Even though the years remaining before the phaseout of hydrochlorofluorocarbon (HCFC) R-22 can be counted on two hands with fingers to spare, current inventory of the industry’s most popular refrigerant remains plentiful, despite the fact that production and importation are down more than 40 percent in two years while heading toward a total phaseout in 2020. Reasons include a spike in production allowed by the U.S. Environmental Protection Agency (EPA) for 2013 only, mild weather, less R-22 equipment coming to market, and use of hydrofluorocarbon (HFC) alternatives in retrofitting existing R-22 equipment.
After allowing just 55 million pounds of R-22 to be produced and imported in 2012, the EPA upped the total in 2013 to 62.8 million pounds and then promised a return to a downward production spiral with a 2014 allocation of 51 million pounds. In general, it is understood that the EPA is trying to allow for adequate, non-disruptive servicing of the existing R-22 equipment inventory while still steering the industry toward non-R-22 alternatives.
But the spike produced some bumps. “The supply of R-22 for contractors in 2013 has greatly exceeded demand due to the extra allocation provided by the EPA, which has led to lower prices,” said Ken Gaglione, senior marketing manager at Honeywell Intl. Inc. He added that an “apparent reduction in dry-ship condensing units” was a factor as well, referring to a 2010 ban on the manufacture of new equipment using R-22. A loophole allowed components like condensing units to continue to be made and shipped, provided they were not pre-charged with R-22.
“R-22 supplies are more than adequate, attributable mainly to the allocation issue by the EPA,” said Maureen Beatty, vice president of operations for National Refrigerants Inc. She added that the cool spring this year reduced the need for R-22 in servicing air conditioning equipment.
“The industry was expecting and preparing for the maximum reduction in allowances as proposed by the EPA,” said Joyce Wallace, North America marketing manager for DuPont. “The ultimate increase in allowances — along with accumulated inventories, the accelerated move to R-22 alternatives, the continued increase in reuse, and the cool spring and wet summer — are all contributing factors.”
“The EPA increase in R-22 allowances is one of the primary drivers for ample supply, along with a record cool spring and summer season,” said Patti Conlan, fluorochemicals business unit product manager for Arkema.
Like others, Gordon McKinney, vice president and COO of ICOR Intl. Inc. attributes supply and demand as a factor.
“Immediately after the EPA’s announcement, R-22 prices began to soften and any supply chain issues quickly evaporated,” he said. “The rapid drop in price, and more than ample supply, left many stakeholders upside-down on the market price and struggling to find buyers. Other contributing factors were the broad acceptance of R-22 replacement refrigerants, the reuse of recovered (non-reclaimed) R-22, and milder summer temperatures.”
That replacement refrigerant aspect was also noted by Jay Kestenbaum, senior vice president of sales and purchasing at Airgas Inc. “The large run-up in R-22 prices in the last two years has led to a great increase in the switch to alternative products. For new equipment, clearly the main choice is R-410A as well as other HFCs. However, for retrofit work, there are newly introduced HFCs and others that have also reduced the demand for R-22 this year.”
For contractors like Jayson Goff, branch manager at T&O Refrigeration Inc., Nashville, Tenn., matters like the R-22 phaseout will sort themselves out. “The supplies of R-22 at our local supply houses are adequate and based on the price stabilization,” he said. “The market is trying to control the price, as it should.”
But what does the future hold as R-22 production resumes its downward direction? “The message for contractors for the next two to five years is clearly ambiguous,” Kestenbaum said. “For those who are in tune with regulations, they do understand that the R-22 production essentially goes away in 2020 — six years from now. However, until the EPA rules for the period of 2015 and beyond, there will be much doubt by contractors whether the product will truly be tight in the early years, or whether the EPA will allow as much as possible until such time as it has no choice but to cut drastically.”
Hopefully, that can be resolved, said DuPont’s Wallace. “By the end of this year, the EPA is scheduled to issue a proposed rule for the 2015-2019 time period and will likely consider a range of scenarios, including significant reductions in allowances to once again ensure that the industry makes a smooth transition away from R-22 during this period.”
Though most refrigerant suppliers will not argue that R-22 systems are built for R-22 refrigerant, many are also urging contractors to continue retrofitting with R-22 alternatives as the phaseout inches closer.
“The bottom line is there is no reason to panic about the R-22 supply,” Beatty said. “While EPA’s actions have increased awareness about the use of R-22, there is a sufficient amount of R-22 available now and in the near future to meet servicing requirements for the installed base of R-22 equipment. This means equipment owners can continue to operate well-maintained R-22 equipment throughout its useful life while properly preparing, both technically and financially, for an orderly transition to a non-ozone depleting refrigerant.”
“R-22 is still available and always the best refrigerant for R-22 equipment,” Conlan said. “No retrofit is an exact drop-in and has potential compromises to capacity and efficiency.”
But the restart of the R-22 production and import phaseout in 2014 does up the call to move beyond R-22, McKinney said.
“Distributors, contractors, and equipment owners are learning some very painful lessons this year about the volatility of the R-22 market,” he said. “We expect many will increase their support of equipment replacement, alternative refrigerants use, and improved service and maintenance practices. For the future, R-22 should be reserved for use in critical applications where alternative refrigerant options are limited, such as flooded chillers and systems with R-22-specific controls.”
Gaglione agreed, stating, “The message to contractors has not changed – they should be aware that R-22 is going away and EPA is expected to resume its scheduled draw-down to meet its obligations under the Montreal Protocol and Clean Air Act,” he said. “Contractors should continue to retrofit with R-22 alternatives to avoid having their customers be invested in obsolete products and faced with more costly retrofits.”
Wallace wants to make contractors aware of that timeline.
“R-22 production will continue to decrease, dropping by 19 percent in January 2014, with further decreases 2015 through 2019,” she cautioned. “In seven cooling seasons, virgin R-22 will no longer be produced.”
SIDEBAR: A Question on Naturals
How do natural refrigerants like CO2 and hydrocarbons (HCs) fit into the picture as hydrochlorofluorocarbon (HCFC) refrigerants fade away? Depending on who you talk to, they may become a stronger player in the U.S. market or gain even greater prominence if their efficiencies and effectiveness grow and HFCs face phasedown.
Several manufacturers were asked to share their thoughts on natural refrigerants. Here is what they had to say:
“There is no single winner for HFC replacements. Alternatives exist today for many applications, and, as technology advances, several options are becoming clear. For example, in commercial refrigeration, naturally occurring gases such as propane, isobutane, and CO2 are increasingly being used as refrigerants.”
Vice president of public affairs
“We believe there is a place for all refrigerant technologies, and non-fluorine-based refrigerants have a place in some applications. When considering refrigerants, it is important to consider and compare the total cost of non-fluorine-based refrigerants versus higher-performing f-gases. While the cost of refrigerant may be lower for non-fluorine-based, they typically require higher capital costs to implement and higher operating costs due to lower capacity.”
Senior marketing manager
Honeywell Intl. Inc.
“We believe that both fluorine and non-fluorine based refrigerants have a place in the market. An objective assessment indicates that in many situations fluorine-based refrigerants offer superior and preferred balance of properties due to the unique properties of this technology.”
North America marketing manager
“A refrigerant solution needs to be the lowest life cycle climate performance (LCCP) environmental impact, which is still fluorocarbons for most applications.”
Fluorochemicals business unit product manager
“The future of the so-called natural refrigerants, such as CO2 and HCs in the U.S., is clearly in doubt whether they will be allowed based on current building codes and other barriers to use in many systems. But at the same time, there is also a major push at this time overseas with the most recent European Parliament environment committee vote to ban HFCs in new equipment from 2020.”
Senior vice president of sales and purchasing
“Existing ACR equipment is not designed to work safely with flammable hydrocarbon-based refrigerants. There are several new heat transfer mediums being developed, but HFC alternative refrigerants appear to be the best long-term solution to phasing out the use of HCFC-22 in existing equipment.”
Vice president and COO
ICOR Intl. Inc.
Publication date: 9/23/2013