Will the Trump administration’s rolling back of refrigerant rules for grocers lower prices for shoppers? Probably not on a large scale, say the two professors.
On May 21, the Trump administration changed two Biden-era Environmental Protection Agency rules for refrigerants, saying the action would lower grocery costs for consumers.
One action delays the deadline for grocers and other companies to phase out the use of climate-damaging hydrofluorocarbons for refrigeration under the 2023 Technology Transition Rule. The White House estimates the move will make more refrigerants — which are used in freezers, refrigerators and air conditioning systems — available to supermarkets, homeowners and other businesses. The White House estimates $900 million in savings, including $800 million from lower grocery costs.
The EPA also took steps on May 21 to amend the 2024 program to exempt all road refrigerant equipment used to transport goods from new leakage requirements for hydrofluorocarbons – a move the White House projects will save $1.5 billion.
Grocery executives were present at the announcement on May 21 and although no grocer has made any binding commitments to passing the cost savings on to shoppers, Kroger CEO Greg Foran said his company is “right in the middle of doing that right now.”
Will buyers miss out on cost savings?
But any cost relief for grocers is unlikely to lower grocery prices for buyers.
“This rollback is unlikely to provide meaningful grocery price relief for consumers, at least not in any near-term or measurable way,” Bernhard Dellheimer, assistant professor of macroeconomics and trade in Purdue University’s department of agricultural economics, told USA TODAY.
From a supply chain and food value perspective, the Biden-era rules target one-time investments or capital costs in equipment upgrades for commercial refrigeration systems, Dellheimer said.
“Pulling back the compliance deadline means that grocers and cold-chain operators who have not yet invested in new equipment are out of trouble for the time being. This may avoid future costs, but it does not reduce any costs currently embedded in grocery prices,” he said.
Dellheimer said shoppers are paying today’s prices for food because of pressures and policies that are driving up energy, labor, transportation and commodity costs — not the refrigerant upgrade costs that grocers were hitting the road for.
Dellheimer’s colleague, Joseph Balagtas, professor of agricultural economics at Purdue, broke down the potential cost savings even if grocers passed 100% of the savings from the rule change on to consumers.
Using the figure of $48 million saved per year from delayed compliance cited in an EPA memo about the new rules, Balagtas said the savings among the U.S. population of 340 million amounts to 14 cents per person, or 56 cents per year for a family of four.
“So the cost savings for a family of four is equivalent to a couple of bananas,” he said. “The best-case scenario is that this regulatory action will have an imperceptible impact on the affordability of groceries.”
FMI says new rules prevent price rise
In a statement, FMI, the Food Industry Association – which represents the food and grocery industry – praised the Trump administration for the action, which it said will prevent increased costs for grocers and consumers.
“FMI is incredibly grateful for EPA’s efforts to curb grocery price increases by revising the Technology Transition Rule and reconsidering the management rule,” the organization said. “Overall, these actions protect the agency’s goals without imposing unnecessary financial burdens on the food industry and grocery shoppers.”
The organization said an economic analysis indicated that EPA’s technology transition rules and management rules together could impose “approximately $144 billion in total costs on American businesses and consumers – equivalent to an economic burden of more than $1,000 per American household.”
Betty Lynn-Fisher is a consumer reporter for USA TODAY.