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The HVAC industry is undergoing a significant transformation as the phasedown of high-GWP refrigerants approaches. As of December 31, 2024, manufacturers have ceased producing and importing residential and light commercial air conditioning and heat pump systems using R-410A, and new systems now feature mildly flammable (A2L) refrigerants, such as R-32 or R-454B. This transition is expected to reshape the market, with contractors adapting to installing and servicing new systems.

Despite economic pressures, including inflation and elevated interest rates, manufacturers remain optimistic about the year ahead. The residential market is expected to remain stable, with mild potential for growth, driven by new construction and replacement business. The commercial and industrial market is expected to see consistent growth, particularly in the data center space.

Manufacturers are focused on transitioning their portfolios to A2L refrigerants and providing training and education on these solutions. The rollout of new equipment has been smooth, with most products ready for launch by Q3 or Q4 of 2024. The industry is also closely monitoring the potential impact of the Trump administration on the Inflation Reduction Act (IRA) and proposed tariffs.

Looking ahead, manufacturers believe that the trend toward electrification and decarbonization will continue, with state and local incentives playing a significant role. The IRA has played a greater role in increasing awareness of higher-efficiency HVAC solutions, and state rebate programs are expected to have a significant impact on the residential HVAC market.

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