As the climate change dialog continues, governments and environmental bodies in the US and internationally are developing and updating energy efficiency standards and chemical usage regulations, impacting the types of products that companies can create and sell. The Montreal Protocol recently mandated developed countries to ban the use of hydrochlorofluorocarbon (HCFC) refrigerants by 2030. HCFC refrigerants have long been used in the manufacture of residential and commercial heating, ventilation, and air condition (HVAC) equipment. While HCFCs account for a small proportion of total greenhouse gas emissions, they are nearly 10,000 times as potent as carbon dioxide. Furthermore, without mitigating actions, HCFC emissions are expected to triple by 2030.
Johnson Controls International Plc. (“JCI”) is a multi-industrial Fortune 500 organization, whose Building Efficiency business unit provides HVAC equipment, controls, and services, for commercial buildings (notably the Empire State Building and the Burj Khalifa). JCI has positioned itself to continue to lead the global HVAC production market, as the market transitions away from HCFC refrigerants. In response to the new regulations, JCI has expanded the availability of low global warming potential (“GWP”) refrigerants in its HVAC product portfolio and provides retrofitting services for customers that wish to convert their existing HVAC equipment to low-GWP refrigerants. Furthermore, for customers that do not wish to immediately convert to HCFC-free refrigerants, JCI offers equipment that can be easily retrofitted with low-GWP options in the future. By providing this ease of product transition, and the optionality of future conversion, JCI has placed itself in a comfortable position to retain its existing customer base.
JCI is also well-positioned to capture new customers from increased global HVAC demand and new regulations. Global demand for HVAC equipment is forecasted to increase by 4% annually, reaching $122 billion by 2020. Domestically, the US market is expected to grow by 7%. (Some of this domestic demand may be spurred by the new regulations; the US Federal government is currently offering tax credits for replacing older HVAC equipment with more efficient systems). Although regulatory changes usually mean higher product costs, here both JCI and its customers stand to benefit from the new regulations. While the initial costs for these new low-GWP products may be higher, these are quickly offset by long-term energy savings. The profit margins for the high-efficiency, low-GWP systems may often be higher than conventional, less-efficient models.
As a long-time proponent of corporate sustainability, JCI has publicly established 2020 goals on greenhouse gas intensity and low GWP refrigerants. CEO Alex Molinaroli posted on the World Economic Forum blog: “[W]e aspire to be innovative, resource efficient, operationally excellent and therefore fully embrace the transition to a sustainable, low-carbon economy.”
JCI is not alone in loudly supporting the reduction of GWP refrigerants in the HVAC industry. Daikin Industries Ltd. (“Daikin”), another of the world’s largest HVAC manufacturers, recently announced it will offer free access to 93 of its patents to its competitors, to encourage the development of low-GWP refrigerant technology. Bold moves like Daikin’s demonstrate that the HVAC industry understands the importance to move away from HCFC use, both for regulatory requirements and bottom-line justification.
While JCI has taken significant steps to transition from HCFC use, there are further opportunities. JCI’s Building Efficiency business should continue broader efforts to design buildings that are less dependent on external energy sources. Recent results from JCI’s 2016 Energy Efficiency Indicator Survey shows that interest in efficiency is at an all-time high, with 72% of companies planning to increase investments in energy efficiency and renewable energy in the coming year, compared to a third of respondents in 2013. JCI should continue to position itself as a market leader in developing not just efficient HVAC systems, but energy efficient buildings.
 Davenport, Coral (October 15, 2016). “Nations, Fighting Powerful Refrigerant That Warms Planet, Reach Landmark Deal”. The New York Times [Online]. < http://www.nytimes.com/2016/10/15/world/africa/kigali-deal-hfc-air-conditioners.html>. Retrieved November 3, 2016.
 Koch, Wendy (September 16, 2014). “Companies join Obama climate push to cut coolant use”. USA Today [Online]. <http://www.usatoday.com/story/money/business/2014/09/16/companies-join-obama-climate-push-to-phase-out-coolant/15713627/>. Retrieved November 3, 2016.
 “Johnson Controls Locations” <http://www.johnsoncontrols.com/location-finder>
 Ivanova, Irina (June 24, 2013). “Empire State Building’s energy savings beat forecast”. <http://www.crainsnewyork.com/article/20130624/REAL_ESTATE/130629951> Crain’s New York Business. Retrieved November 3, 2016.
 Hope, Gerhard (May 26, 2010). “Johnson Controls secures Burj Khalifa contract”. Construction Week Online. <http://www.constructionweekonline.com/article-8452-johnson-controls-secures-burj-khalifa-contract/>. Retrieved November 3, 2016.
 [unknown] (October 19, 2015). “United States: Obama Administration and Private-Sector Leaders Announce Ambitious Commitments and Robust Progress to Address Potent Greenhouse Gases”. Asia News Monitor.
 The Freedonia group. (June 1, 2016). “World HVAC equipment demand to reach $122 billion”. PR Newswire
 Ibid. 7
 Ibid. 6
 “Johnson Controls attends World Economic Forum annual meeting” Johnson Controls < http://www.johnsoncontrols.com/insights/2016/enterprise/features/wef-2016>. Retrieved November 3, 2016.
 Walton, Robert. “Getting to net zero: Organizations are looking beyond lightbulbs to smart energy technology” (July 6, 2016) Utility Dive <http://www.utilitydive.com/news/getting-to-net-zero-organizations-are-looking-beyond-lightbulbs-to-smart-e/422108/>. Retrieved November 3, 2016.