It wasn’t supposed to be like this. The U.S. HVAC industry considered (and largely still considers) an HFC phasedown to be inevitable. Furthermore, it seemed possible to pursue that transition in a relatively calm and orderly fashion.
The U.S. would approve the Kigali amendment to the Montreal Protocol, pursuing a comprehensive phasedown (not phaseout) schedule.
Following that, the Environmental Protection Agency’s (EPA’s) Significant New Alternatives Policy (SNAP) 20 and 21 regulations would take effect. And then a consistent national approach would emerge, and contractors and manufacturers would work through it.
Except none of that happened (yet, anyway).
So when these expected regulations became either abandoned (SNAP 20) or judicially embroiled (SNAP 21), the state of California picked up the guidelines for its own.
Now, with a quarter of 2019 already in the books, where do things stand in California? Are the refrigerant regulations unfolding in the Golden State likely to serve as a bellwether for a brave new disorganized world of domestic refrigerant use? How will that affect the industry as a whole?
SETTING THE SCENE
New Year’s Day ushered in the first wave of restrictions on equipment sales and other refrigerant prohibitions. On the good side, companies seem to be familiar with the rules and the implementation, according to Helen Walter-Terrinoni, Air-Conditioning, Heating and Refrigeration Institute’s (AHRI’s) vice president of regulatory affairs.
The January ban is merely a first step in the state’s commitment to reduce HFC-related emissions by 40 percent compared to its 2013 levels by 2030. The next steps will see refrigerant restrictions covering an expanded range of equipment in a wider range of sizes, and without distinction for flooded or non-flooded evaporators. Future phases will reach into production, sales, and distribution.
Sorting out the particulars of all that rulemaking is a huge task. The California Air Resources Board (CARB) has already begun the complex journey. Last month, Emerson hosted a webinar examining the situation.
“Commercial refrigeration is where you’re going to see a proliferation of refrigeration systems as manufacturers and component manufacturers try to find a balance where they stay within GWP limits [for refrigerants] while minimizing cost, first cost, and service cost of their equipment,” said Rajan Rajendran, vice president, systems innovation center and sustainability at Emerson’s Helix Innovation Center. “In the next four or five years,” he continued, “there’s going to be a lot of learning that we all have to do, as refrigerant changes drive equipment changes.”
Another question the webinar raised was what the future holds for chillers in California under CARB’s plan.
“CARB is still trying to clarify whether process chillers are included in the 2024 deadline,” according to Jennifer Butsch, Emerson’s regulatory affairs manager – air conditioning.
Could R-507 be used in the state after 2022? Might process equipment pick up some sort of exemption?
How will process chillers be treated versus positive displacement chillers?
These, Butsch said, are the issues on the table this year.
Then, in early March, CARB held its first technical working group meeting of the year, made available online for public attendance. The group laid out a number of questions where it is inviting the industry to contribute data and comment to better guide the answers that will shape stationary air conditioning rulemaking.
How should “new a/c equipment” be defined? This sort of question illustrates how deceptively complicated such rulemaking can be. Does a unit’s status change when major components are replaced or added? Should repairs over a certain cost trigger reclassification as “new”?
CARB also wants to understand the current reality of equipment distribution: How many OEMs have manufacturing facilities in California, and what are the sales pathways from OEM to end user?
What mechanism best supports enforcement of these regulations? Options include labeling, disclosure, recordkeeping, and reporting.
Attendees were predictably unexcited about the prospect of additional recordkeeping.
Manufacturer attendees offered input regarding the option of additional labeling, with one attendee noting that the joke in his area is that eventually they might be able to stop painting the equipment altogether.
As required, CARB is also collecting information to assess the economic impact of its rulemaking. On the published data side, its sources range from an AHRI member survey and separate report on the cost of ratifying the Kigali amendment, to other data from the Census Bureau and the Energy Information Administration.
Broader questions it is pursuing include: How much more will equipment cost to buy? These rules will necessitate design changes for a host of equipment, between new designs to run on approved refrigerants and related component compatibility adjustments.
Additional factors include the cost of new production lines, additional safety features (e.g., sensors for potentially flammable refrigerants), and increased transportation costs.
A secondary question addressed whether OEMs will recoup their related costs within two to five years. AHRI’s Lauren Petrillo-Groh, the association’s lead regulatory advisor, cooling technology, expressed doubt that all manufacturers would see payback within that timeframe.
While preliminary, CARB offered estimates of 1 to 2 percent extra cost for PTAC equipment and even less for room or portable equipment.
However, 5 to 15 percent increases were given for several categories of equipment, including central air conditioners/heat pumps, commercial air conditioning, computer room units, and others. Industry attendees in the meeting tentatively supported those early numbers.
Even the question of what exactly to include in “cost” remains to be fully sorted out. After all, OEMs are looking at two milestones at some point in the not too distant future: a refrigerant transition (in stages), and also efficiency-related requirements scheduled for 2023.
CARB’s air pollution specialist, Glenn Gallagher, looked for a silver lining of sorts in the possibility that certain manufacturer expenses may contribute to both sets of changes. AHRI countered that there would, in fact, be two different processes.
That said, AHRI expressed its desire to supply information to help CARB with a clear picture of likely scenarios accordingly, with member survey data on expected costs that first regarded the Department of Energy (DOE)-required efficiency upgrades on their own and only then considered additional refrigerant-related changes.
Additional costs to install and maintain equipment in this environment also factor into the analysis. CARB is roughly estimating 5 to 10 percent more for installation. This estimate considers additional contractor and technician training for A2L refrigerants, the need for new (non-sparking) tools for techs working with these refrigerants, infrastructure changes, and longer installation times stemming from new technology and extra steps demanded by working with A2Ls.
At least one contractor in attendance estimated that installation costs could be as much as 20 percent more.
CARB did not offer preliminary estimates for additional maintenance costs associated with likely refrigerants. However, it would like to assess factors such as sensor lifetime and new expenses of additional leak checks and inspections.
An attendee asked about the installed base of HFC-based equipment and its effect on emissions versus this new wave of equipment. CARB’s assessment is that the emissions reductions will be “good, but slow.” Its sense is that about 1/15 of the stock in question will turn over in a given year.
On a side note, one of CARB’s slides alluded to a reality that, collectively, the industry would still rather not think about the costs (or cost differences) of “California-Specific Product Lines.”
Speaking of California-specific, the state’s initiative may have risen from an abrupt pause at the federal level, but even its plan has encountered a hiccup or two itself. For one thing, California Senate Bill No. 1013 (aka the California Cooling Act) envisioned smoothing the path for this transition with the establishment of the Fluorinated Gases Emission Reduction Incentive Program.
“Unfortunately,” relayed Morgan Smith, program manager for the North American Sustainable Refrigeration Council, “the incentive program went unfunded in the proposed 2019 budget, despite the industry expressing significant support through letters and public comments. There is still time for the budget to be adjusted before June, but there is no indication whether it will happen.”
Hopes may remain among those who attended the recent CARB working group meeting (and among the industry at large), but nobody in the room expressed optimism for a late budget adjustment.
Rajendran commented to The News that California has traditionally offered financial incentives for low-GWP initiatives.
“These incentives have helped create momentum in the state to move toward lower-GWP refrigerants, systems with lower leak rates, and better recordkeeping,” he said.
With or without an incentive program for businesses to pursue early adoption of more climate-friendly cooling systems, he said, end users will have new options for new, retrofit, and upgrade work.
“Since these systems can be in service for decades,” Rajendran said, “users must carefully consider not only today’s regulations, but future constraints as well.”
In the event that the state does fund such a program here, Rajendran pointed out that low-GWP incentives are typically technology neutral and do not promote one refrigeration approach over another.
Senate 1013’s wording called out two priorities for incentives.
The first was low-GWP alternatives that focus on key cooling sectors where technology is commercially available.
The other would encourage the use of low-GWP alternatives in new technologies “for which higher upfront costs, compared with hydrofluorocarbon systems, have been identified by the state air resources board as a market impediment.”
Of special interest to contractors, the act’s language also requires “the professional installation and maintenance” of alternative refrigeration and a/c equipment in pursuit of the overall environmental goal.
Just as California has a reputation for getting out ahead of the rest of the country with environmental initiatives, it turns out that at least one part of California has already taken the initiative in establishing its own incentive program.
The Sacramento Municipal Utility District (www.smud.org) offers incentives for a range of energy-related applications and decisions. In the refrigeration category, SMUD encourages improvements in areas including high-efficiency chiller replacements, complete refrigeration subsystem replacements, refrigeration evaporator fan controls, and more.
The offers include 15 cents per kWh for energy reduction incentives and $200 per kw incentives on improvement related to demand reduction. The SMUD website reports that the total available incentive is limited to 50 percent of a project cost or $150,000, whichever is less.
If funding materializes for a statewide program and CARB needs to hash out particulars, it might consider how the state capital’s own energy district is fostering early adoption.
DROWNING IN LEAKS
In general discussion toward the end of the CARB meeting, leak avoidance and the need to raise its profile inspired a notable consensus, as participants spoke with a firmness the other subjects often did not afford.
Gallagher said CARB’s sense is that it would be extremely difficult to enforce a minimum/maximum leak rate, especially for air conditioning.
Most of air conditioning emissions come from end-of-life mismanagement and/or smaller environments like small businesses or households. The panel recognized it needs to find a way to add value so stakeholders properly handle refrigerants more consistently.
Walter-Terrinoni framed the problem: While 86 percent of GWP is used for refrigeration, air conditioning, and heat pumps globally, 60 percent of that 86 percent is used to top up leaking equipment, she said. She recognized that is a global estimate (via the UN Environment Program) but offered it to show the magnitude of the issue.
She cited halon as a good success story.
“Halon hasn’t been produced for decades,” Walter-Terrinoni said, “but there are still aircraft being built with halon because they’ve been so good [at reclaiming it].”
Emerson’s webinar noted the potential for improvement here, with its presenters highlighting California’s GreenChill program. They reported that the program’s supermarket participants had “drastically cut their leak rates, sometimes by more than half.”
Back in the CARB meeting room, the other aspects of rulemaking may have dominated the morning’s conversation, but Walter-Terrinoni summarized the importance of leak reduction to the board’s staff in plain terms.
“You all are not going to meet your goals unless we figure this thing out,” she said.
According to CARB, additional future technical stakeholder meetings will be followed by a draft regulatory text and the group’s continued economic analysis.
A formal Notice Package should follow this fall, with a follow-up board hearing on the horizon for December.
Until then, there is always room for more to change. California’s legislature could decide to allocate funds for its incentive program. Butsch told Emerson’s webinar attendees that an update on new EPA regulations should arrive by April.
Moreover, despite all the work going into implementing SNAP 20 and 21 in an intelligent fashion, Butsch predicted that adopting those regulations would still not yield enough emissions reductions to meet the state’s overall goal. She opined that California would need to adopt the measures in the Kigali amendment to get closer.
Finally, CARB and industry officials acknowledge and actually invite one other change agent during this process: professional input, especially regarding refrigerant leaks and/or from those in the Golden State.
Making a Federal Case Out of It
“Patchwork” has become almost a cliché in discussing refrigerant management in the U.S. with no federal policy in place. However, a scenario where each state passes its own variation on legal environmental responsibility will almost surely make the U.S. market a sort of nightmare for manufacturers.
The possibility is no picnic for contractors, either. Just ask Todd Washam, ACCA’s director of industry relations. Off the top of his head, Washam can reel off the uncertainties and difficulties that await the hypothetical “wild west” scenario, ignited by the presence of a new generation of refrigerants that are varying degrees of flammable.
“If [a comprehensive policy] doesn’t happen at the federal level, we don’t know who’s going to be able to buy these refrigerants. If the EPA doesn’t have control over it, that could mean the open sale of refrigerant.”
How will those products be stored when they are transported on a tractor trailer? Does the vehicle have to be retrofitted and/or vented? What about the warehouses where refrigerant is stored? Will the warehouse employees require hazmat certification?
“These are issues that the states have not addressed, and they have not shown any real interest in drafting [work to address them],” Washam said.
That doesn’t mean states are standing still. Nature abhors a vacuum, as the saying goes, and many are moving on the topic, albeit at their own speeds.
The U.S. Climate Alliance is a growing group of governors committed to taking action where the EPA has withdrawn as an authority regarding refrigerants.
Emerson’s Jennifer Butsch noted recently that the alliance now represents 49 percent of the U.S. population and 50 percent of its GDP. The current roster stands at 21 states, with four having joined since Feb. 1.
However, as Washam would point out, the devil is in the details. Those states are not committed to taking the identical action on the matter. Whatever they might do, that will leave at least a couple of dozen other states that have not signaled an interest in taking similar steps, with quite a few of them likely to never take such action.
Even the states whose governors are interested demonstrate differing abilities to dedicate staff and other resources to pursuing those goals in a substantive fashion, Washam said.
As for California itself, Washam estimates nearly 12,000 licensed HVAC contractors in the state. If each of them has 12 employees, he noted, then that yields 144,000 technicians who would need to be trained by 2023 on the handling, transportation, and use of whatever flammable or mildly flammable refrigerants are in play.
In that scenario, not everyone is going to be properly trained on it, Washam said.
“And they’re not going to have oversight of how the products are installed,” he added. “So you’re going to have accidents happen, and that’s when the costs will skyrocket — because there will be lawsuits and injuries. And then that’s when the insurance companies will start to take action.”
In the meantime, what is an association that is focused on ensuring “practitioners are positioned to comply with safe handling, installation, maintenance, and servicing” to do? Washam reported that ACCA is encouraging that wording for any potential draft legislation and offering advice on safety and training to manufacturers as they attempt to encourage that legislation. ACCA will be working otherwise to help Congress understand the seriousness of the assorted issues surrounding an HFC phaseout. ACCA can also use its QTech program to educate on the subject. The near-term goal in Washam’s view is for all of the HVAC trade associations to be lobbying for a good federal law that will override assorted state initiatives (or lack of initiative).
“We don’t care what refrigerants are used,” Washam noted. “We care that the industry is prepared for any refrigerants that are coming.”
Publication date: 4/1/2019