Kevin Lamarque | Reuters
The administration estimated that American businesses and families will save more than $2.4 billion under the new rules.
“Our actions allow businesses to choose the refrigeration systems that work best for them, saving them billions of dollars,” EPA Administrator Lee Zeldin said in a statement.
“This will be felt directly by American families in lower grocery prices,” he said.
But it was unclear Thursday whether or how companies such as grocers would use those savings to make it more affordable for shoppers to fill their carts. The changes would not require grocers to take any steps to cut prices, at a time when many households see their budgets stretched by soaring gas prices and years of elevated inflation.
The rules target hydrofluorocarbons, or HFCs, potent greenhouse gases commonly used in refrigeration and air conditioning systems that are widely accepted as contributors to global warming. Under the Biden administration, the EPA in 2023 finalized regulations aimed at cutting leaks and emissions from those systems, affecting industries ranging from grocery stores and food distribution to semiconductor manufacturing.
Now, the EPA is delaying compliance by revising the 2023 rule and another regulation from 2024.
The administration’s messaging appears aimed squarely at inflation-weary consumers, especially as food prices remain politically sensitive ahead of the midterm elections this fall. Grocery retailers rely heavily on refrigeration infrastructure, and compliance with the EPA rules would have required upgrades, leak detection systems and new refrigerants in some cases.
At the time the rules were put in place, the EPA argued they would save businesses and consumers $4.5 billion over time through energy efficiency and lower-cost refrigerants. Grocery and food industry groups warned the transition could cost the industry billions in upfront equipment and compliance expenses.
Large chains such as Walmart, Kroger and Costco have already been investing in “natural refrigerant” systems for years, so the biggest operators were generally better positioned to absorb the transition. Smaller regional grocers and independent stores may have felt the cost burden more acutely.
“An orderly transition of equipment reduces both capital costs and operating costs, and at the end of the day that’s good for consumers because we’re able to take that and put that into lowering prices,” Kroger CEO Greg Foran said at an event at the White House.
Still, it remains unclear whether grocers would pass on cost savings to consumers. When asked at the signing, Foran said the company is “right in the middle” of passing savings on to the consumer and making sure they’re “paying the right price.”
Earlier Thursday before Trump’s policy announcement, Bloomberg News reported that Foran planned price cuts at Kroger to allow the grocer to better compete with Walmart and Costco.
Food inflation is driven by a wide range of factors, including labor, transportation, feed costs and commodity prices, and some of those expenses have risen in recent months due to the Iran war. Refrigeration compliance costs represent a small slice of overall grocery operating expenses.
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