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CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

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

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

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

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

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

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

2.5 MARKUPS ANALYSIS ............................................................................................. 2-7

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

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

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

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

2.9.1 National Energy and Water Savings............................................................................. 2-9

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

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

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

2.12 UTILITY IMPACT ANALYSIS ................................................................................2-10

2.13 EMPLOYMENT IMPACT ANALYSIS.....................................................................2-11

2.14 ENVIRONMENTAL ASSESSMENT........................................................................2-11

2.14.1 Carbon Dioxide ..........................................................................................................2-12

2.14.2 Sulfur Dioxide ............................................................................................................2-12

2.14.3 Nitrogen Oxides .........................................................................................................2-12

2.14.4 Mercury......................................................................................................................2-13

2.14.5 Particulate Matter .......................................................................................................2-13

2.14.6 Monetization of Emissions Reduction Benefits...........................................................2-14

2.15 REGULATORY IMPACT ANALYSIS .....................................................................2-15

LIST OF FIGURES

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

2.1 INTRODUCTION

Section 6295(o)(2)(A) of the Energy Policy and Conservation Act (EPCA), Pub. L. 94-

163, 42 U.S.C. 6291 et seq. requires the U.S. Department of Energy (DOE) to set forth energy 

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

technologically feasible and economically justified. This chapter describes the general analytical 

framework that DOE uses in developing such standards, and in particular, amended energy 

conservation standards for residential clothes washers. The analytical framework is a description 

of the methodology, the analytical tools, and the relationships among the various analyses that 

are part of this rulemaking.

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

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

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

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

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

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

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

information that feed from one analysis to another.
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Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analyses

National Impact

Analysis

Energy Use

Revise Preliminary

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Product Designs

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

•Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail 

Prices

Design Energy/ Use

Advance Notice of Proposed Rulemaking (ANO)

• Efficiency/Performance

• Commercial Products

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review

Product Designs

Utility Impact

Analysis 

Notice of Proposed Rulemaking (NOPR)

Final Rule

Approaches Key Inputs Analyses Key Outputs

Market and Technology

Assessment

Screening Analysis

Engineering Analysis

Product Price

Determination Life-Cycle Cost and 

Payback Period 

Analyses

National Impact

Analysis

Energy Use

Analyses

Life-Cycle Cost 

Sub-Group Analysis

Manufacturer Impact 

Analysis

Shipments

Analysis

Employment Impact

Analysis 

Revise Analyses

• Product Classes

• Technology Options

• Industry Cash Flow

• Sub-Group Cash-Flow

• Direct Employment Impacts

• Competitive Impacts

• Cumulative Regulatory Burden

• Product Designs

• Life-Cycle Costs

• Payback Periods

• National Energy Savings

• Net Present Values

• National Employment Impacts

• Revised Results

• Characterize Industry

• Market Segmentation

• Non-Regulatory Programs

Framework Document

• Efficiency-Level Approach

• Design Option Approach

• Energy Prices

• Installation Costs

• Maintenance & Repair Costs

• Accounting Approach

• Backcast and Forecast

• Market Saturation

• Stakeholder Comments

• Demographics

• Manufacturer Interviews

• GRIM Analysis

• Emission Rates

• National Energy Savings

• Stakeholder Comments

• Identify Firms/Products 

• Historical Shipments

•Retail Price Collection and

Analysis

• Manufacturer Prices

• Average Costs

• Manufacturer Financial Data

Design Options

Product Classes

Retail 

Prices

Design Energy/ Use

Publication of Preliminary Analyses

• Efficiency/Performance

• Commercial Products

Candidate

Standard 

Levels

• Analysis of Energy Use 

Data

Environmental

Assessment

Regulatory Impact

Analysis

Technology Options

• Emission Estimates

• Utility Load Factors

• National Energy Savings

• Non-Regulatory

Alternatives

• NEMS-BT

• ImSET

• NEMS-BT

• Design Options

• Energy Price Forecasts

• Site-to-Source Factors

• Energy-Efficiency Levels

Direct Employment 

Impacts

• National Energy Savings

• National Product Costs

• National Operating Costs

• Utility Impacts

• Analysis of Market Data

• Analysis of Product Data

• Life-Cycle Costs

• Payback Periods

• Installation

Costs

• Maint Costs

• Repair Costs

• UEC

• Energy Prices

Annual Energy Use (UEC)

Preliminary 

Manufacturer Impact 

Analysis

• Manufacturer Prices

• Average Costs

• Conversion Capital Expenditures

• Direct Employment Impacts

• National Energy Savings

• Net Present Values

• Trial Standard Levels (TSLs)

TSLs

• Product Prototypes

Energy-Efficiency 

Levels

• Department of Justice Review

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

document (TSD) are listed below.

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

existing technology options, including prototype designs.

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

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

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

safety.

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

manufacturer’s cost of achieving increased efficiency.

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

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

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

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

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

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

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

given standard.

• A shipments analysis to forecast shipments of residential clothes washers, which are then 

used to calculate the national impacts of standards on energy, net present value (NPV), 

and future manufacturer cash flows.

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

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

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

• A manufacturer impact analysis to assess the potential impacts of energy conservation 

standards on manufacturers’ capital conversion expenditures, marketing costs, shipments, 

and research and development costs.

In this direct final rule, DOE presents the results of the above analyses, incorporating 

revisions to the analyses based on comments and new information received. DOE also presents

results of the following additional analyses in the direct final rule:
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• An LCC subgroup analysis to evaluate variations in consumer characteristics that might 

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

households, differently than the overall population.

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

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

capacity.

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

oil utilities.

• An employment impact analysis to assess the aggregate impacts on national employment.

• An environmental impact analysis to estimate the effects of amended standards on 

emissions of carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxides (NOX), and 

mercury (Hg).

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

conservation standards that potentially could achieve substantially the same regulatory 

goal at a lower cost.

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

Energy Conservation Standards Rulemaking Framework Document for Residential Clothes 

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

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

the Federal Register on August 28, 2009. 74 FR 44306. DOE presented the analytical approach 

to interested parties during a public meeting on September 21, 2009. The framework document is 

available at 

www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/clothes_washers_framew

ork.pdf .

In response to the publication of the framework document and the associated public 

meeting, DOE received comments from interested parties regarding its analytical approach. In 

the direct final rule notice, DOE: (1) summarizes the key comments received from interested 

parties and describes DOE’s responses to those comments; and (2) summarizes any significant 

changes in the analytical approach made since publishing the framework document. This final 

rule TSD contains details of the final analyses conducted for residential clothes washers.
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2.2 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment characterizes the relevant product markets and 

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

2.2.1 Market Assessment

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

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

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

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

information. The subjects addressed in the market assessment for residential clothes washers 

included manufacturers, trade associations, and the quantities and types of products sold and 

offered for sale. DOE examined both large and small and foreign and domestic residential 

clothes washer manufacturers. DOE also examined publicly available data from the key trade 

association for this product category, the Association of Home Appliance Manufacturers 

(AHAM). DOE reviewed shipment data collected by AHAM and Appliance magazine to 

evaluate annual shipment trends. Finally, DOE reviewed other energy efficiency programs from 

utilities, individual States, and other organizations. Chapter 3 of the TSD provides additional 

details on the market and technology assessment.

2.2.2 Technology Assessment

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

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

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

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

feasible.

DOE developed its list of technologically feasible design options for residential clothes 

washers through consultation with manufacturers of components and systems, and from trade 

publications and technical papers. Since many options for improving product efficiency are 

available in existing units, product literature and direct examination provided additional 

information.

Chapter 3 of the TSD includes the detailed list of all technology options identified for 

residential clothes washers.

2.3 SCREENING ANALYSIS

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

technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an 
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adverse impact on product utility or availability; and (4) have adverse impacts on health and 

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

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

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

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

have adverse impacts on health and safety. In addition, DOE removed from the list technology 

options that lack energy consumption data as well as technology options whose energy 

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

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

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

analysis for residential clothes washers.

2.4 ENGINEERING ANALYSIS

The engineering analysis (chapter 5 of the final rule TSD) establishes the relationship 

between the manufacturing production cost (MPC) and the efficiency for each class of residential 

clothes washers. The purpose of the analysis is to estimate the incremental MPCs for a product 

that would result from increasing efficiency levels above the level of the baseline model in each 

product class. This relationship serves as the basis for cost/benefit calculations in terms of 

individual consumers, manufacturers, and the nation. Chapter 5 discusses the product classes 

DOE analyzed, the representative baseline units, the incremental efficiency levels, the 

methodology DOE used to develop the manufacturing production costs, the cost-efficiency 

curves, and the impact of efficiency improvements on the considered products.

The engineering analysis considered technologies not eliminated in the screening 

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

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

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

options, in developing the cost-efficiency curves.

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

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

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

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

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

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

materials derived from tear-downs of the product being analyzed.

DOE proposed used the efficiency-level approach for residential clothes washers, 

combined with the cost-assessment approach to develop a cost for each efficiency level. This 

approach involved physically disassembling commercially available products, consulting with 

outside experts, reviewing publicly available cost and performance information, and modeling 

equipment cost. The efficiency levels that DOE considered in the engineering analysis are 
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attainable using technologies currently available on the market in residential clothes washers. In 

addition, DOE associated each efficiency level with specific technologies that manufacturers 

might use to provide interested parties with additional transparency of assumptions and results 

and the ability to perform independent analyses for verification. Chapter 5 of this TSD describes 

the methodology and results of the efficiency level analysis used to derive the cost-efficiency 

relationships.

2.5 MARKUPS ANALYSIS

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

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

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

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

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

increase) to the change in the retailer or distributor sales price.

To develop markups, DOE identified how the products are distributed from the 

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

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

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

provides details on DOE’s development of markups for residential clothes washers.

2.6 ENERGY AND WATER USE ANALYSIS

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

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

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

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

use in American homes. Chapter 7 of this TSD provides more detail about DOE’s approach for 

characterizing energy and water use of residential clothes washers.

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALSYIS

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

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

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

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

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

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

(energy expenses and maintenance costs), the lifetime of the unit, and a discount rate.
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Because the installed cost of a product typically increases while operating costs typically 

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

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

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

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

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

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

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

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

that incorporate both Monte Carlo simulation and probability distributions.

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

2.8 SHIPMENTS ANALYSIS

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

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

based on an analysis of key market drivers for residential clothes washers. In DOE’s shipments 

model, shipments of products are driven by new construction, stock replacements, and other 

types of purchases.

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

product class and the vintage of units in the existing stock. Stock accounting uses product 

shipments as inputs to estimate the age distribution of in-service product stocks for all years. The 

age distribution of in-service product stocks is a key input to calculations of both the NES and 

NPV, because operating costs for any year depend on the age distribution of the stock. 

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

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

provides additional details on the shipments analysis.

2.9 NATIONAL IMPACT ANALYSIS

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

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

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

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

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

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

probability distributions). To assess the effect of input uncertainty on NES and NPV results, 
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DOE may conduct sensitivity analyses by running scenarios on specific input variables. Chapter 

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

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

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

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

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

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

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

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

before the revised standard takes effect.

2.9.1 National Energy and Water Savings 

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

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

national energy and water consumption, and (5) site-to-source conversion factors for energy. 

DOE calculated national energy and water consumption by multiplying the number of units, or 

stock, of each product class (by vintage, or age) by the unit energy and water consumption (also 

by vintage). DOE calculated annual NES based on the difference in national energy and water 

consumption for the base case (without new efficiency standards) and for each efficiency 

standard being considered. DOE estimated energy consumption and savings based on site energy 

consumption, which it then converted to source energy. DOE estimated water consumption and 

savings based on site water use. DOE did not use a conversion factor for water because no such 

factor has been developed. Cumulative energy and water savings are the sum of the NES for 

each year.

2.9.2 Net Present Value of Consumer Benefit

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

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

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

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

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

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

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

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

percent to discount future costs and savings to present values.

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

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

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

as negative values in the NPV.
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DOE expressed savings in operating costs as decreases associated with the lower energy 

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

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

each vintage that survive in a given year.

2.10 CONSUMER SUBGROUP ANALYSIS

The consumer subgroup analysis evaluates economic impacts on selected groups of 

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

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

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

using the LCC spreadsheet model.

For this rulemaking, DOE analyzed as subgroups: (1) low-income households; (2)

households solely occupied by senior citizens. Chapter 11 of this TSD describes the consumer 

subgroup analysis.

2.11 MANUFACTURER IMPACT ANALYSIS 

The MIA assesses the impacts of new energy conservation standards on manufacturers of 

the considered products. Potential impacts include financial effects, both quantitative and 

qualitative, that might lead to changes in the manufacturing practices for these products. DOE 

identified these potential impacts through interviews with manufacturers and other interested 

parties.

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

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

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

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

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

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

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

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

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

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

2.12 UTILITY IMPACT ANALYSIS

The utility impact analysis estimates the effects of amended energy conservation

standards on installed electricity generation capacity and electricity generation. For this analysis, 

DOE adapted NEMS, which is a large multi-sectoral, partial-equilibrium model of the U.S. 
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energy sector that the EIA has developed throughout the past decade, primarily for preparing 

EIA’s AEO. In previous rulemakings, a variant of NEMS (currently termed NEMS-BT, BT 

referring to DOE’s Building Technologies Program), was developed to better address the 

specific impacts of an energy conservation standard. NEMS, which is available in the public

domain, produces a widely recognized baseline energy forecast for the United States. The typical 

NEMS outputs include forecasts of electricity and natural gas sales, prices, and electric 

generating capacity.

DOE conducts the utility impact analysis as a scenario that departs from the latest Annual 

Energy Outlook reference case. In other words, the energy savings impacts from amended energy 

conservation standards are modeled using NEMS-BT to generate forecasts that deviate from the 

AEO reference case. Chapter 13 describes the results of the utility impact analysis.

2.13 EMPLOYMENT IMPACT ANALYSIS

New or amended energy conservation standards can impact employment both directly 

and indirectly. Direct employment impacts are changes in the number of employees at the plants 

that produce the covered products, and at the affiliated distribution and service companies, 

resulting from the adoption of new standards. DOE evaluated direct employment impacts in the 

MIA. Indirect employment impacts may result from expenditures shifting between goods (the 

substitution effect) and changes in income and overall expenditure levels (the income effect) that 

occur due to the adoption of standards. Chapter 14 describes the results of the employment 

impact analysis.

DOE investigated the combined direct and indirect employment impacts of standards 

using the Pacific Northwest National Laboratory (PNNL)’s “Impact of Sector Energy 

Technologies” (ImSET) model. The ImSET model, which was developed for DOE’s Office of 

Planning, Budget, and Analysis, estimates the employment and income effects energy-saving 

technologies produced in buildings, industry, and transportation. In comparison with simple 

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

economic impacts of energy conservation investments.

2.14 ENVIRONMENTAL ASSESSMENT

To comply with the National Environmental Policy Act and the requirements of 42 

U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a), DOE prepared an environmental assessment of the 

impacts of amended energy conservation standards for residential clothes washers on the human 

environment. The primary environmental effects of these standards would be reduced power 

plant emissions resulting from reduced consumption of electricity. DOE assessed these 

environmental effects by using NEMS-BT to provide key inputs to its analysis. The portion of 

the environmental assessment that will be produced by NEMS-BT considers carbon dioxide 

(CO2), nitrogen oxides (NOx), and mercury (Hg). The environmental assessment also considers 
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impacts on SO2 emissions and discusses particulate matter (PM) emissions. Chapter 15 describes 

the results of the environmental assessment.

2.14.1 Carbon Dioxide

In the absence of any Federal emissions control regulation of power plant emissions of 

CO2, a DOE standard is likely to result in reductions of these emissions. The CO2 emissions 

reductions likely to result from a standard will be estimated using NEMS-BT and national energy 

savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the 

difference between emissions estimated by NEMS-BT at each standard level considered and the 

AEO Reference Case. NEMS-BT tracks CO2 emissions using a detailed module that provides

results with broad coverage of all sectors and inclusion of interactive effects.

2.14.2 Sulfur Dioxide

SO2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide 

and regional emissions cap and trading programs, and DOE has preliminarily determined that 

these programs create uncertainty about the standards’ impact on SO2 emissions. Title IV of the 

Clean Air Act sets an annual emissions cap on SO2 for affected EGUs in all 50 states and the 

District of Columbia (D.C.). SO2 emissions from 28 eastern states and D.C. are also limited 

under the Clean Air Interstate Rule (CAIR, 70 Fed. Reg. 25162 (May 12, 2005)), which created 

an allowance-based trading program that would have gradually replaced the Title IV program in 

those states and D.C. Although CAIR has been remanded to EPA by the U.S. Court of Appeals 

for the District of Columbia Circuit (D.C. Circuit), see North Carolina v. EPA, 550 F.3d 1176 

(D.C. Cir. 2008), it will remain in effect until it is replaced by a rule consistent with the D.C. 

Circuit’s earlier opinion in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 

2010, EPA proposed the Transport Rule, a replacement for CAIR, which would limit emissions 

from EGUs in 32 states, potentially through the interstate trading of allowances, among other 

options. 75 FR 45210 (Aug. 2, 2010).

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

imposition of an efficiency standard could be used to permit offsetting increases in SO2

emissions by any regulated EGU. However, if the standard resulted in a permanent increase in 

the quantity of unused emissions allowances, there would be an overall reduction in SO2

emissions from the standards. While there remains some uncertainty about the ultimate effects of 

efficiency standards on SO2 emissions covered by the existing cap and trade system, the NEMSBT modeling system that DOE uses to forecast emissions reductions currently indicates that no 

physical reductions in power sector emissions would occur for SO2.

2.14.3 Nitrogen Oxides

NEMS-BT also has an algorithm for estimating NOx emissions from power generation. 

As with SO2 emissions, these emissions will be affected by CAIR and its replacement. The 

recent legal history surrounding CAIR, including its proposed replacement by the Transport 

Rule, is discussed above.
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Much like SO2 emissions, a cap on NOx emissions would mean that energy conservation 

standards may have little or no physical effect on these emissions in the 28 eastern states and the 

D.C. covered by CAIR or any states covered by the proposed Transport Rule. Because all states 

covered by CAIR opted to reduce NOx emissions through participation in cap-and-trade 

programs for electric generating units, emissions from these sources are currently capped across 

the CAIR region.

DOE used NEMS-BT to estimate the emissions reductions from possible standards in the 

states where emissions are not capped.

2.14.4 Mercury

Similar to emissions of SO2 and NOX, future emissions of Hg would have been subject to 

emissions caps. In May 2005, EPA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 

(May 18, 2005). CAMR would have permanently capped emissions of mercury for new and 

existing coal-fired power plants in all States by 2010. However, on February 8, 2008, the DC 

Circuit issued its decision in New Jersey v. Environmental Protection Agency, in which it 

vacated CAMR. 517 F.3d 574 (D.C. Cir. 2008) EPA has decided to develop emissions standards 

for power plants under the Clean Air Act (Section 112), consistent with the DC Circuit’s opinion 

on the CAMR. See http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf. 

Pending EPA's forthcoming revisions to the rule, DOE is excluding CAMR from its 

Environmental Analysis. In the absence of CAMR, a DOE standard would likely reduce Hg 

emissions and DOE plans to use NEMS-BT to estimate these emission reductions. However, 

DOE continues to review the impact of rules that reduce energy consumption on Hg emissions, 

and may revise its assessment of Hg emission reductions in future rulemakings.

2.14.5 Particulate Matter

DOE acknowledges that particulate matter (PM) exposure can impact human health. 

Power plant emissions can have either direct or indirect impacts on PM. A portion of the 

pollutants emitted by a power plant are in the form of particulates as they leave the smoke stack. 

These are direct, or primary, PM emissions. However, the great majority of PM emissions 

associated with power plants are in the form of secondary sulfates, which are produced at a 

significant distance from power plants by complex atmospheric chemical reactions that often 

involve the gaseous (non-particulate) emissions of power plants, mainly SO2 and NOx. The 

quantity of the secondary sulfates produced is determined by a very complex set of factors 

including the atmospheric quantities of SO2 and NOx, and other atmospheric constituents and 

conditions. Because these highly complex chemical reactions produce PM comprised of different 

constituents from different sources, EPA does not distinguish direct PM emissions from power 

plants from the secondary sulfate particulates in its ambient air quality requirements, PM 

monitoring of ambient air quality, or PM emissions inventories. For these reasons, it is not 

currently possible to determine how the amended standard impacts either direct or indirect PM 

emissions. Therefore, DOE is not planning to assess the impact of these standards on PM 

emissions. Further, as described previously, it is uncertain whether efficiency standards will 
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result in a net decrease in power plant emissions of SO2 and NOx, since those pollutants are now 

largely regulated by cap and trade systems.

2.14.6 Monetization of Emissions Reduction Benefits

In this section, DOE explains how it plans to monetize the benefits associated with 

emissions reductions. For those emissions for which real national emission reductions are 

anticipated (CO2, Hg, and NOx for 22 states), only ranges of estimated economic values based on 

environmental damage studies of varying quality and applicability are available. Therefore, DOE 

reports estimates of monetary benefits derived using these values and consider these benefits in 

weighing the costs and benefits of each of the standard levels considered.

In order to estimate the monetary value of benefits resulting from reduced emissions of 

CO2 emissions, it is DOE’s intent to use in its analysis the most current Social Cost of Carbon 

(SCC) values developed and/or agreed to by interagency reviews. The SCC is intended to be a 

monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, 

including, but not limited to, net agricultural productivity loss, human health effects, property 

damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to 

monetize the harms associated with climate change will raise serious questions of science, 

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

the SCC can be used to provide estimates of the social benefits of reductions in GHG emissions. 

At the time of this notice, the most recent interagency estimates of the potential global 

benefits resulting from reduced CO2 emissions in 2010 were $4.7, $21.4, $35.1, and $64.9 per 

metric ton in 2007 dollars. These values are then adjusted to 2009$ using the standard GDP 

deflator value for 2008 and 2009. For emissions (or emissions reductions) that occur in later 

years, these values grow in real terms over time. Additionally, the interagency group determined 

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

calculate domestic effects, although preference will be given to consideration of the global 

benefits of reducing CO2 emissions. See appendix 15-A of this TSD for the full range of annual 

SCC estimates from 2010 to 2050. To calculate a present value of the stream of monetary values, 

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

to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also intends to estimate the potential monetary benefit of reduced NOX emissions 

resulting from the standard levels it considers. For NOx emissions, available estimates suggest a 

very wide range of monetary values for NOX emissions, ranging from $370 per ton to $3,800 per 

ton of NOX from stationary sources, measured in 2001$ (equivalent to a range of $447 to $4,591 

per ton in 2009$). Refer to the OMB, Office of Information and Regulatory Affairs, “2006 

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

State, Local, and Tribal Entities,” for additional information. In accordance with U.S. Office of 
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Management and Budget (OMB) guidance, DOE will conduct two calculations of the monetary 

benefits derived using each of the economic values used for NOx, one using a real discount rate 

of 3 percent and another using a real discount rate of 7 percent.

DOE does not plan to monetize estimates of Hg in this rulemaking. DOE is aware of 

multiple agency efforts to determine the appropriate range of values used in evaluating the 

potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance 

regarding consistent valuation and reporting of Hg emissions before it once again monetizes Hg 

in its rulemakings.

2.15 REGULATORY IMPACT ANALYSIS

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

“Regulatory Planning and Review,” 58 FR 51735, October 4, 1993, which was subject to review 

under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) at the 

Office of Management and Budget. The RIA evaluated non-regulatory alternatives to standards, 

in terms of their ability to achieve significant energy savings in the considered products at a 

reasonable cost, and compared the effectiveness of each one to the effectiveness of the adopted 

standards. Chapter 16 of this TSD describes the results of the regulatory impact analysis.

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

and other interested parties can result in substantial improvements to energy efficiency or 

reductions in energy consumption. DOE considered the likely effects of non-regulatory 

initiatives on product energy use, consumer utility, and LCC. DOE based its assessment on the 

actual impacts of any such initiatives to date, but also considered information presented 

regarding the impacts that any existing initiative might have in the future.