Raúl Corredera (Eurovent): "The HVAC-R industry in Europe shows significant progress in some areas and challenges in others"

What is Eurovent and what are the new objectives following your recent election as president?

Eurovent is the voice of the European heating, ventilation, air conditioning and refrigeration (HVAC-R) industry. We represent more than 100 companies directly and more than 1,000 indirectly through our 16 national associations. Most of these companies are SMEs manufacturing in more than 350 locations across Europe. Between them, they generate annual revenues of more than 30 billion euros and employ more than 150,000 European citizens, mostly in quality jobs. Additionally, Eurovent's influence extends with the establishment of partnerships in the Middle East and India.

Eurovent's mission is to bring together HVAC-R technology suppliers to collaborate with policy makers and other stakeholders in order to establish conditions that promote fair competition, innovation and sustainable growth in the European HVAC-R industry. Our vision is to have an innovative and competitive European HVAC-R industry capable of driving sustainable development on a global scale, for the benefit of people, business and the environment.

In this three-year mandate renewal that I am now beginning, having completed a comprehensive and successful transformation of our partnership, we will focus our efforts on three key pillars: collaboration, digitisation and investment for growth.

We will actively collaborate to establish strategic relationships both at European and international level. We will significantly strengthen our presence and advocacy in Brussels, in line with our mission to promote a level playing field based on innovation, sustainability and energy efficiency. We will also embark on a profound digital transformation, further modernising our internal operations and exploring new business segments with greater opportunities. Finally, we will dedicate resources to the expansion of the partnership, with the aim of providing greater added value to our members.

How is the HVAC sector in Europe progressing this year?

According to data compiled by Eurovent Market Intelligence, the HVAC sector in Europe is experiencing diverse progress this year, with notable variations between different product categories and regions. For example, in the chiller market, substantial growth in both value and units sold has been observed, predominantly driven by the adoption of more sustainable refrigerants, in line with the EU F-Gas Regulation. These refrigerants include R290, R744, R717, R32, R454B or R1234ze. During the first quarter of 2024, there has been a significant increase in the value of sales across the European Union.

In terms of rooftop units, the European market has experienced growth in value, despite a slight decrease in the number of units sold during 2023. As with chillers, this increase has been driven by the introduction of units with more sustainable refrigerants. While the first quarter of 2024 showed significant growth in value, the second quarter is expected to show a more stagnant performance in the European market overall.

On the other hand, the air handling units segment demonstrates a mixed panorama. Despite experiencing modest growth in value across the EU in 2023, there was a decline in the number of units sold. At the beginning of 2024, a decline in value was recorded, although recovery is anticipated for the second quarter.

The HVAC-R industry in Europe is showing significant progress in some areas, while facing challenges in others. This sector performance is in line with the broader economic trend in Europe. During the first quarter of 2024, Gross Domestic Product (GDP) increased by 0.4% in the euro area and 0.5% in the EU compared with the same period of the previous year, indicating a slow but steady economic recovery.

Additionally, we expect new legislative frameworks, such as the revised EU Energy Performance of Buildings Directive (EPBD), to contribute to the adoption of energy efficient products in construction and renovation. Furthermore, for the first time, the EPBD has established requirements for Indoor Environmental Quality (IEQ), which are closely aligned with Eurovent's perspective on Indoor Air Quality (IAQ).

What are the challenges and opportunities for the industry in the short and medium term?

The European HVAC-R industry faces a number of challenges in the short and medium term. Although to a lesser extent, supply chain disruptions continue to affect the availability of essential components and raw materials, while economic fluctuations (including inflation and interest rates) impose additional financial pressures. Additionally, labour shortages in the recruitment of qualified engineers and technicians pose another significant challenge, especially in a context of demographic changes. In addition, companies must navigate a complex and fragmented regulatory environment, which can be costly. These challenges are compounded by broader issues, such as the weakened competitiveness of European industries, reflected in stagnating GDP growth, patent applications or R&D spending.

Despite these challenges, the HVAC-R industry has substantial opportunities, particularly in the area of sustainability and energy efficiency. Our sector is set to play a crucial role in energy transition and decarbonisation initiatives at both European and global level, driving demand for innovative HVAC-R solutions. Companies are increasingly committed to developing sustainable products and business practices, which improves their market position. Strong representation at national, European and international level is essential to unlock the full potential of our industry.

Organisations such as Eurovent and its international delegations are working to position the HVAC-R sector as a key player in promoting , ensuring its competitiveness and contribution to a sustainable future.

What is the competitive situation of this sector in Spain compared to other European countries?

Data compiled by Eurovent Market Intelligence reveals a competitive situation of the HVAC-R sector in Spain, showing a mixed but generally favourable trend compared to other European countries. In the chiller market, Spain experienced significantly more growth in the first quarter of 2024 compared to the EU average.

Similarly, in the same period, the market for rooftop units in Spain outperformed the rest of the EU in terms of value growth, although both Spain and the EU as a whole saw a decline in the number of units sold.

In contrast, the market landscape for air handling units presents a more challenging scenario. Although a recovery in the overall European market is expected in the second quarter, the Spanish market is expected to remain stable following a significant decline in the first quarter of 2024. This suggests that while Spain leads in certain areas, especially in chillers and rooftop units, the handling unit segment experiences more intense competition and slower recovery.

In terms of economic performance, Spain's GDP growth for the first quarter of 2024 was 2.4% compared to the same period in the previous year, significantly exceeding the EU average of 0.5%. Despite some challenges, this economic context suggests a relatively stronger market environment in Spain, supporting its favourable trend in the HVAC-R sector. Spain's HVAC-R market demonstrates resilience and growth potential.

What other issues do you consider relevant in the sector?

Our sector urgently needs stronger institutional representation at European and international level. Eurovent, as the undisputed leader in this field, is positioning the European HVAC-R industry to harness its full innovative and competitive potential for a sustainable future. In support of this mission, we have prepared three key recommendations addressed to European legislators for the next legislative cycle, which begins after the European elections that have just taken place:

Firstly, to create a common market without barriers for sustainable products: A new wave of harmonisation is required to restore the single market and ensure fair competition for sustainable products by eliminating divergent national regulations. Sustainability requirements must be market-driven, technology-neutral and evidence-based, offering tangible value for consumers, business and the environment. Improved market surveillance is essential in this respect.

Secondly, to focus on the implementation of European Green Deal policies: In order to realise the ambitions of the European Green Deal, it is crucial to establish certainty and predictable legal frameworks that allow industry to invest in and scale up technologies for decarbonised and healthy buildings. EU directives must be transposed, implemented and applied in a harmonious manner to avoid additional obstacles in the common market.

And thirdly, to develop a strong and effective European industrial strategy: The EU needs a strategy to strengthen the role of European production in sustainable growth. This involves addressing labour shortages, supply chain risks and macroeconomic factors. A revised, better regulated agenda should minimise administrative burdens and take into consideration impacts on competitiveness. The strategy should also recognise the export potential, thereby recognising the position of European industry as a technology supplier to international markets.

In general terms, it should be noted that our HVAC-R market is inherently global, with closely interconnected supply chains, standards and certifications. In Europe, partnership and cooperation are fundamental to our success. A strong European association with a global reach, such as Eurovent, is therefore more crucial than ever. That is why we invite all quality manufacturers and associations to join us in this all-important effort.