Ten years ago, the HVACR Industry Alliance was formed to act as the “unified voice of the North American heating, ventilation, air-conditioning, and refrigeration industry.”
That mantra rings true today as the organization now consists of 11 trade organizations representing contractors, manufacturers, distributors, and more.
“Our mission is to have an open and frank discussion within the HVACR industry association community on matters of importance and seek consensus positions whenever possible,” said Paul Stalknecht, president and CEO, ACCA, and HVACR Industry Alliance chairman. “At times, we are in 100 percent agreement; other times, we may have only a few members in agreement. When we are 100 percent united, we act accordingly and issue statements advocating the united position of the entire HVACR industry.”
On Jan. 12, the alliance sent a letter to then Vice President-elect, Mike Pence, stating its interest in supporting him on efforts to enact policies for further growth and opportunity within the industry. The letter identified six priorities the alliance would like the new administration to focus on: Utilizing industry consensus standards, tax reform and incentives, energy bill and Energy Policy and Conservation Act (EPCA) reform, refrigerants and ratifying the Kigali Amendment, energy-efficient quality HVACR installations, and the workforce.
UTILIZING INDUSTRY STANDARDS AND TAX REFORM INCENTIVES
Under the Obama administration, the industry endured various challenges resulting from numerous standards and regulations. The alliance has made it a mission to encourage discussion between federal bureaucrats and the industries they are targeting prior to the creation of such regulations.
“Continued regulatory action is not a productive way to shape policy, especially when standards already exist,” said Barton James, vice president for government relations, ACCA.
With the ability to work with this new administration, the alliance hopes to shape regulations prior to their release, which they believe will spur business growth and profits.
“By all accounts, the U.S. tax code is one of the most complicated in the world,” said Jon Melchi, vice president of government and external affairs, Heating, Air-conditioning, and Refrigeration Distributors International (HARDI). “We believe tax reform, which simplifies the code, lowers rates, and treats corporations and small businesses fairly, will help our industry grow.
“Tax reform absolutely must address the unfair treatment that commercial HVACR products receive in the tax code,” Melchi continued. “Full business expensing, which includes HVACR, will unleash opportunities across the industry and promote significant energy savings in the United States.”
It is the opinion of the alliance that the federal tax code is outdated and needs updating in order to address the problems associated with it.
“Federal tax depreciation schedules do not reflect the actual equipment life spans for commercial products,” said Stalknecht. “Thus, building owners have little or no incentive to replace old or inefficient systems because the ones in place have not been fully depreciated.”
Furthermore, Stalknecht believes tax incentives will drive in revenue by encouraging contractors to properly install higher-efficiency products, thus leading to more sales and customer protection.
“For the residential market, governments and utilities often offer tax incentives or rebates to homeowners to buy highly efficient products,” said Stalknecht. “But, the full benefits of those programs are often not realized because there was never an effort to ensure they were installed properly. So, when homeowners are incentivized to purchase higher-efficiency equipment in the hope of reducing energy consumption and lowering utility bills in a meaningful way, many are not receiving the full benefits they paid for or intended. In many respects, it’s a consumer protection issue.”
The alliance doesn’t feel that the current EPCA energy bill is reflective of the 21st century product. The group deems the document antiquated, being that is it more than 40 years old. The organization is looking to give the administration suggestions on how to update the important policies.
“The EPCA is that process of how products come into the marketplace, and the current regulatory process is guiding that,” James said. “So, an energy bill is the vehicle to do that and would open doors for the entire industry.”
The EPCA is in need of major change as the efficiency rulemakings have unfavorably impacted the industry in many ways, said Melchi.
“The rules and processes with which the products we make and sell are regulated were developed decades ago,” he said. “The time has come for these processes to reflect the 21st century and properly reflect the true cost of increases while not dampening innovation.”
It’s not just the products that are impacted but other facets of the industry, too.
“This law has produced an endless cycle of efficiency rulemakings that adversely impacts our industry’s competitiveness, consumers’ choices, and installed costs,” Stalknecht said. “It also overlooks the effects of installation on energy efficiency, and, most importantly, the American jobs we create.”
The alliance supports the Kigali Amendment to the Montreal Protocol and recently sent a letter to the Senate requesting its ratification.
This requires developed countries to begin the phasedown of hydrofluorocarbon (HFC) consumption levels in 2024 with some countries freezing consumption in 2028.
“We support the Kigali Amendment because U.S. manufacturers’ goods would not be able to be sold in those countries that have approved the Kigali Amendment, which would have a devastating impact on U.S. manufacturing and employment,” said Stalknecht.
Proper HVAC installation practices have proven to save significant amounts of energy. The HVACR Industry Alliance is urging Congress and the Trump administration to focus on the development of consumer education programs and incentives for proper installation policies and programs that are based on the industry-supported, ANSI-recognized QI 2015 Quality Installation standard, which reflects manufacturer’s recommended procedures.
“This is the most important priority for us as it ties everything together,” said James. “Consumers and the industry have endured countless regulations designed to push efficiency on them. Nobody is focused on the installation side of efficiency. A recent study showed that homeowners use 30 percent more energy than they should due to improperly installed HVAC systems. Environmental groups are pushing for efficiency standards, but they are blind to this [the installation] side of it. By not taking the time to learn what we’re working on, we’re doing the whole country a disservice.”
If not properly installed, HVACR equipment — including cutting-edge, energy-efficient technologies — will not provide important energy savings benefits and will undermine our national energy-efficiency initiatives, said Stalknecht. “The alliance believes that HVACR systems should be installed according to the manufacturers’ recommended installation procedures — the ACCA 5 QI Standard,” said Stalknecht.
HVACR and skilled trades as a whole are struggling to locate qualified employees. The HVACR Industry Alliance has requested the federal government prioritize technical education support, especially in high schools, that highlights the benefits of employment careers in the skilled trades while promoting science, technology, engineering, and mathematics (STEM) education. Also, alliance members would like the Veterans Affairs to support reforms that encourage all states to promote veteran apprenticeship programs with small businesses that have a record of success. They think this could help the industry overall going forward.
“This is one of the most vital issues facing our industry,” Melchi said. “The federal government can immediately have a positive impact by reauthorizing Perkins and similar initiatives, but equally important is President Trump, Vice President Pence, and Secretary [Betsy] DeVos as they champion technical and trade education as an important option for our middle and high school students. We must also work with the VA and armed services to identify opportunities with soon-to-be or recently separated military personnel.”
LOOKING TO THE FUTURE
Moving forward, the alliance is dedicated to continue working with the Trump administration and Congress in hopes of answering each of its six priorities.
“The alliance was formed to centralize the focus for our related associations and to develop a united voice on a select group of issues,” said Stanley Kolbe, director, Sheet Metal & Air Conditioning Contractors’ National Association (SMACNA).
“The new administration is still forming, agencies are largely empty of appointees, and the GOP leaders on the Hill are in charge of the agenda, for now, so there haven’t been any big changes since Trump came into office — it’s still too early. The cabinet is still forming and hundreds of appointments to sub-cabinet spots are yet to be named or even interviewed. Once the budget process escalates, health care and tax proposals will firm up and many other process issues will be resolved. Then, we will see a clearer picture. Executive orders are rarely substantive, but can represent general policy changes or indicate shifts ahead.”
With this new administration, many believe greater things are on the horizon.
“President Trump’s regulatory freeze and review was welcomed news,” Melchi said. “Further, he has signaled that regulatory reform and tax reform are high on his priority list, so even though we are just a short time into the administration, it’s safe to say our issues aren’t out of whack with the administration’s goals.”
Publication date: 4/3/2017