Air conditioning stocks are at record highs, and so are outside temps: it's a self-feeding cycle

Thursday, July 1, 2021 by Snacks

Crank the A/C to "Arctic Tundra"... ICYMI: a record-breaking heat wave has been plaguing the Pacific Northwest. Portland makes you think of rainy days in coffee shops — this summer, it feels more like you're in the coffee. The temp in Portland soared to 116 degrees yesterday, hotter than Miami, Dallas, and LA have ever been. Seattle has seen hundreds of heat-induced ER visits, and Portland is dealing with melting power cables and roads.

Too hot to handle... Not for A/C companies. All that sweat means more $$$ for HVAC companies like Carrier, Lennox, and Trane. Not so coincidentally, their stocks are near record highs. There's just one problem: A/C generates tons of carbon emissions. Keeping the world cool requires heavy electricity use, which is often powered by fossil fuels like coal and gas.

  • 15% of greenhouse gases come from HVAC systems — aka: heating/cooling tech. Now, some A/C giants are trying to go "sustainable."
  • Enter Trane Technologies: Trane's sales jumped last quarter as the world heated up, but it says its #1 strategy is "winning through sustainable innovation."
  • Trane's goal: Reduce 1 gigaton of CO2 emissions from its customers’ footprint by 2030, through “clean” technologies and higher energy-efficiency.

A/C companies are their own tailwind... Thanks to the "Conditioning Climate Cycle." A/C helps fight the sweat-inducing effects of climate change, but it also significantly contributes to them. Nineteen of the hottest years on record have been in the past 20 years. That means more people installing and cranking A/C, which means growing sales for HVAC companies — and more climate-warming emissions. But if HVACs can become more sustainable, they can start reversing more of their negative impact, too.

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