Trakref Launches Refrigerant Roundup
2023 and the End of Business as Usual in Refrigerant Reporting
Happy new year! As we kick off 2023, we are excited to launch our monthly LinkedIn newsletter Refrigerant Roundup. Since 2017, Trakref has published more than 200 blogs, hosted 147 webinars, and produced 32 white papers. All of which is focused on HVAC/R, Refrigerants, and F-gasses (fluorine gasses) in an effort to bring awareness to the impacts that refrigerants have on climate, the environment, and operations.
Since 1994, we have been committed to reducing refrigerant losses and work hard to make the process of tracking refrigerants and F-gasses as simple as possible. During our 28 years, we have manufactured recovery equipment, were part of the team that developed the plastic cylinder, created the cylinder exchange program, and operated reclaim plants in the US, Europe, and Asia. We pioneered software to track cylinders, gas, systems, and the people responsible for their success. We also participate in the regulatory process and have joined in almost every discussion on every continent related to refrigerant stewardship. Our team has helped to shape policies at the local, state, and federal level. Our activism and advocacy are focused on ways to improve best practices, engage the workforce in solution development, and to act as a conduit between operational success and policy development.
2022 was an overwhelming year of updates to regulations related to refrigerants, F-Gasses, and the HVAC/R (ACR) industry. And although we knew the AIM act would be the catalyst for a process of change, we underestimated the speed and scope of changes to refrigerant awareness and management. Since 1987, the EPA was always at the epicenter of refrigerant management policy, but that is no longer the case. Policies have become politicized at the federal level, and the EPA’s effectiveness is marginalized. So states and other groups have taken a more active role in participating in the governance process.
2022 yielded the most updates to refrigerant awareness since the Montreal Protocol brought Ozone Depletion into focus 35 years ago. The reason that states and other groups have joined the effort to curb emissions is because even with all of the existing regulations in place, and more than 3 decades working to gain control over emissions, we now vent 4-5x more refrigerants in the US today than we did 30 years ago.
There is more carbon equivalent impact from refrigerants than from all of the air travel in the US annually. Refrigerant emissions are part of the carbon balance sheet that is reported as part of Scope 1 emissions. Traditional regulatory patterns are being enhanced, and our industry now includes oversight from Shareholders, Mechanical Code and Building Permitting, Energy Conservation, FTC, SEC, State Regulators, OSHA, Clean Air, GreenHouse Gas Program Offices at the State and Federal level, Regional GHG Programs, and numerous program Offices at EPA. And now, foreign regulations will soon have an impact on reporting, recordkeeping, registries, and recycling (end of life) as the EU works to establish a level playing field globally.
The results from 2022 were more than a decade in the making, and 2023 will only build on that activity. Trakref’s passion for this topic inspires us to innovate and drives our commitment to being successful. We measure success one pound at a time, not one subscription at a time, and that makes us different. It is not enough for us to sell a subscription; our team is driven by a deeper commitment to be effective and relatable.
Refrigerant Roundup is written by a small group of passionate refrigerant experts here at Trakref. Our intent is to champion the cause of refrigerant stewardship, foster a refrigerant geek community, and end the business-as-usual approach of “topping off” leaks in systems. To put the scale of 2022’s impact in perspective and in order to provide some foreshadowing for 2023, here is a list of the top items impacting owners, operators, and the service teams that maintain, install, and decommission F-gas-containing appliances:
- The Inflation Reduction Act, dedicating more than $369 billion to cut US greenhouse gas emissions 40% below 2005 levels by 2030. Because the law works through tax incentives that are uncapped, the US could spend up to $800 billion to reduce carbon emissions while creating an estimated 9 million new jobs. Its immediate impact will increase demand for certain refrigerants, putting more pressure on already constrained supplies of refrigerants. Expect heat pumps, heat pump-driven water heaters, and more electric-oriented refrigerant-based systems to get subsidies and be deployed into service.
“This law will reshape the decades ahead. This is the year we pivot toward a better future.”
Fred Krupp EDF
- The AIM Act under the EPA engaged the second of three phases, with the planned obsolescence of traditional refrigerants
- 10% reduction in place – next phase down is in 24 months
- Phase out of high-GWP refrigerants established in December 2022, final comments are due by the end of January
- Be on the lookout for the final leg of the EPAs obligations under this act. The EPA has signaled that it is considering a new branch of regulations to cover HFC maintenance actions and expect new associated licensing and training requirements.
- The new US budget further accelerates climate action – the 4,000+ page budget includes $685 million for industrial decarbonization, $380 million for alternative fuels, $140 million for carbon removal technologies, and creates an Industrial Emissions Reduction Technology Development Program.
- Federal contractors must disclose Scope 1 emissions, which includes refrigerants
- The new EU Corporate Sustainability Reporting Directive (CSRD) will require ~50,000 companies to disclose their carbon emissions and performance on other ESG issues. It is expected that EU disclosure standards and the standards from the newly formed International Sustainability Standards Board (ISSB) will converge.
- The EU Carbon Border Adjustment Mechanism (CBAM) – which was approved just before the holidays – will impose a new tariff on the carbon ‘intensity’ of products imported into the EU. As the world’s largest trading bloc with the largest carbon market, the new EU carbon tariff could help establish a global price on carbon emissions.
States have established their own policies to deal with refrigerants and HVAC/R systems
- California, Washington, and New Jersey all enacted new regulations related to the responsibility to register HVAC/R appliances.
- The US Climate Alliance is acting as a clearinghouse to help facilitate awareness and discussions between states.
Shareholders Want Answers
- Greenwashing won’t be tolerated by regulators in the US, UK, EU, Australia, and other countries that have enacted new policies to prevent companies from making false ESG claims. Last year, Deutsche Bank was raided by police for suspicion of greenwashing and millions in greenwash fines were collected. The new policies aim to provide investors with reliable, consistent, and comparable information about ESG factors. A new report demonstrated the need for these changes since less than one percent of ESG funds would meet the proposed EU ecolabel standard.
- Over 90% of companies plan to increase their sustainability budgets in 2023. Energy efficiency is ranked as the top priority for companies, followed by emissions reduction (Refrigerants), pollution prevention, circularity, and recycling (refrigerants). International Data Corporation forecasts that 75% of large enterprises will implement ESG data management and reporting software as a response to new legislation and stakeholder expectations. They also predict that 30% of organizations will advance beyond reporting capabilities to generate sustainably driven cost and competitive advantages.
- ESG is now heavily politicized in the US causing some firms to roll back their commitments, but that is prudent anyway since Net Zero is unachievable without a better grip on a firm’s refrigerant impact. In 2023, the Republican majority in the House will take on Wall Street, corporate America, and U.S. financial regulators. On January 4, 2023, the SEC updated its timeline for ESG-Related Actions Under RegFlex Agenda disclosure rule with an expected release date of April 2023 for its climate disclosure rule requirements. Although the ruling will face opposition from the conservative majority in the House of Representatives and some business interests, there is overwhelming support for this action.
The Newest Update to Mechanical Codes
- It appears that there are two versions of the A2L home comfort mechanical codes, the IAPMO (The International Association of Plumbing & Mechanical Officials) and the ICC (International Code Council) version. These codes are slightly different from each other. Both will reference ASHRAE Standard 15 and UL Standard 60335-2-40 for installation requirements providing a uniform set of requirements between all states. However, the IAPMO UMC coverage deviates from ASHRAE 15 in how an indoor DX unit will handle an A2L leak, in terms of where the leak can be discharged by the ventilation system. ASHRAE 15 allows for two options: either (a) discharge to indoor spaces provided that the refrigerant concentration will not exceed a specific calculated limit, or (b) discharge to the outdoors. Right now, the UMC version will only allow for condition “b.” In addition, the UMC Technical Committee is currently voting on whether to require brazing-only for A2L fittings or allow for press connects.
- The State of Washington is set to vote later this month on 60335-2-40, which will contain significant changes regarding A2L refrigerants used for comfort cooling. Equipment containing these mildly flammable refrigerants is already available in some states, and more states are amending their building codes to allow for their use. So, it is time to get ready, as A2Ls are coming, and contractors should be in front of this transition.
- Materiality – Materiality is a concept that defines why and how certain issues are important for a company or a business sector. A material issue can have a major impact on the financial, economic, reputational, and legal aspects of a company, as well as on the system of internal and external stakeholders of that company. Regarding refrigerants – an example of Materiality would be the AIM acts has reduced access to refrigerants which will drive costs higher.
- Double Materiality – “Double materiality is an extension of the key accounting concept of materiality of financial information. Information on a company is material and should therefore be disclosed if “a reasonable person would consider it [the information] important”, and an example of Double Materiality in the HVAC/R space would be: as climate gets warmer, we need to operate our HVAC/R systems longer, leading to increases in energy and maintenance and an increase in expected leak rates, therefore increasing related emissions of associated CO2, driving the cycle even higher.
- ESG results will impact a company’s financial position, the higher your risk related to ESG performance, the lower your borrowing score, it will be that simple.
- ESG reporting frameworks – guidance developed to provide companies a process to disclose non-financial information used primarily to help publicly traded companies determine the financial materiality of sustainability-related information for disclosure to the SEC and the public.
The refrigerant management spectrum is maturing, and companies are hiring a new group of stakeholders (Sustainability Professionals) to help manage this phase of growth and transformation. Traditionally, the HVAC/R industry has left the governance and data management to the facilities teams. It was common for HVAC/R techs to get EPA certified and then take that training to bring awareness to their operations teams. The size of the impact was assumed to be so small that refrigerant (F-gas) emission risks did not elevate corporate exposure enough to trigger engagement in the boardroom or at the C-suite level, but that is changing.
As companies address three fundamental and related shifts—the intensified focus on Environmental, Social & Governance (ESG) issues driven by investors, employees, consumers, business partners, ESG rating agencies, and regulators, and the shift to a multi-stakeholder form of capitalism  the growing awareness about the significant environmental impact caused by refrigerants—corporate boards are not only incorporating non-financial matters into discussions of company strategy and business plans but also increasingly considering ESG performance measures in incentive plans.
The growing list of requirements, the patchwork of triggers, and expanding stakeholder engagement are some of the reasons Trakref is launching the Refrigerant Roundup. Trakref has always invested significant resources in sharing industry updates and hosting webinars because we take our role in this community very seriously.
Refrigerant Roundup will be published every month, focusing on different segments of the industry:
Our newsletter will follow the pattern of our blogs – and be operationally focused. The Trakref operational approach focuses on situational needs in 4 categories (recordkeeping, reporting, registration, end of life). Our goal is to cleanly delineate the potential variations of service action and the documentation needs for every member of your team, based on changes in the policies that affect HVAC/R appliances. We will continue to review and track policies and then streamline what is needed. You can join our newsletter to learn more and subscribe to our software to get the end results.
Recently we joined both UNPRI and the UNCDP, so we could work on the inside of these organizations to help them hear your operational voice because that is the context for the way we see these issues. The future of refrigerants is complicated, the topics are broad, and the Refrigerant Roundup will be our platform to share very specific refrigerant-oriented information, so subscribe to this newsletter to get a monthly summary of the big issues impacting HVAC/R owners, operators, sustainability, compliance teams, and facility pro’s in the US, Europe and anywhere you are seeking awareness and better management.