The HVACR industry has shown strong support for two recently introduced pieces of legislation, S 761 and HR 1616. The bills incorporate many of the elements that comprised S 1000, more commonly known as the Shaheen-Portman bill.
The HVACR industry has shown strong support for two recently introduced pieces of legislation, S 761 and HR 1616. The bills incorporate many of the elements that comprised S 1000, more commonly known as the Shaheen-Portman bill.

On April 18, U.S. Sens. Jeanne Shaheen, D-N.H., and Rob Portman, R-Ohio, introduced S 761, the Energy Savings and Industrial Competitiveness Act of 2013 (ESIC). At the same time, U.S. Reps. David McKinley, R-W.Va., and Peter Welch, D-Vt., introduced the companion bill, HR 1616.

The legislative measures are slimmed-down versions of S 1000, the energy-efficiency bill first introduced by Shaheen and Portman in 2011. The updated language makes some concessions, including decreasing the amount of federal loan guarantees, in hopes of gaining the support needed to implement the bill as law.

And, though the bill has broad support in both the House and Senate, as well as from numerous organizations nationwide, it still faces many hurdles before it reaches President Obama’s desk. Meanwhile, industry leaders and organizations are cautiously optimistic about how the legislation will affect the HVACR industry — and when those effects might be felt.

A Few Tweaks

In an effort to garner as much bipartisan support as possible, some changes were made to the bill to make it palatable to the more conservative members of Congress. Most notably, S 761 cuts out $400 million in federal spending that was included in the previous version.

Rob Mosher, director of government relations for the Alliance to Save Energy (ASE), said the financing is the most significant change in the new version of the bill.

“This year’s version does not include an expansion of the federal loan guarantee program for energy-efficiency projects, nor does it contain the revolving loan fund for industrial energy-efficiency projects,” he explained. “Otherwise, the bill is very similar.”

“They wanted to keep the cost to the federal government down,” said Guido Zucconi, assistant vice president of congressional affairs for the Air-Conditioning, Heating & Refrigeration Institute (AHRI). “A lot of the spending now is designed to help the states set up energy-efficiency programs and financing programs.”

Reducing funding from the federal government may help persuade some members of Congress, who may have previously been reluctant to support the energy-efficiency initiative.

“The most significant thing they’ve done this time around is to remove any controversial provisions,” said Robert Wilkins, vice president of public affairs for Danfoss. “I think the stage is set for it now. S 1000 passed out of committee with an 18-3 vote, but, of course, nothing is guaranteed. It’s important for the industry to show strong support for this legislation.”

The language in the newest version of the bill also reduces the authority the U.S. Department of Energy (DOE) has in developing building codes that would affect building efficiency, instead leaving it up to standards-development organizations like ASHRAE to write the appropriate standards.

“In the previous version of the bill, the DOE had the authority to create its own building codes or standards,” Zucconi said. “Now, it’s given less of a role. The DOE can make suggestions, but in the end, they can’t come out with their own codes.”

Tom Werkema, vice president of ASHRAE, said his organization is pleased with the changes. “The old version had some things that standard developers like us had a problem with, but those are gone now,” he said.

HVAC Industry Impact

Though industry leaders agree that the legislation will undoubtedly affect the HVAC industry, they are not yet sure exactly when or how those effects will be felt, or who will be impacted the most.

“The effect is going to be very subtle on manufacturers,” Zucconi said. “It’s going to be more of a test of the mentality of both parties to see how much they can work together and have a real efficiency conversation on what is palatable for both parties. That’s going to affect manufacturing more in the long run.”

Jon Melchi, director of government affairs for Heating, Air-conditioning, Refrigeration Distributors International (HARDI), said distributors will not be impacted as much as manufacturers, though one program included in the bill — the DOE’s SupplySTAR program — is aimed specifically at improving efficiency in distribution and logistics by developing best practices.

“In theory, it is something that interests HARDI distributors,” Melchi said. “I ran it by our distribution and logistics committee, and there was certainly some interest there, but the devil is in the details, and we don’t have those yet.”

As for the HVAC contractor, it will likely be business as usual for a while if the bill becomes law, said Charlie McCrudden, vice president of government relations for the Air Conditioning Contractors of America (ACCA).

“There won’t be an immediate effect if this is passed, since it takes local jurisdictions time before they adopt new codes, and it takes time to develop those new codes,” he said. “I don’t think we’ll see an immediate impact. But, over time, it could change the process or the speed by which codes are developed and implemented.”

Rewarding Retrofits

In addition to strengthening national-model building codes for new homes and commercial buildings — which Werkema said accounts for only about 2 percent of the built environment nationwide — the legislation also has the potential to affect retrofit projects by offering financing for energy-efficiency retrofit projects and providing a uniform way to rate the efficiency of existing buildings.

“The Shaheen-Portman bill references ASHRAE’s Building Energy Quotient (bEQ) that basically labels buildings and allows you to compare buildings of the same size, shape, and construction,” Werkema said. “It’s an enormously powerful tool, especially if it’s referenced in legislation, because now you’re starting to affect existing buildings.”

For example, Werkema said, a realtor could provide the bEQ for several buildings to a potential lessee. From there, the lessee can weigh the price of rent against the cost of utilities to find the best value in a rental property. That, Werkema added, could provide an incredible incentive for building owners to make energy-efficiency upgrades to their buildings that they would normally not consider.

“You need to encourage that building owner to be more efficient, and this helps to do that,” Werkema said.

A Common Goal

From energy-efficiency advocates to large corporations and the organizations that represent them, the Shaheen-Portman bill has received significant support across the board.

“This is as bipartisan and without controversy as you can possibly get,” said Mosher. “More than 200 organizations have publicly endorsed the bill. It has two respected leaders on energy efficiency and policy matters, in general, as sponsors.”

Chip Yost, vice president for energy and natural resources policy for the National Association of Manufacturers (NAM), said it only makes sense for manufacturers nationwide to support the legislation. Since the bill’s initial introduction more than a year ago, NAM, which represents roughly 12,000 manufacturers in the U.S., has been one of its most outspoken proponents.

“Manufacturers use 30 percent of the energy in this country, so there’s a lot of savings to be had if we use this energy more efficiently,” Yost said.

Aside from energy savings, Yost said there are many other reasons to support the bill. “There are going to be some people to whom those financing incentives are important, but we think people ought to do this because it’s the right thing to do.”

The HVAC industry has also shown widespread support for the energy-efficiency legislation, working with Sens. Shaheen and Portman to address and resolve issues.

“We always support anything that improves efficiency and moves things forward,” Zucconi said. “We very much appreciate the work Sens. Shaheen and Portman have done. They’ve been diligent in reaching out to stakeholders, including AHRI.”

“The entire industry seems optimistic about this, and that’s a good thing,” Melchi said. “I haven’t really heard anyone voice concerns. It’s pretty clear that Sens. Shaheen and Portman have done their best to engage stakeholders with this, and we’re happy with that.”

Publication date: 5/20/2013 

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