Free Market Organizations Oppose Costly EPA Air Conditioner Regulations

With temperatures in Washington D.C. topping 90 degrees in recent days and with most of the summer yet to go, it is hard to imagine anyone in the nation’s capital opposed to affordable air conditioning. Yet Congress and bureaucrats at the Environmental Protection Agency (EPA) apparently are, and their agenda could spell bad news for anyone trying to stay cool in the years ahead. On July 6, the Competitive Enterprise Institute and 16 other free market organizations filed comments with the agency explaining why its proposed rule is a bad idea.

Last December, Congress slipped into the big spending/COVID relief bill provisions cracking down on hydrofluorocarbons (HFCs), the widely used class of refrigerants found in most air conditioning and refrigeration systems. It did so on the grounds that HFCs contribute to climate change. This includes HFC-410a, the refrigerant of choice in residential central air conditioners, as well as HFC-134a, which dominates in vehicle air conditioners. And now, the EPA has begun aggressively implementing these provisions in its proposed rule.

If finalized in its current form, the proposed rule would reduce future supplies of HFC-410a and HFC-134a and raise prices for them. As we note in our comments to the agency, doing so will increase air conditioner repair costs. Any system that loses refrigerant from a leak—a common occurrence—would have to replace the lost refrigerants with the increasingly scarce and costly supplies of HFC-410a and HFC-134a.

Worst off would be low-income households, some of which can barely afford air conditioning as it is. And the current western heat wave’s victims are mostly those lacking access to air conditioning, which further underscores the need to keep it as affordable as possible.

Nonetheless, the EPA’s lengthy analysis of its proposed rule ignores the impacts on homeowners and car owners, not to mention businesses that rely on HFC-using air conditioning and refrigeration equipment.

What if, instead of repairing your old residential air conditioner, you decide to buy a new system designed to use one of the supposedly climate-friendlier alternative refrigerants? Expect to pay more, especially for a system using one of the patented new refrigerants that cost several times more than the HFCs they are designed to replace.

But once again, the EPA turns a blind eye to these costs, insisting that these new systems will be better and cheaper overall, without ever explaining why manufacturers and consumers preferred HFC-410a in the first place.

Reality is already beginning to intrude on the EPA’s rosy analysis. Two companies, Honeywell and Chemours, hold patents on many of the substitute refrigerants. One of those, HFO-1234yf, already sells online for around five times more than the HFC it was designed to replace in vehicle air conditioners.

The proposed rule also comes with inflated estimates of the climate change benefits. It does this mainly by relying on computer models of climate change that have been consistently wrong for decades, and always on the side of predicting more warming than actually occurred. Thus, by overstating the sensitivity of the climate to additional greenhouse gases, the EPA inflates the benefits of reducing HFC production and use. The proposed rule predicts $284 billion in avoided climate damage by 2050. At the same time, it assumes no costs to consumers, including homeowners.

The EPA has it backwards—the climate benefits are speculative and likely negligible but the costs to consumers are real and could reach well into the tens of billions of dollars in the coming decades. Our regulatory comment seeks to set the record straight before the rule is finalized.