How the 2024 Presidential Election Could Shape the Future of the HVAC Industry

With the 2024 presidential election just around the corner, the stakes are high for many sectors, especially the HVAC industry. A pivotal focus of this election is the future of the Inflation Reduction Act (IRA) and its impact on energy rebate programs and HVAC-related tax credits. Depending on who wins the presidency—Vice President Kamala Harris or former President Donald Trump—the industry could see significant shifts in policy, funding, and regulatory approaches. We've already noticed the effects of the political season on media buying, but now let's dig into the potential implications of each outcome and what it means for HVAC contractors, manufacturers, and homeowners.

The Inflation Reduction Act: A Quick Refresher

What is the IRA? The Inflation Reduction Act, signed into law in August 2022, aimed to tackle climate change, reduce energy costs, and boost clean energy investments. It allocated $369 billion for energy security and climate initiatives, including $8.8 billion specifically for the Home Energy Rebates programs. These rebates, managed by states, offer incentives to consumers for energy-efficient upgrades like installing heat pumps, high-efficiency HVAC systems, and improved insulation. Additionally, the IRA extended and expanded various tax credits, such as the Section 25C tax credit, which offers homeowners up to $3,200 annually for energy-efficient improvements.

Where Do We Stand Now?

As of October 2024, the implementation of these rebates and credits is in a mixed state:

• Six states have fully launched their Home Energy Rebates programs.
• Fourteen states have been approved but have yet to launch.
• Seven states are still waiting for approval.

The pace of implementation has varied, creating a patchwork landscape that makes planning difficult for contractors and homeowners alike. However, the real uncertainty lies in how the next administration will handle these programs.

🫏What a Harris Victory Could Mean for the HVAC Industry

If Vice President Kamala Harris wins the presidential election, it is likely that the Inflation Reduction Act will remain largely intact. Here’s what that could mean for the HVAC industry:

1. Continued Support for Home Energy Rebates

Kamala Harris has been a vocal supporter of the IRA, having cast the tie-breaking vote that led to its passage in the Senate. While her campaign has not explicitly outlined new policies for the HVAC sector, experts believe that a Harris administration would maintain or even expand the existing rebate programs. This is largely because any significant rollback of the IRA would be considered a "poison pill" for the Democratic Party.

• Why It Matters: HVAC contractors could benefit from a steady stream of demand for energy-efficient installations, driven by incentives that lower the upfront costs for consumers. A more predictable policy environment would help contractors plan long-term investments in training, equipment, and marketing.

2. Focus on Clean Energy and Carbon Reduction

A Harris administration would likely continue to emphasize clean energy, potentially adding more funding for electric heat pumps and other low-emission HVAC technologies. This aligns with broader Democratic goals to reduce carbon emissions and promote sustainability.

• Opportunities for HVAC Contractors:
• Potential for increased demand for electric heat pumps as part of state and federal incentives.
• Opportunities to partner with local governments on pilot programs aimed at reducing carbon footprints.
• Increased focus on training programs for new HVAC technologies, funded by federal grants.

3. Enhanced Enforcement of Efficiency Standards

Democratic administrations traditionally support stricter energy efficiency regulations. Harris could push for more stringent standards on new HVAC installations, which could require homeowners and businesses to upgrade older systems.

• Impact on the Industry: While this could mean an initial surge in demand for compliant systems, it might also increase the regulatory burden on HVAC contractors, requiring more detailed reporting and compliance checks.

🐘What a Trump Victory Could Mean for the HVAC Industry

Donald Trump, known for his deregulatory approach during his previous term, has hinted at a more critical stance towards the Inflation Reduction Act. Although he has not specifically mentioned the Home Energy Rebates, here’s how his potential victory could reshape the HVAC landscape:

1. Scrutiny and Potential Cuts to IRA Programs

Trump has indicated that he would "put the IRA under a microscope," suggesting that he might look for ways to curtail or eliminate some of its programs. However, most experts agree that he would face significant obstacles in rolling back the rebate programs already administered by states.

• Why It Matters: Even if Trump attempts to reduce federal support for these programs, the existing state-run rebate structures may remain intact. This would maintain some level of demand for energy-efficient HVAC systems, albeit with less federal support and possibly more variation between states.

2. Focus on Traditional Energy Sources

Trump’s previous administration focused heavily on promoting fossil fuels, including coal and natural gas, while rolling back Obama-era clean energy initiatives. A renewed focus on traditional energy could mean less federal emphasis on electrification and more support for gas-powered HVAC systems.

• Opportunities for HVAC Contractors:
• Potential uptick in demand for gas-powered systems, especially in states with strong natural gas production.
• Reduced federal push for electrification could mean less pressure to adapt quickly to heat pump installations.
• However, contractors may face fewer state incentives and rebates for promoting energy-efficient systems, potentially slowing market growth.

3. Possible Extension of the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA), which lowered the corporate tax rate to 21%, is set to expire at the end of 2025. Trump has already signaled his intent to extend these tax cuts if elected.

• Impact on the Industry: Lower corporate taxes could benefit HVAC businesses, allowing for reinvestment in equipment, marketing, and workforce training. However, if funding cuts to federal energy programs accompany these tax cuts, HVAC contractors may need to adjust their strategies to balance the pros and cons.

How Congress Could Shape the Future of the IRA

It’s not just about who wins the White House—the balance of power in Congress will also play a crucial role in determining the fate of the Inflation Reduction Act and its related programs. The following scenarios could impact the HVAC industry:

1. Democratic Control of Both Houses

If Democrats maintain control of both the House and Senate, it’s likely that the IRA will remain fully funded, and there could even be efforts to expand it. This would create a stable policy environment for HVAC contractors to continue benefiting from federal incentives.

• Key Takeaway: A Democratic Congress would align with a Harris presidency, making it easier to push through additional support for clean energy and efficiency programs.

2. Republican Control of Both Houses

If Republicans take control of Congress, Trump or Harris would face significant challenges in maintaining the current level of support for the IRA. Budget cuts and legislative gridlock could make it difficult to sustain or expand rebate programs.

• Key Takeaway: For HVAC contractors, this could mean a period of uncertainty where existing programs might be scaled back, leading to a more competitive market for rebates and tax credits.

3. A Split Congress

A split Congress could lead to legislative stalemates, making any significant changes to the IRA difficult to achieve. This could preserve the status quo but limit new opportunities for expansion or additional incentives.

• Key Takeaway: A split Congress might be the most stable outcome in terms of maintaining current programs, but it would also prevent any ambitious new initiatives from taking shape.

What This Means for Homeowners and HVAC Contractors

With so much at stake, homeowners and contractors alike need to stay informed about how these political changes could affect their decisions:

1. Homeowners: Should You Upgrade Now or Wait?

If you’re a homeowner considering a new HVAC system, the upcoming election could influence the financial incentives available to you. Under a Harris administration, energy-efficient rebates and tax credits are likely to remain stable, making it a good time to upgrade. In contrast, a Trump victory could mean reduced incentives, so homeowners might want to act before any potential changes take place.

• Pro Tip: Consult with local HVAC contractors who can guide you through available state-level rebates, which may continue regardless of federal changes.

2. HVAC Contractors: How to Position Your Business for Success

Contractors should be prepared for either outcome by diversifying their offerings:

• Focus on Both Electric and Gas-Powered Systems: This ensures you can meet demand no matter which way the market shifts.
• Stay Updated on State Programs: Even if federal rebates are reduced, state-level programs could remain a key selling point for energy-efficient installations.
• Invest in Training and Certification: With potential regulatory changes, staying ahead in terms of compliance and installation expertise could be a major competitive advantage.

The Long-Term Outlook: Beyond 2025

Regardless of the election outcome, the conversation about energy efficiency and climate change will continue. The HVAC industry, being at the forefront of home energy usage, is uniquely positioned to play a pivotal role in reducing carbon emissions and improving energy efficiency. Here are some long-term trends to watch:

• Electrification of Home Heating: The push for electrification is not going away, with many states aiming for net-zero emissions by 2050. Electric heat pumps, even under a more conservative administration, are likely to see continued growth.
• Technology and Smart HVAC Systems: Advances in smart thermostats and AI-powered HVAC management could become more mainstream, driven by consumer demand for lower utility bills and increased comfort.
• Resilience Against Climate Change: As extreme weather events become more frequent, the demand for reliable, energy-efficient HVAC systems that can operate under stress will only grow.

The Bottom Line

The 2024 presidential election holds significant implications for the HVAC industry, from policy shifts in rebate programs to changes in tax credits and energy standards. For HVAC contractors, homeowners, and manufacturers, staying agile and informed will be key to navigating the uncertainties ahead. While the future is hard to predict, one thing is certain: the next few weeks—and the policies that follow—will shape the HVAC landscape for years to come.

Ready to adapt to these changes? At Levergy, we help HVAC contractors stay ahead of the curve with marketing strategies tailored to industry trends and policy shifts. Whether you need help reaching more customers or want to optimize your online presence, we’re here to guide you. Contact us today to learn how we can help your business thrive in a changing market.