Manufacturers Weather Capitol Changes

May 11, 2009
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Llewellyn King, notable journalist and publisher, encouraged HVACR manufacturers to tell their side of the story early and often, when he addressed the Air Conditioning, Heating, and Refrigeration Institute’s (AHRI’s) Public Policy Symposium.

“Welcome to Washington; we’ve changed the weather just for you.” Those were the words of notable journalist and publisher Llewellyn King as he addressed the group of manufacturer members attending the Air Conditioning, Heating, and Refrigeration Institute’s (AHRI’s) Public Policy Symposium. King focused on more than just weather changes; however, when he kicked off the first session of this Washington briefing attempting to bring members up to speed on the changes in political climate and its effect on the HVACR industry. President Obama was on the top of King’s list of profound changes and appointments to his staff and other agencies followed right behind.

“The Obama campaign has promised a lot and he is setting out to accomplish his promises,” he pointed out. “As these agencies get fully staffed, they will be staffed with wild-eyed men and women.”

With this, King cautioned HVAC manufacturers not to abandon their lobbying efforts.

“This administration, so far, bows to pressure,” he said. “Lobbying at its best works because you help congressmen and women understand things they don’t know. You can’t afford not to have a lobbying effort - you will get left out. It is important that your side of the story be told early and often.”



STIMULUS PACKAGE FUNDS

When it comes to the manufacturer’s side of the story there were three major topics tackled during the meetings: the economic stimulus package, upcoming legislation, and the refrigerant changeover.

Taking a look at the American Recovery and Reinvestment Act of 2009, Kevin Fay, principal at Alcalde & Fay LLP, said the bailout spending is designed to be “targeted, temporary, and transparent.”

“Rapidly spending huge sums of money begs the question, ‘How smart can we do it?’ ”

He also pointed out that the modifications for efficiency standards of equipment that qualifies probably puts the tax credit out of reach for the bulk of those who would like to take advantage of it.

“The old $300 tax credit stimulated approximately $8 billion of spending, but only approximately $4 million was spent on equipment. The bulk was spent on insulation, windows, and metal roofs,” said Fay. “Getting tax credits into consumers’ hands immediately - not next year - would help, but I think the overall stimulus effect is going to be relatively small.”

Molly Ramsdell, senior committee director of the National Conference of State Legislatures (NCSL) and Tamra Spielvogel, committee director for NCSL’s State-Federal Relations program, broke down the disbursement of the economic stimulus package, explaining that the package consists of 100 different streams of money and funds funneled into a few categories. These categories center on funding for existing programs, “shovel ready” projects, tax credits for individuals, and tax breaks for businesses - all under an umbrella of accountability and transparency.

“Most of the funds will flow through existing channels and each department has been given a quick timeline to get the money disbursed,” said Ramsdell.

“Requirements and eligibilities are coming from each governmental department,” said Spielvogel, answering one of the member’s questions about fund availability and qualifications. “Basically, we’re building the plane as we are flying it.”



Melissa Bean (D-IL) attended the Capitol Hill meetings where members were provided further insight to the 111th Congress underway and what its actions could mean to the HVACR industry.

CONGRESSIONAL CLIMATE CHANGES

With new energy bills being drafted in Congress, AHRI updated its climate change strategy. According to David Calabrese, AHRI vice president of public policy, the senators of the 110th Congress knew that an energy bill would not likely pass in their session, so they began concentrating on producing a bill for the 111th Congress, which convened in January. When it came to HFCs, the choice was to either regulate emissions or production. Calabrese noted that because HFCs are used in so many things, they would have proven difficult to track accurately and consistently. Thus, Congress chose to decrease production.

“There was limited interest by the Bush administration in moving forward on the Lieberman-Warner bill among others,” said Calabrese. “The Obama administration, however, has shown a great commitment to enact law in these matters.”

“This is the first White House ready to spend political capital on energy efficiency,” echoed Fay. “What you are going to see out of this Congress and administration is a California-type leadership and attitude on energy and policy. Energy got a lot of lip service in the Bush and Clinton administrations, but it is in the top three of this administration, wrapped in with climate issues.”

As the new legislation is formulated, AHRI cautioned that the refrigerant transition needs to be done over time. The current energy bill drafts are aggressive and potentially harmful to the HVACR industry. These will go through many changes before final votes in Congress are taken, but AHRI is monitoring four main issues and driving a specific approach to each.

The first issue is pushing the term phasedown rather than phaseout when discussing replacements for HFCs.

“Congress needs to recognize the need for substitutes,” said Calabrese. “HFOs [hydrofluoro olefins] are being considered, but they are still essentially an HFC, but with a low GWP [global warming potential].”

The second issue is regulation. AHRI suggests that the existing regulatory-statutory structure should be used. Calabrese also said that HFCs should be treated separately and all regulations should be harmonized at state, federal, and international levels.

AHRI’s third concern is minimized market disruption.

“There should be an appropriate initial cap that doesn’t disrupt supply,” pointed out Calabrese. “There should also be an appropriate rate and decline baseline and appropriate allocations.”

The final issue being monitored was incentives. The association is looking for the new legislation being drafted to provide incentives for energy-efficient products, the development and use of low GWP refrigerants, and for proper recycling and disposal.

There is the possibility of a bill in 2012, but according to Calabrese, “that would be a tough starting date.”

Don Davis, AHRI vice president of government affairs, noted that despite differences in the interpretation of the term “appropriate” by Congress and by AHRI, the association understands and backs the need for energy efficiency.

“We’re on the same page with them for energy efficiency and such,” he said, “but there isn’t the equipment to support it yet.”
 


CAPITOL DISCUSSIONS

The afternoon meetings adjourned to the rooftop terrace of the Hay-Adams Hotel, where former Sen. Chuck Hagel addressed symposium attendees, encouraging them to continue to improve their relationships with members of Congress.

The following day, attendees spent the morning on Capitol Hill with five U.S. representatives - Russ Carnahan (D-MO), Ron Kind (D-WI), Marsha Blackburn (R-TN), Melissa Bean (D-IL), and Robert Latta (R-OH) - who provided further insight to the 111th Congress underway and what its actions could mean to the HVACR industry. Members left the breakfast meeting to visit their senators and representatives in person; each prepared to tell their HVACR story.

Publication Date: 05/11/2009

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