LARGE HVAC SYSTEMS

OVERVIEW

Air conditioners that cool our offices, stores, schools, and restaurants used 1.1 million GWh of energy¹ and emitted 151.3 megatons of CO2 equivalent in 2010.² Adding the electricity and natural gas used by heating and ventilation, commonly provided by the same system, the total energy expenditure used by commercial-scale heating, ventilation, and air conditioning (HVAC) systems topped 2.5 million GWh³ and accounted for more than 7.5% of U.S. GHG emissions.⁴ Americans can vastly reduce the energy we use to stay comfortable during hot summers and cold winters with two strategies: make HVAC systems more efficient and reduce our need to use them.

ANALYSIS

The easiest way to reduce the use of HVAC equipment is by improving a building’s shell— the windows, walls, and insulation. These ideas are covered in the Commercial Building Materials component. In addition to a better-sealed building envelope, some HVAC use could be eliminated with better controls,⁵ system maintenance,⁶ and duct insulation.⁷ These projects are relatively low cost, but because of the payback period many buildings have been reluctant to upgrade.⁸ These types of projects could reduce energy use by as much as a third,⁹ which would lower energy expenditures by $16 billion¹⁰ and save 160,000 GWh of energy if implemented in the 5% least efficient buildings.¹¹

While it is difficult and expensive to switch to a different type of HVAC system, like from a boiler to a furnace,¹² merely upgrading a system generally improves efficiency by more than 20%.¹³ Although commercial systems last between 15 and 35 years,¹⁴more than 4% of commercial-scale HVAC systems are replaced annually. If each of these systems achieved a 20% efficiency gain,¹⁵ businesses would save an aggregate $500 million¹⁶ and CO2 emissions from commercial and industrial HVAC would decrease by 3 megatons each year.¹⁷ Paired with increasing equipment efficiencies, the cumulative effect would reduce U.S. carbon emissions by 39 megatons,¹⁸ the equivalent of emissions from the entire state of Alaska.¹⁹

IMPLEMENTATION

Several policies could have an impact on both sides of reducing HVAC energy use – reduced usage and more efficient systems.

Tighten Minimum Efficiency Standards

To help upgrade the efficiency of available HVAC options, DOE should add more categories to its energy efficiency standards program and more frequently update the standards to spur sector innovation and research. As part of existing law, DOE is required to set minimum efficiency standards for certain electrical equipment, including air conditioners, furnaces and boilers.²⁰ For many HVAC components, it took 15 years to update the standard, missing the opportunity to encourage sector change.²¹ For other HVAC components, such as chillers, there are no national standards at all.²² These standards have saved consumers and businesses $15 billion per year, a return of $650 for every federal dollar spent on the program.²³

Create Manufacturer Tax Incentives

To encourage better products in the HVAC equipment market, Congress should direct DOE and IRS to create a manufacturer tax incentive for domestically produced high-efficiency HVAC equipment. HVAC systems and components are purchased infrequently, with equipment lifetime measured in decades.²⁴ Given the long service life of HVAC equipment, it’s important that the marketplace offer highly efficient options at an attainable price. Manufacturer incentives, coupled with high efficiency standards, are a proven cost-effective method of expanding the number of efficient options.²⁵ If results track those of previous residential HVAC efforts, it could double the availability of efficient equipment.

Strengthen and Expand Building Energy Benchmarking

Detailed in the Commercial Building Materials component, building energy benchmarking would provide market transparency and accurately price efficiency upgrades. These efficiency upgrades would in many cases include the HVAC system.

Clear Regulatory Hurdles to Efficiency Bonds

Commercial PACE Bonds,²⁶ covered in the Commercial Lighting component, would lower the cost of financing for efficiency improvements in commercial spaces, including more efficient HVAC systems.