A.O. Smith, the largest water heater manufacturer in the U.S., is leading a lobbying effort to defend a contentious regulation targeting gas-powered residential water heaters. The company is urging Republican lawmakers to oppose a bill introduced by Senator Ted Cruz (R-TX) that seeks to repeal the regulation, part of the Biden administration’s push for climate-friendly appliance standards.
In a memo circulated last week to Senate offices, A.O. Smith vice president Joshua Greene—who previously worked as a Democratic congressional aide—encouraged lawmakers to support the current regulations. This move highlights how federal policies aimed at combating climate change can, in some cases, benefit certain companies by driving market shifts.
Notably, A.O. Smith’s push is linked to its own business strategy. In August, the U.S. Department of Energy awarded the company a $25 million green energy grant to expand its production of electric heat pump water heaters, positioning A.O. Smith to profit from the shift away from gas-powered models. Sources familiar with the company’s operations told the Washington Free Beacon that A.O. Smith has already phased out most of its gas-powered tankless water heaters in favor of electric alternatives, making the company largely insulated from the new rules.
However, not all manufacturers share A.O. Smith’s position. Rinnai America, which primarily sells gas-powered tankless water heaters, has voiced strong opposition to the regulations. The company argues that the rules would cost it tens of millions of dollars, potentially making its gas-powered water heater plant in Georgia unprofitable. Rinnai has joined a lawsuit led by Republican states and industry groups to challenge the regulations.
Rinnai estimates that the rule would cost its business between $30 million and $36 million annually. The company’s opposition reflects broader concerns in the industry about the financial impact of climate-driven regulations, especially for smaller manufacturers with fewer resources to adapt.
Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, criticized the regulatory approach, arguing that it creates an unfair advantage for certain companies while stifling free-market competition. “It’s not the role of the government to create a captive market for more expensive products,” Lieberman told the Free Beacon. “A free market works best without these regulations.”
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