DOE/EA-1643 

ENVIRONMENTAL ASSESSMENT FOR 

10 CFR Part 431 

Energy Conservation Program for Commercial and Industrial Equipment: Energy 

Conservation Standards for Commercial Ice-Cream Freezers; Self-Contained 

Commercial Refrigerators, Commercial Freezers, and Commercial RefrigeratorFreezers without Doors; and Remote Condensing Commercial Refrigerators, 

Commercial Freezers, and Commercial Refrigerator-Freezers 

December 2008 
CHAPTER 16. ENVIRONMENTAL IMPACT ANALYSIS 

TABLE OF CONTENTS 

16.1 INTRODUCTION ............................................................................................................ 16-1 

16.2 AIR QUALITY ANALYSIS ............................................................................................ 16-1 

16.2.1 Air Pollutant Descriptions.................................................................................. 16-1 

16.2.2 Air Quality Regulation ....................................................................................... 16-3 

16.2.3 Global Climate Change ...................................................................................... 16-5 

16.2.4 Analytical Methods for Air Quality ................................................................... 16-9 

16.2.5 Effects on Power Plant Emissions ................................................................... 16-11 

16.2.6 Effects on Upstream Fuel-Cycle Emissions .................................................... 16-12 

16.2.7 Economic Valuation of Emissions Reductions ................................................ 16-13 

16.3 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL 

RESOURCES ................................................................................................................. 16-19 

16.4 SOCIOECONOMIC IMPACTS ..................................................................................... 16-20 

16.5 ENVIRONMENTAL JUSTICE IMPACTS ................................................................... 16-20 

16.6 NOISE AND AESTHETICS .......................................................................................... 16-20 

16.7 SUMMARY OF ENVIRONMENTAL IMPACTS ........................................................ 16-21 

LIST OF TABLES 

Table 16.2.1 Impact of the CRE Efficiency Standard on Cumulative Energy-Related 

Emissions Reductions of CO2 between 2012 and 2042 by Trial Standard Level 

(TSL).................................................................................................................. 16-8 

Table 16.2.2 Estimates of Savings from CO2 Emissions Reductions under CRE Trial 

Standard Levels at 7% Discount Rate and 3% Discount Rate ......................... 16-15 

Table 16.2.3 Estimates of Savings from Reductions of NOx and Hg under CRE Trial 

Standard Levels at a 7% Discount Rate ........................................................... 16-17 

Table 16.2.4 Preliminary Estimates of Savings from Reductions of NOx and Hg under CRE 

Trial Standard Levels at a 3% Discount Rate .................................................. 16-17 

Table 16.4.1 Mean Life-Cycle Cost Savings for All Customers and Sub-Group, 

Independent Convenience Stores and Small Grocery, VCT.RC.L Example ... 16-20 

Table 16.7.1 Environmental Impact Analysis Results Summary ......................................... 16-22 

16-i 
16-ii 
 

 

CHAPTER 16. ENVIRONMENTAL IMPACT ANALYSIS 

16.1 INTRODUCTION 

This chapter describes potential environmental effects that may result from amended 

energy conservation standards for commercial refrigeration equipment (CRE). The U.S. 

Department of Energy (DOE) proposed energy conservation standards are not site-specific, and 

would apply to all 50 States and U.S. territories. Therefore, none of the proposed standards 

would impact land uses, cause any direct disturbance to the land, or directly affect biological 

resources in any one area. 

All of the potential trial standard levels (TSLs) are expected to reduce energy 

consumption in comparison to a baseline efficiency level. These changes in the demand for 

electricity and the costs of achieving these savings are the primary drivers in analyzing 

environmental effects from imposing CRE standards. Estimates of source energy savings can be 

found in the utility impact analysis in Chapter 14 of this Technical Support Document (TSD). 

Detailed discussion on TSLs can be found in Chapter 9 of this TSD. 

The primary impact of the TSLs is in air quality resulting from changes in power plant 

operations and capacity additions. Therefore, much of this chapter describes the air quality 

analysis. The latter part of the chapter describes potential impacts to other environmental 

resources. 

16.2 AIR QUALITY ANALYSIS 

The primary focus of the environmental analysis is the impact on air quality of amended 

energy conservation standards for Commercial Refrigeration Equipment. The outcomes of the 

environmental analysis are driven by changes in power plant types and quantities of electricity 

generated under each of the alternatives. Changes in generation are described in the utility 

impact analysis in Chapter 14. 

16.2.1 Air Pollutant Descriptions 

For each of the TSLs, DOE calculated total power-sector emissions based on output from 

the NEMS-BT model (see Chapter 14). This analysis considers four pollutants: nitrogen oxides 

(NOx), mercury (Hg), sulfur dioxide (SO2), and carbon dioxide (CO2). An air pollutant is any 

substance in the air that can cause harm to humans or the environment. Pollutants may be 

natural or man-made (i.e., anthropogenic) and may take the form of solid particles (i.e., 

particulates or particulate matter), liquid droplets, or gases.a 

Sulfur Dioxide (SO2) 

In addressing SO2 emissions, the Clean Air Act Amendments of 1990 set an SO2 

emissions cap on all power generation, but permitted flexibility among generators through the 

use of emissions allowances and tradable permits. This SO2 trading process (sometimes called 

a

 More information on air pollution characteristics and regulations is available on the U.S. Environmental Protection 

Agency (EPA) website at www.epa.gov. 

16-1
 
“cap and trade”) implies that the standard will have no affect on total physical emissions because 

emissions will always be at, or near, the allowed emissions ceiling. Consequently, there is no 

direct SO2 environmental benefit from a reduction in electricity use due to the proposed energy 

conservation standards, as long as there is enforcement of the emissions ceiling. But to the 

extent reduced power generation demand decreases the demand for and price of emissions 

allowance permits, there may be an environmentally related economic benefit from the proposed 

energy conservation standards reducing SO2 emissions allowance demand. Furthermore, over 

time, if emissions decline, there is greater flexibility in reducing the ceiling amount. However, 

since DOE does not anticipate a change in SO2 emissions, SO2 emission results are not reported 

in this Chapter. 

Nitrogen Oxides (NOx) 

Nitrogen oxides, or NOx, are the generic term for a group of highly reactive gases, all of 

which contain nitrogen and oxygen in varying amounts. Many of the nitrogen oxides are 

colorless and odorless. However, one common pollutant, nitrogen dioxide (NO2), along with 

particles in the air, can often be seen as a reddish-brown layer over many urban areas. NO2 is the 

specific form of NOx reported in this document. NOx is one of the main ingredients involved in 

the formation of ground-level ozone, which can trigger serious respiratory problems. It can 

contribute to the formation of acid rain, and can impair visibility in areas such as national parks. 

NOx also contributes to the formation of fine particles that can impair human health. 

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combustion 

process. The primary man-made sources of NOx are motor vehicles, electric utilities, and other 

industrial, commercial, and residential sources that burn fossil fuels. NOx can also be formed 

naturally. Electric utilities account for about 22 percent of NOx emissions in the United States. 

Mercury 

Coal-fired power plants emit mercury found in coal during the burning process. While 

coal-fired power plants are the largest remaining source of human-generated mercury emissions 

in the United States, they contribute very little to the global mercury pool or to contamination of 

U.S. waters. U.S. coal-fired power plants emit mercury in three different forms: oxidized 

mercury (likely to deposit within the United States); elemental mercury, which can travel 

thousands of miles before depositing to land and water; and mercury that is in particulate form. 

Atmospheric mercury is deposited on land, lakes, rivers, and estuaries through rain, snow, and 

dry deposition. Once there, it can transform into methylmercury and accumulate in fish tissue 

through bioaccumulation. 

Americans are exposed to methylmercury primarily by eating contaminated fish. Because 

the developing fetus is the most sensitive to the toxic effects of methylmercury, women of 

childbearing age are regarded as the population of greatest concern. Children exposed to 

methylmercury before birth may be at increased risk of poor performance on neurobehavioral 

tasks, such as those measuring attention, fine motor function, language skills, visual-spatial 

abilities, and verbal memory. 

16-2
 
Carbon Dioxide (CO2) 

Carbon dioxide (CO2) is not a regulated or criteria pollutant (see below), but it is of 

interest because of its classification as a greenhouse gas (GHG) and its impact on global climate 

change. GHGs trap the sun’s radiation inside the Earth’s atmosphere and either occur naturally 

in the atmosphere or result from human activities. Naturally occurring GHGs include water 

vapor, CO2, methane (CH4), nitrous oxide (N2O), and ozone (O3). Human activities, however, 

add to the levels of most of these naturally occurring gases. For example, CO2 is emitted to the 

atmosphere when solid waste, fossil fuels (oil, natural gas, and coal), wood, and wood products 

are burned. During the past 20 years, about three-quarters of anthropogenic (i.e., human-made) 

CO2 emissions resulted from burning fossil fuels. 

Concentrations of CO2 in the atmosphere are naturally regulated by numerous processes, 

collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and 

the land and oceans is dominated by natural processes, such as plant photosynthesis. While these 

natural processes can absorb some of the anthropogenic CO2 emissions produced each year, 

billions of metric tons are added to the atmosphere annually. The Earth’s imbalance between 

emissions and absorption results in the continuing growth of GHGs in the atmosphere, causing 

surface air temperatures and sub-surface ocean temperatures to rise. In the United States, CO2 

emissions from both energy generation and industrial processes account for 84.6 percent of total 

U.S. GHG emissions.7 

16.2.2 Air Quality Regulation 

In 1990, EPA amended its regulations implementing Title VI of the Clean Air Act to 

phase out in 2010 chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFC) 

refrigerants. As a result, the refrigeration industry is transitioning to hydrofluorocarbon-based 

(HFC-based) refrigerants in its equipment. For the commercial refrigeration equipment covered 

in this rulemaking, DOE understands that much of the industry has already been using HFCbased refrigerants for both remote condensing and self-contained equipment. Therefore, DOE 

considered the effects of HFC-based refrigerants from the outset by using HFC refrigerants in its 

analyses. For remote condensing equipment, the compressor efficiency values used in its 

analysis are based on ARI 1200, which uses an HFC-based compressor rack with R-404a 

refrigerant. Likewise for self-contained equipment, DOE’s analysis uses R-134a and R-404a, 

both HFC-based refrigerants. The anticipated use of these refrigerants is not an impact of this 

rulemaking. Therefore, the effects of this conversion are outside the scope of this environmental 

analysis. 

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required 

to control. EPA has set national air quality standards for six common pollutants (also referred to 

as “criteria” pollutants), two of which are SO2 and NOx. Also, the Clean Air Act Amendments of 

1990 gave EPA the authority to control acidification and to require operators of electric power 

plants to reduce emissions of SO2 and NOx. Title IV of the 1990 amendments established a 

cap-and-trade program for SO2 that is intended to help control acid rain. This cap-and-trade 

program serves as a model for more recent programs with similar features. 

16-3
 
 

 

In 2005, EPA issued the Clean Air Interstate Rule (CAIR) under sections 110 and 111 of 

the Clean Air Act (40 CFR Parts 51, 96, and 97). CAIR would permanently cap emissions of 

SO2 and NOx in the eastern United States. CAIR would achieve large reductions of SO2 and/or 

NOx emissions across 28 eastern states and the District of Columbia. Under CAIR, states must 

achieve the required emission reductions using one of two compliance options: (1) meet an 

emission budget for each regulated state by requiring power plants to participate in an EPAadministered interstate cap-and-trade system that caps emissions in two stages, or (2) meet an 

individual state emissions budget through measures of the state’s choosing. Phase 1 caps for 

NOx are to be in place in 2009. Phase 1 caps for SO2 are to be in place in 2010. The Phase 2 

caps for both pollutants are due in 2015. 

Also in 2005, EPA issued the final rule entitled “Standards of Performance for New and 

Existing Stationary Sources: Electric Steam Generating Units,” under sections 110 and 111 of 

the Clean Air Act (40 CFR Parts 60, 63, 72, and 75). This rule, also called the Clean Air 

Mercury Rule, is closely related to the CAIR and establishes standards of performance for 

mercury emissions from new and existing coal-fired electric utility steam generating units. The 

Clean Air Mercury Rule regulates mercury emissions from coal-fired power plants. The rule 

creates a market-based cap-and-trade program that will permanently cap utility mercury 

emissions in two phases. The first phase of the rule sets a cap of 38 tons per year and, due to 

incentives created by the cap-and-trade program, EPA projects that emissions will decrease from 

48 tons to 31 tons beginning in 2010. Emissions will continue to decline thereafter until they are 

reduced to the second phase cap of 15 tons when the program is fully implemented, beginning in 

2015. 

In 2007, the U.S. Supreme Court ruled that the EPA had authority to regulate CO2 

emissions. EPA is currently formulating these regulations (Massachusetts v. Environmental 

Protection Agency, No. 05-1120, (549 U.S. 2007)). 

On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. 

Circuit) issued its decision in North Carolina v. Environmental Protection Agency,

b

 in which the 

court vacated the CAIR rule. Even though the D.C. Circuit vacated CAIR, DOE notes that the 

D.C. Circuit left intact EPA's 1998 NOx SIP Call rule, which capped seasonal (summer) NOx 

emissions from electric generating units and other sources in 23 jurisdictions, and gave those 

jurisdictions the option to participate in a cap and trade program. 63 FR 57356, 57359 (Oct. 27, 

1998).c

 The SIP Call rule may provide a similar, although less extensive, regional cap and may 

b

 Case No. 05-1244, 2008 WL 2698180 at *1 (D.C. Cir. July 11, 2008). 

c

 In the NOx SIP Call rule, EPA found that sources in the District of Columbia and 22 “upwind” states were emitting 

NOx (an ozone precursor) at levels that significantly contributed to “downwind” states not attaining the ozone 

NAAQS or at levels that interfered with states in attainment maintaining the ozone NAAQS. To ensure that 

downwind states attain or continue to attain the ozone NAAQS, EPA established a region-wide cap for NOx 

emissions from certain large combustion sources and set a NOx emissions budget for each State. Unlike the cap that 

CAIR would have established, the NOx SIP Call Rule’s cap only constrains seasonal (summertime) emissions. To 

comply with the NOx SIP Call Rule, states could elect to participate in the NOx Budget Trading Program. Under 

this program, each emission source is required to have one allowance for each ton of NOx emitted during the ozone 

season. States have flexibility in how they allocate allowances through their State Implementation Plans, but states 

must remain within the EPA-established budget. Emission sources are allowed to buy, sell, and bank NOx 

allowances as appropriate. On April 16, 2008, EPA determined that Georgia is no longer subject to the NOx SIP 

Call rule. 73 FR 21528 (April 22, 2008). 

16-4
 
 

limit actual reduction in NOx emissions from revised standards occurring in states participating 

in the SIP Call rule. However, the possibility that the SIP Call rule would have the same effect 

as CAIR is highly uncertain. 

16.2.3 Global Climate Change 

Climate change has evolved into a matter of global concern because it is expected to have 

widespread adverse effects on natural resources and systems. A growing body of evidence 

points to anthropogenic sources of GHGs, such as carbon dioxide (CO2), as major contributors to 

climate change. Because this Rule, if finalized, will likely decrease CO2 emission rates from the 

fossil fuel sector in the United States, the Department here examines the impacts and causes of 

climate change and then the potential impact of the Rule on CO2 emissions and global warming. 

Impacts of Climate Change on the Environment 

Climate is usually defined as the average weather, over a period ranging from months to 

many years. Climate change refers to a change in the state of the climate, which is identifiable 

through changes in the mean and/or the variability of its properties (e.g., temperature or 

precipitation) over an extended period, typically decades or longer. 

The World Meteorological Organization and United Nations Environment Programme 

(UNEP) established the Intergovernmental Panel on Climate Change (IPCC) to provide an 

objective source of information about climate change. According to the IPCC Fourth 

Assessment Report (IPCC Report), published in 2007, climate change is consistent with 

observed changes to the world’s natural systems; the IPCC expects these changes to continue. 

Changes that are consistent with warming include warming of the world’s oceans to a 

depth of 3000 meters; global average sea level rise at an average rate of 1.8 mm per year from 

1961 to 2003; loss of annual average Arctic sea ice at a rate of 2.7 percent per decade, changes 

in wind patterns that affect extra-tropical storm tracks and temperature patterns, increases in 

intense precipitation in some parts of the world as well as increased drought and more frequent 

heat waves in many locations worldwide, and numerous ecological changes. 

Looking forward, the IPCC describes continued global warming of about 0.2°C per 

decade for the next two decades under a wide range of emission scenarios for carbon dioxide 

(CO2), other GHGs, and aerosols. After that period, the rate of increase is less certain. The IPCC 

Report describes increases in average global temperatures of about 1.1°C to 6.4°C at the end of 

the century relative to today. These increases vary depending on the model and emissions 

scenarios. 

The IPCC Report describes incremental impacts associated with the rise in temperature. 

At ranges of incremental increases to the global average temperature, IPCC reports, with either 

high or very high confidence, that there is likely to be an increasing degree of impacts (e.g., coral 

reef bleaching, loss of wildlife habitat, loss to specific ecosystems, and negative yield impacts 

for major cereal crops in the tropics), but also projects with likely beneficial impacts on crop 

yields in temperate regions. 

16-5
 
 

Causes of Climate Change 

The IPCC Report states that the world has warmed by about 0.74°C in the last 100 years. 

The IPCC Report finds that most of the temperature increase since the mid-20th century is very 

likely due to the increase in anthropogenic concentrations of CO2 and other long-lived GHGs 

(e.g., methane and nitrous oxide in the atmosphere) rather than from natural causes. 

Increasing the CO2 concentration partially blocks the earth’s re-radiation of captured 

solar energy in the infrared band, inhibits the radiant cooling of the earth, and thereby alters the 

energy balance of the planet, which gradually increases its average temperature. The IPCC 

Report estimates that CO2 currently makes up about 77 percent of the total CO2-equivalentd 

global warming potential in GHGs emitted from human activities, with the vast majority (74 

percent) of the CO2 attributable to fossil fuel use. For the future, the IPCC Report describes a 

wide range of GHG emissions scenarios. However, under each scenario, CO2 would continue to 

comprise above 70 percent of the total global warming potential. 

d GHGs differ in their warming influence (radiative forcing) on a global climate system due to their different 

radiative properties and lifetimes in the atmosphere. These warming influences may be expressed through a 

common metric based on the radiative forcing of CO2, i.e., CO2-equivalent. CO2 equivalent emission is the amount 

of CO2 emission that would cause the same- time integrated radiative forcing, over a given time horizon, as an 

emitted amount of other long- lived GHG or mixture of GHGs. 

16-6
 
 

 

 

Stabilization of CO2 Concentrations 

Unlike many traditional air pollutants, CO2 mixes thoroughly in the entire atmosphere 

and is long-lived. The residence time of CO2 in the atmosphere is long compared to the emission 

processes. Therefore, the global cumulative emissions of CO2 over long periods determine CO2 

concentrations because it takes hundreds of years for natural processes to remove the CO2. 

Globally, 49 billion metric tons of CO2 –equivalent of anthropogenic (man-made) GHGs are 

emitted every year. Of this annual total, fossil fuels contribute about 29 billion metric tons of 

CO2.

e 

Researchers have focused on considering atmospheric CO2 concentrations that likely will 

result in some level of global climate stabilization, and the emission rates associated with 

achieving the “stabilizing” concentrations by particular dates. They associate these stabilized 

CO2 concentrations with temperature increases that plateau in a defined range. For example, at 

the low end, the IPCC Report scenarios target CO2 stabilized concentrations range between 350 

ppm and 400 ppm (essentially today’s value)—because of climate inertia, concentrations in this 

low end range would still result in temperatures projected to increase 2.0°C to 2.4°C above 

pre-industrial levelsf

 (about 1.3oC to 1.7oC above today’s levels). To achieve concentrations 

between 350 ppm to 400 ppm, the IPCC scenarios present that there would have to be a rapid 

downward trend in total annual global emissions of GHGs to levels that are 50 percent to 85 

percent below today’s annual emission rates by no later than 2050. Since it is assumed that there 

would continue to be growth in global populations and substantial increases in economic 

production, the scenarios identify required reductions in GHG emissions intensity (emissions per 

unit of output) of more than 90 percent. However, even at these rates, the scenarios describe 

some warming and some climate change is projected due to already accumulated CO2 and GHGs 

in the atmosphere. 

The Beneficial Impact of the Rule on CO2 Emissions 

If finalized, it is anticipated that the Rule will reduce energy-related CO2 emissions, 

particularly those associated with energy consumption in buildings. In the United States, the 

U.S. Energy Information Administration (EIA) reports in its 2008 Annual Energy Outlook (AEO 

2008)g that U.S. annual energy-related emissions of CO2 in 2005 were about 5.98 billion metric 

tons (about 20 percent of the world energy-related CO2 emissions and about 12 percent of total 

global GHG emissions), of which 2.32 billion tons were attributed to residential and commercial 

buildings sector (including related energy–using equipment, such as CRE). Most of the GHG 

emissions attributed to residential and commercial buildings are emitted from fossil fuel-fired 

power plants that generate electricity used in this sector. In the AEO2008 reference case, EIA 

projected that annual energy-related CO2 emissions would grow from 6.0 billion metric tons in 

2005 to 6.85 billion metric tons in 2030, an increase of 14.5 percent (see Table 16.2., based on 

AEO 2008), while emissions attributable to buildings would grow to 2.92 billion tons, an 

increase of 26.1 percent. 

e

 Other non-fossil fuel contributors include CO2 emissions from deforestation and decay from agriculture biomass; 

agricultural and industrial emissions of methane; and emissions of nitrous oxide and fluorocarbons.

f IPCC Working Group 3 Table TS 2
 g

 www.eia.doe.gov/oiaf/archive/aeo08/index.html
 

16-7
 
 

 

 

As computed for the AEO 2008 reference case, the cumulative U.S. energy-related CO2 

emissions between 2012 and 2042 are described at about 209 billion metric tons. The estimated 

cumulative CO2 emission reductions from a CRE Efficiency Standard (shown as a range of 

alternative Trial Standard Levels) during this same 30-year period are indicated in Table 16.2.1. 

The estimated CO2 emission reductions in Table 16.2.1 are calculated using NEMS-BT model. 

As noted in Chapter 14, NEMS-BT model forecasts end in year 2030. Energy and emissions 

impacts beyond 2030 were extrapolated for this rulemaking. 

Table 16.2.1 Impact of the CRE Efficiency Standard on Cumulative Energy-Related 

Emissions Reductions of CO2 between 2012 and 2042 by Trial Standard 

Level (TSL) 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

CO2 (Million 

metric tons) 8.5 32.8 50.7 52.6 66.0 

The estimated savings shown in Table 16.2.1, which are at most 0.01 percent of U.S. 

energy-related emissions of CO2 (for TSL 5), comprise an even smaller fraction of U.S. 

emissions of GHGs and of world emissions of GHGs. However, the savings would likely reduce 

overall U.S. CO2 emissions, as compared to U.S. CO2 emissions absent an increase in the 

required efficiency of CRE. 

The Incremental Impact of the Rule on Climate Change 

It is difficult to correlate specific emission rates with atmospheric concentrations of CO2 

and specific atmospheric concentrations with future temperatures because the IPCC Report 

describes a clear lag in the climate system between any given concentration of CO2 (even if 

maintained for long periods) and the subsequent average worldwide and regional temperature, 

precipitation, and extreme weather regimes. For example, a major determinant of climate 

response is “equilibrium climate sensitivity,” a measure of the climate system response to 

sustained radioactive forcing. It is defined as the global average surface warming following a 

doubling of CO2 concentrations. The IPCC Report describes its estimated numeric value as 

about 3°C, but the likely range of that value is 2°C to 4.5°C, with cloud feedbacks the largest 

source of uncertainty. Further, as illustrated above, the IPCC Report scenarios for stabilization 

rates are presented in terms of a range of concentrations, which then correlates to a range of 

temperature changes. Thus, climate sensitivity is a key uncertainty for CO2 mitigation scenarios 

that aim to meet specific temperature levels. 

Because of how complex global climate systems are, it is difficult to know to what extent 

and when particular CO2 emissions rates will impact global warming. However, as Table 16.2.1 

indicates, the Rule will likely reduce CO2 emissions rates from the fossil fuel sector. 

16-8
 
 

16.2.4 Analytical Methods for Air Quality 

NEMS-BT incorporates capabilities to assess compliance with SO2 and NOx restrictions 

specified in the Clean Air Act and its amendments. Clean air act provisions include New Source 

Performance Standards and Revised New Source Performance Standards. NEMS-BT also 

includes provisions for the Clean Air Interstate Rule, which imposes stricter restrictions on SO2 

and NOx for some states, and the Clean Air Mercury Rule, which imposes a national mercury 

constraint. 

Coal-fired electric generation is the single largest source of electricity in the United 

States. Because the mix of coals used significantly affects the emissions produced, the model 

includes a detailed representation of coal supply. The model considers the rank of the coal as 

well as the sulfur and mercury contents of the fuel used when determining optimal dispatch. 

The CAIR and mercury rules allow for emissions banking for NOx and mercury, which is 

simulated in the NEMS-BT model. Emissions banking refers to regulated power plant operators 

releasing fewer emissions than what they have allowances for in an earlier year in order to 

release more emissions than permitted by their allowances in a later year. If a power plant 

produces fewer emissions than they are allotted in one year, the regulations (and the NEMS-BT 

model) allow the operator to over-emit in a later year by this same amount. This banking activity 

can mean that outer years end up with levels of emissions that may be greater than anticipated or 

targeted. However, the bank tends to encourage greater short-term emissions reductions. 

The value of an emission allowance within the NEMS-BT model is assumed to be the 

market-clearing price, which is based on the revenue requirements for the capital and operating 

expenses associated with compliance. Banking would lower the overall cost of compliance if the 

discounted, present value of the compliance costs in a given year is less than the corresponding 

cost in a later year. Similarly, banking mercury allowances may reduce the overall cost of 

complying with the mercury emissions limits specified in the Clean Air Mercury Rule. 

Within the NEMS-BT model, planning options for achieving emissions restrictions in the 

Clean Air Act Amendments include installing pollution control equipment on existing power 

plants and building new power plants with low emission rates. These methods for reducing 

emission are compared to dispatching options, such as fuel switching and allowance trading. 

Environmental regulations also affect capacity expansion decisions. For instance, new plants are 

not allocated emissions allowances according to the Clean Air Act Amendments. Consequently, 

the decision to build a particular capacity type must consider the cost (if any) of obtaining 

sufficient allowances. This could involve purchasing allowances or over complying at an 

existing unit. 

Modeling of SO2 trading tends to imply that the physical emissions effects will be zero, 

as long as emissions are at the allowed ceiling. Because SO2 has been regulated with emissions 

caps for more than a decade, and no emissions reductions are reported from the NEMS-BT 

forecast model, DOE does not report SO2 results here. This assumption is consistent with 

previous DOE environmental assessment documents.1 

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As with SO2 emissions, caps on NOx and mercury emissions will possibly result in no 

physical emissions effects resulting from equipment energy conservation standards, but reduced 

power generation demand will have the benefit of generating net emissions allowance credits 

relative to a base case of no energy conservation standard. It was not possible to remove the 

modeling of emission caps for NOx and mercury emissions from the NEMS-BT model to 

simulate the impact on emissions under an uncapped scenario. Therefore, DOE did not use the 

NEMS-BT model output to estimate the NOx and mercury emissions reductions in this analysis. 

DOE instead established a range of possible NOx reductions for each TSL considered.h 

DOE’s low estimate for NOx emission reductions was based on the emission rate of the 

cleanest new natural gas combined-cycle power plant available for electricity generated, under 

an assumption that energy conservation standards would displace the generation of only the 

cleanest available fossil fuels. DOE used the emission rate, specified as 0.0341 kilo-tons of NOx 

emitted per TWh of electricity generated, associated with an advanced natural gas combinedcycle power plant, as specified by NEMS-BT. To estimate the reduction in NOx emissions, DOE 

multiplied this emission rate by the reduction in electricity generation due to the new energy 

conservation standards considered. DOE’s high estimate for an emissions rate was 0.843 kilotons of NOx per TWh based on a nationwide NOx emission rate for all electrical generation 

plants today. Use of such an emission rate assumes that displaced future generation from CRE 

standards comes from power plants no cleaner, in terms of NOx, emission than the plants that are 

being used currently to generate electricity. DOE based this emission rates on AEO2008 data for 

2006, when no regulatory or non-regulatory measures were in effect to limit NOx emissions. 

DOE multiplied this emission rate by the reduction in electricity generation for each TSL 

considered. 

Similar to the NOx emission reduction analysis, DOE established a range of Hg emission 

rates from existing electrical generation technologies to estimate the Hg emissions that could be 

reduced through standards. DOE’s low estimate assumed that future standards would displace 

electrical generation from natural gas-fired power plants, resulting in an effective emission rate 

of zero. The low-end emission rate is zero because natural gas-fired power plants have virtually 

zero Hg emissions associated with their operation. 

DOE’s high estimate was based on a nationwide mercury emission rate from AEO2008. 

Because power plant emission rates are a function of local regulation, scrubbers, and the mercury 

content of coal, it is extremely difficult to identify a precise high-end emission rate. Therefore, 

DOE believes the most reasonable estimate is based on the assumption that all displaced coal 

generation would have been emitting at the average emission rate for coal generation as specified 

by AEO2008. As noted previously, virtually all mercury emitted from electricity generation is 

from coal-fired power plants. DOE based the high end emission rate on the tons of mercury 

emitted per TWh of coal-generated electricity. Based on the emission rate for 2006, DOE 

h On December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is replaced by a rule 

consistent with the court's earlier opinion. North Carolina v. EPA, No. 05-1244, 2008 WL 5335481 (D.C. Cir. Dec. 

23, 2008). Given the uncertain nature of NOx emission regulation during the time that the CRE standards will be 

in effect, and DOE continued to report a range of potential NOx emission reductions using the methodology 

discussed in this chapter. 

16-10
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

derived a high-end emission rate of 0.0255 tons per TWh. To estimate the reduction in mercury 

emissions, DOE multiplied the emission rate by the reduction in coal-generated electricity due to 

the standards considered in the utility impact analysis as determined through the NEMS-BT 

modeling. 

16.2.5 Effects on Power Plant Emissions 

Table 16.2. shows reference power plant emissions in selected years. The AEO 2008 

Reference case emissions are the emissions shown by the NEMS-BT model to result if none of 

the TSLs are promulgated. Table 16.2.3 shows estimated changes in power plant emissions in 

selected years for all commercial refrigeration equipment analyzed for TSL 1 through TSL 5. 

Changes in NO2 and mercury emissions from power plants are shown in these tables. Changes in 

CO2 emissions from all sources are also shown in this table. 

Table 16.2.2 Power Sector Emissions Impacts Forecast for AEO2008 Reference Case 

NEMS-BT Results:* 

2005 2010 2015 2020 2025 2030 

CO2 (Million metric 

tons/year)** 5,982 6,012 6,225 6,390 6,575 6,843 

NOx (Thousand tons/year)† 3,639 2,338 2,112 2,112 2,142 2,169 

Hg (tons/year)† 51.72 37.24 24.19 18.48 16.69 15.41 

* NOx and Hg reported in short tons, CO2 reported in metric tons 

** Comparable to Table A18 of AEO2008: Electric Generators 

† Comparable to Table A8 of AEO2008: Emissions 

Table 16.2.3 Power Sector Emissions Impact Forecasts for Commercial Refrigeration 

Equipment 

NEMS-BT Results: Difference from Reference Case 

Extrapolation 

2015 2020 2025 2030 2035 2040 2042 

Trial Standard Levels 1 

CO2 (Million metric tons/year) -0.164 -0.334 -0.374 -0.285 -0.285 -0.285 -0.285 

NOx (Thousand tons/year)

 High -0.1518 -0.3636 -0.5238 -0.6324 -0.6324 -0.6324 -0.6324

 Low -0.0061 -0.0147 -0.0212 -0.0256 -0.0256 -0.0256 -0.0256 

Hg (tons/year)

 High -0.0038 -0.0079 -0.0094 -0.0081 -0.0081 -0.0081 -0.0081 

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 

Trial Standard Level 2 

CO2 (Million metric tons/year) -0.631 -1.284 -1.439 -1.095 -1.095 -1.095 -1.095 

NOx (Thousand tons/year)

 High -0.5837 -1.3980 -2.0140 -2.4317 -2.4317 -2.4317 -2.4317

 Low -0.0236 -0.0565 -0.0815 -0.0984 -0.0984 -0.0984 -0.0984 

Hg (tons/year)

 High -0.0146 -0.0306 -0.0360 -0.0310 -0.0310 -0.0310 -0.0310 

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 

16-11
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 16.2.3 Power Sector Emissions Impact Forecasts for Commercial Refrigeration 

Equipment - Continued 

Trial Standard Level 3 

CO2 (Million metric tons/year) -0.977 -1.988 -2.228 -1.696 -1.696 -1.696 -1.696 

NOx (Thousand tons/year)

 High -0.904 -2.164 -3.118 -3.765 -3.765 -3.765 -3.765

 Low -0.0366 -0.0876 -0.1261 -0.1523 -0.1523 -0.1523 -0.1523 

Hg (tons/year)

 High -0.0226 -0.0473 -0.0558 -0.0480 -0.0480 -0.0480 -0.0480 

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 

Trial Standard Level 4 

CO2 (Million metric tons/year) -1.013 -2.061 -2.310 -1.758 -1.758 -1.758 -1.758 

NOx (Thousand tons/year)

 High -0.9371 -2.2443 -3.2332 -3.9037 -3.9037 -3.9037 -3.9037

 Low -0.0379 -0.0908 -0.1308 -0.1579 -0.1579 -0.1579 -0.1579 

Hg (tons/year)

 High -0.0234 -0.0491 -0.0578 -0.0497 -0.0497 -0.0497 -0.0497 

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 

Trial Standard Level 5 

CO2 (Million metric tons/year) -1.271 -2.585 -2.897 -2.205 -2.205 -2.205 -2.205 

NOx (Thousand tons/year)

 High -1.1753 -2.8147 -4.0549 -4.8959 -4.8959 -4.8959 -4.8959

 Low -0.0475 -0.1139 -0.1640 -0.1980 -0.1980 -0.1980 -0.1980 

Hg (tons/year)

 High -0.0294 -0.0615 -0.0725 -0.0624 -0.0624 -0.0624 -0.0624 

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 

* All results in metric tons, equivalent to 1.1 short tons and negative values refer to a reduction compared with the base case 

** Comparable to Table A17 of AEO2008: Electric Generators 

† Comparable to Table A8 of AEO2008: Emissions 

Table 16.2.3 shows the range in NOx emission changes calculated using the low and high 

estimate scenarios for specific years by TSL. Cumulative NOx emission reductions over the 

period from 2012-2042 range from 0.59 to 112.84 kilotons for the TSLs considered. These 

changes in NOx emissions are extremely small, ranging from 0.001 to 0.168 percent of the 

national base case emissions forecast by NEMS-BT, depending on the TSL. 

Table 16.2.3 also shows the estimated changes in Hg emissions calculated using the low 

and high estimate scenarios for specific years by TSL. Cumulative Hg emission reduction over 

the period from 2012 to 2042 range from from 0 to 1.732 tons for the TSLs considered. These 

changes in Hg emissions are extremely small, ranging from 0 to 0.003 percent of the national 

base case emissions forecast by NEMS-BT, depending on the TSL. 

16.2.6 Effects on Upstream Fuel-Cycle Emissions 

Fuel-cycle emissions refer to the emissions associated with the amount of energy used in 

the upstream production and downstream consumption of electricity, including energy used at 

the power plant. Upstream processes include the mining of coal or extraction of natural gas, 

16-12
 
 

physical preparatory and cleaning processes, and transportation to the power plant. The 

NEMS-BT does a thorough accounting of emissions at the power plant due to downstream 

energy consumption, but does not account for upstream emissions (i.e., emissions from energy 

losses during coal and natural gas production). Thus, this analysis reports only power plant 

emissions. 

However, previous DOE environmental assessment documents have developed 

qualitative estimates of effects on upstream fuel-cycle emissions. These emissions factors 

provide the reader with a sense of the possible magnitude of upstream effects. These upstream 

emissions would be in addition to emissions from direct combustion. Relative to the entire fuel 

cycle, estimates based on the work of Dr. Mark DeLuchi, and reported in earlier DOE 

environmental assessment documents, find that an amount approximately equal to 8 percent, by 

mass, of emissions (including SO2) from coal production are due to mining, preparation that 

includes cleaning the coal, and transportation from the mine to the power plant.1,2 Transportation 

emissions include emissions from the fuel used by the mode of transportation that moves the coal 

from the mine to the power plant. 

In addition, based on Dr. DeLuchi’s work, DOE estimated that approximately 14 percent 

of emissions from natural gas production result from upstream processes. Emission factor 

estimates and corresponding percentages of contributions of upstream emissions from coal and 

natural gas production, relative to power plant emissions, are shown in Table 16.2.4 for CO2 and 

NOx. The percentages are relative to power plant emissions and provide a means to estimate 

upstream emission savings based on changes in emissions from power plants. The percentage 

effects presented in Table 16.2.4 provide a qualitative approach to viewing effects on fuel cycle 

emissions. The previous section indicates slight overall reductions in CO2, and NOx. Thus, very 

small reductions in upstream emissions of air pollutant could be expected. This approach does 

not address mercury emissions. 

Table 16.2.4 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct 

Power Plant Combustion Emissions 

Percent of Coal Percent of Natural Gas 

Pollutant Combustion Emissions Combustion Emissions 

CO2 2.7 11.9 

NOx 5.8 40 

16.2.7 Economic Valuation of Emissions Reductions 

In addition to the estimation of reductions in physical emissions from an energy 

conservation standard, the analysis also considered the monetary benefits associated with these 

reductions. 

16-13
 
 

 

 

 

 

 

 

 

 

i

Carbon Dioxide (CO2) 

 During the preparation of its most recent review of the state of climate science, the 

Intergovernmental Panel on Climate Change (IPCC) identified various estimates of the present 

value of reducing CO2 emissions by 1 ton over the life that these emissions would remain in the 

atmosphere. The estimates reviewed by the IPCC spanned a range of values. In the absence of a 

consensus on any single estimate of the monetary value of CO2 emissions, DOE used an estimate 

identified by the study cited in Summary for Policymakers prepared by Working Group II of the 

IPCC’s Fourth Assessment Report to calculate the potential monetary value of the CO2 

reductions likely to result from the standards under consideration in this rulemaking. 

To put the potential monetary benefits from reduced CO2 emissions into a form that is 

likely to be most useful to decision makers and interested parties, the estimated year-by-year 

reductions in CO2 emissions were converted into monetary values. The resulting annual values 

were then discounted over the life of the affected appliances to the present using both 3 percent 

and 7 percent discount rates. DOE applied an annual growth rate of 2.4 percent to the value of 

the social cost of carbon (SCC), as suggested by the IPCC Working Group II (2007, p. 822), 

based on estimated increases in damages from future emissions reported in published studies. As 

a result, DOE is assigned a range for the SCC of $0 to $20 ($2007) per ton of CO2 emissions. 

These estimates were based on an assumption of no benefit to an average benefit value reported 

by the IPCC as the SCC.i The resulting estimates of the potential range of the present value of 

benefits associated with the reduction of CO2 emissions are reflected in Table 16.2.8. 

The IPCC estimate used as the upper bound value was derived from an estimate of the 

mean value of worldwide impacts from potential climate impacts caused by CO2 emissions, and 

not just the effects likely to occur within the United States. DOE considers that in estimating a 

monetary value for CO2 emission reductions, the values should be restricted to a representation 

of those costs/benefits likely to be experienced in the United States and expects that such values 

would be lower than comparable global values. There currently are no consensus estimates for 

the U.S. benefits likely to result from CO2 emission reductions. However, DOE believes it is 

appropriate to use U.S. benefit values, where available and not world benefit values, in its 

analysis.j 

 During the preparation of its most recent review of the state of climate science, the Intergovernmental Panel on 

Climate Change (IPCC) identified various estimates of the present value of reducing carbon-dioxide emissions by 

one ton over the life that these emissions would remain in the atmosphere. The estimates reviewed by the IPCC 

spanned a range of values. In the absence of a consensus on any single estimate of the monetary value of CO2 

emissions, DOE used the estimates identified by the study cited in Summary for Policymakers prepared by Working 

Group II of the IPCC’s Fourth Assessment Report to estimate the potential monetary value of CO2 reductions likely 

to result from standards finalized in this rulemaking. According to IPCC, the mean social cost of carbon (SCC) 

reported in studies published in peer-reviewed journals was $43 per ton of carbon. This translates into about $12 per 

ton of carbon dioxide. The literature review (Tol 2005) from which this mean was derived did not report the year in 

which these dollars were denominated. However, we understand this estimate was denominated in 1995 dollars. 

Updating that estimate 1995 estimate to 2007 dollars yields a SCC of $15 per ton of carbon dioxide. 

j

 In contrast, most of the estimates of costs and benefits of increasing the efficiency of CRE include only economic 

values of impacts that would be experienced in the U.S. For example, in determining impacts on manufacturers, 

DOE generally does not consider impacts that occur solely outside of the United States. 

16-14
 
 

 

 

Table 16.2.2 Estimates of Savings from CO2 Emissions Reductions under CRE Trial 

Standard Levels at 7% Discount Rate and 3% Discount Rate 

Trial Standard 

Level 

Estimated 

Cumulative CO2 

(Million metric tons) 

Emission Reductions 

Value of Estimated 

CO2 Emission 

Reductions Based on 

IPCC Range (Million 

2007$) at 7% 

Discount Rate 

Value of Estimated 

CO2 Emission 

Reductions Based on 

IPCC Range (Million 

2007$) at 3% 

Discount Rate 

TSL 1 8.52 $0 to $76.01 $0 to $154.73 

TSL 2 32.76 $0 to $292.26 $0 to $594.94 

TSL 3 50.71 $0 to $452.49 $0 to $921.10 

TSL 4 52.59 $0 to $469.19 $0 to $955.10 

TSL 5 65.95 $0 to $588.44 $0 to $1197.85 

Given the uncertainty surrounding estimates of the SCC, relying on any single study may 

be inadvisable since its estimate of the SCC will depend on many assumptions made by its 

authors. The Working Group II’s contribution to the Fourth Assessment Report of the IPCC 

notes that: 

The large ranges of SCC are due in the large part to differences in assumptions regarding climate 

sensitivity, response lags, the treatment of risk and equity, economic and non-economic impacts, 

the inclusion of potentially catastrophic losses, and discount rates.k 

DOE believes that the most appropriate monetary values for consideration in the 

development of efficiency standards are those drawn from studies that attempt to estimate the 

present value of the marginal economic benefits likely to result from reducing GHG emissions, 

rather than estimates that are based on the market value of emission allowances under existing 

cap-and-trade programs or estimates that are based on the cost of reducing emissions—both of 

which are largely determined by policy decisions that set the timing and extent of emission 

reductions and do not necessarily reflect the benefit of reductions. DOE also believes that the 

studies it relies upon generally should be studies that were the subject of a peer-review process 

and were published in reputable journals. 

The upper bound of the range used by DOE is based on Tol (2005), which reviewed 103 

estimates of the SCC from 28 published studies, and concluded that when only peer-reviewed 

studies published in recognized journals are considered, “that climate change impacts may be 

very uncertain but [it] is unlikely that the marginal damage costs of carbon dioxide emissions 

exceed $50 per ton carbon [comparable to a 2007 value of $20 per ton carbon dioxide when 

expressed in 2007 U.S. dollars with a 2.4 percent growth rate.]” 

k Climate Change 2007 – Impacts, Adaptation and Vulnerability 

Contribution of Working Group II to the Fourth Assessment Report of the IPCC, 17. Available at http://www.ipccwg2.org (last accessed Aug. 7, 2008). 

16-15
 
 

In setting a lower bound of $0, DOE agrees with the IPCC Working Group II (2007) report 

that “significant warming across the globe and the locations of significant observed changes in 

many systems consistent with warming is very unlikely to be due solely to natural variability of 

temperatures or natural variability of the systems” (pp. 9), and thus tentatively concludes that a 

global value of zero for reducing emissions cannot be justified. However, DOE also believes it 

is reasonable to allow for the possibility that the U.S. portion of the global cost of CO2 emissions 

may be quite low. In fact, some of the studies looked at in Tol (2005) reported negative values 

for the SCC. As stated in the NOPR, DOE is using U.S. benefit values, and not world benefit 

values, in its analysis and, further, DOE believes that U.S. domestic values will be lower than the 

global values. Additionally, the statutory criteria in EPCA do not require consideration of global 

effects. Therefore, DOE is using a lower bound of $0 per ton of CO2 emissions in estimating the 

potential benefits. 

Nitrogen Oxides (NOx) and Mercury 

DOE also investigated the monetary impact of efficiency standards on NOx, mercury 

(Hg), and SO2. National SO2 emissions are currently subject to a national cap-and-trade system 

by regulation, while NOx and Hg are not. For the range of NOx reduction estimates (and Hg 

reduction estimates), DOE estimated the national monetized benefits of emissions reductions 

based on environmental damage estimates from the literature. The effect of the SO2 caps is that 

equipment efficiency standards will have almost no effect on physical emissions of SO2, but if 

large enough, could cause incremental changes in the prices of emissions allowances in 

cap-and-trade emissions markets. 

Because of the court ruling discussed in Section 16.2.2, emissions of NOx from electricity 

generation are not controlled by the regulatory caps. For these emissions, DOE estimated the 

national monetized benefits of emissions reductions based on environmental damage estimates 

from the literature. Available estimates suggest a very wide range of monetary values for NOx 

emissions, ranging from $370 per ton to $3800 per ton of NOx from stationary sources, measured 

in 2001 dollarsl or a range of $432 per ton to $4441 per ton in 2007 dollars. 

DOE conducted research and determined that the basic science linking mercury 

emissions from power plants to impacts on humans is considered highly uncertain. However, 

DOE located two estimates of the environmental damages of mercury based on two estimates of 

the adverse impact of childhood exposure to methylmercury on IQ for American children, and 

subsequent loss of lifetime economic productivity resulting from these IQ losses. The high-end 

estimate is based on an estimate of the current aggregate cost of the loss of IQ that results from 

exposure of American children of U.S. power plant origin of $1.3 billion per year in year 2000$, 

which works out to $32.6 million per ton emitted per year (2007$).m The low-end estimate is 

l

 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, 

Local, and Tribal Entities. Office of Management and Budget Office of Information and Regulatory Affairs, 

Washington, D.C.
 m Trasande, L., et al., “Applying Cost Analyses to Drive Policy that Protects Children” 1076 ANN. N.Y. ACAD. 

SCI. 911 (2006).
 

16-16
 
 

 

$664,000 per ton emitted in 2004$ or $729,000 per ton in 2007$), which DOE derived from a 

published evaluation of mercury control using different methods and assumptions from the first 

study, but also based on the present value of the lifetime earnings of children exposed.n The 

resulting estimates of the potential range of the present value benefits associated with the 

national reduction of NOx and Hg emissions are reflected in Table 16.2.9 and Table 16.2.10. 

Table 16.2.3 Estimates of Savings from Reductions of NOx and Hg under CRE Trial 

Standard Levels at a 7% Discount Rate 

Trial 

Standard 

Level 

Estimated 

Cumulative NOx (kt) 

Emission 

Reductions 

Value of Estimated 

NOx Emission 

Reductions 

(Thousand 2007$) 

Estimated 

Cumulative Hg 

(tons) Emission 

Reductions 

Value of Estimated Hg 

Emission Reductions 

(Thousand 2007$) 

TSL 1 0.59-14.58 $64-$1,578 0-0.224 $0-$46 

TSL 2 2.27-56.04 $245-$6,067 0-0.86 $0-$177 

TSL 3 3.51-86.77 $380-$9,394 0-1.332 $0-$274 

TSL 4 3.64-89.97 $394- $9,741 0-1.381 $0-$284 

TSL 5 4.56-112.84 $494-$12,216 0-1.732 $0-$356 

Table 16.2.4 Preliminary Estimates of Savings from Reductions of NOx and Hg under 

CRE Trial Standard Levels at a 3% Discount Rate 

Trial 

Standard 

Level 

Estimated 

Cumulative NOx (kt) 

Emission 

Reductions 

Value of Estimated 

NOx Emission 

Reductions 

(Thousand 2007$) 

Estimated 

Cumulative Hg 

(tons) Emission 

Reductions 

Value of Estimated Hg 

Emission Reductions 

(Thousand 2007$) 

TSL 1 0.59-14.58 $135-$3,329 0-0.224 $0-$91 

TSL 2 2.27-56.04 $518-$12,799 0-0.86 $0-$349 

TSL 3 3.51-86.77 $802-$19,815 0-1.332 $0-$540 

TSL 4 3.64-89.97 $831- $20,547 0-1.381 $0-$560 

TSL 5 4.56-112.84 $1,042-$25,769 0-1.732 $0-$702 

n

 Ted Gayer and Robert Hahn, Designing Environmental Policy: Lessons from the Regulation of Mercury
 

Emissions, Regulatory Analysis 05-01. AEI-Brookings Joint Center For Regulatory Studies, Washington, D.C., 31 pp., 2004. 

A version of this paper was published in the Journal of Regulatory Economics in 2006. The estimate was derived by 

back-calculating the annual benefits per ton from the net present value of benefits reported in the study. 

16-17 
Sulfur Dioxide (SO2) 

Unlike the other pollutants considered in this TSD, SO2 emissions have, for some time, 

been subject to a national cap with corresponding annual allowances openly traded; therefore, 

considerable market experience with these instruments has already been accumulated. It has 

been argued that imposition of any standard that lowers U.S. national electricity consumption 

creates beneficial downward pressure on the prices of these allowances, and this cost reduction 

benefit should be considered in any analysis of a proposed standard. While this assertion is 

fundamentally sound, i.e. reduced electricity demand should ceteris paribus bring about lower 

SO2 allowance prices, there are a myriad of complications impeding any meaningful 

quantification of any associated benefit. While complexity of analysis alone clearly cannot 

justify disregarding a potential consequence of a standard, the Department additionally believes 

these benefits to be both volatile and de minimis when compared to the direct effects of a 

standard as estimated in this TSD. 

Some of the problems to be confronted in an allowance price effect forecast are as listed 

below. 

1.	 Only any net lowering of the total allowance bill to generators free of transfers is the 

potential source of a benefit. Any such compliance cost saving would need to be 

accurately estimated, and this effect is no different from the benefit derived from a cost 

reduction for other inputs, such as fuel. When the SO2 allowance market that was created 

in 1995 under the Clean Air Act Amendments (CA3) began, initial allowance allocations 

were directly granted to large affected units based on their historic (1985-87) use of fuel. 

For 30 years, allowances for the following year are issued every spring at a declining rate 

to these entitled parties, and thereafter can be freely used, traded, or banked. Some 

additional allowances are allocated in diverse ways, e.g. as rewards to generators 

installing control equipment. In other words, the entitled generators holding emission 

rights are losers when the value of allowances declines, while the buyers of allowances 

are gainers. Before they are used, allowances may be traded many times at prices 

reflecting the marginal not average cost of compliance. 

2.	 The trading system allows for allowance banking. Consequently, any observed change in 

a forecast year could represent the manifestation of market fundamentals, but could 

similarly just indicate deposit or withdrawal of allowances. In general, used allowances 

have fallen short of the cap, so emissions may exceed the specified cap for future years. 

3.	 Control efforts could further reduce the SO2 cap for some jurisdictions, creating 

regulatory uncertainty that perturbs the allowance market. The issuance of the proposed 

and final CAIR rules were likely contributing factors to allowance price increases, 

leading to a dramatic 2005 allowance price spike. While prices had already fallen far 

below their historic highs by the time CAIR was vacated in the summer of 2008, spot 

allowance prices nonetheless made a further precipitous drop following the D.C. Circuit 

Court ruling. 

4.	 Because allowances can be traded freely by generators, brokers, and investors, they can 

serve as financial instruments, and, especially since 2003, allowance prices have been 

volatile. Between 2000—when a tightened CA3 cap came into force—and 2007, 

allowances traded between a low of about $120/short ton in 2002 and a high of about 

16-18
 
 

 

$1600/short ton, with the 2005 spike being particularly dramatico. Since there is no 

reason to believe that these conditions will alter over the life of a proposed standard, the 

challenge of forecasting prices is much more complex than a simple supply-demand 

balance might suggest. Also, note that any quantification of the benefit likely depends on 

the level of prices as well as their net change. To believe that a simple delta in the prices 

could be used to estimate the benefit is to believe that the same numerical reduction in 

price would result from the standard whether the prevailing trading price were $100 or 

$1000 per short ton. 

The forecasting tool used for this TSD is the AEO2008 version of NEMS-BT and 

generates forecasts of both SO2 emissions and allowance prices. Unfortunately, this model was 

released before CAIR was overturned, so its forecast enforces the tighter CAIR cap in the 

affected east of country, and does not represent current conditions. Given the timing of the 

CAIR ruling relative to the progress of this analysis, attaining projections without CAIR has not 

been possible. Nonetheless, as an indicative bounding case, the net changes in the average price 

were computed for the period 2012 to 2030 for standard size equipment at TSL 5 (the most 

stringent energy conservation standard considered in this analysis). The estimates represent an 

average of the various model simulations with different impact multipliers (see Appendix J for 

explanation of multipliers used) p. 

For CRE equipment, the specific results indicated about a -0.01 percent change in the 

allowance price in the East region defined within the Electricity Market Module (EMM) of 

NEMS-BT. The Department considers this effect to be inconsequential relative to other 

elements in the benefits analysis, and given the significant effort that would be required to 

develop a refined estimate, the SO2 allowance price effect is not considered in this TSD. If 

future analysis suggests that the SO2 allowance price effect is both significant and estimable 

using NEMS-BT, it may be added to supporting material. 

16.3	 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL 

RESOURCES 

DOE’s proposed action is not site-specific. The efficiency of commercial refrigeration 

equipment being installed in commercial buildings is not expected to affect land disturbance or 

use. Therefore, none of the proposed TSLs is expected to affect the quality of wetlands, or 

threatened or endangered species. Further, this action is not expected to impact cultural 

resources, such as historical or archaeological sites. 

o sources of the historic SO2 allowance prices are http://www.epa.gov/airmarkets/progress/alprices.html, 

http://camddataandmaps.epa.gov/gdm/ 

p

 To be specific with regard to the method, for each simulation the arithmetic change in the allowance price between 

the standards case and the reference was first computed over the period 2012 to 2030. The percentage change was 

computed as this average change divided by the average allowance price in the reference case over the same period. 

After scaling to take into account the specific values of the impact multipliers across simulations (“100X”, “200X”, 

and “300X” values discussed in Appendix J), the resulting percentage changes were subsequently averaged over the 

simulations. The percentage change in the allowance price for the 200X case for CRE equipment was slightly 

positive; this case was not used in the averaging in order to better reflect a bounding case for this equipment. 

16-19
 
16.4 SOCIOECONOMIC IMPACTS 

DOE's analysis has shown that the increase in the first cost of purchasing more-efficient 

Commercial Refrigeration Equipment at the proposed standard level is completely or nearly 

offset by a reduction in the life-cycle cost (LCC) of owning a more efficient piece of equipment. 

In other words, the customer will pay fewer operating costs over the life of the equipment even 

through the first cost increases. The complete analysis and its conclusions are presented in 

Chapter 8 of the TSD. 

For the sub-group of customers that reflect small businesses, defined by independent 

convenience stores and small grocery without access to national accounts, DOE determined that 

the average LCC impact is similar to that for the full sample of customers. Therefore, DOE 

concludes that the proposed action would have negligible socioeconomic impact. For a complete 

discussion on the LCC impacts on independent hotels, see Chapter 12 of the TSD. 

Table 16.4.1 shows the mean LCC savings for VCT.RC.L for both the full sample of 

customers and for the small business subgroup as an example. 

Table 16.4.1 Mean Life-Cycle Cost Savings for All Customers and Sub-Group, 

Independent Convenience Stores and Small Grocery, VCT.RC.L Example 

TSL 1 TSL 2 

Trial Standard Level* 

TSL 3 TSL 4 TSL 5 

All Customers 

Independent Convenience 

Stores and Small Grocery 

$762 

$1,001 

$4,137 

$5,639 

$5,450 $5,419 

$7,454 $7,447 

$5,419 

$7,447 

*Values refer to life-cycle cost savings over the equipment lifetime compared with purchase of baseline equipment 

16.5 ENVIRONMENTAL JUSTICE IMPACTS 

According to Executive Order 12898 of February 11, 1994, “Federal Actions to Address 

Environmental Justice in Minority Populations and Low-Income Populations,” DOE is required 

to examine the effect of more-stringent energy -efficiency standards on (1) small businesses that 

either manufacture or use commercial refrigeration equipment, (2) manufacturers of niche 

products related to commercial refrigeration equipment, and (3) small businesses operated by 

disadvantaged or minority populations. 

DOE identified small businesses as a sub-group that possibly could be disproportionately 

affected by commercial refrigeration equipment energy conservation standards. As described in 

the Life-Cycle Cost Subgroup Analysis, Chapter 11 of the TSD, DOE found that there were no 

disproportionately high and adverse human health or environmental effects on small businesses 

that would result from the proposed energy conservation standards. Because there were no 

disproportionately high and adverse impacts on small businesses in general, DOE believes this 

same conclusion also applies to minority populations. 

16.6 NOISE AND AESTHETICS 

Improvements in efficiency of commercial refrigeration equipment are expected to result 

from changes in the choice of components and other design features. These changes are 

described in Chapter 5 of this TSD. Efficiency improvements result from improved heat 

16-20
 
exchanger designs using increased levels of copper, higher efficiency evaporator fans, higher 

efficiency lighting, and more efficient compressors and condenser fans applied to self-contained 

equipment. These design changes are not expected to change noise levels in comparison to 

equipment in today’s market. In addition, changes to the design to improve the efficiency levels 

are not anticipated to affect the equipment’s aesthetics. None of the design options considered 

by DOE is believed to result in visual changes perceptible to the store customer, with the 

exception of lighting. To achieve the equipment efficiencies provided at TSL 4, and 5, for 

equipment for which case lighting was present in the baseline model and for which the 

engineering design assumed LED lighting, DOE modeled only the energy consumption and 

direct cost impacts of the equipment with solid-state lighting. Solid-state lighting provides a 

functionally equivalent lighting of the product being merchandised. DOE notes that current 

implementations of solid-state lighting in display cases use light from many discrete point 

sources directed at the merchandised product rather than the more diffuse lighting obtained using 

fluorescent bulbs. This may provide a somewhat different presentation of the product; however, 

not one that would result in a negative aesthetic impact. 

16.7 SUMMARY OF ENVIRONMENTAL IMPACTS 

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Table 16.7.1 summarizes anticipated environmental impacts for each of the TSLs across all 

equipment types. Air quality impacts were modeled for each of the TSLs. The summary table 

shows cumulative changes in emissions for CO2, NOx, and mercury over the period 2012 to 

2042. The resulting changes in emission quantities are very small, much less than 1 percent in 

comparison to the reference case. Cumulative CO2 and NOx emissions show a decrease 

compared to the reference case. Mercury emissions show a very small increase in cumulative 

emissions. This increase may result from the combined effects of emissions banking, a shift in 

how power plants are dispatched or the timing within the model of when power plants are 

replaced. 

Upstream fuel cycle emission of CO2 and NOx are described but not quantified in section 

16.2.6. The text describes potential reductions in fuel cycle emissions as percentage of decreases 

in power plant emissions. This qualitative approach suggests that upstream fuel cycle emissions 

would decrease and provides a sense for the magnitude of effects; however, DOE does not report 

actual estimates of the effects. 

Socioeconomic impacts are presented as changes in life cycle costs. No impacts are 

anticipated in the area of environmental justice, wetlands endangered and threatened species, and 

cultural resources, or noise and aesthetics. 

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Table 16.7.1 Environmental Impact Analysis Results Summary 

Environmental Effects 

Reference 

Case* TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Cumulative Emission Reductions** 

CO2 (Million metric tons) 

 NOx (Kilo tons) 

Hg (tons) 

Fuel-Cycle (Upstream) Emissions 

Wetlands, Endangered and Threatened 

Species, Cultural Resources 

Socioeconomic Impacts - VCT.RC.L, 

Mean LCC Savings ($) ‡

 All Customers 

 Convenience Stores and Independent 

 Small Grocery 

Environmental Justice 

Noise and Aesthetics 

238,078

69,049 

568.4 

NA 

NA 

NA 

NA 

NA 

NA 

8.5 

0.59 to 

14.58 

0 to 0.224 

† 

None 

$762 

$1,001

None 

None 

32.8 

2.27 to 

56.04 

0 to 0.86 

† 

None 

$4,137

 $5,639

None 

None 

50.7 

3.51 to 

86.77 

0 to 1.332 

† 

None 

$5,450 

$7,454 

None 

None 

52.6 

3.64 to 

89.97 

0 to 1.381 

† 

None 

$5,419 

$7,447 

None 

None 

66.0

4.56 to 

112.84

0 to 1.732 

† 

None 

$5,419

$7,447 

None 

None 

* The reference case values reflect total cumulative emissions and life-cycle costs in the absence of an energy conservation standard. 

** Cumulative total is over a time period from 2012 to 2042. 

† DOE does not report actual estimates of the effects of standards on upstream emissions, but section 16.2.5 provides a sense for the possible 

magnitude of effects. 

‡ Values refer to life-cycle cost savings over the equipment lifetime compared with purchase of baseline equipment. 

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REFERENCES
 

1 . DOE. 2006. Environmental Assessment for Proposed Energy Conservation Standards 

for Distribution Transformers. DOE/EA-1565. Washington, D.C. 

2. DeLuchi, M. A. Emissions of Greenhouse Gases from the Use of Transportation Fuels 

and Electricity, Volume 2: Appendixes A-S. November, 1993. Argonne National 

Laboratory. Argonne, IL. Report No. ANL/ESD/TM-22-Vol.2. 

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