The U.S. Environmental Protection Agency (EPA) and the dozens of companies offering reclamation services are hoping the most recent announcement of a potential 45 percent reduction in virgin R-22 coming to market — only a couple of years after another big reduction — will trigger greater use of the reclamation option.

The spigot for virgin R-22 has been cranked down every few years since the baseline year of 1999 and then got a major twist in 2010 when “all allocations across the refrigerant industry went from about 312 million pounds to about 110 million pounds, a 64.8 percent reduction across all shapes and sizes of organizations,” said industry observer Ted Gartland. “This was the first time that R-22 has been reduced in such a pervasive manner.”

Until now. The turning was supposed to be a bit each year after 2010 — to 100 million pounds in 2011 and 90 million pounds in 2012. Only now the number being talked about for 2012 is 55 million pounds of virgin and imported R-22. And, in fact, producers and importers are working under the assumption R-22 will be restricted to 55 million pounds pending a final EPA ruling expected by this summer.

Yet through all that turmoil, the amount of recovered refrigerant brought to reclaimers has always been in single-digit or low double-digit percentages of the R-22 universe (see the chart above).

According to the EPA, reclaimers were telling the federal agency in 2011 “that excess supply and low price of virgin HCFC-22 makes reclaim financially unfeasible.”

In the EPA report Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export issued in late 2011, EPA said it “understands that reclaimers can stay in business only if reclaimed gas can be profitably sold for a price that does not exceed the price of virgin gas, and the price of virgin gas will increase only when the supply has contracted.”

A Jump-Start?

Whether or not the recent price spike of R-22 will jump-start reclamation is uncertain.

Arkema’s Patti Conlan said, “The EPA announcement has raised awareness of the need for reclaim. We have been contacted by some new wholesalers who want to join our program, and we have seen an increase in the returned gas.”

Ken Beringer of Airgas Refrigerants Inc. said he has been seeing increased interest. “There is definitely a greater interest in reclamation now that people have seen the reality that R-22 is going away. The dramatic price jumps in such a short period made people realize that they will need to find other means of obtaining R-22. We have had an increase in the amount of customers asking to have their gas reclaimed and sent back rather than selling it outright.”

Debra Goodge of DuPont Reclaim Services agreed. “We have seen indications of increased interest in reclamation as a result of the EPA proposed rule. There is definitely heightened awareness from distributors and contractors. There is a shift from it costing contractors to return their recovered R-22 to an incentive-based model. This shift will support the change in business practices necessary to increase the amount of reclaimed R-22 to meet projected service demand in the accelerated phaseout.”

Carl Grolle of Golden Refrigerant added, “We have seen a spike in the interest of wholesalers who would like to collect refrigerant from contractors. We have also seen a growing awareness among contractors that the recovered refrigerant that they turn into a wholesaler or reclaimer has some value from both a dollars standpoint and as an increasingly scarce resource.”

That uptick in interest is confirmed by Mike Mulligan of USA Refrigerants. “When the EPA made their announcement regarding the 55 million pounds of production/import, we received thousands of phone calls and thousands of website inquiries.”

Kevin Zugibe of Hudson Technologies noted, “We do believe wholesalers are committed to supporting the necessary growth in reclamation and helping in every way possible to see that there is the least amount of disruption in the market place.”

But, according to Ron Vogl of Honeywell Fluorine Products, increased commitment from contractors is uncertain. “The wholesale channel appears to be preparing for increased levels of reclamation in 2012. At this time, it is uncertain if these preparations will result in higher levels of gas being reclaimed by contractors in 2012.”

“The majority of the contractors we have spoken to have not expressed a great deal of concern or interest in reclaimed R-22,” said Refri-Claim’s Gordon McKinney. “What I have found most interesting is that most of the people I have discussed the reclaim issue with do not believe that the increase in virgin R-22 prices will lead to an increase in reclamation levels.”

James Sweetman of Consolidated Refrigerant Solutions had similar thoughts. “Activity is driven by forces like system failure, decommissioning, and repair. Unless contractors are discharging or venting — which I believe is uncommon — then factors such as price or EPA rulings should logically have no impact on activity. Price increases are not going to have contractors scrambling to suck gas out of systems that are operational.”

But Sweetman also said, “We have received more interest and inquiry about our services. These rulings are certainly encouraging contractors to seek out the most beneficial reclaim program for their business.”

During this time of transition, Maureen Beatty of National Refrigerants Inc. noted her company’s perspective, which is a recurring theme among many in the industry who deal with refrigerants. “National’s message regarding the supply of R-22 necessary to meet servicing demands has remained the same: there is no reason to panic. R-22 is still and will continue to be available. It may not be available at the usual selling locations and many wholesalers will have a significantly reduced supply, but National has been preparing for the phasedown of R-22 and intends to provide our customers with their R-22 servicing needs.”

Stumbling Blocks

What is causing contractors not to embrace the reclaim option at a more rapid pace?

Beringer said he sees “the perceived lack of enforcement and the small amounts of R-22 that are collected from residential systems” as stumbling blocks to jump-start reclamation. “We believe that more published examples of the fines issued to companies not adhering to the recovery and reclamation laws will result in more refrigerant returned for reclamation. HVAC contractors are the stewards of our future supply.”

Enforcement was also noted by Grolle: “We have not seen any signs of wrongdoing among the contractors working on mid- to large-size commercial and industrial units. If some of the refrigerant is missing, it must be disappearing from the residential and small commercial market. EPA enforcement has been very sparse among this sector. If someone is not going to obey the law, more laws will not correct the situation — only better enforcement will improve the recovery rate.”

Zugibe said what is needed is “sufficient economics for the contractor to help cover their costs associated with the recovery efforts. We believe the change in market conditions for R-22 will stimulate the required change in activity.”

For Goodge, “R-22 availability and price in the past years has not supported increased recovery and reclaim efforts.” But she added, “Recovery and reclaim is the right thing to do for the environment, for your business, and is now more critical than ever to meet demand going forward. It’s also illegal to vent refrigerant.”

The cost issue was also cited by Mulligan. “Financial incentive is the largest hurdle.” But he noted it is something being addressed by reclaimers.

Another hurdle, he said, is wholesalers. “Some wholesalers are still charging contractors to take back their used material or do not accept used refrigerant at all. Not taking back refrigerants or charging contractors to bring it back is contrary to good environmental policy and responsibility.”

And the contractors themselves might be a factor, said Sweetman. “Ultimately, there’s no way to force more reclaim. The contractor can only return what he/she accumulates through repair, replacement, or retrofit functions.”

He continued, “If there was rampant venting among contractors, then the only means at this point would be stronger enforcement by the EPA. But with the accommodations and credits our industry is providing, contractors have every incentive and little or no stumbling blocks.”

Staying on Message

As to the value of reclamation, all those interviewed by The NEWS are on the same page. Said Grolle, “I don’t think the message has changed. Reclamation allows us to manage a resource that is going to become scarcer. This profession has a deep history of serving people and their needs, and we are in a unique position as an industry to demonstrate how we can adapt to changes. Following the regulations and properly doing our jobs is a reflection on the integrity of the company, the contractor, and the technician. “

Beatty equated the current situation to a previous one. “As with CFCs, reclamation of R-22 will be necessary to meet the continuing servicing needs of the installed base of R-22 appliances. It makes good business sense for contractors to partner with reputable reclaimers who have the technical capability to remove contaminants from their used refrigerant as well as be able to separate refrigerants that have been unintentionally mixed either in a system or through the recovery process.”

Arkema’s Conlan made two points. “Not only is recovery of refrigerant a great benefit to the environment, but the law mandates it. Purposely venting refrigerant is a violation of EPA rules and is subject to hefty fines and penalties.”

And USA Refrigerants’ Mulligan put it simply, “Contractors should take advantage of refrigerant reclamation because it makes good financial sense.”

EPA Holds Firm

One thing is for sure: EPA does not appear to be backing off in its promotion of the value of reclamation. In its most recent report from late 2011, the agency made reference to its 2009 ruling on a reduction in virgin R-22.

“In the 2009 Final Rule, the agency recognized that servicing demand can be met with a combination of newly manufactured or imported HCFCs (virgin HCFCs) and HCFCs that have been recovered and either reused, recycled, or reclaimed. Therefore, EPA did not anticipate that virgin HCFC-22 would need to be produced or imported to meet the entire HCFC-22 servicing demand in each year between 2010 and 2014.

“EPA continues to believe that reused, recycled, and reclaimed material can help meet HCFC-22 servicing needs and is therefore proposing to maintain the same approach to meeting servicing needs at this time.”

Publication date: 04/02/2012