Energy Conservation Program: Energy Conservation Standards for Air-Cooled Commercial Package Air Conditioners and Heat Pumps

DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2022-BT-STD-0015]

RIN 1904-AF34

Energy Conservation Program: Energy Conservation Standards for Air-Cooled Commercial Package Air Conditioners and Heat Pumps

AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Direct final rule.

SUMMARY:

The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including air-cooled commercial package air conditioners and heat pumps with a rated cooling capacity greater than or equal to 65,000 Btu/h. In this direct final rule, DOE is adopting amended energy conservation standards, based on clear and convincing evidence, for air-cooled commercial package air conditioners and heat pumps with a rated cooling capacity greater than or equal to 65,000 Btu/h, which it has determined satisfy the relevant statutory criteria.

DATES:

The effective date of this rule is September 17, 2024, unless adverse comment is received by September 9, 2024. If adverse comments are received that DOE determines may provide a reasonable basis for withdrawal of the direct final rule, a timely withdrawal of this rule will be published in the

Federal Register

. If no such adverse comments are received, compliance with the amended standards established for air-cooled commercial package air conditioners and heat pumps with a rated cooling capacity greater than or equal to 65,000 Btu/h in this direct final rule is required on and after January 1, 2029.

ADDRESSES:

Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at

www.regulations.gov

under docket number EERE-2022-BT-STD-0015. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE-2022-BT-STD-0015, by any of the following methods:

Email: ApplianceStandardsQuestions@ee.doe.gov.

Include the docket number EERE-2022-BT-STD-0015 in the subject line of the message.

Postal Mail:

Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. If possible, please submit all items on a compact disc (“CD”), in which case it is not necessary to include printed copies.

Hand Delivery/Courier:

Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.

No telefacsimiles (“faxes”) will be accepted.

Docket:

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. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.

The docket web page can be found at

www.regulations.gov/docket/EERE-2022-BT-STD-0015.

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

FOR FURTHER INFORMATION CONTACT:

Mr. Lucas Adin, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 287-5904. Email:

ApplianceStandardsQuestions@ee.doe.gov.

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-4798. Email:

Eric.Stas@hq.doe.gov.

For further information on how to submit a comment or review other public comments and the docket, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:

ApplianceStandardsQuestions@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Direct Final Rule

A. Benefits and Costs to Consumers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for ACUACs and ACUHPs

3. 2022-2023 ASRAC ACUAC/HP Working Group Recommended Standard Levels

III. General Discussion

A. General Comments

B. Scope of Coverage

C. Test Procedure and Metrics

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Savings in Operating Costs Compared To Increase in Price (LCC and PBP)

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Equipment Classes

2. Market Post-2023

3. Technology Options

B. Screening Analysis

1. Screened-Out Technologies

2. Remaining Technologies

C. Engineering Analysis

1. Efficiency Levels in Terms of Existing Metrics

a. Baseline Efficiency

b. Higher Efficiency Levels

2. Efficiency Levels in Terms of New Metrics

a. IVEC

b. IVHE

3. Energy Modeling

4. Impact of Low-GWP Refrigerants

5. Cost Analysis

a. MPC Estimates

b. MSP Estimates, Manufacturer Markup, and Shipping Costs

6. Cost-Efficiency Results

D. Markups Analysis

1. Distribution Channels

2. Markups and Sales Tax

E. Energy Use Analysis

1. System-Level Calculations

2. Generalized Building Sample

3. Energy Use Adjustment Factors

4. Comments

F. Life-Cycle Cost and Payback Period Analysis

1. Equipment Cost

2. Installation Cost

3. Annual Energy Consumption

4. Energy Prices

5. Maintenance and Repair Costs

6. Equipment Lifetime

7. Discount Rates

8. Energy Efficiency Distribution in the No-New-Standards Case

9. Payback Period Analysis

G. Shipments Analysis

1. New Shipments

2. Replacement Shipments

3. Stock Calculation

4. Comments

H. National Impact Analysis

1. Equipment Efficiency Trends

2. National Energy Savings

3. Net Present Value Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model and Key Inputs

a. Manufacturer Production Costs

b. Shipments Projections

c. Capital and Product Conversion Costs

d. Manufacturer Markup Scenarios

3. Discussion of MIA Comments

K. Emissions Analysis

1. Air Quality Regulations Incorporated in DOE's Analysis

L. Monetizing Emissions Impacts

1. Monetization of Greenhouse Gas Emissions

a. Social Cost of Carbon Dioxide

b. Social Cost of Methane and Nitrous Oxide

c. Sensitivity Analysis Using EPA's New SC-GHG Estimates

2. Monetization of Other Emissions Impacts

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

2. Economic Impacts on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Direct Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

8. Summary of Economic Impacts

C. Conclusion

1. Benefits and Burdens of TSLs Considered for ACUACs and ACUHPs Standards

2. Annualized Benefits and Costs of the Standards

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 of 1995

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. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Synopsis of the Direct Final Rule

The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”),

1

authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317, as codified) Title III, Part C

2

of EPCA established the Energy Conservation Program for Certain Industrial Equipment. (42 U.S.C. 6311-6317) This covered equipment includes small, large, and very large commercial package air conditioning and heating equipment. (42 U.S.C. 6311(1)(B)-(D)) Such equipment includes as equipment categories air-cooled commercial unitary air conditioners with a rated cooling capacity greater than or equal to 65,000 Btu/h (“ACUACs”) and air-cooled commercial unitary heat pumps with a rated cooling capacity greater than or equal to 65,000 Btu/h (“ACUHPs”), which are the subject of this rulemaking.

3

The current energy conservation standards are found in the Code of Federal Regulations (“CFR”) at 10 CFR 431.97(b).

1

All references to EPCA in this document refer to the statute as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 27, 2020), which reflect the last statutory amendments that impact Parts A and A-1 of EPCA.

2

For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1.

3

While ACUACs and ACUHPs with rated cooling capacity less than 65,000 Btu/h are included in the broader category of commercial unitary air conditioners and heat pumps (“CUACs and CUHPs”), they are not addressed in this direct final rule. The standards for ACUACs and ACUHPs with rated cooling capacity less than 65,000 Btu/h have been addressed in a separate rulemaking (

see

Docket No. EERE-2022-BT-STD-0008). Accordingly, all references within this direct final rule to ACUACs and ACUHPs exclude equipment with rated cooling capacity less than 65,000 Btu/h.

In accordance with the authority provided by 42 U.S.C. 6295(p)(4) and 42 U.S.C. 6316(b)(1), DOE is issuing this direct final rule amending the energy conservation standards for ACUACs and ACUHPs.

4

The amended standards levels outlined in this document reflect the culmination of a negotiated rulemaking that included the following notices and stakeholder comments thereon: May 2020 energy conservation standards request for information (“May 2020 ECS RFI”) (85 FR 27941 (May 12, 2020); May 2022 test procedure (“TP”)/ECS RFI (87 FR 31743 (May 25, 2022)); and the 2022 Appliance Standards and Rulemaking Federal Advisory Committee (“ASRAC”) commercial unitary air conditioners and heat pumps working group negotiations, hereinafter referred to as “the 2023 ECS Negotiations” (87 FR 45703 (July 29, 2022). Participants in the 2023 ECS Negotiations included stakeholders representing manufacturers, energy-efficiency and environmental advocates, States, and electric utility companies. See section II.B.2 of this document for a detailed history of the current rulemaking.

4

See

42 U.S.C. 6316(b) (applying 42 U.S.C. 6295(p)(4)) to energy conservation standard rulemakings involving a variety of industrial equipment, including ACUACs and ACUHPs.

The consensus reached by the ACUAC/HP ASRAC Working Group (hereinafter referred to as “the ACUAC/HP Working Group”) on amended energy conservation standards (“ECS”) is outlined in the ASRAC Working Group Term Sheet (hereinafter referred to as “the ACUAC/HP Working Group ECS Term Sheet”). (ASRAC Working Group Term Sheet, Docket No. EERE-2022-BT-STD-0015, No. 87) In accordance with the direct final rule provisions at 42 U.S.C. 6295(p)(4), DOE has determined that the recommendations contained in the ACUAC/HP Working Group ECS Term Sheet are compliant with 42 U.S.C. 6313(a)(6)(B). As required by EPCA, DOE is also simultaneously publishing a notice of proposed rulemaking (“NOPR”) that contains identical standards to those adopted in this direct final rule. Consistent with the statute, DOE is providing a 110-day public comment period on the direct final rule. (42 U.S.C. 6295(p)(4)(B); 42 U.S.C. 6316(b)(1))) If DOE determines that any adverse comments received provide a reasonable basis for withdrawal of the direct final rule under 42 U.S.C. 6313(a)(6)(B) or any other applicable law, DOE will withdraw the direct final rule and continue the rulemaking under the NOPR. (42 U.S.C. 6295(p)(4)(C); 42 U.S.C. 6316(b)(1)) See section II.A of this document for more details on DOE's statutory authority.

The amended standards that DOE is adopting in this direct final rule are the efficiency levels recommended in the ACUAC/HP Working Group ECS Term Sheet (shown in Table I.1) as measured according to DOE's amended test procedure for commercial unitary air conditioners and heat pumps codified at title 10 of the Code of Federal Regulations (“CFR”), part 431, subpart F, appendix A1 (“appendix A1”).

The amended standards recommended in the Joint Agreement are represented as trial standard level (“TSL”) 3 in this document (hereinafter the “Recommended TSL”) and are described in section V.A of this document. These standards apply to all equipment listed in Table I.1 and manufactured in, or imported into the United States starting on January 1, 2029.

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A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of ACUACs and ACUHPs, as measured by the average life-cycle cost (“LCC”) savings and the simple payback period (“PBP”).

5

The average LCC savings are positive for all equipment classes, and the PBP is less than the average lifetime of the equipment, which is estimated to be 21-30 years, depending on equipment class (

see

sections IV.F and V.B.1 of this document).

5

The average LCC savings refer to consumers that are affected by a standard and are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of new or amended standards (see section IV.F.9 of this document). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline equipment (see section IV.C of this document).

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DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (“INPV”) is the sum of the discounted cash flows to the industry from the reference year through the end of the analysis period (2024-2058). Using a real discount rate of 5.9 percent, DOE estimates that the INPV for manufacturers of ACUACs and ACUHPs in the case without amended standards is $2,653.0 million in 2022$. Under the adopted standards, DOE estimates the change in INPV to range from −7.3. percent to −3.0 percent, which is approximately −$193.9 million to −$79.5 million. In order to bring this equipment into compliance with amended standards, it is estimated that industry will incur total conversion costs of $288.0 million.

DOE's analysis of the impacts of the adopted standards on manufacturers is

described in sections IV.J and V.B.2 of this document.

C. National Benefits and Costs

6

6

All monetary values in this document are expressed in 2022 dollars and, where appropriate, are discounted to 2022 unless explicitly stated otherwise.

DOE's analyses indicate that the adopted energy conservation standards for ACUACs and ACUHPs would save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for ACUACs and ACUHPs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2029-2058), amount to 5.5 quadrillion British thermal units (“Btu”), or quads.

7

This represents a savings of 10.0 percent relative to the energy use of this equipment in the case without amended standards (referred to as the “no-new-standards case”).

7

The quantity refers to full-fuel-cycle (“FFC”) energy savings. FFC energy savings includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy efficiency standards. For more information on the FFC metric, see section IV.H.2 of this document.

The cumulative net present value (“NPV”) of total consumer benefits of the standards for ACUACs and ACUHPs ranges from $4.39 billion (at a 7-percent discount rate) to $15.30 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased equipment and installation costs for ACUACs and ACUHPs purchased in 2029-2058.

In addition, the adopted standards for ACUACs and ACUHPs are projected to yield significant environmental benefits. DOE estimates that the adopted standards will result in cumulative emission reductions (over the same period as for energy savings) of 108.7 million metric tons (“Mt”)

8

of carbon dioxide (“CO

2

”), 25.3 thousand tons of sulfur dioxide (“SO

2

”), 185.1 thousand tons of nitrogen oxides (“NO

X

”), 845.6 thousand tons of methane (“CH

4

”), 0.8 thousand tons of nitrous oxide (“N

2

O”), and 0.2 tons of mercury (“Hg”).

9

The estimated cumulative reduction in CO

2

emissions through 2030 amounts to 0.32 Mt, which is equivalent to the emissions resulting from the annual electricity use of more than 0.23 million homes.

8

A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO

2

are presented in short tons.

9

DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the

Annual Energy Outlook 2023

(

“AEO 2023”

).

AEO 2023

reflects, to the extent possible, laws and regulations adopted through mid-November 2022, including the Inflation Reduction Act. See section IV.K of this document for further discussion of

AEO 2023

assumptions that affect air pollutant emissions.

DOE estimates the value of climate benefits from a reduction in greenhouse gases (“GHG”) using four different estimates of the social cost of CO

2

(“SC-CO

2

”), the social cost of methane (“SC-CH

4

”), and the social cost of nitrous oxide (“SC-N

2

O”). Together these represent the social cost of GHG (“SC-GHG”). DOE used interim SC-GHG values (in terms of benefit per ton of GHG avoided) developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (“IWG”).

10

The derivation of these values is discussed in section IV.L of this document. For presentational purposes, the climate benefits associated with the average SC-GHG at a 3-percent discount rate are estimated to be $4.9 billion. DOE does not have a single central SC-GHG point estimate, and it emphasizes the value of considering the benefits calculated using all four sets of SC-GHG estimates. DOE is presenting monetized benefits of GHG emissions reductions in accordance with the applicable Executive Orders, and DOE would reach the same conclusion presented in this rule in the absence of the estimated benefits from reductions in GHG emissions.

10

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 IWG. (“February 2021 SC-GHG TSD”) (available at:

www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf

) (last accessed Dec. 4, 2023).

DOE also estimated the monetized health benefits of SO

2

and NO

X

emissions reductions associated with energy savings, using benefit-per-ton estimates from the U.S. Environmental Protection Agency,

11

as discussed in section IV.L of this document. DOE estimates the present value of the health benefits would be $3.0 billion using a 7-percent discount rate, and $8.8 billion using a 3-percent discount rate.

12

DOE is currently only monetizing health benefits from changes in ambient fine particulate matter (“PM

2.5

”) concentrations from two precursors (SO

2

and NO

X

), and from changes in ambient ozone from one precursor (for NO

X

), but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions.

11

U.S. EPA, Estimating the Benefit per Ton of Reducing Directly Emitted PM

2.5

, PM

2.5

Precursors and Ozone Precursors from 21 Sectors (available at:

www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors

) (last accessed Dec. 4, 2023).

12

DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of Executive Order (“E.O.”) 12866.

Table I.3 summarizes the monetized benefits and costs expected to result from the amended standards for ACUACs and ACUHPs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others.

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The benefits and costs of the considered standards can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are: (1) the reduced consumer operating costs, minus (2) the increase in equipment purchase prices and installation costs, plus (3) the value of climate and health benefits of emission reductions, all annualized.

13

13

To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2024, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (

e.g.,

2030), and then discounted the present value from each year to 2024. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year, that yields the same present value.

The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered equipment and are measured for the lifetime of ACUACs and ACUHPs shipped in 2029-2058. The health benefits associated with reduced emissions achieved as a result of the adopted standards are also calculated based on the lifetime of ACUACs and ACUHPs shipped in 2029-2058. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate.

14

Estimates of SC-GHG values are presented for all four discount rates in section V.B of this document.

14

As discussed in section IV.L.1 of this document, DOE agrees with the IWG that using consumption-based discount rates (

e.g.,

3 percent) is appropriate when discounting the value of climate impacts. Combining climate effects discounted at an appropriate consumption-based discount rate with other costs and benefits discounted at a capital-based rate (

e.g.,

7 percent) is reasonable because of the different nature of the types of benefits being measured.

Table I.4 presents the total estimated monetized benefits and costs associated with the adopted standard, expressed in terms of annualized values. The results under the primary estimate are as follows.

Using a 3-percent discount rate for all benefits and costs, the estimated cost of the adopted standards is $493.2 million per year in increased equipment costs, while the estimated annual benefits are $1,371.6 million in reduced equipment operating costs, $279.2 million in climate benefits, and $507.9 million in health benefits. In this case, the net benefit would amount to $1.7 billion per year.

Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced NOx and SO

2

emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the standards adopted in this rule is $481.3 million per year in increased equipment costs, while the estimated annual benefits are $944.7 million in reduced equipment operating costs, $279.2 million in climate benefits, and $317.2 million in health benefits. In this case, the net benefit amounts to $1.1 billion per year.

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DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

DOE has determined that the ACUAC/ACUHP Working Group statement containing recommendations with respect to energy conservation standards for ACUACs and ACUHPs was submitted jointly by interested persons that are fairly representative of relevant points of view, in accordance with 42 U.S.C. 6295(p)(4)(A).

15

After considering the analysis and weighing the benefits and burdens, DOE has determined that the recommended standards are in accordance with 42 U.S.C. 6313(a)(6)(B), which contains criteria for adopting a uniform national standard more stringent than the levels contained in the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (“ASHRAE”) Standard 90.1, as amended,

16

for the equipment considered in this document. Specifically, the Secretary has determined, supported by clear and convincing evidence, that the adoption of the recommended standards would result in the significant conservation of energy and is technologically feasible and economically justified. In determining whether the recommended standards are economically justified, the Secretary has determined that the benefits of the recommended standards exceed the burdens. Namely, the Secretary has concluded that the recommended standards, when considering the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings, would yield benefits outweighing the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers.

15

See

42 U.S.C. 6316(b) (applying 42 U.S.C. 6295(p)(4) to energy conservation standard rulemakings involving a variety of industrial equipment, including ACUACs and ACUHPs.

16

As discussed in section II.B.2, ASHRAE 90.1-2019 updated the minimum efficiency levels for ACUACs and ACUHPs to align with those adopted by DOE in the January 2016 Direct Final Rule—

i.e.,

ASHRAE 90.1-2019 includes minimum efficiency levels that are aligned with the current Federal energy conservation standards. The most recent version of ASHRAE Standard 90.1, ASHRAE 90.1-2022, includes the same minimum efficiency levels for ACUACs and ACUHPs as ASHRAE 90.1-2019.

Using a 7-percent discount rate for consumer benefits and costs and NO

X

and SO

2

emissions reduction benefits, and a 3-percent discount rate case for GHG social costs, the estimated cost of the standards for ACUACs and ACUHPs is $481.3 million per year in increased equipment costs, while the estimated annual benefits are $944.7 million in reduced equipment operating costs, $279.2 million in climate benefits, and $317.2 million in health benefits. The net benefit amounts to $1.1 billion per year. DOE notes that the net benefits are substantial even in the absence of climate benefits,

17

and DOE would adopt the same standards in the absence of such benefits.

17

The information on climate benefits is provided in compliance with Executive Order 12866.

The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.

18

For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis.

18

Procedures, Interpretations, and Policies for Consideration in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment, 86 FR 70892, 70901 (Dec. 13, 2021).

As previously mentioned, the standards are projected to result in estimated national energy savings of 5.5 quads (FFC), the equivalent of the primary annual energy use of 59.1 million homes. In addition, they are projected to reduce CO

2

emissions by 108.7 Mt. Based on these findings, DOE has determined the energy savings from the standard levels adopted in this direct final rule are “significant” within the meaning of 42 U.S.C. 6313(a)(6)(A)(ii)(II). A more detailed discussion of the basis for these conclusions is contained in the remainder of this document and the accompanying TSD.

Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is issuing this direct final rule amending the energy conservation standards for ACUACs and ACUHPs. Consistent with this authority, DOE is also publishing elsewhere in this issue of the

Federal Register

a NOPR proposing standards that are identical to those contained in this direct final rule. (

See

42 U.S.C. 6295(p)(4)(A)(i); 42 U.S.C. 6316(b)(1))

II. Introduction

The following section briefly discusses the statutory authority underlying this direct final rule, as well as some of the relevant historical background related to the establishment of energy conservation standards for ACUACs and ACUHPs.

A. Authority

EPCA, Public Law 94-163, as amended, authorizes DOE to regulate the energy efficiency of certain consumer products and industrial equipment. Title III, Part C of EPCA, added by Public Law 95-619, Title IV, section 441(a) (42 U.S.C. 6311-6317, as codified), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve energy efficiency. This equipment includes ACUACs and ACUHPs, which are a category of small, large, and very large commercial package air conditioning and heating equipment and the subject of this rulemaking. (42 U.S.C. 6311(1)(B)-(D)) EPCA prescribed initial standards for this equipment. (42 U.S.C. 6313(a)(1)-(2))

Pursuant to EPCA, DOE must amend the energy conservation standards for certain types of commercial and industrial equipment, including the equipment at issue in this document, whenever ASHRAE amends the standard levels or design requirements prescribed in ASHRAE Standard 90.1, “Energy Standard for Buildings Except Low-Rise Residential Buildings” (“ASHRAE Standard 90.1”). DOE must adopt the amended ASHRAE Standard 90.1 levels for these equipment (hereafter “ASHRAE equipment”), unless the Secretary of Energy (“the Secretary”) determines by rule published in the

Federal Register

and supported by clear and convincing evidence that adoption of a more-stringent uniform national standard would result in significant additional conservation of energy and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)-(B))

In addition, EPCA contains a review requirement for this same equipment (the six-year-lookback review), which requires DOE to consider the need for amended standards every six years. To adopt more-stringent standards under that provision, DOE must once again have clear and convincing evidence to show that such standards would be technologically feasible and economically justified and would save a significant additional amount of energy. (42 U.S.C. 6313(a)(6)(C));

see id.

6313(a)(6)(A)(ii)(II) & (a)(6)(B)(i))

In deciding whether a more-stringent standard is economically justified, under either the provisions of 42 U.S.C. 6313(a)(6)(A) or 42 U.S.C. 6313(a)(6)(C), DOE must determine whether the benefits of the standard exceed its burdens. DOE must make this determination after receiving comments on the proposed standard, and by considering, to the maximum extent practicable, the following seven factors:

(1) The economic impact of the standard on manufacturers and consumers of equipment subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered equipment that are likely to result from the standard;

(3) The total projected amount of energy savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the covered equipment likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy conservation; and

(7) Other factors the Secretary of Energy considers relevant.

(42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII))

The energy conservation program under EPCA, consists essentially of four parts: (1) testing; (2) labeling; (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of the EPCA specifically include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316; 42 U.S.C. 6296(a), (b) and (d)).

Federal energy efficiency requirements for covered equipment established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6316(a) and (b); 42 U.S.C. 6297) DOE may, however, grant waivers of Federal preemption in limited instances for particular State laws or regulations, in accordance with the procedures and other provisions set forth under EPCA. (42 U.S.C. 6316(b)(2)(D))

Under 42 U.S.C. 6314, EPCA sets forth the criteria and procedures DOE is required to follow when prescribing or amending test procedures for covered equipment. EPCA requires that any test procedure prescribed or amended under this section must be reasonably designed to produce test results which reflect energy efficiency, energy use, or estimated annual operating cost of covered equipment during a representative average use cycle and requires that the test procedure not be unduly burdensome to conduct. (42 U.S.C. 6314(a)(2)) Manufacturers of covered equipment must use the Federal test procedures as the basis for: (1) certifying to DOE that their equipment complies with the applicable energy conservation standards adopted pursuant to EPCA (42 U.S.C. 6316(b); 42 U.S.C. 6296), and (2) making representations about the efficiency of that equipment (42 U.S.C. 6314(d)). Similarly, DOE uses these test procedures to determine whether the equipment complies with relevant standards promulgated under EPCA. The current DOE test procedure for ACUACs and ACUHPs appear at title 10 of the Code of Federal Regulations (“CFR”), part 431, subpart F, appendix A.

EPCA also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6313(a)(6)(B)(iii)(I)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered equipment type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa))

Finally, the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140, amended EPCA, in relevant part, to grant DOE authority to issue a final rule (

i.e.,

a “direct final rule” or “DFR”) establishing an energy conservation standard upon receipt of a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary, that contains recommendations with respect to an energy or water conservation standard that are in accordance with the

provisions of 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. (42 U.S.C. 6295(p)(4); 42 U.S.C. 6316(b)(1)) Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine whether a jointly submitted recommendation for an energy or water conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable.

The direct final rule must be published simultaneously with a NOPR that proposes an energy or water conservation standard that is identical to the standard established in the direct final rule, and DOE must provide a public comment period of at least 110 days on this proposal. (42 U.S.C. 6295(p)(4)(A)-(B); 42 U.S.C. 6316(b)(1)) While DOE typically provides a comment period of 60 days on proposed energy conservation standards, for a NOPR accompanying a direct final rule, DOE provides a comment period of the same length as the comment period on the direct final rule—

i.e.

110 days. Based on the comments received during this period, the direct final rule will either become effective, or DOE will withdraw it not later than 120 days after its issuance if: (1) one or more adverse comments is received, and (2) DOE determines that those comments, when viewed in light of the rulemaking record related to the direct final rule, may provide a reasonable basis for withdrawal of the direct final rule under 42 U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B), or any other applicable law. (42 U.S.C. 6295(p)(4)(C); 42 U.S.C. 6316(b)(1)) Receipt of an alternative joint recommendation may also trigger a DOE withdrawal of the direct final rule in the same manner. (

Id.

) After withdrawing a direct final rule, DOE must proceed with the notice of proposed rulemaking published at the same time as the direct final rule and publish in the

Federal Register

the reasons why the direct final rule was withdrawn. (

Id.

)

DOE has previously explained its interpretation of its direct final rule authority. In a final rule amending the Department's “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” at 10 CFR part 430, subpart C, appendix A, DOE noted that it may issue standards recommended by interested persons that are fairly representative of relative points of view as a direct final rule when the recommended standards are in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. 86 FR 70892, 70912 (Dec. 13, 2021). But the direct final rule provision in EPCA does not impose additional requirements applicable to other standards rulemakings, which is consistent with the unique circumstances of rules issued as consensus agreements under DOE's direct final rule authority.

Id.

DOE's discretion remains bounded by its statutory mandate to adopt a standard that results in significant conservation of energy and is technologically feasible and economically justified—a requirement found in 42 U.S.C. 6313(a)(6)(B). As such, DOE's review and analysis of the Joint Agreement is limited to whether the recommended standards satisfy the criteria in 42 U.S.C. 6313(a)(6)(B).

Additionally, DOE notes that the direct final rule authority in EPCA is permissive. If DOE determines that recommended standards satisfy the applicable criteria, the Department “may issue a final rule.” (42 U.S.C. 6295(p)(4)(A)(i)) This discretion is particularly relevant for ASHRAE equipment where the applicable statutory criteria require that an amended standard be technologically feasible and economically justified and result in significant conservation of energy. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This is in contrast to the applicable criteria for covered products and non-ASHRAE equipment, where, in addition to requiring significant conservation of energy, an amended standard must also represent the maximum improvement in energy efficiency that is technologically feasible and economically justified. Thus, there may be situations where the recommended standards for ASHRAE equipment satisfy the criteria in 42 U.S.C. 6313(a)(6)(B), but do not represent that maximum improvement in energy efficiency that is technologically feasible and economically justified. In those situations, DOE has discretion on whether to proceed with a direct final rule or propose its own, more-stringent standard. In order to inform that decision, DOE conducts its typical walk-down analysis when evaluating all direct final rules, including those for ASHRAE equipment. Under that approach, DOE starts from the most stringent possible standard (“max-tech”) and “walks-down” through the TSLs until arriving at the first TSL that meets all of the statutory criteria.

B. Background

1. Current Standards

In a direct final rule published in the

Federal Register

on January 15, 2016 (“January 2016 Direct Final Rule”), DOE prescribed the current energy conservation standards for ACUACs and ACUHPs manufactured on and after January 1, 2023. 81 FR 2420. These standards are set forth in DOE's regulations at 10 CFR 431.97(b) and are repeated in Table II.1.

ER20MY24.076

2. History of Standards Rulemaking for ACUACs and ACUHPs

Since publication of the January 2016 Direct Final Rule, ASHRAE published an updated version of ASHRAE Standard 90.1 (“ASHRAE 90.1-2019”), which updated the minimum efficiency levels for ACUACs and ACUHPs to align with those adopted by DOE in the January 2016 Direct Final Rule (

i.e.,

specifying two tiers of minimum levels for ACUACs and ACUHPs, with a January 1, 2023 compliance date for the second tier). ASHRAE published another version of ASHRAE Standard 90.1 in January 2023 (“ASHRAE 90.1-2022”), which includes the same minimum efficiency levels for ACUACs and ACUHPs as those included in ASHRAE Standard 90.1-2019.

On May 12, 2020, DOE began its six-year-lookback review with for ACUACs and ACUHPs by publishing in the

Federal Register

the May 2020 ECS RFI.

19

85 FR 27941. The May 2020 ECS RFI sought information to help DOE inform its decisions, consistent with its obligations under EPCA. DOE received multiple comments from interested stakeholders in response to the May 2020 ECS RFI, which prompted DOE to publish the May 2022 TP/ECS RFI in the

Federal Register

on May 25, 2022, to investigate additional aspects of the ACUAC and ACUHP TP and standards. 87 FR 31743. In the latter document, DOE identified several issues that it determined would benefit from further comment. DOE discussed these topics (including any comments received in response to the May 2020 ECS RFI that are related to these topics) in the May 2022 TP/ECS RFI. Once again, DOE received a number of written comments from interested parties related to standards for CUACs and CUHPs in response to the May 2020 ECS RFI and the May 2022 TP/ECS RFI. DOE considered these comments in preparation of this direct final rule. Table II.2 and Table II.3 list the stakeholders whose comments were related to standards for ACUACs and ACUHPs and have been considered in this rulemaking. Relevant comments, and DOE's responses, are provided in the appropriate sections of this document.

19

The May 2020 ECS RFI also addressed commercial warm air furnaces, a separate type of covered equipment which was subsequently handled in a different rulemaking proceeding (

see

Docket No. EERE-2019-BT-STD-0042 in

www.regulations.gov

).

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ER20MY24.078

A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.

20

For comments received in response to the May 2020 ECS RFI and May 2022 TP/ECS RFI (which are contained within two different dockets

21

), parenthetical references in this direct final rule include the full docket number (rather than just the document number).

20

The parenthetical reference provides a reference for information located in the relevant docket for this rulemaking, which is maintained at

www.regulations.gov.

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

21

Comments submitted in response to the May 2020 ECS RFI are available in Docket No. EERE-2019-BT-STD-0042. Comments submitted in response to the May 2022 TP/ECS RFI are available in Docket No. EERE-2022-BT-STD-0015.

On July 29, 2022, DOE published in the

Federal Register

a notice of intent to establish a working group for commercial unitary air conditioners and heat pumps to negotiate proposed test procedures and amended energy conservation standards for this equipment (“July 2022 Notice of Intent”). 87 FR 45703. The ACUAC/HP Working Group was established under ASRAC in accordance with the Federal Advisory Committee Act (“FACA”) (5 U.S.C. App 2) and the Negotiated Rulemaking Act (“NRA”) (5 U.S.C. 561-

570, Pub. L. 104-320). The purpose of the ACUAC/HP Working Group was to discuss, and if possible, reach consensus on recommended amendments to the test procedures and energy conservation standards for ACUACs and ACUHPs. The ACUAC/HP Working Group consisted of 14 voting members, including DOE. (

See

appendix A, Working Group Members, Document No. 65 in Docket No. EERE-2022-BT-STD-0015) On December 15, 2022, the ACUAC/HP Working Group signed a Term Sheet (“ACUAC/HP Working Group TP Term Sheet”) of recommendations regarding ACUAC and ACUHP test procedures, including two new efficiency metrics: integrated ventilation, economizing, and cooling (“IVEC”) and integrated ventilation and heating efficiency (“IVHE”). (

See Id.

)

The ACUAC/HP Working Group met five times to discuss energy conservation standards for ACUACs and ACUHPs. These meetings took place on February 22-23, March 21-22, April 12-13, April 26-27, and May 1, 2023. As a result of these efforts, the ACUAC/HP Working Group successfully reached consensus on recommended energy conservation standards in terms of the new IVEC and IVHE metrics for CUACs and CUHPs. On May 1, 2023, the ACUAC/HP Working Group signed the ACUAC/HP Working Group ECS Term Sheet outlining its recommendations which ASRAC approved on October 17, 2023. These recommendations are discussed further in section II.B.3 of this direct final rule.

22

22

The ACUAC/HP Working Group ECS Term Sheet is available at

www.regulations.gov/document/EERE-2022-BT-STD-0015-0087.

3. 2022-2023 ASRAC ACUAC/HP Working Group Recommended Standard Levels

This section summarizes the standard levels recommended in the Term Sheet submitted by the ACUAC/HP Working Group for ACUAC/HP energy conservation standards and the subsequent procedural steps taken by DOE. Recommendation #1 of the ACUAC/HP Working Group ECS Term Sheet recommends standard levels for ACUACs and ACUHPs with a recommended compliance date of January 1, 2029. (ASRAC Term Sheet, No. 87 at p. 2) These recommended standard levels are presented in Table II.4. Recommendation #2 of the ACUAC/HP Working Group ECS Term Sheet recommends revising existing certification requirements to support the new metrics and standards presented in Table II.4, specifically requesting that manufacturers be required to certify the following information publicly to DOE for each basic model: (1) crankcase heat wattage for each compressor stage, and (2) 5 °F heating capacity and COP, if applicable. DOE will address recommendation #2 regarding certification in a separate rulemaking.

ER20MY24.079

After carefully considering the consensus recommendations for amending the energy conservation standards for ACUACs and ACUHPs submitted by the ACUAC/HP Working Group and adopted by ASRAC, DOE has determined that these recommendations are in accordance with the statutory requirements of 42 U.S.C. 6295(p)(4) and 42 U.S.C. 6316(b)(1) for the issuance of a direct final rule. The following paragraphs explain DOE's rationale in making this determination.

First, with respect to the requirement that recommended energy conservation standards be submitted by interested persons that are fairly representative of relevant points of view, DOE notes that the ACUAC/HP Working Group ECS Term Sheet was signed and submitted by a broad cross-section of interests, including the manufacturers who produce the subject equipment. To satisfy this requirement, DOE has generally found that the group submitting a joint statement must, where appropriate, include larger concerns and small businesses in the regulated industry/manufacturer community, energy advocates, energy utilities, consumers, and States. However, the Department has explained that it will be necessary to evaluate the meaning of “fairly representative” on a case-by-case basis, subject to the circumstances of a particular rulemaking, to determine whether additional parties must be part of a joint statement beyond the required “manufacturers of covered products, States, and efficiency advocates” specifically called out by EPCA at 42 U.S.C. 6295(p)(4)(A). In this case, in addition to manufacturers, the ACUAC/HP Working Group ECS Term Sheet also included environmental and energy-efficiency advocacy organizations, and electric utility companies. Although States were not direct signatories to the ACUAC/HP Working Group ECS Term Sheet, the ASRAC Committee approving

the ACUAC/HP Working Group's recommendations included at least two members representing States—one representing the State of New York and one representing the State of California. As a result, DOE has determined that these recommendations were submitted by interested persons who are fairly representative of relevant points of view on this matter, including those specifically identified by Congress: manufacturers of covered equipment, States, and efficiency advocates. (42 U.S.C. 6295(p)(4)(A); 42 U.S.C. 6316(b)(1))

Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine whether a jointly-submitted recommendation for an energy or water conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. In making this determination, DOE conducted an analysis to evaluate whether the potential energy conservation standards under consideration achieve significant energy savings and are technologically feasible and economically justified. The evaluation is similar to the comprehensive approach that DOE typically conducts whenever it considers potential new or amended energy conservation standards for a given type of product or equipment. DOE applies the same principles to any consensus recommendations it may receive to satisfy its statutory obligations. Upon review, the Secretary determined that the ACUAC/HP Working Group ECS Term Sheet comports with the standard-setting criteria set forth under 42 U.S.C. 6313(a)(6)(B). Accordingly, the consensus-recommended efficiency levels were included as the recommended TSL for ACUACs and ACUHPs (

see

section V.A of this document for description of all of the considered TSLs). The details regarding how the consensus-recommended TSL complies with the standard-setting criteria are discussed and demonstrated in the relevant sections throughout this document.

In sum, the Secretary has determined that the relevant criteria under 42 U.S.C. 6295(p)(4) and 42 U.S.C. 6316(b)(1) have been satisfied, such that it is appropriate to adopt the consensus-recommended amended energy conservation standards for ACUACs and ACUHPs through this direct final rule based on the clear and convincing evidence discussed throughout this final rule. Also, in accordance with the provisions described in section II.A of this document, DOE is simultaneously publishing a NOPR proposing that the identical standard levels contained in this direct final rule be adopted.

III. General Discussion

A. General Comments

In response to the May 2020 ECS RFI, DOE received multiple comments from stakeholders generally expressing support for DOE evaluating and amending standards for ACUACs and ACUHPs. (ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at p. 1; CA IOUs EERE-2019-BT-STD-0042-0020 at p. 1; NEEA, EERE-2019-BT-STD-0042-0024 at p. 9; PGE, EERE-2019-BT-STD-0042-0009, pp. 1-2) ASAP, ACEEE,

et al.

stated that very large energy savings could result from amended standards for ACUACs and ACUHPs, citing the max-tech efficiency levels analyzed in the January 2016 Direct Final Rule as well as the range of efficiencies in the current market. (ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at pp. 1-2) PGE also asserted that standards for ACUACs should be substantially higher than standards for ACUHPs to incentivize increased adoption of ACUHPs by commercial consumers, particularly in dual season climates where the commenter claimed that ACUHPs deliver higher efficiency, reduce peak loads, and reduce greenhouse gas emissions. (PGE, EERE-2019-BT-STD-0042-0009 at pp. 1-2)

In response to PGE's assertion that standards for ACUACs should be substantially higher than standards for ACUHPs, DOE notes that at the recommended TSL, the IVEC values are marginally higher for ACUACs with all other types of heat than for ACUHPs, as mentioned in section IV.C.2.a, and are unlikely on their own to incentivize increased adoption of ACUHPs, as discussed in section IV.G.4. At this time, DOE does not have evidence or information that would justify adopting higher standards for ACUACs than ACUHPs by a larger margin than recommended by the ACUAC/HP Working Group.

DOE also received comments in response to the May 2020 ECS RFI from several other stakeholders generally expressing views that DOE should not amend the existing energy conservation standards for ACUACs and ACUHPs. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 3; Carrier, EERE-2019-BT-STD-0042-0013 at pp. 8, 18-19; Lennox, EERE-2019-BT-STD-0042-0015 at p. 1; Trane, EERE-2019-BT-STD-0042-0016 at p. 2) More specifically, AHRI, Carrier, Lennox, and Trane argued that standards should not be amended because of the burdens manufacturers already face, including regulatory changes such as refrigerant regulations, new efficiency metrics and standards for central air conditioners and heat pumps, and pending test procedure and standard updates for variable refrigerant flow equipment. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 2; Carrier, EERE-2019-BT-STD-0042-0013 at pp. 18-19; Lennox, EERE-2019-BT-STD-0042-0015 at pp. 3-4, 8; Trane, EERE-2019-BT-STD-0042-0016 at p. 2) Commenters also asserted that the impacts associated with the 2023 standards could not be assessed at the time of submitting their comments because the standards had yet to take effect, and therefore, considering new standards prior to 2023 would be premature. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 3; Carrier, EERE-2019-BT-STD-0042-0013 at p. 8, Lennox, EERE-2019-BT-STD-0042-0015 at pp. 2-3; Trane, EERE-2019-BT-STD-0042-0016 at p. 2) Lennox also asserted that future market uncertainties are compounded by the COVID19 pandemic. (Lennox, EERE-2019-BT-STD-0042-0015 at p. 2)

DOE acknowledges that at the time of the May 2020 ECS RFI, compliance was not yet required for the second tier of energy conservation standards adopted in the January 2016 Direct Final Rule, which had a compliance date of January 1, 2023. However, the ACUAC/HP Working Group meetings to negotiate recommended energy conservation standard levels and the subsequent agreement outlined in the ACUAC/HP Working Group ECS Term Sheet occurred after January 1, 2023. Further, the analyses of amended energy conservation standards conducted by DOE as part of the 2023 ECS Negotiations were based on the ACUAC/HP market after the 2023 compliance date. DOE notes that despite the concerns raised regarding cumulative regulatory burden and impacts to the market due to the COVID 19 pandemic, Carrier, Lennox, and Trane (as members of the ACUAC/HP Working Group) voted in favor of the recommended standard levels. Additionally, AHRI subsequently supported efforts for a negotiated rulemaking to amend standards in comments received in response to the May 2022 TP/ECS RFI, demonstrating AHRI's position on this issue changed. (AHRI, EERE-2022-BT-STD-0015-0008 at p. 1) Therefore, DOE surmises that those commenters' original positions on this topic changed since the time of the May 2020 ECS RFI.

In response to the May 2020 ECS RFI, AHRI asserted that among ACUACs and ACUHPs, the only equipment category

for which DOE is statutorily required to review amended standards under the six-year-lookback rulemaking is double-duct systems, based on the fact that the 2023 standards adopted in the January 2016 Direct Final Rule had not yet come into effect. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 3) DOE disagrees with AHRI's reading of the statute. The six-year-lookback provision does not reference compliance dates. (

See

42 U.S.C. 6313(a)(6)(C)(1)) The plain language of EPCA requires DOE to evaluate amended standards for ACUACs and ACUHPs “every 6 years” regardless of compliance dates of any amended standards from previous rulemakings. (

Id.

) In this rulemaking, DOE has evaluated the potential for amended standards for ACUACs and ACUHPs (except for double-duct systems, as discussed in section III.B of this document) pursuant to its statutory obligations.

In response to the May 2022 TP/ECS RFI, Lennox highlighted the preparations manufacturers are undergoing to implement the 2023 energy conservation standards, as well as the pending transition to lower global warming potential (“GWP”) refrigerants in 2025. (Lennox, EERE-2022-BT-STD-0015-0009 at p. 2) Lennox recommended that DOE exercise caution with energy conservation standard amendments for ACUAC and ACUHP equipment because manufacturers need time to assess the impacts of an amended test procedure before DOE assesses amending energy conservations standards. (

Id.

) Specifically, Lennox recommended a 180-day period for manufacturers to assess the test procedure before the DOE moves forward with energy conservation standards based on the provisions of 10 CFR part 430, subpart C, appendix A. (

Id.

at pp. 5-6)

As discussed previously, DOE notes that at the time of the May 2022 TP/ECS RFI, compliance was not yet required with the second tier of energy conservation standards adopted in the January 2016 Direct Final Rule. However, the ACUAC/HP Working Group meetings and subsequent ACUAC/HP Working Group ECS Term Sheet agreement occurred after compliance became required with the most recent standards (January 1, 2023), and the analyses of amended energy conservation standards conducted by DOE as part of the 2023 ECS Negotiations were based on the ACUAC/HP market after the 2023 compliance date. DOE notes that after the agreement on the ACUAC/HP Working Group TP Term Sheet, industry members in the ACUAC/HP Working Group conducted simulations to approximate where many models currently on the market would fall in terms of the new IVEC and IVHE metrics. These simulations were shared with a DOE contractor and were used in the 2023 ECS Negotiations. DOE also notes that Lennox was a member of the ACUAC/HP Working Group and agreed to the ACUAC/HP Working Group ECS Term Sheet; therefore, DOE surmises that Lennox's original position on this topic changed since the time of the May 2022 TP/ECS RFI.

B. Scope of Coverage

This direct final rule applies to ACUACs and ACUHPs with a rated cooling capacity greater than or equal to 65,000 Btu/h (excluding double-duct air conditioners and heat pumps), which is the scope of equipment addressed in the 2023 ECS Negotiations.

In the May 2020 ECS RFI, DOE requested comment on several topics related to double-duct systems. 85 FR 27941, 27943-27953 (May 12, 2020). DOE received comments regarding double-duct systems from multiple stakeholders in response to the May 2020 ECS RFI. (Carrier, EERE-2019-BT-STD-0042-0013, pp. 2, 8, 10; AHRI, EERE-2019-BT-STD-0042-0014 at pp. 3-8, 11; UCA, EERE-2019-BT-STD-0042-0008, Attachment 2) Double-duct systems are a sub-category of ACUACs and ACUHPs with a separate definition (10 CFR 431.92), metrics, and efficiency requirements (10 CFR 431.97).

As noted, the scope of proposed standards in the ACUAC/HP Working Group ECS Term Sheet was determined through the 2023 ECS Negotiations and excludes double-duct air conditioners and heat pumps. Therefore, comments regarding energy conservation standards for double-duct systems are outside the scope of consideration for this rulemaking. Topics related to energy conservation standards for double-duct systems will be addressed in a separate rulemaking process.

See section IV.A.1 of this document for discussion of the equipment classes analyzed in this direct final rule.

C. Test Procedure and Metrics

EPCA sets forth generally applicable criteria and procedures for DOE's adoption and amendment of test procedures. (42 U.S.C. 6314) Manufacturers of covered equipment must use these test procedures to certify to DOE that their equipment complies with applicable energy conservation standards (42 U.S.C. 6316(b)(1); 42 U.S.C. 6296) and when making representations about the efficiency of their equipment (42 U.S.C. 6314(d)). Similarly, DOE uses these test procedures to determine whether the equipment complies with the relevant standards promulgated under EPCA. (42 U.S.C. 6314(d)) DOE's current energy conservation standards are expressed in terms of IEER for the cooling efficiency of ACUACs and ACUHPs, and in terms of COP for the heating efficiency of ACUHPs. (

See

10 CFR 431.97(b))

As previously mentioned, the ACUAC/HP Working Group met several times and put forth the ACUAC/HP Working Group TP Term Sheet of recommendations regarding ACUAC and ACUHP test procedures, including new metrics IVEC and IVHE. DOE recently adopted the IVEC and IVHE metrics in a final rule amending the test procedure for ACUACs and ACUHPs.

23

The newly adopted DOE test procedure for ACUACs and ACUHPs appears at 10 CFR part 431, subpart F, appendix A1 (appendix A1). This direct final rule adopts amended energy conservation standards for ACUACs and ACUHPs denominated in terms of the new IVEC and IVHE metrics.

23

The final rule amending the test procedure can be found at

www.regulations.gov

under docket number EERE-2023-BT-TP-0014.

DOE notes that a change in metrics (

i.e.,

from IEER to IVEC and from COP to IVHE) necessitates an initial DOE determination that the new requirement would not result in backsliding when compared to the current standards. (

See

42 U.S.C 6313(a)(6)(B)(iii)(I)) The translation of the current standards to IVEC and IVHE baselines is discussed further in section IV.C.2 of this document.

D. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available products or in working prototypes to be technologically feasible.

See generally

10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 6(b)(3)(i) and 7(b)(1) (“appendix A”).

After DOE has determined that particular technology options are

technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) practicability to manufacture, install, and service; (2) adverse impacts on equipment utility or availability; (3) adverse impacts on health or safety and (4) unique-pathway proprietary technologies. Section IV.B of this document discusses the results of the screening analysis for ACUACs and ACUHPs, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the direct final rule technical support document (“TSD”).

2. Maximum Technologically Feasible Levels

When DOE adopts a new or amended standard for a type or class of covered equipment, it determines the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for ACUACs and ACUHPs, using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C of this direct final rule and in chapter 5 of the direct final rule TSD.

E. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from application of the TSL to ACUACs and ACUHPs purchased in the 30-year period that begins in the year of compliance with the amended standards (2029-2058).

24

The savings are measured over the entire lifetime of the subject equipment purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for equipment would likely evolve in the absence of amended energy conservation standards.

24

Each TSL is composed of specific efficiency levels for each equipment class. The TSLs considered for this direct final rule are described in section V.A of this document. DOE also presents a sensitivity analysis that considers impacts for equipment shipped in a nine-year period.

DOE used its national impact analysis (“NIA”) computer models to estimate national energy savings (“NES”) from potential amended standards for ACUACs and ACUHPs. The NIA computer model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by equipment at the locations where they are used. For electricity, DOE reports national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. For natural gas, the primary energy savings are considered to be equal to the site energy savings. DOE also calculates NES in terms of FFC energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy conservation standards.

25

DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H.2 of this document.

25

The FFC metric is discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012).

2. Significance of Savings

To adopt any new or amended standards for covered equipment more stringent than those set forth in ASHRAE Standard 90.1 or the existing Federal standard (as applicable in the context of the specific rulemaking), DOE must have clear and convincing evidence that such action would result in significant additional energy savings. (

See

42 U.S.C. 6313(a)(6)(C)(i); 42 U.S.C. 6313(a)(6)(A)(ii)(II))

26

26

In setting a more-stringent standard for ASHRAE equipment, DOE must have “clear and convincing evidence” that doing so “would result in significant additional conservation of energy” in addition to being technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This language indicates that Congress had intended for DOE to ensure that, in addition to the savings from the ASHRAE standards, DOE's standards would yield additional energy savings that are significant. In DOE's view, this statutory provision shares the requirement with the statutory provision applicable to covered products and non-ASHRAE equipment that “significant conservation of energy” must be present (42 U.S.C. 6295(o)(3)(B))—and supported with “clear and convincing evidence”—to permit DOE to set a more-stringent requirement than ASHRAE.

The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking. For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of this equipment on the energy infrastructure can be more pronounced than equipment with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis, taking into account the significance of cumulative FFC national energy savings, the cumulative FFC emissions reductions, and the need to confront the global climate crisis, among other factors.

As stated, the standard levels adopted in this direct final rule are projected to result in national energy savings of 5.59 quads, the equivalent of the primary annual energy use of 146 million homes. Based on the amount of FFC savings, the corresponding reduction in emissions, and the need to confront the global climate crisis, DOE has determined (based on the methodology described in section IV of this document and the analytical results presented in section V.B.3.a of this document) that there is clear and convincing evidence that the energy savings from the standard levels adopted in this direct final rule are “significant” within the meaning of 42 U.S.C. 6313(a)(6)(A)(ii)(II).

F. Economic Justification

1. Specific Criteria

As noted previously, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Consumers

EPCA requires DOE to consider the economic impact of a potential standard on manufacturers and the consumers of the equipment subject to the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(I) and (C)(i)) In determining the impacts of potential new or amended standards on manufacturers, DOE conducts an MIA, as discussed in section IV.J of this document. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed

include: (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a standard.

b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP)

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered equipment that are likely to result from a standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP analysis.

The LCC is the sum of the purchase price of a piece of equipment (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. The LCC analysis requires a variety of inputs, such as equipment prices, equipment energy consumption, energy prices, maintenance and repair costs, equipment lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.

The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of more-efficient equipment through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.

For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered equipment in the first year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.

c. Energy Savings

Although significant additional conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(III)) As discussed in section IV.H of this document, DOE uses the NIA computer models to project national energy savings.

d. Lessening of Utility or Performance of Equipment

In establishing equipment classes and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Based on data available to DOE, the standards adopted in this document would not reduce the utility or performance of the equipment under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General of the United States (“Attorney General”), that is likely to result from a standard. (42 U.S.C. 6313(a)(6)(B)(ii)(V)) To assist the Department of Justice (“DOJ”) in making such a determination, DOE will transmit a copy of this direct final rule and the accompanying TSD to the Attorney General for review, with a request that the DOJ provide its determination on this issue. DOE will consider DOJ's comments on the rule contained in its assessment letter in determining whether to proceed with the direct final rule. DOE will also publish and respond to the DOJ's comments in the

Federal Register

in a separate document.

f. Need for National Energy Conservation

DOE also considers the need for national energy and water conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) The energy savings from the adopted standards are likely to provide improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the Nation's needed power generation capacity, as discussed in section IV.M of this document.

DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The adopted standards are likely to result in environmental benefits in the form of reduced emissions of air pollutants and GHGs associated with energy production and use. As part of the analysis of the need for national energy and water conservation, DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document, and the estimated emissions impacts are reported in section V.B.6 of this document.

27

DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document. DOE emphasizes that the SC-GHG analysis presented in this direct final rule and accompanying TSD was performed in support of the cost-benefit analyses required by Executive Order (“E.O.”) 12866, and is provided to inform the public of the impacts of emissions reductions resulting from this rule. However, the SC-GHG estimates were not factored into DOE's EPCA analysis of the need for national energy and water conservation. DOE would reach the same conclusion presented in this

rule in the absence of the estimated benefits from reductions in GHG emissions.

27

As discussed in section IV.L of this document, for the purpose of complying with the requirements of E.O. 12866, DOE also estimates the economic value of emissions reductions resulting from the considered TSLs. DOE calculates this estimate using a measure of the social cost (“SC”) of each pollutant (

e.g.,

SC-CO

2

). Although this estimate is calculated for the purpose of complying with E.O. 12866, the Seventh Circuit Court of Appeals confirmed in 2016 that DOE's consideration of the social cost of carbon in energy conservation standards rulemakings is permissible under EPCA.

Zero Zone

v.

United States DOE,

832 F.3d 654, 677 (7th Cir. 2016).

g. Other Factors

In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described previously, DOE could consider such information under “other factors.”

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to ACUACs and ACUHPs. Separate subsections address each component of DOE's analyses. Comments on the methodology and DOE's responses are presented in each section.

DOE used several analytical tools to estimate the impact of the standards considered in this document on consumers and manufacturers. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments projections and calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (“GRIM”), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE website for this rulemaking:

www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=75.

Additionally, DOE used output from the latest version of the Energy Information Administration's (“EIA's”)

Annual Energy Outlook

(“

AEO

”) for the emissions and utility impact analyses (

i.e., AEO 2023

).

A. Market and Technology Assessment

DOE develops information in the market and technology assessment that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include: (1) a determination of the scope of the rulemaking and equipment classes; (2) manufacturers and industry structure; (3) existing efficiency programs; (4) market and industry trends, and (5) technologies or design options that could improve the energy efficiency of ACUACs and ACUHPs. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the direct final rule TSD for further discussion of the market and technology assessment.

1. Equipment Classes

When evaluating and establishing energy conservation standards, DOE divides covered equipment into equipment classes by the type of energy used, capacity, or other performance-related feature that would justify a different standard. (42 U.S.C. 6313(a)(6)(B)(iii)(II))

DOE currently defines separate energy conservation standards for twelve ACUAC and ACUHP equipment classes (excluding double-duct systems), determined according to the following performance-related features that provide utility to the consumer: rated cooling capacity, equipment subcategory (air conditioner versus heat pump), and supplementary heating type. Table IV.1 lists the current ACUAC and ACUHP equipment classes. (

See also

10 CFR 431.97(b))

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In response to the May 2020 ECS RFI, DOE received multiple comments from stakeholders regarding the equipment classes for ACUACs and ACUHPs. Several stakeholders recommended that DOE evaluate the capacity ranges that separate the current ACUAC and ACUHP equipment classes, and that DOE consider splitting the existing very large equipment classes (

i.e.,

240,000 to 760,000 Btu/h) into separate equipment classes because of the potential for increasing stringency of standards (

i.e.,

more models with efficiency significantly above the 2023 standards) for ACUACs and ACUHPs with capacities at the lower end of the very large capacity range, as compared to the capacity range of very-large equipment as a whole. (ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at pp. 2-3; CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 6; NEEA, EERE-2019-BT-STD-0042-0024 at pp. 3-5) NEEA specifically recommended splitting the very large equipment class into two classes: one greater than or equal to 240,000 Btu/h and less than 384,000 Btu/h, and the other greater than or equal to 384,000 Btu/h and less than 760,000 Btu/h. (NEEA, EERE-2019-BT-STD-0042-0024 at pp. 3-4) The CA IOUs specifically recommended splitting the very large equipment class into two classes: one greater than or equal to 240,000 Btu/h and less than 400,000 Btu/h, and the other greater than or equal to 400,000 Btu/h and less than 760,000 Btu/h. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 6)

In response, DOE notes that the stakeholders that recommended splitting the existing very large equipment classes (ASAP, NEEA, and CA IOUs) had representatives that were members of the ACUAC/HP Working Group and agreed to the recommendations in the ACUAC/HP Working Group ECS Term Sheet, which maintained the existing equipment class capacity boundaries based upon the capacities in the EPCA definitions of small, large, and very large commercial package air conditioning and heating equipment. Consequently, DOE concludes that the recommended energy conservation standards and equipment classes presented in the ACUAC/HP Working Group ECS Term Sheet represent those stakeholders' latest recommendations on equipment classes.

Additionally, the ACUAC/HP Working Group ECS Term Sheet combines all ACUHPs within each capacity range into single equipment classes regardless of supplementary heating type, which is different from DOE's existing equipment class structure (which includes separate equipment classes in each capacity range for: (1) ACUHPs with electric resistance or no heating; and (2)

ACUHPs with all other types of heating). DOE is adopting amended energy conservation standards in terms of the nine equipment classes recommended in the ACUAC/HP Working Group ECS Term Sheet, presented in Table IV.2.

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2. Market Post-2023

In the May 2020 ECS RFI, DOE sought comment on whether currently available models of ACUACs and ACUHPs (excluding double-duct systems) with efficiency ratings that meet or exceed the 2023 standard levels are representative of the designs and characteristics of models that would be expected to be on the market after the 2023 compliance date. 85 FR 27941, 27948 (May 12, 2020).

AHRI, Carrier, and Trane asserted that the ACUAC and ACUHP markets at the time of the May 2020 ECS RFI are not representative of the models that would be expected to be on the market after the 2023 standards take effect. (AHRI, EERE-2019-BT-STD-0042-0014 at pp. 3, 5-6; Carrier, EERE-2019-BT-STD-0042-0013 at p. 7; Trane, EERE-2019-BT-STD-0042-0016 at p. 6) More specifically, AHRI commented that it is impossible to forecast the market impact of the 2023 standards on ACUACs and ACUHPs, and also asserted that State refrigerant regulations that drive the industry to use A2L refrigerants will require components such as compressors to be redesigned to accommodate new refrigerants. (AHRI, EERE-2019-BT-STD-0042-0014 at pp. 3, 5-6) Goodman also stated that alternative refrigerants would impact future product design and characteristics (

e.g.,

requiring factory-installed refrigerant detection sensors depending on the charge amounts of an alternate refrigerant). (Goodman, EERE-2019-BT-STD-0042-0017 at p. 3) Carrier stated the then-current models available on the market that meet the 2023 standards will not be the same products that are offered in 2023 because manufacturers will be working to optimize efficiencies, lower cost, and implement new entry level products. Carrier added that the upcoming 2023 standards will also create a need to further optimize higher-efficiency equipment. Carrier asserted that most products being sold are currently at the minimum efficiency levels, which leads to an inability to properly evaluate the economic impact of moving the markets from the current standards to 2023 standards. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 7) Trane stated that it would be redesigning all of its ACUAC and ACUHP model lines in response to the 2023 standards. (Trane, EERE-2019-BT-STD-0042-0016 at p. 6)

Lennox commented that the market impacts of the 2023 standards are unknown because of uncertainties in assessing the evolving market, including uncertainties in future shipments, the economic impact on manufacturers and consumers, and the total projected energy savings. (Lennox, EERE-2019-BT-STD-0042-0015 at pp. 2-3) However, Lennox also commented that the ACUAC and ACUHP models on the market are representative of designs and characteristics of models that would be expected to be on the market after the 2023 compliance date. (

Id.

at p. 5) Lennox additionally mentioned that the 2023 standards would cause a phase out of single-speed technology and constant airflow fans. (

Id.

)

DOE notes that at the time these comments were received, compliance was not yet required with the current standards. Compliance was required with the current standards beginning January 1, 2023. DOE analyzed the market after January 1, 2023 for its analyses for the 2023 ECS Negotiations and for this direct final rule such that the comments received in 2020 on this matter are now moot. DOE's analysis of the market efficiency distribution to develop IEER efficiency levels is discussed in section of this direct final rule.

3. Technology Options

As part of the market and technology assessment, DOE identifies technologies that manufacturers could use to improve ACUAC and ACUHP energy efficiency. Chapter 3 of the direct final rule TSD includes the detailed list and descriptions of all technology options identified for this equipment.

In the May 2020 ECS RFI, DOE listed 19 technology options determined to improve the efficiency of ACUACs and ACUHPs, as measured by the DOE test procedure, that were presented in the

January 2016 Direct Final Rule. 85 FR 27941, 27946 (May 12, 2020). DOE requested comment on the technology options considered in the development of the January 2016 Direct Final Rule, their applicability to the current market, and the range of performance characteristics for each technology option.

Id.

DOE also sought feedback on other technology options that it should consider for inclusion in its analysis.

Id.

DOE also sought comment on any changes in market adoption, costs, and concerns with incorporating the technologies identified into equipment that may have occurred since the January 2016 Direct Final Rule.

Id.

DOE also requested feedback on how manufacturers would incorporate the technology options from the January 2016 Direct Final Rule to increase energy efficiency in ACUACs and ACUHPs beyond the current levels.

Id.

at 85 FR 27949. This request included information on the order in which manufacturers would incorporate the different technologies to incrementally improve the efficiencies of equipment.

Id.

DOE also requested feedback on whether the increased energy efficiency would lead to other design changes that would not occur otherwise.

Id.

DOE was also interested in information regarding any potential impact of design options on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

Id.

DOE also requested comment on whether certain design options may not be applicable to (or incompatible with) specific equipment classes.

Id.

Several stakeholders stated that, in general, the technology options listed in the May 2020 ECS RFI are appropriate and have not seen any significant changes since the analysis was conducted for the January 2016 Direct Final Rule. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 4; Lennox, EERE-2019-BT-STD-0042-0015 at p. 5; Trane, EERE-2019-BT-STD-0042-0016 at p. 3)

Carrier stated that high-efficiency, multi-stage, and variable-speed compressors, the size of heat exchangers, and more-efficient condenser fan blades and motors can increase efficiency. Carrier also stated that microchannel heat exchangers and expansion valves do not affect efficiency, and that electro-hydrodynamic enhancement has a very minor effect on efficiency.

28

(Carrier, EERE-2019-BT-STD-0042-0013 at p. 4) Carrier stated that it anticipates that the identified technology options would impact practicability to manufacture, install, and service, with potential impacts including larger/heavier chassis, roof curb changes, and modified electrical service to accommodate high-efficiency components. (Carrier, EERE-2019-BT-STD-0042-0013 at pp. 5-6) AHRI stated that there may be limited availability of electro-hydrodynamic enhancements (without elaborating on why) and that direct-drive fan systems at some voltages may not be available. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 4)

28

Carrier used the term electro-hydromatic enhancement, but DOE assumes Carrier was referring to electro-hydrodynamic enhancement.

NEEA recommended that DOE consider the presence of economizers, fan speed control, multi-stage compressors, electronically-commutated motors (“ECMs”), and fan efficiency. (NEEA, EERE-2019-BT-STD-0042-0024 at p. 7)

Trane stated that achieving the 2023 standard levels will take a combination of compressor technology and advanced heat exchanger design. Trane also stated that secondarily, indoor and outdoor fan technologies would be employed to reach the 2023 standard levels. (Trane, EERE-2019-BT-STD-0042-0016 at p. 8) Carrier stated that the technology options identified are currently being used to reach max-tech efficiency and that more of the advanced features would be used to meet the 2023 standards. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 11) Carrier also asserted that additional features or advancements at the time of their comments would create undue burden in terms of cost and increased equipment size, resulting in a lack of marketability for ACUACs and ACUHPs. (

Id.

)

AHRI suggested that DOE contact manufacturers directly to solicit feedback on: (1) how manufacturers would incorporate the identified technology options to increase energy efficiency of ACUACs and ACUHPs and (2) whether certain design options may not be applicable to specific equipment classes. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 7)

In response to the May 2020 ECS RFI, the CA IOUs and ASAP, ACEEE,

et al.

suggested that DOE consider additional alternative refrigerants as a technology option. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 5; ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at pp. 3-4) ASAP, ACEEE,

et al.

stated that alternative refrigerants, including R-452B, R-454B, and R-32, can improve efficiency by at least 5 percent relative to the current refrigerant R-410A, citing testing conducted by Oak Ridge National Laboratory (“ORNL”) in partnership with Trane.

29

(ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at pp. 1, 3-4) In response to the May 2022 TP/ECS RFI, ASAP and ACEEE again recommended DOE consider low-GWP refrigerants as a design option. (ASAP and ACEEE, EERE-2022-BT-STD-0015-0011 at p. 3)

29

Available at:

www.energy.gov/sites/prod/files/2017/04/f34/10_32226f_Shen_031417-1430.pdf.

AHRI commented that considering alternative refrigerants as a technology option is not appropriate and would be unduly burdensome for manufacturers, recommending screening out alternative refrigerants on the bases of technological feasibility and practicability to manufacture, install, and service. (AHRI, EERE-2019-BT-STD-0042-0014 at pp. 4-5) Carrier suggested that alternate refrigerants should not be the basis of an energy efficiency increase. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 7)

As discussed in section IV.C.1 of this document, DOE conducted its engineering analysis by selecting and analyzing currently-available models using their rated efficiency in terms of IEER to characterize the energy use and manufacturing production costs at each efficiency level. As a result, DOE analyzed equipment designs, including expansion devices, indoor and outdoor coils, and fans/motors, consistent with currently available models and the design of the equipment as whole. Therefore, DOE has concluded that the technology options in this direct final rule accurately reflect the efficiency improvement and incremental manufacturing costs associated with these designs.

Comments received in response to the May 2020 ECS RFI were received three years prior to the compliance date of the current standards and the 2023 ECS Negotiations. Since that time, the market has updated to comply with the new standards, and DOE conducted interviews with manufacturers to solicit feedback on all aspects of its engineering analysis, including technology options used to increase efficiency of ACUACs and ACUHPs. Certain technology options were also discussed among the ACUAC/HP Working Group during the 2023 ECS Negotiations. (EERE-2022-BT-STD-0015-0088 at pp. 60-64; EERE-2022-BT-STD-0015-0089 at pp. 17-24) Therefore, DOE surmises that the positions of commenters on certain technology options may have changed since the time of the drafting of some of the comments received.

Regarding economizers, while the IVEC metric accounts for the benefit of economizer cooling and the energy consumed during economizing via calculations, the metric does not include testing with economizer operation due to test burden and repeatability concerns. As such, the IVEC metric does not allow for differentiation in terms of IVEC efficiency between: (1) systems installed with economizers versus not installed with economizers, and (2) different types of economizers offered. Therefore, DOE did not consider economizers as a technology option for this rulemaking.

There are no models currently on the market that include low-GWP refrigerants. Therefore, at this time, DOE does not have sufficient information to consider low-GWP refrigerants as a technology option for improving efficiency. As such, DOE did not consider low-GWP refrigerants as a technology option in its analysis. Section IV.C.4 of this document includes discussion of the impact of low-GWP refrigerants on efficiency and cost of ACUACs and ACUHPs.

Regarding electro-hydrodynamic enhancement, DOE did not identify any prototypes or models currently on the market that incorporate this technology to improve efficiency.

After consideration of the comments received, assessment of technology options used to improve efficiency in models currently on the market, and additional information provided during manufacturer interviews, DOE considered the technology options presented in Table IV.3 as part of this rulemaking.

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A detailed discussion of each technology option identified is contained in chapter 3 of the direct final rule TSD.

B. Screening Analysis

DOE uses the following five screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:

(1)

Technological feasibility.

Technologies that are not incorporated in commercial equipment or in commercially viable, existing prototypes will not be considered further.

(2)

Practicability to manufacture, install, and service.

If it is determined that mass production of a technology in commercial equipment and reliable installation and servicing of the technology could not be achieved on the scale necessary to serve the relevant market at the time of the projected compliance date of the standard, then that technology will not be considered further.

(3)

Adverse impacts on equipment utility or availability.

If a technology is determined to have a significant adverse impact on the utility of the equipment to subgroups of consumers, or result in the unavailability of any covered equipment type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will not be considered further.

(4)

Adverse impact on health or safety of technologies.

If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further.

(5)

Unique-pathway proprietary technologies.

If a technology has proprietary protection and represents a unique pathway to achieving a given efficiency level, it will not be considered further, due to the potential for monopolistic concerns.

10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 6(c)(3) and 7(b).

In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the listed five criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the following sections.

The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.

1. Screened-Out Technologies

In the January 2016 Direct Final Rule, DOE screened-out three technology

options: electro-hydrodynamic enhanced heat transfer (due to technological feasibility and practicability to manufacture/install/service), alternative refrigerants (due to technological feasibility), and sub-coolers (due to technological feasibility). 81 FR 2420, 2449 (Jan. 15, 2016).

In the May 2020 ECS RFI, DOE presented the three technology options that were screened out in the January 2016 Direct Final Rule and the criteria for screening them out. DOE sought feedback on whether the technology options that were screened out in the January 2016 Direct Final Rule should continue to be screened out. DOE also sought comment on what impact the screening criteria would have on consideration of the technology options that were considered (

i.e.,

not screened out) in the January 2016 Direct Final Rule. 85 FR 27941, 27947 (May 12, 2020).

Trane agreed with the screening analysis conducted for the January 2016 Direct Final Rule. (Trane, EERE-2019-BT-STD-0042-0016 at p. 5)

Carrier also agreed with continuing to screen out the technology options that were screened out in the January 2016 Direct Final Rule. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 6) Carrier further recommended that an additional screening criterion be added to address cost of a technology option. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 6)

As discussed in section IV.A.3 of this document, DOE is not considering alternative refrigerants and electro-hydrodynamic enhanced heat transfer as technology options, and, thus, the need to screen them in or out is not relevant. With respect to the third previously-screened out technology option, DOE is aware of at least one model line on the market that uses sub-coolers for increased efficiency. DOE does not find that the third previously-screened out technology meets any of the criteria for being screened out.

In response to Carrier's comment recommending an additional screening criterion be added to address cost of a technology option, the added cost of a technology option is considered in the cost-efficiency analysis and the downstream economic analyses that evaluate the impacts to consumers and the Nation as a whole. Additionally, the product and capital conversion costs manufacturers must bear in order to implement certain technologies are considered in the manufacturer impact analysis, discussed further in section IV.J of this document.

DOE did not find that any of the other technology options it identified met the criteria to be screened-out in this rulemaking.

2. Remaining Technologies

Through a review of each technology, DOE concludes that all of the identified technologies listed in section IV.A.3 of this document met all five screening criteria to be examined further as design options in DOE's direct final rule analysis. In summary, DOE did not screen out any technology options for this rulemaking.

DOE determined that these technology options are technologically feasible because they are being used or have previously been used in commercially-available equipment or working prototypes. DOE also finds that all of the remaining technology options meet the other screening criteria (

i.e.,

practicable to manufacture, install, and service; do not result in adverse impacts on consumer utility, equipment availability, health, or safety; and do not involve a proprietary technology that is a unique pathway to meeting a given efficiency level). For additional details, see chapter 4 of the direct final rule TSD.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of ACUACs and ACUHPs. There are two elements to consider in the engineering analysis: (1) the selection of efficiency levels to analyze (

i.e.,

the “efficiency analysis”) and (2) the determination of equipment cost at each efficiency level (

i.e.,

the “cost analysis”). In determining the performance of higher-efficiency equipment, DOE considers technologies and design option combinations not eliminated by the screening analysis. For each equipment class, DOE estimates the baseline cost, as well as the incremental cost for the equipment at efficiency levels above the baseline. The output of the engineering analysis is a set of cost-efficiency “curves” that are used in downstream analyses (

i.e.,

the LCC and PBP analyses and the NIA).

1. Efficiency Levels in Terms of Existing Metrics

DOE typically uses one of two approaches to develop energy efficiency levels for the engineering analysis: (1) relying on observed efficiency levels in the market (

i.e.,

the efficiency-level approach), or (2) determining the incremental efficiency improvements associated with incorporating specific design options to a baseline model (

i.e.,

the design-option approach). Using the efficiency-level approach, the efficiency levels established for the analysis are determined based on the market distribution of existing equipment (in other words, based on the range of efficiencies and efficiency level “clusters” that already exist on the market). Using the design option approach, the efficiency levels established for the analysis are determined through detailed engineering calculations and/or computer simulations of the efficiency improvements from implementing specific design options that have been identified in the technology assessment. DOE may also rely on a combination of these two approaches. For example, the efficiency-level approach (based on actual equipment on the market) may be extended using the design option approach to interpolate to define “gap fill” levels (to bridge large gaps between other identified efficiency levels) and/or to extrapolate to the “max-tech” level (particularly in cases where the “max-tech” level exceeds the maximum efficiency level currently available on the market).

In this rulemaking, DOE applied an efficiency-level approach, analyzing three specific capacities—90,000 Btu/h (7.5-tons), 180,000 Btu/h (15-tons), and 360,000 Btu/h (30-tons)—that served as representative units for the three equipment capacity ranges—“small” (≥65,000 to <135,000 Btu/h), “large” (≥135,000 to <240,000 Btu/h), and “very large” (≥240,000 to <760,000 Btu/h). DOE selected these representative capacities consistent with the analysis conducted for the January 2016 Direct Final Rule after concluding based on assessment of the current market (and receiving no contrary feedback during the 2023 ECS Negotiation meetings) that these capacities continue to be representative of models on the market in their respective capacity ranges. To develop cost-efficiency curves, DOE used the current cooling efficiency metric (IEER) and later translated each efficiency level to the new cooling efficiency metric (IVEC) because there were no publicly-available data for existing models on the market in terms of the new metric; therefore, the cost to produce these models could not be linked directly to efficiency in terms of IVEC. Selection of the efficiency levels in terms of the current efficiency metrics is discussed in sections IV.C.1.a and IV.C.1.b of this document. Further discussion on the translation from IEER to IVEC can be found in section IV.C.2.a of this document. The selection of heating efficiency levels in terms of the new heating efficiency metric (IVHE) is discussed in section IV.C.2.b of this document.

Based on DOE's review of equipment available on the market and feedback received during manufacturer interviews, DOE understands that the majority of ACUAC models with electric resistance heating or no heating are designed on the same basic platform and cabinet size as the equivalent ACUAC models with all other types of heating and comparable ACUHP models. Because these models typically have similar designs, DOE estimated that implementing the same efficiency-improving design options would result in the same or similar energy savings for comparable equipment classes. As discussed further in section IV.C.2.a of this document, ACUACs with all other types of heating typically are paired with furnaces that impose additional pressure drop that must be overcome by the indoor fan, thus increasing measured indoor fan power, so for otherwise comparable models, efficiencies in terms of IEER are lower for ACUACs with all other types of heating than ACUACs with electric resistance heating or no heating. Therefore, in order to develop equivalently stringent efficiency levels for all ACUACs, DOE first developed higher efficiency levels specifically for ACUACs with electric resistance heating or no heating. As discussed, these efficiency levels were developed in terms of IEER, and were subsequently translated to the new IVEC metric. DOE then translated these IVEC efficiency levels for ACUACs with electric resistance heating or no heating into IVEC efficiency levels for ACUACs with all other types of heating by using furnace pressure drops from product literature to calculate additional indoor fan power consumed and ultimately IVEC decrements to represent the reduction in IVEC as a result of furnace pressure drop. The calculated decrements closely aligned with the decrements proposed in the ACUAC/HP Working Group ECS Term Sheet. As further discussed in section IV.C.2 of this document, DOE did not analyze lower IVEC efficiency levels for ACUHPs as compared to ACUACs.

a. Baseline Efficiency

For each equipment class, DOE generally selects a baseline model as a reference point for each class, and measures changes resulting from potential energy conservation standards against the baseline. The baseline model in each equipment class represents the characteristics of equipment typical of that class (

e.g.,

capacity, physical size). Generally, a baseline model is one that just meets current energy conservation standards, or, if no standards are in place, the baseline is typically the most common or least efficient unit on the market.

In the May 2020 ECS RFI, DOE requested feedback on whether the 2023 energy conservation standards for ACUACs and ACUHPs are appropriate baseline efficiency levels for DOE to apply each equipment class in evaluating whether to amend energy conservation standards for this equipment. 85 FR 27941, 27948 (May 12, 2020). AHRI, Lennox, and Goodman stated that the 2023 standards would be the correct baseline efficiency to be used in a future DOE analysis. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 6; Lennox, EERE-2019-BT-STD-0042-0015 at p. 6; Goodman, EERE-2019-BT-STD-0042-0017 at p. 3)

Consistent with stakeholder feedback, DOE used the current energy conservation standards as the baseline efficiency level in terms of IEER and COP for each equipment class. The baseline efficiency levels in terms of IEER and COP considered in this direct final rule are presented in Table IV.4. As discussed further in section IV.A.1 of this document, consistent with the ACUAC/HP Working Group ECS Term Sheet, DOE is combining ACUHPs with all types of heating into a single equipment class for each capacity range. Therefore, for the baseline for ACUHP equipment classes, DOE used the current IEER standard for ACUHPs with all other types of heating.

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b. Higher Efficiency Levels

For each equipment class, DOE analyzes several efficiency levels above baseline. The maximum available efficiency level is the highest efficiency model currently available on the market. DOE also defines a “max-tech” efficiency level to represent the maximum possible efficiency for a given equipment class.

In the May 2020 ECS RFI, DOE requested comment on what efficiency levels should be considered as max-tech levels for ACUACs and ACUHPs for the evaluation of whether amended standards are warranted. 85 FR 27941, 27949 (May 12, 2020).

The CA IOUs and ASAP, ACEEE,

et al.

suggested DOE should analyze max-tech efficiency levels higher than what were analyzed in the January 2016 Direct Final Rule and consider max-tech efficiency levels that reflect incorporation of all possible technology options. (CA IOUs, EERE-2019-BT-STD-0042-0020 at pp. 6-7; ASAP, ACEEE,

et al.,

EERE-2019-BT-STD-0042-0023 at pp. 1-2, 4) The CA IOUs recommended DOE consider the technology development timeline of emerging technologies in determining max-tech levels, specifically technology options currently in the lab-scale prototype stage. (CA IOUs, EERE-2019-BT-STD-0042-0020 at pp. 6-7)

AHRI, Goodman, and Lennox recommended DOE only consider commercially-available technologies in determining max-tech efficiency levels, specifically those that are used in equipment certified to DOE's Compliance Certification Database (“CCD”). (AHRI, EERE-2019-BT-STD-0042-0014 at p. 6; Goodman, EERE-2019-BT-STD-0042-0017 at p. 3; Lennox, EERE-2019-BT-STD-0042-0015 at p. 6) Lennox additionally commented that the max-tech levels for ACUACs and ACUHPs have increased by up to eight percent since the January 2016 Direct Final Rule, driven by manufacturers having optimized designs for the part-load IEER metric, which is more representative of consumer use than the prior EER full-load metric, not the advancement of technologies that are employed by this equipment. (Lennox, EERE-2019-BT-STD-0042-0015 at p. 6)

Trane stated that the analysis for the January 2016 Direct Final Rule is still relevant and that it supported the process used then for considering max-tech efficiency levels (including manufacturer interviews). (Trane, EERE-2019-BT-STD-0042-0016 at p. 7)

Carrier specified what it argued are the max-tech levels for ACUACs and ACUHPs should be in terms of IEER and COP based on certifications to the AHRI Directory at the time of its comment submission. (Carrier, EERE-2019-BT-STD-0042-0013 at pp. 9-10)

Consistent with feedback from stakeholders, DOE identified incremental efficiency levels based on a review of currently available models on the market, taking into consideration the efficiency levels analyzed for the January 2016 Direct Final Rule. DOE relied on certified IEER data from DOE's CCD and the AHRI Directory, focusing on models that had sufficient information in public product literature to develop costs. Review of the market showed that many of the model lines analyzed for the January 2016 Direct Final Rule are still on the market today; therefore, DOE concluded that many of the efficiency levels analyzed for the January 2016 Direct Final Rule were still appropriate to consider for this rulemaking. DOE started with the efficiency levels used for the January 2016 Direct Final Rule analysis that were above the current IEER standards (

i.e.,

standards with compliance date of January 1, 2023), adjusting IEER values of some efficiency levels as appropriate based on current market efficiency distributions. DOE also added efficiency levels, as needed, to better represent the range of certified IEER ratings for ACUAC models with electric resistance heating or no heating currently available on the market. This included adjusted max-tech levels for some classes that have models on the market with higher rated IEER than the max-tech levels analyzed for the January 2016 Direct Final Rule, consistent with suggestions by stakeholders.

Regarding the CA IOU's comment that DOE consider emerging technologies in determining max-tech levels, as discussed, DOE developed max-tech levels for the engineering analysis based on model designs currently on the market. DOE concluded that it lacked sufficient cost and efficiency information to analyze higher efficiency levels than currently on the market. DOE notes that the max-tech levels presented in this DFR reflect those presented in the 2023 ECS Negotiations, and the CA IOUs were a member of the ACUAC/HP Working Group and did not object to the analyzed max-tech levels in the 2023 ECS Negotiations.

In response to the May 2020 ECS RFI, Carrier also recommended that DOE analyze max-tech efficiency separately for equipment that uses alternate refrigerants once available on the market, as it believes that safety code compliance will require additional components and testing that may restrict the use of certain design options. (Carrier, EERE-2019-BT-STD-0042-0013 at p. 10)

In response, DOE did not analyze max-tech levels for equipment with alternative refrigerants separately for this rulemaking because DOE is not aware of any models on the market at this time that include refrigerants with GWP below the limit of 700 GWP adopted by the Environmental Protection Agency (“EPA”).

30

Section IV.C.4 of this direct final rule includes further discussion on consideration of lower-GWP refrigerants in the engineering analysis.

30

On October 24, 2023, the EPA published a final rule in the

Federal Register

restricting the use of certain higher-GWP hydrofluorocarbons (“HFCs”) in aerosols, foams, and refrigeration, air conditioning, and heat pump products and equipment (“October 2023 EPA Final Rule”). This final rule restricts refrigerants with a GWP higher than 700 in residential and light commercial air conditioning and heat pump systems installed on and after January 1, 2025. 88 FR 73098. On December 26, 2023, EPA published an interim final rule and request for comment in the

Federal Register

amending a provision of the October 2023 EPA Final Rule allowing one additional year, until January 1, 2026, for the installation of new residential and light commercial air conditioning and heat pump systems using components manufactured or imported prior to January 1, 2025. 88 FR 88825.

The higher efficiency levels for ACUACs with electric resistance heating or no heating in terms of IEER considered in this direct final rule are presented in Table IV.5.

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2. Efficiency Levels in Terms of New Metrics

a. IVEC

DOE considered the efficiency levels in terms of IVEC presented in Table IV.6 for this direct final rule. The development of these efficiency levels for each equipment class is discussed in the following subsections.

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ACUACs with Electric Resistance Heating or No Heating

As discussed in section II.B.3 of this document, the ACUAC/HP Working Group recommended the current cooling performance energy efficiency descriptor, IEER, be replaced with the newly-developed IVEC metric. While the cost-efficiency curves were developed in terms of the existing cooling efficiency metric (IEER), DOE translated the IEER values at each

efficiency level to IVEC values for use in the other analyses in this direct final rule, and to allow consideration of potential amended energy conservation standard levels in terms of the IVEC metric.

With this change in cooling efficiency metric, DOE must ensure that a new IVEC-based standard would not result in backsliding of energy efficiency levels when compared to the current IEER standards. (42 U.S.C 6313(a)(6)(B)(iii)(I)) To this end, DOE translated the identified IEER baseline levels (as discussed in section IV.C.1.a of this document) to IVEC baseline levels.

During the course of the 2023 ECS Negotiations, industry members in the ACUAC/HP Working Group provided a DOE contractor with a confidential, anonymized dataset that included simulated IEER and IVEC values for more than 100 models currently available on the market. In this dataset, for each equipment class, there is a range of IVEC values near the IEER baseline. DOE calculated a weighted-average IVEC baseline based on the values in this industry-provided dataset to use as the IVEC baseline for analysis for each equipment class for ACUACs with electric resistance heating or no heating. Further discussion of DOE's analysis of baseline IVEC levels is included in chapter 5 of the direct final rule TSD.

DOE also translated the higher efficiency levels in terms of IEER to IVEC based on the performance correlations it developed (discussed further in section IV.C.3 of this document) (

i.e.,

DOE used the performance correlations to calculate an IVEC value for each IEER efficiency level). Further discussion of DOE's analysis of higher IVEC levels is included in chapter 5 of the direct final rule TSD.

ACUACs with All Other Types of Heating

ACUACs with all other types of heating typically are paired with furnaces that impose additional pressure drop that must be overcome by the indoor fan, thus increasing measured indoor fan power. Therefore, the current IEER standards have lower minimum efficiency for ACUACs with all other types of heating as compared to ACUACs with electric resistance heating or no heating, and DOE considered a similar furnace decrement for IVEC efficiency levels (

i.e.,

difference in IVEC levels between comparable classes to reflect presence of a furnace). The recommended standard levels in the ACUAC/HP Working Group ECS Term Sheet include a furnace decrement of 0.5 for IVEC levels for small and large ACUACs and a furnace decrement of 0.7 for IVEC levels for very large ACUACs. DOE conducted an analysis of furnace pressure drops based on public literature for ACUAC models and used estimates of furnace pressure drop to calculate a furnace IVEC decrement for small, large, and very large ACUACs. DOE's calculated furnace IVEC decrements are similar to the decrements of 0.5, 0.5, and 0.7 included in the ACUAC/HP Working Group ECS Term Sheet for small, large, and very large ACUACs, respectively. Therefore, with these decrements confirmed, DOE used the furnace IVEC decrements from the ACUAC/HP Working Group ECS Term Sheet more broadly to develop IVEC efficiency levels for ACUACs with all other types of heating across all considered efficiency levels for the subject equipment. In other words, for each IVEC efficiency level for ACUACs with electric resistance heating or no heating, DOE subtracted the corresponding furnace IVEC decrement from the ACUAC/HP Working Group ECS Term Sheet to determine the corresponding IVEC efficiency level for ACUACs with all other types of heating. Further discussion of DOE's analysis of furnace IVEC decrements is included in chapter 5 of the direct final rule TSD.

ACUHPs

For the IVEC values of ACUHPs, DOE conducted an analysis to understand the potential decrement in IVEC efficiency ratings between ACUACs and ACUHPs. Using the January 2016 Direct Final Rule IEER decrements between ACUACs and ACUHPs (81 FR 2420, 2456 (Jan. 15, 2016)), DOE determined IEER values at each efficiency level for ACUHPs. The performance correlations developed for each efficiency level of ACUACs were then adjusted to decrease IEER to reflect the lower ACUHP IEER values. Changes made to the performance correlations reflect the design and operating differences between otherwise identical ACUACs and ACUHPs. For example, compressor performance may be lower in a heat pump than an air conditioner due to the reversing valve imposing pressure drop on the suction line (

i.e.,

heat pumps may have reduced capacity at a similar power input). Compressor performance may also be lower in a heat pump than an air conditioner due to circuiting not being fully optimized for cooling operation (

i.e.,

heat pumps may have reduced capacity with a higher power input in this case). Additionally, a heat pump is more likely to require a tube and fin condenser coil instead of a microchannel heat exchanger, which could increase high-side pressure (resulting in a capacity reduction at increased power input) or increase condenser fan power. DOE then calculated IVEC values based on these adjusted correlations for ACUHPs at each efficiency level, and the Department found no significant difference in IVEC between ACUACs and ACUHPs with the same supplemental heating type at each efficiency level using its performance correlations, in contrast to the decrement used when analyzing IEER efficiency levels for the January 2016 Direct Final Rule.

DOE understands the lack of decrement found in IVEC between ACUACs and ACUHPs to be for two reasons: (1) the design differences in ACUHPs that reduce IEER affect vapor compression system performance, and IVEC weights this performance less than IEER for several reasons (

e.g.,

because IVEC also includes economizer-only cooling operation, higher external static pressure requirements, and crankcase heater energy consumption; and (2) the reduction in vapor compression system performance for an ACUHP mentioned previously is counterbalanced by an increase in IVEC due to the metric including fewer hours of off-mode operation (

i.e.,

crankcase heater energy consumption) for ACUHPs than are included in IVEC for ACUACs.

31

Further discussion of DOE's analysis of ACUHP IVEC decrements is included in chapter 5 of the direct final rule TSD.

31

The IVEC metric includes all annual crankcase heater operation, which includes ventilation mode and unoccupied no-load hours for ACUACs and ACUHPs. For ACUACs, the IVEC metric also includes crankcase heater operation during the heating season, because ACUAC compressors do not provide mechanical heating, whereas ACUHP compressors do provide mechanical heating. Specifically, for ACUACs, IVEC includes 4,202 hours of crankcase heater operation during ventilation mode, unoccupied no-load hours, and heating season hours. For ACUHPs, IVEC includes 338 hours of crankcase heater operation during ventilation mode and unoccupied no-load hours.

Given the finding of no IVEC decrement between ACUACs and ACUHPs of the same supplementary heating type, for all efficiency levels except for the levels recommended in the ACUAC/HP Working Group ECS Term Sheet (discussed later in this sub-section), DOE did not analyze lower IVEC efficiency levels for ACUHPs as compared to ACUACs. Because the standard levels recommended in the ACUAC/HP Working Group ECS Term Sheet combine ACUHPs into equipment classes that depend only on cooling capacity, regardless of supplemental heating type, DOE analyzed ACUHPs without separate classes for different

supplementary heating types at all efficiency levels. Therefore, for all efficiency levels (including the baseline) except for the levels recommended in the ACUAC/HP Working Group ECS Term Sheet (discussed later in this sub-section), the IVEC efficiency levels for ACUHPs are the same as the efficiency levels for ACUACs with all other types of heating.

Despite the finding of no IVEC decrement for ACUHPs as compared to ACUACs, the ACUAC/HP Working Group ECS Term Sheet includes marginally lower recommended standards for ACUHPs than ACUACs with all other types of heat. Therefore, at the recommended efficiency level for each ACUHP equipment class, DOE analyzed the IVEC value recommended by the ACUAC/HP Working Group for that class, instead of using the corresponding IVEC level for ACUACs with all other types of heating.

As previously discussed, the additional pressure drop of a furnace and indoor fan energy required to overcome that pressure drop results in lower IVEC for otherwise identical models with furnaces. This pressure drop is the reason that DOE's current standards apply a decrement such that ACUHPs with all other types of heating and have lower IEER standards than ACUHPs with electric resistance heating or no heating. Based on review of models currently on the market and feedback from manufacturer interviews, DOE understands that most manufacturers offer ACUHPs with and without furnaces (

i.e.,

considered in either the “all other types of heating” class or the “electric resistance heating or no heating” class), and ACUHP models with furnaces are typically otherwise identical to ACUHP models without the furnace. Therefore, DOE understands that manufacturers do not design separate baseline ACUHP models to precisely meet the IEER standards for both “electric resistance heating or no heating” and “all other types of heating”; rather, they design a single ACUHP model such that it meets the applicable standard with or without a furnace present. If the presence of a furnace for an ACUHP model impacts the IEER rating for a model by an amount that differs from the decrement present in the IEER standards, using a single ACUHP design to meet both standards inherently means that one model will have an IEER value above the applicable standard, but DOE understands that manufacturers do not undertake the product development effort to design separate slightly less efficient ACUHP models to take advantage of this small IEER gap. Based on feedback from manufacturer interviews, DOE expects this to continue in the future, even in the context of more-stringent standards.

Therefore, considering ACUHP equipment classes including models of all supplementary heating types (which is the equipment class structure recommended in the ACUAC/HP Working Group ECS Term Sheet), DOE assumed that manufacturers would design ACUHPs to meet the applicable IVEC efficiency level with a furnace present; by removing the furnace, the otherwise identical ACUHP models with electric resistance or no heating would naturally achieve a higher IVEC. Therefore, in the analyses following the engineering analysis, DOE assumed that all ACUHP IVEC efficiency levels would be met by ACUHPs with furnaces, and that ACUHPs without furnaces (but otherwise identical to the models with furnaces) would have higher IVEC values. Therefore, to determine the IVEC values achieved by ACUHPs without furnaces, DOE added the previously discussed furnace decrements to the ACUHP efficiency levels (which nominally apply to all ACUHPs regardless of supplementary heating type). As a result, DOE concluded that combining ACUHP equipment classes for all types of heating into single equipment classes for each capacity range would generally result in the same market dynamics and energy savings as having ACUHP equipment classes separated by supplementary heating type (

i.e.,

with the IVEC standard levels for ACUHPs with electric resistance or no heating being higher than the IVEC standard levels for ACUHPs with all other types of heating, with the difference being equal to the previously discussed furnace IVEC decrements). In other words, when comparing IVEC efficiency levels between ACUACs and ACUHPs, DOE's analysis for this direct final rule considers the ACUHP levels to be comparable to the levels for ACUACs with all other types of heating (because the ACUHP levels would need to be met by ACUHP models with furnaces), rather than the ACUHP levels being comparable to the levels for ACUACs with electric resistance or no heating.

b. IVHE

The ACUAC/HP Working Group also recommended the current heating performance energy efficiency descriptor, COP, be replaced with the newly-developed IVHE metric. With this change in heating efficiency metric, DOE must ensure that a new IVHE-based standard would not result in backsliding of energy efficiency levels when compared to the current COP standards. (42 U.S.C 6313(a)(6)(B)(iii)(I)) To this end, DOE first established a baseline at the current energy conservation standard in terms of COP for each of the ACUHP equipment classes, and then translated the COP baseline for each class to an IVHE baseline. As discussed previously, DOE used the current COP energy conservations standards as the COP baseline for all ACUHP equipment classes.

During the 2023 ECS Negotiations and in confidential interviews conducted with manufacturers, two industry members in the ACUAC/HP Working Group provided a DOE contractor with simulated COP and IVHE values. DOE used this data set, as well as DOE's own test data, to determine an IVHE baseline for each ACUHP equipment class. Specifically, DOE identified an IVHE baseline representative of models with simulated COP at or near the current applicable COP standard level for each ACUHP equipment class.

Although, as mentioned, two industry members in the ACUAC/HP Working Group provided DOE contractors with simulated COP and IVHE values, this dataset was significantly smaller than the previously discussed IVEC dataset. Therefore, DOE has concluded that it lacks sufficient IVHE data to identify IVHE efficiency levels more stringent than the levels recommended in the ACUAC/HP Working Group ECS Term Sheet. In particular, many ACUHP models currently on the market with multiple stages of mechanical cooling offer only one stage of mechanical heating. DOE recognizes that the IVHE metric (which includes part-load operation) will incentivize development of multiple stages of mechanical heating in ACUHPs. However, at this time, there are limited IVHE data available for ACUHP models with multiple stages of mechanical heating; therefore, it is unclear which IVHE levels above the recommended IVHE levels are attainable across the range of capacities. Consequently, for all efficiency levels above the recommended efficiency levels, DOE assigned the recommended IVHE levels—

i.e.,

for all IVEC levels above the recommended IVEC levels for ACUHPs, DOE did not analyze an increase in IVHE levels above the recommended IVHE levels.

For efficiency levels between the IVHE baseline and the recommended IVHE levels, DOE used its own test data and confidential data provided by certain industry members to identify incremental IVHE levels corresponding to the incremental IVEC levels.

Commercial buildings where ACUHPs are currently installed tend to be

dominated by cooling hours as compared to heating hours (

e.g.,

there are 4,220 hours with a cooling demand in the IVEC metric and only 1,745 hours with a heating demand in the IVHE metric). Further, as discussed, at this time, there are limited IVHE data available to quantify IVHE improvements from design options that impact only heating efficiency. Therefore, the evaluation of amended energy conservation standards for ACUHPs is focused on the analysis of higher cooling efficiency. While many design options employed to achieve higher cooling efficiency levels could inherently result in higher heating efficiency, DOE did not analyze design options that improve only heating efficiency.

DOE considered the efficiency levels in terms of IVHE presented in Table IV.7 for this direct final rule.

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3. Energy Modeling

As done for the January 2016 Direct Final Rule (

see

81 FR 2420, 2458-2459 (Jan. 15, 2016)), DOE developed component wattage profiles and performance correlations for each efficiency level in this rulemaking (discussed further in section IV.E of this document). This served two purposes. First, and as discussed in section IV.E of this document, these component wattage profiles and performance correlations developed for this direct final rule were used in the energy use analysis, along with hourly building cooling loads and generalized building samples, to estimate the energy savings associated with each efficiency level. Second, as discussed in section IV.C.2.a of this document, the developed performance correlations, along with industry data, were used to develop IVEC values that translated the IEER efficiency levels to the IVEC metric.

As previously mentioned in section IV.C.1.b of this document, many of the efficiency levels analyzed for the January 2016 Direct Final Rule were still appropriate to consider for this rulemaking. For this rulemaking, DOE repurposed component wattage profiles and performance correlations from the January 2016 Direct Final Rule analysis for some of those efficiency levels also included in the January 2016 Direct Final Rule. Some IEER efficiency levels for this direct final rule have an IEER value that is close to but not exactly the same as an IEER efficiency level analyzed in the January 2016 Direct Final Rule. In those cases, DOE adjusted the calculations used to develop the component wattage profiles and performance correlations for that efficiency level from the January 2016 Direct Final Rule analysis so that the resulting IEER would match the IEER value of the new target IEER efficiency level.

For new efficiency levels added in the analysis for this direct final rule that are not close to an IEER efficiency level from the January 2016 Direct Final Rule, DOE selected currently-available models with rated IEER close to the IEER efficiency level to use as the basis for new component wattage profiles and performance correlations. DOE used publicly-available product literature for the selected models to collect relevant compressor, evaporator fan, condenser fan, and capacity data. This information was used to create component wattage profiles and performance correlations as a function of temperature for the new efficiency levels.

These component wattage profiles and performance correlations were then used to calculate an IVEC value for each efficiency level. As discussed in section IV.C.2.a of this document, the IVEC values resulting from these component wattage profiles and performance correlations were used to develop the incremental IVEC efficiency levels corresponding to each incremental IEER efficiency level. More details regarding the methodology for creating the component wattage profiles and performance correlations for each efficiency level and equipment class are presented in chapter 5 of the direct final rule TSD.

DOE did not conduct similar energy modeling for ACUHP representative units since ACUHP shipments represent a very small portion of industry shipments compared to ACUACs shipments (10 percent versus 90 percent). Further, as discussed, in section IV.C.2.a of this document, DOE found no IVEC decrement between ACUACs and ACUHPs of the same supplementary heating type, and, therefore, DOE did not analyze lower IVEC efficiency levels for ACUHPs as compared to ACUACs for all efficiency levels, except for the levels recommended in the ACUAC/HP Working Group ECS Term Sheet. In addition, because ACUHPs represent a small portion of shipments, DOE noted, based on equipment teardowns and an extensive review of equipment literature, that manufacturers generally use the same basic design/platform for equivalent ACUAC and ACUHP models. DOE also considered the same design changes for the ACUHP equipment classes that were considered for the ACUAC equipment classes within a given capacity range. For these reasons, DOE focused energy modeling on ACUAC equipment. Although not considered in the LCC and PBP analyses, DOE did analyze ACUHP equipment in the NIA. From this analysis, DOE believes the energy modeling conducted for ACUAC equipment provides a good estimate of ACUHP cooling performance and provides the necessary information to estimate the magnitude of the national energy savings from increases in ACUHP equipment efficiency.

4. Impact of Low-GWP Refrigerants

On October 24, 2023, EPA published in the

Federal Register

regulations to restrict the use of HFC refrigerants in specific sectors or subsectors (“October 2023 EPA Final Rule”). 88 FR 73098. This includes establishing a GWP limit of 700 for refrigerants used in light commercial air conditioning and heat pump systems (which includes ACUACs and ACUHPs) installed January 1, 2025 or later.

Id.

at 88 FR 73206, 73208. On December 26, 2023, EPA published an interim final rule and request for comment in the

Federal Register

amending a provision of the October 2023 EPA Final Rule allowing one additional year, until January 1, 2026, for the installation of new residential and light commercial air conditioning and heat pump systems using components manufactured or imported prior to January 1, 2025. 88 FR 88825. ACUACs and ACUHPs available on the market today use R-410A, which has a GWP that exceeds this 700 GWP limit. This will require manufacturers to shift away from the use of R-410A to low-GWP refrigerants.

In response to the May 2020 ECS RFI, multiple stakeholders commented regarding the transition to low-GWP refrigerants and their impacts on ACUACs and ACUHPs, which was well before EPA took final regulatory action.

On this topic, the CA IOUs recommended that DOE work closely with the California Air Resources Board, ASHRAE Standing Standard Project Committee 15—Safety Standard for Refrigeration Systems, and AHRI's Low-GWP Alternative Refrigeration Evaluation Program to ensure that equipment meeting low-GWP requirements can meet any new efficiency standard. (CA IOUs, EERE-2019-BT-STD-0042-0020 at p. 5)

NEEA recommended that DOE consider the impact of alternate refrigerants on ACUAC efficiency, including the technical feasibility and economic implications of meeting new and amended standard levels with alternate refrigerants. (NEEA, EERE-2019-BT-STD-0042-0024 at p. 9)

AHRI stated that changes to the engineering analysis would be needed if conducting an analysis at present due to the transition to alternative refrigerants. AHRI stated that the combined costs to add sensors, controls, and other components for new refrigerants, including the cost of these refrigerants, will increase the overall cost of the subject equipment by 10-15 percent over minimum designs of 2018. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 7)

Trane stated that systems that use A2L refrigerants will need more controls and sensors for safety reasons, which it predicted will impact the adoption of the new technologies negatively. (Trane, EERE-2019-BT-STD-0042-0016 at pp. 4-5) Trane also recommended that DOE consider in its analysis the effect of new low-GWP refrigerants on cost, design, and size of units. (Trane, EERE-2019-BT-STD-0042-0016 at p. 7) AHRI, Carrier, and Trane also collectively mentioned the Federal authority to regulate refrigerants and the timing of adoption of State building and safety codes to support mildly flammable (A2L) refrigerants. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 5; Carrier, EERE-2019-BT-STD-0042-0013 at p. 7; Trane, EERE-2019-BT-STD-0042-0016 at p. 4)

In the May 2022 TP/ECS RFI, DOE requested data on the impact of low-GWP refrigerants as replacements for R-410A on: (1) the cooling and heating capacities and compressor power of ACUACs and ACUHPs at various temperature conditions, including, but not limited to, the temperatures currently included in the IEER metric; and (2) the size and design of heat exchangers and compressors used in ACUACs and ACUHPs. 87 FR 31743, 31753 (May 25, 2022). DOE also sought feedback and any additional data on the cost of implementing low-GWP refrigerants in ACUACs and ACUHPs beyond the comments received in response to the May 2020 ECS RFI.

Id.

In response to DOE's request for data on the impact of low-GWP refrigerants on capacities, compressor power, and design of heat exchangers and compressors in the May 2022 TP/ECS RFI, Carrier stated that replacement refrigerants require optimization and compressor displacement changes which could also impact performance results, if not properly compensated for. Carrier provided data for a pure cycle analysis where equal compressor isentropic efficiency, heat exchanger efficiency, and system operating conditions were assumed. The analysis presented by Carrier indicates that new low-GWP refrigerant alternatives R-32 and R-454B do not result in a significant impact on measured EER, IEER, and COP at 47 °F and 17 °F. (Carrier, EERE-2022-BT-STD-0015-0010 Attachment 1 at p. 17) Carrier further commented that the required displacement changes with the alternative refrigerants it analyzed, so compressor optimization is required. Carrier also stated the mass flow rates changed with the alternative refrigerants it analyzed, so coil redesign may be required. (

Id.

)

Lennox stated that implementing low-GWP refrigerants will require extensive product redesign from both a performance and safety standard perspective for ACUACs and ACUHPs. (Lennox, EERE-2022-BT-STD-0015-0009 at pp. 5-6)

With respect to the cost of implementing low-GWP refrigerants in ACUACs and ACUHPs, AHRI stated that refrigerant charge generally increases with increasing efficiency. AHRI added that transporting factory-charged systems with A2L refrigerants would be more expensive than shipping existing systems charged with non-flammable refrigerants. AHRI further commented that the Department of Transportation has not approved special permits allowing systems with larger charge amounts to ship in the same manner as those containing non-flammable refrigerants. AHRI indicated that without special permits, the expectation is that systems over the charge size threshold of 12 kilograms would need to be shipped as HAZMAT, which would be more costly. (AHRI, EERE-2022-BT-STD-0015-0008 at p. 6)

Carrier stated that the likely replacement for R-410A will be A2L refrigerants with low-flame spread per ASHRAE Standard 34, “Designation and Safety Classification of Refrigerants.” (Carrier, EERE-2022-BT-STD-0015-0010 Attachment 1 at p. 17) Carrier further stated that per UL 60335-2-40 4th edition, “Household and Similar Electrical Appliances—Safety—Part 2-40: Particular Requirements for Electrical Heat Pumps, Air-Conditioners, and Dehumidifiers,” and ASHRAE 15-2022, “Safety Standard for Refrigeration Systems,” additional changes would be required for A2L mitigation, including addition of a refrigerant sensor, additional labeling, testing, and certification. (

Id.

) Carrier commented that it is currently conducting design work and system optimization for the anticipated 2025 implementation date, but that it has not determined final details on cost impacts. (

Id.

) Carrier also stated that there is variability in refrigerant prices due to supply chain issues and it anticipates that the start of the American Innovation and Manufacturing (“AIM”) Act regulations would increase those prices. (

Id.

)

NEEA recommended that the analysis consider the effects on efficiency of the likely and approved refrigerant options for ACUACs available domestically and internationally. NEEA specifically recommended that DOE address the technical feasibility and economic implications of meeting amended standard levels with equipment that

uses different refrigerants, similar to the analysis DOE conducted for the 2016 beverage vending machine energy conservation standards rulemaking (81 FR 1028 (Jan. 8, 2016)). (NEEA, EERE-2022-BT-STD-0015-0013 at p. 8)

More generally in response to the May 2022 TP/ECS RFI, NYSERDA recommended that in evaluating amended energy conservation standards, DOE should be mindful of the transition to low-GWP refrigerants that will be more common, even if not required, by 2029. (NYSERDA, EERE-2022-BT-STD-0015-0007 at p. 3)

In response, DOE notes that these comments were received prior to the 2023 ECS Negotiations, and in particular, comments received in response to the May 2020 ECS RFI were received three years prior to the 2023 ECS Negotiations. Therefore, manufacturers' understanding of the impacts of low-GWP refrigerants may have changed since the time of the drafting of some of the comments received. DOE conducted multiple rounds of manufacturer interviews to support the analyses for this direct final rule. In the first round of manufacturer interviews, DOE sought feedback on its engineering analysis, and the Department particularly sought input on the potential impacts of low-GWP refrigerants. DOE understands that manufacturers are currently still in the process of developing models that use low-GWP refrigerants and consequently there are currently no market efficiency data available for models using low-GWP refrigerants. However, based on feedback received to this point during the course of the rulemaking (including manufacturer interviews and Carrier's comment providing preliminary testing data), DOE has concluded that implementation of low-GWP refrigerants such as R-32 and R-454B is unlikely to result in a significant impact on measured efficiency of ACUACs and ACUHPs. Therefore, DOE conducted its engineering analysis for this direct final rule using efficiency data for models currently on the market that use R-410A.

With respect to suggestions that DOE consider the impact of cost of equipment using A2L refrigerants, DOE acknowledges that design changes to implement A2L refrigerants could impact the cost of equipment and that models using A2L refrigerants may require additional controls or sensors to detect leaks and additional labeling. However, DOE's research and feedback from manufacturer interviews suggests that based on information available at this time, these cost differences are not likely to have a significant impact on the marginal cost to improve efficiency (

i.e.,

the costs to implement these changes will likely be similar at each efficiency level). DOE concludes that the switch to A2L refrigerants will not make a significant difference to the incremental costs of higher efficiency levels as compared to R-410A. Similarly, to the extent that shipping costs may increase in some cases for equipment shipped with A2L refrigerants, DOE does not expect these shipping costs are likely to have a significant impact on the marginal costs to consumers. Therefore, DOE conducted its cost analysis, including shipping costs, considering models currently on the market that use R-410A.

5. Cost Analysis

a. MPC Estimates

The cost analysis portion of the engineering analysis is conducted using one or a combination of cost approaches. The selection of cost approach depends on a suite of factors, including the availability and reliability of public information, characteristics of the regulated equipment, and the availability and timeliness of purchasing the equipment on the market. The cost approaches are summarized as follows:

•

Physical teardowns:

Under this approach, DOE physically dismantles commercially-available equipment, component-by-component, to develop a detailed bill of materials for the equipment.

•

Catalog teardowns:

In lieu of physically deconstructing equipment, DOE identifies each component using parts diagrams (available from manufacturer websites or appliance repair websites, for example) to develop the bill of materials for the equipment.

•

Price surveys:

If neither a physical nor catalog teardown is feasible (

e.g.,

for tightly integrated products such as fluorescent lamps, which are infeasible to disassemble and for which parts diagrams are unavailable), cost-prohibitive, or otherwise impractical (

e.g.,

large commercial boilers), DOE conducts price surveys using publicly-available pricing data published on major online retailer websites and/or by soliciting prices from distributors and other commercial channels.

In the May 2020 ECS RFI, DOE sought input on the increase in manufacturer production cost (“MPC”) associated with incorporating particular design options and/or with reaching efficiency levels above the baseline. 85 FR 27941, 27949 (May 12. 2020). Specifically, DOE was interested in whether and how the costs estimated in the January 2016 Direct Final Rule have changed since the time of that analysis.

Id.

DOE also requested information on the investments necessary to incorporate specific design options, including, but not limited to, costs related to new or modified tooling (if any), materials, engineering and development efforts to implement each design option, and manufacturing/production impacts.

Id.

Regarding feedback on MPC associated with each design option and how costs estimated in the January 2016 Direct Final Rule have changed, AHRI commented that the work done to quantify MPCs was generally accurate at the time of the analysis. Regarding the list of design options to improve efficiency, AHRI asserted that ACUAC progression to larger heat exchangers was not properly characterized in the January 2016 Direct Final Rule and that increases to outdoor and indoor fan efficiency were missing. (AHRI, EERE-2019-BT-STD-0042-0014 at p. 7)

DOE notes that AHRI's comment was received three years ago and prior to the 2023 ECS Negotiations. As discussed, as part of the analyses supporting the 2023 ECS Negotiations, DOE contractors conducted engineering interviews with manufacturers (all of which are AHRI members) and analyzed the market after the January 1, 2023 compliance date. During these discussions, DOE contractors received feedback on design options used in higher efficiency equipment (including heat exchangers, indoor fans, and outdoor fans), and the MPCs developed for this direct final rule analysis reflect the feedback received in those confidential interviews. Additionally, the cost-efficiency curves were developed based on ACUAC and ACUHP models available on the market at the time of the 2023 ECS Negotiations. To the extent that available models included larger heat exchangers and increases to outdoor and indoor fan efficiency, the improvement in efficiency and corresponding cost for these design options are reflected in the cost-efficiency curves presented in this direct final rule. Further, the cost-efficiency curves were presented during multiple meetings during the 2023 ECS Negotiations

32

and ACUAC/HP Working Group members had ample opportunity to provide feedback.

32

See

www.regulations.gov/document/EERE-2022-BT-STD-0015-0077

and

www.regulations.gov/document/EERE-2022-BT-STD-0015-0080

for presentations during the 2023 ECS Negotiations with cost efficiency curves.

In the present case, DOE conducted the cost analysis using a combination of physical teardowns and catalog

teardowns of models to assess how manufacturing costs change with increased equipment efficiency. The resulting bill of materials (“BOM”) provides the basis for the MPC estimates. For each equipment class, DOE initially estimated the MPCs for models using physical and catalog teardowns for each manufacturer that included sufficient information in their equipment literature to conduct the cost estimation analysis. As discussed in section IV.C.1 of this document, DOE specifically focused its analysis on 7.5-ton, 15-ton, and 30-ton ACUAC models with electric resistance heating or no heating.

To collect additional information regarding design options and costs associated with equipment at different efficiency levels, DOE provided design details and cost estimates, broken out by production factors (materials, labor, depreciation, and overhead) and also by major subassemblies (

e.g.,

indoor/outdoor heat exchangers and fan assemblies, controls, sealed system) and components (

e.g.,

compressors, fan motors), for each model analyzed in its physical and catalog teardowns to the manufacturers of the models. DOE refined its analysis based on all data and feedback provided by manufacturers in confidential manufacturer interviews.

As previously discussed, DOE did not consider any design changes specific to improving heating efficiency, and the cost-efficiency analysis was focused on cooling mode operation. Further, as discussed, because market efficiency data in terms of the new IVEC metric are not available beyond the limited dataset provided to DOE contractors during the Negotiations, the cost-efficiency analysis was conducted based on IEER, and then IVEC values were developed to translate the IEER efficiency levels to IVEC.

DOE analyzed costs (using physical teardowns and catalog teardowns) across the full range of manufacturers and equipment offerings for which DOE identified sufficient data to conduct the manufacturing cost estimation analysis. Therefore, DOE's cost estimates reflect the various design pathways that each manufacturer uses to increase efficiency in their current model offerings. The following paragraphs provide additional detail on DOE's methodology for developing MPC estimates, and further detail is included in chapter 5 of the direct final rule TSD. Generally, the methodology used for this direct final rule is consistent with the methodology used in the January 2016 Direct Final Rule analysis. 81 FR 2420, 2464 (Jan. 15, 2016).

For small and large equipment classes (represented by 7.5-ton and 15-ton capacities, respectively), DOE developed cost-efficiency curves (

i.e.,

relationship between rated IEER and MPC estimate) for each manufacturer individually, and then aggregated the manufacturer-specific cost curves into an industry-average cost-efficiency curve. For efficiency levels for which there were no analyzed models from a given manufacturer with rated IEER values that exactly match the efficiency level, DOE's primary method to determine the MPCs for those efficiency levels for that manufacturer was to interpolate or extrapolate results. For example, to determine the MPC at 7.5-ton Efficiency Level 1 (15.4 IEER) for one manufacturer, DOE interpolated between the results for models rated at 14.8 IEER and 15.6 IEER. For cases in which a manufacturer does not offer a model near a given efficiency level at the representative capacity but offers models at that efficiency level at a similar capacity, DOE estimated the costs of similar capacity models at the target efficiency level and then scaled those costs up or down to reflect the capacity difference and estimate what the cost would be for that model to achieve that efficiency level at the repres

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