What is in this article?:
- Just like any other product, R-22’s price is driven by supply and demand.
- However, in this case the supply is dictated by the EPA and demand is difficult to predict.
- As a result, prices fluctuate and contractors wonder about the future of this popular refrigerant.
Of all the refrigerants HVACR contractors purchase, R-22 probably comes with the most questions. What’s the current price? Where’s the price heading? How long will it stay on the market?
Just like any other product, R-22’s price is driven by supply and demand. However, in this case the supply is dictated by the EPA and demand is difficult to predict. As a result, prices fluctuate and contractors wonder about the future of this popular refrigerant.
The EPA & R-22: What’s the Latest?
The amount of new R-22 that flows into the marketplace is solely determined by the EPA and every year the spigot gets tighter in accordance with the EPA’s phase out of R-22 (HCFC-22), which is a greenhouse gas that contributes to ozone depletion. Last year, the EPA capped the production and import of R-22 at 62.8 million pounds and this year it is capped off at 51 million pounds. By 2020, or as soon as 2018, all R-22 manufacturing and importation will end. As for future allowances, we are in a holding pattern as the EPA considers three different timelines for the remainder of the phase out.
In December 2013, the agency issued a proposed rule outlining these possible scenarios:
- EPA’s preferred option: Next year’s cap is set at 30 million pounds and declines by 6 million pounds a year through 2019, which would be the last year that R-22 can be manufactured or imported.
- The three-year linear drawdown: R-22 production and importation ends in 2018; until then, caps are set as follows: 2015 – 27 million pounds; 2016 – 18 million pounds; 2017 – 9 million pounds.
- The estimation approach: A cap of 50 million pounds is set for next year while future caps are later determined as the EPA gathers market data.
The public comment period for this proposed rule ended in March. In the weeks prior, many industry and public interests stakeholders urged the agency to take a more aggressive approach. In February, 39 members of congress signed a letter expressing their concern of an R-22 surplus that will grow if the EPA doesn’t accelerate the phase out. Currently, the EPA is weighing industry comments in order to choose the option they feel best balances market needs and environmental concerns. A timeframe has not been set for the final rule.
What Happens to the Price?
The EPA’s chosen route will largely drive the cost of R-22 in the coming years. The aggressive three-year linear drawdown is most likely to cause a significant tightening of supplies while the estimation approach is the least likely to put a strain on the supply-demand dynamic. Regardless, the most important thing to remember is that R-22 is a commodity and its value will change as various factors come into play – everything from the economy to the weather. The best advice is to stay abreast of EPA regulations and educate your customers. It also pays to work with a knowledgeable refrigerant provider that offers fair and competitive pricing.