```

[Federal Register Volume 76, Number 160 (Thursday, August 18, 2011)]
[Proposed Rules]
[Pages 51281-51289]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-21078]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket No. EERE-2010-BT-NOA-0028]
RIN 1904-AC24

Energy Conservation Program for Consumer Products and Certain 
Commercial and Industrial Equipment: Statement of Policy for Adopting 
Full-Fuel-Cycle Analyses Into Energy Conservation Standards Program

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

ACTION: Statement of Policy.

-----------------------------------------------------------------------

SUMMARY: In its effort to adopt several National Academy of Sciences 
(the Academy) recommendations, the U.S. Department of Energy (DOE) 
intends to modify the methods it uses to estimate the likely impacts of 
energy

[[Page 51282]]

conservation standards for covered products on energy use and emissions 
and will work to expand the energy use and emissions information made 
available to consumers. Specifically, DOE intends to use full-fuel-
cycle (FFC) measures of energy use and emissions, rather than the 
primary (or site) energy measures it currently uses. Additionally, DOE 
intends to work collaboratively with the Federal Trade Commission (FTC) 
to make readily available to consumers information on the FFC energy 
and greenhouse gas (GHG) emissions of specific products to enable 
consumers to make cross-class comparisons of product energy use and 
emissions.

ADDRESSES: The docket is available for review at http://www.regulations.gov, including the Federal Register notice of proposed 
policy, the public meeting attendee list and transcript, all comments 
received, and other supporting documents/materials. All documents in 
the docket are listed in the http://www.regulations.gov index. However, 
not all documents listed in the index may be publicly available, such 
as information that is exempt from public disclosure.
    A link to the docket Web page can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/full_fuel_cycle_analyses.html. The regulations.gov Web page will contain simple 
instructions on how to access all documents, including public comments, 
in the docket.

FOR FURTHER INFORMATION CONTACT: 

Mr. Anthoney Pavelich, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies, EE-21, 1000 
Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 
287-1846. E-mail: Anthoney.Pavelich@ee.doe.gov.
Ms. Ami Grace-Tardy, U.S. Department of Energy, Office of the General 
Counsel, GC-71, 1000 Independence Avenue, SW., Washington, DC 20585-
0121. Telephone: (202) 586-5709. E-mail: Ami.Grace-Tardy@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

I. Summary of the Policy
II. Background
III. General Discussion and Discussion of Comments
    A. Considering FFC Energy and Emission Impacts of Prospective 
Efficiency Standards
    B. Using FFC Energy Efficiency Metrics in DOE's Assessment of 
Energy Conservation Standards Impacts
    C. Estimated Impacts From Expansion of Considered GHG Emissions
    D. Methodology for Estimating FFC Energy and Emission Impacts
    E. Consumer Information on FFC Impacts of Specific Covered 
Products
IV. Procedural Issues and Regulatory Review
    A. Review Under the National Environmental Policy Act of 1969
    B. Review Under the Information Quality Bulletin for Peer Review
V. Approval of the Office of the Assistant Secretary

I. Summary of the Policy

    In its August 2010 Notice of Proposed Policy (referred to herein as 
``Notice'' or ``NOPP'') (75 FR 51423), the U.S. Department of Energy 
(DOE) proposed to use full-fuel-cycle (FFC) measures of energy use and 
greenhouse gas (GHG) and other emissions in the national impact 
analyses and environmental assessments included in rulemakings for 
future energy conservation standards (referred to herein as ``energy 
conservation standards'' or ``energy efficiency levels''). DOE stated 
that using the FFC measure in these analyses will provide more complete 
information about the total energy use and GHG emissions associated 
with a specific energy efficiency level than the primary (or site) 
energy measures currently used by DOE. DOE also indicated that 
utilizing the FFC measure for environmental assessments and national 
impact analyses would not require alteration of the measures used to 
determine the energy efficiency of covered products (referred to herein 
as ``appliances and equipment'' or just ``appliances'') because the 
Energy Policy and Conservation Act (EPCA), as amended, requires that 
such measures be based solely on the energy consumed at the point of 
use. (42 U.S.C. 6291(4)-(6), 6311(3)-(4), (18)) However, the Notice 
stated that using the FFC measure in lieu of primary energy in 
environmental assessments and national impact analyses could affect the 
alternative standard levels that DOE considers before choosing an 
energy efficiency level in the future. A policy change to consider FFC 
impacts would increase the energy and emission reductions estimated to 
result from energy efficiency levels. This shift would, consequently, 
increase some of the estimated benefits of such standards.
    The NOPP also proposed that DOE would significantly improve upon 
the Federal Trade Commission's (FTC) existing online databases of 
appliance site energy use and efficiency ratings by including FFC 
energy use and emissions data. DOE's Notice indicated that the improved 
databases could provide tools to enable users to easily compare a 
product's energy use, emissions, and costs to similar products, 
including products that are in different classes, have different 
features or use different fuels. DOE solicited public comment on 
whether such an online service would likely benefit consumers and, if 
so, the most effective way to present this information. DOE also 
solicited comments on the merits of providing GHG emissions and other 
product-specific comparative data on Energy Guide labels.
    After consideration of the comments received on its NOPP, DOE has 
decided to use FFC measures of energy use and GHG and other emissions 
in the national impact analyses and environmental assessments included 
in future energy conservation standards rulemakings. DOE currently uses 
primary (or site) energy consumption for national impact analyses and 
environmental assessments using the National Energy Modeling System 
(NEMS) developed by DOE's Energy Information Administration (EIA). DOE 
will continue to rely upon NEMS-based estimates of primary energy and 
emission impacts, but intends to use conversion factors generated by 
the DOE Argonne National Laboratory (ANL) Greenhouse Gases, Regulated 
Emissions, and Energy Use in Transportation (GREET) model to convert 
these estimates into estimates of FFC energy and emission impacts. DOE 
also will, subject to the availability of funds, support efforts to 
make readily available to consumers and other users of regulated 
products information on the FFC energy use and emissions associated 
with specific products, and the means to compare this energy use and 
emissions to other comparable products, whether or not those other 
products use the same type of energy. The following sections more 
clearly state today's policy as it applies to the different issues 
raised in DOE's NOPP.

II. Background

    Section 1802 of the Energy Policy Act of 2005 (EPACT 2005) directed 
DOE to commission a study with the National Academy of Sciences (the 
Academy) to examine whether the goals of energy conservation standards 
are best served by measurement of energy consumed, and efficiency 
improvements at, the actual point-of-use or through the use of the FFC, 
beginning at the source of energy production (Pub. L. 109-58). The FFC 
measure includes point-of-use energy, the energy losses associated with 
generation, transmission, and distribution of electricity, and the 
energy consumed in extracting, processing, and transporting or 
distributing primary fuels. The study, ``Review of Site (Point-of-Use) 
and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building 
Appliance Energy-

[[Page 51283]]

Efficiency Standards,'' (Academy report) was completed in May 2009 and 
included five recommendations. A copy of the study can be downloaded 
at: http://www.nap.edu/catalog.php?record_id=12670.
    The Academy's primary recommendation is that ``DOE consider moving 
over time to use of a FFC measure of energy consumption for assessment 
of national and environmental impact, especially levels of GHG 
emissions, and to providing more comprehensive information to the 
public through labels and other means such as an enhanced Web site.'' 
\1\ The Academy further recommended that DOE work with the FTC to 
consider options for making product specific GHG emissions estimates 
available to consumers. More specifically, the Academy recommended that 
DOE use the FFC measure of energy consumption for the environmental 
assessment and national impact analyses used in energy conservation 
standards rulemakings.
---------------------------------------------------------------------------

    \1\ Academy Report at p. 10.
---------------------------------------------------------------------------

    DOE's energy conservation program for consumer products and certain 
commercial and industrial equipment sets energy conservation standards 
to reduce U.S. energy consumption in residential and commercial 
buildings. DOE separates covered products into classes differentiated 
by energy source, technology, and capacity. EPCA, as amended, requires 
DOE to set energy conservation standards for covered products based on 
energy consumption at the point-of-use. (42 U.S.C. 6291(4)-(6), 
6311(3)-(4), (18))
    The point-of-use method for measuring energy consumption considers 
the use of electricity, natural gas, propane, and/or fuel oil by an 
appliance at the site where the appliance is operated. DOE uses point-
of-use measures of energy consumption, usually presented in the 
physical units typically used for the relevant fuel (or electricity), 
for setting energy conservation standards. Before choosing an energy 
conservation standard, however, DOE performs several analyses to 
estimate the likely impacts of alternative standard levels. DOE impact 
analyses include a: life-cycle cost analysis, manufacturer impact 
analysis, national impact analysis, engineering analysis, screening 
analysis, environmental assessment, utility impact assessment, and 
employment impact assessment. For many years, DOE has used primary 
energy measures of energy consumption and related emissions in several 
of these analyses, including the national impact analysis and the 
environmental assessment, to estimate the total projected energy 
savings and emission impacts likely to result from the imposition of 
alternative standard levels. Primary energy includes energy consumed 
on-site, plus energy losses that occur in the generation, transmission, 
and distribution of electricity.
    Based on the results of these various analyses, DOE then proposes 
(and, ultimately, adopts) the energy conservation standard that it 
determines achieves the maximum energy efficiency improvement that is 
technologically feasible and economically justified as required by 
EPCA, as amended. (42 U.S.C. 6295(o)(2)(A) Additionally, DOE must 
determine that the establishment of a new or amended energy 
conservation standard will result in significant energy conservation. 
(42 U.S.C. 6295(o)(3)(B))

III. General Discussion and Discussion of Comments

    In response to DOE's Notice, DOE received comments from 41 
entities. Comments were submitted by utilities, research facilities, 
consumer representatives, non-profit organizations, farmers and others. 
In the following sections, the comments received concerning this 
proposed change in policy are summarized and addressed, and DOE 
provides a statement of the resulting policy that it will apply in the 
development of future energy efficiency rules and related activities.
    There were, however, a number of comments received in response to 
the Notice that are peripheral to the issues addressed in the Notice. 
For example, several comments indicated that the Department should not 
use estimates of the social cost of carbon in assessing the impacts of 
prospective energy conservation standards and others disagreed with the 
methods now used by DOE to estimate such cost. (See e.g., NRECA, Public 
Comment, EERE-2010-BT-NOA-0028-0001, p. 3) These issues have been 
addressed in previous rulemakings, would not be affected by today's 
policy change to use FFC analyses, and were not the subject of the 
Academy's report.
    American Public Power Association (APPA) commented that DOE should 
be noting the high degree of subjectivity involved in the monetary 
benefit of reduced carbon dioxide (CO2) in the monetization 
of societal benefits. (APPA, Public Comment, EERE-2010-BT-NOA-0028-
0033, p. 4) This comment on the treatment of the monetary benefits of 
reduced CO2 emissions is outside the scope of the Notice and 
this final Policy Statement. However, DOE notes that DOE's analysis 
does identify such benefits separately in its life-cycle cost and net 
present value benefit calculations.
    The Edison Electric Institute (EEI) indicated that the method used 
by DOE to derive estimates of primary energy inappropriately 
``assigns'' a fossil fuel heat rate for electricity generated by 
renewable and nuclear resources. EEI indicated that this approach 
resulted in an inflated value for the national energy savings 
associated with the electricity demand reductions estimated by 
appliance efficiency standards analyses. (EEI, Public Comment, EERE-
2010-BT-NOA-0028-0007, p. 3) Today's policy would not modify the 
methods used by DOE to calculate primary energy.
    Michigan dairy farmers provided a comment concerning the final 
water heater energy conservation standard. (Weiss, Public Comment, 
EERE-2010-BT-NOA-0028-0009, p. 1) Comments on DOE directives made under 
previous energy conservation standards rulemakings are outside the 
scope of the Notice and are not addressed in this Statement of Policy.

A. Considering FFC Energy and Emission Impacts of Prospective 
Efficiency Standards

    In its August 2010 Notice, DOE proposed to modify the methods it 
uses to estimate the likely impacts of energy conservation standards 
for covered products in order to use FFC measures of energy and related 
emissions in national impact analyses and environmental assessments, 
rather than the primary energy measures that DOE currently uses in 
these analyses. The NOPP also provided various tables with examples of 
the preliminary estimates of the conversion factors that DOE would use 
to shift its estimates of the primary energy savings and emission 
reductions likely to result from various energy efficiency levels to 
their FFC equivalents.
    A few of the comments noted that existing law requires the 
development of efficiency standards based on the energy consumed by an 
appliance at its point-of-use (or site energy). While some commenters 
questioned whether this legal constraint was appropriate, no comments 
argued that DOE was not obligated by existing law to set its energy 
conservation standards using metrics derived from point-of-use (or 
site) energy. In a related comment, the American Council for an Energy-
Efficient Economy (ACEEE) recommended that DOE make a statement 
indicating DOE's intention of keeping gas and electric appliances in 
separate product classes for energy

[[Page 51284]]

conservation standards. (ACEEE, Public Comment, EERE-2010-BT-NOA-0028-
0013, p. 1) The Consumer Energy Council of America (CECA) recommended 
that energy conservation standards continue to be fuel neutral, as they 
indicated was directed by EPCA, as amended, and that DOE should not 
identify or establish favored energy sources. (CECA, Public Comment, 
EERE-2010-BT-NOA-0028-0012, p. 2)
    In response, DOE is confirming that it intends to continue to set 
energy conservation standards for covered products based on energy 
consumption at the point-of-use, as required by EPCA, as amended. (42 
U.S.C. 6291(4)-(6), 6311(3)(4), (18)) DOE is also confirming that it 
will continue to consider comparable products that use different fuels 
in separate classes as required by 42 U.S.C. 6295(q)(1). However, DOE 
does not agree that EPCA, as amended, mandates fuel neutral energy 
conservation standards. In evaluating and establishing energy 
conservation standards, DOE divides covered products into classes based 
on the type of energy used, their size or capacity and other features 
that directly affect the product's energy use or efficiency. EPCA, as 
amended, specifically provides that energy conservation standards for 
different product classes can have higher or lower levels. (See 42 
U.S.C. 6295(q)) DOE sets the energy conservation standard for each 
product class independently based upon the maximum energy efficiency 
improvement that is technologically feasible and economically 
justified, and that results in significant conservation of energy for 
each product class. (See 42 U.S.C. 6295(o)(2)(A)-(B) and (3)(B))
    A number of comments focused on the primary issue raised by the 
Notice: Should DOE consider the FFC energy and emission impacts of 
prospective energy conservation standards in determining whether a 
particular standard should be selected? An appliance efficiency 
standard is chosen based on the results of various analyses--some of 
which EPCA, as amended, directs DOE to perform and some of which DOE 
performs under the discretionary provisions of EPCA. (42 U.S.C. 
6295(o)(2)(B)) EPCA, as amended, does not mandate the use of point-of-
use measures in these analyses, although the ultimate energy 
conservation standard chosen must be expressed as a point-of-use 
measure. (42 U.S.C. 6291(4)-(6), 6311(3)-(4), (18))
    Several commenters supported DOE's proposal to begin considering 
the FFC energy and emission impacts of prospective energy conservation 
standards. The American Gas Association (AGA) indicated their support 
by stating, ``Current efficiency standards and appliance labels rely on 
incomplete energy consumption and emission measurements.'' (AGA, Public 
Comment, EERE-2010-BT-NOA-0028-0004, p. 1) Also in support, the 
National Propane Gas Association commented that the FFC approach will 
enable ``a more comprehensive analysis of total energy and 
environmental impacts of energy efficiency standards.'' (NPGA, Public 
Comment, EERE-2010-BT-NOA-0028-0034, p. 2)
    The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) 
expressed their concern that the use of FFC factors would lengthen the 
rulemaking process by sidetracking discussions of important aspects of 
a rulemaking, such as benefits to the consumer. (AHRI, Public Comment, 
EERE-2010-BT-NOA-0028-0017, p. 3)
    DOE does not believe that the incorporation of FFC energy and 
emission impact analyses will substantially alter the focus of public 
review and comment on DOE's energy conservation standards rulemakings. 
DOE already conducts and presents the results of analyses on a broad 
range of criteria other than the direct impacts of appliance efficiency 
standards on the users of the covered product, as required by statute. 
While new impact analyses or methods often receive considerable 
attention when they are introduced, over time, public comments tend to 
focus on those elements of DOE's analysis that have the greatest impact 
on the identification and selection of the minimum standard level that 
is ultimately adopted. DOE does not believe that the use of FFC factors 
in the national impacts analysis and environmental assessment will 
significantly impact the selection of the minimum standard level 
adopted.
    Other commenters also opposed such a change to the use of FFC 
factors. CECA and EEI both stated that considering FFC impacts would 
push the analysis used to set energy conservation standards beyond what 
is economically feasible and technically justified. EEI also questioned 
whether DOE had a sufficiently reliable basis for estimating FFC energy 
and emission impacts. (CECA, Public Comment, EERE-2010-BT-NOA-0028-
0042, p. 7; EEI, Public Comment, EERE-2010-BT-NOA-0028-0007, p. 2) 
Specifically, EEI commented that ``there is significant disagreement'' 
as to the appropriate FFC and primary energy factors for the same 
energy source among different entities. (EEI, Public Comment, EERE-
2010-BT-NOA-0028-0037, pp. 5-6)
    Under today's policy, DOE will continue to use EIA estimates of 
primary energy and emission impacts as the basis for its impact 
analyses and the GREET model will be used simply to convert these 
primary energy values to their FFC equivalents. This approach avoids 
making any changes to the methods long used by DOE's EIA (and by DOE's 
appliance efficiency standards program) to convert energy end-use 
values to primary energy values, which are the source of many of the 
disagreements referenced by EEI. DOE's ANL has, in the past, compared 
different life-cycle assessment methods and found that the results are 
consistent with those generated by GREET when the same critical input 
parameters are used. This analysis will be cited in future standards 
rulemakings, as appropriate.
    The statute specifically directs DOE to set appliance efficiency 
standards at levels that achieve the maximum energy savings that is 
technologically feasible and economically justified; DOE must also 
determine that the establishment of the chosen standard will result in 
significant energy conservation. (42 U.S.C. 6295(o)(2)-(3)) DOE does 
not believe that the consideration of the FFC energy and emission 
impacts in the national impacts analysis and environmental assessment 
of a standard under consideration is in conflict with this statutory 
directive. In practice, the consideration of FFC energy and emission 
impacts is likely to have comparatively small effects on DOE's analysis 
of the economic justification of specific alternative appliance 
efficiency standards. As indicated by the illustrative tables included 
in the NOPP that provided preliminary estimates of FFC conversion 
factors, the estimated energy savings likely to result from efficiency 
levels under consideration using the FFC method could increase by 
approximately seven to fifteen percent for gas or oil-fired appliances 
and two to fifteen percent for electric appliances, relative to the 
estimates of primary energy savings used currently. These relative 
increases were based on the ratio of FFC energy use and primary energy 
use, which were estimated by the GREET model. This increase in energy 
savings would not affect the estimated value or cost of the resulting 
energy savings, nor the estimated net present value of consumer life-
cycle costs savings, since all energy costs savings are based on DOE 
estimates of the energy costs (derived from retail energy prices) paid 
directly by energy users. As a result of a change to consider FFC 
impacts, there also would be a

[[Page 51285]]

comparable increase in the CO2 emission reductions and in 
the estimated monetary value of such emission reductions. DOE believes 
that these adjustments in the estimated energy savings and in the value 
of the benefits associated with reduced CO2 emissions would 
enhance, rather than distort, DOE's analyses by more fully representing 
the total energy and emissions associated with the delivery of energy 
to consumers.
    While estimates of the additional energy use and emissions 
resulting from the FFC methodology will add some new uncertainties to 
DOE's impact analyses, these new uncertainties are small relative to 
the total additional energy and emission impacts being estimated and 
are comparable to the uncertainties associated with previous DOE 
analyses. Since FFC-based estimates will more fully reflect the total 
energy and emission reductions associated with the imposition of energy 
conservation standards and are not significantly less reliable than 
current methods, DOE has concluded that such estimates should be used 
in future impact analyses.
    Policy Statement: In the national impacts analyses and 
environmental assessments of future energy conservation standards 
rulemakings, DOE intends to include impact estimates based on FFC 
energy and emissions, rather than the previous practice of estimating 
such impacts based on the likely effects on primary energy and 
emissions.

B. Using FFC Energy Efficiency Metrics in DOE's Assessment of Energy 
Conservation Standards Impacts

    In the NOPP, DOE proposed to use FFC measures of energy use and 
related emissions in the national impact analyses and environmental 
assessments included in future energy conservation standards 
rulemakings, but did not propose to create or use extended site or FFC 
measures of energy efficiency in its rules or regulatory impact 
analyses.
    For rulemakings for covered products for which there is a choice of 
fuel, AGA noted the Academy's third recommendation that ``efficiency 
ratings should be calculated using the extended site (source) measure 
of energy consumption until the Department can consider and complete a 
transition to the use of a full fuel-cycle measure of consumption.'' 
AGA recommended that DOE make ``side-by-side comparisons of the 
calculated energy savings from proposed efficiency standard for each 
appliance'' as part of its analysis of the likely impacts of 
prospective standards. While recognizing that DOE does not have the 
statutory authority to use FFC energy efficiency metrics as the basis 
for DOE conservation standards, AGA recommended that DOE create and use 
such metrics as part of its analysis of the likely impacts of 
prospective energy conservation standards. (AGA, Public Comment, EERE-
2010-BT-NOA-0028-0035, pp. 4-5)
    DOE has the statutory authority to create and consider extended 
site or FFC energy efficiency metrics as part of its analysis of the 
likely impacts of prospective energy conservation standards. (See 42 
U.S.C. 6295(o)(2)(B)(i)(VII)) Extended site or FFC energy efficiency 
metrics would provide DOE with a rough indication of the likely energy 
impacts of a shift in the market of products using different fuels 
(i.e., fuel switching) that might result from the imposition of 
alternative energy conservation standards under consideration. If DOE's 
analysis indicated that a particular standard level under consideration 
would likely lead to a shift in consumer purchases from products with 
higher FFC efficiency to products with lower FFC efficiency, then DOE 
decision-makers would be alerted that such a shift would likely 
undercut the energy savings (and emission reductions) resulting from 
that standard level.
    For this reason, DOE carefully considered whether it should 
establish a policy to calculate and use in future rulemakings such 
extended-site or FFC efficiency metrics for appliances for which there 
is a fuel choice. DOE concluded, however, that the use of extended site 
or FFC energy efficiency metrics would only provide a rough indicator 
of the impacts of possible fuel switching on total energy savings and 
emissions and, therefore, would not enhance current DOE estimates of 
the direct impacts of alternative standard levels on fuel choice, 
energy savings, emissions and other factors. On the other hand, such 
FFC energy efficiency metrics may prove to be a useful mechanism for 
conveying complex information to consumers. The issue of consumer 
information is discussed further in Section E of this notice.
    Policy Statement: After careful consideration, DOE has concluded 
that calculating and comparing efficiency ratings on an FFC basis is 
not likely to significantly enhance the considerable information 
already available on the likely impacts of prospective energy 
conservation standards on total energy use, emissions and other 
factors. Consequently, DOE does not intend to create or use such 
metrics in the development of future appliance efficiency standards. 
While DOE already accounts for the potential impacts of fuel switching 
in its energy conservation standards analyses (where appropriate), it 
will make the methodologies and results of fuel switching more explicit 
in all rulemakings in which fuel switching might occur.

C. Estimated Impacts From Expansion of Considered GHG Emissions

    As part of its rulemaking analyses, DOE currently estimates the 
impacts of alternative standard levels on emissions of Carbon Dioxide 
(CO2), Sulfur Dioxide (SO2), Nitrogen Oxide 
(NOX) and Mercury. Of these, CO2 is the only GHG 
addressed in DOE's rulemaking analyses. In the NOPP, DOE proposed to 
add estimates of the impact of alternative energy conservation 
standards on the emissions of two other types of GHGs, methane 
(CH4) and nitrous oxide (N2O), as part of the 
environmental assessments included in future rulemakings. These 
estimates would be provided both as physical units of the emissions of 
these gases and as CO2 equivalents of these emissions based 
on their climate forcing effects (using generally accepted conversion 
factors). Although not directly addressed in the Academy's report, such 
emissions have a direct association with the production and use of 
energy and adding reduction estimates of these gases will allow DOE to 
provide a more comprehensive assessment of the impact of standards on 
GHG emissions. These two gases are included in national GHG emissions 
inventories worldwide and, according to the EPA, they are among the 
principle GHGs that enter the atmosphere due to energy production. 
Addition of reduction estimates of these gases to the environmental 
assessments of future energy efficiency rulemakings could increase the 
estimated impacts of alternative standard levels on CO2-
equivalent GHG emissions by approximately five to seventeen percent, as 
indicated by the preliminary estimates provided in the NOPP.
    Southern Company agreed in their comments that it is reasonable to 
use estimates of the CO2-equivalent emissions of these two 
gases in environmental assessments, stating that the addition would 
provide ``useful, more complete information on the environmental 
impacts of appliance use.'' They also noted ``that most leakage of 
methane from natural gas comes from distribution systems, and electric 
generation generally receives direct service from natural gas 
transmission systems without using gas distribution systems. Therefore 
the

[[Page 51286]]

methane-related global warming impact for electric generation should be 
much less than the adjustment for methane leakage for direct consumer 
use of natural gas, which does use natural gas distribution systems.'' 
(Southern, Public Comment, EERE-2010-BT-NOA-0028-0027, p. 4)
    DOE notes that, for electricity generation from natural gas, the 
GREET model includes methane leakage associated with gas transmission 
systems, but not leakage associated with gas distribution from city 
gate to households. Also, methane leakage in gas production is 
accounted for in the natural gas fuel cycle in GREET.
    NEEA questioned whether the flaring of natural gas and other gases 
during oil production, and methane from coal mining, is included in the 
FFC emissions analysis. (NEEA, Public Comment, EERE-2010-BT-NOA-0028-
0021, p. 3) The emissions from both flaring and venting of gas in oil 
production are accounted for in GREET simulations. Methane released 
into the atmosphere during the production of oil or gas, or during coal 
mining, is also considered as an emission.
    DOE did not receive any comments opposing the addition of these 
gases.
    Policy Statement: DOE intends to add estimates of the impacts of 
alternative energy conservation standards on emissions of 
CH4 and N2O, two significant GHGs, to future 
environmental assessments. These impact estimates will be provided in 
the physical units of these gases, as well as their CO2-
equivalent values. These values, however, will not be used to develop 
estimates of the monetary value of reductions in CO2 
emissions until such time as the methodology used to calculate the 
social cost of carbon is explicitly modified to cover such gases.

D. Methodology for Estimating FFC Energy and Emission Impacts

    DOE proposed to use the GREET model in energy conservation 
standards rulemakings to convert primary energy and emission impacts, 
including CH4 and N2O, to FFC energy and emission 
impacts. The GREET model was originally developed in 1995 and is 
routinely updated with support from several DOE programs. It includes 
more than 100 fuel production pathways, including those addressed by 
the FFC methodology to be used for product standards rulemakings. The 
model and its technical documentation are available at the GREET Web 
site (http://greet.es.anl.gov/). At present, there are more than 15,000 
registered GREET users worldwide.
    In the NOPP, for each alternative energy conservation standard 
under consideration, DOE proposed to first estimate the primary energy 
and related emission impacts by using the same methodologies and NEMS 
projections that DOE's conservation standards program has traditionally 
used. Second, for each alternative energy conservation standard under 
consideration, DOE proposed to use the energy conversion factors that 
are generated using the GREET model to convert primary energy use and 
emission impacts to FFC energy use and emission impacts.
    EEI asked which version of the GREET model was used to derive the 
preliminary conversion values shown in Tables 1 and 2 of the Notice. 
(EEI, Public Comment, EERE-2010-BT-NOA-0028-0037, p. 5) The most recent 
version of the GREET model available at the time, version 1.8d, was 
used to calculate the values in Tables 1 and 2. There will be a new 
version of GREET released in 2011. The latest version of GREET will be 
used when the FFC is calculated in future energy conservation standards 
rulemakings.
    Southern Company commented that DOE's proposal to use existing 
methodologies and NEMS, together with conversion factors generated by 
the GREET model, was a reasonable approach. (Southern, Public Comment, 
EERE-2010-BT-NOA-0028-0027, p. 3) Both AGA and the Natural Gas Supply 
Association (NGSA) commented in support of the GREET model, stating 
that GREET provides ``an adequate modeling platform for the calculation 
of energy consumption and greenhouse gas emissions data as part of the 
Department's energy conservation standards program.'' (AGA, Public 
Comment, EERE-2010-BT-NOA-0028-0035, p. 3; NGSA, Public Comment, EERE-
2010-BT-NOA-0028-0019, p. 2)
    The American Public Gas Association (APGA) commented that it is 
important that DOE use a transparent process to ensure that 
stakeholders understand how the GREET model would be used to calculate 
FFC energy and GHG emissions impacts as part of energy conservation 
standards rulemakings. The National Association of Home Builders 
expressed concern about the level of technical documentation and 
verifiable data provided in the Notice. (APGA, Public Comment, EERE-
2010-BT-NOA-0028-0024, p. 5)
    The methods, data and assumptions used in the GREET model were 
subject to public review and comment under separate Federal and State 
rulemakings. When the current GREET model, or a new version of the 
model, is used in future DOE rulemakings, the methods, data and 
assumptions will again be fully documented and subject to public review 
and comment.
    The Northwest Energy Efficiency Alliance (NEEA) commented that the 
conversion factors and other GREET model estimates presented in the 
Notice appeared frozen in time, yielding minimal changes for most fuels 
analyzed from 2010 to 2030. (NEEA, Public Comment, EERE-2010-BT-NOA-
0028-0021, p. 1) The NEMS and GREET models both forecast or simulate 
changes in energy use and emissions over time. The small changes in the 
conversion factors in Tables 1 and 2 of the Notice reflect the fact 
that large, long-lived capital stocks dominate the energy production 
and transport sector, and change slowly over time. New facilities or 
processes replace existing facilities and processes only gradually over 
many decades. Retrofitting of existing facilities to alter the fuels 
used or substantially reduce emissions can result in more rapid 
changes, and there are efforts to continually improve the ability of 
the GREET model to capture these types of changes.
    Additionally, NEEA asked how to interpret the analyses as they 
apply to nuclear-fueled electricity, noting that the energy returned on 
energy invested (EROEI) for nuclear electricity is likely different 
than the two EROEI values reflected in the current DOE ANL estimates of 
the FFC factors for this source of energy. (NEEA, Public Comment, EERE-
2010-BT-NOA-0028-0021, p. 2) GREET simulations for energy input versus 
output are based on fossil energy input only. This may be the reason 
why the imputed EROEI from the GREET model appears higher than some 
other estimates. The FFC factors are not the same as the EROEI values, 
since EROEI cannot separate use of different types of energy sources, 
which is necessary for FFC and GHG emission estimation. Details of the 
nuclear electricity pathway used in GREET are documented in a paper 
published in 2007 and posted at the GREET Web site.
    EEI commented that the values in Tables 1 and 2 of the Notice are 
stochastic and do not include all aspects of energy production (such as 
energy used for oil drilling or to produce chemicals used in the 
natural gas hydraulic fracturing process). In addition, the tables do 
not show the range of values in the GREET model for different energy 
production methods. (EEI, Public Comment, EERE-2010-BT-NOA-0028-0037, 
p. 5)
    DOE agrees that the values generated by the GREET model reflect 
industry averages that are the product of widely variable processes and 
practices. DOE

[[Page 51287]]

also agrees that the values do not represent all emissions associated, 
either directly or indirectly, with the production and delivery of 
energy to end-users, although DOE believes that the values generated by 
the GREET model will enable DOE to use estimates of energy and emission 
impacts that are a close approximation of the definition of FFC 
analysis recommended by the Academy. More specifically, while the 
current GREET model does not include energy use and emissions of oil 
exploration, it does include the impacts of upstream oil operations 
(including recovery and drilling). In addition, the energy and emission 
impacts of shale gas production will be added to the 2011 update of the 
GREET model.
    Details of the estimates used for specific technology pathways 
(such as residual oil production, natural gas production, electricity 
generation) are provided in the GREET model and the methods, data and 
assumptions underlying these estimates are provided in the GREET 
documentation, both of which are available at http://greet.es.anl.gov/.
    APPA commented that the GREET model is susceptible to multiple 
forms of error because of its large set of base assumptions. APPA also 
stated that the model is subject to manipulation. (APPA, Public 
Comment, EERE-2010-BT-NOA-0028-0033, p. 3) APPA is correct that the 
GREET model, like any life-cycle assessment (LCA) model, is based on a 
multitude of assumptions. The data supporting these assumptions come 
from Federal and State databases, as well as data provided by industry. 
The public can view the model, its assumptions, and the data. This 
transparency helps produce reliable estimates of FFC impacts.
    CECA commented that: ``A simple conversion factor from site energy 
to full fuel cycle is not adequate. There are myriad criteria for 
determining full-fuel-cycle analysis and reaching agreement on a 
satisfactory procedure would likely be beyond DOE/EERE's time and 
resources.'' CECA also cited environmental externalities such as those 
in the European Commission's ExternE model. The ExternE model includes 
not just energy costs but societal concerns such as environmental 
impacts, global warming, accidents, energy security, employment 
impacts, and depletion of non-renewable resources. (CECA, Public 
Comment, EERE-2010-BT-NOA-0028-0012, p. 3) The State of California 
developed a model for transportation fuels which defines a ``Full Fuel 
Cycle Assessment'' as evaluating and comparing the full environmental 
and health impacts of each step in the life-cycle of a fuel, which 
include, but are not limited to, feedstock extraction, transport, 
storage, fuel production, distribution, vehicle operation, refueling, 
combustion, or conversion and evaporation. (California Energy 
Commission, Development of the State Plan for Alternative 
Transportation Fuels, AB 1007, 3/2/2007) These and other models, in 
addition to GREET, are cited in the Academy's report. Other entities 
had similar concerns regarding other available models. (AHRI, Public 
Comment, EERE-2010-BT-NOA-0028-0017, p. 3) AHRI also noted that the 
GREET model was not ``specifically designed for use in DOE efficiency 
standard rulemakings.''
    Today's Policy Statement addresses the energy use and associated 
emissions directly used in, or emitted from, the point of primary fuel 
production to the point of end-use, as specified in the recommendations 
of the Academy's report. Consequently, the scope of FFC, as this term 
is used in this Policy Statement, is limited. Other social and 
environmental impacts, such as the indirect energy and emission impacts 
associated with the manufacture of covered appliances and equipment, or 
the manufacture of the equipment used in fuel production and refining, 
as well as other impacts on health or the environment, are not within 
the scope of the FFC estimates referenced in this Policy Statement.
    In its evaluation of alternative transportation fuels under AB 
1007, the California Energy Commission uses GREET and a fuel-cycle 
definition that is very similar to the FFC approach proposed for use in 
the development of DOE energy conservation standards.
    DOE acknowledges that the GREET model was not specifically designed 
to generate the factors necessary to convert the primary energy and 
emission values now used in DOE's energy conservation standards impact 
analyses into FFC values. DOE is not aware of any model that was 
specifically designed for this purpose. Nevertheless, DOE has concluded 
that the GREET model can be appropriately used for this purpose and 
that the resulting values will be sufficiently reliable to 
significantly improve the usefulness of the resulting energy and 
emission impact estimates. The GREET model has been previously used to 
support certain Federal and State regulatory actions on GHG emissions 
(such as the EPA's Renewable Fuel Standard development and California's 
low-carbon fuel standard development) and Federal vehicle fuel 
efficiency labeling by EPA and DOE. It has already been subject to 
considerable public review and comment. For these reasons, DOE 
concludes that GREET is the best model to use for the purposes of 
today's Policy Statement.
    Policy Statement: In future energy conservation standards 
rulemakings, DOE intends to calculate FFC energy and emission impacts 
by applying conversion factors generated by the GREET model to the NEMS 
projections currently used by DOE. When DOE uses the GREET factors in a 
rulemaking, the factors will be subject to public review and comment. 
These factors will be used to convert the primary energy and emission 
values generated by methodologies that have been traditionally used by 
DOE in its appliance efficiency standards rulemakings to their FFC 
equivalents. The GREET model will also be used to generate estimates of 
the FFC emissions of methane and nitrous oxides.
    From time to time, DOE will review alternative approaches to 
estimating these factors and may decide to use a model other than GREET 
to estimate the FFC energy and emission impacts in any particular 
future appliance efficiency standards rulemaking. For example, DOE is 
aware that a future version of the NEMS model may provide the detail 
necessary to estimate FFC energy and emission impacts. Whether DOE uses 
the GREET model or another model identified in the future, the model 
and FFC energy and emission impacts will be subject to public review 
and comments within an energy conservation standards rulemaking.

E. Consumer Information on FFC Impacts of Specific Covered Products

    The Academy recommended that DOE work with the FTC to initiate a 
project to consider the merits of providing consumers with information 
about FFC energy use and GHG emissions of individual appliances so that 
the public can make more informed purchasing decisions. In particular, 
the Academy recommended that DOE and FTC should initiate a project to 
consider the merits of adding to the Energy Guide label an indicator of 
how an appliance's total energy consumption might affect levels of GHG 
emissions.\2\ The FTC has statutory authority over Energy Guide labels.
---------------------------------------------------------------------------

    \2\ Academy report at p. 12.
---------------------------------------------------------------------------

    DOE indicated in its NOPP that the FTC maintains online databases 
of the site energy use and efficiency ratings of appliances currently 
on the market. These databases do not, however, include FFC energy use 
or any energy cost or emissions-related data. While it is possible to 
compare the site energy

[[Page 51288]]

use and efficiency ratings of different products using these databases, 
such comparisons are often difficult, especially if they involve 
products that have different features. Furthermore, comparing products 
that use different fuels is often not feasible because of differences 
in the measures of energy use or efficiency of products that use 
different fuels.
    In response to the Academy's recommendations, DOE proposed to 
significantly improve upon the FTC's existing on-line databases by 
making FFC energy use and emissions data (and possibly annual energy 
cost data) available to the public. The improved databases could enable 
users to easily compare a product's energy use, associated emissions, 
and costs to similar products, including products that are in different 
classes because they have different features or use different fuels. 
Additional energy, emissions, and cost data could be included by 
updating FTC's online database with the emissions factors developed 
with the GREET model and estimated annual energy use and/or energy cost 
data reported by manufacturers on appliance Energy Guide labels. This 
proposed action was also supported by comments from the Natural 
Resources Defense Council. (NRDC, Public Comment, EERE-2010-BT-NOA-
0028-0030, p. 2)
    Regarding the Energy Guide label, DOE stated in the NOPP that it is 
not clear to DOE that including additional label disclosures, such as 
the GHG emissions indicator mentioned by the Academy, would be valuable 
to customers unless they could easily compare the GHG emissions 
associated with one product to other comparable products or other 
common energy uses. DOE indicated in its proposal that because the GHG 
emissions associated with a particular class of products using the same 
fuel would be directly proportional to that class of products' 
estimated annual energy costs, simply comparing an individual product 
to products of the same class using the same fuel would add little 
useful information to the label. DOE also stated that providing 
comparisons to the energy use, costs or emissions associated with other 
comparable products with different features or that use different fuels 
on the Energy Guide label may increase the complexity of the label, 
making the label more difficult to understand and decreasing the 
utility of the basic annual operating cost information already on the 
label.
    AGA supported the inclusion of emissions information on Energy 
Guide labels to allow customers to better understand the emissions 
implications of their appliance choices. AGA commented that ``any 
concerns regarding the complexity and utility of any particular Energy 
Guide label can and should be addressed in a rulemaking proceeding by 
the FTC to revise the labels. The potential that some labels may be 
perceived by some users as less than clear should not be a basis for 
denying consumers the emissions information they need to make 
environmentally sound appliance choices.'' (AGA, Public Comment, EERE-
2010-BT-NOA-0028-0004, pp. 3-4)
    DOE will make available to the FTC the FFC energy and emission 
factors that it generates for use in rulemakings. DOE still has some 
concerns that using these factors to provide FFC information to 
consumers via the Energy Guide Label is likely to increase the 
complexity of the label and, therefore, may decrease its effectiveness. 
However, DOE believes that other means of providing this information to 
consumers could be as or more effective.
    The Institute for Policy Integrity disagreed with DOE's concerns 
about adding GHG emissions to the Energy Guide labels. The Institute 
pointed out that other labels are far more complex, which indicates 
that consumers are accustomed to relatively complex labels, and 
encouraged DOE to work with the FTC on label modifications. (Institute, 
Public Comment, EERE-2010-BT-NOA-0028-0032, pp. 5-6)
    In contrast, EEI commented that providing consumers with accurate 
product-specific GHG emissions data associated with electricity use 
would likely be extremely complex because each utility has its own 
distinct GHG emission mix. As a result, national or even regional 
average data can be very misleading. If product-specific GHG emissions 
data was made available, EEI, along with others, indicated that it 
supported the use of a website providing such information as opposed to 
including the information on Energy Guide labels. (EEI, Public Comment, 
EERE-2010-BT-NOA-0028-0007, p. 3)
    EEI and CECA Solutions commented that DOE's proposal to provide 
customers with energy use and emissions data back to the point of 
extraction of fossil fuels would lead consumers to incorrectly believe 
that they will save more energy than is the case and could harm the 
ability of consumers to make smart purchasing decisions. (EEI, Public 
Comment, EERE-2010-BT-NOA-0028-0007, p. 2; CECA, Public Comment, EERE-
2010-BT-NOA-0028-0012, p. 2)
    Similarly, NRECA stated that consumers will not accurately 
understand the amount of energy being utilized by their appliances and 
providing this information would burden manufacturers, possibly 
resulting in higher costs for the consumer. (NRECA, Public Comment, 
EERE-2010-BT-NOA-0028-0002, p. 3)
    In response, DOE emphasizes that it is not proposing to provide 
consumers with information that might lead them to conclude that the 
benefits associated with the reduction of FFC energy or emissions would 
be reflected in additional consumer cost savings. DOE does not believe 
that providing consumers with information about the FFC impacts of 
appliances on GHG emissions would mislead consumers about the actual 
energy use of their appliances, nor that providing such information 
would place a significant new cost on manufacturers that would increase 
product costs. However, DOE agrees that providing this type of 
information in a meaningful way, given the large regional variations in 
the electric sector, may well be difficult.
    NRECA went on to comment that ``the analysis and cost effectiveness 
of the efficiency standard must be based upon costs and savings that 
the customers experience.'' They indicated that they believe that 
``placing source energy consumption on a label for the customer is 
misleading at best, and very confusing. Customers could choose the 
``highest'' efficiency unit on the label but find their utility bills 
increasing because the appliance would not be operating on the most 
efficient energy source at the site.'' (NRECA, Public Comment, EERE-
2010-BT-NOA-0028-0002, p. 3)
    DOE agrees that energy conservation standards should continue to be 
based, in large part, on the costs and savings that user's experience. 
However, EPCA, as amended, and other laws direct DOE to consider a 
range of other factors as well, including the energy resource and 
environmental impacts of alternative standard levels. While ongoing 
changes in the electric sector sometimes may make this type of analysis 
complex and less certain, DOE believes that such analyses are 
nevertheless possible and, ultimately, useful to government decision-
makers and many consumers. Regarding the information made available to 
consumers, DOE agrees that information on energy costs and life-cycle 
costs should continue to be emphasized. However, DOE also believes that 
consumers should be given ready access to better information on the 
energy resource and environmental impacts of their appliance choices. 
DOE believes that this objective can be achieved, at least in part, 
through web-

[[Page 51289]]

based information tools, although DOE will also work collaboratively 
with the FTC to determine if changes to Energy Guide labeling 
requirements would be beneficial to consumers.
    DOE agrees with NEEA's comment that the difference between primary 
energy use estimates and FFC energy use estimates is relatively small. 
(NEEA, Public Comment, EERE-2010-BT-NOA-0028-0021, p. 2) However, to 
date, consumers have not had ready access to information on either the 
primary or FFC energy and emission impacts of products. Making such 
information available in a manner that would enable consumers to make 
cross-fuel and cross-class comparisons of comparable products could 
provide consumers with significant new information.
    The Consumer's Union commented that the Energy Guide labels must 
increase consumer awareness of GHG emissions to effectively educate 
consumers and engage them in energy and climate change policy. Such 
labels should ``address regional variation of electricity fuel mixes 
and provide consumers guidance on how to interpret the data given their 
region or particular utility.'' (Consumers, Public Comment, EERE-2010-
BT-NOA-0028-0028, p. 5) DOE agrees that consumers should be given ready 
access to better information on the energy resource and environmental 
impacts of their appliance choices and how to provide this information 
in a meaningful way will be a significant issue for DOE and the FTC to 
consider.
    Policy Statement: Subject to the availability of funds, DOE will 
work with other Federal agencies to make readily available to consumers 
improved information on the energy use, life-cycle cost and associated 
emissions of comparable products, even if those products use different 
forms of energy. Consumers should be able to easily identify the likely 
energy use, life-cycle costs and associated emissions of individual 
products (based on their local energy costs and utility system 
characteristics), but should also be able to compare those attributes 
to a range of other products providing similar utility. In developing 
betters ways of conveying such information to consumers, DOE will 
explore the possible role of common efficiency metrics for products 
using different fuels or energy, and will, as appropriate, solicit 
further public review and comment on the mechanisms developed to make 
available this information to consumers.
    Any updates to Energy Guide labels will be promulgated by the FTC, 
which has statutory authority over Energy Guide labels.

IV. Procedural Issues and Regulatory Review

A. Review Under the National Environmental Policy Act of 1969

    DOE has determined that this Policy Statement falls into a class of 
actions that are categorically excluded from review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and DOE's 
implementing regulations at 10 CFR part 1021. Specifically, this Policy 
Statement describes methods for data analysis and how DOE plans to 
incorporate such data analysis into future energy conservation 
standards. For this reason, and because the Policy Statement does not 
establish an energy conservation standard or take any action that might 
have an impact on the environment, it is covered by the Categorical 
Exclusion A9 under 10 CFR part 1021, subpart D. Accordingly, neither an 
environmental assessment nor an environmental impact statement is 
required.

B. Review Under the Information Quality Bulletin for Peer Review

    In consultation with the Office of Science and Technology Policy 
(OSTP), OMB issued on December 16, 2004, its ``Final Information 
Quality Bulletin for Peer Review'' (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the Bulletin is to enhance the quality and credibility of 
the government's scientific information. Under the Bulletin, the 
Academy recommendations and GREET model are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
that the agency reasonably can determine will have or does have a clear 
and substantial impact on important public policies or private sector 
decisions.'' 70 FR 2664, 2667 (Jan. 14, 2005). The Academy 
recommendations have been peer reviewed pursuant to section II.2 of the 
Bulletin. The GREET model, which is in the public domain, has been 
reviewed through its development and applications over the past 16 
years.

V. Approval of the Office of the Assistant Secretary

    The Assistant Secretary of DOE's Office of Energy Efficiency and 
Renewable Energy has approved publication of this final policy.

    Issued in Washington, DC, on August 10, 2011.
Roland J. Risser,
Program Manager, Building Technologies Program, Energy Efficiency and 
Renewable Energy.
[FR Doc. 2011-21078 Filed 8-17-11; 8:45 am]
BILLING CODE 6450-01-P
```