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California’s HFC Phase-down: Costs, Energy, Leaks and Incentives

RajanRajendran2 Rajan Rajendran | V.P., System Innovation Center and Sustainability

Emerson Commercial & Residential Solutions

As Jennifer Butsch and I discussed in our most recent E360 Webinar, the California Air Resources Board (CARB) has adopted the Environmental Protection Agency’s (EPA’s) Significant New Alternatives Policy (SNAP) regulations 20 and 21. ACHR NEWS, which attended our webinar and CARB’s most recent public stakeholder meeting, has compiled a report on the implications of CARB’s hydrofluorocarbon (HFC) phase-down efforts. Below is a synopsis of their article, which you can read here in its entirety.

California’s HFC Phase-down: Costs, Energy, Leaks and Incentives

In early March, CARB held its first of several public technical working group meetings of the year. While the focus of this workshop was on stationary AC equipment, the scope of the issues discussed also extended to matters impacting commercial refrigeration. The purpose of these meetings is to gain insights into the many questions surrounding the implementation of its current and future regulations governing the state’s HFC phase-down. In this session, CARB posed several questions related to equipment costs, refrigerant leaks, the intersection with energy efficiency regulations and incentives for making the transition to lower-GWP refrigerants. And while these questions were targeted to California stakeholders, their relevance extends to the larger United States, where it is estimated that a federal mechanism to phase down HFCs will eventually be reinstated.

First costs, installation and maintenance

As we discussed in our most recent webinar, the commercial refrigeration sector is where the industry will continue to experience a proliferation of refrigeration systems. But this presents a series of challenges for OEMs and component manufacturers as we attempt to balance refrigerant GWP limits with economic viability — with hopes to minimize first costs, install costs and long-term service expenses of new equipment.

Opinions about cost considerations varied at the CARB meeting, though attendees generally agreed that first costs on AC equipment could range from 5 to 15 percent in various categories of equipment. CARB estimated that install and maintenance costs could increase anywhere from 5 to 10 percent, especially considering the need for additional contractor and technician training and tools to work with lower-GWP refrigerants such as A2Ls.

Factoring energy into the equation

For OEMs, meeting CARB’s GWP limits is only one of the regulatory milestones they will face in the next few years. The Department of Energy’s (DOE’s) new energy efficiency requirements are scheduled for 2023, which means OEMs need to factor both energy-related equipment upgrades and the refrigerant transition into their design cycles. This was another topic of debate at the CARB meeting.

CARB members suggested that OEMs could try to offset upgrade expenses and achieve economies of scale by combining design cycles. Representatives from the Air-Conditioning, Heating and Refrigeration Institute (AHRI) took the position that these upgrades would require separate efforts. To help CARB understand the implications of these scenarios, AHRI cited survey data in which its members considered the costs of efficiency upgrades before addressing required refrigeration changes.

Leak reduction and prevention

Meeting attendees reached a consensus when discussing the problem of refrigerant leaks. As an AHRI representative pointed out: none of California’s GWP targets will be attainable if the industry can’t figure out this critical issue. They cited a UN Environmental Program report that estimated up to 60 percent of GWP sources from HVACR equipment can be traced to leaks.

And as we reported in our recent webinar, supermarkets that in the EPA’s GreenChill program have achieved drastically reduced leak rates, sometimes more than 50 percent. It’s also a reminder that as California and the rest of country continue their transitions to lower-GWP refrigerant alternatives, proper reclamation, recycling and disposal of HFCs will be extremely important.

Incentivizing participation

When the California Senate Bill No. 1013 (aka the California Cooling Act) was passed in 2018, it included an incentive mechanism via the Fluorinated Gases Emission Reduction Incentive Program. To date, this program has remained unfunded in the 2019 budget, although there still is yet a possibility for budget adjustments this year.

As was noted in the article, California’s tradition of incentives has helped create momentum to move the state toward lower-GWP refrigerants, systems with lower leak rates and better recordkeeping. Regardless, early adopters of climate-friendly cooling will have a variety of options from which to choose for new low-GWP systems, retrofits and upgrades.

What’s next?

CARB has stated that it will hold further stakeholder meetings this year, including a workshop focused on commercial refrigeration at the end of May. These meetings will conclude with a draft of the proposed new rulemaking along with continued economic analysis. As the industry awaits an update from the EPA on HFC-related regulations, California continues to be the country’s torchbearer for low-GWP refrigeration and cooling systems. As I was quoted in the article, our industry still has a lot of learning to do in the next four or five years, as the refrigerant transition will continue to drive equipment changes.

 

Refrigerant Regulations: 2018 Recap and 2019 Impacts

RajanRajendran2 Rajan Rajendran | V.P., System Innovation Center and Sustainability

Emerson Commercial & Residential Solutions

The year 2018 brought many changes to refrigerant regulations, with additional activity expected in 2019 and beyond. This blog highlights some of the key developments, which were presented in a recent E360 article. Read the full article here.

 

The regulation of refrigerants continues to be a source of great uncertainty in the commercial refrigeration industry. As global, national and state regulations have targeted the phase-down of hydrofluorocarbon (HFC) refrigerants in recent years, some in the industry have begun the transition toward alternative refrigerants with lower global warming potential (GWP). But these environmentally friendly options raise additional questions about performance and safety.

All in all, it’s a complex regulatory mix that got even more complicated in 2018. But we’re here to recap recent events and place them into a larger context.

The status of EPA SNAP Rule 20

In 2017, the U.S. District Court of Appeals for the D.C. Circuit ruled to vacate the Environmental Protection Agency’s (EPA) Significant New Alternative Policy (SNAP) Rule 20. The court ruled that the EPA did not have authority to phase down HFCs under the Clean Air Act (CAA) — which was originally intended to eliminate ozone-depleting substances (ODS) — and thus could no longer enforce its 2015 GWP-based mandates.

In the absence of Rule 20, the commercial refrigeration industry has many questions about what the path toward a more sustainable and environmentally friendly future for refrigerants will look like. Industry calls to overturn the District of Columbia Court of Appeal’s decision were declined by the Supreme Court, which stated it would not hear the HFC case1. Currently, the EPA is drafting new regulations that will clarify its plans to move forward with SNAP. We anticipate details on their position early this year.

EPA rescinds other HFC-related regulations

The EPA has also indicated that it will no longer enforce refrigerant delistings and has proposed to roll back other HFC-related regulations2. In particular, the EPA has proposed excluding HFCs from the leak repair and maintenance requirements for stationary refrigeration equipment, otherwise known as Section 608 of the CAA.

California adopts Rule 20 as the basis for its initiatives

Regulatory uncertainty at the federal level is not preventing states from adopting their own refrigerant regulations and programs. California Senate Bill 1383, aka the Super Pollutant Reduction Act, was passed in 2016 and requires that Californians reduce F-gas emissions (including HFCs) by 40 percent by 20303. The California Air Resources Board (CARB) has been tasked with meeting these reductions.

Since 2016, CARB had been using EPA SNAP Rules 20 and 21 as the bases of its HFC phase-down initiatives. Even after SNAP Rule 20 was vacated, CARB moved to adopt compliance dates that were already implemented or upcoming. The passing of California Senate Bill 1013 — aka the California Cooling Act — in Sept. 20184 mandates the full adoption of SNAP Rules 20 and 21 as they read on Jan. 3, 2017. The law is currently in effect and does not require additional CARB rulemaking to uphold compliance dates.

CARB is also proposing an aggressive second phase of rulemaking that would further impact commercial refrigeration and AC applications. CARB has held public workshops and invited industry stakeholders to comment on the details of this proposal.

Meanwhile, many other states have announced their plans to follow California’s lead on HFC phase-downs. The U.S. Climate Alliance, formed in 2017 out of a coalition of 16 states and Puerto Rico, is committed to reducing short-lived climate pollutants (SLCPs), including HFCs. Among these alliance states, New York, Maryland, Connecticut and Delaware have announced plans to follow California’s lead on HFC phase-downs.

Refrigerant safety standards and codes under review

Many of the low-GWP, hyrdrofluoroolefin (HFO) refrigerants are classified as A2L, or mildly flammable. R-290 (propane) is also becoming a natural refrigerant option for many low-charge, self-contained applications. Currently, national and global governing agencies are evaluating the standards that establish allowable charge limits and the safe use of these A2L and A3 refrigerants.

Internationally, the International Electrotechnical Commission (IEC) has proposed increasing charge limits for refrigeration systems in IEC60335-2-89 as follows:

  • A2Ls — from 150g to 1.2kg
  • A3s — 500g for factory-sealed systems, and will remain at 150g for split systems

These proposals are still under review and will likely be published sometime in 2019.

Kigali Amendment took effect on Jan. 1

The regulatory uncertainty in the U.S. can sometimes obscure international efforts underway to phase down HFCs. The Montreal Protocol has led the way on this effort for nearly a decade5. In 2016, 197 countries met in Kigali, Rwanda, and agreed on a global HFC phase-down proposal. Known as the Kigali Amendment, this treaty has been ratified by 53 countries (including the E.U.) and took effect on Jan. 1 for participating countries. The U.S. is still considering ratification.

As we move into 2019, there are many moving pieces on the regulatory chess board, but also some encouraging signs of progress. We will be providing the very latest regulatory updates in our next E360 Webinar. Register now to stay informed.

  1. https://www.achrnews.com/articles/140040-supreme-court-declines-to-hear-hfc-case
  2. https://www.epa.gov/section608/revised-section-608-refrigerant-management-regulations
  3. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB1383
  4. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB1013
  5. https://en.wikipedia.org/wiki/Montreal_Protocol#Hydrochlorofluorocarbons_(HCFCs)_Phase-out_Management_Plan_(HPMP)

[Webinar Recap] Global HFC Phase-down, FSMA and Smart Buildings

RajanRajendran2 Rajan Rajendran | V.P., System Innovation Center and Sustainability

Emerson Commercial & Residential Solutions

 

Note: This webinar was presented prior to the January 26, 2018 court rulings on SNAP 20 and 21.

View our most recent E360 Webinar, “Regulations 2018: What’s Set, Pending and Proposed.”

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In our most recent E360 Webinar, I had the opportunity to present, alongside two of my Emerson colleagues, a discussion about what’s predicted on the 2018 regulatory horizon. As we enter the new year, the global HFC refrigerant phase-down continues in varying degrees in different regions around the globe. Here’s a summary of the current activity:

United States — Kigali amendment and the EPA

  • Although the U.S. has not yet ratified the Kigali amendment to the Montreal Protocol, the U.S. State Department issued a statement on Nov. 23 in Montreal that it had “initiated steps to ratify” the amendment.
  • Also in 2017, the U.S. Court of Appeals for the DC Circuit vacated Rule 20 and sent it back to the EPA for revision, stating in its ruling that the EPA had exceeded its authority under the Clean Air Act, Section 612 to require replacements of HFCs. Petitions for a rehearing were filed by several third parties, including leading refrigerant manufacturers and the Natural Resources Defense Council (NRDC).
  • Per EPA Rule 20, R-404A and R-507A are de-listed in new remote condensing units as of January 1, 2018.

Europe — F-Gas phase down

The year 2018 marks a significant drop in the F-Gas (i.e., HFCs) phase-down quota, from the previous 93% of the original baseline to 63%, where it currently resides. As a result, we are seeing an increase in HFC prices in Europe.

Canada — Kigali amendment and HFC ruling

Canada has ratified the guidelines set forth by the Kigali amendment. It has also issued a final HFC ruling that establishes a progressive phase-down schedule.

California Air Resources Board (CARB) — HFC phase-down effort

California has not only signaled its intent to adopt EPA Rules 20 and 21, its CARB initiative calls for even greater phase-down measures, making the target for future phase-downs as low as 150 GWP in certain applications.

Next, Amy Childress, vice president — marketing & planning, cargo solutions, and John Wallace, director of innovation, spoke on the topics of Food Safety Modernization Act (FSMA) and smart buildings.

FSMA — food safety and temperature management impacts

One of the ways food retailers can help prevent food-borne illnesses and comply with FSMA’s record-keeping requirements is by using automated temperature monitoring systems. These systems are easy to implement and provide proactive alerts to help prevent conditions that threaten food safety.

Smart buildings and the smart grid

While the concept of smart buildings with advanced building management and control system technologies is not new, the idea of equipping them with the tools that allow them to transact with services which are outside the building is. This ability to transact in real time when devices are connected can bring benefits not only to local electric utilities (which operate the grid) but also to building owners. There is increasing congressional interest in the potential benefits of smart buildings and their ability to not only respond to internal facility conditions but also consider outside factors such as real-time utility pricing.

To learn more about these topics, view this webinar in its entirety.

Can Amendments to Apprentice Act Address the Technician Shortage?

RajanRajendran2 Rajan Rajendran | V.P., System Innovation Center and Sustainability

Emerson Commercial & Residential Solutions

This blog summarizes an article from ACHR News, entitled “Amending the Apprentice Act”. Click here to read the article in its entirety.

In October, we discussed the growing technician shortage within our industry and ways in which the Apprenticeship Act could help bridge that gap. Here’s an update on how this amendment has taken the next step in the legislative process.

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This past summer, President Trump signed an executive order to expand apprenticeship programs and vocational training. Now, Sen. Roger Wicker of Mississippi has proposed the Apprenticeship Enhancement Act of 2017, amending the National Apprenticeship Act. In short, if this were to be passed, the Department of Labor’s apprenticeship agency would be required to act quickly on applications and create an apprenticeship program within 90 days.

This all sounds like a step in the right direction, but what does it mean for the HVAC industry?

“This legislation could be a game changer for the HVAC and refrigeration industry, which is in desperate need of technical staff,” said Don Langston, president of Aire Rite Air Conditioning & Refrigeration Inc. and Air Conditioning Contractors of America (ACCA) chairman of the board. “My goal, as chairman of ACCA, has been to help address the skills gap and workforce challenges that the industry is facing. I offer full support of ACCA as Senator Wicker works to advance this legislation.”

With that being said, here are some additional pieces of information to consider:

  • It’s estimated that by 2022, the U.S. will need 115,000 HVACR technicians.
  • There are more than 44 million student loan borrowers, each borrower accumulating an average debt of $37,172 — with no guarantee of a job/steady salary upon graduation.
  • Apprenticeships are typically funded by outside resources, eliminating participant needs for student loans.
  • The average starting yearly salary for apprentices is $60,000.

Expanding apprenticeship programs and vocational training could help bridge the gap between the technician shortage and students in search of a career that won’t saddle them in student loan debt. Skilled apprentices in the U.S. not only earn a higher average starting wage than the average college student, they do so without the financial burden and stress of not finding a job in a timely manner post-graduation. With more money to be made and an open job market, it stands to reason that these new apprenticeship programs will fill quickly.

While this legislation may not be the panacea to the technician shortage, it could be huge step toward eliminating it. We’ll continue to watch this legislation closely and see how it develops.

To read more about the apprentice act, visit the full ACHR News article

Mining Apprenticeship Opportunities to Bridge the Refrigeration Gap

RajanRajendran2 Rajan Rajendran | V.P., System Innovation Center and Sustainability

Emerson Commercial & Residential Solutions

This blog summarizes an article from our most recent E360 Outlook, entitled Apprenticeship Opportunities.” Click here to read it in its entirety.

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Through our E360 Outlook magazines and E360 Forums, my colleague Bob Labbett and I have talked at length about the growing technician shortage facing our industry; it’s something we refer to as the refrigeration gap. After facilitating many conversations with stakeholders to address this challenge, we have formed the basis of a solution that focuses on four key areas: awareness, recruitment, training and retention. But we are always looking for creative ways to achieve these objectives.

A recent announcement by the Trump administration about doubling the budget of the federal apprenticeship program piqued our curiosity. Not only were we largely unaware of the program, we were intrigued about its potential for addressing our industry’s technician shortage. To learn more, we put two summer interns at The Helix to work on researching feasibility of the program. Here’s what we dug up.

Relatively low HVACR participation

After poring through the Department of Labor’s (DOL) apprenticeship section of their website, one of the first things we discovered was that HVACR participation in the program was quite low. While there were more than 200,000 active participants in Registered Apprenticeship (RA) programs in 2016, HVACR only accounted for 3,135 of these. Electricians topped this list with 41,489 active apprentices. We quickly realized that our industry has a runway of opportunity that is largely untapped.

Federally funded, state operated

Another key fact we uncovered about the program is that “the Office of Apprenticeship (OA) works in conjunction with independent State Apprenticeship Agencies (SAAs) to administer the program nationally.” What this means is that RA programs are enacted at the state level after meeting the DOL’s apprenticeship standards. What’s more, an individual employer, group of employers, or an industry association can also sponsor an RA program, sometimes in partnership with a labor organization.

Technical schools and colleges play a vital role

The OA is also focused on helping educators build college-to-career pipelines in a variety of occupations through the Registered Apprenticeship College Consortium (RACC). RACC is a national network of post-secondary institutions, employers, unions and associations working to create opportunities for apprentice graduates who may want to further enhance their skills by completing an associate’s or bachelor’s degree.

Even high school-level vocational institutions and career centers can get involved in pre-apprenticeship programs to help students explore career opportunities and become an apprentice while they’re still in high school.

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