Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings

Federal RegisterMay 1, 2024

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DEPARTMENT OF ENERGY

10 CFR Parts 433 and 435

[EERE-2010-BT-STD-0031]

RIN 1904-AB96

Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings

AGENCY:

Federal Energy Management Program, Department of Energy.

ACTION:

Final rule.

SUMMARY:

The Department of Energy (“DOE”) is publishing a rule that establishes energy performance standards for the new construction and major renovation of Federal buildings, including commercial buildings, multi-family high-rise residential buildings, and low-rise residential buildings per the Energy Conservation and Production Act (“ECPA”), as amended by the Energy Independence and Security Act of 2007 (“EISA”). Consistent with the requirements of ECPA and EISA, DOE is establishing Federal building energy performance standards that require Federal agencies to reduce their use of on-site use of fossil fuels (which include coal, petroleum, natural gas, oil shales, bitumens, tar sands, and heavy oils) consistent with the targets of ECPA and EISA. This final rule also provides processes by which Federal agencies may petition DOE for a modification to the final standards.

DATES:

The effective date of this rule is July 15, 2024. Compliance with revised performance standards established in this rule is required for the construction of new and major renovation of Federal buildings, including commercial buildings, multi-family high-rise residential buildings, and low-rise residential buildings, for which design for construction begins on or after May 1, 2025.

ADDRESSES:

The docket for this rulemaking, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

index.

The docket web page can be found at

www.regulations.gov/docket/EERE-2010-BT-STD-0031.

The docket web page contains instructions on how to access all documents, including public comments, in the docket.

FOR FURTHER INFORMATION CONTACT:

Mr. Rick Mears, U.S. Department of Energy, Office of the Under Secretary for Infrastructure, Federal Energy Management Program, FEMP-1, 1000 Independence Avenue SW, Washington, DC 20585-0121. Email:

cer-information@hq.doe.gov.

Ms. Laura Zuber, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 306-7651. Email:

laura.zuber@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

A. Authority

B. Background

C. Final Rule Overview

II. Public Comments on the 2022 SNOPR

III. Discussion of the Final Rule

A. Scope

1. Federal Buildings

2. Calculating Costs

a. Construction and Major Renovations Costs

b. Individual Buildings

c. Major Renovations

d. Energy Conservation Measures

3. Fossil Fuel-Generated Energy Consumption

a. Limitation to On-Site Use of Fossil Fuels

b. Exemptions and Exceptions

B. Performance Standards for Fossil Fuel-Generated Energy Consumption

1. New Construction and Major Renovations of a Whole Building

2. Major Renovations Within a Building

3. Shift Adjustment Multiplier

4. Compliance Date

C. Petitions for Downward Adjustment

1. DOE Review of Petitions

2. Making Petitions for Downward Adjustment Public

3. Bundling Petitions

4. GSA Tenant Agencies

5. Petitions Submitted by the Department of Defense

D. Definitions

IV. Additional Issues Raised by Commenters

A. Authority

B. APA Concerns

V. Methodology, Analytical Results, and Conclusion

A. Cost-Effectiveness

B. Emissions Analysis

1. Air Quality Regulations Incorporated in DOE's Analysis

C. Monetizing Emissions Impacts

1. Monetization of Greenhouse Gas Emissions

a. Social Cost of Carbon

b. Social Cost of Methane and Nitrous Oxide

c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates

2. Monetization of Other Emissions Impacts

D. Public Comment

E. Conclusion

F. Reference Resources

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Information Quality

VII. Approval of the Office of the Secretary

I. Introduction

The following section briefly discusses the statutory authority underlying this final rule, as well as some of the relevant historical background related to the establishment of a fossil fuel-generated energy consumption reduction rule for certain Federal buildings.

A. Authority

Section 305 of ECPA established energy conservation requirements for Federal buildings. 42 U.S.C. 6834. Section 433(a) of EISA amended section 305 of ECPA and directed DOE to establish regulations that require certain new Federal buildings and Federal buildings undergoing major renovations to reduce their fossil fuel-generated energy consumption. 42 U.S.C. 6834(a)(3)(D)(i). The fossil fuel-generated energy consumption reductions only apply to Federal buildings that: (1) are “public buildings” (as defined in 40 U.S.C. 3301)

with respect to which the

Administrator of General Services is required to transmit a prospectus to Congress under 40 U.S.C. 3307;

or (2) those that cost at least $2,500,000 in costs adjusted annually for inflation. 42 U.S.C. 6834(a)(3)(D)(i).

Under 40 U.S.C. 3301(a)(5), “public building” is a building, whether for single or multitenant occupancy, and its grounds, approaches, and appurtenances, which is generally suitable for use as office or storage space or both by one or more Federal agencies or mixed-ownership Government corporations. “Public building” includes Federal office buildings, post offices, customhouses, courthouses, appraisers stores, border inspection facilities, warehouses, record centers, relocation facilities, telecommuting centers, similar Federal facilities, and any other buildings or construction projects the inclusion of which the President considers to be justified in the public interest. The definition does not include a building or construction project that is on the public domain (including that reserved for national forests and other purposes); that is on property of the Government in foreign countries; that is on Native American and Native Alaskan property held in trust by the Government; that is on land used in connection with federal programs for agricultural, recreational, and conservation purposes, including research in connection with the programs; that is on or used in connection with river, harbor, flood control, reclamation or power projects, for chemical manufacturing or development projects, or for nuclear production, research, or development projects; that is on or used in connection with housing and residential projects; that is on military installations (including any fort, camp, post, naval training station, airfield, proving ground, military

supply depot, military school, or any similar facility of the Department of Defense); that is on installations of the Department of Veterans Affairs used for hospital or domiciliary purposes; or the exclusion of which the President considers to be justified in the public interest.

40 U.S.C. 3307 describes the minimum construction, alteration, and lease costs that would trigger a prospectus to Congress.

For these buildings, section 305 of ECPA, as amended by EISA, mandates that the buildings be designed so that a building's fossil fuel-generated energy consumption is reduced as compared with such energy consumption by a similar building in fiscal year (“FY”) 2003 (as measured by Commercial Buildings Energy Consumption Survey (“CBECS”) or Residential Energy Consumption Survey (“RECS”) data from the DOE's Energy Information Administration (“EIA”) by 55 percent beginning in FY 2010, 65 percent beginning in FY 2015, 80 percent beginning in FY 2020, 90 percent beginning in FY 2025, and 100 percent beginning in FY 2030, also shown in Table I.1. 42 U.S.C. 6834(a)(3)(D)(i)(I).

Table I-1—Building Percentage Reduction Requirements by Fiscal Year

Fiscal year

Percentage reduction

2010

2015

2020

2025

2030

100

In addition, ECPA, as amended by EISA, permits DOE to adjust the applicable numeric reduction requirement downward with respect to a specific building, if the head of the Federal agency requesting the downward adjustment certifies in writing that meeting such requirement would be technically impracticable in light of the agency's specified functional needs for that building and DOE concurs with the agency's conclusion. 42 U.S.C. 6834(a)(3)(D)(i)(II). Such an adjustment does not apply to the General Services Administration (“GSA”).

Id.

B. Background

In this final rule, DOE establishes regulations that require certain new Federal buildings and Federal buildings undergoing major renovations to be designed to reduce their fossil fuel-generated energy consumption and provides a process for Federal agencies to petition for a downward adjustment from these requirements if applicable. This rule amends the regulations governing energy efficiency in Federal buildings found in 10 CFR parts 433 and 435.

DOE previously published a notice of proposed rulemaking (“NOPR”) in the

Federal Register

on October 15, 2010, which proposed a rule to implement section 433 of EISA. 75 FR 63404. A public meeting on the NOPR was held on November 12, 2010, and public comments were accepted through December 14, 2010. DOE received several comments expressing concern and encouraging DOE to re-examine the proposed regulations.

In response to these comments, DOE identified additional areas for clarification and consideration that would benefit from further public comment. DOE issued a supplemental notice of proposed rulemaking (“2014 SNOPR”) on October 14, 2014. 79 FR 61694. Comments were accepted through December 15, 2014.

Id.

DOE received comments requesting reconsideration of key issues.

Complete contents of the docket folder may be found at

www.regulations.gov/#!docketDetail;D=EERE-2010-BT-STD-0031.

DOE revisited its proposed rule and issued a second SNOPR on December 21, 2022 (“2022 SNOPR”). 87 FR 78382. The rule proposed in the 2022 SNOPR differed from the rule proposed in the 2014 SNOPR. Specifically, the rule proposed in the 2022 SNOPR:

Limited its application to on-site fossil fuel usage or Scope 1 GHG emissions in CO

e (“Carbon Dioxide Equivalent Gases”).

Introduced a shift multiplier for Federal commercial buildings that operate on extended schedules compared to the private sector buildings sampled in CBECS.

Revised the calculation of fossil fuel usage to be consistent with how DOE measures fossil fuel usage and greenhouse gas emissions in reporting related to Section 432 of EISA.

Clarified that the rule applies to EISA-subject major renovations for (1) all on-site fossil fuel-using systems, (2) on-site fossil fuel-using system level renovations, and (3) on-site fossil fuel-using component level renovations.

Clarified when the rule applies to leased Federal facilities.

Refined an approach to determine required fossil fuel-generated energy consumption levels for EISA-subject major renovations that are limited to system or component level retrofits.

Provided an alternative compliance method for buildings with process loads that are not included in CBECS and RECS.

Clarified that process loads of building types not included in CBECS are not subject to the fossil fuel reduction requirements.

Stated that certain renewable fuels are exempt from the calculation of fossil fuel usage.

Identified information Federal agencies must provide when petitioning for a downward adjustment.

A public meeting on the 2022 SNOPR was held on January 5, 2023, and public comments were accepted through March 23, 2023. 87 FR 78382; 88 FR 12267. The comment period was extended to accommodate requests from stakeholders to provide additional time to analyze the information presented in the 2022 SNOPR and accompanying technical support document.

C. Final Rule Overview

The final rule adopts energy performance standards for new construction and major renovation of Federal buildings. The final rule adds standards for the maximum emissions resulting from on-site fossil fuel usage, language related to the purpose of these new standards, definitions associated with these standards, and a detailed process for Federal agencies petitioning for a downward adjustment from these standards to 10 CFR parts 433 (Federal commercial and multi-family high-rise residential buildings) and 435 (Federal low-rise residential buildings). The final rule adds the following provisions to 10 CFR parts 433 and 435:

Adds a paragraph to the purpose and scope provisions which states that the regulation also establishes the maximum allowable fossil fuel-generated energy consumption standard for EISA-subject Federal buildings.

Adds and revises definitions applicable to 10 CFR parts 433 and 435.

Adds subpart B that outlines the fossil fuel-generated energy consumption requirement, the process for determining a Federal building's fossil fuel-generated energy consumption, and the process for petitioning for a downward adjustment.

Adds Appendix A to Subpart B that identifies the targets for specific building types and climate zones for FY 2020-2024 and FY 2025-2029.

After considering the comments submitted in response to the 2022 SNOPR, DOE makes the following substantive revisions to the rule proposed in the 2022 SNOPR:

Revises the definitions of “construction cost” and “major

renovation cost” so that the definitions list similar costs associated with the construction or major renovation of EISA-subject buildings.

Shortens the review period for the FEMP Director to review petitions for downward adjustment related to construction of new Federal buildings or major renovations from 45 days to 30 days.

Adds regulatory language that clarifies when Federal agencies may bundle petitions for downward adjustments.

Additionally, DOE updated the datasets used for the underlying modeling impact analysis. The final rule is discussed in greater detail in section VII of this document.

II. Public Comments on the 2022 SNOPR

DOE received comments in response to the 2022 SNOPR from the individuals and interested parties listed in Table II-1.

These comments are available in the public docket for this rulemaking. The specific issues relating to the final rule raised by the commenters are addressed in section III of this document. Additional concerns raised by the commenters relating to DOE's authority to promulgate these standards or potential procedural issues are addressed in Section IV of this document. A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.

DOE also held a public meeting webinar on January 5, 2023, where it sought input from stakeholders regarding its proposed rule. DOE focuses on written comments in this final rule, as only one stakeholder (Sierra Club) opted to speak during the public meeting webinar, and its verbal comments were consistent with its written comments later submitted.

DOE received comments from an individual on April 11, 2023, after the re-opened comment period closed. Doc. No. 127. Despite the fact that these comments were filed late, DOE considered the issues raised in these comments when reviewing the rule.

The parenthetical reference provides a reference for information located in the docket for this rulemaking. (Docket No. EERE-2010-BT-STD-0031, which is maintained at

www.regulations.gov

). The references are arranged as follows: (commenter name, comment docket ID number, page of that document).

Table II-1—December 2022 SNOPR Written Comments

Commenter(s)

Abbreviation

Document No.

A J

118

Abbi J

119

Aeroseal

Alliance to Save Energy

ASE

American Chemistry Council

ACC

American Council for an Energy-Efficient Economy, Earthjustice, Rewiring America, Rocky Mountain Institute, & Sierra Club

ACEEE et al.

126

American Gas Association

AGA

100

American Institute of Architects

AIA

114

American Public Gas Association

APGA

102

The American Society of Heating, Refrigerating and Air-Conditioning Engineers

ASHRAE

Anonymous

Bloom Energy

Build SMART

111

Business Council for Sustainable Energy

BCSE

115

Celsius Energy

117

Coalition of 66

Combined Heat and Power Alliance

CHPA

104

Federal Bureau of Investigation

FBI

Fuel Cell & Hydrogen Energy Association

FCHEA

106

Geothermal Exchange

103

Green Buildings Institute

GBI

120

Institute for Policy Integrity at New York University School of Law

International Association of Sheet Metal, Air, Rail and Transportation Workers

SMART

International Code Council

ICC

Jenna B

Lauren Schwarze

Local Officials

125

Michael Ladach

122

Microgrid Resources Coalition

MRC

105

Middle Tennessee Natural Gas Utility District

112

National Electrical Contractors Association

NECA

123

National Propane Gas Association

NPGA

Philadelphia Gas Works

PGW

116

Polyisocyanurate Insulation Manufacturers Association

PIMA

Rinnai America Corporation

121

S. McKnight

127

Samuel Smith

110

Sarah Lance

Sierra Club members

124

Think Microgrid

U.S. Green Building Council

107

View Inc

Washington Gas Light Company

WGL

101

Gas Associations

III. Discussion of the Final Rule

The following section discusses the final rule. The final rule introduces energy performance standards for new construction and major renovation of Federal buildings. The final rule adds standards for the maximum emissions resulting from on-site fossil fuel usage, language related to the purpose of these new standards, definitions associated with these standards, and a detailed process for Federal agencies petitioning for a downward adjustment from these standards to 10 CFR parts 433 (Federal commercial and multi-family high-rise residential buildings) and 435 (Federal low-rise residential buildings). The revisions to 10 CFR parts 433 and 435, as summarized in this section, are presented at the end of this document.

A. Scope

1. Federal Buildings

This final rule applies to a defined subset of new Federal buildings and major renovations to Federal buildings, as specified in section 433 of EISA.

See

42 U.S.C. 6834(a)(3)(D)(i). The term “Federal building” means “any building to be constructed by, or for the use of, any Federal agency [including] buildings built for the purpose of being leased by a federal agency, and privatized military housing.” 42 U.S.C. 6832(6). However, the rule would not apply in cases of Federal agencies leasing space in buildings where the Federal Government does not lease the entire building. Accordingly, if the building at issue is not entirely leased to the Federal Government at the time of renovation, the final energy performance standards do not apply.

The subset of Federal buildings to which this rule applies fall under two categories and will be referred collectively to as “EISA-subject buildings.” The first qualifying category of EISA-subject buildings includes any new Federal buildings or major renovations to Federal buildings that are public buildings, as defined in 40 U.S.C. 3301, for which transmittal of a prospectus to Congress is required under 40 U.S.C. 3307. Under 40 U.S.C. 3307(a)(1), a transmittal of a prospectus to Congress is required if a total expenditure in excess of $1,500,000 is required to construct, alter, or acquire the public building.

Under 40 U.S.C. 3307(h), the GSA Administrator may adjust this value annually to account for construction cost increases. GSA's annual prospectus threshold for FY 2024 is $3,613,000.

GSA also provides a separate dollar threshold for alterations in leased public buildings for which a prospectus is required; in FY 2024, this threshold is $1,806,500.

40 U.S.C. 3307(a) also contains a second prospectus threshold in 40 U.S.C. 3307(a)(3), which applies to alterations of buildings that are leased by the Federal Government for use for a public purpose if the cost of the alteration will exceed $750,000. This threshold is one-half of the threshold for all other new construction or alterations of existing buildings.

See

GSA Annual Prospectus Thresholds, available at

www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.

The second qualifying category of EISA-subject buildings includes any new Federal buildings or major renovations to Federal buildings that are not public buildings and for which the construction cost or major renovation cost is at least $2,500,000 (in 2007 dollars, adjusted for inflation).

For the purposes of calculating this threshold, agencies should use the inflated value of the $2,500,000 as of October of the FY during which the design for construction of the project begins. DOE is adopting a methodology that allows for a constant inflator to be applied during the entirety of the year. By this methodology, an agency should set the Bureau of Labor and Statistics CPI Inflation calculator to $2,500,000 in October 2006 for the value of the original cost threshold. As of the most recent update, October 2023, $2.5 million in 2007 dollars, when adjusted for inflation, is $3,811,583. DOE revises regulatory text in §§ 433.200(a) and 435.200(a) to clarify how the cost thresholds for new public and non-public buildings should be adjusted for inflation.

To find the adjusted cost threshold, go to

data.bls.gov/cgi-bin/cpicalc.pl.

As noted previously, GSA also provides a separate dollar threshold for alterations in leased public buildings ($1,806,500 in FY 2024). DOE will use both thresholds (

i.e.,

the $2,500,000 in 2007 dollars threshold (adjusted for inflation) for Federal buildings that are not public buildings, and the $1,806,500 in FY 2024 dollars threshold for leased public buildings) for this second category of EISA-subject buildings (

i.e.,

buildings for which a prospectus is not required). Using the lower GSA prospectus threshold for leased public buildings is consistent with: (1) current agency practice for such buildings, and (2) the scheme Congress established in EISA section 433 where the prospectus dollar thresholds (

e.g.,

$2,500,000 in 2007 dollars) are also applied to buildings and renovations for which a prospectus is not required.

Table III-1—Cost Thresholds for FY2024 (Million Dollars)

Public

buildings

Non-Public buildings

Construction or Major Renovation to Federally Owned Buildings

* $3.613

** $3.812

Major Renovation of Federally Leased Buildings

† 1.806

†† 1.806

* Cost threshold for buildings that are owned public buildings, as defined in 40 U.S.C. 3301, is determined by the GSA annual prospectus thresholds published for each FY at

www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.

** Cost threshold for any new construction or major renovation that is in an owned, non-public building is determined by adjusting the $2,500,000 in 2007$ for inflation to the current FY. DOE sets the inflated value for the entire FY based on the value reported in October of that FY in the Bureau of Labor and Statistics CPI Inflation calculator

www.bls.gov/data/inflation_calculator.htm.

† Cost threshold for major renovations within leased buildings is determined by the GSA annual prospectus thresholds published for each FY at

www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.

†† Cost threshold for major renovations within leased buildings is determined by the GSA annual prospectus thresholds published for each FY at

www.gsa.gov/real-estate/design-and-construction/annual-prospectus-thresholds.

For example, a building in the first category would include a federal office building for which design for construction began in FY 2024 and with construction or renovation costs that are more than $3,613,000. A building in the second category would include a residential building (which is excluded from the definition of “public building” under 40 U.S.C. 3301) with construction or renovation costs of at least $3,811,583 in FY 2024 ($2,500,000 in 2007 dollars, adjusted for inflation). DOE expects that most low-rise residential buildings that meet the cost threshold will be low-rise

multi-family buildings or low-rise dormitories as Federal low-rise single-family homes are not likely to meet the cost threshold.

The International Code Council (ICC) stated that this final rule should apply to all new Federal buildings and major renovation projects. ICC, Doc. No. 98, pg. 2. ICC asserted that doing so would maximize the long term ecological and economic benefits of the rule.

Id.

However, DOE notes that section 433 of EISA clearly identifies the buildings to which the energy performance standards are to apply. Thus, although DOE encourages Federal agencies consider these energy performance standards holistically in developing their construction and renovation plans, the final rule only applies to EISA-subject buildings.

2. Calculating Costs

The final rule also outlines which costs Federal agencies must include when calculating construction or major renovation costs to an EISA-subject building.

a. Construction and Major Renovations Costs

In the final rule, DOE revises the definitions of “construction cost” and “major renovation cost” proposed in the 2022 SNOPR. The 2022 SNOPR proposed to define “construction cost” as “all costs associated with design and construction of a federal building. It includes the cost of design, permitting, construction (materials and labor), and building commissioning.” 87 FR 78382, 78420. However, the 2022 SNOPR explicitly stated that “construction cost” does not include legal or administrative fees, or the cost of acquiring the land.

Id.

The 2022 SNOPR proposed to define “major renovation cost” as costs associated with the “[r]epairing, remodeling, improving, or extending, or other changes in, a public building as per 40 U.S.C. 3301(a)(1).” These costs included costs associated with the “[p]reliminary planning, engineering, architectural, legal, fiscal[] and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other similar actions necessary for the alteration of a public building[.]”

Id.

One individual commented on the definition of “construction cost” proposed on the 2022 SNOPR. Doc. No. 127, pg. 2. They stated that “construction cost” should include administrative and legal fees because it would increase the number of buildings to which these energy performance standards apply as more construction projects would meet the threshold.

Id.

In addition, they claimed that including administrative and legal fees when calculating construction costs would promote fiscal responsibility with public funds.

Id.

This commenter also argued that land acquisition costs should be included in the definition of “construction cost” because doing so would “incentivize project managers to prioritize the use of existing Federal lands and renovations of existing buildings, rather than buying new spaces”

Id.

After reviewing the definitions proposed in the 2022 SNOPR and stakeholder comments, DOE amends the definitions of “construction cost” to include a similar list of costs that DOE included in the definition of “major renovation cost.” This includes, but is not limited to, the costs of preliminary planning, engineering, architectural, permitting, fiscal and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other similar actions necessary for the construction of a new Federal building. Additionally, DOE amends the definition of “construction cost” to remove the language specifically excluding legal or administrative fees from the calculation of “construction cost.” If legal or administrative fees are associated with the construction of a new Federal building, such as permitting fees, then these costs must be included in the calculation of construction costs. However, DOE notes that most administrative or legal costs are generally part of overhead costs and are not associated with the construction of a new Federal building.

DOE declines to adopt the commenter's suggestion that the cost of acquiring the land should be included in the definition of “construction cost.” DOE previously stated that many new Federal buildings are built on land already owned by the Federal Government. 79 FR 61694, 61698. Thus, including the land costs in the definition of “construction cost” is unnecessary and would have little practical effect. Moreover, not including land costs for new Federal buildings in the threshold calculation would be consistent with the threshold calculation for major renovations, for which land costs are not included.

In addition, DOE also amends the definition of “major renovation cost” so that it aligns with the revised definition of “construction cost.” First, the revised definition of “major renovation cost” provides a general description of major renovation costs—

i.e.,

cost associated with the repairing, remodeling, improving, extending, or other changes in a federal building. Second, the revised definition then lists specific associated costs included in the definition of “major renovation costs.” Third, the revised definition replaces references to “public buildings,” as defined in 40 U.S.C. 3301(a)(1), to “Federal buildings,” as defined in the final rule so that the definition applies to both categories of EISA-subject buildings.

b. Individual Buildings

The final rule applies the cost thresholds to individual buildings rather than multiple buildings in a single project. A commenter urged DOE to reconsider the proposed definition of “buildings” to apply to multiple buildings that are located within the grounds of another public building, meaning that the standard would apply to multiple buildings and “projects” would be the unit of analysis. Doc. No. 127, pg. 1. However, the statute authorizes DOE to establish Federal building energy efficiency performance standards that reduce fossil fuel-generated energy consumption for “new Federal buildings and Federal buildings undergoing major renovations” not “projects” that could include multiple buildings or major renovations. 42 U.S.C. 6834(a)(3)(D)(i). The cost threshold and public building determination stipulated in the statutory language is also specific to individual buildings. Furthermore, the date that design for construction begins (to determine the appropriate reduction target) is also building specific. Thus, when calculating the costs to determine whether the final rule applies, Federal agencies should calculate the costs for individual buildings.

c. Major Renovations

In establishing these standards, DOE is sensitive to the notion that Federal agencies might break up their major renovations into smaller pieces to prevent associated costs from exceeding the applicable threshold. DOE discourages the practice of “breaking up renovation projects to get around the cost threshold” and intends to further address this topic as part of the Department's implementation guidance. Even in cases of replacing individual systems or equipment, for which this rule applies, DOE believes agencies should prioritize pairing energy efficiency measures with reducing fossil fuel use. DOE notes that Section 433 of EISA states that “[i]n establishing criteria for identifying major renovations that are subject to the requirements of this subparagraph,

[DOE] shall take into account the scope, degree, and types of renovations that are likely to provide significant opportunities for substantial improvements in energy efficiency.” 42 U.S.C. 6834(a)(3)(D)(ii). Multiple sequential renovations to the same building are likely to provide significant opportunities for substantial improvements and their cumulative effect over time should be evaluated and utilized to determine the cost of the project for the application of this rule. In this final rule, DOE broadly applies the term “major renovations” to include projects for which Federal agencies can practicably implement the energy efficiency and fossil fuel reduction goals of ECPA and EISA.

DOE is clarifying that the energy performance standards being adopted in this final rule apply both to whole building retrofits as well as multiple minor renovations that occur in phases on the same Federal building as long as the building meets the cost thresholds as explained above. More specifically, this final rule applies to renovations that are so extensive that they replace all on-site fossil fuel-using systems in the building, such as comprehensive replacement or restoration of most or all major systems, interior work (

e.g.,

ceilings, partitions, doors, floor finishes, etc.), or building elements and features. DOE refers to such major renovations as “whole building” renovations throughout this preamble. However, the final rule also requires Federal agencies to consider major renovations that are less than whole building renovations (

i.e.,

component and system level renovations, including multiple sequential renovations) that provide significant opportunities for substantial improvements in energy efficiency and reduce on-site fossil fuel usage across the Federal building portfolio.

d. Energy Conservation Measures

When designing new or renovated buildings, DOE encourages agencies to consider any energy conservation measures (“ECMs”) that have been identified in that building and reported to DOE, as per 42 U.S.C. 8253(f)(3)(A). If identified ECMs include projects that impact on-site fossil fuel usage, DOE urges the agency to evaluate and consider the total of those project costs bundled together when implementing those ECMs to determine whether the total cost meets the thresholds in section 433 of EISA. ECMs that impact on-site fossil fuel usage include, but are not limited to, adding new fossil fuel-using heating, hot water, or cooking systems to an existing building; direct replacement of existing fossil fuel-using heating, hot water, or cooking systems in an existing building; and modification or replacement of any building systems (including systems such as lighting or building envelope systems that do not use fossil fuel directly) that lead to an increase or decrease in the use of fossil fuel. Considering ECM projects in a more comprehensive approach, rather than a piecemeal approach, better aligns with the goals of section 433 of EISA.

3. Fossil Fuel-Generated Energy Consumption

a. Limitation to On-Site Use of Fossil Fuels

Section 433 of EISA directs DOE to establish regulations that require certain new Federal buildings and Federal buildings undergoing major renovations be designed to reduce their fossil fuel-generated energy consumption. 42 U.S.C. 6834(a)(3)(D)(i). The scope of the building energy covered by the final rule is limited by the term “fossil fuel-generated energy consumption.” In the 2022 SNOPR, DOE noted that this term is not defined in section 433 of EISA and proposed to define “fossil fuel-generated energy consumption” as on-site stationary combustion of fossil fuels that contribute to Scope 1 emissions for generation of electricity, heat, cooling, or steam as defined by “Federal Greenhouse Gas Accounting and Reporting Guidance” (Council on Environmental Quality, January 17, 2016). This includes, but not limited to, combustion of fuels in stationary sources (

e.g.,

boilers, furnaces, turbines, and emergency generators). This term does not include mobile sources, fugitive emissions, or process emissions as defined by “Federal Greenhouse Gas Accounting and Reporting Guidance” (Council on Environmental Quality, January 17, 2016).

87 FR 78382, 78421. Pursuant to this proposed definition, the standard would apply to energy consumption from fossil fuels used by equipment and systems designed to support building operations; that is, fossil fuels consumed on site. The proposed definition would not apply to the consumption of fossil fuels used to produce electricity off-site.

DOE received several public comments in response to 2022 SNOPR's proposed definition of “fossil fuel-generated energy consumption.” Several commenters supported the proposed definition. For example, the Green Building Initiative (GBI) expressed support for focusing on on-site generated energy because “it presents the best opportunity to clearly track improvements and more clearly measure improvements of Federal buildings.” GBI, Doc. No. 120, pg. 3. GBI also acknowledged that many factors within off-site generated energy are outside the control of the Federal government and that focusing on on-site generated energy will assist the Federal government in improving the factors that it can control.

Id.

Furthermore, one commenter urged DOE to retain its focus on on-site fossil fuel reduction as it focused the standard on outcomes. Doc. No. 79, pg. 4-5.

DOE also received comments that opposed the definition for “fossil fuel-generated energy consumption” proposed in the 2022 SNOPR. For example, several commenters questioned DOE's authority to define “fossil fuel-generated energy consumption.”

See e.g.,

APGA, Doc. No. 102, pg. 3; NPGA, Doc. No. 90, pg. 3; AGA, Doc. No.100, pg. 11. NPGA and AGA both alleged that DOE does not have authority to define “fossil fuel-generated energy consumption” because the meaning of the term is clear. NPGA, Doc. No. 90, pg. 3; AGA, Doc. No.100, pg. 11. They argued that the plain text of the statute unambiguously refers to the total energy consumption of the buildings, rather than only the on-site energy consumption. AGA, Doc. No.100, pg. 11.

Section 433 of EISA does not define the term “fossil fuel-generated energy consumption of the buildings.” But when the text of section 433 is considered as a whole, it is best read to apply standards only to the on-site consumption of fossil fuels on the site of the Federal building.

In section 433 of EISA, Congress sought to address how certain Federal buildings are designed when they are constructed or undergo major renovations. The operative sentence directing the imposition of standards states that certain new Federal buildings or Federal buildings undergoing major renovations “shall

be designed

so that the fossil fuel-generated energy consumption of the buildings is reduced[.]” 42 U.S.C. 6834(a)(3)(D)(i)(I) (emphasis added). Section 433 then prescribes standards that progressively reduce and then entirely eliminate “fossil fuel-generated energy consumption of the buildings” by FY 2030. 42 U.S.C. 6834(a)(3)(D)(i)(II).

With this text, Congress clearly indicated that section 433 covers fossil fuel-generated energy consumption that can be reduced, and ultimately eliminated, through building design measures. On-site consumption of fossil fuel-generated energy can be reduced, and entirely eliminated, through the use of building design measures. Such

measures may include the installation of electric equipment for space and water heating, along with any insulation, ductwork, and electrical work necessary to ensure the building's needs are met.

By contrast, off-site consumption of fossil fuels, such as the combustion of natural gas and coal by distant power plants, cannot practically be eliminated through building design measures. Building design measures can reduce the amount of fossil-fuel derived electricity that a federal building draws from the grid through various efficiency measures and on-site generation. But such building design measures could not eliminate entirely the consumption of fossil-fuel derived electricity, as section 433 requires beginning in FY 2030, unless section 433 were read to require every Federal building to use on-site non-fossil generation to generate

all

of the electricity that would be used by the building. While self-generation could be achievable for some Federal facilities, for others it is not. Particularly for buildings with high energy demands and limited generation and storage space, such as high energy demand buildings with small site footprints and/or located in areas with poor solar resources, full on-site generation at all times of day could impose extreme additional expense or even be technically impracticable. DOE therefore finds it highly implausible that Congress intended that outcome in adopting the requirement to reduce and eliminate fossil fuel-generated energy consumption through the design of Federal buildings. No commenter has offered any basis to conclude that it would be reasonable to read section 433 as requiring that every new Federal building or major renovation subject to EISA be designed to generate all of its own electricity by FY 2030.

Consumers of electricity, including the Federal government, sometimes seek to reduce the use of fossil fuels in electricity generation through procurement practices, which can include directly contracting for non-fossil generation or the purchase of energy attribute certificates (EACs). These sorts of electricity procurement practices could eliminate the off-site fossil fuel consumption attributed to a building's consumption of electricity. Even so, the availability of these procurement options does not persuade DOE to conclude that section 433 should be read to cover off-site consumption of fossil fuels for two reasons. First, again, section 433 states clearly that the standards it prescribes are to be achieved through design measures in new or renovated buildings. 42 U.S.C. 6834(a)(3)(D)(i)(I) (“buildings shall

be designed

so that the fossil fuel-generated energy consumption of the buildings is reduced[.]”) (emphasis added). A requirement to procure electricity from particular sources or to purchase EACs is not a building design requirement. Indeed, whether a federal building manager elects to purchase electricity from one source or another has nothing to do with how the building is designed.

Further, depending on the geographic location, building managers have limited discretion to elect the source from which they procure electricity. Federal agencies (with limited exceptions) must procure utility services from their serving utility, which may not sell non-fossil fuel derived electricity.

See

40 U.S.C. 501 & 591; FAR Part 41.

Second, a reading that section 433 of EISA, a provision aimed at Federal building design, was also intended to encompass the procurement of electricity is hard to square with Congress' direct treatment of that subject in section 203 of the Energy Policy Act of 2005. That provision, enacted just two years earlier, required the Federal government to procure renewable energy at levels no less than three percent in fiscal years 2007 through 2009, 5 percent in fiscal years 2010 through 2012, and 7.5 percent in fiscal years 2013 and each fiscal year thereafter. 42 U.S.C. 15852. That Congress had addressed renewable energy procurement by the Federal Government in explicit terms so recently, and had set standards that differ so markedly from those in section 433, is yet another reason to disfavor a reading of section 433 that would necessitate the purchase of non-fossil fuel derived electricity as a necessary means of compliance.

Several commenters noted that the definition for “fossil fuel-generated energy consumption” proposed in the 2022 SNOPR, and the scope of the rule, differed from what was proposed in the 2010 NOPR and 2014 SNOPR. In the 2022 SNOPR, in proposing to limit the scope of the rule to only on-site energy consumption from on-site fossil fuel used by equipment and systems designed to support the building, DOE acknowledged that the proposed definition was a shift from the proposed scope of the 2014 SNOPR. 87 FR 78382, 78385. In discussing this shift, DOE observed that it received a comment in response to the 2014 SNOPR that argued that the term should only apply to the on-site energy consumption. 87 FR 78382, 78390, (

see

American Public Power Association (APPA), Doc. No. 71, pg. 2). After considering the comment and reviewing the relevant statutory language, DOE agreed with APPA's analysis and proposed limiting the scope of the rule accordingly.

Upon further review, and as proposed in the 2022 SNOPR, this final rule adopts the definition of “fossil fuel-generated energy consumption” that limits the scope of the rule to on-site energy consumption.

A key attribute to the notice and comment rulemaking process is that agencies invite the public to comment on their proposed rules and agencies can benefit from this feedback. Accordingly, agencies may revise their proposed rules based the feedback they received.

Commenters also stated that the 2022 SNOPR proposed definition of “fossil fuel-generated energy consumption” would have less impact and potential savings (particularly in terms of emissions) than the potential savings under the definition proposed in the 2010 NOPR and 2014 SNOPR. ASHRAE Doc. No. 96, pg. 3; BCSE Doc. No. 115, pg. 2; Gas Associations, Doc. No. 99, pg. 2; Doc. No 122, pg. 1; Doc. No 80, pg. 3. These commenters suggested that DOE include all or some off-site generated energy (particularly purchased electricity generated by fossil fuels) in the definition of “fossil fuel-generated energy consumption.”

Regarding comments on the effects of focusing the rule on on-site energy use, DOE has further analyzed the impacts of the rule. DOE projects site energy and full fuel cycle emissions savings even when the rule is limited to on-site fossil fuel-generated energy consumption. The expected savings are shown in section V.A-C and the accompanying technical support document (“TSD”). DOE notes that the estimated benefits of the rule are derived from purchasing and installing less expensive electric equipment, along with the health and climate benefits from the associated emissions reductions, while the estimated costs come from the operation of such equipment. DOE also expects the net benefits of this rulemaking to increase over time as electricity rates decrease relative to those of natural gas and as the grid continues to shift to a cleaner mix of generation.

DOE also notes that there are other tools available to Federal agencies to reduce the use of off-site fossil fuel-generated energy, such as on-site solar and procurement of renewable EACs. Although Federal building managers can procure fossil fuel-free electricity, primarily through EACs, such procurement measures are not building design measures that reduce on-site fossil fuel-generated energy consumption.

Accordingly, requiring

such actions are outside the scope of DOE's authority under section 433 of EISA. Further, Congress did not give clear authority for fossil fuel-free electricity procurement under section 433 of EISA, as it did under the Energy Policy Act of 2005, which set forth the total electricity from renewable sources that must be procured by the Federal government (

see

42 U.S.C. 15852). Therefore, although there are means to reduce emissions from the electricity use in buildings, which DOE encourages agencies to pursue, this final rule only requires building design measures to reduce the use of on-site fossil fuel-generated energy.

Additionally, at the design stage, the agency controlling the design process would not necessarily be able to guarantee that the building occupant would, in fact, procure the EACs that

would be necessary to meet the applicable fossil fuel energy standards.

Commenters also argued that the rule's proposed focus on the use of on-site fossil fuel-generated energy is a departure from DOE's general position of fuel neutrality. AGA, Doc. No. 100, pg. 9; Gas Associations, Doc. No. 99, pg. 2 n.8. These commenters cite rulemakings related to the energy conservation program for certain consumer and commercial appliances under the Energy Policy and Conservation Act (EPCA). Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the “maximum improvement in energy efficiency” that DOE determines is technologically feasible and economically justified. 42 U.S.C. 6295(o)(2)(A). In applying that standard, DOE considers the improvement in energy efficiency feasible and justified for electric products separately from gas- or oil-fueled products, consistent with 42 U.S.C. 6295(q)(1)(A), which required establishment of a separate standard for any covered products that “consume a different kind of energy from that consumed by other covered products within” the regulated type of products.

In contrast, the language of section 433 is clearly not “fuel neutral,” as the text singles out and disfavors fossil fuels relative to other sources of energy. Further, as discussed above, the language and structure of the statutory text strongly support limiting the scope of the requirement to just the use of on-site fossil fuel-generated energy. Accordingly, the specific applicable statutory text here requires a departure from the fuel neutral approach that DOE uses when setting energy conservation standards for certain consumer and commercial appliances under EPCA.

After further considering the proposed approach in light of the comments received, DOE determines that focusing on direct emissions best aligns with section 433's directive to reduce and ultimately eliminate fossil fuel-generated energy consumption through building design measures of Federal buildings.

The final rule adopts the definition of “fossil fuel-generated energy consumption” as proposed in the 2022 SNOPR, with three revisions. First, the final rule revises the term to be defined from “Scope 1 fossil fuel-generated energy consumption” to “fossil fuel-generated energy consumption.” This clarifies that the scope of this rule aligns with the directive in section 433 of EISA. Second, the final rule revises the definition so that it applies to “on-site stationary consumption” of fossil fuels. This revision uses language that is consistent with section 433 and clarifies that the definition includes the on-site consumption of natural gas. Third, the final rule deletes, “for the purposes of this final rule” from the definition because this language is not necessary.

b. Exemptions and Exceptions

As proposed in the 2022 SNOPR, not all Scope 1 emissions are included under this final rule. DOE identifies several on-site uses are that exempted or excepted from this final rule. First, the standards only apply to on-site fossil fuel use or Scope 1 emissions from stationary combustion sources. Again, section 433 of EISA requires that certain new Federal buildings and Federal buildings undergoing major renovations be designed to reduce fossil fuel-generated energy consumption. As such, this rule does not apply to emissions associated with natural gas for alternatively fueled vehicles (“AFVs”) (or any other “alternative fuel,” defined at 42 U.S.C. 13211) because building design measures do not include use of AFVs. In addition, DOE notes that because the CBECS and RECS data that provide the energy use targets for this rule do not contain manufacturing or industrial process loads, DOE excludes these loads from the scope of the energy performance standards at this time. For buildings with such process loads, the process loads will need to be accounted for in the analysis of the building's fossil fuel consumption and GHG emissions, but such loads would not be subject to the percentage reductions in fossil fuel-generated energy consumption (Scope 1 GHG emissions) required for the building related loads as related to this rule.

Second, this final rule does not apply to the on-site consumption of fossil fuel (or the subsequent emissions) from energy generation associated with the supply of emergency backup electricity. Again, section 433 of EISA requires building design measures for certain Federal buildings to reduce fossil fuel-generated energy consumption. Thus, this rule is focused on the use of on-site energy as

designed

for standard building operations. Emergency backup generation is generally used infrequently and for short periods, for emergency services only when Federal buildings are not operating as designed. In addition, given their limited use, the impact from emergency backup generators, in terms of both direct fossil fuel consumption and emissions, is usually quite small relative to the impact from ongoing building operations. However,

non

emergency

generation from backup generators (such as those for peak shaving or peak shifting) is within in the scope of this rule. DOE also notes that if Federal agencies use their backup generators for both purposes, they will be required to calculate the fraction of their backup generator emissions that is associated with emergency use and the fraction associated with non-emergency use.

Third, the final rule does not apply to on-site energy generation or Scope 1 emissions associated with biomass fuels because biomass fuels are not fossil fuels. Because EISA directed DOE to establish regulations that require fossil fuel-generated energy consumption reductions, and biomass is not a fossil fuel, DOE has intentionally left biomass fuels out of the CBECS and RECS targets developed for this rule. DOE acknowledges that guidance from the Council on Environmental Quality

takes a somewhat different approach on biomass fuels, but DOE believes CEQ's guidance is complementary to this final rulemaking. CEQ's guidance states that the CO

emissions from biomass and biofuel combustion are considered biogenic and are reported separately from fossil fuel-generated GHGs and biomass and biofuel-generated CH

and N

O. This CEQ guidance ensures that any GHG emissions associated with biomass or biofuel use at a covered Federal building are still taken into account in reporting emissions (though reported separately). This rule does not cover such fuels, however, as they are not fossil fuel derived and therefore fall outside the statutory authority.

Federal Greenhouse Gas Accounting and Reporting Guidance,” Council on Environmental Quality (CEQ), January 17, 2016 (CEQs guidance).

DOE received numerous comments on the exemptions and exceptions included in the final rule. These comments ranged from supporting limiting the application of the standards to stationary combustion sources and the exemptions for emergency backup

generators

and the exception of biomass fuels, to urging DOE to adopt additional exemptions or opposing some of the exemptions.

WGL, Doc. No. 101, pg. 5.

Two commenters opposed exempting backup generators from the final rule. CHP Alliance and MRC both noted that emergency backup generators run on fossil fuel. CHP Alliance, Doc. No. 104, pg. 4; MRC, Doc. No. 105, pg. 8. MRC also stated that that emergency backup generators must run on a regular basis to keep them in good operating condition.

CHP Alliance argued that reducing GHG emissions from this type of fossil fuel-generated energy consumption is the purpose of section 433 of EISA. CHP Alliance, Doc. No. 104, pg. 4. Thus, these commenters argued, exempting backup generators is counter to the entire purpose of the final rule.

MRC, Doc. No. 105, pg. 8. MRC asserted that this results in approximately 0.79 metric tons of GHG per MWh of backup supply.

DOE notes that although this rule exempts emergency backup systems, this exemption is limited to when these generators are used solely for emergencies. Therefore, any use of these backup generators for peak shaving, peak shifting, or other demand management activities must be included in the building energy consumption.

An individual commenter urged DOE to reconsider the exception for emissions resulting from biomass fuel. Doc. No. 79, pg. 3. Although this commenter acknowledged that biomass fuel is not fossil fuel-based, the commenter argued that the rule should apply to biomass fuels because they still emit GHG.

Id.

However, as previously noted, biomass fuels are not fossil fuels. Because EISA directed DOE to establish regulations that require Federal agencies to reduce their fossil fuel-generated energy consumption, and biomass fuels are not fossil fuel-based, Congress intentionally excluded biomass fuels from the targets developed for this rule.

DOE received several comments urging DOE to exclude renewable fuels such as biomethane (renewable natural gas), biopropane (renewable propane), and clean hydrogen from the final rule. AGA and NPGA stated that it is appropriate for DOE to exclude biomass fuels from this rule, but argued that DOE should also consider excluding other renewable fuels. AGA; Doc. No. 100, pg. 32-34; NPGA, Doc. No. 90, pg. 8;

see

WGL, Doc. No. 101; pg. 6. Specifically, AGA and NPGA noted that there have been developments in the production of synthetic hydrocarbon. AGA; Doc. No. 100, pg. 32-34; NPGA, Doc. No. 90, pg. 8. Similarly, CHP Alliance observed that combined heat and power (CHP) systems are extremely efficient and some approach 90-percent efficiency. CHP Alliance, Doc. 104, pg. 5.

DOE acknowledges that purely renewable fuels would not fall within the scope of this rulemaking as long as they are not fossil fuel-based or made from blends that contain fossil fuels. A Federal building may use renewable fuels if the Federal agency is able to verify the use of such fuels on-site do not also include fossil fuels in their mixture. Additional specification about fuel content of biofuels will be provided in a companion implementation guidance.

DOE also received several comments on the NOPR and the 2014 SNOPR about differentiating between fossil fuels used to generate purchased electricity (

i.e.,

natural gas versus crude oil). DOE notes that because the rule is now focused on on-site fossil fuel use only, these comments no longer apply. DOE acknowledges that the source emission factors related to electricity are used in DOE's analysis of the impacts of the rule and notes that DOE will use the latest available source emission factors from DOE and EPA.

DOE also received several comments on the treatment of distributed energy resources (DERs) in the 2022 SNOPR suggesting that DOE treat DERs as a “Scope 2” impact and, thus, exempt DERs from these standards. These commenters argued that because emissions from DERs are considered Scope 2 emission for reporting purposes, these emissions should also be considered as Scope 2 emissions for the purposes of this rule.

DOE does not agree with this interpretation because the energy generated by DERs is generated on-site and is consumed directly by one building. Accordingly, the energy consumed by building processes supplied by DERs and generated from fossil fuels falls within the definition of “fossil fuel-generated energy consumption.” When an EISA subject building is connected to an existing DER resource that is located off the building site and is servicing more than one building it may then be treated as energy generated off-site and the energy stream would not be subject to this rule. New DER resources, when qualified as an EISA-subject building, would be subject to this final rule. Additionally, DOE notes that the terms “Scope 1” and “Scope 2” are more commonly utilized when performing GHG emissions calculations and reporting. Here, DOE uses these terms to help describe the scope of building energy use covered by this rule (as discussed in Section III.A). The statutory authority for this rulemaking is based upon the fossil fuel consumption of the energy source and systems that service an applicable building, and the building must be subject to the reduction targets, regardless of how subsequent emissions may be accounted.

B. Performance Standards for Fossil Fuel-Generated Energy Consumption

To provide flexibility, the final rule establishes standards for a fossil fuel-generated energy consumption metric expressed in thousand British thermal units (“kBtu”) per square foot (“ft

”) of building gross area and provides an equivalent conversion of the energy metric measured in greenhouse gas (“GHG”) metrics. DOE opted to include the GHG metric, which will measure Scope 1 emissions, because agencies are already required to track and report their GHG emissions annually utilizing CEQ's guidance. The final rule aligns the quantifications and terminologies with those established in the Federal Greenhouse Gas Accounting and Reporting Guidance. Although CEQ's guidance categorizes Scope 1 emissions as “Generation of electricity, heat, cooling, or steam”, “Mobile sources”, “Fugitive emissions”, or “Process emissions,” this final rule focuses only on the on-site fossil fuel use associated with the “Generation of electricity, heat, cooling, or steam”.

This final rule provides agencies with two separate but equivalent sets of fossil fuel generated energy consumption targets—(1) fossil fuel-generated energy consumption based on a summation of on-site fossil fuel usage expressed in kBtu per ft

of building gross area, and (2) a new carbon dioxide equivalent (“CO

e”) per ft

metric based on the emissions associated with the on-site fossil fuel-generated energy consumption. Agencies may use either metric for their design targets. The CO

e metric is based upon the stationary combustion of natural gas and is most appropriate when that is the only fossil fuel being utilized. When a building is burning fuels other than standard natural gas, it would be most appropriate to use the on-site fossil fuel energy metric in units of kBtu per ft

of building gross area.

To develop these fossil fuel generated energy consumption targets, DOE utilized CBECS and RECS data to determine the on-site fossil fuel usage by fossil fuel type for each building type in CBECS or RECS. The CBECS and RECS data was parsed into the format commonly utilized by DOE to evaluate building energy codes and standards,

such as organizing by climate zone, which aligns with the technical analysis methodology used to evaluate the Federal baseline standards for commercial and multi-family high-rise residential buildings, which rely on Standard 90.1-2019, as well as the Federal baseline standards for low-rise residential buildings, which rely on the 2021 IECC.

DOE determined the kBtu per square foot targets by dividing fossil fuel consumption data by the building area, applying the weighting factors associated with the building, and assigning each building to one of the building type/climate zone categories. DOE determined the CO

e (in metric tons of CO

e) per square foot targets by multiplying the fossil fuel usage for each fuel type by the applicable GHG coefficient (from the CEQ guidance for each fuel type), dividing by the building area, applying the weighting factors associated with the building, and assigning each building to one of the building type/climate zone categories. The resulting targets are shown in Table A-1a and Table A-1b of appendix A to subpart B of parts 433 and 435.

For the purposes of establishing the targets, the final rule identifies and defines 16 categories of commercial buildings and five categories of residential dwelling units that cover all relevant buildings in the Federal building portfolio, including low-rise (single-family and multi-family), mid-rise apartment buildings, and high-rise apartment buildings, to be utilized when referencing the target defining tables in the regulatory text.

The 16 categories of commercial buildings defined are education, food sales, food service, health care (inpatient), health care (outpatient), laboratory, lodging, mercantile (enclosed and strip shopping malls), office, public assembly, public order and safety, religious worship (not applicable), retail (other than mall), service, and warehouse and storage. Many of these commercial building categories are further divided into building types, providing a total of 48 commercial building types. These building categories and building types represent the high-level Principle Building Activity (“PBA”) and low-level Principle Building Activity Plus categories in the 2003 CBECS.

The five categories of residential buildings are: mobile home, multi-family in 2-4-unit buildings, multi-family in 5 or more-unit buildings, single-family attached, and single-family detached. These building types represent the housing unit types in the 2005 RECS (DOE chose to use 2005 RECS data because the RECS was conducted in 2001 and 2005 but not 2003). Residential buildings that fall under 10 CFR part 435 and multi-family mid-rise and high-rise buildings that fall under 10 CFR part 433 will use these same categories. In analyzing the rule, DOE assumes that most multi-family high-rise residential buildings will fall into the “multi-family in 5 or more-unit buildings” category based on the most typical buildings representative of the Federal buildings.

Federal agencies must select from these 53 building categories (including commercial building subcategories) to identify the fossil fuel-generated energy consumption target (expressed in both kBtu per ft

and Scope 1 GHG emissions in CO

e per ft

) for a specific building. DOE notes that the building types available from CBECS and RECS do not correspond directly to the building types used in the Federal Real Property Profile (“FRPP”) and that agencies should exercise their best judgement to select the building category that best matches the building's intended use. Additionally, some buildings may be mixed use, so agencies may need to area-weight the floor space of these CBECS and RECS targets for Federal buildings that do not correspond directly to the CBECS or RECS building types. For example, a Department of Defense (“DOD”) Post Exchange building might have aspects of Food Sales, Food Service, and Mercantile, necessitating the development of an area-weighted target. Similarly, a DOD barracks building might include aspects of Lodging or Residential, Education, and Warehouse, again necessitating the use of an area-weighted mapping.

1. New Construction and Major Renovations of a Whole Building

DOE developed quantitative requirements to determine compliance with the fossil fuel reduction targets within the revised energy performance standards for new construction and major renovations (

i.e.,

major renovation of on-site fossil fuel-using systems or components in a building) of EISA-subject buildings. The adopted quantitative requirements require agencies to calculate the on-site fossil fuel-generated energy consumption in kBtu of fossil fuels or the Scope 1 GHG emissions in CO

e of their proposed building design and compare that estimate to the allowable fiscal year percentage reduction target found in the target tables in appendix A of subpart B to 10 CFR parts 433 and 435. This is done by identifying the allowable target (in either kBtu of on-site fossil fuels or Scope 1 GHG emissions attributed to the generation of electricity, heat, cooling, or steam) for stationary combustion sources as per the “Federal Greenhouse Gas Accounting and Reporting Guidance.” The agencies then divide the kBtu values or the metric tons of CO

e Scope 1 emissions by the floor area of the building to calculate the per square foot (metric tons of CO

e per square foot) value to compare with the target values in appendix A. For buildings that combine two or more building types, area-weighted averaging by square footage for each building type will be used to calculate the maximum allowable fossil fuel-generated energy consumption of the combined building.

2. Major Renovations Within a Building

DOE developed streamlined prescriptive requirements to determine compliance with the energy performance standards for major renovations of systems or components within EISA-subject buildings. Such prescriptive requirements include requiring the systems within the building undergoing major renovation to be brought up to the performance requirements of the individual sections of Standard 90.1-2019 (chapters 5-10). Under the rule, agencies will begin implementing the energy performance standards upon the effective date of the rule. For major renovations in EISA-subject buildings that meet the project cost threshold and coverage requirements and are less than whole building renovations (

i.e.,

projects within the existing building comprising retrofits to a single system or component, such as a HVAC system or a chiller), agencies are required to adhere to the following requirements.

For component level renovations, meaning an individual product or piece of equipment, the final rule requires agencies to utilize electric or non-fossil fuel-using Federal Energy Management Program (“FEMP”) designated or ENERGY STAR equipment, which follow existing Federal requirements for equipment efficiency (found in 10 CFR part 436, subpart C, “Agency Procurement of Energy Efficient Products”).

For system level renovations, meaning a group of equipment pieces that function together to satisfy a building load, agencies must utilize electric or non-fossil fuel-using FEMP designated or ENERGY STAR equipment, in alignment with 10 CFR part 436, subpart C and must also meet the system level requirements for the systems being renovated, as specified in the model energy codes used to establish baseline energy efficiency standards for Federal buildings (

i.e.,

the current Standard 90.1

for Federal commercial and high-rise multi-family buildings covered under 10 CFR part 433 or the current IECC for Federal low-rise buildings covered under 10 CFR part 435).

DOE received three comments in response to the 2022 SNOPR from BCSE, Polyisocyanurate Insulation Manufacturers Association (PIMA), and Aeoroseal stating that DOE should require agencies to implement energy efficiency upgrades before undertaking larger scale electrification renovations. BCSE, Doc. No. 115, pg. 2; PIMA, No. 83, pg. 2; Aeroseal, No. 97, pg. 3. DOE agrees with the commenters that energy efficiency is a key component of decarbonization. Not only does energy efficiency provide more traditional payback periods from operational cost savings, but it can often result in additional capital savings, such as when equipment can be downsized due to the associated energy load reductions. Additional details on the order of application will be provided in separate implementation guidance, but DOE encourages agencies and individual project teams to meet the energy efficiency requirements of 10 CFR parts 433 and 435 prior to applying additional design changes to meet the emissions reduction targets defined in this final rule.

Although this final rule only covers systems and components that utilize on-site fossil fuels, agencies should ensure that projects that could have secondary impacts on fossil fuel-using equipment, such as lighting, appliance or window replacement projects, are considered. DOE encourages agencies to consider whole building optimization for any type of major renovation project to ensure no adverse impacts to on-site fossil fuel use. DOE also encourages on-site renewables such as solar and energy storage systems as good practice. DOE is not including on-site solar as a means to offset on-site fossil fuel consumption because it will not reduce the overall on-site contribution of fossil fuels directly consumed, even though on-site solar is a means to reduce emissions from the electricity use in buildings.

In response to the 2022 SNOPR, DOE received multiple comments discussing the base reference code for Federal building efficiency, noting that newer and different codes or above-code programs (

e.g.,

Standard 90.1-2022 or Passive House) may be able to demonstrate additional energy savings. NECA, Doc. No. 123, pg. 2; Build SMART, Doc. No. 111, pg. 1. In response, DOE acknowledges that ECPA establishes energy performance requirements for Federally owned residential and commercial buildings, based on the IECC and Standard 90.1, respectively. The statutory authority for this rule is an amendment to the existing requirements for Federal buildings, as established by Section 305 of the ECPA, and it does not change the reference code in question. In fact, under ECPA, minimum standards, including the reference code (IECC or Standard 90.1), must be satisfied, and then

in addition

the fossil fuel reduction targets must be applied and adhered to by the building design. DOE does, however, generally encourage the use of updated and advanced building energy codes, innovative codes, and standards, which achieve increased levels of energy efficiency, thereby decreasing fossil fuel use in accordance with the objectives of EISA and this rule.

3. Shift Adjustment Multiplier

In the 2022 SNOPR, because many types of Federal buildings are operated for longer hours than typical for private sector buildings covered in CBECS and RECS, DOE introduced a shift adjustment multiplier. 87 FR 78382, 78391. In addition, DOE notes that hours of operation are already considered in tools such as ENERGY STAR Portfolio Manager, which agencies must use as part of their building benchmarking activities. 42 U.S.C. 8253(f)(8). A building's hours of operation are also implicit in any whole building simulation done on a building design, with longer hours of operation typically leading to higher energy usage.

The shift multiplier

in this final rule is based on analysis by Oak Ridge National Laboratory and was originally developed for ASHRAE Standard 100-2018. It is expressed in “number of operating shifts,” as opposed to actual hours of operation. Shift multipliers vary by building type. For example, for government offices, operating the building for two shifts does not increase the energy usage, but operating the building for three shifts increases the energy use by a multiplier of 1.4. Because residential buildings by their very nature are already considered to be 24-hour operation, the final rule only applies the shift multiplier to Federal commercial buildings regulated under 10 CFR part 433.

Sharp, Terry, ORNL/TM-2014/215, Derivation of Building Energy Use Intensity Targets for ASHRAE Standard 100, August 31, 2011;

https://info.ornl.gov/sites/publications/files/Pub49965.pdf

4. Compliance Date

The final rule provides individual fossil fuel generated energy consumption phase down targets (mandated by EISA) that apply to EISA-subject buildings depending on whether the design for construction or major renovations began in FY 2024, FY 2025 to FY 2029, or during or after FY 2030. The date after which all EISA-subject buildings that have not yet begun design for construction must comply with this final rule is one year after is published in the

Federal Register

For buildings for which design for construction or whole building renovation began in FY 2024 or during the FY 2025 to FY 2029 range, phase down target tables of the maximum allowable on-site fossil fuel-generated energy consumption (expressed in both kBtu per ft

and Scope 1 GHG emissions in CO

e per ft

) by building type and climate zone are provided in Appendix A of 10 CFR parts 433 and 435, subpart B. The values in the tables come from DOE's EIA CBECS (for commercial buildings) and RECS (for multi-family high-rise and low-rise residential buildings), both of which are converted from site energy consumption to kBtu and Scope 1 GHG emissions in CO

e. For EISA-subject buildings for which design for construction or whole building renovation begins in FY 2030 or later, the fossil fuel-generated energy consumption of the building must be zero for all building types and climate zones, based on the calculation established in the regulations.

DOE received comments regarding the compliance dates proposed in the 2022 SNOPR. Washington Gas Light Company (WGL) noted that the rule is overdue and that the directive in Section 433 of EISA assumed that DOE would promulgate energy efficiency performance standards to meet the emission reduction targets in December 2008. WGL, Doc. No. 101, pg. 6. WGL expressed concern that the standards proposed in the 2022 SNOPR “sets up an unrealistic expectation that [F]ederal agencies can achieve a sharp reduction in onsite fossil fuel energy consumption in less than 7 years.”

Id.

In response WGL's comment, DOE is issuing this final rule to meet its statutory obligations under EISA and cannot change the clearly delineated dates for fossil fuel consumption reductions. The performance standards in this final rule will enable Federal agencies to meet the reduction targets established in EISA. Furthermore, DOE notes that the final rule does not require all Federal buildings to meet the performance standards. These requirements only apply to certain new Federal buildings or Federal buildings undergoing major renovations. Thus, if an existing Federal building is not being renovated, then the performance standards do not apply. Also, as discussed below, DOE is confident that

as a practical matter, agencies can meet the requirements of the final rule.

In addition, if Federal agencies (other than GSA) are unable to meet the energy performance standards adopted by this final rule, they may petition DOE to adjust the applicable standard. 42 U.S.C. 6834(a)(3)(D)(i)(II). DOE may adjust the applicable standard if it believes that it is technically impracticable for the agency to meet the energy performance standards.

The Alliance to Save Energy (ASE) stated that DOE should finalize this rule only when DOE feels that agencies can meet the requirements in the rule, especially for the requirements in year 2030 and beyond. ASE, Doc. No. 76, pg. 1. Others, such as ACEEE

et al.

stated that the final rule is overdue, and that DOE should require compliance as soon as possible.

In response to these comments, DOE believes that agencies can meet the requirements of this revised final rule, especially considering the focus on on-site fossil fuel usage, and the widespread availability of electrified appliances (such as heat pumps and electrified cooking equipment) that can completely substitute for fossil fuel-generated energy consumption on-site. The ENERGY STAR program provides extensive details and lists of commercially available electric appliances and equipment, including air source heat pumps that can be found at

https://www.energystar.gov/products/air_source_heat_pumps,

commercial heat pump and VRF equipment that can be found at

https://www.energystar.gov/products/heating_cooling/light_commercial_heating_cooling/light_commercial_hvac_key_product_criteria,

and electric cooking products that can be found at

https://www.energystar.gov/products/electric_cooking_products.

These technologies have now become far more well known and commercially available than they were at the time Congress adopted the requirements in EISA. It is also worth noting that the rule's requirements apply at the design for construction stage, when an agency has the maximum flexibility to develop a design for a new building that will meet the standards, or has the flexibility to select an approach to a major renovation that will meet the more limited requirements that apply to major renovations. Not only are the standards in the final rule required by the statute, they are also reasonable and achievable, given the point in the design and construction process when the standards become applicable and the real world options now available for agency compliance.

C. Petitions for Downward Adjustment

Under section 433 of EISA, agencies other than GSA may petition DOE for an adjustment to the fossil fuel-generated energy performance standard with respect to a specific building if meeting the requirement is technically impracticable in light of the agency's functional needs for the building. 42 U.S.C. 6834(a)(3)(D)(i)(II). As proposed in the 2022 SNOPR, the final rule allows GSA tenant agencies that have significant control over building design to petition DOE. This rule specifies the information petitioning agencies must provide when requesting a downward adjustment. Specifically, as proposed in the 2022 SNOPR, the final rule requires petitioning agencies to describe the building and associated components and equipment; explain why compliance with the requirements is technically impracticable considering the functional needs of the building; demonstrate that all cost-effective energy efficiency and on-site renewable energy measures were included in the building design; provide the largest feasible reduction in fossil fuel-generated energy consumption that can reasonably be achieved; and discuss measures that were evaluated but rejected.

When filing petitions for downward adjustment related to new construction, Federal agencies must include the maximum applicable allowable fossil fuel-generated energy consumption for the proposed building, the requested alternative allowable fossil fuel-generated energy consumption for the building, the estimated fossil fuel-generated energy consumption of the proposed building, the total estimated project cost, and a description of the building and the building energy systems. A description of the building includes, but is not limited to, location, use type, floor area, stories, expected number of occupants and occupant schedule, functional needs of the building, and any other information the agency deems pertinent. Federal agencies must describe the HVAC systems and service water heating system, as well as the loads in the building, including any specialized process, specialized research loads, electric vehicle charging stations, alternatively fueled vehicle fueling stations, emergency backup generators and other energy consuming systems or components. This information will provide DOE the necessary information to review petitions, and help agencies address key questions and options during the design process.

This final rule adopts the standard and requires information for downward adjustment related to major renovations. For major renovations that are whole building renovations, a downward adjustment would be provided at a level equal to the energy efficiency level that would be achieved were the proposed building designed to meet the baseline energy efficiency standard applicable to new construction in 10 CFR parts 433 or 435. For whole building renovations, Federal agencies must provide the same information that is required for new construction. DOE believes the cost of processing the petitions will be de minimis, as DOE already works extensively with Federal agencies on energy-efficiency and decarbonization efforts.

For major renovations that are limited to system or component level retrofits, DOE will provide downward adjustments at a level equal to the energy efficiency level that would be achieved through the use of commercially available systems and/or components by using ENERGY STAR or FEMP designated products. Unlike the required standard, however, the ENERGY STAR or FEMP designated products are not required to be electric or non-fossil fuel based. A major renovation that is limited to a single system or multiple systems could receive a downward adjustment equal to the energy efficiency level that would be achieved through the use of the same ENERGY STAR or FEMP designated products as required for component renovations and through use of the system level requirements for renovations found in the baseline energy efficiency standards in 10 CFR part 433 (Standard 90.1-2019) or 10 CFR part 435 (2021 IECC).

DOE received a comment that supported the changes made to the petition requirements proposed in the 2022 SNOPR from the American Council for an Energy-Efficient Economy (ACEEE), Earthjustice, Rewiring America, RMI, and Sierra Club. They stated that requiring Federal agencies to submit the information proposed in the 2022 SNOPR “will help ensure the petition process meets EISA requirements.” ACEEE

et al.,

Doc. No. 126, pg. 3.

However, other commenters expressed concern with the required information Federal agencies must file with their petitions. CHP Alliance stated that the rule proposed in the 2022 SNOPR is flawed because the new building baseline energy efficiency standard for major renovation is based on replacing all equipment included in the renovation with ENERGY STAR or

FEMP designated products. CHP Alliance, Doc. No. 104, pg. 6. CHP Alliance noted that this requirement excludes CHP systems from being both an onsite power and heating/cooling source option for major renovations because neither ENERGY STAR nor FEMP have products designated for CHP systems.

Id.

CHP Alliance urged DOE to eliminate this requirement or immediately designate CHP systems that use renewable fuels or non-fossil fuels as products which Federal agencies can use.

Id.

DOE requires the use of FEMP and ENERGY STAR designated products when such designations are available as specified in 10 CFR part 436 subpart C because when setting efficiency requirements, both FEMP and ENERGY STAR have integrated life-cycle cost effectiveness into their guiding principles that demonstrate compliance with 10 CFR part 436 subpart A. As such, Federal buyers can have confidence that required products have both good energy performance and a total cost of ownership that is equal to or less than products below set efficiencies.

Although there are no such FEMP or ENERGY STAR designated products for CHP systems, this does not preclude an agency from utilizing such systems. If an agency determines that it would like to utilize a CHP system in an EISA-subject building, it may do so but must ensure that the fossil fuel utilization of the system complies with the energy performance standard. This can be done by utilizing renewable, non-fossil fuel based fuels and is discussed in more detail in section III.A.3.b. Defining Technical Impracticability.

In the 2022 SNOPR, DOE proposed that a “technical impracticability” exists when achieving the fossil fuel-generated energy consumption targets would:

(1) not be feasible from an engineering design or execution standpoint due to existing physical or site constraints that prohibit modification or addition of elements or spaces; (2) significantly obstruct building operations and the functional needs of a building, specifically for industrial process loads, critical national security functions, mission critical information systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and research operations; or (3) significantly degrade energy resiliency and energy security of building operations as defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 101(e)(7) respectively.

87 FR 78382, 78421 and 78430. Upon determination that complying with these standards is technically impracticable, the building is still required to reduce fossil fuel consumption to the maximum extent practicable. Technical impracticability may include technology availability and cost considerations but may not be based solely on cost considerations.

In response to the 2022 SNOPR, DOE received one comment on this topic that claimed that the definition of “technical impracticability” is too ambiguous and could lead to agencies taking advantage of loopholes. Doc. No. 79, pg. 4. DOE notes that Congress directed DOE to base its petition adjudication decisions on agency determinations of technical impracticability. Due to the range of issues and challenges related to technical impracticability that could be faced by agencies, DOE will review each petition on a case-by-case basis and make the ultimate determination as to whether meeting the applicable standard is technically impracticable for that building and project. DOE may also provide further guidance on this topic via an implementation guidance.

1. DOE Review of Petitions

In the 2022 SNOPR, DOE proposed that the Director of FEMP will review the petitions for downward adjustment and make a best effort to return the complete petition within 45 calendar days of submittal. 87 FR 78382, 78397. DOE stated that it would review petitions in a timely manner and if the petitioning agency has demonstrated the need for a downward adjustment per the previous discussion, DOE will concur with the agency's conclusion and notify the agency in writing.

Id.

If DOE does not concur, it would forward its reasons to the petitioning agency.

In this final rule, DOE is modifying the proposed timing. DOE will make a best effort to notify an agency within 30 calendar days of submittal whether a petition is approved or rejected. However, the timeframe does not apply to incomplete petitions, which may result in delays. Complete petitions are described in the regulatory text at the end of this final rulemaking notice, specifically sections § 433.202 and § 435.202. DOE recognizes that agencies want assurance that DOE will respond to petitions in a timely manner in order to avoid project delays. If DOE rejects the petition, it will include its reasons for doing so in its response to the agency.

Additionally, in the 2022 SNOPR, for new construction or major renovations of the whole building, DOE proposed that DOE could establish an adjusted value of on-site fossil fuel-generated energy consumption standard, other than the adjusted value requested in a petition. 87 FR 78382, 78424. DOE is finalizing this provision. If DOE finds that the petition does not support the requested adjusted value but that the statutorily required level was nonetheless technically impracticable, DOE can establish a new adjusted value. 87 FR 78382, 78424. DOE intends this provision to provide flexibility in the petition process and reduce the need for agencies to resubmit petitions in the instance of a rejection. In addition, this provision will likely reduce the likelihood of an agency disagreeing with the result of its petition request, as it will be an active participant in an exchange of information with DOE.

2. Making Petitions for Downward Adjustment Public

Throughout this rulemaking proceeding, DOE received comments urging DOE to make petitions for downward adjustment publicly available. In the 2022 SNOPR, DOE stated that it will publish any petitions that are filed, deemed complete, and screened for national security reasons for downward adjustment that are received (subject to potential filtering for national security reasons) to the DOE website. 87 FR 78382, 78396. ACEEE

et al.

supports making petitions for downward adjustments and DOE responses subject to public scrutiny. ACEEE

et al.,

Doc. No. 126, pg. 3-4. However, ACEEE noted that the 2022 SNOPR did not propose regulatory text requiring such public scrutiny and urged DOE to include such language in the final rule.

DOE opts not to include regulatory language requiring it to make petitions public. DOE notes there is nothing in the statutory text that requires the information be made publicly available. In addition, there are instances where information included with the petitions for downward adjustment cannot be made public (

e.g.,

information with national security implications). However, DOE acknowledges the importance of transparency and will make its best effort to publish any petitions for downward adjustment that are filed, deemed complete, and screened for national security concerns.

3. Bundling Petitions

DOE will allow agencies to bundle petitions for new buildings or whole renovations to buildings that are the same design, have the same set of reduction targets, and would require similar measures to reduce fossil fuel-generated energy consumption. The bundled petitions must clearly state any differences between the buildings and explain why the differences do not warrant the submission of separate

evaluations. For component-level major renovations, DOE will allow bundling petitions that are of the same component and building type. DOE will provide more specific details on the bundling process and criteria in the accompanying implementation guidance.

4. GSA Tenant Agencies

ECPA, as amended, precludes GSA from petitioning DOE for a downward adjustment of the applicable percentage reduction requirement. 42 U.S.C. 6834(a)(3)(D)(i)(II). In the 2022 SNOPR, DOE noted although ECPA prohibits GSA from petitioning DOE for a downward adjustment, it makes no reference to GSA tenant agencies. 87 FR 78382, 78396. DOE stated that allowing GSA tenant agencies to submit a petition for downward adjustment will provide an option for some buildings for which the required fossil fuel-generated energy consumptions reductions may be technically impracticable in light of the building's functional needs, but for which GSA may not submit a petition.

Id.

In the 2022 SNOPR, DOE proposed that for construction of a new Federal building or major renovations of a federal building, if a GSA tenant agency is providing substantive and significant design criteria in the design process, the tenant agency may petition DOE for a downward adjustment of the applicable percentage reduction requirements.

Id.

DOE received one comment on this topic in response to the 2022 SNOPR. ACEEE

et al.

commented that DOE may not allow GSA tenant agencies to petition for downward adjustments because ECPA specifically excludes GSA from the downward adjustment petition process. ACEEE

et al.,

Doc. No. 126, pg. 4. They stated that allowing GSA tenant agencies to petition DOE for downward adjustment would expand the number of buildings eligible for such adjustments in a manner that directly contravenes the ECPA.

Id.

DOE reiterates that although the statute prohibits GSA from petitioning DOE for a downward adjustment, it makes no reference to GSA tenant agencies. The statute allows for an “agency” to petition for a downward adjustment. The term “Federal agency” means any department, agency, corporation, or other entity or instrumentality of the executive branch of the Federal Government, including the United States Postal Service, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. 42 U.S.C. 6832(5). As the ACEEE notes, the statute only prohibits GSA from submitting a petition. Thus, in cases in which the GSA tenant agency exercises significant control of design choices in the building, and GSA does not, it makes little sense to prohibit the GSA tenant agency from petitioning for a downward adjustment if such a prohibition is not required by statute. Moreover, these petitions are still subject to the same criteria and review process as other petitions, including that meeting the requirement would be technically impracticable, which is defined as achieving the fossil fuel-based energy consumption targets would (1) not be feasible from an engineering design or execution standpoint due to existing physical or site constraints that prohibit modification or addition of elements or spaces; (2) significantly obstruct building operations and the functional needs of a building, specifically for industrial process loads, critical national security functions, mission critical information systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and research operations; or (3) significantly degrade energy resiliency and energy security of building operations as defined in 10 U.S.C. 101(e)(6) and 10 U.S.C. 101(e)(7) respectively. DOE does not expect that GSA tenant agencies would commonly be able to make such showings for the more generic types of buildings typical of GSA's holdings. Rather, DOE expects this petition process to be applied in the rare situations where building design needs specific to a GSA tenant agency's unique situation make application of the percentage reduction requirements technically impracticable.

5. Petitions Submitted by the Department of Defense

DOE also considered whether it should have a separate petition process for Department of Defense or other agency projects that serve critical national security functions whereby classified or sensitive information can be withheld, and such petitions will not be subject to public disclosure.

Two commenters stated that DOE should not have a separate petition process for buildings serving national security functions. An individual commenter argued that instead of exempting buildings with national security risks, the Federal government must navigate and balance these national security challenges with policies to reduce fossil fuel-generated energy consumption. Doc. No. 81, pg. 2. Similarly, ACEEE

et al.

commented that buildings serving national security functions must be subject to the same petition review process and policies as other Federal buildings. ACEEE

et al.,

Doc. No. 126, pg. 5.

DOE agrees that there will be no blanket exemptions for national security sites. Section 433(a) of EISA does not provide an exemption from the standard for national security. For some buildings, it may be technically impracticable to achieve the consumption targets so the petition process may be appropriate.

Each agency must provide a petition if they believe their facility cannot meet the statutory requirements due to technical impracticability. DOE intends to review all petitions using the same process. DOE believes the petition process will sufficiently vet buildings and agencies' proposed reasoning as to why achieving the reductions will be technically impracticable.

The definition of “technical impracticability” in this rule is defined as achieving the fossil fuel-based energy consumption targets would (1) not be feasible from an engineering design or execution standpoint due to existing physical or site constraints that prohibit modification or addition of elements or spaces; (2) significantly obstruct building operations and the functional needs of a building, specifically for industrial process loads, critical national security functions, mission critical information systems as defined in NIST SP 800-60 Vol. 2 Rev. 1, and research operations; or (3) significantly degrade energy resiliency and energy security of building operations.

In addition, DOE is sensitive to classification issues and will work with agencies to ensure that sensitive information is treated appropriately. DOE also recognizes that agencies may need flexibility in defining what buildings or projects serve critical national security functions, and that a pending petition may delay projects that serve critical national security functions. DOE intends to work closely with agencies pertaining to petitions for projects with critical national security functions as part of its implementation guidance following publication of the rule.

D. Definitions

The final rule adds definitions for “construction cost,” “design for renovation,” “EISA-subject building or project,” “Federal building,” “Fiscal year (FY),” “Fossil fuel-generated energy consumption,” “Major renovation,” “Major renovation cost,” “Major renovation of all Scope 1 fossil fuel-using systems,” “Major renovation of a Scope 1 fossil fuel-using building system or component,” “Multi-family high-rise residential building,” “Shift adjustment multiplier,” and “Technical impracticability,” and it revises the definition for “proposed building” to 10 CFR 433.2 and 10 CFR 435.2. Any comments relating to specific definitions have been previously discussed in Section III. In addition to

the substantive edits to the definitions of “construction cost,” “fossil fuel-generated energy consumption,” and “major renovation cost,” discussed previously, DOE also makes minor revisions to the definitions of “EISA-subject building or project,” “Federal building,” “fiscal year (FY),” “major renovation,” and “technical impracticability” to remove unnecessary language or to provide clarification. These minor revisions do not change the nature of the definitions proposed in the 2022 SNOPR.

IV. Additional Issues Raised by Commenters

A. Authority

AGA argued in its comments that DOE's authority to promulgate performance standards to reduce emissions from fossil fuel-generated energy consumption expired in December 2008.

AGA noted that section 433 of EISA directs DOE to establish by rule revised Federal building energy efficiency performance standards for both new Federal buildings and for Federal buildings undergoing major renovations, “[n]ot later than 1 year after December 19, 2008.” AGA, Doc. No. 100, pg. 4. Because “agencies may act only when and how Congress lets them [,]” AGA asserted that DOE's authority to establish these standards has lapsed.

Id.,

pg. 5 (

citing Cent. United Life Ins. Co.

Burwell,

827 F.3d 70, 73 (D.C. Cir. 2016)). However, the Supreme Court of the United States has routinely held that unless a statute specifies a consequence for noncompliance with a statutory deadline, an agency's obligation does not disappear when a statutory deadline passes.

United States

James Daniel Good Real Prop.,

510 U.S. 43, 63 (1993);

see Barnhart

Peabody Coal Co.,

537 U.S. 149, 159 (2003)

; Regions Hosp.

Shalala,

522 U.S. 448, 459 n.3 (1998). The EISA does not specify any consequence for noncompliance with its deadlines.

AGA, Doc. No. 100, pg. 4. NPGA supported AGA comments with respect to “the questionable foundation on which this rulemaking was proposed.” NPGA, Doc. No. 90, pg. 7.

B. APA Concerns

Two commenters raised procedural concerns related to the 2022 SNOPR. First, APGA expressed concern that stakeholders were deprived from meaningfully commenting on the 2022 SNOPR. APGA, Doc. No. 102, pg. 9. APGA argued that interested parties needed additional time to review the 2022 SNOPR because the rule proposed marked a significant departure from the previous proposed rules.

Id.

In addition, APGA stated that DOE failed to provide a timely copy of the transcript of the January 5, 2023, public meeting, and, as a result, stakeholders that were not able to attend the meeting were unable to review the relevant docket materials.

Id.

DOE notes that it granted the requests from stakeholders for a 30-day extension of the public comment period. 88 FR 12267. As a result, interested parties had 90 days to review the 2022 SNOPR. Multiple parties used this period as an opportunity to file revised comments.

See e.g.,

ASHRAE, Doc. Nos. 96 and 113, Business Council for Sustainable Energy, Doc. Nos. 87 and 115, and joint comments from local officials, Doc. Nos. 94 and 125.

In addition, a copy of the transcript of the January 5, 2023, public meeting is on the docket web page for this rulemaking. Although the transcript was posted after the initial 60-day comment period closed, it was available when DOE re-opened the comment period for an additional 30 days, providing sufficient time for parties to review and comment on that material in the docket.

V. Methodology, Analytical Results, and Conclusion

This final rule implements fossil fuel reduction targets established under EISA, which will begin to reduce GHG emissions in the near term and prepare Federal buildings for a clean energy future. By ensuring that Federal buildings are designed—either from the ground up, or when being renovated—to reduce fossil fuel use, the rule ensures that long-term, as the electric grid integrates more carbon free energies, emissions will be reduced. DOE recognizes that exchanging on-site fossil fuel generated energy for increased reliance on the electric grid, which may still be generating energy with fossil fuels, will not in every application lead to an immediate reduction in emissions of GHGs and SO

and in some cases could result in some increase in energy costs. This is explored in more detail in Chapter 1, Section 1.8 of the technical support document by examining the overall sensitivity of the rule to future grid cleaning scenarios. However, agencies must make decisions for the long-term, making capital investments today which will have lasting impacts well into the future, resulting in net benefits over the time and the life of the asset. Net benefits will increase significantly as the grid incorporates cleaner sources of electricity, as illustrated by the supporting technical analysis. In addition, DOE expects emerging and improving technological advancements in electric equipment, such as heat pumps, will lead to additional and dramatic site energy savings, further improving the emissions and cost savings cases for this rule.

A. Cost-Effectiveness

DOE conducted an Environmental Assessment (EA) for this final rulemaking.

In addition, DOE referenced a previous technical analysis conducted by the DOE Building Energy Codes Program that evaluated the energy and cost savings impacts, as well as cost effectiveness, of Standard 90.1-2019.

As described in the EA, DOE identified a rate of new Federal commercial construction of 13.3 million square feet per year, with a distribution of building types as shown in Table V-1. Starting in 2030, section 205(c)(ii) of Executive Order 14057, “Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability” (December 8, 2021), requires agencies to “design new construction and modernization projects greater than 25,000 gross square feet to be net-zero emissions by 2030.” This effectively reduces the impact of this rule to apply to new construction and major renovation projects that fall above the cost threshold but are also below 25,000 gross square feet. For the year 2030 and beyond, DOE estimated new Federal commercial and multi-family high-rise residential building construction volume will be 2.2 million square feet per year, with a distribution of building types as shown in Table V-2. The distribution of building types is based on an extraction of the latest 10 years of new construction data entered into the Federal Real Property Portfolio Management System (“FRPP MS”) that meets the required cost threshold of the final rule for cases both before and after the 25,000 Sf minimum triggering E.O. 14057 compliance.

The Environmental Assessment (EA) (DOE/EA-2165) is entitled, “Environmental Assessment for Final Rule, 10 CFR part 433, `Energy Efficiency Standards for New Federal Commercial and Multi-Family High-Rise Residential Buildings' Baseline Standards Update.” The EA may be found in the docket for this rulemaking and at

www.energy.gov/node/472482.

See

DOE's analysis of the cost savings of the 2016 and 2019 ASHRAE 90.1 Standards at

www.energycodes.gov/sites/default/files/2020-07/90.1-2016_National_Cost-Effectiveness.pdf

and

www.energycodes.gov/sites/default/files/2021-07/90.1-2019_National_Cost-Effectiveness.pdf,

respectively.

See

www.realpropertyprofile.gov/FRPPMS/FRPP_Login.

Additionally, DOE identified an estimated rate of Federal major renovation projects that would be influenced by this rule. To do so, DOE utilized data from the Federal

Compliance Tracking System (“CTS”) where agencies report data on building efficiency improvement projects. The data from CTS was queried to include only those projects that would meet the cost threshold and have impacts on site fossil fuel energy consumption. As not all agencies are compliant in reporting data into CTS, results were scaled up to account for agencies out of compliance. As CTS does not supply data on the types of buildings for the reported projects, the distribution of eligible Federal buildings for a renovation that would meet the cost threshold was applied to the estimated total project square footage. DOE identified an estimated rate of new Federal major renovation construction of 1.36 million square feet per year with a distribution of building types as shown in Table V-1. As noted above, Executive Order 14057 effectively reduces the impact of this rule to apply only to new construction and major renovation projects that fall above the cost threshold but are also below 25,000 gross square feet. Taking this into account for the year 2030 and beyond, the estimated new Federal commercial and multi-family high-rise residential building major renovation construction volume per year will be 0.4 million square feet per year, with a distribution of building types as shown in Table V-1 and Table V-2 of this document.

These tables also show the prototype buildings incorporated into simulations that are used to estimate energy use in each building type. DOE derived these prototype buildings from 16 building types in 17 climate zones

using its Commercial Prototype Building models.

Of the 16 prototype buildings, DOE developed costs for 6 prototype buildings that represent the majority of the building types used by Federal agencies to determine the cost effectiveness of Standard 90.1-2016 and Standard 90.1-2019.

DOE then extracted the cost-effectiveness information for those prototype buildings and weighted those values as appropriate to obtain an average cost effectiveness value for building types found in the Federal commercial sector.

Briggs, R.S., R.G. Lucas, and Z.T. Taylor. 2003. “Climate classification for building energy codes and standards: Part 1—Development Process.” ASHRAE Transactions 109(1): 109:121. American Society of Heating, Refrigerating and Air-Conditioning Engineers. Atlanta, Georgia.

DOE's prototype buildings are described at

www.energycodes.gov/prototype-building-models.

See

DOE's technical support document chapter 1 for more information on DOE's analysis of building prototypes.

Table V-1—New Federal Commercial and High-Rise Multi-Family Construction Volume by Building Type for Buildings Constructed in Years 2025-2029

Building type

Fraction of

Federal

construction

volume

(by floor area)

(%)

Assumed BECP prototypes for energy savings

Assumed BECP prototypes for cost effectiveness

Office

17.77

Small Office, Medium Office, Large Office

Small Office, Large Office.

Dormitories and Barracks

14.57

Small Hotel, Mid-rise Apartment, High-rise Apartment

Small Hotel, Mid-rise Apartment.

School

15.65

Secondary School

Primary School.

Service

15.16

Stand-alone Retail, Non-refrigerated Warehouse

Stand-alone Retail.

Other Institutional Uses

5.76

None *

None.

Hospital

7.80

Hospital

Small Office, Large Office.

Warehouses

2.95

Non-Refrigerated Warehouse

None.

Laboratories

4.24

Medium Office, Hospital

Small Office, Large Office.

All Other

2.74

None

None.

Outpatient Healthcare Facility

5.00

Outpatient Healthcare

Small Office.

Industrial

1.63

None

None.

Child Care Center

0.89

Primary School

Primary School.

Communications Systems

1.42

None

None.

Prisons and Detention Centers

0.18

None

None.

Family Housing

1.06

Mid-rise Apartment

Mid-rise Apartment.

Navigation and Traffic Aids

0.53

None

None.

Land Port of Entry

0.68

Non-refrigerated Warehouse

None.

Border/Inspection Station

0.64

Small Office, Non-refrigerated Warehouse

Small Office.

Facility Security

0.25

Small Office

Small Office.

Data Centers

0.34

None

None.

Museum

0.74

None

None.

Comfort Station/Restrooms

0.01

Non-refrigerated Warehouse

None.

Public Facing Facility

0.02

Stand-alone Retail

Stand-alone Retail.

Aviation Security Related

0.00

Small Office

Small Office.

Post Office

0.00

Stand-alone Retail

Stand-alone Retail.

* Note that energy savings and cost-effectiveness mapping are not available for a number of Federal building types, with “other institutional uses,” warehouses, and “all other” being the largest Federal building types with no reliable mapping. As described in this section, DOE considered energy savings and costs for these unmapped Federal building types to be equivalent to the weighted energy savings and cost for the mapped Federal building types.

Table V-2—New Federal Commercial and High-Rise Multi-Family Construction Volume by Building Type for Buildings Constructed in Years 2030-2054

Building type

Fraction of

Federal

construction

volume

(by floor area)

(%)

Assumed BECP prototypes for energy savings

Assumed BECP prototypes for cost effectiveness

Office

14.24

Small Office, Medium Office

Small Office, Large Office.

Dormitories and Barracks

4.02

Small Hotel, Mid-rise Apartment, High-rise Apartment

Small Hotel, Mid-rise Apartment.

School

10.88

Secondary School

Primary School.

Service

18.34

Stand-alone Retail, Non-refrigerated Warehouse

Stand-alone Retail.

Other Institutional Uses

12.63

None *

None.

Hospital

2.97

Hospital

Small Office, Large Office.

Warehouses

6.88

Non-Refrigerated Warehouse

None.

Laboratories

4.37

Medium Office, Hospital

Small Office, Large Office.

All Other

5.58

None

None.

Outpatient Healthcare Facility

7.66

Outpatient Healthcare

Small Office.

Industrial

2.05

None

None.

Child Care Center

2.67

Primary School

Primary School.

Communications Systems

0.87

None

None.

Prisons and Detention Centers

0.26

None

None.

Family Housing

1.49

Mid-rise Apartment

Mid-rise Apartment.

Navigation and Traffic Aids

1.95

None

None.

Land Port of Entry

0.99

Non-refrigerated Warehouse

None.

Border/Inspection Station

0.36

Small Office, Non-refrigerated Warehouse

Small Office.

Facility Security

1.36

Small Office

Small Office.

Data Centers

0.19

None

None.

Museum

0.10

None

None.

Comfort Station/Restrooms

0.03

Non-refrigerated Warehouse

None.

Public Facing Facility

0.09

Stand-alone Retail

Stand-alone Retail.

Aviation Security Related

0.00

Small Office

Small Office.

Post Office

0.00

Stand-alone Retail

Stand-alone Retail.

* Note that energy savings and cost-effectiveness mapping are not available for a number of Federal building types, with other institutional uses, warehouses, and all other being the largest Federal building types with no reliable mapping. As described in this section, DOE considered energy savings and costs for these unmapped Federal building types to be equivalent to the weighted energy savings and cost for the mapped Federal building types.

DOE has determined estimated incremental construction first cost information for the building types and climate zones analyzed for buildings compliant with this final rule (compliant buildings) versus Standard 90.1-2019 (see Table V-3).

Note that the values in Table V-3 have been adjusted to reflect 2022$ from the table that appears in DOE's determination of energy savings for Standard 90.1-2019, which were in 2020$. This adjustment was made using the GDP deflator value to correct for inflation between 2020 and 2022. Organization for Economic Co-operation and Development, GDP Implicit Price Deflator in United States, retrieved from FRED, Federal Reserve Bank of St. Louis;

fred.stlouisfed.org/series/USAGDPDEFAISMEI.

These values have also been adjusted to reflect the same underlying economic assumptions as the 2019 version, and sales tax has also been removed.

Table V-3—Incremental Construction First Cost (2022$) for Compliant Building Design Under the Final Rule vs. Standard 90.1-2019

Prototype

Value

ASHRAE Climate Zone *

Small Office

First Cost

$673

$584

$515

$1,666

$641

/ft

0.12

0.11

0.09

0.30

0.12

Large Office

First Cost

261,781

268,194

196,408

354,808

223,553

/ft

0.52

0.54

0.39

0.71

0.45

Stand-alone Retail

First Cost

19,608

20,240

19,740

21,563

19,363

/ft

0.79

0.82

0.80

0.87

0.78

Primary School

First Cost

(126,946)

(121,994)

(116,139)

(94,722)

(122,894)

/ft

(1.72)

(1.65)

(1.57)

(1.28)

(1.66)

Small Hotel

First Cost

(104,866)

(104,624)

(104,396)

(101,194)

(103,044)

/ft

(2.43)

(2.42)

(2.34)

(2.38)

Mid-rise Apartment

First Cost

(18,343)

(17,490)

(18,113)

(12,445)

(25,126)

/ft

(0.54)

(0.52)

(0.54)

(0.37)

(0.74)

* Negative costs (shown in parentheses) indicate a reduction in cost due to changes in the code, usually due to reduced HVAC capital cost and reduction of venting required for on-site combustion.

DOE used data from Table V-3 to calculate preliminary values for overall estimated incremental first cost of construction for Federal commercial and high-rise, multi-family residential buildings. DOE calculated the incremental first cost of the Federal building types based on the DOE cost prototypes shown in the far-right column of Table V-1 of this document. DOE then calculated the weighted average incremental cost for mapped Federal building types based on their corresponding prototypes, which represent an estimated 79.3 percent of new Federal construction. This weighted incremental cost was assigned to un-mapped Federal building types, and a total weighted incremental cost was calculated by multiplying the incremental cost for each Federal building type by the fraction of Federal construction shown in Table V-1.

The estimated national incremental first cost for building types was developed by multiplying the average (across climate zones) incremental first cost of the prototypes Standard 90.1 cost-effectiveness analysis by the fraction of the Federal sector construction volume shown in Table V-1, and then multiplying that by the total estimate of Federal new construction floorspace.

DOE estimates that total first cost outlays for new Federal buildings will be less under compliant designs than under Standard 90.1-2019, primarily due to lower HVAC equipment costs for some building types (

see

Table V-3). The decrease in capital cost is primarily driven by lower equipment cost as well as the avoidance of gas infrastructure costs, which can include gas lines and venting. See Chapter 1, section 3 of DOE's technical support document for more information. The resulting total incremental first cost estimate is a savings of $8.44 million per year. The average first cost decrease is $1.82 per square foot. These first cost decreases are a result of the lower capital costs of the assumed electric equipment types as dictated in the ASHRAE and IECC energy codes (as mandated in 10 CFR part 433 and 10 CFR part 435 and are the baseline for this modified building efficiency standard). Minimally compliant electric equipment was assumed in the proposed case as hitting the “30% better” (than baseline) performance goal as generally required by regulation, but include a cost effectiveness caveat that can reduce the goal down to minimal compliance. As can be seen in Table V-4,

most building types are projected to switch their space heating systems from a fossil fuel burning system over to an electric resistance-based system.

For the Federal office building, the small and large office prototype first costs were averaged. For the Federal education building, the primary school prototype first cost was used. For the Federal dormitories/barracks building type, the small hotel and mid-rise apartment prototype first costs were averaged.

See Chapter 1 of DOE's technical support document supporting this rulemaking for more information.

Table V-4—Breakdown of Proposed Heating System by Building Prototype

Building prototype

Yearly

constructed SF—Post 2030

(%)

Yearly

constructed SF—Pre 2030

(%)

Baseline gas unit efficiency

Proposed electric

unit efficiency

Space heat notes

Small Office

12.8

14.8

0.81

99% Electric Boilers

Convert using AFUE for gas furnace and AFUE Estimate for Electric Furnace.

Medium Office

2.6

5.5

0.79

99% Electric Furnaces

Convert using pre 1/1/2023 Et estimated Et for Furnaces assuming 0.75 casing loss.

Large Office

0.0

2.3

0.82

99% Electric Boilers

Convert using Et Estimate for boilers.

Stand-Alone Retail

13.2

8.8

0.79

1.76 COP RTU Heat Pump

Convert using national weight heat pump efficiency from office analysis.

Primary School

3.8

1.0

0.81

99%

1/4

Furnaces,

3/4

boilers

1/4

Furnaces,

3/4

boilers. Convert both to electric equivalents.

Secondary School

15.5

18.1

0.82

99% Electric Boilers

Convert using Et Estimate for boilers.

Outpatient Health Care

10.9

5.8

0.82

99% Electric Boilers

Convert using Et Estimate for boilers.

Hospital

8.9

12.7

0.82

99% Electric Boilers

Convert using Et Estimate for boilers.

Small Hotel

0.4

1.2

0.81

99% Electric Furnaces

Convert using AFUE for Gas and AFUE Estimate for Electric.

Warehouse

24.4

13.1

0.79

99% Electric Furnaces

Note Model uses a 0.8 gas AFUE for office space, but 0.7925 for Fine storage and unit heater.

Mid-Rise Apartment

4.7

8.7

0.81

2.4 COP Residential Heat Pump

Convert using AFUE Estimate to residential HSPF.

High-Rise Apartment

2.7

8.2

0.82

99% Electric Boilers

Convert using Et Estimate for boilers.

An estimated 17.7 percent of the projects would utilize heat pumps in their proposed “all electric” case (those that map to Stand Alone Retail and Mid-Rise Apartment prototype models) with assumed efficiency performance metrics as noted. Service hot water systems (when not already specified as an electric system per the 10 CFR parts 433 and 435 requirements) are similarly assumed to be minimally compliant electric resistance systems with 99-percent efficiencies. Cooking systems, where present, are assumed to switch from 40-percent efficient gas systems to 70-percent standard efficiency electric systems.

It should be noted that in all cases higher efficiency electric equipment is available on the market, but the statutory authority of this rule is limited to total building reduction targets and does not specify specific equipment types or efficiency levels. An agency is free to design a project per their own site, cost, and usage specific needs, while complying with applicable efficiency targets. As such, the analysis presented in this final rule intends to capture the base-level compliance cases only. DOE encourages agencies to carefully consider and select higher efficiency equipment (such as even higher efficiency heat pumps and/or more widespread adoption) to the greatest extent possible, given project-specific needs and constraints. Higher efficiency equipment can often provide projects with a lifecycle cost effective solution that saves even more energy and emissions (potentially with higher up-front capital costs) than agencies would achieve through just base compliance with this rule.

DOE also analyzed the relative impact of the final rule on the first cost of newly constructed Federal buildings as

a percentage of the overall annual cost of newly constructed Federal commercial and high-rise buildings. In order to estimate the total cost of construction for new Federal buildings, DOE obtained estimated construction costs for new Federal commercial and high-rise multifamily buildings from RS Means (2020)

for the six building types analyzed in DOE's cost-effectiveness report. These new construction costs were weighted by the percent of Federal floorspace to develop an estimated average cost of a new Federal building of $198 per square foot, as shown in Table V-5. This average construction cost may be multiplied by the overall total of 19.54 million square feet of new Federal construction per year used in this rulemaking to estimate the annual total cost of all new Federal commercial and high-rise multi-family construction, which is $3.86 billion. As previously noted, first cost savings associated with this rulemaking are estimated at $8.62 million per year, indicating a potential cost reduction in new Federal construction costs of 0.223 percent ($8.62 million divided by $3.86 billion).

RS Means. 2020. RS Means Building Construction Cost Data, 78th Ed. Construction Publishers & Consultants. Norwell, MA.

Table V-5—First Cost of Typical New Federal Building in $/ft

Federal building type

Weight

(%)

First cost *

Weighted cost

Office

20.74

$210

$43.51

Barracks and Dormitories

14.85

217

32.18

School

14.33

225

32.25

Service

13.31

116

15.44

Hospital

5.57

200

11.14

Laboratories

4.37

200

8.73

Outpatient Healthcare Facility

3.35

220

7.38

Child Care Center

1.18

225

2.67

Family Housing >3 Stories

0.68

218

1.48

Border/Inspection Station

0.49

220

1.07

Facility Security

0.31

220

0.69

Aviation Security Related

0.01

220

0.02

Public Facing Facility

0.05

116

0.06

Post Office

0.01

116

0.01

Remaining Federal Stock

20.75

198

41.00

Federal Average

100.00

198

197.62

* All building first cost data from RS Means 2020.

DOE determined that the total incremental first cost estimate for Federal buildings (as mapped to the prototype buildings in Table V-1) is a savings of $149.2 million (at a 3-percent discount rate) and a savings of $91.5 million (based on a 7-percent discount rate), with an average first cost decrease of $1.07 per square foot (at a 3-percent discount rate) and $0.66 per square foot (at a 3-percent discount rate).

For annualized energy cost savings, DOE used a similar approach to that used for incremental first cost. That is, DOE developed the national annualized energy cost savings

for building types by multiplying the average (across climate zones) energy cost savings (determined from the same Standard 90.1 cost-effectiveness analysis) by the fraction of the Federal sector construction volume shown in Table V-1, and then multiplying that by the total estimate of Federal new construction floorspace.

DOE notes that it used the best publicly-available data in its analysis, but data about the location of future new construction or major renovations in the Federal sector are limited. Table V-6 shows the estimated annual energy cost savings by prototype buildings for a compliant building compared to buildings meeting only Standard 90.1-2019. This comparison shows projected increases in energy costs across the board because despite the increases in equipment efficiency and overall site energy savings, the projected difference between the cost of fossil fuels (primarily natural gas) and purchased electricity, when evaluated at a national level, are too high for the improvements to overcome. EIA's Annual Energy Outlook for 2023 (AEO 2023)

outlook rate projections indicate that for the same amount of site energy consumed, electricity is about 3.68 times more expensive than natural gas. This number is projected to gradually fall over time to 3.34 times more expensive by the year 2050.

The energy costs used were the national average energy costs used by ASHRAE in the development of Standard 90.1-2019. To quote the cost-effectiveness analysis report “Energy rates used to calculate the energy costs from the modeled energy usage were $0.98/therm for fossil fuel and $0.1063/kWh for electricity. These rates were used for the Standard 90.1-2019 energy analysis and derived from the EIA data. These were the values approved by the SSPC 90.1 for cost-effectiveness for the evaluation of individual addenda during the development of Standard 90.1-2019.”

For the Federal office building, the small and large office prototype LCCs were weighted by estimated fraction of small and large offices observed in the FRPP MS database over the past 10 years of construction. For the Federal education building, the primary school prototype LCC was used. For the Federal dorm/barracks building type, the small office, small hotel, and mid-rise apartment prototype LCCs were averaged.

DOE—U.S. Department of Energy. 2022. Annual Energy Outlook 2023 with Projections to 2050. Washington, DC. Available at

www.eia.gov/outlooks/aeo/.

As it did for the incremental cost analysis, DOE adjusted the 2019 energy cost savings analysis to use the same underlying economic assumptions for its analysis of compliant building designs, including fuel prices, fuel price escalations, labor and material costs, and the removal of sales tax. The resulting total annualized energy cost impacts for the affected buildings' 14.7 million square feet of annual construction for years 2025-2029 and 2.6 million square feet of annual construction for years 2030-2054 was estimated to be an additional cost of $11.05 million per year (at a 3-percent discount rate) and $8.43 million per year (at a 7-percent discount rate). The annualized energy cost impacts were estimated to be an additional $2.38 per square foot (at a 3-percent discount rate) and an additional $1.82 per square foot (at a 7-percent discount rate). The annual energy cost impacts are estimated for one year of Federal commercial and high-rise multi-family

residential construction, and those impacts accumulate over the evaluation period.

Table V-6—Annualized Energy Costs (2022$) for Compliant Building Design vs. Standard 90.1-2019

Building prototype

Total

prototype usage

(%)

Annualized energy

cost savings

(M$2022)

Discount rate

Annualized energy

cost savings intensity

(M$2022/SF)

Discount rate

Small Office

14.78

($1.63)

($1.25)

($0.35)

($0.27)

Medium Office

5.53

(0.61)

(0.47)

(0.13)

(0.10)

Large Office

2.26

(0.25)

(0.19)

(0.05)

(0.04)

Stand-Alone Retail

8.76

(0.97)

(0.74)

(0.21)

(0.16)

Strip Mall

0.00

Primary School

1.02

(0.11)

(0.09)

(0.02)

Secondary School

18.06

(2.00)

(1.52)

(0.43)

(0.33)

Outpatient Health Care

5.76

(0.64)

(0.49)

(0.14)

(0.10)

Hospital

12.68

(1.40)

(1.07)

(0.30)

(0.23)

Small Hotel

1.18

(0.13)

(0.10)

(0.03)

(0.02)

Large Hotel

0.00

Quick-service Restaurant

0.00

Full-service Restaurant

0.00

Mid-Rise Apartment

8.95

(0.99)

(0.75)

(0.21)

(0.16)

High-Rise Apartment

7.90

(0.87)

(0.67)

(0.19)

(0.14)

Non-Refrigerated Warehouse

13.12

(1.45)

(1.11)

(0.31)

(0.24)

Total

100.00

(11.05)

(8.43)

(2.38)

(1.82)

Note:

Negative numbers (shown in parentheses) represent an increased cost.

For LCC net savings, DOE used a similar approach to that used for incremental first cost and first year energy cost savings. That is, DOE developed the national annual LCC net savings

for the entire rule by multiplying the average (across climate zones) LCC net savings (determined from the same Standard 90.1 cost-effectiveness analysis) by the fraction of the Federal sector construction volume shown in Table V-1, and then multiplying that result by the total estimate of Federal new construction floorspace.

DOE only used the climate zones per table V-3 to help further estimate first cost of equipment given variances in equipment type requirements per building type per climate zone. Table V-7 shows annual LCC net savings by prototype buildings for the compliant buildings compared to buildings meeting only Standard 90.1-2019. As DOE did for the incremental cost analysis, DOE adjusted the 2019 LCC analysis to use the same underlying economic assumptions as the compliant buildings, including fuel prices, fuel price escalations, labor and material costs, and the removal of sales tax. The resulting total LCC net savings for 14.7 million square feet of annual construction for years 2025-2029 and 2.6 million square feet of annual construction for years 2030-2054 was estimated to be a cost of $54.87 million (at a 3-percent discount rate) and a savings of $0.089 million (based on a 7 percent discount rate). The average LCC net impacts in year 1 was estimated to be a cost o- $2.97 million (at a 3 percent discount rate) and a savings of $0.01 million (based on a 7-percent discount rate. The annual LCC savings are for one year of Federal commercial and high-rise multi-family residential construction, and those savings would accumulate over the LCC evaluation period. For the purpose of this analysis, DOE relied on a 30-year period.

Lavappa, P and J Kneifel. 2021. Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis-2021 Annual Supplement to NIST Handbook 135.

Table V-7—Annual Net Life-Cycle Cost (LCC) (2022$) for Compliant Building Design vs. Standard

90.1-2019

Building prototype

Total

prototype usage

Cumulative LCC

cost savings,

(M$2022)

Discount rate

Annualized LCC

cost savings, annualized

(M$2022)

Discount rate

Small Office

14.78

($8.11)

$0.013

($0.44)

$0.0015

Medium Office

5.53

(3.03)

0.005

(0.16)

0.0006

Large Office

2.26

(1.24)

0.002

(0.07)

0.0002

Stand-Alone Retail

8.76

(4.81)

0.008

(0.26)

0.0009

Strip Mall

0.00

0.000

0.00

0.0000

Primary School

1.02

(0.56)

0.001

(0.03)

0.0001

Secondary School

18.06

(9.91)

0.016

(0.54)

0.0018

Outpatient Health Care

5.76

(3.16)

0.005

(0.17)

0.0006

Hospital

12.68

(6.96)

0.011

(0.38)

0.0013

Small Hotel

1.18

(0.65)

0.001

(0.04)

0.0001

Large Hotel

0.00

0.000

0.00

0.0000

Quick-service Restaurant

0.00

0.000

0.00

0.0000

Full-service Restaurant

0.00

0.000

0.00

0.0000

Mid-Rise Apartment

8.95

(4.91)

0.008

(0.27)

0.0009

High-Rise Apartment

7.90

(4.33)

0.007

(0.23)

0.0008

Non-Refrigerated Warehouse

13.12

(7.20)

0.012

(0.39)

0.0013

Total

100.00

(54.87)

0.089

(2.97)

0.0100

Note:

Negative numbers (shown in parentheses) represent an increased cost or disbenefit.

DOE calculated the net present value (“NPV”) of the change in equipment cost and reduced operating cost associated with the difference between the compliant case and Standard 90.1-2019. The NPV is the value in the present of a time-series of costs and savings, equal to the present value of savings in operating cost minus the present value of the increased total equipment cost.

DOE determined the total increased equipment cost for each year of the analysis period (2024-2053) using the incremental construction cost described previously. DOE determined the present value of operating cost savings for each year from the beginning of the analysis period to the year when all Federal buildings constructed by 2054 have been retired, assuming a 30-year lifetime of the building.

The average annual operating cost includes the costs for energy, repair, or replacement of building components (

e.g.,

heating and cooling equipment, lighting, and envelope measures), and maintenance of the building. DOE determined the per-unit annual increase in operating cost based on the differences in energy costs plus replacement and maintenance cost savings, which were calculated in the underlying cost-effectiveness analysis by DOE's Building Energy Codes Program. While DOE used the methodology and prices described above to calculate first year energy cost savings and LCC net savings, for the NPV calculations, DOE determined the per-unit annual savings in operating cost by multiplying the per square foot annual electricity and natural gas savings in energy consumption by the appropriate energy price from AEO 2023. DOE forecasted energy prices based on projected average annual price changes in AEO 2023 to develop the operating cost savings through the analysis period.

DOE uses national discount rates to calculate national NPV. DOE estimated NPV using both a 3-percent and a 7-percent real discount rate, in accordance with the Office of Management and Budget's guidance to Federal agencies on the development of regulatory analysis, particularly section E therein:

Identifying and Measuring Benefits and Costs.

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

U.S. Office of Management and Budget,

Circular A-4: Regulatory Analysis

(Sept. 17, 2003) (Available at:

www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf

(Last accessed Oct. 23, 2023).

The present value of increased equipment costs is the annual total cost increase in each year (the difference between the final rule and Standard 90.1-2019), discounted to the present, and summed throughout the analysis period (2024 through 2053) plus 30-year lifetime. Because new construction is held constant through the analysis period, the installed cost is constant.

The present value of savings in operating cost is the annual savings in operating cost (the difference between final rule and Standard 90.1-2019), discounted to the present and summed through the analysis period (2024 through 2053) plus 30-year lifetime. Savings are decreases in operating cost associated with the higher energy efficiency associated with buildings designed to the final rule compared to Standard 90.1-2019. Total annual savings in operating cost are the savings per square foot multiplied by the number of square feet that survive in a particular year through the lifetime of the buildings constructed in the last year of the analysis period.

B. Emissions Analysis

The emissions analysis consists of two components. The first component estimates the effect of potential Federal building energy standards on power sector and site (where applicable) combustion emissions of CO

, NO

, SO

, and Hg. The second component estimates the impacts of potential Federal building energy standards on emissions of two additional greenhouse gases, CH

and N

O, as well as the changes to emissions of other gases due to “upstream” activities in the fuel production chain. These upstream activities comprise extraction, processing, and transporting fuels to the site of combustion.

The analysis of electric power sector emissions of CO

, NO

, SO

, and Hg uses emissions factors intended to represent the marginal impacts of the change in electricity consumption associated with Federal building energy standards. The methodology is based on results published for the AEO 2023, including a set of side cases that implement a variety of efficiency-related policies. The analysis presented in this notice uses projections from

AEO 202

3. Power sector emissions of CH

and N

from fuel combustion are estimated using Emission Factors for Greenhouse Gas Inventories published by the Environmental Protection Agency (“EPA”).

Available at

www.epa.gov/sites/production/files/2023-04/documents/emission-factors_apr2023.pdf

(last accessed July 12, 2023).

To demonstrate this final rule's effects under the Biden-Administration clean-electricity goals, DOE analyzed an additional case where the future grid emission factors were assumed to follow a “100% reduction by 2035” (100 by 2035) profile as utilized in the National Renewable Energy Lab's 100% Clean Electricity by 2035 Study and as defined in NREL's “Cambium 2022 Scenario Descriptions and Documentation” report

detailed in the accompanying TSD for this final rule. This case represents a change in national electricity generation that assumes national power sector CO

emissions reach 100-percent below 2005 levels by 2035. This more aggressive case results in the final rule producing immediate decreases in CO

e gas emissions on a yearly basis (starting in the first analysis year of 2025). Details of this analysis can be found in Chapter 1 of the TSD for this final rule.

Available at

www.nrel.gov/analysis/100-percent-clean-electricity-by-2035-study.html

(last accessed January 19, 2024).

Until 2030, the on-site operation of construction subject to this final rule allows combustion of fossil fuels and results in emissions of CO

, NO

, SO

, CH

, and N

O where these products are used. Site emissions of these gases were estimated using Emission Factors for Greenhouse Gas Inventories and, for NO

and SO

emissions intensity factors from an EPA publication.

U.S. Environmental Protection Agency. External Combustion Sources. In

Compilation of Air Pollutant Emission Factors.

AP-42. Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter 1. Available at

www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors

(last accessed April 15, 2022).

Full fuel cycle upstream emissions, which include emissions from fuel combustion during extraction, processing, and transportation of fuels, and “fugitive” emissions (direct leakage to the atmosphere) of CH

and CO

, are estimated based on the methodology described in Chapter 1 of the TSD.

The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. For power sector emissions, specific emissions intensity factors are calculated by sector and end use. Total emissions changes are estimated using the energy savings calculated in the national impact analysis with energy savings derived from a load shifting modeling analysis of the Standard 90.1-2019 prototype models.

1. Air Quality Regulations Incorporated in DOE's Analysis

DOE's analysis for the electric power sector reflects the AEO, which incorporates the projected impacts of existing air quality regulations on emissions. AEO 2023 reflects, to the extent possible, laws and regulations adopted through mid-November 2022, including the emissions control programs discussed in the following paragraphs and the Inflation Reduction Act.

For further information,

see

the Assumptions to

AEO 2023

report that sets forth the major assumptions used to generate the projections in the Annual Energy Outlook. Available at

www.eia.gov/outlooks/aeo/assumptions/.

emissions from affected electric generating units (“EGUs”) are subject to nationwide and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual emissions cap on SO

for affected EGUs in the 48 contiguous States and the District of Columbia (“D.C.”). 42 U.S.C. 7651

et seq.

emissions from numerous States in the eastern half of the United States are also limited under the Cross-State Air Pollution Rule (“CSAPR”). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce certain emissions, including annual SO

emissions, and went into effect as of January 1, 2015. The AEO 2023 incorporates implementation of CSAPR, including the update to the CSAPR ozone season program emission budgets and target dates issued in 2016. 81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is enforced through the use of tradable emissions allowances. Under existing EPA regulations, for states subject to SO

emissions limits under CSAPR, any excess SO

emissions allowances resulting from the lower electricity demand caused by the adoption of an efficiency standard could be used to permit offsetting increases in SO

emissions by another regulated EGU.

However, beginning in 2016, SO

emissions began to fall as a result of the Mercury and Air Toxics Standards (“MATS”) for power plants. 77 FR 9304 (Feb. 16, 2012). The final MATS rule establishes power plant emission standards for mercury, acid gases, and non-mercury metallic toxic pollutants. Because of the emissions reductions under the MATS, it is unlikely that excess SO

emissions allowances resulting from the lower electricity demand would be needed or used to permit offsetting increases in SO

emissions by another regulated EGU. DOE estimated SO

emissions impacts using emissions factors based on AEO 2023.

CSAPR also established limits on NO

emissions for numerous States in the eastern half of the United States. Federal building energy standards would have little effect on NO

emissions in those States covered by CSAPR emissions limits if excess NO

emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NO

emissions from other EGUs. In such case, NO

emissions would remain near the limit even if electricity generation goes down. Depending on the configuration of the power sector in the different regions and the need for allowances, however, NO

emissions might not remain at the limit in the case of lower electricity demand. That would mean that Federal building energy standards might reduce NO

emissions in covered States. Despite this possibility, DOE has chosen to be conservative in its analysis and has maintained the assumption that Federal building energy standards will not reduce NO

emissions in States covered by CSAPR. Federal building energy standards would be expected to reduce NO

emissions in the States not covered by CSAPR. DOE used AEO 2023 data to derive NO

emissions factors for the group of States not covered by CSAPR.

The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's Federal building energy standards would be expected to slightly reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on AEO 2023, which incorporates the MATS.

C. Monetizing Emissions Impacts

As part of the development of this final rule, for the purpose of complying with the requirements of Executive Order 12866, DOE considered the estimated monetary benefits from the reduced emissions of CO

, CH

, N

O, NO

, and SO

that are expected to result from the energy performance standards considered. This section summarizes the basis for the values used for monetizing the emissions benefits and presents the values considered in this final rule.

To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990, published in February 2021 by the Interagency Working Group on the Social Cost of

Greenhouse Gases (“IWG”) (“February 2021 SC-GHG TSD”).

1. Monetization of Greenhouse Gas Emissions

DOE estimates the monetized benefits of the reductions in emissions of CO

, CH

, and N

O by using a measure of the social cost (“SC”) of each pollutant (

e.g.,

SC-CO

). These estimates represent the monetary value of the net harm to society associated with a marginal increase in emissions of these pollutants in a given year, or the benefit of avoiding that increase. These estimates are intended to include (but are not limited to) climate-change-related changes in net agricultural productivity, human health, property damages from increased flood risk, disruption of energy systems, risk of conflict, environmental migration, and the value of ecosystem services.

DOE exercises its own judgment in presenting monetized climate benefits as directed by applicable Executive orders, and DOE would reach the same conclusion presented in this rule in the absence of the social cost of greenhouse gases. That is, the social costs of greenhouse gases, whether measured using the February 2021 interim estimates presented by the Interagency Working Group on the Social Cost of Greenhouse Gases or by another means, did not affect the rule ultimately finalized by DOE because section 433 of EISA specifically directs DOE to establish regulations that require certain new Federal buildings and Federal buildings undergoing major renovations to reduce their on-site fossil fuel-generated energy consumption by specific amounts and by specific dates; that is, the achievable emissions reductions, and their monetized benefits, would not have changed the energy-consumption reductions required by this rule.

DOE estimated the global social benefits of CO

, CH

, and N

O reductions using SC-GHG values that were based on the interim values presented in the February 2021 SC-GHG TSD. The SC-GHG is the monetary value of the net harm to society associated with a marginal increase in emissions in a given year, or the benefit of avoiding that increase. In principle, the SC-GHG includes the value of all climate change impacts, including (but not limited to) changes in net agricultural productivity, human health effects, property damage from increased flood risk and natural disasters, disruption of energy systems, risk of conflict, environmental migration, and the value of ecosystem services. The SC-GHG therefore, reflects the societal value of reducing emissions of the gas in question by one metric ton. The SC-GHG is the theoretically appropriate value to use in conducting benefit-cost analyses of policies that affect CO

, N

O and CH

emissions. As a member of the IWG involved in the development of the February 2021 SC-GHG TSD, DOE agreed that the interim SC-GHG estimates represent the most appropriate estimate of the SC-GHG until revised estimates were developed reflecting the latest, peer-reviewed science.

See

87 FR 78382, 78406-78408 for discussion of the development and details of the IWG SC-GHG estimates.

There are a number of limitations and uncertainties associated with the SC-GHG estimates. First, the current scientific and economic understanding of discounting approaches suggests discount rates appropriate for intergenerational analysis in the context of climate change are likely to be less than 3-percent, near 2-percent or lower. Second, the IAMs used to produce these interim estimates do not include all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature and the science underlying their “damage functions”—

i.e.,

the core parts of the IAMs that map global mean temperature changes and other physical impacts of climate change into economic (both market and nonmarket) damages—lags behind the most recent research. For example, limitations include the incomplete treatment of catastrophic and non-catastrophic impacts in the integrated assessment models, their incomplete treatment of adaptation and technological change, the incomplete way in which inter-regional and intersectoral linkages are modeled, uncertainty in the extrapolation of damages to high temperatures, and inadequate representation of the relationship between the discount rate and uncertainty in economic growth over long time horizons. Likewise, the socioeconomic and emissions scenarios used as inputs to the models do not reflect new information from the last decade of scenario generation or the full range of projections. The modeling limitations do not all work in the same direction in terms of their influence on the SC-CO

estimates. However, as discussed in the February 2021 TSD, the IWG has recommended that, taken together, the limitations suggest that the interim SC-GHG estimates used in this rule likely underestimate the damages from GHG emissions. DOE concurs with this assessment.

DOE's derivations of the SC-GHGs (

i.e.,

SC-CO

SC-N

O, and SC-CH

) values used for this rule are discussed in the following sections, and the results of DOE's analyses estimating the benefits and disbenefits of the changes in emissions of these pollutants are presented in section VI.A. of this document.

a. Social Cost of Carbon

The SC-CO

values used for this rule were based on the values developed for the February 2021 SC-GHG TSD, which are shown in Table V-8 in five-year increments from 2020 to 2050. The set of annual values that DOE used, which was adapted from estimates published by EPA,

is presented in the final rule TSD. These estimates are based on methods, assumptions, and parameters identical to the estimates published by the IWG, which were based on EPA modeling, and include values for 2051 to 2070. DOE expects additional climate benefits to accrue for products still operating after 2070, but a lack of available SC-CO

estimates for emissions years beyond 2070 prevents DOE from monetizing these potential benefits in this analysis.

See

EPA, Revised 2023 and Later Model Year Light-Duty Vehicle GHG Emissions Standards: Regulatory Impact Analysis, Washington, DC, December 2021. Available at

nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf

(last accessed February 21, 2023).

Table V-8—Annual SC-CO

Values From 2021 Interagency Update, 2020-2050 (2020$ per Metric Ton CO

)

Year

Discount rate

Average

2.5%

Average

95th percentile

2020

152

2025

169

2030

187

2035

206

2040

103

225

2045

110

242

2050

116

260

DOE multiplied the CO

emissions reduction estimated for each year by the SC-CO

value for that year in each of the four cases. DOE adjusted the values to 2022$ using the implicit price deflator for gross domestic product (“GDP”) from the Bureau of Economic Analysis. To calculate a present value of the stream of monetary values, DOE discounted the values in each of the four cases using the specific discount rate that had been used to obtain the SC-CO

values in each case.

b. Social Cost of Methane and Nitrous Oxide

The SC-CH

and SC-N

O values used for this rule were based on the values developed for the February 2021 SC-GHG TSD. Table V-9 shows the updated sets of SC-CH

and SC-N

O estimates from the latest interagency update in 5-year increments from 2020 to 2050. The full set of annual values used is presented in the final rule TSD. To capture the uncertainties involved in regulatory impact analysis, DOE has determined it is appropriate to include all four sets of SC-CH

and SC-N

O values, as recommended by the IWG. DOE derived values after 2050 using the approach described above for the SC-CO

Table V-9—Annual SC-CH

and SC-N

O Values From 2021 Interagency Update, 2020-2050 (2020$ per Metric Ton)

Year

SC-CH

Discount rate and statistic

Average

2.5%

Average

95th percentile

SC-N

Discount rate and statistic

Average

2.5%

Average

95th percentile

2020

670

1500

2000

3900

5800

18000

27000

48000

2025

800

1700

2200

4500

6800

21000

30000

54000

2030

940

2000

2500

5200

7800

23000

33000

60000

2035

1100

2200

2800

6000

9000

25000

36000

67000

2040

1300

2500

3100

6700

10000

28000

39000

74000

2045

1500

2800

3500

7500

12000

30000

42000

81000

2050

1700

3100

3800

8200

13000

33000

45000

88000

DOE multiplied the CH

and N

O emissions change estimated for each year by the SC-CH

and SC-N

O estimates for that year in each of the cases. DOE adjusted the values to 2022$ using the implicit price deflator for GDP from the Bureau of Economic Analysis. To calculate a present value of the stream of monetary values, DOE discounted the values in each of the cases using the specific discount rate that had been used to obtain the SC-CH

and SC-N

O estimates in each case.

c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates

In December 2023, EPA issued a new set of SC-GHG estimates (2023 SC-GHG) in connection with a final rulemaking under the Clean Air Act.

These estimates incorporate recent research and address recommendations of the National Academies (2017) and comments from a 2023 external peer review of the accompanying technical report. For this rulemaking, DOE used these updated 2023 SC-GHG values to conduct a sensitivity analysis of the value of GHG emissions reductions associated with alternative standards for energy standards for Federal buildings. This sensitivity analysis provides an expanded range of potential climate benefits associated with energy standards

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