REFRIGERANTS
Refrigerant phasedown: implications and considerations
Graeme Fox of REFCOM talks about the consequences of phasedown and how to manage them.
I
t has been incredible to hear some people expressing their surprise in the last couple of months at the rapid price rises of R404A. By the time this publication goes to print the price will be roughly five times what it was at the start of the year – an astronomical rise by anyone’s standards and one that is clearly unsustainable for contractors with full service contracts. Other higher GWP gases have also suffered frighteningly steep price increases, although admittedly not to the extent of R404A.
But why is that a surprise to anyone? I have a speech I gave from several years ago warning of the inevitable price rises of high GWP gases such as R404A, and I know others were saying similar things, so it should have come as no surprise when that inevitable rise occurred. If we re-examine the reasons then maybe we will agree that this has always been on the cards, and perhaps agree that it isn’t such a bad thing in the grand scheme of things if our sector is to improve its image and demonstrate its responsible side to end users and clients.
Phasedown steps
From the table highlighting the phasedown steps we can see the initial drop down last year showed only a 7% drop from the 2015 baseline limit of gas that could be placed on the single market.
That may have been such a small figure that some buried their heads in the sand and convinced themselves that all would be okay.
36 August 2017
The other problem we faced as an industry sector was that there was some considerable stockpiling of gas being placed on the market in 2015 ahead of the control measures being put in place, effectively flooding the market and artificially compressing the prices so that we actually saw, in some cases, prices drop after people like me had warned of them rising! However, that only told part of the story. Included in the 93% for 2017, but notably not 2016, was all the gas that comes pre-charged in split systems. Previously, that had been excluded from the quota allowances but came into scope this year using a big chunk of the amount that can be placed on the single market in the form of gas supplied in bottles.
This is like a hidden step where an additional 11% step down in 2017 has put pressure on the total gas being placed on the market, meaning that manufacturers have restricted supply of very high GWP gases like R404A in favour of lower GWP gases that don’t eat up as much of their quota. Already, some gas suppliers are saying they simply won’t be placing any R404A on the market after the end of this year, which will of course further compound this price rise problem.
Implications
The implications of this effect are very serious for contractors and their clients. If contractors are signed up under full service contracts with their clients, then they urgently need to look at their exposure.
Any contract that includes any replacement gas may now leave the contractor exposed to large and increasing costs that may seriously affect their profitability. If any contractor is in this position and there is no immediate prospect of using alternative gases to the likes of R404A then they should seriously consider investing in a stock of gas at today’s prices – it won’t go down any time soon, if ever again.
End users not protected by inclusive service contracts will also need to urgently look at their systems, speak with their service contractors about options, and start planning to either swap out equipment using high GWP gases, or convert existing equipment to lower GWP alternatives to the high GWP gases.
This is something that requires expert advice as the alternatives are not of the ‘one size fits all’ variety; different types of systems require different drop ins or retrofits and proper advice and planning is essential if these systems are to be kept operational over the coming months and years.
Solutions to consider
As outlined in the previous paragraph, the best long term solution is to convert systems to lower GWP alternatives or to swap out the systems themselves as soon as possible. However, that is not always practical or financially possible in the immediate window.
As a short term measure, it is allowable to use recovered gas until 01 January 2030 if that gas
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