Natural Refrigerants Continue to Grow in Retail
More and more companies are realizing the importance of climate concerns. “I believe there is an increasing awareness and a resulting sense of urgency that we must act to address the climate crisis, as such all solutions are being explored and all stakeholders are applying pressure or at minimum beginning to ask questions,” said Tristam Coffin, co-founder and chief operating officer of the consulting firm Effecterra.
Coffin added that the SEC’s proposed rulemaking regarding climate disclosures has helped highlight these expectations.
NASRC recently published a free refrigerant transition hub (https://nasrc.org/ hub) to help retailers navigate regulation changes implemented by the American Innovation and Manufacturing Act. The AIM Act, which was enacted in 2020 authorizes the Environmental Protection Agency to phase down hydrofluorocarbon refrigerant greenhouse gas emissions by 85% by 2036.
“HFC regulations from the AIM Act and several states are pressuring retailers to transition to climate-friendly refrigerants,” Wright said. “Retailers need neutral information to help them make the right decisions. NASRC works in partnership with the supermarket industry, so we are uniquely positioned to identify the gaps in available resources.”
Several national chain food retailers have committed to using naturals in all new store builds, with CO2 transcritical systems emerging as the predominant option. “For existing stores, we are seeing partial or full conversions to naturals although this is still logistically challenging and cost-prohibitive for many retailers,” Wright said.
Coffin said natural refrigerant systems are picking up the pace in the U.S. “Commitments from several major retailers to install CO2 systems specifically has begun to send a market signal that demand for these solutions is increasing,” he said.
Target has focused on natural refrigerants at its store in Vista, California. The location has a complex system of electrical, plumbing, solar and more that makes it the company’s most sustainable store yet. The store also uses CO2 refrigeration to help reduce its emissions.
“Designing this project was intimidating at first, especially when you consider the moving target of energy consumption and all the stakeholders needed to pull it off,” said Rachel Swanson, lead program manager, energy, for Target. “I’m so proud to see it come to life, and looking ahead, I’m excited to use what we learned here to help us achieve our goals and make a positive impact.”
Many retailers are committing multimillion dollar budgets to overhaul their existing systems over the next 10-15 years, Coffin said. Regulations are the core motivating factor for most retailers. “Not only the federal phasedown under the AIM Act but also HFC regulations at the state level,” Wright said. “Everyone sees the writing on the wall and is planning to transition out of HFCs over the coming years.”
Coffin agrees. “Regulation, specifically in California and those to follow in Washington and New York, but also the AIM Act federally were very much the trigger, but I do believe many organizations that have set climate commitments or at minimum have become much more cognizant of their carbon impact and the need to act is also a major driver,” he said.
In addition, company climate targets are also playing an important role in accelerating this transition and putting pressure on retailers to get as close to zero emissions refrigeration as possible, Wright said.
Investor expectations are indirectly driving the move toward naturals because they are pressuring companies to set corporate climate targets and reduce overall greenhouse gas emissions. Since refrigerants represent a majority of company’s baseline emissions, retailers can’t achieve their targets without addressing refrigerant emissions. “Natural refrigerants are currently the only proven and market-ready option with zero or near-zero global warming potential,” Wright said.
Curbside pickup exploded with the pandemic and has changed how some stores are designing their space. For example, many locations are adding more refrigeration in the back where they hold orders for pick up.
“There is a big opportunity to incorporate naturals when adding load to an existing store,” Wright said. “For example, we know there is a big demand for CO2- or propane-based single condensing units to service this load type. Despite the demand, there are insufficient technologies available in the U.S. market today. For propane specifically, we are still waiting on EPA SNAP approval and building code updates to reflect the increased charge limit that would broaden its application.”
Addressing existing facilities is more challenging than designing for new locations. “Added capacity or increased demand on existing facilities is only exacerbating this challenge,” Coffin said. “However, I do believe there is an increased appetite or willingness to act especially as natural refrigerant distributed systems— smaller racks and condensing units—become more readily available. You will also see the use of self-contained mobile coolers utilizing R290 filling a lot of these gaps.”
Coffin said the biggest challenge right now is the supply chain. “It didn’t help that in the early days of the pandemic projects were put on hold and now a lot of retailers are trying to play catch up, so the demand for solutions/systems is high, but the ability for the supply chain to deliver is limited at best. This isn’t specific to naturals, however,” he said. “I do believe in some respects the pandemic has given everyone the time to reflect on how best to proceed into the future.”
Wright said supply chain issues have disproportionately impacted the deployment of natural technologies. “We’ve heard that lead times for CO2 racks is over a year. The delays could compound over the next few years and hurt retailers’ ability to meet regulatory deadlines,” she said.
The federal phasedown of HFCs is expected to result in refrigerant shortages and significant price increases. In Europe, refrigerant prices increased by 900% following a similar HFC phasedown. Also, new legislation introduced in states such as California proposed to ban the sale and distribution of virgin HFC refrigerants as early as 2025, further driving the need for natural refrigerant solutions, NASRC said.
Even still, globally, naturals are synonymous with the latest advancements in refrigeration. “One of the biggest opportunities in the US is to increase the energy efficiency of CO2 transcritical systems. We are seeing new system configurations and components that improve the performance, especially in warmer ambient temperatures,” Wright said.
