EPA Takes Aim at the Future Proposed rulemaking Jumpstarts HFC phasedown

The U.S. Environmental Protection Agency has been given statutory authority to move forward with phasing down hydrofluorocarbons as part of the American Innovation and Manufacturing Act (AIM), which is expected to increase the long-term use of natural refrigerants. The agency has taken rapid action, and on May 3, it released its first proposed rulemaking under the AIM Act to establish an allocation system for the HFC phasedown.

The rule proposes an allowance allocation and trading system, which will determine the amount of HFCs an entity can produce or consume, and it creates the mechanism to phasedown domestic HFCs.

“By phasing down HFCs, which can be hundreds to thousands of times more powerful than carbon dioxide at warming the planet, EPA is taking a major action to help keep global temperature rise in check,” said EPA Administrator Michael S. Regan. “The phasedown of HFCs is also widely supported by the business community, as it will help promote American leadership in innovation and manufacturing of new climate-safe products. Put simply, this action is good for our planet and our economy.”

EPA’s proposal would set the HFC production and consumption baseline levels from which reductions will be made, establish an initial methodology for allocating HFC allowances for 2022 and 2023, and create a robust, agile, and innovative compliance and enforcement system, the agency said.

“EPA intends to use the approach established through this rulemaking to issue allowances for 2022 by October 1, 2021 and plans to revisit the approach for subsequent years in a later rulemaking. In addition to proposing to establish a general HFC allowance pool and a set-aside pool (e.g., for new market entrants), the proposal outlines how EPA plans to issue allowances for specific applications listed in the AIM Act that the agency was directed to provide allowances for, such as mission-critical military applications,” EPA wrote in a release.

EPA will accept comments on this proposal for 45 days after publication in the Federal Register and hold a public hearing. The agency plans to finalize this rule later this year.

The Environmental Investigation Agency is among those who petitioned the EPA to restrict the use of HFCs in key cooling sectors under the AIM Act. “We are incredibly excited by the swiftness with which EPA is setting up a framework to implement landmark climate regulation to eliminate HFCs that will achieve emission reductions of 4.7 billion metric tons of CO2 e by 2050,” said Avipsa Mahapatra, climate campaign lead for EIA.

Natural refrigerants will provide a critical role in the HFC phasedown and can help businesses comply with regulations even if they change. “If you choose a natural refrigerant, you don’t have to worry about EPA coming back and saying, ‘Well, we set the global warming potential limit at X, but in five years we may move it down to another level and then another,” said Lowell Randel, director of government affairs for IIAR. “Natural refrigerants are a good long-term solution and have a long track record of success.”

“EPA had to roll back efforts to phase down HFCs. That led to a gap for the EPA to address HFCs. The AIM Act fills that authority gap that the EPA had due to the court findings.”

– Lowell Randel, director of government affairs for IIAR and senior vice president of government and legal affairs for the Global Cold Chain Alliance

The AIM Act will result in an 85 percent phase-down by 2035, and it gives the EPA a mechanism to fill a gap created when courts ruled the agency did not have the authority to phase down HFCs when the Obama administration attempted to use the Significant New Alternatives Policy (SNAP) Program to advance the goals within the Kigali amendment.

When the courts ruled that SNAP and the Clean Air Act only gave EPA the authority to regulate for ozone and not global warming potential, it forced EPA to change course, Randel said. “EPA had to roll back efforts to phase down HFCs. That led to a gap for the EPA to address HFCs. The AIM Act fills that authority gap that the EPA had due to the court findings,” he explained.

The Biden Administration recently announced it would send the Kigali Amendment to the Senate for ratification, the global HFC phase-down agreement, but the AIM Act authorizes the EPA to implement the amendment domestically.

Addressing how things are cooled is one of the top things we can do to limit our impact on the environment, said David Fauser, director of sales for Toromont. “Refrigerants, in general, are a rather straightforward thing we can address right now. We have the technology, installation base, and know-how already, and the overall cost of ownership is typically more attractive,” he said, adding that net-zero has become a buzzword, and natural refrigerants need to be part of an overall climate pledge by any organization.

Christina Starr, senior policy analyst for EIA, said this is a key moment for the U.S. to demonstrate true climate leadership by implementing the most ambitious feasible restrictions on HFC use. “These regulations are essential to meet the Kigali Amendment HFC phase-down schedule,” she said. “If strong enough, they can make it feasible to accelerate it in several years and help lead the world into the next chapter of Montreal Protocol climate action.”

Through the Montreal Protocol, necessary steps were taken to eliminate the very high ozone depletion potential substances, such as CFCs, which led to the formation of new synthetic refrigerants in the form of HCFCs and HFCs that had a lower potential for ozone depletion, said Trevor Hegg, vice president, product development, industrial refrigeration, and water systems, EVAPCO Inc.

“However, these refrigerants have high global warming potential, and their use will continue to have a negative impact on the environment,” Hegg explained. “For the benefit of the environment, it is important that the use of any refrigerant with ozone-depleting and global warming potential be reduced and eliminated, which is what the AIM Act and the Kigali Agreement support.”

EIA has requested that the EPA prohibit using many HFCs in newly manufactured refrigeration and air conditioning systems ranging from small residential air conditioners to large refrigeration systems in supermarkets, targeting the largest sectors of HFC consumption and emissions. It also called for replicating a proposed regulation recently approved in California.

There are currently several synthetic refrigerants on the market, including HFCs, HFOs, and blends, which all have varying global warming potential numbers associated with them, Randel said.

“The EPA must make up for the lost time and utilize its authority to implement the new climate law, AIM Act in the most ambitious and effective way. Eliminating these potent super pollutants can save hundreds of millions of tonnes of carbon equivalent, pivotal to achieve near-term emissions reduction,” Mahapatra said.

The exact GWP levels the AIM Act will require haven’t been established. “It will depend on the situation, the type of equipment, and the type of application. I suspect it will be different in different applications. We’re going to push for 150 or less,” Schaefer said. Which refrigerants will be allowed long-term will depend on EPA’s short-, medium- and long-term specifications. “Let’s say they make it the 150 GWP, which is similar to what they did in California, that is going to restrict the pool of synthetics that can be utilized because of that lower GWP,” he said.

Dave Schaefer, chief engineer for Bassett Mechanical, said the global warming potential on some synthetic refrigerants is high, which means they aren’t a good long-term solution. “We at IIAR are proponents of the natural refrigerants—the ones that have very low or no GWP. Natural refrigerants have been around for a long time. I don’t see any reason why they would ever get phased out,” he said.

Natural refrigerants are very efficient, and the technology is continuing to evolve. “There are a lot of options,” Randel said. “You can do conventional ammonia refrigeration system, low charge, cascade with CO2 and ammonia, or transcritical CO2 , and in certain applications, you can use hydrocarbons or propane. All are very efficient, and the technology just keeps getting better and better.”

“Refrigerants like ammonia, carbon dioxide, and hydrocarbons have zero ozone depletion potential. Additionally, the global warming potential is nonexistent for ammonia and carbon dioxide and minimal for hydrocarbons.”

– Trevor Hegg, vice president, product development, industrial refrigeration, and water systems, EVAPCO Inc.

Hegg said that CFCs, HCFCs, and HFCs have been scientifically proven to hurt the environment through ozone depletion and global warming. “Sustainability metrics like global warming potential and ozone depletion potential largely exist today because of synthetic refrigerants,” he said.

Natural refrigerants are environmentally friendly. “Refrigerants like ammonia, carbon dioxide, and hydrocarbons have zero ozone depletion potential. Additionally, the global warming potential is non-existent for ammonia and carbon dioxide and minimal for hydrocarbons,” Hegg said. “Natural refrigerants are pure, unlike the newly developed HFO’s which are blends of refrigerants that can be difficult to analyze and recharge.”

Another benefit of natural refrigerants is their favorable thermodynamic properties which support higher refrigeration system efficiencies and reduced carbon footprint. “These better system efficiencies also translate into lower lifecycle costs for the end-user,” Hegg said. Natural refrigerants also do not contain fluorine, which could also be regulated in the future, Hegg said.

Meeting upcoming requirements shouldn’t be a challenge. “I think that one of the things about the AIM Act that strikes me as interesting is that the 85% required reduction by 2035 could be done by 2025,” Fauser said. “We can see the increasing pressure by the public for government to address this for example in Canada, as we’re heading into our next election, the topic of climate change is the cornerstone of campaign messaging.”

There should be plenty of natural refrigerants to meet demand, and Schaefer said that natural refrigerants are relatively inexpensive and readily available right now.

What’s more, there are natural refrigerant equipment and solutions available now, and there will be innovative advances in natural refrigeration technology by the time phaseout of HFCs is complete, Hegg said. “Manufacturers of equipment and system designers faced similar challenges with the phaseout of CFCs and HCFCs,” he explained. “Now is the opportunity to innovate and develop more equipment and systems utilizing natural refrigerants like ammonia, carbon dioxide, and hydrocarbons.”

With man-made refrigerants, there is a strong chance they will get phased out as technology improves. As they do get phased out, there becomes a need to get rid of them safely. Having regulations provides guidelines and helps businesses eliminate grey areas, Fauser said. It also helps with long-term planning.

“If you’re a food production plant that puts in a synthetic refrigerant, but then you have an unforeseen regulation come along, you have to deal with it. It will either hinder or shut down your production. Switching refrigerants and systems on the fly is not an easy task, it is severely disruptive to their business, especially if they have to do it before the end of the lifecycle of their equipment. With natural refrigerants, phase-out/ down is not a concern which mitigates that risk” Fauser said.

Randel said the challenge to phase down is less about the availability of technology and alternatives but is more likely to be capital expenses. “The fact is that people are coming out of a pandemic, and capital budgets might be constrained, but if a company is going to convert from HFC to a natural, the technologies are there for them to make that choice efficiently,” he said.

When examining costs, Fauser said users should explore how long they want the equipment installed for, energy costs, maintenance costs as well as overall safety. In addition, he urged end-users to look beyond price. “You have to ask around and get multiple perspectives and get past the price. Refrigeration is complicated and there are many design paths that could be taken. One of our biggest roadblocks is the buyers’ understanding of the future impact of their decisions today. The ones responsible for making the decision are typically not the ones who deal with the long-term costs,” he said.

Schaefer said owners and operators must review the total cost of ownership. “Some equipment that uses natural refrigerants can last 50 years. However, the commercial type using synthetics can be obsolete in 15 years,” he explained. “Your first cost of ownership might be less, but your long-term cost of ownership could be higher because you have to replace the unit more often.”

As regulations change, manufacturers will ramp up to get acclimated, Schaefer said. “It does take time, but I don’t think it will take years and years to change over. It is already occurring because companies want to do the right thing,” he said.

An added benefit of the AIM Act will be the creation of new jobs and manufacturing output to support new technologies that will be needed, Hegg said.

There will be a need for technicians, engineers, and certified operators within the natural refrigerant space. “It is something that highlights the importance of IIAR’s Academy of Natural Refrigerants, RETA’s certification, and other workforce development efforts,”

Randel said. “Having the pipeline and the training and education available to bring new people into the industry is extremely important. As we look to meet those future demands, I think IIAR and the industry are well-positioned to educate and train the future workforce that will help take us to the next level.” Randel added that IIAR is actively engaging with EPA as they move to implement the AIM Act. “We are developing materials and recommendations for EPA related to the AIM Act. We’re also working with partners in the industry to magnify our voice with the agency,” he said.