# Revised Pr eliminary Cost Analys is	f or	Regulatory Changes to the Listing	Status	of	High - GWP Alternative s

**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**  

### 20152 **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 HFC 227ea 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 poly urethane: 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 unacceptab le 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 c ertain high - GWP alternatives used in aerosols, foams, commercial refrigeration, and motor vehicle air conditioning (MVAC). Exhibit 1 summarizes the regulatory changes analyzed . W hile 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 a re estimated to range from $ 19.5 million to $ 37.8 million, total annual savings are e stimated 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 High GWP 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 d irect 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 th ickness 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 t he regulatory changes ;  The propo rtion of businesses that could be directly affect ed 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 tim e 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; 2 and  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 rate s 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 estim ated per vehicle at time of manufactur e 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 emissi ons. 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 low er- 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 sepa rate 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 comp lete 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 transitionin g 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 ana lysis 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. I t 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) (Europea n 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 assum es 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 manu factures 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 man ufacturing 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 business es identified in the small business screening analysis, two additional manufacturers were identified as potentially still produ cing 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 tot al 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 propell ant (EPA 2013).  **M anufacturers of products for the functional testing of smoke detectors**  — T hree 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 ru lemaking is not anticipated to affect manufacturers in some foam types (polystyrene extruded sheet, flexible polyurethane: slabstock and mould ed, 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 facili ty 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 Econo mic Impact Screening Analysis for Regulatory Changes to the Listing Status of High GWP Alternatives . **Polystyrene Foam Product Manufacturing :**   **Polystyrene: Extruded Boardstock and Billet** — All known XPS manufacturers are larger businesses (i.e., having more than 499 employees 4 ). 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 b etween $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 M anufacturing**  **:**  **R igid**  **P olyurethane: (**  **H ousehold)**  **A ppliance**  — Compan ies still using HFC - 245fa and HFC- 134a are assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more cost effective option over the equipment’s lifetime, but Solstice LBA is assumed to be adopted by small businesses to help a chieve energy efficiency standards and/or to avoid incurring upfront capital costs. Specifically, the smallest businesses (i.e., establishments with zero to nine employees) are assumed to transition fully to Solstice LBA, while other small businesses (i.e. , establishments with more than 10 to 999 employees are assumed to transition 50% to Solstice LBA and 50% to hydrocarbons. Larger businesses (i.e., establishments with more than 999 employees 5 ) were assumed to transition fully to hydrocarbons . Capital faci lity 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, 6 due to higher blowing agent costs; annual costs vary depending on facility size (i.e., number of units produced). **Commercial and Industrial Refrigeration Equipment Manufacturing:**  **R igid**  **Polyurethane: Commercial R efrigeration**  — Companies still using HFC - 245fa and HFC- 134a are assumed to transition to either hydrocarbons or Solstice LBA. Hydrocarbons may be a more cost effective option over the equipment’s lifetime, but Solstice LBA is conservatively assumed to be adopted by sma ll businesses to help achieve energy efficiency standards and/or to avoid incurring upfront capital costs. Specifically, the smallest businesses (i.e., establishments with zero to nine employees) are assumed to transition fully to Solstice LBA, while other small businesses (i.e., establishments with 10 to 749 employees are assumed to transition 50% to Solstice LBA and 50% to hydrocarbons. Larger businesses (i.e., establishments with more than 749 employees 7 ) 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 depend ing 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, 8 due to higher blowing agent costs; annual costs vary depending on facility size (i.e., number of units produced) (EPA 2013). **Urethane and Other Foam Product (Except Polystyrene) Manufacturing :**   **Rigid Polyurethane: S** **andwich** — 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 employees 9 ) are assumed to have a higher production volume , using 450 MT of bl owing agent annually, and incur one time capital conversion cost s between $3 36 ,000 and $403,000, offset by anticipated annual savings of $4 7 0,000 due to lower blowing agent costs (EPA 2013) .  **Rigid Polyurethane: Marine Flotation Foam** — It was assumed that com panies 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 e ntities, 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 form ulation 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 P olyurethane a**  **nd P**  **olyiso cyanurate 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 businesse s (i.e., establishments with more than 499 employees 11 ) 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** — C ompanies still using HFC - 134a are assumed to transition to CO 2 . Capital costs are assumed to be between $1 84,000 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 System**  **s 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 ref rigerants. F or the purposes of this analysis, it is assumed that the retail food industry is operating under business as usual conditions . As such, c ompliance costs are based on the assumption that end users (e.g., supermarket s ) w ill 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 ass umed to be the same (EPA 2013) . Therefore, no annual costs or savings are assumed. For businesses with a n operational commercial refrigeration system that uses R -404A or R - 507A, this regulation does not require that they retire their system or retrofit the ir system to use a different refrigerant . It also does not prevent them from maintaining or servicing their system. Therefore , end users 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 CO 2 system that would have much less impact on c limate 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 system s (EPA 2013) . However neit her 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 $5 0 0,000 associated with using R - 290 or a non -flammable alternative (e.g., R-450A) in place of an HFC

12 W hile an increase in operating costs may be experienced associated with the use of CO 2, these costs are not expected to outweigh the annual savings associated with the lower incremental blowing agent cost.9

refrigerant, which results in an annualized cost of about $14,000 to $4 7 , 00 0 per affected est ablishment. 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 CO 2 in place of an HFC refrigerant, which results in an annualized cost of about $9,4 00 to $23,600 per affected establishment. 14 **Retrofits:**  **Supermarket System**  **s and Remote**  **Condensing Units** — I n 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 th is regulation does not require end - users to retrofit their equipment, but rather prohibit s 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 r ulemaking . Thus, these costs are not included in this analysis.

 **Stand -** **Alone Retail Food Equipment and**  **Refrigerated Vending Machines**  — Th is 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 retrofitt ed . With regard to retrofitting for vending machines, based on the lifetime of the equipment and the dire ct 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 cost s 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 potentia lly affected businesses are in the commercial refrigeration sector, but it is important to note that these businesses will not be affected in a single year; instead, a small proportion of businesses are expected to be affected in each year over a 15 to 20 year period , as existing retail food equipment reaches end of- life and businesses make choices about which alternative refrigerant to use in new systems or retrofits . Even if these business es are affected, EPA assumes that most of them will switch to R -407A. S ince 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 Costs**  **a Annual** 

**Savings b**  Annualized Net

Costs b **Annualized**

**Upfront Costs a**  **Annual**

**Savings b**  **Annualized Net**

**Costs** b **Motor Vehicle Air Conditioning -**  **Exports e**  **240 $**  **8,760 ,000**  **$0** $ 8,760,000 **$0 $0**  **$0 Aerosols**  **<10 $1,040,000**  **($5,250,000)** $0 d **$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) $0 d $2,580,000 ($6,600,000) ($4,020,000) Commercial and industrial refrigeration equipment manufacturing 50 $3,760,000 ($7,480,000) $0 d $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 644,500**  **c $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) $** **42,69 0,000**  **$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 An nualized 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 nega tive 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 Costs a**  **Annual**

**Savings b**  **Annualized Net**

**Costs** b **Annualized**

**Upfront Costs a**  **Annual**

**Savings b**  **Annualized Net**

**Costs** b **Motor Vehicle Air Conditioning –**  **Exports d**  **$ 8,760,000**  **$0 $8,760,000**  **$0 $0**  **$0 Aerosols**  **$860,000 ($5,250,000)**  **$0 c**  **$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) $0 c $1,900,000 ($6,600,000) ($4,700,000) Commercial and industrial refrigeration equipment manufacturing $2,790,000 ($7,480,000) $0 c $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,**  **000 c**  **$ 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 u sed for this analysis. Environmental Protection Agency (EPA). 2013. Global Mitigation of Non - CO2 Greenhouse Gases: 2010 - 2030 Available online at: http://www.epa.gov/climatechange/Downloads/EPAactivities/MAC_Report_2013.pdf . European Union, 2006. Directive 2006/40/EC of the European Parliament and of the Council of 17 May 2006 relating to emissions from air conditioning systems in motor vehicles and amending Counci l Directive 70/156/EEC (Text with EEA relevance) . Available online at: http://eur- lex.europa.eu/legal content/EN/ALL/?uri=CELEX:32006L0040 . ICF International. 2014. Summa ry of Comments For the Notice of Proposed Rulemaking: Protection of Stratospheric Ozone: Change of Listing Status for Certain Substitutes Under the Significant New Alternatives Policy Program. Prepared for U.S. Environmental Protection Agency. November 5, 2014. United Nations Environment Programme (UNEP). 2009. Multilateral Fund for the Implementation of the Montreal Protocol (2009), Project Proposal: China, UNEP/OzL.Pro/ExCom/59/23, http://www.multilateralfund.org/sites/59/Document%20Library2/1/5923.pdf . United Nations Environment Programme (UNEP). 2010. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/62/26, http://www.multilateralfund.org/62/English%20Document/1/6226.pdf . United Nations Environmen t Programme (UNEP). 2011a. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: Egypt, UNEP/OzL.Pro/ExCom/65/32, http://www.multilateralfund.org/6 5/English/1/6532.pdf . United Nations Environment Programme (UNEP). 2011b. Multilateral Fund for the Implementation of the Montreal Protocol (2011), Project Proposal: China, UNEP/OzL.Pro/ExCom/64/29 , http://www.multilateralfund.org/MeetingsandDocuments/currentmeeting/64/English/1/6429.pdf . United Nations Environment Programme (UNEP). 2012. Multilate ral Fund for the Implementation of the Montreal Protocol (2012), Project Proposal: Thailand, UNEP/OzL.Pro/ExCom/68/41 , http://www.multilateralfund.org/68/English/1/6841.pdf . United Nations Environment Programme (UNEP). 2013a. Multilateral Fund for the Implementation of the Montreal Protocol (2013), Report of the Sixty- eighth Meeting of the Executive Committee, U NEP/OzL.Pro/ExCom/68/53/Corr.1, http://www.multilateralfund.org/68/English/1/6853_and_Corr.1.pdf . United Nations Environment Programme (UNEP). 2013b. Multilateral Fund for the Implementation of the Montreal Protocol (2013), Project Proposa l: China, UNEP/OzL.Pro/ExCom/69/23 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 .