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Whether through its own volition, a push from private sector sentiment, or government regulation, the coming decarbonization and electrification movements are expected to have deep impacts on the HVAC industry in the coming years.

As regulations are being considered at multiple levels of government, most in the industry would prefer to see a more uniform and consistent policy set where the federal government commands the authority, but it’s yet to be seen how things shake out at the state and local levels.

The ACHR NEWS asked several industry leaders for their take on what decarbonization looks like for HVAC.

ACHR NEWS: What is the difference between decarbonization and electrification?

Mark Lessans, senior director of sustainability and regulatory affairs, Johnson Controls: Decarbonization means cutting greenhouse gas (GHG) emissions from the sectors of the economy that emit them, including power generation, industry, transportation, buildings, and agriculture. Electrification refers to the shift from combustion end uses, like heating and transit, to electric alternatives.

Decarbonization and electrification are often associated because electrification is a critical step on the path to decarbonization. But to be an effective decarbonization measure, electrification needs to be managed in parallel with other strategies, including energy efficiency and the transition of the energy grid.

In a broad sense, building electrification is shifting HVAC equipment from using on-site fossil fuels toward efficient, electric heat pumps. By operating efficiently and taking advantage of increasingly low-carbon electricity, heat pumps can provide reliable space heating while slashing carbon emissions and utility bills.

ACHR NEWS: How should the HVAC industry be preparing for decarbonization?

Eric Zito, director of product management, heating, and sustainability, Lennox: Decarbonization through the products we sell requires us to consider three factors: the amount of energy used (efficiency), the type of energy used (electrification), and the impact of refrigerant (both reclaiming and the transition to low GWP refrigerants). In business operations, consider how you’re powering buildings and any opportunities to electrify vehicle fleets for distribution. Initial and operating costs for both solar power and electric vehicles have dropped substantially in recent years, especially considering incentives.

Another way for contractors to prepare for decarbonization is to ensure everyone on your team is comfortable with selling, installing, and servicing heat pumps. Heat pumps are increasingly important to be successful in markets across North America. Even in the coldest markets, dual-fuel systems with a heat pump and furnace are a great option.

Lessans: Heat pump technology is evolving rapidly, and it is important that the HVAC industry familiarize itself with these advancements and their appropriate applications. Understanding the technology and its prerequisites for installation will enable the industry to present its customers with multiple decarbonization options and aid them in selecting the solutions that best meet their needs both today and tomorrow.

Today, there are unprecedented incentives available at the federal, state, and utility levels encouraging broader adoption of high-efficiency heat pumps. For example, tax credits such as 25C for consumers and 179D for commercial building owners were expanded under the Inflation Reduction Act and can significantly reduce the upfront costs of these systems.

Michelle Robb, senior director of growth experience, Mitsubishi Electric Trane HVAC US (METUS): The HVAC industry plays an important role in reducing emissions of greenhouse gases. Changes in refrigerants for residential HVAC systems are coming on Jan. 1, 2025, and commercial HVAC systems in 2026, and the performance of variable refrigerant flow (VRF) heat pump systems continue to improve. Both will help with America’s decarbonization efforts. The industry must continue installing energy-efficient, all-electric heat pump solutions, including VRF systems.

HVAC suppliers like us are introducing hybrid variable refrigerant flow (HVRF) air-conditioning and heating solutions as additional offerings to standard VRF units. HVRF systems use less refrigerant than conventional VRF solutions and are a key technology in the movement to electrify and decarbonize buildings. This is crucial since the U.S. has ratified both the AIM Act and the Kigali Amendment, which will make A2L refrigerants mandatory for most HVAC systems, including heat pump solutions, beginning Jan. 1, 2026. To meet new GWP standards, the industry will change from using traditional high-pressure refrigerants like R410A to A2L-classified refrigerants with lower GWP.

ACHR NEWS: Do you feel the decarbonization trend is moving too fast or not fast enough?

Heidi Gehring, director, Residential Product Management, Carrier: For Carrier, decarbonization isn’t a trend — it’s a necessity. Our planet is at a critical juncture. Climate change is causing irreparable damage to the environment, and the need to transition to renewable energy has never been greater. The actions we take today will shape a sustainable future for generations to come.

As we expand our portfolio of intelligent climate and energy solutions, Carrier is accelerating the shift toward electrification, more connected technologies, and environmentally responsible refrigerants. We are helping customers reduce their carbon footprint and meet their sustainability goals by improving energy efficiency in buildings and homes. Together, we are innovating for a sustainable future.

Zito: There are some ways we are moving too fast and some in which we are not moving fast enough.

If the objective is to get to net zero greenhouse gas emissions by mid-century, we are not moving fast enough. However, it is also important to consider how quickly we can develop and leverage new technology and processes, as that can take time. There are some state or local jurisdictions with aggressive timelines in relation to technology currently available. In markets where we’re seeing rapid and effective change, the long-term impacts of sustainable energy are being considered carefully, allowing a faster transition and positive experience for homeowners. Ultimately, it’s about finding a balance between “too fast” and “not fast enough” to drive effective decarbonization.

Joshua Greene, corporate vice president, government, regulatory, and industry affairs, A. O. Smith: Perspective here is key. The decarbonization trend in the U.S. began in earnest almost 20 years ago in California when the State enacted a law (e.g., AB 32), which set a legal framework to decarbonize the State’s economy by requiring the reduction of state-wide greenhouse gas emissions, including from the building sector. Working from that foundation, a national movement began with other states and local jurisdictions following California’s lead. Most of the activity related to AB 32 focused on new construction for the building sector. Fast forward to 2018-2019, a key policy change occurred in California when the city of Berkeley, a local jurisdiction, enacted the nation’s first “gas ban,” which restricted the ability to use gas-fired space and water heating equipment in new construction. Recently, a federal appeals court overturned the city’s gas ban based on federal preemption grounds. The industry, as well as a broad array of stakeholders, are assessing the viability of “gas bans” as a decarbonization policy tool moving forward. However, the other trend in California, and now across other states, is to regulate gas-fired equipment out of the market by requiring “zero-NOx” standards, which is de-facto electrification as gas-fired products may not physically be able to have zero NOx emissions. This product emissions-based regulatory approach is happening with great speed and the industry is attempting to work with regulators on the challenges and barriers with these “air emission” regulations as they cover new construction and retrofit/replacement.

Robb: Decarbonization is a must and, of course, it’s not happening fast enough. Look at 2023’s record-breaking heat. The Inflation Reduction Act of 2022 (IRA) is the largest ever climate investment by the Federal Government in American history, projected to reduce GHG by 31-44% below 2005 levels by 2030. The IRA will also bring energy bill relief to U.S. households and the commercial sector by incentivizing the adoption of more efficient, all-electric appliances and solutions like highly efficient, variable-capacity heat pumps. Greater adoption of electric heat pumps will help slash domestic GHG emissions and lower energy costs for Americans.

However, this is an enormous program, and it’s important to make sure the states have their process and program definitions in place. With the IRA’s rebate programs, for example, states will have to adhere to the efficiency performance standards in the law but will be able to alter the allocations, except when exceeding the amounts and percentages specified.

ACHR NEWS: Is it better for the industry to have the federal government establish decarbonization regulations instead of it being handled at the state and local level? If so, how can the HVAC industry make sure that happens?

Steve Lakin, director of public and industry affairs, Danfoss: Industry concerns are working collaboratively to support decarbonization goals and identify the path forward, whether in collaboration with the EPA, state regulatory agencies, or both. Some jurisdictions are more aggressive in pursuit of meeting climate objectives and, in some instances, their statutes and laws exceed federal regulations — or don’t align with one another. This lack of unanimity suggests to me it’s likely there will never be a one-size-fits-all solution.

Lessans: It is preferable for decarbonization policy to be set at the federal level, and the federal government has taken the lead by coordinating state and local action on building performance standards, establishing decarbonization targets for federal buildings, and defining “zero-emission buildings” for reference in standards and other programs. While one set of federal building decarbonization regulations would be ideal, realistically many states and municipalities will pursue their own policies where the federal government lacks authority. Appropriate guidance from federal agencies can help maintain consistency across these regulations.

The HVAC industry can play an important role by educating policymakers at all levels of government about the building technologies that are available today and how they can help make energy bills lower and more predictable while reducing emissions. The more policymakers understand these technologies and their role in decarbonization, the better they can establish pragmatic policy that promotes their use.

ACHR NEWS: What products are you introducing that apply to the decarbonization trend?

Lakin: We’ve got a broad range of technologies to help our OEM partners reach decarbonization goals including two new variable-speed compressors and our ActiveCooling technology from Danfoss Turbocor.

Zito: Currently, all Lennox products on the market contribute in some way to the decarbonization trend. For example, our highest efficiency gas furnace, the SLP99V variable-capacity gas furnace, has an energy efficiency rating of up to 99% AFUE, which reduces emissions in comparison to lower efficiency models.

MORE EFFICIENT: New products hitting the market, like Lennox’s SL25XPV heat pump, which has an efficiency rating of up to 24 SEER and up to 11.8 HSPF, will help accelerate the HVAC industry’s goal of reducing emissions and energy consumption. (Courtesy of Lennox)

Dual-fuel and cold climate heat pumps have a high capacity for heating at low temperatures, while smart thermostats, like our S40 Smart Thermostat, help manage energy usage efficiently, thereby reducing emissions from our residential systems. The Lennox SL25XPV heat pump is a great example of a heat pump that operates in cold climates and will expand the geography where heat pumps perform well in low temperatures.

Lessans: For residential customers, our York YH5 15.2 SEER2 single-stage heat pump is optimized to meet 25C tax incentives through the IRA. When the YH5 heat pump is paired with our York Y92E 97% AFUE 2-Stage Furnace, homeowners in colder climates can use the most efficient fuel source based on temperature conditions. During the few times a year when temperatures are too low for efficient electric heating, the Y92E furnace provides efficient backup heating and is also optimized to meet 25C eligibility requirements.

In commercial buildings, the Johnson Controls OpenBlue Enterprise Manager continuously scans data streams from the building and external sources like utilities for opportunities to save energy, reduce carbon emissions, improve indoor air quality, and enhance occupant comfort while managing cost. For instance, the OpenBlue platform can help optimize building efficiency through connected chillers and control services.

Greene: A. O. Smith is excited about the future, and we are launching new heat pump offerings for residential and commercial applications, as well as working on a robust product roadmap of additional technologies over the next 10 years.

Robb: We have introduced Heat₂O, a Hybrid VRF solution, and intelli-Heat to provide even greater energy efficiency and a reduced carbon footprint. In 2025, we will introduce a new portfolio of products that use R-454B refrigerant.

Heat₂O is Mitsubishi Electric’s all-electric solution for commercial, high-volume domestic hot water (DWH) in any climate. Energy-efficient and environmentally friendly, Heat₂O uses a natural CO₂ refrigerant with a GWP of 1 and an ozone depletion potential (ODP) of zero.

Our Hybrid VRF (HVRF) system uses a hybrid combination of refrigerant and water in a single system: a unique two-pipe hydronic VRF zoning system with a combination of refrigerant and water to air-condition and heat simultaneously.

Made for residential settings, Mitsubishi Electric’s intelli-Heat system enables homeowners to upgrade their current HVAC system to a hybrid dual-fuel heat pump, significantly reducing gas usage and CO₂ emissions.

Lastly, we continue to expand our Hyper-Heating Inverter (H2i) capabilities. Our H2i lineup has heat pumps producing 100% of heating capacity down to 5° F, -5°F, and soon -10°F. This extended range makes it more feasible for consumers to install and rely on our equipment in colder climates. Since our heat pumps heat longer, consumers won’t need to rely on backup heat.

Karen Meyers, vice president, government affairs, Rheem: Rheem offers a range of products from the Endeavor Line of Heat Pumps to the 120 Volt ProTerra Plug-in Heat Pump Water Heater. These revolutionary products reduce users’ carbon footprint and offer energy-efficient, easy-to-install solutions that can save on utility bills for the end user.

Gehring: To help accelerate decarbonization, Carrier offers a comprehensive collection of electric product offerings, including heat pumps, ductless systems, VRF systems, and geothermal comfort systems. Our all-electric solutions can replace natural gas or propane in virtually any installation or climate. Low-GWP refrigerants, including Puron Advance (R-454B), are part of the equation as well.

ACHR NEWS: How should HVAC contractors be talking to customers about the decarbonization trend?

Zito: The key to discussing decarbonization with homeowners is to know your customers and find ways to educate them on the full impact of their HVAC system. For example, with unplanned replacements, we know the homeowner is focused on restoring heating or cooling as cost-effectively as possible but may not be considering the long-term impact of their system.

Savvy contractors know to use this opportunity to ask questions about hot and cold spots in the home, indoor air quality needs, energy bills, etc. In a similar way, contractors can discuss the positive impact of electrification and the long-term benefits of variable speed and energy-efficient products. An increasing number of customers are concerned with their impact on the environment and are aware of how heat pumps will reduce their carbon footprint. Don’t be afraid to raise the question, especially if you see indicators in the home such as solar panels, an electric vehicle, or an induction cooktop.

Lessans: HVAC contractors who educate themselves about the latest regulations, incentives, and sustainable solutions will be at an advantage when talking to customers about decarbonization. Customers have an unprecedented opportunity to help the planet while cutting their utility bills – system retrofits that use high-efficiency systems can reduce energy, emissions, and costs by between 30% and 40%. With the tax incentives and consumer rebates in the IRA, it’s possible for a wider range of customers to afford the upfront cost of high-efficiency, sustainable HVAC equipment. This, paired with innovations in heat pump technology that are expanding the breadth of applications for a wider range of climates, gives contractors greater opportunities to increase installations in buildings and homes.

Meyers: HVAC contractors are pivotal in guiding customers through the decarbonization trend by explaining its significance in advancing environmental sustainability. They provide valuable information on technologies contributing to decarbonization, highlighting the latest advancements in energy-efficient HVAC products.

Additionally, for those who reside in regions with extreme temperatures, an HVAC contractor may recommend achieving energy optimization with a dual fuel system — such as a heat pump paired with a gas furnace. The system alternates between fuel sources, providing efficient heat in frigid climates while still aligning with a customer’s sustainability goals.

ACHR NEWS: What are some misconceptions about the decarbonization of HVAC?

Lakin: One of the biggest misconceptions is that we don’t have technology available today. We have proven technologies like variable speed compressors and heat exchangers that help improve efficiency and reduce refrigerant charge.

Zito: Some may say that the decarbonization of HVAC is a threat to the industry, that it isn’t possible due to constraints on the electric grid, or that it’s just a passing trend. However, the HVAC industry should view decarbonization as a tremendous opportunity to be at the center of the energy transition over the coming decades. Besides being good business, we can also positively impact the environment and reduce greenhouse gas emissions through our products and operations. While there will be challenges, this is something that will be part of our industry for the foreseeable future, so we should all prepare instead for the long-term benefit for our companies and our families.

Lessans: One common misconception about the electrification of HVAC systems is that the existing fuel combustion appliance — the furnace or the boiler — needs to be removed to install a heat pump. In fact, for many applications, fuel combustion can work well as a backup heating source for heat pumps. Nearly all heat pumps are installed with some form of backup heat and, when part of an integrated system, electric resistance is commonly used. However, electric resistance is extremely inefficient and can lead to spikes in demand on the grid, especially during periods of peak heating demand. Using fuel combustion as a backup instead can enable rapid heat pump deployment in buildings, maximizing emissions reductions today and setting them up for the elimination of fossil fuels down the road.