MIAMI — On a hot June morning in Doral, the temperature is already in the upper 80s and a line of colorful trucks and vans has bellied up to a warehouse loading dock for Watsco, the leading South Florida distributor of air conditioners and heat pumps.
Inside the 89,000-square-foot warehouse, thousands of air conditioners and parts are stacked to the 30-foot ceiling. On a busy summer day, a crew of 10 workers might load more than 500 of the cooling machines into contractors’ trucks, destined for homes, skyscrapers, hospitals and office buildings around region.
This warehouse is part of a nationwide push to clean up the air and cut carbon emissions to avoid the worst consequences of climate change. That’s because decades of federal regulation have pushed HVAC manufacturers to use less polluting refrigerants and make more efficient machines that run on less energy.
Now, almost any time contractors replace an old air conditioner with a new one, they cut a significant chunk out of a home’s carbon emissions.
“I’ve been doing this for 11 years,” said Fernando Villacis, warehouse manager for this Watsco Gemaire location. “This industry has changed a lot.”
The Doral warehouse is one of more than 670 air conditioner and heat pump distribution locations for Gemaire’s Miami parent company, Watsco, the biggest HVAC distributor in the United States. One out of every five air conditioners and heaters sold in the nation comes from Watsco. To be sure, the company is on a mission to make those heating and cooling systems more efficient.
Roughly half of an average U.S. home’s energy goes toward heating and air conditioning, according to the U.S. Energy Information Administration. That number fluctuates with the weather, but it means that, on average, half of your gas and electric bill — and at least half of your home’s carbon emissions — comes from your heater or air conditioner.
Last year, Watsco sold more than 510,000 high-efficiency air conditioners and heat pumps, which the company defines as any heating or cooling system that goes beyond the minimum efficiency standards required by the federal government. Those systems use less energy than the older units they replace, which means that over time, they put less carbon into the atmosphere.
Watsco estimated the high-efficiency heating and cooling systems it sold between January 2020 and May 2023 will prevent 17 million tons of carbon dioxide from being released into the atmosphere over the course of their 18-year lifespan. That’s like taking 200,000 cars off the road for every year these heaters and air conditioners operate.
“You can stop eating meat. You can drive an electric vehicle,” said Marisol Gomez-Melzi, Watsco’s director of sustainability. “But one of the most significant things you can do to cut your carbon footprint is getting a unit that is working efficiently to heat and cool your home.”
From local to Fortune 500 firm
Watsco started as a small air conditioner parts manufacturer in Hialeah in 1956, just as air conditioning was beginning to become common in Florida and, a few years later, across the U.S.
Over the decades, the company aggressively bought up other air conditioner manufacturers and distributors. Eventually, it ditched the manufacturing side of its business to focus on selling air conditioners and heaters made by other companies. By 1999, Watsco was the biggest HVAC distributor in the U.S. Earlier this year, it joined the ranks of the Fortune 500, a list of the biggest publicly owned companies in the U.S. by revenue. The company’s 2022 revenue was $7.3 billion, a nearly 16% jump from $6.3 billion the prior year.
When your A/C breaks down, you probably won’t call Watsco — but you might buy one of its products without realizing it. Watsco is the parent company of eight separate HVAC distributors, which each operate under their own brand name and even compete against each other in some areas. Those distributors sell air conditioners to contractors, who install the systems for homeowners and businesses.
Watsco, headquartered in a sleek office building in Coconut Grove, works with more than 100,000 contractors in 42 states, as well as Puerto Rico, Mexico and Canada. In addition to selling air conditioners and heat pumps, Watsco also has a tech startup arm, Watsco Ventures, which develops tools to help contractors manage their businesses and market air conditioners and heaters to customers.
For instance, Watsco developed an app called On Call Air that helps customers compare their options for air conditioners and heat pumps, with information about each unit’s efficiency and the expected cost to run it.
“We found that two-thirds of the equipment sold through the platform is high-efficiency because you’re giving the customer much more information,” Gomez-Melzi said.
“If we can influence contractors and provide these tools that make it easier to sell this type of [high-efficiency] equipment, we can lead the transition to the decarbonization of the industry.”
Efficiency standards improve
There’s one number that will tell you how efficient your air conditioner or heat pump is: the seasonal energy efficiency ratio (SEER) rating from the U.S. Department of Energy.
When Watsco executive vice president Paul Johnston got into the HVAC industry in 1984, no one was selling particularly efficient air conditioners. “We had a 6 SEER model and an 8 SEER model,” he recalled. But in 1992, the Energy Department started enforcing a minimum energy efficiency standard for the industry.
“The government came out and said hey, the minimum is going to be 10 SEER, and we all cried and moaned and said we couldn’t do it,” Johnston said. “And of course we were able to do it.”
Since then, the Energy Department has raised the standard every few years — including this year, when a new, higher efficiency floor took effect on Jan. 1. Now, all new air conditioners and heat pumps in southern states must have at least a 15 SEER rating. In the northern part of the country, where air conditioners get less use, the minimum efficiency for A/C is 14 SEER.
Earlier this year, the Energy Department also updated its methods for testing efficiency and switched over to a new rating system, dubbed SEER2. The 15 SEER minimum efficiency in southern states is equivalent to a 14.3 SEER2 rating under the new system.
“Each time, we’re incrementally changing to find a way to make the technology work to meet the minimum efficiency of the government,” Johnston said. “And each time that happened, what we saw was that the whole industry would compress around that minimum efficiency.”
Newer A/C units also use newer types of refrigerants that are less damaging to the ozone layer and the climate. Before it was banned in the 1990s, the most common form of freon, dubbed R-12, was a greenhouse gas 10,900 times more potent than carbon dioxide, according to the U.S. Environmental Protection Agency.
Since then, the industry has moved to refrigerants that are less harmful by comparison, like R-32, which is a greenhouse gas that is 675 times more potent than carbon dioxide.
“It’s the combination of improved efficiency plus reducing the impact of the refrigerant that I think is the big story,” Johnston said.
A lifetime effect
When Watsco sells a new air conditioner, it tends to replace a unit that’s more than a decade old, which means it probably lags current efficiency standards and might use older, more harmful refrigerants.
Similarly, Watsco sells electric heat pumps, which can heat buildings more efficiently than gas furnaces — and without burning fossil fuels directly — when the temperature is above freezing. Heat pumps run on electricity, which usually comes at least in part from power plants that burn fossil fuels. But as wind and solar power gradually replace coal- and gas-burning power plants, the electricity that powers heat pumps becomes cleaner over time.
In other words, every time Watsco sells a new heat pump or air conditioner, it tends to lower a building’s carbon emissions. While a new HVAC system can make a difference, it won’t wipe out a homeowner’s energy bill or slash their emissions down to zero by itself, said Steve Samenski, director of building performance for the green building consulting firm The Spinnaker Group, a division of SOCOTEC.
“If you replace 10-year-old technology with new technology that meets the energy code, then you’re definitely doing better,” Samenski said. “A homeowner can probably expect a 10% to 20% improvement if all else is the same.”
The minimum SEER rating from 2006 to 2011 was 13 SEER, which means a lot of A/Cs being replaced right now are probably at that level. If you replace a 13 SEER system with a system at today’s minimum 15 SEER, you’d lower your electricity spending on air conditioning by about 13%, or roughly $150 a year for a 2,000 square foot house, according to utility FPL.
But if you sprang for a more efficient model — say, an 18 SEER A/C — you might cut your electricity spending on cooling by about 28%, or roughly $310 a year. But you’d probably also be spending a significant amount more to buy the unit, perhaps an additional $2,000 or higher, Gemaire’s Villacis said.
These changes are slow and incremental. Although Watsco sells more than half a million high-efficiency air conditioners and heat pumps a year, there are more than 100 million homes in the U.S. alone. It will take decades to slowly replace older units with highly efficient models. But bit by bit, the company is chipping away at the problem.
“In air conditioning, the average unit has a 12- to 14-year life. A gas furnace has a 25- to 30-year life. So if I make a change today, to see that final impact, I have to wait a generation,” Johnston said.
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