p. 

71) ACEEE, et al. also cited a Lawrence Berkeley National Laboratory (LBNL) study20

that linked changes in efficiency to modifying the clearance between fan housing and an 

air handler cabinet wall. (ACEEE, et al., No. 55 at p. 2) According to Ingersoll Rand, 

there are proprietary fan housing designs on the market that already improve mechanical 

efficiency by 10-20 percent at a cost much lower than the cost to implement highefficiency motors or make changes to the impeller and its tolerances. (Ingersoll Rand, 

No. 57 at pp. A-3)

DOE is aware of the studies cited by ASAP and ACEEE, as well as the 

proprietary housing design mentioned by Ingersoll Rand. For the NOPR, DOE decided 

 19 Wiegman, Herman, Final Report for the Variable Speed Integrated Intelligent HVAC Blower (2003) 

(Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf). 20 Walker, I.S, State-of-the-art in Residential and Small Commercial Air Handler Performance (2005) 

LBNL 57330 (Available at: http://epb.lbl.gov/publications/pdf/lbnl-57330plus.pdf). 
66

to include fan housing design modifications as a technology to be evaluated further in the 

screening analysis because of these indications that each could improve fan efficiency. 

Many interested parties requested that DOE keep airflow path design as a 

technology option. (Unico, No. 43 at p. 72; EPA, No. 43 at p. 76; ASAP, No. 43 at p. 77; 

CA IOU, No. 56 at p. 3; ACEEE, et al., No. 55 at p. 2) Manufacturers stated that 

improving airflow path design, like modifying fan housing, is highly cost-effective when 

compared to other enhancements. (Rheem, No. 43 at p. 74; Lennox, No. 43 at p. 74; 

Adjuvant, No. 43 at p. 74) Lennox noted a 10-20 percent improvement in efficiency 

could be achieved by changing the airflow path when evaluated against a baseline design 

coupled with a PSC motor. (Lennox, No. 47 at p. 9; Morrison, No. 58 at p. 5) However, 

the EPA questioned whether considering modified airflow path as a technology option 

was appropriate when DOE plans to only regulate the fan itself and not the entire air 

handler. (EPA, No. 43 at p. 62)

While Morrison agreed that airflow path and fan housing design affect 

performance and efficiency, it argued that establishing a baseline design (over which to 

determine improvement) might be difficult because parameters used to select an 

individual manufacturer’s design may have taken into account considerations outside the 

scope of the furnace fan rulemaking. (Morrison, No. 43 at p. 75) Rheem suggested that 

AHRI should present airflow path and fan housing design data to the DOE in order to 

help establish the two technology options. (Rheem, No. 43 at p. 79)
67

Similar to the fan housing design modifications, DOE decided to include airflow 

path design as a technology option to be evaluated further in the screening analysis as a 

result of these claims of potential fan efficiency improvement. In response to the 

comment received from the EPA, DOE believes including airflow path design is 

appropriate because of its potential to impact fan efficiency. Airflow path design will 

impact the proposed rating metric, FER, because DOE is proposing to test the furnace fan 

as it is factory installed in the HVAC product. As discussed previously in section IV.A.1, 

DOE has conducted its NOPR analyses in such a way as to meet the statutory 

requirements set forth by EPCA without ignoring system effects. Chapter 3 of the NOPR 

TSD provides more technical detail regarding fan housing and airflow path design 

modifications and how these measures could reduce furnace fan energy consumption.

b. Inverter Controls for PSC Motors

In the preliminary analysis, DOE identified inverter-driven PSC motors as a 

technology option. DOE is aware of a series of non-weatherized gas furnaces with 

inverter-driven PSC furnace fan motors that was once commercially available. DOE has 

determined that inverter controls provide efficiency improvement by offering additional

intermediate airflow-control settings and a wider range of airflow-control settings (i.e.,

lower turndown ratio) than conventional PSC controls. The additional airflow-control 

settings and range enable the furnace fan to better match demand. Publically-available 

performance data for the series of furnaces using inverter-driven PSCs demonstrate that 

the use of this technology results in reduced FER values compared to baseline PSC 
68

furnace fans. Consequently, DOE considered inverter-driven PSCs as a technologically 

feasible option for reducing furnace fan energy consumption.

Manufacturers were opposed to listing inverter-driven PSCs as a viable 

technology option. Goodman commented that there are alternate, more cost-effective 

solutions to reduce energy consumption for air-moving systems, such as airflow path 

design. (Goodman, No. 50 at p. 2) Ingersoll Rand and Morrison commented that the 

small energy savings provided by inverter-driven PSCs are not worth the added cost and 

complexity when ECM (referred to herein by DOE as a “constant-airflow BPM motor”)

technology is available at a comparable cost and greater efficiency. (Ingersoll Rand, No. 

57 at pp. A-1; Morrison, No. 58 at p. 2; Rheem, No. 54 at p. 6) Morrison suggested that 

the motor industry was seeking lower-cost alternatives to ECM motors, such as fractional 

horsepower switched reluctance motors or inverter-driven PSCs, but that no low-cost 

alternative currently exists. (Morrison, No. 58 at p. 2) NMC, a motor manufacturer, 

went further, stating that inverter-driven PSC motors using wave chopper controls are not 

typically more efficient than multi-tap PSC motors and that they are not a practical 

alternative to brushless permanent magnet technology. (NMC, No. 60 at p. 2)

DOE recognizes manufacturers’ concerns with the cost-effectiveness of inverterdriven PSC fan motors. However, DOE decided to include inverter-driven PSC motors 

as a technology option to be evaluated further in the screening analysis due to their 

potential to reduce furnace fan energy consumption. DOE evaluates in the engineering 

analysis the cost-effectiveness of all energy-saving technology options that are not 
69

screened out. Chapter 3 of the NOPR TSD provides a more detailed discussion of 

inverter-driven PSC furnace fan motors. 

c. High-Efficiency Motors

In the preliminary analysis, DOE identified four motor types that are typically 

used in furnace fan assemblies: (1) PSC motors; (2) PSC motors that have more than 3 

airflow-control settings and sometimes improved materials (hereinafter referred to as 

“improved PSC” motors); (3) constant-torque BPM motors (often referred to as “X13 

motors”); and (4) constant-airflow BPM motors (often referred to as “ECMs”).21

• Functioning more efficiently at a given operating condition;

 DOE 

finds that furnace fans using high-efficiency motor technology options operate more 

efficiently than furnace fans using baseline PSC motors by:

• Maintaining efficiency throughout the expected operating range; and

• Achieving a lower turndown ratio22 (i.e., ratio of airflow in lowest setting to 

airflow in highest setting).

Ingersoll Rand commented that a PSC motor will use less energy at higher static 

pressures, while an ECM increases energy use as static pressure rises. Ingersoll Rand 

stated that as a result, understanding the impact of switching to an ECM at higher static 

pressures may confuse the consumer. (Ingersoll Rand, No. 43 at p. 67)

 21 “ECM” and “X13” refer to the constant-airflow and constant torque (respectively) BPM offerings of a 

specific motor manufacturer. Throughout this notice, DOE will refer to these technologies using generic 

terms, which are introduced in the list above. However, DOE’s summaries of interested-party submitted 

comments include the terminology used by the interested party when referring to motor technologies.

22 A lower turndown ratio can significantly improve furnace fan efficiency because fan input power has a 

cubic relationship with airflow.
70

DOE is aware that consumers may be confused when BPM motors (referred to as 

ECMs by Ingersoll Rand above) consume more energy than PSC motors at higher static 

pressures, because consumers expect BPM motors to consume less energy than PSC 

motors under the same operating conditions. In general, input power to the fan motor 

increases as static pressure increases to provide a given airflow (i.e., the fan motor has to 

work harder in the face of increased resistance to provide a desired amount of air).23

DOE agrees with Ingersoll Rand that as static pressure increases, input power to a PSCdriven furnace fan will decrease, which is seemingly contradictory to the principle 

described above. DOE finds that input power to a PSC-driven furnace fan decreases 

because the airflow provided by the fan decreases as static pressure rises (i.e., the fan 

does not have to work as hard in the face of increased resistance because the fan is not 

providing as much air). Input power to a constant-airflow BPM motor-driven furnace fan, 

on the other hand, will increase as static pressure rises because the BPM motor-driven fan 

is designed to maintain the desired level of airflow. Recognizing that this behavior could 

complicate comparing the relative performance of these motor technologies, DOE’s 

proposed rating metric, FER, is normalized by airflow to result in ratings that are in units 

of watts/cfm. DOE believes that a comparison using a watts/cfm metric will mitigate 

confusion by accurately reflecting that even though a constant-airflow BPM motor is 

consuming more power at higher statics, it is also providing more airflow, which is useful 

to the consumer.

 23 See chapter 3 of the TSD for more details regarding fan operation.
71

Interested parties recognized the benefits provided by constant-torque and

constant-airflow BPM motors. NMC agreed that variable-speed technology is useful in 

furnace fan applications, because the airflow settings can be adjusted and optimized for a 

range of static pressure levels. (NMC, No. 60 at p. 1) NEEP supported DOE's proposal 

for an efficiency level based on a constant-torque ECM as part of the furnace fan 

analysis, given that these motors are widely available and less expensive than "full 

blown" ECM motors. (NEEP, No. 51 at p. 3) Morrison commented that ECM 

technology offers the best cost for performance value. (Morrison, No. 58 at p. 2) 

Interested parties agreed that the BPM motor variations (i.e., constant-torque and 

constant-airflow) and inverter-driven PSC motors generally have lower turndown ratios 

than a three-speed PSC motor. Table IV.3 contains the turndown ratio estimates supplied 

publicly by interested parties. Manufacturers generally provided similar feedback during 

interviews. NMC stated that the turndown ratios achieved by ECM technology allow for 

continuous circulation at optimal CFM levels, unlike PSC options, which cannot achieve 

low enough CFM. (NMC, No. 60 at p. 1) Lennox commented that including constant 

circulation as part of FER will penalize PSCs and artificially inflate the performance of

ECMs. (Lennox, No. 47 at p. 9) Ingersoll Rand stated that furnace fan turndown ability 

is limited by the physical characteristics of the impeller and bearings. (Ingersoll Rand, 

No. 57 at pp. A-2)
72

Table IV.3: Stakeholder Estimated Fan Motor Turndown Ratios

Stakeholder PSC

Wave 

chopper 

controller 

PSC

Constanttorque ECMConstantairflow ECM

NMC 

(NMC, No. 60 at p. 1) 0.45 0.36 0.45 0.20

Goodman 

(Goodman, No. 50 at p. 2) 0.70-0.75 - 0.40-0.50 0.25-0.35

Rheem 

(Rheem, No. 54 at p. 6) 0.60 - 0.30 0.20

Overall, comments regarding high-efficiency motor turndown ratio validated 

DOE’s expectation that lower turndowns are associated with improved PSCs, inverterdriven PSCs, and BPM motor variations. These motors consume significantly less 

energy over a typical residential furnace fan operating range. DOE disagrees with 

Lennox that including constant circulation as part of FER would “artificially” inflate the 

performance of BPM motors compared to PSC motors, because DOE concludes that 

there is non-trivial use of this mode by consumers. As part of the test procedure 

rulemaking, DOE estimates that on average, consumers operate furnace fans in constantcirculation mode 400 hours annually. This estimate is used to weight fan constantcirculation electrical energy consumption in FER. Excluding this mode from the rating 

metric would underestimate the potential efficiency improvements of technology options, 

such as BPM motors, that could reduce fan electrical consumption while performing this 

function. A detailed discussion of DOE’s estimate for national average constantcirculation furnace fan operating hours can be found in the test procedure NOPR. 77 FR 

28674, 28682 (May 15, 2012). DOE did not revise these estimates in the test procedure 

SNOPR published on April 2, 2013. 78 FR 19606.
73

d. Multi-Stage or Modulating Heating Controls

In the preliminary analysis (77 FR 40530 (July 10, 2012)), DOE identified twostage and modulating heating controls (hereinafter collectively referred to as “multistage” controls) as a method of reducing residential furnace fan energy consumption. 

Multi-stage furnaces typically operate at lower heat input rates and, in turn, a lower 

airflow-control setting for extended periods of time compared to single-stage furnaces to 

heat a residence.24 Due to the cubic relationship between fan input power and airflow, 

operating at the reduced airflow-control setting reduces overall fan electrical energy 

consumption for heating despite the extended hours. In the preliminary analysis, DOE 

analyzed multi-staging controls paired with use of a constant-airflow BPM fan motor as 

one technology option, because DOE found the two to be almost exclusively used 

together in commercially-available products.

ASAP, ACEEE, NCLC, NRDC, and NEEA encouraged DOE to consider X13-

level motors applied with multi-stage furnace controls as a technology option. ACEEE et 

al. added that they expect an X13-level motor paired with multi-stage furnace controls to 

operate at a lower speed (corresponding to the lower burner output) in heating mode for a 

greater number of hours compared to an X13-level motor applied with single-stage 

furnace controls. According to ACEEE et al., the net effect of operating at a lower speed 

for a greater number of hours could be electricity savings, because motor power 

decreases with the cube of the speed. (ACEEE et al., No. 55 at p. 3) Rheem commented

 24 A further discussion of multi-stage heating controls is found in chapter 3 of the preliminary analysis 

TSD, which can be found at the following web address: 

http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-0037. 
74

that it does use modulating furnace controls with PSC and X13 motors, not just ECM 

motors. (Rheem, No. 43 at p. 81) During interviews, other manufacturers also 

commented that multi-stage heating controls can be and are used regardless of motor 

type.

Based on comments from Rheem and other manufacturers, DOE recognizes that 

multi-stage controls can be paired with other motor types, not just constant-airflow BPM 

motors. DOE agrees with ACEEE et al. that implementing multi-stage heating controls 

independent of motor type could result in residential furnace fan efficiency 

improvements. Consequently, DOE has decided to de-couple multi-staging controls from 

the constant-airflow BPM motor technology option. Accordingly, DOE has evaluated 

multi-staging controls as a separate technology option for the NOPR. 

e. Backward-Inclined Impellers

DOE determined in the preliminary analysis that using backward-inclined 

impellers could lead to possible residential furnace fan energy savings. Although limited 

commercial data regarding backward-inclined impeller performance were available, DOE 

cited research by General Electric that showed large improvements in efficiency were 

achievable under certain operating conditions.25

Morrison disagreed with the DOE’s findings, stating that literature indicates there 

are varying degrees of performance improvement when backward-inclined impellers are 

 25 Wiegman, Herman, Final Report for the Variable Speed Integrated Intelligent HVAC Blower (2003) 

(Available at: http://www.osti.gov/bridge/servlets/purl/835010-GyvYDi/native/835010.pdf).
75

used in place of forward-curved impellers. (Morrison, No. 43 at p. 132) Specifically, 

Morrison cited an LBNL study26 where a furnace with a backward-inclined impeller 

exhibited no efficiency gains compared to a low efficiency forward-curved impeller.

(Morrison, No. 58 at p. 3) According to Morrison, limitations on operating speed also 

make it necessary to couple backward-inclined impellers with high-efficiency motors. 

(Morrison, No. 58 at p. 2) Other commenters asserted that the optimal range of operation 

for backward-inclined impellers may fall outside that of typical residential furnace fan 

use. (SCE, No. 43 at p. 59; Ingersoll Rand, No. 57 at p. A-3; EEI, No. 60 at p. 2; CA 

IOU, No. 56 at p. 4) CA IOU testing showed that backward-inclined impellers are more 

sensitive to external static pressures, which could also limit their use. (CA IOU, No. 56 

at p. 4) Rheem stated that improved efficiency of backward-inclined impellers is often 

achieved at mid-flow rates and high static levels. (Rheem, No. 54 at p. 7) Rheem 

commented that research by the replacement part manufacturer (Lau) reveals that 

backward-inclined impellers, at diameters typically used in residential applications, offer 

no significant efficiency improvements. (Rheem, No. 43 at p. 132)

Ebm-papst, a company that provides custom air-movement products, offered a 

diverging opinion from most manufacturers regarding the energy-saving potential of 

backward-inclined impellers. That company retrofitted several HVAC products with 

furnace fan assemblies that incorporated backward-inclined impellers without increasing 

cabinet size and tested them. Depending on the application and the external static 

pressure load (typically 0.5 in.w.c. to 1 in.w.c.), ebm-papst found that the backward-

 26 Walker, I.S., Laboratory Evaluation of Residential Furnace Blower Performance (2005) (Available at: 

http://www.escholarship.org/uc/item/7tx9c86s#page-1).
76

inclined impeller achieved input power reductions from 15-30 percent. (ebm-papst Inc., 

No. 52 at p. 1) Ebm-papst did note that for backward-inclined impellers to match the 

performance of forward-curved impellers without increasing impeller dimensions, fan 

speed must increase. However, ebm-papst did not anticipate that this would be an 

obstacle to implementation using available motor technologies. (ebm-papst Inc., No. 52 

at p. 1) 

DOE recognizes that backward-inclined impellers may not be more efficient than 

forward-curved impellers under all operating conditions and that there may be

considerable constraints to implementation. However, the GE prototype and ebm-papst 

prototype both demonstrate that significant energy consumption reduction is achievable 

at some points within the range of residential furnace fan operation. For this reason, 

DOE has included backward-inclined impellers as a technology option to be evaluated 

further in the screening analysis, where DOE investigates any other concerns regarding 

the use of a technology option, such as the practicability to manufacture or impacts on 

reliability, utility, and safety in the screening analysis.

B.

DOE uses the following four screening criteria to determine which technology

options are suitable for further consideration in an energy conservation standards 

rulemaking:

Screening Analysis

1. Technological feasibility. Technologies that are not incorporated in commercial 

products or in working prototypes will not be considered further.
77

2. Practicability to manufacture, install, and service. If it is determined that mass 

production and reliable installation and servicing of a technology in commercial 

products could not be achieved on the scale necessary to serve the relevant market 

at the time of the compliance date of the standard, then that technology will not be 

considered further.

3. Impacts on product utility or product availability. If it is determined that a 

technology would have significant adverse impact on the utility of the product to 

significant subgroups of consumers or would result in the unavailability of any 

covered product type with performance characteristics (including reliability), 

features, sizes, capacities, and volumes that are substantially the same as products 

generally available in the United States at the time, it will not be considered 

further.

4. Adverse impacts on health or safety. If it is determined that a technology would

have significant adverse impacts on health or safety, it will not be considered 

further.

(10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b))

In sum, if DOE determines that a technology, or a combination of technologies,

fails to meet one or more of the above four criteria, it will be screened out from further 

consideration in the engineering analysis. The reasons for eliminating any technology are 

discussed below.
78

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

DOE screened out fan housing and airflow path design improvements in the 

preliminary analysis. DOE had little quantitative data to correlate specific fan housing 

alterations with efficiency improvements. Additionally, DOE anticipated that any 

improvements to airflow path design that would result in fan efficiency improvement 

would require an increase in furnace fan cabinet size or negatively impact heat exchanger 

performance, thereby compromising the practicability to manufacture or reducing utility 

to consumers.

Interested parties stated many concerns associated with modifying airflow path 

designs to reduce residential furnace fan electrical energy consumption. Morrison 

provided an example illustrating the tradeoffs in thermal performance of selecting an 

airflow path that enhances fan performance. Specifically, Morrison stated that, “a 90%+ 

efficient furnace will have higher pressure drop through the furnace than a similarly sized 

80%+ efficient furnace because of the added heat transfer surface area.” (Morrison, No. 

58 at p. 5) Conversely, manufacturers noted that higher SEER requirements call for 

increased central air conditioner or heat pump indoor coil size, leaving reduced space for 

other HVAC system components. Having to decrease the size of the fan due to these 
79

additional regulations could also make the furnace fan less efficient. (Morrison, No. 43 

at p. 62) Mortex and Morrison also commented that the primary concern when selecting 

an airflow path design is usually safety or impact on heat transfer, not efficiency. 

(Mortex, No. 43 at p. 135; Morrison, No. 58 at p. 5) AHRI and Rheem outlined all of the 

possible housing design modifications that would affect airflow path design, including 

housing shape, distance between components, size of duct openings, and motor 

mounting. (AHRI, No. 48 at p. 3; Rheem, No. 54 at p. 9) AHRI emphasized that some 

modifications could improve or decrease efficiency, but all would require an increase in 

product size and, thus, manufacturing costs. (AHRI, No. 48 at p. 3) During manufacturer

interviews, many manufacturers reiterated or echoed that airflow path design 

modifications would likely require increasing HVAC product size. Manufacturers 

explained that increasing HVAC products size would have adverse impacts on 

practicability to install and consumer utility, because the furnace fan market is 

predominantly a replacement market. Installing HVAC products that are larger in size 

compared to the products they are purchased to replace would likely present issues, 

mainly significant increases in installation costs or minimizing product availability to 

consumers.

DOE did not receive or find additional quantitative data that shows a measurable 

increase in fan efficiency as a result of a specific fan housing or airflow path design 

modification. Even after individual discussion with manufacturers, DOE was not able to 

identify a case where fan housing or airflow path design modifications could lead to 

potential fan energy savings without increasing the size of the HVAC product in which 
80

the furnace fan is used or compromising thermal performance or safety. In response to 

Morrison’s comment, DOE assumes that the “added heat transfer surface area” in the 

90%+ efficient furnace that Morrison refers to is the secondary heat exchanger typically 

used in condensing furnaces. DOE is aware of the impacts on thermal efficiency and 

furnace fan performance of the additional heat exchanger in condensing furnaces. As 

discussed in section III.B, DOE accounted for these impacts in its criteria for 

differentiating product classes. The 90%+ furnace (condensing) and 80%+ furnace (noncondensing) that Morrison refers to would not be in the same product class according to 

DOE’s proposed product classes. In addition, DOE concurs with manufacturers’ 

observations that an increase in envelope size would adversely impact practicability to 

manufacture and install, as well as product utility. Accordingly, DOE has decided to 

screen out fan housing and airflow path design modifications until quantitative data 

become available to show that a fan housing or airflow path design modification results 

in improved fan efficiency without increasing HVAC product size or compromising 

thermal performance or safety.

2. Remaining Technologies

Through a review of each technology, DOE found that all of the other identified 

technologies met all four screening criteria to be examined further in DOE’s analysis. In 

summary, DOE did not screen out the following technology options: (1) inverter-driven 

PSC fan motors; (2) high-efficiency fan motors; (3) multi-stage heating controls; and (4) 

backward-inclined impellers. DOE understands that all of these technology options are 

technologically feasible, given that the evaluated technologies are being used (or have 
81

been used) in commercially-available products or working prototypes. These 

technologies all incorporate materials and components that are commercially available in 

today’s supply markets for the residential furnace fans that are the subject of this NOPR. 

Therefore, DOE believes all of the efficiency levels evaluated in this notice are 

technologically feasible. For additional details, please see chapter 4 of the NOPR TSD.

DOE finds that all of the remaining technology options also 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). Interested 

parties, however, voiced concerns regarding these screening criteria as they apply to 

BPM fan motors and backward-inclined impellers. DOE addresses these concerns in the 

sections immediately below. DOE did not receive public comments relevant to the 

screening analysis criteria for the other remaining technology options. 

 

a. High-Efficiency Motors

AHRI stated that there are a limited number of ECM motor suppliers to furnace 

fan manufacturers. (AHRI, No. 48 at p. 2) Lennox commented that the technology is 

proprietary and dominated by a single motor manufacturer. Lennox added that industry 

competition is adversely affected as a result. (Lennox, No. 47 at p. 6) AHRI and Lennox 

noted that furnace fan manufacturers already have difficulties securing an adequate 

supply, so mandating ECM use would impact product availability. (Lennox, No. 47 at p. 

8; AHRI, No. 48 at p. 2) AHRI and Mortex stated that no alternative ECM exists at the 

scale of Regal Beloit ECMs and that limiting PSC applicability would reduce product 
82

flexibility. (AHRI, No. 48 at p. 2; Mortex, No. 43 at p. 129) Both Goodman and 

Ingersoll Rand do not expect that a technology with better or equivalent performance to 

brushless permanent magnet motors will be available at a reasonable cost in the next 

decade. (Goodman, No. 50 at p. 2; Ingersoll Rand, No. 57 at pp. A-2) 

Regal Beloit disagreed with residential furnace fan manufacturers, claiming that 

there is more than just a single motor manufacturer offering ECM technology. (Regal 

Beloit, No. 43 at p. 130) NMC concurred with Regal Beloit, stating that it too sells 

brushless permanent magnet motors in high volumes to furnace fan manufacturers. 

(NMC, No. 60 at p. 2) NMC supported DOE’s assumption that after implementation of 

furnace fan efficiency standards, brushless permanent magnet motor technologies will 

become increasingly available over time. (NMC, No. 60 at p. 2) Ingersoll Rand 

confirmed that brushless DC motors are an ECM alternative available from several 

suppliers, although prices vary. (Ingersoll Rand, No. 57 at pp. A-2) Although Rheem 

commented that they have applied brushless DC motors produced by more than just a 

single vendor, their current designs and production processes have been developed to be 

specifically paired with Regal Beloit products. (Rheem, No. 54 at p. 7) DOE discovered 

during interviews with manufacturers that there are multiple suppliers of BPM motors. 

DOE also found further evidence that some manufacturers purchase BPM motors from 

multiple suppliers. EEI stated that the expiration of Regal Beloit ECM patents around 

2020 may increase the availability of this motor type while decreasing cost. (EEI, No. 43 

at p. 127)
83

In the preliminary analysis, DOE requested comment as to whether manufacturers 

could alternatively develop BPM motor controls in-house when using high-efficiency 

motors from other, non-Regal Beloit, suppliers. Currently, Regal Beloit offers BPM 

motors packaged with controls. Manufacturers may buy BPM motors that are not prepackaged with controls from a supplier other than Regal Beloit, and develop their own 

controls. DOE anticipated that if furnace fan manufacturers had the ability to develop 

controls independently of Regal Beloit, this might drive down costs as well as 

dependency on a single manufacturer. 

Most furnace fan manufacturers claimed that development of in-house controls 

for BPM motors is not an option. For example, Rheem uses General Electric and Regal 

Beloit software tools to program motors and does not currently have the capability to 

design motor controls without this tool. (Rheem, No. 54 at p. 6) Lennox and Morrison

noted that having to design, build, and test motor controls would increase burden for 

large manufacturers and be prohibitively expensive to small manufacturers, neither of 

which have the expertise to develop these type of complex controls internally. (Lennox, 

No. 47 at p. 6; Morrison, No. 58 at p. 2) Lennox was also fearful that ECM suppliers 

might find motor control development an attempt to develop a replacement product and 

cut ties with furnace fan manufacturers. (Lennox, No. 47 at p. 7)

NMC confirmed that many U.S. motor suppliers bring in equipment from a fan 

manufacturer and develop unique ECM controls tailored to the manufacturer. (NMC, 

No. 43 at p. 128) 
84

While DOE recognizes that Regal Beloit possesses a number of patents in the 

BPM motor space, other motor manufacturers (e.g., Broad Ocean or NMC) also offer 

BPM models. Additionally, DOE is aware that in years past, residential furnace fans 

paired with constant-airflow BPM motors accounted for 30 percent of the market. While 

DOE estimates that constant-airflow BPM motors represent only 10-15 percent of the 

current furnace fan market, the manufacturing capability to meet BPM motor demand 

exists. Thus, DOE has tentatively concluded that BPM motor technology is currently 

available from more than one source and will become increasingly available to residential 

furnace fan manufacturers. 

Some fan manufacturers expressed concern that high-efficiency motor reliance on 

rare earth metals would impact supply. However, DOE is aware of high-efficiency 

motors that do not contain rare earth materials. DOE is also confident, after manufacturer 

discussions, that if BPM motors are adopted as a means to meet a future residential 

furnace fan energy conservation standard, manufacturers would have a number of costand performance-competitive suppliers from which to choose who have available, or 

could rapidly develop, control systems independently of the motor manufacturer. 

b. Backward-Inclined Impellers

According to Rheem, backward-inclined impellers must have larger diameter and 

operate at higher speed than forward-curve impellors in order to attain equivalent 

performance (i.e., flow and pressure rise). (Rheem, No. 54 at p. 7) Goodman asserted 
85

that a 40-50 percent increase in diameter would be necessary for backward-inclined 

impellers to outperform their forward-curved counterparts. (Goodman, No. 50 at p. 2) 

According to AHRI, an impeller diameter increase would lead to an increase in overall 

product size, a change which may not be possible without redesigning the product. 

(AHRI, No. 48 p. 2) Morrison and Rheem argued that the larger evaporator coil size 

required to meet higher SEER requirements already limits the space available for 

furnaces, so an increase in product size due to backward-inclined impellers would 

severely restrict product application. (Morrison, No. 58 at p. 3; Rheem, No. 54 at p.7) 

Ingersoll Rand stated that when used with backward-inclined impellers, motors typically 

operate at twice the RPM of forward-curved impellers for the same air delivery and static 

pressure. (Ingersoll Rand, No. 57 at pp. A-3) However, ebm-papst stated that they 

retrofitted existing equipment with backward-curved impellers, which only required 

making minor changes to the airflow path within the equipment. Ebm-papst also stated 

that it tested the retrofitted products, which achieved reductions of input power to the 

furnace fan in the range of 15-30 percent, depending on the specific equipment and the 

external static pressure (typically tested at 0.5 in.w.c. and 1.0 in.w.c.). (ebm-papst, No. 52 

at p. 1)

AHRI and Rheem were also concerned with the potential impacts that backwardinclined impellers could have on heat exchanger temperatures. AHRI and Rheem stated 

that the air distribution out of a blower housing with a forward-curved wheel is maximum 

at the outside edges of the wheel and decreases at the center of the wheel. The air 

distribution out of a blower housing with a backward-inclined wheel is maximum at the 
86

center of the wheel and tapers off at the outside edges. The modified air distribution out 

of the blower housing would require assessment of heat exchanger temperatures for 

reliability and safety, as temperature limits operation. (AHRI, No. 48 at p. 2; Rheem, No. 

54 at p. 8)

Some commenters also argued that backward-inclined impellers may affect 

furnace fan utility, because the noise produced by this impeller type may limit product 

application. Utilities have claimed that a backward-inclined impeller, in combination 

with increased fan motor speeds to achieve higher efficiency, leads to amplified noise 

levels. (EEI, No. 60 at p. 3; SCE, No. 43 at p. 59) However, during its testing of HVAC 

products retrofitted with a backward-inclined impeller, ebm-papst expressed a contrary 

view, observing that noise levels produced by the backward-inclined impeller were not 

significantly different from forward-curved impellers. (ebm-papst Inc., No. 52 at p. 1)

DOE finds that there are multiple approaches to implementing backward-inclined 

impellers to reduce furnace fan energy consumption. DOE recognizes that one approach 

is to use a backward-inclined impeller that is larger than a standard forward-curved 

impeller, which may lead to larger HVAC products. Another approach is to pair the 

backward-inclined impeller with a motor that operates at increased RPM. Ebm-papst 

tests show a significant potential to reduce fan electrical energy consumption for a 

backward-inclined impeller assembly that uses existing motor technology at higher RPMs 

and is implemented in existing HVAC products (i.e., no increase in product size 

required). Ebm-papst does not believe that achieving higher RPMs with existing motor 
87

technology is an obstacle for implementing this technology. DOE believes that this 

prototype represents a backward-inclined implementation approach that could achieve 

fan energy savings while avoiding the negative impacts listed by manufacturers. 

Consequently, DOE decided not to screen out the backward-inclined impeller technology 

option.

C.

In the engineering analysis (corresponding to chapter 5 of the NOPR TSD), DOE 

establishes the relationship between the manufacturer selling price (MSP) and improved 

residential furnace fan efficiency. This relationship serves as the basis for cost-benefit 

calculations for individual consumers, manufacturers, and the Nation. DOE typically 

structures the engineering analysis using one of three approaches: (1) design option; (2) 

efficiency level; or (3) reverse engineering (or cost-assessment). The design-option 

approach involves adding the estimated cost and efficiency of various efficiencyimproving design changes to the baseline to model different levels of efficiency. The 

efficiency-level approach uses estimates of cost and efficiency at discrete levels of 

efficiency from publicly-available information, and information gathered in manufacturer 

interviews that is supplemented and verified through technology reviews. The reverse 

engineering approach involves testing products for efficiency and determining cost from 

a detailed bill of materials derived from reverse engineering representative products. The 

efficiency values range from that of a least-efficient furnace fan sold today (i.e., the 

baseline) to the maximum technologically feasible efficiency level. For each efficiency 

Engineering Analysis
88

level examined, DOE determines the MSP; this relationship is referred to as a costefficiency curve.

1. Efficiency Levels

In this rulemaking, DOE used an efficiency-level approach in conjunction with a 

design-option approach to identify incremental improvements in efficiency for each 

product class. An efficiency-level approach enabled DOE to identify incremental 

improvements in efficiency for efficiency-improving technologies that furnace fan 

manufacturers already incorporate in commercially-available models. A design-option 

approach enabled DOE to model incremental improvements in efficiency for 

technologies that are not commercially available in residential furnace fan applications. 

In combination with these approaches, DOE used a cost-assessment approach to 

determine the manufacturing production cost (MPC) at each efficiency level identified 

for analysis. This methodology estimates the incremental cost of increasing product 

efficiency. When analyzing the cost of each efficiency level, the MPC is not for the entire 

HVAC product, because furnace fans are a component of the HVAC product in which 

they are integrated. The MPC includes costs only for the components of the HVAC 

product that impact FER. 

a. Baseline

During the preliminary analysis, DOE selected baseline units typical of the leastefficient furnace fans used in commercially-available, residential HVAC models that 

have a large number of annual shipments. This sets the starting point for analyzing 
89

potential technologies that provide energy efficiency improvements. Additional details 

on the selection of baseline units may be found in chapter 5 of the NOPR TSD. DOE 

compared the FER at higher energy efficiency levels to the FER of the baseline unit and 

compared baseline MPCs to the MPCs at higher efficiency levels. 

DOE reviewed FER values that it calculated using test data and performance 

information from publicly-available product literature to determine baseline FER ratings. 

Table IV.4 presents the baseline FER values identified in the preliminary analysis for 

each product class. 

Table IV.4: Preliminary Analysis Baseline FER

Product Class FER (W/1000 cfm)

Non-Weatherized, Non-condensing Gas Furnace Fan 380

Non-Weatherized, Condensing Gas Furnace Fan 393

Weatherized, Non-Condensing Gas Furnace Fan 333

Non-Weatherized, Non-Condensing Oil Furnace Fan 333

Electric Furnace / Modular Blower Fan 312

Manufactured Home Non-weatherized, Noncondensing Gas Furnace Fan 295

Manufactured Home Non-weatherized, Condensing 

Gas Furnace Fan 319

Manufactured Home Electric Furnace / Modular 

Blower Fan 243

Manufacturers asserted that the baseline FER values presented in the preliminary 

analysis were not representative of the furnace fans in the least-efficient residential 

HVAC models offered for sale today. Specifically, manufacturers stated that nonweatherized, non-condensing gas furnaces should be assigned a baseline FER of 451 

instead of 380 and that non-weatherized, condensing gas furnaces should have an FER of 
90

494 rather than 393. (AHRI, No. 48 at p. 5; Morrison, No. 58 at p. 6; Goodman, No. 50 

at p. 5) Rheem also doubted that the difference in efficiency between non-condensing 

and condensing gas furnaces was only 13 points, a FER of 380 versus 393, as presented 

in the DOE’s preliminary analysis. (Rheem, No. 43 at p. 96) Mortex calculated that their 

manufactured home, non-weatherized, non-condensing gas furnace had an FER of 420, 

not 295 as suggested by the DOE. Mortex also stated that published data used to 

calculate FER values were generated using ASHRAE Standard 103, not AMCA Standard 

210, and that calculating FER based on published data may not be the best approach. 

(Mortex, No. 59 at p. 3; Mortex, No. 43 at p. 25) In contrast, Ingersoll Rand stated that 

the baseline FER presented in the preliminary analysis was consistent with the figures 

presented in AHRI Standard 210/240. (Ingersoll Rand, No. 57 at pp. A-7) Unico 

emphasized that the DOE should consider the broad range of designs fitting the 

“baseline” definition, lest the selected FER only be achievable by one manufacturer’s 

design. (Unico, No. 43 at p. 79) Mortex disagreed with the DOE’s key product 

approach, arguing that the selected product classes will have huge variation in efficiency 

(i.e., baseline FER). (Mortex, No. 43 at p. 50) Manufacturers also provided additional 

baseline FER estimates during manufacturer interviews.

Some manufacturers also requested that DOE alter FER to better reflect unit 

capacity. Goodman suggested that DOE should consider using only one metric for all 

furnace fan capacities falling within the residential range (< 130 kBtuh) after making 

adjustments to the metric to include higher capacity units. (Goodman, No. 50 at p. 2)

Alternatively, Mortex recommended that DOE should set maximum FER values for sub-
91

product classes based on cooling capacity and cabinet size. (Mortex, No. 59 at p. 3) 

Similarly, AHRI stated that residential furnace fans having a 5-ton capacity also have

higher FERs and recommended that DOE adjust baseline FER values to include the 

largest-capacity fan within a product class. (AHRI, No. 48 at p. 2) Rheem calculated 

FER for 19 models of gas-fired furnaces that used the same blower housing design, and it

found that FER was generally not dependent on capacity. A graphic summary of 

Rheem’s results are available in the written comment that Rheem submitted.

27 (Rheem, 

No. 54 at p. 5).

DOE evaluated the feedback it received and used the data provided by interested 

parties to generate new FER values and to revise its baseline, intermediate efficiency 

levels, and max-tech FER estimates. DOE’s revisions included FER results for furnace 

fan models that span the capacity range of residential products. After reviewing all of the 

available FER values based on new data, DOE concluded that FER can best be 

represented as a linear function of airflow capacity (i.e., a first constant added to airflow 

multiplied by a second constant). The slope characterizes the change in FER for each unit 

of airflow capacity increase, and the y-intercept represents where the FER line intersects 

the y-axis (where airflow capacity is theoretically zero). DOE proposes to use such linear 

functions to represent FER for the different efficiency levels of the different product 

classes. A more detailed description of the analysis and the methodology DOE used to 

generate FER equations for each efficiency level can be found in chapter 5 of the NOPR 

TSD. 

 27 Publically available at: http://www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0011-

0054. 
92

Table IV.5 shows the revised FER baseline efficiency levels estimates that DOE 

used for the NOPR. 

Table IV.5: NOPR Baseline FER Estimates

Product Class FER*

(W/1000 cfm)

Non-Weatherized, Non-condensing Gas Furnace Fan FER = 0.057 x QMax + 362

Non-Weatherized, Condensing Gas Furnace Fan FER = 0.057 x QMax + 395

Weatherized Non-Condensing Gas Furnace Fan FER = 0.057 x QMax + 271

Non-Weatherized, Non-Condensing Oil Furnace Fan FER = 0.057 x QMax + 336

Electric Furnace / Modular Blower Fan FER = 0.057 x QMax + 331

Manufactured Home Non-weatherized, Noncondensing Gas Furnace Fan FER = 0.057 x QMax + 271

Manufactured Home Non-weatherized, Condensing 

Gas Furnace Fan FER = 0.057 x QMax + 293

Manufactured Home Electric Furnace / Modular 

Blower Fan FER = 0.057 x QMax + 211

Manufactured Home Weatherized Gas Furnace Fan Reserved

Manufactured Home Non-Weatherized Oil Furnace 

Fan Reserved

*

QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test 

procedure. 78 FR 19606, 19627 (April 2, 2013).

b. Percent Reduction in FER

For the preliminary analysis, DOE determined average FER reductions for each 

efficiency level for a subset of key product classes and applied these reductions to all 

product classes. DOE found from manufacturer feedback and its review of publicallyavailable product literature that manufacturers use similar furnace fan components and 

follow a similar technology path to improving efficiency across all product classes. DOE 

does not expect the percent reduction in FER associated with each design option, whether 

commercially available or prototype, to differ across product classes as a result. Table 
93

IV.6 includes DOE’s preliminary analysis estimates for the percent reduction in FER 

from baseline for each efficiency level.

Table IV.6: Preliminary Analysis Estimates for Percent Reduction in FER from 

Baseline for Each Efficiency Level

Efficiency Level (EL) Design Option

Percent Reduction 

in FER from 

Baseline

1 Improved PSC 2%

2 Inverter-Driven PSC 10%

3 Constant-Torque BPM Motor 45%

4 Constant-Airflow BPM Motor 

+ Multi-Staging 59%

5

Premium Constant-Airflow 

BPM Motor + MultiStaging + Backward-Inclined

Impeller

63%*

*DOE estimates that implementing a backward-inclined impeller at EL 5 results in a 10% reduction in FER 

from EL 4. This is equivalent to a reduction of 4% percent of the baseline FER. The total percent 

reduction in FER from baseline for EL 5 includes the 59% reduction from EL 4 and the 4% net reduction of 

the backward-inclined impeller for a total percent reduction of 63% from baseline.

Interested parties questioned DOE’s estimates for the FER reduction for highefficiency motors. NMC commented that the company offers a special high-efficiency 

PSC motor line called PEP® that can achieve 10 points of efficiency improvement over 

standard PSC motors rather than 1.6-percent improvement shown in the preliminary 

analysis. (NMC, No. 60 at p. 1) Other interested parties provided similar estimates for 

improved PSC motors during manufacturer interviews. Unico noted that the highefficiency BPM motor technology options in the Engineering Analysis (constant-torque 

or constant-air-flow BPM) do not improve fan efficiency as much as DOE’s percent 

reduction in FER estimates suggest. (Unico, No. 43 at p. 109) Lennox suggested that a 

more accurate estimate of reduction in FER resulting from PSC to X13 motor 

conversions would be 30 percent as opposed to the 45 percent presented in the 
94

preliminary analysis. (Lennox, No. 47 at p. 2) Goodman provided a reference to a report 

from Advanced Energy of North Carolina28 that stated that replacing PSC motors with 

full-ECM motors results in a 51-percent reduction in full-load efficiency. (Goodman, 

No. 50 at p. 3) Goodman would expect that the reduction in FER for X13 and ECM 

conversions be lower than presented in the preliminary analysis such as 35-50 percent for 

X13s and 45-50 percent for ECM. (Goodman, No. 50 at p. 5)

DOE reviewed its estimates of percent reduction in FER from baseline for each 

efficiency level based on interested party feedback. In addition to the comments 

presented above, interested parties also provided FER values for higher-efficiency 

products in manufacturer interviews. DOE used these data to revise its percent reduction 

estimates. Table IV.7 shows DOE’s revised estimates for the percent reduction in FER 

for each efficiency level that DOE used in the NOPR analyses. For a given product class, 

DOE applied the percent reductions below to both the slope and y-intercept of the 

baseline FER equation to generate FER equations to represent each efficiency level above 

baseline.

Table IV.7: NOPR Estimates for Percent Reduction in FER from Baseline for Each 

Efficiency Level

Efficiency Level (EL) Design Option

Percent Reduction 

in FER from 

Baseline

1 Improved PSC 10%

2 Inverter-Driven PSC 25%

 28 Fitzpatrick and Murray, Residential HVAC Electronically Commutated Motor Retrofit Report (2012) 

(Available at:

http://www.advancedenergy.org/ci/services/testing/files/Residential%20HVAC%20Electronically%20Com

mutated%20Motor%20Retrofit%20Final%20Report.pdf).
95

3 Constant-Torque BPM Motor 42%

4 Constant-Torque BPM Motor 

and Multi-Staging 50%

5 Constant-Airflow BPM Motor 

and Multi-Staging 53%

6 Premium Constant-Airflow 

BPM Motor and Multi-Staging 

+ Backward-Inclined Impeller

57%*

*DOE estimates that implementing a backward-inclined impeller at EL 6 results in a 10% reduction in FER 

from EL 5. This is equivalent to a 4% percent reduction in FER from baseline. The total percent reduction 

in FER from baseline for EL 6 includes the 53% reduction from EL 5 and the 4% net reduction from the 

backward-inclined impeller for a total percent reduction of 57% from baseline.

DOE believes that these revised estimates are consistent with the comments 

received from interested parties. Note that EL 4 in the table above is a newly proposed 

efficiency level. As discussed in section IV.A.3, DOE analyzed multi-staging as a 

separate technology option. For the NOPR, DOE also has evaluated a separate efficiency 

level representing applying multi-staging to a furnace fans with a constant-torque BPM 

motor. DOE recognizes that the percent reduction in FER for inverter-driven PSC 

increased considerably. However, since the baseline FER values increased for the 

NOPR, DOE believes that the percent reductions cannot directly be compared to those 

proposed in the preliminary analysis. DOE notes that the cited reductions may not appear 

to be fully consistent with stakeholder comments in part because they are FER reductions 

rather than reductions in full-load electrical efficiency. DOE expects that FER reductions 

may be significantly higher than full-load input power reductions, especially for 

efficiency levels based on use of BPM motors, because FER includes electrical energy 

consumption at reduced operating modes, for which these motors achieve much greater 

power reduction than PSC designs.
96

2. Manufacturer Production Cost (MPC)

In the preliminary analysis, DOE estimated the manufacturer production cost 

associated with each efficiency level to characterize the cost-efficiency relationship of 

improving furnace fan performance. The MPC estimates are not for the entire HVAC 

product because furnace fans are a component of the HVAC product in which they are 

integrated. The MPC estimates includes costs only for the components of the HVAC 

product that impact FER, which DOE considered to be the:

• Fan motor and integrated controls;

• Primary control board (PCB);

• Multi-staging components;

• Impeller;

• Fan housing; and

• Components used to direct or guide airflow.

DOE separated the proposed product classes into high-volume and low-volume 

product classes and generated high-volume and low-volume MPC estimates to account 

for the increased purchasing power of high-volume manufacturers.29

a. Production Volume Impacts on MPC

Morrison stated that DOE’s assumption that large manufacturers have the same 

purchasing power across product types, even when those products are low volume, may 

 29 High-volume and low-volume product classes are discussed further in chapter 5 of the NOPR TSD. 
97

or may not be true, because low-volume products may run through different processes. 

(Morrison, No. 43 at p. 118) Rheem stated that, in some cases, it uses the same blower 

system in low-volume products that it uses in high-volume products. (Rheem, No. 43 at 

p. 118) Unico commented that it uses different manufacturing processes than those 

presented in DOE’s analysis and recommended that a different metric should be used to 

evaluate technologies that differ by process. (Unico, No. 43 at p. 122) Mortex stated that 

the motor costs for smaller manufacturers can be 15-20 percent greater than for large 

manufacturers because they do not, as stated by NEMA, benefit from economies of scale. 

(Mortex, No. 59 at p. 3; NEMA, No. 43 at p. 113)

DOE recognizes that high-volume manufacturers may use different processes to 

manufacture low-volume products than to manufacture high-volume products. However, 

DOE finds that 94 percent of the MPC for furnace fans is attributed to materials 

(including purchased parts like fan motors), which are not impacted by process 

differences. DOE’s estimates also already account for process differences between 

manufacturers for high-volume and low-volume products. The products that DOE 

evaluated to support calculation of MPC included furnace fans from various 

manufacturers, including both high-volume and low-volume models. Observed process 

differences are reflected in the bills of materials for those products. DOE agrees with 

Mortex that low-volume manufacturers experience higher costs for materials, such as 

motors. DOE believes that its approach to distinguish between high-volume and low-
98

volume product classes accounts for the expected difference in MPC between highvolume and low-volume product classes.30

b. Inverter-Driven PSC Costs

In the preliminary analysis, DOE estimated that the MPC of inverter control for a 

PSC motor is $10-$12, depending on production volume. Ingersoll Rand stated that an 

inverter cannot be added to a PSC for only $10-$12. (Ingersoll Rand, No. 57 at pp. A-7) 

NMC also questioned the validity of the inverter controller cost estimate, stating that the 

cost of an inverter driven controller is significantly higher than $12, unless DOE is 

erroneously equating inverters to wave chopper technology, which is far less efficient. 

(NMC, No. 60 at p. 1)

DOE’s preliminary analysis estimate for the MPC of an inverter-driven PSC was 

indeed based on a wave chopper drive. DOE finds that more sophisticated and costly 

inverters are required to achieve the efficiencies reflected in DOE’s analysis. 

Consequently, DOE has adjusted its cost estimate for PSC inverter technology. DOE 

gathered more information about the cost of inverters that are suited for improving 

furnace fan efficiency. In addition to receiving cost estimates during manufacturer 

interviews, DOE also reviewed its cost estimates for inverter drives used in other 

residential applications, such as clothes washers. DOE finds that $30 for high-volume 

products and $42.29 for low-volume products are better estimates of the MPC for 

 30 High-volume and low-volume product classes are discussed further in chapter 5 of the NOPR TSD.
99

inverters used to drive PSC furnace fan motors. Accordingly, DOE has updated these 

values for the NOPR.

c. Furnace Fan Motor MPC

Manufacturers stated that DOE underestimated the incremental MPC to 

implement high-efficiency motors in HVAC products, other than oil furnaces. (Rheem, 

No. 54 at p. 10) Most manufacturers stated that the cost increase to switch from PSCs to 

more-efficient motor technologies was at least twice that of the DOE’s estimate. 

(Lennox, No. 43 at p. 23, 113 and No. 47 at p. 1; Mortex, No. 43 at p. 25; Rheem, No. 43 

at p. 112; Goodman, No. 50 at p. 3) AHRI and Morrison claimed incremental costs 

associated with an X13 motor should be $60, instead of the $22.73 reported by DOE and 

in the case of ECMs, $133 instead of the $91.95 reported by DOE. (AHRI, No. 48 at p. 

6; Morrison, No. 58 at p. 6) Nidec, a motor manufacturer, commented that DOE should 

directly contact motor suppliers to confirm motor prices. (NMC, No. 43 at p. 112) Regal 

Beloit requested DOE review its assumption on motor horsepower range to explain why 

Rheem and other manufacturers claim their motors cost twice what is shown in DOE’s 

preliminary analysis. (Regal Beloit, No. 52 at p. 242) DOE received additional feedback 

regarding its estimated motor prices during NOPR-phase manufacturer interviews.

Based upon the input received from interested parties, DOE adjusted its motor 

cost estimates. In general, DOE increased its estimates by approximately 10 to 15 

percent, which is consistent with the feedback DOE received. Details regarding DOE’s 

revised motor MPC estimates are provided in chapter 5 of the NOPR TSD.
100

d. Motor Control Costs

In the preliminary analysis, DOE estimated that the MPC of the primary control 

board (PCB) increases with each conversion to a more-efficient motor type (i.e., from 

PSC to constant-torque BPM motor and from constant-torque to constant-airflow BPM 

motor). Both Lennox and Goodman confirmed that higher-efficiency motors require 

more sophisticated and costly controls. These manufacturers stated that control costs for 

an X13 motor application increase from 50-100 percent, as compared to controls for PSC 

motors. (Lennox, No. 47 at p. 8; Goodman, No. 50 at p. 2) Rheem stated that the 

controls of one of its modulating furnace models that uses a variable speed furnace fan 

are costly, although no quantified estimate was provided. (Rheem, No. 54 at p. 7) 

Rheem also responded that Regal Beloit’s Evergreen31 motors, which are designed as 

replacements for PSCs, may be used with the same primary controls developed for the 

original PSC motor.32

 31 Evergreen is a constant-airflow BPM motor that is meant to be installed as an on-site replacement of 

outdated PSC motors.

 (Rheem, No. 54 at p. 7) Ingersoll Rand stated that boards 

supporting modulating motors and communication are the most costly. (Ingersoll Rand, 

No. 57 at pp. A-2) DOE also received feedback regarding the cost of the PCBs associated 

with each motor type during manufacturer interviews. In general, manufacturers

commented that the PCBs used with constant-torque BPM motors are more costly. 

However, other manufacturer interview participants stated that the MPC of the PCB used 

with these motors should be equivalent or even less expensive than the PCBs used with 

PSC motors.

32 The constant-airflow BPM motors that DOE analyzed for EL 5 and EL 6 cannot be used with the same 

primary controls for a PSC motor. See chapter 3 and chapter 5 of the NOPR TSD.
101

DOE agrees with interested parties that the MPC of the PCB needed for a 

constant-airflow BPM motor is higher than for the PCB paired with a PSC motor. DOE 

maintained this assumption for the NOPR. DOE estimates that the MPC of a PCB paired 

with a constant-airflow BPM motor is roughly twice as much as for a PCB paired with a 

constant-torque BPM motor or PSC. DOE also agrees with the interested parties that 

stated that the MPC for a PCB paired with a constant-torque BPM motor is equivalent to 

that of a PCB needed for a PSC motor. DOE revised its analysis to reflect this 

assumption in the NOPR as a result.

e. Backward-Inclined Impeller MPC

Interested parties commented that DOE’s preliminary analysis estimate for the 

incremental MPC associated with implementing a backward-inclined impeller, in 

combination with a premium constant-airflow BPM motor and multi-staging, is too low. 

(AHRI, No. 48 at p. 2; Ingersoll Rand, No. 57 at p. 2) Morrison and AHRI commented 

that tighter tolerances and increased impeller diameter lead to increased material costs, as 

well as increased costs associated with motor mount structure and reverse forming 

fabrication processes. (AHRI, No. 48 at p. 3; Morrison, No. 43 at p. 120) Rheem and 

Morrison stated that the dimensional clearance for a backward-inclined impeller would 

be 0.04-0.05 inches instead of 0.24-0.5 for a forward-curved impeller. (Rheem, No. 54 at 

p. 8; Morrison, No. 58 at p. 3) This increase in product size and tolerance could lead to 

increased production costs. Ingersoll Rand, Morrison, and Rheem all cited increased 

material, assembly controls, reverse forming processes, and the strengthening of motor 
102

mounting systems (necessary at increased motor speeds) as potential costs associated 

with backward-inclined impellers. (Ingersoll Rand, No. 57 at pp. A-3; Morrison, No. 58 

at p. 4; Rheem, No. 54 at p. 8) 

DOE reviewed its manufacturer production cost estimates for the backwardinclined impeller technology option based on interested party comments. During 

manufacturer interviews, some manufacturers reiterated or echoed that DOE’s estimated 

MPC for backward-inclined impellers is too low, but they did not provide quantification 

of the total MPC of backward-inclined impellers or the incremental MPC associated with 

the changes needed to implement them. Other manufacturers did quantify the MPC of 

backward-inclined impeller solutions and their estimates were consistent with DOE’s 

preliminary analysis estimate. Consequently, DOE did not modify its preliminary 

analysis estimated MPC for backward-inclined impellers.

D.

DOE uses manufacturer-to-consumer markups to convert the manufacturer selling 

price estimates from the engineering analysis to consumer prices, which are then used in 

the LCC and PBP analysis and in the manufacturer impact analysis. Before developing 

markups, DOE defines key market participants and identifies distribution channels.

Generally, the furnace distribution chain (which is relevant to the residential furnace fan 

distribution chain) includes distributors, dealers, general contractors, mechanical 

contractors, installers, and builders. For the markups analysis, DOE combined 

mechanical contractors, dealers, and installers in a single category labeled “mechanical 

Markups Analysis
103

contractors,” because these terms are used interchangeably by the industry. Because 

builders serve the same function in the HVAC market as general contractors, DOE 

included builders in the “general contractors” category.

In the preliminary analysis, DOE used the same distribution channels for furnace 

fans as it used for furnaces in the recent energy conservation standards rulemaking for 

those products. 76 FR 37408, 37464 (June 27, 2011). DOE believes that this is an 

appropriate approach, because the vast majority of the furnace fans covered in this 

rulemaking is a component of a furnace. Manufactured housing furnace fans in new 

construction have a separate distribution channel in which the furnace (and fan) go 

directly from the furnace manufacturer to the producer of manufactured homes.

In the preliminary analysis, DOE requested comment on whether the market for 

replacement fans is large enough to merit a separate distribution channel, and, if so, what 

would be an appropriate assumption for its market share. Goodman expressed their belief 

that there is no market for replacing and/or upgrading only the furnace fan component of 

the furnace. (Goodman, No. 50 at p. 3) Goodman and AHRI commented that they are 

opposed to field replacements and retrofits of motors and blowers because such practices 

could have product safety implications. (Goodman, No. 50 at p. 3; AHRI, No. 48 at p. 4) 

In contrast, Nidec recommended that DOE should consider a distribution channel for 

replacing furnace fans in already installed equipment. (Nidec, No. 60 at pp. 2-3)
104

DOE has tentatively concluded that there is insufficient evidence of a replacement 

market for furnace fans. 

DOE develops baseline and incremental markups to transform the manufacturer 

selling price into a consumer product price. DOE uses the baseline markups, which cover 

all of a distributor’s or contractor’s costs, to determine the sales price of baseline models. 

Incremental markups are separate coefficients that DOE applies to reflect the incremental 

cost of higher-efficiency models. 

AHRI and Morrison voiced concerns with DOE's approach to incremental 

markups. (AHRI, No. 48 at p. 6; Morrison, No. 58, at p. 7) These commenters stated that 

while the concept of profits constrained to the long-run cost of capital is a basic tenet of 

microeconomics, it has not been validated empirically and that there are enough 

exceptions and alternative concepts to question the use of that concept in a normative 

manner. AHRI also stated that DOE’s basic theoretical framework requires that the 

relevant industry must be highly competitive, and AHRI believes that there are reasons to 

question this assumption in the context of residential furnace fans. Goodman concurred 

with the concerns noted by AHRI in regards to the markups analysis. (Goodman, No. 50 

at p. 5)

DOE acknowledges that detailed information on actual distributor and contractor 

practices would be helpful in evaluating their markups on furnaces. However, DOE finds 

it implausible that profit per unit would increase in the medium and long run if the cost of 
105

goods sold increases due to efficiency standards. Thus, in the absence of evidence to the 

contrary, DOE continues to assume that markups would decline slightly, leaving profit 

unchanged, and, thus, it uses lower markups on incremental costs of higher-efficiency 

products. Regarding the competitiveness of the HVAC distribution industry and the 

HVAC contractor industry, DOE does not have any empirical measures of 

competitiveness, but its impression, based on experience with these industries, is that 

there is sufficient competition to validate DOE’s assumptions with respect to the 

difficulty of distributors and contractors increasing profits as a result of standards.

AHRI and Morrison disagreed with DOE’s prediction that margins should be 

going up over time as equipment prices decrease. (AHRI, No. 48 at p. 6; Morrison, No. 

58, at p. 7) DOE did not project a decrease in furnace fan prices in the preliminary 

analysis, and the markups are assumed to remain the same over time.

Lennox believes that DOE’s claim that incremental costs will be discounted on 

markups through the distribution chain by approximately 50 percent understates the 

amount of increased costs that manufacturers will seek to pass through to consumers. 

(Lennox, No. 47 at p. 1) DOE does not apply a separate markup on the incremental 

manufacturer selling price. DOE assumes that manufacturers will be able to pass on the 

full incremental costs of higher-efficiency furnace fans.

Morrison stated that the markups analysis does not accurately calculate the costs 

for installers/contractors. Morrison noted that with increase in efficiency standards, there 
106

will be added labor and an associated cost to assure the buyer of the efficiency gains; the 

added labor of installation and commissioning is not included in the markups analysis,

and, thus, the final markup is too small. (Morrison, No. 58, at p. 6) In response, the 

labor for installation and commissioning, including specific costs for higher-efficiency 

furnace fans, is included in the LCC and PBP analysis, as DOE assumes that this cost is 

not part of the consumer cost of the furnace itself.

E.

The purpose of the energy use analysis is to determine the annual energy 

consumption of residential furnace fans in representative U.S. homes and to assess the 

energy savings potential of increased furnace fan efficiency. In general, DOE estimated 

the annual energy consumption of furnace fans at specified energy efficiency levels 

across a range of climate zones. The annual energy consumption includes the electricity 

use by the fan, as well as the change in natural gas, liquid petroleum gas (LPG), 

electricity, or oil use for heat production as result of the change in the amount of useful 

heat provided to the conditioned space as a result of the furnace fan. The annual energy 

consumption of furnace fans is used in subsequent analyses, including the LCC and PBP 

analysis and the national impact analysis.

Energy Use Analysis

DOE used the existing DOE test procedures for furnaces and air conditioners to 

estimate heating and cooling mode operating hours for the furnace fan. The power 

consumption of the furnace fan is determined using the individual sample housing unit 

operating conditions (the pressure and airflow) at which a particular furnace fan will 
107

operate when performing heating, cooling, and constant-circulation functions. The 

methodology and the data are fully described in chapter 7 of the NOPR TSD.

DOE used the Energy Information Administration’s (EIA) Residential Energy 

Consumption Survey (RECS)33 to establish a sample of households using furnace fans for 

each furnace fan product class. RECS data provide information on the age of furnaces 

with furnace fans, as well as heating and cooling energy use in each household. The 

survey also includes household characteristics such as the physical characteristics of 

housing units, household demographics, information about other heating and cooling 

products, fuels used, energy consumption and expenditures, and other relevant data. 

DOE uses the household samples not only to determine furnace fan annual energy 

consumption, but also as the basis for conducting the LCC and PBP analysis.

For the NOPR, DOE used RECS 200934 heating and cooling energy use data to 

determine heating and cooling operating hours. DOE used data from RECS 2009, 

American Housing Survey (AHS) 2011,

35 and the Census Bureau36 to project household 

weights in 2019, which is the anticipated compliance date of any new energy efficiency 

standard for residential furnace fans. These adjustments account for housing market 

changes since 2009, as well as for projected product and demographic changes.

 33 Energy Information Administration, 2009 Residential Energy Consumption Survey (Available at: 

http://www.eia.doe.gov/emeu/recs). 34 See http://www.eia.gov/consumption/residential/data/2009/. 35 See http://www.census.gov/housing/ahs/data/national.html. 36 See http://www.census.gov/popest/.
108

The power consumption (and overall efficiency) of a furnace fan depends on the 

speed at which the motor operates, the external static pressure difference across the fan, 

and the airflow through the fan. To calculate furnace fan electricity consumption, DOE 

determined the operating conditions (the pressure and airflow) at which a particular 

furnace fan will operate in each RECS housing unit when performing heating, cooling, 

and constant-circulation functions.

DOE gathered field data from available studies and research reports to determine 

an appropriate distribution of external static pressure (ESP) values. DOE compiled over 

1,300 field ESP measurements from several studies that included furnace fans in singlefamily and manufactured homes in different regions of the country. The average ESP 

value in the cooling operating mode from these studies results in an average 0.65 in. wc 

for single-family households and 0.30 in. wc for manufactured homes. 

DOE determined furnace fan operating hours in heating mode by calculating the 

furnace burner operating hours and adjusting them for delay times between burner and 

fan operation. Burner operating hours are a function of annual house heating load, 

furnace efficiency, and furnace input capacity.

EEI stated that DOE should take into consideration the impact of more-stringent 

building energy codes when estimating energy use baselines and projected energy 

savings. (EEI, No. 65 at p. 4) In response, DOE’s analysis accounts for the likelihood 

that, compared to recently-built homes in the RECS sample, new homes in the year of 
109

compliance will have both a lower heating load per square foot and more square footage

using the building shell efficiency index from AEO 2012.

In the preliminary analysis, to estimate use of constant circulation in the sample 

homes, DOE evaluated the available studies, which include a 2010 survey in Minnesota37

and a 2003 Wisconsin field monitoring of residential furnaces.38 DOE did not use these 

data directly, however, because it believes they are not representative of consumer 

practices for the U.S. as a whole. In these northern States, many homes have low air 

infiltration, and there is a high awareness of indoor air quality issues, which could lead to 

significant use of constant circulation. To develop appropriate assumptions for other 

regions, DOE modified the data from these States using information from manufacturer 

product literature (which suggests very little use in humid climates) and consideration of 

climate conditions in other regions. 

Several parties stated that DOE overestimated the use of constant-circulation 

mode, thereby overcounting the energy savings from higher-efficiency furnace fans. 

AHRI commented that continuous circulation is used significantly less than estimated in 

DOE’s technical support document. In particular, AHRI pointed out that DOE’s estimate 

of constant-circulation hours is based on surveys taken in only two States -- Wisconsin 

and Minnesota -- where there is high occurrence of indoor air quality issues that make 

use of the continuous fan feature more likely. To overcome this perceived deficiency, 

 37 Provided in CEE, No. 22 at pp. 1-2. 38 Pigg, S., “Electricity Use by New Furnaces: A Wisconsin Field Study” (October 2003) (Available at 

http://www.doa.state.wi.us/docview.asp?docid=1812).
110

AHRI recommended a study of constant-circulation hours in areas of the country that do 

not have high occurrences of indoor air quality issues, leading to an allocation that is 

more representative of behavior in the U.S. (AHRI, No. 48 at p. 4) Ingersoll Rand also 

stated that Wisconsin is not a good representation of the full national population, noting 

that DOE partially acknowledges this by assuming that the North is different from the 

South in terms of the use of constant circulation. (Ingersoll Rand Residential Solutions, 

No. 57, at p. 8) Goodman concurred that the values proposed for constant-circulation 

hours are unrealistically high. Based on Goodman’s experience, the commenter stated 

that a more typical value for the percentage of U.S. households that use the fan in 

constant-circulation mode would likely be in the low single digits. (Goodman, No. 50 at 

p. 3) Morrison also stated that allocation of a large percentage of furnace fan time in the 

circulatory mode (21 percent of total time) is excessive. (Morrison, No. 58, at p. 7)

In contrast, CA IOUs stated that constant-circulation mode on the air handler is a 

primary means for mechanical ventilation of homes. CA IOUs argued that as States 

increasingly adopt building codes that call for more airtight building envelopes, the need 

for mechanical ventilation increases as natural ventilation decreases. Based upon this 

reasoning, CA IOUs stated that 400 hours per year in constant-circulation mode 

(approximately the average that DOE estimated for non-weatherized gas furnace fans) 

would be a conservative estimate. (CA IOU's, No. 56, at p. 3) NEEA stated that based 

on recent trends in ventilation and in the sales of filtration systems, there is a substantial 

increase in the use of constant circulation, especially in new home construction.

(Transcript, No. 43 at p. 193)
111

DOE acknowledges that it would be desirable to have additional data on the use 

of constant circulation in other parts of the country, but DOE was not able to conduct a 

study as suggested by AHRI for the NOPR analysis, nor did any commenter provide such 

data. DOE concurs with the CA IOUs that the use of constant circulation may increase in 

new homes. For the NOPR, DOE used the same assumptions for use of constant 

circulation as it did in the preliminary analysis, which are also used in the proposed DOE 

test procedure for furnace fans. 77 FR 28674 (May 15, 2012). The shares of homes 

using the various constant-circulation modes are presented in Table IV.8. However, 

DOE also performed a sensitivity analysis to estimate the effect on the LCC results if it 

assumed half as much use of constant circulation. These results are discussed in section 

V.B.1 of this notice.

Table IV.8 Constant-Circulation Proposed Test Procedure Assumptions Used for 

NOPR Analysis

Constant-Circulation 

Fan Use

Assumed 

Average 

Number of 

Hours 

Estimated Share 

of Homes in 

North and 

South-Hot Dry 

Regions

Estimated Share 

of Homes in 

South-Hot 

Humid Region 

No constant fan 0 84% 97%

Year-round 7290 7% 1%

During heating season 1097 2% 0.4%

During cooling season 541 2% 0.4%

Other (some constant fan) 365 5% 1%

Total -- 100% 100%
112

Commenting on the preliminary analysis, EEI stated that DOE should balance fan 

energy savings with the potential for additional fuel use of the HVAC product. (EEI, No. 

65 at p. 3) With improved fan efficiency, there may be less heat from the motor, which 

means that the heating system needs to operate more and the cooling system needs to 

operate less. In response, DOE did account for the effect of improved furnace fan 

efficiency on the heating and cooling load of the sample homes. Goodman noted that 

DOE’s assumptions are technically correct with regard to the effect on heating or cooling 

requirements from the change in fan energy consumption, and the adjustments appear to 

be appropriate. (Goodman, No. 50 at p. 4)

In the preliminary analysis, DOE recognized that the energy savings in cooling 

mode from higher-efficiency furnace fans used in some higher-efficiency CAC and heat 

pumps was already accounted for in the analysis related to the energy conservation

standards for those products. To avoid double-counting, the analysis for furnace fans 

does not include furnace fan electricity savings that were counted in DOE’s analysis for 

CAC and heat pump products. 

AHRI and Morrison commented that the LCC analysis includes furnace fan 

operating hours and furnace fan power operation in the cooling mode in the total energy 

consumption calculation. AHRI and Morrison noted that regulated metrics such as SEER 

and Heating Seasonal Performance Factor (HSPF) already address fan energy 

consumption in air conditioners and heat pumps respectively. (AHRI, No. 48 at p. 6; 

Morrison, No. 58, at p. 8) Morrison commented that including this energy savings for 
113

this standard would result in the savings being counted under two regulatory standards. 

Mortex commented that: (1) the electricity used to circulate air in the summer is already 

being accounted for as part of the SEER metric for central air conditioners and heat 

pumps; (2) in the winter, the EAE metric for furnaces accounts for all electricity being 

used, including by the furnace fan; and (3) for heat pumps, the electricity used to 

circulate air is accounted for in the winter heating mode by the HSPF metric. (Mortex, 

No. 59, at pp. 1-2) Ingersoll Rand stated that heating and cooling should not be 

combined, as it does not accurately portray the cooling performance for all possible 

capacities and duplicates the furnace fan inclusion in the SEER determination. (Ingersoll 

Rand Residential Solutions, No. 57, at p. 1) 

The standards for CAC and heat pump products that will be effective in 2015 do 

not require a furnace with BPM motor-driven fan. However, DOE’s rulemaking analysis 

for CAC and heat pump products included savings from those households purchasing a 

CAC or heat pump at SEER 15 or above, that would need to have an BPM motor-driven

fan in their furnace to achieve that efficiency level. The base-case efficiency distribution 

of fans used in the current analysis includes the presence of those BMP motor-driven fans 

in homes with the higher-efficiency CAC or heat pumps. Because the energy savings 

from the considered fan efficiency levels are measured relative to the base-case 

efficiencies, any savings reported here for furnace fans are over and above those counted 

in the CAC and heat pump rulemaking. 
114

Recognizing the possibility of consumers using higher-efficiency furnace fans 

more than baseline furnace fans, DOE included a rebound effect in its preliminary 

analysis. DOE used a 2009 program evaluation report from Wisconsin39 to estimate the 

extent to which increased use of constant circulation under a standard requiring ECM 

furnace fans is likely to cancel out some of the savings from such a fan. 

Commenters presented differing views on the likelihood of a rebound effect for 

furnace fans. Rheem believes that the Wisconsin study is reasonable in its estimate of the 

fraction of households that may switch to continuous circulation use under a standard 

requiring ECM furnace fans. (Rheem, No. 54, at p. 13) Goodman does not believe there 

has been a significant shift in terms of increased usage of continuous fan with customers 

that have an ECM product versus an X13 product versus a PSC product. (Goodman, No. 

50 at p. 4) Ingersoll Rand commented that if there were any comfort basis for the use of 

continuous fan mode, more use might lead to a lower heating set-point and a higher 

cooling set-point, offsetting the added energy consumption for continuous fan. Ingersoll 

Rand commented that the rebound effect, if it exists, is uncertain in direction and 

magnitude and should be deleted from the analysis. (Ingersoll Rand Residential 

Solutions, No. 57, at p. 8)

DOE acknowledges that the magnitude of a rebound effect for furnace fans across 

the country is uncertain. However, because there is some evidence for the existence of a 

 39 State of Wisconsin, Public Service Commission of Wisconsin, Focus on Energy Evaluation Semiannual 

Report, Final (April 8, 2009) (Available at: 

http://www.focusonenergy.com/files/document_management_system/evaluation/emcfurnaceimpactassessm

ent_evaluationreport.pdf).
115

rebound effect, DOE prefers to include such an effect rather than risk overstating the 

energy savings from higher-efficiency furnace fans. The specific assumptions are 

described in chapter 7 of the NOPR TSD.

F.

In determining whether an energy conservation standard is economically justified, 

DOE considers the economic impact of potential standards on consumers. 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 uses the following 

two metrics to measure consumer impacts:

Life-Cycle Cost and Payback Period Analysis

• Life-cycle cost

•

(LCC) is the total consumer cost of an appliance or product, 

generally over the life of the appliance or product. The LCC calculation includes 

total installed cost (equipment manufacturer selling price, distribution chain 

markups, sales tax and installation cost), operating costs (energy, repair, and 

maintenance costs), equipment lifetime, and discount rate. Future operating costs 

are discounted to the time of purchase and summed over the lifetime of the 

product.

Payback period (PBP) measures the amount of time it takes consumers to recover 

the assumed higher purchase price of a more energy-efficient product through 

reduced operating costs. Inputs to the payback period calculation include the 

installed cost to the consumer and first-year operating costs.
116

DOE analyzed the net effect of potential residential furnace fan standards on 

consumers by calculating the LCC and PBP for each efficiency level for each sample 

household. DOE performed the LCC and PBP analyses using a spreadsheet model 

combined with Crystal Ball (a commercially-available software program used to conduct 

stochastic analysis using Monte Carlo simulation and probability distributions) to account 

for uncertainty and variability among the input variables (e.g., energy prices, installation 

costs, and repair and maintenance costs). It uses weighting factors to account for 

distributions of shipments to different building types and States to generate LCC savings 

by efficiency level. Each Monte Carlo simulation consists of 10,000 LCC and PBP 

calculations. The model performs each calculation using input values that are either 

sampled from probability distributions and household samples or characterized with 

single-point values. The analytical results include a distribution of points showing the 

range of LCC savings and PBPs for a given efficiency level relative to the base-case 

efficiency forecast. The results of DOE’s LCC and PBP analysis are summarized in 

section IV.F and described in detail in chapter 8 of the NOPR TSD.

1. Installed Cost

The installed cost at each efficiency level is based on the MSP, distribution chain 

markups, sales tax, and installation cost.

In the preliminary analysis, DOE found that the historic real (i.e., adjusted for 

inflation) producer price index (PPI) for integral horsepower electric motors has been 

relatively flat except for the last few years, and elected to use prices held constant at the 
117

2011 level as the default price assumption to project future motor (and furnace fan) 

prices. Goodman commented that specifically looking at fractional motor (i.e., the type 

used in furnace fans) instead of integral horsepower motors would provide a better 

comparison for furnace fans, and that prices of such motors will not remain flat, but will 

continue to grow in the trend from the last five years. (Goodman, No. 50 at p. 5)

For the NOPR, DOE evaluated the historic real PPI of fractional horsepower 

electric motors instead of integral horsepower electric motors. DOE found that this index 

has been decreasing except for the last few years, when it started to increase. Given the 

uncertainty about whether the recent trend will continue or instead revert to the historical 

mean, for the NOPR, DOE elected to continue using constant prices at the most recent 

level as the default price assumption to project future prices of furnace fans. Appendix 

10-C of the NOPR TSD describes the historic PPI data.

In the preliminary analysis, DOE assumed that a fraction of ECM furnace fan 

installations will require up to an hour of extra labor. Goodman commented that based 

on its experience, at least two hours of extra labor will be required in the majority of 

ECM furnace fan installations. It notes this is particularly true in light of the fact that 

many regulatory authorities, such as California Energy Commission via Title 24, are 

requiring more verification of proper airflow, which may be more challenging with 

advanced technologies such as ECM motors. (Goodman, No. 50 at p. 5)
118

For the NOPR, DOE modified its approach and assumed that up to two hours of 

extra labor will be required for all ECM furnace fan installations. Details of the updated 

approach are available in chapter 8 of the NOPR TSD.

2. Operating Costs

In the preliminary analysis, DOE used the same maintenance costs for furnace 

fans at different efficiency levels. To estimate rates of fan motor failure, DOE developed 

a distribution of fan motor lifetime (expressed in operating hours) by motor size using 

data developed for DOE’s small electric motors final rule (75 FR 10874 (March 9, 

2010)).

40 DOE then paired these data with the calculated number of annual operating 

hours for each sample furnace, including constant circulation for some of the homes. 

Replacement motor costs were based on costs developed in the engineering analysis, and

the labor time and costs were based on RS Means data.41,42 DOE had no information 

indicating the extent to which consumers would replace a fan PSC motor with an ECM, 

so it assumed that when replacement is necessary, consumers replace the failed motor 

with the same type of motor.

Nidec estimated that three percent of the motors operating the furnace fan fail 

each year. (Nidec, No. 60 at pp. 2-3) DOE agrees that the fan motor may fail and 

included motor replacement in the LCC and PBP analysis.

 40 See: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/sem_finalrule_tsd.html 41 RS Means Company Inc., RS Means Residential Cost Data (2012). 42 RS Means Company Inc., Facilities Maintenance & Repair Cost Data (2012).
119

AHRI, Goodman, and Rheem commented that higher-efficiency motors have 

increased failure rates. AHRI and Rheem noted that the failure rate for a high-efficiency 

motor is typically higher than the failure rate of a PSC motor, because the electronics 

added to a high-efficiency motor introduce new failure modes associated with the life of 

electronic controls in damp, very cold, and very hot conditions. (AHRI, No. 48 at p. 6; 

Rheem, No. 54, at p. 14) Goodman commented that generally, more complex motors 

contain more components that can potentially break, which is true of the additional 

controls in X13 and ECM technologies. The commenter recommended that DOE 

estimate that service requirements will be 20 to 50 percent greater for higher-efficiency

motors and related controls, and that the cost of such service will be more for X13 and 

ECM than for PSC motors. Goodman also suggested that DOE should use a reduced 

lifetime (by five to ten percent) for X13 and ECM furnace fan motors, as PSC motor 

technologies are very mature and X13 and ECM are relatively young. (Goodman, No. 50 

at p. 6) 

DOE agrees that the electronics of higher-efficiency motors are likely to have 

increased failure rates. For the NOPR, DOE included repair to electronics for PSC 

motors with controls, constant-torque BPM motors, and especially constant-airflow BPM 

motors. DOE added an extra cost for the cases that require control updates for these 

efficiency levels. DOE also applied an additional labor hour to account for cases when it 

is necessary to replace the motors for the constant-torque BPM and constant-airflow 

BPM efficiency levels. See chapter 8 of the NOPR TSD for further details.
120

DOE did not have a firm basis for quantifying the degree to which constanttorque BPM motors and constant-airflow BPM motors have a shorter lifetime than PSC 

motors. Although DOE used the same motor lifetime for each fan efficiency level in 

terms of total operating hours, the lifetime in terms of years is lower for constant-torque 

BPM and constant-airflow BPM motors, because they are more frequently used in multistage heating mode. In addition, DOE included additional labor hours to repair constanttorque BPM and constant-airflow BPM motors, as well as higher equipment cost for the 

BPM motors. Thus, on average, consumers with constant-torque BPM motors or 

constant-airflow BPM motors have higher life-cycle repair costs.

Goodman commented that DOE excluded annual repair and maintenance costs 

from its payback analyses, and it believes those annualized costs should be included. 

(Goodman, No. 50 at p. 6) In response, DOE’s rulemaking analysis, and this NOPR, use 

a simple payback period, which does not account for changes in operating expense over 

time. This payback period is the amount of time it takes the consumer to recover the 

additional installed cost of more-efficient products, compared to baseline products, 

through energy cost savings. Repair costs are generally most significant in the later years 

of a product’s lifetime. Thus, they are not necessarily relevant to the payback periods 

that consumers actually experience. 
121

3. Other Inputs

DOE modeled furnace fan lifetime based on the distribution of furnace lifetimes 

developed for the recent energy conservation standards rulemaking for furnaces.

43 76 FR 

37408, 37476-77 (June 27, 2011). DOE used the same lifetime for furnace fans at 

different efficiency levels because there are no data that indicate variation of lifetime 

with efficiency. However, DOE modeled fan motor failure and replacement as a repair 

cost that affects a certain percentage of furnace fans, as discussed above. Ingersoll Rand 

commented that there should be no reason for an electric furnace to have a shorter 

lifetime than a fossil-fueled furnace. (Ingersoll Rand Residential Solutions, No. 57, at p. 

9) For the NOPR analysis, DOE assumed that the lifetime for the fans installed in 

electric furnaces and gas furnaces is the same.

DOE used the same distribution of discount rates for furnace fans as it used in the 

recent energy conservation standards rulemaking for furnaces. For replacement furnaces, 

the average rate is 5.0 percent. 

4. Base-Case Efficiency Distribution

To estimate the share of consumers that would be affected by an energy 

conservation standard at a particular efficiency level, DOE’s LCC and PBP analysis 

considers the projected distribution (i.e., market shares) of product efficiencies in the first 

compliance year under the base case (i.e., the case without new or amended energy 

 43 Available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp

_direct_final_rule_tsd.html.
122

conservation standards). For the preliminary analysis, DOE found very limited data with 

which to estimate either current shares or recent trends. DOE requested comments on its 

estimate of the base-case efficiency distribution of furnace fans in 2019, as well as data 

that might support use of different assumptions.

Several parties commented that DOE’s estimates of constant-torque BPM motor 

and constant-airflow BPM motor market growth seem overly optimistic. Ingersoll Rand 

commented that DOE overestimated the future market share of these motors. (Ingersoll 

Rand Residential Solutions, No. 57, at p. 2) Lennox stated that the preliminary TSD’s 

market growth assumptions are overstated for both constant-torque and variable-speed 

(ECM) motors. Lennox believes other factors increased adoption of higher-efficiency 

products between 2009 and 2011, namely, that was the period when a $1,500 Federal tax 

credit was available for furnaces with an AFUE rate of 95 percent or more. (Lennox, No. 

47 at p. 2) Morrison commented that the projections for ECM market penetration are 

based on information from 2010 that presents an overly positive picture for the growth 

absent incentives. It stated that the market share of ECM motors has fallen in 2012 and 

will likely remain around that level without additional incentives, although it noted that 

regional furnace and air conditioner standards would likely increase market penetration 

of ECM and X13 motors. (Morrison, No. 58 at p. 8) AHRI and Morrison conceded that 

DOE's regional standards for central air conditioners, heat pumps and furnaces may 

slightly increase the usage of ECM and X13 motors, but such an increase would still not 

match DOE's projected ECM market share. (AHRI, No. 48 at p. 4; Morrison, No. 58 at 

p. 8) Rheem presented a forecast from its procurement group that shows the share of 
123

variable-speed motors declining to the 20-25 percent range in 2012 and remaining at that 

level in 2013. (Rheem, No. 54, at p. 13) EEI stated that DOE should take into 

consideration the impact of tax incentives for the purchase of energy-efficient heating and 

cooling equipment when estimating energy use baselines and projected energy savings. 

(EEI, No. 65 at p. 4) AHRI included a chart showing a declining trend in the usage of 

ECM and X13 motors after the expiration of the Federal tax credits. (AHRI, No. 48 at p. 

4)

AHRI commented that current trends suggest that the ECM and X13 market 

shares will be 25-30 percent and 10-15 percent respectively by 2019, assuming there are 

no further tax credit incentives in coming years. (AHRI, No. 48 at p. 4) Goodman 

commented that DOE’s assumed market shares for X13 and ECM fans are significantly 

higher than Goodman’s estimates, and that recent values are probably skewed as a result 

of Federal tax credits. Goodman estimates that about 70 percent of shipments in 2019 are 

expected to be PSC, and ECM motors are likely to be twice the volume of X13 motors 

(i.e., 20 percent ECM and 10 percent X13). (Goodman, No. 50 at p. 4) 

For the NOPR, DOE reviewed the information provided by the manufacturers and 

modified its estimate of market shares in 2019. The NOPR analysis assumes that the 

combined market share of constant-torque BPM fans and constant-airflow BPM fans will 

be 35 percent in 2019. The shares are 13 percent for constant-torque BPM fans and 22

percent for constant-airflow BPM fans. DOE estimated separate shares for replacement 

and new home applications.
124

The market shares of efficiency levels within the constant-torque BPM motor and 

constant-airflow BPM motor categories were derived from AHRI data on number of 

models.44 No such data were available for the PSC fan efficiency levels, so DOE used 

the number of models it tested or could measure using product literature to estimate that 

40 percent of shipments are at the baseline level and 60 percent are improved PSC fans. 

There are currently no models of PSC with a controls design, so DOE assumed zero 

market share for such units. The details of DOE’s approach are described in chapter 8 of 

the NOPR TSD. 

5. Rebuttable Presumption Payback Period

As discussed in section III.E.2, EPCA provides that a rebuttable presumption is 

established 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. (42 U.S.C. 6295(o)(2)(B)(i)) The 

calculation of this so-called rebuttable presumption payback period uses the same inputs 

as the calculation of the regular PBP for each sample household, but it uses average 

values instead of distributions, and the derivation of energy consumption and savings 

only uses the parameters specified by the proposed DOE test procedure for furnace fans 

rather than the method applied in the energy use analysis (described in section IV.E), 

which considers the characteristics of each sample household.

 44 DOE used the AHRI Directory of Certified Furnace Equipment (Available at: 

http://www.ahridirectory.org/ahridirectory/pages/home.aspx) as well as manufacturer product literature. 
125

DOE’s LCC and PBP analyses generate values that calculate the payback period 

for consumers of potential energy conservation standards, which includes, but is not 

limited to, the three-year payback period contemplated under the rebuttable presumption 

test discussed above. However, DOE routinely conducts a full economic analysis that 

considers the full range of impacts, including those to the consumer, manufacturer, 

Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of 

this analysis serve as the basis for DOE to definitively evaluate the economic justification 

for a potential standard level (thereby supporting or rebutting the results of any 

preliminary determination of economic justification).

G.

DOE uses forecasts of product shipments to calculate the national impacts of 

standards on energy use, NPV, and future manufacturer cash flows. DOE develops 

shipment projections based on historical data and an analysis of key market drivers for 

each product. 

Shipments Analysis

The vast majority of furnace fans are shipped installed in furnaces, so DOE 

estimated furnace fan shipments by projecting furnace shipments in three market 

segments: (1) replacements; (2) new housing; and (3) new owners in buildings that did 

not previously have a central furnace.
126

To project furnace replacement shipments, DOE developed retirement functions 

for furnaces from the lifetime estimates and applied them to the existing products in the 

housing stock. The existing stock of products is tracked by vintage and developed from 

historical shipments data. The shipments analysis uses a distribution of furnace lifetimes 

to estimate furnace replacement shipments.

To project shipments to the new housing market, DOE utilized projected new 

housing construction and historic saturation rates of various furnace and cooling product 

types in new housing. DOE used AEO 2012 for projections of new housing. Furnace 

saturation rates in new housing are provided by the U.S. Census Bureau’s Characteristics 

of New Housing.

45

DOE also included a small market segment consisting of households that become 

“new owners” of a gas furnace. This segment consists of households that have central air 

conditioning and non-central heating or central air conditioning and electric heating and 

choose to install a gas furnace.

Several parties stated that DOE’s shipments estimates appear to be too high. 

(AHRI, No. 48 at p. 5; Goodman, No. 50 at p. 6; Rheem, No. 54, at p. 15; Ingersoll Rand 

Residential Solutions, No. 57, at p. 2; Morrison, No. 58 at p. 6) Goodman stated that 

DOE projects growth from approximately 3 million units in 2011 to more than 4 million 

in 2020, whereas Goodman estimates about 3.7 million units in 2020, or less if new 

 45 Available at: http://www.census.gov/const/www/charindex.html.
127

energy conservation standards affect sales. (Goodman, No. 50 at p. 6) AHRI, Morrison,

and Rheem stated that prior to 2006, the demand for large homes with multiple furnace 

systems was more common than it is today, and it is not clear that the demand for homes 

with multiple furnace systems can be projected into the future. These commenters also 

argued that the shipment projections do not show an echo effect loss in replacement sales 

for the drop in furnace sales in 2009-2013. (AHRI, No. 48 at p. 5; Morrison, No. 58 at p. 

6; Rheem, No. 54 at p. 15) EEI stated that DOE’s projected shipments of furnace fans do 

not appear consistent with other estimates of furnace shipments that EEI has observed.

(EEI, No. 65 at p. 4) Lennox noted that DOE has projected significant market growth 

starting in 2012 and continuing forward, which does not appear to be supported by recent 

sales figures. (Lennox, No. 47 at p. 2)

For the NOPR, DOE utilized more recent historical shipments data for gas-fired 

and oil-fired furnaces, which show a decline in 2012. DOE also reviewed and modified 

its projection of furnace shipments. The new projection (depicted in chapter 9 of the 

NOPR TSD) shows a lower level of replacement shipments in the 2025-30 period, which 

is a consequence (i.e., an echo) of the decline in historical shipments in 2007-2009. The 

NOPR projection for 2020 shows total shipments of 3.7 million, which is the same as the

3.7 million estimated by Goodman. 

Regarding the comment from AHRI, Morrison, and Rheem, DOE's methodology 

does not presume that past demand for homes with multiple furnace systems will 

continue in the future. However, it does assume that furnaces installed in the past will be 
128

replaced, so the installation of multiple furnaces in the past would contribute to future 

growth in shipments.

In the preliminary analysis, DOE considered whether standards that require moreefficient furnace fans would have an impact on furnace shipments. Lennox stated that an 

overly-stringent standard for furnace fans would bring further increased costs to 

consumers, beyond the added product cost from tightened AFUE standards for furnaces, 

venting and drainage for condensing furnaces (required in northern States by regional 

standards), and standby mode and off mode power regulations. Lennox stated that higher 

purchase prices cause consumers to defer purchases, repair existing furnaces, and/or find 

less-efficient, higher-polluting alternate sources of heat. (Lennox, No. 47 at p. 3) 

Goodman commented that it would expect reduction in furnace sales after 

implementation of a new furnace fan standard, since many consumers will choose to 

repair instead of replacing products currently in their home, thereby avoiding the need to

pay the initial cost of a more expensive, higher-efficiency product. (Goodman, No. 50 at 

p. 6) Morrison also commented that higher upfront costs could lead to consumer 

switching to less-efficient products and push consumers to repair rather than replace 

units. (Morrison, No. 58, at p. 9)

DOE agrees that it is reasonable to expect that energy conservation standards for 

residential furnace fans that result in higher furnace prices would have some dampening 

effect on sales. Some consumers might choose to repair their existing furnace rather than 

purchase a new one, or perhaps install an alternative space heating product. To estimate 
129

the impact on shipments of the price increase for the considered efficiency levels, DOE 

used the relative price elasticity approach that was applied in the 2011 furnace standards 

rulemaking.46 76 FR 37408, 37483 (June 27, 2011). This approach also gives some 

weight to the operating cost savings from higher-efficiency products. Chapter 9 in the 

NOPR TSD describes the method applied.

H.

The NIA assesses the NES and the NPV from a national perspective of total 

consumer costs and savings expected to result from new or amended energy conservation 

standards at specific efficiency levels. DOE determined the NPV and NES for the 

potential standard levels considered for the furnace fan product classes analyzed. To 

make the analysis more accessible and transparent to all interested parties, DOE prepared 

a computer spreadsheet that uses typical values (as opposed to probability distributions) 

as inputs. To assess the effect of input uncertainty on NES and NPV results, DOE has 

developed its spreadsheet model to conduct sensitivity analyses by running scenarios on 

specific input variables. 

National Impact Analysis

Analyzing impacts of potential energy conservation standards for residential 

furnace fans requires comparing projections of U.S. energy consumption with new or 

amended energy conservation standards against projections of energy consumption 

without the standards. The forecasts include projections of annual appliance shipments, 

 46 Available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp

_direct_final_rule_tsd.html.
130

the annual energy consumption of new appliances, and the purchase price of new 

appliances.

A key component of DOE’s NIA analysis is the energy efficiencies projected over 

time for the base case (without new standards) and each of the standards cases. The 

projected efficiencies represent the annual shipment-weighted energy efficiency of the 

products under consideration during the shipments projection period (i.e., from the 

assumed compliance date of a new standard to 30 years after compliance is required). 

In the preliminary analysis, DOE derived a growth rate in the market share of 

ECM fans by extrapolating the trend from 2005, when the ECM share was 10 percent, to 

2010, when it was approximately 30 percent. In so doing, DOE considered the favorable 

cost-effectiveness of ECM fans and assumed that their market share would peak and level 

off at 79 percent. 

AHRI and Rheem stated that DOE’s assumption that the market share for furnace 

fans with ECM technology will increase to 75 percent is not supported by the industry 

data, especially since the Federal residential tax credits have expired. (AHRI, No. 48 at p 

5; Rheem, No. 54, at p. 15) Goodman also stated that a 75 percent peak market 

penetration of ECM motors as estimated by DOE seems high. Goodman estimates a 

value in the range of 40-50 percent by mid-century. (Goodman, No. 50 at p. 4)
131

For the NOPR, DOE reviewed the information provided by the manufacturers and 

modified its estimate of the long-run trend in market shares of constant-torque BPM and 

constant-airflow BPM motor furnace fans. The NOPR analysis assumes a long-run trend 

that results in market share of the constant-torque BPM and constant-airflow BPM 

furnace fans reaching 45 percent in 2048.

For the preliminary analysis, DOE used a “roll up” scenario for estimating the 

impacts of the potential energy conservation standards for residential furnace fans. 

Under the “roll-up” scenario, DOE assumes: (1) product efficiencies in the base case that 

do not meet the standard level under consideration would “roll-up” to meet the new 

standard level; and (2) product efficiencies above the standard level under consideration 

would not be affected. To be consistent with the assumption regarding base-case 

efficiency after the compliance year, DOE assumed that for each standards case, the 

efficiency distribution in each product class remains unchanged after 2019. DOE used 

the same approach for the NOPR.

1. National Energy Savings Analysis

The national energy savings analysis involves a comparison of national energy 

consumption of the considered products in each potential standards case (TSL) with 

consumption in the base 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). Vintage represents the age of the product. DOE calculated annual NES based 
132

on the difference in national energy consumption for the base case (without new 

efficiency standards) and for each higher efficiency standard. DOE estimated energy 

consumption and savings based on site energy and converted the electricity consumption 

and savings to primary energy using annual conversion factors derived from the AEO 

2012 version of the NEMS. Cumulative energy savings are the sum of the NES for each 

year over the timeframe of the analysis.

DOE has historically 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). While DOE stated in that notice that it intended to use the 

Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) 

model to conduct the analysis, it also said it would review alternative methods, including 

the use of EIA’s National Energy Modeling System (NEMS). After evaluating both 

models and 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 a more appropriate tool for this specific use. 77 FR 49701 

(August 17, 2012). Therefore, DOE is using NEMS model to conduct FFC analyses. 
133

Goodman questioned the introduction of FFC measures of energy use. It noted 

that, under 42 U.S.C. 6291(4), “energy use” is defined as “the quantity of energy directly 

consumed by a consumer product at point of use...” (Goodman, No. 50 at p. 4)

The definition of “energy use” cited by Goodman is intended to apply at the 

product level. This is apparent from the complete definition: “The term ‘energy use’

means the quantity of energy directly consumed by a consumer product at point of use, 

determined in accordance with test procedures under section 6293 of this title.” (42 

U.S.C. 6291(4)) The law also 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)) The term “energy” means 

electricity or fossil fuels, but the Secretary may, by rule, include other fuels within the 

meaning of the term “energy” if he determines that such inclusion is necessary or 

appropriate to carry out the purposes of this chapter. . (42 U.S.C. 6291(3)) The inclusion 

of energy used in the full fuel cycle of electricity or FFC metric provides a more 

complete accounting of the fossil fuels used at the building is within the purposes of 

chapter 77, which include conservation of energy supplies through energy conservation 

programs. (42 U.S.C. 6201(4)) saved by standards, and its use is in keeping with DOE’s 

statutory authority. The approach used for today’s NOPR, and theto derive FFC 

multipliers that were applied, arefor today’s NOPR is described in appendix 10-B of the 

NOPR TSD. DOE requests comment on the FCC multipliers and the assumptions made 

to derive the multipliers. Comment [A35]: Change recommended by 

OIRA.
134

2. Net Present Value Analysis

The inputs for determining NPV are: (1) total annual installed cost; (2) total 

annual savings in operating costs; (3) a discount factor to calculate the present value of 

costs and savings; (4) present value of costs; and (5) present value of savings. DOE 

calculated net savings each year as the difference between the base case and each 

standards case in terms of total savings in operating costs versus total increases in 

installed costs. DOE calculated savings over the lifetime of products shipped in the 

forecast period. 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 and 7 percent to discount future costs and savings 

to present values.

For the NPV analysis, DOE calculates increases in total installed costs as the 

difference in total installed cost between the base case and standards case (i.e., once the 

standards take effect). 

DOE assumed no change in residential furnace fan prices over the 2019−2048

period. In addition, DOE conducted a sensitivity analysis using alternative price trends, 

specifically one in which prices decline over time, and another in which prices rise. These 

price trends are described in appendix 10-C of the NOPR TSD.

DOE expresses savings in operating costs as decreases associated with the lower 

energy consumption of products bought in the standards case compared to the base 
135

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.

DOE estimates 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.47 The NPV results for the residential furnace fan 

TSLs are presented in section V.B.3 of this notice.

I.

In the NOPR stage of a rulemaking, DOE conducts a consumer subgroup analysis. 

A consumer subgroup comprises a subset of the population that may be affected 

disproportionately by new or revised energy conservation standards (e.g., low-income 

consumers, seniors). The purpose of a subgroup analysis is to determine the extent of 

any such disproportional impacts. 

Consumer Subgroup Analysis

For today’s NOPR, DOE evaluated impacts of potential standards on two 

subgroups: (1) senior-only households and (2) low-income households. DOE identified 

these households in the RECS sample and used the LCC spreadsheet model to estimate 

the impacts of the considered efficiency levels on these subgroups. The consumer 

subgroup results for the residential furnace fan TSLs are presented in section V.B.1 of 

this notice.

 47 OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs.”
136

J.

1. Overview

Manufacturer Impact Analysis

DOE performed an MIA to estimate the financial impact of new energy 

conservation standards on manufacturers of residential furnace fans and to calculate the 

potential impact of such standards on employment and manufacturing capacity. The 

MIA has both quantitative and qualitative aspects. The quantitative part of the MIA 

primarily relies on the Government Regulatory Impact Model (GRIM), an industry cashflow model with inputs specific to this rulemaking. The key GRIM inputs are data on the 

industry cost structure, product costs, shipments, and assumptions about markups and 

conversion expenditures. The key output is the industry net present value (INPV). 

Different sets of assumptions (markup scenarios) will produce different results. The 

qualitative part of the MIA addresses factors such as product characteristics, impacts on 

particular subgroups of firms, and important market and product trends. The complete 

MIA is outlined in chapter 12 of the NOPR TSD.

For this rulemaking, DOE considers the “furnace fan industry” to consist of 

manufacturers who assemble furnace fans as a component of the HVAC products 

addressed in this rulemaking.

DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the 

MIA, DOE prepared a profile of the residential furnace fans industry that includes a topdown cost analysis of manufacturers used to derive preliminary financial inputs for the 
137

GRIM (e.g., sales, general, and administration (SG&A) expenses; research and 

development (R&D) expenses; and tax rates). DOE used public sources of information, 

including company SEC 10-K filings, 48 corporate annual reports, the U.S. Census 

Bureau’s Economic Census, 49 and Hoover’s reports. 50

In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis to quantify 

the potential impacts of a new energy conservation standard. In general, energy 

conservation standards can affect manufacturer cash flow in three distinct ways: (1) 

create a need for increased investment; (2) raise production costs per unit; and (3) alter 

revenue due to higher per-unit prices and possible changes in sales volumes. 

In Phase 3 of the MIA, DOE conducted structured, detailed interviews with a 

representative cross-section of 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. See section IV.J.4 for a 

description of the key issues manufacturers raised during the interviews.

Additionally, in Phase 3, DOE evaluated subgroups of manufacturers that may be 

disproportionately impacted by new standards or that may not be accurately represented 

by the average cost assumptions used to develop the industry cash-flow analysis. For 

 48 U.S. Securities and Exchange Commission, Annual 10-K Reports (Various Years) (Available at:

http://sec.gov). 49 U.S.Census Bureau, Annual Survey of Manufacturers: General Statistics: Statistics for Industry Groups 

and Industries (Available at: 

http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t). 50 Hoovers Inc. Company Profiles (Various Companies) (Available at: http://www.hoovers.com). 
138

example, small manufacturers, niche players, or manufacturers exhibiting a cost structure 

that largely differs from the industry average could be more negatively affected. DOE 

identified one subgroup (i.e., small manufacturers) for a separate impact analysis.

DOE applied the small business size standards published by the Small Business 

Administration (SBA) to determine whether a company is considered a small business. 

65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) 

and codified at 13 CFR part 121. To be categorized as a small business under North 

American Industry Classification System (NAICS) code 333415, “Air-Conditioning and 

Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment 

Manufacturing,” a residential furnace fan manufacturer and its affiliates may employ a 

maximum of 750 employees. The 750-employee threshold includes all employees in a 

business’s parent company and any other subsidiaries. Based on this classification, DOE 

identified at least 14 residential furnace fan manufacturers that qualify as small 

businesses. The residential furnace fan small manufacturer subgroup is discussed in 

chapter 12 of the NOPR TSD and in section V.B.2.d of this notice.

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the changes in cash flow due to new standards 

that result in a higher or lower industry value. The GRIM analysis uses a standard, 

annual cash-flow analysis that incorporates manufacturer costs, markups, shipments, and 

industry financial information as inputs. The GRIM models changes in costs, distribution 

of shipments, investments, and manufacturer margins that could result from new energy 
139

conservation standards. The GRIM spreadsheet uses the inputs to arrive at a series of 

annual cash flows, beginning in 2013 (the base year of the analysis) and continuing to 

2048. DOE calculated INPVs by summing the stream of annual discounted cash flows 

during this period. For residential furnace fan manufacturers, DOE used a real discount 

rate of 7.8 percent, which was derived from industry financials and then modified 

according to feedback received during manufacturer interviews. 

The GRIM calculates cash flows using standard accounting principles and 

compares changes in INPV between a base case and each standards case. The difference 

in INPV between the base case and a standards case represents the financial impact of the 

new energy conservation standard on manufacturers. As discussed previously, DOE 

collected this information on the critical GRIM inputs from a number of sources, 

including publicly-available data and interviews with a number of manufacturers 

(described in the next section). The GRIM results are shown in section V.B.2.a. 

Additional details about the GRIM, the discount rate, and other financial parameters can 

be found in chapter 12 of the NOPR TSD.

a. Government Regulatory Impact Model Key Inputs

Manufacturing a higher-efficiency product is typically more expensive than 

manufacturing a baseline product due to the use of more complex components, which are 

typically more costly than baseline components. The changes in the MPCs of the 

Manufacturer Production Costs
140

analyzed products can affect the revenues, gross margins, and cash flow of the industry, 

making these product cost data key GRIM inputs for DOE’s analysis.

In the MIA, DOE used the MPCs for each considered efficiency level calculated in 

the engineering analysis, as described in section IV.C and further detailed in chapter 5 of 

the NOPR TSD. In addition, DOE used information from its teardown analysis, 

described in chapter 5 of the TSD, to disaggregate the MPCs into material, labor, and 

overhead costs. To calculate the MPCs for equipment above the baseline, DOE added the 

incremental material, labor, and overhead costs from the engineering cost-efficiency 

curves to the baseline MPCs. These cost breakdowns and product markups were 

validated and revised with manufacturers during manufacturer interviews.

Shipments Forecast

The GRIM estimates manufacturer revenues based on total unit shipment forecasts 

and the distribution of these values 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 forecasts derived from the shipments analysis 

from 2013 (the base year) to 2048 (the end year of the analysis period). See chapter 9 of 

the NOPR TSD for additional details.

For the standards-case shipment forecast, the GRIM uses the NIA standards-case 

shipment forecasts. DOE assumes a new efficiency distribution in the standards case, in 

which product efficiencies in the base case that did not meet the standard under 
141

consideration would “roll up” to meet the new standard in the year that compliance is 

required.

Product and Capital Conversion Costs

New energy conservation standards would cause manufacturers to incur one-time 

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 one-time investments in 

research, development, testing, marketing, and other non-capitalized costs necessary to 

make product designs comply with the new energy conservation standard. Capital 

conversion costs are one-time investments in property, plant, and equipment necessary to 

adapt or change existing production facilities such that new product designs can be 

fabricated and assembled. 

To evaluate the level of capital conversion expenditures manufacturers would 

likely incur to comply with new energy conservation standards, DOE used manufacturer 

interviews to gather data on the anticipated level of capital investment that would be 

required at each efficiency level. DOE validated manufacturer comments through 

estimates of capital expenditure requirements derived from the product teardown analysis 

and engineering analysis described in chapter 5 of the TSD.
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DOE assessed the product conversion costs at each considered efficiency level by 

integrating data from quantitative and qualitative sources. DOE considered marketshare-weighted feedback regarding the potential costs of each efficiency level from 

multiple manufacturers to determine conversion costs such as R&D expenditures and 

certification costs. Manufacturer data were aggregated to better reflect the industry as a 

whole and to protect confidential information. 

In general, DOE assumes that all conversion-related investments occur between 

the year of publication of the final rule and the year by which manufacturers must comply 

with the new standard. The investment figures used in the GRIM can be found in section 

IV.J.2 of this notice. For additional information on the estimated product and capital 

conversion costs, see chapter 12 of the NOPR TSD.

b. Government Regulatory Impact Model Scenarios

In the NIA, DOE modeled shipments with a roll-up scenario to represent possible 

standards-case efficiency distributions for the years beginning 2019 (the year that 

compliance with new standards is proposed to be required) through 2048 (the end of the 

analysis period). The roll-up scenario represents the case in which all shipments in the 

base case that do not meet the new standard would roll up to meet the new standard level, 

with the efficiency of products already at the new standard level remaining unchanged. 

Consumers in the base case who purchase products above the standard level are not 

Shipment Scenarios
143

affected as they are assumed to continue to purchase the same product in the standards 

case. See chapter 9 of the NOPR TSD for more information.

Markup Scenarios

As discussed above, MSPs include direct manufacturing production costs (i.e., 

labor, materials, and overhead estimated in DOE’s MPCs) and all non-production costs 

(i.e., SG&A, R&D, and interest), along with profit. To calculate the MSPs in the GRIM, 

DOE applied non-production cost markups to the MPCs estimated in the engineering 

analysis for each product class and efficiency level. Modifying these markups in the 

standards case yields different sets of impacts on manufacturers. For the MIA, DOE 

modeled two standards-case markup scenarios to represent the uncertainty regarding the 

potential impacts on prices and profitability for manufacturers following the 

implementation of new energy conservation standards: (1) a preservation of gross margin 

percentage markup scenario; and (2) a preservation of operating profit markup scenario. 

These scenarios lead to different markups values that, when applied to the inputted 

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” markup 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 production costs increase 

with efficiency, this scenario implies that the absolute dollar markup will increase as 

well. Based on publicly-available financial information for manufacturers of residential 

furnace fans and comments from manufacturer interviews, DOE assumed the non-
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production cost markup—which includes SG&A expenses, R&D expenses, interest, and 

profit—to be the following for each residential furnace fan product class: 

Table IV.9: Manufacturer Markup by Residential Furnace Fan Product Class

Product Class Markup

NWG-NC 1.30

NWG-C 1.31

WG-NC 1.27

NWO-NC 1.35

EF/MB 1.19

MH-NWG-NC 1.25

MH-NWG-C 1.25

MH-EF/MB 1.15

Because this markup scenario assumes that manufacturers would be able to 

maintain their gross margin percentage markups as production costs increase in response 

to a new energy conservation standard, it represents a high bound to industry 

profitability.

In the preservation of operating profit scenario, manufacturer markups are set so 

that operating profit one year after the compliance date of the new energy conservation 

standard is the same as in the base case. Under this scenario, as the costs of production 

increase under a standards case, manufacturers are generally required to reduce their 

markups to a level that maintains base-case operating profit. The implicit assumption 

behind this markup scenario is that the industry can only maintain its operating profit in 

absolute dollars after compliance with the new standard is required. Therefore, operating 

margin in percentage terms is squeezed (reduced) between the base case and standards 

case. DOE adjusted the manufacturer markups in the GRIM at each TSL to yield 
145

approximately the same earnings before interest and taxes in the standards case as in the 

base case. This markup scenario represents a low bound to industry profitability under a 

new energy conservation standard.

3. Discussion of Comments

During the preliminary analysis public meeting, interested parties commented on 

the assumptions and results of the preliminary analysis TSD. Oral and written comments 

addressed several topics, including testing and certification burdens, cumulative 

regulatory burdens, compliance date, impacts on small businesses, and conversion costs. 

a. Testing and Certification Burdens

Manufacturers expressed concerns about the potential testing and certification 

burdens that may be associated with a new furnace fan energy conservation standard. 

Ingersoll Rand commented that the rulemaking would result in additional burden from 

testing, certification, and compliance, leading to an increased cost for consumers. 

(Ingersoll Rand, No. 57 at p. 2) Rheem stated that, in the past, there has been no 

requirement for manufacturers to test and report furnace airflow data according to any 

industry or governmental standard. In addition, Rheem added that there have been no 

certification requirements that require the testing of multiple samples. Therefore, Rheem 

concluded that it is not reasonable to assume that manufacturers already have the data 

available to rate hundreds of current furnace models. For companies like Rheem, which 

have a large number of basic models, the commenter lamented that compliance with new 

testing requirements would create a significant burden. (Rheem, No. 54 at p. 3) In order 
146

to relieve some of the testing burden, Mortex recommended that DOE should allow 

manufacturers to use Alternative Efficiency Determination Methods (AEDMs). (Mortex, 

No. 43 at p. 25) Mortex also recommended that DOE should use an alternative test 

procedure that is integrated with AFUE testing so that all models do not have to be tested 

separately under the residential furnace fan test procedure. (Mortex, No. 59 at p. 3) 

Manufacturers were also concerned that the time needed to certify all their products 

would reduce investment in innovative technologies, because fewer resources would be 

available for R&D. (Rheem, No. 54 at p. 16) 

DOE recognizes the concerns that manufacturers have regarding test burden. As 

discussed in section III.A, DOE proposed in the April 2, 2013 test procedure SNOPR to 

adopt a modified version of an alternative test method recommended by AHRI and other 

furnace fan manufacturers that aligns the residential furnace fan test procedure with the 

DOE test procedure for residential furnaces to significantly reduce burden on industry.

78 FR 19606. DOE also estimated the capital expenditure, time to test, and cost to test 

according to the proposed residential furnace fan test procedure in the SNOPR. DOE 

found that the proposed test procedure would not result in significant capital expenditures 

for manufacturers, because they would not have to acquire or use any test equipment 

beyond the equipment already used to conduct the test method specified in the DOE 

residential furnace test procedure (i.e., the AFUE test setup). DOE also found that the 

time to conduct a single furnace fan test according to its proposed furnace fan test 

procedure would be less than 3 hours and cost less than one percent of the manufacturer 

selling price of the product into which the furnace fan is integrated. Consequently, DOE 
147

does not find that testing furnace fans according to this proposed test procedure would be 

unduly burdensome. Id. at 19619-21

b. Cumulative Regulatory Burden

Interested parties expressed concern over the cumulative regulatory burden that 

would result from a residential furnace fan energy conservation standard. Morrison 

commented that the energy conservation standards that already apply to residential 

HVAC products, in combination with a standard for furnace fans, would significantly 

increase manufacturer burden. (Morrison, No. 43 at p. 23) Both AHRI and Morrison 

stated that DOE’s current estimation of the incremental cost of testing furnace fans (at 

less than 2 percent of the manufacturer selling price) does not account for the additional 

burden placed on furnace manufacturers that must now also certify standby mode and off 

mode energy consumption, along with AFUE. (AHRI, No. 48 at p.7; Morrison, No. 58 at 

p. 10) Furthermore, Morrison commented that several of the manufacturers who are 

impacted by this residential furnace fans rulemaking face even greater cumulative 

regulatory burden, because they also produce other products regulated by DOE. 

(Morrison, No. 58 at p. 10)

Instead of creating a set of residential furnace fan standards through a separate 

energy conservation rulemaking, manufacturers and efficiency experts advocated for 

combining all furnace-related standards into one rulemaking or to have only one metric 

for all furnace-related products. California Investor Owned UtilitiesCA IOU

recommended that DOE should, in future iterations of furnace-related standards, combine 
148

CAC/HP, furnaces, and furnace fans into a single rulemaking, given their interrelated 

performance and energy consumption. (CA IOU, No. 56 at p. 2) Morrison and Rheem 

were also concerned that the cost of certifying furnace fan efficiency ratings would 

increase upfront costs for consumers and therefore lead them to choose less-efficient 

products (e.g., space heaters) or repair HVAC units instead of replacing them. (Morrison, 

No. 58 at p. 9; Rheem, No. 54 at p. 16) Furthermore, Morrison believes a single 

combined metric would prevent consumer confusion that can arise from having multiple 

metrics assigned to a single product, and Morrison opined that such approach would also 

reduce the regulatory burden imposed on manufacturers. (Morrison, No. 43 at p. 24)

DOE realizes that the cumulative effect of multiple regulations on an industry 

may significantly increase the burden faced by manufacturers that need to comply with 

regulations and testing requirements from different organizations and levels of 

government. DOE takes into account the cumulative cost of multiple regulations on 

manufacturers in the cumulative regulatory burden section of its analysis. Additionally, 

DOE considers the cumulative regulatory burden as part of its decision process in setting

proposed standards. Further information on cumulative regulatory burden can be found in 

section V.B.2.e of this notice and in chapter 12 of the NOPR TSD.

c. Compliance Date and Implementation Period

Efficiency advocates expressed support for a compliance date sooner than five 

years after publication of the final rule, because it would result in additional energy 

savings. Earthjustice commented that EPCA does not mandate a lead time of five years 
149

for furnace fans because furnace fans are not listed in section 325(m) (42 U.S.C. 

6295(m)(4)(A)(ii)) as a product to which a 5-year lead time applies. (Earthjustice, No. 49 

at p. 2) In a joint comment (hereinafter referred to as the joint comment), the Appliance 

Standards Awareness Project, American Council for an Energy-Efficient Economy, 

National Consumer Law Center, Natural Resources Defense Council, and Northwest 

Energy Efficiency Alliance encouraged DOE to consider a compliance date three years 

after publication of the final rule. According to the joint commenters, a three-year lead 

time for manufacturers is feasible, because the efficiency levels that DOE evaluated for 

the preliminary analysis are based on technologies that are already widely employed in 

current HVAC products – namely ECM and X13 motors. (ACEEE, et al., No. 55 at p. 3) 

NEEP also recommended a compliance date three years after publication of the final rule. 

(NEEP, No. 51 at p. 3) 

However, according to Goodman, EPCA mandates a lead time of greater than five 

years. Goodman commented that EPCA prohibits a manufacturer from being forced to 

apply new standards to a product that has had other new standards applied to it within a 

6-year period. (42 U.S.C. 6295(m)(4)(B)) Therefore, the earliest effective date for new 

energy conservation standards for residential furnace fans, pursuant to EPCA, would be 

January 1, 2021 because a new AFUE standard will become effective on May 1, 2013 

and a new SEER/HSPF standard will become effective January 1, 2015. (Goodman, No. 

50 at p. 8 )
150

In response to these comments regarding the appropriate compliance date for 

residential furnace fan standards, DOE agrees with the joint commenters’ observation 

that under 42 U.S.C. 6295(m)(4)(A)(ii), EPCA does not specify furnace fans as a product 

with a 5-year lead time. DOE does not agree with Goodman’s interpretation of 42 U.S.C. 

6295(m)(4) as prohibiting a compliance date prior to January 2021. DOE has tentatively 

concluded that 42 U.S.C. 6295(m)(4) is only applicable to amendments to existing 

standards, butand residential furnace fans are covered products that have not been 

previously regulated. Furnace fans are explicitly addressed only at 42 U.S.C. 

6295(f)(4)(D), which does not specify any compliance dates. Therefore, since EPCA 

does not mandate a specific lead time for furnace fans, DOE considered the actions 

required by manufacturers to comply with the proposed standard to determine an 

appropriate lead-time. During manufacturer interviews, DOE found that standards would 

result in manufacturers’ extending R&D beyond the furnace fan assembly to understand 

the impacts on the design and performance of the furnace or modular blower in which the 

furnace fan is integrated. To comply with the proposed standard, manufacturers may have 

to alter not only the designs and fabrication processes for the furnace fan assembly, but 

also for the furnace or modular blower into which the furnace fan is integrated. Similar 

products that require similar actions for compliance typically have lead times of five 

years. For these reasons, DOE selected a 5-year compliance date.

d. Small Businesses

DOE received comments regarding its analysis of small businesses. Mortex 

formally requested that DOE prepare a regulatory flexibility analysis since it believes that 

Comment [A36]: Change recommended by 

OIRA.
151

DOE has not certified that the amendments in the test procedure proposed rule do not 

have a significant economic impact on a substantial number of small entities. (Mortex, 

No. 59 at p. 3) During the preliminary analysis public meeting, Unico asked whether 

small manufacturers will be included in DOE’s cost-benefit analysis. (Unico, No. 43 at 

p. 56) However, Ingersoll Rand is concerned that DOE limits the manufacturer analysis 

to only small manufacturers. (Ingersoll Rand, No. 57 at p. 2)

For the manufacturer impact analysis, DOE determined the impact of a new 

standard on the entire residential furnace fans industry, including manufacturers of all 

sizes. However, DOE also evaluated subgroups of manufacturers that may be 

disproportionately impacted by new standards. For this rulemaking, DOE identified 

small businesses as a subgroup and discusses the impacts on this subgroup in the initial 

regulatory flexibility analysis, which can be found in section VI.B of today’s notice. 

DOE’s decision to prepare a regulatory flexibility analysis for the residential furnace fans 

standards rulemaking NOPR is separate from its decision to not prepare a regulatory 

flexibility analysis for the residential furnace fans test procedures NOPR. DOE did 

previously certify to SBA that its proposed test procedure for residential furnace fans 

would not have a significant economic impact on a substantial number of small entities.

e. Conversion Costs

Several manufacturers expressed concerned as to the capital conversion costs that 

may be associated with a new standard. Rheem stated that stringent standards may 

require significant capital conversion costs and that this is a key issue for the MIA. 
152

(Rheem, No. 54 at p. 16) Morrison expressed a similar concern, stating that 

manufacturers may incur significant capital conversion costs at “overly burdensome” 

regulation levels. (Morrison, No. 58 at p. 9)

DOE acknowledges manufacturers’ concerns regarding capital conversion costs

and carefully took this matter into account in developing its proposal. During 

manufacturer interviews, DOE requested information about potential conversion costs at 

each efficiency level for each product class. DOE evaluated the information gathered 

during the interviews, as well as data from the engineering analysis, to determine capital 

conversion costs. Conversion costs are discussed in detail in section V.B.2.a of today’s 

notice and in chapter 12 of the TSD.

4. Manufacturer Interviews

DOE considers the manufacturer of the HVAC product in which the residential 

furnace fan is integrated to be the furnace fan manufacturer. DOE is aware that HVAC 

product manufacturers purchase many of the components in the furnace fan assembly

(e.g., the motor and impeller) from separate component manufacturers. However, the 

HVAC product manufacturer determines the design requirements, selects the purchased 

components based on these requirements, and performs the final assembly and integration 

of the fan assembly into the HVAC product. For these reasons, DOE considers the 

HVAC product manufacturer to be the furnace fan manufacturer. Accordingly, DOE 

interviewed manufacturers representing approximately 90 percent of residential gas 

furnace and central air conditioner sales, approximately 15 percent of residential oil 
153

furnace sales, 51 over 85 percent of electric furnace/modular blower sales, and 

approximately 90 percent of manufactured home furnace sales. These interviews were in 

addition to those DOE conducted as part of the engineering analysis. The information 

gathered during these interviews enabled DOE to tailor the GRIM to reflect the unique 

financial characteristics of the residential furnace fan industry. All interviews provided 

information that DOE used to evaluate the impacts of potential new energy conservation 

standards on manufacturer cash flows, manufacturing capacities, and employment levels.

During the manufacturer interviews, DOE asked manufacturers to describe their 

major concerns about this rulemaking. The following sections describe the most 

significant issues identified by manufacturers. DOE also considered all other concerns 

expressed by manufacturers in its analyses. However, manufacturer interviews are 

conducted under non-disclosure agreements (NDAs), so DOE does not document these 

discussions in the same way that it does public comments in the comment summaries and 

DOE’s responses throughout the rest of this notice.

a. Testing and Certification Burdens

All interviewed manufacturers expressed concerns about testing and certification 

burdens. In particular, manufacturers were concerned about the additional time required 

to test products for compliance with the new standard. Because the test procedure

proposed in the May 15, 2012 furnace fan test procedure NOPR (77 FR 28674) is 

 51 DOE did reach out to a number of residential oil-fired furnace manufacturers, but most declined to be 

interviewed. However, DOE notes that fan assemblies and the processes by which they are fabricated do 

not change significantly across furnace type.
154

different from testing methods that are currently being used for residential furnaces, 

manufacturers argued that a significant amount of time would need to be invested. Some 

manufacturers suggested that the testing burden could be reduced if the testing for FER 

could be coordinated with testing for AFUE. In general, manufacturers were more 

concerned about the additional time and labor required to conduct the testing rather than 

the cost of testing equipment and stations, which were expected to be minimal. 

As explained in section IV.K.3.a, DOE recognizes the concerns that 

manufacturers have regarding test burden and has issued a test procedure SNOPR that 

would align the proposed residential furnace fan test procedure with the DOE test 

procedure for residential furnaces, thereby reducing the burden on manufacturers. 78 FR 

19606 (April 2, 2013).

b. Market Size

During interviews, manufacturers raised concerns about the potential of new 

furnace fan energy conservations standards to cause the residential furnace fan market to 

contract. Manufacturers claimed that an increase in overall product costs, resulting from 

component changes or increased test burden, would lead to a reduced volume of furnace 

sales. They stated that higher costs could drive consumers to purchase refurbished or 

repaired units instead of new products. Higher costs might also push consumers towards 

using alternative heating technologies (e.g., space heaters or radiant heat) which may be 

less efficient. One manufacturer also noted that the market for residential furnace fan 

products has already shrunk 6-7 percent and is expected to have slow growth over the 
155

next few years. Given that manufacturers expect slow or no growth in the near future for 

most of the product classes even without new energy conservation standards, the addition 

of new standards could lead to further market contraction. 

Although the production costs for furnace fans are estimated to increase with 

higher efficiency levels, DOE does not expect overall shipments of furnaces to decrease 

due to an increase in standards. On the contrary, based on the shipments analysis, total 

shipments for the furnace fan industry are not expected to decrease in the years following 

the standards compliance year. Chapter 9 of the NOPR TSD provides more information 

on shipment estimates during the analysis period.

c. Cumulative Regulatory Burden

DOE identified a number of cumulative regulations that may affect residential 

furnace fan manufacturers. Interviewed manufacturers mentioned the following 

regulations as potentially having an impact and contributing to burden: (1) DOE Energy 

Conservation Standards for Furnaces and Central Air Conditioners and Heat Pumps; (2) 

DOE’s Certification, Compliance, and Enforcement rulemaking; (3) DOE’s Alternative 

Efficiency Determination Methods and Alternate Rating Methods rulemaking; (4) EPA’s 

phaseout of Hydrochlorofluorocarbons (HCFCs); (5) EPA’s Energy Star program; (6) 

State regulations such as California Title 24; (7) the South Coast Air Quality 

Management District Rule 1111; (8) Canadian energy efficiency regulations; and (9) 

ASHRAE Standard 90.1. Some manufacturers indicated that the largest portion of their 

research and development budget goes toward meeting the various DOE standards. One 
156

manufacturer also recommended that DOE standards should be spread apart by at least 

five year periods so that manufacturers can allocate appropriate time to meet standards 

and develop new products. 

DOE also asked manufacturers under what circumstances they would be able to 

coordinate expenditures related to other regulations. Manufacturers emphasized the 

benefits of having fewer metrics to evaluate and limiting the scope of coverage for 

residential furnace fans to strictly those units housed in furnaces. In addition, 

manufacturers requested that DOE consider harmonizing with international standards to 

lessen the cumulative burden. Manufacturers also requested that the compliance date for 

some standards be pushed out to allow enough time for product development and limit 

stranded assets. 

DOE recognizes and takes into account the cumulative cost of multiple 

regulations on manufacturers in the cumulative regulatory burden section of its analysis. 

Further information on cumulative regulatory burden can be found in section V.B.2.e of 

this notice and in chapter 12 of the NOPR TSD.

d. Consumer Confusion

In addition to the regulatory burden imposed by multiple standards, manufacturers 

were concerned with issues arising from multiple metrics that all apply to a single 

product. Furnaces alone already have energy efficiency rating metrics for AFUE and 

standby power, so with an additional FER metric, furnaces would be labeled with three 
157

different metrics. Manufacturers stated during interviews that three metrics are too many 

for a single product, and that consumers who use these rating metrics to evaluate and 

compare product performance may get confused if multiple metrics are labeled on one 

furnace. Manufacturers recommended that DOE should focus on the thermal 

performance of the furnace and not the fan energy consumption, which is a small fraction 

of a furnace’s overall energy use. 

In response, DOE is required by EPCA to consider and establish energy 

conservation standards for residential furnace fans by December 31, 2013. (42 U.S.C. 

6295(f)(4)(D)) DOE is also required to develop test procedures to measure the energy 

efficiency, energy use, or estimated annual operating cost of each covered product prior 

to the adoption of an energy conservation standard. (42 U.S.C. 6295(o)(3)(A) and (r)) 

Pursuant to these statutory requirements in EPCA, DOE proposes new energy 

conservation standards in this notice, based on its proposed rating metric (FER). 

Commenters have provided noDOE requests comment and information to demonstrateon

the potential for significant consumer confusion regarding the FER metric for residential 

furnace fans, beyond speculation.

e. Motors

Manufacturers questioned the use of X13 and ECM motors as a design option to 

improve furnace fan efficiency. As these motors employ more complex controls and 

have higher maintenance costs than PSC motors, it was suggested that long-term 

reliability may be an issue. Manufacturers expect that the number of warranty claims, as 

Comment [A37]: Change recommended by 

OIRA.
158

well as warranty-associated costs, would increase if use of X13s and ECMs increased. 

X13s and ECMs are also more-expensive components that would increase the initial cost 

of the products in which they are used. Since these motors would increase product price 

but reduce reliability, manufacturers anticipate more consumers seeking to repair or 

refurbish existing products rather than purchase new ones. Furthermore, manufacturers 

may face challenges in obtaining a sufficient supply of motors due to the potential supply 

limitations of ECMs. 

DOE recognizes the concerns that manufacturers have about the reliability of 

ECM motors. However, DOE did not receive sufficient quantitative data from 

manufacturers regarding the failure rates and number of warranty claims for the different 

motor types to make any firm conclusions about their reliability. Consequently, DOE 

retained X13 and ECM motors as a design option for consideration.

K.

In the emissions analysis, DOE estimates the reduction in power sector emissions 

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

from potential energy conservation standards for the considered products. In addition to 

estimating impacts of standards on power sector emissions, DOE estimated emissions

impacts in production activities (extracting, processing, and transporting fuels) that 

provide the energy inputs to power plants. These are referred to as “upstream” emissions.

Together, these emissions account for the full-fuel-cycle. In accordance with DOE’s FFC 

Emissions Analysis
159

Statement of Policy (76 FR 51281 (August 18, 2011)), this FFC analysis also includes 

impacts on emissions of methane (CH4) and nitrous oxide (N2O), both of which are 

recognized as greenhouse gases. 

DOE conducted the emissions analysis using emissions factors that were derived 

from data in EIA’s AEO 2012, supplemented by data from other sources. DOE 

developed separate emissions factors for power sector emissions and upstream emissions. 

For residential furnace fans, DOE also calculated site and upstream emissions from the 

additional use of natural gas associated with some of the efficiency levels. The method 

that DOE used to derive emissions factors is described in chapter 13 of the NOPR TSD.

For CH4 and N2O, DOE calculated emissions reduction in tons and also in terms 

of units of carbon dioxide equivalent (CO2eq). Gases are converted to CO2eq by 

multiplying the tons of the gas by the gas's global warming potential (GWP) over a 100-

year time horizon. Based on the Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change,52 DOE used GWP values of 25 for CH4 and 298 for N2O.

EIA prepares the Annual Energy Outlook using NEMS. Each annual version of 

NEMS incorporates the projected impacts of existing air quality regulations on emissions. 

AEO 2012

 52 Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. 

Lowe, G. Myhre, J. Nganga, R. Prinn,G. Raga, M. Schulz and R. Van Dorland. 2007: Changes in 

Atmospheric Constituents and in Radiative Forcing. In Climate Change 2007: The Physical Science Basis. 

Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on 

Climate Change. S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. 

Miller, Editors. 2007. Cambridge University Press, Cambridge, United Kingdom and New York, NY, 

USA. p. 212.

generally represents current legislation and environmental regulations, 

Comment [A38]: Change recommended by 

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160

including recent government actions, for which implementing regulations were available 

as of December 31, 2011.

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 (D.C.). SO2 emissions from 28 eastern States and D.C. were 

also limited under the Clean Air Interstate Rule (CAIR; 70 FR 25162 (May 12, 2005)), 

which created an allowance-based trading program that operates along with the Title IV 

program. CAIR was remanded to the U.S. Environmental Protection Agency (EPA) by 

the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) but it 

remained in effect. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North 

Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). 53 On July 6, 2011, EPA issued a 

replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 

(August 8, 2011). The AEOOn August 21, 2012 emissions factors used for today’s 

NOPR assume, the implementation ofD.C. Circuit issued a decision to vacate CSAPR, 

and ordered EPA to continue administering CAIR.

54

 53 CAIR was remanded to the U.S. Environmental Protection Agency (EPA) by the U.S. Court of Appeals 

for the District of Columbia Circuit (D.C. Circuit) but it remained in effect. See North Carolina v. EPA, 

550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). 54 On December 30, 2011, the D.C. Circuit stayed the new rules while a panel of judges reviews them, and 

told EPA to continue administering CAIR. See EME Homer City Generation, LP v. EPA, Order, No. 11-

1302, Slip Op. at *2 (D.C. Cir. Dec. 30, 2011). On August 21, 2012, the D.C. Circuit issued a decision to 

vacate CSAPR. See EME Homer City Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at *24 

(D.C. Cir. Aug. 21, 2012). The court again ordered EPA to continue administering CAIR. AEO 2012 had 

been finalized prior to both these decisions, however. DOE understands that CAIR and CSAPR are similar 

with respect to their effect on emissions impacts of energy conservation standards. . See EME Homer City 

Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012) cert. granted, 81 USLW 3567 (U.S. Jun. 24 2013) 

(No. 12-1182). . 

Comment [A39]: Change recommended by 

OIRA.

Formatted: No underline

Comment [A40]: Change recommended by 

OIRA.

Formatted: Underline, Not Highlight
161

AEO 2012 had been finalized prior to CSAPR being vacated. The AEO 2012

emissions factors used for today’s NOPR assume the implementation of CSAPR. As a 

result, for the purpose of calculating emissions reductions of SO2 and NOX in this NOPR, 

DOE refers to impacts under CSAPR even though CSAPR is not currently in effect. This 

should not alter the accuracy of DOE’s projections, however, because DOE expects that 

the impacts of energy conservation standards on SO2 and NOx emissions would be similar 

regardless of whether CAIR or CSAPR are in effect.55

The attainment of emissions caps is typically flexible among EGUs and is 

enforced through the use of emissions allowances and tradable permits. Under existing 

EPA regulations, any excess SO2 emissions allowances resulting from the lower 

electricity demand caused by the adoption of an energy conservation standard could be 

used to permit offsetting increases in SO2 emissions by any regulated EGU. In past 

rulemakings, DOE recognized that there was uncertainty about the effects of efficiency 

standards on SO2 emissions covered by the existing cap-and-trade system, but it 

concluded that negligible reductions in power sector SO2 emissions would occur as a 

result of standards. 

Beginning in 2015, however, SO2 emissions will fall as a result of the Mercury 

and Air Toxics Standards (MATS) for power plants, which were announced by EPA on 

 55 This is because SO2 emissions will be well below the cap under either rule, such that emissions 

reductions will be realized to the same extent; the caps on NOX emissions in the 22 states regulated under 

both rules will have the same effect such that reductions in electricity generation from efficiency standards 

would result in little change in NOX levels (as explained further below).

Comment [A41]: Change recommended by 

OIRA.
162

December 21, 2011. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA 

established a standard for hydrogen chloride as a surrogate for acid gas hazardous air 

pollutants (HAP), and also established a standard for SO2 (a non-HAP acid gas) as an 

alternative equivalent surrogate standard for acid gas HAP. The same controls are used 

to reduce HAP and non-HAP acid gas; thus, SO2 emissions will be reduced as a result of 

the control technologies installed on coal-fired power plants to comply with the MATS 

requirements for acid gas. AEO 2012 assumes that, in order to continue operating, coal 

plants must have either flue gas desulfurization or dry sorbent injection systems installed 

by 2015. Both technologies, which are used to reduce acid gas emissions, also reduce 

SO2 emissions. Under the MATS, NEMS shows a reduction in SO2 emissions when 

electricity demand decreases (e.g., as a result of energy efficiency standards). Emissions 

will be far below the cap established by CSAPR, so it is unlikely that excess SO2

emissions allowances resulting from the lower electricity demand would be needed or 

used to permit offsetting increases in SO2 emissions by any regulated EGU. Therefore, 

DOE believes that efficiency standards will reduce SO2 emissions in 2015 and beyond.

CSAPR established a cap on NOx emissions in 28 eastern States and the District 

of Columbia. Energy conservation standards are expected to have little effect on NOx

emissions in those States covered by CSAPR because excess NOx emissions allowances 

resulting from the lower electricity demand could be used to permit offsetting increases 

in NOx emissions. However, standards would be expected to reduce NOx emissions in 

the States not affected by the caps, so DOE estimated NOx emissions reductions from the 
163

potential standards considered in today’s NOPR for these States where emissions are not 

capped.

The MATS limit mercury emissions from power plants, but they do not include 

emissions caps, and, as such, DOE’s energy conservation standards would likely reduce 

Hg emissions. For this rulemaking, DOE estimated mercury emissions reduction using 

emissions factors based on AEO 2012, which incorporates the MATS.

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

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

emissions from power plants. DOE is investigating the possibility of using other methods 

to estimate reduction in PM emissions due to standards. The great majority of ambient 

PM associated with power plants is in the form of secondary sulfates and nitrates, which 

are produced at a significant distance from power plants by complex atmospheric 

chemical reactions that often involve the gaseous emissions of power plants, mainly SO2

and NOx. The monetary benefits that DOE estimates for reductions in SO2 and NOx

emissions resulting from standards are in fact primarily related to the health benefits of 

reduced ambient PM.

L.

As part of the development of this NOPR, DOE considered the estimated 

monetary benefits from the reduced emissions of CO2 and NOX that are expected to result 

from each of the considered efficiency levels. In order to make this calculation similar to 

Monetizing Carbon Dioxide and Other Emissions Impacts
164

the calculation of the NPV of consumer benefit, DOE considered the reduced emissions 

expected to result over the lifetime of products shipped in the forecast period for each 

efficiency level. This section summarizes the basis for the monetary values used for CO2

and NOX emissions and presents the values considered in this rulemaking.

For today’s NOPR, DOE is relying on a set of values for the social cost of carbon 

(SCC) that was developed by an interagency process. A summary of the basis for those 

values is provided below, and a more detailed description of the methodologies used is 

provided as an appendix to chapter 14 of the NOPR TSD.

1. Social Cost of Carbon 

The SCC is an estimate of the monetized damages associated with an incremental 

increase in carbon emissions in a given year. It is intended to include (but is not limited 

to) changes in net agricultural productivity, human health, property damages from 

increased flood risk, and the value of ecosystem services. Estimates of the SCC are 

provided in dollars per metric ton of carbon dioxide. A domestic SCC value is meant to 

reflect the value of damages in the United States resulting from a unit change in carbon 

dioxide emissions, while a global SCC value is meant to reflect the value of damages 

worldwide.

Under section 1(b)(6) of Executive Order 12866, “Regulatory Planning and 

Review,” 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, 

assess both the costs and the benefits of the intended regulation and, recognizing that 
165

some costs and benefits are difficult to quantify, propose or adopt a regulation only upon 

a reasoned determination that the benefits of the intended regulation justify its costs. The 

purpose of the SCC estimates presented here is to allow agencies to incorporate the 

monetized social benefits of reducing CO2 emissions into cost-benefit analyses of 

regulatory actions that have small, or “marginal,” impacts on cumulative global 

emissions. The estimates are presented with an acknowledgement of the many 

uncertainties involved and with a clear understanding that they should be updated over 

time to reflect increasing knowledge of the science and economics of climate impacts.

As part of the interagency process that developed the SCC estimates, technical 

experts from numerous agencies met on a regular basis to consider public comments, 

explore the technical literature in relevant fields, and discuss key model inputs and 

assumptions. The main objective of this process was to develop a range of SCC values 

using a defensible set of input assumptions grounded in the existing scientific and 

economic literatures. In this way, key uncertainties and model differences transparently 

and consistently inform the range of SCC estimates used in the rulemaking process.

a. Monetizing Carbon Dioxide Emissions

When attempting to assess the incremental economic impacts of carbon dioxide 

emissions, the analyst faces a number of serious challenges. A recent report from the 

National Research Council points out that any assessment will suffer from uncertainty, 

speculation, and lack of information about: (1) future emissions of greenhouse gases; (2) 

the effects of past and future emissions on the climate system; (3) the impact of changes 
166

in climate on the physical and biological environment; and (4) the translation of these 

environmental impacts into economic damages. As a result, any effort to quantify and 

monetize the harms associated with climate change will raise serious questions of 

science, economics, and ethics and should be viewed as provisional.

Despite the serious limits of both quantification and monetization, SCC estimates 

can be useful in estimating the social benefits of reducing carbon dioxide emissions. Most 

Federal regulatory actions can be expected to have marginal impacts on global emissions. 

For such policies, the agency can estimate the benefits from reduced emissions in any 

future year by multiplying the change in emissions in that year by the SCC value 

appropriate for that year. The net present value of the benefits can then be calculated by 

multiplying the future benefits by an appropriate discount factor and summing across all 

affected years. This approach assumes that the marginal damages from increased 

emissions are constant for small departures from the baseline emissions path, an 

approximation that is reasonable for policies that have effects on emissions that are small 

relative to cumulative global carbon dioxide emissions. For policies that have a large 

(non-marginal) impact on global cumulative emissions, there is a separate question of 

whether the SCC is an appropriate tool for calculating the benefits of reduced emissions. 

This concern is not applicable to this rulemaking, however.

It is important to emphasize that the interagency process is committed to 

updating these estimates as the science and economic understanding of climate change 

and its impacts on society improves over time. In the meantime, the interagency group 
167

will continue to explore the issues raised by this analysis and consider public comments 

as part of the ongoing interagency process.

b. Social Cost of Carbon Values Used in Past Regulatory Analyses

Economic analyses for Federal regulations have used a wide range of values to 

estimate the benefits associated with reducing carbon dioxide emissions. In the final 

model year 2011 CAFE rule, the U.S. Department of Transportation (DOT) used both a 

“domestic” SCC value of $2 per metric ton of CO2 and a “global” SCC value of $33 per 

metric ton of CO2 for 2007 emission reductions (in 2007$), increasing both values at 2.4 

percent per year. DOT also included a sensitivity analysis at $80 per metric ton of CO2.

56 

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per metric ton 

of CO2 (in 2006$) for 2011 emission reductions (with a range of $0−$14 for sensitivity 

analysis), also increasing at 2.4 percent per year.57

 56 See Average Fuel Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74 FR 14196 

(March 30, 2009) (Final Rule); Final Environmental Impact Statement Corporate Average Fuel Economy 

Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at: 

A regulation for packaged terminal air 

conditioners and packaged terminal heat pumps finalized by DOE in October of 2008 

used a domestic SCC range of $0 to $20 per metric ton CO2 for 2007 emission reductions 

(in 2007$). 73 FR 58772, 58814 (Oct. 7, 2008). In addition, EPA’s 2008 Advance Notice 

of Proposed Rulemaking on Regulating Greenhouse Gas Emissions Under the Clean Air 

Act identified what it described as “very preliminary” SCC estimates subject to revision. 

73 FR 44354 (July 30, 2008). EPA’s global mean values were $68 and $40 per metric ton 

http://www.nhtsa.gov/fuel-economy) (Last accessed December 2012).

57 See Average Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 2011-2015, 73 

FR 24352 (May 2, 2008) (Proposed Rule); Draft Environmental Impact Statement Corporate Average Fuel 

Economy Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at 3-58 (June 2008) 

(Available at: http://www.nhtsa.gov/fuel-economy) (Last accessed December 2012).
168

CO2 for discount rates of approximately 2 percent and 3 percent, respectively (in 2006$ 

for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of 

how best to quantify the benefits from reducing carbon dioxide emissions. To ensure 

consistency in how benefits are evaluated across agencies, the Administration sought to 

develop a transparent and defensible method, specifically designed for the rulemaking 

process, to quantify avoided climate change damages from reduced CO2 emissions. The 

interagency group did not undertake any original analysis. Instead, it combined SCC 

estimates from the existing literature to use as interim values until a more comprehensive 

analysis could be conducted. The outcome of the preliminary assessment by the 

interagency group was a set of five interim values: global SCC estimates for 2007 (in 

2006$) of $55, $33, $19, $10, and $5 per metric ton of CO2. These interim values 

represented the first sustained interagency effort within the U.S. government to develop 

an SCC for use in regulatory analysis. The results of this preliminary effort were 

presented in several proposed and final rules.

c. Current Approach and Key Assumptions 

Since the release of the interim values, the interagency group reconvened on a 

regular basis to generate improved SCC estimates. Specifically, the group considered 

public comments and further explored the technical literature in relevant fields. The 

interagency group relied on three integrated assessment models commonly used to 

estimate the SCC: the FUND, DICE, and PAGE models. These models are frequently 
169

cited in the peer-reviewed literature and were used in the last assessment of the 

Intergovernmental Panel on Climate Change. Each model was given equal weight in the 

SCC values that were developed. 

Each model takes a slightly different approach to model how changes in 

emissions result in changes in economic damages. A key objective of the interagency 

process was to enable a consistent exploration of the three models while respecting the 

different approaches to quantifying damages taken by the key modelers in the field. An 

extensive review of the literature was conducted to select three sets of input parameters 

for these models: climate sensitivity, socio-economic and emissions trajectories, and 

discount rates. A probability distribution for climate sensitivity was specified as an input 

into all three models. In addition, the interagency group used a range of scenarios for the 

socio-economic parameters and a range of values for the discount rate. All other model 

features were left unchanged, relying on the model developers’ best estimates and 

judgments.

The interagency group selected four sets of SCC values for use in regulatory 

analyses. Three sets of values are based on the average SCC from three integrated 

assessment models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The fourth 

set, which represents the 95th-percentile SCC estimate across all three models at a 3-

percent discount rate, is included to represent higher-than-expected impacts from climate 

change further out in the tails of the SCC distribution. The values grow in real terms over 

time. Additionally, the interagency group determined that a range of values from 7 
170

percent to 23 percent should be used to adjust the global SCC to calculate domestic 

effects, although preference is given to consideration of the global benefits of reducing 

CO2 emissions. Table IV.10 presents the values in the 2010 interagency group report,58

which is reproduced in appendix 14-A of the NOPR TSD.

Table IV.10 Annual SCC Values from 2010 Interagency Report, 2010–2050 (in 2007 

dollars per metric ton CO2)

Year

Discount Rate %

5 3 2.5 3

Average Average Average 95th Percentile

2010 4.7 21.4 35.1 64.9

2015 5.7 23.8 38.4 72.8

2020 6.8 26.3 41.7 80.7

2025 8.2 29.6 45.9 90.4

2030 9.7 32.8 50.0 100.0

2035 11.2 36.0 54.2 109.7

2040 12.7 39.2 58.4 119.3

2045 14.2 42.1 61.7 127.8

2050 15.7 44.9 65.0 136.2

The SCC values used for today’s notice were generated using the most recent 

versions of the three integrated assessment models that have been published in the peerreviewed literature.59

 58 Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency 

Working Group on Social Cost of Carbon, United States Government, February 2010. 

Table IV.11 shows the updated sets of SCC estimates in five-year 

increments from 2010 to 2050. Appendix 14-B of the NOPR TSD provides the full set of 

http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf 59 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, April 2013. See 

appendix 14-B of the NOPR TSD.. May 2013. 

http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf

.
171

SCC estimates, as well as the 2013 report from the interagency group. The central value 

that emerges is the average SCC across models at the 3-percent discount rate. However, 

for purposes of capturing the uncertainties involved in regulatory impact analysis, the 

interagency group emphasizes the importance of including all four sets of SCC values.

Table IV.11 Annual SCC Values from 2013 Interagency Update, 2010–2050 (in 2007 

dollars per metric ton CO2)

Year

Discount Rate %

5 3 2.5 3

Average Average Average 95th Percentile

2010 11 33 52 90

2015 12 38 58 109

2020 12 43 65 129

2025 14 48 70 144

2030 16 52 76 159

2035 19 57 81 176

2040 21 62 87 192

2045 24 66 92 206

2050 27 71 98 221

It is important to recognize that a number of key uncertainties remain, and that 

current SCC estimates should be treated as provisional and revisable since they will 

evolve with improved scientific and economic understanding. The interagency group also 

recognizes that the existing models are imperfect and incomplete. The National Research 
172

Council report mentioned above points out that there is tension between the goal of 

producing quantified estimates of the economic damages from an incremental ton of 

carbon and the limits of existing efforts to model these effects. There are a number of 

concerns and problems that should be addressed by the research community, including 

research programs housed in many of the Federal agencies participating in the 

interagency process to estimate the SCC. The interagency group intends to periodically 

review and reconsider those estimates to reflect increasing knowledge of the science and 

economics of climate impacts, as well as improvements in modeling.

In summary, in considering the potential global benefits resulting from reduced 

CO2 emissions, DOE used the values from the 2013 interagency report, adjusted to 2012$ 

using the Gross Domestic Product price deflator. For each of the four cases specified, the 

values used for emissions in 2015 were $12.9, $40.8, $62.2, and $117 per metric ton 

avoided (values expressed in 2012$). DOE derived values after 2050 using the relevant 

growth rates for the 2040-2050 period in the interagency update. 

DOE multiplied the CO2 emissions reduction estimated for each year by the SCC 

value for that year in each of the four cases. To calculate a present value of the stream of 

monetary values, DOE discounted the values in each of the four cases using the specific 

discount rate that had been used to obtain the SCC values in each case.

AHRI agreed that the monetization of emission reductions is an important factor 

to consider, but it stated that DOE has no statutory responsibility to establish a monetary 
173

value for potential environmental benefits of appliance and equipment standards. It 

added that there is currently no consensus on any single estimate of the value of CO2

emissions, and, therefore, DOE should not indulge in speculation to determine a value 

when it has no statutory obligation to do so. (AHRI, No. 48 at p. 7)

In response, it is noted that EPCA directs DOE to achieve the maximum 

improvement in energy efficiency that is technologically feasible and economically 

justified. (42 U.S.C. 6295(o)(2)(A)) DOE determines whether a standard is 

economically justified by considering, to the greatest extent practicable, a number of 

factors. (42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) Among these factors is “other factors the 

Secretary [of Energy] considers relevant.” The Secretary considers the economic benefits 

that may accrue to society from reduction of CO2 emissions a relevant factor. DOE 

further notes that the incorporation of environmental externalities, such as damage from 

climate change, is a well-established principle in cost-benefit analysis by Federal 

agencies. DOE acknowledges that the value to place on a ton of avoided CO2 emissions 

in future years is very uncertain, and for this reason it uses a wide range of monetary 

values (from $12.9 per ton to $117 per ton for emissions avoided in 2015).

AHRI also stated that DOE should not allow evaluation of environmental impacts 

to negate or make moot what has always been, and should remain, the core analysis in 

appliance and equipment standards rulemakings: the consumer payback period and lifecycle cost analysis. (AHRI, No. 48 at p. 7) In response, DOE notes that environmental 
174

and other impacts associated with reduced emissions are but one of the factors that DOE 

considers in determining whether a standard is economically justified. 

2. Valuation of Other Emissions Reductions

DOE investigated the potential monetary benefit of reduced NOX emissions from 

the potential standards it considered. As noted above, DOE has taken into account how 

new energy conservation standards would reduce NOX emissions in those 22 States not 

affected by the CSAPR. DOE estimated the monetized value of NOX emissions 

reductions resulting from each of the TSLs considered for today’s NOPR based on 

estimates found in the relevant scientific literature. Available estimates suggest a wide 

range of benefit per ton values for NOx from stationary sources, ranging from $468 to 

$4,809 per ton in 2012$.60 In accordance with OMB guidance, DOE conducted two 

calculations ofcalculated the monetary benefits derivedfrom NOx reductions using each 

of thean average benefit per ton valuesvalue for NOX, one using a real and discount 

raterates of 3 percent and the other using a real discount rate of 7 percent.61

DOE did not monetize Hg or SO2 emission reductions for today’s NOPR because 

it is currently evaluating appropriate valuation of reduction in these emissions.

 60 For additional information, refer to U.S. Office of Management and Budget, Office of Information and 

Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal Entities (2006). 61 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
175

M.

The utility impact analysis estimates several effects on the power generation 

industry that would result from the adoption of new or amended energy conservation 

standards. In the utility impact analysis, DOE analyzes the changes in electric installed 

capacity and generation that result for each trial standard level. The utility impact 

analysis uses a variant of NEMS, which is a public domain, multi-sectored, partial 

equilibrium model of the U.S. energy sector. DOE uses a variant of this model, referred 

to as NEMS-BT,

Utility Impact Analysis

62 to account for selected utility impacts of new or amended energy 

conservation standards. DOE’s analysis consists of a comparison between model results 

for the most recent AEO Reference Case and for cases in which energy use is 

decremented to reflect the impact of potential standards. The energy savings inputs 

associated with each TSL come from the NIA. Chapter 15 of the NOPR TSD describes 

the utility impact analysis in further detail.

NEEP recommended estimating the value of capacity reduction due to appliance 

standards as part of the NOPR, because reducing the need for electricity capacity is an 

important benefit that minimum efficiency standards bring to the country and various 

regions. Noting that the NOPR provides estimates of the expected reduction in electricity 

capacity due to residential furnace fan standards, NEEP urged the Department to also 

 62 DOE/EIA approves use of the name NEMS to describe only an official version of the model without any 

modification to code or data. Because this analysis entails some minor code modifications and the model is 

run under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the 

name “NEMS-BT” (“BT” is DOE’s Building Technologies Program, under whose aegis this work has been 

performed). 
176

include a financial benefit estimate associated with these capacity reductions. (NEEP, 

No. 51 at p. 3)

For the NOPR, DOE used NEMS-BT, along with EIA data on the capital cost of 

various power plant types, to estimate the reduction in national expenditures for 

electricity generating capacity due to potential residential furnace fan standards. The 

method used and the results are described in chapter 15 of the NOPR TSD. 

DOE is evaluating whether parts of the cost reduction are a transfer and thus, 

according to guidance provided by OMB to Federal agencies, should not be included in 

the estimates of the benefits and costs of a regulation.63

 63 OMB Circular A-4 (Sept. 17, 2003), p. 38.

Transfer payments are monetary 

payments from one group to another that do not affect total resources available to society

(i.e., exchanges that neither decrease nor increase total welfare). Benefits occur when 

savings to consumers result from real savings to producers, which increases societal 

benefits. Cost savings from reduced or delayed capital expenditure on power plants are a 

benefit, and not a transfer, to the extent that the reduced expenditure provides savings to 

both producers and consumers without affecting other groups. There would be a transfer 

to the extent that the delayed construction caused some other group (e.g., equipment 

suppliers or landowners who might have assets committed to the projects) to realize a 

lower return on those assets. DOE is evaluating these issues to determine the extent to 
177

which the cost savings from delayed capital expenditure on power plants are a benefit to 

society.64

EEI stated that as part of its analysis on the potential impact of new residential 

furnace fan efficiency standards on utilities, DOE should consider the impacts of 

increased demands on gas and oil systems, especially during peak fossil fuel demand 

days. (EEI, No. 65 at p. 2) In response, DOE has tentatively concluded that the increase

in gas and oil use associated with higher furnace fan efficiency levels is expected to be 

very small in the context of overall gas and oil demand, and as such, DOE believes that 

the impact on gas and oil systems would be insignificant.

EEI stated that with respect to electric utilities, DOE should ensure that it does not 

overestimate the potential for residential furnace fan energy conservation standards to 

reduce peak load demand. According to EEI, the vast majority of electric utilities in the 

U.S. reach peak demand during the summer air conditioning season. (EEI, No. 65 at p. 2) 

In response, DOE’s analysis with NEMS uses a demand load shape that approximates the 

daily and seasonal load of residential furnace fans. Thus, the resulting estimates of 

changes in generating capacity due to higher residential furnace fan efficiency are 

reasonable. 

 64 Although delayed investment implies a savings in total cost, the savings may be less than the savings in 

capital cost because the delay may also cause increases in other costs. For example, if the delayed 

investment was the replacement of an existing facility with a larger, more-efficient facility, the increased 

cost of operating the old facility during the period of delay might offset much of the savings from delayed 

investment. That the project was delayed is evidence that doing so decreased overall cost, but it does not 

indicate that the decrease was equal to the entire savings in capital cost.
178

N.

Employment impacts from new or amended energy conservation standards 

include 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 jobs created or eliminated in the national economy due to: 

(1) reduced spending by end users on energy; (2) reduced spending on new energy supply 

by the utility industry; (3) increased consumer spending on the purchase of new products; 

and (4) the effects of those three factors throughout the economy. 

Employment Impact Analysis

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.65

 65 See Bureau of Economic Analysis, “Regional Multipliers: A User Handbook for the Regional InputOutput Modeling System (RIMS II),” U.S. Department of Commerce (1992).

 There are many reasons for these differences, including wage 

differences and the fact that the utility sector is more capital-intensive and less laborintensive than other sectors. Energy conservation standards have the effect of reducing 
179

consumer utility bills. Because reduced consumer expenditures for energy likely lead to 

increased expenditures in other sectors of the economy, the general effect of efficiency 

standards is to shift economic activity from a less labor-intensive sector (i.e., the utility 

sector) to more labor-intensive sectors (e.g., the retail and service sectors). Thus, based 

on the BLS data alone, DOE believes net national employment may increase because of 

shifts in economic activity resulting from energy conservation standards for residential 

furnace fans.

For the standard levels considered in today’s NOPR, DOE estimated indirect 

national employment impacts using an input/output model of the U.S. economy called 

Impact of Sector Energy Technologies version 3.1.1 (ImSET).66

 66 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL18412, Pacific Northwest National Laboratory (2009) (Available at: 

 ImSET is a specialpurpose 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 the 187 sectors. ImSET’s 

national economic I–O structure is based on a 2002 U.S. benchmark table, specially 

aggregated to the 187 sectors most relevant to industrial, commercial, and residential 

building energy use. DOE notes that ImSET is not a general equilibrium forecasting 

model, and understands 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 overwww.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
180

estimate actual job impacts over the long run. For the NOPR, DOE used ImSET only to 

estimate short-term (2019 and 2024) employment impacts.

For more details on the employment impact analysis, see chapter 16 of the NOPR 

TSD.

V. Analytical Results and Conclusions

This section addresses the results from DOE’s analyses with respect to potential 

energy conservation standards for residential furnace fans. It addresses the TSLs 

examined by DOE, the projected impacts of each of these levels if adopted as energy 

conservation standards for furnace fans, and the proposed standard levels that DOE sets 

forth in today’s NOPR. Additional details regarding DOE’s analyses are contained in the 

TSD supporting this notice.

A.

DOE developed trial standard levels (TSLs) that combine efficiency levels for 

each product class of residential furnace fans. 

Trial Standard Levels

Table V.1 presents the efficiency levels for 

each product class in each TSL. TSL 6 consists of the max-tech efficiency levels. TSL 5 

consists of those efficiency levels that provide the maximum NPV using a 7-percent 

discount rate (see section V.B.3 for NPV results). TSL 4 consists of those efficiency 

levels that provide the highest NPV using a 7-percent discount rate, and that also result in 

a higher percentage of consumers that receive an LCC benefit than experience an LCC 

loss (see section V.B.1 for LCC results). TSL 3 uses efficiency level 3 for all product 
181

classes. TSL 2 consists of efficiency levels that are the same as TSL 3 for nonweatherized gas furnace fans, weatherized gas furnace fans, and electric furnace fans, but 

are at efficiency level 1 for oil-fired furnace fans and manufactured home furnace fans. 

TSL 1 consists of the most common efficiency levels in the current market. In summary, 

Table V.1 presents the six TSLs which DOE has identified for residential furnace fans, 

including the efficiency level associated with each TSL, the technology options 

anticipated to achieve those levels, and the expected resulting percentage reduction in 

FER from the baseline corresponding to each efficiency level.

Table V.1 Trial Standard Levels for Residential Furnace Fans

Product Class

Trial Standard Levels

(Efficiency Level)*

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas

Furnace Fan 

1 3 3 4 4 6

Non-weatherized, Condensing 

Gas Furnace Fan 1 3 3 4 4 6

Weatherized Non-Condensing 

Gas Furnace Fan 1 3 3 4 4 6

Non-Weatherized, NonCondensing Oil Furnace Fan 1 1 3 1 3 6

Non-weatherized Electric 

Furnace/Modular Blower Fan 1 3 3 4 4 6

Manufactured Home NonWeatherized, Non-Condensing 

Gas Furnace Fan 

1 1 3 1 3 6

Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan 

1 1 3 1 3 6

Manufactured Home Electric 

Furnace/Modular Blower Fan 1 1 3 4 4 6

* Efficiency level (EL) 1 = Improved PSC (12 percent). (For each EL, the percentages given refer to 

percent reduction in FER from the baseline level.) EL 2 = Inverter-driven PSC (25 percent). EL 3 = 

Constant-torque BPM motor (38 percent). EL 4 = Constant-torque BPM motor + Multi-Staging (51 

percent). EL 5 = Constant-airflow BPM motor (57 percent). EL 6 = Constant-airflow BPM motor + MultiStaging (61 percent).
182

B.

1. Economic Impacts on Consumers

Economic Justification and Energy Savings

a. Life-Cycle Cost and Payback Period

To evaluate the economic impact of the considered efficiency levels on 

consumers, DOE conducted an LCC analysis for each efficiency level. More-efficient

residential furnace fans would affect these consumers in two ways: (1) annual operating 

expense would decrease; and (2) purchase price would increase. Inputs used for 

calculating the LCC include total installed costs (i.e., equipment price plus installation 

costs), operating expenses (i.e., energy costs, repair costs, and maintenance costs), 

product lifetime, and discount rates. 

The output of the LCC model is a mean LCC savings (or cost) for each product 

class, relative to the baselinebase case efficiency levelsdistribution for residential furnace 

fans. The LCC analysis also provides information on the percentage of consumers for 

whom an increase in the minimum efficiency standard would have a positive impact (net 

benefit), a negative impact (net cost), or no impact.

DOE also performed a PBP analysis as part of the LCC analysis. The PBP is the 

number of years it would take for the consumer to recover the increased costs of higherefficiency products as a result of energy savings based on the operating cost savings. The 

PBP is an economic benefit-cost measure that uses benefits and costs without 

Comment [A42]: Change recommended by 

OIRA.
183

discounting. Chapter 8 of the NOPR TSD provides detailed information on the LCC and 

PBP analyses. 

DOE’s LCC and PBP analyses provide five key outputs for each efficiency level 

above the baseline, as reported in Table V.2 through Table V.9. for the considered TSLs. 

(Results for all efficiency levels are reported in chapter 8 of the NOPR TSD.) These 

outputs include the proportion of residential furnace fan purchases in which the purchase 

of a furnace fan compliant with the new energy conservation standard creates a net LCC 

increase, no impact, or a net LCC savings for the consumer. Another output is the 

average net LCC savings from standards-compliant products, as well as the median PBP 

for the consumer investment in standards-compliant products. Savings are measured 

relative to the base case efficiency distribution (see section IV.F.4), not the baseline 

efficiency level.

Comment [A43]: Change recommended by 

OIRA.

Comment [A44]: Change recommended by 

OIRA.
184

Table V.2 LCC and PBP Results for Non-Weatherized, Non-Condensing Gas

Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$ Net

Cost

No 

Impact

Net 

Benefit

Baseline $343 $2,146 $2,489 $0 0% 100% 0% ---

1 1 $354 $1,943 $2,297 $64 2% 68% 30% 1.34

2 $403 $1,649 $2,052 $253 25% 25% 50% 3.98

3 2, 3 $414 $1,389 $1,803 $442 18% 25% 57% 2.69

4 4, 5 $496 $1,273 $1,769 $474 33% 14% 53% 5.38

5 $662 $1,333 $1,995 $275 53% 12% 35% 11.53

6 6 $697 $1,260 $1,957 $313 58% 0% 42% 11.20

Table V.3 LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace 

Fans 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that

Experience

2012$ Net

Cost

No 

Impact

Net 

Benefit

Baseline $339 $2,259 $2,598 $0 0% 100% 0% ---

1 1 $351 $2,066 $2,417 $49 1% 75% 24% 1.35

2 $398 $1,775 $2,173 $203 21% 41% 38% 4.13

3 2, 3 $408 $1,506 $1,914 $361 10% 41% 49% 2.73

4 4, 5 $490 $1,414 $1,904 $371 24% 34% 42% 5.39

5 $658 $1,488 $2,146 $199 45% 29% 27% 11.73

6 6 $692 $1,415 $2,107 $238 57% 0% 43% 11.03
185

Table V.4 LCC and PBP Results for Weatherized, Non-Condensing Gas Furnace 

Fans

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$ Net

Cost

No 

Impact

Net 

Benefit

Baseline $329 $1,944 $2,273 $0 0% 100% 0% ---

1 1 $340 $1,759 $2,099 $35 0% 81% 18% 1.27

2 $387 $1,549 $1,936 $104 13% 56% 31% 4.94

3 2, 3 $397 $1,276 $1,673 $228 7% 56% 37% 2.65

4 4, 5 $476 $1,170 $1,645 $247 25% 33% 41% 6.39

5 $636 $1,290 $1,926 $39 51% 27% 22% 15.53

6 6 $670 $1,228 $1,898 $67 63% 0% 37% 13.32

Table V.5 LCC and PBP Results for Non-weatherized, Non-Condensing Oil 

Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$ Net

Cost

No 

Impact

Net 

Benefit

Baseline $387 $2,540 $2,927 $0 0% 100% 0% ---

1 1, 2, 

4 $404 $2,389 $2,794 $40 12% 71% 18% 5.49

2 - $470 $2,042 $2,512 $245 46% 28% 26% 12.33

3 3, 5 $482 $1,896 $2,378 $344 43% 28% 29% 6.97

4 - $570 $1,833 $2,402 $326 49% 28% 23% 12.07

5 - $798 $1,887 $2,685 $120 58% 28% 14% 27.47

6 6 $833 $1,840 $2,673 $132 79% 0% 21% 25.41
186

Table V.6 LCC and PBP Results for Non-Weatherized Electric Furnace/Modular 

Blower Fans

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$ Net

Cost

No 

Impact

Net 

Benefit

Baseline $241 $1,198 $1,439 $0 0% 100% 0% ---

1 1 $252 $1,100 $1,352 $21 5% 73% 21% 2.39

2 - $295 $954 $1,249 $84 28% 37% 34% 6.16

3 2, 3 $294 $830 $1,124 $160 20% 37% 42% 3.15

4 4, 5 $315 $771 $1,086 $185 27% 25% 48% 3.55

5 - $450 $855 $1,305 $18 52% 25% 23% 12.83

6 6 $482 $824 $1,306 $17 68% 0% 32% 13.45

Table V.7 LCC and PBP Results for Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$* Net

Cost

No 

Impact

Net 

Benefit

Baseline $254 $1,144 $1,398 $0 0% 100% 0% ---

1 1, 2, 4 $265 $1,070 $1,335 $26 13% 56% 32% 3.35

2 - $310 $955 $1,265 $97 62% 0% 38% 10.74

3 3, 5 $315 $901 $1,216 $146 58% 0% 42% 7.02

4 - $391 $876 $1,267 $95 70% 0% 30% 13.10

5 - $537 $927 $1,464 ($102) 85% 0% 15% 26.22

6 6 $569 $909 $1,478 ($116) 85% 0% 15% 26.73

*Parentheses indicate negative values.
187

Table V.8 LCC and PBP Results for Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fans 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$* Net

Cost

No 

Impact

Net 

Benefit

Baseline $271 $1,355 $1,626 $0 0% 100% 0% ---

1 1, 2, 4 $282 $1,261 $1,543 $27 7% 68% 26% 2.73

2 - $326 $1,123 $1,449 $96 43% 29% 28% 10.47

3 3, 5 $334 $1,039 $1,373 $152 38% 29% 32% 6.46

4 - $410 $1,005 $1,416 $111 68% 4% 27% 14.82

5 - $564 $1,053 $1,618 ($82) 82% 4% 14% 34.31

6 6 $597 $1,025 $1,622 ($86) 84% 0% 16% 32.23

*Parentheses indicate negative values.

Table V.9 LCC and PBP Results for Manufactured Home Electric 

Furnace/Modular Blower Fan 

Efficiency 

Level TSL

Life-Cycle Cost Life-Cycle Cost Savings 2012$ Median 

Payback 

Period Installed 

Cost years

Discounted 

Operating 

Cost

LCC

Average 

Savings 

% of Consumers that 

Experience

2012$* Net

Cost

No 

Impact

Net 

Benefit

Baseline $192 $663 $855 $0 0% 100% 0% ---

1 1, 2 $202 $608 $810 $14 8% 71% 21% 2.49

2 - $243 $561 $804 $20 37% 38% 25% 9.99

3 3 $241 $499 $739 $64 28% 38% 34% 4.35

4 4, 5 $259 $464 $723 $78 34% 26% 40% 4.61

5 - $382 $539 $921 ($70) 59% 26% 15% 16.75

6 6 $412 $525 $937 ($86) 82% 0% 18% 17.11

* Parentheses indicate negative values.
188

The results in the above tables reflect the assumptions for use of constant

circulation in the proposed DOE test procedure for furnace fans. As discussed in section 

IV.E, DOE also performed a sensitivity analysis for non-weatherized gas furnace fans to 

estimate the effect on the LCC results if it assumed half as much use of continuous 

circulation.67

Table V.10

Under this revised assumption, for non-weatherized, non-condensing gas 

furnace fans, the average LCC savings decline somewhat in the sensitivity analysis, and 

the share of consumers that experience an LCC benefit declines slightly (see ). 

The same changes occur for non-weatherized, condensing gas furnace fans, but the 

magnitude of the effect is somewhat larger than for non-condensing gas furnace fans (see 

Table V.11).

 67 Non-weatherized gas furnace fans account for the vast majority of furnace fans used in constantcirculation mode.
189

Table V.10 LCC and PBP Results for Non-Weatherized, Non-Condensing Gas 

Furnace Fans Under Alternative Constant-Circulation Scenarios

Constant-Circulation Scenario

Efficiency 

Level TSL

Current Test Procedure 

Assumptions

Half of Current Test Procedure 

Assumptions

Average 

LCC 

Savings 

% of Consumers that 

Experience

2012$

Average 

LCC 

Savings 

% of Consumers that 

Experience

2012$

Net

Cost

No 

Impact

Net 

Benefit

Net

Cost

No 

Impact

Net 

Benefit

1 1 $64 2% 68% 30% $59 2% 68% 29% 

2 - $253 25% 25% 50% $189 27% 25% 48% 

3 2, 3 $442 18% 25% 57% $362 19% 25% 56% 

4 4, 5 $474 33% 14% 53% $376 34% 14% 51% 

5 - $275 53% 12% 35% $173 55% 12% 33% 

6 6 $313 58% 0% 42% $204 60% 0% 40% 

Table V.11 LCC and PBP Results for Non-Weatherized, Condensing Gas Furnace 

Fans Under Alternative Constant-Circulation Scenarios

Constant-Circulation Scenario

Efficiency 

Level TSL

Current Test Procedure 

Assumptions

Half of Current Test Procedure 

Assumptions

Average 

LCC 

Savings 

% of Consumers that 

Experience

2012$

Average 

LCC 

Savings 

% of Consumers that 

Experience

2012$

Net

Cost

No 

Impact

Net 

Benefit

Net

Cost

No 

Impact

Net 

Benefit

1 1 $49 1% 75% 24% $41 1% 75% 24% 

2 $203 21% 41% 38% $127 22% 41% 37% 

3 2, 3 $361 10% 41% 49% $266 11% 41% 48% 

4 4, 5 $371 24% 34% 42% $256 25% 34% 40% 

5 $199 45% 29% 27% $78 47% 29% 24% 

6 6 $238 57% 0% 43% $107 60% 0% 40% 
190

b. Consumer Subgroup Analysis

DOE estimated the impacts of the considered efficiency levels (TSLs) on the 

following consumer subgroups: (1) senior-only households; and (2) low-income 

households. The results of the consumer subgroup analysis indicate that for residential 

furnace fans, senior-only households and low-income households experience lower 

average LCC savings and longer payback periods than consumers overall, with the 

difference being larger for low-income households. The difference between the two 

subgroups and all consumers is larger for non-weatherized, non-condensing gas furnace 

fans (see Table V.12) than for non-weatherized, condensing gas furnace fans (see Table 

V.13). Chapter 11 of the NOPR TSD provides more detailed discussion on the consumer 

subgroup analysis and results for the other product classes.

Table V.12 Comparison of Impacts for Consumer Subgroups with All Consumers, 

Non-Weatherized, Non-Condensing Gas Furnace Fans 

Average Life-Cycle Cost Savings Median Payback Period 2012$

Efficiency 

Level

years

TSL SeniorOnly

LowIncomeAll 

Consumers

SeniorOnlyLowIncomeAll 

Consumers

1 1 $47 $35 $64 1.8 2.1 1.3 

2 $200 $123 $253 5.4 6.3 4.0 

3 2, 3 $344 $232 $442 3.7 3.8 2.7 

4 4, 5 $343 $206 $474 7.2 7.8 5.4 

5 $142 $7 $275 15.6 17.2 11.5 

6 6 $164 $14 $313 15.3 16.5 11.2 
191

Table V.13 Comparison of Impacts for Consumer Subgroups with All Consumers, 

Non-Weatherized, Condensing Gas Furnace Fans 

Average Life-Cycle Cost Savings Median Payback Period 2012$

Efficiency 

Level

years

TSL SeniorOnly

LowIncomeAll 

Consumers

SeniorOnlyLowIncomeAll 

Consumers

1 1 $41 $32 $49 1.6 2.2 1.4 

2 $173 $129 $203 5.1 6.6 4.1 

3 2, 3 $313 $245 $361 3.2 4.0 2.7 

4 4, 5 $301 $212 $371 6.6 8.5 5.4 

5 $121 $35 $199 14.5 18.3 11.7 

6 6 $151 $52 $238 12.2 16.4 11.0 

c. Rebuttable Presumption Payback

As discussed in section IV.F.5, EPCA provides a rebuttable presumption that, in 

essence, 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. However, DOE routinely 

conducts a full economic analysis that considers the full range of impacts, including those 

to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively 

evaluate the economic justification for a potential standard level, thereby supporting or 

rebutting the results of any preliminary determination of economic justification. For 

comparison with the more detailed analytical results, DOE calculated a rebuttable 

presumption payback period for each TSL. Table V.14 shows the rebuttable presumption 

payback periods for the residential furnace fans product classes. 
192

Table V.14 Rebuttable Presumption Payback Periods for Residential Furnace Fan

Product Classes

Product Class Rebuttable Presumption Payback 

TSL 1

years

TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Non-Weatherized, NonCondensing Gas Furnace Fan 1.13 1.65 1.65 3.08 3.08 6.21

Non-weatherized, Condensing 

Gas Furnace Fan 

1.06 1.49 1.49 2.82 2.82 5.72

Weatherized Non-Condensing 

Gas Furnace Fan 

1.41 2.02 2.02 3.78 3.78 7.62

Non-Weatherized, NonCondensing Oil Furnace Fan1.84 1.84 2.46 1.84 2.46 8.16

Non-weatherized Electric 

Furnace/Modular Blower Fan 

1.14 1.60 1.60 1.80 1.80 4.97

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan 1.33 1.33 1.91 1.33 1.91 7.26

Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan 

1.25 1.25 1.79 1.25 1.79 6.85

Manufactured Home Electric 

Furnace/Modular Blower Fan

1.51 1.51 2.13 2.39 2.39 6.59

2. Economic Impact on Manufacturers

As noted above, DOE performed an MIA to estimate the impact of new energy 

conservation standards on manufacturers of residential furnace fans. The following 

section describes the expected impacts on manufacturers at each considered TSL. 

Chapter 12 of the NOPR TSD explains the analysis in further detail.

a. Industry Cash-Flow Analysis Results

Table V.15 and Table V.16 depict the financial impacts (represented by changes in 

INPV) of new energy standards on manufacturers of residential furnace fans, as well as 

the conversion costs that DOE expects manufacturers would incur for all product classes 
193

at each TSL. To evaluate the range of cash flow impacts on the residential furnace fans 

industry, DOE modeled two different mark-up scenarios using different assumptions that 

correspond to the range of anticipated market responses to potential new energy 

conservation standards: (1) the preservation of gross margin percentage; and (2) the 

preservation of operating profit. Each of these scenarios is discussed immediately below. 

To assess the lower (less severe) end of the range of potential impacts, DOE 

modeled a preservation of gross margin percentage markup scenario, in which a uniform 

“gross margin percentage” markup is applied across all potential efficiency levels. In this 

scenario, DOE assumed that a manufacturer’s absolute dollar markup would increase as 

production costs increase in the standards case.

To assess the higher (more severe) end of the range of potential impacts, DOE 

modeled the preservation of operating profit markup scenario, which assumes that 

manufacturers would be able to earn the same operating margin in absolute dollars in the 

standards case as in the base case. In this scenario, while manufacturers make the 

necessary investments required to convert their facilities to produce new standardscompliant products, operating profit does not change in absolute dollars and decreases as 

a percentage of revenue.

The set of results below shows potential INPV impacts for residential furnace fan 

manufacturers; Table V.15 reflects the lower bound of impacts, and Table V.16

represents the upper bound.
194

Each of the modeled scenarios results in a unique set of cash flows and 

corresponding industry values at each TSL. In the following discussion, the INPV results 

refer to the difference in industry value between the base case and each standards case 

that results from the sum of discounted cash flows from the base year 2013 through 2048, 

the end of the analysis period. To provide perspective on the short-run cash flow impact, 

DOE includes in the discussion of the results below a comparison of free cash flow 

between the base case and the standards case at each TSL in the year before new 

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 

base case.
195

Table V.15 Manufacturer Impact Analysis for Residential Furnace Fans -

Preservation of Gross Margin Percentage Markup Scenario*

Units Base 

Case

Trial Standard Level

1 2 3 4 5 6

INPV 2012$ 

Millions 252.2 252.9 265.7 265.1 286.0 286.5 310.4

Change in INPV

2012$ 

Millions - 0.7 13.5 12.9 33.8 34.2 58.2

(%) - 0.3 5.3 5.1 13.4 13.6 23.1

Product 

Conversion 

Costs

2012$ 

Millions - 1.1 2.8 2.9 3.1 3.2 9.3

Capital 

Conversion 

Costs

2012$ 

Millions - - - - - - 155.0

Total 

Conversion 

Costs

2012$ 

Millions - 1.1 2.8 2.9 3.1 3.2 164.3

Free Cash Flow 2012$ 

Millions 12.12 11.78 11.28 11.25 11.17 11.15 (60.44)

Free Cash Flow 

(change from 

Base Case)

% 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66)

* Values in parentheses are negative values.

Table V.16 Manufacturer Impact Analysis for Residential Furnace Fans -

Preservation of Operating Profit Markup Scenario*

Units Base 

Case

Trial Standard Level

1 2 3 4 5 6

INPV 2012$ 

Millions 252.2 249.2 225.5 223.6 197.8 196.7 82.1

Change in INPV

2012$ 

Millions - (3.0) (26.7) (28.6) (54.4) (55.5) (170.1)

(%) - (1.2) (10.6) (11.3) (21.6) (22.0) (67.5)

Product 

Conversion 

Costs

2012$ 

Millions - 1.1 2.8 2.9 3.1 3.2 9.3

Capital 

Conversion 

Costs

2012$ 

Millions - - - - - - 155.0

Total 

Conversion 

Costs

2012$ 

Millions - 1.1 2.8 2.9 3.1 3.2 164.3

Free Cash Flow 2012$ 

Millions 12.12 11.78 11.28 11.25 11.17 11.15 (60.44)
196

Free Cash Flow 

(change from 

Base Case)

% 0.0 (2.82) (6.94) (7.21) (7.85) (8.02) (598.66)

* Values in parentheses are negative values.

TSL 1 represents the most common efficiency levels in the current market for all 

product classes. At TSL 1, DOE estimates impacts on INPV for residential furnace fan 

manufacturers to range from -$3.0 million to $0.7 million, or a change in INPV of -1.2 

percent to 0.3 percent. At this potential standard level, industry free cash flow is 

estimated to decrease by approximately 2.8 percent to $11.78 million, compared to the 

base-case value of $12.12 million in the year before the compliance date (2018).

DOE anticipates no capital conversion costs at TSL 1, because manufacturers 

would be able to use a different motor type without making significant changes to their 

manufacturing equipment or production processes. DOE anticipates minor product 

conversion costs associated with redesigning products that are currently below the 

proposed efficiency level and updating product literature. 

TSL 2 represents EL 1 for the oil and manufactured home product classes, and EL 

3 for all other product classes. At TSL 2, DOE estimates impacts on INPV for residential 

furnace fan manufacturers to range from -$26.7 million to $13.5 million, or a change in 

INPV of -10.6 percent to 5.3 percent. At this potential standard level, industry free cash 

flow is estimated to decrease by approximately 6.9 percent to $11.28 million, compared 

to the base-case value of $12.12 million in the year before the compliance date (2018).
197

DOE anticipates no capital conversion costs at TSL 2, because manufacturers 

would be able to use a different motor type without making significant changes to their 

manufacturing equipment or production processes. DOE anticipates product conversion 

costs at TSL 2 to be higher than those at TSL 1, because more products in the market 

(with the exception of oil furnaces and manufactured housing products) would need to be 

redesigned in order to meet the higher proposed efficiency levels. Additional product 

literature would also need to be updated for the redesigned products. 

TSL 3 represents EL 3 for all product classes. At TSL 3, DOE estimates impacts 

on INPV for residential furnace fan manufacturers to range from -$28.6 million to $12.9 

million, or a change in INPV of -11.3 percent to 5.1 percent. At this potential standard 

level, industry free cash flow is estimated to decrease by approximately 7.2 percent to 

$11.25 million, compared to the base-case value of $12.12 million in the year before the 

compliance date (2018).

DOE anticipates no capital conversion costs at TSL 3, because manufacturers 

would be able to use a different motor type without making significant changes to their 

manufacturing equipment or production processes. DOE anticipates product conversion 

costs at TSL 3 to be slightly higher than those at TSL 2 because more manufactured 

housing products in the market would need to be redesigned in order to meet the higher 

proposed efficiency levels. Additional product literature would also need to be updated 

for the redesigned products. 
198

TSL 4 represents the efficiency levels that provide the highest NPV using a 7-

percent discount rate, and that also result in a higher percentage of consumers receiving 

an LCC benefit rather than an LCC loss. At TSL 4, DOE estimates impacts on INPV for 

residential furnace fan manufacturers to range from -$54.4 million to $33.8 million, or a 

change in INPV of -21.6 percent to 13.4 percent. At this potential standard level, 

industry free cash flow is estimated to decrease by approximately 7.9 percent to $11.17 

million, compared to the base-case value of $12.12 million in the year before the 

compliance date (2018).

DOE anticipates no capital conversion costs at TSL 4, because manufacturers 

would be able to use a different motor type without making significant changes to their 

manufacturing equipment or production processes. DOE anticipates product conversion 

costs at TSL 4 to be higher than those at TSL 3, because more products in the market

(with the exception of oil furnaces) would need to be redesigned in order to meet the 

higher proposed efficiency levels. Additional product literature would also need to be 

updated for the redesigned products. 

TSL 5 represents the efficiency levels that provide the maximum NPV using a 7-

percent discount rate. At TSL 5, DOE estimates impacts on INPV for residential furnace 

fan manufacturers to range from -$55.5 million to $34.2 million, or a change in INPV of -

22.0 percent to 13.6 percent. At this potential standard level, industry free cash flow is 

estimated to decrease by approximately 8.0 percent to $11.15 million, compared to the 

base-case value of $12.12 million in the year before the compliance date (2018).
199

DOE anticipates no capital conversion costs at TSL 5, because manufacturers 

would be able to use a different motor type without making significant changes to their 

manufacturing equipment or production processes. DOE anticipates product conversion 

costs at TSL 5 to be slightly higher than those at TSL 4, because more oil furnaces and 

manufactured housing electric furnaces in the market would need to be redesigned in 

order to meet the higher proposed efficiency levels. Additional product literature would 

also need to be updated for the redesigned products.

TSL 6 represents the max-tech efficiency level for all product classes. At TSL 6, 

DOE estimates impacts on INPV for residential furnace fan manufacturers to range from 

-$170.1 million to $58.2 million, or a change in INPV of -67.5 percent to 23.1 percent. 

At this potential standard level, industry free cash flow is estimated to decrease by 

approximately 598.7 percent to -$60.44 million, compared to the base-case value of 

$12.12 million in the year before the compliance date (2018).

DOE anticipates very high capital conversion costs at TSL 6 because 

manufacturers would need to make significant changes to their manufacturing equipment 

and production processes in order to accommodate the use of backward-inclined 

impellers. This design option would require modifying, or potentially eliminating, 

current fan housings. DOE also anticipates high product conversion costs to develop new 

designs with backward-inclined impellers for all their products. Some manufacturers 
200

may also have stranded assets from specialized machines for building fan housing that 

can no longer be used.

b. Impacts on Employment

To quantitatively assess the impacts of energy conservation standards on direct 

employment in the residential furnace fan industry, DOE used the GRIM to estimate the 

domestic labor expenditures and number of employees in the base case and at each TSL 

from 2013 through 2048. DOE used statistical data from the U.S. Census Bureau’s 2011 

Annual Survey of Manufacturers (ASM),68 the results of the engineering analysis, and 

interviews with manufacturers to determine the inputs necessary to calculate industrywide labor expenditures and domestic employment levels. Labor expenditures related to 

manufacturing of the product are a function of the labor intensity of the product, the sales 

volume, and an assumption that wages remain fixed in real terms over time. The total 

labor expenditures in each year are calculated by multiplying the MPCs by the labor 

percentage of MPCs. 

The total labor expenditures in the GRIM were then converted to domestic 

production employment levels by dividing production labor expenditures by the annual 

payment per production worker (production worker hours times the labor rate found in 

the U.S. Census Bureau’s 2011 ASM). The estimates of production workers in this 

section cover workers, including line-supervisors who are directly involved in fabricating 

and assembling a product within the manufacturing facility. Workers performing 

 68 "Annual Survey of Manufactures (ASM)," U.S. Census Bureau (2011) (Available at: 

http://www.census.gov/manufacturing/asm/).
201

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.

The total direct employment impacts calculated in the GRIM are the sum of the 

changes in the number of production workers resulting from the new energy conservation 

standards for residential furnace fans, as compared to the base case.

For residential furnace fans, DOE does not expect significant changes in domestic 

employment levels from baseline to EL 5. One manufacturer commented during 

interviews that employment may be affected if their profit margins decreased due to a 

new standard, in which case consideration may be given to moving production facilities 

to another country, but changes in employment due to standards are generally not a major 

concern for manufacturers of residential furnace fans, because all efficiency levels from 

baseline to EL 5 can be achieved by substituting a higher-efficiency component for an 

existing component. DOE found during manufacturer interviews that the assembly 

processes for integrating the higher-efficiency components do not differ significantly 

from those used for existing components. For instance, manufacturers design their 

housings and motor mounts to be compatible with all motor types. Consequently, no 

additional labor is required to integrate higher-efficiency motors and controls to reach EL 

1 through EL 3, and labor costs will be equivalent to the baseline at those levels. The 
202

same is true for integration of components that enable multi-stage heating capabilities (in 

addition to higher-efficiency motors) to reach EL 4 and EL 5.

The only standard level at which significant changes in employment would 

possibly be expected to occur is at EL6, the max-tech level. At EL 6, DOE estimates 

increases in labor costs because backwards-inclined impeller assemblies are heavier and 

require more robust mounting approaches than are currently used for forward-curved 

impeller assemblies. The alternate mounting approaches needed to integrate backwardinclined impeller assemblies could require manufacturers to modify their current 

assembly processes, resulting in increased labor. However, DOE received limited 

feedback from manufacturers regarding the labor required to produce furnace fans with 

backward-curved impellers, because they generally do not have any experience in 

working with this design option. 

 

DOE notes that the employment impacts discussed here are independent of the 

indirect employment impacts to the broader U.S. economy, which are documented in 

chapter 15 of the NOPR TSD.

c. Impacts on Manufacturing Capacity

According to the residential furnace fan manufacturers interviewed, the new 

energy conservation standards proposed in today’s NOPR would not significantly affect 

manufacturers’ production capacities. Some manufacturers mentioned that capacity 

could potentially be impacted by additional testing requirements and bottlenecks with 
203

sourcing if motor suppliers cannot keep up with demand, but concerns were not generally 

expressed about manufacturing capacity until max-tech levels. Thus, at the proposed 

TSL, DOE believes manufacturers would be able to maintain manufacturing capacity 

levels and continue to meet market demand under new energy conservation standards.

d. Impacts on Subgroups of Manufacturers

Small manufacturers, niche equipment manufacturers, and manufacturers 

exhibiting a cost structure substantially different from the industry average could be 

affected disproportionately. As discussed in section IV.J using average cost assumptions 

developed for an industry cash-flow estimate is inadequate to assess differential impacts 

among manufacturer subgroups. 

For the residential furnace fans industry, DOE identified and evaluated the impact of 

new energy conservation standards on one subgroup, specifically small manufacturers. 

The SBA defines a “small business” as having 750 employees or less for NAICS 333415, 

“Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial 

Refrigeration Equipment Manufacturing.” Based on this definition, DOE identified 14 

manufacturers in the residential furnace fans industry that qualify as small businesses. 

For a discussion of the impacts on the small manufacturer subgroup, see the regulatory 

flexibility analysis in section VI.B of this notice and chapter 12 of the NOPR TSD.
204

e. Cumulative Regulatory Burden

While any one regulation may not impose a significant burden on manufacturers, 

the combined effects of recent or impending regulations may have serious consequences 

for some manufacturers, groups of manufacturers, or an entire industry. Assessing the 

impact of a single regulation may overlook this cumulative regulatory burden. In 

addition to energy conservation standards, other regulations can significantly affect 

manufacturers’ financial operations. Multiple regulations affecting the same 

manufacturer can strain profits and lead companies to abandon product lines or markets 

with lower expected future returns than competing products. For these reasons, DOE 

conducts an analysis of cumulative regulatory burden as part of its rulemakings 

pertaining to appliance efficiency. 

During previous stages of this rulemaking, DOE identified a number of 

requirements in addition to new energy conservation standards for residential furnace 

fans. The following section briefly summarizes those identified regulatory requirements 

and addresses comments DOE received with respect to cumulative regulatory burden, as 

well as other key related concerns that manufacturers raised during interviews.

This notice proposes CC&E requirements for residential furnace fans. In 

addition, the April 2, 2013 test procedure SNOPR included proposed sampling 

requirements for CC&E testing of residential furnace fans that mandate that, unless 

DOE Certification, Compliance, and Enforcement (CC&E) Rule
205

otherwise specified, a minimum of two units need to be tested for each basic model. 78 

FR 19606, 19625.

Manufacturers indicated during interviews that the regulatory burden from 

certification and compliance testing is one of the biggest problems they face. One 

manufacturer stated that it could potentially shut down the industry due to the large 

number of basic models that need to be tested. DOE recognizes that the CC&E 

requirements contribute to cumulative regulatory burden. However, for the reasons

discussed in section IV.J.3, DOE does not find that testing furnace fans according to its 

proposed test procedure would be unduly burdensome.

On June 27, 2011, DOE published a direct final rule in the 

DOE Energy Conservation Standards for Furnaces and Central Air Conditioners 

and Heat Pumps

Federal Register to 

amend the energy conservation standards for residential furnaces, central air conditioners, 

and heat pumps (the “HVAC rule”). 76 FR 37408. In addition to setting a base national 

standard, the June 27, 2011 direct final rule also implemented regional standard levels, 

where the minimum efficiency level for a product is determined by the geographic region 

in which it is sold. (DOE subsequently confirmed adoption of these standards through 

publication of a notice of effective date and compliance dates for this rulemaking in the 

Federal Register on October 31, 2011. 76 FR 67037.) Compliance with these standards 
206

was required on May 1, 2013 for non-weatherized furnaces and will be required on 

January 1, 2015 for weatherized furnaces, central air conditioners, and heat pumps.69

Since furnace fan manufacturers are also manufacturers of the HVAC product in 

which the furnace fan is used, furnace fan manufacturers are subject to the amended 

energy conservation standards for residential furnaces, central air conditioners, and heat 

pumps. At the minimum energy efficiency levels selected for the direct final rule, DOE 

estimated that the total industry investment required to meet the amended energy 

conservation standards would be $28 million (in 2009$). At the minimum energy 

efficiency levels selected for this notice of proposed rulemaking, DOE estimates that the 

total industry investment would be $3.1 million. Manufacturers of furnace fans face 

product conversion costs related to standards for furnace fans, as well as product and 

capital conversion costs related to standards for residential furnaces, central air 

conditioners, and heat pumps. 

The direct final rule for energy conservation standards for residential furnaces, 

central air conditioners, and heat pumps includes standards for energy efficiency as well 

as standards for standby mode and off mode energy consumption. DOE has completed a 

test procedure final rule for standby mode and off mode energy consumption in 

residential furnaces. 77 FR 76831 (Dec. 31, 2012). DOE is also preparing a test 

 69 DOE notes that the American Public Gas Association (APGA) brought a lawsuit challenging the energy 

conservation standards pertaining to non-weatherized gas furnaces, and that lawsuit is currently pending 

before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). There is also a 

settlement agreement before the Court regarding this matter. On May 1, 2013, the D.C. Circuit granted a 

motion requesting a stay of the May 1, 2013 compliance date for non-weatherized gas furnaces. In its 

order, the Court stayed the compliance deadline for six months following the issuance of any opinion by 

the Court in this case upholding the standards.
207

procedure for standby mode and off mode energy consumption in residential central air 

conditioners and heat pumps.

The U.S. is obligated under the Montreal Protocol to limit production and 

consumption of HCFCs through incremental reductions, culminating in a complete 

phaseout of HCFCs by 2030. On December 15, 2009, EPA published the “2010 HCFC 

Allocation Rule,” which allocates production and consumption allowances for HCFC-22 

for each year between 2010 and 2014. 74 FR 66412. On January 4. 2012, EPA 

published the “2012 HCFC Allocation Proposed Rule,” which proposes to lift the 

regulatory ban on the production and consumption of HCFC-22 (following a court 

decision

EPA Phaseout of Hydrochlorofluorocarbons (HCFCs)

70 in August 2010 to vacate a portion of the “2010 HCFC Allocation Rule”) by 

establishing company-by-company HCFC-22 baselines and allocating allowances for 

2012-2014. 77 FR 237.

HCFC-22, which is also known as R-22, is a popular refrigerant that is commonly 

used in air-conditioning products. Manufacturers of residential furnace fans who also 

manufacture residential central air conditioners must comply with the allowances 

established by the allocation rule, thereby facing a cumulative regulatory burden.

 70 See Arkema v. EPA, 618 F.3d 1 (D.C. Cir. 2010).

EPA ENERGY STAR
208

During interviews, some manufacturers stated that ENERGY STAR 

specifications for residential furnaces, central air conditioners, and heat pumps would be 

a source of cumulative regulatory burden. ENERGY STAR specifications are as follows:

Table V.17: ENERGY STAR Specifications for HVAC Products that Use Furnace 

Fans

Gas Furnaces Rating of 90% AFUE or greater for U.S. South gas furnaces

Rating of 95% AFUE or greater for U.S. North gas furnaces

Less than or equal to 2.0% furnace fan efficiency*

Oil Furnaces Rating of 85% AFUE or greater

Less than or equal to 2.0% furnace fan efficiency*

Air-Source Heat Pumps >= 8.2 HSPF/ >=14.5 SEER/ >=12 EER for split systems

>= 8.0 HSPF/ >=14 SEER/ >=11 EER for single-package 

equipment 

Central Air Conditioners >=14.5 SEER/ >=12 EER for split systems

>=14 SEER/ >=11 EER for single-package equipment

* Furnace fan efficiency in this context is furnace fan electrical consumption as a percentage of total 

furnace energy consumption in heating mode.

DOE realizes that the cumulative effect of several regulations on an industry may 

significantly increase the burden faced by manufacturers that need to comply with 

multiple regulations and certification programs from different organizations and levels of 

government. However, DOE notes that certain standards, such as ENERGY STAR, are 

optional for manufacturers. Furthermore, for certain products listed in the table above, 

ENERGY STAR standards are equivalent to the standards set in DOE’s June 27, 2011 

direct final rule for energy conservation standards for residential furnaces, central air 

conditioners, and heat pumps.

Canadian Energy Efficiency Regulations
209

In June 2010, the Office of Energy Efficiency of National Resources Canada 

(NRCan) published a bulletin to announce the proposal of new electricity reporting 

requirements for air handlers used in residential central heating and cooling systems that 

are imported into Canada for sale or lease.71 In November 2011, NRCan published a 

regulatory update which stated that NRCan intends to apply reporting requirements to 

only air handlers used in residential gas furnaces, and that requirements for air handlers 

used in other heating and cooling systems would be expanded in a future regulatory 

amendment. 72 In this update, NRCan proposed to use Canadian Standards Association 

(CSA) C823-11 (Performance of air handlers in residential space conditioning systems) 

as the test method for determining efficiency. Consequently, manufacturers of furnace 

fans used in residential gas furnaces may face additional reporting requirements if they 

sell their products in Canada.

Title 24, Part 6, of the California Code of Regulations includes building energy 

efficiency standards for residential and nonresidential buildings. The California Energy 

Commission (CEC) published new standards in 2008, which became effective January 1, 

2010, that include watts per cubic foot per minute (W/CFM) limits for fans used in 

central, residential HVAC systems.

California Title 24

73

 71 Air Handlers – June 2010, Natural Resources Canada (Available at: 

http://oee.nrcan.gc.ca/regulations/bulletins/14551) (Last accessed May 6, 2013). 72 Regulatory Update - November 2011, Natural Resources Canada (Available at: http://

http://oee.nrcan.gc.ca/regulations/bulletins/17839) (Last accessed May 6, 2013). 73 Building Energy Efficiency Program, California Energy Commission (Available at: <

http://www.energy.ca.gov/title24/>) (Last accessed May 6, 2013). 
210

ASHRAE Standard 90.1, “Energy Standard for Buildings Except Low-Rise 

Residential Buildings,” sets minimum efficiency standards for buildings, except low-rise 

residential buildings. On May 16, 2012, DOE published the final rule in the 

ASHRAE Standard 90.1

Federal 

Register for Energy Conservation Standards and Test Procedures for Commercial 

Heating, Air-Conditioning, and Water-Heating Equipment, through which DOE adopted 

the efficiency levels specified in ASHRAE Standard 90.1–2010. 77 FR 28928.

Included in the ASHRAE standards are minimum efficiency levels for 

commercial heating, air-conditioning, and water-heating equipment. Several 

manufacturers of residential furnace fans also manufacture this equipment. 

Rule 1111 of the South Coast Air Quality Management District (AQMD) 

currently requires residential furnaces installed in the District to meet a NOX emission 

limit of 40 nanograms per joule (ng/J) of heat output.

Low-NOX requirements 

74 The development of this rule is 

an ongoing process to evaluate low-NOX technologies for combustion equipment. In 

1983, the rule was amended to limit applicability to furnaces with a heat input of less 

than 175,000 Btu per hour, or for combination heating and cooling units, a cooling rate of 

less than 65,000 Btu per hour.75

 74 South Coast AQMD List of Current Rules, California Environmental Protection Agency Air Resouorces 

Board (Available at: 

 However, the rule was again amended in 2009 to 

http://www.arb.ca.gov/drdb/sc/cur.htm) (Last accessed May 6, 2013). 75 See https://aqmd.gov/hb/attachments/2011-2015/2013Mar/2013-Mar1-019.pdf. 
211

establish a new limit of 14 ng/J for non-condensing, condensing, weatherized, and mobile 

home furnaces, with the following compliance schedule:76

Table V.18: Low NOX Compliance Schedule

Compliance Date Furnace Type

Oct 1, 2014 Condensing Furnace

Oct 1, 2015 Non-condensing Furnace

Oct 1, 2016 Weatherized Furnace

Oct 1, 2018 Mobile Home Furnace

The Proposed Amended Rule (PAR) 1111 affects manufacturers, distributors, 

wholesalers, builders, and installers of residential furnaces. AHRI indicates that, 

although there are currently no manufacturers of fan-type gas-fired residential furnaces 

within the AQMD jurisdiction, some of these manufacturers do sell and distribute 

products installed in this District. 

PAR 1111 also provides manufacturers with an alternative compliance option. 

For any furnace type, a manufacturer may request a delayed compliance date of up to 

three years if they submit a plan and pay an emission mitigation fee. 

DOE discusses these and other requirements, and includes the full details of the 

cumulative regulatory burden analysis, in chapter 12 of the NOPR TSD. DOE also 

discusses the impacts on the small manufacturer subgroup in the regulatory flexibility

analysis in section VI.B of this NOPR.

 76 See http://www.arb.ca.gov/DRDB/SC/CURHTML/R1111.pdf. 
212

3. National Impact Analysis

a. Significance of Energy Savings

For each TSL, DOE projected energy savings for residential furnace fans 

purchased in the 30-year period that begins in the first full year of compliance with 

amended standards (2019-2048). The savings are measured over the entire lifetime of 

products purchased in the 30-year period. DOE quantified the energy savings attributable 

to each TSL as the difference in energy consumption between each standards case and the 

base case. Table V.19 presents the estimated primary energy savings for each considered 

TSL, and Table V.20 presents the estimated FFC energy savings for each considered 

TSL. The energy savings in the tables below are net savings that reflect the subtraction 

of the additional gas or oil used by the furnace associated with higher-efficiency furnace 

fans. With improved fan efficiency, there is less heat from the motor, which means that 

the furnace needs to operate more. The approach for estimating national energy savings 

is further described in section IV.H.1.

The difference between primary energy savings and FFC energy savings for all 

TSLs is small (less than 1%), because the upstream energy savings associated with the 

electricity savings are partially (or fully, for TSL 2 and 3) offset by the upstream energy 

use from the additional gas or oil used by the furnace due to higher-efficiency furnace 

fans. The ranking of TSLs is not impacted by the use of FFC energy savings.

Comment [A45]: Change recommended by 

OIRA.

Formatted: English (U.S.)

Comment [A46]: Change recommended by 

OIRA.
213

Table V.19 Cumulative National Primary Energy Savings for Trial Standard Levels 

for Residential Furnace Fans Sold in 2019-2048

Product Class Trial Standard Level

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas Furnace Fan 

quads

0.254 1.021 1.021 1.861 1.861 2.404

Non-weatherized, Condensing 

Gas Furnace Fan 

0.276 0.877 0.877 2.003 2.003 2.793

Weatherized Non-Condensing 

Gas Furnace Fan 

0.032 0.138 0.138 0.264 0.264 0.338

Non-Weatherized, NonCondensing Oil Furnace Fan0.005 0.005 0.025 0.005 0.025 0.051

Non-weatherized Electric 

Furnace/Modular Blower Fan 

0.042 0.202 0.202 0.357 0.357 0.451

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan 0.010 0.010 0.039 0.010 0.039 0.089

Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan 

0.002 0.002 0.008 0.002 0.008 0.022

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.009 0.009 0.034 0.060 0.060 0.073

Total – All Classes 0.631 2.265 2.344 4.562 4.617 6.221

Note: Components may not sum to total due to rounding.

Table V.20 Cumulative National Full-Fuel-Cycle Energy Savings for Trial 

Standard Levels for Residential Furnace Fans Sold in 2019-2048

Product Class Trial Standard Level

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas Furnace Fan 

quads

0.256 1.021 1.021 1.870 1.870 2.421

Non-weatherized, Condensing 

Gas Furnace Fan 

0.277 0.866 0.866 2.005 2.005 2.802

Weatherized Non-Condensing 

Gas Furnace Fan 

0.032 0.138 0.138 0.266 0.266 0.340

Non-Weatherized, NonCondensing Oil Furnace Fan0.005 0.005 0.024 0.005 0.024 0.050

Non-weatherized Electric 

Furnace/Modular Blower Fan 

0.042 0.202 0.202 0.357 0.357 0.452

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan 0.010 0.010 0.039 0.010 0.039 0.089
214

Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan 

0.002 0.002 0.008 0.002 0.008 0.022

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.010 0.010 0.034 0.061 0.061 0.074

Total – All Classes 0.635 2.254 2.332 4.576 4.629 6.250

Note: Components may not sum to total due to rounding.

OMB Circular A-477 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 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.78

 77 U.S. Office of Management and Budget, "Circular A-4: Regulatory Analysis" (Sept. 17, 2003) (Last 

accessed September 17, 2013 from http://www.whitehouse.gov/omb/circulars_a004_a-4/).

 This time frame mayWe would note that the review timeframe established in 

EPCA generally does not be statistically relevant with regard tooverlap with the product 

lifetime, product manufacturing cycles, or other factors specific to residential furnace 

fans. Thus, such results are presented for informational purposes only and are not 

indicative of any change in DOE’s analytical methodology. The NES results based on a 

78 EPCA requires DOE to review its energy conservation 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. (42 U.S.C. 6295(m))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 

consumer products, the compliance period is 5 years rather than 3 years.

Comment [A47]: Change recommended by 

OIRA.

Comment [A48]: Change recommended by 

OIRA.
215

9-year analytical period are presented in Table V.21. The impacts are counted over the 

lifetime of products purchased in 2019–2027.

Table V.21 Cumulative National Primary Energy Savings for Trial Standard Levels 

for Residential Furnace Fans Sold in 2019-2027

Product Class Trial Standard Level

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas Furnace Fan 

quads

0.085 0.348 0.348 0.642 0.642 0.846

Non-weatherized, Condensing 

Gas Furnace Fan 

0.076 0.239 0.239 0.545 0.545 0.755

Weatherized Non-Condensing 

Gas Furnace Fan 

0.010 0.046 0.046 0.086 0.086 0.111

Non-Weatherized, NonCondensing Oil Furnace Fan0.002 0.002 0.009 0.002 0.009 0.021

Non-weatherized Electric 

Furnace/Modular Blower Fan 

0.012 0.058 0.058 0.102 0.102 0.130

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan 0.003 0.003 0.013 0.003 0.013 0.030

Manufactured Home NonWeatherized, Condensing Gas 

Furnace Fan 

0.001 0.001 0.002 0.001 0.002 0.006

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.003 0.003 0.012 0.020 0.020 0.025

Total – All Classes 0.193 0.700 0.727 1.402 1.421 1.924

Note: Components may not sum to total due to rounding.

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 residential furnace fans. In accordance 
216

with OMB’s guidelines on regulatory analysis, 79

Table V.22

DOE calculated NPV using both a 7-

percent and a 3-percent real discount rate. shows the consumer NPV results 

for each TSL considered for residential furnace fans. In each case, the impacts cover the 

lifetime of products purchased in 2019-2048. 

Table V.22 Cumulative Net Present Value of Consumer Benefit for Trial Standard 

Levels for Residential Furnace Fans Sold in 2019-2048

Product Class

Discount 

Rate

%

Trial Standard Level

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas Furnace Fan

billion 2012$*

3%

1.46 9.86 9.86 11.09 11.09 8.28

Non-weatherized, 

Condensing Gas Furnace Fan

1.49 11.16 11.16 12.23 12.23 9.20

Weatherized NonCondensing Gas Furnace Fan 0.17 1.12 1.12 1.30 1.30 0.49

Non-Weatherized, NonCondensing Oil Furnace Fan0.02 0.02 0.19 0.02 0.19 0.10

Non-weatherized Electric 

Furnace/Modular Blower Fan

0.15 1.05 1.05 1.29 1.29 0.12

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan0.04 0.04 0.25 0.04 0.25 (0.06)

Manufactured Home NonWeatherized, Condensing 

Gas Furnace Fan

0.01 0.01 0.05 0.01 0.05 (0.02)

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.03 0.03 0.13 0.17 0.17 (0.17)

Total – All Classes 3.37 23.30 23.81 26.16 26.57 17.95

Non-Weatherized, NonCondensing Gas Furnace Fan

7%

0.53 3.52 3.52 3.71 3.71 1.98

Non-weatherized, 

Condensing Gas Furnace Fan

0.51 3.78 3.78 3.91 3.91 2.11

Weatherized NonCondensing Gas Furnace Fan 0.06 0.39 0.39 0.41 0.41 (0.01)

Non-Weatherized, NonCondensing Oil Furnace Fan0.01 0.01 0.07 0.01 0.07 0.01

 79 OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 

http://www.whitehouse.gov/omb/circulars_a004_a-4). 
217

Non-weatherized Electric 

Furnace/Modular Blower Fan

0.05 0.33 0.33 0.40 0.40 (0.20)

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan0.02 0.02 0.08 0.02 0.08 (0.09)

Manufactured Home NonWeatherized, Condensing 

Gas Furnace Fan

0.00 0.00 0.02 0.00 0.02 (0.02)

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.01 0.01 0.04 0.05 0.05 (0.13)

Total – All Classes 1.19 8.07 8.23 8.51 8.64 3.65

* Numbers in parentheses indicate negative NPV.

The NPV results based on the aforementioned 9-year analytical period are 

presented in Table V.23. The impacts are counted over the lifetime of products 

purchased in 2019–2027. As mentioned previously, this information is presented for 

informational purposes only and is not indicative of any change in DOE’s analytical 

methodology or decision criteria. 

Table V.23 Cumulative Net Present Value of Consumer Benefit for Trial Standard 

Levels for Residential Furnace Fans Sold in 2019-2027

Product Class Discount 

Rate %

Trial Standard Level

1 2 3 4 5 6

Non-Weatherized, NonCondensing Gas Furnace Fan

billion 2012$*

3%

0.63 4.32 4.32 4.88 4.88 3.75

Non-weatherized, 

Condensing Gas Furnace Fan

0.55 4.11 4.11 4.51 4.51 3.51

Weatherized NonCondensing Gas Furnace Fan 0.07 0.48 0.48 0.56 0.56 0.27

Non-Weatherized, NonCondensing Oil Furnace Fan0.01 0.01 0.09 0.01 0.09 0.07

Non-weatherized Electric 

Furnace/Modular Blower Fan

0.05 0.39 0.39 0.48 0.48 0.04

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan0.02 0.02 0.11 0.02 0.11 (0.01)

Manufactured Home NonWeatherized, Condensing 0.00 0.00 0.02 0.00 0.02 0.00
218

Gas Furnace Fan

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.01 0.01 0.06 0.07 0.07 (0.07)

Total – All Classes 1.35 9.36 9.59 10.53 10.72 7.55

Non-Weatherized, NonCondensing Gas Furnace Fan

7%

0.29 1.98 1.98 2.09 2.09 1.17

Non-weatherized, 

Condensing Gas Furnace Fan

0.26 1.87 1.87 1.94 1.94 1.11

Weatherized NonCondensing Gas Furnace Fan 0.03 0.22 0.22 0.23 0.23 0.02

Non-Weatherized, NonCondensing Oil Furnace Fan0.00 0.00 0.04 0.00 0.04 0.02

Non-weatherized Electric 

Furnace/Modular Blower Fan

0.02 0.17 0.17 0.20 0.20 (0.10)

Manufactured Home NonWeatherized, NonCondensing Gas Furnace Fan0.01 0.01 0.05 0.01 0.05 (0.05)

Manufactured Home NonWeatherized, Condensing 

Gas Furnace Fan

0.00 0.00 0.01 0.00 0.01 (0.01)

Manufactured Home Electric 

Furnace/Modular Blower Fan

0.01 0.01 0.02 0.03 0.03 (0.07)

Total – All Classes 0.63 4.26 4.35 4.50 4.58 2.09

* Numbers in parentheses indicate negative NPV.

As noted in section IV.H.2, DOE assumed no change in residential furnace fan 

prices over the 2019−2048 period. In addition, DOE conducted a sensitivity analysis 

using alternative price trends: one in which prices decline over time, and one in which 

prices increase over time. These price trends, and the NPV results from the associated 

sensitivity cases, are described in Appendix 10-C of the NOPR TSD.

c. Indirect Impacts on Employment

DOE expects energy conservation standards for residential furnace fans to reduce 

energy costs for consumers, with the resulting net savings being redirected to other forms 

of economic activity. Those shifts in spending and economic activity could affect the 
219

demand for labor. As described in section IV.N, DOE used an input/output model of the 

U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered 

in this rulemaking. DOE understands that there are uncertainties involved in projecting 

employment impacts, especially changes in the later years of the analysis. Therefore, 

DOE generated results for near-term time frames (2019 and 2024), where these 

uncertainties are reduced. 

The results suggest that the proposed standards would be likely to have 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 NOPR TSD presents more 

detailed results about anticipated indirect employment impacts.

4. Impact on Product Utility or Performance 

DOE has tentatively concluded that the standards it is proposing in this NOPR would

not lessen the utility or performance of residential furnace fans. 

5. Impact of Any Lessening of Competition 

DOE has also considered any lessening of competition that is likely to result from 

new and amended standards. The Attorney General determines the impact, if any, of any 

lessening of competition likely to result from a proposed standard, and transmits such 

determination in writing to the Secretary, together with an analysis of the nature and 

extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))
220

To assist the Attorney General in making such a determination, DOE has 

provided DOJ with copies of this notice and the TSD for review. DOE will consider 

DOJ’s comments on the proposed rule in preparing the final rule, and DOE will publish 

and respond to DOJ’s comments in that document.

6. Need of the Nation to Conserve Energy 

An improvement in the energy efficiency of the products subject to this rule is 

likely to improve the security of the nation’s energy system by reducing overall demand 

for energy. Reduction in the growth of electricity demand resulting from energy 

conservation standards may also improve the reliability of the electricity system. 

Reductions in national electric generating capacity estimated for each considered TSL are 

reported in chapter 15 of the NOPR TSD.

Energy savings from standards for the residential furnace fan products covered in 

today’s NOPR could also produce environmental benefits in the form of reduced 

emissions of air pollutants and greenhouse gases associated with electricity production. 

Table V.24 provides DOE’s estimate of cumulative emissions reductions projected to 

result from the TSLs considered in this rulemaking. The table includes both power sector 

emissions and upstream emissions. 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 NOPR TSD.
221

As discussed in section IV.K, DOE did not include NOX emissions reduction from 

power plants in States subject to CSAPR, because an energy conservation standard would 

not affect the overall level of NOX emissions in those States due to the emissions caps 

mandated by CSAPR. For SO2, projected emissions will be far below the cap established 

by CSAPR, so it is unlikely that excess SO2 emissions allowances resulting from the 

lower electricity demand would be needed or used to permit offsetting increases in SO2

emissions by any regulated EGU. Therefore, DOE believes that efficiency standards will 

reduce SO2 emissions.
222

Table V.24 Cumulative Emissions Reduction for Potential Standards for 

Residential Furnace Fans

TSL

1 2 3 4 5 6

Primary Energy Emissions*

CO2 (million metric tons) 57.12 214.17 221.76 416.41 421.74 563.75

SO2 (thousand tons) 31.17 117.04 121.28 227.23 230.23 307.77

NOX (thousand tons) 30.66 122.38 126.31 227.18 229.86 303.72

Hg (tons) 0.24 0.95 0.98 1.76 1.79 2.36

N2O (thousand tons) 0.67 2.65 2.75 4.96 5.03 6.66

CH4 (thousand tons) 4.65 18.24 18.91 34.24 34.72 46.01

Upstream Emissions

CO2 (million metric tons) 1.88 5.99 6.11 13.37 13.42 18.50

SO2 (thousand tons) 12.18 38.30 39.17 86.23 86.63 119.61

NOX (thousand tons) 0.50 2.00 2.04 3.72 3.75 4.95

Hg (tons) 0.00 0.00 0.00 0.01 0.01 0.01

N2O (thousand tons) 0.02 0.09 0.09 0.16 0.17 0.22

CH4 (thousand tons) 127.91 352.80 365.71 879.41 887.59 1249.3

Total Emissions

CO2 (million metric tons) 59.01 220.16 227.87 429.78 435.16 582.25

SO2 (thousand tons) 43.36 155.34 160.44 313.46 316.86 427.38

NOX (thousand tons) 31.16 124.38 128.35 230.90 233.60 308.67

Hg (tons) 0.24 0.95 0.99 1.77 1.80 2.38

N2O (thousand tons) 0.70 2.74 2.84 5.12 5.19 6.88

N2O 207.2 thousand tons

CO2eq** 816.0 845.0 1527.0 1547.7 2049.3

CH4 (thousand tons) 132.56 371.04 384.62 913.65 922.31 1295.3

CH4 million tons CO2eq** 3.314 9.276 9.616 22.84 23.06 32.38

* Includes emissions from additional gas use associated with more-efficient furnace fans.

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

As part of the analysis for this NOPR, DOE estimated monetary benefits likely to 

result from the reduced emissions of CO2 and NOX estimated for each of the TSLs 

considered for residential furnace fans. As discussed in section IV.L, for CO2, DOE used 

four sets of values for the SCC developed by an interagency process. Three sets of 

values are based on the average SCC from three integrated assessment models, at 

discount rates of 2.5 percent, 3 percent, and 5 percent. The fourth set represents the 95thpercentile SCC estimate across all three models at a 3-percent discount rate. The SCC 

Formatted Table

Formatted Table

Formatted Table

Formatted Table
223

values for CO2 emissions reductions in 2015, expressed in 2012$, are $12.9/ton, 

$40.8/ton, $62.2/ton, and $117/ton. The values for later years are higher due to 

increasing damages as the magnitude of projected climate change increases. Table V.25

presents the global value of CO2 emissions reductions at each TSL. DOE calculated 

domestic values as a range from 7 percent to 23 percent of the global values, and these 

results are presented in chapter 14 of the NOPR TSD.

Table V.25 Global Present Value of CO2 Emissions Reduction for Potential 

Standards for Residential Furnace Fans

TSL

SCC Case*

5% 

discount 

rate, 

average

3% 

discount 

rate, 

average

2.5% 

discount 

rate, 

average

3% discount 

rate, 95th

percentile

Primary Energy Emissions**

million 2012$

1 298.5 1531.1 2498.9 4724.6

2 1121.1 5746.8 9377.5 17732.7

3 1161.1 5951.3 9710.9 18363.5

4 2177.1 11165.3 18221.5 34451.9

5 2205.1 11308.6 18455.1 34893.8

6 2943.6 15103.4 24651.6 46603.0

Upstream Emissions

1 9.9 50.5 82.4 155.9

2 31.3 160.5 261.9 495.0

3 32.0 163.9 267.5 505.7

4 70.0 358.6 585.1 1106.2

5 70.3 360.1 587.6 1110.8

6 97.0 496.6 810.1 1531.5

Total Emissions

1 308.3 1581.7 2581.3 4880.5

2 1152.4 5907.3 9639.4 18227.7

3 1193.1 6115.2 9978.5 18869.2

4 2247.2 11524.0 18806.6 35558.1

5 2275.5 11668.7 19042.7 36004.6

6 3040.6 15599.9 25461.7 48134.5

* For each of the four cases, the corresponding SCC value for emissions in 2015 is 

$12.9, $40.8, $62.2, and $117 per metric ton (2012$). The values are for CO2 only (i.e Comment [A49]: Change recommended by 

OIRA.

., 

not CO2eq of other greenhouse gases).
224

** Includes site emissions from additional use of natural gas associated with moreefficient furnace fans.

DOE is well aware that scientific and economic knowledge about the contribution 

of CO2 and other greenhouse gas (GHG) emissions to changes in the future global 

climate and the potential resulting damages to the world economy continues to evolve 

rapidly. Thus, any value placed in this rulemaking on reducing CO2 emissions is subject 

to change. DOE, together with other Federal agencies, will continue to review various 

methodologies for estimating the monetary value of reductions in CO2 and other GHG 

emissions. This ongoing review will consider the comments on this subject that are part 

of the public record for this and other rulemakings, as well as other methodological 

assumptions and issues. However, consistent with DOE’s legal obligations, and taking 

into account the uncertainty involved with this particular issue, DOE has included in this 

NOPR the most recent values and analyses resulting from the interagency review process.

DOE also estimated a range for the cumulative monetary value of the economic 

benefits associated with NOX emissions reductions anticipated to result from standards 

for the residential furnace fan products that are the subject of this NOPR. The dollar-perton values that DOE used are discussed in section IV.L. Table V.26 presents the present 

value of cumulative NOX emissions reductions for each TSL calculated using the average 

dollar-per-ton values and 7-percent and 3-percent discount rates.
225

Table V.26 Present Value of NOX Emissions Reduction for Potential Standards for 

Residential Furnace Fans

TSL 3% Discount Rate 7% Discount Rate

Power Sector and Site Emissions*

million 2012$

1 31.0 10.7

2 116.4 40.0

3 120.7 41.4

4 226.2 77.8

5 229.2 78.8

6 306.1 105.3

Upstream Emissions

1 12.4 4.4

2 39.0 13.9

3 39.9 14.3

4 88.0 31.6

5 88.4 31.7

6 122.3 44.0

Total Emissions**

1 43.4 15.1

2 155.4 53.9

3 160.5 55.7

4 314.2 109.4

5 317.6 110.6

6 428.3 149.3

* Includes site emissions from additional use of natural gas 

associated with more-efficient furnace fans.

** Components may not sum to total due to rounding.

The NPV of the monetized benefits associated with emissions reductions can be 

viewed as a complement to the NPV of the consumer savings calculated for each TSL 

considered in this rulemaking. Table V.27 presents the NPV values that result from 

adding the estimates of the potential economic benefits resulting from reduced full-fuelcycle CO2 and NOX emissions in each of four valuation scenarios to the NPV of 

consumer savings calculated for each TSL considered in this rulemaking, at both a 7-

percent and a 3-percent discount rate. The CO2 values used in the columns of each table 
226

correspond to the four scenarios for the valuation of CO2 emission reductions discussed 

above.

Table V.27 Potential Standards for Residential Furnace Fans: Net Present Value of 

Consumer Savings Combined with Present Value of Monetized Benefits from CO2

and NOX Emissions Reductions 

TSL

Consumer NPV at 3% Discount Rate added with:

SCC Case

$12.9/metric ton 

CO2

* and Low 

Value for NOX

**

SCC Case

$40.8/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$62.2/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$117/metric ton

CO2

* and High 

Value for NOX

**

1

billion 2012$

3.7 5.0 6.0 8.3

2 24.5 29.4 33.1 41.8

3 25.0 30.1 34.0 43.0

4 28.5 38.0 45.3 62.3

5 28.9 38.6 45.9 63.2

6 21.1 34.0 43.8 66.9

TSL

Consumer NPV at 7% Discount Rate added with:

SCC Case

$12.9/metric ton 

CO2

* and Low 

Value for NOX

**

SCC Case

$40.8/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$62.2/metric ton 

CO2

* and 

Medium Value 

for NOX

**

SCC Case

$117/metric ton 

CO2

* and High 

Value for NOX

**

1

billion 2012$

1.5 2.8 3.8 6.1

2 9.2 14.0 17.8 26.4

3 9.4 14.4 18.3 27.2

4 10.8 20.1 27.4 44.3

5 10.9 20.4 27.8 44.8

6 6.7 19.4 29.3 52.1

* These label values represent the global SCC in 2015, in 2012$. ** Low Value corresponds to $468 per ton of NOX emissions. Medium Value corresponds to $2,639 per 

ton, and High Value corresponds to $4,809 per ton.

Although adding the value of consumer savings to the values of emission 

reductions provides a valuable perspective, two issues should be considered. First, the 

national operating cost savings are domestic U.S. consumer monetary savings that occur 
227

as a result of market transactions, while the value of CO2 reductions is based on a global 

value. Second, the assessments of operating cost savings and the SCC are performed 

with different methods that use quite different time frames for analysis. The national 

operating cost savings is measured for the lifetime of products shipped in 2019–2048. 

The SCC values, on the other hand, reflect the present value of future climate-related 

impacts resulting from the emission of one metric ton of CO2 in each year. Because of 

the long residence time of CO2 in the atmosphere, these impacts continue well beyond 

2100.

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)(VI)) No other factors were considered in this analysis.

C.

When considering proposed standards, the new or amended energy conservation 

standard that DOE adopts for any type (or class) of covered product shall be designed to 

achieve the maximum improvement in energy efficiency that the Secretary determines is 

technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In 

determining whether a standard is economically justified, the Secretary must determine 

whether the benefits of the standard exceed its burdens 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))

Proposed Standards
228

For today’s NOPR, DOE considered the impacts of standards 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 in understanding the benefits and/or burdens of each TSL, tables 

in this section summarize the quantitative analytical results for each TSL, based on the 

assumptions and methodology discussed herein. The efficiency levels contained in each 

TSL are described in section V.A. In addition to the quantitative results presented in the 

tables, DOE also considers other burdens and benefits that affect economic justification. 

These include the impacts on identifiable subgroups of consumers who may be 

disproportionately affected by a national standard, and impacts on employment. Section 

V.B.1.b presents the estimated impacts of each TSL for these subgroups. DOE discusses 

the impacts on direct employment in residential furnace fan manufacturing in section 

V.B.2.b, and discusses the indirect employment impacts in section V.B.3.c.

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 
229

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, renter 

versus owner or builder versus purchaser). Other literature indicates that with less than 

perfect foresight and a high degree of uncertainty about the future, consumers may trade 

off at a higher than expected rate between current consumption and uncertain future 

energy cost savings. This undervaluation suggests that regulation that promotes energy 

efficiency can produce significant net private gains (as well as producing social gains by, 

for example, reducing pollution).

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 a purchase of a product in the standards case, this decreases 

sales for product manufacturers and the cost to manufacturers 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 changes in the volume of product 

purchases in chapter 9 of the NOPR TSD. DOE’s current analysis does not explicitly 

control for heterogeneity in consumer preferences, preferences across subcategories of 
230

products or specific features, or consumer price sensitivity variation according to 

household income (Reiss and White, 2005).80

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 standards, and potential enhancements to the 

methodology by which these impacts are defined and estimated in the regulatory 

process.81 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.

1. Benefits and Burdens of Trial Standard Levels Considered for Residential Furnace 

Fans 

Table V.28 through Table V.30 summarize the quantitative impacts estimated for 

each TSL for residential furnace fans. The national impacts are measured over the 

lifetime of furnace fans purchased in the 30-year period that begins in the first full year of 

compliance with amended standards (2019-2048). The energy savings, emissions 

 80 P.C. Reiss and M.W. White. Household Electricity Demand, Revisited. Review of Economic Studies

(2005) 72, 853–883. 81 Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice. 

Lawrence Berkeley National Laboratory (2010) (Available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (Last accessed 

May 3, 2013).
231

reductions, and value of emissions reductions refer to full-fuel-cycle results. Results that 

refer to primary energy savings are presented in chapter 10 of the NOPR TSD.

Table V.28 Summary of Analytical Results for Residential Furnace Fan Standards: 

National Impacts

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

National Full-Fuel-Cycle Energy Savings quads

0.635 2.254 2.332 4.576 4.629 6.250

NPV of Consumer Benefits

3% discount rate

2012$ billion

3.37 23.30 23.81 26.16 26.57 17.95

7% discount rate 1.19 8.07 8.23 8.51 8.64 3.65

Cumulative Emissions Reduction (Total FFC Emissions)

CO2 million metric tons 59.01 220.2 227.9 429.8 435.2 582.3

SO2 thousand tons 43.36 155.3 160.4 313.5 316.9 427.4

NOX thousand tons 31.16 124.4 128.4 230.9 233.6 308.7

Hg tons 0.24 0.95 0.99 1.77 1.80 2.38

N2O thousand tons 0.70 2.74 2.84 5.12 5.19 6.88

N2O 207.2 thousand tons

CO2eq* 816.0 845.0 1527.0 1547.7 2049.3

CH4 thousand tons 132.6 371.0 384.6 913.7 922.3 1295

CH4 million tons CO2eq* 3.314 9.276 9.616 22.84 23.06 32.38

Value of Emissions Reduction (Total FFC Emissions) 

CO2 ***

2012$ billion

0.308 to 

4.880

1.152 to 

18.23

1.193 to 

18.87

2.247 to 

35.56

2.275 to 

36.01

3.041 to 

48.13

NOX – 3% discount rate 0.043 0.155 0.161 0.314 0.318 0.428

NOX – 7% discount rate 0.015 0.054 0.056 0.109 0.111 0.149

** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

** Range of the economic value of CO2 reductions is based on interagency estimates of the global benefit 

of reduced CO2 emissions.
232

Table V.29 Summary of Analytical Results for Residential Furnace Fan Standards: 

Manufacturer and Average or Median Consumer Impacts*

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Manufacturer Impacts

Industry NPV (3.0) to 

0.7

2012$ 

million

(26.7) 

to 13.5

(28.6) 

to 12.9

(54.4) 

to 33.8

(55.5) 

to 34.2

(170.1) 

to 58.2

Industry NPV (1.2) to 

0.3 % change (10.6) to 5.3

(11.3) 

to 5.1

(21.6) 

to 13.4

(22.0) 

to 13.6

(67.5) 

to 23.1

Consumer Average LCC Savings 

Non-weatherized, Noncondensing Gas Furnace 

Fan

2012$

$64 $442 $442 $474 $474 $313

Non-weatherized, 

Condensing Gas Furnace 

Fan

$49 $361 $361 $371 $371 $238

Weatherized NonCondensing Gas Furnace 

Fan 

$35 $228 $228 $247 $247 $67

Non-Weatherized, NonCondensing Oil Furnace 

Fan

$40 $40 $344 $40 $344 $132

Non-weatherized Electric 

Furnace/Modular Blower 

Fan

$21 $160 $160 $185 $185 $17

Manufactured Home 

Non-weatherized, Noncondensing Gas Furnace 

Fan

$26 $26 $146 $26 $146 ($116)

Manufactured Home 

Non-weatherized, 

Condensing Gas Furnace 

Fan

$27 $27 $152 $27 $152 ($86)

Manufactured Home 

Electric Furnace/Modular 

Blower Fan

$14 $14 $64 $78 $78 ($86)

Consumer Median PBP 

Non-weatherized, Noncondensing Gas Furnace

Fan

years

1.34 2.69 2.69 5.38 5.38 11.20

Non-weatherized, 

Condensing Gas Furnace 

Fan

1.35 2.73 2.73 5.39 5.39 11.03

Weatherized NonCondensing Gas Furnace 

Fan 

1.27 2.65 2.65 6.39 6.39 13.32

Non-Weatherized, Non- 5.49 5.49 6.97 5.49 6.97 25.41
233

Condensing Oil Furnace 

Fan

Non-weatherized Electric 

Furnace/Modular Blower 

Fan

2.39 3.15 3.15 3.55 3.55 13.45

Manufactured Home 

Non-weatherized, Noncondensing Gas Furnace 

Fan

3.35 3.35 7.02 3.35 7.02 26.73

Manufactured Home 

Non-weatherized, 

Condensing Gas Furnace

Fan

2.73 2.73 6.46 2.73 6.46 32.23

Manufactured Home 

Electric Furnace/Modular 

Blower Fan

2.49 2.49 4.35 4.61 4.61 17.11

*Parentheses indicate negative values.

Table V.30 Summary of Analytical Results for Residential Furnace Fan Standards: 

Distribution of Consumer LCC Impacts

Product Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Non-Weatherized, Non-Condensing Gas Furnace Fan

Net Cost 2% 18% 18% 33% 33% 58%

No Impact 68% 25% 25% 14% 14% 0%

Net Benefit 30% 57% 57% 53% 53% 42%

Non-weatherized, Condensing Gas Furnace Fan

Net Cost 1% 10% 10% 24% 24% 57%

No Impact 75% 41% 41% 34% 34% 0%

Net Benefit 24% 49% 49% 42% 42% 43%

Weatherized Non-Condensing Gas Furnace Fan 

Net Cost 0% 7% 7% 25% 25% 63%

No Impact 81% 56% 56% 33% 33% 0%

Net Benefit 18% 37% 37% 41% 41% 37%

Non-Weatherized, Non-Condensing Oil Furnace Fan
234

Net Cost 12% 12% 43% 12% 43% 79%

No Impact 71% 71% 28% 71% 28% 0%

Net Benefit 18% 18% 29% 18% 29% 21%

Non-weatherized Electric Furnace/Modular Blower Fan

Net Cost 5% 20% 20% 27% 27% 68%

No Impact 73% 37% 37% 25% 25% 0%

Net Benefit 21% 42% 42% 48% 48% 32%

Manufactured Home Non-Weatherized, Non-Condensing Gas Furnace Fan

Net Cost 13% 13% 58% 13% 58% 85%

No Impact 56% 56% 0% 56% 0% 0%

Net Benefit 32% 32% 42% 32% 42% 15%

Manufactured Home Non-Weatherized, Condensing Gas Furnace Fan

Net Cost 7% 7% 38% 7% 38% 84%

No Impact 68% 68% 29% 68% 29% 0%

Net Benefit 26% 26% 32% 26% 32% 16%

Manufactured Home Electric Furnace/Modular Blower Fan

Net Cost 8% 8% 28% 34% 34% 82%

No Impact 71% 71% 38% 26% 26% 0%

Net Benefit 21% 21% 34% 40% 40% 18%

Note: Components may not sum to total due to rounding.

First, DOE considered TSL 6, which would save an estimated total of 6.25 quads 

of energy, an amount DOE considers significant. TSL 6 has an estimated NPV of 

consumer benefit of $3.65 billion using a 7-percent discount rate, and $17.95 billion 

using a 3-percent discount rate. 

The cumulative CO2 emissions reduction at TSL 6 is 582.3 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $3.041

billion to $48.13 billion. The other emissions reductions are 427.4 thousand tons of SO2,

308.7 thousand tons of NOX, 2.38 tons of Hg, 6.88 thousand tons of N2O, and 1.295

thousand tons of CH4.
235

At TSL 6, the average LCC savings are positive for Non-weatherized, Noncondensing Gas Furnace Fans, Non-weatherized, Condensing Gas Furnace Fans, 

Weatherized Non-Condensing Gas Furnace Fan , Non-Weatherized, Non-Condensing Oil 

Furnace Fan, and Non-weatherized Electric Furnace/Modular Blower Fans. The LCC 

savings are negative for Manufactured Home Non-weatherized, Non-condensing Gas 

Furnace Fans, Manufactured Home Non-weatherized, Condensing Gas Furnace Fans, and 

Manufactured Home Electric Furnace/Modular Blower Fans. The median payback period 

is lower than the median product lifetime (which is 22.6 years for gas and electric furnace 

fans) for all of the product classes. The share of consumers experiencing an LCC cost 

(increase in LCC) is higher than the share experiencing an LCC benefit (decrease in 

LCC) for all of the product classes. 

At TSL 6, manufacturers may expect diminished profitability due to large 

increases in product costs, stranded assets, capital investments in equipment and tooling, 

and expenditures related to engineering and testing. The projected change in INPV ranges 

from a decrease of $170.1 million to an increase of $58.2 million based on DOE’s 

manufacturer markup scenarios. The upper bound of $58.2 million is considered an 

optimistic scenario for manufacturers because it assumes manufacturers can fully pass on 

substantial increases in product costs. DOE recognizes the risk of large negative impacts 

on industry if manufacturers’ expectations concerning reduced profit margins are 

realized. TSL 6 could reduce INPV in the residential furnace fan industry by up to 67.5 

percent if impacts reach the lower bound of the range.
236

Accordingly, the Secretary tentatively concludes that at TSL 6 for residential 

furnace fans, the benefits of significant energy savings, positive NPV of consumer 

benefit, emission reductions and the estimated monetary value of the CO2 emissions 

reductions, as well as positive average LCC savings for most product classes would be 

outweighed by the high percentage of consumers that would experience an LCC cost in 

all of the product classes, and the substantial reduction in INPV for manufacturers. 

Consequently, DOE has concluded that TSL 6 is not economically justified. 

Next, DOE considered TSL 5, which would save an estimated total of 4.629

quads of energy, an amount DOE considers significant. TSL 5 has an estimated NPV of 

consumer benefit of $8.64 billion using a 7-percent discount rate, and $26.57 billion 

using a 3-percent discount rate. 

The cumulative CO2 emissions reduction at TSL 5 is 435.2 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $2.275

billion to $36.01 billion. The other emissions reductions are 316.9 thousand tons of SO2, 

233.6 thousand tons of NOX, 1.80 tons of Hg, 5.19 thousand tons of N2O, and 922.3

thousand tons of CH4.

At TSL 5, the average LCC savings are positive for all of the product classes. 

The median payback period is lower than the average product lifetime for all of the 

product classes. The share of consumers experiencing an LCC benefit (decrease in LCC) 
237

is higher than the share experiencing an LCC cost (increase in LCC) for five of the 

product classes (Non-Weatherized, Non-Condensing Gas Furnace Fans, Nonweatherized, Condensing Gas Furnace Fans, Weatherized Non-Condensing Gas Furnace 

Fans, Non-weatherized Electric Furnace/Modular Blower Fans, and Manufactured Home 

Electric Furnace/Modular Blower Fans), but lower for the other three product classes.

At TSL 5, the projected change in INPV ranges from a decrease of $55.5 million 

to an increase of $34.2 million. At TSL 5, DOE recognizes the risk of negative impacts if 

manufacturers’ expectations concerning reduced profit margins are realized. If the lower 

bound of the range of impacts is reached, as DOE expects, TSL 5 could result in a net 

loss of 22.0 percent in INPV for residential furnace fan manufacturers.

Accordingly, the Secretary tentatively concludes that at TSL 5 for residential 

furnace fans, the benefits of significant energy savings, positive NPV of consumer 

benefit, positive average LCC savings for all of the product classes, emission reductions

and the estimated monetary value of the CO2 emissions reductions, would be outweighed 

by the high percentage of consumers that would be negatively impacted for some of the 

product classes, and the substantial reduction in INPV for manufacturers. Consequently, 

DOE has concluded that TSL 5 is not economically justified.

Next, DOE considered TSL 4, which would save an estimated total of 4.576

quads of energy, an amount DOE considers significant. TSL 4 has an estimated NPV of 

consumer benefit of $8.51 billion using a 7-percent discount rate, and $26.16 billion 

using a 3-percent discount rate. 
238

The cumulative CO2 emissions reduction at TSL 4 is 429.8 million metric tons. 

The estimated monetary value of the CO2 emissions reductions ranges from $2.247

billion to $35.56 billion. The other emissions reductions are 313.5 thousand tons of SO2, 

230.9 thousand tons of NOX, 1.77 tons of Hg, 5.12 thousand tons of N2O, and 913.7

thousand tons of CH4.

At TSL 4, the average LCC savings are positive for all of the product classes. 

The median payback period is lower than the average product lifetime for all of the 

product classes. The share of consumers experiencing an LCC benefit (decrease in LCC) 

is higher than the share experiencing an LCC cost (increase in LCC) for all of the product 

classes.

At TSL 4, the projected change in INPV ranges from a decrease of $54.4 million 

to an increase of $33.8 million. At TSL 4, DOE recognizes the risk of negative impacts if 

manufacturers’ expectations concerning reduced profit margins are realized. If the lower 

bound of the range of impacts is reached, as DOE expects, TSL 4 could result in a net 

loss of 21.6 percent in INPV for residential furnace fan manufacturers.

After considering the analysis and weighing the benefits and the burdens, the 

Secretary tentatively concludes that at TSL 4 for residential furnace fans, the benefits of 

significant energy savings, positive NPV of consumer benefit, positive average LCC 

savings for all of the product classes, emission reductions and the estimated monetary 
239

value of the CO2 emissions reductions would outweigh the reduction in INPV for 

manufacturers. The Secretary has tentatively concluded that TSL 4 would save a 

significant amount of energy and is technologically feasible and economically justified. 

Therefore, DOE today proposes to adopt the energy conservation standards for residential 

furnace fans at TSL 4. Table V.31 presents the proposed energy conservation standards 

for residential furnace fans.

Table V.31 Proposed Energy Conservation Standards for Residential Furnace Fans

Product Class Proposed Standard:

FER* (W/1000 cfm)

Non-Weatherized, Non-Condensing Gas 

Furnace Fan FER = 0.029 x QMax + 180

Non-weatherized, Condensing Gas 

Furnace Fan FER = 0.029 x QMax + 196

Weatherized Non-Condensing Gas 

Furnace Fan FER = 0.029 x QMax + 135

Non-Weatherized, Non-Condensing Oil 

Furnace Fan FER = 0.051 x QMax + 301

Non-weatherized Electric Furnace / 

Modular Blower Fan FER = 0.029 x QMax + 165

Manufactured Home Non-Weatherized, 

Non-Condensing Gas Furnace Fan FER = 0.051 x QMax + 242

Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fan FER = 0.051 x QMax + 262

Manufactured Home Electric 

Furnace/Modular Blower Fan FER = 0.029 x QMax + 105

Manufactured Home Weatherized NonCondensing Gas Furnace Fan Reserved

Manufactured Home Non-Weatherized 

Non-Condensing Oil Furnace Fan Reserved

*

QMax is the airflow, in cfm, at the maximum airflow-control setting measured using the proposed DOE test 

procedure. 78 FR 19606, 19627 (April 2, 2013).
240

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards

The benefits and costs of today’s proposed standards can also be expressed in 

terms of annualized values. The annualized monetary values are the sum of: (1) the 

annualized national economic value, expressed in 2012$, of the benefits from operating 

products that meet the proposed standards (consisting primarily of operating cost savings 

from using less energy, minus increases in equipment purchase costs, which is another 

way of representing consumer NPV), and (2) the monetary value of the benefits of 

emission reductions, including CO2 emission reductions.82 The value of the CO2

reductions, otherwise known as the Social Cost of Carbon (SCC), is calculated using a 

range of values per metric ton of CO2 developed by a recent interagency process. 

Although combining the values of operating savings and CO2 reductions provides 

a useful perspective, two issues should be considered. First, the national operating 

savings are domestic U.S. consumer monetary savings that occur as a result of market 

transactions while the value of CO2 reductions is based on a global value. Second, the 

assessments of operating cost savings and SCC are performed with different methods that 

use different time frames for analysis. The national operating cost savings is measured 

for the lifetime of products shipped in 2019–2048. The SCC values, on the other hand, 

 82 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized 

values. First, DOE calculated a present value in 2013, the year used for discounting the NPV of total 

consumer costs and savings, for the time-series of costs and benefits using discount rates of 3 and 7 percent

for all costs and benefits except for the value of CO2 reductions. For the latter, DOE used a range of 

discount rates. From the present value, DOE then calculated the fixed annual payment over a 30-year

period, starting in 2013, that yields the same present value. The fixed annual payment is the annualized 

value. Although DOE calculated annualized values, this does not imply that the time-series of cost and 

benefits from which the annualized values were determined would be a steady stream of payments.
241

reflect the present value of future climate-related impacts resulting from the emission of 

one metric ton of CO2 in each year over a very long period. 

Table V.32 shows the annualized values for the proposed standards for residential 

furnace fans. The results under the primary estimate are as follows. (All monetary values 

below are expressed in 2012$.) Using a 7-percent discount rate for benefits and costs 

other than CO2 reduction (for which DOE used a 3-percent discount rate along with the 

SCC series corresponding to a value of $40.8/ton in 2015), the cost of the residential 

furnace fan standards proposed in today’s rule is $231 million per year in increased 

equipment costs, while the benefits are $872 million per year in reduced equipment 

operating costs, $571 million in CO2 reductions, and $8.24 million in reduced NOX

emissions. In this case, the net benefit amounts to $1,220 million per year.

Using a 3-percent discount rate for all benefits and costs and the SCC series 

corresponding to a value of $40.8/ton in 2015, Table V.32 shows the cost of the 

residential furnace fans standards proposed in today’s rule is $290 million per year in 

increased equipment costs, while the benefits are $1585 million per year in reduced 

operating costs, $571 million in CO2 reductions, and $15.56 million in reduced NOX

emissions. In this case, the net benefit amounts to $1,882 million per year.
242

Table V.32 Annualized Benefits and Costs of Proposed Standards (TSL 4) for 

Residential Furnace Fans

Discount 

Rate

Primary 

Estimate*

Low Net 

Benefits 

Estimate

High Net 

Benefits 

Estimate

million 2012$/year

Benefits

Operating Cost Savings

7% 872 710 1082

3% 1585 1264 2011

CO2 Reduction Monetized 

Value ($12.9/t case)** 5% 139 117 171

CO2 Reduction Monetized 

Value ($40.8/t case)** 3% 571 477 702

CO2 Reduction Monetized 

Value ($62.2/t case)** 2.5% 877 732 1079

CO2 Reduction Monetized 

Value ($117/t case)** 3% 1761 1471 2167

NOX Reduction Monetized 

Value (at $2,639/ton)**

7% 8.24 6.97 9.99

3% 15.56 13.03 19.09

Total Benefits†

7% plus 

CO2 range

1,019 to 

2,641

834 to 2,188 1,263 to 3,259

7% 1,451 1,194 1,794

3% plus 

CO2 range

1,740 to 

3,362

1,394 to 

2,748

2,201 to 4,197

3% 2,172 1,754 2,732

Costs

Incremental Product Costs

7% 231 273 201

3% 290 346 250

Net Benefits

Total†

7% plus 

CO2 range

788 to 2,410 561 to 1,915 1,062 to 3,058

7% 1,220 921 1,593

3% plus 

CO2 range

1,450 to 

3,072

1,047 to 

2,402

1,951 to 3,947

3% 1,882 1,407 2,482

Formatted: Subscript
243

* This table presents the annualized costs and benefits associated with residential furnace fans shipped in 

2019−2048. These results include benefits to consumers which accrue after 2048 from the products 

purchased in 2019−2048. Costs incurred by manufacturers, some of which may be incurred in preparation 

for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. 

The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing 

starts from the AEO 2012

** The CO2 values represent global values of the SCC, in 2012$, in 2015 under several scenarios. The first 

three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, 

respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% 

discount rate. The SCC values increase over time. The value for NOX (in 2012$) is the average of the low 

and high values used in DOE’s analysis.

Reference case, Low Estimate, and High Estimate, respectively. Incremental 

product costs reflect a constant product price trend in the Primary Estimate, an increasing price trend in the 

Low Benefits Estimate, and a decreasing price trend in the High Benefits Estimate. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of 

$40.8/t in 2015. In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost and 

NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of 

CO2 values.

VI. Procedural Issues and Regulatory Review

A.

Section 1(b)(1) of Executive Order 12866, “Regulatory Planning and Review,” 58 

FR 51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to 

address, including, where applicable, the failures of private markets or public institutions 

that warrant new agency action, as well as to assess the significance of that problem. The 

problems that today’s proposed standards address are as follows: 

Review Under Executive Orders 12866 and 13563

(1) There is a lack of consumer information and/or information processing capability 

about energy efficiency opportunities in the home appliance market.

(2) There is asymmetric information (one party to a transaction has more and better 

information than the other) and/or high transactions costs (costs of gathering 

information and effecting exchanges of goods and services).
244

(3) There are external benefits resulting from improved energy efficiency of 

residential furnace fans that are not captured by the users of such equipment.

These benefits include externalities related to environmental protection and 

energy security that are not reflected in energy prices, such as reduced emissions 

of greenhouse gases.

 In addition, DOE has determined that today’s regulatory action is an 

“economically significant regulatory action” under section 3(f)(1) of Executive Order 

12866. Accordingly, section 6(a)(3) of the Executive Order requires that DOE prepare a 

regulatory impact analysis (RIA) on today’s rule and that the Office of Information and 

Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) review this 

rule. DOE presented to OIRA for review the draft rule and other documents prepared for 

this rulemaking, including the RIA, and has included these documents in the rulemaking 

record. The assessments prepared pursuant to Executive Order 12866 can be found in the 

technical support document for this rulemaking. 

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued 

on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)). Executive Order 13563 is 

supplemental to and explicitly reaffirms the principles, structures, and definitions 

governing regulatory review established in Executive Order 12866. To the extent 

permitted by law, agencies are required by Executive Order 13563 to: (1) propose or 

adopt a regulation only upon a reasoned determination that its benefits justify its costs 

(recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations 
245

to impose the least burden on society, consistent with obtaining regulatory objectives, 

taking into account, among other things, and to the extent practicable, the costs of 

cumulative regulations; (3) select, in choosing among alternative regulatory approaches, 

those approaches that maximize net benefits (including potential economic, 

environmental, public health and safety, and other advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify performance objectives, rather than specifying 

the behavior or manner of compliance that regulated entities must adopt; and (5) identify 

and assess available alternatives to direct regulation, including providing economic 

incentives to encourage the desired behavior, such as user fees or marketable permits, or 

providing information upon which choices can be made by the public. 

DOE emphasizes as well that Executive Order 13563 requires agencies to use the 

best available techniques to quantify anticipated present and future benefits and costs as 

accurately as possible. In its guidance, the Office of Information and Regulatory Affairs 

has emphasized that such techniques may include identifying changing future compliance 

costs that might result from technological innovation or anticipated behavioral changes. 

For the reasons stated in the preamble, DOE believes that today’s NOPR is consistent 

with these principles, including the requirement that, to the extent permitted by law, 

benefits justify costs and that net benefits are maximized. 

B.

The Regulatory Flexibility Act (5 U.S.C. 601 

Review Under the Regulatory Flexibility Act

et seq.) requires preparation of an 

initial regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for 
246

public comment, unless the agency certifies that the rule, if promulgated, will not have a 

significant economic impact on a substantial number of small entities. As required by 

Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 

67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 

2003, to ensure that the potential impacts of its rules on small entities are properly 

considered during the rulemaking process. 68 FR 7990. DOE has made its procedures 

and policies available on the Office of the General Counsel’s website 

(http://energy.gov/gc/office-general-counsel). DOE has prepared the following IRFA for 

the products that are the subject of this rulemaking.

1. Description and Estimated Number of Small Entities Regulated 

a. Methodology for Estimating the Number of Small Entities

For the manufacturers of residential furnace fans, the Small Business 

Administration (SBA) has set a size threshold, which defines those entities classified as 

“small businesses” for the purposes of the statute. DOE used the SBA’s small business 

size standards to determine whether any small entities would be subject to the 

requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 

53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size standards are 

listed by NAICS code and industry description and are available at: 

www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 

Residential furnace fan manufacturing is classified under NAICS 333415, “AirConditioning and Warm Air Heating Equipment and Commercial and Industrial 
247

Refrigeration Equipment Manufacturing.” The SBA sets a threshold of 750 employees or 

less for an entity to be considered as a small business for this category.

To estimate the number of companies that could be small business manufacturers 

of products covered by this rulemaking, DOE conducted a market survey using available 

public information to identify potential small manufacturers. DOE’s research involved 

industry trade association membership directories (including AHRI), public databases 

(e.g., AHRI Directory,83 the SBA Database84), individual company websites, and market 

research tools (e.g., Hoovers reports) to create a list of companies that manufacture or sell 

products covered by this rulemaking. DOE also asked stakeholders and industry 

representatives if they were aware of any other small manufacturers during manufacturer 

interviews and at DOE public meetings. DOE reviewed publicly-available data and 

contacted select companies on its list, as necessary, to determine whether they met the 

SBA’s definition of a small business manufacturer of covered residential furnace fans. 

DOE screened out companies that do not offer products covered by this rulemaking, do 

not meet the definition of a “small business,” or are foreign owned and operated. 

DOE initially identified at least 40 potential manufacturers of residential furnace 

fan products sold in the U.S. DOE then determined that 26 were large manufacturers, 

manufacturers that are foreign owned and operated, or manufacturers that do not produce 

products covered by this rulemaking. DOE was able to determine that approximately 14 

 83 See www.ahridirectory.org/ahriDirectory/pages/home.aspx. 84 See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
248

manufacturers meet the SBA’s definition of a “small business” and manufacture products 

covered by this rulemaking.

b. Manufacturer Participation

Before issuing this NOPR, DOE attempted to contact all the small business 

manufacturers of residential furnace fans it had identified. One of the small businesses 

consented to being interviewed during the MIA interviews. DOE also obtained 

information about small business impacts while interviewing large manufacturers.

c. Industry Structure

The 14 identified domestic manufacturers of residential furnace fans that qualify 

as small businesses under the SBA size standard account for a small fraction of industry 

shipments. Generally, manufacturers of furnaces are also manufacturers of furnace fan 

products. The market for domestic gas furnaces is almost completely held by seven large 

manufacturers, and small manufacturers in total account for only 1 percent of the market. 

These seven large manufacturers also control 97 percent of the market for central air 

conditioners. The market for manufactured home furnaces is primarily held by one large 

manufacturer. In contrast, the market for domestic oil furnaces is almost entirely 

comprised of small manufacturers.

d. Comparison Between Large and Small Entities

The proposed standards for residential furnace fans could cause small 

manufacturers to be at a disadvantage relative to large manufacturers. One way in which 
249

small manufacturers could be at a disadvantage is that they may be disproportionately 

affected by product conversion costs. Product redesign, testing, and certification costs 

tend to be fixed and do not scale with sales volume. For each product model, small 

businesses must make investments in research and development to redesign their 

products, but because they have lower sales volumes, they must spread these costs across 

fewer units. In addition, because small manufacturers have fewer engineers than large 

manufacturers, they would need to allocate a greater portion of their available resources 

to meet a standard. Since engineers may need to spend more time redesigning and testing 

existing models as a result of the new standard, they may have less time to develop new 

products.

Furthermore, smaller manufacturers may lack the purchasing power of larger 

manufacturers. For example, since motor suppliers give discounts to manufacturers 

based on the number of motors they purchase, larger manufacturers may have a pricing 

advantage because they have higher volume purchases. This purchasing power 

differential between high-volume and low-volume orders applies to other furnace fan 

components as well, including the impeller fan blade, transformer, and capacitor. 

2. Description and Estimate of Compliance Requirements 

Since the proposed standard for residential furnace fans could cause small 

manufacturers to be at a disadvantage relative to large manufacturers, DOE cannot certify 

that the proposed standards would not have a significant impact on a significant number 

of small businesses, and consequently, DOE has prepared this IRFA.
250

At TSL 4, the level proposed in today’s notice, DOE estimates no capital 

conversion costs and product conversion costs of $0.014 million for a typical small 

manufacturer, compared to product conversion costs of $0.431 million for a typical large 

manufacturer. These costs and their impacts are described in detail below.

To estimate how small manufacturers would be potentially impacted, DOE used 

the market share of small manufacturers to estimate the annual revenue, earnings before 

interest and tax (EBIT), and research and development (R&D) expense for a typical small 

manufacturer. DOE then compared these costs to the required product conversion costs 

at each TSL for both an average small manufacturer and an average large manufacturer 

(see Tables VI.1 and Table VI.2). In the following tables, TSL 4 represents the proposed 

standard.

Although conversion costs can be considered substantial for all companies, the 

impacts could be relatively greater for a typical small manufacturer because of much 

lower production volumes and the relatively fixed nature of the R&D resources required 

per model. Small manufacturers also have less engineering staff and lower R&D budgets. 

As a result, the product conversion costs incurred by a small manufacturer would likely 

be a larger percentage of its revenues, R&D expenses, and EBIT, than those for a large 

manufacturer. Table VI.1 shows the product conversion costs for a typical large 

manufacturer versus those of a typical small manufacturer. Table VI.2 compares the total 
251

conversion costs of a typical large manufacturer as a percentage of annual R&D expense, 

annual revenue, and EBIT to those of a typical small manufacturer.

Table VI.1: Comparison of a Typical Small and Large Residential Furnace Fan 

Manufacturer’s Product Conversion Costs

Product 

Conversion 

Costs for a 

Typical Large 

Manufacturer 

(2012$ millions)

Product 

Conversion 

Costs for a 

Typical Small 

Manufacturer 

(2012$ millions)

Baseline $0.000 $0.000 

TSL 1 $0.154 $0.007

TSL 2 $0.378 $0.012

TSL 3 $0.391 $0.014

TSL 4 $0.431 $0.014

TSL 5 $0.438 $0.019

TSL 6 $1.261 $0.045

Table VI.2: Comparison of a Typical Small and Large Residential Furnace Fan 

Manufacturer’s Product Conversion Costs to Annual R&D Expense, Annual 

Revenue, and EBIT

Large Manufacturer Small Manufacturer

Product 

Conversion 

Costs as a 

Percentage 

of Annual 

R&D 

Expense

Product 

Conversion 

Costs as a 

Percentage

of Annual 

Revenue

Product 

Conversion 

Costs as a 

Percentage 

of Annual 

EBIT

Product 

Conversion 

Costs as a 

Percentage 

of Annual 

R&D 

Expense

Product 

Conversion 

Costs as a 

Percentage 

of Annual 

Revenue

Product 

Conversion 

Costs as a 

Percentage 

of Annual 

EBIT

Baseline 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

TSL 1 14.7% 0.3% 4.0% 137.9% 2.6% 37.4%

TSL 2 36.1% 0.7% 9.8% 226.3% 4.3% 61.4%

TSL 3 37.3% 0.7% 10.1% 267.7% 5.1% 72.7%

TSL 4 41.1% 0.8% 11.2% 267.7% 5.1% 72.7%

TSL 5 41.8% 0.8% 11.3% 368.4% 7.0% 100.0%

TSL 6 120.4% 2.3% 32.7% 850.6% 16.2% 230.9%
252

Based on the results in Table VI.1 and Table VI.2, DOE understands that the 

potential product conversions costs faced by small manufacturers may be proportionally 

greater than those faced by larger manufacturers. However, the total cost at TSL 4 of 

approximately $14,000 per small manufacturer is still a small percentage of a small 

manufacturer’s total annual revenues (5.1 percent) and product conversion costs would 

also only be a one-time expense. Furthermore, TSLs lower than the proposed TSL would 

not result in significantly lower product conversion costs for small manufacturers.

3. Duplication, Overlap, and Conflict with Other Rules and Regulations 

DOE is not aware of any rules or regulations that duplicate, overlap, or conflict 

with the rule being proposed today.

4. Significant Alternatives to the Rule

The discussion above analyzes impacts on small businesses that would result from 

the other TSLs DOE considered. Although TSLs lower than the proposed TSLs would 

be expected to reduce the impacts on small entities, DOE is required by EPCA to 

establish standards that achieve the maximum improvement in energy efficiency that is

technically feasible and economically justified, and result in a significant conservation of 

energy. Thus, DOE rejected the lower TSLs. 

In addition to the other TSLs being considered, the NOPR TSD includes a 

regulatory impact analysis in chapter 17. For residential furnace fans, this report 

discusses the following policy alternatives: (1) no standard, (2) consumer rebates, (3) 
253

consumer tax credits, (4) manufacturer tax credits, and (5) early replacement. DOE does 

not intend to consider these alternatives further because they are either not feasible to 

implement without authority and funding from Congress, or are expected to result in 

energy savings that are much smaller (ranging from less than 1 percent to approximately 

33 percent) than those that would be achieved by the proposed energy conservation 

standards.

DOE continues to seek input from small businesses that would be affected by this 

rulemaking and will consider comments received in the development of any final rule.

C.

1. Description of the Requirements

Review Under the Paperwork Reduction Act of 1995

DOE is developing regulations to implement reporting requirements for energy 

conservation, water conservation, and design standards, and to address other matters 

including compliance certification, prohibited actions, and enforcement procedures for 

covered consumer products and commercial and industrial equipment covered by EPCA. 

DOE is adopting provisions to require manufacturers of covered consumer 

products and commercial and industrial equipment to maintain records about how they 

determined the energy efficiency, energy consumption, water consumption or design 

features of their products. DOE is also going to require manufacturers to submit a 

certification report indicating that all basic models currently produced comply with the 

applicable standards using DOE’s testing procedures, as well as include the necessary 
254

product specific certification data. The certification reports are submitted for each basic 

model, either when the requirements go into effect (for models already in distribution) or 

when the manufacturer begins distribution of a particular basic model, and annually 

thereafter. Reports must be updated when a new model is introduced or a change 

affecting energy efficiency or use is made to an existing model. The collection of 

information is necessary for monitoring compliance with the energy conservation 

standards and testing requirements for the consumer products and commercial and 

industrial equipment mandated by EPCA.

The information that would be required by these regulations, once effective, and 

that is the subject of the collection of information, would be submitted by manufacturers 

to certify compliance with energy conservation, water conservation, and design standards 

established by DOE. DOE would also use the information to determine whether an 

enforcement action is warranted and to better inform DOE during a test procedure and 

energy conservation standards rulemaking. 

DOE received OMB approval for collecting certification, compliance, and 

enforcement information for residential furnace fans on XXX, under OMB Control 

Number 1910-1400. 

2. Method of Collection

Respondents must submit electronic forms using DOE’s on-line

Compliance Certification Management System (CCMS) system.
255

3. Data

The following are DOE estimates of the total annual reporting and 

recordkeeping burden imposed on manufacturers of residential furnace fans subject to 

certification, compliance, and enforcement provisions. These estimates take into account 

the time necessary to develop testing documentation, complete the certification, and 

submit all required documents to DOE electronically.

OMB Control Number: 1910-1400.

Form Number: None.

Type of Review: Regular submission.

Affected Public: Manufacturers of residential furnace fans covered by this

rulemaking.

Estimated Number of Respondents: 37.

Estimated Time per Response: Certification reports, 20 hours.

Estimated Total Annual Burden Hours: 740.

Estimated Total Annual Cost to the Manufacturers: $55,000 in 

recordkeeping/reporting costs.

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.
256

D.

Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has 

determined that the proposed rule fits within the category of actions included in 

Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of 

a CX. 

Review Under the National Environmental Policy Act of 1969

See 10 CFR Part 1021, App. B, B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). 

The proposed rule fits within the category of actions because it is a rulemaking that 

establishes energy conservation standards for consumer products or industrial equipment, 

and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE 

has made a CX determination for this rulemaking, and DOE does not need to prepare an 

Environmental Assessment or Environmental Impact Statement for this proposed rule. 

DOE’s CX determination for this proposed rule is available at http://cxnepa.energy.gov/. 

E.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 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 that it will follow in the development of such regulations. 65 FR 

Review Under Executive Order 13132
257

13735. DOE has examined this proposed rule and has tentatively determined that it 

would not have a substantial direct effect on the States, on the relationship between the 

national government and the States, or on the distribution of power and responsibilities 

among the various levels of government. EPCA governs and prescribes Federal 

preemption of State regulations as to energy conservation for the products that are the 

subject of today’s proposed 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, Executive Order 13132 requires no further action.

F.

With respect to the review of existing regulations and the promulgation of new 

regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on 

Federal agencies the general duty to adhere to the following requirements: (1) eliminate 

drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a 

clear legal standard for affected conduct rather than a general standard; and (4) promote 

simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review 

required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that 

Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly 

specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal 

law or regulation; (3) provides a clear legal standard for affected conduct while 

promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; 

(5) adequately defines key terms; and (6) addresses other important issues affecting 

clarity and general draftsmanship under any guidelines issued by the Attorney General. 

Review Under Executive Order 12988
258

Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations 

in light of applicable standards in section 3(a) and section 3(b) to determine whether they 

are met or it is unreasonable to meet one or more of them. DOE has completed the 

required review and determined that, to the extent permitted by law, this proposed rule 

meets the relevant standards of Executive Order 12988.

G.

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. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 

1531). For a proposed regulatory action likely to result in a rule that may cause the 

expenditure by State, local, and Tribal governments, in the aggregate, or by the private 

sector of $100 million or more in any one year (adjusted annually for inflation), section 

202 of UMRA requires a Federal agency to publish a written statement that estimates the 

resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a),

(b)) The UMRA also requires a Federal agency to develop an effective process to permit 

timely input by elected officers of State, local, and Tribal governments on a proposed 

“significant intergovernmental mandate,” and requires an agency plan for giving notice 

and opportunity for timely input to potentially affected small governments before 

establishing any requirements that might significantly or uniquely affect 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 

Review Under the Unfunded Mandates Reform Act of 1995

http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
259

Although today’s proposed rule, which proposes new energy conservation 

standards for residential furnace fans, does not contain a Federal intergovernmental 

mandate, it may require annual expenditures of $100 million or more by the private 

sector. Specifically, the proposed rule would likely result in a final rule that could 

require expenditures of $100 million or more, including: (1) investment in research and 

development and in capital expenditures by residential furnace fans manufacturers in the 

years between the final rule and the compliance date for the new standards, and (2) 

incremental additional expenditures by consumers to purchase higher-efficiency 

residential furnace fans, 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 proposed 

rule. 2 U.S.C. 1532(c). The content requirements of section 202(b) of UMRA relevant to 

a private sector mandate substantially overlap the economic analysis requirements that 

apply under section 325(o) of EPCA and Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of the NOPR and the “Regulatory 

Impact Analysis” section of the TSD for this proposed rule respond to those 

requirements. 

Under section 205 of UMRA, the Department is obligated to identify and consider 

a reasonable number of regulatory alternatives before promulgating a rule for which a 

written statement under section 202 is required. 2 U.S.C. 1535(a). DOE is required to 
260

select from those alternatives the most cost-effective and least burdensome alternative 

that achieves the objectives of the proposed 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(f) and (o), today’s proposed rule would establish energy 

conservation standards for residential furnace fans that are designed to achieve the 

maximum improvement in energy efficiency that DOE has determined to be both 

technologically feasible and economically justified. A full discussion of the alternatives 

considered by DOE is presented in the “Regulatory Impact Analysis” section of the TSD 

for today’s proposed rule.

H.

Section 654 of the Treasury and General Government Appropriations Act, 1999 

(Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment 

for any rule that may affect family well-being. This rule would not have any impact on 

the autonomy or integrity of the family as an institution. Accordingly, DOE has 

concluded that it is not necessary to prepare a Family Policymaking Assessment.

Review Under the Treasury and General Government Appropriations Act, 1999

I.

Pursuant to Executive Order 12630, “Governmental Actions and Interference with 

Constitutionally Protected Property Rights,” 53 FR 8859 (March 15, 1988), DOE has 

determined that this proposed rule would not result in any takings that might require 

compensation under the Fifth Amendment to the U.S. Constitution.

Review Under Executive Order 12630
261

J.

Section 515 of the Treasury and General Government Appropriations Act, 2001 

(44 U.S.C. 3516 note) provides for Federal agencies to review most disseminations of 

information to the public under information quality guidelines established by each agency 

pursuant to general guidelines issued by OMB. OMB’s guidelines were published at 67 

FR 8452 (Feb. 22, 2002), and DOE’s guidelines were published at 67 FR 62446 (Oct. 7, 

2002). DOE has reviewed today’s NOPR under the OMB and DOE guidelines and has 

concluded that it is consistent with applicable policies in those guidelines.

Review Under the Treasury and General Government Appropriations Act, 2001

K.

Executive Order 13211, “Actions Concerning Regulations That Significantly 

Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires 

Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects 

for any proposed significant energy action. A “significant energy action” is defined as 

any action by an agency that promulgates or is expected to lead to promulgation of a final 

rule, and that: (1) is a significant regulatory action under Executive Order 12866, or any 

successor order; and (2) is likely to have a significant adverse effect on the supply, 

distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a 

significant energy action. For any proposed significant energy action, the agency must 

give a detailed statement of any adverse effects on energy supply, distribution, or use 

should the proposal be implemented, and of reasonable alternatives to the action and their 

expected benefits on energy supply, distribution, and use. 

Review Under Executive Order 13211
262

DOE has tentatively concluded that today’s regulatory action, which sets forth 

proposed energy conservation standards for residential furnace fans, is not a significant 

energy action because the proposed standards are not likely to have a significant adverse 

effect on the supply, distribution, or use of energy, nor has it been designated as such by 

the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy 

Effects on this proposed rule.

L.

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.”

Review Under the Information Quality Bulletin for Peer Review 

Id. at 2667.

In response to OMB’s Bulletin, DOE conducted formal in-progress peer reviews 

of the energy conservation standards development process and analyses and has prepared 

a Peer Review Report pertaining to the energy conservation standards rulemaking 
263

analyses. Generation of this report involved a rigorous, formal, and documented 

evaluation using objective criteria and qualified and independent reviewers to make a 

judgment as to the technical/scientific/business merit, the actual or anticipated results, 

and the productivity and management effectiveness of programs and/or projects. The 

“Energy Conservation Standards Rulemaking Peer Review Report” dated February 2007 

has been disseminated and is available at the following Web site: 

www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VII. Public Participation

A.

The time, date, and location of the public meeting are listed in the DATES and 

ADDRESSES sections at the beginning of this notice. If you plan to attend the public 

meeting, please notify Ms. Brenda Edwards at (202) 586-2945 or 

Attendance at the Public Meeting

Brenda.Edwards@ee.doe.gov. As explained in the ADDRESSES section, foreign 

nationals visiting DOE Headquarters are subject to advance security screening 

procedures. Any foreign national wishing to participate in the meeting should advise 

DOE of this fact as soon as possible by contacting Ms. Brenda Edwards to initiate the 

necessary procedures.

In addition, you can attend the public meeting via webinar. Webinar registration 

information, participant instructions, and information about the capabilities available to 

webinar participants will be published on DOE’s website at: [INSERT LINK].
264

Participants are responsible for ensuring their systems are compatible with the webinar 

software.

B.

Any person who has an interest in the topics addressed in this notice, or who is 

representative of a group or class of persons that has an interest in these issues, may 

request an opportunity to make an oral presentation at the public meeting. Such persons 

may hand-deliver requests to speak to the address shown in the ADDRESSES section at 

the beginning of this notice between 9:00 a.m. and 4:00 p.m., Monday through Friday, 

except Federal holidays. Requests may also be sent by mail or email to: Ms. Brenda 

Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 

1000 Independence Avenue, SW, Washington, DC 20585-0121, or 

Procedure for Submitting Requests to Speak and Prepared General Statements For 

Distribution

Brenda.Edwards@ee.doe.gov. Persons who wish to speak should include with their 

request a computer diskette or CD-ROM in WordPerfect, Microsoft Word, PDF, or text 

(ASCII) file format that briefly describes the nature of their interest in this rulemaking 

and the topics they wish to discuss. Such persons should also provide a daytime 

telephone number where they can be reached. 

DOE requests persons scheduled to make an oral presentation to submit an 

advance copy of their statements at least one week before the public meeting. DOE may 

permit persons who cannot supply an advance copy of their statement to participate, if 

those persons have made advance alternative arrangements with the Building 
265

Technologies Program. As necessary, requests to give an oral presentation should ask for 

such alternative arrangements.

C.

DOE will designate a DOE official to preside at the public meeting and may also 

use a professional facilitator to aid discussion. The meeting will not be a judicial or 

evidentiary-type public hearing, but DOE will conduct it in accordance with section 336 

of EPCA (42 U.S.C. 6306). A court reporter will be present to record the proceedings 

and prepare a transcript. DOE reserves the right to schedule the order of presentations 

and to establish the procedures governing the conduct of the public meeting. There shall 

not be discussion of proprietary information, costs or prices, market share, or other 

commercial matters regulated by U.S. anti-trust laws. After the public meeting, 

interested parties may submit further comments on the proceedings, as well as on any 

aspect of the rulemaking, until the end of the comment period.

Conduct of the Public Meeting

The public meeting will be conducted in an informal, conference style. DOE will 

present summaries of comments received before the public meeting, allow time for 

prepared general statements by participants, and encourage all interested parties to share 

their views on issues affecting this rulemaking. Each participant will be allowed to make 

a general statement (within time limits determined by DOE), before the discussion of 

specific topics. DOE will allow, as time permits, other participants to comment briefly 

on any general statements. 
266

At the end of all prepared statements on a topic, DOE will permit participants to 

clarify their statements briefly and comment on statements made by others. Participants 

should be prepared to answer questions by DOE and by other participants concerning 

these issues. DOE representatives may also ask questions of participants concerning 

other matters relevant to this rulemaking. The official conducting the public meeting will 

accept additional comments or questions from those attending, as time permits. The 

presiding official will announce any further procedural rules or modification of the above 

procedures that may be needed for the proper conduct of the public meeting.

A transcript of the public meeting will be included in the docket, which can be 

viewed as described in the Docket section at the beginning of this notice and will be 

accessible on the DOE website. In addition, any person may buy a copy of the transcript 

from the transcribing reporter.

D.

DOE will accept comments, data, and information regarding this proposed rule 

before or after the public meeting, but no later than the date provided in the DATES

section at the beginning of this proposed rule. Interested parties may submit comments, 

data, and other information using any of the methods described in the ADDRESSES

section at the beginning of this notice. 

Submission of Comments

Submitting comments via www.regulations.gov. The www.regulations.gov web 

page will require you to provide your name and contact information. Your contact 
267

information will be viewable to DOE Building Technologies staff only. Your contact 

information will not be publicly viewable except for your first and last names, 

organization name (if any), and submitter representative name (if any). If your comment 

is not processed properly because of technical difficulties, DOE will use this information 

to contact you. If DOE cannot read your comment due to technical difficulties and 

cannot contact you for clarification, DOE may not be able to consider your comment.

However, your contact information will be publicly viewable if you include it in 

the comment itself or in any documents attached to your comment. Any information that 

you do not want to be publicly viewable should not be included in your comment, nor in 

any document attached to your comment. Otherwise, persons viewing comments will see 

only first and last names, organization names, correspondence containing comments, and 

any documents submitted with the comments. 

Do not submit to www.regulations.gov information for which disclosure is 

restricted by statute, such as trade secrets and commercial or financial information 

(hereinafter referred to as Confidential Business Information (CBI)). Comments 

submitted through www.regulations.gov cannot be claimed as CBI. Comments received

through the website will waive any CBI claims for the information submitted. For 

information on submitting CBI, see the Confidential Business Information section below.

DOE processes submissions made through www.regulations.gov before posting. 

Normally, comments will be posted within a few days of being submitted. However, if 
268

large volumes of comments are being processed simultaneously, your comment may not 

be viewable for up to several weeks. Please keep the comment tracking number that 

www.regulations.gov provides after you have successfully uploaded your comment. 

Submitting comments via email, hand delivery/courier, or mail. Comments and 

documents submitted via email, hand delivery/courier, or mail also will be posted to 

www.regulations.gov. If you do not want your personal contact information to be 

publicly viewable, do not include it in your comment or any accompanying documents. 

Instead, provide your contact information in a cover letter. Include your first and last 

names, email address, telephone number, and optional mailing address. The cover letter 

will not be publicly viewable as long as it does not include any comments.

Include contact information each time you submit comments, data, documents, 

and other information to DOE. If you submit via mail or hand delivery/courier, please 

provide all items on a CD, if feasible, in which case it is not necessary to submit printed 

copies. No telefacsimiles (faxes) will be accepted.

 

Comments, data, and other information submitted to DOE electronically should 

be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) 

file format. Provide documents that are not secured, that are written in English, and that 

are free of any defects or viruses. Documents should not contain special characters or 

any form of encryption and, if possible, they should carry the electronic signature of the 

author. 
269

Campaign form letters. Please submit campaign form letters by the originating 

organization in batches of between 50 to 500 form letters per PDF or as one form letter 

with a list of supporters’ names compiled into one or more PDFs. This reduces comment 

processing and posting time. 

Confidential Business Information. Pursuant to 10 CFR 1004.11, any person 

submitting information that he or she believes to be confidential and exempt by law from 

public disclosure should submit via email, postal mail, or hand delivery/courier two wellmarked copies: one copy of the document marked “confidential” including all the 

information believed to be confidential, and one copy of the document marked “nonconfidential” with the information believed to be confidential deleted. Submit these 

documents via email or on a CD, if feasible. DOE will make its own determination about 

the confidential status of the information and treat it according to its determination.

Factors of interest to DOE when evaluating requests to treat submitted 

information as confidential include: (1) A description of the items; (2) whether and why 

such items are customarily treated as confidential within the industry; (3) whether the 

information is generally known by or available from other sources; (4) whether the 

information has previously been made available to others without obligation concerning 

its confidentiality; (5) an explanation of the competitive injury to the submitting person 

which would result from public disclosure; (6) when such information might lose its 
270

confidential character due to the passage of time; and (7) why disclosure of the 

information would be contrary to the public interest.

It is DOE’s policy that all comments may be included in the public docket, 

without change and as received, including any personal information provided in the 

comments (except information deemed to be exempt from public disclosure). 

E.

Although DOE welcomes comments on any aspect of this proposal, DOE is 

particularly interested in receiving comments and views of interested parties concerning 

the following issues:

Issues on Which DOE Seeks Comment

1. Additional FER value data that are generated using the DOE residential 

furnace fans test procedure proposed in the April 2, 2013 SNOPR (78 FR 19606), as 

well as the product class, measured airflow capacity in the maximum airflow control 

setting, and technology options of the model for which each FER value is calculated.

2. DOE’s methodology for accounting for the relationship between FER and 

airflow capacity, and the resulting efficiency levels that are represented by equations 

for FER as a function of airflow capacity. (See Chapter 5 of the NOPR TSD)

3. The reasonableness of the values that DOE used to characterize the 

rebound effect with higher-efficiency residential furnace fans.
271

4. DOE’s estimate of the base-case efficiency distribution of residential

furnace fans in 2018.

5. The long-term market penetration of higher-efficiency residential furnace 

fans.

6. DOE performed physical teardowns on a selection of units currently on 

the market. From the bills of materials and cost model developed using this teardown 

data, DOE calculated an estimate of the manufacturer production cost for each 

covered product class in the engineering analysis. DOE also developed estimates of 

the costs for components that affect energy consumption, namely those it considered 

as design options. These estimates were obtained from a combination of sources, 

including publicly available prices from vendors and confidential estimates provided 

by manufacturers. These price data are aggregated for use in the engineering analysis. 

DOE seeks comment and data regarding the manufacturer production costs for 

furnace fan equipment and components and the technological feasibility of applying 

technologies identified in the engineering analysis to meet the proposed standards.

7. To estimate the impact on shipments of the price increase for the 

considered efficiency levels, DOE used the relative price elasticity approach that was 

applied in the 2011 energy conservation standards rulemaking for residential 

furnaces. DOE welcomes stakeholder input and estimates on the effect of amended 

standards on future furnace fan equipment shipments. DOE also welcomes input and 

data on the demand elasticity estimates used in the analysis.

Formatted: List Paragraph, Line spacing:

single
272

8. DOE requests comment on whether there are features or attributes of the 

more energy-efficient furnace fans that manufacturers would produce to meet the 

standards in this proposed rule that might affect how they would be used by 

consumers. DOE requests comment specifically on how any such effects should be 

weighed in the choice of standards for furnace fans for the final rule.

9. For this rulemaking, DOE analyzed the effects of this proposal assuming 

that the furnace fans would be available to purchase for 30 years, and it undertook a 

sensitivity analysis using 9 years rather than 30 years of product shipments. The 

choice of a 30-year period of shipments is consistent with the DOE analysis for other 

products and commercial equipment. 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. We are seeking 

input, information and data on whether there are ways to refine the analytic timeline 

further.

10. DOE defines lifetime as the age at which residential furnace fan 

equipment is retired from service. DOE modeled furnace fan lifetime based on the 

distribution of furnace lifetimes developed for the recent energy conservation 

standards rulemaking for residential furnaces. DOE welcomes further input on the 

average equipment lifetimes for the LCC analysis and NIA.
273

11. DOE solicits comment on the application of the new SCC values used to 

determine the social benefits of CO2 emissions reductions over the rulemaking 

analysis period. The rulemaking analysis period covers from 2017 to 2046 plus an 

additional 50 years to account for the lifetime operation of the equipment purchased 

in that period. In particular, the agency solicits comment on its derivation of SCC 

values after 2050, where the agency applied the average annual growth rate of the 

SCC estimates in 2040−2050 associated with each of the four sets of values.

12. The agency also seeks input on the cumulative regulatory burden that may be 

imposed on industry either from recently implemented rulemakings for these products or 

other rulemakings that affect the same industry. 

VIII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today’s notice of proposed 

rulemaking.

List of Subjects 

10 CFR Part 429

Administrative practice and procedure, Commercial equipment, Confidential 

business information, Energy conservation, Household appliances, Imports, Reporting 

and recordkeeping requirements. 

10 CFR Part 430

Comment [A50]: Change recommended by 

OIRA.
274

Administrative practice and procedure, Confidential business information, Energy 

conservation, Household appliances, Imports, Intergovernmental relations, Small 

businesses. 

Issued in Washington, DC, on 

________________________________

David T. Danielson

Assistant Secretary

Energy Efficiency and Renewable Energy
275

For the reasons stated in the preamble, DOE proposes to amend parts 429 and 430 

of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth 

below: 

PART 429— CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR 

CONSUMER PRODUCTS AND COMMERCIAL AND INDUSTRIAL 

EQUIPMENT

a. The authority citation for part 429 continues to read as follows:

Authority: 42 U.S.C. 6291-6317.

2. Section 429.12 is amended by:

a. Amending paragraph (d) table, first column, second row (i.e.

b. Removing in paragraph (b)(13) “429.54” and adding in its place 429.58”; and 

, for products with a 

submission deadline of May 1st) by removing the word “and” and by adding “and 

Residential furnace fans” at the end of the listed products.

c. Adding paragraph (i)(5).

The addition reads as follows:

§ 429.12 General requirements applicable to certification reports.

* * * * *

(i) Compliance dates. * * *

(5) Residential furnace fans, [date five years after publication of the final rule].
276

3. Section 429.58 is added to read as follows:

§ 429.58 Furnace fans.

(a) Sampling plan for selection of units for testing. [Reserved]

(b) Certification reports.

(1) The requirements of §429.12 are applicable to residential furnace fans; and

(2) Pursuant to §429.12(b)(13), a certification report shall include the following 

public product-specific information: The fan energy rating (FER) in watts per thousand 

cubic feet per minute (W/1000 cfm); the calculated maximum airflow at the reference 

system external static pressure (ESP) in cubic feet per minute (cfm); the control system 

configuration for achieving the heating and constant-circulation airflow-control settings 

required for determining FER as specified in the furnace fan test procedure (10 CFR part 

430, subpart B, appendix AA); the measured steady-state gas, oil, or electric heat input 

rate (QIN) in the heating setting required for determining FER; and for modular blowers, 

the manufacturer and model number of the the electric heat resistance kit with which it is 

equipped for certification testing.

PART 430 - ENERGY CONSERVATION PROGRAM FOR CONSUMER 

PRODUCTS

4. The authority citation for part 430 continues to read as follows:

Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
277

5. Section 430.32 is amended by adding paragraph (y) to read as follows:

§430.32 Energy and water conservation standards and their effective dates.

* * * * *

(y) Residential furnace fans. Residential furnace fans manufactured on or after (date five 

years after date of final rule publication in the Federal Register), shall have a fan energy 

rating (FER) value that meets or is less than the following values:

Product Class FER* (Watts/cfm)

Non-Weatherized, Non-Condensing Gas 

Furnace Fan (NWG-NC)

FER = 0.029 x QMax + 180

Non-Weatherized, Condensing Gas Furnace 

Fan (NWG-C)

FER = 0.029 x QMax + 196

Weatherized Non-Condensing Gas Furnace 

Fan (WG-NC)

FER = 0.029 x QMax + 135

Non-Weatherized, Non-Condensing Oil 

Furnace Fan (NWO-NC)

FER = 0.051 x QMax + 301

Non-Weatherized Electric Furnace / Modular 

Blower Fan (NWEF/NWMB)

FER = 0.029 x QMax + 165

Manufactured Home Non-Weatherized, NonCondensing Gas Furnace Fan (MH-NWG-NC)FER = 0.051 x QMax + 242

Manufactured Home Non-Weatherized, 

Condensing Gas Furnace Fan (MH-NWG-C)

FER = 0.051 x QMax + 262

Manufactured Home Electric Furnace / 

Modular Blower Fan (MH-EF/MB)

FER = 0.029 x QMax + 105

Manufactured Home Non-Weatherized Oil 

Furnace Fan (MH-NWO) Reserved

Manufactured Home Weatherized Gas Furnace 

Fan (MH-WG) Reserved

*

QMax is the airflow, in cfm, at the maximum airflow-control setting.

* * * * *