Responsible Refrigerant Management in the Age of Uncertainty

No doubt if you are reading this, it is because you have been shocked by the recent spike in R-22 refrigerant prices due to the recent allocation squeeze by the EPA and DOE. See my last blog article for the abridged history on how we got to doubling R-22 prices. Many are now speculating on where the price of R-22 will go. Some think it will come back down somewhat when the EPA reconvenes on this allocation reduction again after a 90 day statutory waiting period. Others believe that the price will stabilize at the current new levels. Michael Mulligan of USA Refrigerants lends this perspective:
“For all intents and purposes, pricing should essentially remain at current levels until the EPA makes it final ruling. The earliest date that the EPA will rule is May 2012. If the EPA ultimately rules that 45% of the baseline is the magic number for 2012 and that’s it, prices may increase further. There are no indicators in writing or circulating that the EPA will allow for further production of R-22 beyond the 45% baseline already approved.”

Whatever happens, it is ultimately clear that HVAC contractors must implement strict refrigerant management programs to reduce the overall costs of refrigerant for themselves and their customers. Such a program should include refrigerant recovery standards to insure the collection of separate uncontaminated bulk storage cylinders for R-22, R410A and other refrigerants with proper identification. Cylinder storage and evacuation will be critical in order for contractors to get the best prices for recycled refrigerant with the best purity. Contractors should not mix refrigerants and should use dedicated, tagged recovery cylinders and hoses by refrigerant type. In that way, they are assured of getting the best prices for recovered refrigerant. Refrigerant buy back programs offered by refrigerant distributors and recyclers offer the best opportunity to decrease the overall costs of bulk refrigerant purchases.  For more information on how to implement such a program, see USA Refrigerants FAQ sheet , Dupont Refrigerants Web Site or the Air Conditioning Contractors of America.  For specific details on the EPA HCFC Phaseout Program, visit the EPA Regulatory Program site.

In response to our request for a consumer information tool to help explain the recent escalation of R-22 refrigerant, ACCA President Paul Stalknecht acted quickly.   “I want to thank you for that great suggestion you had about sending ACCA members information they could provide their customers to explain the recent spike in R-22 pricing.   As soon as I got back to the office, I had staff working on such a document.  We sent out the below notice to the membership and got more hits on the link than anything we have ever done.” To help inform customers and handle objections, ACCA members can get their copy of the consumer information leaflet on the R-22 price spike.

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

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Price of R-22 Refrigerant Soars After EPA Reduces Allocations by 45%

When the 25C Tax Credits were in place in 2010 allowing a $1500 Federal Tax Credit (on top of utility rebates) to upgrade to a 16 SEER high efficiency system with R410 refrigerant, consumers in the northeast rushed to the opportunity to upgrade their systems and switch to environmentally friendly refrigerant from R-22.  However, last year those tax credits were reduced to $300 per system and demand fell off steeply. This year, they were not renewed at all and the lack of incentives combined with the deepening recession has pretty much squelched most consumer demand to switch out older refrigerant 22 systems.  The EPA has just made that decision a very costly one, especially for those with consistent system leaks who will be looking for a “top-off” instead of replacing their old system. Although this news story on an Illinois HVAC contractor’s refrigerant pricing sounds a bit onerous, it will become the status quo this summer.

Another contractor’s opinion on where R-22 refrigerant prices are going:

According to Charlie McCrudden,  ACCA Vice President of Government Relations, “the EPA controls the production of HCFCs, including the refrigerant known as R-22, through allowances that limit how much each gas manufacturer and importer can produce or import in a given year. Under the implementation of the Montreal Protocol, the production and use of R-22 is slowly being phased out. In August 2011, the EPA proposed to adjust the allocations in place for the years 2012-2014. This adjustment was necessary because of a lawsuit filed by two HCFC producers who had completed a legal trade of allocations that EPA had failed to recognize in its allocations released in 2009. The EPA consulted with industry stakeholders before proposing to reduce the annual allocations. In gathering information used to develop the August 2011 allocation adjustment, EPA found that there was an oversupply of R-22 in the marketplace, partly evident by a lack of demand, increased reuse of R-22, and low wholesale prices. In fact, in 2010, producers of R-22 only utilized 86% of their allocations. A trade organization representing the manufacturers and importers of R-22 supported these claims, and advocated for a 20% reduction in allocations for 2012-2014. By the end of 2011, EPA had yet to finalize its adjustment proposal for the 2012-2014 allocations. But EPA did release a subsequent version of the August 2011 adjustment proposal on December 30, 2011, one that proposed to reduce the allocations for 2012-2014 between 11-47%. Without a finalized adjustment rule, the producers and importers of R-22 were stuck in a legal limbo – on January 1, 2012, they did not have the authority to manufacture or import R-22.”

As a result, the price of R-22 has skyrocketed by as much as 40% in the last few weeks and contractors have not been able to fill standing orders on skids at originally quoted prices. Consumers with older R-22 systems will be paying considerably higher per pound prices if they cannot be convinced to upgrade their systems. R-22 refrigerant prices have already passed R410A prices with this one increase and now many homeowners who opted for replacing just their condensing units with a “dry shipped” model this year are already about to feel the pain of what they thought was an economical alternative to a complete system upgrade.

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!