What Price R-22?

April 2, 2012
This issue of The NEWS has an extended focus on refrigerant reclamation in the context of the announcement that it appears there will be a significant drop-off in supplies of virgin R-22.

The stories (“Will R-22 Phasedown Jump-Start Reclaimers?”, “Contractors Promote Reclamation,” and “Resource Guide to Reclaim Services”) go into the specifics of the reclamation sector; and a previous story in the Feb. 6 issue set the stage for understanding why virgin R-22 is being phased out at a faster pace than most would have anticipated.

The primary question asked in this issue of The NEWS is, “Will the faster phasedown of R-22 result in more use of reclamation that brings recovered R-22 back up to ARI-700 purity standards?”

Your multiple-choice options are:

A. Maybe

B. Hopefully

C. Not sure

D. I don’t know

E. Nobody knows

And the correct answer is: All of the above.

Perhaps one of the reasons for the uncertainty is that we are in the very, very early stages of understanding the implications of a 45 percent reduction in the amount of virgin R-22 that can be manufactured and imported. In fact, it isn’t even a done deal yet. The U.S. Environmental Protection Agency (EPA) may take until the summer to issue the final ruling. It does appear that 45 percent will be the final number — and, in fact, manufacturers have been producing virgin R-22 at that pace since early this year as part of compliance with a non-enforcement statement from the EPA if manufacturers hold to that percentage.

Another aspect is the prediction from many in the industry that there more than likely will not be a shortage of R-22 in the near future. Some of those factors relate to the sluggish economy, the wide use of HFC-410A in new construction air conditioning (what there is of that), and the fact that the industry did not use its full allocation of R-22 in recent years. Use of R-22 is going to continue to drop because everybody knows that the end of the production of virgin R-22 comes in 2020, so every piece of equipment running on R-22 today is going to have no new refrigerant for service in about eight years — and a lot of the R-22 equipment operating today will still be operating in 2020.

But we still seem to want to hold onto whatever R-22 we can get. And related to that is the question: How long will we put up with higher costs of the refrigerant until we seek an alternative? Will that time come before supplies drop below demand?

This could relate to homeowners, who might be willing to pay more for R-22 during a service call than investing in the retrofit of an alternative refrigerant or the change-out of the residential system to one running on HFC-410a, which is not subject to any phaseout.

When it comes to larger systems, consider a supermarket. Think of the decision makers for a store or a chain. Their big costs include employees; energy (which can be controlled by using energy-efficient equipment); and food (with overall small markups passed along to customers). So how much of their decision will be based on refrigerant costs, especially with tight, well-
running systems?

At what point does the rising cost of R-22 become an issue? As long as that refrigerant can still be obtained and its cost passed along to customers who may well grin (well, probably not grin) and bear the higher charge, it is just part of the overall cost of maintaining proper temperature.

At present, it is the unknowns of all these factors that is still causing uncertainty in the reclamation sector.

Publication date: 04/02/2012