Cost of Popular Home Air Conditioning Refrigerant Up 300 Percent in 2012

Federal EPA regulations limiting the production of R-22 refrigerant are increasing air conditioning repair and maintenance costs for home and business owners across the U.S. at a staggering rate.

June 12, 2012 (FPRC) -- Prices have begun to steadily rise for a common refrigerant used in many air conditioning systems due to federal regulations designed to encourage the use of a newer, greener alternative.

For the past forty years, R-22 has been the aerosol propellant of choice in residential air and heating systems. According to a recent report, however, its use in home systems is expected to rapidly fall over the next few years, bottoming out around ten percent of its historic use nationwide. As production and consumption costs for Freon increase, ac repair and maintenance costs for older residential systems that were designed to specifically use R-22 have increased more than 300 percent in 2012, alone.

In an effort to meet federal goals on overall carbon emissions, the Environmental Protection Agency tracks the allowable allocations of R-22 usage, and publishes the allocations of R-22 use on a yearly basis. This past January, however, the EPA did not release their allocations for allowable R-22 usage, making the manufacture or importation of additional R-22 illegal.

The complete in production has resulted in a spike in the price of R-22, causing homeowners to recoil in horror when their ac systems spring a leak or require recharging of the traditional propellant.

When breached for comment, Barry Andrews, president of Air National of Houston, LLC stated, "As a home air conditioning repair and service provider, I feel it is my responsibility to influence owners of older, leaking systems to consider replacing their units with newer units."

"Considering the rapid spike in prices, there's no way of predicting what prices are going to be down the road", Andrews added.

The rush to new installations isn't heralded by all, however, and some industry leaders are adopting a wait-and-see attitude towards the situation.

"We still don't know for sure what the EPA is planning", stated John Erwin, president of The National HVAC Convention. "There's every possibility that new allocations will be published and production will resume. We just don't know."

Limitations on R-22 production began as a result of The Montreal Protocol, an international treaty signed in 1987 that established requirements to encourage the worldwide phase-out of ozone depleting CFCs (chlorofluorocarbons). One of the provisions of the treaty require that nations enact regulations that would ultimately eliminate the use of R-22 by January 1, 2020.

Manufacturers of R-22 began halting production in 2010, so as to be in compliance with the U.S. EPAs Clean Air Act, which intends to limit the production of pollutants that emit greenhouse gasses as a byproduct. R-22 is one step more serious than that; it is itself classified as a greenhouse gas.

As an alternative, new systems are being designed to run on a more environmentally friendly propellant, R-410A. The newer refrigerant will not work in older systems, and requires a higher system pressure to produce effective propellant effects. In addition to being more eco-friendly, the newer refrigerant also promotes a financial incentive for homeowners because it is deemed more efficient than its obsolete counterpart, with some reports indicating an average of 40% reduction in home energy costs.

Critics of the phase-out plan argue that although R-410A does not contribute to the depletion of the ozone layer, the propellant is still a "blend" of CFCs, and as such, contributes to global warming just like it's older predecessor, R-22.

Another refrigerant on the list of acceptable propellants is R-407C, which at this time is only available to households outside of the U.S., and are commonly found in Europe.

The EPA has stated that it will continue to review newer, non-ozone-depleting air conditioning refrigerants as they are developed.

California Home Service Contract Association Reports: Value of Home Service Contracts Increases in Wake of EPA Proposal to Reduce Allowances of Freon(R)

VAN NUYS, Calif., May 17, 2012 (BUSINESS WIRE) -- As a steady increase in the price of a common air conditioning refrigerant prompts a spike in maintenance costs for homeowners across California and the nation, the California Home Service Contract Association (CHSCA) reports home service contracts are increasing in value.

On Jan. 1, 2010, the Environmental Protection Agency (EPA) placed a ban on the manufacture of new air conditioners using R-22, a refrigerant more commonly known as Freon(R), because of its ozone depleting effects. The use of R-22 was not banned, but allowances were dictated on its future manufacture and in order to service existing home air conditioners.

Then on Jan. 4 of this year, the EPA proposed a rule that, if adopted, would significantly reduce production and distribution of Freon(R) by as much as 50 percent. This has significantly increased, and in many cases, more than doubled the price of Freon(R) in recent weeks, according to the CHSCA.

"The majority of the time our industry repairs an existing air conditioning system, R-22 is involved in that repair," Jeff Powell, chairman of the CHSCA, said. "That means the cost of repairing air conditioners has gone up significantly. However, because home service contracts cover service and repair to existing systems, and providers have generally not increased the price of those contracts, the value to consumers has increased."

Home service contracts generally provide service, repair or replacement for items such as dishwashers, ovens, disposers, electrical and plumbing systems -- and most importantly, heating, ventilation and air conditioning systems. Many home service contract providers also offer a menu of optional items such as pool and spa equipment, well pumps, and free standing appliances such as refrigerators and clothing washers and dryers for an additional fee. Contracts do not cover pre-existing conditions, but provide service, repair or replacement for failures arising due to normal wear and tear during the contract period.

To learn more about home service contracts and providers in California, please visit http://www.homeservicecontract.org/california.htm .

About CHSCA
Members of the new CHSCA, which provide approximately 95 percent of all home service contracts in California, include 2-10 Home Buyers Warranty, American Home Shield Corporation, BPG Home Warranty, Fidelity National Home Warranty Company, First American Home Buyers Protection, HMS National/Cross Country Home Services, Inc., Home Security of America, Inc., Home Warranty of America, Inc. and Old Republic Home Protection Co., Inc.

About the National Home Service Contract Association
The NHSCA is a non-profit 501((C)) (6) industry trade organization of member companies serving home service contract providers and consumer interests throughout the United States. To learn more about the NHSCA and to find answers to the most common questions regarding the purchase of home service contracts, visit www.homeservicecontract.org .
SOURCE: California Home Service Contract Association

        
        For California Home Service Contract Association 
        Jeff Powell, 818-374-7477 
        Art Ansoorian, 805-653-1648

EPA freon policy raising prices, Lubbock A/C companies say

Consumers can reduce their costs by eventually replacing the old unit with a new one or keeping equipment repaired and leaky hoses fixed on older units.

Posted: May 3, 2012 - 5:52pm | Updated: May 4, 2012 - 12:30am

By Adam D. Younglubbockonline.com Copyright 2012 Lubbock Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. May 3, 2012 - 06:52pm

EPA freon policy raising prices, Lubbock A/C companies say

AVALANCHE-JOURNAL

A decades-old Environmental Protection Agency policy aimed at eventually phasing out R-22 freon in hopes of preventing damage to the planet’s ozone layer is making an impact on consumers’ pocketbooks this year.

But Lubbock air-conditioning technicians have tips for consumers to curb the costs as prices rise.
Yearly EPA benchmarks set to phase out all production of Hydrochlorofluorocarbon-22, also known as R-22 freon, in the United States by 2020 have hit supply and availability particularly hard in 2012, and Hub City air-conditioning companies say they’re having to pass the costs along to
consumers — sometimes raising the cost of a refill from $20- to $40-plus per pound.

With cooling systems requiring up to eight pounds and sometimes more, that could mean an extra $160 or more per service just for R-22, said Greg Welch, co-owner of Lellem Welch Plumbing Heating & AC.

“In the past, we had some customers’ units where it was cheaper for them to put a little bit of freon in to top it off, but that’s just not the case anymore,” Welch said.

Both Welch and his father, co-owner Richard Welch, said they and every air-conditioning service they know of have noticed R-22 wholesale prices jump by 200 percent or more.

“We absorb some of that, but we have to pass it along to the consumer,” Greg Welch said. The Welches said they’ve held their price down to twice last year’s cost for R-22.

Greg Skarda, owner of Master Tech Heating & Air Conditioning, estimated his cost for R-22 is up 230 percent over last year.

He blamed the price hike in part on the reduced production set by the EPA and partly on distributors selling 30-gallon barrels of R-22 in lesser quantities than in the past.

Skarda said distributors, once able to offer discounts by selling 30-gallon drums in pallets of 20 or more, now sell the drums two or four at a time.

Increased R-22 prices along with higher costs for commodities used in repairs, such as copper and silver in solder, also affect the price of air-conditioning repairs, Skarda said.

Since shortly after scientists in the 1980s discovered the Hydrochlorofluorocarbons of R-22 likely damage the planet’s ozone layer, the EPA has recommended substitutes such as R-410A, a blend of hydrofluorocarbons that does not contribute to depletion of the ozone layer, but, like R-22, potentially contribute to global warming as a greenhouse gas, according to the EPA.

Since 2005, R-22 consumption in the United States has fallen by more than half, from 107,258 metric tons in 2005 to 42,974 in 2010, according to a statement from EPA spokeswoman Catherine C. Milbourn.

Data for 2011 was not available.

Both the Welches and Skarda said they have not noticed a difference in effectiveness between R-22 and 410-A, but both said the price of the replacement has become considerably cheaper.

“The 410 used to be more expensive, but its price hasn’t increased where R-22 has,” Skarda said.
The Welches said consumers can reduce their long-term costs for air conditioning by selecting a cooling unit using a compound like 410-A, which costs about $25 per pound.

Since 2010, the EPA has banned the use of R-22 in new residential cooling units, though some new units still are available without the R-22 coolant in them at purchase.

The consumer is forced to pay the difference.

Along with eventually replacing a cooling unit, the EPA and service providers recommend consumers still operating older units using R-22 have leaky hoses fixed and equipment repaired, rather than topping off their tanks.

Both Richard Welch and Skarda recommended homeowners keep their units' compressors clean and change air filters once per month to improve efficiency and increase the cooling system’s lifespan.

To comment on this story:
adam.young@lubbockonline.com • 766-8725
leesha.faulkner@lubbockonline.com • 766-8706


Source: Amount of HCFC-22 consumption in the U.S. as reported to the United Nations between 2005-2010 provided by the EPA.

R-22 Refrigerant Shortage Anticipated

by Michael Garry
Apr. 9, 2012
 
MORRIS TOWNSHIP, N.J. — Because of a proposed revision late last year by the Environmental Protection Agency concerning the availability of R-22 refrigerant, “there’s a very good possibility the R-22 supply may not meet the demand,” said Ron Vogl, technical marketing manager for Honeywell Refrigerants here.

Vogl made those comments as the main presenter during a recent SN-hosted webinar, sponsored by Honeywell, on the R-22 phase-out and retrofitting refrigeration and air-conditioning systems.

As an ozone-depleting gas, R-22 has been subject to a federal phase-out that began in 2010 and will proceed through 2020. On Dec. 30, 2011, the EPA published a proposed rule that would remove an additional 30 million to 100 million pounds of R-22 from the marketplace between 2012 and 2014. The final EPA rule will be published later this year.

The EPA is projecting between 27 million and 43 million pounds of R-22 will be reclaimed by users in 2012 — not enough to meet demand, Vogl said. Supply concerns and price increases have “caused a little bit of angst” among retailers, he noted. “Supermarkets are aggressively looking to retrofit away from this refrigerant.”

In selecting a replacement refrigerant, Vogl pointed to several criteria: capacity, efficiency, mass flow, global warming potential, superheat and oil return. A new refrigerant must continue to be miscible with lubricant oil so that the oil can protect the compressor. “Lubricant selection is refrigerant/system/compressor specific and critical to a successful project,” he said.

Some supermarket chains going after efficiency are using the R-407 series refrigerants as a replacement, said Vogl. “If you reduce leaks and charge size in a conventional system using the 407 series, you get competitive from an environmental standpoint with some of the newer systems.”

R-22 Refrigerant Shortage Anticipated

Michael Garry

MORRIS TOWNSHIP, N.J. — Because of a proposed revision late last year by the Environmental Protection Agency concerning the availability of R-22 refrigerant, “there’s a very good possibility the R-22 supply may not meet the demand,” said Ron Vogl, technical marketing manager for Honeywell Refrigerants here.

Vogl made those comments as the main presenter today during an SN-hosted webinar, sponsored by Honeywell, on the R-22 phase-out and retrofitting refrigeration and air-conditioning systems.

As an ozone-depleting gas, R-22 has been subject to a federal phase-out that began in 2010 and will proceed through 2020. On Dec. 30, 2011, the EPA published a proposed rule that would remove an additional 30 million to 100 million pounds of R-22 from the marketplace between 2012 and 2014. The final EPA rule will be published later this year.

The EPA is projecting between 27 million and 43 million pounds of R-22 will be reclaimed by users in 2012 — not enough to meet demand, Vogl said. Supply concerns and price increases have “caused a little bit of angst” among retailers, he noted. “Supermarkets are aggressively looking to retrofit away from this refrigerant.”

In selecting a replacement refrigerant, Vogl pointed to several criteria: capacity, efficiency, mass flow, global warming potential, superheat and oil return.

EPA Expected to Reduce R-22 Refrigerant Allocation

Maintenance Insider

While the EPA is not expected to issue a final allocation determination until later this summer, R-22 allocations will likely be reduced between 11 percent and 47 percent from the previous level.

Property managers have recently received information from their service providers informing them that the supply of R-22 refrigerant is uncertain and prices have escalated sharply as a consequence.

NMHC’s Eileen Lee says that it has been implied that the Environmental Protection Agency (EPA) has accelerated the phase out of this refrigerant, thus causing the supply disruption. While EPA has temporarily reduced the allocation (the amount of R-22 that is able to be produced or imported), this is an interim measure based in part on the oversupply of R-22 in the marketplace. The final allocation levels of R-22 will be issued later this year, and supplies are expected to be available to meet demand.

Background: R-22 is a member of a class of ozone-destroying chemicals (HCFCs) that is regulated under an international agreement. As of 2010, manufacturers were prohibited from importing R-22 for use in new equipment and, after 2020, R-22 will no longer be permitted to be manufactured or imported. Only R-22 that is recycled from other sources will be available for servicing existing equipment.

EPA sets an allocation level for the amount of R-22 that can be produced or imported. EPA and equipment manufacturers expect that the phase-out timetable for R-22 will enable the servicing of existing equipment throughout its useful lifetime. EPA is not accelerating the phase-out schedule of R-22, Lee says.

However, last year, EPA found that there was an oversupply of R-22 in the marketplace. A trade organization representing the manufacturers and importers of R-22 supported these claims, and advocated for a 20 percent reduction in allocations (the amount able to be produced or imported) for 2012-2014. Additional information on R-22 is available at www.epa.gov/ozone/title6/phaseout/22phaseout.html.

Current Situation: In January, EPA issued an interim proposal that reduced allocations for the current period by 45 percent. This reduction caused concern within the air conditioning/ refrigeration service industry. While EPA is not expected to issue a final allocation determination until later this summer, R-22 allocations will likely be reduced between 11 percent and 47 percent from the previous level, Lee says.

Air-conditioning service providers did not anticipate the current supply disruption. NAA/NMHC have consulted with colleagues at the Air Conditioning Contractors Association for an explanation of the current marketplace situation. They have provided a memorandum at www.naahq.org/governmentaffairs.

Best Practices: See www.epa.gov/ozone/title6/phaseout/22phaseout.html for the description of the preferred common-sense approach at a technician level. It will help to properly diagnose a problem with an air-conditioning system and repair the system to maintain the smallest amount of R-22 possible. “When it is time to replace the system, recover the R-22 in such a way as it can be reused onsite to reduce the amount of R-22 needed to be purchased. This type of response ensures the smallest financial impact on the community regardless of the supply and price of R-22 in the future,” says Paul Rhodes, National Safety & Maintenance Instructor, NAA Education Institute.

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.

EPA mandate heats up freon prices

by Ryan Naquin

You may be singing the summertime blues the next time your air conditioner runs out of freon. An EPA mandate is pushing up the costs for air conditioning units made before 2010.

The freon used in air conditioners is called r-22, and it's expected to more than double in price.

Verlon Wulf, a local repairman, has worked with air conditioners for more than 25 years. He says the majority of the work he does during the summer months is on one thing.

"We get a lot of calls where they have a leak and something is going on, when we do have to get out there and add some refrigerants to it, and of course most of that is for r-22," says Wulf.

Unfortunately, r-22 is about to get more expensive.

"Before, if you wanted to add some r-22 it was probably about $20 a pound something like that, now it's up closer to$45 to $50 a pound."

The price will now increase due to an Environmental Protection Agency mandate that forced a change in all A/C units built at the beginning of 2010. Those units take r-4-10-A freon, which is better for the environment.

"The new refrigerants, because of the mix and the blend that they are, dissipate a whole lot quicker so when it does leak out into the atmosphere it does a lot less damage," adds Wulf.

The EPA mandate also forced manufacturers to cut back on the production of r-22 freon, which makes the price go up because inventory is down.

The newer freon is still about $20 a pound. The average air conditioner holds between five and ten pounds.

The EPA mandate also phases out the production of r-22 freon by 2020.

What’s Going on with R-22

By Charlie McCrudden | January 30, 2012
Recent actions by the U.S. Environmental Protection Agency (EPA) regarding HCFCs have led to uncertainty about the availability of R-22 in the coming months and years. In response, contractors have noticed a ramp-up in the chatter about R-22 and price changes as some manufacturers and importers have amended their sales policies.

This situation is the culmination of several factors, including the continued implementation of the federal government’s policies regarding HCFCs, current market conditions, and delays in the regulatory process.

As most contractors know, the EPA controls the production of HCFCs, including the refrigerant known as R-22, through allowances that limit how much each gas manufacturer and importer can produce or import in a given year. Under the implementation of the Montreal Protocol, the production and use of R-22 is slowly being phased out.

In August 2011, the EPA proposed to adjust the allocations in place for the years 2012-2014. This adjustment was necessary because of a lawsuit filed by two HCFC producers who had completed a legal trade of allocations that EPA had failed to recognize in its allocations released in 2009.

EPA consulted with industry stakeholders before proposing to reduce the annual allocations. In gathering information used to develop the August 2011 allocation adjustment, EPA found that there was an oversupply of R-22 in the marketplace, partly evident by a lack of demand, increased reuse of R-22, and low wholesale prices. In fact, in 2010, producers of R-22 only utilized 86% of their allocations. A trade organization representing the manufacturers and importers of R-22 supported these claims, and advocated for a 20% reduction in allocations for 2012-2014.

By the end of 2011, EPA had yet to finalize its adjustment proposal for the 2012-2014 allocations. But EPA did release a subsequent version of the August 2011 adjustment proposal on December 30, 2011, one that proposed to reduce the allocations for 2012-2014 between 11-47%.

Without a finalized adjustment rule, the producers and importers of R-22 were stuck in a legal limbo – on January 1, 2012, they did not have the authority to manufacture or import R-22. Recognizing this problem, on January 20, 2012, EPA sent “non-enforcement” letters to the producers and importers of R-22, alerting them that they could resume the manufacture and import of R-22 in the interim even though EPA had yet to set the new allocation amounts. The non-enforcement letter advised that production would be curtailed by 45% of their last allocation amount, the high end of the allocation adjustment proposal.

It is expected that the EPA adjustment proposal will take at least until the summer of 2012 to be completed. The end result could be a reduction in R-22 allocations somewhere between 11-47%, meaning it is likely the final adjustment proposal will be less than the interim 45% reduction and that more R-22 may be produced or imported.

ACCA has been following this issue to provide contractors with the most up-to-date and precise information available. We will continue to monitor the allocation adjustment rulemaking process and alert members of any progress or actions taken by EPA.

UPDATE: February 2, 2012

The last two weeks have been like no other in the industry.

As a follow-up to the regulatory alert posted last week, I thought I would try to give some further background on what’s driving the uncertainty in the R-22 marketplace.

Two factors make the R-22 market different from a typical open and competitive marketplace where the rules of supply and demand govern.

First, as everyone knows, the use of R-22 is slowly, but actively being phased out by the EPA under the Montreal Protocol. About every five years, the manufacture and import of R-22 is stepped down under a program http://www.epa.gov/ozone/title6/phaseout/hcfc.html designed to phase out the production and use by 2030.

Second, under the phase down, the production and import of R-22 marketplace is tightly controlled through production and consumption allocations granted by the EPA, typically on a five year basis.
In regulating the marketplace and setting the production and import allocations, EPA is making certain assumptions about how much R-22 will be necessary for servicing needs going forward. (Remember that as of 2010, newly manufactured R-22 cannot be used in newly manufactured appliances, only servicing existing equipment.)

During the phase down, EPA has repeatedly tried to make clear that it wants to oversee a smooth transition away from the HCFCs. That’s partly the reason for the allowing the continued manufacture of dry charged R-22 condensing units.

As part of that transition, EPA wants to promote recovery and reclamation of R-22 for continued servicing needs, but also encourage changeover to non-ozone depleting substance alternatives, refrigerants like 410A.

It’s impossible to predict exactly where EPA will decide to set the allocation amounts for 2012-2014. As noted in the regulatory alert, the earliest their decision will come out is this summer. Until then you can expect to see more uncertainty about price and availability.

Charlie McCrudden is ACCA Vice President for Government Relations.

R-22 Update

Friday, January 27, 2012

There has been much recent discussion regarding the market for HCFC-22 in 2012, as the EPA works to finalize its allocation and production rights for 2012-2014. Here are some basic facts HARDI wanted to communicate to our membership.

1.) There is an ongoing EPA rulemaking concerning the allocation of refrigerants, including R-22 for 2012-2014. The EPA has suggested a reduction of allocation rights of R-22 between 11% and 47% in each year (2012-2014). EPA’s proposed reduction was not unexpected.

2.) While the rulemaking process is underway, it is illegal for a company to produce or import refrigerant into the United States. The EPA therefore must send out a “non-enforcement” letter, which allows companies to legally produce or import refrigerant. This letter was expected by many companies to arrive the first week of January; however it was delayed until Friday, January 20. Thereby 15 work days had passed where no refrigeration production or importation occurred.

3.) The EPA's "non-enforcement" letter called for a 17% reduction from the original R-22 baseline, or a 45% reduction off of the 2011 allocation. In 2011 the total R-22 allocation was approximately 100 million pounds. Currently manufacturers and producers are operating under guidance that only 55 million pounds will be approved in 2012. If the finalized rule calls for less than a 45% reduction, a manufacturer/producer could produce and import up to their allocated amount.

4.) From 2005-2010 (2011 data is not yet available), only 77% of Consumption Allowances for HCFC-22 were used. These figures along with comment from stakeholders to the EPA, regarding the oversupply of R-22 in the marketplace, have led EPA to consider a more aggressive phasedown.

5.) In 2011, EPA sought comment from the Alliance for Responsible Atmospheric Policy, of which HARDI and all major refrigerant producers are members, regarding a suggestion for a more aggressive reduction in R-22. The Alliance formally submitted a suggestion for a 20% reduction in Consumption Allowances.

The EPA Works to Finalize its Allocation and Production Rights for HCFC-22 for 2012-2014

There has been much recent discussion regarding the market for HCFC-22 in 2012, as the EPA works to finalize its allocation and production rights for 2012-2014. Here are some basic facts HARDI wanted to communicate to our membership.
 

1.)    There is an ongoing EPA rulemaking concerning the allocation of refrigerants, including R-22 for 2012-2014. The EPA has suggested a reduction of allocation rights of R-22 between 11% and 47% in each year (2012-2014), in addition to the annual 10% reduction each of those years set by the 2009 Allocation Rule. EPA’s proposed reduction was not unexpected, and is supported by some industry stakeholders.

2.)    Since the current rule is not final, it is illegal for a company with 2011 allocation rights to produce or imports HCFCs into the United States until receipt of a “non-enforcement” letter from EPA which was expected by many companies to arrive the first week of January; however this letter was delayed until Friday, January 20. Thereby, 15 work days had passed where no refrigerant production or importation occurred.

3.)    In this “non-enforcement” letter, EPA stated that production and importation should be limited to approximately 17% of a company's 2011 baseline until the rulemaking is complete. If, when the rulemaking is completed, the final reduction is less than 17% of the 2011 baseline, a company will be allowed to increase production and importation to their allocated limits. HARDI does not expect this rulemaking to be completed by the beginning of summer.

4.)    From 2005-2010 (2011 data is not yet available), only 77% of Consumption Allowances for HCFC-22 were used. These figures along with comment from stakeholders to the EPA, regarding the oversupply of R-22 in the marketplace and concerns of stockpiling, have led EPA to consider a more aggressive phasedown.

5.)    In 2011, EPA sought comment from the Alliance for Responsible Atmospheric Policy, of which HARDI and all major refrigerant producers are members, regarding a suggestion for a more aggressive reduction in R-22. The Alliance formally submitted a suggestion for a 20% reduction in Consumption Allowances.   

HARDI’s Refrigerants & Refrigeration Council is currently accepting member comments on what the annual reduction should be in this rule. 

EPA Approves Latest Refrigerant Substitutes

The U.S. Environmental Protection Agency (EPA) last month added three hydrocarbons as acceptable alternatives in household and small commercial refrigerators and freezers through the agency’s Significant New Alternatives Policy (SNAP) program.

By Anne Vazquez, on January 13, 2012, at 11:18 am

The three substitutes, for use in small commercial and refrigerators and freezers (and their household counterparts), mark the first time hydrocarbon replacements might be widely used in the U.S. The refrigerants approved as acceptable substitutes, with use conditions, are propane, isobutane, and a chemical known as R-441A.

EPA took action after requests from Ben and Jerry’s and General Electric, as well as A.S. Trust & Holdings, and True Manufacturing, a family owned small business. SNAP is globally recognized as the only program designed specifically to evaluate substitutes for ODS and to focus on the industrial sectors that use them.

“[This] is a great example of how businesses and EPA can work together to protect our planet and drive innovation,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “This action increases the options for effective, climate friendly refrigerants in the U.S.”

Under the Clean Air Act, the SNAP program evaluates substitute chemicals and technologies for ozone depleting substances (ODS). The newly approved refrigerants (propane, isobutane, and R-441A) can be used to replace ozone depleting chlorofluorocarbon (CFC)-12 and hydrochlorofluorocarbon (HCFC)-22 in household refrigerators, freezers, combination refrigerator-freezers, and commercial standalone units.

Replacing older refrigerants will reduce greenhouse gas emissions by an estimated 600,000 metric tons by 2020, equal to the emissions from the annual electricity use of nearly 75,000 homes, and will help protect people’s health and the environment.

At the recent 23rd Meeting of the Montreal Protocol Parties, EPA and the U.S. Department of State announced that 108 countries signed a declaration to address hydrofluorocarbons (HFCs). While HFCs are ODS substitutes, they are increasingly contributing to climate change. The approval of hydrocarbons in the U.S. is significant because hydrocarbons are more environmentally friendly substitutes than HFCs.

The Alliance for Responsible Atmospheric Policy's Response to the EPA's Allocation of HCFC 22