Of the dozens of regulations that have been issued the last few years, the U.S. Environmental Protection Agency’s (EPA’s) rule governing the production and importation of hydrochlorofluorocarbon (HCFC)-22 has had perhaps the most immediate impact on HVACR contractors. Additionally, the EPA’s Significant New Alternatives Policy (SNAP) Program, Section 608 of the Clean Air Act, and President Barack Obama’s Climate Action Plan have all shaped the ever-changing refrigerant landscape. And, with no signs of this regulatory action slowing, 2016 is set to be another year full of significant changes in the refrigerant market.


In October 2014, the EPA announced its final phasedown schedule regarding the production and importation of HCFC-22. The order called for an immediate drop from 51 million pounds allowed in 2014 to 22 million pounds in 2015, 18 million pounds in 2016, 13 million pounds in 2017, 9 million pounds in 2018, and 4 million pounds in 2019. No new or imported R-22 will be allowed in the U.S. on or after Jan. 1, 2020.

Stefanie Kopchick, North America marketing manager for refrigerants, The Chemours Co., said the annual allowances have decreased faster than the market demand for R-22, which has depleted inventory across the supply chain.

“Chemours is not excluded from this reality,” she said. “As a result, in 2016, we’re starting to feel the snugness in supply; our wholesale partners have been cut back significantly as the inventory Chemours built in advance of the final phasedown period continues to be depleted.”

With meteorologists predicting normal to warmer-than-normal temperatures this summer, industry leaders only expect demand for the refrigerant to increase. Further adding to the increasing demand is a drop in reclamation and an increase in interest values affecting financing decisions, said Gordon McKinney, vice president and COO of Icor Intl.

“The amount of R-22 being recovered and reclaimed is not expected to contribute much more than 8 million pounds this year,” he said. “Interest rates are on the rise, and that will make repairing a better option than replaceing for many air conditioning and refrigeration equipment owners. With service demands for R-22 in the U.S. still estimated to be in the tens of millions of pounds per year, many R-22 users will need to transition to an ozone-safe alternative, like ICOR’s NU-22B®, to service legacy R-22 systems.”

McKinney mentioned the price of R-22 increased in the fourth quarter of 2015 by an average of 15 percent, is expected to increase through the year, and could reach record levels by the end of 2016. For HVACR contractors and distributors, this could spell trouble.

“When it comes to R-22 allocation, how much each distributor and user has access to will depend on where they are in the food chain,” McKinney explained. “As a distributor or user, the smaller you are, the less important you will be to the allocation holders.”

Richard Winick, director of global sales, Honeywell Fluorine Products, also expects demand for R-22 to increase again this year as supplies continue to decrease.

“Our estimates for R-22 aftermarket consumption by end users are somewhere in the 50-60 million pound range for 2016, so when you compare that level of demand with the 18 million pounds of new R-22 that can be produced or imported in 2016, you can see a supply-demand imbalance happening,” Winick said. “While we expect to see more big R-22 users transition away from HCFCs in 2016, the industry will likely need to draw down its R-22 inventory in 2016 for supply and demand to remain balanced.”

In contrast to McKinney, Winick said the volume of reclaimed R-22 seems to be increasing, though he points out that, “While the reclaimers report to us more activity than a few years ago, they alone can’t make up a potential gap in supply of approximately 30-40 million pounds of R-22.”


One development that may help alleviate the demand for R-22 moving forward is the end of production of the dry-shipped R-22 unit, said Jon Melchi, vice president of government affairs and business development for Heating, Air-conditioning, and Refrigeration Distributors International (HARDI).

“By the end of February, manufacturers aren’t going to be able to produce dry R-22 condensing units — after that, they’re gone,” he said. “It’s probably not going to impact the South as much, since it doesn’t allow for 13-SEER units anyway, but it shows the industry is going to move away from dry-charge R-22 condensing units in 2016 because of the end of the sell-through, and because of the reduction in production from the manufacturers in the first quarter of 2016. It’ll be interesting to see how manufacturers will handle their products.”

Still, Melchi said he anticipates things will get tighter, and prices will continue to increase as the clock winds down to the complete phaseout of R-22 in 2020. As a result, Melchi said, the supply chain will need to be aware of where their refrigerant is coming from.

“As the reduction of the R-22 supply continues, there becomes an increased likelihood for illegally imported or counterfeit refrigerant,” he said. “Most distributors are on an allocation limit and have adapted accordingly.”

Jay Kestenbaum, senior vice president of sales and purchasing, Airgas Inc., also warned against counterfeit refrigerants. “When products are in short supply, such as in the past with chlorofluorocarbons [CFCs] like R-12, there is an increase of smuggled product and tainted, contaminated, or false substitutes proliferating the industry,” he said. “Purchasers should know whom they are buying from — not only their reputation but also the history of the product — to prevent exposure from these illegal imports or below-spec substitutes.”


Additional changes to Section 608 and the SNAP program will affect the refrigerant landscape in 2016, said Charlie McCrudden, senior vice president of government relations for ACCA. “We’ve got the rule out on Section 608 and changes to that program, and we’ll probably see more changes to the SNAP list and maybe more delisting of refrigerants and additions of new refrigerants,” he said.

“The EPA is evaluating changes to the SNAP program, and the current administration has made it clear it wants to seriously consider changes to approved refrigerants that are listed under the SNAP and DOE energy-efficiency standards by the end of the year,” said David Calabrese, vice president of government affairs, Daikin U.S. Corp. “These federal agencies are working fervently to get these rulemakings completed this year because they don’t know the direction that a new administration will take, and the Daikin team has been working with our industry association and environmental groups to provide input to these regulatory efforts so that they are favorable for all stakeholders.”


As R-22 inventory drops off and prices continue to rise, manufacturers are working to bring new refrigerants to market and ensure the supply chain is aware of such products and how to use them.

“Honeywell has been working with contractors and end users since the final rule was released by running hundreds of training sessions around the U.S. and making comprehensive retrofit information available on our website,” Winick said. “We expect the demand for Genetron 422D, Performax LT, and Solstice N40 to grow in 2016 as end users accelerate their move away from HCFCs and also some HFCs as a result of the July 2015 EPA HFC delisting rule. While we will have R-22 available for customers, our focus and investments are now on next-generation products.”

Icor also offers a broad range of educational tools and services to help prepare refrigerant users for the transition away from R-22, McKinney said. “From online training videos and slide programs, customized webinars, and a toll-free Tech-2-Tech™ support hotline, Icor can accommodate the support requirements for companies of any size or level of service expertise.”

Chemours’ Opteon™ portfolio of low-GWP (global warming potential) refrigerants helps meet the growing demand for alternatives, Kopchick said. “Opteon XP40 (R-449A), the Chemours flagship nonflammable [A1] replacement for R-404A, is approved by major equipment manufacturers, and has already seen widespread global adoption in its first year of commercialization. XP40 provides a 67 percent reduction in GWP over R-404A while improving system energy efficiency and offering an excellent direct replacement option for supermarkets still running on R-22 and looking for a more sustainable retrofit solution.”


For distributors and contractors, the most important way to cope with the R-22 phaseout is to stay informed.

“If they haven’t already done so, contractors should begin to view any R-22 they work with as an asset,” Kopchick said. “Capturing R-22 and returning it for reclaim or recovery and re-use is critical to ensuring sufficient reclaim in the market to counterbalance the continued allowance reductions. Contractors should also be sure they are familiar with the retrofit products available for R-22 systems. Chemours frequently works with its wholesale partners to host training, webinars, and other sessions to provide the most up-to-date information to the industry.”

Larger contractors will have greater access to R-22 than smaller companies, and those with fewer assets will need to mitigate more of their R-22 use this year with an ozone-safe alternative, McKinney said. “There are a number of alternatives available today, and they need to start educating themselves on how to use them and how to determine which one best suits their particular service needs,” he said. “No matter where you are in the R-22 food chain, if you service R-22 equipment, at some point in the future, you will need to depend on an alternative refrigerant. You only need to look to the CFC phaseout to know that demand will eventually overcome supply and there will be millions of legacy R-22 systems that will require service for many years to come.”

Well-informed contractors are in a better position to help their customers, too, Winick said. “Honeywell provides apps, literature, videos, and webinars and continually provides new resources for wholesalers and contractors to use. We encourage wholesalers and contractors to take advantage of the educational tools Honeywell makes available and to contact us to schedule training.”


From manufacturers to distributors to HVACR contractors, nobody will be unaffected by the R-22 phaseout and the other numerous refrigerant changes and innovations that occur in 2016.

“We’ve already heard from wholesalers that they anticipate having trouble getting ample R-22 supply for the 2016 season and expect its price will reflect the supply-demand balance, or imbalance, in the market,” Kopchick said. “This then translates to contractors, as they may experience spot shortages in supply and higher prices in 2016 and beyond.

“Contractors will likely also see the delta in pricing between R-22 and the retrofit alternatives continue to increase, which will drive more frequent selection and use of retrofit products,” Kopchick continued. “As the phaseout of R-22 progresses, it behooves contractors to strategically partner with their suppliers so that they have someone whom they know and trust to keep them informed of the market conditions and realities throughout the year.”

Winick said HVACR contractors will only see R-22 prices continue to increase leading up to the end of production and importation in 2020. “Unlike in the past, when almost everything was solved using R-22, contractors today should consider R-22 as just one of several tools in their toolboxes,” he said. “We are educating contractors about their refrigerant options and asking them to educate their customers, as well.

Refrigerant distributor National Refrigerants Inc. is doing what it can to ensure its customers have enough R-22 to support their continued servicing needs, including conducting seminars for contractors and equipment owners.

“Contractors will need to rely on their wholesale suppliers to keep them informed of the available supply, since some refrigerant manufacturers may limit the quantity of R-22 available to each wholesaler,” said Maureen Beatty, vice president of operations for National Refrigerants. “Contractors should be aware of the importance of buying R-22 from a reputable supplier so they can be certain they are purchasing legally manufactured R-22 that meets AHRI [Air-Conditioning, Heating, and Refrigeration Institute] Standard 700. They should also find additional sources of refrigerant information so they can obtain a complete and unbiased view of the refrigerant industry. Additional sources should include industry association and government websites and, of course, The NEWS.”

Kestenbaum also stressed the importance of preparedness in ensuring contractors have enough refrigerant on hand. “Contractors should plan together with their loyal suppliers and equipment manufacturers and obtain as much information as possible as to what refrigerants are good replacements for the existing product in current systems,” he suggested. “Contractors and all purchasers should be aware of the possibility that the market will again be impacted by illegal or below-spec product as shortages reduce the availability of ample supplies in our industry.”

Tom Beaulieu, president of Bay Area Services Inc. in Green Bay, Wisconsin, said the company made the switch to 100 percent R-410a right away and has largely escaped the volatility of R-22 prices, which he says have been steadily increasing in Wisconsin.

“The state of the R-22 refrigerant [market] helps us convince customers to replace rather than repair,” he said. “Most residential systems that use R-22 that have issues involving the refrigerant system are at a point where they should be replaced, anyway. It does help our replacement sales business.”

Beaulieu has also received a great deal of guidance from his distributor, Gustave A. Larson Co. “We take advantage of any training that pertains to our business,” he said. “They [Gustave A. Larson Co.] have a very good training department and cover this issue very well.”

Mike Agugliaro, co-owner of Gold Medal Services in East Brunswick, New Jersey, also said his company has mostly avoided having to deal with R-22 supply issues because management chose to switch to R-410a units before the phaseout even began. Gold Medal also ensures its employees are properly trained on the variety of refrigerants available to the customer through in-house training and field training, in addition to utilizing vendors and manufacturers for training.

“We’ve found that it actually boosted our sales in the HVAC department the moment consumers were aware of the changes coming,” Agugliaro said. He hopes the phaseout will continue to “prompt homeowners to replace their units with a new R-410a system, since the newer units are more efficient and will cost less to repair in the future.”

Ultimately, staying ahead of the phaseout will be the best option for the industry in 2016 and beyond.

“In the end, a thoughtful R-22 retrofit strategy is in the best interest of all,” Winick said. “It will provide a rational movement away from R-22 and will get everyone in the HVACR business moving in the same direction.”

Publication date: 2/8/2016

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