News

Summer 2019 Refrigerant Industry Update

Tariffs, trade wars, anti-dumping, Kigali, international regulations, and climate change. These are just a few of the factors affecting the current refrigerant industry to some extent. Note that none of them include weather, which has traditionally been the driving force behind refrigerant demand and price volatility. Over the last several years, we have seen each of these factors impact refrigerants in various ways, and to varying degrees. In looking ahead to Summer ‘19, we will look at each of these factors and their potential impacts. Please note that these are opinions, and should be taken into consideration as such.

As we move past the halfway point of the Trump Administration’s first term, we have seen the focus shift to trade and international sanctions lately. For the refrigerant industry, this has meant increased prices on steel cylinders imported from China, as well as the looming threat of tariffs on the remaining products produced in China and imported to the US, including component refrigerants. Put together with the current anti-dumping duties already in place for packaged HFC’s from China, there is potential for a major disruption in the market this year. Component refrigerants (R125, R32, etc) that were originally excluded from the previous round of anti-dumping duties are now on the list of potentially tariffed products if the trade war with China continues to escalate. As you know, the vast majority of the global supply of HFC’s originates in China. This would result in increased cost of refrigerant(s) from the PRC, whether imported in bulk to be packaged in the US, or brought in already packaged. As we have seen in the past, China is willing to manipulate the yuan to mitigate some of the effects of the tariffs, but a 25% proposed tariff would likely be too great to offset.

As the ripple effects of the US backing out of the 2016 Paris Agreement are still becoming clear, what has become clear is the intent of the rest of the world (184 States, plus the EU have signed on, with over 70 countries ratifying it already). While the HFC phaseout schedule outlined in Kigali is more gradual than the HCFC phasedown schedule, the global desire for climate change regulation is growing. In fact, for the second year in a row, the 2019 HARDI Congressional Fly-In focused on HFC regulations and the entire industry’s support of the measure. From OEM’s to wholesale distributors, the vast majority of US businesses approve of, and are lobbying for, the ratification of Kigali.

In the meantime, the California Air Resources Board (CARB) has proposed legislation that would take the HFC phasedown from Kigali, and add more aggressive targets in order to meet climate change targets. A coalition of other states have joined forces with California, which would make implementation a messy affair, to say the least. Without clear Federal guidelines, a patchwork of regulations governing acceptable refrigerants and equipment will paralyze the industry. In addition to meeting global climate change goals, the Kigali Amendment (and CARB regulations) have been projected to have a net positive effect on the overall economy and jobs market of over $10B and 33,000, respectively. It will be important to monitor the movement of legislation, and the potential ratification of Kigali as the season wears on.

Finally, on to weather and climate. While two very different things, both obviously have an effect on the refrigerant industry. Firstly, weather. In the short term, predictive models from NOAA and the National Weather Service show increased chances for hotter-than-normal temperatures and normal to less-than-normal rainfall across much of the perimeter of the country this summer. While it looks like a continuation of the wet Spring for the MidWest, the rest of the country could experience a hot, dry summer. Generally, we would expect this to lead to a rise in refrigerant prices as demand ramps up.

As this relates to climate change, we can see clear trends in the overall average temperatures rising across the globe. While environmentalists have been sounding the alarm for years, what we’re witnessing now is a confluence of industry and activism that is driving major changes across the globe. In the medium-long term, these concerns are going to create rifts between countries/economies that have embraced reform, and those that have not. Low-GWP alternatives to current refrigerants will become more and more popular, as will natural refrigerants, which boast 0 GWP. Standards and regulations are coming into focus for mildly flammable (A2L) and flammable (R600, R290, etc.) refrigerants. As global pressure to make a change mounts, medium-term replacements are going to experience a surge in popularity until extremely low GWP refrigerants are widely available.

Over the last decade, we have seen accelerated change in the refrigerant landscape and markets. This volatile market and unclear future will continue until many of the above issues are resolved. Do your part today by becoming involved in decision-making and policy proposals. Ask your refrigerant distributor about their plans for reclamation and alternative refrigerants. Talk to OEM’s about equipment changes and plan for the future. The status quo is not holding anymore, and if you want to thrive in these uncertain times, learn as much as you can and make your voice heard. As always, for more information or to ask questions, please let us know at
info@dynatempintl.com.

Sincerely,
Will Gresham
Executive Vice President
Dynatemp Refrigerants

The New and Improved DynaCycle Cylinder Exchange Program!

DynaCycle Refrigerant Exchange Program has been around for years, but we recently worked hand-in-hand with our customers to improve upon our existing program and make it easier and more beneficial for distributors and contractors alike. After some fine tuning we are excited to share that DynaCycle Cylinder Exchange Program is an easy way to get paid for your valuable refrigerants. We are still PAYING for gas! We accept all non-flammable HFO, HFC, HCFC and CFC Refrigerants.

Quick facts on our program:

  1. DynaCycle is a cylinder exchange program. Similar to a propane exchange program at your local supermarket or home DIY store, DynaCycle  will supply you with state-of-the-art composite recovery cylinders and steel recovery cylinders that you can sell or exchange with your customers. Send filled cylinders back to us, and we’ll send  you more empties. After we receive your batch of recovery cylinders, we’ll test, generate EPA  compliant documentation, and pay you top dollar for your refrigerants.

2. What we provide: DynaCycle will send the first crate of empty recovery
cylinders to the distributor’s processing location(s).
Contents will include the following-
• 50 lb. Steel Recovery Cylinders
• 30 lb. Steel Recovery Cylinders (optional)
• 50 lb. Composite Recovery Cylinders (optional)
• 125 lb. Steel Recovery Cylinders (optional)
• Cylinder Tags
• HazMat Shipping Labels and Address Labels
• Heavy Duty Shipping Container with Cardboard Cover

Your DynaCycle representative will work with you to determine the correct product mix for your initial shipment. You may choose to setup processing centers at individual locations, distribution hubs or a combination of both. When choosing where to establish DynaCycle processing centers, consider the time it will take to receive between 18 and 24 filled refrigerant recovery cylinders in those chosen locations.

3. The exchange: Your customer may exchange a filled DOT 4BA or 4BW recovery cylinder for an empty cylinder of similar type and capacity. There is no processing fee associated with a cylinder exchange. DynaCycle offers both composite and steel cylinders for resale so that distributors can sell an empty exchange cylinder to customers that do not have their own recovery cylinder to exchange.

4. Tagging: Filled recovery cylinders are tagged and placed in the shipping container that was provided by  DynaCycle. Distributor personnel will ensure that the DynaCycle cylinder tag is completely filled  in and securely attached the customer’s recovery cylinder.

5. How shipping works: When the distributor has packed the shipping container full (approximately 18 to 28 filled 30 lb and 50 lb recovery cylinders), DynaCycle should be contacted to initiate the shipping process and pickup scheduling.  DynaCycle will provide you with a pickup date, Bill of Lading and additional packing and shipping instructions as necessary. Similarly, DynaCycle will send a container of corresponding, empty recovery cylinders and tags to replenish the distributor’s processing center.

6. Reporting: Within about ten business days of DynaCycle receiving a shipment of filled recovery cylinders, the distributor will receive a payment report and  EPA Compliant receiving report (pdf format)  for each technician customer.

7. Payment: DynaCycle will issue payments in the form of check or credit, whichever the distributor prefers. Shipments received by the 20th day of the month will be issued payment at the end of the same month. Shipments received after the 20th day of the month will be paid at the end of the following month. Payments will always be issued less than 45 days from the receipt of a shipment of  recovered refrigerant.

DynaCycle recommends that distributors share a portion of the program proceeds with their contractor- technician customers in the form of a store credit. In our experience, this policy builds momentum in the program and increases customer loyalty. The contractor pay rate will be left to the discretion and direction of the wholesale distributor. Issuing store credit instead of cash or check allows the distributor to retain some margin dollars on the sale of product.

Why DynaCycle?
• Get Paid for your Valuable Recovered Refrigerant
• Build Customer Loyalty and Increase Sales
• EPA Compliant Reports Supplied at No Charge
• No Shipping Costs
• No Obligation to Purchase Refrigerant
• No Per-Cylinder Pump Down Fees
• All non-flammable HFO, HFC, HCFC and CFC Refrigerants accepted
• Flexible programs
• No annual requirements

For more information on the DynaCycle Refrigerant Exchange Program please call (717) 249-0157.

The New York Yankees Join The UN Climate Change Framework

As seen on United Nation’s Climate Change:

In December of 2018, UN Climate Change and the sports industry partnered to launch the Sports for Climate Action Framework. This initiative encourages sports teams, fans, athletes and the sports industry as a whole to meet the goals of the Paris Agreement.  As stated on the United Nation’s website, the main goal of the Paris Agreement is to “keep the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.”

While many major international sports teams and groups, including FIFA, Tokyo 2020 Summer Olympics, Formula E, and the International Olympic Committee have already joined the UN Sports for Climate Action Framework, the New York Yankees are the first major North American sports team to join.

Those who commit to The Framework commit to the following ideals:

  • Undertake systematic efforts to promote greater environmental responsibility;
  • Reduce overall climate impact;
  • Educate for climate action;
  • Promote sustainable and responsible consumption;
  • Advocate for climate action through communication

Sources:

  1. https://unfccc.int/news/new-york-yankees-become-first-major-north-american-team-to-join-un-sports-for-climate-action
  2. https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

An Update on the State By State HFC Phase-down

In the absence of the United States joining the Paris Climate Accord or ratifying the Kigali Amendment, states have begun to draft their own legislation to phase-down HFC refrigerants or intend to create regulations through the state’s EPA office. While many states have announced their plans to reduce HFCs, some states are much further along, regarding the legislative progress than others. Here is an update on where the some states are in the phase-out process.

States with supporting legislation approved and regulations being promulgated or discussed:

California– Through the California Air and Resources Board (CARB), California is by far the furthest along in its quest to enforce a state-wide phase-down of HFC refrigerants.

Beginning on January 1, 2019 high GWP refrigerants (including 404A and 507A) were banned, through the California Cooling Act, in the following applications: New and retrofit supermarket systems, new and retrofit remote condensing units, retrofit stand-alone units, and new stand-alone medium-temperature units with a compressor capacity below 2,200 Btu/hour and not containing a flooded evaporator. On January 1, 2020, they will be banned in: new stand-alone medium-temperature units with a compressor capacity equal to or greater than 2,200 Btu/hour, stand-alone medium-temperature units containing a flooded evaporator, and stand-alone low-temperature units.

According to the plan, the maximum cut-off for GWP levels by year are as follows:

By 2021:

  • Prohibition of refrigerants with a GWP of 150 or greater in new refrigeration systems containing 50 or more lbs of refrigerant.
  • Prohibition of refrigerants with a GWP of 1,500 or greater in new refrigeration systems containing 20 to 50 lbs of refrigerant.
  • Prohibition of refrigerants with a GWP of 750 or greater in new air conditioning systems containing two or more lbs of refrigerant.
  • Prohibition of refrigerants with a GWP of 150 or greater in new chillers (refrigeration or air-conditioning).

Regarding the sale of high-GWP refrigerants, the Short Lived Climate Pollutants Strategy would include:

  • By 2020, no production, import, sale, distribution or entry into commerce of refrigerants with a GWP of 2500 or greater.
  • By 2024, no production, import, sale, distribution or entry into commerce of refrigerants with a GWP of 1500 or greater.

For more information see CARB’s website. There will also be an incentive program for low-GWP refrigeration but funding has not been allocated through the California legislature.

Massachusetts-  In 2016, Massachusetts Governor Baker signed an executive order “establishing an Integrated Climate Change Strategy for the Commonwealth, which included a directive to publish a Comprehensive Energy Plan (CEP). ” In response to the executive order, The Comprehensive Energy Plan was published in December of 2018. It is likely that a short-lived climate pollutant phase-down will accompany the law.

 

New York- Governor Andrew Cuomo directed the New York Department of Energy and Conservation to propose a plan to phase-out HFCs. The DEC released their plan in September of 2018 which begins the phase-down of HFCs in applications like propellants and foam blowing agents in January 2020. Find full proposal here.  It is likely that a short-lived climate pollutant phase-down will accompany the law.

 

Connecticut- In 2015, Governor Dannel Malloy issued an Executive Order to create a state governors council on climate change. This council, named the GC3, developed a recommendation that included an economy-wide GHG emission reduction target of 45 percent below 2001 levels by 2030. The Connecticut General Assembly adopted the GC3’s proposal when they passed the An Act Concerning Climate Change Planning and Resiliency. Finally, Governor Malloy signed the recommendation into law. Relating specifically to HFC reduction, Governor Malloy asked Connecticut’s Department of Energy and Environment Protection (DEEP) to create regulations that phase-out HFCs following California’s CARB regulations as a guide.

 

Maryland- Like many Governor’s previously mentioned, Governor Hogan signed a legislation in 2015 to strengthen Maryland’s Commission on Climate Change.  Following that legislation, the Governor signed the Greenhouse Gas Emissions Reduction Act of 2016. The goal of this legislation is to achieve a 25% reduction in Maryland’s greenhouse gases by 2020. It is likely that a short-lived climate pollutant phase-down will accompany the law.

States with stated intentions to start legislation to phase down HFCs:

New Jersey– The New Jersey legislature introduced three pieces of legislation that will impact the HFC phase-down. As stated in ASHRAE’s Government Affairs Update: 

 “Senate Bills 3013, 3207 and 3291 (companion Assembly Bills 4417, 4821 and 4775 respectively) place new limits on HFCs and increase reduction targets previously enacted by the legislature. SB 3013 revises the 2050 limit on statewide greenhouse gas emissions to reduce those emissions by 13 million metric tons by that year, or 80% below the 2006 level. SB 3207 establishes new time frames for implementation of certain requirements in the state’s “Global Warming Response Act” and requires the state Department of Environmental Protection (DEP) to adopt strategies to reduce short-lived climate pollutants. SB 3291 establishes a statewide HFC emission limit and requires DEP to establish a hydrofluorocarbon emissions monitoring and reporting program. All three of these bills have been referred to the Senate Environment and Energy Committee.”

Washington State– In December, Washington State’s governor, Jay Inslee, proposed climate change legislation that included $959,000 of funding to eventually phase-out HFCs or as his brief categorized them “super pollutants”.  This legislation would reduce greenhouse gas emissions in Washington state by 25 percent below 1990 levels by 2035. This proposal still needs to be enacted by the legislature before the Department of Ecology will begin the regulation process.

In the absence of a national HFC phase-down, states have resorted to their own timelines and regulations. This creates a difficulty for those in the HVACR industry to meet differing standards. At Dynatemp International we support a federally mandated HFC phase-down schedule. A federally mandated phase-down of HFCs, like the Kigali Amendment, would provide market clarity, access to global trade, and an increase in U.S. jobs. See more on the Kigali Amendment here. 

 

Sources:

http://hydrocarbons21.com/articles/8734/washington_governor_proposes_hfc_reduction_program

http://www.r744.com/articles/8796/california_expected_to_announce_gwp_regulation_for_acs_by_december?utm_source=shecco+natural+refrigerants&utm_campaign=d485e7aeb4-Bi-Weekly+Newsletter_20180731_COPY_01&utm_medium=email&utm_term=0_9db972ca57-d485e7aeb4-291794217

http://www.r744.com/articles/8531/new_york_to_phase_out_hfcs?utm_source=shecco+natural+refrigerants&utm_campaign=5501df3efb-Bi-Weekly+Newsletter_20180731_COPY_18&utm_medium=email&utm_term=0_9db972ca57-5501df3efb-291794217

http://www.ammonia21.com/articles/7929/carb_launches_rulemaking_for_epa_snap_rules