For this article and a previous one that ran in the May 10 issue, The NEWScontacted a number of manufacturers of products in the chiller sector to ask their thoughts of key issues. Their feedback came in mid-April and the articles were written shortly thereafter, meaning some of the more fluid issues may be subject to change by the time the first article was published on May 10 and this second article is published. The first article covered some specific legislative and regulatory issues; this article focuses on environmental matters and projections for economic growth in the chiller sector.
ENVIRONMENTAL ISSUESRandy Newton, global leader in applied systems at Trane, a business of Ingersoll Rand, said, “The Environmental Protection Agency Endangerment Finding (which finds greenhouse gases as a danger to society) gives the EPA [Environmental Protection Agency] the authority to regulate greenhouse gases under the Clean Air Act. Since HFCs, including R-410A and R-134a, used in the chiller sector today are one of the six baskets of greenhouse gases, they would fall under the EPA’s scope.
“At the same time, Congress is considering comprehensive climate legislation that would also address HFCs under a cap and trade scenario. Either of these methods could result in a phase-down in the use of HFCs. Ingersoll Rand/Trane and the industry are working with Congress and the EPA to consider a phase-down that would not only achieve a significant reduction in the global warming potential (GWP) of the refrigerant, but also maintain or enhance energy efficiency and safety in whatever solutions are developed in the future. Given this legislative and regulatory pressure, Ingersoll Rand/Trane is working with the refrigerant producers to identify potential low-GWP, energy-efficient, and safe alternatives to the existing HFCs.
“It is too early to tell what these alternatives will be. This is why it’s imperative that any HFC phase-down program must allow adequate time to develop new chemicals, commercialize new equipment with those chemicals, potentially shape codes that support safe use of these new solutions, and also ensure the service infrastructure is developed to support these new solutions. It will take industry 10 years from the time a new chemical is identified to when the entire equipment portfolio can be fully transitioned. And, the new chemicals are not yet confirmed.”
Julian R. de Bullet, director of industrial relations for McQuay International, also noted industry involvement in the refrigerant issue. “McQuay supports the EPA and its continued energetic phaseout schedule of all ozone depleting substances as long as there are existing alternatives available.”
Added William McQuade, director of government and industrial relations for Chiller Solutions, at Johnson Controls, “With the recent EPA endangerment finding and other recent proposed rule-makings, it is clear that the EPA intends, in some manner, to regulate and eventually reduce the amount of HFC refrigerants consumed in the United States because of their global warming potential. We are confident, however, that the EPA understands that suitable energy-efficient replacements for these refrigerants do not currently exist for many applications. Therefore, any reduction or regulation will be a phase-down, not a phaseout, of these substances and will be accomplished over a suitable time period to allow the industry to develop new solutions.
“At Johnson Controls, we have always been on the forefront of evaluating new refrigerant solutions. Our experience with the elimination of CFCs in the late 1980s will prove valuable in making the right choice as we move to low-GWP refrigerants. This experience also taught us that the choice of a refrigerant is really an optimization of many properties, and will depend on the application, equipment type, and region of use. Future solutions in our industry will include both natural and chemical refrigerants. In each case, the choice must not have any ozone-depletion potential, and it must result in a system whose efficiency is equal to or better than the system it replaces. Efficiency is so important because 95 percent of a chiller’s greenhouse-gas emissions come from the energy used to power the chiller during its life, and only 5 percent come from emission of the refrigerant contained inside the chiller.
“Choosing a solution based only on GWP can negatively impact the environment. Refrigerant solutions must also result in equipment that can be applied safely in its intended environment, is reliable in its use, and is affordable in first cost and operation.
For Danfoss North America President Robert Wilkins, much of what is going on reflects major changes. “The United States is in the midst of transformational policy that is likely to have wide and sweeping implications for the industry. There are many bills in Congress dealing with energy and climate change. One in particular relevant to the chiller industry is the proposed Building Star bill, which offers the best opportunity to stimulate the economy and stimulate energy savings.
“Building Star will create jobs in the hard-hit construction and manufacturing sector, and it would seek to replace the inefficient CFC chillers by providing rebates when new, more efficient chillers are installed in their place.”
THE MARKETComing up with a timeline for economic recovery can be as daunting as figuring out how pending regulations could affect the industry.
Said Newton, “In general, we expect the chiller markets to remain depressed at least through the first half of the year unless there are artificial stimuli to drive growth in the form of tax credits or cash rebates that are currently being considered by Congress. The replacement segment has seen less of a decline than new construction, and there remains some strength in the health care, government, and educational segments. Economic recovery, depending upon its strength and timing, may drive some recovery in the chiller markets in the second half of the year.”
Noted de Bullet, “We are forecasting a positive increase in both water-cooled and air-cooled chiller bookings. A robust replacement market and a more involved owner participation in purchasing the most efficient chiller choice for their application will drive this. The sustainable initiatives thriving in our industry allow more owners input for choosing new technologies. These advanced technologies result in substantial positive life-cycle results for a user.”
Ian Casper, senior program manager, Building Efficiency, for Johnson Controls, said general predictions show “economic recovery to begin some time in 2010 or 2011 should apply to the chiller business, as replacements begin to occur (especially those postponed due to curtailed spending), and as various government programs stimulate construction and renovation projects in major global markets. Nongovernment-funded new construction projects are likely to return more slowly, tempering the recovery of the chiller market. A slow, but steady, recovery of the chiller market is the most likely forecast of the next three to five years.”