Seeing these A2L units in the field was a stark reminder that the refrigerant transition is also well underway in the U.S., and similar to the situation in Europe, many are ill-prepared.

To recap, the AIM Act was passed in December 2020 and calls for phasing down HFCs such as R-410A by 85% by 2036. We experienced the initial reduction of HFC production last year, which amounted to only 10%. However, next year will bring an additional 30% cut, which is expected to have a significant -- and painful -- impact on the HVACR industry.

Some contractors are already reporting a substantial rise in refrigerant prices, which aligns with expectations under this kind of regulatory framework: when access to the supply is restricted and demand remains high, price increases are inevitable. Numerous experts are predicting that the phasedown of refrigerants, including R-410A, could result in price hikes in the U.S. of 600% or more in the upcoming years.

The underlying concept is to motivate companies to shift away from high-GWP refrigerants and embrace lower-GWP alternatives, such as A2Ls. By creating the motivation, the U.S. hopes to avoid the chaos that occurred in Europe when it started phasing down HFC refrigerants several years ago.

In Europe, the HFC supply was reduced by nearly 40% in 2018, causing refrigerant prices to soar by as much as 1000%. While the phasedown schedule was aggressive, there was also an absence of demand-side regulations, so end users were not informed or directed to switch their refrigerants or HVAC equipment, resulting in a lack of readiness and leaving them to navigate the transition on their own.

The effects of that chaotic transition are still reverberating throughout Europe, and they’re the reason why the AIM Act approaches the phasedown in a very different way. In the U.S., EPA is using sector-based controls to phase down the production and consumption of HFCs in a more targeted and efficient manner. EPA is hoping that this will facilitate a gradual and orderly transition away from HFCs.

But I am genuinely concerned that contractors may not be giving enough attention to next year’s steep reduction in HFC production. During recent interviews, many have expressed greater worry about supply chain challenges and the shortage of labor; however, there is a potential for refrigerant shortages as soon as January 2024. And despite the AIM Act requiring EPA to establish a comprehensive reclamation program, the final rule is still in progress.

In the meantime, not enough refrigerant is being recovered and reclaimed to make up for the virgin production cut. In fact, since 2017, the overall reclamation rate of HFCs has increased only 6%, and just 1.6% of the HFCs that were sold in 2020 were placed back on the market through reclamation. That’s definitely not enough, because as supplies of virgin refrigerant dwindle, EPA is counting on the availability of reclaimed refrigerant to service existing equipment in future years.

And remember that EPA is also proposing a ban on R-410A in new HVAC equipment, starting in 2025, which is only 18 months away. Not all manufacturers will have A2L equipment ready to go early next year, and some states may not have updated their building codes to allow their installation anyway. These issues, combined with the increasing difficulty and expense of finding R-410A to service existing equipment, mean 2024 will likely be a very interesting year.