The practice of predicting the future is as old as humanity. In ancient times, many practices flourished to ask for direction from the Gods through sacrifices. Sacrifices were the means of establishing communications between humans and the Gods, so as to gain important info on future events. The Roman “augur” (a priest and official in classical Roman times) was in charge of determining the future by observing the flight of birds, and this prediction was used to decide whether or not to enter war. Later, as science progressed and the scientific method took hold, some of the questions asked in ancient times became obvious, and some practices were ridiculed. Nevertheless, we still desire to understand and predict the future, as the human mind runs beyond the present to seek and ensure prosperity. And often, even nowadays, considered as being a technological era, things turn out differently than expected. We make mistakes and tend to expect the future to be a straight line, which projects past data into future trends.
The aim of this post is to break free from that straight line.
To make a forecast, we first need to determine what is important and, even more, what is not. We then need to discriminate between current events and the deeper processes that underlie these. Predicting the short-term picture or events is outside of my scope. I have settled on the target of 2035 as a foreseeable time horizon by when specific events will have been resolved by the deployment of deep processes, and therefore it is possible to provide a broad picture of what the HVAC business might look like.
There are essentially two major driving forces defining the evolution of HVAC and hence what its future will look like: Regulations, a result of geopolitics and political institutions, and Technology. A detailed look at the macro-trends underway in these areas, and their interactions, can shed light on the future of HVAC in broad terms.
In geopolitical terms, North America will remain quite stable, whereas Eurasia will experience growing instability by 2035. In this scenario, the US will retain its leadership role in the world. There are several facts supporting the idea of the US as global power, including:
- Demographics, plus a lower average age of its population than its contenders;
- Its unprecedented military power throughout human history, in particular full control of the oceans, which account for more than 90% of world trade;
- Comparable hegemonies lasted centuries across history, and the US has held this role only since 1945.
Eurasia, which is the world largest continent, comprising countries from Portugal to China, through Russia and Afghanistan, is a tumultuous region due to the growing contrasting interests of each major block. The ongoing war in Ukraine, the ambitions of regional players and disputes in the Indo-Pacific are striking examples. As a European, I see the lasting intrinsic flaws of European institutions, whose weakness stem from the unwillingness to surrender fundamental parts of national sovereignty to the European Union. Despite the fact that energy policies (and therefore HVAC) have proven so far some of the best examples of European integration, we need to keep in mind that the EU is not framed by a Treaty that mandates nations to enforce Directives. So far, things have gone quite well, but will not necessarily continue to in the future.
Another deep force in act is global regionalisation, which started with the global financial crisis in 2008. This refers to the trauma caused by disillusion with globalisation, and the “End of History”, especially in the West. Equality and the end of conflicts have turned out to be ephemeral as, in fact, capital has been progressively impoverishing labour, and conflicts are still spreading in most parts of the planet. In this perspective, COVID-19 has been an accelerator of the redesign of supply chains, which will continue in the direction of having the Americas for the Americas, Europe for Europe, Asia for Asia. It is not hard to imagine that this will likely go beyond the supply of goods: in digitalisation too, the forces dividing the internet into regional or national contexts will gain momentum.
Looking at technology, can we expect major developments in thermodynamics? Not really, a major (perceived) novelty such as CO2 is simply a rerun of trials carried out in the early 20th century. Thermodynamics is 200 years old, and its principles are well known and established. Given the scale of this discussion, it is more likely that some sort of optimisation will occur. Electrical engineering too is an ancient discipline. Electrification has been around for more than 100 years. Quite interesting for this discussion is the dominance of electricity as a form of energy, which is growing and will keep growing in the future (more information in: Electricity – the most noble energy carrier). Electronics is a newer frontier in engineering and even more is software engineering. And it is in the latter, in particular under the guise of Artificial Intelligence (AI), that breakthrough innovation is happening, leaving many questions unresolved today.
These questions stem from technology but are asked of Governments: since the beginning of the Internet era and thus digitalisation, the fact is that policy makers, who also need to consider ethics, have not been able to keep up with the pace of technological developments, as the private drivers of these developments are focused on commercial goals. Considering the challenges parents experience with educating their children on the use of smartphones, it is clear how unprepared Western societies still are today. The advent of AI will aggravate this gap, posing watershed questions for the future of humanity. Among these questions is the paradox of AI that, by making systems more efficient, will also make them more vulnerable.
Tangible results of the intangible by definition are going to come to the forefront in areas where massive data is available, and the AI giants have already full control of this. If we take as a benchmark the success of generalist AI of AlphaZero against the specialistic chess engine of Stockfish, the lesson learnt is that AI is already able to discover untapped opportunities of performance, inaccessible to humans. Then, if the rules of the game of chess become the constraints of HVAC system and components, it is not unrealistic to think of AI also taking over in HVAC / energy system management.
AI start-ups attracted $38 billion in America and $25 billion in Asia in 2020. It is a huge sum of money, which gives the idea of the ongoing challenges and prospects.
And so, what about HVAC in 2035?
It will be more fragmented and regional than today, less global than yesterday. Value chains will rely much more on being self-sufficient within the same region, and technological developments will not be open as easily to cross borders. Apart from raw materials, whose location is determined by mother nature, metal and electronic components will become progressively more available within regions, as value chains will require this. Moreover, local practices (e.g. hydronic vs air distribution) will sharpen rather than flatten, because local norms will arise in place of common transnational laws. At a European level, for instance, it is not unlikely that some Member States will not fully ratify F-gas Regulations as they are, if the national interest is at stake. Wider usage of patents is expected as a consequence of national restrictions to prevent foreign intrusions. Therefore, the HVAC businesses will require greater efforts to operate in international arenas than today. We have been used to thinking of technology and digitalisation across and above borders, yet in the near future these will remain within borders.
As the usage of electricity increases compared to other energy carriers, the current trend of substituting gas-fired boilers with heat pumps will continue throughout the next decade. And so will the trend towards higher energy efficiency. Here, and in particular in Residential HVAC, where a vast amount of data has been available to hubs such as home assistants for some time now, AI will step in with undiscovered opportunities for energy efficiency, and supersede some of the certainties of today.
Whereas all of this is likely to take place around us, in the next decades, the US will still be the driver of innovation, followed by China. Against the perceptions and expectations of some, this needs to be kept in mind.
Climate Systems provides fresh commercial HVAC innovations to the Sioux Falls area. Call 605.334.2164, email info@climatesystemsinc.com or visit climatesystemsinc.com to learn more.
Source: “Forecast HVAC in 2035,” Carel
