Converging regulatory deadlines in the United States and European Union are forcing HVAC manufacturers and contractors to overhaul supplier qualification processes, procurement workflows, and technical training programs as low-global-warming-potential (GWP) refrigerant mandates accelerate.
Regulatory Background
At the start of 2025, the U.S. Environmental Protection Agency enforced a nationwide mandate under the American Innovation and Manufacturing (AIM) Act, requiring new refrigerants in HVAC and commercial refrigeration to carry a GWP of 700 or lower. Companies can no longer manufacture or import most new equipment using refrigerants above 700 GWP as of January 1, 2025. New systems with higher-GWP refrigerants may only be installed until January 1, 2026, provided all components were manufactured or imported before January 1, 2025.
Under the AIM Act, the U.S. must reduce total HFC production and consumption by 85% below baseline levels by 2036. Carve-outs exist for variable refrigerant flow (VRF) systems, which can be installed until January 1, 2027, if components were manufactured or imported before January 1, 2026, and in some permitted projects until January 1, 2028.
In Europe, requirements are equally stringent. The European Union finalized a major revision to its F-Gas Regulation (EU 2024/573), establishing a sharply accelerated HFC phase-down that legally binds the refrigeration, air conditioning, and heat pump industries to a rapid transition toward low-GWP or natural alternatives. The regulation targets an 80% reduction in HFC consumption by 2030, compared to the 2011-2013 baseline. From 2025, the F-Gas Regulation also bans exports of RACHP systems intended for refrigerants with a GWP of 1,000 or above, where those systems cannot be placed on the EU market.
Below the federal level, state regulations create a patchwork of compliance requirements that contractors must navigate carefully. New York's Part 494 regulation aligns with the federal prohibition but maintains distinct reporting requirements - for VRF systems containing more than 50 pounds of refrigerant, annual reporting to New York State will be required starting June 2028. New York City's building codes do not yet fully adopt ASHRAE 15.2 for residential applications, meaning heat pumps serving single dwelling units must comply with the stricter commercial ASHRAE 15 standard.
Supplier Compliance and Supply Chain Pressure
Under the AIM Act, new rules include lower 15-pound leak detection thresholds and mandatory automatic leak detection for large systems, shifting supplier and safety requirements. Vendors that fail to comply with these standards expose contractors to EPA fines, operational shutdowns, and loss of insurance coverage.
Refrigerant producers must ramp up production of low-GWP refrigerants, which may cause supply chain disruptions or higher costs. The regulation affects a broad range of stakeholders: manufacturers must redesign systems, facility managers are planning upgrades, and contractors need updated training. Certification for handling flammable A2L or high-pressure refrigerants is essential but not yet universal. While large operators are largely prepared, smaller firms and contractors may be under-informed or under-resourced, increasing compliance and financial risk.
As of July 2025, nearly 90% of new residential and light-commercial AC/HP systems in the U.S. used substitute low-GWP refrigerants, according to AHRI and the Alliance for Atmospheric Policy. Industry associations, including the Air Conditioning Contractors of America (ACCA), have warned that differing state refrigerant rules could further complicate the transition and urged the EPA to discourage a patchwork of state-level regulations.
New equipment requirements include factory-installed leak detection sensors. If a leak is detected, the system must trigger a mitigation response - such as activating a fan to disperse refrigerant below flammable concentrations. All components, including compressors, expansion valves, and electrical parts, must be specifically designed for A2L refrigerants.
Contractor Adaptation and Market Outlook
In commercial VRF applications, the market is expected to shift toward a greater number of smaller systems rather than fewer larger ones. This approach offers advantages including reduced refrigerant volumes per system, smaller and more contained zones, and generally easier installation. For critical facilities such as hospitals and data centers, mechanical rooms now require active ventilation, gas detection, and automated isolation logic tied directly into building management systems. Controls platforms must not only monitor pressure and temperature but actively respond to leak thresholds and trigger safety protocols in real time.
The low-GWP refrigerants market is projected to grow from approximately USD 31.8 billion in 2024 to an estimated USD 106 billion by 2035 - a compound annual growth rate of 11.5% - driven primarily by regulatory requirements. Major producers including Honeywell, Chemours, and Daikin are expanding investments in HFO blends and natural refrigerant technologies. Honeywell has pledged more than USD 1 billion to its Solstice HFO line, including collaborations with manufacturers such as Bosch.
After the initial 2025 manufacturing transition, the next major AIM Act thresholds arrive in 2029 and 2034 - step-downs that will materially reduce the volume of HFCs that can be produced or imported into the United States, tightening supply and increasing economic pressure on higher-GWP refrigerants. Delaying transition dates or raising GWP limits, industry groups have argued, would undermine years of investment and misalign HFC demand with the AIM Act's tightening supply caps, ultimately driving up refrigerant prices for consumers.
