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NEXT Series: What policy changes will shape the refrigeration industry in 2016?

19 January 2016

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As leaders from business, politics and academia gather for the World Economic Forum in the Swiss resort of Davos (20-23 January), 2016 is expected to see several legislative developments relevant to natural refrigerants. Montreal Protocol discussions on a possible HFC phase-down will take centre stage internationally. In the US, California is expected to finalise its strategy to reduce emissions of HFCs, while other parts of the world will continue to look into measures to limit the use of these substances.
Although significant progress towards tackling HFC emissions at international level was made during 2015, the most crucial discussions on the details of an agreement that would gradually reduce consumption and production of these gases in both developed and developing countries is still to take place this year. Several Montreal Protocol meetings are planned within the next 12 months, with the first one taking place in April. Hopes are high that a deal will be reached to amend the Protocol to phase down HFCs at a key Meeting of the Parties in November.

Meanwhile, an annual assessment published by the World Economic Forum ahead of this week's gathering identified climate change as the world's biggest economic risk.

Failure to mitigate and adapt to climate change was cited as the risk with the greatest potential impact in 2016 in the survey of nearly 750 experts, who assessed 29 separate global dangers for both impact and likelihood over the next decade.

Naturals poised to take place of HFCs

Glenn Gallagher, an air pollution specialist at the California Air Resources Board (CARB), believes a global consensus on phasing down HFCs can be reached in 2016. “We expect an international agreement on the phase-down of hydrofluorocarbons (HFCs) is likely this year, through amendments to the existing Montreal Protocol that has worked so well to reduce the production – and therefore, the emission – of ozone-depleting substances. As the production of HFCs is phased down, natural refrigerants and lower-global warming potential synthetic refrigerants will have to take the place of HFCs.”

As countries prepare for major new international developments, they are not remaining idle at national level, but are seeking rather to advance their national policies in anticipation of global changes. R744.com outlines some of the key developments that are expected to have an impact on the heating, cooling and refrigeration industry in 2016 in selected regions.

US federal and state-level actions on HFCs…

Action under the US Environmental Protection Agency’s (EPA) Significant New Alternatives Policy (SNAP) Programme, which has the authority to approve the use of natural refrigerants in additional applications and to ban the use of high GWP HFCs in certain sectors, is foreseen to continue.

“We’ll use our expertise to identify and evaluate substitutes in the US to reduce hydrofluorocarbons (HFCs), another potent climate pollutant. This work domestically will help us lead global efforts to finalise a requirement in 2016 for countries to reduce production and use of HFCs under the Montreal Protocol,” said Gina McCarthy, administrator for the EPA.

"The SNAP already announced the de-listing of R507, R504 and HFC-134a, this will have a significant impact on the growth of natural refrigerants," told Marc-André Lesmerises, president of Canadian company Carnot Refrigeration to R744. 

…to create new opportunities for naturals

Industry expects the review of the Section 608 of the Clean Air Act to be another legislative change with a far-reaching impact on the refrigeration sector this year. The 2015 proposal foresees adding HFCs to the regulation and lowering the trigger rate for mandatory repairs from a 35% leak rate to 20% instead.

At state level, CARB is working on measures to limit the use of HFCs, with a strategy foreseen for completion before the end of this year. “While we expect and hope for a global HFC phase-down agreement under the Montreal Protocol, CARB is considering a California phasedown of HFC production and imports if no international or national agreement can be reached,” said Gallagher.

“We are also considering proposing bans on refrigerants with high-global warming potentials in new stationary refrigeration and stationary air-conditioning equipment. The actual GWP limits and start dates of the bans are still under consideration.”

The US presidential elections to be held in November 2016 will have an overarching impact on the refrigeration industry and will effectively determine the future position of the United States towards taking action to combat climate change – with Republican candidates likely to halt or significantly slow down progress in this direction.

As the US enters presidential election year, Clay Rohrer of Parker Hannifin said his company would be closely watching the US government and the US Environmental Protection Agency for any future policy changes.

2016 'year of delivery' on EU energy policy 

Maroš Šefčovič, a European Commission vice-president responsible for the Energy Union, declares that “2016 will be a year of delivery” on EU energy policy. Several key legislative dossiers are up for review this year, including targets for energy efficiency and renewable energy beyond 2020, as well as energy performance of buildings. Early this year, the Commission plans to unveil a Heating and Cooling Strategy that will outline the framework for updating relevant EU legislation and possibly trigger new directives.

The implementation of the EU F-Gas Regulation is underway following its entry into force at the beginning of last year. As of 2016, the HFC phase-down mechanism requires reducing HFCs placed on the EU market by 7%.

A report from the European Environment Agency (EEA), published in December (see R744.com 18/12/15), revealed a 90% increase of bulk imports of fluorinated gases between 2013-2014 compared to the previous 12 months as companies sought to stockpile HFCs before the HFC phase-down takes effect. Given that HFCs contained in pre-charged equipment will be included in the phase-down as of 2017, companies are expected to intensify their efforts to move away from f-gases in these technologies during 2016.

Besides the EU F-Gas Regulation, the long-awaited Eco-design Regulation for commercial refrigeration should be finalised this year, setting EU-wide mandatory minimum efficiency requirements for the technology for the first time. This regulation has been long awaited by the refrigeration industry, points out Marek Zgliczynski from Embraco: “The EU Eco-design Regulation is in delay for the commercial refrigeration sector. It is a very important piece of legislation still missing, considering the importance of indirect emissions.”

Meanwhile, under EU legislation governing mobile air-conditioning systems (the so-called MAC Directive), the use of fluorinated greenhouse gases with a GWP higher than 150 in all new vehicles put on the EU market will be totally banned from 1 January 2017. New vehicles with MAC systems using these gases will not be registered, sold, or able to enter into service in the EU.

Austrian company Obrist told R744.com that they expect this to have a positive impact on the natural refrigerant industry in 2016.

Australia to establish HFC phase-down in 2016

In 2015, Australia’s Federal Government formally announced its intention to phase down the use of HFCs. Environment Minister Greg Hunt stated that “Australia will fast-track work to reduce domestic HFC emissions by 85% by 2036”. An options paper released in October 2015 outlined possible ways for Australia to address the issue of HFCs, and industry views were collected to better evaluate the best path forward.

The final recommendations report for the government to consider is slated for publication in April 2016, with further industry consultations likely to take place in the meantime.

To read the first article in the NEXT Series focusing on the development of the natural refrigerants market in 2016, please click here.

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