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Notice

Energy Conservation Program for Consumer Products and Commercial and Industrial Equipment: Effect of Revised Estimates of the Social Cost of Carbon

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AGENCY:

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

ACTION:

Notice of Data Availability (NODA).

SUMMARY:

The U.S. Department of Energy (DOE) has, for several years, used monetary values for the Social Cost of Carbon (SCC) to estimate the value to society of reducing carbon emissions that could result from rulemakings establishing energy conservation standards for residential appliances and industrial equipment. In recent standards rulemakings for microwave oven standby and off modes, metal halide lighting fixtures, commercial refrigeration equipment, walk-in coolers and freezers, and furnace fans, DOE used SCC values developed by an interagency group and released to the public in May 2013 by the Office of Management and Budget (OMB). OMB has issued updated SCC values that reflect minor technical corrections to the estimates that were released in May 2013. The purpose of this notice is to show the impact of these updated values on the national economic benefits projected to result from the proposed standards for commercial refrigeration equipment, walk-in coolers and freezers, metal halide lighting fixtures, and furnace fans.

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FOR FURTHER INFORMATION CONTACT:

Requests for additional information may be sent to Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-1692. Email: John.Cymbalsky@ee.doe.gov.

Ms. Ami Grace-Tardy, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-5709. Email: Ami.Grace-Tardy@hq.doe.gov.

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SUPPLEMENTARY INFORMATION:

I. Introduction

For several years, DOE has used the monetary values provided by the SCC to estimate the value to society of reduced carbon emissions from rulemakings establishing energy conservation standards for residential appliances and industrial equipment. DOE has recently issued standards rulemakings for microwave oven standby and off modes, commercial refrigeration equipment, walk-in coolers and freezers, metal halide lighting fixtures, and furnace fans. DOE issued a final rule for microwave oven standby and off modes standards (78 FR 36316 (June 17, 2013)), and it issued notices of proposed rulemaking (NOPR) for metal halide lighting fixtures (78 FR 51463 (August 20, 2013)), commercial refrigeration equipment (78 FR 55889 (September 11, 2013)), walk-in coolers and freezers (78 FR 55781 (September 11, 2013)), and residential furnace fans (78 FR 64067 (October 25, 2013)). The analyses prepared for these rulemakings used values for the SCC that were developed by an interagency group and issued by OMB in May 2013.[1] The May 2013 estimates reflect values that are similar to those used by other governments, international institutions, and major corporations. Table 1 shows the May 2013 sets of SCC estimates in five year increments from 2010 to 2050. The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from the three integrated assessment models that were evaluated, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution.

On November 1, 2013, OMB issued updated values for the May 2013 SCC.[2] OMB announced a 60-day public comment period on the updated values and the underlying technical support document on November 26, 2013. 78 FR 70586. These updated values reflect minor technical corrections to the May 2013 SCC estimates. The technical corrections to the May 2013 SCC values represent the best available science and data on the economic impacts on society of climate change, and, as such, will be used by DOE in its rulemakings. Table 2 shows the updated sets of SCC estimates in five year increments from 2010 to 2050. The changes from the May 2013 values to the November 2013 values are small.

Table 1—Annual SCC Values From May 2013 Interagency Report, 2010-2050

[2007 dollars per metric ton CO2]

YearDiscount rate (percent)
532.53
AverageAverageAverage95th Percentile
201011335290
2015123858109
2020124365129
2025144870144
2030165276159
2035195781176
2040216287192
2045246692206
2050277198221
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Table 2—Annual SCC Values from November 2013 Interagency Report Update, 2010-2050

[2007 dollars per metric ton CO2]

YearDiscount rate (percent)
532.53
AverageAverageAverage95th Percentile
201011325189
2015113757109
2020124364128
2025144769143
2030165275159
2035195680175
2040216186191
2045246692206
2050267197220

II. Discussion

As indicated above, the updated SCC values are only slightly different from the May 2013 SCC values. As such, the impact of using these values on DOE's estimates of the economic value of reductions in CO2 emissions associated with the energy conservation standards for the products mentioned in section I is very small, and in no way affects the policy decisions made by DOE in the relevant rulemakings. Nonetheless, DOE wishes to inform interested parties of the exact effect of the updated values on the national economic benefits projected to result from the proposed standards for commercial refrigeration equipment, walk-in coolers and freezers, metal halide lighting fixtures, and residential furnace fans. The benefits of reductions in CO2 emissions associated with energy conservation standards using the May 2013 SCC values and the updated SCC values, along with the total net benefits in each case, are shown in: Table 3 for the proposed metal halide lighting fixtures standards (in real 2012 dollars); Table 4 for the proposed commercial refrigeration equipment standards (in real 2012 dollars); Table 5 for the proposed walk-in coolers and freezers standards (in real 2012 dollars); and Table 6 for the proposed residential furnace fans standards (in real 2012 dollars). Given the small change in the benefits, DOE has, in this notice, only shown the summary National impacts of the changes and not the results at the more detailed trial standard levels (TSLs). However, DOE notes that the changes at the Trial Standard Level (TSL) level are equally small and do not in any way affect DOE's evaluation of those TSLs.[3]

Table 3—Summary of National Economic Benefits and Costs of Proposed Metal Halide Lamp Fixture Energy Conservation Standards 4

CategoryPresent value (million 2012$)Discount rate (percent)
Benefits
Operating Cost Savings1,8487
3,7483
Using Revised November 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($11.8/t case)*3325
CO2 Reduction Monetized Value ($39.7/t case)*1,5143
CO2 Reduction Monetized Value ($61.2/t case)*2,4062.5
CO2 Reduction Monetized Value ($117/t case)*4,6663
NOX Reduction Monetized Value (at $2,639/ton)*457
913
Total Benefits 3,4067
5,3523
Using Original May 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($12.9/t case)*3335
CO2 Reduction Monetized Value ($40.8/t case)*1,5323
CO2 Reduction Monetized Value ($62.2/t case)*2,4362.5
CO2 Reduction Monetized Value ($117/t case)*4,6893
NOX Reduction Monetized Value (at $2,639/ton)*457
913
Total Benefits 3,4247
5,3713
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Costs
Incremental Installed Costs8977
1,2943
Net Benefits (Using Revised November 2013 SCC Values) Costs
Including CO2 and NOX Reduction Monetized Value2,5107
4,0583
Net Benefits (Using Original May 2013 SCC Values) Costs
Including CO2 and NOX Reduction Monetized Value2,5287
4,0763
* The CO2 values represent global values of the social cost of CO2 emissions (in 2012$) in 2015 under several scenarios. The first three values are averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth value represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX is the average of the low and high values used in DOE's analysis.
 Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $39.7/t or $40.8/t in 2015 (derived from the 3% discount rate value for SCC).

Table 4—Summary of National Economic Benefits and Costs of Proposed Commercial Refrigeration Equipment Energy Conservation Standards 5

CategoryPresent value (million 2012$)Discount rate (percent)
Benefits
Operating Cost Savings2,6957
6,0343
Using Revised November 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($11.8/t case) *3065
CO2 Reduction Monetized Value ($39.7/t case) *1,4813
CO2 Reduction Monetized Value ($61.2/t case) *2,4182.5
CO2 Reduction Monetized Value ($117/t case) *4,5273
NOX Reduction Monetized Value (at $2,639/ton) *507
1083
Total Benefits4,2267
7,6233
Using Original May 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($12.9/t case) *3085
CO2 Reduction Monetized Value ($40.8/t case) *1,5043
CO2 Reduction Monetized Value ($62.2/t case) *2,4522.5
CO2 Reduction Monetized Value ($117/t case) *4,5523
NOX Reduction Monetized Value (at $2,639/ton) *507
1083
Total Benefits4,2497
7,6463
Costs
Incremental Installed Costs1,0897
1,9673
Net Benefits (Using Revised November 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value3,1377
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5,6563
Net Benefits (Using Original May 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value3,1607
5,6793
* The CO2 values represent global values of the social cost of CO2 emissions (in 2012$) in 2015 under several scenarios. The first three values are averages of SCC distributions calculated using 5, 3, and 2.5 discount rates, respectively. The fourth value represents the 95th percentile of the SCC distribution calculated using a 3 discount rate. The value for NOX is the average of the low and high values used in DOE's analysis.
 Total Benefits for both the 3 and 7 cases are derived using the series corresponding to SCC value of $39.7/t or $40.8/t in 2015 (derived from the 3 discount rate value for SCC).

Table 5—Summary of National Economic Benefits and Costs of Proposed Walk-In Coolers and Freezers Energy Conservation Standards 6

CategoryPresent value (billion 2012$)Discount rate (percent)
Benefits
Operating Cost Savings12.417
31.563
Using Revised November 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($11.8/t case) *1.875
CO2 Reduction Monetized Value ($39.7/t case) *8.873
CO2 Reduction Monetized Value ($61.2/t case) *14.192.5
CO2 Reduction Monetized Value ($117/t case) *27.393
NOX Reduction Monetized Value (at $2,639/ton) *0.247
0.553
Total Benefits21.527
40.983
Using Original May 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($12.9/t case) *1.885
CO2 Reduction Monetized Value ($40.8/t case) *8.963
CO2 Reduction Monetized Value ($62.2/t case) *14.362.5
CO2 Reduction Monetized Value ($117/t case) *27.523
NOX Reduction Monetized Value (at $2,639/ton) *0.247
0.553
Total Benefits21.617
41.073
Costs
Incremental Installed Costs3.777
7.263
Net Benefits (Using Revised November 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value17.767
33.723
Net Benefits (Using Original May 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value17.847
33.803
* The CO2 values represent global values of the social cost of CO2 emissions (in 2012$) in 2015 under several scenarios. The first three values are averages of SCC distributions calculated using 5, 3, and 2.5 discount rates, respectively. The fourth value represents the 95th percentile of the SCC distribution calculated using a 3 discount rate. The value for NOX is the average of the low and high values used in DOE's analysis.
 Total Benefits for both the 3 and 7 cases are derived using the series corresponding to SCC value of $39.7/t or $40.8/t in 2015 (derived from the 3 discount rate value for SCC).
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Table 6—Summary of National Economic Benefits and Costs of Proposed Furnace Fan Energy Conservation Standards 7

CategoryPresent value (billion 2012$)Discount rate (percent)
Benefits
Operating Cost Savings11.587
32.003
Using Revised November 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($11.8/t case) *2.225
CO2 Reduction Monetized Value ($39.7/t case) *11.443
CO2 Reduction Monetized Value ($61.2/t case) *18.602.5
CO2 Reduction Monetized Value ($117/t case) *35.423
NOX Reduction Monetized Value (at $2,639/ton) *0.117
0.313
Total Benefits23.137
43.763
Using Original May 2013 Social Cost of Carbon Values
CO2 Reduction Monetized Value ($12.9/t case) *2.255
CO2 Reduction Monetized Value ($40.8/t case) *11.523
CO2 Reduction Monetized Value ($62.2/t case) *18.812.5
CO2 Reduction Monetized Value ($117/t case) *35.563
NOX Reduction Monetized Value (at $2,639/ton) *0.117
0.313
Total Benefits23.217
43.843
Costs
Incremental Installed Costs3.077
5.853
Net Benefits (Using Revised November 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value20.067
37.913
Net Benefits (Using Original May 2013 SCC Values)
Including CO2 and NOX Reduction Monetized Value20.147
38.993
* The CO2 values represent global values of the social cost of CO2 emissions (in 2012$) in 2015 under several scenarios. The first three values are averages of SCC distributions calculated using 5, 3, and 2.5 discount rates, respectively. The fourth value represents the 95th percentile of the SCC distribution calculated using a 3 discount rate. The value for NOX is the mid-range value used in DOE's analysis.
 Total Benefits for both the 3 and 7 cases are derived using the series corresponding to SCC value of $39.7/t or $40.8/t in 2015 (derived from the 3 discount rate value for SCC).

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Issued in Washington, DC, on December 24, 2013.

Kathleen B. Hogan,

Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy.

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Footnotes

1.  Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013.

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3.  In DOE rulemakings, “TSLs” represent different efficiency levels that DOE analyzes when deciding which efficiency level to propose or adopt based on statutory criteria.

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4.  See Table I.3 at 78 FR 51463, 51468 (August 20, 2013).

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5.  See Table I.3 at 78 FR 55889, 55893 (September 11, 2013).

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6.  See Table I-3 at 78 FR 55781, 55786-87 (September 11, 2013).

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7.  See Table 1.3 at 78 FR 64067, 64071 (October 25, 2013).

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[FR Doc. 2013-31270 Filed 12-27-13; 8:45 am]

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