After the past few weeks of various States announcing their plans to phase out HFC refrigerants and the expectation of more States to follow it got me thinking about how these changes will end up affecting the pricing of HFC refrigerants across the country. The worse thing that can happen is for us to fall into the trap that the European Union finds itself in. Over there the prices on various HFC refrigerants have gone up hundreds of percent. These huge rises in price have caused many basic refrigerants to be out of reach for consumers and contractors.
The high prices in Europe has also caused a rash of crime on refrigerants. The crimes vary from illegal smuggling, to using disposable containers, to selling refrigerant online without proper documentation, and to mass theft from warehouses. Each one of these crimes have occurred due to the high profit and reward due to the inflated prices.
The good news here folks is that with these State by State phase downs here in the US the chances of prices sky-rocketing here are reduced significantly. The problem that occurred in Europe was that there were mandatory production and import regulations put in place.
These regulations restricted the flow of refrigerant and caused the supply to shrink all the while keeping around the same demand. I understand the intention of these restrictions, but they have caused a lot of pain to end users and contractors. Most regulators in Europe have just told people to tough through it. After a few years of hardship most of the HFC applications will be replaced by HFOs or Natural Refrigerants.
The US Market
The United States did something similar when it came to popular HCFCs like R-22. With R-22 there was a staggered phase down over a ten year period. The restrictions began in 2010 and are coming to a head in 2020. (In 2020 no import or production can occur on R-22, the only exception is reclaimed R-22.)
As can be expected, we saw similar price hikes on R-22 due to these regulations. At it’s peak last year we were seeing prices for a thirty pound cylinder at around seven-hundred dollars. Today’s price is much lower at only around three-hundred dollars a cylinder, but it is still quite high when comparing to it’s HFC counterpart, R-410A, that comes in at only around one-hundred dollars.
With these State by State laws there is not mention of production or import caps. (Not that I have seen anyways.) Instead, these laws focus on the applications that these HFC refrigerants use. To me, this seems to be the smarter way to go about it. By targeting the applications and mandating the converting of new systems over to a more climate friendly refrigerant we will win the war on HFCs simply by attrition. After a certain amount of time has passed the demand for HFCs will shrink and shrink until they eventually disappear and are fully replaced by alternative refrigerants. All of this would be done without restricting the flow of refrigerants into the country/state.
This my friends, seems to be the way to do it. We are not hamstringing ourselves by restricting supply and causing prices to skyrocket. No, instead we wage our war against the new machines out there and reward those who want to retrofit their old systems. Basically, this all boils down to the carrot versus the stick. Do we want to give our contractors and manufacturers incentives and mandates on new systems, or do we want to just cut-off the supply entirely and let everyone scramble to figure it out?