A Look at Climate Legislation

October 12, 2009
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In his opening remarks, Robert Wilkins (on right), president of Danfoss North America, summed up the challenges facing the HVACR industry: “We know change is coming, and that it is required as our nation faces strategic issues related to energy and climate change. The challenge is that change should be well informed, and that we should be well informed about where it will take us, so we can adapt and achieve our business goals.”

Climate change legislation, the role of HFC refrigerants, and the new - and rapidly changing - energy landscape.

These were some of the topics as more than 60 HVACR industry professionals convened in Washington, D.C, for the 11th Danfoss EnVisioneering symposium.

Keynote speaker Kateri Callahan, president of Alliance to Save Energy, said, “Energy efficiency offers enormous potential for savings in all sectors. By capturing the potential available from existing technologies with an internal rate of return of 10 percent or more, we could cut global energy demand growth by one-half or more over the next 15 years. In other words, global energy demand in 2020 would decline by an amount equal to almost 150 percent of the entire U.S. energy consumption today.”

Callahan further remarked, “The federal economic stimulus package has dedicated $65 billion in spending related to energy efficiency.”

In his opening remarks, Robert Wilkins, president of Danfoss North America, summed up the challenges facing the industry.

“The issues today are important and complex,” he said. “Energy prices have moderated a bit, but the trend continues upward. We have seen the effects of supply interruptions with traditional energy sources, especially those in sensitive or critical parts of the world, and along the U.S. Gulf Coast.

“We know change is coming, and that it is required as our nation faces strategic issues related to energy and climate change. The challenge is that change should be well informed, and that we should be well informed about where it will take us, so we can adapt and achieve our business goals.”



CLIMATE CHANGE AND HFCS: WHAT'S ON THE HORIZON

Several symposium speakers said Congress would finalize a new climate change law before December. According to comments at the meeting, on the Senate side there is strong support for separating control and reduction of HFCs from waste by-product gases in order to control the costs of such refrigerants and allow adequate time to develop alternatives. The Senate energy-climate bill is expected to include a tax title to offset the high cost of energy caused by cap and trade.

On the international front, industry experts believe there is a strong possibility that the Montreal Protocol may exercise more regulatory control over HFCs just as it has long done with CFCs and HCFCs. Because the Protocol is focused on production-consumption, HFCs could still be measured in the “big basket” of global warming gases. Thus countries could get credit for HFC reductions, but HFCs would be administered by the protocol.

It was noted during the symposium that climate change legislation is important to the HVACR industry because it will set guidelines for reducing greenhouse gas emissions and regulating the production and use of refrigerants, including HFCs.

But some experts aren’t so sure that Congress can finalize a climate change bill before an international climate change conference scheduled for December in Copenhagen, Denmark. Kevin Fay, president of Alcalde & Fay, Arlington, Va., and executive director of the International Climate Change Partnership, noted that 45 senators are believed to be supportive of climate legislation similar to the Waxman-Markey bill. Fifteen more must endorse it to gain passage in the Senate.

He pointed out that the Waxman-Markey bill provides a model for international consideration to reduce HFC emissions. For example, it mandates a 33 percent reduction in HFCs from 2005 levels by 2020. If the Senate adopts Waxman-Markey in its entirety, it is projected that the HFC portion of the bill would achieve 16-25 billion tons of CO2 reductions between 2012 and 2050 in the United States alone. If this approach were applied globally, Fay believes the HFC portion would achieve 3-13 billion tons of CO2 reductions per year.



SENATE COMMITTEE EXPECTS INVESTMENT IN CLEAN ENERGY

The Senate Energy & Natural Resources Committee’s American Clean Energy Leaders Act (ACELA), now under discussion, would establish a new Clean Energy Deployment Administration. An entity within the Department of Energy, this administration would be responsible for a transmission grid upgrade, an energy efficiency title (both residential and commercial), and a demonstration project for carbon capture and storage technology. In the process, the administration would double the investment in clean-energy research and development.



INDUSTRY PERSPECTIVE ON ENERGY EFFICIENCY

Stephen Yurek, president of the Air-Conditioning, Heating, and Refrigeration Institute, commented that the Waxman-Markey bill, while well intentioned, contained provisions of concern to the HVACR industry, particularly with regard to building codes.

Yurek said the act “would effectively allow any jurisdiction in the nation to enact its own energy policy through the use of prescriptive building codes,” a situation he said would impact the ability of manufacturers to provide products to residential and commercial customers in the most timely, efficient, and economical way.

A better way, he said, would be for Congress to provide greater incentives for consumers to upgrade their older, less efficient equipment. “If a reduction in energy intensity is the goal - as Congress has said many times it is - the focus has to be on upgrading the nation’s installed base of heating and cooling equipment,” Yurek said. He advocated for a combination of federal tax incentives and state and utility rebates for the purchase of energy-efficient products, perhaps using the Energy Star® designation as a guideline for eligibility.

For more information, visit www.envisioneering.danfoss.com.

Publication date: 10/12/2009

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