17-i CHAPTER 17. R EGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

17.1 INTRODUCTION ......................................................................................................... 17-1

17.2 METHODOLOGY ........................................................................................................ 17-1

17.2.1 Modeling Method............................................................................................... 17-1

17.2.1.1 General Service Fluorescent Lamps................................................... 17-2

17.2.1.1.1 Scenarios Analyzed .......................................................... 17-2

17.2.1.1.2 Market Share Matrices ..................................................... 17-3

17.2.1.2 Incandescent Reflector Lamps ........................................................... 17-3

17.2.1.2.1 Scenario............................................................................ 17-3

17.2.1.2.2 Market Share Matrices ..................................................... 17-4

17.2.2 Policy Assumptions ........................................................................................... 17-4

17.2.3 Interaction of Non-Regulatory Alternatives ...................................................... 17-4

17.3 NON-REGULATORY ALTERNATIVES ................................................................... 17-5

17.3.1 No New Regulatory Action ............................................................................... 17-5

17.3.2 Consumer Rebates ............................................................................................. 17-5

17.3.3 Consumer Tax Credits ....................................................................................... 17-8

17.3.4 Manufacturer Tax Credits.................................................................................. 17-9

17.3.5 Voluntary Energy-Efficiency Programs ............................................................ 17-9

17.3.6 Early Replacement........................................................................................... 17-10

17.3.7 Bulk Government Purchases............................................................................ 17-10

17.4 RESULTS SUMMARY FOR NON-REGU LATORY ALTERNATIVES................. 17-11

17.4.1 No New Regulatory Action ............................................................................. 17-12

17.4.2 Consumer Rebates ........................................................................................... 17-12

17.4.3 Consumer Tax Credits ..................................................................................... 17-12

17.4.4 Manufacturer Tax Credits................................................................................ 17-12

17.4.5 Voluntary Energy-Efficiency Programs .......................................................... 17-13

17.4.6 Bulk Government Purchases............................................................................ 17-13

17.4.7 Energy Conservation Standards....................................................................... 17-13

REFERENCES ..................................................................................................................... ... 17-14

LIST OF TABLES

Table 17.2.1 Market Share Matrix for PAR38 90W in the Commercial Sector for Roll-Up, No Product Substitution Scenario for Proposed Standards ..................................................... 17-4

Table 17.3.1 Market Penetrati on Due to Consumer Rebates for GSFL Product Classes......... 17-7

Table 17.3.2 Market Penetrati on Due to Consumer Rebates for IRL Product Classes ............17-8 Table 17.4.1 GSFL: NES and NPV of Non-Regulato ry Alternatives Comp ared to the Adopted17-ii Standards...................................................................................................................... ....17-11

Table 17.4.2 IRL: NES and NPV of Non-Regulatory Alternatives Compared to the Adopted

Standards...................................................................................................................... ....17-11

LIST OF FIGURES

Figure 17.3.1 Commercial Market Penetration Curve as a Function of Simple PBP................ 17-6 Figure 17.3.2 Residential Market Penetration Curve as a Function of Simple PBP ................ 17-717-1 CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

The Department of Energy (DOE) has determin ed that energy conservation standards for general service fluorescent lamps (GSFL) and incandescent reflector lamps (IRL) constitute a “significant regulator y action” under Executive Order (E .O.) 12866 “Regulatory Planning and Review.” 58 FR 51735 (October 4, 1993). Therefore, DOE has prepared this regulatory impact analysis (RIA), which is subject to revi ew under the Executive Order by the Office of Information and Regulatory Affairs (OIRA). 58 FR 51735. This chapter evaluates several nonregulatory alternatives and compares the costs an d benefits of each alte rnative to the proposed

standards.

DOE identified six major, non-regulatory a lternatives to standards as representing feasible policy options to ach ieve potentially similar improvements in GSFL and IRL energy efficiency:

 Consumer Rebates

 Consumer Tax Credits

 Manufacturer Tax Credits

 Voluntary Energy Efficiency Programs

 Bulk government purchases

 Early replacement

DOE evaluated each of the alternatives that apply to the lamp products covered by this final rule in terms of its ability to achieve significant energy savings at a reasonable cost, and compared the effectiveness of each one to that of the adopted standards. The following sections discuss the analysis method used, the non-regulat ory alternatives cons idered, and the energy savings calculated.

17.2 METHODOLOGY

17.2.1 Modeling Method

Each non-regulatory altern ative to the proposed sta ndards improves the average efficiency of new lamp products relative to the base case ( no new regulatory action). The analysis assumed that each non -regulatory alternative would en tice consumers to purchase lamps at targeted efficacy levels, the same efficacy levels as required by the proposed standards. Contrary to the proposed standards, howeve r, the market penetration of non-regulatory alternatives would only impact the portion of the ma rket below the targeted efficacy level. DOEmade specific assumptions about the percentage of this market impacted under each nonregulatory alternative. Details of th ese assumptions can be found in section 17.3

.17-2 In comparing a non-regulatory alternative to the proposed sta ndards, the key measures of comparison were:

 National energy savings (NES) in kilowatt hours (kWh): Cumulative national primary energy savings for equipment bought in the peri od from the effective date of the policy case, 2012, to end of the analysis period, 2042.

 Net present value (NPV): Th e value of net monetary savi ngs from equipment bought in the period from the effective date of the po licy case, 2012, to the e nd of the analysis period, 2042. DOE calculated the NPV as the difference between the present value of equipment and operating expenditures (incl uding energy) in the base case, and the present value of expenditure s in each alternative case. a

DOE quantified the market penetration of each alternative; that is, what percent of consumers below the target efficacy level woul d migrate to the higher efficacy products. DOE then revised inputs to the nationa l impact analysis (NIA) spreadsh eet models. (See chapter 11 of the technical support document (TSD ) for a description of the NIA spreadsheet models.) With these modifications, DOE calculated the NES and NPV of each non-regulatory alternative, and compared it to that of the proposed standards. The sections below provi de more detail on how the NIA Spreadsheet Models for GSFL and IRL were modified for these calculations.

17.2.1.1 General Service Fluorescent Lamps

17.2.1.1.1 Scenarios Analyzed

Although DOE considered eight different co mbinations of base and standards case scenarios for the GSFL NIA (see TSD chapter 10, Shipment Analysis, for a description of each), DOE only considered two scenario combinati ons when calculating energy savings and net present value for the RIA. Specifically, DOE us ed the roll-up scenario to model consumer responses to each of the non-regulat ory alternatives considered. The roll-up scenario represents a scenario in which only consumers purchasing produc ts below the target e fficacy level would be affected by the regulatory or non-regulatory initia tive. This contrasts with the shift scenario (analyzed in the NIA), which assumes that all co nsumers, even those who in base-case purchase products with efficacies higher th an the baseline efficacy, will shift to even higher efficacy products in response to amended energy conser vation standards. Because the non-regulatory alternatives analyzed in the RIA are directed towards those consumers that do not already use energy efficient products, DOE determined that th e roll-up scenario would best reflect market behavior. DOE analyzed the roll-up scenario in combination with the Existing Technologies base case and the High Lighting Expertise standa rds case scenario, which represents the upper

a DOE used the same time period for NPV in the RIA as it did for the NIA in the notice of proposed rulemaking. The longer period for operating cost savings allows the policy impact analysis to account for the operating cost savings benefits for products purchased through the year 2042.17-3 bound energy savings and NPV, and the Emergi ng Technologies base case and the Market Segment-Based Lighting Expertise standards-cas e scenario, which reflects the lower bound.

17.2.1.1.2 Market Share Matrices

Having selected a scenario to use for mode ling purposes, DOE then calculated the market penetration for each lamp type (e.g., 4-foot T8 me dium bipin) and in each market segment (e.g., lamp failure, new construction, retrofit) of each no n-regulatory alternative as a percentage of the market penetration forecast. For example, for the consumer rebate non-regulatory alternative in the 2012 4-foot T8 medium bipin High Expertise market share matrix for new ballasts, DOE

calculated that 25.5% of standa rds-case market penetration (i.e., 100%) would occur with consumer rebates. DOE ran this analysis for each non-regulatory alternative for both of the

aforementioned scenarios.

17.2.1.2 Incandescent Reflector Lamps

17.2.1.2.1 Scenario

Although DOE considered eight different comb inations of base-case and standards-case scenarios for the IRL NIA, DOE only considered two of these scenario combinations when calculating energy savings for the RIA. DOE believed that the roll-up scenario best reflected the market under each of the non-regulatory alternativ es considered. As discussed earlier with regard to GSFL, because these non-regulatory alternativ es are directed towards those consumers that do not already use energy efficient products , for IRL, DOE determined that the roll-up

scenario would best reflect market behavior.

Furthermore, DOE believed that a scen ario modeling “No Product Substitution” (described in section V.E.5.ii of the April 2009 NOPR) would best model the market for nonregulatory alternatives. 74 FR 16920, 16970 (A pril 13, 2009). The No Product Substitution scenario does not model any addi tional shift to non-regulated reflector technologies, such as exempted IRL or reflector compact fluorescen t lamps (R-CFL). The BR and R-CFL Product Substitution scenarios (with models a movement to these alternative lamp types) was developed to model consumers’ responses to the high first- cost of standards-compliant products that would enter the market following an imposed standar d. Because mandatory standards will not be imposed in a non-regulatory alternative, consum ers will not encounter this situation and are therefore unlikely to shift from IRL to other lamp types due to voluntary initiatives. Therefore,

DOE concluded that the No Product Substitution s cenario was the most appropriate to model a voluntary energy program.

Based on these two points, DOE determined that the Roll-up, No Product Substitution scenario paired with both the Existing Technologies and Em erging Technologies base-case shipment scenarios would best reflect market beha vior and used only these scenarios to calculate NES and NPV for the RIA analysis.17-4 17.2.1.2.2 Market Share Matrices

Having selected a scenario to use for m odeli ng purposes, DOE then calculated the market penetration of each non-regulatory alternative. DOE used these market penetration percentages to modify the market share matrices. DOE assu med that the market penetration represented the percent of consumers that would migrate from th e lamp they would have bought in the base case to the lamp at a higher efficacy level. Table 17.2.1 demonstrates this modification in more

detail. Table 17.2.1 shows the market share matrix for IR L in the roll-up no product substitution

scenario. It also shows the sam e market sh are matrix, adjusted to reflect the government purchase alternative.

Table 17.2.1 Market Share Matrix for PAR38 90W in the Commercial Sector for Roll-Up, No Product Substitution Scenario for Proposed Standards

Base Case TSL 4 Bulk Government

Purchase at TSL4 EL Lamp Type

2011 2042 2013 2042 2013 2042

0 Halogen 77% 45% 0% 0% 58% 35%

1 Improved Halogen (Xenon) 0% 0% 0% 0% 0% 0%

2 Long Life HIR 5% 13% 0% 0% 4% 10%

2 Improved Halogen (Silver) 3% 5% 0% 0% 2% 4%

3 HIR 10% 25% 0% 0% 8% 19%

4 Improved HIR 5% 13% 100% 100% 27% 32%

5 Improved HIR Plus 0% 0% 0% 0% 0% 0%

As seen in the tables, consumers that do not migrate to higher efficiencies remain at their existing efficiency level. Simila r modifications were made to the market share matrices for other baselines for each of the non-regulatory alternatives.

17.2.2 Policy Assumptions

DOE calculated the impact of non-regulatory alternatives from the effective date for proposed efficiency standards, 2012, through the end of the an alysis period, 2042. In some scenarios, increased product prices are partially mitigated by government rebates or tax credits.

DOE assumed that credits and reba tes would be paid for by consumers in another form (such as additional taxes), and therefore di d not include them as a benefit for the purposes of calculating

the national NPV. DOE did not consider admi nistrative costs for any of the non-regulatory policies in its analysis. Inclusion of such costs would decrease the NPV by a small amount.

17.2.3 Interaction of Non-Regulatory Alternatives

DOE calculated the impacts of each regulatory policy separately from those of the other policies. In practice, certai n alternatives are often most effective when implemented simultaneously with other incentives. DOE attempted to make conservative assumptions to avoid double-counting policy impacts. Therefore, the impacts of non-regulatory alternatives17-5 reported below are not additive. Furthermore, the combined impact of several or all of the policies may not be inferred by adding the results together.

17.3 NON-REGULATORY ALTERNATIVES

The impact of a non-regulatory alternative is strongly influenced by the rate of consumer participation and is therefore less certain than the impact of the adopted standards, which require mandatory compliance. To determine market penetration rates, DOE conducted a literature review of each non-regulatory a lternative and consulted with key experts to gather information on similar incentive programs that have been implemented in the U.S. By studying actual results of these programs, DOE sought to make credible assumptions of their potential market impacts.

This section summarizes DOE’s c onclusions from this research as they apply to each nonregulatory alternative.

17.3.1 No New Regulatory Action

The case in which no new regulat or y action is taken with rega rd to lighting efficiency

constitutes the base case scenario described in chapter 11 of the TS D. This case defines the basis of comparison for all other scenarios. By de finition, no new regulatory action yields zero energy savings and a net present value of zero dollars.

17.3.2 Consumer Rebates

Consumer rebates cover a portion of the di fference in incremental product price between products meeting baseline efficacy levels and th ose meeting higher efficacy levels, resulting in a higher percentage of consumers purchasi ng more-efficacious models. For GSFL, DOE estimated the impact of improving the simple payb ack through a rebate th at paid 70 percent of the incremental product price. DOE based the 70-percent rebate on ex isting utility rebate programs for replacing a T12 lamp with a T8 lamp or upgrading an existing T8 lamp to a more efficacious T8 lamp. DOE studied each program a nd found that the average rebate amounted to about 70 percent of the incremental product pric e. DOE assumed that the consumer rebate policy would cover the incremental equipment cost s for IRL by the same percentage. DOE then used a market penetration curve, which estimates percent market adoption of a technology as a function of technology simple payback period (PBP). DOE calculated the payback for each product with and without the reba te to project the increased ma rket penetration of the product due to a rebate program.

DOE first calculated the simple payback fo r each design option with an efficacy meeting the target efficacy level relative to the base case design with no re bate (see chapter 8 of the TSD for details on lamp product classes). It then calculated another simple payback for each product class meeting the target efficacy level, with a rebate reducing its incremental product price,

relative to the base case. Becau se of the incremental cost reduction due to the rebate, the payback (in years) for the reba te product is shorter.DOE then used market penetration curves 1 to estimate the increased percentage of consumers who would purchase units that meet the target efficiency leve ls if given a rebate

incentive. Figure 17.3.1 and Figure 17.3.2 show the market penetration curves used in this analysis.

Figure 17.3.1 Commercial Market Penetration Curve as a Function of Simple PB P

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 1 2 3 4 5 6 7 8 91Market Penetration

Payback Period (years) 0

17-6Figure 17.3.2 Residential Market Penetratio n Curve as a Function of Simple PBP

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 1 2 3 4 5 6 7 8 91Market Penetration

Payback Period (years) 0

For GSFL, DOE considered how three different lamp purchase events might be affected by consumer rebates: lamp failure, standards induced retrofit, and ballast failure (or new construction). Using the curves above, DOE calcu lated the market penetration for all analyzed lamp types. Table 17.3.1 shows the calculated market penetration for each GSFL lam p type and lamp purchase event.

Table 17.3.1 Market Penetration Due to Co nsumer Rebates for GSFL Product Classes

Lamp System Sector Purchase Event Market

Penetration

4-foot T12 MBP Residential Lamp Failure 0%

4-foot T12 MBP Residential Ballast Failure 91%

4-foot T12 MBP Residential Retrofit 30%

4-foot T8 MBP Residential Ballast Failure 33%

4-foot T12 MBP Commercial Lamp Failure 12%

4-foot T12 MBP Commercial Ballast Failure 16%

4-foot T12 MBP Commercial Standards-Induced Retrofit 5%

4-foot T8 MBP Commercial Lamp Failure 0%

4-foot T8 MBP Commercial Ballast Failure 26%

8-foot T12 SP slimline Commercial Lamp Failure 6%

8-foot T12 SP slimline Commercial Ballast Failure/ Standards-Induced Retrofit 0%

8-foot T8 SP slimline Commercial Lamp Failure/Ballast Failure 0%

4-foot T5 MiniBP SO Commercial Lamp Failure 0%

4-foot T5 MiniBP SO Commercial Ballast Failure 33%

8-foot T12 RDC HO Industrial Lamp Failure/Ballast Failure 33%

8-foot T8 RDC HO Industrial Ballast Failure 0%

4-foot T5 MiniBP HO Industrial Lamp Failure/Ballast Failure 0%

17-717-8 Similar to GSFL, DOE assumed that the re bate for IRL products would cover 70 percent of the incremental product price. Table 17.3.2 shows the market penetration for each product

class and b aseline for IRL.

Table 17.3.2 Market Penetration Due to Co nsumer Rebates for IRL Product Classes

Baseline Lamp Sector Market

Penetration

90W PAR38 Commercial 13%

Residential 41%

75W PAR38 Commercial 13%

Residential 43%

50W PAR30 Commercial 32%

Residential 60%

To estimate the impacts of this rebate policy, DOE applied these market share increases to the market share matrices of the NIA spreadsh eet model. DOE assumed that the impact of this policy would be to permanently tr ansform the market so that th e increased market penetration seen in the first year of the program would be maintained throughout the forecast period. The resulting energy savings are shown in section 17.4.2

.

17.3.3 Consumer Tax Credits

Consumer tax credits cover a percentage of the difference in incremental product price between products meeting baseline efficiency levels and those with higher efficiencies.

Consumer tax credits are considered a viable non-regulatory market transformation program, as shown by the inclusion of Federal consumer tax credits in the Energy Policy Act of 2005 (EPACT 2005) for various residential appliances.

DOE estimated that for both GSFL and IRL, the consumer participation rate would be lower than the rate of participation in consumer rebates. Research on ta x credits has shown that the time delay to the consumer in receiving a re imbursement through a tax credit, plus the added transaction costs in tax-return preparation, make the tax credit incentiv e less effective than a rebate received at the time of pur chase. Based on previous analysis 2 , DOE assumed that only 60 percent as many consumers would take advantage of the tax credit as woul d take advantage of a

rebate.

Using a similar approach as for the rebate policy, DOE estimated that the market share of the target efficacy level lamp pr oducts would increase due to cons umer tax credits over the base case. For both lamp products, these percentage ma rket penetrations are 60 percent of the market penetrations estimated for the consumer rebate policy (which are shown in Table 17.3.1 and

Table 17.3.2 ).

DOE assumed that the impact of this polic y would be to permanently transform the

market so that the increased mark et penetration seen in the firs t year of the program would be maintained throughout the forecast period. Section 17.4.3 presents the results of the analysis for

the consum er tax credit policy.17-9 17.3.4 Manufacturer Tax Credits

Manufacturer tax credits are considered a viable non-regulatory market transformation program, as shown by the inclusion of Federal tax credits in EPACT 2005 for manufacturers of residential appliances. Similar to consumer tax credits, manufacturer tax credits would effectively result in lower product prices for c onsumers by an amount that covers part of the incremental price difference between products m eeting baseline efficien cy levels and those meeting targeted efficiency levels.

DOE assumed that this incentive policy would help reimburse manufacturers for retooling costs. Because these tax credits woul d go to manufacturers instead of consumers, DOE assumed that manufacturers would pass on the redu ced costs. However, because the program

would not be visible to the end- consumers, DOE assumed that half of the consumers assumed to take advantage of consumer tax credits would purchase more-efficient products under a manufacturer tax credit program. 3 Using this information, DOE calculated the percentage by which market penetration of the target efficacy level lamp products would increase due to

manufacturer tax credit s over the base case.

DOE assumed that the impact of this polic y would be to permanently transform the

market so that the increased mark et penetration seen in the firs t year of the program would be maintained throughout the forecast period. Section 17.4.4 below presents the results of the analysis for the m anufacturer tax credit policy.

17.3.5 Voluntary Energy-Efficiency Programs

DOE estimated the impact of a voluntary energy efficiency program by reviewing the historical and projected market transformation performance of past and current ENERGY STAR programs. The Environmental Protection Agency (EPA) introduced the Green Lights program in January of 1991. Green Lights was a voluntary (non -regulatory) program tasked with a goal of reducing air pollution by promoti ng energy efficient lighting. Companies that elected to participate in this program installed energy effici ent lighting where it proved to be cost-effective (as long as lighting quality was not diminished ). In return, the EPA provided technical assistance and public recognition. In a simila r effort, the EPA launched the ENERGY STAR program in 1992 as a voluntary labeling program to help consumers identify the most energy efficient products on the market. In 1996, Green Lights became a part of the ENERGY STAR

program 4

.

In order to determine how a lighting market would respond to a voluntary energy program, DOE analyzed the success of the Gr een Lights program in the 1990s. One of the significant results of the Green Lights program was observed in th e fluorescent ballast market. Electronic ballasts are, on average, more efficient than magnetic ballasts. As such, as a result of the Green Lights initiative, electronic ballasts bega n to enter the market in increasing numbers. A study that analyzed the impact of public pr ograms on fluorescent ballast shipments concluded

that of all the electr onic ballasts ship ped between 1986 and 2000, 61 percent were due to a public17-10 program 5 . DOE used data from the US Census to cal culate the percent of the market that opted

to use more efficient ballasts as a result of a voluntary program. To do this, DOE calculated 61 percent of the electronic ballast shipments and divided it by the sum of those shipments plus the total magnetic ballast shipments. The 39 percent of electronic ballasts that did not occur as a result of a public program were not included in the denominator, si nce consumers who bought these ballasts were considered to already be us ing energy efficient tec hnologies. DOE concluded

that 20% of the market would sh ift to more efficient products as a result of a voluntary energy efficiency program. This percentage was app lied across all baselines and efficiency levels.

DOE assumed that the impact of this polic y would be to permanently transform the

market so that the increased mark et penetration seen in the firs t year of the program would be maintained throughout the forecast period. Section 17.4.5 below presents the results of the analys is for the voluntary energy efficiency program alternative.

17.3.6 Early Replacement

The early replacem ent policy alte rnative envisions a program to replace old, inefficient units with models meeting efficiency levels higher than baseline products. DOE did not model

this scenario because the lifetime of GSFL and IRL is very short (t he lifetime of even the highest efficacy IRL lamp is only 1.2 years), so the savings would not be very great. Early replacement policies are generally beneficial for products with long lifetimes ( e.g. , washers and dryers, furnaces) and those that require a significant upfr ont investment, neither of which apply to GSFL

and IRL.

17.3.7 Bulk Government Purchases

Under this p olicy alternative, the government sector would be encouraged to shift its purchases to lamps that met the target efficacy levels. Aggregating public sector demand could provide a market signal to manufacturers and vendor s that some of their largest customers seek suppliers with products that meet an efficacy target at competitive prices. This program could also induce “market pull” impacts through the effects of manufacturer s and vendors achieving economies of scale for high-efficiency products. DOE assumed that government agencies, such

as the U.S. General Services Administration (GSA), would administer such a program.

Similar to previous analysis, DOE used floor space data from the 2003 commercial buildings energy consumption survey (CBECS 2003) 6 to derive the proportion of governmentowned floor space to total commercial floor spa ce (including malls), which is 21.4 percent. DOE assumed that floor space owned equated to lamp sales. DOE then added a 1.4 percent marketpull impact to arrive at a conservativ e 22.8 percent market penetration rate. 7 This percentage was used for both GSFL and IRL, and across all tr ial standard levels (TSLs). Bulk government purchases will not affect the residential market.

DOE assumed that the impact of this po licy would be to permanently transform the

market so that the increased mark et penetration seen in the firs t year of the program would be17-11 maintained throughout the forecast period. Section 17.4.6 below presents the results of the analysis for the bulk governm ent purchases policy.

17.4 RESULTS SUMMARY FOR NON- REGUL ATORY ALTERNATIVES

The final rule adopted TSL4 for GSFL and TSL4 for IRL. Table 17.4.1 and Table 17.4.2 show the NES and NPV of each of the applicable non-regu latory alternatives at the adopted

standard levels. The case in wh ich no regulatory action is taken c onstitutes the base case (or “No New Regulatory Action”) scenario. Since this is the base case, energy savings and NPV are zero by definition. For comparison, the table in cludes the impacts of the adopted energy

conservation standards. The ta bles display the NPV results ba sed on two discount rates (seven percent and three percent real). Note that th e tables do not include early replacement as an

alternative. As discussed in section 17.3.6 , DOE found that this alternat ive was not applicable to

GSFL or IRL.

Table 17.4.1 GSFL: NES and NPV of Non-Regu latory A lternatives Compared to the Adopted Standards
Net Present Value (billion $2008) Policy Alternatives 1 National Energy Savings (quads) 7% Discount Rate 3% Discount Rate No New Regulatory Action 0 0 0

Consumer Rebates 2.44-3.10 6.62-8.70 14.39-18.479

Consumer Tax Credits 2.33-2.72 6.37-7.63 13.83-16.31

Manufacturer Tax Credits 2.24-2.44 6.19-6.84 13.41-14.68 Voluntary Energy Efficiency Programs 2.48-2.95 6.65-8.17 14.53-17.52

Bulk Government

Purchases 2.53-3.06 6.74-8.43 14.75-18.16

Adopted Standards 2 3.83-6.30 10.02-17.51 21.84-37.07

Notes:

1 NPV discounted to 2009; Non-regulatory alternatives encourage purchases of GSFL at TSL4.

Table 17.4.2 IRL: NES and NPV of Non-Regulatory Alternatives Compared to the Adopted Standards
Net Present Value (billion $2008) Policy Alternatives 1 National Energy Savings (quads) 7% Discount Rate 3% Discount Rate No New Regulatory Action 0 0 0

Consumer Rebates 0.47-0.64 1.89-2.41 3.70-4.81

Consumer Tax Credits 0.29-0.39 1.18-1.50 2.28-2.94

Manufacturer Tax Credits 0.15-0.20 0.65-0.81 1.21-1.54 Voluntary Energy Efficiency Programs 0.23-0.42 1.02-1.63 1.90-3.12

Bulk Government

Purchases 0.04-0.23 0.26-0.90 0.34-1.58

Adopted Standards 0.94-2.39 1.83-9.06 3.78-17.81

Notes:

1 NPV discounted to 2009, Non-regulatory alternatives enco urage purchases of IRL at TSL4.17-12 The results for each scenario are reported at the TSLs adopted by DOE in this rulemaking: TSL4 for GSFL and IRL. For GSFL , the lower end of the range represents the emerging technologies, market segment based ligh ting expertise scenari o, whereas the upper end of the range represents the exis ting technologies, high lighting expe rtise scenario. For IRL, the range of impacts results from the two base-case shipment scenarios analyzed in the NIA. The lower end of the range represents the emerging technologies scenario, wh ereas the upper range represents the existing technologies scenario.

None of the non-regulatory alte rnatives examined by DOE would save as much energy or likely have an NPV as high as the adopted standards. Additionally, several of the alternatives would require new legislation, such as consumer or manufacturer tax cred its, since authority to carry out those alternatives does not presently exist. The follow ing section reviews the NES and NPV for each non-regulatory alternative.

17.4.1 No New Regulatory Action

The case in which no regulatory action is take n constitutes the base case (or “No Action”) scenario. Since this is the base case, energy savings and NP V are zero by definition.

17.4.2 Consumer Rebates

At the es timated participation rates for G SFL, DOE calculated thatconsumer rebates would provide between 2.44 and 3.10 quads of na tional energy savings and an NPV between $6.62 and $8.70 billion (at a 7-percent discount rate). For IRL, DOE calculated that consumer rebates at the estimated participation rate s would provide between 0.47 and 0.64 quads of national energy savings and an NPV between $1.89 and $2.41 billion (at a 7-percent discount rate). Although DOE estimated that consumer re bates would provide national benefits for GSFL and IRL products, these benefits would likely be smaller than the benefits resulting from the adopted energy conservation standards. Thus, DOE rejected consumer rebates as a policy alternative to energy co nservation standards.

17.4.3 Consumer Tax Credits

For GSFL, at the e stimated participation rate, consumer tax credits would provide national energy savings between 2.33 and 2.72 quads and an NPV between $6.37 and $7.63 billion (at a 7-percent di scount rate). At the estimated participation rates for IRL, consumer tax credits would provide between 0.32 and 0.42 quads of national energy savings and an NPV between $0.29 and $0.39 billion (at a 7-percent discount rate). DOE estimated that while consumer tax credits would yield national benefits for GSFL and IRL, these benefits would be much smaller than the benefits from the adopt ed energy conservation standards. Thus, DOE rejected consumer tax credits as a policy alte rnative to energy cons ervation standards.

17.4.4 Manufacturer Tax Credits17-13 At the estimated participation rates for GSFL, DOE calculated that manufacturer tax credits would provide between 2.24 and 2.44 quads of national energy savings and an NPV between $6.19 and $6.84 billion (at a 7-percent discount rate). Fo r IRL, DOE estimated national energy savings between 0.15 and 0.20 quads a nd an NPV between $6.19 and $6.84 billion (at a 7-percent discount rate) fo r IRL. DOE estimated that while ma nufacturer tax cr edits would yield national benefits for GSFL and IRL, these benefits would be much smaller than the benefits from the adopted energy conservation standards. Thus , DOE rejected manufactu rer tax credits as a policy alternative to ener gy conservation standards.

17.4.5 Voluntary Energy-Efficiency Programs

For GSFL, DOE estimated that voluntary energy efficiency targets would provide between 2.48 and 2.95 quads of national ener gy savings and an NPV between $6.65 and $8.17 billion (at a 7-percent discount rate). For IRL, DOE estimated national energy savings between 0.23 and 0.42 quads and an NPV between $1.02 and $1.63 billion (at a 7-per cent discount rate) for IRL. DOE estimated that while voluntary energy efficiency targets would yield national benefits for GSFL and IRL, thes e benefits would be much sma ller than the benefits from the adopted energy conservation standa rds. Thus, DOE rejected volunt ary energy efficiency targets as a policy alternative to en ergy conservation standards.

17.4.6 Bulk Government Purchases

At the above estim ated participation rates, the bulk government purch ases scenario would provide between 2.53 and 3.06 quads of national energy savings and an NPV between $6.74 and $8.43 billion (at a 7-percent discount rate) for GSFL, and between 0.04 and 0.23 quads of national energy savings and an NPV between $0.26 and $0.90 billion (at a 7-percent discount rate) for IRL. DOE estimated that while bul k government purchases would yield national benefits for GSFL and IRL, thes e benefits would be much sma ller than the benefits from the adopted energy conservation standa rds. Thus, DOE rejected volunt ary energy efficiency targets as a policy alternative to en ergy conservation standards.

17.4.7 Energy Conservation Standards

DOE adopts the efficacy levels listed in section I.A of the final rule. As indicated in the paragraphs above, none of the a lternatives DOE examined would save as much energy as the proposed energy conservation standards. In add ition, several of the alternatives would require new enabling legislation, such as customer ta x credits, since authority to carry out those alternatives does not presently exist.17-14 REFERENCES

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