Clean energy supply chain
Each day, Americans install more than 18,000 new central air-conditioner units outside their homes. Every time this happens, families are missing an opportunity to lower their bills, increase their comfort and even help save lives. But new legislation put forth in Congress this month could allow more Americans to seize that opportunity.
A key provision in the recently introduced HEATR Act encourages manufacturers to convert their whole supply of traditional central ACs — which can only cool — into devices that both heat homes and cool them: heat pumps. Sponsored by Democratic Senators Klobuchar, Smith, Hickenlooper, Whitehouse, Leahy, Merkley and Booker, the bill has the potential to transform American climate control.
Two-way heat pumps have a few important advantages over both one-way air conditioners and traditional heat sources. They tend to be two to four times more efficient than competing devices, which means they result in comparable or lower energy bills for most families. By taking over from other heat sources such as gas, oil and wood, heat pumps can dramatically reduce indoor air pollution and greenhouse gas emissions. Even homes in Florida, which have only a handful of heating days each year, can benefit.
The market is already moving in this direction, albeit slowly. Nearly 4 million heat pumps were sold in the U.S. last year. However, 6 million central AC units were sold in the same period. The U.S. Energy Information Administration projects that based on current trends, sales of central ACs will still outnumber heat pumps in 2050. This market inertia comes with real costs. Because HVAC systems can last 15 to 20 years, when a homeowner installs a new central AC, the chance of electrifying their heating before 2040 drops sharply. Locking in outdated infrastructure in this way pushes back the clock for American decarbonization by decades.
This would be an enormous missed opportunity. Central ACs and central heat pumps are often nearly identical machines. Think of them as two cars of the same make, except only one of them has a reverse gear. For manufacturers, the main difference between the two technologies is just a few hundred dollars’ worth of parts to make the heat move in two directions. But that small initial cost difference gets inflated by supply-chain markup and installation costs, so by the time consumers are buying a central heat pump, the upfront cost difference can be substantial.
Transforming the market
But it doesn’t have to be this way. Instead of it taking decades, we could replace every one-way central AC for sale in the U.S. with a two-way heat pump in only a couple of years. And we can do it at minimal cost to taxpayers and companies — with big benefits for both consumers and the environment.
Last year, we collaborated on a study looking into what would happen if the federal government incentivized manufacturers to switch all their production of central residential air conditioners to heat pumps. Our research, carried out in partnership with the appliance efficiency nonprofit Clasp, indicated that a voluntary incentive program could save consumers $27 billion over the next decade. The average affected family would save $169 in annual energy bills (and these estimates were made before this winter’s gas and oil price increases). Within a decade, the reduced air pollution could save more than 800 lives each year. Greenhouse gas emissions would fall by 49 million metric tons annually. Depending on the program design, benefits would outweigh costs by 5× to 8×.
A program like the one proposed by the HEATR Act would give companies the confidence to go all-in on heat pumps. Because the cost difference would be covered, wholesale and consumer heat-pump prices could fall to the level of current AC prices. And because participation is voluntary, it would just speed up a market transition that’s already underway.
Families don’t even need to get rid of their existing heating systems to take advantage of a heat pump. While top-of-the-line “cold-climate” heat pumps can deal with the toughest winters, even basic heat pumps can be paired with existing fossil fuel systems in a hybrid configuration.
This approach preserves consumer choice of heating sources, avoiding the ire of states that have “banned the bans” on gas for space heating. An average heat pump will still be more efficient on all but the coldest days, displacing between 40 percent and 90 percent of the fossil fuels used by a fuel-based backup system, depending on the region, the home, the system chosen and the quality of the installation.
Hybrid configurations allow both consumers and contractors to get used to the idea of heat pumps. The option of retaining backup heat from furnaces limits strain on the grid. The fact that consumers can keep their existing systems makes things easier for contractors in cold climates because it reduces the risk of expensive winter service trips. A hybrid approach can also simplify the installation process by avoiding the need for electric-panel upgrades. And the next time families need to replace their HVAC system, they’ll have years of familiarity with heat pumps under their belt, reducing fears and smoothing the path to full electrification by 2050.
A program that dramatically raises the number of heat pumps on the market while lowering their cost also has important equity benefits. Renters have little control over their HVAC system, but if all central ACs on the shelves were replaced by similarly priced heat pumps, the owners of those properties would be much more likely to opt for heat pumps. Lower-income homeowners would profit from reductions in heat pump prices as well. Heat pumps offer especially large savings for people in rural areas who rely on expensive heat sources such as oil, propane and electric resistance (this difference can amount to $1,000 or more annually). These benefits flow directly from the wholesale replacement of central ACs with heat pumps, without being dependent on other subsidy programs.
Good, fast and cheap — with appeal across the political spectrum
The HEATR Act has real potential to attract bipartisan support. We are a case in point: One of us is a blue-collar conservative (Nate), and the other is an Ivy League liberal (Alexander). There aren’t many policies we agree on. But this is one that we both see as a pragmatic, commonsense proposal.
America is especially well positioned to take advantage of this opportunity to accelerate the widespread adoption of central heat pumps. Because many homes in the U.S. use ducted HVAC systems, swapping in a central heat pump instead of a central AC is a relatively simple process. The installations are nearly identical, often requiring only an upgraded thermostat and less than an hour of additional setup. What’s more, we already have the manufacturing capacity to produce many of these units domestically, providing good American jobs while also electrifying American homes.
The old saying goes that you can have good, fast or cheap — but you can only pick two. Moving to 100% heat pumps with hybrid HVAC systems allows us to get all three. Cutting fossil-fuel use by 40% to 100% is good. Making it happen in only a few years is fast. Achieving tens of billions of dollars in savings for only a few billion in incentives is cheap. We shouldn’t let this rare opportunity pass us by.
The opinions expressed in this article represent the personal views of the authors and do not necessarily represent the views of their affiliated institutions.
Alexander Gard-Murray is a political economist studying policies to accelerate decarbonization. He is currently a postdoctoral fellow at the Climate Solutions Lab and the Rhodes Center for International Economics and Finance at Brown University.