Big players in the water heater business are fighting Republican efforts to roll back a Biden-era efficiency standard, arguing that foreign competitors stand to unfairly benefit.
Those foreign competitors, however, still have the upper hand.
Whether the clash of water heater titans derails the GOP rollback effort is uncertain. When the House voted last month to overturn the regulation via the Congressional Review Act, it enjoyed bipartisan backing.
But two House Republicans did not support it, and at least one Senate Republican is noncommittal on the matter. They cited potential downsides to businesses if the regulation is killed.
“I’m looking at what’s best for the long-term prospects of citizens,” Sen. Bill Hagerty (R-Tenn.) said, adding that a “balancing act” must be performed regarding considerations like jobs and the nation’s competitiveness.
Tennessee hosts a major manufacturing plant for A.O. Smith, which has been at the forefront of fighting to save the rule. On the other side is Japanese-based Rinnai, which has led the effort to scrap the rule.
At issue is a December decision from the Department of Energy on natural gas-fueled, tankless water heaters like those made by Rinnai.
Such heaters generally store very little but provide instantaneous hot water. They’re more energy efficient than heaters with tanks, but the extent of the efficiency depends on the technology they use. Condensing units outperform noncondensing ones.
Under the new standards, tankless water heater makers have about five years to sell only appliances that reach an efficiency level that is about where the more expensive condensing units are.
Opponents of the regulation include Rinnai, Japan-based Noritz and the natural gas industry. Other major players in the water heater sector support it, even though they would have to retool their manufacturing to meet it.
The fight has sizable stakes. DOE estimated that industry would have to spend $20.4 million to comply with the rule. Rinnai, the biggest player in noncondensing tankless heaters, said in regulatory comments that it would have to spend between $3 million and $9 million to upgrade its Georgia facility to meet the rule’s requirements.
President Donald Trump’s Energy Secretary Chris Wright has taken up the cause against the water heater rule, calling it “completely nuts.”
Rinnai has filed a lawsuit with a coalition of GOP state attorneys general and drummed up support for the CRA resolution. Around the time of Trump’s inauguration, a bevy of conservative media outlets slammed the rule, framing it as a threat to consumer choice that could shut down Rinnai’s new manufacturing plant in Georgia and the 200 people it employs.
On the other side are companies led by A.O. Smith. They are trying to stop the congressional action, arguing that it could exempt tankless heaters from any new efficiency rules, while other appliances’ standards can ratchet up regularly.
“We strongly support President Trump’s America First Agenda. However, the CRA in question is inconsistent with that agenda, as it will provide a special exemption from U.S. regulations that primarily benefits a small group of foreign companies to the detriment of American manufacturers like A. O. Smith and for that reason we continue to oppose it,” A.O. Smith CEO Kevin Wheeler said in a statement.
‘Radical energy decisions’
So far, Rinnai and its allies are winning.
The House last month voted 221-198 to pass the CRA resolution overturning the regulation, with 11 Democrats joining Republicans. The Senate could vote on it soon, according to a leadership aide granted anonymity to speak candidly.
“The new rule raises minimum efficiency levels for tankless water heaters to levels that are not achievable for non-condensing tankless water heaters,” Frank Windsor, president of Rinnai America, said in a statement.
“The DOE rule will eliminate this very efficient and affordable solution as an option to consumers, and in many cases will force the consumers to go back to the less efficient tanks.”
A.O. Smith, meanwhile, has tried to appeal to conservative ideals in its advocacy too, including using “America First” themes. A memo it circulated to lawmakers argues that overturning the rule could open up water heaters to regulation by liberal states like California and that it would favor some companies over others.
Water heater makers like Rheem and Bradford White had supported the DOE rule previously. Neither company responded to requests for comment, but disclosures show they lobbied officials on the issue as recently as the fourth quarter of 2024. All three companies make both tankless and tank heaters.
Opponents have also emphasized the U.S. roots of their companies, in contrast to the CRA supporters.
The Air-Conditioning, Heating and Refrigeration Institute, which represents water heater manufacturers, is opposed to the CRA. “Our members have started investing in the changes necessary to comply with this,” spokesperson Francis Dietz said.
Cost questions
DOE estimated an average cost increase of $231 per appliance from the rule, though the gas industry said it’s closer to $450.
Trump called out the water heater rule in one of his executive orders on Inauguration Day, telling DOE to review it for potential changes or repeal. DOE last month delayed the effective date, and Wright spoke about it at the recent Conservative Political Action Conference.
“We have a factory in the southeastern part of the United States that employs hundreds of people to build a particularly popular product these days. … It’s among the cheapest ways to heat your water, takes the least space, lower cost, burns natural gas, our lowest-cost thermal energy we can have in our homes. It’s a win on every box,” Wright said.
“So what did the Biden administration do? They see a hot product, Americans are voting yes. They passed a regulation that would make that product illegal. And that company would be dead. In fact, that company is very fearful for the jobs and opportunity of those workers. That’s hundreds of American jobs. I care personally about that.”
Wright said the factory would stay open, thanks to Trump. “But again, President Trump fixed that problem, fixed that problem. We found a fix, and we are fixing that problem.”
DOE did not respond to a request for comment on what actions the agency is planning, though the White House said the administration supports the CRA action. Rolling back or repealing the regulation would likely take months.
Rep. Bob Latta (R-Ohio), chair of the House Energy and Commerce Subcommittee on Energy, said on the House floor that the resolution would “right the wrongs of the previous administration, execute President Trump’s agenda and protect our consumers.”
Reps. Derrick Van Orden of Wisconsin and Russell Fry of South Carolina, the lone dissenting Republicans who voted “present,” both have A.O. Smith facilities in or near their districts.
Fry said the A.O. Smith manufacturing plant in McBee, South Carolina, was on his mind, as well as the fact that many of the competing products are manufactured outside the country.
“It’s a very small town with a very big facility footprint, so I’m just trying to be sensitive to local concerns,” Fry said. “What I wanted most of all is a pause so we could get everyone on the same sheet of music.”
Asked about his vote and whether it was about A.O. Smith, Van Orden responded, “It’s about jobs, man,” and declined to elaborate.
This story also appears in Energywire.
