Revised	Preliminary	Cost Analysis	for	Regulatory	

Changes to	the	Listing	Status	of	High-GWP	

Alternatives

P REPARED FOR :

 Stratospheric	Protection	Division	

Office	of	Air	and	Radiation	

U.S.	Environmental	Protection	Agency	

Washington,	D.C.	20460	

P REPARED BY :

ICF	International	

1725	Eye	Street,	NW	

Washington,	DC	20006	

A PRIL 2015
2

Exhibit 1: Summary of Regulatory Changes Analyzed

 List unacceptable HFC-134a for new MVACs starting in 

model year 2021 except as allowed under a narrowed use 

limit for certain exports.

 List unacceptable HFC-125 for aerosols in 2016, restrict 

use of HFC-134a to certain medical aerosols and technical 

aerosols in 2016; restrict HFC-227ea and blends of HFC227ea and HFC-134a in aerosols to metered dose inhalers 

in 2016.

 List unacceptable certain HFCs and HFC blends in 1) rigid 

polyurethane appliance foam; 2) flexible polyurethane; 3) 

rigid polyurethane: commercial refrigeration and 

sandwich; 4) rigid polyurethane and polyisocyanurate 

laminated boardstock; 5) rigid polyurethane slabstock; 6) 

polyurethane integral skin; 7) polystyrene: extruded 

sheet; 8) polystyrene: extruded boardstock and billet; 9) 

polyolefin; 10) PU marine flotation foam and 11) phenolic 

foams in various years from 2017 to 2020 for specified 

end-uses, except for certain military, space- and 

aeronautics- related applications. 

Commercial Refrigeration:

 List unacceptable 10 high-GWP HFCs/HFC blends for: new 

supermarket systems in 2017; new remote condensing 

units in 2018.

 List unacceptable 9 high-GWP HFCs/HFC blends for: 

retrofitted supermarket systems and retrofitted remote 

condensing units in 2016.

 List unacceptable 31 high-GWP HFCs/HFC blends for: new 

stand-alone medium-temperature units with a 

compressor capacity below 2,200 Btu/hr and not 

containing a flooded evaporator in 2019.

 List unacceptable 28 high-GWP HFCs/HFC blends for: new 

stand-alone medium-temperature units with a 

compressor capacity equal to or greater than 2,200 

Btu/hr; new stand-alone units containing a flooded 

evaporator; new stand-alone low-temperature units in 

2020.

 List unacceptable 20 high-GWP HFCs/HFC blends for new 

vending machines in 2018.

 List unacceptable R-404A and R-507A for: retrofitted 

vending machines and retrofitted stand-alone retail food 

refrigeration equipment in 2016.

Executive	Summary

This analysis presents an estimate of the overall potential 

costs associated with a rulemaking to change the listing 

status of certain high-GWP alternatives used in aerosols, 

foams, commercial refrigeration, and motor vehicle air 

conditioning (MVAC). Exhibit 1 summarizes the regulatory 

changes analyzed. While about 645,000 businesses are 

potentially affected by this rule, the analysis estimates that 

the rule is expected to result in changes in costs for less than 

0.1% of those businesses. Using a 7% discount rate, total 

annualized compliance costs across affected businesses are 

estimated to range from $28.0 million to $50.6 million; total 

annual savings are estimated to be about $19.3 million; thus 

annualized net compliance costs are estimated to range 

from $8.7 million to $42.7 million. Using a 3% discount rate,

total annualized compliance costs across affected businesses 

are estimated to range from $19.5 million to $37.8 million,

total annual savings are estimated be about $19.3 million, 

and thus annualized net compliance costs are estimated to 

range from $0.2 million to $31.9 million.

Methodology

This analysis builds on the general approach taken previously 

to estimate potential economic impacts on small 

businesses—as described in Economic Impact Screening 

Analysis for Regulatory Changes to the Listing Status of HighGWP Alternatives—to extend the assessment to all-sized 

businesses potentially affected by the rulemaking. Industries 

potentially affected by these regulatory changes were 

primarily identified by North American Industry Classification 

System (NAICS) codes.

1

Costs to affected businesses were 

calculated using a direct compliance cost method and then 

annualized. Costs or savings associated with changes in 

energy efficiency were not estimated because energy 

efficiency is related to a number of factors, including 

equipment design or thickness of foam, and not just to the refrigerant or foam blowing agent used.

Apart from a few exceptions, this analysis uses the same assumptions as the small business screening analysis, 

including those about: 

 

1

The small business threshold varied for specific industries based on their NAICS code.
3

 Which industries might be affected by the regulatory changes;

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

HFCs affected by this rulemaking are still—or were ever—known to be in use, and what proportion of 

the market the affected HFCs are expected to represent at the time that the status of the HFC changes 

for that sector; 

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

for modeling purposes;2and 

 The capital, operating, maintenance, and other direct compliance costs incurred by affected businesses.

Table 1 provides the basic financial assumptions used in this analysis. 

Table 1: Financial Assumptions used in Cost Analysis

Parameter Assumption

Discount rates 3% and 7%

Constant Year Dollars 2013$

Lifetime for 

annualizing costs

Varies based on equipment type: 25 years for foam manufacturing; 20 years for commercial 

refrigeration; 10 years for aerosol product manufacturing; Not Applicable for MVACs because 

costs are estimated per vehicle at time of manufacture

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

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

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

as “larger” businesses).

Motor	Vehicle	Air	Conditioning Assumptions

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

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

(MY) 2017–2025 light-duty vehicles. 77 FR 62624, 62807-810 (October 15, 2012); see also 75 FR 25325, 25431-

32 (May 7, 2010) (discussing the same issue for MY 2012–2016 light duty vehicles).

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

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

the increasing availability of lower-GWP chemicals suitable for this purpose and systems that can use them, as 

well as increasing requirement for lower-GWP refrigerants in Europe, EPA based the light-duty greenhouse gas 

 

2

The transition scenario analyzed here reflects possible steps towards compliance with the final rule. The 

transition scenario reflects a direct compliance cost method and does not assume the regulated community 

chooses higher-cost solutions where known solutions exist. A separate technical support document analyzes the 

benefits of the final rule and makes separate assumptions on the possible transitions for compliance based on 

considerations of the market and activity towards lower-GWP solutions. Higher or lower benefits do not 

necessarily correlate to higher or lower costs due to the different assumptions and methodologies used in the 

different analyses. However, the transition scenarios assumed here are similar to the lower, less aggressive 

transition scenario in the benefits analysis. 
4

(LD GHG) standards for MYs 2017–2025 in part on an expected gradual transition to lower-GWP refrigerants. 

Thus, in setting the level of the standards, EPA projected that the industry will make the full transition to lowerGWP refrigerants over the period of time spanning between MY 2017 and MY 2021, and the level of the 

standard in each of these model years reflects a projected 20 percent increase in substitution in each model 

year and complete transition by MY 2021. 77 FR 62720/2-3. In support of the assumption of this multi-year 

transition, the LD GHG rule for MYs 2017–2025 includes an extensive discussion of the refrigerant substitute 

availability and technical feasibility of transitioning the fleet. 77 FR 62720; 62807-810.

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

manufacturers are expected to transition their vehicle production for domestic sales out of HFC-134a prior to 

the status change date for this sector (i.e., model year 2021). Factors affecting the transition to low-GWP 

refrigerants in MVAC are discussed in the preamble to the final rule as well as in the LD GHG rule and its 

supporting documents. Because the analysis supporting the LD GHG rulemaking accounted for impacts of a full 

transition by MY 2021 for domestic sales, this analysis considers only export vehicles to estimate costs that 

would be incurred as a result of this rulemaking. 

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

install the MVAC systems in-house. Potential costs to manufacturers were estimated based on per-system costs 

of alternative systems, as identified in EPA’s report on Global Mitigation of Non-CO2 Greenhouse Gases: 2010–

2030 (EPA 2013), and converted to 2013 dollars. The incremental per-system cost of an alternative MVAC 

system compared to an HFC-134a system is estimated to be about $62/unit. These incremental costs are less 

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

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

mitigating HFC-134a use such as the European MAC Directive (2006/40/EC) (European Union 2006).For export 

countries lacking such regulations or incentives and also lacking infrastructure to service low-GWP refrigerants, 

the rule allows continued use subject to the requirements of a “narrowed use limit” through 2025. This analysis 

assumes that low-GWP service infrastructure will be established by 2025 in these export countries and that 

there will be no incremental costs for vehicle manufacturers to manufacture and export vehicles with low-GWP 

refrigerant MVAC systems by 2025.

3 However, for the purpose of this analysis, at the higher end of the range, 

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

that do not have regulations or initiatives mitigating 134a use in motor vehicles or for countries where the 

market demand is more elastic to incremental cost changes. 

Aerosol	Assumptions

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

the HFCs included in the rule; or manufactures products for which the included HFCs will be listed as acceptable, 

 

3

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

MVAC systems in-house. Currently, potential costs to manufacturers are estimated based on per-system costs of alternative 

systems, as identified in EPA’s report on Global Mitigation of Non-CO2 Greenhouse Gases: 2010-2030 (EPA 2013), and 

converted to 2013 dollars. The incremental per-system cost of an alternative MVAC system compared to an HFC-134a 

system is estimated to be about $62/unit. These incremental costs are less than 1% relative to the total direct 

manufacturing cost for a light duty vehicle.
5

subject to use conditions. However, some tire inflator manufacturers and manufacturers of products for the 

functional and sensitivity testing of smoke detectors still use HFC-134a propellant and are expected to be 

affected by this rulemaking. 

 Tire inflator manufacturers—In addition to the two small businesses identified in the small business 

screening analysis, two additional manufacturers were identified as potentially still producing aerosol 

tire inflators containing HFC-134a propellant, using the U.S. Department of Health and Human Services 

Household Products Database and employee data available from Dun and Bradstreet (2014). These four 

manufacturers are assumed to produce a total of approximately 20.6 million tire inflators per year; this 

estimate was based on a production estimate from one manufacturer and by applying a ratio of annual 

sales to that production estimate to approximate annual production for the other manufacturers. The 

manufacturers are expected to incur one-time capital conversion costs between $342,000 and $1.3 

million to convert to hydrocarbons, and annual savings of approximately $0.26 per aerosol can produced 

due to the lower cost of hydrocarbon-based propellant (EPA 2013). 

 Manufacturers of products for the functional testing of smoke detectors—Three small businesses were 

identified in the small business screening analysis and one additional manufacturer was identified as still 

producing products containing HFC-134a propellant, using available employee data and parent company 

information. Although production totals for these smoke detector tester products are not available, the 

market is considered to be very small. The affected manufacturers are expected to incur one-time 

capital conversion costs between $105,000 and $530,000 to convert to HFO-1234ze propellant, and 

annual costs of approximately $0.13 per aerosol can produced due to the higher cost of HFO-1234ze 

propellant (EPA 2013).

Foams	Assumptions

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

flexible polyurethane: slabstock and moulded, rigid polyurethane, polyolefin, phenolic) because these foam 

types are not known to be currently manufactured in the United States using the HFCs listed as unacceptable. 

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

In the foams sector, compliance costs generally include one-time capital costs for a production facility to 

transition to an alternative blowing agent; in some foam end-uses, these capital costs would be offset by annual 

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

more detail, please see Economic Impact Screening Analysis for Regulatory Changes to the Listing Status of HighGWP Alternatives.

Polystyrene Foam Product Manufacturing:

 Polystyrene: Extruded Boardstock and Billet—All known XPS manufacturers are larger businesses (i.e., 

having more than 499 employees4). Companies still using HFC-134a are assumed to transition to 

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

 

4

The small business threshold varied for specific industries based on their NAICS code.
6

approximately between $4.6 million and $7.2 million per production line (ICF 2014). Each large business 

is assumed to have three production lines (UNEP 2011b, 2013b).

Household Refrigerator and Home Freezer Manufacturing:

 Rigid Polyurethane: (Household) Appliance— Companies still using HFC-245fa and HFC-134a are 

assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more costeffective option over the equipment’s lifetime, but Solstice LBA is assumed to be adopted by small 

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

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

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

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

businesses (i.e., establishments with more than 999 employees5) were assumed to transition fully to 

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

million and $6.1 million per facility (EPA 2013), but these costs are offset by annual savings of up to $4.8 

million per facility due to lower blowing agent costs; savings vary depending on facility size (i.e., number 

of units produced). No capital costs were assumed to convert to Solstice LBA (since this option is 

considered to be a near drop-in replacement for HFC-245fa), but annual costs per facility were 

estimated to be between $2,000 and $3.0 million per facility,6due to higher blowing agent costs; annual 

costs vary depending on facility size (i.e., number of units produced).

Commercial and Industrial Refrigeration Equipment Manufacturing:

 Rigid Polyurethane: Commercial Refrigeration— Companies still using HFC-245fa and HFC-134a are 

assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more costeffective option over the equipment’s lifetime, but Solstice LBA is conservatively assumed to be adopted 

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

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

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

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

businesses (i.e., establishments with more than 749 employees7) are assumed to transition fully to 

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

million per facility, while net annual savings are estimated to be between $1.3 million and $1.6 million 

per facility, due to lower blowing agent costs; savings vary depending on facility size (i.e., number of 

units produced). No capital costs are assumed to convert to Solstice LBA (since this option is considered 

to be a near drop-in replacement for HFC-245fa), but annual costs per facility are estimated to be 

 

5

Ibid.

6

Depending on the number of appliances assumed to be manufactured per facility and the cost of Solstice LBA (which was 

assumed to range from $14 to $17 per kilogram).

7

The small business threshold varied for specific industries based on their NAICS code.
7

between $500 and $754,000 per facility,8due to higher blowing agent costs; annual costs vary 

depending on facility size (i.e., number of units produced) (EPA 2013).

Urethane and Other Foam Product (Except Polystyrene) Manufacturing:

 Rigid Polyurethane: Sandwich— Companies still using HFC-134a are assumed to transition to 

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

blowing agent annually, and incur one-time capital costs for conversion between $183,000 and 

$220,000 (UNEP 2012, UNEP 2013a), offset partially by anticipated annual savings due to lower blowing 

agent costs (EPA 2013). Larger businesses (i.e., establishments with more than 499 employees9) are

assumed to have a higher production volume, using 450 MT of blowing agent annually, and incur onetime capital conversion costs between $336,000 and $403,000, offset by anticipated annual savings of 

$470,000 due to lower blowing agent costs (EPA 2013).

 Rigid Polyurethane: Marine Flotation Foam—It was assumed that companies still using HFC-134a would 

transition to hydrocarbons (i.e., pentane) and HFO/water blends. The smaller marine flotation foam 

manufacturers (i.e., those with less than 10 employees) are expected to transition to HFO/water 

systems. Of the remaining entities, 50% would be expected to transition to pentane blowing agents and 

the remaining 50% to HFO/water systems.

Capital costs for transitioning to HFO/water systems were assumed to be between $210,000 and 

$253,000 per facility, covering the cost of formulation development and compliance testing. Incremental 

annual operating costs were conservatively estimated to be between $97,000 and $116,000 per facility, 

due to higher blowing agent costs (EPA 2013).

10

Capital costs for transitioning to pentane blowing agents were assumed to be between $210,000 and 

$632,000 per facility (UNEP 2010c). Incremental annual operating costs were assumed to be zero; while 

an increase in operating costs may be experienced associated with the use of hydrocarbons—due to the 

need for raw materials for fire retardants—these costs are not expected to outweigh the annual savings 

associated with the lower blowing agent cost.

 Rigid Polyurethane and Polyisocyanurate Laminated Boardstock— Companies using HFC-134a or HFC245fa are assumed to transition to hydrocarbons. Small businesses are assumed to produce foams 

containing approximately 25 MT of blowing agent annually, and incur one-time capital costs for 

conversion between $432,000 and $520,000 (UNEP 2009, 2010, 2011a). Larger businesses (i.e., 

establishments with more than 499 employees11) are assumed to have a higher production volume, 

using 65 MT of blowing agent annually, and incur a one-time capital conversion cost between 

approximately $518,000 and $959,000 (UNEP 2009, 2010, 2011a). Both small and larger businesses are 

assumed to realize annual savings due to the lower blowing agent costs.

 

8

Depending on the number of appliances assumed to be manufactured per facility and the cost of Solstice LBA (which was 

assumed to range from $14 to $17 per kilogram).

9

The small business threshold varied for specific industries based on their NAICS code.

10 Assuming Solstice LBA costs between $14 and $17 per kilogram.

11 The small business threshold varied for specific industries based on their NAICS code.
8

 

 Polyurethane Integral Skin— Companies still using HFC-134a are assumed to transition to CO2. Capital 

costs are assumed to be between $184,000 and $220,000 for a typical firm (UNEP 2012, UNEP 2013a). 

Incremental annual operating costs are assumed to be zero.

12

Commercial	Refrigeration Assumptions

Cost assumptions for the commercial refrigeration sector are summarized below; for more detail, see Economic 

Impact Screening Analysis for Regulatory Changes to the Listing Status of High-GWP Alternatives.

New Systems:

 Supermarket Systems and Remote Condensing Units—Some movement out of high-GWP refrigerants 

(e.g., R-404A and R-507A) in new equipment has already been observed in the retail food industry, and 

industry pledges, such as those made by the Consumer Goods Forum to phase out HFC refrigerants in 

newly purchased equipment by the end of 2015, may serve to accelerate the transition out of HFC 

refrigerants. For the purposes of this analysis, it is assumed that the retail food industry is operating 

under business as usual conditions. As such, compliance costs are based on the assumption that endusers (e.g., supermarkets) will use R-407A in new systems in place of R-404A and R-507A, and that the 

incremental cost of using this alternative instead of R-404A or R-507A is negligible (i.e. zero dollars) 

since, given that the composition of R-404A and R-407A are similar, the cost of the refrigerant is 

assumed to be the same (EPA 2013). Therefore, no annual costs or savings are assumed.

For businesses with an operational commercial refrigeration system that uses R-404A or R-507A, this 

regulation does not require that they retire their system or retrofit their system to use a different 

refrigerant. It also does not prevent them from maintaining or servicing their system. Therefore, endusers are not considered to be affected until they choose to purchase a new system anyway, at which 

point their choice of new refrigerant is impacted. 

The regulation also does not prescribe that any business transition to a particular, lower-GWP 

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

refrigerant/technology are not estimated in this analysis. For example, up to 50 percent of large 

supermarkets might choose to replace an old R-404A or R-507A system with a new transcritical CO2

system that would have much less impact on climate than a new R-407A system. Those supermarkets 

are estimated to incur an additional total annualized upfront cost of about $979,000 and total annual 

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

expansion systems (EPA 2013). However neither the costs nor savings of such a choice is included in this 

analysis because it is not required by the rule.

 Stand-Alone Retail Food Equipment—Compliance costs are based on the assumption that each 

establishment manufacturing the equipment will incur a one-time capital investment cost of $150,000 

to $500,000 associated with using R-290 or a non-flammable alternative (e.g., R-450A) in place of an HFC 

 

12 While an increase in operating costs may be experienced associated with the use of CO2, these costs are not expected to 

outweigh the annual savings associated with the lower incremental blowing agent cost.
9

refrigerant, which results in an annualized cost of about $14,000 to $47,000 per affected 

establishment.13

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

establishment manufacturing the equipment will incur a one-time capital investment cost of $100,000 

to $250,000 associated with using CO2 in place of an HFC refrigerant, which results in an annualized cost 

of about $9,400 to $23,600 per affected establishment.14

Retrofits:

 Supermarket Systems and Remote Condensing Units—In the absence of this regulation, this analysis 

estimates that a number of companies would have CFC-12, R-502, or HCFC-22 supermarket systems or 

remote condensing units in operation in 2016 and 2018, respectively, that would be available for 

retrofitting—with R-404A, R-507A, or R-422D being the preferred retrofit refrigerant—and would thus 

be affected by this regulation. 

Compliance costs are based on the assumption that end-users would use R-407A as the retrofit 

refrigerant in place of R-404A and R-507A, and that the incremental cost of using this alternative instead 

of R-404A or R-507A is negligible (i.e. zero dollars) based on cost assumptions discussed above (EPA 

2013). The EPA (2013) also assumes that there is a one-time conversion cost associated with performing 

a refrigerant retrofit on a remote retail food system. However, since this regulation does not require 

end-users to retrofit their equipment, but rather prohibits the use of certain refrigerants to be used as a 

retrofit, the labor costs associated with performing the retrofit itself are not a compliance cost of the 

rulemaking. Thus, these costs are not included in this analysis.

 Stand-Alone Retail Food Equipment and Refrigerated Vending Machines—This analysis assumes that 

stand-alone equipment using CFC-12, R-502, or HCFC-22 in operation by 2016 would not retrofit this 

equipment due to the high costs of retrofitting equipment relative to the cost of purchasing a new unit, 

and hence, would not need to be retrofitted. With regard to retrofitting for vending machines, based on 

the lifetime of the equipment and the direct transition from CFCs to HFCs in this end-use before 1996, 

the analysis assumes that no vending machines will have CFC-12, R-502, or HCFC-22 systems in 

operation in 2016 that would be available for retrofitting and hence, would not need to be retrofitted.

Results

Using the methodology and additional assumptions described above, Table 2 below summarizes the estimated 

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

discount rate. Table 3 summarizes the estimated annualized costs by sector at a 3% discount rate. As shown, 

while about 645,000 businesses are potentially subject to this rule, the analysis estimates that the rule is 

expected to result in changes in costs for less than 0.1% (or fewer than 200) of these businesses.

 

13 Using a 7% discount rate.

14 Ibid. 
10

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

from $28.0 million to $50.6 million; total annual savings are estimated be about $19.3 million; thus annualized 

net compliance costs are estimated to range from $8.7 million to $42.7 million. Using a 3% discount rate, total 

annualized compliance costs across affected businesses are estimated to range from $19.5 million to $37.8

million; total annual savings are estimated be about $19.3 million; thus annualized net compliance costs are 

estimated to range from $0.2 million to $31.9 million.

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

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

expected to be affected in each year over a 15 to 20 year period, as existing retail food equipment reaches endof-life and businesses make choices about which alternative refrigerant to use in new systems or retrofits. Even 

if these businesses are affected, EPA assumes that most of them will switch to R-407A. Since the composition of 

R-404A and R-407A are similar, the cost of the refrigerant is the same. Therefore, no annual costs or savings are 

assumed for this change.
11

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

Sector

Estimated Number of 

Businesses 

Potentially Impacted 

by the Rule

Higher Lower

Annualized 

Upfront Costsa

Annual 

Savingsb

Annualized Net 

Costsb

Annualized 

Upfront Costsa

Annual 

Savingsb

Annualized Net 

Costsb

Motor Vehicle Air Conditioning - Exportse240 $8,760,000 $0 $8,760,000 $0 $0 $0 

Aerosols <10 $1,040,000 ($5,250,000) $0d$250,000 ($5,250,000) ($5,000,000)

Foams 120 $38,990,000 ($14,090,000) $32,120,000 $27,200,000 ($14,090,000) $13,110,000 

Polystyrene foam product manufacturing <10 $27,490,000 $0 $27,490,000 $17,640,000 $0 $17,640,000 

Household refrigerator and freezer 

manufacturing <10 $3,090,000 ($6,600,000) $0d

$2,580,000 ($6,600,000) ($4,020,000)

Commercial and industrial refrigeration 

equipment manufacturing 50 $3,760,000 ($7,480,000) $0d

$3,130,000 ($7,480,000) ($4,350,000)

Urethane and other foam product (except 

polystyrene) manufacturing 60 $4,640,000 ($10,000) $4,630,000 $3,850,000 ($10,000) $3,840,000 

Commercial Refrigeration 644,500c$1,800,000 $0 $1,800,000 $570,000 $0 $570,000 

New equipment 474,900 $1,800,000 $0 $1,800,000 $570,000 $0 $570,000 

Supermarket systems 29,300 $0 $0 $0 $0 $0 $0 

Remote condensing units 445,500 $0 $0 $0 $0 $0 $0 

Stand-alone equipment 30 $1,520,000 $0 $1,520,000 $450,000 $0 $450,000 

Vending machines 10 $280,000 $0 $280,000 $110,000 $0 $110,000 

Retrofits 169,600 $0 $0 $0 $0 $0 $0 

Supermarket systems 10,500 $0 $0 $0 $0 $0 $0 

Remote condensing units 159,100 $0 $0 $0 $0 $0 $0 

Stand-alone equipment 0 $0 $0 $0 $0 $0 $0 

Vending machines 0 $0 $0 $0 $0 $0 $0 

ALL SECTORS 644,800 $50,590,000 ($19,340,000) $42,690,000 $28,030,000 ($19,340,000) $8,680,000 

Totals may not sum due to independent rounding.

a

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

b

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

c

It is possible that some businesses will be affected for multiple types of equipment, resulting in a lower total number of discrete businesses affected by the rule. However, 

since it is not known how many businesses would be affected by multiple equipment types, the total maximum number of businesses that could be affected is shown.

d

Annualized net costs have been rounded to zero rather than a negative annualized net cost for the higher estimate. The rounding assumes that at least some portion of the 

industry would have made the change even in the absence of the regulation.

e

Costs are estimated on a per vehicle basis and are assumed for a subset of the export market only.
12

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

Totals may not sum due to independent rounding.

a

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

b

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

c

Annualized net costs have been rounded to zero rather than a negative annualized net cost for the higher estimate. The rounding assumes that at least some portion of the 

industry would have made the change even in the absence of the regulation. 

d

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

Sector

Higher Lower

Annualized 

Upfront Costsa

Annual 

Savingsb

Annualized Net 

Costsb

Annualized 

Upfront Costsa

Annual 

Savingsb

Annualized Net 

Costsb

Motor Vehicle Air Conditioning – Exportsd$8,760,000 $0 $8,760,000 $0 $0 $0 

Aerosols $860,000 ($5,250,000) $0c$210,000 ($5,250,000) ($5,040,000)

Foams $26,940,000 ($14,090,000) $21,860,000 $18,910,000 ($14,090,000 $4,820,000 

Polystyrene foam product 

manufacturing $18,400,000 $0 $18,400,000 $11,810,000 $0 $11,810,000 

Household refrigerator and freezer 

manufacturing $2,280,000 ($6,600,000) $0c

$1,900,000 ($6,600,000) ($4,700,000)

Commercial and industrial refrigeration 

equipment manufacturing $2,790,000 ($7,480,000) $0c

$2,320,000 ($7,480,000) ($5,160,000)

Urethane and other foam product 

(except polystyrene) manufacturing $3,480,000 ($10,000) $3,470,000 $2,890,000 ($10,000) $2,880,000 

Commercial Refrigeration $1,280,000 $0 $1,280,000 $400,000 $0 $400,000 

New equipment $1,280,000 $0 $1,280,000 $400,000 $0 $400,000 

Supermarket systems $0 $0 $0 $0 $0 $0 

Remote condensing units $0 $0 $0 $0 $0 $0 

Stand-alone equipment $1,080,000 $0 $1,080,000 $320,000 $0 $320,000 

Vending machines $200,000 $0 $200,000 $80,000 $0 $80,000 

Retrofits $0 $0 $0 $0 $0 $0 

Supermarket systems $0 $0 $0 $0 $0 $0 

Remote condensing units $0 $0 $0 $0 $0 $0 

Stand-alone equipment $0 $0 $0 $0 $0 $0 

Vending machines $0 $0 $0 $0 $0 $0 

ALL SECTORS $37,840,000 ($19,340,000) $31,910,000c$19,530,000 ($19,340,000) $180,000
13

References

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

Regulatory Changes to the Listing Status of High-GWP Alternatives for a full list of references used for this 

analysis.

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

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

70/156/EEC (Text with EEA relevance). Available online at: http://eur-lex.europa.eu/legalcontent/EN/ALL/?uri=CELEX:32006L0040.

ICF International. 2014. Summary of Comments For the Notice of Proposed Rulemaking: Protection of 

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

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

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http://www.multilateralfund.org/69/English/1/6923.pdf.
14

U.S. Department of Commerce. 2013. Office of Transportation and Machinery, International Trade 

Administration: Trends in U.S. Vehicle Exports, July 2013. Accessible online at: 

http://www.trade.gov/mas/manufacturing/oaai/build/groups/public/@tg_oaai/documents/webcontent/tg

_oaai_004086.pdf.