1 

Rulemaking Framework 

 for 

Commercial and Industrial Air Compressors 

U.S. Department of Energy 

Office of Energy Efficiency and Renewable Energy 

Building Technologies Office 

January 24, 2014 
i 

TABLE OF CONTENTS 

1. INTRODUCTION .................................................................................................................... 1

1.1 The Appliances and Commercial Equipment Standards Program ................................... 2

1.2 Equipment for which the Department of Energy is Considering Standards .................... 2

1.2.1 Type of Gas Compressed ..................................................................................... 3

1.2.2 Compression Principle ......................................................................................... 4

1.2.3 Input Energy Forms Used .................................................................................... 5

1.2.4 Equipment Size .................................................................................................... 6

1.2.5 Equipment System Boundary .............................................................................. 6

1.3 Equipment Definitions ..................................................................................................... 8

1.3.1 Positive Displacement Compressors .................................................................... 8

1.3.2 Dynamic Compressors ......................................................................................... 9

1.4 Efficiency Metrics and Implementation Methods.......................................................... 10

1.4.1 “Bare” Compressor Efficiency .......................................................................... 10

1.4.2 Compressor “Package” Efficiency ..................................................................... 11

1.4.3 Compressed Air System Efficiency ................................................................... 11

1.5 Test Procedures .............................................................................................................. 11

1.6 Overview of the Rulemaking Process ............................................................................ 13

1.7 Preliminary Analysis ...................................................................................................... 14

1.8 Notice of Proposed Rulemaking .................................................................................... 15

1.9 Final Rule ....................................................................................................................... 15

1.10 Labeling ......................................................................................................................... 16

2. ANALYSES FOR RULEMAKING ....................................................................................... 16

3. MARKET AND TECHNOLOGY ASSESSMENT ............................................................... 19

3.1 Market Assessment ........................................................................................................ 19

3.2 Equipment Classes ......................................................................................................... 19

3.3 Technology Assessment ................................................................................................. 20

3.4 Baseline Units ................................................................................................................ 21

4. SCREENING ANALYSIS ..................................................................................................... 21

5. ENGINEERING ANALYSIS ................................................................................................. 22

5.1 Engineering Analysis Overview .................................................................................... 22

5.2 Baseline Models ............................................................................................................. 24

5.3 Approach for Determining the Cost-Efficiency Relationship ....................................... 24

5.4 Efficiency Levels ........................................................................................................... 27

5.5 Proprietary Designs ........................................................................................................ 28

5.6 Outside Regulatory Changes Affecting the Engineering Analysis ................................ 28

6. MARKUPS ANALYSIS ........................................................................................................ 29

7. ENERGY USE ANALYSIS ................................................................................................... 30

8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ............................................ 32

8.1 Analytical Approach ...................................................................................................... 33

8.2 Installation Costs ............................................................................................................ 34

8.3 Energy Prices ................................................................................................................. 34

8.4 Maintenance and Repair Costs....................................................................................... 34

8.5 Equipment Lifetime ....................................................................................................... 35
ii 

8.6 Discount Rates ............................................................................................................... 35

9. SHIPMENTS ANALYSIS...................................................................................................... 36

9.2 Standards Impacts on Shipments ................................................................................... 36

10. NATIONAL IMPACT ANALYSIS ....................................................................................... 36

10.1 Energy Efficiency Trends .............................................................................................. 37

10.2 National Energy Savings................................................................................................ 37

10.3 Net Present Value .......................................................................................................... 38

11. CUSTOMER SUBGROUP ANALYSIS ................................................................................ 38

12. MANUFACTURER IMPACT ANALYSIS........................................................................... 39

12.1 Sources of Information for the Manufacturer Impact Analysis ..................................... 39

12.2 Industry Cash-Flow Analysis ......................................................................................... 40

12.3 Manufacturer Subgroup Analysis .................................................................................. 40

12.4 Competitive Impacts Assessment .................................................................................. 41

12.5 Cumulative Regulatory Burden ..................................................................................... 41

13. UTILITY IMPACT ANALYSIS ............................................................................................ 42

14. EMPLOYMENT IMPACT ANALYSIS ................................................................................ 43

15. EMISSIONS ANALYSIS ....................................................................................................... 44

16. MONETIZING REDUCED CO2 AND OTHER EMISSIONS .............................................. 46

17. REGULATORY IMPACT ANALYSIS ................................................................................. 47

LIST OF TABLES 

Table 1.1 Overview of Currently Available Compressor Test Procedures ...................... 12

Table 6.1 Air Compressor Distribution Channel Magnitudes and Power Ranges ......... 29

LIST OF FIGURES

Figure 2.1 Flow Diagram of Analyses for the Commercial and Industrial Air 

Compressors Energy Conservation Standards Rulemaking Process ............................................ 18

 
iii 

LIST OF ACRONYMS 

AEC annual energy consumption 

AEO Annual Energy Outlook 

acfm actual cubic feet per minute 

BLS Bureau of Labor Statistics 

CAGI Compressed Air and Gas Institute 

CAIR Clean Air Interstate Rule 

CAS compressed air system 

CFR Code of Federal Regulations 

CO2 carbon dioxide 

COGS cost of goods sold 

D.C. District of Columbia 

DOE U.S. Department of Energy 

DOJ U.S. Department of Justice 

EERE Office of Energy Efficiency and Renewable Energy 

EGU electric generating unit 

EIA Energy Information Administration 

EPA U.S. Environmental Protection Agency 

EPCA Energy Policy and Conservation Act 

EU European Union 

FOIA Freedom of Information Act 

FFC full-fuel-cycle 

GHG greenhouse gas 

GREET Greenhouse Gases, Regulated Emissions, and Energy Use in 

Transportation 

GRIM Government Regulatory Impact Model 

HAP hazardous air pollutants 

Hg mercury 

HCFC hydrochlorofluorocarbon 

HP horsepower 

ImSET Impact of Sector Energy Technologies 

ISO International Organization for Standardization 

LBNL Lawrence Berkeley National Laboratory 

LCC life-cycle cost 

MATS Mercury and Air Toxics Standards 

MIA manufacturer impact analysis 

MPC manufacturer production cost 

MSP manufacturer selling price 

NCI Navigant Consulting Incorporated 

NEMS National Energy Modeling System 

NES national energy savings 

NOPR notice of proposed rulemaking 

NOx oxides of nitrogen 

NPV net present value 

OMB U.S. Office of Management and Budget 
iv 

PBP payback period 

PM particulate matter 

PNNL Pacific Northwest National Laboratory 

POS point-of-sale promotion 

psig pounds per square inch gauge 

R&D research and development 

RoHS Reduction of Hazardous Substances 

SCC social cost of carbon 

SEC Securities and Exchange Commission 

SG&A selling, general, and administrative costs 

SO2 sulfur dioxide 

TSD technical support document 

TSL trial standard level 

U.S. United States 

U.S.C. United States Code 

VSD variable speed drive
1 

RULEMAKING FRAMEWORK FOR COMMERCIAL AIR 

COMPRESSORS 

1. INTRODUCTION 

The purpose of this document is to describe the procedural and analytical approaches the 

U.S. Department of Energy (DOE) anticipates using to evaluate energy conservation standards 

for commercial and industrial air compressors. 

 

The DOE Appliances and Commercial Equipment Standards Program, in the Office of 

Energy Efficiency and Renewable Energy’s (EERE’s) Building Technologies Office, develops 

and promulgates test procedures and energy conservation standards for consumer appliances and 

commercial equipment. The process for developing standards involves analyses, public notice, 

and consultation with interested parties. Such parties, collectively referred to as interested parties 

or stakeholders, include manufacturers, consumers, energy conservation and environmental 

advocates, State and Federal agencies, and any other groups or individuals having an interest in 

the energy efficiency standards and test procedures. 

This document is intended to inform stakeholders of the standards rulemaking process for 

commercial and industrial air compressors and to encourage and facilitate stakeholder input 

during the rulemaking. This document is the starting point for developing standards and is not a 

definitive statement with respect to any issue to be determined in the rulemaking. 

Section 1 provides an overview of the rulemaking process. Sections 2 through 17 discuss 

analyses DOE intends to conduct to follow the statutory guidance and requirements for this 

standards rulemaking. In determining whether new energy conservation standards are feasible 

and justified, DOE will conduct an engineering analysis, a life-cycle cost (LCC) and payback 

period (PBP) analysis, a national impact analysis, and a manufacturer impact analysis (MIA), 

among others. 

Information regarding this rulemaking effort, along with any formal proposal and 

accompanying analyses, will be maintained on the DOE website at: 

http://www1.eere.energy.gov/buildings/appliance_standards/residential/commercial air 

compressors.html

This document contains comment boxes that highlight issues on which DOE seeks 

comment and requests feedback from interested parties. The comment boxes also are 

used to ask specific questions on the approaches the DOE is proposing to follow to 

conduct the analyses required for the standards rulemaking. Such requests for stakeholder 

feedback are numbered according to the section in which they appear. 
2 

1.1 The Appliances and Commercial Equipment Standards Program 

Title III of the Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94-163, as 

amended (42 U.S.C. 6291 et seq.), sets forth various provisions designed to improve energy 

efficiency. Part C of Title III of EPCA (42 U.S.C. 6311-6317), which was re-designated for 

editorial reasons as Part A-1 upon codification in the U.S. Code, establishes the “Energy 

Conservation Program for Certain Industrial Equipment,” which covers certain commercial and 

industrial equipment (hereafter referred to as “covered equipment”). 

EPCA specifies a list of equipment that constitutes covered commercial and industrial 

equipment. (42 U.S.C. 6311(1)(A) – (L)). The list identifies 11 types of equipment and sets forth 

a twelfth provision for any other type of industrial equipment which the Secretary of Energy 

(Secretary) classifies as covered equipment. EPCA also specifies the types of industrial 

equipment that can be classified as covered in addition to those already enumerated in 42 U.S.C. 

6311(1). This equipment includes compressors. (42 U.S.C. 6311(2)(B)(i)). Industrial equipment 

must also, without regard to whether such equipment is in fact distributed in commerce in the 

United States for industrial or commercial use, be of a type that: 

1. in operation consumes, or is designed to consume, energy; 

2. to any significant extent, is distributed in commerce for industrial or commercial use, 

and; 

3. is not covered equipment as defined in 42 U.S.C. 6291(a)(2) of EPCA, other than a 

component of covered equipment with respect to which there is in effect a determination 

under 42 U.S.C. 6312(c). (42 U.S.C. 6311(2)(A)). 

In general, to classify equipment as covered commercial or industrial equipment, the 

Secretary of Energy must determine that classifying the equipment as covered equipment is 

necessary for the purposes of Part A-1 of EPCA. The purpose of Part A-1 of EPCA is to improve 

the efficiency of electric motors, pumps, and certain other industrial equipment to conserve the 

energy resources of the Nation. (42 U.S.C. 6312(a),(b)). In considering whether to establish 

standards for commercial air compressors, DOE issued a Proposed Determination of Coverage 

on December 31, 2012. (77 FR 76972). DOE received comments from interested parties and 

stakeholders, which are available in the relevant docket (EERE-2012-BT-STD-0040) and have 

been considered in developing this framework document. In addition, DOE attended a meeting 

sponsored by the Alliance to Save Energy regarding potential energy conservation standards for 

commercial and industrial air compressors. Meeting participants included compressor 

manufacturers and energy conservation advocates such as the Appliance Standards Awareness 

Project (ASAP) and the National Resources Defense Council (NRDC). 

1.2 Equipment for which the Department of Energy is Considering Standards

The general term “commercial and industrial compressors” covers a wide range of equipment 

and applications. There is currently no statutory definition of compressors. As a result, in the 

Proposed Determination of Coverage discussed above, DOE considered the following definition for 

“commercial and industrial compressors” to clarify the coverage of any potential test procedure or 

energy conservation standard: 
3 

Compressor: A compressor is an electric-powered device that takes in air or gas at 

atmospheric pressure and delivers the air or gas at a higher pressure. Compressors typically 

have a specific ratio, the ratio of delivery pressure to supply pressure, greater than 1.20. 

After further evaluating this definition and considering the comments it received, DOE is 

now considering the following definition, taken from the International Organization for 

Standardization (ISO) Technical Report (TR) 12942: 

Compressor: A machine or apparatus converting different types of energy into the potential 

energy of gas pressure for displacement and compression of gaseous media to any higher 

pressure values above atmospheric pressure with pressure-increase ratios exceeding 1.1. 1

Based on the information DOE has reviewed to this point, DOE is considering the possibility 

of setting energy conservation standards for a subset of commercially available compressors that 

accounts for a significant share of energy use, as described in section 1.2.1. ISO/TR 12942 provides 

the means to further categorize and classify compressors based on a variety of equipment 

characteristics. DOE is considering further clarifying the scope of coverage based on the following 

equipment characteristics, as described in ISO/TR 12942: 

 Type of gas compressed, 

 Compression principles, 

 Input energy forms used (electricity, fuel heat, etc.) and driver types, 

 Equipment capacity, and 

 Equipment system boundary. 

Item 1-1 DOE requests comment on its proposed definition for “compressor.” DOE is 

also specifically requesting comment regarding the pressure ratio of 1.1 

specified in the definition for “compressor,” as specified by ISO/TR 12942. 

Item 1-2 DOE requests comments on whether it should cover positive-displacement, 

dynamic, and combined compressors, and whether any other types of 

compressors should be considered for inclusion in the scope of this 

rulemaking effort. 

1.2.1 Type of Gas Compressed 

Compressors can be used to compress many different types of gases, depending upon the 

application in which the unit is being used. DOE does not have a substantial amount of 

information regarding the prevalence of air vs. non-air compressing equipment. However, the 

limited data DOE has indicate that non-air compressing equipment represents a relatively small 

fraction of the overall compressors market. As such, DOE is currently considering covering only 

compressors intended to compress air. DOE requests additional data regarding the prevalence of 

compressors other than air compressors. 
4 

DOE is also concerned about the possibility of creating a situation in which standards 

could be circumvented by manufacturers attempting to market “air compressors” as “non-air (or 

gas) compressors” to avoid coverage. To address this possibility, DOE is interested in additional 

feedback regarding what technical differences there may be between air and non-air 

compressors, as well as if there is any difference in relative energy use between the two. 

Item 1-3 DOE requests comment on the scope of coverage for compressors, whether it 

should be limited to only “air compressors,” and the potential for 

circumvention. 

Item 1-4 DOE requests shipping data for compressor equipment based on the type of 

gas compressed. DOE also seeks comment regarding the technical and relative 

energy use differences (if any) between air and non-air compressors. 

1.2.2 Compression Principle 

DOE is considering further clarifying the scope of covered equipment based on the 

primary physical compression principle used. ISO/TR 12942 describes two primary physical 

compression principles: "positive displacement" and "dynamic." The ISO/TR 12942 definitions 

for each are provided below: 

 Positive-displacement compressor: a compressor machine in which the admission and 

compression of successive volumes of the gaseous medium are performed periodically by 

forced expansion and diminution of at least one closed space in at least one working 

chamber by means of displacement of at least one moving member or by the 

displacement and forced discharge of the gaseous medium into the high-pressure area.a

 Dynamic compressor: a compressor machine in which the gas pressure increase is 

achieved in continuous flow essentially by increasing its kinetic energy in the flow path 

of the machine due to acceleration to the high velocities by mechanical action of blades 

placed on a rapid rotating wheel and further transformation of the kinetic energy into the 

potential energy of the elevated pressure by successive deceleration of the said flow. 

ISO/TR 12942 also describes a third-type of compressor – a “combined compressor machine”: 

 Combined compressor machine: a compressor machine in which the compression of 

gaseous medium or media is performed simultaneously or successively by dynamic and 

positive-displacement compressors driven by a common prime mover.” 

At this time, DOE is considering covering positive-displacement, dynamic, and combined 

compressors. 

 a

 Note: The closed spaces with variable or displaceable volumes represent compression chambers. In one working 

chamber, there can be one or several variable-volume compression chambers 
5 

Item 1-5 DOE requests comments on whether it should cover positive-displacement, 

dynamic, and combined compressors, and whether any other types of 

compressors should be considered for inclusion in the scope of this 

rulemaking effort. 

1.2.3 Input Energy Forms Used 

Compressors can be powered by using different types of energy, which can serve as the 

basis for dividing this equipment into two categories: electrically driven and fossil fuel-driven 

compressors. Depending upon the size of the compressor, electrically driven equipment can be 

powered by either single-phase or three-phase power. Fossil fuel powered air compressors can be 

can be powered by using several different kinds of fuels including diesel fuel, gasoline, and 

natural gas. 

Currently, DOE is considering covering only electrically driven equipment that operate 

on three-phase alternating line current. Preliminary estimates from the EU Lot 31 ongoing work 

suggest that "hobby" compressors (~1.5 horsepower (HP) and lower, single-phase) represent 

78.3 percent of all compressor sales (in units)2)

b

 but account for only 0.7 percent of air 

compressor energy use.3 This limited scope will exclude mainly these single (and two-phase, if 

applicable) “hobby compressors,” which have an insignificant impact on the estimated overall 

energy consumption of compressors. Most industrial equipment, responsible for over 99 percent 

of estimated compressor energy consumption, use three-phase power.4

Diesel fuel- or gasoline-driven air compressors are generally portable and designed to be 

used in environments where access to electricity is limited or non-existent. These fuels are used 

to power an internal combustion engine that directly drives the compressor, instead of an electric 

motor. Gasoline is typically used to power smaller capacity units (wheel-barrow style, vehicle 

mounted), while diesel is used for larger units (trailer, skid-mounted). 

Natural gas-driven air compressors are generally stationary and used in operations where 

safety and reliability are of primary importance – such as the chemical and petrochemical 

industries. This equipment runs the entire spectrum of size from 25 to greater than 20,000 HP. 

Publicly available sources of equipment specifications have been difficult to find, but anecdotal 

information suggests that this equipment tends to be larger and often engineered-to-order, 

resulting in lower sales compared to electrically driven equipment. 

DOE is considering covering all types of compressors regardless of the input energy form 

used. Currently, DOE does not have a substantial amount of information regarding the 

prevalence of fossil fuel-driven equipment. However, the limited data DOE has indicate that this 

equipment represents a relatively small market fraction of the overall compressors market. As 

such, DOE requests additional data regarding the prevalence of fossil fuel-driven equipment. 

 b

 See Lot 31 - Ecodesign Preparatory Study on Compressors Task 2, pg 16, February 2013, http://www.ecocompressors.eu/. Lot 31 is a draft of the EU’s preparatory study on electric motor systems/compressors in the 

context of the Ecodesign Directive. 
6 

Item 1-6 DOE requests comment on its proposal to cover all types of compressors 

regardless of the input energy form used. In addition, DOE requests comment 

on its proposal, for electrically driven compressors, to cover only those that 

operate on three-phase alternating current. 

Item 1-7 DOE requests shipment data for compressor equipment based on the input 

energy form used. 

1.2.4 Equipment Size 

DOE is also considering clarifying the scope of coverage based on equipment size as 

measured in rated HP. DOE is considering aligning its efforts with the current energy efficiency 

standards for electric motors, as codified in subpart B of Title 10 of the Code of Federal 

Regulations, Part 431 (10 CFR Part 431) and covering equipment rated from 1 through 500 HP. 

Item 1-8 DOE seeks comment on its proposal to cover compressors rated from 1 

through 500 HP. 

1.2.5 Equipment System Boundary 

There may be greater potential for energy savings if the energy conservation standards 

addressed compressors as a system of components. Compressor systems are subject to a variety 

of inefficiencies, and those inherent in the compressor are often among the smallest. As a result, 

addressing other system inefficiencies in any DOE regulations could significantly increase 

energy savings. 

DOE gave serious consideration to the following options in regulating compressors, 

depending in part on how this equipment is used and sold. These options reflect DOE’s 

understanding that there are three different ways in which this equipment is manufactured: 

1. Compressor: This option refers to the “bare” compressor or singular machine 

responsible for the change in air pressure and is sometimes referred to as an “air 

end,” which is the compression chamber where air is compressed. ISO 12942 

refers to this level of equipment as the "mechanical compressor."1 This term 

would be exclusive of any other devices, such as an electric motor. 

2. Compressor inclusive of ancillary equipment: This option includes a driver, such 

as an electric motor, and may include other equipment, such as gears, drains, airtreatment (filtering) equipment, onboard controls, etc. This configuration is 

considered the single largest piece of equipment brought to market by an 

individual manufacturer. 
7 

3. Compressor inclusive of all componentry or compressed air system (CAS): This 

term would treat the compressor as being inclusive of all componentry that would 

be attached and would include components starting from the air intake and 

including the final ‘point-of-use.” Under this approach, the compressor could 

include the many configuration packages that could be attached such as the 

distribution (piping) network, air-treatment systems, sequencers, storage tanks, 

and any end-use equipment (e.g., pneumatic tools). 

DOE received public comments in response to its Proposed Determination of Coverage 

noted above (77 FR 76972). Among other things, those comments stated that greater savings 

could be attained by covering the entire CAS (Kaeser, No. 2 at p. 2, Ingersoll Rand, No. 2 at p. 2, 

and CAGI, No. 3 at p. 3). This approach would include the air compressor, the network of 

compressed air piping, and any equipment connected to the compressed air network. 

While the assertions correctly assess the potential reduction in energy use and (2) have 

been largely substantiated, the savings identified by these commenters are achieved using several 

different measures – all of which exist outside the compressor package. Examples of such 

energy-reduction improvements to the CAS include: leak detection and reduction, removal of 

inappropriate compressed air end-uses, proper pipe sizing, proper centralized control 

configuration, and so forth. Coverage of the CAS has the following significant drawbacks that 

weigh against its adoption as the basis for an equipment classification for the following reasons: 

1. Each CAS is unique to a specific installation; 

2. Each CAS includes equipment from several different manufacturers; and 

3. A single CAS can include several different compressors, of different types, that 

may all have different operating pressures. 

Implementing a broader approach with respect to compressor efficiency would require 

DOE to (1) establish a methodology for measuring losses in an arbitrary air-distribution network; 

and (2) assess what certification, compliance, or enforcement practices would be required for 

various systems, standard and non-standard, and potential waiver criteria. 

In view of (1) the paucity of potential energy savings from bare compressors; (2) a 

myriad of unique installation configurations for CAS leading to testing and compliance 

certification concerns; and (3) potentially meaningful efficiency improvements for the 

compressor package, DOE is adopting an approach that would cover the compressor “package” 

rather than focusing solely on the compressor component – or the entire compressor “system”. 

Item 1-9 DOE requests comment on its proposal to cover the compressor “package” 

and rather than the “bare” compressor or the entire CAS. 
8 

1.3 Equipment Definitions 

DOE is considering how to define commercial and industrial air compressors, and 

definitions for specific types of compressors. In addition to the definition for the term 

“compressor” previously addressed in section 1.1, DOE bases the following definitions on those 

in the EU Draft Lot 31 Task 1 Report, which are, in turn, based on ISO/TR12942. DOE is 

considering definitions for additional equipment that would extend beyond that which is 

addressed by the EU regulation. DOE may include additional necessary parameters determined 

appropriate to these air compressor definitions. The definitions under consideration are as 

follows. 

Compressor is a machine or apparatus converting different types of energy into the 

potential energy of gas pressure for displacement and compression of gaseous media to any 

higher pressure values above atmospheric pressure with pressure-increase ratios exceeding 1.1.1

Pressure-increase Ratio is the ratio of the absolute discharge pressure to the absolute 

inlet pressure. 

Positive displacement compressor is a compressor machine in which the admission and 

compression of successive volumes of the gaseous medium are performed periodically by forced 

expansion and diminution of a closed space(s) in a working chamber(s) by means of 

displacement of a moving member(s) or by displacement and forced discharge of the gaseous 

medium into the high-pressure area. 

Dynamic compressor is a compressor machine in which the gas pressure increase is 

achieved in continuous flow essentially by increasing its kinetic energy in the flow path of the 

machine due to acceleration to the high velocities by mechanical action of blades placed on a 

rapid rotating wheel and further transformation of the kinetic energy into the potential energy of 

the elevated pressure by successive deceleration of the said flow. 

1.3.1 Positive Displacement Compressors 

DOE is also considering including the following definitions for several subcategories of 

positive displacement compressors. If included, DOE would use these definitions to help provide 

a basis for dividing products into different equipment classes, as described in Section 3.2. DOE 

may also consider other definitions as appropriate. 

Rotary compressor is a positive displacement compressor in which gas admission and 

diminution of its successive volumes or its forced discharge are performed cyclically by rotation of 

one or several rotors in a compressor casing. 

Scroll compressor is a compressor in which closed-space compression chambers are formed 

between two identical spiral bands inserted eccentrically in each other and their flat end cover plates, 

the volumes of said spaces being cyclically decreased and increased from periphery to the center by 

orbital non-rotating plane-parallel motion of one spiral band inside the fixed one along the circular 

path. 
9 

Screw compressor is an externally meshing double-rotor compressor in which the rotors have 

helical lobes and grooves, volumes of said grooves being cyclically decreased and increased by 

engagement and disengagement of each groove-lobe pair, and their simultaneous shifting from lowpressure rotor end to the high-pressure end due to their synchronized rotation. 

Reciprocating compressor is a displacement compressor in which gas admission and 

diminution of its successive volumes are performed cyclically by straight-line alternating movement 

of a moving member(s) in a compression chamber(s). 

Piston compressor is a reciprocating compressor in which the moving member constitutes a 

piston reciprocating in a cylinder. 

Diaphragm (membrane) compressor is a reciprocating compressor in which the moving 

member constitutes a peripherally clamped and sealed flexible membrane or diaphragm in essentially 

concavo-concave compression chamber. 

1.3.2 Dynamic Compressors 

DOE is also considering, but is not limited to, including the following definitions for 

several subcategories of dynamic compressors. If included, DOE would use these definitions to 

help provide a further basis for dividing products into different equipment classes, as described 

in Section 3.2. 

Radial compressor is a dynamic compressor in which the acceleration of the gas stream 

in the meridional plane is performed in radial direction with respect to the axis of rotation of the 

bladed wheel. 

Axial compressor is a dynamic compressor in which the acceleration of the gas stream in 

the meridional plane is performed in the direction parallel to the axis of rotation of the bladed 

wheel. 

Item 1-10 DOE seeks comment on the proposed definitions for compressors.

Item 1-11 DOE seeks comment on the proposed definition for positive displacement 

compressors and the definitions for all associated subcategories. DOE also 

seeks comment if there are any additional subcategories of positive 

displacement compressors that it should consider when weighing whether to 

set energy conservation standards for compressors. 
10 

Item 1-12 DOE seeks comment on the proposed definition for dynamic compressors and 

the definitions for all associated subcategories. DOE also seeks comment if 

there are any additional subcategories of dynamic compressors that should be 

considered as part of its efforts to evaluate whether to set energy conservation 

standards for compressors. 

1.4 Efficiency Metrics and Implementation Methods 

To establish a metricc

 to determine efficiency for compressors, DOE reviewed the metrics 

that can be calculated for these devices based on basic thermodynamic principles, as well as 

those used in other regulatory or voluntary programs. Depending on the final equipment system 

boundary, as discussed in Section 1.2.5, chosen for coverage (i.e., “bare” compressor, 

compressor “package,” or CAS), DOE is considering several different metrics. 

1.4.1 “Bare” Compressor Efficiency 

If DOE chooses to cover “bare” compressors, DOE is considering using one of the 

following efficiency metrics. The efficiency of a “bare” compressor can typically be measured 

by comparing the performance of an actual compressor unit to a theoretically ideal isentropic 

(adiabatic and reversible) compression process or a theoretically ideal isothermal compression 

process. 

1.4.1.1 Isentropic Efficiency 

The compressor efficiency can be expressed as isentropic efficiency, or the ratio of the 

required theoretical isentropic power to actual shaft power used. The isentropic efficiency is the 

amount of work needed by the ideal isentropic compression divided by the power input of the 

real compressor for the same compression task. The isentropic efficiency assumes that no heat 

exchange to the surroundings takes place, but in reality, the gas is often cooled down to certain 

operating temperatures. This heat can be recovered, but this aspect is not considered in the 

isentropic efficiency. While cooling after compression does not affect the efficiency of the 

compression process itself, compression using oil-injection or multiple staging in conjunction 

with intercooling does affect energy efficiency. 

1.4.1.2 Isothermal Efficiency 

The compressor efficiency can also be expressed as isothermal efficiency, or the ratio of 

the required theoretical isothermal power to actual shaft power used. The isothermal efficiency is 

the amount of work needed for a theoretical isothermal compression divided by the power input 

of the real compressor for the same compression task. 

 c

 A metric is a standard of measurement, or the parameter DOE will use to determine if a compressor meets an 

energy conservation standard. 
11 

Both efficiency metrics provide reasonable expressions of a compressor unit’s efficiency; 

however, many consider the use of isentropic efficiency to be more suitable for the following 

reasons: 

 It provides a simplified comparison between different operating pressures/pressure ratios; 

 Isentropic efficiency is widely accepted in other (i.e., non-industrial air) technical fields 

like energy technology; and 

 Compressors without internal or interstage cooling are physically not able to compress 

isothermally. 

1.4.2 Compressor “Package” Efficiency 

If DOE chooses to cover compressor “packages,” DOE is considering using the following 

metric: 

1.4.2.3 Specific Power Requirement 

The specific power requirement or kilowatt per cubic foot per minute (kW/cfm) is 

commonly used in the field of industrial compressed air packages (e.g., ISO 1217:2009 

Displacement compressors - Acceptance tests5

). The specific power requirement is what is 

currently being used by the Compressed Air and Gas Institute (CAGI) as part of its voluntary 

equipment testing and certification program.d 

1.4.3 Compressed Air System Efficiency 

As described in Section 1.2.5, there are several obstacles inherent in developing a metric 

for CAS’s. Furthermore, DOE is currently unaware of any industry metric for measuring the 

efficiency of CAS’s. As such, if DOE chooses to cover CAS’s, DOE would develop a new 

metric that could measure and describe the efficiency of any arbitrary air system. 

Item 1-13 DOE seeks input regarding whether the efficiency metrics listed effectively 

characterize the efficiency for each equipment system boundary. DOE also 

requests input on whether any other efficiency metrics should be considered 

as part of its efforts in evaluating whether to set standards for this equipment. 

1.5 Test Procedures 

Manufacturers would be required to use a DOE-prescribed test procedure to establish 

compliance with any standards adopted and make representations of energy efficiency for 

commercial and industrial air compressors. DOE would also use the prescribed test procedure to 

verify the performance of the covered equipment once standards have been set. Thus, in 

 d

 See http://cagi.org/performance-verification/overview.aspx. 
12 

conjunction with considering setting standards for commercial and industrial air compressors, 

DOE is also considering a test procedure rulemaking that would define the requisite test 

procedure for all covered commercial and industrial compressors. DOE intends for the test 

procedure to include an efficiency descriptor and the methods necessary to adequately measure 

the performance of the compressor for the purposes of determining compliance with the 

applicable energy conservation standards. 

When establishing or amending test procedures for particular equipment, DOE reviews 

industry test procedures that measure the energy use or energy efficiency of the equipment. DOE 

then considers whether to: (1) adopt a test procedure in its entirety, (2) adopt portions of a test 

procedure (or procedures) with modifications or additions, or (3) develop a new test procedure if 

the existing test procedures do not provide the means necessary to calculate the applicable 

energy use or efficiency metric that may be prescribed by statute. In addition, DOE’s test 

procedures consider ambient test conditions, repeatability and tolerances on test conditions and 

results, along with test equipment calibration and accuracy, among other things. 

Table 1.1 shows a number of test procedures that relate to the compressors for which 

DOE is considering establishing standards. 

Table 1.1 Overview of Currently Available Compressor Test Procedures 

Test Procedure Origin Notes 

ISO 1217:2009 Displacement 

compressors – Acceptance Tests 

International Used by CAGI for voluntary compressor 

certification program 

ISO 5389:2005 

Turbocompressors – 

Performance test code 

International Used by CAGI for voluntary compressor 

certification program 

DOE will review these test procedures, along with additional test procedures that may not 

necessarily be listed in Table 1.1, in the test procedure rulemaking. In discussions with stakeholders, 

DOE determined that ISO 1217:2009 – Displacement compressors – Acceptance Tests5

 and ISO 

5389:2005 – Turbocompressors – Performance test code 6 are the most widely used in the industry. 

DOE, in its test procedure development, aims to align its test procedure with existing and widely 

used industry test procedures to the extent possible, to limit unnecessary burden on manufacturers. 

Item 1-14 DOE requests comment on the use of the ISO 1217 and ISO 5389 test 

procedures, as well as any other test procedures, as a basis for the 

development of a DOE test procedure, including any modifications or 

additions that may be necessary. 

Item 1-15 DOE requests comment on the scope of each test procedure with respect to the 

equipment for which DOE is considering standards, as well as any limitations 

of these test procedures. 
13 

1.6 Overview of the Rulemaking Process 

The process for establishing the regulatory requirements for commercial and industrial air 

compressors comprises several steps, including: (1) establishing test procedures to evaluate 

energy consumption of the covered equipment; (2) performing various preliminary analyses of 

the technological and economic feasibility of energy efficiency standards; (3) issuing a notice of 

proposed rulemaking; and (3) issuing a final rule. DOE encourages interested parties to 

participate in each of these steps. 

Under EPCA, when DOE establishes new or amended standards, it must consider, to the 

greatest extent practicable: (1) the economic impact of the standard on the manufacturers and 

consumers of the affected equipment; (2) the savings in operating costs throughout the estimated 

average life of equipment compared to any increases in the initial cost, or maintenance expense; 

(3) the total projected amount of energy savings likely to result directly from the imposition of 

the standard; (4) any lessening of the utility or the performance of the equipment likely to result 

from the imposition of the standard; (5) the impact of any lessening of competition, as 

determined in writing by the Attorney General, that is likely to result from the imposition of the 

standard; (6) the need for national energy conservation; and (7) other factors the Secretary of 

Energy considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)) Other statutory considerations include 

those set forth in 42 U.S.C. 6295(o)(1)–(2)(A), (2)(B)(ii)–(iii), and (3)–(4). 

DOE considers the participation of all interested parties to be a very important part in the 

process for setting forth energy conservation standards. DOE actively encourages the 

participation and interaction of interested parties during the comment periods provided at each 

step. Beginning with public comment on the Framework Document and during subsequent 

comment periods, interactions among interested parties provide a balanced discussion of critical 

information required to conduct the standards rulemaking. Additionally, DOE encourages the 

development and submission of consensus agreements between stakeholders. 

In its efforts to set energy conservation standards, DOE publishes through the Federal 

Register notices to inform the public about its activities in this effort. Subsequent to announcing 

the availability of the Framework Document, DOE typically publishes three additional public 

notices that further advance DOE’s efforts to set standards for a given product or equipment. 

The publication of the Preliminary Analysis (see section 1.7) describes in detail the analytical 

framework DOE plans to apply and presents the public with the opportunity to vet the models 

and tools that DOE plans to use in developing its proposed standards. This step is designed to 

help facilitate additional public participation before DOE formally proposes a rule for public 

consideration. The approach laid out in the Preliminary Analysis also addresses stakeholder 

comments to the Framework Document. Next, DOE publishes a notice of proposed rulemaking 

(NOPR) (see section 1.4), which presents DOE’s proposed standards. In doing so, the notice 

addresses comments received in response to the Preliminary Analysis, analyzes the impacts of 

standards on consumers, manufacturers and the Nation, and details DOE’s balancing of those 

impacts. Finally, DOE publishes the final rule (see section 1.5), which contains any standards 

DOE may adopt along with the applicable compliance dates. The final rule notice addresses 

comments submitted in response to the NOPR, presents any revised analyses of the projected 

impacts from these standards, and discusses DOE’s balancing of the impacts. 
14 

1.7 Preliminary Analysis 

As part of its efforts at preparing a proposed rule, DOE typically identifies equipment 

design options or efficiency levels that it will analyze in detail and those it should eliminate from 

further consideration. This process includes a market and technology assessment (see section 3) 

and a screening analysis (see section 4). These activities include identifying the key issues and 

design options or efficiency levels to be considered by DOE as it considers the development of a 

rulemaking proposal. 

At the start of the Preliminary Analysis, DOE considers potential efficiency levels for 

each equipment class. DOE uses these efficiency levels to collect manufacturer cost data, 

historical shipment data, shipment-weighted average efficiency data, and preliminary 

manufacturer impact data (e.g., capital conversion expenditures, marketing costs, research and 

development costs). During the Preliminary Analysis stage, DOE presents consumer LCC impact 

and PBP results (see section 8); national energy savings (NES) and consumer net present value 

(NPV) results (see section 10) for a range of efficiency or energy use levels; and a preliminary 

manufacturer impact analysis (see section 12). 

DOE bases the selection of efficiency or energy use levels to analyze on the costs and 

benefits of efficiency levels or design options. In addition to the efficiency corresponding to the 

maximum technologically feasible (“max tech”) design and the efficiency corresponding to the 

minimum life-cycle-cost point, DOE generally selects levels or design options for consideration 

that span the full range of technologically achievable efficiencies. 

The range of levels analyzed typically includes: 

 • The least efficient model or model with the highest energy consumption in the market. 

 • The current efficiency level, as applicable under 10 CFR Part 431. 

• The highest energy efficiency level or lowest energy consumption level that is 

technologically feasible (the max-tech level); 

• The level with the lowest LCC; and 

• Levels that incorporate noteworthy technologies or fill in large gaps between other 

efficiency levels considered. 

The efficiency or energy use levels analyzed serve to demonstrate the functions and 

outputs of the models and tools used by DOE. During the Preliminary Analysis, these models 

and tools are tested for the different equipment classes at each efficiency or energy use level 

analyzed. 

DOE will make the results of the analyses available on its website for review and will 

consider comments on them after publication of the Preliminary Analysis. As part of this 

process, DOE also makes available for public comment a preliminary technical support 

document (TSD) containing the details of all the analyses performed to date. 
15 

1.8 Notice of Proposed Rulemaking 

After the publication of the Preliminary Analysis, there is a public comment period and a 

public meeting. DOE also conducts further economic impact analyses. These analyses may 

include refinements of previous analyses, and will include a consumer LCC sub-group analysis 

(see section 11), a complete manufacturer impact analysis (see section 12), a utility impact 

analysis (see section 13), an employment impact analysis (see section 14), an emissions analysis 

(see section 15), and a regulatory impact analysis (see section 17). 

DOE will make the results of all the analyses available on its website for review and will 

consider comments after the publication of the NOPR. This review and comment process may 

result in revisions to the preliminary analyses that DOE performed. The analytical process ends 

with the selection of proposed standard levels presented in the NOPR. DOE selects the proposed 

standard levels from the trial standard levels (TSLs) analyzed. The NOPR, published in the 

Federal Register, will document the evaluation and selection of any proposed standards. 

For each equipment class, DOE will identify the maximum improvement in energy 

efficiency or maximum reduction in energy use that is technologically feasible. If DOE proposes 

a level that is below the max-tech level, it will sequentially explain the reasons for eliminating 

higher levels beginning with the highest level considered. The DOE will present the analysis 

results in the NOPR and the analysis details in an accompanying TSD. 

DOE considers many factors in selecting its proposed standards. These factors or criteria 

are established by statute and capture the many benefits and costs of the standards. When the 

DOE publishes the NOPR, it will provide the Department of Justice (DOJ) with a copy of the 

NOPR and TSD and solicit feedback on the impact of the proposed standard level on 

competition. DOJ will review these standard levels in light of any lessening of competition that 

is likely to result from the imposition of standards. DOE will consider DOJ’s determination on 

the impacts of the proposed standard on competition in preparing the final rule. The NOPR is 

followed by a public comment period that includes a public meeting. 

1.9 Final Rule 

In view of any comments received on the NOPR, DOE may revise its analyses. On the 

basis of these comments, DOE will review the engineering and economic impact analyses and 

proposed standards and make modifications as necessary. 

After the publication of the NOPR, DOE will conduct a thorough review of all analyses 

performed, and of the TSLs. Final revisions to the analyses and TSLs will be made as 

appropriate. 

Before the final rule is issued, DOE will consider any comments from DOJ on the NOPR 

relating to the impacts of the proposed standard levels on competition to determine whether 

changes to these standard levels are needed. 

The standards rulemaking will conclude with the publication of the final rule. DOE will 

select any final standard levels based on the complete record before it, including any comments 
16 

or data submitted in response to the Framework Document and Preliminary Analysis. The final 

rule will promulgate any standard levels and the accompanying compliance date for 

manufacturers to meet. The final rule notice will also explain the basis for their selection. A final 

TSD will also be made available once the rule is issued. 

1.10 Labeling 

Section 344 of EPCA, as amended, 42 U.S.C. 6315, provides labeling requirements for 

commercial and industrial equipment. Where DOE prescribes test procedures for compressors, 

DOE must then determine whether the following criteria are met before prescribing a labeling 

rule: (1) labeling in accordance with this section is technologically and economically feasible 

with respect to such class of compressors; (2) significant energy savings will likely result from 

such labeling; and (3) labeling in accordance with this section is likely to assist consumers in 

making purchasing decisions (42 U.S.C. 6315(h)). At a minimum, such labels must include the 

energy efficiency of the subject equipment, as tested under the prescribed test procedure. In 

addition, the labeling rule may address other requirements, including: how to display the label; 

requirements to display additional information related to energy efficiency or energy 

consumption − which may include instructions for maintenance and repair of the covered 

equipment; and requirements that any printed matter displayed or distributed with the equipment 

at the point of sale also include the same information as required on the label (42 U.S.C. 6315(b) 

and 42 U.S.C. 6315(c)). See also 77 FR 75400 (December 20, 2012) (DOE notice seeking 

information related to commercial and industrial equipment labeling). 

DOE may analyze the appropriateness of a labeling rule in conjunction with the analyses 

for standards described in the remainder of this document. 

Item 1-16 DOE seeks comment on whether a labeling rule would be technologically or 

economically feasible, result in significant energy savings, or assist customers 

in making purchasing decisions. 

Item 1-17 DOE seeks comment on information that it should consider requiring for 

display on any prospective label, as well as factors DOE should consider 

regarding the size, format, and placement of any such label. 

2. ANALYSES FOR RULEMAKING 

EPCA requires DOE to establish energy conservation standards that achieve the 

maximum improvement in energy efficiency that is technologically feasible and economically 

justified. Economic justification includes consideration of the economic impacts on domestic 

manufacturers and consumers, national benefits (including environmental impacts) issues of 

consumer utility, and impacts from any lessening of competition. The analyses conducted in 

support of the standards rulemaking effort help to ensure that the final standards meet these 

criteria of technological feasibility and economic justification. 
17 

This section offers an overview of DOE’s analytical methodology and discusses the 

major components of the analyses DOE will conduct. A consistent analytical approach will be 

applied by DOE through its consideration of each analysis as a part of the overall standardssetting framework. 

Figure 1 summarizes the analytical components of the standards-setting process. The 

analyses are presented in the center column. Each analysis has a set of key inputs, which are data 

and information required for the analysis. “Approaches” are the methods that will be used to 

obtain key inputs. For example, some key inputs exist in public databases, some will be collected 

from stakeholders, and some will be developed by the project team in support of DOE’s 

evaluation efforts. The results of each analysis are key outputs, which would feed directly into 

the analytical framework that DOE would apply if it determines that standards would satisfy the 

statutory requirements (i.e., technological feasibility and economic practicability). Dotted lines 

connecting one analysis to another indicate the flow of information. 

 
18 

Figure 2.1 Flow Diagram of Analyses for the Commercial and Industrial Air 

Compressors Energy Conservation Standards Rulemaking Process 
19 

3. MARKET AND TECHNOLOGY ASSESSMENT 

The market and technology assessment will provide information about the commercial air 

compressor equipment industry. This assessment is used to determine equipment classes and 

identify potential design options or efficiency levels for each equipment class. 

3.1 Market Assessment 

DOE will qualitatively and quantitatively characterize the structure of the commercial air 

compressor equipment industries and markets. In the market assessment, the DOE will identify 

and characterize the manufacturers of commercial air compressors; estimate market shares and 

trends in the market; address regulatory and non-regulatory initiatives intended to improve the 

energy efficiency or reduce the energy consumption of commercial air compressors; and explore 

the potential for technological improvements in the design and manufacturing of commercial air 

compressors. 

DOE will use historical equipment shipments and prices as an aid to create shipment 

scenarios and predicting future prices. Market structure data will be used to assess competitive 

impacts as part of the manufacturer impact analysis. 

Item 3-1 DOE requests information that would contribute to the market assessment 

(e.g., current equipment features and efficiencies, equipment-feature and 

efficiency trends, historical equipment shipments and prices). 

3.2 Equipment Classes 

DOE intends to separate commercial air compressors into equipment classes. DOE will 

consider a separate energy conservation standard for each equipment class. The criteria for 

separation into different classes are: type of energy used and capacity or other performancerelated features that justify a separate energy conservation standard. In determining equipment 

classes, DOE is required to consider the utility of the feature to the consumer and other factors 

deemed appropriate by the Secretary. (42 U.S.C. 6295(q)) 

For commercial air compressors, there are no previously specified equipment classes. As 

such, DOE is considering establishing equipment classes based on one or more of the following 

design characteristics: 

 The size of the unit, as measured in rated horsepower; 

 The capacity of the unit as measured in the volume of compressed air delivered in 

cubic feet per minute; 

 The compression principle (as described in section 1.2.1); 

 The method (or lack thereof) of inter- and post-cooling; 

 The absolute gauge output pressure of the delivered air, and 

 The method of lubrication. 
20 

DOE will analyze whether there are unique design constraints associated with these 

design characteristics that would warrant the creation of separate equipment classes. 

Item 3-2 DOE requests input from interested parties about the design characteristics 

and criteria that it is considering using when creating equipment classes. In 

particular, should additional or fewer criteria beyond those identified above be 

used as a basis for developing equipment classes? 

Item 3-3 DOE requests input from interested parties about how commercial 

compressors should be separated into equipment classes using the listed 

design characteristics. 

3.3 Technology Assessment 

DOE uses information about commercially available technology options and prototype 

designs as input in identifying technologies manufacturers could use to attain higher energy 

efficiency levels. In consultation with interested parties, DOE intends to develop a list of 

technologies to consider in the analysis. Initially, this list will include all those technologies that 

may improve energy efficiency and will serve to establish the maximum technologically feasible 

(i.e., max-tech) design. In the screening analysis, DOE will eliminate from consideration 

technologies that are not technologically feasible, or that fail to meet certain criteria as to 

practicability to manufacture, install and service, impacts on equipment utility or availability, or 

impacts on health or safety. 

DOE has identified the following designs that may be used to improve commercial and 

industrial air compressor performance: 

• Improved controls, 

• Improved "air end" efficiency, 

• Improved cooling fan efficiency, 

• Improved part-load efficiency, 

• Improving drivers (high efficiency motors and variable speed drives), and 

• Including the use of multiple staged compressors. 

Item 3-4 Of the technologies listed above, are there any that DOE should not consider 

because of their impacts on safety, performance, or consumer utility of the 

equipment? 

Item 3-5 Are there other unlisted technologies that DOE should consider as design 

options and what, if any, impacts do the design options have on safety, 

performance, and consumer utility? 
21 

3.4 Baseline Units 

Once DOE establishes equipment classes, it will select a baseline model as a reference 

point for each equipment class, against which it can measure changes resulting from energy 

conservation standards. The baseline model in each equipment class represents the characteristics 

of products in that class. Typically, a baseline model would be a model that just meets currently 

required energy conservation standards. However, for compressors there are no required energy 

conservation standards. Consequently, a baseline would be selected on the basis of DOE’s 

market and technology analysis of compressors with the lowest efficiency and high volume 

production, where there is opportunity for improved efficiency and significant energy savings. 

Once DOE has established the baseline models, DOE will determine representative 

efficiencies for each of these models using one of the primary metrics described earlier in this 

Framework Document (see section 1.4). 

DOE will use these baseline models and efficiencies in the engineering analysis and the 

LCC and PBP analysis. To determine energy savings and changes in price, DOE will compare 

each higher-energy-efficiency or lower-energy-consumption design option with the baseline 

model. 

Item 3-6 DOE seeks input from interested parties about the selection of representative 

equipment classes and baseline models and their efficiencies for the 

engineering and LCC analyses. In particular, DOE is interested in receiving 

information on which types and sizes of compressors are most common, and 

whose efficiency levels would be most easily generalized and applied to other 

categories. 

4. SCREENING ANALYSIS 

The purpose of the screening analysis is to screen out design options that DOE will not 

consider in examining potential standards, if any, for commercial air compressors. 

As an initial matter, DOE will develop a list of design options (through its own research 

and in consultation with interested parties) for consideration in the engineering analysis (see 

section 5). The identified candidate design options will encompass all those technologies that 

may improve energy efficiency. Thereafter, DOE will review each design option in light of the 

following four criteria: 

1. Technological feasibility. DOE will not further consider technologies unless they are not 

incorporated in commercially-available products or in working prototypes. 

2. Practicability to manufacture, install, and service. If DOE determines that mass 

production of a technology in commercial products and reliable installation and servicing 

of the technology could not be achieved on the scale necessary to serve the relevant 
22 

market by the time of the effective date of the standard, then it will not consider that 

technology further. 

3. Adverse impacts on equipment utility or availability. If DOE determines a technology to 

have significant adverse impact on the utility of equipment to significant subgroups of 

consumers, or result in the unavailability of any covered equipment type with 

performance characteristics (including reliability), features, size, capacities, and volumes 

that are substantially the same as products generally available in the United States at the 

time, it will not consider that technology further. 

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not consider that technology 

further. 

DOE will document the reasons for eliminating any design options during the screening 

analysis and will publish this documentation for stakeholder review and comment as part of the 

Preliminary Analysis. 

5. ENGINEERING ANALYSIS 

After conducting the screening analysis described above, DOE will perform an 

engineering analysis based on the remaining design options that would improve equipment 

efficiency. The engineering analysis consists of estimating the energy consumption and cost of 

compressor equipment at various levels of increased efficiency. This section provides an 

overview of the engineering analysis (section 5.1), and discusses baseline units (section 5.2), 

DOE’s proposed approach for determining the cost-efficiency relationship (section 5.3), 

efficiency levels (section 5.4), proprietary designs (section 5.5), and cumulative regulatory 

burdens that might affect the engineering analysis (section 5.6). 

5.1 Engineering Analysis Overview 

The purpose of the engineering analysis is to determine the relationship between 

manufacturer selling price (MSP) and air compressor efficiency. In determining the costefficiency relationship, DOE estimates the increase in MSP associated with design changes that 

increase the efficiency of compressors relative to the baseline models (which in most cases are 

the most typical low efficiency equipment currently sold on the market). 

As a preliminary step in this analysis, DOE may determine an appropriate subset of 

representative equipment classes to analyze. DOE would extrapolate the results of this analysis 

to the remaining equipment classes. Typically, each representative equipment class would 

represent the majority of the shipments in its category. The number of representative equipment 

classes will depend on the availability of data that would allow DOE to develop appropriate 

relationships between the engineering analysis results of the representative equipment class and 

the other equipment classes not directly analyzed. 

Once DOE establishes the representative equipment classes and representative units, it 

selects a baseline model as a reference point for each representative unit from which to measure 
23 

changes resulting from the design options. DOE will then develop separate cost efficiency 

relationships for each baseline model analyzed. 

DOE will derive cost estimates for the engineering analysis (which it also will use in the 

manufacturer impact analysis) from a reverse-engineering process, supplemented by 

manufacturer-supplied data. The reverse-engineering process consists of a detailed equipment 

disassembly process, where: (1) representative units are torn down; (2) all components, 

processes, assembly, and manufacturing steps are noted in an activities-based cost model; and (3) 

all manufacturing costs are calculated. Representative units are chosen based on the range of 

efficiencies, design options, and capacities. 

The result is a “green-field” modele

 of the subject unit and the factory in which it would 

be built. These unit-specific factory requirements can then be aggregated by market share, unit 

shipments, or any other method DOE wishes to utilize to derive industry-wide estimates. 

The industry-wide estimates will consist of detailed incremental cost data, disaggregated 

into the incremental costs of material,f

 labor,g and overhead.h DOE will associate incremental 

costs with specific design options or design option combinations required to achieve a given 

efficiency level or with the efficiency levels themselves, depending on the analysis approach, as 

described in section 5.3. 

DOE seeks design, efficiency, and cost information to determine the cost of improving 

the efficiency of the baseline models. In addition, in tandem with a review of the efficiencies of 

units currently on the market, DOE will use the reverse-engineering to identify design options or 

design option combinations associated with the most efficient products to establish the highest 

efficiency that is technologically feasible (i.e., the max-tech level) within each equipment class. 

Item 5-1 DOE seeks input on the methods and approaches used by manufacturers to 

improve the efficiency of compressors and, in particular, how frequently 

equipment re-design would be the only method employed. 

 e

 A “green-field” model estimates the cost of a product as if it were built in a brand-new facility that had just broken 

ground. DOE accounts separately for items such as depreciation and one-time costs that may be incurred. 

f

 Direct material costs are the costs of raw materials such as steel, copper, and insulation, and also include scrap 

metal that can be traced to final or end equipment. Direct material costs do not include indirect material costs which 

are attributed to supplies that may be used in the production process, but are not assigned to final pieces of 

equipment (e.g., lubricating oil for production machinery). g

 Labor costs are the earnings of workers who assemble parts into a finished good or operate machines in the 

production process. Direct labor includes the fringe benefits of direct laborers such as group health care, as well as 

overtime pay. Direct labor does not include indirect labor, which is defined as the earnings of employees who do not 

work directly in assembling a piece of equipment—such as supervisors, janitors, stockroom personnel, inspectors, 

and forklift operators. 

h

 Factory overhead excludes depreciation, but includes indirect labor, downtime, set-up costs, indirect material, 

expendable tools, maintenance, property taxes, insurance on assets, and utility costs. Factory overhead does not 

include selling, general, and administrative costs (SG&A), research and development (R&D), interest, or profit 

(which DOE accounts for separately). 
24 

5.2 Baseline Models 

DOE selects baseline models that represent the characteristics of compressors in a given 

equipment class used in common commercial or industrial applications. Typically, the baseline 

model would be a model that just meets current energy conservation standards. Because energy 

conservation standards for compressors do not exist, however, DOE will select baseline models 

representative of the least efficient and highest production volume, most typical compressor 

offered for sale in the market. Selection of the baseline model for each representative unit will 

encompass consideration of compressor features and performance characteristics. 

DOE is considering the appropriate method to develop baseline efficiency levels 

representative of the least efficient, most typical compressors offered for sale in each equipment 

class, recognizing that each equipment class contains compressors with a broad range of pressure 

ratios and delivered air volumes. 

DOE’s determination of the appropriate baseline efficiency levels will be determined by 

compressor model data, pricing data, and shipment data by efficiency that are publicly available or 

provided to DOE. Shipment data may indicate more appropriate baseline levels than model 

availability data, as the least efficient compressors may not have significant shipments and, therefore, 

would not be considered the least efficient, most typical compressors in the market. 

At a subsequent stage in its analysis, DOE will use the baseline models to conduct the 

engineering analysis and the LCC and PBP analyses. To determine energy savings and changes 

in manufacturer selling price, DOE will compare each higher-energy-efficiency equipment 

design against the baseline model. 

Item 5-2 DOE seeks input on appropriate baseline unit efficiencies for commercial air 

compressors. 

Item 5-3 DOE seeks information regarding the specific technological characteristics of 

the baseline model for each equipment class, including the technologies 

described in section 3.3. 

5.3 Approach for Determining the Cost-Efficiency Relationship 

DOE uses a manufacturing cost structure that follows the traditional manufacturing 

process and includes: 

1. Equipment Costs: Recurring costs associated with manufacturing. 

a. Full production cost (manufacturer production cost (MPC)), i.e., direct labor, 

direct material, overhead (indirect labor, indirect material, maintenance, 

depreciation, taxes, insurance related to assets). 
25 

b. Non-production cost, i.e., selling (market research, advertising, point-of-sale 

(POS) promotion, sales person compensation and travel, logistics such as 

warehousing, delivery, record keeping), general and administration (costs for 

service and staff units, general corporate costs such as compensation, etc.), 

research and development (R&D) (costs associated with efforts to find new or 

improved products or production processes) and interest (costs of borrowing 

funds). DOE typically uses manufacturer markups calculated from publicly 

available financial information (e.g., Securities and Exchange Commission 10-K 

reports) to account for non-production costs. 

2. Conversion Costs: Investments to bring production facilities and equipment designs in 

compliance with the new regulation. 

a. Equipment conversion costs, i.e., investments in research, development, testing, 

and marketing focused on making equipment designs comply with the new 

standard. 

b. Capital conversion costs, i.e., investments in property, plant, and equipment to 

adapt or change existing production facilities so that the new equipment designs 

can be fabricated and assembled. 

c. Stranded assets, i.e., equipment or tooling that become obsolete as a result of new 

regulation. 

To derive the material and labor cost portions of the full production cost, DOE plans to 

purchase, test, and tear down selected compressors within each representative equipment class. 

DOE will disassemble and inventory the compressor components, creating a bill of materials and 

identifying manufacturing processes required to fabricate the compressors. 

DOE may supplement the findings from its tests and teardowns through: (1) a review of 

data collected from manufacturers about prices, efficiencies, and other features of various models 

of compressors, and (2) interviews with manufacturers about the techniques and associated costs 

used to improve efficiency. If possible, DOE will then aggregate the cost numbers by weighing 

individual data points by company-level sales volumes for each equipment class. 

DOE recognizes that there may be limited public information on national shipments, 

manufacturing costs, channels of distribution, and manufacturers’ market shares of air 

compressors. DOE encourages interested parties to submit any available data that pertain to these 

areas of interest and that would improve DOE’s understanding of the air compressor market. 

DOE is sensitive to manufacturer concerns regarding proprietary designs and will make 

provisions to maintain the confidentiality of proprietary data submitted by manufacturers or 

discussed during manufacturer interviews. Materials provided to Lawrence Berkeley National 

Laboratory (LBNL) and Navigant Consulting, Inc. (NCI), DOE contractors for this effort, are 

generally subject to the terms of the applicable non-disclosure agreement under which those 
26 

materials are submitted. In the case of materials provided to LBNL or NCI in the context of a 

DOE rulemaking and subject to a non-disclosure agreement, those materials are generally not 

shared with DOE, apart from aggregated data that do not identify particular submitters. These 

materials may also be subject to a variety of laws and regulations governing the disclosure of 

Federal agency information. Information submitted to DOE will be protected in accordance with 

all applicable federal laws, rules, or regulations, including, but not limited to, the Trade Secrets 

Act, 18 U.S.C. §1905, and the Freedom of Information Act (FOIA), 5 U.S.C. §552, and DOE's 

implementing regulations at 10 CFR 1004. 

Manufacturer cost information should reflect the variability in baseline models, design 

strategies, and cost structures that exist among manufacturers. If necessary, DOE will qualify any 

aggregated cost-efficiency data using information obtained through follow-up discussions with 

manufacturers. These interviews will provide a deeper understanding of the various 

combinations of technologies used to increase compressor efficiency, as well as their associated 

manufacturing costs. 

During the interviews with manufacturers, DOE will gather information about the capital 

expenditures needed to increase the efficiency of baseline models to various efficiency levels 

(i.e., conversion expenditures by efficiency). DOE will also gather information about the 

depreciation method(s) used to expense the conversion expenditures. DOE will then estimate the 

contribution of the depreciation of conversion capital expenditures to the incremental overhead 

portion of the full production cost. 

This approach will enable DOE to characterize the cost-efficiency relationship for 

compressors across the entire efficiency range for all equipment classes and allow the public to 

examine the aggregated cost and design assumptions that underlie the cost-efficiency estimates, 

while maintaining the confidentiality of proprietary data as described above. 

DOE typically uses markups to represent non-production costs and convert the MPC to 

the MSP. DOE intends to estimate manufacturer markups from publicly available financial 

information (e.g., Securities and Exchange Commission 10-K reports) and from information 

obtained in manufacturer interviews. 

DOE typically does not include conversion costs in the engineering analysis. Although 

these costs may be passed along to the customer, they are traditionally considered during the 

manufacturer impact analysis. DOE understands, however, that some primary methods used to 

increase the efficiency of compressors may not represent any difference in manufacturing cost, 

but which incurs primarily up-front R&D and conversion costs. If DOE decides to account for 

some or all of these conversion costs, these costs would be included as part of the manufacturer 

markups (see section 6). 
27 

Item 5-4 For each equipment class, DOE seeks comments on methods and approaches 

that DOE intends to employ to determine potential efficiency improvements 

for air compressors. Detailed information on air compressor performance and 

the related incremental manufacturing costs (e.g., material costs, labor costs, 

overhead costs, building conversion capital expenditures, capital expenditures 

for tooling or equipment conversion associated with more efficient designs, 

R&D expenses, and marketing expenses) would be useful. 

Item 5-5 DOE seeks comment on the markup approach proposed for developing 

estimates of manufacturer selling prices. 

Item 5-6 DOE seeks comment on the approach to determining the relationship between 

manufacturer selling price and air compressor efficiency. 

Item 5-7 DOE seeks comment on appropriate transportation and shipping costs to 

include in the analysis and whether those costs are likely to vary for higherefficiency equipment. 

Item 5-8 DOE seeks comment on the conversion costs required to improve the 

efficiency of the air compressors to various levels, as well as what portion of 

these costs would be passed on to the consumer. 

5.4 Efficiency Levels 

To establish the efficiency levels DOE intends to consider in this rulemaking, DOE will 

identify the highest efficiency that is technologically feasible within each equipment class (i.e., 

the max-tech level) and analyze the design options and costs associated with improving 

compressor efficiency from the baseline through the max-tech model. DOE intends to collect 

compressor efficiency data from various manufacturer catalogs to establish the range of 

efficiencies currently available on the market. DOE will also use these data to categorize 

relationships between efficiency and technological options where the technological options used 

can be identified. 

DOE notes that the maximum efficiency levels available in current compressor 

equipment may not necessarily correspond to the max-tech levels. It is possible that some of the 

design options that have met the screening criteria (i.e., passed the screening analysis) may be 

working prototypes that are not yet commercially available and, therefore, would not be found in 

today’s available maximum efficiency compressors. DOE seeks stakeholder input to determine 

the appropriate max-tech efficiency levels to apply. (42 U.S.C. § 6295(p)(2)) 

Item 5-9 DOE seeks comment from interested parties about the range of efficiency 

levels that should be examined as part of its analysis. 
28 

Item 5-10 DOE seeks comment from interested parties about a methodology that would 

be appropriate for determining the max-tech models for each compressor 

analyzed. 

5.5 Proprietary Designs 

DOE will consider in its engineering and economic analyses all design options that are 

commercially available or present in a working prototype, including proprietary designs and 

technologies. However, DOE will consider a proprietary design in the subsequent analyses only 

if the achieved efficiency level can also be reached using other non-proprietary design options. If 

the proprietary design is the only approach available to achieve a given efficiency level, then 

DOE will reject that efficiency level, as the analytical results would appear to favor one 

manufacturer over others. 

DOE is sensitive to manufacturer concerns regarding proprietary designs and will make 

provisions to maintain the confidentiality of proprietary data submitted by manufacturers or 

discussed during manufacturer interviews. Materials provided to Navigant Consulting, Inc., a 

DOE contractor for this effort, are generally subject to the terms of the applicable agreement 

under which those materials are submitted. In the case of materials provided to NCI in the 

context of a DOE rulemaking and subject to a non-disclosure agreement, those materials are 

generally not shared with DOE, apart from aggregated data that do not identify particular 

submitters. These materials may also be subject to a variety of laws and regulations governing 

the disclosure of Federal agency information. Information submitted to DOE will be protected in 

accordance with all applicable federal laws, rules, or regulations, including but not limited to the 

Trade Secrets Act, 18 U.S.C. §1905, and the Freedom of Information Act (FOIA), 5 U.S.C. 

§552, and DOE's implementing regulations at 10 CFR 1004. 

Item 5-11 Are there proprietary designs or technologies of which DOE should be aware 

for any of the commercial air compressors under consideration as part of its 

efforts in evaluating whether to set standards for commercial and industrial 

compressors? If so, how should DOE acquire the cost data necessary for 

evaluating these designs? 

5.6 Outside Regulatory Changes Affecting the Engineering Analysis 

In conducting an engineering analysis, DOE considers the effects of regulatory changes 

outside DOE’s statutory energy conservation standards rulemaking process that can impact the 

manufacturers of the covered equipment. Some of these changes can also affect the energy 

efficiency or energy consumption of the products that would be covered under a rulemaking 

proposal to set standards for commercial and industrial compressors. DOE will attempt to 

identify all cumulative engineering issues that could impact the engineering analysis. The 

consideration of these issues is closely related to the cumulative regulatory burden assessment 

that DOE will carry out as part of the manufacturer impact analysis. Based on consideration of 
29 

the comments received on the engineering analysis documented in the Preliminary Analysis, 

DOE will update the analysis as needed. It will reflect those changes in the documentation of the 

NOPR. 

Item 5-12 Are there outside regulatory issues that DOE should consider in its analysis of 

commercial air compressors? 

6. MARKUPS ANALYSIS 

DOE uses customer price estimates in its LCC, PBP, and national impact analyses. DOE 

typically uses manufacturer-to-customer markups to convert estimates of the manufacturer 

selling price derived from the engineering analysis (section 5) to customer prices. The 

manufacturer-to-customer markups are in addition to the manufacturer markups on production 

costs that DOE uses in estimating manufacturer selling price in the engineering analysis. 

Before developing markups, DOE identifies distribution channels (i.e., how the 

equipment is distributed from the manufacturer to the customer). DOE’s consultations with 

industry experts indicate that compressor manufacturers provide compressors to the marketplace 

through a variety of channels. 

Based on discussions with industry experts, DOE believes there are three main channels 

that air compressors move through between the manufacturer and final consumer. Channels are 

defined by the air compressor's power rating, in horsepower, and by the general method of 

compression. Table 6.1 approximates what DOE believes to be the distribution channels for 

compressors. 

Direct Sales: This channel represents direct sales from a manufacturer to the final 

consumer. 

Authorized Distributor: This channel represents a mix of businesses that are authorized 

by specific manufacturers to sell their equipment. These may be independent businesses, or 

manufacturer/company-owned stores. Authorized distributors will generally have the ability to 

sell the complete line of a manufacturer's equipment, and offer full-service and parts. 

Retail Merchants: This channel represents a mix of businesses, including: catalog sales, 

internet sales, big-box retail, or other merchant retail sales. These sales can be either through 

manufacturer authorized agents or non-authorized distributors. Equipment sold through nonauthorized distributors is sold with limited support. 

Table 6.1 Air Compressor Distribution Channel Magnitudes and Power Ranges 

Type of 

Compressor Channel Size of Channel 

(% units) 

Power Range (HP) 

Min Max 

Rotary Positive Direct Sales 5 All 
30 

Authorized Dealer 90 0 500 

Retail Merchant 5 0 150 

Reciprocating 

Direct Sales 2 5 30 

Authorized Dealer 48 5 30 

Retail Merchant 50 0 15 

Centrifugal 

Direct Sales 50 300 and above 

Authorized Dealer 50 100 500 

Retail Merchant 0 None 

Consistent with the approach followed for other products and equipment, DOE will 

determine an average manufacturer markup by examining the annual Securities and Exchange 

Commission (SEC) 10-K reports filed by publicly traded manufacturers of appliances and 

commercial equipment to include air compressors. DOE will also use current industry-level 

financial data reported in the Economic Census produced by the U.S. Census Bureau to estimate 

markups for distributors and catalog sales.7, 8 If available, DOE will also make use of financial 

data included in industry reports. 

 

The baseline markup relates the manufacturer sales price of baseline products to the 

distributor sales price. DOE calculates the baseline markup as an average ratio of selling price to 

cost. Incremental markups are coefficients that relate the change in the manufacturer sales price 

of higher-efficiency models to the change in the distributor sales price. The incremental markup 

reflects a situation in which the distributor faces an increase in cost of goods sold (CGS) for 

particular equipment because of manufacturing changes necessitated by new or amended 

standards. 

In addition to developing markups, DOE will develop and include sales taxes to calculate 

final prices to customers. DOE will use an annually updated Internet source, the Sales Tax 

Clearinghouse, to calculate applicable sales taxes.i

, 

Item 6-1 DOE seeks comment on the distribution channels and the share of industry 

shipments for each distribution channel described in this document as it 

applies to the range of compressors that DOE is considering regulating. 

7. ENERGY USE ANALYSIS 

DOE establishes the annual energy consumption of equipment and assesses the energysavings potential of various equipment efficiencies. As part of the energy use analysis, certain 

engineering assumptions may be required regarding equipment application, including how often 

the equipment is operated and under what conditions. DOE uses the annual energy consumption 

and energy-savings potential in the LCC and PBP analyses to establish the savings in customer 

operating costs at various equipment efficiency levels. 

 i

 Source: http://www.thestc.com/
31 

The annual energy consumption (AEC) associated with an air compressor in actual use 

depends primarily on the power drawn by the compressor and its air demand profile. DOE uses 

the term “air demand profile” to represent the temporal variation of the useful output from the 

compressor at the point of discharge—that is, the variation in delivered air volume at a given 

pressure, over a period of time, relative to a predetermined fixed output power, which may be the 

“full load,” “full operating pressure,” or other well-defined useful output point for the 

compressor at its rated operating pressure. Thus, the air demand profile represents the time 

variability in the ratio of the actual air volume output to a predetermined fixed output. 

 If there is little variation in the total airflow volume and air pressure on a compressor 

over the period of usage, only the number of annual operating hours needs to be determined to 

estimate the AEC. For example, DOE expects this situation to occur in some industrial 

applications where a compressor is run almost constantly to supply air for base load applications. 

The demands for air required by a facility or end-use are often dynamic (changing over 

time), which can create highly variable air demands across equipment classes and applications. A 

compressor being used as a "trim" compressor as part of a multi-compressor compressed air 

system would have constantly changing airflow rates and total volume air flow variation 

throughout the year. The annual energy consumption in this case would be based on a summation 

of the number of hours run for specific flow rate bins and the corresponding hourly energy 

consumption in each bin. 

A related issue is how a compressor is sized to an application. From an energy efficiency 

standpoint, optimally sized compressors would be selected to provide their peak efficiency for 

each application. In practice, however, DOE recognizes that the use of discrete compressor 

designs and sizes, as well as practical application constraints, results in many, if not most, 

compressors typically operating at points other than their peak efficiency.9

 

The useful work done by any compressor will vary widely across a range of possible 

applications. The energy used by the compressor in producing the useful work equals the flow 

energy transferred to air compression plus all energy losses associated with the compressor 

package (including the air-head, the motor, controls, cooling fans, and the transmission system). 

DOE intends for this analysis to capture and estimate energy consumption in the field for 

a variety of applications. For applications not specifically considered, DOE will apply a generic 

air demand profile for the equipment class. DOE will develop statistical models describing the 

expected range of end-use air demand profiles for compressors in different applications. DOE 

will determine whether the model parameters should also vary with the compressor equipment 

class or rated power (in HP). DOE will use manufacturer performance data to determine the 

energy use of a compressor under the expected deviation from the peak efficiency. This approach 

will provide a statistical distribution of AEC values for each compressor type and application for 

use in the LCC and payback period analysis (section 8). 
32 

Item 7-1 DOE requests comment and recommendations for identifying high sales 

volume and large installed base application segments corresponding to 

specific applications for which the compressors used may have similar enduse air demand profiles. 

Item 7-2 DOE seeks recommendations on sources of data or analysis methods that 

would provide end-use air demand profiles for each of the equipment classes 

of compressors falling within the major application segments that are under 

consideration as potential regulated equipment. 

Item 7-3 DOE requests input on ways to characterize compressor sizing and selection 

practices for different equipment classes and applications. 

Item 7-4 DOE requests comment on the degree of equipment oversizing that is 

prevalent in different application segments.8 

Item 7-5 DOE seeks comment on methods for determining nominal (non-market 

segment specific) end-use air demand profiles for compressor equipment 

classes under consideration in this document. 

Item 7-6 DOE seeks comment on the current penetration level of variable speed drives 

(VSDs) in the installed base of equipment in each application segment for the 

various types of compressors that DOE is considering regulating. DOE also 

seeks comment on the baseline condition for applications without VSDs, such 

as running at full load, use of controls, etc. 

Item 7-7 DOE requests comment and recommendation on the range and number of 

sizes over which the analysis should be carried out for each specific 

compressor capacity in actual cubic feet per minute (acfm), and rated air 

pressure in pounds per square inch gauge (psig). 

Item 7-8 DOE requests comment and estimates to establish the mean value and the 

ranges of likely values for transmission, motor, motor control, and compressor 

control efficiencies, as well as the impact of a control on compressor and 

motor performance and efficiency. 

8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS 

This section describes the life-cycle cost (LCC) and payback period (PBP) analysis that 

DOE will perform for commercial and industrial air compressors, including how DOE develops 

the inputs to the calculation. The LCC analysis establishes the total cost of an appliance over its 

lifetime (including purchase price and operating costs). The PBP analysis calculates the amount 
33 

of time required for energy cost savings to pay back any increased cost of higher-efficiency 

equipment. 

The effects of energy conservation standards on customers include a change in operating 

expense (usually decreased) and a change in purchase price (usually increased). DOE analyzes 

the net effect on customers by calculating the LCC and PBP using the engineering performance 

data, the equipment prices, and the energy-use and end-use load characterization data. Inputs to 

the LCC calculation include the cost to the customer of the installed equipment (purchase price 

plus installation cost), operating expenses (energy expenses and, if applicable, repair costs and 

maintenance costs), the lifetime of the equipment, and a discount rate. 

8.1 Analytical Approach 

DOE plans to conduct an LCC and PBP analysis for each of the representative units for 

each air compressor design line. DOE conducts the LCC and PBP analysis by modeling both the 

uncertainty and variability in the inputs using Monte Carlo simulation and probability 

distributions. The Monte Carlo approach identifies the percentage of customers benefiting from 

and being burdened by a prospective standard. 

The LCC model uses Monte Carlo simulation to sample probability distributions for 

several of the parameters that affect the LCC. The Monte Carlo simulation may be implemented 

using Microsoft Excel spreadsheets and the Crystal Ball add-in program. Each Monte Carlo 

simulation would typically consist of 10,000 computer-generated LCC and PBP calculations. 

Each calculation uses input values sampled from a probability distribution or defined as single 

point values. The analysis results are presented as a distribution of LCC values and summary 

statistics such as average LCC and standard deviation. 

DOE expects to use probability distributions to characterize equipment lifetime, discount 

rates, and annual energy use and to represent the degree to which equipment is optimally sized 

for a given demand of air volume. DOE may also use probability distributions for distributor 

markups. DOE expects to use point values to characterize the other LCC inputs, including the 

manufacturer markup, as these data are available only as single values. 

To accurately estimate the percentage of customers that would be affected by a particular 

standard level, DOE accounts for the distribution of equipment efficiencies expected for the 

compliance year. In other words, rather than analyzing the impacts of a particular standard level 

assuming that all customers are currently purchasing equipment at the baseline level, DOE 

conducts the analysis by taking into account the full range of equipment efficiencies that 

customers would purchase under the base case (i.e., the case without new energy efficiency 

standards). By accounting for customers who already purchase more-efficient equipment, DOE 

avoids overstating the potential benefits from standards. DOE determines the LCC and PBP for a 

particular standard level relative to the base case distribution of equipment efficiencies. Hence, if 

the equipment chosen in the base case has an efficiency that meets a given standard level, the 

customer is not affected by a given candidate standard level; the LCC savings are zero and the 

payback period is not defined. 
34 

DOE also performs an analysis to determine whether the three-year rebuttable 

presumption of economic justification applies, that is, whether the additional cost of purchasing 

equipment that meets the standard level would be less than three times the value of the energy 

savings in the first year. (42 U.S.C. § 6295(o)(2)(B)(iii)) For this analysis, DOE determines the 

value of the first year’s energy savings using the DOE test procedure. Although DOE examines 

the rebuttable-presumption criteria, the economic justification of standard levels are based on the 

analysis conducted pursuant to section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. § 6295(o)(2)(B)(i)) 

The following sections discuss how DOE plans to develop key inputs to the LCC and 

PBP analysis, including (1) installation costs, (2) energy prices, (3) maintenance and repair costs, 

(3) equipment lifetime, and (4) discount rates. The other inputs to the LCC and PBP analysis—

namely, manufacturer costs, annual energy consumption, and markups for the determination of 

equipment prices—have been previously addressed. 

8.2 Installation Costs 

The installation cost includes labor, overhead, and any other miscellaneous materials and 

parts. DOE is aware that there is variability in the costs for commercial and industrial sector air 

compressor installations. However, DOE does not have information to suggest that existing 

installation practices would necessarily change under an energy conservation standard. 

Item 8-1 DOE seeks comment on whether installation costs for air compressors 

increase with higher-efficiency equipment. 

8.3 Energy Prices 

DOE will use tariff-based marginal energy (where available, average if not available) 

prices to value energy savings for commercial and industrial customers. Marginal prices will be 

developed for the commercial and industrial sectors for 13 geographic areas—the nine U.S. 

Census divisions, with four large states (New York, Florida, Texas, and California) treated 

separately. For Census divisions that contain one of the large states, DOE calculates the regional 

average values leaving out data for the large state—for example, the Pacific region average does 

not include California, and the West South Central region average does not include Texas. 

DOE will then use projections of energy prices for commercial and industrial customers 

by census division from the most recent version of the Energy Information Administration’s 

(EIA’s) Annual Energy Outlook (AEO) to estimate future energy prices. 

8.4 Maintenance and Repair Costs 

DOE will consider any expected changes to maintenance and repair costs for the covered 

equipment. Small incremental changes in equipment efficiency are expected to incur little or no 

change in repair and maintenance costs over baseline equipment. For equipment with significant 

energy efficiency improvements over the baseline, there may be increased repair and 
35 

maintenance costs because such equipment may incorporate technologies that are not widely 

available. 

Item 8-2 DOE invites comment on whether repair costs may change for more efficient 

air compressors. 

8.5 Equipment Lifetime 

DOE will use information from catalogs and various literature sources, and input from 

manufacturers and other stakeholders, to establish air compressor lifetimes (measured in years) 

for use in the LCC and subsequent analyses. DOE believes that the average air compressor 

lifetime in the field is between 10 and 20 years, depending on air compressor type and size. A 

European study from 2001 estimated average lifetimes for air-compressors between 10 and 100 

KW (13 and 147 HP) to be 13 years, and those between 110 and 300 KW (147 and 495 HP) to be 

16 years.10 Further, research done by the California Utilities' Statewide Codes and Standards 

Team in support of California building energy efficiency standards used an average 15 year 

lifetime for all air compressors.11 DOE expects to use probability distributions to characterize 

equipment lifetime, to represent the variance of lifetimes that this equipment experiences in the 

field. DOE may consider the correlation between air compressor lifetime and annual operating 

hours, or equipment maintenance, if quantitative evidence is found that these factors in the field 

affect air compressor lifetimes. 

Item 8-3 DOE seeks comment on appropriate air compressor lifetimes for the 

equipment under consideration, as well as data regarding correlation between 

compressor hours of use and air compressor lifetime. 

8.6 Discount Rates 

The calculation of LCC requires the use of an appropriate discount rate for those 

commercial or industrial companies that purchase air compressors. DOE will derive the discount 

rates for these commercial and industrial customers by estimating the capital costs for companies 

that purchase air compressors. The cost of capital is commonly used to estimate the present value 

of cash flows to be derived from a typical company project or investment. Most companies use 

both debt and equity capital to fund investments, so the cost of capital is the weighted-average 

cost of equity and debt financing, which is referred to as the weighted-average cost of capital. 

Item 8-4 DOE seeks input on the proposed approach for estimating discount rates for 

air compressor customers. 
36 

9. SHIPMENTS ANALYSIS 

DOE uses shipment projections by equipment class to calculate the national impacts of 

standards on energy consumption, NPV, and future manufacturer cash flows. DOE’s approach 

considers that shipments of air compressors are driven by the economic growth of commercial 

and industrial sectors that use this equipment. Historical data will be used to establish the 

relationship between shipments of air compressors and the appropriate index for sector growth. 

DOE intends to use historical shipments data of air compressors from the U.S. Department of 

Commerce's Census Bureau to characterize the shipments of this equipment.12, 13 

DOE typically projects shipments for a 30-year period beginning with the expected 

compliance date of any standards. 

Item 9-1 DOE seeks comment on the shipments forecast methodology. DOE invites 

comments regarding the selection of appropriate economic drivers. 

Item 9-2 DOE requests historical shipments data for the equipment proposed in this 

framework, with further breakdowns where available including, but not 

limited to, delivered air volume (acfm), air pressures (psig), motor HP, and/or 

efficiency. 

9.2 Standards Impacts on Shipments 

DOE plans to derive standards-case forecasts using the same data used in the 

development of the base-case forecasts. Often, DOE standards cases forecasts take into account 

the usual increase in purchase price and the usual decrease in operating costs caused by a new 

standard. The magnitude of the difference between the standards-case and base-case shipment 

forecasts depends on the estimated purchase price increase, as well as the operating-cost savings 

from the standard. DOE plans to assess whether there are sufficient data to estimate the impact of 

the considered standard on air compressor shipments relative to the base case. 

Item 9-3 DOE seeks comment on how an energy conservation standard for air 

compressors might impact shipments of the equipment. 

10. NATIONAL IMPACT ANALYSIS 

The NIA assesses the aggregate impacts of potential efficiency standards at the national 

level. Impacts that DOE will report include the NES from potential air compressor standards 

(i.e., the cumulative incremental energy savings from air compressor efficiency standards) and 

the NPV of the total customer benefits. 
37 

10.1 Energy Efficiency Trends 

A key component of DOE’s estimates of NES and NPV is the equipment energy 

efficiency forecasted over time for the base case (without new standards) and for each of the 

standards cases. To develop the various cases, DOE plans to develop market-share efficiency 

data (i.e., data on the distribution of equipment shipments by efficiency) for the air compressor 

equipment classes DOE is considering. DOE will estimate the change in efficiency in the base 

case by considering historical trends and input from stakeholders. 

The market-share efficiency data will allow DOE to estimate the efficiency impact that 

standards may have in the standards’ compliance year. DOE expects to use a “roll-up” scenario 

in developing potential standards for air compressors. Under this scenario, DOE assumes (1) 

equipment 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) equipment efficiencies above the 

standard level under consideration would not be affected. DOE plans to use this scenario because 

it does not believe air compressor manufacturers would not take on the addition costs associated 

with re-tooling and make modifications to air compressor lines with efficiency higher than the 

new standard level. 

Once DOE establishes the shipment-weighted efficiency for each considered standard 

level for the assumed compliance date of the standard, it can estimate future shipment-weighted 

efficiencies using the same rate of forecasted efficiency growth as in the base case, or if 

appropriate, a different rate. 

Item 10-1 DOE seeks comment on how the efficiency of air compressors is likely to 

change over the long run in the absence of standards. 

10.2 National Energy Savings 

DOE intends to calculate national air compressor energy consumption for each year 

beginning with the expected compliance date of any standards. It will calculate national air 

compressor energy consumption for the base cases and each efficiency standard level analyzed, 

and the energy savings will be calculated as the difference in energy consumption between the 

base case and the standards cases. DOE plans to perform this calculation through the use of a 

spreadsheet model that accounts for the stock of equipment affected by standards.j

 The energy 

savings are measured over the entire lifetime of products purchased in the 30-year projection 

period.k

 j

 Several examples of NES spreadsheet models from previous rulemakings can be found on DOE’s website at: 

http://www.eere.energy.gov/buildings/appliance_standards/. k

 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. 
38 

DOE intends to consider whether there may be a rebound effectl

 associated with more 

efficient commercial air compressors in its determination of NES. Increased equipment 

utilization may result from an increase in energy efficiency. If data indicate that there may be a 

rebound effect and the data are sufficient to allow quantification of this effect for commercial air 

compressors, DOE will account for the rebound effect in its calculation of NES. 

Item 10-2 DOE seeks comment on the likelihood of increased air compressor usage as a 

direct result of improved air compressor efficiency. 

10.3 Net Present Value 

To determine the NPV of potential energy conservation standards, DOE calculates annual 

energy expenditures based on annual energy consumption by incorporating forecasted energy 

prices, using the forecasts of shipments and average energy efficiency described in section 9. 

DOE calculates annual equipment expenditures by multiplying the price per unit by the number 

of forecasted shipments. The difference between a base case and a standards-case scenario gives 

the national energy cost savings and increased equipment expenditures in dollars. The difference 

each year between energy cost savings and increased equipment expenditures is the net savings 

(if positive) or net costs (if negative). DOE discounts those annual values to the present time and 

sums them to obtain a NPV. 

Consistent with guidelines set by the U.S. Office of Management and Budget (OMB), 

DOE will conduct two NPV calculations, one using a real discount rate of 3-percent and the 

other using a real discount rate of 7-percent (OMB, Circular A-4: Regulatory Analysis 

(September 17, 2003). The discount rates for the determination of NPV differ from the discount 

rates used in the LCC analysis (which are developed from a customer’s perspective). The 7-

percent real value is an estimate of the average before-tax rate of return on private capital in the 

U.S. economy. The 3-percent real value represents the “societal rate of time preference,” which 

is the rate at which society discounts future consumption flows to their present value. 

11. CUSTOMER SUBGROUP ANALYSIS 

The LCC analysis described in section 8 analyzes the impacts of energy conservation 

standards on all users of commercial and industrial air compressor. For the subgroup analysis, 

DOE divides users into subgroups, which comprise a subset of the population that is likely, for 

one reason or another, to be affected disproportionately by new or revised energy conservation 

standards (e.g., small businesses or firms that use air compressor in particular applications where 

energy savings are likely to be small).m The purpose of a subgroup analysis is to determine the 

 l

 The rebound effect describes a situation in which users increase their use of products as a result of this reduction in 

operating costs, thereby reducing the energy savings achieved. 

m These firms differ from any air compressor manufacturers who may qualify as a small business under the size 

standards established by the Small Business Administration. DOE analyzes impacts to these small businesses, 
39 

extent of this disproportional impact. DOE will work with stakeholders to identify any subgroups 

for this consideration and will conduct a subgroup analysis once a NOPR is prepared . 

Item 11-1 DOE seeks comment on what, if any, user subgroups are appropriate in 

considering standards for air compressors. 

12. MANUFACTURER IMPACT ANALYSIS 

DOE will collect, evaluate, and report preliminary information and data on manufacturer 

impacts in the preliminary TSD. Such preliminary information includes the anticipated 

conversion capital expenditures by efficiency level and the corresponding anticipated impacts on 

employment in the commercial air compressor industry. DOE will solicit further information 

during the preliminary engineering analysis manufacturer interviews. 

DOE intends for the manufacturer impact analysis to provide an assessment of the 

potential impacts of energy conservation standards on manufacturers of commercial air 

compressors. In addition to financial impacts, a wide range of quantitative and qualitative effects 

may occur following adoption of a standard that may require changes to the manufacturing 

practices for these products. DOE will identify these effects through interviews with 

manufacturers, as well as other interested parties and experts. 

For the NOPR, DOE will supplement the results of the preliminary manufacturer impact 

analysis conducted as part of the Preliminary Analysis with more detailed analyses, described in 

sections 12.1 through 12.5. Specifically, DOE will carry out an industry-wide cash-flow analysis 

using the Government Regulatory Impact Model (GRIM), identify and analyze subgroups of 

manufacturers whose business varies significantly from the industry as a whole, perform a 

competitive impacts assessment, and review the cumulative regulatory burden for the industry. 

12.1 Sources of Information for the Manufacturer Impact Analysis 

Many of the analyses described earlier provide important information that DOE uses as 

inputs for the manufacturer impact analysis. Such information includes financial parameters 

developed in the market assessment (section 3.1), manufacturing costs from the engineering 

analysis (section 5.3), retail price forecasts (section 6), and shipments forecasts (section 9). DOE 

supplements this information with information gathered during manufacturer interviews. 

 

DOE will conduct detailed interviews with manufacturers to gain insight into the range of 

potential impacts of standards. The interview process plays a key role in the manufacturer impact 

analysis, since it provides an opportunity for directly affected parties to express their views on 

important issues. During the interviews, DOE will solicit information on the possible impacts of 

standards on manufacturing costs, equipment prices, sales, direct employment, capital assets, and 

industry competitiveness. Both qualitative and quantitative information are valuable in terms of 

 which would be directly impacted by any final standards DOE might establish, as required by the Regulatory 

Flexibility Act (see section 12.3 below). 
40 

this analysis. DOE prefers an interactive interview process, because it helps clarify responses and 

provides the opportunity to identify additional issues. 

DOE will ask interview participants to identify all confidential information provided in 

writing or orally, and DOE will determine whether the information submitted is entitled to 

confidential treatment. It will consider information gathered, as appropriate, in the energy 

conservation standards decision-making process. However, DOE will not make confidential 

information available in the public record. DOE also will ask participants to identify all 

information that they wish to have included in the public record but do not want to have 

individually attributed to them; DOE will incorporate this information into the public record, but 

will report it without attribution. 

DOE will prepare a summary of the major issues and outcomes resulting from the 

manufacturer interviews. This summary will become part of the TSD that DOE will produce to 

accompany any proposal that may be issued. 

12.2 Industry Cash-Flow Analysis 

The industry cash-flow analysis relies primarily on the GRIM. DOE uses the GRIM to 

analyze the financial impacts of new energy conservation standards on the industries that 

produce the products covered by the standard. 

The GRIM analysis uses a number of inputs—annual expected revenues; manufacturer 

costs such as costs of goods sold; selling, general, and administrative costs; taxes; and capital 

expenditures (both ordinary capital expenditures and those related to standards)—to determine a 

series of annual cash flows beginning from the announcement of the new standard and 

continuing for several years after its implementation. DOE compares the results against basecase projections that involve no new standards. The financial impact of new standards is the 

difference between the two sets of discounted annual cash flows. Other performance metrics, 

such as return on invested capital, are also available from the GRIM. 

DOE will gather the inputs needed for the GRIM from two primary sources: the analyses 

conducted up to this point and interviews with manufacturers and other interested parties. 

Information gathered from previous analyses will include financial parameters, manufacturing 

costs, price forecasts, and shipments forecasts. Interviews with manufacturers and other 

interested parties will be essential in supplementing this information. 

12.3 Manufacturer Subgroup Analysis 

Average industry cost values may not adequately assess differential impacts among 

subgroups of manufacturers. DOE recognizes that smaller manufacturers, niche players, and 

manufacturers exhibiting a cost structure that differs significantly from the industry average may 

be affected differently by the imposition of standards. Ideally, DOE would consider the impact 

on every firm individually. In highly concentrated industries, this may be possible. In industries 

having numerous participants, however, DOE uses the results of the market and technology 

assessment to group manufacturers into subgroups, as appropriate. For commercial air 

compressors, DOE is interested in feedback about potential subgroups, including small 
41 

businesses. The detailed manufacturer subgroup impact analysis will entail calculating cash 

flows separately for each defined class of manufacturer. 

Item 12-1 DOE seeks comment on appropriate manufacturer subgroups, if any, that 

DOE should consider in a manufacturer subgroup analysis for commercial and 

industrial air compressors. 

Item 12-2 DOE seeks comment on small businesses that could be impacted by energy 

conservation standards for commercial and industrial air compressors, and 

what the impacts on small businesses of potential standards might be. 

12.4 Competitive Impacts Assessment 

EPCA directs DOE to consider any lessening of competition likely to result from an 

imposition of standards. (42 U.S.C. § 6295(o)(2)(B)(i)(V)) It further directs the Attorney General 

to determine in writing the impacts, if any, of any lessening of competition. (42 U.S.C. § 

6295(o)(2)(B)(ii)) 

DOE will gather and report available firm-specific financial information and impacts, and 

it will then report the aggregated impact of the standard on manufacturers. The competitive 

impacts analysis will focus on assessing the impacts to smaller, yet significant, manufacturers. 

DOE will base the assessment on manufacturing cost data and on information collected from 

interviews with manufacturers. The manufacturer interviews will focus on gathering information 

that will help in assessing asymmetrical cost increases to some manufacturers, increased 

proportion of fixed costs potentially increasing business risks, and potential barriers to market 

entry (e.g., proprietary technologies). DOE will provide the Attorney General with a copy of the 

NOPR for consideration in his/her evaluation of the impact of standards on the lessening of 

competition. 

12.5 Cumulative Regulatory Burden 

DOE is aware that other regulations may apply to the equipment that it is considering 

regulating as part of today’s effort, as well as to other equipment produced by the same 

manufacturers. Multiple regulations may result in a cumulative regulatory burden on these 

manufacturers. Accordingly, DOE will analyze and seek to mitigate the overlapping effects of 

amended DOE standards and other regulatory actions on manufacturers of commercial air 

compressors manufactured (alone or as a component of another piece of equipment) . DOE will 

consider these issues during the manufacturer impact analysis. 

Regulations that could affect the industries impacted by a proposal to set standards for 

compressors include: 

 Energy efficiency standards for electric motors. DOE recently published a NOPR for 

the electric motors standards rulemaking. DOE understands that any standards set for 
42 

electric motors will affect the compressors industry and will take this into account 

when performing any and all of its analyses. 

 Environmental Protection Agency (EPA)-mandated phase-out of HCFCs. The EPAmandated phase-out of hydrochlorofluorocarbon (HCFC) refrigerants affected 

multiple residential products (i.e., refrigerators, room air-conditioners, and 

commercial air compressors), requiring manufacturers to switch to non-ozonedepleting refrigerants as of January 1, 2010. 

 Reduction of Hazardous Substances (RoHS) directive. The Directive on the 

Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic 

Equipment was adopted in February 2003 by the European Union (EU) and became 

effective July 1, 2006.n RoHS identifies specific categories of products that can 

contain no more than threshold amounts of mercury, lead, cadmium, hexavalent 

chromium, and certain fire retardants (e.g., polybrominated biphenyls and 

polybrominated diphenyl ethers). While this legislation does not extend to products in 

the United States, domestic manufacturers selling to the EU market must produce 

RoHS-compliant appliances. These manufacturers may choose to promulgate the 

associated design changes across their entire equipment line. 

Item 12-3 What other regulations or pending regulations should DOE consider in its 

examination of cumulative regulatory burden? 

13. UTILITY IMPACT ANALYSIS 

To estimate the effects of energy conservation standards for air compressors on the 

electric and gas utilities industries, DOE plans to use a variant of EIA’s NEMS, called NEMSBT. NEMS is a large, multi-sectoral partial equilibrium model of the U.S. energy sector, used 

primarily for the purpose of preparing EIA’s AEO. NEMS produces a widely recognized 

reference case forecast for the United States through 2040 and is available in the public domain. 

The effect of reducing site energy use is modeled by making NEMS runs that deviate 

from the most recent AEO Reference case. Each year, DOE develops response coefficients using 

the NEMS-BT which give changes in capacity and generation by fuel type for a given quantity of 

site energy use reduction to a particular energy end use. DOE develops response coefficients for 

several different energy end uses. To model the impact of this standard on the electric and gas 

utilities industries, the response coefficients will be weighted by end use, and then they will be 

applied to the site energy savings for air compressors which is generated from the NIA analysis. 

Item 13-1 DOE seeks comment from interested parties about its proposed use of NEMSBT to conduct the utility impact analysis. 

 n

 Available at http://ec.europa.eu/environment/waste/weee/index_en.htm. 
43 

14. EMPLOYMENT IMPACT ANALYSIS 

The employment impact analysis examines indirect employment impacts from standards, 

which consist of the net jobs created or eliminated in the national economy, other than in the 

manufacturing sector being regulated, caused by: (1) reduced spending by end users on energy; 

(2) reduced spending on new energy supply by the utility industry; (3) increased spending on 

new equipment to which the new standards apply; and (4) the effects of those three factors 

throughout the economy. (Direct employment impacts are any changes in the number of 

employees of manufacturers of the equipment subject to standards, their suppliers, and related 

service firms. The MIA will address impacts on the number of employees working for the 

manufacturers.) 

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). The BLS regularly publishes its estimates of the 

number of jobs per million dollars of economic activity in different sectors of the economy, as 

well as the jobs created elsewhere in the economy by this same economic activity. Data from 

BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and 

indirectly) than expenditures in other sectors of the economy.o

 There are many reasons for these 

differences, including wage differences and the fact that the utility sector is more capitalintensive and less labor-intensive than other sectors. Energy conservation standards have the 

effect of reducing consumer utility bills. Because reduced consumer expenditures for energy 

likely lead to increased expenditures in other sectors of the economy, the general effect of 

efficiency standards is to shift economic activity from a less labor-intensive sector (i.e., the 

utility sector) to more labor-intensive sectors (e.g., the retail and service sectors). 

 

Once DOE issues a NOPR, DOE plans to estimate 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).p ImSET is a special-purpose version of the “U.S. Benchmark National 

Input-Output” (I–O) model, which was designed to estimate the national employment and 

income effects of energy-saving technologies. The ImSET software includes a computer-based 

I–O model having structural coefficients that characterize economic flows among 187 sectors 

most relevant to industrial, commercial, and residential building energy use. 

DOE notes that ImSET is not a general equilibrium forecasting model and 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 over-estimate actual job impacts over the long run. DOE may 

consider the use of other modeling approaches for examining long-run employment impacts. 

 o

 See Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output 

Modeling System (RIMS II). Washington, DC. U.S. Department of Commerce, 1992. 

p

 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL-18412, 

Pacific Northwest National Laboratory, 2009. Available at: 

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf 
44 

Item 14-1 DOE seeks comments about its proposed approach to assessing national 

employment impacts. 

15. EMISSIONS ANALYSIS 

In the emissions analysis, DOE will estimate 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, DOE will 

estimate 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 (FFC). In accordance with 

DOE’s FFC Statement of Policy (76 FR 51281), the FFC analysis includes impacts on emissions 

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

DOE conducts the emissions analysis using emissions factors derived from data in the 

latest version of EIA’s Annual Energy Outlook (AEO), supplemented by data from other sources. 

EIA prepares the Annual Energy Outlook using NEMS. Each annual version of NEMS 

incorporates the projected impacts of existing air quality regulations on emissions. The text 

below refers to AEO 2013, which generally represents current legislation and environmental 

regulations, including recent government actions, for which implementing regulations were 

available as of December 31, 2012. 

Because the on-site operation of air compressors may require use of fossil fuels and 

results in emissions of CO2, NOx, and SO2 at the sites where these appliances are used, DOE will 

also account for the reduction in these site emissions and the associated upstream emissions due 

to potential standards. 

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap and trading 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), which created an allowance-based trading program that operates along 

with the Title IV program in those States and D.C. 70 FR 25162 (May 12, 2005). CAIR was 

remanded to 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). On July 6, 2011 EPA issued a 

replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 

2011). On August 21, 2012, the D.C. Circuit issued a decision to vacate CSAPR. See EME 

Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012). The court ordered EPA to 

continue administering CAIR. AEO 2013 assumes that CAIR remains a binding regulation 

through 2040. 

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, 
45 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions 

by any regulated EGU. In past rulemaking efforts, 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 no reductions in power sector emissions would occur for SO2 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 December 21, 

2011. 77 FR 9304 (February 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 2013 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 that would be 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. 

CAIR established a cap on NOX emissions in eastern States and the District of Columbia. 

Energy conservation standards are expected to have little or no physical effect on these emissions 

in those States covered by CAIR 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 estimates NOX emissions reductions from potential standards in the 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. DOE 

will estimate mercury emissions reduction using emissions factors based on AEO 2013, 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. 
46 

Item 15-1 DOE seeks comment about its approach to conduct the emissions analysis for 

the equipment that would be covered under this rulemaking. 

16. MONETIZING REDUCED CO2 AND OTHER EMISSIONS 

DOE plans to consider the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to result from each of the standard levels 

considered. 

To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE plans to use the most current social cost of carbon (SCC) values developed and/or agreed to 

by an interagency process. The SCC is intended to be a monetary measure of the incremental 

damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net 

agricultural productivity loss, human health effects, property damage from sea level rise, and 

changes in ecosystem services. Any effort to quantify and to monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics. But with full 

regard for the limits of both quantification and monetization, the SCC can be used to provide 

estimates of the social benefits of reductions in GHG emissions. 

The Interagency Working Group on Social Cost of Carbon released an update of its 

previous report in 2013.q

 The most recent estimates of the SCC in 2015, expressed in 2012$, are 

$11.8, $39.7, $61.2, and $117 per metric ton of CO2 avoided. For emissions reductions that occur 

in later years, these values grow in real terms over time. Additionally, the interagency group 

determined that a range of values from 7-percent to 23-percent should be used to adjust the 

global SCC to calculate domestic effects, although DOE will give preference to consideration of 

the global benefits of reducing CO2 emissions. 

DOE multiplies 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 discounts the values in each of the four cases using the discount rates that had been 

used to obtain the SCC values in each case. 

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also estimates the potential monetary benefit of reduced NOX emissions resulting 

from the standard levels it considers. For NOx emissions, estimates suggest a very wide range of 

 q 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; revised November 

2013. http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf
47 

monetary values, ranging from $468 to $4,809 per ton in 2012$).r

 In accordance with OMB 

guidance, s DOE calculates a range of monetary benefits using each of the economic values for 

NOX and real discount rates of 3-percent and 7-percent. 

 

DOE is evaluating the appropriate valuation of avoided SO2 and Hg emissions. Whether 

monetization of reduced SO2 and Hg emissions will occur as part of any proposed rule that DOE 

issues for compressors is yet to be determined. 

Item 16-1 DOE requests comment about the approach it plans to use for estimating 

monetary benefits associated with emissions reductions. 

17. REGULATORY IMPACT ANALYSIS 

If DOE issues a proposal to set standards for commercial and industrial compressors, it 

will prepare a regulatory impact analysis to address the potential for non-regulatory approaches 

to supplant or augment energy conservation standards to improve the efficiency of commercial 

air compressors. DOE recognizes that voluntary or other non-regulatory efforts by 

manufacturers, utilities, and other interested parties can result in substantial improvements in 

efficiency. DOE intends to analyze the likely effects of non-regulatory initiatives on equipment 

energy use, customer utility, and LCC. DOE will attempt to base its assessment on the impacts of 

any such initiatives to date, but will also consider information presented regarding the impacts 

that an initiative might have in the future. 

If DOE proposes energy conservation standards for commercial air compressors, and the 

NOPR constitutes a significant regulatory action as defined under section 3(f) of Executive 

Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993), DOE will 

prepare and submit to OMB for review the assessment of costs and benefits required under 

section 6(a)(3) of the order. 

 

 r

 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, Washington, DC. s OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
48 

APPENDIX A: LIST OF ITEMS FOR COMMENT 

Item 1-1 DOE requests comment on its proposed definition for “compressor.” DOE is also 

specifically requesting comment regarding the pressure ratio of 1.1 specified in 

the definition for “compressor,” as specified by ISO/TR 12942.Item 1-2 

Item 1-2 DOE requests comments on whether it should cover positive-displacement, 

dynamic, and combined compressors, and whether any other types of compressors 

should be considered for inclusion in the scope of this rulemaking effort. 

Item 1-3 DOE requests comment on the scope of coverage for compressors, whether it 

should be limited to only “air compressors,” and the potential for circumvention. 

Item 1-4 DOE requests shipping data for compressor equipment based on the type of gas 

compressed. DOE also seeks comment regarding the technical and relative energy 

use differences (if any) between air and non-air compressors. 

Item 1-5 DOE requests comments on whether it should cover positive-displacement, 

dynamic, and combined compressors, and whether any other types of compressors 

should be considered for inclusion in the scope of this rulemaking effort. 

Item 1-6 DOE requests comment on its proposal to cover all types of compressors 

regardless of the input energy form used. In addition DOE requests comment on 

its proposal, for electrically driven compressors, to cover only those that operate 

on three-phase alternating current. 

Item 1-7 DOE requests shipment data for compressor equipment based on the input energy 

form used. 

Item 1-8 DOE seeks comment on its proposal to cover compressors rated from 1 through 

500 HP. 

Item 1-9 DOE requests comment on its proposal to cover the compressor “package” and 

not the “bare” compressor or the entire CAS. 

Item 1-10 DOE seeks comment on the proposed definitions for compressors. 

Item 1-11 DOE seeks comment on the proposed definition for positive displacement 

compressors and the definitions for all associated subcategories. DOE also seeks 

comment if there are any additional subcategories of positive displacement 

compressors that it should consider when weighing whether to set energy 

conservation standards for compressors. 

Item 1-12 DOE seeks comment on the proposed definition for dynamic compressors and the 

definitions for all associated subcategories. DOE also seeks comment if there are 

any additional subcategories of dynamic compressors that should be considered as 

part of its efforts to evaluate whether to set standards for compressors 
49 

Item 1-13 DOE seeks input regarding whether the efficiency metrics listed effectively 

characterize the efficiency for each equipment system boundary. DOE also 

requests input on whether any other efficiency metrics should be considered as 

part of its efforts in evaluating whether to set standards for this equipment. 

Item 1-14 DOE requests comment on the use of the ISO 1217 and ISO 5389 test procedures, 

as well as any other test procedures, as a basis for the development of a DOE test 

procedure, including any modifications or additions that may be necessary. 

Item 1-15 DOE requests comment on the scope of each test procedure with respect to the 

equipment for which DOE is considering standards, as well as any limitations of 

these test procedures. 

Item 1-16 DOE seeks comment on whether a labeling rule would be technologically or 

economically feasible, result in significant energy savings, or assist customers in 

making purchasing decisions. 

Item 1-17 DOE seeks comment on information that it should consider requiring for display 

on any prospective label, as well as factors DOE should consider regarding the 

size, format, and placement of any such label. 

Item 3-1 DOE requests information that would contribute to the market assessment (e.g., 

current equipment features and efficiencies, equipment-feature and efficiency 

trends, historical equipment shipments and prices). 

Item 3-2 DOE requests input from interested parties about the design characteristics and 

criteria that it is considering using when creating equipment classes. In particular, 

should additional or fewer criteria beyond those identified above be used as a 

basis for developing equipment classes? 

Item 3-3 DOE requests input from interested parties about how commercial compressors 

should be separated into equipment classes using the listed design characteristics. 

Item 3-4 Of the technologies listed above, are there any that DOE should not consider 

because of their impacts on safety, performance, or consumer utility of the 

equipment? 

Item 3-5 Are there other unlisted technologies that DOE should consider as design options 

and what, if any, impacts do the design options have on safety, performance, and 

consumer utility? 

Item 3-6 DOE seeks input from interested parties about the selection of representative 

equipment classes and baseline models and their efficiencies for the engineering 

and LCC analyses. In particular, DOE is interested in receiving information about 

which types and sizes of compressors are most common, and whose efficiency 

levels would be most easily generalized and applied to other categories. 
50 

Item 5-1 DOE seeks input on the methods and approaches used by manufacturers to 

improve the efficiency of compressors, and in particular, how frequently 

equipment re-design would be the only method employed. 

Item 5-2 DOE seeks input on appropriate baseline unit efficiencies for commercial air 

compressors. 

Item 5-3 DOE seeks information regarding the specific technological characteristics of the 

baseline model for each equipment class, including the technologies described in 

section 3.3. 

Item 5-4 For each equipment class, DOE seeks comments on methods and approaches that 

DOE intends to employ to determine potential efficiency improvements for air 

compressors. Detailed information on air compressor performance and the related 

incremental manufacturing costs (e.g., material costs, labor costs, overhead costs, 

building conversion capital expenditures, capital expenditures for tooling or 

equipment conversion associated with more efficient designs, R&D expenses, and 

marketing expenses) would be useful. 

Item 5-5 DOE seeks comment on the markup approach proposed for developing estimates 

of manufacturer selling prices. 

Item 5-6 DOE seeks comment on the approach to determining the relationship between 

manufacturer selling price and air compressor efficiency. 

Item 5-7 DOE seeks comment on appropriate transportation and shipping costs to include 

in the analysis and whether those costs are likely to vary for higher-efficiency 

equipment. 

Item 5-8 DOE seeks comment on the conversion costs required to improve the efficiency 

of the air compressors to various levels, as well as what portion of these costs 

would be passed on to the consumer. 

Item 5-9 DOE seeks comment from interested parties about the range of efficiency levels 

that should be examined as part of its analysis. 

Item 5-10 DOE seeks comment from interested parties about a methodology that would be 

appropriate for determining the max-tech models for each compressor analyzed. 

Item 5-11 Are there proprietary designs or technologies of which DOE should be aware for 

any of the commercial air compressors under consideration as part of its efforts in 

evaluating whether to set standards for commercial and industrial compressors? If 

so, how should DOE acquire the cost data necessary for evaluating these designs? 

Item 5-12 Are there outside regulatory issues that DOE should consider in its analysis of 

commercial air compressors? 
51 

Item 6-1 DOE seeks comment on the proposed distribution channels and the share of 

industry shipments for each distribution channel for the range of compressors 

proposed under this rulemaking. 

Item 7-1 DOE requests comment and recommendations for identifying high sales volume 

and large installed base application segments corresponding to specific 

applications for which the compressors used may have similar end-use air demand 

profiles. 

Item 7-2 DOE seeks recommendations on sources of data or analysis methods that would 

provide end-use air demand profiles for each of the equipment classes of 

compressors falling within the major application segments that are under 

consideration as potential regulated equipment. 

Item 7-3 DOE requests input on ways to characterize compressor sizing and selection 

practices for different equipment classes and applications. 

Item 7-4 DOE requests comment on the degree of equipment oversizing that is prevalent in 

different application segments. 

Item 7-5 DOE seeks comment on methods for determining nominal (non-market segment 

specific) end-use air demand profiles for compressor equipment classes under 

consideration in this document. 

Item 7-6 DOE seeks comment on the current penetration level of variable speed drives 

(VSDs) in the installed base of equipment in each application segment for the 

various types of compressors that DOE is considering regulating. DOE also seeks 

comment on the baseline condition for applications without VSDs, such as 

running at full load, use of controls, etc. 

Item 7-7 DOE requests comment and recommendation on the range and number of sizes 

over which the analysis should be carried out for each specific compressor 

capacity in actual cubic feet per minute (acfm), and rated air pressure in pounds 

per square inch gauge (psig). 

Item 7-8 DOE requests comment and estimates to establish the mean value and the ranges 

of likely values for transmission, motor, motor control, and compressor control 

efficiencies, as well as the impact of a control on compressor and motor 

performance and efficiency. 

Item 8-1 DOE seeks comment on whether installation costs for air compressors increase 

with higher-efficiency equipment. 

Item 8-2 DOE invites comment on whether repair costs may change for more efficient air 

compressors. 
52 

Item 8-3 DOE seeks comment on appropriate air compressor lifetimes for the equipment 

proposed in this rulemaking, as well as data regarding correlation between 

compressor hours of use and air compressor lifetime. 

Item 8-4 DOE seeks input on the proposed approach for estimating discount rates for air 

compressor customers. 

Item 9-1 DOE seeks comment on the shipments forecast methodology. DOE invites 

comments regarding the selection of appropriate economic drivers. 

Item 9-2 DOE requests historical shipments data for the equipment proposed in this 

framework, with further breakdowns where available including, but not limited to, 

delivered air volume (acfm), air pressures (psig), motor HP, and/or efficiency. 

Item 9-3 DOE seeks comment on how an energy conservation standard for air compressors 

might impact shipments of the equipment. 

Item 10-1 DOE seeks comment on how the efficiency of air compressors is likely to change 

over the long run in the absence of standards. 

Item 10-2 DOE seeks comment on the likelihood of increased air compressor usage as a 

direct result of improved air compressor efficiency. 

Item 11-1 DOE seeks comment on what, if any, user subgroups are appropriate in 

considering standards for air compressors. 

Item 12-1 DOE seeks comment on appropriate manufacturer subgroups, if any, that DOE 

should consider in a manufacturer subgroup analysis for commercial and 

industrial air compressors. 

Item 12-2 DOE seeks comment on small businesses that could be impacted by energy 

conservation standards for commercial and industrial air compressors, and what 

the impacts on small businesses of potential standards might be. 

Item 12-3 What other regulations or pending regulations should DOE consider in its 

examination of cumulative regulatory burden? 

Item 13-1 DOE seeks comment from interested parties about its proposed use of NEMS-BT 

to conduct the utility impact analysis. 

Item 14-1 DOE seeks comment about its proposed approach to assessing national 

employment impacts. 

Item 15-1 DOE seeks comment about its approach to conduct the emissions analysis for the 

equipment that would be covered under this rulemaking. 

Item 16-1 DOE requests comments about the approach it plans to use for estimating 

monetary benefits associated with emissions reductions. 
53 

 
54 

REFERENCES 

1 International Organization for Standardization (ISO), ISO 12942, Compressors—

Classification— Complementary information to ISO 5390, International Organization for 

Standardization (ISO), 2012, 

2 Van Holsteijn en Kemna B.V. (VHK), Task 2 Economic and Market Analysis European 

Commission, Brussels/ Delft, 18 February 2013 2013, 

3 Van Holsteijn en Kemna B.V. (VHK), Task 4 Technical analysis existing products, 

European Commission, Brussels/ Delft, 18 February 2013 2013, 

4 Van Holsteijn en Kemna B.V. (VHK), Task 1 Product Definition, Standards and 

Legislation European Commission, Brussels/ Delft, 18 February 2013 2013, 

5 International Organization for Standardization (ISO), ISO 1217, Displacement 

compressors— Acceptance tests, International Organization for Standardization (ISO), 

2009, 

6 International Organization for Standardization (ISO), ISO 5389, Turbocompressors — 

Performance test code, International Organization for Standardization (ISO), 2005, 

7 Census Bureau, Air and Gas Compressor Manufacturing, U.S. Department of 

Commerce, Washington, DC, 2007, 

8 Census Bureau, Industrial Machinery and Equipment Merchant Wholesalers, U.S. 

Department of Commerce, Washington, DC, 2007, 

9 California Investor-Owned Utilities Codes and Standards Enhancement, Measure 

Information Template – Compressed Air Systems, California Public Utilities 

Commission, 2011, 

http://www.energy.ca.gov/title24/2013standards/prerulemaking/documents/2011-08-

17_workshop/documents/8_Fractional_Motors.pdf, Last accessed: 07-16-2013 

10 Peter Radgen and Edgar Blaustein, Compressed Air Systems in the European Union - 

Energy, Emissions, Sanvings Potential and Policy Acitions, Stuttgart, 2001, 

11 San Diego Gas and Electric, Southern California Gas Company, Southern California 

Edison, and Pacific Gas and Electric Company, Compressed Air Systems - 2013 

California Building Energy Efficiency Standards, 2011, 

12 Manufacturing and Construction Division Census Bureau, Pumps (except hydraulic) and 

Compressors - 2001 - 2010, U.S. Department of Commerce, Washington, DC, 2001 - 

2010, 
55 

13 Manufacturing and Construction Division Census Bureau, Pumps (except hydraulic) and 

Compressors - 1960 - 2000, U.S. Department of Commerce, Washington, DC, 1960 - 

2000, 

14 David M. McCulloch, Compressed Air and Gas Handbook, L. Schraff, Ed., Sixth ed. 

Cleveland, OH.: Compressed Air and Gas Institute, 2003. 

15 William Scales and David M. McCulloch, Best Practices for Compressed Air Systems, 

Second ed.: Compressed Air Challenge, 2009.