The Business Case for Avoiding

1
The Business Case for Avoiding
ReplacingHigh-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 AutomobileAC Market
Transformation

• Countries respond to energy and environmental
  concerns with labeling, energy efficiency
  standards, and product prohibitions
• EC is phasing out MACs with GWPgt150 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

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

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

5
India Project Team

• Stephen O. Andersen, IGSD
• Bhaskar Deol, NRDC
• Arunabha Ghosh, CEEW
• Anjali Jaiswal, NRDC
• Rajeev Palakshappa, CEEW
• Girish Sethi, TERI

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September 2012 MeetingsChennai, 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

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India Business Case StudyPreliminary 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

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India Business Case StudyPreliminary 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

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India Business Case StudyPreliminary 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

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

11
India Business Case StudyAdditional 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

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Thank You
13
Backup Slides Follow
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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

15
The Best Available New TechnologyDeveloped 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

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 350-700 HFO blends
• Not flammable, claimed to be energy efficient,
  little information publically available