U.S. AC Crisis No One's Talking About: The backstory from Jorge Alvarez, iGasUSA

0:00Rinse takes your laundry and hand delivers it to your door, expertly cleaned and folded, so you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. It is my understanding that President Trump may not even believe in global warming. It is speculated that the refrigerant that we've used for the last 30 years is contributing to global warming.

0:41There is a phase down that President Trump, in signing the AIM Act, would bring the phase down of the use of CORE-10A gradually. Within about a 15-year span, the Biden EPA mandated that we make this change immediately. This is going to kill and hurt inflation. And worse yet, it's going against President Trump's initiative, which is to bring jobs back to the USA. 80 % of this refrigerant is being manufactured in China. I don't expect this to be a priority to him. But it will become a priority when he's sweating in his mansion because it's hot and they can't get refrigerant gas to fix the system.

1:20Make American air conditioning affordable again.

1:28You know, George, America is going through a crisis right now that some people that may have not been touched on this yet or and potentially will be with the summer coming. You're the VP of sales for for iGas. You know, walk the audience through what's going on right now, man. Sure. And it's scary because a lot do not know what's about to happen. But unfortunately, many in the South already know what's happening. And that is, there's not enough refrigerant gas to go around to help the air conditioning contractors install new systems. Moreover, the cost of new air conditioning systems have dramatically increased the installed cost.

2:05And the reasoning for both of these issues was a Biden-era EPA rule that went into effect on January 1st of this year, which now mandates that all the manufacturers of air conditioning systems to use one of two refrigerants. They're both flammable. Refrigerants in the past have not been flammable, but these both refrigerants are now flammable. And of these two refrigerants, the one being used the most is R454, which is a patented refrigerant. And there just isn't enough going around. The manufacturers rarely have enough to manufacture the systems. But more importantly, when an air conditioning contractor goes out to your house, you're going to find out, number one, they can't top off the system, meaning they can't properly install the system because of the deficit of the refrigerant gas.

2:57Number two, they're going to pay much, much more for this refrigerant, as high as 600 percent more for this patented refrigerant gas that there's just not enough to get around. That's interesting. So when the Biden administration came in and set this bill or whatever it was, effective January 1, to make to to utilize gases that are, you know, EPA friendly, what does that actually mean? What was being used before? Why was it so bad in the beginning? Okay, well, you have to ask yourself, do you believe in global warming? Some do, some don't. If you believe in global warming, the EPA, well, the United States ratified the Kigali Agreement, and the Kigali Agreement was a global agreement where global warming was the issue.

3:43And it is speculated that our 410A refrigerant, the refrigerant that we've used for the last 30 years, is contributing to global warming. And if that is true, and if that is the case, there is a phase down that President Trump, in signing the AIM Act in 2019 that went into effect 2020, would bring the phase down of the use of 410A gradually within about a 15 year span so that we would slowly transition to these new flammable gases. But what happened was the Biden EPA. So you're about to make a trade based on a friend's text. But which you do you listen to? Is it, we could buy a house in Tulum.

4:33Get optioning those options. We could lose everything. Or let's do a little research. Get your head in the trade and make the investment decision that's right for you. Learn more at finra.org slash trade smart. in October of 2023 mandated that we make this change immediately. And within 15 months, we are the only country on the planet that is doing this. There are over 200 countries that have ratified the Kigali agreement. So many countries are following the phase down, but we are the only country on the planet that mandated for us to make this change within a 15-month period. And it's impossible, it's unachievable, and it's unattainable.

5:21That's why today we're suffering. The issue is the summer really isn't even here yet. That's really when we're going to see it. Americans, 50 to 70 % of Americans are lending paycheck to paycheck. And when you're faced with a staggering cost to replace an air conditioning system or even repair an air conditioning system due to the elevated increased price of the refrigerant gas, it's virtually impossible to mandate and control. This is going to kill and hurt inflation. And worse yet, it's going contrary 100 % against President Trump's initiative, which is to bring jobs back to the USA. The sad part is this patented refrigerant, 80 % of this refrigerant is being manufactured in China.

6:10So it's not even US made, it's made in China. It's being shipped from China to Mexico, where the vast majority of all the air conditioning systems utilized in the United States are manufactured. This episode is brought to you by State Farm. Listening to this podcast, smart move. Being financially savvy, smart move. Another smart move, having State Farm help you create a competitive price when you choose to bundle home and auto. Bundling, just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer.

6:49Availability, amount of discounts and savings, and eligibility vary by state. And then crossing the border into the United States with no tariffs, no duties due to the North American Trade Act. So the U.S. government is not receiving what it should in terms of benefits such as the tariffs and the duties. But moreover, the consumers are the ones who are faced with paying the bill, footing the bill. That's interesting. Thank you for that background. You know, to me, when I'm listening, I'm hearing a simple economic thing, right? It's called supply and demand. With Biden accelerating that to make it go immediately, right?

7:34Instead of gradual over how, how, how many years now we have a supply issue, right? Which is driving up the cost. You know, I, I just, I just see it as that, right? Because, you know, the reason why it's so expensive now is because there's not enough of it. We don't have time to make it. So it's driving up the cost of it. I, I just wonder when things like this, like, you know, you can look at the global warming aspect of it. Fine. I can get down with that. I'm not here to say whether it's real or it's fake. What I am saying is it doesn't sound like this was very well thought through from an American people's pocket standpoint.

8:10Exactly. Exactly. I think that the industry should have had and played a role in this decision. Unfortunately, we weren't. And the result is what's happening today. And I tell everyone, speak to a friend, a neighbor, a colleague, a family member, anyone who has just recently replaced an air conditioning system. You will see what's happening. You will hear what's happening. You will learn what's happening. I say, listen to me, but don't believe me. Talk to your neighbors, friends and colleagues. You're going to see the reality of what's happening. And it's only going to get worse every day that goes by now that the summer season is upon us.

8:52And the only salvation that we feel can take place is to have either the administrator of the EPA, Mr. Lee Zeldin, or President Trump to simply remove the HVAC management rule and the technology transition rule that was enacted under President Biden's EPA. just get rid of it. The phase down under the AMAC, the Kegali agreement, it's already in place. A great analogy is if I'm wearing my trousers and I'm putting on a belt to secure it, but having to put on also suspenders, you don't need a belt and suspenders. We don't need the HBC management rule, the technology transition rule, and the AMAC. Simply go with the AMAC and follow the AIM Act like the rest of the world did.

9:48That's all we need to do. I'm wondering why the decision was made though, right? Because if the rest of the world is following a certain trend or a certain cadence on this, it's like, why would we jump the gun and cut all the other two gases off immediately? Because here's the other thing that I heard you say, and I want to back up for the audience, is that those other gases were not flammable. These other two gases are flammable. So when I'm looking at this as a homeowner, homeowner, sorry, and I'm, I'm in Florida and it's about to be hurricane season. There's a couple of things that really concern me.

10:24George is, is okay. If something goes through and something trips, like maybe even lightning hits my unit, well now it can catch on fire before it couldn't. Right. So there's a lot of different things at play here, flammability and then also just the hurricane in general taking out my unit. Now I'm forced, and these other homeowners are forced in the Southern states that are in Hurricane Alley to deal with a bigger issue than they're ready for. Exactly. These refrigerants are officially rated A2L refrigerants. And how and why the decision was made, I wish I was involved with the EPA back in October of 2023.

11:02I wish I would have consulted or been consulted with back in October of 2023. The only logical explanation they could have would be simply to speed up the migration to the new non-global warming potential gases. Other than that, I can't understand why they would have done what they've done. Yeah, I can appreciate the overall thought of, if this isn't environmentally friendly, let's make a move. But to move so quickly to a point where it puts people in jeopardy, like you said, 50 to 60 % of Americans live paycheck to paycheck? Exactly. And that's a reality. And when you have to repair an air conditioning system, and we're talking a repair that might have cost you$150 to$200 now costing you$600 to$800 or to replace the system.

11:59Look at the air conditioning system cost 15 months ago, 18 months ago, a three ton air conditioner would be installed for$3 ,000 to$4 ,000 on average. That same air conditioner today, minimum$8 ,000 to$11 ,000. So the costs associated with the purchase and installation of air conditioning systems are now greatly, greatly increased. And unfortunately, the consumers who are going to be experiencing problems this summer are going to pay the bill. And it's expected and calculated that$23 to$25 billion in additional dollars will be spent in 2025 alone for air conditioning systems due to these two rules that the EPA enacted.

12:48And it needs to change. It can't happen. America can't afford to pay an additional$25 billion for air conditioning for no reason at all. When it comes to what your family eats and drinks, you know your choices matter. You're the expert because you know what fits your life. and getting it right starts with good information. That's why America's beverage companies are sharing more information about our ingredients at goodtoknowfacts.org. No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit goodtoknowfacts.org. Man, you know, when you're talking about just the cost of the gas and the things, from$3 ,000 to$8 ,000 to$11 ,000.

13:36That's one thing, right? But then you look at, you talked about installation. That's cost of labor. Now these companies have to pay their people, their installers, a premium to offset, right? They have to charge so much money for that labor aspect of it now. And so the consumer is just not getting hit on the cost of the gas or the tariffs or the parts that they can't even get or whatever, right? They're getting hit on the installation. They're getting hit on the labor. Well, you're right. But look at the contractor's position as well. The contractor has the unfortunate role of convincing the consumer to replace the air conditioning system because it's required, but then informing them that they're not able to have the refrigerant necessary to properly install the system.

14:34So in many cases, they're installing an air conditioning system with a deficit of the refrigerant gas necessary because it's just not available. These cylinders are refrigerant gas. The 454B is the nomenclature of the refrigerant gas. This refrigerant gas, it comes in roughly a 20 to 21 pound cylinder. This 20 to 21 pound cylinder traditionally based on typical refrigerant costs, such as 410A, would typically cost$50 to$75 for that volume of refrigerant gas, maybe$90 for that volume of gas. With 454, that cylinder is now$1 ,000 if you can find it. So it's a tremendous cost. And that's where the issues truly lie.

15:23The contractors facing the consumers and explaining to the consumers, I've got your air conditioning system. Yes, it costs a lot more. And guess what? I don't have, and I can't find the refrigerant necessary to properly install your air conditioning system. How do, so I'm like thinking of a lot of different things. I'm thinking of the danger behind this. Let's say someone's AC unit goes out and they have a young child and they're forced to be in a home that doesn't have any AC. Now that child dehydrates. So they're not only just dealing with that, but they're having to go and take their child to the hospital to get fluids, to get into an area where they can cool down.

16:04I see so many different things going on here. Like it, maybe that's the father in me, right? I'm thinking, well, damn. Absolutely. Absolutely. So you're right. And it's not only the safety at home, But the safety in the wholesale distribution houses that will inventory this refrigerant gas, they're now mandated and it's different per municipality, per state. So there is one rule that will govern the whole United States. No, every municipality and every state of this country will have a specific fire rule on how you will store and transport. Then the DOT, the U.S. DOT, there are restrictions regarding A2L refrigerants and the transportation of A2L refrigerants.

16:51So these are the many issues that have come to light and the increase in costs are associated to all of these restrictions and all of these changes and mandates and leak detection systems for the refrigeration, the cold chain. When you look at the supermarkets, the changes because of these rules, it used to be a supermarket, if a, say, a Publix or a Kroger, if any of their stores had a leak in any of their refrigeration systems, they would simply repair the leak and replace the refrigerant that leaked out. Well, with these new rules, if you lost more than 15 pounds of refrigerant in that system, you must now under the laws recharge the systems with reclaimed refrigerant.

17:41You can no longer use new virgin refrigerant. You must utilize reclaimed refrigerant, which is you can't even find. And it's very, very expensive. And if you can't do that, these stores are forced to replace their systems with a whole new refrigeration systems. And we're talking a refrigeration system of a rack system in a supermarket may cost minimum$100 ,000 to half a million dollars per store. So when you look at very large franchises, very large corporations, we're talking about a capital investment that is not it's just not in the budget. But more importantly, what about the small mom and pop grocery stores?

18:25That's exactly where I was going in my mind with it, man. Exactly. How do they afford what we're talking single digit profit margins that many of these companies are achieving? How do you utilize the capital that you have to invest in such a capital expenditure? You can't. So it's unrealistic. It's as if the EPA never really thought this out. And it really shouldn't be this way. That's why there's hope. The hope is that the word gets out to Lee Zeldin and or President Trump. and they will end it and remove it because they're the only ones left that can do it. Let me ask you a question about Zeldin.

19:15You would think he would know, right? I'm assuming, he's part of the EPA, correct? Does he not know this is going on? Does he not know this is an issue? I have to assume that he knows, but again, I'm assuming, I would assume that Lee Zeldin doesn't have the time to speak to me or anybody else in my position, but I'm sure that his aides do. And his aides hopefully have shared this information with Lee Zeldin. There has been talk that Lee Zeldin is aware of the issue, but not the magnitude of the issue. And that's where I think the crescendo of this issue is imminent. It's going to happen soon. The heat is here.

20:05And when enough of the right people have this issue, that it will be forced to be dealt with. Because remember, nobody's immune to this, Sean. It doesn't matter. It could be - Not even them. Exactly. And that's why nobody is immune to this. And when it affects them or somebody they know or love, then hopefully they will do something about it. You know, I can appreciate, you know, Lee Zeldin, like maybe not getting the information or, or maybe just saying, Hey, I'm too busy to even deal with this. But to me, being involved in that organization, to me, it's almost a prerequisite. Now, from Trump's standpoint, there's a lot of crazy things going on in the world, right?

20:46You had the riots out in LA, then you had everything going on with Iran this past weekend. And but but but for it to get on his desk, like that's the last part, right? Because it can't go to the to the floor now. We're past that. It has to be. Yeah. Like and I want the audience to really understand that, like it cannot be voted on. Trump literally has to go and say no and sign it like we are reverting back. We're going to do a slow fade into this thing. This is not good for the American people. This is very difficult. I just, it's hard for me, dude, because like, I am such a, I am, I'm such a softy George, because like, you know, and again, you know, I'm nowhere near as busy as Donald Trump or even Mr.

21:29Lee Zeldin, but I can tell you something. If I do something right. And I know it's going to impact somebody in a negative way, or I'm seeing something, I do whatever I can to bring it to the forefront and try to fix it. Sean, you're right on. I mean, this is about what you got in your first question, you know, right or wrong or good or bad. This is this is doing the right thing for the right people. And it is my understanding that President Trump may not even believe in global warming. So that's why I truly believe that if he caught wind of this and I understand he's very busy and I don't expect this to be a priority to him.

22:07But it will become a priority when he's sweating in his mansion or his family members are sweating because it's hot and they can't get refrigerant gas to fix the system. That's when it will come to light. And that's why I'm saying the crescendo will be soon. It's going to happen. It's here now. But the heat, the sustained heat nationwide hasn't been here. We've been very hot in the south, especially in Florida, which is where our headquarters or world headquarters are. But as soon as the rest of this country has sustained heat for any period of time, that's when we will experience the major issues.

22:48My question to you is, how do some of these small to mid-sized businesses, how are they dealing with this issue? Because you're in Florida. I mean, Florida is like the mecca for small to mid-sized businesses, right? Mom, pop. So there's a lot of HVAC companies running around here in Southwest Florida. How do you think they're feeling about this situation? How is it impacting them? Well, it's funny that you mentioned that because just today, the Air Conditioning Contractors Association of Florida, I had a long conversation with them today because they're the voice of the contractor. And they're the ones who are searching and pleading for an answer.

23:30I've been in many forums in the last 12 weeks or venues in the last 12 weeks where I've been with many of the manufacturers of air conditioning systems, many of the manufacturers of refrigerant gas, where we've had the forum and the ability and the venue for the contractors to reach out and ask questions. And the overwhelming concern with the air conditioning contractors is the lack of answers as to why this is happening or what the solution is. So they've been in many of these forums where they're listening to the problem and they know and understand the problem and they're dealing with the consumers and they simply want an answer.

24:19How and when will this be resolved? and nobody, nobody, nobody can answer that question. So at this point, the only thing that can happen is to either have Mr. Lee Zeldin or Mr. President Trump do something about it. So Lee Zeldin can actually make that move too. He doesn't even need Trump. He can make it. Either one of the two have the ability to have this taken care of. To your point earlier, we did work with the Senate and the House to support two separate resolutions for Congress to vote on, which unfortunately just never made it, never gained enough support. And at this point, as you stated, the time has passed.

25:02So at this point, we have to petition Mr. Zeldin and Mr. Trump to get this fixed, get this done. Well, you know, for the people listening and watching, is there a way to do that? You know, petition it? Like, is there a website? What are the resources to start that type of movement? Go to www.maacaa.org. Make American Air Conditioning Affordable Again.org. Oh, very nice. That's a nice campaign that you would think Trump would get behind, man. Right? Right? And I would hope. And simply go to the website and go to change.org. There's a link to change.org. There's a petition, and this petition will be forwarded to Lee Zeldin and to President Trump.

25:57And that's why we're asking for anyone and everyone who has an air conditioning system or cares about what's happening to please go to the website, maacaa.org, hit the link, hit the support button, and sign the petition. Let's get this taken care of. We're not talking about hurting the environment because we respect the EMAC. We respect the phase down. We believe in the phase down. We simply do not feel that we should be forced to do it right away and forced to switch to one of two refrigerants and be the only country on the planet forced to do so. That's true. So M-A-A-C-A-A dot org. Go there.

26:47You know, I, so thank you for that because I'm actually asking for my household as well, right? Like I want to know how at least I can have some peace of mind if I take action on something. And to your point, like, yes, we want to respect these, this changeover, but at the same time, for it to be so quick and so hasty to a point where there's not enough gas. Let me ask you this question. How many companies are making these two gases? It's patented and there's two companies that own the patent. So a duopoly. Keep going. Wow. It is what it is. Not much else to say. My issue, and I think the industry issue, really isn't with the two main bachelors or with the patent.

27:39It really is with the EPA. Because why mandate that we as an industry, the air conditioning industry and the refrigeration industry, why mandate that we switch immediately to a 700 GWP gas or lower when no other country on the planet ever did this or ever came up this? Why? There's no reason for it. GWP is global warming potential. Each refrigerant gas has its own global warming potential. It's rated from zero to 10 ,000. And the lower the GWP, the less probability that it will contribute to global warming. And the EPA said, well, you must be 700 GWP or lower. There are only two gases that are below 700 GWP.

28:35One is 454B, which is about 460 GWP. And the other is R32, which is about 680 GWP. So it's just below the 700 threshold. So these are the only two gases that are allowed to be utilized in the United States for new air conditioning systems as of January 1st, 2025. And that's where this issue comes from. That's interesting. What was the global warming potential on the gases that were used prior to 2025? And it's at the range, 2 ,800. But understand this, Sean, the phase down gives the U.S. under the Kigali agreement, it gives us a threshold, a limit of gases that we can utilize. And actually calculated with the molecules, the 410A, although it's 2800, is still within the limits when you look at the threshold that the AIM Act has held.

29:44And the threshold continues to be lowered as years go down. That way, it will naturally bring the evolution to a new gas or switch to a new gas based on market conditions. And that's how typically it has been done. That's how the rest of the world is doing it. And that's how it should be now. the manufacturers should have, based on calculations of how much refrigerant gas they need and what the threshold is at that given year, utilize any gas they want to, as long as they stay below the threshold. And if we did that, and that's the heart of the AMAC, we would be fine. And it would take about 10 to 15 years to transition to the newer gases.