I read an article earlier this week on counterfeit 1234yf refrigerant being caught at a port in Poland. This refrigerant was no doubt bound for the Western European market. Polish authorities, in co-ordination with Honeywell, seized the counterfeit shipment and had it destroyed at the purchaser’s expense. As most of you know R-134a was phased out entirely in new vehicles within the European Union. While there was not a specific refrigerant chosen as a replacement most of the market moved towards this new HFO known as R-1234yf. It had a low Global Warming Potential, it had no Ozone Depletion Potential, and it was only slightly flammable. It seemed like the perfect solution.
This was great news to the big refrigerant manufacturers Honeywell and Chemours (DuPont). These two companies hold patents on 1234yf. This patent is not expiring anytime soon. In essence, these two companies have a monopoly on the automotive market within the European Union. There is an alternative refrigerant, CO2/R-744, that was developed by the German company Daimler… but it is still in it’s infancy stages and is not widely used in new models yet.
After writing this article I was informed that I was mistaken when it comes to the patents on 1234yf. There are various patents that are held on 1234yf and they fall into two categories. The first is known as the process patent and the other is known as the application patent.
The process patent is a patent on the recipe that is used to create HFO 1234yf. Honeywell holds a patent here, but there are other ways to create 1234yf. So, outside companies can produce 1234yf legally and hopefully come in at a competitive price point.
The application patents are just that. They are patents on the certain applications that 1234yf can be used in. Honeywell for example holds patents using 1234yf in automotive applications. So, while other companies can produce 1234yf we are still at a bottleneck with the application patents. The good news is that these may expire earlier then the 2030 date that I had mentioned earlier.
The price on R-1234yf is a whole other story. Typically, you could get a pound of R-134a for around three-dollars. This is what folks were used to and what they expected to pay if they needed an air conditioning repair. R-1234yf however is in a whole other ballpark. Your typical price per pound on this product could range from fifty to seventy dollars a pound. That is nearly a two-thousand percent increase in price to businesses and customers.
So, now let’s look at this critically. We have a very high priced product, a product that is produced by a select few companies, and it is a product that EVERY vehicle within the European Union needs. I’m sorry folks, but these three points means that this is a prime candidate for counterfeit or fraudulent product to hit the market. This is just human nature. Yeah, there is a risk if these folks get caught but there is also a huge reward: profit. Think if this counterfeit product hits the market at twenty percent less then the genuine Honeywell/Chemours product. Customer gets a significant savings and the business behind it makes a killing.
In order to stop this fraudulent product Honeywell has been working with various governments within the European Union and even with China. There was a publicized incident last year in the Czech Republic where fraudulent 1234yf was found at a port. The year before Honeywell and the Chinese government prosecuted a person involved in the production and sale of counterfeit 1234yf. This individual received nine months in jail. There was another incident reported by the CoolingPost last month. This time a shipment was seized at a Polish port.
Most of this product either comes in to a Eastern European country’s port or it travels by road from China, into Turkey, into Bulgaria, and then to whatever western country they wish. Just like with previous counterfeit refrigerant, the product is coming from China. These are most likely the same guys who were producing counterfeit R-22 a few years back when R-22’s price had hit record highs. It was also the Chinese that was found to be violating the Montreal Protocol by still widely producing and using R-11. It is not a surprise that they are diving into the fraudulent HFO market.
Honeywell states that they are going after these fraudulent 1234yf products to protect consumers and to protect their equipment. They may very well have the interests of protecting consumers but, in my opinion, all this is is Honeywell protecting their monopoly and aggressively going after anyone tries to infringe on their market. Whatever their motivations are they are going to have one hell of a game of whack-a-mole on their hands. The Chinese have been very lackadaisical when it comes to enforcing regulations and preventing illegal products from being manufactured and sold. For every company that Honeywell goes after another one will pop right back up.
Who knows folks, maybe this product is one-hundred percent clean and is made to the same specifications that Honeywell/Chemours have set forward. Even if it was though it would still be targeted and destroyed for patent infringement. I won’t make a lot of friends by saying this, but I am not a fan of this monopoly. No two companies should control the entire automotive refrigerant market.
While we haven’t felt the pressure of this high priced HFO product here in the United States I can assure you folks that it is coming and it is coming sooner then you think. Earlier this year I did an article on the number of cars using 1234yf. The numbers were staggering. In 2019 nearly sixty percent of new vehicles use R-1234yf. In just a few years that number is expected to climb to ninety percent. R-134a is being phased out here in the United States as well and the only real alternative at this time is 1234yf.
This trend only really started to hit US automotive manufacturers back in 2015. Most automotive companies state that it takes an average of five to six years for a vehicle to need an HVAC repair. Next year is when we may really start to see that sticker shock when folks begin bringing in their vehicles for an air conditioning repair. We could have a simple compressor replacement and recharge price increase by hundreds of dollars.
Don’t get me wrong folks, I am not advocating for any illegal product. Frankly, it is not safe and you never truly know what you are getting. That being said, there definitely needs to be more competition introduced into the 1234yf marketplace.