The EPA and You

The Montreal Protocol is a document signed by many nations that gives us in the HVAC industry (and other industries as well) the road map as to how certain chemicals will be phased out over time, due to their ODP (Ozone Depletion Potential). Whether this is scientific or not is a discussion for another day. The fact is that the nations that signed on are obliged to follow the phase out.

Of particular interest to my industry over the last couple of weeks has been what is going to happen to R-22. Any of you reading this in your homes or office buildings that have air conditioning probably have a machine that uses R-22 within rock throwing distance. With the quicker phaseout of refrigerants R-12 and R-502, many commercial refrigeration applications moved to R-22 as well.

In addition to this, I have one more sidetrack to make before I get to the main point of this post. A few years ago there were to be no more new units made that used R-22 refrigerant. The Chinese exploited a loophole in the poorly written law and kept making units that used R-22, but shipped them “dry” – in other words, the technician in the field would put the refrigerant in the unit upon installation.

The OEM’s in the US put up a huge stink and demanded the EPA either close the loophole, or let everyone do it. They let everyone do it. These units were enormously popular last summer. In a central air conditioner for home use, contractors were once again able to “cut ’em out, cut ’em in” like they used to do. Before the availability of the dry R-22 units, contractors were forced to swap out the evaporator coils on the inside of the house since the new condensers, charged with the new refrigerant R-410a, are not compatible with old R-22 evaporators. To be honest, the new dry R-22 condensers aren’t either, but that is a different post for a different day. They worked, for now, and everybody was happy.

This brings us to January 2012. The previous rule for R-22 phase-out written by the EPA allocated 100 million pounds for 2011 and 90 million pounds for 2012. The EPA decided to accelerate this and was proposing anywhere from 55 to 80 million pounds for 2012. But the EPA sat on its hands and didn’t issue a ruling at all! Worst case scenario. This from one of the manufacturers of R-22 on January 5:

As of today, no producer or importer has the legal right to manufacture or import R-22 for refrigeration or air conditioning use. Under such circumstances the EPA is expected to issue ‘non enforcement’ letters to allow business continuity.

Consequently, given the current absence of non-enforcement letters and the possibility of significantly higher than previously expected reductions in allocation rights, (company x) must now evaluate the impact such a reduction may have on our ability to meet customer demands.

Meanwhile, since then, the EPA has proposed cutting the R-22 allocations by FORTY FIVE percent. This does not help business continuity, to say the least! In addition, no final ruling has been made, and we still don’t know the true allocations.

So what are the results to the market?

It is destroyed. Manufacturers are not accepting orders for any price right now. Consequently, guys like me (distributors) are halting all large quantity sales until we can figure out what is going on. Oh, the price? Since the first of the year, it has tripled to the street.

The market for R-22 is completely locked down and in a total state of chaos. Rumors are flying, and contractors don’t know who to believe or what to do.

In addition, it is time for us to begin ordering our air conditioning equipment to sell this summer. Nobody has any idea at all what to do about the dry R22 units. Will they be allowed to be sold? Will the cost be prohibitive with the new allocations/pricing on R22?

All this and more, courtesy of the Environmental Protection Administration.

So if your air conditioner conks out this summer in your house or business, or if you own a convenience store and a refrigeration unit goes down, or if you work in a restaurant and a walk in cooler goes down, expect that bill to be WAY higher than you thought it would be.

Not judging, just sayin’.

15 thoughts on “The EPA and You”

  1. There is a public policy group in TX that is dedicated to telling people the damage the EPA is doing to businesses – they were talking about high handed coercion to some refiners in TX – what they were doing wasn’t illegal but if they didn’t spend the money the EPA wanted – like the mafia – life could become very difficult for them down the road …

  2. @Bill – it is another classic case of people in positions of authority with absolutely no clue how their actions affect markets and no technical expertise whatsoever on the subject at hand. I think it was David Foster who once said we have a Congress making laws on everything from baseball to refrigerants and nobody has a clue how either work. Or something like that.

  3. EPA walked into our business last summer and just said hey we’re doing an inspection. Pointed out several minor things and said we have to fix it all and left. We spend $15,000+ and wait for some follow up and the first letter we get from them says everything is fine no problems.

    Never saw them again. I hope it stays that way.

  4. @Dan – and few people realize today that it was Richard Nixon who signed the law creating the EPA. On the Texas refiners, they basically coerced them in to doing something expensive – even though it wasn’t legally required – because the refiners knew down the road they needed the EPA’s cooperation…

  5. So if your air conditioner conks out this summer in your house

    We don’t have a central A/C unit at home. Too expensive to retrofit an old home, and between the shade trees and old construction window units are sufficient.

    I’ve been replacing our old window units for new ones, working on the last two this summer. What will this do for the price of those?

  6. @Brian – probably won’t affect new window shakers too much as those come with R410a for the most part. You should look into a ductless mini split though – so much more efficient and comfortable.

  7. Dan,as a matter of curiosity, how good is the science behind the Montreal accord? Or could you refer me to such sites as address the issue? For global warming there is NO scientific basis for all the scare stories,which is not to say there isn’t some minor warming in all the noise. is the go to site for global warming and related topics-actually it is the best scientific blog I have seen.

  8. @Renminbi – I honestly don’t know how good the Montreal Protocol science is, but I suspect it is very bad. The whole phaseout thing is based on the ODP, or Ozone Depleting Potential of the chemicals. I have heard many studies that say that the Ozone Layer fluctuates naturally now. Deep down I think it is all b.s. R-22, the chemical discussed above has a very low ODP and quite low global warming potential (GWP). So it sounds like a scam to me.

    In addition it has been the law for a very long time that any service technicians must recover and recycle refrigerants when they are servicing the equipment. This includes the guys that are junking the old stuff. So in the end, very, very little of these chemicals are actually escaping into the atmosphere.

    Cow farts (methane) probably cause more damage to the ozone and that has been going on for eternity.

  9. “it is another classic case of people in positions of authority with absolutely no clue how their actions affect markets . . . ”

    I disagree. I think these people know exactly what they’re doing. I also know that someone spent a lot of time studying our political system and figured out how the executive branch can effectively gut the Constitutional power-sharing provisions, allowing the Congress no voice whatsoever.

    This is the quintessential statutory situation the lawless Obama flunkies love: the Law either doesn’t exist yet (like this situation, or like the budget), or the Law is muddled and unworkable (ObamaCare). Absent a statute that clearly sets out requirements, the flunkies get to use their own discretion in complying with the rules. Thus, you see so many hundreds of businesses in Pelosi’s district get waived out of one of the beginning ObamaCare requirements.

    In this new A/C snafu, “the EPA is expected to issue ‘non enforcement’ letters to allow business continuity.” Once again, the people mist affected by the legal requirements are forced to go, hat in hand, to the very incompetents who have screwed it all up, and there request permission to continue on with their businesses. Let’s see if Republican-owned HVAC businesses get such letters as easily as do Democrat-owned businesses, or if they end up going belly-up like so many Republican-owned GM dealers across the country.

    These people are lying thieving scum. Any and all means and methods to keep your money out of their hands are now approved and encouraged.

  10. @Bobby – I think you make some great points but I don’t see anything here but business as usual by the EPA. As far as the non enforcement letters go, these aren’t mom and pop shops waiting for them, they are international chemical giants that are waiting such as Honeywell, DuPont, Arkema (part of the old TotalFina Elf) and others. I don’t think party affiliation really matters.

    This isn’t the first time my industry has been affected by crap judgement by the EPA – over the years they consistently and constantly stumble on very simple matters no matter the administration. I think it is just a government issue, not really a party line thing. This isn’t making excuses for anyone putting people in these positions that don’t understand how their actions are going to affect real people this summer when their A/C conks out.

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