How to handle uncertainty in the R22 market.
There are many things I’d like to tell you about the 2013 AHR Expo held in Dallas in late January, but the message about refrigerants is so urgent that it pre-empts my regular show coverage (which will follow in the April issue of Supply House Times).
The bizarre world of EPA regulations
Rumors were circulating at the show that because of limited supplies, supply houses are charging more than $30 per pound for R22. It used to be $2 per pound. Why the sudden price increase?
Originally, HCFC manufacturers were told they could produce up to 17.7% of their baseline allowances in 2013. Then, in a letter from the EPA on Jan. 7, manufacturers were told to make up to only 11.9% of their baseline allowance if they don’t want to face prosecution. Although there is no official ruling that lowers the production limit, exceeding it may result in legal action. Now production is currently limited by threat, but not law.
A chance to grow
While meeting with friends at AHR to discuss this problem, a suggestion was given on how supply house owners and managers could use the limited supplies of HCFC-22 to gain a business advantage.
It is a fact that most HVACR contractors still are dumping the extremely rare and valuable R22 into the atmosphere. However, there are some contractors who are very diligent about returning all recovered refrigerant for reprocessing. It’s a shame that under current practice the refrigerant they are reclaiming is to be sold to others who aren’t being as responsible.
Also, it would be a positive move for supply houses to get others onto the refrigerant recovery bandwagon. Do this by establishing a program within your company to track returned refrigerant by dealership and then one to sell similar quantities back to only those who are returning it. This way, the conscientious contractors would receive the fruits of their own labor.
Such a program can easily be set up and monitored. First, establish a buyback program with your recovery supplier — one that allows you to repurchase any recovered refrigerant you ship to them in bulk quantities. This will not only be an effective way for your better customers to be assured of having R22 reserves as quantities of the product dwindle, but it also is a way to create better ties with your customers, all the while adding a bit of profit to your company’s bottom line.
The other shoe
There is an unseen problem still in the wings for consumers and the industry. It’s the fact the current refrigerant (R410a) being used following the phase-out of R22 also is in the process of being phased out throughout the world due to “global warming” concerns.
What comes after that? I asked this question of Roy Kuczera, senior vice president of sales for Fujitsu’s HVAC products division. He told me in Japan and Europe they are already using a more “environmentally friendly” refrigerant, a R410a relative going by the designation R32. Although it is an easily manufactured and fairly inexpensive refrigerant, many question whether it will be allowed to be used in the U.S. because it is mildly flammable. U.S. manufacturers are working on a more expensive substitute, R1234yf.
So, what’s the problem? Both new refrigerants use a different lubricant and neither is a “drop-in” replacement for R410a.
And how long will it be until the new refrigerant results in the phase-out of our current new refrigerants? Until another “Al Gore” piece of legislation.