That's not just where the world is headed, but that's where the technology investment is gonna go. People aren't going to invest in that much more in gas powered water heaters. They will, I mean, some will, right. That's that's not going away anytime soon. But that's not where most of it goes.

This is Take Stock! Presented by Commusoft, the podcast where we bring together diverse experts and leaders to discuss the top trends, ideas, and strategies used in the field service industry and beyond. Let's dive in.

Hello, in this episode of Take Stock, we're gonna be looking at something familiar, but in a different light.

Heating and cooling.

Those were the not so subtle sounds of my GoldStar, GWHD 5,000. Many of our listeners will be familiar with similar units, in addition to larger heating and cooling systems available on the market. Today, in this episode, we'll be looking at heating and cooling through the lens of an issue, getting global attention, climate change.

Royal Highness, his excellence, his ladies and gentlemen, the six years since the Paris climate agreement have been the hottest years on record. Our addiction to fossil fuels is pushing humanity to the brink. We face a stark choice- either we stop it or it stops us. And it's time to say enough. Enough of brutalizing biodiversity, enough of killing ourselves with carbon. Enough of treating nature like a toilet, enough of burning and drilling and mining our way deeper. We are digging our own graves. 

That was United Nations Secretary General, Antonio Guetteres speaking at the 2021 UN Climate Change Conference, commonly known as COP26. The Secretary General's rhetoric seemed pretty dire, but with good reason. According to the latest report from the UN-sponsored Intergovernmental Panel on Climate Change, or the IPCC, human caused greenhouse gas emissions continue to rise causing the planet to warm, which scientists around the world say will have dire global consequences.

So what does all this have to do with HVAC? Actually a whole lot, but before we get into the nitty gritty of how global warming will impact heating and cooling, let's take a step back and talk about what exactly is climate change and how does it work.

To help explain how I brought in some expert support

A few weeks ago, I had the chance to speak with Mark Nabong. Mark has done a lot. He's helped Tesla develop electric vehicle infrastructure, served as legal counsel for the Natural Resources Defense Council, and currently works as Principle Development Consultant for Monotreme Consulting, which does renewable energy and telecom infrastructure.

Mark knows a lot about climate change and how it's going to affect the world. And to help break things down, I asked Mark to start at the top. So what exactly is climate change? 

Global warming climate change tend to refer to the same things. That is the idea that various environmental causes are leading to the Earth's temperature on average increasing and to a number of other related effects happen. The earth has experienced most of its hottest years ever. Recently in the last, you know, 40, 50 years, it is a very, very rapidly warming earth. 

Okay. So the planet is warming. We know that when humans extract process and burn fossil fuels like coal oil and natural gas for energy, they emit what is known as greenhouse gases, such as carbon dioxide, which heavily contributes to this.

So why is this bad?

This is a problem. It's a problem. Both for folks who care a lot about the environment, you know, because this can lead to significant species loss, significant habitat degradation. But it's also really a concern for people who care about people. If the polar ice caps melt, the water levels can rise significantly, you know, several meters or even more depending on how much melt and you know, 80% of the human population lives within,  50 miles of the ocean. The point is, a very large amount of people that are affected by.

Wow. Climate change is not good. We're told that humans need to transition from burning fossil fuels to using cleaner, more renewable energy folks in the renewable energy industry. Refer to this as energy transition. Mark helped shed some light on this term.

Energy transition is the term we use for the movement of electrical needs from generation by fossil fuels, which is the majority of it now to energy by renewable energy sources. So solar, wind, hydro geothermal, and nuclear, that last bit is a controversial one. Is nuclear renewable or not. I think it's a very good question. I don't want to touch it here right now. But basically those nuclear, wind, or geothermal, hydro those are the main ones that that people talk about when they talk about moving into an energy transition.

This isn't the first energy transition that's been made. You know, you could make the argument that the move in the late 1800's, early 1900's into fossil fuels into hydrocarbons was a major energy change, you know, prior to that human's energy.

Biologically, it was a horse, right? It was a human being turning turning a wheel. It was wind grinding and milling corn, right. Milling, milling cereals and now the burning of wood. And then that turns the clock turns a few ticks and then we're making most of our energy by burning fossil fuel. So it's another one of those energy, energy transition. So it's not just one energy transition. 

That was a pretty interesting perspective. Looking back, not too far in the past, humanity went through a pretty sudden and substantial energy transition. If we did it, then can we do it? I know, I try my best to respect the environment I recycle and I compost when possible. I ride my bike and I take public transportation, but will my travel habits and reusable water bottle be enough to stop the devastating effects of climate change. What do you think, Mark? 

When you talk to anybody about what has to be done, you have a public responsibility, large scale responsibility, and you have individual responsibility and the individual responsibility can seem very, very small weighed against the public one, but it is still real.

It is to draw, an analogy to cycling, it's very good that people recycle very, very good that people recycle, but recycling as individuals, as households is nowhere near on the scale as industrial recycling or should be on industrial recycling, right. To make environmental change, a personal choice and only a personal choice means that, you know, we're, we're never gonna get anywhere, right.

If you make it up to every single person to police their city, every single person to engage in firefighting classes. Oh, okay. That sounds good. But functionally, that's not really gonna work. You have to have a more organized system at the macro level. To make, to make the world safer, better et cetera.

So there is a need to move towards cleaner and more efficient behavior at the individual level, the family level, the corporate level, at the national, regional, and international levels. 

So in addition to my own personal choices, Public entities such as local, national, and international governments and agencies will have to and already have enacted laws and regulations to mitigate the effects of climate change.

When it comes to the heating and cooling industry, we're stuck in a catch 22. As the planet warms air conditioning will become a greater and more widely used necessity. But as we use more energy intensive air conditioners, the planet will continue to warm at a faster rate. It's like we're stuck in this vicious cycle.

So how do we get out and how can we responsibly regulate the industry and avoid the damaging effects of climate change? To understand. Let's take a look back at some national regulations enacted in the United States.

The year is 1990. The human genome project began, the hit sitcom Seinfeld was in its very first season, and George H. W. Bush was president: 

"...every American expect and deserves to, to breathe clean air. And as president, it is my mission to guarantee it for this generation and for generations to come well, as we used to say in the Navy mission defined mission accomplished, and today I am very proud on behalf of everyone here to sign this clean air bill clean air act of 1990."

That was H. W. Signing the Clean Air Act of 1990, an amendment to the original legislation enacted in 1963, heavily added to in 1970 and further amended in later years. In this legislation, were provisions protecting the ozone layer, which shields the earth from the sun's harmful ultraviolet rays and at the time, was being depleted by pollution.

Air conditioners used refrigerants called chloroflurocarbons or hydroflurocarbons known as CFCs or HFCs and commonly known as freons. These substances are known to deplete the ozone and layer and contribute to climate change. This act and subsequent regulations by the Environmental Protection Agency phase out the use of these ozone depleting substances.

According to the United Nations because of this and other essential actions by governments, the private sector and the general public, the ozone layer is projected to heal completely within the coming decades. 

So public action and regulation work! But with regulation, there are often inevitable growing pains.

Take for example, the AIM act or the American Innovation and Manufacturing Act. Signed in 2020, a few of the provisions in this legislation include giving the EPA the authority to phase down HFCs over a 15 year period and ban disposable cylinders for HFCs in the hopes of preventing waste and leakage, which contributes to global warming.

While this legislation is well meaning members of the HVAC community, including the ACC or the air conditioning contractors of America have called on the EPA to stop the disposable cylinder ban citing a number of reasons, including a lack of domestic refillable container manufacturing and worker safety issues.

Regulation has the best of intentions, but it can certainly hit speed bumps along the way.

So what's the latest legislation and regulation that heating and cooling contractors need to know about enter the Inflation Reduction Act.

This legislation, signed into law last month, aims to temper growing inflation and includes some critical climate action that directly affects the HVAC industry. Let's dive into some of the details. According to the Department of Energy the legislation creates a wide range of incentives to help American households make energy saving improvements to their homes.

Some of these include an $8,000 heat pump rebate for low and moderate income households, a $4,000 rebate for an energy efficiency retrofit that saves 35% or more on energy usage, and $2,000 for houses that save 20% or more. $1,200 credits for measures that reduce home energy waste, like efficient window, door, and insulation projects. And these credits can be claimed multiple times. 

In addition to providing incentives for projects, the Inflation Reduction Act provides a 30% tax credit for investing in clean energy systems like solar, wind, and geothermal heat pumps. For further reading, we'll link resources and texts that detail legislation further in the episode description.

But for now, more importantly, how is this going to affect your heating and cooling business?

And what are the implications for the industry as a whole?

First and foremost: heat pumps. Now is the time for you to become familiar with the latest and greatest heat pump products on the market today, especially if you're in a climate zone that is most conducive to an efficient heat pump system.

This leads us to our next implication: products.

But I'll say, familiarize yourself with the products that are available, you know, familiarize yourself with heat pumps. Familiarize yourself with the geothermal pumps. A geothermal pump is basically an installation that, that goes deep into the ground, like deep into the ground and uses the temperature differential between deep into the ground and the surface to drive temperature changes within the home. That's definitely possible in some in certain locales, the heat pump is. Otherwise, a lot depends on your build, right. But if you're an HVAC guy for a commercial installation, you know, do talk about alternative sources of energy for the installation because they can be substantially cheaper for their client. 

Customers are going to want to know what products are out there, especially if they are energy saving, therefore cost saving. Now is the time to diversify your product line and keep energy efficient products top of mind, as demand increases in the coming years.

When installing new energy efficient appliances in a customer's it's important to remember that the home's electrical systems may need to be retrofitted. The IRA's $4,000 rebate will contribute to that initial step. Diversifying your services can help make your business a one stop shop for HVAC and electrical needs, build trust with customers, and ultimately grow your business.

As you grow your business, it's important to keep the future in mind. Consider what Mark says here: 

That's not just where the world is headed, but that's where the technology investment is gonna go. People aren't going to invest in that much more in gas powered water heaters. They will, I mean, some will, right. That's that's not going away anytime soon, but that's not where most of it goes. 

And you know, another analogy I'll make you know is flip phones are important. Like there's always a space for flip phones, right. But the majority of the money is gonna go to the handheld tablets, handheld phones that are iOS phones and Android phones. That's where a lot of it goes. And  I'd argue that that's a little bit of what we're dealing with here. It is all well and good to be someone who can service a rotary phone. But at some point it's gonna be a niche, specialty, nostalgic, antique market.

Finally, one of the most critical takeaways: stay up to date with local, regional, and national regulations. From the Inflation Reduction Act, to the upcoming HFC phase down, it's critical to stay informed on upcoming laws and regulations that will affect your business. Regardless of political view or party, these regulations and future legislation will impact your business.

Staying on top of how these regulations will affect the industry will enable you to adapt your products and services to stay ahead of the competition. In the episode description we'll link a variety of resources, including resources from the ACCA, EPA, DOE, Congress, and others to help you stay informed and ready to adapt.

Well, that's all the time we have for today.  I'd like to give a big thank you to Mark Nabong for joining me and imparting his invaluable knowledge. And I'd like to thank you listeners for joining me for this series. We're excited to hit the ground running with more episodes, so stay tuned and we'll see you in Series Two.

This has been Take Stock! Presented by Commusoft.. We hope you enjoyed this episode. Be sure to subscribe, leave a review and check out more content on our Facebook, Instagram, Twitter, and at our website, commusoft.com.