People tend to use words like “complex” and “intense” to describe government regulations that impact the HVAC industry. These days, “rapidly changing” could also be applied, as the industry quickly shifts its plans to accommodate the potential change to the DOE’s regional furnace standard.

According to manufacturers who closely follow such government actions, there is a great need to be vigilant to stay abreast of these issues — and they predict only more problems arising from future regulations.

Staying Flexible

Now that it appears as if regional standards may be stripped of a mandate that would have required 90 percent AFUE furnaces in the Northern region, manufacturers explained how they are responding to the potential rule change.

Karl Zellmer, vice president of sales, Emerson Climate Technologies, noted that although the pending change in the furnace standard does put a lot of last-minute pressure on the industry to adjust its plans, there is a history within the industry of dealing with changing regulations.

“We have done this before with the 13 SEER change in 2006 and with the R-410A change in 2010. We will support whatever our OEM customers need to achieve compliance with these regulations,” he said.

According to John Gibbons, director, product and platform strategy, Carrier, “Meeting our customer needs is a priority at Carrier, and once we were notified that the furnace standards had been potentially vacated, we alerted our channel partners in the North that they can continue to sell and install 80 percent furnaces until further notice. We’ve made adjustments to our production schedules in order to accommodate an anticipated fluctuation in demand.”

He continued, “We’ve historically been flexible with our production schedules, and this case is no different as we’ve made the necessary alteration to our forecast schedules. However, longer term an uncertain regulatory landscape is not healthy for manufacturers, channel partners, or consumers, and can delay energy savings for the nation.”

Karen Meyers, corporate director, government relations, Rheem, said that her company was preparing for all contingencies relating to regional efficiency standards.

“We would have been prepared to support our customers regardless of the outcome of this litigation,” she said, adding, “The settlement may not have been the most optimal outcome for encouraging greater adoption of energy-efficient furnaces, but it may provide certainty for the industry, which is very important in today’s business climate.”

On the Horizon

Looking ahead, manufacturers anticipate that regulations affecting HVAC will only increase.

“Overall, we can expect to see more regulation in our industry, not less,” Meyers said. “In January 2012, the DOE had eight pending rulemakings on its docket that affected the heating, cooling, and water heating industries. This year, we have 10 pending rulemakings that affect our industries. We are also seeing increasing regulation both on a national and provincial level in Canada. From our vantage point, it looks like the regulatory environment will remain intense for years to come.”

She pointed out a few potential DOE regulations that could impact the industry, including new test procedures and new component standards. “The DOE is in the process of recommending new test procedures for residential water heaters, which would require uniform test procedures to determine the efficiency of water heaters,” Meyers said. “From our standpoint, it is imperative that the industry and DOE come together to agree on the test procedures in a timely manner. That’s because new EF [Energy Factor] standards go into effect in 2015 as part of the National Appliance Energy Conservation Act (NAECA). We must all agree on the test procedures well in advance so that manufacturers can ensure that our products have all been properly tested and ready to go to market before the 2015 NAECA deadline.

“One other important regulatory topic on the horizon relates to the possibility of the DOE mandating separate efficiency standards for components of HVAC and water heating products; meaning, a furnace fan would have to meet a specific efficiency standard before it could go into a furnace. The furnace would still have to meet a different energy standard. Creating separate efficiency standards for components could considerably hinder product speed-to-market because manufacturers would have to rigorously test every element of a unit against different efficiency standards. We are keeping a close watch on this topic in 2013.”

Zellmer noted that the desire to reduce global warming may also result in significant new regulations.
“HVAC products might be affected simultaneously by the need to use refrigerants which offer lower direct global warming potential (GWP) but also must maintain very high efficiency which also affects GWP,” he said. “Emerson is working with our OEM customers to advise regulators on the relative benefits and costs associated with various solutions involving new refrigerants.”

Farther down the road, Gibbons added that there is an increasing focus on the tightness of the home envelope and duct configuration.

“We see that as an area of focus for the future and are staying a step ahead with our Energy Experts program,” he said. The program, which Carrier launched in 2012, trains contractors on home performance. “Through the Energy Experts program, Carrier factory-authorized dealers become knowledgeable on all areas of home-energy conservation. They conduct whole-home energy audits and provide solutions to consumers that can save energy costs.”

Coordinating Across the Industry

To keep on top of the myriad rules and laws that regulate HVAC, manufacturers stressed the importance of partnering with, and maintaining strong relationships with, industry associations.

Gibbons pointed to the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), Air Conditioning Contractors of America (ACCA), and Heating, Air-conditioning, and Refrigeration Distributors International (HARDI) as associations that “do a great job at providing key information and keeping manufacturers up to speed.”

Zellmer added North American Technician Excellence (NATE) and ASHRAE to the list, noting that all of the industry associations form a cooperative effort to spread the word to contractors. “There are a lot of smart people working to figure this out and communicate any concerns we have with the regulating organizations,” he said.

Meyers noted that it’s not only important to collaborate with trade associations, but also to reach out to key government contacts. “We work closely with several trade associations to make sure that we’re in step with the top priority issues for our industry. We also forge relationships with key legislators and regulators, and employ a government affairs team,” she said.

Communicating with Contractors

The next step in the communication chain is making sure that information about government actions is disseminated to contractors. Many manufacturers use website resources to keep contractors up to date on the latest regulations affecting the industry.

In January Emerson launched a new website,, focused on providing this type of information.

“Emerson is not using this site to promote any products, rather we are just providing it to help our industry explain some of the more confusing parts of the HVAC purchase decisions to consumers so they can make good, informed decisions about what to buy,” Zellmer said.

In addition to leveraging its website, Gibbons said that Carrier sends weekly emails to “maintain a constant stream of communication with our distributors and channel partners.”

Meyers noted that Rheem aids contractors and homeowners through its website’s Homeowners Resource Center, which includes detailed information about government rebate programs and tax credits.

“We also supply them with the proper IRS forms for tax credits, which they can then pass along to homeowners. When major rebate programs are announced, we will post updates on and develop a customer-facing e-communication with all the pertinent details,” she explained.

She added, “Now that the 25C tax credits have been extended, it will be important for contractors to know what products qualify for the tax credit and what homeowners need to do to take advantage of them.”

Manufacturing Efficiency

While manufacturers must build products to meet government standards, they also strive to create products that outperform the standard.

“Emerson Climate supports many OEM-system customers with technology that helps them achieve higher efficiency standards like Energy Star,” noted Zellmer. “Some that have historically helped with higher efficiency are the Copeland Scroll UltraTech™ compressor and Copeland Scroll Variable Speed™ compressor, which allow some of the highest efficiency air conditioning and heat pump performance available today.”

He added, “Soon we will be launching even more high-efficiency compressors to help our customers achieve high system efficiency in a cost-effective manner.”

Gibbons said that Carrier offers many products that meet Energy Star guidelines for the North and South, including the 2013 Energy Star Most Efficient qualified Carrier® Model 59MN7 Infinity® 98 gas furnace with Greenspeed™ intelligence, with heating efficiency up to 98.5 percent AFUE, and the Carrier 25VNA Infinity® 20 adaptable-speed heat pump with Greenspeed™ intelligence, with cooling efficiency up to 20.5 SEER and heating efficiency up to 13 HSPF.

According to Meyers, Rheem has consistently had products featured on the Energy Star Most Efficient list. “This year the Rheem Prestige Series RASL-JEC 18 SEER condensing unit, the Ruud Ultra Series UASL-JEC model, and the Rheem 16 SEER RRL series of package gas/electric units earned recognition on the list.”

She also noted that Rheem launched a high-efficiency condensing power direct-vent water heater in January, and is slated to roll out an entirely new high-efficiency furnace platform later this year.

As manufacturers move ahead and create products with advancing efficiencies, they will also keep a close eye on the regulations that govern their products and the contractors who install them.

“It will be imperative that manufacturers, distributors, and contractors initiate open dialogues about the real-world impact of proposed regulations. We also must work with our respective trade associations to voice our positions to the DOE and other regulatory bodies,” Meyers said.

Publication date: 2/11/2013