The EU & The Shortage of HFC Refrigerants

It seems that the European Union is always a few steps ahead when it comes to climate and environmental technology. I remember back when I was in the trucking industry. It was the year 2007 and it was a big year for the US market. All new trucks were required by law to have a Diesel Particulate Filter and along with that came Diesel Exhaust Fluid. This invention was an effort to reduce the pollution caused by semi-trucks going across our roads.

But here’s the thing though. While we here in the US were scrambling around trying to meet requirements our friends over in the EU had been dealing with DPFs and Diesel Exhaust Fluid for years. In fact if you look it up today some of the biggest suppliers of Diesel Exhaust Fluid here in the United States are European Companies.

The point that I’m trying to make here is that the EU is always a few steps ahead of us. If you ask me I prefer it this way. They get to be the guinea pigs and test all of these new technologies and new regulations out before they float across the ocean to us. In the latest example of this we can look no further then HFC refrigerants such as R-134a, R-404A, and R-410A.

There are two main measures in the EU that are aimed to phase out HFC refrigerants.

  1. The first, known as the MAC Directive, was aimed at R-134a and it’s usage in the automobile marketplace. This change stated that no new vehicles manufactured in 2017 and on could use refrigerant that have a Global Warming Potential (GWP) greater than one-hundred and fifty times that of Carbon Dioxide. That requirement alone ruled out the standard R-134a refrigerant that we find in most vehicles today. Car manufacturers were basically left with one choice as an alternative refrigerant which was the new HFO-1234yf refrigerant. It met the GWP requirements and was also being pushed by Honeywell and Chemours. This transition was bumpy and there was some resistance from German manufacturers but in the end it worked out.
  2. The second change is known as the F-Gas Regulation. Most of you familiar with the industry will know exactly what I am talking about. Instead of targeting automobiles this regulation went after everything else. That meant home air conditioners, supermarket coolers, industrial applications, and everything else in between. The new rule called for better and more proper leak detection methods, proper recovery, and additional training on working with HFCs.

That wasn’t the big change though folks. Another part of this regulation and the problem that everyone over there is running into is that this F-Gas Regulation actively limited the amount of HFC refrigerants allowed in the European Union. While this is normally how phase outs work the European Union grossly overestimated their ability to phase out HFC refrigerants. Because of this poor estimation the EU is now running into huge supply problems on HFC refrigerants. At some points last year you could NOT obtain a cylinder of R-404A or R-507A and if you were lucky enough to find one you were going to pay an arm and a leg.

Just over the last year there has been a seven-hundred percent increase on various HFC refrigerants such as R-134a, R-404A, and even R-410A. Let’s take a moment and really think about that number. Seven-hundred percent. Let’s say R-404A is at $100 a cylinder here in the US today. Times that by seven. Imagine what that would do to your bottom line. This price increase is tied directly to the F-Gas regulation and the related scheduled phase out of refrigerants. Some refrigerants were affected more than others. The worst off are your R-404A, R-507A, and now R-134a. Puron is climbing up there too and it’s only a matter of time before it becomes scarce as well.

This phase out is not going according to plan and there are many companies, groups, and organizations that are up in arms about it. These Draconian rules are destroying people’s businesses. In fact there are many groups of refrigerant companies and workers that have asked the EU for an exception to some of these rules. One group out of Germany stated that they are in favor of phasing out these refrigerants but an exception should be made to new units that are pre-charged with refrigerant and that are being exported out of the European Union.

Business wise it makes sense but I could also see the EU ruling against this stating that the new machine will still be using HFC refrigerant elsewhere in the world and will contribute to Global Warming. Another group from Sweden filed for an exemption or an extension claiming that they need more time to convert their systems to lower GWP refrigerants. How many exemptions will be granted? How bumpy will this phase out be?

Is the United States Next?

The question on everyone’s mind, or at least my mind, is what will happen here in the United States? In the short term I  could actually see this shortage helping to lower prices slightly. While there are still Fluorine supply issues in China that is causing the prices to stay high we should be thankful that the European Union’s demand is significantly lower than it has been in previous years.

As far as what will happen in the future I am just not certain. If you were to ask me a month or two ago I would have said that we may be running into this exact issue here in the United States due to the EPA’s phase out of HFCs under their SNAP Rule 20. But now, with the court overturning their rule and rejecting an appeal it is tough to know exactly what will happen to the United States’ HFC market.

There is a bill that was introduced to the Senate last week but it is still preliminary and no real work has been done to it yet. The only other chance of HFCs being phased out here in the US is the Kigali Amendment to the Montreal Protocol. But, here again, we are waiting for the Senate and Trump to ratify. At this point no one knows what will happen.

In closing all I can say as we watch prices go up and up this summer is be glad that you are not over in Europe and having to pay three or four times what you are paying here. Be thankful for the little things!