The Exchanges

Q So where are we in the adoption of these new, uh, loaded GWP refrigerants at this point?

A So we're going through a transition right now, kind of, as we speak, the first of the year, uh, R-Forten-A, which is kind of the most common refrigerant used in the commercial refrigeration residential, uh, the residential markets, um, won't be available to ship in new equipment, and so as we, you know, we're, we're going to go through a couple years here as we transition out of one of these, you know, 2000 GWP refrigerants down to the six or 700 Uh, GWP refrigerants. Um, we're gonna see this market dynamic now of the only, uh, there, and there will be a phase down in what is available, uh, to be produced, so the manufacturers have been set limits, um, as part of the AIM Act. Uh, so there, there will be, there will be a decreasing supply of refrigerant available for people who have R-Forten in their, uh, in their residential units, for example. And so that will, uh, You know, by 2030, the, the source of refrigerant for service will have to come from reclaim and recovered refrigerant. That will have to be the primary source as these manufacturing quotas go down year over year.

AI assessment note: “So we're going through a transition right now, kind of, as we speak”

Q Let's talk about refrigerants, starting with what are refrigerants? What do they do? What's the purpose?

A Yeah, refrigerants are used to make sure you can complete a refrigeration cycle. So, you know, in any air conditioner, for example, and I'll, I'll use a residential because that's probably the easiest one to describe. Um, you need to take refrigerant and change it from a liquid to a gas over and over again to be able to collect heat inside the space or inside your home, and then reject that heat outside your home. So refrigerants are substances that are used in that cycle, and they repeat the cycle over and over by, uh, by going from liquid to gas phase to collect and reject the heat. Um, they've been around for a long time, and, you know, they're, they're Basically the working fluid for any refrigeration or air conditioning type of application.

AI assessment note: “Basically the working fluid for any refrigeration or air conditioning type of application.”

Q And that, that's a big number, right? Like, that's, I don't, I don't, I don't remember the number offhand, but that's, that's on the order of aviation, right? It's about the same.

A It is, yeah. And, and, and, you know, you just think about it, if you get it down to a U.S. context, I mean, you know, just the residential sector in the United States is, You know, the equivalent of 1.7 million cars on the road annually. So they are, they are big numbers. Uh, and that's just the direct portion, right? Which we, we, we kind of put refrigerant emissions into the direct and indirect categories. The direct portion is refrigerant that escapes from equipment. The indirect portion, which is three or four times, uh, the impact is the carbon emitted by producing the energy to run the equipment. So you've got, you know, you've got two impacts, direct and indirect, but that indirect impact is, is also an important consideration in the air conditioning and refrigeration industries.

AI assessment note: “It is, yeah. And, and, and, you know, you just think about it”

Q Okay. So let's talk about the most promising next generation, low GWP refrigerants. What are they? And, and I guess the other question here is like, what is the challenge with introducing new refrigerants? What are the metrics that determine whether they are good or not?

A You know, I, I come, my lens for this is kind of from the, from a product developer. And so we use refrigerants in our applications. And when we, when we evaluate refrigerants to put into new pieces of equipment, We, we look at a couple things, but the two primary, uh, well, I'd say three primary, uh, considerations are one, how does it perform in the equipment? Does it, is the equipment more efficient or less efficient when you transition to refrigerants? And as we talked about earlier, you know, 80% of the, uh, of the CO₂ impact from a piece of equipment is that energy efficiency, uh, or the, the energy that's created to run the equipment. The only, the other 20% comes from the, From the refrigerant. So when we evaluate refrigerants, the ability to operate very efficiently is probably the number one impact, uh, or the number one metric that we look at. The second thing we look at is safety. Is there a safety concern? Is the refrigerant toxic? Is it flammable? Um, so safety is, is, is always a concern. Um, efficiency, I would say, is what we start with, then we look at safety, and then the third thing is, is it available in the market? You know, are there Ample sources. Does that mean the price is lower or higher? Now, different refrigerants operate, um, better in different applications. So, um, if you look at, you know, really low refrigeration temperatures, so things for fas…

AI assessment note: “three primary considerations are one, how does it perform in the equipment”

Q Okay, so let's get to the climate impact. Um, how much emissions are refrigerants responsible for today?

A You know, it's, the data is not exact, but it, you know, the, the best estimates are it's between, you know, between one and a half and two gigatons annually of CO₂e or carbon dioxide equivalents. And so, you know, when you look at, when you kind of run that out over the next, ah, you know, when you run that out toward, to twenty-fifty, you know, you're starting to get, look at, you know, 30 to 50 gigatons of CO₂e Uh, over the next 20 to 25 years. And, you know, if we got that target one and a half degrees C, um, that can't be met without dealing with this refrigerant issue and, and being able to, to minimize the impact of refrigerants on the environment.

AI assessment note: “between one and a half and two gigatons annually of CO₂e”

Q talk about why there are emissions from refrigerants, right? Because you could imagine, like, let's just say you're using CO₂ as refrigerant. I think people will obviously understand CO₂ is, is, has global warming potential. Um, but if it were sitting there in a closed loop and it never escaped into the atmosphere, then you would have no climate impact. So what is it that's actually causing the emissions here?

A Yeah, there's, and I think that's a, that's the most important point here, is that until the refrigerant leaks to the atmosphere, it doesn't have a negative impact on the environment. So if you could, in an ideal world, if you could keep all the refrigerant in the piece of equipment that it was designed to operate with, and then recover that refrigerant at the end of life, and then either properly recycle it or destroy it, you really don't have any environmental impact. So all these, uh, all this impact that we're talking about, this 1.5 gigatons annually, Is coming from that refrigerant being released into the atmosphere, either intentionally by, um, by technicians who are unaware or untrained, or unintentionally by equipment that fails and then releases the, the refrigerant into the atmosphere.

AI assessment note: “released into the atmosphere, either intentionally by... technicians... or unintentionally by equipment that fails”

Q how much of the problem is a technical problem versus a sort of, I don't know, market problem? Like, is, Is the problem of leakage, for example, or lack of recovery, is it actually just a difficult technical challenge to avoid leakage or to recover? Or is it just that, like, actually, like you said, we need to train technicians better, we need to mandate a certain end-of-life process, etc.?

A Yeah, it's really not a technical problem. The technology exists. Nothing has to be developed to be able to successfully, uh, recover, reclaim, and, and, uh, refrigerants. It is, it is more of a, frankly, it's more of an economic problem right now. The, the market price for reclaimed refrigerant is more expensive than it is to use virgin refrigerant. So, and when I say virgin refrigerant, it's refrigerant that has not been used previously. Um, so today, the primary Driver for a lot of the venting is economic. It, the technician or the contractor's time is worth, uh, worth more than actually collecting the refrigerant and selling it into the, into the reclamation market. Now, that will change over time. We've seen this in the past as new refrigerants, uh, as old refrigerants are being replaced with new refrigerants, the market for the aftermarket price for these reclaimed refrigerants goes up, Then it becomes economical for contractors to, uh, to recover and, and reclaim those refrigerants.

AI assessment note: “Yeah, it's really not a technical problem. The technology exists.”

Q So do we have data on, it sounds like there's, you know, there are multiple categories of these emissions. There's the leaking from an operating unit, whether intentionally or unintentionally, and then there's end-of-life equipment, um, Whether if you don't do sufficient reclamation or recovery, then at least in the atmosphere, do you know how much is coming from each of those categories?

A You know, I would say that there's not real good data here. It's one of the, one of the areas that there's, I think, a significant gap, and one area for additional research is to understand, um, you know, I think we have a pretty good understanding of what occurs from leaking equipment, because there's a track, there's a record there, right, of refrigerants that's been purchased and installed in equipment. You know, the single biggest emitter is the refrigeration sector, and that's Primarily the, what I'd call the commercial refrigeration sector. That's supermarkets, convenience stores, and that's the single largest emitter. What we don't have real good data on is, you know, end of life residential air conditioning equipment. So when a homeowner's unit, when it comes time to replace, um, for whatever reason, you know, how much of that refrigerant is left in that unit? And then is that refrigerant, um, you know, collected, recovered, reclaimed, or recycled, or sent for destruction? So that's a, That to me is a, is a gap in the, in the data set, and one that, um, you know, would, would require some research to close, but I think it's research that would be important to do.

AI assessment note: “You know, I would say that there's not real good data here.”

Q Who are the major players here? I mean, is it, you know, so we have obviously the HVAC OEMs, companies who make the, um, air conditioners and so on, cooling systems for data centers, whatever it might be. Are they Producing their own refrigerants? Are they buying refrigerant?

A No, they, they, they buy refrigerants. So I, I'd say there's kind of three parts to this market, right? There's the, the large chemical companies who produce the refrigerants. There's the air conditioning and refrigeration OEMs who use the refrigerants, uh, in their product, and so they design product to operate with, with these refrigerants. And then there's the service side of the business, kind of, once the equipment's installed. So those are contractors, And refrigerant, uh, reclaimers who, uh, who service the equipment, who will actually take the equipment, take the refrigerant out of equipment at end of life and get it into the, either the reclamation cycle or the destruction cycle, depending on, uh, on what the use for that refrigerant is or what the, what the state of it is when it comes out of the equipment. So, you know, again, three primary parts of this. One, there's a refrigerant manufacturer. Two, there's the OEM who uses the refrigerant. Uh, in their device, and then third, there's the service side of this, which takes care of the equipment after it's installed.

AI assessment note: “No, they, they, they buy refrigerants. So I, I'd say there's kind of three parts”

Q So you mentioned we started long ago with ammonia and carbon dioxide. What are the predominant refrigerants that we use today? I, I know it varies by application, but high level.

A It does. And, and those refrigerants are still around today. Um, since then, you know, a whole family of synthetic refrigerants has been created. And I say synthetic, they're made through a chemical process. And, you know, we've had an evolution through those as well. The original synthetic refrigerants, uh, were found to have significant, uh, Uh, ODP, or ozone depletion potential, and so that, that was the first problem with these synthetic refrigerants. They're fluorinated or chlorinated, and they were causing holes in the ozone layer, so the Montreal Protocol was the first major treaty to reduce these, the use of these gases, uh, and come up with a second generation of refrigerants, let's call it, that were a little more environmentally friendly. Now, while we solved the ozone depletion problem, we created a global warming problem. The refrigerants that were developed to Uh, replaced the original set, uh, then had a significant global warming impact, and as we learn more about climate science, and we learn more about what impacted the climate, um, this second generation of refrigerants were found to be significantly, a significant contributor to the global warming, and so now we're in the process of changing out those refrigerants to, uh, to a third generation, let's call it, of lower GWP or global warming potential refrigerants.

AI assessment note: “we're in the process of changing out those refrigerants to, uh, to a third generation”

Q You mentioned they've been around for a long time. I would be interested in, like, a brief history of refrigerants. Like, when did we start using them, and then how have the actual refrigerants, the, the materials that we've used as refrigerants, how have they evolved over time?

A Yeah, so you, you go back to, you know, the original, um, the original refrigerants were all the natural refrigerants, ammonia, carbon dioxide, um, were the first ones that were used, and that's, you know, goes back well over a hundred years. Um, and they were used primarily in the refrigeration industry. I mean, ice makers were kind of the first, were the first, uh, uh, uses of some of those refrigerants. You know, Willis Carrier is the one who gets credit for, for using those and in kind of air conditioning systems is the father of air conditioning, and then they've, they've migrated since then to, um, you know, to all sorts of different, you know, applications, whether it be transport refrigeration or, you know, residential refrigeration and air conditioning, um, You know, industrial, uh, process cooling today, the biggest consumer of cooling is data centers. So as we talk about AI and all the AI applications, all that doesn't exist without a significant amount of cooling to keep those servers warm and keep those data centers operating. So it's been a real evolution from basically some minor comfort cooling and food process all the way now to every industrial process pretty much requires some sort of cooling, uh, and to make it, to make it viable.

AI assessment note: “the original refrigerants were all the natural refrigerants, ammonia, carbon dioxide”