Last week, President Joe Biden spoke about climate change legislation. His executive moves to spur heat pump production stalled. Anna Cashew/Getty Images
Nearly two months ago, President Joe Biden invoked a Cold War-era law to increase domestic production of heat pumps and building insulation.
The Defense Production Act allows the commander in chief to redistribute supplies for defense needs. Biden used it after Russia invaded Ukraine, when sanctions on gas producers sent gas prices skyrocketing.
At the time, administration officials said Biden’s actions on heat pumps and insulation could cut electricity bills for American households, reduce climate change and free up natural gas to support the country’s beleaguered European allies.
“The truth is, there is no shortage of heat pumps,” said Francis Dietz, vice president of public relations for the Air Conditioning, Heating and Refrigeration Institute. “And never.”
Dietz and other business leaders say demand, not supply, is the bottleneck in the US, where heat pumps and thermal insulation are increasingly being adopted. This reality ran counter to Biden’s orders, and in an industry held back by cheap gas and ubiquitous melting pots, little progress has been made.
The Inflation Reduction Act, finalized by Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-Virginia), includes $9 billion in rebates and provisions to promote energy efficiency. Helping consumers electrify their homes. It also includes $500 million to implement the Defense Manufacturing Executive Order, as well as expanding U.S. solar panel manufacturing capacity and increasing supplies of critical minerals (Energywire, June 7).
While Biden’s clean energy order could be a “signal step” at a time when climate legislation in Congress is failing, Daniel Cohen, author of Facing the Climate Deadlock and professor of civil and environmental engineering at Rice University, said: “But now they can take action.” for new goals. .
“It looks like this is finally giving Biden some money and potentially spurring more domestic production of these mission-critical devices,” he said. “So this is exactly the push and pull you want to see. stimulating the production and purchase of such equipment.”
Despite their name, heat pumps do not produce heat, they can be used to heat and cool buildings.
This is how heat pumps work: they use electricity and refrigerant to push warm air out of a building in the summer and draw warm air into the building in the winter, even in very cold conditions. Both functions are easier to implement in well-insulated buildings.
But they “are approaching cost parity compared with fossil-fuel sources of heat in multiple markets,” McKinsey & Co. But they “are approaching cost parity compared with fossil-fuel sources of heat in multiple markets,” McKinsey & Co. said in a white paper last week. Но они «приближаются к паритету затрат по сравнению с источниками тепла на ископаемом топливе на многих рынках», — говорится в официальном документе McKinsey & Co. But they are “approaching cost parity with fossil fuel heat sources in many markets,” McKinsey & Co. said in a white paper. last week. Но McKinsey & Company заявила в официальном документе на прошлой неделе, что они «приближаются к паритету затрат» по сравнению с источниками тепла на ископаемом топливе на нескольких рынках. But McKinsey & Company said in a white paper last week that they are “approaching cost parity” compared to fossil fuel heat sources in several markets. “In some regions, especially in Europe, rising gas prices as well as continuous improvements in energy efficiency have in some cases given heat pumps an advantage in operating costs.”
This is partly due to the heat problem sweeping the continent, where air conditioning is relatively rare. It is also the fear of a looming energy crisis, with Russia threatening to cut off major EU gas supplies in the dead of winter.
In France, for example, energy efficiency subsidies make heat pumps “a cheaper option for households than gas and oil, both in terms of upfront costs and total cost of ownership,” according to Bloomberg NetZero Pathfinders. Meanwhile, Italy is offering a “super stimulus” subsidy that “enables households to receive a 110% tax rebate on the price of low-carbon heating installations.”
“This is going to be a megatrend that’s been talked about a lot and that’s Europe’s transition to heat pumps,” the CEO of Carrier Global Corp., told financial analysts last week. Dave Gitlin.
“When you look at places in the world that have never had air conditioning before — whether it’s Portland and Seattle, Oregon, or now London and Frankfurt — you see that we’re leaning towards this air-conditioned space,” he said in a statement. . This is stated in a press release from the company. Conference call about quarterly earnings.
Gitlin added that much of the climate-driven demand could be met through “more sustainable solutions.” “Because obviously we want to be part of the solution to climate change, not part of the problem.”
According to a McKinsey report, heat pumps are 2.2 to 4.5 times more efficient than gas ovens. Since heat pumps do not burn fossil fuels that warm the planet, the consultants estimate that the global use of “heat pumps instead of traditional boilers and stoves could reduce global carbon dioxide emissions by 3 gigatonnes per year.”
However, the US is a tough market. Experts say that even if the Schumer-Manchin bill is passed, domestic demand for heat pumps and insulation could still run into problems.
This is partly due to the fact that natural gas in the United States is more abundant and cheaper than in other countries. The average price of natural gas in the US in June was $7.67 per 1 million British thermal units, according to the latest data from the World Bank on commodities. In Europe, natural gas costs an average of $34.35 per million British thermal units.
In the absence of the Schumer-Manchin Act, there is also limited federal support for energy efficiency and heat pump jobs, which would make them more cost-competitive with gas-fired ovens and water heaters.
At the same time, policies for natural gas appliances vary greatly from place to place. Some progressive cities have banned gas connections in new buildings, while other conservative-controlled states have passed laws to remove gas bans (Energywire, February 2, 2021).
But perhaps the biggest hurdle to increasing demand for heat pumps in the United States is a general lack of familiarity with the product.
“If I have a gas stove and it needs to be replaced, I will probably continue to replace it with a gas stove, because I know gas stoves, I have used them, and I am comfortable with them.” – Air Air Conditioning, Heating and Refrigeration Research Dietz said.
“When I called my contractor, I said, hey, my gas stove is broken and they came and they will probably recommend another gas stove,” Dietz said.
Biden’s order will not solve these problems. It doesn’t help the insulation industry either: supply is currently not a problem, since this inexpensive product is already being produced domestically in large volumes.
“This designation was not requested or imposed by the insulation industry,” said Kurt Rich, President and CEO of the North American Insulation Manufacturers Association. “We have not encountered any unusual manufacturing or supply chain issues that would justify such a designation.” .
Rich and Dietz also said they haven’t heard of any stakeholder meetings, which the White House newsletter promises will be an administration effort to “make the most of the [Defense Production Act] tools that President Biden provides.” The first step to influence. Action. ”
The bill includes up to $8,000 in rebates for the purchase of heat pumps and will provide $200 million “for the education and training of contractors involved in installing energy efficient homes and improving electrification.”
Ari Matusiak, co-founder and CEO of Rewiring America, the advocacy group that pushed the White House to use 1950 electrification, said that when Biden issued orders for heat pumps and isolation of the Defense Production Act, he “played the long game.” Laws to combat climate change.
“We’re going to provide 121 million American homes with more heat pumps, and heat pump penetration is barely touching the surface of American homes,” he explained. “So over the next 10 to 15 years, we’re going to need more heat pumps.” in the market than we need in the market. There are many more now, which shows caution when investing in our production facilities.”
Matusiak added that the Defense Production Law “is more than a messaging tool, it’s a real industrial policy lever that can organize a dialogue with industry and organize resources.” The Schumer-Manchin Act may finally give “investment institutions a head start in putting [the executive order] into practice.”
Correction: An earlier version of this story misquoted Kurt Rich, President and CEO of the North American Insulation Manufacturers Association.