For as long as there has been recovery and recycling, there has been reclamation. But reclamation is a bit of a different animal.
Recovery and recycling of refrigerant takes place on site with equipment toted to the site by the service technician. Reclamation typically involves refrigerant recovery and shipment to a reclaim facility. Reclamation can be more time-consuming, but it provides the best assurance that a reintroduced refrigerant is of the highest quality.
According to the U.S. Environmental Protection Agency (EPA), the definition of reclamation is: “To reprocess refrigerant to at least the purity specified in the AHRI [Air-Conditioning, Heating, and Refrigeration Institute] Standard 700-2006, ‘Specifications for Fluorocarbon Refrigerants,’ and to verify this purity using the analytical methodology prescribed in the standard. Reclamation requires specialized machinery not available at a particular job site or auto repair shop. The technician will recover the refrigerant and then send it either to a general reclaimer or back to the refrigerant manufacturer.”
The pending final phaseout of virgin and imported R-22 by 2020, at the latest, is again drawing attention to the reclamation sector, as it provides a way for existing supplies of the refrigerant to continue to be used.
To see where the sector is headed over the next five years, The NEWS collected comments from numerous companies involved in reclamation services. Here, in alphabetical order by company, is a collection of the responses.
Comments by Ken Beringer, senior vice president
The future direction of refrigerant reclamation is very uncertain at this time, but the industry will always move toward the products that produce the greatest return on investment in buildings, equipment, technology, and labor. Due to many factors, the products that will have the greatest shortage are unknown at this time. The picture will be much clearer when the EPA makes a decision on the HCFC [hydrochlorofluorocarbon] phaseout for 2015 through 2019 and the future of HFC [hydrofluorocarbon] gases.
Reclamation of R-22 grew dramatically after the EPA accelerated the phaseout of HCFC gases in 2012 and retreated almost as rapidly when additional production and importation rights were granted in 2013. When this happened, the price of new R-22 plummeted and created a chain reaction with reclamation companies, lowering the purchase price of used product from as high as $8.50 per pound to as low as $1 per pound. The incentive to return used product was no longer attractive to mechanical contractors and end users. This resulted in a dramatic reduction in the volume of used R-22 being reclaimed. There have been many companies reaching out to the EPA to reduce HCFC allocations, which, in turn, will reduce the oversupply and raise prices enough to entice people to return used product again.
The government is attempting to lower the amount of GWP [global warming potential] refrigerants being released into the atmosphere and HFC gases represent a great portion of the problem. If HFC gases are phased out as expected, reclaimed products will be in demand to cover the needs of most automobiles and many large industrial skids. This will be similar to the early days of reclamation when CFC [chlorofluorocarbon] production ceased and the industry was created.
Companies will need to invest more in technology, especially separation, as virgin gas supplies diminish. The industry should be very attractive over the next five years, and the reclamation of HCFC and HFC gases is encouraged by responsible government action.
Comments by Patti Conlan, marketing manager
Arkema anticipates the requirements for reclaimers to tighten up over the next five years with the EPA’s recently proposed HCFC rule. The EPA is looking at increased requirements around record keeping, reporting, testing, and accountability for all refrigerants. This includes expanding reports of processing and inventory by refrigerant type, increasing reclaim certification requirements, and expanding end-product testing requirements. In the long term, we would expect reclaimers to handle fewer CFCs and HCFCs and more HFCs with recent SNAP [Significant New Alternatives Policy] announcements concerning R-134a and R-404a. In addition, reclaim capacity and technical know-how will need to expand to serve a wider group of mixed refrigerants with different physical and chemical properties.
Comments by James Sweetman, president
When determining where our industry is headed, we should take into account how our industry has evolved over the past several years. Traditionally, contractors had only one outlet for used refrigerant, and typically it was an inconvenient and costly process. There were few reclaimers willing to provide cylinder management services directly to contractors, and incentives, if any, were reserved for the distributor. Where this has always been our focus, at last, many reclaim facilities are now willing to provide services and incentives directly to the contractor. Even the large corporations, which typically only served the distribution side, are realizing the importance of serving contractors directly. Moving forward into the years ahead, we see this trend continuing.
We have always believed that the future of the reclaim industry would lie in its ability to provide contractors with exceptional services and incentives for reclaiming recovered refrigerant. It is the regulatory landscape and the commitment to environmental responsibility that mandates responsible recovery practices. But, it is the reclaim industry that lessens the burden of such regulations and commitments. Yes, there will be new technologies, and yes, the regulatory landscape will continue to change. But one aspect that should continue to progress and evolve is our industry’s commitment to simplifying the process for mechanical contractors. We believe that the future success of our company, and that of our industry, lies in our ability to deliver efficient, compliant, and profitable reclaim services directly to mechanical contractors.
Comments by Gus Rolotti, vice president, technical sales and marketing
In the recent past, based on EPA’s estimates for consumption and production, the industry expected to experience shortages of R-22 that could only be alleviated by using retrofit refrigerants (such as R-434A, R-407A/C, etc.) and reclaimed R-22. However, our very dynamic refrigerant market and the lower demand for equipment due to a weaker economy changed that, producing more options for retrofits and greater availability of virgin R-22. The net effect was reclaimed R-22 taking over a much smaller portion of the market than originally expected.
The future of reclaim will be a direct result of the availability of virgin R-22 and its price, with less material at a higher price being an incentive to use reclaimed R-22. It will all depend, of course, on what allocation levels the EPA selects for 2015 and beyond. If the EPA decides to reduce supply by setting lower allocation limits in order to expedite the transition out of HCFCs, the amount of reclaimed material needed and used by the market will very likely increase.
Coolgas Inc., and its sister companies under the A-Gas banner, is ready to assist the market by supplying AHRI 700-compliant reclaimed R-22. Our company is aggressively purchasing not only recovered R-22 to reclaim, but also CFCs to take care of them in an environmentally responsible manner to reduce GHG [greenhouse gas] emissions. We are also supplying virgin R-22 and good R-22 retrofit options as market demand dictates.
Comments by Bill Auriemma, CEO
In 2019, R-22 will remain the most heavily used refrigerant regardless of which phasedown route the EPA chooses later this year. Therefore, there will continue to be a strong need for R-22 recovery and reclamation. At the same time, we will start to see greater use of replacement products as the next generation of refrigerants works its way into the market. Subsequently, reclamation companies must be equipped to reclaim a wider variety of refrigerants and separate mixes that may entail a broad assortment of transitional and new gases.
The focus will shift from R-22 to the reclamation of other refrigerants, especially HFCs, as the EPA continues its efforts under the Climate Action Plan. The focus will also shift to whether a North American Amendment (NAA) succeeds to include an HFC phasedown in the Montreal Protocol. In the likely event of an HFC phasedown, reclamation will center on popular refrigerants such as R-410A and R-134a, and their sales will mimic that of R-22 — albeit to a lesser degree. Additionally, reclaimers may have an increased opportunity to participate in carbon credit programs as more gases become eligible for destruction.
While EPA activities will continue to steer the direction of the reclamation market, it is up to the HVACR industry to adapt. By preparing now, we can ensure a smooth transition for our customers and our businesses into the next decade and beyond.
Comments by Debra Goodge, refrigerants reclaim manager
For the five years prior to 2012, reclaimed R-22 had been running steady at a rate of 5-6 percent. In 2012, there was an increase in the amount of reclaimed R-22 reported, up 1.1 million pounds to 8 percent of the EPA’s estimated total demand. We believe this is attributed to a delay in the final rule being published, causing the marketplace to operate at roughly 40 percent less R-22 supply for a good part of the year. The impact from supply uncertainty appeared to stimulate contractors to take action and transition their customers away from R-22 to avoid supply concerns while alternative refrigerants were readily available. In addition, distributors and others were offering value-based incentives and access to the reclaimed R-22. With the EPA evaluating several phase out scenarios for 2015-2019, the five-year accelerated phase out schedule would reduce allowances to 22 million pounds beginning in 2015, which is a 29 million pound reduction from 2014. The EPA estimates various levels of recovery, in its November 2013 “Updated Projected Servicing Needs Report,” but it’s important to note that, even in the lower recovery scenario, 32 million pounds of supply will come from reclaimed R-22 beginning in 2015. Whichever phase out approach is finalized later this year, a major step change in service practices will be needed to supplement supply. DuPont and its Authorized Refrigerant Reclaim Centers continue to simplify the process and offer incentives for recovered R-22, as well as other value-added services, such as recordkeeping reports for compliance purposes and refrigerant asset management to assist customers and end users in refrigerant management plans.
Comments by Carl Grolle, president
It’s important to remember that refrigerant reclamation is basically just a specialized waste treatment service. We collect wasted, used, or otherwise unwanted refrigerants and purify them by removing contaminates. These refrigerants are then resold to the marketplace. It’s a fairly competitive market between the various reclamation companies, and we fight for the used refrigerants from a rather steady and limited supply of refrigerants returned from contractors.
The focus during the next five years will be on the diminishing supply of R-22. As the R-22 supply shrinks, it will certainly lead to significant increases in the cost of remaining R-22. From the reclaimer’s standpoint, most of the price increases will be offset by the increasing price paid for used R-22.
Some projections have suggested that there could be a significant increase in the amount of refrigerant being returned for reclamation. We are very skeptical that this will happen. In the 18 years we have been reclaiming, we have seen very few contractors who don’t care about following the regulations. Ever since the regulations have prevented venting, the yearly amount of refrigerant returned to reclaimers has been relatively stable. We are also concerned that if good service practices are not followed, much of the R-22 being returned from change outs could be mixed with newer replacements. It is more important than ever for the HVAC service community to help itself by recovering as much R-22 as possible without mixing it.
Comments by Ted Atwood, president
As a reclaim company, our job is simple: We have to be the best at recycling refrigerant and giving our customers the solutions they need to ensure profitability, growth, and market competitiveness. Because of this, we have to pay close attention to the EPA’s proposed rule on the adjustments in HCFC allocations and how this affects the market along with movement in price relative to reclaim volume. Polar Technology has done an internal analysis on this dynamic and has noticed that as price goes down, reclaim volume picks up, but as price goes up, hoarding occurs, displacing reclaim companies from the market. As R-22 prices jumped and supplies seemingly were shrinking, contractors were acting quickly to buy cylinders and store material to hedge against the pending shortage. This activity was driving incredibly high prices.
Based upon market research and data, there does not seem to be a direct correlation between the price of R-22 as it rises and the quantity of reclaim received. Initial reviews show the inverse — reclaim drops as pricing rises. One theory is that certified 608 technicians are the total conduit for the connection to system owners. System owners and noncertified 608 technicians cannot buy refrigerant. Licenses are granted to individuals who are not held accountable for reporting refrigerant usage. Therefore, as the price of refrigerant increases, companies will horde refrigerant, which decreases reclaim volume.
Comments by Adam Dykstra, president and CEO
There are three things that motivate refrigerant recovery: altruism, fear, and money. Those who recognize that venting refrigerant is harmful to the environment and care about the world they leave their children and grandchildren will recover simply because it’s the right thing to do. Contractors who fear the $37,500 EPA fines associated with venting violations will comply with the law and return their recovered refrigerants to reclaimers, as required. The final motivator is money. As the value of recovered refrigerant rises, and ultimately exceeds the cost of recovery, contractors will gladly recover or contract a recovery specialist to recover all refrigerants.
It’s likely that supplies of HCFCs (read R-22) will tighten over the next five years. As a result, new refrigerant prices will rise along with contractor recovery incentives. Supply is controlled by the EPA allocation phase down (import and manufacture of new refrigerant), contractor compliance through EPA enforcement, and contractors who simply do the right thing. Together, these actions determine how significant any shortage may be.
The reclamation industry has sufficient capacity to meet the entire industry’s supply need. The question is: Will it be properly utilized as a result of contractor recovery efforts? Five years from now, the only HCFCs available for servicing your customer’s equipment will come from those who properly recover. Will you be one?
Publication date: 4/7/2014