What’s going on with Freon – Part 2 – Today’s market

Posted by on Feb 17, 2012

A good question to possibly ask is, “why does this matter now?”. R-22 is available now, and we have until 2020 before the production stops. I guess the good news is that our industry has done a pretty job of changing over to R-410A and moving away from R-22. As a result, the demand for R-22 has actually been less than anticipated in the allocation plans. In 1986, producers of R-22 only utilized 86% of their allocations (source – acca.org). 

The EPA has to legislate these allocations. They have tried to reduce these allocations to not only comply with the law, but also to anticipate the market and demand. That being said, as of the 1st of January 2012, the EPA had not released their allocations for this year. So as of January 1st, the manufacturers of R-22 did not have the authority to produce or import and R-22 – production totally stopped.

If you remember from your high school economics courses, when supply goes down or stops and demand remains relatively constant, the price goes through the roof. As contractors, we saw an increase of almost 3x between December 2011 and January 2012. We also saw rationing – one of our suppliers will only sell 5 drums of R-22 per contractor per week.

On January 20th, the EPA set a letter to producers and importers of R-22 allowing them to resume the production and importing of R-22. But, they have not set final allocation numbers for this year. so, the market is still unsettled.

Over the last month, pricing has settled down a bit, but it is still 2-2 1/2 times the price in December. No one knows exactly where this will go moving forward and how much R-22 will be available for use this year.

The reason that we wanted to post this and give you the details is because a large majority of residential and commercial cooling systems still use R-22. And, while R-22 is not a consumable in the system, as your systems become older, they can begin to leak slowly which will require R-22 to be added.

Hopefully, this information will help you be able to make a good decision about whether to repair or replace a leaking system. Obviously, as R-22 wholesale pricing is up 2-3x, retail will be the same. We saw retail pricing of R-22 in the $80-$90 per pound range. And since a residential air conditioning unit may contain 5 pounds or more, it can get quite expensive to repair an R-22 system.

Next time, I will focus on more of the practical issues facing consumers and contractors this year. I will also discuss “dry-charge” R-22 units that have become available on the market – should you buy one or not?

As always, please feel free to call us at any time to discuss this or any other issues relating to your heating and cooling systems.

You’ll need cold cash to service your air conditioner

By Jim Weiker

Air-conditioner repairs could leave central Ohio homeowners hot and bothered this spring.

This winter, the cost of the refrigerant used in older air-conditioning units jumped more than 200 percent.

That means homeowners who used to pay $150 or $200 to recharge their air conditioners for the summer could pay twice that amount this time around.

“If you’ve got a leaker and need a couple pounds (of refrigerant) to get you through the summer, it’s going to cost you a whole lot more this summer than it has in the past,” said John Frary, service manager with the Favret Co., a Columbus heating and air-conditioning firm.

The price of R-22, the refrigerant used in many older air conditioners, skyrocketed on Jan. 20 after the U.S. Environmental Protection Agency ordered that manufacturers cut production of the material by 45 percent this year.

The wholesale price then “went off the charts,” said Rod Essig, with Carr Supply, a Columbus company that supplies the heating and air-conditioning industry.

The cost of a 30-pound tank instantly leapt from about $150 to about $400. Homeowners who traditionally have paid about $20 a pound during a service charge could now pay about $50 a pound.

The jump is so severe that at least one company, Sears Heating and Cooling in Columbus, might start charging by the ounce.

“We have customers who regularly ask us to add refrigerant every year because they have a small leak,” said Sears Heating owner Paul Schwerling. “But this will be so expensive by the pound.”

The EPA is phasing out R-22 by 2020 because it damages the ozone layer that protects Earth. Most air conditioners built in the past five years, and all air conditioners built in the past two, use a different refrigerant, called R-410A.

Still, an estimated 70 million — as much as 75 percent — of existing home air conditioners rely on R-22, according to industry sources.

January’s EPA announcement prompted such a run on R-22 that many distributors, including Carr, limited the amount that contractors could purchase. Distributors typically don’t stock a lot of R-22 until weather and demand heat up in the spring.

“We got caught with our pants down, along with many other distributors,” Essig said.

Some industry officials worry that air-conditioning contractors could end up without R-22 altogether this summer, although Talbot Gee, executive vice president of a trade group that represents heating and cooling suppliers, said he thinks there will be enough to meet demand.

Gee’s organization, Columbus-based Heating, Airconditioning & Refrigeration Distributors International, has joined others in an effort to raise R-22 production limits this year. Still, the long-term outlook on R-22 is clear: It will become more scarce and expensive until it vanishes altogether in eight years.

Manufacturers are promoting alternatives to R-22, although Gee said that using them could void warranties.

Industry officials think the rising cost to repair older air conditioners could fuel sales of new units, which can run $3,000 to $5,000.

“If you have a leak and need a refrigerant repair, it may be advantageous to upgrade your system because of cost,” Frary said.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

The Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants

Price of R-22 Air Conditioner Refrigerant Drastically Increases

Written by Jesse Muench

We are quite concerned about the recent drastic price increase of R-22 (also called Freon), a coolant used in many air conditioners, due to a regulation put into place by the Environmental Protection Agency (EPA) (http://www.epa.gov/ozone/title6/downloads/Homeowner.pdf) that will phase out the use of R-22 completely by the year 2020. R-22 has been shown to release Hydrochlorofluorocarbons (HCFC’s), which are harmful to the ozone, leading the EPA to gradually eliminate it.

Because of this phase out R-22 refrigerant will gradually be produced less and less, thus diminishing supplies and increasing costs of the coolant. The cost for Freon recently doubled, and is anticipated to eventually triple, placing a major burden on air conditioner owners. The recent spikes in price have put HVAC contractors in a state of frenzy. In the South where air conditioners are used more frequently many HVAC companies are buying as much R-22 as possible thus making it even scarcer and making the price even higher in the North.

If you own an air conditioner that uses R-22 there are two primary issues that will affect you. The first is that as time goes on it will become more and more expensive to add Freon to your air conditioner, and eventually it will be completely unavailable. The second issue is that theft of R-22 from your air conditioner becomes much more likely. As Freon becomes more and more scarce and the prices rise it will become much more valuable, and increase the incentive to steal it.

Most air conditioners 5-10 years or older use R-22. If you are uncertain of what type of refrigerant your air conditioning unit uses don’t hesitate to give us call and we can help you determine if this recent price shift will affect you. We are also available for any questions you have about this change or challenges it may present to you. Feel free to give us a call at 262-677-1037 for any of these questions or for more information. There is also a Frequently Asked Question section on the EPA’s website that can help you better understand what this all means for you. We will keep you updated of any major changes in this matter right here on our blog. Also be sure to watch the video attached below in which our owner Steve Holland briefly discusses what to expect with Freon and how it will affect you.

The information contained in this article have been written for the HVAC industry public or private and are not to copied, reproduced or plagiarized without the written consent of the author. News publications and trade organizations interested in using content contained in this blog/article can contact Steve Holland at Holland Home Services at the Contact Us section of this.

HARDI has recently filed comments on two issues which will undoubtedly have a great impact on HVACR distributors.

HARDI recently filed comments on the Environmental Protection Agency’s (EPA) proposed R-22 allocation rule for 2012-2014. While HARDI supports an orderly reduction of R-22 it was our view that significant market confusion resulted from both the delay in EPA beginning this rulemaking process and concerns and delays with EPA’s “non-enforcement letters” which allow companies to produce and import refrigerants while the rulemaking process is taking place.
 

Last week, HARDI submitted comments to the Department of Energy regarding possible enforcement proposals for the newly established regional efficiency standards for furnaces and air-conditioners. HARDI stated in its comments that while distributors will likely play an active and voluntarily role in communicating the new standards to contractors, the Department of Energy lacks the legal authority to include distributors in enforcement schemes. HARDI maintained that legislative language clearly outlines responsible entities for the energy efficiency of furnaces and air-conditioners and distributors are not a named party.
 

HARDI will continue to update membership on these important issues as developments occur.

EPA Proposes Faster R-22 Phaseout

By Peter Powell

 

How much HCFC-22 will be available to contractors in 2012 is an unanswered question as the Environmental Protection Agency (EPA) considers a faster phaseout of HCFCs.

 

The EPA began the year by issuing a 75-page proposal called Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export.

When and if the proposal takes effect, it would allow less virgin HCFCs to come to market than the previous phasedown announced on Jan. 1, 2010. The previous rule allocated 45.4 KT (100 million pounds) in 2011 and 40.7 KT (90 million pounds) of R-22 for 2012. In this latest proposed rule, the EPA could reduce the quantity available for production and import in 2012 to between 25.1 to 36.2 KT (55 million to 80 million pounds).

The latest proposal from EPA says that the phasedown will range from 11 to 47 percent per year beginning in 2012 and ending in 2014, which is in addition to the 10 percent annual reduction built into the previous rule.

A Proposal for Now

The proposal is just that — a proposal. Comments were invited through Feb. 3, but the EPA may not issue a final ruling until summer.

However, the delay in issuing solid production numbers has led to a period of confusion in the industry. For three weeks, production and importation was not allowed until the EPA issued a non-enforcement letter on Jan. 20 saying the agency would not fine producers as long as they do not exceed the amount of allowances outlined in the letter. The letter said producers and importers combined cannot exceed 55 million pounds for 2012, a 45 percent reduction from 2011, while the EPA finalizes the rule.

As producers resumed production, there were reports of price increases. At the same time R-22 manufacturers were looking at allocation options for their own wholesaler customers.

Richard Rowe, global group president for Arkema, said in late January that Arkema would strive “to serve existing customers with [the amount] of refrigerant they had used in the past for as long as possible during the phaseout of R-22.”

Lincoln Germain, global business director of heat transfer and fluorine products for Honeywell, also noted Honeywell’s focus on current customers and said, “We will not be accepting new customers.”

Jim Bachman, national sales and marketing manager for DuPont Refrigerants, said, “DuPont’s focus is on ensuring supply to our existing, loyal distributors and their downstream customers. Clearly, though, we feel it’s extremely important that industry participants focus on implementing plans to reduce their dependence on R-22 as soon as possible.”

All this factored into a comment from Jay Kestenbaum, senior vice president for product management at Airgas, who stressed the importance of those who deal with refrigerants to rely on “reliable, solid suppliers.” He noted the situation “is not new to our industry as we have seen similar situations during the phaseouts of CFCs, and more recently during shortage periods for HFC-134a in 2005, and just last year during the worldwide shortages of all HFC-125 based blends.”

Reasons for a Faster Phasedown

Those who have followed the issue closely point to several reasons that may be behind the EPA’s proposal to speed up the HCFC phasedown. These include the following:

• The EPA’s concern over a lack of adequate reclamation of R-22, whose reuse is not factored into virgin allocations.

• The agency is perhaps upset over the industry’s aggressive use of an allowance in the 2010 ruling that permits dry-shipping of R-22 components such as condensing units — this despite the fact that many in the industry have campaigned to have the EPA close the so-called loophole.

• The fact that the industry did not use its entire 2010 allocation of R-22 in part because of a sluggish economy and OEM focus on HFC refrigerants in new equipment.

The HFC Aspect

Another aspect of the equation is that nearly all refrigerant manufacturers capable of making virgin R-22 are also manufacturing a wide range of HFC refrigerants that can be retrofitted into R-22 systems — and those HFCs are not subject to any phasedown. Refrigerant manufacturers have been promoting wider use of such refrigerants for a number of years.

In fact, during the AHR Expo in late January in Chicago, a number of manufacturers referenced that.

For example, Gordon Mc-Kinney, vice president and CEO of ICOR International, said, “If HCFC pricing increases at the pace that many predict it will, refrigerant users and equipment owners will be quickly adjusting their own priorities. Many are already ahead of the curve and well acclimated to using R-22 alternatives.”

A statement from Honeywell said, “As R-22 supplies become more expensive and supplies tighten, many of our customers will be looking for alternatives to R-22 to retrofit into their systems.”

DuPont’s Bachman said, “It is critical to consider the impact of the R-22 supply reductions on your business and the benefits that R-22 replacement refrigerants can provide to equipment owners. HFCs offer a viable alternative to R-22.”

And all continued to urge contractors to make more use of the numerous refrigerant reclamation options in place, which allow recovered R-22 to be brought back to ARI-700 purity standards and reintroduced to the market without being counted as part of the virgin R-22 allocations.

Gauging Supply

With the industry currently assuming 55 million pounds — rather than the 90 million pounds anticipated — coming to market in 2012, the question of shortages is being brought up.

Honeywell’s Germain said in late January he anticipates “spot” shortages through 2012.

Jonathan Melchi, director of government affairs for the Heating, Airconditioning, and Refrigeration Distributors International (HARDI), a wholesaler trade association, said he did believe the market would tighten yet does not anticipate a large shortfall through 2012. He credited this to large supplies of R-22 currently being held by wholesalers and their customers, as well as a still sluggish economy.

DuPont’s Bachman said, “The reductions in the proposed rule are significant and major changes in business practices are necessary to avoid a supply shortfall.”

However the allocation situation plays out, there is general support for the willingness of the EPA to set up a timeline for continual phasedown through 2014, although there are differing views on what the percentages should be. And it was noted that even though the phaseout is being sped up, there still appears there will be some virgin R-22 available until the spigot is turned off in 2020, except for a 0.5 percent trickle continuing to 2030.

CO2 Projects on the Rise

By Peter Powell

 

No technology has been generating more attention in recent months than the use of R-744 (CO2) as a refrigerant. Throughout 2012, The NEWS and its exclusive refrigeration e-newsletter, FROSTlines, will publish reports and case histories on how R-744 is being used worldwide. Here are some of the latest announcements from a variety of sources.

 

Online Information

Danfoss has launched an online information portal that discusses CO2 as a refrigerant. It explains why the company considers CO2 among the most attractive refrigerants in industrial refrigeration and food retail applications and what kind of efficiency, safety, and environmental advantages can be achieved when using CO2 systems.

According to a report in the online publication R744.com, “There are a list of myths and assumptions as regards the use of CO2 as refrigerant that are only partly true or simply outdated. As a leading provider of solutions also for CO2 systems, Danish-based Danfoss has collected all these possibly misleading assumptions about CO2 to explain them in a comprehensible way. Myths such as the safety, efficiency, or costs of CO2 systems are discussed or overruled by case studies that prove the opposite.”

Heat Pumps

The South Korean companies Samsung and LG received government funding to develop CO2 heat pump water heaters. Samsung Electronics developed the prototype of the CO2 heat pump water heater, the Eco Cute, under the South Korean government’s project to support technological development of domestic companies. Samsung was subsequently chosen to develop medium- to large-size commercial CO2 heat pump water heaters, and LG Electronics was selected to develop smaller-sized residential units.

Transcritical in London

Harrods, the London department store, has installed a CO2 transcritical refrigeration system in its food hall. The existing HCFC-22 and HFC-404A refrigeration systems cooling the cold rooms and food cases have been replaced with a CO2 plant room using parallel compression technology. The plant room houses three HT/LT transcritical CO2 systems, each delivering 160 kW of cooling.

Transcritical Report

At the ATMOsphere Europe 2011 conference, Christoph Brouwers and Lothar Serwas from Carrier Commercial Refrigeration reported on the use of CO2 in direct expansion systems (DX).

They presented a case study from 2010 based on Carrier’s installation of approximately 150 stores with CO2OLtec™ transcritical systems in operation. These stores gained 18.5 MW of medium temperature refrigeration capacity. It was stated that the energy performance of these systems was mainly attractive at average annual temperatures of up to +15˚C.

Carrier also presented a study during the Chillventa 2010 Congress, maintaining that up to 19˚C, CO2 refrigeration systems would outperform other refrigerants. The same study concluded that CO2 systems would perform slightly better than other refrigerants between 20 and 26˚C.

In October 2011, Carrier put CO2OLtec TM direct expansion (DX) systems in some 300 stores. The systems offer 33 MW medium temperature refrigeration capacity with estimated emissions savings of 77,600 tons of CO2 equivalent emissions.

The report said, “Carrier is now working on overcoming the commonly referred to ‘CO2 equator’ which goes through Southern Europe along the northern shore of the Mediterranean, defining the efficiency limit CO2 systems compared to traditional HFC systems when assessed on a yearly average ambient temperature basis of maximum 15˚C.”

Oil Separator

The online publication R477.com reported that U.S.-based Temprite launched an addition to its 130 Series of coalescent oil separators for transcritical CO2 applications. The new 139A model is designed for high efficiency in larger R-744 refrigeration systems.

“The Temprite 130 Series is optimized for CO2 transcritical refrigeration applications and builds on the previous success of Temprite’s 920 and 920R Series coalescent oil separators, both extensively used in subcritical applications for many years,” the report said.

“The 130 Series utilizes the most efficient oil-refrigerant filtering/separation technology available. An efficient oil-gas separation technology becomes both more important and challenging when using CO2, as the refrigerant has a higher density than conventional refrigerants.

“Ambient outdoor temperature can also be troublesome for CO2 systems. Now, the manufacturer has developed the new 139A separator to bring maximum thermal efficiency especially to large CO2 refrigeration systems. With twice the separation capacity of the Model 137A, large-rack refrigeration users may find that one 139A will replace two 137A oil separators.”

Booster Compressor

In the Brazilian publication Engenharia e Arquitetura, Bitzer engineer Alessandro da Silva explained how working with very low evaporation temperatures multi-stage compression, such as in booster systems, can help to avoid high compression rates that can compromise compressor volumetric efficiency.

The report said, “The booster compressor is a single-stage compressor operating at the low-pressure stage of the cooling system with its discharge connected to the suction side of the high-pressure compressor. The two external pressure levels of the compressor system enable it to deliver refrigerated air to all refrigeration points in a system at the required temperatures. Booster systems can substantially reduce the rate of compression resulting in longer life of compressors and lower power consumption and are one of the most suitable systems for low temperatures. Booster systems can avoid some of the problems associated with single-stage compression systems.

“CO2 racks that include a booster system have compressor valve plates designed to ensure high rates of mass flow. The motors installed in the semi-hermetic CO2 compressors are larger than those in HCFC-22, HFC-404A, or HFC-507 systems, due to the need for greater capacity cooling.” However, the CO2 compressors are physically much smaller when compared with those for the previously mentioned f-gas systems.