The Argument Against the HFC Senate Bill S. 2754

As most of you know there is pending legislation within the United States Senate that aims to phase down HFC refrigerants across the country. It is titled the ‘S.2754 – American Innovation and Manufacturing Act of 2019.‘ I wrote about this when it was first introduced back in October of 2019.  This legislation is yet another attempt to push HFC refrigerants out of use in the United States. We’ve seen the EPA’s SNAP rules from 2015 get over turned. We’ve seen the Kigali Amendment stall. Will it be any surprise if this proposed bill stalls as well? I think not.

That being said it does appear that the bill is picking up steam within the Senate. I took a look at the bill today and noticed that it now has thirty-three Senators as cosponsors. While there are still many hurdles to get through it may be time to start taking it seriously. As I said earlier the bill aims to phase down HFC refrigerants across the country. This covers all of your popular refrigerants such as R-134a, R-32, R-125, and R-143a. (There are others as well, for a full listing visit the actual bill text.) It should be noted that while R-410A and R-404A are not mentioned their components are… and if the components are phased down then the blends will be too.

Just like with other phase downs the approach is staggered over multiple years. The aim is to reduce usage based off of the baseline usage quotas from January 1st, 2011 to December 31st, 2013. The timeline is rather generous giving nearly sixteen years to achieve their final phase down goal. The proposed timeline in this bill looks like this:

Date% of Production Baseline% of Consumption Baseline
2020–202390 percent90 percent
2024–202860 percent60 percent
2029–203330 percent30 percent
2034–203520 percent20 percent
2036 and thereafter15 percent15 percent.

What is pushing this bill though folks is not the timeline but the benefits. Yes, according to the bill if we move forward with this plan to phase down HFC refrigerants then the United States will see thirty-three-thousand new manufacturing jobs created, billions invested into innovation/research, and over twelve billion per year in positive trade balance. At first glance who wouldn’t vote for this? It seems like a ‘jobs’ bill. Since its introduction I have seen very little arguments against it. It has been mostly positive from the larger players within the industry so it definitely got my attention when I found a dissenting opinion that was submitted to the Senate.

The Argument Against

At this point the bill is still in the Senate Environment and Public Works committee and has not been pushed to the Senate for a vote. In an effort to gain more knowledge on the industry and the impact of the potential bill the Senate introduced an information gathering session between March 25th and ending on April 8th. This period allowed submission of written testimony from any parties. There was also a similar period for questions to be submitted that ended on April 15th another period for answers to be submitted to the committee by April 29th (Tomorrow).

It was during the first period we had mentioned, March 25th to April 8th, that we saw the submission of a written testimony from Dave Stevenson at the Caesar Rodney Institute. The testimony can be found by clicking here or by visiting our sources page at the bottom of this article. There are a few arguments that he presented. The first is the assumption that if we pass this bill then the United States will become a leader in refrigerant technology which will cause a trade balance surplus in the billions. But as he argues, since the year 2000 the trade imbalance has been growing. Each year the United States is importing more and more refrigerant and related equipment while our exports are only slightly growing. The majority of these imports are coming from Mexico and Canada with China and Korea not too far behind. So, what will stop this from continuing? How will this bill incentivize these companies to start manufacturing in America again? Will we really see the new jobs that the bill promises?

The other argument, and the biggest one, is the factor of cost. As we all know the cost of HFC refrigerants versus the cost of HFO refrigerants is dramatic. For a perfect example just look at R-134a versus R-1234yf. R-134a can be anywhere from three to five dollars a pound. 1234yf can be anywhere between fifty to seventy dollars a pound. In the best case scenario we are still looking at a nine-hundred percent increase in cost.

Who will be paying this extra cost? All of this will be an extra burden on businesses and eventually end user consumers. Again, going with the car example we could see standard air conditioned repairs see their price tag raised by over a one-hundred dollars all because of HFC versus HFO refrigerant. Now imagine this extra cost passed on all air conditioning and refrigeration equipment found in homes, offices, gas stations, grocery stores, and everywhere else. There will be a significant impact to businesses and end users.

Conclusion

I believe Mr. Stevenson makes some valid points here. When the bill was proposed back in October I was very skeptical of the thousands of jobs and the billions of dollars of increased revenue. It all seems like a pipe dream that is told so that we can finally phase down HFC refrigerants. It is difficult to say if the promises in this bill will hold true. That being said, I believe we do need a comprehensive HFC legislation passed at the Federal level. Otherwise we are going to have a smattering of various state regulations that all vary slightly from state to state. This will make business difficult and burdensome for manufacturers and contractors. Having one centralized policy across the country will make things much easier for everyone.

Thanks for reading,

Alec Johnson

RefrigerantHQ

Sources:

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