• Climate Change Strikes the HVACR Industry Again

    July 2, 2013
    President Obama's Climate Change plan, announced in late June, will restrict coal-based utilities by forcing them to reduce their greenhouse gas emissions. Some say that could cause significant increases in utility costs, gasoline prices, and increased jobless rates. Others say just the opposite. What's going on?

    On Tuesday, June 25, 2013 President Obama announced his administration’s plans to fight climate change. He dubs this a "Make or break" issue. His plan will change how Americans produce and consume electricity.

    The Obama plan is the first Federal effort to reduce greenhouse gas emissions from the power sector and it doesn’t require congressional approval or oversight. He will use his executive powers to bypass a deadlocked Congress and place limits on new and existing power plants that emit carbon dioxide, the heat-trapping gas that’s largely blamed for global warming.

    The biggest targets: coal-fired power plants, which account for nearly a third of the greenhouse gas emissions in this country.

    The goal: Obama wants to reduce greenhouse gas emissions 17% from 2005 levels and wants to hit this goal by 2020.

    Shortly after the announcement of the President’s plan, an outcry on both sides of the aisle resounded. Republicans claim such a plan would result in job loss. According to an editorial in the Wall Street Journal (Obama Details Plan for Climate Change, WSJ, June 26, 2013, Pg. 1), Senate Minority Leader Mitch McConnell (R., KY) called it “tantamount to declaring a war on jobs. It’s tantamount to kicking the ladder out from beneath the feet of many Americans struggling in today’s economy.”

    Other Republicans decried the White House move saying it would cause gasoline prices to skyrocket and that it was nothing more than a newfangled cap-and-trade tax program.

    Though most Democrats back the President’s plan, Senator Joe Manchin (D., WV) is quoted as saying that President Obama “is totally out of touch with the economy of this country and what makes this economy work.” Others see a number of other hurdles to the plan.

    To be fair, there are some potential upsides to this as well. If coal-fired power plants are taken offline or even partially offline, this could stimulate growth in the renewable energy industry in the long term. In the short term, the country would have to rely more on natural gas and nuclear energy. The Obama plan also calls for $8 billion in Federal loan guarantees for cleaner fossil fuel projects which could lead to more jobs.

    So how does this impact our industry? Well climate change legislation in the U.S. has always focused on refrigerants that are made of hydroflourocarbons (HFCs), which are said to have very high global warming potential.

    There certainly is potential for increased costs to consumers for comfort-conditioning homes and businesses, grocery stores and medical facilities, if coal-fired utilities reduce the power they feed to the national grid. Though there’s potential for renewable energy, will these sources be able to make up for the shortfall left after coal-fired utilities go offline?

    If consumer utility costs go up, does that make it harder for you to sell already-expensive high-efficiency comfort systems, especially if consumers are making less money? Perhaps that can be countered by offering better financing, but that depends on the state of the banking industry, right?

    Steve Yurick, Air-conditioning, Heating, Refrigeration Institute (AHRI) president and CEO touted, in a statement released shortly after the Obama announcement, how AHRI and its member companies have led the global effort in battling climate change through emission reductions from HFC-based refrigerants and finding alternatives to those refrigerants.

    This is very true and as an industry, we should be proud of these efforts. But AHRI didn’t act alone. Contractors and distributors were also instrumental in bringing these changes to the marketplace through their consmer sales and education efforts.

    Now with this new plan, contractors, distributors, and manufacturers alike may face increased costs for doing business. Consumers most likely will pay MORE for their electricity and gas and, ultimately, their comfort, food, and medicines — all of which rely on the refrigeration process. Some say the negatives and positives balance each other out.

    What do you think? Please drop me a note at [email protected] or sign in below to discuss your thoughts right here on the website.