Dan from Madison

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’.