The 1990s: The Decade of Refrigerant Chaos — and Change
Thanks to what happened just prior to the start of the 1990s, cooling was a hot and heavy subject debated throughout the entire world this past decade.
In 1987, 24 countries signed an historic treaty under the United Nations Environmental Plan. This treaty was called the Montreal Protocol on Substances that Deplete the Stratospheric Ozone Layer. The Montreal Protocol was the first cooperative effort by nations from around the world to protect the environment and call for reduction and eventual elimination of a class of compounds. It called for periodic scientific, technical, and economical options assessments to determine if further revisions were required.
The original protocol called for a 50% reduction in chlorofluorocarbon (CFC) chemical production by 1998. However, the use, elimination, and phaseout of CFCs — and hydrochlorofluorocarbons (HCFCs) — was discussed in many different languages throughout most of the 90s.
In truth, the refrigeration industry drastically changed since the signing of the Montreal Protocol. The refrigerants used in well over 95% of the world’s systems were to be eventually phased out during the decade of the 90s. Many who spent a lifetime designing or servicing R-11, R-12, R-114, R-500, and R-502 systems now saw these systems replaced or retrofitted with an alphabet soup of new refrigerants. Then the R-22 phaseout began.
Engineers, wholesalers, contractors, and mechanics were all affected. So were system manufacturers, chemical producers, and component manufacturers. Beyond that, the consumers and the general public were also greatly affected.
Society and the general public were still able to enjoy the comfort of a cool environment and the miracle of a refrigerated food supply. However, they now view these modern conveniences, or the refrigerants and refrigerating machines that produce them, with a new sense of appreciation and value. The hvacr industry certainly does.
In the 1990s, refrigerants began to be viewed as renewable resources due to high prices, limited supply, increased public environmental awareness, and regulations. This new perspective changes the way and the cost of doing business.
While the rules and practices that transpired across the entire decade were complex, the aims can be simply stated as follows:
Thanks to 1990 activities, refrigerants are now managed from cradle to grave. New refrigerant was charged into new equipment, whose new designs overcame efficiency losses during operation. Used refrigerant is supposed to be isolated in the system or recovered for cleaning and reuse. Also, damaged or mixed refrigerant is supposed to be properly disposed of.
Before the signing of the Montreal Protocol, refrigerants were viewed as inexpensive, harmless chemicals. Refrigerants were vented during service and new refrigerant was used to recharge systems. However, ozone depletion and global warming are two environmental issues that have drastically changed this view.
Because of the Montreal Pro-tocol and, in turn, the passage of the U.S. Clean Air Act Amend-ments (CAAA) in 1990, refrigerants are now viewed as renewable resources due to their high cost and potential environmental damage. During the 1990s (and beyond), all segments of the refrigeration industry concentrated their efforts to select new refrigerants; maximize energy efficiency; contain refrigerants; and use recycling practices to prevent depletion of the used refrigerant supply.
Red AlertThe News, of course, covered both sides of the global warming/ozone depletion debate right from the start. For instance, in the Jan. 8, 1990 issue, it reprinted an article by Rogelio Maduro, which first appeared in the July/August 1989 issue of The 21st Century. The headline said it all: “The myth behind the ozone hole scare.” A week later, The News reported on the refrigerant stance taken by the Air-Conditioning and Refrigera-tion Institute (ARI).
“There is no need at present or in the near future to add HCFCs to the chemicals regulated to protect the ozone,” ARI informed the U.S. Department of Energy (DOE) in early January. “While it may become advisable to phase them out 40 or 50 years from now, or limit their production, there is no need to rush to judgment at the present time.
“There are currently no substitutes for the HCFCs,” ARI summarized. “We are still grappling with substitutes for the CFCs.”
Before you could say “Slow down,” state and local governments jumped into the legislative mode, with the intent to control CFCs. They included provisions for recovery and recycling, taxes, labels, and bans.
Such “chaos” made for interesting talk at the 1990 International Air-Conditioning, Heating, Refrig-erating (AHR) Exposition in Atlanta, GA. At the expo itself, there were more dire warnings about rising CFC prices, shortages, and stiff penalties, but little in the way of environmentally and politically safe drop-in replacements. Meanwhile, at the 1990 ASHRAE Winter Meeting, forums such as “What happens when R-502 is eliminated?” were heavily attended.
To make matters more complicated, later in the year the “Second Meeting of the Parties” was held in London, England. New scientific data on the damaging effects of chlorine had the Montreal signers even more worried.
To close out the year, Congress passed the 1990 U.S. Clean Air Act Amendments (CAAA) in Novem-ber. These called for the phaseout of CFC and HCFC refrigerants to a specific schedule, which only made the industry scramble that much more. The U.S. Environ-mental Protection Agency (EPA) was given responsibility to draft and enforce regulations, implementing the CAAA.
1991: No Need to Panic — yetDespite the ever-tightening regulatory noose around CFCs, most contractors appeared to be taking the challenge in stride to start 1991.
For example, only 2% of those responding to a News survey of contractors in early January 1991 identified the CFC “crisis” as the single biggest problem they would face in 1991. In fact, one somewhat-defiant contractor responded in this manner: “The CFC issue is a hoax. Only the customers are getting the shaft.”
Although 80% of respondents had experienced a “steep” price hike in the compounds, only one-quarter contacted their local government representatives about it. Evidently awaiting a stronger signal from the federal government, only one-third of contractors were recapturing or recycling refrigerants, too.
However, several respondents saw ominous signs. “The CFC issue has not yet affected us considerably, but it will soon,” warned one prophetic respondent.
It was no surprise that a rapid influx of refrigerant recovery and recovery-recycle devices were featured at the 1991 AHR Expo in New York, NY. Meanwhile, major refrigerant manufacturers made strong moves toward both R-123 and R-134a.
No Venting AllowedIn 1992, contractors and service technicians going to jobsites to repair air conditioning units had to change the habits of a lifetime. Effective July 1992, no more venting of refrigerants to the atmosphere was allowed. The coolant had to be removed and recycled or reclaimed to ARI-specified levels of purity — in any case, it needed to be contained. The penalties are severe enough to ensure compliance.
“The CFC issue, reclaiming, and certification will keep us all on our toes this year,” said one respondent to the News’ annual survey of contractors. “I think many small businesses will go by the wayside.”
Said another: “The only trend I worry about is the increase in the time to service equipment that needs CFC removal, and the attitude of the customer toward the increase in his costs. It’s not going over very well.”
Not too long after the “no-venting” regulation went into effect, approximately 400 reports of refrigerant venting violations reached EPA’s 10 regional branches. Before the end of the year, a New England contractor was fined $18,101 for venting an HCFC refrigerant.
As to be expected, a deluge of recovery-only equipment surfaced at the 1992 AHR Expo, held in Anaheim, CA. Meanwhile, the race to develop the next set of alternative refrigerants continued. Manu-facturers came to the yearly expo prepared to stake out their territory for medium- and low-temperature refrigerants to replace R-22 and R-502. “It’s going to be a long road and answers aren’t going to come easily,” noted one commercial director for fluorocarbons.
A month later, the industry pledged cooperation with Pres-ident George Bush’s decision to order a unilateral phaseout of CFCs by the end of 1995, four years earlier than called for by the Montreal Protocol. However, the industry resisted a proposal that would phase out production of HCFC-22 by 2005, with exceptions for servicing equipment until 2015. The industry asked for an HCFC-22 phaseout for new equipment in 2010, and a 2020 phaseout for existing equipment. The News even got into the act, asking contractor-subscribers (April 6, 1992, page 8) to “Send a message to the President: ‘Keep HCFC-22 Longer.’”
On May 4, the EPA published its proposed rule on warning labels for products either containing or manufactured with CFCs. The rule requires permanent identification labels on all products containing recoverable ozone-depleting chemicals, to promote recycling. These requirements dealing with Class I products took effect May 15, 1993.
The next swirl of controversy surfaced after EPA announced that techs handling refrigerants needed to be certified by July 1, 1993, and recovery-recycling units needed to be certified by Jan. 1, 1993. In turn, associations quarreled over how EPA-mandated tech certification would be handled.
The Mechanical Contractors Association of America (MCAA) threw down the gauntlet by urging EPA not to grandfather techs who had taken courses for certification. However, the Refrigera-tion Service Engineers Society (RSES) — which had trained, tested, and certified 20,000 to date — cried foul.
To make matters more interesting, ACCA and Ferris State announced in June they would offer a national recovery certification program for service techs, designed to meet anticipated certification requirements of the EPA.
Before the year closed, several dozen industry representatives attended a meeting in Washington, DC, to comment on the EPA’s proposed refrigerant-recycling rule.
EPA And Its Recyling RuleAt the start of 1993, York International expressed its “firm support of HCFC-123 as a viable refrigerant for centrifugal chillers, and renews its commitment to assist all owners of CFC-based equipment in the transition to alternative refrigerants.” The statement was made in response to an earlier announcement from Carrier, which said the company would phase out the sale of CFC chillers by the end of 1993, and continue its ban on HCFC-123 in favor of chillers using HFC-134a.
Before leaving office, President George Bush used his final days to propose an EPA refrigerant phaseout accelerated package, and to sign a final EPA rule on CFC labeling.
At the 1993 AHR Expo in Chicago, a clear message was expressed: The hvacr industry needs to work together to effectively manage the CFC-free transition. The urgency of this message was underscored with the recent EPA announcement that the Clean Air Act Amendment’s phaseout schedule would accelerate the phaseout of CFCs to Jan. 1, 1996. At the time of the show, there were only 153 weeks of CFC production left.
Soon after the expo, DuPont announced that it would accelerate its phaseout of CFC production one year. After the end of 1994, the company said it would not produce CFCs for the U.S. or other developed countries. “We believe the two-year advance notice of our phaseout gives industry time to take full advantage of available options,” said a company spokesperson.
At the slow rate that hvacr equipment owners were moving from CFC-bearing chillers to those using alternative refrigerants, ARI reported that there would still be about 67,000 machines left unconverted by the end of 1995 — the last call for CFC production. The gloomy prospect emerged from the spring meeting of ARI.
The long-awaited EPA recycling rule was finally signed on April 23. Most significantly, the rule created the first-ever national mandatory certification program for service technicians, linking certification with the ability to buy refrigerants or work on systems where refrigerant recovery or recycling comes into play. The provision had been taken out, then was reinstated after the EPA received an overwhelming 20,000 industry responses approving the proposal.
The final version incorporated mandatory technician certification, grandfathering of certified technicians, and repair of leaky systems. Big systems (50-lb charge and greater) were assigned an allowable annual leak rate — 15% or 35% — and must be repaired within 30 days. The responsibility rests with the equipment owner.
EPA also requires contractors to show ownership of recovery-recycling units. Effective August 12, contractors had to submit a signed statement to the EPA stating that they possess sufficient certified equipment to perform on-site recycling and/or recovery.
Finally, Certification Testing For TechsOf major concern to manufacturers is the integrity of the purity levels of resold recycled refrigerants, and that they meet ARI Standard 700 requirements by test. It even got to the point that refrigerant manufacturers claimed that foreign suppliers were exporting CFC-12 to the U.S. without paying the $4.35-per-lb excise tax, and then selling it at half the price of domestic refrigerants.
The EPA, in turn, eventually concluded that refrigerants must undergo the scrutiny of third-party inspection. However, its Industry Recycling Guideline is not met with open arms from contractor groups. ACCA, for instance, complained that the guideline did not give contractors enough discretion in the handling of used refrigerants, especially the authority to determine when refrigerants should be recycled or reclaimed before resale.
In the end, there were two key dates for service technicians taking certification tests to handle refrigerants under the EPA regulation. Nov. 14, 1994, was the deadline beyond which only certified techs could buy CFC or HCFC refrigerants.
Technicians who attended a “voluntary” EPA-approved certification program and were issued a certification card, could buy CFCs or HCFCs for six months. By May 15, 1995, either the voluntary test had to have been grandfathered by EPA, or the technician had to pass an EPA-approved test to continue buying refrigerant.
Before the year closed, EPA grandfathered 15 “voluntary” training and certification programs that got off to an early start, before the final certification requirements were set in the May 13, 1993 final rule.
Sidebar: Consolidation Buying Frenzy was Short-LivedIn the late 1990s, one of the biggest concerns of hvacr contractors was not necessarily keeping track of all the changes in refrigerants or indoor air quality regulations. It was consolidation.
Early on the consolidation scene were the likes of American Residential Services (ARS), Group Maintenance Corporation (GroupMAC), Service Experts, and ComfortSystems USA. Here were Wall Street companies buying up independent contractors. By early 1998, when a consolidated contractor hung out his/her shingle down the street, the gut reactions from independent contractors were curiosity, disdain, and an urge to stage an all-out offensive to keep existing customers and find new ones.
In short, there was a new kid on the block and it was time to put your best foot forward.
The aggressive acquisition programs put into place by these consolidators, however, turned out to be short-lived. Before the last decade concluded, the main players in the consolidation movement turned their focus from buying contracting firms to turning into successful operating businesses. Expansion by acquisition is no longer the catch phrase. It has become expansion through internal growth.
In the case of GroupMAC, which formed in 1997 to consolidate contractors in the commercial and industrial mechanical trades, it eventually merged with Building One Services Corporation to form today’s Encompass Services Corp. Meanwhile, ServiceMaster acquired ARS, which ran into some operational difficulties, in May of 1999. And just before 1999 closed, Service Experts was acquired by industry giant Lennox Industries.
“All companies [Wall Street hvacr consolidators] were designed to become an operating company, not a consolidator,” explained Bill Murdy, current ceo of Comfort- Systems USA. “We are now internalizing a lot of our business practices as opposed to expanding into new markets.”
Simply stated, consolidators have become operating companies.
“We will ultimately raise industry standards through the service we provide,” said Lennox/Service Experts’ Jim Mishler.
Time will tell.
Publication date: 04/30/2001