If you’re trying to make these decisions or determine how these regulatory changes may impact you, Copeland is here to help you chart a path forward. We’ve compiled a summary of the key changes and their potential implications for your business.

IRA Tax Credits Eliminated

Incentives to promote energy-efficient HVAC technology, which were authorized under the Inflation Reduction Act (IRA), have been eliminated by the Big Beautiful Bill, including 25C, 25D, and 45L tax credits. These were designed to help homeowners and businesses ease the costs of decarbonization, including the transition to electric heat pumps and efforts to reduce reliance on traditional fossil-fuel heating methods.

For example, 25C offered up to $2,000 for qualified heat pumps, water heaters, biomass stoves, or biomass boilers through 2032. Although residential heat pump adoption has increased in recent years, many homeowners have made the shift without taking advantage of these tax credits. As a result, we don’t anticipate that the loss of federal incentives will significantly slow heat pump adoption moving forward. That said, homeowners should still explore available rebates and incentives from local utilities or state-led programs.

Copeland has worked with OEMs and national labs for many years to advance heat pump technologies. We share the goal of making them technologically viable and financially favorable alternatives to gas-powered space heating systems, including the critical role of dual-fuel systems. In turn, this gives contractors and end-users the confidence to adopt these emerging and evolving technologies.

Reconsidering the Technology Transition Rule

Finalized in 2023, the Environmental Protection Agency’s (EPA) Technology Transition rule set GWP limits aimed at phasing down the demand for higher-GWP HFC refrigerants in new equipment across HVACR sectors. In March, the new EPA administration announced 31 actions on a “day of deregulation,” including a “reconsideration” of the Technology Transition rule. As such, it’s currently under review.

The first sector transitions took effect in January 2025, when a 700 GWP limit was enacted for new residential and light commercial air conditioning and comfort chiller sectors, effectively transitioning them to lower-GWP A2L refrigerants. New food retail self-contained equipment also transitioned to a 150 GWP limit, requiring either A2L or A3 (i.e., R-290) refrigerants.

Timelines for the remainder of the food retail sector are not far behind. In January 2026, new remote condensing units are scheduled to comply with GWP limits of 150 to 300, with similar GWP limits on supermarket parallel rack systems expected to follow in 2027.

That said, changes to the Technology Transition rule are expected. The EPA had previously granted petitions for reconsideration related to it, which are currently being implemented. Items impacting HVACR include:

• Revision to exclude R-410A condensing units as “specified components” for residential air conditioning to prevent a potentially perpetual replacement cycle; and
• Revision to allow new low-temperature intermodal transport containers for deep-frozen temperature ranges to continue using refrigerants above 700 GWP.

Recently, a petition has been filed requesting a reconsideration to allow the cold storage sector to use up to 700 GWP (currently listed as 150 to 300 GWP); it’s under review.

In addition, the FMI (Food Industry Association) has pending litigation challenging the EPA’s Technology Transition rule, arguing that end-users didn’t have the time or financial resources to meet the transition deadlines. This could impact several sectors in the commercial refrigeration space.

As the industry awaits clarity from the EPA, speculation is growing about the potential to delay GWP limit timelines or even revert to previous, higher GWP limits. But changing the rule could cause significant disruptions.

OEMs, food retailers, contractors, and the entire equipment supply chain have been preparing for this lower-GWP transition for years. Many OEMs have already made significant investments, while using the opportunity to improve system reliability, performance, and efficiency. Delaying or reversing the rollout of these advancements could mean returning to previous-generation technologies, which would put investments at risk and require additional costs to transition back. Rolling back the Technology Transition rule could also lead to a more complicated patchwork of state rulemaking.

Copeland empathizes with retailers and understands the financial challenges associated with transitioning to lower-GWP refrigerants, particularly for small grocers. However, any delay in transitioning new equipment away from high-GWP fluids could intensify refrigerant pricing pressures for servicing these systems for their full useful life and potentially force more aggressive phasedowns in future transitions. Striking the right balance is essential.

Refrigerant Management Under Review

The EPA previously introduced a refrigerant management rule as the “third leg of the stool” in implementing the AIM Act. Subsection (h) authorizes the EPA to manage HFCs through proper leak repair, detection, and refrigerant management provisions (i.e., recovery and reclamation).

The rule addresses widely accepted refrigerant management best practices and extends upon Section 608, which was previously enacted for ozone-depleting substances (ODS).

Like many HVACR industry stakeholders, Copeland supports the concepts included in subsection (h) and the many advantages of its refrigerant management best practices:

• Lowering maintenance and operating costs;
• Increasing refrigeration performance; and
• Minimizing negative environmental impacts.

However, we also recognize that some of its provisions may present implementation challenges, such as the requirement to use 100% reclaimed refrigerant for servicing specific sectors by 2029. Given that some common HFCs (i.e., R-448A and R-449A) haven’t been in use long enough to support adequate recovery, this may become more difficult to implement in practice.

EPA’s Energy Star Program

The EPA’s Energy Star program is also at risk of being significantly cut or defunded per the EPA’s proposed reorganization and budget. Its uncertain fate has raised more questions than answers throughout the industry, including potential restructuring options such as transferring ownership to the Department of Energy (DOE) or converting it into a privately owned program.

Since the program’s inception in 1992, hundreds of manufacturers have actively participated in achieving Energy Star certification, particularly with consumer-facing applications. For example, Energy Star helps the residential air conditioning industry set standards for mid- and high-efficiency tiers.

Regardless of how Energy Star is restructured, OEMs will continue to pursue producing higher-efficiency products that exceed minimum efficiency requirements.

DOE Energy-Efficiency Standards

Recent DOE announcements about postponing and potentially reversing HVAC efficiency standards have led to confusion about future efficiency targets across various types of HVACR equipment.

For residential and commercial central air conditioning and heat pump (CAC/HP) equipment, the most recent efficiency increases (SEER2 and HSPF2) took effect in 2023. According to the anti-backsliding provision in the Energy Policy and Conservation Act (EPCA), these levels cannot be easily rolled back.

Generally, DOE’s process to increase efficiency occurs in two phases: publishing a test procedure and finalizing a separate energy conservation standard. These efforts typically take multiple years to complete.

In December 2024, the DOE published an update to the CAC/HP test procedure, which resulted from a multiyear negotiation among a diverse group of stakeholders. For OEMs, this revised test procedure changed how equipment is tested, but it doesn’t increase the minimum efficiency levels. The effective date of this test procedure has been delayed multiple times; it was proposed for July 7, 2025, with a likely one-year delay in the compliance date of the Controls Verification Procedure applicable to variable-speed systems.

Future plans to update DOE efficiency standards may also be impacted, as the process of defining the next iteration of efficiency metrics was expected to begin in January 2025, according to the DOE’s latest regulatory agenda. However, it’s unclear how the DOE intends to proceed, potentially delaying the next step in efficiency standards for several years.

Regarding commercial refrigeration equipment (CRE) and walk-in coolers and freezers (WICFs), Congress passed a joint resolution of disapproval in May, following the Congressional Review Act (CRA) process to repeal the DOE’s Energy Conservation Standards for Commercial Refrigerators, Freezers, and Refrigerator-Freezers (i.e., CRE). President Trump signed it into law on May 9, and House Joint Resolution 75 effectively nullified the DOE’s final rule on energy conservation standards for CRE, which would have gone into effect in 2029.

Under that rule, the DOE would have adopted amended energy conservation standards for CRE to achieve the maximum improvement in energy efficiency that’s “technologically feasible and economically justified.” As a result of its nullification, the most recent 2017 standard remains in effect for the foreseeable future. It’s uncertain when the DOE will re-evaluate energy conservation standards for this equipment.

A similar joint resolution of disapproval was passed for WICF. As a result, the DOE's Energy Conservation Program: Energy Conservation Standards for Walk-In Coolers and Walk-In Freezers rule — published on December 23, 2024 — was nullified. Thus, the rule has no force or effect, and the DOE is generally prohibited from issuing a “substantially similar” rule in the future without new authorization from Congress. The DOE officially withdrew the rule in the Federal Register on May 20, confirming its nullification.

Tariff Turbulence

The administration’s tariff-driven trade policy has led to instability and unpredictability in the HVACR industry. A 50% tariff has been imposed on steel and aluminum, increasing costs for key raw materials used in the equipment supply chain. This translates to higher prices for finished HVACR units and parts, which are then passed down to distributors, contractors, and ultimately, consumers.

The administration’s long-term goals of reshoring U.S. manufacturing, reducing trade deficits, and restabilizing fair tariff rates would allow domestic producers to re-evaluate supply chains and invest in more predictable, dependable, and potentially lower-cost providers.

In this unsettled regulatory environment, HVACR industry stakeholders will need to stay informed and be prepared to adapt to various potential scenarios. Maintaining a calm, objective, and fact-based understanding of the implications is wise as the industry seeks clarity. For our part, Copeland is committed to providing industry stewardship and helping the industry navigate this dynamic regulatory landscape.