Not a cool industry to be in

Climate change is a global issue that many of us have discussed in boardrooms, over lunch, and at tête-à-tête sessions with friends, family and colleagues. These discussions revolve around the Montreal Protocol and what it means for the environment, the economy, the government and the public. Montreal Protocol is an international environmental agreement formed to save the earth from ozone depleting substances. It can have far-reaching economic consequences, apart from an environmental impact.

Cooling and heating are vital for humans as well as for refrigerants. Hence it is important we understand how we use these technologies to ensure we have a safer planet without having to compromise too much on comfort. Refrigerants are used prominently for air-conditioners, refrigerators and automobiles. These sectors benefit from the increasing urbanisation in India.

As an ‘Article 5’ country (since India is a signatory of the Montreal Protocol), starting January 1, 2015, India needs to cut down on HCFC (hydrochlorofluorocarbons ) use, as these gases affect the ozone layer. Nearly 35 per cent of India’s air-conditioner units are imported, completely assembled and charged with refrigerant HCFC. However, after July 1, 2015, according to the guidelines, these units will have to be brought into the country without refrigerant charge.

The penetration level for air-conditioners in India is only about 6 per cent as against 25 per cent for China but this only stands to grow further.

So what will happen after July 2015? We will use gases like HFC (hydrofluorocarbon) which are not ozone depleting and which the developed world (such as Europe, the US, Canada and others) has already transitioned to. Developed countries were bound to phase out ozone depleting substances earlier than the developing nations (the ‘Article 5’ countries).

However, there is another question that is being discussed at the highest levels — HFC phase-down. The HFC group of refrigerants do not deplete the ozone layer but still have high global warming potential; when leaked into the atmosphere they support climate change. If not restricted in its usage it is expected to have a significant impact in the long run.

India and other developing nations are in the process of transitioning to HFC even as we realise that these gases harm the environment. This is not an easy situation for India and industry. We, along with the rest of the world, need to understand and address this issue taking into account our climate and economic development.

There are two dimensions to the issue of air-conditioning and refrigeration vis-à-vis global warming: a direct impact due to the emission of refrigerants and an indirect one due to energy consumption. The sum of these two factors is called the ‘total equivalent warming impact’ (TEWI).

In accordance with its definition, the TEWI depends on a number of factors: direct leakage including leakage during production, annual leakage rates and recovery losses, and indirect factors including the efficiency of the installation and the carbon intensity of electricity production. For example, if the source of electricity is wind power or hydropower, direct leakage is more important than when electricity is produced by coal.

It is important to note that emissions occur during the entire life-cycle of refrigerants: production, use, and recycling or destruction. In total, estimated annual emissions of F-gases from refrigeration systems alone amount to the equivalent of more than 1,000 million tonnes of CO2, which is augmented by emissions from mobile and stationary air-conditioning units.

The total contribution of emissions of fluorinated gases to global warming is comparable to that of the aviation or computer industries. Although the absolute figures and the projections from various sources are subject to debate, the scale of the problem cannot be underestimated.

Countries within the European Union have already agreed to reduce their usage of HFC gases through a separate regulation applicable to EU countries. US companies have agreed to a voluntary phase-down and are working with other countries for inclusion of a similar agreement under the Montreal Protocol.

These legislative and voluntary actions are agreed on while substitution technologies are often not fully developed yet. .

However, given the varied views on such a proposal, the member countries are unable to reach a consensus. India has consistently requested the manufacturers of refrigerants to indicate the options available as most of the options for air-conditioning are HFC (fluorinated gases) with varying degrees of global warming potential (GWP) and toxicity/flammability.

It is important to understand these two parameters, that is GWP and flammability along with a third parameter, affordability. Balancing these three is critical for the industry to adopt any new refrigerant. For instance, natural refrigerants and hydrocarbons are ideal as they have low GWP and zero ODP (ozone depletion potential). However they are toxic in nature and flammable, and hence safety becomes an issue.

For India and the HVAC-R (heating, ventilating, air-conditioning and refrigeration) industry it is a critical time. We need to understand the challenge it faces, look at the options from current refrigerants and find a solution to mitigate the risk of falling short of refrigerant in the future, and buying it at very high prices. From the current options available, it is clear that there is no one refrigerant that suits all the applications where it is to be used.

Also, with the ‘Make in India’ initiative propelling manufacturing activity in the country, it is imperative for India to adopt energy efficient refrigerants that will cause minimum damage to the environment. Although refrigeration penetration in India is minimal, it is important to take pre-emptive measures.

Some applications such as industrial and commercial refrigeration have had success with natural refrigerants where toxicity, flammability and premature technology cost need to be addressed. Domestic refrigeration has seen success with hydrocarbons as the charge quantities are less. Commercial refrigeration has had big success with CO2 as refrigerant, although this does not seem to have been fully exploited yet. In the air-conditioning space some manufacturers have been successful with hydrocarbons for low tonnage. For larger capacities and commercial air-conditioning the options available currently are HFCs or mildly flammable HFCs.

Refrigerant availability will continue to change. India would do well to adopt a path best suited to its needs and one that supports sustainable economic growth. Given the current scenario in which the HVAC-R industry is dependent on technologies from abroad, we need to choose options with a long-term view as newer technologies and refrigerants emerge.

The safety factor with regard to natural refrigerants should be explored to mitigate risk and make it conducive for large-scale consumption. For this, the entire refrigerant ecosystem — equipment manufacturers, the government and component manufacturers — must find a balance between profitability and impact on the environment.

The writer is the president of Danfoss Industries