Last month Chairman Henry Waxman of the House Energy and Commerce Committee, and Chairman Edward Markey of the House Subcommittee on Energy and Environment, released an over 600-page discussion draft of legislation titled the American Clean Energy and Security Act of 2009 (ACES), which combines energy and climate policy into one package.

The legislation currently has four titles, including one that increases energy efficiency across all sectors of the economy, and another on global warming that establishes a cap-and-trade program to ensure that aggregate emissions from covered entities (such as electric utilities, oil companies, and large industrial sources) are reduced by 3 percent below 2005 levels in 2012, 20 percent below 2005 levels in 2020, 42 percent below 2005 levels in 2030, and 83 percent below 2005 levels in 2050.

One of the most significant issues to the HVACR industry in this draft is the HFC climate change title. If passed, this legislation will reduce HFC use by 85 percent and sharply limit its availability over several years. The legislation proposes a cap-and-trade program schedule and allocations for HFC producers, users, and importers.

The industry is just now moving away from HCFC-22 to HFCs - a transition that has taken many years. Under the proposed legislation, we would face an HFC phase-down (not a phaseout) - without clear alternatives available. While some options do exist, no one refrigerant is acceptable for all applications in refrigeration and air conditioning. In fact, air conditioning is one area where alternatives are not currently available.

INDUSTRY GROUP ADVOCATES

There are some very essential criteria that industry groups are working very hard to have included in any legislation.

First, it must treat HFCs separately from other gases in the Kyoto Protocol basket of gases. They are not a waste byproduct of combustion and are not intentionally emitted into the atmosphere. They play a significant role in enabling the industry to move away from HCFCs. The global warming potential (GWP) contribution from air conditioning and refrigeration equipment is much more affected by energy efficiency and the CO2 emissions from generating electricity than by possible refrigerant leaks. Bottom line: The industry doesn’t want to compromise energy efficiency.

Second, we are advocating to minimize market disruption. The industry favors an initial cap on HFCs that doesn’t disrupt supply, and a reduction curve that would enable the industry to transition to alternative refrigerants. This would give refrigerant producers a few years to develop alternative synthetic refrigerants, while equipment manufacturers find ways to utilize both synthetic and natural refrigerants.

Third, HFCs and alternative refrigerants should be environmentally effective, while still maintaining efficient performance characteristics and ensuring product functionality.

Several alternative refrigerants are already being used. For example, in other parts of the world hydrocarbons (HCs) are being used in white goods and small commercial refrigeration applications with charges under 150 grams. CO2 is a very good alternative for supermarket applications. HFO1234yf, a new synthetic, has been developed and evaluated mostly in mobile air conditioning. It is chemically similar to HFCs, but has a much lower GWP. Unfortunately, there is no clear refrigerant choice for air conditioning applications, and we don’t have enough experience with these refrigerants throughout the entire channel.

Although incentives aren’t covered in the HFC climate change title, policy-makers are considering this. The industry is advocating for transition assistance. This would help the industry to promote energy-efficient products, create new low-GWP compounds, and develop products that use low-GWP compounds, whether synthetic or natural. And, the legislation should provide more incentives for industry to recycle, reclaim, and destroy refrigerants.

Finally, the industry group stresses the need to harmonize treatment at the international, federal, and state levels. This means the federal government would preempt state or local programs to avoid a patchwork of HFC-related programs.

IMPLICATIONS FOR HVACR INDUSTRY

The proposed cap-and-trade program will very likely raise the cost of HFCs - perhaps substantially. This will undoubtedly put pressure on the industry to change those applications where alternative refrigerants are already available.

For example, a typical supermarket uses 1,000-1,400 pounds of refrigerant to refrigerate the cases and coolers, and they’re subject to leaks in the lengthy piping runs with multiple connections. An alternative strategy is secondary-loop systems, which circulate glycol for medium-temperature applications or CO2 for low-temperature applications. This application substantially reduces refrigerant volume and leakage potential. Secondary-loop systems also enable the use of low-GWP refrigerants such as CO2.

Home appliances are another market segment where alternative refrigerants are needed. Outside the United States, isobutane is a common refrigerant in home appliances. Isobutane is used in small refrigerant charges, but it is flammable.

However, equipment design changes or adding safety devices could greatly reduce the fire risk. Underwriters Laboratories has updated their standard to include hydrocarbons for use in commercial refrigerators and freezers. Major appliance manufacturers and the U.S. Environmental Protection Agency (EPA) are now evaluating the use of isobutane in home appliances and propane for refrigerators and freezers. In fact, the EPA’s Significant New Alternatives Policy (SNAP) program is designed to evaluate and regulate substitutes for ozone-depleting chemicals being phased out under the Clean Air Act (CAA).

Other applications, especially air conditioning, could be more challenging with regard to alternative refrigerants. CO2 and hydrocarbons are not viable solutions in this market segment, and it’s too early to know if new synthetic refrigerants such as HFO1234yf could be viable.

WHAT'S NEXT ON THE REFRIGERANT FRONT?

There’s a good chance that the Waxman-Markey legislation will move from committees to the House floor soon. Meanwhile, the Senate Energy and Natural Resources Committee, under the leadership of Chairman Jeff Bingaman, N.M., has completed work on four separate bills that will serve as the foundation for a comprehensive energy bill. That committee was expected to release the bill at the end of April 2009.

Equipment manufacturers are already considering alternative refrigerants in those sectors where low-GWP alternatives are available, and refrigerant producers are investigating new solutions. These efforts will likely accelerate over the next year or two.

The HCFC phaseout in 2010 will provide a preview for the HFC phase-down. Contractors are already reviewing their capabilities to recover, store, recycle, reuse, and destroy R-22. They want to be sure their employees are fully trained and have the right equipment and processes in place. Contractors and wholesalers can also take a proactive approach to the pending legislation that will likely come from this new administration by participating in industry organizations such as Air Conditioning Contractors of America, and the Heating, Airconditioning and Refrigeration Distributors International, and by contacting their local legislative representatives. Developing and enhancing their capabilities now will pay off when the HFC phase-down begins, perhaps in 2012 or 2013.

No matter how you slice the refrigerant issue - and the political and economic ramifications that come with it - it’s going to be an interesting ride.

Publication date: 05/25/2009