As the vice president of government affairs at Rheem Manufacturing, I had the privilege of addressing industry leaders at the AHR Expo earlier this year, where we delved into the impact of decarbonization and electrification on the HVAC sector.

Inspired by that discussion, the following will shed light on the shifts reshaping our industry and why it’s crucial to embrace sustainability as not just a trend but as a cornerstone in our industry.

HVAC’s Important Role to Play in Reducing Emissions: Heating and cooling buildings, homes and offices account for a significant chunk of all U.S. energy consumption, around 35%. With an increased focus on decarbonization, the HVAC industry has emerged as a key player in the drive toward emissions reduction. At the forefront of this movement are heat pumps, poised to revolutionize the way we heat and cool spaces while drastically cutting down on energy-related emissions.

The momentum behind heat pumps received a significant boost in 2023, with nine U.S. states joining forces to accelerate building decarbonization efforts. Through a memorandum of understanding, these states committed to a groundbreaking multistate action plan aimed at achieving a 2030 goal, ensuring that 65% of residential-scale HVAC and water heater equipment shipments are electric heat pumps. This ambitious target emphasizes a commitment to driving the widespread adoption of eco-friendly heating and cooling solutions. 

Building on this multistate initiative is California, renowned for its trailblazing approach to environmental stewardship. California has set forth a goal of installing six million new heat pumps in residential and commercial applications by the decade’s end.

Decarbonization and Electrification: Decarbonization and electrification represent the trajectory of our industry. Consumers, especially younger homeowners, are prioritizing eco-friendly HVAC solutions. The industry is seeing this shift reflected in sales, with heat pumps surpassing traditional furnaces for the first time. Americans bought more than 4.3 million heat pump units in 2022 compared to roughly 3.9 million natural gas furnaces, according to the New York State Energy Research and Development Authority.

Yet, navigating this landscape of rapid change presents challenges. ENERGY STAR, a beacon of efficiency standards and a program run by the U.S. Environmental Protection Agency and U.S. Department of Energy has embarked on a transformative journey, contemplating the exclusion of gas-powered HVAC systems from its roster. ENERGY STAR has removed anything using gas from its Most Efficient list, and now ENERGY STAR has proposed removing AC units from the program altogether. If this goes forward, the only HVAC equipment that would qualify in 2025 would be heat pumps and other ductless products.

Concurrently, states like New York, California, and Colorado are implementing stringent regulations aimed at phasing out carbon-intensive heating technologies. New York, for one, has an upcoming gas ban that is set to go into effect in certain new buildings beginning in 2026 – it would apply to buildings seven stories or less in 2026 and all others in 2029. Also, Colorado set ultra-low NOx emissions standards for gas furnaces and water heaters sold after January 1, 2026.  

Strategies for Success in Decarbonization and Electrification: To thrive in this new era, the industry must be equipped with a diverse array of products and informative training programs. Success hinges on empowering contractors, distributors and all industry partners with the knowledge and expertise necessary to lead and remain confident during this evolving environment. Quality installation training and broadly educating customers about the benefits of highly efficient equipment like heat pumps are crucial. 

Homeowners already see the value of heat pumps. Heat pump water heaters are a rapidly growing market segment. A study recently found that 73% of the next homeowner generation, Gen Z, is willing to pay more for sustainable products. Further, 89% of commercial building occupiers note sustainability is increasingly important to their business strategies, stated property management company, JLL. 

Home and business owners also see the importance of sustainability through many lenses. Incentives and rebates serve as powerful motivators, encouraging individuals and businesses to opt for greener alternatives. Whether it’s a cash rebate or tax credit, these incentives help offset the initial cost of eco-friendly HVAC systems, making them more accessible to a wider audience. Beyond the immediate financial savings, sustainable products like heat pumps offer a slew of long-term benefits. By reducing energy consumption and carbon emissions, eco-friendly water and HVAC solutions contribute to a healthier environment.

Overall, decarbonization isn’t just a buzzword, it’s our future. The industry has a chance to lead the way in making HVAC more sustainable. By embracing innovation and working together, the HVAC industry can create a future where comfort and sustainability go hand-in-hand.