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The Business Case for Avoiding & Replacing High-Global Warming Potential HFC Refrigerants While Phasing Out HCFC Refrigerants Arunabha Ghosh, CEEW Stephen.

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Presentation on theme: "The Business Case for Avoiding & Replacing High-Global Warming Potential HFC Refrigerants While Phasing Out HCFC Refrigerants Arunabha Ghosh, CEEW Stephen."— Presentation transcript:

1 The Business Case for Avoiding & Replacing High-Global Warming Potential HFC Refrigerants While Phasing Out HCFC Refrigerants Arunabha Ghosh, CEEW Stephen O. Andersen, IGSD David Doniger & Bhaskar Deol, NRDC Side Event to Montreal Protocol Open-Ended Working Group Bangkok, 26 June 2013 Preliminary findings of a project of: The Council on Energy, Environment & Water (CEEW), The Energy & Resources Institute (TERI), Institute for Governance & Sustainable Development (IGSD), and The Natural Resources Defense Council (NRDC) in collaboration with relevant industry associations

2 Global Drivers of Room and Automobile AC Market Transformation Countries respond to energy and environmental concerns with labeling, energy efficiency standards, and product prohibitions –EC is phasing out MACs with GWP>150 by 2017 –US EPA removing HFC-134a from MACs through vehicle emission standards; will reduce high-GWP HFCs through SNAP program –Australia taxes HFCs to encourage containment, recovery and recycling and for tax revenue –Japan is rewarding the most energy efficient products with market domination through Top Runner –China is enacting stringent energy efficiency standards and offering rebates for purchase of top runner products –Agreement of China President Xi Jinping and US President President Barack Obama to phase-down of climate-damaging HFCs using the Montreal Protocol 2

3 Each Global Market Region is Unique Local climate conditions –Cooling season temperature and humidity Mix of domestic and foreign air conditioning supply –China sources nearly all their room AC from domestic and foreign companies manufacturing in China –India sources room AC from domestic manufacturers, foreign companies manufacturing in India, and from imports from manufacturers in countries such as China, Korea, and Thailand –The US, EU, and many other countries source room AC primarily from manufacturers in other countries AC purchase cost, energy price, appliance energy efficiency standards, and other factors determine total ownership cost 3

4 What is the India Business Case Project? Explores the business case for avoiding high-GWP HFCs for room air conditioners (RAC) and motor vehicle air conditioners (MACs) in India Consolidates relevant market data Characterizes what makes the Indian market unique and challenging Catalogues the drivers changing Indian domestic and export AC markets Collects the wisdom of industry leaders and engineers Shares findings through business and engineering organizations 4

5 India Project Team Stephen O. Andersen, IGSD Bhaskar Deol, NRDC Arunabha Ghosh, CEEW Anjali Jaiswal, NRDC Rajeev Palakshappa, CEEW Girish Sethi, TERI 5

6 September 2012 Meetings Chennai, Mumbai, New Delhi & Pune Informal Government –National Ozone Unit & Bureau of Energy Efficiency Technology NGOs & IGOs –The Energy and Resources Institute (TERI) & UNDP Influential & Respected Technology Experts –Professor Radhey S. Agarwal (IIT, retired), Dr. Sukumar Devotta (NEERI, retired) Rajendra Shende (UNEP retired, now at TERRA Policy Center) & Markus Wypior (GIZ) Industry Associations –Refrigerator and Air-Conditioner Manufacturers Association (RAMA) –Society of Indian Automobile Manufacturers (SIAM) Mobile AC Companies –Delphi, TATA & Subros Room AC Companies –AECOM, Birla, Blue Box, Blue Star, Carrier, Daikin, Danfoss, Emerson, General Electric, Godrej, Hitachi, Kenmore Vikas, Samsung, Tecumseh, Voltas & Whirlpool Chemical Suppliers –Honeywell 6

7 India Business Case Study Preliminary Findings & Challenges (1) Technology to leapfrog high-GWP HFCs in RAC and MACs is available and the companies in India know how to implement it Indian companies wonder why they are asked to implement technology not yet commercialized or promoted in developed countries or in the countries where they market products Safety standards are needed for manufacturing, installing, and servicing equipment using flammable refrigerants to give confidence in safety and to prevent unsafe products The Government of India and its Ozone Cell are respected and appreciated by Indian companies and could be influential in moving forward with coordinating energy efficiency standards with the phase-out schedule and in rapidly implementing and enforcing safety standards 7

8 India Business Case Study Preliminary Findings & Challenges (2) Most companies in India currently plan to implement HFC-410a to replace HCFC-22, but anticipate a second transition One companyGodrejhas already leapfrogged HFC-410a by implementing HC-290 and has capacity to supply a growing market in 2013; 25% of 2013 sales have been 5-Star HC units Two companiesDaikin and Panasonicplan to leapfrog HC-410a by implementing HFC- 32 and will also have capacity to supply a growing market in 2013 Commercialization of these environmentally superior flammable refrigerants requires appropriate safety standards and disciplined installation and service in strict compliance with the standards 8

9 India Business Case Study Preliminary Findings & Challenges (3) Most automobile ACs manufactured in India use HFC-134a There are three viable refrigerant options to replace HFC-134a in automobiles: HFO- 1234yf, HFC-152a, and CO2 Nearly all vehicle manufacturers in China, Europe, India, Japan, and North America have chosen HFO-1234yf as the next-generation refrigerant But current price of HFO-1234yf is about five times more than HFC-134a; there is a need to identify and promote local refrigerant vendors and to incentivize local production Society of Indian Automobile Manufacturers (SIAM) says energy efficiency of MACs is a high priority; a shift to HFO-1234yf would be more attractive Two companiesTata Motors and Maruti Suzukihave designed prototype HFO-1234yf systems for the vehicles they intend to export to Europe Delphi and Subros have sophisticated and capable research facilities in India that could develop components and systems suitable for the hot and humid Indian climate 9

10 Business Lessons from Montreal Protocol Developed countries phase-down first, driving innovation, shaking out the best technology, removing barriers, achieving economy of scale, and implementing necessary safety standards Some Indian companies are ahead of the competition: –At the forefront of room A/C solutions with low-GWP refrigerants and high energy efficiency –Engineering and supplying solutions for motor vehicle A/C The Montreal Protocol Multilateral Fund (MLF) could finance the transition even before Article 5 controls are scheduled Coordinating HCFC phase-out and HFC production phase-down could include supplementary finance for maximum energy efficiency A credit mechanism could help MAC manufacturers reduce system design costs by incentivising the use of the same refrigerant for cars for the domestic and export markets 10

11 India Business Case Study Additional Work Underway CEEW will convene dialogues of various stakeholders, from industry, academia, research institutions and government; it was also consider implications for trade and investment rules of changing standards TERI will prepare a matrix that analyzes alternatives to HFCs and HCFCs considering GWP, energy efficiency, peak energy consumption, investment requirements for firms, and impacts on consumers initial purchase prices and lifetime energy costs IGSD and Daikin will publish a Life Cycle Climate Performance (LCCP) analysis on direct, indirect and embedded emissions of Room AC using different refrigerants in Indian climate zones The Confederation of Indian Industry plans to conduct a structured survey of various stakeholders (including building, vehicle, and other applications of HFCs) to capture their views and perspectives These efforts will complement ongoing investigations by the NoU 11

12 Thank You 12

13 Backup Slides Follow 13

14 Room AC Refrigerant Choice Air conditioner choice balances concerns over ozone, climate, purchase price, operating cost and safety A decade ago, in the rush to protect the ozone layer, companies selected HFC-410a to replace HCFC-22 in room AC for non-A5 markets Today HFC-410a is considered as a transition substance soon to be replaced by environmentally superior technology A5 Parties can either leap-frog HFC-410a or can convert first to HFC-410a and then to the new technology Life-Cycle Climate Performance (LCCP) is the comprehensive metric for choosing next generation refrigerants are environmentally sustainable and offer affordable cooling performance 14

15 The Best Available New Technology Developed by A5/non-A5 Partnerships GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) has partnered with Gree in China and Godrej in India to commercialize small capacity, highly energy efficient split room AC using HC-290 (propane) refrigerant MITI (Ministry of International Trade and Industry, Japan) and Daikin with other Japanese companies has partnered with companies in China, Indonesia, and Thailand to commercialize small and medium capacity, highly energy efficient split room AC using HC- 32 refrigerant. Daikin will also commercialize HFC-32 for manufacture in its own factories in India, Japan, and other countries. Next-generation technology likely to be introduced first in A5 markets close to manufacture with prospect of growing sales 15

16 Article 5 Choices In Phasing out HFC-22 in Room AC GWP 2288 HFC-410a –Not flammable, energy efficiency with or without heating mode –The best available technology a decade ago when non-A5 phased out –Now considered an unsustainable and obsolete transitional substance GWP 4 HC-290 (propane) –Highly flammable, but safe & energy efficient in small-sized split ACs without heating mode GWP 675 HFC-32 –Mildly flammable, but safe & energy efficient in small- and mid-sized split ACs with or without heating mode; energy efficient at high ambient temperatures GWP HFO blends –Not flammable, claimed to be energy efficient, little information publically available 16

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