As I am sure that all of you know when it comes to manufacturing refrigerant there are only a few players left in town. Sure there are some smaller companies scattered here and there across the country but for the most part when you are buying refrigerant it is coming from one of two companies: Honeywell or Chemours. (Formerly DuPont.) These two companies are household names because of their innovations and inventions but also because of their size. Honeywell’s revenue last year was thirty-nine billion dollars. Chemour’s net revenue last year was just shy of six billion dollars. (Don’t let that six billion number fool you though, Chemours was the DuPont company just a few years ago and we all know how big they are.)
There are other medium sized companies out there today that are still manufacturing refrigerants across the country and outside of the states. Now, I am not going to count the Chinese guys as half that stuff is counterfeit or not mixed correctly. Instead I am going to highlight two companies that you may have already heard of: MexiChem and Arkema. At this point in the game they are the only major competition against the two giants.
Mexichem and Arkema have been fighting the conglomerates Honeywell and Chemours tooth and nail on a variety of issues. I won’t get into everything but I will point out two major suits. They were the ones who started the anti-dumping law-suits against R-134a a few years ago. They were also the ones who filed suit against Honeywell and Chemours claiming that they were exhibiting anti-competitive behavior on their 1234YF product.
The Patent
We all knew that the timeline for HFC refrigerants was short lived due to their Global Warming Potential. We all knew that alternative refrigerants were being developed even before R-410A was being rolled out across the country. What I did not know until writing this article was that Honeywell patented their new HFO refrigerant that they developed in co-operation with DuPont/Chemours. Yes, that’s right. They patented HFO-1234YF and their other classes of HFO refrigerants. The patent details can be ready by clicking here.
What does that mean? Well folks, I am by no means an expert here when it comes to patent law but from what I can gather from the sources that I have read and gathered (Source list at bottom of the article.) is that only Honeywell or Chemours can manufacture HFO-1234YF. So, this new refrigerant that will be used all across the European Union next year and potentially throughout the United States in 2021 will be held in the hands of only two companies: Honeywell and Chemours. Fast forward five or ten years and it will be at the point that whenever an automobile develops a leak and needs more refrigerant it will be bought from either Chemours or Honeywell. Now that just doesn’t seem right now does it?
For those of you who haven’t bought 1234YF yet you will be in for a shock when you see the price. Right now it’s running around seven-hundred dollars for a ten pound cylinder. Heck, you can get a thirty-pound cylinder of R-22 for less. Maybe even a rusted cylinder of R-12. It makes you wonder. Is the cost this high due to the innovation and the hours spent in the lab creating this new class of refrigerant or is it an effort to keep profits up in between these two companies?
To top it all off Honeywell and Chemours are building each their own separate HFO-1234YF plants in the southern United States. Honeywell actually just opened their three-hundred million dollar plant in Geismar, Louisana. One state over in Texas the Chemours company broke ground in February of this year on their two-hundred and thirty million dollar plant. The Chemours facility is expected to go live at the end of 2018, although this may be delayed due to the hurricane Texas just went through. At least they are keeping their plants here in the States.
Arkema
While Mexichem was battling it out in the courts trying to get anti-dumping duties placed on R-134a Chinese imports Arkema was fighting Honeywell and Chemours on their patent and manufacturing rights of 1234YF. They originally filed suit with the European Commission stating that Honeywell has unfairly limited supplies and manufacturing of the refrigerant.
There isn’t a lot of news on this but this snippet I found is from October of 2014. I wanted to quote it to provide you with some context, “The European Commission announced Tuesday that it believes Honeywell International Inc. and E.I. DuPont de Nemours and Co. may have violated antitrust rules by allegedly limiting the production and development of a new environmentally friendly refrigerant used in car air-conditioning systems.” – Source.
Now I am not sure what happened to this initial feeling but I can tell you that nothing came of this. There was never an official ruling and the investigation is still ongoing but I believe it has stalled and nothing will come from it.
In June of this year Arkema filed another suit with the European Commission over Honeywell not allowing them to produce and manufacture 1234YF refrigerant. Arkema accused Honeywell of dominating the HFO-1234yf market and preventing fair competition. Since this suit was just filed there has been little news on the outcome or even rumors on what will happen.
Conclusion
Honeywell has invested nearly one-billion dollars into research, planning, constructing, and manufacturing 1234YF. Their plan, along with Chemours, is to dominate the market of automobile refrigerant in the European Union and soon in the United States. It seems that governments in the European Union and even here in the US have turned a blind eye towards this ever growing monopoly between these two companies. They are not concerned as the end game here is to stop Global Warming and to reduce the Global Warming Potential of automobile refrigerants. If it comes at the cost of having an even bigger conglomerate then so be it as long as Global Warming is slowed down. Take that as you will.
Like it or not 1234YF is the future for automobile refrigerants across the world. It has already been deemed so. The question is will there be enough competition to keep prices low or will auto shops be paying an arm and a leg just to get a few pounds of 1234? I can’t even imagine what the markup would be to the customer!
Remember folks, all Arkema wants to do is produce the refrigerant themselves but they cannot due to the constraints of the patent and Honeywell’s licensing. It’s that simple. Will the EU rule in favor? We will see. We will see.