Table of Contents Acronyms and Abbreviations 1.Introduction 2.Problem definition 2.1.What is the issue or problem that may require action? What is the size of the problem? 2.2.What are the underlying drivers of the problem? 2.3.Who is affected by the problem, in what ways, and to what extent? 2.4.How would the Problems evolve without Intervention? 2.5.Compliance costs 3.Why should the EU Act? 4.Policy Objectives 4.1.General Objectives 4.2.Specific Objectives 4.3.Consistency with other EU policies 5.Policy Options 5.1.No Action - BAU2015 5.2.Voluntary Agreement 5.3.Energy Label 5.4.ECO1 Proposal

5.5.ECO2 Proposal 5.6.ECO3 Proposal 5.7.Common provisions (miscellaneous) 5.8.Other Sub-Options Considered and Discarded 5.9.Options for Impact Analysis 6.Analysis of Impacts 6.1.Introduction 6.2.Environmental Impact 6.3.Economic Impacts 6.4.Social Impact 6.5.Exemptions 6.6.Inclusion of Motors used in End-Products 6.7.Conclusion on Economic, Social and Environmental Impacts 7.Comparison of Policy Options 8.Market Surveillance and Evaluation 8.1.Market Surveillance 8.2.Evaluation and monitoring Annex 1.Glossary Annex 2.Procedural Information Annex 3.Stakeholder Consultation

Annex 4.Minutes of the Consultation Forum Meeting Annex 5.Evaluation of Regulation 640/2009 on ecodesign requirements for electric motors Annex 6.Who is Affected by the Initiative and How Annex 7.Analytical model used Annex 8.Assessing Double Counting of Motor Regulation Impacts Annex 9.Outcome of the Life Cycle Cost assessment

Acronyms and Abbreviations AC Alternating Current (changing direction periodically at a certain frequency - as in the public electricity grid) ATEX Motor suited for EXplosive ATmosphere BAU Business-as-usual (describing a scenario without any further intervention) CEMEP European Committee of Manufacturers of Electrical Machines and Power Electronics (industry association representing motors and drives manufacturers at EU level) DC Direct Current (constant direction - as in a battery) GHG Greenhouse gas IA Impact Assessment IE International Efficiency; class defining minimum energy efficiency based on international standards (IE1: standard / IE2: high / IE3: premium / IE4: super premium) IEC International Electrotechnical Commission; global standardisation organisation kW kilo Watt, 103 Watt (unit of power) kWh kilo Watt hour, 103 Watt per hour (unit of energy)

LCC Life cycle cost over the whole lifetime of a product, including purchase cost and energy costs LLCC Least life cycle cost; used to determine the energy efficiency requirements that minimise costs of a product for its whole lifetime. MEErP Methodology for the Ecodesign of Energy-related Products MtCO2eq Mega tonne CO2 equivalent, 109 kg of gas equivalent to potency of CO2 (unit of greenhouse gas emissions) MSA Market Surveillance Authority (in charge of enforcing ecodesign regulation in a Member State) NGO Non-Governmental Organisation TWh Tera Watt hour, 1012 Watt per hour (unit of energy) VSD Variable Speed Drive yr Abbreviation used as denominator for units expressed per year (e.g. TWh/yr) Notes: −Annex 1 contains a glossary with the technical terms used in this Impact Assessment. −Annex 8 contains a section on acronyms specifically used in that Annex.



This report commits only the Commission’s services involved in its preparation and does not prejudge the final form of any decision to be taken by the Commission. 1.Introduction The Ecodesign Directive 2009/125/EC plays a key role in the European Union’s efforts to achieve its energy efficiency target of 20% energy savings by 2020, as well as the 32.5% 2030 target. It is estimated, that with energy savings of around 2000 TWh, the Ecodesign Directive will deliver almost half of the energy savings needed to achieve the 2020 target. It is expected to contribute further to the 2030 target, up to a quarter of the remaining effort to be achieved relative to a business-as usual scenario. The Ecodesign directive is thus a key instrument within the EU’s energy policy and Energy Union strategy. Ecodesign measures also reinforce the free circulation of goods on the EU internal market generate savings for the end-users, and contribute to innovation and EU industry competitiveness. Electric motors represent the single largest electrical end use, representing about half of the EUs electricity consumption. Electric motor systems were identified in the 2005 Ecodesign Directive as a key product group to be investigated. As a consequence, Commission Regulation (EC) 640/2009 on ecodesign requirements for electric motors (amended by regulation 4/2014) was developed (hereafter ‘the motor regulation’), with a view to regulate the motors with the largest saving potential, i.e. asynchronous induction AC motors. These are widely used, especially in industrial applications because they are rugged, reliable and economical. It should be noted that regulating the performance of electrical motors is not specific to the EU. Countries around the world from US to Australia, China and Turkey have regulated those since the late 90ies. A global standard developed by the International Electrotechncial Commission (IEC) is available since 2008.

The current EU Regulation 640/2009 foresees that: ·From June 2011 on, motors with a rated output of 0.75 - 375 kW must meet the International Efficiency class 2 (IE2) efficiency level. ·From January 2015: motors with a rated output of 7.5 - 375 kW must meet IE3 efficiency level - or the IE2 efficiency level and be equipped with a variable speed drive (VSD). ·From January 2017: all motors with a rated output of 0.75 - 375 kW must meet the IE3 efficiency level or the IE2 efficiency level in combination with a variable speed drive. As part of the impact assessment, an evaluation of the existing motors regulation has been carried out. The results can be found in annex 5. It shows that indeed a significant transformation of the motors market under the scope of the regulation occurred, when energy efficiency standards were introduced in 2011 and 2015 - with IE 1 (and below) motors falling in market share from 80 % in 2009 to 17 % in 2016 whilst at the same time the IE 3 premium class share rose from 0 % to 29 %. The energy savings realised in the year 2017 are estimated as 31 TWh and the corresponding GHG emissions reduction as 12 MteqCO2. The savings are expected to amount to 102 TWh per year by 2030 (see Annex 5). This is lower than the 208 TWh initially anticipated but represents nevertheless about 9% of the remaining effort to reach the 325% 2030 target. The scope of the current regulation is limited to middle-size 3-phase motors ranging from 0.75 kW to 375 kW, with 2 to 6 poles, up to 1000 volts. These are very common motors, which were perceived as easy to regulate at the time, inter alia because a technical global standard was available. This meant that the following AC induction motors were excluded: ØSmall motors below 0.75 kW; ØSingle-phase motors (up to a few kW maximum); ØVery large motors above 375 kW; ØLess common 8-pole motors (slower rotation speed); ØMedium voltage motors (above 1000 volts, usually above 375 kW); In addition, a few exclusions were foreseen by precaution, for special purpose motors (brake motors, explosion-proof motors, and submersible motors). The current scope does not include Variable Speed Drives (VSDs) that may be used to control the speed and output of the motor when the application is characterised by a variable load/speed. In such situation, the VSD allows to achieve considerable energy savings compared to mechanical means of adjusting the load/speed (e.g. a valve in the case of a motor-driven pump). However VSDs have also their own energy losses, which are currently not regulated in the EU. The motors in the scope of the current regulation have an electricity consumption of nearly 1.000 TWh per year (2015), about twice Germany's annual electricity consumption. Regulation 640/2009 requires the Commission to review its effectiveness and appropriateness in light of technological progress within seven years after its entry into force, i.e. by August 2016. The Commission undertook a review study and presented the results to the Ecodesign Consultation Forum on 29 September 2014. This report outlines the outcome of the review process, proposes several policy options that result of the review process (such as reinforced requirements and scope extension), evaluates the associated impacts, and proposes a preferred policy option that allows to capture an energy efficiency potential of about 10 TWh. More detailed procedural information is provided in Annex 2, with information on stakeholder consultation in Annex 3, and the minutes of the Consultation Forum in Annex 4. 0.Problem definition 2.1.What is the issue or problem that may require action? What is the size of the problem? The EU has over 8 billion electric motors in use, consuming half of the electricity produced in the Union. The sector is very heterogeneous, with a huge variety technologies, applications and sizes. The sales volume is significant (about 750 million motors a year), as is the environmental impact from energy consumption (about 2000 TWh per year) and emissions (about 800 MtCO2 eq/yr). The preparatory study established, for the products under investigation, a valuable potential for additional energy savings which can be achieved without excessive costs as the improvement of the 'average' product results in lower life cycle costs for end users (both industrial and household).

Realising even the smallest energy efficiency increase in electric motors creates significant overall energy savings with further benefits regarding the EU's energy efficiency and greenhouse gas (GHG) emission targets and its security of supply. Small gains in energy efficiency, even if leading to a more expensive motor, can result in significant cost savings for the end-user over the lifetime of the product. In industrial applications where the motor is used intensively, the energy cost can represent over a hundred times the acquisition costs. The review study identified several problems with the current motor regulation (the reason for these problems is further explained in the next section): 1. Missed energy and monetary savings because energy efficient requirements for mid-sized motors in scope are no longer optimal Technological progress and international developments have resulted in more energy efficient motors at lower cost, but in many instances however buyers are not benefitting from this, resulting in missed energy and monetary savings at end-user level. Figure 1: Minimum energy efficiency legislation for low voltage AC motors in different countries, status 2015 (Note that the IE3 regulation-plans for China were recently postponed). The EU started regulating the minimum energy efficiency of motors after many other developed economies, and its ambition levels are behind countries such as the USA, Japan or Canada. The current regulation requires motors in scope either to reach an energy efficiency class of at least IE3, or to reach IE2 class if the motor is supplied with a variable speed drive (VSD). The review study however demonstrated through life cycle cost assessment that IE2 motors are no longer optimal from a least life cycle cost perspective. Annex 9 presents the outcome of the life cycle cost assessments that were used in this impact assessment. 2. Inefficient motors and VSDs not within the scope of the current regulation are traded on the European market resulting in missed energy and monetary savings. VSDs have a great potential to reduce consumption in variable load applications. However in the absence of regulation, buyers of motors or VSDs do not always purchase the 'optimum' product that would result in the lowest end-user cost over the lifetime of the product. This concerns motors not in scope, and in particular small 3-phase motors, single-phase motors as well as large 3-phase motors, 8-pole motors and VSDs. These motors consumed 440 TWh of electricity in 2015 and represent a valuable savings potential. While the scope of the current regulation – and any extension to large motors – mainly targets motors used in industrial applications, extension to smaller and single-phase motors would introduce a wide range of other applications, for example in domestic appliances where further cost-effective savings can be achieved. Regarding VSDs in particular, recent investigations indicate that drives sold by key manufacturers very often already reach IE2 energy efficiency class, which is the highest class defined in the newly published standard for VSDs. However, there are less efficient drives on the market and life cycle calculations demonstrated that it would be cost-effective to purchase drives that are at least IE2. 3. Regulatory failure: IE2 + VSD difficult to enforce and actually not picked up by the market VSD plus IE2 requirement, as an alternative to IE3, proved difficult to enforce by market surveillance authorities because actual installation of a motor with its VSD can only be verified on-site and more importantly is the responsibility of the installer and not the manufacturer – which actually runs against the general logic of Ecodesign enforcement. The Swiss regulation (which is largely based on the EU regulation) therefore did not include the IE2 + VSD option and only established IE3. It also seems that the IE2+VSD option was not implemented in practice to a significant extent: preliminary VSD sales data for 2013-2016 do not show an increased sales uptake beyond the current trend. Finally, the performance of an IE2 motor equipped with a VSD has not necessarily the same performance as the IE3 level, as the gains induced by a VSD are application-specific: while in variable-speed applications the use of VSD can generate significant energy savings, it can generate losses when used in fixed-speed applications. 4. Regulatory failure: Risk of circumvention During stakeholder consultation several Member States have expressed concerns that the exemptions for certain categories of mid-sized motors in the current regulation are used to supply the market with inefficient motors, creating loopholes and missed energy savings. There was therefore a need to reassess the current extent of exemptions and consider whether they need to be maintained in their full scope. As indicated in annex 5, the lost net savings resulting from regulatory failures and loopholes identified in this report are estimated as about 10 TWh per year in 2030. 2.2.What are the underlying drivers of the problem? 0.0.0.Problems 1 and 2: Market failures: Myopic behaviour, split incentives, accounting rules, installation guidelines etc.

There are several reasons why economic actors (both business and private) do not spontaneously choose the product that is the most cost-effective over the product's life-time. Standard neoclassical economic theory postulates that economic actors behave perfectly rationally. In reality, economic actors are limited by the information they have, the cognitive limitations of people's minds and the finite amount of time they have to make a decision . In every company, one or multiple bounded rational individuals take the actual decision on which investment to make, e.g. which motor to buy. These investment decisions are not always the economically optimal ones in the long-term. For example, research has shown that only around 47% of all profitable energy efficiency investments recommended to firms by external auditors are actually undertaken , , , . The reasons for such behaviour are manifold: investments directly improving the core business, such as productivity improvements, are significantly more often undertaken than ones offering energy savings9. Thus, companies are less likely to undertake energy saving measures even if they have the same economic viability as other investments , . Other reasons include the owner/employee-dilemma, where the employees of a company are optimising their actions in line with their strict performance evaluation criterions such as increasing sales numbers rather than reducing costs; this notion is supported by the observation that the reduced or missing need for profitable investments of legal entities in public or quasi-public ownership exhibit the most barriers to energy efficiency investments12. Further, the absence of financial risk assessment procedures for investments related to energy efficiency appears to be another market hindrance. Research shows that many companies rely on simplistic payback rules rather than standard 'net-present-value' calculations or the more sophisticated methods such as 'value-at-risk' that are common in the financial industry , . As a result of this inadequate investment assessment, many companies require very short payback periods for energy efficient products, usually in the range of less than two years, to have a large but irrational 'safety margin' without any further economic rationale12, 14, . These hindrances not only increase the EU's energy consumption, but also reduce the EU's overall competitiveness, resulting in suboptimal economic investment decisions. Not only projects such as the construction of a new plant are affected by irrational investment decisions. Also the maintenance of existing installations, e.g. the replacement of broken motors in existing plants, often does not follow economic rationale: companies with flexible budgeting rules are more likely to opt for economically sensible and energy efficient replacement motors compared to the ones with strict capital rationing rules10, . In the latter case each business unit has a fixed budget, and the motor with the lowest purchase price but higher running costs is selected, because the running costs come from a different budget. In cases with low maintenance budgets, companies postpone replacement of old equipment far beyond its duty life. A survey in Switzerland found that 56% of motors operate longer than their operating life expectancy. This results in old, low-efficient motors being used for much longer than planned, and motor-related equipment beyond its service life often shows higher energy consumption due to wear-and-tear. Due to budget pressure, replacement planning is often only an afterthought and parts are only replaced when they break down. Such a breakdown is then immediately an emergency situation because the production stops. The quickest and low-risk strategy is often to buy a one-on-one replacement for the old, inefficient motor as there is no time to reflect on the relevance of selecting a motor that offer better performances. Further, many industrial motors are used in food, chemical and other process industries. The process installations are generally designed according to installation standards and guidelines like API-standards (American Institute of Petroleum engineers). These standards sometimes relate to safety instructions, but they primarily prescribe what equipment, including motors, should be used to ensure production-continuity under all circumstances. However, these standards are not yet adapted to technological developments of motors. They usually use the principle of ‘proven design’, which means that a piece of equipment like a motor can only be used after the supplier has proven that it worked satisfactorily in the same application for 20 years. In practice this means that much of the design of the equipment currently in use, including motors and drives, dates back to the 1950s. Without mandatory ecodesign requirements this practice is very difficult to change. These standards also overlook that investments in more efficient products such as motors can provide a significant boost to reliability, because modern, efficient products often offer longer lifetimes and less frequent production halts, thereby increasing a firm's productivity. , Finally, many motors, especially smaller motors, are integrated into finished/intermediate goods, which are then further sold through the supply and distribution chain. In these instances, the original equipment manufacturers usually have no incentive to buy an energy-efficient motor, because they will not benefit from the associated running cost reductions. This is again a facet of the split incentive issue raised above. In those situations the manufacturer will usually just buy the cheapest motor that is compatible with the client's requirements. The end-user is often not informed of the energy efficiency of the motor, especially for small motors below 0.75kW for which efficiency information is often simply missing from websites and brochures. This aspect is particularly relevant for the considered scope extension (e.g. small motors integrated in domestic appliances). The review supporting this IA found that the incentive structure depends on the intended application of the motor, as well as on the ambition level of product level regulation in place (see Annex 8 for more details on this issue). 0.0.1.Problem 3: Difficult enforcement of the VSD+IE2 option (as an alternative to IE3) Member States and other stakeholders stated that IE2 motors equipped with VSD are not equivalent to IE3 motors, and considered this option as difficult to enforce by market surveillance authorities (MSAs). Indeed, it is most often the installers or sometimes the end-users, who decide whether to put a VSD on a motor since they know what is most suitable for the application. It is not possible to take action against a manufacturer if the installer/end-user decides not to combine the motor with a VSD even if the manufacturer instructs them do so. Checking compliance would mean that MSAs would have to significantly expand their activities and carry out on-site visits – instead of simply checking the self-declared compliance of the motor manufacturer. Without this extension of activities an effective enforcement of the option allowing a combination of a less efficient motor with a speed drive is not ensured. 0.0.2.Problem 4: Risk of loopholes in Existing Motor Regulation Several Member States, EU industries and NGOs informed the Commission during the stakeholder consultation that certain producers/importers may exploit the current exemptions by declaring normal AC motors as ‘explosion proof’ or ‘brake’ types, thus escaping the minimum requirements. These products were originally exempted under the precautionary principle due to concerns related to the special applications where these products are used. The experience gained during the application of the Regulation showed however that the precautionary exemption is not fully justified. Moreover, removing the exemption would bring the provisions in line with international standards as both types of motors (non-integral brake motors and explosion proof) are covered in the energy efficiency standard for motors (IEC 60034-30). Fixing these issues is seen as important for the credibility and effectiveness of the ecodesign measure, will ensure the effective functioning of a level playing field for all manufacturers and will induce additional energy savings. 2.3.Who is affected by the problem, in what ways, and to what extent? The foregone energy and monetary savings resulting from the use of inefficient motors potentially affect all users of motors, in industry, services and households - with the latter not purchasing motors directly but integrated in other products. The Society as a whole is also affected, through increased environmental impact associated with energy consumption, missed jobs in energy-efficient motor systems, and increased EU energy dependency. This problem also affects the motor and VSD industry, as it prevents the development of a market for more energy-efficient products that would increase industry revenues and improve its competitive edge. The loopholes in the regulation affect the work of Market Surveillance Authorities and penalise motor manufacturers who have invested in the production of energy-efficient motors but do not get all the associated benefits due to unfair competition by those who exploit the loopholes. Loopholes also potentially affect end-users through the purchase of less cost-effective motors. Section 6 describes in detail the impacts of the proposed policy options, covering not only energy and monetary savings for end-users, but also business revenue, GHG emissions and employment. Annex 6 provides a qualitative description of the impact of the policy options on the affected actors. The rest of the present section provides a description of the motors and VSDs market. The largest European motor-system manufacturers are ABB (€35 billion revenue, 145k employees) , Siemens (€40 billion revenue, 100k employees) , Schneider Electric (€25 billion revenue, 170k employees) and Danfoss (€4.6 billion revenue, 24k employees). These companies realise around a quarter of their revenues in motor systems, a quarter of which in the EU. All in all, the EU market for motor-systems represents a market value of around €6.5 billion (about a quarter of the global market) and 130 000 jobs. There is a strong presence of SMEs in motor installation, repair and maintenance, but not in production of motors and drives for this market segment. The EU market for electric motors in scope is €3 billion in value and unit sales are 10 million per year. The estimated value of the market for variable speed drives (VSDs) was 2.6 billion in 2015.

CEMEP, the European industry association of motor manufacturers, estimates that in 2012 around 4 million VSDs were sold with new motors. Market researcher IHS estimates that for every two new motors with VSDs a third VSD is sold as retrofit. Moreover, CEMEP estimates that between 2014 and 2020 the market penetration of VSDs will grow from 25% to 50% for all industrial motors . Figure 2 gives an overview of the market in unit sales for motors and drives. Figure 2: EU 2012 sales of motors in scope, divided by size (Small is 0.75-7.5 kW, Medium 7.5-75 kW, Large 75-375 kW) and by speed control (with or without VSD). The EU is a net importer of industrial motors, with about a third of the motors sold in the EU being imported. For every five motors sold in the EU, one is exported. However, the average value of an exported motor is about four times that of an imported one. As a result, in terms of value, exports are worth about twice the imports, and only 20% of the value of the motors sold in the EU comes from imported motors . NB: These figures do not include the motors installed in (semi-) finished goods that enter or exit the EU. Considering all 3-phase AC motors in the range current scope (0.75-375 kW), the 2014 EU production of motors >0.75 kW is worth €5.2 billion, of which €1.45 billion is exported (see Figure 3 ). Imports amount to €0.59 billion where China, especially for the smaller motor sizes, is an important player (see Figure 4 ). Figure 3: EU-2014 production and trade of AC multi-phase motors by size class. Due to the importance of exports, there is a benefit for European motor-system manufacturers to update the motor regulation in line with international developments. Further, the energy efficiency standard for VSDs was recently developed by European manufacturers, and is a strong contender of becoming the world-wide standard. A possible inclusion of VSDs therefore also has an important competitiveness aspect as the design of the regulation can give the EU manufacturers in this area an important advantage. Therefore, the industry association CEMEP is supporting the inclusion of energy efficient VSDs in a revision of the motor regulation. Figure 4: EU-2014 import and export share by country. 2.4.How would the Problems evolve without Intervention? Ecodesign is a key driver for innovation in products' energy efficiency and a support to EU’s technological and environmental leadership. Without requirements suited to technological progress, the future market for motors and VSDs in the EU is expected to offer less advanced (and energy efficient) technologies than in other economies. As shown in the evaluation (Annex 5), the motor regulation stimulates the sale of more efficient products, and hence makes research and development costs viable while lowering the purchase costs of efficient products due to the economics of scale. The absence of intervention also negatively influences users of motors and VSDs through sub-optimal running costs due to missed energy savings, as well as higher purchase costs for highly efficient motors compared to a scenario with regulation. Lowering the costs for customers would have a beneficial impact on the competitiveness of EU industries using motors and VSDs. Without an update of the regulation in line with technological progress, providing the necessary energy efficient motors for the export market would become more challenging, because manufacturers would need to invest in the development and production of more efficient motors for export while at the same time not finding buyers for these on their important European home market. China and the USA are currently in the process of introducing new minimum energy efficiency requirements. If the EU does not align its requirements, US and Chinese manufacturers will find themselves with products and production lines for which write-off will be minimal and for which there will be no longer a domestic market, but an open EU market with lower requirements where cheaper, less-efficient motors can be sold. The Union's market for small motors (below 0.75 kW) , which is out of scope of the current motor regulation, is seen as an example of possible development as they are now covered by International Standards and regulated in other jurisdictions. In the particular case of the VSDs the EU actually has a competitive interest in creating a first mover advantage for its own industry (see above). This area is currently not regulated, but EU manufacturers have developed the basis for a potential new global standard. The detailed analysis of the situation without any regulatory change is considered in section 5.1 (Business as usual scenario). 2.5.Compliance costs In the process of review, it has proven difficult to obtain data from motor industry on projected or actual compliance costs (e.g. costs to re-design the motors, change production lines) in relation to energy efficiency requirements. Several reasons may be put forward for this:

·Difficulty for industry to disentangle ex-post whether an innovation was triggered by EU provisions vs provisions required on other markets. Difficulties to ex post determine whether the innovation was also (at least) partly driven by non-regulatory factors. ·Commercial secrecy; ·Legal risks (sharing cost information can be considered as fraudulent commercial practice). Given the non-availability of compliance cost, we consider motor price increases as indicator, noting however that pricing strategies are not solely determined by compliance costs for energy efficiency, but also reflect size (kW), brand reputation, quality (longevity), production volume, service, distribution structure/margins, etc. These latter factors mean that the EU can still compete with Asia on industrial motors, despite much higher prices (prices quoted for high-quality EU motors can be more than 10 times higher than prices found on the internet for cheap motors from Asia). Prices and price increase of motors due to ecodesign measures used in his impact assessment are based on market research and stakeholder consultation (table 7.6 in Annex 7). A price difference of 15% is not uncommon between IE3 and IE2 motors, the difference being usually higher for smaller motors (typically 20-30%) than for large motors (less than 10%). More information on product cost is provided in section 6.3.1. As sales volumes of IE3 motors increase, it can be expected that the difference will go down due to scale effects. The price increase will result in increased business revenue for motor producers, and is a consequence of redesign efforts, including investment in updating the existing production lines, as well the enhancement of the intrinsic quality of the motors (e.g. energy-efficient usually require more copper, higher quality alloys). This is described in more detail in section 6.3.3. 0.Why should the EU Act? There is clear added value in requiring minimum energy efficiency levels at EU-level. Without harmonised requirements at EU level, Member States would be incentivised to require their own minimum energy efficiencies for motors placed on their national market in the framework of their environmental and energy policies, as was the case for many products before the Ecodesign Directive was implemented, thus effectively undermining the free movement of products. Whilst it could be conceivable that every MS implements the global available IEC standard nationally, it would still not be guaranteed that the single market would not be fragmented by different energy efficiency levels, scopes and applicable dates. So the EU intervention effectively regulates those aspects and otherwise fully integrates the available international standard, hence not duplicating work carried out at global level. The review study carried out prior to this impact assessment confirmed the efficiency of the regulation's EU-wide application (i.e. the ratio between burden and benefit) is adequate: the format of a Commission Regulation ensures immediate and simultaneous introduction of the measure in all EU Member States; motor industry testing efforts have not increased significantly with respect to the situation before the regulation where they often had to do similar efficiency tests for commercial reasons. Market surveillance effort by Member States will increase in line with an extension of scope, but on the other hand will benefit from the clarifications around the exemptions. The legal basis for acting on an EU level through the Ecodesign Directive is Article 114 TFEU, which relates to the "the establishment and functioning of the internal market". In more detail, Article 114(3) TFEU specifies that the Commission "in its proposals […] concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection. [...] Within their respective powers, the European Parliament and the Council will also seek to achieve this objective." Article 194 TFEU, which amongst others, gives the EU the objective "in the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment" to "ensure security of energy supply in the Union" and "promote energy efficiency and energy saving and the development of new and renewable forms of energy". Finally there is an in-built proportionality and significance test in the Ecodesign legislation through the procedure defined in Article 15 of the Ecodesign Directive. Articles 15(1) and 15(2) state that in case a product represents a significant volume of sales, has a significant environmental impact within the Community, presents a significant potential for improvement without entailing excessive costs, while taking into account an absence of other relevant Community legislation or failure of market forces to address the issue properly and with a wide disparity in environmental performance of products with equivalent functionality, the product shall be evaluated for an implementing measure or self-regulation. Following the procedure as defined in Article 15(3) of the Ecodesign Directive, including the analysis (‘preparatory study’), it was established that electric motor systems fulfil the above eligibility criteria. Furthermore, the preparatory process, including extensive stakeholder consultations and the Ecodesign Consultation Forum, ensured that significant negative impacts on user functionality of the product, health, safety, environment, affordability and life cycle costs, industry competitiveness were considered (including SMEs see detailed paragraph on SMEs, section 6.3.4). The option of self-regulation has been considered, but no industry proposal was put forward. In short, during the consultations none of the Member States or any other stakeholder suggested any other option than setting minimum energy efficiency requirements at EU level. 1.Policy Objectives This Impact Assessment focuses on objectives specific for motors since the objectives for ecodesign in general have already been set out in the Impact Assessments for the Ecodesign Directive. 4.1.General Objectives Following the legal basis in the TFEU, the general objectives are to: 1.Facilitate free circulation of efficient motor systems within the internal market; 0.Promote competitiveness of the EU motor and VSD industry through the creation or expansion of the EU internal market for sustainable products; 1.Promote the energy efficiency of motor systems as contribution to the EU's objective to reduce energy consumption by at least 32.5 % and domestic GHG emissions by 40 % by 2030; implement the energy efficiency first imperative established in the Energy Union strategy and

2.Increase the energy security in the Union and reduce dependency through a decrease in energy consumption of motor systems. There are several synergies between these objectives. Reducing electricity consumption (by increasing the energy efficiency) leads to lower carbon, acidifying and other emissions to air. Tackling the problem at EU single market level enhances efficiency and effectiveness of the measure. Alignment with global test standards and thus ‘teaming up’ with other jurisdictions also reinforces the effectiveness and efficiency of the measure. 4.2.Specific Objectives The specific objectives of the policy options considered in this impact assessment are to develop a policy that corrects the problems and underpinning drivers identified in the problem definition (section 2): 1.Achieve additional cost-efficient energy savings for the motors already within scope by adjusting the ambition level in line with international and technical developments; 0.Achieve new cost-efficient energy savings for motors currently out of the scope, by ensuring where possible that no more inefficient motors and VSDs are traded on the EU market and aligning with current global standards. 1.Address the issue of loopholes and exemptions for mid-sized motors. 4.3.Consistency with other EU policies Improved energy efficiency of motors and VSDs would contribute to the EU energy efficiency 2030 target of 32.5%, and to the 40% greenhouse gas reduction target by 2030. It is fully in line with the third dimension of the Energy Union ("Energy Efficiency First") in which ecodesign plays a major role. It is coherent with the Commission priorities for the internal market ("A deeper and fairer internal market"), as it would encourage investment in R&D and provide for a level playing field for all market actors across the Union market. It is also consistent with the latest EU priorities in terms of Sustainable Development in which energy efficiency is mentioned several times, and is aligned with the 2015 EU action plan for the Circular Economy, which includes comprehensive commitments on ecodesign (see in particular section 6.2.3 of this report indicating how the circular economy perspective has been taken into account). The contribution to the 2030 energy and climate targets is quantified in section 7. Moreover, the regulation of motors is consistent with the existing provisions on energy efficiency in buildings as well as with existing Ecodesign requirements at product level for products including a motor. The rules for energy efficient buildings call on MS to ensure that in the case of a new construction or a major renovation heating and cooling systems in buildings (which include motors) are optimised based on cost optimal calculations, whilst the motor regulation ensures that the least efficient motors included in buildings can no longer be sold. 0.Policy Options In order to address the issues identified in Section 3 and to achieve the policy objectives defined in Section 4, the following policy options are considered (detailed description in the next sections): -BAU2015: no further action, the motor regulation currently in place remains unchanged; -Voluntary agreement; -Energy Label; -ECO1: increase the ambition level for the motors within the current scope (0.75-375kW): remove the IE2+VSD option; -ECO2: Same as ECO1, but expanding the current scope to larger motors up to 1000 kW. Also single-phase AC motors and 8-pole motors are included, as well as previously exempted non-integral brake motors and explosion-proof motors. For VSDs, requirements are also set; -ECO3: Same as ECO2 but expanding the scope of ECO2 towards smaller motors, down to 0.12 kW; These policy proposals are based on least life cycle cost calculations and reflect the latest developments of international standards for motors and VSDs. 5.1.No Action - BAU2015

This option implies that the current regulation stays in place and is not revised. In Sections 2 and 3 it has been explained why this is problematic and action is needed. This option is retained as a baseline (BAU) scenario (see Figure 5 ). It is worth noting that the current BAU scenario, which is the basis for evaluating the policy options, is different from the BAU scenario from 2009 . The current motor regulation covers electric three-phase AC motors with output in the range of 0.75-375 kW with exemptions for special motors (i.e. ATEX, Brake, Submersibles, motors with 8 poles or more) or those intended in special temperature or pressure conditions. For motors in the range of 0.75-7.5 kW the current regulation had initially a minimum energy requirement of at least IE2 class. Per 1 January 2017 this became either 'IE3' class or 'IE2+VSD'. The latter was already the requirement for motors in the range of 7.5-375 kW, since 2015. The 'IE2+VSD' alternative was intended to promote the use of VSDs in variable load situations; it does not regulate the energy losses of the VSD itself. Figure 5: No action BAU scenario. All requirements are introduced in the currently applicable motor regulation. In this scenario, the efficiency for all motors is assumed to improve autonomously and slowly beyond the existing minimum requirements due to suboptimal market development but not in the pace and at the levels that a regulation would achieve. The improvement pace is set based on similar energy efficiency improvements in the past. This scenario implies that no requirements for VSDs are set and that MSA s will need to continue enforcing the IE2 plus VSD option. 5.2.Voluntary Agreement A voluntary agreement, which is to be given priority according to the Ecodesign Directive, has not been proposed by industry. Minimum mandatory requirements are already in force for these products and in case of substituting those by a voluntary agreement there would be a risk of free riders in case not all actors present on the market would sign such an agreement and comply with it. In any case, with no proposal put forward by industry, there is no voluntary agreement that would meet the conditions of the Ecodesign Directive and this option is thus discarded from further analysis. 5.3.Energy Label An alternative to minimum energy efficiency requirements could be the use of energy labels according to the Energy Labelling Regulation . These provide energy efficiency (linked to running costs) and other relevant information (e.g. on noise, water consumption, performance) to consumers. However, in almost all cases the motors in scope are purchased by professional buyers and are supplied to end-users as component of finished goods such as household appliances, industrial equipment, etc. Professional buyers may not always choose the most efficient motor for several reasons (as discussed in earlier sections), but these reasons do not usually involve lack of information or understanding of that information. A relatively small number of industrial motors, mostly as spare parts, are acquired through wholesale/retail channels. A larger fraction, in particular for integration in components or end-products, is purchased directly from the motor manufacturers that provide detailed information regarding product characteristics including on energy efficiency. An energy label under the Energy Labelling Regulation would thus create administrative burden while offering little, if any, possible gain and is thus discarded. 5.4.ECO1 Proposal The ECO1 proposal does not change the scope of the existing motor regulation, but requires all motors in scope to be aligned to the international IE3-level as of 15 January 2021 (see Figure 6 ). This aligns the requirements with current global trends and technological progress. Figure 6: Proposed new energy efficiency requirements for ECO1 scenario. The current regulation offers the possibility to either place an IE2-motor combined with a VSD or an IE3-motor on the Union's market. The IE2+VSD provision has proven difficult to enforce, which means that IE2 motors can be still be placed on the market without any guarantee that they will be effectively driven by a VSD. Based on revised life cycle cost calculations, the review study demonstrated that mid-sized IE2 motors are not cost-efficient any more. The ECO1 scenario therefore removes the IE2-motor plus VSD option. Under this option the energy use of the VSD s as such is not regulated.

5.5.ECO2 Proposal This proposal is similar to the ECO1 proposal in that it includes the same new minimum energy efficiency requirements for the motors in the current scope. But the ECO2 scenario also extends the scope to larger motors and motors previously excluded, in line with developments in other jurisdictions. ECO2 is based on the findings of the motor regulation's review study, and takes into account comments from the Ecodesign Consultation Forum. This scenario does not consider the small motors under 0.75 kW. The scenario also covers the energy efficiency of a VSD rather than their sole addition to a motor. This is supported by industry association CEMEP, and European manufacturers specifically developed an energy efficiency standard to allow for the VSDs' inclusion . Furthermore, the scenario includes some previously exempted special purpose motors, which are also covered by minimum energy efficiency standards in the USA, and for which the exclusion is no longer justified (see section 2.2.3). The most important additions to the ECO1 proposal are therefore: −Larger low-voltage motors in the range 375-1000 kW are included and have to reach IE3-level from 15 January 2021. −8-pole motors are included from 1 July 2022, and have to achieve the same requirements as 2-4-6 poles motors. −Single phase motors are included and have to reach IE2-level from 1 July 2022. −The energy efficiency of VSDs is included with a minimum requirement of IE2-level from 15 January 2021. −Minimum efficiency requirements applicable to standard motors will also apply to special purpose motors (non-integral brake motors and explosion-proof (ATEX) motors) from 1 July 2022, with the exception of Exe increased safety motors (IE2 level). Figure 8 Figure 7 provides an overview of the scope of ECO2 and the related minimum energy efficiency requirements. 5.6.ECO3 Proposal This proposal is similar to the ECO2 proposal but it extends the scope towards small motors, down to 0.12 kW (both 3-phase and single phase) that are currently not regulated. These motors have to reach IE2-level from 1 July 2022. For VSDs, scope and requirements are similar to ECO2. As for the other ECO options, the required energy efficiency levels are based on life cycle cost analysis (see Annex 9). The ECO3 scenario is also in line with developments in other jurisdictions and based on the findings of the review study, and takes into account comments from the stakeholders. Figure 8: Proposed requirements and timing in ECO3 proposal. The extension to small motors implies that motors included in electrical household appliances are also concerned. Comments received during the stakeholder consultation from manufacturers of such products were extensively considered (see section 6.6). Regarding the small 3-phase motors, LCC calculations indicated that there could be an economic justification for requiring IE3, but not as compelling for the larger 3-phase motors (see Annex 9 which shows that IE3 is more economical than IE2 in only 8 out the 12examined cases). Although IE2 and even IE3 are already commercially available from larger manufacturers, requiring IE2 would already necessitate a significant market transformation as these motors are not yet available from many of the smaller manufacturers that exist in the UE. Considering the other arguments put forward by the industry (e.g. see sections 6.6) and the fact that IE3 is not 100% economically compelling, sticking to IE2 for these motors is seen as a reasonable choice until a possible revision of the regulation.

5.7.Common provisions (miscellaneous) A few improvements to the current text of the regulation are proposed for all ECO options. They are not expected to have a measurable impact but are meant to facilitate enforcement or avoid possible problems: -Inclusion of 60 Hz motors: there is at the moment virtually no market in the EU for 60 Hz motors since the entire EU grid is operated at 50 Hz. However some stakeholders pointed to a risk of loophole if 60 Hz motors were placed on the market and operated by VSDs (at 60Hz or other frequency relevant for the application). -The methods to calculate the energy efficiency of motors are to be adapted according to the latest international standards. -To clarify the concept of continuous duty, a reference is to be made to the applicable international standard. 5.8.Other Sub-Options Considered and Discarded 0.0.0.Inclusion of medium-voltage motors Currently only low voltage motors (i.e. below 1000 volts) are regulated. However, quite a few large motors (in the range 375-1000 kW) used in heavy industrial applications are produced as medium voltage motors (above 1000 volts), the advantage being that they can be connected directly to a medium voltage electrical grid without a transformer, resulting in reduced costs and reduced electrical losses. For the time being, no international classification exists regarding the energy efficiency of such motors. Therefore, as an outcome of the review study, the Commission proposed to the Consultation Forum to include a review clause in the new regulation to address possible minimum energy efficiency requirements for these motors during the next review of the regulation. However, many stakeholders insisted on an immediate inclusion of these motors in the scope of the regulation, while CEMEP strongly argued that there was no agreed method for setting requirements for these motors. Further consideration was given to this issue during the Impact Assessment. It was found that other parameters than energy efficiency are critical and decisive in the design and selection of these motors. This concerns notably the starting capabilities (warm and cold motor) as well as the specification of short circuit capabilities of the mains connection point at the customer premises. In the meantime, a CEMEP-CENELEC task force developed an approach for the determination of the efficiency classes for these motors. However, this does not contain the values, levels and tolerances that are necessary for the definition of the classes; these should be determined in a standard. In conclusion it seems premature to set energy efficiency requirements for these motors, and the option of a review clause should be maintained, in parallel with the elaboration of an appropriate standard by CENELEC. The impact of this decision is limited because this represents a limited market (a few thousand motors sold each year in the EU) and these motors are often custom-made with high energy efficiency requirements anyway. 0.0.1.Energy efficiency requirements for motors set to IE4 level A limited number of stakeholders requested that by 2020, motors within the range 0.75 kW – 375 kW should reach the IE4 energy efficiency level. This option was considered in the review study (2012-2104), which showed that the LLCC option of most motors was IE3, except the larger ones (e.g. 110 kW). However, the report also specified that the cost effectiveness of this measure should be reviewed under a range of operating conditions and highlighted some technical challenges like increased motor size. It concluded that if the IE4 markets develops well over the next three years (up to 2017), the IE4 level could be requested for the year 2022. However, the latest industry data shows a 0.5% market share for IE4 motors for 2015 and for 2016 in the EU. According to market intelligence reports, although IE4 motors are expected to nearly double in terms of revenue share worldwide, they will account for only 2.0% of global motor shipments by 2021. Moreover most IE4 motors on the market concern permanent magnet, synchronous and switched reluctance motors. These motor types are currently out of scope because they are intrinsically very efficient. This indicates that the market is not mature yet for requiring IE4 for the motors in scope. However this should be considered in the future, through a review clause in the regulation. 0.0.2.Setting requirements for VSD and drives when sold together Recently, a new standard (IEC 61800-9-2:2017) was finalised that sets limit values for a motor system, i.e. a motor and a VSD together. It takes into consideration the motor losses, the VSD losses, plus the losses induced by the VSD in the motor when both are combined. It allows to optimise the combination of a VSD and a motor. The option to regulate, on the basis of this standard, a motor and a VSD when they are supplied together came late in the impact assessment process and its implementation requires additional work. For instance the standard is not complete, it covers only for 4-poles motors. There are other difficulties to solve, including market surveillance aspects. This option should be further investigated when revising the new regulation, possibly at an early stage. 0.0.3.Inclusion of submersible motors Although it was not presented as an option to the Ecodesign Consultation Forum in September 2014, the inclusion of submersible motors has been considered in this impact assessment. It was not retained because of lack of technical standard for energy efficiency determination.

5.9.Options for Impact Analysis The shortlist of options for further analysis includes: -BAU: no further action -ECO1: keeping the scope of the current motor regulation while updating the requirements -ECO2: similar to ECO1 but including larger motors and some motors excluded in the current regulation -ECO3: Similar to ECO2 but including smaller motors 0.Analysis of Impacts 6.1.Introduction Reliable data for the very heterogeneous electric motor sector is scattered. As mentioned in Section 1, electric motors can be found in many energy-using products, either as a main or as an auxiliary component. There is a large variety and motors sold as component, in sub-assemblies and in assembled end-products. This brings a considerable uncertainty to the statistical information on the subject. Most studies use, directly or indirectly, an interpreted version of Eurostat data to estimate sales. Industry associations such as CEMEP complement this information with production data reported by their members or specifically collected for a preparatory study or review. Global market research companies like IHS are a valuable source to confirm trends, but difficult to use in the public domain to verify detailed sales figures, because they may not have the desired categorisations and boundaries as the products in scope. Energy consumption is assessed from estimated averages for power outputs, operating hours, load factors and effectiveness of VSDs per category. These estimates are provided by various sources (literature, experts, etc.) and checked for stakeholder consensus. The review study has provided considerable input, and has been complemented by further analysis, including a re-assessment of some of the life cycle cost calculations, data collection and stakeholder contributions (notably CEMEP). Some hypotheses made in the review study have been revisited as part of the present IA. Estimated prices and price increase of motors due to ecodesign measures are based on market research and stakeholder consultation. Employment impacts are derived from revenue per employee, again checked against reported revenue totals for the sector and information from annual reports of individual manufacturers. In this Impact Assessment, in line with the MEErP, (industrial) energy prices were assessed from Eurostat data and for future projections an escalation rate of 4% was used. All prices and costs are expressed in Euro 2010, calculated with historical inflation. For investment-type considerations, a discount rate of 4% is used, in line with the Commission's recommended values (IA guidelines). For primary energy conversion rates for electricity generation and distribution a Primary Energy Factor (PEF) of 2.5 is used, implying by convention a 40% efficiency over the full projection period. For GHG emissions, the emission rate (in kg CO2 eq./kWh) does vary over the projection period in line with overall EU projections as indicated in the MEErP. This Impact Assessment has made a major effort to reduce the inherent uncertainty of quantitative data within above mentioned limitations. It has subdivided the market in many segments each with their specific commercial and technical characteristics. Segments relate to power sources, power outputs, purposes and whether or not the motor is fitted with a VSD. Considering that not every cross-section generates meaningful results, the base cases were identified as shown in Table 1 below.







Table 1: Market segments ('base cases') in stock model. Voltage Phase Output General purpose Special purpose LV or MV 1 or 3 kW-range without VSD with VSD* explosion-proof brake-motor submersible LV 1 0.12-0.75 x x >0.75 x x 3 0.12-0.75 x x 0.75-7.5 c c x x 7.5-75 c c x x 75-375 c c x x 375-1000 x x MV 375-1000 Note: c = current scope; x = extended scope as proposed by ECO2 or ECO3 - LV= low voltage, MV= medium voltage *=In current regulation VSDs were stimulated through VSD+IE2 option; new policy options address the own power use of the VSDs The scenario calculations relate to the period 1990-2050 with special focus on the period 2010-2030, where the impacts of policy measures become apparent. More details of the modelling can be found in Annex 7. As a result of the detailed analysis carried out for this impact assessment, the figures diverge to a certain extent from those in the review study (generally reducing the estimate of potential savings). Where energy savings have been found lower than in the review study, the Life Cycle Cost calculations have been reassessed, to make sure that the requirements levels still match the Least Life Cycle Cost levels even with lower savings (see Annex 9). Also note that all data in section 6 relate to impacts from the motor regulation itself. Unless mentioned otherwise, the question whether some of the impacts ‘would have occurred anyway’ due to other ecodesign regulations for end-products is addressed in Section 7 (comparison of options). Background information on this issue can be found in Annex 8.

6.2.Environmental Impact 0.0.0.Electricity savings All ECO scenarios save energy compared to the BAU. Figure 9 presents the electricity consumption in the EU for the various scenarios. Not revising the current motor regulation results in an energy consumption of 1 495 TWh/yr in 2030. The ECO1 option saves 4 TWh/yr in 2030 compared to the BAU while ECO2 saves 12 TWh/yr compared to the BAU. ECO3 saves 14.3 TWh, which is 20% more than ECO2. For comparison, 14 TWh/yr is more than the electricity consumption of Latvia and Estonia together in 2015. Table 2 below gives, for the years 2030 and 2040, an overview of the annual electricity consumption in those years and the accumulative consumption 2020-2030 and 2030-2040 compared to the BAU scenario. Figure 9: Electricity consumption of the different policy scenarios. Table 2: Energy consumption of different policy options in TWh Policy options Annual Accumulative 2020 2030 2040 2020-2030 2020-2040 BAU 1469 1495 1535 16317 31486 Difference vs. BAU ECO1 -4.3 -4.4 -26 -72 ECO2 -12.0 -14.1 -68 -209 ECO3 -14.3 -16.2 -82 -244 The table below shows the contribution of each motor type to the total energy savings in 2030 in the ECO3 scenario. It can be seen from the table that about 60% of the impact stems from the scope extension. Contribution of each sub-category of motor (TWh) 2030 % 3-phase 0.75-375 kW 5.8 41% Small 1 phase motors 0.12-0.75 kW 0.9 7% Small 3-phase motors 0.12-0.75 kW 1.4 10% Single phase induction motors > 0.75 kW 2.5 17% Large 3-phase induction motors 375-1000 kW 1.7 12% Explosion proof motors 0.75-375 kW 1.2 8% Brake motors 0.75-375 kW 0.7 5% 8-pole motors 0.75-375 kW 0.1 0.5% Total 14.3 100% 0.0.1.Greenhouse Gas Emissions Greenhouse gas (GHG) emissions, expressed in MtCO2eq, follow the same trend as the electricity consumption. There is however a steeper downward trend in GHG emissions due to a continuous decrease of specific GHG emissions per kWh electricity following increased use of renewable energy sources in EU electricity production and the shift to cleaner fossil fuels such as natural gas. Figure 10 gives an overview of the GHG emissions in the different scenarios. The policy option ECO1 saves 1.4 MtCO2eq, and ECO2 a further 2.6 MtCO2eq compared to the BAU in 2030. ECO3 increases the savings by 20% up to 4.9 MtCO2eq. Figure 10: GHG emissions of the different policy scenarios. Table 4 gives an overview of the gross GHG emissions and savings. For comparison, the savings are the equivalent of the annual emissions from 4 large (500 MW) fossil fuel fired power plants or the equivalent of the annual GHG emissions avoided by over 2600 onshore windmills (2 MW each). Table 4: GHG emission in MtCO2eq 0.0.2.Other Environmental Impacts – Energy dependency

Reductions in the consumption of electricity in final energy demand are associated with multiple environmental benefits and are estimated to have an impact in reducing energy imports – especially oil and gas. The air pollution and health impacts are mainly achieved through the reduction of SO2, NOx and PM emissions and corresponding pollution control costs. The 9.6 TWh net electricity savings in 2030 will induce 2.5 TWh savings of natural gas (0.2 Mtoe), 0.1 TWh of oil (0.01 Mtoe), thereby reducing the energy dependency of the EU. It also saves 3.3 TWh of coal, for which dependency is less an issue. 0.0.3.Circular Economy perspective The environmental life-cycle assessments in the technical preparatory studies, which are a part of the motor regulation's review, show that energy consumption and the related emissions, especially GHG emissions, are by far the most dominant environmental impact for this product category. The use of critical raw materials is minimal, because the products in scope are AC induction motors, meaning that they do not contain permanent magnets with neodymium (unlike Permanent Magnet motors). Metal content, especially copper content, of electric motors is high and achieving very high recycling rates is unproblematic. Further, the reparability of electric motors is good: bearings can be replaced and stators/rotors can be rewired. Therefore, it does not seem to be proportionate at this stage to consider additional measures in support of Circular Economy objectives or other environmental aspects for this product group, other than the exemption for spare parts mentioned below, and the provision of information relevant for disassembly, recycling or disposal at end-of-life, as already foreseen under the current measure. Comments were raised by some stakeholders that accelerated phasing out of IE2 motors (envisaged under the ECO scenarios) would result in more waste as for certain motors repairs or replacements will no longer be possible. This possible effect on resource efficiency was taken into account (see in particular discussion on spare parts in section 6.5). 6.3.Economic Impacts 0.0.0.Product Costs Changing production from IE2-level motors to IE3-level motors does not require new assembly lines or production plants. As stated by industry, it requires one-off redesign work and necessitates investment to replace some of the existing tools used in the production lines. More efficient motors tend to have higher labour costs and to require more copper, higher quality ferrite and to be heavier. Some of them are also larger (change of length or frame size in exceptional cases). As a consequence, the selling price of the products in scope is expected to increase, typically by between 10 and 20% for the sector, representing additional production costs plus margin. From Table 7 , one can see that by 2030 the production costs for industry are expected to increase on average by 1.2%, 5.1% and 8.1% in 2030 for the ECO1, ECO2 and ECO3 scenarios respectively. The relative increases for trade and installers are assumed to be similar, as they are usually calculated as a margin on product costs. This cost increase applies to the transition from the current product mix of motors and VSDs of various efficiencies, to the energy-efficient mix described in the ECO scenarios. Cost figures established under the review study carried out prior to the impact assessment have been used, with updates where needed. Figure 11 gives an overview of the relationship between prices and energy efficiency of an exemplary motor type (M3 – 11 kW), with 2010 prices. For this motor type, the base case on the graph represents the IE0 level, the BAT (Best Available Technology) represents the IE4 level and the intermediate case is the IE2 level. In 2010, a typical 11 kW IE2 motor costs €680 . The price increase for an IE3 motor of this size, which all the ECO scenarios would make mandatory, was calculated at 88€ (+13%) by interpolation between the intermediate case and the BAT. Actual price increases observed in 2017 for an IE3 motor of this size are about 10%, which indicates that the estimate was quite good. Due to further technological progress, and economies of scale, the price increase is estimated to become lower once new ECO requirements will come into force, making the switch to efficient motors economically even more beneficial for end-users. Annex 7, Table 7.6, shows market prices at three different efficiency levels (low, medium and best efficiency) for each of the 22 base cases. Figure 11: Prices and efficiencies are shown for Base Case, intermediate and BAT level motors. The price at other efficiency levels, e.g. at the IE3 level as shown as an illustration, is derived by interpolation. 0.0.1.User Expenditure End-users will face higher acquisition costs due to higher product costs, either as direct motor buyer (e.g. in some large industrial plants) or as buyers of goods in which motors are embedded (e.g. industry or households). However the overall expenditure over the lifetime of the motor is expected to go down due to energy savings. This is ensured through the selection of energy efficiency levels that match the least Life Cycle Costs over the product lifetime, as required by the Ecodesign directive. These cost optimum levels have been determined under the review study and where needed have been confirmed during the impact assessment (see Annex 9). Table 5 gives the annual user expenditure, and Table 6 presents the accumulative expenditure since 2020 for the reference years 2030 and 2040. The first row of each table gives absolute expenditure for the baseline. The following rows relate to increase, due to acquisition and maintenance, and reductions, due to energy costs, in expenditure due to the proposed scenarios. Table 5: Annual user expenditure in billion Euros (Euro2010) Table 5 shows an increase in annual acquisition costs in 2030 of up to €0.1 billion for option ECO1, €0.5 billion for ECO2 and €0.9 billion for ECO3. But overall, end-users will save €0.8 billion for option ECO1, €2.4 billion for ECO2 and 2.9 billion for ECO3 in 2030 due to energy savings. Table 6 with accumulative expenditure shows that in the period 2020-2030 the users will invest around €1.5 billion more for option ECO1 but will save around €4.6 billion in lower energy bills. For option ECO2 the additional investments amount to €5.6 billion, while the energy savings reach €10.4 billion. For ECO3, the total additional investment is €9.2 billion and total energy savings amount to €14.6 for the period 2020-2030. For that option the benefits are more obvious when looking at the period 2020-2040, because the effects of the measure only take effect in 2022, as stipulated in section 5.6. Around that year the acquisition costs will rise in a significant manner due to new requirements in force, while the energy savings will take several years to materialise due to the progressive replacement of the motor stock. The cumulative effect in the period 2020-2030 is therefore mitigated. For the period 2020-2040, the picture is better as ECO3 induces an additional investment of €6.4 billion for the end-users, compensated by €8.0 billion energy savings over that period. These figures provide an overall picture covering varied situations. More specifically, it is expected that industrial motor users will benefit substantially from the regulation through increased energy savings that are significantly larger than the incremental purchase cost of the motor. In the domestic and tertiary sector especially covered by the ECO3 scenario, users will experience various outcomes depending on the type of end-product and the usage they make of it. A user who rarely uses an appliance might experience an overall cost increase over the lifetime of the product, while an intensive user will experience substantial benefits. Overall, an 'average' domestic user will benefit from the regulation. Indeed, the energy efficiency requirements have been set in order to match the least life cycle cost for a typical application. Small motors for domestic appliances tend to be very cheap; therefore, should a financial loss occur for some end-users, it is likely to remain very limited. The cost-benefit analysis is described in Annex 9. Table 6: Accumulative user expenditure in billion Euros (Euro2010)

0.0.2.Business Revenues The increased motor acquisition costs discussed in Section 6.3.1 translate into a revenue increase for the economic actors: it is estimated that 54% of the increase will benefit the motor producing industry, 26% the traders and dealers, and 20% the installers (installation, assembly and maintenance). Table 7: Business revenue for industry, trade and installers in billion Euros (Euro2010) As can be deduced from Table 7 , total business revenue increase by 1.2%, 4.8% and 7.8%in 2030 for the ECO1, ECO2 and ECO3 scenarios respectively. Note that the modelling of revenues takes into account not only extra production costs based on today’s pricing, but also a learning effect that reduces production costs by 1% annually. However it has to be noted that in the current economic context the motors industry may not be able to materialise the full benefits of the regulation. Indeed since 2014 the oil and gas industry crisis has resulted in an unprecedented decline in investment in this sector, negatively affecting the global sales of motors and VSDs. This results in oversupplies, lower market prices and revenues for the motor systems industry. This means that suppliers may not be able to pass to their customers the full cost of more energy efficient motors. Sales are expected to recover in the period 2018-2021. The product's value at end-of-life is assumed zero, i.e. costs for disassembly and disposal are assumed to be covered by revenue from recycling. Products in the scope are AC induction motors, meaning that they do not contain permanent magnets with neodymium. Hence there is no additional rest-value from recovery of this relatively rare material. Nonetheless, cost-neutrality is a conservative assumption, because the value of the metal content, especially of copper, is usually much higher than any recycling and disposal costs. It has also to be understood that figures represent a global picture, as some manufacturers may get greater benefits than others. The specific case of SMEs is considered in the next section. Specific segments of the motor and VSD markets deserve a separate discussion: a)Very large motors (375-1000 kW) EU manufacturers have a very strong position in the manufacture (and export) of very large motors in the range of 375-1000 kW, covered in the ECO2 and ECO3 scenarios. The ‘IE3’ level is already in line with current trends. It does raise the EU ambition level to what is already, or soon expected to be, customary in the rest of the world and supports EU manufacturers in keeping their competitive edge. `)VSDs In the ECO2 and ECO3 scenarios, it is proposed to regulate the efficiency of VSDs in line with the international standard adopted early 2017. The energy efficiency IE2 level is proposed, i.e. the highest level in defined in the standard. Unfortunately there is not an internationally agreed definition of higher levels (IE3 or IE4 levels): while many of 97 products analysed in a recent study largely exceed the minimal threshold for IE2 and potentially qualify for hypothetical IE3 or even IE4 levels, CEMEP's position is that defining and requiring levels above IE2 for VSDs is premature. Setting requirements for VSDs at the IE2 level will raise attention on VSDs and on VSD efficiency, will make sure all VSD manufacturers measure and declare VSD efficiency, will eliminate the mots inefficient drives that probably still exist on the market, and it will pave the way for tighter requirements in a future review of the regulation, based on a revised international standard. However in order to encourage the placing on the market of more efficient drives, it is proposed to define IE3 and IE4 classes in the regulation as part of the information requirements. a)8-pole motors Based on life cycle cost calculation, the ECO2 and ECO3 scenarios include 8-pole motors that were previously excluded. These motors represent a very small market and are commercially available in IE2 and IE3 versions. According to CEMEP, manufacturers that have not already adjusted their production lines may face difficulties to make the necessary investments. This is why it could make sense to allow 3 years for this industry segment to adapt (i.e. 01/07/2022). b)small motors (below 0.75 kW also called 'fractional horsepower' motors) In ECO3, it is considered to extend the scope to the 'fractional horsepower' motors. The share of imports of these motors in the EU market is progressively increasing (from 13% in 2009 to 29 % in 2016). Imports are dominated by Asian companies in the form of separate motors or, above all, motors integrated in components or end-products. Third country producers that integrate the motors in products that then – as a component or end product – cross the EU border will have to declare compliance with the Ecodesign motor regulation on their document of conformity. The importers may be subject to document inspection and possibly also verification and testing by the EU market surveillance authorities. The proposed ambition level of ECO3 for these motors is the ‘IE2’ level. This market can be categorised as follows:

I.Industrial 3-phase motors, for which IE2 is already commercially available but not widespread. N.Industrial single-phase motors, for which IE2 represents an ambitious level, that is not currently widespread. It is however economically justified due to the intensive use of these motors in the industry. I.Single-phase motors used in domestic appliances that are produced in very large quantities, are usually less robust and tend to be very cheap. Here the IE2 level also represents an ambitious level, not widespread on EU market. It has an economic justification because the extra cost of these motors will be compensated by energy savings also when assuming only 400 running hours per year (see annex 9). It as to be noted that for smaller motors, energy savings are proportionally higher than for large motors (see figure 1.2 in Annex 1): for example a 0.37 kW 4-poles IE2 motor consumes 9.2% less than its IE1 counterpart. Smaller motors being also produced by smaller companies, it is believed that sufficient time should be provided for industry to adapt to this market transformation. This is why requirements in the ECO3 scenario could be proposed to enter into force as of 1st July 2022. See also discussion in section 6.6 for further discussion of the specific case of motors integrated into products. c)Single phase motors For single-phase motors over 0.75 kW covered in the ECO2 and ECO3 scenarios, it is also believed that sufficient time should be provided for industry to adapt, for similar reason as described above for small motors. d)Special purpose motors (brake motors and explosion-proof motors) Regarding brake motors, which are usually a standard motor with a brake to abruptly slow or stop the shaft rotation, there is a general consensus among stakeholders in favour of removing the exclusion. One exception would remain for integrated brake motors as the motor cannot be tested independently. CEMEP has pointed out technical difficulties related to the intermittent nature of brake motors operation and has argued for setting requirements at IE2 level. This would reopen a risk of loophole and is not seen as a major issue: the regulation proposal is limited to motors rated for continuous duty; brake motors working and rated for intermittent duty would in fact be excluded. Similarly the exemption provided for explosion-proof (ATEX) motors could be defined more specifically, and the distinction should be made between motors operating in explosive atmospheres generally, for which there is no reason to foresee an exemption, and Increased Safety (Exe) motors, as defined in IEC EN 60079-7, which have certain technical specificities such as larger clearances, that may not enable them to reach high efficiency levels such as IE3 and for which IE2 is therefore proposed. This is in line with the provision of the international standard on motors energy efficiency (IEC 60034-30-1). For both categories, sufficient time adaptation is needed in order to adapt the products if needed, and allow the notified bodies to perform the conformity assessment pursuant to the ATEX directive where applicable. 0.0.3.SMEs The impact on SMEs needs to be considered along the whole value chain, taking into account the benefits for the segments of trading, customizing, installing and servicing motors, as well as fan users, balancing the possible difficulties for some specific market segments. SMEs producing electric motors in the current scope are rare. Market data suggest that to be competitive in the production of standard motors a company size of more than 500 employees is needed. And even then, these 'smaller companies' like Marelli Motors or Gruppo Lafert tend to specialise on those market segments where the competitive edge stems from their customer service and tailor-made solutions to very specific needs. The scope extension towards smaller motors considered in ECO3 would involve a greater number of SMEs directly active in motors production. CEMEP highlighted that for this specific market segment smaller companies could face difficulties in making the investments needed to produce high efficiency motors, with the risk that their production would cease. Similar difficulties were mentioned for single phase motors and 8-pole motors, for which they believe the narrow EU market does not justify the necessary investments. The investments required to transform the production lines are proportionally more significant for SMEs than for larger companies, hence the potential difficulties. SMEs whose product range includes mainly motors in the new scope will be more affected. However in practice the product range of SMEs tend to be quite diverse, including for example motors already in scope for which the investment has already been made, motors in the new scope requiring additional investments, and motors not in scope for which no investment is needed. It sometimes includes other types of equipment as well. In total probably about 120-150 competitors are active on the EU market of small industrial motors. About 80 companies are based in the EU, and imports come mainly from countries such as China (Wolong, Blue Ocean, Klee, Able, Techtop, etc.), Thailand (Fasco), US (Weg, Franklin, etc…) or Turkey. A series of large players (not SMEs) dominate the market: it is believed that about 20 companies such as Siemens, EBM, Nidec, ABB, Wolong ATB, SEW, Danaher, Lenze, Hanning, Lafert, Baumüller, Nord, Stöber, EME-Unilectric, Motovario, AEG, Amer, Came, … dominate the market of small industrial motors with a share of about 70%-80%. However the main presence of SMEs in the motors business resides in importing, reselling, customising, installing and maintaining, although exact numbers are not available as these small companies supply a broad range of industrial services, of which motor related activities are only a part. These SMEs will benefit from the new regulation through increased business revenue, as explained in the previous section. The greatest benefits are expected in the ECO3 scenario (largest revenues). SMEs using motors in the course of their activities will benefit from the new regulation through reduced costs over the lifetime of the motors, as any increase of motor prices will be compensated by greater savings in energy bills. Considering the widespread use of motors, this will provide benefits to many enterprises. The benefits are proportionate to the energy savings, which means that ECO3 will provide the greatest benefits. As mentioned above, the impact on SMES needs to be considered along the whole value chain, taking into account the benefits for the segments of trading, customizing, installing and servicing motors, as well as motor users, balancing the difficulties for some specific market segments. We consider that the overall benefits of the measure on SMEs, taking into account the whole value chain as highlighted above, will outweigh the difficulties that may be encountered by the SMEs specifically active in motors manufacturing, leading to the conclusion that ECO3 may be an advantageous option for SMEs.

0.0.4.Innovation, Research and Development, Competitiveness and Trade In 2014 ABB employed around 8 500 researchers and developers in more than 30 countries. ABB’s research and development (R&D) investments in 2014 totalled $1.5 billion, representing 3.8% of revenues. In 2013, Siemens invested €4.29 billion in its total R&D. This represents 5.7% of revenue. Also Schneider Electric devotes 5% of its revenue to R&D (€1.2-1.3 billion). Assuming proportionality with sales, these three companies globally spend more than €1 billion annually on R&D for new products and new production facilities of motors and VSDs. For the sector as a whole, the R&D expense in motor systems may be as high as €1.5 billion. Overall, the revision of the motor regulation is expected to support innovation and drive market transformation, similarly to what could be observed in the past (see Annex 5). It is in line with ongoing market trends towards higher energy efficiency, and will act as a catalyst towards more energy efficient motors and VSDs. However it is not expected that the regulation will lead to any significant structural increase of R&D budgets because products meeting the requirements are already commercially available on the market. Impact will be most limited in the ECO1 scenario, as IE3 motors are largely available today. Under ECO2 additional process innovation may be required, mainly for single-phase or 8-pole motors and for companies not producing energy-efficient VSDs. For ECO3, process innovation may also be required, especially for single-phase motors – thus bringing in a category that so far has not yet been subject to minimum requirements in the EU. As the techniques to improve energy efficiency of induction motors are known already, innovation is likely to focus on cost-reduction, except for companies willing to offer products going beyond requirements. This development of innovative energy-efficient technologies at competitive prices will enhance competitiveness of European manufacturers in home and foreign markets. On the contrary, no action (the BAU scenario) could lead to lower R&D spending or declining revenues, because the demand for innovative motor systems would be lower and hence reduce pay-back on R&D investments. It has to be noted that new requirements assessed in this Impact Assessment would be introduced within a timeframe that is in line with the market's investment and innovation cycle, as established through consultation with industry stakeholders. The new requirements would be technology-neutral, as manufacturers are free to choose the options in order to improve the efficiency of their motors. A review clause is foreseen in order to keep pace with technological developments. 0.0.5.Administrative costs a) Industry The existing motor regulation defines that the assessment of conformity to the requirements is based on self-declaration by manufacturers, which is still seen as most appropriate option for any potential revision of the regulation. No stakeholder or Member State expressed doubt about the appropriateness of this system, or requested a different basis for the conformity assessment. This system of conformity assessment, in conjunction with compliance verification by MSAs (Market Surveillance Authorities), is considered capable of ensuring an effective and efficient implementation of all policy options. In line with the established practice for legislation on the EU's single market for goods, the proposed policy options would make use of the CE marking with a declaration of conformity. In practice, when placing products regulated by ecodesign on the market, companies are therefore required to: I.assess the product’s conformity with the relevant requirements (typically requires physical testing of product energy efficiency) N.issue an EC declaration of conformity I.affix the CE mark on the products II.keep the documents relating to conformity assessments and declarations of conformity available for inspection by Member States for a period of 10 years after the last product has been manufactured (i) (ii) and (iv) are performed once for each product type and do not need to be repeated for each individual product of this type that goes out of the factory. Therefore there are no additional administrative or reporting requirements for companies already producing IE3 motors in scope. Companies placing products on the market in the proposed new scope (ECO2 or ECO3 scenarios), or that are newly producing IE3 motors in the existing scope (ECO1 scenario) will of course have to go through the self-declaration procedure described above. The current motors regulation also contains information requirements (Annex I.2: product information requirements on motors) : motor manufacturers and manufacturers of products in which motors are incorporated have to provide information listed in points 1 to 12 of the annex on their free access websites and technical documentation. However following assessment of stakeholder comments, it appears that these information requirements could be revised, removing unnecessary administrative burden, in particular for manufacturers of products containing motors. b) Authorities The form of the legislation would be a Commission Regulation, which is directly applicable in all Member States. This means there are no costs for transposition of the legislation into national legislation. The Impact Assessment on the recast of the Energy Labelling Directive calculated the administrative burden of introducing a new implementing directive, similar to the proposed ecodesign implementing measure, in accordance with the EU Standard Cost Model. It estimates the administrative cost of implementing measures in the form of a Directive at €4.7 million of which €720 000 for administrative work on the amendment and development of the new directive and €4 million for transposition by Member States. It follows that the administrative cost of a Commission Regulation would be not more than €720 000. Further, most of these costs also arise in the BAU case, because the review leading to a revision, with all the involved costs, is a legal obligation on the Commission through the existing motor regulation. MSAs are currently enforcing the motor regulation through compliance checks. An extension in scope increases the extent of surveillance activities as for any ecodesign regulation but does not create specific technical challenges. To the contrary, the current regulation addresses several loopholes and problems encountered by MSAs in the context of the current regulation. Enforcement involves random spot-checks by MSAs, but from experience with other regulations of this type most spot-checks are not random but follow a risk-based approach e.g. based on indications of competitors or third parties (e.g. industry or specific complaints of buyers). In those cases, MSAs maybe in a position to recuperate testing and legal costs, and to collect fines. Based on (incomplete) data collected from Member States it was estimated in the IA for the revision of the energy labelling Directive (2015) that total market surveillance spending by Member States was likely to be around € 10 million annually for ecodesign and energy labelling. If one assumes equal spending for the +/- 45 ecodesign / energy labelling measures, the spending is about 200.000 € per measure. Increasing the scope of the motors regulation is likely to result in a shift of resources rather than an increase of resources: MS budgets for market surveillance do not increase in proportion to the scope of products to be covered; each Market Surveillance Authority establishes its own priorities, often on a risk-based approach.

Surveillance also encompasses activities such as outreach to actors (through webinars, brochures…) whose cost does not depend on the size of the scope of individual measures. The EU is taking several measures to improve effectiveness of market surveillance such as support to the ADCOs (Administrative Cooperation Groups), the setting up of an energy labelling products database, the preparation of guidelines, and the review of the enforcement legislation on products. It also provides financial support to joint surveillance actions in the field of ecodesign and energy labelling. Regarding motors integrated as components into end-products, a first compliance check can be done based on the technical documentation at no additional cost, for instance to ensure that the motor bears the CE-mark and that it is accompanied with the necessary technical documentation proving compliance. If the MSA wants to test the motor this may lead to higher costs if the motor has to be dismantled from the product in which it is integrated. However MSAs have other ways to have access to such motors, e.g. they may order them from the motor supplier or ask to the appliance manufacturer to provide them. 0.0.6.Intellectual Property Rights Motors of efficiency class IE3 are commonly available from all major manufacturers. No stakeholder such as industry associations or individual companies raised concerns that more stringent ecodesign requirements would impose proprietary technology on manufacturers. 0.0.7.Stranded investments When a regulation is reviewed and tighter requirements are proposed, the question of stranded investments arises. In the case of motors, the risk of stranded investments might exist for the production of IE2 motors. As of 16 June 2011, the IE2 efficiency level was required for all motors under scope of 640/2009. IE3 level have been introduced on 1 January 2015 and 1 January 2017 depending on the power, but IE2 motors are still allowed if equipped with a VSD. According to the three assessed ECO policy options, the IE3 efficiency level will be mandatory for these motors, as of 15 of January 2020. This means that investments in the production of IE2 motors (supposedly made before the IE2 requirement entered into force i.e. 16 June 2011) will last for 9 years at least. Considering the high depreciation rates practiced by the industry, 9 years is an appreciable duration and therefore the proposed phase-in time should not result in significant stranded assets. The industry association CEMEP did not raise this issue and was supportive to moving to the higher IE3 efficiency level for the motors currently in scope. In conclusion, stranded investments do not seem to be a concern for the proposed ECO measures. 6.4.Social Impact 0.0.0.Affordability Electric motors are generally not directly purchased by private consumers. The motors in scope are sold to industry, the energy sector and to some extend also the tertiary sector, with many used as components in end-products. The scope extension under ECO 3 will also increase the efficiency of motors in many household appliances. The end-users will experience some increase in purchase price for their motorised products. There will be an overall change in the balance between upfront acquisition costs (which increase) and running costs (which will be lowered) but, as indicated in Section 6.3.2, the large savings in energy costs make this investment attractive (see also annex 9). 0.0.1.Health, Safety and Functionality Aspects There are no specific health and safety aspects related to the measures analysed. Explosion-proof and other motors will still have to comply, and can comply, with EU safety requirements. There are no known negative impacts from using more efficient motors as prescribed by the policy options. 0.0.2.Employment Impact on EU employment was estimated from average revenue per job. For industrial jobs (manufacturing, OEMs and business services) this is set at €50,000 per job. For trade (logistics, retailers, agents, importers and whole sellers) €60,000 per job is assumed and for installation work the revenue is set at €100,000 per employee. A share of these jobs, especially the OEMs, will be created outside the EU . The new policy options will add around 6,500 (ECO1 scenario) to 20,000 jobs (ECO2 scenario) by 2030. The methodology, which is in line with latest publications on the issue , , takes into account only jobs in the supply chain. Induced employment from spending of e.g. employee’s earnings or tax revenues is not taken into account here, but would only increase the total number of jobs created. 6.5.Exemptions During stakeholder consultation, a number of technical difficulties related to the existing or new regulation were raised by stakeholders. These were taken into consideration during the impact assessment, and the following exemptions are considered in order to ensure smooth implementation of the regulation: a)Spare parts Under the current regulation, a motor supplied as spare part, to replace a motor that was not regulated when it was placed on the market, has to comply with the latest requirements applicable at the time it is supplied. This supports a fast replacement of the inefficient motor stock. However in some situations this can create difficulties. Indeed, energy efficient motors have different characteristics than standard motors. The extent to which these specific characteristics diverge depends on the strategies used by manufacturers to increase the efficiency for a specific model. In general however, energy efficient motors tend to be heavier, sometimes larger, and to have higher inertia (heavier rotor). Such differences may cause practical problems when replacing an existing motor by a more energy–efficient one, for example in an industrial installation or a complex product in which the motor is integrated. Sometimes this may be resolved by simple adaptations, by re-engineering, but in some cases this might be uneconomical and the product in which the original motor was integrated has to be replaced by a new product. This is not necessarily an optimal outcome in terms of circular economy. To resolve these issues industry players have advocated for an exemption for motors supplied as spare parts. Such exemption would favour the reparability of products in which the motors are integrated, but it slows down the replacement of inefficient motors and it creates a potential loophole, as it is quite difficult for market surveillance authorities to trace motors sold as spare parts and make sure they are effectively used as such. Therefore the exemption should not be allowed for an indefinite period of time. In the circulators regulation a 5-years exemption has been allowed for circulators integrated in products, which face a similar issue. This is considered insufficient by industry. As an outcome of the reflexion, a spare parts availability of 7 years is proposed for motors integrated in products, as a pragmatic solution allowing to balance the justified need of spare parts availability and the necessity to limit the existence of the loophole in time.

`)Nuclear installations Motors specifically designed and qualified to ensure safety of nuclear installations, as defined in article 3 of Directive 2009/71/EURATOM should be excluded because the high cost associated with requalification in the nuclear domain. a)Totally Enclosed Non-Ventilated (TENV) Motors and TEAO (Totally Enclosed Air Over) TENV motors are designed to operate without a fan and they predominantly dissipate heat by radiation. Their nominal output power is therefore typically only 30% compared to a standard IEC “air cooled” motor and are designed in larger frame size (size of the motor body). They are provided without their own fan and cannot therefore be tested separately. TEAO motors are designed to be cooled by the specific air stream of the driven equipment (e.g. a fan). Therefore testing requires a dedicated cooling device. There is currently no internationally recognised test method for such motors. b)Integrated brake motors Motors with an integrated brake where the brake is an integral part of the inner motor construction and can neither be removed nor supplied by a separate power source during the testing of motor efficiency should be excluded because they cannot be tested independently (replaces the general exemption for brake motors in regulation 640/2009). c)Increased safety motors Increased safety motors (Exeb) as defined in standard IEC EN 60079-7:2015 should be assigned the IE2 level as discussed in section 2.2.3 (replaces the general exemption for motors designed to operate in potentially explosive atmospheres in regulation 640/2009). d)Motors with mechanical commutators. Mechanically commutated motors (e.g. Universal motors and some DC motors) have a very low operating time limited by the lifetime of the commutators. The preparatory study has shown that they have a low environmental impact. This exemption was not in regulation 640/2009 because its scope was limited to squirrel cage motors that by