CHAPTER 10: NATIONAL IMPACT ANALYSIS 

TABLE OF CONTENTS 

10.1 INTRODUCTION ......................................................................................................... 10-1 

10.2 FORECASTED EFFICIENCIES FOR BASE AND STANDARDS CASES .............. 10-2 

10.2.1 Method and Assumptions .............................................................................................. 10-2
 

10.2.2 Standard-Size Refrigerator-Freezers.............................................................................. 10-6 

10.2.3 Standard-Size Freezers................................................................................................. 10-10 

10.2.4 Compact Refrigerators and Freezers............................................................................ 10-11 

10.3 NATIONAL ENERGY SAVINGS ............................................................................. 10-13 

10.3.1 Definition ..................................................................................................................... 10-14 

10.3.2 Inputs............................................................................................................................ 10-15 

10.3.2.1 Shipments................................................................................................... 10-15 

10.3.2.2 Equipment Stock........................................................................................ 10-15 

10.3.2.3 Annual Energy Consumption per Unit ...................................................... 10-15 

10.3.2.4 National Annual Energy Consumption...................................................... 10-17 

10.3.2.5 Site-to-Source Conversion Factors ............................................................ 10-17 

10.4 NET PRESENT VALUE............................................................................................. 10-18 

10.4.1 Definition ..................................................................................................................... 10-18 

10.4.2 Inputs............................................................................................................................ 10-20 

10.4.2.1 Average Annual Product Cost ................................................................... 10-20 

10.4.2.2 Annual Operating Cost Savings per Unit................................................... 10-21 

10.4.2.3 Total Annual Increases in Product Cost.....................................................10-22 

10.4.2.4 Total Annual Savings in Operating Cost ................................................... 10-22 

10.4.2.5 Discount Factor.......................................................................................... 10-22 

10.4.2.6 Present Value of Costs...............................................................................10-23 

10.4.2.7 Present Value of Savings ...........................................................................10-23 

10.5 RESULTS OF NES AND NPV CALCULATIONS ................................................... 10-23 

10.5.1 Summary of Inputs....................................................................................................... 10-23 

10.5.2 Results of National Energy Savings Calculations ....................................................... 10-24 

10.5.2.1 Standard-Size Refrigerator-Freezers.......................................................... 10-24 

10.5.2.2 Standard-Size Freezers............................................................................... 10-25 

10.5.2.3 Compact Refrigerators and Freezers.......................................................... 10-26 

10.5.3 Annual Costs and Savings ........................................................................................... 10-27
 

10.5.4 Results of Net Present Value Calculations .................................................................. 10-28 

10.5.5 Summary of NIA Results............................................................................................. 10-30
 

LIST OF TABLES 

Table 10.2.1 Standard-Size Refrigerator-Freezers: Base-Case Efficiency Distributions ....... 10-4 

Table 10.2.2 Standard-Size Freezers: Base-Case Efficiency Distributions............................ 10-4 

10-i 

EERE-2008-BT-STD-0012 COMMENT 20
Table 10.2.3 Compact Refrigerators and Freezers: Base-Case Efficiency Distributions ....... 10-5 

Table 10.2.4 Top-Mount Refrigerator-Freezers: Efficiency Distributions in 2014 for 

Base and Standards Cases.................................................................................. 10-7 

Table 10.2.5 Top-Mount Refrigerator-Freezers: Efficiency Distributions in and After 

2021 for Base and Standards Cases ................................................................... 10-7 

Table 10.2.6 Bottom-Mount Refrigerator-Freezers: Efficiency Distributions in 2014 for 

Base and Standards Cases.................................................................................. 10-8 

Table 10.2.7 Bottom-Mount Refrigerator-Freezers: Efficiency Distributions in and 

After 2021 for Base and Standards Cases.......................................................... 10-8 

Table 10.2.8 Side-by-Side Refrigerator-Freezers: Efficiency Distributions in 2014 for 

Base and Standards Cases.................................................................................. 10-9 

Table 10.2.9 Side-by-Side Refrigerator-Freezers: Efficiency Distributions in and After 

2021 for Base and Standards Cases ................................................................... 10-9 

Table 10.2.10 Upright Freezers: Efficiency Distributions in 2014 for Base and Standards 

Cases ................................................................................................................ 10-10 

Table 10.2.11 Upright Freezers: Efficiency Distributions in and After 2021 for Base and 

Standards Cases ............................................................................................... 10-10 

Table 10.2.12 Chest Freezers: Efficiency Distributions in 2014 for Base and Standards 

Cases ................................................................................................................ 10-11 

Table 10.2.13 Chest Freezers: Efficiency Distributions in and After 2021 for Base and 

Standards Cases ............................................................................................... 10-11 

Table 10.2.14 Compact Refrigerators: Efficiency Distributions in 2014 for Base and 

Standards Cases ............................................................................................... 10-12 

Table 10.2.15 Compact Refrigerators: Efficiency Distributions in and After 2021 for 

Base and Standards Cases................................................................................ 10-12 

Table 10.2.16 Compact Freezers: Efficiency Distributions in 2014 for Base and 

Standards Cases ............................................................................................... 10-13 

Table 10.2.17 Compact Freezers: Efficiency Distributions in and After 2021 for Base 

and Standards Cases......................................................................................... 10-13 

Table 10.3.1 Standard-Size Refrigerator-Freezers: Shipment-Weighted Average Annual 

Energy Consumption in 2014 .......................................................................... 10-16 

Table 10.3.2 Standard-Size Freezers: Shipment-Weighted Average Annual Energy 

Consumption in 2014....................................................................................... 10-16 

Table 10.3.3 Compact Refrigerators and Freezers: Shipment-Weighted Average Annual 

Energy Consumption in 2014 .......................................................................... 10-16 

Table 10.4.1 Standard-Size Refrigerator-Freezers: Shipment-Weighted Average 

Product Cost in 2014 for Base and Standards Cases ....................................... 10-21 

Table 10.4.2 Standard-Size Freezers: Shipment-Weighted Average Product Cost in 

2014 for Base and Standards Cases ................................................................. 10-21 

Table 10.4.3 Compact Refrigerators and Freezers: Shipment-Weighted Average 

Product Cost in 2014 for Base and Standards Cases ....................................... 10-21 

Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value...... 10-24 

Table 10.5.2 Standard-Size Refrigerator-Freezers: Cumulative National Energy 

Savings, quads ................................................................................................. 10-25 

10-ii 

EERE-2008-BT-STD-0012 COMMENT 20
Table 10.5.3 Standard-Size Refrigerator-Freezers: Discounted Cumulative National 

Energy Savings, quads..................................................................................... 10-25 

Table 10.5.4 Standard-Size Freezers: Cumulative National Energy Savings, quads ........... 10-26 

Table 10.5.5 Standard-Size Freezers: Discounted Cumulative National Energy Savings, 

quads................................................................................................................ 10-26 

Table 10.5.6 Compact Refrigerators and Freezers: Cumulative National Energy 

Savings, quads ................................................................................................. 10-27 

Table 10.5.7 Compact Refrigerators and Freezers: Discounted Cumulative National 

Energy Savings, quads..................................................................................... 10-27 

Table 10.5.8 Standard-Size Refrigerator-Freezers: Discounted Cumulative Net Present 

Values .............................................................................................................. 10-29 

Table 10.5.9 Standard-Size Freezers: Discounted Cumulative Net Present Values............. 10-30 

Table 10.5.10 Compact Refrigerators and Freezers: Discounted Cumulative Net Present 

Values .............................................................................................................. 10-30 

Table 10.5.11 Standard-Size Refrigerator-Freezers: NES and NPV Results ......................... 10-31 

Table 10.5.12 Standard-Size Freezers: NES and NPV Results .............................................. 10-31 

Table 10.5.13 Compact Refrigerators and Freezers: NES and NPV Results ......................... 10-32 

LIST OF FIGURES 

Figure 10.2.1 Projected Shipment-Weighted Energy Use Factors as a Function of 

Standard Level for Product Class 7 ................................................................... 10-6 

Figure 10.3.1 Marginal Site-to-Source Conversion Factors for Electricity ........................... 10-18 

Figure 10.5.1 Non-Discounted Annual Increases in Installed Cost and Savings in 

Operating Cost for Product Class 3 at Standard Level 3 ................................. 10-28 

10-iii 

EERE-2008-BT-STD-0012 COMMENT 20
 

CHAPTER 10. NATIONAL IMPACT ANALYSIS 

10.1 INTRODUCTION 

This chapter describes the method the U.S. Department of Energy (DOE) used to 

estimate the national impacts of candidate standard levels for residential refrigeration products. 

DOE evaluated the following impacts: (1) national energy savings (NES) attributable to each 

possible standard, (2) monetary value of those energy savings to consumers of the considered 

products, (3) increased total installed cost of the products because of standards, and (4) net 

present value (NPV) of energy savings (the difference between the value of energy savings and 

increased total installed cost). 

DOE determined both the NES and NPV for all the efficiency levels considered for new 

standards for residential refrigeration products. DOE performed all calculations for each 

considered product using a Microsoft Excel spreadsheet model, which is accessible on the 

Internet. <www.eere.energy.gov/buildings/appliance_standards/> The spreadsheets, which 

implement the National Impact Analysis (NIA) model, combine the calculations for determining 

the NES and NPV for each considered product with input from the appropriate shipments model. 

Details and instructions for using the NIA model are provided in appendix 10-A. 

Chapter 9 provides a detailed description of the shipments models that DOE used to 

forecast future purchases of the considered products. Chapter 9 includes detailed descriptions of 

consumers’ sensitivities to total installed cost, operating cost, and income, and how DOE 

captured those sensitivities within the model. 

Throughout its analysis, DOE studied seven product classes in detail. For the National 

Impact Analysis, each of these classes represents a product category which also contains other 

product classes. DOE assigned each of the twenty product classes to one of these seven product 

categories. The following list indicates which product classes are associated with each product 

category: 

•	 Top-mount refrigerator-freezers: product classes 1, 1A, 2, 3, 3A, and 6; represented 

by product class 3. 

•	 Bottom-mount refrigerator-freezers: product classes 5 and 5A; represented by product 

class 5. 

•	 Side-by-side refrigerator-freezers: product classes 4 and 7; represented by product 

class 7. 

•	 Upright freezers: product class 9 only. 

•	 Chest freezers: product classes 8a, 10, and 10A; represented by product class 10. 

a

 Product class 8, “upright freezers with manual defrost” is analyzed as part of the “chest freezer” category because 

products in this class are much more technologically similar to chest freezers. 

10-1 

EERE-2008-BT-STD-0012 COMMENT 20
 

•	 Compact refrigerators: product classes 11, 11A, 12, 13, 13A, 14, and 15; represented 

by product class 11. 

•	 Compact freezers: product classes 16, 17, and 18; represented by product class 18. 

To estimate the national impacts of new standards for all the product classes considered 

in this rulemaking, DOE allocated the product cost and annual energy consumption of each 

representative product class to all product classes within its category. 

10.2 FORECASTED EFFICIENCIES FOR BASE AND STANDARDS CASES 

This section describes the method DOE used to forecast the energy efficiencies of 

considered products under the base case and each of the potential standards cases. It provides 

efficiency distributions for all product classes of standard-size refrigerator-freezers, standard-size 

freezers, and compact refrigerators and freezers. 

10.2.1 Method and Assumptions 

A key factor in estimating NES and NPV is the trend in energy efficiency forecasted for 

the base case (without new standards) and each of the standards cases. In calculating the NES, 

per-unit annual energy consumption is a direct function of product efficiency. For the NPV, two 

inputs, the per-unit total installed cost and the per-unit annual operating cost, depend on 

efficiency. The first input, the per-unit total installed cost, is a direct function of efficiency. The 

per-unit annual operating cost, because it is a function of the per-unit annual consumption, is 

indirectly dependent on product efficiency. 

For each product class considered for new standards, DOE determined the distribution of 

product efficiencies in the marketplace in 2007 based on data submitted by the Association of 

Home Appliance Manufacturers (AHAM).1

 Using the 2007 efficiency distribution as a starting 

point, DOE developed a base-case efficiency distribution based on certain assumptions regarding 

future trends. DOE assumed that increases in efficiency are driven largely by the ENERGY 

STAR program and the consumer incentives available for ENERGY STAR appliances. DOE 

evaluated the historical trends in energy use by refrigeration products, as reported in the AHAM 

Fact Book 20052

 (as well as data provided by AHAM for 2006 and 20071). Based on the AHAM 

information, DOE concluded that the roughly constant energy use per appliance observed 

between 2001 and 2007 reflected the growing market share for larger appliances and product 

classes that use more energy, such as side-mount refrigerator-freezers, balanced by an increasing 

market share for ENERGY STAR appliances. 

The requirements for meeting ENERGY STAR qualification were changed on April 1, 

2008, for standard-size refrigerator-freezers, but remained the same for standard-size freezers 

and compact products.3

 DOE assumed that the market for standard-size refrigerators will shift 

toward greater efficiency between 2007 and 2014 (the assumed effective date of a new standard) 

10-2 

EERE-2008-BT-STD-0012 COMMENT 20
in response to the change in ENERGY STAR requirements. In particular, DOE assumed (for all 

product classes) that the percentage of shipments that meet the new ENERGY STAR criteria will 

be the same in 2014 as it was in 2007. For standard-size freezers and all compact products, DOE 

assumed no change in the distribution of efficiencies before 2014. For standard-size refrigeratorfreezers, DOE assumed that the market share of products that qualified for the ENERGY STAR 

label in 2007 but could not meet the 2008 criteria, gradually will shift to meet the new criteria, 

resulting in the same market share for ENERGY STAR refrigeration products in 2014 as in 

2007. For product class 3, for example, the ENERGY STAR market share in 2007 was 13.4 

percent. The assumed market share in 2014 (under the new criteria) also is 13.4 percent (see 

Table 10.2.1). 

Base case. For the base-case scenario, DOE assumed that the ENERGY STAR 

requirements for all product classes will become more stringent in 2014 than in 2008, if there 

were no revised standards. This assumption reflects the view that, in the absence of DOE 

standards, the ENERGY STAR program (and or other federal or State programs) would feel 

compelled to increase promotion of higher-efficiency refrigeration products. DOE assumed that 

energy use by ENERGY STAR products would be required to be 25 percent, rather than 20 

percent, lower than the standard for standard-size refrigerator-freezers and compact products, 

and 15 percent, rather than 10 percent lower for standard-size freezers. DOE then assumed that 

the ENERGY STAR market shares in 2021, under the new qualification criteria, would equal the 

ENERGY STAR market shares in 2007. Finally, DOE assumed that the efficiency distributions 

would be fixed from 2021 until the end of the forecast period (30 years after the assumed 

effective date of 2014). 

Table 10.2.1 shows the market shares of product efficiencies that DOE projected for 

standard-size refrigerator-freezers in 2007, 2014, and 2021. The table also lists the shipmentweighted energy use factor (SWEUF) for each product class for those years. The distributions for 

product classes of freezers and compact models are not projected to change between 2007 and 

2014, but are projected to change between 2014 and 2021 in response to assumed ENERGY 

STAR requirements (Tables 10.2.2 and 10.2.3). 

10-3 

EERE-2008-BT-STD-0012 COMMENT 20
Table 10.2.1 Standard-Size Refrigerator-Freezers: Base-Case Efficiency Distributions 

Energy 

Use 

Top-Mount RefrigeratorFreezers 

(market share in %) 

Bottom-Mount RefrigeratorFreezers 

(market share in %) 

Side-by-Side RefrigeratorFreezers 

(market share in %) 

Factor 2007 2014 2021 2007 2014 2021 2007 2014 2021 

1.0 

0.90 

0.85 

0.80* 

0.75 

0.70 

0.65 

0.60 

0.55 

80.7 

5.9 

13.2 

0.2 

0.0 

0.0 

0.0 

0.0 

0.0 

80.7 

5.9 

0.0 

13.4 

0.0 

0.0 

0.0 

0.0 

0.0 

80.7 

5.9 

0.0 

0.0 

13.4 

0.0 

0.0 

0.0 

0.0 

11.8 

0.1 

69.8 

18.3 

0.0 

0.0 

0.0 

0.0 

0.0 

11.8 

0.1 

0.0 

88.1 

0.0 

0.0 

0.0 

0.0 

0.0 

11.8 

0.1 

0.0 

0.0 

88.1 

0.0 

0.0 

0.0 

0.0 

25.0 

43.0 

30.3 

1.7 

0.0 

0.0 

0.0 

0.0 

-

25.0 

43.0 

0.0 

32.0 

0.0 

0.0 

0.0 

0.0 

-

25.0 

43.0 

0.0 

0.0 

32.0 

0.0 

0.0 

0.0 

-

SWEUF 0.974 0.967 0.961 0.859 0.824 0.780 0.908 0.893 0.877 

* Meets 2008 ENERGY STAR criteria. 

Table 10.2.2 Standard-Size Freezers: Base-Case Efficiency Distributions 

Energy Use 

Upright Freezers 

(market share in %) 

Chest Freezers 

(market share in %) 

Factor 2007 2014 2021 2007 2014 2021 

1.0 

0.90* 

0.85 

0.80 

0.75 

0.70 

0.65 

0.60 

0.55 

81.5 

17.0 

1.0 

0.1 

0.2 

0.2 

0.0 

0.0 

0.0 

81.5 

17.0 

1.0 

0.1 

0.2 

0.2 

0.0 

0.0 

0.0 

81.5 

0.0 

18.0 

0.1 

0.2 

0.2 

0.0 

0.0 

0.0 

84.7 

14.3 

0.8 

0.0 

0.0 

0.2 

0.0 

0.0 

0.0 

84.7 

14.3 

0.8 

0.0 

0.0 

0.2 

0.0 

0.0 

0.0 

84.7 

0.0 

15.1 

0.0 

0.0 

0.2 

0.0 

0.0 

0.0 

SWEUF 0.980 0.980 0.972 0.984 0.984 0.977 

* Meets 2008 ENERGY STAR criteria. 

10-4 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.2.3 Compact Refrigerators and Freezers: Base-Case Efficiency Distributions 

Energy Use 

Compact Refrigerators 

(market share in %) 

Compact Freezers 

(market share in %) 

Factor 2007 2014 2021 2007 2014 2021 

1.0 

0.90 

0.85 

0.80* 

0.75 

0.70 

0.65 

0.60 

0.55 

97.1 

0.3 

0.0 

0.9 

1.7 

0.0 

0.0 

0.0 

0.0 

97.1 

0.3 

0.0 

0.9 

1.7 

0.0 

0.0 

0.0 

0.0 

97.1 

0.3 

0.0 

0.0 

2.6 

0.0 

0.0 

0.0 

0.0 

95.4 

4.6 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

95.4 

4.6 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

95.4 

4.6 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

SWEUF 0.994 0.994 0.993 0.995 0.995 0.995 

* Meets 2008 ENERGY STAR criteria. 

Standards cases. To determine efficiency distributions for cases in which a candidate 

standard applies, DOE used a “roll-up + market shift” scenario for 2014, the year that revised 

standards are assumed to become effective, and subsequent years. DOE assumed that product 

efficiencies in the base case that did not meet the standard under consideration would roll up to 

meet the new standard in 2014. 

DOE further assumed that revised standards would result in a market shift such that 

market shares of products with efficiency better than the standard would gradually increase. In 

keeping with the perspective of the base case scenario that energy efficiency will be a policy 

priority, DOE assumed that the ENERGY STAR program will continue to promote efficient 

appliances after revised standards are introduced in 2014. For a standard that calls for an energy 

use factor of 0.9 (a 10-percent reduction in energy use from the current standard) for standardsize refrigerator-freezers, DOE assumed that the ENERGY STAR requirement would remain 20 

percent better than the standard. For all other standard levels for standard-size refrigeratorfreezers other than the maximum-efficiency level, DOE assumed that the ENERGY STAR 

program would use a threshold of 15 percent better than the standard, because it might be 

difficult to achieve 20 percent better than the standard at the new, higher efficiency levels. For all 

standard levels other than the maximum-efficiency level, DOE assumed that the ENERGY 

STAR program would use a threshold of 10 percent better than the standard for standard-size 

freezers, and 20 percent better than the standard for compact refrigeration products. Those levels 

correspond to the current ENERGY STAR requirements (relative to the standard). 

Using the above criteria, DOE assumed that from 2014 to 2021 the market share of 

ENERGY STAR appliances for each product category would grow linearly until it reached the 

level obtained in 2007. DOE assumed that after 2021 the percentage of shipments at each 

efficiency level would remain fixed at the 2021 values. 

10-5 

EERE-2008-BT-STD-0012 COMMENT 20
 Figure 10.2.1 is a graphical representation of DOE’s approach. The figure shows a plot of 

the shipment-weighted energy use factor for product class 7 (representative of all side-by-side 

refrigerator-freezers) for the base case and each candidate standard level. Some units in each 

year exceed the standard level in all cases except candidate standard level 7, which represents the 

maximum-efficiency case. Similar figures could be created for every product class. Shipment-Weighted Energy Use Factor

1 

0.9 

Base case 

CSL 1 (0.9) 

0.8 CSL 2 (0.85) 

CSL 3 (0.8) 

CSL 4 (0.75) 0.7 

CSL 5 (0.7) 

CSL 6 (0.65) 

0.6 CSL 7 (0.6) 

0.5 

0.4 

2005 2010 2015 2020 2025 2030 2035 2040 2045 

Year 

Figure 10.2.1 Projected Shipment-Weighted Energy Use Factors as a Function 

of Standard Level for Product Class 7 

10.2.2 Standard-Size Refrigerator-Freezers 

Tables 10.2.4 through 10.2.9 show the efficiency distributions for 2014 and 2021 that 

DOE used for the considered refrigerator-freezer product classes under the base case and each 

potential standards case. Efficiency distributions for the base and standards cases transition 

linearly from 2014 to 2021, after which they remain fixed. The tables include the shipmentweighted energy use factor (SWEUF) associated with each case. 

10-6 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.2.4 Top-Mount Refrigerator-Freezers: Efficiency Distributions in 2014 for Base 

and Standards Cases 

Efficiency 

Level 

(% less 

than 

baseline 

energy 

use) 

Energy 

Use 

Factor 

Baseline 1.0 

1 (10) 0.90 

2 (15) 0.85 

3 (20) 0.80 

4 (25) 0.75 

5 (30) 0.70 

6 (35) 0.65 

7 (40) 0.60 

8 (45) 0.55 

SWEUF 

Base 

Case 

80.7 

5.9 

0.0 

13.4 

0.0 

0.0 

0.0 

0.0 

0.0 

0.967 

1 

-

86.6 

0.0 

13.4 

0.0 

0.0 

0.0 

0.0 

0.0 

0.887 

2 

-

-

86.6 

13.4 

0.0 

0.0 

0.0 

0.0 

0.0 

0.843 

Market Share % 

Standards Case 

3 4 5 

- - -

- - -

- - -

100.0 - -

0.0 100.0 -

0.0 0.0 100.0 

0.0 0.0 0.0 

0.0 0.0 0.0 

0.0 0.0 0.0 

0.800 0.750 0.700 

6 7 8 

- - -

- - -

- - -

- - -

- - -

- - -

100.0 - -

0.0 100.0 -

0.0 0.0 100.0 

0.650 0.600 0.550 

Table 10.2.5 Top-Mount Refrigerator-Freezers: Efficiency Distributions in and After 

2021 for Base and Standards Cases 

Efficiency Market Share % 

Level Standards Case 

(% less 

than 

baseline Energy 

energy Use Base 

use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 80.7 - - - - - - - -

1 (10) 0.90 5.9 86.6 - - - - - - -

2 (15) 0.85 0.0 0.0 86.6 - - - - - -

3 (20) 0.80 0.0 0.0 0.0 86.6 - - - - -

4 (25) 0.75 13.4 13.4 13.4 0.0 86.6 - - - -

5 (30) 0.70 0.0 0.0 0.0 13.4 0.0 86.6 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 13.4 0.0 86.6 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 13.4 13.4 86.6 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.4 100.0 

SWEUF 0.961 0.880 0.837 0.787 0.737 0.687 0.643 0.593 0.550 

10-7 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

Table 10.2.6 Bottom-Mount Refrigerator-Freezers: Efficiency Distributions in 2014 for 

Base and Standards Cases 

Efficiency 

Level 

(% less 

than 

baseline 

energy 

use) 

Energy 

Use 

Factor 

Baseline 1.0 

1 (10) 0.90 

2 (15) 0.85 

3 (20) 0.80 

4 (25) 0.75 

5 (30) 0.70 

6 (35) 0.65 

7 (40) 0.60 

8 (45) 0.55 

SWEUF 

Base 

Case 

11.8 

0.1 

0.0 

88.1 

0.0 

0.0 

0.0 

0.0 

0.0 

0.824 

1 

-

11.9 

0.0 

88.1 

0.0 

0.0 

0.0 

0.0 

0.0 

0.812 

Market Share % 

Standards Case 

2 3 4 5 6 

- - - - -

- - - - -

11.9 - - - -

88.1 100.0 - - -

0.0 0.0 100.0 - -

0.0 0.0 0.0 100.0 -

0.0 0.0 0.0 0.0 100.0 

0.0 0.0 0.0 0.0 0.0 

0.0 0.0 0.0 0.0 0.0 

0.806 0.800 0.750 0.700 0.650 

7 

-

-

-

-

-

-

-

100.0 

0.0 

0.600 

8 

-

-

-

-

-

-

-

-

100.0 

0.550 

Table 10.2.7 Bottom-Mount Refrigerator-Freezers: Efficiency Distributions in and After 

2021 for Base and Standards Cases 

Efficiency Market Share % 

Level Standards Case 

(% less 

than 

baseline Energy 

energy Use Base 

use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 11.8 - - - - - - - -

1 (10) 0.90 0.1 11.9 - - - - - - -

2 (15) 0.85 0.0 0.0 11.9 - - - - - -

3 (20) 0.80 0.0 0.0 0.0 11.9 - - - - -

4 (25) 0.75 88.1 88.1 88.1 0.0 11.9 - - - -

5 (30) 0.70 0.0 0.0 0.0 88.1 0.0 11.9 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 88.1 0.00 11.9 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 88.1 88.1 11.9 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.00 0.00 88.1 100.0 

SWEUF 0.780 0.768 0.762 0.712 0.662 0.622 0.606 0.556 0.550 

10-8 

EERE-2008-BT-STD-0012 COMMENT 20
Table 10.2.8 Side-by-Side Refrigerator-Freezers: Efficiency Distributions in 2014 for Base 

and Standards Cases 

Efficiency 

Level 

(% less than 

baseline 

energy use) 

Baseline 

1 (10) 

2 (15) 

3 (20) 

4 (25) 

5 (30) 

6 (35) 

7 (40) 

Energy Use 

Factor Base Case 

1.0 25.0 

0.90 43.0 

0.85 0.0 

0.80 32.0 

0.75 0.0 

0.70 0.0 

0.65 0.0 

0.60 0.0 

SWEUF 0.893 

1 

-

68.0 

0.0 

32.0 

0.0 

0.0 

0.0 

0.0 

0.868 

Market Share % 

Standards Case 

2 3 4 5 6 7 

- - - - - -

- - - - - -

68.0 - - - - -

32.0 100.0 - - - -

0.0 0.0 100.0 - - -

0.0 0.0 0.0 100.0 - -

0.0 0.0 0.0 0.0 100.0 -

0.0 0.0 0.0 0.0 0.0 100.0 

0.834 0.800 0.750 0.700 0.650 0.600 

Table 10.2.9 Side-by-Side Refrigerator-Freezers: Efficiency Distributions in and After 

2021 for Base and Standards Cases 

Efficiency 

Level 

(% less than 

baseline 

energy use) 

Baseline 

1 (10) 

2 (15) 

3 (20) 

4 (25) 

5 (30) 

6 (35) 

7 (40) 

Energy Use 

Factor Base Case 

1.0 25.0 

0.90 43.0 

0.85 0.0 

0.80 0.0 

0.75 32.0 

0.70 0.0 

0.65 0.0 

0.60 0.0 

SWEUF 0.877 

1 

-

68.0 

0.0 

0.0 

32.0 

0.0 

0.0 

0.0 

0.852 

Market Share % 

Standards Case 

2 3 4 5 6 7 

- - - - - -

- - - - - -

68.0 - - - - -

0.0 68.0 - - - -

32.0 0.0 68.0 - - -

0.0 32.0 0.0 68.0 - -

0.0 0.0 32.0 0.0 68.0 -

0.0 0.0 0.0 32.0 32.0 100.0 

0.818 0.768 0.718 0.668 0.634 0.600 

10-9 

EERE-2008-BT-STD-0012 COMMENT 20
 

10.2.3 Standard-Size Freezers 

Tables 10.2.10 through 10.2.13 give the efficiency distributions in 2014 and 2021 that 

DOE used for the base case and each standards case for the standard-sized freezer product 

classes. The efficiency distributions for the base and all standards cases transition linearly from 

2014 to 2021, after which they remain fixed. The tables include the SWEUF associated with 

each case. 

Table 10.2.10 Upright Freezers: Efficiency Distributions in 2014 for Base and Standards 

Cases 

Efficiency Market Share % 

Level Standards Case 

(% less 

than Energy 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 81.5 - - - - - - - -

1 (10) 0.90 17.0 98.5 - - - - - - -

2 (15) 0.85 1.0 1.0 99.5 - - - - - -

3 (20) 0.80 0.1 0.1 0.1 99.6 - - - - -

4 (25) 0.75 0.2 0.2 0.2 0.2 99.8 - - - -

5 (30) 0.70 0.2 0.2 0.2 0.2 0.2 100.0 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 

SWEUF 0.980 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.550 

Table 10.2.11 Upright Freezers: Efficiency Distributions in and After 2021 for Base and 

Standards Cases 

Efficiency Market Share % 

Level Standards Case 

(% less 

than Energy 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 81.5 - - - - - - - -

1 (10) 0.90 0.0 81.5 - - - - - - -

2 (15) 0.85 18.0 18.0 81.5 - - - - - -

3 (20) 0.80 0.1 0.1 18.1 81.5 - - - - -

4 (25) 0.75 0.2 0.2 0.2 18.3 81.5 - - - -

5 (30) 0.70 0.2 0.2 0.2 0.2 18.5 81.5 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 18.5 81.5 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 18.5 81.5 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 18.5 100.0 

SWEUF 0.972 0.890 0.840 0.791 0.741 0.691 0.641 0.591 0.550 

10-10 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.2.12 Chest Freezers: Efficiency Distributions in 2014 for Base and Standards 

Cases 

Efficiency 

Level 

(% less 

than 

baseline 

energy use) 

Energy 

Use 

Factor 

Base 

Case 1 

Baseline 1.0 84.7 -

1 (10) 0.90 14.3 99.0 

2 (15) 0.85 0.8 0.8 

3 (20) 0.80 0.0 0.0 

4 (25) 0.75 0.0 0.0 

5 (30) 0.70 0.2 0.2 

6 (35) 0.65 0.0 0.0 

7 (40) 0.60 0.0 0.0 

8 (45) 0.55 0.0 0.0 

SWEUF 0.984 0.900 

Market Share % 

Standards Case 

2 3 4 5 

- - - -

- - - -

99.8 - - -

0.0 99.8 - -

0.0 0.0 99.8 -

0.2 0.2 0.2 100.0 

0.0 0.0 0.0 0.0 

0.0 0.0 0.0 0.0 

0.0 0.0 0.0 0.0 

0.850 0.800 0.750 0.700 

6 7 

- -

- -

- -

- -

- -

- -

100.0 -

0.0 100.0 

0.0 0.0 

0.650 0.600 

8 

-

-

-

-

-

-

-

-

100.0 

0.550 

Table 10.2.13 Chest Freezers: Efficiency Distributions in and After 2021 for Base and 

Standards Cases 

Efficiency Market Share % 

Level 

(% less than Energy 

Standards Case 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 84.7 - - - - - - - -

1 (10) 0.90 0.0 84.7 - - - - - - -

2 (15) 0.85 15.1 15.1 84.7 - - - - - -

3 (20) 0.80 0.0 0.0 15.1 84.7 - - - - -

4 (25) 0.75 0.0 0.0 0.0 15.1 84.7 - - - -

5 (30) 0.70 0.2 0.2 0.2 0.2 15.3 84.7 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 15.3 84.7 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 15.3 84.7 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.3 100.0 

SWEUF 0.977 0.892 0.842 0.792 0.742 0.692 0.642 0.592 0.550 

10.2.4 Compact Refrigerators and Freezers 

Tables 10.2.14 through 10.2.17 show the efficiency distributions in 2014 and 2021 that 

DOE used for the base case and all potential standards cases for compact refrigeration product 

classes. The efficiency distributions for the base and standards cases transition linearly from 

2014 to 2021, after which they remain fixed. The tables include the SWEUF associated with 

each case. 

10-11 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.2.14 Compact Refrigerators: Efficiency Distributions in 2014 for Base and 

Standards Cases 

Efficiency Market Share % 

Level 

(% less than Energy 

Standards Case 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 97.1 - - - - - - - -

1 (10) 0.90 0.3 97.4 - - - - - - -

2 (15) 0.85 0.0 0.0 97.4 - - - - - -

3 (20) 0.80 0.9 0.9 0.9 98.3 - - - - -

4 (25) 0.75 1.7 1.7 1.7 1.7 100.0 - - - -

5 (30) 0.70 0.0 0.0 0.0 0.0 0.0 100.0 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 

SWEUF 0.993 0.897 0.848 0.799 0.750 0.700 0.650 0.600 0.550 

Table 10.2.15 Compact Refrigerators: Efficiency Distributions in and After 2021 for Base 

and Standards Cases 

Efficiency Market Share % 

Level 

(% less than Energy 

Standards Case 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 97.1 - - - - - - - -

1 (10) 0.90 0.3 97.4 - - - - - - -

2 (15) 0.85 0.0 0.0 97.4 - - - - - -

3 (20) 0.80 0.0 0.0 0.0 97.4 - - - - -

4 (25) 0.75 2.6 2.6 0.0 0.0 97.4 - - - -

5 (30) 0.70 0.0 0.0 2.6 0.0 0.0 97.4 - - -

6 (35) 0.65 0.0 0.0 0.0 2.6 0.0 0.0 97.4 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 2.6 2.6 0.0 97.4 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 2.6 2.6 100.0 

SWEUF 0.993 0.896 0.846 0.796 0.746 0.697 0.647 0.599 0.550 

10-12 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.2.16 Compact Freezers: Efficiency Distributions in 2014 for Base and Standards 

Cases 

Efficiency Market Share % 

Level 

(%less than Energy 

Standards Case 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 95.4 - - - - - - - -

1 (10) 0.9 4.6 100.0 - - - - - - -

2 (15) 0.85 0.0 0.0 100.0 - - - - - -

3 (20) 0.80 0.0 0.0 0.0 100.0 - - - - -

4 (25) 0.75 0.0 0.0 0.0 0.0 100.0 - - - -

5 (30) 0.70 0.0 0.0 0.0 0.0 0.0 100.0 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0.600 0.550 

Table 10.2.17 Compact Freezers: Efficiency Distributions in and After 2021 for Base and 

Standards Cases 

Efficiency Market Share % 

Level 

(% less than Energy 

Standards Case 

baseline Use Base 

energy use) Factor Case 1 2 3 4 5 6 7 8 

Baseline 1.0 95.4 - - - - - - - -

1 (10) 0.90 4.6 100.0 - - - - - - -

2 (15) 0.85 0.0 0.0 100.0 - - - - - -

3 (20) 0.80 0.0 0.0 0.0 100.0 - - - - -

4 (25) 0.75 0.0 0.0 0.0 0.0 100.0 - - - -

5 (30) 0.70 0.0 0.0 0.0 0.0 0.0 100.0 - - -

6 (35) 0.65 0.0 0.0 0.0 0.0 0.0 0.0 100.0 - -

7 (40) 0.60 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 -

8 (45) 0.55 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0.600 0.550 

10.3 NATIONAL ENERGY SAVINGS 

DOE calculated the national energy savings associated with the difference between the 

base case and the case associated with each potential standard for the refrigeration products 

10-13 

EERE-2008-BT-STD-0012 COMMENT 20
considered herein. DOE calculated cumulative energy savings throughout the forecast period, 

which extends from 2014 to 2044. 

10.3.1 Definition 

The following equation shows that DOE calculated annual national energy savings (NES) 

as the difference between two projections: a base case (without new standards) and a standards 

case. Positive values of NES represent energy savings (that is, national annual energy 

consumption (AEC) under a standard is less than in the base case). 

_ NESy = AEC AEC BASE STD 

Cumulative energy savings are the sum of annual national energy savings throughout the 

forecast period, which extends from the assumed effective date of new standards (2014) to 30 

years after that date (2044). The calculation is represented by the following equation. 

NEScum = ∑NES y 

DOE calculated the national annual energy consumption by multiplying the number or stock of 

each product class (by vintage) by its unit energy consumption (UEC; also by vintage). The 

calculation of national annual energy consumption is represented by the following equation. 

AEC y = ∑STOCKV ×UECV 

DOE defined the quantities for the above expressions as follows. 

AEC = national annual energy consumption each year in quadrillion British thermal units 

(quads), summed over vintages of the product stock, STOCKV; 

NES = annual national energy savings (quads); 

STOCKV = stock of product (millions of units) of vintage V that survive in the year for which 

DOE calculated annual energy consumption; 

UECV = annual energy consumption per product in kilowatt hours (kWh) [electricity 

consumption is converted from site energy to source energy (quads) by applying a 

time-dependent conversion factor]; 

V = year in which the product was purchased as a new unit; and 

y = year in the forecast. 

The stock of a product depends on annual shipments and the lifetime of the product. As 

described in chapter 9, DOE projected product shipments under the base case and standards 

cases. DOE projected that shipments under the standards cases would be slightly lower than 

under the base case, because of the higher purchase cost of more efficient products. In other 

words, DOE believes that the higher purchase cost would cause some consumers to forego 

purchasing new products. 

10-14 

EERE-2008-BT-STD-0012 COMMENT 20
To avoid including savings attributable to shipments displaced because of standards, 

DOE used the projected standards-case shipments and, in turn, the standards-case stock, to 

calculate the annual energy consumption for the base case. 

10.3.2 Inputs 

The inputs to the calculation of national energy savings (NES) are: 

• Shipments; 

• product stock (STOCKV); 

• annual energy consumption per unit (UEC); 

• national annual energy consumption (AEC); and 

• site-to-source conversion factor (src_conv). 

10.3.2.1 Shipments 

DOE forecasted shipments of each considered product class under the base case and all 

standards cases. Several factors affect forecasted shipments, including purchase cost, operating 

cost, and household income. As noted earlier, the increased cost of more efficient products 

causes some consumers to forego buying the products. Consequently, shipments forecasted 

under the standards cases are lower than under the base case. The method DOE used to calculate 

and generate the shipments forecasts for each considered product class is described in detail in 

Chapter 9, Shipments Analysis. 

10.3.2.2 Equipment Stock 

The equipment stock in a given year is the number of products shipped from earlier years 

that survive in that year. The NIA model tracks the number of the number of units shipped each 

year. DOE assumes that products have an increasing probability of retiring as they age. The 

probability of survival as a function of years since purchase is the survival function. Chapter 9 

provides additional details on the survival functions that DOE used for each product. 

10.3.2.3 Annual Energy Consumption per Unit 

DOE used the shipment-weighted energy use factors (SWEUFs) presented in section 10.2 

for the base case and standards cases, along with the data on annual energy consumption 

presented in chapters 7 and 8, to estimate the shipment-weighted average annual per-unit energy 

consumption under the base and standards cases. The average annual per-unit energy 

consumption projected for 2014 for each product category is shown in Tables 10.3.1 through 

10.3.3. 

10-15 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

Table 10.3.1 Standard-Size Refrigerator-Freezers: Shipment-Weighted Average Annual 

Energy Consumption in 2014 

Base 

Case 

Standards Case 

1 2 3 4 5 6 7 8 

Top-Mount 

SWEUF 

 Avg. Energy Use (kWh) 

0.967 

636 

0.887 

582 

0.843 

554 

0.800 

526 

0.750 

493 

0.700 

460 

0.650 

427 

0.600 

394 

0.550

361 

Bottom-Mount 

SWEUF 

 Avg. Energy Use (kWh) 

0.824 

575 

0.812 

567 

0.806 

563 

0.800 

559 

0.750 

524 

0.700 

489 

0.650 

454 

0.600 

419 

0.550

384 

Side-by-Side 

SWEUF 

 Avg. Energy Use (kWh) 

0.893 

971 

0.868 

944 

0.834 

907 

0.800 

870 

0.750 

815 

0.700 

761 

0.650 

707 

0.600 

652 

-

-

Table 10.3.2 Standard-Size Freezers: Shipment-Weighted Average Annual Energy 

Consumption in 2014 

Base Standards Case 

Case 1 2 3 4 5 6 7 8 

Upright 

SWEUF 0.980 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Energy Use (kWh) 960 881 832 784 735 686 637 588 539 

Chest 

SWEUF 0.984 0.899 0.850 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Energy Use (kWh) 613 560 529 498 467 436 405 374 343 

Table 10.3.3 Compact Refrigerators and Freezers: Shipment-Weighted Average Annual 

Energy Consumption in 2014 

Base Standards Case 

Case 1 2 3 4 5 6 7 8 

Refrigerator 

SWEUF 

 Avg. Energy Use (kWh) 

0.994 

323 

0.897 

291 

0.848 

275 

0.799 

260 

0.750 

244 

0.700 

227 

0.650 

211 

0.600 

195 

0.550

179 

Freezer 

SWEUF 

 Avg. Energy Use (kWh) 

0.995 

311 

0.900 

281 

0.850 

266 

0.800 

250 

0.750 

235 

0.700 

219 

0.650 

203 

0.600 

188 

0.550

172 

10-16 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

         

10.3.2.4 National Annual Energy Consumption 

The national annual energy consumption (AEC) is the product of the annual energy 

consumption per unit and the number of units of each vintage. This method of calculation 

accounts for differences in unit energy consumption from year to year. The equation for 

determining the annual energy consumption, which was presented in section 10.3.1, is repeated 

here. 

AEC = ∑STOCKV ×UECV 

In determining national annual energy consumption, DOE first calculated annual energy 

consumption at the site, then applied a conversion factor, described below, to calculate primary 

energy consumption. 

10.3.2.5 Site-to-Source Conversion Factors 

In determining national annual energy consumption, DOE initially calculated the annual 

energy consumption at the site (for electricity, the energy in kWh consumed at the household or 

establishment). It then used site energy consumption to calculate primary (source) energy 

consumption by applying a conversion factor to account for losses associated with the 

generation, transmission, and distribution of electricity. The site-to-source conversion factor is a 

multiplicative factor used to convert site energy consumption into primary or source energy 

consumption, expressed in quads (quadrillion Btus). DOE used annual site-to-source conversion 

factors based on the version of the National Energy Modeling System (NEMS)b

 that corresponds 

to EIA’s Annual Energy Outlook 2008 (AEO 2008).4

 The factors are marginal values, which 

represent the response of the system to an incremental decrease in consumption. For electricity, 

the conversion factors change over time in response to projected changes in generation sources 

(i.e., the types of power plants projected to provide electricity to the Nation). Figure 10.3.1 

shows the site-to-source conversion factors from 2005 to the end of the forecast period. DOE 

assumed that conversion factors remain at 2030 values throughout the rest of the forecast. 

b For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation.  A useful summary is National Energy Modeling System: An Overview 2000,

DOE/EIA‐0581(2000), March 2000.  EIA approves use of the name NEMS to describe only an official version

of the model without any modification to code or data.  Because this analysis entails some minor code

modifications and the model is run under various policy scenarios that are variations on EIA assumptions, 

DOE refers to the model by the name NEMS‐BT (BT is DOE’s Building Technol

aegis this work has been performed).  NEMS‐BT was previously called NEMS‐BRS.

ogies Program, under whose

10-17 

EERE-2008-BT-STD-0012 COMMENT 20
0 

2000 

4000 

6000 

8000 

10000 

12000 

14000 

Marginal Site-to-Source Conversion Factor for 

Electricty (Btu/kWh) 

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 

Year 

Figure 10.3.1 Marginal Site-to-Source Conversion Factors for Electricity 

10.4 NET PRESENT VALUE 

DOE calculated the net present value (NPV) of the increased product cost and reduced 

operating cost associated with the difference between the base case and each potential standards 

case for the considered refrigeration products. 

10.4.1 Definition 

The NPV is the value in the present of a time-series of costs and savings. The NPV is 

described by the equation: 

_ NPV = PVS PVC 

Where: 

PVS = present value of savings in operating cost, and 

PVC = present value of increased total product cost to consumers. 

10-18 

EERE-2008-BT-STD-0012 COMMENT 20
DOE determined the PVS and PVC according to the following expressions. 

PVS = ∑OCSy × DFy 

PVC = ∑TICy × DFy 

Where: 

OCS = total annual savings in operating cost each year summed over vintages of the product 

stock, STOCKV; 

TIC = total annual increases in product cost each year summed over years of the product 

shipments, SHIPy; 

DF = discount factor in each year; and 

y = year in the forecast. 

DOE calculated the total annual consumer savings in operating cost by multiplying the 

number or stock of a given product class (by vintage) by its per-unit operating cost savings (also 

by vintage). DOE calculated the total annual increases in consumer product cost by multiplying 

the number or shipments of the given product class (by vintage) by its per-unit increase in 

consumer product cost (also by vintage). The calculation of total annual operating cost savings 

and total annual product cost increases is represented by the following equations. 

OCS y = ∑STOCKV ×UOCSV 

TIC y =∑SHIPy ×UTICy 

Where: 

STOCKV = stock of products of vintage V that survive in the year for which DOE calculated 

annual energy consumption, 

UOCSV = annual per-unit savings in operating cost, 

V = year in which the product was purchased as a new unit, 

SHIPy = shipments of products in year y, and 

UTICy = annual per-unit increase in installed product cost in year y. 

DOE determined the total increased product cost for each year from the effective date of 

a potential standard to 2044. It determined the present value of operating cost savings for each 

year from the effective date of the standard to the year when all units purchased by 2044 have 

been retired. DOE calculated costs and savings as the difference between a standards case and a 

base case without new standards. 

10-19 

EERE-2008-BT-STD-0012 COMMENT 20
DOE developed a discount factor from the national discount rate and the number of years 

between the present (i.e., year to which the sum is being discounted) and the year in which the 

costs and savings occur. The NPV is the sum over time of the discounted net savings. 

10.4.2 Inputs 

The inputs to calculation of the net present value (NPV) are: 

• Average annual product cost; 

• average annual savings in operating cost,; 

• total annual increases in product cost; 

• total annual savings in operating cost; 

• discount factor; 

• present value of costs; and 

• present value of savings. 

The increase in total annual product cost is equal to the annual change in the average 

annual product cost (difference between base case and standards case) multiplied by the 

shipments forecasted in the standards case. As with the calculation of the NES, DOE did not 

calculate total annual product costs using base-case shipments. To avoid including savings due to 

displaced shipments (by consumers deciding not to buy higher-cost products), DOE used the 

standards-case projection of shipments and, in turn, the standards-case stock, to calculate product 

costs. 

The total annual savings in operating cost are equal to the change in annual operating cost 

(difference between base case and standards case) per unit multiplied by the shipments 

forecasted in the standards case. 

10.4.2.1 Average Annual Product Cost 

The average annual product cost is directly dependent on efficiency. DOE therefore used 

the SWEUFs presented in section 10.2 for the base case and each standards case, along with the 

product costs at various efficiency levels (presented in chapter 8), to estimate the shipmentweighted average annual product cost under the base and standards cases. Tables 10.4.1 through 

10.4.3 show the shipment-weighted average consumer product cost based on the SWEUFs that 

correspond to the base case and each standards case in 2014. 

10-20 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

Table 10.4.1 Standard-Size Refrigerator-Freezers: Shipment-Weighted Average Product 

Cost in 2014 for Base and Standards Cases 

Base 

Case 

Standards Case 

1 2 3 4 5 6 7 8 

Top-Mount 

SWEUF 0.967 0.887 0.843 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 1,081 1,086 1,090 1,099 1,121 1,155 1,206 1,271 1,335 

Bottom-Mount 

SWEUF 0.824 0.812 0.806 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 1,447 1,449 1,449 1,451 1,470 1,525 1,614 1,696 1,790 

Side-by-Side 

SWEUF 0.893 0.868 0.834 0.800 0.750 0.700 0.650 0.600 -

 Avg. Product Cost 2008$ 1,456 1,460 1,466 1,496 1,559 1,634 1,710 1,817 -

Table 10.4.2 Standard-Size Freezers: Shipment-Weighted Average Product Cost in 2014 

for Base and Standards Cases 

Base Standards Case 

Case 1 2 3 4 5 6 7 8 

Upright 

SWEUF 0.980 0.899 0.849 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 501 507 514 517 533 563 597 657 758 

Chest 

SWEUF 0.984 0.899 0.850 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 514 519 524 545 564 568 581 621 707 

Table 10.4.3 Compact Refrigerators and Freezers: Shipment-Weighted Average Product 

Cost in 2014 for Base and Standards Cases 

Base 

Case 

Standards Case 

1 2 3 4 5 6 7 8 

Refrigerator 

SWEUF 0.994 0.897 0.848 0.799 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 159 164 167 171 186 187 192 205 224 

Freezer 

SWEUF 0.995 0.900 0.850 0.800 0.750 0.700 0.650 0.600 0.550

 Avg. Product Cost 2008$ 207 214 219 238 258 273 300 302 311 

10.4.2.2 Annual Operating Cost Savings per Unit 

The average annual operating cost includes the costs for energy, repair, and maintenance. 

As described in chapter 8, for all the considered products DOE assumed that potential standards 

10-21 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

would produce no increase in maintenance or repair costs. For all the considered products, 

therefore, DOE determined the per-unit annual savings in operating cost based only on the 

savings in energy costs attributable to a standard. DOE determined the per-unit annual savings in 

operating cost by multiplying the per-unit annual savings in energy consumption developed for 

each product class by the appropriate energy price. As described in chapter 8, DOE forecasted 

energy prices based on EIA’s AEO 2009.5 

10.4.2.3 Total Annual Increases in Product Cost 

The total annual increase in product cost for any given standards case is the product of 

the average cost increase per unit due to the standard and the number of units of each vintage 

shipped. This method accounts for differences in product cost from year to year. The equation 

for determining the total annual increase in product cost for a given standards case, which was 

shown in section 10.4.1, is repeated here. 

TIC y =∑SHIP y×UTICy 

10.4.2.4 Total Annual Savings in Operating Cost 

The total annual savings in operating cost for any given standards case is the product of 

the annual savings in operating cost per unit attributable to the standard and the number of units 

of each vintage. This method accounts for differences in annual savings in operating cost from 

year to year. The equation for determining the total annual savings in operating cost for a given 

standards case, which was presented in section 10.4.1, is repeated here. 

OCS = ∑STOCKV ×UOCSV 

10.4.2.5 Discount Factor 

DOE multiplied monetary values in future years by a discount factor to determine the 

present value. The discount factor (DF) is described by the equation: 

1

DF = _ ( y yp ) (1+ r ) 

Where: 

r = discount rate, 

y = year in which the monetary value exists, and 

yP = year in which the present value is being determined. 

Although DOE used consumer discount rates to determine the life-cycle cost of 

refrigeration products (chapter 8), it used national discount rates to calculate national NPV. DOE 

estimated NPV using both a 3-percent and a 7-percent real discount rate, in accordance with the 

10-22 

EERE-2008-BT-STD-0012 COMMENT 20
Office of Management and Budget’s guidance to Federal agencies on the development of 

regulatory analysis, particularly section E therein: Identifying and Measuring Benefits and 

Costs.

6

 DOE defined the present year as 2009. 

10.4.2.6 Present Value of Costs 

The present value of increased product costs is the annual total cost increase in each year 

(the difference between a standards case and the base case), discounted to the present and 

summed throughout the period in which DOE is considering the installation of products (that is, 

from the effective date of standards, 2014, to 2044). DOE calculated annual increases in installed 

cost as the difference in total product cost for new appliances purchased each year, multiplied by 

the shipments in the standards case. 

10.4.2.7 Present Value of Savings 

The present value of savings in operating cost is the annual savings on operating cost (the 

difference between the base case and a standards case), discounted to the present and summed 

from the effective date to the time when the last unit installed by 2044 is retired from service. 

Savings are decreases in operating cost associated with the higher energy efficiency of products 

purchased in the standards case compared to the base case. Total annual savings in operating cost 

are the savings per unit multiplied by the number of units of each vintage that survive in a 

particular year. 

10.5 RESULTS OF NES AND NPV CALCULATIONS 

The National Impact Analysis (NIA) model produces estimates of the NES and NPV 

attributable to a given candidate standard level. The inputs to the NIA model were discussed in 

sections 10.3.2 (inputs to NES ) and 10.4.2 (inputs to NPV). DOE generated the NES and NPV 

results using a Microsoft Excel spreadsheet, which is accessible on the Internet 

<www.eere.energy.gov/buildings/appliance_standards/> Details regarding and instructions for 

using the spreadsheet are provided in appendix 10-A. 

10.5.1 Summary of Inputs 

Table 10.5.1 summarizes the inputs to the NIA model. A brief description of the data is 

provided for each input. 

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EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.5.1 Inputs to Calculation of National Energy Savings and Net Present Value 

Input Description 

Shipments Annual shipments from shipments model. (See chapter 9.) 

Effective date of standard 2014. 

Base-case forecasted efficiencies See section 10.2. 

Standards-case efficiencies See section 10.2. 

Annual energy consumption per unit Annual weighted-average values are a function of SWEUF. 

(See section 10.3.2.1.) 

Total installed cost per unit Annual weighted-average values are a function of the 

efficiency distribution. (See section 10.4.2.1.) 

Energy cost per unit Annual weighted-average values are a function of annual 

energy consumption per unit and energy prices. (See chapter 8 

for energy prices.) 

Repair and maintenance costs per unit No changes in repair and maintenance cost assumed at higherthan-baseline efficiency levels. 

Forecast of energy prices Energy prices: EIA AEO20095

 forecasts (to 2030) and 

extrapolation thereafter. (See chapter 8.) 

Marginal energy site-to-source 

conversion factor 

A time-series conversion factor that includes electric 

generation, transmission, and distribution losses. Conversion, 

which changes yearly, is generated by DOE-EIA’s NEMS* 

program. 

Discount rates 3% and 7% real. 

Present year Future expenses are discounted to 2009. 

* Chapter 13, Utility Impact Analysis, provides more detail on the National Energy Modeling System (NEMS). 

10.5.2 Results of National Energy Savings Calculations 

The following sections provide results of calculating NES for the efficiency levels 

analyzed for the considered products. NES results, which are cumulative from 2014 to 2044, are 

primary energy savings. DOE based the inputs to the NIA model on weighted-average values, 

yielding results that are discrete point values, rather than a distribution of values as in the lifecycle cost and payback period analyses. The results in Tables 10.5.2 through 10.5.7 represent all 

the product classes that DOE included in each of the seven representative product categories, not 

only the primary product class that accounts for the bulk of shipments in each category. 

10.5.2.1 Standard-Size Refrigerator-Freezers 

Table 10.5.2 shows the NES results for the efficiency levels analyzed for standard-size 

refrigerator-freezers. Table 10.5.3 shows the magnitude of the NES if the savings are discounted 

at rates of 3 percent and 7 percent. 

10-24 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

Table 10.5.2 Standard-Size Refrigerator-Freezers: Cumulative National Energy Savings, 

quads 

Efficiency Level 

(% less than baseline 

energy use) 

Top-Mount 

RefrigeratorFreezer* 

Bottom-Mount 

RefrigeratorFreezer** 

Side-by-Side 

RefrigeratorFreezer*** 

1 (10) 1.10 0.04 0.31 

2 (15) 1.69 0.06 0.73 

3 (20) 2.35 0.20 1.31 

4 (25) 3.01 0.37 1.91 

5 (30) 3.65 0.53 2.50 

6 (35) 4.20 0.57 2.93 

7 (40) 4.78 0.73 3.35 

8 (45) 5.28 0.77 -

* Includes product classes 1, 1A, 2, 3A, and 6 as well as product class 3. 

** Includes product class 5A as well as product class 5. 

*** Includes product class 4 as well as product class 7. 

Table 10.5.3 Standard-Size Refrigerator-Freezers: Discounted Cumulative National 

Energy Savings, quads 

Efficiency Level 

(% less than 

baseline energy 

use) 

Top-Mount 

Refrigerator-Freezer* 

Bottom-Mount 

Refrigerator-Freezer** 

Side-by-Side 

Refrigerator-Freezer*** 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

1 (10) 0.57 0.26 0.02 0.01 0.16 0.07 

2 (15) 0.87 0.40 0.03 0.01 0.37 0.17 

3 (20) 1.21 0.56 0.10 0.04 0.67 0.30 

4 (25) 1.55 0.72 0.18 0.08 0.98 0.44 

5 (30) 1.88 0.87 0.27 0.12 1.28 0.58 

6 (35) 2.17 1.00 0.29 0.13 1.50 0.68 

7 (40) 2.47 1.13 0.37 0.17 1.72 0.78 

8 (45) 2.72 1.25 0.40 0.18 - -

* Includes product classes 1, 1A, 2, 3A, and 6 as well as product class 3. 

** Includes product class 5A as well as product class 5. 

*** Includes product class 4 as well as product class 7. 

10.5.2.2 Standard-Size Freezers 

Table 10.5.4 shows the NES results for the efficiency levels analyzed for standard-size 

freezers. Table 10.5.5 shows the magnitude of the NES if the savings are discounted at rates of 3 

percent and 7 percent. 

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EERE-2008-BT-STD-0012 COMMENT 20
 

 

Table 10.5.4 Standard-Size Freezers: Cumulative National Energy Savings, quads 

Efficiency Level 

(% less than baseline energy use) Upright Freezers* Chest Freezers** 

1 (10) 0.34 0.23 

2 (15) 0.55 0.37 

3 (20) 0.75 0.50 

4 (25) 0.96 0.63 

5 (30) 1.15 0.76 

6 (35) 1.34 0.87 

7 (40) 1.51 1.00 

8 (45) 1.63 1.07 

* Includes product class 9 only. 

** Includes product classes 8 and 10A as well as product class 10. 

Table 10.5.5 Standard-Size Freezers: Discounted Cumulative National Energy Savings, 

quads 

Efficiency Level 

(% less than baseline 

energy use) 

Upright Freezers* Chest Freezers** 

3% Discount 

Rate 

7% Discount 

Rate 

3% Discount 

Rate 

7% Discount 

Rate 

1 (10) 0.17 0.08 0.12 0.05 

2 (15) 0.28 0.12 0.19 0.08 

3 (20) 0.38 0.17 0.25 0.11 

4 (25) 0.48 0.22 0.32 0.14 

5 (30) 0.58 0.26 0.38 0.17 

6 (35) 0.68 0.30 0.44 0.20 

7 (40) 0.76 0.34 0.50 0.22 

8 (45) 0.83 0.37 0.54 0.24 

* Includes product class 9 only. 

** Includes product classes 8 and 10A as well as product class 10. 

10.5.2.3 Compact Refrigerators and Freezers 

Table 10.5.6 shows the NES results for the efficiency levels analyzed for compact 

refrigerators and freezers. Table 10.5.7 shows the magnitude of the NES if the savings are 

discounted at rates of 3 percent and 7 percent. 

10-26 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

Table 10.5.6 Compact Refrigerators and Freezers: Cumulative National Energy Savings, 

quads 

Efficiency Level 

(% less than baseline energy use) Compact Refrigerators* Compact Freezers** 

1 (10) 0.13 0.03 

2 (15) 0.20 0.04 

3 (20) 0.27 0.06 

4 (25) 0.32 0.07 

5 (30) 0.38 0.08 

6 (35) 0.44 0.09 

7 (40) 0.48 0.10 

8 (45) 0.52 0.11 

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11 

** Includes product classes 16 and 17 as well as product class 18 

Table 10.5.7 Compact Refrigerators and Freezers: Discounted Cumulative National 

Energy Savings, quads 

Efficiency Level 

(% less than baseline 

energy use) 

Compact Refrigerators* Compact Freezers** 

3% Discount 

Rate 

7% Discount 

Rate 3% Discount Rate 7% Discount Rate 

1 (10) 0.07 0.03 0.02 0.01 

2 (15) 0.11 0.05 0.02 0.01 

3 (20) 0.14 0.07 0.03 0.02 

4 (25) 0.17 0.08 0.04 0.02 

5 (30) 0.21 0.10 0.04 0.02 

6 (35) 0.24 0.12 0.05 0.03 

7 (40) 0.26 0.13 0.06 0.03 

8 (45) 0.28 0.14 0.06 0.03 

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11 

** Includes product classes 16 and 17 as well as product class 18 

10.5.3 Annual Costs and Savings 

Figure 10.5.1 illustrates the basic inputs to the calculation of net present value (NPV) by 

showing the non-discounted annual increases in product cost and annual savings in operating 

cost at the national level for efficiency level 3 for product class 3 (refrigerator-freezers– 

automatic defrost with top-mounted freezer and without through-the-door ice service). The figure 

also shows the net savings, which is the difference between the savings and costs for each year. 

The annual increase in product cost is the total cost for products purchased each year in the 

forecast period. The annual savings in operating cost applies to products operating in each year. 

The NPV is the difference between the cumulative annual discounted savings and cumulative 

10-27 

EERE-2008-BT-STD-0012 COMMENT 20
annual discounted costs. DOE could create figures like Figure 10.5.1 for each of the considered 

efficiency levels for each product class. 

-0.5 

0 

0.5 

1 

1.5 

2 

2.5 

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 

Billions of 2008 Dollars 

Operating Cost Savings 

Incremental Product Cost 

Net Savings 

Year 

Figure 10.5.1	 Non-Discounted Annual Increases in Installed Cost and Savings 

in Operating Cost for Product Class 3 at Standard Level 3 

10.5.4 Results of Net Present Value Calculations 

This section provides results of calculating net present value (NPV) for the potential 

efficiency standards for the considered refrigeration product classes. Results, which are 

cumulative, are shown as the discounted value of the savings in dollar terms. Results are 

provided for each potential efficiency standard. DOE based the inputs to the NIA model on 

weighted-average values, yielding results that are discrete point values, rather than a distribution 

of values as in the life-cycle cost and payback period analysis. 

The present value of increased total installed cost is the total annual increase in installed 

cost (the difference between the standards case and base case), discounted to the present and 

summed throughout the period for which DOE evaluated the impact of standards. 

Savings are decreases in operating cost associated with the higher energy efficiency of 

products purchased in the standards case compared to the base case. Total savings in operating 

10-28 

EERE-2008-BT-STD-0012 COMMENT 20
 

cost are the savings per unit multiplied by the number of units of each vintage (i.e., year of 

manufacture) that survive in a particular year. For units purchased by 2044, the operating cost 

includes energy consumed until the last unit is retired from service. 

Tables 10.5.8 though 10.5.10 show the NPV associated with the potential standards for 

the considered refrigeration products. Detailed results showing the breakdown of the NPV into 

national installed product cost and operating cost savings are provided in appendix 10-B. As was 

the case with NES results, the results for NPV refer to all the product classes that DOE included 

in each of the seven representative product class categories, not simply to the primary product 

class that accounts for the bulk of shipments in each case. 

Table 10.5.8 Standard-Size Refrigerator-Freezers: Discounted Cumulative Net Present 

Values 

Efficiency 

Level 

(% less 

than 

baseline 

energy use) 

Top-Mount 

Refrigerator-Freezer* 

Bottom-Mount 

Refrigerator-Freezer** 

Side-by-Side 

Refrigerator-Freezer*** 

3% Discount 

Rate 

billion 2008$ 

7% Discount 

Rate 

billion 2008$ 

3% Discount 

Rate 

billion 2008$ 

7% Discount 

Rate 

billion 2008$ 

3% Discount 

Rate 

billion 2008$ 

7% Discount 

Rate 

billion 2008$ 

1 (10) 13.39 5.08 0.50 0.19 3.68 1.35 

2 (15) 20.16 7.60 0.73 0.27 8.52 3.11 

3 (20) 26.57 9.79 2.13 0.70 11.89 3.82 

4 (25) 31.08 11.01 1.98 0.40 14.15 3.94 

5 (30) 33.86 11.35 1.61 0.01 15.12 3.42 

6 (35) 34.26 10.57 1.43 -0.19 16.17 3.20 

7 (40) 32.78 8.75 0.60 -0.91 15.73 2.22 

8 (45) 31.53 7.18 0.40 -1.12 - -

* Includes product classes 1, 1A, 2, 3A, and 6 as well as product class 3. 

** Includes product class 5A as well as product class 5. 

*** Includes product class 4 as well as product class 7. 

10-29 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.5.9 Standard-Size Freezers: Discounted Cumulative Net Present Values 

Efficiency Level 

(% less than 

baseline energy 

use) 

Upright Freezers* Chest Freezers** 

3% Discount Rate 

billion 2008$ 

7% Discount Rate 

billion 2008$ 

3% Discount Rate 

billion 2008$ 

7% Discount Rate 

billion 2008$ 

1 (10) 4.52 1.59 3.11 1.10 

2 (15) 7.21 2.53 4.78 1.68 

3 (20) 9.92 3.48 6.04 2.03 

4 (25) 12.23 4.23 7.68 2.60 

5 (30) 14.28 4.86 9.14 3.07 

6 (35) 15.82 5.25 9.61 3.06 

7 (40) 16.62 5.29 11.01 3.52 

8 (45) 16.54 4.98 10.51 3.09 

* Includes product class 9 only. 

** Includes product classes 8 and 10A as well as product class 10. 

Table 10.5.10 Compact Refrigerators and Freezers: Discounted Cumulative Net Present 

Values 

Efficiency Level 

(% less than 

baseline energy 

use) 

Compact Refrigerators* Compact Freezers** 

3% Discount Rate 

billion 2008$ 

7% Discount Rate 

billion 2008$ 

3% Discount Rate 

billion 2008$ 

7% Discount Rate 

billion 2008$ 

1 (10) 1.00 0.43 0.20 0.08 

2 (15) 1.39 0.59 0.30 0.12 

3 (20) 1.81 0.76 0.08 0.00 

4 (25) 1.45 0.55 0.10 0.00 

5 (30) 1.97 0.78 0.00 -0.06 

6 (35) 2.12 0.83 0.09 -0.02 

7 (40) 1.72 0.59 0.06 -0.05 

8 (45) 0.92 0.17 0.01 -0.08 

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11. 

** Includes product classes 16 and 17 as well as product class 18. 

10.5.5 Summary of NIA Results 

This section provides NES (undiscounted) and NPV results together for each efficiency 

level considered for the refrigeration product classes. Tables 10.5.11 though 10.5.13 allow the 

reader to see which efficiency levels have the highest energy savings while also having a positive 

NPV. 

10-30 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

Table 10.5.11 Standard-Size Refrigerator-Freezers: NES and NPV Results 

Efficiency 

Level 

(percent 

less than 

baseline 

energy 

use) 

Top-Mount 

Refrigerator-Freezer* 

Bottom-Mount 

Refrigerator-Freezer** 

Side-by-Side 

Refrigerator-Freezer*** 

NES 

(quads) 

NPV @ 

3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 

7% 

Discount 

Rate 

(billion 

2008$) 

NES 

(quads) 

NPV @ 

3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 

7% 

Discount 

Rate 

(billion 

2008$) 

NES 

(quads) 

NPV @ 

3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 

7% 

Discount 

Rate 

(billion 

2008$) 

1 (10%) 1.10 13.39 5.08 0.04 0.50 0.19 0.31 3.68 1.35 

2 (15%) 1.69 20.16 7.60 0.06 0.73 0.27 0.73 8.52 3.11 

3 (20%) 2.35 26.57 9.79 0.20 2.13 0.70 1.31 11.89 3.82 

4 (25%) 3.01 31.08 11.01 0.37 1.98 0.40 1.91 14.15 3.94 

5 (30%) 3.65 33.86 11.35 0.53 1.61 0.01 2.50 15.12 3.42 

6 (35%) 4.20 34.26 10.57 0.57 1.43 -0.19 2.93 16.17 3.20 

7 (40%) 4.78 32.78 8.75 0.73 0.60 -0.91 3.35 15.73 2.22 

8 (45%) 5.28 31.53 7.18 0.77 0.40 -1.12 - - -

* Includes product classes 1, 1A, 2, 3A, and 6 as well as product class 3. 

** Includes product class 5A as well as product class 5. 

*** Includes product class 4 as well as product class 7. 

Table 10.5.12 Standard-Size Freezers: NES and NPV Results 

Efficiency Level 

(percent less 

than baseline 

energy use) 

Upright Freezers* Chest Freezers** 

NES 

(quads) 

NPV @ 3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 7% 

Discount 

Rate 

(billion 

2008$) 

NES 

(quads) 

NPV @ 3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 7% 

Discount 

Rate 

(billion 

2008$) 

1 (10%) 0.34 4.52 1.59 0.23 3.11 1.10 

2 (15%) 0.55 7.21 2.53 0.37 4.78 1.68 

3 (20%) 0.75 9.92 3.48 0.50 6.04 2.03 

4 (25%) 0.96 12.23 4.23 0.63 7.68 2.60 

5 (30%) 1.15 14.28 4.86 0.76 9.14 3.07 

6 (35%) 1.34 15.82 5.25 0.87 9.61 3.06 

7 (40%) 1.51 16.62 5.29 1.00 11.01 3.52 

8 (45%) 1.63 16.54 4.98 1.07 10.51 3.09 

* Includes product class 9 only. 

** Includes product classes 8 and 10A as well as product class 10. 

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EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10.5.13 Compact Refrigerators and Freezers: NES and NPV Results 

Efficiency 

Level 

(percent less 

than baseline 

energy use) 

Compact Refrigerators* Compact Freezers** 

NES 

(quads) 

NPV @ 3% 

Discount Rate 

(billion 2008$) 

NPV@ 7% 

Discount Rate 

(billion 2008$) 

NES 

(quads) 

NPV @ 3% 

Discount 

Rate 

(billion 

2008$) 

NPV@ 7% 

Discount Rate 

(billion 2008$) 

1 (10%) 0.13 1.00 0.43 0.03 0.20 0.08 

2 (15%) 0.20 1.39 0.59 0.04 0.30 0.12 

3 (20%) 0.27 1.81 0.76 0.06 0.08 0.00 

4 (25%) 0.32 1.45 0.55 0.07 0.10 0.00 

5 (30%) 0.38 1.97 0.78 0.08 0.00 -0.06 

6 (35%) 0.44 2.12 0.83 0.09 0.09 -0.02 

7 (40%) 0.48 1.72 0.59 0.10 0.06 -0.05 

8 (45%) 0.52 0.92 0.17 0.11 0.01 -0.08 

* Includes product classes 11A, 12, 13, 13A, 14, and 15 as well as product class 11. 

** Includes product classes 16 and 17 as well as product class 18. 

10-32 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

REFERENCES 

1	 Association of Home Appliance Manufacturers. Aggregated Refrigerator‐Freezer 

Shipments and Efficiency Data for DOE Refrigerator‐Freezer Energy Efficiency Standards 

Rulemaking, January 16, 2009. Memo to Detlef Westphalen, Navigant Consulting, Inc. 

2	 AHAM. AHAM 2005 Fact Book. 2005. Association of Home Appliance Manufacturers: 

Washington, D.C. 

3	 U.S. Environmental Protection Agency. ENERGY STAR–Refrigerators & Freezers Key 

Product Criteria. 2009. U.S. EPA: Washington, DC. (Last Accessed April 30, 2009.) 

<www.energystar.gov/index.cfm?c=refrig.pr_crit_refrigerators> 

4	 U.S. Department of Energy–Energy Information Administration. Annual Energy Outlook 

2008 with Projections to 2030. February 2008. U.S. DOE–EIA: Washington, D.C. 

DOE/EIA-0383(2008). 

5	 U.S. Department of Energy-Energy Information Administration. An Updated Annual Energy 

Outlook 2009 Reference Case Reflecting Provisions of the American Recovery and 

Reinvestment Act and Recent Changes in the Economic Outlook, April, 2009. Washington, 

DC. SR/OIAF/2009-03. 

<http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf> 

6	 Office of Management and Budget. OMB Circular A-4, Regulatory Analysis. 2003. OMB: 

Washington, D.C. September 17, 2003. 

<www.whitehouse.gov/omb/assets/omb/circulars/a004/a-4.pdf> 

10-33 

EERE-2008-BT-STD-0012 COMMENT 20
APPENDIX 10-A. USER INSTRUCTIONS FOR SHIPMENTS AND NIA 

SPREADSHEETS 

TABLE OF CONTENTS 

10-A.1 INTRODUCTION ...............................................................................................10-A-1 

10-A.1.1 Standard-Size Refrigerator-Freezers....................................................................10-A-1 

10-A.1.2 Standard-Size Freezers.........................................................................................10-A-2 

10-A.1.3 Compact Refrigerators.........................................................................................10-A-3 

10-A.1.4 Compact Freezers.................................................................................................10-A-4 

10-A.2 BASIC INSTRUCTIONS....................................................................................10-A-5 

10A-i 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

APPENDIX 10-A. USER INSTRUCTIONS FOR SHIPMENTS AND NIA 

SPREADSHEETS 

10-A.1 INTRODUCTION 

The results obtained for the shipments analysis and the national impact analysis (NIA) 

can be examined and reproduced using the Microsoft Excel spreadsheet available on the U.S. 

Department of Energy Building Technologies website 

at: http://www.eere.energy.gov/buildings/appliance_standards/. 

There are a total of four NIA spreadsheets, one each for the following product types: 

standard-size refrigerator-freezers, standard-size freezers, compact refrigerators, and commercial 

compact freezers. The four spreadsheets posted on the DOE website represent the latest versions 

and have been tested with Microsoft Excel 2003. 

To execute the spreadsheet requires Microsoft Excel 2003 or a later version. The NIA 

spreadsheet performs calculations to forecast the change in national energy use and net present 

value due to an energy conservation standard. The energy use and associated costs for a given 

standard are determined first by calculating the shipments and then calculating the energy use 

and costs for all equipment shipped under that standard. The differences between the standards 

and base cases can then be compared and the overall energy savings and present values 

determined. 

10-A.1.1 Standard-Size Refrigerator-Freezers 

 The standard-size refrigerator-freezer NIA spreadsheet or workbook consists of the 

following worksheets: 

Input and Summary	 Contains user input selections under “User Inputs” and a summary 

table, Cumulative Energy Savings and NPV for the selected 

standard level efficiency distribution. The sheet contains the 

efficiency levels being considered for standard-size refrigeratorfreezers and the associated incremental prices. This sheet also 

contains base and standards case efficiency trends for standard-size 

refrigerator-freezers, and efficiency weighted average energy use 

and equipment price for the base and standards cases. 

Historical Shipment & Contains data for historical sales of standard-size refrigeratorMarket Share freezers by product class. The forecast market share between topmount and side/bottom-mount refrigerator-freezers is provided. 

Base Case	 Contains the calculations for determining the shipments, energy 

consumption, and operating costs for the base case. The sheet starts 

with the stock accounting of the equipment and uses the survival 

10-A-1
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

function to calculate the surviving stock. It then performs 

calculations of replacements, and shipments going into new 

housing. The sheet calculates replacement units, shipments going 

into new units, and early replacement shipments, and aggregates 

them into total shipments. 

Base Energy Calc Contains additional stock accounting calculations to properly 

allocate shipments, energy use, and costs to top-mount and 

side/bottom-mount refrigerator-freezers for the base case. 

Standards Case Contains stock accounting of the equipment that calculates annual 

shipments estimates, energy savings, and operating cost savings for 

the standards case. The energy and cost savings in a single year are 

the difference between the base case energy use and costs and the 

standard case energy use and costs for that year. 

Standards Energy Calc Contains additional stock accounting calculations to properly 

allocate shipments, energy use, and costs to top-mount and 

side/bottom-mount refrigerator-freezers for the standards case. 

Housing Projections Contains the projected new housing construction starts and total 

housing stock for the three economic scenarios (Reference, Low 

Growth, and High Growth). Also provides the early replacement 

rate. 

Fuel Prices Contains projected average energy prices for the three economic 

scenarios. 

Heat Rates Contains the marginal site to source conversion factors that are 

used in the source energy savings calculations, for both electricity 

and gas. 

Lifetime Contains the probability of survival of a standard-size refrigeratorfreezer at a given age and the average lifetime of a unit. 

10-A.1.2 Standard-Size Freezers 

The standard-size freezer NIA spreadsheet or workbook consists of the following 

worksheets: 

Input and Summary	 Contains user input selections under “User Inputs” and a summary 

table, Cumulative Energy Savings and NPV for the selected 

standard level efficiency distribution. The sheet contains the 

efficiency levels being considered for standard-size freezers and 

the associated incremental prices. This sheet also contains base 

10-A-2
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

 

and standards case efficiency trends for standard-size freezers, and 

efficiency weighted average energy use and equipment price for 

the base and standards cases. 

Historical Shipment Contains data for historical sales of standard-size freezers by 

product class. 

Base Case Contains the calculations for determining the shipments, energy 

consumption, and operating costs for the base case. The sheet starts 

with the stock accounting of the equipment and uses the survival 

function to calculate the surviving stock. It then performs 

calculations of replacements, and shipments going into new 

housing. The sheet calculates replacement units, shipments going 

into new units, and shipments going to first time owners (existing 

households that do not already own the product), and aggregates 

them into total shipments. 

Standards Case Contains stock accounting of the equipment that calculates annual 

shipments estimates, energy savings, and operating cost savings for 

the standards case. The energy and cost savings in a single year are 

the difference between the base case energy use and costs and the 

standard case energy use and costs for that year. 

Housing Projections Contains the projected new housing construction starts and total 

housing stock for the three economic scenarios (Reference, Low 

Growth, and High Growth). Also provides the early replacement 

rate. 

Fuel Prices Contains projected average energy prices for the three economic 

scenarios. 

Heat Rates Contains the marginal site to source conversion factors that are 

used in the source energy savings calculations, for both electricity 

and gas. 

Lifetime Contains the probability of survival of a standard-size refrigeratorfreezer at a given age and the average lifetime of a unit. 

10-A.1.3 Compact Refrigerators 

The compact refrigerator NIA spreadsheet or workbook consists of the following 

worksheets: 

Input and Summary	 Contains user input selections under “User Inputs” and a summary 

table, Cumulative Energy Savings and NPV for the selected 

10-A-3
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

standard level efficiency distribution. The sheet contains the 

efficiency levels being considered for compact refrigerators and 

the associated incremental prices. This sheet also contains base 

and standards case efficiency trends for compact refrigerators, and 

efficiency weighted average energy use and equipment price for 

the base and standards cases. 

Historical Shipment Contains data for historical sales of compact refrigerators by 

product class. Also provides historical saturations of compact 

refrigerators in lodging, residential, and commercial buildings. 

Base Case Contains the calculations for determining the shipments, energy 

consumption, and operating costs for the base case. The sheet starts 

with the stock accounting of the equipment and uses the survival 

function to calculate the surviving stock. It then performs 

calculations of replacements, and shipments going into new 

housing, new lodging, and new commercial buildings, and 

aggregates them into total shipments. 

Standards Case Contains stock accounting of the equipment that calculates annual 

shipments estimates, energy savings, and operating cost savings for 

the standards case. The energy and cost savings in a single year are 

the difference between the base case energy use and costs and the 

standard case energy use and costs for that year. 

Housing & Comm Flrspc 

Project 

Contains the projected new housing construction starts, total 

housing stock, projected new commercial floorspace projections, 

and total lodging and commercial floorspace stock for the three 

economic scenarios (Reference, Low Growth, and High Growth). 

Fuel Prices Contains projected average energy prices for the three economic 

scenarios. 

Heat Rates Contains the marginal site to source conversion factors that are 

used in the source energy savings calculations, for both electricity 

and gas. 

Lifetime Contains the probability of survival of a standard-size refrigeratorfreezer at a given age and the average lifetime of a unit. 

10-A.1.4 Compact Freezers 

The compact freezer NIA spreadsheet or workbook consists of the following worksheets: 

10-A-4
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

Input and Summary Contains user input selections under “User Inputs” and a summary 

table, Cumulative Energy Savings and NPV for the selected 

standard level efficiency distribution. The sheet contains the 

efficiency levels being considered for compact freezers and the 

associated incremental prices. This sheet also contains base and 

standards case efficiency trends for compact freezers, and 

efficiency weighted average energy use and equipment price for 

the base and standards cases. 

Historical Shipment Contains data for historical sales of compact freezers by product 

class. 

Base Case Contains the calculations for determining the shipments, energy 

consumption, and operating costs for the base case. The sheet starts 

with the stock accounting of the equipment and uses the survival 

function to calculate the surviving stock. It then performs 

calculations of replacements, and shipments going to first time 

owners (existing households that do not already own the product), 

and aggregates them into total shipments. 

Standards Case Contains stock accounting of the equipment that calculates annual 

shipments estimates, energy savings, and operating cost savings for 

the standards case. The energy and cost savings in a single year are 

the difference between the base case energy use and costs and the 

standard case energy use and costs for that year. 

Housing Projections Contains the projected new housing construction starts and total 

housing stock for the three economic scenarios (Reference, Low 

Growth, and High Growth). Housing data used solely to determine 

a compact freezer saturation in new housing. 

Fuel Prices Contains projected average energy prices for the three economic 

scenarios. 

Heat Rates Contains the marginal site to source conversion factors that are 

used in the source energy savings calculations, for both electricity 

and gas. 

Lifetime Contains the probability of survival of a standard-size refrigeratorfreezer at a given age and the average lifetime of a unit. 

10-A.2 BASIC INSTRUCTIONS 

Basic instructions for operating the NIA spreadsheets are as follows: 

10-A-5
 

EERE-2008-BT-STD-0012 COMMENT 20
1.	 Once the NIA spreadsheets have been downloaded from the Web, open the file using 

Excel. At the bottom, click on the tab for the worksheet ‘Input and Summary’. 

2.	 Use Excel’s View/Zoom commands at the top menu bar to change the size of the display 

to make it fit your monitor. 

3.	 The user can change the model parameters listed in the grey box labelled “User Inputs”. 

The parameters are: 

a.	 Lifetime: To change value, type in the desired value that lies within the maximum 

lifetime indicated. 

b.	 Discounting future values: To change the value used for discounting NPV and 

national energy savings, and the year in which to discount to. 

c.	 Relative Price Elasticity: To change value, use the drop-down arrow and select 

the desired impact (this parameter is not considered in the cooking products 

analysis). 

d.	 Economic Growth: To the change value, use the drop-down arrow and select the 

desired Growth level (Reference, Low, or High). 

4.	 Once the parameters have been set, there are two options; 

a.	 Click the “Select CSL’ button to choose which candidate standard level to 

analyze. The associated efficiency distributions and growth trends are fixed as 

specified in Chapter 10 of this preliminary technical support document. Once the 

CSL has been selected, click the “OK” button to make your selected CSL 

effective. (This option is not available for compact freezers.) 

b.	 Click the “Set base case/Standards Case” button and define the efficiency 

distribution of the market, and the efficiency growth rate for both the base case 

and the standards case. Once the distribution and the growth rate have been set, 

click the “update” button to make your defined distribution effective. 

5.	 The results are automatically updated and are reported in the summary table for each 

product class to the right of the “User Inputs” box. 

10-A-6
 

EERE-2008-BT-STD-0012 COMMENT 20
APPENDIX 10-B. NATIONAL EQ UIPMENT AND OPERATING COSTS 

TABLE OF CONTENTS 

10-B.1 INTRODUCTION ............................................................................................... 10-B-1 

10-B.2 RESULTS ............................................................................................................ 10-B-2 

10-B.2.1 Standard-Size Refrigerator-Freezers.................................................................... 10-B-2 

10-B.2.2 Standard-Size Freezers......................................................................................... 10-B-8 

10-B.2.3 Compact Refrigerators....................................................................................... 10-B-12 

10-B.2.4 Compact Freezers............................................................................................... 10-B-14
 

LIST OF TABLES 

Table 10-B.2.1 Standard-Size Refrigerator-Freezers, Top-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$)...................... 10-B-3 

Table 10-B.2.2 Standard-Size Refrigerator-Freezers, Top-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$)...................... 10-B-4 

Table 10-B.2.3 Standard-Size Refrigerator-Freezers, Bottom-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$)...................... 10-B-5 

Table 10-B.2.4 Standard-Size Refrigerator-Freezers, Bottom-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$)...................... 10-B-6 

Table 10-B.2.5 Standard-Size Refrigerator-Freezers, Side-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$)...................... 10-B-7 

Table 10-B.2.6 Standard-Size Refrigerator-Freezers, Side-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$)...................... 10-B-8 

Table 10-B.2.7 Standard-Size Freezers, Upright Product Class: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, SevenPercent Discount Rate (billion 2008$)..................................................... 10-B-9 

Table 10-B.2.8 Standard-Size Freezers, Upright Product Class: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, ThreePercent Discount Rate (billion 2008$)................................................... 10-B-10 

Table 10-B.2.9 Standard-Size Freezers, Chest Product Classes: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, SevenPercent Discount Rate (billion 2008$)................................................... 10-B-11 

Table 10-B.2.10 Standard-Size Freezers, Chest Product Classes: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, ThreePercent Discount Rate (billion 2008$)................................................... 10-B-12 

10-B-i 

EERE-2008-BT-STD-0012 COMMENT 20
Table 10-B.2.11 Compact Refrigerators: Cumulative National Equipment and 

Operating Costs with NPV from 2014–2044, Seven-Percent Discount 

Rate (billion 2008$) ............................................................................... 10-B-13 

Table 10-B.2.12 Compact Refrigerators: Cumulative National Equipment and 

Operating Costs with NPV from 2014–2044, Three-Percent Discount 

Rate (billion 2008$) ............................................................................... 10-B-14 

Table 10-B.2.13 Compact Freezers: Cumulative National Equipment and Operating 

Costs with NPV from 2014–2044, Seven-Percent Discount Rate 

(billion 2008$) ....................................................................................... 10-B-15 

Table 10-B.2.14 Compact Freezers: Cumulative National Equipment and Operating 

Costs with NPV from 2014–2044, Three-Percent Discount Rate 

(billion 2008$) ....................................................................................... 10-B-16 

10-B-ii 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

APPENDIX 10-B. NATIONAL EQUIPMENT AND OPERATING COSTS 

10-B.1 INTRODUCTION 

In this appendix, the Department presents the components of the net present value (NPV), 

namely, the present value of the equipment (or total installed costs) and the present value of the 

operating costs for each of the four residential refrigerator-freezer product types. The present 

value of equipment costs is also termed the cumulative national equipment costs while the 

present value of operating costs is also termed the cumulative national operating costs. 

As presented in Chapter 10, National Impact Analysis, the NPV is described by the 

equation: 

_ NPV = PVS PVC 

where: 

PVS = Present value of operating cost savings (including energy, water, repair, and 

maintenance costs) and 

PVC = Present value of increased total installed costs (including equipment and 

installation). 

The PVS and PVC are determined according to the following expressions: 

PVS = ∑OCSy × DFy 

PVC = ∑TICy × DFy 

where: 

OCS = Total annual operating cost savings each year summed over vintages of the 

product stock, 

TIC = Total annual installed cost increases each year summed over vintages of the 

product stock, 

DF = Discount factor in each year, and 

y = Year in the forecast (i.e., 2012 to 2042). 

PVS and PVC are determined for each year from the effective date of the standard to the year 

when units purchased in 2042 retire. 

The present value of operating costs and the present value of equipment costs (or total 

installed costs) are the components comprising the PVS and PVC, respectively. The PVS is 

10-B-1
 

EERE-2008-BT-STD-0012 COMMENT 20
 

determined by taking the difference between the present value of operating costs for the base 

case and the present value of operating costs for the standards case. The PVC is determined by 

taking the difference between the present value of equipment costs for the base case and the 

present value of equipment costs for the standards case. 

10-B.2 RESULTS 

For following sections provide tables showing the present value of operating costs (also 

known as the cumulative national operating costs) and the present value of equipment costs (also 

known as the cumulative national equipment costs) each of the four appliance products. For 

each product, two sets of results are presented; one based on a seven-percent and another based 

on a three-percent discount rate. 

In the tables provided in the following sections, the national operating and equipment 

costs are presented for the base case (i.e., without standards) and each standard level analyzed. 

Differences between the base case and standards cases are also presented. The difference in the 

national equipment costs represents the PVC or present value of equipment cost increases while 

the difference in the national operating costs represents the PVS or present value of operating 

cost savings. The difference between the base case and standards case total national equipment 

and operating costs represents the NPV. 

10-B.2.1 Standard-Size Refrigerator-Freezers 

Tables 10B.2.1–10B.2.6 present the national equipment and operating costs, PVC, PVS, 

and NPV for standard-size refrigerator-freezers at real discount rates of seven- and three-percent, 

respectively. 

All base case values were determined with shipments projections established under the 

standards case. As detailed in Chapter 9, shipments projections under the standards cases were 

determined to be lower than those in the base case projection due to the higher installed cost of 

the more efficient equipment. As a result, DOE used the standards case shipments projection 

and, in turn, the standards case equipment stock, to determine the NPV to avoid the inclusion of 

savings due to displaced shipments. Thus, the base case values shown in Tables 10B.2.1–10B.2.6 

vary with the standards case. 

DOE studied seven three product classes in detail for standard-size refrigerator-freezers. 

For the National Impact Analysis, each of these classes represents a product category which also 

contains other product classes. For standard-size refrigerator-freezers, the following list indicates 

which product classes are associated with each product category: 

•	 Top-mount refrigerator-freezers: product classes 1, 1A, 2, 3, 3A, and 6; represented 

by product class 3. 

•	 Bottom-mount refrigerator-freezers: product classes 5 and 5A; represented by product 

class 5. 

10-B-2
 

EERE-2008-BT-STD-0012 COMMENT 20
 

•	 Side-by-side refrigerator-freezers: product classes 4 and 7; represented by product 

class 7. 

Table 10-B.2.1	 Standard-Size Refrigerator-Freezers, Top-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 46.62 101.53 148.15 

Standard Level 1 46.89 96.18 143.07 

Difference* -0.27 5.36 5.08 

Base Case 46.56 101.46 148.03 

Standard Level 2 47.19 93.24 140.43 

Difference* -0.62 8.22 7.60 

Base Case 46.42 101.26 147.68 

Standard Level 3 48.03 89.86 137.89 

Difference* -1.61 11.40 9.79 

Base Case 46.11 100.85 146.96 

Standard Level 4 49.72 86.24 135.95 

Difference* -3.60 14.61 11.01 

Base Case 45.68 100.26 145.93 

Standard Level 5 52.06 82.53 134.59 

Difference* -6.38 17.73 11.35 

Base Case 45.10 99.49 144.59 

Standard Level 6 54.92 79.10 134.02 

Difference* -9.82 20.39 10.57 

Base Case 44.32 98.43 142.75 

Standard Level 7 58.77 75.23 134.00 

Difference* -14.45 23.20 8.75 

Base Case 43.61 97.47 141.08 

Standard Level 8 62.04 71.86 133.89 

Difference* -18.43 25.61 7.18 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-3
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.2 Standard-Size Refrigerator-Freezers, Top-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 88.80 223.02 311.83 

Standard Level 1 89.32 209.12 298.44 

Difference* -0.52 13.91 13.39 

Base Case 88.71 222.85 311.57 

Standard Level 2 89.90 201.51 291.40 

Difference* -1.18 21.35 20.16 

Base Case 88.45 222.37 310.81 

Standard Level 3 91.57 192.68 284.24 

Difference* -3.12 29.69 26.57 

Base Case 87.91 221.37 309.27 

Standard Level 4 94.86 183.33 278.19 

Difference* -6.96 38.04 31.08 

Base Case 87.14 219.95 307.08 

Standard Level 5 99.45 173.78 273.22 

Difference* -12.31 46.17 33.86 

Base Case 86.15 218.14 304.29 

Standard Level 6 104.96 165.07 270.03 

Difference* -18.80 53.06 34.26 

Base Case 84.79 215.63 300.42 

Standard Level 7 112.48 155.16 267.64 

Difference* -27.69 60.47 32.78 

Base Case 83.57 213.38 296.95 

Standard Level 8 118.84 146.58 265.42 

Difference* -35.27 66.80 31.53 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-4
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.3 Standard-Size Refrigerator-Freezers, Bottom-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 31.06 17.30 48.36 

Standard Level 1 31.06 17.11 48.17 

Difference* 0.00 0.19 0.19 

Base Case 31.06 17.30 48.36 

Standard Level 2 31.07 17.01 48.08 

Difference* -0.02 0.29 0.27 

Base Case 31.03 17.29 48.31 

Standard Level 3 31.27 16.34 47.61 

Difference* -0.24 0.95 0.70 

Base Case 30.88 17.22 48.10 

Standard Level 4 32.22 15.48 47.70 

Difference* -1.34 1.75 0.40 

Base Case 30.72 17.16 47.88 

Standard Level 5 33.25 14.62 47.87 

Difference* -2.53 2.54 0.01 

Base Case 30.63 17.12 47.74 

Standard Level 6 33.59 14.35 47.94 

Difference* -2.97 2.77 -0.19 

Base Case 30.39 17.02 47.41 

Standard Level 7 34.84 13.48 48.32 

Difference* -4.45 3.54 -0.91 

Base Case 30.29 16.98 47.27 

Standard Level 8 35.18 13.21 48.40 

Difference* -4.89 3.77 -1.12 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-5
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.4 Standard-Size Refrigerator-Freezers, Bottom-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 60.30 40.68 100.98 

Standard Level 1 60.31 40.17 100.48 

Difference* -0.01 0.51 0.50 

Base Case 60.30 40.68 100.97 

Standard Level 2 60.33 39.92 100.24 

Difference* -0.03 0.76 0.73 

Base Case 60.24 40.64 100.88 

Standard Level 3 60.75 38.01 98.75 

Difference* -0.51 2.64 2.13 

Base Case 59.95 40.48 100.43 

Standard Level 4 62.72 35.73 98.45 

Difference* -2.77 4.75 1.98 

Base Case 59.63 40.30 99.93 

Standard Level 5 64.86 33.46 98.32 

Difference* -5.23 6.84 1.61 

Base Case 59.50 40.23 99.73 

Standard Level 6 65.41 32.89 98.30 

Difference* -5.91 7.34 1.43 

Base Case 59.08 40.00 99.08 

Standard Level 7 67.86 30.61 98.47 

Difference* -8.78 9.38 0.60 

Base Case 58.94 39.92 98.86 

Standard Level 8 68.41 30.06 98.47 

Difference* -9.47 9.86 0.40 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-6
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.5 Standard-Size Refrigerator-Freezers, Side-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Seven-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 63.01 81.15 144.17 

Standard Level 1 63.16 79.65 142.81 

Difference* -0.15 1.50 1.35 

Base Case 62.97 81.12 144.09 

Standard Level 2 63.40 77.58 140.98 

Difference* -0.43 3.53 3.11 

Base Case 62.68 80.87 143.55 

Standard Level 3 65.16 74.57 139.73 

Difference* -2.48 6.30 3.82 

Base Case 62.25 80.52 142.77 

Standard Level 4 67.53 71.30 138.83 

Difference* -5.28 9.22 3.94 

Base Case 61.72 80.08 141.81 

Standard Level 5 70.39 68.00 138.39 

Difference* -8.67 12.08 3.42 

Base Case 61.33 79.76 141.09 

Standard Level 6 72.31 65.58 137.89 

Difference* -10.98 14.18 3.20 

Base Case 60.81 79.33 140.15 

Standard Level 7 74.82 63.11 137.93 

Difference* -14.00 16.22 2.22 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-7
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.6 Standard-Size Refrigerator-Freezers, Side-Mount Product Classes: 

Cumulative National Equipment and Operating Costs with NPV from 

2014–2044, Three-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 122.36 182.70 305.06 

Standard Level 1 122.64 178.74 301.38 

Difference* -0.29 3.96 3.68 

Base Case 122.28 182.62 304.90 

Standard Level 2 123.11 173.27 296.38 

Difference* -0.83 9.35 8.52 

Base Case 121.74 182.00 303.73 

Standard Level 3 126.69 165.15 291.84 

Difference* -4.96 16.84 11.89 

Base Case 120.97 181.13 302.09 

Standard Level 4 131.39 156.55 287.94 

Difference* -10.43 24.58 14.15 

Base Case 120.02 180.06 300.09 

Standard Level 5 137.07 147.90 284.97 

Difference* -17.05 32.17 15.12 

Base Case 119.36 179.31 298.67 

Standard Level 6 140.78 141.72 282.50 

Difference* -21.42 37.59 16.17 

Base Case 118.47 178.32 296.79 

Standard Level 7 145.61 135.45 281.06 

Difference* -27.14 42.87 15.73 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B.2.2 Standard-Size Freezers 

Tables 10B.2.7–10B.2.10 present the national equipment and operating costs, PVC, PVS, 

and NPV for standard-size freezers at real discount rates of seven- and three-percent, 

respectively. 

All base case values were determined with shipments projections established under the 

standards case. As detailed in Chapter 9, shipments projections under the standards cases were 

determined to be lower than those in the base case projection due to the higher installed cost of 

the more efficient equipment. As a result, DOE used the standards case shipments projection 

and, in turn, the standards case equipment stock, to determine the NPV to avoid the inclusion of 

savings due to displaced shipments. Thus, the base case values shown in Tables 10B.2.7– 

10B.2.10 vary with the standards case. 

10-B-8
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

Throughout its analysis, DOE studied two product classes in detail for standard-size 

freezers. For the National Impact Analysis, each of these classes represents a product category 

which also contains other product classes. For standard-size freezers, the following list indicates 

which product classes are associated with each product category: 

• Upright freezers: product class 9 only. 

• Chest freezers: product classes 8a, 10, and 10A; represented by product class 10. 

Table 10-B.2.7 Standard-Size Freezers, Upright Product Class: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, Seven-Percent 

Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 7.01 34.32 41.33 

Standard Level 1 7.09 32.65 39.74 

Difference* -0.09 1.68 1.59 

Base Case 6.99 34.29 41.28 

Standard Level 2 7.16 31.59 38.75 

Difference* -0.17 2.70 2.53 

Base Case 6.98 34.26 41.24 

Standard Level 3 7.21 30.54 37.76 

Difference* -0.23 3.71 3.48 

Base Case 6.94 34.13 41.07 

Standard Level 4 7.42 29.43 36.84 

Difference* -0.48 4.71 4.23 

Base Case 6.88 33.96 40.84 

Standard Level 5 7.70 28.28 35.98 

Difference* -0.82 5.68 4.86 

Base Case 6.78 33.69 40.47 

Standard Level 6 8.13 27.09 35.22 

Difference* -1.34 6.60 5.25 

Base Case 6.63 33.26 39.90 

Standard Level 7 8.77 25.83 34.61 

Difference* -2.14 7.43 5.29 

Base Case 6.44 32.72 39.17 

Standard Level 8 9.49 24.70 34.19 

Difference* -3.05 8.03 4.98 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

a

 Product class 8, “upright freezers with manual defrost” is analyzed as part of the “chest freezer” category because 

products in this class are much more technologically similar to chest freezers. 

10-B-9 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.8 Standard-Size Freezers, Upright Product Class: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, Three-Percent 

Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 13.45 78.49 91.94 

Standard Level 1 13.62 73.80 87.42 

Difference* -0.17 4.69 4.52 

Base Case 13.43 78.38 91.81 

Standard Level 2 13.74 70.86 84.60 

Difference* -0.32 7.53 7.21 

Base Case 13.41 78.30 91.71 

Standard Level 3 13.85 67.93 81.78 

Difference* -0.45 10.37 9.92 

Base Case 13.32 77.96 91.29 

Standard Level 4 14.24 64.81 79.06 

Difference* -0.92 13.15 12.23 

Base Case 13.21 77.49 90.69 

Standard Level 5 14.79 61.63 76.42 

Difference* -1.58 15.86 14.28 

Base Case 13.03 76.73 89.76 

Standard Level 6 15.63 58.31 73.93 

Difference* -2.60 18.42 15.82 

Base Case 12.75 75.56 88.30 

Standard Level 7 16.88 54.81 71.69 

Difference* -4.13 20.75 16.62 

Base Case 12.39 74.10 86.49 

Standard Level 8 18.26 51.69 69.95 

Difference* -5.86 22.41 16.54 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-10
 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.9 Standard-Size Freezers, Chest Product Classes: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, Seven-Percent 

Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 4.65 22.50 27.15 

Standard Level 1 4.69 21.36 26.05 

Difference* -0.03 1.14 1.10 

Base Case 4.64 22.46 27.09 

Standard Level 2 4.77 20.65 25.42 

Difference* -0.13 1.80 1.68 

Base Case 4.59 22.31 26.90 

Standard Level 3 5.00 19.87 24.86 

Difference* -0.41 2.44 2.03 

Base Case 4.57 22.27 26.84 

Standard Level 4 5.07 19.17 24.24 

Difference* -0.50 3.10 2.60 

Base Case 4.54 22.19 26.74 

Standard Level 5 5.20 18.46 23.66 

Difference* -0.66 3.73 3.07 

Base Case 4.43 21.88 26.32 

Standard Level 6 5.66 17.60 23.26 

Difference* -1.23 4.29 3.06 

Base Case 4.41 21.81 26.22 

Standard Level 7 5.79 16.91 22.71 

Difference* -1.38 4.90 3.52 

Base Case 4.25 21.35 25.60 

Standard Level 8 6.41 16.10 22.51 

Difference* -2.17 5.26 3.09 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-11
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

Table 10-B.2.10Standard-Size Freezers, Chest Product Classes: Cumulative National 

Equipment and Operating Costs with NPV from 2014–2044, Three-Percent 

Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 8.93 51.47 60.40 

Standard Level 1 9.00 48.29 57.29 

Difference* -0.07 3.18 3.11 

Base Case 8.90 51.34 60.25 

Standard Level 2 9.16 46.31 55.47 

Difference* -0.25 5.03 4.78 

Base Case 8.81 50.95 59.76 

Standard Level 3 9.60 44.12 53.72 

Difference* -0.79 6.83 6.04 

Base Case 8.78 50.83 59.61 

Standard Level 4 9.74 42.19 51.92 

Difference* -0.96 8.64 7.68 

Base Case 8.73 50.61 59.34 

Standard Level 5 10.01 40.19 50.19 

Difference* -1.28 10.42 9.14 

Base Case 8.52 49.77 58.30 

Standard Level 6 10.88 37.80 48.69 

Difference* -2.36 11.97 9.61 

Base Case 8.47 49.57 58.04 

Standard Level 7 11.14 35.89 47.03 

Difference* -2.67 13.68 11.01 

Base Case 8.17 48.32 56.49 

Standard Level 8 12.34 33.64 45.98 

Difference* -4.17 14.68 10.51 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B.2.3 Compact Refrigerators 

Tables 10B.2.11 and 10B.2.12 present the national equipment and operating costs, PVC, 

PVS, and NPV for compact refrigerators at real discount rates of seven- and three-percent, 

respectively. 

All base case values were determined with shipments projections established under the 

standards case. As detailed in Chapter 9, shipments projections under the standards cases were 

determined to be lower than those in the base case projection due to the higher installed cost of 

the more efficient equipment. As a result, DOE used the standards case shipments projection 

and, in turn, the standards case equipment stock, to determine the NPV to avoid the inclusion of 

10-B-12
 

EERE-2008-BT-STD-0012 COMMENT 20
 

savings due to displaced shipments. Thus, the base case values shown in Tables 10B.2.11 and 

10B.2.12 vary with the standards case. 

Throughout its analysis, DOE studied one product class in detail for compact 

refrigerators. For the National Impact Analysis, this class represents a product category which 

also contains other product classes. For compact refrigerators, the following indicates which 

product classes are associated with the product category: 

•	 Compact refrigerators: product classes 11, 11A, 12, 13, 13A, 14, and 15; represented 

by product class 11. 

Table 10-B.2.11Compact Refrigerators: Cumulative National Equipment and Operating 

Costs with NPV from 2014–2044, Seven-Percent Discount Rate (billion 

2008$) 

Standard Level Equipment Operating Total 

Base Case 5.54 6.65 12.19 

Standard Level 1 5.68 6.09 11.76 

Difference* -0.14 0.56 0.43 

Base Case 5.50 6.60 12.10 

Standard Level 2 5.75 5.76 11.51 

Difference* -0.25 0.84 0.59 

Base Case 5.46 6.56 12.02 

Standard Level 3 5.82 5.44 11.25 

Difference* -0.36 1.12 0.76 

Base Case 5.28 6.37 11.65 

Standard Level 4 6.09 5.01 11.10 

Difference* -0.81 1.36 0.55 

Base Case 5.27 6.36 11.62 

Standard Level 5 6.11 4.73 10.85 

Difference* -0.85 1.62 0.78 

Base Case 5.19 6.27 11.46 

Standard Level 6 6.23 4.40 10.64 

Difference* -1.04 1.87 0.83 

Base Case 5.01 6.09 11.09 

Standard Level 7 6.47 4.03 10.50 

Difference* -1.47 2.06 0.59 

Base Case 4.75 5.82 10.58 

Standard Level 8 6.78 3.62 10.41 

Difference* -2.03 2.20 0.17 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-13 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

Table 10-B.2.12Compact Refrigerators: Cumulative National Equipment and Operating 

Costs with NPV from 2014–2044, Three-Percent Discount Rate (billion 

2008$) 

Standard Level Equipment Operating Total 

Base Case 10.95 14.10 25.05 

Standard Level 1 11.22 12.83 24.06 

Difference* -0.27 1.26 1.00 

Base Case 10.86 13.98 24.84 

Standard Level 2 11.36 12.09 23.45 

Difference* -0.50 1.89 1.39 

Base Case 10.78 13.88 24.66 

Standard Level 3 11.48 11.37 22.85 

Difference* -0.71 2.52 1.81 

Base Case 10.40 13.44 23.84 

Standard Level 4 12.00 10.39 22.39 

Difference* -1.59 3.04 1.45 

Base Case 10.37 13.40 23.77 

Standard Level 5 12.04 9.76 21.80 

Difference* -1.67 3.64 1.97 

Base Case 10.20 13.20 23.40 

Standard Level 6 12.26 9.01 21.28 

Difference* -2.06 4.18 2.12 

Base Case 9.83 12.75 22.58 

Standard Level 7 12.71 8.15 20.86 

Difference* -2.88 4.60 1.72 

Base Case 9.30 12.12 21.42 

Standard Level 8 13.27 7.24 20.51 

Difference* -3.97 4.89 0.92 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B.2.4 Compact Freezers 

Tables 10B.2.13 and 10B.2.14 present the national equipment and operating costs, PVC, 

PVS, and NPV for compact freezers at real discount rates of seven- and three-percent, 

respectively. 

All base case values were determined with shipments projections established under the 

standards case. As detailed in Chapter 9, shipments projections under the standards cases were 

determined to be lower than those in the base case projection due to the higher installed cost of 

the more efficient equipment. As a result, DOE used the standards case shipments projection 

and, in turn, the standards case equipment stock, to determine the NPV to avoid the inclusion of 

10-B-14
 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

savings due to displaced shipments. Thus, the base case values shown in Tables 10B.2.13 and 

10B.2.14 vary with the standards case. 

Throughout its analysis, DOE studied one product class in detail for compact freezers. 

For the National Impact Analysis, this class represents a product category which also contains 

other product classes. For compact freezers, the following indicates which product classes are 

associated with the product category: 

• Compact freezers: product classes 16, 17, and 18; represented by product class 18. 

Table 10-B.2.13Compact Freezers: Cumulative National Equipment and Operating Costs 

with NPV from 2014–2044, Seven-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 1.31 1.70 3.01 

Standard Level 1 1.36 1.57 2.93 

Difference* -0.05 0.13 0.08 

Base Case 1.30 1.69 2.99 

Standard Level 2 1.37 1.49 2.87 

Difference* -0.07 0.20 0.12 

Base Case 1.24 1.63 2.87 

Standard Level 3 1.49 1.38 2.87 

Difference* -0.25 0.25 0.00 

Base Case 1.22 1.60 2.82 

Standard Level 4 1.53 1.29 2.82 

Difference* -0.31 0.31 0.00 

Base Case 1.18 1.56 2.74 

Standard Level 5 1.60 1.20 2.80 

Difference* -0.42 0.36 -0.06 

Base Case 1.17 1.55 2.72 

Standard Level 6 1.61 1.14 2.75 

Difference* -0.44 0.42 -0.02 

Base Case 1.14 1.52 2.67 

Standard Level 7 1.65 1.06 2.71 

Difference* -0.51 0.47 -0.05 

Base Case 1.11 1.49 2.60 

Standard Level 8 1.70 0.98 2.68 

Difference* -0.59 0.51 -0.08 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-15 

EERE-2008-BT-STD-0012 COMMENT 20
 

Table 10-B.2.14Compact Freezers: Cumulative National Equipment and Operating Costs 

with NPV from 2014–2044, Three-Percent Discount Rate (billion 2008$) 

Standard Level Equipment Operating Total 

Base Case 2.48 3.46 5.94 

Standard Level 1 2.56 3.17 5.74 

Difference* -0.09 0.29 0.20 

Base Case 2.46 3.44 5.90 

Standard Level 2 2.60 3.00 5.60 

Difference* -0.14 0.43 0.30 

Base Case 2.34 3.28 5.62 

Standard Level 3 2.81 2.73 5.54 

Difference* -0.47 0.55 0.08 

Base Case 2.29 3.23 5.53 

Standard Level 4 2.87 2.55 5.42 

Difference* -0.58 0.68 0.10 

Base Case 2.21 3.13 5.34 

Standard Level 5 3.00 2.34 5.34 

Difference* -0.79 0.79 0.00 

Base Case 2.20 3.11 5.31 

Standard Level 6 3.02 2.19 5.21 

Difference* -0.82 0.92 0.09 

Base Case 2.14 3.04 5.18 

Standard Level 7 3.09 2.02 5.11 

Difference* -0.96 1.02 0.06 

Base Case 2.07 2.96 5.03 

Standard Level 8 3.18 1.85 5.02 

Difference* -1.11 1.11 0.01 

* Equipment Cost Difference represents the PVC; Operating Cost Difference represents the PVC; NPV is 

represented by the bold and italicized values. 

10-B-16
 

EERE-2008-BT-STD-0012 COMMENT 20
CHAPTER 11. LIFE-CYCLE COST SUBGROUP ANALYSIS
 

TABLE OF CONTENTS 

11.1 INTRODUCTION ......................................................................................................... 11-1 

11.2 PURCHASE PRICE IMPACTS.................................................................................... 11-1 

11-i 

EERE-2008-BT-STD-0012 COMMENT 20
CHAPTER 11. LIFE-CYCLE COST SUBGROUP ANALYSIS 

11.1 INTRODUCTION 

The life-cycle cost (LCC) subgroup analysis evaluates impacts on any identifiable groups 

or customers who may be disproportionately affected by any national energy efficiency standard 

level. The Department of Energy (DOE) will conduct this analysis as one of the analyses for the 

notice of proposed rulemaking (NOPR). DOE will accomplish this, in part, by analyzing the 

LCC and payback periods (PBPs) for those customers that fall into any identifiable groups. DOE 

plans to evaluate variations in regional energy prices and variations in energy use that might 

affect the net present value of a standard to customer subpopulations. To the extent possible, 

DOE will obtain estimates of each input parameter’s variability and will consider this variability 

in its calculation of customer impacts. DOE plans to perform sensitivity analyses to consider 

how differences in energy use will affect subgroups of customers. 

DOE will determine the impact on customer subgroups using the LCC Spreadsheet 

Model, which allows for different data inputs. The standard LCC analysis (described in Chapter 

8) focuses on the households and establishments that use refrigerators, refrigerator-freezers, and 

freezers. For standard-size refrigerator-freezers and freezers, DOE can use the LCC Spreadsheet 

Models to analyze the LCC for any subgroup by sampling only that subgroup. (Chapter 8 

explains in detail the inputs to the model used in determining LCC and PBPs.) 

In the case of households that use refrigerator-freezers and freezers, some possible 

subgroups DOE may choose to consider are: (1) low-income households, and (2) senior citizens. 

In the case of commercial establishments that use compact refrigerators and freezers, small 

businesses are a subgroup that DOE may choose to consider. If it analyzes small businesses, 

DOE will likely focus on small business subgroups such as lodging establishments. 

11.2 PURCHASE PRICE IMPACTS 

DOE will be especially sensitive to increases in the purchase price of the equipment due 

to new standards, to avoid negative impacts on identifiable population groups that may not be 

able to afford significant increases in equipment price. For such customers that are sensitive to 

price increases, increases in first costs of a product can preclude the purchase of a new model of 

that product. As a result, some customers may retain products past their useful life. These older 

products are generally less efficient to begin with, and their efficiency may deteriorate further if 

they are retained beyond their useful life. Increases in first cost also can preclude the purchase 

and use of a product altogether, resulting in a potentially large loss of utility to the customer. 

11-1 

EERE-2008-BT-STD-0012 COMMENT 20
CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANLAYSIS 

TABLE OF CONTENTS 

12.1 INTRODUCTION ......................................................................................................... 12-1 

12.2 METHODOLOGY ........................................................................................................ 12-1 

12.2.1 Phase 1: Industry Profile.................................................................................... 12-2 

12.2.2 Phase 2: Industry Cash-Flow Analysis and Interview Guide ............................ 12-2 

12.2.2.1 Industry Cash-Flow Analysis............................................................ 12-2 

12.2.2.2 Interview Guide ................................................................................ 12-2 

12.2.3 Phase 3: Sub-Group Analysis ............................................................................ 12-3 

12.2.3.1 Manufacturer Interviews................................................................... 12-3 

12.2.3.2 Revised Industry Cash-Flow Analysis.............................................. 12-3 

12.2.3.3 Manufacturer Sub-Group Analysis................................................... 12-4 

12.2.3.4 Competitive Impact Assessment....................................................... 12-4 

12.2.3.5 Manufacturing Capacity Impact ....................................................... 12-4 

12.2.3.6 Employment Impact.......................................................................... 12-4 

12.2.3.7 Cumulative Regulatory Burden ........................................................ 12-5 

12.3 PRELIMINARY MANUFACTURER IMPACT ANALYSIS ..................................... 12-5 

12.3.1 General Interview Structure............................................................................... 12-5 

12.3.1.1 Key Issues ......................................................................................... 12-6 

12.3.1.2 Shipment Projections ........................................................................ 12-6 

12.3.1.3 Profitability ....................................................................................... 12-6 

12.3.1.4 Product Mix ...................................................................................... 12-6 

12.3.1.5 Conversion Costs, Manufacturing Capacity, and Employment 

Levels................................................................................................ 12-7 

12.3.1.6 Market Shares and Industry Consolidation....................................... 12-8 

12.3.1.7 Product Utility and Innovation.......................................................... 12-8 

12.3.1.8 Impact on Small Manufacturers........................................................ 12-8 

12.3.1.9 Cumulative Burden ........................................................................... 12-9 

12.3.1.10 State Energy Conservation Standards............................................... 12-9 

12.3.1.11 International Energy Conservation Standards .................................. 12-9 

12.4 RESIDENTIAL REFRIGERATION PRODUCT PRELIMINARY MIA RESULTS.. 12-9 

12.4.1 Key Issues ........................................................................................................ 12-10 

12.4.2 Profitability, Product Mix, and Shipments ...................................................... 12-12 

12.4.3 Conversion Costs, Manufacturing Capacity, and Employment Levels ........... 12-13 

12.4.3.1 Impact on U.S. Production and Jobs............................................... 12-13 

12.4.3.2 Foreign Labor.................................................................................. 12-13 

12.4.4 Industry Consolidation..................................................................................... 12-14 

12.4.5 Impact on Product Utility and Innovation ....................................................... 12-14 

12.4.6 Cumulative Burdens......................................................................................... 12-14 

12.4.6.1 Pending Regulations from the CPSC.............................................. 12-15 

12.4.6.2 Potential Climate Change and Greenhouse Gas Legislation .......... 12-15 

12.4.6.3 Standards for Other Products Made by Residential Refrigeration 

Products Manufacturers .................................................................. 12-15 

12.4.6.4 State and International Standards.................................................... 12-16 

12-i 

EERE-2008-BT-STD-0012 COMMENT 20
12.4.7 Impact on Small Manufacturers....................................................................... 12-16 

12-ii 

EERE-2008-BT-STD-0012 COMMENT 20
 

CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS 

12.1 INTRODUCTION 

The purpose of the manufacturer impact analysis (MIA) is to identify the likely 

impacts of amended energy conservation standards on manufacturers. The U.S. 

Department of Energy (DOE) will conduct this analysis with input from manufacturers 

and other interested parties and will apply this methodology to its evaluation of amended 

energy conservation standards for residential refrigerators, refrigerator-freezers, and 

freezers. DOE will also consider financial impacts and a wide range of quantitative and 

qualitative industry impacts that might occur following the amendment of an energy 

conservation standard. For example, a particular energy conservation standard level, if 

adopted by DOE, could require changes to residential refrigeration products 

manufacturing practices. DOE will identify and come to understand these impacts 

through interviews with manufacturers and other interested parties during the Notice of 

Proposed Rulemaking (NOPR) stage of its analysis. 

Recently, DOE announced changes to the MIA format through a report issued to 

Congress on January 31, 2006 (as required by section 141 of the Energy Policy Act of 

2005 (EPACT 2005)), entitled “Energy Conservation Standards Activities.”a

 Previously, 

DOE did not report any MIA results until the Notice of Proposed Rulemaking (NOPR) 

phase; however, under this new format, DOE has collected, evaluated, and reported 

preliminary information and data during the preliminary phase (the phase preceding the 

NOPR) of this rulemaking. Such preliminary information includes the anticipated 

conversion capital expenditures by efficiency level and the corresponding anticipated 

impacts on jobs. DOE solicited this information during the engineering analysis 

manufacturer interviews and reported the results below. 

12.2 METHODOLOGY 

DOE conducts the MIA in three phases and further tailors the analytical 

framework based on comments from interested parties. In Phase 1, DOE creates an 

industry profile to characterize the industry and conducts a preliminary MIA to identify 

important issues that require consideration. The preliminary technical support document 

(preliminary TSD) presents the results of the Phase 1 analysis. In Phase 2, DOE prepares 

an industry cash-flow model and an interview questionnaire to guide subsequent 

discussions. In Phase 3, DOE interviews manufacturers, and assesses the impacts of 

amended energy conservation standards both quantitatively and qualitatively. Using the 

government regulatory impact model (GRIM), DOE assesses industry and sub-group 

a

 This report is available on the DOE website at 

www.eere.energy.gov/buildings/appliance_standards/2006_schedule_setting.html. 

12-1
 

EERE-2008-BT-STD-0012 COMMENT 20
cash flow and NPV. Then, DOE assesses impacts on competition, manufacturing 

capacity, employment, and regulatory burden based on manufacturer interview feedback 

and discussions. The NOPR TSD presents results of the Phase 2 and 3 analyses. 

12.2.1 Phase 1: Industry Profile 

In Phase 1 of the manufacturer impact analysis, DOE collects pertinent qualitative 

and quantitative financial and market information. This includes residential refrigerator, 

refrigerator-freezer, and freezer manufacturer market share, corporate operating ratios, 

wages, employment, and production cost ratios. Sources of information may include 

reports published by industry groups, trade journals, the U.S. Census Bureau, copies of 

Securities Exchange Commission (SEC) 10-K filings, and interviews with manufacturers. 

DOE also relies on information from its market and technology assessment, engineering 

analysis, life-cycle cost analysis, markup analysis, and analysis of capital expenditure 

requirements and other data submitted by AHAM to determine the product prices to 

characterize the residential refrigeration product industry. 

12.2.2 Phase 2: Industry Cash-Flow Analysis and Interview Guide 

In Phase 2, DOE will perform a preliminary industry cash-flow analysis and 

prepare written guidelines for interviewing manufacturers. 

12.2.2.1 Industry Cash-Flow Analysis 

DOE uses the GRIM to analyze the financial impacts of amended energy 

conservation standards on the residential refrigeration products industries. Standards will 

likely require additional investment, raise production costs, and affect revenue through 

higher prices and, possibly, lower sales. The GRIM uses several factors to determine a 

series of annual cash flows for the year standards become effective and for several years 

after implementation. These factors include annual expected revenues, costs of sales, 

selling and general administration costs, taxes, and capital expenditures related to 

depreciation, new standards, and maintenance. Inputs to the GRIM include 

manufacturing costs, shipments forecasts, and price forecasts developed in other 

analyses. Another input, financial information, will be developed based on publicly 

available data and confidentially submitted manufacturer information. DOE compares the 

results of the GRIM against baseline projections where no standards are in place. The 

financial impact of amended energy conservation standards is the difference between the 

two sets of discounted annual cash flows. 

12.2.2.2 Interview Guide 

DOE will conduct interviews with manufacturers to gather information on the 

effects of standards on revenues and finances, direct employment, capital assets, and 

industry competitiveness. Before the interviews, DOE will distribute an interview guide 

that will provide a starting point to identify relevant issues and help identify the impacts 

of standards on individual manufacturers or sub-groups of manufacturers. DOE 

anticipates that the interview guide will cover current organizational characteristics, 

industry infrastructure, manufacturer cash-flow analysis, a competitive impacts 

12-2
 

EERE-2008-BT-STD-0012 COMMENT 20
assessment, an employment impacts assessment, and a manufacturing capacity impacts 

assessment. 

12.2.3 Phase 3: Sub-Group Analysis 

Phase 3 activities will take place after the publication of the NOPR documents 

and will include manufacturer interviews, revision of the industry cash-flow analysis, 

manufacturer sub-group cash-flow analysis, competitive impact assessment, 

manufacturing capacity impact, employment impact, and cumulative regulatory burden. 

12.2.3.1 Manufacturer Interviews 

The information gathered in Phase 1 and the cash-flow analysis performed in 

Phase 2 will be supplemented with information gathered during interviews with 

manufacturers during Phase 3. The interview process has a key role in the manufacturer 

impact analyses, since it provides an opportunity for interested parties to express their 

views privately on important issues, allowing confidential or sensitive information to be 

considered in the rulemaking decision. 

DOE will conduct detailed interviews with as many manufacturers as necessary to 

gain insight into the range of potential impacts of standards. During the interviews, DOE 

will solicit information on the possible impacts of standards on sales, direct employment, 

capital assets, and industry competitiveness. Both qualitative and quantitative information 

are valuable. Interviews will be scheduled well in advance in order to provide every 

opportunity for key individuals to be available for comment. Although a written response 

to the questionnaire will be acceptable, DOE prefers an interactive interview process 

because it helps clarify responses and provides the opportunity to identify additional 

issues. 

All information transmitted will be considered, as appropriate, in DOE’s decisionmaking process. Interview participants will be asked to identify all confidential 

information provided in writing or orally; no confidential information will be made 

available in the public record. Participants will also be asked to identify all information 

they wish included in the public record but do not want to have associated with their 

interview. This information will be incorporated into the public record but reported 

without attribution. 

12.2.3.2 Revised Industry Cash-Flow Analysis 

In Phase 2 of the MIA, DOE will provide manufacturers with a preliminary 

GRIM for review and evaluation. During the interviews, DOE will seek comment and 

suggestions regarding the values selected for the parameters. Upon completion of the 

interviews, DOE will revise its industry cash-flow model based on manufacturer 

feedback. 

12-3
 

EERE-2008-BT-STD-0012 COMMENT 20
12.2.3.3 Manufacturer Sub-Group Analysis 

Using average cost assumptions to develop an industry cash-flow estimate is not 

adequate for assessing differential impacts among sub-groups of manufacturers. Smaller 

manufacturers, niche players, or manufacturers exhibiting a cost structure that differs 

largely from the industry average could be more negatively affected. Ideally, DOE would 

consider the impact on every firm individually; however, it typically uses the results of 

the industry characterization to group manufacturers exhibiting similar characteristics. 

During the interview process, DOE will discuss the potential sub-groups and sub-group 

members that have been identified for the analysis. DOE will look to the manufacturers 

and other stakeholders to suggest what sub-groups or characteristics are most appropriate 

for the analysis. 

12.2.3.4 Competitive Impact Assessment 

Section 342 (6)(B)(i)(V) of the Energy Policy Act of 1992 (EPCA) directs DOE 

to consider any lessening of competition likely to result from imposition of standards. It 

further directs the U.S. Attorney General to determine the impacts, if any, of any decrease 

in competition. DOE will make a determined effort to gather and report firm-specific 

financial information and impacts. The competitive analysis will focus on assessing the 

impacts on smaller, yet significant, manufacturers. The assessment will be based on 

manufacturing cost data and information collected from interviews with manufacturers. 

The manufacturer interviews will focus on gathering information that would help in 

assessing asymmetrical cost increases to some manufacturers, the potential increase in 

business risks from an increased proportion of fixed costs, and potential barriers to 

market entry (e.g., proprietary technologies). 

12.2.3.5 Manufacturing Capacity Impact 

One of the significant outcomes of standards could be the obsolescence of 

existing manufacturing assets, including tooling and investment. The manufacturer 

interview guide will have a series of questions to help identify impacts on manufacturing 

capacity, specifically capacity utilization and plant location decisions in North America 

with and without a standard; the ability of manufacturers to upgrade or remodel existing 

facilities to accommodate the new requirements; the nature and value of stranded assets, 

if any; and estimates for any one-time restructuring and other charges, where applicable. 

12.2.3.6 Employment Impact 

The impact of amended energy conservation standards on employment is an 

important consideration in the rulemaking process. To assess how domestic employment 

patterns might be affected, the interview will explore current employment trends in the 

refrigeration products industry. The interview will also solicit manufacturer views on 

changes in employment patterns that may result from increased standard levels. The 

employment impacts section of the interview guide will focus on current employment 

levels associated with manufacturers at each of their production facilities, expected future 

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employment levels with and without a standard, and differences in workforce skills and 

issues related to the retraining of employees. 

12.2.3.7 Cumulative Regulatory Burden 

DOE recognizes and seeks to mitigate the overlapping effects on manufacturers of 

amended energy conservation standards and other regulatory actions affecting the same 

products. DOE will analyze and consider the impact on manufacturers of multiple, 

product-specific regulatory actions. Based on its own research and discussions with 

manufacturers, DOE identified several regulations and proposed regulations relevant to 

refrigerator, refrigerator-freezer, and freezer manufacturers, including existing or new 

standards, potential limits on greenhouse gas (GHG) emissions, including 

hydrofluorocarbon (HFC) refrigerants and foam-blowing agents, standards for other 

products made by refrigerator, refrigerator-freezer, and freezer manufacturers, State 

energy conservation standards, and International energy conservation standards. DOE 

will study the potential impacts of these cumulative burdens in greater detail during the 

MIA conducted during the NOPR phase. 

12.3 PRELIMINARY MANUFACTURER IMPACT ANALYSIS 

During the preliminary rulemaking phase, DOE conducted a preliminary 

evaluation of the impact of potential amended energy conservation standards on 

manufacturer financial performance, manufacturing capacity and employment levels, and 

product utility and innovation. A primary focus was to identify the cumulative burden 

that industries face from the overlapping effect of new or recent DOE energy 

conservation standards and/or other regulatory action affecting the same products or 

industries. 

The primary sources of information for this analysis were on-site or telephone 

interviews with manufacturers of residential refrigeration products conducted during the 

fall and winter of 2008. To maintain confidentiality, DOE did not identify the individual 

manufacturers that disclosed information. The evaluation only reports aggregated 

information and does not disclose sensitive or company-specific information. 

For the preliminary MIA, DOE conducted interviews with manufacturers 

primarily to identify key issues and gain insights into the qualitative impacts of amended 

energy conservation standards. For each product, DOE used an interview guide to gather 

responses from multiple manufacturers on many issues. All of the interview guides 

covered the same general topic areas, but each interview guide was adapted to the needs 

of each product category. Appendix 12-A contains a copy of the interview guides for 

residential refrigerators, refrigerator-freezers, and freezers. 

12.3.1 General Interview Structure 

The manufacturer interviews included questions relating to the following topics. 

DOE received responses to most, if not all, of these topics from various manufacturers. 

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12.3.1.1 Key Issues 

Perhaps the most important aspect of the preliminary MIA is the opportunity to 

identify key manufacturer issues early in the development of amended energy 

conservation standards. During the interviews, DOE engages manufacturers in a 

discussion about what they perceive to be the key issues in the rulemaking. Key issues, 

once identified, are added to the list of topics explored during the interviews. For 

example, key issues in previous rulemakings have included concerns over patent 

protections that might prevent some companies from implementing higher efficiency 

designs. 

12.3.1.2 Shipment Projections 

Shipment projections can be a significant factor in determining the impacts of 

amended energy conservation standards. The interviews provide an opportunity for 

manufacturers to share information that can help DOE quantify the magnitude of any 

changes in shipments resulting from amended energy conservation standards. DOE is 

interested in information relating to the current number of product shipments, broken 

down by product class, capacity rating, and efficiency level. DOE also seeks input on the 

forecast of future shipments absent amended energy conservation standards. 

Manufacturers are asked how they would expect shipments to change for the industry as a 

whole as a function of standard levels and why they expect these changes might occur. 

More specific questions aim to derive a price elasticity estimate for use in the national 

impact analysis (NIA) spreadsheet. 

Another aspect of the shipments discussion is to understand the impacts of a 

reduction in shipments on individual refrigeration products companies. 

12.3.1.3 Profitability 

DOE requests manufacturers’ views on what they perceive to be the possible 

impact of potential amended energy conservation standards on their future profitability. 

Amended energy conservation standards could affect financial performance in several 

different ways. Several of these impacts are captured in previous sections. For instance, 

the capital and product conversion outlays needed to upgrade or redesign products and 

product platforms before they have reached the end of their useful life can engender 

significant conversion costs that otherwise would not be expended, resulting in reduced 

cash flow and stranded investments. Higher energy efficiency standards also can result in 

higher per-unit costs that may deter some consumers from purchasing the products, or 

cause some consumers to choose less efficient products, thereby reducing shipments. 

12.3.1.4 Product Mix 

DOE is interested in understanding if amended energy conservation standards 

might change a manufacturer’s product mix and if this change affects profits. For 

example, higher energy efficiency standards might limit a manufacturer’s ability to 

differentiate products and market premium products that command higher profit margins. 

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The interview guide also investigates how amended energy conservation 

standards might affect a manufacturer’s consumer mix and its distribution channels, and 

how in turn this might change profitability. 

12.3.1.5	 Conversion Costs, Manufacturing Capacity, and Employment 

Levels 

During the interviews, DOE asks manufacturers to quantify and explain both the 

capital and product conversion costs necessary to raise the energy efficiency of their 

product lines to the proposed standard levels. In some instances, manufacturers may be 

able to meet proposed standard levels by modifying existing products. In other cases, the 

necessary changes may entail a complete product-line redesign. In these situations, an 

increase in efficiency standards will cause manufacturers to incur one-time conversion 

capital expenditures and product-conversion expenses. Conversion capital expenditures 

are one-time investments in property, plant, and equipment. Product-conversion expenses 

include one-time investments in research, product development, testing, and marketing. 

One of the significant outcomes of amended energy conservation standards could 

be the obsolescence of existing manufacturing assets, including tooling and other capital 

investment. The interview guide includes questions to identify impacts on manufacturing 

capacity. DOE developed these questions to understand the impact of potential amended 

standards on: 

•	 North American manufacturing capacity; 

•	 capacity utilization and plant location decisions in North America both with and 

without standards; 

•	 the ability of manufacturers to upgrade or remodel existing facilities to 

accommodate a new product mix; and 

•	 the nature and value of stranded assets, if any. 

The impact of amended energy conservation standards on employment is an 

important consideration in the rulemaking process. DOE uses the interviews to explore 

current trends in production employment and solicit manufacturer views on changes in 

employment patterns resulting from amended energy conservation standards. Questions 

regarding employment impacts help to understand 

•	 current employment levels associated with manufacturing the subject products at 

each production facility; 

•	 expected future employment levels both with and without amended standards; and 

•	 differences in workforce skills and issues related to retraining employees. 

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12.3.1.6 Market Shares and Industry Consolidation 

Amended energy conservation standards can alter the competitive dynamics of the 

marketplace. This can include prompting companies to enter the market, exit the market, 

or merge with other companies. The preliminary MIA interview questions ask 

manufacturers to share their perspectives on industry consolidation both in the absence of 

amended standards and assuming amended standards at various efficiency levels. The 

interview questions focus on gathering information that helps in assessing 

• disproportionate cost increases to some manufacturers; 

• increased proportion of fixed costs potentially increasing business risks; and 

• potential barriers to market entry (e.g., proprietary technologies). 

DOE conducts an assessment of anti-competitive effects of proposed standards in 

order to protect the interests of the consumer. During the interviews, DOE solicits 

information to understand if amended standards could result in disproportionate 

economic or performance penalties for particular consumer/user sub-groups. 

DOE also asks manufacturers if amended energy conservation standards could 

result in products that will be more or less desirable to consumers due to changes in 

product functionality, utility, or other features. 

12.3.1.7 Product Utility and Innovation 

Amended energy conservation standards can force manufacturers to compromise 

product utility to consumers by eliminating energy-consuming features. During the 

interviews, DOE requests information on the effects of proposed standards on product 

utility. 

Amended energy conservation standards may require investment in conversion 

costs, including research and development (R&D). This required spending may force a 

manufacturer to reduce funding usually allocated to product innovation. Amended energy 

conservation standards may also force manufacturers to eliminate innovative energyconsuming features from their products. During the interviews, DOE requests 

information on the effect of proposed standards on innovation. 

12.3.1.8 Impact on Small Manufacturers 

DOE will consider the possibility of small businesses being affected by the 

promulgation of amended energy conservation standards for residential refrigerators, 

refrigerator-freezers, and freezers. Should any small business manufacturers be identified, 

DOE will study the potential impacts on these small businesses in greater detail during 

the MIA. 

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12.3.1.9 Cumulative Burden 

While any one regulation may not impose a significant burden on manufacturers, 

the combined effects of several impending regulations may have serious consequences 

for some manufacturers, groups of manufacturers, or entire industries. Assessing the 

impact of a single regulation may overlook this cumulative regulatory burden. 

Expenditures associated with meeting other regulations are an important aspect of 

DOE’s consideration of the “cumulative regulatory burden” the industry faces. The 

interviews help DOE identify the level and timing of investments manufacturers are 

expecting to incur as a result of these regulations. Manufacturers are also asked under 

what circumstances they might be able to coordinate any expenditures related to these 

regulations and efficiency standards. 

In addition to the amended energy conservation for residential refrigeration 

products, several other Federal regulations and pending regulations apply to other 

products these manufacturers make. DOE will investigate these cumulative regulatory 

burdens in greater detail during the NOPR phase of the rulemaking. 

12.3.1.10 State Energy Conservation Standards 

DOE identified and described regulatory programs at the state level in the market 

and technology assessment (chapter 3 of the preliminary TSD) for the products covered 

in this rulemaking. Multiple States have requirements for products covered under this 

rulemaking. Accommodating multiple State standards in addition to National standards 

raises costs for manufacturers. 

12.3.1.11 International Energy Conservation Standards 

DOE discussed regulatory programs from certain other countries, such as Canada 

and Mexico, in the market and technology assessment, (chapter 3 of the preliminary 

TSD). A few manufacturers sell a small portion of their total production to countries 

outside the United States. In these cases, the products must meet the standards for each 

country. Companies may design some units to meet more stringent standards than those 

imposed by the United States in order to minimize the number of product variations. 

12.4	 RESIDENTIAL REFRIGERATION PRODUCT PRELIMINARY MIA 

RESULTS 

During the preliminary MIA interview, manufacturers identified key issues 

surrounding DOE’s rulemaking for refrigeration products and provided feedback 

regarding the potential impact of amended energy conservation standards. DOE 

summarized the feedback below. 

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12.4.1 Key Issues 

One of the main questions in each of the preliminary interview guide asks: “What 

are the key issues for your company regarding the refrigeration products energy 

conservation standard rulemaking?” This open question initiated dialogue with the 

manufacturers, enabling them to identify key points that DOE would explore and discuss 

during the interview. This section describes the key issues manufacturers felt were of the 

highest importance in relation to the residential refrigeration products energy 

conservation standards rulemaking and that would have the most significant impact on 

the industry. Manufacturers indicated that, for the most part, the risks associated with 

these issues increase with more stringent energy conservation standards. The issues are 

overall concerns that many manufacturers expressed and in some cases, are dependent 

upon the product class. 

Refrigerator, refrigerator-freezer, and freezer manufacturers cited concerns 

regarding a number of issues that are covered in greater detail elsewhere in this chapter. 

These issues were conversion costs, the impact to U.S. production and jobs, cumulative 

regulatory burden, and the impact on product utility. Detailed descriptions of these 

manufacturer concerns are provided in the appropriate sections that follow; only brief 

descriptions are provided here. 

•	 Increased Conversion Costs – A number of manufacturers indicated that 

conversion costs will be much greater if the adopted standards require significant 

changes to efficiency rather than moderate changes to efficiency. This is due to 

the need for wall thickness increases rather than just component swaps in the case 

of significantly more stringent energy standards. 

•	 Impact to U.S. Production and Jobs – Manufacturers generally agreed that 

increased standards requiring investment in new plants would most likely have 

the effect of lowering U.S. production and jobs because plants would be built 

overseas for the benefit of lower labor costs. 

•	 Cumulative Regulatory Burden – Many manufacturers indicated that refrigeration 

products face a number of pieces of new legislation that would exacerbate the 

burden created from more stringent energy standards. These include a potential 

Greenhouse Gas (GHG) bill in the U.S. and changing energy standards in Canada 

and abroad. 

•	 Impact to Product Utility – Several manufacturers expressed concern about the 

possibility of lower product utility resulting from stricter energy standards. If 

thicker walls are required to meet new standards, internal volumes would be 

reduced while still using the same amount of floor space. Other features that can 

increase energy usage, such as glass doors and multiple temperature zones in 

drawer compartments, may have to be removed if standards are significantly 

stricter. 

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The other issues of key importance to manufacturers are the current poor economic 

conditions, the circumvention of new standards and need for enforcement, and the timing 

and technical difficulty of achieving new standards. 

•	 Current Economic Conditions – A number of manufacturers indicated that the 

current status of the U.S. economy has put strains on the financial conditions of 

their companies. This strain diminishes their ability to support the investments 

required to meet new energy standards and causes a competition for capital 

between these required investments and other opportunities such as research and 

new product development. Any impact from new standards on conversion costs, 

U.S. production, and jobs would be greater because of the difficult economic 

environment. 

•	 Circumvention and Enforcement – Several manufacturers expressed concern that 

some manufacturers have not followed the intent of the current test procedure or 

have actively circumvented the test procedure via sensors that detect test 

conditions. These sensors direct a controller to disable certain energy-using 

functions during the test in order to achieve lower energy consumption for the 

Energy Guide labeling. These actions have hurt domestic manufacturers 

competitively. Other companies expressed concern that there is not enough 

enforcement of energy standards to ensure that products meet the ratings on their 

labels. Some import brands have submitted incorrect or incomplete data to DOE 

for labeling, particularly for compact product classes. Since some importers 

source from multiple manufacturers, and label submissions are associated with the 

import brand rather than the manufacturing company, it is difficult to track 

labeling issues to the original manufacturer. 

•	 Technical Difficulty to Achieve New Standards – Many manufacturers expressed 

concerns about the technical difficulty in achieving new standards that are 

significantly more stringent than current levels. They pointed out that there are 

fewer additional low-cost technology improvements available now than there 

were during past rulemakings. Specifically, compact freezers were cited as a 

product class in which it will be especially difficult to make significant 

improvements. The standards for compact freezers are already more stringent 

relative to capacity than are standards for compact refrigerators. Compact units, in 

general, pose a challenge because there are very few low-capacity compressors 

with sufficiently high efficiencies. Several manufacturers indicated that 

improvements could be made, but highlighted the importance of staying informed 

by DOE of the proposed new standard levels throughout the rulemaking process. 

They also emphasized having adequate time between the final rule and the 

effective date of the new standards to ensure adequate time is available to 

redesign products and to make the appropriate investments in manufacturing 

lines. 

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12.4.2 Profitability, Product Mix, and Shipments 

DOE asked manufacturers during the preliminary manufacturer interviews how 

amended energy conservation standards would affect their profitability, product mix, and 

overall shipments. Nearly all manufacturers stated that amended energy conservation 

standards could lower profits depending upon the efficiency level under consideration by 

DOE. In particular, manufacturers indicate that new standards requiring cost increases of 

15-20 percent or more would have significant impacts through lowered industry 

shipments and a shift in product mix. 

Manufacturers of all types of refrigeration products state that cost increases at 

these levels would drive consumers toward lower-cost products. Nearly all manufacturers 

have certain product lines that would have difficulty meeting new standards that are 

significantly stricter. They say that they would most likely drop some of these products 

because of technical difficulties in achieving new standards. 

Several manufacturers of refrigerators and refrigerator-freezers stated that they 

would shift their product mix to compete in lower cost products or would no longer be 

able to compete as heavily in ENERGY STAR products. This would lower profitability 

because lower cost and baseline products typically cannot command as much of a margin 

as do premium and Energy Star products. Contrarily, some manufacturers expect to move 

more strongly towards higher-end products because of the higher profit margins 

available. They contend that the cost-competitive nature of low-end refrigeration 

products makes it very difficult to pass on increased costs to the consumer. For this 

reason, they indicate that they would modify their product mix to be weighted more 

heavily toward higher-margin products. One manufacturer even noted that it would exit 

certain low-margin product classes completely if the investment costs required to meet 

the amended energy standards were too high. Still, other manufacturers did not expect to 

change their product mix much at all, either because their product platforms are far from 

the end of their efficiency capability or because their market strategy calls for 

maintaining a fixed portion of ENERGY STAR products. 

All manufacturers agree that amended energy standards would decrease profit 

margins for refrigeration products in general. Manufacturers stated that the extent to 

which margins diminish will depend on how much cost their competitors are able to pass 

through to the customer. Manufacturers of higher-end products have higher margins, and 

thus greater capacity to absorb cost increases, whereas entry level products have very thin 

margins and minimal capacity to absorb cost increases. Manufacturers stated that 

customers of lower-end products are very price-sensitive and the ability of a 

manufacturer to pass cost increases through without affecting demand for low-end 

products is extremely limited. In general, most manufacturers agree that significantly 

stricter amended energy standards would increase retail prices and lower demand for 

refrigeration products across the board. Specifically, many indicated that increased costs 

will price some consumers out of the market completely and bring would-be purchasers 

of higher-end units down to entry-level products, thereby reducing both overall demand 

and demand for higher-margin refrigeration products. 

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12.4.3 Conversion Costs, Manufacturing Capacity, and Employment Levels 

DOE estimated that a typical high-volume domestic refrigerator, refrigeratorfreezer, or freezer production line would have a life cycle of approximately ten years in 

the absence of amended energy conservation standards. During that period, 

manufacturers would not make major equipment changes that alter the underlying 

platforms. Thus, an amended energy conservation standard that took effect and resulted 

in a major platform redesign before the end of the platform’s life would strand a portion 

of the earlier capital investments. 

DOE asked manufacturers what level of conversion costs they anticipate if 

amended energy conservation standards were to take effect. Manufacturers said that 

conversion costs would be significant if amended standards require new product 

platforms, as opposed to component swaps only. The primary changes that would dictate 

new product platforms are significant alterations to wall thicknesses or the use of vacuum 

insulated panels (VIP). The cost of such changes varies by manufacturer, depending on 

the volume of production and whether capital, tooling, and engineering investments are 

required. Lower-volume manufacturers have indicated that conversion costs in this 

scenario could range from a few million dollars to tens of millions. Higher volume 

manufacturers have indicated potential costs in the range of hundreds of millions of 

dollars. 

Additionally, manufacturers have identified the cost of plant closings as an 

important component of conversion costs. Several manufacturers indicated that 

significant energy efficiency increases would drive them to construct new plants in 

lower-cost labor markets. Mexico, specifically, was offered as a potential location. Some 

existing U.S. plants would either be closed or downsized, reducing domestic employment 

levels and leaving some stranded assets. Contrarily, a few domestic manufacturers 

indicated that they would have few stranded assets or that they would not move 

production outside the U.S. 

12.4.3.1 Impact on U.S. Production and Jobs 

The impact of amended energy conservation standards on employment is an 

important consideration in the rulemaking process. As indicated in section 12.3.2.3 

above, significant increases to the energy efficiency standards for refrigeration products 

would cause some manufacturers to close domestic production facilities and to construct 

new plants outside of the U.S. Manufacturers with existing facilities abroad indicated that 

they may expand or modify those facilities rather than build entirely new plants. 

12.4.3.2 Foreign Labor 

Manufacturers indicated that there has been a shift in production out of the United 

States, in particular to Mexico. For compact products, the trend has been towards 

production even further from the U.S., particularly China. Manufacturers said that 

amended energy conservation standards could exacerbate these trends. Some 

manufacturers are very committed to keeping production in the U.S., but in general these 

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do not include the highest-volume manufacturers. Consideration of production outside 

the U.S. is primarily driven by concerns about profitability and the opportunity for lower 

labor costs. 

12.4.4 Industry Consolidation 

Three companies now account for the majority of U.S. sales of residential 

refrigeration products. The relative market share among these companies and between 

these companies and other manufacturers varies depending on product class. In certain 

product classes, other manufacturers dominate the market. A trend of consolidation has 

occurred within the industry in recent years. Most manufacturers anticipate further 

consolidation in the future, even in the absence of amended energy conservation 

standards. Manufacturers also indicated that new standards could impact future 

consolidation by making certain manufacturers less competitive. 

12.4.5 Impact on Product Utility and Innovation 

Amended energy conservation standards can affect purchasers of residential 

refrigeration products by increasing or decreasing the utility of such products. 

Manufacturers generally agree that stringent energy efficiency standards would decrease 

innovations and reduce product utility. They believe that product utility would be 

impacted in several ways. First, significantly stricter standards would increase the costs 

of refrigeration products across the board. Most manufacturers believe that the price 

increases would force lower income customers out of the market for refrigeration 

products altogether. Second, meeting new standards will likely require manufacturers to 

increase product wall thicknesses. Most residential kitchens have limited refrigerator 

space, so the wall thicknesses of refrigeration products would be forced to grow inward. 

This leaves less internal volume available for use by the customer. This is an issue of 

great concern for virtually all manufacturers. Finally, several manufacturers indicated that 

other product features currently available today may have to be removed in order to meet 

new standard levels and maintain acceptable product costs. Examples of these features 

include ice and water dispensers, glass doors, soda can dispensers, crisper compartments, 

antisweat features, and food preservation capabilities. 

Manufacturers also believe that product innovation would be affected by amended 

energy conservation standards. Specifically, they say that innovation will increase in the 

area of energy efficiency, but it will decrease or disappear in the development of other 

features. New efficiency standards would cause manufacturers to divert money from the 

development of new, brand-differentiating features to the development of features that 

decrease energy usage. 

12.4.6 Cumulative Burdens 

Based on its own research and discussions with manufacturers, DOE identified 

several regulations relevant to residential refrigeration products, including: 

• regulations from the Consumer Products Safety Commission (CPSC); 

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EERE-2008-BT-STD-0012 COMMENT 20
• potential climate change and greenhouse gas (GHG) regulation; 

• new DOE test procedures for residential refrigeration products; 

• standards for other products made by residential refrigeration product 

manufacturers; 

• other State energy conservation standards; and 

• international energy conservation standards. 

Complying with such regulations requires corporations to invest both human and 

capital resources. The following subsections discuss in greater detail regulations affecting 

the residential refrigeration products industry. 

12.4.6.1	 Pending Regulations from the CPSC 

Several manufacturers stated that the CPSC was considering regulations regarding 

the labeling and materials identification for residential refrigeration products. They 

indicated that the regulations would essentially duplicate existing Underwriters 

Laboratories (UL) certification requirements for safety. At the time that the manufacturer 

impact analysis interviews were conducted, the new CPSC regulations were still pending. 

The rulemaking was passed in December 2008, however, and is published in 16 CFR 

1101. 

12.4.6.2	 Potential Climate Change and Greenhouse Gas Legislation 

Many manufacturers expressed concern about potential climate change 

legislation. This is an area of great importance within the industry. Manufacturers expect 

a climate change bill that regulates the use and emissions of GHG’s to be passed by 

Congress in the near future. As a result, use of hydrofluorocarbons (HFC’s), the most 

commonly used refrigerants and foam-blowing agents, would become restricted. These 

substances would eventually be phased out, or their use capped at a restricted level. This 

presents a problem for manufacturers because the key alternative insulation foam 

blowing agent is cyclopentane. Insulation made with this blowing agent has higher 

conductivity than current state-of-the art foam insulation, and conversion to cyclopentane 

presents factory issues due to its flammability..Conversion of the currently-used 

refrigerant, HFC-134a, to the most likely alternative, R-600a or isobutane, would require 

product redesign, and causes issues associated with safety certification compliance under 

UL regulations. Proposed legislation presents uncertainty for manufacturers as to how 

hydrocarbon refrigerants and foam-blowing agents would be regulated for safety within 

the U.S. Manufacturers indicate that the costs of making changes associated with 

conversion to new refrigerants and blowing agents would be in the millions of dollars. 

12.4.6.3	 Standards for Other Products Made by Residential Refrigeration 

Products Manufacturers 

In addition to the efficiency regulations for residential refrigeration products, 

several other Federal regulations and pending regulations apply to other products 

manufactured by the companies that manufacture refrigeration products. Many of these 

companies manufacture multiple lines of residential appliances, including clothes 

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EERE-2008-BT-STD-0012 COMMENT 20
washers, clothes dryers, dishwashers, and cooking products, all of which are also subject 

to Federal efficiency regulations. Some of these products are currently undergoing 

rulemakings amending the test procedures to incorporate standby and off mode energy 

consumption as well. Additionally, manufacturers pointed out that changes are being 

made to the refrigeration products test procedures concurrent with the refrigeration 

products energy conservation standard rulemaking. 

12.4.6.4 State and International Standards 

Manufacturers stated that there are a number of state and international standards 

that they must adhere to in addition to those currently under consideration in this 

rulemaking. European standards such as the Restriction on the use of Hazardous 

Substances (RoHS), Waste Electrical and Electronic Equipment (WEEE), and the 

Registration, Evaluation, Authorization, and restriction of Chemicals (REACH) create 

additional compliance costs for manufacturers that compete in Europe. Manufacturers 

indicated that California has programs similar to these that are either already in place or 

are currently in development. Additionally, different efficiency standards in foreign 

countries add to the range of regulations that manufacturers must meet. DOE will 

investigate these cumulative regulatory burdens in greater detail during the MIA analysis. 

12.4.7 Impact on Small Manufacturers 

The Small Business Administration (SBA) defines small business manufacturing 

enterprises for North American Industry Classification System (NAICS) code 335222, 

Household Refrigerator and Home Freezer Manufacturing, as companies with 1000 or 

less employees. SBA lists small business size standards that are matched to industries as 

they are described in the NAICS. The size standard defines the maximum allowable size 

of a for-profit small business for Federal Government programs. Size standards are 

generally based on the average annual receipts or the average number of employees at a 

firm. 

The manufacturer interviews indicated that smaller refrigeration product 

manufacturers typically have smaller corporate research and development and 

engineering staff than larger manufacturers. Smaller manufacturers often produce niche 

or specialty products and focus on providing products that other larger manufacturers do 

not produce. Although small manufacturers often have a more limited product range than 

larger manufacturers, the effort to address some aspects of regulations are relatively fixed 

and do not scale directly with the number of products or product platforms produced. 

Consequently, the cumulative burden of regulations will tend to place more of a burden 

on smaller manufacturers because of their more limited resources. 

DOE will study the potential impacts to these small businesses in greater detail 

during the MIA. 

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APPENDIX 12-A. PRELIMINARY MANUFACTURER IMPACT ANALYSIS 

QUESTIONNAIRE 

TABLE OF CONTENTS 

12A.1 INTRODUCTION ...............................................................................................12-A-1
 

12A.2 QUESTIONNAIRE .............................................................................................12-A-1
 

12-A-i 

EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

APPENDIX 12-A. PRELIMINARY MANUFACTURER IMPACT ANALYSIS 

QUESTIONNAIRE 

12-A.1 INTRODUCTION 

DOE used the questionnaire below to interview a number of refrigerator and freezer 

manufacturers during the pre-NOPR phase of the rulemaking to analyze the impact of energy 

conservation standards on manufacturers. Individual manufacturer responses are kept 

confidential. Aggregated results are summarized in chapter 12. 

12-A.2 QUESTIONNAIRE 

1 Issues 

1.1	 What are the key issues for your company regarding a possible future product 

rulemaking? 

2 Shipment Projections 

2.1	 What is your company’s approximate market share in each of the product classes? 

2.2	 Would you expect your market share to change once standards become effective? 

Does your outlook change with higher efficiency levels? 

2.3	 How would you expect shipments to change for the industry as a whole as a function 

of standards and why? 

2.4	 Looking at price/cost effects only, how would you expect shipments to change for a 

25 percent, 50 percent, 100 percent, or 200 percent manufacturer price/cost increase? 

3 Conversion Costs 

3.1	 What level of capital expenditure and product conversion costs would you anticipate 

to make at higher standard levels? Please describe what they are and provide your 

best estimate of their respective magnitudes. 

3.2	 How would the imposition of new energy conservation standards affect capacity 

utilization and manufacturing assets at your domestic production facilities? Would a 

new standard result in stranded capital assets? Would any facilities be closed or 

downsized? Added or upgraded? 

3.3	 How might a new standard impact product innovation? 

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EERE-2008-BT-STD-0012 COMMENT 20
4 Product Mix and Profitability 

4.1	 How would your company’s product mix and marketing strategy change with 

changes in the efficiency standard? 

4.2	 Would the current percentage of shipments at the Energy Star level be the same 

under a new standard? 

4.3	 What distribution channels are used from the manufacturer to the retail outlet? What 

is the share of product going through each distribution channel? 

4.4	 Generally, how would new product standards affect your customer mix, distribution 

channels, and corresponding profit margins? 

4.5	 How might a new standard affect the Energy Star program, and consequently your 

firm? 

5 Market Shares and Industry Consolidation 

5.1	 In the absence of new standards, do you expect any industry consolidation? 

5.2	 How would new standards affect your ability to compete? 

5.3	 Could new standards disproportionately advance or harm the competitive positions 

of some firms? 

5.4	 Are there concerns over intellectual property? 

5.5	 Could new standards result in disproportionate economic or performance penalties 

for particular consumer/user subgroups? 

5.6	 Beyond price and energy efficiency, could new standards result in products that will 

be more or less desirable to consumers due to changes in product functionality, 

utility, or other features? 

6 Cumulative Regulatory Burden 

6.1	 Are there recent or impending regulations on your specific product or other products 

that impose a cumulative burden on the industry? 

6.2	 If so, what is the total expected impact of those other regulations? 

12-A-2
 

EERE-2008-BT-STD-0012 COMMENT 20
CHAPTER 13. UTILITY IMPACT ANALYSIS 

TABLE OF CONTENTS 

13.1 INTRODUCTION ......................................................................................................... 13-1 

13.2 METHODOLOGY ........................................................................................................ 13-2 

13.3 RESULTS ...................................................................................................................... 13-3 

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CHAPTER 13. UTILITY IMPACT ANALYSIS 

13.1 INTRODUCTION 

The Department of Energy (DOE) will analyze specific effects of its proposed standard 

levels on the electric utility industry as part of the notice of proposed rulemaking analyses, using 

a variant of the U.S. DOE/Energy Information Administration (EIA)’s National Energy 

Modeling System (NEMS). The NEMS is a large, multi-sectoral, partial equilibrium model of 

the U.S. energy sector. EIA uses NEMS to produce the Annual Energy Outlook (AEO).

1

 NEMS 

produces a widely recognized baseline energy forecast for the United States, and this energy 

forecast is available in the public domain. DOE will use a variant known as NEMS-BT to 

provide key inputs to the analysis.a

The utility impact analysis will consist of a comparison between model results for the 

base case and for policy cases in which proposed standards are in place. The use of NEMS-BT 

for the utility analysis offers several advantages. As the official DOE energy forecasting model, 

NEMS relies on a set of assumptions that are transparent and have received wide exposure and 

commentary. NEMS-BT allows an estimate of the interactions between the various energy 

supply and demand sectors and the economy as a whole. The utility impact analysis will report 

the changes in installed capacity and generation, by fuel type, that result for each trial standard 

level, as well as changes in electricity and natural gas sales to the residential and commercial 

sectors. 

DOE plans to conduct the utility impact analysis as a policy deviation from the 2009 

version of the AEO that reflect provisions of the American Recovery and Reinvestment Act 

(ARRA) and recent changes in the economic outlook (AEO2009),1 applying the same basic set of 

assumptions. For example, the operating characteristics (e.g., energy conversion efficiency, 

emissions rates) of future electricity generating plants are as specified in the AEO2009 reference 

case. DOE also will explore deviations from some of the reference case assumptions, to represent 

alternative futures. Two alternative scenarios use the high and low economic growth cases. 

(The reference case corresponds to medium growth.) The high economic growth case assumes 

higher projected growth rates for population, labor force, and labor productivity, resulting in 

lower predicted inflation and interest rates relative to the reference case and higher overall 

aggregate economic growth. The opposite is true for the low growth case. Because EIA does 

not plan to produce high and low economic growth cases corresponding to the AEO2009 that 

a  For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation.  A useful summary is National Energy Modeling System: An Overview 2000,

DOE/EIA‐0581(2000), March 2000.  EIA approves use of the name NEMS to describe only an official version

of the model without any modification to code or data.  Because this analysis entails some minor code

modifications and the model is run under various policy scenarios that are variations on EIA assumptions, 

DOE refers to the model by the name NEMS‐BT (BT is DOE’s Building Technol

aegis this work has been performed).  NEMS‐BT was previously called NEMS‐BRS. 

ogies Program, under whose

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includes the ARRA, DOE plans to estimate these cases based on the March 2009 release of the 

AEO2009 that excludes the ARRA.2 

13.2 METHODOLOGY 

The electric utility impact analysis will consist of NEMS-BT forecasts for generation, 

installed capacity, sales, and prices. NEMS provides reference case load shapes for several end 

uses. The model uses predicted growth in demand for each end use to build up a projection of 

the total electric system load growth for each region, which it uses in turn to predict the 

necessary additions to capacity. NEMS-BT accounts for the implementation of efficiency 

standards by decrementing the appropriate reference case load shape. DOE will determine the 

size of the decrement using data for the per-unit energy savings developed in the life-cycle cost 

and payback period analysis (Chapter 8) and the forecast of shipments developed for the national 

impact analysis (Chapter 9). 

The predicted reduction in capacity additions is sensitive to the peak load impacts of the 

standard. DOE will investigate the need to adjust the hourly load profiles that include this end 

use in NEMS-BT. 

 Since the AEO2009 version of NEMS forecasts only to the year 2030, DOE must 

extrapolate results to 2044. DOE conducts an extrapolation to 2044 to be consistent with the 

analysis period being used by DOE in the national impact analysis (NIA). It will not be feasible 

to extend the forecast period of NEMS-BT for the purposes of this analysis, nor does EIA have 

an approved method for extrapolation of many outputs beyond 2030. While it might seem 

reasonable in general to make simple linear extrapolations of results, in practice this is not 

advisable because outputs could be contradictory. For example, changes in the fuel mix implied 

by extrapolations of those outputs could be inconsistent with the extrapolation of marginal 

emissions factors. An analysis of various trends sufficiently detailed to guarantee consistency is 

beyond the scope of this work and, in any case, would involve a great deal of uncertainty. 

Therefore, for all extrapolations beyond 2030, DOE intends to use simple replications of year 

2030 results; in this way results are guaranteed to be consistent. As with the AEO reference case 

in general, the implicit assumption is that the regulatory environment does not deviate from the 

current known situation during the extrapolation period. Only changes that have been announced 

with date-certain introduction are included in NEMS-BT. 

For petroleum products, EIA uses the average growth rate for the world oil price over the 

years 2010 to 2025, in combination with the refinery and distribution markups from the year 

2025, to determine the regional price forecasts. Similarly, EIA derives natural gas prices from an 

average growth rate figure in combination with regional price margins from the year 2025. 

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13.3 RESULTS 

Results of the analysis will include changes in residential and commercial electricity 

sales, installed capacity and generation by fuel type for each trial standard level, in five-year 

increments extrapolated to the year 2044. 

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REFERENCES 

1	 U.S. Department of Energy-Energy Information Administration. An Updated Annual Energy 

Outlook 2009 Reference Case Reflecting Provisions of the American Recovery and 

Reinvestment Act and Recent Changes in the Economic Outlook, April, 2009. Washington, 

DC. SR/OIAF/2009-03. 

<http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf> 

2	 U.S. Department of Energy-Energy Information Administration. Annual Energy Outlook with 

Projections to 2030, March, 2009. Washington, DC. DOE/EIA-0383(2009). 

<http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html> 

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CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS 

TABLE OF CONTENTS 

14.1 INTRODUCTION ......................................................................................................... 14-1 

14.2 METHODOLOGY ........................................................................................................ 14-1 

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CHAPTER 14. EMPLOYMENT IMPACT ANALYSIS
 

14.1 INTRODUCTION 

The Department of Energy (DOE) intends the employment impact analysis to estimate 

national job creation or job elimination resulting from possible new standards, due to reallocation 

of the associated expenditures for purchasing and operating equipment. DOE will conduct this 

analysis as one of the analyses for the notice of proposed rulemaking (NOPR). DOE will 

estimate national impacts on major sectors of the U.S. economy, using publicly available data 

and incorporating different energy price scenarios that it will carry out as part of the analysis for 

the NOPR. DOE will make all methods and documentation available for review. 

The imposition of standards can impact employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at the plants that produce the 

covered equipment, along with the affiliated distribution and service companies, resulting from 

the imposition of standards. DOE will evaluate direct employment impacts in its manufacturer 

impact analysis, as described in Chapter 12. Indirect employment impacts may result from 

expenditures shifting between goods (the substitution effect) and changes in income and overall 

expenditure levels (the income effect) that occur due to the imposition of standards. 

DOE expects new equipment standards to decrease energy consumption, and therefore to 

reduce expenditures for energy. The savings in energy expenditures may be spent on new 

investment and other items. The standards may increase the purchase price of equipment, 

including the retail price plus sales tax, and increase installation costs. 

Using an input-output model of the U.S. economy, this analysis seeks to estimate the 

year-to-year effect of these expenditure impacts on net economic output and employment. 

A simple model might involve reduced expenditures for energy and reallocation of that money 

toward other sectors in the economy. DOE intends the employment impact analysis to quantify 

the indirect employment impacts of these expenditure changes. It will evaluate direct 

employment impacts in the manufacturer impact analysis step of the process. 

14.2 METHODOLOGY 

To investigate the combined direct and indirect employment impacts, DOE will use the 

Pacific Northwest National Laboratory (PNNL)’s ‘Impact of Sector Energy Technologies’ 

(ImSET) model.1

 PNNL developed ImSET, a spreadsheet model of the U.S. economy that 

focuses on 188 sectors most relevant to industrial, commercial, and residential building energy 

use, for DOE’s Office of Energy Efficiency and Renewable Energy. ImSET is a special-purpose 

version of the U.S. Benchmark National Input-Output (I-O) model, which has been designed to 

estimate the national employment and income effects of energy saving technologies that are 

deployed by DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the 

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previous versions of the model used in earlier rulemakings, this version allows for more 

complete and automated analysis of the essential features of energy efficiency investments in 

buildings, industry, transportation, and the electric power sectors. 

The ImSET software includes a computer-based I-O model with structural coefficients to 

characterize economic flows among the 188 sectors. ImSET’s national economic I-O structure is 

based on the 1997 Benchmark U.S. table, specially aggregated to 188 sectors.2 

DOE intends to use the ImSet model to estimate changes in employment, industry output, 

and wage income in the overall U.S. economy resulting from changes in expenditures in the 

various sectors of the economy. For example, commercial clothes washer standards may reduce 

energy expenditures and increase equipment prices in the commercial sector. These expenditure 

changes are likely to reduce commercial and energy sector employment. At the same time, these 

equipment standards may increase commercial sector investment, and increase employment in 

other sectors of the economy. DOE designed the employment impact analysis to estimate the 

year-to-year net national employment effect of these different expenditure flows. 

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REFERENCES 

1	 Roop, J. M., M. J. Scott, and R. W. Schultz. ImSET: Impact of Sector Energy Technologies, 

2005. Pacific Northwest National Laboratory, Richland, WA. PNNL- 15273. 

2	 Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and Jiemin Guo. “Benchmark 

Input-Output Accounts of the U. S. Economy, 1997,” Survey of Current Business, December 

2002. pp. 19-117. 

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ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION 

STANDARDS FOR RESIDENTIAL REFRIGERATAORS, REFRIGERATORFREEZERS, AND FREEZERS 

TABLE OF CONTENTS 

1.0 INTRODUCTION ........................................................................................................EA-1 

2.0 METHODOLOGY .......................................................................................................EA-2 

2.1 Air Emissions................................................................................................................EA-2 

2.2 Economic Value of Emission Reductions.....................................................................EA-5 

3.0 RESULTS ...................................................................................................................EA-15 

LIST OF TABLES 

Table EA.1 Global Social Cost of Carbon (SCC) Estimates ($/t CO2 in 2007 (2006$)), 

Based on 3% and 5% Discount Rates................................................................EA-10 

Table EA.2 Global Social Cost of Carbon Estimates ($/t CO2 in 2007 in 2006$), Using 

Newell & Pizer Adjustment for Future Discount Rate Uncertainty ..................EA-12
 

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ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION 

STANDARDS FOR RESIDENTIAL REFRIGERATAORS, REFRIGERATORFREEZERS, AND FREEZERS 

1.0 INTRODUCTION 

The Department of Energy (DOE) will conduct an environmental assessment as part of 

the notice of proposed rulemaking. DOE will assess the impacts of proposed energy 

conservation standards for residential refrigerators, refrigerator-freezers, and freezers on certain 

environmental indicators using a variant of the U.S. DOE/Energy Information Administration 

(EIA)’s National Energy Modeling System (NEMS).a EIA uses NEMS to produce the Annual 

Energy Outlook (AEO).1 DOE will use a variant known as NEMS-BT to provide key inputs to 

the analysis, based on the 2009 version of the AEO (AEO2009). Results of the environmental 

assessment will be similar to those provided in AEO2009. 

DOE intends the environmental assessment to provide emissions results to policymakers 

and other stakeholders, and to fulfill requirements that the environmental effects of all new 

Federal rules be properly quantified and considered. The environmental assessment considers 

three pollutants— sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury (Hg)—as well as 

carbon emissions. The only form of carbon emissions tracked by NEMS-BT is carbon dioxide 

(CO2), so the carbon discussed in this report is only in the form of CO2. For each of the trial 

standard levels, DOE will calculate total emissions using NEMS-BT, using additional, external 

analysis as needed. 

Although DOE plans to consider only SO2, NOx, mercury, and CO2 in its environmental 

assessment, there are other air pollutants which are of concern. Specifically, the Clean Air Act 

requires the Environmental Protection Agency (EPA) to set National Ambient Air Quality 

Standards for the following six common air pollutants, also know as “criteria pollutants”: (1) 

ozone, (2) particulate matter (PM), (3) carbon monoxide (CO), (4) nitrogen dioxide, (5) SO2, and 

(6) lead.2 EPA recently added to this list mercury. But none of the “criteria pollutants” not 

already considered (i.e., ozone, PM, CO, and lead) are driven significantly by electric utility 

power plants. Therefore, DOE does not intend on addressing them in the environmental 

assessment. In the case of ozone and particulate matter, other pollutants are precursors to their 

formation and atmospheric conditions are the driver behind their formation. Also, SO2 and NOx 

are the primary precursors to ozone and PM, respectively, and will already be addressed by the 

environmental assessment. In the case of CO, electric utilities are not significant sources. For 

electric power plants, almost all carbon emissions come out in the form of CO2 as the 

combustion process is lean enough not to yield CO in significant amounts. Finally, with regard 

to lead, the ban on the use of leaded gasoline has resulted in a dramatic decrease in lead 

emissions since the mid 1970s. Now industrial processes (not electric utilities), particularly 

a For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000, 

DOE/EIA-0581(2000), March 2000. EIA approves use of the name NEMS to describe only an official version of 

the model without any modification to code or data. Because this analysis entails some minor code modifications 

and the model is run under various policy scenarios that are variations on EIA assumptions, DOE refers to the model 

as NEMS-BT (BT is DOE’s Building Technologies Program). NEMS-BT was previously called NEMS-BRS. 

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primary and secondary lead smelters and battery manufacturers, are responsible for most of lead 

emissions and all violations of the lead air quality standards. 

2.0 METHODOLOGY 

DOE plans to conduct the utility impact analysis as a policy deviation from the 2009 

version of the AEO that reflect provisions of the American Recovery and Reinvestment Act 

(ARRA) and recent changes in the economic outlook (AEO2009),1

 applying the same basic set of 

assumptions. For example, the emissions characteristics of an electricity generating plant will be 

exactly those used in AEO2009. The NEMS reference case and alternative growth scenarios are 

as described in the utility impact analysis (see Chapter 13 of the preliminary technical support 

document). Below are descriptions of the air emissions that DOE will analyze in the 

environmental assessment. 

2.1 Air Emissions 

Carbon Dioxide (CO2) 

Carbon dioxide (CO2) is not a regulated or criteria pollutant, but it is of interest because 

of its classification as a greenhouse gas (GHG). GHGs trap the sun’s radiation inside the Earth’s 

atmosphere and either occur naturally in the atmosphere or result from human activities. 

Naturally occurring GHGs include water vapor, CO2, methane (CH4), nitrous oxide (N2O), and 

ozone (O3). Human activities, however, add to the levels of most of these naturally occurring 

gases. For example, CO2 is emitted to the atmosphere when solid waste, fossil fuels (oil, natural 

gas, and coal), wood, and wood products are burned. During the past 20 years, about threequarters of anthropogenic (i.e., human-made) CO2 emissions resulted from burning fossil fuels. 

Concentrations of CO2 in the atmosphere are naturally regulated by numerous processes, 

collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and 

the land and oceans is dominated by natural processes, such as plant photosynthesis. While these 

natural processes can absorb some of the anthropogenic CO2 emissions produced each year, 

billions of metric tons are added to the atmosphere annually. In the U. S., CO2 emissions from 

both energy generation and industrial processes account for 84.6 percent of total U.S. GHG 

emissions. 

NEMS-BT tracks carbon emissions using a detailed carbon module; this approach 

provides good results because of its broad coverage of all sectors and inclusion of interactive 

effects. Past experience with carbon results from NEMS suggests that the NEMS-generated 

emissions estimates are somewhat lower than estimates based on simple average factors. One of 

the reasons for this divergence is that NEMS tends to predict that conservation displaces 

renewable generating capacity in the later years of its forecast. On the whole, NEMS-BT 

provides carbon emissions results of reasonable accuracy, at a level consistent with other 

published Federal results. 

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Sulfur Dioxide (SO2) 

The NEMS-BT model reports the two airborne pollutant emissions that DOE has reported 

in past analyses, SO2 and NOx. The Clean Air Act Amendments of 1990 set an SO2 emissions 

cap on all power generation.3

 The attainment of this target, however, is flexible among 

generators through the use of emissions allowances and tradable permits. The NEMS-BT model 

includes a module for SO2 allowance trading and delivers a forecast of SO2 allowance prices. 

Accurate simulation of SO2 trading tends to imply that physical emissions effects will be zero, as 

long as emissions are at the ceiling. But to the extent reduced power generation demand 

decreases the demand for and price of emissions allowance permits, there is an environmentally 

related economic benefit from the proposed energy conservation standards reducing SO2 

emissions allowance demand. Furthermore, over time, if emissions decline, there is greater 

flexibility in reducing the ceiling amount. However, since DOE does not anticipate a change in 

SO2 emissions, DOE does not plant to report SO2 emission impacts. There is an SO2 benefit 

from conservation in the form of a lower allowance price but, since the impact of any one 

standard on the allowance price is likely small and highly uncertain, DOE does not plan to 

monetize the SO2 benefit. 

Nitrogen Oxides (NOx)

 Nitrogen oxides, or NOx, are the generic term for a group of highly reactive gases, all of 

which contain nitrogen and oxygen in varying amounts. Many of the nitrogen oxides are 

colorless and odorless. However, one common pollutant, nitrogen dioxide (NO2), along with 

particles in the air can often be seen as a reddish-brown layer over many urban areas. NO2 is the 

specific form of NOx reported in this document. NOx is one of the main ingredients involved in 

the formation of ground-level ozone, which can trigger serious respiratory problems. It can 

contribute to the formation of acid rain, and can impair visibility in areas such as national parks. 

NOx also contributes to the formation of fine particles that can impair human health. 

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combustion 

process. The primary manmade sources of NOx are motor vehicles, electric utilities, and other 

industrial, commercial, and residential sources that burn fossil fuels. NOx can also be formed 

naturally. Electric utilities account for about 22 percent of NOx emissions in the United States. 

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

The impact of these emissions, however, will be affected by the Clean Air Interstate Rule 

(CAIR), which the U.S. Environmental Protection Agency (EPA) issued under sections 110 and 

111 of the Clean Air Act (40 CFR Parts 51, 96, and 97) on May 12, 2005.4 CAIR will 

permanently cap emissions of SO2 and NOx in eastern states of the United States. CAIR 

achieves large reductions of SO2 and/or NOx emissions across 28 eastern states and the District 

of Columbia (DC). States must achieve the required emission reductions using one of two 

compliance options: 1) meet an emission budget for each regulated state by requiring power 

plants to participate in an EPA-administered interstate cap-and-trade system that caps emissions 

in two stages, or 2) meet an individual state emissions budget through measures of the state’s 

choosing. Phase 1 caps for NOx are to be in place in 2009. Phase 1 caps for SO2 are to be in 

place in 2010. The Phase 2 caps for both pollutants are due in 2015. 

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On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. 

Circuit) issued its decision in North Carolina v. Environmental Protection Agency, which 

vacated the CAIR issued by the U.S. Environmental Protection Agency on March 10, 2005.5 

But on December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is 

replaced by a rule consistent with the court’s earlier opinion. North Carolina v. Environmental 

Protection Agency, 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). 

The NEMS-BT version to be used by DOE to estimate NOx emission impacts includes 

the cap on NOx emissions as specified by CAIR. As with SO2 emissions, a cap on NOx 

emissions means that equipment efficiency standards may have no physical effect on these 

emissions in the 28 eastern states and DC. When NOx emissions are subject to emissions caps, 

DOE’s emissions reduction estimate corresponds to incremental changes in the prices of 

emissions allowances in cap-and-trade emissions markets rather than physical emissions 

reductions. Therefore, while the emissions cap may mean that physical emissions reductions 

will not result from standards in those states covered by CAIR, standards could produce an 

environmental-related economic benefit in the form of lower prices for emissions allowance 

credits. However, as with SO2 allowance prices, DOE does not plan to monetize this benefit 

because the impact on the NOx allowance price from any single energy conservation standard is 

likely small and highly uncertain. For those states not covered by CAIR, DOE intends to 

estimate the impact on NOx emissions using NEMS-BT. 

Mercury (Hg) 

Coal-fired power plants emit Hg found in coal during the burning process. While coalfired power plants are the largest remaining source of human-generated Hg emissions in the 

United States, they contribute very little to the global Hg pool or to contamination of U.S. 

waters. U.S. coal-fired power plants emit Hg in three different forms: oxidized Hg (likely to 

deposit within the United States); elemental Hg, which can travel thousands of miles before 

depositing to land and water; and Hg that is in particulate form. Atmospheric Hg is then 

deposited on land, lakes, rivers, and estuaries through rain, snow, and dry deposition. Once 

there, it can transform into methylmercury and accumulate in fish tissue through 

bioaccumulation. 

Americans are exposed to methylmercury primarily by eating contaminated fish. Because 

the developing fetus is the most sensitive to the toxic effects of methylmercury, women of 

childbearing age are regarded as the population of greatest concern. Children exposed to 

methylmercury before birth may be at increased risk of poor performance on neurobehavioral 

tasks, such as those measuring attention, fine motor function, language skills, visual-spatial 

abilities, and verbal memory. 

NEMS-BT has an algorithm for estimating these emissions from power generation. EPA 

issued on May 18, 2005 the final rule entitled “Standards of Performance for New and Existing 

Stationary Sources: Electric Steam Generating Units,” under sections 110 and 111 of the Clean 

Air Act (40 CFR Parts 60, 63, 72, and 75).6 This rule, also called the Clean Air Mercury Rule 

(CAMR), was closely related to the CAIR and established standards of performance for Hg 

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emissions from new and existing coal-fired electric utility steam generating units. The CAMR 

regulated Hg emissions from coal-fired power plants. But on February 8, 2008, the U.S. Court 

of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in State of New 

Jersey, et al. v. Environmental Protection Agency,

7

 in which the Court, among other actions, 

vacated the CAMR referenced above. EPA has recently decided to develop emissions standards 

for power plants under the Clean Air Act (Section 112), consistent with the D.C. Circuit’s 

opinion on the CAMR. Accordingly, on February 6, 2009, the Department of Justice, on behalf 

of EPA, asked the Supreme Court to dismiss EPA’s request (petition for certiorari) that the Court 

review the D.C. Circuit Court’s vacatur of the Clean Air Mercury Rule (CAMR). On February 

23, 2009, the Court also denied the Utility Air Regulatory Group’s request to review the U.S. 

Circuit Court of Appeals decision. 

The NEMS-BT version to be used by DOE to estimate Hg emission impacts does not cap 

Hg emissions and will not do so until the EPA issues a rule regarding Hg that is consistent with 

the Court’s decision. 

2.2 Economic Value of Emission Reductions 

In examining the impact of potential standards, DOE plans to assess potential monetary 

benefits from reduced emissions of CO2, NOx, Hg, and SO2 associated with this rulemaking. 

Carbon Dioxide (CO2) 

DOE plans on relying on a set of values developed by an interagency process that 

conducted a thorough review of existing estimates of the social cost of carbon (SCC). The SCC 

is intended to be a monetary measure of the incremental damage resulting from greenhouse gas 

(GHG) emissions, including, but not limited to, net agricultural productivity loss, human health 

effects, property damages from sea level rise, and changes in ecosystem services. Any effort to 

quantify and to monetize the harms associated with climate change will raise serious questions of 

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

monetization, the SCC can be used to provide estimates of the social benefits of reductions in 

GHG emissions. 

For at least three reasons, any single estimate of the SCC will be contestable. First, 

scientific and economic knowledge about the impacts of climate change continues to grow. With 

new and better information about relevant questions, including the cost, burdens, and possibility 

of adaptation, current estimates will inevitably change over time. Second, some of the likely and 

potential damages from climate change—for example, the value society places on adverse 

impacts on endangered species—are not included in all of the existing economic analyses. These 

omissions may mean that the best current estimates are too low. Third, controversial ethical 

judgments, including those involving the treatment of future generations, play a role in 

judgments about the SCC (see in particular the discussion of the discount rate, below). 

To date, regulations have used a range of values for the SCC. For example, a regulation 

proposed by the U.S. Department of Transportation (DOT) in 2008 assumed a value of $7 per 

ton CO2 (2006$) for 2011 emission reductions (with a range of $0–14 for sensitivity analysis). 

Regulation finalized by DOE used a range of $0–$20 (2007$). Both of these ranges were 

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designed to reflect the value of damages to the United States resulting from carbon emissions, or 

the “domestic” SCC. In the final Model Year 2011 Corporate Average Fuel Economy rule, DOT 

used both a domestic SCC value of $2/t CO2 and a global SCC value of $33/t CO2 (with 

sensitivity analysis at $80/tCO2), increasing at 2.4 percent per year thereafter. 

In recent months, a variety of agencies have worked to develop an objective methodology 

for selecting a range of interim SCC estimates to use in regulatory analyses until improved SCC 

estimates are developed. The following summary reflects the initial results of these efforts and 

proposes ranges and values for interim social costs of carbon used in this rule. It should be 

emphasized that the analysis described below is preliminary. These complex issues are of course 

undergoing a process of continuing review. Relevant agencies will be evaluating and seeking 

comment on all of the scientific, economic, and ethical issues before establishing final estimates 

for use in future rulemakings. 

The interim judgments resulting from the recent interagency review process can be 

summarized as follows: (a) DOE and other Federal agencies should consider the global benefits 

associated with the reductions of CO2 emissions resulting from efficiency standards and other 

similar rulemakings, rather continuing the previous focus on domestic benefits; (b) these global 

benefits should be based on SCC estimates (in 2007$) of $55, $33, $19, $10, and $5 per ton of 

CO2 equivalent emitted (or avoided) in 2007; (c) the SCC value of emissions that occur (or are 

avoided) in future years should be escalated using an annual growth rate of 3 percent from the 

current values); and (d) domestic benefits are estimated to be approximately 6 percent of the 

global values. These interim judgments are based on the following considerations. 

1.	 Global and domestic estimates of SCC. Because of the distinctive nature of the climate 

change problem, estimates of both global and domestic SCC values should be considered, 

but the global measure should be “primary.” This approach represents a departure from 

past practices, which relied, for the most part, on measures of only domestic impacts. As 

a matter of law, both global and domestic values are permissible; the relevant statutory 

provisions are ambiguous and allow the agency to choose either measure. (It is true that 

Federal statutes are presumed not to have extraterritorial effect, in part to ensure that the 

laws of the United States respect the interests of foreign sovereigns. But use of a global 

measure for the SCC does not give extraterritorial effect to Federal law and hence does 

not intrude on such interests.) 

It is true that under OMB guidance, analysis from the domestic perspective is required, 

while analysis from the international perspective is optional. The domestic decisions of 

one nation are not typically based on a judgment about the effects of those decisions on 

other nations. But the climate change problem is highly unusual in the sense that it 

involves (a) a global public good in which (b) the emissions of one nation may inflict 

significant damages on other nations and (c) the United States is actively engaged in 

promoting an international agreement to reduce worldwide emissions. 

In these circumstances, the global measure is preferred. Use of a global measure reflects 

the reality of the problem and is expected to contribute to the continuing efforts of the 

United States to ensure that emission reductions occur in many nations. 

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Domestic SCC values are also presented. The development of a domestic SCC is greatly 

complicated by the relatively few region- or country-specific estimates of the SCC in the 

literature. One potential estimate comes from the DICE (Dynamic Integrated Climate 

Economy, William Nordhaus) model. In an unpublished paper, Nordhaus (2007) 

produced disaggregated SCC estimates using a regional version of the DICE model. He 

reported a U.S. estimate of $1/tCO2 (2007 value, 2007$), which is roughly 11 percent of 

the global value. 

An alternative source of estimates comes from a recent EPA modeling effort using the 

FUND (Climate Framework for Uncertainty, Negotiation and Distribution, Center for 

Integrated Study of the Human Dimensions of Global Change) model. The resulting 

estimates suggest that the ratio of domestic to global benefits varies with key parameter 

assumptions. With a 3-percent discount rate, for example, the U.S. benefit is about 6 

percent of the global benefit for the “central” (mean) FUND results, while, for the 

corresponding “high” estimates associated with a higher climate sensitivity and lower 

global economic growth, the U.S. benefit is less than 4 percent of the global benefit. With 

a 2-percent discount rate, the U.S. share is about 2 to5 percent of the global estimate. 

Based on this available evidence, a domestic SCC value equal to 6 percent of the global 

damages is used in this rulemaking. This figure is in the middle of the range of available 

estimates from the literature. It is recognized that the 6 percent figure is approximate and 

highly speculative and alternative approaches will be explored before establishing final 

values for future rulemakings. 

2.	 Filtering existing analyses. There are numerous SCC estimates in the existing literature, 

and it is legitimate to make use of those estimates to produce a figure for current use. A 

reasonable starting point is provided by the meta-analysis in Richard Tol, “The Social 

Cost of Carbon: Trends, Outliers, and Catastrophes, Economics: The Open-Access, 

Open-Assessment E-Journal,” Vol. 2, 2008-25. http://www.economicsejournal.org/economics/journalarticles/2008-25 (2008). With that starting point, it is 

proposed to “filter” existing SCC estimates by using those that (1) are derived from peerreviewed studies; (2) do not weight the monetized damages to one country more than 

those in other countries; (3) use a “business as usual” climate scenario; and (4) are based 

on the most recent published version of each of the three major integrated assessment 

models (IAMs): FUND, DICE and PAGE (Policy Analysis of the Greenhouse Effect). 

Proposal (1) is based on the view that those studies that have been subject to peer review 

are more likely to be reliable than those that have not been. Proposal (2) is based on a 

principle of neutrality and simplicity; it does not treat the citizens of one nation 

differently on the basis of speculative or controversial considerations. Proposal (3) stems 

from the judgment that as a general rule, the proper way to assess a policy decision is by 

comparing the implementation of the policy against a counterfactual state where the 

policy is not implemented. A departure from this approach would be to consider a more 

dynamic setting in which other countries might implement policies to reduce GHG 

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EERE-2008-BT-STD-0012 COMMENT 20
emissions at an unknown future date, and the United States could choose to implement 

such a policy now or in the future. 

Proposal (4) is based on three complementary judgments. First, the FUND, PAGE, and 

DICE models now stand as the most comprehensive and reliable efforts to measure the 

damages from climate change. Second, the latest versions of the three IAMs are likely to 

reflect the most recent evidence and learning, and hence they are presumed to be superior 

to those that preceded them. It is acknowledged that earlier versions may contain 

information that is missing from the latest versions. Third, any effort to choose among 

them, or to reject one in favor of the others, would be difficult to defend at this time. In 

the absence of a clear reason to choose among them, it is reasonable to base the SCC on 

all of them. 

The agency is keenly aware that the current IAMs fail to include all relevant information 

about the likely impacts from greenhouse gas emissions. For example, ecosystem 

impacts, including species loss, do not appear to be included in at least two of the models. 

Some human health impacts, including increases in food-borne illnesses and in the 

quantity and toxicity of airborne allergens, also appear to be excluded. In addition, there 

has been considerable recent discussion of the risk of catastrophe and of how best to 

account for worst-case scenarios. It is not clear whether the three IAMs take adequate 

account of these potential effects. 

3.	 Use a model-weighted average of the estimates at each discount rate. At this time, there 

appears to be no scientifically valid reason to prefer any of the three major IAMs (FUND, 

PAGE, and DICE). Consequently, the estimates are based on an equal weighting of 

estimates from each of the models. Among estimates that remain after applying the filter, 

the average of all estimates within a model is derived. The estimated SCC is then 

calculated as the average of the three model-specific averages. This approach ensures that 

the interim estimate is not biased towards specific models or more prolific authors. 

4. Apply a 3-percent annual growth rate to the chosen SCC values. SCC is assumed to 

increase over time, because future emissions are expected to produce larger incremental 

damages as physical and economic systems become more stressed as the magnitude of 

climate change increases. Indeed, an implied growth rate in the SCC is produced by most 

studies that estimate economic damages caused by increased GHG emissions in future 

years. But neither the rate itself nor the information necessary to derive its implied value 

is commonly reported. In light of the limited amount of debate thus far about the 

appropriate growth rate of the SCC, applying a rate of 3 percent per year seems 

appropriate at this stage. This value is consistent with the range recommended by IPCC 

(2007) and close to the latest published estimate (Hope, 2008). 

For climate change, one of the most complex issues involves the appropriate discount 

rate. OMB’s current guidance offers a detailed discussion of the relevant issues and calls for 

discount rates of 3 percent and 7 percent. It also permits a sensitivity analysis with low rates for 

intergenerational problems. (“If your rule will have important intergenerational benefits or costs 

you might consider a further sensitivity analysis using a lower but positive discount rate in 

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EERE-2008-BT-STD-0012 COMMENT 20
addition to calculating net benefits using discount rates of 3 and 7 percent.”) The SCC is being 

developed within the general context of the current guidance. 

The choice of a discount rate, especially over long periods of time, raises highly 

contested and exceedingly difficult questions of science, economics, philosophy, and law. See, 

e.g., William Nordhaus, “The Challenge of Global Warming (2008); Nicholas Stern, The 

Economics of Climate Change” (2007); “Discounting and Intergenerational Equity” (Paul 

Portney and John Weyant, eds., 1999). Under imaginable assumptions, decisions based on costbenefit analysis with high discount rates might harm future generations—at least if investments 

are not made for the benefit of those generations. (See Robert Lind, “Analysis for 

Intergenerational Discounting,” id. at 173, 176–177.) At the same time, use of low discount rates 

for particular projects might itself harm future generations, by ensuring that resources are not 

used in a way that would greatly benefit them. In the context of climate change, questions of 

intergenerational equity are especially important. 

Reasonable arguments support the use of a 3-percent discount rate. First, that rate is 

among the two figures suggested by OMB guidance, and hence it fits with existing National 

policy. Second, it is standard to base the discount rate on the compensation that people receive 

for delaying consumption, and the 3-percent rate is close to the risk-free rate of return, proxied 

by the return on long term inflation-adjusted U.S. Treasury Bonds. (In the context of climate 

change, it is possible to object to this standard method for deriving the discount rate.) Although 

these rates are currently closer to 2.5 percent, the use of 3 percent provides an adjustment for the 

liquidity premium that is reflected in these bonds’ returns. 

At the same time, other arguments support use of a 5-percent discount rate. First, that rate 

can also be justified by reference to the level of compensation for delaying consumption, because 

it fits with market behavior with respect to individuals’ willingness to trade off consumption 

across periods as measured by the estimated post-tax average real returns to private investment 

(e.g., the S&P 500). In the climate setting, the 5-percent discount rate may be preferable to the 

riskless rate because it is based on risky investments and the return to projects to mitigate climate 

change is also risky. In contrast, the 3-percent riskless rate may be a more appropriate discount 

rate for projects where the return is known with a high degree of confidence (e.g., highway 

guardrails). 

Second, 5 percent, and not 3 percent, is roughly consistent with estimates implied by 

reasonable inputs to the theoretically derived Ramsey equation, which specifies the optimal time 

path for consumption. That equation specifies the optimal discount rate as the sum of two 

components. The first reflects the fact that consumption in the future is likely to be higher than 

consumption today (even accounting for climate impacts), so diminishing marginal utility 

implies that the same monetary damage will cause a smaller reduction of utility in the future. 

Standard estimates of this term from the economics literature are in the range of 3 to 5 percent. 

The second component reflects the possibility that a lower weight should be placed on utility in 

the future, to account for social impatience or extinction risk, which is specified by a pure rate of 

time preference (PRTP). A conventional estimate of the PRTP is 2 percent. (Some observers 

believe that a principle of intergenerational equity suggests that the PRTP should be close to 

zero.) It follows that discount rate of 5 percent is within the range of values which are able to be 

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EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

 

 

 

 

 

derived from the Ramsey equation, albeit at the low end of the range of estimates usually 

associated with Ramsey discounting. 

It is recognized that the arguments above—for use of market behavior and the Ramsey 

equation—face objections in the context of climate change, and of course there are alternative 

approaches. In light of climate change, it is possible that consumption in the future will not be 

higher than consumption today, and if so, the Ramsey equation will suggest a lower figure. Some 

people have suggested that a very low discount rate, below 3 percent, is justified in light of the 

ethical considerations calling for a principle of intergenerational neutrality. See Nicholas Stern, 

“The Economics of Climate Change” (2007); for contrary views, see William Nordhaus, The A 

Question of Balance (2008); Martin Weitzman, “Review of the Stern Review on the Economics 

of Climate Change." Journal of Economic Literature, 45(3): 703–724 (2007). Additionally, some 

analyses attempt to deal with uncertainty with respect to interest rates over time; a possible 

approach enabling the consideration of such uncertainties is discussed below. Richard Newell 

and William Pizer, “Discounting the Distant Future: How Much do Uncertain Rates Increase 

Valuations?” J. Environ. Econ. Manage. 46 (2003) 52-71. 

The application of the methodology outlined above yields estimates of the SCC that are 

reported in Table EA.1. These estimates are reported separately using 3-percent and 5-percent 

discount rates. The cells are empty in rows 10 and 11 because these studies did not report 

estimates of the SCC at a 3-percent discount rate. The model-weighted means are reported in the 

final or summary row; they are $33 per t CO2 at a 3-percent discount rate and $5 per t CO2 with a 

5-percent discount rate. 

Table EA.1 Global Social Cost of Carbon (SCC) Estimates ($/t CO2 in 2007 (2006$)), 

Based on 3% and 5% Discount Rates* 

Model Study Climate Scenario 3% 5% 

1 FUND Anthoff et al. 2009 FUND default 6 -1 

2 FUND Anthoff et al. 2009 SRES A1b 1 -1 

3 FUND Anthoff et al. 2009 SRES A2 9 -1 

4 FUND Link and Tol 2004 No THC 12 3 

5 FUND Link and Tol 2004 THC continues 12 2 

6 FUND Guo et al. 2006 Constant PRTP 5 -1 

7 FUND Guo et al. 2006 Gollier discount 1 14 0 

8 FUND Guo et al. 2006 Gollier discount 2 7 -1 

FUND Mean 8.25 0 

9 PAGE Wahba & Hope 2006 A2-scen 57 7 

10 PAGE Hope 2006 7 

11 DICE Nordhaus 2008 8 

Summary Model-weighted Mean 33 5 

*The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), 

Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or 

DICE and use business-as-usual climate scenarios. All values are based on the best available information from the 

underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates 

included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. 

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EERE-2008-BT-STD-0012 COMMENT 20
 

DOE has conducted analyses at $33 and $5 per ton as these represent the estimates 

associated with the 3 percent and 5 percent discount rates, respectively. The 3 percent and 5 

percent estimates have independent appeal and at this time a clear preference for one over the 

other is not warranted. Thus, DOE has also included—and centered its current attention on—the 

average of the estimates associated with these discount rates, which is $19. (Based on the $19 

global value, the domestic value would be $1.14 per ton of CO2 equivalent.) 

It is true that there is uncertainty about interest rates over long time horizons. 

Recognizing that point, Newell and Pizer have made a careful effort to adjust for that 

uncertainty. See Newell and Pizer, supra. This is a relatively recent contribution to the literature. 

There are several concerns with using this approach in this context. First, it would be a 

departure from current OMB guidance. Second, an approach that would average what emerges 

from discount rates of 3 percent and 5 percent reflects uncertainty about the discount rate, but 

based on a different model of uncertainty. The Newell-Pizer approach models discount rate 

uncertainty as something that evolves over time; in contrast, one alternative approach would 

assume that there is a single discount rate with equal probability of 3 percent and 5 percent. 

Table EA.2 reports on the application of the Newell-Pizer adjustments. The precise 

numbers depend on the assumptions about the data generating process that governs interest rates. 

Columns (1a) and (1b) assume that “random walk” model best describes the data and uses 3-

percent and 5-percent discount rates, respectively. Columns (2a) and (2b) repeat this, except that 

it assumes a “mean-reverting” process. As Newell and Pizer report, there is stronger empirical 

support for the random walk model. 

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Table EA.2 Global Social Cost of Carbon Estimates ($/t CO2 in 2007 in 2006$),* Using 

Newell & Pizer Adjustment for Future Discount Rate Uncertainty** 

Model Study Climate Scenario 

Random- walk 

model 

Mean-reverting 

model 

3% 5% 3% 5% 

(1a) (1b) (2a) (2b) 

1 FUND Anthoff et al. 2009 FUND default 10 0 7 -1 

2 FUND Anthoff et al. 2009 SRES A1b 2 0 1 -1 

3 FUND Anthoff et al. 2009 SRES A2 15 0 10 -1 

4 FUND Link and Tol 2004 No THC 20 6 13 4 

5 FUND Link and Tol 2004 THC continues 20 4 13 2 

6 FUND Guo et al. 2006 Constant PRTP 9 0 6 -1 

7 FUND Guo et al. 2006 Gollier discount 1 14 0 14 0 

8 FUND Guo et al. 2006 Gollier discount 2 7 -1 7 -1 

FUND Mean 12 1 9 0 

9 PAGE Wahba & Hope 2006 A2-scen 97 13 63 8 

10 PAGE Hope 2006 13 8 

11 DICE Nordhaus 2008 15 9 

Summary Model-weighted Mean 55 10 36 6 

*The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), 

Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or 

DICE and use business-as-usual climate scenarios. All values are based on the best available information from the 

underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates 

included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. 

**Assumes a starting discount rate of 3 percent. Newell and Pizer (2003) based adjustment factors are not applied to 

estimates from Guo et al. (2006) that use a different approach to account for discount rate uncertainty (rows 7-8). 

The resulting estimates of the social cost of carbon are necessarily greater. When the 

adjustments from the random walk model are applied, the estimates of the social cost of carbon 

are $10 and $55, with the 3 percent and 5 percent discount rates, respectively. The application of 

the mean-reverting adjustment yields estimates of $6 and $36. Since the random walk model has 

greater support from the data, DOE also conducted analyses with the value of the SCC set at $10 

and $55. 

In summary, DOE will consider in its decision process for the notice of proposed 

rulemaking the potential global benefits resulting from reduced CO2 emissions valued at $5, $10, 

$19, $30 and $55 per metric ton, and has also presented the domestic benefits derived using a 

value of $1.14 per metric ton. 

DOE is well aware that scientific and economic knowledge about the contribution of CO2 

and other GHG emissions to changes in the future global climate and the potential resulting 

damages to the world economy continues to evolve rapidly. Thus, any value placed in this 

rulemaking on reducing CO2 emissions is subject to likely change. 

DOE, together with other Federal agencies, is reviewing various methodologies for 

estimating the monetary value of reductions in CO2 and other GHG emissions. This review will 

consider the comments on this subject that are part of the public record for this and other 

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EERE-2008-BT-STD-0012 COMMENT 20
 

 

 

 

rulemakings, as well as other methodological assumptions and issues, such as whether the 

appropriate values should represent domestic U.S. benefits, as well as global benefits (and costs). 

Given the complexity of the many issues involved, this review is ongoing. 

Nitrogen Oxides (NOx) 

As discussed earlier, with respect to NOx the CAIR rule has been reinstated by the 

courts. Therefore, NOx emissions in those states covered by CAIR will be subject to a cap with 

corresponding annual allowances openly traded. DOE’s approach to NOx allowance price 

impacts are discussed below. 

For those states not covered by CAIR, DOE plans on estimating the monetized benefits 

of NOx emissions reductions in these states based on environmental damage estimates from the 

literature. Available estimates suggest a very wide range of monetary values for NOx emissions, 

ranging from $370 per ton to $3,800 per ton of NOx from stationary sources, measured in 2001$ 

or a range of $432 per ton to $4,441 per ton in 2007$.8 

Mercury (Hg) 

DOE plans on estimating the monetized benefits of Hg emissions reductions based on 

environmental damage estimates from the literature. DOE has determined that the basic science 

linking mercury emissions from power plants to impacts on humans is considered highly uncertain. 

However, DOE identified two estimates of the environmental damages of mercury based on two 

estimates of the adverse impact of childhood exposure to methyl mercury on IQ for American 

children, and subsequent loss of lifetime economic productivity resulting from these IQ losses. 

The high-end estimate is based on an estimate of the current aggregate cost of the loss of IQ in 

American children that results from exposure to mercury of U.S. power plant origin ($1.3 billion 

per year in 2000$), which translates to $32.6 million per ton emitted per year (2007$).9 The lowend estimate was $664,000 per ton emitted in 2004$ or $729,000 per ton in 2007$, which DOE 

derived from a published evaluation of mercury control using different methods and assumptions 

from the first study, but also based on the present value of the lifetime earnings of children 

exposed.10 b 

Sulfur Dioxide (SO2) and Nitrogen Oxides (NOx) Allowance Prices 

With regard to SO2 emissions, unlike the other pollutants to be considered in this 

analysis, these emissions have for some time been subject to a national cap with corresponding 

annual allowances openly traded; therefore, considerable market experience with these 

instruments has already been accumulated. It has been argued that imposition of any standard 

that lowers U.S. national electricity consumption creates beneficial downward pressure on the 

prices of these allowances, and this cost reduction benefit should be considered in any analysis of 

a proposed standard. While this assertion is fundamentally sound (i.e., reduced electricity 

demand should ceteris paribus bring about lower SO2 and NOx allowance prices) there are a 

myriad of complications impeding any meaningful quantification of any associated benefit. 

b

 The estimate was derived by back-calculating the annual benefits per ton from the net present value of benefits 

reported in the study. 

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EERE-2008-BT-STD-0012 COMMENT 20
While complexity of analysis alone clearly cannot justify disregarding a potential consequence of 

a standard, DOE additionally believes these benefits to be both volatile and de minimis when 

compared to the direct effects of a standard as estimated in this analysis. 

Some of the problems to be confronted in an allowance price effect forecast are: 

•	 Only any net lowering of the total allowance bill to generators free of transfers is the 

potential source of a benefit. Any such compliance cost saving would need to be 

accurately estimated, and this effect is no different from the benefit derived from a cost 

reduction for other inputs, such as fuel. When the SO2 allowance market that was created 

in 1995 under the Clean Air Act Amendments began, initial allowance allocations were 

directly granted to large affected units based on their historic (1985-87) use of fuel. For 

30 years, allowances for the following year are issued every spring at a declining rate to 

these entitled parties, and thereafter can be freely used, traded, or banked. Some 

additional allowances are allocated in diverse ways (e.g. as rewards to generators 

installing control equipment). In other words, the entitled generators holding emission 

rights are losers when the value of allowances declines, while the buyers of allowances 

are gainers. Before they are used, allowances may be traded many times at prices 

reflecting the marginal not average cost of compliance. 

•	 The trading system allows for allowance banking. Consequently, any observed change in 

a forecast year could represent the manifestation of market fundamentals but could 

similarly just indicate deposit or withdrawal of allowances. In general, used allowances 

have fallen short of the cap so emissions may exceed the specified cap for future years. 

•	 Control efforts could further reduce the SO2 cap for some jurisdictions, creating 

regulatory uncertainty that perturbs the allowance market. The issuance of the proposed 

and final CAIR rules were likely contributing factors to allowance price increases leading 

to a dramatic 2005 allowance price spike. While prices had already fallen far below their 

historic highs by the time CAIR was vacated in the summer of 2008, spot allowance 

prices nonetheless made a further precipitous drop following the D.C. Circuit Court 

ruling. 

•	 Because allowances can be traded freely by generators, brokers, and investors, they can 

serve as financial instruments, and, especially since 2003, allowance prices have been 

volatile. Between 2000, when a tightened Clean Air Amendment cap came into force, 

and 2007, allowances traded between a low of about $120/short ton in 2002 and a high of 

about $1600/short ton, with the 2005 spike being particularly dramatic.11 12 Since there is 

no reason to believe that these conditions will alter over the life of a proposed standard, 

the challenge of forecasting prices is much more complex than a simple supply-demand 

balance might suggest. Also, note that any quantification of the benefit likely depends on 

the level of prices as well as their net change. To believe that a simple delta in the prices 

could be used to estimate the benefit is to believe that the same numerical reduction in 

price would result from the standard whether the prevailing trading price were $100 or 

$1000 per short ton. 

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EERE-2008-BT-STD-0012 COMMENT 20
With regard to NOx emissions, CAIR has only recently been reinstated by the courts, 

therefore market instruments with regard to NOx are not known. But DOE is left to presume that 

the same problems that confront an SO2 allowance price effect forecast would also apply to a 

NOx allowance price effect forecast. 

As noted earlier, the forecasting tool to be used for this analysis is the AEO2009 version 

of NEMS-BT, which generates forecasts of both SO2 and NOx emissions and allowance prices. 

DOE intends to review the allowance price forecasts and the effect that refrigerator standards 

have on them. If this review suggests that the SO2 and NOx allowance price effects are both 

significant and estimable using NEMS-BT, it may be included in the environmental assessment 

for the notice of proposed rulemaking. 

3.0 RESULTS 

The results for the environmental assesssment are similar to a complete NEMS run, as 

published in the AEO2009. These include emissions for SO2, NOx, mercury, and CO2 in fiveyear forecasted increments, extrapolated to the year 2043. DOE will report the outcome of the 

analysis for each trial standard level as a deviation from the AEO2009 reference case results. 

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REFERENCES
 

1	 U.S. Department of Energy-Energy Information Administration. An Updated Annual Energy 

Outlook 2009 Reference Case Reflecting Provisions of the American Recovery and 

Reinvestment Act and Recent Changes in the Economic Outlook, April, 2009. Washington, 

DC. SR/OIAF/2009-03. 

<http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf> 

2 U.S. Environmental Protection Agency. Six Common Air Pollutants. Washington, DC. 

<http://www.epa.gov/air/urbanair/> 

3 U.S. Environmental Protection Agency. Clean Air Act. Washington, DC. 

<http://www.epa.gov/air/caa/> 

4	 U.S. Federal Register. Rule To Reduce Interstate Transport of Fine Particulate Matter and 

Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NOX 

SIP Call, Final Rule, May 12, 2005. 70 FR 25162. 

5	 U.S. Environmental Protection Agency. Clean Air Interstate Rule. 

<http://www.epa.gov/cleanairinterstaterule/> 

6	 U.S. Federal Register. Standards of Performance for New and Existing Stationary Sources: 

Electric Utility Steam Generating Units, Final Rule, May 18, 2005. 70 FR 28606. 

7	 U.S. Environmental Protection Agency. Clean Air Mercury Rule. 

<http://www.epa.gov/oar/mercuryrule/> 

8	 Office of Management and Budget, Office of Information and Regulatory Affairs, 2006 

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

Mandates on State, Local, and Tribal Entities, 2006. Washington, DC. 

<http://www.whitehouse.gov/omb/inforeg/2006_cb/2006_cb_final_report.pdf> 

9	 Trasande, L., C. Schechter, K.A. Haynes, and P.J. Landrigan, “Applying Cost Analyses to 

Drive Policy that Protects Children,” 1076 ANN. N.Y. ACAD. SCI. 911 (2006). 

10	 Ted Gayer and Robert Hahn, “Designing Environmental Policy: Lessons from the Regulation 

of Mercury Emissions,” Regulatory Analysis 05-01 (AEI-Brookings Joint Center For 

Regulatory Studies) p. 31 (2004). A version of this paper was published in the Journal of 

Regulatory Economics in 2006. 

11	 U.S. Environmental Protection Agency, Allowance Prices (1995-2004), SO2 Allowance Price 

Index. Washington, DC. <http://www.epa.gov/airmarkets/progress/alprices.html> 

12	 U.S. Environmental Protection Agency, Clean Air Markets – Data and Maps. Washington, 

DC. <http://camddataandmaps.epa.gov/gdm/> 

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REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY CONSERVATION 

STANDARDS FOR RESIDENTIAL REFRIGERATORS, REFRIGERATORFREEZERS, AND FREEZERS 

TABLE OF CONTENTS 

1.0 INTRODUCTION ...................................................................................................... RIA-1
 

2.0 METHODOLOGY ..................................................................................................... RIA-1 

LIST OF TABLES 

Table RA.1 Non-Regulatory Alternatives to Standards ......................................................... RA-1 

RIA-i 

EERE-2008-BT-STD-0012 COMMENT 20
REGULATORY IMPACT ANALYSIS FOR PROPOSED ENERGY CONSERVATION 

STANDARDS FOR RESIDENTIAL REFRIGERATORS, REFRIGERATORFREEZERS, AND FREEZERS 

1.0 INTRODUCTION 

Under the Process Rule (Procedures for Consideration of New or Revised Energy 

Conservation Standards for Consumer Products, 61 FR 36974 (July 15, 1996)), the Department 

of Energy (DOE) is committed to continually explore non-regulatory alternatives to standards. 

DOE will prepare a draft regulatory impact analysis pursuant to E.O. 12866, “Regulatory 

Planning and Review,” which will be subject to review under the Executive Order by the Office 

of Management and Budget’s Office of Information and Regulatory Affairs. 58 FR 51735. 

DOE has identified six major alternatives to standards as representing feasible policy options to 

achieve customer product energy efficiency. It will evaluate each alternative in terms of its 

ability to achieve significant energy savings at a reasonable cost, and will compare the 

effectiveness of each one to the effectiveness of the proposed standards rule. 

The non-regulatory means of achieving energy savings that DOE proposes to analyze are 

listed in Table RA.1. The technical support document (TSD) in support of DOE’s notice of 

proposed rulemaking will include a complete quantitative analysis of each alternative, the 

methodology for which is discussed briefly below. 

Table RA.1 Non-Regulatory Alternatives to Standards 

No new regulatory action 

Consumer tax credits 

Manufacturer tax credits 

Performance Standards 

Rebates 

Voluntary energy efficiency targets 

Early replacement 

Bulk government purchases 

2.0 METHODOLOGY 

DOE will use the National Impact Analysis (NIA) Spreadsheet Models for each of the 

four appliance products to calculate the national energy savings and the net present value (NPV) 

corresponding to each alternative to the proposed standards. The NIA Spreadsheet Models for 

residential refrigerators, refrigerator-freezers, and freezers are discussed in Chapter 10 of the 

preliminary TSD. To compare each alternative quantitatively to the proposed conservation 

standards, DOE will need to quantify the effect of each alternative on the purchase and use of 

energy efficient residential dishwashers, dehumidifiers, and cooking products, and commercial 

clothes washers. Once it has quantified each alternative, DOE will make the appropriate 

RIA-1
 

EERE-2008-BT-STD-0012 COMMENT 20
revisions to the inputs in the NIA Spreadsheet Models. Key inputs that DOE may revise in these 

models are: 

•	 Energy prices and escalation factors; 

•	 Implicit market discount rates for trading off purchase price against operating 

expense when choosing equipment efficiency; 

•	 Consumer purchase price, operating cost, and income elasticities; 

•	 Consumer price-versus-efficiency relationships; and 

•	 Equipment stock data (purchase of new equipment or turnover rates for inventories). 

The key measures of the impact of each alternative will be: 

•	 energy use (in exajoules, or 1018 joules): Cumulative energy use of the equipment 

from the effective date of the new standard to the year 2042. DOE will report 

electricity consumption as primary energy. 

•	 National energy savings: Cumulative national energy use from the base case 

projection minus the alternative policy case projection. 

•	 Net present value: The value of future operating cost savings from equipment bought 

in the period from the effective date of the new standard (2012) to the year 2042. 

DOE will calculate the NPV as the difference between the present value of equipment 

and operating expenditures (including energy) in the base case, and the present value 

of expenditures in each alternative policy case. DOE will discount future operating 

and equipment expenditures to 2009 using a seven-percent and three-percent real 

discount rate. It will calculate operating expenses (including energy costs) for the life 

of the equipment. 

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EERE-2008-BT-STD-0012 COMMENT 20