As more than 5 million World Cup fans visit the United States, many are learning something Americans have known for generations: air conditioning is a necessity. In much of the country, it is what makes daily life, work, commerce, and even outdoor events possible during the summer.
Some visitors who once mocked America’s dependence on air conditioning are quickly changing their tune after experiencing the heat and humidity of places such as Texas, Florida, and Georgia. The world is discovering the value of modern cooling just as global demand for it is exploding.
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That should be good news for American companies developing new air conditioning equipment.
The U.S. is home to thousands of companies that distribute, install, and maintain the cooling technologies that keep homes comfortable, food safe, and businesses operating. As an industry, wholesale distribution represents more than $160 billion in economic activity. As consumers around the world seek to purchase new air conditioning systems, American companies should be well-positioned to export this technology to new customers and grow America’s economy.
Instead, a recent regulatory change threatens to move the industry in the wrong direction.
Just before Memorial Day, federal regulators reversed course on a planned transition to next-generation refrigerants for supermarket and commercial refrigeration systems. The change allows new commercial refrigeration systems to be installed using higher-impact refrigerants that place far greater demand on the nation’s limited supply. Proponents of the change claim it was necessary to prevent unnecessary changeouts to equipment not available on the market. These claims were easily rebutted in the public record and by the growing number of stores installing compliant equipment.
This change also has effects that go far beyond the frozen food aisle. It affects air conditioners and heat pumps in homes and businesses, as well as access to the global cooling market.
If demand for older refrigerants remains artificially high, supplies will become tighter, and costs will rise by up to 24%, according to regulators. That affects schools, hospitals, small businesses, and consumers. But the impact doesn’t stop there.
The world is moving toward the next generation of cooling technology. American companies should be leading that transition and exporting the products and expertise that make it possible.
But the recent regulatory change could make it impossible. The U.S. is a party to the Kigali Amendment to the Montreal Protocol, an international agreement driving the global transition to newer cooling technologies. To ensure compliance, the Kigali Amendment restricts access to international markets unless a country is a party to the amendment and meets its requirements.
If the U.S. fails to report that it has met its targets or withdraws from the Kigali Amendment altogether, the agreement’s trade provisions would restrict exports of covered refrigerants and refrigerant-containing equipment to more than 170 countries that have ratified the treaty. Even worse, falling out of compliance would prevent access to the components necessary to blend the refrigerants that keep equipment used by millions of Americans every day running.
That is why trade associations representing distributors and contractors have joined together in federal court to challenge the rule. The U.S. must stay on course toward American cooling technologies becoming the global standard and cannot allow short-term interests to undermine long-term competitiveness.
Our concern is simple: allowing a small sector of refrigerant users to continue to consume far more of the nation’s limited supply of refrigerants will raise consumer prices and make it harder for the U.S. to stay on track with its international commitments. Commitments that have far-reaching consequences for noncompliance would be felt by manufacturers trying to export American products, distributors managing increasingly constrained supplies, contractors servicing equipment across the country, and ultimately, consumers who rely on cooling and refrigeration daily.
EUROPE’S DEADLY HEAT WAVE OPENS THE DOORS TO ASIAN AIR CONDITIONING MAKERS
This summer, World Cup visitors are seeing firsthand the benefits of air conditioning, but recent changes threaten the future of this industry. America should be leading in an industry it invented, not making it harder for its own companies to deliver it.
At a time when global demand for cooling is soaring and international markets are opening, the U.S. should strengthen its position as an exporter of advanced cooling technologies. Instead, we risk sacrificing long-term competitiveness, export opportunities, and refrigerant availability to satisfy the short-term demands of a few companies.
Alex Ayers is Vice President of Government Affairs at the Heating, Air-conditioning, & Refrigeration Distributors International.
