3 Ways To Invest In The Future Of Air Conditioning (2023)

There could be investment gold in a surprising place — air conditioning.

This roughly $48 billion industry is expected to grow at a 1% annual rate in the next five years propelled by powerful trends — most notably climate change.

Carrier CARR , Trane Technologies, and Johnson Controls are likely beneficiaries of the future of air conditioning.

HVACR Industry

Heating, Ventilation, Air Conditioning and Refrigeration (HVACR) is a large industry that has been hurt by the pandemic but is likely to enjoy modest future growth. According to IBISWorld, in the five years to 2020, residential construction activity has expanded due to rising per capita disposable income and relatively low interest rates.

While office construction has taken a beating as more people work from home, demand for home improvements — including HVACR upgrades — has soared due to the pandemic. IBISWorld expects 1% average growth in this $47.6 billion (estimated 2020 revenue industry) through 2025.


Carrier — a leader in this industry — suffered a decline in revenue in the June-ending quarter. As I wrote last month, Carrier’s second quarter revenue fell 20% to almost $4 billion while adjusted operating profit declined 42% to $442 million from the year before.


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Since going public in March, its stock is up 167% to about $32 a share. Evidently investors liked the good news it shared with investors in July: CEO David Gitlin raised guidance for the just ended quarter due to “continued cost reduction actions, progress on our top line initiatives and improvement in the U.S. in June.”

Carrier says it’s positioning itself to capture future growth opportunities — with a specific focus on satisfying demand for indoor air quality (IAQ).

As Chris Nelson, President, HVAC, Carrier said in an October 5 interview, “This global pandemic has shined a spotlight on the importance of [IAQ]. In response to this ever-present – but more center-stage than ever before – need, Carrier launched the Healthy Buildings Program, an expanded suite of solutions to help deliver healthy, safe and efficient indoor environments.”

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Carrier offers IAQ assessments — dubbed the Safe Start Service — “to ensure that buildings are ready for occupancy,” Nelson noted. Carrier has recently launched a product in response to the pandemic — the “OptiClean negative air machine which helps clean contaminated air and prevent it from spreading to different sections of a building.”

Expected regulatory changes require HVACR manufacturers to respond now. Nelson pointed out that Carrier is planning now to develop products that comply with “a minimum efficiency change in 2023 for both residential and light commercial products across the U.S.”

Carrier is also working now to comply with “hydrofluorocarbon (HFC) reductions as outlined in the Kigali Amendment to the Montreal Protocol. The first step down in the U.S. is expected [despite uncertainty about its ratification] in 2024 for residential and commercial cooling equipment.”

Carrier’s Healthy Buildings Program provides technologies to boost IAQ. These include MERV, HEPA, and electrostatic filters; an always on “command center” that monitors air quality and equipment health, and the MyWay app that enables building occupants to “personalize their occupant experience,” explained Nelson.

Carrier is also adopting new refrigerants with lower Global Warming Potential (GWP).Nelson warns that “some of these refrigerants are classified as mildly flammable and require additional safety sensors and system design modification.”

Carrier is developing more efficient compressors and partnering with refrigerant makers — most notably The Chemours Company CC — which will replace Carrier’s R-410A with “R-454B as [the company’s] primary lower GWP [refrigerant] in all its ducted residential and light commercial packaged solutions sold in North America,” he said.

Carrier is limiting its business focus to its areas of strength and partnering with companies to close the capability gap and get new products to market more rapidly. To satisfy Carrier’s requirements, potential partners must share its philosophy that “effective partnerships succeed when the parties understand and appreciate one another’s unique strengths and advantages,” Nelson argued.

To adapt to changing customer needs and Carrier’s evolving priorities, Nelson has advice for potential partners. As he said, they “should perform strong self-assessments to understand what they offer, and what they need.When looking to a global HVAC leader like Carrier, they need to be sure that goals align and that they possess strong technology to adapt to emerging trends.Ultimately, it’s about knowing themselves, knowing Carrier, and working together constructively in building the relationship.”


Investors have not been quite as enthusiastic about Trane. Trane’s revenues and profits fell in the quarter ending June 2020 and its stock is up 22.3% so far in 2020. As I wrote last month, its revenues fell 13% to $3.1 billion while operating income dropped 25% to $424 million in the second quarter.

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Trane did not offer guidance for the third quarter. According to its earnings announcement, “Given the current uncertainty created by the Covid-19 pandemic and its impact on the Company's end markets, the Company has not reinstated financial guidance for 2020. The Company intends to reevaluate guidance on its third quarter earnings call.”

Trane is certainly investing in the future of air conditioning and it sees similar opportunities as Carrier does in improving IAQ and reducing greenhouse gases.

As Trane’s chief technology and strategy officer Paul Camuti explained in an October 1 interview, “As a leader in HVAC and climate innovation, increasing global population, economic growth in developing countries, and a warming climate...pose [Trane with] major opportunities [and] responsibilities for [heating and cooling in buildings and homes].”

Trane has set very specific goals for how it will reduce greenhouse gases in its own operations and in its HVAC products. As Dave Regnery, Trane Technologies President and COO, said on October 1, “Heating and cooling buildings today contributes to about 15% of global carbon emissions, and could contribute up to 25% by 2030. [We’ve] set bold sustainability commitments, including reducing our own carbon footprint, and reducing customers’ greenhouse gas emissions by a gigaton (1 billion metric tons) by 2030.”

Trane also sees increased customer interest in IAQ due to the pandemic. In response, Trane is “delivering solutions that help buildings achieve both efficiency and healthier indoor spaces – we believe that you can achieve both,” Regnery said.

Trane has made fast progress in cutting HFCs. As Camuti pointed out, “we were the first to introduce low-global-warming potential refrigerants in our EcoWise portfolio for chillers and refrigerated truck and trailers. We also work closely with organizations like ASHRAE and UL to help shape codes and standards that will accelerate the pace that lower carbon technologies and can meet the sustainability needs of our customers.”

Trane has also introduced technologies for reducing energy consumption and carbon emissions. “Intelligent energy services coupled with solutions such as thermal energy storage can work to reduce peak demand and [ease investment in] renewable electricity generation. Technologies like high-SEER-rated units and heat pump technologies connected to intelligent controls [can] further reduce the environmental footprint of home heating and cooling,” Regnery argued.

Trane is placing a greater emphasis on partnering to meet its climate goals. Camuti explained that the company has created a Sustainability Council of experts in “sustainability, infrastructure development, energy policy, and technology and has created an external advisory council for its Center for Healthy and Efficient Spaces.”

Trane is pursuing new partnerships. As Regnery said, “We are always interested in having conversations about collaborating to achieve a sustainable future for our industry, our customers, and the planet.”

Johnson Controls

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Johnson Controls — whose stock is roughly unchanged in 2020 — suffered a less severe revenue decline than Carrier and Trane in the quarter ending June 2020. Its revenue was down 16% and adjusted earnings before interest and taxes fell 11% to $707 million.

Its outlook for the second half of 2020 is less pessimistic. As I wrote in September, CEO George Oliver said in the company’s July 31 earnings call, “Given the trends in Q3, we expect to see a nice sequential improvement in revenue, which is expected to result in a year-over-year organic revenue decline in the high-single to low double-digit range” compared to an earlier forecast of 15% to 20% revenue decline.

Johnson Controls is investing in research to capture the opportunities created by regulations that require new refrigerants.

As David Budzinski, Vice President, Commercial Excellence, Global Products, Johnson Controls, explained in a September 29 interview, “When you think of refrigerant leak-detection systems, a lot is being driven by HVAC companies using more flammable refrigerants. Refrigerant leak-detection systems are critical for people in the building space. And that ties into a Johnson Controls core principle — to keep people safe and healthy.”

Johnson Controls is working on such systems now. “We’re doing different iterations and innovations of our product lines to lead the market in these areas. Our next-generation leak-detection systems are cost effective, connected, intelligent and flexible for people to use on any type of HVAC system or refrigerant-based system,” Budzinski explained.

Johnson Controls redesigned its rooftop unit platform to make it more efficient while complying with new regulatory standards. As he said, the new platform “is 30% more efficient in light commercial space, meets the January 2023 lower emissions refrigerant standards, is energy efficient, and due to its variable-speed compressors reduces overall operating costs while complying with low-HFC refrigerant requirements.”

The company is also using new technology to improve refrigerant leak detection. By incorporating artificial intelligence and predictive diagnostics, Johnson Controls provides “connected systems that allow [customers] to detect building leaks in real-time [so they can] react before it turns into a catastrophic issue,” according to Budzinski.

Johnson Controls partners with customers — end users, channel partners, distributors and system integrators — to keep up with their changing needs. The company also works with technology suppliers — such as Microsoft MSFT , Intel, and Foxconn — to tap expertise that complements its own.

As Budzinski concluded, “Our HVAC and digital intelligence, coupled with market information and direct customer feedback, help us create road maps with our partners. Our goal is to help them advance their businesses with us.”

Investors have concluded so far that Carrier is the best bet on these future opportunities and Trane’s stock has performed admirably. However, if Johnson Controls delivers unexpectedly good growth in future quarters, now would be a good time to invest.

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What will air conditioning be like in the future? ›

Over the next few decades, the global demand for air conditioning is expected to skyrocket. According to the International Energy Agency, the number of AC units in buildings across the world should reach 5.6 billion by 2050, up from only around 2 billion units today.

What is the 3 most important factors for an AC unit? ›

The Big Three

You want to look at the AC unit's power, energy efficiency, and noise. There are many kinds of air conditioning units that can fulfill your cooling needs, but you should be able to narrow down the ones which can work the best for you.

How can air conditioning be improved? ›

One of the best ways to boost the efficiency of your air conditioner is to keep the vents free from debris. Take some time to walk around your house and take stock of the vents. These are either going to be on the ceiling or the floor.

Is air conditioning a good investment? ›

While you're unlikely to get your full return on investment, you might get as much as 20-30% back when you sell your home. Adding a new HVAC can increase in your home's resale value, which will raise the overall market value. The average cost of an HVAC system is roughly $10,000 or more including installation costs.

What is the new technology to replace air conditioner? ›

The thermally driven air conditioning method is another new HVAC technology. This type of technology uses natural gas or solar energy to produce cool air. This is the cheapest option compared to traditional A/C units, but is not yet widely used. However, it is very effective and efficient.

Will we need air conditioning? ›

As the world heats up, billions of people need air-conditioning. This 120-year-old technology used to be considered a luxury, but in the age of climate change, it is a necessity for human survival.

What are the key points of a air conditioner? ›

Air conditioners have three main components: a compressor, a condenser coil, and an evaporator coil. They also have a special chemical called refrigerant that loops through the system absorbing and removing heat. Working together these three components convert the refrigerant from gas to liquid and back to gas quickly.

Which are the four factors that are needed to be controlled in air conditioning? ›

An air-conditioning system must be effective regardless of outside climatic conditions and involves control over four fundamental variables: air temperature, humidity, movement and quality.

What are the 3 top reasons that you should purchase an HVAC maintenance contract? ›

5 Benefits of an HVAC Maintenance Contract
  • Improved Energy Efficiency.
  • Priority Service.
  • Discounts on Repairs.
  • Maintain Equipment Warranty.
Nov 18, 2020

How does air conditioning benefit society? ›

Improves the Quality of Air

This is because they are capable of flittering out pollen, dust, and other allergens present in the environment. By reducing humidity, air conditioners can check the growth of mildew and mold.

How has air conditioning helped society? ›

Now used in about 90% of all single-family homes in the U.S., the adoption of residential air conditioning units has improved comfort, health, productivity, and much more! It has also saved countless lives.

Does HVAC have a future? ›

While the use of heating, ventilation, and air conditioning (HVAC) is inevitable, we have and are developing more sustainable ways of heating and cooling, such as heat pumps and photovoltaics.

What is the return on investment of a new HVAC system? ›

Installing a new HVAC system provides a significant return on investment, with the average ROI being right around 60%. This is higher than many other home improvements, and if you choose an energy-efficient HVAC system, it can increase your home's value anywhere from 5% to 7%.

Which technology is best in air conditioner? ›

The inverter air conditioner is by far the most energy efficient. It is more economical and smooth in operation than the fixed speed air conditioner. It consumes less electricity due to its variable speed compressor, and is also good for the environment.

Can we replace air conditioner? ›

If you kept your air conditioner in good condition over its lifetime, expect to need a replacement in about 10-15 years. Keep in mind that as your A/C grows older, its mechanical parts can become unavailable or obsolete over time. If you aren't able to replace a broken part, you will need to purchase new unit.

What are the three types of air conditioner? ›

The 3 Different Types of AC Systems
  • Central Air Conditioning. Split air conditioning systems, also known as central air conditioners, get their name because they are split between the inside and outside of a home. ...
  • Mini-Split/Ductless Unit. ...
  • Heat Pump.
Jul 1, 2015

Why is it important air conditioning? ›

According to Mayo Clinic, running an A/C not only reduces humidity in your home, but can also lower the amount of pollen, mold, mildew and other airborne outdoor allergens that can potentially lead to asthma symptoms. Air conditioners can also lower your exposure to indoor allergens, like dust mites.

Why do people need air conditioning? ›

The most important health benefit of air conditioning is reducing your home's humidity. Living in a house that prevents high humidity creates a less damp home, as well as keeping you healthy. High humidity is linked to dust mites, mould, heatstroke and dehydration.

How can I cool my house without AC? ›

10 Genius Tricks To Keep Your House Cool Without Air Conditioning
  1. Rotate Your Ceiling Fan Counter-Clockwise. ...
  2. Block The Heat With Your Curtains. ...
  3. Open Your Windows In The Evenings. ...
  4. Opt For Cotton Sheets. ...
  5. Create A DIY 'Air Conditioner' ...
  6. Turn On Your Kitchen Exhaust Fan. ...
  7. Drink More Water. ...
  8. Create A Cross Breeze.
Jul 23, 2019

What is the most important part of an air conditioner? ›

The compressor of an air-conditioning system is considered to be the engine of the unit. Thus, the compressor is the most important component of your AC unit. This functions together along with a substance known as working fluid. Together, they help to transform the gas into a liquid.

What 2 key functions does an air conditioner perform? ›

There are three primary functions to a room Air Conditioner. First is to cool a specific area, such as a room, not an entire home. The second is to dehumidify, to remove moisture out of the air, so you're not sitting in a cold, clammy environment. The third function is to filter the air within the home.

What are the five main factors that affect the comfort air conditioning? ›

5 Factors that can Affect Air Conditioner Efficiency
  • Lack of maintenance. Just like your car, your air conditioner requires regular maintenance in order to operate smoothly and efficiently year-after-year. ...
  • Poor airflow. ...
  • Dirty coils. ...
  • Duct leaks. ...
  • Low thermostat settings.

What is 4 way climate control? ›

4-zone automatic climate control: allows an individually regulated climate to be set for the driver, front passenger, and left and right sides in the rear.

Why HVAC is a good trade? ›

According to the Bureau of Labor Statistics, employment in the HVAC industry is projected to grow 15 percent from 2016-2026, much faster than the average for all occupations. The diversity of job opportunities and advancement in systems makes this industry an attractive and rewarding career.

What are the benefits of HVAC maintenance? ›

Here are five benefits of regular HVAC maintenance:
  • Fewer Repairs Needed. Having annual maintenance on your HVAC system means fewer repairs in the future. ...
  • Keeps Your Unit Lasting Longer. ...
  • Improved Safety for You and Your Family. ...
  • Lower Utility Bills. ...
  • Better Indoor Air Quality.
Jun 18, 2020

Why is HVAC in high demand? ›

A Growing Population Means More Demand for HVAC Services

This is because HVAC systems typically have a lifespan of 15-20 years. So as the population ages, more and more people will need to replace their old systems with new ones. This increased demand will create even more jobs in the HVAC industry.

How does air conditioning affect the economy? ›

Look at the flip side though: income increases grow the demand for air conditioning, but air conditioning also increases income growth. Actually, even in the U.S., despite the much-lamented “physical addiction” of Americans to cool air, air conditioners use just about 6 percent of total electricity produced.

How did air conditioning change American life? ›

It made possible industrial work like printing, food processing and electrical manufacturing that would be hard to manage in sweltering heat. And it created the possibility for white-collar jobs in mechanically cooled office buildings.

Why is air conditioning important in industry? ›

Air conditioning systems are there to ensure that the temperature of your office, warehouse or factory remains at a constant. By keeping the ambient temperature at a regulated level you will help your team to stay alert and work productively whilst potentially reducing the number of mistakes made too!

What is the global impact of the air conditioner? ›

The researchers calculated air conditioning is responsible for the equivalent of 1,950 million tons of carbon dioxide released annually, or 3.94% of global greenhouse gas emissions. Of that figure, 531 million tons comes from energy expended to control the temperature and 599 million tons from removing humidity.

How important is HVAC in our community? ›

Why Are Ventilation Systems So Important? Even beyond the pandemic, HVAC systems play a major role in creating a safe and comfortable learning environment for students and school staff by regulating indoor air quality and maintaining comfortable temperature levels.

How important is central air conditioning? ›

A central air conditioning system uses filters to help improve the quality of your air. This helps eliminate pollen, dust and lint from the air. This type of air conditioning system is the most effective way to circulate cool air through your entire home.

What are the opportunities and future growth in the HVAC field? ›

According to the Bureau of Labor Statistics (BLS), HVAC technician employment is expected to increase by 15 percent through 2026. The continuing growth of construction, both commercial and residential, is a factor in the projected growth, in addition to the increasing prevalence of service contracts.

What is the future of home heating? ›

In the long-term, using renewable electricity to heat our homes – whether directly or via 'green hydrogen' – will help insulate us from sudden price shocks too, since we won't be dependent on large quantities of imported gas.

What is the new HVAC technology for 2023? ›

In 2023, the new minimum efficiency standards for heat pumps will increase by 1.0 SEER to 15.0 SEER. Split-system heat pumps must also achieve a minimum of 8.8 HSPF. Any 14.0 SEER heat pump built before January 1, 2023, can still be installed on or after January 1, 2023.

What is a return for air conditioning unit? ›

Return vents: What is a return vent? These vents suck the air from each room and send it back to the air conditioning or heating system. Return vents tend to be bigger than supply vents, and you won't feel any air coming from them. When an HVAC system delivers air to a room, it increases that room's air pressure.

How can I save money to replace my HVAC system? ›

Tips for Saving Money on a New HVAC System
  1. Look for Local Incentives.
  2. Check for Company Rebates.
  3. Look for Off-Season Discounts.
  4. Be Sure to Compare Quotes.
  5. Vet Contractors for the Best Deals.
Apr 6, 2022

Why does my HVAC have two returns? ›

Having two air return vents allows you to seasonally control which air is returning to the HVAC system. In older homes, this may not be an option. The theory is that in the Summer cooling season, you want to be circulating warmer air back through the HVAC system to be cooled.

What is the most common problem with air conditioning? ›

Inadequate Maintenance

If you allow filters and air conditioning coils to become dirty, the air conditioner will not work properly, and the compressor or fans are likely to fail prematurely.

What are the risks of air conditioning? ›

Staying Too Much in Air Conditioning can Affect your Health: Know How
  • Lethargy. ...
  • Dehydration. ...
  • Dry Or Itchy Skin. ...
  • Headaches. ...
  • Respiratory Issues. ...
  • Infectious Diseases. ...
  • Allergies and Asthma. ...
  • Acclimatisation to Cold Air.
May 7, 2022

Is HVAC expected to grow? ›

b. The U.S. HVAC systems market is expected to grow at a compound annual growth rate of 5.6% from 2022 to 2030 to reach USD 26.93 billion by 2030.
Report AttributeDetails
Market size value in 2022USD 17.45 billion
Revenue forecast in 2030USD 26.93 billion
Growth rateCAGR of 5.6% from 2022 to 2030
10 more rows

Does AC hurt the environment? ›

Most air conditioners are fueled by electricity and use a refrigerant that results in gaseous emissions that contribute to global warming and ozone layer depletion. In fact, some studies predict that by 2050, roughly 25 percent of global warming will be caused by air conditioning.

Does air conditioning worsen climate change? ›

It misses the ultimate irony: air conditioning itself contributes significantly to global warming. Most AC units still use refrigerants that are powerful greenhouse gases (GHGs) thousands of times more potent at trapping heat in the atmosphere than carbon dioxide, the main GHG.

How air conditioning is warming the world? ›

Air conditioners pose another direct problem for the climate. Many of them use refrigerants that are also powerful heat-trapping gases. Chemicals like hydrofluorocarbons (HFCs) can be upward of 12,000 times more potent at trapping heat in the atmosphere than carbon dioxide.

What are the HVAC trends for 2023? ›

By the beginning of 2023, new cooling systems will have refrigerants with a low potential for global warming as part of HVAC industry trends. Manufacturers will have to build heat pumps and air conditioning units compatible with R-454b. It's more environmentally friendly and mildly flammable.

Will HVAC be in demand? ›

A Growing Population Means More Demand for HVAC Services

This is because HVAC systems typically have a lifespan of 15-20 years. So as the population ages, more and more people will need to replace their old systems with new ones. This increased demand will create even more jobs in the HVAC industry.

Can AC be eco-friendly? ›

A number of technological innovations are also making AC units greener and efficient. One such innovation is the use of R-32 refrigerant in air conditioners—a next generation, environment friendly refrigerant designed to save the ozone layer and reduce global warming.

What impact does air conditioning have on human life? ›

Unless systems are cleaned regularly, air conditioners can be a source of health issues. Air contamination can become a severe problem that contributes to respiratory ailments in people. Additionally, air conditioning at work and home can lead to problems, such as colds, fevers, headaches and fatigue.

What affects air conditioning? ›

The short answer is there are multiple factors that impact your AC system's efficiency, such as its SEER rating, condition of your air ducts, and the temperature settings for your thermostat. By taking care of your air conditioner you will improve its efficiency.

How will global warming affect the demand for air conditioning? ›

As climate change causes temperatures to climb and hot spells to last longer, billions more people will need or want air conditioning – and because of expanding economic development, a growing number will be able to afford it.

What kills more people cold or heat? ›

But surprisingly, cold kills more people globally than heat each year.

How important is air conditioning in our country? ›

Air conditioners circulate and filter air, removing pollutants and mold from the air. This is especially important for people who suffer from allergies and asthma because it minimizes the irritants that trigger an attack. This only holds true, however, if your system is kept clean and filters are regularly changed.

Who uses the most air conditioning in the world? ›

Japan ranked the highest in air-conditioning penetration rate, with around 91 percent of Japanese households having some form of air-conditioning.
Share of households that have air-conditioning (AC) worldwide in 2016, by country.
CharacteristicPenetration rate
United States90%
Saudi Arabia63%
6 more rows
Mar 17, 2022


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