# Revised	Preliminary	Cost	Analysis	for	Regulatory

Options	to	Change	Listing	Status	of	High‐GWP

Alternatives

P REPARED FOR 

### :

Stratospheric	Protection	Division

Office	of	Air	and	Radiation

U.S.	Environmental	Protection	Agency

Washington,	D.C.	20460

P REPARED B Y 

### :

ICF	International

1725	Eye	Street,	NW

Washington,	DC	20006

J UNE 

### 20, 20142 

## Executive Summary

This analysis presents an estimate of the overall potential costs associated with a proposed rulemaking to

change the listing status of certain high

‐ GWP alternatives used in aerosols, foams, commercial refrigeration, and

motor vehicle air conditioning (MVAC). Exhibit 1 summarizes the regulatory options proposed. Across all

regulatory options, while about 645,000 businesses are potentially affected by this proposed rule, the analysis

estimates that the proposed rule is expected to result in changes in costs for less than 0.1% of those businesses.

Using a 3% and 7% discount rate, total annualized compliance costs across affected businesses are estimated to

be about $23.8 and $30.5 million, respectively; total annual savings are estimated to be about $25.1 million (for

both discount rates); thus, annualized net compliance costs are estimated to be roughly

‐ $1.4 and $5.4 million,

respectively.



## Methodology

This analysis builds on the general approach taken

previously to estimate potential economic impacts on

small businesses—as described in Economic Impact

Screening Analysis for Regulatory Options to Change

Listing Status of High

‐ GWP Alternatives —to extend the

assessment to all

‐ sized businesses potentially affected

by the proposed rulemaking

. Industries potentially

affected by these proposed regulatory options were

primarily identified by North American Industry

Classification System (NAICS) codes. Costs to affected

businesses were calculated using a direct compliance

cost method and then annualized. Costs or savings

associated with changes in energy efficiency were not

estimated because energy efficiency is related to a

number of factors, including equipment design or

thickness of foam, and not just due to the refrigerant or

foam blowing agent used.

Apart from a few exceptions, this analysis uses the

same assumptions as the small business screening

analysis, including those about:

 Which industries might be affected by the proposed regulatory options;

 The proportion of businesses that could be directly affected by the proposed rulemaking, based on

whether the HFCs affected by this proposed rulemaking are still—or were ever—known to be in use, and

what proportion of the market the affected HFCs are expected to represent at the time that the

regulations would come into effect;

 The alternatives that are implemented in the transition away from the HFCs affected by this proposed

rulemaking, for modeling purposes; and

 The capital, operating, maintenance, and other direct compliance costs incurred by affected businesses. Exhibit 1: Summary of Regulatory Options Proposed

 List unacceptable HFC

‐ 134a for new MVACs for light

‐ duty

vehicles and trucks starting in model year 2021.

 List unacceptable HFC

‐ 134a for aerosols in 2016, with

exceptions for medical aerosols and technical aerosols; list

unacceptable HFC

‐ 125 for aerosols; list HFC

‐ 227ea

unacceptable for aerosols in 2016, with exceptions for

metered dose inhalers.

 List unacceptable all HFCs, except HFC

‐ 152a, and all HFC

blends in 1) rigid polyurethane: (household) appliance; 2)

flexible polyurethane: slabstock and moulded; 3) rigid

polyurethane: commercial refrigeration; 4) rigid

polyurethane: sandwich; 5) rigid polyurethane and

polyisocyanurate laminated boardstock; 6) rigid polyurethane:

slabstock; 7) polyurethane integral skin; 8) polystyrene:

extruded sheet; 9) polystyrene: extruded boardstock and

billet; 10) polyolefin; and 11) phenolic foams in 2017.

 List unacceptable HFC

‐ 134a and Formacel TI in rigid

polyurethane spray foam in 2017.

 List unacceptable 10 high

‐ GWP HFCs/HFC blends for new and

retrofit retail food refrigeration equipment (supermarkets and

condensing units) in 2016.

 List unacceptable 32 high

‐ GWP HFCs/HFC blends for new

reach

‐ in coolers and other self

‐ contained retail food

refrigerators and freezers and for vending machines in 2016.

 List unacceptable R

‐ 404A and R

‐ 507A for retrofit reach

‐ in

coolers and other self

‐ contained retail food refrigerators and

freezers and for vending machines in 2016.3 Table 1 provides the basic financial assumptions used in this analysis.

Table 1: Financial Assumptions used in Cost Analysis

Parameter Assumption

Discount rates 3% and 7%

Constant Year Dollars 2013$

Lifetime for annualizing costs Varies based on equipment type: 25 years for foam manufacturing; 20 years

for commercial refrigeration; 10 years for aerosol product manufacturing;

Not Applicable for MVACs because costs are estimated per vehicle at time of

manufacturing

The sections below briefly describe the cost assumptions, as well as additional assumptions that were required

for the aerosols and foams sectors to extend the small business economic impact screening assessment to those

businesses not characterized as small under the Small Business Administration guidelines (hereafter referred to

as “larger” businesses).



### Motor Vehicle Air Conditioning Assumptions

The EPA has previously examined when automobile manufacturers may be able to transition their fleets to

lower GWP refrigerants in its rules to extend the greenhouse gas and fuel economy standards for model year

(MY) 2017

‐ 2025 light

‐ duty vehicles. 77 FR 62624, 62807

‐ 810 (October 15, 2012); see also 75 FR 25325, 25431

‐ 32

(May 7, 2010) (discussing the same issue for MY 2012

‐ 2016 light duty vehicles).

When refrigerants leak from current motor vehicle air conditioning systems, they contribute to overall GHG

emissions. Using lower GWP refrigerants can significantly reduce the climate impact of these emissions. Given

the increasing availability of lower

‐ GWP chemicals suitable for this purpose and systems that can use them, as

well as increasing requirement for lower

‐ GWP refrigerants in Europe, EPA based the light

‐ duty GHG standards

for MYs 2017

‐ 2025 in part on an expected gradual transition to lower

‐ GWP refrigerants. Thus, in setting the

level of the standards, EPA projected that the industry will make the full transition to lower

‐ GWP refrigerants

over the period of time spanning between MY 2017 and MY 2021, and the level of the standard in each of these

model years reflects a projected 20 percent increase in substitution in each model year and complete transition

by MY 2021. 77 FR 62720/2

‐ 3. In support of the assumption of this multi

‐ year transition, the Light

‐ Duty GHG rule

for MYs 2017

‐ 2025 includes an extensive discussion of the refrigerant substitute availability and technical

feasibility of transitioning the fleet. 77 FR 62720; 62807

‐ 810.

Given current industry trends and other regulatory incentives and requirements, all light duty vehicle and truck

manufacturers are expected to transition their vehicle production for domestic sales out of HFC

‐ 134a prior to

the effective date of this regulatory option (i.e., model year 2021). However, this analysis implicitly assumes that

all manufacturers would continue to produce light

‐ duty vehicles and trucks containing HFC

‐ 134a in the United

States for export in the absence of this proposed rulemaking. Since the EPA rulemaking documents already

analyze domestic sales, this analysis considers only export sales to estimate costs that would be incurred as a

result of this rulemaking.

Light duty vehicle manufacturers purchase MVAC system components from a third party and then assemble and

install the MVAC systems in

‐ house. Potential costs to manufacturers were estimated based on per

‐ system costs

of alternative systems, as identified in EPA’s report on Global Mitigation of Non

‐ CO 2 Greenhouse Gases: 2010

‐4 2030 (EPA 2013), and converted to 2013 dollars. The incremental per

‐ system cost of an alternative MVAC

system compared to an HFC

‐ 134a system is estimated to be about $62/unit. These incremental costs are less

than 1% relative to the total direct manufacturing cost for a light duty vehicle. It is assumed that the impact of

the rulemaking on most export sales is minimal due to export countries with similar regulations or initiatives

mitigating HFC

‐ 134a use such as the European MAC Directive (2006/40/EC) (European Union 2006). Therefore,

incremental costs are assumed for manufacturers that may produce solely for an export market for countries

that do not have regulations or initiatives mitigating HFC

‐ 134a use in motor vehicles or for countries where the

market demand is more elastic to incremental cost changes.



### Aerosol Assumptions

A significant portion of the aerosol product manufacturing industry never used HFCs; already transitioned out of

the HFCs included in the proposed rule; or are proposed to be excepted. However, some tire inflator

manufacturers still use HFC

‐ 134a propellant and are expected to be affected by this proposed rulemaking. In

addition to the two small businesses identified in the small business screening analysis, two additional

manufacturers were identified as potentially still producing aerosol tire inflators containing HFC

‐ 134a propellant

using the U.S. Department of Health and Human Services Household Products Database and employee data

available from Dun and Bradstreet (2014). These four manufacturers are assumed to produce a total of

approximately 18.6 million tire inflators per year; this estimate was based on a production estimate from one

manufacturer and by applying a ratio of annual sales to that production estimate to approximate annual

production for the other manufacturers. The manufacturers are expected to incur one

‐ time capital conversion

costs of $342,000 to convert to hydrocarbons, and annual savings of approximately $0.26 per aerosol can

produced due to the lower cost of hydrocarbon

‐ based propellant (EPA 2013).



### Foams Assumptions

The proposed rulemaking is not anticipated to affect manufacturers in some foam types (polystyrene extruded

sheet, flexible polyurethane: slabstock and moulded, rigid polyurethane: spray, polyolefin, phenolic) because

these foam types are not known to be currently manufactured in the United States using the HFCs proposed to

be unacceptable. The regulatory options would serve to avoid the future use of these HFCs in these foam types.

In the foams sector, compliance costs generally include one

‐ time capital costs for a production facility to

transition to an alternative blowing agent; in some foam end

‐ uses, these capital costs would be offset by annual

savings associated with lower alternative blowing agent costs. Assumptions are briefly described below; for

more detail, please see Economic Impact Screening Analysis for Regulatory Options to Change Listing Status of

High

‐ GWP Alternatives

.

Polystyrene Foam Product Manufacturing:

 Polystyrene: Extruded Boardstock and Billet —Companies still using HFC

‐ 134a are assumed to transition

to hydrocarbons. Capital costs for a facility to transition to hydrocarbons are estimated to be

approximately $641,000 per production line (UNEP 2011b, 2013b). A single production line is assumed

for small businesses; three production lines are assumed for larger businesses (i.e., establishments with

more than 499 employees) (UNEP 2011b, 2013b).5 Household Refrigerator and Home Freezer Manufacturing:

 Rigid Polyurethane: (Household) Appliance —Companies still using HFC

‐ 245fa and HFC

‐ 134a are

assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more cost

‐

effective option over the equipment’s lifetime, but Solstice LBA is assumed to be adopted by small

businesses to help achieve energy efficiency standards and/or to avoid incurring upfront capital costs.

Specifically, the smallest businesses (i.e., establishments with zero to nine employees) are assumed to

transition fully to Solstice LBA, while other small businesses (i.e., establishments with more than 10 to

999 employees are assumed to transition 50% to Solstice LBA and 50% to hydrocarbons. Larger

businesses (i.e., establishments with more than 999 employees) were assumed to transition fully to

hydrocarbons. Capital facility costs to convert to hydrocarbons were assumed to be $5.1 million per

facility (EPA 2013), but these costs are offset by annual savings of up to $4.8 million per facility due to

lower blowing agent costs; savings vary depending on facility size (i.e., number of units produced). No

capital costs were assumed to convert to Solstice LBA (since this option is considered to be a near drop

‐

in replacement for HFC

‐ 245fa), but annual costs per facility were estimated to be up to $2.5 million per

facility, due to higher blowing agent costs; annual costs vary depending on facility size (i.e., number of

units produced).

Commercial and Industrial Refrigeration Equipment Manufacturing:

 Rigid Polyurethane: Commercial Refrigeration —Companies still using HFC

‐ 245fa and HFC

‐ 134a are

assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more cost

‐

effective option over the equipment’s lifetime, but Solstice LBA is conservatively assumed to be adopted

by small businesses to help achieve energy efficiency standards and/or to avoid incurring upfront capital

costs. Specifically, the smallest businesses (i.e., establishments with zero to nine employees) are

assumed to transition fully to Solstice LBA, while other small businesses (i.e., establishments with 10 to

749 employees are assumed to transition 50% to Solstice LBA and 50% to hydrocarbons. Larger

businesses (i.e., establishments with more than 749 employees) are assumed to transition fully to

hydrocarbons. Capital costs to transition to hydrocarbons are assumed to total approximately $1.3

million per facility, while net annual savings are estimated to be up to $2.8 million per facility, due to

lower blowing agent costs; savings vary depending on facility size (i.e., number of units produced). No

capital costs are assumed to convert to Solstice LBA (since this option is considered to be a near drop

‐ in

replacement for HFC

‐ 245fa), but annual costs per facility are estimated to be up to $630,000 per facility,

due to higher blowing agent costs; annual costs vary depending on facility size (i.e., number of units

produced) (EPA 2013).

Urethane and Other Foam Product (Except Polystyrene) Manufacturing:

 Rigid Polyurethane: Sandwich —Companies still using HFC

‐ 134a are assumed to transition to

hydrocarbons. Small businesses are assumed to produce foams containing approximately 13.3 MT of

blowing agent annually, and incur one

‐ time capital costs for conversion of $183,000 (UNEP 2012, UNEP

2013a), offset partially by anticipated annual savings due to lower blowing agent costs (EPA 2013).

Larger businesses (i.e., establishments with more than 499 employees) are assumed to have a higher

production volume, using 450 MT of blowing agent annually, and incur a one

‐ time capital conversion

cost of $336,000, offset by anticipated annual savings of $470,000 due to lower blowing agent costs

(EPA 2013).6  Rigid Polyurethane and Polyisocyanurate Laminated Boardstock —Companies using HFC

‐ 134a or HFC

‐

245fa are assumed to transition to hydrocarbons. Small businesses are assumed to produce foams

containing approximately 25 MT of blowing agent annually, and incur one

‐ time capital costs for

conversion of $432,000 (UNEP 2009, 2010, 2011a). Larger businesses (i.e., establishments with more

than 499 employees) are assumed to have a higher production volume, using 65 MT of blowing agent

annually, and incur a one

‐ time capital conversion cost of approximately $761,000 (UNEP 2009, 2010,

2011a). Both small and larger businesses are assumed to realize annual savings due to the lower blowing

agent costs.

 Polyurethane Integral Skin —Companies still using HFC

‐ 134a are assumed to transition to CO 2

. Capital

costs are assumed to be about $184,000 for a typical firm producing 7.7 MT of blowing agent annually

(UNEP 2012, UNEP 2013a). Incremental annual operating costs are assumed to be zero. 1



### Commercial Refrigeration Assumptions

Cost assumptions for the commercial refrigeration sector are summarized below; see Economic Impact

Screening Analysis for Regulatory Options to Change Listing Status of High

‐ GWP Alternatives for more detailed

descriptions.

New Systems:

 Supermarkets and Condensing Units —Some movement out of high

‐ GWP refrigerants (e.g., R

‐ 404A and

R

‐ 507A) has already been observed in the retail food industry, and industry pledges, such as those made

by the Consumer Goods Forum to phase out HFC refrigerants in newly purchased equipment by the end

of 2015, may serve to accelerate the transition out of HFC refrigerants.

Compliance costs are based on the assumption that end

‐ users (e.g., supermarkets) would use R

‐ 407A in

new systems in place of R

‐ 404A and R

‐ 507A, and that the incremental cost of using this alternative

instead of R

‐ 404A or R

‐ 507A is negligible (i.e. zero dollars) since, given that the composition of R

‐ 404A

and R

‐ 407A are similar, the cost of the refrigerant is assumed to be the same. Therefore, no annual costs

or savings are assumed for this option (EPA 2013). The proposed rule does not require that businesses

with a refrigeration system using R

‐ 404A or R

‐ 507A stop using their system, retrofit the system to use a

different refrigerant, or prevent them from maintaining their system. Therefore, end

‐ users are not

considered to be affected until they choose to purchase a new system or retrofit a system anyway, at

which point their choice of new refrigerant is impacted.

The proposed rule also does not prescribe that any business transition to a particular, lower

‐ GWP

refrigerant or alternative technology, so additional costs any businesses incur by choosing a more

expensive option to replace a system are not estimated in this analysis. For example, up to 50 percent of

large supermarkets might choose to replace an old R

‐ 404A or R

‐ 507A system with a more expensive new

transcritical CO 2 system that would have much less impact on climate than a new R

‐ 407A system. Those

supermarkets would incur an additional total annualized upfront cost of about $979,000 and total

annual cost savings of about $72,000 compared to the cost of choosing conventional HFC centralized

1 While an increase in operating costs may be experienced associated with the use of CO 2, these costs are not expected to

outweigh the annual savings associated with the lower incremental blowing agent cost.7 direct expansion systems, also based on the cost assumptions in the above report. However neither the

costs nor savings of such a choice is included in this analysis because it is not required by the proposed

rule.

 Self

‐ contained Refrigerators and Freezers —Compliance costs are based on the assumption that each

establishment manufacturing the equipment will incur a one

‐ time capital investment cost of $50,000

associated with using R

‐ 290 in place of an HFC refrigerant, which results in an annualized cost of about

$4,700 per affected establishment.

 Refrigerated Vending Machines —Compliance costs are based on the assumption that each

establishment manufacturing the equipment will incur a one

‐ time capital investment cost of $100,000

associated with using CO 2 in place of an HFC refrigerant, which results in an annualized cost of about

$9,400 per affected establishment.

Retrofits:

 Supermarkets and Condensing Units —In the absence of this proposed rulemaking, this analysis

estimates that a number of companies would have CFC

‐ 12, R

‐ 502, or HCFC

‐ 22 systems in operation in

2016 that would be available for retrofitting—with R

‐ 404A, R

‐ 507A, or R

‐ 422D being the preferred

retrofit refrigerant—and would thus be affected by the regulatory options proposed.

Compliance costs are based on the assumption that end

‐ users would use R

‐ 407A as the retrofit

refrigerant in place of R

‐ 404A and R

‐ 507A, and that the incremental cost of using this alternative instead

of R

‐ 404A or R

‐ 507A is negligible (i.e. zero dollars) based on cost assumptions discussed above (EPA

2013). EPA (2013) also assumes that there is a one

‐ time conversion cost associated with performing a

refrigerant retrofit on a remote retail food system. However, since the proposed rulemaking does not

require end

‐ users to retrofit their equipment, but rather only proposes to prohibit the use of certain

refrigerants to be used as a retrofit, the labor costs associated with performing the retrofit itself are not

a compliance cost of the proposed rulemaking. Thus, these costs are not included in this analysis and

climate benefits are not accounted for either.

 Self

‐ contained Refrigerators and Freezers, and Refrigerated Vending Machines —This analysis assumes

that refrigerant retrofits are not performed on self

‐ contained retail food equipment or vending

machines.



## Results

Using the methodology and additional assumptions described above, Table below summarizes the estimated

number of businesses potentially affected by the rule as well as the estimated annualized costs by sector at a 7%

discount rate, based on the regulatory options proposed 2

. Table 3 summarizes the estimated annualized costs by

sector at a 3% discount rate. As shown, while about 645,000 businesses are potentially subject to this proposed

2 In the SBREFA analysis entitled “ Economic Impact Screening Analysis for Regulatory Options to Change Listing Status of

High

‐ GWP Alternatives “, the corresponding proposed regulatory options are labeled 1c, 2, 5b, 7b, 8b, 9b, and 10c.8 rule, the analysis estimates that the proposed rule is expected to result in changes in costs for less than 0.1% of

these businesses.

Using a 3% and 7% discount rate, total annualized compliance costs across affected businesses are estimated to

be about $23.8 and $30.5 million, respectively; total annual savings are estimated to be about $25.1 million (for

both discount rates); thus, annualized net compliance costs are estimated to be roughly

‐ $1.4 and $5.4 million,

respectively.

The majority of potentially affected businesses are in the commercial refrigeration sector, but it is important to

note that these businesses will not be affected in a single year; instead, a small proportion of businesses are

expected to be affected in each year over a 15 to 20 year period, as existing retail food equipment reaches end

‐

of

‐ life and businesses make choices about which alternative refrigerant to use in new systems or retrofits. Even

if these businesses are affected, EPA assumes that most of them will switch to R

‐ 407A. Since the composition of

R

‐ 404A and R

‐ 407A are similar, the cost of the refrigerant is the same. Therefore, no annual costs or savings are

assumed for this option.

This analysis looks at the minimum cost to comply with the rule. We also investigated emissions reductions

under three scenarios by which the regulated community would comply with the proposed regulatory options 3

.

Table 2: Estimated Compliance Cost of the Proposed Regulatory Options using a 7% Discount Rate

Sector Estimated Number

of Businesses

Subject to the Rule Annualized

Upfront Costs a Annual

Savings b Annualized

Net Costs b

Motor Vehicle Air Conditioning

‐ Exports 240 c $8,764,000 c $0 c $8,764,000 c

Aerosols <10 $195,000

‐ $5,424,000

‐ $5,229,000

Foams 270 $21,368,000

‐ $19,722,000 $1,646,000

Polystyrene foam product

manufacturing 140 $11,189,000 $0 $11,189,000

Household refrigerator and freezer

manufacturing 10 $4,313,000

‐ $10,673,000

‐ $6,360,000

Commercial and industrial refrigeration

equipment manufacturing 60 $3,090,000

‐ $9,040,000

‐ $5,950,000

Urethane and other foam product

(except polystyrene) manufacturing 60 $2,776,000

‐ $9,000 $2,767,000

Commercial Refrigeration 644,500 d $222,000 $0 $222,000

New equipment

Supermarkets 29,30 0 $ 0 $ 0 $ 0

Condensing units 445,50 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines 40 $222,000 $0 $222,000

Retrofits

Supermarkets 10,50 0 $ 0 $ 0 $ 0

Condensing units 159,10 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines 0 $0 $0 $0

ALL SECTORS 645,000 $30,549,000

‐ $25,146,000 $5,403,000

3 See “Climate Benefits of the SNAP Program Status Change Rule, June 2014”.9 Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for a subset of the export market only.

d It is possible that some businesses will be affected by more than one regulatory option and for multiple types of equipment, resulting in

a lower total number of discrete businesses affected by the rule. However, since it is not known how many businesses would be affected

by more than one regulatory option, the total maximum number of businesses that could be affected is shown.

Table 3: Estimated Compliance Cost of the Proposed Regulatory Options using a 3% Discount Rate

Sector Annualized

Upfront Costs a Annual

Savings b Annualized Net

Costs b

Motor Vehicle Air Conditioning

‐ Exports $8,764,000 c $0 c $8,764,000 c

Aerosols $160,000

‐ $5,424,000

‐ $5,264,000

Foams $14,643,000

‐ $19,722,000

‐ $5,079,000

Polystyrene foam product manufacturing $7,488,000 $0 $7,488,000

Household refrigerator and freezer manufacturing $3,184,000

‐ $10,673,000

‐ $7,489,000

Commercial and industrial refrigeration equipment

manufacturing $2,113,000

‐ $9,040,000

‐ $6,927,000

Urethane and other foam product (except polystyrene)

manufacturing $1,858,000

‐ $9,000 $1,849,000

Commercial Refrigeration $190,000 $0 $190,000

New equipment

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $190,000 $0 $190,000

Retrofits

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $0 $0 $0

ALL SECTORS $23,757,000

‐ $25,146,000

‐ $1,389,000

Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for small subset of export market only.10 

## References

The following references are cited in this memorandum; see also Economic Impact Screening Analysis for

Regulatory Options to Change Listing Status of High

‐ GWP Alternatives for a full list of references used for this

analysis.

Environmental Protection Agency (EPA). 2013. Global Mitigation of Non

‐ CO2 Greenhouse Gases: 2010

‐ 2030

Available online at: http://www.epa.gov/climatechange/Downl oads/EPAactivities/MAC_Report_2013.pdf

.

European Union, 2006. Directive 2006/40/EC of the European Parliament and of the Council of 17 May 2006

relating to emissions from air conditioning systems in motor vehicles and amending Council Directive

70/156/EEC (Text with EEA relevance). Available online at: http://eur

‐ lex.europa.eu/legal

‐ content/EN/ALL/?uri=CELEX:32006L0040

.

United Nations Environment Programme (UNEP). 2009. Multilateral Fund for the Implementation of the

Montreal Protocol (2009), Project Proposal: China, UNEP/OzL.Pro/ExCom/59/23,

http://www.multilateralfund.org/si tes/59/Document%20Library2/1/5923.pdf

.

United Nations Environment Programme (UNEP). 2010. Multilateral Fund for the Implementation of the

Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/62/26,

http://www.multilateralfund.or g/62/English%20Document/1/6226.pdf

.

United Nations Environment Programme (UNEP). 2011a. Multilateral Fund for the Implementation of the

Montreal Protocol (2011), Project Proposal: Egypt, UNEP/OzL.Pro/ExCom/65/32,

http://www.multilateralfu nd.org/65/English/1/6532.pdf

.

United Nations Environment Programme (UNEP). 2011b. Multilateral Fund for the Implementation of the

Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/64/29,

http://www.multilateralfund.or g/MeetingsandDocuments/curre ntmeeting/64/English/1/6429.pdf.

United Nations Environment Programme (UNEP). 2012. Multilateral Fund for the Implementation of the

Montreal Protocol (2012), Project Proposal: Thailand, UNEP/OzL.Pro/ExCom/68/41,

http://www.multilateralfu nd.org/68/English/1/6841.pdf.

United Nations Environment Programme (UNEP). 2013a. Multilateral Fund for the Implementation of the

Montreal Protocol (2013), Report of the Sixty

‐ eighth Meeting of the Executive Committee,

UNEP/OzL.Pro/ExCom/68/53/Corr.1, http://www.multilateralfund.org/ 68/English/1/6853_and_Corr.1.pdf.

United Nations Environment Programme (UNEP). 2013b. Multilateral Fund for the Implementation of the

Montreal Protocol (2013), Project Proposal: China, UNEP/OzL.Pro/ExCom/69/23

http://www.multilateralfu nd.org/69/English/1/6923.pdf.11 

## Appendix A: Higher Impact Scenario

Tables 2 and 3 present the estimated annualized costs of the proposed regulatory options 4 at a 7% and 3%

discount rate, respectively. Tables A1 and A2 provides indicative figures of the range of potential costs that

could occur from a higher impact scenario based on alternate regulatory options that were not proposed 5

. These

scenarios were run in order to give a sense of how costs might change under different assumptions.

Table A1: Estimated Compliance Cost of the Higher Scenario

– using 7% Discount Rate

Sector Estimated Number

of Businesses

Subject to the Rule Annualized

Upfront Costs a Annual

Savings b Annualized

Net Costs b

Motor Vehicle Air Conditioning

– Exports 240 c $8,764,000 c $0 c $8,764,000 c

Aerosols <10 $195,000

‐ $5,424,000

‐ $5,229,000

Foams 330 $32,377,000

‐ $19,722,000 $12,655,000

Polystyrene foam product

manufacturing 140 $11,189,000 $0 $11,189,000

Household refrigerator and freezer

manufacturing 10 $4,313,000

‐ $10,673,000

‐ $6,360,000

Commercial and industrial refrigeration

equipment manufacturing 60 $3,090,000

‐ $9,040,000

‐ $5,950,000

Urethane and other foam product

(except polystyrene) manufacturing 120 $13,785,000

‐ $9,000 $13,776,000

Commercial Refrigeration 644,500 d $222,000 $0 $222,000

New equipment

Supermarkets 29,30 0 $ 0 $ 0 $ 0

Condensing units 445,50 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines 40 $222,000 $0 $222,000

Retrofits

Supermarkets 10,50 0 $ 0 $ 0 $ 0

Condensing units 159,10 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines 0 $0 $0 $0

ALL SECTORS 645,000 $41,557,000

‐ $25,146,000 $16,412,000

Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for small subset of export market only.

d It is possible that some businesses will be affected by more than one regulatory option and for multiple types of equipment, resulting in

a lower total number of discrete businesses affected by the rule. However, since it is not known how many businesses would be affected

by more than one regulatory option, the total maximum number of businesses that could be affected is shown.

Table A2: Estimated Compliance Cost of the Higher Scenario

– using 3% Discount Rate

Sector Annualized

Upfront Costs a Annual

Savings b Annualized Net

Costs b

Motor Vehicle Air Conditioning

– MVACs $8,764,000 c $0 c $8,764,000 c

4 The corresponding proposed regulatory options are labeled 1c, 2, 5b, 7b, 8b, 9b, and 10c in the SBREFA analysis entitled

“ Economic Impact Screening Analysis for Regulatory Options to Change Listing Status of High

‐ GWP Alternatives “,

5 The higher impact scenario costs are estimated based on a corresponding alternate set of regulatory options not proposed

that are labeled 1c, 2, 5c, 7b, 8b, 9b, and 10c in the SBREFA analysis entitled “ Economic Impact Screening Analysis for

Regulatory Options to Change Listing Status of High

‐ GWP Alternatives “,12 Aerosols $160,000

‐ $5,424,000

‐ $5,263,000

Foams $25,079,000

‐ $19,722,000 $5,357,000

Polystyrene foam product manufacturing $7,488,000 $ 0 $7,488,00 0

Household refrigerator and freezer manufacturing $3,184,000

‐ $10,673,00 0

‐ $7,489,00 0

Commercial and industrial refrigeration equipment

manufacturing $2,113,000

‐ $9,040,000

‐ $6,927,000

Urethane and other foam product (except polystyrene)

manufacturing $12,294,000

‐ $9,000 $12,285,000

Commercial Refrigeration $190,000 $0 $190,000

New equipment

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $190,000 $0 $190,000

Retrofits

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $0 $0 $0

ALL SECTORS $34,193,000

‐ $25,146,000 $9,047,000

Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for small subset of export market only.13 

## Appendix B: Lower Impact Scenario

Tables 2 and 3 present the estimated annualized costs of the proposed regulatory options 6 at a 7% and 3%

discount rate, respectively. Tables B1 and B2 provides indicative figures of the range of potential costs that could

occur from a lower impact scenario based on alternate regulatory options that were not proposed 7

. These

scenarios were run in order to give a sense of how costs might change under different assumptions.

Table B1: Estimated Compliance Cost of Lower Scenario

– using 7% Discount Rate

Sector Estimated Number

of Businesses

Subject to the Rule Annualized

Upfront Costs a Annual

Savings b Annualized

Net Costs b

Motor Vehicle Air Conditioning 240 $8,764,000 c $0 c $8,764,000 c

Aerosols <10 $195,000

‐ $5,424,000

‐ $5,229,000

Foams 0 $0 $0 $0

Commercial Refrigeration 644,500 d $25,000 $0 $25,000

New equipment

Supermarkets 29,30 0 $ 0 $ 0 $ 0

Condensing units 445,50 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines <10 $25,000 $0 $25,000

Retrofits

Supermarkets 10,50 0 $ 0 $ 0 $ 0

Condensing units 159,10 0 $ 0 $ 0 $ 0

Self

‐ contained refrigerators, freezers,

and vending machines 0 $0 $0 $0

ALL SECTORS 645,000 $8,984,000

‐ $5,424,000 $3,560,000

Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for small subset of export market only.

d It is possible that some businesses will be affected by more than one regulatory option and for multiple types of equipment, resulting in

a lower total number of discrete businesses affected by the rule. However, since it is not known how many businesses would be affected

by more than one regulatory option, the total maximum number of businesses that could be affected is shown.

Table B2: Estimated Compliance Cost of the Lower Scenario

– Using 3% Discount Rate

Sector Annualized

Upfront Costs a Annual

Savings b Annualized

Net Costs b

Motor Vehicle Air Conditioning $0 c $0 c $0 c

Aerosols $160,000

‐ $5,424,000

‐ $5,264,000

Foams $0 $0 $0

Commercial Refrigeration $18,000 $0 $18,000

New equipment

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $18,000 $0 $18,000

6 The corresponding proposed regulatory options are labeled 1c, 2, 5b, 7b, 8b, 9b, and 10c in the SBREFA analysis entitled

“ Economic Impact Screening Analysis for Regulatory Options to Change Listing Status of High

‐ GWP Alternatives “,

7 The lower impact scenario costs are estimated based on a corresponding alternate set of regulatory options not proposed

that are labeled 1c, 2, 6, 7b, 8b, 9a, and 10c in the SBREFA analysis entitled “ Economic Impact Screening Analysis for

Regulatory Options to Change Listing Status of High

‐ GWP Alternatives “,14 Retrofits

Supermarkets $0 $0 $0

Condensing units $0 $0 $0

Self

‐ contained refrigerators, freezers, and vending machines $0 $0 $0

ALL SECTORS $8,942,000

‐ $5,424,000 $3,518,000

Totals may not sum due to independent rounding.

a Includes annualized upfront capital costs as well as recurring annual costs.

b Savings are shown as negative values; costs are shown as positive values.

c Costs are estimated on a per vehicle basis and are assumed for small subset of export market only.