Poor-Quality HVAC Installs Are Costing Us. A Solution Is Within Reach.

California has ambitious goals for transitioning to clean, all-electric appliances to eliminate building emissions. But meeting these goals will require action on a little discussed, yet critical issue: HVAC permitting compliance. 

Heating, ventilation, and air conditioning (HVAC) is responsible for 24 percent of electricity use and 40 percent of gas use in California buildings, with households spending over $1,000 on HVAC alone each year.

Without a doubt, these systems have significant impacts on energy costs and home comfort. That is why HVAC installations are required by law to be permitted and comply with the California Building Code’s quality installation requirements. 

Yet, today, most HVAC installations in California are completed without a permit. In fact, only about 10 percent of residential HVAC replacements are permitted, resulting in about 315,000 unpermitted HVAC installations every year. Widespread, unpermitted HVAC installation wastes energy, worsens indoor air quality, and hinders the transition to clean, electric appliances. The California State Legislature can and must improve HVAC permitting compliance by passing Senate Bill (SB) 795 this year. 

Permit noncompliance is costing us

Today, only about 10 percent of residential and 25 percent of commercial HVAC replacements are permitted and inspected to ensure compliance with California’s quality installation requirements.

This permit noncompliance is increasing households’ energy bills. Installing an HVAC unit properly can reduce energy use by 30 to 40 percent by preventing energy waste from leaking ducts, oversized units, poor insulation, and refrigerant leaks. As a result, quality installation can save households hundreds of dollars each year on their energy bills. 

Energy wasted by unpermitted HVAC systems also adds to California’s peak electricity demand-- straining the grid and costing utility customers millions. The Sacramento Municipal Utility District (SMUD) alone, serving less than 5 percent of California’s population, estimates that it spent an extra $1.1 million dollars over 3 years due to unpermitted HVAC installations.

Poor quality HVAC installations result in health and safety risks. Leaky ducts, which are a feature of low-quality HVAC installations, create an effect called “back drafting”: as pressurized air escapes through holes in ducts, make-up air gets pulled from the attic, crawlspace, or wall cavity into the air conditioned space. This introduces mold or pollutants from these spaces into the living area, deteriorating the building’s indoor air quality.

Poor quality HVAC installations also undermine California’s emissions reduction goals. The refrigerants in most existing air conditioners have 1,500 to 2,000 times the warming effect of carbon dioxide. Quality installation is essential to preventing leaks of these refrigerants and providing an intervention point for proper disposal of the old system. Quality installation also reduces energy waste, thus reducing appliance emissions.

Finally, permit non-compliance is limiting California’s ability to meet its building electrification targets. Many efficient, electric appliance installations are supported by government and utility incentive programs, which require contractors to pull a permit to participate in the program. By contrast, gas appliance installations are more likely to be completed without a permit – artificially reducing their installation costs (along with installation safety and quality) compared to electric heat pumps. 

California must enforce permitting requirements across the board to reduce energy costs, improve home health and safety, and bring our climate targets within reach.

The legislature can act this year

This year, the California Legislature has a chance to act by passing critical legislation to improve HVAC permit compliance. 

SB 795 provides a simple, low-cost solution to better enforce permit requirements. The bill requires the California Energy Commission (CEC) to create a registry of HVAC equipment sold in California and a central code compliance data repository. The CEC, the California State Licensing Board, and local permitting offices will have streamlined access to code compliance documentation and will be able ensure that contractors pull a permit for each HVAC project they complete.

Under the current system, contractors who play by the rules are unfairly penalized for it because they are undercut by unscrupulous contractors who skirt permit and code requirements. SB 795 will help contractors who comply with state permit requirements by stepping up enforcement against those who don’t.

SB 795 is foundational to achieving California’s ambitious building electrification targets and has numerous co-benefits, garnering widespread support from labor, building industry, and environmental groups. To address the climate crisis while improving affordable energy access, the state has no time to waste in passing SB 795.