Days of R404A are numbered

High-GWP refrigerants may soon be in short supply and rising in price as stockpiles dwindle, international pressures hit our shores, and the HFC phase-down quotas start to bite. And according to experts at AIRAH’s Refrigeration 2022 conference this week, that means it’s time for contractors to urgently switch away from R404A.

When the HFC phase-down began in January 2018, concerns were voiced about the possibility of prices spiking – as they had done in Europe under the F-Gas regulation. Those fears, however, proved largely unfounded in Australia; the past four years have been relatively smooth in terms of refrigerant prices.

While that has meant stability, industry observers say that it has also created complacency. At the “cold face”, knowledge about the phase-down and the need to transition to lower-GWP refrigerants remains low. In particular, R404A remains a popular choice for low- and medium-temperature refrigeration applications, such as commercial refrigeration, supermarket display cases, cold rooms, transport refrigeration and process cooling.

But as the speakers at Refrigeration 2022 warned, that will soon have to change.

Supply shock coming

Sythree Director John McCormack opened proceedings with a presentation on the changing landscape of refrigerants and the forces driving the change. He noted that the current cost of refrigerants is lower than should be expected due to inventory stockpiled before the HFC phase-down started. This inventory has effectively “masked” the first two reductions in Australia’s refrigerant import quota.

But that stockpile is shrinking. Based on the data in Cold Hard Facts 2021, McCormack estimates that in 2023, Australia could be facing a shortfall of as much as 500 tonnes of refrigerant.

“Importers have a fixed quota,” he says, “and as the quota steps down they have less CO₂e to sell. So they will lift the price for higher GWP products to reflect the quota they consume.”

Accordingly, McCormack expects rapid increases for high-GWP products such as R404A and R410A. He also predicts shortages.

“When the inventory is gone in the first half of next year, importers and wholesalers will have to look at what they sell. There is not enough quota to import enough HFCs to meet the demand, regardless of the price. They will have to pick which customers they support with their limited supply.”

Some of this pressure will be eased by moving to readily available HFO blends that can be used in existing equipment, such as replacing R404A with R449A, and replacing R134a with R513A.

“This would free up enough quota to cover the step downs for 2022, 2024 and 2026,” says McCormack, “which would give the market the time to upskill for these new technologies. Of course, this will not happen. All the supermarkets and coldrooms cannot move straightaway, and neither can all the cars and other R134a equipment.

“We will see a supply shock. That’s when the market will believe that this phase-down is real.”

In the meantime, other factors will also put upward pressure on prices. Due to raw material cost increases and global freight, virgin HFC prices have increased by about 17 per cent. The cost of distribution around Australia has also increased sharply with rising fuel prices. These costs will be passed on in the near future.

Shock or shift?

On day two of the conference, Graeme Dewerson from the Expert Group presented Cold Hard Facts 2021. The latest in the series of reports prepared for the Department of Agriculture, Water and the Environment analyses data from 2020 to identify key developments and trends in the refrigeration and air conditioning industry.

Cold Hard Facts 2021 includes data on total refrigerant usage in Australia versus bulk imports. In 2017, the year before the HFC phase-down started, there was a spike in imports. But in 2019 and 2020, usage outstripped imports. Dewerson noted that this trend is likely to continue until market pre-quota stockpiles are depleted. But at that point, he said that refrigerant recycling is likely to step up to fill any gap between imports and usage.

Indeed, some have suggested that the move away from R404A may not be so much a shock as a shift. It is thought that recycling could generate 100–200 tonnes of recycled HFCs in the event of a shortfall. Others have flagged that recycling the HFC blends is not as easy as recycling refrigerants such as R22.

As noted above, lower GWP alternatives exist for R404A. Products such as R448A and R449A are direct replacements, offering around a 65 per cent CO₂e reduction on R404A. This means that the large volume of R404A imported in 2020 represents a “carbon sponge” that can be converted to other products. But again, this will rely on industry transitioning quickly.

Government considering options

Pat McInerney from the Department of Agriculture, Water and the Environment also presented at Refrigeration 2022, with an update on the HFC phase-down.

As well as providing some background on the Montreal Protocol and the Kigali Amendment that has set targets for the phase-down of HFCs globally, McInerney highlighted areas where Australia may need to take more action than simply restricting bulk imports.

One such area concerns R404A. According to Cold Hard Facts 2021, 822 tonnes of R404A were imported in 2020, compared to 838 tonnes in 2019 – a very slight decrease. McInerney indicated that the government has recognised the issue, and is now looking at ways to address it. One option is a ban on certain equipment types using R404A, though such bans may be complicated to implement. In short, this piece of work is ongoing.

Time to move

Although future government policy is still not clear, the message for contractors is: the days of R404A are numbered. Experts highlighted the need to have conversations with customers about this refrigerant and how rising prices will impact their business. They also noted that the imperative is now even greater to avoid installing new equipment on R404A and invest the extra money to move to a more future-proof product.

Additionally, there is a need to build knowledge among practitioners about replacement products, retrofit processes, and how to optimise systems on those products.