ICARHMA –EPEE Interactive Workshop...The ongoingrevisionprocess oftheF-Gas Regulation Art. 10 oftheF-Gas Regulation 842 / 2006: • By 4 July 2011, the Commission shall publish a

1

ICARHMA – EPEE Interactive Workshop

A short introduction to EPEE & ICARHMA

Andrea Voigt

EPEE Director General

Steve Yurek

Secretariat ICARHMA

AHRI President & CEO

Montreal Protocol Meeting, Bangkok,

25/07/2012 2

Introduction to EPEE

The European Partnership for Energy & theEnvironment

Andrea Voigt, Director General

Montreal Protocol Meeting,

Bangkok, 25/07/20123

The full value chain of the Refrigeration,

Air Conditioning and Heat Pump SectorA major part of the European RAC & HP industry

• > 200,000 employees in Europe

• > € 30 billion turnover in Europe


Bangkok, 25/07/20124

EPEE’s mission is to promote:

EnvironmentalCompliance

Safety

Affordability

EnergyEfficiency

5

EPEE’s three key priorites

• Energy Efficiency

– Ecodesign Directive

– Energy Efficiency Directive

– Eco Label and Energy

Label…

• Market Surveillance

– Raise awareness on the

importance of properly

enforcing and policing

legislation

• The F-Gas Regulation and

its revision

– Maintain and strengthen

the F-Gas Regulation

– Support a technically and

economically feasible

phase-down


Bangkok, 25/07/20126

Introduction to ICARHMA

International Council of Air-Conditioning, Refrigeration, and Heating

Manufacturers’ Associations

Steve Yurek , ICARHMA SecretariatMontreal Protocol Meeting,

Bangkok, 25/07/20127

ICARHMA

• Established 1991 – AHRI organized

• AHRI is the Secretariat

• Purpose

– Unite and strengthen the voice of global industry

– Focus on energy efficiency and environmental

stewardship

• Created as ICARMA but added heating in 2009

� ICARHMA


Bangkok, 25/07/20128

Members

• ABRAVA – Brazil

• AHRI – United States

• AREMA –Australia

• CRAA – China

• EPEE – Europe

• EUROVENT – Europe

• HRAI – Canada

• JRAIA – Japan

• KRAIA – Korea

• RAMA - India

What does ICARHMA do?

• Global strategy, advocacy and standards

activity

• Current main topics include:

– Climate Change

– Refrigerants

– Energy Efficiency (MEPS)

– Intellectual Property Rights

– Standards


Bangkok, 25/07/201210

Recent Activities

• Refrigerants and Responsible Use (2012)

• Comprehensive Responsible Refrigerant Use

(Update: 2010)

• Global Technician Training Guidelines

(Update: 2010)

• Responsible Equipment Management

(Update: 2010)


Bangkok, 25/07/201211

Part I:

Refrigerants and the global context

A global perspective on

refrigerant choice

Steve Yurek

Secretariat ICARHMA

President & CEO of the Air-Conditioning, Heating and

Refrigeration Institute (AHRI)


Bangkok, 25/07/201212

Refrigerants Are Vital

• Used in Air-conditioning,

– Vital for personal Health, Comfort, and Well-being

• Used in Refrigeration

– Prolong life of perishable food

– Keep life-saving medicines safe

• Improve

– Health, Productivity, and Safety


Bangkok, 25/07/201213

Things to discuss today:

• Evaluating refrigerant characteristics for informed choices

• Proper refrigerant handling

• Refrigerant Research

• Making transition predictable, smooth, and informed


25/07/201214

Goal:

Appropriate Successor Refrigerants

• No ozone depletion

• Low total global warming potential

(LCCP/TEWI)

– Direct

– Indirect

• Safe

• Economical


25/07/201215

Choosing a Refrigerant

• Cannot be based on one factor

• Must be based on an analysis of all factors:

– Safe

– Energy efficient

– Widely available

– Economical

• Will be different for different applications


25/07/201216

Law of Unintended Consequences

• Most economic sectors are inter-connected

• Policy makers need to be sure that:

– Policies do not reduce emissions in one sector

while increasing in another

– Low emissions should not be at expense of overall

efficiency

– Efficiency must be maximized in all situations


25/07/201217

ICARHMA Policy Statement

• Many factors go into decisions on refrigerants:

• Not just GWP but also: – Cost effectiveness for intended application

– Energy efficiency

– Safety

– Operating pressures

– Capital and operating costs

– Operating temperatures

• In addition, national, regional, and local laws


25/07/201218

Ammonia

Benefits

• Economical

• Low GWP

• Efficient

• Available


25/07/201219

Drawbacks

• Flammable

• Highly toxic

• Incompatible with

copper and copper

alloys

Hydrocarbons

Benefits:

• Efficient

• Low Toxicity

• Economical


25/07/201220

Drawbacks:

• Highly flammable

• Prohibited by some

building codes

CO2

Benefits

• Low GWP

• Economical

• Non-flammable


25/07/201221

Drawbacks

• Operates at higher

pressures

• Expensive

• Prone to leaks

R-32

Benefits:

• Lower GWP

• Economical


25/07/201222

Drawbacks:

• Slightly flammable

Planning for Phase-Down of High GWP

Refrigerants

• Business needs predictability

• Research into new generation of refrigerants

• Determining positives and negatives for

alternatives


25/07/201223

Barriers

to Use of Alternative Refrigerants

• Recently completed project summarizes barriers region-by-region

– CO2, Ammonia, Hydrocarbons, R-32, and HFO-1234yf

• Conclusion: Most would be restricted in Japan, U.S., EU.

• Not just technical barriers but also legislative and regulatory barriers


25/07/201224

Life Cycle Climate Performance (LCCP)

Model for HVACR Systems

• Established a standardized methodology to

calculate LCCP of HVACR Equipment

• Developed user-friendly Excel-based

simulation tool to perform LCCP calculations

for U.S. residential heat pumps

• Final report and tool available at:

http://www.ahrinet.org/technical+results.aspx.


25/07/201225

Low GWP Alternative

Refrigerant Evaluation Program

• Objectives

– Identify and evaluate promising

low-GWP alternative refrigerants

– Understand technical challenges,

avoid duplicative efforts, and

efficiently use industry resources

• Program started in March 2011


25/07/201226

Responsible Use

• Minimizing environmental releases– Contain refrigerants in secure or closed systems

and containers

– Train all personnel in proper handling techniques

– Ensure refrigerants are safely handled at the end

of their useful life:

• Recovery

• Recycle, reclaim, or destroy


25/07/201227

Be Ambassadors

of Information• We are producers and primary users

– We have knowledge and experience!

• We have a unique responsibility to help ensure

informed decisions

• Consumers depend on us to educate

policymakers so that products are as economical,

efficient, and environmentally sound as possible


25/07/201228

Summary• Different situation than when

transitioned from HCFCs to HFCs

• Still inventing alternatives

• Broadened our consideration to include refrigerants that were

disqualified before because they were toxic and/or flammable

• We have the time to do the necessary research

• But we must be serious and expend the resources

commensurate with the challenge

• We have a good record as an industry


25/07/201229

Climate action in Europe:

HFC phase-down and its impact on the heating and cooling industry

Andrea Voigt, Director General

The European Partnership for Energy and theEnvironment (EPEE)

Part II:

The impact of refrigerant policy on the regional level


Bangkok, 25/07/201230

Containment & recovery

• Preventive tightness checks

• Leak detection systems:

Record keeping (logbooks)

• Recovery, recycling or destruction

Training and certification

• Adequate training

• Mutual recognition in the EU

• Minimum requirements

Reporting obligations

• Applies to producers, importers

and exporters of quantities > 1to

• Member States to establish

reporting systems.

Labelling

• Chemical abbreviation of F-gas,

weight of the refrigerant

• Kyoto protocol-covered

• Where applicable: product is

hermetically sealed.

• Further information in the

manual (e.g. GWP)

The current EU F-Gas Regulation:

Four main pillarsThe F-Gas Regulation 842/2006

4 main pillars


25/07/201231

The ongoing revision process

of the F-Gas RegulationArt. 10 of the F-Gas Regulation 842 / 2006:

• By 4 July 2011, the Commission shall publish a report based on the experience of the application of this Regulation.

• Where necessary, the Commission shall present appropriate proposals for revision of the relevant provisions of this Regulation.

EU Commission report on the need for further action

Yes: Revision No: Revision

EU Commission Impact Assessment

EU Commission legislative proposal

• Öko-Recherche Report

• Stakeholders

• Öko-Institut Report

• Stakeholders


Bangkok, 25/07/201232

The outcome of the Commission report:

The F-Gas Regulation stabilises emissions

Further reduction is needed:

• Up to 70 Mtonnes of CO2eq

in all F-gas applications

• Drive transition towards

technologies with lower

GWP

– Phase-down

– Bans

– Voluntary agreements

• Improve containment and

recovery

• Improve monitoring

• Take into account latest

scientific information

-28%

-44%

-46%

-64%

BAU

F-Gas & MAC

Additional measures

Source: EU Commission report:

http://ec.europa.eu/clima/policies/f-gas/docs/report_en.pdf


Bangkok, 25/07/201233

The importance of flexibility:

Refrigerant choice is essential but complex

Size of

equipment

Application-Temp. Level

- Residential/ Industrial/

Commercial

Geographical

location

Performance

Low indirect

impact- Capacity

- Energy Efficiency

Health & Safety

considerations

Compatibility

with key

components

Low direct

environmental

impactCompliance with

relevant

regulations

34

The importance of a balanced approach:

No sacrifice on energy efficiency !

Two thirds

of total

GHG

emissions

in RAC

equipment

are due to

energy use

144 Mtonnes

CO2eq

335 Mtonnes

CO2eq

Direct

Emissions

Indirect

Emissions

Year 2010


Bangkok, 25/07/201235

Heat pumps are essential

to reach the EU 20-20-20 targets and beyond

Heat

Pumps

use

F-Gases

to run

safely and

efficiently

*Based on the same amount of heat delivered: 1300 TWh

0

50

100

150

200

250

300

350

Fossil fuel boilers Heat pumps

Indirect

emissions

from energy

use

Direct

refrigerant

emissions

-155Mt

Year 2030

Mto

nn

es

CO

2e

q e

mis

sio

ns

36

Why a phase-down?

Flexible, safe and cost-effective


Bangkok, 25/07/201237

Global context Reinforces

F-Gas Reg.

Energy

saving

Cost-

effective

Uptake of

renewables

Paves the

way

Sets the

path for a

global

phase-down

Stimulates

leakage

prevention

and

refrigerant

recovery

Permits the

use of the

most

efficient

refrigerant

Cost can be

spread over

time

Heat pumps

achieve

substantial

CO2 savings

vs. fossil fuel

boilers

Potential F-Gas

consumption

cut by up to

80% in 2050

Regulatory certainty

>70 Mtonnes of CO2eq HFC emission reduction potential in 2030

The need for reliable data:

Two studies

• French ERIE / ARMINES and British SKM Enviros

research institutes

• Refrigeration, Air-Conditioning and Heat Pump

Market: 80% of total F-Gas emissions

• Analysis of 7 main sectors , 43 subsectors and

14 alternatives to currently used refrigerants.


Bangkok, 25/07/201238

Three phase-down scenarios

• Scenario A:

Conservative view of current changes in the use of

refrigerants

• Scenario B:

Accelerated transition to lower GWP refrigerants in new

systems and improvements in emission rates created by

full implementation of the F-Gas Regulation.

• Scenario C:

Early, accelerated transition from very high GWP

refrigerants to lower GWP alternatives and widespread

use of mildly flammable refrigerants (not feasible today)


Bangkok, 25/07/201239

CONSUMPTION Reduction

Consumption

savings in 2030

vs. 2010:

Scenario A:

>60 Mtonnes CO2eq

Scenario B:

>120 Mtonnes CO2eq

Scenario C:

>150 Mtonnes CO2eq:

Not feasible today

Scenarios to be re-

assessed in 2020.

North American proposal

CFC,HCFC,HFC in the RAC sector

2010 baseline

-30%

-65%

A

B

C

40

EMISSION Reduction

0

20

40

60

80

100

120

140

160

Year 2010 Scenario A Scenario B

-73Mt

Mto

nn

es

CO

2e

q

Y 2030

41

Abatement costs vary substantially

depending on applications

-5 0 5 10 15 20 25 30

Transport Refrigeration

Mobile AC

Chillers & Hydronic Heat Pumps

Industrial Refrigeration

SAC and Heat Pumps

Scen.B vs. A, 2030, Average € / tonne CO2 eq abated

Domestic Refrigeration: - 157 € / tCO2 eq; Commercial Refrigeration still being assessed

€/

Mto

nn

eC

O2e

q a

ba

ted

42

Cost predictions are difficult:Technology maturation, new products

High capital, high

maintenance, low

efficiency

Mid-case values Low capital, low

maintenance, high

efficiency

Scen.B vs. A, 2030, Average € / tonne CO2 eq abated

Va

lue

s st

ill b

ein

gfi

na

lise

d

> 75%

43

Five main recommendations

1. A gradual phase-down approach offers

regulatory certainty

� Emission reduction potential of 70

Mtonnes CO2eq in 2030

� Time for innovation and adaptation of

technologies, standards, etc.

2. A realistic baseline of phase-down is

essential

� Market growth by 2010 needs to be taken

into account

3. Over-ambitious consumption reduction

targets will hinder emission reduction

� Today not feasible due to restricted use of

midly flammables

� Energy efficiency and uptake of heat

pumps will suffer

� Cost will accelerate44

4. Reducing emissions comes at a cost

� Maintaining and strengthening the F-Gas

Regulation is the most cost-effective

measure

� Combined with a phase-down, cost can be

spread over time

5. A re-assessment in 2020 is indispensable

� Monitoring of technology progress is

needed

� Building codes and standards may evolve


Bangkok, 25/07/2012

Part II:

The impact of refrigerant policy on the regional level

Australia’s Carbon Tax

Steve Anderson, Executive Director

Refrigerants Australia


Bangkok, 25/07/201245

Carbon Tax –

The shape of things to come

• Australia introduced a carbon tax on July 1

• Attracting international interest – ohter

governments watching closely

• Industry should also watch closely, and

critically monitor the outcomes


Bangkok, 25/07/201246

First the good news

• Just a tax- not an Emissions Trading Scheme

• Removes the volatility of carbon pricing- given

the relatively large size of the carbon price in

relation to the price of the product, this could

have been extremely destabilising

47Montreal Protocol Meeting,

Bangkok, 25/07/2012

Then the rest…

• A straight tax that will cost the industry

approximately $270 million in year 1

• Will apply to both bulk refrigerant and

charged equipment

• Typically add $32 a kg for R134a, $47 a kg to

R410a, $89 a kg to R404a

• HCFCs not affected


25/07/201248

But wait there’s more…

• Increases due to the tax alone are just part of

the picture

• The sheer size of the tax will generate

significant cost increases in areas such as

finance, insurance and compliance

• Then GST will be added to all these


25/07/201249

Who does it effect, and how?

• A lot more than ‘Australia’s 500 biggest

polluters’

• About 1400 licencees under Ozone Protection

and Synthetic Greenhouse Gas Legislation,

mostly small and medium sized enterprises


25/07/201250

How is it passed on?

• Only the importers of bulk HFCs and pre-charged equipment will pay the tax

• As it goes down to the next level it becomes part of the price of goods sold

• So from there, sales tax will also be payable on the increased price

• Fees commenced1 July 2012, rise by inflation plus 2.5% until 2016

• Then set at average carbon price for the previous year

• Floor price on carbon of $15 per tonne


25/07/201251

Impact will vary

across sectors and products

• Less than $20 on the price of a new car, costing $25,000 (<1%)

• Less than $100 on a good quality 7.4 kW split system retailing for $2,600 (<4%)

• Less than $150 on a good quality 14 kW ducted system, costing $12,000 (1%)

• But could create significant financial stress for importers, wholesalers and contractors - e.g. insurance, security, financing costs


25/07/201252

But significant impact

in some areas

• New equipment with large refrigerant charges,

where alternatives are available

• Refrigerant cost will be a more important

consideration, along with energy, in the

context of the total cost of the equipment

• But policy-makers have not attempted to

estimate any resultant emission reductions


25/07/201253

A ‘typical’ contractors van

• 22kg R404a increase of $1954

• 22kgs R407c increase of $443



• Total increase $4143


25/07/201254

International experience

US

• In the late eighties the US Government placed a

significant tax on CFCs, the theory being it would

drive consumers away from these products

• Was seen to have little effect, except to provide a

super-profit for CFC smugglers

• Will we see this here?

• The tax was not extended to HCFCs when these

substances were controlled


25/07/201255

Why a carbon price?

• Carbon pricing is intended to drive

behavioural change

• A price signal is supposed to lead to a

preference for low-carbon products

• But will it work with refrigerants?


25/07/201256

What will this achieve?

• There are no targets, no plan to measure the success or otherwise of the policy

• Requirements of the Regulation Impact Statement (RIS) essentially ignored- no consideration of alternative approaches, no cost benefit analysis

• Industry input largely ignored- one-size-fits-all approach

• Many possible perverse outcomes: smuggling, counterfeiting, undercharging, unsafe substitution, keeping inefficient equipment, poor servicing


25/07/201257

What does the future hold?

• Coalition government committed to rescind

carbon tax

• This will not be without its complications

• Industry remains committed to transition to

low-GWP refrigerants

• This will occur independently of the Australian

carbon tax


25/07/201258

Not learning from history

• A 25 year record of success with ozone

protection through the Montreal Protocol and

intelligent national end-use controls

• Good working relationships with government

provided certainty, minimal disruption, cost-

effective outcomes

• This success can be replicated moving to low-

GWP refrigerants


25/07/201259


25/07/201260

Thank you for your attention!

Contact information:


Bangkok, 25/07/201261

AHRI

www.ahrinet.org

[email protected]

EPEE

www.epeeglobal.org

[email protected]

Refrigerants Australia

www.refrigerantsaustralia.org

[email protected]

Documents

ICARHMA –EPEE Interactive Workshop...The ongoingrevisionprocess oftheF-Gas Regulation Art. 10 oftheF-Gas Regulation 842 / 2006: • By 4 July 2011, the Commission shall publish a