CHAPTER 17. REGULATORY IMPACT ANALYSIS

TABLE OF CONTENTS

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

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

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

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

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

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

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

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

17.2.1.2.2 Market Share Matrices ..................................................... 17­3

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

17.2.3 Interaction of Non­Regulatory Alternatives ...................................................... 17­4

17.3 NON­REGULATORY ALTERNATIVES ................................................................... 17­5

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

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

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

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

17.3.5 Voluntary Energy­Efficiency Programs ............................................................ 17­9

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

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

17.4 RESULTS SUMMARY FOR NON­REGULATORY ALTERNATIVES................. 17­11

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

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

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

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

17.4.5 Voluntary Energy­Efficiency Programs .......................................................... 17­13

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

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

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

LIST OF TABLES

Table 17.2.1 Market Share Matrix for PAR38 90W in the Commercial Sector for Roll­Up, No

Product Substitution Scenario for Proposed Standards ..................................................... 17­4

Table 17.3.1 Market Penetration Due to Consumer Rebates for GSFL Product Classes......... 17­7

Table 17.3.2 Market Penetration Due to Consumer Rebates for IRL Product Classes............ 17­8

Table 17.4.1 GSFL: NES and NPV of Non­Regulatory Alternatives Compared to the Proposed

17­i

EE-2006-STD-0131 COMMENT 37.2
Standards.......................................................................................................................... 17­11

Table 17.4.2 IRL: NES and NPV of Non­Regulatory Alternatives Compared to the Proposed

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

LIST OF FIGURES

Figure 17.3.1 Commercial Market Penetration Curve as a Function of Simple PBP................ 17­6

Figure 17.3.2 Residential Market Penetration Curve as a Function of Simple PBP ................ 17­7

17­ii

EE-2006-STD-0131 COMMENT 37.2
CHAPTER 17. REGULATORY IMPACT ANALYSIS

17.1 INTRODUCTION

The Department of Energy (DOE) has determined that energy conservation standards for

GSFL and IRL constitute a “significant regulatory action” under Executive Order (E.O.) 12866

“Regulatory Planning and Review.” 58 FR 51735 (October 4, 1993). Therefore, DOE has

prepared this regulatory impact analysis (RIA), which is subject to review under the Executive

Order by the Office of Information and Regulatory Affairs (OIRA). 58 FR 51735 This chapter

evaluates several non­regulatory alternatives and compares the costs and benefits of each

alternative to the proposed standards.

DOE identified six major, non­regulatory alternatives to standards as representing

feasible policy options to achieve potentially similar improvements in GSFL and IRL energy

efficiency:

• Consumer Rebates

• Consumer Tax Credits

• Manufacturer Tax Credits

• Voluntary Energy Efficiency Programs

• Bulk government purchases

• Early replacement

DOE evaluated each of the alternatives that apply to the lamp products covered by this

final rule in terms of its ability to achieve significant energy savings at a reasonable cost, and

compared the effectiveness of each one to that of the adopted standards. The following sections

discuss the analysis method used, the non­regulatory alternatives considered, and the energy

savings calculated.

17.2 METHODOLOGY

17.2.1 Modeling Method

Each non­regulatory alternative to the proposed standards improves the average

efficiency of new lamp products relative to the base case (no new regulatory action). The

analysis assumed that each non­regulatory alternative would entice consumers to purchase lamps

at targeted efficacy levels, the same efficacy levels as required by the proposed standards.

Contrary to the proposed standards, however, the market penetration of non­regulatory

alternatives would only impact the portion of the market below the targeted efficacy level. DOE

made specific assumptions about the percentage of this market impacted under each nonregulatory alternative. Details of these assumptions can be found in section 17.3.

17­1

EE-2006-STD-0131 COMMENT 37.2
In comparing a non­regulatory alternative to the proposed standards, the key measures of

comparison were:

• National energy savings (NES) in kilowatt hours (kWh): Cumulative national primary

energy savings for equipment bought in the period from the effective date of the policy

case, 2012, to end of the analysis period, 2042.

• Net present value (NPV): The value of net monetary savings from equipment bought in

the period from the effective date of the policy case, 2012, to the end of the analysis

period, 2042. DOE calculated 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 case.1

DOE quantified the market penetration of each alternative; that is, what percent of

consumers below the target efficacy level would migrate to the higher efficacy products. DOE

then revised inputs to the national impact analysis (NIA) spreadsheet models. (See chapter 11 of

the technical support document (TSD) for a description of the NIA spreadsheet models.) With

these modifications, DOE calculated the NES and NPV of each non­regulatory alternative, and

compared it to that of the proposed standards. The sections below provide more detail on how

the NIA Spreadsheet Models for general service fluorescent lamps (GSFL) and incandescent

reflector lamps (IRL) were modified for these calculations.

17.2.1.1 General Service Fluorescent Lamps

17.2.1.1.1 Scenarios Analyzed

Although DOE considered eight different combinations of base and standards case

scenarios for the GSFL NIA (see TSD Chapter 10, Shipment Analysis, for a description of each),

DOE only considered two scenario combinations when calculating energy savings and net

present value for the RIA. Specifically, DOE used the Roll­up scenario to model consumer

responses to each of the non­regulatory alternatives considered. The Roll­up scenario represents

a scenario in which only consumers purchasing product below the target efficacy level would be

affected by the regulatory or non­regulatory initiative. This contrasts with the Shift scenario

(analyzed in the NIA), which assumes that all consumers, even those who in base­case purchase

products with efficacies higher than the baseline efficacy, will shift to even higher efficacy

product in response to amended energy conservation standards. Because the non­regulatory

alternatives analyzed in the RIA are directed towards those consumers that do not already use

energy efficient products, DOE determined that the Roll­up scenario would best reflect market

behavior. DOE analyzed the Roll­up scenario in combination with the Existing Technologies

base case and the High Lighting Expertise standards case scenario, which represents the upper

DOE used the same time period for NPV in the RIA as it did for the NIA in the notice of proposed rulemaking.

The longer period for operating cost savings allows the policy impact analysis to account for the operating cost

savings benefits for products purchased through the year 2042.

17­2

1

EE-2006-STD-0131 COMMENT 37.2
bound energy savings and NPV, and the Emerging Technologies base case and the Market

Segment­Based Lighting Expertise standards­case scenario, which reflects the lower bound.

17.2.1.1.2 Market Share Matrices

Having selected a scenario to use for modeling purposes, DOE then calculated the market

penetration for each lamp type (e.g., 4­foot T8 medium bipin) and in each market segment (e.g.,

lamp failure, new construction, retrofit) of each non­regulatory alternative as a percentage of the

penetration forecast. For example, for the consumer rebate non­regulatory alternative, DOE in

the 2012 4­foot T8 medium bipin High Expertise market share matrix for new ballasts, DOE

calculated that 25.5% of standards case penetration (i.e., 100%) would occur with consumer

rebates. DOE ran this analysis for each non­regulatory alternative both the aforementioned

scenarios it analyzed for the RIA.

17.2.1.2 Incandescent Reflector Lamps

17.2.1.2.1 Scenario

Although DOE considered eight different combinations of base­case and standards­case

scenarios for the IRL NIA, DOE only considered two of these scenario combinations when

calculating energy savings for the RIA. DOE believed that the Roll­up, No Product Substitution

scenario best reflected the market under each of the non­regulatory alternatives considered. As

discussed earlier with regard to GSFL, because these non­regulatory alternatives are directed

towards those consumers that do not already use energy efficient products, for IRL, DOE

determined that the Roll­up scenario would best reflect market behavior.

Furthermore, DOE believed that a scenario modeling “No Product Substitution” would

best model the market for non­regulatory alternatives. The No Product Substitution scenario

does not model any additional shift to non­regulated reflector technologies, such as exempted

IRL or reflector compact fluorescent lamps. The Product Substitution scenario (with models a

movement to these alternative lamp types) was developed to model consumers’ response to the

high first­cost of standards­compliant products that would enter the market following an imposed

standard. Because mandatory standards will not be imposed in a non­regulatory alternative,

consumers will not encounter this situation and are therefore unlikely to shift from IRL to other

lamp types due to voluntary initiatives. Therefore, DOE concluded that the No Product

Substitution scenario was the most appropriate to model a voluntary energy program.

Based on these two points, DOE determined that the Roll­up, No Product Substitution

scenario paired with both the Existing Technologies and Emerging Technologies base­case

shipment scenarios would best reflect market behavior and used only these scenarios to calculate

NES and NPV for the RIA analysis.

17.2.1.2.2 Market Share Matrices

17­3

EE-2006-STD-0131 COMMENT 37.2
Having selected a scenario to use for modeling purposes, DOE then calculated the market

penetration of each non­regulatory alternative. DOE used these market penetration percentages

to modify the market share matrices. DOE assumed that the market penetration represented the

percent of consumers that would migrate from the lamp they would have bought in the base case

to the lamp at a higher efficacy level. Table 17.2.1 demonstrates this modification in more

detail. Table 17.2.1 shows the market share matrix for IRL in the roll­up no product substitution

scenario. It also shows the same market share matrix, adjusted to reflect the government

purchase alternative.

Table 17.2.1 Market Share Matrix for PAR38 90W in the Commercial Sector for Roll­Up,

No Product Substitution Scenario for Proposed Standards

EL Lamp Type

Base Case TSL 4 Bulk Government

Purchase

2011 2042 2013 2042 2013 2042

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

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

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

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

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

4 Improved HIR 5% 13% 100% 100% 58% 35%

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

As seen in the tables, consumers that do not migrate to higher efficiencies remain at their

existing efficiency level. Similar modifications were made to the market share matrices for other

baselines for each of the non­regulatory alternatives.

17.2.2 Policy Assumptions

DOE calculated the impact of non­regulatory alternatives from the effective date for

proposed efficiency standards, 2012, through the end of the analysis period, 2042. In some

scenarios, increases on product prices are partially mitigated by government rebates or tax

credits. DOE assumed that credits and rebates would be paid for by consumers in another form

(such as additional taxes), and therefore did not include them as a benefit for the purposes of

calculating the national NPV. DOE did not consider administrative costs for any of the nonregulatory policies in its analysis. Inclusion of such costs would decrease the NPV by a small

amount.

17.2.3 Interaction of Non­Regulatory Alternatives

DOE calculated the impacts of each regulatory policy separately from those of the other

policies. In practice, certain alternatives are often most effective when implemented

simultaneously with other incentives. DOE attempted to make conservative assumptions to

avoid double­counting policy impacts. Therefore, the impacts of non­regulatory alternatives

reported below are not additive. Furthermore, the combined impact of several or all of the

policies may not be inferred by adding the results together.

17­4

EE-2006-STD-0131 COMMENT 37.2
17.3 NON­REGULATORY ALTERNATIVES

The impact of a non­regulatory alternative is strongly influenced by the rate of consumer

participation and is therefore less certain than the impact of the proposed standards, which

require mandatory compliance. To determine market penetration rates, DOE conducted a

literature review of each non­regulatory alternative and consulted with key experts to gather

information on similar incentive programs that have been implemented in the U.S. By studying

actual results of these programs, DOE sought to make credible assumptions of their potential

market impacts. This section summarizes DOE’s conclusions from this research as they apply to

each non­regulatory alternative.

17.3.1 No New Regulatory Action

The case in which no new regulatory action is taken with regard to lighting efficiency

constitutes the base case scenario described in chapter 11 of the TSD. This case defines the basis

of comparison for all other scenarios. By definition, no new regulatory action yields zero energy

savings and a net present value of zero dollars.

17.3.2 Consumer Rebates

Consumer rebates cover a portion of the difference in incremental product price between

products meeting baseline efficiency levels and those meeting higher efficiency levels, resulting

in a higher percentage of consumers purchasing more­efficient models. For GSFL, DOE

estimated the impact of improving the simple payback through a rebate that paid 70 percent of

the incremental product price. DOE based the 70­percent rebate on existing utility rebate

programs for replacing a T12 lamp with a T8 lamp or upgrading an existing T8 lamp to a more

efficacious T8 lamp. DOE studied each program and found that the average rebate amounted to

about 70 percent of the incremental product price. DOE assumed that the consumer rebate

policy would cover the incremental equipment costs for IRL by the same percentage. DOE then

used a market penetration curve, which estimates percent market adoption of a technology as a

function of technology simple payback. DOE calculated the payback for each product with and

without the rebate to project the increased market penetration of the product due to a rebate

program.

DOE first calculated the simple payback for each design option with an efficiency

meeting the target efficiency level relative to the base case design with no rebate (see chapter 8

of the TSD for details on lamp product classes). It then calculated another simple payback for

each product class meeting the target efficiency level, with a rebate reducing its incremental

product price, relative to the base case. Because of the incremental cost reduction due to the

rebate, the payback (in years) for the rebate product is shorter.

17­5

EE-2006-STD-0131 COMMENT 37.2
DOE then used market penetration curvesi

to estimate the increased percentage of

consumers who would purchase units that meet the target efficiency levels if given a rebate

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

analysis.

Figure 17.3.1 Commercial Market Penetration Curve as a Function of Simple PBP

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Market Penetration

0 2 4 6 8 10

PBP

17­6

EE-2006-STD-0131 COMMENT 37.2
Figure 17.3.2 Residential Market Penetration Curve as a Function of Simple PBP

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Market Penetration

0 2 4 6 8 10

PBP

For GSFL, DOE considered how three different lamp purchase events might be affected

by consumer rebates: lamp failure, standards induced retrofit, and ballast failure (or new

construction). Using the curves above, DOE calculated the market penetration for all \ analyzed

lamp types. Table 17.3.1 shows the calculated market penetration for each GSFL lamp type and

lamp purchase event.

Table 17.3.1 Market Penetration Due to Consumer Rebates for GSFL Product Classes

Lamp System Sector Purchase Event Market

Penetration

4­foot T12 MBP Residential Lamp Failure 0%

4­foot T12 MBP Residential Ballast Failure 91%

4­foot T12 MBP Residential Retrofit 30%

4­foot T8 MBP Residential Ballast Failure 33%

4­foot T12 MBP Commercial Lamp Failure 12%

4­foot T12 MBP Commercial Ballast Failure 16%

4­foot T12 MBP Commercial Standards­Induced Retrofit 5%

4­foot T8 MBP Commercial Lamp Failure 0%

4­foot T8 MBP Commercial Ballast Failure 26%

8­foot T12 SP slimline Commercial Lamp Failure 6%

8­foot T12 SP slimline Commercial Ballast Failure/ Standards­Induced Retrofit 0%

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

4­foot T5 MiniBP SO Commercial Lamp Failure 0%

4­foot T5 MiniBP SO Commercial Ballast Failure 33%

17­7

EE-2006-STD-0131 COMMENT 37.2
8­foot T12 RDC HO Industrial Lamp Failure/Ballast Failure 33%

8­foot T8 RDC HO Industrial Ballast Failure 0%

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

Similar to GSFL, DOE assumed that the rebate for IRL products would cover 70 percent

of the incremental product price. Table 17.3.2 shows the market penetration for each product

class and baseline for IRL.

Table 17.3.2 Market Penetration Due to Consumer Rebates for IRL Product Classes

Baseline Lamp Sector Market

Penetration

90W PAR38 Commercial 13%

Residential 41%

75W PAR38 Commercial 13%

Residential 43%

50W PAR30 Commercial 32%

Residential 60%

To estimate the impacts of this rebate policy, DOE applied these market share increases

to the market share matrices of the NIA spreadsheet model. DOE assumed that the impact of this

policy would be to permanently transform the market so that the increased market penetration

seen in the first year of the program would be maintained throughout the forecast period. The

resulting energy savings are shown in section 17.4.2.

17.3.3 Consumer Tax Credits

Consumer tax credits cover a percentage of the difference in incremental product price

between products meeting baseline efficiency levels and those with higher efficiencies.

Consumer tax credits are considered a viable non­regulatory market transformation program, as

shown by the inclusion of Federal consumer tax credits in EPACT 2005 for various residential

appliances.

DOE estimated that for both GSFL and IRL, the consumer participation rate would be

lower than the rate of participation in consumer rebates. Research on tax credits has shown that

the time delay to the consumer in receiving a reimbursement through a tax credit, plus the added

transaction costs in tax­return preparation, make the tax credit incentive less effective than a

rebate received at the time of purchase. Based on previous analysisii

, DOE assumed that only 60

percent as many consumers would take advantage of the tax credit as would take advantage of a

rebate.

Using a similar approach as for the rebate policy, DOE estimated that the market share of

target efficiency level lamp products would increase due to consumer tax credits over the base

case. For both lamp products, these percentage market penetrations are 60 percent of the market

penetrations estimated for the consumer rebate policy (which are shown in Table 17.3.1 and

Table 17.3.2).

17­8

EE-2006-STD-0131 COMMENT 37.2
DOE assumed that the impact of this policy would be to permanently transform the

market so that the increased market penetration seen in the first year of the program would be

maintained throughout the forecast period. Section 17.4.3 presents the results of the analysis for

the consumer tax credit policy.

17.3.4 Manufacturer Tax Credits

Manufacturer tax credits are considered a viable non­regulatory market transformation

program, as shown by the inclusion of Federal tax credits in EPACT 2005 for manufacturers of

residential appliances. Similar to consumer tax credits, manufacturer tax credits would

effectively result in lower product prices for consumers by an amount that covered part of the

incremental price difference between products meeting baseline efficiency levels and those

meeting targeted efficiency levels.

DOE assumed that this incentive policy would help reimburse manufacturers for

retooling costs. Because these tax credits would go to manufacturers instead of consumers, DOE

assumed that manufacturers would pass on the reduced costs. However, because the program

would not be visible to the end­consumers, DOE assumed that half of the consumers assumed to

take advantage of consumer tax credits would purchase more­efficient products under a

manufacturer tax credit program.

iii Using this information, DOE calculated the percentage by

which market penetration of target efficient level lamp products would increase due to

manufacturer tax credits over the base case.

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

market so that the increased market penetration seen in the first year of the program would be

maintained throughout the forecast period. Section 17.4.4 below presents the results of the

analysis for the manufacturer tax credit policy.

17.3.5 Voluntary Energy­Efficiency Programs

DOE estimated the impact of a voluntary energy efficiency program by reviewing the

historical and projected market transformation performance of past and current ENERGY STAR

programs. The Environmental Protection Agency (EPA) introduced the Green Lights program in

January of 1991. Green Lights was a voluntary (non­regulatory) program tasked with a goal of

reducing air pollution by promoting energy efficient lighting. Companies that elected to

participate installed energy efficient lighting where it proved to be cost­effective (as long as

lighting quality was not diminished). In return, the EPA provided technical assistance and public

recognition. In a similar effort, the EPA launched the ENERGY STAR program in 1992 as a

voluntary labeling program to help consumers identify the most energy efficient products on the

market. In 1996, Green Lights became a part of the ENERGY STAR programiv.

In order to determine how a lighting market would respond to a voluntary energy

program, DOE analyzed the success of the Green Lights program in the 1990s. One of the

significant results of the Green Lights program was observed in the fluorescent ballast market.

Electronic ballasts are, on average, more efficient than magnetic ballasts. As such, as a result of

17­9

EE-2006-STD-0131 COMMENT 37.2
the Green Lights initiative, electronic ballasts began to enter the market in increasing numbers.

A study that analyzed the impact of public programs on fluorescent ballast shipments concluded

that of all the electronic ballasts shipped between 1986 and 2000, 61 percent were due to a public

programv

. DOE used data from the US Census to calculate the percent of the market that opted

to use more efficient ballasts as a result of a voluntary program. To do this, DOE calculated 61

percent of the electronic ballast shipments and divided it by the sum of those shipments plus the

total magnetic ballast shipments. The 39 percent of electronic ballasts that did not occur as a

result of a public program were not included in the denominator, since consumers who bought

these ballasts were considered to already be using energy efficient technologies. DOE concluded

that 20% of the market would shift to more efficient products as a result of a voluntary energy

efficiency program. This percentage was applied across all baselines and efficiency levels.

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

market so that the increased market penetration seen in the first year of the program would be

maintained throughout the forecast period. Section 17.4.5 below presents the results of the

analysis for the voluntary energy efficiency program alternative.

17.3.6 Early Replacement

The early replacement policy alternative envisions a program to replace old, inefficient

units with models meeting efficiency levels higher than baseline equipment. DOE did not model

this scenario because the lifetime of GSFL and IRL is very short (the lifetime of even the highest

efficacy IRL lamp is only 1.2 years), so the savings would not be very great. Early replacement

policies are generally beneficial for products with long lifetimes (e.g., washers and dryers,

furnaces) and represent a significant upfront investment, neither of which apply to GSFL and

IRL.

17.3.7 Bulk Government Purchases

Under this policy alternative, the government sector would be encouraged to shift its

purchases to lamps that met the target efficiency levels. Aggregating public sector demand could

provide a market signal to manufacturers and vendors that some of their largest customers seek

suppliers with products that meet an efficiency target at competitive prices. This program could

also induce “market pull” impacts through the effects of manufacturers and vendors achieving

economies of scale for high­efficiency products. DOE assumed that government agencies, such

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

Similar to previous analysis, DOE used floor space data from CBECS 2003vi to derive the

proportion of government­owned floor space to total commercial floor space (including malls),

which is 21.4 percent. DOE assumed that floor space owned equated to lamp sales. DOE then

added a 1.4 percent market­pull impact to arrive at a conservative 22.8 percent market

penetration rate.vii This percentage was used for both GSFL and IRL, and across all TSLs. Bulk

government purchases will not affect the residential market.

17­10

EE-2006-STD-0131 COMMENT 37.2
DOE assumed that the impact of this policy would be to permanently transform the

market so that the increased market penetration seen in the first year of the program would be

maintained throughout the forecast period. Section 17.4.6 below presents the results of the

analysis for the bulk government purchases policy.

17.4 RESULTS SUMMARY FOR NON­REGULATORY ALTERNATIVES

The NOPR proposed TSL 3 for GSFL and TSL 4 for IRL. Table 17.4.1 and Table 17.4.2

show the NES and NPV of each of the applicable non­regulatory alternatives at these proposed

efficiency levels. The case in which no regulatory action is taken constitutes the base case (or

“No Action”) scenario. Since this is the base case, energy savings and NPV are zero by

definition. For comparison, the table includes the impacts of the proposed energy conservation

standards. The tables display the NPV results based on two discount rates (seven percent and

three percent real). Note that the tables do not include early replacement as an alternative. As

discussed in section 17.3.6, DOE found that this alternative was not applicable to GSFL or IRL.

Table 17.4.1 GSFL: NES and NPV of Non­Regulatory Alternatives Compared to the

Proposed Standards

Policy Alternatives1 National Energy

Savings (quads)

Net Present Value (billion $2007)

7% Discount Rate 3% Discount Rate

No New Regulatory Action 0 0 0

Consumer Rebates 1.33­1.74 1.89­2.67 4.57­6.58

Consumer Tax Credits 0.63­0.83 1.09­1.33 2.32­3.17

Manufacturer Tax Credits 0.35­0.44 0.68­0.70 1.35­1.64

Voluntary Energy

Efficiency Programs

1.09­1.44 1.50­2.10 3.68­5.19

Bulk Government

Purchases

1.21­1.61 1.66­2.36 4.08­5.82

Proposed Standards2 3.15­7.12 3.11­7.39 8.57­24.87

Notes: 1 NPV discounted to 2007; Non­regulatory alternatives encourage purchases of GSFL at TSL 3.

Table 17.4.2 IRL: NES and NPV of Non­Regulatory Alternatives Compared to the

Proposed Standards

Policy Alternatives1 National Energy

Savings (quads)

Net Present Value (billion $2007)

7% Discount Rate 3% Discount Rate

No New Regulatory Action 0 0 0

Consumer Rebates 0.52­0.69 1.52­1.89 3.19­3.97

Consumer Tax Credits 0.32­0.42 0.96­1.17 1.97­2.44

Manufacturer Tax Credits 0.16­0.21 0.53­0.64 1.05­1.28

Voluntary Energy

Efficiency Programs

0.26­0.45 0.83­1.28 1.65­2.59

Bulk Government

Purchases

0.04­0.24 0.23­0.72 0.32­1.33

Proposed Standards 1.25­2.21 3.72­6.00 7.68­12.45

Notes: 1 NPV discounted to 2007, Non­regulatory alternatives encourage purchases of IRL at TSL 4.

17­11

EE-2006-STD-0131 COMMENT 37.2
The results for each scenario are reported at the TSLs proposed by DOE in this

rulemaking: TSL 3 for GSFL, TSL 4 for IRL. For GSFL, the range results from the effects of

applying the lighting expertise scenario discussed in section V.E.4.b of the NOPR. The lower

end of the range represents the emerging technologies, market segment based lighting expertise

scenario, whereas the upper end of the range represents the existing technologies, high lighting

expertise scenario. For IRL, the range of impacts results from the two base­case shipment

scenarios analyzed in the NIA. The lower end of the range represents the emerging technologies

scenario, whereas the upper range represents the existing technologies scenario.

None of the non­regulatory alternatives examined by DOE would save as much energy or

have an NPV as high as the proposed standards. Additionally, several of the alternatives would

require new legislation, such as consumer or manufacturer tax credits, since authority to carry

out these alternatives does not presently exist. The following section reviews the NES and NPV

for each non­regulatory alternative.

17.4.1 No New Regulatory Action

The case in which no regulatory action is taken constitutes the base case (or “No Action”)

scenario. Since this is the base case, energy savings and NPV are zero by definition.

17.4.2 Consumer Rebates

At the estimated participation rates for GSFL, DOE calculated that consumer rebates

would provide between 1.33 and 1.74 quads of national energy savings and an NPV between

$1.89 and $2.67 billion (at a 7­percent discount rate). For IRL, DOE calculated that consumer

rebates at the estimated participation rates would provide between 0.52 and 0.69 quads of

national energy savings and an NPV between $1.52 and $1.89 billion (at a 7­percent discount

rate). Although DOE estimated that consumer rebates would provide national benefits for GSFL

and IRL products, these benefits would be smaller than the benefits resulting from the proposed

energy conservation standards. Thus, DOE rejected consumer rebates as a policy alternative to

energy conservation standards.

17.4.3 Consumer Tax Credits

For GSFL, at the estimated participation rate, consumer tax credits would provide

national energy savings between 0.63 and 0.83 quads and an NPV between $1.09 and $1.33

billion (at a 7­percent discount rate). At the estimated participation rates for IRL, consumer tax

credits would provide between 0.32 and 0.42 quads of national energy savings and an NPV

between $0.96 and $1.17 billion (at a 7­percent discount rate). DOE estimated that while

consumer tax credits would yield national benefits for GSFL and IRL, these benefits would be

much smaller than the benefits from the proposed energy conservation standards. Thus, DOE

rejected consumer tax credits as a policy alternative to energy conservation standards.

17.4.4 Manufacturer Tax Credits

17­12

EE-2006-STD-0131 COMMENT 37.2
At the estimated participation rates for GSFL, DOE calculated that manufacturer tax

credits would provide between 0.35 and 0.44 quads of national energy savings and an NPV

between $0.68 and $0.70 billion (at a 7­percent discount rate). For IRL, DOE estimated national

energy savings between 0.16 and 0.21 quads and an NPV between $0.53 and $0.64 billion (at a

7­percent discount rate) for IRL. DOE estimated that while manufacturer tax credits would yield

national benefits for GSFL and IRL, these benefits would be much smaller than the benefits from

the proposed energy conservation standards. Thus, DOE rejected manufacturer tax credits as a

policy alternative to energy conservation standards.

17.4.5 Voluntary Energy­Efficiency Programs

For GSFL, DOE estimated that voluntary energy efficiency targets would provide

between 1.09 and 1.44 quads of national energy savings and an NPV between $1.50 and $2.10

billion (at a 7­percent discount rate). For IRL, DOE estimated national energy savings between

0.26 and 0.45 quads and an NPV between $0.83 and $1.28 billion (at a 7­percent discount rate)

for IRL. DOE estimated that while voluntary energy efficiency targets would yield national

benefits for GSFL and IRL, these benefits would be much smaller than the benefits from the

proposed energy conservation standards. Thus, DOE rejected voluntary energy efficiency targets

as a policy alternative to energy conservation standards.

17.4.6 Bulk Government Purchases

At the above estimated participation rates, the bulk government purchases scenario would

provide between 1.21 and 1.61 quads of national energy savings and an NPV between $1.66 and

$2.36 billion (at a 7­percent discount rate) for GSFL, and between 0.04 and 0.24 quads of

national energy savings and an NPV between $0.23 and $0.72 billion (at a 7­percent discount

rate) for IRL. DOE estimated that while bulk government purchases would yield national

benefits for GSFL and IRL, these benefits would be much smaller than the benefits from the

proposed energy conservation standards. Thus, DOE rejected voluntary energy efficiency targets

as a policy alternative to energy conservation standards.

17.4.7 Energy Conservation Standards

DOE proposes to adopt the efficiency levels listed in section VI.C of the NOPR. As

indicated in the paragraphs above, none of the alternatives DOE examined would save as much

energy as the proposed energy conservation standards. In addition, several of the alternatives

would require new enabling legislation, such as customer tax credits, since authority to carry out

those alternatives does not presently exist.

17­13

EE-2006-STD-0131 COMMENT 37.2
REFERENCES

i

Energy Savings Potential of Solid State Lighting in General Illumination Applications. Final

Report. Prepared by Navigant Consulting Inc. for Lighting Research and Development, Building

Technologies Program, Office of Energy Efficiency and Renewable Energy. U.S. Department of

Energy. December 2006.

ii U.S. Department of Energy. Regulatory Impact Analysis for Today’s Energy Conservation

Standards for Residential Furnaces and Boilers. September 2007. Available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/fb_fr_tsd/ria.pdf.

iii U.S. Department of Energy. Regulatory Impact Analysis for Today’s Energy Conservation

Standards for Residential Furnaces and Boilers. September 2007. Available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/fb_fr_tsd/ria.pdf.

iv Energy Star. “Major Milestones.” Last viewed on December 23, 2008. Available at

http://www.energystar.gov/index.cfm?c=about.ab_milestones.

v Horowitz, Marvin J. “Economic Indicators of Market Transformation: Energy Efficient

Lighting and EPA's Green Lights”, Energy Journal, Vol. 22, No. 4, pp. 95­122

vi U.S. Department of Energy. Energy Information Agency, Commercial Building Energy

Consumption Survey (2003). Available at:

http://www.eia.doe.gov/emeu/cbecs/cbecs2003/detailed_tables_2003/detailed_tables_2003.html.

vii U.S. Department of Energy. Regulatory Impact Analysis: Energy Conservation Standards for

Consumer Products, Covering: Fluorescent Lamp Ballasts. October 1999. Available at:

http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/regulatory_impact.p

df.

17­14

EE-2006-STD-0131 COMMENT 37.2