Game-Changing HVACR Shifts: What 2024 Taught Us – how the EPA, the Courts, and Local Energy Policies are Reshaping the Industry

The HVACR industry experienced a transformative year in 2024, driven by the ongoing transition to refrigerants with lower global warming potential (GWP), significant regulatory shifts, and growing debates over energy policy. The landscape rapidly evolved from federal mandates to local battles over natural gas bans, presenting challenges and opportunities for stakeholders relying on the existing system. The industry’s commitment to environmentally friendly practices and technologies underscores a broader push toward a sustainable future.

Shaping Building Operations Amid HVAC/R Regulatory Changes

2024 revealed that evolving HVAC/R regulations are redefining the boundaries of building operations. These new rules, shaped by domestic policies and global competition, push building owners and operators to adapt quickly and strategically.

This year, Tammy and I committed to learning about the problems friends and colleagues asked us to investigate. We saw the rise of proven tools and strategies to meet these challenges. Along with a small round table of partners, we traveled the world, went to trade shows, and found that amazing new tech in leak detectors were newly available, data-driven platforms that tell us where to focus and indicate problems weeks before they are problems and real-time tracking systems that go beyond the casual ineffective manyltics that we had hoped would lead to better outcomes.

The refrigerant transition dominated the year, propelled by the American Innovation and Manufacturing (AIM) Act of 2020. This legislation, enforced by the U.S. Environmental Protection Agency (EPA), mandates an 85% phasedown of hydrofluorocarbons (HFCs) by 2036 (we are at 40% right now). Starting January 1, 2025, all newly manufactured and imported residential heat pumps and air-conditioning units must use lower-GWP refrigerants like R-454B and R-32.

The EPA has also mandated a phased-in tagging and labeling requirement (effective January 1, 2025) for all refrigerants and equipment to ensure compliance. These rules are designed to improve tracking and ensure safety and environmental standards adherence. Proper labeling must include refrigerant type, GWP values, and detailed handling instructions. Detecting and addressing refrigerant leaks is crucial for compliance and safety, as modern systems can identify such leaks and adjust operations accordingly.

Looking Forward to 2025:

In 2025, the focus will shift to the HVAC industry, preparing for the 2026 requirements, including mandatory enhanced leak detection systems, stricter inventory management, and refrigerant recordkeeping requirements. Training for technicians and owners operators on handling new refrigerants will be critical as the complexity of regulations grows annually through 2029.

Also, I expect the service level agreement contracts to be modified to reflect changes in record-keeping responsibility.

Scope of Impact:

Similar transitions, such as the phaseout of CFCs in the 1990s, have historically led to substantial industry adaptations, including manufacturing changes, increased compliance costs, and expanded training programs. The AIM Act’s scope is even broader, impacting residential, commercial, and industrial HVAC systems across the United States.

The broad impact of the AIM Act has exposed vulnerabilities in the existing system, highlighting the need for more resilient and straightforward policy frameworks. The industry saw a rapid shift away from low-value refrigerants like 408A, so the regulated base stocks can produce more future-proof materials like 448A and 449A in the short term.

Possible Solutions:

1. Encourage owners and operators to set “clear” leak rate or usage goals and then work backward to develop technological solutions that align with those objectives. Before making investments, it’s crucial to understand the data, indexes, quality metrics, and short-term achievable benchmarks.

2. Develop partnerships between manufacturers and training institutions to address skill gaps, focusing on integrating renewable technologies. Emphasizing renewable technologies in training programs can improve efficiency, support reliable power supply, reduce energy bills, and generate local jobs, contributing to more inclusive and resilient energy systems.

3. Determine the best compliance and maintenance posture for your company’s future and risk profile. An aggressive posture often indicates a focus on preventative maintenance over break-fix solutions, ensuring that your systems remain efficient and compliant with evolving regulations.

The EPA’s implementation of the AIM Act has deeply engaged the HVAC/R industry, offering a clear but “distant” roadmap and driving steady progress in the transition. However, the industry continues to grapple with a critical shortage of resources needed to repair and maintain an extensive fleet of active equipment.

While a step forward, the regulations address only a fraction of the necessary changes to maintenance practices. This regulated transition unfolds alongside parallel shifts in energy management, uptime optimization, and the escalating need to control costs associated with reactive repairs.

Chevron Doctrine Overturned: What It Means for Building Owners & Operators

In a landmark decision, the U.S. Supreme Court overturned the 1984 Chevron U.S.A. v. Natural Resources Defense Council ruling, granting federal agencies significant discretion in interpreting ambiguous laws. This decision curtails regulatory authority across all sectors, including HVACR, and places new burdens on owners and operators to navigate a fragmented regulatory landscape.

Looking Forward to 2025 and Beyond:

The reversal of the Chevron Doctrine is poised to accelerate state-level climate initiatives, creating a decentralized patchwork of policies. Compounding this complexity is the EPA’s limited ability to engage directly with the stakeholders responsible for funding and executing these transitions—namely, the owners and operators of HVACR equipment. Constrained by congressional oversight and court rulings, the EPA often fails to include these critical stakeholders in its planning and communication processes. This leaves owners and operators in a reactive position, navigating regulatory changes independently.

Adding to the challenge, industry associations that advocate against centralized federal oversight sometimes inadvertently foster fragmented state regulations as a substitute for stripped-away federal authority. The result is a regulatory environment where owners and operators must manage compliance across disparate state rules without the benefit of cohesive, nationwide guidance.

Scope of Impact:

Historically, centralized federal oversight has allowed for more streamlined regulatory processes, giving stakeholders clear, uniform expectations. However, the Chevron Doctrine’s reversal shifts the responsibility of managing compliance from federal agencies to individual businesses, creating heightened administrative burdens. For multi-tenant and multi-location enterprises such as REITs and grocery chains, the lack of coordinated federal engagement increases costs, risks, and complexity, leaving these organizations to independently discover, react, and respond to a growing array of state regulations.

Possible Solutions:

Proactive Engagement with State and Regional Policies

Owners and operators must shift resources to closely monitor and align with emerging state-level initiatives, including those led by groups like the U.S. Climate Alliance. Leveraging state-specific incentives and building regional compliance strategies can help offset administrative burdens.

Develop Internal Expertise

Investing in regulatory expertise within organizations will help manage disparate state rules more effectively. Specialized teams can identify risks and opportunities tied to local regulations, ensuring timely compliance.

Advocate for Industry Collaboration and Federal Clarity

Owners, operators, and industry groups must collectively push for more explicit statutory guidance from Congress, advocating for policies that balance federal oversight with state flexibility while ensuring the voice of those funding transitions is heard in policy discussions.

Build Partnerships with Industry Associations

Collaborating with industry associations can help ensure that lobbying efforts align with the broader needs of owners and operators, avoiding unintended consequences like fragmented state regulations. In a landmark decision, the U.S. Supreme Court overturned the 1984 Chevron U.S.A. v. Natural Resources Defense Council ruling, granting federal agencies significant discretion in interpreting ambiguous laws. This decision reduces regulatory authority across all sectors, including HVACR.

“Relying on the EPA as your main guide to run your business is risky. Their rules give only part of the picture and won’t fully help you keep customers comfortable, food fresh, or data moving safely and fast. This approach can leave your business unprepared for bigger problems, like equipment failures and rising costs.”

Instead, take charge with a stronger strategy. Focus on improving your systems’ daily performance and finding ways to save money. Shift from following EPA rules to building a plan centered on operational performance. This will keep your equipment running smoothly, cut costs, and ensure you’re ready for anything.

Reducing HVAC/R Energy: A Key Step Toward Energy Efficiency, Electrification, Reliability, and Future-Proofed Buildings

Demand-side management (DSM) is a strategy to optimize energy use by reducing overall consumption or shifting usage to off-peak times. It improves energy reliability, reduces costs, and helps manage grid capacity more effectively.

DSM in 2025: A Growing Priority

As 2025 approaches, DSM could become increasingly active in preparing for challenges like the Carbon Border Adjustment Mechanism (CBAM) and bills like CSRD in Europe and SB253 in California. Using DSM, building operators can optimize performance, stay compliant, and reduce costs in a shifting regulatory landscape.

Keep it simple—don’t overcomplicate the process. Build on small successes and expand your DSM strategies as you gain insights. Starting small and scaling steadily ensures sustainable improvements and long-term success.

Looking Forward to 2025:

The focus on DSM is expected to grow as policymakers, utilities, and businesses recognize its potential to complement electrification efforts. By prioritizing energy efficiency and strategic demand planning, regions can avoid overloading grids, reduce consumer costs, and enhance the reliability of renewable energy integration.

Scope of Impact:

Electrification introduces new challenges for utilities, including infrastructure upgrades and managing variable renewable energy sources. DSM helps address these challenges by smoothing energy demand, enabling greater use of clean energy, and minimizing reliance on backup fossil fuel systems, such as natural gas, during peak loads.

Possible Solutions:

1. Enhance DSM Programs: Invest in technologies and initiatives that measure and help you optimize energy use, such as smart grids, dynamic pricing, and intelligent building management systems.

2. Incentivize Energy Efficiency. To reduce peak demand and overall consumption, build the concept of energy consumption into your service level agreements with your providers and price-retrofits and demand-response systems with a measurable value for carbon – i.e., carbon per ton of $50-$100 per ton.

3. Promote building owners’ awareness of energy-saving benefits, including cost savings, environmental impact, and energy reliability as a shared opportunity between ownership, management, engineers, and HVAC service providers.

Policymakers and businesses can create a sustainable, efficient, and reliable energy future while navigating the complexities of electrification and natural gas transitions by focusing on demand-side management.

A Call for Action: Aligning Workforce and Technology for 2025 and Beyond

To future-proof the HVAC/R industry and achieve sustainability goals, a key focus in 2025 must be a complementary alignment between the workforce and the technologies they depend on. Workforce development alone is not enough; the technology supporting the industry must evolve to work seamlessly for those who rely on it daily. This means investing in training, apprenticeships, and career opportunities and ensuring that the technology is accessible and reliable and enhances operational efficiency. This alignment is crucial for transitioning to more environmentally friendly refrigerants, contributing to a sustainable future.

At Carbon Connector, we recognize that this alignment is critical. The workforce needs trustworthy tools—technologies that are intuitive, efficient, and designed to solve real-world challenges. For 2025, the commitment must include empowering the workforce with smarter, integrated solutions that reduce complexity, improve decision-making, and enable a shift from reactive maintenance to strategic operations.

Combining these efforts, the HVAC/R industry can create a resilient framework in which skilled professionals and advanced technologies work harmoniously. This alignment will lead to more reliable systems and lower operational costs, which will be paid for by successfully meeting energy efficiency and sustainability goals. It’s time to expect more from our technology and empower our workforce to maximize its potential. This is also an excellent entry path for more workers.

Federal and State Legislation: Key Policies Shaping HVACR, Including the Inflation Reduction Act

Several bills introduced this year highlight the growing intersection of HVACR and energy policy, emphasizing the need to reduce greenhouse gas emissions through legislative measures:

• New York: Prohibits certain HFCs in specific applications under NYCRR Part 494, aligning with EPA SNAP rules.

• Colorado: Restricts high-GWP HFCs in specific applications as part of its climate action plan to reduce greenhouse gas emissions.

• Washington: Enforces HB 1050, banning high-GWP refrigerants and setting GWP limits for new equipment to help reduce greenhouse gas emissions.

• California: Implements SB 1013, capping GWP at 150 for refrigerants in large systems in new facilities, contributing to emission reduction efforts.

• Massachusetts: Phases specific HFCs in refrigeration, chillers, and aerosol propellants to meet climate goals and reduce greenhouse gas emissions.

• The Refrigerator Freedom Act and similar House bills aim to limit federal appliance regulations, but their futures in the Senate are uncertain.

• The Indoor Air Quality and Healthy Schools Act of 2024 gained bipartisan support but awaits a House vote.

• Inflation Reduction Act-funded rebate programs for energy-efficient HVAC systems gained traction. As of November, ten states and D.C. offered rebates.

New policies and initiatives promote new energy sources and emphasize the transition to local ones. These policies also support local energy generation projects to enhance energy efficiency and reduce grid congestion. Democrats’ efforts to promote green energy include the need for storage solutions to manage production and performance-based utility rate-making to encourage renewable energy integration into state energy policies.

Future-Proofing HVACR: What Lies Ahead

The HVACR industry is poised for a transformative era. 2025 is poised to be a pivotal year for regulatory compliance and strategic innovation. Ownership and management responsibilities in the sector are expected to expand as stakeholders navigate an increasingly complex framework of requirements and opportunities. The industry’s commitment to a sustainable future is evident as it strives to meet long-term sustainability goals.

The transition to lower-GWP refrigerants will remain a top priority. The industry’s immediate priorities include tagging and labeling requirements, enhanced leak detection systems, and inventory management requirements.

Compliance will become more stringent by 2026, necessitating proactive measures from owner-operators, distributors/manufacturers,, and technicians. Historical precedents, such as the phaseout of CFCs, reveal that early adoption of technology and process changes can mitigate challenges while maximizing competitive advantage.

However, federal regulatory shifts, such as the overturning of the Chevron Doctrine, add a layer of complexity. As federal agency authority diminishes, the role of state governments and regional coalitions like the U.S. Climate Alliance grows.

This decentralized approach introduces variability across state lines and opens new avenues for local innovation and tailored solutions. For example, states actively participating in climate initiatives (at least 10) will likely set aggressive benchmarks for refrigerant management and energy efficiency, creating challenges and opportunities for businesses operating across multiple jurisdictions.

Ownership of HVACR assets will also evolve as systems become more technologically integrated and data-driven. Building Management Systems (BMS) and IoT-enabled equipment are becoming critical tools for monitoring performance, tracking compliance, and identifying energy and cost-saving opportunities. However, disparate technologies hosting BMS data are often improperly labeled, indexed, or benchmarked, leading to ineffectiveness.

At Carbon Connector, we are spearheading projects to enhance the usability of this data, ensuring it is reliable and actionable. By improving data management, we aim to bridge gaps in the workforce by providing insights that can supplement gaps in the workforce. Owners and operators must invest in digital solutions and training to optimize these systems effectively. Collaboration with service providers, manufacturers, and regulatory bodies will be key to navigating the learning curve and achieving long-term benefits.

For over 30 years, the HVACR industry has been eager to expand its workforce, yet progress has been slow. The demanding and unpredictable nature of the work has deterred many potential technicians. However, there’s a growing recognition that a more routine work schedule could attract more individuals to the field. At Carbon Connector, we’re focusing on creating a more structured and predictable work environment. By implementing regular schedules and providing clear career pathways, we aim to make the HVACR industry more appealing to newcomers. This approach addresses existing skill gaps and prepares the next generation of technicians to handle the complexities of modern HVACR systems, from advanced refrigerants to new regulatory frameworks.

Collaboration among industry stakeholders, policymakers, and community advocates will be critical. Developing public-private partnerships, advocating for balanced policies, and investing in technological and human capital will shape the industry’s trajectory. The HVACR sector’s ability to adapt and innovate to evolving requirements will determine compliance success and set the foundation for a more sustainable and efficient future.

As the HVACR industry moves into 2025, transitioning to lower-GWP refrigerants, tagging and labeling requirements, and preparing for the increasingly complex 2026 standards will dominate the agenda. The Chevron decision’s regulatory fallout and energy policy debates will also shape the industry’s trajectory. Collaboration between industry stakeholders, policymakers, and regulators will be essential to navigating these challenges while seizing opportunities for innovation and sustainability. Local energy generation projects, such as community solar, will play a crucial role in future-proofing the HVACR industry by enhancing energy efficiency and reducing reliance on the traditional grid.

The Energy Transition is the Impact point on HVACR.

The energy transition is driving changes in the HVACR industry, influencing the energy mix with a focus on reducing greenhouse gas emissions and increasing energy efficiency.

Renewable energy sources, such as solar and wind power, are becoming more prevalent in building management, emphasizing the importance of renewable integration to link utility revenues to performance in efficiency, customer service, and renewable energy efforts.

The energy transition also leads to developing new energy systems, such as heat pumps and variable refrigerant flow (VRF) systems.

Building owners and operators must adapt to these changes to remain competitive and sustainable.

Building Performance in Focus: Tools and Solutions for Emerging HVACR Regulations

Awareness is growing among building owners and operators as new HVACR regulations emerge, impacting operations segment by segment. While tied to climate goals, these regulations are primarily driven by a fragmented political approach to solving more significant systemic issues. The burden of compliance doesn’t fall on the industry at large—it falls on the owners and operators who must navigate these changes to ensure reliable building performance.

In 2024, we saw a shift in the narrative. It’s no longer about just facing challenges—it’s about leveraging proven tools and strategies that deliver results. Leading companies have piloted and validated innovative solutions, from more affordable and effective leak detection technologies to advanced data-driven decision-making tools. These resources empower operators to monitor performance, guide activity, and make informed decisions that optimize building operations and reduce costs.

The key lesson of 2024 is clear: the tools to do the job exist. By adopting more intelligent leak detection systems, embracing data for proactive decision-making, and utilizing tracking platforms for maintenance and compliance, owners and operators can shift from reactive tactics to strategic, performance-driven operations.

The path forward isn’t just about adapting to regulations—it’s about building better, smarter, and more resilient systems that ensure long-term success. With the right tools and strategies, building performance’s future is achievable and within reach.

Opportunities and Risks in the Transition

The energy transition, combined with the maintenance modifications mandated under the AUM Act, presents opportunities for the HVACR industry. For example, technologies can be adapted to deliver energy-efficient HVACR systems, and maintenance teams can be assisted in shifting from break-fix to preventative maintenance. This commitment to innovation improves homeowner comfort and efficiency and contributes to a sustainable future by reducing environmental impact.

However, there are also risks, such as increased regulatory requirements and changing energy landscapes. Ensuring access to affordable energy is crucial in this transition, as it supports community engagement and inclusive approaches to clean energy initiatives.

We often speak of the HVACR industry’s preparation, but the industry comprises hundreds of different stakeholders. Building owners and occupants are two of the least aware stakeholders, and they must also be educated about their options based on the new landscape.

Strategy Over Tactics: Trust, Work, and the Danger of Procrastination

In the fast-evolving HVAC/R landscape, procrastination is the enemy of progress. Delaying action only compounds challenges and increases costs, while a well-defined strategy ensures lasting results. Success isn’t about short-term fixes—it’s about committing to the journey, building trust, and working to deliver meaningful outcomes.

At Carbon Connector, we believe strategy always beats tactics. Leveraging advanced tools like leak detection, real-time tracking, and data-driven insights, we help you make informed decisions that drive measurable, long-term results.

Procrastination only postpones solutions, but building trust with the right partner ensures you stay ahead of challenges instead of reacting to them. We can turn hesitation into action, moving from reactive decisions to proactive, strategic leadership.

Let’s take the journey together because the sooner we start, the better the results will be.

Best of luck to us all in 2025.