Efficiency Standards Agreement Signed; Controversy Erupts Over Lack of Input from Contractors/Distributors

On October 13, 2009, the nation's leading manufacturers of residential central air conditioners, furnaces, and heat pumps met in Washington D.C. at the National Press Club to sign an historic, voluntary agreement with the nation's leading energy-efficiency advocacy organizations supporting new federal standards for those products.

The manufacturers, lead by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) gathered together with representatives from The American Council for an Energy-Efficient Economy (ACEEE), as well as the Alliance to Save Energy to sign an agreement that calls for regional efficiency standards to replace a quarter century of national standards. The agreement also recommends more stringent building code provisions for new construction.

According to a press release issued by AHRI, the agreement sets different standard levels in three climate regions — North, South, and Southwest — recognizing that appropriate investments in heating and cooling efficiency depend on usage. Such regional standards are allowed under the Energy Independence and Security Act of 2007.

The agreement also allows states to include even higher efficiency levels for heating and cooling systems in new homes. New houses can be built without physical restrictions that might hinder installation of highly efficient equipment — as there might be when replacing equipment in an existing home. This new approach, according the AHRI press release, “will strike a balance between the desire for greater state and regional flexibility and the need for a uniform marketplace, and they say that it looks to the nation's long-term energy future by supporting the most efficient new systems where they are most cost-effective.”

AHRI President Steve Yurek spoke at the event and said that the new standards are projected to save U.S. consumers about $13 billion in today's dollars between 2013, when the new standards begin to take effect, and 2030 — taking into account the incremental cost of the more efficient equipment.

He added that between now and 2030, the agreement will save 3.7 quadrillion Btus of energy nationwide, “which is equivalent to all the energy consumed by approximately 18 million households in a single year, or enough to meet the annual energy needs of either Georgia, Massachusetts, Michigan, Missouri, North Carolina, or Virginia.”

Yurek also said the new standards will do three positive things for the industry and for the country:

• Raise the minimum efficiency of residential central air conditioning systems by about 8%

• Raise the minimum efficiency of residential furnaces by about 13%

• Result in a 5% reduction of the total heating energy load

• Result in a 6% reduction of the total cooling energy load in 2030.

ACEEE Executive Director Steve Nadel told the gathering that these energy savings will result in annual greenhouse gas emission reductions of 23 million metric tons of carbon dioxide (CO₂) in 2030, an amount equal to that produced by approximately four million cars every year.

In addition to the above mentioned organizations, executives of the Natural Resources Defense Council (NRDC), Northeast Energy Efficiency Partnerships (NEEP), the Appliance Standards Awareness Project (ASAP), the California Energy Commission (CEC), the Northwest Power and Conservation Council (NWPCC), and more than a dozen individual furnace and air conditioner manufacturers signed the agreement following months of negotiations.

The signatories agreed to submit their agreement jointly as a legislative proposal to Congress for inclusion in the energy legislation currently under consideration. The groups will also recommend that the U.S. Department of Energy (DOE) promulgate a rule adopting the agreed-upon regions and efficiency standards.

Yurek said, “In addition to saving significant amounts of energy for the nation, and saving consumers considerable money, this agreement provides the industry with greater certainty in the marketplace, which enables more investment, enhances global competitiveness, and preserves jobs.”

Nadel added that ACEEE, “believes this proposal represents a large leap forward in improving our nation's energy efficiency, while also reducing consumer energy bills and helping to clean our environment. Regional standards are a major step for cost-effective savings and will help manufacturers meet the very different needs of homes in cold, hot-humid, and hot-dry climates.”

“We all know that constructing buildings efficiently ‘from the ground up’ is the best way to maximize savings of energy, money, and emissions,” said Alliance to Save Energy President Kateri Callahan. “This is particularly critical in homes, where heating and cooling typically account for the largest single chunk — about 40% — of monthly energy bills. So, the building codes provision of today's agreement is especially significant. It allows states to adopt codes to ensure major savings for new homeowners, while also taking a bite out of global warming.”

Also attending was Senator Bob Menandez (D-NJ), who told the crowd that the agreement is sensible and important and it gives the Department of Energy “more tools.”

“This agreement can save American Consumers $10 billion in energy costs over 10 years and I salute the HVAC industry for working so hard to make this happen.”

But What About the Contractors and Distributors?

Noticeably missing from the proceedings were representatives from the Air Conditioning Contractors of America (ACCA) and the Heating, Airconditioning and Refrigeration Distributors International (HARDI) organizations. In a separate joint statement issued shortly after the signing, ACCA Chairman Stan Johnson and President and CEO Paul Stalknecht, explained that though they were asked to endorse the agreement, they felt they couldn't without approval of their HVAC contractor members.

“At this time we cannot support something this sweeping,” Johnson and Stalknecht said.

“As a contractor-driven organization, we must have direction from our members. We will survey our contractor members, explaining the proposed legislation and asking for their opinions on the potential impact of these various changes on the HVACR contracting industry.”

In their statement, Johnson and Stalknecht point out that the regulatory environment is different from what it was a year ago, and they believe AHRI and its members reached this agreement in good faith, “with an eye toward achieving higher efficiency in accord with the realities of their businesses.

“However, at the end of the day, it is contractors who recommend, purchase,and install HVACR equipment. The actual efficiency of that equipment — no matter what its government-mandated rating — is dependent entirely on the professional capabilities and skill of the contractor who installs it.

“Once our member contractors have had time to analyze and respond to this proposal in accord with the realities of their businesses, ACCA will determine the path forward that best meets the needs of the contractor community, our customers, our economy, and our environment.”

For members of HARDI, the news wasn't received enthusiastically either. In a statement released shortly after the announcement from AHRI, David McIlwaine, HARDI president, wrote, “we learned of these negotiations in mid-August and immediately expressed concerns to AHRI about their unilateral negotiations on an agreement which conflicted with every major policy position of the industry regarding appliance standards.

“We met with and questioned AHRI's decision to enter into these negotiations without the input and involvement of any other industry stakeholders such as distributors or contractors and stressed that regionalized efficiency standards would arguably affect HVAC distributors and border state contractors more than equipment manufacturers. Despite these and a host of other concerns from HARDI and ACCA, AHRI remained committed to finalizing this agreement on their own.”

McIlwaine says HARDI declined to sign the agreement not only because it signaled a complete reversal of every industry policy position of the last three plus years, but also because AHRI was unwilling to provide assurances that they would not enter into future “consensus” agreements unilaterally on the next phase of implementation and enforcement of this agreement or any other future agreements affecting other industry stakeholders.

He also stated that HARDI will take a proactive leadership position in the enforcement and compliance aspect of this agreement. “But we retain the right to advocate against all or portions of the agreement (to be determined by the HARDI membership in the coming months) as the signatories attempt to advance legislation to implement the terms of the agreement.”