2-i

CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM INTERESTED 

PARTIES, AND DOE RESPONSES

TABLE OF CONTENTS

2.1 INTRODUCTION ........................................................................................................... 2-1

2.2 MARKET AND TECHNOLOGY ASSESSMENT........................................................ 2-5

2.2.1 Market Assessment .......................................................................................................... 2-5

2.2.1.1 Definition and Scope of Coverage................................................................. 2-5

2.2.1.2 Product Classes.............................................................................................. 2-9

2.2.1.3 Test Procedure ............................................................................................. 2-10

2.2.2 Technology Assessment................................................................................................. 2-12

2.3 SCREENING ANALYSIS ............................................................................................ 2-12

2.4 ENGINEERING ANALYSIS........................................................................................ 2-12

2.5 MARKUPS ANALYSIS ............................................................................................... 2-14

2.6 ENERGY USE ANALYSIS.......................................................................................... 2-14

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ................................... 2-17

2.8 SHIPMENTS ANALYSIS ............................................................................................ 2-18

2.9 NATIONAL IMPACT ANALYSIS.............................................................................. 2-19

2.9.1 National Energy Savings................................................................................................ 2-20

2.9.2 Net Present Value of Consumer Benefits ...................................................................... 2-20

2.10 CONSUMER SUBGROUP ANALYSIS ...................................................................... 2-20

2.11 MANUFACTURER IMPACT ANALYSIS.................................................................. 2-21

2.12 EMISSIONS ANALYSIS.............................................................................................. 2-21

2.13 MONETIZING REDUCED CO2 AND OTHER EMISSIONS .................................... 2-24

2.14 UTILITY IMPACT ANALYSIS................................................................................... 2-25

2.15 EMPLOYMENT IMPACT ANALYSIS....................................................................... 2-25

2.16 REGULATORY IMPACT ANALYSIS ....................................................................... 2-26

REFERENCES .......................................................................................................................... 2-27

LIST OF FIGURES

Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process......................................... 2-2
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CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM INTERESTED 

PARTIES, AND DOE RESPONSES

2.1 Introduction

Section 6295(o)(2)(A) of the Energy Policy and Conservation Act (EPCA), Pub. L. 94-

163, 42 U.S.C. 6291 et seq. requires the U.S. Department of Energy (DOE) to establish energy 

conservation standards that achieve the maximum improvement in energy efficiency of 

consumer products that is technologically feasible and economically justified. This chapter 

describes the general analytical framework that DOE uses in developing such standards, and in 

particular, energy conservation standards for portable air conditioners (ACs). The analytical 

framework is a description of the methodology, the analytical tools, and the relationships among 

the various analyses that are part of this rulemaking. The methodology that addresses the 

statutory requirement for economic justification, for example, includes analyses of life-cycle 

cost; economic impact on manufacturers and users; national benefits; effects, if any, on utility 

companies; and impacts from any lessening in competition among manufacturers.

Figure 2.1.1 summarizes the analytical components of the standards-setting process. The 

focus of this figure is the center column, identified as “Analyses.” The column labeled “Key 

Inputs” lists the types of data and information required for each analysis. Some key inputs come 

from public databases; DOE collects other inputs from interested parties or other knowledgeable 

experts within the field. The column labeled “Key Outputs” shows analytical results that feed 

directly into the standards-setting process. The figure shows how the analyses fit into the 

rulemaking process and how they relate to one another. Arrows connecting analyses show the 

types of information that feed from one analysis to another.
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Figure 2.1.1 Flow Diagram of Analyses for the Rulemaking Process
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The analyses performed as part of the preliminary analysis stage and reported in this 

preliminary technical support document (TSD) are listed below.

 A market and technology assessment to characterize the relevant product markets and 

existing technology options, including prototype designs.

 A screening analysis to review each technology option and determine if it is 

technologically feasible; is practical to manufacture, install, and service; would adversely 

affect product utility or product availability; or would have adverse impacts on health and 

safety.

 An engineering analysis to develop cost-efficiency relationships that show the 

manufacturer’s cost of achieving increased efficiency. 

 An analysis of markups for determining product price; markups throughout the 

distribution channel relate the manufacturer production cost to the retail cost paid by the 

consumer.

 An energy use analysis to determine the annual energy use of the considered product for 

a representative set of users.

 A life-cycle cost (LCC) and payback period (PBP) analysis to calculate the savings in 

operating costs the consumer will realize throughout the life of the covered product 

compared to any increase in installed product cost likely to result directly from 

imposition of a standard.

 A shipments analysis to forecast product shipments, which then are used to calculate the 

national impacts of potential standards on energy consumption, net present value (NPV), 

and future manufacturer cash flows.

 A national impact analysis (NIA) to assess the aggregate impacts, at the national level, of 

potential energy conservation standards for the considered product, as measured by the 

NPV of total consumer economic impacts and the national energy savings (NES).

 A preliminary manufacturer impact analysis (MIA) to assess the potential impacts of 

energy conservation standards on manufacturers, such as impacts on capital conversion 

expenditures, marketing costs, shipments, and research and development costs.

The analyses DOE will perform in any subsequent notice of proposed rulemaking 

(NOPR) stage include those listed below. In addition, DOE will revise the analyses it performed 

in the preliminary analysis stage based on comments and new information received on topics 

including, but not limited, to those listed below.

 An LCC subgroup analysis to evaluate variations in customer characteristics that might 

cause a standard to affect particular consumer sub-populations, such as low-income 

households, differently than the overall population.

 An MIA to estimate the financial impact of standards on manufacturers and to calculate 

impacts on competition, employment, and manufacturing capacity.

 A utility impact analysis to estimate the effects of proposed standards on electric and gas 

utilities.

 An employment impact analysis to assess the aggregate impacts of amended energy 

conservation standards on national employment.
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 An environmental impact analysis to provide estimates of the effects of amended energy 

conservation standards on emissions of carbon dioxide (CO2), sulfur dioxide (SO2), 

nitrogen oxides (NOx), and mercury (Hg).

 A regulatory impact analysis to present major alternatives to proposed amended energy 

conservation standards that could achieve substantially the same regulatory goal at a 

lower cost.

For each rulemaking, DOE typically first develops a framework document that describes 

the approaches and methods DOE will use in evaluating the need for new or amended standards; 

however, portable ACs are not currently covered products under EPCA. For this rulemaking, 

DOE began the process by publishing a notice of proposed determination (NOPD) in the Federal 

Register on July 5, 2013 (hereinafter the “July 2013 NOPD”), which included DOE’s tentative 

determination that portable ACs fulfill the criteria for being added as a covered product pursuant 

to 42 U.S.C. 6292(b)(1). 78 FR 40403, 40404. The July 2013 NOPD is available at 

http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0033-0001.

In response to the publication of the July 2013 NOPD, DOE received comments from 

interested parties regarding DOE’s tentative determination that portable ACs meet the criteria for 

being considered a covered product. Additionally, interested parties commented on potential 

issues DOE should address in developing any test procedures or energy conservation standards 

for portable ACs. In the preliminary analysis, DOE: (1) summarizes the key comments received 

from interested parties and describes DOE’s responses to those comments; and (2) explains in 

further detail each of the issues for which DOE seeks public comment in the executive summary.

This preliminary TSD contains details of the preliminary analyses conducted for portable ACs.
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2.2 Market and Technology Assessment

The market and technology assessment characterizes the relevant product markets and 

existing technology options, including working prototype designs, for the considered products.

2.2.1 Market Assessment

When DOE begins an energy conservation standards rulemaking, it develops information 

that provides an overall picture of the market for the products considered, including the nature of 

the products, the industry structure, and market characteristics for the products. This activity 

consists of both quantitative and qualitative efforts based primarily on publicly available 

information. The subjects addressed in the market assessment for portable ACs included 

manufacturers, trade associations, and the quantities and types of products sold and offered for 

sale. DOE examined both large and small and foreign and domestic manufacturers. Finally, DOE 

reviewed other energy efficiency programs from utilities, individual States, and other 

organizations.

DOE reviewed relevant literature and interviewed manufacturers to develop an overall 

picture of the portable AC industry in the United States. Industry publications and trade journals, 

government agencies, and trade organizations provided the bulk of the information, including (1) 

manufacturers and their market shares; (2) shipments by product type; (3) detailed product 

information; and (4) industry trends. The analysis developed as part of the market and 

technology assessment is described in chapter 3 of the preliminary TSD.

2.2.1.1 Definition and Scope of Coverage

In the July 2013 NOPD, DOE presented discussion (1) explaining why classifying 

portable ACs as covered products is necessary and appropriate to carry out the purposes of 

EPCA, and (2) describing the estimate that the average annual per-household energy use by 

portable ACs is likely to exceed 100 kilowatt-hours (kWh) per year. 78 FR 40403, 40404–05 

(Jul. 5, 2013).

In response to the July 2013 NOPD, interested parties commented on DOE’s preliminary 

determination that portable ACs fulfill the requirements for covered products under EPCA. The 

Association of Home Appliance Manufacturers (AHAM); Pacific Gas and Electric Company, 

Southern California Gas Company, San Diego Gas and Electric, and Southern California Edison 

(hereinafter referred to as the “California Investor-Owned Utilities (IOUs)”); and the American 

Council for an Energy-Efficient Economy (ACEEE), Natural Resources Defense Council 

(NRDC), Appliance Standards Awareness Project (ASAP), Alliance to Save Energy (ASE), 

Consumer Federation of America (CFA), Consumers Union (CU), National Consumer Law 

Center (NCLC), Northwest Energy Efficiency Alliance (NEEA), and Northwest Power and 

Conservation Council (NPCC), (hereinafter referred to as the “Joint Commenters”) all 

commented in support of DOE’s proposed determination that portable ACs are a covered product 
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under EPCA. (AHAM, NOPD No. 6 at p. 1a; California IOUs, NOPD No. 5 at p. 1; Joint 

Commenters, NOPD No. 4 at p. 2) Edison Electric Institute (EEI) stated that it did not object to 

DOE’s proposed determination. However, EEI also commented that it is not clear if the 

aggregate annual energy consumption of portable ACs exceeds 4.2 terawatt-hours (TWh), which 

according to EEI is required under EPCA. Additionally, EEI commented that DOE did not 

address energy labeling in the proposed determination, and that if portable ACs were tested and 

labeled in the same manner as for a room AC, consumers could compare estimated energy costs 

and usage, encouraging manufacturers to produce portable ACs that are as efficient as room 

ACs. (EEI, NOPD No. 3 at pp. 2–3, 5)

DOE notes that the 4.2 TWh aggregate energy consumption threshold and the assessment 

of whether labeling would be sufficient to achieve the maximum energy efficiency that is 

technologically feasible and economically justified are requirements that must be met in order 

for DOE to prescribe an energy conservation standard for a particular product. (42 U.S.C. 

6295(l)(1)) However, for a product to be classified as a covered product, DOE must determine 

only that: (1) classifying the product as a covered product is necessary for the purposes of EPCA; 

and (2) the average annual per-household energy use by products of such type is likely to exceed 

100 kWh per year. (42 U.S.C. 6292(b)(1))

Because interested parties generally supported DOE’s proposed determination in the July 

2013 NOPD, DOE has continued its analysis of portable ACs in this preliminary analysis and in 

a separate rulemaking in support of developing test procedures for these products. In support of 

the test procedure rulemaking, DOE published a notice of data availability (NODA) in the 

Federal Register on May 9, 2014 (hereinafter the “May 2014 NODA,” 79 FR 26639) and issued 

a notice of proposed rulemaking (NOPR) on February 12, 2015 (hereinafter the “February 2015

Test Procedure NOPR”).

b

Because portable ACs are not currently considered covered products under EPCA, there 

is no regulatory definition for these products. In the July 2013 NOPD, DOE proposed a 

definition for portable ACs to be added in the Code of Federal Regulations to clarify coverage of 

any potential test procedure or energy conservation standards for these products. DOE proposed 

defining a portable AC as “a consumer product, other than a ‘packaged terminal air conditioner,’ 

which is powered by a single phase electric current and which is an encased assembly designed 

as a portable unit that may rest on the floor or other elevated surface for the purpose of providing 

delivery of conditioned air to an enclosed space. It includes a prime source of refrigeration and 

may include a means for ventilating and heating.” DOE also noted that this proposed definition is 

 

a A notation in the form “AHAM, NOPD No. 6 at p. 1” identifies a written comment: (1) made by AHAM; (2) 

recorded in document number 6 that is filed in the docket of the rulemaking for determination of coverage of 

portable ACs as a covered consumer product (Docket No. EERE–2013– BT–STD–0033) and available for review at 

www.regulations.gov; and (3) which appears on page 1 of document number 6.

b The test procedure is available at: 

http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/79.
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mutually exclusive to the definition for a room AC, which is “designed as a unit for mounting in 

a window or through the wall.” 79 FR 40403, 40404 (Jul. 5, 2013).

In response to the July 2013 NOPD, interested parties commented on the scope of 

coverage under the proposed portable AC definition. AHAM supported the scope of coverage 

based on the proposed definition, and suggested that DOE indicate that the definition covers spot 

coolers, single-duct, and dual-duct portable ACs. (AHAM, NOPD No. 6 at p. 2) The California 

IOUs and EEI stated that the requirement in the definition to be powered by a single-phase 

electric current may exclude some equipment designed for commercial applications. The 

California IOUs encouraged DOE to consider a large range of portable ACs, both residential and 

commercial, to ensure that all potential savings are examined and analyzed. In particular, the 

California IOUs recommended that DOE consider covering portable ACs with capacities above 

14,000 British thermal units per hour (Btu/h) because there are units currently on the market with 

cooling capacities up to and above 65,000 Btu/h. (California IOUs, NOPD No. 5 at pp. 1–2; EEI, 

NOPD No. 3 at p. 5) EEI also commented that DOE should consider revising the definition of 

“portable air conditioner” to ensure that three-phase electrical current units are covered, and to 

better reflect products that currently are on the market with and without heating capability. (EEI, 

NOPD No. 3 at p. 5)

Oceanaire, Inc. (Oceanaire) commented in response to the May 2014 NODA, which 

referenced the portable AC definition included in the July 2013 NOPD, that according to the 

EPCA definition, commercial spot coolers (portable ACs that do not have ducting attached to the 

condenser) are not covered products. According to Oceanaire, commercial spot coolers are 

mainly used in the rental market where emergencies create a need for immediate and focused 

cooling systems, with example applications including food and cosmetics processing plants, 

outdoor entertainment venues, and steel processing factories. Oceanaire noted that the cooling 

capacity of these rental units range between 1 and 5 tons (12,000 to 60,000 Btu/h), where actual 

performance is determined by a wide range of operating environments which may include high

temperature, high humidity, and corrosive conditions that are not experienced in household 

applications. Further, Oceanaire noted that its commercial product construction is robust, 

comprising mainly 18 gauge and thicker steel cabinetry and support structures. (Oceanaire, 

NODA No. 2 at pp. 1–2

c

)

Portable ACs, most commonly in single-duct and dual-duct configurations, typically 

range in cooling capacity from 5,000 to 14,000 Btu/h when measured according to existing 

industry test methods. Spot coolers, portable ACs with no ducting attached to the condenser air 

stream, are typically intended for larger spaces and harsher applications, and most have a cooling 

capacity greater than 14,000 Btu/h.

 

c A notation in the form “Oceanaire, NODA No. 2 at pp. 1–2” identifies a written comment: (1) made by Oceanaire, 

Inc. (Oceanaire); (2) recorded in document number 2 that is filed in the docket of the portable AC test procedure 

rulemaking (Docket No. EERE–2014– BT–TP–0014) and available for review at www.regulations.gov; and (3) 

which appears on pages 1–2 of document number 2.
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As discussed in the February 2015 Test Procedure NOPR, the proposed portable AC test 

procedure does not include measures of spot cooler performance. Therefore, DOE conducted this 

preliminary analysis only on single-duct and dual-duct portable ACs.

DOE also recognizes that certain portable ACs include options for operating as a 

dehumidifier and/or heater, with heating means provided by either an electric resistance heater or 

by modifying internal refrigerant flow to operate the unit as a heat pump. The dehumidification 

function may be achieved in some units by removing the condenser duct(s), and for certain units, 

disabling the self-evaporative feature by draining the condensate before it reaches the condenser 

coils or deactivating the condensate slinger fan when the controls are set to dehumidification 

mode. In all of these cases, the air flow pattern and psychrometrics differ fundamentally from 

those of a dehumidifier, resulting in different energy efficiencies, even though both products may 

use a refrigeration system to remove moisture from the air.

DOE also recognizes that although room ACs and portable ACs share many of the same 

components that operate similarly to provide cooled air to a conditioned space, a portable AC, 

unlike a room AC, may be entirely located within the conditioned space so that some or all of the 

condenser air may be drawn from that space, and heat from the refrigeration system and ducting 

is transferred to the conditioned space as well. These differences lead to differing energy 

efficiencies between room ACs and portable ACs, even if the products were to incorporate the 

same components. In addition, operation of the portable AC without activation of the 

refrigeration system may be more accurately characterized as “air circulation” rather than 

“ventilation”, because the portable AC may be operated without drawing air from outside the 

conditioned space. Thus, DOE proposed in the February 2015 Test Procedure NOPR to clarify in 

the definition of “portable air conditioner” that the primary function of the product is to provide 

cooled conditioned air to the space in addition to other functions such as air circulation or 

heating, and that it is a product other than a room AC or dehumidifier. In sum, DOE proposed in 

the February 2015 Test Procedure NOPR to add to 10 CFR 430.2 the following definition for 

“portable air conditioner” that clarifies the scope of products and aligns with the definitions for 

dehumidifiers and room ACs:

An encased assembly, other than a “packaged terminal air conditioner,” “room air 

conditioner,” or “dehumidifier,” designed as a portable unit for delivering cooled, conditioned air 

to an enclosed space, that is powered by single-phase electric current, which may rest on the 

floor or other elevated surface. It includes a source of refrigeration and may include additional 

means for air circulation and heating.

DOE conducted this preliminary analysis according to this proposed definition of 

portable AC and excluded spot coolers from consideration as discussed above. However, DOE 

will consider comments and information received from interested parties on the revised portable 

AC definition proposed in the February 2015 Test Procedure NOPR, and expects to establish the 

final definition in a future determination of coverage.

In response to the July 2013 NOPD, EEI also commented that unvented gas space heaters 

are a competing product to portable ACs with heating mode. EEI stated that DOE should add 
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unvented gas space heaters as a covered product to be market neutral. (EEI, NOPD No. 3 at p. 6) 

DOE evaluates products to determine whether they meet the EPCA requirements for being 

considered a covered product. Any such determination for unvented gas space heaters would be 

the subject of a separate rulemaking for those products.

2.2.1.2 Product Classes

When evaluating and establishing energy conservation standards, DOE generally divides 

covered products into product classes by the type of energy used or by capacity or other 

performance-related features that affect efficiency. Different energy conservation standards may 

apply to different product classes. (42 U.S.C. 6295(q)) 

In response to the July 2013 NOPD, the Joint Commenters commented that any potential 

energy conservation standards should not differentiate between single-duct and dual-duct units 

because both provide the same utility to consumers. (Joint Commenters, NOPD No. 4 at p. 2)

For this preliminary analysis, DOE considered whether it should separate portable ACs 

into separate product classes based on two characteristics: duct configuration and capacity. 

Portable ACs are typically available with three types of duct configurations that affect 

product performance: single-duct, dual-duct, and spot cooler. As mentioned previously, DOE did 

not consider spot coolers for this preliminary analysis. Single-duct units draw all of the 

condenser inlet air directly from the conditioned space without the means of a duct, and 

discharge the hot condenser outlet air to the unconditioned space through a duct. Dual-duct units 

draw some or all of the condenser inlet air from the unconditioned space through a duct, and may 

draw additional condenser inlet air directly from the conditioned space. The condenser outlet air 

is discharged to the unconditioned space by means of a separate duct. Single-duct units typically 

create more net negative pressure within the conditioned space than dual-duct units, leading to

more infiltration airflow from outside the conditioned space. This typically leads to lower singleduct unit efficiencies than for comparable dual-duct units when measured according to the 

method proposed in the February 2015 Test Procedure NOPR. 

DOE evaluated whether there is any consumer utility associated with the different duct 

configurations. DOE considered whether all installation locations would be able to accommodate 

both single-duct and dual-duct units. Based on manufacturer feedback and a review of the market 

and the range of possible window connections, DOE is not aware of any installation location that 

would preclude the use of either duct configuration. DOE also investigated whether duct 

configuration may affect noise performance of a portable AC. Based on a review of published 

noise data, DOE did not find a correlation between noise levels and duct configuration. Although 

duct configuration impacts unit performance, DOE tentatively concludes that duct configuration 

does not require separate product classes because it is not aware of any unique consumer utility 

associated with either configuration.

Additionally, portable AC efficiencies are a function of product capacity. Higher-capacity 

units typically achieve a higher cooling energy efficiency ratio (EERcm) than lower-capacity 
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units when measured according to the method proposed in the February 2015 Test Procedure 

NOPR. DOE observed from its test data that this relationship between efficiency and capacity is 

consistent across the range of measured capacities for products that implement the same 

technologies. DOE did not identify any inherent differences in efficiency for different ranges of 

capacity that would produce a different efficiency-capacity relationship. Therefore, DOE is not 

proposing separate portable AC product classes based on capacity. Instead, DOE is proposing 

equations to relate efficiency to capacity.

As a result, DOE did not separate portable ACs into any additional product classes for 

this preliminary analysis.

2.2.1.3 Test Procedure

The market assessment also typically provides information on DOE’s test procedure for 

measuring the efficiency or energy consumption of the product being analyzed. DOE does not 

currently specify a test procedure for portable ACs, but is developing such a test procedure in a 

separate rulemaking.

In response to the July 13 NOPD, DOE received multiple comments from interested 

parties describing issues DOE should consider in the development of a portable AC test 

procedure.

AHAM commented that a DOE rulemaking to develop a test procedure for portable ACs 

would eliminate the issue of inconsistent manufacturer rating and reporting. (AHAM, NOPD No. 

6 at p. 3). AHAM also commented that the Canadian Standards Association (CSA) has a test 

procedure that could be incorporated by reference, and that American National Standards 

Institute (ANSI)/AHAM PAC-1-2009 “Portable Air Conditioners”d(ANSI/AHAM PAC-1-2009)

is almost identical to that procedure. AHAM stated that it was nearing completion of an updated 

version of PAC-1, which would be fully harmonized with the CSA test procedure. AHAM 

further suggested that DOE work with Natural Resources Canada (NRCan) and CSA to ensure 

harmonization between the U.S. and Canadian test procedures because the market for appliances, 

including portable ACs, is integrated in North America. (AHAM, NOPD No. 6 at pp. 2–4)

The California IOUs commented that establishing a test procedure as a part of a standards 

rulemaking process would ensure that representations of energy use for the product would better 

reflect actual usage and be more meaningful for consumers making purchasing decisions. 

(California IOUs, NOPD No. 5 at p. 3)

The Joint Commenters commented that any DOE test procedure for portable ACs must 

be based on net capacity, with realistic reductions for the heat of compression dissipated by the 

indoor-mounted compressor. (Joint Commenters, NOPD No. 4 at p. 2) The Joint Commenters 

and Consumer Reports urged DOE to develop a portable AC test procedure that is comparable to 

 

d ANSI/AHAM test procedures are available for purchase online at: www.aham.org. 
2-11

the room AC test procedure to allow consumers to make comparisons between the two products 

that serve similar functions. (Consumer Reports, NOPD No. 2 at p. 2; Joint Commenters, NOPD 

No. 4 at p. 2)

DOE is conducting a separate rulemaking to develop a portable AC test procedure, in 

which it addresses these comments and other issues related to portable AC testing. DOE initiated

the test procedure rulemaking by publishing the May 2014 NODA to request feedback on 

potential testing options. 79 FR 26639. In the May 2014 NODA, DOE presented data from 

investigative testing according to ANSI/AHAM PAC-1-2009 and ANSI/ American Society of 

Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 16-1983 (RA 99), 

“Method of Testing for Rating Room Air Conditioners and Packaged Terminal Air 

Conditioners” (ANSI/ASHRAE Standard 16-1983e), with certain modifications to allow testing 

of portable ACs. DOE also presented an alternate test approach, in which testing would be 

conducted according to ANSI/AHAM PAC-1-2009, but the calculations for cooling capacity and 

EERcm would account for the heating effect of infiltration air and heat lost through the case and 

ducts to the conditioned space.

In response to the May 2014 NODA, the California IOUs commented that the outputs of 

any DOE test procedure for portable ACs should include the airflow delivered, total capacity, 

sensible capacity, and latent capacity. The California IOUs stated that in the dry regions of the 

country, customers need sensible capacity while in humid regions customers need latent 

capacity, and that reporting and displaying all this information will help inform consumers in the 

selection of the equipment for their humidity conditions. (California IOUs, NODA No. 5 at p. 3) 

DOE notes that while these parameters may be calculated as intermediate steps in determining 

the test unit’s cooling capacity and EERcm, EPCA defines a performance-based energy 

conservation standard for products that do not consume water as one which prescribes a 

minimum level of energy efficiency or a maximum quantity of energy use. (42 U.S.C. 

6291(6)(a)) Thus, DOE cannot establish energy conservation standards for portable ACs based 

on multiple metrics. However, DOE could specify that this granular data be reported by the 

manufacturer under the certification, compliance, and enforcement requirements of 10 CFR part 

429. DOE also notes that labeling of energy performance falls under the scope of the Federal 

Trade Commission’s (FTC) regulations.

Based on feedback received in response to the May 2014 NODA and further investigative 

testing, DOE proposed a test procedure for portable ACs in the February 2015 Test Procedure 

NOPR. The proposed test procedure is consistent with the alternate approach in the May 2014 

NODA; however the February 2015 Test Procedure NOPR references the recently updated 

version of the PAC-1 standard, AHAM PAC-1-2014 “Portable Air Conditioners” (AHAM PAC1-2014). The 2014 version of the standard includes minor revisions to the indoor and outdoor 

conditions from the 2009 version to fully harmonize with CSA’s test procedure. After careful 

 

e ANSI/ASHRAE test procedures are available for purchase online at: www.techstreet.com.
2-12

review of both versions of PAC-1, DOE does not expect the revisions to that test procedure to 

have a significant impact on test results.

For this preliminary analysis, DOE used the procedure proposed in the February 2015

Test Procedure NOPR to characterize portable AC performance.

2.2.2 Technology Assessment

DOE typically uses information relating to existing and past technology options and 

working prototype designs as inputs to determine what technologies manufacturers may use to 

attain higher performance levels. In consultation with interested parties, DOE develops a list of 

technologies for consideration. Initially, these technologies encompass all those it believes are 

technologically feasible.

DOE developed its list of technologically feasible design options for portable ACs

through consultation with manufacturers, and from trade publications and technical papers. 

Because many options for improving product efficiency are available in existing units, product 

literature and direct examination provided additional information.

Chapter 3 of the preliminary TSD includes the detailed list of all technology options 

identified for potential efficiency improvements in portable ACs.

2.3 Screening Analysis

The screening analysis examines various technologies as to whether they: (1) are 

technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an 

adverse impact on product utility or availability; and (4) have adverse impacts on health and 

safety. DOE developed an initial list of efficiency-enhancement options from the technologies 

identified as technologically feasible in the technology assessment. Then DOE, in consultation 

with interested parties, reviewed the list to determine if these options are practicable to 

manufacture, install, and service, would adversely affect product utility or availability, or would 

have adverse impacts on health and safety. In the engineering analysis, DOE further considered

efficiency enhancement options that it did not screen out in the screening analysis. Chapter 4 of 

the preliminary TSD contains details on the screening analysis for portable ACs.

2.4 Engineering Analysis

The engineering analysis (chapter 5 of the preliminary TSD) establishes the relationship 

between the manufacturer production cost (MPC) and the efficiency of portable ACs. The 

purpose of the analysis is to estimate the incremental MPCs for a product that would result from 

increasing efficiency levels above the baseline model. This relationship serves as the basis for 

cost/benefit calculations in terms of individual consumers, manufacturers, and the nation. 

Chapter 5 discusses the product classes DOE analyzed, the representative baseline units, the 
2-13

incremental efficiency levels, the methodology DOE used to develop the MPCs, the costefficiency curves, and the impact of efficiency improvements on the considered products.

The engineering analysis considered technologies not eliminated in the screening 

analysis, designated as design options, although certain technologies were not analyzed for the 

reasons set forth in chapter 5 of the preliminary TSD. DOE considered the analyzed design 

options in developing the cost-efficiency curves.

In response to the May 2014 NODA, AHAM commented that it will be difficult for DOE 

to determine appropriate standards or trial standards levels without a sufficient baseline 

according to the AHAM test procedure. Because of the range of differences between rated and 

measured capacities and efficiencies, AHAM stated that a conversion factor between rated and 

tested values is not feasible. AHAM suggested that DOE would need to know test results for a 

majority of products on the market to conduct a robust analysis. (AHAM, NODA No. 4 at p. 3) 

DOE agrees that a conversion factor between rated capacity or efficiency and the tested 

value is not feasible. However, during investigative testing, DOE observed trends relating 

cooling efficiency to cooling capacity. DOE used these trends to define efficiency levels for 

products with similar design options, including the baseline efficiency level. The efficiency 

levels that DOE considered in the engineering analysis are not all attainable by the products in 

DOE’s investigative test sample. DOE relied on its investigative test data and modeling to 

determine the extent of efficiency improvements possible for portable ACs beyond the maximum 

observed efficiency. DOE again established trends relating efficiency to capacity to define the 

higher efficiency levels.

DOE typically structures its engineering analysis around one of three methodologies: (1) 

the design-option approach, which calculates the incremental costs of adding specific design 

options to a baseline model; (2) the efficiency-level approach, which calculates the relative costs 

of achieving increases in energy efficiency levels without regard to the particular design options 

used to achieve such increases; and/or (3) the reverse-engineering or cost-assessment approach, 

which involves a “bottom-up” manufacturing cost assessment based on a detailed bill of 

materials derived from tear-downs of the product being analyzed. 

DOE used a hybrid approach of the design-option and reverse-engineering approaches for 

this preliminary analysis. This approach involved physically disassembling commercially 

available products, reviewing publicly available cost information, and modeling equipment cost. 

From this information, DOE estimated the MPCs for a range of products currently available on 

the market. DOE then considered the steps manufacturers would likely take to improve product 

efficiencies. In its analysis, DOE determined that manufacturers would likely rely on certain 

design options to reach higher efficiencies. From this information, DOE estimated the cost and 

efficiency impacts of incorporating specific design options at each efficiency level. DOE also 

provides further discussion on the design options and efficiency improvements in chapter 5 of 

this TSD, including design options that met the screening criteria, but did not factor into the costefficiency relationship.
2-14

In response to the July 2013 NOPD, the Joint Commenters suggested that the engineering 

analysis consider the feasibility of mounting the compressor in the condenser cooling airstream 

so its heat is discharged outdoors, instead of adding to the load on the portable AC. (Joint 

Commenters, NOPD No. 4 at p. 2) DOE notes that all of the products observed in its teardown 

sample used the condenser airstream to cool the compressor. As a result, this design option is 

incorporated into the MPC estimates at each of the analyzed efficiency levels.

Chapter 5 of this preliminary TSD describes the methodology and results of the analysis 

used to derive the cost-efficiency relationships.

2.5 Markups Analysis

DOE analyzed product markups to convert the MPCs estimated in the engineering 

analysis to consumer prices, which then are used in analyzing the LCC and PBP and 

manufacturer impacts. To develop markups, DOE identified how portable ACs are distributed 

from the manufacturer to the consumer. After identifying appropriate distribution channels, DOE 

relied on economic data from the U.S. Census Bureau and other sources to determine how prices 

are marked up as products pass from the manufacturer to the consumer. The manufacturer 

markup converts MPC to manufacturer selling price. DOE developed an average manufacturer 

markup by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed 

by publicly traded manufacturers primarily engaged in appliance manufacturing. DOE calculated 

markups for baseline products (baseline markups) and for more efficient products (incremental 

markups). The incremental markup relates the change in the manufacturer sales price of higherefficiency models (the incremental cost increase) to the change in the retailer or distributor sales 

price. Chapter 6 of this preliminary TSD provides details on DOE’s development of markups for 

portable ACs.

2.6 Energy Use Analysis

DOE assessed the energy savings potential from higher-efficiency portable ACs in order 

to develop energy savings values to be used in the LCC and subsequent analyses. The goal of the 

energy use characterization is to generate a range of energy use values that reflect real-world use 

of portable ACs in American homes and businesses. By incorporating data on how portable ACs 

actually are used by U.S. consumers, DOE can estimate the energy that would be consumed (or 

potentially saved) by products having various efficiency levels. As part of the energy use 

analysis, certain engineering assumptions and data are required, including how often the product 

is operated and in which mode of operation (cooling or fan-only), the size of the area to be 

cooled, installation conditions, and climate conditions. DOE, however, found few real-world data 

to help approximate portable AC energy use, and thus had to make various assumptions in the 

energy use analysis. 

Critical to DOE’s energy use analysis was room AC data from the Energy Information 

Administration’s (EIA’s) 2009 Residential Energy Consumption Survey (RECS 2009) and 2003 
2-15

Commercial Buildings Energy Survey (CBECS 2003), the most recent surveys available at the 

time of DOE’s analysis. Both surveys collect nationally representative information related to 

consumers’ appliance use and energy consumption, including the use of window- or wallmounted room ACs. The two surveys collect data on annual energy costs for cooling, along with 

climate-related characteristics. DOE’s assumptions include the following considerations.

 Ownership of a window- or wall-mounted room AC used in a RECS 2009 household 

or CBECS 2003 enterprise could be used to approximate the ownership of a portable 

AC.

 The portable AC was installed according to manufacturer instructions (for example, a 

dual-duct portable AC would have both ducts installed and properly insulated).

 The number of operating hours spent in cooling mode for a window- or wall-mounted 

room AC used in a RECS household or CBECS enterprise could be used to 

approximate the hours a portable AC spends in cooling mode.

 The upper limit of total hours of portable AC operation in either cooling or fan-only 

mode were estimated assuming that a portable AC would be operated only in months 

having 5 or more cooling-degree days that exceed 65° F.

 For rooms measuring less than 250 square feet, the portable AC setpoint can be 

reached (the cooling load is constant) and operating hours would decrease with a 

higher-capacity portable AC.

 For rooms measuring 250 square feet or more, the cooling load could not be met by 

increasing the capacity of the portable AC and, therefore, cooling operation would 

continue until the user turned off the unit. The operating hours spent in cooling mode 

would remain constant for any portable AC operating at any efficiency level.

 The average capacity at each efficiency level reflects the full range of capacities at 

that efficiency level.

The energy use analysis requires DOE to establish a range of total annual operating hours 

as well as hours for each mode of operation (cooling or fan-only). DOE utilized RECS 2009 and 

CBECS 2003 data to establish the upper limit of portable AC annual operating hours for both 

modes of operation. To estimate annual portable AC use and energy consumption, DOE began 

by assigning each RECS household and CBECS commercial enterprise that uses a room AC to 

one of the 321 weather stations operated by the National Oceanic and Atmospheric 

Administration (NOAA). DOE identified which weather station best matched the heating and 

cooling degree-days in the RECS 2009 data set or the CBECS 2003 data set. The climate data 

obtained from NOAA’s National Climatic Data Center helped DOE determine the maximum 

amount of time the portable AC would be operated annually and apportion the annual electricity 

use for portable ACs in various geographic areas among the months of the year. DOE assumed a

portable AC would be operated only in months having 5 or more cooling-degree days that 

exceed 65° F.

DOE was able to use RECS 2009 and CBECS 2003 room AC data to estimate the range 

of annual operating hours a portable AC spends in cooling mode based on the method used in 

DOE’s 2011 final energy conservation standards rulemaking for room ACs. DOE assumed the 

operating hours calculated for households and businesses having a room AC represent operating 
2-16

hours spent in cooling mode for a baseline portable AC unit. The energy use of a portable AC

motor during cooling mode was calculated using the method for determining rated capacity and 

efficiency stipulated in the proposed DOE test procedure. The distribution of operating hours 

spent in fan-only mode is based on a preliminary analysis of field-metered data (Burke et al.

f

), in 

which DOE assumed that fan-only time was proportional to cooling-mode time. DOE estimated 

that time spent in fan-only mode was about 30 percent of the time spent in cooling mode.

An additional factor in DOE’s energy use analysis is the square footage of the room the

portable AC attempts to cool. In cases where the baseline portable AC adequately meets the 

cooling load of a room, a higher-capacity unit will reduce the hours of operation in cooling 

mode. If the baseline unit cannot handle the cooling load, however, field metering data indicate 

the compressor will remain running until a user turns the unit off. (Burke, et al.). A study of

portable AC performance conducted by Consumer Reportsgfound that portable ACs tested in a 

250-square-foot room labored to provide adequate cooling. Based on those observations, DOE 

assumed households using a higher-efficiency (and thus higher-capacity) portable AC in a room 

measuring less than 250 square feet would experience a reduction in hours of operation in 

cooling mode, assuming a fixed load. In areas that meet or exceed 250 square feet the hours 

spent in each mode would not change, because no portable AC would be able to cool the room 

adequately. 

DOE used the following equation to estimate portable AC energy consumption at each

efficiency level being considered.

PACENERGY = (

Total Hours of Use

Year ) ×

[(

Capacity × XCOOL

EER ) (

1

1000) + (XFan × kWFan) + (XStby × kWstby)]

Where:

PACENERGY = annual energy consumption of portable AC (kWh/year),

Total Hours of Use

Year

= number of hours the portable AC is used per year (at > 0 W), 

Capacity = rated capacity in Btu/h as measured by the test procedure for 

portable ACs,

EER = energy efficiency ratio (Btu/Wh),

XCool = fraction of time in cooling mode,

 

f T. Burke, et al., Using Field-Metered Data to Quantify Annual Energy Use of Portable Air Conditioners, Lawrence 

Berkeley National Laboratory, Report No. LBNL-6868E (December 2014). Available at:

www.osti.gov/scitech/servlets/purl/1166989.

g

June 12, 2014 06:00 AM, http://www.consumerreports.org/cro/news/2014/06/are-portableair-conditioner-claims-alot-of-hot-air/index.htm
2-17

XFan = fraction of time in fan-only mode,

XStby = fraction of time in standby mode,

kWFan = power consumption (in kW) of fan-only mode, and

kWStby = power consumption (in kW) of standby/off mode.

DOE is considering efficiency levels that exceed the baseline level through 

implementation of technology options that increase both the EERcm and cooling capacity of 

portable ACs. When the hours spent in cooling mode decreased in a potential standards case 

compared to the base case, DOE allocated the time difference to fan-only mode.

Chapter 7 of this preliminary TSD provides more detail about DOE’s approach to 

characterizing energy use of portable ACs. 

2.7 Life-Cycle Cost and Payback Period Analysis

In determining whether an energy efficiency standard is economically justified, DOE 

considers the economic impacts of efficiency levels on consumers. Energy conservation 

standards produce a change in consumer operating costs—usually a decrease—and a change in 

product purchase price—usually an increase. DOE used the following two metrics to measure 

potential impacts on consumers.

 LCC is the total consumer cost of an appliance or product, generally over the life of 

the product. The LCC calculation includes total installed cost (product manufacturer 

selling price, markups throughout distribution channel, sales tax, and any installation 

costs); operating costs (energy, repair, and maintenance costs); product lifetime, and 

discount rate. Future operating costs are discounted to the time of purchase and 

summed over the lifetime of the appliance or product.

 PBP measures the amount of time required for consumers to recover the assumed 

higher purchase price of a more energy efficient product through reduced operating 

costs. Inputs to the calculation of PBP include the installed cost to the consumer and 

first-year operating costs. DOE's analysis produces a simple PBP based on using 

single-point average values to estimate the purchase price and undiscounted first-year 

operating cost.

DOE analyzed the net effect on consumers of potential standards for portable ACs by 

calculating the LCC and PBP using the engineering performance data, energy use data, and 

markups. Other inputs included retail prices and installation costs, energy prices, discount rates, 

and product lifetimes. DOE examined installation, maintenance, and repair costs for the

efficiency levels considered in this rulemaking. Typically, incremental changes in energy 

efficiency produce no, or only minor, changes in installation, repair, and maintenance costs over 

baseline efficiency products.

The LCC and simple PBP analysis utilized values that reflect unit energy consumption in 

the field. DOE used EIA’s energy price data to determine the range and variability of prices for 

electricity in 2012, then used projections of the prices from EIA’s Annual Energy Outlook 20141
2-18

to estimate future electricity prices. DOE developed discount rates by estimating the finance cost 

for consumers to purchase appliances. As described in section 2.6, DOE developed samples of 

individual households and commercial enterprises that use portable ACs. By developing such 

samples, DOE was able to calculate the LCC to account for the variability in energy 

consumption and electricity price among users of portable ACs.

DOE used probability distributions to characterize discount rates and product lifetimes. 

DOE developed discount rates separately for residential consumers and for those in the 

commercial subsectors that purchase portable ACs. DOE developed discount rates from 

estimates of the interest rate, or finance cost, applied to purchases of residential products. 

Following accepted principles of financial theory, the finance cost of raising funds to purchase 

products can be interpreted as (1) the financial cost of any debt incurred by the purchase, 

principally interest charges on debt; or (2) the opportunity cost of any equity used for the 

purchase, principally forfeited interest earnings on household equity.

DOE used Monte Carlo simulations and probability distributions to model both the 

uncertainty and variability in inputs to the LCC and PBP analysis. DOE developed LCC and PBP 

spreadsheet models that incorporate the results of Monte Carlo simulations sampling from 

probability distributions. Because certain key inputs to the analysis consist of probability 

distributions rather than single-point values, the analysis produces a range of LCC and PBP 

results that enables DOE to identify the percentage of consumers who will achieve LCC savings 

or incur net cost at each considered efficiency level. Chapter 8 of this preliminary TSD describes 

the results of the LCC and PBP analysis.

In performing an iteration of the Monte Carlo simulation for a given consumer, product 

efficiency is chosen based on its probability. If the chosen product efficiency is greater than or 

equal to the efficiency level under consideration, the LCC and PBP calculation reveals that a 

consumer is not affected by the efficiency level. By accounting for consumers who already 

purchase more efficient products, DOE avoids overstating the potential benefits from increasing 

product efficiency. 

2.8 Shipments Analysis

DOE needs projections of product shipments to calculate the national impacts of potential 

standards on energy use, NPV, and future manufacturer cash flows. DOE projected shipments 

based on an analysis of key market drivers for portable ACs. DOE estimated future shipments of 

portable ACs to two market segments: (1) replacements; and (2) homeowners who previously 

had no portable AC (first-time owners).

To project shipments of replacement units, DOE utilized the 10-year estimated lifetime to 

develop a retirement function for portable ACs. DOE applied that retirement function to the 

current stock of products. DOE's shipments model, which takes a stock accounting approach, 

uses historical product shipment data as inputs to estimate the age distribution of in-service 

product stocks for all years. The age distribution of product stocks is a key input to calculations 
2-19

of both the NES and NPV, because operating costs for any year depend on the age distribution of 

the stock. 

To project shipments to first-time owners, DOE calibrated the estimated shipments with 

the historical data by introducing into the model a market segment identified as households 

currently lacking portable ACs. DOE estimated that annually 0.17 percent of current households 

that have no portable AC would purchase one during 2019–2048. DOE also considered the 

impacts on shipments from changes in product purchase price and operating costs associated 

with higher energy efficiency levels. See chapter 9 of this preliminary TSD for more details 

regarding the shipments analysis.

2.9 National Impact Analysis

The NIA assesses the NPV, to the nation, of total consumer LCC and NES. DOE 

determined both the NPV and NES for the efficiency levels examined for portable ACs. To make 

the analysis more accessible and transparent to all interested parties, DOE prepared a Microsoft 

Excel spreadsheet model to forecast NES and the national consumer economic costs and savings 

resulting from potential efficiency levels. The spreadsheet model uses as inputs typical values as 

opposed to probability distributions. To assess the effect of input uncertainty on NES and NPV 

results, DOE can conduct sensitivity analyses by running alternative scenarios on specific input 

variables. 

Several of the inputs for determining NES and NPV depend on projected trends in 

product energy efficiency. Analyzing impacts of potential energy conservation standards for

portable ACs requires comparing projections of U.S. energy consumption with energy 

conservation standards against projections of energy consumption without standards. The 

analysis includes projections of annual product shipments, the annual energy consumption of 

new products, and the purchase price of new products. 

A key component of DOE’s NIA is the energy efficiency projected over time for the base 

case (without new standards) and for each efficiency level. For the base case, DOE uses the 

efficiency distributions developed for the LCC analysis, assuming some rate of change each year 

during the analysis period. The projected efficiencies represent the annual shipment-weighted 

energy efficiencies of portable ACs during the analysis period (i.e., from the assumed 

compliance date of a new standard to 30 years after compliance is required, in this case 2019–

2048). 

For the standards case analysis, DOE used a roll-up scenario in projecting efficiency 

trends after potential standards take effect. Under a roll-up scenario, all products that perform at 

efficiencies less than a prospective standard are moved, or rolled-up, to the minimum efficiency 

level allowed under the standard. Product efficiencies that exceed a given efficiency level remain 

the same as before the standard takes effect. In addition to a “roll-up” scenario, DOE developed a 

shift scenario. In the shift scenario DOE applies an annual increase in average energy efficiency 
2-20

to the shipments-weighted energy efficiencies, as done for the base case. Chapter 10 of this 

preliminary TSD provides additional details regarding the NIA.

2.9.1 National Energy Savings 

DOE calculated annual NES as the difference between national energy consumption in 

the base case and under each efficiency level considered. The inputs for determining the NES 

are: (1) annual energy consumption per unit, (2) shipments, (3) product stock, (4) national energy 

consumption, and (5) site-to-power-plant and full-fuel-cycle conversion factors for energy. DOE 

calculated national energy consumption by multiplying the number of units, or stock (by vintage, 

or age), by the unit energy consumption (also by vintage). DOE estimated energy consumption 

and savings based on site energy consumption, which it then converted to primary and full-fuelcycle energy using annual conversion factors derived from the most recent version of the 

National Energy Modeling System. Cumulative energy savings are the sum of the NES for each 

year throughout the forecast period.

2.9.2 Net Present Value of Consumer Benefits

DOE calculated net monetary savings for consumers in each year after potential standards 

take effect for the base case and each standards case. The inputs for determining the NPV of the 

total costs and savings experienced by consumers are (1) total annual installed cost, (2) total 

annual savings in operating costs, and (3) a discount factor to calculate the present value of costs 

and savings. DOE calculated savings throughout the lifetime of products shipped in 2019–2048, 

accounting for differences in yearly energy prices. DOE used the most recent edition of EIA’s 

Annual Energy Outlook (AEO 2014) as the default source of projections for future energy prices 

and total housing stock. DOE also will calculate the NPV assuming economic growth scenarios 

that are higher and lower than the AEO reference case, and assuming product price alternatives 

that are higher and lower than the default product price.

Total savings in operating costs are the product of savings per unit and the number of 

units of each vintage that survive in a given year. DOE calculated NPV as the difference between 

the present value of operating cost savings and the present value of total installed costs. DOE 

applied real discount rates of both 3 percent and 7 percent to discount future costs and savings to 

present values. DOE uses 3-percent and 7-percent real discount rates in accordance with 

guidance provided by the Office of Management and Budget (OMB) to Federal agencies on the 

development of regulatory analysis. (OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying 

and Measuring Benefits and Costs”)

2.10 Consumer Subgroup Analysis

DOE intends to evaluate impacts on consumer subgroups, especially low-income and 

senior consumers during any subsequent NOPR analysis. During the preliminary analysis, DOE 

has identified consumer subgroups that it believes may be affected disproportionately by new or

revised energy conservation standards. 
2-21

At any subsequent NOPR stage of this rulemaking, DOE will conduct an LCC subgroup 

analysis. A consumer subgroup comprises a subset of the population that may be affected 

disproportionately by new or revised energy conservation standards (e.g., low-income 

consumers, seniors). The purpose of a subgroup analysis is to determine the extent of any such 

disproportional impacts.

2.11 Manufacturer Impact Analysis

DOE performed a preliminary manufacturer impact analysis (MIA) to estimate the 

financial impact of higher energy conservation standards on manufacturers of portable ACs, and 

to calculate the impact of such standards on competition, employment and manufacturing 

capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the 

MIA relies on the government regulatory impact model (GRIM), an industry-cash-flow model 

customized for this industry. For more detail on the MIA, see chapter 12 of the preliminary TSD.

In response to the July 2013 NOPD, AHAM commented that NRCan is also working on 

developing energy conservation standards for portable ACs. AHAM urged DOE to work with 

NRCan to harmonize potential standards in the United States and Canada, and to harmonize 

compliance timelines to avoid increased consumer confusion and manufacturer cost. (AHAM, 

NOPD No. 6 at p. 4) EEI stated that DOE should align any rulemaking for portable ACs with the 

timetables for standards for competitive products so that the impacts of a new standard will be 

market neutral to the greatest extent. (EEI, NOPD No. 3 at p. 6) 

As part of the MIA, DOE considers the timing and impact of cumulative regulatory 

burdens on manufacturers of portable ACs, including all DOE energy conservation standards

affecting manufacturers of portable ACs, as well as other portable AC-focused federal, regional, 

and local regulations. DOE considers all such regulations that have taken or will take effect three

years before or after the compliance date of the new energy conservation standards for portable 

ACs.

2.12 Emissions Analysis

In the emissions analysis, DOE will estimate the reduction in power sector emissions of 

carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2) and mercury (Hg) from 

potential energy conservation standards for the considered products. In addition, DOE will 

estimate emissions impacts in production activities (extracting, processing, and transporting 

fuels) that provide the energy inputs to power plants. These are referred to as “upstream” 

emissions. Together, these emissions account for the full-fuel-cycle (FFC). In accordance with 

DOE’s FFC Statement of Policy (76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes 

impacts on emissions of methane and nitrous oxide, both of which are recognized as greenhouse 

gases.
2-22

DOE primarily will conduct the emissions analysis using emissions factors for CO2 and 

most of the other gases derived from data in the latest version of EIA’s Annual Energy Outlook 

(AEO). Combustion emissions of CH4 and N2O will be estimated using emissions intensity 

factors published by the Environmental Protection Agency (EPA), GHG Emissions Factors 

Hub.

h

EIA prepares the Annual Energy Outlook using the National Energy Modeling System

(NEMS). Each annual version of NEMS incorporates the projected impacts of existing air quality 

regulations on emissions. The text below refers to AEO 2014, which generally represents current 

legislation and environmental regulations, including recent government actions, for which 

implementing regulations were available as of October 31, 2013.

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap and trading programs. Title IV of the Clean Air Act sets an annual 

emissions cap on SO2 for affected EGUs in the 48 contiguous states and the District of Columbia 

(D.C.). SO2 emissions from 28 eastern states and D.C. were also limited under the Clean Air 

Interstate Rule (CAIR), which created an allowance-based trading program that operates along 

with the Title IV program in those States and D.C. 70 FR 25162 (May 12, 2005). CAIR was 

remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. 

Circuit), but it remained in effect.i On July 6, 2011 EPA issued a replacement for CAIR, the 

Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (Aug. 8, 2011). On August 21, 2012, the 

D.C. Circuit issued a decision to vacate CSAPR.j The court ordered EPA to continue 

administering CAIR. AEO 2014 assumes that CAIR remains a binding regulation through 2040.k

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions 

by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about 

the effects of efficiency standards on SO2 emissions covered by the existing cap-and-trade 

 

h www.epa.gov/climateleadership/inventory/ghg-emissions.html

i See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 

2008).

j See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012).

k On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for 

further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's 

methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other 

downwind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision 

that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation, No 12-1182, slip op. at 32 

(U.S. April 29, 2014). Because DOE is using emissions factors based on AEO 2014, the analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant for the 

purpose of DOE's analysis of SO2 emissions.
2-23

system, but it concluded that no reductions in power sector emissions would occur for SO2 as a 

result of standards.

Beginning in 2016, however, SO2 emissions will fall as a result of the Mercury and Air 

Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the final MATS 

rule, EPA established a standard for HCl as a surrogate for acid gas hazardous air pollutants 

(HAP), and also established a standard for SO2 (a non-HAP acid gas) as an alternative equivalent 

surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP 

acid gas; thus, SO2 emissions will be reduced as a result of the control technologies installed on 

coal-fired power plants to comply with the MATS requirements for acid gas. AEO 2014 assumes 

that, in order to continue operating, coal plants must have either flue gas desulfurization or dry 

sorbent injection systems installed by 2016. Both technologies, which are used to reduce acid gas 

emissions, also reduce SO2 emissions. Under the MATS, emissions will be far below the cap that 

would be established by CAIR, so it is unlikely that excess SO2 emissions allowances resulting 

from the lower electricity demand would be needed or used to permit offsetting increases in SO2

emissions by any regulated EGU. Therefore, DOE believes that energy efficiency standards will 

reduce SO2 emissions in 2016 and beyond.

CAIR established a cap on NOX emissions in eastern States and the District of Columbia. 

Energy conservation standards are expected to have little or no physical effect on these emissions 

in those States covered by CAIR because excess NOX emissions allowances resulting from the 

lower electricity demand could be used to permit offsetting increases in NOX emissions. 

However, standards would be expected to reduce NOX emissions in the States not affected by the 

caps, so DOE estimated NOX emissions reductions from potential standards in the States where 

emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions 

caps and, as such, DOE’s energy conservation standards would likely reduce Hg emissions. DOE 

estimated mercury emissions reduction using emissions factors based on AEO 2014, which 

incorporates the MATS.

Power plants may emit particulates from the smoke stack, which are known as direct 

particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power 

plants. DOE is investigating the possibility of using other methods to estimate reduction in PM 

emissions due to standards. The great majority of ambient PM associated with power plants is in 

the form of secondary sulfates and nitrates, which are produced at a significant distance from 

power plants by complex atmospheric chemical reactions that often involve the gaseous 

emissions of power plants, mainly SO2 and NOX. The monetary benefits that DOE will estimate

for reductions in SO2 and NOX emissions resulting from standards are in fact primarily related to 

the health benefits of reduced ambient PM. 
2-24

2.13 Monetizing Reduced CO2 and other Emissions

DOE will consider the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to result from each of the standard levels 

considered.

To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE will use the most current Social Cost of Carbon (SCC) values developed and/or agreed to 

by an interagency process. 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 damage 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. 

The Interagency Working Group on Social Cost of Carbon released an update of its 

previous report in 2013.l The most recent estimates of the SCC in 2015, expressed in 2013$, are 

$12.0, $40.5, $62.4, and $119 per metric ton of CO2 avoided. For emissions reductions that occur 

in later years, these values grow in real terms over time. Additionally, the interagency group 

determined that a range of values from 7 percent to 23 percent should be used to adjust the global 

SCC to calculate domestic effects, although DOE gives preference to consideration of the global 

benefits of reducing CO2 emissions. 

DOE will multiply the CO2 emissions reduction estimated for each year by the SCC value 

for that year in each of the four cases. To calculate a present value of the stream of monetary 

values, DOE will discount the values in each of the four cases using the discount rates that had 

been used to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also will estimate the potential monetary benefit of reduced NOX emissions 

resulting from the standard levels it considers. Estimates of monetary value for reducing NOX

from stationary sources range from $476 to $4,893 per ton in 2013$.

m DOE will calculate

 

l Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. 

Interagency Working Group on Social Cost of Carbon, United States Government; revised November 2013.

www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulatorimpact-analysis.pdf

m U.S. 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, 

Washington, DC.
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monetary benefits using a medium value for NOX emissions of $2,684 per short ton (2013$), and 

real discount rates of 3 percent and 7 percent.

2.14 Utility Impact Analysis

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and 

generation that result for each trial standard level (TSL). The utility impact analysis is based on 

output of the DOE/Energy Information Administration (EIA)’s National Energy Modeling 

System (NEMS). NEMS is a public domain, multi-sectored, partial equilibrium model of the 

U.S. energy sector. Each year, DOE/EIA uses NEMS to produce an energy forecast for the 

United States, the Annual Energy Outlook (AEO). The EIA publishes a reference case, which 

incorporates all existing energy-related policies at the time of publication, and a variety of side 

cases which analyze the impact of different policies, energy price and market trends. As of 2014, 

DOE will use a new methodology based on results published for the Annual Energy Outlook 

2014 (AEO 2014) Reference case and a set of side cases that implement a variety of efficiencyrelated policies.

2.15 Employment Impact Analysis

The adoption of energy conservation standards can affect employment both directly and 

indirectly. Direct employment impacts are changes in the number of employees at the plants that 

produce the covered products. DOE evaluates direct employment impacts in the MIA. 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 standards. DOE defines indirect employment impacts from standards as net jobs eliminated or 

created in the general economy as a result of increased spending driven by increased product 

prices and reduced spending on energy.

Indirect employment impacts are investigated in the employment impact analysis using 

the Pacific Northwest National Laboratory’s “Impact of Sector Energy Technologies” (ImSET) 

model.n The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis 

to estimate the employment and income effects of energy-saving technologies in buildings, 

industry, and transportation. Compared with simple economic multiplier approaches, ImSET 

allows for more complete and automated analysis of the economic impacts of energy 

conservation investments.

 

n M.J. Scott, O.V. Livingston, P.J. Balducci, J.M. Roop, and R.W. Schultz, ImSET 3.1: Impact of Sector Energy 

Technologies, PNNL-18412, Pacific Northwest National Laboratory (2009) (Available at: 

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
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2.16 Regulatory Impact Analysis

In the NOPR stage, DOE will prepare a regulatory impact analysis (RIA). The RIA 

addresses the potential for non-regulatory approaches to supplant or augment energy 

conservation standards in order to improve the energy efficiency or reduce the energy 

consumption of the product covered under this rulemaking. DOE recognizes that voluntary or 

other non-regulatory efforts by manufacturers, utilities, and other interested parties can 

substantially affect energy efficiency or reduce energy consumption. DOE bases its assessment 

on the actual impacts of any such initiatives to date, but also considers information presented by 

interested parties regarding the impacts existing initiatives might have in the future.
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REFERENCES

 

1

 U.S. Department of Energy, Energy Information Administration. Annual Energy Outlook 2014

with Projections to 2040. 2014. Washington, D.C. Report Number DOE/EIA-0383(2014). 

(Last accessed May 22, 2014.) < http://www.eia.gov/forecasts/aeo/ >