American heat pump manufacturing got a boost earlier this month through a White House order aimed at phasing down reliance on foreign energy due to Russia’s war on Ukraine.
On June 6, President Joe Biden invoked the Defense Production Act (DPA) to expand the manufacture and availability of energy-saving technologies, including heat pumps and solar. The technologies, products, and component materials will be made in America. Technologies included in Biden’s DPA order are:
- Solar
- Transformers and electric grid components
- Heat pumps
- Insulation
- Electrolyzers, fuel cells, and platinum group metals
Invoking the DPA paves the way for more federal investment in those technologies. The Cold War-era law gives the president emergency authority, through executive order, to control U.S. domestic manufacturing by requiring private companies to prioritize and fulfill contracts with the federal government that address national needs. Presidents Donald Trump and Joe Biden both invoked the DPA in response to the COVID-19 pandemic, addressing issues like hoarding, production of critical supplies, vaccination and testing, and — most recently — the baby food shortage.
Biden’s order aims to take ownership of the country’s clean energy independence. It reflects twin goals of energy independence for security reasons — a point underscored by U.S. bans on Russian oil/gas — and for advancing clean energy, a goal of the Biden-Harris administration. More than 40% of all U.S. energy consumption comes from buildings, homes, offices, schools, hospitals, military bases, and other critical facilities. Language in the DPA specifically calls out clean energy infrastructure, including solar, geothermal, wind, and biomass sources, as a critical part of U.S. national defense.
“For too long, the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations,” said Secretary of Energy Jennifer Granholm. “With the new DPA authority, DOE can help strengthen domestic solar, heat pump, and grid manufacturing industries while fortifying America’s economic security and creating good-paying jobs, and lowering utility costs along the way.”
Federal Investment
Through the DPA order, the White House is telling manufacturers to make heat pumps as part of a federal contract — i.e., the government is a guaranteed buyer.
The White House has been pushing for heat pumps as an alternative heating source; under a plan announced June 13 by the Biden Administration, non-condensing indoor gas furnaces would be phased out beginning in 2029. Gas furnaces account for an estimated 15% of annual residential energy use in the U.S. According to figures from the Census Bureau, more than 47 million homes — more than 38% of all homes in the country — are heated with warm-air natural gas furnaces.
“To reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries such as Russia for oil and gas, heat pumps are an important solution,” stated the energy.gov press release. “Their use by the U.S. and allies can shrink Russian revenue for war and reduce climate instability. However, currently, U.S. HVAC manufacturers are not producing heat pumps at the rate needed. The Biden-Harris Administration can help American manufacturing expand and expedite the installation of heat pumps in homes and residential buildings by qualified building professionals.”
“It’s Only Positive”
John Thomas, CEO of geothermal heat pump manufacturer WaterFurnace, said in an interview that he’s “encouraged” by Biden’s use of the DPA to speed the manufacture of domestic clean energy technologies, citing the “mutual benefits” of responding to both global energy costs and decarbonization/electrification efforts in the U.S. and worldwide.
“It's kind of the intersection of those two things. And then there's the economic benefit of transforming the energy infrastructure — that can mean a lot of well-paid skilled jobs across the U.S.,” Thomas said. “We're struggling through an available employment market opportunity right now in the US, but higher [numbers of] skilled jobs are always better for the economy.”
While it’s still too early for him to predict how much of an effect the order will have on the heat pump industry, Thomas is optimistic.
“We feel strongly that it will have a positive effect on driving exactly that entrepreneurial investment that we're talking about and raise consumer awareness, obviously with the benefits of extending the tax credit,” he said. “I mean, it's only positive.”
The DOE will be heading up the production effort. Thomas’ understanding is that once the DOE gets a scope and intent from the White House, they'll convene a group of stakeholders, either in a forum or individually, to gather input on how to approach the project.
