Heat pumps are a key technology to make buildings more energy efficient and free homes from dirty fossil fuels. That’s why the Inflation Reduction Act is offering tens of billions of dollars in tax credits and rebates to encourage American consumers to install them.
But if the largest tax credit in the policy mix — a tax credit of up to $2,000 for heat pumps that use electricity to heat and cool buildings — has such a high level of efficiency that most of the country’s tax credits currently available , heat pumps can… not reach it?
The smoldering conflict shows how complex climate-friendly policies can become when benevolence plunges headlong into less-than-ideal market realities.
Some in the industry fear that the performance standards now in place to push manufacturers to build more efficient heat pumps could severely limit the number of products available to customers looking to take advantage of federal incentives to help pay for the switch from fossil gas to electric heating.
According to Nate Adams, an electrification advocate and chief executive of HVAC 2.0, which makes software for installing HVAC, this could harm the technology and tax incentives aimed at promoting it.
“If there are too many negative experiences, it can greatly slow down the process,” he said. â�<“对于一个仍然主要围绕当地和区域承包商和安装商网络组织的行业而言，“口碑营销确实至关重要”，他说。 â�<“对于一个仍然主要围绕当地和区域承包商和安装商网络组织的行业而言，“口碑营销确实至关” “For an industry that is still largely organized around a network of local and regional contractors and installers, “word-of-mouth marketing is really critical,” he said. â�<“糟糕的评论被阅读了数百次。” â�<“糟糕的评论被阅读了数百次。” “Bad reviews are read hundreds of times.”
That’s why Adams is looking forward to news from the Coalition for Energy Efficiency (CEE) board meeting this week. The Inflation Reduction Act requires heat pumps to “meet or exceed the maximum efficiency rating set by this obscure group of North American energy efficiency program administrators” to be eligible for tax credits.
Currently, the maximum efficiency rating of air-fired heat pumps—heat pumps that heat and cool the air in buildings—in Central and Eastern Europe is much stricter than the standard set by Energy Star, the other major household appliance efficiency standard in the United States. which operates in accordance with the US Department of Energy and the Environmental Protection Agency.
In fact, Adams says, less than 10 percent of heat pumps in North America meet the highest Central and Eastern European standards in the general configuration category for residential central heating. Most of the rest of the heat pumps are slightly less efficient, but still quite powerful – even one of these slightly less efficient heat pumps is much more efficient than resistive heating and much cleaner than a fossil fuel heating system.
What’s more, affordable efficient systems are typically at least $3,000 more expensive than less efficient, more widely available heat pumps, he said. He noted that it would be difficult to sell tax credits for heat pumps to customers if the markup on the price of the relevant equipment was greater than the tax credit itself.
But that could all change after the CEE board meeting this week. At that point, the group is expected to decide on new heating and cooling regulations that will come into effect in 2023, the same year that the tax credit is first offered.
The CEE declined to comment on what options it is considering for the new standard. But a September 30 CEE report obtained by Canary Media suggests the group is considering changing its current efficiency rating structure to make it simpler, which would allow most heat pumps currently rated Energy Star to be eligible for tax credit.
“These changes in Central and Eastern Europe, if they really happen, will make me very, very happy,” Adams said. â�<“具有合理的效率要求，它开辟了许多我们可以使用的设备。” â�<“具有合理的效率要求，它开辟了许多我们可以使用的设备。” “With reasonable efficiency requirements, there is a lot of equipment that we can use.” This includes units that combine good low-temperature performance (an important factor for heat pumps) and cost between $4,000 and $5,000, “and this is where the $2,000 tax credit really matters,” he said.
Nate Kinsey, senior policy manager at New York-based home energy efficiency startup Sealed, said his firm backs the proposed alliance with ENERGY STAR. According to 2021 data, not only have ENERGY STAR qualified heat pumps increased in choice—about 39% of heat pumps currently available in the North American market—but customers are much more familiar with the ENERGY STAR label than they are with the ENERGY STAR. label Introduction to labels. Detailed performance metrics used by CEE.
“Combining a heat pump tax credit with ENERGY STAR is a rare win-win opportunity,” he said.
But not everyone in the industry shares this view. Some environmentalists and energy efficiency regulators fear that the changes proposed by the CEE may conflict with what they say is the clear intent of the Inflation Reduction Act: to increase efficiency in the US heat pump market.
“We believe the purpose of this is to ensure that consumers have access to very efficient, high quality products that meet their heating needs,” said Mark Kresovik, Senior Policy Director of the Energy Efficient Economy Council. â�<“我们的评估是，中东欧应继续推动市场超越，特别是考虑到这些税收抵免的慷慨。” â�<“我们的评估是，中东欧应继续推动市场超越，特别是考虑到这些税收抵免的慷慨。” “Our assessment is that the countries of Central and Eastern Europe should continue to push the market to grow better, especially given the generosity of these tax incentives.”
ACEEE is also concerned that the proposed relaxation of heat pump efficiency ratings is “a concerted effort by the industry to relax CEE standards for a wider range of heating and cooling systems,” Kresovik said. CEE also defines energy efficiency standards for fossil gas water heaters and stoves, he said, and its current gas water heater standards are weaker than the current Energy Star standards and need to be tightened.
A CEE spokesperson told Canary Media that the organization has “received comments from the HVAC industry on these projects. Our members are working hard to develop performance requirements that can meet our membership goals, they have long term customer reward plans and common concerns. about product availability, cost-effectiveness, and added value associated with higher performance levels.”
Sealed’s Kinsey said he understands concerns that reducing efficiency requirements for heat pumps could also set a precedent for lowering fossil fuel equipment requirements. He stressed, however, that it is important to expand the availability and affordability of heat pumps in order to accelerate wider market adoption of a technology that not only eliminates fossil fuels in buildings, but is also faster than the systems it replaces. effectively.
Adams noted that tax credits under the Inflation Reduction Act for electric vehicles are subject to income caps, with more expensive cars and richer customers not being able to receive them. Establishing a heat pump tax credit that only applies to the most expensive products goes in the opposite direction: “It’s like saying you can only get an electric car tax credit if you can afford a Tesla Plaid.” – the most expensive model of the automaker. he said.
On the other hand, Kresovik notes that efficiency gains in consumer products ranging from washing machines to light bulbs are largely driven by government standards. Instead of changing those standards to make more existing products eligible for tax breaks and other forms of government incentives, he said, “manufacturers need to meet the growing demand for all the benefits that high-performance products provide.”
Heat pump manufacturers can adapt their equipment designs and manufacturing processes to changing regulations, Dana Fisher, head of regulatory strategy for heat pump manufacturer Mitsubishi Electric, said last week at a webinar hosted by Electrify Now, a non-profit organization that supports electrification. But “It takes a lot of work to make these massive changes in the market, and it doesn’t happen in a vacuum,” he said. â�<“这需要持续增长。” â�<“这需要持续增长。” “It requires constant growth.”
Manufacturers also need time to make changes to their product lines – waiting for those changes can be costly. If stricter energy efficiency standards eventually slow down the widespread adoption of heat pumps due to rising prices, and thereby reduce the impact of the new tax credit, it could seriously slow down the development of technologies considered key to tackling climate change. The International Energy Agency says global heat pump installations need to triple by 2030 to reach zero carbon by 2050. But last year, the number of heat pumps in the US grew by only 15 percent.
It’s important to make the tax credit program as effective as possible in stimulating the transformation of the US heat pump market, Fisher said. Of all the electrification incentive structures in the Inflation Reduction Act, “I think the tax credit is really the biggest driver,” he said.
Unlike two other major home electrification and efficiency stimulus programs passed by law, which cost nearly $9 billion before they expired, the heat pump tax credit can be used indefinitely for the next 10 years, he said. â�<“在10 年期间，可能会发放数百亿甚至1000 亿美元的税收抵免，具体取决于电气化起飞的速度，”他说。 1000 “Within 10 years, tens of billions or even $100 billion in tax credits could be issued, depending on how fast electrification progresses,” he said.
This speed is critical. The more people who take advantage of the heat pump tax credit over the next decade, the better the emissions reduction will be.