Industry Report on HFC Phasedown Shows Low Consumer Costs

This post written by Christina Theodoridi, NRDC's HFCs Technical Analyst. 

Phasing down hydrofluorocarbons (HFCs) will cost consumers little and, in some cases, will save them money on energy bills. That’s the conclusion of a new report by the Alliance for Responsible Atmospheric Policy, a coalition of chemical makers and equipment manufacturers that are preparing to switch from HFCs to safer alternatives.

HFCs are chemicals used in refrigeration, air conditioning, insulating foams, aerosols, and other applications. They are extremely potent greenhouse gases, with a heat-trapping power hundreds to many thousands of times that of carbon dioxide.

The international community agreed to phase down these super pollutants under an amendment to the Montreal Protocol, the treaty adopted under President Ronald Reagan that saved the ozone layer. The HFC amendment, adopted in Kigali, Rwanda, in 2016, will take effect in January 2019. More than 60 countries have already ratified the Kigali Amendment, and the Trump administration said last year that the U.S. supports the goals and approach of the phasedown and is reviewing whether to submit the amendment to the Senate for ratification.

The transition from HFCs to safer alternatives enjoys the broad support of the industries that make and use them. For these companies, the HFC phasedown is an opportunity to innovate, invest, and grow. A previous Alliance report forecasts that embracing the HFC phasedown will create 33,000 American jobs and will increase U.S. exports by $5 billion over the next decade. Importantly, the new report finds that these benefits come thanks to a greater share of the world market for American companies and less U.S. market loss to importing competitors, not greater costs to U.S. consumers.

But, should the U.S. fail to join the global phasedown effort promptly, those benefits could be lost to other countries.

Benefits for Consumers and Industry

The new Alliance report analyzes the HFC phasedown’s cost impact on consumers in two large applications, residential and commercial air conditioning, in 2029, 10 years into the phasedown. The report finds that the transition to HFC alternatives will come at little to no extra cost to consumers, even under highly conservative assumptions (such as the unlikely case that new refrigerants cost five times today’s). Experience from previous transitions replacing ozone-depleting substances shows the average market price of modern refrigerants will not change that much. The lifetime ownership cost of cooling equipment changes so little because refrigerant cost is a small part of the total cost of owning and operating these systems. 

The Alliance analysis shows that the lifetime cost of residential and commercial air conditioning will be essentially the same regardless of whether or not the HFC phasedown happens. In addition, the new refrigerants are more energy efficient than traditional HFCs, and cooling equipment will requires less refrigerant both when new and while being maintained. Lower energy consumption and less-frequent servicing will ultimately save consumers money. And we’ll suffer less warming.

How to Reap the Benefits

The Alliance report cautions that the industry needs clear strategic signals starting today to maximize the benefits of the transition to climate-friendlier refrigerants. In particular, they need to know that the U.S. is committed to the HFC phasedown with plenty of lead time to comply—time that’s already running short, with obligations under the Kigali Amendment beginning in 2019.

The Alliance also recommends several additional ways to ensure a smooth HFC phasedown. Upgraded appliance energy efficiency standards should be synchronized with related HFC prohibitions to allow manufacturers to address both regulations with a single product redesign. Product safety standards and building codes need to be modified and updated to safely use some new refrigerants, which may be mildly toxic or flammable.    

American companies want the U.S. to join in the HFC phasedown by ratifying the Kigali Amendment and implementing it with federal regulation. In the absence of federal action, states like California, New York, Maryland, and Connecticut are stepping forward with their own plans to reduce use of HFCs. More states are expected to join them soon. Many companies have expressed support for these policies provided they are consistent across states.           

NRDC will work to achieve the HFC phasedown however it needs to happen—at the federal level, through state action, or a combination of both. The new Alliance report shows that the transition will cost consumers little and likely will save them money overall. We’re ready to work together with industry to get the job done.