Balancing environmental progress with economic reality

OPINION – After this past election, it is refreshing to hear California’s political leaders identifying that affordability is a message they received loud and clear from the voters. A great first step toward affordability is to stop adding more expenses to daily living.

Unfortunately, California regulators are still aggressively acting to layer additional financial burdens on Californians. And ironically, potentially betray the climate goals they’re trying to achieve.

Here’s an example from the frontlines of the fight for affordability.

Last month, along with a coalition of business and labor organizations, Rinnai America Corporation filed a lawsuit in federal court to pre-empt the South Coast Air Quality District (District) from implementing regulations that would essentially ban the future use of natural gas appliances for 44 percent of California’s population.

Rinnai has been manufacturing heating products for over 100 years, and we are now a world leading producer of tankless waters heaters. One may assume our opposition to banning natural gas is one of self-interest. That may be true if our products weren’t contributing to affordable energy efficiency, but the reality is companies like ours are providing the innovation to combat climate change without squandering abundant and affordable fuels. Consumers should not be denied the choice to use our products.

Eliminating gas water heaters from the market, regardless of their efficiency, raises several practical concerns that deserve careful consideration.

First, the transition costs would fall heavily on those least able to afford them. While we sell the most efficient electric heat pump water heaters in the world, the fact is that installing an electric heat pump water heater system can cost up to $15,000 – a significant burden for working families, particularly in rural and under-resourced areas. Many homes would require expensive electrical panel upgrades, and local power grids would need substantial reinforcement to handle increased demand.

There are also important legal considerations. The Energy Policy and Conservation Act established a national framework for energy efficiency standards to prevent a patchwork of state regulations that could fragment the market and increase costs for consumers. The proposed regulations being put forth by the District appear to conflict with this federal framework.

Most importantly, there are alternative solutions that could achieve significant emissions reductions while maintaining affordability and consumer choice. High-efficiency gas appliances already deliver substantial environmental benefits. New technologies, such as hydrogen-blended fuels, show great promise.

The path forward should incorporate multiple approaches. A gradual transition that includes high-efficiency gas appliances, dual-fuel systems, and hydrogen-ready products would allow time for infrastructure development while still achieving meaningful emissions reductions. This approach would also enable continued innovation in clean energy technologies.

We believe regulators and manufacturers share common goals: reducing emissions, improving energy efficiency, and ensuring all Californians have access to reliable, affordable hot water. However, the District’s current proposal’s aggressive timeline and limited technological options could slow progress toward these goals by forcing resources into rapid compliance rather than long-term innovation.

We recommend regulators adopt a more collaborative approach that:

• Extend compliance timelines to allow for infrastructure development
• Includes high-efficiency gas appliances as part of the solution
• Promotes investment in promising technologies like hydrogen fuel
• Provides support for communities facing high transition costs
• Harmonizes with existing federal standards

Environmental protection and economic prosperity aren’t mutually exclusive goals. More thoughtful regulation that considers all stakeholders can achieve meaningful emissions reductions while preserving jobs, consumer choice, and market innovation.

The future of clean energy depends on smart policy that encourages innovation while ensuring affordable access for all Californians. Let’s take the time to get this transition right.

Frank Windsor is President of Rinnai America Corporation, a leading brand of tankless water heaters in North America.