Executive orders pause IRA rebate programs, withdraw from Paris climate accord
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The HVACR industry is no stranger to shifting federal policies, but two recent executive orders from the Trump administration signal significant changes with wide-reaching implications for contractors. These actions—one withdrawing the U.S. from international climate agreements and the other pausing the disbursement of funds tied to the Inflation Reduction Act (IRA)—are likely to impact the regulatory landscape for the HVACR contracting industry.
Pausing energy efficiency funds: What it means for contractors
The “Unleashing American Energy” executive order halts the disbursement of funds tied to energy efficiency programs under the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), raising questions for HVACR contractors about the future of the IRA’s energy efficiency rebate programs.
Contractors operating in the 11 states and Washington, DC, where rebate programs have already launched, should have some confidence that these programs will continue under the states’ contractual agreements with the federal government. However, programs approved more recently—particularly the $3.7 billion awarded just last week—are more likely to be affected by the pause, given the directive to suspend financial disbursements until further review.
It’s important to note that a pause does not necessarily mean these programs will be terminated. The new administration has signaled that it intends to evaluate program guidelines to align with its priorities, which could include removing unnecessary restrictions or changes to eligibility criteria. That said, several Congressional committees have already floated a recission of these funds as an option to pay for their priorities, making it unwise for contractors or consumers to rely on rebates until states officially receive money in hand.
On the bright side, efficiency tax credits of up to $3,200 per year remain unaffected and continue to provide valuable opportunities for homeowners to save on high-efficiency HVACR installations. It is highly unlikely that Congress would retroactively eliminate this benefit, making it a dependable resource for promoting energy-efficient upgrades. Contractors should remain vigilant, however, as mid-year changes to tax legislation could occur. ACCA’s HVAC Blog will provide updates as these developments unfold.
Prioritizing America in global climate policy
President Trump also signed the “Putting America First in International Environmental Agreements” executive order, formalizing the U.S.’s withdrawal from the Paris Agreement and other commitments under the United Nations Framework Convention on Climate Change. The stated intention of this action is to safeguard the U.S. economy and protect consumer choice, signaling a rollback of international obligations that previous administrations had prioritized to address climate change.
The Paris Climate Agreement, adopted in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC), is a landmark international accord designed to address climate change globally. Its primary goal is to limit global temperature increases to below 2°C above pre-industrial levels, with aspirations to limit warming to 1.5°C. Participating nations are encouraged to take meaningful steps to reduce greenhouse gas emissions and adopt strategies to build resilience against the impacts of climate change.
At its core, the Paris Climate Agreement is a framework for collaboration, not an enforceable mandate. Each nation sets its own emissions reduction targets, known as Nationally Determined Contributions (NDCs), reflecting their specific economic circumstances and capabilities. Importantly, these commitments are not legally binding; there are no penalties for failing to meet them. Instead, the Agreement operates on a principle of transparency and accountability, encouraging countries to review and enhance their commitments every five years.
Contractors and businesses feel the agreement’s impact indirectly through its guidance on domestic policies. Governments use the agreement’s goals as a framework to shape regulations, incentives, and programs aimed at reducing emissions. This aspirational nature gives flexibility to countries while fostering global alignment on climate action.
For HVACR contractors, the withdrawal from the Paris Agreement raises several questions about the future of domestic climate-related initiatives. It may lead to shifts in federal regulations, particularly around emissions reductions and energy efficiency standards. Contractors will need to stay attuned to how this rollback influences compliance obligations.
This withdrawal also highlights the importance of ACCA’s ongoing advocacy efforts. We are working to ensure that any changes to environmental policies prioritize practical, achievable goals that protect contractors and their customers from excessive costs or burdensome requirements.
By understanding the shifting dynamics around rebate programs and efficiency incentives, contractors can better manage customer expectations and prepare for potential changes.
ACCA will continue to advocate for the resumption of these programs and provide timely updates to help members navigate this evolving landscape.
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Posted In: Climate Change, Energy Policy, Polices & Procedures
