1. HFC Synthetic Refrigerant Phase Down
HFC Synthetic Refrigerant Phase Down. Understanding the implications for investing and operations for end users.
Matthew Darby Chair Climate Controls Companies Association (NZ)
Founder and MD EcoChill

2. The HVAC&R industry is facing some of the biggest change in it’s history – this will affect all industries dependent on heating and cooling infrastructure.

3. Ongoing legislation to meet New Zealand's international treaty commitments for Net 0 emissions by 2050 has changed the landscape…
1996
NZ implements Ozone Layer Protection Act & Regulations
2oo8 Climate Change Response (ETS) Act
2010
New HCFC Imports reduced on yearly basis by 63%
2015 NO HCFC’s imported: R22
2019 HFC PHASE DOWN
BEGINS
NZ Regulatory change focused on phasing down F-gas refrigerants.
1992 United Nations Framework Convention on Climate Change
Objective: Global warming 2º minimum by 2050.
Environmental issues are causing a change in our approach to the synthetic refrigerants first used in the 1920s as we identify they are impacting on world in an unacceptable way. With 15% of the worlds energy consumption coming from refrigeration (and remember this is really only 1st world demand) it is no wonder environmental legislative pressure has come on the refrigeration industry. There is huge change happening in the refrigeration industry and I’m not convinced that the majority of providers have got their head around the implications for design, installation and servicing for themselves and their customers. CFC refrigerants are now banned and no longer - Ozone Depleting. Because of their Global Warming Potential HCFCs are no longer available and the common refrigerant R22 can no longer be imported into NZ - though this isn't a use ban. Many systems are still currently operating on it and as an industry we are seeing many continuing to use it. Sometimes strategically but more often due a lack of knowledge about what that may mean for operating costs, (try $1000 a jug as some are paying), or downtime; or as a calculated risk that a system will last without issues until a new one is in place.
1987
Montreal Protocol 3

4. Despite cost and supply implications and developments in natural refrigerant options, demand for F-gases continues to rise.
Approx. 925 ton across the board.
New Zealand consumed
500 ton to March 2015.
22% increase on 2014.
Estimates of annual leak rate as high as 70%.
175T
500T
249T
We need to ensure that end users that rely on heating and cooling understand the changing landscape to make decisions.
Source:
EPA Synthetic Greenhouse Levy 2015 Report
Dave Nicholls IRHACE/ Refrigerant Recovery

5. NZ HFC Phase Down Begins in 2019
NB: As required by Kigali; NZ domestic policy TBA.
“We will work with industry to develop a regime to phase down HFCs which is:
–workable
–environmentally effective
–consistent with any international obligations”.
We now understand the governments commitments to the HFC phase down and the MfE are currently putting together the consultation program to work through implementation. this is a very “doable” change with incremental phase down. We already know however that the response to R22 has not been decisive as required and that this change has a much larger impact in terms of the degree of training and knowledge in new refrigerants.
Jean Le Roux,
Manager International Team, Ministry for the Environment.

6. The NZ Emissions Trading Scheme is already causing impacts.
Principle tool to control emissions impact and meet global warming targets. Carbon Pricing NZ Carbon unit price is NZ $18/ US$ 12.46¹.
To achieve a 2°C global warming limit by Est: US$ $120.00
So in NZ we have stuck with an Emissions Trading Scheme as the way we have been influencing purchasing behaviour with the ETS setting and imposing a financial cost on Gas emissions. You can see the price has fluctuated dependent on policy and a carbon unit currently sits around $NZ18 or $12.50US.
¹March 2017

7. The ETS has placed significant additional cost to operating costs -these will continue to rise.
Refrigerant
Carbon cost per kg.
R-404a
$70
R-410A
$37
R-134a
$25
Estimated +$11,000,000 to WHOLESALE costs in 2016.
Estimated 33% increase annually for next 3 years as “2 for 1” subsidy removed.
And it has added significant cost to refrigerant, an estimated $11M to WHOLESALE costs in Costs that will rise by a 1/3 annually over the next 3 years as the NZ gov removes the current 2 for 1 subsidy that is in place.

8. Not just NZ change driving impacts: Globally HVACR manufactures and suppliers in the US, Europe, Japan, China and Canada are meeting strict low GWP legislative frameworks ahead of New Zealand's phase out schedule.
Global action puts New Zealand at risk for refrigerant and technology availability.

9. This will mean current synthetics refrigerants will become more expensive and supply restricted as they are phased out. Less used refrigerants, that not all the New Zealand HVAC&R industry is currently used to working with, will become more common place.

10. Responding to change comes down to 3 options:
Retain
Keep current systems
Retrofit
Keep plant and replace with a synthetic refrigerant.
Replace
Build new plant with synthetic or natural refrigerant.
Capital Cost
Low
Strategy
Low
Capital Cost
Med
Strategy
Med - High
Capital Cost
Med -High
Strategy
High
So what does this mean for the “now”? Where is refrigeration at in NZ?
The change in the legal status of refrigerants and the impact on cost and potential down time makes this the time for big picture thinking what to invest in. There are 3 real strategic options
Option 1: Retain existing systems
Reason for doing: End of life equipment with replacement strategy, capital or timing issues.
Risks:
1. No new R22 available within NZ - some may be stockpiled / recycled.
2.Virgin R22 cannot be brought in; recycled can from qualifying countries though an approved process (under review).
3.Lack of availability may impact length of time to fix systems.
4. Old technology; not capitalising on business advantages.
5. Poor economic returns.
Technical strategy:
1. CONTAINMENT: Leak detection /preventative maintenance critical
2. Needs strong refrigeration partner support program
3. Ask refrigeration partner about recycled R22 availability and how they will be able to support / delivery timeframes
Option 2: Modify systems – replace R22 in existing systems with alternative refrigerants
Reason for doing: Serviceable equipment with long life expectancy, difficult site/significant build work needed to change to a new system, gain immediate cost savings/ ROI opportunities.
1. Some plants unable to be modified.
2. Cannot solve existing issues / extend plant life if at end of cycle.
3. Future proofing as better alternatives become available.
4. Choice of refrigerant:
- Efficiencies & capacity may not be the same as existing
- Changes to operating costs
- Implementation issues e.g. leakages /breakdowns (drop in)
- Synthetic refrigerants target for future regulation (GWP)
1. Term “Drop in” misleading – systems often require recalibration /component changes
2. Resolve existing issues prior to carrying out work.
3. Save money – do at same time as other work e.g. leak/ component replacement
4. If you have multiple systems of the same type these can provide a “testing ground” to watch performance as well as provide a source of recycled R22
Option 3: Replace systems –with synthetic or natural refrigerant
Reason for doing: Gain immediate cost savings/ ROI opportunities, business efficiencies, operational & product advantages . End of life equipment/ age & life expectancy, maintenance and repair costs. Meet current & future regulatory and environmental requirements.
1. Choice of system and future proofing.
2. Choice of provider; provider knowledge and management of implementation.
3. For synthetic refrigerants: target for future regulation (GWP)
1. Assess providers and look for an expert with specialised knowledge (CCCA members)
2. Evaluate refrigerant options available
3. Understand ROI, costs and benefits
Investment options, risk management and future proofing need to be considered.

11. The HVAC&R industry group is technology neutral
The HVAC&R industry group is technology neutral. Need to ensure end users have the right information to make informed choices and a skilled, professional industry exists to support you.

12. Changing landscape of refrigerants:
Move to environmentally friendly options – low GWP.
Lower GWP also increase in flammability.
Design and safety considerations.
New skills required.
Energy and cost savings and performance opportunities.
Supply and cost of F Gas options need to be monitored.
Synthetic
CFC’s (Phased Out)
HCFC (Importation Ban)
HFC’s (Phasing out)
HFO’s (Coming Soon)
Natural
Ammonia
CO2 HC
Water
Air
Synthetics:
Introduced as safe/efficient – now several being phased out through legislation
HFC’s most commonly used
HFOs relatively new and number of challenges
Naturals:
Fell out of favour with intro of synthetics
New technology makes more energy efficient/ safer (ammonia & HCs)
Requires right skills
Blends
Synthetic / natural mixes been used as CFC/ HCFC replacements.
Interim solution as fall under SGG legislation
Question of impact of cross contamination & impact on operational life and efficiencies.
Alternatives:
Not commercially viable in the main
CFO, Electocaloric and magnetic furthest ahead & for coolstores magnetic solution 7-10 years away.
Commercially
viable
Secondary Systems

13. Do not meet Global <150 GWP criteria.
HFC options in use to Retrofit or Replace systems will face restrictions and eventual phase out.
Ref.
Safety
Performance
Economics*
Environment GWP (100Y)
404A
$147/kg
3922
449A
$135/kg
1397
407F
$90/kg
1824
134A
$67kg
1430
513A
$?? Kg
631
404 A - With work able to replicate existing performance. Replace expansion valves / metering devices / system seals /system drier and oil .
438A - Operates at similar pressure and temperature. Requires system seals/ drier to be replaced. Reportedly does not require oil change – our experience differs from this
407F - Requires system seals /system drier replaced and oil changes. Gas has “temperature glide” so may require expansion valve changes if original valves marginal. Higher discharge temperature may affect condensers.
SAFETY: High level of industry knowledge of install and management
Non flammable and high safety ratings – still require proper safety and licensed handling
Legend
0 = Poor
1 = OK
2= Good
3 = Excellent
Do not meet Global <150 GWP criteria.
*Generalized NZ market prices July 2017

14. New Synthetic Low GWP option: HFO’s.
New build only: Under ANZ HAZNO Standards, HFO’s are not a drop in replacement.
Safety
Low toxicity, flammable, toxic on combustion (unique property).
Performance
No know installs within NZ.
Economics
N/A. $203kg ex importer
GWP
(GWP 100Y) 4
Environmental
No impact ozone/ Low GWP.
Breaks down into Trifluoroacetic Acid– potential impacts at high concentrations.
HFO 1234yf
Hydrofluroolefins
HFOs are the new synthetic HCFC replacement. Supermarket chain in Australia currently trialling though no cool stores in NZ have been converted to/ running on
Debate surrounding toxicity, performance.
The current concern is that all F based gases seem to be under constant scrutiny as their environmental credentials are questioned. Further The F in the F Gas Flourine is now listed as a critical resource with some projections suggesting if we swapped just 25% of global refrigeration requirements onto it we’d be out of it in 30 years.

15. Replace Refrigerants: Naturals
Providers must have the skills and knowledge in making recommendations, design and servicing.
Ref.
Safety
Performance
Economics*
Environment GWP (100Y)
CO2
(R744) 1
$6.50/kg HC
(R1270)
$82/kg 3
Ammonia (R717)
$14/kg
CO2 Notes:
Safety Lower toxicity, non-flammable , high pressures .
Performance:Climate dependent – work well in NZ with excellent efficiency. Discharge pressure high, critical temp low.
HC: Safety Lower toxicity, higher flammability – requires specialist design and management.
Performance: Pressure/ capacity similar to R22. Temp behavior . Non corrosive. Compatible mineral oils. Proven.
Amm:
Safety: Higher toxicity, lower flammability – requires specialist design and management.
Perf: High efficiency & low power. High discharge temp. Small plants not suitable lubricants. Corrosive on copper.
Overview Notes
Increasing evidence suggests most economic solution given regulatory issues - higher capital costs up front as require new build.
Can provide energy efficiency gains & heat recovery benefits
Often require specialist skill set and advice to manage
Rapidly changing industry advances - lot of misinformation exists
Legend
0 = Poor
1 = OK
2= Good
3 = Excellent
*Generalized NZ market prices July 2017

16. The industry does not have a compulsory licensing or registration scheme. The move to flammables means End-users need to be aware of choosing professional HVAC&R providers who have the skills and knowledge to support them as the industry transitions.
No legal requirement to be licensed to work with refrigerants.
Only legal requirement comes from compressed gas regulations.
Good qualifications available but not everyone has one.
80% of industry have less than 3 people – self taught.
Little resource to upskill, invest in professional development or gain exposure to new technologies.

17. Opportunities exist to educate end users on HVAC&R advancements that improve profitability - driving energy and system efficiencies while supporting GWP objectives.
GWP Objectives
Regulatory compliance
Operating cost reductions
Performance improvements
Health & Safety
Containment strategy
Easy and clean disposal
Energy usage reductions

18. END USERS need to understand the impacts of F-Gas phase down on: - Health & Safety. - Investment decisions. - Selection of HVAC&R providers. Both opportunities and risks exist.