• HCFC Phaseout Rules Begin Year on Note of Relief

    Jan. 1, 2010
    We talk to two members of HARDI's Refrigeration Council and try to assess the impact and the preparedness of wholesalers in this transition from R-22 to other refrigerants

    Sometimes the best surprises are those that never happen.

    That is what appears to be the case with the EPA's final ruling last month regarding the Jan. 1 phaseout of HCFCs.

    The intent of the EPA rulings was to ensure the implementation of U.S. compliance with the Montreal protocol that included the reduction of U.S. production and consumption of HCFCs, to close product importation loopholes for recharged appliances and to clarify definitions related to prohibitions of HCFCs.

    However, a preliminary December 2008 ruling, which did not contain “final” language, left wholesalers concerned. Issues arose regarding the servicing of existing air conditioning and refrigeration systems, inventory components manufactured before Jan. 2010, replacement levels for virgin R-22 and the status of new or stalled projects.

    It's basically what we expected, and that's business as usual, says Jon Perry, HARDI's Refrigeration Council chair and president of Rock Hill, SC-based C.C. Dickson Co.

    “There will be serviceability of product in the field, and wholesalers will be able to use the inventory they have to service their customers and won't be stuck with any unwanted inventory,” says Perry.

    For Perry and other wholesalers, the clarity of the rulings and the lack of any “curveballs” pave the way for strategic planning that until now had left some wholesalers unsure since late 2008. “Now that we know what the rules are, every wholesaler and manufacturer can make plans for the next five years,” Perry says.

    The EPA HCFC phaseout rules span five years, beginning Jan. 1, 2010, and end Dec. 31, 2014.

    In brief, the rulings:

    • Allow for the servicing of existing R-22 air-conditioning and refrigeration systems without interruption;

    • Remove any impact on exiting component inventories manufactured before Jan. 1, 2010;

    • Formalize the stepdown of virgin R-22 cap from 2010-2014 set below estimated demand;

    • Create a grandfather clause of two years for new installation projects.

    While there has been no industrywide study of wholesaler preparedness for the R-22 phaseout issue, both Perry and Bill Bergamini, refrigeration council vice chair, believe that most HARDI wholesalers who could be affected by the rules had prudently prepared for the final ruling. “We anticipated that the final ruling would be thoughtfully addressed, but until we actually saw it there is always a degree of concern,” says Perry.

    He noted that any wholesaler who had not planned for the eventual replacement of R-22 could now “catch up” given the EPA timeline.

    Both Perry and Bergamini agreed that many manufacturers had already introduced R-410A products into the market to ensure that the future technology of the industry became a mainstay of their product lines without waiting for EPA mandates.

    Planning for the phaseout became a test of business acumen to make the transition as seemless as possible while remaining profitable for business, Perry says. But he notes that ultimately the change was good for the consumer too, who still remains largely in the dark regarding the effects of the transition.

    “From the customer standpoint, selling R-410A equipment was the right thing to do,” Perry says.

    He acknowledges that the higher price of R-410A equipment, at least initially, and the learning curve of working with a new technology might have dampened initial enthusiasm on the part of contractors. The key is to share all the information with consumers and let them make the decision, he says.

    But if constant vigilance during the past year became worrisome for some wholesalers, Bergamini, president of Countryside, IL-based ILLCO Inc., takes a different view.

    Bergamini sees opportunity in all these changes, not through rose-colored glasses of wishful thinking but rather through a real dollars-and-cents approach that can add to the bottom line. Wholesalers will have the opportunity to introduce the latest products with a new technology.

    “For progressive companies, change presents opportunities,” Bergamini says. “As an industry, we need to make sure we have a voice in guiding that change.”

    Perry and Bergamini (along with co-chair, Frank Meier), declined any credit for the efforts of their committee in both educating and influencing the EPA's final ruling.

    However, HARDI Vice President Talbot Gee, speaking at a Dec. 14, 2009, teleseminar, said the Refrigeration Council, the HCFC task force and other industry leaders were “absolutely instrumental” in helping obtain a very favorable outcome with the final rules.

    Tom Pericˊ is the editor of HVACR Distribution Business. Contact him at 856/874-0049 or [email protected].